Author: Kristian Derrick

The loan-to-value (LTV) ratio is essential when taking out a mortgage as it can determine whether or not you get approved and the interest rate you get.

With LTV 80 mortgages UK, the mortgage is worth 80% of the total property value, and you can get 80% LTV mortgages UK for residential or buy-to-let properties.

This guide explores everything you need to know about the best mortgages worth 80% LTV in the UK.

How Do LTV 80 Mortgages Work?

With 80% LTV mortgages UK, the lender offers you a loan worth 80% of the house’s total cost, and you must cover the remaining 20% with a deposit if you’re a first-time buyer or the equity you’ve built up in your current property if you’re remortgaging.

You’ll then repay the borrowed amount plus interest over the mortgage term.

The LTV will determine the deal you get on a mortgage. Generally, the lower the LTV, the lower the rates and the more mortgage options you’ll have.

Lenders usually offer LTVs from 50% to 95%, and an 80% LTV is in the middle of this range, so you’ll have plenty of good options to choose from.

Types of 80% LTV Mortgages UK

You can choose from different types of 80% LTV mortgages whether you’re buying property for the first time, remortgaging, or moving home.

Popular options include:

Fixed Rate 80% LTV Mortgages

With fixed-rate deals, you get a fixed interest rate for a certain period, and you’re guaranteed to pay the same amount every month.

You can fix your mortgage rate for 2, 3, 5, 7, 10, 15, or even 40 years with some lenders.

It ensures your mortgage repayments don’t change because of interest rate changes.

Tracker Rate 80% LTV Mortgages

Tracker rate mortgages offer a variable rate that follows the Bank of England base rate, with lenders applying particular margins like 2% above the base rate.

Monthly payments can fluctuate if the base rate changes, and you can choose a term of 2 to 5 years before the mortgage enters the lender’s standard variable rate (SVR), which is usually more expensive.

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Can I Get 80% LTV Mortgages UK?

Yes. The main thing to ensure you’re eligible for an 80% LTV mortgage is to have a deposit worth 20% of the property value.

Lenders always consider the size of your deposit and whether it’s coming from an approved source.

Widely accepted sources include savings, proceeds from a property sale, equity releases, inheritance, gifts from family, or the sale of other assets.

Depending on where it came from, you can use different ways to evidence your mortgage deposit.

For example, personal savings will require at least six months’ bank statements, and a property sale will require a copy of the completion statement.

A gifted deposit will require a signed legal agreement confirming the value of the gift and that it will never need to be repaid.

The table below shows how much deposit you’ll need to get 80% LTV mortgages UK for properties of different values:

Property Value	Deposit Amount (20%)	Mortgage Amount (80%)
£200,000	£40,000	£160,000
£300,000	£60,000	£220,000
£400,000	£80,000	£320,000

Criteria for LTV 80 Mortgages in the UK

Apart from the deposit, you must meet the lender’s other criteria to qualify for 80% LTV mortgages UK.

These can include:

Income

Lenders will want to know how much you earn and whether the income is regular.

You’ll need to provide copies of your recent payslips or bank statements.

You can still qualify for 80% LTV mortgages with a complex income, like freelance earnings that fluctuate or bonuses and commissions.

However, it can be challenging for lenders to use their standard criteria, and you’ll need the help of a mortgage broker to identify the best lenders for such applications.

Outgoings and Credit History

Lenders will look at your monthly outgoings to establish whether you can afford the mortgage.

They’ll need to know about your personal loans, credit cards, pensions, childcare costs, and car loans to ensure you can cope with monthly mortgage repayments.

They’ll also review your credit history to determine your track record of paying back loans.

You can still qualify for LTV 80 mortgages UK with negative scores on your report, but you’ll have fewer deals and lenders available.

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Property Type

The type of property you’re buying can affect whether or not you get approved for the best mortgages worth 80% LTV in the UK.

Non-standard properties like listed buildings or houses with thatched roofs can make it trickier to secure a mortgage.

Such properties usually require a lot of maintenance and costly insurance.

They’ll have less demand, and the lender will be concerned about the resell potential if they’re forced to repossess your house.

Pros and Cons of LTV 80 Mortgages UK

Pros

• You’ll pay less interest overall than borrowing mortgages that exceed 80% LTV.
• You’ll have access to better rates than LTV mortgages over 80%
• You can easily save up a 20% deposit compared to other deposit sizes like 30% or 40%, so you can quickly get on the property ladder with 80% LTV mortgages and even have some money left for renovations or emergencies.
• Getting onto negative equity with LTV 80 mortgages can be harder than mortgages with higher LTV. Negative equity is usually caused by falling property prices and involves the property being worth less than the mortgage you have on it.

Cons

• Depending on the property value, saving up a deposit of 20% can be challenging, especially if you’re a first-time buyer.
• You’ll pay higher interest rates than mortgages with lower LTVs, like 70% or 60%. Lenders usually divide their mortgage deals into different LTV bands with 5% increments. Every band features a different interest rate, and the higher you go, the higher the rate.
• You’ll also have fewer deals and lenders to choose from compared to borrowers with more significant deposits.

LTV 80 Mortgages Final Thoughts

Using an LTV mortgage calculator can help you compare thousands of 80% LTV mortgage deals.

