Category: Mortgages

Going through the entire mortgage process is not easy, especially if you are a first-time home-buyer.

That said, a mortgage broker can help save you time and money.

From finding the best rates and lowest fees to completing the application and closing the loan on time, mortgage brokers have a good command of the mortgage process.

By working with a broker, you will benefit from their extensive knowledge in the market, helping you land the best mortgage deal available.

However, mortgage broker fees can vary significantly and not all provide the same level of service.

Are you wondering how much a mortgage broker costs in the UK?

After reading this guide, you will have the answer to all your questions and more in this article. Read on!

Do Mortgage Brokers Charge A Fee?

Some mortgage brokers do not charge an upfront fee for their service and only profit from a commission from the lender.

The majority of mortgage brokers, however, will charge a fee for their different services, such as:

• Assessing your financial situation.
• Searching the entire market to find the best deal available.
• Negotiating your mortgage terms and conditions.
• Taking care of your paperwork.
• Managing the entire application process, from submission until settlement and beyond.

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How Much Fee Do Mortgage Brokers Charge?

The pricing structure from one mortgage broker to the next can vary significantly, so you should discuss and research the costs before agreeing to use your mortgage broker and ask for their fees in written form.

There are various pricing models that brokers work with, including fee-free, hourly rate, fixed charge, percentage, or combination.

Some mortgage brokers do not charge any fee for their service and benefit only from the commission from the lender.

Costs in hourly rates can quickly escalate in case of complications, so you should try to estimate how many hours you will be charged for.

A typically fixed charge would range from £300-£600.

In the percentage model, the broker will charge a percentage of the mortgage that you are taking out. So, for instance, if you take out a loan of £193,000 and they are charging 1%, you will be paying them £1,930.

Finally, some brokers use a combination of these pricing structures.

For example, they may charge a fixed fee and get a commission from the lender. It’s also worth knowing that all brokers receive a commission from the lender.

Here, the majority of brokers we work with are only paid through lender commission. The ones who charge an upfront fee will refund the costs if they fail to get you a mortgage.

Fees For Extra Time

Some cases are more complicated, requiring brokers to spend extra time and effort finding a lender.

The broker may charge for the additional time needed to secure a mortgage in this situation.

For example, the borrower might have initially refrained from fully disclosing their actual financial situation.

This can result in delays, and the broker might have to do extra paperwork and research.

To avoid running into extra fees, you should always take the time to understand your broker fee disclosure form before signing anything fully.

Is There A Difference In Second Charge Mortgage Broker Fees?

Whether you’re applying for a first or second charge debt shouldn’t make a difference.

The 0.3-1% is a standard fee, and your broker will charge you the same way.

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What’s A Mortgage Referral Fee?

Some banks and lenders offer mortgage referral fees as an incentive for mortgage brokers to recommend certain lenders.

However, in today’s market, lenders normally pay brokers a commission, so referral fees are rare, if not virtually non-existent.

Should I Expect Any Other Fees?

When applying for a mortgage, you need to be aware that there may be more costs involved than just the monthly payments.

Some brokers charge extra fees like stamp duty, removal costs and financial advisor mortgage fees.

While fee amounts vary from lender to lender, they could include the following extra charges:

• Mortgage broker finder fees.
• Underwriting fees.
• Mortgage broker application fees.
• Cancellation fees.

Get in touch with our expert advisors to ensure you won’t run into hidden or surprise fees.

The brokers we work with are transparent about the fees they charge, or we can refer you to a fee-free broker if your case allows it.

Are There Fee-Free Mortgage Brokers?

Fee-free mortgage brokers do exist, which is a cost-effective solution.

These brokers earn a commission payment from your lender once the mortgage completes and won’t charge you a fee on top of this.

Fee-Free Or Paid Broker – Which Is Better?

It all depends on your mortgage broker, and there is no simple yes or no answer to this question.

Unfortunately, not all brokers are equally ethical, and some may take advantage.

For instance, a fee-free broker may guide borrowers to take out an unsuitable mortgage with a lender with whom they can earn a greater commission.

This is why fee-free brokers are best reserved for simpler cases and complex issues may require a more experienced broker.

Fee-free or not, the main objective is to work with an experienced, competent, trustworthy mortgage broker.

You can learn more about your broker by researching feedback and reviews through third-party review sites such as Trust Pilot or getting recommendations from friends and family.

That way, you will know who to stay clear from and whom you can work with confidently.

It’s also important to ensure that your broker is fully qualified by the FCA (Financial Conduct Authority), as they are in the safest place to give you trusted advice.

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Can I Use An Online Mortgage Broker Fee Calculator?

Online mortgage broker fee calculators can provide a quick picture of what you might expect to pay.

But unfortunately, online mortgage broker fee calculators can’t assess your unique circumstances and financial situation.

On the other hand, an advisor will know what type of mortgage you need after speaking with you.

Having a well-versed broker to work with can make the difference between a successful mortgage application and rejection, so it’s always best to find the right broker for your situation.

When Do I Pay A Mortgage Broker?

You may be required to pay your fees upfront or once your mortgage application has been approved.

Can I Negotiate Mortgage Broker Fees?

Yes, borrowers can negotiate mortgage rates and fees. If there are fixed fees, you can still compare them with multiple lenders.

Can I Get A Refund On My Broker Fee?

Yes, you can get a refund in several cases.

For instance, if you change your mind about an agreement you signed with a credit broker online or over the phone, you have the right to cancel the contract at any time within the first 14 days and get a refund of the money you’ve paid.

You can also get a refund if your broker misled you, shared your details with third parties, or took fees you had not agreed to.

Do Mortgage Brokers Offer Cashback?

Although not every lender will offer this, some brokers can arrange a cashback for you.

If you get a cashback mortgage, you’ll be given a lump sum upon mortgage completion to cover any necessary expenses such as legal fees, stamp duty, removals, home repairs or even new furniture.

Can I Find An Independent Mortgage Broker in the UK?

Independent fee-free mortgage brokers will put you at the centre of every decision, providing you with an all-rounded service.

Our advisors can put you in touch with independent no-fee mortgage brokers throughout the whole UK market in:

• Coventry
• Liverpool
• London
• Leeds
• Huddersfield
• Bristol
• Manchester
• Sheffield
• Nottingham
• Worthing
• Northampton
• Edinburgh
• Glasgow
• Exeter
• Scotland
• Leicester
• Bolton
• Wirral

Make an inquiry online and speak with one of the best fee-free mortgage advisors in the UK.

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Get Help From An Expert

If you’re still unsure about how much mortgage broker fees cost and who is going to pay them, call us up or make an inquiry to talk with an advisor.

The advice you will receive will always be kept between us. What’s more, it’s free!

Whatever your circumstances, we believe that a mortgage shouldn’t stop you from getting your step on the property ladder to finding your next home.

