Frequently Asked Questions

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Mortgages

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General

You can get a mortgage from a bank, building society or a specialist mortgage lender. You can apply direct to these companies or you can use a broker. A broker will advise you on the right deal for you as well as assisting in the application stage.

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Some mortgage brokers, like ourselves, offer advice from the whole of the market. A tied advisor will only offer advice from a select number of lenders. This may mean you do not get access to the best products or miss out on the right mortgage for you by using a tied advisor.

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There are a number of factors that determine how much a lender will lend. These include, but not limited to, your income, credit commitments, housing costs, dependant adults or children, the size of deposit or equity available & the mortgage term.

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The right mortgage term for you depends on your individual circumstances. Mortgage terms can vary between 5 - 40 years, although the majority of lenders will want the mortgage to be repaid before retirement and usually by a specific age, such as 75. The shorter the mortgage term, the less interest you will pay in total, however your monthly mortgage payments will be higher. The longer the mortgage term, the more interest you will pay, this does however give you lower monthly payments which may be more manageable. Speak to one of our advisers to discuss your specific requirements.

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You can remortgage at any point, however your existing lender may charge you to redeem your mortgage (particularly if you are within your initial deal with them). To discuss your circumstance in more detail and find out if remortgaging is right for you, talk to one of our advisers.

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Before applying for a mortgage it is a good idea to understand what has been reported to credit reference agencies about you. If you find you have had some adverse credit, such as missed payments, a CCJ or defaults, you may still be able to find a mortgage lender. Whilst most high street lenders will shy away from this lending, there are specialist lenders available that will look to help. It is important that you understand what is on your credit file and who will be prepared to lend before applying for a mortgage, this is where a whole of market adviser can really help. Talk to one of our advisers to find the most suitable lender for you.

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Lenders criteria for the self employed can vary from lender to lender drastically. From the length of time you have been self employed, what income they consider towards your mortgage and what proof they will require for this will be different for every lender. It is vital that before you submit your application you know your meet the lenders criteria to ensure you are not wasting time and money. Speak to one of our advisers today to give yourself the best chance of having your mortgage agreed.

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Most lenders will allow you to move your mortgage to a new home providing that you and the new property meet their requirements. To discuss your circumstance in more detail talk to one of our advisers today.

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Most mortgage lenders will allow you to increase your mortgage for a variety of reasons providing you meet their requirements. The amount and cost of the new borrowing will depend on your current loan to value as well as your income and commitments.

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No one knows when interest rates will rise, however if you are concerned that they may rise and this may increase your mortgage payments to more than you would like, you could potentially be protected from this with a fixed rate mortgage. Speak to one of our advisers today to discuss your options.

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The type of mortgage deal you are on will determine if a rate rise effects your mortgage payment straight away. If your are on a tracker or variable your monthly payments will generally increase immediately. If you are on a fixed mortgage then the rate rise will have no impact on you until the end of your fixed term.

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Interest is calculated on the outstanding debt either daily, monthly or annually. If you were to make a payment to your mortgage to reduce the debt owed and the mortgage is calculated daily, you would then start to see reduced interest being charged immediately.

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If you are purchasing a freehold property you will need to arrange building insurance to comply with the mortgage conditions. There is no requirement to arrange any life cover however it is advisable to talk through your circumstances to ensure you have adequate cover in place to protect you and your family. Our advisers have a number of tools available to help you review your situation and advise what is best for you.

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Typically at the end of your initial mortgage deal with a lender you will move on to their Standard Variable Rate. This may mean you are not on the most competitive deal, you may find your monthly payments suddenly increase, as well as being at risk from rates increasing making your monthly payment more expensive. You can however move onto a new deal with either the same lender or another lender. We can help you talk through your circumstances and advise you on the best option for you.

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Fees & Charging

We typically charge a fee of £190 to be paid on application and £190 to be paid on reciept of a mortgage offer. These fees can vary depending on circumstances. We will disclose all costs to you before submitting an application so you are fully aware of any charges you may incur.

