Everything you need to know about mortgages!

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Looking for a mortgage broker but don't know where to start? Want to buy a house at auction but you don't know if you can get a mortgage? Or maybe you just want to know how to boost your credit score.  Here you will find 31 answers to some of the most asked questions about mortgages and the mortgage process. 

Can I get a mortgage if I am over 60?

Yes, potentially you could obtain a mortgage if you are over 60. However, there are a couple of factors that will be checked for criteria by the mortgage lender. Firstly, it will be your anticipated retirement age. Lenders ages at the end of application do differ with the standard or average being 70, 75, 80, or 85 and there are also mortgages available with no end dates. The other areas a lender assesses are:

  • your employment status: employed, self-employed, limited company director
  • the employment area you work in and whether it's feasible to work to that age, 
  • or if you have any other forms of income, which are sustainable to that age to cover the affordability the mortgage.

My bank rejected me can I still get a mortgage?

If your bank has rejected you that doesn't automatically mean you can't get a mortgage. The best thing to do is talk to a mortgage adviser who has access to many lenders.  Each lender's criteria is different so you may have been rejected because of your own bank's internal credit scoring system. As advisers we look at the overall picture and combine your circumstances with our knowledge of the lenders criteria before applying for a mortgage.  

How can I boost my credit score?

There are a few things you can do to improve your credit score. The first tip I would give people would be to ensure they keep up to date with any commitments they've currently got. So any loans or credit cards, and things like not going over overdraft limits is a good idea as well. With rolling finance or credit cards and overdrafts, make sure you're not getting too close to the limit on those as some lenders will frown upon that, viewing it as bad management of your money.

The other hint I would strongly advise is to ensure that you're on the electoral roll. The lenders use this to be able to locate you and basically take a record of where you've lived.

How much can I afford?

Each mortgage lender has its own criteria for working out how much a client can borrow. This will be done using affordability calculators and the lenders written criteria. The best advice for finding out what you would be able to borrow is to speak to a trusted mortgage adviser.  They'll be able to run through the questions each lender will ask in order to ascertain what you can borrow. The main things lenders will be looking at to make this decision are details of your income and also the details of the expenditure.

Some lenders will ask slightly more than others. But by speaking to a mortgage adviser you will get an accurate picture of what you're able to borrow. It helps enormously to have idea of what you can afford they you put in an offers ona house.

Should I remortgage?

Yes, you should, if it's a possibility. It's not something you have to do, but very rarely will you see somebody stick with the same lender for the entire term of the mortgage.  Most people will take advantage of a new deal, some people may want to borrow more or pay off a lump sum, (which is more than the usual permitted 10 percent) or some people may have done work to a property and the value has increased, meaning they could access a better rate as their loan to value is lower.

There are many reasons why you should remortgage and even if you think it's not possible, get in touch with your mortgage adviser, because an initial check will help determine whether or not remortgaging is an option.


Are mortgage rates going up?

This is another question we get asked quite a lot. People wanting us to predict when the Bank of England is going to increase its rates, or whether the lenders are going to increase or decrease the rates of their lending. Another question we get asked by people is: when my current mortgage deal finishes, are the rates going to be more or less competitive than they were when we took it out? They're all questions we just can't answer.

The key, when you're talking about interest rates and what's going to happen, is really trying to make sure you've considered your own circumstances; your circumstances as an individual, your circumstances as a family, and really tried to make sure that the deal and the rate you're going for is appropriate for your needs at the time and appropriate to your needs for the plans you have moving forward.

Then we need to continually review those plans to ensure the decisions you make, now, work for you in the future.

What is SVR?

Standard variable rate is the interest rate, which you switch to when your initial mortgage deal ends. Generally when you take out a mortgage, you'll enter into a fixed rate period for a number of years, after which, your mortgage will revert to the lender's SVR.  Advantages to this include perhaps no early repayment charge, should you wish to pay off your mortgage early or remortgage to a better deal. If interest rates are low, then your monthly payments could also reduce.

On the contrary, if interest rates go up, so could your monthly mortgage payment. Other disadvantages include a lack of certainty on your monthly payments, which you may like. If your fixed rate is due to come to an end your monthly payments are likely to rise. So, find yourself a trusted adviser who can look into your mortgage options for you.

