Expert Mortgage & Property Financing Solutions

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What is a Mortgage?

Mortgages are loans secured against a property. They can be used to purchase residential and Buy-To-Let properties.

Mortgages are usually taken over a long term (20-40 years), most providers will have a minimum term of 5 or more years. Interest is chargeable on the outstanding mortgage balance.

They can either be taken on an interest only basis where only the interest is paid on a monthly basis and the capital remains unpaid. Usually, the lender would require a capital repayment vehicle for an interest only mortgage.

More commonly mortgages are taken out on a capital repayment basis, whereby the mortgage balance will be cleared by the end of the mortgage term, so long as the monthly payments are maintained.

Arranging the Right Mortgage Product

When starting your mortgage, you’ll typically select an initial product lasting 2 to 10 years. Some of the most common options include:

Fixed

Whereby the mortgage payments will remain the same for the duration of the product term.

Tracker

whereby the mortgage product will track the Bank of England base rate, and therefore the monthly payments can reduce, as well as increase during the product term.

Standard Variable

This is the lenders standard rate which can be increased or decreased by the lender at their discretion. This is also usually the reversionary rate for lenders.

Offset mortgage

This allows the mortgagee to offset savings against their mortgage balance, therefore the interest will not be chargeable on the “savings” element although interest will not be received either.

Things To Consider Before Applying for a Mortgage:

Applying for a mortgage is a significant step in your financial journey, and proper preparation can make all the difference. From understanding your credit file to budgeting effectively, there are several key factors to consider before starting the process.

Credit file

It’s always good to review your credit file prior to applying for a mortgage to avoid any unexpected surprises. A poor credit history could make it more difficult to secure a mortgage.

Budget

Draw up a budget plan of your household income and expenses. A breakdown will be required for your mortgage application. Outstanding debt will also impact the amount you can borrow.

Deposit

The larger the deposit you have, the better the rate you will secure. You will commonly come across the term Loan-to-Value (LTV) which is a measure of your mortgage vs the property value. Typically, the lower the LTV, the better the rate.

Conveyancer

A firm which carries out the legal work required for a property purchase. Consider if you would like to select your own conveyancer or use one pre-selected by the lender.

Stamp duty

A tax which needs to be paid on the purchase of a property. This could change from time to time, based on the government budget, for the latest rates, see https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

Valuation

The valuation assesses whether the property is suitable security for the mortgage, there are several different types of valuers therefore it’s important full consideration is given