A mortgage is likely to be the single largest financial commitment you ever make, so you want to be sure you understand your options before making any decisions. From your first home to your dream home, we can talk you through the wide range of mortgage products and repayment options available to you.
Buying or refinancing a home is one of the biggest decisions you will make, and the choices can feel overwhelming. Whether it is your first home, a move, a self build, a remortgage or something more specialist, we search a wide range of lenders to find a deal that suits you, and handle the paperwork from application through to completion.
This guide walks through how buying a home works, the types of mortgage and repayment methods available, the costs to budget for, specialist lending options and when it makes sense to remortgage. When you are ready, book a consultation and we will talk it through in plain English.
Whether it is your first home, selling a previous property, or a self build, it is best to understand what type of mortgage you require before you start.
Mortgage lenders are required by the Financial Conduct Authority (FCA) to assess whether applicants can afford to repay the loan they wish to take out. To do this, they undertake a mortgage affordability assessment, which considers your income, debts, and spending.
Not sure where to start? Our mortgage affordability calculator gives you a quick estimate before we talk through your options in detail.
Different mortgages suit different circumstances. Here are the main options we will help you weigh up.
The rate stays the same, so your payments are set at a certain level for an agreed period. At the end of that period, the lender will usually switch you onto its Standard Variable Rate. A fixed rate makes budgeting much easier because your payments stay the same even if interest rates go up. However, it also means you won't benefit if rates go down. You may have to pay a penalty to leave your lender, or an early repayment charge if you pay back extra during the fixed rate period.
Your monthly payment fluctuates in line with a Standard Variable Rate (SVR) of interest, set by the lender. You probably won't get penalised if you decide to change lenders, and you may be able to repay additional amounts without penalty too. Many lenders won't offer their standard variable rate to new borrowers.
Your monthly payment fluctuates in line with a rate that's equal to, higher, or lower than a chosen Base Rate (usually the Bank of England Base Rate). The rate 'tracks' that rate, usually for a set period of two to three years. A tracker may suit you if you can afford to pay more when rates rise, and you'll benefit when they fall. You may have to pay a penalty or an early repayment charge during the tracker period.
Like a variable rate mortgage, your payments can go up or down, but you'll get a discount on the lender's SVR for a set period, after which you'll usually switch to the full SVR. A discounted rate can give you a gentler start when money may be tight, but you must be confident you can afford the payments when the discount ends and the rate increases.
These schemes allow you to overpay, underpay or even take a payment 'holiday'. Any unpaid interest is added to the outstanding mortgage; any overpayment reduces it. Some have the facility to draw down additional funds up to a pre-agreed limit.
An offset mortgage lets you use your savings to reduce your mortgage balance and the interest you pay on it. For example, if you borrowed 200,000 but had 50,000 in savings, you'd only pay interest on 150,000. Offsets are generally more expensive than standard deals, but can reduce your monthly payments while still giving you access to your savings.
Over recent years the government has backed a number of schemes, such as 'Help to Buy', to support homebuyers. We can explain the details of these schemes and whether you can benefit from them.
There are two main ways to repay what you borrow.
This is the most appropriate method for repaying a residential mortgage. Your monthly payments comprise a portion to pay the interest on the money you have borrowed, plus a portion to repay the capital sum. The benefit is that you can see the mortgage reducing each year, albeit very slowly in the early years, and you are guaranteed to repay the debt at the end of the term, as long as payments are maintained.
Your monthly payments only cover the interest on the mortgage balance. The capital remains the same and must be repaid at the end of the term, so you will need a separate investment, or combination of investments, to generate the capital required, and prove you can afford to do this. Lenders are increasingly strict about acceptable repayment vehicles. If you fail to generate enough to repay the mortgage by the end of the term, you may be forced to sell your property.
It helps to budget for the main costs you are likely to incur when arranging a mortgage:
If you are looking for buy to let, second charge loans, or bridging finance, you will have specialist requirements that set you apart from a standard residential purchaser.
Whether you're an experienced landlord or just starting out, you'll have specialist requirements that set you apart from a standard residential purchaser. We can access the major lenders in the buy to let market, including those specialising in lending to professional landlords, and we've developed relationships with insurers offering specialist landlords' buildings and contents policies. Please note that some buy to let mortgages are not regulated by the Financial Conduct Authority.
Second charge loans can be secured against residential or buy to let properties. Provided by specialist lenders, they are generally short-term loans secured against the property, where the lender has second call on it if the borrower defaults. Second charges tend to be more expensive than 'firsts', but can still be the best option for people seeking to raise capital where their main lender won't provide further finance, or where expensive early redemption charges would apply.
A bridging loan is taken out to 'bridge' the gap between the purchase of a new property and the sale of an existing one. Loans are generally short-term, secured on the existing property and repaid once it sells. 'Bridges' may help you secure your new property, but they can be expensive, and if the sale of your existing property falls through you'll be left paying two loans at once. Some bridging loans are not regulated by the Financial Conduct Authority.
Why would you remortgage? Some people remortgage because they wish to switch lenders to get a better deal, or to raise further capital for home improvements. Remortgaging may add flexibility that you did not have in your current deal, and some people remortgage to consolidate debt.
It is important to check the costs of switching, as you may find the fee exceeds the saving. If you switch early from your deal you may incur an early repayment charge.
Mortgage lenders are required by the Financial Conduct Authority (FCA) to assess whether you can afford to repay the loan you want to take out. They carry out an affordability assessment that considers your income, your debts and your spending. We'll help you understand what you're likely to be able to borrow before you apply.
Common options include fixed rate, variable rate, tracker, discounted, flexible and offset mortgages, along with government-backed schemes. Each works a little differently and suits different circumstances, and we'll talk you through which is right for you.
With capital repayment, your monthly payments cover both the interest and part of the amount you borrowed, so the balance reduces over time and is cleared by the end of the term. With interest only, your payments cover only the interest, and you will need a separate plan to repay the capital at the end of the term.
Typical costs include a valuation fee, an arrangement fee, legal costs and fees, Stamp Duty, our advice fee and, in some cases, an early repayment charge.
Yes. We can help with buy-to-let, second charge loans and bridging finance, accessing major and specialist lenders. Please note that some buy-to-let mortgages and some bridging finance are not regulated by the Financial Conduct Authority.
People remortgage to switch to a better deal, to raise capital for home improvements, to gain flexibility or to consolidate debt. It's important to check the cost of switching, as fees can sometimes outweigh the saving, and leaving a deal early may trigger an early repayment charge.
Your property may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
Most Buy to Let mortgages and some Bridging Finance are not regulated by the Financial Conduct Authority.
Book a no-obligation consultation and we will talk through your options in plain English.
Book a consultation