Everything you need to know to get you started with your mortgage

How Much Can I Borrow?

How much you can borrow will depend on the size of your deposit and affordability rating. There are many free mortgage calculators available online to give you an initial gauge of your borrowing potential – we recommend Money Saving Expert – but the best way to get a more accurate figure is to speak to lenders directly or to seek the advice of a mortgage broker. Depending on your circumstances, we work with a number of reputable, local brokers and will happily put you in touch when you’re ready to find out how much you can borrow.

As estate agents, we advise you to take financial advice regarding your budget, and ideally obtain confirmation of a ‘mortgage in principle’ prior to booking any viewings. This will ensure that, when you find your dream home, you’re in the best position to make a formal offer, and not miss out to another bidder, who has more detailed evidence of their ability to proceed with the purchase.

What are the Different Types of Mortgages in the UK?

We know that buying a property is a big decision, and it can be overwhelming to navigate the different loan options available. To get you started, here’s a simplified list of the most common types of mortgages in the UK.

1) Fixed-rate mortgages: A fixed-rate mortgage is a type of mortgage where the interest rate remains fixed for a set period of time, typically two, three, or five years. This provides borrowers with the security of knowing exactly what their mortgage payments will be each month, regardless of changes to the Bank of England base rate.

2) Variable-rate mortgages: With a variable-rate mortgage, the interest rate can go up or down over time, depending on changes to the Bank of England base rate. This means that your monthly mortgage payments can change, making it harder to budget for the long term.

3) Discount mortgages: A discount mortgage offers a discount on the lender’s standard variable rate for a set period of time, typically two or three years. This means that the interest rate can still go up or down, but you’ll pay less than the standard variable rate during the discount period.

4) Buy-to-let mortgages: Buy-to-let mortgages are designed for people who want to buy a property to let out. The interest rates on buy-to-let mortgages tend to be higher than standard residential mortgages, and the amount you can borrow is based on the potential rental income of the property. Click to invest in a buy-to-let property

5) Equity release mortgages: Equity release mortgages allow homeowners over the age of 55 to release some of the equity in their property. This can be done through a lump sum payment or a regular income, and the interest on the loan is usually rolled up and paid off when the property is sold.

It is also worth considering whether you’ll take on a ‘repayment’ or ‘interest-only’ mortgage, and your broker will be able to discuss the pros and cons for both with you. 

What is the Difference between a Mortgage in Principle and a Mortgage Offer?

A mortgage in principle (also known as a decision in principle or agreement in principle) is a preliminary assessment by a lender of how much they may be willing to lend you based on some basic information you provide about your financial situation. It is not a binding agreement or commitment to lend, and you will still need to go through a full mortgage application process to obtain a mortgage offer.

A mortgage offer (also known as a mortgage offer letter) is a formal agreement between you and a lender to lend you a specific amount of money to buy a specific property. To obtain a mortgage offer, you will need to provide detailed information about your financial situation and the property you want to buy, and the lender will carry out a full assessment of your application, including a credit check and a valuation of the property. If your application is successful, the lender will issue you with a mortgage offer letter, which outlines the terms and conditions of the loan, including the interest rate, the term, and any fees or charges associated with the mortgage.

In summary, a mortgage in principle is a preliminary assessment of how much you may be able to borrow, while a mortgage offer is a formal agreement between you and the lender to lend you a specific amount of money to buy a property. A mortgage in principle is useful for giving you an idea of how much you may be able to borrow before you start house hunting, while a mortgage offer is the final step in securing a mortgage for a specific property.

Remortgaging your Property

Remortgaging is the process of switching your existing mortgage to a new lender or product. Most mortgages will have an initial term, usually two, three or five years, where the repayments are lower. For this reason, most homeowners will remortgage before going onto the higher rate. Other reasons for remortgaging include:

If interest rates have fallen since you took out your existing mortgage, remortgaging to a new lender or product with a lower interest rate could  reduce your monthly repayments and save you money.

If you currently have a variable rate mortgage, you may want to remortgage to a fixed rate product to provide certainty over your monthly repayments.

If your property has increased in value since you took out your mortgage, remortgaging could allow you to release some of the equity in your home to fund home improvements, pay off other debts or invest elsewhere.

You may want to remortgage to consolidate other debts, such as credit cards or personal loans, into your mortgage to reduce your overall monthly repayments.

You may want to remortgage to increase or decrease the term of your mortgage, for example, to reduce your monthly repayments or to pay off your mortgage sooner.

When remortgaging, it’s important to consider any early repayment charges or other fees that may apply, as well as the overall cost of the new mortgage, including any arrangement fees or valuation fees. Once again, we would always suggest speaking to a mortgage broker to ensure you get the right offer for your circumstances.

Find Out How Much You Can Borrow

We work with some of the best brokers in the industry (having tried them all) including FSA-approved financial planners and we’ll put you in touch with the person best suited to your needs.

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