Mortgage FAQs
Accepting the mortgage offer
If you wish to go ahead with your mortgage, then you will need to accept the mortgage offer. From this point onwards there is a large amount of work that needs to be done by your solicitor or licensed conveyor. For example, you will receive a document known as a mortgage deed from your solicitor whom will explain all the details. Is a legal contract between you and your lender and both of you will have to sign... [more]
Advantages of switching a mortgage
The four main reasons for switching your mortgage, other wise known as remortgaging, are as follows: - 1. You can releases equity in your property. 2. You can benefit from lower interest rates. 3. You can switch from a variable interest rate to a fixed rate if you think rates might rise. 4. You can switch... [more]
Bad credit remortgage
Even if you have bad credit problems, it is still possible to raise money to consolidate your debts. If you are a homeowner, a bad credit remortgage is a good solution to raise money and tackle your existing debts. There are many lending companies offereing bad credit remortgage deals to homeowners... [more]
Can I afford a mortgage?
When you are housing hunting, looking for your dream home, it is ever so easy to get carried away, and before you know it you are forking out thousands of extra pounds in order to get your perfect palace. It is very important to keep your feet on the ground. You should know in advance how much you can realistically afford to borrow, and how much your mortgage is going to cost your each month, so... [more]
Cost of switching your mortgage
This is all according to each individual lender. Some may decide to charge you for switching your mortgage, others may not. A redemption statement can be gained from your lender informing you of how much you still owe on your existing mortgage, and how much a switching charge may cost. The types... [more]
Getting a mortgage or remortgage
1. Make sure you know the differences between repayment and interest only mortgages and find out from the lender what consists of each. For example, the different types of investment concerning interest only mortgages, such as ISAs. 2. Discover the differences in repayment methods. For example, interest only loans are of a higher risk than repayment mortgages because there is no guarantee that... [more]
How to switch your mortgage
You have chosen to switch your mortgage to a new lender, these are the steps to be taken, as follows : - 1. A mortgage application form has to be completed and submitted, along with certain documents, such as bank statements, payslips or proof of identity, which will support your application. 2. At the time of your application a valuation fee will be issued, unless this is free. If it is not free then your lender... [more]
Interest only mortgages
With interest only mortgages you pay back the interest during the term, simple! You usually make other arrangement for paying back the loan, such as using an ISA. There is a risk attached to this type of mortgage though, the investment might not grow fast enough to repay the loan when its due, so you are literally gambling on the fact that the return on your investment, after tax, will be higher... [more]
ISA mortgage
As well as paying interest to your lender, you also pay into a stocks and shares individual savings account, often known as an ISA mortgage, useful to build up enough money to pay off your mortgage at the end of your term. The Advantages of an ISA. 1. ISAs are a tax efficient way in which to invest... [more]
Low cost endowment mortgage
An endowment policy is a long-term savings plan invested in the stock market. Some advisors these days recommend them as a good way of repaying your mortgage. The Advantages of a low cost endowment mortgage 1. A low cost endowment policy will automatically give you life cover, which would pay off your mortgage if you were to die during the term. The Disadvantages of a low cost endowment... [more]
Making a formal mortgage application
Once you have found the property you want to buy and decided on the mortgage best for you, then you can make a formal mortgage application. You will need to complete a long and arduous mortgage application form. If you have any problems in completing it, you can always ask your lender or financial advisor for help. But you must remember that you are responsible for the accuracy of the details you supply, to check thourally before you sign. At this point the lender will want to know about your circumstances, and if it... [more]
Mortgage offer rejected
There are 2 main reasons why your mortgage offer might be turned down, they are as follows: - 1. Due to problems with the property. 2. Due to difficulties concerning your circumstances, i.e. your age, income or credit history. If the problem relates to your credit history, it is worth asking the lender to tell you which credit reference agency they used, and contact them to obtain a copy of your record. There is... [more]
Pension mortgage
A pension mortgage system works by taking out an interest only loan and also paying money into a personal pension or stakeholder. Once you retire you will be able to cash out your tax-free lump sum, which is used to pay off your mortgage. The Advantages of a pension mortgage. 1. The lump sum collected at the end of the term, used to pay off the mortgage is completely tax-free. 2. There is no other mortgage deal... [more]
Receiving a mortgage offer
All being well your mortgage application is accepted; you will be offered the mortgage, often known as an offer in advance. This offer will lay out the terms of the mortgage offer and will often state the amount that the lender is willing to lend you, the interest rate of the mortgage, the length of time the mortgage will run for and it will also contain the conditions on which it is offering you the mortgage. It is important... [more]
Remortgage deal
Applying for a remortgage deal. You have chosen to switch to a new lender and get a good remortgage deal, these are the steps to be taken, as follows : - 1. A mortgage application form has to be completed and submitted, along with certain documents, such as bank statements, payslips or proof of identity, which will support your application for a remortgage deal. 2. At the time of your application a valuation... [more]
Repay mortgage if you switch
You can switch mortgages regardless of whether you have a re-payment mortgage or an interest-only mortgage; you can also change your repayment method too. Even people who have endowment mortgages will take the chance to switch part of their entire mortgage to a repayment mortgage. However, if you plan to do this you must seek independent advise... [more]
Repayment mortgage
A repayment mortgage consists of instalments throughout the term of the loan to pay off the money you borrowed together with the interest. The Advantages of a repayment mortgage. 1. Repayment mortgages are considerably flexible. If you find yourself in trouble concerning your monthly payments, then your lender may increase the term, allowing you to reduce them. 2. Repayment mortgages... [more]
Standard rate mortgage
