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You may find yourself in a situation where you need to buy someone out of a house for several reasons, such as during a divorce, separation, or when siblings inherit a property but not everyone wants to retain their share.

Regardless of the circumstance, understanding the process of a mortgage buyout in the UK is essential to ensure a smooth and legally sound transfer of ownership.

While many people assume that buying someone out of a property is a complicated affair, it doesn’t have to be.

With the help of a mortgage broker, legal advice, and an understanding of the necessary steps, the process can be more straightforward and less stressful than initially thought.

What Does Buying Someone Out of a House Mean?

A mortgage buyout refers to purchasing another person’s share of the property you jointly own. This situation typically arises when one party wants to assume full ownership of the property, effectively releasing the other party from the mortgage and removing their name from the title deed.

Once the buyout is complete, the individual remaining will be the sole owner, responsible for all mortgage payments and any other liabilities associated with the property.

For example, if you and a partner or sibling co-own a property, and you wish to take over full ownership, you would need to buy them out by purchasing their share of the equity.

Following the buyout, their name would be removed from the mortgage, and they would no longer have any financial responsibility for the home.

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Steps to Buying Someone Out of a Property in the UK

1. Property Valuation

The first step in a mortgage buyout is determining the current market value of the property. This can be done by hiring a chartered surveyor for a formal valuation, which typically incurs a fee but provides an accurate assessment of the property’s worth.

You may also seek informal valuations from estate agents, which are usually quicker and often free, though less formal. It’s essential that both parties agree on the valuation figure to avoid disputes later in the process.

2. Determine the Outstanding Mortgage

Once the property value is established, you’ll need to subtract the amount remaining on the mortgage. To find out how much is left to pay, request a redemption statement from your lender. This statement will show the outstanding balance and any additional fees that may be incurred when the mortgage is settled or transferred.

3. Calculate the Equity

Equity is the difference between the current property value and the remaining mortgage balance. For instance, if your home is valued at £300,000 and the remaining mortgage is £100,000, the equity in the property is £200,000.

This equity will be split between the co-owners based on their ownership share. In many cases, particularly in divorces, the equity is split 50/50. However, this can vary depending on how much each party has contributed to the deposit or mortgage payments over the years.

4. Negotiate the Buyout Amount

The buyout amount is the portion of the equity that you will need to pay the other party to assume full ownership. If the equity in the property is £200,000 and the other person owns 50%, you would need to pay them £100,000 to buy them out.

In some situations, such as an amicable separation, the other party may be willing to accept a lower buyout figure, but this should be agreed upon and documented legally to avoid future disputes.

5. Remortgaging to Fund the Buyout

Most individuals cannot afford to buy someone out of a property without accessing extra funds.

A common way to finance the buyout is through remortgaging. Remortgaging involves replacing your current mortgage with a new one, often with higher borrowing, to free up the cash needed to pay the other party.

The process is treated similarly to applying for a new mortgage, and your lender will assess your income, credit score, and affordability.

Keep in mind that since you’re now applying as a single owner, your affordability will be judged solely on your income and financial standing.

6. Legal Transfer of Ownership (Transfer of Equity)

Once the financial details are sorted, you’ll need to formally transfer the property ownership.

A solicitor or conveyancer will handle the legal aspects of the buyout, including updating the Land Registry to reflect the new ownership and ensuring the departing party’s name is removed from the title deeds and mortgage.

The solicitor will also draft the transfer of equity documents, which both parties will need to sign. Solicitors typically charge between £250 and £300 for their services.

7. Stamp Duty Considerations

In some cases, you may be required to pay stamp duty as part of the buyout process. This generally applies when the buyout involves significant sums, particularly if the amount being transferred exceeds the £250,000 threshold.

However, stamp duty is usually not applicable if the transfer occurs as part of a divorce or civil partnership dissolution.

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Alternatives to a Mortgage Buyout

If remortgaging or buying someone out isn’t feasible, there are other options you can consider:

  • Sell the Property: This is often the easiest solution when parties cannot agree on a buyout figure or are unable to afford it. Once the property is sold, the mortgage is repaid, and the remaining equity is divided between the co-owners. Selling the property allows both parties to move on without the financial burden of the mortgage or property ownership.
  • Maintain Joint Ownership: If both parties are on good terms, maintaining joint ownership may be a viable solution, especially if there are children involved or if neither party wants to move. However, this arrangement requires clear agreements about who will be responsible for ongoing costs like mortgage payments, maintenance, and repairs.
  • Raise Funds from Other Sources: If remortgaging isn’t an option, you may be able to raise the necessary funds through personal savings, loans, or assistance from family members. However, any additional loans will need to be factored into your affordability, as you will be responsible for repaying both the mortgage and any loans.

Common Challenges in a Mortgage Buyout

While a mortgage buyout can be straightforward in amicable situations, it can become complicated if there are disagreements over the property’s value, ownership share, or financial contributions.

If both parties don’t agree, the buyout process may take longer and could involve legal proceedings. In such cases, it is advisable to consult with a family solicitor or mediator to resolve the disputes and reach a fair agreement.

Additionally, the affordability of remortgaging can be a significant hurdle, particularly if the mortgage was originally based on two incomes.

In this scenario, working closely with a mortgage advisor can help you explore alternative financing options or negotiate better terms with your lender.

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Conclusion

Navigating a mortgage buyout in the UK can seem daunting, especially if it occurs during an emotionally charged time, like a divorce or separation. However, with the right financial and legal guidance, the process can be manageable.

By understanding how to value the property, calculate equity, and explore financing options such as remortgaging, you can take ownership of the property while ensuring the other party is compensated fairly.

For those unsure of how to proceed, seeking the expertise of a mortgage advisor is highly recommended.

They can assist with everything from finding the best remortgage deals to guiding you through the legal aspects of transferring ownership.

This expanded version provides more comprehensive information on the mortgage buyout process, potential challenges, and alternative solutions while maintaining clarity and thoroughness in explaining each step involved.

How To Calculate Buying Someone Out of a House Final Thoughts

Navigating the mortgage buyout process alone can be overwhelming, especially if you’re also dealing with a divorce or separating from someone you don’t get along with.

You can make things easier by consulting an independent mortgage advisor or broker who can support you and guide you through the process.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

The Bank of England estimates that around four million households will be exposed to mortgage rate rises, and coupled with rising costs of living, it will be harder to afford mortgage repayments over 2023.

With inflation currently elevated, it’s vital to know your mortgage affordability to ensure you only borrow what you can comfortably repay without overstretching your finances.

If you’re wondering about the size of mortgage you can afford in the UK, a mortgage affordability calculator is an excellent place to start.

However, it only provides a rough estimate since mortgage providers consider different factors to determine your affordability.

Here’s everything you need to know about how much mortgage you can afford.

