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Mortgages
First Time Buyer
Get ready to pop the champagne and celebrate one of life’s biggest milestones – becoming a homeowner for the first time! It might seem like a daunting feat, especially with all the financial lingo and mortgage options to consider. But fear not, With a little help from us, getting your first mortgage can be a breeze. Whether you’re starting with a small deposit or have been saving up for a while, there are plenty of deals out there for first-time buyers. We’re here to help you navigate through the maze of mortgage options, from the first credit check to finally getting the keys to your new castle. So, sit back, relax, and let’s make your homeownership dreams a reality!
Remortgage
Are you interested in improving your mortgage terms? Perhaps it’s time to bid farewell to your current lender and explore better options. Our experts can help you find the right mortgage plan tailored to your needs.
Buy To Let
Get ready to unlock the secrets of “buy to let” mortgages! These are special mortgages for properties intended to be rented to tenants. But, hold onto your hats, because there are some twists and turns that make them different from regular mortgages.
Firstly, interest rates are a little higher, instead of the usual 5-10% deposit, you’ll need to put down at least 20% of the loan value.
Watch out, though, because some sneaky products might come with a larger fees. To avoid any nasty surprises and find the right buy to let mortgage, give us a hoot at Nightingale. Get ready to rock the rental property world!
Home Mover
If you have a mortgage on your existing property, many lenders will allow you to transfer it to the new home. This is known as ‘porting’ your mortgage. Alternatively, you might find it works better to pay off the mortgage on your old house and take out a new mortgage for the new property.
Mortgage types
Fixed rate
A fixed rate mortgage charges a set rate of interest for a predetermined period. Once this period is over, the interest rate usually revers to the lender’s Standard Variable Rate (SVR).
Tracker
A tracker mortgage is a type of variable rate mortgage which “tracks” a base rate – usually the Bank of England’s base rate. However, unlike traditional variable rate mortgages, a tracker mortgage doesn’t have to match the Bank of England’s rate exactly. Instead, the rate the borrower is charged is likely to be a little above the base rate.
Offset
An offset mortgage links the borrower’s savings to their mortgage balance. By choosing an offset mortgage, homeowners can reduce the amount of interest charged and potentially pay off the mortgage sooner.
Cashback
A cashback mortgage pays the borrower an upfront lump sum. This can enable them to pay for a costly expense such as home furnishings, a car or university tuition fees. The rate paid tends to be based on the bank’s Standard Variable Rate (SVR).
Discount rate
A discount rate mortgage offers borrowers a reduction on the lender’s Standard Variable Rate (SVR) for a set period of time. The rate can fluctuate and so although the borrower will repay less than the SVR, their repayments could rise or fall.
Variable rate
A variable rate mortgage sees the interest owed rise or fall depending on the base rates set by the bank. When the base rate is low, borrowers may benefit from extremely low mortgage repayments. However, if the base rate increases, so too will the amount borrowers are expected to pay in interest.
Interest only
When a homeowner has an interest only mortgage, they won’t pay traditional mortgage payments each month. Instead, they’ll only repay the interest that is due. At the end of the mortgage term, the homeowner will be expected to pay the property’s value in full.
Types of Buyers
Day-rate / Fixed-rate Contractor
For contractors who do not fit the mold of a traditional permanent employee, buying a home can be a complicated endeavor. However, day rate contractor mortgages provide an avenue for homeownership for individuals working in various professional fields, such as IT, engineering, and construction. It’s important to note that several lenders might reject mortgage applications for day rate contractors.
Ltd Company Director
If you’re a Limited Company Director, you’re eligible for the same mortgage options as other applicants, whether they’re employed or self-employed. However, the application process for company directors differs in the way your income is evaluated. It’s important that your mortgage broker accurately assesses your application and selects the right lender based on your individual circumstances.
Self-Employed Individual: Understanding the Challenges and Solutions
Securing a mortgage when you’re self-employed is more complex than for those in traditional full-time positions, mainly due to the unique nature of income verification. Lenders want to be certain that you can consistently meet your mortgage payments without posing a risk to their investment. However, self-employment often involves fluctuating income from month to month, which can make lenders perceive it as less stable than traditional employment. As a result, some lenders may decline your application without considering your unique situation.
