Category: Mortgages

With house prices rising and renters paying more than homeowners a year, it can be challenging to decide which is better between buying and renting.

Both options have benefits and drawbacks, and your best choice depends on your circumstances and priorities.

Let’s explore both options to ensure you make an informed decision.

Buying Vs Renting in the UK 

Before deciding whether buying or renting is the best option, you need to weigh the pros and cons involved.

Pros of Buying a Home

Homeownership comes with various upsides, including:

• Freedom

Owning your own home means you don’t have to adhere to any tenancy agreement that states what you can and can’t do.

You’ll not need anyone’s permission to keep pets, decorate or furnish your home however you want and even make structural changes to enhance its value.

• Security

You’ll enjoy the security of a home in the long run without worrying about being forced to move by the landlord at short notice.

• Investment

Buying a home is investing in your future, and the monthly repayments will contribute towards something that is yours instead of your landlord’s.

You’ll have an asset that can increase in value, and you can sell it or use the equity to buy a bigger property, downsize to fund a retirement or invest the profit.

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• Control

A fixed-rate mortgage makes it easier to control outgoing costs since you know exactly how much you owe each month.

When renting, you’re on the whim of the landlord, who can decide to increase your rent at any time.

Cons of Buying a Home

A few drawbacks of homeownership include:

• It’s a huge commitment

Buying a home is one of the biggest financial commitments you’ll ever make.

It will likely be your most considerable monthly expenditure for years, and you must be sure you can meet the monthly mortgage payments.

You may not have much left for other expenditures if you overstretch your budget, and if your circumstances change, you may struggle with repayments and even lose your home.

• Property market changes

The property market is volatile, and although the overall trend for properties is increasing in value, prices can also fall.

You might end up in negative equity if the prices fall too much and you find yourself with a property worth less than the mortgage.

• Additional costs

Owning a home comes with additional costs you must consider.

You’ll need to pay for insurance to cover the building and contents and protect your mortgage if something happens to you.

You’ll also be responsible for legal fees, Stamp Duty, Capital Gains Tax and maintenance or repair costs like fixing a leaking roof.

• Less flexible

Moving or selling can be time-consuming and difficult when you own a home, especially if you have a joint mortgage.

When you separate from your partner, taking over the mortgage or selling the property can be costly and complicated.

Legal and estate agency fees and moving costs can also be more prohibitive.

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Pros of Renting

Renting comes with various benefits that can suit your lifestyle, including:

• Flexibility

It’s easier to move quickly when renting, as most rental agreements are only six to 12 months long.

If you lose your job, change jobs or simply want to live in a different area, you’ll not face many barriers.

You can give your landlord notice, walk away, rent a smaller home, or temporarily move in with family or friends as you figure things out.

• Easier budgeting

You’ll only need a small deposit, and rental payments rarely change. You’ll know your rent each month, making it easier to budget.

• You don’t have to worry about property prices or maintenance

You’ll not be affected if property prices or interest rates go up or down.

You’ll also not be responsible for maintenance costs, and if something goes wrong, you can simply call the landlord to fix it.

• More choice

Renting allows you to live in a bigger house and nicer area than you could when buying.

Some desirable locations in the UK are out of reach for most buyers, but you can live in a sought-after area when renting.

Cons of Renting

A few disadvantages of renting include:

• You’re not investing in yourself

Renting involves making large monthly payments to your landlord’s mortgage instead of your own.

You can easily pay rent your whole life instead of becoming a homeowner.

• It’s becoming more expensive to rent

Renting has become more expensive than owning a home in terms of monthly accommodation costs.

According to the Home Let Rental Index, rents are historically high and will continue to rise throughout 2023.

• Rules

You must abide by the landlord’s rules when renting, and there could be restrictions on modifying the property or owning pets.

• Sudden changes

You’ll be at the landlord’s mercy, and they can make sudden changes that disrupt your life.

For example, they can decide to increase the rent and impact your budgeting or suddenly sell the property and force you to find somewhere else to live.

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Considerations When Deciding to Buy or Rent

Your situation will help you decide whether buying or renting is the right option.

A few things to consider include the following:

Do You Have Enough Deposit?

Difficulties saving for a deposit remain one of the biggest barriers to homeownership.

Although 0% deposit or 100% mortgages are available, they often come with various pre-conditions you must meet, including good credit ratings or having a guarantor co-sign the mortgage.

How Long Will You Stay?

If you expect circumstances to change, like moving jobs, renting may be more flexible and cheaper.

When you start paying rent, the deposit is cheaper than the initial cost of owning a home.

Can You Afford Repayments and Upfront Costs?

You must consider whether you earn enough to afford monthly mortgage repayments and the upfront costs of buying a home.

Such costs can include Stamp Duty, survey or valuation fees, solicitor fees, estate agent fees and moving fees.

The costs can vary, and you must weigh whether you can afford them before taking the plunge.

Is Buying Better than Renting UK? Final Thoughts

Buying a home can be a great way to secure your financial future, but renting can also be suitable if you can’t afford a property purchase, want more flexibility, or are not ready to settle down.

An independent advisor can help assess your circumstances and provide bespoke advice on the best way forward.

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’ll have various options when taking out a mortgage, including whether to be charged a fixed or variable interest rate on the amount you borrow.

One can be better than the other, depending on your circumstances.

This guide compares variable vs fixed mortgages in the UK to help you determine the right option.

What Is a Fixed-Rate Mortgage?

A fixed-rate mortgage offers a fixed interest rate for a certain period, and you’re guaranteed to pay the same amount every month.

Most fixed-rate mortgages involve two-year and five-year deals but can also last up to 10 years or longer, depending on the lender and the product you choose.

When the fixed-rate period ends, you’ll automatically move to the lender’s standard variable rate (SVR) unless you remortgage to a new deal.

The SVR can involve considerably higher rates than the rate you were paying in the fixed term.

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Benefits of a Fixed Mortgage

The main advantage of fixed mortgages is they give you certainty.

You know how much you’ll pay monthly for a set period since you’ve locked in the rate.

The fixed rate doesn’t change during the agreed period and will not be affected by changes in the bank of England’s base rate.

