Mortgage
The key things you need to know about buying your first home
- First Steps
The Money Advice Service affordability calculator will provide you an approximate amount you will able to borrow but please remember the amount varies from lender to lender and will also depend on things such as dependants, term of your proposed mortgage and monthly credit commitments. In most cases taking out a joint mortgage increases the amount you will be able to borrow if you are both in paid employment but the most important thing to consider is being comfortable with the monthly payments, not just now but for the whole term of the mortgage.
The calculator is provided for information purposes only and does not contain all of the details required to choose a mortgage. Make sure that you read the separate Key Facts Illustration (KFI) provided before you make a decision. The information provided by the calculator does not constitute formal mortgage offer.
The most common questions asked is how much your mortgage cost?
It’s a very good question because your mortgage is probably going to be your biggest ever monthly financial commitment and it is vitally important to know the payment will be affordable both now and in the future, but, we prefer to ask how much you can afford and work back your loan amount from there because this will provide loan parameters you can work within when looking for a property.
The Money Advice Service mortgage calculator is quick and easy to use so you can find out the cost of your mortgage in seconds.
Simply adjust the following to calculate your mortgage costs:
- The amount you want to borrow
- The interest rate
- The number of years you wish to borrow the money over
The deposit required to purchase a property is pivotal to the cost of mortgage and options you will be offered so the more you can put down the better rate of interest you will obtain because lenders consider buyers with bigger deposits a lower risk so if you can afford 10% – 25% you will have access to more mortgages and better interest rates.
Mortgage deposits are usually at least 5% of the value of the property you are buying. So, for example, if you want to buy a home costing £100,000, you’d need to save up a minimum deposit of £5,000.
There are 100% mortgages currently available where a Helper can deposit 10% of the purchase price into an interest paying Helpful Start Account for 3 years after which point the money is returned with interest if the mortgage payments are kept up to date.
- How Much
We understand that saving is hard and buying a property is expensive, before you purchase your new home, there are extra one-off charges and fees you will need to take into account which include:
- Deposit
- Mortgage arrangement Fee
- Valuation or Homebuyers Survey Fee
- Legal Fees
- Stamp Duty Land Tax
- Broker Fee
- Moving Costs
And once you are in your new home there will be regular ongoing bills over and above the monthly mortgage payment such as:
- Council Tax
- Electricity, Gas & Water Bills
- TV Licence
- House Insurance
- Life Insurance
- Repairs & Decorating
Is It Cheaper To Rent Or Buy A House
Many people believe that paying rent “dead money” but buying a house isn’t right for everyone so the following need to be considered beforehand.
The pros of buying
- You will be buying an asset which can increase in value
- You are living in your own home with the security in knowing you can stay as long as you like
- You can decorate, extend and renovate the property as you wish
The cons of buying
- Having a mortgage is a financial commitment you must maintain or face losing your home
- Houses are expensive and saving a deposit can take a long time
- House prices can increase and decrease with a decrease possibly leaving you in Negative Equity
- Repairs are at your own expense
The pros of renting
- It is easier to move house if you need to relocate for employment
- You can move without the time and expense of buying and selling
- The opportunity to explore and decide if the area is right for you before committing to purchase
- To live in an area you could not afford to purchase
The cons of renting
- You pay rent to a landlord every month and this can go up
- Your landlord can ask you to leave at the end of the agreed tenancy period
- You may not be able to make any changes to the property
Having life insurance isn’t compulsory when you take out a mortgage but we would recommend you consider it so that your loved ones don’t struggle to make the monthly mortgage payments if you and the income you provide are not around to contribute. None of us likes to think about dying but having cover to pay out a lump sum would ease the financial burden on your family should the unthinkable happen.
Life insurance is easy to apply for and we can compare policies from a range of different insurers on your behalf so you can be certain you find the most appropriate policy to suit your needs and circumstances. There are several different types of life insurance policy available but the right one for you will depend on your personal circumstances, there are three main types of life insurance cover, level term assurance, decreasing term assurance and whole-of-life cover. Here is what you need to know:
When you buy a life insurance policy you pay premiums each month, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your family.
Level Term Assurance – The amount of cover you have remains the same during the term of the policy. This kind of cover is often taken out alongside interest-only mortgages, as the capital you owe does not decrease over time.
Decreasing Term Assurance – The amount of cover you have reduces over time. Decreasing policies are often taken out at the same time as a repayment mortgage, so that the amount of cover you have decreases along with the capital you owe.
Whole-Of-Life – Protects you for your lifetime, but means you’ll pay premiums right up until the point you die and costs are steeper because you’re guaranteed a pay-out.
How much does life insurance cost?
The amount you will pay for life insurance is based on the type of policy required, amount of cover required, how long cover is required, your age and health (including any existing medical conditions) and the type of policy you’ve chosen. Policies with decreasing cover are usually cheaper than those with level cover and whole of life policies the most expensive because they provide protection throughout the whole of your life.
There are also other forms insurance cover that can be incorporated into a life insurance policy such as:
- Critical Illness Cover
- Global Treatment
- Fracture Cover
- Extra Care Cover
- Income Protection
Tax in the form of Stamp Duty is payable when you purchase a property in the UK and you will need to factor this into your budget when considering how much deposit you have available to purchase a property.
In England and Northern Ireland Stamp Duty Land Tax and is payable for purchases above £125,000, though currently first time buyers are exempt for properties up to £300,000.
A 3% surcharge applies to additional properties such as second homes or buy to let.
- What Else
When buying a new home your mortgage lender will require a valuation of the property just to make sure they are happy the property is in good condition and adequate security for the mortgage they will provide, however, this is for the lenders benefit so you may also want to get a more in-depth survey of the property before you commit to buying it.
What is the difference? Read our Survey Brochure and watch the short video below before you decide which is right for you.
- Basic Valuation
This is not a survey but a report prepared after a brief inspection of the property solely for the benefit of the mortgage lender to establish whether the property provides adequate security for the amount you want to borrow. Obvious defects will be pointed out in the valuation but it should not be regarded as a full survey. Most lenders charge valuation fees on a scale depending on the value of the property. The report is basic, and all lenders disclaim any responsibility for the condition of the property. You have no redress against the surveyor for any defects or problems that are missed and you may not be provided with a copy of the report.
- Homebuyer’s Report
A Homebuyer Report is intended for conventional, residential properties e.g. houses, flats and bungalows which appear to be in reasonable condition and have not been subject to significant alteration since construction. The HomeBuyer Report is intended to inform you on the soundness or otherwise of all aspects of the property, and whether it is a suitable purchase at the price agreed with any major defects specified. It is more expensive and extensive than the basic valuation. Advice can be given on specific items if required, and if further specialist investigation is thought necessary this will be stated in the report. The report may also offer you some limited recourse should the surveyor (acting on your behalf, rather than the lender’s), be negligent.
