Category: Mortgages

A mortgage is a huge commitment, and mortgage repayments are likely to be your most considerable monthly expenditure.

For informed financial decisions, it’s wise to get an accurate measure of how much mortgage repayments will cost you.

This article will explore 200k mortgage repayments and how different factors like the term, interest rate, individual circumstances, income, and deposit can affect repayments.

What Are The Repayments For A £200k Mortgage?

Different factors can affect your monthly repayments for a 200k mortgage.

The repayments are not the same for everybody because every borrower is different and has individual circumstances and credit history.

All lenders are not created equal and may offer different terms and deals that may affect your mortgage repayments.

Generally, the main factors that will significantly impact how much repayments for a 200k mortgage cost you include the interest rate you get from the lender and the loan term.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How Interest Rate Affect £200K Mortgage Repayments

Like other loans, it’s crucial to consider the interest rate for a 200k mortgage loan as it can affect how much you repay every month. Mortgage lenders in the UK may offer interest rates ranging from 1% to 5%, mainly depending on your risk profile or credit history and the size of your deposit.

Here’s an estimate of the monthly repayments you would make for a 200k mortgage based on different interest rates in 30 years.

Interest Rate	1%	2%	3%	4%	5%
Monthly Repayment	£643	£739	£843	£954	£1074

Interest Only Repayments

Repayments for a 200k mortgage can also depend on whether the loan is a capital repayment or an interest-only mortgage. You repay a percentage of the interest plus capital every month with capital repayment mortgages.

Some lenders may also offer interest-only repayment plans where you only repay the interest on the loan every month and nothing of the capital or amount borrowed. At the end of the loan term, the capital becomes due in one huge lump sum.

It’s easy to accumulate considerable debt with interest-only repayments, so lenders will require that you have a viable repayment strategy. It involves a written plan showing how you’ll pay the total balance on the mortgage at the end of the term.

How Loan Terms Affect £200K Mortgage Repayments

Generally, you can get a 5 to 30-year loan term to repay a 200k mortgage. The amount it will take you to pay off a 200k mortgage will depend on how much you can realistically afford to pay each month.

The length of the mortgage has a significant effect on repayments and how much you ultimately pay. Extended periods will have cheaper monthly repayments but a higher overall cost, while lesser periods will have higher monthly repayments but a lower total amount.

For example, a 200k mortgage over 30 years will cost you more than a mortgage for 25 years or less but will have cheaper monthly repayments that may be worth the extra cost.

It’s advisable to base your decision on how much you can realistically afford to repay each month without financial strain. The table below can give you an idea of how the term affects the total amount and repayments for a 200k mortgage based on an interest rate of 3%.

Term	Monthly Repayment	Interest	Total Repaid
30 years	£843	£103,495	£303,495
25 years	£948	£84,478	£284,478
20 years	£1106	£66,169	£266,169
15 years	£1381	£48,853	£248,853
10 years	£1931	£31,729	£231,729
5 years	£3594	£15,616	£215,616

What Income Do I Need To Get A 2ook Mortgage?

While qualifying for a 200k mortgage will come down to more than your income, lenders will generally cap the amount you can borrow based on your monthly salary.

Some can advance you up to  4.5 times your salary, and others can go up to 5 times or even six times with the right circumstances.

Remember, lenders will look at other things to determine your affordability, including your monthly expenses, the deposit you have, and your credit history.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

How The Deposit Can Affect 200k Mortgage Repayments

The more deposits you can put down, the better the rates and terms of the mortgage since lenders will see you as a lower risk. Better rates translate to lower monthly repayments, so the higher the deposit, the better the deal.

The amount needed as a deposit will depend on the lender’s loan-to-value (LTV) ratio, your employment type, credit rating, and if you’re after a buy-to-let or residential mortgage.

The rate will generally get better with a bigger deposit size. The higher the amount you can put down, the lower the interest and mortgage loan amount you’ll have to repay.

What Are The Repayments For A 200k Buy-To-Let Mortgage?

Rules for buy-to-let mortgages are usually stricter and slightly different from residential mortgages. Lenders will have higher minimum income requirements and require more significant deposits.

Some may consider rental income forecasts and require that the projected rental payments cover 125% to 130% of the 200k mortgage monthly repayments.

You can make most buy-to-let mortgage repayments on an interest-only basis, and this will be more tax-efficient and flexible for you as a landlord. You’ll have the option to quickly sell the property when you wish to clear the loan balance.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Other Factors That Can Affect 200k Mortgage Repayments

Your Credit Rating

Like other loans, your credit rating and history can affect the terms of the deal on a 200k mortgage. The better the rating, the better the rate. A bad rating may cause lenders to look at you as riskier, translating to less favourable rates and higher deposits.

However, every lender is different, and some may see you more positively than others, depending on your current circumstances.

Final Thoughts

Every borrower and lender is different, so expert, bespoke advice is the best way to determine what 200k mortgage repayments will cost you.

While mortgage calculators can be helpful, they can only give you a general idea. They will not consider other variables that come into play, including your income sources, credit history, monthly expenses or deposit amount

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’ve got your heart set out on a property that needs a £150,000 mortgage, the first thing to ask yourself is how much it would cost you a month.

It’s vital to know whether you can afford monthly repayments for a £150,000 mortgage now and in the future to make an informed decision.

In this guide, we’ll explore how much a £150,000 mortgage will cost you a month, how much deposit and income you’ll need, factors that affect the costs and how to get the best rates available.

Cost Of A £150,000 Mortgage A Month

Various things can impact how much a £150,000 mortgage costs you a month. These include:

• The mortgage term or length
• The lender’s interest rate
• The loan to value (LTV) ratio
• Your deposit amount
• Whether it’s capital repayment or interest-only mortgage
• Your credit history and profile

Remember, every lender is different, and they have different criteria to determine eligibility and the terms and rates they offer you.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How The Term Affects The Cost Of A £150,000 Mortgage

The mortgage term significantly affects how much a £150,000 mortgage costs a month and what you ultimately pay in total. Most lenders in the UK offer between 5 to 30 years to repay a £150,000 mortgage.

How long you’ll need to pay off the mortgage will depend on how much you can realistically afford to pay each month.

You’ll get cheaper monthly repayments with extended periods, but the overall cost will be higher at the end of the loan term.

You’ll have higher monthly repayments with a shorter mortgage term but a lower overall cost. A £150,000 mortgage with a term of 30 years will cost you thousands more than a mortgage for 20 years or less.

However, the cost of the more extended period may be worth it if you need cheaper monthly repayments you can easily afford.

It’s wise to choose a term based on how much you can afford each month without getting into financial hardship. Based on a 3% interest rate, the table below can give you a rough idea of how the term affects how much a £150,000 mortgage costs a month and in total.