A rise in the interest rate causes financial knock-on effects in several areas, including mortgages, borrowing, pensions and savings.

Lowering interest rates means cheaper borrowing; rising rates mean borrowing gets more expensive.

The Bank of England recently raised the bank rate from 0.25 to 1% for the UK.

As a result, we could experience an increased cost when loaning money.

What Is An Interest Rate Rise?

The interest rate at which banks borrow from the Bank of England is determined by the Monetary Policy Committee (MPC) within the Bank of England.

The Bank of England has been increasing interest rates to prevent the inflation rate from continuing to grow to critically high levels.

When the Bank of England’s MPC votes to raise the Base Rate, banks, in turn, raise their interest rates to maintain profits.

When borrowing costs increase, people spend less, dampening economic growth and slowing inflation.

So, when we hear that interest rates have gone up, it means the MPC has decided to increase the base rate.

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What Does Rising Interest Rates Mean For Me?

The impact rising rates have on you depends on your personal financial situation, such as how much you owe and how much you have in savings.

Rising interest rates generally mean savers earn more interest, and borrowers pay more on financial products such as loans, mortgages and credit cards.

Will Rising Interest Rates Affect Mortgages?

Whether or not rising interest rates will affect your mortgage repayments depends on the type of mortgage you have and when your deal terminates.

For example, if you are on a standard variable rate mortgage, you will most likely see an increase in your rate.

However, situations may vary as each lender decides how much to increase.

To be sure, go through the mortgage terms and conditions in your mortgage paperwork.

If you have a fixed rate mortgage, you’re signed up for a fixed pay rate for a fixed period.

As a result, your interest rate won’t go up until your fixed term ends. However, rising interest rates always make remortgaging more expensive.

Your repayments will be immediately impacted if you have a tracker mortgage, also called a variable mortgage.

These mortgages track the base rate, so whenever the Bank of England rate rises or falls, the mortgage payments will do the same.

Have A Financial Plan In Place

With looming interest rate changes, it’s a smart idea to have a robust financial plan in place.

A 0.25% rate rise might not sound like a huge difference, but when we calculate things out, there’s much more interest to pay each month and throughout the mortgage.

Take a look at the table to see how much more you’d pay on a £200,000 mortgage if interest rates rise from the current 1%. The monthly repayments are set to £897.

–	1%	2%	3%	4%	5%
Monthly Payment	£1,001.25	£1,111.66	£1,228.17	£1,350.41	£1,477.98
Monthly Increase	£104.02	£110.41	£116.51	£121.83	£127.57

Steps To Manage An Interest Rate Rise On Your Mortgage

Check Out What Mortgage You’re On

First things first! Find out what mortgage deal you are on and the interest rate you are paying.

This is important because how the interest rise will affect you depends on the type of mortgage you’re on and when your deal ends.

If you aren’t sure, go through your mortgage paperwork or call your mortgage provider to help find out.

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Calculate How The Interest Rate Rise Will Affect You

Once you know the deal you’re on, you can now find out how and when the rise might affect you.

The MoneySavingExpert Calculator is a great tool that helps work out the numbers.

Look For Ways To Cut Spending

If your mortgage costs are likely to go up, it’s a great time to look at the family budget and identify ways to save money.

Then, you can use the money you save to start building a buffer so you’ll be able to afford your mortgage.

Get Help

If you’re worried about how to afford the mortgage, you can get the advice and peace of mind you need by consulting a financial expert.

A financial adviser can help you budget, assess your income, and guide you with your financial planning to keep you from running into roadblocks.

Work On Building Your Credit Score

If you have a less-than-good credit score, now is a great time to improve it, as it will help you get a better deal when you remortgage.

So, use a credit score check to find out where you can improve your score, clear out any debts, and avoid taking out any more credit in the coming months.

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Shop Around For The Best Deal

Whenever your deal ends, it is a smart idea to shop around to find the best deal on the market.

So, if your current mortgage deal is coming to an end, you should check whether any better rates are available.

You might encounter early repayment fees, but if you can find a better deal, they might be totally worth it.

Overpay On Your Mortgage

If interest rates are prone to increase in the future, making additional payments towards your mortgage now can be a great idea.

It might be some time until the rate increase comes into play, so cut back on personal expenses to take advantage of the current rate and pay a bit extra.

Check out your mortgage provider to ensure that you can overpay and if there are any charges.

How Will Rising Interest Rates Impact Borrowers?

Non-mortgage loans, secured or unsecured, can be affected by an increase in interest rate.

For example, your credit card lender might increase their interest rates and pass this on to you; however, you will be notified first and given some time before the interest rate hits your pockets.

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Already Borrowing?

In general, unsecured loans are agreed to at a fixed interest rate.

Are you on a fixed deal? If so, the amount of interest during the fixed rate term will remain the same regardless of whether interest rates rise.

However, there is a possibility for the rate on your credit card or overdraft to rise. In that case, you will receive notice beforehand.

Are You Planning To Borrow?

Borrowing after an interest rate rise means more expensive borrowing.

So, if you are looking to borrow and have found a good deal, it’s better to hurry as the best deals tend to disappear quickly if there is a hint that rates will rise.

How Will Rising Interest Rates Impact Savings?

To the saver, rising interest rates can be good news! If interest rates on savings accounts move up, savers will benefit by earning more money.

Banks often compete to offer the best interest rates, so if your provider isn’t passing on a rate increase, it might be time to shop around to find the best deal.

How Will Rising Interest Rates Impact Pensions?

Rising interest rates might mean growth in your pension pot. As many pension funds are invested in bonds, the value of bonds could increase when interest rates rise.

Higher interest rates are also good news for those looking to take out an annuity, an insurance that offers you a set income after you retire.

Since annuity rates are linked to returns from gilts, higher interest rates could mean rising gilt yields and annuity rates.

Mortgage down payments are one of the biggest hurdles for first-time buyers getting on the property ladder.

Typically, there is a 10% down payment for your mortgage, and the average UK price is at £255,535 now. This means that you’ll need to have around £25,500 to make the deposit.

Most of the time, people ready to purchase a home won’t have this sum in their pockets.

So if you’re pinching and scraping together a deposit, a gift deposit can be a breath of fresh air.

Parents, grandparents, or siblings will often step up and help make the down payments with gift funds.

They will gift a part, or all, of the deposit sum to help them achieve eligibility for the mortgage.

Read on to know everything you need to know about deposit gifts!

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What Is A Gifted Deposit?

A gifted deposit is money given to a homebuyer as a contribution towards the deposit or equal to the whole deposit.

Gift deposits are growing increasingly popular as a way of helping first-time buyers get a step on the property ladder.

They are usually given by parents, and sometimes by grandparents or siblings.

A gifted deposit is a gift; it’s not a loan and must be given with no strings attached.

The money must be given freely, and the giver should have no stake in your property.

