Category: Mortgages

Can you get a mortgage on a steel framed home?

by Dax McLeanPosted on

When looking to purchase a home, your first thoughts are probably around size and location rather than its structural material.

After all, aren’t all homes made from bricks and mortar?

In most cases, it’s bricks and cement that make up our homes. However, through the ages, we humans have used many materials to build our cozy abodes.

For example, in your hunt for your forever home, you may come across houses made from wood, concrete, brick, clay, and even steel.

While you don’t often see these materials hidden behind the paint and trimmings, they make up the base structure of your home.

The durability of this structure becomes important when trying to get a mortgage, especially in the case of steel framed houses.

Unfortunately, steel framed homes can be problematic when it comes to insurance and resale, hence the hesitancy of some lenders when considering a mortgage on them.

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The primary reason for the bad rep steel framed homes get is building quality because steel frameworks often develop structural issues over time.

While some lenders may consider offering mortgages on specific reliable steel frame constructions, others draw the line and refuse.

As with most challenges when running the mortgage gauntlet, it’s simply a matter of finding the right lender for the job. But this in itself can prove tricky.

Before applying for a mortgage on a steel framed home, one of your first steps should be to investigate whether its construction is structurally sound.

In other words, check if the structure is displaying signs of corrosion. This can be done by requesting a detailed property survey.

Why should you get a property survey done?

When looking to purchase a steel framed home, it’s imperative to get a building survey done by an experienced surveyor.

They will conduct a full property check and inspect the structural stability of the steel structure.

Choosing a surveyor with experience in surveying steel will ensure any defects are spotted timeously.

What does a surveyor check?

  • Corrosion – Stanchions checked for rust
  • Evidence of subsidence – Movement of the property’s foundations.
  • Signs of asbestos/ hazardous materials – Asbestos was banned in the UK in 1999 and has been linked to many health-related illnesses and deaths.
  • Roof – Checked for leaks and structurally sound.
  • Drains – Checked for leaks, poor flow, blockages, and pollution.
  • Pest infestations – Rats, mice, dry and wet rot, termites, and woodworm
  • Signs of damp
  • Boiler / Electric meter

Factors that could influence your mortgage

When purchasing a steel framed house, certain factors may influence its mortgage-ability.

Reinforcement

Reinforcing a steel framed property may increase its mortgage-ability. This is when brick is used to strengthen the foundations. However, this can be costly.

Insurance

Obtaining insurance for a steel framed home can be challenging as well as costly. While there are specialist lenders who may offer insurance, it’s often at a higher premium.

Related guides: 

Do I need a higher deposit for a steel frame home?

When lenders consider mortgage applications, they look for ways to mitigate the risks they are exposed to.

As a result, you may need to supply a higher deposit to circumvent their risk of lending against what they term as a non-standard property.

This is a property made from materials other than bricks and mortar – in this case, a steel frame.

While most lenders require a deposit of 10%, this can increase if the property you purchase is steel framed.

Your credit history and the results of the property survey will determine the increase in the deposit required.

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Can you get a BISF construction mortgage?

Acquiring a mortgage for a BISF home may be more challenging than you think. Here’s why. Many homes on the steel frame market are BISF homes (British Iron and Steel Federation.) However, their numbers are not an indication of their popularity but rather their necessity.

Constructed in the 1940s, right after the second world war, BISF homes were a quick solution for the growing housing demand when building materials were hard to find.

As a result, the building quality was poor, made from panels resembling flat-pack furniture and quickly erected on site.

However, aside from cheap building quality and materials, these houses are also listed on the Housing Defects Act (1985), making them even more unattractive to prospective lenders.

To increase its mortgage-ability, you could reinforce the property with brick, but this can prove costly.

When considering the purchase of a BISF home, it’s best to discuss your options with a specialist lender who understands the steel frame market. They can help you make an informed decision and possibly assist with a mortgage.

Related guides: 

Final thoughts

The mortgage process is challenging even for those with a great credit score purchasing a standard property. However, the process becomes more difficult for those looking to purchase a non-standard property such as a steel frame home.

The additional issues with a steel frame home can make reinforcing, insuring, and purchasing such a home more costly than you anticipated.

That’s why it’s recommended that you obtain professional advice when buying a steel frame home.

Using an experienced broker will help you traverse the pitfalls of purchasing a steel frame home and improve your chances of obtaining mortgage approval.

Frequently Asked Questions

1. Why are steel frame homes problematic?

The steel framework of these homes often develops structural defects. This makes them difficult to resell, insure and, as a result, obtain a mortgage on them.

2. Is reselling a steel frame home difficult?

Obtaining a mortgage and insurance on this type of home is challenging. Therefore you may find it difficult to sell in the future.

3. Bad credit, can I get a mortgage on a steel frame home?

Bad credit history can affect a mortgage application irrespective of the property you are looking to purchase.

However, the added difficulties experienced when purchasing a steel frame home may mean you need to seek the advice of a specialist advisor.

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: 

Refurbishment Mortgage

by Dax McLeanPosted on

If you’re looking for a loan to buy a property that needs major renovations, or you’re eyeing a property but can’t afford the renovations, a refurbishment mortgage can be suitable for your needs.

Conventional mortgages finance the purchase of properties or homes but won’t cover the cost of renovations.

You can take advantage of price reductions where renovations are required. Here’s everything you need to know about refurbishment mortgages in the UK.

What Are Refurbishment Mortgages?

Refurbishment mortgages are also called renovation mortgages or refurbishment finance. They’re a type of loan that allows repairs or renovations to commence on a property.

Some refurbishment mortgages allow you to take out mortgage sizes equal to the post-renovation value of the property.

You can use such loans to finance property purchases and fund the needed developments to make the house into your ideal home.

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How Do Refurbishment Mortgages Work?

Refurbishment mortgages are short-term finance solutions that require you to have a clear exit strategy from the onset showing the lender how you’ll repay the loan.

Lenders base the loan amount you can borrow on the property’s projected value once the renovations are complete. They also consider the potential rental income the property could achieve if it is for a buy to let.

The release of funds usually occurs in two stages where a percentage of the property’s purchase is initially advanced, and then you receive the remainder once you complete refurbishments.

Bridging Finance may also be arranged over shorter terms. This agreement can be closed or open. Closed exits feature dates already known, like a completion date already decided upon for repaying the loan.

Open exit strategies feature an agreed timeframe dependent on delays or the completion of works.

Types of Refurbishment Mortgages

The type of refurbishment mortgage suitable for you will depend on the scale of work you need to undertake and can include:

Light Refurbishment Mortgages

Light refurbishment mortgages are suitable for properties that only require light or minor upgrades.

These are usually non-structural or primarily decorative works that don’t require compliance with building regulations or planning permissions to continue with developments.

