Buying a new home is hugely exciting but it can also be quite daunting. Choosing a mortgage is one of the things many buyers worry about the most, but with thousands of mortgage products available to us, you are in safe hands.
Choosing a mortgage is more straight forward than you might expect. Here we explain what you need to know to help you better understand the process.
There are thousands of mortgages on the market that are available to all types of customer but many banks and building societies also package specific deals for first-time buyers that may include cashback incentives or free conveyancing etc.
How much can I borrow?
It’s a good idea to work out roughly how much you can borrow before you start house hunting. There is no point in picking your ideal home only to find that it is beyond your financial reach.
In the past, lenders traditionally calculated the amount you could borrow as a multiple of your salary. So, you might typically be granted a mortgage of four times your gross annual earnings. Nowadays all banks and building societies lend funds according to affordability and will ask for details of your income and outgoings before they decide on a figure. They will also consider the impact of future interest rate rises.
If you are eligible for the Help to Buy scheme some banks and building societies will only require you to put down a 5% deposit. If not, you will generally require a minimum deposit of 15% for a house and 20% for a flat. The larger the deposit you have, the better the interest rates available to you will be.
This is the legal process of transferring the ownership of a property. This is carried out by a solicitor or a suitably qualified conveyancer and you should expect to pay in the region of £1,500 for a standalone purchase.
Stamp Duty Land Tax (SDLT) is a payment made by the purchaser of a property to the government. To find out how much your potential SDLT liability might be please contact us or see https://www.tax.service.gov.uk/calculate-stamp-duty-land-tax/#/intro
Don’t forget to factor fees into your cost calculations. Most lenders charge an arrangement fee for your mortgage, which could be £1,000 or more. Some also levy a non-refundable booking fee of several hundred pounds.
Choosing the right mortgage
Our advisers are here to find the right mortgage for you. Whatever your deposit size, and whether you want a fixed or a variable rate deal, we will compare mortgage products from a wide range of lenders so you can be sure you are getting the best product for you.
A mortgage is secured against your home. This means that if you don’t pay your mortgage every month you might lose your house as the lender can repossess it.