Who Can Gift A Deposit?

Almost anyone can give a deposit, from family members to partners to even friends.

However, most mortgage lenders prefer gifted deposits from an immediate relative, for example, a parent, grandparent or sibling. A partner can also make a gift deposit.

More distant relatives who are not related to you by blood, such as aunts and uncles, or friends, may not be approved by many lenders.

On the other hand, some lenders only allow parents to gift the money.

Although it’s not a common scenario, you should also keep in mind that most lenders will not accept a gifted deposit from a person who is also the one selling the house.

So, for instance, if you’re purchasing a property from your parents and they’re also the ones helping you fund it, it could be harder to get a mortgage (since that’s just a price reduction on the property).

So if you’ve received a gifted deposit offer from a loved one and are wondering what to do next, it’s a good idea to check with an advisor first to see if a lender will accept it.

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What Are The Rules On Gifted Deposit To Buy A House?

Rules on gifted deposits vary from lender to lender. They will all have their own qualifications and criteria around gifted deposits.

Here are the basic rules that most will agree on:

1. Confirmation that the money is really a gift and not a loan.
2. Confirmation that the gifter has no financial stake or legal right to the property.
3. Confirmation That The Money Is Really A Gift And Not A Loan.

Mortgage lenders see gift and loan deposits as two completely different things.

So before approving a gifted deposit, your lender will want the gifter to confirm in written form that the sum is indeed a gift with no expectation of repayment.

If you have to pay the sum back, it will be considered a loan, and your lender will either reduce to accept it or add it to your monthly outgoings to determine whether you can afford the mortgage repayments.

How Do You Prove That The Money Is A Gift?

To prove that the money is a gift, you will need a Gifted Deposit Letter.

While larger banks and lenders will give you a form to fill in, smaller lenders might require a lawyer’s letter.

The Gifted Deposit Letter needs to include the following:

• Gifter’s name.
• Your name.
• The total amount given.
• The source of the money.
• The relationship between the gifter and the receiver.
• Confirmation that it’s a gift with no obligation for repayment.
• Confirmation that the gifter has no financial or commercial stake in the property.
• Proof that the gifter is financially solvent.

The Gifted Deposit Letter needs to be signed by you, the gifter, as well as a witness.

Does The Gifter Need To Provide Anything Else?

Yes, the person giving the money will need to provide:

• Proof of funds: The person giving the money will need to prove that they actually have the money to give you and the source of the funds. If the gifted sum comes from an expected source, such as a property sale, it will be easier to prove. If the money was saved over time, bank statements and payslips would be needed to pass the anti-money laundering checks.
• Proof of ID: The person giving the money must show a photo ID, such as their passport or citizenship. They will also need to provide two proofs of address.

Confirmation that the gifter has no financial stake or legal right to the property.

If this isn’t included in the Gifted Deposit Letter, your lender may require a separate signed letter.

This letter will need to state that the person making your deposit expects no legal interest or equity in your property.

How Big A Sum Can Gifted Deposits Be?

There is no limit on how big a gifted deposit can be, but some lenders only accept a gifted deposit up to a percentage of the property’s value.

It’s also important to note that a large gift could be subject to inheritance tax.

What About Gifted Deposits And Inheritance Tax?

Anyone can gift up to £3,000 a year, exempt from inheritance tax – the tax on the estate of someone who’s died.

Any unused allowance from the previous year can be carried over.

So, for example, if your parents have not given away any money in the last year, they could give you £6,000 this year.

And they could gift you £12,000 if they haven’t gifted anyone in the previous two years.

However, if the sum they give exceeds this, the money would be liable for inheritance tax.

This is because if the gifter dies within seven years of handing it over, it would still be viewed as part of their estate for inheritance tax purposes.

So if the person’s real estate, including the gift, is more than £325,000, up to 40 per cent tax would be due on the excess. The tax on the gift goes down as the seven years elapse.

Alternatives To A Gifted Deposit Mortgage 

There are other options if your loved ones want to help you purchase a house but can’t gift you a deposit.

For example, they can be the guarantor on your mortgage, where they would be liable for the payments if you fail to make a payment.

You can also take out a joint mortgage with them, where both of you would be responsible for paying the loan.

If friends and family can’t help, there are also government schemes like shared ownership or Help to Buy.

These will require a much smaller deposit, usually 5%, for first-time buyers.

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Have You Been Offered A Gifted Deposit?

If you aren’t confident enough to take the next step, reach out to our team of mortgage brokers to get expert advice on your gifted mortgage deposit.

A mortgage is one of the most significant commitments you’ll make in your financial life.

It will likely be your most considerable monthly expenditure, and knowing how much you’ll pay each month will help you understand the actual cost of your target home.

If you’re considering taking out a £300,000 mortgage, this guide will show you how the monthly repayments are calculated, how much income you need to qualify, and the factors that can affect your application.

Monthly Repayments On A £300k Mortgage

Different customers can make differing monthly repayments for a £300k mortgage because the figures are calculated based on personal factors like:

• Your income and employment type.
• Your credit rating.
• Your interest rate.
• The length of the mortgage.
• Your repayment type.

Here’s an example of how monthly repayments can differ based on the interest rate and term:

Interest Rate   Term	1%	2%	3%	4%	5%
10 Years	£2,628	£2,760	£2,897	£3,037	£3,182
15 Years	£1,795	£1,931	£2,072	£2,219	£2,372
20 Years	£1,380	£1,518	£1,664	£1,818	£1,980
25 Years	£1,131	£1,272	£1,423	£1,584	£1,754
30 Years	£965	£1,109	£1,265	£1,432	£1,610

How Much Do You Need To Earn To Qualify?

Lenders will use multiples of your salary or income to determine how much you can borrow.

Some will offer loans at four times your annual income, while others will offer 4.5 x, 5x, or 6x under the right conditions.

Therefore, to qualify for a £300k mortgage, you’ll need to earn £75,000 annually based on 4x your income, £60,000 based on 5x income, and £50,000 based on 6x your income.

However, the income requirements can differ among mortgage lenders as they assess applications case-by-case when deciding.

Mortgage lenders assess your debt-to-income ratio to determine your affordability.

They’ll look at your monthly income minus any outgoings.

A lower debt-to-income ratio is more attractive because it shows lenders you have more disposable income for mortgage repayments.

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Such outgoings can include:

• Utility bills like water, gas, or electricity.
• Council tax.
• Childcare costs.
• Credit cards.
• Car insurance.
• Home and content insurance.
• Broadband and TV packages.
• Car finance.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How The Interest Rate Affects Monthly Repayments

The interest rate on the mortgage determines how much your loan balance grows each month. The higher the interest rate, the higher the monthly repayments.

Mortgage interest can be fixed or variable, affecting your monthly repayments.

With fixed mortgage rates, the interest rate and monthly repayments remain the same for a certain period.

