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FAQ

We like to keep things simple, but we know that you are bound to have a few questions about your mortgage and the home buying process.

There is no question too simple or complex to ask and we will give you our honest answers without jargon or bias.

Ask away or see if your question has already been answered below. You can always give us a call for a chat at any time if you need more information – we are here for you after all.

First Time Buyer Questions

It’s not impossible. The problem is that shops such as fast food outlets, launderettes and some cafes and bars open at unsociable hours; attract noise; and generate smells, which makes lenders loathe to lend on such properties. Because of this anti-social element, lenders’ major issue is that these properties are more difficult to resell and, in a declining market, tend to lose their value quicker, especially if you have a small deposit. However, there are many factors to consider, especially if the property is in a desirable area. For more general shops there should not be an issue, although some lenders may limit the loan you can get, but even if it is a more “undesirable” shop, the good news is that there are lenders who will be able to assist. Any good broker would be able to research the property thoroughly and liaise directly with valuers to find the right lender for you.

To produce an Agreement in Principle (AIP), the lender or bank will need to do a credit check, however, many lenders use a ‘soft’ credit check which will not affect your credit rating at all as it leaves no “footprint” on your credit file. Some lenders do still use a “hard” credit check which does leave a mark, but one or two of these would not cause an issue. Multiple searches however, could start to affect your credit rating so we let you know each time we apply for an AIP and keep searches to the absolute minimum.

The quick answer is yes, though it can be trickier, but it is certainly not impossible.

First of all there is a difference between lenders who “Credit Search” and those who “Credit Score”. Lenders that credit score are more likely to have an issue with a poor credit rating, but those that search – i.e. they just look to see if you have any bad debt or missed payments – should not discriminate against you just for a poor rating.

If you do have some bad credit then there are still lenders who will offer you a mortgage but you should expect to pay a higher interest rate. You may also need a chunkier deposit, instead of 5% you should aim for 15%. Many of the lenders that accept poor credit ratings are only accessible through brokers so give us a call and we can discuss your options.

Whether buying with friends or buying with a partner, the bank will look at all your income and outgoings to work out your affordability.

Different lenders work in different ways and some will use the highest two incomes whilst others may be able to use up to 4 incomes together before applying their affordability calculation.

For a general idea, add up all your incomes and multiply them by 4.5, this will then give you an idea how much a bank may lend you. You can read more about buying with friends on our blog.

Yes, you can. But there are some issues to be mindful of.

Essentially it works the same as a normal mortgage except the property will be valued off the developers plan rather than the actual building (as that doesn’t exist yet – obviously!). When the property is ready the valuer will go back to confirm the value still stands and the property is habitable, (this often involves another small fee of around £150).

The issue comes when completion is over 12 months away as lenders mortgage offes will not be valid for that long so in effect you will have to re-apply on terms available at that time.

Because you have to exchange on the property some way in advance there can be issues if the mortgage offer does not then come through as you expected.

We will guide you through this whole process and ensure that you are never left in any doubt as to your mortgage availabiltiy and continue to scour the market for you for the best products available.

Remortgage Questions

Yes! If you have enough equity in your current home, remortgaging can be a great way of raising funds to go towards your next property purchase.

First of all, ask your bank. Depending on whether they agree or not, your next option could be to remortgage to another bank’s interest-only product. Don’t forget, you need a repayment plan in place (and unfortunately winning the lottery doesn’t count!)

Buy to Let Questions

Buy-to-let mortgages are for landlords who want to buy property to let to tenants. If you would like to move into your buy-to-let mortgage, we would recommend converting your buy-to-let mortgage to a residential one. Give us a call if this is something you want to discuss in depth.

Airbnb is becoming more and more popular and demand is increasing, whether it be owners letting out their house during special events such as a Wimbledon, or their own holiday homes when they are not there. The most important thing for owners to do before letting their property on this basis is to check that their mortgage provider actually allows this in their terms and conditions. Most lenders do not currently allow this, so it may be deemed a breach of their mortgage conditions and at worst case could lead to a demand to repay their whole mortgage. This also may invalidate their home insurance, so if any major damage occurs their home insurance may well not cover the costs of repairs.

There is some good innovation in this market, however, as lenders acknowledge this more. There is even one High Street lender that now will allow their borrowers under their standard conditions to let their property under Airbnb for up to 90 days per year.

In the wider BTL market, lenders have been slow to step up and allow this under their normal conditions. This is due to almost all lenders insisting on a standard tenancy agreement (AST) to be in place as a condition of their mortgage, which this type of tenancy would fall foul of.

Some lenders have introduced changes to allow Airbnb and other short lets, by just extending their existing Holiday let criteria. A couple of other lenders have introduced new products to the market specifically to take advantage of this emerging market, which is great news and provides more competition in this space, which can be only good news for borrowers moving forward. There are a few other lenders that are in development of mortgage products that cater for Airbnb style lets, so watch this space for further options in this market.

Buying Overseas Questions

Lenders are always looking at niche areas to enter into the over-crowded BTL market. The availability of holiday-let mortgages has been steadily increasing in the past few years. Historically these have only been offered by Building Societies, but recently more specialist BTL lenders have stepped into the market, which has increased competition and provide better mortgage product choice.

