Frequently Asked Questions
In this section we have tried to provide answers to some basic common mortgage related questions
What should I think about when choosing A Mortgage?
To assist you to narrow down the search for your new mortgage, you should first decide which is the most affordable mortgage and term for your circumstances.
To help you decide on the method most suitable for you, it would be sensible to take into account your attitude to risk. Only a repayment mortgage can guarantee, assuming all mortgage payments are maintained, that your mortgage debt will be repaid at the end of the original mortgage term.
By choosing Mortgage & Insurance Choices to assist you in sourcing your mortgage, we will recommend a mortgage that suits you, by identifying your needs, affordability and preference .
What if I can’t meet my Mortgage Payments?
Contact your lender as soon as you realise you have a problem. Although your mortgage is secured on your home, lenders see repossession as the last resort – they stand to make more money from your mortgage than the sale of your home.
Lenders will work out a plan with you to reduce your payments for a time or stop them temporarily, and work out a new term for your mortgage.
Why switch from my current accountant?
Various factors determine the size of mortgage you can have:
- The deposit you pay on the house: a lender would usually expect you to put down at least 5% of the purchase price of the house, though some lenders will consider a 100% mortgage with a suitable guarantor.
- Your salary: generally, you can have a mortgage equivalent to four and a half times your salary. If you have a joint mortgage, you could apply for four times your combined salaries
- The amount of any existing commitments you have: the amount of personal loans, hire purchase agreements may be deducted from the amount available for you to borrow.
The lender will expect to see proof of your salary and may write to your employer for confirmation.
If you include commission or bonuses in your salary amount, the lender would expect confirmation from your employer that these are regular payments.
Where do I start?
To assist you to narrow down the search for your new mortgage, you should first decide how much you can afford and how much the lender will offer to lend you.Mortgage and Insurance Choices offer this service for free(Please see Why Choose Us? for clarity) at your initial consultation, by going through your income and outgoings and finding your level of affordability.
With your permission we will then make available to you a mortgage promise from the chosen lender who will confirm the amount they will lend and the term.This will give you peace of mind in knowing you have a mortgage in place.If you are buying a home the Estate Agent would normally request a copy of this to demonstrate your ability to purchase a particular property.
When you wish to go ahead we will again search all the lenders on a “whole of market”basis to recommend the best lender,the most suitable product and ensure the term recommended meets your affordability. You also need to bear in mind that the interest payments in respect of fixed rate mortgages can rise once the initial ‘fixed’ period ends.
If you are intending to sell your home in the near future,we will check whether there are any redemption penalties attached to the mortgage or if your mortgage deal will allow you to port the mortgage on to the next property. We will check which arrangement fees the lender charges and whether these are refundable should you decide not to proceed midway through the application process.
We will check for additional costs such as mortgage indemnity premiums and any hidden fees.By using us,we will save you a lot of time checking the differences between the various lenders as it is a minefield to attempt on your own.
What should I think about when choosing a Mortgage?
Under these arrangements you are required to make monthly payments which are made up of part capital and part interest. The structure of the repayment method normally means that during the early years of the mortgage, little capital is repaid. The rate of repayment accelerates over time. Repayment mortgages are normally quite flexible as it is sometimes possible to extend the term of the loan but only with the written permission of the lender. Also, it is normally possible to increase the capital repayment of the loan so decreasing the term, allowing you to repay your debt early.
These arrangements do not require that you make capital repayments until the end of the loan. The monthly payments to the lender are made up entirely of interest on your outstanding debt. In order to repay the loan at the end of the term, you must have an amount equal to the outstanding debt. Most people achieve this by making regular contributions to a savings plan; this plan is targeted to accumulate an amount sufficient to repay the outstanding debt at the end of the mortgage term.Please be aware of the fact that these mortgages are high risk and are only suitable for those with a high risk attitude.Most clients are cautious and would opt for a repayment mortgage.There is no guarantee that the investment vehicle will be sufficient to pay off any of the loan. Lenders are now very reluctant to lend on an interest only basis and their criteria to lend on this basis is understandably harsh.
These are a newer style of mortgage arrangement. They offer you the option to increase or decrease your monthly payments( so long as you have made sufficient overpayments). This flexibility is designed to assist you to manage your cash flow.
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