How Does a Remortgage Work?

Remortgaging is something that people go through all the time. But what does a remortgage mean in practice? What are the actual benefits of remortgaging a property – and when can you remortgage at all? Some of the processes can seem a little confusing at first, which is why we’re here to help break things down a little for you.

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Purchasing a Property | What You Need to Know

From everyone here at My Mortgage & Protection Experts, we hope you’re staying safe during this time. As government guidance is allowing estate agents to go back to work, this means you can start thinking about moving house or buying your first property again. Hopefully, this will be sooner rather than later.

As things are moving so fast at this time, we wanted to create an informative blog about purchasing a property. One that will hopefully explain everything you need to know. From applying for a mortgage to house insurance. And remember, even if you don’t plan on purchasing a property soon, it doesn’t hurt to plan. Plan: this is one of the best tips we can offer you.

So, without further ado, let’s get started:

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Applying for A Mortgage

If you want to buy anything you need to have the right amount of funds. Obvious, right? When it comes to purchasing a property, however, it isn’t so simple.

To buy a flat or a house will cost more than most of us will have in our bank account at one time ever. So, how does anyone buy a property at all? The answer is with a mortgage.

A mortgage is a type of loan you take out against the value of the property you’re purchasing. You can take out a mortgage to buy either land or a house or flat. We’re going to discuss the different types of mortgages on offer and the benefits available. But, the general idea is you pay back a certain amount of the loan monthly over time. How much will vary depending on the type of mortgage you have taken out.

This can sound daunting if you’re purchasing a property for the first time, right? Of course, such a big financial commitment is going to feel intimidating initially. However, there are First Time Buyer Mortgage Schemes available and Guarantor Mortgages to assist first-time buyers. Help is also at hand to guide you through the whole process by speaking with our qualified and professional Mortgage Broker team.

Deposits

Typically, mortgages are available from 95% i.e. you put in a deposit of 5% for the property that you want to purchase. The deposit funds need to be available but are only put into the transaction when completing the purchase transaction (so right at the very end).

There are also schemes available such as ISA’s to assist you with saving for a deposit.

It should be noted, that generally the higher the level of deposit, the better the interest rate offered by the lenders will be. So, therefore, if you have a deposit of 10% compared to 5%, the 10% deposit would generally attract a better deal from the lender.

It should be pointed out that during the Covid-19 pandemic; Lenders have been more risk-averse. This means that they have generally wanted to see higher levels of deposits i.e. 10-15% as a minimum. As the markets gradually return to normality, we should see the return of 95% loans in due course.

First-Time Buyer Mortgage

If you’re purchasing a property for the first time have a look at our mortgage eligibility checker. This allows you to have an instant indication on whether you’re eligible for a mortgage. Without even having to speak to someone. The decision will be based around your financial position and a financial assessment.

If you’re eligible, one of the mortgage schemes that can help you to purchase a home is Help to Buy. A lot of young people trying to break out on their own will need financial assistance to purchase their first property. This is the reality of the world today for first-time buyers.

Help to Buy is a government scheme to assist first-time buyers to get mortgages for new build homes. As long as the value of the property being purchased is below £600,000. The scheme allows a first-time buyer with a deposit equivalent to 5% of the property value to be eligible for a mortgage.

So as an example, if you had a 5% deposit you would arrange a mortgage for 95% of the property value. The Help to Buy loan scheme (if eligible) contributes a further 20% deposit to your purchase. You therefore only need to apply for a 75% loan, meaning generally a better deal and a higher chance of application success.

The remaining money is paid for by a government loan. This is an interest-free loan for the first five years. At the end of the five-year period, you will need to either repay the loan or start paying interest on it.

Please note that we have focused the information on the Government-backed scheme for those buying in England. There are different schemes available if you are purchasing in Wales, Northern Ireland or Scotland.

Please note, this is only available for new build properties. Speak to one of our experts if you need further information.

This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.

Home Movers

Definitely, there is positive movement in the market and a lot of activity with properties now available to view.

Again, generally, the biggest deposit that you have the better as this will generally benefit you with a lower interest rate.

Getting your finances in order and any mortgage requirements pre-agreed is sensible. Whatever the market conditions, it is really important to ensure that you are in the strongest possible position so that you can move quickly to strike a deal. We would highly recommend, complete our mortgage eligibility check or even better speak with one of our professional advisers to get your mortgage agreed in principle.

handing over keys to a new property

Life assurance

At My Mortgage & Protection Experts, we believe that it is important to protect you and your new home. You will have had to work and save for your deposit. Therefore, once you have bought your new home it is vitally important that you protect your most valuable asset. We can assist, by providing you with a full personal mortgage protection review.