With rising interest rates and inflation, a fixed-rate mortgage can be more attractive as it guarantees you’ll pay the same monthly without worrying about unexpected changes.

Drawbacks of a Fixed Mortgage

Since the rate you pay doesn’t change, you risk missing out on potential reductions in interest rates and lower repayments.

If rates fall during the fixed term of the deal, you’ll continue paying more than necessary for months or years.

If you want to exit to a cheaper deal during the fixed term, you may have to pay early repayment charges, which can be very expensive.

What Is a Variable Rate Mortgage?

With variable-rate mortgages, the interest rate can change over time.

The rate you pay and the monthly repayments can go up or down, and different lenders can base such changes on different measures.

How and when it changes can depend on the type of variable rate mortgage you choose.

These include:

• Tracker Mortgage Rate – A tracker mortgage tracks the base rate of the Bank of England and always remains at a specified percentage point above the base rate. When the base rate increases, the tracker mortgage rate rises, and when it falls, the tracker rate decreases.
• Standard Variable Rate – The standard variable rate is the lender’s default rate. Each lender works out their SVR differently and is almost always higher than any of their other offers. It’s not tied to the Bank of England base rate, but it can reflect changes in the base rate, and the lender can change it at any time.
• Discounted Variable Rate – With a discounted rate, your interest rate will be at a set percentage below the lender’s SVR for a set period. For example, if the lender’s SVR is 5% and your mortgage runs at a 2% discount, you’ll get an interest rate of 2%. The discounted rate can run for two to five years, and you may pay a penalty if you wish to switch or pay off your mortgage within that time.

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Benefits of Variable Rate Mortgages

A potential advantage of variable-rate mortgages is the rate can go down since the interest rate is not set.

You can pay less for a mortgage than you would with a fixed deal and save money over time.

Variable-rate mortgages are also less likely to have early repayment charges, making it cheaper to switch your deal or pay off your mortgage entirely.

Drawbacks of Variable Rate Mortgages

The main disadvantage of variable rate mortgages is that they can go up at any time, making it more difficult to anticipate what you’ll pay and budget.

They usually involve higher rates than fixed deals, and you could make much higher mortgage repayments.

Most lenders pace certain collars on variable-rate mortgages to ensure the interest rate can’t fall below a certain percentage.

For example, if the collar is 1% and the interest rates fall to 0%, you’ll still pay 1%.

Are Variable Mortgages Better Than Fixed Mortgages?

The type of mortgage best suited for you will depend on your financial situation and how much risk you’re able and willing to take.

If you can’t afford the risk of your mortgage going beyond a certain amount, a fixed mortgage can provide you with more security.

However, if your finances can accommodate a rise in mortgage repayments, a competitive variable-rate mortgage can allow you to take advantage of low initial interest rates while offering the potential for reduced monthly payments if interest rates fall.

Taking current interest rates into account can help you decide whether or not you should fix your mortgage and for how long.

With inflation peaking at the end of 2022, thanks to increases in food and energy prices, the Bank of England base rate will likely go up to try and control the inflation levels.

Therefore, it’s an excellent time to fix your mortgage for two or five years and lock in a lower rate.

The low rate will be guaranteed, and your monthly payments will not change even when interest rates rise.

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How Do Costs of Variable Vs Fixed Mortgages Compare?

Most fixed-rate mortgages feature an upfront fee which can be called an arrangement fee, product fee, or completion fee.

They can range from £500 to £1,999, so you can’t afford to disregard them in your mortgage calculations.

You must also factor in the early repayment charge if you intend to repay early or make overpayments.

Sometimes the fee can make variable-rate deals more attractive since they may not have product fees or early repayment charges.

However, the rate can be much higher, and it can be worth paying the product fee for a fixed-rate deal, especially if you don’t intend on making overpayments.

Variable vs Fixed Mortgages Final Thoughts

Your circumstances and attitude toward risk will ultimately dictate the right type of mortgage for you.

A mortgage advisor or broker with experience in both mortgage types can provide bespoke advice on whether a variable or fixed mortgage is appropriate for your 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.

If you’re a young adult or low-income earner with family members or friends willing to help you financially, a joint borrower sole proprietor (JBSP) mortgage can help you get on the property ladder.

If you want to buy a property with the help of other people and retain sole ownership, read on to learn more about joint borrower sole proprietor mortgages in the UK.

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What Is A Joint Borrower Sole Proprietor Mortgage?

A JBSP mortgage allows you to share mortgage repayment responsibilities with one or more sponsors or additional borrowers, usually parents or close family members.

It enables multiple people to buy a property together, but only one person maintains ownership.

You can maximise your buying potential with a JBSP mortgage by using all parties’ combined income while maintaining 100% home ownership.

The other parties are not named on the title deed and have no legal claim over the property or any increase in its value.

JBSP mortgages allow people to help someone they care about buy a home or get a bigger and better property.

They’re suitable for young people who would otherwise need to save for many years to buy a house and can also be useful in helping elderly parents secure a mortgage with support from their children.

How Does A Joint Borrower Sole Proprietor Mortgage Work?

Although only one person owns the property, everyone on the mortgage is responsible for keeping up with repayments.

Some aspects of JBSP mortgages are similar to standard mortgages.

All borrowers are assessed, and their income and expenses are considered to determine affordability.

You can incorporate up to four applicants on a JBSP mortgage for a single property.

The more closely you all fit the lender’s eligibility criteria, the more generous they’ll be on their offer.

Such criteria can include income, creditworthiness and age limits like applicants not being over 70 or 80 at the end of the term.

While some lenders don’t have restrictions on who you can get a JBSP mortgage with, most require helpers to be family members.

This ensures you trust each other and have each other’s back since a JBSP mortgage involves joint liability.

If one of you can’t repay, the others are liable for covering the whole amount.

Therefore, ensure you only apply for a JBSP mortgage with someone you trust and who has excellent financial standing.

How Does A JBSP Mortgage Differ From A Joint Mortgage?

The critical difference is that, unlike joint mortgages, not all applicants on a JBSP mortgage will have ownership rights.

With joint mortgages, the applicants who get the mortgage own it together, and if the property is sold, the equity gets split between everyone.

