Author: Dax McLean

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.

Check Today's Best Rates >

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.

Check Today's Best Rates >

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.

Check Today's Best Rates >

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 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

Early repayment charges (ERCs) are important considerations when looking for mortgages, planning to overpay on your current deal, or thinking of remortgaging.

Paying off your mortgage early and switching to a better deal can make financial sense if you get a lower rate, but it can be costly.

Read on to find out how you can get a mortgage with no early repayment charge and leave whenever you want without hefty fees.

What Is An Early Repayment Charge?

Also called a redemption fee, an early repayment charge is a penalty fee imposed by mortgage lenders if you want to end your mortgage deal before the end of the official deal term.

Lenders charge ERCs if you pay off your loan early, exceed overpayments allowed by the terms and conditions of the deal, or transfer your mortgage to another product before the fixed-rate deal or incentive period is over.

When lenders offer you a mortgage, they set terms on the understanding that you’ll keep the loan for an agreed amount of time, allowing them to make a certain amount of interest.

When you repay your loan early or overpay, you end up paying less interest.

The ERC is meant to help the lender recoup the lost interest and to discourage borrowers from jumping from deal to deal.

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Are Mortgages With No Early Repayment Charge Available?

Yes. Easy exit penalty-free mortgages are available in the UK, but they’re usually much harder to secure.

You need to be aware of what they involve before you commit to applying for one.

Lenders want stability and surety, so you can expect to face a payoff of some kind, even with a mortgage with no ERC, if you want to walk away from the agreement.

It can include additional fees or higher interest rates when taking the loan out.

The lending criteria can be stricter, with such mortgages being open only to certain types of borrowers.

Lenders will want to be sure you’re an attractive borrower with a sizeable deposit.

You’ll have better chances with lower loan-to-value (LTV) ratios, and your credit history will be considered together with your affordability and income.

You’ll likely receive a better deal if you’re in a strong financial position.

Types Of Mortgage With No Early Repayment Charge

You can sign up for some mortgages and avoid redemption fees if you decide to break your mortgage.

Some are easier to get than others and include the following:

Standard Variable Rate (SVR) Mortgages

An excellent way to avoid ERCs is to wait until your introductory or incentive period ends before leaving.

You’ll automatically move onto the lender’s standard variable rate and leave whenever you want without paying an early repayment charge.

SVR mortgages are usually very expensive and can move up and down unexpectedly, so it’s recommended to move to a new mortgage deal as soon as possible.

Fixed-rate Mortgages

Fixed-rate mortgages allow you to secure an interest rate for a given time.

The monthly repayments will remain at a fixed cost for the fixed rate period, which can be 2, 3, or 5 years.

Although it’s rare to find fixed-rate mortgages without an early repayment charge, a few lenders offer them.

They can be costlier than other fixed-rate deals and come with tons of other fees, so you need to be sure they’re worth taking out.

Tracker Mortgages

Tracker mortgages are variable-rate mortgages where the interest and monthly repayments can go up and down.

You’ll be at the mercy of fluctuating Bank of England base rates instead of the whims of your lender.

Although the interest you pay can change according to the base rates, tracker mortgages are usually easier to negotiate and have the ERC waived.

Check Today's Best Rates >

Is A Mortgage With No Early Repayment Charge Right For Me?

Deciding whether or not a mortgage with no early repayment charge is right for you will largely depend on how likely you are to leave your deal early.

Here are some benefits and drawbacks of mortgages with no ERC to consider.

Benefits

• Flexibility

If you want the flexibility to leave your mortgage deal whenever you want without facing penalties, a mortgage with no ERC is a suitable choice.

It allows you to be more spontaneous and can come in handy if you’re unsure where you’ll be in a few months or years.

• Overpayments

Overpayments allow you to pay off your mortgage more quickly.

Most mortgages allow you to make overpayments on your mortgage by 10% of what you owe the lender every year before the ERCs come into effect.

A mortgage with no early repayment charge allows you to overpay as much as you want.

It’s suitable if you expect a windfall and want to achieve a mortgage-free status early without penalties.

Drawbacks

• Additional Fees

A mortgage with no ERC will likely feature additional fees like an admin or arrangement fee that you must pay the provider to sort out the new mortgage for you.

• Higher Interest Rates

Lenders will likely set higher interest rates for a mortgage with no early repayment charges.

It will translate to higher monthly repayments, and you’ll pay more interest throughout the mortgage.

• Rare

Mortgages with no early repayment charge are few and difficult to find. You’ll have fewer mortgages and lenders to choose from, making it challenging to secure an attractive deal.

