Mortgages

Self-Employed Mortgages in 2021

Self-Employed Mortgages in 2021

It’s been well publicised that the UK’s Government response to the Global Pandemic has had its controversies, while the furlough scheme has helped many, there has been little help for a large proportion of the Self-Employed who have been forced out of work and what help there has been has not been available to all.

For many years being Self-Employed has been a disadvantage when it comes to how you are assessed for a mortgage, whereas someone in a permanent contract of employment could get a mortgage on day 1 of starting a new job, a self-employed person typically has to demonstrate earnings over a 2- or 3-year period to even be considered for a mortgage. Factor in that it is the net profit figure that you are usually assessed on and there is no doubt it is harder as a Self-Employed person to qualify for a mortgage. That said, pre-Covid when you could demonstrate the required level of earnings over a period of time, being Self-Employed became less of a disadvantage when applying for mortgages and mortgage lenders would offer the same terms to a Self-Employed person as an employed.

That has changed with Covid, not only has being Self-Employed, particularly as a sole trader, meant access to any kind of furlough scheme has been denied, those taking the Self-Employed Income Support Scheme grants, designed to help the self-employed, have since found themselves jumping through hoops to get a mortgage or denied mortgages altogether. For many Self-Employed in need of re-mortgaging to save money and go on to a better rate or continue with plans to move or improve homes once business has improved, this has been a cruel blow.

Getting a good mortgage adviser who is experienced in helping Self-Employed people get a mortgage in a post Covid world will save you a lot of time, stress and potential disappointment. Life has been disappointing enough for the past year for so many, speak to a Mortgage Adviser early, so that you don’t have to go this one alone. So how has Covid changed eligibility for a mortgage if you are Self-Employed? These are typical examples where lenders have tightened their criteria specifically for the Self-Employed.

  • It is likely that you will be assessed using lower income multiples in some cases meaning you can’t borrow as much today as you could have over a year ago.
  • You may need a bigger deposit, in some cases as much as 40% of the value of your home.
  • Previously taking the Self-Employed Income Support Scheme Grant (SEISS) may rule you out of getting a mortgage for a period of time until you can demonstrate that your earnings have returned to the levels required for the mortgage.
  • You may need to demonstrate in greater detail that your business has returned to the required level of earnings, for example by providing business bank statements.

If you have struggled financially, it is possible that you have had no choice but to borrow against loans or credit cards, this will further make life difficult for you when it comes to applying for a mortgage.

Many Self-Employed people have had to change their work altogether, some have been able to take up paid employment until life returns to normal, others have had to move away from the profession that they know and love and offer a totally different service that fits within the current restrictions.

Helping the Self-Employed to get on the property ladder has been a rewarding part of my role as Director and Mortgage Adviser here at The Money Guardian, at the moment though it has more than its fair share of challenges. That said, in some cases, we can still get good results for Self-Employed clients, the journey can take longer and be more difficult, but with the right set of circumstances and advice and our support, being self-employed does not need to be a barrier to getting a mortgage, even at the moment. We want to be here to support you if you are Self-Employed, whether you are surviving or thriving, whether it is now or in the future, to get a plan in place to help your financial position, move or improve your home and secure a mortgage when the time is right.

If you are Self-Employed and need help with getting a mortgage, please get in touch with one of our Advisers here at The Money Guardian. It is never to early to get good mortgage advice, whether it is putting a recovery plan into place to achieve that goal of moving home or improving your current home in 6 or 12 months, or longer. We are here to support you now and help you to be ready for when life returns to normal and your business can get back on track.

Melanie Eastwood is Director and Mortgage Adviser at The Money Guardian, founding the company in 2017 after a long and successful career in Financial Services. She is passionate about helping people achieving their goals when it comes to owning property or other financial aspirations. An activist at heart, Melanie tries to make a difference in her community where time allows and, in the past, has served as a local councillor, campaigning against cuts to the NHS and defending local green spaces, she has previously been a foster carer and is also the driving force behind an initiative working with local charities and school children planting trees in their town. The Money Guardian won the NatWest Hero Award in 2021 for its service to customers and the community and has featured in The Times as Vouched For Top Rated Mortgage Advisers for 3 consecutive years.


Melanie Eastwood

Melanie established The Money Guardian to offer an alternative to the overly complicated world of financial planning. As Melanie explains, “I love it when clients tell us how good they feel knowing their finances are sorted. It’s important to us that they’re able to walk through the big decisions in life feeling completely confident.”

