Category: Mortgages

A cashback mortgage involves a deal where the lender pays cash to the borrower as an incentive to purchase a home with them.

Mortgage cashback allows the lender to stand out from the competition, and you get a cash lump sum to use however you like, from moving costs to mortgage repayments and furniture.

However, although a cashback mortgage offer may sound like a great deal, it can feature higher interest rates and additional terms, so it’s essential to understand all the features involved with this type of financing.

Read on to learn everything you need to know about cashback mortgages.

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How Does a Cashback Mortgage Work?

A cashback mortgage allows you to receive a certain amount after approval of your mortgage application or after making your first repayment.

The sum can be a percentage of the amount you’re borrowing, an amount equal to one of your monthly payments up to a limit or a fixed amount.

Costs can spiral when buying a property, and a cashback can help you cover some of the costs.

The cashback usually ranges from £150 to £1000 and can be transferred directly into your bank account or sent to your solicitor.

The solicitor can then pass the money on to you, or you can have them keep it to cover their fee.

Can I Get a Cashback Mortgage Offer When Remortgaging?

Yes. Although some lenders restrict their mortgage cashback offers to first-time buyers, others offer cashback on remortgage deals.

Other lenders don’t limit their cashback deals to a particular type of borrower or mortgage and can provide cashback incentives for all types of mortgages.

You can find cashback deals when taking out variable or fixed interest rate mortgages or buying a buy-to-let property.

Each lender will have their criteria for who qualifies for a cashback, and they can have different definitions of what makes a first-time buyer.

No matter the type of mortgage, you should carefully consider whether the cashback is worth it in the long term.

Advantages and Disadvantages of Mortgage Cashback

Advantages

• Lump sum cash of up to £1000 to use as you like
• A percentage of your mortgage as a cashback in some cases
• Some lenders cover your legal fees or removal costs and save you money
• Reduction in the overall costs associated with buying a home

Disadvantages

• Interest rates can be higher, making monthly payments more expensive
• Tighter restrictions on early mortgage repayments and overpayments
• Mortgage fees can be less competitive on cash mortgages.

Terms to be aware of with a Cashback Mortgage

You’ll usually need to agree to additional terms when you accept a cashback as part of your mortgage deal.

The terms can vary between lenders but usually involve repaying some or all of the cashback if you leave the mortgage before the agreed term ends and paying an exit fee.

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Cashback mortgages usually have an introductory period ranging from two to five years and can have less flexibility for making overpayments during this time.

While most mortgages allow up to 10% overpayments yearly, it can be less with a cashback mortgage, and you must be aware of the limits imposed to avoid hefty penalties.

Although early repayment charges (ERCs) are usually standard with all types of mortgages if you overpay, they can be higher in cashback mortgages.

You may get penalised by as much as 3% to 5% of the amount you’ve overpaid and end up cancelling out any benefit gained from the cashback.

Criteria for a Cashback Mortgage

The lender will need you to meet the standard criteria as other mortgages, including creditworthiness, affordability, age and deposit amount.

However, cashback mortgages usually feature additional criteria, which can vary depending on the lender.

These can include:

• Being a first-time buyer
• Hold a current account with the mortgage provider
• Borrow over a certain minimum amount
• Purchasing a property with a good energy efficiency rating

Is a Cashback Mortgage Offer Worth It?

Getting a lump sum of cash when taking out a mortgage can seem irresistible since you can use the funds to take care of other costs in the home-buying process.

However, the benefits may only be short-term since you’ll likely pay a higher interest rate for the entire mortgage duration, making it more expensive overall.

You must ensure you do your calculations and ensure the mortgage is suitable for your circumstances.

£1000 may sound appealing now, but is it worth paying a higher rate for 25 to 30 years?

You also need to consider other factors like overpayment and early repayment penalties.

A cashback mortgage may not be worthwhile if the cash you get is less than the interest you’ll save by taking out an alternative deal.

There can be fewer downsides to accepting a cashback mortgage if you get a cashback deal with a rate matching the best deals available.

However, these are usually rare and far between.

You also need to watch out for high administration or arrangement fees when applying for cashback mortgages since the fees can cost more than you get back.

Some cashback mortgage offers also feature refunds and discounts on certain costs in the home-buying process as a further incentive. Such costs can include booking fees, stamp duty, and survey costs.

They can also offer discounts on various recommended insurance providers, legal firms or surveyors.

However, the lender may not necessarily have the best deals on the market, and you may find it cheaper to source all these services elsewhere.

To work out the actual cost of the cashback mortgage and determine if it’s worth it, check how much you’ll repay each month over the course of the deal and compare this with non-cashback mortgage deals.

Don’t forget to compare the annual percentage rate of charge (APRC) to determine which deal offers the most savings overall while considering the incentives.

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What Is a Cashback Mortgage? Final Thoughts

It’s vital to work out the overall cost of a cashback mortgage by considering the interest rate and monthly payments to determine whether the cash incentive is worth it.

An expert mortgage advisor or broker specialising in cashback mortgages can help you determine whether it’s the best option for you and where you can find the best deals for 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.

Getting a mortgage is essential when buying a home, and it’s normal to have questions about the processes involved and their timeline.

These can include how long does it take to complete a mortgage application?

How long does it take to get a mortgage approved?

Or how long does a mortgage offer last?

Knowing how long it will take can help you plan your move and avoid hold-ups. Read on to learn more about the entire mortgage process timeline in the UK.

How Long Does a Mortgage Application Take?

A mortgage application involves a few different stages that can impact how long it takes, including the complexity of your situation, the lender you’re applying with, and the information they ask for.

It’s usually a simple and smooth process that includes the following:

Getting the Mortgage in Principle

The first step is to get a mortgage in principle (MIP), also called a decision in principle (DIP).

The MIP is a certificate from the lender that gives you an idea of how much you can borrow to purchase a home ‘in principle.’

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It’s optional and not binding and can help you when house hunting since it shows sellers and estate agents that you’re a serious buyer likely to get a mortgage.

How Long Does Getting a Mortgage in Principle Take?