If you’re planning to move, sell your property soon, or expect a windfall, a mortgage with no ERC can be worth it.

You may face higher fees and monthly repayments that make it expensive in the short term, but it will be cheaper in the long run since you’ll avoid paying hefty early repayment charges when you want to pay off your mortgage early.

Check Today's Best Rates >

Mortgage With No Early Repayment Charge UK Final Thoughts

It can be challenging to get a mortgage with no early repayment charge, but it’s not impossible.

An experienced mortgage broker can help you decide whether it’s the best option for you and give you access to the best deals in the market.

They can also help you make a strong application to increase your chances of success.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

The Bank of England’s Base Rate is the interest rate set and charged for lending money from the central bank in the UK, in this case the Bank of England to commercial banks.

Although banks can choose to offer the interest rates of their choosing on the financial products they offer e.g. loans and mortgages, the reality is that the Bank of England’s base rate does have a big impact on what they decide to offer.

The Bank of England’s ability to influence the interest rates offered by commercial banks means that they can encourage or discourage spending.

For example, if spending is deemed to be too low, the base rate will be decreased and if it’s too high, it will be reduced.

What is the current Base Rate?

At present, the Bank of England’s base rate stands at 3.5%.

During the pandemic, the base rate was slashed twice to help ease the strain on the economy. Once in March 11th 2020 from 0.75%  to 0.5% and then again on the 18th March 2020 to just 0.1%.

However, since then the base rate has been increased numerous times, now hitting the 3.5% figure at the most recent update.

The Bank of England review the base rate on the first Thursday of every month and may be changed depending on the rate of spending in the economy.

However, during times of crisis they can meet and make changes more regularly, just like they did during the coronavirus pandemic.

What is the Bank of England Base Rate?

The base rate is the interest rate set by the Bank of England (BoE). This is the interest rate they charge commercial banks for borrowing their money.

Although the interest rates offered on financial products are influenced by a umber of factors, including the bank/lenders own decision, their interest rates are often derived from base rate.

It’s for this reason that the base rate can also have an impact on mortgage interest rates.

However, the type of mortgage you are on will be another important factor in terms of how much and when the base rate will impact your mortgage interest.

For example, it’s important to be aware that in the short term changes in mortgage interest rates don’t impact current mortgage borrowers, since the majority are on a fixed term mortgage.

A fixed-rate mortgage is a mortgage with a specific interest rate locked in for a certain duration e.g. 2, 4 or 10 years.

Therefore, the majority of people i.e. those on a fixed rate mortgage will see no change in their mortgage payments in the short term.

It’s only once the fixed term comes to an end and that you are placed onto your mortgage lenders standard variable rate will you likely be impacted by an increased interest rate.

Increasing Base Rates Doesn’t Always Mean Higher Mortgage Interest Rates

It’s also important to remember that although the base rate is often correlated with higher mortgage interest rates, this isn’t always the case.

For example, after the mini-budget in September 2022 lenders factored in price increases to their financial products and since then mortgage rates have slightly decreased over the last few months, not increased.

History of the Bank of England Base Rate UK

Overall, the Bank of England has done a good job at maintaining a stable base rate since they were founded back in 1694. However, there has been a few periods of turbulence, including:

• The highest interest rate ever recorded was in 1979 when it peaked at 17%.
• The lowest ever interest rate recorded was in 2020 when it fell to 0.1%.

Bank of England base rate 1979-2023

	Bank rate at year end (%)*
1979	17
1980	14
1981	14.375
1982	10
1983	9.0625
1984	9.5
1985	11.375
1986	10.875
1987	8.375
1988	12.875
1989	14.875
1990	13.875
1991	10.375
1992	6.875
1993	5.375
1994	6.125
1995	6.375
1996	5.9375
1997	7.25
1998	6.25
1999	5.5
2000	6
2001	4
2002	4
2003	3.75
2004	4.75
2005	4.5
2006	5
2007	5.5
2008	2
2009	0.5
2010	0.5
2011	0.5
2012	0.5
2013	0.5
2014	0.5
2015	0.5
2016	0.25
2017	0.5
2018	0.75
2020	0.25
2020	0.10
2021	0.25
2022	0.5
2022	0.75
2022	1.0
2022	1.25
2022	1.75
2022	2.25
2022	3.0
2022	3.5

 

Source: Bank of England Official Bank Rate History

When does the base rate change?

The Bank of England change the base rate the first Thursday of every month or eight times annually. H

However, at times of crisis they may change it more often.

