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Frequently Asked Questions
Mortgages
- Why use an Independent Mortgage advisor?
- How much will I be able to borrow?
- What is the mortgage term?
- What is exchange of contracts?
- What is mortgage completion?
- What is a Standard Variable Rate(SVR)?
- What is Annual Percentage Rate(APR)?
- Do I have to have buildings insurance to get a mortgage?
- Do I have to have life insurance to secure a mortgage?
- What are the total costs and charges associated with the mortgage process?
- How much will I need to put down as a deposit?
- How do I protect and improve my credit score?
- How do I find a solicitor?
- Who is responsible to pay the estate agent's fees and how much is it?
- I am a Foreign National; Can I buy property in the United Kingdom?
- Please submit a query for any other questions you might have!
Considering the possible savings that can be achieved by finding a lower interest rate or the increased costs and payments associated with the wrong product, mortgaging is not to be taken lightly and must be seen as an opportunity. Relying on your independent advisor will ensure that you have a professional person searching the entire market for the best possible deal. Your advisor will negotiate with the bank and do the application on your behalf and guide you through the maze of products and potholes. Using specialised software systems, only available to independent advisors, we can search the entire market and compare mortgages to the last detail. We are regulated by the Financial Services Authority (www. fsa.gov.uk) which means we adhere to the highest standards set by them and in most cases we exceed their requirements.
The amount you will be able to borrow is determined mainly by your income and your expenditure. The process for determining this amount varies from lender to lender, but normally you can borrow between 3 and 5 times your income on a single application and 2 and 4 times your income on a joint application. It is possible to ad up to four applicants on one mortgage. Other factors that can affect your success are your residential status and the amount of deposit you have available to put down. Affordability has become a major measurement tool for banks in determining whether you will qualify for a mortgage and how much they will lend to you. Your credit record also plays a significant role in the success of your application and which mortgage product you will qualify for. Where possible, manage and protect your credit record at all times as it is a valuable asset.
The mortgage term is term chosen over which the property will be to be repaid in the case of a repayment mortgage. A normal mortgage term would be 25 years, but this can be changed to suit your requirements. As an example, if you are closer to retirement, your mortgage term will be reduced to reflect this fact.
Exchange of contracts occurs when all the outstanding mortgage and property requirements are met and both parties' solicitors are satisfied to exchange contracts. Exchange is the physical exchange of contracts by both the seller and buyers' solicitors. At this stage you will also be expected by your solicitor to provide proof of buildings insurance if you are buying a freehold property and any life insurance taken out to cover the outstanding debt will have to be placed on risk. After exchange you are the owner of the property.
The official date for completion of a sale of a house, when keys are actually transferred.
Each bank will usually have their own Standard Variable Rate(SVR). This rate is derived from the Bank of England Rate(BOE) which is set by the Bank of England on a monthly basis. The SVR will on average be around 2% higher than the rate set by the BOE. In general bank will increase and decrease their SVR with changes in the BOE, but this is not always so. Banks have discretion whether they want to increase or decrease.
An explanation to identify the true cost of borrowing and a standard in order to provide a method of comparing costs of different loans. It is a legal requirement that a true APR figure be provided with any loan.
If you are buying a Freehold property you will have to provide proof of adequate buildings insurance to the solicitor by the time of exchange. Banks require this to protect them in case the property is damaged by an unexpected event.
No, this is not a requirement set by lenders in order to qualify for a mortgage, but we strongly recommend that you protect your family against the outstanding debt of the property purchased. Term Life insurance is an inexpensive way of providing funds to repay the outstanding mortgage balance should something unforeseen happen to you or your partner.
At outset:
None
On Application
| PSG administration fee | Click here |
| Basic Valuation Feed | +/- £450 incl VAT |
| Arrangement Fee | +/- £1000 (can usually be added to the loan) |
On Exchange of Contracts
| Deposit | 5% to 25% of the value of the property |
| Stamp duty on purchase price | 0% up to £125,000 |
| 1% £125 001 to £250,000 | |
| 3% £250 001 to £500,000 | |
| 4% above £500,001 | |
| Solicitors Fees | +/-£800 + Vat |
| Local Authority Searches & Land Registry | +/-£400 + Vat |
This depends on several factors: Your occupation, residential status, credit history, income and outstanding debt. Expect to put down at least 5%, this will also increase your chances of securing a competitive rate and product. It is possible to obtain a 100% mortgage, but this will usually mean that banks will protect their increased risk buy additional charges or a much higher interest rate.
Please read our section on improving your credit report.
In order to find a good solicitor you have several options. You can find one in the yellow pages or speak to your advisor if you need help in this regard. He/she will be able to refer a qualified solicitors firm that specialise in conveyance work. Having a good solicitor will ensure the process moves smoothly, besides the legal work and protection they provide.
The seller pays the commission of the Estate Agent. Commission is only payable upon completion of the mortgage and will be transferred to the Agent by the Solicitor. Estate agents charge between 1.5% and 3% to market a property.
This all depends on your current circumstances. The main factors banks take into account when considering whether to grant you a mortgage or not, are as follows:
- Your visa status. Many banks look beyond the 'Red Passport' and accept foreign nationals especially South Africans and other Antipodeans on Work Permits, Highly Skilled and Ancestral Visas. A fact that many foreign nationals are unaware of. Once you obtain permanent right to reside you are dealt with on the same basis as a British Citizen.
- Time in the UK. In most cases banks would expect that you have been in the UK for at least 6 months and that you have considerable time left on your visa.(12-18 months)
- Employment status. Banks make a distinction between individuals that are self employed, employed or working through limited companies. In general it's much easier to obtain a mortgage while being permanently employed.
- Deposit. Being able to provide a deposit for your intended purchase lowers the risk of the banks and thus it's easier to obtain a mortgage on this basis. In some cases it's possible to obtain a mortgage without a deposit but you should expect a higher risk adjusted interest rate.
- Type and valuation of the property. Before the bank grants you a mortgage, they will do a full valuation of the property to determine its suitability as security for the loan. Properties that are more difficult to secure mortgages on are: Flats above shops and high-rise ex-council properties.
- Credit record. Banks use your credit record to determine how well you've managed credit that has been given to you in the past. This includes credit cards, store cards, overdrafts and personal loans. Missing in utility payments or incurring any CCJ's(county court judgements) against you will seriously impede your chances of securing any future credit. Please refer to the following link for advice on how to improve credit history.
To maximise your chances of obtaining a mortgage it's imperative that you speak to an independent professional adviser. We specialise in dealing with cases like yours on a regular basis and know how to present your application, to which bank, in the most positive light. Each bank's criteria for foreign nationals are different. Considering that there are more than 200 banks, building societies and private lenders in the United Kingdom you can count yourself extremely lucky to run this gauntlet successfully without any help.
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