Each lender has its own standard interest rate it charges for its mortgages, traditionally known as the ‘standard variable rate.’ This rate is usually higher than the Bank of England base rate, but follows its ups and downs, approximately. The many different lenders charge many different standard rates. For example, in April 2003, the lowest standard rate was 5.59% and the highest was 7.49%... [more]
Switch mortgage for flexibility
If your income is not as reliant as when you first took out your mortgage, then you may wish to switch mortgage to a more flexible mortgage as they offer greater scope. They enable you to adjust your repayments as and when requested, so you can increase your repayments when you can afford to, and reduce or miss a payment when you can’t. Simple!... [more]
Switch mortgage to release equity
You will always gain equity in your home if the value of your property has increased since you brought it. You can switch mortgages to borrow extra money, and at the same time get a better deal. For example: - If the value of your home is £250,000 and your outstanding mortgage is £185,000, you have £165,000 worth of equity. You could then approach a lender to get a new mortgage, for sat £200,000... [more]
Switch mortgage to save money
It is likely that you may be paying higher interest rates compared to others that are on the market. If this is the case, then research into the matter to see if you can benefit from switching your mortgage. You may also find yourself coming to the end of a good deal, a discounted or fixed deal for expample, and you are now paying your lenders standard rate. If this were the case then it would be beneficial to switch... [more]
Switching my mortgage
Some people who have had the same mortgage for a long period of time decide it is high time they switch mortgage or lender, as the market for loans and mortgages has grown significantly, introducing many advantages and benefits. Switching mortgages could not be easier, simply change one mortgage to another! You don’t even have to change your lender as they can often offer you valuable advice... [more]
What about a 25 year mortgage?
A 25 year mortgage is especially popular with first time buyers. The main reason being the longer the term of mortgage, the lower the monthly repayments will be. You must take care that the term does not extend into your retirement though, as you will find it difficult to keep up with repayments. Alternatively why not think about a shorter-term mortgage that saves you interest and frees you from your mortgage... [more]
What about getting a mortgage certificate?
The very first thing you must do before even looking at a property to buy, you must obtain a mortgage certificate, otherwise known as a mortgage promise or an agreement in principle. This is a document from a lender showing how much they will be willing to pay you. These statements only last for a short period of time, usually 3 months, so make you know how long yours lasts for... [more]
What are base rate trackers?
A base rate tracker mortgage tracks the bank base rate (BBR), by which the interest rate is set by the Bank of England each month, where the lender sets their rate a percentage above or below this. Almost all lenders offer a tracker mortgage of some sort. Here is an example to help you understand. Say the bank base rate is 8%. A mortgage that is 1.5% above the base rate for 2 years will start off at 9.5%, so if the base rate moves during this period, so will your rate, but always with a 0.5% margin... [more]
What are capped rates?
A capped rate is similar to a fixed rate. It is guaranteed that between the capped period, usually 2 to 5 years, you will not have to pay interest rates that go above a certain level, with an additional advantage that if your lenders interest rate tips below the capped rate, you will pay theirs! When the capped rate expires you will revert to your lenders rates. You can also get a discounted capped rate which can offers.. [more]
What are discounted rates?
A discounted rate is a set deduction off the lenders standard rate for a certain period of time. When the standard rate goes up, your rate will go up, and when the standard rate goes down, so too will your rate. For example, a 4% discount off a 7% standard rate leaves you paying 5%. However, if the standard rate rises to 8%, you pay 6%. If it falls to 6% you pay 4%... [more]
What happens after completion?
After completion, your solicitor will contact your lender to confirm that completion has taken place, and at some point you will receive a letter from your lender confirming that the mortgage is active and the amount of your monthly repayments. Your first payment is usually slightly more than your standard monthly payments, depending on when in the month completion occurred. For example, if your mortgage... [more]
What if I already have a mortgage?
It is possible to have more than one mortgage on your home. Many banks, building societies and lending companies will lend if there is sufficient “ free equity” in the property. This is the difference between what the property is worth and what you owe on any existing mortgages. Some people think that if they pay their first mortgage they can miss payments on any second or subsequent mortgage... [more]
What is a cash back deal?
Some mortgage deals offer cash back as an addition. The lender will pay you a cash lump sum once the mortgage has been set up to use in any way you wish. The amount of cash back available depends upon the lender and type of deal, and sometimes the amount borrowed. There are two different types of cash back deals, they are as follows: - 1. The deals that pay a fixed sum, often between £100... [more]
What is a mortgage?
In basic terms, a mortgage is simply a loan that you can take out to help you buy a property. The loan is secured on the property, so if you fail to keep up with your re-payments, then the lender can evict you and sell the house. If you wish to take out a mortgage then you will have to decide on what interest rate deal to go for, and by what method you are going to use to repay your mortgage... [more]
What mortgage deals are there?
There are many, many different mortgage deals out there, and this is because each lender has its own standard Interest Rate that it charges on its mortgage, often called the standard variable rate. Lenders also promote ranges of special deals at special interest rates, although these deals are often aimed at first time buyers, people switching mortgages but not moving from the house, (known as re-mortgaging) and people who wish to move house... [more]
Where can I get a mortgage?
There are many different lenders, companies and business by which you are able to get a mortgage, but Lenders and Intermediaries are the two main branches. Below are details of each. Lenders. Mortgage lenders such as building societies, banks and specialist lenders sell mortgages direct to borrowers. You are able to go to them for advice, and they recommend and sell you a mortgage from their own range. This can limit your choice so shop around and see what different deals are on offer, but only do this if you are... [more]