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What is a Mortgage?
A mortgage is a sum of money borrowed from a bank or building society in order to purchase a property. The money is paid back to the Lender over a fixed period of time together with accrued interest.
A mortgage is a sum of money borrowed from a bank or building society in order to purchase a property. The money is paid back to the Lender over a fixed period of time together with accrued interest.
What is a Repayment Mortgage?
With a repayment mortgage your monthly payments consist of both the capital amount borrowed together with accrued interest. The capital outstanding reduces until it is fully paid off at the end of your chosen term. In the early years, you will be paying back mainly interest.
What is an Interest Only Mortgage?
With this type of mortgage you only repay the interest accrued on the mortgage each month. The most important fact about this mortgage is that the capital borrowed does not reduce throughout the term and at the end of the term, the whole borrowed amount will still be outstanding.
With a repayment mortgage your monthly payments consist of both the capital amount borrowed together with accrued interest. The capital outstanding reduces until it is fully paid off at the end of your chosen term. In the early years, you will be paying back mainly interest.
What is an Interest Only Mortgage?
With this type of mortgage you only repay the interest accrued on the mortgage each month. The most important fact about this mortgage is that the capital borrowed does not reduce throughout the term and at the end of the term, the whole borrowed amount will still be outstanding.
How do you repay an Interest only mortgage?
It is usual for the borrower to take out a savings or investment plan at the same time as applying for the mortgage; this could be an ISA, Pension or Endowment plan. Another way an interest only mortgage can be repaid is by selling the property.
What is a Fixed Rate Mortgage?
With a Fixed Rate Mortgage the interest rate you pay stays the same for a fixed period of time pre-arranged with the lender. This can be between 1-25 years.
What is a Capped Rate Mortgage?
A Capped Rate Mortgage is similar to a fixed rate, however the interest rate is “capped” at a certain level and cannot go above this level. If the interest rate falls below the capped level, the rate you pay will fall as well.
What is a Discounted Mortgage?
This option is linked to the lenders Variable Rate. The Lender may offer you a discount to their Variable Rate for a specified period of time. With this option there is no certainty what your future payments could be.
What is a Tracker Mortgage?
The interest rate “tracks” the bank of England Base rate. The rate will either be discounted from the base rate or track above the base rate. When the Bank of England base rate changes, so will your interest rate.
What are Cashbacks?
The Lender may offer you a cash incentive once the mortgage has been taken out. Although Cashbacks can be offered on all mortgage types, they are most common when you apply for a Variable Rate Mortgage. The interest rate will normally be higher.
What is a Flexible mortgage?
Flexible mortgage provide greater freedom with your finances, allowing you to overpay, underpay, borrow back overpayments and take payment holidays. Many people use flexible mortgage to accelerate the repayment of their mortgage, they do this by regular and lump sum overpayments.
Most mortgage lenders now build in some flexible features into the traditional mortgage deals, which means that you now get flexible fixed rates, discounts and trackers.
If you are considering a flexible mortgage, please contact us in order that we can discuss your requirements.
What are Redemption Penalties?
Some Lenders expect you to stay with them for a minimum period of time. If your Lender has offered you a special scheme (Fixed Rate, Discounted, Cashback mortgage) they may charge you an Early Redemption Charge if you decide to repay the loan prior to the scheme ending.
It is possible to find Lenders and schemes with No Early Redemption Charges.
It is usual for the borrower to take out a savings or investment plan at the same time as applying for the mortgage; this could be an ISA, Pension or Endowment plan. Another way an interest only mortgage can be repaid is by selling the property.
What is a Fixed Rate Mortgage?
With a Fixed Rate Mortgage the interest rate you pay stays the same for a fixed period of time pre-arranged with the lender. This can be between 1-25 years.
What is a Capped Rate Mortgage?
A Capped Rate Mortgage is similar to a fixed rate, however the interest rate is “capped” at a certain level and cannot go above this level. If the interest rate falls below the capped level, the rate you pay will fall as well.
What is a Discounted Mortgage?
This option is linked to the lenders Variable Rate. The Lender may offer you a discount to their Variable Rate for a specified period of time. With this option there is no certainty what your future payments could be.
What is a Tracker Mortgage?
The interest rate “tracks” the bank of England Base rate. The rate will either be discounted from the base rate or track above the base rate. When the Bank of England base rate changes, so will your interest rate.
What are Cashbacks?
The Lender may offer you a cash incentive once the mortgage has been taken out. Although Cashbacks can be offered on all mortgage types, they are most common when you apply for a Variable Rate Mortgage. The interest rate will normally be higher.
What is a Flexible mortgage?
Flexible mortgage provide greater freedom with your finances, allowing you to overpay, underpay, borrow back overpayments and take payment holidays. Many people use flexible mortgage to accelerate the repayment of their mortgage, they do this by regular and lump sum overpayments.
Most mortgage lenders now build in some flexible features into the traditional mortgage deals, which means that you now get flexible fixed rates, discounts and trackers.
If you are considering a flexible mortgage, please contact us in order that we can discuss your requirements.
What are Redemption Penalties?