Getting a MIP is quick as most lenders allow you to apply online and give an instant decision if you have all the necessary documents ready.

It can take up to 24 hours or less and remain valid for 30 to 90 days.

During this time, you’ll need to view properties and have an offer accepted on your chosen home.

What Documents Do You Need for a Mortgage in Principle?

The lenders will require basic information like your income, expenses, and how much you’ve saved for a deposit and will check your credit history.

It will involve a soft search that doesn’t impact your credit file, and you’ll need original documents like:

• Three months’ worth of payslips is employed
• Valid ID like a passport or driving license
• Bank statements from the last three or six months
• Tax returns for the previous 12 to 36 months if self-employed

Mortgage Application

Once you’ve found a property you’d like to buy, it’s time to apply for a complete mortgage application.

You can apply with the same lender who gave you the MIP or with a different lender if they offer a better deal.

Going with the same lender can speed up the application process and make it easier since you’ve already started on the preliminary steps.

How Long Does It Take to Complete a Mortgage Application?

Filling out a mortgage application isn’t lengthy, and it can take less than 24 hours, provided your finances are in order, and you have the necessary information and documents ready.

Most lenders and brokers use an electronic submission process and will need the following documents in addition to the ones supplied for your MIP:

• Proof of earnings from the last three years
• A P60 form is employed
• Council tax and utility bills for the last three to six months
• Estate agent details and address of the property you want to buy
• Expenditure details like childcare, insurance policies, entertainment, and travel costs
• Proof of any other income, like benefits
• Personal loan and credit card statements

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Mortgage Approval

After submission, the lender will review the application and supporting documents and conduct a hard credit search recorded on your credit file.

Lenders will look at how much you’re currently borrowing and your reliability as a borrower based on your past financial obligations.

The lender will arrange a valuation of the property you wish to buy to ensure it’s worth what you’re paying.

An independent surveyor will visit the property and carry out structural checks.

It can take around 24 hours, after which they’ll create a report with a final decision on the property value.

If everything is in order, you’ll get a formal mortgage offer.

How Long Does It Take to Get a Mortgage Approved?

It can take two to four weeks from applying to getting a mortgage offer.

However, it can be shorter or longer, depending on the complexity of your application.

Lenders will need a few weeks to complete the relevant checks, and the process can get held up if the valuation report is inconsistent with the amount you’re applying for.

Your application can get declined, adding a few more weeks to your mortgage journey for another application. The lender can also set a higher interest rate or request a higher deposit.

How Long Does a Mortgage Offer Last?

Mortgage offers usually last around six months and show the exact date the offer expires, providing enough time to complete your property purchase.

Once the deadline has passed, you may need to reapply with the same lender or another, and they’ll re-examine your circumstances.

Some lenders can accept to extend your offer for around a week or less, depending on their internal policies.

How Long Does Mortgage Completion Take?

Completion is the final stage of the mortgage application process, and it involves exchanging contracts with your seller and paying your deposit to make the property sale legally binding.

You can exchange contracts around two months after receiving the official mortgage offer.

However, it can take longer if you’re joining a chain of other buyers since the progress of their purchases will have a knock-off effect on your timeline.

The longer the chain of properties, the slower the process can become, as it can be difficult to speed up this part.

Once you exchange contracts, your lawyer will organise the completion date with the seller’s lawyer.

You’ll take ownership of the property on the completion date and get the keys to your new home, although you don’t have to move in immediately.

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How Long Does It Take to Get a Mortgage? Final Thoughts

Being prepared as much as possible can help avoid delays and speed up the mortgage process.

Using a mortgage broker or advisor can also make the process easier and quicker since they have experience arranging mortgages and know what lenders require and which are likely to approve your 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.

Although mortgages are private loans, the Bank of England and the Financial Conduct Authority regulate the lenders who provide them.

Mortgage affordability rules can vary between lenders but usually follow the same practices.

If you’re considering getting onto the property ladder, getting acquainted with affordability for mortgage rules can help you improve your approval chances.

Here’s everything you need to know about rules for mortgage affordability in the UK and the recent changes.

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What Are the UK Mortgage Affordability Rules?

Rules for mortgage affordability help ensure you can repay the amount you borrow and the accumulated interest for as long as possible without getting into financial strain.

Mortgage providers are businesses and must secure an income while competing with other lenders and providing loan products that are fair and attractive to borrowers.

The Financial Conduct Authority requires mortgage lenders to assess whether applicants can afford to repay the amount they wish to borrow.

Lenders do this by undertaking mortgage affordability assessments where your income, debts and spending are considered.

Taking out a mortgage you can’t afford can have serious consequences, including losing your home and damaging your credit record and financial situation beyond repair.

Falling behind on mortgage repayments is riskier than having rent arrears, so affordability assessments must be rigorous.

Mortgage affordability is usually based on various factors that directly and indirectly affect how much you can borrow.

How Much Can You Borrow Based on Mortgage Affordability Rules?

Mortgage providers can assess affordability however they wish, provided it’s considered fair to the consumer, so each can have slightly different processes.

Some lenders are willing to offer more than others, but as a rule of thumb, most applicants can only borrow up to 4 or 4.5 times their annual income based on mortgage affordability rules.

If you search extensively, you can find some lenders offering up to 5 times your income under the right circumstances.

If you’re making a joint application and buying a home with someone else, the affordability assessment is usually based on your combined annual income.

For example, if your income is £20,000 and your partner’s income is £30,000, you can borrow (£20,000 + £30,000) x 4 or 4.5 = £200,000 – £225,000.

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Direct Factors in Affordability for Mortgage Rules

Although income is the largest factor in mortgage affordability assessments, other significant factors you should be aware of include the following:

Debts

Your current debts can influence the amount a lender will lend to you. If you’re currently paying off large debts, it can reduce the amount you can borrow.

Debts are usually considered significant if they require monthly repayments amounting to over 50% of your monthly income.

You’ll likely need to wait until you’ve paid off some of this debt before you apply for a mortgage.

Average Spending

Lenders will want to see how much you spend on monthly outgoings like food, bills, household essentials, childcare, travel, leisure and clothing.

