Whether you are looking to buy a home as a first-time buyer in York, are moving home in York, or are ready to remortgage in York, you’ll quickly begin to realise there are a lot of options out there for you when it comes to taking out your mortgage.
In this article we have put together a comprehensive list of the most popular types of mortgages available to customers on the mortgage market.
If you have any questions regarding any of the mortgage options that we talk about below, then please do not hesitate to get in touch with a dedicated mortgage advisor for expert, open & honest mortgage advice in York & surrounding areas.
A fixed-rate mortgage will mean that your monthly mortgage payments will remain unchanged for the duration of your mortgage term.
The length of which you want to fix your payments for is your choice, with typical choices being somewhere around 2, 3 or 5 years or longer.
No matter what happens with inflation, the interest rates or the nationwide economy, you know that your mortgage payment, which is usually a person’s single biggest outgoing, will always be routinely consistent.
A tracker mortgage will serve the purpose of providing you with a mortgage interest rate that basically mimics the Bank of England’s base rate.
This means that neither yourself or the mortgage lender will set the rate and it will change as and when the base rate does. If the base rate goes up, your interest rate goes up. If it goes down, yours will go down too. Of course, this happening is beneficial to you.
You will be paying back at a percentage that is above the Bank of England base rate. If we use this in an example; Let’s say the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying back your interest a rate of 2%.
When you take out a repayment mortgage this means that each month you will be paying back a combination of both the interest and capital. This is the standard mortgage people think of when looking to buy a home.
Going off the basis that you are able to keep your payments going for the mortgage term duration, you will be guaranteed to have paid it off in full and own the home of your dreams by the end of it.
This is generally, across the industry and wider world, considered the most risk-free way to pay your capital back to the mortgage lender. Early on in your term, the amount you’ll be paying will be mostly the interest, with your balance reducing at a slower rate. This is especially the case if your term is 25, 30 or 35-years.
The process quickens up within the last ten years or so of your mortgage, where you will be paying back more capital than interest, with the balance reducing at a far quicker rate.
Whilst we do still regularly encounter many buy-to-let mortgages being set up on an interest-only basis (this is an option that works out much better for many landlords), it is increasingly more difficult these days to get a residential property on an interest-only mortgage.
The reason for this is because once you reach the end of your term, you will still have the full mortgage amount to pay off all in one go, with no additional income to fund the amount you’re required to pay.
That being said, there are various unique circumstances where this can be a suitable option for customers, including downsizing when you are older or if you happen to have other investments you are able to use to pay back the capital.
Lenders are often incredibly strict when it comes to offering these products now and the loan to values tend to be much lower than they were in previous years.
The way an offset mortgage works is that your mortgage lender will set you up a savings account that will work in tandem with your mortgage account.
To explain this using an example, let’s say that you have a mortgage balance of £100,000 and you deposit £20,000 is into your savings account, you will only be paying interest on the difference between those figures, which in this instance would work out at £80,000.
This can be a very efficient way of managing your finances, especially if you are wont to be paying higher rates of tax.
When the mortgage deal that you are on initially finally reaches the point of confusion, your mortgage lender may wish to offer you a new deal for you to accept, ensuring that you stay with them. This kind of deal is known as a product transfer.
Although it would be nice, you will not be rewarded by a mortgage lender for your loyalty. The offer that they make you may not be competitive with the kinds of deals you could have access to elsewhere.
What also tends to be an annoyance for customers, is that the mortgage rates for these product transfers are not as good as the types of rates they would be offering their new customers. Great for a first-time buyer, not so much for an existing homeowner.
It may look like a fairly simple, straightforward process to just swap onto your current lenders new deal, but please always bear in mind that it will be in your interest to at least have a look at what other deals you may be eligible for.
You might find that your lender tries to sway you onto their deal, without providing any mortgage advice.
This can be a really risky process, because if you go into their new deal without advice, you are essentially saying goodbye to all the valuable consumer protection you would otherwise have benefitted from by speaking to a Remortgage broker in York.
