Tag: fixed mortgage deals

Exclusives might help with

• Free mortgage valuation
• Free legal fees
• Cash-back towards fees
• Competitive interest rates

Exclusives to a particular network are not available on all mortgage products from all mortgage lenders.

First-time buyer mortgages

Being a first-time buyer can be a very exciting period in your life. Whether you decide to buy a property alone with your partner, with family or with a friend. It will be one of the most expensive decisions you ever make.

During recent decades we’ve seen a substantial increase in property prices. This makes the first step onto the property ladder more difficult than ever. But there are still numerous incentives available to help first-time buyers. Many incentives are available through mortgage brokers.

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Home mover mortgages

You need a bigger house, have to relocate or downsize to a smaller property and need to know your mortgage options.

Home mover mortgages are similar to a standard residential mortgage. It’s simply the process of applying for a new mortgage when moving into a new property. Your personal circumstances will be assessed by a mortgage adviser to ensure your new mortgage is suitable. Making sure the new mortgage is the right mortgage is important to ensure it is affordable whilst meeting your current circumstances.

Redemption fees to consider

If you decide to move to a new property whilst tied in with your existing lender on a specific rate for a certain period of time such as: two, three or five years. There maybe redemption fees to pay. On many occasions such fees can be avoided but this depends entirely on your mortgage terms.

Porting your mortgage
It might be possible to port your existing mortgage to a new property which can eliminate redemption penalties in certain circumstances.

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Remortgages 

What is a remortgage?

A remortgage is when you change your mortgage deal by switching to a different lender on more competitive rates or suitable terms.

The reasons why people remortgage is simple.

• To reduce their monthly mortgage payments especially when their mortgage rate is due to increase when their 2 year, 3 year or 5 year tie in period comes to the end.

• Some people want to release the equity tied up in their property by borrowing more money secured against their property.

You may have to pay an early repayment charge to your existing lender if you remortgage

Buy-to-let mortgages

You want to invest in property and become a landlord so require a buy-to-let mortgage.

Maybe you’re already a landlord and want to purchase another rental property. You might need to remortgage an existing rental property to raise money for your deposit on another property.

Possibly your a landlord and your mortgage deal has ended so you require a competitive mortgage deal to reduce your mortgage payments.

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Your property may be repossessed if you do not keep up repayments on your mortgage. Not all Buy to Let Mortgages are regulated by the Financial Conduct Authority.

Let-to-buy mortgages

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).

Second home

You need a mortgage to buy a home for holidays, a split job location or for other reasons like for your child to live in while in further education.

Guarantor

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.

Buying property at auctions

You want to buy a house at auction but you don’t have sufficient 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 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.

Commercial Mortgages & Bridging Loans are referred to a Master Broker.

Commercial Mortgages & Bridging Loans are not regulated by the Financial Conduct Authority.

Repayment vehicles

• 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 term will be outstanding at the end of the mortgage term. Interest only mortgages are most commonly used for buy to let property purchases but can be used for residential homeowner mortgages subject to meeting lenders criteria.

Mortgage deposit

The size of the deposit required is influenced by your credit history, affordability, age, purchase price and other considerations.

When applying for a mortgage on owner occupier properties the deposit can be as low as 5% of the property valuation for first-time-buyer’s with good credit history. In other cases the mortgage deposit required can be 35% if applicants have adverse credit or when buying rental property. We need to understand your situation before determining the size of the deposit you will require.

Gifted deposit

A gifted deposit helps home buyers purchase property without using their own savings. Instead a small sum of money is gifted from the relative of the person or persons buying the property and the remaining balance is funded by a mortgage.

A gifted equity deposit can help purchase property by using a discount in the property’s value as your deposit. A percentage of the property value will be classified as your deposit.

A gifted cash deposit is a transfer of funds from the person gifting your deposit to your bank account. Typically and most commonly family gifted cash deposits are acceptable by lenders.

Family can gift a much larger deposit compared with gifted deposits paid by non-related persons, vendors and builders.

Vendor deposits and builder deposits of 5% are typically accepted by lenders when the person is not related.

Proof of deposit

The proof you are required to supply to evident the source of your mortgage deposit will depend on where the funds are coming from. For example, if personal savings are being used, most mortgage lenders ask you to submit 6 months of bank statements to confirm the build up of funds over time.

If the deposit is a gifted deposit either in equity or cash mortgage lenders would require a letter signed by the donor confirming:

– the funds are not repayable
– the amount being gifted
– the donor will not live in the property
– the donor will hold no interest in the property upon completion.

A vendor deposit gifted from a non family member and builder will be considered by various lenders.

Income

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 are not acceptable to all lenders but might be acceptable to other lenders.

• Employed with 3 months or more wage slips
• Employed with 1 months wage slip
• Self-employed with 1 year’s accounts
• Self-employed with more than 2 year’s accounts
• Pension
• Rental income
• Fixed term contract
• Zero hour contract
• Benefits
• Maintenance income
• Dividend
• Working Abroad
• All income types will be considered.

Maximum borrowing

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 and annual expenditure combined with income ratios and income multiples. As income ratios differ between lenders it is possible to obtain larger mortgages from one lender than another lender based on the same income and expenditure figures.

There is not one formula available to determine the exact borrowing limits for all borrowers, from all lenders.

Borrowing limits on residential homeowner mortgages are also confined to a maximum loan to value usually between 95% and 70% of the property value. This means borrowers require a minimum deposit or minimum equity amount of between 5% and 30%. 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 mortgages

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.

Age

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.

Retirement
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.

Credit history
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
• Defaults
• CCJ’s

Other considerations
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.

Fixed rate
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?

Flexibility
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.

Other costs
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:

Stamp duty
This is a tax you pay when you buy a property based on the property’s value.

Legal fees
You will pay fees to your solicitor for doing the legal work associated with your purchase. This work is known as conveyancing.

Land registry
A fee for registering your ownership of a property.

Estate agent
Payable to your agent if you are selling through one. Typically this is a percentage of the final sale price.

Removal company
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.

Mortgage valuation
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.

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.