FAQs

What is a Mortgage?

A mortgage is a long-term loan secured on your home. ‘Secured’ means that, if you don’t keep up the repayments, the lender can repossess your home and sell it in order to get its money back.

How much can I borrow?

Most lenders will typically offer up to four times the main earner’s income, or slightly lower multiples of joint income. Other lenders will look at ‘affordability’, basing their lending decision more on your credit history/credit score and your net pay after your regular bills and commitments. This can sometimes mean you can borrow more, but remember that you must always be sure you can afford the monthly payments.

What supporting documents do you require from me?

Lenders use various methods to assess your income for the calculation above. Often this will include asking for payslips, P60’s, self-employed accounts or bank statements as evidence of your income.

Do all mortgages have to be over a 25 year term?

Mortgages are often taken out over a ‘standard’ 25 year term, but lenders will usually allow you to borrow over a shorter or longer term. By extending the term, the payments are lower, but it will take longer to pay of your mortgage. If you are less than 25 years from retirement, you should consider a shorter term so that the mortgage is paid off before you stop work?

What if my mortgage term goes beyond my retirement age?

You should consider whether you will have sufficient income (from pension income, for example) to continue to pay your mortgage. If not, you will need to consider reducing the mortgage term (see above) to match your intended retirement. If you cannot meet your mortgage payments in retirement, you may be forced to sell your home to pay back the lender.

What is the difference between repayment & interest only?

With every payment you make on a repayment mortgage (also called a ‘capital and interest’ mortgage) you will pay both interest on the mortgage and also pay off some of the capital. Provided you maintain all of your payments over the term of the mortgage, this type of mortgage is guaranteed to be paid off at the end of the term.

With every payment to an interest-only mortgage, you pay only the interest. This means that at the end of the mortgage term you will still owe the full amount that you originally borrowed. You will need to have enough money at the end of the mortgage term to pay off the whole amount. This may be from regular savings (for example to a Building Society account, ISA or an endowment) or from investments (such as sale of a second investment property).
There is no guarantee with an interest-only mortgage that the value of your savings and investments will be sufficient to repay your mortgage and this is therefore considered a ‘higher risk’ mortgage.

If you cannot pay off your mortgage at the end of the term, the lender can repossess your home and sell it to repay the debt.

What happens if I want to overpay my mortgage?

Most mortgage allow the facility to make overpayments of up to 10% of the capital during each calendar year. If it is your intention to sell your property within a couple of years, please bear in mind any early repayment charges (see – What happens if I want to close my mortgage before the end of the term – below)

What happens if I want to close my mortgage before the end of the term?

If you repay your mortgage before the end of the term, there may be a charge payable to the lender, called an ‘early repayment charge’. The highest charges are usually in the early years of the mortgage, typically tied in to the same period as the initial ‘special’ rate (fixed, discount etc), but sometimes extending beyond this. Where the charge extends beyond the initial period it is called an ‘overhang’. The early repayment charge varies between lenders and products but is typically between 1% – 7% of the total mortgage amount borrowed for 1 – 10 years. Thus for a £100,000 mortgage there could be an early repayment charge of up to £7,000!
Clearly if you intend to repay your mortgage in the early years it is important to choose a mortgage with low or nil early repayment charges.

Can I transfer my mortgage onto a new property if I moved?

Some mortgages are portable – this means that if you move house, you can take your current mortgage to your new home (called ‘Porting’), often for little or no cost. The lender may require additional proof of income or credit status at the time of porting your mortgage, so if your circumstances have changed or you require a substantially different mortgage amount, you may no longer fit that lender’s criteria and a new lender may be your only option.

What fees are involved when taking out a mortgage?

Many lenders will allow you to add some or all of the re/mortgage costs to the amount borrowed, including application fees, broker fees and sometimes legal and valuation costs. This is often a very useful feature if you want to keep the up-front costs as low as possible. You should be aware, though, that by adding fees to the loan, you will pay interest on them for the full term of the mortgage, increasing the total amount you pay. If you can afford to pay the fees from your own savings, it is likely to save you money in the long run.

Do you charge a fee for arranging a mortgage?

A fee of £495 is payable upon completion of your mortgage. A fee only option of 1% of the loan amount, payable upon completion, is also available. We will also be paid commission from the lender.
A fee of £895 is charged for our services, £295 for a Equity Release Further Advance and £495 for a Lifetime Mortgage Further Advance, payable upon completion of your mortgage. We will also be paid commission from the provider.

Can I instruct my own Surveyor to do a Survey or Valuation on my property instead of using the lender’s own Surveyor?