It’s also worth consulting an independent mortgage broker who can help you secure the best mortgage worth 80% LTV in the UK based on your circumstances.

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

When looking for a fixed-term mortgage, one of the most important decisions is how long you want to fix your mortgage.

Most borrowers choose a 2-year or 5-year mortgage UK when looking for consistent monthly mortgage payments that don’t change during that timeframe.

However, there are various factors you must consider when deciding whether committing to a 2-year or 5-year mortgage UK is the right option for you.

Read on to learn about 2-year and 5-year mortgages, their pros and cons, and considerations to help you make the right choice.

What is a 2-Year Mortgage UK?

A 2-year mortgage allows you to have a fixed interest rate that doesn’t change for two years.

You’ll know the exact monthly repayments during this period, which will remain the same even when interest rates rise or fall.

It’s usually the shortest term for fixing your mortgage interest since 1-year deals are less common.

A 2-year mortgage is usually the cheapest fixed-rate mortgage since interest rates on shorter-term deals are generally lower than on longer-term deals.

Pros of a 2-Year Mortgage

• Short Term Commitment

A 2-year mortgage features a short-term commitment and is viable if you know your needs or circumstances can change soon.

A 2-year mortgage will keep your options open since you’re not locked in a long-term commitment.

• Low-Interest Rates

Interest rates on 2-year mortgages are usually lower than on longer fixes, translating to lower and more affordable monthly payments.

• Flexibility to Move or Remortgage Sooner

A 2-year mortgage makes it easier to move houses or remortgage sooner if you want to switch to a new deal, especially if interest rates have reduced by the end of the two years.

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Cons of a 2-Year Mortgage

• Uncertainty in the Long-term

You’ll only fix your interest for a short time, and there’s no way of knowing the kind of interest you’ll get when your fixed term expires.

You may end up in the lender’s standard variable rate (SVR), which is much higher.

• Remortgaging Costs

Remortgaging to get a better deal will likely involve some additional costs, which can add up to a significant amount depending on the number of times you remortgage over the lifetime of the mortgage.

For example, paying £1,000 every time you remortgage and switching ten times can add up to £10,000 in fees.

• Less Financial Certainty

You’ll have less financial certainty with a 2-year mortgage, especially if your circumstances change.

You may end up in a situation where monthly payments have increased due to rising interest rates, and your income has decreased, making it challenging to afford the mortgage.

What is a 5-Year Mortgage?

A 5-year mortgage deal allows you to fix your interest rate at the same level for five years.

It will enable you to lock in the interest rate for a longer period, giving you peace of mind that the monthly payments will remain the same for longer, regardless of what happens to the interest rates.

Rates for 5-year mortgages are usually higher than for shorter-term fixes because they give you budgeting certainty for more extended periods.

Pros of a 5-Year Mortgage

• Long-term Certainty

Your monthly repayments will remain predictable for a long time, giving you more certainty in case of economic uncertainty or changes that can affect your financial position.

If your situation changes, like your income reduces or you get a child, you won’t have to worry about increases in your monthly payments.

• Protection from Rising Interest

If the base rate continues to rise, shorter-term mortgages can be worse off as they can get into a higher mortgage rate when the short period ends.

With 5-year mortgages, you’ll have protection from rising interest rates since you’ll remain on your current rate for longer.

• Save on Remortgaging Fees and Time

Locking in a long-term deal helps avoid the hassle of remortgaging every few years, helping you avoid the costs of remortgaging, such as a lender or solicitor fee.

You’ll also save the time involved in the remortgaging process, including researching for the best deal, filling out lots of paperwork, and providing proof of earnings.

Cons of a 5-Year Mortgage

• Higher Interest Rates

Longer mortgage deals often feature higher interest rates than shorter-term deals. However, the gap has narrowed over the years, so it shouldn’t be too much of a difference.

• Less Flexible

A 5-year mortgage is a long-term commitment and is less flexible if circumstances change and you need to move or remortgage.

You may need to transfer the mortgage to a new property, and if you can’t and are forced to exit, you’ll likely incur early repayment charges (ERCs) and exit fees.

• You May Be Stuck with Higher Rates

While you can benefit from a longer-term mortgage if the interest rates rise, a 5-year mortgage risks getting stuck with higher interest rates until the mortgage term ends if the interest rates go down.

You won’t be able to take advantage of reduced interest rates during the fixed-term period.

Considerations when Choosing Between a 2-Year and 5-Year Mortgage UK

A few things to consider to ensure you choose the right mortgage include:

Will Your Circumstances Change Soon?

If your situation is unlikely to change and you have no plans of moving house or remortgaging soon, it’s worth locking yourself in favourable rates for as long as possible.

However, if you plan to start a family or change jobs and need to move to a different location or a larger property, a 2-year mortgage can be a suitable choice as it leaves your options open.

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What Is the Predicted Bank of England Interest Rate?

It’s worth researching expert forecasts on the base rate from the Bank of England for the next few years.

Although accurate predictions can be difficult, factors like rising inflation or economic uncertainty can help determine whether the base rate will likely rise or fall.

Locking in a longer deal can help safeguard you against sudden rises in interest rates, while shorter deals can make it easier to remortgage to a better deal when the rates fall.

