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General Information

Buying a house is one of the most exciting and important decisions that you will make. Arm yourself with as much information as you can and seek independent mortgage advice for your final decision.

Different ways to repay your mortgage

Repayment
Over the term of the mortgage, the capital and interest is repaid, therefore on completion of the mortgage no money is owed to the lender.
Interest Only
As the name implies, with this mortgage throughout the term only interest is paid to the lender, therefore on completion of the mortgage the Capital is still outstanding. An investment vehicle may be needed to repay the capital. i.e. Endowment, Pension or ISA.
Endowment Mortgage
A savings plan that runs for the same term as a mortgage, and on maturity, the endowment should repay the loan. Traditionally, one of the most popular ways of repaying an interest only mortgage. However, due to recent poor market performance this method of loan repayment is proving to be less and less popular.
Pension Mortgage
Using this method, the tax-free lump sum payable on maturity of a pension policy, is used to repay the capital amount outstanding on a mortgage.
ISA
Individual Savings Account, a relatively new type of investment it is based on the old PEP, it is a unit trust savings plan which pays out a tax free amount at the end of the term. The Government have said that these will run for at least ten years.
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Different types of mortgage

Variable Rate
A rate that rises and falls in line with the changes made by the lender. Fixed Rate: The interest rate is fixed for a period, ie 5 years. Whether interest rates fall or rise, with a Fixed Rate the payment would remain the same. Often lenders will at the end of a Fixed Rate, tie you in for a further period, commonly known as the redemption period.
Capped Rate
A mixture of Fixed and Variable rate. The lender will Cap the mortgage at an agreed rate, if interest rates remain above this rate, you will be charged the Capped Rate, if rates drop below the Capped Rate, your rate will also drop. Again similar to fixed rates, there may also be a redemption period.
Discounted Rate
A discount is given off the lenders Variable Rate for a certain period, ie 2 years. Therefore, whether interest rates rise or fall, you will be charged a rate less the discount. A redemption period may also apply.
Cashback
The lender will, either on completion of the mortgage or shortly afterwards, give you a cash sum. This is generally a percentage of the mortgage ie 3%. Cashback mortgages can be linked to Discounted, Fixed or Capped Rates.
Base Rate Tracker
As the name suggests these mortgages are linked to the base rate set by the bank of England which can rise or fall on a monthly basis, please note that most lenders offering this type of mortgage charge a premium above the base rate for this type of product.
Flexible Mortgages
If you are considering moving or re-mortgaging, this may be the ideal mortgage for you. Flexible mortgages are designed to adapt, they offer features such as interest calculated on a daily basis (Australian Style), flexible repayments including, payment holidays, overpayments, underpayments and offset facilities in most cases they can be set up with no mortgage indemnity premium and valuation fees, some even offer a cheque book and fixed rates.
LIBOR
A mortgage linked to the London Inter Bank Offered Rate, as opposed to most mortgages, which are linked to the Bank of England Base Rate. The rate is reviewed four times a year, and is used mostly by adverse credit lenders and some buy to let lenders.
Foreign Currency
Some lenders offer mortgages in different currencies, mostly for purchasing properties abroad. A handful of lenders also now offer Euro currency and US$ mortgages for UK properties.
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How lenders define types of borrower