With joint borrower sole proprietor mortgages, the other parties accept responsibility for repayments but have no legal claim to the property.

Only one person is listed on the title deed, meaning the people helping you with the mortgage will not get any money if you sell the property.

They can also avoid stamp duty surcharges on second properties.

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How Does A JBSP Mortgage Differ From A Guarantor Mortgage?

JBSP and guarantor mortgages allow family members and parents to help someone get on the property ladder without legally owning the property.

However, unlike joint borrower sole proprietor mortgages, where all applicants agree to contribute to mortgage repayments from the beginning, guarantors only become liable when you cannot keep up with repayments.

With guarantor mortgages, your family member or parent is only there as a plan B to convince the lender if you have shortcomings like credit issues or a small deposit and give them peace of mind in case anything goes wrong.

Advantages and Disadvantages of Joint Borrower Sole Proprietor Mortgages

Advantages

• Access To Better Deals

With help from other applicants, you’ll have a higher income and deposit, allowing you to access better and cheaper deals than you otherwise would.

You also have access to a better choice of properties.

• Independence

Since you’ll be the sole owner of the property, you can do what you want without asking for permission from co-applicants.

As your salary or income increases, the other parties can gradually reduce their repayments and allow you to take full responsibility for the mortgage.

• Additional Borrowers Can Avoid Stamp Duty

Additional 3% stamp duty surcharges are usually levied on second properties.

However, since the family member or parent helping you with the mortgage doesn’t have ownership rights on the property, they won’t have to pay any stamp duty or capital gains tax.

• Get a Mortgage With a Bad or No Credit History

If you have low credit scores or are yet to build up enough credit history, applying with others can be an excellent option to get approved quickly.

You can convince lenders by teaming up with someone with a good credit history and years of experience repaying loans on time.

Disadvantages

• All Applicants Face Credit Risks

All applicants will be affected equally by defaults, penalties incurred or missed payments.

Since everyone is jointly and severally liable, all your credit histories will be affected if no one makes the monthly repayment.

• Lack of Ownership

Being responsible for repayments but not having any rights or equity on the property isn’t an attractive offer for everyone, especially if the owner makes irresponsible decisions about the property.

Money can easily cause arguments and put a strain on relationships.

• Age Limits

JBSP mortgage deals come with age limits on when the loan should be repaid, making it challenging to qualify if potential sponsors or parents fall outside the accepted age range.

Even if you choose a shorter term to accommodate advanced ages, it will likely come with higher repayments.

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How Much Can You Borrow With A JBSP Mortgage?

Similar to standard mortgages, lenders allow you to borrow up to 4.5 times your income with JBSP mortgages.

However, you’ll be able to combine your incomes and borrow more.

For example, if you earn £15,000, you can only borrow £67,500 (£15,000 x 4.5) alone.

Assuming you and the co-applicants earn £30,000 combined, you can borrow £135,000 with a JBSP mortgage.

Joint Borrower Sole Proprietor Mortgage Final Thoughts

Joint borrower sole proprietor mortgages are niche products not offered by most lenders.

Consulting a qualified mortgage adviser can ensure you get access to direct lenders offering JBSP mortgages, bespoke guidance suitable for your situation and help in the application 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.

If you want to reduce your monthly mortgage repayments and have a solid repayment strategy to pay off the mortgage later down the line, moving from a capital repayment to an interest-only mortgage can be the right move.

This guide explores everything you need to know about switching to an interest-only mortgage in the UK.

What Is An Interest Only Mortgage?

With an interest-only mortgage, you only repay the interest on your mortgage every month throughout the term.

Your monthly repayments will be significantly lower than repaying capital and interest together, and it’s an excellent way to keep costs low throughout the mortgage duration.

However, you’ll owe the full amount you borrowed at the end of the mortgage term.

You’ll need an effective repayment strategy or plan to repay the lender the original capital as a lump sum, and the lender will need to agree with it as part of the application process.

Most lenders allow various repayment strategies, ranging from reselling the property to savings and investments.

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Can You Switch To An Interest Only Mortgage?

Yes. Most lenders will let you switch to an interest-only mortgage if you’re on a repayment or capital and interest mortgage, provided you can meet their criteria.

Things that lenders will consider when making their decision include:

Your Repayment Strategy

The repayment strategy is a plan you’ll need to cover the final balance you’ll owe the lender at the end of the mortgage term.

You’re responsible for having this plan in place when taking out an interest-only mortgage, and the lender must approve it.

You must also maintain the repayment strategy throughout the loan term, ensuring you remain on track to repay what you borrow.

The best repayment strategy will depend on your situation and your lender, with options including a remortgage, selling the property, investments that generate cash, or saving each month.

Each lender will have different criteria, but you’ll need to show proof that your plans are realistic.

Some lenders may not accept certain repayment strategies and may not allow you to switch.

Equity

Lenders will carefully consider your equity or how much of the property you own outright.

Generally, interest-only mortgages tend to have a lower loan-to-value (LTV) rate than repayment mortgages.

The LTV expresses the percentage you own vs the percentage you still owe the lender as a percentage.

You must have enough equity to meet the lender’s minimum equity requirements.

If your LTV is high, you may have to wait until your equity increases or the property’s value increases before switching to an interest-only mortgage.

Income and Credit History

Most lenders have high-income requirements for interest-only mortgages, and you may need to be earning at least £75,000 for them to allow you to switch.

However, some lenders don’t have any minimum income requirements.

Like other mortgages, lenders will also scrutinise your credit history when deciding whether you can switch.

Interest-only mortgages are riskier for lenders since they must wait for many years before you repay the actual loan.

They’ll consider your credit history more carefully to determine how you handle money and whether you repay your debts on time.

Is Switching To An Interest Only Mortgage Right for Me?

An interest-only mortgage may not be suitable for most people because you need a reliable repayment strategy to make it work.

Here are a few benefits and drawbacks of switching to consider when making your decision:

Benefits

• Low Monthly Repayments

You’ll only make low monthly repayments since you’re only paying off the interest instead of the loan itself.

It’s one of the biggest advantages of switching and can be beneficial if you’re struggling with monthly repayments.

