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If you have a mortgage in Lincoln, you might wonder how your monthly payment is split. Part of it goes to paying off the money you borrowed (the principal), and part goes to paying interest.
Understanding the breakdown of your payments can help you make better financial decisions.
This article will explain how mortgage payments work and how making extra payments, often called overpayments, can save you money and reduce the length of your mortgage in Lincoln.
If you have an interest-only mortgage deal, then your payment is solely interest, and the principal remains unchanged throughout the term.
The information below is aimed at customers in Lincoln with full capital repayment mortgages; part-and-part mortgages will be more complex.
A capital repayment mortgage payment in Lincoln typically comprises two main components: the principal and the interest.
The principal is the sum you borrowed from the lender to purchase your home. Each payment gradually reduces this principal amount.
Nowadays, it’s common for first time buyers in Lincoln to have mortgage terms that extend up to 40 years, providing more flexibility and manageable monthly payments.
Interest is the cost of borrowing that money. It is the fee the lender charges for the loan.
This interest can either be fixed for a certain period, offering predictable payments, or variable or tracker-based, meaning the rate can fluctuate over time based on market conditions.
When you get a mortgage in Lincoln, the lender provides you with an amortisation schedule. This schedule shows how much of each payment goes to the principal and how much goes to interest.
Let’s say you have a £200,000 mortgage in Lincoln with a 4% interest rate over 30 years. Your monthly payment would be around £955.
In the first month, about £667 of that payment would go to interest, and £288 would go to the principal. Over time, more of your payment will go to the principal, and less to interest.
At the beginning of your mortgage in Lincoln, the principal is large, so the interest part is also large. As you keep making payments, the principal gets smaller, so the interest part of each payment gets smaller too.
When you are close to the end of your mortgage term, the majority of your monthly payment is principal.
Overpayments reduce the principal balance, and since interest is calculated on this remaining principal, a smaller principal means you will pay less interest overall.
By paying more than the required amount, you can reduce the number of years you need to make payments, freeing you from your mortgage sooner.
Overpayments help you build equity faster. Equity is the portion of your home that you own outright, enhancing your financial stability and investment in your property.
Work Out Your Mortgage Payments in Lincoln
During your free appointment with your mortgage advisor in Lincoln, they will provide you with an accurate figure as to what your monthly payments will be.
Making overpayments involves paying more than your regular monthly mortgage payment. This strategy can accelerate the repayment of your mortgage in Lincoln and save you money on interest.
Firstly, you pay less interest. Overpayments reduce the principal balance, and since interest is calculated on this remaining principal, a smaller principal means you will pay less interest overall.
Secondly, overpayments shorten your mortgage term. By paying more than the required amount, you can reduce the number of years you need to make payments, freeing you from your mortgage in Lincoln sooner.
Lastly, you build equity faster. Equity is the portion of your home that you own outright.
Overpayments help you increase your equity more rapidly, enhancing your financial stability and investment in your property.
Using our previous example, if you pay an extra £100 each month, you can pay off your mortgage several years earlier and save thousands of pounds in interest.
Before making overpayments, it’s crucial to check your mortgage terms.
Some mortgages impose penalties for overpayments, so review your mortgage agreement or speak to your lender to confirm you can make overpayments without incurring extra charges.
Next, set a budget to ensure you can afford to make overpayments while still covering other expenses and emergencies.
You can establish regular overpayments by setting up a standing order or direct debit. This ensures you automatically pay extra each month.
When you remortgage in Lincoln, consider discussing offset mortgages with your mortgage advisor in Lincoln, as they might suit your financial situation.
Additionally, you can make lump sum payments if you receive a bonus, inheritance, or other windfall.
Check with your lender on how to proceed, as they may provide a unique reference number to allocate your payment correctly.
While making overpayments can be highly advantageous, there are a few important considerations to keep in mind.
Ensure you have an emergency fund. It’s crucial to maintain sufficient savings for unexpected expenses before committing to overpayments, as the money used for overpayments isn’t easily accessible.
Additionally, be aware of early repayment charges. Some mortgages impose fees if you overpay beyond a certain limit, which can diminish the benefits of overpaying.
