Author: Kristian Derrick

No. Gazumping is legal in the UK and can rob you of the dream home you’ve set your heart on in the final steps of the home-buying process.

The threat of getting gazumped is high when there are delays, when buyer demand exceeds the supply of available homes or if you’re buying a house in a sought-after area.

Read on to find out more about gazumping and how to prevent gazumping.

What Is Gazumping?

Gazumping involves a situation where someone else makes a higher offer on a property you’re buying, and the seller accepts that offer, pushing you out of the purchase.

Gazumping occurs when an offer has already been accepted and is not the same as being outbid.

It usually occurs before the exchange of contracts, and in most cases, the seller wants to maximise the amount they can obtain from the property.

Gazumping is likely to happen in a hot property market, or when property prices are rising, there are property shortages or more willing buyers than properties for sale are available.

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However, you can also get gazumped if you fail to keep to the agreed or prescribed timescale.

For example, you may be stuck in a property chain, or your solicitor is dragging their feet.

The seller may decide to reject your offer in favour of a buyer who can move more quickly and proceed within the expected timeframe.

Generally, the longer the house-selling process goes on, or the longer it takes for the sale to go through, the greater the risk of getting gazumped.

Why Is Gazumping Legal in the UK?

While gazumping is considered unethical and is frowned upon, the practice is legal in the UK.

Although your offer may have been accepted, the agreement between you and the seller doesn’t become legally binding until contracts have been exchanged.

It applies to England, Northern Ireland and Wales, and the accepted offer is only considered a verbal agreement.

The seller is technically open to other offers until you sign a written contract.

The property is not yet secure, and you remain vulnerable to gazumping because the seller can decide not to sell to you before exchanging contracts.

If you look at most property websites, you’ll see properties advertised and listed as ‘Sold STC’, meaning an offer has been accepted, but the sale is still ‘subject to contracts’ being agreed upon and exchanged.

What Are the Consequences of Gazumping?

Gazumping can be a big problem for buyers and sellers. It can be upsetting and stressful, and you can be left disappointed and frustrated as a buyer after finding the house of your dreams and making plans for it, then bam!

A new buyer swoops in out of nowhere, and the seller accepts them, forcing you to start again from scratch and look for a new house.

Gazumping can also be risky for sellers since the new buyer may offer more than they can afford or more than the house is worth.

The sale may fall through when they fail to raise enough money, or the gazumper may simply be unscrupulous and looking to get other buyers out of the way so they can gazunder the seller.

Gazundering is the opposite of gazumping, and it involves the buyer reducing the amount of an offer at the last minute, just before the exchange of contracts.

Such buyers blame higher interest rates and market conditions in the hope the seller will have no option to accept it.

Although perfectly legal, it can backfire, and the seller can build resentment and walk away on principle.

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Gazumping can also be expensive for everyone involved, especially when it happens late in the sale process.

Time and money may have already been spent on surveys, drawing up documents, paying solicitors and mortgage application fees.

A lot of money can be lost, and most buyers find themselves seriously out of pocket after getting gazumped late.

How Can You Prevent Gazumping?

Although it’s impossible to avoid the risk altogether, there are some actions you can take to reduce the risk of getting gazumped.

These include:

Getting a Mortgage in Principle (MIP)

Having a Mortgage in Principle (MIP) or Agreement in Principle (AIP) before making an offer on the house can help speed up the buying process and avoid unnecessary delays.

Making A Strong Offer

Avoid the temptation of going for excessive discounts.

The better your offer price, the less chance somebody will be willing to beat it, reducing the chances of the seller accepting another offer.

Requesting Property Removal from the Market

You can ask the seller to stop marketing the property once they accept your offer and prevent gazumping.

You can make it a condition of your offer, and there is less risk of new offers being submitted and accepted if the property is no longer being advertised.

Entering A Lock-in Agreement

You can ask the seller to enter a lock-in or exclusivity agreement to show they’re serious about selling to you.

It involves a signed document where the seller agrees not to negotiate with other potential buyers and gives you dibs on the sale for a certain amount of time.

Buying in Cash

You can prevent gazumping by buying the property outright and not relying on a mortgage.

It ensures a much faster process, and most sellers prefer cash buyers because they’re chain-free and not relying on mortgage approval, reducing the risk of the sale falling through.

