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Author: Kristian Derrick

Payday Loans Mortgages – Can You Get a Mortgage with a Loan?

by Kristian DerrickPosted on

There are many different types of loan out there, which may be useful in a variety of different circumstances.

However, arguably the most controversial type of loan is the payday loan.

This is intended to be a short term loan for those in incredibly difficult financial situations.

Their intention is simply to give you enough to get by until payday comes about. However, they can have insanely high-interest rates of higher than 1000%.

Here at Mortgageable, we’ve looked at the challenges that payday loans present when you’re applying for a mortgage, and how, if it’s possible to overcome them, to secure a bad credit mortgage.

What is a payday loan?

Payday loans is often a method of short-term borrowing for those looking for fast finance.

As a result, lenders that offer payday loans often charge interest rates that are incredibly high.

The loan is then repaid within a month, typically on ‘payday’, which is why they are referred to a ‘payday loans’.

Payday loans have a reputation for offering extreme interest rates, yet when people desperately need finance, they can be helpful.

Typically, payday loans are used in an emergency, i.e. when something happens out of the blue and the finances aren’t available until payday.

The interest rates on payday loans can exceed 1000%. It wouldn’t be financially wise to use them often, yet reported figures indicate that individuals tend that take out payday loans often do it multiple times.

So how do payday loans impact your ability to get a mortgage?

Can I get a mortgage if I’ve had payday loans in the past?

Whilst it’s impossible to argue that having one in your history is not going to be a good thing, it may be still possible to get a mortgage despite having a history of payday loans.

Make no mistake, it will make things harder for you as you won’t have as many options in terms of the type of mortgage you can go for, and you will probably have to go for a specialist lender instead of a high street one, who is likely to reject your mortgage application.

The best thing you can do is speak to a mortgage advisor who specialises in helping those in your situation.

At Mortgageable, we can look at your particular record and situation and give you the best advice for where to go for a mortgage and the steps you need to take to improve your credit report in order to increase your chances of being accepted for a mortgage.

We can also make you aware of the extra barriers that you will have to overcome.

You will almost certainly have to put down a higher deposit and if you have bad credit, you can expect to pay a higher interest rate on your mortgage.

It’s also unlikely that you will be given 100% of the money that you need for the house, instead, it can vary from 75% to 95% depending on the lender and the rest of your credit report.

Also, you may have less choice in terms of the lenders you will be able to pick from, and the type of mortgage plan you will be eligible to select.

How Long do Payday Loans Stay on your credit report?

Any type of late or defaulted loan payment will remain on your credit file for 6 years and that includes Payday loans.

Just like any type of borrowing the credit reference agencies treat them equally.

For a mortgage application, this may make it more difficult to be approved by a lender, but there may still be options available.

There will likely be less choice, but it all depends on your particular circumstances.

Why don’t lenders like payday loans?

The main reason why most mortgage lenders don’t like payday loans is that generally, they suggest that you’re irresponsible with your money, and you’re unable to live within your means, and manage your budget efficiently.

Many people who take out payday loans do so simply because they can’t wait to save up for something frivolous that they wish to have.

Of course, this isn’t always the case as you might have been put into that situation because you have fallen ill, or a horrible accident has happened in your home.

Unfortunately, a lot of lenders may not take this into account and just look at the fact you’ve taken out a payday loan.

Historically, some sites have stated that payday loans can actually be good for a mortgage application, claiming that if you can be shown to take out a payday loan and pay it back on time, it will show the lender that you’re good at managing your debt.

However, this information is false and can lead to your mortgage application being instantly rejected.

Even if you manage to pay it back on time, with as little interest as possible, any payday loan will have an effect on your mortgage application.

Mortgage lenders want to know that the mortgage will be repaid, and unfortunately, if you have a history of payday loans, you will be seen as a bigger risk.

This is because it will be assumed that you’re bad at managing your money, and therefore will be less likely to be able to pay them the amount that you have agreed.

For this reason, most high street lenders will just turn you away straight away if you have payday loans on your credit report.

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What will be taken into consideration with my application?

Credit repayment history

Like any type of credit, taking out a payday loan will leave a mark on your credit report, where lenders will be able to see that you’ve had payday loans in the past.

Someone who once took out a payday loan will face much fewer obstacles than someone who has taken out several payday loans, been late on most of the payments, gone into default, declared bankruptcy, and gone onto a debt management plan.

You need to do what you can to ensure that the rest of your credit report is looking good, that way, it will be easier for lenders to overlook the fact it has payday loan on it.

But, it is important to remember that a payday loan will stay on your credit report for six years.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

LTV

The LTV on the mortgage application is also considered – LTV refers to how your required loan is compared to how much deposit you have put down.

For example, if you have paid a 5% deposit, you will need a 95% LTV. For those with a good credit report, this is usually fairly straightforward to get.

However, for those who have taken out a payday loan, the LTVs available will be much lower, meaning you may have to get a bigger deposit. This will likely be something which you will need to discuss with your mortgage advisor.

How do I find out what previous loans I have had? 

If you are unsure whether you have had a Payday loan in the past, or in fact any other type of loan, you can find out by checking your credit report.

The report will detail all of the data help about your history stored by the Call Credit reference agency.

Your report will a history of your borrowing in the last six years, including any Payday loans.

What if I’ve been declined for a mortgage already?

If you’ve already been declined for a mortgage, get in touch with us today.

We may be able to explain to you why it was that you were denied a mortgage the first time around, and what the best option will be for next time.

Perhaps the issue was with the particular lender that you went to, and you would have better luck if you had gone to another lender instead.

Or perhaps you need to work on improving the rest of your credit report in order to minimise the impact that a payday loan is going to have on it.

Another option would be to wait at least 12 months, as some lenders want to see at least 12 months without a payday loan being taken out before they’ll consider an application.

A sensible aim to have is to improve the rest of your credit score. This can be done in a variety of ways:

  • Avoid any more credit applications – especially any more payday loans.
  • Ensure you’re on the electoral roll at gov.uk
  • Make sure all bills are paid on time – this shows lenders that you can be trusted to manage your finances. One late payment may not have a huge impact on your credit report, but several missed payments may rule you out from certain lenders.
  • Check your credit report for any errors or inaccuracies
  • Check if you’re financially connected to an ex-partner or housemate
  • Don’t apply for several credit products in a short space of time – this can come in the form of phone contracts, utility bills and credit cards. If all done in a short space of time, it could suggest to a mortgage lender that you’re struggling with your finances.

Contact us today to see if you can get a mortgage with a history of payday loans

Sometimes, if you’ve taken out a payday loan, you might feel that getting a mortgage is out of reach.

We’ve arranged mortgages for customers with a history of payday loans, so give us a call on 01925 906 210 contact us today to discuss your circumstances and start your new mortgage application.

Can you get a mortgage with a CCJ?

by Kristian DerrickPosted on

Can you get a mortgage with a CCJ? If you have blemishes on your credit record, you may be worried that you are ineligible for a mortgage.

You may be reluctant to approach lenders or apply for mortgages in case you are refused and your credit rating is further affected.

The truth is, that ‘black marks’ on your credit history do not automatically rule you out of getting a mortgage.

There are a number of niche lenders that specialise in providing mortgages to those with defaults or CCJs.

These lenders will consider the severity, the duration, and how historical the credit issues are, then determine how closely you meet their other eligibility requirements.

In this article, we will explain the best way to secure a mortgage if you have CCJs or defaults on your credit file.

Getting a Mortgage with CCJs

As a result of having bad credit, many people are refused a mortgage.

However, a mortgage broker can help you find lenders who are more likely than traditional lenders to accept your application.

It will take time to assess your particular circumstances and lenders may have additional criteria, in this guide, we will cover some of the major points to help you understand how it is still quite possible to secure a mortgage with a CCJ.

What is a CCJ?

A CCJ, otherwise known as a County Court Judgement, is issued if you fail to pay a debt that you owe.

Having one of more CCJs on your credit file may affect your mortgage choices, but it certainly doesn’t rule out lending altogether -you may need to look for a bad credit mortgage lender.

Whilst, many mainstream lenders will refuse to offer a mortgage to those with an open CCJ or ones that have been issued in the past 3 years, there are lenders that will take them into consideration.