- Building Survey
This is the most detailed type of survey and is usually required when a full assessment of the property is needed. It is also the most expensive. It is also highly advisable for properties built before 1900. Surveys of this type cover all aspects of the property in greater depth than the Homebuyer’s Report and detail remedial work required. You have right of recourse to the Surveyor in the event a defect with the property is subsequently found which would have been there when the original survey was done – for example a woodworm infestation or rising damp.
When looking at the vast choice of mortgage types and products available you may become overwhelmed and quickly become confused having to choose a mortgage that suits your current and future needs and circumstances. The choice available may leave you wondering where to start with most people simply picking the cheapest interest rate but you ought to understand that the cheapest interest rate does not mean it is the best product to suit your circumstances and current and future needs.
There is a lot to understand before making the final decision on one specific mortgage product so we have put together the following summary to explain and help you understand which mortgage may be right for you.
How do mortgages work?
All mortgages work in the same basic way through borrowing money to purchase a property, you pay interest on the loan and eventually pay it back but they start to become complicated when the following are factored into the equation:
- Different Ways To repay
- Different Interest Rate Types
- Borrowing for different periods of time
- Fees and Charges
What are the different ways to pay?
- Repayment mortgages
- Interest-Only mortgages
What are the different interest rate types?
- Standard Variable Rate
- Fixed rate mortgages
- Tracker mortgages
- Discounted rate mortgages
- Capped rate mortgages
- Cashback Mortgages
- Offset Mortgage
What types of mortgage features are available?
- Free Valuation
- Product Term
- Portability
- Overpayments
- Penalty Period
- Early Repayment Charge
Repayment mortgages
With a repayment mortgages your monthly payment is calculated to repay the interest you owe plus some of the capital you’ve borrowed. At the end of the mortgage term you will have paid back everything you owe and will own your home outright.
Interest Only mortgages
With an interest-only mortgage you just pay the interest each month and repay the capital from another means at the end of the mortgage term. Typical repayment vehicles are:
- Cash/Savings
- Endowment
- Stocks & Shares
- Pension Tax Free Cash
- Sale Of Mortgaged or Other Property
With the repayment vehicles listed there is a risk that insufficient funds will be available to repay the mortgage at the end of the mortgage term therefore lenders can insist you evidence how you intend repaying the loan.
Standard Variable Rate Mortgage
Every lender has a Standard Variable Rate (SVR) which is their basic mortgage lending rate. The interest rate goes up and down as mortgage rates generally change and are influenced by the Bank of England base rate but other factors also come into play. The interest rate you pay on an SVR mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same. A mortgage on SVR is normally more expensive but has no Early Redemption Charges (ERC) so it is good for people who need to stay penalty free pending sale or house move.
Fixed Rate mortgage
Fixed rate mortgages are popular because your mortgage rate is fixed for a set number of years (2, 3, 5 and sometimes 10 years). You know exactly how much you’ll be paying each month for that length of time, regardless of what happens to interest rates on other mortgages so fixed rates are good for people who want to accurately budget and protect against interest rate increases.
Tracker Mortgages
A Tracker mortgages moves in line with a nominated interest rate that is usually the Bank of England base rate or LIBOR (London Interbank Offered Rate). The mortgage rate you pay is will be a set interest rate above or below the nominated rate. When the nominated rate moves up or down you will adjust by the same amount.
Some lenders set a minimum rate below which your interest rate will never fall but there’s no limit to how high it can go, with a nominated rate set at 0.75% and an add-on rate of 2.0%, your mortgage rate will be 2.75%. A Tracker product is usually cheaper than a Fixed Rate and is good for people who want a lower interest rate and believe rates will remain low or fall but can pay more if interest rates do increase.
Discount Rate Mortgages
The discount is a reduction on the lender’s Standard Variable Rate (SVR) detailed above, mortgages with discounted rates are some of the cheapest available but because they are linked to the lenders SVR the rate will go up and down when their SVR changes, typically the discount will only last for a certain period i.e. 2-5 years before reverting to SVR. A Discounted product is good for people who want a low initial rate but can pay more if interest rates do increase.
Capped Rate Mortgages
A Capped rate mortgage is a variable rate product with a ceiling (a cap) on how high your interest rate can rise which provides the comfort of knowing that your payments will never exceed a certain level while benefiting from rate reductions. A capped mortgage is good for people wanting to set a maximum limit on their monthly mortgage payments.
Cashback Mortgages
A Cashback is a product incentive offered by lenders that provides money back to you on completion. The interest rate charged and fees for this type of product is usually higher so careful consideration should be given to this type of product before proceeding, A Cashback mortgage can be helpful to someone who has limited capital and needs help with moving costs but can afford higher monthly payments.
Offset Mortgages
An Offset mortgages links savings and the mortgage together, the product looks at how much money is in the savings and deducts that amount from the mortgage balance to calculate how much interest is due on the difference or net balance i.e. if your mortgage balance is £100,000 and you have savings of £10,000, your mortgage interest is calculated on £90,000 which reduces the amount of interest you will pay. An offset mortgage product will be more expensive than a regular mortgage product but is good for people who have high level of savings and want instant access to the money, this particularly appealing to higher-rate taxpayers because there is no taxation on the savings but no interest payable either.
Fixed, Tracker, Discount, Capped, Cashback and Offset mortgages usually have an Early Repayment Charge (ERC) payable during the initial incentive period. You should carefully read the separate Key Facts Illustration (KFI) provided before making a decision to proceed.
If you are looking to purchase a New Build home we can help you through a process which can be more difficult than a conventional purchase if you’re buying off-plan.
- New Build Mortgage Expertise
Our advisers have many years of experience dealing with Builders and Help to Buy agencies.
- Exclusive New Build Mortgages
IMDNE also have access to exclusive new build mortgage products not available directly from lenders.
We will advise and recommend the most suitable mortgage deal for you and provide expert knowledge and support throughout the whole process to owing your new home.
We’ll help you avoid these pitfalls when getting your mortgage:
- Missing a tight deadline to exchange contracts
Developers usually impose a 28 day deadline to exchange contracts once your reservation fee has been paid which can often be a challenge for most mortgage lenders, however, our knowledge and lender relationships will help make sure their deadlines are met. We have access to lenders new build departments which enables us to process your mortgage application quicker to reduce the time taken to obtain your mortgage offer. - Having to re-apply for a mortgage when buying off plan
When purchasing a property that won’t be ready for a few months it can sometimes be an issue if your lenders mortgage offer is only valid for three months. We will make sure the product recommended is the most appropriate to cater for this issue and your circumstances. - Navigating the Help to Buy Equity loan scheme
The Help to Buy equity loan scheme allows you to buy a new build property with a minimum 5% deposit. We can tell you if you qualify and recommend the best lender and mortgage deal depending on your priorities, as well as checking that Help to Buy is available through your chosen lender. Not all lenders offer the scheme and not all deals or rates are available, so choosing the right deal for you can be complex. The application form for the help to buy scheme is long and complex. The good news is we’ll guide you through the application process and help you complete your Help to Buy application.
