The financial world can be extremely complex
It is not as simple as looking for the lender with the cheapest rate, or an insurer with the cheapest premium.
Yes, the interest rate or premium is key as a starting point. However, how might that change in the short, medium or long term?
We undertake a comprehensive review of other key factors that affect the real cost to you.
For example, some lenders charge arrangement fees that can be large enough to make the overall cost of lending unattractive when compared to others.
Exclusive deals & rates
Free valuation fees, free legal fees and cash back towards fees are available on many mortgages. Some incentives are exclusive to our mortgage network Quilter Financial planning and member firms, so may not be available elsewhere. Exclusive deals could include mortgage products with lower interest rates.
Free legal fees, free valuation fees, cash back towards fees and lower interest rates exclusive to our network Quilter Financial planning are not available on all mortgage products from all lenders.
First time buyer
You want to get on the property ladder and own your own home.
You need a bigger house, have to relocate or downsize to a smaller property.
You don’t want to waste money by paying more than you should for your current or future borrowing. Remortgaging can reduce those costs.
Free valuation fees and free legal fees may be available on remortgage products, making the process easier and cheaper to complete. Free legal fees and valuation fees are not applicable on all mortgage products from all lenders.
Buying to let
You want to invest in property and become a landlord, or you are already a landlord and want to purchase another property using the equity in your existing buy to let property as the deposit.
Buy to Let mortgage advice is not regulated by the Financial Conduct Authority.
Letting to buy
Allows you to borrow money to buy and move into a new home while your existing residence is let out to tenants (Which generates an income).
You need a home for holidays, a split job location or for your child to live in while in further education.
As a parent or close family member you want to help someone else buy their own home by taking on some of the risk of the mortgage by acting as guarantor. This usually requires offering your home or savings as security against the loan and agreeing to cover the mortgage payments if the homeowner misses a payment.
Buy property at auction
You want to buy a house at auction but you don’t have enough cash in the bank to purchase the property.
Commercial loans related to purchasing, letting or refinancing commercial properties.
Commercial loans are used to build property or refurbish properties. In both cases, we can help.
Bridging loans are either open bridging loans or closed bridging loans. Closed bridging loans are less risky for lenders so application fees and interest rates charged tend to be less than fees and interest rates applied to open bridging loans.
Bridging loans might be used to:
• Buy property at auction
• Refurbish property and sell
• Refurbish property and let
• Complete the urgent purchase of one property which would otherwise fall through.
All details will be discussed with your advisor.
Commercial Mortgages & Bridging Loans are referred to a Master Broker. Commercial Mortgages & Bridging Loans are not regulated by the Financial Conduct Authority.
Repaying your mortgage
The two most common repayment vehicles are;
- Capital Repayment provides certainty your mortgage will be repaid at the end of the mortgage term.
- Interest Only means your monthly payments only cover your interest repayment. The amount borrowed at the start of the loan will be outstanding at the end of the mortgage term. Interest only mortgages are most commonly used for buy to let properties, but can be used for residential loans subject to meeting certain criteria requirements set by lenders.
- All details on the most suitable repayment vehicle will be discussed with your adviser.
The size of a deposit required is influenced by your credit history, affordability, age and other considerations. Homeowner mortgage deposits can be as low as 5%. In other cases they are more.
The deposit required on buy to let properties ranges from 20% to 40% of the property value. Commercial property loans require a similar-sized deposit.
A gifted equity deposit or gifted cash deposit can be accepted in some cases. This could help buyers purchase property without having any savings available towards their deposit.
A gifted equity deposit can help people buy property from family members using the discount in the purchase price as their deposit. The purchase price must not be inflated by the vendor and in all cases will be verified by the lenders valuation company.
A gifted cash deposit is a transfer of funds to your account from a family member.
In both cases lenders require a letter signed by the donor confirming:
– the funds are not repayable
– the donor will not live in the property
– the donor will hold no interest in the property upon completion.
Vendor deposits and builder deposits will be considered by lenders.
In order to obtain your mortgage approval We have to verify all sources of income.
As a broker we understand income can come from different sources. Some sources can be more difficult to understand than other sources. Some income types will not be acceptable to all lenders, but might be acceptable to other lenders.
- Employment with 3 months wage slips or more
- Employed with 1 month wage slip
- Self-employed with 1 year’s accounts
- Self-employed with more than 2 year’s accounts
- Rental Properties
- Fixed term contracts
- Zero hour contracts
- Maintenance Payments
- Working Abroad
- All income types will be considered.
If you have any concerns regarding your income please ask for help and don’t let it deter you from applying.
How much can you borrow?
Residential homeowner mortgages
Your borrowing limit is assessed using affordability criteria which varies between lenders. Affordability and borrowing limits are calculated using criteria such as annual income, annual expenditure, combined with income ratios or multiples. As income ratios differ between lenders. It is possible to obtain a larger mortgage from one lender than another lender using the same income and expenditure details. There isn’t one formula available in the market to determine the exact borrowing limits for all borrowers, from all lenders.