Fortunately, not all lenders share this view. To navigate these challenges and find the right lender, it’s wise to work with a specialised self-employed mortgage broker. Our Mortgage Experts deals with these scenarios daily and are knowledgeable in identifying lenders and mortgage options tailored to your needs. Don’t hesitate to contact us to explore the mortgage options available to you as a self-employed individual.
CIS: Mortgages for Contractors and Subcontractors
If you are a contractor or subcontractor who has enrolled in the government’s Construction Industry Scheme (CIS), you may hear the term “CIS mortgage” when applying for a mortgage. This is because your enrollment in the scheme is relevant to assessing your income, and some lenders may require proof of it.
While not all lenders offer CIS mortgages, those that do may have different lending criteria. Typically, these mortgages allow subcontractors to prove their income using the gross amount shown on the payslips they receive from contractors, instead of providing business accounts or a Self-Assessment tax return.
When applying for a CIS scheme mortgage, lenders usually assess applicants on a case-by-case basis. To qualify, you may be required to provide your CIS payslips for at least three to six months, depending on the lender. These payslips will be used to calculate an average monthly income, which will be used to determine your annual income. Additionally, bank account statements for the same period may also be needed.
High Net Worth Mortgages
A high net worth mortgage is a specialized type of loan designed for individuals with an annual net income of £300,000 or assets worth £3 million or more. These borrowers may not be subject to the same lending regulations as other customers, as lenders who specialise in high net worth agreements often offer higher loan amounts, income multiples, and bespoke terms and conditions. High net worth mortgages are often required for high-value properties or investments in order to build a property portfolio. These loans can be more complex than standard residential home loans and may necessitate lending through offshore structures, special purpose vehicles, trusts, and foundations to safeguard assets.
Frequently Asked Quesitons
How much can I borrow?
Borrowing capacity is primarily determined by a person’s income and current credit commitments. However, it’s important to note that each lender has their own unique approach to calculating how much an individual can borrow.
How much will a mortgage cost each month?
Factors such as the loan amount, mortgage term, and interest rate will determine the outcome.
What is the difference between a repayment mortgage and an interest only mortgage?
If you’re in the market for a mortgage, it’s important to know the difference between repayment and interest only mortgages.
A repayment mortgage guarantees that your mortgage will be fully paid off by the end of the term, as long as all payments have been made.
On the other hand, with an interest only mortgage, only the cost of interest is covered by your monthly payments, leaving the loan amount unchanged. By the end of the term, you would need to either sell the property to repay the mortgage or find another source of funding to repay the loan.
What insurance do I need for a mortgage?
At the very least, it is important to have building insurance to protect your property. Additionally, we recommend insuring the contents of your home, as well as considering life insurance and income protection insurance. For the most competitive options, we offer quotes from the whole market.
Can I move my mortgage to another lender if they are offering a better interest rate?
It’s possible to switch to a different lender in order to benefit from more favourable interest rates. We will reach out to you as your current mortgage deal nears its end to present the options that are available to you.
What costs are there when buying a property?
Acquiring a property involves several expenses, which are outlined below:
- Stamp Duty Land Tax (SDLT): First-time homebuyers are currently exempt from paying SDLT. Visit https://www.gov.uk/stamp-duty-land-tax for current applicable tax rates.
- Solicitor’s Fees: The solicitor’s fees are calculated based on the property’s purchase price. First-time homebuyers generally pay around £1500-2000
- Valuation Fees: Most lenders offer free valuations, particularly for first-time buyers and remortgages. Valuation fees are usually based on the purchase price.
- Lender’s Arrangement Fees: These fees, which average around £999, can be added to the mortgage or paid upfront.
- Mortgage Broker Fees: You will find this in our terms of business.
How do I find out the maximum mortgage that I can get?
Contact us at Nightingale Mortgage Consultants for a free initial no obligation assessment.
Ready to talk about your mortgage?