Securing a small deposit or high Loan to Value (LTV) mortgage
If you’ve got a relatively small deposit of 10% or less, some lenders will place restrictions on the deals available for new build home purchases. As we are new build specialists we have access to high LTV deals which are not available directly from some lenders.
The key things you need to know about moving home
- Moving On
The Money Advice Service affordability calculator will provide you an approximate amount you will able to borrow but please remember the amount varies from lender to lender and will also depend on things such as dependants, term of your proposed mortgage and monthly credit commitments. In most cases taking out a joint mortgage increases the amount you will be able to borrow if you are both in paid employment but the most important thing to consider is being comfortable with the monthly payments, not just now but for the whole term of the mortgage.
The calculator is provided for information purposes only and does not contain all of the details required to choose a mortgage. Make sure that you read the separate Key Facts Illustration (KFI) provided before you make a decision. The information provided by the calculator does not constitute formal mortgage offer.
The most common questions asked is how much your mortgage cost?
It’s a very good question because your mortgage is probably going to be your biggest ever monthly financial commitment and it is vitally important to know the payment will be affordable both now and in the future, but, we prefer to ask how much you can afford and work back your loan amount from there because this will provide loan parameters you can work within when looking for a property.
The Money Advice Service mortgage calculator is quick and easy to use so you can find out the cost of your mortgage in seconds.
Simply adjust the following to calculate your mortgage costs:
- The amount you want to borrow
- The interest rate
- The number of years you wish to borrow the money over
The deposit required to purchase a property is pivotal to the cost of mortgage and options you will be offered so the more you can put down the better rate of interest you will obtain because lenders consider buyers with bigger deposits a lower risk so if you can afford 10% – 25% you will have access to more mortgages and better interest rates.
Mortgage deposits are usually at least 5% of the value of the property you are buying. So, for example, if you want to buy a home costing £100,000, you’d need to save up a minimum deposit of £5,000.
There are 100% mortgages currently available where a Helper can deposit 10% of the purchase price into an interest paying Helpful Start Account for 3 years after which point the money is returned with interest if the mortgage payments are kept up to date.
- How Much
We understand that saving is hard and buying a property is expensive, before you purchase your new home, there are extra one-off charges and fees you will need to take into account which include:
- Deposit
- Mortgage arrangement Fee
- Valuation or Homebuyers Survey Fee
- Legal Fees
- Stamp Duty Land Tax
- Broker Fee
- Moving Costs
And once you are in your new home there will be regular ongoing bills over and above the monthly mortgage payment such as:
- Council Tax
- Electricity, Gas & Water Bills
- TV Licence
- House Insurance
- Life Insurance
- Repairs & Decorating
Is It Cheaper To Rent Or Buy A House
Many people believe that paying rent “dead money” but buying a house isn’t right for everyone so the following need to be considered beforehand.
The pros of buying
- You will be buying an asset which can increase in value
- You are living in your own home with the security in knowing you can stay as long as you like
- You can decorate, extend and renovate the property as you wish
The cons of buying
- Having a mortgage is a financial commitment you must maintain or face losing your home
- Houses are expensive and saving a deposit can take a long time
- House prices can increase and decrease with a decrease possibly leaving you in Negative Equity
- Repairs are at your own expense
The pros of renting
- It is easier to move house if you need to relocate for employment
- You can move without the time and expense of buying and selling
- The opportunity to explore and decide if the area is right for you before committing to purchase
- To live in an area you could not afford to purchase
The cons of renting
- You pay rent to a landlord every month and this can go up
- Your landlord can ask you to leave at the end of the agreed tenancy period
- You may not be able to make any changes to the property
Having life insurance isn’t compulsory when you take out a mortgage but we would recommend you consider it so that your loved ones don’t struggle to make the monthly mortgage payments if you and the income you provide are not around to contribute. None of us likes to think about dying but having cover to pay out a lump sum would ease the financial burden on your family should the unthinkable happen.
Life insurance is easy to apply for and we can compare policies from a range of different insurers on your behalf so you can be certain you find the most appropriate policy to suit your needs and circumstances. There are several different types of life insurance policy available but the right one for you will depend on your personal circumstances, there are three main types of life insurance cover, level term assurance, decreasing term assurance and whole-of-life cover. Here is what you need to know:
When you buy a life insurance policy you pay premiums each month, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your family.
Level Term Assurance – The amount of cover you have remains the same during the term of the policy. This kind of cover is often taken out alongside interest-only mortgages, as the capital you owe does not decrease over time.
Decreasing Term Assurance – The amount of cover you have reduces over time. Decreasing policies are often taken out at the same time as a repayment mortgage, so that the amount of cover you have decreases along with the capital you owe.
Whole-Of-Life – Protects you for your lifetime, but means you’ll pay premiums right up until the point you die and costs are steeper because you’re guaranteed a pay-out.
How much does life insurance cost?
The amount you will pay for life insurance is based on the type of policy required, amount of cover required, how long cover is required, your age and health (including any existing medical conditions) and the type of policy you’ve chosen. Policies with decreasing cover are usually cheaper than those with level cover and whole of life policies the most expensive because they provide protection throughout the whole of your life.
There are also other forms insurance cover that can be incorporated into a life insurance policy such as:
- Critical Illness Cover
- Global Treatment
- Fracture Cover
- Extra Care Cover
- Income Protection
Tax in the form of Stamp Duty is payable when you purchase a property in the UK and you will need to factor this into your budget when considering how much deposit you have available to purchase a property.
In England and Northern Ireland Stamp Duty Land Tax and is payable for purchases above £125,000, though currently first time buyers are exempt for properties up to £300,000.
A 3% surcharge applies to additional properties such as second homes or buy to let.
- What Else
When buying a new home your mortgage lender will require a valuation of the property just to make sure they are happy the property is in good condition and adequate security for the mortgage they will provide, however, this is for the lenders benefit so you may also want to get a more in-depth survey of the property before you commit to buying it.
What is the difference? Read our Survey Brochure and watch the short video below before you decide which is right for you.
- Basic Valuation
This is not a survey but a report prepared after a brief inspection of the property solely for the benefit of the mortgage lender to establish whether the property provides adequate security for the amount you want to borrow. Obvious defects will be pointed out in the valuation but it should not be regarded as a full survey. Most lenders charge valuation fees on a scale depending on the value of the property. The report is basic, and all lenders disclaim any responsibility for the condition of the property. You have no redress against the surveyor for any defects or problems that are missed and you may not be provided with a copy of the report.
- Homebuyer’s Report
A Homebuyer Report is intended for conventional, residential properties e.g. houses, flats and bungalows which appear to be in reasonable condition and have not been subject to significant alteration since construction. The HomeBuyer Report is intended to inform you on the soundness or otherwise of all aspects of the property, and whether it is a suitable purchase at the price agreed with any major defects specified. It is more expensive and extensive than the basic valuation. Advice can be given on specific items if required, and if further specialist investigation is thought necessary this will be stated in the report. The report may also offer you some limited recourse should the surveyor (acting on your behalf, rather than the lender’s), be negligent.