• Temporary Switch

Some lenders allow temporary switches to interest-only repayments, making things easier in periods of financial difficulty. It can lower your monthly repayments for a short period, usually 1 to 2 years.

• Flexibility

You’ll have the flexibility to choose what to do with your money with an interest-only mortgage instead of tying it up in the property.

You can invest what you’re saving monthly and make profits, especially if the interest rates are low.

Drawbacks

• High Risk

Even with a well-planned repayment strategy, there’s always the risk of not ending up with the money you need to clear the loan at the end of the mortgage term.

You’ll need a huge sum to repay the loan in a lump sum, and things can get tricky if your repayment plan performs poorly or falls through.

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• Negative Equity

In case the value of your property drops, you’ll end up repaying a bigger loan than what your property is worth, which is referred to as negative equity.

You’ll have a greater risk of negative equity with an interest-only mortgage than with a repayment mortgage because you’re not reducing the value of your debt, only the interest.

• You’ll Repay More Overall

Although an interest-only mortgage is an excellent way to keep costs low, you’ll pay more overall interest than a repayment mortgage.

Mortgage interest is charged on the total amount you owe, and since the amount you owe doesn’t reduce, the interest you pay over the full term will not change either.

Interest Only Mortgage Alternatives

If you’re struggling to afford a capital repayment mortgage or you want to save money on immediate monthly outgoings, there are other options to consider before switching or if you don’t qualify for switching.

These include:

Mortgage Holidays

Also called a payment deferral or freeze, a mortgage holiday allows you to take a break from your monthly repayments for some time.

It can also involve reducing your monthly repayments, usually for a short period, like three months.

Part and Part Mortgage

This type of mortgage involves paying part of the mortgage on an interest-only basis and part of it on a repayment basis.

However, you may still pay more interest, and although the amount due at the end of the term can be lower, you’ll still need a repayment strategy to cover it.

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Switching To An Interest Only Mortgage Final Thoughts

If you’re considering switching to an interest-only mortgage, consult a mortgage adviser before taking the plunge.

They can offer tailored advice that suits your unique situation, help you with the application process and provide alternative solutions if you don’t qualify.

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 employment or job role and income are essential considerations of any mortgage application, and changing jobs after mortgage approval can complicate things.

The lender will need to reassess their view on lending to you, and depending on how your affordability has been affected, you may continue with the agreement, or the provider may withdraw it.

Here’s everything you need to know about changing jobs after mortgage approval.

Why Does Changing Jobs After Mortgage Approval Matter?

Changing jobs can mean your situation differs from when the lender assessed you and approved you for a mortgage.

Lenders want to be sure you can still afford to make mortgage repayments on time, which can be affected by changes to your stability and income.

Changing jobs can make you a risky borrower in a few ways, including:

Your Income Can Change

Your income is factored into your affordability, and if your new job has a different salary or income, you may not be able to afford repayments.

You may have previously proved your income to get approved, but that may no longer be true.

A decrease in income can invalidate the lender’s calculations and take you back to square one.

However, if your income remains the same or increases, you may convince the lender to continue with the mortgage.

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You’ll Likely Be On Probation

Your new job will likely include a probation period, and an employer can abruptly let you go.

The less time you’ve been in a position, the less likely lenders will view you as a stable borrower.

Lenders assess probation periods on a case-by-case basis, and your job security can determine whether or not you get a favourable outcome.

For example, if you’re a specialist in your industry, the lender will likely view the job as secure even if you just started because it can be challenging to replace your skillset.

However, if you’re in low-skilled or unskilled work, your job security can be questionable since your role can be easy to fill if you fail the probation period.

You Face A Higher Redundancy Risk

Thousands of workers are made redundant every year, and although it’s uncommon, it can crop up from time in different industries.

If your employer is forced to make redundancies and you just started a new role, you’ll be most at risk as the newer employees are usually the first to go.

The longer the probation period, the higher your risk, and lenders may not view you favourably since there’s a more extended timeframe where you can be let go.

Should I Inform The Lender When Changing Jobs After Mortgage Approval?

Yes. You have a duty of disclosure from the moment you apply for a mortgage up to mortgage completion when the house sale goes through and you get the keys.

This means you have a legal obligation to inform your mortgage lender of all changes that can impact your application or affordability.

Some lenders can even perform random checks to ensure nothing can affect their decision, so they’ll likely find out about your job change and will probably not consider it favourably if you were hiding it.

It’s recommended to inform your lender when changing jobs after a mortgage approval, especially if the change means you may face financial difficulties that make it challenging to repay the mortgage on time.

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Are Some Job Changes After Mortgage Approval Unacceptable?

Yes. Although affordability is the most important factor, some job changes can make it riskier for the lender to loan you.

For example, if you change from employment to self-employment after a mortgage approval, the lender can withdraw the approval as it’s considered a higher risk.

If the job change makes it difficult for the lender to understand your income or involves variable income, it can be tricky for the lender.

The nature of your income and how you earn your money can be primary concerns since lenders need to discern a baseline and conduct an affordability assessment.

Most lenders will only consider self-employed income if you’ve worked for 12 months and filed tax returns which can give an idea of your income.

If your new job relies heavily on commission, lenders will consider this as less stable, even if you’re making a higher income than a fixed salary.

If your new salary includes bonuses contingent on meeting in-job requirements, lenders may not consider them in the affordability assessment.

If the new job is on a fixed-term contract basis, the lender may not view you favourably since your job will end after a certain period and you can be let go without notice.

What To Do When Changing Jobs After Mortgage Approval

Start by compiling as much documentation for your new job as possible to provide evidence and inform the lender of the job change.

This includes copies of your offer of employment, salary amount, contract and other documentation around remuneration or bonuses.

If you have a similar or better job, you’ll likely be able to continue with the mortgage since you should be able to afford the monthly mortgage repayments.

Even if your income or salary decreases but you can prove comfortable affordability, your approval will not get affected.

The mortgage offer will only be withdrawn if the job change puts you in a drastically different situation. You may not get that particular mortgage, but you can likely qualify for another mortgage.

However, this involves starting the process again and waiting around three months to pass the probation period and accumulate enough payslips to prove your income is stable.