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Tips for Buying your First Home

Tips for Buying your First Home

There is no end of information available with tips on how to buy your first home, to the point that I have wondered if I really need to add to the plethora of information available on the internet, but as a Mortgage Adviser myself and Director of a successful Mortgage Advice company, I felt I had to add a bit of my perspective into the mix. Every day I advise lovely people at all ages and stages on how to buy a property, so let me shed some light on the process.

Firstly, there is no embarrassment in not having a clue what to do when it comes to buying a home. It can be a daunting process, from knowing how to get a mortgage, what a mortgage even is, to negotiating with estate agents. I deal with clients in so many walks of life and professions who have skills and knowledge in areas that I wouldn’t have a clue about, yet often they feel embarrassed for not knowing more about mortgages when I ask them….even those who already have a mortgage.

When you come to me as my client and want to know about getting a mortgage, I want you to feel comfortable to admit what you don’t know and I can help fill the gaps.

Before sending more tips for buying a home into the google stratosphere of tips for buying a home, I thought I would try to think of some less talked about angles, but ones that are really important and that I discuss with my clients every day in my Mortgage Advice meetings.

So, in no particular order:

Find out early how much you can borrow on a mortgage.

It’s never too early to find out how mortgages work and how your current position helps you to get a mortgage. In particular it can be highly motivating once you find out how near or far you are to getting the mortgage that you need, to live where you want. Kicking your plans into action and making those all-important changes in your life to increase your options. It might be that you find out that your current income and job isn’t enough to get a house in your local area, this doesn’t need to be a negative, it could inspire you to look for alternative employment or explore a new area to live in.

It might be that you find out that your current level of debt is holding you back, or the plans to get a new car lease will reduce the amount that you can borrow on a mortgage, meaning you have a nice car and still no house. Understanding how these decisions affect your potential for a mortgage can help to motivate you to rethink your priorities and budget, and reduce your monthly outgoings.

As a Mortgage Adviser myself, I don’t like having to disappoint a client when I know the property that they have in mind is financially out of reach. The best part of my job is when I can deliver them good news, often my clients are surprised to hear that they are in an even better position with getting a mortgage than they had expected.

Here are a few tips from me on finding out how much you can borrow on a mortgage:

  • Start early and speak to a Mortgage Adviser, tell them your time-line for buying a home. I will always give potential clients the time they deserve to understand their mortgage options, even if they aren’t looking to buy a home straightaway. This gives them the best chance of being ‘ready’ when the time comes and avoids disappointment later on. I am always surprised how fast time goes between me first speaking to a client and then hearing from them again when they have been busy putting plans into action, whether it is increasing their savings for a deposit, reducing their outgoings or even securing a new higher paid job.
  • Remember your own bank might not be the right bank for you when it comes to a mortgage, ok being honest, sometimes it is the right bank too, but if you ask a good Whole of Market Mortgage Adviser for advice from the outset, they can include your current bank in their research and compare what they are willing to offer you against others. It may be that a different lender can offer you greater levels of borrowing, even if it is just that little bit extra that you need to secure the home that you are after. Another lender might also offer lower interest rate or fees, saving you valuable pounds and, in some cases, they might require a smaller deposit from you. Let a good Mortgage Adviser compare your options and give you the confidence in the right lender for your particular circumstances.
  • Don’t make any big changes to your circumstances without checking how they impact on your potential to borrow in the near future. When considering a change of job or a new financial commitment, check with your Mortgage Adviser first. It may be that you are a Self-Employed Sole Trader and looking to change to a Limited Company Director, or leave your job and become Self-Employed. These decisions can delay your plans to apply for a mortgage by several months or even years, if done at the wrong time.

 

So, plan early and if your goal is to own your first home or move on to the next bigger home in 6 or 12 months or even longer, speak to a good Mortgage Adviser and ask for a free initial assessment of your circumstances. I will always give an initial assessment to my clients for no charge and there is no expectation of how long a client should take in putting that plan into action. I build a relationship with my clients that they can trust and choose to come back to when they have more questions or are ready to move to the next stage of buying properties.

Next an important part of the homebuying process once you have been told that you can get a mortgage is the exciting part of looking for houses, this is also when you might find yourself dealing with Estate Agents for the first time in your life. So what can you expect?

