Frequently Asked Mortgage Questions

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Frequently Asked Mortgage Questions
Frequently Asked Mortgage Questions

Frequently Asked Mortgage Questions

Jon Porter and Julian Nicolls answer some frequently asked mortgage questions.

Podcast was accurate at point of publication and is subject to change (May 2023)

Think carefully before securing other debts against your home.

You may have to pay an early repayment charge to your existing lender if you remortgage.

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

Most Buy-to-Let Mortgages are not regulated by the Financial Conduct Authority.

Content was accurate at point of publication and is subject to change (May 2023)

What does a mortgage broker do?

A mortgage broker is really there to make your life easier, whether you’re buying a house, remortgaging, changing things with an existing mortgage… or perhaps you’re not sure which direction to go in.

A broker can be there from the start to hold your hand through the whole process. Obviously we arrange the mortgage for you, but also explain everything and help along the way. Years ago, people would waste days walking up and down the high street trying to find the right way to do things.

That’s the thing of the past now – just sit down with a specialist mortgage broker like ourselves and we can do the whole thing for you.

When should I see a mortgage broker?

As soon as you’re considering any sort of borrowing against a property. It’s never too early. Get an understanding that you can do what you want to do. There’s no point in finding a property and not being able to achieve the finance to get it. So see us soon as possible.

How much deposit do I need as a First Time Buyer and how much can I borrow?

The simple answer on the deposit is none – because there are schemes where you don’t need a deposit at all. There are different ways it can be structured.

There are also schemes where a family member can put their assets against the mortgage as a deposit. There’s various ways of doing it.

Linking to what John said about when to see a mortgage broker, often First Time Buyers hold back – they think they need to save a deposit or wait for certain things to happen. Don’t wait – if you’re thinking about buying your first home, speak to us straight away.

We can actually give you that timeline and get you mortgage ready. You might go for a scheme where you don’t need a deposit, or you might get some good guidance on how to get that deposit together.

How do mortgage rates and interest work?

There are different products available – there’s fixed rates, trackers, variable rates. It’s all about tailoring them to your requirements. It might be a fixed rate, which pretty much does what it says on the tin, or sometimes there’s a variable rate required. We advise according to what best suits your needs.

What sort of help and schemes are available for First Time Buyers?

This can be a bit of a minefield for First Time Buyers, but a broker will help you navigate through that. There are three different areas – government schemes, builder incentives and lenders offering certain options.

Government schemes include shared ownership, where you buy part of a property and then the rest of it is owned by a housing association that you pay rent to. That can be a really good way of getting into a bigger house or flat than you could otherwise afford, because the rent is typically less than the mortgage.

With builder incentives, new build developers might pay your stamp duty or contribute towards your deposit, which can really help you get into your first home. Also, different lenders have schemes, as we mentioned earlier, where you may not need a deposit or you can bring a family member in to boost affordability.

There are lots of schemes available, and they’re not all restricted to First Time Buyers. It’s another reason to have a chat with your mortgage broker.

Can your mortgage cover your stamp duty?

Technically yes, but it’s essentially using part of your deposit. You would need to increase your borrowing amount because you’re reducing your deposit. But it all depends on where you are, what you’re buying and whether stamp duty is payable. We will advise you on that as well.

Who is classed as a home mover?

This is anybody who already owns a home and is buying a new place with a mortgage. It could also be somebody who’s previously owned a property and is now buying a new home.

It’s a term that people can get tied in knots over – am I a First Time Buyer or a home mover? While it’s relevant for stamp duty, it’s not always relevant to the lender. Some lenders will do special deals for First Time Buyers, some lenders do special deals for home movers.

It’s not something to worry too much about, but typically a home mover has already owned a property and is buying a new one.

What is porting?

Basically it’s transferring your existing mortgage to a new property. We would want to give advice on that, to see whether it’s the most suitable option. There may be reasons to do additional borrowing, or perhaps lower your borrowing.

We’re here to give you advice, because there could be different rates. We need to look at the tie-in periods for your ported product and try to match things up as much as possible. We would always advise on whether porting is the best option.

What are my remortgage options?

Just to clarify, remortgage actually means moving your mortgage from one lender to another. People often think it means borrowing more money with the same lender.

Both are options, but typically people remortgage from one lender to another to get a better deal. They might also need to borrow more money, which is known as capital raising. That can be done for myriad reasons: home improvements, holidays or because there’s been a change in circumstance.

Quite often clients will come to us with a problem – a need to finance something. Restructuring debts via remortgaging is an option that a mortgage broker will look at. We always have an open mind when we sit down with clients to work out the best route to go down.

It’s all about individual service and individual advice to see if remortgaging is the best way to get you on the right track.

Why remortgage at the end of a fixed rate deal and what happens if I don’t re-mortgage after my deal expires?

You will go over to the lender’s standard variable rate at the end of the fixed period – and that’s what lenders want. It’s where they make their money.

We will do an annual review to see if your rate’s still tied in for your fixed period. We’ll discuss the future to stop you going over to that standard variable rate and, instead, get you the most suitable deal out there to meet your requirements.

How do mortgage overpayments work?

Very simply, it’s just paying more than your normal monthly mortgage payment. It helps reduce the capital. You can do it to shorten the term of the mortgage and pay it off more quickly. Or, you could reduce the monthly payment and keep the same mortgage term – or even a combination of the two.

Speak to a mortgage broker when you’re looking at restructuring a mortgage. If you’re looking at making a large repayment, we need to work out the best way of doing that.

When you set your mortgage up, we will take account of your expectations of how much you’re going to pay off the mortgage. Might you be expecting a bonus? Might you be working overtime some months? Might your work be seasonal? Perhaps you want to vary the amount you pay on your mortgage through the year.

There’s lots of different ways you can use overpayments, all with the aim of saving interest and getting rid of the mortgage more quickly.

How does a Buy to Let mortgage work?

It is different in how the income is assessed. A residential mortgage is based upon your income, whereas Buy to Let is based upon the rental income. It’s all about getting an understanding of the deposit you will need and what’s going to be achievable for the monthly rent from the property. We’d be able to advise accordingly.

How many Buy to Let properties can I own?

There isn’t really a limit, but there are different types of Buy to Let borrowing and different ways those mortgages will be assessed by the lender, depending on how many you have.

A typical Buy to Let landlord has one or two properties. That’s straightforward Buy to Let lending. If you’re looking to create or grow a larger portfolio of properties, that comes under the category of Portfolio Landlords. The regulator requires that these mortgages are assessed slightly differently, and it’s more of a specialist area.

You can also explore whether it makes sense to own those properties through a limited company rather than your personal name. Again, it’s something a mortgage broker can advise on, in conjunction with your accountant to decide which is best.

Is there anything else you’d like to get across?

Whichever your circumstances and whatever stage of life you’re in, if you’re a property owner and you have a mortgage, or you’re thinking of borrowing, have a chat with a mortgage broker. Keep up to date with what’s going on, so you know what your options are.

We keep in touch with our clients regularly. We don’t just ‘fix and forget’ – we want to understand what’s going on in your life. There are other things that might need to be adjusted or changed.

Nobody wants to be worrying about the mortgage every day, but it’s something to think about regularly.