Choose the property you will call home.
Buying a house is often a challenging process filled with numerous considerations, from understanding different mortgage options to handling legal requirements and costs and fees.
Here’s a comprehensive guide on how our team of specialist mortgage advisors are able to provide you with the advice you need to obtain the best mortgage deal bespoke to your situation, whatever it might be.
Mortgages for your home
When it comes to purchasing a new home, mortgages can be the resource that will make it possible. This type of loan is designed to give you the ability to finance your new property. With a mortgage, you have the opportunity to secure the home of your dreams by using the value of the property itself as security for your loan.
One of the key features of a mortgage is the repayment structure. Rather than paying the entire purchase price upfront, for example, £400,000. You can take a loan from your bank for a percentage of the property’s value and spread the repayments over anything between 5 and 40 years. This time frame enables you to make manageable monthly payments, ensuring that homeownership remains within reach for a wider range of buyers.
It’s important to note that mortgages come in different variations, including fixed-rate and variable-rate options:
With a fixed-rate mortgage, your interest rate remains consistent for a pre-defined number of years, be that 2, 3 or 5 years. This provides stability and predictability, as your monthly payments will remain the same over time.
On the other hand, a variable-rate mortgage offers a fluctuating interest rate that may change periodically based on market conditions which include the Bank of England’s base rate movements or a lender’s own standard variable rate adjustments. This option provides potential flexibility, as your monthly payments may adjust accordingly and often enables clients to borrow without any early repayment penalties.
Choosing the right mortgage for your new home involves careful consideration of your financial situation, long-term goals, and risk tolerance. Our experienced mortgage advisors will ensure you select the one that best aligns with your needs and preferences. A mortgage is not just a loan but a pathway for you to move to your dream home.
Criteria for a first-time buyer
For first-time buyers, qualifying for a mortgage depends on several factors, such as: credit score, income, job stability, and debt-to-income ratio
Before, lenders would require a deposit payment of at least 5%. Recently, some lenders will offer a 100% loan to value mortgages for those who are eligible.
Our advisors will assess the following criteria to determine your eligibility for a mortgage:
– Credit score: Lenders will assess the credit history of first-time buyers by looking at their credit scores. But don’t worry if your credit score is less than perfect. We know that in the real world, life happens to us all and can mean missed payments on a loan, credit card, or mortgage payment can impact lenders offering you a mortgage. As a specialist broker, we have access to lenders willing to accept certain missed payments, county court judgements or defaults.
– Income: Lenders consider the income of first-time buyers to ensure they have the financial means to make mortgage payments. If your income is not as regular as your electric bill, give us a call. As specialist mortgage brokers, we have access to lenders that support borrowers with less stable incomes, such as first-time buyers that are self-employed.
– Job stability: Consistent employment history and job stability are factors that lenders take into account for first-time buyers. Having a consistent employment record and reliable earnings increases the confidence of lenders in approving the mortgage. However, as we are specialist mortgage brokers, we have access to many lenders willing to lend to you should you be self-employed, on a zero hour contract or a limited company director.
– Debt-to-income ratio: Lenders also analyse the debt-to-income ratio of first-time buyers. This ratio compares their total monthly debt payments to their monthly income. A lower debt-to-income ratio indicates a healthier financial position and a higher chance of having the mortgage approved. Even if you have a high debt-to-income ratio, there are specialist lenders we can recommend that may support you with your mortgage.
– Deposit: First-time buyers can put down a deposit as little as 5% of the purchase price. In the last months, certain lenders have introduced the opportunity for borrowers to secure 100% loan-to-value mortgages (it means £0 deposit!). If this is something that you would be interested in, give us a call, and we will quickly look for a lender that can check if you qualify to apply for this type of loan.
The larger deposit, the better the interest rate most lenders will offer you. It’s advisable to talk to one of our friendly mortgage advisors. They can guide you through the process, assess your eligibility, and tell you the best mortgage options that align with your financial situation and goals.
How much can I borrow as a first buyer?
As a first-time buyer, the amount you can borrow primarily depends on your financial situation. Lenders use a formula called loan-to-income ratio (LTI) to determine your maximum loan amount. This ratio is the amount you can borrow compared to your income. Another important factor to consider is the loan-to-value (LTV) ratio.