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This will vary from lender to lender. Typically a lender will charge a product fee for the mortgage these can range from £0 - £2,000 but can be higher. We disclose all costs before applying for your mortgage.

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Some mortgage lenders will allow you to add certain fees to the mortgage, typically this is usually the application fee for the mortgage.

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The majority of lenders do not charge to value your property if you are remortgaging and some have started to offer a free valuation when purchasing as well.

For those who do charge the fees will be linked to the value of the property and can range from £100  - £2,000 and can be higher in some circumstances. The type of survey you require will also determine how much this may cost. 

The majority of lenders do not charge to value your property if you are remortgaging and some have started to offer this when purchasing as well.

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To help with the purchase of a property you will need a solicitor their fees will vary from around £800 - £2500 and again can be higher depending on the work required. If you are remortgaging many lenders will cover the cost of the legal work required for you.

Once you have bought the property you will need to pay stamp duty, the costs of this are covered separately in our FAQ

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Purchasing

Typically the minimum deposit required is 5%. There are a select few 100% options that you could be eligible for from various lenders. The larger deposit you have available the better the interest rate will be available for you. Lenders also see customers with larger deposits to be less risky and may be willing to lend more if a higher deposit is being used. Speak to one of our advisers today to see what options are available for you.

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A Help to Buy ISA is a type of ISA designed to help first time buyers save for their first home. You will receive a 25% bonus on your saving when you use the money to purchase a property, up to a maximum of £3000. The accounts are per person rather than household, the maximum deposit you can place in to open the account is £1200, with a maximum monthly contribution of £200 from then on.

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With a Help to Buy Equity Loan the Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest. With London Help to Buy the equity loan can increase up to 40%. You won’t be charged interest on the equity loan for the first five years of owning your home. This scheme is only available on new build homes.

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Shared ownership schemes are a mix of buying and renting. You buy part of the property and rent the other part at a reduced rate. Anyone is eligible for shared ownership providing household income is below £80,000 (£90,000 in London) Once you have bought your initial share you will have an option to buy a bigger share of the property at a later date, this is known as stair-casing. Your monthly payments will consist of a payment to the mortgage provider for the share you have bought, and a payment of rent to the landlord who owns the remaining share in the property.

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Right to Buy allows most council tenants to buy their council home at a discount. You can apply to buy your home if you have lived there for more than 3 years, you are a council tenant (or where when it was sold to your current landlord) and the property is your main home.

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Buying at auction can be costly if you are not prepared. Once you have been successful with your bid you will need to pay a non-refundable 10% deposit and commit to completing on your purchase within 28 days. It is vital if you are thinking of buying at auction that you have your finance plans in place as well as having done your homework on the property so you are aware of what you are bidding on. We can help you find the right lenders for your auction property so you can go and bid in confidence.

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Stamp duty rates are calculated on the property purchase price. Stamp duty rates are different for residential and commercial property.

What are the current Stamp Duty Rates?

The current stamp duty rates in England, Wales and Northern Ireland are shown in the table below:

Stamp Duty Rates
                                                                                                                                          Band                                  Normal Rate        Additional Property

less than £125k                          0%                       3%*

£125k to £250k                          2%                        5%

£250k to £925k                          5%                        8%

£925k to £1.5m                          10%                     13%

rest over £1.5m                         12%                      15%

    * An additionl property purchased for less than £40k will attract 0% tax. For purchases from £40k to £125k the rate will be 3% on full purchase price.                                                                                                                                                                     

For a single property purchase, no SDLT will be paid on the first £125,000. Between £125,000 and £250,000 buyers will pay 2% within this band, 5% on the portion between £250,000 and £925,000, 10% within the next band up to £1.5 million and 12% over that. For additional property, such as buy to let or second homes, there is now a 3% surcharge applied to all bands

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There are a number of different types of survey. What you will need depends on the condition & age of the property, and how much your budget is. Typically there are 3 options a mortgage valuation, a homebuyers report or a full building survey.  