Assessing regular spending habits can help lenders determine whether you have enough left over to cover monthly mortgage repayments and can be a reliable borrower.

The amount you can borrow will reduce if you have high monthly outgoings over your budget. It might be worth keeping your spending as low as possible for 3 to 6 months before applying for a mortgage.

Indirect Factors in Rules for Mortgage Affordability

Some eligibility factors can indirectly affect the amount you can borrow by increasing or decreasing the number of deals and mortgage providers you can access.

These include:

Your Credit History

The better your credit history, the more products and mortgage lenders you’ll have access to and the higher your chances for approval.

The quality of your mortgage deal will generally improve with the strength of your credit score.

If your credit report has minor issues like late payments or defaults, you may still be considered, but your income multiple will be lower.

Some lenders will disregard your application entirely if you have significant issues like county court judgements or bankruptcy.

However, some specialist providers can consider, and you’ll need a qualified mortgage broker to help you explore your options and navigate the situation.

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Employment Status and Profession

Stable employment and sustainable income can play a role in getting approved. Mortgage providers want to ensure you earn enough every month to cover mortgage payments in full and on time.

If you earn from non-traditional sources or are self-employed, lenders can be cautious about how much they can include in the affordability assessment.

This is because the income can fluctuate, and you may not always earn the same amount each year.

It can be challenging to guarantee the highest possible amount, and the lender may choose to use the previous year’s figure or an average of two years.

Some lenders will also offer higher income multiples to borrowers in specific professions like lawyers, doctors and accountants.

The lenders may stipulate a particular age range for such buyers, like 25 to 40.

Loan To Value (LTV)

The loan-to-value of the mortgage is the percentage of the total property price that you’re borrowing.

For example, if the property is worth £200,000 and the mortgage is £180,000, the LTV is 90%.

Your deposit amount will influence the LTV, and lenders generally offer better deals to applicants with lower LTVs because they offer more security.

You can get low-interest rates and more affordable monthly repayments with a low LTV.

Mortgage Affordability Rules for Buy-to-Let Properties

Affordability assessments for buy-to-let mortgages can differ from standard residential mortgages because rental income will likely be used for mortgage repayments instead of employment income.

Lenders may base their assessment on the projected rental income.

Changes to Rules for Mortgage Affordability

In August 2022, the Bank of England scrapped a key mortgage affordability stress test that required borrowers to afford a 3%-point rise in interest before getting approved for a mortgage.

This makes it easier to get on the property ladder.

However, the 4.5 times income rule remains in place, and you’ll still need to fulfil FCA affordability tests.

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UK Mortgage Affordability Rules Final Thoughts

Preparing for a lender’s affordability assessment and fulfilling mortgage affordability rules is wise before applying.

You can do this by improving your credit score, clearing any debts you may have, reducing your spending and saving up a substantial deposit.

A mortgage broker can also help you find the best deals for your situation and guide you through the process.

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 new build home has various benefits as they’re typically more energy efficient, feature fewer maintenance costs, and you won’t have a chain of buyers above you.

However, arranging a new build mortgage can be more complicated than for an older property, but it’s not impossible.

Here’s everything you need to know about new build mortgages in the UK.

What Is a New Build Mortgage?

A new build mortgage is designed for properties that have never been lived in or bought.

They’re available among high street mortgage providers and specialists, and each lender will have their definition of what constitutes a new build.

Some consider new builds as newly constructed properties only, while others include off-plan properties where you commit to buy a new home before construction starts or when it’s in the process of being built.

It can also include properties that have been substantially renovated within the past two years and not sold during that period.

New build properties are appealing since everything is new, including paintwork, tiling, bathrooms and kitchens, meaning they need little to no maintenance.

They also comply with the latest building regulations, making them more energy efficient than older buildings, and you don’t have to deal with a chain of buyers.

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What Deposit Do I Need for a New build Mortgage?

Lenders usually require more significant deposits when purchasing a new build than a standard property.

The value of the new build property can fall when you start living on it, meaning the lender takes on more risk, so they protect themselves from the inevitable property devaluation.

Most lenders have loan-to-value (LTV) ratios of 75% to 85% and will require you to deposit 15% to 25% of the property’s value.

The LTVs are higher than the 90% to 95% LTV ratios offered on standard properties, and you’ll also need to save up a bigger deposit if you’re buying a new build flat instead of a house.

Timescales for New Build Mortgages

When it comes to new build mortgages, you may face issues with how long your mortgage offer is valid.

Developers often feature demanding timeframes, and lenders may struggle to complete your application within the required time.

If you’re buying off plan, you must carefully time your application.

Although some new build mortgage offers can last longer than standard mortgage offers and go for 9 to 12 months instead of 6 months, it’s not always the case.

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If the developer encounters a delay in the build time or overruns, your mortgage offer could expire, meaning you’ll need to start the entire application process again and getting the same terms isn’t guaranteed.

It’s worth checking how long your offer is valid if you’re buying off-plan and starting the mortgage process as you can.

Consulting a mortgage broker can save time and help you find suitable deals that can last longer or reapply for alternatives if necessary.

Government Schemes for New Build Buyers

Various government schemes can help you buy a new build property.

These include:

The Deposit Unlock Scheme

The Home Builders Federation developed the Deposit Unlock Scheme to help first-time buyers and home movers buy a new build home with a 5% deposit.

The scheme is exclusive to new build homes, and you can only buy a home from a builder participating in the Deposit Unlock scheme and using a mortgage offered by a participating lender.

The maximum amount you can take out to buy a property using the scheme is £750,000, but this will depend on your circumstances and the lender.

First Homes Scheme

The First Homes Scheme was launched in June 2021, and it provides first-time buyers with the opportunity of buying a new build property at a discounted price starting from 305 to 50% of the market value.

The discount is at the local council’s discretion in the area where the property is built and is agreed upon directly with the developer.

Once the discount is given, it’s locked on that property and stays on the home forever, so every time it’s sold, the new buyer benefits from the discount.

The scheme is open to buyers of any profession, but key workers like firefighters and NHS staff are given priority.