First Time Buyer
Suitable for individuals that have not owned a property before these loans usually offer low up front costs to reduce the initial cost of moving and in some cases provide the ability to borrow up to 100 % of the property value.
Right to Buy
Loans designed specifically for council tenant’s that are eligible to buy their home at a discounted rate. Discounts available are up to a maximum of 70 %, (60 % in Scotland). Please note: The actual discount amount offered is usually dependant on the total amount of time in council tenancy, of which, there is a minimum period of 2 years.
Self-Build
Mortgages specifically designed for individuals looking to build their own property, some lenders offering loan features such as the ability to release capital from the loan in stages to suit the borrowers individual build situation and reduce their need for high up front personal investment.
Self-Cert
Self-certification mortgages require borrowers to sign a declaration of earning’s, which the mortgage lender accepts as the income earned. Unlike Non Status mortgages, however, the lender may check an individual’s employment status, or their length of trading, or may check with the accountant to confirm he acts for the client, lending of this nature is normal restricted to 85% (sometimes 90%) of the valuation of the property.
Non-Status
As the name suggests, this mortgage allows people to arrange loans without declaring an income on the application form. This can be useful in situations where individuals wish to borrow that are self-employed without accounts or on a low basic salary, high commission package. However, the lender may still check an individual’s employment status, or their length of service/trading, or may check with the accountant to confirm he acts for the client.
Re-mortgage
Re-mortgaging need not be expensive or time consuming and depending on the terms of your existing mortgage could save you both money and time. There are some lenders who will pay your fees for you and with the average time to complete a re-mortgage being just 3-4 weeks re-mortgaging has never been easier- so what should you do now?
  • Check the conditions on your existing mortgage - there may be redemption penalties - this information can be found on your mortgage offer. If in doubt contact us and we will check this for you.
  • Apply for a redemption statement from your existing lender
  • Contact us for the best deals and an informal discussion
  • When submitting your application you should supply us with as much information as possible, this will normally consist of last 3 months bank statements & payslips, proof of identity and latest mortgage statements. These will all help in the smooth process of re-mortgaging.
Buy to Let
Whether you already own an investment property, or would like to enter this highly profitable market, choosing the right mortgage for your property can prove the difference between succeeding or not.
A Buy to Let mortgage is now available from a growing number of lenders, all with their own criteria for how much they will lend you, what type of property they will lend on, and of course what interest rate they charge. Broadly speaking they can be broken down into two categories: the first base how much they will lend you on your own financial circumstances, the other base it on the property value and the prospective rental income. The first category tend to have the lower interest rates, but increasingly in today’s market, the difference is negligible.
Buying an investment property requires a much larger deposit than buying a residential property. The deposit you will need ranges from 15% to 25%, dependant again on the property and lender chosen. The lender will require you to have the property let through a recognised professional letting agent such as ARLA (Association or Residential Letting Agents).
  • Purchase or Refinance up to 85% of property value
  • Affordability based purely on Rental Income
  • Single or Portfolio properties
  • Multiple Occupancy tenancies available
Let to Buy
These schemes allow you to Let out your existing property and purchase a new one as your main residence. Your existing mortgage payment need only be covered by rental payment Up to 95% available on new purchase, Idea if you want to keep your house for any reason and buy another, bigger or smaller.
100% Mortgages
Mainly considered for first time buyers, where little or no deposit can be found, the deals offered are normally competitive in terms of rates however the Mortgage Indemnity Premium can be very expensive.
Negative Equity
In this type of case the lender will offer a mortgage to purchase your new property and a unsecured loan to cover the negative equity in the house you have moved from. This type of lending is considered on an individual basis only and no guidelines to the amounts are normally issued.
Adverse Credit Lending
County Court Judgements (CCJ's), Defaults Mortgage Arrears Bankruptcy Orders Involuntary Arrangements (IVA's) are now part of 1 in 4 peoples credit history. Most high street lenders will not accept mortgage applications from individuals who have, or have had, any of the above. Those lenders that will accept applications generally charge higher interest rates and large up front fees. We have access to specialist lenders who take a common sense view on this sensitive subject. They offer competitive rates, low fees with schemes to suit most situations.
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The costs involved in getting a Mortgage

Valuation Fee
A fee charged by the lender for valuing the property, sometimes called a survey fee. There are 3 different types of valuation
  • Basic Mortgage Valuation: Carried out by the lender to enable them to decide the value of the property and general condition of property.
  • Homebuyers Report: Includes the basic valuation, but also gives you a more detailed report on the property.
  • Full Structural Survey: Carried out by a structural engineer, and gives you a complete structural report on all aspects of the property. Can be very expensive.
Broker Fee
This is normally charged by your broker for the initial work in finding and advising on the mortgage.
Arrangement Fees
An arrangement, booking or completion fee may be charged by your lender. Some may charge them on application, others on completion.
Solicitors
Solicitors charge for work to be carried out for the legal elements to your mortgage, on some re-mortgage deals the lender will offer this service free.
Stamp Duty
Charged by the Government in bands
  • Up to £59,999 no charge
  • £60,000 to £249,999 1% of the purchase price
  • £250,000 to £499,999 3%
  • £500,000 and above 4%
Relief may be given in some development areas.
Completion Fees
These fees are charged by the Lenders and can be shown as a percentage say 0.5 or even 1% others charge a flat fee.
Other Costs
Your solicitor or broker will confirm all other fees to you before the final transaction, below is a list of some costs that you may encounter:
  • Land Registry
  • Bankruptcy search
  • Environmental search
  • Local Search
  • Radon Gas Search
After the normal survey you may need:
  • Damp & Timber report
  • Structural Engineers report
  • Tree root or height
  • Drainage
As a guide you should allow a minimum of 3-4% of the purchase price of a property to cover these costs.
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Mortgage related terms