Know that there are good, bad (and ugly) Estate Agents

No surprises there I know, and within any branch of estate agents there will be good or bad ones to deal with but I am talking about the ethics within an Estate Agency that influence how they treat you. Usually, where there is a chain, the ethics are similar in different branches and dictate the way they approach engaging with you as a potential buyer (or seller).As a potential buyer, some Estate Agents capitalise on your lack of knowledge and to cut a long story short, they make money out of you as a result. Whether it is implying you need to use their in-house mortgage adviser, or their preferred solicitor with reasons such as ‘it speeds things up’, ‘most people do’, ‘it is expected that you use ours’ this is not true! There is no need to use the mortgage adviser that the Estate Agent is recommending to you nor their solicitor. I say to my clients, why disclose your buying power with the people you intend to negotiate with?

Where it is being suggested that you use the solicitor that they recommend, while some may offer a good service, in the worst of examples, the solicitors in question are not even solicitors, but simply refer you to another solicitor, taking a referral fee in the process that often comes as a hidden cost to you.

In my experience, the good Estate Agents are often the smaller, privately owned local firms where you often get to deal directly with the owner as part of the sales negotiation. The owner has a vested interest in every potential sale that they are dealing with and they tend to be more transparent than the ‘Sales Negotiators’ in the bigger chains. There are lots of examples of Estate Agents who have adopted a self-serving approach to selling houses and this can leave you as a potential buyer feeling like a cheap porn in the process. Smaller agencies usually do not try any heavy-handed referrals to their mortgage adviser or preferred solicitor and in a lot of cases will only recommend one if you ask for their help.

I often see that first-time buyers or those looking at lower value properties are treated with less respect than those who already own a home or are looking at higher value properties and this is a real shame. I help my clients to be equipped for those encounters and conversations and offer additional support when it comes to making an offer. I also take a pro-active role in dealing with the Estate Agent once my client has had an offer accepted to give the Estate Agent and person selling their house (the ‘Vendor’) the confidence and transparency to know the Sale will be progressed. This can be a frustrating stage of the journey for Estate Agents and vendors once an offer is accepted in good faith and time wasters will often not fulfil their duties at this point, wasting valuable weeks in the process and messing everyone around. I help my clients AND the Estate Agents so no one has their time wasted.

So, a few of my tips for dealing with Estate Agents include:

  • Do your preparation before approaching an Estate Agent including finding your own Mortgage Adviser, someone who is on your side and ideally can support you in approaching Estate Agents, know what your financial borrowing potential is and don’t divulge this to your Estate Agent or you will give away your negotiating position.
  • Be ready for the Sales Tactics by the Estate Agent. Of course we understand the need for some of them in getting their client, the Vendor the best price for the poperty, but some cheap tactics are more than unecessary, from other viewers ‘accidentally’ turning up at the same time, to delaying coming back to you on your offer while they try to bump up other offers, so be be clued up to these techniques. The good Estate Agents will manage your expectations including coming back to you at the end of the day if the vendor needs more time to consider your offer. They appreciate that a night can seem a long time to be waiting to hear back. Don’t be frightened to withdraw your offer if you feel it is being used to bump up offers on more viewings. You can do so politely and express your interest in returning to make an offer when the other viewings have taken place.
  • Don’t feel under pressure to use their Mortgage Adviser or recommended solicitor. Remember they are recommending you this as they will be paid a referral fee and percentage of commission for each successful referral, it is a lucrative way of generating additional money for the Agency. Trust Pilot can be a good way of doing some research yourself as to the quality of the company that you are being recommended to. If the company doesn’t feature on Trust Pilot, there may be other ways to find out their reviews also.
  • Do find out more about the circumstances of the vendor, as well as the Estate Agent and vendor knowing your position when you are making an offer, it is reasonable to ask about theirs. It is just as important to the process for you to get a sense if the person selling the house (the ‘vendor’) and their circumstances, fill you with confidence and fit with your hopes for timings. Finding out how long a property has been on the market for, other offers being considered, other planned viewings and the position of the vendor such as have they bought a house already or will they be moving to new build (when is the expected completion date) and other factors that I talk about more in my blog ‘How to successfully negotiate buying a property’.
  • Don’t accept being treated badly by an Estate Agent the good Estate Agents respect the fact that even though their client is the person they are selling the house for, you are a potential client of theirs too. Whether it’s responding to your calls and offers and managing your expectations, a good Estate Agent will get these basics right. This is an area that I find some of the Estate Agents with a higher turnover of staff simply can’t compete with, it is likely that you will get a better service and more respect from the established small local agency. Be prepared to walk away from a deal if you feel you are not being treated fairly, there will be another house and a great Estate Agent just around the corner.

