Let us answer all your mortgage questions
Choosing the right mortgage can be a daunting process. Here are some answers to the most frequently asked questions.
We provide initial advice for free and without obligation. Only when you choose to proceed would we charge a fee of £250 and when your case completes a fee of between zero and 0.5% of the mortgage achieved - depending on the type of mortgage that you get. Basic PAYE mortgages - £250 is all you will pay. Self-employed mortgages, Limited Company Mortgages, Expat Mortgages, Mortgages for Portfolio Landlords (>3 properties) or any commercial mortgages at all - then it will be 0.5% of the mortgage amount.
Every lender will be different in their approach in terms of to what you can borrow – there simply is no set formula. The actual amount that you are eligible to borrow will be determined by the cost of the property you wish to purchase, the size of deposit you have, your income and affordability (taking into account your monthly financial commitments and any future commitments). As a complete rule of thumb – and it is different from all lenders and all customers – but the amount of the loan will not be that far off from 4.5 times your provable taxable earnings. So remember - not what income you earn – but what taxable income you earn - as detailed on your tax return!!
This is simply swapping the mortgage you have on your current property for another mortgage with a different lender. You may consider this option if your existing mortgage deal has expired, or is about to expire, and you want to see if a more competitive deal is available. You could also consider this if your circumstances have changed and you want to borrow more. There are many reasons why you would re-mortgage, but this does not involve moving home.
Conveyancing refers to the legal work completed by the solicitor or conveyancer you choose when buying or selling a property. It’s important to have either a conveyancer or a solicitor already lined up because as a buyer or a seller, you will need this in place to start and complete your transaction.
If you are employed, you will need to provide at least your last 3-4 months payslips as a guide, your P60 from the last tax year and your last tax return if you have done one. If you are self-employed, the easiest way to prove your taxable income is via SA302s, which can be obtained (for free) from HMRC. Alternatively at least 2 years' trading accounts may also be acceptable to lenders. Some lenders may have other requirements. You will be required to provide your bank statements for the last 3-4 months as well. If you have any other form of income i.e tax credits, then written evidence from the provider will be required.
The answer to this is simply down to what you can afford. What is most suitable for you in terms of the type of mortgage and exactly how long you can/should have it – it is important to have a chat with us and see what is the best option for you
One of the most difficult aspects of organising a mortgage is sorting through the hundreds/thousands of mortgage deals currently available. There are over 3,000 different mortgage products out there that are updated every day. To establish what is suitable for you it is important to take into account your current circumstances as well as your priorities and long term plans. ‘Different strokes for different folks’.
Typically the list of fees could include:
1. Valuation fee – charged by the lender to value the property and generally paid up front with your application
2. Legal fee – charged by the solicitor to complete the conveyancing transactions on the property. Part of this is paid up front when the solicitors are instructed but the remainder is paid upon completion.
3. Stamp Duty Land Tax (SDLT) – a tax levied by the government on any property purchase above £125,000. Always calculated by the solicitor and paid over to HMRC by them.
4. Lender arrangement fee – charged by the lender for arranging the loan. This is nearly always added to the loan but will therefore increase the size of the loan.
5. Booking fee – charged by the lender for booking the funds for your mortgage and typically charged up front with your application
6. Broker fee – will be charged as follows:
i) On application of the mortgage £295 paid directly by you, the customer
ii) On successful completion 0.5% of the mortgage paid by the solicitor, typically
No - not by some arbitrary age limit. However - your agreed mortgage term will be decided by any lender on the basis of what you can afford. It was not that long ago that most mortgages went to Age 60, then to 65, then to 70 and more and more lenders are now offering 75 and even 80/85 years of age.
The higher lending charge, formerly known as a mortgage indemnity guarantee (MIG), is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the value of the property. This fee may be used by the lender to purchase an insurance policy designed to protect them against any loss, in the event of you defaulting and ceasing to repay your mortgage
When you take out a mortgage with an initial deal on an e.g. fixed, tracker or discounted rate basis, should you repay the mortgage in full or part before the deal ends, you usually will have to pay an Early Repayment Charge which, in most cases, is charged as a percentage of the loan. Some mortgages will offer a ‘portability’ option, which means that if you move house when you are still tied into your deal, you can ‘port’ the mortgage to the new property and avoid the Early Repayment Charge.
In the first instance you should seek permission from your Mortgage Lender. Your lender may increase the interest rate to reflect the change in risk, as you need a specific Buy-2-Let Mortgage. We can provide you with advice on your mortgage and insurance options. Remember that you may also need to change the type of building insurance you hold on the property to ensure it is appropriate for this purpose.