Some examples of light refurbishments include:

  • Redecorations or aesthetic changes.
  • Fitting a new kitchen or bathroom
  • New windows
  • Electrical rewiring
  • Central heating system installation
  • Improvements to fittings and fixtures

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Heavy Refurbishment Mortgages

Heavy refurbishment mortgages are suitable for properties that require structural changes like extensions. These projects will likely cost more than 15% of the property value and require more formal planning.

You may be required to obtain planning permission and comply with building regulations requirements.

Heavy refurbishments can include:

  • Conversions
  • Demolitions
  • Internal and external structural works
  • Property extensions

Because of the nature of heavy refurbishment projects, you’ll need to consider the duration the finance will be required to allow enough time for the planning stage.

For larger projects, like developing multiple units like apartment blocks or building a property in its entirety, commercial or developmental finance is a better option.

Related guides: 

Refurbishment Mortgage Rates

The rate you’ll be charged for the refurbishment mortgage and other associated fees will depend on your circumstances and the property itself and type of mortgage/bridging finance.

An essential factor to remember when considering refurbishment finance is that it usually only starts at around 75% of the property value after refurbishments are completed. It can be challenging to get financing for anything higher than 75% of the post-refurbishment value.

Refurbishment mortgages often allow you to take out a loan big enough to renovate the property at the same low-interest rate as the property mortgage. The amount you’re investing in and the scale of the project will all impact the rates you’re offered.

Consulting a mortgage specialist or advisor with access to the entire market can ensure you get the best deal available, depending on your circumstances.

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Suitability Of A Refurbishment Mortgage

A refurbishment mortgage is suitable if you’ve found the house of your dreams, but it needs some work before you can move in or sell it. These can include:

  • Being in an appropriate location but needing more work
  • You want to build up into the roof for a studio or an extra bedroom
  • You want to get more living room by digging down into the basement
  •  The house is currently unmortgageable

Many high street providers and private banks offer refurbishment mortgages for residential and commercial properties in the UK. You may need to look beyond high street lenders or building societies at other lending options if the property doesn’t fulfill their requirements.

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What To Do If The Property Is Considered Unmortgageable

In some circumstances, refurbishment mortgages may be ineligible if the associated property is deemed unmortgageable. Some reasons for this can include:

  • Uninhabitable properties because of poor conditions like property derelict or lack of weatherproofing.
  • There is evidence of invasive plants like Japanese Knotweed.
  • The property faces flooding, rot, dump or subsidence.
  • The property’s value is under £50,000.
  • Planning permission is absent, or the property isn’t listed in the Lands Registry.

In such situations, you can use bridging loans for prompt property development, after which you can subsequently apply for traditional mortgages against the property.

Bridging loans are an alternative to refurbishment mortgages, especially when time is a factor. They can come in handy with auction properties when a deposit is required upon winning the property, and the refurbishment mortgage process takes too long.

Bridging loans also require you to have an exit strategy, and their suitability may depend on your circumstances. They’re short-term financial products that require you to own another high-value asset that can act as a down payment.

Refurbishment Mortgage Final Thoughts

Refurbishments are considerably different, so it’s wise to consult an advisor when looking for a heavy or light refurbishment mortgage.

They may have access to exclusive deals and products you’ll not find on the open market and can help you find suitable financing for your project.

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: 

Single Person Mortgages: Can I get Mortgage on my own?

by Dax McLeanPosted on

Borrowers often think their options are limited as they consider buying a home when single or on one salary, but that isn’t necessarily the case.

You’ll not be treated any differently by lenders when applying for a mortgage as a single person.

It’s very common for first-time buyers to purchase their first property alone. Here’s everything you need to know about single-person mortgages.

Can you get a mortgage when single/on your own?

Yes! Single-person mortgages are pretty standard, and the application process can be more straightforward than joint application mortgages because only a single person is assessed.

The only limit is financial because it means you’ll be applying with only one income. It may mean that you’ll have a lower deposit or have to wait a little longer to buy than couples with joint incomes who can save for a deposit quicker.

Even if lenders have rejected you before, working with a mortgage advisor or broker can help you get a single-person mortgage with other lenders.

While you may need to work harder to get the necessary finances in place, you can put yourself in the best possible position to qualify through careful planning.

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How much can you borrow as a single person?

Your income will determine the maximum amount you can borrow in a single-person mortgage. Many lenders place the limit they can advance at 4.5 times your income.

Under the right circumstances, some can stretch the amount to x5 or x6 times your income this depends on other factors and could be lower.

Different factors can impact a lender’s willingness to advance the loan on high-income multiples. The primary consideration among many lenders is affordability based on your income and outgoings and other financial commitments i.e. loans, credit cards that will remain.

An important thing to remember is that different lenders will consider you differently. Some may see you more favourably than others, so it’s essential to shop around for the best possible deal.

What size deposit does a single person need?

Many individual borrowers assume a larger than average deposit is needed when applying for mortgages by themselves, but this isn’t true.

Single-person mortgage applications can be stronger than joint applications, and you can even qualify for a 5% deposit. Generally, you can get a mortgage worth up to 95% of the property value in the UK.

It’s wise to save up as much deposit as possible because you have more and better options among lenders with a higher deposit. Lenders will consider you lower risk when you have a higher deposit, and the deal generally gets better every time you move up 5% in deposit size.

The higher the amount you can put down, the lower the interest and mortgage loan amount you’ll have to repay. As you save up for a single-person mortgage, aim for 5%, 10%, 15%, and 20% milestones.

Right to buy scheme as a single person

If you live in a council property and qualify for the right to buy scheme, the mortgage and property ownership will need to be in the names of the person or persons on the right to buy documents.

Therefore, if you are the only person on the paperwork, you will be the only one eligible to apply for the mortgage via most lenders. This means the lender will make the usual assessments based on you alone, including your income and affordability.

Right to buy as a joint mortgage

There are circumstances when a single person applying for a mortgage via the right to buy scheme will be ineligible for the mortgage on their own but their names will be the only one on the right to buy paperwork.

In this situation, it may be possible to add another individual onto the mortgage in a similar way to a joint mortgage sole proprietor setup.

When to consider a joint mortgages in a sole name

There are times when you may want to consider having a joint mortgage in a joint borrower, sole proprietor (JBSP) agreement. One common situation is when you want to help a family member out with their mortgage payments.

A JBSP enables second parties to help others purchase a home by joining the mortgage without being featured in the title deed. It’s often a good option for first-time buyers, and it can protect your assets and provide valuable tax benefits.

Related guides: 

A solo mortgage for bad credit

You may also want to consider a single-person mortgage when your partner has a bad credit history. If two people will occupy the property, but one has bad credit that can appear on the application, a solo mortgage is a suitable option with some lenders.

Many specialist lenders can still consider your application and approve the mortgage even if you have a bad credit score. Whether late payments, bankruptcy, or debt management caused your adverse scores, some lenders are more than ready to help you.

They’ll assess how recent or severe your credit issues are and concentrate on your affordability and how you handle your finances now. High street lenders will not consider you if you have bad credit, so it’s better to work with mortgage advisors or brokers who have access to specialized lenders.

