Mortgages

Mortgages can be complicated whether it is a first time buy, a re-mortgage, a buy to let or a commercial mortgage. That's why we spend time to search for the most appropriate mortgage from the thousands that are available in the market.

Mortgages can be very deceptive. What appears to be a very good interest rate may not be the most competitive after you have added the various fees (valuation or survey fee, an arrangement or booking fee and legal fees). We always look at the overall cost to ensure that we are providing a highly competitive mortgage which matches the criteria which you have given us.

The following information may help you with your mortgage decisions.

Mortgages for different situations

First time buyer

If you are thinking of buying your first home you may be finding the whole process of choosing the right mortgage and actually buying your property rather daunting. We can guide you through the process and advise you on the mortgage options.

Here are a few guidelines to help:

The amount of mortgage you can get will depend on your income. Some lenders will simply use an income multiple, for instance 3.25 times the gross salary for a single borrower. For a couple, it could be 3.25 times the first income plus 1 times the second or 2.5 times combined incomes. Others will look at the overall affordability of the monthly mortgage payments. Lenders do differ in the amount that they are prepared to lend so it is important to do your research.

The amount you can borrow plus the deposit you have will give the amount you can pay for your first property. The amount of deposit required will vary from lender to lender. However as a general rule, the higher the deposit you have, the lower the interest rate you will pay on your mortgage loan.

It is important to remember that there are costs to pay in addition to the mortgage and deposit. There will be a valuation or survey fee, an arrangement or booking fee, legal fees, possibly a higher lending charge and stamp duty for properties above a certain figure.

Re-mortgaging

You may be looking for a better mortgage deal or are thinking of releasing some of the equity in your property. It could be your home or an investment property. The process of re-mortgaging really is fairly simple and the potential monthly saving rewarding.

If you are paying your lender's standard variable rate you may be paying more than you need to and it may be possible to make savings. You may already be on a special scheme such as a fixed rate, tracker or discount. However, once this comes to an end, you will usually be put back on the standard variable rate automatically. It is important to review your mortgage in good time before the end of the special rate.

Buying to let

Buy to let is an option for people wanting to invest in residential rental property. Most lenders will base their lending decision on the likely rental income of the property and not the applicant's income as with ordinary domestic mortgages.

Generally a deposit of 25% is required with a buy to let property.

Not all buy to let mortgages are regulated by the Financial Services Authority.

Commercial

Commercial mortgages are used in many circumstances.

You may want to purchase or develop your own business premises or want finance  to purchase a commercial property for investment purposes.

Commercial mortgages are available for individuals, partnerships and limited companies. Examples of the properties considered are hotels, restaurants, shops, nursing homes, post offices etc.

Commercial mortgages are not regulated by the Financial Services Authority.

Types of mortgage

Fixed rate

A fixed rate means that the interest rate is guaranteed to remain unchanged for a certain period. This, in turn, means that the monthly payments will remain the same for this period. There is normally a redemption penalty if you want to redeem all or part of the loan in the fixed period.

Discounted rate

A discounted rate is a discount to a lender's standard variable rate (SVR). Unlike a fix, a discounted rate is variable so that the interest rate and monthly payment will change if the SVR changes. A lender's SVR will usually change with the Bank of England base rate. A redemption charge usually applies for the discounted period.

Tracker

A tracker rate tracks the Bank of England base rate. Again this is a variable rate and the interest rate and monthly payment will change if the base rate changes. Again a redemption charge will normally apply in the scheme period.

Capped rate

A capped rate sets a limit on the interest rate you will pay. If rates rise, your payments will not go above that level but if rates fall below the cap so will the monthly payments.

Standard variable rate (SVR)

SVR is the standard rate at which a lender will lend. If you are not on a special scheme such as those above, you will be the SVR. The interest rate will change as a lender adapts to changes in the Bank of  England base rate. There is normally no redemption penalty if you are paying the SVR.

Flexible mortgage

Flexible loans allow you to overpay and underpay when you choose, without penalty. This may be suitable for people who have fluctuating incomes or who want to clear their mortgages early.

Your home may be repossessed if you do not keep up repayments on your mortgage