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What Are Mortgage Affordability Calculators?

Mortgage affordability calculators are online tools you can use to know how much you can afford to borrow based on your financial situation.

Simply fill in various details like your income, monthly expenses, and the desired loan term, and the mortgage affordability calculator will show you estimates of the maximum amount you can afford.

It also allows you to adjust input values to determine how changes in income, expenses, and loan terms can impact your affordability.

A mortgage affordability calculator is valuable since it shows how much you can comfortably afford without overextending yourself.

However, it should only be used as a starting and not a guarantee, since lenders will conduct a more comprehensive assessment before approving your application.

Factors that Influence The Size of Mortgage You Can Afford UK

The Lender

All lenders are different and feature their own affordability criteria when determining the size of mortgage you can afford.

Some use manual processes, while others use automated systems based on your credit score, and you’ll find that you can borrow different amounts depending on the lender you approach.

Lenders have traditionally used income multiples or loan-to-income (LTI) ratios to determine mortgage affordability, where they use information like your net disposable income and monthly expenditure to determine the maximum loan repayments you can afford.

Different lenders can feature different lending caps like 3x, 4x, or 5x your income, so it’s wise to shop around and compare various mortgage providers to ensure you get the best deal.

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Credit Score and History

Your credit score can significantly impact mortgage affordability, since it influences the maximum amount a lender is willing to offer and the number of lenders willing to consider your application.

Mainstream lenders can reject you outright if you have low or adverse credit scores, and you may need to approach a specialist lender to get a mortgage.

The severity of your credit issue and when it occurred will impact your mortgage affordability assessment and the lenders willing to consider you.

Income Type

The type of income you have can also affect how much a lender is willing to offer, depending on whether the income is enough and secure to make repayments now and in the foreseeable future.

You may need to jump through a few hoops if you have a complex income type, and not all lenders will consider every penny you earn when assessing mortgage affordability.

Certain income types, like salaries paid in cash, can be deemed unacceptable, while non-standard and variable income types can be considered a higher risk as they’re difficult to predict.

Monthly Expenditure

Lenders will also closely examine your regular monthly expenditures or outgoings to determine the size of mortgage you can afford UK.

Rule changes implemented under the Mortgage Market Review require a more stringent assessment of monthly spending when determining mortgage affordability, and this involves answering detailed questions about your spending habits and lifestyle.

Lenders will look at how much money you spend on all sorts of things, including debt payments, regular bills, insurance, childcare, memberships, clothing, holidays, entertainment, and travel.

Lenders will also want to know if your outgoings are likely to change significantly in the coming years, like if you plan to start a family, to determine how much you can afford to borrow.

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How to Improve the Size of Mortgage You Can Afford UK

A few steps you can take to improve the size of mortgage you can afford UK include:

Improving Your Credit Score

Your credit score not only affects whether your application is successful, but also influences how much your monthly repayments will be, therefore affecting the size of mortgage you can afford.

Enhancing your score is one of the most effective things you can do when preparing for your mortgage application.

Request a credit report and ensure all the information is correct and up-to-date.

You can also repay old debts, close unused bank or credit card accounts, reduce your use of credit, and repay your bills on time to improve your score.

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Reduce Your Spending

Lenders will look at your monthly spending habits to determine whether you manage your money well or you’re living beyond your means.

Regular monthly outgoings towards certain things like high-risk or unnecessary items and gambling can impact your ability to repay and make you an unappealing mortgage applicant, reducing how much you can afford to borrow.

Prove You Can Manage Debt

Repaying your debts in full every month and paying off any outstanding debts can show you’re a reliable borrower while also improving your credit score.

Lenders will view you more positively when you don’t have any other significant financial commitment, and you’ll have more disposable income that will make it possible to afford a larger-sized mortgage.

Increase Your Deposit

Although the deposit size doesn’t affect affordability models, it can impact your borrowing potential or what house you can afford to buy.

The deposit will affect the loan-to-value (LTV) ratio, which is the amount you’re borrowing compared to the overall cost of the loan.

The lower the LTV, the lower the risk to the lender, making you a more attractive borrower.

However, a higher LTV can make it challenging to borrow the amount you want, resulting in higher rates and fees that limit how much mortgage you can afford.

How Much Mortgage Can I Afford? Final Thoughts

Ensure you only borrow the size of mortgage you can afford comfortably without struggling, instead of borrowing the maximum amount your income can allow and straining your finances.

You can use a mortgage affordability calculator to get a rough idea of how much you can afford, or consult an independent mortgage advisor or broker with whole-market access to gain a better understanding of your situation and options.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

If you’re looking for a mortgage without a credit history in the UK, you’re not alone.

Data shows that around 5 million Brits, or 10% of the adult population in the UK, are credit invisible, meaning they don’t have a credit history.

Although not having a credit history can make things challenging, you can still qualify for a no credit mortgage and secure the financing you need to buy a home with the right help and guidance.

Here’s everything you need to know about how to get a mortgage with no credit history in the UK.

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Why Is A Credit History Important?

A credit history provides a record of your past borrowing and repayment activities and is usually recorded in your credit report.

It simply shows that you’ve taken out loans, used credit cards or participated in other credit-related financial transactions reported to credit reporting agencies or bureaus.

Lenders use your credit history to determine the risk of lending to you by assessing how well you manage credit and whether you make repayments on time and use credit facilities responsibly.

Having no credit history means you don’t have enough credit activity to make up a credit score, which lenders want to see before deciding whether to offer you a mortgage.

Lenders will have no information to assess, making it difficult to determine whether you’re a reliable borrower who can manage a mortgage.

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Can You Get A Mortgage Without A Credit History?

Yes. Although your options may be limited, you can still get a mortgage without a credit history among specialised lenders with more flexible criteria for assessing your eligibility.

Such mortgages are usually called no credit score mortgages or no credit mortgages.

To get a mortgage without a credit history, you’ll need proof of your ability to repay the mortgage.

Some lenders are more inclusive and will consider other personal and financial circumstances that help determine your eligibility when assessing your application, including employment history, income, and overall wealth.

How to Get A Mortgage Without A Credit History

You can get a no credit mortgage through the following steps:

Determine Why You Don’t Have A Credit History

Identifying why you don’t have a credit history is an excellent first step in rectifying the situation and improving your chances of getting a mortgage.

Some valid reasons why you may not have a credit history include:

  • You’ve just turned 18 and are yet to borrow or build a credit history.
  • You live with your parents or family and don’t have any bills or bank accounts in your name or a record of rent payments.
  • You recently moved to the UK as a foreigner or have moved back after a long period abroad and can’t transfer credit histories from another country.
  • Your credit history has become outdated. Credit records only feature transactions from the last six years, so if you haven’t borrowed or made a mark for six years or more, you may find yourself in the shadows.
  • You’re not registered on the UK electoral poll.
  • You don’t have a fixed or permanent UK address.
  • You don’t have an employment history in the UK.
  • You don’t have a UK bank account.