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Getting A Right To Buy Single Person Mortgage

If you meet the qualification for a Right To Buy Scheme and are looking to purchase your council house, then the ownership and mortgage of the property will need to be in the name of the person on the Right to Buy paperwork.

Frequently Asked Questions

Single Person Mortgages For The Self-Employed

You can still qualify for a single-person mortgage when you’re self-employed. They’ll consider your income & outgoings, employment, and accounts when assessing your mortgage application.

Depending on the lender you choose, you may be required to provide account statements for the last one, two, or three years for a Ltd Company and/or tax calculations. This is where working with a broker or advisor comes in handy as they know which lenders will accept shorter account periods.

These are some of the major factors they will take into account:

  • Income figures – lenders will want to see your turnover, profits and drawing of any salary or dividends. Most will then average your income over the previous three years.
  • Your accounts – lenders typically want to see your accounts over the previous few years, in general the longer the period you can show the better, but there are some lenders that will be happy to consider applications from individuals with accounts under 3 years.
  • Employment status – lenders will assess mortgage applications from sole traders and limited company directors differently. If you are a limited company director, they will usually look at the amount of income you have drawn from the business. However, certain lenders will also consider the retained profit that’s been drawn, in which case the amount you can borrow could potentially be greater.

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How can you take someone off the mortgage?

You can also subject to affordability use a single-person mortgage to take someone off a mortgage. When you change from a joint to a single mortgage, it’s the same as having the other person reapply for a new mortgage alone with the same lender or a new one.

Such a move can provide you with better rates, but you still have to factor in the fees for remortgaging in your decision.

Can I get a single person mortgage with a low deposit?

It’s certainly possible. If you are looking to buy a home for the first time, there are 95% mortgages available, whether that be new builds or a direct purchase. There are also various schemes available to help first time buyers, including the help to buy scheme.

Can I apply for a mortgage in one persons name even if there are two people buying the property?

Typically not. Lenders require all owners to be named in order to approve the mortgage.

However, what is possible is to and get a mortgage in two names with only one owner named on the deeds.

This is referred to as a joint mortgage sole proprietor and is used when an individual wants to assist with mortgage payments, but has no legal rights to the equity.

There are some common reasons why this route may be pursued, for example, if someone wanted to help out a family member who has bad credit, yet wants to apply for a mortgage for the first time.

Can I get a sole name buy-to-let mortgage?

Yes. Securing a buy-to-let mortgage in a single name is a similar application process to securing a single mortgage on a residential property.

Typically, lenders will have have strict minimum income requirements for buy-to-let mortgages, but there are others who are more flexible, speaking to a mortgage broker will help you find the lenders that have no such requirements.

Single Person Mortgages Final Thoughts

With the right advice, getting a single-person mortgage can be effortless. Using an advisor has many benefits, and they can help you get the best rates available in the whole market.

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: 

Mortgages For Professionals – A Complete Guide

by Dax McLeanPosted on

If you are are considered a professional, the mortgages available to you may include exclusive deals and rates you can get if you’re in particular lines of work.

Such professions can range from medical and critical workers to legal practitioners and business executives.

In this guide, you’ll learn what a professional mortgage is, professions considered, the benefits and how to find lenders specialising in mortgages for professionals.

What is a professional mortgage? 

Mortgages for professionals aren’t necessarily types of products. Mortgages for professionals refer to borrowers classed as professionals applying for mortgages and lenders offering them bespoke deals or exclusive rates.

It involves special treatment when a professional applies for the same mortgage product as everyone else.

Professionals can get such special treatment because they’re considered lower-risk borrowers, making lenders more lenient or flexible with their deposit requirements or eligibility criteria.

As a professional, you can get different rates among different lenders because not all lenders view professionals favourably.

To ensure you get an appropriate lender, you may have to speak to a mortgage broker experienced in arranging mortgages for professionals.

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Need more help? Check our quick help guides: 

Which professions are considered? 

Professions considered by mortgages lenders to be lower risk include the following:

Key workers:

  • Teachers
  • Police
  • Civil servants
  • Military
  • Firefighters

Medical professionals:

  • Nurses
  • Doctors
  • Optometrists
  • Pharmacists
  • Vets
  • Dentists

Other professionals:

  • Architects
  • Accountants
  • Barristers
  • Solicitors
  • Surveyors

High earners: 

  • Business executives
  • Investment bankers
  • Individuals with a high net worth or asset-rich may also qualify

Mortgage lenders will offer borrowers in such categories better deals. Their predictable career progressions, qualifications, and reliable income statistically make them a much safer bet than other borrowers.

Lenders are more willing to advance the mortgage at better terms to attract more of these borrowers.

You can even get an exclusive product range from some lenders for high earners and professionals, while others provide an enhanced discretion level or discounts.

Related guides: 

Advantages of a professional mortgage

Benefits of borrowing through mortgage lenders who specialise in professionals include:

  • Lower Fees and Superior Rates

Borrowers in qualifying professions can get fee discounts and favourable interest rates from some mortgage lenders.

  • Lenient Deposit Requirements

Lenders often ask for higher deposits when risk is present. Working in any safe profession will help offset any risk, and your chances of getting a low deposit mortgage will be higher as a professional.

  • Higher Multiples in Income

While average mortgage customers can only borrow from 4.5 to 5 times their salary, the salary or income of higher earners and professionals can be stretched 5.5 or even six times by some lenders.

  • Overpayment Facilitation

Mortgage lenders usually allow borrowers to overpay on their mortgages by 10% annually without any penalties. However, they’re more flexible for those in certain professions, and the limit may go as high as 20%.

With the right circumstances, some mortgage lenders will not impose an overpayment capo at all.

  • Options To Borrow Back

Professional borrowers have higher chances of coming across investments and making more enormous expenditures when opportunities arise. In addition to overpayment flexibilities, some lenders will also offer facilities for borrowing up to particular defined limits at any time.

The mortgage lender can allow you to borrow the total capital payments you’ve already made. Others will let you borrow additional funds without an entire application process, and others can provide instant cash withdrawals straight into your bank account up to a predefined limit.

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  • Mortgage Repayment Breaks

Professionals are more likely to get approved for mortgage repayment breaks or holidays by lenders than non-professionals in the same circumstances. Generally, borrowers in high-earning professions are less likely to run into difficulties with their mortgages after they’ve postponed a few payments.

  • Fewer Proofs for Income

To prove your income as a self-employed borrower, lenders may require you to provide two to three years of your account’s history. In contrast, professionals are more likely to get approved for mortgages with only a 12-month trading history, which can be helpful for those who haven’t been in their current roles for long.

  • Specialized Treatment

Lenders who specialise in offering mortgages to professionals provide personalised services which translate to VIP treatments and smoother mortgage setups.

