A mortgage is essentially a high-value loan, which is secured on the property you intend to purchase. Unlike a typical secured loan however, qualifying for a mortgage can be notoriously difficult.
The first step in the application process is to determine how much you can afford to borrow. You’ll need to consider what kinds of monthly repayments you can afford, while determining how much your chosen lender(s) will be willing to offer. This needs to be taken into account in accordance with all additional borrowing costs, along with the 10% minimum deposit you’ll need to provide.
If you decide to go ahead, you’ll need to provide your chosen lender with comprehensive evidence of your current financial status and income. Extensive credit checks are also mandatory, which often stand between mortgage applicants and the homes they intend to buy. Arrangement fees, admin fees, valuation fees and so on may also be payable at the time of application.
Getting the best possible deal on your mortgage means considering major High Street lenders and independent specialists alike. With UK Property Finance’s whole-of-market comparison service, you’re guaranteed an unbeatable deal.
A buy-to-let mortgage – aka BTL mortgage – is a specialist homeowner loan for buyers intent on letting the property out to tenants. The basic rules and requirements surrounding buy-to-let are similar to those of conventional mortgages, though with a few key differences to take into account.
For example, arrangement fees and overall borrowing costs for buy-to-let tend to be considerably higher. The buy-to-let can also expect elevated rates of interest, along with minimum deposit requirements in the region of 25%. It’s possible to borrow almost any amount, but allowances are usually linked with the amount of rental income the landlord will receive. Typically, the estimated rental income needs to be around 30% higher than the monthly mortgage payment.
Obtaining a high-quality, low-cost buy-to-let mortgage with a major High Street lender is becoming increasingly difficult. As a result, experienced landlords have begun turning to specialist lenders and independent service providers. Given the potential costs associated with buy-to-let, comparing the market in its entirety comes highly recommended.
Whether you’re interested in your first buy-to-let or planning to extend your current portfolio, we’ll help you find an unbeatable deal from our exclusive network of lenders.
Mortgages are calculated by taking the sum of money borrowed (minus the deposit) along with all additional costs and the agreed rate of interest, before dividing the total balance into small repayments over the agreed period. In the case of a variable mortgage, total borrowing costs may vary significantly as the APR increases or decreases throughout the life of the mortgage.
In addition, borrowing costs vary significantly in accordance with the specifics of the loan and the applicant. With most major lenders, overall borrowing costs for a 10-year mortgage would be exponentially lower than the same mortgage taken over a 30-year period. In addition, the financial status and credit history of the applicant can affect borrowing costs and interest rates. As can the size of the loan and its intended purpose.
Lenders also implement their own unique policies regarding how much the applicant can borrow. For some, it’s a set multiple of their annual salary. For others, it’s calculated on the basis of their current financial status and income. Shopping around is essential for ensuring you find the best mortgage deal to suit your requirements and budget. It’s also important to look beyond the High Street, considering specialist lenders where available.
In theory, you can take out as many mortgages as you like. Or at least, as many mortgages as you can afford. These days, it’s impossible to qualify for a mortgage without first having your eligibility verified by the lender. If you aren’t in a position to comfortably repay the loan as agreed, you will not qualify.
However, if your financial position, credit history and employment status inspire the lender, they’ll be happy to offer you a mortgage. Any additional mortgages (and general debts) you have will be taken into account, though will be considered in accordance with your financial status and income.
Nevertheless, it’s worth remembering that every mortgage you take on amounts to another enormous debt to pay off. If there are alternatives to a mortgage available, they’re worth considering. Bridging loans, development finance, auction finance or perhaps simply paying for the property in cash. All of which could save you a small fortune in borrowing costs, while at the same time simplifying the purchase process.
To discuss the alternative options to a traditional mortgage, contact the team at UK Property Finance for an obligation-free consultation.
Many of the UK’s major lenders have begun offering guarantor mortgages. Particularly popular among first-time buyers, guarantor mortgages provide a helping hand for those who may otherwise be unable to get on the property ladder. If unable to meet the strict requirements of the lender personally, a third-party can ‘guarantee’ the loan on their behalf. This essentially means that the guarantor takes ultimate responsibility, in the event that the borrower is unable to repay the loan as agreed.
As with a traditional mortgage, eligibility for a guarantor mortgage is considered in accordance with credit history, financial status, proof of income and so on. In this instance though, on the part of the guarantor. Some lenders consider all guarantor mortgages to be comparatively high-risk, therefore attach elevated interest rates and borrowing costs for such services.
Guarantor mortgages are available from major banks, but it’s nonetheless important to compare the market in its entirety. There are dozens of specialist lenders across the UK who specialise in guarantor mortgages, subprime mortgages and various services you won’t find on the High Street. Contact the team at UK Property Finance and we’ll compare the market on your behalf.