Although it may be more difficult and more complicated than securing a mainstream mortgage, it is possible to secure a mortgage with CCJs through a speciality lender.

In these cases, your mortgage application is likely to be declined by many lenders, but it is still possible to secure a mortgage with a poor credit rating.

Can I get a mortgage with CCJs?

There a number of factors regarding your CCJ(s) that mortgage lenders will take into account, including:

  • The Date of the CCJ – The most important factor is when the CCJ was registered. The longer the date that the CCJ was issued, the better the chances of securing a mortgage. The date the CCJ has been resolved is also important, with many lenders requiring CCJs to be settled for 12 months or more before agreeing to a mortgage. However, there may be a few lenders that don’t require CCJs to be resolved at all.
  • Number of CCJs – A specialist bad credit mortgage lender will typically limit the number of CCJs registered in the last two years to 2, with minimal restrictions for those registered longer than 24 months ago. The larger the deposit you have, the more CCJs your lender is likely to accept, as long as they were issued over 12 months ago.
  • Amount of CCJ – The amount of the CCJ is important as it often determines the amount of deposit you will need to put down. If your CCJ was issued over 2 or 3 years ago, the amount of the CCJ will have little effect on your mortgage, however, if it is less than 2 years old, size does matter. For example, a CCJ over 12 months old that is £2,500, would probably require a 15% deposit. If the CCJ is less than 12 months old, it is limited to £1,000. Generally speaking, the larger the deposit you have, the larger the amount of CCJ your lender will accept. For a large CCJ, expect to require a deposit of between 25 and 35%.
  • Satisfied or Unsatisfied CCJ – Speciality lenders will vary on whether they accept lenders with unsatisfied or satisfied CCJs, but you will have access to a larger choice of lenders if your CCJ is resolved. If your CCJ is unsatisfied, some lenders may require you to pay it off before applying for a mortgage, while others will allow you to apply as long as the CCJ is over 2 years old. Lenders that accept satisfied CCJs may require it to be paid off for over 12 months before accepting your application.

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Getting a Mortgage with a CCJ is not the only thing your lender will consider.

They will also have eligibility requirements that you will need to meet to improve your chances of successfully applying for a mortgage.

They are:

  • Deposit – The bigger the deposit you have, the better. If you only have 5% to put down, then your CCJs will need to be older than 3 years at least. If you have a 25% or more as a deposit, then you could still be eligible for a mortgage with CCJ issued in the last 12 months. In fact, most lenders will require a large deposit for bad credit mortgages.
  • Mortgage Type – Standard mortgages (fixed rate, variable, tracker, etc.) and remortgages will have the most flexible eligibility criteria when it comes to CCJs. Things may get a little more complicated for first-time buyers, with some providers only accepting lenders with CCJs under £1,000. Buy to Let mortgages may be a little more difficult, often having further restrictions put in place. You may be required to put up a larger deposit or meet a minimum age requirement.
  • Affordability – More recent CCJs may restrict your lending. Your employment may also be a factor. For example, lenders may impose further restrictions if are self-employed with less than two years of accounts.
  • Additional Credit Issues – Other credit problems on your file may also affect your likelihood of being accepted for a mortgage. Issues such as late payments are considered less serious and tend to be acceptable in the previous 2 years, as long as they don’t stretch to more than 3 months late. More severe credit problems, such as bankruptcy, repossessions, IVA, or being in a debt management plan, along with CCJs, may make is much more difficult to find a willing mortgage provider. Missed mortgage payments are more serious.

Read our full guide on applying for a mortgage after an IVA.

Can I get a mortgage with a satisfied CCJ?

Fortunately getting a mortgage with a CCJ or defaults is possible and your options will be more abundant if you have a satisfied CCJ.

If you have an unsatisfied CCJ, many lenders require you to pay it off before applying for a new mortgage, yet there are still lenders available who do offer mortgages to those with unsatisfied CCJs and defaults.

When do CCJs Expire?

County Court Judgments (CCJs) stay on the Register of Judgements, Orders and Fines for 6 years in total. They also stay for the same amount of time on your credit report/file.

Thankfully, a CCJ will not stay on your file permanently and will be removed at the end of the 6 year period.

Even better, you do not need to wait to apply for a remortgage and you may have the opportunity to secure one, even with a CCJ against you.

And remember, if you pay your debt off in full within one month of the judgement being issue you won’t have the CCJ recorded.

In these cases, you will be recorded as “satisfied” in the register, allowing potential lenders to see you cleared your debts.

Looking for a commercial mortgage with bad credit? You may be interested in the possibility of shared ownership.

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How Do I Know if I have a CCJ?

Have you ever been refused a loan or credit in the past?

There are many potential reasons for this, one of them being if you have had a CCJ placed against your name.

You can check if you have A CCJ by accessing the Register of Judgements, Orders and Fines.

There is a small fee to do this, so the alternative and often free method is to ask the credit reference agency.

Often people ask the question “how do I know if I have a CCJ?” and this can be a result of various different reasons.

For example, a debt that you felt wasn’t communicated effectively to you or maybe even misplaced paperwork, that means you were not aware.

It’s common for the courts to mail you the details of a CCJ against you, but if you are still unsure, you can always access the Register of Judgements, Orders and Fines to find out and put your mind at rest.

Can I Get a Mortgage with a CCJ?

Regardless of your credit score and whether it has a CCJ recorded, getting a mortgage with a CJJ is just like any other applicants and an affordability assessment will be completed on you.

This is to determine the mortgage rate amount and the interest rate you will be offered.

If you have a CCJ on your credit report, this might result in you being assessed in a different way.

Typically, those with a CCJ will not be able to borrow as much as those with a clean credit file and the associated costs will be higher e.g. interest and admin fees. This is even more applicable to those with unpaid or recent CCJs.

It is not all bad news though. You could still get a great mortgage deal with or without a CCJ. Mortgageable can help find you and compare mortgages for CCJs and defaults with our network of lenders.

Thankfully, there are still mortgage lenders that accept CCJs.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

Getting a Mortgage with Defaults

You can still get a mortgage with defaults on your credit file.

A specialist lender may be able to find you a deal that fits your circumstances, as long as you match their criteria in other areas, such as income, affordability, and other credit issues.

Types of Mortgage Defaults on Credit File

Late Payments, Missed Payments, and Defaults

A late payment is when a bill is paid after the due date; a missed payment is when the bill is not paid; a default is marked on your credit file when there have been several missed payments.

You are usually issued with written notice of default and given a deadline to respond.

The creditor can then close your account and request payment in full, with the default staying on your credit file for six years.

You should be aware that late payments will also appear on your credit history for up to 6 years, but are marked differently (with a number next to it representing how many months late it is), and are often ignored by lenders if they occurred more than 2 years ago.

Missed payments also appear on your credit history, and along with defaults, they are considered the more serious credit issues.

Lenders will consider how long it took to repay the debt or how much is owed.

The more historical the missed or default payments, the better your chances of getting a mortgage with a history of defaults.

Want a mortgage for a rental property? They work slightly differently to regular residential mortgages, learn all about them in our buy to let mortgages with bad credit.

Secured Loans and Unsecured Loans

In the world of defaults, there are two types of loan: secured loans and unsecured loans.

A secured loan is one that is linked to an asset, such as a house i.e. mortgage payments.

An unsecured loan includes the likes of utility and phone bills, and credit card payments, car loans not linked to an asset.

Missed payments and defaults to unsecured loans are considered to be much less serious than those on secured loans.

A few missed payments on unsecured loans over the last 6 years is unlikely to affect a mortgage application.

If you have more missed payments than that, you may be expected to put down a larger deposit or be offered a deal with a higher interest rate.

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Defaults on Mortgage Payments

The most severe kind of missed payment in the eyes of lenders is a missed mortgage payment.

A single late payment made over 2 years ago may be acceptable to some lenders, but to secure a new mortgage, you really need to be up to date in your current one.

Even specialist poor credit lenders will find it difficult to lend to those in mortgage arrears.

Recent Missed Payments

The more recent the missed payment the worse it looks to lenders.

Defaults in the last 12 months will seriously affect your chances of getting a mortgage, particularly if you have a small deposit.

To increase your chances of securing a mortgage with a good rate, raise as much of a deposit as possible.