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Moving Fast and Staying in Touch

You can also prevent gazumping by moving the process along quickly.

You want to get to the contracts exchange point as fast as you can.

Keep in touch with all parties involved to sort out issues quickly and respond quickly to requests for information.

Keep the pressure on your solicitors and broker, and ensure your case doesn’t fall behind.

Getting Home Buyers Insurance

Although insurance can’t prevent gazumping, it can limit the financial pain of getting gazumped by covering costs like legal, survey and mortgage fees.

Is Gazumping Illegal in the UK? Final Thoughts

Gazumping is legal in the UK, and although it’s rare, it can happen, especially if you delay buying your dream home.

Always be prepared and try to close the deal and exchange contracts as soon as possible.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

A cashback mortgage involves a deal where the lender pays cash to the borrower as an incentive to purchase a home with them.

Mortgage cashback allows the lender to stand out from the competition, and you get a cash lump sum to use however you like, from moving costs to mortgage repayments and furniture.

However, although a cashback mortgage offer may sound like a great deal, it can feature higher interest rates and additional terms, so it’s essential to understand all the features involved with this type of financing.

Read on to learn everything you need to know about cashback mortgages.

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How Does a Cashback Mortgage Work?

A cashback mortgage allows you to receive a certain amount after approval of your mortgage application or after making your first repayment.

The sum can be a percentage of the amount you’re borrowing, an amount equal to one of your monthly payments up to a limit or a fixed amount.

Costs can spiral when buying a property, and a cashback can help you cover some of the costs.

The cashback usually ranges from £150 to £1000 and can be transferred directly into your bank account or sent to your solicitor.

The solicitor can then pass the money on to you, or you can have them keep it to cover their fee.

Can I Get a Cashback Mortgage Offer When Remortgaging?

Yes. Although some lenders restrict their mortgage cashback offers to first-time buyers, others offer cashback on remortgage deals.

Other lenders don’t limit their cashback deals to a particular type of borrower or mortgage and can provide cashback incentives for all types of mortgages.

You can find cashback deals when taking out variable or fixed interest rate mortgages or buying a buy-to-let property.

Each lender will have their criteria for who qualifies for a cashback, and they can have different definitions of what makes a first-time buyer.

No matter the type of mortgage, you should carefully consider whether the cashback is worth it in the long term.

Advantages and Disadvantages of Mortgage Cashback

Advantages

• Lump sum cash of up to £1000 to use as you like
• A percentage of your mortgage as a cashback in some cases
• Some lenders cover your legal fees or removal costs and save you money
• Reduction in the overall costs associated with buying a home

Disadvantages

• Interest rates can be higher, making monthly payments more expensive
• Tighter restrictions on early mortgage repayments and overpayments
• Mortgage fees can be less competitive on cash mortgages.

Terms to be aware of with a Cashback Mortgage

You’ll usually need to agree to additional terms when you accept a cashback as part of your mortgage deal.

The terms can vary between lenders but usually involve repaying some or all of the cashback if you leave the mortgage before the agreed term ends and paying an exit fee.

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Cashback mortgages usually have an introductory period ranging from two to five years and can have less flexibility for making overpayments during this time.

While most mortgages allow up to 10% overpayments yearly, it can be less with a cashback mortgage, and you must be aware of the limits imposed to avoid hefty penalties.

Although early repayment charges (ERCs) are usually standard with all types of mortgages if you overpay, they can be higher in cashback mortgages.

You may get penalised by as much as 3% to 5% of the amount you’ve overpaid and end up cancelling out any benefit gained from the cashback.

Criteria for a Cashback Mortgage

The lender will need you to meet the standard criteria as other mortgages, including creditworthiness, affordability, age and deposit amount.

However, cashback mortgages usually feature additional criteria, which can vary depending on the lender.

These can include:

• Being a first-time buyer
• Hold a current account with the mortgage provider
• Borrow over a certain minimum amount
• Purchasing a property with a good energy efficiency rating

Is a Cashback Mortgage Offer Worth It?

Getting a lump sum of cash when taking out a mortgage can seem irresistible since you can use the funds to take care of other costs in the home-buying process.

However, the benefits may only be short-term since you’ll likely pay a higher interest rate for the entire mortgage duration, making it more expensive overall.

