Get a Better Mortgage Deal
Our Mortgage Service - helping you make the right decision
Special features of what we offer include:
- Whole of market service - we work with most UK lenders
- Great Rates! - Access to leading market mortgage rates
- Exclusive Deals - Access to exclusive loan deals not available on high street
- Fast turnaround - speak to us today if you need to move quickly. We can access bridging loans and short term finance
- Credit challenges? - We have lenders who will take into account previous defaults and missed payments
- Raising Finance? - Looking to raise additional finance on top of your existing mortgage or buy to let mortgage? - we have access to a range of finance solutions
The essence of the Fair Mortgages service is professional independent mortgage and protection advice brought to you by a team of specialist advisers and experienced administration support.
Finding a mortgage
One of the most important initial steps to take when planning a property purchase is to work out exactly how much you can afford to borrow. It can be tempting to take out the maximum mortgage available to you, but it’s important to consider how you would keep up repayments if your financial circumstances changed.
Most mortgage lenders offer high loan to value (LTV) mortgages deals if you are a first time buyer. With the introduction of the Help to Buy scheme, first time buyers could find mortgages requiring a deposit of as little as 5% of the property value.
If you are looking to move home, it’s important to shop around for the best mortgage deal available for your circumstances. The best mortgage deals for home movers tend to go to people who can provide a high deposit. You can use personal savings as well as the equity from the sale of your current property to fund your deposit on your new home.
If you are looking to save money on your existing mortgage or to raise some additional money against your property, remortgaging your home could be the perfect option. It can often be cheaper to add an extension to your existing property rather than moving home, and a remortgage deal could give you extra cash to finance this.
What is the Loan-To-Value ratio (LTV)?
The loan to value ratio of a mortgage indicates how much of your property you own outright (covered by your deposit, and commonly known as equity) and the amount you are borrowing (covered by your mortgage). Generally speaking, the higher the deposit you are able to put down (and thus the greater the proportion of the property you can purchase outright at the outset), the better the mortgage deal you are likely to get, and the greater your choice of deals is likely to be.
Getting accepted for a mortgage
A mortgage lender is likely to ask you about some of the following issues when assessing your eligibility for a mortgage:
- Is your income sufficient to cover your repayments each month?
- Have you ever missed a mortgage payment or other repayment in the past?
- Is your income stable and secure?
- Do you have significant outstanding debts waiting to be repaid?
- What is your previous credit record?
If you can meet all these criteria, you will need to collect the relevant documents to demonstrate this. Depending on the mortgage lender, they may ask you to provide your address history, recent bank statements, payslips, accounts (if you are self employed), and details of your existing financial commitments such as loan or credit card repayments.
Types of Mortgage Finance
There are different types of mortgage finance depending on your needs.
If you are purchasing a new property this is often referred to as a "first time buyer mortgage" or if you are buying for a second time or more simply a "purchase mortgage". If you are staying in your house but want to get a better deal on the existing mortgage you have in place this is called a remortgage. You can remortgage with your existing lender or you can remortgage to a new lender.
Lenders will differentiate their mortgage products based on the mortgage type and the product details and rates on offer will vary. The job of a good mortgage broker is to help you sift through the different deals on offer to help find the right mortgage finance for you. As well as residential mortgage products some lenders offer buy to let mortgages. If you are looking to buy a property to let out to tenants "buy to let mortgage" products allow you to raise finance based on lender set criteria. Buy to let mortgage rates are typically higher than residential mortgage rates.
For situations where short term finance is needed often to bridge a gap, a bridging loan or bridging finance as it is often called can be useful in particular scenarios often where time is of the essence. Click here for more information about our bridging loans service. Bridging finance is designed for short term periods typically 3 to 12 months.
What finance is right for you will depend on your circumstances so getting good advice is imperative.
There are three main types of mortgage rate available:
Fixed rate mortgages
Fixed rate mortgages are set at the same rate for an agreed period of time – usually two to a five year fixed rate. This can offer reassurance as you can be sure that your repayments will be the same each month for the length of the fixed rate agreement, allowing you to plan your budget going forward.
A tracker mortgage, as the name suggests, ‘tracks’ an interest rate, usually the Bank of England Base rate over a set period of time. The length of a tracker mortgage can range from two years to the life of the mortgage. An interest rate will be set at the outset of the mortgage agreement, after which your monthly mortgage repayments will vary depending on the movement of the interest rate that is being tracked. While the Base Rate is low, tracker mortgages can be appealing, but they carry the risk of higher monthly repayments if interest rates go up.
An offset mortgage allows you to link your current account or savings account in order to offset the cost of their repayments. Instead of earning interest on your savings, the money is set against your mortgage. Therefore, you pay less interest on that debt. If you have substantial savings or rely on an irregular income, an offset mortgage may be the best option for you.
Repaying your mortgage
You can choose to repay your mortgage in two different ways:
Capital Repayment Mortgage
With this type of mortgage, your monthly payments go towards paying off a proportion of both the capital owed and the interest on the loan. At the end of the mortgage term, the loan will have been paid off in full.
Interest Only Mortgage
With this type of mortgage, you only pay off the interest every month, so monthly repayments are lower. Lenders have strict criteria on who they lend to on an interest only basis - call us on 0117 313 7780 for more information if this option is of interest. While some lenders will take house sale as a valid repayment strategy for the mortgage most will require a valid repayment method in place to cover the capital repayment when the mortgage comes to an end.
For more information see our How to Get a Mortgage Guide - alternatively to compare top mortgage rates and find the best mortgage deals for you, use the mortgage calculator to search over 5,000 mortgage deals based on your personal circumstances.