Term	Monthly Repayment	Interest	Total Repaid
30 years	£632	£77,621	£227,621
25 years	£711	£63,358	£213,358
20 years	£832	£49,627	£199,627
15 years	£1,036	£36,437	£186,437
10 years	£1,448	£23,796	£173,796
5 years	£2,695	£11,712	£161,712

How Interest Affects The Cost Of A £150,000 Mortgage

The interest rate is crucial for any mortgage or loan because it will directly affect how much you pay each month. Mortgage lenders in the UK can offer interest rates from 1% to 5% for a £150,000 mortgage.

The rates lenders are willing to offer are usually based on your credit history or profile and the size of your deposit. The interest plus a portion of the capital or amount borrowed is paid back each month for the duration of the loan until the total amount is cleared.

For example, here’s an estimate of how much you would pay each month for a £150,000 mortgage with a 30-year term based on different interest rates.

Interest Rate	1%	2%	3%	4%	5%
Monthly Repayment	£482	£554	£632	£716	£805

Interest-Only Payments

How much a £150,000 mortgage costs you a month can also differ depending on whether you get a capital repayment or an interest-only mortgage.

Capital repayment plans require you to pay off a percentage of the borrowed amount plus interest every month for the entire loan period.

With interest-only mortgages, you’re only required to pay off the interest on the loan every month and nothing off the capital. The capital or amount borrowed becomes due at the end of the loan term in one lump sum.

You must have a viable repayment strategy to qualify for an interest-only £150,000 mortgage because it’s easy to accumulate a significant debt that can be difficult to repay without a good plan.

A viable strategy assures the lender that you can pay off the entire outstanding balance at the end of the loan period.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

How The Deposit Affects How Much A £150,000 Mortgage Costs A Month

The deposit you can put down for a £150,000 mortgage directly affects the loan to value (LTV) ratio and the terms and interest rate of the mortgage.

The LTV ratio refers to the amount the lender is willing to offer you relative to the total value of the property. It reflects the proportion of the mortgaged property and the proportion you’ve paid off upfront with your deposit.

A higher deposit means a lower LTV, which translates to better mortgage rates and terms. Lenders will see you as a lower risk if you have a high deposit, and they can provide you with better deals with a lower monthly repayment.

A low deposit translates to a high LTV ratio, and lenders can insist on stricter terms translating to higher interest rates or fees. The best deals you can get for a £150,000 mortgage will require a higher deposit and a low LTV ratio. The higher the amount you can put down, the lower the interest rate, monthly repayments and overall loan amount you’ll have to repay.

Monthly Costs For A £150,000 Mortgage For A Buy-To-Let

You’ll find slightly different rules for a buy-to-let mortgage. You may have to provide a higher deposit and meet strict income requirements set by lenders to qualify.

Some lenders will only accept a 25% deposit and above, and others may consider rental income forecasts and require that the projected rent covers 125% to 130% of the monthly repayments.

Many buy-to-let mortgages are offered on an interest-only basis, translating to lower monthly repayments for a £150,000 mortgage.

It provides more flexibility and tax efficiency for landlords, and they can quickly sell the property at the end of the term and clear the loan balance.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

£150,000 Mortgage Costs Final Thoughts

Generally, the interest rate and the mortgage term will influence how much a £150,000 mortgage costs you a month.

How much you can put down as a deposit will influence the rate you get and the deal the lender is willing to offer. The higher the deposit, the better the rates and terms of the deal.

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Restrictions imposed by a deed of covenant can negatively impact your mortgage application process. In addition, these limitations can affect the property’s value and make it challenging to resell.

This doesn’t mean mortgage lenders won’t consider properties with a deed of covenant, but they will require in-depth knowledge of what the covenant covers.

It is more challenging to obtain a mortgage on a property with a restrictive deed of covenant than a positive covenant.

A restrictive covenant prevents the buyer from certain forms of usage or improvement without permission. Often permission is not granted, thus limiting the homeowner’s living arrangements which can prove frustrating. No one enjoys being told what to do in their own castle!

This very reason puts potential buyers off when purchasing a home governed by a deed of covenant, therefore making the resale of these homes somewhat tricky.

Additionally, when banks look to mortgage a home, they want the surety of a quick resale should the mortgage fail, something a restrictive covenant is sure to impede.

What is a Deed of Covenant?

This is a legally binding document (deed) which details certain obligations or restrictions to which the homeowner must adhere. A covenant is there to ensure that homeowners abide by their property terms.

These stipulations are attached to the property and not to the property owner personally. Therefore they apply specifically to the property and not to the owner.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Types of Covenant

Covenants can be either positive or restrictive and can benefit or restrict your living arrangements.

• Positive covenants

Usually, positive covenants benefit the property. As a result, these covenants don’t represent a risk to mortgage lenders, and mortgages are relatively easy to obtain.

Types of positive covenants include those that detail repair and maintenance, installing boundary fences, and financial outlay for property improvement.

• Restrictive covenants

In contrast, restrictive covenants restrict land usage and make obtaining a mortgage challenging.

Types of restrictive covenants include but are not limited to alterations, satellite dishes, and buildings. They may also restrict the types of animals allowed on the property and prevent certain types of trade or vehicles from parking on the land.

Is it Possible to Get a Mortgage with a Restrictive Covenant?

Depending on the type of restrictions and the lender you select, getting a mortgage on a property with a restrictive covenant is possible. That said, some lenders are more suited to this type of mortgage, so it’s best to do your research.

Often the legal obligations attached to the property are why lenders are more cautious with this type of covenant. This is because some restrictions can affect the property value and resale ability making them more high-risk.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Disadvantages of Restrictive Covenants

When purchasing a property with a restrictive covenant, it’s best to discuss the restrictions with an experienced conveyancer.

This will help you understand your legal obligations towards the property. Some disadvantages of a restrictive covenant are detailed below.

• Restricted property renovations
• Reduced resale-ability
• Prevented from building on the land
• Unable to extend the property
• Mortgages may be challenging to obtain

Do Mortgage Lenders accept Restrictive Covenants?

Buyers looking to purchase a property with a restrictive covenant will have limited choice in terms of mortgage lenders. This is because lenders view these properties as higher risk due to the obligations you as the homeowner will have to adhere to.

In addition, restrictive covenants make properties harder to sell, thus further impacting the buyers’ ease of obtaining a mortgage. As a result, lenders often charge higher fees and interest rates to mitigate the risk, and a larger deposit may be required.

Specialist lenders design mortgages specifically for this type of purchase, and provided you meet the lender’s relevant criteria, a mortgage may be possible.

Can I Breach a Covenant?

Legally you are required to uphold the conditions of the covenant. Should you breach the covenant, the courts can grant injunctions forcing you to pay penalty fines.

Can I Purchase Insurance against a Covenant?