The next base rate change is set for the 2nd February 2023, with the following one on 23 March 2023.

The Monetary Policy Committee can decide to change or keep the current interest base rate.

They make this decision based on the current status of the economy and may or may not change it based on their view of the best course of action that would result in stabilising the UK economy.

Why does the Bank of England change the Base Rate?

The Bank of England increase the base rate in order to “cool” the economy and control surging inflation.

In October, the Consumer Prices Index (CPI) measure of inflation rose to a heady 11.1% in the 12 months to October, in direct conflict with government targets of 2% inflation.

Unfortunately, if inflation does not start to fall, the Bank of England could decide to continue to increase rates into the new year.

The cost of energy is another major contributor to surging inflation, but thanks to the UK government’s Energy Price Guarantee this has been tempered to a large degree.

What determines the mortgage interest rates?

Although your actual mortgage rate will be determined by factors like the product you choose and your particular lender, the Bank of England’s base rate also has a major impact to mortgage interest rates.

The base rate doesn’t just impact mortgages, but a wide range of financial products, as well as the value of the pound itself.

The Bank of England review the base rate on the first Thursday of every month and may be changed depending on the rate of spending in the economy.

For example, if spending is deemed to be too low, the base rate will be decreased and if it’s too high, it will be reduced.

What does this mean for you?

With interest rates changing regularly, there is a lot of volatility in the market at present with mortgage deals being constantly updated to reflect the rapid pace of change.

With this in mind, it’s now unarguably more true than ever that you should contact a mortgage broker for help and advice.

A mortgage broker or advisor can hold your hand through the entire process, from initial searches to dealing with the legal stuff, to ensure the process is as smooth as possible.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

The Bank of England’s Base Rate is the interest rate set and charged for lending money from the central bank in the UK, in this case the Bank of England to commercial banks.

Although banks can choose to offer the interest rates of their choosing on the financial products they offer e.g. loans and mortgages, the reality is that the Bank of England’s base rate does have a big impact on what they decide to offer.

The Bank of England’s ability to influence the interest rates offered by commercial banks means that they can encourage or discourage spending.

For example, if spending is deemed to be too low, the base rate will be decreased and if it’s too high, it will be reduced.

What is the current Base Rate?

As of December 2023, the Bank of England has maintained its base rate at 5.25%. This rate has been in effect since August 2023, when it was raised from 5%.

During the pandemic, the base rate was slashed twice to help ease the strain on the economy. Once in March 11th 2020 from 0.75%  to 0.5% and then again on the 18th March 2020 to just 0.1%.

However, since then the base rate has been increased numerous times, now hitting the 3.5% figure at the most recent update.

The Bank of England review the base rate on the first Thursday of every month and may be changed depending on the rate of spending in the economy.

However, during times of crisis they can meet and make changes more regularly, just like they did during the coronavirus pandemic.

What is the Bank of England Base Rate?

The base rate is the interest rate set by the Bank of England (BoE). This is the interest rate they charge commercial banks for borrowing their money.

Although the interest rates offered on financial products are influenced by a umber of factors, including the bank/lenders own decision, their interest rates are often derived from base rate.

It’s for this reason that the base rate can also have an impact on mortgage interest rates.

However, the type of mortgage you are on will be another important factor in terms of how much and when the base rate will impact your mortgage interest.

For example, it’s important to be aware that in the short term changes in mortgage interest rates don’t impact current mortgage borrowers, since the majority are on a fixed term mortgage.

A fixed-rate mortgage is a mortgage with a specific interest rate locked in for a certain duration, e.g. 2, 4 or 10 years.

Therefore, the majority of people i.e. those on a fixed rate mortgage will see no change in their mortgage payments in the short term.

It’s only once the fixed term comes to an end and that you are placed onto your mortgage lenders standard variable rate will you likely be impacted by an increased interest rate.

Increasing Base Rates Doesn’t Always Mean Higher Mortgage Interest Rates

It’s also important to remember that although the base rate is often correlated with higher mortgage interest rates, this isn’t always the case.

For example, after the mini-budget in September 2022 lenders factored in price increases to their financial products and since then mortgage rates have slightly decreased over the last few months, not increased.

History of the Bank of England Base Rate UK

Overall, the Bank of England has done a good job at maintaining a stable base rate since they were founded back in 1694. However, there have been a few periods of turbulence, including:

• The highest interest rate ever recorded was in 1979 when it peaked at 17%.
• The lowest ever interest rate recorded was in 2020 when it fell to 0.1%.