Build Up Some Credit History

You can quickly build up your credit rating through some simple actions like:

  • Opening a bank account – An excellent first step is opening a bank account in your name, and it’s suitable if you just turned 18 or have been living abroad or with your parents. Have some money going in and out of the account regularly to show good management.
  • Registering as a voter – Registering as a voter and getting listed on the electoral register is quick and easy and will help prove where you live.
  • Taking out a utility bill in your name – Take responsibility for some utility bills like internet, energy or water by making yourself the account holder and setting up direct debits from your bank account.
  • Taking out a mobile phone contract – If you’ve been using someone else’s mobile plan, consider taking out a mobile phone contract on your own. It will get captured on your credit file and is suitable for showing you reliably pay your bills.
  • Using any regular payment as evidence – Some credit agencies feature services that allow you to capture standard payment information like subscription payments to Netflix or council tax from your bank account as proof of regular, timely payments.
  • Taking out a credit card – taking out a credit card is one of the simplest and most effective ways to show you can manage borrowing, and you don’t have to make unwanted expenditures. You can use the card to pay for regular items like food shopping and pay it off at the end of every month to show you can make repayments on time without fail.

How Does the Lending Criteria for No Credit Mortgages Differ?

Without a credit history, the risk is significantly higher for lenders, which can impact the lending criteria in the following ways:

  • Capped borrowing – You’ll only be able to borrow up to a certain amount, as most lenders will not be willing to offer higher income multiples. Instead of providing 4 to 4.5 or 5 times your salary, lenders may limit borrowing to 2 or 3 times your salary.
  • Higher deposit – Lenders will likely ask for a higher deposit to mitigate the risk of a no credit mortgage, so ensure you save as much as possible before applying.
  • Higher Interest Rates – Lenders may also charge higher interest rates because of the risk of providing a mortgage without a credit history.

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How To Get A Mortgage With No Credit History UK Final Thoughts

Getting a mortgage with no credit history in the UK can be challenging, so it’s wise to proceed cautiously.

You can improve your chances of getting a mortgage without a credit history by consulting an independent mortgage advisor or broker with experience helping borrowers with no credit history get approval for a mortgage.

They can show you how to build up a credit history quickly and introduce you to lenders likely to approve your application based on your situation.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Since 2022, the increased rates introduced by the Bank of England has impacted mortgage affordability for the average Brit.

Hikes have made it almost impossible for some trying to get onto the property ladder for the first time or working with a tighter budget.

The solution? Mortgages with a guarantor!

Guarantor mortgages are certainly not new to the UK market, and they’re best known for providing first-time and budget buyers with inroads to the property world.

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Getting a mortgage isn’t easy for everyone, especially if your earnings don’t reach the minimum requirement, the accrued savings for a deposit aren’t high enough, or you have a less-than-stellar credit rating or haven’t built one up yet.

While a guarantor loan might seem like a financial saviour, it doesn’t come without risks and challenges – for both buyer and guarantor.

To better understand if a guarantor loan is the most viable option, here’s what you need to know…

Guarantor Loans – What Are They?

Guarantor loans allow applicants to use a relative to co-sign the mortgage agreement to act as a guarantor for the debt.

This means that the guarantor will agree to settle the outstanding amount if the home buyer defaults on their mortgage payments.

Getting someone to agree to be a guarantor is tricky, as they will be required to provide collateral, usually in the form of their accrued savings or their own home or assets.

As a guarantor, there’s a lot of risk involved. While they are required to cover costs that the home buyer cannot, they will never own equity in the property.

Types of Guarantor Loans Available in the UK

More mortgage providers are developing products that allow close family members and parents to assist borrowers in qualifying for a mortgage.

Here’s an overview of each product type for your consideration.

Family Springboard Mortgages, aka Deposit Boost Mortgages

These mortgages make it possible for family members to help the buyer by offering their savings as collateral for the mortgage.

Some well-known financial services providers offer this type of mortgage, including Family Building Society and Barclays Bank.

While each lender has different requirements, they usually work similarly.

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Some institutions allow first-time buyers to get a mortgage with zero deposit if a family member puts 10% of the property value into a linked savings account.

After a set number of years, and all mortgage instalments have been paid according to the mortgage agreement, the family member can receive their 10% deposit back with the added benefit of interest included.

If the home buyer cannot afford their payments, the 10% can be used to cover costs.

Joint Borrower Sole Proprietor Mortgage (JBSP)

Joint borrower sole proprietor mortgages are very sought-after. This type of mortgage requires a family member to share liability for the mortgage.

While only the buyer is listed on the property deeds, the family member will be jointly liable for the debt.

Not being listed on the deeds makes it simpler for the assisting family member to avoid the cost of tax, stamp duties, and other fees often associated with owning equity in a second home.

Even with a co-signatory, the home buyer can benefit from the exemptions offered on stamp duties for first-time buyers.

The costs of a JBSP are best discussed with a mortgage broker, but in most instances, these loans are offered at the standard rates of the lender and based on the loan to value.

Not all lenders offer this type of mortgage as it’s quite a niche product that could be impacted by the age of the family member offering assistance, and of course, there’s risk to all parties.

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Advantages of Acquiring a UK Guarantor Mortgage

One advantage for guarantors is that a parent or close family member can help a loved one buy their first home without having to gift them money to use as a deposit.

For some people who already own their own home or have a large savings, this is the ideal situation.

Guarantors aren’t expected to pay anything towards the mortgage if the buyer keeps on top of their monthly repayments.

Any cash that the guarantor offers as collateral for the mortgage is given back to them after the arrangement comes to an end.

It’s only used if the buyer defaults on the mortgage payments or can no longer afford the instalments.

Is A Guarantor Mortgage the Right Fit for Me?

Guarantor mortgages aren’t well suited to everyone.

If you’re a first-time buyer and don’t have a big enough deposit or your income isn’t high enough to meet the stipulated requirements, a guarantor mortgage may be the best choice for you.

Some buyers have no credit history because they have never been in debt or have a poor credit history – in both of these instances, guarantor mortgages can be beneficial.

In such instances, the guarantor will need to be financially stable and have a good credit history in order for the mortgage to be granted.

One of the biggest perks of guarantor mortgages is that you can possibly borrow 100% of the property value instead of having to put down a hefty deposit.

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Who Can You Ask to Be a Guarantor On Your Mortgage?

Some terms and conditions govern guarantor mortgages.

For instance, the guarantor must be a parent or close family member.

You’ll need to ask a family member who is financially stable with a good credit history, as the lender will assess their creditworthiness as if they are the home buyer.

In most instances, the guarantor must meet all the lender’s qualifying criteria.