When changing jobs after mortgage approval, the outcome will largely depend on your circumstances, and the lender will consider all the information you present before making a final decision.

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Changing Jobs After Mortgage Approval Final Thoughts

Changing jobs after mortgage approval can be risky for you and the lender and require a reassessment of whether or not you can continue with the initial agreement.

Don’t forget to consult your mortgage broker or advisor and inform them of the changes.

They can give you practical solutions to any problems your job change can cause and even find products that fit your changes if necessary.

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

Yes. You can add someone to a mortgage with your existing provider or when remortgaging with a new mortgage provider.

It can seem complex, but it can be straightforward with the right expertise and support.

This guide explores everything you need to know about adding someone to a mortgage in the UK.

How Do I Add Someone To A Mortgage?

Adding someone to your mortgage isn’t simply about changing the names on the mortgage with your lender.

You must apply to have the other person’s name added by filling out some forms so the lender can check their details.

The legal process of adding someone to a mortgage is called equity transfer and can be done in two main ways:

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Adding Someone To Your Current Mortgage

If you’re adding someone to a current mortgage, you’ll need to approach your existing lender to arrange it.

The lender will run you through a similar process to a new application, and the person you’re adding will be subject to standard income and credit checks before the lender can add them to the mortgage.

The person you’re adding will be jointly responsible for the mortgage repayments, and the lender must ensure they can afford them.

The application can easily get approved if they meet the lender’s criteria since having two people on the mortgage is better than one.

However, your current lender isn’t obligated to add someone else if they don’t meet the criteria, no matter how well you’ve managed the mortgage.

A solicitor may need to be involved when adding the new name to the title deed, and the lender can charge a fee for processing the request.

Remortgaging To A Joint Mortgage

Another option is remortgaging, where you sign up for a new mortgage policy with your current lender or a different one.

You can remortgage by applying for a new joint mortgage with the person you want to add.

It will be like a new mortgage application involving property valuation, income assessment, and credit and affordability checks.

Consulting a mortgage adviser with whole market access before remortgaging can ensure you get the best deal available for your circumstances.

They can compare different lenders and mortgages and even help with your application, saving you time and effort.

Which Is The Best Way To Add Someone To A Mortgage?

Whether remortgaging or adding someone to an existing agreement is the right move will depend on a few circumstances.

One of the major issues is whether or not you’re on a deal subject to early repayment charges (ERCs).

If you’re tied in a fixed term or incentive period with your lender, you’ll pay a hefty ERC that can reach thousands of pounds if you leave the mortgage before the end of the period.

The cost may not be worth remortgaging with a new lender, so it can be better to add the other person to your existing agreement through a transfer of equity.

However, remortgaging will be more suitable if you’re not tied to a fixed term.

Remortgaging allows you to compare different deals available from different lenders and get favourable rates that can save you tons of money.

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Considerations When Adding Someone To A Mortgage

A mortgage is a significant commitment, and there are a few things you need to consider before you add someone to a mortgage.

These include:

The Relationship Status

If you’re in a civil partnership or marriage, then there’s no need to add your partner to your mortgage.

When it comes to married couples, it doesn’t matter whose name the property is under since you’ll both have a claim.

If the deed holder dies, the property automatically passes from one spouse to the other.

If you’re not married but want to own the property with your partner jointly, you’ll need to add them to your mortgage.

However, it’s wise to protect your investment if you initially bought the property before meeting them and have built up significant equity over the years.

Circumstances can change anytime, and you may not feel happy about your partner getting half of the equity you worked hard for after a breakup.

You can add your partner to the mortgage and still protect your equity through a tenants in common arrangement.

It allows you to define the share of the property each person will own from the outset instead of automatically dividing it 50/50 as a joint mortgage would do.

Legal Work

Legal advice is essential before adding someone to your title deeds and mortgage.

There are wider implications to consider, including tax, inheritance and what should happen in case of a separation.

You’ll need the help of a solicitor to work out all the legal details.

The solicitor will need to get a copy of the title from the Land Registry to add a name to the property deeds and create a transfer deed that you and your partner will sign in front of a witness.

They can also help you prepare documents to protect your equity if you’re not married.

It can include a deed of trust stating what you’ll each own or a cohabitation agreement with arrangement for property and finances while living together or when you split up, die, or get ill.

Credit Association

Your partner’s credit score will be associated with yours when you get a joint mortgage, meaning their financial information will show up on your credit report.

You may not need to worry if they have a good credit score, but you’ll probably want to avoid linking your score to theirs if it’s bad.

This is because it will reflect negatively on you and make it difficult to borrow in future or remortgage your property.

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Can You Add Someone To A Mortgage? Final Thoughts

If you’re thinking about adding someone to your mortgage, start by getting legal advice from a solicitor.

They’ll advise you on how to protect yourself and any kids involved.

Also, check whether your existing deal has an early repayment charge and how much it would cost before deciding whether to add someone to your existing agreement or remortgage to a joint 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.

A mortgage offer usually lasts between 3 and 6 months from the day it’s issued.

The mortgage offer’s length can vary from lender to lender, and knowing how long it’s valid can help you make the necessary plans to finalize your home purchase.

Read on to learn more about mortgage offers in the UK.

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What Is a Mortgage Offer?

A mortgage offer is a formal document or confirmation that the lender will lend you the agreed amount needed to finance your home purchase.

It’s a binding contract between you and the mortgage lender.

You’ll only get a mortgage offer after you have completed your mortgage application and the lender has assessed your circumstances, including income and ability to afford mortgage repayments.

The mortgage lender will also conduct a valuation of the property you plan to buy to ensure the mortgage loan is equal to the property’s value and you’re paying a fair price in line with the market average of similar properties.

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How Long Will I Wait for A Mortgage Offer?

It can take around 2 to 6 weeks to receive a mortgage offer after you accept an agreement in principle and complete the application.

The lender will conduct underwriting checks during this period, including an in-depth assessment of your credit history and financial situation.

The lender will ask for information like:

• Payslips for the last three months from your employer
• Proof of identity like a driver’s license or passport
• Bank statements from the last three months
• Copies of utility bills from the last three months
• A P60 form from your employer

Depending on your situation, the lender may require other documents.