2-Year or 5-Year Mortgage UK Final Thoughts

It’s important to consider your needs and circumstances when choosing between a 2-year or 5-year mortgage.

An independent mortgage broker specialising in fixed-rate deals can assess your requirements and help you find the best mortgage and lender for your situation.

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

Mortgage industry jargon can be challenging at the best of times, especially for newbies to the mortgage world or those who have been out of the loop for some time.

To ensure that you understand what you’re getting yourself into and what sellers, lenders, and mortgage advisors are talking about, familiarising yourself with the jargon and terminology relating to UK mortgages is a good idea.

UK Mortgage Terminology and Jargon Every Borrower Should Know

We’ve compiled a helpful list below to help you cut through the noise and confusion of your upcoming mortgage.

Different Types of Mortgage Deals and Products

This does not refer to the mortgage itself but the features of the mortgage.

In short, these features will determine what terms and conditions a borrower is subject to.

Offset Mortgages

You can link your savings account to your mortgage account if you have high savings. This reduces the interest rate you’ll be expected to pay.

Family Assist Mortgages

This is where a family member signs surety for another family member. This is very similar to a guarantor mortgage.

Guarantor Mortgages

If you’re struggling to get onto the property ladder because you have a less-than-ideal credit score or your earnings aren’t enough, you can ask someone in good financial standing to sign as a guarantor for you on your mortgage.

This means that if you default on your mortgage payments, the guarantor will be responsible for ensuring the instalment is paid.

Shared Ownership Schemes/The Right to Buy Scheme

If you don’t have a guarantor, the government offers these schemes to assist you in getting onto the property ladder.

Self-Build Mortgages

If you want to build your own home on the property, you can apply for a mortgage to cover the building costs.

Islamic Mortgages

This is Sharia-compliant financing that enables Muslims to buy homes with the laws and regulations of their religion in consideration.

Different Types of Mortgages

Residential Mortgages

This is the type of mortgage you apply for if you intend to buy the property for your own use, and take personal residence of the space.

Buy-to-Let Mortgages

You can apply for this type of mortgage if you intend to use the property as income.

This means you will be the landlord but won’t live on the property yourself.

Commercial Mortgages

If you intend to use a property for business or to rent to a business to make an income, you will apply for a commercial mortgage.

Remortgage

This is a form of refinancing or switching your existing mortgage product to another deal.

Equity Release Mortgages

These mortgages are only open to individuals who are 55 to 65+. These mortgages are intended to raise funds using the residential home as security against the funds.

Types of Repayments

Every type of mortgage will have a repayment type attached. This is the type of instalment you will make each month. Here are the terms you need to understand.

Interest-Only Mortgages

If you opt for this repayment type, you will only pay the interest amount for the full loan term.

When you get to the end of the loan term, you will need to pay the entire loan amount as a lump sum.

This is a popular payment type for buy-to-let and commercial mortgages. It’s unusual for this to be applied to residential mortgages in the UK.

Capital Repayment Mortgages

This is a combination loan where you pay a portion of the capital loan amount and a portion of the interest each month.

You will have settled the entire amount by the end of the UK mortgage term.

Part and Part Mortgages

This type of UK mortgage payment type mixes two repayment types together. For instance, you will pay part capital and part interest-only payment types on one contract.

Terms Referring to Interest Rates on UK Mortgages

Fixed Rate Mortgages

This means that you’ll pay the same amount of interest for your loan term.

Sometimes, this is not the entire term as fixed-rate UK mortgages are available in two, three, five, and ten-year options.

You can sometimes fix a mortgage for 25+ years, but certain disadvantages come with this.

Variable Rate Mortgages

This type of interest rate isn’t fixed, which means it can fluctuate for the duration of your loan.

You will find three types of variable interest rate mortgages:

• Tracker rate variable mortgages in the UK

This interest rate is influenced by the Bank of England base rate, so your interest rate may rise and fall according to that base rate.

• Discount rate variable mortgages in the UK

This interest rate is set below the standard variable rate (SVR). This can be set over two or five years. Your interest rate will vary and fluctuate but will be less than the SVR.

• Standard variable rate mortgages in the UK

Lenders all have an SVR, which is their default interest rate. The lender controls this interest rate, and it is not a fixed product.

You can switch from this type of interest rate at any time. In most instances, it is the most expensive type of variable interest.

Additional Terms Borrowers Should Be Aware of!

Deposit

This is the upfront amount you must pay to get a mortgage. This ranges from 5% to 40% of the overall property value.

Agreement in Principle

This is sometimes called a mortgage in principle.

This is an offer from the mortgage lender stating how much they will lend you if your application is accepted.

It’s a good idea to get an agreement in principle before applying for a full mortgage loan, as it will help you understand what price range to look in when shopping for a property.

Conveyancing

This process is carried out by a solicitor who handles the transfer of deeds and funds between the buyer and the seller.

Loan to Value (LTV)

This refers to the amount you can loan vs the actual property cost.

Credit Score

This is a record of your financial behaviour held by the various credit bureaus.

Your score will impact how much a mortgage lender is willing to give to you.

If you have a high credit score, you will get a lower interest rate and be offered higher mortgage amounts than if you have a poor credit score.