Sometimes, the rules are slightly different – as with offset and family springboard mortgages.

Lenders pay close attention to the guarantor’s financial situation to ensure that the person signing surety on the mortgage can realistically afford to cover the costs of the entire mortgage if the buyer defaults on the loan or can no longer afford it.

If you’re wondering if retired parents can be your mortgage guarantor, the answer is yes.

In such instances where the guarantor is retired, the mortgage provider will assess their savings and assets that they can provide as collateral along with their current credit rating and pension income, if any.

Some lenders see age as a factor when assessing whether a guarantor is fitting or not.

Before applying for a guarantor loan with a retired guarantor, it is best to consult with a professional mortgage broker to see the likelihood of being accepted and also to ensure you’re considering all of your options.

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What Are the Risks of Guarantor Mortgages for Both Buyer and Guarantor?

The table below presents some of the risks faced by each party:

  • Risks to the Guarantor Risks to the Buyer
  • Responsible for the debt if the buyer defaults on the agreement
  • If a guarantor passes away, the buyer must find a new guarantor
  • Responsible for the fees on late payments
  • If a 100% mortgage is acquired and house prices dip, the buyer could be in negative equity in the home.
  • If the property is repossessed and sold to defray costs, the guarantor is responsible for the shortfall between the sale price and outstanding mortgage amount.
  • The buyer is financially linked to the guarantor for the foreseeable future, which could make family ties awkward in the long run.
  • Any property or assets offered as collateral are at risk if the mortgage amount cannot be covered.
  • Savings could be lost if used as security, and the home buyer cannot pay the outstanding mortgage
  • Could impact the guarantor’s ability to get approval for other credit types, as they may be seen as financially overextended in terms of responsibilities.

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Is It Possible to Switch From a Guarantor Mortgage to Another Type?

All lenders have their own terms and stipulations when it comes to guarantor mortgages.

Generally, lenders will require the home buyer to build a decent amount of equity in the property before they can switch to a guarantor-free mortgage.

This is usually around 20%, but it’s lender-dependent.

Most lenders anticipate a buyer’s income increasing over time along with their equity in the property, which means that the guarantor will no longer be needed in time.

At such a time when the buyer is in a better financial position, they can remortgage the property and hopefully get a better interest rate without the need for a guarantor.

Sometimes, that’s impossible, and remortgaging may still require a guarantor.

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Mortgage with Guarantor in the UK Conclusion

If you’re unsure if a guarantor mortgage is the best route for you, chatting with an unbiased professional mortgage broker can help you better plan and put things into the right financial perspective.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to Statista, mortgage rate increases broke records in 2022, seeing the Bank of England introduce several bank rate hikes that resulted in higher mortgage rates.

With increasing mortgage rates, many Brits have looked into switching mortgage deals to enjoy better rates.

New deals have hit the market, and you might even find yourself shopping around for better options.

What happens if you come across a variable rate mortgage? Should you get one, or are there more viable mortgage types for you?

You may even wonder if you should consider tracker mortgages or SVR mortgages (Standard variable rate) before considering a discount variable rate mortgage.

One of the biggest driving forces behind switching mortgage types is costs, and if you’re looking to save and think that a discount variable rate mortgage is the way to do that, there are a few things you’ll need to know about this kind of mortgage first.

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How Discounted Variable Mortgages Work in the UK

The first thing you should be aware of as someone on the property ladder is that all mortgage companies have what’s called a standard variable rate.

This is an interest rate that the lender itself determines.

The Bank of England’s base rate then influences how the lender’s interest rate fluctuates, but it’s not strictly linked to that base rate.

If you are on a tracker or fixed-rate mortgage, and the initial term ends (usually 2 to 5 years), your mortgage will revert to a standard variable rate.

You can remortgage when that happens or just before.

For many, a discounted variable rate mortgage is alluring because it sets the interest you’ll pay at just below the provider’s standard variable rate for a set term.

The interest rate isn’t fixed, though, so it will rise and fall as the mortgage provider’s standard variable rate does.

In this way, discounted variable mortgages work rather similarly to tracker mortgages.

Of course, they’re not tracking the Bank of England’s base rate but rather the lender’s standard variable rate at a discounted amount.

An example of how a discounted variable rate mortgage works:

  • Your lender has a standard variable rate of 3%, and if you’ve been given a 1% discount, you’ll be paying 2% interest.
  • If the lender’s rate suddenly increases to 4%, your interest rate will increase, but only to 3%.
  • Mortgage providers can fluctuate their interest rates at any time.

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How Discounted Variable Rate and Tracker Mortgages Compare

You’ll find that discounted variable rate mortgages and tracker mortgages have a similar format, but there’s one area where they are different.

A tracker mortgage will closely follow the base rate of interest put out by the Bank of England.

The result is that borrowers on this type of mortgage often enjoy a lower interest rate than other mortgage types.

Discounted variable rate mortgages are different in that they track the mortgage provider’s standard variable rate.

Essentially, this means that they can sometimes be cheaper than standard variable rate mortgages, but the rate can jump and fall without warning, unlike tracker mortgages.

Pros and Cons of Discounted Variable Rate Mortgages UK

Advantages

Not all discounted variable rate mortgages in the UK are the same.

The products may have differences, but here are some of the most common associated advantages to expect:

  • If the Bank of England happens to reduce its interest rate and your lender responds by dropping its interest rate, you could benefit from an even lower interest rate.
  • As long as your deal is in place, your interest rate will be lower than your mortgage provider’s standard variable rate.
  • Associated early repayment charges are usually lower when you have a discounted variable rate mortgage. This is beneficial if you wish to pay a little more each month to pay down the debt sooner.

Disadvantages

  • Monthly instalments on a discounted variable rate mortgage are not fixed, meaning that even half a per cent rise in the interest rate could increase your monthly instalment exponentially.
  • Fluctuating mortgage payments can make it hard to budget each month.
  • Lenders typically apply a collar to discounted variable rate mortgages. This is a limit to the level that your interest rate can drop to.

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Costs Associated with UK Discounted Variable Rate Mortgages

All mortgages come with fees, but discounted variable rate mortgages come with additional fees that some other mortgages simply don’t have.

Before acquiring a discounted variable rate mortgage, check that the fees won’t negate any anticipated savings.

Some fees to enquire about include the arrangement or establishment fee and any penalties you might face, such as early repayment charges and exit fees.

To get the best possible deal, it’s always recommended to use an experienced mortgage broker who can find the best deals and investigate the fees before you sign anything.

A mortgage broker can also advise you if the discounted variable rate mortgage is best for your specific financial situation and affordability.

Related mortgages guides: 

What To Do If I Can’t Afford My Discounted Variable Rate Mortgage Instalments?

Sometimes life and finances become a bit challenging and the fluctuating interest rate of a discounted variable rate mortgage can become difficult to afford.

