FAQs – Catagories
Frequently asked questions
What Proof Do You Need of My Identity and Income?
Typically, the documents you might need to provide include: three months of payslips; bank statements; proof of identity; proof of address; proof of deposit; existing mortgage statement (if applicable) and business accounts or SA302’s if you are self-employed.
What does a decision in principle mean?
A decision in principle shows what a lender could be prepared to lend you. It’s also known as a mortgage in principle or an agreement in principle. It’ll give you an idea of what you can afford – handy for when you start looking for your dream home.
However, a full mortgage application must be completed to secure a formal mortgage offer. That bit comes once you’ve offer accepted on the house you want to purchase.
What’s the difference between a fixed-rate mortgage and a variable-rate mortgage?
With a fixed-rate mortgage, the amount you pay stays the same for an agreed term. This gives you peace of mind knowing your monthly repayments won’t change within that term – making budgeting easier.
By contrast, with a variable-rate mortgage, the amount you pay can go up and down with the Bank of England base rate.
Not sure what the base rate is? It influences the interest rates that lenders charge for things, such as mortgages and other loans. So, if the base rate rises, your monthly repayments are likely to go up, and vice versa.
How can I pay off my mortgage more quickly?
If you want to pay off your mortgage more quickly, you could look at making overpayments. Most of the lenders allow 10% annual overpayments without incurring early repayment charges. Do check lender’s terms and conditions.
How long will house purchase take?
Usually it takes from 6- 12 weeks. Mortgage process is just a tiny piece in the purchase puzzle! Conveyancing work usually takes most of the time, therefore pay attention when choosing a conveyancer.
Can I take a new credit card/ loan whilst in the mortgage process?
Avoid taking any new credit commitments, as no matter that you have received a formal mortgage offer, before releasing funds, the lender might do an additional credit check and the offer might be pulled off.
What is max age for a mortgage?
There is no single answer to this. Most of the lenders lend up to the 70th birthday of an older applicant. However, there are many who go beyond! Don't forget there are retirement mortgages too.
How long should I fix my mortgage for?
There’s a range of factors to consider here, including interest rates, mortgage costs, and also your particular plans.
Within the market, deals typically vary from two-year fixed-rate deals, through to 10-year fixed-rate deals.
You may warm to the idea of your monthly repayments staying the same for a decade. But remember that if your circumstances change and you do need to sell during that time, you could face large early repayment charges.
If you think you might end up moving in a few years, a shorter deal could be more appropriate.
Can I get a mortgage with adverse credit?
Depending on your situation and what kind of adverse you have, it might be possible to obtain a mortgage. If not from one of the high street lenders, then one of the specialist lenders might look at it.
First time buyer – Frequently asked questions
Can I buy a property without a deposit?
The short answer is yes. You can buy a property without a deposit at the moment. However, it will either have to be based on your proves or rental etc. or you will have to get a guarantor. Give me a shout and we will discuss further.
If I am a first time buyer at the age of 50, can I still get a mortgage?
100% Yes. Lenders have different maximum ages; however, most of them go up to the age of 70 without requiring proof of pension. It's never too late to buy your dream home.
What other fees will I have to pay?
Conveyancing and legal fees is unavoidable. Stamp duty depends on the purchase price and stamp duty allowances. There might be a charge for property value, or product fee as well.
How long should I expect the process to take?
Depending on whether you are buying a chain-free property or not, purchases usually take from 6 to 12 weeks. However, depending on the length of the chain, these timescales might be completely different.
How long are offers valid?
Usually, offers are valid for six months. Sometimes, they can be extended depending on the situation. New-build property offers are usually valid for a longer period of time.
Residential – Frequently asked questions
Can I keep my current property and buy a second residential property?
In fact, you can, as long as you pass the lender's affordability checks. Bear in mind, it will be your additional property, so stamp duty surcharge will apply.
Can I use a 100% mortgage for a next time purchase?
Unfortunately, no 100% mortgages are only available for first-time buyers to help them get on the property ladder.
If I had a mortgage 10 years ago, but sold the property, am I a first-time buyer?
If you owned a home in the past, but sold it, you do not count as a first-time buyer.
How much deposit do I need?