- Building Survey
This is the most detailed type of survey and is usually required when a full assessment of the property is needed. It is also the most expensive. It is also highly advisable for properties built before 1900. Surveys of this type cover all aspects of the property in greater depth than the Homebuyer’s Report and detail remedial work required. You have right of recourse to the Surveyor in the event a defect with the property is subsequently found which would have been there when the original survey was done – for example a woodworm infestation or rising damp.
When looking at the vast choice of mortgage types and products available you may become overwhelmed and quickly become confused having to choose a mortgage that suits your current and future needs and circumstances. The choice available may leave you wondering where to start with most people simply picking the cheapest interest rate but you ought to understand that the cheapest interest rate does not mean it is the best product to suit your circumstances and current and future needs.
There is a lot to understand before making the final decision on one specific mortgage product so we have put together the following summary to explain and help you understand which mortgage may be right for you.
How do mortgages work?
All mortgages work in the same basic way through borrowing money to purchase a property, you pay interest on the loan and eventually pay it back but they start to become complicated when the following are factored into the equation:
- Different Ways To repay
- Different Interest Rate Types
- Borrowing for different periods of time
- Fees and Charges
What are the different ways to pay?
- Repayment mortgages
- Interest-Only mortgages
What are the different interest rate types?
- Standard Variable Rate
- Fixed rate mortgages
- Tracker mortgages
- Discounted rate mortgages
- Capped rate mortgages
- Cashback Mortgages
- Offset Mortgage
What types of mortgage features are available?
- Free Valuation
- Product Term
- Portability
- Overpayments
- Penalty Period
- Early Repayment Charge
Repayment mortgages
With a repayment mortgages your monthly payment is calculated to repay the interest you owe plus some of the capital you’ve borrowed. At the end of the mortgage term you will have paid back everything you owe and will own your home outright.
Interest Only mortgages
With an interest-only mortgage you just pay the interest each month and repay the capital from another means at the end of the mortgage term. Typical repayment vehicles are:
- Cash/Savings
- Endowment
- Stocks & Shares
- Pension Tax Free Cash
- Sale Of Mortgaged or Other Property
With the repayment vehicles listed there is a risk that insufficient funds will be available to repay the mortgage at the end of the mortgage term therefore lenders can insist you evidence how you intend repaying the loan.
Standard Variable Rate Mortgage
Every lender has a Standard Variable Rate (SVR) which is their basic mortgage lending rate. The interest rate goes up and down as mortgage rates generally change and are influenced by the Bank of England base rate but other factors also come into play. The interest rate you pay on an SVR mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same. A mortgage on SVR is normally more expensive but has no Early Redemption Charges (ERC) so it is good for people who need to stay penalty free pending sale or house move.
Fixed Rate mortgage
Fixed rate mortgages are popular because your mortgage rate is fixed for a set number of years (2, 3, 5 and sometimes 10 years). You know exactly how much you’ll be paying each month for that length of time, regardless of what happens to interest rates on other mortgages so fixed rates are good for people who want to accurately budget and protect against interest rate increases.
Tracker Mortgages
A Tracker mortgages moves in line with a nominated interest rate that is usually the Bank of England base rate or LIBOR (London Interbank Offered Rate). The mortgage rate you pay is will be a set interest rate above or below the nominated rate. When the nominated rate moves up or down you will adjust by the same amount.
Some lenders set a minimum rate below which your interest rate will never fall but there’s no limit to how high it can go, with a nominated rate set at 0.75% and an add-on rate of 2.0%, your mortgage rate will be 2.75%. A Tracker product is usually cheaper than a Fixed Rate and is good for people who want a lower interest rate and believe rates will remain low or fall but can pay more if interest rates do increase.
Discount Rate Mortgages
The discount is a reduction on the lender’s Standard Variable Rate (SVR) detailed above, mortgages with discounted rates are some of the cheapest available but because they are linked to the lenders SVR the rate will go up and down when their SVR changes, typically the discount will only last for a certain period i.e. 2-5 years before reverting to SVR. A Discounted product is good for people who want a low initial rate but can pay more if interest rates do increase.
Capped Rate Mortgages
A Capped rate mortgage is a variable rate product with a ceiling (a cap) on how high your interest rate can rise which provides the comfort of knowing that your payments will never exceed a certain level while benefiting from rate reductions. A capped mortgage is good for people wanting to set a maximum limit on their monthly mortgage payments.
Cashback Mortgages
A Cashback is a product incentive offered by lenders that provides money back to you on completion. The interest rate charged and fees for this type of product is usually higher so careful consideration should be given to this type of product before proceeding, A Cashback mortgage can be helpful to someone who has limited capital and needs help with moving costs but can afford higher monthly payments.
Offset Mortgages
An Offset mortgages links savings and the mortgage together, the product looks at how much money is in the savings and deducts that amount from the mortgage balance to calculate how much interest is due on the difference or net balance i.e. if your mortgage balance is £100,000 and you have savings of £10,000, your mortgage interest is calculated on £90,000 which reduces the amount of interest you will pay. An offset mortgage product will be more expensive than a regular mortgage product but is good for people who have high level of savings and want instant access to the money, this particularly appealing to higher-rate taxpayers because there is no taxation on the savings but no interest payable either.
Fixed, Tracker, Discount, Capped, Cashback and Offset mortgages usually have an Early Repayment Charge (ERC) payable during the initial incentive period. You should carefully read the separate Key Facts Illustration (KFI) provided before making a decision to proceed.
If you are looking to purchase a New Build home we can help you through a process which can be more difficult than a conventional purchase if you’re buying off-plan.
- New Build Mortgage Expertise
Our advisers have many years of experience dealing with Builders and Help to Buy agencies.
- Exclusive New Build Mortgages
IMDNE also have access to exclusive new build mortgage products not available directly from lenders.
We will advise and recommend the most suitable mortgage deal for you and provide expert knowledge and support throughout the whole process to owing your new home.
We’ll help you avoid these pitfalls when getting your mortgage:
- Missing a tight deadline to exchange contracts
Developers usually impose a 28 day deadline to exchange contracts once your reservation fee has been paid which can often be a challenge for most mortgage lenders, however, our knowledge and lender relationships will help make sure their deadlines are met. We have access to lenders new build departments which enables us to process your mortgage application quicker to reduce the time taken to obtain your mortgage offer. - Having to re-apply for a mortgage when buying off plan
When purchasing a property that won’t be ready for a few months it can sometimes be an issue if your lenders mortgage offer is only valid for three months. We will make sure the product recommended is the most appropriate to cater for this issue and your circumstances. - Navigating the Help to Buy Equity loan scheme
The Help to Buy equity loan scheme allows you to buy a new build property with a minimum 5% deposit. We can tell you if you qualify and recommend the best lender and mortgage deal depending on your priorities, as well as checking that Help to Buy is available through your chosen lender. Not all lenders offer the scheme and not all deals or rates are available, so choosing the right deal for you can be complex. The application form for the help to buy scheme is long and complex. The good news is we’ll guide you through the application process and help you complete your Help to Buy application.