CCJ Mortage Options

If you are still unsure about your options or have a question we haven’t managed to answer in this guide, feel free to contact us today for a free, no-obligation discussion.

Call us today on 01925 906210 or email us. One of our advisors can talk through all of your options with you.

How Long Does a Mortgage Application Take to be Approved?

Kristian Derrick
by Kristian DerrickPosted on

How long does mortgage approval take? Buying a home can be a lengthy process. There are lots of viewings, mountains of paperwork, and many checks to go through before you get to the exchanging of keys and contracts.

Find out how long it takes to get a mortgage with our guide which covers everything you need to know about the mortgage application process.

If you need to borrow money, there is no moving forward with a house purchase until you have a mortgage approved by a lender.

How long it takes to get a mortgage can depend on a number of factors, including the likes of your credit rating, the results of a mortgage valuation survey, and your income and affordability assessment.

How Long Does a Mortgage Application Take To Be Approved?

The average time for a mortgage to be approved in the UK is typically between 2 to 6 weeks.

In some cases, it can be approved as fast as 24 hours but this is typically very rare.

How Long Does a Mortgage Application Take?

So, how long does it take to get a mortgage?

There are several things that can impact how long it takes to get a mortgage – the stages involved in a mortgage application are outlined below:

Mortgage Application Process Timeline:

Mortgage in Principle

The first step of the process is usually getting a mortgage in principle.

This is simply a statement from a lender, stating that they can lend you a certain amount to purchase a home ‘in principle’.

It is a really quick process if you have all the necessary documents ready (ID i.e passport, 3-6 months bank statements, and proof of income) and have picked out a mortgage deal.

A lender will ask you for some basic information, such as your income, current financial status, etc., and will check your credit history, where they will verify you have the required credit score for a mortgage.

This is not a guarantee that a lender will definitely agree to a mortgage in the future, but it useful to have to show estate agents., as it will demonstrate that you are serious about buying.

Your estate agent will be able to show you homes that could be purchased with the loan agreed in principle.

Furthermore, an agreement in principle may speed up your application process once you have found a property you want to make an offer on, especially if you are going with the same lender.

Recommended guides: 

The Mortgage Application

The next step in arranging a mortgage is the application.

Filling in your mortgage application is not a lengthy process, it should only take a few hours at the most, as long as you have your finances in order and the necessary documents and information at hand.

To determine the amount you are eligible to borrow and your reliability to pay it back, lenders will need evidence of the following:

  • Details of the property you have put an offer on, as well as information on the seller’s estate agent and proof of your deposit.
  • Valid ID, such as a passport, to prove your identity and proof of your current address, such as a utility bill.
  • Three months bank statements, which can be used to show what your current outgoings are, including the likes of other credit commitments, childcare, utilities, leisure time, holidays, money to savings, pension contributions, etc.
  • Up to six months of payslips to provide proof of your income, including any bonuses or overtime. If you are self-employed, your accounts and a few years of tax returns will be required to determine what monthly payments you can afford.

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A lender will review all this information and carry out a credit check.

If they need no further information or clarification from you, they will arrange a valuation of the property you are hoping to buy, to determine if it priced correctly and suitable for a mortgage.

There are different types of mortgages, and make sure you are aware of the fees involved in buying a mortgage.

Usually, the valuation carried out by your lender will be a ‘Standard Valuation’, which is the minimum check required by law, before a mortgage can be approved.

An independent surveyor will carry out an inspection of the property, taking note of any major issues or defects that could affect the value property.

They will also investigate what similar homes in the area have sold for, to see how your desired property compares.

They will then complete a report known as a Standard Valuation, which will be reviewed by your lender.

If you want a more detailed survey – perhaps you have been burned before – there are a couple of more thorough evaluations you can have carried out before moving forward with the mortgage process. They are:

  • Full Buildings Survey – Used to be known as a Structural Survey, a Full Buildings Survey involves a comprehensive inspection of the condition of the property, including any structural abnormalities or defects, any necessary repairs, and maintenance requirements. This is useful for period properties, larger homes, or non-traditional builds.
  • A Homebuyer’s Report – Includes more detailed information than a Standard Valuation, including information any current or potential future issues with the property and maintenance and/or repair costs.

If your lender is satisfied with the valuation and all other checks, your mortgage application should be approved and your offer will become official.

Sometimes, the surveyor may determine that the sale price or your offer is higher than the value of the property.

This is actually quite common and could be due to a number of issues, such a market conditions, structural defects or just a seller overestimating the value of their property.

These downgraded valuations are not just there for the protection of the lender, but also for your protection, to prevent you from paying more for a property than it is worth, as this may put you into negative equity.

However, there are still options open to you to secure a mortgage in these instances.

You can contact the seller with the results of the valuation to discuss a potential reduction in the selling price.

If this is fruitless, and you really want the property you could increase your deposit amount to make up the shortfall.

How long does it take to get a valuation done?

After you have submitted your mortgage application, your lender will instruct the surveyor to carry out a valuation, the aim of which is to ensure the property is worth the amount you are wanting to pay for it.

The surveyor will contact the estate agent in control of the property and request access to carry out a thorough inspection and survey of the property so that they can check it is structurally sound and has no obvious issues.

This typically takes a day since most surveyors will create the report on the same day as the inspection and sent it straight to the mortgage lenders underwriter.

Once the mortgage lender’s underwriter has received a copy of your completed survey, they will be checking to see if the valuation makes sense and that there are no issues with the property highlighted in the report.

From start to finish, the entire valuation process takes around 2 weeks to complete on average.

How long does it take between a mortgage valuation and offer?

After the valuation has been received from the surveyor, the lender’s underwriter will have all the required information to come to a final decision and will then be able to provide a mortgage offer.

At the point, the mortgage lender is willing to make an offer you will have it sent to through the mail. Your conveyancing solicitor will also be mailed the offer.

It can take up anywhere from 2 to 20 days to receive an offer.

How long does it take to exchange contracts?

Once your solicitor has received the offer from your lender, you should be able to exchange contracts with them in around 2 months.

During the mortgage application period, your solicitor will have been executing the conveyancing process.

This involves tasks such as applying to your local authority, for a market search, which takes around 1 month on average, although can take longer depending on how busy your local authorities property and the land department is.

Other tasks your solicitor will have been doing include communicating with the seller’s solicitors and asking relevant and important questions.

Once all of the above tasks have been taken care of, your solicitor will book a meeting with you for a pre-exchange meeting, where you can ask questions and raise any issues.

If you are happy, they will then arrange a convenient time for a final competition date.

How long does completion take?

The competition date – the day you finally get to start life in your new home.

Once the exchange of contracts has taken place, your appointed solicitor will organise the mortgage to be finalised so that you now officially own your home.

The period from the exchange of contracts to the completion date depends on both the buyer and owner.

Once you have both agreed to a date, it takes 1 week from this point since this is the amount of time it will take to receive the funds once your solicitor has notified your lender.

Typically it takes around a month from the exchange of contracts to the completion.

How Long Does a Mortgage Offer Last?

A very common question we receive is “how long does a mortgage offer last?”, generally speaking, It can take between 2 and 6 weeks to get a mortgage offer.

However, if your application is a little more complicated, such as you are looking to buy a non-standard build, or have bad credit, it may take longer.

Once your mortgage application has been approved, the offer is usually valid for 6 months. However, some lenders may have a completion deadline for their offer.

After this deadline has passed, you may be able to still use the same lender for a mortgage, but your eligibility is likely to be re-assessed as circumstances may change.

Therefore, you may have to start the application process again and your new offer may be altered depending on your current circumstances.

Related reading? 

Is it possible to speed up the mortgage application process? 

A mortgage broker can really help with the mortgage process as they will be familiar with all of the latest deals on the market, and the ones you are most likely to be accepted for.

This will save you a considerable amount of time as you won’t have to research for the deals that are best suited to your circumstances.

Your broker will also help you to fill in your application forms and let you know what documentation you need to complete the process quickly.

Furthermore, they will handle the submitting of the application and liaising with your solicitor to get the whole process moving much quicker.

How long does it take to get a mortgage if I’ve got a poor credit history?

Getting a mortgage with poor credit is trickier. Most mainstream lenders are reluctant to loan to those with bad credit as their poor credit history doesn’t provide the assurance they need that the loan will be paid back.

