All your questions answered

What are the UK mortgage affordability rules?

Lenders will typically use an income multiple of 4 – 4.5 times salary per person. For example, if you earn £30,000 a year, you may be able to borrow anywhere between £120,000 and £135,000. Please note that lending is based upon affordability, for a personalised calculation please get in touch.

What does it mean to have a 5-year fixed mortgage rate?

With a 5-year fixed rate mortgage, you’ll pay the same interest rate on your mortgage for a fixed period of 5 years. This means your monthly repayment will not change for 5 years. You can also get fixed rates for longer or shorter periods of time, such as 2 years fixed, or 10 years fixed. There are variable rate mortgages available where your monthly repayments can change.

How do interest rates affect my mortgage?

If the Bank of England base rate goes up and you have a variable rate mortgage, it is likely that your monthly repayment will also follow and rise. The higher the interest rate, the higher your monthly payment. 

Often lenders will offer lower interest rates the more deposit you have. 

Do I have to pay for stamp duty as a first-time buyer?

From 23rd September 2022, first-time buyers will not pay Stamp Duty on the first £425,000 of any property. Tax bands for first-time buyers are as follows:

Property valueSDLT rate
Up to £425,000Zero
The next £625,000 (the value between £425,001 to £1,050,000)5%

The Stamp Duty bands for those replacing a primary residence from 23rd September 2022 are as follows:

Property or lease premium or transfer valueSDLT rate
Up to £250,000Zero
The next £675,000 (the portion from £250,001 to £925,000)5%
The next £575,000 (the portion from £925,001 to £1.5 million)10%
The remaining amount (the portion above £1.5 million)12%

A first-time buyer is defined as an individual or individuals who have never owned an interest in a residential property in the United Kingdom or anywhere else in the world and who intends to occupy the property as their main residence.

Can you remortgage during a fixed term?

You can remortgage during a fixed term, however there may be early repayment charges associated with your mortgage. These charges can be costly if you are wanting to remortgage. It’s always best to talk to an adviser to ensure you have explored all options and the reasons for remortgaging, for example further advances and porting a mortgage. 

What is the deposit on a buy-to-let mortgage?

A buy-to-let mortgage deposit is usually 25%, however there are some lenders that will accept a lower deposit in some circumstances. 

What is a mortgage in principle?

A certificate to prove that a lender has accepted you for a mortgage in principle, this is subject to underwriting, and a survey on a property. This is often useful for buyers looking for properties, as many Estate Agents will insist on having one before accepting an offer. It also helps buyers determine how much they can borrow before looking at properties. 

When do I need life insurance?

If you have loved ones in your life that rely on you, such as a partner, children or relatives, it is highly recommended that you take out a life insurance policy. 

Critical illness and income protection insurance are equally important as they provide different types of financial protection for you and your family should you suffer a critical illness or be unable to work due to sickness. 

Why do I need a mortgage broker?

Mortgage brokers will offer advice and guidance throughout the process and will also act as your advocate with the mortgage lenders, solicitors, and estate agents, making it less stressful and increasing your chances of securing a mortgage. Mortgage brokers can also sometimes get great deals in comparison to going directly to the lender. Mortgage brokers will compare the market for you, ensuring that you get the most suitable mortgage for your needs and circumstances. 

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