Mortgage
Services
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Fresh Financial
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Mortgage |
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Many people make the mistake of not investigating mortgages until they have found the property they want. In order to remove a potential area of stress it is advised that you get some assurances and preliminary financial checks before you even start looking at properties to buy. Being 'given the nod' on a mortgage at this stage can also put you in a much better position when you make an offer. What are Mortgages? Mortgages are basically loans from a bank, building society or other financial institution, which is paid back (with interest) over a number of years. The property itself is used as security against the loan. This is why the lender insists, at your cost, that a qualified surveyor provides a valuation to confirm that the property is, for mortgage purposes, at least equal to the amount being paid. Also because the property is the security for the loan, your home is at risk if you do not keep up the repayments. In the event of default, and after providing due notice, the mortgage lender will have the right to repossess your home, evict you and sell it to try to recover the amount loaned. In order to secure a mortgage, your proposed lender will have to check out your ability to repay the loan. They do this by taking references to confirm the amount of income you receive from your employers, by making credit checks to confirm you are creditworthy and also ensuring you have no County Court Judgements (CCJs) against you, for example, for default of loan repayment in the past. Depending on your age, most lenders are prepared to offer you a loan up to 3 times your regular yearly income. This is your income net of any other loan repayments or regular payments your have to make. If you're married, engaged or living with your partner, it may be possible to include one year of your partner's annual income, with some lenders being more generous by allowing you 2.5 times your joint net income. In addition to the level of your income versus the value of the loan you are seeking, there are a number of factors that need to be considered: The type of property you are looking to buy - for example, leasehold and converted properties can make a difference to the percentage loan available. How much cash you have for a deposit and therefore, given the value of the property you want to buy, the percentage loan you will need. Given the percentage loan, whether a mortgage indemnity guarantee is required (an extra payment often demanded if you are borrowing over 75% of the value of the property). What your employment status is, full or part time and for how long, self-employed or on contract and the certainty of your income from this. Any other loans or liabilities you have, the amount outstanding and the value of monthly repayments. The entire process of gaining a formal mortgage offer typically takes about one month.
Types of Mortgages The varieties of mortgages available are becoming increasing complex and it is important that you find one that suits you, and your circumstances. It is important you seek sound advice; speak to Fresh Financial and one of our professional advisers will support you all the way free of charge.
Repayment Mortgages Repayment mortgages are where both the capital (the amount loaned) plus interest against it, is paid back over a set number of years, between 20 or 30 years, but it could be less. Each month you would repay part capital and part-interest. At the outset the proportion of interest in this repayment will be higher than in later years. As the repayment mortgages reduce, and the amount of capital borrowed steadily decreases over the years, the amount of interest payable also decreases. Therefore, in later years, you will be repaying increasing amounts of capital and reducing amounts of interest. A Low Start Capital Repayment option, usually only available to first time buyers, is essentially where, for a given period of a few years, interest-only is repaid. Then gradually an increasing capital element is repaid. Quite often the initial lower repayments inevitably means higher payments later on. It is usual for the lender to take out a life insurance policy, to cover the repayment of the capital should you die before the loan is repaid. This would probably be a term policy, co-terminating with the final repayment of capital on the loan.
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