The purchasing of a property or home is one of the biggest decisions and largest investments we can make. Buying a property with a mortgage can seem daunting. You should find out how much you will be allowed to borrow before searching for a property.
Because a UK mortgage is worked out according to income, a joint application can have an affect on the amount financed, two incomes can result in more money being made available to you.
Obtaining a mortgage can all seem very confusing and feel like it is going to take forever. It is advisable to be aware of any mortgage fees there may be, often people do not realise there are extra charges for arranging a mortgage.
There are fees that many people forget or don't even realise exist :
The Deposit - This is a sum of money you will pay as a down payment on a property. Most lenders will expect you to make some sort of deposit as many will not lend you 100% of the property value.
Indemnity Guarantee - This is usually payable if you are going to borrow more than 75% of the value of the property, however some lenders will insist you pay it if you are borrowing more than 90%. Indemnity Guarantee Insurance is an insurance that protects the lenders investment (not yours). Should you not keep up mortgage payments and your property is repossessed, then should it be sold for less than is still owed on the mortgage your lender will be able to claim the difference. If the lender does make a claim on this type of insurance then the insurance company themselves could actually claim this money back from you. Bear in mind that this aforementioned difference can work out to be very little or it could run into thousands of pounds.
Mortgage Payment Protection - This is a type of insurance that will cover your mortgage payments should you be unable to make them due to unforeseen circumstances such as unemployment redundancy, sickness or injury.
Life Insurance - Life Insurance is a policy that will pay out a sum a money in the event of death. Should an insured person die during the the policy term then the sum assured is paid out to a dependant, family member or partner. Some Life Insurance policies will include critical illness cover.
Buildings Insurance - This type of insurance covers the cost of rebuilding or repairing your property should it be destroyed or damaged. Many mortgage will insist you have this cover.
Surveys - A property valuation must be carried out so the mortgage lender can ascertain the size of loan it is prepared to make for the property. The cost of this survey will vary according to the size and value of the property. The survey will report on the condition of the property and it's surroundings. It will ascertain whether the property is worth the asking price as a building report is a full structural survey.
Legal Expenses - A solicitor and conveyancer will deal with all the legal procedures that are required in property purchasing. They ensure that everything is done legally to ensure that you will be the next legal owner of the property. They will process all required paperwork as well as converse with the sellers legal team, they will ensure that the name on the property's deeds are transferred. They will ensure that the land registry fees are paid as well as the stamp duty. Both of these fees are payable by you, however some properties are offered with stamp duty paid for you.
Solicitors will exchange contracts when everything has been agreed between the buyer and seller, once contracts have been exchanged both parties are legally bound and a moving in date can be set.
Removal Fees - If you do not have your own transport you will have to employ a removal company to move all your possessions into your new property. You may have to pay for the hire of a van if you plan to move your possessions to your new property yourself.
Utility Connection Charges - Such things as Phone, TV, will probably need to be reconnected and a fee for this made be incurred.
Steps to a UK Mortgage
It need not be confusing there are a few basic steps to follow when thinking of applying for a mortgage.
1 - Find out how much you can borrow. Try different lenders and understand their products.
2 - Save up as large a deposit as possible. This way you will have to borrow less.
3 - Look at property prices in the area you wish to live. Consider what type of property you wish to buy. Engage the services of an estate agent to find what you are looking for in the right area if you cannot afford to take time out to look for yourself.
4 - Once you have found the property you wish to buy make an offer. If it is accepted find a solicitor to deal with all legalities.
5 - Once exchange of contracts has taken place sort out a moving in date.
6 - Remember to inform utility suppliers such as Gas, Electric, Water, Phone, Internet suppliers of your change of address.
100% Mortgages
If you feel that you will not be able to save up enough money for a deposit or you are in a rush to move then there are 100% mortgages available for consumers who want them More interest is charged on these type of mortgages and there is a larger indemnity guarantee premium as you are considered to be a greater risk to your lender.
Mortgage Repayment Difficulties
If you are having difficulties making repayments then the best thing to do is take action quickly. Inform your lender of your circumstances, they can help you to not sink deeper and deeper into debt. Many lenders will work out a plan with you that will enable you to make some sort of reduced payment. Your circumstances are likely to change for the better and normal payments can then resume putting you back on track. Remember by taking fast action and controlling your debt you will have a better credit rating in the future.
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