Related guides: 

Mortgage lenders that favour professionals 

You can find exclusive deals for professionals among various high street banks. Some may offer discounts that include additional borrowing and offset facilities, among other perks. Others may allow you to borrow up to 5.5 times your salary.

Private mortgage lenders, challenger banks, and specialist lenders offer special deals for high earners and professionals. Such lenders don’t always advertise themselves, and you m unlikely to find them while searching on Google.

This is where mortgage brokers specialising in arranging finance for professionals come in. They can provide you with access to all lenders in the market, and the right advisor knows the exact lender who is suitable to your employment type and income. It ensures you get an appropriate lender the first time, which helps you avoid wasting time and gives you peace of mind.

How to Find Lenders Specialising in Mortgages for Professionals

Some brokers specialise in matching professional borrowers with lenders who cater to professionals. They understand the mortgage requirements for those in such lines of work and know the exact lenders to approach for the best deal and rates.

Therefore, if you’re looking for exclusive mortgage deals for high earners and professionals, the best place to start is with mortgage brokers experienced in arranging them. They have access to lenders who offer such arrangements, and they’ll negotiate the best terms and rates on your behalf.

They’ll also help with your mortgage application while providing you with bespoke advice you can’t find anywhere else.

Frequently Asked Questions

Can You Apply as a Newly Qualified Professional?

Yes. Some mortgages offer newly qualified professionals up to 5.5 times their salary. Such borrowing can allow you to borrow up to 95% of the property price provided you qualify and have a minimum salary.

Such competitive offers can benefit new professionals who are first-time buyers and have a small deposit at hand. And although the name only mentions newly qualified professionals, the deals remain open to those who’ve qualified for longer, even up to five years.

Therefore, some applicants can get an advantage since they’ve had time to see increases in their salary, which can boost how much they can borrow.

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Are there any mortgage schemes for professionals?

Yes, there are schemes available. For military and ex-military people, there is Forces Help to Buy. The First Homes scheme is also availble for NHS staff – you can read more about this initiative on the government’s website.

Finding the Best Rate

Remember, all loans, including mortgages for professionals, are subject to affordability assessments, and not all favoured professionals are guaranteed to qualify.

It’s vital to work out exactly how much you can comfortably afford before looking for a mortgage. You can use tools like mortgage calculators to get a ballpark of what your repayments may be at different rates. They’re usually free to use when you visit broker and lender websites and will not affect your credit score.

Also, consider the mortgage rates and look at a range of mortgage lenders to see if you can get a better deal based on your financial and personal circumstances.

Mortgages For Professionals Final Thoughts

As mentioned before, a whole market mortgage broker is your best bet for finding the best lenders and mortgages for professionals. They’ll also support you in the application process and in making realistic financial plans for your mortgage.

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: 

Can I Buy My Council House While On Benefit?

by Dax McLeanPosted on

If you’re on benefits and have dreams of owning your very own council house, you may wonder if it’s even a possibility.

Being on benefits means less access to credit for many people, but does that really come into play when applying for funds to buy a council house?

The short answer to the question is “yes, you can buy a council house while on benefits!” In most instances, your benefit will be added as a form of supplementary income when the mortgage company carries out the required affordability assessment.

Of course, you will need to prove in most instances that benefits are not your sole income stream.

Which Benefits Allow You to Buy a House?

You may be able to buy a council house while on any of the following benefits.

  • Working tax credit
  • Widow’s pension
  • Severe disability allowance
  • Maternity allowance
  • Industrial injuries
  • Incapacity
  • Disability living allowance
  • Child benefit
  • Carer’s allowance
  • Attendance allowance

What’s the Catch?

One clincher is that you will no longer be allowed to claim housing benefits when you buy a house while on benefits – you certainly won’t be able to use a housing benefit to pay for mortgage costs.

Keep in mind that you’re only eligible for housing benefits if you have savings of less than £16,000.

If you have savings greater than that and are claiming housing benefits and applying for a mortgage while on benefits, you may find that your local council takes a closer look at your situation, and you may find yourself in a spot of trouble!

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Need more help? Check our quick help guides: 

Can I Get a Mortgage if My Only Form of Income is Benefits?

Most mortgage companies will require you to have additional income streams in addition to your benefits. That said, if your benefits are your sole income stream, there are still options available for you to get a mortgage and acquire housing cost payments.

Government Schemes That Will Help You Buy a Council House on Benefits

If you’re looking into government schemes that do more than pay off the interest element of your home loan, you’re in luck. Several government schemes will assist you with purchasing a council home on benefits.

  • Right to Buy Scheme

This Scheme is aimed at individuals already living in a council house. It aims to help tenants purchase their homes at a considerable discount.

It is said that this Scheme will also become available to housing association tenants in the near future. The discount amount fluctuates depending on the location of your home.

You have a right to buy if the council house is your only home and is self-contained. However, you also need to be a secure tenant.

In 2019 the maximum discount was set at £82,800 in England, with a slightly elevated discount allowed in London of £110,500.

That said, discounts may increase annually, so it’s best to check with your council. Factors that influence the discount offered would include your tenancy term and, of course, the property’s value is placed on the market.

If you have been a tenant for 3 – 5 years, you can expect a discount of around 50% with an increase of 2% per additional year of tenancy, capped at a max of 70% discount.

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Related guides: 

  • Preserved Right to Buy Scheme

In instances where the council-owned your home but sold it to another landlord while you were an occupant, you could be eligible for Preserved Right to Buy. The Preserved Right to Buy is a legal right extended to former local authority tenants, provided they were secure tenants.

Preserved Right to Buy works very similarly to the Right to Buy Scheme, where discounts range from £84,600 across England to £112,800 in London.

The best way to find out if you’re eligible for the Preserved Right to Buy scheme is to check with your current landlord. If you’re not eligible, there is an additional scheme that may assist you – this is called the Right to Acquire Scheme.

You could be eligible if you were a secure council tenant and living in your home when it was transferred from the council to another landlord, like a housing association.

You could also be eligible if you then moved to another home owned by the new landlord. But not if you moved to a home owned by a different landlord.

Your landlord will be able to tell you whether you have the Preserved Right to Buy. If you’re a housing association tenant and you’re not eligible for this Scheme, you may be eligible for the Right to Acquire Scheme instead.

The Right to Acquire Scheme is aimed at tenants of housing association homes with a public sector landlord for no less than three years. You can then buy your home at a discount of £9,000 – £16,000, depending on the home’s location and value.

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Related guides: 

Buy a Council House While on Benefits Final Thoughts

As you can see, there are several avenues you can take when wanting to buy a council house on benefits. Chat with your mortgage broker and your landlord to determine which option is best suited to your needs and financial situation.

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: 

Steps to Getting a Million Pound Mortgage

by Dax McLeanPosted on

Properties valued at £1 million and over have continued to increase across the UK, and so has their demand.

More and more buyers are searching for large properties with more space, luxury, extra bedrooms, and gardens.

