- Moving House
- Buying First Time
- Borrow £20k to £500k+
- Low & Fixed Rates
What Mortgage Do I Need?
We offer three main types of residential mortgages and one that is for property investment:
- Remortgages – where you replace an existing mortgage with a new and better deal that has favourable terms (e.g. a lower interest rate). more
- Moving Home mortgages – where you decide to move home but not to transfer your current mortgage to your new home. Perhaps because you need to borrow more and/or get better terms. more
- First-time buyer mortgages – where you no longer wish to rent but wish to jump onto the property ownership ladder. more
- Buy-to-Let mortgages – where you want to buy a property as an investment and generate a rental income rather than live in it yourself. more
Our mortgage broker partner is not limited in the range of first charge mortgages they will consider for you. So, you can be confident no stone will be left unturned.
Get Your Quotes Now:
- Compare 100s of deals
- Rep. 4.1% APRC (Rates start at 3.2% APRC )
- All credit ratings welcome
- Up to 95% LTV
- No upfront fees
What do you want to do?
How to Get the Best Mortgage Deal
Lending Criteria and Requirements
The precise lending criteria will depend on the type of mortgage and also the specific lender. But it is possible to make some general observations about basic criteria you will need to satisfy:
- LTV (loan to value) limit – you will not be able to obtain a mortgage for 100% of the property’s value. So, you will need to provide either a deposit or bring some equity over from a previous property. The minimum size of this will range between 5% and 20% of the property’s value depending on the type of mortgage (more information on other pages).
- Affordability – you will need to be able to demonstrate that you will be able to afford to pay the monthly repayments.
- Repayment of capital – if you want an interest-only mortgage then you will need to be able to show how you intend to repay the capital balance at the end of the mortgage.
- Risk – the better your credit rating and the more stable your employment the lower your interest rate is likely to be. Your income need not come from employment. It could be investment income or perhaps even pension income. In terms of the latter, there may be age restrictions.
The Process of Obtaining a Mortgage
There are around 1000 mortgage products from over 250 UK lenders! As a broker, we are able to cover the whole market. There are products designed for first-time buyers, others for current property owners and yet more for investors and self-builders. Then there are those with a variable rate of interest, and others with a fixed rate for one, two or more years. The number of products overall rapidly rises.
The best thing to do is to use us to help you find the mortgage you need. Along with our mortgage broker partner, we’ll rapidly be able to help you narrow down your options and find the mortgage that best suits your circumstances. There are no upfront fees.
Useful Mortgage Articles
Your Mortgage Checklist: Questions to Ask Yourself
- How much do I need to borrow? How much cash can I bring to the deal as a deposit?
- Can I afford the monthly payments this borrowing implies?
- Should I take advantage of any short-term discounted deals?
- Should I fix my interest rate, and if so then for how long?
- Should I pay a higher arrangement fee to access a lower interest rate? Will it pay off?
- Would the flexibility to make overpayments on my mortgage be useful if this means I may pay a higher rate in the meantime?
- To what extent is my credit rating going to affect the deals I can get? What can I do now to improve it?
- What are all the fees I might be confronted with during the mortgage period? Am I comfortable with these?
There’s a lot of information to help you answer these questions in the section below.
How do Mortgages Work?
Mortgages are by the far the largest debt that any of us will ever encounter. Not only are they large but they tend to be repaid over decades. The mortgage repayments you make are also likely to be the largest component of your monthly budget. So it makes sense to understand some of the basic concepts that surround them. And of course you should make sure that you fully understand the specific terms of any mortgage contract before you sign it.
What’s meant by Loan to Value (LTV)?
This measure sets an important limit on the amount the lender will lend to you. The average UK house price is £250,000. With a typical maximum LTV of 90%, and ignoring any affordability test, the lender will limit the maximum amount they will lend on such a property to 90% x £250,000 = £225,000. This also shows that you will need to contribute at least 10% of the purchase price – either a deposit you’ve been saving for if you are a first-time buyer or carried forward from a previous property you’re perhaps moving from.
So, what determines the maximum LTV? That’s not so easy to answer, except to say that it comes down in part to a lender’s appetite for risk, how competitive the market is and also the health of the economy.
There’s another important factor linked to LTV%. If you borrow an amount that is a high proportion of your property’s value (i.e. a high LTV%) the lender will view this as riskier. This could trigger a higher rate of interest. Why is it riskier? Consider what would happen if the £250,000 property you bought using a £225,000 mortgage falls in value to £200,000. You’ve lost your deposit, but the lender is also at risk of losing £25,000. In a situation where lenders sense the housing market could fall they will tend to reduce the maximum LTV%.
Interest Rate Options
There are a number of aspects in relation to mortgage interest rates you need to be aware of:
- The risk to the lender:
- From your own credit repayment behaviour as recorded in your credit file and reflected in your credit rating. The better risk you are the lower down the scale your rate will be.
- As implied by the mortgage value as a % of the property purchase price (the LTV). The lower the LTV the lower the rate that you should be offered. In other words the greater the deposit you can offer the lower rate you can expect to get (up to a point).
- The state of the economy and the health of the property market.
- Variable vs fixed interest rates. For budgeting purposes you may wish to fix your rate for a number of years. It may mean that in the short term you pay more than the variable rate. That may be frustrating but the peace of mind may be worth it. You may find that you can get a capped rate of interest where you benefit from a variable rate with an upper limit to the rate charged. Which of these options you choose is a judgement call. There is no right answer as no one knows the future.
