HILL EDITION | MORTGAGES
Mortgages made simple Steve Partridge answers some of the most frequently asked mortgage questions 7 Do I need to clear all my debts before applying or will some lenders still accept me? No, you don’t always need to clear all
1 Is the lowest interest rate always the best deal or can fees and flexibility make another option better? The lowest interest rate is definitely not always the best option; each lender will have set criteria and you must fit this criteria to be able to apply with them. The lender will always offer the one that fits your circumstances. 2 Does a bigger deposit always guarantee a much better deal or is there a ‘sweet spot’ (such as 10, 15 or 20%)? The bigger the deposit, the better the rate you can obtain, as it reduces the risk to the lender. Be sure to go with what’s affordable to you and what your circumstances dictate, but the best advice is always to put down as much deposit as you can. 3 Will staying with my own bank give me the best offer or are other lenders usually cheaper? Sticking with your own bank is not always the best thing to do. There are up to 12,000 different mortgage products on the market, and any one lender will only have a small percentage of these. Also, your own bank may not have the right criteria to fit your circumstances. 4 Is it impossible to get a mortgage if I’m self-employed or on a contract? All lenders will openly accept mortgage applications from people who are self- employed, and many have different options for contractors. 5 Should I always fix my mortgage rate or are tracker/discounted deals sometimes better? There are times when a tracker/discounted mortgage deal could be more suitable for you; this would be discovered when discussing your circumstances, along with your attitude to risk. The right mortgage product would then be recommended for you by your broker. 6 Can I only remortgage when my deal ends or can I switch earlier without losing money? You can remortgage at any point, but an early repayment charge will often be incurred to break the terms of your existing deal. We would always review what rates are available at the time, as it may be more beneficial to pay the exit charge and switch over to a new rate.
your debts. It would depend on the overall affordability of your case as to what the lender would consider acceptable. 8 Is it true I can’t get a mortgage if I’m older or near retirement? This isn’t true. There are many factors that determine whether you can have a mortgage, and your age is just one of them. Your current employment, planned retirement and pension income would all be considered when assessing the mortgage application. 9 Will applying with multiple lenders damage my credit score badly? All credit scores repair themselves and most lenders will only do what is called a soft score, which doesn’t impact your overall credit rating. 10 Is it true that once I take out a mortgage, I can’t change or overpay it easily? All lenders give some facility to overpay. If you can overpay your mortgage, then you could potentially save a lot in interest over the term of your mortgage. Overpaying when you can doesn’t mean you are committing to a regular expenditure. 11 Do lenders only look at my income or do they consider my spending habits too? There are many things that lenders look at in making an overall lending decision; income is always one of those and sometimes spending habits can also impact a mortgage application. On bank statements, things like gambling can be seen as negative.
12 Is it always harder for offer special products for them? Most lenders want to encourage first-time buyers and offer more enhanced affordability. Each case will always be treated on its own merits. 13 What are the lender income multiples for working out your affordability? If you are a first-time buyer, many lenders offer 5.5x your income, subject to your income and status. If you have owned a property before then many lenders will offer 5x your income. first-time buyers or do lenders
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Most lenders want to encourage first-time buyers and offer more enhanced affordability
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