Have a read below through our mortgage advice section, answering the most frequently asked questions – please note this is very general advice and is not meant to be specific to any one person. As such, for specific advice relevant to your own situation, we strongly recommend getting in touch with an advisor. The advisers we work with are whole of market and have years of experience in arranging all types of mortgages, from the most straightforward to the most difficult. If there’s a mortgage out there for you – they will find it.
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Most frequently asked questions…
- Which lender will approve me?
- Which mortgage term is best?
- Fixed Vs Tracker rates
- Repayment Vs Interest only
- Fee free Vs Fee loaded products
- Direct Vs Broker deals
Which lender will approve me?
If you’ve been declined for a mortgage you’re probably wondering if there are any lenders that will approve your application, and if so, which one offers the best rates. We believe in helping our visitors find the finance they need AND making sure it’s the best deal too. The following factors can have the biggest impact on lending decisions:
Employment type – If you have recently retired, changed employment status to self employed, taken a new job on a short or probationary contract, or an agency for example, then some lenders may not accept your application. Because each lender is different some will accept you however, it’s just having the relationships and knowledge of the market to find them.
Affordability – If your income has reduced or you are looking to borrow more money to high levels when compared to your income, then you may struggle with certain lenders. Some only lend up to 3x your salary, some go up to 5x, and occasionally higher on a discretional basis for higher income earners.
Credit score – Credit ‘score’ and ‘history’ are different things. Credit history is a 6 year record of achievement in everything finance. Anything you borrow, agreements you make, credit cards, overdrafts, mobile phones, buying a sofa, all acknowledged and payment history logged. Credit score relates to a lenders interpretation of your history. Every lender can view things differently, and also have a different ‘pass mark’ to determine who they lend to and who they don’t, depending on how much cash they have to lend out at the time and their current market strategy. As a result, credit reference agencies provide you with a score based on their systems, but they aren’t the same as a lender would give.
Property type – Some lenders take issue with properties of a certain age, and many decline any non-standard construction such as concrete, timber, or thatched properties. Often, new build properties are required to have NHBC certificates that guarantee the property for 10 years, and a lender can decline them without one. However, some lenders are happy with them if there is another certificate in place, which is often the case with self-built properties. These are regularly signed off for 6 years by an architect for example, which some lenders will be happy with.
Ownership and marital status – Almost every lender will decline applications by married individuals applying in sole name, however there are a few that still consider it in the right circumstances. In fact, some lenders accept married people to gift depoait and still not be on the mortgage!
Deposit / Equity – you are far more likely to be accepted at 50% LTV than 95% LTV, regardless of the rest of your application. This is purely because the risk for a lender is far less.
Which mortgage term is best?
Old school advisers set mortgages up over 25 years and never changed them, whereas nowadays the right term really depends on your budget. If you have £800 a month set aside for mortgages and relevant insurance, and the mortgage is £900 over 25 years, if the lender allows it might be an idea to increase the term to 30 years to drop the outgoings to a more affordable level. Similarly, if your budget is £800 a month and its £400 over 25 years, then it might be an idea to reduce the term to 15 years to pay it off quicker and reduce the overall interest you pay. Re-mortgage advice should always factor in your budget and repayment strategy to ensure the mortgage is paid off as quickly as you can, ideally before retirement and if not, to ensure you can afford the mortgage throughout the term.
Which product is best for me?
The type of mortgage you take is important because you’ll be able to fit it around your situation and plan going forward. Need to minimise upfront costs? Then a fee free product would be ideal. Planning to move or refinance in 2 years? Then a 2 year tie in might be best to avoid any penalty, and tying yourself into a 5 year deal would be a bad idea. Coming into some money early on in the term? Then a mortgage with flexible overpayment facility might be best. Getting this right can potentially save you hundreds or even thousands in interest and fees.
Fixed rate Vs. Tracker rate
This question is age old, and many customers aren’t really sure which is right for them. A fixed rate will lock your rate for the initial period, a tracker rate can increase but is often cheaper. It’s a gamble either way because fixing at a slightly higher rate will cost more if rates don’t change over the term, a tracker rate might be cheaper initially but cost more if rates go up. The truth is – no one really knows what will happen to interest rates, so advising on this is near impossible, but the general thought is that they can’t really get much lower at the moment! It is usually recommended that you fix if you like to know where you are for budgeting purposes, and take a tracker if you feel rates will stay low and are comfortable paying more if they don’t.
Fee loaded products Vs. Fee free products
Don’t always just look for the best rate – look for the best deal. If you want a 2 year fixed rate, then look at the total cost over 24 months, taking into account the interest AND all fees it costs to set the mortgage up. Often on mortgages for £100k and less, fee free products work out better. The only exception to this is when you are looking for the cheapest monthly payment and are happy to pay more over the term.
Repayment Vs. interest only
Nowadays its becoming increasingly difficult to borrow on an interest only basis. Some major lenders have pulled out of the interest only market altogether and now only lend on repayment products. They are still out there for those who meet the strict requirements and have suitable repayment vehicles such as endowments or other investment portfolios. Buy to let mortgages are the exception, as these are almost always arranged on interest only as standard, viewed by lenders as investments rather than necessarily repaying capital over the term. Generally repayment is the way, but if you have lump sum investments to clear off the mortgage before the end of the term and you want to minimise monthly outgoings, then interest only might be worth considering. Because of the criteria however, you may limit the number of lenders that approve you, and thus the range of products to choose from which could mean you don’t get the best rates.
Direct Vs. Broker
The mortgage market is a dual priced world, and you can either get a deal direct with the lender or through a broker – often lenders products are the same through both channels, but there are some who charge more for broker arranged deals, and others that offer exclusives through brokers. Some lenders only deal with customers directly, others only deal with customers through a broker. Often if your application isn’t straightforward then a broker is the way to go – otherwise you’ll spend weeks going lender to lender, credit scoring and damaging your file as you go, with no real clue if there’s a deal out there.
Mortgage advice articles
Below are the most recent articles we’ve published on all things mortgages. Have a browse through or use the search box at the top of the page…