My final tips for buying your first home are:

Spend wisely and Budget – Not only will this help build up your savings for a deposit, it will help you to adopt positive lifelong spending habits. If there is one thing the last year – 2020 – has taught us, we never know what is around the corner, there is a balance to strike when we come out the other side with living life to the full, making new memories but not spending to excess. The latter often leads to borrowing on credit cards and eventually consolidating debts with personal loans that can quickly add up and at worst, lead to mismanagement of your debts that lead to bad credit. In the long term this can have a detrimental effect on your ability to get a mortgage and be a vicious cycle that you can’t get out of. Spending wisely does not mean you can’t buy the nice outfit, or have a night out with your friends, it just means you have to know where your compromises are and how you can enjoy all of the things that make you feel happy while being motivated to achieve your end goal of buying your first home.

Choose the right person to buy a home with – Getting a mortgage and buying a home is an expensive process, it is a long-term commitment, the decision of choosing who you should be doing it with should not be taken lightly. By taking a joint mortgage out with someone, you are creating a financial association between the two of you that could take many years to undo if it goes wrong. With the best of intentions, the process of buying a home and living together comes with great stress that can test any relationship or friendship. The process of undoing the financial tie later down the line if all goes wrong, can leave a real mess behind, someone can be stuck on a mortgage for many years after they have wanted to get out of it. It is not an easy commitment to walk away from and can be expensive to repay a mortgage early, with an early repayment charge, solicitor fees and estate agency fees. When you become party to a mortgage you are jointly responsible for keeping up repayments on your mortgage, you can’t elect to only pay half or less if either of you enter into financial difficulties unless the other party is willing to step in and pay more. Failing to keep up repayments on the mortgage, whoever is responsible, has a detrimental impact on both parties and your home can be repossessed. You might be prevented from moving on in your life and getting a mortgage with someone else in the future.

Being supported through the home buying process can save you hundreds if not, thousands of pounds, particularly over the life of a mortgage. Getting a good Mortgage Adviser on your side can be a relationship for life that will add value and confidence each and every time your mortgage needs to be reviewed or your aspirations change. If you would like to see how a member of The Money Guardian team can help you, contact a member of our team at info@themoneyguardian.co.uk.

Melanie Eastwood is Director and Mortgage Adviser at The Money Guardian, founding the company in 2017 after a long and successful career in Financial Services. She is passionate about helping people achieving their goals when it comes to owning property or other financial aspirations. An activist at heart, Melanie tries to make a difference in her community where time allows and, in the past, has served as a local councillor, campaigning against cuts to the NHS and defending local green spaces, she has previously been a foster carer and is also the driving force behind an initiative working with local charities and school children planting trees in their town. The Money Guardian won the NatWest Hero Award in 2021 for its service to customers and the community and has featured in The Times as Vouched For Top Rated Mortgage Advisers for 3 consecutive years.


Melanie Eastwood

Melanie established The Money Guardian to offer an alternative to the overly complicated world of financial planning. As Melanie explains, “I love it when clients tell us how good they feel knowing their finances are sorted. It’s important to us that they’re able to walk through the big decisions in life feeling completely confident.”

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Mortgages for Contract Workers

Mortgages for Contract Workers

If you are a contract worker you might be feeling uncertain about how banks and building societies will view the temporary nature of your contract when it comes to getting a mortgage. You might have started making enquiries with your own bank and be confused or disappointed with the outcome. You might be at the peak of your earnings potential in a highly rewarding job but feeling out on a limb when it comes to your financial plans and owning a home or moving up the property ladder.

As if getting a mortgage isn’t daunting enough without the added uncertainty about what you tell your bank and how they will assess you for a mortgage. You might be worried that you will be looked upon less favourably than someone in a full time and permanent roll and this can sometimes be disheartening when your colleagues at work are buying property around you with their permanent contracts.

Having been a contract worker myself during my financial services career before founding The Money Guardian I understand the wrestle with pursuing your career goals as a contract worker while needing to make firm plans when it comes to buying property. Particularly as being a contract worker with looming end dates of contracts can make it difficult to meet the requirements for signing a new lease if you find yourself needing to move to a new rented house. It can be a constant stress in the back of your mind.

You will be pleased to know that getting a mortgage as a Contract Worker, with the right support and advice from a Mortgage Adviser with experience in mortgages for Contract Workers can be both achievable and stress free.

