Borrower Status

The different mortgage types and status

1.  Help to Buy Scheme

Help to Buy scheme's are an initiative established by the government in 2013 to stimulate the housing market.

There are 2 main elements to the Help to Buy scheme:

• Help to Buy Loan Scheme
• Help to Buy Mortgage Indemnity Guarantee Scheme

Help to Buy Loan Scheme – Who is eligible?

• New build property only
• Must be main residence not a buy to let or 2^nd/holiday home
• For First time buyers looking to buy a new build property
• For existing homeowners looking to move up the property ladder buying a new build property
• For permanent UK residents – UK Citizens or Foreign Nationals with permanent leave to remain
• New build property must be from a home builder approved for the Help to Buy scheme
• You cannot be a multiple property owner – for example, you cannot own second homes, holiday lets or buy to lets.

Help to Buy Loan Scheme – How much can I borrow?

• 5% minimum deposit of property purchase price by you
• 75% mortgage loan
• 20% maximum government Help to Buy Loan
• Maximum purchase price £600,000
• Maximum term 25 years
• Example: House purchase £100,000.  Your deposit £5,000, Mortgage £75,000, Help to Buy Loan £20,000

How much does Help to Buy Loan Cost?

• First 5 complete years, no charge to borrow government 20%
• At start year 6, if you have not repaid the loan, a yearly charge is made.
• The Yearly Charge can be paid monthly or yearly.
• Yearly charge starts at 1.75%
• Yearly charge then increases each year by RPI inflation + 1% (it is RPI and not CPI because RPI inflation includes increases in house prices whereas CPI does not)
• Yearly charge is paid by direct debit and you will be contacted 1 month before it is due to start.  If you do not pay by direct debit, a monthly admin fee is charged.

Repaying the Help to Buy Loan

• Minimum staged/stepped repayment 10%
• Maximum repayment of course 20%.
• How much? The value is % of the market value of the property at the time, not the loan amount.
• House price up example: If the £100,000 purchase price of the house has increased in value to £150,000.  A 10% Help to Buy Loan repayment would cost £15,000 and a 20% full repayment would be £30,000.
• House price down example: If the £100,000 purchase price has decreased in value to £80,000.  A 10% Help to Buy Loan repayment would cost £8,000 and a 20% full repayment would be £16,000.

What if I sell the property/move?

• Full repayment of the Help to Buy Loan is required.
• Repayment is again based upon the sale price of the property, if it has gone up or down then the Help to Buy Loan will be repaid in proportion in line with the examples above.

Renting

You are not allowed to rent your Help to Buy property after you have purchased, you would be required to repay your Help to Buy loan.

What sort of mortgage?

• Most mortgage lenders offer access to the Help to Buy scheme.
• Interest only mortgages are not allowed
• Capital and Interest repayment mortgages only
• Part exchange property deals are not allowed
• Normal mortgage terms apply from lenders

Other expenses

• Usual property and mortgage expenses apply
• Stamp Duty
• Land registry searches
• Mortgage application fees
• Solicitors/conveyancing fees
• Council tax
• Utilities – gas, electricity, telephone, water rates etc.

Help to Buy Mortgage Indemnity Guarantee Scheme

• Start date 1 January 2014
• Cannot combine help to buy loan scheme with help to buy mortgage guarantee scheme
• Can buy new build or older and existing property
• Maximum purchase price £600,000
• 5% minimum deposit paid by you
• 95% Mortgage loan from mortgage lender
• Mortgage lender is therefore taking a larger risk by lending you up to 95% of purchase price
• Government offers an insurance scheme to the mortgage lender of your risk of defaulting on the mortgage and them having to repossess the property
• Quite simply, the mortgage company is insured by Help to Buy Guarantee scheme against risk of loss if your mortgage goes “wrong”

For more information on Help to Buy contact us or watch our Help to Buy video.

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2. Buy To Let Mortgage.

There are now many specialist buy to let and second property mortgages.

You should be aware for a buy to let mortgage, in general terms you will need a deposit on average in the region of 25% and/or rent potential at around 120 to 130% of the mortgage interest payments.

How much can I borrow?

• Most lenders will expect a deposit of 25%. 
• There are lenders who will check your income and affordability.
• There are many lenders who will not check you income but will assess a buy to let mortgage based solely on the rental potential of the property.  This is called "rental cover" and usually needs to be a rent equivalent to 120 to 130% of the interest payments on the mortgage.
• Many people are therefore able to buy second properties despite having a mortgage on their main home.

Why Buy to Let? Income Yield

• Many people invest for inflation protection.  When inflation increases, wages eventually increase and thus property prices increase.
• The population of the UK is also set to expand by another 10m people in the by 2025 according to the Office for National Statistics.
• There is a housing shortage in the UK
• This means that property capital values and rents will gradually rise.  This is why property investment is popular when property prices are lower.
• Rental yields, i.e.  the return can be expected to be 5-10% pa depending uon the property price paid, the location and the rental potential.

Why Buy to Let? Growth

• The population is set to expand.
• Continued inflation will drive up wages which will drive up property prices
• The governments Help to Buy scheme is drawing more people to the property market, this may drive prices up.
• In the words of Mark Twain: "Buy land, they are not making anymore"

What is Gearing?  Gearing is a means for people to boost investment returns. 

• For example, you buy a property with a 25% deposit of £50,000 for a buy to let property valued at £200,000.
• You rent the property for 5 years
• The house grows in value to £250,000.
• You sell the property for £250,000.
• Your profit is £50,000 but you only invested £50,000.  You have geared up your profit by borrowing meaning a return of 100%.

Buy to Let Mortgage Additional Information

Affordability is sometimes not assessed on your income, buy to let mortgages can be assessed on the rental income potential of the property in question.

