Home mortgage UK
A mortgage is a simple transaction, involving the; lending/borrowing of money secured on a specified property. The deal works for both parties. The borrower gets to purchase a property, subject to ability to service debt repayments, without having to save the capital.The lender gets to make a slow profit, based on the difference between the rate at which they can borrow money, and the rate at which they can lend that money out, with tangiable assets in the form of the property, acting as security for both parties.
The Mortgage Process Explained
- Decide on the maximum purchase price that you can afford View suitable properties
- Bid on suitable properties
- Have an offer accepted
- Complete mortgage application
- Obtain mortgage offer
- Appoint a solicitor
- Exchange contracts
- Complete the transaction
The average time from submitting a mortgage application to completion in the UK is around 13 weeks. For my clients, the average is around 9 weeks. The fastest I\'ve managed it is 2 weeks, the slowest took a year ! due to legal complications. The worst points in the process for the purchaser are the time lags between submitting the application and receiving the valuation report - 2-3 weeks, and between receiving the mortgage offer to exchanging contracts - 1 - 8 weeks.
Decide on the maximum purchase price that you can afford Add maximum that you can borrow, subtract all fees, and any cash you wish to retain, or the equity in your existing property, any cash you wish to commit, and the earmark for home improvements. That\'s your maximum purchase price. Check using an online mortgage calculator, whether you can afford the monthly payments. If you can\'t, reduce your maximum. Bear in mind the stamp duty bands of 0% up to £120,000, 1% from 120,001 - £250,000, 3% from £250,001 - £500,000, and 4% from £500,001 upwards.If you\'re a first time buyer, ignore the bit about equity in your existing property.
Mortgage Problems
Mortgage Problems can be divided into three distinct areas
- Problems obtaining a mortgage
- Problems during the mortgage process
- Problems encountered during the mortgage term
Problems obtaining a mortgage
Not enough income (for a particular lender)
Income not provable (for self employed)
Some income not wholly accepted for the employed - for example bonus or commission
Not enough deposit
Unable to provide documented address history for the last three years if not on electoral roll
existing debt payments reduce income for income multiples
Outside other lender criteria
Problems during the mortgage process
-
incorrect information supplied for the agreement in principle
- property values at less than the agreed price
- further reports required for the valuer
- lender applies a retention
- vendors withdraws the property
- vendor accepts a later, higher offer
- legal problems
- lender asks for additional paperwork
- buildings insurance difficult to obtain
Problems during the mortgage term
- Problems, not noted on the valuation report become apparent
- Change of circumstances mean that mortgage payments are missed
- problems marketing the property when moving on
There are over 4,500 mortgage schemes to choose from, offered by over 200 lenders - or more accurately around 100 lenders, each with multiple identities. So how do you choose the right mortgage for you and your particular circumstances. How can you compare a 2 year tracker, with a 2 year discount, a 2 year fixed rate and a 2 year capped rate, if the fees charged are different
What if one of the deals offers a free valuation, and another, free conveyancing. What if yet another deal has slightly higher fees, but a £500 cashback. What if two of them work on daily interest, and the other two yearly interest. How important is flexibility. Will any of them overlook your CCJ for £87 that some awful music club hit you with 4 years ago. Can you keep your existing property to rent out if you want to. Will any of the lenders take non-guaranteed overtime into account. What about a freehold flat. What if the deal that you\\'d like to take is offered by an obscure Building Society with only one branch, 300 miles away. They don\'t offer an agreement in principle service, but do charge a non-refundable £300 application fee. One way of trying to sort your way through the maze of schemes is to walk into your local bank or building society and ask them. You may well find though, that you are only offered a mortgage provided by that Bank or Building Society. That may be fine if the deal is competitive, but how would you knowWorse, you may not meet their lending criteria, and be turned down for a mortgage which would be readily offered by another lender. Another option would be to assess the whole mortgage market, in an effort to find a) lenders who\'s criteria you fit, then b) the best deal from these lenders. Then, you\'d have to contact the lender concerned, and either visit them, to obtain an agreement in principle, or persuade them to visit you. After that you\'d complete an application form.Other Articles
