What is a mortgage?
A mortgage is a loan from a bank or building society used to buy a property. It is a secured loan; this means that the lending establishment will own part of your home until you have paid off the mortgage in full.
How do mortgages work?
At the time of borrowing you agree a timescale to pay back the amount borrowed, plus interest. Most mortgage periods are calculated over 25years but you can opt for shorter or longer terms depending on your age and affordability.
You may decide to fix your mortgage term over a period of years. After this you can review or renew. At this point you can usually amend the number of years over which you choose to pay.
How do deposits work?
Mortgage lenders will require an initial deposit to cover part of the purchase price. The deposit is a percentage of the property’s value and different products require different LTV (Loan to Value) amounts to qualify for certain rates.
If the property you are buying costs £200,000 a 10% deposit would be £20,000. The remaining £180,000 would then be lent to you by the mortgage lender.
Interest Only or Repayment mortgage?
If you opt for an interest only mortgage then your monthly repayments will only pay off the interest owed. This leaves the balance unaffected each month. To counter this you will need to arrange to pay off the balance at the end of the term by saving this separately using an ISA, Investment or similar.
A repayment mortgage apportions your monthly payment to the interest AND part of the balance owed each month. By the end of the mortgage you will have paid the balance in full.
What are fixed and variable rates?
Interest rates on fixed rate mortgages do not change for a set period of time (usually between one and five years, though longer terms are possible)
The interest on Variable rate mortgages can change at any time, although they usually rise and fall with the Bank of England base rate.
Discount mortgages usually rise and fall with the lenders standard variable rate for a set period of time.
Tracker mortgages follow the Bank of England base rate but are variable – so if the base rate was 2% then a Tracker at 1% above the base would have a rate of 3%
Buying your first home can be a daunting experience. Understanding all the terminology that the mortgage process brings can be quite a challenge. We pride ourselves on keeping things clear and simple at evey stage of the process with your adviser working alongside you to help and guide you.
You may have many questions:
How much can I borrow?
How much deposit do I need?
Is my credit rating good enough?
How much will it cost?
What insurance do I need?
We can help with answers to all of these questions and more. We can discuss your needs at any time whether you have found a property or are just starting to think about your first purchase.
We search the whole of the market to find the best options for you for both mortgages and protection. This saves you the time of going to every provider and ensures you get the best deal.
Whether your rate is ending and you are looking for a new deal, or you want to borrow additional funds for a purchase or to repay other loans we can advise on the best options for you including those from your existing lender. If you have a Help to Buy Equity Loan or a Shared Ownersip property we can advise on options for repaying these schemes.
Fee free service for new and existing customers. We contact existing customers up to 6 months before the expiry of their rate to discuss options and future plans.
It is important in this area that again a client’s fees are kept low, as most clients do not wish to pay for valuation or legal costs when it comes to a new mortgage rate. We look firstly at your current provider to see what they would offer you to stay with them and we then look at the open market to see if there is anything better that can be applied for.
We look after all our existing clients to ensure that once they use our services that they are then looked after year in and year out.
The ways in which people are paid are constantly changing and the number of fixed term, open-ended and zero hours contracts are increasing. These type of contracts are often found in the IT and service sectors and in the past have provided challenges to obtaining a mortgage.
With years of experience in this field we have access to a large number of lenders who are able to consider these types of contracts so we can make this an easier process than previously experienced. Often we are able to obtain the exactly the same rates that are offered to employed applicants.
Typically contractors have had to pay additional fees to advisers to help find a mortgage. At Evolve our charging is exactly the same as employed applicants.
Sometimes things don't quite work out as planned and you may have experienced credit issues which you might think make you ineligible for a mortgage. We have spoken to many customers like this and surprised them by being able to find a lender who will offer the mortgage they are looking for.
Some examples of credit issues we have overcome:
Naturally, it will depend on the exact circumstances and the age of the credit issues but we can advise on what options are available either now or give a timescale for when lenders may consider a mortgage application or what you can do to help improve your credit rating.
