Want A New Mortgage So You Can Move House Or If You Simply Want To Save Money On Your Current Mortgage Here Is Your Complete Guide
Call Now On 08000-146-701 For A Free Initial Phone Consultation
How To Get A Mortgage For Your New Home
If You Are Looking To Move Home And Need A New Mortgage Here Are Some Tips On How To Get Your Home Loan
So your current home is feeling too small and it’s time to move on. Here is your guide to getting the mortgage you need. Many of these details apply to re-mortgaging your property although there are some differences which are covered in more detail later.
Start With Your Current Mortgage
The first thing you need to do is to look at your existing mortgage and find out whether you are still tied into a fixed or tracker rate with them. If the answer is yes then you will almost certainly be charged a redemption penalty if you decide to move your mortgage to a different lender.
Usually, these charges are completely avoidable. Most lenders will allow you to ‘port’ your mortgage over to the new property. This means that you move your mortgage from the current property over to your new home. You will still need to pay fees for the valuation and legal costs but any redemption fees will be waived. In most cases your mortgage adviser will be able to assist you in this process and help you complete the required forms.
How much can you borrow?
The amount that you can borrow will be decided by a number of factors:
- Income – from employment, pension, child benefit and other sources
- Liabilities – loans, credit cards, hire purchase arrangements and other monthly commitments
- Financial Dependants
- Your age and the term of the mortgage you require
- Credit Score
Your mortgage broker can help you to calculate your borrowing capacity by estimating the mortgage you can obtain based on your circumstances and obtain an agreement in principle which will confirm that your credit score is good enough for you to obtain a mortgage.
Types Of Mortgage
There are many different types of available mortgage – here are the most common
Fixed Rate Mortgages
These can vary from 1 to 10 year fixed (or longer) On average most people fix from 2-5 years. Once you fix a mortgage, the rate will not go up or down within the fixed rate period. Generally, the longer you fix a mortgage for, the higher the mortgage rate will be (effectively you pay for the longer term security) With the vast majority of lenders you will be charged redemption penalties if you move the mortgage to another provider within the fixed rate period.
Tracker Or Discounted Rate Mortgages
Unlike fixed rates which do not change, tracker rate mortgages are usually set at an amount above the Bank of England base rate and therefore can rise and fall according to what is happening to interest rates. Generally, tracker rates are slightly cheaper than fixed rates but could eventually end up costing you more if interest rates rise in the future.
Discounted rates are similar to tracker rates but instead of being linked to the base rate they tracker the lender’s variable rate – the standard rate that the lender charges it customers. With a discounted rate, changes to the rate do not have to follow the Bank of England base rate and can be increased by the lender at any time.
Offset mortgages work by offsetting borrowing against the amount of savings you hold with the lender. These type of mortgages often come with flexible features such as draw-down or unlimited over-payment facilities. These type of mortgages tend to be charged at a higher rate of interest than traditional mortgages so you would need to hold a large amount of money in cash in order for this type of mortgage to be beneficial for you.
Mortgage Repayment Methods
Capital & Repayment
The simplest mortgage repayment method is capital and repayment mortgages; these simply include a single monthly payment that goes towards paying both the capital and interest element of your mortgage . The shorter the term of your mortgage, the more expensive the monthly payment. A longer term will result in a much lower monthly mortgage payment but an increase to the amount of interest that you pay over the loan.
The last few years have seen thousands of people advised to take out interest only mortgages – mortgages in which the monthly payment only covers the interest charged. Often, these mortgages came packaged up with Endowments which were sold more because of the benefit to the adviser rather than the customers that bought them.
Although interest only mortgages still have their place, they are more usually liked to other forms of investments such as ISA or the sale of property and interest only mortgages are mainly now reserved for sophisticated property investors with higher incomes and large amounts of equity in the property.
Applying For Your New Mortgage
Your Mortgage Adviser will need to confirm all of your financial details relevant to your mortgage and obtain confirmation in the form of payslips or tax returns and bank statements, as well as confirming your identity. Having discussed your needs and requirements your mortgage broker will thane be able to recommend the best mortgage provider and product based on your specific needs and requirements.
To Fix Or Not To Fix?
One of the most common questions we get is whether or not you should fix your mortgage and if so for how long should you fix for. The truth is that without the benefit of a crystal ball it is impossible to accurately recommend whether you should fix your mortgage or not. The best that your adviser can do is explain the differences between the various options which are available so that you can make an informed choice.
Keeping Your Current Property Via A Let To Buy
It may be possible to retain your current property and rent the property out once you have purchased your new home; a process known as let to buy. If you are interested in this option then speak to your mortgage adviser. Please note that due to changes in stamp duty rules, this option will result in additional stamp duty charges on the new purchase.
Your Re-Mortgage Guide
Approximately 3 Million People In The UK Are On Their Lenders Variable Rate – At A Cost Of Over £4 Billion p.a.
Re-mortgaging is a very simple process and is usually simpler and much less stressful than buying a property. If you are on your lenders standard variable rate then the chances are you are losing money unnecessarily. Even if you plan to move house in the near future you can always move the mortgage to your new property and so avoid paying redemption penalties. Here is everything you need to know about re-mortgaging your property.
Find Out What Your Existing Lender Will Offer You
The first step is to speak to your current lender and find out what they will offer you in terms of a new mortgage rate. Try not to focus just on the rate, the fees they will charge you to move to the new rate is also important.
How Much Equity Do You Have?
The more equity your property has (the proportion of your property value to the amount of mortgage you owe) the better the mortgage rate than you will receive. You can estimate the value of your property in many different ways, you can speak to your local estate agents and ask them for an estimate or you can look at sites such as Zoopla who will estimate your property value.
Can You Move To Another Lender?
If you are re-mortgaging then you have obtained a mortgage before but have your circumstances changed? If you have moved jobs, become self-employed or if you have failed to keep up credit repayments or taken out additional loans or credit cards since you originally took out the mortgage then your ability to obtain a new mortgage may be affected.
Need Additional Borrowing?
If you need additional borrowing in order to make home improvements, to purchase a buy to let property or for any other purpose then this will affect how you refinance your existing mortgage as not all lenders will be happy to offer you additional borrowing at the same interest rate as if you were just refinancing your current mortgage.
Speak To A Mortgage Adviser
Speak to a mortgage adviser with FindAdviser and they will then go through your options and help you to decide which option is best for you.
Call Now On 08000-146-701 For A Free Initial Phone Consultation