This is called indemnity insurance and is usually offered when purchasing the property by your conveyancer. However, this type of insurance doesn’t cover every property type and covenant. In addition, the cost of the insurance can be high and further impact your purchasing decision.

You may find that your mortgage lender requests you to purchase indemnity insurance, but this depends on the types of restrictions imposed on the property.

Is it Possible to Remove a Covenant from my Property?

This can be challenging and time-consuming and won’t provide a quick mortgage approval. Removing a covenant requires contacting the person with the benefit of the covenant to obtain ‘retrospective consent.’

As a last resort, you can contact the Upper Tribunal Lands Chamber to try and have the covenant removed or changed.

One disadvantage of removing the covenant prior to purchase is that it may increase the property’s value and thus cause your purchase price to increase.

Is it Difficult to Purchase Land with a Covenant?

While land mortgages differ significantly from property mortgages, they are also impacted by land that has an attached covenant. Often this means the mortgage options are limited due to the restrictions imposed on the land, which affects the resale-ability.

When purchasing land, lenders stipulate that you obtain building consent at the point of applying for the mortgage. This assures the lender that the property has value and will resell easily if required. Therefore, if the covenant prevents you from building on the land, this may create a challenge when looking for mortgage approval.

Obtaining planning permission prior to applying for a mortgage is common practice, and as long as the covenant restrictions allow, you can build with confidence in the future.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Purchasing a Property with a Deed of Covenant Final word

Purchasing a property with a deed of covenant may present particular challenges when looking for mortgage approval.

For example, it may inflate the interest rate on the mortgage, increase the deposit required and impose restrictions that you will be legally obliged to follow.

However, not all covenants are restrictive. So, before you cross covenant restricted properties off your wish list, discuss your options with a specialist mortgage advisor. They can assess your situation and your exact obligations regarding the deed of covenant.

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Prefab houses have been on the UK housing market since the end of the Second World War.

The post-war housing shortage meant that the demand for cheap, affordable homes sky-rocketed.

As a result, Prime Minister Winston Churchill used them as part of his plan to address this issue, and in 1944 they found their way into the Housing Act 1944 under the heading ‘Temporary Accommodation.’

The government at the time proposed to fill the gap in available housing by building 500 000 prefab homes which were only meant to last for 10 years!

Over the years, their popularity has remained static, and many have lasted long past their 10-year sell-by date!

However, this popularity has recently spiked due to the greater demand for sustainable and affordable housing.

What is a prefab house?

A prefab or prefabricated home is, as the name suggests, pre-made. Each piece of the house is factory manufactured and then transported to the building site where it is assembled.

This is the ultimate in flat-pack furniture. Prefab homes are the fastest, most affordable, and highly sustainable way of building a home.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Different Types of Prefab Houses in the UK

There are three types of prefab homes to choose from when building your forever home.

• Modular home

Each piece of the modular home is factory-made, transported to the building site, and constructed on permanent foundations.

• Manufactured home

Also called mobile homes, these houses are built and transported in bulk sections to be fully assembled on site. These homes are not affixed to permanent foundations.

• Kit homes

Construction is from factory manufactured pre cut pieces. These are then assembled by hired contractors or the homeowners themselves.

Is a Prefab House the Cheapest?

Prefab homes are between 10-25% cheaper to build than a standard brick and mortar home. Of course, this depends on the modern conveniences chosen.

However, even the modular home, considered the most expensive prefab home, is 10-20% cheaper than a traditional house.

The reason for this cheaper price tag is down to the use of mass-produced building materials and reduced need for carpenters, electricians, and plumbers on site. This reduces costs and keeps construction time to a minimum.

While a prefab may be cheaper in the long run, there are additional costs to consider aside from the actual price of the prefabricated pieces.

For example, you may need to purchase land, apply for permits, and request access to utilities and services such as electric, water, and sewerage. Additionally, you may need to factor in the cost of a driveway, garage, and possible landscaping.

Check Today's Best Rates >

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Can You Finance a Prefab Home?

While financing a prefab home is slightly more tricky than a standard build, some mortgage providers will offer homeowners the financing they need. This can be done in two ways: a construction loan or chattel mortgage.

• Construction loan

A construction loan can provide the finance you need to cover the initial costs of building the prefab home. This can then transition into a mortgage once the construction is complete.

• Chattel Mortgage

This is a loan specifically for unfixed property, for example, a manufactured home, houseboat, or plane. This type of mortgage uses the property (chattel) as collateral on the loan.

It is slightly different from a standard mortgage where a lien (right to keep possession of) secures the loan on the stationary property.

An additional incentive for buyers using this type of mortgage is that it can be used even if the prefab home is situated on leased land.

Besides all the benefits this type of mortgage offers, it is often more expensive than standard mortgages, and it can be challenging to find a mortgage provider that offers them.

Pros and Cons of a Prefab Home

Weighing up the pros and cons of a prefab home is a prudent thing to do. However, despite its cheaper price tag, it may not be the best option for you and your family.

Pros

• Sustainability

Prefab homes may have better insulation than standard homes due to tighter seams and joints. This results in better energy efficiency and lower energy consumption.

• Cost

A prefab house can be cost-effective and faster to build than a traditional house.

• Safety

Prefab homes are often better built than standard homes and can easily withstand adverse weather.

Cons

• Utilities

Rough terrain, closest water source, electric supply, and drainage issues can make setting up essential utilities and services difficult.

• Regulations

Zoning laws and building codes must be adhered to when constructing a prefab home. Additionally, homeowners will require specific permits and permissions when building a prefab home which can be costly and time-consuming.

• Upfront Cost

Unlike traditional houses, prefab houses are usually paid for upfront rather than over a period of time. This can make the initial upfront cost relatively high without finance.

• Financing

Depending on your financial history, financing for a prefab home can be challenging to obtain.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

How to get preapproval on a Prefab Modular Home

Preapproval is the mortgage lenders’ process to determine the loan amount you can borrow. This is usually determined by your income, credit score, and assets combined. They also use this to decide the interest rate on your loan.

When applying for preapproval, your mortgage adviser will ask for the following information.

•  Identification & address verification
• Employment status
• Debt-to-income ratio (DTI)
• Proof of income
• Credit history
• Other credit commitments

To ensure the preapproval process goes smoothly, you need the following documentation to support your application.

• Proof of address
• Bank statements
• Passport / Driving license
• Credit file
• Deposit finances

Once preapproved, you can start the process of searching for your forever prefab home.

Mortgages for Prefab Homes Last word

Affordability and sustainability are two words synonymous with housing trends today. Everyone seems to want a cheaper, eco-friendly alternative to everything, including housing.

This is why prefab homes are gaining traction in popularity on the housing market today. However, this doesn’t mean a prefab home is suitable for you, so be sure to weigh up the pros and cons carefully!