For example, a lender offering a loan to income of 4 x income will offer an applicant with an annual income of £50,000 a mortgage of £200,000 (£50,000 x 4).
Loan to value ratio
The loan-to-value (LTV) ratio is the percentage of the property’s value that you can borrow. For example, an 80% LTV means that you can borrow up to 80% of the property’s value, and the remaining 20% will be funded by either your savings or a gift.
It’s important to note that the LTV ratio can vary depending on the lender and your affordability. Some lenders offer higher LTV ratios, allowing you to borrow more with a smaller deposit, while others may require a larger deposit and offer lower LTV ratios. We have lenders that can offer options for a 5% deposit or even no payment, lending 100% of the property value.
Whether you are a first-time buyer or looking to move home, our advisers will provide you with a same-day mortgage quote as we have access to the whole of the market.
Cost of Stamp Duty
Stamp Duty Land Tax (SDLT), also known as Stamp Duty, is a tax you pay when buying a property in the UK costing more than £250,000, or £425,000 for first-time buyers.
The amount of tax varies depending on the property’s price and your circumstances. If the property is valued at more than £250,000 (or £425,000 for first-time buyers), the stamp duty can go from 5% to 12%, depending on the price of the property.
If the purchase is a second property purchase, an additional 3% stamp duty will apply.
Credit reports and scores for mortgages
Your credit report and score can impact your mortgage application. It not only influences your mortgage approval but also the interest rate you’ll get. The higher the credit score, the more likely you’ll qualify for a lower interest rate. An insider tip is to make sure you are registered to vote on the council of your current residence. Being registered to vote can increase your credit score.
Don’t be shy to call us if you are not sure if your credit score is helpful. We know which specific lenders that can offer you a loan independent of your credit score situation.
Mortgages for a homemover
If you’re moving home, you might be able to “transfer” your current mortgage over to your new property. Alternatively, you can repay your current mortgage and take out a new one. Your decision might depend on the current interest rate you are paying on your mortgage, your lenders terms or the value of the mortgage needed.
Give us a quick call, and our mortgage brokers can advise you on the best strategy after carefully listening to your specific situation. You will know all the pros and cons of the options on the market that are best for you and still be in the driver’s seat deciding the direction you want to go.
A remortgage is the process of transferring your current mortgage to a new arrangement, either with your existing lender (product switch) or a new lender (remortgage). The objective of remortgaging can be to secure a more favourable interest rate, lower monthly repayments, or access additional funds.
Typically, mortgages in the UK are offered with reduced rates for a period of between two and five years. This could be on a fixed or variable rate basis.
We proactively contact all our clients 7 months prior to the end of any initial period. This allows us to assess whether there are superior deals available from their current lender or alternative lenders, ensuring that they obtain the most competitive rates throughout the entire mortgage term.
Residential mortgages, most of the time, are the only path for a person or families to achieve their dream of owning a home. Whether you are a first-time buyer or considering remortgaging, understanding the eligibility criteria, repayment options, and available deals is essential. Our experienced team of mortgage advisors are here to guide you through the process, looking for the best mortgage options tailored to your needs. Take the first step to having your dream house by contacting us today. You can have an initial quote in 15 minutes.
What is the difference between a mortgage and a homeowner loan?
A mortgage is a loan specifically used to finance the purchase of a property. It is secured by the property itself and typically has a long-term repayment period. On the other hand, a homeowner loan, also known as a home equity loan or second mortgage, allows homeowners to borrow against the equity they have built in their property. Homeowner loans are often used for home improvements or other personal expenses.
Can I have a residential mortgage for a second home?
Yes! It is possible to obtain a residential mortgage for a second home. However, the eligibility criteria and lending requirements may differ compared to purchasing a primary residence. When applying for a mortgage for a second home, you will need to inform the lender which property will serve as your main home. Lenders may consider factors such as your financial situation, income stability, and the purpose of the second home. Consult one of our mortgage advisors, who can guide you through the process and help you explore the available options for financing a second home.
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Remember | Your home may be repossessed if you do not keep up repayments on your mortgage.