Securing a small deposit or high Loan to Value (LTV) mortgage
If you’ve got a relatively small deposit of 10% or less, some lenders will place restrictions on the deals available for new build home purchases. As we are new build specialists we have access to high LTV deals which are not available directly from some lenders.
The key things you need to know about remortgaging
- Switching
There are many reasons why people choose to re-mortgage their home:
- Reduce The Monthly Payments
- Protect Against Interest Rate Rises
- Consolidate Debts
- Home Improvements
- Add or Remove Someone
- Change To A More Suitable Product
Think carefully before securing other debts against your home or property. Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an Early Repayment Charge (ERC) to your existing lender if you re-mortgage.
Work out how much you can afford to pay
The first step to re-mortgage is to work out how much you can afford to pay, many people change lenders to reduce their monthly repayments but you should consider an increase to “stress test” affordability should the monthly payments increase.
Investigate the costs to re-mortgaging
There are usually some costs involved when switching your mortgage to a new lender. These include an arrangement fee paid to your new lender for setting up the mortgage, as well as potential valuation and legal fees. You may have to pay an exit fee for leaving your current lender. Certain fees can be added to your mortgage balance, but remember that you’ll be paying interest on them if you do. If paying them up front, make sure you budget for them. Fortunately, many re-mortgage deals will have low or sometimes even no set up costs – as part of our advice, we always check that any new deal is worthwhile based on both the interest rate and any fees involved.
Checking if your current mortgage has restrictions, don’t assume that you’re free to leave your current deal whenever you want. You may be tied in with Early Repayment Charges (ERCs) and these can be costly. Check with your current lender whether you have ERCs, how much they are and when they end.
Looking for a new mortgage
When looking for the best mortgage deals to suit you, you’re likely to find a lot to choose from and selecting the right one may seem daunting. This is where using an independent mortgage broker is your best option as they’ll do all the research for you. If you approach your current bank for advice on good mortgage deals, they will only suggest their own rates.
A broker, however, will compare offers from across the market – helping you find the best possible deal for you.
Check what your current lender will offer
Before you commit to a new mortgage agreement we would advise you to check what your current provider will offer because they may have suitable products available for you as an existing customer. Once you have these details let us know and we can complete a mortgage review to compare their offer against deals offered by other lender to establish if it is worth re-mortgaging to a new lender.
Submitting your application
Once we have carried out the comparison, completed our research and found a suitable product it is time to submit your application. At this point we will send you the research documentation for consideration that will include a Key Facts Illustration (KFI) setting out all you need to know about the new mortgage proposed and what costs and fees are involved. You will also receive
At this point you will need to pull together the documentation required for us to assess and submit your mortgage application, typically these will include ID, Proof Of Residence, Payslips and Bank Statements.
There is legal work required to complete a re-mortgage, if your product does not offer free legal work or a cashback to pay your own legal fees we can help appoint a solicitor on your behalf.
Receiving your mortgage offer
Once your mortgage application has been submitted we will liaise with the lender to make sure the process of underwriting and valuation run smoothly through to issue of the mortgage offer. When the mortgage offer is issued copies will be posted to you and your appointed solicitor to check and make sure everything is correct prior to setting up completion.
Completing the re-mortgage
Once the appointed solicitor has received their copy of the mortgage offer and associated legal paperwork they will get in touch with you to complete the legal work and set a completion date.
You can re-mortgage at any time but there is no point in doing so unless it will provide a positive result such as:
- Reducing The Interest Rate
- Your Current Product i.e. Fixed Rate Is Going To End
- You Have More Equity In Your Home
- There Are Savings To Be Made
- A New Product Offers Additional Protection
It is normal to start the re-mortgage process around 8 weeks prior to expiry of your early repayment charge to ensure you are ready to switch as soon as your current deal ends to prevent your interest rate reverting to the higher Standard Variable Rate (SVR).
If your current mortgage has an early repayment charge or penalty to redeem this needs to be carefully considered when looking to re-mortgage, if a significant saving can be made it may be worth looking at a re-mortgage but other factors such as the length of term remaining until the penalty expires need to be assessed.
- How Much
Re-mortgaging can help you reduce the cost of your monthly mortgage payments but an interest rate designed to attract your attention should be carefully considered with the fees and charges examined closely rather than only looking at the headline rate.
The following are explanations of the fees and charges
Re-mortgage arrangement fees
Lenders mortgage products are often, but not always, designed with arrangement fees payable when setting up a new mortgage. An arrangement fee can either be a percentage of the loan amount or a fixed fee which you can usually pay upfront or add to the mortgage. Adding the fee to your mortgage will save your capital but because the mortgage balance attracts interest you will pay interest on the fee over your whole mortgage term. Paying upfront means you won’t pay any interest on the fee. The arrangement fee is usually non-refundable if, for any reason, you don’t go through with the re-mortgage.
Mortgage booking fees
As well as arrangement fees, some lenders will also charge a booking fee to secure the deal recommended. You will pay a booking fee upfront at the application stage of the process, it cannot be added to your mortgage, is non- refundable and typically range between £100 to £300.
Re-mortgage legal fees
Legal fees are the payable to a solicitor or conveyancer to carry out the legal work required to transferring your mortgage from one lender to another. They will also arrange for you to pay the outstanding mortgage balance to your current lender and transfer remaining funds to you on completion.
Sometimes lenders offer free legal work as part of the re-mortgage deal, in which case they’ll appoint a solicitor who will get in touch with you once your mortgage has been offered by the lender.
Re-mortgage valuation fees
Your new lender will need to value your property before they offering the mortgage, they do this to confirm how much the property is worth. When re-mortgaging a lender will usually appoint their own valuer but you will be expected to pay the cost of the valuation unless it is free as part of the re-mortgage deal.
Mortgage early repayment charges (ERCs)
Early repayment charges are fees that you must pay if you want to leave your current mortgage deal before it finishes, if your current mortgage has an early repayment charge or penalty to redeem this needs to be carefully considered when looking to re-mortgage, if a significant saving can be made it may be worth looking at a re-mortgage but other factors such as the length of term remaining until the penalty expires and actual monetary amount of penalty need to be assessed .
You should always check to see if you have an ERC before applying to re-mortgage because they could wipe out any potential savings you think you are going to make.
You don’t usually have to pay any early repayment charges if you’re currently on your lender’s standard variable rate.
Mortgage exit fees
Exit fees, otherwise known as mortgage completion fees – are administration charges sometimes imposed by lenders when you pay off your mortgage in full, either to re-mortgage elsewhere, or because you’ve reached the end of your mortgage term.
Fee Free re-mortgage deals
Not all lenders will charge re-mortgage fees. Some might offer a free valuation or free legal fees (or both) when you re-mortgage. Occasionally there may be no charges at all. Our adviser will carry out a full assessment then let you know which deal best suits your needs.