Redemption Penalty
This is a charge made by the lender payable if you pay off your mortgage 'redeem', before a certain time ' penalty period'. This penalty can be expressed in a number of ways, either as a percentage of the redeemed mortgage, or as a set penalty i.e. 6 times you monthly mortgage payment. The penalty period can be the same as the Fixed or Capped term that was initially taken. The more competitive the mortgage interest rate, the longer the penalty period. This can run for a period of up to five years after the Fixed or Capped term.
Mortgage Indemnity Premium
Only applicable on loans 75% of the purchase price/value or above. This is an insurance the lender takes out against you defaulting on your mortgage. The premium can usually be added to the mortgage, in which case you will be paying interest on it for however long you have the mortgage. Alternatively, many lenders give you the option to pay the premium in twelve monthly instalments during the first year. Or the premium could be paid off in a lump sum at the start of the mortgage. Some lenders do not now charge you an indemnity premium, instead electing to pay the premium themselves. Also known as Higher Percentage loading fee or Mortgage Indemnity Guarantee (MIG).
Compulsory Insurance
Some lenders offer preferential rates if you will take their insurance. It can be buildings, or buildings and contents, and sometimes unemployment insurance as well. Some lenders may charge a fee typically £25.00 if you do not use them for your cover.
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Frequently Asked Questions (FAQ)

What type of mortgage should I have?
This is by far the most common question asked, not only for first time buyers but by those who are re-mortgaging or buying for the second time. Since taking out your original loan your circumstances may well have changed considerably and a different type of mortgage may well make sense. Mortgage-Adviser-UK will talk you through this as every case is different thus helping you come to the correct decision.
How much can I borrow?
As a rough guide, most Lenders will allow you three or four times income or in the case of a joint mortgage two and a half to three times joint income. These figures are commonly known as ‘income multiples’. The size of the loan may also depend on the type of property you intend to purchase. You may find some lenders offer a higher income multiple if your credit score is high or if you are a professional such as a Doctor or solicitor. For a guide to you borrowing potential and monthly costs click here for mortgage calculator, for a free personal illustration and the repayment costs contact your Mortgage Consultant at Mortgage-Adviser-UK, 08000 43 43 44
Are there any other costs involved?
As well as the actual price of your new home there are a lot of other extra costs to consider. See Fees, Before deciding how much you can afford use our budget planner or contact one of our Mortgage Consultants on 08000 43 43 44 who will discuss with you the costs.
Can I get a mortgage with bad credit history?
Mostly the answer is yes,However it will depend on the amount of deposit you have and how bad the credit history is, This type of lending is commonly known as Adverse credit lending or Sub –Prime, recently there have been lots of new lenders specialising in this area giving more competition therefore forcing the rates down giving you the consumer a better deal.
Should I arrange a mortgage before I find a home?
This is becoming more and more important to do as you will be in a good position to move quickly when you do find the home you want, thereby reducing the risk of losing out to a cash buyer. It also confirms the amount you can borrow, therefore how much you can offer for the house you want.
I’ve found the house I want to buy, what next?
Once you have found your new home you should make an offer to the Estate Agent selling the property. Do not be told that your offer will only be accepted after discussing your arrangements with their Financial Adviser or Mortgage Consultant. Check out the design your own mortgage and an adviser will give you an illustration of the best deal.
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A Guide to Purchasing Your Own Home

“ Choosing the right mortgage is probably one of the most important decisions in your life - make sure it’s the right one!”

Looking for a new home can be a time of great excitement, however, without the right kind of help it can also be a time of great anxiety. Mortgage-Adviser-UK aims to guide you through the mortgage maze effortlessly and with peace of mind. At Mortgage-Adviser-UK we pride ourselves on our understanding of the Mortgage Market and this clearly shows in our level of customer service offered to prospective home buyers.

As Independent Mortgage Consultants we have access to over 300 Lenders with over 6000 different schemes to choose from. No one house purchase is the same as another reflecting the need for such a variety of mortgages. Mortgage-Adviser-UK use a computer link to source all the available mortgages and after discussing fully all your needs and requirements we will try our best to match you to the right mortgage.

There are a wide range of mortgages available, just a few are listed here.

I’ve found the house I want to buy, what next?