Currently, a 5% deposit is the minimum required by most lenders. However, the required deposit might be impacted by the property you are purchasing.
Is it easier to get a mortgage as a second-time buyer?
Strictly speaking, eligibility and affordability criteria for a mortgage are the same whether you are a first or second-time buyer.
Buy to let – Frequently asked questions
Can I buy a buy to let property, as a first time buyer?
Most lenders require you to own your property. However, there are some lenders willing to lend if you are in rented accommodation or living with parents/partner, etc. So, yes, it is possible.
What is a minimum deposit for a buy to let purchase?
A minimum currently is 20%, however, most of the lenders won’t lend without 25% deposit. Standard is 25%
How much can I borrow?
Unlike residential mortgage, where the amount you can borrow is based on your income, a Buy to Let mortgage is assessed on an expected rental that the property is expected to generate.
What is house in multiple occupation (HMO)?
If you are planning on letting out your property to several tenants who aren’t members of the same family it may be a HMO. A property is classed as HMO if at least 3 tenants live in it, forming more than one household, and use shared facilities like the toilet, bathroom, kitchen etc. If you are thinking of doing so, HMO license might be required.
Can I buy a house and rent it to a family member?
No, if you are looking to get a buy-to-let investment mortgage on it. If you are looking to rent it out to your family member, you need a regulated buy-to-let mortgage.
Let to buy – Frequently asked questions
What is let to buy?
If you have enough equity in your home, you remortgage and release some cash to put down a deposit on a new home. You remortgage on let to buy the product, where the mortgage available will be assessed on projected rental income. And you move out to your new residential.
What is the lending criteria for let-to-buy?
Minimum equity required to stay in the property 25%. Proof of onward purchase will be required.
What are the cons of let-to-buy?
You are now responsible for two mortgages. If you have tenants that is brilliant, however if you don’t the lender doesn’t care, you are liable for your mortgage payments. You will be hit by stamp duty surcharge which currently is 3%, as you will have additional property.
What are the pros of let-to-buy?
It can help ease the pressure when you’re in a property chain. Don’t forget advantage of that potential value increase.
Remortgage – Frequently asked questions
What is a remortgage?
Remortgage usually is moving your current mortgage to a different lender, however sometime you might remortgage with your current lender if you need to change the mortgage amount, term etc.
What is the most common reason for remortgaging?
The most common reason is to cut the cost of the mortgage. Sometimes a new lender offers a much more competitive rate, and it makes financial sense to move over to them.
Can I raise funds then remortgage?
There is a potential to capital raise, as long as you have sufficient equity, and pass affordability checks.
What costs are involved in remortgaging?
You will have to pay your current mortgage exit fee. Most of the lenders usually offer free valuation, however, there might be a product fee payable. If you are remortgaging then your current deal hasn’t ended yet, you might need to pay early repayment charges. Conveyancing – even though lenders usually offer either free legal work or cashback which can be used against these costs.
When to start the remortgage process?
Mortgage offers are usually valid for 6 months, so if your current deal ends in less than 6 months, you can definitely look around for a better deal.
Protection – Frequently asked questions
Is life insurance compulsory when taking out a mortgage?
There is no legal requirement of getting life protection. However strongly advisable. If the worse were to happen, don’t you think your family will have to deal with enough emotional consequences, carrying a financial mortgage burden would only make things worse?
Is critical illness cover expensive?
Price depends on your age, health conditions if any, your BMI etc. The younger you take out any insurance policy the cheaper it will be.
What does guaranteed premiums mean?
Let’s say you took out life protection at the age of 30. It costs you £35 to cover your mortgage, if you took it on a guaranteed premium basis for 30 years this means, your monthly payments won’t change, no matter the fact that you are getting older or gaining a few pounds, etc. As long as you do not amend your cover.
Can I have multiple protection policies?
Yes, there is nothing to stop you from not only having multiple policies but also having them with different providers. Clients usually choose to go with one provider due to the ease of underwriting or single direct debit, but it is entirely up to you.
Can I cancel my protection policy?
Yes, you can cancel your protection policies at any time by simply canceling your direct debit. However, I strongly advise you not to cancel any policies until you have new ones in place, to protect you from being uninsured.