Bank of England base rate 1979-2023

	Bank rate at year end (%)*
1979	17
1980	14
1981	14.375
1982	10
1983	9.0625
1984	9.5
1985	11.375
1986	10.875
1987	8.375
1988	12.875
1989	14.875
1990	13.875
1991	10.375
1992	6.875
1993	5.375
1994	6.125
1995	6.375
1996	5.9375
1997	7.25
1998	6.25
1999	5.5
2000	6
2001	4
2002	4
2003	3.75
2004	4.75
2005	4.5
2006	5
2007	5.5
2008	2
2009	0.5
2010	0.5
2011	0.5
2012	0.5
2013	0.5
2014	0.5
2015	0.5
2016	0.25
2017	0.5
2018	0.75
2020	0.25
2020	0.10
2021	0.25
2022	0.5
2022	0.75
2022	1.0
2022	1.25
2022	1.75
2022	2.25
2022	3.0
2022	3.5

 

Source: Bank of England Official Bank Rate History

When does the base rate change?

The Bank of England change the base rate the first Thursday of every month or eight times annually. H

However, at times of crisis they may change it more often.

The next base rate change is set for the 2nd February 2023, with the following one on 23 March 2023.

The Monetary Policy Committee can decide to change or keep the current interest base rate.

They make this decision based on the current status of the economy and may or may not change it based on their view of the best course of action that would result in stabilising the UK economy.

Why does the Bank of England change the Base Rate?

The Bank of England increase the base rate in order to “cool” the economy and control surging inflation.

In October, the Consumer Prices Index (CPI) measure of inflation rose to a heady 11.1% in the 12 months to October, in direct conflict with government targets of 2% inflation.

Unfortunately, if inflation does not start to fall, the Bank of England could decide to continue to increase rates into the new year.

The cost of energy is another major contributor to surging inflation, but thanks to the UK government’s Energy Price Guarantee this has been tempered to a large degree.

What determines the mortgage interest rates?

Although your actual mortgage rate will be determined by factors like the product you choose and your particular lender, the Bank of England’s base rate also has a major impact on mortgage interest rates.

The base rate doesn’t just impact mortgages, but a wide range of financial products, as well as the value of the pound itself.

The Bank of England review the base rate on the first Thursday of every month and may be changed depending on the rate of spending in the economy.

For example, if spending is deemed to be too low, the base rate will be decreased and if it’s too high, it will be reduced.

What does this mean for you?

With interest rates changing regularly, there is a lot of volatility in the market at present, with mortgage deals being constantly updated to reflect the rapid pace of change.

With this in mind, it’s now unarguably more true than ever that you should contact a mortgage broker for help and advice.

A mortgage broker or advisor can hold your hand through the entire process, from initial searches to dealing with the legal stuff, to ensure the process is as smooth as possible.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

University education comes with a hefty price tag in the UK, and it can leave you in considerable debt.

Student loans can run into tens of thousands of pounds, and it’s important to know how they can affect your future, especially when buying a home.

This article explores how student loans can affect mortgage applications and how you can increase your chances of a positive outcome.

Can You Get Mortgages With Student Loans?

Yes. Although it can impact your application, having a student loan doesn’t disqualify you from getting a mortgage.

Responsible mortgage lenders must check student loans alongside other types of debt when assessing whether or not you can afford the mortgage.

However, although they’re technically debts, student loans aren’t looked at in the same light as other types of debts.

Student loans don’t appear on your credit file, so the amount you owe and repay doesn’t show up on any credit record.

Your student loan won’t play into the credit search aspect of your mortgage application and won’t have as much impact as other debts like credit cards or personal loan debts.

With the right guidance from a mortgage advisor or broker, you can access mortgages that best fit your circumstances and finances.

They can provide tailored advice to suit your needs and give you access to lenders most likely to accept your situation.

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How Do Student Loans Affect Mortgage Applications?

Lenders will consider how the student loan affects your affordability when assessing how much money they can lend you through a mortgage.

Some key areas they’ll be interested in include:

Your Monthly Repayments

Lenders need to deduct any existing financial responsibilities from your income to calculate the size of the loan you can afford, including the amount you pay out every month on your student loan.

Lenders want to be sure that what you have left after spending and debt commitments is enough to afford mortgage repayments safely.

Generally, the more you pay monthly toward your student loans, the less you can borrow.

The Outstanding Balance

Lenders will also be interested in how much is left to repay on your student loan to get a full picture of your financial commitments in the long run.

A mortgage is among the most significant commitments you’ll make in your financial life and will likely involve periods of more than 20 years.

