Your mortgage is probably the largest financial transaction and commitment you are likely to undertake. So it’s no wonder more and more people are seeking mortgage advice which is individually tailored to their own needs and requirements.
We at Fairfield Financial Solutions Ltd are not tied to any particular lender, which means that we have the ability to act on your behalf in order to establish the most suitable mortgage solution for you. We look at your mortgage not only as a loan to buy your home, but as part of your overall financial profile, tying it in with your intended retirement date, plans to start a family or when you may wish to move home.
Based on the information you provide in an initial meeting with our adviser, we will search the mortgage market reviewing the lenders available, some of which offer exclusive products to brokers such as ourselves. It is essential that you provide truthful and up-to-date information to us to enable us to determine which lender will offer you the most suitable mortgage options suited to your particular requirements.
Residential mortgages are one of the most common forms of credit in the UK, making it possible for millions of homeowners to afford their homes. Unless you are in the fortunate position to buy a property outright, you will need to borrow some money and that’s where the mortgage comes in.
A long-term loan taken out by one or more individuals to purchase a home in which they are going to live, a residential mortgage comes in various formats, making it easier to find one that best suits your circumstances.
Residential mortgages include fixed rate, variable or tracker mortgage options and are granted on homes that are used as a residence by the borrowers. It must not be rented out to tenants or used for commercial purposes.
Residential mortgages require a cash deposit, starting from a minimum of 5% of the property value.
A residential mortgage is calculated on your loan to value ratio (LTV). Your LTV is the amount borrowed set against the value of the property. E.g. if you are looking to purchase a £200,000 property and have £40,000 deposit, you will need to borrow £160,000. This gives you an 80% LTV ratio with your deposit accounting for the other 20%. The lower the LTV rations the less risk for lenders and the better interest rates you’ll see offered. 80% and less is seen as a low LTV ratio and anything above is at the high end.
Interest is the fee a lender charges for lending you money in the first place, and is charged on the value of the mortgage owed. This means you will repay the value of your mortgage, plus the interest rates you have agreed.
However, you are unlikely to stay in a fixed interest rate for the duration of a mortgage. The three mortgage products are outlined below:
- Fixed Rate Mortgage – this sets out a monthly payment for a number of years, typically between 2 and 5. However longer options are available. This type of mortgage can be beneficial if interest rates rise significantly, however you will not benefit from falling rates.
- Tracker Mortgage – using the Bank of England’s base rate with a pre-agree mark up, this is a more changeable rate.
- Variable Rate Mortgage – changing at the discretion of the lender, this option means the cost of your mortgage may go up or down. However it is unlikely to be a sudden increase as lenders still need to remain competitive.
What kind of borrower are you?
Each residential mortgage can be tailored to fit the needs of different home buyers. Whether you are a first-time buyer, looking to remortgage or simply moving home, our advisers are here to provide impartial advice to ensure you find the product that’s best suited to you.
Call us on 01638 551476 to speak to one of our team.
Buy To Let mortgages are available specifically to buy a property to rent out. The main difference is that lenders take the potential rental income into account when deciding how much they are willing to lend.
These loans can be arranged on an interest only basis, although other options are available, and are calculated on your income and a percentage of the rental income you will receive for renting the property.
Available as fixed, discounted or tracker deals, these mortgages do usually require a larger deposit than a standard mortgage due to the higher risk involved. These risks are viewed as the property being left empty, or that a tenant may stop paying rent.
If you are looking to start a landlord portfolio or want to increase an existing one, let our team find the buy to let mortgage that’s right for you. Call our team on 01638 551476 to discuss your options.
The Financial Conduct Authority does not regulate most forms of buy to let mortgages.
Introduced by the Government in 2013, the Help To Buy Scheme has opened up the market to first time buyers in England. Coupled with low mortgage interest rates, and now available on new and old properties, first time buyers will only need a deposit of 5% in order to get a mortgage for up to 75% of the property’s value.
The scheme is aimed at those who would have otherwise been priced out of the market, allowing first time buyers to get a loan worth up to 20% of the property’s value (40% in London from April 2016. This leaves you only needing to pay a deposit of 5% if a 75% mortgage is given.
For example, a £10,000 deposit, could help you purchase a home worth up to £200,000. This breaks down into 5% for the deposit (£10,000), 20% for the government loan (£40,000), and 75% for the mortgage (£150,000). The benefit of using the government loan is that there are no loan fees for the first 5 years of owning your home.
You will own your home, which means you can sell it at any time, but you’ll have to pay back the equity loan.
Are you eligible?
All applicants are subject to credit checks and stress tests, and each mortgage lender will have their own terms on eligibility.
To qualify you will need:
- a minimum of 5% deposit (the property value cannot exceed £600,000)
- a secured mortgage of up to 80% (75% for first-time buyers and new build properties)
- a clean credit history
- proof you can afford the repayments
To discuss your eligibility for the Scheme, just call one of our team on 01638 551476.
Commercial mortgages are loans secured against property that is not your home or residence. Buy-to-let mortgages are a special type of commercial mortgage, but generally this type of mortgage is taken on for loans of over £50,000 (although some lenders have a minimum of £75,000 or more).
Typically granted for up to 70% of the value of the property, borrowers are required to have a cash deposit for the balance of the purchase price required. This is because lenders take the property you are buying as the only security for the loan. If you don’t have the cash you may be able to offer the lender additional security which may come in the form of another property in which you have considerable equity in.
Mortgages may still be granted on leasehold properties, but it is usual for lenders to require more than 70 years on the lease before additional security is required.
With many options open to the commercial markets, understanding your options is key. Our specialist Commercial Broker is here to offer impartial advice to ensure your business is on the best track possible. To find out more contact our office on 01638 551476.
Remortgaging is the process in which a homeowner or commercial property owner switches to a new mortgage product. This can be with the same or a different lender, and is usually done when a fixed rate mortgage term ends. If nothing is actioned after your term ends you’ll be moved onto a long term variable rate, which can typically be higher than the rates offered on new mortgage deals.
Things to consider:
Fixed vs variable: What best suits your circumstances at the time of remortgaging? Would you prefer the security knowing exactly what your monthly repayments will be for the next few years, or would you be happy to take a bit more of a risk with variable options in order to take advantage of potentially lower monthly payments in the short term?
Arrangement fees: The mortgage with the lowest rate may not actually be the cheapest deal. Factor in the costs of arrangements fees, as you may find it cheaper to pay a slightly higher rate of interest if the set up costs are lower. There are many variables affecting these fees, but you may find the arrangement fee is lower if you are borrowing a larger amount for instance.
Other fees: There will be legal and valuation costs to factor in. Although lower than when you originally bought your property, your new lender will require a valuation survey and you will need to instruct a solicitor.
Deposits: The amount of equity in your home may make a difference on the competitive mortgage products you can qualify for.
Early repayment charges: Consider the early repayment charges, should you be unsure of how long you want to be tied to your current mortgage deal. Some products will include an early repayment charge, whilst others, such as lifetime trackers for example, are completely penalty-free.
Exit fee: Your current lender will most likely charge an exit fee, covering the administration costs of closing your account. Costs vary depending on the lender.
To discuss your options for remortgaging, contact our team on 01638 551467.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
For mortgages, we can be paid by commission, a fee, or a combination of both. Our typical fee is £250 and is payable on receipt of the mortgage offer.
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