Porting a Mortgage

This is when a borrower takes their mortgage with them when they move to another house.

This isn’t something that all lenders allow, but some modern mortgage lends do allow it.

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

Getting a mortgage in the UK is a big step. It’s possibly– no, make that definitely the biggest investment most people will make in their lifetime.

There’s no denying that mortgage applications can be a bit of a challenge, but with the right research, know-how, and knowing how to organise your documentation, you can confidently forge ahead.

Before you start with the paperwork, you’ll need to save a deposit for your UK mortgage.

The minimum amount mortgage lenders UK will ask on a property is 5%, so do the calculations and ensure you’ve set aside this amount before you begin any applications.

You can use several free UK mortgage calculators to see how much you’ll be allowed to borrow, what the deposit will be and what the estimated monthly instalments are.

Once you’ve got an idea of your spending power, you can start making mortgage comparisons with the leading UK mortgage lenders.

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What Are the Requirements to Apply for a UK Mortgage and How Do I Prepare My Application?

When applying for a UK mortgage, you will need to decide if you’re going to approach a lender directly or if you’re going to acquire the professional services of a mortgage advisor.

A good tip is to get an agreement in principle before processing a full mortgage application.

“Agreement in principle” is defined: this is an indication from a lender/bank that they could lend a specified amount based on the information/details the borrower has provided about their income, spending, and debts.

With a mortgage in principle or agreement in principle (AiP), you know what price range you can shop in.

Preparing Your Mortgage Application

All lenders follow a similar mortgage application in the UK.

UK mortgage lenders want some form of security in that you can repay the loan that you’re applying for.

You’ll need to prove that you can afford the loan.

To prove that you can afford the mortgage and that you’re a viable candidate for a loan, you’ll need to prepare your mortgage application accordingly.

There are 6 basic steps you need to follow to ensure a streamlined UK mortgage application process without any hiccups along the way.

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6 Steps to Preparing Your Mortgage UK Application

Quick Overview of Steps:

1. Check Your Credit Score
2. Get Proof of Address
3. Get Valid Proof of ID
4. Provide Proof of Deposit
5. Provide Proof of Earnings/Income
6. Draw Up a List of Your Monthly Expenses

Step 1: Check Your Credit Score

All mortgage lenders UK are required to do a credit check on applicants.

This is a soft credit check if you have an agreement in principle (this won’t impact your credit record).

When you’re at the stage of processing the full application, you can expect a hard credit check, which will appear on your credit record.

Bad credit scores don’t automatically mean you can’t get a mortgage, but you can expect the process to be more challenging.

Good credit scores are approved and processed quicker, but those with poor credit scores can expect additional checks to apply, higher interest rates demanded, and lower final mortgage amounts offered.

To avoid surprises, get a copy of your credit report before applying for mortgages UK.

This allows you to make improvements and also correct data that might be incorrect.

Step 2: Get Proof of Address

Your proof of address must be current and include your full name and address.

Utility bills are great for proof of address, but remember that if you’re using a bill as proof of address, you must include all pages of the bill, not just the front page showing your particulars.

Whether you need digital or hard copies of your proof of address will depend on which lender you’re working with.

Step 3: Get Valid Proof of ID

Valid identity is vitally important when applying for a UK mortgage.

You’ll need a form of ID with photographic evidence, so consider using your driver’s license, passport, or similar.

Your ID expiry dates must remain valid 6 months after your application date.

Step 4: Provide Proof of Deposit

You’ve gathered a deposit; now you need to prove it.

All UK mortgage lenders will want to ensure that you’ve legally acquired your deposit and that they’re comfortable with how you’ve gathered your deposit.

For instance, some lenders will reject applications if the deposit was acquired through a loan or gambling.

Someone can gift you the money, but they will need to write you a letter and sign it stating that it was a gift. Proof of deposit can be proven with bank statements.

Step 5: Provide Proof of Earnings/Income

You don’t need to be formally employed to apply for a UK mortgage (you can be self-employed, a contractor, or earn your income through alternative means).

Still, you’ll need to prove that you earn a sufficient amount to afford the monthly instalments comfortably.

Each mortgage lender will have its preferred proof of income format, but most often, the request will be for payslips, bank statements, and company financials (if you’re self-employed) – and you can even use your tax returns.

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You must provide evidence of each income stream if you have multiple income streams.

You can also include additional income as part of your proof of earnings, such as payments you have received for commission, bonuses, and overtime.

Remember that self-employed individuals must provide 12-36 months of full accounts.

Step 6: Draw Up a List of Your Monthly Expenses

An affordability assessment is an important part of the process.

Mortgage lenders UK will want to compare your monthly income with your outgoing expenses.

This will uncover how much cash flow you have available to pay for a mortgage instalment.

The list will be compared with your bank statement, so be as thorough and transparent as possible.

Before applying, scrutinise your bank statement for costs you can reduce.

If you have subscriptions and accounts you don’t use, cancel them and allow the difference to show on your bank statements before starting applications.

This will show more available cash flow for your instalment.

What Do You Need to Get a Mortgage in the UK? Conclusion

Working with a UK mortgage broker can help simplify your application process and ensure that you have everything in order for a smooth process.