Once you have found your new home you should make an offer to the Estate Agent selling the property. Do not be told that your offer will only be accepted after discussing your arrangements with their Financial Adviser or Mortgage Consultant.

You should arrange for a Solicitor to carry out the legal work for you - Mortgage-Adviser-UK have negotiated special rates with various Solicitors please ask your Consultant to recommend one in your area.

Once the offer has been accepted by the Estate Agent contact our Mortgage Consultants to ensure that the property is within your price range and to complete the relevant paperwork. You will probably have to submit a survey fee and or/booking fee with your application and you will be advised of how much this will be by your Consultant.

On receipt of you’re your application back to our office the processing of your application will be undertaken by the Mortgage Partnership (MK) Limited, and you will receive a letter out lining the mortgage you have taken and any penalties associated.

Throughout the processing of your mortgage application the client services department will keep you informed of the progress and be on hand to answer any queries you may have.

A survey will be carried out on your property once the Lender has received all the relevant references. The survey will involve a local surveyor checking the property for damp course and any notable structural problems; a note will also be made of the value of the house for mortgage purposes. You should receive a copy of this report and your Consultant will be more than happy to run through any queries with you. There are different levels of surveys which can be carried out ranging from basic to a full structural - ask your Mortgage Consultant to explain this to you.

You should allow four weeks for the processing of your application and when all satisfactory references are received the Lender will issue you with a Mortgage Offer - this sets out the terms under which the Lender is prepared to offer you the loan. This is an important document and you should run through this with your Mortgage Consultant or Solicitor before you complete.

Once you have accepted your offer and all the preliminary legal work has been carried out by your Solicitor you will be informed of a date to Exchange Contracts. At this stage you will be asked to pay any deposits or fees applicable to your mortgage. Remember all monies due to the solicitor must be cleared funds before the exchange date.

As soon as you have exchanged contracts it is necessary to start your life insurance policy. You will be advised of this well in advance by - Mortgage-Adviser-UK, who will have been working to have your life insurance applications accepted and ready to commence for your mortgage.At this stage you will also be responsible for Buildings Insurance on the new property and we will help and advise you on this throughout your application.

Can I afford the Repayments?

Before taking out any loan ensure that you can adequately meet the repayment terms. Complete the Budget Checklist below to give some indication of the surplus income left after deductions. Always take professional advice before entering into any agreement.

Budget Checklist

Income

Joint Net Salary£________

Overtime/Commission£________

Other Income£________

Total Monthly Income£________(A)

Monthly Outgoings

Utilities £________

Council Tax £________

Telephone £________

Standing Orders £________

Food/Drink £________

Entertainment £________

Loans or Credit Cards £________

TV Licence £________

Clothing £________

Other Outgoings £________

Total Monthly Outgoings £________(B)

Maximum available for Mortgage Payment is (A) - (B) £________

Questions to ask your Mortgage Adviser

Are you a Member of the Code of Mortgage Lenders?
The Code of Mortgage Lending Practice was introduced for mortgage lenders on 1st July 1997 to set out good practice in the marketing, selling, underwriting and administration of mortgages.
What fees do you charge and are these refundable?
Your mortgage adviser should discuss with you any fees which his company charges for arranging your mortgage. If the amount of the fee is less than £250 he should confirm that he is receiving a fee upto that amount, if the fee exceeds £250 he should inform you in writing of the exact amount. There may also be an administration fee.
Are you an Independent Mortgage Adviser or do you use a panel of Lenders?
Your mortgage adviser should advise you at outset whether or not he is an Appointed Agent of a Lender for mortgage business, and therefore acting on their behalf, or that he arranges mortgages from a selection of preferred Lenders - if this is the case then he will give you details of the Lenders that he uses.
If you are Independent how do you source your recommended Lenders?
If your adviser researches the whole market for mortgage purposes he will tell you this and will probably advise you that he uses a modem link which is updated daily to give upto the minute rates and special offers.
If you are tied to an Insurance Company am I obliged to take out their insurance policies to secure my loan or am I able to take Independent Financial Advice?
No mortgage loan should be conditional on the purchase of life products from a Bank/Building Society/Tied Agent and you should always seek Independent Financial Advice in this respect.
What after sales service do you provide?
Once you have decided to proceed with your mortgage application ensure that your mortgage adviser has sufficient office backup to cope with the processing of your application. What other services are available? Will your adviser keep you updated with new products and changes to the mortgage market even after your mortgage completes?
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