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A mortgage broker helps you to find the right mortgage deal for your needs. They have access to many different mortgage products from lots of lenders. Having access to a range of products and lenders means you aren’t tied to just one lender’s criteria like you would be if you applied for a mortgage with your bank or building society. They are also there to deal with the whole application process – which can be difficult especially if you’re a first-time buyer.
Yes, some Mortgage Brokers do usually charge a fee. But at 177 Mortgages, all our services are fee-free.
Types of Mortgages
A repayment mortgage repays some of the interest you owe and some of the capital you’ve borrowed every month. If you make all of your repayments, at the end of the mortgage term you will have paid back the amount you borrowed, and you’ll own your home outright. Payments for a repayment mortgage will be higher than for an interest-only mortgage. You can see the different payment amounts on our Mortgage Calculator.
With an interest-only mortgage, your monthly payments only cover the cost of the interest that is being charged on the amount you borrowed. The amount that you owe does not reduce. At the end of the mortgage term, the capital that you borrowed must be repaid in full. To do this you would need a repayment vehicle – for example savings, investments or selling the property. Lenders are likely to ask to see evidence of how you intend to repay the loan. Payments for an interest-only mortgage will be lower than for a repayment mortgage. You can see the different payment amounts on our Mortgage Calculator.
A fixed-rate mortgage means the interest on the amount you borrowed remains the same for a set period. This means you know exactly how much you will be paying every month up to the end of your fixed period. Most lenders have fixed rates for between 2 and 5 years but some offer longer periods of up to 10 years. There are usually restrictions and penalties for overpaying or replaying your mortgage before the end of the fixed period. At the end of your fixed-rate period, you would move on to the lender’s Standard Variable Rate. We can help you find the right mortgage to suit your needs.
A Tracker Rate mortgage is a variable rate and will usually change when the Bank of England changes its base rate. So, your monthly payment can go up or down depending on how it changes. The tracker rate is an incentivised rate for a set period – usually for between 2 and 5 years. At the end of the period, you would move on to the lender’s Standard Variable Rate. We can help you find the right mortgage to suit your needs.
At the end of any fixed-period mortgage deal, your borrowing will move on to the lender’s Standard Variable Rate. As it’s a variable rate it means your monthly payment can go up or down if the Bank of England changes its base rate. Every lender sets their own SVR and there are usually no restrictions on overpaying or early repayment charges. So you have the flexibility to overpay or repay your mortgage without charge.
If you are coming to the end of your current mortgage deal, get in touch to find out what options are available for you. You can usually do this 3 to 6 months before your deal ends. Find out more about remortgaging.
If you are looking to buy a property that you will rent out then you will need a special Buy to Let mortgage. We can also arrange these types of mortgages, find out more about Buy to Let mortgages.
Yes. Our specialist New Build team are the experts on all the current National and Regional house buying schemes which are designed to help first-time buyers. They work with specialist lenders so that you can make the dream of owning your first house a reality with as little as a 5% deposit. Find out more about our new homes mortgages.
Applying for a mortgage
Every lender has their own way of calculating how much they will lend based on your income and monthly credit commitments. It’s important to be accurate in the figures you provide during any application as you will need to support these figures with documentary evidence – things like payslips and bank statements.
This is an initial check that a lender will carry out on you based on some basic information. This includes your income, any ongoing monthly financial commitments like loans, hire purchase agreements or maintenance payments, the amount of deposit you have and your credit score. They will then give you a Decision in Principle – allowing you to find a property based on the amount you can borrow. You can then progress to a full application where you will need to provide evidence to support the information you supplied. So, it’s important that you are accurate when providing this information.