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Gone are the days when purchasing a buy-to-let property was a cost-effective way of getting onto the property ladder. Recent changes have impacted the complexities of the process.

Stamp duty increases, tax reviews, and changes to the lending criteria exacted by mortgage providers have meant that purchasing a property for buy-to-let purposes is now much more challenging.

Another change to the market was the consumer buy-to-let mortgage, a form of borrowing aimed at people who have become accidental landlords.

This is the term given to people who inherit property or perhaps move in with a partner and rent out their property on a short-term basis.

What is a Consumer Buy-to-let Mortgage?

A consumer buy-to-let mortgage is specifically designed for people who have become accidental landlords. As mentioned previously, this can happen through property inheritance or when people rent out their property for a short period.

Other forms of consumer buy-to-let mortgages included purchasing a property with the intent to let it to a family member or if being a landlord is not your primary occupation.

In more specific terms and according to the Mortgage Credit Directive Order 2015, a consumer buy-to-let (CBTL) mortgage contract is defined as – “a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purpose of a business carried on, or intended to be carried on, by the borrower.”

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Consumer buy-to-let vs. Standard buy-to-let

The primary differences between these two mortgages are who they are designed for and how they are regulated.

Standard buy-to-let mortgages are aimed at landlords investing in property to let to prospective tenants.

These landlords purchase properties for the sole purpose of letting them to tenants as a form of income. They are regarded as professional landlords.

In contrast, consumer buy-to-let mortgages are geared towards the individual looking to rent property to family members or those who fall into the accidental landlord category. As a result, the income generated from the rental agreement is not their primary source of income.

The FCA regulates consumer buy-to-let mortgages (Financial Conduct Authority,) while standard buy-to-let’s are unregulated. This is because investors purchasing a property specifically for buy-to-let purposes do not require the same amount of protection.

This consumer protection protects buyers from the dangers of mis-selling and poor advice by giving them the security of FCA regulated contracts and cover provided by the FSCS (Financial Services Compensation Scheme)

Next Steps for Accidental Landlords

Knowing what to do when you become an accidental landlord can be confusing. However, it is your responsibility as a landlord, accidental or otherwise, to ensure you understand your legal obligations and avoid being in breach of your agreement.

Below is a list of steps you should take to ensure you are not breaching your mortgage terms.

• Notify your current mortgage lender of your situation
• Request permission to let out your property
• Contact a consumer buy-to-let advisor

Note that you will breach your mortgage agreement if you let out a property with a residential mortgage agreement. Invariably this breach can allow the lender to demand full payment of the entire outstanding debt as a lump sum.

Unfortunately, most people don’t have access to this level of funds and may default on payment, affecting their credit rating and possibly losing their homes.

If you are unsure of the steps you need to take, contact a consumer buy-to-let advisor for expert advice. Always apply the golden mortgage rule; if in doubt, ask.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

What Are the Eligibility Criteria for a Consumer Buy-to-let mortgage?

The below criteria will help you determine whether you are eligible for a consumer buy-to-let mortgage.

• Property rental is not your primary occupation.
• You or a close relative previously lived in the property.
• The property was not purchased to let it out.
• You do not own any rental properties.

Regulations governing consumer buy-to-let mortgages prevent applications in the following circumstances.

• Property rental is your primary occupation
• You own other rental properties which are rented out
• This is a new property that you plan to rent out once purchased

Lenders recognise that each buyer’s circumstances are unique; therefore, if you are unsure whether you qualify for a consumer buy-to-let mortgage, speak to an experienced mortgage adviser.

Which Lenders Offer Buy-to-let Mortgages?

BTL mortgages are pretty popular and are offered by many of the leading mortgage lenders in the industry. Big names such as Clydesdale Bank, Virgin Money, and Santander are some of the lenders that offer a BTL mortgage.

However, going directly to large lenders may mean you are only offered the products they provide, meaning you may miss the opportunity to compare the market. Comparing the market is crucial to ensure you get the best deal possible.

To do this, you would need to discuss your mortgage requirements with a mortgage broker specialising in consumer buy-to-let mortgages. This will allow you access to expert advice and the full quota of products you qualify for, resulting in an informed decision.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Do I need Insurance as a Consumer Buy-to-let Landlord?

Unfortunately, your standard home insurance policy probably won’t cover the property if you’re letting it out to tenants. This means you will need a policy that suits the specific requirements of your property while providing you with the best deal.

We recommend comparing different insurers to obtain the right level of insurance at the best possible price.

Types of insurance policies a consumer buy-to-let landlord should consider are as follows:

• Rental protection insurance
• Public liability insurance
• Landlords building /content insurance
• Legal expense cover

These types of insurance mean you, as the landlord, are covered in most instances when things don’t go quite to plan.
Last word

A consumer buy-to-let mortgage is an excellent option for those looking to rent to close family or have inherited property unexpectedly.

Buyers are protected by the regulations of the FCA (Financial Conduct Authority) and covered by the FSCS (Financial Services Compensation Scheme).

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking for an interest-only mortgage, you may have a hard time finding one. They used to be quite popular, but because of the higher risks involved compared to repayment mortgages.

Some providers still offer these mortgages, but you will have to meet specific criteria to get one.

Let’s investigate the criteria and eligibility rules surrounding this type of mortgage so you can decide if it’s the right mortgage option for you.

Interest-only mortgages explained

Firstly, let’s clarify what an interest-only mortgage is and how it works. Quite simply, the monthly repayments on the mortgage are, as the name suggests, made up of only the interest.

Therefore the lump sum capital initially borrowed is not repaid until the end of the mortgage term. Mortgage terms can vary and at the end of this term, the lender will expect full payment of the capital borrowed.

When you apply for the mortgage, the lender will require evidence of how you expect to repay the capital.

When discussing repayment, the term you may hear to describe this is a repayment vehicle.’ Common repayment vehicles include investments, the sale of property, pensions, savings.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Interest-only mortgage criteria

As with any mortgage, there are specific criteria you will need to meet to get an interest-only mortgage.

For example, the lender will want to assess whether you can afford the load and if you can repay the capital sum borrowed.

In addition, there may be other eligibility rules the lender will expect borrowers to meet. For example:

Deposit

The lender will expect you to raise the required deposit and provide evidence of how you will repay the loan.

Earnings

Although you will only be paying the monthly interest initially, you will still be expected to prove your earnings. Usually, this is based on your annual earnings and may include a partner’s earnings if it is a joint application.

In addition, lenders will want to see you can afford the loan amount you wish to borrow.

Each lender will have criteria you will need to meet before providing a loan. However, the above are the most common requirements.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Reaching the end of an interest-only mortgage. Now what?

When the end of the mortgage term comes around, you will need to repay the initial capital amount borrowed. There are several ways you can do this, depending on your circumstances.

