One of the more frequently encountered questions we hear from prospective first time buyers in Lincoln, is them wondering how much their mortgage process is going to cost them.
To answer this, we have compiled a short list of all the fees you can expect to pay when you are looking to purchase a new home, and when they will become payable.
This will only apply if you are selling your home. With a surge in popularity of online estate agencies, you can be looking at the mid-to-low hundreds for a standard website listing.
That being said, for a more localised service, you could be looking at a fee around 1-2% of the property price.
Your mortgage lender will need you to have a valuation carried out on the property you are purchasing to ensure that the property is worth the amount you are looking to borrow from them.
Prices for a property survey can vary anywhere from nowhere (for a basic valuation with some lenders) up to several hundred pounds for a much more in-depth Home Buyers’ Report, maybe even more than that for a Full Building Survey.
The key to working around the cost, is that you always have an element of choice in the level of detail your survey goes into, with your decision depending on the age and property type, as well as any concerns you may have.
Sometimes you may have a product with a cheaper rate, but the benefit can be outweighed by the payable arrangement fee to the mortgage lender.
This cost doesn’t exist with every mortgage lender, so you may not have to pay anything at all, though in some cases it could be upwards of 3 figures, depending on the mortgage lender in question.
You may find that these costs can be paid upfront, though you may also be able to add these onto the balance of your mortgage. It is worth noting though, that this would mean incurring further interest charges.
As a team of expert mortgage advisors in Lincoln, helping with first time buyers and people moving home in Lincoln alike, we are able to compare deals for you in order to find a suitable one for your needs.
You will need to hire the services of a qualified solicitor. The cost of this service can be quoted very differently depending on the firm you are speaking to. An estimation for a straight forward purchase with a local company is likely within the mid-hundreds.
You will need to give the property address, whether it’s leasehold or freehold and how much you are purchasing it for, in order to receive accurate quotations.
The key points to cover when asking for a quote are:
In addition to the costs and disbursements involved in paying your solicitor, depending on your circumstances, you may also be required to pay this tax which the solicitor collects on completion of the property purchase.
This doesn’t apply to everyone. The government have been known to change the criteria on Stamp Duty, with the latest change being in favour of first time buyers in Lincoln. The latest Stamp Duty updates can be found here.
A mortgage broker in Lincoln will typically charge for their service. The cost of this will vary from company to company.
In our case, your dedicated mortgage advisor in Lincoln will discuss this in more detail with you during your free initial mortgage appointment.
We would definitely recommend choosing a local company such as ourselves, rather than a big organisation. They are more likely only to charge on completion, as opposed to any application fees and additional costs that could be incurred.
Of course if you are moving home in Lincoln, the cost of doing so in regard to the actual moving aspect, can be quite costly. This will depend on the level of service you are looking for.
Hiring your own van and doing the work yourself can be quite cheap. Opting for a local man with a van can be only slightly more than hiring your own van. A professional van service can be in the high hundreds, early thousands.
To further discuss the costs involved in buying a home, including anything we may have missed, book your free mortgage appointment today. A trusted mortgage advisor in Lincoln will be more than happy to discuss this with you.
If you’ve decided to stay in your current property instead of moving, then you should probably look to Remortgaging. Remortgages are where you switch to better rates on your current deal. As experienced Mortgage Advisors in Lincoln, this is something we may be able to help with.
The banks rely on their customers sticking with what they know and not shopping around. It’s not uncommon for there to be cheaper offers for you elsewhere, all you have to do is have a look at a price comparison website or contact a mortgage broker to compare deals on your behalf.
If you’ve had your mortgage for quite a long time, then you could be on a low Bank of England tracker deal. You may even be paying less than 1%. If this explains your situation, you might be thinking about leaving that mortgage where it is for now. However, your payments will increase when the base rate eventually goes up.
Subject to the usual affordability checks and assuming you have got equity in your property, then it is entirely possible to increase your mortgage for potential home improvements.
This can be a good investment if you use the money wisely. Often, we see customers do this to facilitate building an extension or converting their loft into an additional room.