Over the years we have seen numerous examples of customers just agreeing to go onto these “follow-on” deals and locking themselves into a deal that is not appropriate for their circumstances.
The kicker here, is that because they agreed to move onto the deal out without taking any mortgage advice, they have waived a lot of their rights in terms of making a complaint about the lender or the deal.
We once had a mortgage case where a customer who was pregnant opted to take this route and was declined for a small further advance to fund some necessary home improvements a couple of months down the line.
She was then left with having to pay quite a large early repayment charge in order to swap from her existing lender onto a new one who was willing to lend her the necessary funds to accomplish her home improvement goals.
After we have taken a look at your case, if we think a product transfer is the most suitable deal for you we will absolutely recommend that as a course of action for you. If we don’t think so, then we’ll look at where to go next.
When we arrange the mortgage for you as a mortgage broker in York, then all the regulation and consumer protection will apply to you.
In short, even if the mortgage process seems pretty quick and straightforward, we will still always recommend that you seek expert mortgage advice. A second opinion costs nothing and making a mistake when taking a new product can be something that ends up costing more than you thought it would.
If you are looking to remortgage in York, you’ll find that the mortgage market is highly competitive and savings can typically be made by a dedicated mortgage advisor scanning the market for a new and more favourable mortgage deal.
Although the mortgage journey can sometimes seem quite stressful, in the long run, it can be extremely rewarding. You’ll go down one of two paths on your mortgage journey; one is that you find the property of your dreams that you can see yourself living in for the foreseeable future and two is that you buy your first home to get yourself onto the property ladder and keep going up until you find a home that suits you best.
Whichever path you choose to take, you will always find yourself coming to the end of your mortgage term. At this point, you are going to have to decide whether you want to remortgage or move home.
Another option could be to buy another property as well as keeping your current one and let it out as a let to buy. Also, this can work in the opposite way if you want to purchase a property as a Buy to Let.
A Remortgage is simply using the funding for a new mortgage to pay off your current mortgage. The term ‘Remortgage’ is very vague, it covers a lot of ground. You can actually Remortgage for lots of different reasons and in this mortgage guide, we are going to cover the most common reasons to why people Remortgage.
When you take out a mortgage product, its term will usually be somewhere between 2-5 years. There are lots of different types of mortgages, some being more popular than others. Their rate will vary depending on the product that you take out. For example, a Tracker mortgage will follow the Bank of England’s base rate; this rate will fluctuate depending on the economy and how it’s performing; whereas a Fixed-Rate mortgage will have set monthly payments that will never change until your fixed-term has ended.
So, you have a mortgage product that is perfect for you, however, your mortgage term is ending in 3 months time – what do you do?
– Firstly, you should check whether you can access a better rate or not. Occasionally, if from the point of when you took out your mortgage product you had a lower credit score than you do now, you may be able to get a better deal. To find this out for free, you should get in touch with a Mortgage Broker in York like ourselves. We will review your mortgage and your options to see whether or not you can access a better product.
– Secondly, once you find out about the options that are available to you, it’s your choice whether you want to renew your current deal or Remortgage/transfer products through your same lender.
If you don’t Remortgage, you will fall straight onto your lender’s standard variable rate of interest once your mortgage term has ended. Their standard rate is likely to come with higher costs than your current mortgage deal; that’s why you should always Remortgage! Ideally, you want to begin the process 3 months prior to your product ending.
You may be able to save money in places you didn’t think you could by remortgaging!
If you feel like you’ve found your dream home and have no plans on Moving Home in York, you have an option to Remortgage for home improvements. Home improvements can mean anything from a loft conversion to a garden extension – it can be anything you could class as improvements for your home.
In the middle of the coronavirus pandemic in 2020, we received enquiries left, right and centre about Remortgaging for home improvements such as a home office, gym, new kitchen and even bars. We think that everyone’s mentality was the same at the time. This investment has not only provided more living and breathing space inside of the property, but has also risen the property’s value.
When you Remortgage for home improvements, you will be adding more to your total monthly mortgage payments as your total mortgage amount will increase to incorporate the costs for the home improvements. So, at first it may seem like it’s costing you more each month, however, in the long run you may find that the home improvements massively increase your property’s overall value.