There are differences between lenders in terms of how they assess your income as a contract worker from zero hours contracts to fixed term contracts, IT contracts, professional contracts, CIS workers, contracts through umbrella companies, rolling contracts and locum professionals. The key to success is usually helped along by experience in contract work and continuous employment in the same line of work as well as the remaining term of the contract. First Time contracts are not ideal from a mortgage lender perspective though a few will consider, particularly where there is a previous continuous history of employment in the same line of work. My motto at The Money Guardian is if anyone can get you the positive outcome, we can, and our kind words from clients prove that.

Trying to navigate the differences between lenders on your own as a Contract Worker can be time consuming and at times disheartening, you might even put off moving altogether. Speaking to a Whole of Market, independent Mortgage Adviser experienced in Contract Worker Mortgages at the start of your journey, can help you to secure the best mortgage for your circumstances quicker. This can make all the difference to securing your dream home as you will be able to access mortgages offering greater levels of borrowing, with lower deposits than you might have thought possible yourself.

The key to having a successful and enjoyable career in contract work and pursuing your aspirations to buy a home, is getting great advice from a Mortgage Adviser experienced in contract work, however early in your journey you are. I find it highly rewarding to work alongside a client for as long as it takes to make their financial goals a reality and get them in the home that their hard work deserves. Contract work doesn’t have to be a barrier to owning a home, whether alone or with a growing family, it’s never too early to start speaking to a Mortgage Adviser.

Your home is at risk of repossession if you do not keep with the repayments on your mortgage.

Melanie Eastwood is Director and Mortgage Adviser at The Money Guardian, founding the company in 2017 after a long and successful career in Financial Services. She is passionate about helping people achieving their goals when it comes to owning property or other financial aspirations. An activist at heart, Melanie tries to make a difference in her community where time allows and, in the past, has served as a local councillor, campaigning against cuts to the NHS and defending local green spaces, she has previously been a foster carer and is also the driving force behind an initiative working with local charities and school children planting trees in their town. The Money Guardian won the NatWest Hero Award in 2021 for its service to customers and the community, and has featured in The Times as Vouched For Top Rated Mortgage Advisers for 3 consecutive years.


Melanie Eastwood

Melanie established The Money Guardian to offer an alternative to the overly complicated world of financial planning. As Melanie explains, “I love it when clients tell us how good they feel knowing their finances are sorted. It’s important to us that they’re able to walk through the big decisions in life feeling completely confident.”

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5 Reasons You Should Seek Equity Release Advice

5 Reasons You Should Seek Equity Release Advice

If you’re thinking about equity release, there are few things you should consider before you apply. Equity release is a useful way to free up cash from your home in retirement. You might need to meet increasing living costs. You might be looking at investing. Or you might want to help your loved ones get on the property ladder. Whatever your motivation, you should seek equity release advice from a specialist adviser first. Here are five reasons why:

#1 They’ll explain the options available to you.

Due to rising demand, the number of equity release products on the market has increased dramatically in recent years. With specialist equity release advice, you can find specific products that suit your needs. Equity release products are split into two broad categories: lifetime mortgages and home-reversion plans. A lifetime mortgage comes with a fixed interest rate. Unlike a typical repayment mortgage, you don’t pay it off in regular instalments. Instead, your debt is rolled up. This means interest is calculated on an ever-increasing total. You only pay off the lifetime mortgage when you come to sell your property or move into long-term care. A home-reversion plan means an equity release company buys a fixed share of your property from you but below the market value. This is because the company is taking a risk on house prices. They also don’t know when they’ll get their money back as the property wouldn’t be sold until you die or move into care. They make money by waiting for the value of their share to increase over time. When you seek equity release advice, your adviser will explain the difference between products and recommend the best option for you.

#2 They’ll save you money
Equity release advice can help you find a mortgage with the most competitive equity release interest rate and the lowest charges. Some products allow you to make monthly or ad-hoc interest repayments to keep the total debt down. Some start out with you committing to pay the interest and then you can switch to a roll-up basis in the future. You can also choose a drawdown product that gives you access to the funds in stages so you only pay interest on the equity you’ve actually released. A specialist equity release adviser can suggest ways to cut your costs and find products with the right features for you.

