Mortgage Questions & Answers


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Below is a list of frequently asked questions relating to mortgages.  If you have a question that is not listed below, please complete our mortgage question form.

How much can I borrow?
What costs are associated with taking out a mortgage?
How are my monthly payments calculated?
How much deposit will I need?
Do Mortgage Advisers charge fees?
Who are the best lenders?
What type of mortgage is best for me?
What is the process for buying a house?
How long will it take for a mortgage to be accepted?
What paperwork do I need to complete for a mortgage?
Which solicitor will do the conveyancing work?
What support will be available once I have taken out a mortgage?
I'm self-employed - can I still get a mortgage?
I have a bad credit rating - can I still get a mortgage?
If my mortgage adviser doesn't charge a fee, how do they get paid?
What is an Early Redemption Charge?
Do lenders require me to take out life insurance?
I'm struggling with my current mortgage - can you help?


How much can I borrow?

The amount you can borrow for a mortgage depends on several factors, which include:

  • The size of your deposit
  • Your income
  • Your credit rating
  • The value of the property you are purchasing / remortgaging
  • Your overall affordability

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What costs are associated with taking out a mortgage?

There are a number of costs associated with taking out a mortgage, which can include:

  • Arrangement Fee (typically £300 - £1,000)
  • Valuation Fee (typically £200 - £300)
  • Higher Lending Charge - only imposed by some lenders on those who wish to borrow more than about 90% of the property value and will usually be about will usually be 1.5% of the mortgage loan amount
  • Early Repayment Charge (ERC) - only applicable if you want to pay off your loan during the discounted or fixed period of your mortgage deal and will usually be 2 - 4% of the mortgage loan amount

All costs should be notified to you in your Key Features Illustration (KFI) or quote, which will be given to you by your Mortgage Adviser.

There are other costs that are associated with moving home too, which include removal costs, solicitors costs (conveyancing) and if you're selling a house through an estate agency, estate agency fees.

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How are my monthly payments calculated?

Your monthly mortgage payments are based on four main variables:

  1. The mortgage loan amount
  2. The term of of the loan e.g. 25 years
  3. The interest rate
  4. Whether it's a repayment mortgage, interest-only or a combination of both

You can use our mortgage calculators to work out how much you might pay on a mortgage.

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How much deposit will I need?

This depends on a number of factors such as the lender, your credit rating and income, but for a residential mortgage, you will normally require at least a 10% deposit on the value of the property.  If it's a buy-to-let mortgage, this will increase to at least 20%.

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Do Mortgage Advisers charge fees?

That depends on the mortgage adviser that you are using and fees typically range from £195 upwards (this could be requested up front).  All Independent Mortgage Advisers at our sister company Money Advice Financial Services do not charge fees.

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Who are the best lenders?

There is no single best lender.  Many lenders tend to specialise in cerain areas such as buy-to-let mortgages or sub-prime for example so where one lender might offer some really compeitive rates for one person, they might not do for someone else who is in a different situation.

Our sister company Money Advice Financial Services have access to the whole of the market, so can search virtually all mortgage lenders for the best deals and sometimes have access to exclusive deals with certain lenders.

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What type of mortgage is best for me?

There is no single answer to this question as everyone's circumstances and requirements are different. The best course of action it to seek independent professional advice before making any decision. At the same time, it also helps to know more about the types of mortgages.

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What is the process for buying a house?

Buying a house is one of the biggest financial decisions that you will make in your life. It can be a lengthy and complicated process, but luckily there is a lot of good advice around helping you to make your home-buying experience as easy and problem-free as possible.  The house-buying process can be summarised in the following steps:

  • Work out how much you can afford (a good mortgage adviser will help with this)
  • Get a mortgage agreement in principle (AIP)
  • Choose your home
  • Make an offer
  • Make an application
  • Choose a solicitor
  • Have a survey and valuation done
  • Arrange for Life Insurance
  • Finalise your Mortgage with your solicitor
  • Exchange contracts and finalise financial details
  • Organise your move
  • Move in!

Our sister company Money Advice Financial Services will take you through the whole process and help you to understand what is happening and why.

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How long will it take for a mortgage to be accepted?

