Frequently Asked Questions

A mortgage is a loan that is secured upon a property. The borrower agrees to pay back the loan over a certain period of time and the mortgage lender takes a charge over the property. They set an interest rate and the terms of the loan, which the borrower agrees to and then the property is used as collateral.

Your credit worthiness is an important aspect of getting a mortgage, but even with credit that isn't perfect there are lenders that may still accept your application. When you submit an application to a lender the majority of them will credit score you and at this point they will decide whether they are happy to initially accept you. If the first lender says no, there is usually a back up, and even then there are specialist lenders that offer more bespoke criteria. Its important to understand your credit, and therefore getting a credit report early can be very useful (please see our credit report section for more information).

The best answer for this is to put down as much as you are able to. The more deposit you put down, generally speaking, the better mortgage products you will have access to, and the less interest you will pay overall. The minimum deposit you should look to put down is 5%, however, there are some niche products where you only need £5k or even no deposit at all depending upon your circumstances. The type of property you buy may also mean you need to put down slightly more (e.g. newbuild flats or with certain buying/housing schemes). It's always worth speaking to a mortgage adviser as early as you can to check your eligibility and help you formulate a plan.

Whether buying or remortgaging you can expect to pay some, or even all of the fees set out below. The first is a broker fee, which you pay to your adviser for searching, arranging and processing your mortgage, this can range from £0 - £999 depending upon your circumstances and the broker you use. The second fee is the lenders booking/arrangement fee, these can vary from £0 - £1,500 and depending upon the lender some are even a percentage of the loan amount. These fees can usually be added to the mortgage, but you need to be careful as you may pay interest on fees added. The next fee to consider is a valuation fee, this is completed to make sure the property is a safe security for the lender and is valued at the correct price. Depending upon the type of valuation required this can range from £0 - £800. A lot of lenders will give you a free basic valuation (which covers off their requirements), but may not give you any information about the property. The final fee is the legal fee. This will range hugely depending upon whether you are purchasing or remortgaging as a lot of lenders will cover the cost of legal work on a remortgage, or give you cashback to cover the costs. On a purchase you will need to instruct your own solicitor and the cost of this can vary depending upon your circumstances. Please get in touch if you require an estimate.

The main things to have prepared before you speak to a mortgage adviser are: your proof of income; proof of outgoings/account conduct; proof of credit worthiness; proof of ID and proof of address. Whilst not every lender or broker will require all of this information, if you have it prepared you are in the best possible position. Proof of income relates to your payslips. If you are employed, it is advisable to have 3 months of payslips. If you are self employed, a lender will usually need a minimum of 2 years business accounts (if a LTD company) or tax calculations/SA302s and tax year overviews if a sole trader. Proof of outgoings/account conduct relates to things like your bank statements. This will allow a lender to assess your spending and how much money moves in and out of your account. 3 months is usually the maximum a lender would initially ask for. Proof of credit worthiness is usually completed through the lender credit scoring you, but to check, you should have a credit report to show to your mortgage adviser. Proof of ID may be required and this is best in the form of your passport or a valid driving licence. Proof of address documents are documents that you have received in the post and show you live where you say you do. A good example would be a utility bill, bank statement or council tax bill.

Your borrowing amount is based on a few elements, but breaking it down to the real basics, a lender will look at how much you earn and how much you spend on your credit commitments. They may also take into account your spending on council tax, utilities and essential monthly expenditure. They will also look at childcare costs, student loan, ground rent and any service charges for the property. Historically, lenders used an income multiple and took away your annualised monthly credit commitments, but it isn't quite as easy as that nowadays. The best way to find out how much you can borrow is to contact a mortgage broker. We use an array of information from different lenders to calculate how much you can borrow. 

A Decision in Principle is where a lender provisionally accepts you. You usually submit less information than you would for a full mortgage application but enough for them to assess affordability, some criteria and credit score you. These 'Decision in Principles' are usually valid for 3 months and you can then use them with an estate agent to prove you are able to get a mortgage. Whilst this is not fully underwritten, it is a good indicator of you being able to borrow the amount you want and get a mortgage. We regularly speak to clients who are starting to look at properties and complete a Decision in Principle for them to put them in the best position to secure the home of their dreams. They then come back to us to complete a full mortgage application.

This is what a lender uses to decide what product you are able to get. It is how much you need to borrow in relation to how much equity or deposit you have in/for the property. A good example is if you buy a house for £100k, and have £10k deposit, you would be at 90% Loan to Value (LTV). You would need a mortgage of £90k which is 90% of £100k. The bigger your deposit and the lower the LTV, the better products you will get. A lower LTV can also mean an easier credit score and more affordability, so it is always good to try and save as much as you can.

The first answer is to reduce your overall term when you remortgage. The lower your overall term is, the quicker you are going to pay off your mortgage. You can however also make overpayments and this is always advisable as it comes directly off the outstanding capital of your mortgage. Most lenders allow you to overpay 10% of your outstanding balance annually, with some giving you 20%. You can also get products that don't have any restrictions on you overpaying, but generally you will pay more for the privilege. 

The best way to look at this is the quicker you pay your mortgage off the less interest you will pay overall. That said, the monthly payments must be affordable and obviously you want to be able to have the lifestyle that you want. With this in mind, the best advice is to have the shortest term you can afford on a monthly basis.