• Switch to a repayment mortgage

If you meet the lender’s criteria, you could remortgage and switch to a repayment mortgage agreement.

• Cash payment

You could use savings, investments, or the tax-free portion of your pension to pay off the loan. Always seek professional advice when cashing in investments and pensions.

• Equity release

If you are over 55 years old and own enough equity in your property, you could release it to repay the loan.

• Remortgage

Apply for a remortgage with your existing lender. For example, suppose you have a good repayment history, enough equity in the property, and a deposit.

In that case, your current lender may consider a new application for an interest-only mortgage, thus extending the term.

• Remortgage and Switch lenders

Consider switching lenders when trying to remortgage as some lenders offer longer mortgage terms and have different rules regarding the applicant’s age.

Check Today's Best Rates >

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

What repayment vehicles do lenders accept?

Depending on the lender, the criteria for repayment of an interest-only mortgage may differ. Each one will have their preferred method of repayment, and so while one may accept remortgaging, others may not.

In general, lenders will want proof of one or more of the following repayment plans.

• Property sale

Most lenders don’t accept this form of repayment. However, a few may accept it if you have as an example between £100,000 and £200,000 equity by the end of the term. You can also use the sale of a different property to repay the loan.

• Investments

There are quite a few investment types you can use to repay your home loan. These include investment bonds, endowment policies, ISA savings, stocks & shares, and unit trusts.

In all instances, the lender will want to see evidence of their value and projected growth.

• Pension lump sum

Some borrowers use the tax-free 25% portion of their pension to pay off their home loan.

This is usually drawable at 55 years. However, this may not be sufficient to cover the loan and could mean combining it with another source of funds.

In addition, drawing off your pension has tax implications and could affect your retirement finances. We suggest you discuss this with a pension advisor before making any pension withdrawals.

Minimum value required for repayment vehicles

While lenders will want to see that your repayment vehicle can repay the loan, you may not need the exact loan amount available when you take the mortgage. Generally, repayment vehicles grow over time; this is an accepted fact.

However, you will need evidence that it will grow and be able to pay the initial sum loaned. Some lenders require a minimum value for repayment vehicles, but if one lender rejects you, you can always approach another.

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Deposit required for an interest-only loan

Mortgages are based on the loan-to-value (LTV) ratio, determining how much you can borrow in relation to the property value.

For example, if you put down a £20,000 deposit on a house valued at £200,000, then 10% is owned by you, and your LTV is 90%.

Most interest-only mortgage lenders would expect an LTV of between 50-85%, which means your deposit could be as much as 15%.

Minimum income required for an interest-only mortgage

Many lenders don’t have a minimum income requirement and will use a mortgage calculator to ensure you can afford the loan.

However, some lenders require a high minimum income, while others are more lenient and accept income plus repayment plans. Each lender has different policies, and not all will expect a minimum income on an interest-only mortgage.

Types of income accepted by lenders include fixed monthly income, self-employed (based on net profit,) part-time (based on earnings), contract work, and pension income (based on pension payments.)

How much can I loan for an interest-only mortgage?

Usually, the amount you can borrow is 4 times your annual salary. However, this may not be enough to get an interest-only mortgage if your property value is high.

Depending on your circumstances, some lenders are more flexible and may consider loaning 5 or 6 times your annual salary.

It’s worth noting that an interest-only mortgage is capped at the value of the repayment vehicle if using property.

Therefore if the loan is based on the sale of a property in which you have £100,000 equity, the maximum mortgage amount would be for the same value.

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Interest-only mortgages final considerations

Lastly, all is not lost if you have a repayment shortfall and can’t borrow the amount needed on an interest-only mortgage.

Some lenders will allow you to take some of the loan as interest-only and the rest on a mortgage repayment plan, effectively splitting the loan. This can make qualifying for an interest-only mortgage a lot easier!

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking to secure a mortgage on a zero hour contract, it can be more difficult but isn’t impossible.

Over the past few years, the upward trend in zero-hour contracts has caused lenders to rethink the criteria required for buyers needing a mortgage.

Obtaining a mortgage on a zero-hour contract use to be more difficult because lenders tended to view this form of employment as unstable.

For example, no work equates to no pay, which means an unpaid mortgage putting the lender at risk.

However, recently, lenders have noticed the increase in this type of employment, meaning they have had to change their game plan to remain in the mortgage market.

Whilst most lenders prefer buyers to be in full-time employment, some lenders offer mortgages to those on zero-hour contracts, thus opening the proverbial home-buying door to those who may otherwise have found it firmly shut.

However, approaching the application with the correct information may lead to the approval of a mortgage and, subsequently, the purchase of your ‘forever home!

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

Zero-hour contract mortgage explained

Firstly, a zero-hour contract can be broadly defined as an employment contract that allows the employer to hire staff without any guarantee of work.

Often the work is sporadic, offered at short notice, and your salary depends on the hours or shifts you work.

This causes uncertainty with lenders who provide standard mortgages as they require regular payments of set amounts which can easily be unpaid should your salary fluctuate each month.

However, a zero-hour contract mortgage is designed for those who have this type of employment contract.

Lenders who offer this type of mortgage understand that some employers don’t provide the stability of a full-time contract to their employees.

In addition, just because you are on a zero-hour contract does not mean you don’t earn the same or more than your full-time contract counterparts.

Can you get a mortgage on a zero-hour contract?

Yes, it’s possible, however, a zero-hour contract immediately labels you as higher risk, since lenders prefer more stable forms of income. However, the good news is that all lenders are different and some lenders will accept applications from higher risk applicants, including those on zero hour contracts.

Such lenders can be difficult to locate and its likely that your application will be rejected or you will be offered a mortgage with an extremely high interest rate, the key is to talk to a mortgage broker who will be able to do a full search of the market and find you the best possible lenders.

How do mortgage lenders view zero hour contracts?

The reality is that lenders will likely view an application from an individual on a zero hour contract less favourably than an individual on a full time contract.

Why? Your income is not guaranteed and so you will be considered higher risk and more likely to miss mortgage payments in the future.

This will typically mean lenders will reject your application, offer a higher interest rate or expect you to put down a larger deposit.

What criteria will lenders assess?

When considering a mortgage application from an individual on a zero hour contract, lenders will look at the following criteria:

Employment History

If you have been working for the same employer or in the same industry for twelve months, it demonstrates that your employment is secure. As a result, lenders often use this as their starting point.

In contrast, if your employment history has gaps or perhaps you have started a new job, it may cause lenders to feel that your employment isn’t quite as stable as they would like.

Earnings

Demonstrating that your income is sufficient to repay the mortgage will increase the confidence of lenders considering your mortgage application.

Zero-hour contracts don’t automatically mean you earn less than is required. Moreover, showing you have savings put away each month provides your application with additional ‘brownie points.’