Some lenders set minimum acceptable overall debt levels for borrowers, so large student loans can impact their willingness to lend and at what terms.

They must be sure you can cover the cost of the mortgage and the student loan with your earnings.

This can depend on when you took the loan and how much you earn since most student loans are set up so that you only start making repayments after achieving a certain salary threshold.

If you don’t yet earn enough to repay student loans, you don’t have to worry since lenders understand that you’ll only start repaying as your salary increases, meaning it won’t affect your affordability.

What Deposit Amount Is Needed To Get A Mortgage With Student Loans?

Like all mortgage applications, the higher your deposit, the more favourably you’ll be viewed by mortgage lenders.

The deposit required by the mortgage lender will depend on the price of the property you’re buying and whether you’re classed as high or low risk.

Most lenders set the maximum loan-to-value (LTV) ratio at 90%, meaning you’ll need a deposit of 10%.

The LTV shows how much of the property you own outright. Some can accept as little as a 5% deposit, while others will need you to put down more if you’re considered higher risk because of issues like bad credit.

You’ll need adequate income to save and be considered for a mortgage, and student finance is not classed as income.

Although repayments towards student loans can hinder saving for a mortgage deposit, you can consider mortgage options for low-income earners like joint mortgages, guarantor mortgages and government schemes that help first-time buyers.

Mortgage advisors or brokers can help you find the best option for you.

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Should I Disclose My Student Loans On Mortgage Applications?

Yes. Your student debt is an important part of your overall financial situation, even if you’re not making any repayments.

Withholding information in your application can be considered mortgage fraud, and it’s not worth the risk because you can still qualify for a mortgage with student loans.

You’re legally required to be honest and transparent in mortgage applications and give lenders a clear and realistic picture of your finances.

Although the student loan will not appear in your credit file, the repayments can still appear in your PAYE payslip and tax returns, even if you’re self-employed.

It would be difficult for lenders to miss the student loan since they’ll require you to present proof of income to qualify for a mortgage.

What Should Be My Earnings To Get A Mortgage With Student Loans?

Lenders will use multiples of your salary or income to determine how much you can borrow.

Some offer loans four times your annual income, while others offer 4.5 x, 5x, or 6x under the right conditions.

Your income must be sufficient for your desired property, but affordability is the most important factor.

Mortgage lenders assess your debt-to-income ratio to determine your affordability.

They’ll look at your monthly income minus any outgoings, including student loan repayments.

A lower debt-to-income ratio is more attractive because it shows lenders you have more disposable income for mortgage repayments.

Do Student Loans Affect Mortgage Applications? Final Thoughts

Student loans can only affect your mortgage application if they affect your affordability.

They’ll not affect your credit score because they don’t appear on your credit file.

Mortgage advisors with experience arranging mortgages for applicants with student loans can help you find a suitable option to suit your circumstances.

You can also increase your chances by having a healthy deposit and increasing your income to ensure you’re attractive to lenders and can afford to repay the mortgage.

Give Mortgageable a call today at 01925 906 210 or contact us to speak to one of our friendly advisors.

With the steady rise of property prices across the UK over the years, 1 million mortgages are no longer a rarity.

If you’re looking to purchase a large investment property or a home with more space, luxury, extra bedrooms, and gardens, a £1 million mortgage can help you fulfil your dreams.

Here’s everything you need to know about £1 million mortgages and how to get one.

Can You Get A 1 Million Mortgage In The UK?

Yes. Unlike before, when only private lenders offered 1 million mortgages, more and more lenders can provide this level of funding today.

You can access a 1 million mortgage if you meet the eligibility and affordability requirements for this type of lending.

You’ll first need to find a suitable lender who offers £1 million mortgages.

It can be a high street or private mortgage provider, with most borrowers preferring private lenders thanks to their flexibility and better terms.

A private provider is more willing to take on risks and consider you holistically.

Check Today's Best Rates >

They can tailor the loan to your needs and consider your range of assets and earnings, making it easier to get a better loan-to-value (LTV) ratio.

However, you’ll likely need an introduction to access a private lender who can offer a £1 million mortgage.

High street providers are easier to access and are usually more straightforward.

Although you’ll not get a bespoke level of service like a private lender, mainstream lenders are usually more open, and their acceptance criteria and mortgage process are more transparent.

How To Get A 1 Million Mortgage

You can apply for a £1 million mortgage like any other mortgage.

The following steps can help ensure you’re on the right track:

Step 1: Prepare The Necessary Documents

Having your paperwork ready in advance can help save time, and there may be extra scrutiny on your affordability for a £1 million mortgage.

