Your Questions Answered...
If you've never applied for a mortgage before, or haven't been through the process for some time, you will no doubt have questions. If anything you need to know isn't listed below, please get in touch.
How does a mortgage work?
A Bank, Building Society or Specialist Mortgage Lender loans money with interest. In return, their loan is secured against the value of your property. The details of the loan agreement are registered against the Title of that property, normally a first charge. This is known as a mortgage.
What different types of mortgage are there?
There are two main types of mortgages; Fixed Rate Mortgage and Variable Rate Mortgage. A Fixed Rate Mortgage means that your interest amount is fixed for a period of time (usually two to five years). Your repayments won't change during your fixed period, giving great peace-of-mind.
A variable rate mortgage means the amount of interest you pay can change, and therefore so do your repayments. Variable rate mortgages could be tracker based, standard, discounted, collared or capped. If you would like further information, please do give us a call.
What fees do I pay to get a mortgage?
Our brokers take all the hard work out of finding the very best mortgage offers available from our panel of over 70 lenders. Our brokers are CeMap qualified and FCA Regulated, but we don't charge you any fees.
There are other fees to consider - application/product fees from the lender. These can range from £0 to £1500. Valuation fees that can range from £0 - 1000. You will also need to consider solicitors fees, stamp duty and the physical moving cost.
How much can I afford to borrow?
There is no prescribed criteria or method to determine what you can borrow. The amount you qualify for will be determined by the purchase price of the property, the deposit you are able to put down, your income and monthly expenses, and your credit score. Online calculators can be a good guide, but the best thing to do is talk it through with a broker to find the lender that best suits your circumstances.
I have bad credit, is this a problem?
Credit file issues will not necessarily prevent you from getting a mortgage. Our advisors have great success in helping clients with adverse credit. There are a number of lenders that we work closely with who are more favourable to clients who have previously had trouble sourcing finance. Talk to one of our advisors today for further information.
What is loan-to-value, LTV?
Lenders often talk about the LTV requirement. LTV is an acronym for the Loan-to-Value Ratio. This is a term used to describe the ratio of a loan to the value of the property purchased, expressed as a percentage. For example; if you borrow £170,000 to purchase a property valued at £200,000 the LTV is 170,000/200,000 or 85%, the remaining 15% is your equity in the form of a deposit. If you are remortgaging, this remaining percentage represents your equity.
Can I get a mortgage with a part-time job?
Lenders in general are more interested in your total income and financial status rather than the number of hours you work. After all, it is perfectly possible for a part-time worker in a lucrative position to earn more than an entry-level full-time worker. Provided you have enough proof of income, your part-time employment status should not be an issue.
How many payslips do I need to provide?
This varies from lender to lender and is also determined by the length of your employment. Some lenders will accept just one months’ pay slip, whereas others may require proof of income for 3 months, a full year or longer (generally agency). If you receive commission, tips or bonuses, you may need to provide more than someone who only gets a basic salary. If you want to know more about your specific situation, please get in touch.
Which lenders offer the most money?
Maximum mortgage policies vary significantly among major banks and independent lenders alike. For example, the biggest European bank, HSBC is currently able to offer a maximum of 4.75X the applicant’s annual salary while Barclays and Santander may offer up to 5.5X. Flexible specialist lenders, away from the high street, can offer significantly more, depending on circumstances. Eligibility for larger mortgages is established on the basis of deposit, income, financial status (outstanding loans and credit cards etc. at time of application), credit history, employment status and so on.
Can I have two residential mortgages?
Residential mortgages are typically the cheapest mortgages available, hence, there could be more restrictions on the number of residential mortgages you can have. Provided you can prove the income required to pay the first and subsequent monthly payments certain lenders will allow finance for the purchase of additional homes for personal use, a holiday home, weekend residence etc.
Can I remortgage to pay off debt?
Definitely but it is important to remember that as you are transferring unsecured debt to debt secured against your property, your home may be at risk if you fail to keep up with your monthly repayments. Consolidating debts with one affordable remortgage could lead to significant savings on your monthly outgoings and total amount to be repaid however it is important to seek professional advice before securing any loan against your property.
Can you rent to a family member using a buy-to-let mortgage?
Some lenders offer a specialist ‘family buy to let mortgage’ that enables landlords to let properties to family members. These mortgage contracts will be classified as 'Regulated Buy-to-Let' and will be subject to stricter underwriting. Generally, affordability is assessed using repayment methods.
How long do pay-day loans stay on your credit file?
Payday loans can have an adverse effect on your eligibility for mortgages, loans, credit cards and so on. Unfortunately, any record of payday loans on your credit report will be visible for at least six years. Nevertheless the longer the period between your last payday loan and your current application, the less likely it is to affect your eligibility.
This page is updated regularly, but if you have a question relating to your situation, please give us a call today.