For example, if you’re self-employed, you may need to provide accountant-certified business account statements and SA302 tax returns for the last two years.

If you rely on benefits like universal Credit or disability allowance, you’ll need to prove that it’s a long-term income source.

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How Does a Mortgage Offer Differ from A Mortgage in Principle (MIP)?

A mortgage in principle (MIP) is a theoretical mortgage offer that helps guide you in your search for a suitable property.

It’s also called an agreement in principle or a decision in principle and is provided after you apply for a mortgage and pass the credit check and lender’s eligibility requirements.

The MIP is a written statement from the mortgage lender outlining how much they can lend you to buy a property.

Since it’s not an actual mortgage offer, it gives you an idea of the deal you can obtain if you commit to a full application.

A MIP is useful in convincing estate agents and sellers you have a serious intent on buying the property.

Unlike a mortgage offer, a MIP usually lasts 30 to 90 days after it’s issued. It doesn’t guarantee that you’ll receive a mortgage offer and the interest rate, term, amount and mortgage features are all subject to change at this stage.

The MIP can simply be a gateway to the next stage, and you don’t even need to apply for a mortgage with the same lender you get the MIP from.

What Is Included in A Mortgage Offer?

A mortgage offer confirms the amount the lender is willing to give you, the term you need to repay and the interest rate.

It’s a big step in the right direction on your journey to owning a home and will contain information like the following:

• Your details like name, address and age
• Information about the property you intend to buy
• Important details on the financial commitment you’re about to make
• Details of the consequences of failing to make repayments

What Happens After Receiving a Mortgage Offer?

You’ll get an official period of reflection after receiving the mortgage offer to consider the terms and decide whether to accept, usually around 7 days.

You can cancel at this stage, but it may cost a fee. Once you’ve accepted the offer, you can move on to the next stage, which involves exchanging contracts.

Before exchanging contracts, a few things must happen, including agreeing on fittings and fixtures, ensuring you’ve done a building survey and having building insurance.

You must also ensure you have the finances ready to complete the transaction, including your deposit and mortgage offer.

The process also involves a lot of legal stuff or conveyancing before you can buy the house.

You can only proceed with exchanging contracts or legally committing to the house purchase and getting the keys to your home after your solicitor’s and the seller’s solicitors are happy with the transaction.

The length of the mortgage offer provides enough time to complete the legal stuff before it expires.

What Should You Do When a Mortgage Offer Expires?

Sometimes issues like unexpected delays can make it impossible to complete a sale before the mortgage offer runs out. Start by contacting your mortgage provider as soon as possible.

Most lenders are understanding and can offer you an extension on the mortgage offer.

However, you must contact the lender before the mortgage offer expires since they may require a few weeks to sort things out, which can involve additional fees.

Extensions can last around one month, allowing you to complete the purchase of your new property.

If you wait too long to notify the mortgage provider of the delay or they’re not willing to offer an extension, you’ll need to reapply for a mortgage.

If your situation hasn’t changed, you’ll likely get approved for a new mortgage quickly.

You’ll go through the same checks again but may have to pay the solicitor again and arrange another valuation.

How Long Does A Mortgage Offer Last? Final Thoughts

Getting a mortgage offer is a significant milestone when buying a house, but there’s still work to do before completion.

The clock starts ticking as soon as you get the offer, and you must ensure you complete the purchase within 3 to 6 months or your lender’s specific timeframe before it expires.

An extension is better than a new application if a delay is unavoidable, especially if your situation has changed.

Ensure you consult a mortgage advisor or broker to help you navigate the process and even get you an extension if needed.

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 credit scores can impact the deal you get from a lender, mortgages have no minimum credit score.

The notion that you need a specific credit score to qualify for a mortgage is a misconception because credit scores can vary considerably, and credit checks are only one part of the mortgage application assessment.

Read on to learn more about credit scores and mortgages in the UK.

What Is A Credit Score?

A credit score is a numeric rating that measures your likelihood of repaying a loan on time.

It simply shows how reliable you are at borrowing money and is created by credit reference agencies using a scoring model based on the information in your credit report.

Your credit score can vary as agencies and lenders use different scoring systems or models.

The credit score can also depend on the data used to calculate it, the source of the data used, the type of loan product the score will be used for, and even the day it was estimated.

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Factors usually considered by credit scoring models include your bill-paying history, any current unpaid debts, the number and types of loans you have, how long you’ve had a loan and whether you’ve had debts sent to collections, bankruptcies, and foreclosures and how long ago.

Do I Need A Minimum Credit Score For Mortgages?

No. You can get a mortgage with any credit score.

There’s no set credit score that will make you automatically eligible or ineligible for a mortgage because each lender will interpret your credit history differently.

Additionally, getting a mortgage will depend on more than your credit score.

Lenders will use your credit score as part of the mortgage application assessment.

A good credit score will give the lender the impression that you’re a reliable borrower and can repay the mortgage on time.

This will give you access to more lenders and make it easier to unlock better deals, but there is no guarantee.

You can have the best credit scores and still get declined for a mortgage because other factors affect your chances.

Low or bad credit scores can make it challenging to get approved, but it’s still possible with a robust application.

Every lender is different, and what is considered a good credit score by one lender can be average or insufficient for another and vice versa.

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Which Credit Reference Agencies Do Mortgage Lenders Use?

Mortgage lenders in the UK use three main credit reference agencies:

Experian, Equifax, and TransUnion.

Although all the agencies use similar information to produce your credit score, the scores can be slightly different.

Lenders may use one of the credit reference agencies or a combination when making their assessment.

For example, if you have different scores in each agency, the lender can use the middle score to assess your application, and if two agencies agree on your score, the lender may use that score in the assessment.

It can help to check each credit report and know which agency you have a better score with and which lenders work with who.

What Are The Different Scoring Systems?

Each credit reference agency uses a unique scoring system that ranges from very poor to excellent.

Although no specific score guarantees you a mortgage, you’ll be in a better position with higher credit scores.

The table below outlines the rating score for each agency.