- Discounted rates. Lenders may tempt you with a heavily discounted rate for a short period. But then the rate returns to a much higher one. Should you succumb to this temptation? Unless you need the cashflow advantage you may just want to do the maths on the total repayment costs and choose the lowest.
- Arrangement fees. You may chase a lower interest rate deal only to find you’ve got to pay a higher arrangement fee.
What Loan Period to Choose?
As with any form of credit it always makes sense to repay it as quickly as possible as this can significantly help to reduce the total interest paid. However, the problem with a mortgage is the sheer size of it relative to your annual income. Traditionally mortgages have been repaid over a 25-year time span. The reality is you can choose any period you like. Over the last decade, as property prices have risen, so too have the mortgage terms. It is not uncommon to see first-time buyers taking out a mortgage for 31 to 35 years.
Interest Payment Example
£200,000 borrowed at a fixed 5% on a repayment basis
- Over 25 years: Monthly repayments of £1169. Total interest over 25 years = £150,754
- Over 31 years: Monthly repayments of £1059. Total interest over 31 years = £193,867
You may be tempted by the idea of saving £110 per month. But are you comfortable with extending your repayments by 6 years and increasing your interest costs by 29%? Could you make savings elsewhere in your budget to make sure you speed up your repayments?
The example above is for a traditional repayment mortgage where the capital is paid off gradually over the life of the loan. But there are mortgages where your monthly payments are only the interest part. So, how do you repay the capital? These options are acceptable to lenders so long as you can demonstrate to them that your plan is credible:
- Cash savings or cash ISA (though now less popular with lenders)
- Stocks & shares ISA
- Investment bonds
- Unit trusts
- Endowment policies
- Other properties or assets
You should continuously monitor the progress of your repayment plan to ensure it will deliver. The lender will occasionally check with you. What lenders will not accept as repayment plans are:
- Speculation that property prices will grow enough such that the growth in value will allow you to pay off the mortgage and buy a smaller house to live in.
- The promise of a future windfall (e.g. inheritance)
The is a range of fees you could be confronted by while applying for and living with a mortgage. They include:
- Booking fee – to “reserve” the mortgage funds with your lender when you are completing your application. This fee is not usually refundable.
- Valuation fee – where the lender does a basic assessment of the proposed property to value it. Refundable only if the inspection has not been done.
- Arrangement fee – when the funds are paid out to you. This is refundable if you are declined for the loan. If accepted you can normally add this to the loan. Sometimes a fixed £ amount, sometimes a % of the loan value.
- CHAPS fee – to cover the cost of the lender sending the mortgage funds to your solicitor.
- Higher Lending Charge – where the mortgage has a high LTV%. and thus is a higher. The lender may use this charge to pay for a Mortgage Indemnity Guarantee (an insurance policy).
- Early Repayment Charge – usually a %-based fee levied if you exit a fixed, discounted or tracker deal early.
Our Money & Credit Guides
If you’re uncertain which type of credit might suit you or you have a money problem then one of guides may help you. We summarise each type of loan and their pros and cons, and address issues regarding debt and credit ratings.
Mortgages: things to know before you apply
A mortgage is a form of credit designed specifically for the purchase of a property. Mortgages tend to be large and tend to be repaid over a long period of time, often 25 years or more. There are different types of mortgage depending on whether you’re buying your first property, moving to a new home, looking for a better mortgage deal or investing in property with rental in mind.
Choosing the right mortgage can seem daunting given that there are over 1000 options available at any one time. But they all share the same basic principles. A good mortgage broker can help you identify the right deal for you. In the meantime, you can find out more about the workings of mortgages.
To be able to get a mortgage you will need to demonstrate that you have a stable form of income that makes repayments affordable. On top of that if you are a first-time buyer you will need to be able to offer a sufficiently large deposit (either savings or perhaps a gift/loan from the bank of mum and dad). Your chances of getting the loan you want on the terms you need are also improved if you have a good credit rating.
The key factors that will determine the amount you can borrow include:
- your income – repayments need to be affordable
- the value of the property you want to buy
- the deposit or other equity you can bring to the deal
- the maximum LTV% the lender is prepared to work with
- your credit rating – the better it is then the higher the LTV you may get
- the type of property you want to buy.
There is a wide range of fees that you may encounter when applying for, arranging and living with a mortgage. Some may seem inconsequential but others can be significant and could well affect your choice of mortgage.
You end a mortgage by paying it off completely. Or you can end a mortgage by remortgaging to a new deal with the same or different lender. Some mortgages allow you to make overpayments such that you can end a mortgage earlier than planned. If you end a mortgage early it is possible you might incur an early repayment charge.
All repayment behaviour is recorded on your credit file. So, the immediate impact is that a missed repayment is recorded on your file. However, if you know that you will miss a repayment or your circumstances change (e.g. you are made unemployed) you must talk to your lender. Don’t stick your head in the sand. Remember that mortgage debt is secured against a property. As a last resort, a lender could repossess your property and sell it to pay off what you owe.
There are around 11 million mortgages in the UK with a total outstanding value of £1.5 trillion as of the start of 2020. On this basis, the average mortgage has around £138,000 left to pay.
Each year there are around 350,000 to 400,000 first-time mortgages issued. And there are nearly 500,000 remortgages each year. Around 50% of these remortgages are done to borrow more (i.e. release equity from the property). On average the amount added to the mortgage is around £50,000. The other half of remortgages are done simply to get a better deal.
There are around 200,000 buy-to-let mortgages issued each year of which one third is for new acquisitions. The balance is remortgaging. The buy-to-let sector has been very buoyant for decades although in decline since 2015 when tax changes made such investment less profitable.
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