The Mortgage valuation; Used by mortgage lenders to asses what the property is worth, note any major damage and confirm it is sufficient security for the loan.                                                                                                                                                                   Homebuyers Report; More detailed report however still "non-intrusive" so the surveyor will not move any furniture, lift floor boards or drill holes. This means the report they produce will be limited to what they can see.                                                                       

Full Building Survey; Building surveys can be expensive but maybe worth the cost, particularly if looking at old or unusual properties. The surveyor will go into the attic, check behind walls, and looking between floorboards and ceilings, you will receive a thorough report including advice on repairs, potential costs and what may happen if not repaired.

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Types of Mortage

On a repayment mortgage your monthly mortgage payment will include the interest for the month as well as a payment towards the initial capital borrowed. Typically as the amount owed decreases, the % of your monthly payment going towards interest will decrease whilst more will be used towards repaying the capital every month.

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On an interest only mortgage your monthly payments will only include the interest amount due and no capital will be repaid. This will mean you will have lower monthly payments. However you will need to have a way of repaying the capital at the end of the mortgage term.

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A fixed rate mortgage has a fixed interest rate for a set period of time, this is generally either 2,3,5,7 or 10 years. A fixed rate mortgage guarantees you know how much your monthly payments will be for the period you are fixed for.

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Tracker mortgages track a rate specified by the lender, typically the Bank of England base rate, at a set margin above or below it. This means your payment will change if there is any changes to the base rate

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A Lifetime Tracker works the same as a regular tracker, however this is for the full term of the mortgage rather than an initial period. As this is a tracker product and tracking a rate specified by the lender, your mortgage payments may increase and decrease depending on the movement of the interest rate.

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An offset mortgage is where the lender will offset any savings you have in place with them against your mortgage debt. You then only pay interest on the difference in the balance of your savings and your mortgage. This can potential save thousands of pounds and have your mortgage repaid quicker. Generally savings are not tied in and are still accessible if required. Offsetting can be a fantastic way to make your money work harder for you.

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A Discount Mortgage is where a lender offers a discount on another rate, typically the SVR, for a specified time. Usually this is for 2,3 or 5 years. As this is linked to the SVR, if the SVR was to move up or down in rate, your monthly payments would also increase or decrease accordingly.

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A buy to let mortgage is a mortgage on a property that you plan to let out. Typically the amount being lent is calculated using the rental income the property will receive as well as the property value rather than your own personal income. There have been many changes in the buy to let market over the past few years making it difficult to know which lender is right for you. Our advisers can advise you which is the best mortgage for your circumstances.

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A let to buy mortgage is a mortgage arranged on your current residential property so that you can rent it out and purchase a new home. Depending on your circumstances you may be able to raise money on your existing property to help fund a new purchase rather than needing to sell. There are specific tax implications that you will need to consider before doing this.

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Guarantor mortgages can help you buy a home even if you have no deposit or your financial circumstances may make it difficult. The guarantor will not own a share of the property or be named on the deeds they will however be responsible for paying the mortgage should you not be able to. They will sign a legal agreement to make your repayments for you if you fall behind.

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Building your own home from scratch is the dream for many people. However financing it can be the thing of nightmares if you do not know where to go. Self build mortgages have become a niche due to lack of demand and concerns over the risk from some lenders. However have a good whole of market mortgage adviser will ensure you find a lender who is willing to help. Talk to one of our advisers today to see how we can help that dream become reality.

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Bridging finance is short term lending usually secured against an asset like a property. You may require bridging finance if you need quick access to funds or the property you are buying needs some renovation before being suitable for a mortgage lender to be prepared to lend on.

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Jargon Buster

A mortgage is a loan that a lender secures against your property. A mortgage can be used to buy a property or re arrange existing finance.

