Q. How much can I borrow?
The amount that each person can borrow is based on their income, their current credit commitments and to some extent the amount of deposit they have.
Q. How much deposit do I need?
The minimum deposit can be as low as 5% although these are few and far between. Normally the minimum deposit is 10% however there is a significant reduction in the interest rates available once the deposit reaches 15%.
Q. How much will a mortgage cost each month?
The cost of the mortgage is governed by three things, the amount borrowed, the term of the mortgage and the interest rate charged and therefore is quite specific to each individual. A general rule of thumb would be about one third of your total take home pay would be the maximum that most lenders would provide a mortgage for
Q. What is the difference between a repayment mortgage and an interest only mortgage?
A repayment mortgage is guaranteed to pay off your mortgage by the end of the term as long as all payments have been made. With an interest only mortgage your monthly payments only pay the interest that is due so at the end of the term you still owe the same amount that you originally borrowed and would need to either sell your property to repay the mortgage or find the money to repay it from another source by that time
Q. Can I use a guarantor for my mortgage?
Yes if your income is not enough to get the mortgage amount required then a close family member(usually parents) can act as a guarantor however the guarantor will need to prove that they can afford all of the mortgage in addition to any mortgage they may have of their own.
Q. What insurance do I need for a mortgage?
The building itself needs to be insured plus life insurance is recommended along with Mortgage Payment Protection Insurance which is designed to pay your mortgage payments if you are either off work due to accident or sickness or lose your job due to redundancy. Independent whole of market quotes can be provided on request
Q. Can I move my mortgage to another company if they are offering a better interest rate?
Yes, about 60% of the mortgages that we transact are moving mortgages from one company to another.
Q. What costs are there when buying a property?
- Stamp Duty: (a kind of tax) which is currently payable at the following percentages:
- Up to £125,000 - no stamp duty to pay
- £125,001-£250,000 - 2%
- £250,001-£925,000 - 5%
- £925,001-£1.5 million - 10%
- Over £1.5 million - 12%
- So, if you were to purchase a house for £300,000, you would pay no stamp duty on the first £125,000, 2% on the next £125,000 and 5% on the final £50,000.
- This would be calculated as follows:
- £125,000 at 2% = £2,500 plus £50,000 at 5% = £2,500
- Total Stamp Duty bill would be £5,000
- Solicitor’s fees: which are also based on the purchase price, a quotation can be provided on request; a typical first time buyer will pay between £500.00 and £1,000
- Valuation fee: which is also based on the purchase price and varies from lender to lender and are sometimes free to First Time Buyers
- Lenders arrangement fees: which can usually be added to the mortgage if required and average about £999.00
- Mortgage broker fee: Can be anywhere from zero to 1 or 2% of the loan amount (Money Matters FS Ltd normal fee is £499.00 which is reduced for repeat customers).
Q. Can I pay my mortgage off early?
Yes you can but beware of early repayment penalties if you have only had your current mortgage product for a short time.
Q. Can I make overpayments on my mortgage to pay it off sooner?
Yes, normally you are allowed to pay off up to 10 percent of the balance in any one year without incurring any repayment penalties
Q. Can I have more than one mortgage?
You can normally only have one residential mortgage but you are able to buy another property to let out
Q. What is a Buy to Let mortgage
A buy to Let mortgage is where you a buy another property specifically as an investment with the intention of letting it out and as long as the rent covers the mortgage payments due by a certain amount the mortgage is agreed based on the rent and not your own income.
Q. How much deposit do I need for a Buy to Let mortgage?
Normally a minimum of 25% deposit is needed for a Buy to Let mortgage.
Q. Is there any tax to pay when I sell my property?
No, not for your main residence but investment properties bought on a Buy To Let basis will be subject to Capital Gains Tax
Q. What is a credit score?
This is a score that we all have and is based on various things about the way we have conducted our finances over the preceding six years and is used by financial services companies to assess our credit worthiness.
Q. How can I improve my credit score?
You can improve your credit score by proving that you can cope with all your various credit commitments such as loans and credit card payments and by paying things like mobile phone bills and utility bills on time. Being on the electoral role also helps.
Q. How do I find out the maximum mortgage that I can get?
By contacting us at Money Matters FS Ltd for a free no obligation assessment