What is a mortgage? In legal terms it’s the way a lender creates a security in your property for the money you’ve borrowed. For you, it’s the way you can borrow money to buy the home you want.
There are some lenders you will be familiar with, banks & building societies you see on the high street or in advertising. However, with the help of a skilled broker, you can increase your choice of lender from a much wider choice of banks, building societies and specialist lenders, all of which are competing to secure you as a customer. Brokers also benefit from exclusive mortgage products not available to customers applying directly.
Before going further, let’s see what’s involved in buying your home by clicking on the video below.
Your home may be repossessed if you do not maintain payments on any mortgage or loan secured against it.
What Type of Advice Can You Expect?
When considering where to find your mortgage advice you should be aware of what options are available to you. A G Mortgages Ltd will discuss your plans and make a recommendation offering a “whole of market” proposition from over 80 lenders
Other brokers may offer advice and recommend mortgages from a limited panel of lenders, whereas going directly to your bank limits you to those mortgages the bank offers.
Should I Choose a Repayment or Interest-Only Mortgage?
With the repayment mortgage, sometimes referred to as a capital & interest mortgage, each payment you make includes some payment towards reducing the capital (the money you borrowed) as well as interest charged on the capital. If the payments are maintained as agreed with the lender, you will repay the mortgage at the agreed date. In the early years your repayments will be mainly interest so mortgage balance will reduce more slowly.
With interest-only mortgages, you only repay the interest on the amount borrowed. At the end of the mortgaged term the capital is still outstanding so you will need to have a pot of money to repay the mortgage at the end of the term. Traditionally the preferred product for repaying the capital was a mortgage endowment policy (which included a set amount of life cover), although more recently Individual Savings Accounts (ISAs) and pensions are being used. However, you must be aware that the pot of money you build during the mortgage term may not be sufficient to repay the mortgage.
As part of the service, you will be advised on your options, and which is more suitable for your circumstances.
What’s The Difference Between a Fixed Rate and Variable Rate?
With a fixed rate mortgage your monthly mortgage payment is fixed for a specified number of months or years as agreed when you select your mortgage product. This may help you with your budgeting as you know what you will be paying for your mortgage each month.
With a variable rate mortgage (including products know as tracker, discounted, capped or standard variable), your monthly mortgage payment can increase or decrease depending on economic and market conditions. The interest rate may be linked to the Bank of England Base Rate or set independently be the lender.
As part of the service, you will be advised on your options, and which is more suitable for your circumstances.
How Much Can I Borrow?
Lenders need to satisfy themselves that the mortgage they offer you is both affordable today and sustainable. To satisfy the underwriting you will be asked to provide evidence of your income.
Whether you are employed, self-employed, working a fixed-term contract or have a combination of income sources, many lenders have introduced a more flexible approach.
With access to lender’s affordability models, criteria and underwriters, A G Mortgages Ltd will be able to assess and advise you on which lenders are likely to be suitable and how much you could borrow so you can feel more confident when buying or remortgaging your home.
What Deposit Will I Need?
If you are remortgaging your current home, a lender will use the current equity (the difference between the mortgage loan and the value of the property) to decide the loan-to-value which will impact the choice of mortgages offered.
When buying a new home, you will usually need to provide a deposit of at least 5%nof the purchase price, although some lenders offer mortgages where no deposit is required. The larger your deposit the wider the choice of lenders and the greater the choice of mortgage products.
Lenders will accept deposits from a wide variety of sources, including the proceeds from previous sales, savings including ISA’s, gifts from family members and sometimes friends, or from builder incentives when buying a new build.
Whatever your deposit, we will be able to discuss options available to you.
Credit Files, Credit Searches and Credit Scores.
Everyone has a credit file which holds information about such things as your address history, credit history and anyone you may have a financial link to. This data is used by all lenders when deciding whether to lend you money, whether a credit card, loan or mortgage.
On application for any credit, a lender will complete a credit search looking at your credit file to identify patterns of behaviour with your past credit to see if you are suitable for future credit. In addition, a lender completes a credit score, which looks at how well you match their preferred client profile. If your credit search and credit score are both acceptable, the lender is more likely to offer you a mortgage.
Your credit file holds information about you and those you have a financial connection to. Sometimes there may be outdated or incorrect information which you will be unaware of, but which can result in an application being declined. Typical examples might be unpaid bills at a previously rented property from after you left, or old phone contracts not closed properly. In rare case, you may have been the victim of identity theft. The credit reference agency may also be able to offer tips to improving your credit score or to identify and report suspicious/fraudulent activity to you.
There are 3 main credit reference agencies which lenders might use: Experian, Equifax, and TransUnion. However, each lender may have its own preferred credit reference agency, and sometimes the data can vary between the agencies. A G Mortgages Ltd has affiliated to Checkmyfile* which combines the data from all these credit reference agencies into a single report.