You must ensure you do your calculations and ensure the mortgage is suitable for your circumstances.

£1000 may sound appealing now, but is it worth paying a higher rate for 25 to 30 years?

You also need to consider other factors like overpayment and early repayment penalties.

A cashback mortgage may not be worthwhile if the cash you get is less than the interest you’ll save by taking out an alternative deal.

There can be fewer downsides to accepting a cashback mortgage if you get a cashback deal with a rate matching the best deals available.

However, these are usually rare and far between.

You also need to watch out for high administration or arrangement fees when applying for cashback mortgages since the fees can cost more than you get back.

Some cashback mortgage offers also feature refunds and discounts on certain costs in the home-buying process as a further incentive. Such costs can include booking fees, stamp duty, and survey costs.

They can also offer discounts on various recommended insurance providers, legal firms or surveyors.

However, the lender may not necessarily have the best deals on the market, and you may find it cheaper to source all these services elsewhere.

To work out the actual cost of the cashback mortgage and determine if it’s worth it, check how much you’ll repay each month over the course of the deal and compare this with non-cashback mortgage deals.

Don’t forget to compare the annual percentage rate of charge (APRC) to determine which deal offers the most savings overall while considering the incentives.

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What Is a Cashback Mortgage? Final Thoughts

It’s vital to work out the overall cost of a cashback mortgage by considering the interest rate and monthly payments to determine whether the cash incentive is worth it.

An expert mortgage advisor or broker specialising in cashback mortgages can help you determine whether it’s the best option for you and where you can find the best deals for your circumstances.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Getting a mortgage is essential when buying a home, and it’s normal to have questions about the processes involved and their timeline.

These can include how long does it take to complete a mortgage application?

How long does it take to get a mortgage approved?

Or how long does a mortgage offer last?

Knowing how long it will take can help you plan your move and avoid hold-ups. Read on to learn more about the entire mortgage process timeline in the UK.

How Long Does a Mortgage Application Take?

A mortgage application involves a few different stages that can impact how long it takes, including the complexity of your situation, the lender you’re applying with, and the information they ask for.

It’s usually a simple and smooth process that includes the following:

Getting the Mortgage in Principle

The first step is to get a mortgage in principle (MIP), also called a decision in principle (DIP).

The MIP is a certificate from the lender that gives you an idea of how much you can borrow to purchase a home ‘in principle.’

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It’s optional and not binding and can help you when house hunting since it shows sellers and estate agents that you’re a serious buyer likely to get a mortgage.

How Long Does Getting a Mortgage in Principle Take?

Getting a MIP is quick as most lenders allow you to apply online and give an instant decision if you have all the necessary documents ready.

It can take up to 24 hours or less and remain valid for 30 to 90 days.

During this time, you’ll need to view properties and have an offer accepted on your chosen home.

What Documents Do You Need for a Mortgage in Principle?

The lenders will require basic information like your income, expenses, and how much you’ve saved for a deposit and will check your credit history.

It will involve a soft search that doesn’t impact your credit file, and you’ll need original documents like:

• Three months’ worth of payslips is employed
• Valid ID like a passport or driving license
• Bank statements from the last three or six months
• Tax returns for the previous 12 to 36 months if self-employed

Mortgage Application

Once you’ve found a property you’d like to buy, it’s time to apply for a complete mortgage application.

You can apply with the same lender who gave you the MIP or with a different lender if they offer a better deal.

Going with the same lender can speed up the application process and make it easier since you’ve already started on the preliminary steps.

How Long Does It Take to Complete a Mortgage Application?

Filling out a mortgage application isn’t lengthy, and it can take less than 24 hours, provided your finances are in order, and you have the necessary information and documents ready.

Most lenders and brokers use an electronic submission process and will need the following documents in addition to the ones supplied for your MIP:

• Proof of earnings from the last three years
• A P60 form is employed
• Council tax and utility bills for the last three to six months
• Estate agent details and address of the property you want to buy
• Expenditure details like childcare, insurance policies, entertainment, and travel costs
• Proof of any other income, like benefits
• Personal loan and credit card statements

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Mortgage Approval

After submission, the lender will review the application and supporting documents and conduct a hard credit search recorded on your credit file.

Lenders will look at how much you’re currently borrowing and your reliability as a borrower based on your past financial obligations.

