Information For 1st Time Mortgage Buyers
Hot Topics
- Types of Mortgage:
- Variable rates Mortgages: - mortgage payments are calculated by your lender on the so-called "Standard Variable Rate". This is based on the monetary "base rate" that is reviewed monthly by the Bank of England.
- Income Multiples Explained
- If you are an employee, the majority of mortgage lenders will calculate the maximum size of a mortgage loan based on your salary.
- How Is Interest Calculated On a Mortgage?
- Interest is charged in different ways depending on what kind of mortgage you have.
- What is a Fixed Rate Mortgage?
- A loan where the initial payments are based on a certain interest rate for a stated period and the rate payable will not change during that period regardless of changes in the lender's standard variable rate.
- What Are Flexible Mortgages?
- Generally, people rebroke their mortgage deal once every five or six years. They also may change their mortgage lender at the end of a discounted or fixed period. Chances are in that in the time between their last remortgage, the mortgage market will have changed a great deal.
Your first mortgage will be the most significant financial undertaking of your life so far, but how exactly do you go about getting a mortgage?
More importantly still, how do you go about getting the right mortgage ?
1st time buyers often rush into taking out a mortgage, many of them without any advice to help them make the right choices. Today’s mortgage market is extremely competitive with thousands of different products available from hundreds of providers. Choosing the right mortgage is difficult even for a trained advisor, never mind a 1st time mortgage buyer!
Please ensure that you read all of the information below before applying for a mortgage!
Borrowing Limits
The total amount you can borrow will depend on your income. Usually lenders use multiples of 3.25 times the gross salary of a single borrower.
A couple can get 3.25 times their main income plus one times their second income. Some lenders will allow you to take 2.5 times your combined income.
Loan To Value
Some lenders will only lend you a set percentage of your property value, this reduces the chance of the property being worth less than the amount you borrowed should you default on your payments.
Stamp Duty
You also have to pay stamp duty, which is 1% of the purchase price for properties between £60,000 and £250,000, 3% up to £500,000, and 4% over that amount.
Surveys, Legal fees, Arrangement Fees and other costs
You will have to pay for the survey, the valuation of your property, and the solicitors fees. All of these add to the cost of your mortgage. Check your mortgage offer as some lenders will provide some of the necessary surveys and check ups as part of your mortgage offer.
Mortgage Indemnity
A Mortgage Indemnity Guarantee is insurance covering the lender against you defaulting on your payments when your property is worth less than the current loan.
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