With variable mortgage rates, the interest rate can go up or down from month to month, meaning the amount you repay monthly is subject to change.

The right deal will depend on your circumstances and what you want from the mortgage.

How Much Deposit Do You Need?

The deposit required by the mortgage lender will depend on the price of the property you’re buying and whether you’re classed as high or low risk.

Most lenders set the maximum loan to value (LTV) ratio at 90%, meaning you’ll need a deposit of 10%.

The LTV shows how much of the property you own outright. Some can accept as little as a 5% deposit, while others will need you to put down more if you’re considered higher risk because of issues like bad credit.

Size matters when it comes to residential mortgage deposits, and it can affect the interest rates you get, which affects your monthly repayments.

A larger deposit means a lower LTV, and it increases your chances of getting favourable rates from more lenders as they consider the mortgage a lower risk.

If the total amount of the property you’re buying costs £300,000 in the market and lenders need a 10% deposit, you’ll need to make a £30,000 down payment.

You would then borrow £270,000 from the mortgage lender.

Recommended reading for mortgage hunters: 

• Mortgage deposit gifts
• How much does a mortgage broker cost?
• Can you build on the green belt?
• Shortest term mortgage in the UK
• Buying a warehouse in the UK
• Porting a mortgage explained
• Transferring a mortgage

How The Term Affects Repayments

Generally, the longer the mortgage term, the less you’ll pay each month in repayments.

However, you’re likely to pay back more overall because you’ll pay interest on the loan for a more extended period.

A shorter term means you’ll pay more per month, but the overall cost of the loan will be lower.

If you have a £300k mortgage with a term of 30 years and an interest rate of 3.92%, you’ll pay £1,418 monthly and £510k in total.

However, if you get the mortgage for a term of 10 years, you’ll make monthly payments of £3,026 and pay £363k in total.

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How The Repayment Type Affects Monthly Repayments

You can choose between repayment and interest only mortgages, which will affect how much you pay each month.

With repayment mortgages, you make one payment per month, part of which goes towards repaying the capital, and the rest covers the interest.

With interest only mortgages, you’ll only pay off the interest each month and repay the whole loan amount at the end of the term.

Your monthly payments will be higher in a repayment mortgage than in an interest-only mortgage.

Interest only mortgages are suitable if you want to keep monthly costs down.

However, the amount due at the end of the term can reach significant amounts, and lenders will need proof of a repayment strategy to pay off the capital in one lump sum.

Lenders will require you to put down more significant 25% to 30% deposits to qualify for an interest-only mortgage.

Other Factors That Can Affect Your Mortgage

Your Income Sources

Most lenders prefer applicants with full-time jobs and PAYE salaries. If your income source is considered non-standard, like being self-employed, lenders will typically offer you less attractive rates.

Some may even reject your application, and it’s wise to consult a mortgage broker who can connect you to specialised lenders who accept different income types.

Bad Credit

Most mortgage lenders prefer applicants with good credit reports, but having bad credit doesn’t disqualify you from getting approved for a £300k mortgage.

You can get specialist providers who offer mortgages to bad credit borrowers, but they’ll likely feature higher rates and repayments than customers with good credit.

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Final Thoughts

An online mortgage calculator can help you calculate your monthly repayments before applying for a £300k mortgage.

However, it’s only a rough idea of what you’re eligible for and not an accurate cost.

For more accuracy and guidance, consult a specialist mortgage broker who can advise you on where to get the best rates no matter your circumstances.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

A mortgage is one of the most significant commitments you’ll make in your financial life.

It will likely be your most considerable monthly expenditure, and knowing how much you’ll pay each month will help you understand the actual cost of your target home.

If you’re considering taking out a £300,000 mortgage, this guide will show you how the monthly repayments are calculated, how much income you need to qualify, and the factors that can affect your application.

Monthly Repayments On A £300k Mortgage

Different customers can make differing monthly repayments for a £300k mortgage because the figures are calculated based on personal factors like:

• Your income and employment type.
• Your credit rating.
• Your interest rate.
• The length of the mortgage.
• Your repayment type.

Here’s an example of how monthly repayments can differ based on the interest rate and term:

Interest Rate   Term	1%	2%	3%	4%	5%
10 Years	£2,628	£2,760	£2,897	£3,037	£3,182
15 Years	£1,795	£1,931	£2,072	£2,219	£2,372
20 Years	£1,380	£1,518	£1,664	£1,818	£1,980
25 Years	£1,131	£1,272	£1,423	£1,584	£1,754
30 Years	£965	£1,109	£1,265	£1,432	£1,610

How Much Do You Need To Earn To Qualify?

Lenders will use multiples of your salary or income to determine how much you can borrow.

Some will offer loans at four times your annual income, while others will offer 4.5 x, 5x, or 6x under the right conditions.

Therefore, to qualify for a £300k mortgage, you’ll need to earn £75,000 annually based on 4x your income, £60,000 based on 5x income, and £50,000 based on 6x your income.

However, the income requirements can differ among mortgage lenders as they assess applications case-by-case when deciding.

Mortgage lenders assess your debt-to-income ratio to determine your affordability.

They’ll look at your monthly income minus any outgoings.

A lower debt-to-income ratio is more attractive because it shows lenders you have more disposable income for mortgage repayments.

Apply for a mortgage today

Such outgoings can include:

• Utility bills like water, gas, or electricity.
• Council tax.
• Childcare costs.
• Credit cards.
• Car insurance.
• Home and content insurance.
• Broadband and TV packages.
• Car finance.

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How The Interest Rate Affects Monthly Repayments

The interest rate on the mortgage determines how much your loan balance grows each month. The higher the interest rate, the higher the monthly repayments.

Mortgage interest can be fixed or variable, affecting your monthly repayments.

With fixed mortgage rates, the interest rate and monthly repayments remain the same for a certain period.

With variable mortgage rates, the interest rate can go up or down from month to month, meaning the amount you repay monthly is subject to change.

The right deal will depend on your circumstances and what you want from the mortgage.

How Much Deposit Do You Need?

The deposit required by the mortgage lender will depend on the price of the property you’re buying and whether you’re classed as high or low risk.

Most lenders set the maximum loan to value (LTV) ratio at 90%, meaning you’ll need a deposit of 10%.

The LTV shows how much of the property you own outright. Some can accept as little as a 5% deposit, while others will need you to put down more if you’re considered higher risk because of issues like bad credit.

Size matters when it comes to residential mortgage deposits, and it can affect the interest rates you get, which affects your monthly repayments.

A larger deposit means a lower LTV, and it increases your chances of getting favourable rates from more lenders as they consider the mortgage a lower risk.

If the total amount of the property you’re buying costs £300,000 in the market and lenders need a 10% deposit, you’ll need to make a £30,000 down payment.

You would then borrow £270,000 from the mortgage lender.

