What insurance do I need for a mortgage?
As a minimum, the building itself needs to be insured. We would usually recommend that you also insure the contents within your home too. Other insurances we recommend are life insurance, income protection insurance and critical illness cover.
Can I make an overpayment on the mortgage?
Yes, with most lenders. They are likely to have an annual allowance for overpayments of 10% of your mortgage balance, this will be fully explained to you in a mortgage consultation. It can differ from lender to lender. But as an example- with a £220,000 mortgage balance each year you will be able to pay your monthly payment and 10% of the balance in addition (e.g. £22,000 ) either in one lump or varied instalments. Some lenders offer higher than 10% on an annual basis.
What will my first payment be?
This will vary from lender to lender. Some lenders don’t take a payment up front which can be handy if you are paying rent or another mortgage. It’s always wise to look at the best lending option for your mortgage but your adviser will be able to give you some advice on which lender makes a first payment that works best for you.
What is a credit score?
This is a score that we all have and is based on how we have conducted our finances over the preceding six years and is used by financial services companies to assess your credit worthiness.
What costs are there when buying a property?
There are various costs associated with buying a property which we’ve detailed below:
- Stamp Duty Land Tax (SDLT): Current percentages payable can be found at https://www.gov.uk/stamp-duty-land-tax
- Solicitor’s fees: These are based on the purchase price and complexity of the transaction. They vary from one firm to another and getting more than one quote is often wise.
- Valuation fees: For most lenders these are also based on purchase price. Some lenders offer free valuations, especially for first time buyers and remortgages. Homebuyers Survey and building surveys are options to consider, they will cost more than a basic valuation.
- Lenders arrangement fees: These can usually be either added to the mortgage or paid up front and average at about £999, but vary from nothing to higher. We ensure the fee is worth paying as a fee free product might be a more cost effective choice.
*Broker fee: These vary and will be made clear to you before you instruct a broker to act on your behalf.
Can I make payments every week to my mortgage?
This has been popular abroad, as yet most UK lenders will only take their mortgage payments monthly via direct debit.
How long will I need to have been in my job to get a mortgage?
Most lenders like to see a track record over 6 months, that said with most lenders if you have a signed contract and your first pay slip issued it’s something a lot of lenders will be fine with. If we are needing to use variable income ie: overtime, bonus/commission payments these are normally required to be evidenced for at least 3 months.
How many years books will I need if I’m self employed?
Some lenders will work with one years books. The majority will need two years full completed and submitted accounts to use any income from self-employment.
Do I need an agreement in principle?
With most mortgage lenders now doing a soft footprint on your credit score, an agreement is a good idea, mainly to give you peace of mind. This will also back up your position financially with owners and estate agents so they know finance is achievable should you see a property you like.
How much will a mortgage cost each month?
This will vary depending on the loan amount, the term of the mortgage and the interest rate.
What is the difference between a repayment and an interest only mortgage?
A repayment mortgage is guaranteed to pay off your mortgage by the end of the term as long as all payments have been made.
An interest only mortgage is where your monthly payments are only covering the cost of the interest and your loan amount will remain the same. At the end of the term, you would either need to sell the property to repay the mortgage or find another source to repay the loan.
Can I pay my mortgage off early?
Yes, however you could have early repayment charges to pay if you have a fixed rate and only had your mortgage product for a short amount of time.
What is a buy to let mortgage?
A Buy-to-Let mortgage is where you buy another property specifically as an investment with the intention of letting it out.
What is an agreement in principle?
This is commonly abbreviated to AIP, or DIP (Agreement in Principle, Decision In Principle) which is the same thing just called differently across lenders and brokers. It is a certificate evidencing that the lender has conducted a credit score and provisionally happy to lend to you.
How much can I borrow?
The main things that dictate how much a person or couple can borrow is income and current credit commitments. All lenders have different ways to calculate what someone can borrow. There are many factors and a broker can run through this with you.
How do I find out the maximum mortgage I can get?
This will be made up of a lot of criteria, based on your age, income, current commitments, deposit and credit score history. Due to it’s complexity and varied lending it’s always advisable to speak to a broker to get an accurate idea. There can be a large difference between the most and least generous lender. Even the product chosen can impact the outcome.
Can I make overpayments to pay off my mortgage earlier?
Yes, most lenders allow up to 10% of the mortgage balance to be overpaid each year without incurring any penalties. Some are higher and some are lower.
How much deposit do I need?
You will need a minimum of 5% deposit. The more deposit you put in, the better the interest rates will be. For example, if you put in 15% deposit this will often get you a lower interest rate than a 10% deposit. It can also effect how much they will lend.
Can I move my mortgage to another lender if they’re offering a better rate?
Yes. You can “remortgage” to another lender to take advantage of their better interest rates. Any potential early repayment charge has to be factored into calculations. As part of our service, we will contact you as you approach the final few months of your existing mortgage deal to provide you with details of the options available to you.
How much deposit do I need for a buy to let mortgage?
Typically you will need a minimum of 25% deposit. Some lenders will accept a lower deposit, but it will restrict your options of potential lenders.
How can I improve my credit score?
You can improve your score by proving that you can repay debt and cope with any credit commitment you have, such as loans and credit cards and by paying things like mobile phone bills and utility bills on time. Also, it helps to be on the electoral role.
How long is a mortgage valid for?
If you ask a lender for an agreement in principle these will normally be valid between 30 — 90 days. This checks your credit score and is the first step in the application process. It does not secure the mortgage in full. Once you’ve found a property you can apply for a mortgage. Once this is approved the mortgage offer will usually be valid for 6 months, but can vary dependent on the lender.
What is an offset mortgage?
An offset mortgage works by linking a borrower’s mortgage account to their savings account. This arrangement helps reduce the amount of interest paid on the mortgage as the savings balance is offset against the mortgage debt.