The lender needs to ensure that your estimate of the value of the house is correct as your house as their lending is secured on your home. You will normally have to pay for this valuation to be conducted.
There are three types:

i. A mortgage valuation
This is a very simple inspection of the property and is the minimum requirement to acquire a mortgage. It will involve a very limited inspection of the property and is not in any way a survey. It is just a confirmation to the lender that the property is worth sufficient security to cover the mortgage.
If you have instructed a survey independently of your mortgage application, most lenders will expect you to pay for a mortgage valuation with their own Valuer/Surveyor as this is the minimum valuation requirement.
For a remortgage, this is only valuation option. Often the lender’s Valuer is happy to conduct a ‘drive by’ valuation without entering the property.

ii. A homebuyer’s survey and valuation
This is suitable for a standard property type which is not very old and will advise on value as well as giving a more detailed report on the condition and state of repair of the property. Minor items of disrepair (that are aesthetic and do not affect the value of the property), which do not materially affect the value, will not be reported.

iii. A building survey
This is a very comprehensive survey of all parts of the property. Advice on the value of the property is not included. This type of survey may be more appropriate for larger, older properties or non-standard buildings or buildings of a commercial nature. This survey is the most expensive of all 3 types of survey.

It is up to you which type of survey you feel happiest with but you should remember that the risk is solely yours when buying a property. For this reason it is strongly recommended to have a homebuyer’s valuation and survey undertaken as a minimum.

Where the lender’s surveyor finds defects at the property, ultimately it will become a condition of the mortgage offer that the defects are rectified quickly by whoever has agreed to complete the works, the vendor or buyer. Sometimes the lender may even retain part of the loan until the works have been completed with proof.

Why do lenders wish to see my credit file?

Your credit file will list credit history details about you over the previous 6 years, such as mortgages, unsecured debt – credit cards, loans, car finance, overdrafts, mobile phone contracts and utility contracts, such as gas & electricity. In addition, your credit file will give details of your payment history for this credit agreements. The most widely used credit file checking agencies that lenders use are Equifax and Experian, although there are other agencies available. By allowing lender to view details on your credit file, they can build a profile of what you are generally like as a borrower and the level of your available credit

I have a large amount of unsecured debt, credit cards and loans etc. Can I acquire a mortgage?

We can usually still help even if you have an adverse credit history. Impaired credit could be a result of many factors and consequently lenders tend to make their judgment based on the specific details for each case.

I have been declared bankrupt, had an IVA or defaults on my credit file. Can I acquire a mortgage?

We can usually still help even if you have an adverse credit history. Impaired credit could be a result of many factors and consequently lenders tend to make their judgment based on the specific details for each case.

What are the different types of mortgage interest rates?

i. Variable rate – This is a rate where monthly payments will be determined by the lender’s standard variable rate (SVR) and will increase/decrease in line with this rate.
ii. Fixed rate – This is a rate fixed at a set percentage for a set period of time.
iii. Discounted rate – This is a rate is discounted from the lender’s usual standard variable rate (SVR) for set period of time
iv. Tracker – This is a variable rate linked to either the Bank of England base rate or LIBOR rate for set period of time or can be for the lifetime of the mortgage.

Do I have be tied in with a lender for a specific amount of time?

The different types of mortgage interest rates are listed above. The set period of time for how long the interest rate lasts if depend on your circumstances. For example, if you know that your circumstances may change or that you wish to pay off some or all of your mortgage or move house, it is important to be tied in for the most appropriate period time. The usual options are 2 years, 3 years, 5 years, 7 years and 10 years but these vary from lender to lender.
If your circumstances were to change during the specific tied in period, it may result in you having to pay early repayment charges.

We can usually still help even if you have an adverse credit history. Impaired credit could be a result of many factors and consequently lenders tend to make their judgment based on the specific details for each case.

What does loan to value mean?

There are many different interest rates offered by lenders across the mortgage market. In general lower interest rates are offered to lower levels of borrowing, usually under 60%.
Loan to value is calculated by the loan amount required divided by the purchase price/value x 100 = LTV %.

I’m self employed or I’m a Contractor. Is it possible for me to acquire a mortgage?

Offers are subject to individual circumstances. You will be asked to prove your income with either certified accounts or if you file your own accounts, a copy of a HMRC’s SA302 and Tax Year Overview documents. Lenders usually use a self employed applicant’s net income for their income multiples.

Is it possible to self certify my income for a mortgage application?

In the past it was possible that if you were self employed and you did not have accounts prepared or your accounts did not yet show your rise in profit, or you had income from self employment and employed work or you were employed with a low basic salary and high bonuses which you had not yet received at the mortgage application stage, you could have a mortgage on a self certification basis.

However this type of mortgage is no longer available since the recession of 2007. In the current mortgage market, lenders wish to see a copy of certified accounts or if an application files their own accounts, a copy of the applicant’s SA302s and possibly also their tax year overviews. Usually lenders wish to see the previous 3 years. The figure that lenders usually use the ‘net income’ figure which is clearly shown on the HMRC SA302 document.