As a result, a million-pound mortgage isn’t as rare as it used to be.

Before, you could only get a £1 million mortgage from private banks, but more high street banks provide this level of borrowing or more today.

Here are the typical steps to getting a million-pound mortgage:

Choose Between a Private Lender and a Bank

The first step involves finding a suitable lender with an appetite for this particular market. The choice always comes down to a private or high street bank.

Private banks usually have the lion’s share of the million-pound mortgage market because of their flexibility, but you shouldn’t rule out high street lenders.

Let’s go over the benefits of each type of lender to ensure you make an informed decision.

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Need more help? Check our quick help guides: 

Private Banks

  • More Flexibility

Private banks are more flexible in their acceptance criteria, and this is why they’ve traditionally dominated the high-value mortgage space. They’re more willing to take on risks and consider you holistically.

They’ll look at more than your income and factor in things that a regular lender may not like your assets, bonuses, or shares. You can even get a mortgage on pension income from some private lenders.

Therefore, if you’re self-employed, have unusual income streams, or are looking to use your foreign income for a UK-based mortgage, a private lender is a better option than a high street bank.

  • More Specialized In £1 Million Mortgages

Private banks are often more experienced in this area of the market. You may have to pay a premium, but it may reflect in the services you receive.

They offer a more tailored customer experience with customized approaches that may suit you better.

They’re also generally more efficient in pushing the deal through because it’s what they specialize in.

Some specialize in rural area properties with more acreage and the home plus rental units or additional outbuildings.

Others focus on prestigious properties in locations that will always be desirable for high-end investors.

  • Better Terms

Flexibilities of private lenders often extend to the kind of terms they offer. You may have a higher chance of obtaining a better loan to value (LTV) ratio or an interest-only mortgage.

While high street lenders may have competitive rates, it won’t be helpful to you if you can’t get the loan to value ratio you’re looking for, or they can’t consider your range of earnings or assets when deciding the terms.

Instead of using a standardized decision-making procedure, private banks take a more bespoke approach.

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Related guides: 

High Street Bank

  • Easy Access

High street lenders are easier to access compared to private lenders, who may sometimes require an introduction.

Others may also have exclusive criteria you have to fulfil before you can even get an audience. High street lenders are more open, and it doesn’t diminish their competency.

Some feature specialized teams that only deal with large mortgages like a million-pound mortgage.

  • More Straightforward

With a high street lender, you either fit the criteria, or you don’t. Such a standardized and rigid methodology can also be a strength.

The process of applying for a mortgage is easy to understand, and they’re transparent about their acceptance criteria.

Therefore, you’re likely to get approved provided you fit the criteria and apply correctly.

  • Fewer Fees and Commitment

Some private banks don’t want to work with y0u on a one-off basis they often want to establish long-term relationships.

They may request to put your ‘assets under management (AUM)’ or take over your current day-to-day account or banking needs.

However, ‘dry lending’ is now commonly available among private banks, and you’ll not be obligated to transfer assets if it doesn’t suit you. With high street lenders, much less of a commitment is required to move the deal forward.

To ensure you make the right choice and get the finance you need, the advice of a mortgage broker can be invaluable.

They’re always looking across the whole property finance lending market as part of their job, including large and small lenders and private and high street banks.

Related guides: 

How Much Income Is Required For A Million-Pound Mortgage?

It may depend on whether you go private or choose a high street lender. Conventional lenders will often base their affordability calculations on your salaried income i.e 4.5 times your income, some offer more some offer less.

They may also conduct stress testing where your fixed expenses like childcare are factored in.

An FCA regulatory change in 2014 also capped the number of high loan-to-income mortgages that lenders could issue. No more than 15% of a lender’s mortgages can be over 4.5x income.

Following the regulation, some lenders took action to restrict all loans over 500,000 pounds under this level.

Some high street lenders even impose caps on higher-value loans, and they’ll not lend beyond 75-80% LTV for £1 million and above.

In contrast, private lenders are much more flexible. Applications are considered on a case-by-case basis.

They will look at your income plus the yearly bonus and any other income streams you may have when assessing your application.

Apply for a mortgage today

Monthly Cost Of A One Million Pound Mortgage

The amount you pay per month will depend on the interest rate. You can get a £1 million mortgage on an interest-only or repayment basis with repayment periods of typically 5 to 35 years.

Like all other loans, your perceived risk profile can be a major factor in your monthly payments. It can affect the loan to value (LTV) the lender is willing to offer.

Things that can affect your risk profile include your credit history, deposit size, and the type of property you’re eyeing.

What Deposit Is Needed For A Million Pound Mortgage?

Most high street lenders will need substantial down payments for a million-pound mortgage and above to reduce their loan exposure and risk.

The majority look for deposits of at least 25%, and you can get the cheapest deals with 40% deposits and above. Only a small number of high street lenders will go as low as 10%.

Private banks are more willing to stretch the LTV and may offer up to 95% LTV for lower-risk borrowers.

You can also get a good deal if they want to build a longer-term relationship with you and you have a strong prospect of future earnings.

For illustrative purposes, the table below outlines different LTVs relating to your perceived risk level that can affect the required deposit.

Risk LTV Needed Deposit Mortgage Amount
Lower risk 95% £50,000 £950,000
Lower risk 90% £100,000 £900,000
Lower risk 85% £150,000 £850,000
Lower risk 80% £200,000 £800,000
Medium risk 75% £250,000 £750,000
Medium risk 70% £300,000 £700,000
Medium risk 65% £350,000 £650,000
Medium risk 60% £400,000 £600,000
Medium risk 55% £450,000 £550,000
Higher risk 50% £500,000 £500,000

Steps to Getting a Million Pound Mortgage Conclusion 

If you are considering a Million Pound Mortgage, the best starting point is to seek professional advice and explore the options available to 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.

Further reading: 

What is a Fixer Upper Mortgage?

by Dax McLeanPosted on

If you’re in the property market to make some money, you probably already know that buying a fixer-upper property can provide an opportunity for great profits.

Fixer-upper properties are also great for people who want to get a property with potential at a low price and take their time fixing it up – for their own occupation.

Getting a property that’s not in prime condition often comes with reduced rates attached, and if you’re savvy enough to get it at a great price point, you can flip the property and make the most of price reductions where renovations are needed.

In a survey done by Buildworld in 2021 in the UK, it was found that 72% of respondents would be willing to buy a home that’s ready to move into, whereas 41% of people said they would be interested in buying a fixer-upper property.

So it all really comes down to money, time, and of course, what sort of skills you have when it comes to home renovation.

For many, the concept of renovating a fixer-upper home is exciting because they initially get to save on the cost of the home, and they have more opportunity to create a space for themselves that caters to their personal taste and style.

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Of course, the money aspect of fixer-upper properties can be daunting. How do you fund the purchase of the property and the renovations?