You’ll likely need documents like proof of income, proof of ID, proof of address, evidence of commissions or bonuses, credit reports, and solicitor details.

Step 2: Ensure Your Credit Report Is Correct and Updated

The status of your credit report can make a difference in the interest rate you get on the £1 million mortgage.

Ensure you get a copy of your credit report and confirm that it’s up to date and free of inaccuracies.

Step 3: Consult A Mortgage Broker

Mortgage brokers specialising in £1 million mortgages can guide you on how to apply and which lenders to approach for high-value deals.

Consulting a broker with experience in this market can help save you time and money.

They can also give you access to lesser-known lenders who offer bespoke deals to borrowers taking out large mortgages.

Income Needed For A 1 Million Mortgage

The income needed to qualify for a 1 million mortgage will depend on your chosen lender.

Most conventional lenders determine the size of the mortgage you’re eligible for based on how much you earn.

They usually base affordability calculations on 4 to 5 times your salary or up to 6 and 7 times in rare cases and may require that you make at least £200,000 yearly for a £1 million mortgage.

They then compare it to your fixed expenses through a stress-testing process and include all your outgoings, from child care to gym memberships.

Getting a mortgage from conventional lenders can be challenging if your income includes foreign income, discretionary bonuses, or irregular earnings.

Private lenders are more flexible and can consider all your income streams, including dividends, pensions and rental income. Some even accept assets like luxury items or cars as collateral.

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Deposit For A 1 Million Mortgage

Most lenders will need substantial down payments for a £1 million mortgage to reduce the risks involved.

Conventional lenders may not be willing to go beyond a 75%-80% LTV, meaning you’ll need a deposit of at least 25% to qualify for a £1 million mortgage.

The best deals usually start with deposits of 40% and above, and only a few lenders can accept a 10% deposit if you have a robust application and minimal risk factors.

Private providers are usually more willing to stretch the LTV and can offer up to 95% LTV for lower-risk borrowers.

You can also get a good deal if they want to build a longer-term relationship with you, and you have a strong prospect of future earnings.

Can I Get An Interest Only 1 Million Mortgage?

Yes. Interest-only £1 million mortgages exist and feature similar restrictions to smaller interest-only mortgages.

You’ll have better chances of an interest-only 1 million mortgage with private providers, and they’ll likely need a higher deposit with LTV ratios that don’t exceed 75%.

An interest-only £1 million mortgage will allow you to make smaller monthly repayments with a large balance being due at the end of the mortgage term.

You’ll need to show the lender a viable repayment strategy that reassures them of your capability to pay off the sizeable principal amount in one payment.

Exit strategies can include equity in other properties, investment portfolios, or selling the property at the end of the term.

1 Million Mortgage For A Buy To Let

Lenders also offer £1 million mortgages for buy-to-let properties, but the terms are usually different than residential mortgages.

You’ll need a larger deposit as buy-to-let properties are considered higher risk.

Lenders may also set minimum income requirements when assessing affordability, but others may decide based on projected rental yields.

You may be required to cover 125-130% of the monthly repayments on your mortgage with the rental income.

Private lenders can be more open to considering additional income like savings, capital from property and pensions.

Researching the area where the buy-to-let property is situated is important because sometimes it can be challenging to generate enough rental income to make the investment feasible.

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£1 Million Mortgages Final Thoughts

If you’re looking for a £1 million mortgage and don’t know where to start, consult a mortgage broker or advisor specialising in arranging such deals.

You’ll benefit from their experience and knowledge, and they can quickly assess your needs and situation to connect you to a suitable lender.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

Flipping homes is an excellent real estate investment strategy where you quickly buy, renovate and resell properties and make a huge profit.

A buy-to-sell mortgage is a suitable financing option if you’re looking to buy a property and sell it for profit, but don’t have the money to cover the costs outright.

Here’s everything you need to know about buy-to-sell mortgages.

What Is A Buy To Sell Mortgage?

A buy-to-sell mortgage is a short-term financing option meant to cover the cost of investing in a property that you expect to sell at a higher value soon after, usually within 12 months.

They’re also called bridging loans and can be arranged more quickly than traditional mortgages, with typical loan periods ranging from 1 to 3 years.

Regular mortgages are not suitable for flipping properties because they usually feature early repayment charges, and the lender may not allow you to sell within six months after purchase.

With a buy-to-sell mortgage, you can repay within months when you sell the property, and interest is calculated monthly instead of yearly.

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Why Choose A Buy To Sell Mortgage?

Buy-to-sell mortgages are suitable for flipping properties for various reasons. They take less time to organise, and you can have the funds you need within days instead of months.

