Do I need a mortgage broker?
One of the hardest – and most time consuming – parts of arranging a mortgage is sorting through literally hundreds of mortgage deals out there. A professional mortgage adviser can research the mortgage market for you and recommend the best mortgage for your needs – often saving you money on your monthly repayments in the process.
Your mortgage broker also acts as an intermediary between you and the mortgage lender, and prepares and collates all the necessary paperwork on your behalf – saving you valuable time and effort.
If you’re thinking of moving home or reviewing your mortgage to save money, speak to a mortgage adviser as soon as possible – and take the headache out of finding the right mortgage.
How do I know if I will be approved for a mortgage?
The short answer is – you don’t. Working with a mortgage adviser increases your chances of being approved for a mortgage. How? Their in-depth understanding of your financial circumstances means they will select a mortgage that’s right for you, and one that has a greater chance of being approved.
Your mortgage broker can apply for an agreement in principle (sometimes called an AIP) on your behalf. The AIP tells you whether your credit score is good enough for your mortgage application to be accepted by the lender, and gives you an idea of how much you may be able to borrow.
How much can I borrow?
When it comes to deciding how much you can borrow, every lender is different. The amount you can borrow is determined by the lender’s internal credit scoring process plus the cost of the property you’re buying, the size of your deposit, your income and affordability (which takes into account your monthly bills and payments and any future commitments).
How much deposit do I need?
The government’s mortgage guarantee scheme, which came into effect in April 2021 means you now need a deposit of just 5% for a property purchase of up to £600,000. The scheme is available to first time buyers and people who already own a property.
How do I know which mortgage is right for me?
Your mortgage advisor will carry out extensive research to establish the right – and most affordable – mortgage for you. Their research takes into account your current financial circumstances (including how much you earn and how much you spend each month) as well as your priorities, financial goals and long-term plans.
All reputable mortgage advisers are covered by the Financial Conduct Authority, for your peace of mind and protection. This regulation requires your mortgage broker to recommend the most suitable mortgage for you – so you know you’re in safe hands.
What fees will I need to pay?
Fees may include the following:
Charged by the lender to value the property and generally paid up front with your application (though occasionally provided free by some lenders).
Charged by a qualified surveyor to check the property you’re buying and to report on any faults.
Charged by your solicitor to complete the conveyancing transactions on the property. Part of the solicitor’s fee is paid up front when you instruct your solicitors, and the remainder is paid on completion of the house purchase.
Stamp duty land tax
A tax levied by the government on all property purchases in England or Northern Ireland. See https://www.gov.uk/stamp-duty-land-tax for up-to-date information.
Land transaction tax
For property purchases in Wales. See https://gov.wales/land-transaction-tax-guide for up-to-date information.
Lender’s arrangement fee
Charged by the lender for arranging the loan. Your arrangement fee can usually be added to the loan, increasing the size of the loan.
Charged by your mortgage adviser to save you time and money researching the entire mortgage market and ensuring you get the most suitable mortgage for your needs.
I’ve had bad credit in the past. Can I still get a mortgage?
If you’ve had bad credit in the past, you may still be able to get a mortgage. It’s vital that you fully disclose any credit problems as failing to do so risks your mortgage application being rejected.
You can download a copy of your credit report from four major credit agencies here:
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Your mortgage advisor will select the most appropriate lender for your mortgage application, reflecting your credit status.
I have a new business and only have one year’s accounts. Can I still get a mortgage?
There are a small number of lenders that consider providing a mortgage on the basis of one year’s accounts, but your mortgage advisor can search the market and find a lender that suits your circumstances.
What if I become seriously ill or my partner dies and I can’t afford my mortgage repayments?
It’s an understandable concern. As well as helping you to buy your home, I can also make sure you get to keep it should a disaster strike. As long as you maintain a suitable insurance policy you can be assured that funds will be available when needed. When you take out a large debt you should always consider protecting it against the unpredictability of life, such as death or critical illness. Get in touch for a quote for life assurance and/or serious illness protection insurance.
What type of mortgage do I need?
Once you’ve decided how to pay back the capital and interest involved in buying your home, you need to think about the type of mortgage you want. Your mortgage advisor can help you decide whether a fixed or variable interest rate is best for you.
Fixed-rate mortgages are popular because they offer fixed repayments for a set period of time – usually two to five years. They offer protection against interest rate fluctuations and can help you to plan your monthly expenses.
If you opt for a variable rate mortgage you can expect your payments to increase or decrease in line with the Bank of England base rate.
What does all the terminology mean?
LTV stands for loan to value, and is the ratio of the size of your mortgage loan to the value of the property you’re buying. For example, a loan of £160,000 is 80% LTV of a £200,000 property.
AIP or DIP
Two terms with the same meaning – AIP stands for agreement in principle, and DIP stands for decision in principle. Your mortgage adviser can apply for an AIP/DIP on your behalf to give you an idea of how much you can borrow from your chosen lender, based on affordability and credit score.
The APRC, or annual percentage rate of charge, is the total cost of the credit – or the full amount you need to pay to buy your home – expressed as an annual percentage of the total amount of credit.
A mortgage offer is made by your mortgage lender as formal confirmation that they are prepared to offer you the mortgage you applied for. It’s an important and exciting stage as it means you can proceed to…
Exchange of contracts
This is the point at which an agreement to buy or sell a property becomes legally binding. Once a buyer and a seller have exchanged contracts – and the buyer has paid a deposit – they can’t back out of the deal. The contract exchange is handled by the solicitors representing both the buyer and the seller.
The completion date is usually the day you move into your new home. It’s the date on which you take legal ownership of the property and start paying the mortgage.
Buildings and contents insurance
Mortgage lenders require you to protect your home against damage. Buildings insurance offers this protection. Contents insurance protects your possessions – such as furniture and electrical goods. Many insurers offer combined buildings and contents insurance. Get in touch for a quote.
ERC stands for early repayment charge – a fee charged by the mortgage lender in the event that the loan is repaid in full – or in part – before the end of the contract.
SVR stands for standard variable rate, which is the mortgage lender’s standard interest rate. Most fixed-rate and discount rate mortgages switch to the standard variable rate when the special deal comes to an end. This can be a good time to talk to your mortgage adviser about remortgaging.