Financing your home

Financial services are thoroughly regulated and only those who are suitably qualified should give advice. We can introduce you to our independent financial advisers who will find the best mortgage deal for you. Your advisor will ensure that all the options available to you are thoroughly explained ensuring that you fully understand there recommendations.

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It is preferable to consider mortgage options before you look for your new home. This way you’ll have a good idea of how much you can pay for a property and what the monthly cost will be. The best time to apply for a mortgage is likely be when you have actually agreed your purchase, thereby ensuring you will be certain that you have the best deal that is available to you at that time. If however, you intend approaching only the one lender it is advisable that you apply for a mortgage certificate from them straight away in order that you be prepared when you find the right house to buy. Before issuing a certificate, the lender will probably take up references and make credit enquiries.

Mortgage Types

Repayment
As you pay off your mortgage every month you pay off both the capital (money you borrowed) and the interest (a charge for the Loan). You usually pay off mostly interest in the early years and then gradually more of the capital debt.

Interest Only
Only interest on the loan is paid to your lender. You will need to have a separate savings plan in order to pay off the balance of the loan at the end of the mortgage.

Combination
Some lenders may allow you to combine both repayment methods.

Flexible
These allow you to pay in extra amounts to reduce your outstanding loan or build up money you can draw on in the future. This means you can vary payments and take payment holidays. Interest may be charged during the payment holidays period but ultimately you could pay your mortgage off early.

Buy-to-let
Buy to let mortgages are only available for properties which are to be let out. Usually every type of mortgage such as variable, fixed and tracker mortgages can be made available - subject to the lenders deals at any time. Currently the maximum loan to value is normally 85% and there are various lender calculations used to ensure that the rental income you will receive will be sufficient to service your mortgage loan. We will be able to explain in detail how these lenders vary with their calculation.

Interest rate types

Standard Variable Rate
Mortgage payments go up and down in line with the standard variable base rate set by that particular lender. Each lender may have a slightly different standard variable rate which they set after the Bank of England has set its interest rates.

Capped Rate
Similar to a standard variable rate, but the rate will not go above an agreed limit for a guaranteed period. If interest rates fall below that set level, your rate will also fall, but never rise above the agreed level.

Fixed Rate
You will pay fixed payments for a guaranteed period. This rate will usually change to the lenders standard variable rate at the end of the guaranteed period.

Discounted Rate
Starts with a discount off the standard variable rate, for a limited period. Usually reverting to the lenders standard variable rate.

Tracker
A tracker mortgage will track the Bank of England base rate. The Bank of England base rate is set monthly by the monetary policy committee. If your interest rate chosen tracks the Bank of England base rate you will be subject to the rises and falls in line with base rate changes as and when they happen. For example some lenders may charge slightly above or slightly below the Bank of England base rate.

Other Costs

Solicitors
You will need to pay for a solicitor or licensed conveyancer to carry out the legal transaction on your property such as preparing draft contracts, applying for searches and reporting to the lender on the title of the property.
They will ensure that the property is legally yours on completion and look out for any issues that may affect it.

Application Fees
Some mortgage lenders now charge an application fee to cover their initial administration costs. Fees are especially common with limited offers like fixed-rate deals and may not be refunded if your purchase falls through.

Cashback Feature
You would receive cashback after completion. There may be an early repayment charge or a requirement to repay the cashback on early repayment during a specified term.

Higher Lending Charge
If you want to borrow more than 75% of the purchase price or valuation of your home, the lender may impose what is known as a higher lending charge. This is effectively insurance, for the benefit of the lender should you default on the loan.

Stamp Duty
Stamp duty is a tax on buying property, and generally applies to all residential properties worth over £125,000. It is 1% of the value up to £250,000, 3% up to £500,000 and 4% thereafter.