You can also Remortgage in York to find yourself a better mortgage term. Homeowners often do this to reduce their term or gain more flexibility with their payments.
Doing this can result in you having a shorter period of time to pay back your mortgage, which means that you won’t be tied down for a large portion of your life. Yes, this will increase your mortgage payments, but it will allow you to finish your mortgage quicker than before you decreased your term. The longer your mortgage term is, the less your mortgage payments will be, and vice versa.
Once you’ve got that mortgage payment history associated with your name and your lender knows that you are a reliable customer, they may allow for flexibility with your mortgage term. Doing this can sometimes allow you to overpay your mortgage.
It’s likely that you’ll have some amount of equity within your home, even if it is only a little. You can work out the amount of equity that you have in your home by taking the difference between how much is still owed on your mortgage and the current value of your property.
You can release some of this equity and turn it into a lump sum of cash. This money can be spent however you want as it is your equity; for example, you may want to use it for home improvements, to put down a deposit on another property, to pay off a car loan or to go on holiday – remember, it’s up to you!
Some people, usually older homeowners, will release equity in the form of a Lifetime Mortgage. You can find out more about this in our Equity Release in York article.
If you have built up any unsecured debts in your past, did you know that in some cases you can incorporate these into your mortgage through remortgaging?
It may not be the easiest of tasks to consolidate your debts into your mortgage. Before allowing you to do so, lenders will look at how much money you owe, the value of your property and what your credit rating is like.
Lenders will always be very careful when it comes to letting applicants consolidate debts into their mortgage. One reason for this is that your monthly mortgage payments will be increased; they will question whether they think you’ll be able to manage the extra costs of consolidating your debts. Another reason for this is that if you fall into arrears and your house ends up being repossessed, all of these debts have been secured within the property, which may make the lenders get no profit from the property.
Before consolidating your debts into your mortgage, we always recommend that you speak to an expert Mortgage Advisor in York – particularly a debt consolidation professional.
If you are approaching the end of your fixed-mortgage term and you are thinking about Remortgaging for a specific reason, even if it isn’t one of these, you should get in touch with our team. We offer a free remortgage consultation/review to every customer in York, so we advise that you take advantage of this if you are thinking of Remortgaging.
You will get to speak with your own dedicated Mortgage Advisor in York, who will guide you through the whole remortgage process, trying to find the perfect deal for you and your personal and financial circumstances.
Overpaying, even by a small amount, can make such a difference to the amount on the interest you pay back during your mortgage. The sooner you start to do this, the sooner these extra payments can take effect.
Most First-Time Buyers in York tend to be aware of the difference overpaying mortgages can have on the interest you end up paying back. Even if you do only overpay by small amounts. It’s also relatively well known that the earlier you start overpaying the better because the extra payments have a longer period to take effect.
Many homeowners cannot afford to make extra payments. However, it could be argued that the main reason that people end up not overpaying mortgages is that there’s always some more exciting thing you can be spending your money on!
A big part of the problem is remembering to overpay. It’s not something that’s particularly likely to cross your mind too often, except perhaps when your mortgage only has a few years left.
Therefore, we recommend setting up a standing order that’s payable to your lender each month. If you can organise that to go out on the same date as your regular mortgage repayment, the overpayments will quickly start to “feel” part of your mortgage.
A benefit of opting for a standing order is that, unlike a direct debit, you are in control, not the receiver. That means if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out the next month. Whilst it’s not ideal to stop overpaying, at least you will have benefitted from the overpayments made up until that point.
Overpaying your mortgage is a great habit to get into, you don’t need to go overboard, but you’ll be pleased when you get to the end of your mortgage repayments and realise you’ve shaved off a year or two.
In some cases, lenders will let you make reduced mortgage repayments or take a payment holiday if you can demonstrate a history of overpaying. Before taking a payment break though, it’s important to check with your lender that you are eligible. Otherwise, you might end up with a negative mark on your credit report and this is something you should strive to avoid.
