How does a Mortgage work?
A bank or building society loans money with interest. In return their loan is secured against the value of a person’s property. The details of the loan agreement are registered against the Title of that property- this is known as a mortgage.
What is a mortgage broker?
Mortgage brokers, like myself, will research the most suitable mortgage product on their client’s behalf to ensure they get the best possible deal.
Is your mortgage advice independent?
Yes, my advice is always independent and impartial. I will recommend products that I consider to be the most appropriate mortgage to meet your needs and circumstances.
How much can I afford?
There is no prescribed criteria to determine what you can borrow. The amount you qualify for differ from one mortgage lender to the next, and will be based upon the purchase price, the deposit you are able to put down, your income and monthly expenses. However, during your initial free consultation we will be able to determine your maximum loan amount so you can start house-hunting in earnest.
What fees are involved in getting a mortgage?
I will take all the hard work out of finding the right mortgage available for your circumstances. I charge a client fee of £290, payable once the mortgage offer has been produced. Any fees will be detailed on the documentation provided prior to any commitment made by the client.
What different types of mortgages are there?
There are two main types of mortgages…
Fixed Rate Mortgage – means that your interest amount is fixed for a period of time (usually two to five years) therefore your repayments do not change.
Variable Rate Mortgage – means the amount of interest you pay can change, and therefore so do your repayments.
I have bad credit; will this be a problem?
This will not necessarily prevent you from getting a mortgage. There are several lenders that will consider clients who have previously had trouble sourcing finance.
Agreement in principle (AIP) – A document from a mortgage provider approving that you will be able to borrow an amount. You can use this to verify to a seller that you are able to afford to buy their property.
APR – Annual percentage rate: the total cost of a mortgage, counting the interest and fees. It assumes you will have the mortgage for the entirety of the term, so may or may not be a useful way to compare deals.
Arrangement fee – This is a set-up fee for a mortgage. Most mortgage lenders will allow you to add this fee to the loan but means you pay interest on it for the whole mortgage term.
Arrears – To go into arrears, means you have ‘defaulted’ at least once on your mortgage repayments – you have missed a month’s payment. Contact your lender as soon as possible if you think you may go into arrears.
Conveyancing – The legal procedure you are required to go through when you buy or sell property. This is done by a solicitor or licensed conveyancer.
Discounted-rate mortgage – A discounted-rate deal is when the interest rate that you are charged is a set amount, less than your mortgage lender’s standard variable rate.
Early repayment charges (ERCs) – These are penalty fees you need to pay in order to leave a mortgage during a specified period, usually the period of the initial deal.
Equity – The amount of the property that you own outright, i.e. your deposit plus the capital you have paid off on your mortgage.
Gazumping – This is when an offer was made and accepted by the seller, but then another party makes another, higher offer which is accepted by the seller regardless.
Guarantor – A third party who agrees to meet the monthly payments of the buyer if they are unable to pay, this is a most common party with first time buyers, the guarantor is usually a parent or guardian. Read about guarantor mortgages.
Family offset mortgage – This is used by family members (mainly parents) who want to assist first-time buyers get onto the property ladder. Your savings are balanced against your child (or other family member)’s liability, the volume that they owe and pay in interest is lowered.
Fixed-rate mortgage – The mortgage interest rate stays constantly the same for the initial period of the deal, which can be anything from one year to 10 years. Meaning that you can be sure of exactly what you will be paying on your mortgage each month, as your rate will not go up – or down – with the Bank of England base rate.
Flexible mortgage – A flexible mortgage deal is one that allows you to overpay, underpay or even take a payment holiday from your mortgage. This can assist in you paying off your mortgage early to save money on interest, however flexible mortgages are usually more expensive than conventional ones.
Freehold – You own all the property and the land it was built on.
Help to Buy – Help to buy is an initiative launched by the government which involves various scheme designed to help first time buyers get onto the property ladder. This includes equity loans, mortgages guarantee, ISAs and specific schemes for Wales and Scotland.
Interest-only mortgage – This is when you only pay off the interest on a mortgage each month, without paying off any of the loan itself. The idea here is that you build up enough money to pay off the mortgage at the end of this term in another way.
Joint life – A ‘joint life’ policy is one that is taken out by two or more people. Joint life policies can be useful for protecting a family in the event of either or both parents dying.
Joint mortgage – This is when a mortgage is taken out by two or more than two people. This could be used if you are buying a house with a partner, friend, or a family member. It can also be used by parents who want to help their children buy a property.
Leasehold – This is when you own the building – but not the land it stands on, you own this for a set period, this could be anything up to 999 years). You could find it hard to get a mortgage if there are fewer than 70 years left on the lease of a property that you want to buy.
Loan-to-value (LTV) – This is the size of your mortgage as a percentage of the property’s value. The cheapest deals of these incline to be accessible for people who are borrowing 60% or less.
Mortgage deed – This is an official contract between lender and the borrower, this outlines the legal obligations of the borrower and the rights the lender has if a borrower fails to make a repayment.
Negative equity – This is when the value of your home falls below the value remaining on your mortgage.
Offset mortgage – An offset mortgage serves to link saving and a current account. Credit balances are often offset against a mortgage debt, so you only pay interest on the difference. This is also true for paying off the capital.
Portability – This is a portable mortgage; you can transfer your borrowing from one property to another if you move.
Repayment mortgage – This is when you pay off the mortgage interest and part of the capital of your loan each month. Unless you miss any of the repayments, you are guaranteed to have paid off this mortgage by the end of the term.
Repayment vehicle – This is required by lenders if you take out an interest only mortgage – this is the means of which you’re going to pray back to mortgage by the term’s bed, this could be another property or a stocks and shares portfolio.
Right to Buy scheme – This was originally intended to enable tenant so the council houses to but homes that they ae being lived in, this is being opened to housing association tenants also.
Shared ownership – You can buy a share of a property (this is usually somewhere between 25% and 75%). And pay rent of the remaining share. Which is owned by the local housing association.
Stamp duty – Stamp duty land tax is payable when you buy a property for more than a certain value and other specific criteria.
Standard variable rate (SVR) – The default mortgage interest rate that a lender will charge after the initial mortgage deal period comes to an end. This could be higher or lower than an original rate.
Tracker mortgage – The interest rate on a mortgage tracks back to the base rate set by the Bank of England – by a margin above or below it.
Valuation survey – Lenders always carry a valuation survey