In such an instance, there are various courses of action you can take.

  • Remortgage and move onto a different mortgage deal – this could incur early repayment charges
  • Switch to an interest-only deal
  • Take a break from your repayments

All of these will help you immediately experience financial relief, but may increase the overall cost of your mortgage in the long run.

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FAQs

What Are Variable Mortgage Rates UK 2023?

It’s difficult to pinpoint an exact variable mortgage rate UK 2023 as each lender determines their own variable rate.

That said, the common average variable mortgage rate is around 8%.

What is a Discounted Standard Variable Rate Mortgage?

This is a type of variable rate mortgage with an interest rate that’s discounted from the lender’s standard variable rate, but still follows its fluctuation patterns.

How Long Are Typical Discounted Variable Rate Mortgage Terms in the UK?

In the UK, discounted variable rate mortgage terms usually run for 2 to 5 years before the deal will revert to a standard variable rate mortgage, or the borrower can remortgage.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Rumour has it that 50-year mortgages will soon become available in the UK, but understandably, many Brits are unsure about whether they should lock their mortgage in for the next half-century!

For many, thinking ahead to next month or next year is tough.

The average mortgage, which usually lasts 25 to 35 years, can even be daunting.

With 50-year mortgages on the horizon, even more forethought may be required when considering buying a property.

One particular lender has been given the go-ahead to offer such mortgages, and it’s got the property market in a fluster, especially where fixed rates are typically available between two and five years.

Are 50-Year Mortgages a Complete Surprise to the UK Market?

While only one lender is licensed to offer 50-year mortgages in the UK, it’s rumoured that more lenders will join in quite soon with similar offers.

These could be referred to as “ultra-long fixed term” mortgages.

Of course, the mortgage market has been heading in this direction for quite some time, with some mortgage lenders already offering credit between 11 and 40 years.

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What’s the reason behind 50-year mortgages getting granted?

It’s said that the Government wants to promote intergenerational lending to assist younger investors in entering the property market.

50-Year Mortgages UK – What’s the Catch?

A 50-year mortgage comes with a longer repayment period, providing better cashflow each month.

But, and it’s a big one, 50-year mortgages are more expensive than regular-term mortgages.

Advantages of 50-Year Mortgages

Despite the higher rates attached to long-term loans, they’ve still received a lot of public interest.

A 5% deposit is required in most instances, which is highly attractive to first-time buyers trying to get onto the property ladder.

With fluctuating interest rates causing uncertainty, it is no surprise that the fixed rate is attractive.

Another drawcard for 50-year mortgage providers is that they can offer property buyers less stress and greater convenience, as they won’t have to worry about remortgaging the home every 2–5 years.

The length of the fixed term also allows people to plan their financial futures with more certainty.

Knowing your mortgage monthly instalments for the foreseeable future can be a comfort.

Of course, there’s the issue of financial stress tests that borrowers have to pass to get the mortgage they apply for.

This test determines if they can afford the mortgage if there are upward changes to the interest rate in the future.

This may not mean that lenders no longer bother with stress tests, but the basis of these tests may make it simpler for borrowers to pass them.

Restrictions on how many borrowers can access will certainly apply.

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Disadvantages of 50-Year Mortgages in the UK

One of the biggest downsides of a 50-year mortgage is probably the risk involved.

There’s simply no knowing how a person’s financial situation or even living situation might change in the next 50 years.

And there may be hefty repayment charges if you wish to settle the amount earlier.

A possible disadvantage to be aware of is that while rates are astronomical and ever-increasing right now, that’s not to say it will always be that way.

Some borrowers may lock themselves into a fixed rate for the next 50 years, only to find that rates drop in the near future to lower than their current fixed rate.

It’s thought that if lenders consider waiving early repayment charges on their long-term fixed mortgages, they may become even more popular.

They may even become more popular if it’s possible for borrowers to acquire more than 15% of their mortgage above 4.5 times their income, but right now, that’s speculation.

Those who are looking to buy a family home to live in for the rest of their lives will find the 50-year mortgage a very viable option.

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How Will Brits Respond to the 50-Year Mortgage?

One of the big questions surrounding 50-year mortgages is how Britons will accept it, if at all.

Industry experts imply that it may remain a niche product because the general British mindset is on two-year fixed-rate mortgages.

Lenders and banks typically see longer-term loans as riskier, so the criteria to qualify may be fairly strict, or some lenders may simply not be keen to offer such products.

The consensus is that the 50-year mortgage will appeal to certain customers based on their unique financial situation and stage of life.

Some say that there are rumblings of a new product that may come after the 50-year loan, where children can inherit property with an existing mortgage to get into the property market.

There’s always the risk that inheriting children may not afford the instalments of the existing mortgage, which could mean it’s a while before such a product hits the market.

50-Year Mortgages UK Conclusion

Whether a 50-year mortgage is for you will come down to the intricacies of your personal financial situation.

To ensure that you make the right financial decision for you, it’s recommended to chat with a qualified and experienced mortgage broker who can present the various options available to you and assist you with making the right choice.

FAQs

How Does a 50-Year Mortgage Work?

When a mortgage is spread over 50 years, the monthly instalments will be around 50% of what would be on a standard-term mortgage.

Borrowers can then expect to have more cash flow for everyday life.

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Is a 50-Year or 30-Year Mortgage Better?

A 50-year mortgage may be more appealing because it comes with slightly lower monthly instalments than a 30-year mortgage.

The disadvantage, however, is that you’ll be paying off the property for longer and may have higher fees to pay.

Are Banks Offering 50-Year Mortgages?

Currently, only one mortgage lender, Perenna, is offering 50-year mortgages, but it’s believed that other lenders and banks will offer similar products in the future.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

If you’re looking for Sharia-compliant financial services in the UK, there are some options available.

Statistics show us that 20 banks provided services in Islamic finance as of 2016, with five of them being fully Sharia law compliant.

More banks and financial institutions are starting to offer Sharia-compliant products and services.

Interest-bearing loans are forbidden in Islam, which can pose a problem when wanting to buy a home.

Of course, the property and mortgage market caters to halal alternatives, providing options for Islamic buyers to get on the property ladder in the most Sharia-compliant way.

Nowadays, Muslims in the UK can purchase the home of their dreams with a Sharia-compliant mortgage.

Below, we look at Islamic mortgages and what you need to know:

What Are Islamic Mortgages?

Sharia-compliant mortgage alternatives provide buyers with options to purchase a home with no interest.

You’ll find many options available, all with a basic loan model.

With an Islamic mortgage, the bank will purchase the property and thus become the official property owner.

To purchase the property, you will pay monthly “rental” amounts to buy out the bank’s stake in the property.

You must pay the rental portions for a set period to become the legal owner.

There will either be a nil balance at the end or a lump sum that needs to be settled for the property to become legally yours.