You can borrow extra funds for most legal purposes, examples of this would be:
Remember by increasing your mortgage you will end up paying back more interest, so you need to be sure you are doing this for the right reasons.
It can be a bad idea to add debt to your mortgage, as you will end up paying back more interest overall by extending the term of your debts to make the payments lower.
You are also taking debt, which is not secured, and securing it on your home. This puts you at risk of repossession if you cannot afford repayments. Consolidating debts that you can afford or credit cards that are at 0% interest will almost certainly be the wrong thing to do.
However, if you need to reduce your monthly outgoings to avoid missing payments, (which could damage your credit rating), then it might be a possible option.
Often your current Lender will offer you a new deal to stay with them, they may call this a “Product Transfer” or “Retention” product. This isn’t necessarily guaranteed and sometimes you have to contact your provider directly to see what is available.
Some lenders allow you to make a product switch online without taking advice or providing further information/documentation.
Whilst it may be easier to stay with the same provider and switch products rather than put forward a new application to a different lender, you may find that you could save a lot of money by doing so.
Also, many Banks still offer preferential rates to new borrowers over existing ones. One day, Lenders will get their act together and realise that taking a more ethical approach would breed loyalty amongst their customers.
How having your mortgage agreed at the outset can help you negotiate on an asking price
A Mortgage Agreement in Principle is essentially a document to prove you have a mortgage in place. It is something we obtain for all of our clients and almost all Lenders offer them. It also proves that you are credit-worthy because for the Agreement certificate to be issued you must pass the lenders credit score.
A Mortgage Agreement in Principle is not a guarantee that you will definitely get a mortgage as your full application will require further background checks (such as evidence of income) and a satisfactory valuation of the property itself.
However, it is a good idea to get one done at the earliest opportunity for the following reasons:
1. Negotiating Power
2. Avoid Disappointment
3. Knowing your Limits
When you are ready to make an offer on a new home most Estate Agents will undertake due diligence and ask you to produce evidence that you have funds available to complete the purchase. This will take the form of bank statements and also an Agreement in Principle certificate that we can provide for you. Once you have provided them with all this documentation the Estate Agent will then normally stop marketing the property and put a “Sold” or “Sale Agreed” board up.
If you already have a Mortgage agreed before you make an offer you are making yourself appear as an attractive proposition as this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and done something about it. This might persuade a seller to accept an offer you put forward on their property underneath the asking price.
When it comes to buying a house some clients have always “put the cart before the horse”, that is to say they go full steam ahead and make an offer on a property without first checking that they are actually in a financial position to proceed. This can lead to terrible disappointment if the mortgage application fails because by that time they have really got their heart set on their new family home. This disappointment can be avoided by contacting us at an early stage because sometimes there are things that are causing a mortgage to decline that can be overcome given a little time.
For example, there may be a niggling issue on your credit report, perhaps a disputed mobile phone bill which can be easily rectified. Maybe you thought you were on the Voter’s roll and you’re not – once again that can be sorted out given a few weeks.
Or maybe you can’t get a mortgage at all! But if that’s the case it’s better that you know now rather than mess people about and we’ll be able to tell you what you need to do to improve your credit-worthiness for the future.
Ok, so you know you’ve got a good credit rating because you’ve never been turned down for credit, you’re registered on the Voter’s roll and you’ve always made your credit card payments on time – so what can go wrong?!
Well, you could approach 10 different Lenders these days and get 10 different maximum mortgage amounts! They all calculate affordability in their own unique ways. If you’re self-employed it really is a minefield: some Lenders take your net profit, others your salary and divided. Some use your latest year, others an average over 3 years.
Still think it’s simple?
Knowing your borrowing limits is important as then you know for sure what your price range is. We’ll be able to advise you of the maximum mortgage available to you and, even more importantly, together we’ll work out how much you can afford to pay back each month.
Also known by their official title of “Second Charge Mortgage”, a Secured Loan is a loan that helps secure the property of your dreams, albeit with higher than standard interest rates.