The mortgage rate may be slightly higher than general residential rates and there may be many other considerations that you need to consider such as:

• The need to decide on tenancy terms and agreements
• The fact that you, as a landlord, will need to comply with many laws with regard to tenancy and ensuring that your property is safe
• It is worth considering involving a professional managing agent as they may supply you with and indeed ensure compliance with all the necessary rules and regulations

For Buy to Let Mortgage help on purchasing a second property contact us.

Capital Gains Tax on 2nd Properties

You should also be aware that only your main residence grows tax free.  Second homes or rental properties may attract capital gains taxes when you sell them on.  Find out more.

Request mortgage advice.  Landlords speak to us today and find out about saving money with the buy to let scheme.

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3. First Time Buyer Mortgage - the facts:

• There are thousands of people trying to get on the property ladder for the first time everyday
• There are hundreds of mortgage lenders who will offer mortgages to first time buyers

Special Mortgage Terms for the First Time Buyer

Many lenders have special mortgage deals and terms to help first time buyers onto the property market such as

• 100% Mortgages
• Cash back Mortgages
• Low Start Mortgages and Discounted Mortgages
• Stepped Mortgages
• Shared Equity Mortgages

We search through over 8,500 mortgage deals everyday to find the best ones to suit our clients requiring a first time mortgage:

Are you a first time buyer looking for a mortgage deal? Take Action - Request mortgage advice or complete our simple mortgage search form.

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4. Low Deposit Mortgage

100% Mortgage - The Facts:

• There are thousands of people who would like a 100%, no deposit mortgage everyday
• There are now no mortgage lenders who will offer 100% mortgages

Why No More 100% Mortgages?

• These mortgages were one the causes of the 2008 Credit Crunch and Banking, Toxic Debt and Property Crisis
• You can get still help though with deposits under the Government's Help to Buy Deposit scheme.

Low Deposit Mortgage - Special Terms Available

Many lenders have special deals and terms to help you onto or back onto the property market such as

• Help to Buy Deposit Mortgage Scheme
• Cashback Mortgages 
• Low Start Mortgages and Discounted Mortgages
• Stepped Mortgages
• Shared Equity Mortgages

We search though over 3,500 mortgage deals everyday to find the best ones to suit our clients:

Take Action - Request mortgage advice or complete our simple mortgage search form.

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5. Second Home Mortgage - Second Property and Mortgage

There are now many specialist buy to let and second property / home mortgages.  Contact us for a mortgage quotation today.

You should be aware that for a second home mortgage in general terms you will need a deposit on average in the region of 20%.  The mortgage rate on a second home mortgage may be slightly higher than general residential rates and there may be many other considerations that you need to consider such as:

• Periods of un-occupancy may affect insurance
• If you are buying to rent, the need to decide on tenancy terms, agreements, landlord laws and more.

Capital Gains Tax on 2nd Properties

You should also be aware that only your main residence grows tax free.  Second homes or rental properties may attract capital gains taxes when you sell them on.  Find out more.

Request mortgage advice or complete our simple mortgage search form and get your second home mortgage at a better rate.

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6. Overseas Mortgages

Mortgages are stressful at the best of times let alone overseas
Mortgages for property overseas can also offer language barriers and local customs issues.

Overseas property may present tax issues in the UK or overseas.

• Save time
• Save money
• Lose the stress
• Overseas Property and a Mortgage is one of the biggest investments you make
• Don't make mistakes that you regret for many years to come
• We do the work for you

Yes, there is a fee to pay but you are possibly investing in your lifetime dream or your future income or both.

Do you really want to chance it.

Contact us.  Let our friendly award winning team over help and advice on a range of countries and overseas mortgages.

We suggest you read our international section.

We have a range of mortgages available in over forty countries.

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7. Credit Problem Mortgage

The Facts: CCJ's, Arrears, Others Debts and Getting a Mortgage

• There are thousands of people who have both major and minor credit problems everyday
• There are hundreds of mortgage lenders who will offer mortgages to people with credit issues

Credit Problem Mortgage Do Not Despair

Whether you have missed a mortgage payment of whether you have £40,000 in credits cards and other debt, there is likely to be a lender who will offer a mortgage and help you manage your finances into a more affordable position.

Take Action - Ask about Adverse Credit Mortgages

The best thing you can do is to take action and stop any issues getting worse.  You can contact us in strictest confidence and we will give you the facts.

• Do not be ashamed or hide from the truth 
• We have probably dealt with your type of credit issue many times
• You are not unique in worrying or in getting yourself into difficulty 
• You just need to take action

Hundreds of people everyday rearrange their finances and wish they had taken action much sooner.

Credit Problem Mortgage, Request mortgage advice from us today.

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8. Commercial Mortgage

Business and Commercial Mortgages and Borrowing

Quite simply, as well as a person taking out a mortgage so can a business. 

Even a pension fund can take out a mortgage.

If you intend to borrow money to purchase commercial premises or other property that you intend to use for commercial reasons (with the exception of buy to let property) you need to establish a commercial mortgage.

Commercial mortgages are commonly available from many lenders although there are specialist lenders and special lending divisions for larger lenders that work in this sector rather than the normal residential lenders.

Normally, for commercial mortgages there is a minimum deposit of around 30% of the value of a property.

For commercial mortgages there are also arrangement fees of anything from 0.5% up to 2% depending upon the risk involved.

They are normally repayment/capital & interest type commercial mortgages and have shorter terms.  Interest rates are normally standard variable rates and quoted as percentages above Bank of England base rates.

For example, commercial loan of 1.75% above base over 5 years.

Many business owners use their pension funds to purchase commercial property. Find out more.

Commercial Mortgage Request mortgage advice or complete our simple mortgage search form.

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