Recommended reading for mortgage hunters: 

• Mortgage deposit gifts
• How much does a mortgage broker cost?
• Can you build on the green belt?
• Shortest term mortgage in the UK
• Buying a warehouse in the UK
• Porting a mortgage explained
• Transferring a mortgage

How The Term Affects Repayments

Generally, the longer the mortgage term, the less you’ll pay each month in repayments.

However, you’re likely to pay back more overall because you’ll pay interest on the loan for a more extended period.

A shorter term means you’ll pay more per month, but the overall cost of the loan will be lower.

If you have a £300k mortgage with a term of 30 years and an interest rate of 3.92%, you’ll pay £1,418 monthly and £510k in total.

However, if you get the mortgage for a term of 10 years, you’ll make monthly payments of £3,026 and pay £363k in total.

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How The Repayment Type Affects Monthly Repayments

You can choose between repayment and interest only mortgages, which will affect how much you pay each month.

With repayment mortgages, you make one payment per month, part of which goes towards repaying the capital, and the rest covers the interest.

With interest only mortgages, you’ll only pay off the interest each month and repay the whole loan amount at the end of the term.

Your monthly payments will be higher in a repayment mortgage than in an interest-only mortgage.

Interest only mortgages are suitable if you want to keep monthly costs down.

However, the amount due at the end of the term can reach significant amounts, and lenders will need proof of a repayment strategy to pay off the capital in one lump sum.

Lenders will require you to put down more significant 25% to 30% deposits to qualify for an interest-only mortgage.

Other Factors That Can Affect Your Mortgage

Your Income Sources

Most lenders prefer applicants with full-time jobs and PAYE salaries. If your income source is considered non-standard, like being self-employed, lenders will typically offer you less attractive rates.

Some may even reject your application, and it’s wise to consult a mortgage broker who can connect you to specialised lenders who accept different income types.

Bad Credit

Most mortgage lenders prefer applicants with good credit reports, but having bad credit doesn’t disqualify you from getting approved for a £300k mortgage.

You can get specialist providers who offer mortgages to bad credit borrowers, but they’ll likely feature higher rates and repayments than customers with good credit.

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Final Thoughts

An online mortgage calculator can help you calculate your monthly repayments before applying for a £300k mortgage.

However, it’s only a rough idea of what you’re eligible for and not an accurate cost.

For more accuracy and guidance, consult a specialist mortgage broker who can advise you on where to get the best rates no matter your circumstances.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

You’re a UK ex-pat if you’re a UK national but currently live abroad.

Expat mortgages allow you to take out a mortgage on a property in the UK if you’re a UK national currently living and working outside the UK and possibly earning in non-sterling currency.

Applying for a UK mortgage as an ex-pat can be complex and challenging as lenders continue to tighten their borrowing requirements.

However, the strength of foreign currency against the pound can put you in an excellent position to purchase property back home as an investment or a place to return to in the future.

Here’s everything you need to know about ex-pat mortgages in the UK.

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Types Of Expat Mortgages UK

You can get ex-pat mortgages and remortgages for residential and buy to let properties.

Expat Mortgages For Residential Property

You can take out an ex-pat mortgage for a residential property if you’re a British citizen working abroad and plan on moving back to the UK.

You can also have a family in the UK and want to buy a property for them to live in.

Residential ex-pat mortgages are available on interest only and repayment bases.

They also feature fixed, discount, and tracker rates, and you can find lenders who don’t mind your non-sterling income, lack of UK credit history, or self-employment status.

Expat Mortgages For Buy To Let

You can rent out your UK property through a buy-to-let mortgage while away, whether it’s your first investment or you’re looking to extend your portfolio.

You can use the rental income to cover the cost of the mortgage.

You can also take out an ex-pat mortgage if you want to remortgage a residential property on a buy-to-let basis.

You should inform your lender if you’re going to let out your home when you leave the UK. They’re usually willing to grant consent to let until your current mortgage deal ends.

Why Use An Expat Mortgage Broker?

Most high street lenders like banks don’t offer ex-pat mortgages mainly because they can’t conduct credit searches on applicants who aren’t in the UK.

They can also reject your application because you earn in foreign currency or are self-employed.

Specialist assistance is often required to secure an ex-pat mortgage in the UK. Specialist lenders are more flexible, and they’ll consider your situation and offer you the most competitive rates.

Most specialist lenders are only available through ex-pat mortgage brokers.

Before you decide on any ex-pat mortgage, it’s wise to consult an independent ex-pat mortgage broker.

They can understand your situation and search the entire ex-pat mortgage market for a fair deal.

Expat mortgage brokers usually have access to specialist lenders and products that consumers aren’t aware of, and they can present you with a broader range of options.

They can evaluate your circumstances and guide you on the most competitive deals, thanks to a firm understanding of this niche market.

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Difficulties When Applying For Expat Mortgages

You have to expect the mortgage criteria and application process to be trickier for you as an ex-pat.

Lenders have tightened their restrictions and must consider your risk level to ensure they only offer affordable mortgages with less likelihood of defaults.

Factors like currency fluctuations, economic uncertainties affecting employment, and lack of international credit ratings mean the risk is naturally higher if you live abroad.

More time and information are necessary to complete the lending process, making it difficult for the average ex-pat to secure a UK mortgage.

Different time zones, IDs, payroll verifications, and accounting systems are administrative burdens the lender will pass on to you through higher interest rates and fees.

The products on offer can be more expensive, but with the right advice from an ex-pat mortgage broker, you can get the best mortgage deal to suit your situation.

Factors That Can Improve Your Chances Of Getting An Expat Mortgage

Proof Of Earnings

Proving earnings is usually more straightforward for formally employed people than self-employed ones.

You can simply present payslips dating back over some time to prove income.

You’ll likely need to provide account statements dating back a few years and confirmed by an internationally recognised accountant if you’re self-employed.

Having your income paid into a UK bank account can make it easier to prove income, but it’s usually not a must.

Keep Some Kind Of Financial Association In the UK

You can get a broader range of mortgages in the UK if you maintain some form of financial association in the UK.

It can be as simple as a residential address like your parent’s home or a credit card. It helps you maintain a financial footprint in the UK, which lenders will consider positively.

Ensure you understand how it might affect your tax affairs by consulting an independent advisor who understands the tax affairs of ex-pats before deciding on your best course of action.

Deposits

You’ll need a deposit when purchasing any property in the UK, whether you’re an ex-pat or not.

Compliance with anti-money laundering regulations in the UK requires you to go through various due diligence processes, including providing evidence of where the deposit originates.

Whether the money comes from savings, equity from property sales, inheritance, or other investments, ensure you keep a record of any lumpsum payments to assist in the application.

Provide As Much Information As Possible

Lenders usually make their decisions based on the information you provide.

Since there are no international credit checks, you’ll need to provide more paperwork at every process stage.