When you are ready to proceed to a full application it’s important that you have all the documentation available to ensure it can be submitted quickly. So, it’s a good idea to start preparing and collecting these whilst you are looking for a property. These will include:
- Proof of identity – passport or driving licence
- Proof of income
- proof of any benefits you receive
- P60 form from your employer
- your last three months’ payslips
- statement of two to three years’ accounts from an accountant if you are self-employed
- tax return form SA302 if you have earnings from more than one source or are self-employed
- Bank statements of your current account for the last three to six months
- Utility bills
- Proof of deposit
The information on the application form must match the documents you provide. For example, don’t round up your salary – enter the amount exactly as it appears on your payslips. The documents need to be originals and often home-printed online statements and bills won’t be accepted unless they have been certified by your bank, utility provider or by your solicitor. You will also need to provide the address of the property you want to buy, and the details of your estate agent and your solicitor.
Yes, you can. There are lenders that we work with that have a better understanding of self-employed and contractor income sources. We understand the documentary evidence that they require and can be sure that we provide these lenders with the correct income figures and sources. For more information then take a look at our Contractor Mortgages.
Yes, you can, as there are lenders and products available for people with adverse credit. If you or your partner have a poor credit history due to missing mortgage payments, CCJs, IVAs or bankruptcy, the options may be reduced but there are ways we can help. There are lots of factors that can help your application so it’s best to speak to us so we can advise on the best steps to take. Get in touch with us.
You will need a minimum of at least 5% of the property purchase price. However, the bigger the deposit the better the interest rates will be for you. These thresholds change every 5% – 10% with most lenders. It’s important to remember that you will also need to have the money available to pay for the other fees involved in purchasing a property. See costs here.
When you are getting close to the end of a fixed period your lender will get in touch to tell you that you will move to their SVR. You can now look at all of the remortgage options available to you. This could be simply moving to another product with the same lender – which is a Product Transfer. Alternatively using a mortgage broker allows you to review all of the remortgage options available to you based on your current circumstances. You can find out more about how we can help you with remortgaging.
The costs of Mortgages
The amount you pay each month will be determined by how much you borrow, the term of the mortgage, the interest rate, and the repayment type. You can use our Mortgage Calculator to get an idea of what your monthly payment would be.
There are other costs involved so you need to take this into account when you have your deposit saved. These additional costs will need to be paid for in full at the time of the purchase. Here are some details on the main ones:
- Stamp Duty Land Tax – this is the tax paid on the purchase of a property. First-time buyers are exempt from this tax up to a threshold, and the tax only starts on properties over a certain value. You can find the current rates here and we also have a Stamp Duty calculator available here.
- Solicitors / Conveyancer fees – this is for the legal work that is required to make the purchase. We can arrange this service for you with one of our trusted Conveyancers.
- Valuation and Survey fees – your mortgage provider will want to check that the property you are borrowing the money for is worth the price you are paying. Sometimes this valuation is free – especially for remortgages. They will also want to ensure that the property is in a good state of repair and will require an independent surveyor to complete a report. The costs for this are usually based on the purchase price of the property.
- Lender’s arrangement fees – some products may come with an arrangement or booking fee. You can sometimes add this to the loan amount – but remember you would then be paying interest on this amount over the full term of the loan. Lenders will have products without fees, but they may not be as good. We can help you decide based on what is the most affordable and cost-effective for you and your circumstances.
- Moving costs – this will be different for everyone but it’s important to remember this when you are creating your budget.
- Maintenance/Service Charges – some properties especially flats and apartments will have annual charges for the upkeep of the building. Sometimes you may have to pay in advance for the coming months or the remainder of the year.
This will depend on the tenure of the property. If the property is freehold – that is you own the land that the property is built on, then you will be required to have buildings insurance in place as a minimum. You can also choose to include contents insurance with this, to insure the items inside your property.
If you buy a property that is Leasehold, then you own the property for a certain length of time which is known as the “term of the lease”. This is common in flats and apartments and usually, the cost of insuring the entire building will be covered in the Maintenance or Service Charge so you wouldn’t need buildings insurance. Again, you can choose to insure the contents of your property.
177 Protect can help you find the right policy to meet your needs based on the property you are buying and the level of insurance that you are looking for.
It’s not a requirement of a mortgage but if the worst were to happen, a life insurance policy would provide a lump sum tax-free amount on your death. This would ensure that your partner and dependents could pay off the mortgage. There are several options and costs are based on your personal circumstances and the amount of cover. You can also choose to insure at a fixed amount or decreasing with the outstanding balance of the loan. 177 Protect can help you decide what’s right for you based on your circumstances.