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An Agreement in Principle (or Decision in Principle) is the first step towards having your new mortgage approved. You will need to confirm to the lender your income, outgoings and what you require from your mortgage. The lender will use this information to assess whether the mortgage is affordable and also complete a credit check. If you are successful you will receive confirmation of this from the lender. An estate agent will want to see this confirmation when you are viewing properties to know you are a serious buyer who can afford the property you are looking at. If you require an Agreement in Principle speak to one of our advisers today

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A deposit is the amount of money you are using to purchase a property alongside the mortgage. A higher deposit will mean a lower loan to value which will mean you maybe able to get a lower interest rate for your mortgage

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You family or friends may be willing to gift you money to help with the deposit towards purchasing a property. The lender will want to ensure this gift is not being loaned to you, and the person giving you the deposit will not retain any interest in the property. Typically a lender will want a letter from the person(s) gifting the money to confirm this.

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LTV means Loan to Value. Loan to value effects the rate you receive from a lender. The lower the loan to value the better interest rates available. It is calculated by taking the amount of the mortgage, dividing it by the property value and multiplying by 100 to get a percentage. i.e. £160,000 mortgage on a property valued at £200,000 would be 80%. 160,000/200,000 x 100.

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Equity is the calculated by using the value of the property and taking away the mortgage amount. i.e £200,000 property value with £160,000 mortgage would leave £40,000 equity. The amount of equity you have can allow you to get a better deal on your mortgage, or you maybe able to borrow against this equity in the future.

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ERC stands for Early Repayment Charge. Depending on the arrangement you have with your lender, there maybe an ERC to be paid should you decide to repay part or all of the mortgage. Typically ERCs are for the length of the fixed, discount or tracker rate you are applying for. Some mortgage may allow a specified overpayment allowance to allow you to make some overpayment without incurring charges

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SVR stands for Standard Variable Rate, you will typically go on to this rate at the end of your initial deal with a lender. A standard variable rate is a variable rate that can move up or down at the lenders discretion, if you are currently on your lenders SVR speak to one of our advisers today to see if we can save you money.

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The Bank of England Base Rate is is the interest rate that the Bank of England charges for secured overnight lending. The Bank of England meet on the first Thursday of every month to decide if this rate needs to change. If the Bank of England Rate changes this may have an impact on your monthly mortgage payment depending on the type of mortgage you are on.

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APRC stands for "Annual Percentage Rate of Charge". This figure will illustrate the cost of your mortgage for the whole term including any fees payable. This will take into account the initial rate you are on as well as any standard variable rate you may move on to after the intial deal has expired. 

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The freeholder of a property owns the property and the land it stands on outright. You are responsible for all maintenance of the property and land.                                            

A leaseholder owns the property for the length of the lease agreement, at the end of the agreement the ownership reverts back to the freeholder. Leasehold properties are usually flats. The length of the lease can have an effect on the property value, anything under a 70 year lease can sometimes be difficult to mortgage. You have the right to extend a lease if you have owned it for 2 years, providing the original lease was over 21 years, the cost of this will depend on the property. As well as the length of the lease you will also need to consider the cost of the service charge (maintenance of communal areas, repairs), ground rent, building insurance and any administration charges from the freeholder. 

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A second charge is a type of secured loan or debt secured against a property. However they have secondary priority behind the first charge, which will typically be your mortgage lender. If the property is sold the first charge will be repaid first, any second charges will then be repaid, any additional funds would then be paid to you.   

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MMR stands for Mortgage Market Review which came into force in April 2014. This has changed how lenders calculate how much they are willing to lend. There is now more focus on affordability and ensuring you can repay your mortgage both now and in the future should rates rise. Lenders will now typically want to know more about your spending habits to ensure you do not over commit yourself.

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Conveyancing is the process of legally transferring home ownership from the seller to the buyer. If you are taking out a mortgage you will require a solicitor or conveyancer to do this. The legal work involves:

- examining the contract and supporting documents and raising queries with the sellers solicitor 

- local authority searches 

- checking "title register" and "title plan" at Land Registry 

- checking flood risk 

- water authority searches 

- chancel repair search 

- environmental search 

- arranging exchange of contract and completion dates                                                                               

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