The good news is that fixer-upper mortgages are designed to help you do just that. With a fixer-upper mortgage, you can borrow enough for the property plus renovation costs.

This article will explain how fixer-upper mortgages work and how you can take advantage of them.

Getting Buy-to-Renovate Mortgages

The first thing you need to understand is that not all mortgage providers will jump at the opportunity to mortgage a fixer-upper.

If the property is considered inhabitable, you won’t get the cash you need to buy the property and fix it up.  Property checks need to be done, and then the type of property may also affect the final decision.

Need more help? Check our quick help guides: 

Instances Where a Bank or Mortgage Provider Says “No”

In some instances, banks and mortgage providers will reject your mortgage application for a fixer-upper property if:

  • The property is in a dire state as a result of neglect.
  • The property is deemed inhabitable, which can happen if certain aspects of the building aren’t up to standard.
  • The property requires a conversion.

Working with a specialist mortgage broker could help you overcome this challenge, though. In some instances, you may still find the funding required to purchase the property and fix it up.

Apply for a mortgage today

Standards Required to Get Fixer Upper Mortgages in UK

If the property isn’t in the best state, but your heart is set on it, you may need to refer to the most basic standards a home has to meet in the UK for it to be considered habitable and therefore worthy of a mortgage. These include the following:

  • The home must be watertight, which means that the roof must be in good condition.
  • There must be a basic kitchen or food-making facilities.
  • There must be a bathroom with a toilet inside the house.
  • The house must have a working water supply (good plumbing).
  • The property must be secure.

Mortgage providers find these details quite important, so it’s best to do a thorough property check before putting in a mortgage application.

Post-Renovation Property Values

When shopping around for fixer-upper mortgages, you will find that most offer the full amount to buy and renovate the property.

Let’s say that the post-renovation property value is considered to be £200,000 and you’re offered a loan on an 80% ratio of the expected property value once renovated. This means you can take out a mortgage of £160,000.

If the property that you’ve got your eye on is a bit run down but isn’t considered inhabitable, you will probably be offered 80-90% of the property value as it stands.

Related guides: 

Can I Use a Conventional Mortgage for a Fixer-Upper Property?

You may be wondering if you need to seek out a specialist fixer-upper loan or if you can simply apply for a conventional mortgage. The answer is a simple yes. You can use a conventional mortgage to buy a fixer-upper property, but first, give some thought to your financial situation.

Conventional mortgages will provide funding to purchase a property that you plan to occupy, but it won’t pay for renovation costs. This can be the ideal option if you have money set aside that you can use for renovations or if you plan to take out a second loan to cover the renovation costs specifically.

Things to be Aware of When Buying a Fixer Upper Property

If you’re buying your first home and want to opt for a fixer-upper, there are several things to be aware of. Before you start your application, here are a few things you should pay attention to.

  • Pay for a full property survey to bring to light any problems that may not be immediately obvious. This gives you a clearer idea of how much the renovations will cost and how much you need to accumulate before you can start your renovation project.
  • Work with a mortgage provider that takes your personal finances and current situation into consideration.
  • Before you plan the renovations, ensure that you are fully aware of the building regulations and required planning permissions.
  • Set a further 15% of the expected costs aside because renovations are rarely as clear-cut and affordable as they initially seem. Unexpected expenses have a habit of simply cropping up.
  • Renovations don’t just cost money; they take time too. Make sure that you have enough time to manage the project or you may find yourself wasting more money on unnecessary services along the way.

Apply for a mortgage today

Related guides: 

 Fixer Upper Mortgage Final Thoughts

While the prospect of buying a fixer-upper is exciting and of course, alluring, always keep in mind that banks and mortgage providers do their checks for a reason.

If a bank is dead set on not approving a fixer-upper mortgage for your required property, it may be time to move on and look for a different property.

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: 

Mortgage On Timber-Framed House

by Dax McLeanPosted on

Timber-framed buildings have become increasingly popular in commercial and residential properties since their introduction to British architecture.

They have the advantage of cheaper building materials, quicker and easier construction methods, and superior energy efficiency characteristics.

Despite their popularity, some mortgage lenders in the UK still consider such properties as non-standard. This can make getting a mortgage, buying, or selling timber-framed houses challenging.

However, it’s very much possible with the correct advice and guidance. Let’s explore timber-framed house mortgages so you can learn how to get one and the potential issues to avoid with these properties.

Getting A Mortgage On A Timber Framed House

Various lenders can provide you with a mortgage for a timber-framed house. However, unlike mortgages for traditional homes, many variables can affect whether the mortgage will be approved and the terms the lender will offer you. These include:

The Age And Type Of Property

Although newer is not always better, the property-built period can be a significant factor. Lenders view modern timber frame houses more positively because the more recent the build, the more stringent the building regulations and methods used.

Few lenders will consider a mortgage for a frame built before 1970.

Additionally, there are many types of timber used in manufacturing timber frames. Some are more reliable than others, but unfortunately, they’ve often painted with the same brush without considering the comparative strengths and weaknesses.

This makes a detailed survey very important when you’re looking for a mortgage for a timber-framed house.

Impartial assessments from surveyors like the Royal Institution of Chartered Surveyors (RICS) can provide a comprehensive report on the frame’s condition to assure lenders of the mortgage suitability.

Lenders will want to know the specific kind of timber frame in the property. If surveyors can’t inspect or access the timber frame, lenders may require a hidden defects insurance.

Need more help? Check our quick help guides: 

Other Materials

Lenders will also look at other building materials like the exterior or cladding on the timber-framed house. Exteriors made from stone or brick are preferred.

It can be challenging to get a mortgage on a timber-framed home with an exterior made of more brittle materials like plastic or metal.

Lenders may also be reluctant to offer mortgages for timber-framed houses depending on the cladding.

Cladding secured directly to the frame is considered less weatherproof, less secure, and more susceptible to fire risks. The cladding must be easily maintainable to avoid depreciation and damage that can affect the house’s value.

Lender Choice

All lenders are not the same. Each will have their criteria to decide whether they’ll offer a mortgage for a timber-framed house. Some lenders are more open to financing timber-based properties at excellent rates.

This is where the services of a mortgage adviser are invaluable. Their experience and knowledge can simplify selecting lenders with the best rates for non-standard properties.

You may even be lucky and get access to specialist lenders with great deals not available to the general public.

Credit History, Deposit, And Security

Lenders will look at your credit history to determine how risky a borrower you are. Your chances of securing a mortgage can be negatively affected by recent defaults, missed payments, or repossessions.

It may be a barrier, but it’s usually not a deal breaker, and you may be eligible for bad credit mortgages.

Lenders may also ask for a larger deposit because a timber-framed house is considered a non-standard property with higher risk.

You’ll also find it easier to sway lenders in your favour when you offer security like another property against the mortgage.

Local Demand

As a non-standard property, a timber-framed house may be in lower demand than other properties, which can affect your chances of getting a mortgage.

