Mortgages

When seeking a mortgage, many people start by looking on the internet. This is good to give you an idea of rates, and there are many calculators available to see what your monthly payments might be. The difficulty is knowing which deal actually suits you.  

To find the right deal, it is best to contact a whole of market adviser, one who specialises in mortgages. At Talk Money we would always find out about you first; are you a first time buyer or do you have a current mortgage? Are you trying to move, or are you staying put and looking for a new deal to reduce your repayments? What are your future plans and how long do you intend to remain in your property? We will need to know about your income, outgoings and if you have any loans or credit outstanding.

Once we have a clear picture we will know which lenders would suit you.   You may be in a position where you will have a vast choice of lenders, or we may reduce this to a shortlist who are likely to lend.

Then, it’s about finding the right deal from the available lenders to suit your personal circumstances, needs and budget.

Most lenders now have online systems, meaning that we can get you an immediate decision in principle. Your mortgage application can then be sent online to the mortgage provider, meaning that they start processing your case straightaway.

We will keep in touch with the lender and monitor your application, keeping you up to date with progress.

With our knowledge and  experience we are able to deal with the lender on your behalf, ironing out any difficulties which may arise as your mortgage is being processed.  

At Talk Money we deal with the lender on your behalf ensuring your mortgage process is as smooth and stress free as possible.

Buying your first home is an exciting but often confusing time as you navigate the buying process.  It is especially difficult for first time buyers in the current climate with the hike in interest rates.  

Currently you can borrow up to 95% of a property value.  However,  as the rates have increased, this means that you may not be able to borrow as much based on the lenders’ affordability calculations.  So, even though property purchase prices may have reduced, it is sometimes a stretch for first time buyers to be able to borrow the amount they need. 

It is noticeable in the past years that many families are helping their sons & daughters get onto the property ladder by tapping into the “Bank of Mum & Dad”.  Others are not so fortunate, and if they are renting, it can be difficult to save.

Here are some costs you should bear in mind.  It is wise to get estimates for these beforehand so that you can budget and ensure you have sufficient funds:

• Mortgage arrangement and valuation fees.

• Survey fees.

• Solicitor’s fees.

• Removal costs.

• Initial furnishing and decorating costs.

Many first time buyers are confused with the buying process, so below is a basic timeline of events for you to follow, including some wording for documents and events you will encounter on the way:

If you are in the fortunate position through saving, or family assistance to have sufficient deposit, you should first find out how much you are able to borrow in terms of a mortgage.   

I recommend that you speak to a Whole of Market mortgage adviser who will have access to all of the major lenders in the marketplace.   The mortgage adviser will explain the different types of rate available, how they work and ensure you have good knowledge of your options.  

You will need your personal details such as your addresses for the last three years and your financial details including your salary, net profit (if you are self-employed) and details of any debts or liabilities.  This will allow the adviser to work out how much you can borrow.

Lenders use affordability when calculating the amount they will lend; they will take into account many factors, such as your credit score, income, outgoings and any monthly payments for loans or credit cards.  All lenders calculations are different meaning that the amount they will lend will also vary.   Your adviser will be able to calculate how much each lender would be likely to lend, thereby identifying lenders who are able to lend the amount you require.

Once the recommended lender has been researched and possible loan amount calculated, the next stage is to make an application for an initial Decision in Principle. This is normally an online process with an instant response.  Sometimes the lender may need further information, but once agreed your adviser can print a Decision in Principle certificate.  This means that the lender has performed a credit search on you personally and assessed the information they have been provided.   “In principle” based on this information they would be willing to lend.

The certificate will provide details of the mortgage amount they have agreed in principle.   An estate agent would normally wish to see this certificate when they put forward your offer.  It confirms to them that you are a viable purchaser for the property and have your finances in place.  The certificate puts you in a great position when you go out to view properties.

Once you find a property and the offer is accepted, your mortgage adviser would ask for details of the property and which solicitor you wish to use.  You would then instruct your solicitor to proceed and they will commence their work, legal searches on the property and communication with the vendor’s solicitor.  The solicitor will provide a breakdown of the work involved and the costs, including, if applicable any stamp duty that would be payable.

