Moving home mortgage - finding the best mortgage

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A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Whether you are a moving to another property for the first time, or you are an experienced house buyer, we can help you every step of the way.

Please check the information below and get in touch with any questions.

In simple terms, the more money you have for a deposit, the better – as with a larger deposit the Loan-To-Value ratio (or LTV, which is the ratio between the mortgage amount and the value of the property) will be lower. 

With a lower LTV, you will be able to access the cheapest mortgage interest rates.

However, savings for a deposit is a challenge for most of us. At the minimum, your mortgage deposit will need to be at least 5% of the value of the property you are buying, so a maximum LTV of 95%. For example, if you want to buy a home costing £300,000, you would need a minimum deposit of £15,000. However, please also note that not many mortgage lenders will be available to lend at 95% LTV, and the mortgage products tend to be more expensive. This is because lenders consider homebuyers with bigger mortgage deposits as lower risk than those with only a small amount to put down.

So, ideally, you should aim for a bigger the deposit, to access a wider choice of mortgage options and better mortgage rates.

The lowest deposit mortgages are usually 95% LTV deals which mean you need to put down a 5% deposit. Some lenders do offer mortgages up to 100%, but only if parents or family members can provide additional cash or equity as security. 

Mortgage regulation has become much more stringent, especially since the global financial crisis of 2008, when several lenders used to offer 100% mortgage deals (i.e. mortgages with no deposit requirement).

Let’s bear in mind that that mortgage lenders update their offering on a regualr basis, and every mortgage lender has different product and criteria.

Please talk to us to find out the best options available now to suit your specific needs.

If you are lucky enough to receive help from parents, it is possible to use gifted money towards your deposit.

If you are buying a home using a gifted deposit, the mortgage lender may require confirmation that the person gifting the money will have no claim on the property, and that they do not expect their money back. This can be easily achieved by providing the mortgage lender with a signed “gifted deposit letter” from your parents.

Please note that lenders would not accept gift deposits from friends or unrelated third parties. Anti-money-laundering regulation has also specific requirements to check the legitimacy of the gifted money.

Please talk to us should you plan to receive a gifted deposit.

If you plan to buy a property to let out, you will need a bigger deposit than you would if you buy a property to live in.

The vast majority of BTL mortgage lenders will require a deposit of at least 25% of the property value. Similarly to a residential mortgage, the larger the deposit you can put down, the more mortgage deals you will have available to you and the cheaper the mortgage rates.

MOST FORMS OF BUY TO LET MORTGAGE ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY.

There are also other ways you can get help with your deposit, through some government schemes. 

Please check out “What help can I get as a home mover?” or talk to us for more information.

Your Mortgage Experts do not advise on ISAs or other investments.

The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.

Help to Buy - Backed by HM Government  

The government has created two Help to Buy schemes to help first time buyers and home movers.

• Help to Buy: Equity Loan
• Help to Buy: Shared Ownership

If you’re buying a new build property in England, you may be eligible for the government’s Help to Buy equity loan scheme.  If you are an existing home owner, the Help to buy: Equity Loan scheme will be available until 31 March 2021. 

A new Help to Buy: Equity Loan for first time buyers only will be available from 1 April 2021 to 31 March 2023.

You will only need to put down a 5% deposit. The government will lend you a further 20% (or up to 40% in Greater London) of the property price interest-free for the first five years, so you’ll only need a mortgage for 75% of the buying price (or a mortgage of 55% in Greater London).

Equity loans are available to first time buyers as well as homeowners looking to move. The home you want to buy must be newly built with a price tag of up to £600,000.

You must not own any other property at the time you buy your new home with a Help to Buy: Equity Loan. This scheme is available in England only. Other schemes are available in other parts of the UK.

For more information, please visit the government website by clicking here.

Please note that by clicking on the link above you will leave Your Mortgage Experts' website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you. 

As there could be a lot of information to digest, please feel free to get in touch and we will be happy to help.

Help to Buy: Shared Ownership is another government scheme, that can be used with either a newly built home or with an existing one through resale programmes from housing associations.

Through the scheme you buy a share of your home (minimum 25% and maximum 75% of the home’s value) and pay rent on the remaining share. Later on, you could buy bigger shares of the home when you can afford to, through a process called staircasing. 

In England you could be eligible if:

• your household earns £80,000 a year or less outside London, or your household earns £90,000 a year or less in London
• you are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.

You will need to take out a mortgage to pay for your share of the home’s purchase price, or fund this through your savings. Shared Ownership properties are always leasehold.

Remember for Shared Ownership, in addition to any maintenance and service charge costs, you will need to pay the rent on the proportion of the property you do not own. The rent is usually 3% of the unsold equity.