What is a Decision in Principle or a DIP

A decision in principle is the first step to getting a mortgage. It's an indication from your mortgage lender how much they are willing to lend you for that mortgage. It's not legally binding and the amount on the offer could change following an assessment of your income, your expenditure and other factors at point of application. A decision in principle may involve a soft credit search which will not affect your credit score, but vice versa, it may involve what's called a hard credit search, which can potentially affect your credit rate.

A dip usually lasts about 60 to 90 days. You should definitely speak to your mortgage adviser and obtain a DIP before you put an offer on a house. Most estate agents will want a dip certificate before they will take the property off the market.

Why do mortgage applications get rejected?

There are numerous reasons why a mortgage lender might decline a mortgage application. These can include things such as credit scoring. So, for example, clients who have had poor credit in the past and maybe missed payments. They can include non-disclosure or false disclosure; so clients who perhaps exaggerate their income or not told lenders about certain things relating to their employment. The lenders don't look favourably on being midlead.  They will always perform these checks and they'll always look to verify the information that clients have provided.

That's why we would always encourage full and accurate disclosure and speaking to a mortgage broker to explain your individual position when you want to apply for a mortgage. By doing that, it gives you the best chance of being able to obtain that mortgage and to buy or refinance the property you want, avoidng potentially being declined.

What is a mortgage?

A mortgage is a loan taken out to purchase a property or land. The loan is secured against the value of your home until it's paid off, the property is the security. There are two main types of mortgages: 

1. Repayment: Each monthly payment is in two parts and goes towards both the capital and the interest... Which over time will reduce the loan amount. (Capital being the money that you borrow, and interest being the charge made by the lender on the amount you owe.) 

2. Interest only mortgage: These mortgages will usually have lower payments as you only pay interest. However, at the end of the mortgage term, you will have to repay the capital.

Can I get a mortgage if I have been furloughed?

The honest answer is it can be difficult. Each lender takes a different view on furlough income because of the uncertainty that we have all experienced over the last 18 months. Some lenders won't look at furlough income whatsoever; some will accept it on the basis that you're returning to work on a specified date and you have an employer's letter to confirm this. Like I said, each lender has a different criteria, so, the best thing that I can suggest to you is find yourself an adviser that knows the lenders so the can look at your individual circumstances and explore the options with you.

Mortgage: Can I have a lodger?

The answer to this question is, it depends on your lender. A lot of lenders are fine. A lot of the lenders have no concerns with lodgers and are quite happy for the owners to have lodgers living with them. However, there are some lenders that are not happy with that situation and would say no. The key is to check with the lender that you're with to see if they're happy with you having a lodger or not.
And obviously, if you're in the process of buying a property, speak to your broker and just make sure they're aware of what your plans are, just to ensure that they put you with the lender that will allow you to do what you want to do, when you move into the house.

Can I get a mortgage if I am under 25?

Yes, provided you are 18 or over, you can apply for a mortgage. You will need to go through an affordability assessment like everyone else, which looks at your cash commitments, your liabilities, your income and expenditure. This is to make sure that you aren't spending more than you are earning. Once this process is done, there are other things to go through, but the answer to your question is yes!

Can mortgage brokers influence underwriters?

As brokers, we really take the time to understand and know the lenders' individual criterias and policies. We also do the same with the clients; we really try to understand the circumstances and situation that the clients are in. So when that's combined, although we can't directly influence what an underwriter does, what we can do is really understand what they're looking for and position the application in a way that the underwriter can look at it in the best possible light.  This gives the client the best chance to be accepted by the lender and by the underwriter.

Mortgage for second home - Can YOU get one?

Yes, potentially you could keep your home if you are to move house. The areas that lenders will look at is affordability, if it's affordable for you to maintain that mortgage plus the new property.  They'll look at the residential status of that property, whether it will be a second home, a let to buy or a holiday home. They'll also look at the ongoing purchase as well and what the criteria is with that property.  Factors to consider: 

1. The stamp duty charges with an ongoing purchase.

2. Whether you currently own a property.

3. Whether you're adding to your portfolio.

 So there is potential to keep your home, but it is down to criteria and affordability.

Can mortgage offers be extended?

Mortgage offers can be extended.  Each individual mortgage offer will usually have an initial expiry date, at which point the lender would reserve the right to withdraw the initial mortgage offer. However, they do appreciate that there are certain circumstances where these would need to be extended beyond the initial dates. The lenders themselves, they may reserve the right to perform additional checks, for example, an additional credit check at the point in which the offer is extended. And they might also ask for further proof of income, so perhaps more up to date payslips. However, as I said, they will usually look to assist clients with this as they appreciate there are circumstances where this needs to occur.

