General Mortgage Questions:
How much can I borrow?
The amount you can borrow is usually based on a multiplication of your salary. Each lender
has their own lending criteria. Most if not all Bank and Building Societies will give you
three times your salary, with some lenders allowing four times or more. If you are buying
a house jointly, both incomes can be taken into account when assessing the maximum that can
be borrowed. Any outstanding borrowing such as a personal loan will be taken into account
and the maximum any lender will allow you to borrow would include this amount. If you are
trying to get the maximum borrowing a mortgage advisor would know which lenders have the
highest salary multiplication. It is possible in some cases to borrow up to 125% of valuation.
What interest rate would I be paying?
The interest rate depends on a number of factors. Usually the best rates are found when a
high deposit is being made by the purchaser. The amount you pay into your home leaves a
percentage to be mortgaged and this is called the "loan to value ratio" or LTV for short.
For instance if you purchase a property which has a value of £100,000, and you have a deposit
of £50,000 then the loan you need is 50% of the valuation which means you need a LTV of 50%.
Normally this would allow you to gain a cheaper mortgage than if you only paid in £10,000
meaning that you had to find a mortgage with a LTV of 90%. You can also get a discounted
mortgage or a fixed rate mortgage etc which will reduce your costs in the early stages.
What is the normal length of a mortgage?
Most common would be 25 years. However, if you are young enough some lenders will allow
longer than this. The important thing to remember is that borrowing money is expensive, and
the quicker time period you pay it back over, the lower the overall cost is. Most if not all
lenders will want to know how you are going to fund a mortgage if the end period takes you into
retirement or over the age of 65. Most lenders will also let you overpay the mortgage, (although
not usually during a fixed or discount period), which means it can be paid off a few years
earlier saving you money on interest on the long term. At the opposite end of the scale,
some lenders will not lend if the period is to short, say under five years.
What costs are involved in buying a property and taking out a mortgage?
These could include some or all of the following:-
survey fees; solicitors fees; legal costs; estate agents fees; stamp duty; mortgage
arrangement fees; brokers fees.....
My credit history is not good, can I still get a mortgage?
There are mortgages available for most credit histories, although you might have
to pay a premium over normal interest rates. Most high street lenders will not deal
in this type of mortgage, so you will probably need to take the advice of a professional
to find a suitable mortgage for your circumstances.
I take it the law is the same for all of the UK?
Wrong. A Solicitor trained in Scotland is not qualified to practice in England and visa versa.
Also the buying process for property is different in Scotland and England.