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.
What Is A Mortgage?
A mortgage is a loan that enables you to purchase or refinance a property.
The mortgage offer sets the terms and conditions of how the lender will give you the money to buy your house or flat.
This will include your personal information, the duration of the loan, and the interest rate. The loan is “secured” on your property, and so the mortgage offer will also mention the property address and the property value.
When you take out a loan, you’re promising the lender that you’ll use the money for its intended purpose and repay it over time.
As a mortgage is a loan secured against your home, your home may be repossessed if you do not maintain repayments on your mortgage or any other load secured against it. You may have to pay an early repayment charge to your existing lender when you remortgage.
What Is Loan to Value (LTV)?
The loan-to-value ratio is a measure of the riskiness of a loan.
The loan-to-value ratio (LTV) is a financial term used by lenders to express the proportion of a property’s value that they are willing to offer as a loan.
The loan-to-value (LTV) ratio is the proportion of the value of a house you want to purchase that your mortgage covers. To illustrate, if the value of the desired home is £500,000 and you have saved up £100,000 for a down payment (that in this example is 20% of the property purchase value), then you will require financing in order to cover the remaining 80%of the property’s price. So your mortgage will be £400,000. Therefore, in this example scenario, your LTV would be 80%.
Having a lower LTV usually means you’ll have more options and better interest rates than if your LTV is higher.
As you pay down your mortgage, the loan-to-value (LTV) ratio decreases. So when it’s time to remortgage, your LTV will usually be lower than when you first took out the mortgage.
For example, if you’re remortgaging 3 years later and your remaining mortgage amount is £325,000, your LTV is now 65% (or £325,000/ £500,000).
How Much Will My Mortgage Cost In Total?
Being aware of the total cost is essential when taking out a mortgage, as this encompasses not only the interest rate but also other potential fees and incentives (for example, cashback).
Lenders sometimes try to “tease you in” with a low-interest rate, but that mortgage might have several fees that end up costing more than a mortgage with a slightly higher interest rate and no fees.
Some potential fees you might incur are an arrangement fee for the lender, an administrative fee paid to the legal team, and early repayment charges (a percentage of the total if you choose to overpay or switch mortgages during your fixed term).
To sweeten the deal, some lenders offer perks like “free legal” (having solicitors paid for by the lender), free valuations of your property, and cashback after you close on the loan.
What Is The Annual Percentage Rate of Charge (APRC)
APRC is the Annual Percentage Rate of Charge. For recommended mortgages, you’ll see an APRC next to other relevant information.
APRC calculates the average interest you would pay over the entire mortgage term by combining the product rate during the initial deal period (e.g. the rate for the initial 2 year fixed rate period), with your lender’s standard variable rate (SVR). After your initial term ends, you go onto the SVR unless you remortgage.
However, APRC presumes you’ll never remortgage, even though getting a new mortgage will usually secure you a lower rate than an SVR. Therefore, if you’re intending to switch deal at some point during your mortgage term, APRC will of course change.
What Is An Evidence of Research?
A list of the top 50 mortgage products, sorted from least to the most expensive.
When we recommend a mortgage to you, we will also send you an EOR (evidence of research) list.
After we personally search for the best mortgage that meets your needs, we sort the results by overall cost. The top mortgage on that list may not always be the best choice available to you, because it may not fit a need you have specified or you may not meet the underwriting acceptance criteria for that product.
When it comes to mortgages, we’ll always recommend the first one that fits your situation and explain if other cheaper mortgages may not be available or suitable for you. If there’s something on your report that you don’t understand, just ask your mortgage expert.
If You Are Stuck Trying to Decide Between Two Mortgages That Cost The Same Amount, Here Are Some Tips.
How can I be sure I’m getting the best product deal?
Although cost is a primary concern when taking out a mortgage, we want to ensure you end up working with excellent lenders who won’t make mistakes processing your application. So even if cost isn’t as big of a factor, we’ll let you know about the lenders with the best reputation and customer service.
Our experts will provide you with two documents after you chat with them.
The KFI, also known as the European Standardized Information Sheet (ESIS), provides essential information to consumers in a standardized format.
This document provides all of the details about the lender and the mortgage product recommended
The key facts illustration will clarify:
- Mortgage amount
- The term of the mortgage
- Interest rates (during and after any initial deal period)
- Monthly payments (during and after any initial deal period)
- Any fees charged by the lender (including when they will need to be paid)
- Any additional elements, such as free legal service or cash back, ability to make overpayments and so on. Your Mortgage Experts will discuss all of these in detail with you.
Evidence of Research (EoR)
Thanks to our research technology, we are able to search mortgage products from across 90+ mortgage lenders, and therefore we will provide you with a list of available products from this comprehensive range from across the market. Please bear in mind that you may not qualify for all of those, and not all products may be suitable to you. Our Experts will select the ones that you will qualify for an will explain this to you.