The lender will arrange a valuation of the property you wish to buy to ensure it’s worth what you’re paying.

An independent surveyor will visit the property and carry out structural checks.

It can take around 24 hours, after which they’ll create a report with a final decision on the property value.

If everything is in order, you’ll get a formal mortgage offer.

How Long Does It Take to Get a Mortgage Approved?

It can take two to four weeks from applying to getting a mortgage offer.

However, it can be shorter or longer, depending on the complexity of your application.

Lenders will need a few weeks to complete the relevant checks, and the process can get held up if the valuation report is inconsistent with the amount you’re applying for.

Your application can get declined, adding a few more weeks to your mortgage journey for another application. The lender can also set a higher interest rate or request a higher deposit.

How Long Does a Mortgage Offer Last?

Mortgage offers usually last around six months and show the exact date the offer expires, providing enough time to complete your property purchase.

Once the deadline has passed, you may need to reapply with the same lender or another, and they’ll re-examine your circumstances.

Some lenders can accept to extend your offer for around a week or less, depending on their internal policies.

How Long Does Mortgage Completion Take?

Completion is the final stage of the mortgage application process, and it involves exchanging contracts with your seller and paying your deposit to make the property sale legally binding.

You can exchange contracts around two months after receiving the official mortgage offer.

However, it can take longer if you’re joining a chain of other buyers since the progress of their purchases will have a knock-off effect on your timeline.

The longer the chain of properties, the slower the process can become, as it can be difficult to speed up this part.

Once you exchange contracts, your lawyer will organise the completion date with the seller’s lawyer.

You’ll take ownership of the property on the completion date and get the keys to your new home, although you don’t have to move in immediately.

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How Long Does It Take to Get a Mortgage? Final Thoughts

Being prepared as much as possible can help avoid delays and speed up the mortgage process.

Using a mortgage broker or advisor can also make the process easier and quicker since they have experience arranging mortgages and know what lenders require and which are likely to approve your application.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

Although mortgages are private loans, the Bank of England and the Financial Conduct Authority regulate the lenders who provide them.

Mortgage affordability rules can vary between lenders but usually follow the same practices.

If you’re considering getting onto the property ladder, getting acquainted with affordability for mortgage rules can help you improve your approval chances.

Here’s everything you need to know about rules for mortgage affordability in the UK and the recent changes.

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What Are the UK Mortgage Affordability Rules?

Rules for mortgage affordability help ensure you can repay the amount you borrow and the accumulated interest for as long as possible without getting into financial strain.

Mortgage providers are businesses and must secure an income while competing with other lenders and providing loan products that are fair and attractive to borrowers.

The Financial Conduct Authority requires mortgage lenders to assess whether applicants can afford to repay the amount they wish to borrow.

Lenders do this by undertaking mortgage affordability assessments where your income, debts and spending are considered.

Taking out a mortgage you can’t afford can have serious consequences, including losing your home and damaging your credit record and financial situation beyond repair.

Falling behind on mortgage repayments is riskier than having rent arrears, so affordability assessments must be rigorous.

Mortgage affordability is usually based on various factors that directly and indirectly affect how much you can borrow.

How Much Can You Borrow Based on Mortgage Affordability Rules?

Mortgage providers can assess affordability however they wish, provided it’s considered fair to the consumer, so each can have slightly different processes.

Some lenders are willing to offer more than others, but as a rule of thumb, most applicants can only borrow up to 4 or 4.5 times their annual income based on mortgage affordability rules.

If you search extensively, you can find some lenders offering up to 5 times your income under the right circumstances.

If you’re making a joint application and buying a home with someone else, the affordability assessment is usually based on your combined annual income.

For example, if your income is £20,000 and your partner’s income is £30,000, you can borrow (£20,000 + £30,000) x 4 or 4.5 = £200,000 – £225,000.

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Direct Factors in Affordability for Mortgage Rules

Although income is the largest factor in mortgage affordability assessments, other significant factors you should be aware of include the following:

Debts

Your current debts can influence the amount a lender will lend to you. If you’re currently paying off large debts, it can reduce the amount you can borrow.

Debts are usually considered significant if they require monthly repayments amounting to over 50% of your monthly income.