This is especially helpful if you’re self-employed or earn income through multiple alternative streams.

A mortgage advisor or broker can cut through the noise of a UK mortgage application and help you get things on track as quickly 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.

Your mortgage will undoubtedly be the biggest financial commitment of your life.

According to latest figures, the average mortgage balance in the UK at the end of 2021 was a whopping £137,934.

And with mortgage interest rates sitting at 5.13% (as of February 2023) for a two-year fixed rate and 4.78% for a five-year fixed rate, you must make the right decision.

If you’re applying for a new mortgage in the UK and will meet with a mortgage advisor, here are ten questions you should have ready for them.

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1. How Much Can I Borrow for My UK Mortgage?

The most important question, of course, is how much you can borrow if you qualify for a UK mortgage.

Any motivational coach will tell you to put your past behind you and never look back, but in the case of UK mortgages, this isn’t possible as your credit history may come back to haunt you.

Your credit score will undoubtedly play a role in how much you can borrow for a mortgage. The better your credit score is, the more you’ll be able to borrow.

Your credit score is affected by the following:

• What credit you already have available, and what portion you’re using.
• How you’ve handled account payments in the past.
• Court judgments against you.
• Electoral roll registration.
• The total of your debt.
• How many credit checks have been done in your name.

Based on your credit score, what can you expect to borrow?

This one has no straightforward answer because mortgage lenders work differently.

Some might use a complex affordability assessment to determine the maximum amount you can borrow, whereas others may use income multiples.

Providing the mortgage advisor with all your financial information will help them determine a realistic mortgage loan amount.

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2. What Documents Are Required to Apply for UK Mortgages?

Here’s a list of what is generally required.

If there is anything extra required, your mortgage advisor will be able to advise you:

• Proof of income (bank statements, pay slips or tax returns)
• Valid form of ID
• P60 if you’re employed
• Tax returns if you’re self-employed

3. What Types of Mortgages UK Are Offered?

There are many types of mortgages available in the UK, and you may want your mortgage advisor to explain each type to you:

• 95% mortgages
• Buy-to-let mortgages
• Capped-rate mortgages
• Flexible mortgages
• Guarantor mortgages
• Help to Buy mortgages
• Standard variable rate mortgages
• Joint mortgages
• Offset mortgages
• Tracker mortgages

4. What Interest Rates Can You Expect on Your UK Mortgage?

What you will pay in interest is determined by the type of mortgage you’re offered.

For instance, a fixed interest rate means that you’ll pay the exact amount for the specified period (as in the case of a 2-year fixed mortgage APR, your instalment won’t change for 2 years).

Discounted variable rates provide discounted rates from the lender’s SVR (Standard Variable Rate), and so rise and fall.

Keep in mind that mortgage lenders control their APRs.

Base rate tracker means that the Bank of England’s rate impacts your mortgage.

5. What Valuation Options Are Available?

When applying for a UK mortgage, the lender will want to conduct a valuation to understand if the property is a viable security for the loan you’re applying for.

While it seems only to benefit the bank, it can also help you figure out if you’re paying too much for the property.

There are several types of valuations to choose from, as follows:

• Homebuyers survey and valuation – this is a thorough valuation that also provides feedback on expected repairs and maintenance required on the property to maintain its value.
• Basic valuation – this simply determines the property value and highlights urgent or significant repairs required.
• Building/structural survey – this is a comprehensive survey that provides in-depth advice on whether the building requires repairs and maintenance immediately and in the future.

6. Are There Arrangement Fees on a UK Mortgage?

Arrangement fees are setup fees charged by the mortgage lender. This can be a fixed lump sum or a certain percentage of your total loan cost.

This fee is payable at the start of your mortgage and can range between £500 and £2,000 or even higher.

Before your mortgage advisor finds the ideal mortgage UK for you, ask what the expected arrangement fees are so that you can budget accordingly.

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7. Can I Overpay on My Mortgage UK?

Mortgage lenders generate their profits through interest, which means a lengthy loan is preferable to them.

If you wish to overpay your mortgage, it means fewer interest payments to the lender.

For this, lenders may charge a penalty.

In some instances, mortgage lenders let you pay back 10% more each year without charging a penalty.

Discuss the expected penalties for overpaying with your mortgage advisor to ensure that you don’t incur fees when you’re trying to settle your mortgage faster.

8. Are There Early Settlement Penalties on UK Mortgages?

While you may think settling your mortgage early is admirable, mortgage lenders in the UK may penalise you.

Early repayment charges can be levied if you pay back a portion of the mortgage before the specified date. Some penalties can be as much as 5%.

It’s best to ascertain the early settlement penalties – these should also be detailed in your mortgage contract.

9. Do I Have to Take Out Insurance on My Mortgage?

As mortgages are high-value debt, lenders typically insist on buildings insurance.

It’s a good idea to enquire if the insurance must be through them or if you can find buildings insurance elsewhere.

You may be expected to pay a fee if your insurance is with another provider. It’s also a good idea to discuss whether or not income protection and life cover are required.

10. How Long Does it Take to Process a Mortgage Application?

It’s difficult to say how quickly a mortgage application in the UK will be processed. Some mortgages are processed rapidly, while others take a few months.