You can request your SA302 from HMRC on 0300 200 3300 quoting your Full Name & National Insurance Number.

I’m a PhD student. Is it possible for me to acquire a mortgage?

Stipend income is paid to a person who could be working towards a PhD or completing research for a university. It is possible for PhD students to acquire a mortgage. Current lending criteria is that the applicant who earns a stipend income must be purchasing a property jointly with another applicant who does not a stipend income.
Lenders usually request a Letter of Confirmation from the Payer to show the applicants’ name and the monetary value of the stipend allowance to support a mortgage application

What is Equity Release. Why is Equity Release different to a standard residential mortgage?

Equity release is a way of getting cash from the value of your home without having to move out of it. The value or equity you have in your home is its open market value less any mortgage or other debt held against it. Although the value of houses has risen over the years, selling up or moving somewhere cheaper to raise extra funds may not be for everyone and this is where Equity Release schemes can help. You need to be over 55 and own your own home. You can get a cash lump sum, with or without a drawdown facility to use as you wish or roll up the interest with no monthly payments for the balance to be closed at a later date. Equity Release allows you to continue to live in your own home.

What is an offset mortgage?

An Offset Mortgage works by ‘offsetting’ a mortgage borrower’s savings against what they owe on their mortgage, therefore reducing the overall amount of interest that they pay.

For example: A Borrower has a £100,000 mortgage
+ £20,000 in savings with the same banking institution

With an offset the borrower only pays interest on the £80,000 difference, which means that the borrower may be able to pay off their mortgage more quickly.

It is possible to link a child’s mortgage to their parents or other relatives’ savings. The savings can still be held in the parents’/relative’s name(s) and are accessible to them in the usual way.

I’m tied in with my lender. Is it possible to release further capital to borrow additional funds?

Most lenders offer the facility to borrow an additional balance to your mortgage at a later date to when you initially took out the mortgage. The reason that you would prefer to remain with your existing lender rather than remortgage elsewhere could be to avoid having to pay any early repayment charges. We can research the market for you to check that it is best advice to remain with your existing lender to borrow additional funds or whether to remortgage elsewhere to acquire a better rate.

My current interest rate is ending soon. Can you help me to acquire a new rate?

In the final months of your current fixed or discounted rate, it is time to contact us here at Turney & Associates to avoid paying your existing lender’s standard variable rate for your Residential or Buy to Let mortgage(s).
We would be pleased to discuss your current mortgage requirements with you. We could offer you very competitive rates to enable you to reduce your monthly mortgage payments.

How much is stamp duty?

Visit the government’s website for the current rates of stamp duty: https://www.gov.uk/stamp-duty-land-tax/overview

Is a Buy to Let mortgage the same as a standard residential mortgage?

It is not possible to secure a standard residential mortgage onto a Buy to Let property. There are specific Buy to Let mortgage products for security onto investment properties.
We do have access to lenders who do not require proof of personal income and will lend on rental income. However lenders require the rental income to cover at least 125% of the mortgage payment.

Can I borrow in my limited company name rather than my personal name?

Yes it is possible to have a mortgage secured onto a property through a Limited Company name for tax efficiency purposes.

Do I have to have Buildings insurance to cover my property?

It is compulsory to have Buildings insurance on your property in case of unforeseen damage or destruction if you wish to secure a mortgage on it. Your Solicitor may wish to see a copy of your Buildings insurance to check against your lender’s Valuation Report to make sure that the policy offers sufficient cover set by your lender’s Surveyor/Valuer.

Turney & Associates can arrange Buildings insurance for residential and let properties with the option to add contents cover.

How much deposit do I need to put down to purchase a Buy to Let?

The minimum deposit is usually 20%.

What is a Let to Buy mortgage?

The best way to explain a Let to Buy mortgage is using an example case.

Mr & Mrs Smith are living in a property that they currently own with or without a mortgage.
They would ideally like to buy a new property to call their home and rent out their current property to tenants.
The mortgage required to re-mortgage their existing property as a rental property is called a Let to Buy mortgage.

This funds from this re-mortgage could then be used as a deposit to purchase Mr & Mrs Smith’s new home and a new residential mortgage could be taken out secure on their new home.
The main difference between a Let to Buy and a Buy to Let Re-mortgage is that with the former the property that the mortgage is secured on is/was the client’s residential home that they lived in. A Buy to Let re-mortgage is when a client wishes to re-finance an existing rental property.

Can a House of Multiple Occupancy (HMO) have a standard Buy to Let mortgage secured on it?

Due to the licence required for HMOs set from council to council, it is important that the mortgage secured on the property reflects the requirements set for HMOs. Therefore the Buy to Let mortgage product must be suitable for HMOs.

I’m a Professional Landlord. Can I acquire a Buy to Let mortgage?

There are a limited number of lenders who offer mortgages to applicants whose main source of income is from property letting.

