Find the mortgage you need, without the hassle you don’t

A mortgage is a type of loan that’s used to buy a property. With a mortgage, the finance you borrow to buy your home is secured against the value of the property. This means that if you are unable to repay your mortgage, your lender could take your home to recover their costs.

To be eligible for a mortgage, you’ll need to have a few things going for you.

4 critical factors to be eligible for a mortgage

• You must 18 years old or older.
• A deposit of at least 5% of the property’s value.
• An income (or joint income) that would allow you to comfortably make your mortgage repayments.
• A healthy credit score.

APRC stands for Annual Percentage Rate of Charge. It shows how much it will cost you to borrow money over the term of your mortgage, taking into account any additional fees or charges. APRC also takes into account that your lender may offer you a lower interest rate for the first few years. It is then expressed as a percentage so you can easily compare your different mortgage options.

APRC vs APR

APRC is different from what an APR is specifically, so it is important to note the differences. You can also find out how your APRC is decided.

There are a few different factors that affect the mortgage rate you’re offered. Two things that you can do to improve the rate that you’re offered are:

Mortgage rate offer factors

• Having a good credit score;
• Putting down a bigger deposit.

LTV ratio stands for loan-to-value ratio. Your LTV ratio is used by lenders to decide how risky it is to lend you the money to buy your home.

It compares how much of the property you will own – i.e. how much deposit you can put down in relation to the property’s value – to how much they will need to lend to you to make up the difference. The lower your LTV ratio, the better the mortgage rate you’re likely to be offered.

We often get asked about the difference of a fixed vs variable rate mortgage. Here it is, in a nutsell.

With a fixed rate mortgage, your mortgage repayments will remain the same for an agreed fixed rate period – often from two to five years. After that, it’s common to remortgage to a new fixed rate deal, or your mortgage will revert to your lender’s standard variable rate (SVR).

With a variable rate mortgage, your mortgage payments could go up or down during your mortgage term.

Types of variable rate mortgages

There are two main types of variable mortgage:

• Tracker mortgages, which track the Bank of England base rate, and;
• Discount mortgages, which offer a fixed discount on the lender’s SVR (which can fluctuate).

How to decide on fixed vs variable rate mortgage

Your mortgage adviser will tell you what the best option for your circumstances is after completing a fact find with you and getting to know your requirements.

People often ask us to compare interest-only vs repayment mortgages and what the difference is.

The Interest-only vs repayment mortgage

An interest-only mortgage is where you only pay off the interest the grows on your mortgage. This can mean that your monthly payments are lower. However you will need to eventually repay your mortgage once your the term comes to an end.

More about the repayment mortgage

The most common option is a repayment mortgage. This is where you have the security of paying off a bit of the loan as well as the interest with each monthly payment. If all repayments take place, at the end of the term you will own the property completely.

No, if you have the cash to buy a property outright, you don’t need a mortgage to buy a home. If you don’t have that much cash available, you will need to apply for a mortgage.

To apply for a mortgage, you’ll need to speak to a mortgage adviser. They will find the right mortgage option for you. Once you’ve had your offer accepted on a property, they will then take you through every step of the mortgage application process. You’ll also need a solicitor (conveyancer) to complete the legal work involved with buying a home.

Remortgaging is when you take out a new mortgage for the same property. For instance, if your current fixed-rate mortgage is coming to an end and you don’t want to end up on your lender’s standard variable tariff, you can take out a new fixed-rate mortgage with the same lender or a different one.

Popular reasons to remortgage include:

• Your current fixed-rate mortgage is expiring
• You want a better rate
• The value of your house has increased
• You want to borrow more
• You want to overpay, and you can’t on your current deal

Just remember that if you remortgage before your current fixed-rate term comes to an end, you may have to pay an early repayment charge.