Your mortgage adviser will make a full application to the lender who would now want to see supporting documentation for your application.  This is often payslips, accounts if you are self-employed, bank statements and proof of your identification.   

Once the lender is happy with the paperwork provided and you have passed their checks, they will instruct a valuer to go to the property to ensure it is suitable for them to lend.  They would want to make sure that the property meets their criteria and is saleable should you default on the mortgage.  Lenders would normally require a Basic Valuation, but if you wanted the property to be looked at in more detail structurally for your own peace of mind,  you could opt for a Homebuyers Report or Full Structural Survey.  This would be at additional cost to the lender’s basic valuation fee.  Please click on the following link to find out more about Homebuyers Reports. https://www.rics.org/uk/products/home-surveys-licences/homebuyer-report/  (By clicking this link you are departing from the regulatory site of Talk Money. Talk Money is not responsible for the accuracy of the information within the linked site).

If your lender is happy with the documentation you have provided and the valuation of the property, their next stage is for them to make a Mortgage Offer.   The offer should be read carefully as it informs you of the legal basis on which they will lend. It will contain details of the rate offered, the fees, penalties for early repayment and other terms of the mortgage.   

Your solicitor will receive a copy of the mortgage offer which will inform them that your mortgage is agreed.  They will then know that they can request the funds from the lender at the appropriate time.

Once your solicitor has completed their legal checks, they would ask you for some or all of your deposit.  You are then ready to Exchange Contracts.  At this point both parties are legally obliged to proceed with the sale and a completion date will be set.   

Your solicitor will request the funds from the lender in time for the Completion Date  and any remaining deposit from you.  These funds form the purchase price of the property and are paid to the solicitor when you complete.  This is the day you are finally a property owner and can move into your new property. Congratulations!

At Talk Money we provide a whole of market mortgage service.  We will ensure you know all of your options and guide you through the process of making your first property purchase.

Many people don’t review their mortgages because they think that it is a stressful and time consuming process to go through. Let me assure you otherwise.

A remortgage is less stressful than you may think for a number of reasons. For instance, there is only one person involved, you, not a whole chain of people! The process is even easier if you enlist the help of a professional mortgage adviser. Not only do we recommend the right product for you, but we submit your application online and deal with the lender on your behalf. This means that you don’t even have to chase your mortgage application, we will do it all for you.  

When you remortgage, you will have to instruct a solicitor to carry out legal work for both you and the lender. Don’t let this put you off, there are many very competitive deals which cover this cost. The lender will instruct their own solicitor who will do the legal work for you free of charge. This can make a huge saving.   

If your property has a high value, a free valuation can also save pounds. 

Some remortgage products have application fees attached and some have little or no fees.  We will calculate the most cost effective deal for the size of your mortgage.

The question is, should you fix your rate or should you opt for a variable tracker or discounted rate? Firstly, here is an explanation of these different types of rates:

Fixed rates

When you fix your mortgage rate, your monthly repayments stay the same for a set period of time, the underlying Bank base rate has no impact on your monthly payments. Fixed rates come in varying terms, typically 1-5 years, but there are longer terms available.  

Variable rates

Variable rate mortgages come in many different guises. A “discount” rate will be at a set percentage below the lender’s standard variable rate for a set period of time. (All lenders have their own individual standard variable rates, some higher than others). The lenders change their own variable rates as the Bank of England moves the rates, however, they can delay changing their rates, or can even choose not to pass rate changes on at all. 

A more recent version is the “Tracker”. This is often seen as a fairer way of taking a variable rate mortgage, it is set at a differential to the actual Bank of England base rate. Some deals have a floor, meaning that the rate will not reduce below a certain level.  Generally though, the rate will change at exactly the same time as the Bank base rate, meaning that the lender cannot manipulate the rates, but will pass on any changes immediately to the borrower.

How do I decide?

Part of your decision should be based on whether you think the Bank of England base rate is likely to rise or lower significantly over the next few years. Predicting this is not easy, and much depends on the timing of when you take your mortgage.  

Possible rate movements should not be your only consideration – your personal situation and attitude to risk are a very important factor. Many people like to know exactly how much they will be paying for a set period of time. This can give peace of mind, and will stop you worrying every time the Bank of England meets each month!