How much any house is worth can be a contentious issue with many on-line systems inaccurately estimating property values. You probably have your own figure in mind but it is always good to back that up with accurate up to date statistical data. The most common ways a lender will value your property is utilising data they hold and asking their valuer to check recent comparable sales data from the Land Registry.
Where there is no recent comparable sales data a lenders valuer will use the little known “Price Per Square Meter” method within prescribed tolerances for that area. There is no magic involved in this method you simply need to know how big your property is compared with the last sale from the EPC Register and pro-rata the different size using Price Per Square Meter, here’s how it works:
The house across the road is 75 m2 and recently sold for £100,000 therefore it has sold for £1,333/m2.
Your house is 100 m2 therefore should be worth £133,333 based on the price per square meter ratio above.
Having life insurance isn’t compulsory when you take out a mortgage but we would recommend you consider it so that your loved ones don’t struggle to make the monthly mortgage payments if you and the income you provide are not around to contribute. None of us likes to think about dying but having cover to pay out a lump sum would ease the financial burden on your family should the unthinkable happen.
Life insurance is easy to apply for and we can compare policies from a range of different insurers on your behalf so you can be certain you find the most appropriate policy to suit your needs and circumstances. There are several different types of life insurance policy available but the right one for you will depend on your personal circumstances, there are three main types of life insurance cover, level term assurance, decreasing term assurance and whole-of-life cover. Here is what you need to know:
When you buy a life insurance policy you pay premiums each month, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your family.
Level Term Assurance – The amount of cover you have remains the same during the term of the policy. This kind of cover is often taken out alongside interest-only mortgages, as the capital you owe does not decrease over time.
Decreasing Term Assurance – The amount of cover you have reduces over time. Decreasing policies are often taken out at the same time as a repayment mortgage, so that the amount of cover you have decreases along with the capital you owe.
Whole-Of-Life – Protects you for your lifetime, but means you’ll pay premiums right up until the point you die and costs are steeper because you’re guaranteed a pay-out.
How much does life insurance cost?
The amount you will pay for life insurance is based on the type of policy required, amount of cover required, how long cover is required, your age and health (including any existing medical conditions) and the type of policy you’ve chosen. Policies with decreasing cover are usually cheaper than those with level cover and whole of life policies the most expensive because they provide protection throughout the whole of your life.
There are also other forms insurance cover that can be incorporated into a life insurance policy such as:
- Critical Illness Cover
- Global Treatment
- Fracture Cover
- Extra Care Cover
- Income Protection
- What Else
When looking at the vast choice of mortgage types and products available you may become overwhelmed and quickly become confused having to choose a mortgage that suits your current and future needs and circumstances. The choice available may leave you wondering where to start with most people simply picking the cheapest interest rate but you ought to understand that the cheapest interest rate does not mean it is the best product to suit your circumstances and current and future needs.
There is a lot to understand before making the final decision on one specific mortgage product so we have put together the following summary to explain and help you understand which mortgage may be right for you.
How do mortgages work?
All mortgages work in the same basic way through borrowing money to purchase a property, you pay interest on the loan and eventually pay it back but they start to become complicated when the following are factored into the equation:
- Different Ways To repay
- Different Interest Rate Types
- Borrowing for different periods of time
- Fees and Charges
What are the different ways to pay?
- Repayment mortgages
- Interest-Only mortgages
What are the different interest rate types?
- Standard Variable Rate
- Fixed rate mortgages
- Tracker mortgages
- Discounted rate mortgages
- Capped rate mortgages
- Cashback Mortgages
- Offset Mortgage
What types of mortgage features are available?
- Free Valuation
- Product Term
- Portability
- Overpayments
- Penalty Period
- Early Repayment Charge
Repayment mortgages
With a repayment mortgages your monthly payment is calculated to repay the interest you owe plus some of the capital you’ve borrowed. At the end of the mortgage term you will have paid back everything you owe and will own your home outright.
Interest Only mortgages
With an interest-only mortgage you just pay the interest each month and repay the capital from another means at the end of the mortgage term. Typical repayment vehicles are:
- Cash/Savings
- Endowment
- Stocks & Shares
- Pension Tax Free Cash
- Sale Of Mortgaged or Other Property
With the repayment vehicles listed there is a risk that insufficient funds will be available to repay the mortgage at the end of the mortgage term therefore lenders can insist you evidence how you intend repaying the loan.
Standard Variable Rate Mortgage
Every lender has a Standard Variable Rate (SVR) which is their basic mortgage lending rate. The interest rate goes up and down as mortgage rates generally change and are influenced by the Bank of England base rate but other factors also come into play. The interest rate you pay on an SVR mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same. A mortgage on SVR is normally more expensive but has no Early Redemption Charges (ERC) so it is good for people who need to stay penalty free pending sale or house move.
Fixed Rate mortgage
Fixed rate mortgages are popular because your mortgage rate is fixed for a set number of years (2, 3, 5 and sometimes 10 years). You know exactly how much you’ll be paying each month for that length of time, regardless of what happens to interest rates on other mortgages so fixed rates are good for people who want to accurately budget and protect against interest rate increases.
Tracker Mortgages
A Tracker mortgages moves in line with a nominated interest rate that is usually the Bank of England base rate or LIBOR (London Interbank Offered Rate). The mortgage rate you pay is will be a set interest rate above or below the nominated rate. When the nominated rate moves up or down you will adjust by the same amount.
Some lenders set a minimum rate below which your interest rate will never fall but there’s no limit to how high it can go, with a nominated rate set at 0.75% and an add-on rate of 2.0%, your mortgage rate will be 2.75%. A Tracker product is usually cheaper than a Fixed Rate and is good for people who want a lower interest rate and believe rates will remain low or fall but can pay more if interest rates do increase.
Discount Rate Mortgages
The discount is a reduction on the lender’s Standard Variable Rate (SVR) detailed above, mortgages with discounted rates are some of the cheapest available but because they are linked to the lenders SVR the rate will go up and down when their SVR changes, typically the discount will only last for a certain period i.e. 2-5 years before reverting to SVR. A Discounted product is good for people who want a low initial rate but can pay more if interest rates do increase.
Capped Rate Mortgages
A Capped rate mortgage is a variable rate product with a ceiling (a cap) on how high your interest rate can rise which provides the comfort of knowing that your payments will never exceed a certain level while benefiting from rate reductions. A capped mortgage is good for people wanting to set a maximum limit on their monthly mortgage payments.
Cashback Mortgages
A Cashback is a product incentive offered by lenders that provides money back to you on completion. The interest rate charged and fees for this type of product is usually higher so careful consideration should be given to this type of product before proceeding, A Cashback mortgage can be helpful to someone who has limited capital and needs help with moving costs but can afford higher monthly payments.
Offset Mortgages
An Offset mortgages links savings and the mortgage together, the product looks at how much money is in the savings and deducts that amount from the mortgage balance to calculate how much interest is due on the difference or net balance i.e. if your mortgage balance is £100,000 and you have savings of £10,000, your mortgage interest is calculated on £90,000 which reduces the amount of interest you will pay. An offset mortgage product will be more expensive than a regular mortgage product but is good for people who have high level of savings and want instant access to the money, this particularly appealing to higher-rate taxpayers because there is no taxation on the savings but no interest payable either.