You’ll likely need to wait until you’ve paid off some of this debt before you apply for a mortgage.

Average Spending

Lenders will want to see how much you spend on monthly outgoings like food, bills, household essentials, childcare, travel, leisure and clothing.

Assessing regular spending habits can help lenders determine whether you have enough left over to cover monthly mortgage repayments and can be a reliable borrower.

The amount you can borrow will reduce if you have high monthly outgoings over your budget. It might be worth keeping your spending as low as possible for 3 to 6 months before applying for a mortgage.

Indirect Factors in Rules for Mortgage Affordability

Some eligibility factors can indirectly affect the amount you can borrow by increasing or decreasing the number of deals and mortgage providers you can access.

These include:

Your Credit History

The better your credit history, the more products and mortgage lenders you’ll have access to and the higher your chances for approval.

The quality of your mortgage deal will generally improve with the strength of your credit score.

If your credit report has minor issues like late payments or defaults, you may still be considered, but your income multiple will be lower.

Some lenders will disregard your application entirely if you have significant issues like county court judgements or bankruptcy.

However, some specialist providers can consider, and you’ll need a qualified mortgage broker to help you explore your options and navigate the situation.

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Employment Status and Profession

Stable employment and sustainable income can play a role in getting approved. Mortgage providers want to ensure you earn enough every month to cover mortgage payments in full and on time.

If you earn from non-traditional sources or are self-employed, lenders can be cautious about how much they can include in the affordability assessment.

This is because the income can fluctuate, and you may not always earn the same amount each year.

It can be challenging to guarantee the highest possible amount, and the lender may choose to use the previous year’s figure or an average of two years.

Some lenders will also offer higher income multiples to borrowers in specific professions like lawyers, doctors and accountants.

The lenders may stipulate a particular age range for such buyers, like 25 to 40.

Loan To Value (LTV)

The loan-to-value of the mortgage is the percentage of the total property price that you’re borrowing.

For example, if the property is worth £200,000 and the mortgage is £180,000, the LTV is 90%.

Your deposit amount will influence the LTV, and lenders generally offer better deals to applicants with lower LTVs because they offer more security.

You can get low-interest rates and more affordable monthly repayments with a low LTV.

Mortgage Affordability Rules for Buy-to-Let Properties

Affordability assessments for buy-to-let mortgages can differ from standard residential mortgages because rental income will likely be used for mortgage repayments instead of employment income.

Lenders may base their assessment on the projected rental income.

Changes to Rules for Mortgage Affordability

In August 2022, the Bank of England scrapped a key mortgage affordability stress test that required borrowers to afford a 3%-point rise in interest before getting approved for a mortgage.

This makes it easier to get on the property ladder.

However, the 4.5 times income rule remains in place, and you’ll still need to fulfil FCA affordability tests.

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UK Mortgage Affordability Rules Final Thoughts

Preparing for a lender’s affordability assessment and fulfilling mortgage affordability rules is wise before applying.

You can do this by improving your credit score, clearing any debts you may have, reducing your spending and saving up a substantial deposit.

A mortgage broker can also help you find the best deals for your situation and guide you through the process.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

A new build home has various benefits as they’re typically more energy efficient, feature fewer maintenance costs, and you won’t have a chain of buyers above you.

However, arranging a new build mortgage can be more complicated than for an older property, but it’s not impossible.

Here’s everything you need to know about new build mortgages in the UK.

What Is a New Build Mortgage?

A new build mortgage is designed for properties that have never been lived in or bought.

They’re available among high street mortgage providers and specialists, and each lender will have their definition of what constitutes a new build.

Some consider new builds as newly constructed properties only, while others include off-plan properties where you commit to buy a new home before construction starts or when it’s in the process of being built.

It can also include properties that have been substantially renovated within the past two years and not sold during that period.

New build properties are appealing since everything is new, including paintwork, tiling, bathrooms and kitchens, meaning they need little to no maintenance.

They also comply with the latest building regulations, making them more energy efficient than older buildings, and you don’t have to deal with a chain of buyers.

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What Deposit Do I Need for a New build Mortgage?

Lenders usually require more significant deposits when purchasing a new build than a standard property.

The value of the new build property can fall when you start living on it, meaning the lender takes on more risk, so they protect themselves from the inevitable property devaluation.