Lenders will need reassurance that it’s possible to get a quick sale in case of foreclosure so they can make back their money. This is another situation where a mortgage adviser can save a lot of time and effort.

They can help you reassure lenders by showing that the local housing market has many non-standard houses that consistently sell well. Thanks to their knowledge of local demand, they can also help you find local lenders who are more amenable.

Self-Build Mortgage for A Timber Framed House

If you’re looking to construct a timber-framed property, a Self-Build Mortgage can be suitable. Lenders will require that you have the expertise and means to build it or at least be able to oversee its construction.

Timber frame is often preferred among self-build mortgage borrowers because it’s a relatively quick method of construction and it has energy efficiency benefits.

With a Self-Build Mortgage, funds are released to you in staged payments or drawdowns as the construction work progresses. Many lenders will undertake site inspections before releasing the funds at each stage to ensure the job is going as planned.

Related guides: 

Buy To Let Mortgage On A Timber Framed House

You may get a Buy-To-Let Mortgage on a timber-framed property if you meet the lender’s eligibility criteria. The variables that affect whether the mortgage for a timber-framed house will be approved are the same for residential and commercial properties.

However, the affordability assessment will likely be different. Lenders can base their lending decisions on the viability of the investment and whether the forecasted income from rent payments can adequately cover the monthly repayments.

Mortgage For A Timber Framed Extension

Most lenders will be cautious about the type of external finish they permit, and you may have to find a specialist lender for a timber-framed extension.

Timber frame extensions require less labour and can be less expensive than traditionally built ones. However, it’s advisable to ensure the value the extension adds to your home exceeds the amount it will cost.

Related guides: 

Mortgage For A House With Timber Cladding

Some lenders may accept decorative cladding over blockwork, but others will turn you away outright if the property doesn’t have any blockwork underneath the cladding. Timber cladding may scare away lenders because of the maintenance required.

You have to maintain timber cladding regularly, and if you fail to keep up, the home’s value will quickly depreciate.

This can make it difficult or even impossible to resell it. Your choices may be restricted by the extend of timber cladding coverage on the property.

Some lenders may only consider you if it’s limited to the first floor and the ground floor is block and brick. Others will still lend to you even when the entire property is covered.

Mortgage On Timber-Framed House Final Thoughts

An independent mortgage adviser is your best bet in getting the financing you need for the property you want regardless of whether it’s standard or non-standard, like a timber-framed house. Consult with an advisor before making an application.

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: 

£200,000 Mortgage – What are the repayments?

by Dax McLeanPosted on

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

It’s essential to know whether you can afford it before arranging your mortgage.

To help you get an idea of what you need to save towards your mortgage, we’ll explore the £200,000 mortgage in this article, including the kind of deposit you’ll need, what the repayments may cost you, and other cost considerations.

Deposit For A £200,000 Mortgage

The amount you’ll need as a deposit for a £200,000 mortgage will depend on the lender’s loan to value (LTV) ratio, your income, credit rating, and if you’re after a buy to let or residential mortgage.

You’ll find the LTV expressed as a percentage, referring to the mortgage to property value ratio.

Generally, you may get a mortgage amount of up to 95% of the property value in the UK. Therefore, to qualify for a mortgage, you’ll need to save at least 5% of the property value as a first-time buyer.

A 20% deposit is the standard for attractive mortgages and interest rates, and the deal generally gets better every time you move up 5% in deposit size, however this depends on the lender rates available.

The higher the amount you can put down as a deposit, the lower the interest and mortgage loan amount you’ll have to repay.

It’s wise to aim for 5%, 10%, 15%, 20% milestones as you save for a mortgage. Lenders will consider you lower risk when you have a high deposit.

Related reading: 

Deposit For Bad Credit £200,000 Mortgage

With a history of bad credit, lenders will consider you a higher risk, although it’s not a deal-breaker. The worse it is, the greater the risk which translates to a larger deposit and less favourable terms.

Keep in mind that not all lenders are the same, and generally speaking, each application is regarded on its own merit. Your unique situation may mean that you can get the loan you want, even with bad credit.

Lenders will ask for different deposit sizes and offer different rates for a bad credit £200,000 mortgage as lender criteria can differ from one to another.

Generally, lenders will consider issues like a few late repayments or a low credit score as low risk and offer you better rates and LTV ratios.

However, problems like recent repossessions or bankruptcy may make them more cautious, resulting in a higher interest rate or deposit – or possibly even a loan application rejection.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Deposit For £ 200,000 Buy-To-Let Mortgage

A £200,000 buy-to-let mortgage will require a higher minimum deposit than a residential mortgage. Most lenders often require a deposit of 25%, while others can accept 15% as long as you fit other criteria.

Buy to let mortgages also have other strict criteria, and a common factor to consider is minimum income requirements. Some lenders may insist that you have to be making at least £25,000 annually.

Others will look at the rental income forecasted and request that the rental payments you project cover 125%-130% of the £200,000 mortgage monthly payments.

It’s also worth noting that most lenders don’t offer buy-to-let mortgages to first-time buyers who don’t own their own homes yet. However, you can get specialist lenders who will consider you provided you meet their criteria.

Repayments For A £200,000 Mortgage

The term of the £200,000 mortgage and the interest rate you get from a lender are the main factors that will affect how much the repayments will cost you.

Remember that every lender is different, and various factors like your credit history or circumstances can affect your monthly repayments.

Interest Rate For A £200,000 Mortgage

As with any other loan, the interest rate for a mortgage loan is essential to consider. Generally, you can get an interest rate between 1% and 5% among mortgage lenders in the UK.

The table below can give you an estimate of the total repayments you would make monthly for a £200,000 mortgage at various interest rates over a term of 25 years.

  • Interest Rate 1% 2% 3% 4% 5%
  • Monthly Repayment £753 £848 £948 £1055 £1170

Interest Only Repayments

Some lenders can offer an interest-only repayment plan for a £200,000 mortgage. You only repay the interest on the loan each month and nothing off the amount you borrowed, which becomes due at the end of the term in one huge lump sum.

Because of the risk of accumulating a huge debt that may be hard to repay, lenders will require that you have a plan for repaying the total balance at the end of the mortgage term.

The Term For A £200,000 Mortgage

Mortgages can take 5 to 40 years to pay back, and the length of the term will have a significant effect on how much you’ll ultimately pay. More extended periods will have cheaper monthly payments but will have an extra cost.

A £200,000 mortgage paid over 35 years will cost you thousands more than when you repay it over 20 years or less.

The less the term of your mortgage, the less the total amount you’ll pay for the loan.

Check out the table below to get an idea of how the term affects the total and monthly repayments of a £200,000 mortgage based on a 3% interest rate.

