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mortgage information

Mortgage Information

Mortgage Information



We have compiled some background information about the mortgage process. Once you are ready to buy then please complete our enquiry form with your requirements.
 

New Mortgage

Buying a new home can be an exciting experience. Historically we have seen steady house price increases. These house price increases has been made affordable by lower interest rates.

House prices may continue to rise or they may fluctuate in the future. We recommend you view your home purchase as a long term investment.

A mortgage is one of the biggest investments you are likely to make. On a 100,000 mortgage you could pay back over 200,000 to the lender.

You will be responsible for repaying the debt, is the monthly payment affordable?. Are you concerned about fluctuations in interest rates. Your mortgage broker will discuss the key features in any new mortgage you are looking to take out
 
Remortgage

Most people with an existing mortgage should consider remortgaging as part of a periodic review of their finances. Competition amongst mortgage lenders is fierce and the potential savings significant.

Finding the right deal can be difficult given the vast number of mortgages available. Using a mortgage broker such as ourselves will enable you to find the best mortgage.

 
Buy to Let

Click on the Buy to let link for more information

Capital Raising
 
As part of a new mortgage or a re-mortgage you may wish to raise finance for home improvements or for another purpose. Mortgages are available for this purpose up to 90% loan to value, please complete your enquiry

 
Borrowing Limits

Mortgages are available for property loans of up to 90% loan to value. The larger the deposit, the better the mortgage terms available.

Most building societies and banks will allow a mortgage loan of 3 to 4x's the annual income of all applicants. There are some lenders that will lend up to 5 x's your income. Any loans or credit agreements should be deducted from your salary before applying the multiple. If you have a deposit and wish to borrow in excess of the criteria, complete our fact find, we may be able to help.

It is important to assess whether you will be able to afford future mortgage payments. Think about what would happen if you or your partner were unable to work in the future - see insurances
 
Mortgage Options

There are many different mortgage options available:

Fixed Rate allows you to fix the interest rate of your loan so that for a set period you have the reassurance of knowing that your repayments will not alter.

A Capped Rate fixes a upper ceiling to the interest rates so that in the event of rising interest rates you will not pay any more than the limit set by the cap. If rates fall below the cap then your repayments will reduce.

Fixed and Capped rate mortgages are most suitable to those who are working to a budget and need to know that their repayments will not exceed a set figure.

Discounted Rate mortgages allow a discount to the standard variable interest rate for a set period.

As an incentive to attract new clients many companies now offer a lump sum Cash back. These are obviously useful if cash is needed at the outset, however the opening interest rates may not be as attractive.

Flexible mortgages , also termed Australian mortgages have become increasingly popular in recent times. They enable the borrower to actively manage their mortgage perhaps by altering the monthly payments or by paying off lump sums. Other options include the facility to take payment holidays and to borrow further amounts.

Early Repayment charges: To attract new borrowers, mortgage lenders may offer an introductory discount or some other incentive. This will invariably cost the lender money. To protect their investment the lender may impose early repayment charges should the borrower redeem their mortgage within a specified period. These charges are likely to apply during the first few years of a new mortgage. Schemes are available which exclude these charges.

 
Repaying the Loan

While there are many different mortgage interest rate options, there are just two types of repayment method, interest only and capital and interest (repayment)

With an interest only mortgage you pay the interest only to the lender. Most people take out a further investment to run alongside which it is hoped will pay off the loan at the end of the term. Mortgage lenders are fairly flexible about what investment method is used to pay off the loan and popular choices have been endowment policies, unit trusts and pensions.

With a repayment mortgage each payment made pays both the interest and a small part of the capital. With this type of mortgage your mortgage loan will be paid off at the end of the term.
With a repayment mortgage you are using your capital to actively reduce your debt. With an interest only mortgage you hope that your invested capital will achieve a better rate of return than the mortgage interest rate.

 
Investments

The following investments have been popular choices for people with interest only mortgages.

Endowment policies : These policies are run mainly by insurance companies and friendly societies. They are regarded as low to medium risk investments. The fund managers invest on the stock market, in property and in fixed interest investments. Policies can be unit linked or with profits. Unit linked means that a value is calculated, usually daily which directly relates to the value of the underlying fund. Unit prices can be followed in the broadsheet newspapers.

A 'with profits' policy entitles you to a share in the profits of the insurance company. Issuing companies vary their annual bonus according to investment performance and anticipated future investment conditions. The variance in annual bonus has historically been small which provides a degree of security to the policyholder. A terminal bonus is also normally declared at the end of the term. Life assurance is included in the contract which will pay off the mortgage in the event of death.

Unit trusts : Predominantly stock market investments where your money is 'pooled' together with other investors in a fund which may be managed or unmanaged (tracker). There is a risk element to your capital as unit prices can fall as well as rise, and a periodic review would be recommended to ensure that the fund performance is adequate. This type of fund is quite flexible and tax free benefits are available if taken out within an ISA.

Pensions : If you are eligible for a personal pension, you can opt to use part of your pension fund to clear your mortgage. This will obviously reduce the amount that you will have available to go towards your pension, however you will receive full income tax relief on your contributions.

Another factor to consider is that the earliest you can draw your personal pension is from your 50th birthday (generally). Your pension date will need to coincide with the term of your mortgage. Advice regarding pensions can be obtained from an independent financial adviser.

 
The Market

There is a vast array of mortgages available. The deals on offer change weekly as companies compete for business. Newspapers and magazines regularly produce 'best buy' lists, but do not show the total costs.

Our computer programs will analyse all cost elements, such as fees, discounts, cashbacks to arrive at the total overall cost, for all the schemes on the market.
 
The Costs

At the outset you will need to have funds available to pay for the following:

  • Deposit
  • Legal fees (including stamp duty). In most cases there will be a conveyancing fee. You may be liable for the lender's legal fees.
  • Valuation and survey fees
  • Lenders fees

With some mortgages it is possible for some of the above to be included in the mortgage loan. Alternatively some of these items could be funded from a cashback mortgage. If you have no funds to put towards these costs then tick the 'add initial charges' box in the fact find.

 
Insurances

Insurance provides the protection against unforeseen events in the future.
Some insurances are compulsory.

Buildings insurance will be required to protect against loss or damage to your home. Cover is required from exchange of contracts.

 Home contents insurance, though not compulsory would be recommended to protect your possessions.

Life assurance is often required by mortgage lenders and when linked to your mortgage will clear the mortgage loan on the death of the policyholder. If you are married or in a long term relationship, we recommend you consider joint cover.

Accident, Sickness and Unemployment insurance : For most people their mortgage payment is their largest single outgoing, this insurance provides some protection against loss of income due to accident , sickness and unemployment.

Critical Illness cover : Normally pays out a lump sum on the diagnosis of a critical illness ( ie. cancer, stroke, renal failure and heart disease).

Permanent Health insurance : Provides income protection if the policyholder is unable to work because of accident, disability or ill health.

 
Step by Step Guide

Think about what type of mortgage you would prefer, do you want low payments for the first two or three years, would a cashback be useful.

Complete your enquiry, we will help find you the best deal. The next stage is to obtain a decision in principle from the lender, you will then know how much you are able to borrow and you will be in a position to make an offer.

  • Contact us - get your mortgage agreed in principle
  • House hunting
  • Appoint a solicitor
  • Make an offer, subject to survey and contract.
  • Complete mortgage application
  • Exchange contracts, pay deposit
  • Arrange removals
  • Move home!