* Checkmyfile will pay A G Mortgages Ltd when you complete your validated trial.
What Costs Should I Consider?
Moving home or buying your first home involves costs for a variety of services so it’s important to budget for these.
The costs include: mortgage application fees, survey fees, legal fees, stamp duty and removal services.
First Time Buyers.
First time buyers are usually defined as applicants that have never owned a property in the UK or abroad.
It’s both exciting and daunting to start the journey to buying your first home, and many lenders have introduced schemes to help you. Speaking with family and friends can be a good place to start but it is really important to seek expert advice. A G Mortgages Ltd will be able to answer all your questions, and support you throughout your journey, starting with understanding your needs, and letting you know how much you can borrow and how much it will cost.
Home-Movers.
You’re moving home and might feel confident in your understanding of the process but what’s changed since you bought your current home?
Preparation is key and as a professional, I can help you go through the figures and assess the options with any existing mortgage, and any implications for your move.
Remortgaging for a New Deal.
If your current mortgage deal is coming to an end, you should have received a letter from your lender explaining how much your mortgage payments will increase and you may be offered a new mortgage product, but without any accompanying advice.
Before making any decisions, why not get impartial advice around your plans so that you will have the opportunity to compare your current lender with alternatives that may be more suitable.
Borrowing More.
You may need to borrow more money for home improvements, for big purchases, or to help children with their first purchase. Your first option may be to speak with your current lender and request a further advance.
However, your current lender may be unable to help. So what do you do if you if your current mortgage has a large penalty for moving to a new lender. Speak with A G Mortgages Ltd and explore alternative solutions.
Experienced and Newly Qualified Professionals
Some lenders will have mortgage products and criteria dedicated to certain “professional” occupations. This is where a lender expects an applicant in a certain profession to have a defined career path with expectations of increases in income. These lenders may offer larger mortgages than would be available elsewhere and are a good solution in areas with high property prices.
Occupations will include, but is not limited to: Accountants, Architects, Barristers, Chartered Surveyors, Engineers, Financial Advisers, Medical (Ambulance Workers, Dentists, Doctors, Nurses, Pilots, Police Officers, Solicitors, Teachers, Vets.
Complex and Unusual Incomes.
In today’s world, more clients have multiple sources of income, for example, commissions, bonuses, allowances, 2nd jobs, short-term contracting, bank hours, dividend income, DWP benefits, investments or pensions. You may even be paid in a foreign currency when you’re working abroad.
Lenders had previously considered you to be either employed or self-employed with simple rules about what was an acceptable source of income, but as incomes become more complex, lenders are adapting their approach.
However, lenders have a wide variety of rules about what incomes can be included in the assessment of what you can borrow, so specialist advice from a knowledgeable mortgage adviser can help you find the right lender to meet your borrowing needs.
Guarantors and Family Support.
Sometimes mortgage applicants have insufficient income or insufficient deposit to be able to secure the required mortgage, so lenders have created a variety of innovative solutions whereby a close family member can offer support by acting as a guarantor, or being a co-mortgagee, or offering additional security to the lender.
These can be more complicated arrangements than standard mortgages so specialist advice is essential to ensure everyone understands their obligations and responsibilities.
Foreign Nationals and “Ex-Pats”.
Being a foreign national living and working in the UK is not usually a bar to securing a mortgage, but understanding what the lenders’ rules are requires specialist knowledge to link your specific status to the right lender. Knowing what visa you have or your immigration status allows a mortgage broker to quickly find a solution. It may even be as simple as asking an applicant to send a share code available from the UK Government website.
As a UK national living abroad, you can still secure a mortgage and property in the UK, possibly for yourself if you’re planning to return to the UK or for a family member already living in the UK. Specialist lenders are available although there are likely to be some additional checks to be made as part of the application process.
Buying From Family.
There are times when you might be buying from a relative. Sometimes this can be at full market value and sometimes at a lower price.
Lenders can accept this arrangement and in some cases, no deposit is required from the purchaser. Instead the mortgage is based on the market value and the deposit is seen as the difference between the mortgage that can be approved and the market value.
This is an unusual scenario so speaking to a specialist mortgage broker can help all parties through the process and answer many questions.
Later Life Borrowers.
There may be a variety of reasons for older borrowers requiring a mortgage. Common reasons include: helping family buy a home by providing money towards a deposit; home improvements or modifications to make life easier; buying a 2nd home or holiday home; increasing retirement income; inheritance tax planning.
You may have another reason.
Whether you’re looking for a lump-sum of money, extra income , or a combination of both, there are more lenders now offering far more products to meet your goals. A G Mortgages Ltd can discuss your plans and explore your options with either direct access to lenders or specialists that can help you.
Adverse or Limited Credit History.
