Ask a mortgage expert
The mortgage market and process isn't easy to navigate. All that terminology, all that jargon. It's enough to give the best of us a headache. Well, as independent mortgage experts, we are here to help.
So many questions
You can find some questions and (importantly) some answers below to standard questions. But if you don't see the answer to your question, then just use the form at the bottom to submit your own and we'll come back to you.
General Mortgage Questions
There is no one size fits all criteria to determine what you can borrow. The amount you qualify for will be determined by the purchase price of the property, the deposit you are able to put down, your income and monthly expenses. However, generically speaking, you can expect to be able to borrow around 4x your income, although some lenders do offer more.
A repayment mortgage is guaranteed to pay off your mortgage by the end of the term as long as all payments have been made. An interest only mortgage is where your monthly payments are only covering the cost of the interest and your loan amount will remain the same. At the end of the term, you would either need to sell the property to repay the mortgage or find another source to repay the loan.
There’s a range of factors to consider here, including interest rates, mortgage costs, and also your particular plans. Within the market, deals typically vary from two-year fixed-rate deals, through to 10-year fixed-rate deals, although some lenders will offer even longer timeframes.
Whilst you may like the idea of your monthly repayments staying the same for a decade, remember that if your circumstances change and you do need to sell during that time, you could face large early repayment charges. So, if you think you might end up moving in a few years, a shorter deal could be more appropriate.
Equally, if you’re going to be staying in your home for a while and are looking for some security should the Bank of England increase the base rate, then a longer term deal could be more suitable.
First Time Buyer Mortgage Questions
The minimum deposit that lenders will accept is normally 5% of the property value. However, if you only save this amount then your options could be limited, as most lenders will only offer mortgages to those with a minimum of 10% deposit. For example, if you want to buy a home for £200,000 you’ll need to put down a £20,000 deposit.
The more you can afford to put down as a deposit, the wider the choice of mortgages you will have access to and the better the rate will be.
The amount you can borrow depends on how much you earn and how much of a deposit you have to put down. You’ll only be allowed to borrow what the lender thinks you can afford, so as a general rule, they’ll restrict the amount you can borrow if you’re buying on your own to around four times’ your income, or if you are buying with someone, about three times your combined income. This can vary from lender to lender. We can provide you with a more specific idea when we speak to you.
Whilst they are no hard and fast rules, normally first-time buyers go for a fixed rate mortgage, as this provides peace of mind that the amount paid each month will remain the same during the term of the deal. But, if you don’t mind the idea of payments changing then you might want to look at variable mortgages too.
Remortgage Questions
There are a number of reasons why you should remortgage. The most popular reason is when you have come to the end of a preferential rate on your current mortgage. At this point you will probably move onto your lender’s more expensive standard variable rate. Other reasons include:
You’d like to release equity in your home and you know its value has increased.
You want to free up cash to fund home improvements.
You want to borrow more money via your home’s value.
You want to switch from interest only to repayment mortgage.
Buy To Let Mortgage Questions
An HMO (House in Multiple Occupation) is a house where multiple, unrelated tenants have exclusive access to their rooms and share common living areas, such as a kitchen or bathroom. The property can either be let on one agreement that includes all the tenants, or each tenant can have its own agreement. Legislation requires that some HMOs are licensed by the local authority, so it is important to check.
Alas, you cannot! Buy to let mortgages are only available on properties that are immediately habitable. If the property requires improvements before it can be let may need to consider bridging finance in the first instance. Then, when the property is ready to let, you can then move onto a buy to let mortgage.
As buy to lets are a commercial transaction they are not regulated by the Financial Conduct Authority. That being said from 21 March 2016 the rules changed to incorporate what is known as Consumer buy to Let.
Consumer buy to Let provides a distinction between “accidental” landlords who may need consumer protection and “professional” landlords who operate their property portfolios as a business.