Some property deals fall through because the process can take too long.

Your mortgage advisor should be able to provide insight into your specific situation.

The National Association of Estate Agents has recorded the average mortgage taking around 53 days to process.

Questions to Ask a Mortgage Advisor UK Conclusion

When discussing your requirements with your mortgage advisor, it’s best to ask these 10 questions.

Jot them down and add more to your list to ensure you’re able to make an informed decision about one of the biggest financial commitments of your life.

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

The first you need to do when buying property in the UK is to compare mortgage brokers vs banks.

The range of options on the mortgage market can be overwhelming, and depending on your situation, a bank or mortgage broker can be a suitable choice.

This guide compares which is the better between a bank vs a mortgage broker to help you make an informed decision.

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Mortgage Brokers vs Banks

Mortgage brokers are intermediaries who help you find the best mortgage deals.

They have extensive knowledge of the entire mortgage market and have access to a wide range of lenders.

In addition to experience in the industry, mortgage brokers can provide support and guidance throughout the mortgage process.

Brokers usually charge a fee for their services, and you can pay this upfront or have it rolled into the mortgage cost.

Some brokers also receive commissions from the lender.

Banks are traditional lenders, and you can go to them directly for a mortgage.

You’ll know who you’re dealing with when you go to a bank for a mortgage, allowing more transparency.

There are no hidden or broker fees, and you can get excellent rates if you have a positive relationship with the bank.

However, you’ll only be limited to a few products or services.

Pros of Mortgage Brokers

• Access to a Wide Range of Products

Mortgage brokers have relationships with different lenders and can help you access a wider range of products.

They can shop around and compare different mortgages to find the best deal for you.

• Time Saving

Mortgage brokers can do the legwork on your behalf, including gathering and preparing all the necessary paperwork, shopping around, comparing deals, contacting lenders and negotiating better deals for you.

They can compare multiple lender criteria with your application and see if you can get approved even before submitting your application.

This can save you time in the application process and help you avoid applications that will likely get rejected.

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• Specialist Expertise and Bespoke Advice

Mortgage brokers can offer guidance and support if you have unique circumstances that make you unqualified for mortgages with traditional lenders like banks.

For example, situations like a complex financial situation, non-standard income or bad credit history call for specialist mortgage lenders and a mortgage broker can help you find one.

They can offer bespoke advice based on your situation and steer you towards flexible mortgage providers who will likely approve your application even if you fall into a ‘higher-risk’ lending category.

• Better Impartial Deals

Whole-of-market access allows mortgage brokers to shop for the best deals and rates.

You’ll have better chances of securing a competitive mortgage deal and getting impartial advice not limited to a particular product.

Cons of Mortgage Brokers

• Cost

You’ll likely need to pay mortgage brokers for their services.

• Conflict of Interest

Mortgage brokers who are not independent or properly monitored can have a conflict of interest and only recommend specific mortgage providers so they can benefit from better commissions.

Pros of Approaching a Bank Directly

• Familiarity and Reputation

Most banks are usually well-established and have a positive reputation, which can give you peace of mind that you’re working with a dependable lender.

Having a prior connection with the bank or loan officers can also help simplify the process and negotiate some costs like origination or underwriting fees.

• Transparency and no Extra Costs

When approaching a bank directly, you’ll know exactly what you’re getting into and who you’re dealing with and don’t have to deal with broker fees or hidden costs.

Cons of Approaching a Bank Directly

• Limited Products

When you approach a bank directly, you’re limited to one set of products, and the officers will only recommend their products.

• Less Flexibility

Banks usually have rigid rules around their mortgages and are not flexible enough to accommodate borrowers with unique circumstances.

They have minimum requirements, and you’ll get rejected automatically if you don’t meet the criteria.

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Which Is Better, A Bank or Mortgage Broker?

In most cases, approaching an independent mortgage broker is usually better than going directly to the bank.

When you go directly to the bank, you risk missing out on more suitable deals elsewhere.

Unless you’re a financial expert with thorough mortgage market knowledge, you can’t say with absolute certainty that you’re getting the best deal available.

Working with a mortgage broker can get you the most favourable rates thanks to their access to the whole market.

Some lenders only promote their products exclusively through brokers and don’t deal directly with the public.

A mortgage broker can give you access to such deals, giving you more options than you would otherwise have with a specific lender or bank.

A mortgage broker can also make all the difference if you fall into the higher-risk category like having bad credit, being self-employed, retired, an ex-pat or having a low income.

If you’re in such a situation and approach a bank directly, they’ll likely turn you away or charge higher interest rates.

A mortgage broker with expertise can improve your prospects and connect you to specialist lenders who consider your application and provide the most favourable terms.

Costs of a Bank vs a Mortgage Broker

A mortgage broker may charge a fee for their services, while approaching a bank will not.

However, you must consider the overall cost of the mortgage you’ll get from a bank vs a mortgage broker.

While you might save a small amount by going to the bank directly without seeking professional advice, you may end up with an expensive mortgage since there’s no guarantee you’ll get the best deal available.

With a mortgage broker, you can save significantly in the long run if they help you find a better deal than you would get alone.

Additionally, some mortgage brokers have success-only policies and don’t charge anything if they fail to get you a fair deal.