Insurances to consider are, protecting your income, life assurance, critical illness, unemployment cover and home insurance. Just imagine a situation where for whatever reason yours or a partner’s income were to stop? What implications would this have? Insurance will give you valuable peace of mind, ensuring that if the worst happens, you have provisions in place to protect you.

Income protection insurance isn’t a conventional house insurance policy. This type of insurance plan is available in a variety of policies. The purpose of an income protection scheme is to cover your costs in the event your income falls. This could be due to an accident at work or becoming unemployed. This insurance policy will protect your interests and allow you to continue to repay your mortgage.

To find out more about purchasing a property, get in touch with us today:

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How Does a Mortgage Work?

Let’s take things back to basics. Here is a step by step guide to the mortgage process.

But the thing is, there is more than one type of mortgage. In this blog, we’re going to go through different types of mortgages. As well as guide you through how a mortgage works. Here are some examples of different mortgage options on the market.

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What is a Mortgage?

A mortgage is a loan you take out to help you buy a property or land. For most lenders, you will have to put down a minimum of a 5% deposit and the rest of the money you need will form the loan. Typically, most mortgages are taken out for a period of 25 years (Some mortgages may have longer or shorter terms) and the mortgage loan is secured against the value of your property.

You will pay back this loan monthly over an agreed period of time. You will also pay interest on the amount you have borrowed alongside your monthly payments. This is either a fixed interest rate or a variable rate of interest. Fixed interest rates are unchangeable payments you agree to. Whereas variable interest rates will fluctuate depending on the current interest rate set by the lender.

Affordability

The interest rate of your mortgage is something you have to consider when planning your monthly payments. It’s important that the mortgage applied for is affordable and Lenders have strict criteria concerning affordability.

 With affordability being a key consideration it is important that you work out your outgoings. Include financial commitments such as HP, loans or credit card bills, tax, food bills, and household bills. These are all things your lender will consider when calculating your affordability when you apply for a mortgage. Mortgage lenders require proof of your monthly income and specific expenditure information. As well as if you have any debts to repay.

happy couple signing for a mortgage


Mortgage Interest Rates

Typical interest rates are the lender’s variable rate (often known as the standard variable rate), fixed rates, tracker rates and discounted rates.

Variable-rate mortgages. A variable-rate is set by the individual lender. As the name suggests, with a variable rate mortgage your interest rate and mortgage payment could go up or down from month to month. If you choose a variable interest rate, this can be beneficial if interest rates drop.

Fixed-rate mortgages set the interest rate at a fixed amount for a period of time. This is normally a period of 2 to 5 years, however, there are longer-term fixed rates around sometimes up to 10 years in term. The advantage of the fixed-rate is a known monthly payment, however, if interest rates drop below your rate, then you will be potentially paying more than you need to.

Tracker rates, follow the Bank of England base rate. The rate could be described as “base rate +2%, this means that your interest rate would be the Bank of England base rate +2%. However, if the Bank of England base rate changes, the rate you pay will change, up or down.

Discounted mortgages follow the lender’s standard variable layer rate. The lender sets the variable rate and typically when the Bank of England changes the base rate, up or down. Then the variable-rate will generally follow suit plus or minus a margin for the lender. This again means that the monthly payment can change up to or down.

With most mortgage deals, all your rate will revert to the lender’s variable rate when your initial scheme comes to an end. So, as an example, if you have opted for a two-year fixed rate, at the end of the 2 year period your mortgage would revert to a variable rate.

How Mortgages Work When Moving Home

Depending on your mortgage deal, you may be able to transfer an existing mortgage loan onto your new property. This will depend on the value of your current property and your new house. You may be asked to take out more money to afford your new property. But, you may also be able to pay off your existing mortgage by scaling down in home size.

Types of Mortgages

There are three main types of mortgages:

● First-Time Buyer – This a mortgage specific for people taking their first step onto the property ladder. If you’re buying your first home, this is the mortgage that you will benefit most from.

●     Remortgage – Remortgaging can be a great way to save money and find a better interest rate for a similar mortgage type where there is no additional borrowing. It is always important to consult a mortgage advisor when you consider remortgaging. This way you ensure you find the best deal for you based on your needs, circumstances and preferences. You may have to pay an early repayment charge to your existing lending if you remortgage.

● Home-Mover – This type of mortgage helps you to move from one property to another. For people who have already brought their first home.

Whenever considering which mortgage is right for you and your circumstances, it is vital to consult a mortgage advisor. For more information from our mortgage experts, get in touch with our team today:

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Give us a call on 03300 949 409 to enquire about all the mortgage options available to you. If you have any questions, please contact us to discuss your options.

“A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.”