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- How Much Deposit Do I Need?
- As a general rule of thumb, you need to make a deposit of about 5 – 10% of the total amount you are borrowing.
- Is There Any Way I Can Lower My Monthly Repayments Without Switching Mortgages?
- If you find that you cannot afford your monthly mortgage repayments and do not wish to switch your mortgage to another lender – then you will need to negotiate new terms with your existing lender.
- What If I Die Before My Mortgage Is Paid Off?
- If you die before your mortgage has been repaid, your estate will face the cost of paying back the outstanding balance. The mortgage will not be written off by the lender, it will have to be paid by the next of kin.
- What are Variable Rate Mortgages?
- A variable rate mortgage is when you pay a standard variable rate (SVR) that changes in line with the Bank of England's base rate. The SVR is usually between 2% and 4% higher than the Bank of England's base rate, but this will vary from lender to lender.
- What is Adverse Credit?
- If a borrower has a history of poor credit usage then this is described as Adverse Credit, Sub Prime or just simply, Bad Credit. Poor Credit history can include County Court Judgements (CCJ's), Bankruptcy, Mortgage arrears or any late payments on credit cards, credit arrangements etc.
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.
- How Is Interest Calculated On a Mortgage?
- Where can i buy a mortgage ?
- Can I Get a Mortgage With A Group Of Friends?
- How Much Is The Valuation Fee?
- Will I Have To Pay An Arrangement Fee And How Much Will It Be?
- What Exactly is a Mortgage?
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