FAQ

What is a mortgage?

A Mortgage is a loan taken out from a Mortgage Refinancing Lenders / Brokers to pay for a property. The loan is divided into Capital, i.e. the amount of money you borrow to purchase the property at a Current Daily Mortgage Interest Rate, i.e. the amount the mortgage refinancing lender charges for lending you the money.

Who is a Mortgage Broker/ Lender?

That is a Mortgage Broker / Lenders Qualified to give you advice on buying a mortgage. Many operate as part of a one or two man band operation, or are tied to estate agent. Some Mortgage Refinancing Brokers / Lenders work from home and rely on referrals from intermediaries such as accountants and solicitors for business, while others work online, using the Internet to generate business.

There are around 10,000 mortgage refinance products in the market, so it' a very good idea to consult a Mortgage Refinancing Broker for help in finding the right Mortgage Refinancing Product. They will be able to tell you about the Best Mortgage Refinancing Deals currently available, including some that are exclusive to advisers. They will also be able to offer advice about how to repay your mortgage, home insurance and other financial matters.

How much mortgage can I get?

The amount of money depends on the amount you can comfortably afford to repay each month. It will also depend on the Mortgage Refinancing Lender you choose as each has its own guidelines. Some Mortgage Refinancing Lender may only lend you a multiple of three times your income while others may stretch to four, five or even six times.

If you are buying as a couple the Mortgage Refinancing Calculation multiples will be different. Some Mortgage Refinancing Lenders will lend you two and a half times both annual incomes while others will offer three to three and a half times the greater income plus one times the second income.

Somehow the major factor getting your mortgage is determined by the amount you earn. Mortgage Refinancing Lender generally apply multiples to your income to calculate your maximum loan. Mortgage Refinancing Lender may be prepared to offer high mortgage multiples if you are putting down a large deposit: because you are committing more of your money to the property it represents stronger security, and they may therefore be prepared to lend you more.

Your credit history is also important in determining which Mortgage Refinancing Lender will be prepared to lend to you, or whether they will offer you their most favorable interest rates. If you have consistently met your payments under current and previous credit agreements you will be entitled to the more competitive mortgages on the market. If, however, you have failed to keep up your payments, the mortgage rates available are likely to reflect this.

Finally, the third important factor in determining a Mortgage Refinancing Lender’s decision is the property itself; the value and general condition of the property will always need to be assessed to ensure that it represents adequate security. Also some Mortgage Refinancing Lenders have criteria which may rule out certain property types.

How do I prove my income?

If you are employed, the Mortgage Refinancing Lender will request written evidence from your employer such as pay slips or other documents proving that you are working and get the salary.

If you are self-employed you may need to show a mortgage company three years' audited accounts or a letter of confirmation from an accountant if you have not been in business long enough to prove that you can afford the mortgage repayments.

Many mortgage companies have a variety of criteria, some willing to be more flexible than others. It is a good idea to speak to an Independent Mortgage Broker for getting an impartial advice.
 

Mortgage repayment options…

There are three types of Mortgage Repayment Options to consider when you are choosing your mortgage:

Capital Repayment Mortgages allow you to repay the loan throughout the term. Your monthly payment is made up of both interest and capital repayment so that at the end of the term the whole mortgage is repaid. The advantage of this repayment method is that, as long as you make all your payments, the mortgage is guaranteed to be repaid by the end of the term.

If, on the other hand, you opt for interest only mortgage payment, your monthly payment will be made up solely of interest, so that your borrowing will remain the same throughout the term. At the end of the mortgage term, assuming you have not made any lump sum repayments, you will still owe the same amount that you borrowed in the first place. In this scenario it is your responsibility to ensure that either a suitable repayment vehicle (such as an endowment or pension plan) is in place, or that the loan is repaid by means of lump sum repayments or sale of the property. So, while this option does mean lower monthly mortgage payments, it also places added responsibility on you, and potentially greater risk.

The final option, so-called ‘part and part’, is to combine the two methods so that you pay interest only on part of the loan and capital repayment on the rest. This might be suitable if you have, for example, an endowment that is not likely to cover the whole of your debt at the end of the term, or where you have increased your borrowing and want the certainty that the additional borrowing will be repaid by the end of the mortgage term.

Advantages and disadvantages of different mortgage products…

Different mortgage products have specific advantages and disadvantages; your choice of mortgage will depend on your specific situation and your attitude to both risk and cost.

If your priority is security then the logical decision may be to fix your mortgage rate, so that your payments will stay the same for an initial period, so that during the initial period your payments can drop but not increase. The main disadvantage of most fixed and capped rates is that if you choose to switch to another Mortgage Refinancing Lender, and often if you choose to pay your mortgage off early, you may have to pay large early repayment charge; if you wish to keep your options open, and safeguard future flexibility, this can be a major factor in deciding not to choose fixed or capped mortgage payment.
 

Early repayment charges...

In many cases Mortgage Refinancing Lender will protect their interests by attaching early repayment charges to the initial period of a mortgage, either in line with an initial fixed or discounted rate, for example, or beyond the initial rate (known as overhang): these may be charged in a number of different situations. The Mortgage Refinancing Lender would almost always set an early repayment charge if you change to a different Mortgage Refinancing Lender within the early repayment period set within the mortgage offer. They might also charge you if you move house or pay the mortgage off in full.

It is of the greatest importance to consider what the early repayment charges may be when deciding which mortgage product suits your situation: if you need to keep your options open with regard to moving house, or shopping around for better deals, then a product with no early repayment charges would be advantageous. On the other hand, if you have no plans to change lender in the immediate future, and wish, for example, to fix your monthly payment, then an early repayment charge may not matter to you at all.

Early repayment charges are generally worked out as a percentage of the outstanding balance, and will vary widely from lender to lender. One of our responsibilities is to ensure that you are fully aware of all penalties that you may be charged before you make any final decision as to what product best suits your needs.

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