The reason for this is because, in the event of a repossession, the provider of the Secured Loan must wait for the original provider to sell the property before getting their money back. Whilst this is often known as an expensive “last resort”, they can often be incredibly helpful for certain situations.
Your mortgage stays exactly how it is if you take out a Secured Loan. The new amount is borrowed from a different provider and a separate direct debit.
The length of this new amount varies, as you could take it out over a shorter or longer-term than your main mortgage. If you’re only in need of a small amount, you may benefit from looking at unsecured borrowing.
When first-time buyers are ready to make an offer on a property you want to buy it’s important that you put your circumstances across to the Seller or Estate Agent in such a way that gives you the best chance of having that offer accepted. You will never beat a cash buyer but if you have a Mortgage Agreement in Principle in place you will definitely be in a better position than other potential buyers (your competitors!) who haven’t taken that step with their Mortgage Broker in Lincoln.
Buying a property is a negotiation process. If your initial offer is rejected then you will be asked whether you want to increase so don’t be afraid to offer less in the first instance than you really are happy to pay. If your increased offer is also rejected sometimes it just boils down to whether you are willing to pay the asking price (especially if the property in question has just been placed on the market) or whether you are prepared to walk away and find somewhere else.
Please feel free to give us a call if you require any help with this or have any further questions, we will be happy to help.
If you are possibly considering taking some form of equity release mortgage, it is understandable that you will want to know what the risks are.
Equity Release Mortgages may not be suitable for everyone so it is important that you get proper specialist advice before making any arrangements. Most people’s concerns fall into the following categories:
With a traditional mortgage, lenders have the right to take possession of a property should the borrower fail to keep up regular monthly repayments. However, since most equity release schemes don’t require a monthly repayment, then this question of “affordability” becomes irrelevant.
With a Lifetime Mortgage, your interest would normally “roll up” so there should be no reason why you would lose your property to a lender.
Historically there have been instances where lenders took possession of properties but these days this type of lending is highly regulated and the industry works hard to avoid circumstances where repossession is required.
The terms of your agreement would normally allow you to stay in the property until you die. If your circumstances changed – for example, you needed to go into long term care – then the property would normally be sold.
With a Lifetime Mortgage, the lender would then be repaid all capital plus any rolled up interest from the sale proceeds and you would retain any excess over this amount.
If you have a Home Reversion Plan, you would have already sold the home to the provider, so in these circumstances, they would then sell the property on the open market and keep all proceeds.
This is one reason why it is important to understand the difference in the type of plan, so make sure your advisor goes through these fully and clearly before making any commitment.
With Lifetime Mortgages, upon your demise, the property would be sold and the capital, plus all accumulated interest would be paid back to the provider from the sale proceeds to settle their mortgage.
The difference between the sale price and the settlement figure would then go into your estate to form part of your inheritance. People often ask: “What if the debt has increased above the value of the property? Will my family have a debt to pay back?” However, you would normally receive a “No Negative Equity Guarantee” which, in simple terms, means that if the above occurred, then that is a risk the lender would have to take and there would be no further repayment required from your family.
Finally, should you have any further concerns, there is an industry body known as The Equity Release Council which exists to ensure that all products of this type are safe and accessible.
All participants in the Equity Release Market should subscribe to the Council’s Statement of Principles which you can check on their website – https://www.equityreleasecouncil.com – along with any other details that may concern you.
In a nutshell, therefore, as long as you ensure that you obtain advice from a firm whose advisors are members of the Equity Release Council, and who recommended products from providers who are also members, then you can be confident that you will receive full, clear information about any worries you may have.
At Lincolnmoneyman.com, we have a history of providing you with bespoke, detailed, local mortgage advice as to what may be the most suitable way forward in your particular circumstances.
To add to this service, we’ve now teamed up with an Equity Release Specialist and between us, we’d be happy to come to meet you in the comfort of your own home to answer any questions you may have on anything mentioned above by way of a free consultation.