Understanding how your mortgage payment in Lincoln is divided between interest and principal can significantly improve your financial management.
Making overpayments is a strategy that can help you save on interest and pay off your mortgage more quickly.
It’s essential to review your mortgage terms and ensure that overpayments fit within your budget.
If you have questions about your mortgage or are considering making overpayments, an independent mortgage broker in Lincoln like us can offer expert mortgage advice in Lincoln.
We provide tailored mortgage advice and help you find the best options for your situation.
Contact us today for a free, no-obligation appointment to discuss your mortgage and how to make the most of your payments in Lincoln.
The credit scoring process used by mortgage lenders can be a source of concern for many First Time Buyers in Lincoln and Home Movers in Lincoln. However, it’s important to understand that mortgage lenders rely on this system as a practical and reliable way to assess risk effectively.
If you find yourself apprehensive about credit scoring when applying for a mortgage, there’s no need to be overly anxious. The reassuring fact is that numerous mortgage lenders operate, each with its unique scoring methods and criteria.
To address your concerns and increase your chances of mortgage approval, obtaining a copy of your credit report when applying for a mortgage is a prudent step.
Providing an up-to-date credit report to your mortgage advisor in Lincoln upfront allows you to paint a clearer picture of your financial situation and enhances the prospects of a successful application.
Moreover, having your credit report in hand enables your mortgage advisor in Lincoln to identify any potential issues or areas for improvement, enabling you to proactively address them before applying for a mortgage.
This proactive approach not only bolsters your chances of approval but also instils confidence and peace of mind throughout the entire mortgage process.
It’s essential to remember that each mortgage lender has its specific criteria. If one lender declines your application, don’t be disheartened. Your mortgage advisor in Lincoln will work with you to explore the most suitable options available in the market.
When it comes to checking your credit report for mortgage purposes, you have several credit reference agencies to choose from, including Experian and Equifax. Our top recommendation is CheckMyFile, which offers a comprehensive overview based on data gathered from multiple credit agencies.
By using CheckMyFile, you benefit from a 30-day free trial, allowing you to review your credit report without any cost during this period. The best part is that you can cancel the trial at any time without any obligations.
This approach empowers you to make informed decisions about your creditworthiness and ensures that your mortgage application rests on a solid foundation. By following the link below, you can access a free, instant PDF download.
Try it FREE for 30 days, then £14.99 a month – cancel online anytime.
Improving your creditworthiness is essential when applying for a mortgage, and there are several steps you can take to enhance your credit score.
First and foremost, exercise caution when it comes to price comparison websites, as they may trigger credit searches that could potentially have a negative impact on your score.
To avoid raising any red flags with mortgage lenders, it’s advisable to refrain from applying for other types of credit in the immediate future.
Being registered on the electoral roll can positively affect your credit score. Ensure that your name and address are both accurate and up-to-date to give your score a boost. Errors in your address details can create the impression of multiple residences, which might potentially impact your creditworthiness.
Prudent management of your credit card usage can exert a significant influence on your credit score. Maxing out your credit card every month can lead to a score decrease, so it’s wise to use it responsibly and regularly pay off the balance in full.
While closing store or credit card accounts that you no longer use might lead to a short-term dip in your score, it can be a beneficial long-term move, reducing your vulnerability to fraud.
Furthermore, financial ties with family members, friends, or ex-partners can have an impact on your credit score, especially if their credit history is less than stellar. If you no longer have active financial connections with these individuals, you can request credit reference agencies to remove these links.
When seeking mortgage advice in Lincoln, providing our trusted and experienced mortgage advisors with comprehensive information about your finances will enable them to offer the best guidance and support throughout the mortgage application process.
With their expertise and your improved credit score, you’ll be well-positioned to secure the ideal mortgage that suits your needs and financial situation.
Please note that the information contained in this article is for general guidance purposes only and should not be considered as legal, financial, or tax advice.
All information regarding Stamp Duty is taken from the government website and is in-line with the September 2022 Mini-Budget. The laws and regulations related to Stamp Duty are subject to change, and the information in this article may not reflect the latest updates or changes in the law.
