Why to get mortgage advice?
Getting a mortgage is one of the most severe financial decisions you will make, so it is essential to get it right
Independent mortgage advisers have a broad knowledge and expertise on the mortgage market and can search on your behalf to recommend the best deal. Finding these deals on your own requires a lot of analysis and talking through your circumstances with different lenders. We might also find a deal you can't find alone. Potentially, it increases the probability of being approved for a mortgage as we know which lenders best suit your circumstances. It works well if you are self-employed or do not have a large deposit. If you get regulated mortgage advice rather than exploring on your own, we will propose a relevant mortgage for your needs and circumstances. If needed, you have a right to complain to the Financial Ombudsman Service and automatically have more rights when you take advice. Without advice, you take full responsibility for the decision.
Get independent mortgage advice at the start of your mortgage, whether it is the first mortgage or you are looking to re-mortgage. It saves you time and effort in the long run. The good idea is to speak to a few firms, to see what's on offer and compare charges. By doing research, you can divide mortgage advisers into two types: * Mortgage advisers connected directly to lenders, who usually only recommend mortgages from that specific lender; ** Mortgage brokers, or independent financial advisers, can look at various lenders, often the whole market.
We check your finances to ensure you satisfy the individual lender's affordability criteria. We might have privileged deals with lenders We assist you in completing the paperwork, so lenders should handle your application faster. We help you consider all mortgage costs and features, not only the interest rate. We should only recommend an appropriate mortgage and will tell you which ones you are likely to get!
It depends on the amount of the expected rent. It means your lender will intend to ensure that the rental income covers and exceeds mortgage payments to 25-35%. In case the rental valuation of the property is unsatisfactory to the loan to value (LTV), lenders typically require a larger deposit.
You might have signed up for a perfect deal when you first took out your mortgage. But the mortgage market changes over time, and new deals become available. It means a better deal might be available for you now, saving hundreds of pounds. You won't necessarily have to change lenders. Check always if any fees on any new mortgages and any early repayment charges from your existing lender. As a result, these fees can cause remortgage more expensive than staying on your current mortgage.
You are flexible to remortgage. But you might have to pay an early repayment charge. From this point, most people remortgage at the end of the fixed or discount rate term, when the current mortgages stop being a good deal.
Before switching, check out the costs. You can expect lenders to offer fee-free deals to you, but if they don't, you'll have to pay legal, valuation and administration costs. We recommend using the Annual Percentage Rate of Charge (APRC) to assess deals. It is a way of calculating interest rates with mortgage-related fees, allowing you to compare mortgage deals.
Lenders and independent mortgage brokers will propose mortgage deals based on how much you can borrow compared to the property's current value. It is a percentage called the 'loan-to-value' (LTV). For the remortgage, the lower LTV you need, the more deals might be available, providing you with an opportunity for cheaper mortgages. To calculate your LTV, divide your outstanding mortgage amount by the property's current value and multiply the result by 100.
Taking a new mortgage, you often get an introductory deal with a low fixed or discounted rate for initial years. It last from two to five years. After that, a lender will typically move you onto a standard variable rate (SVR), which is usually higher than other rates elsewhere. It stimulates you to look at other lenders and proposals to see if switching to a new mortgage deal saves you money.
Remortgaging is also helpful if you plan to get a more flexible deal when you aim to overpay or switch to an offset or current account mortgage. Here you will be eligible to use savings to reduce the interest you pay. Additionally, you will have the right to draw your savings back if required.
Remortgaging is also an option to merge other debts by paying them off, in case you want to borrow extra money. It is because mortgage interest rates are usually lower than those on personal loans and credit cards.
BTL mortgages are like residential mortgages but with crucial differences, such as: Interest rates and fees are higher; Minimum deposits for a buy-to-let mortgage is usually 25%, compared with 10% for residential; Usually, BTL mortgages are interest-only. It means you pay the interest monthly but not the capital amount. You repay it at the end of the mortgage term. BTL mortgages are available on a repayment basis too. The Financial Conduct Authority (FCA) doesn't regulate most BTL mortgage lending. Some exceptions include inherited property to let, or you let the property to a close family member. These are considered consumer buy-to-let mortgages and are assessed based on affordability rules as residential mortgages and regulated by FCA in the same way as residential mortgages.
You need to secure additional funds to proceed with your mortgage payments and maintain the property because of the following: You will not always have tenants or rent paid; Repair bills.
For a basic rate taxpayer, CGT on buy-to-let second properties is 18%, and for a higher or additional rate taxpayer, it is 28%. If you sell your buy-to-let property, you usually pay CGT if your gain exceeds £12,300 (£24,600 for couples with jointly owned assets). You can reduce your CGT by offsetting Stamp Duty, solicitor and estate agent fees, and losses on a sale of a buy-to-let property in a previous year by deducting from any capital gain. You should declare any gain from selling your property to HMRC and pay tax within 30 days.
In most cases, you need to borrow money for your first home in the United Kingdom. So, residential mortgages are the standard way to secure that. A residential mortgage is a loan to support one or more persons to buy a home to live there. You must use the property as a residential without the opportunity to rent it out to tenants or for commercial purposes. Lenders propose residential mortgages for first-time buyers, those moving home and looking for a remortgage. Usually, you will repay a mortgage with added interest in monthly instalments. If you take an interest-only mortgage, lenders charge only interest during all terms and a lump sum paid at the end. Secure a mortgage against the property. If you cannot keep up with mortgage repayments, a lender has the legal right to repossess your home. A lender can recoup its money and force you to sell your home as a last resort. A typical mortgage is about 25 years. Nowadays, mortgage terms are getting longer for 30 years or more. Be aware that many lenders have an upper age limit of 75 at the end of the mortgage agreement, and if you're 65, you would have to agree to repay your mortgage over a 10-year term.
If you consider your property purchase as an investment producing regular income, which you intend to let, you need a buy-to-let mortgage (BTL) to rent out your property. Many lenders consider a buy-to-let mortgage a higher risk, so you may need to satisfy certain conditions to be eligible. Different from lender to lender, it usually includes: Existed ownership of home where you live; A good credit record without extensive borrowings, including credit cards; A separate from rental revenues evidence of employment income or earnings from self-employment. Typically about annual £25,000 +; A maximum age requirement of around 75 years of age with lower age limits of some lenders; An LTV limit of at least 75% means you need a minimum of 25% savings to proceed with a buy-to-let mortgage. Your assumed rental income should cover 125% of your mortgage repayments.
The rent income is taxable and may be liable to income tax. You should declare this on your Self Assessment tax return. Tax rates for England, Wales and Northern Ireland are 20%, 40% and 45%, depending on your income tax band. Tax rates for Scotland are 19%, 20%, 21%, 41% and 46%.
You can no longer deduct the mortgage interest you pay to lenders from rent to reduce your tax. You'll now receive only a tax credit on 20% of the interest element of mortgage payments. Nowadays, you'll pay a lot more tax than you might have done before.
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