Mortgage Advice

A mortgage broker will take much of the stress out of applying for a mortgage and provide you with assistance throughout the whole process. You will likely have a face to face meeting where you will be able to discuss your individual mortgage requirements and be provided with answers to your questions. 

A broker is able to research the mortgage market and will then provide you with a recommendation that suits your needs.The broker will also act as an intermediary between you and the mortgage lender and will prepare and collate all necessary paperwork.

To obtain a mortgage you will need to have earned income. This can be through employment or self-employment but you will need to provide evidence of this income. The self-employed will often need to have been trading for 2 or 3 years.

You will also require a deposit of at least 5% of the purchase price of the property. If you have a higher deposit available you are likely to be able to access more attractive interest rates.

When applying for a mortgage the lender will carry out a credit check so a good credit rating will assist you in obtaining the loan amount you require.  

The amount you are able to borrow can vary from lender to lender depending on a variety of factors, including how much deposit you have, what your annual income is and any outstanding debts you may have. When lenders are deciding whether they will lend to you they will do an affordability check specific to their individual lending criteria. They will also assess your ability to cope with increasing costs if interest rates rise. Therefore, lenders will sometimes assess us as being able to afford to borrow a lower amount than we personally think we can afford.

As criteria vary from lender to lender, we use our expertise to try to find a lender who will be able to meet your requirements. Please feel free to give us a call and we would be happy to discuss your options with you.

If you would like a general idea of what you may afford please use our affordability calculator, provided by the Money Advice Service.

https://www.moneyinperson.co.uk/mortgages/calculators-tools/affordability-calculator/

There are many different products on the market which cater for a variety of circumstances. Generally, the higher deposit you are able to save the lower the interest rates you are likely to pay. The amount of deposit also influences what the lender feels you can afford after considering your personal circumstances. Usually a minimum deposit of 5% of the property purchase price is required. On top of this you will also need to have savings to pay for legal costs, stamp duty and other expenses associated with buying a home.

Please feel free to give us a call and we would be happy to discuss with you your options.

If you would like a general idea of what you may afford, or calculate stamp duty costs please click on the links below.

https://www.moneyinperson.co.uk/mortgages/calculators-tools/affordability-calculator/

https://www.moneyinperson.co.uk/mortgages/calculators-tools/stamp-duty-calculator/

Lenders may charge some of these fee types. Not all fee types will apply to every mortgage. You adviser will run through these in detal with you.

Arrangement fee: This is the fee for the mortgage product and is sometimes known as the product fee or completion fee. Sometimes you can add this to your mortgage but this will increase the amount you owe and likely your interest and your monthly payments.

You should check whether the fee is refundable if the mortgage doesn’t go ahead.  If not, it may be possible to request the fee is added to the mortgage and then to pay it once the application has been approved and is definitely going ahead.

Booking fee: This is sometimes charged when you simply apply for a mortgage deal and is not usually refundable even if your mortgage falls through. Some mortgage providers will include it as part of the arrangement fee, while others will only add it on depending on the size of the mortgage.

Valuation fee: The mortgage provider will value your property and make sure it’s worth the amount you wish to borrow. Some lenders won’t charge this fee on certain mortgage deals. You can also pay for your own property survey to identify all the repairs or maintenance that might be needed.

The lender’s survey only looks at the property value, not necessarily the potential problems and future costs. You can often ask the valuer to provide a Homebuyers survey for an additional cost. This survey will be much more detailed and look at the general condition of the property and any areas of concern, rather than just the value.

Telegraphic transfer fee: Sometimes known as CHAPS (Clearing House Automated Payment System), this fee pays for your mortgage provider to transfer the money to your solicitor. It’s usually non-refundable, so if the deal falls through you probably won’t get the money back.

Mortgage account fee: This pays for the lender’s administration costs in setting up, maintaining and closing your mortgage. If you’ve paid this fee, then it’s unlikely you’ll need to pay the exit fee (see below) although an early repayment charge (see below) might still apply if you close the mortgage early.

Mortgage broker fee: This fee is for a mortgage broker, if you choose to hire one, for arranging the mortgage or giving you advice. Some mortgage brokers won’t charge a fee and instead take commission from the mortgage provider. Details of how we get paid for the work we do for you are in this document.

Higher lending charge: Not all lenders charge this fee and it’s only likely to be a requirement if you have a small deposit, as this pays for the lender’s insurance if you can’t pay back the mortgage and they have to sell your property at a loss.

Early repayment charge: This fee might not always apply, so be sure to check what the rules are with each mortgage provider, especially if you want to make an early repayment in the future. If you already had a mortgage, check your keyfacts illustration or European Standard Information Sheet (ESIS) document to see what the cost is. Your adviser should always discuss these charges with thou in detail.