If you are diagnosed with a critical illness then you may not be able to work but you will still need to continue paying your mortgage every month. Some lenders will allow you to take small “payment holidays” but it’s important to think about what you would do in the long term. There are insurance policies that can cover you if you are critically ill. 177 Protect can help you decide what is right for you based on your circumstances.
If you are unable to work due to sickness or injury you will still need to continue paying your mortgage every month. Some lenders will allow you to take small “payment holidays” but it’s important to think about what you would do in the long term. There are Income Protection Cover policies that will provide you with a regular income to help cover the monthly mortgage payment. 177 Protect can help you decide what is right for you based on your circumstances.
Paying off your Mortgage
Yes, but there might well be restrictions or penalties depending on your product. For fixed-interest rate products, there will usually be early repayment charges applicable if you repay the mortgage in full during this period. This is usually a percentage of the mortgage balance and decreases as you get closer to the end of your deal. For example, during a 3-year deal, 3% in year 1, 2% in year 2, and 1% in the final year. It is always good to talk to your mortgage adviser before you decide to repay the mortgage in full.
Yes, this would decrease the amount of interest that you pay overall but some products have restrictions on the amount that you can overpay. Most fixed-rate mortgages allow 10% of the outstanding balance to be paid off each year. So, if you plan to make large overpayments it might be worth looking at products that have no early repayment restrictions. We will ensure we find the right mortgage for you.
Mortgage jargon buster
Annual Percentage Rate. This is calculated by taking the total interest cost over the term of the mortgage, plus fees which may be applicable.
This is the set-up fee for your mortgage and can include a range of fees such as booking and application fees. It’s extremely important to consider these when picking a mortgage deal as they can cost thousands over the lifetime of a mortgage. At 177 Mortgages we NEVER charge you an arrangement fee.
This is when you have not kept up your payments and have ‘defaulted’ at least once. By falling into arrears you are at risk of losing your home.
The rate of interest set by the Bank of England. This is used to base some mortgages on e.g. tracker mortgages. SVRs (Standard Variable Rates) are also set depending on base rate moves.
This is another mortgage set-up fee. These can also be absorbed or included in the Arrangement Fee.
A short-term loan (typically 12 months) secured against a property that is used to ‘bridge’ a gap between a longer-term solution becoming available. You can read more about the different types of bridging loans that we can offer here.
The amount you borrow as a mortgage to buy a property.
This score which is personal to you is used to help determine your suitability for borrowing. When a borrower has a poor credit score it is typically from missed payments on credit agreements, credit cards or loans. It is always best to check your credit score before applying for a mortgage.
A secured facility that is typically used for the construction of a residential property, or a conversion or refurbishment work. You can read more about the different types of specialist lending that we can offer here.
Some mortgages incur an early repayment charge if some, or all, of the mortgage, is paid off before the end of the agreed term.
The amount of value a property has, minus the outstanding sum on the mortgage on it.
A person, such as a parent, who guarantees to meet the mortgage repayment if the borrower cannot.
A document that sets out the details of the mortgage.
The percentage of the price of a property that you have borrowed as a mortgage. For example, if you borrow £90,000 on a property worth £100,000, the LTV is 90%.
The length of time you have agreed to pay off your mortgage. This is typically 25 years but can be more or less.
When the amount you owe on your mortgage is greater than the value of your property. This can become problematic when you are looking to move house.
A type of mortgage that allows borrowers to ‘offset’ any savings they have against their mortgage. For example, if you have a £100,000 offset mortgage and £25,000 savings, you will only pay interest on £75,000.
Most lenders allow 10% overpayments every year on a mortgage without penalty. Overpaying will mean you pay less interest and therefore shorten the time it takes to pay off the mortgage.
A Mortgage that sits behind the 1st charge loan (usually a traditional mortgage with a bank), a product like this is used for extra borrowing or to fund things such as home renovations or personal spending. You can read more about the different types of specialist lending that we can offer here.