The information on your credit file is pivotal to obtaining a mortgage, lenders will look at the history on your credit file to assess the level of risk but having issues on your credit file doesn’t automatically preclude you from obtaining a mortgage because there are products designed to cater for these types of issues, however, we would recommend you obtain a free copy of your Multi Agency Credit Report to check creditworthiness before applying for a mortgage, you can do this at CheckMyFile.
What is on your Credit Report
- Your payment history for the last 6 years
- Details of who’s looked at your credit report
- Details of people you are financially connected to
- Other addresses you’re linked to
- Other names you’ve been known by
- Your registration on the electoral roll
- Details of bankruptcies, insolvencies and court judgements
Why should I obtain a copy of my Credit Report
- Check the accuracy of the information held about you
- Make sure there is nothing that could affect your chance of obtaining credit
Prevent identity theft
If you are moving home, you may want to keep your current property and rent it out which is known as a Let to Buy which will either require “Consent to Let” from your current mortgage lender, which not all lenders allow, or re-mortgage to a new lender onto a Buy to Let mortgage which can also be combined with a release of available equity to help fund your ongoing purchase.
Failure to notify your current lender of your intention to rent out your home could be considered a serious breach of your mortgage contract.
Should you decide to rent out your current home there is added responsibility and legal obligations to fulfil as a landlord such as obtaining landlords insurance.
The key things you need to know about buying to let
- Buy To Let
A property is considered a Buy to Let when it is purchased as an investment by the owner who intends to become a landlord and rent out the property to unrelated occupants for rental profit and/or capital growth.
Do I need a buy to let mortgage to rent out a property?
If mortgage finance is required to purchase a property on this basis a Buy To Let mortgage is required because you will not be resident at the property. Unlike a residential mortgage, where you can borrow based on your income, a Buy to Let mortgage is assessed on rent income the property will generate.
A Buy to Let mortgage is a loan secured against a property which you own and intend to rent out to a tenant, you are buying to rent out the property or Buying to Let and it remains your responsibility to meet the monthly mortgage payments. A Buy to Let mortgage bases how much you can borrow on the anticipated rental income confirmed by the lenders valuer rather than your own income.
Lenders have detailed criteria for Buy to Let mortgages that we can help clarify before you decide to proceed i.e. rental stress tests, acceptable property types, minimum loan amounts and minimum property valuations but below is a simple guide to the process of letting us help you obtain the most suitable Buy to Let mortgage:
- Research the type of property you want to buy
- Research rental demand and the area you want to buy
- Decide how much deposit you can put down
Call us to research the best Buy to Let mortgages available
- How Much
Having life insurance isn’t compulsory when you take out a mortgage but we would recommend you consider it so that your loved ones don’t struggle to make the monthly mortgage payments if you and the income you provide are not around to contribute. None of us likes to think about dying but having cover to pay out a lump sum would ease the financial burden on your family should the unthinkable happen.
Life insurance is easy to apply for and we can compare policies from a range of different insurers on your behalf so you can be certain you find the most appropriate policy to suit your needs and circumstances. There are several different types of life insurance policy available but the right one for you will depend on your personal circumstances, there are three main types of life insurance cover, level term assurance, decreasing term assurance and whole-of-life cover. Here is what you need to know:
When you buy a life insurance policy you pay premiums each month, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your family.
Level Term Assurance – The amount of cover you have remains the same during the term of the policy. This kind of cover is often taken out alongside interest-only mortgages, as the capital you owe does not decrease over time.
Decreasing Term Assurance – The amount of cover you have reduces over time. Decreasing policies are often taken out at the same time as a repayment mortgage, so that the amount of cover you have decreases along with the capital you owe.
Whole-Of-Life – Protects you for your lifetime, but means you’ll pay premiums right up until the point you die and costs are steeper because you’re guaranteed a pay-out.
How much does life insurance cost?
The amount you will pay for life insurance is based on the type of policy required, amount of cover required, how long cover is required, your age and health (including any existing medical conditions) and the type of policy you’ve chosen. Policies with decreasing cover are usually cheaper than those with level cover and whole of life policies the most expensive because they provide protection throughout the whole of your life.
There are also other forms insurance cover that can be incorporated into a life insurance policy such as:
- Critical Illness Cover
- Global Treatment
- Fracture Cover
- Extra Care Cover
- Income Protection
Tax in the form of Stamp Duty is payable when you purchase a property in the UK and you will need to factor this into your budget when considering how much deposit you have available to purchase a property.
In England and Northern Ireland Stamp Duty Land Tax and is payable for purchases above £125,000, though currently first time buyers are exempt for properties up to £300,000.
A 3% surcharge applies to additional properties such as second homes or buy to let.
Stamp Duty Land Tax (SDLT)
SDLT is payable on a Buy to Let property in UK you will need to factor this into your budget when considering how much deposit you have available to purchase a property. the current rates of SDLT are:
- 3% tax on the first £125,000
- 5% on the portion up to £250,000
- 8% on the portion up to £925,000
- 13% on the portion up to £1.5 million
Capital Gains Tax (CGT)
If you sell the property for more than you paid for it after deducting costs such as stamp duty, estate agent, solicitor and broker fees. By making a profit you have made a “Capital Gain” therefore tax will apply, however, you have an individual annual allowance (separate to your personal allowance) to offset against any gain.
Income Tax
Rental income is taxable and must be declared on your tax return so tax can be charged in accordance with your income tax banding.
Inheritance Tax (IHT)
Inheritance Tax is payable on buy to let properties but the amount depends on your personal circumstances.
Any Buy to Let property that you own will form part of your estate for Inheritance Tax purposes.
Disclaimer
The information provided above is of a general nature and should not be deemed a substitute for specific advice on your own personal circumstances. It is recommended to obtain specific professional advice from a suitably qualified tax adviser before you taking or refraining from any action.
- What Else
Even if you are not a first time buyer, when you apply for a mortgage, the whole procedure can seem confusing and overwhelming.
That’s where your mortgage broker comes in.
They could save you time, effort and most importantly money by utilising their expert advice and mortgage knowledge to get you the best deal – a deal, perhaps, you would not have found on your own.
You’re probably thinking, “That all sounds great, but I bet it costs a bundle”. Well, no. If you choose a broker like London and Country, you can get all this and more completely for free.
What does a mortgage broker do?
A mortgage broker helps you understand the mortgage process and will try to get you the best deal.
They are your guide through the daunting prospect of deciding which mortgage is best for your situation. Your mortgage broker will also explain rates, the different types of mortgages and how long is best to borrow for.
