Mortgages
A mortgage is a special type of loan, usually from a bank or building society that is then used to purchase a property. The mortgage is secured against your property until you have paid it off in full. This means the lender could repossess your home if you fail to repay it.
You repay the loan amount you borrowed over a longer term and at an affordable rate together with interest being the profit the lender makes from having loaned you that money.
There are many circumstances as to why you would want a mortgage, the main ones are:
First Time Buyer (FTB)
Home Mover Mortgage
Remortgaging
Shared Ownership Mortgage
Buy To Let Mortgage (BTL)
Equity Release Mortgage (Coming soon - watch this space)
Second Charge Mortgage
Please see below for more.
Mortgage for a First Time Buyer (FTB)
A first-time buyer is defined as a person or if multiple applicants, all the applicants, who have never owned or had an interest in any freehold or leasehold property in the UK or abroad before, who apply for a mortgage.
As you purchase your first home as a first-time time-buyer, you will no doubt be excited and nervous at the same time.
There are literally thousands of different types of mortgages on the market at any given time and understanding which one best suits your needs takes patience skill and understanding.
Getting the right type of mortgage to suit your personal circumstances can save you literally thousands of pounds over the term of the mortgage.
As a first-time buyer, it is imperative that you fully understand the commitment and obligations you make when taking out a mortgage.
We can hold your hand through that process and ensure that you find the right mortgage that best suits your personal circumstances and needs.
Moving Home Mortgages
You may already have a home and now wish to move to a bigger property, or the opposite and downsize instead. Or perhaps just relocate for another reason.
In any of those circumstances and many others, when moving home, you may be able to transfer your current mortgage over to your new property, which is known as “porting”.
If "porting" is not possible we can advise you on the best mortgage options available to you on the market from across the market.
If you wish to move from one home to another, you may wish to find a completely new mortgage deal by taking out a new mortgage with your existing lender or a different one.
We are here to help you make an informed decision, contact us.
Remortgages / Rate swap
If you, for example, have a discounted rate mortgage and the term of that discount has come to an end, you may wish to take out another mortgage to benefit from a further period of discount by taking out a new mortgage with your existing lender or a new one.
If you wish to move from one home to another, you may wish to find a completely new mortgage deal by taking out a new mortgage with your existing lender or a different one.
It is often worth talking to your current mortgage provider or a broker who will advise you on which path to take and which one will suit your needs and circumstances the best and in doing so you could save thousands of pounds over the term of your mortgage.
Buy to Let
Buy to let or BTL mortgages are mortgages specifically for landlords who wish to buy a property to rent it out to a tenant.
The rules around buy to let mortgages are similar to those around regular mortgages nowadays, but there are some key differences. There are also special tax considerations that you should also be aware of before taking on a second or subsequent property to let to tenants and further, there are additional SDLT fees payable for second or subsequent owned properties such as buy to let mortgages.
The general idea is that a buy to let landlord will purchase a property with a buy to let mortgage and get rent from a tenant that more than covers the mortgage payments that are due on the property.
Many investors find that buy a buy to let property is an attractive option because you can potentially earn a profit in two ways:
a) Rental yield – what your tenant(s) pay in rent, minus any maintenance and running costs, like repairs and agent fees; and
b) Capital growth – the profit you earn if you sell your property for more than you paid for it.
With any investment, there is always a risk and you should carefully consider the risks before taking on a buy to let mortgage. Getting specialist advice from a mortgage broker in relation to the many buy to let products on the market is essential.
Shared Ownership Scheme Mortgages
Purchasing a property outright in the traditional way can be very costly and out of the reach of many key workers and first-time buyers. A possible alternative is a shared ownership scheme.
Shared ownership schemes are also sometimes referred to as part buy/part rent.
Shared ownership schemes allow buyers to purchase a share or proportion of a home – usually between 25% and 75%.
As you only need a mortgage for the share that you intend to purchase, the amount of money required for the mortgage obviously reduces and therefore the deposit is also often much lower compared to purchasing a property outright.
The builder or housing association then retains ownership of the other 50% which you can buy in sections over time as your circumstances improve.
During the time that the builder or housing association owns the remaining share, you continue to pay (usually) a below market value rent on the remainder together with any service charge and ground rent.
Equity Release - Lifetime Mortgage!
The difference between what your home is worth and the amount you owe to your mortgage lender is known as the “equity" in your home. In simple terms, for example, if your home is worth £300,000 and the mortgage outstanding is £200,000 then you have approximately £100,000 equity in your home, not taking into account any other charges or fees that may be payable.
Equity release allows you to access that portion of the money tied up in your home without having to sell the property.
If you are over 55 years old and want to have some extra money – perhaps to secure an inheritance for your family - you can release some of the equity tied up in your home and take it as a large lump sum, a number of small amounts, or a mixture of both.
In the main, there are two equity release options, a Lifetime Mortgage and a Home Reversion plan.
Lifetime Mortgages and Home Reversion Plans are very complex and only CeRER qualified mortgage brokers can give advice on these types of mortgages.
Second Charge
A second charge is not a further advance against your home. See the further advance section below for an explanation as to what a further advance is.
The difference between what your home is worth and the amount you owe to your mortgage lender is known as the “equity" in your home. In simple terms, for example, if your home is worth £300,000 and the mortgage outstanding is £200,000 then you have approximately £100,000 equity in your home, not taking into account any other charges or fees that may be payable.
In some circumstances, for example, to pay for an extension on your home, you may wish to secure more borrowing against your home against that increased equity and in doing so a second mortgage lender will take security for their loan against the equity in your home.
These types of mortgages are more specialised and you should take greater care in taking out a second charge against your home.
Further Advance
A further advance is not a second charge against your home. See the second charge section above for an explanation of what a second charge is.
In simple terms, a further advance is taking on more borrowing from your existing mortgage lender. This could, however, be typically at a different rate to your main mortgage.
This involves changing the terms of your existing arrangement with your lender and increasing the sum that they loan to you.
This route can make sense if your lenders' further advance interest rates are competitive or if you do not want to remortgage, or switch lenders, or obtain a second charge.