To find out of shared ownership is available in the area you would like to live, you can speak to the Housing team in the local council, or housing association.

Not all lenders will give a shared ownership mortgage, but many of the major lenders will do so. 

Please get in touch to discuss further and we will be happy to help.

Mortgage lenders will check your credit profile at the credit bureaux, such as Equifax, Experian or Call Credit. 

Most mortgage lenders will also calculate a credit score to help work out whether you’ll be able to repay a loan or mortgage. 

If you are unsure about your credit score, it is a good idea to check it by contacting directly one of the main credit bureaux and obtain your credit report. 

If you have a good credit score, you would generally qualify for the best available mortgages in the market. If your credit score is impaired, you may be rejected by mainstream mortgage lenders; however, there are specialist mortgage lenders that would consider a case on its merit and that make their lending decisions through a more detailed and manual underwriting process. If you do not have a good credit score, please let us know and we will be able to advise you on the most suitable options available to you.

We will be happy to review your credit report, provide any clarification and discuss how it may impact your eligibility for the best available mortgage products, and advise you on best available options. Please get in touch.

It is very important that you are registered to vote, as this is one of the main ways that mortgage lenders verify your identity and address.

Please also make sure that you are registered at your current address; if you are unsure, please double check you’re not still registered at a previous address.

If you are not a UK, EU or qualifying Commonwealth national – and therefore can’t register to vote, please let us know as there would be other requirements and information to provide in order to verify your identity and address.

You can easily register on the elector roll at the link here.

Please note that by clicking on the link above you will leave Your Mortgage Experts' website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you. 

In recent years mortgage regulation have changed, and the rules that mortgage lenders apply to assess borrowers’ affordability have become more stringent. The main reason for  those changes was to make lenders more responsible about their lending decisions – and to make sure that their customers could afford what they borrow. Borrowers should be able to afford their mortgage repayments both at the time they apply and also in the future, when interest rates may go up. This sounds all common sense, but it also means there is a little bit of work and preparation that anyone wishing to apply for a mortgage will need to do.

At Your mortgage Experts we will review your income and expenditures, to establish the maximum mortgage you can apply for, and the monthly repayment you can afford.

We will need to get to know you, and understand your circumstances, preferences and needs in relation to your financial arrangements and future plans, by completing a “fact find”.

The fact find will help paint a "picture of you", it will establish a clear sense of your finances, and it will give you the confidence around what you could comfortably afford with your mortgage.

To aid with the affordability assessment, we will ask you for your income and a  breakdown of your expenditures. We would categorise your expenditures as follows:

Essential expenses

This is what you regularly spend on the things you cannot do without, such as food, water, gas and electricity, telephone, essential travel costs (e.g. travel to work, school runs), council tax, buildings insurance (it is a condition of any mortgage that the building must be insured), ground rent and service charges (only for leasehold properties), household laundry and cleaning.

Basic quality of living costs

This is what you spend on occasional essentials, such as leisure costs, clothes, household goods (such as furniture and appliances) and repairs, personal goods such as toiletries, basic leisure costs, TV licence, and childcare.

Repayments and other commitments

These are payments that you have to make, such as credit card bills, loans or hire purchase payments, child maintenance and alimony payments.

Source of deposit

As part of anti-money laundering regulation, we will need to confirm the source of your deposit.

If you’ve saved up for it, you will need to provide a bank statement from your savings account. If some (or all) of your deposit comes from your parents, you will need a letter from them stating whether the money is a gift or a loan. Please note that lenders would not accept gift deposits from friends or unrelated third parties.

A specific template should be used for the gift deposit letter, which we will provide. 

Other questions

To complete the assessment of your profile, we would also need to ask the following:

• Do you expect your income to change/ reduce?
• Do you expect your regular expenditure to change/ increase?
• Do you have any children or other dependents?
• Do you expect any other changes to your personal circumstances?

Your credit history is a critical element to establish what mortgage products you are eligible for. In simply terms, it helps the lender decide whether you will be able to repay what you owe, based on your previous borrowing activity,

During your conversation with the mortgage adviser, you will be asked if you have ever had a County Court Judgment or any other Court Order for non-payment of a debt, and if you have been late with making any payments on your existing credit commitments or utility bills. If you have, this could be an issue. Speak to us about what to do.

Also, we will ask if you have ever been in arrears with a mortgage, rent, loan, credit card or store card, been refused a mortgage or credit, or had a property repossessed. You will need to let us know if you’ve ever been declared bankrupt or insolvent. 

Mortgage lenders will generally only lend up to retirement age, which is often but not always between 60 and 70 years of age. 

If you expect to have an income in your retirement, you may be able to apply for a mortgage beyond the retirement age. In which case, you will also be asked to provide evidence of your pension plans. Please note each lender have different policy requirements when it comes to lending into retirements. Talk to us to find out best options available. 