However, this doesn’t mean that those with bad credit are completely ineligible for a mortgage.

There are a number of niche mortgage providers that specialise in securing mortgages for those with no credit history, or serious blemishes on their credit record.

These lenders will consider the severity of the credit issue, the duration of the credit issues, the age of the problem, along with the standard eligibility criteria for a mortgage.

It is likely that you will need to put down a larger deposit on a mortgage if you have bad credit as a bigger deposit will offset some of the risks of loaning to someone with bad credit.

You will also need documentation to prove that you can afford the monthly payments including bank statements and payslips.

Furthermore, your outstanding loans, along with any other outgoings will be assessed and may affect the amount that you can borrow.

If you have bad credit and are interested in buying a home, get in touch with an experienced mortgage broker who has access to the whole market.

They will be able to access a wider range of mortgage deals including those from speciality lenders that fit in with your requirements.

This will make the process of applying for a mortgage go much quicker than having to research individual lenders yourself, which is even more important for first time buyers.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Key Takeaways on your Mortgage Application Timeline

  • A mortgage in principle may help to make the mortgage application process go a little smoother, by showing you and lenders what you can afford.
  • A mortgage application requires valid ID & address verification, your estate agent and solicitor’s details, proof of income and outgoings and proof of deposit.
  • A valuation of the property will be carried out to determine it is priced correctly and is suitable for a mortgage.
  • Generally speaking, it usually takes two to six weeks to get a mortgage approved.
  • The application process can be accelerated by going through a mortgage broker who can find you the best deals that suit your circumstances.
  • A mortgage offer is usually valid for 6 months.

Call us today on 01925 906 210 or complete our quick and easy First Time Buyer Mortgage Application.

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Remortgaging Costs (Legal Fees & Others Expalined)

by Kristian DerrickPosted on

When you have a mortgage, you are often tied to a deal that only lasts for a finite period of time, such as 2 or 5 years.

This means that once the term is over you will be transferred to your lenders base interest rate, which could see your monthly payments skyrocket.

That is why it is so important that you consider remortgaging in time before your current deal is finished.

There will be costs to remortgaging, but if you choose the right deal from the right lender, you can save yourself thousands over the course of your mortgage.

This is why it’s one of the most common reasons for remortgaging, it can save you a lot of money, other common reasons include to release equity, for home improvements or to buy new property.

The Costs of Remortgaging

There are a number of fees that come with remortgaging, so it is important to determine if the money you will save will outweigh the costs.

A lower monthly payment may seem attractive, but it could cost you dearly if you haven’t factored in the costs of remortgaging. Let’s take a look at some of the common remortgaging fees.

Early Repayment Charges

You will have to pay early repayment charges to your current lender if you choose to leave your existing mortgage deal before it is up. It is important you determine how big this fee may be as it may completely eclipse any savings you may make with a new mortgage.

Repayment charges vary depending on the type of mortgage you are currently on and how long you have been on it. Generally speaking, the early repayment charge reduces with the length of time on the mortgage.

For example, with a five-year tracker, the early repayment charge could be 5% (of the outstanding mortgage debt) in the first year, decreasing by 1% each year of the deal.

If the sums are a little complicated for you to work out, speak to your mortgage broker who will be able to talk you through all the numbers in a way that is easy to understand.

Deeds Release /Exit Fee

The Deeds Release/Exit Fee is paid to your existing lender.  Not all lenders will charge a Deeds Release/Exit Fee, but if yours does, you can expect to up to £300.

Arrangement Fees

The arrangement fee is charged by your new lender to set up the new mortgage and is non-refundable if something goes wrong. This fee will vary between lenders and could be a fixed fee or a percentage of the loan amount.

Usually, the better the interest rate the higher the arrangement fee, so you should discuss with your mortgage advisor if a low-interest rate is worth the high fee.

You can pay the arrangement fee upfront to your new lender or you can add it the cost of your mortgage. It should be noted that if you add the fee onto your mortgage, you will be paying interest on it for the entire mortgage term. So, if you can pay it upfront, you will save yourself money in the long run.  Some lenders have fee-free products.

Related reading: 

Booking Fee
Also non-refundable, a booking fee is charged by some lenders to secure a good rate on your chosen remortgaging deal. This will be paid up-front to your new lender and is usually between £100 and £200.

Conveyancing Fee

Paid to your solicitor, the conveyancing fee covers the legal work required to transfer your mortgage from your old lender to your new lender. Your solicitor will also handle the payment of the outstanding debt to your existing lender.

Some remortgaging deals will include a free legal package, but in these cases, the lender chooses the solicitor and therefore you will not be guaranteed a swift and efficient service. The conveyancing fee usually comes in at around £300.

There may be additional conveyancing fees to be paid to your solicitor if you are remortgaging to buy out a partner or to add someone to the mortgage. Make sure you tell your solicitor this before they go ahead with the paperwork.

Valuation Fee

A valuation is required by a lender for security purposes so that they know that they can recoup their losses following repossession if you don’t keep up with the mortgage repayments. Many remortgage packages include a valuation for free, and unlike buying a new home, you won’t need to pay for a structural survey or a home buyer’s report.

If you are expected to pay for the valuation, the price will depend on the size and value of the property, but it usually costs between £200 and £400.

Mortgage Broker Fee

If you are remortgaging through a mortgage broker you may have to pay them a fee which can vary between a fixed fee or a percentage of the loan amount. A fixed fee is usually around the £300-£500 mark, but if you are paying your broker a percentage fee it can be quite expensive.

Just 1% of a £150,000 loan is £1,500.  If you have to pay your broker up-front and something goes wrong you will lose this money, so always ask if you can pay upon completion.

If you have bad credit, it’s still possible to secure a remortgage with bad credit, if you need assistance, don’t hesitate to contact us.

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How to Reduce the Cost of Remortgaging

There are a number of things you can do to keep the costs of remortgaging as low as possible, they include:

  • Shop Around – Don’t just take the first deal that you come across. Take a look at mortgages from a number of lenders until you find the best deal. That is where a mortgage broker adds value as they will do this for you.
  • Stick with your Current Lender – Speak with your existing lender as they may be able to offer you a great new mortgage deal, which will avoid the fees incurred when switching to a new lender.
  • Boost Your Credit Rating – As with any mortgage, the better your credit rating, the better remortgage deals you will be offered. Obtain a copy of your credit report and learn more about your financial history to discover where you can make improvements.

Requirements for Buy To Let Mortgages UK

by Kristian DerrickPosted on

What is a Buy to Let Mortgage?

Before we go into eligibility criteria, required deposits etc. first you should know what a buy to let mortgage is, to see if it something that is attractive to you and your circumstances.

Well, a buy to let mortgage is just as it sounds – it is a mortgage that allows you to buy a property and rent it out and potentially build a portfolio of properties.

Most lenders will offer this type of mortgage, but it is likely that interest rates and fees will be higher than a traditional mortgage as they are considered to be higher risk.

Similar to the residential mortgage when it comes to the legal stuff, the buy to let mortgage are most often agreed upon on an interest-only basis, with the rental income being used to make the mortgage payments.

However, buy to let mortgages often have different eligibility criteria and will take into account if the investment is viable.

The amount that can be generated from renting the property will be a key factor, as it should be able to cover the monthly mortgage payments by 125%.

For example, if your mortgage payments are £500 a month, your rental income will have to be £625 a month. Some lenders have other calculations.

Eligibility Criteria for a Buy to Let Mortgage

If you think a buy to let mortgage might suit your needs, then you really need to know the eligibility criteria and make sure you tick all the right boxes before applying.

Your lender will take the following into consideration:

Credit History

A poor or limited credit history does not necessarily rule you out of a buy to let mortgage. Yes, it is true that many vendors are not keen to lend to those with a poor or no credit history, CCJs, IVAs, or a history of late payments.

However, there are specialist lenders out there that are willing to lend to those with a bad credit rating.

They may require a larger deposit and assurances that you can make the monthly payments, but they will do their best to find the deal that fits in with your circumstances.

Affordability and Income

For a buy to let mortgage, your lender may have a minimum income requirement for the buyer, particularly if you are becoming a landlord for the first time.

The usual income requirement for most lenders is £25,000, but there are lenders that will accept a lower personal income.