#3 They’ll make you aware of the costs
With many equity release mortgage products, the interest rolls up. This means the loan is only repaid through the sale of your property when you die or move into long-term care. The total you owe can grow quickly because of the compound interest. If you live for many years after taking out the mortgage, you could find the debt eventually exceeds the value of your property. This is called negative equity. To avoid negative equity, you must take out a plan with a lender approved by the Equity Release Council. These lenders offer a No Negative Equity Guarantee. This will ensure you never owe more than your home is worth. An equity release adviser will show you which products protect your estate from additional costs. They will also provide a detailed projection showing how much the plan will cost over your lifetime. That way, you can see the financial implications of any decision you make.

 

#4 They’ll help you protect your family’s inheritance
If you choose to release equity, you will have less to pass on to your family. Typically, your home will be sold to repay the mortgage. Depending on how much interest has accrued, there may not be much left over. An equity release adviser will explain how to maximise the value of your estate. For example, certain equity release products allow you to ring-fence some of the equity in your home as a guaranteed inheritance. You should discuss your plans with your family before taking out an equity release product. Your family may prefer to help you financially to preserve their future inheritance.

 

#5 They’ll make sure equity release is right for you
With equity release, it’s important to understand your current needs and your future wants. Using a portion of your property wealth now may reduce the value of your estate in time. This could also affect your entitlement to any means-tested benefits. Equity release advisers will consider all of your options before recommending equity release. You may prefer to downsize. Or use another form of borrowing, such as re-mortgaging your home or
getting help from your family.

 

— — — — — —
Is equity release right for you?
The Money Guardian can help you decide. Our expert advisers will be glad to guide you through the process and offer no-obligation recommendations. If you do decide to go ahead, we can handle the application and make sure the whole process is as easy as possible for you. Equity release may involve a lifetime mortgage, which is secured against your property. Or a home reversion-plan, which requires the sale of your property for a discounted price. To understand the features and risks, ask for a personalised
illustration.


Dominic Brierley

Dominic joined The Money Guardian as a senior partner. He brings a wealth of experience from 30 years in financial services.

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Mortgage Guide

Mortgage Guide

A mortgage is probably the biggest financial commitment you’ll ever make, and you may have little or no previous experience of applying for one.

It’s not easy to compare different mortgage deals, and the decisions you make now could affect you for years to come.

So we’ve put together this guide to get you started and hopefully make the process a great deal easier for you. When you need advice, we’re here for you, every step of the way.

Whether you’re a first-time buyer or have bought a home before, this guide will help you find the right mortgage for you and stay in control of it in future.

We’ll show you how to:

  • Prepare for the process
  • Understand the different types of mortgage
  • Secure the best deal
  • Stay on top of mortgage fees
  • Move to a new mortgage

Preparing for your mortgage application

If you want to secure your dream home, then you need to do your homework.

Effectively you need to convince a lender that they should lend you a large sum of money, and that you’ll be able to pay this back.

The stronger your application, the better the deal you may be offered. The better your mortgage deal, the more money you may save in the long-term. But a weaker application may lead to a more expensive deal, or be refused outright.

The best approach is to do everything you can to try and succeed first time. Asking us help you to secure a mortgage is one of the best and easiest ways to ensure that you succeed first time.

Tips to get mortgage prepared

Save the biggest deposit you can

With a larger deposit you can secure a lower interest rate and also won’t have to borrow as much. Over time, this can save you a huge

amount of money. Remember to leave some money aside for moving costs, such as stamp duty, conveyancing and insurance.

Complete a budget planner

Write down your regular monthly outgoings like rent, mortgage payments, utility bills etc. This will be taken into account when lenders assess you for affordability so it important to know where your money goes, you might even decide to make changes to your spending habits when you see it written down. If you don’t have a budget planner or know where to start, give us a call and we’ll help you.

Check your credit score

You need a good history of borrowing and repaying money on time. Register with a credit scoring company to see what lenders will see and use it to manage your credit profile on an ongoing basis. If you don’t already, start using a credit card and pay off the balance

in full each month. Also cancel any credit cards or store cards you don’t use. You can also give us a call to find out other ways to boost your credit score.

Reduce other liabilities

Pay down any other debts as far as possible, and cut back non-essential spending such as expensive holidays, luxury items or costly

hobbies. Avoid gambling in the months before your application and steer completely clear of payday loans.

Gather your paperwork

When applying for your mortgage you will need to present three recent payslips and/or bank statements. If you’re self-employed, you’ll generally need to submit at least two years of recent accounts

instead of payslips. Also have your monthly spending calculations ready (see above) as your lender will ask for this information.