To qualify, you must be a first-time buyer with a combined household income below £80,000 or £90,000 in London.

It also includes a price cap of £420,000 within London and £250,000 anywhere outside London on qualifying properties after the discount.

Shared Ownership

Shared Ownership can be a suitable option if you want to buy a new build home but only have a small deposit.

The Shared Ownership Scheme is geared towards first-time buyers, allowing you to buy a portion of new build property and then rent the remaining share from a housing association or council.

It’s an excellent stepping stone allowing you to buy from 10% to 75% of a new build home and pay a smaller mortgage than buying the property outright.

You can buy more shares if and when you can afford it through staircasing.

The more of the property you own, the less rent you pay until you reach 100% ownership.

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New Build Buyer Incentives

New-build property developers sometimes offer incentives to sweeten the deal, like paying for Stamp Duty and legal fees, since it’s easier to offer an incentive to attract buyers than reduce the overall purchase price.

It’s worth noting that mortgage lenders will consider such incentives when deciding how much to lend you.

The lender can reduce the amount you can borrow if the incentive is worth a significant amount, like over 5% of the property value.

Knocking the amount that surpasses the 5% off the purchase can significantly impact your LTV ratio and the mortgage rates you’re eligible for.

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New Build Mortgages UK Final Thoughts

When buying a new build property, you should consult a mortgage advisor or broker specializing in new build mortgages.

They have experience and in-depth knowledge of such properties and understand their complexities.

They can research the market on your behalf, find the best deal for your circumstances, give you access to exclusive deals, provide bespoke advice and help with your 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.

According to statistics released by the UK government in 2019, around 772,000 homeowners in the UK stated that they owned a second home.

In 2009, only 572,000 households reported having a second home in the UK.

This statistic shows that more people are showing an increased interest in owning a second property.

If you already own property in the UK but want to buy a second property to use as a holiday home or another household for your family to use, you’re in the market for a second home mortgage.

Second home mortgages are not mortgages you wish to rent out to other residents – the second home mortgage must be for a property you intend to use personally.

The first thing you need to know about UK second home mortgages is that they’re a little more challenging to get approved than a first home mortgage.

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This makes sense when you consider that paying for two mortgages is considered “high risk.”

Stringent checks apply to second home mortgages UK, meaning applicants need to ensure that their finances and documentation are in fantastic order before they even consider applying.

Pros and Cons of a Second Home Mortgage UK

It’s best to be 100% certain of what you’re getting into before applying for a second home mortgage UK.

Below are some pros and cons to consider:

Pros of Second Home Mortgages

• Second home mortgages are more affordable than second charge mortgages and secured loans
• How you handle your existing mortgage could promote the success of your application
• Successful application means you will have two properties (convenient, comfort, and sound investment)
• A second home mortgage is a separate mortgage from your first home mortgage. In the event that you run into trouble with your second mortgage, your first home is not at risk.

Cons of Second Home Mortgages

• The checks are stricter for applicants of second home mortgages.
• The minimum deposit is usually 15% of the property value.
• You will put additional strain on your budget (you could over-indebt yourself).
• Indirectly, your current home is at risk as you may need to sell the first property to cover costs if your situation changes and you can’t afford to continue paying for both.

Qualifying Criteria to Get Approved for a UK Second Home Mortgage

Mortgage providers have strict criteria in place for applicants of second home mortgages.

In fact, the criteria are stricter than our first home mortgage because there’s a risk that two mortgages may overwhelm your budget.

Below is a brief overview of some of the requirements to qualify for a second home mortgage UK.

• At least 15% of the total value of the property must be paid as a deposit
• You must be of legal age
• You must pass an affordability assessment (comparison of your income vs. expenses)
• You must earn the minimum monthly income stipulated by the lender (this can fluctuate from one lender to the next)

Keep in mind that interest rates are typically higher on second home mortgages.

Still, you may find that some lenders are negotiable if you discuss your financial situation directly with them.

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Is a UK Second Home Mortgage the Same as a Remortgage?

Second home mortgages are often confused with second mortgages or remortgages.

A second home mortgage is neither of these things.

A remortgage is when you switch from one provider to another or get a different interest rate or deal.

Second Home Mortgage UK vs. Buy-to-Let Mortgage – Which One Do You Need?

Many people need clarification on the concept of a second home mortgage in the UK.

A second home mortgage is strictly for a second property that you plan to use personally.

For example, if you wish to purchase a second property and rent it out, you must apply for a buy-to-let mortgage.

Now, what if you start with a second home mortgage but decide later that you want to rent it out to cover costs or make a profit?

In this instance, you will need to be in direct contact with your lender to get permission from them to do so. With this type of transition, there could be additional fees/costs involved.

There are, of course, other scenarios you need to be aware of. For instance, what if you buy a second home mortgage, and somewhere along the way, the property you buy needs to become your primary home, not your secondary one?

In such instances, you have 24 months to inform HM Revenue and Customs of the change.

Don’t avoid doing this, as it safeguards you against paying capital gains tax should you wish to sell the property in the future.

Fixed Interest vs. Variable Interest on Second Home Mortgages UK

When applying for a second home mortgage in the UK, you will choose between a fixed-interest mortgage and a variable-interest mortgage.

What’s the difference, and which one should you choose?

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Fixed Interest Mortgages:

A fixed interest mortgage is a type that comes with interest rates that are locked in, so you will always know precisely what your monthly instalment will be.

Variable Interest Mortgages:

Variable interest mortgages usually seem cheaper, but as interest rates fluctuate, your monthly instalments may go up.

As a result, you may pay far more each month than you initially anticipated.

Fees vs. No Fees:

Another thing to be aware of when applying for second home mortgages is that some present “no fees” offers.

Mortgages with no fees typically come with higher interest rates, which in the end, could come to more than if you acquire a mortgage with fees included.

Also, note that second home mortgages come with an additional 3% stamp duty.

Second Home Mortgages UK Conclusion

Applying for a second home mortgage in the UK follows the same process as applying for a first mortgage except the checks are more stringent and you’ll be expected to put down a higher deposit amount.