When applying for a mortgage, having a high credit score improves your chances of being successful. But then, a high credit score alone doesn’t guarantee that the financial institution will approve your mortgage because different lenders have their internal grading system that determines the approval of mortgage applications.
Because each lender has its unique set of criteria for approving a mortgage, another could accept you if one lender rejects your application. This trial and error kind of occurrence is the reason why you need a Mortgage Advisor that can direct you to the right lender that will approve your application. A good mortgage advisor will also help you assess your chances with the different lenders and help you get the best deal.
If you want to get an explicit knowledge of your credit score, you can contact lots of credit reference agencies to know your credit scores. For people seeking mortgage advice in York, we always recommend consulting Equifax, Experian, and several other credit reporting agencies to get your credit report. It is necessary to consult more than one, just if any of these agencies make an error in your credit report.
To get a higher credit score, below are some recommendations we have for people seeking mortgage advice in York:
If you’re always searching for credit multiple times, you could ruin your credit score and chances of having your mortgage application approved. Instead of damaging your credit score with repeated searches, it is best to use approved price comparison websites to get the best prices and know what’s available for you.
The truth is, if you’d be applying for a mortgage soon, it may not be wise to do credit searches within that period. Although lenders know that you will repay your credit, they do not want you to have debts when applying for your mortgage.
People on the voters’ roll are considered more stable and organized than people who are not, and it reflects positively on their credit score. To improve your credit score, you may need to update your current address and provide correctly every necessary information to enlist yourself on the electoral roll. This enlistment will improve your credit score, and lenders will rank you higher.
Another way to improve your credit score is to know your maximum credit limit and make sure you don’t get there. Maxing out your credit limits your credit score and makes lenders regard you as one who can’t manage their resources. Lenders want only to do business with financially responsible people, so exceeding a card limit or overdraft is considered a red flag.
It is necessary to update your address history to ensure that your provider knows where exactly you live at a given time. Ensure that the details are correct, especially if you live in a flat- which could be quite tricky due to different address formatting.
If you have old credit accounts that you no longer use, contact the providers to close the accounts. At first, lenders may be skeptical in the bid to determine if you requested for the termination or if the providers closed it themselves. However, it will be beneficial in the long run as it streamlines your credit score and protects you from fraud.
If you have family, an ex-wife or husband, or any other person connected to the spending of your finances, you need to remove those links. The truth is, those links weaken your credit score without making it obvious. Reach out to reference agencies and request to terminate the connections between you and these persons. Doing this will surely improve your credit score.
Whether you’re a First-Time Buyer in York, looking to Remortgage in York, Moving House in York or any other kind of mortgage scenario, your credit score should always be one of your top priorities. Get in Touch with a Mortgage Broker in York and a dedicated advisor will talk you through any necessary steps for you to take.
Divorce or separation from a partner is always a daunting experience. However, if you and your ex-partner have finally decided to part ways and bear a joint mortgage, you would be worried or confused about how to work around a solution.
Here are three main questions that most ex-couples thinks of while receiving Divorce & Mortgage Advice in York regularly:
To help you understand the basics of working around a solution, we’ve put together the following guide to make things a little clearer and, hopefully, a little easier for all concerned. Often the case gets complicated if there are kids involved. It’s often the mum who stays in the property, but there may come a moment that whoever is in position wants to take over the Mortgage in their own hands.
When you are trying to remove your ex-husband’s name from the Mortgage, you’ll need to provide sufficient evidence that you’ll be able to meet your mortgage payments successfully on your own. Lenders are instructed to review your salary and your disposable income and then decide if you are financially strong enough to manage the load of instalments or not.
Similarly, the lenders will evaluate your ex-partner’s affordability and decide whether he’ll be able to afford mortgage payments forward or not. So a thorough check will be performed on both parties regardless of whether you have stayed up to date with your mortgage payments in the past or not.
Quite often in these situations, someone can intervene to replace the ex-partner such as a family member or indeed your new partner. You can also reach out to Mortgage Lenders for help.