There are three main types of mortgage broker:
- Those who are tied to just one lender
- Those who can recommend mortgages from a panel of lenders
- Those who are completely independent and therefore not tied to any lenders
A handy tip: Some of the best deals can always be found by going to independent mortgage brokers like London and Country. As the UK’s leading independent mortgage broker, we are not tied to one particular bank or building society, so it’s in our interest to get you the best deal – and we’ll always have your interests in mind.
Once you have decided on a broker, they will start to gather relevant information for your mortgage application; similar to the paperwork a bank or building society would collect regarding your credit history. They will then use this information to tailor the best rate to your situation.
After this has been completed, the broker will submit the information to a lender and will converse thoroughly with both parties to ensure everything runs smoothly.
And as a fee free mortgage broker – you can’t say much fairer than that!
Fee-free mortgage brokers
I know what you’re thinking – a mortgage broker that doesn’t charge a fee? It sounds too good to be true!
In fact, we do receive a fee, but it comes from the lender when a new mortgage completes, not the borrower. A lot of mortgage brokers will charge you a fee on top of the fee they get from the lender, but not us. Using a fee-free broker is a great way to save money during an already costly process.
Just to be clear: there are no hidden costs for borrowers at all.
The important features
- A mortgage broker is sometimes able to secure a better rate for your mortgage than if you went directly to the lender yourself.
- If you want reliable, impartial advice then one of the best options is to go to an independent broker. That way you know they are not tied to one particular lender, and they will be able to give you balanced advice on a large range of lenders products and criteria
- We know that it is expensive to move house, but one of the best ways to save money is to go to a mortgage broker that is fee-free. This alone could end up saving you thousands.
Should I use a mortgage broker?
Yes, if you feel like you need one. They are invaluable for taking the weight off lenders in an already busy and difficult time. Even better if you can find a fee-free broker.
When you apply to London & Country you will have your own dedicated advisor.
One essential part of a mortgage broker’s job is to remain impartial. Their only concern is to find the best deal for you, completely tailored to your situation. Like us, most independent mortgage brokers are not associated with a particular affiliate, but if you are concerned this is worth checking before you sign any documents.
If you use a mortgage broker like London and Country, you could end up saving yourself hundreds in mortgage broker fees as well as securing a competitive interest rate.
When buying a new home your mortgage lender will require a valuation of the property just to make sure they are happy the property is in good condition and adequate security for the mortgage they will provide, however, this is for the lenders benefit so you may also want to get a more in-depth survey of the property before you commit to buying it.
What is the difference? Read our Survey Brochure and watch the short video below before you decide which is right for you.
- Basic Valuation
This is not a survey but a report prepared after a brief inspection of the property solely for the benefit of the mortgage lender to establish whether the property provides adequate security for the amount you want to borrow. Obvious defects will be pointed out in the valuation but it should not be regarded as a full survey. Most lenders charge valuation fees on a scale depending on the value of the property. The report is basic, and all lenders disclaim any responsibility for the condition of the property. You have no redress against the surveyor for any defects or problems that are missed and you may not be provided with a copy of the report.
- Homebuyer’s Report
A Homebuyer Report is intended for conventional, residential properties e.g. houses, flats and bungalows which appear to be in reasonable condition and have not been subject to significant alteration since construction. The HomeBuyer Report is intended to inform you on the soundness or otherwise of all aspects of the property, and whether it is a suitable purchase at the price agreed with any major defects specified. It is more expensive and extensive than the basic valuation. Advice can be given on specific items if required, and if further specialist investigation is thought necessary this will be stated in the report. The report may also offer you some limited recourse should the surveyor (acting on your behalf, rather than the lender’s), be negligent.
- Building Survey
This is the most detailed type of survey and is usually required when a full assessment of the property is needed. It is also the most expensive. It is also highly advisable for properties built before 1900. Surveys of this type cover all aspects of the property in greater depth than the Homebuyer’s Report and detail remedial work required. You have right of recourse to the Surveyor in the event a defect with the property is subsequently found which would have been there when the original survey was done – for example a woodworm infestation or rising damp.
If you are moving home, you may want to keep your current property and rent it out which is known as a Let to Buy which will either require “Consent to Let” from your current mortgage lender, which not all lenders allow, or re-mortgage to a new lender onto a Buy to Let mortgage which can also be combined with a release of available equity to help fund your ongoing purchase.
Failure to notify your current lender of your intention to rent out your home could be considered a serious breach of your mortgage contract.
Should you decide to rent out your current home there is added responsibility and legal obligations to fulfill as a landlord such as obtaining landlords insurance.
The key things you need to know about secured loans
- Secured Loan
A Secured Loans, also known as second mortgage, homeowner loan or second charge loan are secured against your property. Secured Loans are ideal if you want to borrow additional money and are usually used to consolidate existing credit or to make home improvements. As your property is provided as collateral for the loan, loan providers see you as less of a risk, however, your home could be at risk if you are unable to repay your Secured Loan.
A Secured Loan is simply another loan that sits behind your first mortgage. This means that you will continue with your current mortgage product and therefore not incur any early repayment charges potentially associated with a re-mortgage. A Secured Loan could provide the ability to consolidate debt into affordable monthly repayments. When the Second Mortgage is repaid the debt is finished, whereas a debt management option could have significant implications on your ability to get finance
in the future.
Like a mortgage, you will be required to pay the remaining amount of your Second Mortgage from
the proceeds of the sale.
- How Much
Second Mortgage amounts are available from £5,000 to £2,500,000 but if you have a request that is outside this range we may still be able to help. Consolidating credit cards, store cards and catalogue credit with a lower rate homeowner loan could significantly reduce your outgoings leaving you to enjoy life with less financial pressure. You can choose a plan that suits your initial finances but pay it off quickly or extend the term to reduce your monthly repayments – either way you are in control.
How much any house is worth can be a contentious issue with many on-line systems inaccurately estimating property values. You probably have your own figure in mind but it is always good to back that up with accurate up to date statistical data. The most common ways a lender will value your property is utilising data they hold and asking their valuer to check recent comparable sales data from the Land Registry.
Where there is no recent comparable sales data a lenders valuer will use the little known “Price Per Square Meter” method within prescribed tolerances for that area. There is no magic involved in this method you simply need to know how big your property is compared with the last sale from the EPC Register and pro-rata the different size using Price Per Square Meter, here’s how it works:
The house across the road is 75 m2 and recently sold for £100,000 therefore it has sold for £1,333/m2.
Your house is 100 m2 therefore should be worth £133,333 based on the price per square meter ratio above.
If you would like to increase the amount you wish to borrow simply contact us to discuss your
options.
- What Else
It can vary from case to case but from the day you call us, we aim to complete in just a few weeks
and we will always keep you informed throughout the process. We pride ourselves on offering the
best possible customer service and as a result, believe we can offer one of the quickest completion times within the Second Mortgage industry.
Yes but a ‘soft search’ will be used that does not affect your credit rating in any way because there is no footprint placed on your credit file.
We will use our experience within the Secured Loans to ensure that you aren’t penalised for not having a perfect credit file. Even people with the most severe credit problems are welcome and
almost all circumstances are considered.