Most lenders have loan-to-value (LTV) ratios of 75% to 85% and will require you to deposit 15% to 25% of the property’s value.

The LTVs are higher than the 90% to 95% LTV ratios offered on standard properties, and you’ll also need to save up a bigger deposit if you’re buying a new build flat instead of a house.

Timescales for New Build Mortgages

When it comes to new build mortgages, you may face issues with how long your mortgage offer is valid.

Developers often feature demanding timeframes, and lenders may struggle to complete your application within the required time.

If you’re buying off plan, you must carefully time your application.

Although some new build mortgage offers can last longer than standard mortgage offers and go for 9 to 12 months instead of 6 months, it’s not always the case.

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If the developer encounters a delay in the build time or overruns, your mortgage offer could expire, meaning you’ll need to start the entire application process again and getting the same terms isn’t guaranteed.

It’s worth checking how long your offer is valid if you’re buying off-plan and starting the mortgage process as you can.

Consulting a mortgage broker can save time and help you find suitable deals that can last longer or reapply for alternatives if necessary.

Government Schemes for New Build Buyers

Various government schemes can help you buy a new build property.

These include:

The Deposit Unlock Scheme

The Home Builders Federation developed the Deposit Unlock Scheme to help first-time buyers and home movers buy a new build home with a 5% deposit.

The scheme is exclusive to new build homes, and you can only buy a home from a builder participating in the Deposit Unlock scheme and using a mortgage offered by a participating lender.

The maximum amount you can take out to buy a property using the scheme is £750,000, but this will depend on your circumstances and the lender.

First Homes Scheme

The First Homes Scheme was launched in June 2021, and it provides first-time buyers with the opportunity of buying a new build property at a discounted price starting from 305 to 50% of the market value.

The discount is at the local council’s discretion in the area where the property is built and is agreed upon directly with the developer.

Once the discount is given, it’s locked on that property and stays on the home forever, so every time it’s sold, the new buyer benefits from the discount.

The scheme is open to buyers of any profession, but key workers like firefighters and NHS staff are given priority.

To qualify, you must be a first-time buyer with a combined household income below £80,000 or £90,000 in London.

It also includes a price cap of £420,000 within London and £250,000 anywhere outside London on qualifying properties after the discount.

Shared Ownership

Shared Ownership can be a suitable option if you want to buy a new build home but only have a small deposit.

The Shared Ownership Scheme is geared towards first-time buyers, allowing you to buy a portion of new build property and then rent the remaining share from a housing association or council.

It’s an excellent stepping stone allowing you to buy from 10% to 75% of a new build home and pay a smaller mortgage than buying the property outright.

You can buy more shares if and when you can afford it through staircasing.

The more of the property you own, the less rent you pay until you reach 100% ownership.

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New Build Buyer Incentives

New-build property developers sometimes offer incentives to sweeten the deal, like paying for Stamp Duty and legal fees, since it’s easier to offer an incentive to attract buyers than reduce the overall purchase price.

It’s worth noting that mortgage lenders will consider such incentives when deciding how much to lend you.

The lender can reduce the amount you can borrow if the incentive is worth a significant amount, like over 5% of the property value.

Knocking the amount that surpasses the 5% off the purchase can significantly impact your LTV ratio and the mortgage rates you’re eligible for.

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New Build Mortgages UK Final Thoughts

When buying a new build property, you should consult a mortgage advisor or broker specializing in new build mortgages.

They have experience and in-depth knowledge of such properties and understand their complexities.

They can research the market on your behalf, find the best deal for your circumstances, give you access to exclusive deals, provide bespoke advice and help with your application.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

According to statistics released by the UK government in 2019, around 772,000 homeowners in the UK stated that they owned a second home.

In 2009, only 572,000 households reported having a second home in the UK.

This statistic shows that more people are showing an increased interest in owning a second property.

If you already own property in the UK but want to buy a second property to use as a holiday home or another household for your family to use, you’re in the market for a second home mortgage.

Second home mortgages are not mortgages you wish to rent out to other residents – the second home mortgage must be for a property you intend to use personally.

The first thing you need to know about UK second home mortgages is that they’re a little more challenging to get approved than a first home mortgage.

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This makes sense when you consider that paying for two mortgages is considered “high risk.”

