What is a mortgage?
A mortgage is a loan from a lender such as a bank or building society that enables you to purchase a property. It is a secured loan on your property.
What are interest only and repayment mortgages?
* Interest only - the amount you pay covers only the interest owed. With this type of mortgage, your capital remains outstanding. At the end of the term, you will need to pay off the full outstanding balance. This means you will need to have planned for some means of paying off the balance from your savings, ISA or other investments.
* Repayment - The amount you pay includes the capital, which is the amount you borrowed, and the interest charged by the lender each month, so by the end of the mortgage term the full capital gets paid, and you have repaid your mortgage.
What is your advice to first time buyers or anyone taking out a mortgage?
* Make sure you are registered with your local authority on the voter’s role as it is one way to determine your proof of address.
* Aim to have a clean credit score. It is advisable to use a reputable credit rating agency and check the status of your credit worthiness. If there are any anomalies or errors, you should aim to rectify these.
* Have a current bank account.
* Avoid having too many loans and credit cards as these may affect your borrowing.
How can someone know how much they can borrow?
* For employed people, income verification is required. Generally, they are payslips, bank statements, P60, bonus, overtime, or any other income proofs. Most lenders will generally lend between 4 to 5 times of a joint income.
* Self-employed people will require two years’ accounts and SA302s. It can sometimes be done based on one years’ accounts subject to terms.
* There are special mortgages for daily rate contractors and for professionals such as dentists.
Why would clients go to a mortgage broker and not go direct to the bank or building society?
Instead of a client going from one bank to another, a broker is a one-stop-shop who can provide them advise based on their circumstances and needs.
Brokers use a special software to source the best rate and the maximum amount that you can borrow based upon your circumstances.
What advice would you give to someone who is visiting the broker for the first time?
* Check if they are registered with the Financial Conduct Authority (FCA).
* Some brokers may charge a fee and you should clarify that at the outset with the broker. Are they refundable?
* Do they deal with a limited number of lenders, or do they source from the whole of the market?
* Ask for their combined initial disclosure documents (CIDD) terms of business / scope of service
Is there any key action you would recommend to existing borrowers?
* If you are on a variable rate, make sure you contact your current lender to review and ask them for a new deal. Many clients are on a higher variable rate of which they are not aware! You can phone the same lender and ask for a new product which could save you significant amount of money without any underwriting.
* If you are on interest only mortgage, see if you can change to a repayment mortgage otherwise when your term comes to an end, you could risk having to sell your property or downsize as the amount of loan owed is still outstanding.
* Make sure your mortgage does not pass through your retirement age.
* Make sure you have life insurance / protection cover in case of death so that mortgage must be paid.
What is life insurance and why should people consider it?
* Safeguarding or protecting loved ones and dependents financially in the event that you unexpectedly die and leave them behind is by taking out life insurance. Note, life insurance is not a savings or investment product and has no cash value unless a valid claim is made.
There are other types of mortgages such as buy to let, let to buy, shared ownership, help to buy and limited company mortgages. Also, if someone has credit problems these can be looked at.
For more information,
Contact Dinesh Shonchhatra:
Tel: 0208 424 8686 or
Mobile 07956 810647 or
email [email protected].
Major Estates Financial Services is well established with over 32 years’ experience and a track record of success, offering expert mortgage advice from our in-house independent mortgage advisers. For more information, contact Dinesh Shonchhatra: call 0208 424 8686 or mobile 07956 810647 or email [email protected].
“Your home may be repossessed if you do not keep up repayments on your Mortgage”