The first thing that you should do is to contact your lender - in all circumstances - immediately - and let them know what is going on. There are all sorts of things that they 'may' be able/be prepared to do - a payment holiday for a month or 2 or 3, a switch to a temporary 'interest only' payment if you have a repayment mortgage, you might be able to claim under the Protection Product that you have - there are all sorts of things that can be done - starting with talking to your lender.
No you do not. Legally. However - many lenders will insist that when you take out a large debt, you should consider protecting it against the unthinkable like death and serious illness, even long term illness. Protecting the mortgage used to be a requirement by every lender – now it is optional. It is very sensible though – Term Assurance to protect your mortgage payments – Critical Illness Policies to protect against serious illness - there is also Buildings and Contents insurance to consider - again, many lenders may even insist it is in place as you move into your new home
15. If I get a Decision in Principle (DIP) with one lender, what can I do if a better product comes up before my application?
A DIP will tell you whether your credit score is good enough for your mortgage application to be accepted by them, and the level of borrowing they may be willing to consider. It does not oblige you to go to a particular lender any more than it obliges them to provide you with a mortgage offer, but it does enable you to get an early indication of what value properties you can be looking at.
The most important thing is affordability. If you have a stated budget we will recommend going up to that to keep the mortgage term short enough that you do not have to pay more interest than you should. If your payments would take you over your budget we will recommend a longer term as over time you will have various other options. As the amount owed goes down, you owe less, earn more, or the LTV adjusts over time, as well over paying options available on most mortgages. The important thing is to know that your obligations that are over a fixed period will remain and it may behoove you to come out of such an arrangement, but you can revise your arrangements when you re-mortgage so the important thing is to keep your affordability manageable.
No. This will entirely depend on the amount that you are able to borrow and the value of the property that you want to buy. Depending on personal circumstances we can look at mortgages from 5% deposit for 1st time buyers, more end up around the 10 -15% mark and Buy-2-Let mortgages start at around the 25% deposit mark or higher. Generally the larger the deposit you can afford the cheaper the mortgage repayments.
Yes. There is a mortgage for everyone. It is not complicated – the higher the income that you have, the bigger deposit that you have and the better the credit score – perhaps obviously, the interest rate charged will be less! An issue with credit is usually called ‘adverse credit’ and there are a number of lenders that specialise exclusively with this.
It is not up to you. It will always depend on what your lender insists upon. You have to have a valuation if you are buying with a mortgage but you may not need to have a survey. However, in most situations it is advisable. There are different types of valuation and different lenders charge different amounts of money for them. The basic valuation is called a ‘desk-top valuation’ - nice and quick and easy, often thrown in for free from the lender. A Homebuyers Report is a more detailed repost on the property and is the most common. The most expensive (and most detailed and thorough) is a full structural survey, sometimes insisted upon by any lender for older properties and unique properties particularly.
A repayment mortgage is where you pay the interest as well as the capital borrowed, so your mortgage balance is reduced every time you make a payment. In the early years you will pay mostly the interest and a little towards your capital but in the later years you pay more towards the capital.
A Whole of Market mortgage advisor is an impartial intermediary who acts solely in the interests of the mortgage borrower and not the lender. Unlike the High Street banks, Whole of Market advisors provide advice from products across more than one lender, offering a much wider choice. There are 3,000 mortgage products out there - what is the best one for you - ask Bram Vis.
No. Of course, you would expect us to say no, but we do so with very good reason. Although these basic search engines can be useful for completing some initial self research, they can never be as sophisticated as the specialist whole of market search engines designed and used by any broker.
Yes. Bram Vis is a Mortgage Adviser for Julian Harris Mortgages Ltd, authorised and regulated by the Financial Conduct Authority No. 304155 Co No. 3927189.
Absolutely not. Although we offer the widest possible range of insurance, including building and contents cover through the UK’s leading insurers, there is no obligation on your part to arrange your cover through us. However, we would hope you would give us the opportunity of discussing and hopefully competitively matching all your insurance needs.
A fixed rate mortgage. It has varied over the years, but there is no doubt that the fixed rate mortgage is the most popular now. Why? Because of nervousness about the future of interest rates and the prospect of them rising - the opportunity is there to fix your payments to effectively hedge against a future rate rise.
It depends. On what? On the value of your house that you are purchasing and your status as well. Remember it always depends on whether you are a) a 1st time buyer, or b) the property is less than £300,000 or c) you are a Buy-to-Let investor and it is a 2nd home. Contact this office today for an immediate reply!
No. You never pay CGT on your main home in the UK - this is called PPR relief (Principle Private Residence) relief. NOT available in other countries but it is in the UK - and available only on your main home.