If you’re ready to get the process started, chat to an experienced mortgage broker to ensure your handling the application process efficiently (and correctly).

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

If you’re living with a disability or a long-term illness and have applied for a mortgage and been turned down, you may wonder if your health situation is to blame.

While many may think that’s the case, the problem often comes from the lack of affordability – which can happen to anyone, not just disabled or ill individuals.

In most instances, the inability to pass an affordability assessment comes from the borrower being on benefits or a small income, which lenders see as risky.

Even with a disability, you must meet the lender’s requirements before you are deemed a viable candidate for a UK mortgage.

If you are wondering if you can get a mortgage in the UK if you’re disabled or suffering a long-term illness, wonder no more. Wonder no more! We bring the answers directly to you!

Below, we cover the legalities involved in getting a mortgage if you’re disabled and on benefits. Believe it or not, there are lenders more than willing to assist!

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The Equality Act 2010 Says All UK Mortgage Applicants Must Be Treated Fairly

The Equality Act 2010 states that lenders must treat applicants fairly.

What does this mean? It means that you cannot be rejected or required to meet stricter criteria (more interest to pay or higher deposit requirements) based on your disability or health status when applying for a mortgage in the UK.

Mortgage lenders in the UK must strictly base their outcomes on the applicant’s credit score and the loan’s affordability.

This means that unless your disability or illness impacts your ability to pay for the loan, you cannot be rejected based on illness and disability!

The Act states that anyone with “a physical or mental condition that has a substantial and long-term impact on your ability to do normal day-to-day activities” will be protected by the Act.

Mortgages for Disabled People in the UK

If you have a long-term illness or disability, you may be living on benefits, and it’s this little fact often impacts the outcome of a disabled or ill person’s mortgage application in the UK.

However, because benefits are considered unreliable income, you may find it challenging to qualify for a UK mortgage application.

But that doesn’t mean that all applicants on benefits will be turned away.

In fact, if you’re on disability benefits and you’re also employed, this could be a good thing for your mortgage application.

This means that your benefits are seen as a boost to your existing income.

In scenarios where your benefits are larger than your salary/income, you may find it a little more challenging to qualify.

All of this said, even if your entire income is benefits based, there are still lenders willing to help you get the funding you require for your mortgage.

UK Disability and Illness Benefits Most Likely to Be Accepted by UK Lenders

Lenders are only concerned with affordability and, of course, your ability to repay the loan.

This is why certain benefits are accepted over and above others, as they are considered more stable.

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Also, you can only use a benefit as proof of sufficient income if the main applicant is the claimant of the disability benefit.

The following benefits are most often accepted by mortgage providers in the UK:

• Disability Living Allowance – DLA
• Adult Disability Benefit
• Personal Independence Payments (PIP)

You must provide proof of your benefits income when applying for a mortgage.

But what if you’re not on a disability benefit but receive other benefits?

Can they be used as proof of sufficient income?

Some benefits that aren’t disability-related can be used, and these usually include the following:

• Maternity Pay
• Widows Pension
• Child Benefit
• Child Tax Credit
• Universal Credit
• Working Tax Credit
• Job Seekers Allowance
• Attendance Allowance
• Carers Allowance

Of course, getting benefits and an income doesn’t automatically mean that you will qualify for a mortgage.

Mortgage lenders will consider your full income (salary + benefits) and compare this to your current and ongoing expenses.

If you have a small amount of money available at the end of the month, and it appears you won’t comfortably afford the loan repayments, the application will most-likely be rejected – not because of your disability or long-term illness but merely on the basis of ill-affordability.

Schemes That Help Disabled Applicants Get UK Mortgages

In some instances, getting a disability UK mortgage can prove challenging.

If this is the case, you can use one of the several schemes available that help disabled applicants get into the property market.

One such scheme is the MySafeHome scheme which offers shared-ownership options.

You can use this scheme if you’re on PIP (Personal Independence Payment), DSA (Disability Living Allowance), Universal Credit, Pension Credit, or ESA.

Another scheme is the HOLD scheme, which also offers shared-ownership options.

To be eligible for this scheme, you must prove that you can’t buy a suitable home that caters to your disability or illness.

You must also be a first-time property investor and earn no more than £80,000.

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Making the Process Easier for Applicants of Disability Mortgages in the UK

If you’re at a loss for where to start or just need a bit of guidance to make the mortgage application process easier for you, it’s best to chat with an experienced mortgage broker who has knowledge of the industry and working experience helping disabled people or those with a long-term illness to get the funding they need to buy a home.

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

With summer coming up, more Brits are considering their options for a second home mortgage, and you guessed it; a holiday home!

One of the first things that come to mind, after the financial factor, is where to buy a holiday home.

There are plenty of options spread across the UK – how do you make the ideal choice?

For most people, choosing a holiday home comes down to several factors as follows:

• Location, location, location!
• Climate
• Cost of property (affordability)
• Crime rate
• The people

Not sure where to start? Don’t worry! We did the legwork for you!

Check out our top pick of the best places to buy a holiday home in the UK.

Where to Buy the Best Holiday Homes in South West England

New Forest District

New Forest isn’t just gorgeous but enjoys around 217 hours of sunshine per month, which is much more than most places.

It is no surprise that it’s a tourist hotspot, with the national park’s beautiful trees towering over the area.

This area is exceptional for families and couples, with many opportunities for walking, camping, and canoeing.

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And to top it all off, there’s something for thrill-seekers, too: a theme park!

Water quality is excellent, and you can expect the average temperature to be around 16 degrees Celsius.

While New Forest is not the cheapest area to invest in, it is considered one of the best. Check out Brockenhurst and Lymington.

Torridge

Spanning the north coast of Devon, Torridge is a firm favourite for locals and holidaymakers.

You’ll find gems of South West England, such as Westward Ho and the Hartland Devon Heritage Coast, in the area.

Torridge enjoys 186 hours of sunshine per month and has an average temperature of 16 degrees Celsius.

Beaches, a theme park and an outdoor activity centre, provide all the entertainment one could want while on holiday!

