1

Which type of mortgage to choose

These days, there are more types of mortgage than ever before, and it can be difficult to cut through the maze:

Fixed mortgage
Tracker mortgage
Variable mortgage
Discount mortgage
Stepped mortgage
Capped rate mortgage
Offset mortgage
Equity release mortgage
Buy-to-let mortgage (scroll down)

These days, most mortgages are set up on a ‘repayment’ basis, also known as a ‘capital and interest’ mortgage. However, if you are able to make regular lump sum repayments (for example, using your annual bonus), an ‘interest only’ mortgage may be a better option.

Each week we will highlight a different mortgage type best buy – see more

2

How much you can borrow and what it will cost

In days gone by, lenders considered mortgages based on a simple multiplication of your salary. However, times have changed and lenders have refined their business model.

Today, each lender has slightly different criteria, but they all look closely at your monthly expenditure to ensure you can afford the repayments.

The amount you are able to borrow will depend on your age, especially if you want a mortgage that goes beyond traditional retirement age.

Special rates may be available that last from two years to the whole mortgage term.

Use the calculator below to get a quick guide of how much you may be able to borrow.

Please enter individual or combined figures in all boxes as appropriate.

IMPORTANT: This calculator will give you a rough guide to what you may be able to borrow; it could be more or it could be less, once a full assessment of your financial situation has been made. Our mortgage advisers can guide you through this process.

This is not a quotation under the Consumer Credit Act. Figures are subject to validation of income, credit checks and a property valuation.

3

How to improve your chances of being approved

The best way to improve your chances of getting a mortgage is by having a clean and active credit profile. Here are some tips:

Ensure your mobile phone contract is completely finished before you stop making monthly repayments – this has become the single biggest cause of people struggling to obtain a mortgage.

Check your credit report regularly. If you spot any anomalies, challenge the relevant company immediately.

On credit cards, do not run consistently high balances, always remain within the agreed limit, and pay at least the minimum payment every month.

Remember that any loans or car lease agreements you have will affect the amount of mortgage that a lender will consider.

Make every loan repayment on time.

If you change address, promptly inform all the companies where you have a credit agreement. This includes mobile phone companies, utilities and credit cards.

If you do not yet have a credit rating, get a credit card and pay it off in full each month. This helps build up your credit profile over time.

4

The latest on Buy-to-let mortgages

If you are looking to buy properties as an investment, or considering letting out your current main residence while purchasing a new one, there are some important facts you need to know.

You will have to pay a 3% Stamp Duty surcharge on the whole purchase price of any property you buy.

Unlike a standard residential mortgage, the amount you can borrow will not be primarily governed by your income (although some lenders will insist your income is at a certain level). Rather, it will be driven by the size of the loan in proportion to the property value (Loan to Value), and the amount of rental income that an independent valuer believes the property would yield assuming it’s let on an unfurnished basis. All lenders have their own calculations for this.

Before you become a landlord, it’s important to consider the tax you will have to pay on the rental income and on the profit when you eventually sell the property.

5

We can help!

We will explain all your mortgage options in plain English, describing which benefits and drawbacks apply to your specific situation. Our knowledge of the market enables us to place you with the lender that offers you the most advantageous terms, so you end up with the best possible mortgage for your needs.

To arrange your initial appointment, please contact us on 020 8891 0711 or hello@globeifa.co.uk