Borrowing limits on residential homeowner mortgages are also confined to maximum loan to values of between 95% and 75% of the properties valuation. This means borrowers require a minimum deposit or minimum equity amount of between 5% and 25%. The maximum LTV and minimum deposit required can be determined by applicants credit profile. Borrowers with a less than average credit file would generally require a larger deposit.
Buy-to-let affordability and borrowing limits are calculated differently than homeowner mortgages. Assessing affordability for buy-to-let mortgages can be a two step process. Some lenders require borrowers to have a minimum combined annual income before being eligible to apply for a buy-to-let mortgage. This minimum income amount varies between lenders. On the other hand some lenders do not require a minimum income.
Borrowing limits are assessed on buy-to-let mortgages according to the markets rental valuation. The property should be self-financing. If the property is not self-financing the majority of lenders will not approve the amount requested. This does not mean your application is declined. It means lenders will consider a smaller loan amount inline with market rental valuations.
During lenders affordability assessment on buy-to-let mortgages. Lenders apply stress rates well above the interest rate being charged. This approach ensures mortgages are approved with huge consideration of potential interest rate increases.
Borrowing limits on buy-to-let mortgages are also confined to maximum loan to values of around 80%. This means borrowers require a minimum deposit or minimum equity amount of 20% to be approved for a mortgage.
Maximum and minimum age
Each lender sets their own criteria on the minimum age of applicants on application and the maximum age of applicants at the end of the mortgage term. The minimum age can be 18 years. The maximum age at the end of the mortgage term can be 85 years.
Age limits on buy-to-let mortgages can differ from homeowner mortgages. If buy-to-let properties are self-financing. The maximum age of applicants at the end of the mortgage term can be higher.
If applicants are considering extending their mortgage term into retirement age. Or if applicants are retired and want to apply for a mortgage based on retirement income. Providing applicants income is sufficient to support the mortgage payments. There won’t be any issues.
If applicants don’t have a pension plan or another income to show they can meet the mortgage payment. The maximum age of applicants at the end of the term is typically set between 66 years of age and 70 years of age. When employment comes to an end.
Mortgages repaid over longer periods will increase the amount of interest applied to the loan balance.
All details need to be discussed before determining the most suitable mortgage term.
The mortgage market is extremely diverse in lending criteria as one size doesn’t fit all. Criteria from one lender cannot support the requirements of all clients.
Our panel of lenders, representative of the whole of the market, have a variety of mortgage options available, creating more opportunities for approval on more competitive terms. We aim to support client’s with;
- Perfect credit history
- Less than perfect credit history
- Missed payments on credit commitments
It’s important you’re aware of the different features applicable to the many different types of mortgages available on the market. Some of those key features you need to consider are:
Early repayment charges
If you wish to partially or fully repay your mortgage during its term.
Portability of the loan
If you move you may wish to keep your current mortgage.
Would you benefit by fixing the interest rate with the lender for a set period?
Annual percentage rate (APR)
What is the real cost of borrowing, not just the interest rate charged?
The ability to overpay, take payment holidays, or switch repayment types
Frequency of interest additions
How often the lender calculates and adds interest to your loan, for example daily, monthly, or annually, can affect the cost of your borrowing.
Insurance is very similar
We will advise you so that if you ever need to make a claim you or your dependants will receive what you were expecting.
This is why analysing and monitoring the enormous range of products is important. This ensures you get the best solution.
Arranging any type of finance comes with fees and costs. Here are some examples that may apply, depending on whether you are buying a new property or remortgaging an existing one:
This is a tax you pay when you buy a property based on the property’s value.
You will pay fees to your solicitor for doing the legal work associated with your purchase. This work is known as conveyancing.
A fee for registering your ownership of a property.
Payable to your agent if you are selling through one. Typically this is a percentage of the final sale price.
Fees vary depending on how far and how much you’re moving. You will typically pay 50% as a deposit and the rest on the day you move. It’s best to get several quotations before deciding which firm to use.
This is for the lender’s benefit not yours. It satisfies them that the property is worth what you say it is.
Property valuation / survey
This is for your benefit and satisfies you that there are no issues with the property you’re buying. You may pay for a full structural survey or a less comprehensive homebuyer’s survey.
Mortgage lender’s arrangement fee
You pay this to the lender for arranging your mortgage, either up front or by adding it to your loan. Arrangement fees can vary significantly depending on the mortgage product you choose.
Early repayment charges
If you repay your mortgage in full, or in part but exceed the agreed partial repayment level, before the end of your mortgage term you can expect to pay a fee. This can range from a simple administration fee to significant early-redemption charges.
Higher lending charge
Where you are borrowing a high proportion of your property’s value your lender will insure itself against you defaulting and property values falling. The lender will usually pass this cost to you by adding it to the loan.
Our Terms of Business will clarify the areas of advice covered by your specific adviser.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it. Think carefully before securing other debts against your home.