Brokers can discuss the general options available, but they’ll still need a detailed understanding of your situation to determine whether they can help you.

Ensure you provide all the required information as early as possible to avoid wasting time and getting rejected later in the process because you don’t meet all the criteria.

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Final Thoughts

Because of the complexities involved in ex-pat mortgages, it’s vital to consult and seek advice from an ex-pat mortgage broker.

They’ll likely have access to specialist lenders and exceptional mortgage deals not available anywhere else.

They’ll also save you valuable time and make the process smoother than approaching ex-pat mortgage lenders directly.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

You can find many residential and buy-to-let tracker mortgages in the market, and they can be a viable alternative to fixed-rate and discount rate mortgages.

But what exactly are they, how do the best tracker mortgages work, and why would you choose one? Read on to find out.

What Are Tracker Mortgages?

Tracker mortgages are a type of variable mortgage where the interest follows or tracks an external interest rate.

Tracker mortgages usually follow the Bank of England’s base rate, and lenders use it to set the interest rate on their mortgage deals.

Mortgages lenders can add or deduct a percentage of interest on top of the base rate.

Your mortgage rate can potentially increase or decrease depending on whether the external Bank of England base rate goes up or down.

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How Do Tracker Mortgages Work?

A shift in the base rate can alter the amount you pay each month with a tracker mortgage. If the base rate rises, your monthly payments increase. If it falls, your payments will be cheaper.

For example, let’s assume you get a tracker mortgage where the pay rate is the Bank of England base rate plus 0.9%.

If the base rate were 1%, you’d pay 1.9%. If it climbed to 2%, you’d pay 2.9%.

However, if the Bank of England reduced its base rate to 0.5%, you’d pay 1.4%.

Because of the uncertainty around how much the base rate could change, it’s essential to ensure you can still afford the repayments if they were to increase.

Your lender will write to you informing you of your new rate and monthly payments if the pay rate on your tracker mortgage changes.

What Is The Bank Of England Base Rate?

The base rate is the interest rate that banks and other lenders pay when borrowing from the Bank of England.

It’s the most important interest rate in the UK because it influences most interest rates, including credit cards, savings accounts, loans, and mortgages.

The current Bank of England base rate stands at 1%. It rose from 0.75% on 5^th May 2022 to try and control inflation.

It was previously reduced to 0.1% in March 2020 to help control the economic shock of Covid-19.

The Bank of England’s Monetary Policy Committee (MPC) decides the base rate.

They meet every six weeks to vote on whether the base rate should increase, decrease or remain the same depending on government targets. They occasionally hold emergency meetings to adjust the base rate.

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Why Choose A Tracker Mortgage?

A tracker mortgage can be a good option if you’re confident the base rate will remain low or fall over the tracker period.

It’s an excellent choice when interest rates are low and steady or high but falling.

Your tracker mortgage will fall by the same proportion if the Bank of England cuts its base rate, giving you lower monthly payments.

Making a decision may depend on what you think the base rate will do in the future.

However, this can be difficult to predict, and even experts get it wrong sometimes. The base rate tends to increase when the economy is doing and decrease during a recession.

With tracker mortgage deals, you can pay less for your mortgage during tough times, but the interest rates can increase when the economy recovers.

Advantages Of Tracker Mortgages

• Great option when the base rate is low or is falling
• Very transparent, and payments won’t go up more than any increase in the Bank of England’s base rate during the tracker period.
• Some tracker mortgages have caps beyond which rates can’t rise, giving you security about the highest rate you’ll pay
• Some allow unlimited overpayments
• Some lifetime tracker mortgages don’t usually have early repayment charges

Disadvantages Of Tracker Mortgages

• Tracker rates are variable and linked to the base rate. If the base rate goes up, your mortgage rate monthly repayments increase.
• If the tracker mortgage doesn’t have a cap, there’s no limit on how much the pay rate can increase.
• Some tracker mortgages have a collar, which is a rate they won’t fall below even if the Bank of England cuts rates that far. Therefore, you may not benefit from falls in the base rate once it reaches a certain level.
• You may face an early exit fee if you need to change your mortgage or exit the tracker deal early. For example, if the interest rates start rising more quickly than you expected.

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How Long Do Tracker Mortgages Last?

Lenders usually provide tracker mortgages over a fixed period, either two, three, five, or ten years.

You’ll start paying the lender’s variable rate when the tracker period ends, usually higher.

Lifetime tracker mortgages are also available among many lenders and last the entire mortgage term.

Remember, a lifetime tracker mortgage is not the same as a lifetime mortgage. You can take out a lifetime tracker mortgage and repay over the mortgage term.

With a lifetime mortgage, you can take out equity on your home, and it’s only repaid when you die or go into a care home.

Lifetime tracker mortgages usually have a cap that the lifetime mortgage rate can’t rise above.

You’ll also not pay early redemption charges if you want to remortgage or pay off your mortgage early.

What’s The Difference Between Tracker And Standard

Variable Rate Mortgages?

All lenders have their standard variable rate (SVR). Lenders can choose to change their SVR at any time, and although the changes are usually in line with the Bank of England base rate, they don’t have to be.

Tracker mortgage rates follow the external Bank of England base rate rather than the SVR set by the lender.

Do Tracker Mortgages Charge Fees?

Like fixed-rate mortgage deals, many tracker mortgages come with a set-up fee.

You can find fees like product fees, arrangement fees, or booking fees, which vary in cost.

You can pay the fee upfront or add it to the loan.

Final Thoughts

Tracker mortgages can provide various benefits and savings, especially if the base rate remains low or falls.

Consulting a mortgage broker or advisor can help you get specialist information on the terms, rates, and lenders available in the market to ensure you make an informed decision.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

The idea of climbing the property ladder and owning a home may seem unattainable, with the average price of a home almost 11 times the average wage in London.

However, it’s no longer impossible.

You can now get a mortgage seven times your salary, well above the traditional maximum, allowing you to buy properties you thought were out of your price range.

Here’s everything you need to know about mortgages seven times your salary.

How Can You Get A Mortgage 7 Times Your Salary?

You no longer have to be classed as a high net worth individual to access a mortgage based on seven times your salary.

However, you’ll not have many choices since only one mortgage lender in the UK offers mortgages based on seven times your salary.

The mortgage deal is fixed for life, and it allows you to borrow a higher income multiple and lock the monthly payments at the same amount for a minimum of 10 years and a maximum of 40 years.

It provides you with guaranteed, far-reaching security and certainty about what you’re paying for the lifetime of the mortgage, meaning no nasty surprises or rate shocks from rising interest rates along the way.

To qualify for a mortgage seven times your salary, you may need to:

• Work in one of the various professions like firefighters, NHS clinicians like paramedics or nurses, police officers, or teachers in the public sector.
• Earn a minimum basic salary of at least £25,000 annually.
• Have a deposit of at least 10%.