If you decide to remove your name from the Mortgage, it’s a more similar process to how you removed your ex-partner’s name. But since you choose to vacate yourself from the property and move on, it might create difficulties for you at times.
This might need consent from your partner that you want to call off your name from the Mortgage. Your lender will also perform an affordability check on your partner to find out if he can afford the future mortgage payments or not.
Once you get given consent to remove your name from the Mortgage, you’ll undoubtedly start looking for a new house of your own. The mortgage payment for your old property will be considered if you want to buy a new property in the future. Hence, it’s essential in these instances that you take Specialist Mortgage Advice in York before making an offer. You’ll find some lenders as more generous while others are strict.
The answer to this one is yes, you can. Lenders & their credit scoring systems consider many factors before they offer you a mortgage. Continuous and timely financial payments are just one of these. The lenders will scrutinize how much you are contributing to the existing mortgages and whether you will be able to manage additional mortgage payments on top of them or not.
They will also consider the risk factor, for instance, how likely your home gets repossessed because you could not afford your mortgage payments. They will not take any risks either. The monthly payment of the Mortgage you still hold with your ex will need to be input alongside any other loans & credit commitments you may have.
Once we have keyed all this in for you the various Lenders’ systems will confirm the maximum amount you can borrow so you know your budget at the outset & how much deposit you will need to put down.
Consolidating unsecured credit into your mortgage is not something that should be considered a light decision. Before making this decision it is important to speak to a Mortgage Advisor in York to consider all the options.
By rolling unsecured credit into your mortgage, you will normally pay back more overall. However, your monthly payments may be lower and for some people that is the main motivation behind it.
Remember, you are securing debt against your home. If mortgage payments are not kept up with then you will be at risk of your home being repossessed which is very different to missing payments on loans or credit cards.
In the past, it has often been quite easy to obtain credit, perhaps too easy. It’s quicker for people to borrow money rather than saving up. Sometimes people have used the loophole of investing in remortgage for home improvements to increase the value of their property by a sizeable amount. It is hard to try and pay off the debt itself when over time it is accumulating interest. Not everyone qualifies for zero percent credit card transfers.
Before consolidating credit, it is best practice to do a budget planner beforehand which will allow you to analyse your outgoing expense. These may be luxury items that you are able to go without for a while, i.e. gym membership, takes, etc. Perhaps a personal loan to consolidate your credit cards could be an answer as a loan has a set end date whereas a credit cards. Additionally, since a personal loan is normally taken out over a shorter term than a mortgage then you may pay back less interest.
It may also be worth speaking with a family member who may be able to help. It may seem embarrassing for some people to ask for a bail out but often family members understand and if they are able to help then they will.
If all the available avenues have been exhausted, then a debt consolidation mortgage might be right for you. It certainly is one way of reducing your monthly payments if you are struggling to save but it could be difficult to carry out without an experienced Remortgage Broker in York.
Equity Release mortgages can help people in a number of ways. Many people have heard of them, but are unsure as to whether they would be eligible and what benefits they may obtain, so in this article, we’re going to look at:
Firstly, your “equity” can be summarised as the value of your stake vested in the bricks and mortar of the property. So, if you already own your home, then your “equity” is the open market value of your house less the balance of any mortgage outstanding on it. If you’re a buyer, your “equity” is the amount of cash deposit you are putting into the transaction.
Secondly, Equity release Mortgages are aimed at older borrowers. Thus, you’d need to be at least 55 years old to be considered for an Equity Release plan and for some types that increase to age 60. In general, it’s fair to say that the older you are, the better terms you’re likely to be offered by a lender.
Other factors that would be considered in a traditional mortgage application, however – for example, earned income, pension income, number of dependents etc. – do not come into it. It is purely based on the value of your property.
The answer to this question is not entirely straightforward. Put simply, the amount you can borrow on this type of deal will be dictated by a combination of how old you are and how much equity you have?
Most providers have their own calculators and these can vary, but it’s fair to say the older you are, the more equity can be released. Your Equity Release Advisor will be able to accurately calculate this figure for you when you meet up.