Some Lenders expect you to stay with them for a minimum period of time. If your Lender has offered you a special scheme (Fixed Rate, Discounted, Cashback mortgage) they may charge you an Early Redemption Charge if you decide to repay the loan prior to the scheme ending.
It is possible to find Lenders and schemes with No Early Redemption Charges.
How much Deposit do I need to get a Mortgage?
Having a deposit toward the purchase of your home is preferable but it is possible to borrow 100% of the purchase price. In some situations lenders will consider a mortgage in excess of the purchase price.
I have a deposit how does this help?
Having a deposit helps in several ways. One of the main advantages is an increased choice of the lenders wishing to assist and an increased number of mortgage schemes to choose from.
What fees should I expect to set up a Mortgage?
Lenders will want a valuation to be carried out on the property you wish to purchase, the cost of this report is usually charged to you. In addition you may be asked to pay either a Booking or Arrangement fee, these fees are specific to a scheme being offered by the lender. Finally, you may be required to pay a Higher Lending Charge, this is an Indemnity Insurance taken out by the lender.
What other fees should I expect?
When buying a home you would usually use a Solicitor to carry out the legal work, the Solicitor will work on your behalf and for the Lender; you are expected to pay for this work.
If you are buying a property with a value in excess of £125,000 you will be charged a tax called Stamp Duty. Stamp Duty is charged at different rates depending on the purchase price:
Property Value £125,000 - £250,000 = 1% of Purchase Price
Property Value £250,001- £500,000 = 3% of Purchase Price
Property Value over £500,000 = 4% of Purchase Price
Other costs may include a more detailed survey of the property you are buying and of course your moving costs.
What is Right To Buy?
If you are offered the opportunity to buy either your Council home or Housing Association property you could be eligible for mortgage finance. In most cases you would be offered a discount against the open market value of your home, this results in the Right to Buy value. Lenders will often agree to lend you 100% of the Right-to-Buy value. In most cases you would still have to pay the usual fee's associated in buying a home, including Stamp Duty.
What is Shared Ownership?
Shared ownership schemes vary depending on where you live. In most cases you buy a share of the property with the help of a mortgage; the Housing Association will buy the other share and will charge you rent on a monthly basis.
I have a poor credit history, can I get a Mortgage?
This will depend on the extent of your credit problems, if you are still declared bankrupt the answer would be no. If you have less serious credit problems such as Defaults or County Court Judgements you may still be able to get mortgage finance. To be sure about your credit history you should order a copy of your credit report.
The overall cost for comparison is 7.6% APR
How should I choose a Mortgage?
It is important to take advice from an Adviser who is regulated by the Financial Services Authority (FSA).
Having a deposit toward the purchase of your home is preferable but it is possible to borrow 100% of the purchase price. In some situations lenders will consider a mortgage in excess of the purchase price.
I have a deposit how does this help?
Having a deposit helps in several ways. One of the main advantages is an increased choice of the lenders wishing to assist and an increased number of mortgage schemes to choose from.
What fees should I expect to set up a Mortgage?
Lenders will want a valuation to be carried out on the property you wish to purchase, the cost of this report is usually charged to you. In addition you may be asked to pay either a Booking or Arrangement fee, these fees are specific to a scheme being offered by the lender. Finally, you may be required to pay a Higher Lending Charge, this is an Indemnity Insurance taken out by the lender.
What other fees should I expect?
When buying a home you would usually use a Solicitor to carry out the legal work, the Solicitor will work on your behalf and for the Lender; you are expected to pay for this work.
If you are buying a property with a value in excess of £125,000 you will be charged a tax called Stamp Duty. Stamp Duty is charged at different rates depending on the purchase price:
Property Value £125,000 - £250,000 = 1% of Purchase Price
Property Value £250,001- £500,000 = 3% of Purchase Price
Property Value over £500,000 = 4% of Purchase Price
Other costs may include a more detailed survey of the property you are buying and of course your moving costs.
What is Right To Buy?
If you are offered the opportunity to buy either your Council home or Housing Association property you could be eligible for mortgage finance. In most cases you would be offered a discount against the open market value of your home, this results in the Right to Buy value. Lenders will often agree to lend you 100% of the Right-to-Buy value. In most cases you would still have to pay the usual fee's associated in buying a home, including Stamp Duty.
What is Shared Ownership?
Shared ownership schemes vary depending on where you live. In most cases you buy a share of the property with the help of a mortgage; the Housing Association will buy the other share and will charge you rent on a monthly basis.
I have a poor credit history, can I get a Mortgage?
This will depend on the extent of your credit problems, if you are still declared bankrupt the answer would be no. If you have less serious credit problems such as Defaults or County Court Judgements you may still be able to get mortgage finance. To be sure about your credit history you should order a copy of your credit report.
The overall cost for comparison is 7.6% APR
How should I choose a Mortgage?
It is important to take advice from an Adviser who is regulated by the Financial Services Authority (FSA).
On completion, there MAY be a fee for mortgage advice. The precise amount will depend on your
circumstances but we estimate it to be £195.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.
circumstances but we estimate it to be £195.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.