Hot Topics
- How Is Interest Calculated On a Mortgage?
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Interest is charged in different ways depending on what kind of mortgage you have.
- How Do I Switch Mortgages?
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Switching mortgages (remortgaging) has been made very easy by the industry, in reaction to the fact that most people remortgage their homes on a regular basis i.e. every 5 years on average.
- Refinance Mortgage
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What is a Refinance Mortgage?
- Base Rate Tracker Mortgage
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A base rate tracker mortgage tracks the Bank Of England’s base interest rate then adds on a additional figure to arrive at the borrowers variable rate. Your monthly mortgage interest payments go up when the base rate goes up and they go down when the base rate goes down. The base rate tracker interest rate is usually between 0.5% and 1.0% above the Bank Of England's Base Rate.
- What Happens If I Have Bank Defaults?
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If you have failed to meet payments on a credit agreement such as secured loans, unsecured/personal loans, credit cards, store cards or car finances etc, or you have failed to comply with your lender’s requirements, you will be described as having 'defaulted'.
How Much Can I Afford?
You have to be very careful when buying a house to be sure that you will be able to afford the monthly mortgage repayments – as you risk losing your home completely if you find you simply cannot afford it.
If you are moving into a house on your own then you will generally be able to get a mortgage for 3 times your salary. You will also need to provide a deposit of at least 5% of the total house price. So if your annual salary is £30,000 you will be able to afford a property worth £95,000 – leaving a £5,000 deposit.
If you are moving into a house as a couple or with a friend – the rules are slightly different. You will be offered either three times the annual income of the higher earner plus the total second income, or two-and-a-half times the total joint income.
Many lenders offer variations on the above rules. Some banks offer graduate mortgages and will allow you to borrow 4 or 5 times your salary. If you have a good credit history you may be able to get more than 3 times your salary from many lenders – however you have to consider what you can afford to pay back on a monthly basis, and it’s simply not worth borrowing more than you can afford if it is going to financially cripple you to meet the repayments.
You may also be able to get a mortgage where you do not need to give a deposit, these are known as 100% mortgages.
Another good way to work out what you can afford is to use a mortgage calculator – inputting all the details of your monthly outgoings i.e. bills, car, entertainment and food. This will give you a good idea of whether you will be able to manage your monthly mortgage repayments.
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