The uses of Equity Release are many and varied, here are just a few examples:
In short, most legal reasons can be accommodated. Don’t forget, Equity Release mortgages are not necessarily suitable for everyone and in some of these instances there may be other, more suitable courses of action, but your Advisor will help you with this.
At Yorkmoneyman.com, we’ve got a history of providing you with bespoke, detailed, mortgage advice in York as to what may be the most suitable way forward in your particular circumstances.
To add to this local service, we’ve now teamed up with Equity Release Specialist and between us, we’d be happy to come to meet you in the comfort of your own home to discuss any questions you may have on anything mentioned above.
If you are possibly considering taking some form of equity release mortgage, it is understandable that you will want to know what the risks are. Equity Release Mortgages may not be suitable for everyone so it is important that you get proper advice before making any arrangements. Most people’s concerns fall into the following categories:
With a traditional mortgage, lenders have the right to take possession of a property should the borrower fail to keep up regular monthly repayments. However, since most equity release schemes don’t require a monthly repayment, then this question of “affordability” becomes irrelevant. With a Lifetime Mortgage, your interest would normally “roll up” so there should be no reason why you would lose your property to a lender.
Historically there have been instances where lenders took possession of properties but these days this type of lending is highly regulated and the industry works hard to avoid circumstances where repossession is required.
The terms of your agreement would normally allow you to stay in the property until you die. If your circumstances changed – for example you needed to go into long term care – then the property would normally be sold. With a Lifetime Mortgage, the lender would then be repaid all capital plus any rolled up interest from the sale proceeds and you would retain any excess over this amount.
If you have a Home Reversion Plan, you would have already sold the home to the provider, so in these circumstances, they would then sell the property on the open market and keep all proceeds. This is one reason why it is important to understand the difference in the type of plan, so make sure your advisor goes through these fully and clearly before making any commitment.
With Lifetime Mortgages, upon your demise, the property would be sold and the capital, plus all accumulated interest would be paid back to the provider from the sale proceeds to settle their mortgage. The difference between the sale price and the settlement figure would then go into your estate to form part of your inheritance. People often ask: “What if the debt has increased above the value of the property? Will my family have a debt to pay back?”.
However, you would normally receive a “No Negative Equity Guarantee” which, in simple terms, means that if the above occurred, then that is a risk the lender would have to take and there would be no further repayment required from your family.
Finally, should you have any further concerns, there is an industry body known as The Equity Release Council which exists to ensure that all products of this type are safe and accessible. All participants in the Equity Release Market should subscribe to the Council’s Statement of Principles which you can check on their website – https://www.equityreleasecouncil.com – along with any other details that may concern you. In a nutshell, therefore, as long as you ensure that you obtain advice from a firm whose advisors are members of the Equity Release Council, and who recommended products from providers who are also members, then you can be confident that you will receive full, clear information about any worries you may have.
At Yorkmoneyman.com, we’ve a history of providing you with bespoke, detailed, Specialist Mortgage Advice in York as to what may be the most suitable way forward in your particular circumstances. To add to this local service, we’ve now teamed up with an Equity Release Specialist and between us we’d be happy to come to meet you in the comfort of your own home to answer any questions you may have on anything mentioned above by way of a free consultation.
A portable mortgage is a term used to describe a mortgage that can be moved from one property to the next without penalty. Often, customers who are in the middle of a fixed rate deal and are looking to move, ask “Can I port my mortgage?” This is because they can avoid early repayment charges if their lender allows it.
Not all mortgages are portable but most High Street mortgages are. If you are with a specialist lender, then you may not have the option to port. However, a quick call to your lender will confirm one way or the other.
Even when porting is an option, not all customers choose to do so. A few things to consider are:
A sub-account on your mortgage is created when you port your mortgage and the additional funds end being on a different deal to the original one. This means that although you only have one mortgage and one direct debit, two different rates of interest apply.
Down the line, having sub-accounts can be quite confusing as the different products will overlap each other. To get them back aligned at some point will mean one of the sub-accounts having to drift onto the lenders’ standard variable rate for a period of time.