Others offer free initial consultations on your circumstances and mortgage needs, which can be useful if you’re sceptical.

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Bank vs Mortgage Broker UK Final Thoughts

Unless you’re a mortgage expert, consulting an independent and qualified mortgage broker is better than going directly to the bank.

They can help you save time and money and prevent damage to your credit report while giving you access to various mortgage deals and products that suit your situation and needs.

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

People all over the UK are feeling the strain of the cost-of-living crisis caused by economic turbulence and rising inflation.

Since last year, interest rate forecasts in the UK have gradually risen as the Bank of England tries to curb inflation, leading to fears of higher mortgage rates and more pressure on homeowners’ budgets across the UK.

But what is the forecast for interest rates in the UK this year, and how will it affect homeownership?

This guide explores the current and predicted interest rates in the UK and how they affect the mortgage market.

What Are the Interest Rate Forecasts UK?

The Bank of England (BOE) increased the Base Rate nine times in 2022, and the latest change came on February 2^nd 2023, rising from 3.5% to 4%, considered the highest level in 14 years.

The rising interest rate is an attempt to reduce soaring annual inflation rates, now at 10.1%, above the target rate of 2%.

The rise in the base rate is higher than was previously predicted, and there are concerns that it might rise again more aggressively to combat inflation.

Further interest rate hikes are accepted in 2023, with forecasts for interest rates UK showing the base rate can increase to between 4.25% and 4.75% by the middle of 2023 and remain around this level for the rest of the year.

The Monetary Policy Committee (MPC) of the BOE, which decides on the actions to take, is set to meet again on March 23^rd 2023, to decide on the next level for interest rates.

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Why Are There Increases in Interest Rate Forecasts UK?

One of the main jobs of the MPC is to control inflation and ensure it comes down to various targets.

The current target is 2%, and interest rates are used to manage inflation.

Although the BOE can’t stop inflation from going higher or lower than the target, they can try and bring it back to the target by increasing or decreasing the Base Rate.

When inflation is low, and the BOE wants to encourage spending and borrowing, it lowers the base rate, which makes loans more affordable.

When they want to reduce inflation, they raise the base rate, which increases overall interest rates in the UK economy.

Increasing the interest rates makes it more expensive for people to borrow money and buy things.

It encourages people to save rather than spend in the overall economy.

When more people spend less on services and goods overall, the prices of commodities will tend to rise more slowly, trans

What Is the Impact of the Predicted Interest Rates UK on Mortgage Rates?

The Base Rate usually influences other rates in the UK, including those you might have for a loan, mortgage or savings account.

Tracker mortgages directly follow the base rate, and customers can expect mortgage rates to go up in line with the increase.

However, mortgage experts state that despite the interest rate increases by the BOE, not all mortgage rates will go up.

Interest rates for fixed-rate mortgages have gradually declined for the past few months since the mini budget in September 2022.

The current or predicted interest rates in the UK are not expected to impact this trend.

This is because mortgage providers tend to adjust their rates ahead of time to account for worst-case scenario increases.

Most mortgage lenders likely adjusted their rates after the economic turmoil that followed the mini-budget.

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Therefore, the knock-on impact of the base rate increases will not affect fixed-rate mortgages in the same way as tracker mortgages.

If you’re on a fixed-rate deal, your mortgage rate will stay the same for the duration of that deal.

With standard variable rates, the rate you automatically move to when your fixed term expires, there is no direct link with the base rate.

However, you’ll be at the lender’s mercy throughout the mortgage’s lifetime.

They can increase or decrease with the base rate or according to the whims of your mortgage provider.

Recommended guides: 

• Remortgage for home improvements.
• How long does mortgage approval take?
• Remortgage with bad credit.
• Remortgage for help to buy.

What Should I Do with the Increased Forecast for Interest Rates UK?

An increased forecast for interest rates can be scary for borrowers, especially with soaring food prices, energy bills and other increases in outgoings associated with the cost of living.

A few actions you can take include:

Fixing Your Mortgage

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.

Fixed-rate mortgages allow borrowers to know exactly how much they pay each month without worrying about unexpected changes.

With rising interest rates and inflation still high, more interest rate rises are likely, resulting in higher mortgage rates that cause your monthly repayments to go up if you don’t fix your mortgage beforehand.

You can choose to fix your mortgage rate for 1, 2, 3, 5, 7, 10, or 15 years.

Two-year fixes are cheaper and usually provide more freedom and access to the best rates.

They’re suitable if you want to switch deals regularly or are considering moving home soon.

Consider how long you want to commit to an agreement and whether your circumstances are likely to change soon.

Lock in a New Rate

You can lock in a new rate if you’re due for a remortgage in the next six months, then switch when your deal ends and avoid early repayment charges (ERCs).

Most lenders 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 currently pay, you can save money by remortgaging.

Will The Predicted Interest Rates UK Cause a Fall in Property Prices?

Yes. An increase in mortgage costs will cause reduced demand for homes, leading to a fall in property prices.

Housing Price indexes have predicted that prices will fall by around 10% in 2023, with the market being dominated by needs-based buyers who don’t rely on mortgages.

However, a resurgence in value may occur in 2024 as economic conditions improve and mortgage rates reduce.