Can I get a mortgage if I am over 50?

Yes, absolutely you can. You may have some restrictions on the terms of your mortgage, particularly if it goes into retirement. But the short answer is yes. If you are 50 and looking for a mortgage, there are lenders that will consider you.

Mortgage where parents can help?

There are a few ways that your parents could help when applying for a mortgage. The first one is they could help out with the deposit by providing some or all of the deposit that's needed. Generally, the bigger deposit you have, the lower the interest rate you get on your mortgage. So it's definitely a benefit if parents can help on that front. The other way that they could help would be by being a party to the mortgage application with you. That's generally done at the moment through what's called a joint borrower's sole proprietor mortgage, where the parents are on the application. however, they don't own the property. The benefit from each side of that arrangement is that the "child" in this scenario can benefit from the parents' income allowing them to borrow what they need to with the enhanced affordability. And the benefit for the parents, is that they don't own the property, so they wouldn't have the additional second home stamp duty to pay

Are mortgage brokers worth it?

Using a mortgage broker can save you time and money. We can look at a comprehensive range of mortgage lenders and products. In addition to this, you have one point of contact that can guide you through from beginning to the end of your mortgage and help you to make it as stress free as possible.

I'm self-employed... can I get a mortgage?

So the simple answer to the question is you absolutely can. The main difference between somebody who's employed and self-employed, and applying for a mortgage, is the length of time that you need to have been doing it for. So for somebody who's self-employed, a lender would generally want to see a minimum of one year's accounts, for most lenders that would be two or potentially three years. The other main difference really is how they assess your current position as somebody who's self-employed.  So, again, as things stand at the moment with covid, the lenders like to check the position that you're in is still relative to where you were in previous years. But yes, being self-employed certainly doesn't stop you getting a mortgage. It does make it slightly more complicated. But that's where using a broker who knows what they're doing will give you a benefit.

Can a mortgage be withdrawn after completion?

Mortgage lenders can't withdraw mortgage offers after completion has occurred. This is because the money has legally been drawn down and the purchase or remortgage transaction has completed.  The only time a lender might be able to do this is if criminal activity has occurred or a client has made false disclosure or held information back.  Generally speaking, once the funds have been released, the mortgage offer cannot be withdrawn.

Can my mortgage cover the Stamp Duty?

This is actually a question we get asked quite a lot. I think a lot of the time people are quite interested in adding on additional costs and fees to a mortgage. With stamp duty it's very difficult to add it on. It basically involves just paying a smaller deposit. So if the stamp duty is a thousand pounds and you've got a ten thousand pound deposit, effectively, you just need to put down a £9000 deposit and use the leftover thousand to cover the cost of the stamp duty.

The other thing that is sometimes worth thinking about with this subject is whether or not you need the full deposit to cover the percentage that the lender requires.  If you do, it may be worth considering a mortgage that has cash back. Some lenders do have mortgages with cashback, which could potentially cover the cost of the stamp duty for you when you buy the house.

I have a mortgage, do I really own my own property? 

So the answer to this question is yes. Even if you have a mortgage on a property, you're still the legal owner, or owners, of the property. The mortgage is basically a secured charge against the property. It does give the lender certain rights and it does give the lender an interest in your property. Should you break the terms and conditions of your mortgage, it would potentially allow them at some point to take possession of the property and sell it to get their money back

But, as long as you stick to the terms and conditions of your mortgage, you are the legal owners of that property, throughout the term of the mortgage and beyond that, once the mortgage is paid off.

Who sets mortgage rates?

Mortgage interest rates are determined by national and world market forces.  Lenders will have different rates depending on the lender's overheads, their costs, their risk appetite, as well as other factors. Therefore, interest rates will vary from lender to lender. This is with regards to things like fixed rate, discounted variable rates, tracker rates and their standard variable rate.

When is mortgage insurance required?

Mortgage insurance is a phrase that covers a wide variety of different things. Buildings insurance, for example, is something we would recommend people have in place the whole way through the term of a mortgage and generally beyond. I think it's always worth insuring your property. If you are purchasing a property, you have to have buildings insurance in place in order to exchange contracts. 

For things like life insurance, critical illness insurance, income protection, and accident protection... these are things that we would recommend you have in place where you have a risk. Everybody's situation and circumstances are different. Everyone will have different requirements in terms of what insurance they should have. So, we would highly recommend you speak to an adviser and get advice on what is suitable for you and what you should put in place.