This depends on a number of factors, but typically an agreement in principle (AIP) can be completed within 30 minutes and an application should be accepted within 24/48 hours - subject to the information on the application form being correct.  What takes time for a mortgage offer to be fully accepted can include outside influences such as a survey and/or a home buyers report and these can take anywhere from a week to several months.

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What paperwork do I need to complete for a mortgage?

A good mortgage adviser will be on hand to guide you through the house buying process and will advise you on what paperwork you will need to produce and when.  The paperwork will include:

  • Proof of identity e.g. photographic evidence such as a driving licence or passport and proof of address (e.g. utility bill)
  • If you are employed, proof of salary from your employer i.e. P60, wage slips
  • If you are self-employed, copies of your audited accounts
  • If you are working on a short-term contract, evidence of the length of your contract
  • Existing mortgage statement, verifying existing repayments and lender
  • Details of your wider financial circumstances e.g. bank statements

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Which solicitor will do the conveyancing work?

You can either choose your own solicitor or we can arrange one of our trusted partners to carry out the conveyancing and any other legal work that's required relating to the purchase of your new home.

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What support will be available once I have taken out a mortgage?

If you have arranged your mortgage through one of the Money Advice Financial Services Mortgage Advisers, you can expect them to give you information and guidance on arranging utility providers, protection, helping with budgeting and anything else you may need help with.  They will also be available anytime you have any questions relating to your mortgage and will conduct periodic financial reviews to help ensure your financial products are both competitive and suitable for your circumstances.

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I'm self-employed - can I still get a mortgage?

Yes, but it is not as easy as it was before the credit crunch of 2007/2008.  You will need to supply audited accounts (typically going back 3 years) and bank statements.  Our sister company Money Advice Financial Services can search the market for you to find the best lenders for the self-employed.

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I have a bad credit rating - can I still get a mortgage?

Yes, though the lending criteria is usually more strict for those with a poor credit rating.  This can include larger deposits, a higher income multiple (in comparison to the mortgage loan amount) and usually a more stable income.

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If my mortgage adviser doesn't charge a fee, how do they get paid?

Mortgage Advisers get paid from the lender what is known as a procuration fee.  This can be a percentage of the loan amount or a flat fee and is paid for the work the adviser does in searching the market, giving advice, dealing with paperwork and liaising between the client and other people involved in the purchase of the house e.g. the lender, solicitor, estate agent etc.

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What is an Early Redemption Charge?

An Early Redemption Charge (ERC) is a fee imposed by a lender in the event of redemption of all or part of a loan before a specified date or period of time (usually the mortgage deal period).  The ERC might be several months interest or a percentage of your loan, but either way, it could cost you several thousand pounds.

Once the special deal period is over, then the ERC no longer applies and this can be a good time to speak to your Mortgage Adviser about what other deals on the market might be suitable for you.

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Do lenders require me to take out Life Insurance?

No, but life insurance is strongly recommended if you have a partner or family that rely on your income to cover the mortgage and other living expenses.  If you do not have dependents, then Critical Illness Cover, Mortgage Protection Insurance and/or Income Protection Insurance may be more suitable.

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I'm struggling with my current mortgage - can you help?

The first thing to do if you are struggling to pay your mortgage is speak to your lender of Mortgage Adviser.

Money Advice offers a full range of financial services, which include family budget planning and Free Debt Help & Advice.  It is important that you prioritise your outgoings and pay the really important things first.  These include your mortgage and other day-to-day living expenses such as utility bills, food, childcare and council tax.

A tailored debt solution may be able to help you negotiate lower payments or even 'write off' other debts that you cannot afford to pay.  These debts include unsecured debt such as credit cards, personal loans, store cards etc.

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Useful Links

>>> Money jargon simplified
>>> Buy To Let Mortgages
>>> First Time Buyer Mortgages
>>> Remortgages
>>> Mortgage Enquiries
>>> Mortgage Calculators
>>> Mortgage Payment Protection Insurance
>>> Equity Release
>>> Debt Help & Advice

Your home may be repossessed if you do not keep up repayments on your mortgage.

 

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Mortgage Questions & Answers