Free Mortgage Advice
Free Mortgage Advice: Simply, a mortgage is like any other kind of secured loan - you borrow money, and you pay it back with interest over a period of time. But it has one key difference: the secured loan is against your home. So if for any reason you can't repay it, the mortgage providers can sell your home to recover their money. Your mortgage advisor will give you more mortgage advice on mortgages if you request them.
Secondly you may be asking how does a mortgage work?
Again put simply, you take out a secured loan mortgage how much can i borrow and the value of the property less your deposit, for a length of time agreed between you and the mortgage provider. This is generally 3-4 times single or joint salary, between 5-15% deposit on the value of the property over a term between 5 and 30 years. Using our mortgage calculator will help you with this. Your mortgage advisor will also be able to give you more free mortgage advice or be more specific to all of the above depending on what mortgage deal you have selected and what the criteria is for particular mortgage providers.
You are charged mortgage interest on the secured loan, which is determined by the mortgage lenders. Mortgage lenders usually set their mortgage interest rates based on the Bank of England base rate, which is reviewed monthly.
You pay the mortgage back in one of two ways, repayment mortgage or interest only mortgages more information on both types can be found in our mortgage repayment options.
You can choose different deals for your mortgage interest rate, such as fixed mortgages, flexible mortgages or even variable rate mortgage.
At Money and me we pass your details to our mortgage partners who will take care of almost all of your paperwork for you making the entire process easy, but in case you ever wonder what some of the terminology or jargon used when it comes to mortgages hopefully you will find the answer below.
Mortgage Advice
Annual statement
A statement from your mortgage lender, sent every year, showing among other things what you've paid and what you still owe. It will also show your mortgage balance. You should always retain these statements for future reference especially if you intend to change mortgages on a regular basis as the mortgage advisor can retain this on file for the new lender and it helps further issues such as affordability for your new mortgage if your circumstances haven't changed from your previous remortgage.Approval in principle
A certificate which some lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents. This can also be useful when visiting new build sites as they generally the sales staff will take you more seriously. This can also be referred to as a decision in principal (DIP).APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs. Most mortgage providers have a different APR as part of this figure is based on the cost to the mortgage lender to offer the money to the clients which will include staff, rates etc and all mortgage lenders are different.Authorized firm
A firm that has permission from the FSA to carry out regulated activities. This will generally be a mortgage firm with mortgage advisors or an independent financial mortgage advisors firm who also have mortgage advisors in the practice. Their is no difference as both need to hold the same qualifications to advise on mortgages. Details of authorized firms can be found on the FSA web site.Buy-to-let mortgage
A loan you take out to buy a property which you intend to rent to tenants. Buy to let mortgages are generally slightly higher interest rates than that of residential mortgages, they are also generally set up as interest only mortgages although if you can afford to we would recommend repayment mortgage if you intend to keep the property long term. People are using buy to let mortgages as alternative funding for retirement. To get free mortgage advice on buy to let mortgages speak to one of our mortgage advisors.Capital
The amount you borrow to help buy your home. This is generally 90% of the purchase price depending on your circumstances. This amount does not take into account the fees you will need to pay for surveys and legal fees. This may vary so please speak with your mortgage broker regarding this.
Capped mortgage
A mortgage that has a maximum limit on the interest rate you'll have to pay during a special deal period. Capped mortgages work in a way if your cap was set at 5.99% and interest rates were at 7% then you would only pay interest on the 5.99%, anything less than 5.99% then you would pay the lesser amount.Cash back mortgage
A mortgage that comes with a cash sum (often a percentage of the amount you're borrowing). This amount would be returned to one once the mortgage has been completed generally from the solicitor completing the mortgage on your behalf.Collared rate mortgage
A mortgage with a minimum interest rate you'll pay during a deal period. If mortgage rates were o.5% and your collar was 3% then you would continue to pay interest on your mortgage of 3% and not the 0.5% as this is the rate your collar was set at.Deposit
The amount of money that you're putting into buying a home (not including the mortgage money you're borrowing). Mortgage deposits have increased since the credit crunch and a typical 10% deposit either in cash or equity is needed for most mortgage lenders to secure a mortgage although some mortgage lenders will go as little as 5% deposit.Discounted rate mortgage
This has a discounted variable rate of interest for a set period, after which the rate will increase. This can be a good type of mortgage as long as you are prepared to accept large changes in your monthly mortgage payments, as if rates go up sharply then your payments will also increase but if rates go down you should benefit from cheaper monthly mortgage payments.Early repayment charge
A charge you may have to pay if you break off a mortgage deal - by paying it back early and/or moving to another mortgage lender. This is generally associated with Fixed mortgages, tracker mortgages, discounted mortgages and other mortgage deals but not generally with standard variable rate mortgage.Fixed rate mortgage
An interest rate that is fixed (ie it doesn't move up or down) for a set period of time. Fixed rate mortgages generally have a fee applied to them which can be added to the mortgage but remember if you do this you will pay interest on the fee. Fixed rate mortgages have been the most common type of mortgage for many years. The most common fixed term has been 2 years but you should choose the term that is most suitable to your needs.Income multiples
The factor by which your earnings are multiplied to find out how much you can borrow. This has been as high as 9 times in the past with affordability calculators but in realistic terms 3.5, 4 times salary should be used as a guide to how much you can borrow.
