When buying a house, whether it is your first or not, things can get a little stressful.
There are a lot of decisions to make, papers to sign and companies to consider that all swear they can give you the best deal. With our mortgage FAQ, we can hopefully relieve you from any burning questions you may have to make your buying experience much easier.
Where can I get a mortgage from?
You can apply for a mortgage from a bank or other financial institution, like a building society, credit union or specialist mortgage lender. You can apply directly, but by using an independent mortgage adviser such as Mortgage Solutions, you may be able to find a better deal.
What types of mortgage are available?
There are a variety of mortgages to choose from, each with varying features and benefits, but some of the more common types include Standard Variable Rate (SVR) mortgages, Fixed Interest Rate mortgages, and Tracker Rate Mortgages.
How much can I borrow for a mortgage?
This depends on a number of factors. Many Mortgage Market Review lenders usually look at how much you can afford per month, rather than using a portion of your annual salary, however, some lender may cap your affordability at a salary multiple, such as four times a joint salary. Things like income from a second job, tax credits, bonuses and maintenance payments will be considered, so your credit history and monthly outgoings will be assessed.
How much of a deposit do I need?
This all depends on your financial circumstances and the mortgage provider you choose. ‘100% mortgages’, where you can borrow 100% of the property’s value, have almost disappeared entirely, but it’s still possible to get a 95% mortgage, where you pay a low deposit of 5% of the property’s value. Government schemes like Help to Buy, shared ownership and Right to Buy can also help with lower up-front costs, but otherwise, many lenders ask for a 10% deposit or more.
What mortgage fees will I pay?
Some lenders might charge an arrangement fee to cover the cost of setting up a mortgage. On top of this, the lender may charge a booking fee upon application, which is usually non-refundable, even if the mortgage doesn’t go ahead. You may also have to pay a valuation and legal fee to cover the lender’s conveyancing costs.
What insurance do I need?
Providers typically insist on appropriate buildings insurance, and some may also push you to buy mortgage life insurance, critical illness cover and mortgage payment protection insurance. Of course, you don’t have to accept insurance products offered by your mortgage provider and you may find something more suited to you by shopping around.
What if I can’t keep up the repayments?
If you can’t keep up the repayments, your home could be at risk, so you should speak to your lender as soon as possible. They’ll be able to give some options, such as a short repayment holiday or a new repayment plan that could help you to get back on your feet.