At Evolve we are able to assist with a vast number of Buy to Let scenarios including:
As we are whole of market we have the opportunity and expertise to find the right solution and best rates from a large range of providers.
How do buy-to-let mortgages work?
A buy-to-let (BTL) mortgage is used when someone wants to buy a property and rent it out to someone else. These kinds of products are similar to regular residential mortgages. However, there are some differences, so it’s important to understand how they work.
How do I make money from a BTL property?
In theory, the rent your tenant pays will cover your monthly mortgage payments, and even leave you a bit extra. With some BTL mortgages, you must be able to prove that the potential rental value of the property will be greater than your repayment fees.
As a landlord, however, you will be liable for other charges. For example, letting agent fees, repair and upkeep, and remarketing costs. And it’s always possible that a property will be empty for months on end, or something like the boiler could pack up, which means rental income may vary.
Over the years, you will also make money on the value of the property. Once the BTL mortgage has been repaid, all profits you make from selling the property, or continuing to rent it out, will be yours.
How do repayments work?
Most BTL mortgages work on an interest-only basis. This means you’ll only pay interest on the loan itself, and the capital will not be paid off.
Interest only repayments can be helpful when cashflow gets tight, or unexpected repairs need to be performed.
However, you will need to decide how and when you pay off the remaining capital over the lifetime of the BTL mortgage.
Do I need a large deposit for a BTL mortgage?
At present, you’ll need to provide at least a 20-25% deposit to get a BTL mortgage.
As with standard mortgages, the larger your deposit, the better rate you will be able to access. For BTL mortgages, having a deposit of over 40% is generally the threshold for accessing better deals.
Should I form a company to buy a rental property?
This option has been taken up by some enterprising landlords, so they can still claim the rate relief and wear and tear allowance that private individual landlords now cannot.
However, this isn’t a straightforward process, and can incur other costs, such as higher interest rates on the kind of mortgages available to companies.
Our advisors can discuss this approach with you, to see whether it could work for your circumstances.
If I already have a BTL property, is it worth remortgaging?
Yes, and many landlords have benefitted from this since the taxation changes reduces their access to relief. It’s a common way for landlords to raise money to purchase another property, renovate an existing property, or simply gain capital for other reasons.
And often, it’s a great way to get a better deal.
Can I turn my current home into a buy to let?
Yes, and this process is called let-to-buy. You’ll need enough equity in your home to access a let to buy mortgage. And in general, these mortgages are taken out at the same time as you take out a regular mortgage to buy your new property.
When in doubt, get expert advice.
Equity Release allows you to unlock the equity in your home in a safe and regulated way. You will still own your home (via a Lifetime mortgage) and will continue to benefit from its increasing value. You have the right to remain in your home until you die or move into long term care.
We work with leading market providers to offer independent advice on Lifetime Mortgages.
One of our independent financial advisers can provide you with equity release advice, and review your circumstances to find the best solution for you. Please visit our Evolve Lifetime website www.evolvelifetime.com
You could borrow up to:
Total Interest Paid:
Figures provided will be dependent on your financial situation, property value and the size of your deposit or equity.
Our housing needs change throughout our lives no matter where you live and it can be difficult to find the right mortgage, especially since changes in lending came into effect during the global downturn.
Securing the right finance that matches your needs can really save you time, money and most importantly stress. Whether you are looking to buy your first home, thinking of investing in retail property or perhaps to build a retirement nest egg we can help. When children leave home often people look to downsize or even to free up some funds to get your children on the property ladder.
Note: The results you obtain from the mortgage calculator are for general guidance only. The results cover only interest and/or capital repayments. They do not include any fees or charges that may be associated with obtaining a mortgage. Note that future interest rates may go up. You should seek independent financial advice on the type and size of mortgage which you may be able to obtain based on your specific personal circumstances.
Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.