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Three Types of Sharia Mortgages in the UK

There are three main types of Sharia-compliant mortgages that you can access in the UK.

These include:

  • Murabaha

With this particular no-interest plan, a Sharia-compliant provider purchases the property and then sells it to you at a higher price, which you then pay in set monthly instalments.

This type of halal mortgage is typically seen in commercial property purchases.

  • Ijara

This is a purchase plan enabling buyers to pay a portion of rent and a portion of capital payment towards the outstanding amount.

Throughout the term of the loan, your stake in the property remains consistent.

  • Diminishing Musharaka

This halal purchase plan works as a joint agreement between an Islamic bank and the buyer.

This works with the buyer paying set instalments each month that go towards reducing the bank’s ownership of the property while increasing yours.

Deciding which of these mortgage alternatives is right for you will take some time and consideration.

As with all things, there are pros and cons to keep in mind.

Related reading: 

Disadvantages & Advantages of Islamic Alternative Loans

One of the biggest disadvantages of alternative loans is that you might end up paying more rent than is usual for your local area.

Of course, this isn’t always the case, as some mortgages work out to less rental than the area average.

This is because the majority of halal and Islamic mortgage providers apply LIBOR-pegged values to determine the rental amount.

LIBOR is the London Interbank Offered Rate, which used to be a standard benchmark representing the interest rates typically applied to short-term loans between banks.

Another thing you need to be aware of is that the bank will be the legal owner of the property while you’re paying monthly instalments, but that doesn’t mean you’re exempt from the fees that property owners usually face.

This means that you will still need to pay the required amounts for the stamp duties, conveyancing, and insurance.

These amounts are added to the initial cost of the purchase plan.

In terms of advantages, Islamic mortgages allow you to purchase a property while still observing Sharia laws.

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They’re available to Muslims and non-Muslims and offer an ethical way of borrowing.

Required Deposit for Islamic Loans in UK

When applying for an Islamic alternative loan, you will need to put down an initial deposit. This is usually set at 20% of the loan amount.

Finding Islamic Mortgages in the UK

If you’re a Sharia buyer and want to find great Islamic mortgages, you don’t have to seek out specific Islamic banks.

Several Sharia mortgage alternatives can be found at building societies and UK banks.

Islamic purchase plans and mortgages are regulated by the FCA (Financial Conduct Authority).

While there are three types of Sharia purchase plans available, several products are available within each, so it’s advised to discuss the various options and your financial situation with a halal mortgage broker specialist before making a final decision.

Islamic Mortgages Conclusion

Finding an Islamic mortgage is getting easier than it was in years gone by.

With the right mortgage expert to guide you and with some consideration for your current financial situation, you can find a Sharia-compliant mortgage that sets you up to buy the home of your dreams without having to worry about going against Sharia law.

FAQs

Which Banks and Building Societies in the UK Offer Islamic Mortgages?

Several banks and building societies offer Islamic mortgages, such as Gatehouse, Al Alhi, Heylo Housing, and United National Bank, to name a few.

How Do I Check if an Islamic Mortgage is Sharia-Compliant?

Islamic mortgage providers usually have a panel of Islamic scholars that verify if the services and products they’re offered are Sharia-compliant.

Providers who are legitimate will be willing to share the details of their panel members.

Why Are Islamic Mortgages More Expensive?

In some instances, Islamic mortgages can be more expensive than other mortgages because of the increased administration cost and the fact there’s little competition, with very few lenders offering Islamic purchase plans.

Related mortgage guides: 

Do Islamic Mortgages Require a Credit Check?

Yes, credit checks also apply to halal mortgages, as is the law.

Credit checks ensure that you can comfortably afford the instalments attached to a loan.

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Who is Eligible for Islamic Mortgages?

It’s not only Islamic buyers that can make use of Islamic mortgages.

Sharia-compliant mortgage providers can offer services and products to non-Islamic buyers too.

Islamic banks are required to offer in line with a set of social and ethical responsibilities.

You can’t make use of Islamic loans if you’re dealing in alcohol, gambling, tobacco, arms, or pornography.

What Makes Islamic Mortgages Halal?

As Islamic mortgages don’t include an interest based loan, they’re considered halal.

Traditional mortgages are considered haram (forbidden) as interest is required.

Banks and providers of Islamic mortgages usually seek guidance from Islamic law experts to ensure that their payment plans are genuinely Sharia-compliant.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

According to Statista, mortgage loans in the UK are projected to experience an increase in monthly costs by the 4th quarter of 2024.

This statistic alone may have new homeowners looking at their mortgage deal and wondering if they should try to pay it early or switch to a better deal.

If your financial situation changes, and you want to repay your mortgage early, or if a new property catches your eye, and you want to get rid of your current property, so you can get it, chances are that settling your current mortgage early is on the forefront of your mind.

If you don’t want to continue with your existing mortgage, you can pay it off early or remortgage, but you should know a few things first.

One of the biggest disadvantages of paying your mortgage early or remortgaging is the ERC (early repayment charge) that your current lender will impose on you.

If you’re exiting your mortgage early to save money, you should first take the time to ensure that the ERC won’t negate any expected savings.

To fully understand how it works, you only need to learn more about ERCs and how they work. Then, you can find ways to avoid or minimise it.

Below, we cover everything you need to know before deciding whether repaying your mortgage early is worth it.

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What is an ERC?

It isn’t easy to provide a precise figure for an ERC, as each is calculated as a percentage of the remaining mortgage balance.

Usually, ERCs are between 1% and 5% of the mortgage balance.

Sometimes, lenders are more lenient on the percentage, especially if the mortgage deal is already nearing its end.

For instance, if you’re trying to exit your current mortgage deal in the first year, you may have the highest percentage applied of 5%, but if you’re in the fourth year of your mortgage, you may find you’ll have a 1% charge.

Of course, this cannot be guaranteed, as each mortgage lender has its own terms.

What Do Early Repayment Charges Cost on the Average UK Mortgage?

It’s difficult to provide a precise figure for an ERC as each is calculated as a percentage of the remaining mortgage balance.

Usually, ERCs are between 1% and 5% of the mortgage balance.

In some instances, lenders are more lenient on the percentage, especially if the mortgage deal is already nearing its end.

For instance, if you’re trying to exit your current mortgage deal in the first year, you may have the highest percentage applied of 5% but if you’re in the fourth year of your mortgage, you may find you’ll have a 1% charge.

Of course, this cannot be guaranteed, as each mortgage lender has its own terms.

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When Do ERCs Apply?

Every mortgage has a tie-in period. This is the period of your fixed-rate deal.

ERCs apply during the tie-in period.

Sometimes, depending on your contract, it may extend beyond the tie-in period.

For example, someone on a 2-year fixed rate deal may still face an ERC when switching to another deal within the first 3 years of their mortgage.