Furthermore, you may be able to find a lender that will have no income requirements, going on the rental potential of the property alone. This is as long as you can gain monthly payments that are 125% of the monthly mortgage payments.

Your income type may also be taken into consideration. It is not to say that you won’t be able to get a deal if you are a contractor, self-employed, or receiving a pension or other benefits. Those who are self-employed are usually expected to provide 2-3 years’ worth of accounts or tax returns, and a few months of bank statements.

Additionally, if a part of your monthly or yearly income comes from the likes of commission, bonuses, or benefits, you may need to search out a specialist lender that will take these supplements to an income into an account when making a decision.

Finally, a mortgage advisor will often make an assessment of your outgoings to show the disposable income you have at the end of each month.

If you have a large number of outgoings or existing loans (such as a lease on a car), your lender may implement a cap on how much you can borrow.

Deposit

Buy to let mortgages tend to require larger deposits than a standard residential mortgage. Whereas is not unusual to get a residential mortgage with just a 5% deposit, for a buy to let mortgage you may need as much as 25% deposit to be accepted.

However, there are some specialist lenders that will offer you 80% or 85% buy to let mortgage if certain criteria are met. Therefore, it is important to raise as large a deposit as possible, if you are considering a buy to let property.

Age

Age can be an eligibility factor with some lenders of buy to let mortgages. The minimum age for those applying for a mortgage is 18, but some lenders may have restrictions of 21 years of age or even 25 as the risk is lower. Furthermore, some mortgage providers may be unwilling to lend to applicants over a certain age, with a common age restriction being 75. However, some mortgage providers will lend to those up to 85 years of age, and some may not have any age restrictions at all.

Property Usage

Usually, lending for a single tenancy is relatively straightforward. However, it may be more complicated if your buy to let mortgage is for a holiday let, short-term let, and house with multiple occupants (HMO).

If you are planning on buying for an HMO you may need a special license and more importantly, your choice of mortgage lenders will be pretty limited. Talk with a whole of market mortgage advisor to see what deals are available to you.

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Can a First Time Buyer Secure a Buy to Let Mortgage?

Yes, a first-time buyer can apply for a buy to let mortgage, but your option of lenders could be limited. Most lenders will require you to own your own residential property before agreeing to a buy to let mortgage. So, you can be a first-time landlord, if you already own a home, but for a complete first-time buyer, you will find your options for a buy to let mortgage are minimal. Speak to an experienced mortgage advisor to better understand your entire buy to let options.

Need more information? Read our related quick help guides: 

Are all Properties Eligible for a Buy to Let Mortgage?

If you are looking to secure a buy to let mortgage, your lender will want to know that your chosen property is suitable for renting out.

The final decision will come down to the specifics of the property, such as its condition (if you plan on any renovations before renting), its location, and the rental market in the area.

However, most mortgage providers will have restrictions on the buy to let properties they will lend on. These include:

  • Ex-Local Authority Flats – Securing a mortgage will depend on the location of the property and the number of privately owned flats in the block.
  • New Build Flats – Usually vendors will require a larger deposit for a new build flat, although this can be dependent on area.
  • Flats Above Commercial Properties – Such as flats or maisonettes above restaurants. Cafes, shops or offices may have lender restrictions.
  • High Rise Flats – Lenders often put restrictions on the number of floors in a block of flats.
  • Holiday Homes – You lender will want to know that your holiday home can generate a sufficient income to cover the mortgage costs all year round.

Our expert mortgage advisors will be able to go into detail with you the types of property which are best suited for buy to let mortgages and where you will be able to get the best deal.

Main Takeaways

  • A buy to let mortgage is for those looking to buy a property with the intention of renting it out.
  • You will usually need a bigger deposit for a buy to let mortgage than a standard residential mortgage.
  • Many lenders will have income requirements that a buyer will have to meet.
  • Most mortgage providers will want to know that your chosen property can achieve a monthly rental income that is 125% above the mortgage payments.
  • First-time buyers can secure a buy to let mortgage, but options are limited.
  • Speak to our expert whole of market mortgage advisors who can discuss all your buy to let mortgage options and find the best deal for you.

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

Fees For a Mortgage (First Time Buyer Fees UK)

Yaz Shaw
by Kristian DerrickPosted on

When budgeting for buying a house there is so much more to take into consideration than the cost you’re willing to go to for your property.

The deposit that you are initially putting down is only the start of the outgoing costs of buying a home.

There are the likes of fees, stamp duty, and other charges that you will be expected to pay, both before completion and after completion.

To help you with your budgeting when buying a house, we have put together a guide on all the fees you can expect to pay and when you may expect to pay them.

Fees Before Completion

Long before you get the keys to your new home, there are numerous fees and cost that you need to pay. Here are the fees that come prior to completion.

Mortgage Costs

There are quite a few fees involved in the process of securing a mortgage.

  • Deposit – The deposit for your home is the biggest cost you will have to pay before completion. How much you will pay depends on the cost of the property and the type of mortgage you signed up for. For example, if you went for a 90% mortgage, you would need to put down 10% of the property’s value as a deposit.
  • Arrangement Fee – This is charged by your lender primarily for their administration costs. These fees are now an integral part of a mortgage and often directly affect your lender’s interest rate. You can either pay the arrangement fee up front or you can add it onto the cost of your mortgage. If you add the arrangement fee on the cost of your mortgage you will be paying interest on it, but if you pay up front and something goes wrong with the purchase, you may lose the money entirely.
  • What you may choose to do is to add the fee onto your mortgage and then immediately overpay your mortgage upon completion to pay it off straight away to avoid extra interest. Most lenders allow an overpayment of 10% of the outstanding mortgage balance each year without penalties, but it is always a good idea to check with your provider to make sure.
  • Booking Fee – There are a few lenders that may charge you a booking fee to secure you a good rate on a tracker, fixed-rate, or discount mortgage. The cost is usually no more than £200, but it is non-refundable.
  • Valuation Fee – Charged by your lender, the valuation fee covers the cost of determining your property’s worth. This is so your mortgage provider knows they can get a decent return on their investment if you fail to keep up with repayments. It, therefore, determines how much your mortgage provider is willing the lend you. The valuation fee depends on the purchase price and type of valuation chosen. Sometimes the lender will offer a free basic valuation.

If you are wondering how long a mortgage application takes to approve, the answer is that it depends on a range of factors. Make sure you are aware of the credit score requirements before you submit your application and the fees involved in buying a property.

Homebuyers Report/Full Structural  – You are not required to pay for a detailed survey but it is certainly recommended. This would give you a thorough report on the property and whether there are any issues that need to be dealt with, such as structural problems, damp, or plumbing issues.

If there are any problems, this survey may be used to renegotiate a better price. A full structural survey usually costs between £400 and £700 although a Homebuyers Report is cheaper and may be discounted through the lender.

Mortgage Broker Fee – You may need to pay your mortgage broker for acting as an intermediary between you and the lender. With some brokers, you may need to pay a fee upfront to get the process moving and a final fee upon completion.

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Stamp Duty and Land Tax

Stamp Duty is a government tax in England and Wales that is paid on homes costing more than £125,000.

However, if you are a first-time buyer, you get a little more leeway and will only pay Stamp Duty on the first £300,000 for properties costing up to £500,000. For house costing between £125,001 and £250,000, buyers will pay 2%.

For houses costing more than £250,000, the buyer will pay the 2% and then 5% on the amount that is over £250,000 up to £925,000.

Between £925,001 to £1,500,000, you will pay 10%, and on the amount above £1,500,001, you will pay 12%.

If you live in Scotland, instead of Stamp Duty you will pay the Land and Buildings Transaction Tax Rate.

You don’t have to pay this on the first £145,000, pay 2% on the cost between £145,001 and £250,000, and pay 5% on the cost of your purchase between £250,001 and £325,000.

Our expert mortgage advisors will be able to give you further information on the Stamp Duty and Land tax you can expect to pay, depending on the cost of your intended property.

Solicitor Fees

You will require a solicitor to take care of all the legal work that comes with buying a home. These include dealing with transferring ownership between parties, checking for any hidden problems that could affect you immediately or in the future, checking that your paperwork is correct, and registering the property in your name with the Land Registry. Some mortgage companies in England and Wales will cover these fees if you go with one of their chosen solicitors. Alternatively, your provider may give you some cash back on completion to go towards the legal costs.