What is Life Assurance?

Life cover provides a lump sum or monthly benefit in case of the death of the policy holder, enabling the remaining members of the family to be able to continue the same standard of living. It is possible to add critical illness cover to this policy and to cover your mortgage with a decreasing balance or a level lump sum over the term of your mortgage.

What is Critical Illness Cover?

Critical Illness cover provides a lump sum or monthly benefit in case of the critical illness of the policy holder, enabling the remaining members of the family to be able to continue the same standard of living. It is possible to add life assurance to this policy and to cover your mortgage with a decreasing balance or a level lump sum over the term of your mortgage.

What is Income Protection or Accident Sickness or Unemployment insurance?

Income Protection Plans provide cover to prevent your mortgage from going into arrears and eventually having your home repossessed by providing assistance in making mortgage interest repayments when a person is sick. This type of policy is designed for long term cover and can cover for up to 65% of your gross salary (excluding bonuses or car allowance).
The deferment periods available are 4, 13, 26 and 52 weeks and the expiring age can go up to retirement (50 – 75 years).
Accident, Sickness, Unemployment Insurance and Mortgage Payment Protection Insurance provides cover to prevent your mortgage from going into arrears and potentially having your home repossessed. Accident Sickness, Unemployment insurance provides assistance in making mortgage interest repayments if you have an accident, are sick or are made redundant. This type of policy is designed for short term cover and renewed annually.
It is possible to base an income protection product on your income rather than your mortgage payments.
Plus, an option is to have an additional 25% of cover to cover regular monthly commitments such as home insurance etc. Cover is available for up to 65% of your gross salary (excluding bonuses or car allowance).
Also it is possible to have a solely Accident and Sickness policy or a solely Unemployment policy.
The deferment periods available are 4 or 13 and are available for a period of 12 or 24 months. Policies can be arranged to rise with inflation and Back to Day One cover option also available.

Can you recommend a Solicitor or Conveyancing firm to complete the legal work for my case on my behalf?

We offer a fast conveyancing quotation service to get your purchase and/or sale moving as quickly as possible. We have access to over 200 solicitors around the country all individually rated by past clients. There is never a charge if your sale or purchase does not complete.

What is the difference between a leasehold or a freehold property?

Freehold – a type of property ownership which is superior to all others because it has no limitations. A freehold title can be bought and sold. The owner of the title is registered at the Land Registry.
Leasehold – a type of property ownership which is granted by the owner of the freehold for a specific term, the terms being set out in a lease. Like the freehold, this is also a title which can be bought and sold, and the owner of the leasehold title is registered at the Land Registry.

My property has a short lease. Can I acquire a mortgage?

For leasehold properties, mostly flats, apartments and maisonettes, a short lease can make sourcing a mortgage on the property more difficult. A lease term lower than 60 years is deemed as short.
As a rule, properties with shorter leases can negatively affect the property value as the property may be entirely unmortgagable and therefore can only be purchased in cash. Plus acquiring a new lease from the freeholder is seen as another cost to any potential purchaser which could be seen as off-putting.
The 1993 Leasehold Reform Act[1] usually means that 90 years can be added to a lease at a fair price[2].
It is not only mortgages for purchases than this affects, if you already own a leasehold property and you wish to remortgage it as the occupier or landlord, the lease term will be brought into consideration at the mortgage underwriting stage of the process.

Can you help me to acquire a mortgage to purchase my Right to Buy Council property?

If you meet certain criteria, you will be eligible to purchase your council home. The current economic climate can make this an attractive proposition for certain council house tenants.

What is Shared Ownership?

Shared Ownership allows you to part-buy and part-rent your home from a housing association. The share of the property you purchase is usually between 25% and 75% (a mortgage can be secured on this percentage of the property) and you rent the remaining share from the housing association. It is possible to increase your share of the property until you own the entire the property (with or without a mortgage). This process is called ‘staircasing’.

What is the Help to Buy scheme?

The scheme was launched on 8th October 2013. Under the scheme, buyers will need to raise only 5% of the property value as a deposit, while the government will then provide a guarantee to the mortgage lender for up to a further 15% up a maximum property value of £600,000. The scheme is available to both new-build and existing properties.

Bank of England Governor Mark Carney sent a letter to Chancellor Philip Hammond in late September 2016 explaining that the current health of the mortgage market meaning borrowers have become less reliant on it and therefore the falling use of the scheme means it should close as planned at the end of the planned three-year term on 31st December 2016.

It is important to note that the mortgage market has changes since the beginning of this scheme with more lenders offer up to 95% loan to value mortgages that not linked to the Help to Buy scheme.

Can you help me to acquire a self build mortgage?

If you are considering building your own home, renovating or converting an existing property, we can source suitable finance for your project based upon your specific requirements.

YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP
UP REPAYMENTS ON A MORTGAGE

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