A mortgage is money borrowed from a lender in the form of a loan, which is usually repaid over an agreed period (referred to as “the mortgage term”).

The amount of the mortgage you can borrow is based on your income and outgoings, and the ability to pay back that amount.

You will need to put down some of your own money towards the purchase of the property, and this known as a deposit. Usually a deposit is a minimum of 5% of the total property price.

The mortgage will be secured on the property by the mortgage lender. This means that the lender may repossess your home, if you do not keep up with the payments on your mortgage.

Taking up a mortgage is an important commitment and selecting the right one can be a daunting decision that you’ll need to think about carefully. It is important that you understand the different types of mortgages available, and please talk to us so that we can guide you and ultimately recommend the best one to suit your needs. 

There are the following main types of mortgages:

• Fixed rate: with a fixed rate mortgage, the interest rate, and therefore your monthly payments, are fixed for a specified period of time – and don’t change until an agreed date, irrespective of any changes made by the Bank of England to their base rate. You can fix a mortgage for an initial period of 2 to 3 years, up to 10 years or sometimes even more. The longer you fix the interest rate period, the more expensive the interest rate, so you will want to balance this decision, also based on your personal circumstances.
• Tracker: a tracker mortgage has an interest rate that typically follows the Bank of England base rate, plus a an additional margin. Your mortgage payments can therefore change and you don’t have the certainty that you would with a fixed rate mortgage. If the base rate rises, your payments will go up. 
• Standard Variable Rate (SVR): SVRs do not track the Bank of England’s base rate, but they are set by a mortgage lender, generally at their discretion. Therefore if this changes, there will be a corresponding change in your monthly payments. Lenders will tell you in advance about changes in your rate and when they will occur.
• Discounted variable: with these mortgages, the interest rate is a discount on the lender’s Standard Variable Rate (SVR) for a set initial period of time. The discounted rate will therefore move up and down in line with the lender’s SVR.

There are also other types of mortgage that may be relevant to your circumstances, such as offset mortgages, cash back, etc. 

Please talk to us and we will be happy to help.

The mortgage term is the period over which you choose to repay the mortgage.

Mortgage lenders will not typically allow you to choose a mortgage term that would extend beyond your planned retirement age.

For repayment mortgages

The mortgage term has a big impact on your monthly payments. Mortgages can span 25, 30 or also up to 40 years but you can choose to set a shorter term to pay it off sooner, which will increase your monthly repayments. The longer the term, the lower the monthly repayment. However, with a longer term, it means you will end up paying interest on the mortgage loan for a longer period, and thus you will pay more interests overall during the term of the mortgage.

If you would like to have the option to repay the loan as quickly as possible, you may want to consider a mortgage that allows you to make overpayments, rather than committing yourself to a shorter repayment term. In which case, you should check if any overpayment fees apply.

A solicitor or conveyancer will handle all the legal aspects of buying the property for you. It is an important decision, as you want to choose someone that can provide great service in what is likely to be a stressful process. 

Conveyancing is the legal term for transferring ownership of property, whether you are buying or selling. A solicitor will handle the contracts, carry out local council searches, deal with the Land Registry, and transfer the funds to pay for your property.

Make sure your chosen property specialist is a member of the Law Society of England and Wales/ Law Society of Scotland and a member of the Law Society’s Conveyancing Quality Scheme.

Conveyancers must be members of the Council for Licenced Conveyancers.

If you want help with finding the right solicitor, please get in touch and we will be happy to recommend you one.

When you buy a property, the mortgage lender will require a valuation of the property to ensure they are happy to lend against it. This lender’s valuation only happens after you have submitted the full mortgage application.

Whilst you are negotiating the property purchase price with the seller, you may also want to instruct a survey for your own peace of mind.

There are different types of survey:

• RICS Condition Reports 
• RICS HomeBuyer Reports
• RICS Building Survey
• Building or full structural survey

This report describes the condition of the property, identifies any risks and potential legal issues and highlights any urgent defects. It’s most suitable for new-build and conventional homes in good condition; no advice or valuation is provided in this survey.

A HomeBuyer Report is a survey suitable for standard properties in reasonable condition.

The report will identify if there are any structural problems, such as subsidence or damp, and other potential issues. 

However, the report doesn’t look beyond the floorboards or behind the walls.

Some home-buyers’ reports include a property valuation, that can help towards the property price negotiation.

If there’s no valuation included, you could always refer to the report’s suggestions for repairs to renegotiate the asking price.

The RICS Building Survey provides the same level of in-depth inspection as a building survey, but with a simple presentation style and a 1, 2, 3 rating system to help highlight the most serious issues. This report is mainly aimed at larger or older properties, or if you’re planning major refurbishment works.

