Different Types Of Mortgages Explained
First time buyers
Buying your first home is a milestone in your life, and whilst arranging the finance may not be as exciting as planning the decoration or furnishings it is nonetheless very important. Choosing the wrong lender or deal can cost you hundreds or even thousands of pounds over the lifetime of a mortgage. This is another reason why it is so important to get advice from a professional who knows the market and is able to recommend products based on your individual circumstances.
Remortgaging
There are a number of reasons why you might want to remortgage your property: saving money on your monthly payments; reducing or increasing the term of the mortgage; borrowing additional funds for home improvements or capital raising for other reasons.
Remortgaging is usually carried out when you come to the end of your deal and there are no penalties for switching. We will search the mortgage market to see whether it is more beneficial to move lender or stay with your existing one. In most cases, lenders will pay for a revaluation of your property and the legal costs of moving the loan or may provide a cash back to help with the costs.
Building your own property
Some people prefer to design and build their own home, and there are a number of lenders who can facilitate this. Funds are usually released in stage payments to enable the builder to finance the build as it progresses. The main reasons for this are:
- You only pay interest on the amount you have drawn down – saving you money.
- You can’t borrow more than 80% of the current value of the property – protecting the lender
Before a lender will agree to providing finance for a self build project you will need to provide a full breakdown of the costs for the build, along with architect’s plans that have been passed by the local authority to confirm it meets building regulations and is suitable for the area. Some lenders will require an architect or other professional to act as a project manager while the build is taking place and will be expected to report to the lender on each stage as it is completed.
Buying to let
If you are looking to purchase a property or properties with a view to letting, you will need a minimum deposit of 20% of the purchase price, although most lenders require 25%. The mortgage affordability is based on the rental income and in some cases your earned income as well. There have been a number of changes in the way buy to let mortgages are granted and as a result they are not as readily available as previously.
Purchasing a property is stressful and daunting, especially for those who have never done it before. It is the biggest purchase you are likely to make in your life and it makes sense to get advice from a professional who will guide you through the maze of deals on offer. However, there is so much more to buying a property than just choosing the right deal and lender.
Speaking to one of our advisers before you start the journey will set you on the right path. We will be able to provide you with information such as the amount you can borrow, the size of deposit you will require, strategies for getting the property at the best possible price and most importantly whether or not you can get a mortgage based on your credit report, income and outgoings and other factors that are peculiar to each lender.
Our advisers know the market and whether a particular lender will be likely to lend, this can save a huge amount of time and wasted applications to lenders who are unlikely to accept your proposal based on you meeting their criteria.
Each time an application for credit is made, the lender records a search on your credit file. Multiple searches can have an adverse affect on your credit score meaning there is a greater likelihood of being declined by subsequent lenders.
You will require the services of a solicitor to submit a formal offer to the seller. If you don’t have one, we can point you ineffective direction as we have built up relationships with a number of solicitors over a long period of time.
The government have recognised that finding a large enough deposit to access the best rates can be prohibitive, and have introduced a range of initiatives designed specifically to aid borrowers facing these issues. They have called them “Help to Buy” schemes. Our advisers can inform you if you qualify and whether or not any are suitable for you.
As well as a deposit you will require to have money to pay the solicitors fees, these are usually payable to the solicitor with the deposit in the week before you move.
Repaying The Finance
First time buyers
Buying your first home is a milestone in your life, and whilst arranging the finance may not be as exciting as planning the decoration or furnishings it is nonetheless very important. Choosing the wrong lender or deal can cost you hundreds or even thousands of pounds over the lifetime of a mortgage. This is another reason why it is so important to get advice from a professional who knows the market and is able to recommend products based on your individual circumstances.
Remortgaging
There are a number of reasons why you might want to remortgage your property: saving money on your monthly payments; reducing or increasing the term of the mortgage; borrowing additional funds for home improvements or capital raising for other reasons.
Remortgaging is usually carried out when you come to the end of your deal and there are no penalties for switching. We will search the mortgage market to see whether it is more beneficial to move lender or stay with your existing one. In most cases, lenders will pay for a revaluation of your property and the legal costs of moving the loan or may provide a cash back to help with the costs.
Building your own property
Some people prefer to design and build their own home, and there are a number of lenders who can facilitate this. Funds are usually released in stage payments to enable the builder to finance the build as it progresses. The main reasons for this are:
- You only pay interest on the amount you have drawn down – saving you money.
- You can’t borrow more than 80% of the current value of the property – protecting the lender
Before a lender will agree to providing finance for a self build project you will need to provide a full breakdown of the costs for the build, along with architect’s plans that have been passed by the local authority to confirm it meets building regulations and is suitable for the area. Some lenders will require an architect or other professional to act as a project manager while the build is taking place and will be expected to report to the lender on each stage as it is completed.
Buying to let
If you are looking to purchase a property or properties with a view to letting, you will need a minimum deposit of 20% of the purchase price, although most lenders require 25%. The mortgage affordability is based on the rental income and in some cases your earned income as well. There have been a number of changes in the way buy to let mortgages are granted and as a result they are not as readily available as previously.
There is no mortgage deal that is right for all purchasers or those wanting to remortgage, and certainly, no one deal that is the best for everyone.
It is important that you understand the benefits and drawbacks of the different types of mortgage available. The information below is a simplistic guide to the types of mortgage available. We will advise you according to your circumstances to get the most suitable deal for you.
