Speak to the Mortgage Experts.
We present all of your available mortgage options.
We will be in touch to seek further information about your case and discuss options available to you.
Experienced administrators work with you to provide the lender with all the details required to obtain a mortgage offer.
The Process For Your Mortgage.
3 Simple Steps.
How it works and what you need to know:
What is a deposit?
A deposit is a sum of money you will pay when purchasing a property (in conjunction with a mortgage). Therefore, your deposit plus the mortgage, will equal the purchase price.
Do I have a big enough deposit?
Generally speaking, the bigger your deposit, the easier it is to get a mortgage and the better interest rate you will get. The minimum deposit that can usually get you a mortgage would be 5%. First time buyers usually find it more difficult to put down a sizable deposit, often relying on gifts from parents and other family members.
Loan to Value (LTV)
Lenders will calculate your loan to value (LTV), which often determines the products available to you. For instance, if you were to borrow £200,000 with a deposit of £38,000 (borrowing £162,000), your LTV would be 81%. If the deposit was increased slightly to £40,000, this would reduce the borrowing amount to £160,000, and the LTV would drop to 80%. This would likely reduce the interest rate as lenders have different rates at 70%, 80%, 90% LTV. It is important to discuss your deposit with your advisor as you may be able to reduce your rate by only increasing your deposit by a small amount.
Getting a mortgage with a small deposit
There are mortgages available for at 95% LTV, however these tend to be a higher rate of interest and applicants must fit lenders’ strict criteria. In these cases, the advice of a mortgage adviser is more important as mortgage options can be very restricted.
Lenders will start by assessing your income. Their methodology for this assessment will differ depending on whether you are employed, self-employed, contractor, etc. Many lenders will also include other forms of income, such as secondary jobs, overtime, commission, benefits, etc. Most lenders will multiple your income up to 4 or 5 times, however a select few lenders will be able to lend up to 6 times your income (providing you have a good credit history and meet minimum income criteria). Lenders will also investigate any monthly outgoings, debts and other credit commitments to ensure interest payments can be made. These include:
Secured loans (e.g. other mortgages)
Un-secured loans (e.g. personal or student loans)
Credit card payments (e.g. overdraft)
Hire purchase (e.g. purchased car on credit)
Before taking out a mortgage, you must also consider other additional costs, such as:
Solicitors fees (approx.. £500 - £1500)
Valuation fees (approx. £300 - £1500)
Survey fees (approx. £300 - £500)
Broker fees (approx.. £500 - £1000)
Stamp duty Land Tax (depends on property value)
Mortgage application fees (approx.. £500 - £1500)
Land registry fees (approx.. £100)
Local authority searches (approx. £500)
Costs associated with moving properties (approx.. £500 - £1000)
*All these costs are estimates and will depend on your circumstances.
Schemes that can help you with your mortgage:
A second mortgage can be added to the property, which will help you to borrow more. These are interest only and you could lend between £15,000 and £250,000. There are no early repayment charges. You need to put in a minimum of 5% of the property value and could boost your deposit by an additional 25%. The lender will share appreciation/depreciation of the property.
Rent a Room
If you have found your ideal home (at least 2-bedroom property) but can’t meet the affordability criteria, a ‘rent a room’ mortgage might be for you. By renting out a room, you can borrow up to 8 times your income. There needs to be a formal agreement with a tenant (rent agreed). The property needs to be ready for occupation on completion of the mortgage.
Help to Buy
Help to buy is government scheme, which is aimed at helping first time buyers on the property ladder or increase their deposit.
A guarantor mortgage is one that is secured / guaranteed by a third party (typically a family member).
Application in principle
Once a realistic borrowing amount has been decided and a lender has been identified, an application in principle is made. This is not a legally binding document from the lender, but it is an agreement to grant a mortgage based on the information provided. This provisionally lets you know how much you can borrow, subject to finding a suitable property in a specified time, usually 30 days. It is a relatively quick process to receive an AIP as lenders only require basic information, while also conducting a soft credit check.
Mortgage Illustration and Certificate
A mortgage illustration (ESIS) is a document which outlines all the key facts and details relating to your mortgage. Your mortgage broker will talk through this document with you to make sure you understand every aspect.
A mortgage certificate is also issued by your broker, which confirms an application in principle has been issued and the applicant has funds to make a purchase. You can use this document to provide evidence to an estate agent before making an offer.