Exit/Closure fee: This is a fee to your lender when you repay your mortgage, even if you are not repaying it early. If you’ve already paid the mortgage account fee then it’s unlikely you’ll need to pay this particular fee as it will usually include set up and maintenance, as well as the closure of the account. Check what your mortgage account fee covers to make sure.

You may qualify for Support for Mortgage Interest (SMI). SMI is not a benefit but rather a “loan” provided to claimants who are unable to work through illness or unemployment. That is to say whatever Support for Mortgage Interest you might receive will have to be repaid. The Department for Work and Pensions will take a charge on the property, making it a secured loan and that loan will have to be repaid after you return to work, on the sale of the property or at death. 

Home owners who experience a period of unemployment due to redundancy or ill health and claim SMI, will have a debt to the government which has to be repaid in addition to any arrears which may accumulate on the mortgage. This may be quite difficult to clear once you return to work and the DWP having a second charge on your home may interfere with your ability to remortgage in the future.

Generally Support for Mortgage Interest begins payments 39 weeks/9 months after you claim one of the income-related benefits. These include Income Support, Income Based Job Seekers Allowance, Income-Related Employment and Support Allowance or Universal Credit. After the 39 week deferred period, Support for Mortgage Interest would pay the interest only on your outstanding mortgage as well as for loans you have taken out for certain repairs and improvements to your home. Mortgage interest on amounts up to £200,000 may qualify for Support for Mortgage Interest. 

Key concerns are:

• It is a loan rather than a benefit
• You won't receive anything for the first 9 months
• It will only cover the interest, not the capital part of your mortgage payment

In view if these limitations, a suitable insurance product may be beneficial for some people. The insurance could address these issues:

• Any payout will not have to be repaid
• It will start to pay before 9 months
• It can cover both the interest and the capital part of your mortgage payment

There are policies which provide insurance to cover the cost of the mortgage for a number of months in the event of unemployment on sickness and these plans would help you to maintain your mortgage. Of course, like all insurances there are terms and conditions and these plans are not suitable for everybody. For example, the self-employed or those who own their own business may not find them so useful and these plans will not provide cover if it is already evident that you are likely to be made redundant. However, these restrictions aside such insurance may well meet a need and ensure that if you were to lose your job or be unable to work for a period, that you did not fall into arrears on the mortgage. It could also alleviate the need to have a Support for Mortgage Loan from the government which would subsequently need to be repaid.

If you would like to discuss any of these issues with us or know more about relevant insurances then please feel free to contact us. 

A shared ownership mortgage is where you part-buy and part-rent your home. You purchase a share of the property, usually between 25% and 75%, with a mortgage. You then pay rent to the landlord on the share of the property which they own. The landlords in these schemes are usually housing associations. 

As you are only purchasing a share of the property the deposit you will require is likely to be lower than if you were purchasing the whole property. You will also have the opportunity to increase the share of the property which you own at a later point. However you would need to be aware that the purchase price would be based on the valuation of the property at the time the additional share was applied for, which may have increased.

Critical Illness Cover is not compulsory. However we strongly recommend that you consider it, as without it you may not be able to keep up with mortgage payments if you suffer from a serious illness. The probability of you claiming under critical illness is six times more likely than life insurance according to experts*.

Critical Illness Cover is designed to pay out a lump sum if you are diagnosed with one of a large range of illnesses specified in the plan. You can obtain a standalone Critical Illness policy or one alongside Life Insurance, in which case the policy will pay on death or on earlier diagnosis of a critical illness.

*Source: https://www.theguardian.com

If the whole of your income is received through benefits then it is unlikely you will be able to obtain a mortgage. However if you receive benefits in addition to an earned income some lenders will take some of these benefits into account when assessing your affordability.

This is a Government scheme called Help to Buy Equity Loan. It is a scheme for first time buyers and home movers, but is restricted to those purchasing a new build property. The property you are purchasing must also be your only residence up to a maximum value of £600,000.

You will only need a 5% cash deposit as the Government will then lend you up to 20% of the cost of your property. You will borrow the rest, up to 75%, from a mortgage lender on a repayment basis.

There is a specific mortgage used to purchase a council house, called ‘Right to Buy’. You will need your ‘Right to Buy’ offer provided by your local Council or Housing Association to obtain a mortgage. You will not need to provide your own deposit as most lenders will take your discount as the deposit.

As with all residential mortgages a full affordability assessment will be carried out by the lender to determine whether you will be able to borrow the amount you require. You will need to provide evidence of income as well as provide details of your regular monthly outgoings.

This type of mortgage will enable you to raise funds to purchase land and build your own property. The main difference between a self-build mortgage and a house purchase mortgage is that with a self-build mortgage money is released at specific stages as the build progresses, rather than as a single amount.