 

Agency	Very Poor	Poor	Fair	Good	Excellent
Experian	0-560	561-720	721-880	881-960	961-999
Equifax	0-279	280-379	380-419	420-465	466-700
TransUnion	0-550	561-565	566-603	604-627	628-710

 

To access the best mortgage deals and rates, you should try and get your credit score into the excellent category.

What Information Do Credit Reference Agencies Use?

Credit reference agencies hold information about you in a credit report or file and usually involve your finances and borrowing details.

It can include:

• The electoral roll shows how long you’ve been registered to vote at a given address. It can help prove your name and address to the lender so they can quickly identify you.
• The duration you’ve stayed at your current address and previous addresses. It can help to show stability in your life and reassure the lender.
• Credit agreements or borrowings. It helps show the amount you borrowed, the lender, and repayments. It will also show the repayments you missed.
• Public records like bankruptcies, county court judgements, debt relief orders, IVAs, and administration orders.
• The number of credit applications shows how many times you’ve applied for loans and the frequency. If you’ve applied many times within a short period, it can show that you don’t manage your finances effectively.

It’s recommended to look out for errors on your report, like incorrect borrowing figures, the wrong address or missing payments.

Fixing such errors can quickly improve your credit score.

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How Can I Improve My Credit Score?

While one-off actions like correcting errors on your report or registering on the electoral roll can improve your credit score, long-term credit use is the most effective way to improve your scores.

You may think that shying away from borrowing can show you’re good with money, but it can reduce your credit score.

Without a record of your borrowing, lenders will not know how reliable you will be with repayments. A few things you can try to improve your credit score include:

• Taking out a credit card and spending and paying off a small amount monthly to show lenders you can manage your credit responsibly.
• Paying off debts to improve your debt-to-income ratio
• Closing any old credit cards, you no longer use
• Encouraging anyone you share a joint account with to work on their credit
• Avoid applying with multiple lenders at once

Can I Apply For A Mortgage With Bad Credit Scores?

Yes. You can still get a mortgage with bad credit scores, usually rated as poor or very poor.

However, you’ll need access to specialist lenders who focus on your affordability instead of your credit score.

You may also need a bigger deposit and can get higher interest rates than someone with good credit scores, so it may be worth improving your credit score before applying.

Minimum Credit Score For Mortgages UK Final Thoughts

There is no minimum credit score for mortgages in the UK, but good credit scores put you in a better position for attractive mortgage deals and rates.

Consult a mortgage adviser if you’re unsure whether to apply or improve your credit score first.

They can provide personalised advice based on your situation and help you apply with the best lenders.

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

Looking for the right mortgage can feel overwhelming as new products and lenders pop up daily.

Working with an experienced mortgage adviser can make things easier and ensure you get the most competitive deal, thanks to their expert knowledge of the mortgage market.

However, you must be prepared before approaching any adviser to ensure you get the best advice and assistance.

Here are a few questions to ask a mortgage adviser in the UK.

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Do You Have FCA Authorisation?

It’s important to ensure the mortgage adviser has the required credentials before dealing with them. Not just anyone can legally give mortgage advice.

Mortgage advisers in the UK must be authorised and regulated by the Financial Conduct Authority (FCA).

The FCA reviews and assesses advisers to ensure they’re suitable and qualified to advise on mortgages with no previous bad history.

It evaluates them regularly and checks if they’re following the set procedures and guidelines, like finding the right deals for borrowers, fair treatment and not making recommendations based on their interests.

You can even be entitled to compensation if a regulated adviser recommends the wrong deal.

The lender may not be authorised directly but can be an agent of a regulated firm.

You can search the name of the adviser or firm in the FCA register to check if they’re regulated, what they can do and your protections when dealing with them.

Do You Have Whole-Of-Market Access?

Once you know the adviser is authorised to provide mortgage advice, it’s important to ask them if they’re giving you advice on mortgages from the whole market or only a few lenders.

The types of advisers available include those tied to specific lenders, those who consider deals from a limited pool of preferred lenders and those who search the entire market for the widest range of products.

Advisers dealing with only a few lenders may not be able to get you the best deal, meaning you can end up paying more than you need to in interest every month.

It can easily range from hundreds to thousands of pounds every year and accumulate to a small fortune over the lifetime of your loan.

What Are the Charges for The Services?

Mortgage advisers can charge you a fee, work on a commission basis where they get a cut from the lender and don’t charge you or a combination of the two.

Depending on the service and type of mortgage you’re after, some can charge differently.

If it’s a simple process like remortgaging, you may get a lower fee, while first-time mortgages involving more work can attract higher costs.

Others can charge a fee for the first mortgage only and agree to arrange subsequent remortgages or mortgages free of charge.

Most online mortgage advisers are usually free but only choose those who search the whole market.

Even if you do pay for assistance, it’s typically minimal compared to the time and money you save in the long run.

How Much Am I Eligible to Borrow?

A good mortgage adviser will ask you some questions about your job, income and outgoings to establish how much you can borrow.

They’ll also look at your credit history, which can impact how favourably lenders look at you.

Most lenders allow you to borrow multiples of your income depending on your affordability.

If you have many debts and bills each month, you’ll likely be limited on how much you can borrow as the lender will think you don’t have much to spare to afford monthly mortgage repayments.

Your adviser can guide you on the best action plan if you can’t borrow the amount you want, such as waiting and saving a larger deposit or adjusting your property search criteria.

They can also arrange a mortgage in principle (MIP) from an actual mortgage lender, so you know how much you can borrow.

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How Much Deposit Do I Need?

Lenders have different deposit requirements determined by the minimum loan-to-value (LTV) ratio they’re willing to accept.

LTVs of 85% to 90% are common for residential mortgages meaning you’ll need a deposit of 15% or 10% of the property value.

Some lenders can even accept 5% deposits depending on your situation, but they can feature higher interest rates.

Generally, the more you can put down as a deposit, the better the deals your mortgage adviser will be able to get for you.

A high deposit demonstrates greater commitment, making it easier for lenders to trust you.

What Type of Mortgage Is Suitable for Me?

The mortgage adviser can help guide you on the best type of mortgage for your situation.

