For most of us, buying property will be the biggest financial decision we’ll ever make. Before you choose a specific deal, you need to decide what type of mortgage is the most appropriate for your needs.
Joint borrower sole proprietor
With a joint borrower sole proprietor mortgage, you can get mum and dad (or someone else) to lend you their income to help you pass the affordability and loan to income ratio checks. They become responsible for the loan but don’t own the house so you don’t need to pay the 2nd home stamp duty surcharge.
For an interest only mortgage, your monthly payments will only cover the interest on your mortgage balance. The capital you owe (i.e. the amount you borrowed) will not go down and you will need to repay this in full at the end of your mortgage term. This means you will need to make a separate investment or combination of investments to generate the capital required, and you will also need to prove that you can afford to do this. You should bear in mind that the value of investments can go down as well as up and you may not get back the original amount invested. For an interest only mortgage, the lender will need to see your plan for repaying the loan when the interest only period ends. If you fail to generate enough to repay your mortgage by the end of the mortgage term, you may be forced to sell your property. With an interest only mortgage, you must be able to demonstrate how you will repay the capital sum at the end of the term. Sale of the mortgaged property to downsize is sometimes an acceptable repayment strategy.
Part interest only and part repayment
When you need a large home now but you plan to downsize this can be a great option. You pay off around half your home and for the rest you pay only the interest as above.
For When things need looking at from another perspective and in detail.
1 year of business accounts
You left the profit in the business for tax planning reasons
You pay yourself in dividends
You have an overseas income
You are not paid in GBP
You are subject to visa restrictions
Your property has 2 kitchens
Your property has a flat roof
Non standard construction
Self-employed and LTD company directors
Some of our lenders have underwriters that will understand your accounts and look to lend based on your real income, last year’s income, dividend income, reinvested income ect...
Day one Contractor Mortgages
With a history in the same industry, you can potentially borrow based on up to 48 times your weekly income as soon as you get the 1st payslip. No need to have 3 years of accounts and be restricted to profit after expenses.
CCJs, Low credit score & Missed payments
Credit blips happen. We place you with the lenders who get it. If things are really bad we might have to place you via a packager but it’s rare that nobody will lend. Bad credit tends to make it more expensive.
Fixed, Variable or Tracker
With a fixed rate mortgage the rate stays the same, so your payments are set at a certain level for an agreed period. At the end of that period, the lender will usually switch you onto its standard variable rate. You may have to pay a penalty to leave your lender, especially during the fixed rate period. You may also be liable to pay an early repayment charge if you overpay during the fixed rate period. A fixed rate mortgage makes budgeting much easier because your payments will stay the same during the fixed rate period - even if interest rates go up. On the other hand, it also means you won’t benefit if rates go down.
Your monthly payment fluctuates in line with a standard variable rate (SVR) of interest, which is set by the lender. You probably won’t get penalised if you decide to change lenders and you may also be able to repay additional amounts without incurring a penalty. Many lenders won’t offer their SVR to new borrowers.
Your monthly payment fluctuates in line with a rate that’s lower, or more likely higher than a chosen Base Rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years. You may have to pay a penalty to leave your lender, especially during the tracker period. You may also be liable to pay an early repayment charge if you overpay on your mortgage during the tracker period. A tracker mortgage may suit you if you can afford to pay more when interest rates go up – and, of course, you’ll benefit when they go down. It’s not a good choice if your budget won’t stretch to higher monthly payments.