They’re suitable for quick purchases when the timing is a factor, like buying a property at auction.

Buy-to-sell mortgages are also more flexible than standard mortgages and can allow you to repay after a short period.

]Unlike traditional mortgages that include penalties if you repay before the loan term ends, buy-to-sell mortgages are designed for investors who want to sell and repay the loan after a few months.

Buy-to-sell mortgages give you more scope in what you can buy regardless of the property’s condition.

You can only use standard mortgages to buy habitable homes for yourself or your tenants.

Buy-to-sell mortgages allow you to buy uninhabitable homes which may not have working bathrooms or kitchens or are not secure, then renovate them for resale.

Eligibility Criteria

While individual lenders will have criteria for deciding whether to approve or reject your loan application, buy-to-let mortgages can vary from standard mortgages in the following ways:

Deposit

The loan-to-value (LTV) ratio accepted by the lender will determine the amount of deposit you need to put up.

The LTV is usually capped at a lower maximum than standard mortgages at around 75% on average for buy-to-let mortgages.

Some lenders can accept higher LTV depending on your circumstances, and a mortgage broker can help find a suitable deal.

Exit Strategy

In standard mortgages, repayment affordability is usually assessed based on your income from employment or projected rental income.

With buy-to-let mortgages, lenders place more importance on your exit strategy.

It refers to how you intend to repay the loan at the end of the term, which usually involves selling the property after completing renovations.

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Credit History

Although lenders may look into your credit history to see how you handle your finances, it will not have much of an impact on buy-to-sell mortgages like other types of borrowing.

Lenders will mainly focus on whether or not you can raise enough capital to repay the loan from the sale of the property.

Provided the lender is confident in your ability to sell and get enough funds to repay the loan, past late or missed payments will be less relevant.

Loan Period

Most buy-to-sell mortgages feature short repayment periods of up to a year, with some going up to 24 or 36 months.

Being realistic about how long you need to flip the property is vital.

Remember that renovation projects can sometimes take longer than expected, and the last thing you want is to come to the end of the buy-to-let mortgage term before selling and repaying the loan.

Buy To Sell Mortgage Options

There are broad buy-to-sell mortgage options, and the right choice for you will depend on your circumstances and needs.

These include:

Bridging Loans

A bridging loan is suitable if you want to flip a property within a year or sooner.

They feature higher interest rates than mortgages, but you can use them to buy un-mortgageable properties.

You’ll get the funds quicker and don’t need to wait six months before reselling or deal with early repayment penalties.

Refurbishment Finance

Getting a mortgage can be challenging if you want to buy a property that needs upgrading since most lenders don’t approve mortgages for uninhabitable properties.

Properties are considered too risky if they don’t have functional kitchens, bathrooms or security.

A refurbishment loan is more suitable for such cases where the aim is to renovate and resell for profit.

Lenders can offer light or heavy refurbishment products with property value assessed post-refurbishment instead of the current value, allowing you to borrow more than standard mortgages.

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How To Increase Your Chances of Buy To Sell Mortgage Approval

Deposit

The larger the deposit, the more likely you’ll get approved with a good interest rate. Most lenders require a deposit of at least 25% of the property’s value.

Strong Exit Strategy

The more realistic your exit strategy appears, the easier it is to get approval.

If the project involves renovations, the lender will want to see that evidence that the amount you borrow can cover the costs within the specified term

A Good Property

Lenders will be more comfortable approving the loan if the property looks easy to sell.

If it’s already suitable to live in and has no huddles to a smooth sale, such as non-standard construction or leaseholds, it will work in your favour in convincing the lender.

Experience Flipping Properties

Lenders will quickly approve your application if you can show them you’ve previously used buy-to-let mortgages to flip properties successfully.

Buy To Sell Mortgage Final Thoughts

If you’re looking for financing to quickly buy, renovate and sell a property, a buy-to-sell mortgage can provide the financing you need.

To ensure you get the best deal for your situation and needs, consult a mortgage advisor or broker with experience in buy-to-sell mortgages.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.

Saving or borrowing enough to purchase a home in the UK can be challenging, with average house prices being almost ten times the average wage.

The good news is it’s no longer unattainable thanks to a seven times income mortgage.

It allows you to borrow seven times your salary to help you purchase properties you thought you couldn’t afford.

Here’s everything you need to know about a seven times income mortgage UK and how you can get one.

Can You Get A 7-Times Income Mortgage?

Yes. Although it’s rare, getting a seven times income mortgage in specific circumstances is possible.