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UK Interest Rate Forecasts Final Thoughts

With increases in the base rate and rising UK interest rate forecasts, now is a great time to consider fixing your mortgage and locking in lower rates.

Consulting a qualified mortgage broker can also help you navigate the current climate and get the best mortgage rates for your circumstances.

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

You can save hundreds or even thousands of pounds in interest and have more monthly cash by paying off your mortgage early.

You’ll own your home outright sooner and no longer have mortgage payments hanging over your head.

However, paying your mortgage off early isn’t always a good idea and may not be suitable for everyone.

If you’re wondering, is it worth paying off a mortgage early?

Here are some benefits and drawbacks of paying your mortgage off early to help you decide whether it’s a suitable option and some considerations when paying off your mortgage early.

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Pros of Paying Off Your Mortgage Early

Interest Savings

Saving money on interest is one of the main reasons for paying off your mortgage early.

Mortgage interest rates are usually higher than other interest rates, and you can save thousands of pounds depending on how early you pay off your mortgage.

Some money goes towards your interest each month you make a mortgage payment, so you’ll pay less if you make fewer payments.

Own Your Home Sooner

Paying your mortgage off early allows you to own your home outright sooner, so you don’t have to worry about a change in circumstances in the future.

You’ll have peace of mind knowing that even if you hit a rough financial patch, you’ll not risk foreclosure and losing your home because you can’t keep up with monthly mortgage payments.

With full ownership, you can do whatever you want with your home without asking the mortgage provider for permission, such as renting it out or transferring ownership.

Eliminate Monthly Payments

Paying your mortgage off early eliminates monthly payments and frees up your cash flow.

You’ll have extra funds to put toward other things and achieve a better work/life balance since you don’t have to worry about bringing in a substantial monthly income to cover all your outgoings.

You can free up a sizable chunk and have it, invest, or use it for other expenses.

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Building Equity

You’ll build equity in your home more quickly by paying off your mortgage early.

You can easily qualify for refinancing with more equity and leverage it in other loans, saving you more money in the long run through lower rates and monthly payments.

You can quickly get financing to make home improvements and increase the value of your property or pay off other debts.

Cons of Paying Your Mortgage Off Early

Opportunity Costs

You’ll likely need a significant amount to pay off your mortgage early, meaning you can’t use the funds for other financial goals.

You may be paying off your mortgage early at the expense of other higher-return opportunities, an emergency fund, or savings for retirement.

Loss of Tax Breaks

When making mortgage payments, you can lower your taxable income by claiming the amount you pay on your mortgage interest.

Paying your mortgage off early means you lose such perks and any possible tax savings.

You Tie Up Your Wealth

Since your home is illiquid, you’ll tie up a significant chunk of your money and can’t quickly or easily convert it to cash.

If you get an investment opportunity or face a financial emergency, you may need to sell your house, which can take a while since you must wait until a buyer is available and the sale is closed.

Is it Worth Paying Off A Mortgage Early?

Here are a few factors to consider to determine whether paying your mortgage off early is a worthwhile option for you:

Will You Be Charged for Paying Off Your Mortgage Early?

An early repayment charge (ERC) may apply if you pay off your mortgage early or overpay over the agreed monthly limit.

Lenders make money by charging interest on a loan, and they’ll lose money when you pay off your mortgage early.

They set up an ERC or exit fee to compensate for lost profits, especially if you’re not on the lender’s standard variable rate (SVR).

The ERC usually equals a certain percentage of the mortgage loan amount or a certain number of monthly interest payments.

Most lenders only allow you to overpay up to 10% yearly without penalties. The first thing to consider is how much it will cost before paying off your mortgage early.

You may end up paying the interest you would have paid or losing more money in hefty fees, so consult your mortgage provider and contract before proceeding.

Do You Have More Expensive Outstanding Debts?

It’s wiser to focus on paying off higher-interest, expensive debts before paying your mortgage off early.

Expensive debts charging higher interest rates cost a lot to pay off over time compared to your mortgage, meaning it can work in your favour to pay them off first if you have the cash.

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Do You Have an Emergency Fund?

Ensure you have a robust emergency fund before paying off your mortgage early with all the funds you have.

Throwing every extra penny at your mortgage can get you out of that particular debt, but it can put you in a tricky situation if you don’t have anything set aside for emergencies.

If you face an unexpected bill or medical costs or find yourself out of work for a few months and haven’t put anything aside, you may need to borrow or take out credit cards to cover your bills.

Before considering paying your mortgage off early, set aside an emergency fund to keep you going for at least three months in case anything happens.

Do You Have a Pension Scheme?

Is it worth paying off a mortgage early or setting yourself up for the best financial position later in life?

If you don’t have a pension scheme or are only making minimum contributions on the one you have, putting more money towards the pension is a better idea than paying off your mortgage early.

A pension is a tax-efficient way to save money and secure your life financially after retirement.

Your employer and the government will also increase your contributions, and you’ll benefit from tax relief.

Should I Pay My Mortgage Off Early? Final Thoughts

So, is it worth paying off a mortgage early?

What’s best for you will ultimately come down to your situation, personal goals and how much money you have to spare.

Consider all your options and consult a financial advisor if you’re unsure of the best course of action.

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