Use us as your mortgage broker

We have the knowledge and experience to find you the best mortgage deal available on the market, based entirely on your unique circumstances. Before we recommend a mortgage to you, we’ll have compared it against hundreds of others out there to make sure it’s the right one for you and, we’ll deal with the lender’s application process for you and deal with all the paperwork.

Types of mortgage

The mortgage you need to buy a home is called a residential mortgage. There are three main types of residential mortgage: repayment, interest-only and part & part.

Repayment mortgage

Your monthly payments will pay back the whole loan, including interest, over the mortgage term. This means that when the mortgage term is over, the borrowed money is completely repaid.

Interest-only

Your monthly payments will pay only the interest on the loan (so will be smaller than with a repayment mortgage). However, at the end of the mortgage term you will have to pay back the original amount you borrowed. You might do this by using other savings or investments, or by selling the property.

Part & Part

Your mortgage may be a mixture of repayment and interest-only, so that a portion of the loan is paid off by the end of the mortgage term but an amount remains outstanding that needs to be settled at the end.

Finding the right deal

When you take out a mortgage, the number one question is usually, ‘How much will I have to pay each month?’ The answer depends of course on how much you borrow – but also on what mortgage deal you have.

There are a variety of different kinds of mortgage deal, including fixed rate, tracker, capped, discounted, variable and offset.

Choosing the right type of mortgage is really important so it’s important to understand the pros and cons of each kind of deal. That’s where we can help you by explaining each type so that you understand the difference and we discuss if each meets your needs.

How do mortgage rates affect me?

A mortgage deal is the agreement you have with your lender, covering the initial rate of interest you will pay, and how long you’ll pay this rate for. Remember that a deal may not last for the whole period of your mortgage – most fixed-rate deals last between two and five years, though a few do run for longer.

The risk when taking out any mortgage is that interest rates may rise in the future, increasing your monthly repayments potentially until you can no longer afford them.

In the next section we’ll give you more information about different mortgage deals.

Comparing different types of mortgage deals

Fixed rate

Suitability: First-time buyers, people who like to know where they stand financially

With a fixed-rate mortgage, you know exactly how much interest you will pay for the length of the deal period. The downside is that if mortgage rates fall, you will be stuck paying the fixed rate you agreed.

Once a fixed-rate deal ends, you’ll be switched to the lender’s  Standard Variable Rate (SVR), which may be higher and less predictable. However, you may then be able to remortgage to a new deal.

Comparing different types of mortgage deals

Tracker rate

Suitability: Those who want lower interest than a fixed-rate, but could afford to pay more if necessary

A tracker mortgage moves in line with an external interest rate (usually the Bank of England base rate), and may be set slightly higher or lower. The main advantage is that it falls when the tracked rate falls. The disadvantage could be that there is no limit to how high it can go. There are limits that can be placed by lenders on how low and high rates can go before stopping, we can explain that in more detail if you would like.

Comparing different types of mortgage deals

Discounted rate

Suitable for: Those looking for the lowest rates, but who could afford to pay more and can cope with unpredictability

Discount mortgages may offer some of the lowest rates available, so can be very attractive initially. However, the discounted period is limited, and the mortgage tracks the lender’s SVR rather than the base rate. This can mean rate rises are higher and far less predictable.

Comparing different types of mortgage deals

Variable rate

Suitable for: Those who could afford to pay a lot more if necessary, or those unable to obtain any other kind of deal

Variable mortgages follow the lender’s SVR, which may rise even if the Bank of England’s base rate does not. Initially interest rates may be affordable, but be aware that these can rise significantly and without warning.

Mortgage fees

When taking out a mortgage you will have to pay fees – ranging from quite small to very substantial, depending on the deal being offered.

You may also have to pay fees when you leave your current mortgage, especially if you pay it off early or remortgage.

Fees when setting up your mortgage include

Arrangement fee – this is one of the variables . Some mortgages have no arrangement fee, while others run to a few thousand pounds. Some buyers add this fee to the mortgage if they can’t pay it up front – but if you do this, you’ll pay more over time due to interest.

Booking fee – when you agree a deal, you sometimes have to pay a fee upfront to secure it. Expect this to be between £100 and £200.

Valuation fees – this is a standard check your lender will carry out on the property to make sure it’s worth the price you are paying for

  1. The cost of this is about £300 although some mortgage deals come with a free valuation.

Note that although this valuation is a type of survey, you should not treat this as a substitute for hiring your own surveyor to check the property thoroughly for any faults or defects.