Where to Buy the Best Holiday Homes in South East England

Hastings

As it turns out, Hastings is one of the best places to buy holiday property in all of England!

It’s vastly popular among holidaymakers and offers swimming, beaches, walks and a plethora of amenities to enjoy.

Hastings enjoys 222 hours of sunshine per month and an average temperature of 17 degrees Celsius.

Canterbury

Canterbury is an area that steals the hearts of many Brits looking for prime holiday homes that provide a wealth of natural beauty and entertainment opportunities.

It also helps that Canterbury hosts not just one but three UNESCO world heritage sites.

These include the ruins of St Augustine’s Abbey, the Church of St Martin, and the Canterbury Cathedral.

Canterbury also enjoys a whopping 235 hours of sunshine per month, an average temperature of 17 degrees Celsius and various walks and historical sites for entertainment.

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Where to Buy the Best Holiday Homes in the East Midlands and Yorkshire

East Lindsey District

East Lindsey can be found nestled in the coastal district of Lincolnshire.

The area enjoys 193 hours of sunshine each month and an exceptionally low crime rate.

There’s plenty to do and see when holidaying in East Lindsey District, with the most popular attractions including Skegness Beach and Natureland Seal Sanctuary.

Tea rooms, sports bars, pubs, and restaurants also delight visitors.

City of Nottingham

For those who like to holiday in bustling communities that are active and busy, the City of Nottingham is a top pick!

The city is jam-packed with restaurants, bars, shopping malls, sports stadiums, and even night clubs.

With a lively atmosphere and so much to see and do – even open-water swimming – it’s one of the most popular areas to own holiday property.

For sun lovers, the City of Nottingham enjoys 184 hours of sunshine per month.

Where to Buy the Best Holiday Homes in the East Anglia

East Suffolk District

East Suffolk District stands out for holidaymakers who like to swim at some of the best beaches.

As one of the best places to buy a holiday home in East Anglia, East Suffolk offers plenty to do and see.

You can enjoy beach escapes and walks and enjoy the area’s various shops, restaurants, and pubs.

The average temperature in East Suffolk is around 17 degrees Celsius, and the area gets around 222 hours of sunshine per month.

Great Yarmouth District

Another best place to buy a holiday home in East Anglia is Great Yarmouth.

The seafront of Great Yarmouth is known as the “Golden Mile” and those with holiday property in the area can enjoy beautiful sandy beaches, outdoor and indoor attractions and even amusement arcades.

Great Yarmouth District enjoys a very low crime rate, around 227 hours of sunshine per month, and average temperatures of 17 degrees Celsius.

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How to Buy a Holiday Home in the UK

If you already have a mortgage to pay off your primary home in the UK, you might wonder how it’s possible to buy a second property.

If you’re specifically buying a second property to serve as a holiday home that you will personally use yourself, you will need to apply for a mortgage called a second home mortgage.

This is for property that you don’t plan to rent out to other people.

If you wish to buy a holiday home in England so that you can hire it out to holidaymakers, you will need to apply for a buy-to-let mortgage.

It’s vitally important that your finances are in good order if you’re going to apply for a second home mortgage.

Best Place to Buy a Holiday Home in the UK Conclusion

Spend some time considering which type of mortgage would be best for you, based on your intended purpose for the property.

After that, you should consult with a mortgage expert who can advise you on the requirements for the type of loan you’re looking for.

Applying for a second home mortgage to get a holiday home can be simplified with the help and guidance of a professional.

Keep in mind that second home mortgages often require a 15% deposit.

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

In this guide, we will talk about student mortgages UK and the frequently asked questions surrounding them.

Many British students’ default thinking process is that they won’t be able to get a mortgage simply because they’re a student. And we’re here to challenge that thinking.

The reality is that students can get onto the property ladder if they want to, and this post covers how to do that.

First off, don’t blame yourself too harshly if you’ve thought negatively about mortgages in the past while.

It’s not entirely outrageous to believe that lenders (especially mortgage lenders) that are typically risk-averse may consider students (regardless of age) a “no-go.”

After all, it’s normal for students to have limited income and a credit history that could be more robust.

This all said, lenders are making it possible for student mortgages UK.

Below we look at pertinent information for student mortgages in the UK.

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Can Students Get Mortgages in the UK?

The great resounding answer to this question is; yes! UK student mortgages exist, but you’ll have to use alternative avenues to the average full-time employed citizen seeking a mortgage.

For starters, having a co-signatory or collateral will simplify the process.

But, of course, even with collateral or a co-signatory, you’ll still need to prove you’re in good financial standing and that you will be responsible once the UK student mortgage is extended.

The good news is that mortgage lenders in the UK consider each application individually, taking into account unique circumstances for each.

One of the best steps you can take is to consult with and even be represented by an experienced mortgage broker who has specific knowledge of how student mortgages UK work.

Proof of Income UK Students Can Use When Applying for Mortgages

As you may well know, how much you earn is an important part of any mortgage application.

Keep in mind that not all income streams are considered viable, and the type of income accepted will often come down to which UK student mortgage lender you use.

Many UK lenders will accept bursaries and stipends as a viable income source.

Before a lender commits, they will take a look at several factors as follows:

• How big is the deposit you’re putting down?
• Do you have a co-signatory?
• What collateral do you have to offer?
• Do you have a stable secondary income source?
• How long does your grant or stipend last?
• Are you already dealing with existing debt?
• Are you working, and if so, how much are you generating each month?
• What are your current monthly expenses?

If you’re receiving an allowance, trust payout, or generating income, make sure you mention this and provide evidence.

The more you earn or receive (and can prove), the better it is for your application.

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Can Any and All Students Get UK Student Mortgages?

Of course, lending in the mortgage industry is non-discriminatory in the UK.

While certain student types may have greater access to income streams or be considered more responsible, lenders must look at the overall income amount, affordability and value of your collateral, or financial standing of your co-signatory (guarantor).

This means that the course you are studying doesn’t come into play and won’t impact the outcome of your UK student mortgage application.

One niggling point to keep is if you’re a foreign national seeking property in the UK as a student.

