Before I get my mortgage

Before I get my mortgage

How easy is to get a mortgage?

In my opinion its pretty easy to get a mortgage, all you have to do is get us the paperwork we ask for, we’ll work out what you can do and what you want, you can then leave it to us to sort. Easy-peasy.

How much is this going to cost?

People often ask us what the costs are for arranging a mortgage or buying a house. Whilst we don’t charge for arranging mortgages, many advisors do and they can be eye wateringly high. So consider this an optional fee of anything up to £3,000 which is the highest we’ve known a person be charged.
The solicitors will typically be in the region of £1,000-£1,500 for the standard work and disbursements, if additional work is needed for things like leasehold or new build properties this can increase the figure. Solicitors’ charges do differ, so more and some less. Generally, we would suggest avoiding the cheapest and the super expensive, but it’s best to get a quote before you sign up to avoid any crippling fees being dropped on you at the last hurdle.


The surveyors can be free with a mortgage if you only want the basic, some lenders will allow you to upgrade to a more in-depth survey like a homebuyer’s report or full building survey, these differ from lender to lender and not all offer them. If you were to arrange a homebuyers report they’re typically in the region of £500-£600 for an average property.


Then there’s the stamp duty, this is based on the house value and how many properties you will own on completion. This is something you should speak to your advisor about to clarify for your circumstances. A first-time buyer is exempt up to £300,000. A second time buyer is exempt up to £125,000 and they then pay 2% on the difference. So, for example a person buying their second home for £200,000 would pay 2% on the £75,000 difference so £1,500. If you will own more than 1 property on completion you may be liable for the higher rate of stamp duty which means there is no starting point and it starts at 3%, it then increases by 2% when you get to £125,000 so if you bought a second property and were liable for the higher rate of stamp duty you would be liable for £7,500. The above calculations have been calculated whilst ignoring the current stamp duty holiday.


So, the costs are very variable depending on your circumstances but this could give you an idea of the costs you’re facing.


Can you give me a guide price on monthly payments?

With monthly payments it’s difficult to give a guide price on the monthly costs of a mortgage but to give some idea below are 3 grids to show the varying payments depending on the loan amount and term. They’re all calculated on an interest rate of 2% but the rate available could be higher or lower than this.

Loan amount Term Interest Rate Monthly Payment
£100,000 25 years 2% £423.85
30 years 2% £369.62
35 years 2% £331.26

Loan amount Term Interest Rate Monthly Payment
£150,000 25 years 2% £635.78
30 years 2% £554.43
35 years 2% £496.89

Loan amount Term Interest Rate Monthly Payment
£200,000 25 years 2% £847.71
30 years 2% £739.24
35 years 2% £662.53

When does the mortgage need to be repaid by?

The lenders will typically want the mortgage to be repaid before the eldest person reaches retirement age, this is to avoid the possibility of having to evict elderly people from their home. The banks don’t want to do it, and will look to other means first but sometimes there isn’t another option. Some lenders will let you take the mortgage beyond your retirement age but those that do will only agree to it on a common-sense approach. For example, if you have a pension that will provide a significant income in retirement, they may be able to offer you a longer mortgage. It can also be done for where there is a younger person on a mortgage who is able to afford the mortgage payments on their own. For example, an older couple have got to 70 years old and their interest only mortgage has come to an end and the lender either wants them to repay it or sell. Either way the mortgage is being repaid, but if they had a child who had the means to afford the mortgage payments, they may be able to remortgage the property and add the child to the mortgage so they are able to stay in the property. Sometimes this isn’t an option and sometimes it is, but perhaps it isn’t ideal for the child, maybe they don’t want to. But still, this is why the lenders prefer to avoid the scenario as it can be messy when trying to get out, especially if left to the last minute.

How much am I allowed to borrow? What will my monthly payments be? How much will I actually pay back over time?

The amount you can borrow varies significantly on the lender approached and your personal circumstances. Typically, 4.5-5x your salary with a reasonable term, no debts, financial commitments or dependents is a good general guide. Whilst some debt may not affect the loan amount and shortening the term it is too circumstance specific to give a solid answer as there isn’t a 1 size fits all.
A lot of the information relevant to the specific mortgage you are applying for can be found on the illustration you will be given in advance of the application being submitted. The Total Amount Payable (TAP) can be found under section 3. It assumes you pay the mortgage deal and then move onto the standard variable rate and neither you nor the lender do anything about it or make any changes and everything is paid on time. So, whilst this gives you an idea of cost in reality its not a true reflection, but it’s the best we’ve got.
The monthly payments can be found under section 6, this will show the payments whilst on the deal as well as the payments when it moves onto the follow-on rate, typically a standard variable rate.

How long will it take to get my mortgage offer?

The time to get a mortgage offer differs between lenders, how busy they are and how complicated and/or messy the application is. A Decision in principle can usually be done within half an hour to an hour once we have a completed factfind and the relevant paperwork, these are usually an instant decision, but they can refer too. When a decision in principle refers it is put in front of an underwriter to assess the case, these are usually due to an anomaly on the credit report or internal system, where the application is close to a decline or perhaps where there is a keying error. We don’t always find out.
The mortgage offer itself is usually within 2 weeks of the application being submitted, however the valuation can be a key factor. The offer will not be issued until the valuation has been completed, received and assessed. If the valuation can’t get done quickly because either the surveyor is busy, the estate agent is slow to deal with it or the vendor can’t or won’t allow access promptly. Sometimes these scenarios are reasonable, sometimes they’re not, sometimes we don’t find out.

Can I protect my deposit incase my partner and I split up?

Should a person want to protect their equity or deposit when buying with somebody or adding them to an existing mortgage, it is possible to arrange what is called a declaration of trust or deed of trust. Whilst they can be kept simple, some circumstances may need them to be more complicated. These would typically be arranged by the solicitor/conveyancer so they are live for when you complete, but they can be arranged for afterwards.
A simple example is if a couple buy a house together, one puts down the full deposit e.g. £10,000. In the event they separated the first £10,000 goes to them and its 50/50 thereafter.
For the full details its best to speak to your chosen solicitor or conveyancer who will be able to go through the options with you in more detail.

 

 

Contact Financial Options Selby

 

Financial Options (Selby) Ltd
24, Finkle Street, Selby, North Yorkshire, YO8 4DS

 

Call: 01757 709888