Mortgage FAQ’s

When your fixed rate ends if you don’t re mortgage you will revert back to the lenders Standard Variable rate (SVR), this is usually higher than your fixed rate typically between 3-4%. You can start the re mortgage process up to 6 months before your deal ends. Your current lender can switch your deal up to 3 months before your current deal with them ends.

A tracker mortgage is a type of variable rate that normally tracks the Bank of England base rate. These interest rates can go up and down and a meeting is held monthly by the Bank of England to determine this.

Tracker rates may or may not have and early repayment charge (ERC), if they don’t have an ERC this will allow you to re mortgage within your scheme period onto another product.

When you arrange a mortgage with your high-street bank, you speak to an advisor who submits your application, a call centre will then process your documents and an underwriter will make the final decision. A mortgage brokerage takes most of these steps away by dealing with it in house and as a result the brokerage will get paid a fee by the bank for doing the work.

Identification and address proof. Lenders will credit score you on application, they also electronically ID you. If you cannot be electronically Identified, you will need to evidence ID and Address proof in the following format:
- Passport (in date)
- Drivers licence (with your correct address on)
- Council Tax bill (dated within 12 months)
- Utility bills (dated within 3 months)
- Bank statements posted to you (dated within 3 months)
- Credit card or loan agreements posted to you (dated within 3 months)

Income proof will vary depending on your job role see below a few examples:
- Your last three months’ payslips from your employer (employed)
- Bonus/commission/overtime payslips (employed with varying income)
- Your latest P60 tax form, showing income and tax paid for the year. (employed)
- Your last three years’ tax calculations and tax year overviews (if you are a self-employed sole trader)
- Your last three years company accounts completed by a qualified accountant (self-employed directors of limited companies)

Loan-to-value is simply your mortgage loan compared to the value of your house expressed as a percentage. For example, if you compare a £100,000 loan to a £200,000 value property. Your loan to value would be 50%. If your LTV is higher it will be represented in the interest rate your lender offers you. If you have a high Loan to value, you own less of your house and so will be a higher risk to the lender if you were to have the property repossessed.

Your deposit determines your interest rate. When you apply for a mortgage having a bigger deposit will allow you to borrow less from the bank, so having a lower Loan to Value will result in a lower interest rate. You can buy a property with Just 5% deposit, due to COVID-19 we have seen lenders insist on a larger deposit to access their rates.
When buying a Buy to Let a minimum of 25% deposit is needed to proceed.
The lender will need to see a paper trail to ensure you have your deposit from an acceptable source. A few common examples are:
- 3 months savings bank statements
- 3 months LISA/ HTB ISA statements
- Gift letter if a family member or friend is gifting your funds.

Freehold properties such as houses are sold with the land included in the sale. When buying Leasehold properties such as flats/shared ownership properties you will not own the land under the property, in this instance you will pay the freeholder a ground rent each year. There may also be a service charge when you own a flat, this is paid each month. Service charges are used to cover communal area maintenance such as lifts, gardens.

The 10-year warranty such as NHBC, LABC etc, will protect your property against any defects that may arise. As newbuilds are built relatively quickly they can take time to ‘settle’ rarely this leads to defects that need rectifying under the warranty.

Builders will often want to incentivise you buying the property by offering incentives. This may be a contribution towards deposit, paying the stamp duty, paying for upgrades and even paying for moving costs. Either way these make buying a new home a bit easier and are widely accepted by lenders.

So you have submitted all your documents, the valuation has been done, next is the mortgage offer. Once the lender is happy with what they have seen they will issue you a mortgage offer, this is usually valid for 6 months. When buying a newbuild a longer completion may mean you need a longer mortgage offer, your advisor will always discuss this with you.

The government HTB scheme allows you to buy a newbuild property with just 5% deposit. If you buy in London the government will contribute 40% towards your deposit, if you buy outside London the amount is 20% towards your deposit. With recent changes to HTB there are geographical price limits on purchases now from the end of March 2021 If you own a property currently and want to buy a newbuild again with HTB, your purchase must complete by the end of March 2021 always speak to your builder as completion delays are expected due to Covid-19.

A Energy performance Certificate measures a properties energy efficiency. Newbuilds always strive for an A rating but older properties will often be lower down this scale of A-G. A poor EPC can affect a lenders decision to lend on a property so always check for a valid EPC when viewing.

A solicitor will transact the conveyancing process, this will involve searches and enquiries on your behalf. Examples of searches you would expect;
- Local Authority Searches
- Environmental searches
- Water and draining
- Coal mining
- Land Charges
- Chancel repair liability
Enquiries may involve asking if the property has ever suffered from flooding, subsidence, structural defects. Rights of way, restrictions and house maintenance related enquiries.

When looking at the market your product may have one of the following fees:
⁃ Valuation fee (this can be free or around £200)
⁃ Arrangement fee (normally £999)
⁃ Booking fee (normally £100)
- Mortgage Broker fee (This will normally be £300-£500)
The above costs can all vary depending on the lender and broker you choose; lenders may charge no fees to make their product more competitive.