Expect to pay around £1,000 to £2000 in legal fees that will be paid throughout the buying process and upon completion. You can use your own solicitor, but they will have to be agreed upon by the mortgage company as they will handle the legal work for all parties.

Insurance

Your lender will not accept any mortgage application without buildings insurance, which will protect both your and their investment against fire, subsidence, flooding, etc.

Although it not required by lenders it is also wise to have contents insurance to cover your possessions, as well as life insurance that will pay off the mortgage if something were to happen to you.

Fees After Completion

Even after you have exchanged keys and contracts, there are some extra costs and payments, some of which are ongoing. These include:

Ground Rent and Service Charges

There could be further fees to pay upon completion of your house purchase, such as if your property is a leasehold, where you don’t actually own the land, instead of paying to rent it from the freeholder for many decades. In these cases, you might have to pay a service charge for upkeep as well as ground rent.

If you are moving to a freehold, which has communal areas, which are shared by a number of neighbours, you will probably have to pay a monthly maintenance cost for the upkeep, such as gardening costs, fixing the roof etc.

Moving Costs

Moving can be an expensive business – the cost of a removal company could cost between £100 and £1000 depending on the amount of stuff you need to be transported. You could save yourself some money if you have some willing friends and family members that can help you out. Even better if one of them has a van.

Mortgage Repayments

Make sure you sign up for a mortgage that you can actually afford. Failure to pay your mortgage could result in your home being repossessed. In the years following your house purchase regularly reassess your mortgage options to ensure that you are always getting the best rate you can. It could save you thousands of pounds over the term of your mortgage.

Furnishings and Decorating

It is important to factor into your budget any furniture, white goods, or decorating that your new house will need to make it liveable to the standard you would like.

This is especially true if you currently rent a furnished place, as you will need everything – you really don’t realise how much stuff it takes to make a functional home until you buy your first home. From the small things like lightbulbs and cutlery to the big stuff like beds and the boiler (expect to pay somewhere in the region of £1,500 – £2,000 for one of the best combi boilers!). All these costs add up, so you will need to be sure you have some money put aside in your budget unless you want to live in a shell for a few years.

Make sure you know what comes included within the cost of your home – if the likes of the white goods are not written down in the contract, you cannot be sure that they will be included in the sale. You need to be aware of any extra costs.

Types of First-Time Buyer Mortgages

For a more in-depth look into some common types of first-time buyer mortgages, check out our following guides:

Or if you want a more general overview check out the different types of mortgages.

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Different Types of Mortgages UK

by Kristian DerrickPosted on

The world of mortgages can be a difficult one to navigate. How do you know that you are choosing the one that best suits you and your circumstances?

A mortgage is not something you can just rush into, you really do need to weigh up your options to ensure that you are getting the best deal – it can save you thousands of pounds.

If you are a first-time buyer it can be particularly overwhelming knowing which mortgage is the one you should be looking at. But, it is important that you do your research before applying for anything to avoid a costly mistake.

The Different Types of Mortgages

You have found the house of your dreams and had your offer accepted, so now it is time to sort out that mortgage. There is a lot of jargon to navigate – fixed-rate, interest-only, tracker etc. – but you really should familiarise yourself with it all before you meet with your mortgage advisor so you know which questions to ask. Here is our guide to the different types of mortgage.

Fixed-rate Mortgage

With a fixed-rate mortgage, your monthly interest rate stays the same for the entire term of the deal, which means that your payment will be the same each month.

Fixed-rate mortgages usually run for terms between 2 and 5 years, after which you will be switched to the lenders SVR (Standard Variable Rate).

This means you should look to switch your rate or remortgage before your fixed rate ends, as your monthly payments may increase significantly if you let them go to the SVR.

The major benefit to a fixed-rate mortgage is that your rate will not rise, no matter what is happening with the market. This makes this particular mortgage a good choice for first-time buyers or those on a tighter budget who need the stability of a payment that is the same every month. On the other side, if interest rates go down, you could be paying a higher monthly payment than you would be on a variable-rate deal.

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Tracker Mortgage

For a tracker mortgage, your interest rate is dependent on the Bank of England base rate. Your payment will be the Bank of England base rate plus a further rate, 2.5% for example, and when the base rate changes, so does your payment.

Typically, a tracker mortgage will usually have a deal period once it begins, i.e lasting around two years or longer, after which you will be transferred to your providers SVR if you do not review your options. You may have the option for a ‘lifetime’ tracker mortgage, where your payments are linked to the Bank of England base rate for the entire term of the mortgage.

The major benefit of the tracker mortgage is that your monthly payments will go down if the Bank of England base rate drops (although with Brexit uncertainty, this could be unlikely).

Furthermore, your interest rate is not affected by changes in your lenders SVR, just the base rate of the Bank of England. However, with a tracker mortgage, you will never know what your payments are going to be throughout the term, which can be a little troubling if you have sudden financial troubles.

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Discount Mortgage

A discount mortgage can be a little more complicated for some other deals, but you can secure some lower payments at the start of your term. You will pay your lenders standard variable rate (which does not change often), with a fixed discount for a certain period of time. For example, if a lenders SVR is 3.5% and your mortgage is discounted by 1.3%, your rate would be 2.2%

It is fairly common for a discount mortgage to be ‘stepped’, which means you pay the discounted rate for part of the deal and then the higher rate for the remainder of the deal. With a discount mortgage, the good news is that your rate will be lower than the vendor’s SVR for the length of your deal, and if the SVR is low then your payments could be very affordable indeed.

However, your lender may raise their SVR at any time, which will lead to more expensive payments. Look for a discount mortgage which has an interest rate cap which it cannot go above so you can ensure your payments won’t go over a certain amount each month.

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Standard Variable Rate (SVR) Mortgage

Every mortgage vendor has its own SVR, which is not dependent on the Bank of England base rate as they set it themselves. As the lenders set their own SVR, the rate will vary from lender to lender, so you will have to shop around to get the best deal. Furthermore, vendors can change their SVR whenever they like, which means that your payments could go up, particularly if there is word that the Bank of England base rate is set to rise.

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Interest-only Mortgage

With an interest-only mortgage, each month you are just paying the interest and not any of the capital. The payments will be low, but at the end of the mortgage term, you will still owe the overall balance of what you initially borrowed. With the interest-only, you will need to show that you will able to pay off the mortgage once the term is up.

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Repayment Mortgage

The repayment mortgage is much more common than the interest-only mortgage and is where you pay off some of the interest and some of the loan in each monthly payment. The payments will be higher than with an interest-only mortgage, but the upside is that you are building your investment in your home as the monies owed is reducing over the term.

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Things to Consider Before Applying for a Mortgage

Before you apply for a mortgage, try to determine which type is best suited to your situation – our expert mortgage advisors can help you with this. The type of mortgage which will be best for you will depend on whether you want to know what your mortgage payments will be every month if you would struggle if your payments were to go up, and if you suspect that your income is likely to change.

Make sure to try to ensure you are aware of the fees involved in buying a property and that your credit score meets the requirements before you apply for a mortgage.

If you want some flexibility in your payments – such as the opportunity to overpay, take payment breaks, or underpay, then ask our advisors about flexible mortgages. Overpaying usually doesn’t require a special mortgage, but often your lender will only let you overpay by a certain amount (say 10%) each year without incurring any penalties. Flexibility in a mortgage usually comes at a price, so you will have to weigh up these extra costs with the benefits.

Types of First Time Buyer Mortgages

For a more in-depth look into some common types of first time buyer mortgages, check out our following guides:

Main Takeaways

  • You generally have a choice between fixed-rate and variable-rate mortgages. The type which is best for you is dependent on your circumstances.
  • Discuss your options with a whole of market mortgage advisor, who can advise you on the best deals for your personal situation.
  • Have an idea in your mind of the monthly payment you can afford and use this to help determine the best mortgage for you.

If you want to overpay, underpay, or take payment breaks as your mortgage advisor or lender about any flexible options you can add to your plan

Top 9 Reasons to Remortgage in 2024

Yaz Shaw
by Kristian DerrickPosted on

Mortgages in themselves can seem rather complicated with the likes of fixed rates, variable rates, tracker mortgages, and more to contend with.

If you are a first-time buyer, you may be a little confused when your mortgage advisor mentions remortgaging in the future.

