In this section you'll find answers to some of the questions that our customers typically ask and some mortgage terminology explained.
What documents and information will I need for my mortgage appointment?
Print off our Pre-appointment checklist which has a full list of the documentation and information you will need to provide to your mortgage adviser so that you get accurate advice.
How do the mortgage rules introduced April 2014 affect me if I want to get on the housing ladder?
The more stringent lending requirements don't just cover affordability checks - you also need to be able to demonstrate to the lender that mortgage repayments would be met if your circumstances change in the future. This might include starting a family, changing jobs or retiring.
How much more than my annual salary can I borrow?
Lenders look at how much disposable income you have after taking into account your outgoings and how resilient you are to unexpected income shocks or a rise in interest rates. It’s a good idea to work with a broker before property hunting so you know how much you might be able to borrow. Do take a look at our how much can I borrow calculator or contact us to speak with an adviser. The actual amount that you are allowed to borrow will differ between lenders and each lender will carry out their own affordability checks.
How do I access the best tiers of interest rates?
Higher deposits, which are often 20% to 40% of the property value, will provide access to the best rates available on the market. All applications are subject to underwriting, lender criteria and property assessment as well as other checks.
What charges can I expect to pay for mortgage advice and arrangement service?
Unlike many brokers, we don’t have any upfront broker fees. Our fee is a success only fee due on the legal completion of your mortgage. Initial consultations are free of charge. A typical fee of £449 may be charged on completion. The fee is dependent on your circumstances and will not exceed 0.5% of the loan amount. Blackstone Financial Solutions do not charge a fee if your property purchase falls through. Please talk to us about your individual requirements and ask for a quotation.
What about legal fees, stamp duty and other home buying costs?
It's worth remembering that you will have solicitor and valuer/surveyor fees. Please obtain an estimate based on the property you have in mind. Homes valued at more than £125,000 are subject to Stamp Duty. To calculate yours, please see our stamp duty calculator which makes it very easy to work out how much stamp duty you will need to pay on a new property purchase.
What can I do to enhance my chances of getting a mortgage?
If you want to boost the chance of your mortgage application being accepted you should prepare well in advance. As outgoings as well as income are all part of the mix, you should do all you can to reduce and ideally clear any outstanding credit card, car finance or loan debts. Take a look at our make sure you’re prepared and twelve tips for mortgage success section. Speak to an adviser at Blackstone for advice and the best deals for your circumstances.
What should I know about interest rates?
No one can say exactly when or if interest rates will rise. The general expectation is that interest rates will rise gradually over the next few years. The UK Base Rate is set by the Bank of England based on economic changes. You can follow economic news and the Bank of England monthly announcements regarding the Bank of England Base Rate in the financial section of a quality newspaper. However, there is no certainty that the types of low interest rates we see today will be accessible in the future. So if you are considering a property purchase, now is a very good time to look at your options.
What can I do now to prepare for any interest rate rise?
If you can make any cutbacks to your spending or make overpayments on your mortgage now, these may help you to build up savings that you can use to cover any future increase in monthly payments should interest rates rise. Ask your adviser about fixed rate mortgage options for payment certainty and to shield yourself against any rate rises.
What are the different types of mortgage?
You can read about the different types of mortgage for a main residence in our residential mortgages section. There’s more detailed information about mortgages in our free guide, “A helping hand guide to buying, re-mortgaging and protecting your home”.
Can I benefit from Re-mortgaging?
First check your current mortgage product details. Contact your current lender and ask for the following details, which will be needed by your mortgage adviser:
a. The current interest rate, monthly repayment & loan balance outstanding.
b. Type: Is it a fix, discount, tracker or on an SVR?
c. Deal deadline: If it's a short-term deal (e.g. a 2yr fix), when does it end?
d. Term: How long is the remaining mortgage term, i.e. when will the mortgage term fully finish (e.g. 20yrs)?
e. Penalties: Are there any early-repayment charges/penalties? If so how much and when will these end?
You also need to let us know the realistic value of your home as this will affect the loan-to-value (LTV): The proportion of your home's current value you are borrowing. e.g. £225,000 outstanding on a £300,000 property is a 75% LTV. The lower the LTV, the better deal you can get. So if your home has increased in value you may gain.
Everyone should check, but not everyone can save by re-mortgaging (changing lender to move to a better deal). Please contact us to see how we can help. Mortgage rates are at historic lows and the above basic information will allow us to check if a better deal is available.
Should I get a credit report?
A lender will use one of three credit agencies to check how reliable you are before offering you a mortgage; these are Call Credit, Equifax and Experian. It is worth getting your Statutory Report from all three as they can vary, although this should be rare. Please see our make sure you’re prepared section.
Remember your Blackstone adviser is on hand to answer any questions or concerns you may have and provide advice based on your individual circumstances. Please contact us now for a free, no-obligation consultation.
Most lenders charge an arrangement or application fee for a mortgage. Some lenders will allow you to add this to the mortgage and the fee varies depending on the lender and the mortgage product chosen.
With a capped-rate mortgage, your payments are variable and often linked to a base rate, however, they are fixed not to go above a certain level, known as the 'ceiling' or 'cap'. These kinds of mortgage are useful if you want the security of knowing that your payments can't rise above a certain level and you still benefit if they fall.
This is the legal process involved when buying or selling property. Most people use a solicitor or a licensed conveyancer when buying or selling a property because there’s quite a lot of detailed work to do when transferring the ownership of a property. Lenders will only use certain solicitors from a panel. We know which ones are on the panel and can recommend cost effective solicitors.