Job role & industry

Your job role or occupation can show lenders the skills or qualifications you hold; this demonstrates the likelihood of you finding work easily to repay the mortgage.

It’s important to note that some lenders will never accept an application from an individual on a zero hours contract, however, some will as long as you can demonstrate a stable history of working in these types of roles.

If you have already been declined and you are on a zero hours contract, don’t give up quite yet, as our mortgage brokers will be more than happy to help you find a lender and offer assistance with completing the application.

Check Today's Best Rates >

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Deposit requirements for zero-hour contract mortgages

Figuring out the deposit you require can be quite tricky as it depends mainly on the lender and your circumstances.

In some cases this can be as little as a 5% deposit, but this is only usually possible via the help to buy scheme. In general, the standard amount needed is around 10%, but as much as 15% for individuals with a poor credit history.

It’s worth noting that the higher the deposit you can offer, the more favorable this looks on your application.

It stands to reason the higher the deposit, the less risk involved for the lender, which is what you want to show when working on a zero-hour contract.

To better understand the amount, you will require it’s best to speak to a mortgage advisor who can assess your circumstances and situation.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Zero hour contract mortgage lenders

Deciding which type of lender is best for you depends largely on the type of mortgage you require.

For example, a buy to let mortgage is very different from a regular mortgage, and those with credit issues may need to seek help and advice from an adverse credit lender.

Choosing the right lender for you is vital to avoid wasting your time, money and possibly missing out on purchasing your chosen home. Let’s take a look at lenders suited for zero-hour contract mortgages.

Specialist lenders for bad credit

Having a bad credit score doesn’t automatically cross you off the mortgage list. However, it will make the process more challenging. While specialist lenders may help, this will depend on the credit issues you are facing.

It’s also worth noting that a bad credit score coupled with a zero-hour contract may provide additional challenges. Often lenders will refuse mortgage applications based on the bad credit without considering the type of employment contract you hold.

Again, specialist lenders are there to help in this type of situation. However, the rates may not be as good compared to regular mortgages, and the fees may be higher.

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Buy to let mortgages for zero-hour contract workers

Can you get a buy to let mortgage on a zero hour contract? It may still be possible, but in general, it’s going to be more difficult.

Lenders commonly require to to provide proof of a minimum personal income through either employment or self-employment and assess this your accounts.

If this is your first buy to let property application, the criteria is much similar to a residential mortgage and you will usually need to provide 12 months of minimum income. However, there may be some specialist lenders that are willing to accept lending if you have less than 12 months income proof.

In addition, if you have previous history as a landlord, lenders will typically be more likely to approve your application, as the income criteria will be less important.

Mortgage advice for zero-hour contracts

Obtaining mortgage advice from a specialist advisor is a smart move for those on a zero-hour contract.

The truth is while some lenders recognise that the zero-hour contract is the future of today’s workforce, there are still very few that will consider your application.

Trying to figure out which lender will assist you can prove to be a daunting task.

However, a specialist advisor takes the guesswork out of your search. Furthermore, they can prepare your application and see you get the best mortgage rates possible.

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

When looking to purchase a home, your first thoughts are probably around size and location rather than its structural material.

After all, aren’t all homes made from bricks and mortar?

In most cases, it’s bricks and cement that make up our homes. However, through the ages, we humans have used many materials to build our cozy abodes.

For example, in your hunt for your forever home, you may come across houses made from wood, concrete, brick, clay, and even steel.

While you don’t often see these materials hidden behind the paint and trimmings, they make up the base structure of your home.

The durability of this structure becomes important when trying to get a mortgage, especially in the case of steel framed houses.

Unfortunately, steel framed homes can be problematic when it comes to insurance and resale, hence the hesitancy of some lenders when considering a mortgage on them.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

The primary reason for the bad rep steel framed homes get is building quality because steel frameworks often develop structural issues over time.

While some lenders may consider offering mortgages on specific reliable steel frame constructions, others draw the line and refuse.

As with most challenges when running the mortgage gauntlet, it’s simply a matter of finding the right lender for the job. But this in itself can prove tricky.

Before applying for a mortgage on a steel framed home, one of your first steps should be to investigate whether its construction is structurally sound.

In other words, check if the structure is displaying signs of corrosion. This can be done by requesting a detailed property survey.

Why should you get a property survey done?

When looking to purchase a steel framed home, it’s imperative to get a building survey done by an experienced surveyor.

They will conduct a full property check and inspect the structural stability of the steel structure.

Choosing a surveyor with experience in surveying steel will ensure any defects are spotted timeously.

What does a surveyor check?

• Corrosion – Stanchions checked for rust
• Evidence of subsidence – Movement of the property’s foundations.
• Signs of asbestos/ hazardous materials – Asbestos was banned in the UK in 1999 and has been linked to many health-related illnesses and deaths.
• Roof – Checked for leaks and structurally sound.
• Drains – Checked for leaks, poor flow, blockages, and pollution.
• Pest infestations – Rats, mice, dry and wet rot, termites, and woodworm
• Signs of damp
• Boiler / Electric meter

Factors that could influence your mortgage

When purchasing a steel framed house, certain factors may influence its mortgage-ability.

Reinforcement

Reinforcing a steel framed property may increase its mortgage-ability. This is when brick is used to strengthen the foundations. However, this can be costly.

Insurance

Obtaining insurance for a steel framed home can be challenging as well as costly. While there are specialist lenders who may offer insurance, it’s often at a higher premium.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Do I need a higher deposit for a steel frame home?

When lenders consider mortgage applications, they look for ways to mitigate the risks they are exposed to.

As a result, you may need to supply a higher deposit to circumvent their risk of lending against what they term as a non-standard property.

This is a property made from materials other than bricks and mortar – in this case, a steel frame.

While most lenders require a deposit of 10%, this can increase if the property you purchase is steel framed.

Your credit history and the results of the property survey will determine the increase in the deposit required.

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Can you get a BISF construction mortgage?

Acquiring a mortgage for a BISF home may be more challenging than you think. Here’s why. Many homes on the steel frame market are BISF homes (British Iron and Steel Federation.) However, their numbers are not an indication of their popularity but rather their necessity.

Constructed in the 1940s, right after the second world war, BISF homes were a quick solution for the growing housing demand when building materials were hard to find.

As a result, the building quality was poor, made from panels resembling flat-pack furniture and quickly erected on site.

However, aside from cheap building quality and materials, these houses are also listed on the Housing Defects Act (1985), making them even more unattractive to prospective lenders.

To increase its mortgage-ability, you could reinforce the property with brick, but this can prove costly.

When considering the purchase of a BISF home, it’s best to discuss your options with a specialist lender who understands the steel frame market. They can help you make an informed decision and possibly assist with a mortgage.