In theory, you can apply for a UK student mortgage regardless of where you live.

Still, if you use a guarantor (co-signatory) to secure the UK mortgage, the guarantor must own property in the UK to qualify.

3 Steps to Apply for Student Mortgages UK

To apply for a mortgage in the UK as a student, follow these simple steps:

Step 1:  Check Your Credit Score

Your credit history report will indicate how viable you are as a mortgage applicant.

You don’t have to pay for a credit check; you can check your credit score for free using the Experian website here.

Step 2: Consult with a Mortgage Broker

Chatting with a mortgage broker with specific experience with student mortgages in the UK is a step in the right direction.

They can guide you towards the right type of mortgage and ensure that you have everything required for the best possible potential application outcome.

Step 3: Compile the Required Documents

A mortgage broker can provide you with a checklist of the documents you will need to present during your application.

Make sure that you have everything required before processing your initial application.

Scrambling for documents last minute may just delay the entire process.

Can Students Get Joint Mortgages in the UK?

It appears that while joint student mortgages UK aren’t the norm, there are no rules or stipulations against them.

When students (or students and their partners) apply for joint mortgages, there’s a standard process to expect.

For example, the main income earner’s salary/income will be considered to determine affordability.

In short, to qualify for a joint student mortgage in the UK, the student or the partner earning the higher income must prove that they can afford the loan instalments even without the other applicant.

Types of UK Student Mortgages Available

As a student in the UK, you can consider the following types of loans that are suitable for students:

1.   Buy for University Scheme

In this instance, the parents are usually responsible for the mortgage, but the student’s (child’s) name is officially on the deed.

Students often rent out rooms to make an income to pay instalments. You can’t buy just any property with this mortgage type.

In fact, lenders will require the property you have in mind to meet certain criteria concerning the size of the house, the location, the number of rooms, and how many years you have left to study.

No fixed interest rates are possible, and you can expect the APR to be typically high.

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2.   Family Springboard Mortgage

This UK student mortgage is available to students with family members who can put up 10% of the total property value as collateral.

The amount is put into savings with the lender. The actual buyer will need to provide 5% of the property value.

3.   Guarantor Mortgages

This is a “just in case” mortgage whereby the student applying is responsible for the loan repayments.

Still, a co-signatory will take responsibility if something happens and the student can no longer afford to repay the loan.

The tricky part is that your chosen guarantor will be assessed as if they are applying for the mortgage themselves, and they must already own property in the UK.

4.   Joint Borrower or Sole Proprietor Mortgages

This is the ideal UK student mortgage for a first-time buyer. In this instance, only one applicant holds the actual mortgage, but several people can pay into the mortgage.

Student Mortgages UK Conclusion

Student mortgages are certainly possible in the UK, but you must select the right type of UK student mortgage for your situation and only get into a loan that you’re sure you can afford to repay.

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

Your age can directly affect your eligibility for a mortgage, as lenders set upper and lower age limits for applicants to minimize the risk involved in lending and ensure they get a full return on their investment.

Here’s everything you need to know about mortgage age limits in the UK.

How Does Age Affect Mortgage Eligibility?

The older you get, the riskier you become to mortgage providers, making it harder to get a mortgage.

You’ll likely be on a lower income when older, either due to retirement or not working full time.

Your income will also be lower even with a pension to fall back on.

You’ll also have a greater risk of health issues as your age advances, impairing your ability to survive the full term of a standard 25–30-year mortgage and further inhibiting your eligibility.

To help mitigate such risks, lenders set maximum age limits on their deals.

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What Is the Maximum Age Limit for A Mortgage?

Mortgage lenders usually set their age limits, so there’s no absolute maximum.

Lenders can stipulate a particular age limit at the point of application or when the mortgage term ends.

The lender may require that you’re not over 55 or 60 years when applying for a mortgage and that the mortgage term ends by the time you’re 70 or 75.

Mainstream providers are usually more conservative in their age limits, setting the maximum age at the end of the mortgage at 70 or your retirement age, whichever comes sooner.

Lenders specializing in later-life mortgage products can go up to 80 years and beyond.

Some don’t stipulate any age limits and instead decide whether to lend to older borrowers on a case-by-case basis.

Most lenders acknowledge the increased life expectancies today, and more people are working longer, creating more flexibility and leniency when lending into the retirement age.

What Other Factors Affect Mortgage Eligibility After Retirement?

Securing a mortgage isn’t just about how old you’ll be at the end of the term.

Other stringent conditions that can further impact your eligibility include:

Affordability

Affordability is crucial in all mortgages, regardless of your age. Lenders will only approve your mortgage application if you can prove you can make your repayments on time each month throughout the full term.

If the term runs into your retirement or you’re applying for a mortgage post-retirement, you must provide sufficient evidence that you can continue with repayments.

Lenders determine affordability by comparing your debt to income (DTI) ratio or monthly income vs outgoings and basing their decision on the amount you have left over that can cover mortgage repayments.

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The Loan-to-Value (LTV) Ratio

The LTV is the size of your mortgage compared to the market value of the property you’re buying, expressed as a percentage.

Most lenders set a maximum LTV ratio and offer better deals to applicants with lower LTV.

A large deposit can give you a low LTV and increase your chances of getting favourable rates from more lenders as they consider the mortgage a lower risk.

A low LTV gives the lender more security in case property prices fall.

With a high LTV, the mortgage amount can exceed the property value in case of sudden drops, making it difficult for the lender to recoup their investment if you fail to make repayments.

Most lenders readily approve an 80% LTV for repayment mortgages, meaning you’ll require a 20% deposit.

Others accept 80%, while a select few consider 95% LTV, subject to meeting other criteria.

The maximum LTV is usually 85% for interest-only mortgages, but this can decrease to 75% for older applicants.

Property Type and Credit History

The type of property you want to buy and issues surrounding your credit history can also create obstacles for later-life borrowing.

Attempting to borrow to finance a non-standard property can be difficult because of the risks associated with such properties.

Unusual properties have a limited market, and most lenders consider them a higher risk.

If you default and the lender has to repossess, they’ll find it harder to sell than other properties.