The amount payable for Stamp Duty will entirely depend on personal circumstances. Please speak with the solicitor acting on your behalf, who will be more appropriate to advise on this.
Information Source: MoneyHelper
Stamp Duty Land Tax is a tax that applies to owners of residential properties in England and Northern Ireland. It encompasses both leasehold and freehold properties, including those who have a mortgage and those who have purchased the property outright.
For a first time buyer in Lincoln, Stamp Duty is exempt for properties valued at £425,000 or less. If the property’s value exceeds this amount but doesn’t surpass £625,000, you won’t pay Stamp Duty on the first £425,000.
Beyond that threshold, Stamp Duty applies to the remaining amount at a rate of 5%, up to £200,000. However, if your property’s cost exceeds £625,000, you won’t qualify for first-time buyers’ relief and will be subject to the standard Stamp Duty rates.
To be eligible as a first time buyer in Lincoln for this relief, you must be purchasing your only or primary residence and have never previously owned a property, whether in the UK or abroad.
As of the time of this writing, these rules are in effect until March 2025. Beyond that date, Stamp Duty will revert to the previous thresholds.
In an effort to enhance accessibility in the property market, the government introduced revisions to Stamp Duty regulations specifically tailored to first time buyers in Lincoln.
As you may already know, accumulating the necessary funds to cover mortgage applications, deposits, and conveyancing fees can be a considerable challenge.
Existing property owners often have the advantage of built-up equity in their homes, which can be leveraged to meet the costs associated with purchasing a new property.
However, for first time buyers in Lincoln, the situation is quite different. They are typically either renters or may not possess the same level of equity on which to rely.
As mentioned earlier, the exceptions to these rules apply to properties valued over £425,000 but up to £625,000, in which case you’ll pay a proportion of the amount exceeding £425,000. For properties valued over £625,000, first-time buyer relief does not apply.
Regrettably, even if you’ve never previously owned a home, you do not qualify for first-time buyer relief if you’ve inherited a property. The same rule applies if you’ve purchased a share in a property or if you are jointly purchasing with someone who is not a first time buyer themselves.
Moreover, if you are considering a first time buyer buy to let in Lincoln, you will be subject to Stamp Duty. This is because you are making a buy to let purchase rather than a residential property purchase.
The amount you need to pay will vary based on your specific circumstances, so it’s advisable to consult with your solicitor for detailed information.
Typically, your solicitor will take care of the Stamp Duty return and payment process on your behalf. However, you do have the option to manage it yourself.
Regardless of the chosen approach, it’s your responsibility to ensure that the return is filed within the stipulated timeframe. Even if you are not required to pay any Stamp Duty, you must still submit a return, unless you are eligible for an exemption.
It’s essential to keep in mind that Stamp Duty rates and regulations may vary depending on the property’s location. To ensure a clear understanding of the precise tax rules applicable to your property purchase, it’s advisable to consult with your solicitor or conveyancer.
Beyond the Stamp Duty expenses, if you’re in the process of applying for a first time buyer mortgage in Lincoln, you might be curious about other costs that could come into play. One of the significant ones is your deposit. Typically, mortgage lenders require a minimum of a 5% deposit.
However, if you have a less-than-ideal credit history or are aiming for more favourable interest rates, it might be prudent to put down a deposit of 10-15%. In addition to this, another cost that is a certainty is solicitors or conveyancing fees.
Furthermore, there’s a selection of potential fees, which may or may not apply to your specific case. These encompass a mortgage arrangement fee, which is charged by your mortgage lender for setting up your mortgage. Valuation and survey fees are additional costs you may need to consider.
If you choose to engage a mortgage broker, they might, in some cases, have their own fee, although this can vary. Then there are general expenses like removal costs, potential repair expenses, furnishing outlays, and home insurance.
It’s worth noting that many of these costs are not fixed and, in some instances, are optional. For a more precise breakdown of the potential expenses you might encounter on your journey to homeownership, a mortgage advisor will provide valuable guidance.
First-time buyers in Lincoln facing challenges in stepping onto the property ladder should be aware that assistance is available to facilitate their home ownership dreams.