Stringent checks apply to second home mortgages UK, meaning applicants need to ensure that their finances and documentation are in fantastic order before they even consider applying.

Pros and Cons of a Second Home Mortgage UK

It’s best to be 100% certain of what you’re getting into before applying for a second home mortgage UK.

Below are some pros and cons to consider:

Pros of Second Home Mortgages

• Second home mortgages are more affordable than second charge mortgages and secured loans
• How you handle your existing mortgage could promote the success of your application
• Successful application means you will have two properties (convenient, comfort, and sound investment)
• A second home mortgage is a separate mortgage from your first home mortgage. In the event that you run into trouble with your second mortgage, your first home is not at risk.

Cons of Second Home Mortgages

• The checks are stricter for applicants of second home mortgages.
• The minimum deposit is usually 15% of the property value.
• You will put additional strain on your budget (you could over-indebt yourself).
• Indirectly, your current home is at risk as you may need to sell the first property to cover costs if your situation changes and you can’t afford to continue paying for both.

Qualifying Criteria to Get Approved for a UK Second Home Mortgage

Mortgage providers have strict criteria in place for applicants of second home mortgages.

In fact, the criteria are stricter than our first home mortgage because there’s a risk that two mortgages may overwhelm your budget.

Below is a brief overview of some of the requirements to qualify for a second home mortgage UK.

• At least 15% of the total value of the property must be paid as a deposit
• You must be of legal age
• You must pass an affordability assessment (comparison of your income vs. expenses)
• You must earn the minimum monthly income stipulated by the lender (this can fluctuate from one lender to the next)

Keep in mind that interest rates are typically higher on second home mortgages.

Still, you may find that some lenders are negotiable if you discuss your financial situation directly with them.

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Is a UK Second Home Mortgage the Same as a Remortgage?

Second home mortgages are often confused with second mortgages or remortgages.

A second home mortgage is neither of these things.

A remortgage is when you switch from one provider to another or get a different interest rate or deal.

Second Home Mortgage UK vs. Buy-to-Let Mortgage – Which One Do You Need?

Many people need clarification on the concept of a second home mortgage in the UK.

A second home mortgage is strictly for a second property that you plan to use personally.

For example, if you wish to purchase a second property and rent it out, you must apply for a buy-to-let mortgage.

Now, what if you start with a second home mortgage but decide later that you want to rent it out to cover costs or make a profit?

In this instance, you will need to be in direct contact with your lender to get permission from them to do so. With this type of transition, there could be additional fees/costs involved.

There are, of course, other scenarios you need to be aware of. For instance, what if you buy a second home mortgage, and somewhere along the way, the property you buy needs to become your primary home, not your secondary one?

In such instances, you have 24 months to inform HM Revenue and Customs of the change.

Don’t avoid doing this, as it safeguards you against paying capital gains tax should you wish to sell the property in the future.

Fixed Interest vs. Variable Interest on Second Home Mortgages UK

When applying for a second home mortgage in the UK, you will choose between a fixed-interest mortgage and a variable-interest mortgage.

What’s the difference, and which one should you choose?

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Fixed Interest Mortgages:

A fixed interest mortgage is a type that comes with interest rates that are locked in, so you will always know precisely what your monthly instalment will be.

Variable Interest Mortgages:

Variable interest mortgages usually seem cheaper, but as interest rates fluctuate, your monthly instalments may go up.

As a result, you may pay far more each month than you initially anticipated.

Fees vs. No Fees:

Another thing to be aware of when applying for second home mortgages is that some present “no fees” offers.

Mortgages with no fees typically come with higher interest rates, which in the end, could come to more than if you acquire a mortgage with fees included.

Also, note that second home mortgages come with an additional 3% stamp duty.

Second Home Mortgages UK Conclusion

Applying for a second home mortgage in the UK follows the same process as applying for a first mortgage except the checks are more stringent and you’ll be expected to put down a higher deposit amount.

If you’re ready to get the process started, chat to an experienced mortgage broker to ensure your handling the application process efficiently (and correctly).

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.

If you’re living with a disability or a long-term illness and have applied for a mortgage and been turned down, you may wonder if your health situation is to blame.

While many may think that’s the case, the problem often comes from the lack of affordability – which can happen to anyone, not just disabled or ill individuals.