What mortgage can I get for £600 a month?

There's quite a few factors that need to be considered when answering this question. There is the element of the mortgage lenders, how much you are borrowing, the term that you take the mortgage over, the deposit that you place down on the mortgage, which then determines what loan to value products you can receive and the interest rate. So what we look to do is obviously set a mortgage payment to meet your budget. Sometimes this is specified by the providers due to affordability and criteria checks. But what we can do is look into those options for you.

Which lenders will use child maintenance?

There are a number of lenders that will use child maintenance when they're assessing affordability for a mortgage. However, each lender can look at maintenance in a slightly different way. Some will need it to be via a court order or through the CSA. Some are happy to take it via a personal agreement. As long as it's been received for a reasonable amount of time, be that three months, six months, 12 months, depending on the individual lender.

Some lenders won't take all of the maintenance into account. And may only asses it at 50 or 60 percent of what's being received.  Some may also want to know how old the children are and what the plans are when the maintenance stops being paid.  Becasue of the complex nature of this topic we would always recommend that you get advice.  A broker can put you in the best possible position with a lender, one that is the most appropriate or best suited to you based on your individual circumstances.

What happens at the end of your mortgage term? 

This is all dependent on how your mortgage is set up. If your mortgage is set up on capital and interest, also known as repayment, if you maintain and continue to make your payments, at the end of the term, your mortgage will be paid off and you'll be mortgage free.

If you set up the property in the form of an interest only mortgage, there is the issue of paying back the capital element of the loan.  For this you should have a repayment vehicle in place to cover that balance, whether that is an endowment, sale of property, investments, or other properties in the background in the form of buy to lets.

So, there are a couple options at the end of your mortgage term, but it's all about that initial setup and the advice you receive at the beginning.

Can I take out a mortgage to build my own house? 

Yes is the answer to the question. You do this by what's called a self-build mortgage. So, a self build mortgage is different  to a conventional mortgage in the fact that the money is released at different stages.  You can take out initial borrowing against the land that either you already own, or you're purchasing, and then funds are released at different stages throughout the build to allow you to pay for the work as it's completed.

The things to be aware of with a self build mortgage are: the lender will want to make an assessment at the start that you have enough money in savings, and the borrowing from the mortgage, whilst allowing for a contingency so that you are able to build the property and complete it. They will also want to see some form of warranty or certificates in place to guarantee the work that's being completed. Self build rates and fees are generally a little bit higher than normal mortgage rates, this is to reflect the additional risk that's being taken by the lender

Can I get a mortgage for an auction property?

When getting a mortgage for an auction property, there are a few things that you need to be mindful of. First, being you are time restricetd to around four weeks to get to completion. You must get a decision in principle before you go to auction to prove that you can actually afford the mortgage. Secondly, you need to put down a 10 percent deposit and if you can't get a mortgage, you don't get that money back.  Once the gavel falls, you are legally bound to purchase that property. 

You must also be aware that not all auction properties are eligible for a mortgage loan. You need to make sure the property reaches a certain standard to be accepted. A lender will only give you the agreed amount based on the price at which the property is being valued. So, be careful with your bids. 

If your bid goes above the valuation, which is not uncommon, you will be expected to pay the difference from your own funds.

Sometimes you can get a bridging loan which can help you in the interim to pay the costs and it can be obtained much quicker than a mortgage. A bridging loan provides you with a short term solution to buy your home before your long term mortgage can be completed. So I'd definitely say weigh up your options and speak to an adviser to make the right decision for you.

Which mortgage broker should I use? 

There are a lot of options when it comes to mortgage brokers and it can be quite difficult to know where to start. The first thing I would do is look them up online, have a look at things like Google reviews. It'll give you a good indication as to previous customers' experiences with that business. Have a look at their website. Does it give you the feeling of a business you want to work with? Speak to people you trust, your family and friends, and ask them who they've used previously. Would they be happy to recommend that person to you? Did they do a good job for them? 

And finally, speak to the broker. Every broker works slightly differently but what you want to get is a feel for whether or not they will support you right the way through the process. Ask... Will they find me the best deal? Will they liaise with estate agents and the solicitors? Will they arrange and organise my insurances to make my life as easy as possible?

Speaking to the broker directly, you should be able to get a good indication of how they'll support you through that process.

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Friday, 28 January 2022

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