DECISION IN PRINCIPLE
Also referred to as an Agreement in Principle, this informs the borrower if, in principle, a lender will provide money and in what amount.
These are the fees your solicitor has to pay on your behalf (e.g. Stamp Duty, Land Registry fees and search fees) which will be added to your conveyancing bill from the solicitor on completion of the buying or selling of a property.
A discounted rate mortgage offers you reduced repayments for a given term. This interest rate is discounted from the published lender standard variable rate, for an agreed period from the start of the mortgage. The standard rate can go up and down, but the discount amount remains fixed during the agreed period.
EARLY REPAYMENT CHARGE (ERC)
This is a charge that you may have to pay if you want to repay all or part of your mortgage before the end of a set period. Some charges may apply only for as long as the set period lasts. An ERC may not always apply and will be dependent on your terms and conditions. It’s also possible to choose a product with no ERC’s however the product interest rate charged is usually higher. The ERC will be shown on a Mortgage Key Facts illustration which is provided prior to arranging a mortgage and your mortgage offer.
The difference between the amount you owe on your mortgage and the current value of your property. For example if your home is worth £350,000 and the mortgage on your property is £200,000 your equity would be £150,000.
EXCHANGE OF CONTRACTS
In England and Wales, the swapping of contracts between a buyer's and seller's conveyancers at which point the buyer should take out buildings insurance on the property. Once contracts are exchanged both parties are legally bound to the transaction.
A rate of interest guaranteed not to change over a fixed period of time.
Some lenders offer arrangements that include the cost of completing the legal work involved in arranging a mortgage and buying a home. These arrangements vary but they all reduce the amount you’ll need to pay at the outset.
When the seller, having already accepted an offer, accepts another higher offer from someone else, before contracts are exchanged.
A person who promises they will pay the borrower's debt, usually if the borrower fails to.
This is a more detailed report that a surveyor completes for you. There’s an important difference between a basic valuation report and a homebuyer’s report. The valuation report belongs to the lender and the valuer completes the report for them. With a homebuyer’s report, the surveyor works for you and they’re responsible to you if they fail to spot things. Whilst this costs more than a basic valuation, you should consider asking for a homebuyer’s report as it will give you a lot more information about your property. It’s particularly useful if you’re buying an older property. Your lender will normally use the homebuyer’s report to help them decide whether to lend on your property, so you won’t normally need more than one report. Your lender can arrange this. Please ask us for details.
INTEREST ONLY MORTGAGE
You only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce. With this type of mortgage you need to make arrangements to repay the balance at the end of the mortgage term.
The amount of interest paid or charged (usually given as a percentage).
Usually a solicitor or licensed conveyancer needs to be appointed to deal with the legal aspects of purchasing a property which will incur costs. You should ask for an estimate of these costs before you instruct the legal expert.
A loan taken out to help purchase a house. The mortgage is secured against the property.
This is the formal document approving the mortgage you have requested. Issued by a lender once your application has been fully agreed and all checks such as a valuation and confirmation of your income details have been carried out.
Monthly repayments to a mortgage can be increased, resulting in the mortgage being repaid before the end of the mortgage term. The overpayments flexibility varies from lender to lender and the product chosen.
An annual summary of all your payslips. Your employer gives you one at the end of every tax year (if you still work for the employer). Keep it safe.
LUMP SUM PAYMENTS
One-off payments, on top of your regular repayments, that can be used to pay off your mortgage early – if your lender allows you to. With some mortgages there may be an early repayment charge associated with making overpayments above a given percentage.
Some lenders let you move your mortgage to a new property when you move house subject to underwriting and conditions.
A statement from your current lender on how much you need to pay them to close your mortgage.
This is the term used when moving your mortgage from one lender to another without actually moving house. You may do this to raise capital, change the mortgage term or type and also to potentially reduce your outgoings. This might be possible by switching to another mortgage product with the same lender or by switching your mortgage to a competitor.
Your monthly payments gradually pay off your mortgage as well as the interest.
STANDARD VARIABLE RATE (SVR)
The Standard Variable Mortgage Rate is the rate you'll usually automatically switch to at the end of your deal’s initial period unless agreed or stated otherwise. At that time, it could be higher or lower than the rate you will have been paying and may vary over the remaining term of your mortgage. Most mortgage lenders have a published standard variable rate of interest.
The length of time over which you agree to pay back your mortgage is often referred to as the 'mortgage term'. Increasing the number of years you pay the mortgage off over will lower your payments but the downside of this is that you will pay more for the mortgage in the long run.
The period of time you would need to remain on certain mortgage terms to avoid an early repayment charge.
This is a variable rate mortgage where the interest rate is linked directly to the Bank of England Base Rate. Therefore when the Base Rate changes, the rate on your tracker mortgage fluctuates in line with the base rate.
UNDERPAYMENTS AND PAYMENT HOLIDAYS
Some mortgages allow you to reduce the amount you pay each month, or to stop making monthly payments, if you’ve previously overpaid. Lenders only normally allow you to make underpayments or take payment holidays for a limited period. This can be useful if your income falls for a period of time. In both cases you’ll be paying less than the normal monthly payment so the amount of your mortgage will increase.
It is a legal requirement that the lender has the property valued to ensure that the property is an acceptable security. The mortgage lender`s valuer will need to inspect and value the property. The cost, if any, of this valuation depends upon which lender you choose and the value of the property. Your lender will use this report to help them decide whether they’ll lend you the amount of money you need to buy your property.
An interest rate you pay on your loan or mortgage which rises and falls according to a specific index – such as the base rate set by the Bank of England.
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