Frequently Asked Questions

When does the Government stamp duty holiday finish?

The government stamp duty holiday ends on the 31st March 2021

How do I know how much deposit I need?

First you need to have a healthy deposit. Typically 10% or more. There are mortgages where you can use 5% such as a Government Help to Buy mortgage. During a 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. There fore you need to save more.

How do I know if I qualify for a mortgage?

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 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 £100k. 

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. 

How do I get a mortgage ready for an Auction?

Auctions are usually for properties which need to be sold quickly. It is important to find out as much about the property as you can because some properties at auction you won't be able to get a mortgage on. Typically the mortgage needs to be ready within 28 days so the earlier you speak to an advisor the better. Often a Bridging loan is required to pay the vendor whilst a mortgage is being prepared to pay back the Bridging finance.

Be careful you can lose your deposit if you dont have the money ready in 28 days. 

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First home buyers – mortgage hunting

 

  1. THE DEPOSIT
    A Deposit is the down payment on your property. It provides you with some equity and the knowledge that if you sold in a good market you would get that back minus any professional fees you pay. 

SAVING A DEPOSIT

Even if you have landed that high paying job and know you can afford large repayments, a deposit proves that you are not someone who spends everything they earn on lifestyle and also proves that you have the ability to save and not spend should things get a bit tight over the years.  

A savings vehicles that has been identified is the ‘Lifetime ISA’ which is a government backed scheme provided by some savings/investment providers allowing you to save £4000 a year and the government would add a bonus of £1000 (or 25% of your total savings for that year). You will need to be between 18-39 years old. The ISA can be a cash or stocks and shares ISA or a mixture of both. Lifetime ISA’s once opened can be deposited into until you turn 50 years old and withdrawals can only be made to purchase a house or if you turn 60 years or you have a terminal illness with less than 12 months to live. For further information https://www.gov.uk/lifetime-isa

Some of you deposit can be gifted by your parents and grandparents. Refer to this government website for gifting allowances https://www.gov.uk/inheritance-tax/gifts

  1. THE MORTGAGE HUNT

Finding the right mortgage advisor is probably the most important thing you will do before anything else when applying for a mortgage. This person is the go-to person before, during and after purchasing a house (they are typically not just for one transaction).

Firstly, consider where and who you are dealing with regarding the mortgage advice you are being provided with. Is it important that the mortgage advisor is not employed by the company selling the property? 
Is it important that the mortgage advisor has a range of different lenders and products? 

Is the mortgage advisor face to face, Over the phone or even web based?

Consider the products available on the market – so Bank or mortgage advisor?
Is it important that there is no conflict of interest when buying the property between you, the estate agent (who works for the seller) and  mortgage advisor? 
These are questions you need to consider because once you have a mortgage its long-term debt in most cases and is the mortgage advisor going to help service your requirements in the future?

Secondly (other help available)

So, once you have saved a deposit say 5-10% of a property you can apply for a mortgage with some sense of optimism. There are some lenders that will lend up to 100% but in exceptional circumstances.

The government also has another scheme called ‘Help to buy’ where the government provides you with an equity loan of 20% to 40% of a  property value. In London, say you find a property for £400,000 and you have £20,000 (5%) The government would lend you £160,000 interest free for 6 years and you would need a mortgage of £220,000. The Help to buy equity loan needs to be repaid in 6 years’ time, so remember this as it is not well communicated on government websites. 

Some lenders also provide family based mortgages which offer guarantor and secured deposit type mortgages (family offset mortgages) . Speak to your mortgage advisor who should be well versed in such products.

  1. PUTTING AN OFFER IN
    The next step is actually putting the offer in and seeing if it gets accepted. That’s up to you and what you can afford now you are approved for a mortgage (plus any scheme or family assistance you may have chosen).

  2. . Be sure to read about different types of property because there are types of property that lenders won’t lend on, or require higher deposits such as brick builds, property with structural issues, some ex council properties, some high-rise properties and short lease hold properties. Ask your mortgage broker if you are unsure because they can advise you whether there are lenders who can help. 

  3. CHOOSING PROFESSIONALS

  4.  You will need to choose a Conveyancing Solicitor to undertake water, land registry, chancel searches among many other types of checks involving all the legal aspects of transferring the ownership of a property from a seller to a buyer and registering the mortgagor’s interest in the property. 
    They also normally arrange the payment of stamp duty to HMRC after completion (when funds have been transferred and keys handed over) 

Note: Prices differ depending on the complexity of the property. 

CHARTERED SURVEYOR: This is purely your decision and is recommended. You are able to get a condition report to check that the property is in good order, a full property survey detailing some searches and a home buyers survey.