Equity Release – How can it help me? Equity Release mortgages can help people in a number of ways. Many people have heard of them, but are unsure as to whether they would be eligible and what benefits they may obtain, so in this article, we’re going to look at:
Firstly, your “equity” can be summarised as the value of your stake vested in the bricks and mortar of the property. So, if you already own your home, then your “equity” is the open market value of your house less the balance of any mortgage outstanding on it. If you’re a buyer, your “equity” is the amount of cash deposit you are putting into the transaction.
Secondly, Equity release Mortgages are aimed at older borrowers. Thus, you’d need to be at least 55 years old to be considered for an Equity Release plan and for some types that increase to age 60.
In general, it’s fair to say that the older you are, the better terms you’re likely to be offered from a lender. Other factors that would be considered in a traditional mortgage application, however – for example, earned income, pension income, number of dependents etc. – do not come into it. It is purely base on the value of your property.
The answer to this question is not entirely straightforward. Put simply, the amount you can borrow on this type of deal will be dictated by a combination of how old you are and how much equity you have?
Most providers have their own calculators and these can vary, but it’s fair to say the older you are, the more equity can be released. Your Equity Release Advisor will be able to accurately calculate this figure for you when you meet up.
The uses of Equity Release are many and varied, here are just a few examples:
In short, most legal reasons can be accommodated. Don’t forget, Equity Release mortgages are not necessarily suitable for everyone and in some of these instances there may be other, more suitable courses of action, but your Advisor will help you with this.
At Lincolnmoneyman.com, we have a history of providing you with bespoke, detailed, local mortgage advice as to what may be the most suitable way forward in your particular circumstances.
To add to this local service, we’ve now teamed up with Equity Release Specialist and between us, we’d be happy to come to meet you in the comfort of your own home to discuss any questions you may have on anything mentioned above.
With a lack of certainty surrounding Brexit news in the minds of many, it can be difficult finding trustworthy, un-edited advice online regarding Brexit. Even more so when it comes to the property market. Many have missed out prime opportunities that could’ve benefitted them a great deal in the long run.
Political situations have been known to influence the property market, of which our mortgage advisors are all too familiar with. As such, they’re preparing for the future by looking at potential outcomes for customers post-Brexit. There seems to be a lot of built-up demand for properties currently.
These are just some of the reasons why we are advising our clients to at least get a wider perspective of their options, especially if they’re planning on just seeing how things go, which may not be the best idea. If you are looking to move into a new house in 2020, we would suggest that you have a chat with as soon as you can. We aim to make the process as smooth and easy as possible.
It can often take a while to prepare your home for sale and to get it on the market. This includes the two or three valuations to get a secured opinion, the time for you to choose your preferred Estate Agent, sign your agency agreement and get the photos finalised.
You may find that other people had the same mindset – when the new year comes around and your home is available on the market, theirs will be available too. The more houses on the market, the more options for home buyers, which in turn could affect house prices.
If you’re thinking of moving in 2020 or the near future, you’re always welcome to get in touch and discuss your mortgage options – We offer a free initial consultation to all customers.
If your personal situation has recently changed and you are looking to remove a person from a mortgage then please get in touch as this can sometimes be quite a specialist area. Our Mortgage Advisors in Lincoln have a lot of experience in this area of expertise and have helped many customers during a financial separation.
If you look at the situation from the mortgage lenders side, they have two people for security on the property, so if a situation like mortgage arrears or more seriously repossession occurred then they have two parties to chase for financial compensation.
If they were to allow one person off the mortgage then this halves the chance they would have to see payment. Usually if the person that wants to keep the property can afford the property in their own right based on income and affordability this may be allowed.
This largely differs between mortgage lenders and this is where I can help as during this time, it may be advisable to switch mortgage lender and get a better mortgage deal in a sole name.
Often, in situations like financial separations a lump sum may be also raised against the property to ‘pay off’ the other party.
Problems can arise, the main one being that the income may not be large enough to afford the whole mortgage in a sole name, there are still ways I can help such as family guarantors etc.
We’re also able to help if you would like to put life insurance policies and any home insurance policies in sole names. Our Mortgage Advisors in Lincoln are very experienced in this field so there is never usually a situation I have not come across at some point before.