It is always wise to know your remortgage options, especially if you have a fixed rate mortgage, which can end in the space of a few years, resulting in a hike in your mortgage payments.

Numbers of remortgages are at the highest they have been for a decade, with homeowners determined to get the best deals they can.

With increasing uncertainty over Brexit and the potential rise in base rates, it is so important to know where you stand with remortgaging.

What is a Remortgage?

Put simply, a remortgage is taking out a new mortgage on a property you already own outright or have an existing loan on.

You have two options when it comes to remortgaging – either you go through a product transfer with your existing lender, or you can switch to a new mortgage provider.

  • Product Transfer – Involves swapping deals with your current provider without actually borrowing any more money.
  • Switching Lender – Your new lender will pay the funds that are released to the old lender through a solicitor, and then your mortgage with the new provider will continue.

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Reasons to Remortgage

There are several reasons why you might consider remortgaging your property and the benefits to it could be really significant.  Put simply, remortgaging can drastically improve your finances.

You could save thousands on interest, fix your mortgage rate to protect against price hikes (really useful with the uncertainty of Brexit ), make payments more affordable, or release some equity. Let’s look at some of the main reasons to remortgage in more detail:

1. Remortgaging for a Better Rate

Switching to a different mortgage provider may involve paying a small exit fee to your current provider, or there may be an early repayment charge on your outstanding loan which could be as much as 5%.

However, these extra charges could be worth the cost as you could save a huge amount of money switching providers for a better rate, particularly if your loan is still very large.

Look into the rates other providers can offer and work out if you will be saving more money despite the charges you may have to pay to leave your current lender.

Related quick help remortgage guides: 

It’s a good idea to familiarise yourself with the costs of remortgaging, especially remortgaging with bad credit since you are likely to be offered a higher interest rate.

2. Your Current Mortgage Deal is Ending

Fixed rate, tracker, or discount mortgages tend to only have a term of 2 to 5 years before it reverts to the lender’s standard variable rate (SVR), which can be much higher and can cost you thousands over time. To avoid being transferred to the SVR, look for cheaper mortgages around 16 weeks before your current deal ends.

3. Borrowing Money on Your Mortgage

You may want to release some equity in your home, whether it is to pay for repairs, upgrading a kitchen and/or bathroom, or to pay off other existing debts. Your current lender may have declined your request to loan more money. By switching mortgages you may be able to release some equity at a cheaper rate. Your new lender will want to know why you are borrowing more money and may ask for evidence.

4. You Own More Equity

The longer you pay into your mortgage the more equity you will have in your home. Therefore, you may have the opportunity to get a cheaper deal with a remortgage at a lower LTV (loan-to-value) ratio than your current mortgage.

5. Switching Mortgage Type

Perhaps you are looking to switch to a repayment mortgage from an interest-only loan. The chances are that you won’t need to remortgage as your lender should easily be able to make the switch for you.

You may even have the option to keep some of the loans on your interest-only deal and switch part of it to capital repayment. It can be more difficult, however, to change from a capital repayment mortgage to an interest-only loan.

Perhaps you want a mortgage that is more flexible that allows you to take a payment holiday if you are changing jobs, travelling, studying etc. Maybe you have heard about the offset mortgages that combine your loan with your current account or savings.

Whatever flexibility you are looking for, there is a chance that there is a mortgage that fits your needs. However, you should be aware that you may pay a little extra for the option of flexibility, so be sure you only choose the optional extras that work for you. You can always revisit any other options you may need in the future.

Related reading: 

6. Release Equity for a Buy to Let

If the amount left on your mortgage is relatively small, remortgaging to release equity to purchase a buy to let is not a bad idea if you want to buy new property. The release of equity can be used to place a deposit on a buy to let, which may work out much more cost effective as a buy to let mortgage typically have high interest rates.

As this new buy to let mortgage is certain to be larger than your current mortgage, you will need to prove to your lender that you can afford the repayments.

However, expected income from renting the new property may be taken into account when calculating your eligibility for a bigger mortgage.

Additionally, there could be periods of time where your buy to let property is empty, so you will need to show your lender that you a contingency plan to pay the mortgage with no rental income.

Similar principles apply if you are looking to release a lump sum from your current home to purchase an additional house. Your lender will want to know that you will be able to keep up with the higher repayments each month.

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7. Remortgaging to Beat Base Rate Rises

All this uncertainty over Brexit does have a lot of lenders worried about how it may affect the Bank of England base rates.  With a variable rate mortgage, like a discount or tracker, your payments will increase significantly if the base rate continues to rise. You may want to consider switching to a fixed rate mortgage, so you know what you will be paying each month, at least in the short term.

8. The Value of Your Home has Significantly Increased

The value of your property may have significantly increased – due to renovations or extensions – since you took out your current mortgage. This means that you could be in a lower LTV band and become eligible for lower interest rates.

If you think this may be the case, get in touch with our expert mortgage advisors to find you a new rate.

9. Change in Circumstances – Divorce

If you are divorcing or splitting with a partner that you have co-signed a mortgage with and you need to consider separating your finances. The shared home is usually the biggest asset that needs to be split and there are several options open to you.

Selling the house, paying off the loan and splitting any profit is one option, and allowing your partner to buy you out is another. But, if you want to stay in the house you will have to take over the entire mortgage repayments and may need to buy out your partner.

If this is your chosen course of action you will need to contact your lender as soon as possible to see if it is possible to transfer the mortgage into your name only. Your mortgage provider will want to make sure that you can afford the payments on your sole income.

If you do not meet their eligibility criteria you may be able to secure a new mortgage with a different lender. Legal work and costs will apply for the change of name.

So, there you have it, all the reasons why you should always be considering your remortgaging options. You may be able to save yourself thousands of pounds over the course of your repayment term.

You can also make sure that you are always getting the best deal, improving your financial situation. If you are considering remortgaging, get in touch with your mortgage advisor today.

Use our mortgage broker service to get access to thousands of deals and not just the ones your bank recommends.

Reasons to Remortgage Main Takeaways

  • A remortgage involves taking out a new mortgage on a property you own.
  • Discuss your remortgaging options with our expert mortgage advisors
  • Remortgaging can save you thousands of pounds, as well as releasing equity in your property, and improving your financial situation.
  • You may get a better rate by remortgaging, avoiding the Standard Variable Rate of your current lender.
  • Remortgaging can free up some capital to purchase additional homes to expand your property profile, but you will need to show lenders you can afford the additional payments.

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Best Bad Credit Mortgage Lenders (UK)

by Kristian DerrickPosted on

Having a poor credit rating doesn’t mean you can’t get a mortgage and you’ll never own property. You may even be afraid to approach lenders for a mortgage in case you get turned down and your credit rating taking another potential hit.

Furthermore, it can be difficult to know if your credit rating is bad, as different banks and lenders will have varied opinions on credit based on your history.

If you’re wondering how to get a mortgage with a bad credit rating, read on to find out everything you need to know about bad credit mortgages.

Is It Possible to Get a Mortgage with a Bad Credit History?

The short answer is yes. If your credit does fall into this ‘bad’ estimation, that doesn’t mean that you can’t get a mortgage.

It may be more difficult than if your credit was better, but there are specialist lenders out there that offer bad credit mortgages, giving you a chance to get on the property ladder.

Rather than look at the blemishes on your credit history, these lenders will look at the duration and severity of the issues, as well as how close you are to meet their eligibility requirements.

Specialist bad credit mortgage lenders are more flexible with their lending, compared to their mainstream counterparts.

With specialist lenders, your bad credit history or poor credit score may not necessarily stand in your way of getting a mortgage, providing mortgages to those with:

  • Missed mortgage payments or other late payments.
  • A poor credit score or no credit history.
  • Defaults in payments.
  • Bankruptcy or repossessions.
  • CCJs and IVAs.
  • Debt management schemes or payday loans.
  • Multiple credit issues.

In terms of severity, bankruptcy and repossession are considered the most serious, whilst the likes of missed mobile phone payments are on the other end of the scale.

Are you wondering “Why your mortgage application was declined?“, read on to find out how you may be able to avoid that in the future.

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What Issues are Taken into Consideration for a Bad Credit Mortgage?

