Top Tips on Choosing the Perfect Mortgage
31st March 2015
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It can sometimes be difficult finding the perfect mortgage by yourself, but here are some top tips from Joanne Ramsden Financial Solutions to help you.

  1. How much money can I borrow?

Your borrowing potential is dependent on your income and your expenditure, taking into consideration credit card / loan payments, household costs such as ground rent and council tax. Each lender has a different set of criteria for assessing your affordability. We always check  the lenders criteria before submitting an application to enhance the chances of getting your mortgage approved first time.

  1. How much will it cost me a month?

This depends on how much you borrow and how many years you take your mortgage over. The longer the term, the lower the monthly repayment but remember you will pay more interest over the full term of your mortgage. This is something we could make a recommendation on once we have got to know your situation.

  1. What types are there and how do they differ?

There are 2 different types of mortgage: 1. Capital Repayment, which means your monthly payment is made up of the interest charged by the lender and some of the amount you have borrowed. 2. Interest only, which means you only pay off the interest each month and have an investment to pay off the amount you borrow at the end of the term, this could be an ISA or a Pension for example. In this instance you are relying on the performance of the investment to repay the mortgage.

There are different types of interest rates too, such as fixed rates, discounted rates, tracker rates and capped rates - all of these we would explain in detail and make a recommendation as to the most suitable after getting to know more about your needs and requirements.

  1. How much of a deposit will I need?

A minimum of 5% of the purchase price. The bigger the deposit the better an interest rate we should be able to source for you.

  1. Why should I use a mortgage advisor?

Using Joanne Ramsden Financial Solutions you will get ADVICE on your mortgage, the term of your mortgage, the type of repayment and the type of interest rate. We have over 20 years experience in this field. We also complete the application on your behalf and liaise with Solicitors and estate agents to ensure a smooth and efficient process. Applying online yourself you are relying on your own knowledge and expertise, and your own time in ensuring all documents are given to the right people at the right time .

  1. Am I stuck in the mortgage forever?

It is rare that people take a mortgage and remain in the same product with the same lender for the full term of their mortgage. Reasons for changing may be - a better rate, moving home, wanting to borrow more at a later date. You do have to check if any early repayment chanrges are attached to your mortgage as detailed in your mortgage offer. We explain all of these before applying for a mortgage, having assessed your needs at the time of the application. Your future plans would impact on the recommendation we made at the time.

  1. Will repayments stay the same?

Your repayments will change with interest rates if you are on a variable rate, or if you repay a lump sum, change the the term of your mortgage or increase the amount of your mortgage.

  1. In how much detail do mortgage lenders look at me?

Each lender is different. As a rule of thumb for a residential mortgage, the lender would be looking at your income, your fixed cost outgoings such as council tax and loan payments. They will also do a credit check to see if you have missed payments to credit agreements in the past to make an assessment on the risk of lending to you. They will also want proof of your identity and address history over the past 3 years.

  1. Can I apply for a mortgage and see if they’d accept me before I find a property?

You can get a decision in principle, but beware that this can leave a “footprint” on your credit rating. Any changes between getting the Decision in Principle and the Mortgage application will invalidate the Decision in Principle. Changes such as, change to your income and expenditure, changes to your credit rating, and change to the purchase price and amount of deposit you use etc. Also a Decision in Principle is specific to the lender. When you find a property and are ready to apply there may be a more suitable mortgage with a different lender and therefore your Decision in Principle has been an irrelevant exercise.

  1. Do I need to pay the mortgage back before I retire?

This depends on your affordability in retirement. If you have sufficient income in retirement to be able to afford the mortgage then the lender may consider extending the term into retirement. We can advise on this more clearly after assessing your financial situation.

  1. What costs/fees are there when I apply for a mortgage and do I pay these even if I am not offered a mortgage?

Fees from the lender vary depending on the mortgage you apply for. We would explain all of these before you make your application and would have considered the overall costs of the mortgage before making a recommendation to you. Some fees are payable up front and non refundable. If a  mortgage is not offered after making an application, this could be due to information provided on the valuation report, or not meeting the lenders criteria. If you apply through Joanne Ramsden Financial Solutions all the fees would be explained at the outset before we have completed the application. We would explain what fees are refundable if the application does not go ahead and in what circumstances. Joanne Ramsden Financial Solutions charge a Fee of £295 for the research we do and then making the application. This fee would only be charged once we had found a suitable lender for you and we were confident we could proceed with a successful application. All of this would be explained at our initial meeting. The initial consultation would be free of charge.

  1. Will I pay more back over time if my deposit is small?

The bigger the deposit as a % of the purchase price the lower the interest rate we should be able to secure for you. The higher the interest rate the more you will repay over the term.

  1. Can I amend my repayment amounts? So if my wage increases I could increase what I pay back each month?

This depends on the mortgage you apply for. You would need to check you product allows you to do this without penalty.This will be detailed on your mortgage offer. We would explain all off this to you before making the recommendation. This is a question we would ask before making a recommendation as to the lender and the product, to ensure you had a mortgage with the flexibility to do this.

  1. Is it trickier for two people to apply for a mortgage instead of just one?

You will both be assessed for income and expenditure and credit rating etc. The mortgage would be assessed on your combined circumstances and you would both liable for the mortgage. We would be able to assess both your needs and make a recommendation. In some circumstances a single application would be advised.

Your home may be repossessed if you do not keep up repayments on your mortgage

 

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Gaynor R

Member since: 10th July 2012

Hi I am Gaynor Ramsden and am passionate about all things Bolton. I hope you enjoy reading my blogs and find them to be interesting and thought provoking. I would love you to add your personal comments...

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