The report can highlighting issues and advice on defects, repairs and maintenance and repair options and the consequences of not dealing with any potential highlighted issues.

This is the most comprehensive survey and is particularly suitable for older homes or homes that might need repairs.   

The report is extensive and it provides detailed advice on repairs, but it does not usually include a valuation. Although the surveyor can’t look under floorboards or behind walls, the report should include the surveyor’s opinion on the potential for hidden defects in those area.

You should ensure that your surveyor is a member of a recognised governing body such as the Residential Property Surveyors Association (RPSA) or Royal Institution of Chartered Surveyors.

You can find a surveyor on the RPSA or RICS websites.

Please note that by clicking on the links above you will leave Your Mortgage Experts' website.  Your Mortgage Experts has no control or responsibility for the pages you are about to access, or to where any subsequent links may take you. 

An Agreement in Principle (AIP), also known as Decision in Principle (DIP), Approval in Principle, Mortgage in Principle, or a Mortgage Promise, is a preliminary statement from a mortgage lender indicating what you might be able to borrow.

The Agreement in Principle (AIP) is not required when you set off to look to purchase a property. However, some estate agents will insist that you have one, as it is a way they qualify you as a  potential buyer. 

An alternative to a decision in principle, and often a simpler and more relevant one is to provide the estate agent with the name of you mortgage adviser, who can confirm your mortgage raising capacity. At Your Mortgage Experts we will be happy to talk to the estate agent to take the pressure off you.

It is worth bearing in mind the following:

• An Agreement in Principle is not mortgage offer, therefore it does not guarantee that you will be able to get a mortgage in the end.
• An AIP can also impact your credit score, if the mortgage lender runs a “hard check” that will leave a “footprint” on your credit record. This can negatively impact your credit rating if you apply for several Agreement in Principle in a short period of time. Fortunately, some lenders will use a “soft credit check” for AIPs which doesn’t leave a footprint. 

Please check with us for further details.

At Your Mortgage Experts we will be able recommend the most suitable mortgage lenders for you. Based on this, we can run an Agreement in Principle with the chosen lender.

In order to do so, we will need to gather some personal information, including your income and expenditure.

Life insurance is not compulsory, when you remortgage or get a new mortgage. It is taken for peace of mind that your loved ones will not have to struggle financially in the event of your death, as the lump sum paid out at your death can extinguish an outstanding mortgage commitment and/or help out your dependants financially.

You may already have life insurance through your employer, which is known as death-in-service policy. In which case, you should review the arrangement and check if this is sufficient to cover your mortgage. 

As life insurance becomes more expensive with age, it may make financial sense to take out a policy early in your life, and certainly at the start of a new mortgage, if you do not have an adequate policy in place already.

Life insurance pays out a lump sum to your beneficiaries when you die.

You should look for the best deal, not the cheapest one. Paying slightly higher premiums may mean you get additional benefits and the comfort that it will have been money well spent, should something happen to you ahead of time.

Life insurance is often taken out together with critical illness cover, which pays out a lump sum upon diagnosis of a specified illness.

Another type of cover is income protection, which pays you a monthly income if you are unable to work due to accident or illness.

The choice of the right protection cover will depend on your individual circumstances.  Please talk to us and we will be able to recommend the most suitable cover for you.

When you buy life insurance you pay a monthly premium, usually for a fixed term. If you die during this term, the policy will pay out a tax-free cash lump sum to your dependants.  

There are three main types of life insurance: level term assurance, decreasing term assurance and whole-of-life cover.

1. With level term assurance, the amount of cover you have remains the same during the term of the policy. This cover may be suitable alongside interest-only mortgages, as the mortgage amount you owe remains constant and does not decrease over time. The term of this life policy is generally chosen to at least match the term of the mortgage. You will get a pay-out if you die within the term.
2. With decreasing term assurance, as the name suggest, the amount of cover reduces over time. This cover is generally suitable if you take out a repayment mortgage, so that the amount of cover you have decreases along with the mortgage balance you owe. The term of this life policy is generally chosen to at least match the term of the mortgage. You will get a pay-out if you die within the term.
3. Whole-of-life insurance protects you for your lifetime, but means you’ll pay premiums right up until the point you die and they are typically more expensive, as the pay-out if of course guaranteed when you die.

The amount you pay for life insurance is based on your age and health, if you have any pre-existing medical conditions, whether you are a smoker, how long you want cover for (term), how much cover you need and the type of policy.

Premiums for decreasing policies tend to be cheaper than for level term assurance policies because the level of cover reduces over time. Premiums are most expensive for whole-of-life insurance because this type of cover provides protection for your lifetime.

Please talk to us for a personalised quote.