It may be disadvantageous to switch to a new deal within your tie-in period, but once that time passes, you may find that switching saves you money.

Another thing to be aware of is that an ERC may also apply to other types of mortgages, including variable-rate mortgages.

You may also have to pay an early repayment charge in the following scenarios:

  • You have a lump sum to pay off the mortgage before the mortgage term ends.
  • Your mortgage is still in a special-rate period, and you switch to a new mortgage deal.
  • You find a better mortgage deal and switch to it before the end of your contract.
  • You overpay each month in hopes of paying down your mortgage quicker.
  • You can’t move your mortgage to a new property, but you’re moving home.
  • Your new property is worth less than your current home, and you wish to transfer your mortgage to the new property.

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How Lenders Approach ERCs

Every UK mortgage lender is different, with their own terms and conditions in place.

Some lenders have a flat penalty fee for early repayment, whereas others may apply a certain percentage of the outstanding mortgage amount.

By looking at your mortgage contract, you can determine the specific terms and conditions if you repay your mortgage early.

All the details should be listed in your mortgage contract.

When getting into a mortgage deal, it’s best to inquire directly about the possible fees and penalties if you settle your mortgage early.

Is It Possible to Get a Mortgage with No Early Repayment Charge?

You will find that not all mortgages have an ERC worked into the deal.

For instance, standard variable rate mortgages and tracker mortgages rarely include an ERC.

You may think it’s a great idea to get one of these mortgages but keep in mind that they’re also more expensive than other mortgage types as they come with higher interest rates.

That said, if you think you’ll be repaying your mortgage early or want to have the option of changing to a different mortgage deal during the loan term, these mortgage types may be the most viable option for you.

If you’d prefer to start with a low-interest mortgage with lower monthly instalments, you may want to avoid standard variable rate mortgages and tracker mortgages.

If you’re unsure what type of mortgage is best suited to your financial situation and future plans, discussing the various options with a professional mortgage advisor is in your best interests.

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Tips for Avoiding Early Repayment Charges on Your UK Mortgage

Everyone hoping to switch mortgage deals or pay off their mortgage early wants to know how to avoid those pesky early repayment charges.

If you check your mortgage contract, you may find that there’s a specific date mentioned when early repayment charges will no longer apply.

If you adhere to this date, there should be no penalty when switching deals or repaying early.

This is just one way of avoiding early repayment charges on your mortgage. Some other ways include:

  • Avoid overpaying the agreed mortgage instalment amounts.
  • Instead of switching to a new mortgage deal when you move, port your mortgage. First, check with the mortgage lender if they charge fees for porting a mortgage.
  • Opt for a mortgage deal that doesn’t impose ERCs. This could be a standard variable rate mortgage or a tracker mortgage.
  • Opt to have the ERC added to your new mortgage deal. This is a short-term cash flow fix but isn’t the most financially sound option, as interest will be added to the additional amount.

Is the ERC Worth It?

You may wonder if it’s worth simply going ahead with your plans to exit the mortgage early and pay the early repayment charge.

If the early repayment charge won’t put you in a difficult financial position, it may be worth it.

Also, and quite obviously, if you can save a decent amount of money by changing to a different mortgage deal, it’s certainly worth it.

If you won’t be saving any money and the exit will exhaust your finances, you may want to stick with your current mortgage or wait until the date when the ERC will no longer apply.

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Mortgage Early Repayment Conclusion

It can certainly help to discuss the various options with your real estate agent or dedicated mortgage advisor.

Understanding the pros and cons of exiting your existing mortgage early and how ERCs actually work can save you headaches and financial burdens in the future.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

If you’ve found the home of your dreams, but the mortgage you’d require to cover the cost is £180,000, you may wonder if you can even afford it.

The average UK mortgage granted is around 200,000. Before applying for a mortgage, it’s a good idea to calculate the monthly instalments.

That way, you’ll avoid overindebting yourself or plunging your budget into distress.

The amount you’ll pay on a £180,000 mortgage will depend on several factors, but a general example can be provided.

Say you acquire a standard repayment mortgage with an interest rate of around 6%, which is typical for current times. The term you received is 25 years.

Your expected monthly instalments would be around £1,160 per month.

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What Salary Do I Need for a £180,000 Mortgage?

While several factors come into play when applying for a £180,000 mortgage, the general earnings required are around £40,000 to £45,000 per annum.

This is because most lenders will only loan you an amount that is 4 to 4.5 times your annual salary.

That said, your amount is only one factor of an affordability assessment.

For example, some borrowers have acquired up to 7 times their annual salary based on certain factors.

How Much Deposit Do I Need on a £180,000 Mortgage?

The deposit is an important focus point for most borrowers, as it’s the most difficult part to organise.

On a mortgage of £180,000 in the UK, lenders typically expect a minimum of 15% deposit.

If you put down a 15% deposit, which comes to £31,800, you’d realistically be able to purchase a property for £212,000 while acquiring a mortgage for £180,200.

With this in mind, remember that many mortgage deals and schemes are on the market, meaning there’s no hard and fast rule about putting down a 15% deposit.

Sometimes, borrowers only put down a 5% deposit (£9,500), enabling them to purchase property valued up to £190,000.

Sometimes, lenders can offer a zero deposit option, but this is very rare.

Factors that Influence Mortgage Repayments UK

Of course, several factors can influence mortgage repayments as follows:

Mortgage Type

The amount of interest added to your loan will influence how much you pay towards your monthly instalments.

For instance, tracker mortgages have interest rates in line with the Bank of England base rate.

As the base rate fluctuates, so does your mortgage instalment.

If you’d prefer no surprises and want to know with certainty how much you’ll pay each month, a fixed-rate mortgage is a good option.

The rates on a fixed-rate mortgage may appear higher at first, but they’re consistent and won’t spike when the interest rate does.

Another type of mortgage is an interest-only mortgage.

This type of mortgage has greatly reduced rates. During the term of your mortgage, you would only pay the interest on the loan.

At the end of your loan term, you will have a lump sum of £180,000 to pay.

These types of mortgages are a little trickier, as lenders will want you to show evidence of settling the remaining amount when the interest is paid off.

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Interest Rate

Interest rates you are offered can be the difference between an affordable mortgage and one you cannot afford.

As of July 2023, mortgage rates in the UK are between 5.5% and 6.5%.

You may think 1% less isn’t a big amount, but it certainly is on a mortgage of £180,000.

Your creditworthiness will influence how lenders see you and ultimately determine what sort of interest rate you can get.

If you meet the criteria in place by the lender, you’ve got a better chance of achieving a mortgage rate on the lower end of the scale.

Of course, the best deals are often negotiated with the help of a mortgage broker.