Higher lending charge – this often applies to high loan-to-value mortgages and can be around 1.5% of the mortgage value. Another reason to try and raise a larger deposit!

Fees when paying off your mortgage (or remortgaging)

When taking out a mortgage, it’s important to think ahead if you pay it off or remortgage (as this may be in just a few years’ time). Large Early Repayment Charges (ERCs) can keep you in a poor-value mortgage, so be sure to factor these in when assessing the pros and cons of fixed rate deals.

Early Repayment Charges

Very common on mortgages today,also known as a redemption penalty, this can be very expensive, up to 5 per cent of the mortgage value (that’s £7,500 on a £150,000 mortgage).

Exit fee

Usually small, you will sometimes have to pay these at end of the deal. Still remember to find out what they will be, and factor them in.

You shouldn’t treat your mortgage as a one-off purchase. Rather, it’s an ongoing financial arrangement that needs regular attention. The terms of the mortgage deal you are offered may only stay in place for a few years, after which they may change.

This can result in higher monthly repayments. To ensure that you can still afford these repayments – and also keep them as low as possible – you will probably need to seek out new mortgage deals every few years.

Equally, your circumstances may improve, enabling you potentially to secure a better mortgage deal. This is another reason to consider remortgaging.

This is something we will help you to do throughout your mortgage lifetime if you sign up as a client of ours, we pride ourselves on helping our clients make their money go as far as possible.

As you can see, there are plenty of factors to consider when looking for the best mortgage deal. Mistakes are easy to make, and can be very costly and hard to put right later on.

For this reason, we strongly recommend you ask us to help you with your mortgage application.

After getting to know you better we will explain all your options to you, help you weigh up the pros and cons and based on everything you tell us find you a mortgage deal that is absolutely right for you and your circumstances.

Even more importantly, we will search the whole of the market to find the best deal for you, including many that are not available on the open market or on price comparison sites.

Given the length of a typical mortgage term, this can save you many thousands of pounds overall.

Finally, and most importantly, using us as your mortgage adviser will help to maximise your chances of your application being accepted, and quickly – so you won’t have to miss out on your dream home.

Thanks for reading, we hope you’ve found this useful and remember, help with securing the best mortgage deal is only a few clicks or a phone call away.

Dominic Brierley

Dominic joined The Money Guardian as a senior partner. He brings a wealth of experience from 30 years in financial services.

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Guide to prices

Guide to prices

At The Money Guardian we believe that financial planning should be accessible to everyone whatever they earn, and so we work hard to ensure you get great value from fees that are reasonable and fair. Wherever we can, we offset our costs with any commission paid by the financial product provider. And we will always tell you about any fees before completing any work on your behalf.

Insurance

No charge.
Helping you find the right insurance for your situation is our pleasure, and it won’t cost you anything. Insurance providers offer a commission payment as a thank you for the introduction, and this is sufficient to cover our costs.

Mortgages

In most cases we charge an application fee of £475 for mortgages, prior to getting to this point in the mortgage process, we provide lots of free guidance and research.
The remaining cost of arranging your mortgage is covered by the lender as a commission payment, which allows us to keep our fees to a minimum.
If your case is more complicated, these fees may be subject to change, but we’ll always agree this with you first before going any further.

Will Writing

A standard Single Will costs £245
A Mirror Will, for you and your partner, costs £325.

In most cases the standard priced Wills are enough. As well as the time involved in understanding your requirements, coaching you to make some important decisions and producing your Will, this includes:

  • The naming of your partner/spouse and all children in Wills as required.
  • Up to 2 named Guardians.
  • Up to 4 named Executors.
  • Partner/Spouse and all children as beneficaries.
  • 1 Draft Will for checking.
  • Final Will for signing, and guidance for signing.
  • Commentary to help you to understand your Will now and in the future.
  • 2 Additional Copies of Wills for your safe keeping.
  • A guide to completing your Letter of Wishes (available to download)
  • Storage for life with your own registered key card that you can access at any time.
  • Registration of your Will online at the National Will Database.

If you require any additional people or gifts to be named these will be charged at £5 each. When producing the draft will, if you require any changes to your initial requirements, these will be charged at £10 per change.
If your Will is more complicated than a standard Will and we need to charge extra, we will explain these charges to you before completing any work, giving you the chance to agree to the new price.