EoR is dedicated to finding you the best available mortgage/lender for you specifically, based on your personal information and circumstances. We take into account what you want and need, as well as your background and scoring, in order to recommend the best available option.
Keep in mind that you can always talk to your adviser about other options, or even apply with a different lender if you have a preference.
What Is An ESIS?
A guide to understanding your mortgage illustration document
European Standard Information Sheet (ESIS)
This document contains the essential terms of your new mortgage recommendation, including information on the borrower and lender, interest rates, payments and charges. It is crucial that you understand it entirely as it will be used to create your mortgage contract with the lender.
The illustration has been produced by us and not the lender, which means that there may be small discrepancies in the quotes from time to time. This is due to rounding up or down of % points. However, you will receive a mortgage offer document from the lender with fully accurate information if you choose to proceed with what Your Mortgage Experts has recommended.
For how long is it valid?
The information in the ESIS document is only current for the day that we generate it. The data we use to research products can change at any time, but lenders may make changes at their own discretion. Nevertheless, we are always checking for updates so that you will be aware of potential changes before they happen. This way, nothing catches you by surprise further down the line or if a better deal becomes available.
Is this a mortgage offer?
No, and ESIS is not a mortgage offer. An ESIS is only an example of the kind of mortgage we think would be best for you, given what you have told us and the current market trends.
What is an Agreement in Principle (AIP) or Decision in Principle (DIP)?
One step closer to owning our dream home.
A Decision in Principle (DIP) is a certificate you’ll receive from a lender that indicates the amount they are likely to lend to you. It is often also called Agreement in Principle (API).
A DIP is not an offer for a mortgage
DIPs don’t force either party to the agreement to commit; for example, you might want to keep shopping around or your circumstances could change after we tell you the outcome of your AIP application. The AIP is not a guarantee from the lender but it’s nonetheless an important first step in any mortgage application process.
This is the step where we check your credit.
The DIP lender credit-checks you for affordability and makes the decision based on that information. By accessing their system, we are able to do a search on your behalf that will show up under the lender’s name rather than ours.
If you’re wary of a hard search on your credit, some lenders only require a soft check. We recommend getting an AIP from these types of lenders so that there’s no negative impact left on your credit file. Just get in tough with Your Mortgage Experts at https://yourmortgageexperts.co.uk/ to begin exploring decisions in principle with various lenders, and we will guide you through the process and sort this out for you.
How Long Will It Take To Get My Mortgage?
On average, how long does it take to complete a mortgage application?
The duration takes to secure a mortgage depends on numerous factors and is typically 4-8 weeks.
Can you provide me with a general estimate?
When you’re ready to apply with the lender we suggest, we’ll be able to give you a close approximation of how long it will take. We’ll have gathered a thorough understanding of your needs and requirements by this point, as well as how swiftly the processing team works on the lender’s side.
Get Started Online on Your Mortgage Experts website
Getting started online on our website is a quick and easy process that will only take you 10 -15 minutes.
Our advisers are here for you and will take as long as needed to understand your needs and circumstances. This includes a 30mins conversation for straightforward cases or an hour+ for more complex topics; we’ll always make sure everything is right before providing you with a tailored mortgage recommendation.
The amount of time it takes for us to come to a decision on your Agreement in Principle and give you our recommendation can range from 1 hour to 48 hours. This all depends on the urgency of the case and how soon we receive all relevant documents from you.
Can you give me regular updates on your progress?
We realize how critical it is to be updated on the status of your application at all times, and we strive to make a usually tricky and manual process less painful and instead more transparent, easier to navigate and faster. The timeframes after we have submitted your mortgage application largely fluctuate depending on the lender’s processing speed and the details of each case. Typically, this ranges from 2-4 weeks.
We will keep a close eye on the lenders associated with your case and frequently update you on any new developments, and progress. We also use a start of the art technology that lets you track progress online yourself, and you can also speak with us at any time.
Finding The Right Mortgage Option For You
Your Mortgage Experts will help you understand which available product deals will best suit you from our range of comprehensive offering covering more than 90+ lenders in the market.
To speak to one of our expert mortgage advisers, simply give us a call on 0208 154 1111 or Get Started Online.
Or drop us a line: hello@yourmortgageexperts.co.uk
Your Mortgage Experts, London W9 2HQ.
Luca Bertolino
Mortgage ExpertYour Mortgage Experts is led by Luca Bertolino with 20 years experience in financial services and in the property market. Through Luca’s wealth of knowledge and expertise, Your Mortgage Experts have become a trusted adviser that clients have come to rely upon for all their mortgage and protection needs.
