What exactly is a mortgage?

A mortgage is any long-term loan secured on a property, usually used to buy the home. It traditionally ran for a fixed period of 25 years but most mortgages are now more flexible, allowing for early repayment or, if your circumstances dictate, the term can be extended beyond the original fixed period.

What is meant by re-mortgaging?

It is becoming more and more popular to take out a new mortgage for a property that is already owned, in order to get a more competitive rate or to raise funds for other purposes, including school fees or investments. But you should be aware that you might have to pay early repayment charges to your existing lender if you remortgage with another lender.

What sorts of mortgages are there?

Repayment mortgages
Also known as a repayment or capital & interest mortgages, your repayments pay off the interest and part of the capital borrowed each month, over a set term.

Interest-only loans
Your repayments only repay the interest on your mortgage. You are responsible for the repayment of the capital when the mortgage reaches the end of the term, usually financed through some kind of savings plan.

Discount variable mortgages
Discount variable loans are cheaper than the standard variable rate at the beginning of your mortgage and allow you to enjoy the benefit of the discount for a set period of time. Again, early repayment charges might apply if your mortgage is repaid during the discount period.

Fixed rate loans
This product has a fixed rate of interest on your mortgage for a set period, agreed at the outset of your mortgage. Fixed rate mortgages are ideal for people who want to budget and know exactly what their monthly outgoings will be. Si even if interest rates increase, your payments will remain the same during the period of the fixed rate. But you should be aware that if you are paying at a rate that is lower than the prevailing rate, your repayments are likely to go up after the fixed rate period ends. And early repayment charges may apply if the mortgage is repaid during the fixed rate period.

Tracker mortgages
Tracker mortgage interest rates are linked to the Bank of England base rate for a fixed period, so if the base rate goes up, the rate of interest you will have to pay on your mortgage will go up too. However, if the Bank of England rate falls, your monthly repayments will be reduced.

Flexible mortgages
Flexible mortgages are designed to accommodate your changing financial needs and you might have the option to overpay, underpay, take payment holidays, or even make penalty-free lump sum repayments.

Is a fixed mortgage right for me?

The answer to that depends on your own personal circumstances. If interest rates going up would leave you uneasy and feeling under pressure, it may be best to fix your mortgage for peace of mind. The benefit is that your monthly mortgage repayments are fixed for the duration of the fixed term so you can plan ahead without fear of rising mortgage repayments. At the end of your chosen fixed rate term, you will normally revert to the lender’s current variable rate but you may be able to choose another fixed rate from the selection available at that time. You may have to pay an early repayment charge to your existing lender if you repay your mortgage within the fixed rate period.

How much will I be permitted to borrow?

Your maximum loan will be determined by your current income, including any commission, bonuses and overtime. Some lenders will calculate your overall borrowing ability using a straightforward multiple of your income while others will base the maximum you can borrow on your net disposable income. Whichever type of mortgage suits your circumstances, we can help you calculate your individual borrowing limits.

Your home may be repossessed if you do not keep up repayments on your mortgage.

For mortgages – A fee of £250.00 is payable at the outset and £250.00 is payable on production of a mortgage offer. We will also be paid commission from the Lender.

Can I get a mortgage to build my own property?

All lenders have their own lending criteria, but you can usually borrow fund to cover the cost of building your own property, subject to your income. If you wanted to buy a site on which to build your dream home, this might well be the way to do it. The maximum loan for this is typically up to 90% of the total value and the funds would usually be released in a series of stages.

What costs and fees am I likely to incur?

There are some standard fees and charges that will apply and we will explain these in full at the start of the process. These might include:

Valuation fees – all lenders require a valuation to be carried out on your property to confirm its market value (as opposed to its structural soundness), mainly for the lender’s own benefit. And it will also tell you if there’s something seriously wrong with the property.

Buildings survey – this would usually only apply to a second-hand house and involves a complete inspection of the property by a qualified surveyor or engineer. This is not compulsory but it is recommended if the property hasn’t been well maintained or if you have any doubts about the soundness of the house.

The cost of this survey is down to you and is non-refundable in the event you don’t go ahead with an offer for the property. However, it may highlight expensive repairs that, if not turning you off the sale, could help you to negotiate a more realistic purchase price.

Higher lending charge – this insurance protects the lender against loss in the event of repossession or a fall in property prices where the loan amount owed exceeds the sale price of your property. It is usually applied where the loan is in excess of 75% of the purchase price and is only applied to the loan amount over that threshold. Not all lenders impose this insurance.

Legal and outlay costs – these will vary depending on the solicitor, and whether your deeds are registered with the Land Registry or Registry of Deeds. You should ask your solicitor to outline all costs to you in advance. Your legal fees could amount to a substantial sum so it is well worth shopping around for a competitive solicitor. We can advise you of good solicitors in your area.

Do I need any insurance protection to cover my mortgage?

For peace of mind, it’s always worth considering some of the options – they are there to help you, after all.

For details of the types of cover available, see the Protection section.

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