You may have concerns about being turned-down by a lender because of current or past credit problems or you may have been declined finance previously and wondered why.
Seeking advice could help you more than you might believe. It could be a small blip such as a missed payment on a credit card, or something more serious such as debt management plans, or bankruptcy. Whatever it is, when assessing your circumstances, A G Mortgages Ltd will work with you to find a solution.
Where your credit needs extra support, you might be referred to dedicated organisations that can help offer free advice in rearranging your debts to improve your finances.
You should always take specialist advice before securing credit commitments and other debts against your home.
Most people will be buying a pre-owned home with a traditional mortgage but there are a wide range of property classifications which may have specific implications and require more specialist mortgages.
New-Build Property.
New build properties can be an attractive option with additional benefits such as deposit incentives, kitchen appliances and carpets included, and a warranty. You may even be able to negotiate with the developer which style of kitchen or bathroom you prefer, and whether you can upgrade the flooring. It is likely the energy efficiency will be very good and this should help keep your fuel bills lower. Sometimes it’s just nice to get that “new build feeling” when you’re the first person to own the property.
However, new-build homes may require you to pay a reservation fee, or the property may be ready for occupation when you were expecting. If you are buying as part of a larger development, you should expect some ongoing noise and disruption from other parts of the development as construction continues so speak with the developer about their plans.
As some lenders have criteria specifically for new-build homes, early advice from A G Mortgages Ltd will help you plan effectively to secure the mortgage suited to your proposed purchase.
Shared Ownership.
Shared ownership may offer you more options if you’re struggling to buy the home you need, especially if you’re struggling to raise a large deposit.
With shared ownership, you can purchase a share of the property, usually starting at 25% of the market value, and pay rent on the remaining share of the property. Over time you can buy more of the property, known as “staircasing” which could lead to full ownership in the future.
This can be an effective way to buy a larger home for the long-term with a view to taking full ownership over the years. However, you should refer the the housing association which is offering the property for full details.
Second Homes.
You may wish to buy a second home for work or leisure purposes, or for a family member to live in.
Lenders will be able to offer you a mortgage subject to your income, but you will need to consider the higher rate stamp duty and ensure you have the correct insurance for the property.
If you’re buying abroad, there are considerations in regards to tax and legal rules of the country in which you are buying. If you’re looking at south-east Spain, A G Mortgages Ltd has partnered with Roda Sales near Murcia.
Buy to Let & Let To Buy.
If you have ever wanted to become a landlord, or maybe you inherited a property, there are a wide range of strategies and mortgages to suit you situation and plans.
Do you want to create a limited company? Do you want to build a portfolio of properties? What type of tenant do you prefer? What is an HMO and will I need a licence? What type of property is acceptable? What are the tax implications?
How much you can borrow is impacted by all of these questions so early professional advice is strongly recommended.
Not all buy-to-let mortgages are regulated by the Financial Conduct Authority.
Holiday & Short-term Lets.
With the growth of AirB&B has come a growth in people looking at buying property for short-term lets.
Lenders will assess these types of mortgage applications in a very different way to the traditional mortgage. By understanding these rules, A G Mortgages Ltd can help you prepare your business plan to present to a lender in the best way to help increase your chances of securing the mortgage finding you require.
Unusual Property & Construction Types.
Not all properties will meet the traditional type of home and many lenders are very traditional. Examples of unusual properties that you may find are: freehold flats; flats above commercial property such as retail units; small studio flats; concrete constructions; large acreage.
Lenders are available to meet the majority of these unusual properties and A G Mortgages Ltd will be able to let you know if the property you wish to buy is unsuitable, saving you time and money.
Self-Build Projects.
Have you ever watched Grand Designs and thought “I could build my own home just the way I want it to be”? It can be very complicated and needs professional support throughout.
You may need a specialist “self-build” mortgage where the funds are issued in stages in line with progress of the project. At the end of the project when the property has been finished and all the appropriate completion certificates are issued, you might need to remortgage onto a more traditional mortgage, which often has more attractive interest rates.
Bridging Loans & Auction Finance.
There may be times you need finance quickly or for a short period of time. You may be looking to buy and renovate a property before selling it; you may need to buy a new home before completing the sale of your current home; you may be planning to purchase at auction which often requires you to pay for the property within a few weeks.
Bridging finance could be the solution where you can secure short-term money, usually secured against property you already own, and which can also be secured against more than one property.
Once the money is no longer required, you settle the loan, sometimes by selling the property you bought, selling other property or by refinancing into a more traditional mortgage.
Commercial Property.
Commercial mortgages are assessed in a very different way to residential mortgages. You may need long-term or short-term finance. You may be buying an existing business or property, or you may be looking for development finance.
Whatever type of commercial finance you are looking for, it will be a bespoke solution based on your plan and experience so speak to a specialist as early as possible so you know what your options are.