Related guides: 

• When was my house built? 
• Buying out a sibling from an inherited house 
• How long does it take to release mortgage funds? 
• Does a valuation mean that a mortgage is approved? 
• Mortgage lenders that accept benefits 
• Can I extend my interest-only mortgage term? 

Final thoughts

The mortgage process is challenging even for those with a great credit score purchasing a standard property. However, the process becomes more difficult for those looking to purchase a non-standard property such as a steel frame home.

The additional issues with a steel frame home can make reinforcing, insuring, and purchasing such a home more costly than you anticipated.

That’s why it’s recommended that you obtain professional advice when buying a steel frame home.

Using an experienced broker will help you traverse the pitfalls of purchasing a steel frame home and improve your chances of obtaining mortgage approval.

Frequently Asked Questions

1. Why are steel frame homes problematic?

The steel framework of these homes often develops structural defects. This makes them difficult to resell, insure and, as a result, obtain a mortgage on them.

2. Is reselling a steel frame home difficult?

Obtaining a mortgage and insurance on this type of home is challenging. Therefore you may find it difficult to sell in the future.

3. Bad credit, can I get a mortgage on a steel frame home?

Bad credit history can affect a mortgage application irrespective of the property you are looking to purchase.

However, the added difficulties experienced when purchasing a steel frame home may mean you need to seek the advice of a specialist advisor.

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

If you’re looking for a loan to buy a property that needs major renovations, or you’re eyeing a property but can’t afford the renovations, a refurbishment mortgage can be suitable for your needs.

Conventional mortgages finance the purchase of properties or homes but won’t cover the cost of renovations.

You can take advantage of price reductions where renovations are required. Here’s everything you need to know about refurbishment mortgages in the UK.

What Are Refurbishment Mortgages?

Refurbishment mortgages are also called renovation mortgages or refurbishment finance. They’re a type of loan that allows repairs or renovations to commence on a property.

Some refurbishment mortgages allow you to take out mortgage sizes equal to the post-renovation value of the property.

You can use such loans to finance property purchases and fund the needed developments to make the house into your ideal home.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How Do Refurbishment Mortgages Work?

Refurbishment mortgages are short-term finance solutions that require you to have a clear exit strategy from the onset showing the lender how you’ll repay the loan.

Lenders base the loan amount you can borrow on the property’s projected value once the renovations are complete. They also consider the potential rental income the property could achieve if it is for a buy to let.

The release of funds usually occurs in two stages where a percentage of the property’s purchase is initially advanced, and then you receive the remainder once you complete refurbishments.

Bridging Finance may also be arranged over shorter terms. This agreement can be closed or open. Closed exits feature dates already known, like a completion date already decided upon for repaying the loan.

Open exit strategies feature an agreed timeframe dependent on delays or the completion of works.

Types of Refurbishment Mortgages

The type of refurbishment mortgage suitable for you will depend on the scale of work you need to undertake and can include:

Light Refurbishment Mortgages

Light refurbishment mortgages are suitable for properties that only require light or minor upgrades.

These are usually non-structural or primarily decorative works that don’t require compliance with building regulations or planning permissions to continue with developments.

Some examples of light refurbishments include:

• Redecorations or aesthetic changes.
• Fitting a new kitchen or bathroom
• New windows
• Electrical rewiring
• Central heating system installation
• Improvements to fittings and fixtures

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Heavy Refurbishment Mortgages

Heavy refurbishment mortgages are suitable for properties that require structural changes like extensions. These projects will likely cost more than 15% of the property value and require more formal planning.

You may be required to obtain planning permission and comply with building regulations requirements.

Heavy refurbishments can include:

• Conversions
• Demolitions
• Internal and external structural works
• Property extensions

Because of the nature of heavy refurbishment projects, you’ll need to consider the duration the finance will be required to allow enough time for the planning stage.

For larger projects, like developing multiple units like apartment blocks or building a property in its entirety, commercial or developmental finance is a better option.

Related guides: 

• Mortgage 5 times salary.
• Can you get a mortgage on land? 
• Refurbishment mortgages.
• Part and part mortgages.
• HMO mortgages.

Refurbishment Mortgage Rates

The rate you’ll be charged for the refurbishment mortgage and other associated fees will depend on your circumstances and the property itself and type of mortgage/bridging finance.

An essential factor to remember when considering refurbishment finance is that it usually only starts at around 75% of the property value after refurbishments are completed. It can be challenging to get financing for anything higher than 75% of the post-refurbishment value.

Refurbishment mortgages often allow you to take out a loan big enough to renovate the property at the same low-interest rate as the property mortgage. The amount you’re investing in and the scale of the project will all impact the rates you’re offered.

Consulting a mortgage specialist or advisor with access to the entire market can ensure you get the best deal available, depending on your circumstances.

Check Today's Best Rates >

Suitability Of A Refurbishment Mortgage

A refurbishment mortgage is suitable if you’ve found the house of your dreams, but it needs some work before you can move in or sell it. These can include:

• Being in an appropriate location but needing more work
• You want to build up into the roof for a studio or an extra bedroom
• You want to get more living room by digging down into the basement
•  The house is currently unmortgageable

Many high street providers and private banks offer refurbishment mortgages for residential and commercial properties in the UK. You may need to look beyond high street lenders or building societies at other lending options if the property doesn’t fulfill their requirements.

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What To Do If The Property Is Considered Unmortgageable

In some circumstances, refurbishment mortgages may be ineligible if the associated property is deemed unmortgageable. Some reasons for this can include:

• Uninhabitable properties because of poor conditions like property derelict or lack of weatherproofing.
• There is evidence of invasive plants like Japanese Knotweed.
• The property faces flooding, rot, dump or subsidence.
• The property’s value is under £50,000.
• Planning permission is absent, or the property isn’t listed in the Lands Registry.

In such situations, you can use bridging loans for prompt property development, after which you can subsequently apply for traditional mortgages against the property.

Bridging loans are an alternative to refurbishment mortgages, especially when time is a factor. They can come in handy with auction properties when a deposit is required upon winning the property, and the refurbishment mortgage process takes too long.

Bridging loans also require you to have an exit strategy, and their suitability may depend on your circumstances. They’re short-term financial products that require you to own another high-value asset that can act as a down payment.

Refurbishment Mortgage Final Thoughts

Refurbishments are considerably different, so it’s wise to consult an advisor when looking for a heavy or light refurbishment mortgage.

They may have access to exclusive deals and products you’ll not find on the open market and can help you find suitable financing for your project.

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

Further reading: 

• How much does the average mortgage cost?
• Modern method of auction 
• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts

Borrowers often think their options are limited as they consider buying a home when single or on one salary, but that isn’t necessarily the case.

You’ll not be treated any differently by lenders when applying for a mortgage as a single person.