Such unique properties can include houses with timber frames, high-rise flats, listed buildings, new builds, non-standard construction, and uninhabitable property.

Lenders will also consider you a higher risk if you have poor or bad credit.

The main issues involved in eligibility assessments when credit issues are a factor include the type and severity of the credit issue, the date it was registered and the reason for the bad credit.

Mortgage Alternatives for Older Borrowers

Various mortgage alternatives exist for an older borrower, provided you meet the eligibility criteria.

These include:

Lifetime Mortgages

Eligibility for lifetime mortgages starts at age 55 and is a form of equity release.

It’s a mortgage secured against your home, provided it’s your main residence, allowing you to retain ownership.

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You get a tax-free lump sum or smaller multiple pay outs to do with as you please and repay the loan amount and any accrued interest when you move into long-term care or pass away and the property is sold.

You can also choose to set aside some of the property’s value as an inheritance for your family.

Home Reversion

A home reversion plan allows you to sell all or part of your home by releasing equity in exchange for a single lump sum or regular payments.

Lenders allow you to continue living on the property rent-free until you die or move into long-term care, provided you insure and maintain it.

Retirement Interest-Only Mortgage

With RIO mortgages, you only pay interest, similar to standard interest-only mortgages.

The loan amount is then paid off when you sell the property, move into long-term care, or pass away.

RIO mortgages usually feature minimum age requirements starting from 50 years.

Older People Shared Ownership (OPSO)

OPSO is a type of shared ownership for people aged 55 years and older.

It allows you to buy an initial share in an OPSO home, from 10% to 75% of the market value, and then pay rent on the remaining share.

Mortgage Age Limit UK Final Thoughts

Getting a mortgage when you’re older or retired can present some hurdles, and products may be harder to come by, but it’s not impossible.

A mortgage adviser or broker with experience arranging later-life mortgages can increase your chances of success, give you an in-depth view of the market and help you find an appropriate lender for 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.

You’re travelling the countryside or walking through the streets of your favourite British village, and your eye rests on a cute sign affixed to a cottage with a rambling rose creeper and a thatched roof: Rose Cottage.

Ahh, there’s something about that cottage already, and it’s not just that it’s in your favourite village or only that it’s pretty.

It’s about more; it’s been named, and the name itself is rather quaint. And therein lies a bit of psychology to think of when buying and selling property in the UK.

You’d probably never guess that giving your property a name might drive up its value and earn it more attention.

Don’t worry – most people don’t know that either.

But property value research has provided a titbit of information that’s garnered much interest in recent times.

What’s that? For starters, homes named “Courtenay House” in the UK are typically far more expensive than other properties and usually go for somewhere in the £4.8m.

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Research has found that homes with that name tend to be more expensive than those with any other.

By now, you’ve probably got a myriad of questions.

Did you pay too much for your property because it came with a name? Can you change the name, and at what cost?

Will you get more for your property than its deemed value because it has a name?

Should you name your property to increase its value? Should you avoid named properties if you’re in the market for a mortgage?

First, let’s deviate a little onto some of the other popular names doing the rounds on the property market in the UK.

Other Popular Names for High-Price Properties

While House of Courtenay is the house name that brings in the highest sale price, there are other house names that bring in a pretty packet for those trying to sell them.

And while these names are already being used, perhaps they could inspire some creativity if you’re looking to name your property:

These include:

• Meadow View
• The Willows
• Ivy Cottage
• Hillside
• Orchard Cottage
• Rose Cottage
• Woodlands

Undeniably, these property names have a certain ring to them, but what makes them sell at higher prices than other unnamed properties?

Of course, the value of a property is first and foremost about the quality of the space and the size, but other factors come into play; psychology.

A named property follows a carefully chosen theme, style, era or similar.

This creates a feeling of authenticity, uniqueness, and of course, being elite.

Status is a big deal in the property market – this is certainly food for thought when trying to sell your property or buy one.

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Back to the House of Courtenay, Though

Let’s get back to the nitty gritty about the House of Courtenay.

To buy a property called House of Courtenay, you would typically need about £4.8m – at least that’s what the average property price works out to.

While you catch your breath, here are a few more facts you might want to know about properties named Courtenay in the UK:

• Courtenay properties in the UK that sold for the most were in Hampshire, Exeter, and North London (ranging from £2.9m to £7.7)
• Other high-priced properties that are named include: South Penthouse, Bar House, Ormidale, and Doves House.

Now that you’ve caught your breath, let’s look at where House of Courtenay comes from. Is it a historic name and what makes it so popular (and expensive, for that matter)?

First of all, Courtenay is not a name that originates from Britain. However, according to research, a medieval French dynasty is linked to the name.

Apparently, in the 12th Century, some of the family relocated to the UK, with most Courtenays residing in Devon.

As a result, many B&Bs, hotels, and manor houses have been named after the dynasty.

Let’s Talk About the Reason Why Named Houses Cost More

It costs just £40 to personalise your home address and this small fee could drive up the value of your house by a whopping 40%.

Why spend thousands on expensive renovations, extensions and extravagant garden landscaping to increase the value of your home when you can simply name your home and benefit exponentially?

You’ve probably seen enough homes in the UK named to know that naming homes in the country isn’t a new fad that just hit the market.

In fact, naming houses is a custom that’s happened for centuries in the UK. It was first seen with the upper class as they named their castles, halls, and manor houses.

They were clearly onto something good.

When you give your property a name, you add a personal touch to the space, which can be descriptive, sentimental, or historic.

Naming Your Home to Increase its Value in the UK

If you want to jump on the property naming bandwagon, it’s best to take a bit of time to carefully choose a name.

Before you settle on a name, write to the local council of your area.

The council will be in contact with Royal Mail to ensure that the name you wish to use hasn’t already been taken, especially in your area.

If the name hasn’t been taken, you’ll be informed once it’s accepted. Now, make your home’s signage – which shouldn’t cost you more than £40.

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If You’re Buying…

With this information in mind, you can cut costs by negotiating with owners who have named their properties or entirely avoid purchasing named properties.

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