When you have poor credit or no credit history, other factors will be taken into consideration to determine whether you can actually afford a mortgage and the monthly repayments.

Firstly, your employment status and income will need to be disclosed to your lender.

The lump sum you have available for a deposit is also of great interest to a specialist bad credit mortgage agency.

For a conventional mortgage on a residential property, the usual sum required for a deposit is at least 5% of the property’s value, but it may be more depending on circumstances.

For a buy to let home the deposit can be as high as 25%.

If you have bad credit, the ability to put down a larger deposit than the traditional mortgage lenders expect may lower your perceived risk of not being able to pay off the loan.

Regular outgoings will be also taken into account – such as dependent children, other loans, credit cards etc. – and the proportion of your income they take up.

This will help to determine how much money you will be able to borrow based on the monthly payments you can comfortably make.

Also, the type of property is of interest, particularly those with specialist features and non-standard construction.

If the home you’re interested in has the likes of a timber frame, thatched or grass roof, etc. you may need to go through a specialist lender.

How do I Get a Bad Credit Mortgage?

It is important to note that specialist lenders will put conditions in place that are different from mainstream lenders.

You are likely to need a larger deposit than those required for a conventional mortgage, with specialist lenders having stringent caps on the amount of money they are willing to lend those with bad credit.

The majority of bad credit mortgage lenders may loan 60% of the property’s value, however, a few may be willing to lend as much as 90%.

Additionally, you can expect a poor credit mortgage to have interest rates that are significantly higher than those from high street banks.

However, there will also be potential marked effects on your credit rating if you keep up with the payments.

Over time your credit rating may improve, which could give you the option to remortgage with better interest rates in the future.

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Preparing for your Bad Credit Mortgage Application

It is important to know what your actual credit rating is before applying for a mortgage so contact one of the main credit rating agencies Experian or Equifax for an accurate credit report.

It is imperative that the information supplied is current and correct, so double-check everything before submitting.

There are several online services that will provide you with a credit report for free online, or there are paid online subscription services so you can monitor your credit rating.

Additional documentation that you will require for your mortgage application includes the likes of:

  • A current driving license or passport to verify your identity.
  • Bank statements for your current account dating back between 3 to 6 months.
  • Payslips from the last 3 to 6 months or if you are self-employed, your accounts and tax return forms (SA302) for the previous 3 years.
  • Utility bills.
  • Council Tax bill.
  • Insurance policies.
  • Proof of any benefits you receive.
  • Your general living cost, such as travel expenses, childcare, regular outgoings etc.
  • Details of the property you wish to purchase, the estate agent you are buying through, and your solicitor.

Each specialist lender may have different criteria when it comes to what information you require and your income and outgoings.

So, before applying, get in touch with our expert team here at Mortgageable to see if there’s anything else needed for your application.

Be sure not to make multiple online or mainstream bank applications as rejections can negatively affect your credit rating further.

Having several ‘hard’ searches on your credit file can adversely affect your chances of getting a mortgage when you find the right lender.

Note: Are you looking for commercial property but have a bad credit history? Bad credit commercial mortgages may be an option for you.

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What About My Income?

Your income will usually determine the cap on the amount you are eligible to borrow.

Most mortgage providers will allow borrowing up to four times your annual salary, although some may offer up to 5 or 6 times your salary if the circumstances are right.

Affordability is key and lenders us affordability calculators to assess lending levels.

If your credit is bad, but you are a high earner you will still be considered a high risk for a mortgage that is a high multiple of your wage.

It may be possible through an expert mortgage broker, who can find you a flexible lender that specialises in bad credit mortgages to high earners.

Start your search for a mortgage by getting some advice from a whole-of-market mortgage broker and determine what your best options are depending on your income and how much you would like to borrow.

If you have a bad credit rating and a low income it may be a little harder to secure a mortgage as they are definitely not common, falling into the niche category of lenders.

Still, this doesn’t mean you won’t be able to get a mortgage – there may be a lender out there that specialises in lending to those with poor credit and a low income.

There are other options available if you fall into both categories, such as supplementing your low income with benefits, Shared Ownership schemes, and guarantor mortgages.

Get in touch with us today to talk through your options with you and advise you on the best route to go down.

Bad Credit Mortgage Lenders Main Takeaways

  • Yes, those with a poor credit history can still get a mortgage.
  • Raise as large as a deposit as you can as this will improve your chances of getting a mortgage.
  • Check your credit reports and improve your credit rating as much as possible before applying.
  • Find a lender that specialises in bad credit mortgages – that’s where Mortgageable come in!
  • Speak to our export mortgage advisors today to discuss through your options.

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Mortgage Brokers/Advisors St Helens

by Kristian DerrickPosted on

We’re delivering unrivaled mortgage advice and brokerage from the very heart of St Helens, producing an unrelenting carousel of delighted St Helens mortgage customers from first time buyers to landlords.

Our qualified team of expert mortgage advisors in St Helens pride themselves not only on their extensive and ever expanding knowledge of all things mortgageable but also their thorough and invaluable insightfulness of the St Helens property market.

Mortgage Saints – Proudly boasting access to array of mortgage options exceeding over 20,000 packages. We’ve got access to more mortgages than Saints have seats in their stadium

201520162017
St.Helens, WA9 1£68,200£76,200£66,400
St.Helens, WA9 2£58,300£70,000£82,600
St.Helens, WA9 3£95,000£89,400£100,000
St.Helens, WA9 4£111,000£116,000£120,000
St.Helens, WA9 5£148,000£162,000£157,000
St.Helens, WA10 1£56,600£61,800£64,600
St.Helens, WA10 2£120,000£140,000£123,000
St.Helens, WA10 3£106,000£113,000£106,000
St.Helens, WA10 4£116,000£107,000£106,000
St.Helens, WA10 5£213,000£220,000£214,000
St.Helens, WA10 6£133,000£153,000£171,000
Figures shown are the average sold prices for all homes in the postcode for the duration of the year. Figures supplied by http://a.plumplot.co.uk

St Helens Mortgage Advice, Mortgage advisor St.Helens

Obtaining a mortgage can often be a huge personal milestone within your lifetime and almost certainly your biggest financial commitment…

Setting our property and mortgage trivia burdened brains to one side, it’s the personal aspect of your mortgage application that brings out the very best in our time-served mortgage team in St Helens.

A second-to-none offering from over twenty thousand mortgage packages gives our customers an acceptance advantage we never let go to waste but it’s our mortgage teams endeavour to get to know each individual mortgage customer personally, that sets us apart, providing you the priceless peace of mind and bespoke service that we truly pride ourselves on.

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Buy Local, Mortgage Local.

The St Helens mortgage advice team provide a national scale, industry leading mortgage service from dozens of household name lenders with an all important local touch. 

A gaggle of friendly mortgage advisors hellbent on brokering you a mind-blowing mortgage package are on hand to assist you 6-days a week from our mortgage office in Hardshaw Street, St Helens town centre.

A mortgage team so local they’re still driven through their bereavement of Pimblette’s pies and the closure of Woolworths. Remember when Gym-Bug was a bowling alley? Lest we forget

Mortgage Mining for The Good, The Bad and The Ugly Credit.

When we’re not actively granting our St Helens customers the mortgage of their dreams, we spend our time dealing with banks – so you don’t have to.

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Our unique and exclusive access to hundreds of mortgage deals from dozens of the UK’s top banks and lenders combined with our mortgage know-how and some nigh-on forensic mortgage hunting, makes finding your ideal mortgage a breeze, no matter your circumstances.

Mortgage advice in St Helens has never been easier. Fill out our quick questionnaire and one of the team will give you a call.

Not all mortgage advice is created equal. We deliver for first time buyers, buy-to-let mortgage customers, re-mortgagers and especially bad credit mortgage applicants

All-inclusive. But Not Illusive.

Mortgage Advice Warrington, Mortgage Advice Infographic, Mortgages, Warrington, Mortgageable

Re-mortgaging, first time buying, buy-to-let, or bad credit applications. We’re securing mortgages like they’re going out of fashion.

Start your mortgage application here, it only takes a few minutes and then one of our local advisors will call you. Simple.

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Visit our Warrington Office:
60 High Street, Newton, Warrington, WA12 9SH

For your convenience we also have advisors based in St.Helens:
14a Hardshaw Street, St.Helens, WA10 1RE

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