Term Monthly Repayment Interest Total Repaid

  • 30 years £843 £103,495 £303,495
  • 25 years £948 £84,478 £284,478
  • 20 years £1106 £66,169 £266,169
  • 15 years £1381 £48,853 £248,853
  • 10 years £1931 £31,729 £231,729
  • 5 years £3594 £15,616 £215,616

It’s wise to base your decision on how much you can realistically afford to repay each month. Mortgage loan advisers can help you decide which is the best option for your circumstances.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Other Costs To Consider

While the deposit will take up a large chunk of your savings, other fees you’ll need to consider when getting a £200,000 mortgage include:

Valuation Fees

A valuation to ensure the property you’re buying is worth the amount you’re planning to pay is necessary. Lenders can arrange for this, but you’ll usually have to pay for it, and the costs can vary depending on the property’s value, location, and terms of the deal.

Solicitor Fees

You’ll also have to pay the fees for a property solicitor who will handle the legal aspects of your property purchase. They can charge a flat fee or a percentage of the property price. There may also be other additional fees like getting the property registered as a new owner in the Land Registry.

Insurance Fees

Mortgage lenders may require that you have the property insured from the moment you enter into a contract. This ensures coverage in case of any damage to the structure of the property. Some insurers offer home insurance with property and contents insurance that covers your belongings against theft or damage.

How Much Is A £200,000 Mortgage A Month? Final Thoughts

When considering what mortgage amount to apply for ask an expert to assist you. Affording the repayments each month comfortably should be a number one priority.

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

How Much Is A £150,000 Mortgage A Month?

by Dax McLeanPosted on

Before taking out a mortgage, it’s advisable to find out how much it will cost you to pay back monthly.

Mortgage repayment will probably be your most significant outgoing expense every month, and it’s vital to know whether you can afford it now and in the future.

In this guide, we’ll break down how much a £150 000 mortgage could cost you per month, the factors that influence monthly costs, and how you can get the best rates available.

Monthly Repayments For A £150 000 Mortgage

How much you pay every month for a £150000 mortgage will depend on various factors.

The most important ones are the length or term of the mortgage and the interest rate you’re given.

Keep in mind that every lender is different, and they’ll have their criteria to determine the rates they give you.

Factors like your profile or credit history and your level of deposit can influence the interest rate a lender is willing to offer.

Interest Rates For A £150,000 Mortgage

The interest rate affects the monthly repayments on any loan, and you typically you may get a rate ranging between 1% to 5% for a £150000 mortgage in the UK based on current rates.

The interest is usually added to a portion of the capital or amount borrowed and paid back each month for the loan duration.

Here’s an illustration of how the monthly repayments can differ on a £150000 mortgage with a 30-year term based on different interest rates:

  • Interest Rate 1% 2% 3% 4% 5%
  • Monthly Repayment £482 £554 £632 £716 £805

Interest Only Repayments

You may also get the option to repay only the interest every month for a £150000 mortgage. In such an agreement, the total amount of capital borrowed becomes due at the end of the term, and you only repay the interest each month.

However, to qualify for an interest-only £150000 mortgage, you must show the lender evidence of a viable repayment strategy. This is because you risk piling up a huge debt that can be difficult to repay without a good plan.

The repayment strategy assures the lender that you can cover the entire balance at the end of the mortgage term.

You’ll also need a larger deposit to qualify. With an interest-only mortgage, you’ll have lower monthly costs since you’re not paying anything off the capital amount.

Related reading: 

The Term For A £150 000 Mortgage

Typically you may get a term of between 5 to 30 years to repay a £150000 mortgage depending upon your circumstances. The term will have a massive effect on your monthly repayments as well as the total amount you’ll ultimately pay.

With a more extended period, you’ll have cheaper monthly payments. However, the total amount you’ll repay for the loan will be higher than a shorter period. You can save thousands by repaying your loan over a shorter period.

To give you an idea of how the term affects monthly and total payments of a £150 000 mortgage, check out the table below, which is based on a 3% interest rate.

Term Monthly Repayment Interest Total Repaid

  • 30 years £632 £77,621 £227,621
  • 25 years £711 £63,358 £213,358
  • 20 years £832 £49,627 £199,627
  • 15 years £1,036 £36,437 £186,437
  • 10 years £1,448 £23,796 £173,796
  • 5 years £2,695 £11,712 £161,712

The less the loan term, the less the total amount you’ll pay, but the higher the monthly payments. Keep in mind that the period you get will depend on your circumstances, and it’s wise to base your decision on the amount you can realistically afford each month.

Recommended: Learn more about the different types of mortgages and the fees involved in buying a home.

Deposit Amount Affects How Much You Pay Monthly

The deposit you’ll need for a £150000 mortgage will depend on the lender’s loan to value (LTV) ratio. It describes how much a lender is willing to offer you compared to the value of the property you’re buying and is expressed as a percentage.

For example, with a £15000 deposit, you’ll own 10% on a property worth £150 000 and borrow 90%. This makes the LTV ratios 90%.

With a low deposit, you’ll be seen as a riskier borrower, which may translate to higher interest rates from lenders. Lenders in the UK can offer you a mortgage of up to 95% of the property value depending upon lender criteria.

The higher the deposit, the lower the interest and loan amount you have to repay monthly and in total.

Bad Credit Effects On A £150 000 mortgage

There are bad credit £150 000 mortgages available in the UK, but lenders may require a higher deposit and charge you higher interest rates to offset the risk. This will ultimately translate to higher payments every month.

It’s important to remember that every lender is different, and each borrower is treated as an individual on a case-by-case basis. Each may offer different rates and ask for different deposit sizes for a bad credit £150 000 mortgages.

You can still get reasonable rates and LTV ratios depending on the severity and recency of your bad credit issue. Lenders will favour borrowers with older credit issues compared to those with more recent misdemeanours. Consulting a mortgage adviser can help you get the best rates for your circumstances.

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Monthly Payments For A £150 000 Buy to Let Mortgage

Your monthly payments and deposit will be different depending on whether you’re eyeing a residential or buy to let mortgage. Many buy-to-let mortgage providers require a 25% deposit, and others can ask for 15% provided you meet their criteria.

The monthly payments may be lower because most buy to let mortgages are on an interest-only repayment basis. Also, unlike residential interest-only agreements, you don’t require a viable repayment strategy in buy to let mortgages.

Lenders gladly accept the sale of the property at the end of the period to cover the amount with a buy to let.

Other Fees That May influence How Much You Pay

In addition to the interest and capital percentage, other fees may influence how much you pay each month i.e. broker fees, lender fees, buildings insurance.

How Much Is A £150000 Mortgage A Month? Final Thoughts

When considering what mortgage amount to apply for ask an expert to assist you. Affording the repayments each month comfortably should be a number one priority.

If you’re ready to take the leap, we’re ready to help you with your first time buyer mortgage application.

As a first time buyer, it’s natural to have a lot of questions. Ask away, one of our friendly advisors would love to talk things through with you.

Call us today on 03330 90 60 30 or complete our quick and easy First Time Buyer Mortgage Application.

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experts below and we'll call you
at a time that suits you.
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