You’ll not need to work in a particular profession if you’re a higher-income earner with a minimum annual salary of £75,000.

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If you’re taking out a joint mortgage, only one of you will qualify for seven times salary multiple while the other’s income is multiplied by five.

You’ll get interest rates that start at 2.99%, and while other mortgages only let you overpay by up to 10%, you can pay as much as you want towards mortgages seven times your salary without any penalties.

Getting A Mortgage Seven Times Your Salary With A High Net Worth

You can also get a mortgage seven times your salary if you’re a high-net-worth individual.

You must meet a least one of the following criteria to qualify for a high-net-worth mortgage exemption:

• Hold assets worth £3 million or more.
• Have an annual net income of £300,000.

If you meet the high-net-worth criteria, various mortgage lenders can offer bespoke deals outside the standard lending criteria.

You can borrow high loan amounts up to seven times your salary or even higher.

You can also apply for asset-backed mortgages among specialist lenders if you have a high net worth with wealth tied up in assets.

It allows you to secure the debt against a valuable asset like shares or a stock portfolio.

Private mortgage lenders often offer mortgages for high-net-worth individuals, and you can’t simply find them through a Google search.

Therefore, you’ll need to consult a mortgage broker who specialises in arranging mortgages seven times your salary to gain access to such lenders.

Alternatives To Mortgages 7 Times Your Salary

Possible alternatives to consider when you need to borrow more than six times your salary include:

Secured Loans

A secured loan is a common way of funding a seven times salary mortgage.

A secured loan is also called a second charge, and it requires you to use something that you own as collateral or security for loan repayments.

You can use your home or any other high-value asset like your car.

Many lenders are willing to provide up to 10 times your salary with secured loans, but the interest rates can be higher. Some can even offer more because the risk is lower for the lender.

If you default or fail to keep up with repayments, they can repossess your home or other assets you use as security and resell it to recover any outstanding balance.

Therefore, you must be realistic and ensure you only borrow what you can afford to repay comfortably.

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Joint Mortgages

You can take out a mortgage with another person to borrow a higher amount. Joint mortgages allow you to borrow a multiple of the highest earner’s salary plus the salary of the second applicant.

For example, if you earn £34,000 annually, getting a mortgage seven times your salary (£238,000) can be difficult.

However, you’ll be closer to achieving your goal if you apply with a partner earning £31,000 annually. A lender can offer 5 x £34,000 (£170,000) plus the second income of £31,000, meaning you can borrow up to £201,000.

Other lenders can offer you a slightly lower multiple based on the combined total of both incomes.

Remortgaging And Equity Release

Remortgaging can help you raise extra capital if you already own a home and want to purchase a second home or invest in a buy to let.

You can get funds to boost the deposit you can put up towards a second property.

Equity release is another opti0n if you own most or all of your home. You can release some of the equity and put it towards a deposit for a second home or property.

However, equity releases can be expensive, and you need to consider the associated risks before proceeding.

Factors That Can Affect Your Eligibility

If you don’t qualify for high-net-worth mortgage exemptions, your chances of qualifying for a mortgage seven times your salary or borrowing such amounts through other avenues can be affected by how closely you meet the lender’s eligibility criteria.

Lenders may assess factors like:

• The amount of deposit you have.
• Your credit history.
• Your age.
• Your income sources or how you make your income.
• Your monthly expenses or outgoings.

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Mortgage Seven Times Salary UK Final Thoughts

Getting a mortgage seven times your salary is no longer a distant dream, but there are few ways to secure such a mortgage and few alternatives to consider.

Working with a qualified mortgage broker or adviser who helps people borrow such amounts can help you access specialist lenders and increase your chances of approval.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Being a contractor can offer you many perks, including independence and flexibility. However, it also comes with uncertainty, especially when buying a home.

Getting a contractor mortgage can be challenging, but it’s very achievable with the right approach and the help of a contractor mortgage broker.

Here’s everything you need to know about contractor mortgages.

What Are Contractor Mortgages?

Contractor mortgages are suitable for workers without permanent employment.

Contractors can be self-employed individuals, zero-hour workers, fixed term contractors, umbrella company employees, or agency professionals.

Applying for a mortgage as a contractor can be challenging, and it tends to have higher failure rates.

Many lenders turn down contractors and prefer applicants in full-time employment who they view as lower risk.

Freelancers tend to have less predictable incomes than people in employment.

Lenders are more cautious if your income fluctuates or you work on fixed term contracts, seeing you as a higher risk when lending.

You’ll need to show evidence that convinces the lender otherwise.

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What Are The Lending Criteria For Contractors?

Together with usual criteria like age, income, credit rating, and the property type, mortgage lenders who are contractor friendly consider various factors when deciding whether you’re eligible for a mortgage, including:

• The period you’ve been contracting.
• The kind of contracting you do.
• How long you’ve worked in that industry.
• If you’ve had any contract renewals.
• The period left on your contract.

Getting a mortgage as a contractor early in your career can be difficult because you’ll need to show lenders you’ve been working consistently.

Most lenders will require a 12 months’ worth of working history, and some may accept six months.

Others can consider you on the first day of a new contract and offer a contractor mortgage using multiples of your day rate, provided it’s for at least six months, and you have a history of working in such a capacity.

The lender will use the day rate to calculate the amount you’re likely to earn by multiplying it by the number of weeks.

How Much Can I Borrow On Contractor Mortgages?

The amount you can borrow will depend:

• The types of income you have.
• How much deposit you have.
• How the mortgage provider works out affordability.

Mortgages providers generally assess your affordability by looking at how much you earn, your monthly expenses, and your income stability.

A specialist lender who considers your contractor mortgage application based on your daily rate is a viable option.

They’ll calculate your income by multiplying your day rate by the number of days you work each week x 48 (even if you work longer than this).

It will provide your average annual income. Most lenders offer income multiples of 4 times your yearly income, giving you a rough idea of how much you could borrow.

You can find numerous free online contractor mortgage calculators to tell you how much you can borrow working in a self-employed capacity.

Remember, the amount you can borrow will likely be lower than what the online calculators say since lenders consider other factors in their decision.

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How Much Deposit Do I Need For Contractor Mortgages?

Your mortgage deposit as a contractor can be similar to most other borrowers.

You can get a contract mortgage on a residential property with a 10% deposit if you’re a lower risk borrower, meaning the lender offers the loan on a 90% loan to value (LTV) ratio.

Most lenders accept 10% deposits, but some might expect 15-20% if other risks are involved in the deal, like bad credit or non-standard properties.

It would help if you’ve had at least one renewal on your contract or you have a minimum of six months left on it.

Under the right circumstances, some lenders can even offer mortgages with a 95% LTV.

With government schemes like Help to Buy, you can get a contractor mortgage from specialist lenders with a 5% deposit.