There are various considerations when investors are looking at this as an option. Firstly, research into the demand of the locations that are being considered is paramount.  The nature of the holiday let being seasonal means you can only rely on income for part of the year, so you need to make sure there is enough reserve to cover the periods where there is little income as the mortgage still needs to be paid. Secondly, a lot of traditional Holiday BTL homes have restrictions on how much of the year they can be let for or used for their own use, so a solicitor should be used to check if there are such restrictions on the title of the property before purchasing. Thirdly I would always recommend initially engaging a local letting agent to manage the property, especially due to the high turnover of guests in the busy season makes this difficult to personally manage.

Despite the economic uncertainty over Brexit, there is more demand than ever in the popular holiday areas due to ‘staycations’ and some recent relaxation of local planning laws in holiday locations has allowed more properties to be made available for purchasing. There has also been an influx of overseas visitors due to the weakening of the Pound making UK holidays cheaper.

There has been a large increase in the availability of expat mortgages in the past few years as lenders look for other ways to meet market demand. Again, often this area is provided for by Building Societies or the offshore arms of some UK banks. Often expats have very good income and very low outgoings which make them a strong borrower in the eyes of the lenders. So long as the lenders are happy with where the borrower is resident (there are some countries that are deemed a higher risk than others) and they have a stable income, preferably with a recognised company, then the lenders are happy to lend. As per normal buy-to-lets, the lenders look for the rent to support the mortgage, along with the usual financial strength of an expat borrower adding to this.

Although there are many lenders for expats, the obstacles tend to mainly be in the logistics of getting a mortgage approved while not resident in the UK. The lender, solicitor and broker need to ensure they have adequately carried out all the usual due diligence, including proof of id and residence, proof of income, employment and expenditure. This usually needs to be done with original documentation, although there are some ways to assist this process which a good broker will be able to run through.

The use of a good broker in this market is invaluable. They should be able to identify the lenders that will be available based on the borrowers’ specific situation, circumstances and preferences. A good broker should also have direct access to the lenders that operate in this space, which means they will be aware of all the criteria, due diligence requirements and the best way to achieve a successful application.

There is a good choice of mortgage products for expats, however, lenders will usually offer specific rates for expat borrowers, which reflect the additional work that is needed to approve an expat mortgage and the higher risk associated with lending to an overseas borrower. This means the interest rate and fees will be higher than the best domestic BTL mortgages currently available. There are still mortgage product options available on variable or fixed rates , which the broker will be able to run through once the choice of lenders has been established.

Mortgage brokers are not tax advisers so we would always recommend taking advice from a tax adviser and solicitor who are experienced in this area, following which the broker can assist to put the right finance in place based on this advice.

Regards assisting buying homes abroad, it does depend on the location and the size of the mortgage that can dictate which lenders are in the market for that borrower. There are some specialist brokers in the market now that solely advise on overseas mortgages, who have contacts with banks in different countries to arrange the mortgage. There are some clients who prefer to borrow against their UK property and pay for cash for the overseas property, which most good brokers can assist with.

Taking the local legal advice in the location of the purchase is always recommended, to go through the prevalent local laws of ownership to ensure the buyer is fully aware of any risks and restrictions on the ownership.

Moving home questions

This is a really good question and one we get a lot of when we do mortgage presentations around various companies. There is much confusion as to what lenders actually look at with regards to spending patterns and what constitutes good or bad financial behaviour in their eyes.

 

The good news is that you needn’t worry, you are allowed to have a social life! Lenders look at your credit score as a whole which, if you have always paid your bills, credit cards or any loan payments on time should be fine. Where bank statements are concerned the key things they are looking at are whether you go into overdraft and if you do, is it within limits.

 

They don’t like things like payday loans, lots of online betting transactions or even joke references from friends when they may transfer money to you. It may seem funny at the time, but lenders sometimes don’t see the humour.

 

They also look for anything regular like Direct Debits to see where your monthly spending is already allocated. Insurance costs, pension and school fees are other items.

 

In your case, with a healthy disposable income and as long as your bank accounts are run satisfactorily, there should be no issues. Spending in pubs and restaurants is of course totally discretionary and most underwriters will understand that your lifestyle will change once you have a mortgage.

 

Saying this, in the three months leading up to getting a mortgage I would perhaps start to act as if you were paying a mortgage and reign in any extravagances or big lump sums that may lead to questions. Make sure you keep well within overdraft limits and present the best picture possible to the underwriters. If nothing else this is good preparation to get you used to budgeting with a larger mortgage payment.

 

From what you have said I don’t think there is anything to worry about and no need to suddenly revert to cash to pay for everything. Lenders are comfortable with credit as long as it is all paid on time without any issues.

 

I would also recommend checking your credit score with a reputable firm such as Noddle, Experian or Equifax. This will tell you if there are any concerns at all and provide you with a credit score. The closer you can get to 999 as a score the better, but again if it a little way off that do not worry.

 

I would always recommend you speak to a professional mortgage broker if you have any concerns at all and find the most suitable product and lender from the myriad of choices now available. Just don’t deny yourself that beer or bottle of wine just yet.

Important information

Your home may be repossessed if you do not keep up repayments on a mortgage or any
debt secured upon it.

A fee of up to 1% of the mortgage amount may be charged depending on individual circumstances.
A typical fee is £495.

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