1. Must I clear my mortgage by a certain age?
Mortgages are usually designed to be repaid no later than the borrowers normal retirement age. That is normally 65 for employed people (male and female) and 70 for self employed. Most lenders will consider a longer term providing the borrower has enough income after retirement.
2. Can I get a mortgage offer before I find a property?
Yes an agreement in principle can be offered to get the process going but the lender won’t make a formal mortgage offer until a valuation has been carried out on the property you wish to buy or re-mortgage.
3. What is a buy to let?
Buy to let mortgages are designed for people who want to buy a property and let it out to tenants. Buy to let is becoming a popular way for private landlords to invest. They provide income from the tenants’ rental payments and growth from any increase in the property value.
4. What is a self-certification mortgage?
These mortgages are ideal for self employed people who perhaps have not been in business for the required 3 years or cannot produce accounts for a 3 year period but can demonstrate usually through an Accountant’s reference that they can service the mortgage payments. These loans usually require a bigger deposit of around 15% of the purchase value or if it’s a re-mortgage this usually cannot exceed 85% loan to value (LTV). Interest rates are usually higher but from time to time there are some good deals around.
5. What is a flexible mortgage?
Flexible mortgages are loans which allow you to increase or decrease the size of your repayments within certain limits. Being able to do this may help you cope with the changes in your income or spending, and to reduce your outstanding commitments without penalty if you get a bonus.
Many self employed people whose income varies from one month to the next find these products helpful. They can make overpayments when earnings are at the annual peak, and cut their payments when earnings fall again. Some flexible mortgages will allow you to withdraw sums you have overpaid into your mortgage account to help deal with emergencies.
6. Why do the best discount deals vanish so quickly?
When a lender offers a particular special mortgage, it allocates a certain sum of money to be lent on a particular product. With particularly good deals, this first allocation may be taken up very quickly on a first come first serve basis.
When this happens, lenders generally go back to the money markets to get another batch of funds for further lending. By the time this process is complete, economic or competitive circumstances may have changed enough so it is no longer possible to offer the original product.
7. Do county court judgments always disqualify me?
If a county court rules against you for defaulting on a debt, that listing is listed on your credit rating. Having such a judgment listed against you may mean it is difficult to obtain a mortgage through most lenders. However there are a number of increasing specialist lenders who will lend to people with a CCJ or other credit problems. Use our fillout forms for a no obligation professional opinion.
8. Should I rule out redemption penalties?
Most cashback, fixed and capped rate mortgages, and also discount mortgages, have redemption penalties. With fixed rates, capped and discount mortgages these penalties will usually last as long as the special rate but quite often they also apply after the special rate has finished. Mortgages with penalties extending beyond the special period are said to have redemption tail or tie in beyond the special rate. These redemption penalties especially on cash back mortgages could typically last 6 years.
For most people it is best to avoid a mortgage with a redemption tail. This allows you to keep your options open at the end of the special rate period to look for another deal without incurring what might be a very expensive penalty which can equal as much as 5% of the mortgage loan.
9. How do I repay capital with an interest only loan?
If you have an interest only mortgage, your monthly payments will pay off the interest on your mortgage but not the money you initially borrowed. You can pay off the original loan you borrowed any way you choose, but you often have to inform the lender at the start how you intend to do this. Most people often set up and save money in a separate plan designed to pay off the capital when the mortgage term is complete.
The main options for saving in this way are in an ISA, an endowment policy or a pension.
10. Do I always need life insurance?
Some lenders insist you buy life cover. We can provide an independent view along with quotes and discount the commission from leading providers and make the costs cheaper than normally going direct. You may also want to consider taking out critical illness cover, which would pay your mortgage if you suffer an illness, which would affect your earning power, such as a stroke to cancer.
11. What happens if I lose my job?
If you lose your job and cannot pay your mortgage payments your house could be at risk. It is strongly recommended that you take out a mortgage accident sickness and redundancy policy, in connection with your mortgage, which will pay your loan repayments for up 12 months, while you get back on your feet.
12. What are the additional costs that I might occur in taking out a mortgage?
The costs related in taking out a mortgage could vary considerably depending on the type of deal selected but here are the usual things to look out for:
- Valuation Fee (payable on application) can be free depending on the deal.
- Booking Fee (payable on application) depends on type of deal being selected
- Arrangement Fee (usually added to the mortgage or payable on completion) depends on type of deal being selected Legal costs, to cover land registry fees and various searches. (Sometimes these costs can be free payable by the lender depending on what deal is selected)
- Stamp Duty (A Government tax on purchases over £60,000)
- MIG (Mortgage Indemnity Guarantee Insurance) payable on loans normally over 90% loan to value but can vary depending on the deal
- Term Assurance (recommended, but not always compulsory)
- Accident Sickness and Unemployment Insurance (recommended, but not always compulsory)
- Building Insurance (either from the lender or a third party)
- Contents Insurance (recommended but not compulsory).
13. What is MIG and will I have to pay it?
MIG stands for Mortgage Indemnity Guarantee Insurance. It is a one off premium paid usually by the borrower to an insurance company on high loan to value (LTV) mortgages so that in the event of the property being repossessed and sold at a loss, the lender can recoup any losses they incur from the insurance company.
This cost is ether added to the loan or is repaid in monthly installments usually over a 12-month period after completion. The majority of lenders only charge MIG to borrowers where the mortgage is over 90% of the value of the property (LTV 90%). However there are a lot of variations on this, with some lenders not charging at all, even on 100% loans where as others will charge on loans as low as 70% LTV.
14. What evidence do you need to confirm my identity and earnings?
- Typical documents we might need are as follows:
- Copy of Passport or Driving Licence (to confirm identity)
- 3-month wage slips or banks statements or accounts if self employed (to prove income)
15. What outgoings should I include on my mortgage application?
The only information we normally need is information on current credit or loan commitments, which have more than 6 months to go before they are paid off. General living expenses such as gas, electric, groceries and general household bills need not be included.