Frequently Asked Questions
What is Government stamp duty and how much does it cost?
From the 1st October 2021 government stamp duty land tax will be as follows:
£0 to £125,000 = 0% tax
£125,001 to £250,000 = 2% tax
£250,000 to £925,000 = 5% tax
£925,000 to £1.5million = 10% tax ---------- £1.5million plus = 12%
First home buyers
£0 to £300,000 = 0% tax
£300,000 to £500,000 = 5% tax
£500,001+ = the same as Home Movers (no 300k 0% tax)
Second+ home buyers (BTL or rental)
The same as Home Movers plus 3% on the overall purchase price
How do I know how much deposit I need?
First you need to have a healthy deposit. Typically 10% or more but there are mortgages where you can use 5% deposit but with a high interest rate. You will need an excellent credit rating to get a mortgage like this. There are also government help mortgages that we offer where a 5% deposit is used and the government help to buy scheme with 20-40% of the property purchase. Give us a call to discuss.
Please note during a financial recession 15%-20% becomes the norm for a deposit as Bank and building societies look to not take all the risk. They pass the risk back to the borrower. Therefore you need to save more and it becomes more difficult to sell property at good price.
How do I know if I qualify for a mortgage?, how much can I borrow?
A rule of thumb is typically 4 to 5 times your salary or 4 to 5 times your income plus dividends if you are self employed. There are many people who work on day rates where there is a different calculation but also those who work on commission which different calculations re needed.
Other key factors are existing debts, young dependants and non working adults who live in the property with you and the biggest one if all you need to have a reasonable credit rating.
How do I know if I have good credit?
There is only one way to be 100% sure and that is to check with the credit reference agencies. Things that affect your credit score include;
1. Any missed loan payments
2. Any missed credit card payments
3. Any missed utility or telecom payments
4. County court judgments
5. Bankrupt or IVA
6. Changing of address frequently. They prefer that you have 3 years at one address before changing to another and also prefer that you are registered to vote - even for local elections if you are a foreign national.
A tip to help you check our credit score is a website called www.checkmyfile.co.uk. This checks a number of credit agencies giving you a better understanding of your credit.
Can I get a mortgage if I am on a Foreign visa, Tier 2 Visa or an Ancestry Visa?
Most banks prefer that you are in the UK working for 2-3 years and have a 25% deposit when applying for a mortgage as a Foreign National. There are some banks that allow 1 year but you need to be Tier 2 Visa or ancestry Visa and be registered to vote. Foreign national mortgages are challenging because there are a lot more checks involved than with a standard mortgage given that there is less information available about the individual. Talk to us about your situation and we can typically point you in the right direction.
How long does a mortgage take to get approved?
A mortgage can take up to 2 months or more to approve depending on how complex it is and demands on the lenders (volume of mortgages). Although this is not the norm it is best to start with this expectation. The best thing to do is be prepared and ready. Speak to a mortgage advisor as early as possible to ensure when you are ready to buy a property you have all your information ready. A Decision in Principle (DiP) is only required at the point you want to make an offer on a property. A DiP is only valid for a short time so may not be appropriate straight away.
What is a Help to Buy mortgage?
The Help to Buy equity loan is a government scheme which allows first home buyers to purchase a property using a 5% deposit. If you meet the criteria the government will lend you 20% (or 40% in London) as an interest free for 5 years equity loan and then charge interest on the loan after 5 years. It is up to you to get the other funds from the bank preferably through a regulated mortgage advisor who will know which bank is best for you.
Remember it is an equity loan so if the property goes up in value so does the HtB mortgage you owe to the government. If the property goes down you still owe the original amount.
What happens if my mortgage payments go past retirement age?
Banks as well as Financial advisors are a lot more weary of this issue now as people are living longer and working longer and living on state pensions longer. It is a dilemma because all aspects of taking a mortgage beyond retirement age can cause a lot of harm to the borrower. Typically a mortgage needs to be repaid before retirement to ensure that a state pension doesn't need to cover mortgage your payments. State pensions are not made for this purpose.
If a mortgage goes beyond retirement, say 70 years of age then the mortgage payments should be met via other investments or a private pension. This is possibly why we have seen such a huge appetite for purchasing rental properties.
Do I need to pay a fee to a mortgage advisor?
Some mortgage advisors charge a fee. Typically this is to cover internal costs associated with the advice being offer.
Does Exclusive Financial charge a fee? Most of the time I dont charge a fee. I only charge if the mortgage is below £150k.
Are there properties that you cannot get a mortgage on?
There is a reason a mortgage may be cheaper and sometimes it is due to the type of property or the the length of a lease on said property.
Rule of thumb would be to check with the estate agent why the property is cheaper. If the answer isn't clear maybe speak to a mortgage advisor or a surveyor. Properties that don't get mortgages easily include concrete builds from before 1945, flats above or adjacent to shops or industrial estates. flats with a share of freehold, flats with short leases.