Mortgages - Compare mortgage rates to find the best mortgage deals currently available accross the market.
General Things to Consider
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Follow the links below to Learn about different types of Mortgages guide:
- Minimum and maximum borrowing – some providers will only lend certain amounts.
- Loan to value – This is the ratio between size of loan and value of property. So, for example if you require a £90,000 mortgage on a property valued at £100,000 the loan-to-value you require is 90%. Some lenders have specific limits on these.
- High Lending charges - This is a fee that is used to buy insurance to protect the mortgage lender if you borrow more than a given amount. Many mortgage lenders will lend you up to, say, 90% of the value of a property without this fee. But if you want to borrow more, the lender usually requires you to pay for insurance to ensure that it will recover all its money if the property has to be sold for less than the amount of the mortgage. It must be noted that the insurance company will take recourse against the home owner even though the provider is compensated for the shortfall.
- Rate – it is worthwhile shopping around to ensure you are getting a good rate to prevent paying over the odds for your mortgage.
- Wage criteria – some lenders will have minimum salary requirements. For any mortgage the lender will assess how much they are willing to lend you based on your income and outgoings.
- Early repayment charges - If you repay (redeem) your mortgage at any time prior to the end of the mortgage term you may have to pay certain fees or an interest penalty (redemption penalty). If the mortgage is repaid in the early years there may be a heftier penalty, a product penalty. An extended redemption tie-in means that this penalty will continue to be payable beyond the initial term of the mortgage.
- Portability - A mortgage which can be transferred between properties with the same lender when you move house.
- Overpayments - This is when monthly repayments to a mortgage are increased, meaning that the mortgage is repaid before the end of the mortgage term.
- Insurance - Lenders insist that the property is adequately insured with a suitable buildings insurance policy, covering against the usual risks. In addition to this you will need contents insurance to cover theft, fire, damage etc. Another form of insurance is a mortgage payment protection plan that is designed to offer income protection against unemployment, sickness and redundancy.
- Life assurance – It is prudent for life assurance to be taken out to cover the value of the loan, allowing the mortgage to be repaid should you die.
- Legal costs - Usually a solicitor or licensed conveyancer needs to be appointed to deal with the legal aspects of purchasing a property which will incur costs. You should ask for an estimate of these costs before you instruct the legal expert.
- Valuation / surveys – It is a legal requirement that the lender has the property valued to ensure that the property is an acceptable security. The mortgage lender's surveyor will need to inspect and value the property. The cost, if any, of this valuation depends upon which lender you choose and the value of the property.
- Arrangement fees - Most lenders charge an arrangement or application fee for a mortgage. Some lenders will allow you to add this to the mortgage and the fee varies depending on the lender chosen and the mortgage offer.
- Stamp Duty - This is a government tax based on the property's purchase price and is calculated as follows: Up to £125K = Nil, £125,001 - £250,001K = 1%, £250K - £500K = 3%, £500,001K+ = 4%.