Working with contractor mortgage brokers with access to the entire market can help you access lenders positioned to offer you a good deal.

Ensure you save up as big a deposit as you can. The more money you can put down upfront, the more likely you’ll get good deals with lower interest rates.

Documents Needed To Get A Mortgage As A Contractor

It can be more complicated to prove monthly earnings in contractor mortgages than in traditional mortgages.

Your lender or broker will tell you precisely what you need, and they’ll usually ask for the following:

• Proof of experience and day rate.
• An SA302 with a summary of the income reported to the HMRC.
• Invoices.
• Bank statements.

Getting A Mortgage If You Contract Under A Limited Company

Most contractors operate under limited companies to do their freelance work since most businesses don’t hire sole traders.

If you operate under the off-payroll working rules, you’re still not considered an employee, meaning you still face stringent application processes like other freelancers.

Lenders will determine your affordability based on your salary and dividends.

If you supplement your earnings with other income, you’ll need to adjust your earning structure or work with specialist lenders who will accept your supplemental earnings.

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Top Tips To Get A Mortgage As A Contractor

Follow the following tips to put yourself in the best position to get a mortgage:

• Create a consistent working pattern like having a steady workflow and avoiding many breaks in the 12 months before applying.
• Work on your credit score by determining what it is and improving it.
• Establish new contracts or renew agreements to show current and future stability.
• Gather evidence of your monthly work through invoices, bank accounts, and statements.

Mortgage Lenders for Contractors Final Thoughts

Most mainstream lenders will not understand the challenges and complexities of borrowers who work as contractors. They can turn you away altogether or offer less favourable rates.

A specialist contractor mortgage broker will help you find niche lenders willing to lend to contractors.

You’ll get access to all the best mortgage lenders for contractors in the UK based on your needs and circumstances to increase your chances of success.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

A mortgage is likely to be one of your most significant financial commitments, so it’s essential to shop around for the best deals.

A fixed mortgage rate holds great appeal, especially at times like now when interest rates are rising, and the cost of living is reaching crisis levels.

Whether you’re a first-time buyer or are looking to remortgage, fixed-rate mortgages can provide you with peace of mind, more security around monthly household costs and various benefits.

Here’s everything you need to know about the best 5-year fixed mortgages in the UK.

What Is A 5 Year Fixed Mortgage?

A 5-year fixed mortgage is a mortgage where the interest rate you get charged remains fixed for the first five years. The fixed-rate term is usually different from the overall mortgage term.

The overall mortgage term is the total amount of time you pay back the mortgage.

For example, you can take out a mortgage of 25 years but have a fixed rate of 2% for the first five years.

Once you reach the end of your fixed-rate period, the lender transfers you to their standard variable rate (SVR) for the remaining mortgage term.

It’s usually higher than the introductory rate you were on, so many people remortgage or make new deals with the lender as they approach the end of the fixed period.

You’re allowed to make arrangements for a remortgage or other deal up to six months before the end of your introductory rate.

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Why Choose A 5 Year Fixed Rate Mortgage?

A five-year fixed-rate mortgage is suitable if you intend on staying on the property for the medium to long-term future but expect your situation to change later on.

They’re prevalent among borrowers, providing you with stability without thinking too far in advance.

You get peace of mind that your mortgage repayments will stay the same throughout the fixed period even if interest rates go up elsewhere.

Mortgage lenders usually have fixed rate deals that last from 1 to 10 years or more.

Generally, the longer the fixed term, the more expensive the rate, so choosing t’s best to choose a deal that best suits your needs.

A few things you can consider when making your decision include:

• Is cost or security more important?

Short term fixed rates are likely to be cheaper, while long term fixed rates offer payment security.

• How often do you want to remortgage?

You can get the lowest rates with short term fixes, but you’ll have to remortgage more often, usually with fees each time.

• Are you likely to move house?

It can be difficult or expensive to move house when you’re locked in a fixed-rate deal for a more extended period.

What Are The Pros And Cons Of Fixed-Rate Mortgages?

Pros

• Easier Budgeting – A fixed-rate mortgage enables easier budgeting because you know how much interest you’ll pay, and the monthly repayments remain the same throughout the fixed term.
• They’re stable because you’re protected from any increase in interest rates.
• You’re allowed to choose the term for your fixed-rate deal, and this can be one to ten years or more. Mortgage deals with one year and over ten years fixed rates are rare and usually only available from specialist lenders or mortgage brokers.
• Fixed-rate deals will usually offer lower rates than a lender’s standard variable rate, which can help you save money on your repayments.

Cons

• Compared to variable-rate deals like tracker or discount rates, fixed-rate mortgages tend to have higher rates.
• You won’t get any decrease in your monthly payments if interest rates fall, while variable-rate mortgages will become cheaper.
• You can face early repayment charges if you leave your fixed-rate deal early or pay off the mortgage.
• You may need to pay high upfront fees, usually upwards of £1,000. The interest rate is usually higher if there are no upfront fees, so you can decide to pay high upfront fees for the benefit of lower rates and monthly payments.

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How Much Do Fixed Rate Mortgages Cost?

The total cost of your fixed mortgage deal will depend on various factors, including:

• How much you borrow or the size of your loan.
• The interest rate you pay. The rate you get depends on how long you fix for. The longer the term, the higher the rate.
• Whether you’re on a repayment or interest-only mortgage.
• Any upfront fees attached to the fixed deal.
• The loan to value (LTV) ratio influenced by the size of your deposit or the equity you have in your home if you’re remortgaging or moving. You’re seen as less risky if you have a lower LTV and are awarded lower rates.

What Fees Will I Pay For Fixed Mortgages?

• Arrangement fees are standard when taking out mortgages, and £1,000 is the average for competitive deals. You can add the arrangement fee to your mortgage debt instead of paying upfront, but this can increase your borrowing and the interest you pay.
• When applying for mortgages, a booking fee is a one-off non-refundable cost, but not all deals come with one, so it can range from zero to a few hundred pounds.
• You may also pay for the valuation where the lender confirms the property is worth the sum borrowed. Some lenders can waive this fee as an incentive.
• You may also trigger an early repayment charge if you quit the fixed-rate mortgage before the agreed term ends. It’s usually a percentage of the outstanding sum and can reach substantial amounts.

How Can I Get A 5 Year Fixed Mortgage?

All mortgage lenders offer fixed rate deals, so they’re easy to find. You can either apply directly or through a mortgage broker or specialist.

A successful application can depend on various factors, including your income, any outstanding debts or loans and your credit rating.

Brokers often have access to deals not available elsewhere and can come in handy if your finances are unconventional.

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Best Mortgage Rates 5 Year Fixed Final Thoughts

The best five-year fixed mortgage deal will ultimately depend on your situation and needs.

Consider how long you intend to stay on the property, how your situation can change in the next five years and consult a mortgage adviser to figure out the best deal for you.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.