Whether you’re a seasoned homeowner or a first-time buyer, there are some common questions you should ask a mortgage expert.
To make sure we stay up to date with the ever-changing world of mortgages, our Lang Town & Country team works closely with Justin Lusher.
Justin is a Whole of Market Mortgage Adviser based down the road at Royal William Yard, whose extensive knowledge and services has helped people move in and around Plymouth for 25 years.
He shares our no-jargon, no-nonsense ethos when working with clients, as well as our passion for delivering the highest level of customer service possible.
Here, Justin breaks down some mortgage myths and answers seven of the most common questions people ask a mortgage adviser.
1. What is a Mortgage Agreement in Principle?
A mortgage Agreement in Principle (AIP) is when a lender will carry out a soft credit check based upon your details.
They will look at your income and financial commitments and basically decide in principle whether they’d be willing to lend you the amount that you require to obtain a mortgage. The lender will then provide a mortgage certificate.
It is important to get this as early as possible as a purchaser as an estate agent will ask for proof of this Agreement in Principle if you wish to make an offer on a property.
2. How long does it take to process a mortgage?
In terms of the time it takes to process a mortgage application, obtaining the actual mortgage Agreement in Principle (AIP) can be done instantly with the vast majority of lenders.
The application process actually can vary in time, depending on which lender you use for that application, to obtain what is called the mortgage offer. This is when a lender agrees that they will lend you, the buyer, the amount needed to purchase the property.
With some lenders that can take, believe it or not, just 48 hours in some circumstances. But for the vast majority of lenders, it would take about three to four weeks to get to the mortgage offer stage, which is when your application would be complete.
3. What documentation do I need for a mortgage application?
The documentation needed for a mortgage application will depend on whether you’re employed or self-employed.
All applicants will obviously need to prove identity in the form of a passport or driving licence and proof of address in terms of utility bills, bank statements etc.
All applicants will also need to provide three months’ worth of bank statements and statements for the source of where your deposit is coming from.
Employed applicants will typically need to provide three months of payslips and potentially a P60, depending on what income is being used for the application.
Self-employed applicants will require the last two years’ tax calculations and SA302s or potentially accounts if necessary, depending on which lender the application is submitted with.
4. What mortgage products are available through lenders?
The mortgage products that are available for lenders in terms of interest rate options are generally tracker and fixed rate.
The tracker product will follow the Bank of England base rate so you’ll be a certain percentage generally above the base rate for a specified period of time.
So, whatever happens with the base rate, your mortgage interest rate and monthly payment will go up or down if the base rate goes up or down.
Fixed rate is a good scheme for budgeting as you will know exactly what you’re paying for a set period of time – generally two, three, five or, in some cases, 10 years.
This would be perfect if you are someone who does like to budget and likes to know what they’re paying every month.
5. What deposit do I need for a mortgage?
The deposit required for a mortgage application, the minimum deposit the vast majority of lenders now require would be 5% which is fantastic news for those buyers who are struggling to obtain a deposit of more than 5%.
Indeed, one lender has recently released a mortgage with potentially only 1% or £5000 deposit needed.
The larger deposit you have, the cheaper the interest rate and the better the terms and conditions potentially.
6. What if I’m having difficulty with my mortgage payments?
At the beginning of last year, the Government introduced the Mortgage Charter, which the majority of high street lenders have signed up to.
So, if you are struggling with your mortgage payments, lenders will give you various options to help you.
The best advice I can give is that if you are struggling with mortgage payments, contact your lender at the earliest opportunity. They will give you options. There will be the option of changing the repayment method of your mortgage to interest only for six months.
There will also be the option of potentially extending the term, or even potentially taking a payment holiday.
Whatever the case, do contact your lender at the earliest opportunity.
7. What are the costs involved with obtaining a mortgage?
The first cost involved with obtaining a mortgage will be a valuation fee.
The vast majority of lenders will give you a free basic valuation. However, if you should have to pay for a basic valuation, that can vary anything from £100 to £300 potentially.
If you want to have a homebuyer’s valuation which is a more in depth survey then you would need to instruct that separately as the majority of lenders don’t tend to have this option when selecting the type of survey you require. Costs for that obviously can vary, and you would need to contact the surveyor for that quote.
The other fee associated with the mortgage would be an arrangement fee. That can also vary depending on what particular mortgage product a lender is offering.If they did charge an arrangement fee, you would be able to add that to the mortgage so you wouldn’t have to find that sum up front.
If you’d like to discuss your mortgage options or you’d like some advice, please get in touch with Lang Town & Country via our website and we’ll be happy to pass your details on to Justin.
