Whether you are buying your first home, moving house, remortgaging or buying an investment property, we work with you to get the most suitable mortgage for your needs.
A mortgage is one of the biggest, if not the biggest, financial commitment you’ll ever make. Therefore, you will want to make sure you get the mortgage that suits you, your circumstances and your lifestyle, for the right cost.
What affects borrowing?
Affordability – gone are the days of multiples of earnings for a basis on which to be assessed for a mortgage. Lenders now look in more detail at what you spend as well as what you earn, to see if you’ll be able to afford the mortgage comfortably, given your other committed outgoings (e.g. debts, childcare, household bills).
Credit score – how you’ve managed credit will affect your credit score, i.e. how much credit you have, how much you use, late payments, defaults, etc. will produce a credit score which lenders take into account. The better the score, the less risk you are to a lender and the more likely they are to lend to you.
Loan-to-value (LTV) – this is the mortgage as a percentage of the property value. The higher the percentage, the more risk there is to a lender which can inevitably impact a lending decision. In addition, interest rates are higher to reflect the extra risk, meaning higher repayments which in turn impacts affordability.
Mortgage term – Ideally, you want the shortest term which is affordable. The shorter the term, the quicker you repay the mortgage and the less interest you pay, reducing the overall cost. However, repayments could be unaffordable if the term is too ambitious. Similarly, whilst lenders are usually happy lending over your working life, lending into retirement is subject to more checks for affordability. You also pay more interest over a longer term, so will repay much more in total.
We work through these areas with you so that we can recommend the most suitable product and lender based on your needs and circumstances.
Choosing the right product
There are a wide range of mortgage products to meet almost every need. The most common ones are:
Fixed rate – the interest rate is fixed for an agreed period (e.g. 2, 3, 5 years) and regardless of what happens to interest rates generally in the economy, your repayments stay the same during that period, so you’ll always know what you’re paying.
Tracker – the interest rate tracks above the Bank of England base rate by a set amount and usually for a set period. When the base rate goes up then your repayments go up, and when it goes down your repayments go down. This means that you have to be comfortable that you will be able to make your mortgage repayments in the future, regardless of what happens to the Bank of England base rate.
Discounted – this is a variable rate that is not tracking the Bank of England base rate, so it can be increased or decreased by a lender independently of this. However, the interest rate is at a discount to the Standard Variable Rate (see below) for a set period, and so this can help those that need lower repayments in the early years of the mortgage.
Standard Variable Rate – this is a lenders standard, non-promotional rate which usually applies after a promotional rate ends (e.g. fixed, tracker or discount rate). It is generally an uncompetitive rate compared to those available in the market at any given time. The rate can be varied by a lender independently of the Bank of England base rate.
Offset – attractive to those with savings which are held in a savings account linked to the mortgage. Instead of earning interest on savings, you don’t get charged interest on your mortgage for the balance of the savings account with the lender. This means that you pay less interest on your mortgage while you have savings. They can be variable or fixed rates.
Flexible – these mortgages will usually allow overpayments without penalties, and underpayments (within limits). Those with fluctuating earnings sometimes find such products useful. Flexible mortgages are usually variable rates, but can be fixed, and they are sometimes combined other features such as the ability to offset savings.
Buy-to-Let – these are mortgages specifically for those with investment properties which they will not be residing in, but are letting to tenants as landlords. The products themselves are typically fixed or tracker rates.
Again, we will get to understand your circumstances so that we can discuss the relevant types of mortgage product that best suits your needs.
Most new residential mortgages are now on a repayment basis (i.e. capital and interest), with lending criteria for interest-only mortgages now much tighter. However, buy-to-let mortgages are still often set up on an interest-only basis, with a view that the property is an investment and will ultimately be sold one day to realise gains and repay the mortgage.
Finding the best deal
Given that mortgage repayments are generally most peoples’ largest outgoing, it’s important to shop around to make sure that you’re getting the best deal. Otherwise it could cost you a significant amount of money if you get it wrong.
But what does the ‘best deal’ mean to you?
For people wanting the lowest repayments, the best deal might be the lowest interest rate so that monthly repayments are lower, regardless of lenders’ fees that might be payable upfront. For others, the best deal will be the lowest overall cost over a set period, and so will want to consider the total cost of fees and repayments over the period.
We make sure that we understand what’s important to you in terms of cost, so that we can recommend the right product, with the right lender, at the right price.
For details on our charges for mortgage advice please click here.
Your home may be repossessed if you do not keep up repayments on your mortgage. Buy-to-let mortgages are not regulated by the Financial Conduct Authority.
Protection and insurance
As well as making sure you get the right mortgage deal, we recognise that you may have a number of other financial considerations when buying a house. These range from making sure the right level of life insurance, critical illness cover and income protection are in place, through to arranging home insurance.
During our discussions, we can agree what else you need to consider, and can if necessary, help you source the right products to meet your needs.