Mortgage Interest rate
The figure that determines how much interest you pay to the mortgage provider. Usually linked to the Bank of England's rates and can move up or down. In the early years a repayment mortgage payments to the mortgage lender are made up of interest and in the later years it will reverse to more of the payment going on the repayment of the capital and not the interest element of the mortgage loan.Interest-only mortgage
A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way. Generally people on interest only mortgages will have a mortgage endowment, ISA savings or some other form of savings to repay the loan at the end of the term. The way to work out your mortgage payments if you are interest only are to take the amount borrowed multiply this by the interest rate you are paying and divide this answer by 12 and this will give you your monthly interest only mortgage payment.Loan-to-value
The percentage of money you want to borrow compared to the cost of the property. Most mortgage providers will base this on the lower of the sale price of the property or the survey price that has been submitted by the surveyor. If you are getting the property cheaper from a relative advise the mortgage advisor of this and he will advise the mortgage lender at the start of the mortgage process.Mortgage
A loan which is secured against your property. Also known as secured loan, many people take out a second mortgage or secured loan on their property for various reasons with different providers than their mortgage is with. If you are considering a second mortgage or secured loan on your property for debt consolidation please be aware you are securing this against your property. Get mortgage advice before you get a second mortgage.Mortgage broker
A mortgage broker helps you understand the various mortgage types and deals available to them. A mortgage broker may recommend a mortgage for you or they may provide you with information to enable you to make your own choice. Mortgage broker works either on a tied, panel or whole of market basis, it is our recommendation that you use a mortgage broker who is whole of market. This enables your mortgage broker to select from a bigger selection of mortgage providers and from more mortgage deals for you. Mortgage broker will be paid commission for his services and the mortgage broker may also charge you a fee, ensure you discuss payment options with the mortgage broker before proceeding with your mortgage application.Remortgaging
The process of changing your mortgage for a different one, without moving home. Your mortgage broker will advise you on the best deal available to you from the mortgage lenders for remortgaging. Many people also remortgage to raise additional capital for house improvements and or debt consolidation, before remortgaging for debt consolidation purposes speak with your mortgage broker who will point out the pitfalls of remortgaging for debt consolidation.Repayment mortgage
A mortgage that pays off both the secured loan and the interest at the same time. Make all the payments and the mortgage will be fully repaid. This is similar to a personal loan but with a longer term, make the payments as agreed with the mortgage provider and the balance will be zero at the end of the term. If you have other secured loans or second mortgages on the property these will only be paid off if you selected the same term and a repayment type of mortgage for them also.Stamp duty
A tax which home buyers must pay on properties above a government set figure. This will depend on the value of the property and if the property passes the stamp duty thresh hold, your mortgage broker will advise you of the current stamp duty thresholds and rates that would apply to your purchase, this only applies to purchases and not to the remortgage market.Standard variable rate mortgage
A mortgage loan at the mortgage lender's normal mortgage rate - ie without any discounts or deals. Most people would not stay on a variable rate mortgage as this is generally more expensive than the deals available in the market. In previous years people would stay on the variable rate mortgage but this has changed over time with mortgage lenders trying to attract new clients and the amount of mortgage brokers that is now in the market to help people with their mortgage.Secured
A mortgage is a secured loan on your home; this means that if you fail to repay it, your mortgage lender may be able to sell your home to get its money back. If for any reason you have difficulty with your mortgage payments we recommend you speak with the mortgage provider who will listen to you and try and help the situation, do not avoid speaking with the mortgage lender as this can often make the situation more difficult in the future.Survey
A report on the condition of the property you are planning to buy. Home information reports should be available for you to purchase on the property that is of interest to you from the vendor of the property, but the mortgage lender will still require a mortgage survey at the very least from you before it agrees to lending on that specific property. The mortgage advisor will assist you with this if you require as they generally have a good relationship with the surveyors in the area and may be able to negotiate a discounted price from the surveyor on your behalf. The mortgage advisor may also charge you a small administration fee for this which is generally well worth it as it helps with your mortgage application.Tracker rate mortgage
A mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it. These type of mortgages are generally linked to the Bank Of England base rate which is set on a monthly basis, which means that your mortgage payment could fluctuate on a monthly basis.Mortgage Term
The length of your mortgage. Mortgages generally have a term between 5 and 30 years depending on the age of the client at the outset of the mortgage. The mortgage term can be changed in the future as long as you can afford the monthly repayments, they can be extended to reduce the monthly mortgage payments if you are on a repayment mortgage or reduced if you can afford larger monthly payments to your mortgage. The term of the mortgage will not affect the monthly mortgage payment on an interest only mortgage as this is purely an interest payment on the amount borrowed.Mortgage Valuation
A brief inspection, for the benefit of your mortgage lender, of the home you hope to buy. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey or a more in depth survey on the property condition.
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The guidance and/or advice contained within this website is subject to the UK regulatory regime and is targeted to UK consumers.
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