Most people use standard repayment mortgages to purchase a home, which involves repaying a portion of the interest and loan amount each month until you clear the debt by the end of the loan term.

You can also choose an interest-only mortgage where you only pay off the interest each month, so monthly repayments are lower.

However, you’ll owe the entire capital at the end of the mortgage term and must repay it in one lump sum.

You can also ask your adviser about other types of mortgages like discounted, offset and tracker mortgages.

The adviser can also help you decide on a suitable loan term based on your finances.

Mortgage terms usually range from 10 to 40 years. The longer the term, the lower the monthly repayments, but you pay more interest in the long run.

Should I Fix My Mortgage, and For How Long?

Fixing your mortgage can protect you from future interest rate rises and ensure your mortgage repayments don’t change because of interest rate changes.

A fixed-rate mortgage offers a fixed interest rate for a certain period, and you’re guaranteed to pay the same amount every month.

Most fixed-rate mortgages involve two-year and five-year deals.

Two-year fixes are cheaper and usually provide more freedom and access to the best rates on offer.

The adviser can guide you on the best option for your circumstances.

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Questions To Ask a Mortgage Adviser Final Thoughts

Knowing what to ask your adviser can ensure you get the best guidance and assistance for your situation.

Only choose regulated advisers with access to the whole mortgage market to ensure you’re safe and can get the best deals when purchasing 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.

Fixing your mortgage can ensure peace of mind and protect you from the higher costs of future interest rates.

Deciding whether to fix the interest rate and for how long is a big decision when applying for a mortgage since it will determine the costs of your monthly repayments.

Read on to learn more and ensure you make an informed decision when deciding whether you should fix your mortgage.

Why Should You Consider Fixing Your Mortgage?

A rise in interest rates can be scary for many borrowers.

A fixed-rate mortgage can protect you from future rate rises and ensure your mortgage repayments don’t change because of interest rate changes.

A fixed-rate mortgage offers a fixed interest rate for a certain period, and you’re guaranteed to pay the same amount every month.

Interest rates in the UK have been rising since 2021, and with inflation still high, more interest rate rises are likely.

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This will impact the mortgage market and result in higher mortgage rates, meaning your monthly repayments will go up if you don’t fix your mortgage beforehand.

Fixed-rate mortgages are a common type of home loan in the UK.

They allow borrowers to know exactly how much they’re paying each month without worrying about unexpected changes.

How Long Should I Fix My Mortgage For?

You can choose to fix your mortgage rate for 1, 2, 3, 5, 7, 10, or 15 years.

One-year and 15-year fixes are rare, with most fixed-rate mortgages involving two-year and five-year deals.

Two-year fixes are cheaper and usually provide more freedom and access to the best rates on offer.

Some lenders can set an initial lower fixed interest rate for some time as an incentive to encourage you to apply.

If you can get a new incentive period or deal at substantially lower rates than you’re currently paying, you can save money by switching or remortgaging, especially if there are low or no early repayment charges.

Two-year deals are suitable if you want to switch deals regularly or are considering moving home soon.

A five-year deal can protect your mortgage for longer, but it will be more expensive.

It’s harder for lenders to predict what will happen in the market over a longer period, so the longer you fix your mortgage, the higher the interest rate will be.

Consider how long you want to commit to a deal and whether your circumstances are likely to change soon.

Fees On Fixed Rate Deals

You need to look out for various charges when comparing fixed-rate mortgage deals. These include:

Early Repayment Charges

If you want to exit the deal before the end of the fixed rate period, the lender can charge a financial penalty known as the early repayment or redemption charge.

The charges are usually set as a percentage of the outstanding balance and can be quite expensive, especially in the early years of the fixed-rate period.

For example, early repayment charges can start at around 5% or 2% of the balance for five-year and two-year fixes in the first year and reduce by 1% each year after that.

If you’re likely to move house before the fixed-rate period ends, you’ll want to consider a shorter-term fixed-rate deal or deals with low or no early repayment charges.

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Up-front Fees

Lenders can charge an upfront fee for a fixed-rate mortgage, which can be an arrangement fee, product fee, or completion fee.

Most lenders charge around £999, but some deals can feature fees as high as £1,499 or £1,999.

Fixed-rate mortgage deals with zero upfront fees are also available, but they usually feature higher interest rates.

Sometimes deals with higher interest rates and zero upfront fees can work out cheaper over the fixed term, so ensure you compare your options.

Overpayment Fees

Lenders can set how much you’re allowed to overpay each year on an ad hoc basis or in regular overpayments.

Most fixed-rate mortgage providers allow you to overpay up to 10% of the balance yearly, and if you exceed this amount in the period, you get an early repayment charge.

What Should I Do When The Fixed Rate Period Ends?

Your lender will transfer you to a standard-variable rate (SVR) mortgage when the fixed-rate period ends.

With SVR mortgages, lenders can increase or decrease mortgage repayments at any time.

Most lenders move in line with the Bank of England’s base rate, so if it goes down, your repayments decrease, but if it goes up, your repayments increase.

However, lenders aren’t required to mirror the Bank of England’s base rate and can move it whenever they want.

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SVRs tend to be more expensive with a higher rate than you would get for a fixed rate period.

It’s not uncommon for SVRs to double the rate you had on the fixed-rate period and considerably impact your monthly payments.

Therefore, it’s important to remortgage to a new deal before you’re transferred to the SVR.

You can arrange it with your current lender or a new provider as much as six months before your fixed period is due to end.

Are Interest Rates Likely To Change?

Taking current interest rates into account can help you decide whether or not you should fix your mortgage and for how long.

With inflation peaking at the end of 2022, thanks to increases in food and energy prices, the Bank of England base rate will likely go up to try and control the inflation levels.

Therefore, it’s an excellent time to fix your mortgage for two or five years and lock in a lower rate.

The low rate will be guaranteed, and your monthly payments will not change even when interest rates rise.

Should I Fix My Mortgage? Final Thoughts

Now is a great time to consider fixing your mortgage before further increases in the base rate come into force.

You’ll be able to lock in lower rates for the entire fixed-rate period, so you know exactly how much you’re paying each month.

Ensure you consult an independent mortgage broker who can help you find the best deals and guide you through the entire 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.