Lenders will use multiples of your salary or income to determine how much you can borrow.

Common amounts include four times your annual income, while others offer 4.5x, 5x, or 6x under the right conditions.

Only a limited number of lenders offer mortgages on a 7x income multiple, and the best way to explore your options is through a mortgage advisor or broker.

They can be a massive help, given how restricted your options can be, and you’ll benefit from their extensive industry knowledge and relationships with lenders.

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Eligibility For 7 Times Income Mortgage

The criteria you get will depend on the lender. Some require the following for you to be eligible:

• You’re a first-time buyer, a home mover or are remortgaging.
• You live in England or Wales.
• You want to buy a property worth £50,000 to £10m.
• You have a deposit of at least 10%.
• You earn at least £25,000 working as a firefighter, paramedic, nurse, police, doctor, teacher, barrister, accountant, dentist, lawyer, engineer, surveyor or architect.

You’ll need to earn at least £75,000 if you don’t work in any of the above jobs, and if you’re taking out a joint mortgage, only one of you will be eligible.

The lender will multiply one income up to 7 times and the remaining one up to 5 times to determine how much you can borrow.

7 Times Income Mortgage With A High Net Worth

People with a high net worth aren’t always restricted to the same lending criteria or regulations as other borrowers.

Mortgage lenders specialising in high net worth agreements are usually willing to offer much higher income multiples, loan amounts and bespoke terms and conditions.

You can borrow up to 7 times your salary through a high net worth mortgage if you have an annual net income of £300,000 or more or assets worth £3 million or more.

High-net-worth mortgages are usually larger and more complex than standard home loans and suitable for high-value properties or investments.

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If your wealth is tied up in assets, you can apply for asset-backed mortgages up to seven times your salary through specialised lenders.

It involves securing the debt against valuable assets like stock portfolios or shares.

Specialised lenders don’t often advertise their services and mostly work through brokers or advisers, so finding the right broker is key to landing a bespoke deal.

Alternatives To 7 Times Income Mortgage

Alternatives to secure the mortgage you need when you want to borrow seven times your income include:

Joint Mortgages

Applying with another person is an excellent way to boost your borrowing power.

Someone else on the application can lift the total income and help you reach your desired borrowing amount.

Some lenders even allow more than two applicants on a mortgage application, with the highest earners determining how much you can borrow as a group.

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Secured Loans

A secured loan is an excellent way to get hold of more financing, including borrowing up to seven times your income.

Usually classified as a second-charge loan, you’ll secure the amount you borrow against a property you own or another high-value asset.

You can get up to 10 times your income with a high-value asset as a security, but you’ll likely get high-interest rates.

The risk is usually lower for the lender because they can repossess the asset you use as security and resell it to recover the outstanding balance if you default.

Ensure you only borrow what you can realistically afford to repay with secured loans.

Equity Release and Remortgaging

You can also consider releasing the equity held up in your house through a lifetime mortgage if you’re over 55 years and want a seven times income mortgage.

It can help you access extra funds and make a higher borrowing limit more realistic.

With such equity releases, repayments don’t have to be made until you either go into long-term care or die.

Remortgaging an existing home, you own partially or outright can help increase your buying power for an additional property.

It can provide extra capital to boost your deposit and allow you to access a bigger mortgage close to 7 times your income if you approach the right lender.

Supplemental Income

If you have a complex income or get funds through different sources, it can help improve your position with lenders and help you borrow more.

Some lenders consider all income sources, and you can incorporate your commissions, bonuses, overtime, investments or pensions to increase your borrowing power.

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Factors That Can Impact Eligibility For 7 Times Income Mortgage

If you’re not a high net worth borrower, the following factors can affect your chances of qualifying for a seven times income mortgage or borrowing such amounts:

Expenditures

Even with a large salary, the amount you spend on your outgoing costs can play a role in influencing lenders.

Excessive spending can disqualify you or result in high rates.

Deposit

The deposit size impacts the loan-to-value (LTV) ratio, and a large deposit can make your application more attractive to lenders.

Credit History

Lenders get a snapshot of how you handle your debts and overall finances through your credit rating.

You can get the best rates with a good rating, but even with bad credit, you can access specialised lenders who offer bad credit mortgages.

7 Times Income Mortgage UK Final Thoughts

A 7 times income mortgage is an excellent way to buy the house you want.

Consider approaching a mortgage advisor or broker with experience arranging such mortgages to help explore whether you qualify and increase your chances of approval.

Call us today on 01925 906 210 or contact us. One of our advisors can talk through all of your options with you.