It’s very common for first-time buyers to purchase their first property alone. Here’s everything you need to know about single-person mortgages.

Can you get a mortgage when single/on your own?

Yes! Single-person mortgages are pretty standard, and the application process can be more straightforward than joint application mortgages because only a single person is assessed.

The only limit is financial because it means you’ll be applying with only one income. It may mean that you’ll have a lower deposit or have to wait a little longer to buy than couples with joint incomes who can save for a deposit quicker.

Even if lenders have rejected you before, working with a mortgage advisor or broker can help you get a single-person mortgage with other lenders.

While you may need to work harder to get the necessary finances in place, you can put yourself in the best possible position to qualify through careful planning.

Check Today's Best Rates >

Need more help? Check our quick help guides: 

• Reasons why a mortgage could be declined on affordability. 
• How reliable is a mortgage in principle?
• How do joint mortgages work?
• Can you get a mortgage on a fixed-term contract?

How much can you borrow as a single person?

Your income will determine the maximum amount you can borrow in a single-person mortgage. Many lenders place the limit they can advance at 4.5 times your income.

Under the right circumstances, some can stretch the amount to x5 or x6 times your income this depends on other factors and could be lower.

Different factors can impact a lender’s willingness to advance the loan on high-income multiples. The primary consideration among many lenders is affordability based on your income and outgoings and other financial commitments i.e. loans, credit cards that will remain.

An important thing to remember is that different lenders will consider you differently. Some may see you more favourably than others, so it’s essential to shop around for the best possible deal.

What size deposit does a single person need?

Many individual borrowers assume a larger than average deposit is needed when applying for mortgages by themselves, but this isn’t true.

Single-person mortgage applications can be stronger than joint applications, and you can even qualify for a 5% deposit. Generally, you can get a mortgage worth up to 95% of the property value in the UK.

It’s wise to save up as much deposit as possible because you have more and better options among lenders with a higher deposit. Lenders will consider you lower risk when you have a higher deposit, and the deal generally gets better every time you move up 5% in deposit size.

The higher the amount you can put down, the lower the interest and mortgage loan amount you’ll have to repay. As you save up for a single-person mortgage, aim for 5%, 10%, 15%, and 20% milestones.

Right to buy scheme as a single person

If you live in a council property and qualify for the right to buy scheme, the mortgage and property ownership will need to be in the names of the person or persons on the right to buy documents.

Therefore, if you are the only person on the paperwork, you will be the only one eligible to apply for the mortgage via most lenders. This means the lender will make the usual assessments based on you alone, including your income and affordability.

Right to buy as a joint mortgage

There are circumstances when a single person applying for a mortgage via the right to buy scheme will be ineligible for the mortgage on their own but their names will be the only one on the right to buy paperwork.

In this situation, it may be possible to add another individual onto the mortgage in a similar way to a joint mortgage sole proprietor setup.

When to consider a joint mortgages in a sole name

There are times when you may want to consider having a joint mortgage in a joint borrower, sole proprietor (JBSP) agreement. One common situation is when you want to help a family member out with their mortgage payments.

A JBSP enables second parties to help others purchase a home by joining the mortgage without being featured in the title deed. It’s often a good option for first-time buyers, and it can protect your assets and provide valuable tax benefits.

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A solo mortgage for bad credit

You may also want to consider a single-person mortgage when your partner has a bad credit history. If two people will occupy the property, but one has bad credit that can appear on the application, a solo mortgage is a suitable option with some lenders.

Many specialist lenders can still consider your application and approve the mortgage even if you have a bad credit score. Whether late payments, bankruptcy, or debt management caused your adverse scores, some lenders are more than ready to help you.

They’ll assess how recent or severe your credit issues are and concentrate on your affordability and how you handle your finances now. High street lenders will not consider you if you have bad credit, so it’s better to work with mortgage advisors or brokers who have access to specialized lenders.

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Getting A Right To Buy Single Person Mortgage

If you meet the qualification for a Right To Buy Scheme and are looking to purchase your council house, then the ownership and mortgage of the property will need to be in the name of the person on the Right to Buy paperwork.

Frequently Asked Questions

Single Person Mortgages For The Self-Employed

You can still qualify for a single-person mortgage when you’re self-employed. They’ll consider your income & outgoings, employment, and accounts when assessing your mortgage application.

Depending on the lender you choose, you may be required to provide account statements for the last one, two, or three years for a Ltd Company and/or tax calculations. This is where working with a broker or advisor comes in handy as they know which lenders will accept shorter account periods.

These are some of the major factors they will take into account:

• Income figures – lenders will want to see your turnover, profits and drawing of any salary or dividends. Most will then average your income over the previous three years.
• Your accounts – lenders typically want to see your accounts over the previous few years, in general the longer the period you can show the better, but there are some lenders that will be happy to consider applications from individuals with accounts under 3 years.
• Employment status – lenders will assess mortgage applications from sole traders and limited company directors differently. If you are a limited company director, they will usually look at the amount of income you have drawn from the business. However, certain lenders will also consider the retained profit that’s been drawn, in which case the amount you can borrow could potentially be greater.

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How can you take someone off the mortgage?

You can also subject to affordability use a single-person mortgage to take someone off a mortgage. When you change from a joint to a single mortgage, it’s the same as having the other person reapply for a new mortgage alone with the same lender or a new one.

Such a move can provide you with better rates, but you still have to factor in the fees for remortgaging in your decision.

Can I get a single person mortgage with a low deposit?

It’s certainly possible. If you are looking to buy a home for the first time, there are 95% mortgages available, whether that be new builds or a direct purchase. There are also various schemes available to help first time buyers, including the help to buy scheme.

Can I apply for a mortgage in one persons name even if there are two people buying the property?

Typically not. Lenders require all owners to be named in order to approve the mortgage.

However, what is possible is to and get a mortgage in two names with only one owner named on the deeds.

This is referred to as a joint mortgage sole proprietor and is used when an individual wants to assist with mortgage payments, but has no legal rights to the equity.

There are some common reasons why this route may be pursued, for example, if someone wanted to help out a family member who has bad credit, yet wants to apply for a mortgage for the first time.

Can I get a sole name buy-to-let mortgage?

Yes. Securing a buy-to-let mortgage in a single name is a similar application process to securing a single mortgage on a residential property.

Typically, lenders will have have strict minimum income requirements for buy-to-let mortgages, but there are others who are more flexible, speaking to a mortgage broker will help you find the lenders that have no such requirements.

Single Person Mortgages Final Thoughts

With the right advice, getting a single-person mortgage can be effortless. Using an advisor has many benefits, and they can help you get the best rates available in the whole market.

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

Further reading: 

• How much does the average mortgage cost?
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• What mortgage can I get for £500? 
• Mortgages for discharged bankrupts