In most instances, the inability to pass an affordability assessment comes from the borrower being on benefits or a small income, which lenders see as risky.

Even with a disability, you must meet the lender’s requirements before you are deemed a viable candidate for a UK mortgage.

If you are wondering if you can get a mortgage in the UK if you’re disabled or suffering a long-term illness, wonder no more. Wonder no more! We bring the answers directly to you!

Below, we cover the legalities involved in getting a mortgage if you’re disabled and on benefits. Believe it or not, there are lenders more than willing to assist!

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The Equality Act 2010 Says All UK Mortgage Applicants Must Be Treated Fairly

The Equality Act 2010 states that lenders must treat applicants fairly.

What does this mean? It means that you cannot be rejected or required to meet stricter criteria (more interest to pay or higher deposit requirements) based on your disability or health status when applying for a mortgage in the UK.

Mortgage lenders in the UK must strictly base their outcomes on the applicant’s credit score and the loan’s affordability.

This means that unless your disability or illness impacts your ability to pay for the loan, you cannot be rejected based on illness and disability!

The Act states that anyone with “a physical or mental condition that has a substantial and long-term impact on your ability to do normal day-to-day activities” will be protected by the Act.

Mortgages for Disabled People in the UK

If you have a long-term illness or disability, you may be living on benefits, and it’s this little fact often impacts the outcome of a disabled or ill person’s mortgage application in the UK.

However, because benefits are considered unreliable income, you may find it challenging to qualify for a UK mortgage application.

But that doesn’t mean that all applicants on benefits will be turned away.

In fact, if you’re on disability benefits and you’re also employed, this could be a good thing for your mortgage application.

This means that your benefits are seen as a boost to your existing income.

In scenarios where your benefits are larger than your salary/income, you may find it a little more challenging to qualify.

All of this said, even if your entire income is benefits based, there are still lenders willing to help you get the funding you require for your mortgage.

UK Disability and Illness Benefits Most Likely to Be Accepted by UK Lenders

Lenders are only concerned with affordability and, of course, your ability to repay the loan.

This is why certain benefits are accepted over and above others, as they are considered more stable.

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Also, you can only use a benefit as proof of sufficient income if the main applicant is the claimant of the disability benefit.

The following benefits are most often accepted by mortgage providers in the UK:

• Disability Living Allowance – DLA
• Adult Disability Benefit
• Personal Independence Payments (PIP)

You must provide proof of your benefits income when applying for a mortgage.

But what if you’re not on a disability benefit but receive other benefits?

Can they be used as proof of sufficient income?

Some benefits that aren’t disability-related can be used, and these usually include the following:

• Maternity Pay
• Widows Pension
• Child Benefit
• Child Tax Credit
• Universal Credit
• Working Tax Credit
• Job Seekers Allowance
• Attendance Allowance
• Carers Allowance

Of course, getting benefits and an income doesn’t automatically mean that you will qualify for a mortgage.

Mortgage lenders will consider your full income (salary + benefits) and compare this to your current and ongoing expenses.

If you have a small amount of money available at the end of the month, and it appears you won’t comfortably afford the loan repayments, the application will most-likely be rejected – not because of your disability or long-term illness but merely on the basis of ill-affordability.

Schemes That Help Disabled Applicants Get UK Mortgages

In some instances, getting a disability UK mortgage can prove challenging.

If this is the case, you can use one of the several schemes available that help disabled applicants get into the property market.

One such scheme is the MySafeHome scheme which offers shared-ownership options.

You can use this scheme if you’re on PIP (Personal Independence Payment), DSA (Disability Living Allowance), Universal Credit, Pension Credit, or ESA.

Another scheme is the HOLD scheme, which also offers shared-ownership options.

To be eligible for this scheme, you must prove that you can’t buy a suitable home that caters to your disability or illness.

You must also be a first-time property investor and earn no more than £80,000.

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Making the Process Easier for Applicants of Disability Mortgages in the UK

If you’re at a loss for where to start or just need a bit of guidance to make the mortgage application process easier for you, it’s best to chat with an experienced mortgage broker who has knowledge of the industry and working experience helping disabled people or those with a long-term illness to get the funding they need to buy a home.

Call us today on 03330 90 60 30 or contact us. One of our advisors can talk through all of your options with you.