Mortgage Guide
Frequently Asked Questions
Q. How much can I
borrow?
Deduct payments to credit commitments from salary and then, as an
approximation, multiply by 4 for a single income or 3 for a joint
income. Your credit status may increase or reduce the multiple.
How much can I borrow calculator
Q. Who has the
cheapest mortgage?
This will depend on your individual requirements, from which we can
determine the lender you could use, the type of scheme you prefer
(fixed, variable, cashback..), how long any special rate lasts for (e.g.
fixed for 5 years), whether you go for a low rate with fees or a higher
rate with no fees, redemption penalties, tie in period or not, plus many
other factors.
Q. Which is best, an
interest only or a repayment mortgage?
A repayment mortgage guarantees to repay your mortgage, interest only
does not. Most lenders insist on a repayment vehicle for an interest
only mortgage – the interest plus the cost of the repayment vehicle will
be no cheaper than a repayment mortgage. You might be able to pay off
your mortgage early using a repayment vehicle but then again it might
take longer – there is no guarantee. How much risk are you prepared
to take? Do you understand the risks? The answer depends on your own
individual circumstances.
Q. I have experienced
difficulties with making credit payments. Can I get a mortgage?
This will not prevent you from getting a mortgage unless you are
bankrupt. The rate will be higher than normal and it may cost more to
arrange. You will need a bigger deposit, usually at least 10%.
Q. I have changed jobs
and have a probationary period, can I get a mortgage?
Most lenders will insist that you have passed a probationary period but
we know some that are very competitive and will not concern themselves
with a probationary period.
Q. What is the maximum
period a mortgage can run for?
Most lenders will stop at 35 years or your retirement age. You can
extend a mortgage term beyond retirement age if you can demonstrate that
you can afford the payments. Most lenders are not willing to lend beyond
age 75 unless you want an equity release mortgage.
Q. Do I need a
deposit?
Some lenders will not require a deposit. It is even possible to get a
mortgage for more than the property value (max 130%)
Q. I pay rent of
£800pm and can easily afford a mortgage, why can’t I borrow more?
You may be able to afford a mortgage at today’s rates but what about in
the future? If rates go up you may not be able to afford the mortgage
and you risk losing your home and potentially some or all of the equity
in it. Lenders therefore use an affordability matrix which may be a
multiple of your salary or a combination of this and your credit profile
to determine a level of lending that is not too risky for you or them.
Q. I want to buy a
house with 3 friends, can we all get a mortgage on one property?
Yes you can but not all of your incomes will be taken into account.
Most lenders will only take two incomes but there are some that take 3.
Each person on the mortgage will be responsible for each others payments
(i.e. if one person decided not to pay any more the others would have to
meet that person's payments or risk affecting their own credit rating)
Q. I've heard about
self certification mortgages, can I borrow as much as I like?
No, this is is a risky strategy. If you state that your income is
greater than it really is then you are committing mortgage fraud, which
is a criminal offence. Safeguards on maximum borrowings are in place for
your good as well as the lender, if you cannot meet the payments because
circumstances change (e.g. interest rates go up) you could lose your
home.