Mortgage Term

The length of time you have to repay your mortgage (the term) can influence how much you repay. Many mortgages run over 25 years, but several runs for 30 years.

It’s important to note that choosing a longer repayment term may seem like you’re paying less, as your monthly instalments would be lower.

However, a longer term means you pay more in interest over the loan term.

Related mortgage guides: 

Additional UK Mortgage Costs to Consider

When applying for a mortgage, the amount you pay back is not the amount you’ll genuinely pay back.

You must have some additional funds set aside to cover additional mortgage costs.

These include:

Establishment fee

This can range from £1000 to £2500, which is paid to the lender as a lump sum or split between monthly payments.

If you can’t afford to pay this off as a lump sum in advance and opt for the amount to be added to your instalments, you’ll pay interest on it.

Broker Fees

Brokers may charge the buyer and the lender a commission, but some don’t charge the buyer.

These fees can vary from one broker to the next.

Deposit

You’ll need to put down a deposit between 5% and 25% depending on the housing scheme or mortgage type you happen to get.

Stamp Duties

Stamp duties are fees paid to the government. If you’re purchasing a £180,000 property, the stamp duty will likely be around 2%.

Valuation Fees

In most instances, valuation fees are around £300. The lender will charge this to evaluate the premises to confirm its value.

Survey Costs

A survey is a more thorough inspection of the property to determine if there are underlying issues that may need attention and be costly to tend to.

The survey usually costs between £400 and £1,500.

Conveyancing Costs

A solicitor must be hired to manage the official and legal paperwork during the purchase.

Conveyancing fees in the UK typically cost between £800 and £1,500.

Sometimes, lenders will cover this cost, but it’s not always the case.

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£180,000 Mortgage UK Conclusion

If you’re interested in purchasing a property that’s in the £180,000 price range, you’ll need to ensure you have a good credit record, earn around £40,000-£45,000 per month, and meet the lenders’ eligibility criteria.

Speaking with a professional mortgage advisor could help you find the right deal for you.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.

Mortgage brokers are professional individuals who know everything there is to know about mortgages.

When acquiring the services of a mortgage broker in the UK, you can rest assured that you’ll learn about all the most viable mortgage options available.

Selecting the ideal mortgage deal for you can be a daunting experience, especially if all the lenders and their packages seem similar.

With a mortgage broker, you can cut through the noise of mortgage comparisons and get advice on which options suit your financial situation.

Below, we feature the ins and outs of using a mortgage broker and mention some of the leading names in the UK.

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Do I Really Need a Mortgage Broker?

No law says you must hire a mortgage broker, but it’s recommended.

Mortgage brokers are qualified advisors tasked with getting their clients the best mortgage deal possible.

Mortgage brokers are also qualified individuals.

They must have qualifications to practice, and they’re regulated by the Financial Conduct Authority (FCA).

While brokers can advise on all types of lenders and mortgages, it’s good to note that some lenders only deal directly with clients, so they may not have access to every deal out there.

Before knowing if you really need one when you’re buying a property, you’ll need to consider several things.

First and foremost, if your situation is unique, you may want to consider hiring a specialist mortgage broker.

People with irregular income or a desire to buy a unique property often benefit from the advice and guidance of a professional mortgage broker.

If your situation is considered normal or standard, you can still benefit greatly from using a mortgage broker because they spend their time hunting for the best deals available, ensuring that you’re never paying more than you absolutely have to.

A mortgage broker will also handle all of the paperwork, ensure you know about housing and government schemes you can sign up for, and keep tabs on the process to ensure everything progresses swiftly.

Related mortgage guides: 

Benefits of Using a UK Mortgage Broker

There are several perks to using a mortgage broker in the UK. With the right mortgage broker on your side, you can save yourself hassle, stress, and time.

Of course, the main aim is also to cut back on the costs of buying a new home.

Competent mortgage brokers won’t just parrot mortgage company information. Their knowledge goes far deeper than that.

They will have an expert understanding of the industry and be able to recommend lenders most likely to approve your application based on a quick overview of your financial situation.

Fees are normal when using a mortgage broker.

Usually, buyers will pay a fee to the mortgage broker for their services and collect a commission from the lender.

Some estate agencies or mortgage companies offer mortgage broker services free to the buyer and only collect a commission from the lender.

Your mortgage broker isn’t guaranteed to be a miracle worker, though.

Some lenders make it a rule to only deal with a direct buyer, which means you won’t be able to use a broker to access such deals.

That said, and it’s often the case, some mortgage advisors have access to mortgage deals that are not open to direct customers.

Overview of advantages of using a mortgage broker:

  • Professional brokers are focused on finding the best deal for you.
  • Tied brokers may be able to organise lower interest rates and certain incentives for you.
  • Your broker may recommend a solicitor to hire when purchasing a property.
  • Brokers act as an intermediary between the buyer and lender, which means that you won’t find yourself accepting terms or agreeing to deals that you don’t entirely understand. Your broker will explain everything to you.
  • Mortgage brokers do all the legwork during the mortgage setup. This includes making calls, doing progress checks, gathering documents, and ensuring that the mortgage application goes through timeously.

Finding the Best UK Mortgage Brokers

If you’re looking for a mortgage broker in the UK, you will find that there are thousands registered.

Here are a few ways you can find the best mortgage brokers available to you:

Local Estate Agency

If your local estate agency buys and sells homes, they may have their own in-house mortgage brokers.

Using a local mortgage broker through the agency you wish to buy a property can save time and money and give you peace of mind that the broker has a vested interest in ensuring your deal goes through.

Using Comparison Sites

Several online platforms will allow you to input your requirements, and the system provides you with a list of options to consider.

In most instances, mortgage brokers on comparison sites are legitimate.

Check Review Sites

Finding excellent reviews for mortgage brokers online is a great way to get insight into the type of service they offer and what to expect.

You will also know which mortgage advisors to avoid.

Personal Recommendations

Word of mouth is a powerful way to find the right mortgage advisor.

Perhaps a family member or friend had a great experience with a particular mortgage broker.

They can help you connect with them and get the ball rolling.

Related reading: 

What Qualifications Should a Mortgage Broker in the UK Have?

You may want to ensure that your mortgage broker is a reliable, transparent and experienced individual.

Simply trusting that someone is a qualified and approved mortgage broker would be risky.

If you wish to check the qualifications of your mortgage advisor, they should have a level 3 qualification.

Some mortgage brokers have a Certificate in Mortgage Advice and Practice diploma, also referred to as a CeMAP diploma.

This is a higher level qualification and indicates more experience in the industry.

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Best Mortgage Brokers in the UK Conclusion

Finding the best mortgage brokers in the UK takes a bit of time and forethought.

Opt for mortgage advisors who are qualified, experienced, and come with good reviews and reputations in the industry.

Call us today on 01925 906 210 or contact us to speak to one of our friendly advisors.