Not only is there Stamp Duty relief for first time buyers, but an array of other schemes have been devised to make homeownership more attainable. Among the more popular options are Shared Ownership mortgages in Lincoln, enabling you to acquire a portion of a property and pay rent on the remainder.
Another valuable scheme is Forces Help to Buy (FHTB), tailored to support service members in borrowing up to 50% of their salary, up to £25,000, interest-free.
Prospective homebuyers who are currently council tenants may also qualify for a Right to Buy mortgage in Lincoln, where eligible tenants can purchase their property at a reduced price. Depending on the mortgage lender, you’ll often find this discount can serve as a deposit.
Additionally, it’s worth highlighting the advantages of a Lifetime ISA, a savings account that allows you to contribute towards your deposit. You can save up to £4,000 per year, with the government providing a 25% top-up, up to a maximum of £1,000 per year.
To delve deeper into these schemes and explore additional, more niche options, you can visit the government’s Own Your Home website. Alternatively, you can connect with a trusted mortgage advisor in Lincoln, who will guide you through these options and set your mortgage journey in motion.
If you’re a first time buyer in Lincoln, entering the realm of mortgages may seem like a daunting task, especially if you have limited prior knowledge of the process. However, there’s no need for it to be overwhelming.
Adequate preparation is key, which is why we’ve compiled a list of nine essential questions to pose while you’re in the midst of your house hunting journey.
When you’ve been surveying various properties and find one that piques your interest, it’s a prudent step to give it careful consideration before committing. Keep in mind that this decision likely represents the most significant financial commitment you’ll make in your life.
The duration of time you have for this deliberation may vary, depending on the level of interest the property has garnered from other potential buyers or inquirers.
Hence, it’s advisable to inquire about the level of interest surrounding the property. A high level of interest suggests that you’ll need to expedite your final decision-making process.
Another factor that can significantly influence various aspects of your mortgage process is whether your property is part of a chain or not.
In cases where the property is brand new or involves situations like bereavement or emigration, there typically won’t be an onward chain. In such scenarios, there’s often the potential for a swift transaction, especially if you’re also part of a property chain.
If you don’t need to sell your existing property before purchasing the new one, you’ll find yourself in a more advantageous position compared to others. This lack of dependency on selling a property first can expedite the home-buying process.
Leveraging this advantage can be particularly useful during negotiations regarding the property’s price.
If you’re not purchasing a new build property, there’s a possibility that the previous owner may have chosen to leave some items behind, which can prove highly beneficial. Typically, these items include appliances like washing machines, fridges, freezers, and even sheds that they’ve left for the next occupant.
This can be a real time and money-saver for buyers, which is great news. However, if you neither want nor need these items, you should account for the cost of disposing of them.
For those buying a new build property, you might have the option to purchase additional extras that will be in the property when you move in.
Having insight into your potential neighbours can be invaluable when moving into an unfamiliar area. For many, the quality of their neighbourly relationships can significantly impact their living experience.
New housing developments offer a fresh start, allowing residents to shape the community. However, this can also be a gamble due to the uncertainty of the neighbourhood’s future dynamics.
When considering running costs, it’s essential to factor in the type of house you’re interested in and its location. Explore various aspects such as Council Tax rates and average utility expenses.
You can gather this information by consulting the seller or conducting online research. Having this data at your fingertips will enable you to budget effectively for each property you’re considering.
For many first time buyers in Lincoln, having a sunny garden for late summer evenings, ideal for reading books in natural light, is a top priority. Consequently, the orientation of the house becomes significant.
If this is an essential feature for you, you might notice that properties with south-facing gardens come with a higher price tag. This premium is often due to the abundance of sunlight they receive throughout the day.
This can greatly influence your budget. To help with your financial planning, here are some key aspects you should investigate:
A typical step in the home-buying journey involves initiating negotiations for a property. It’s important to be well-prepared when you’re ready to make an offer on a property you’re interested in.
Additionally, it’s advisable to engage in a conversation with the seller or their estate agent to gain insight into their expectations regarding a suitable price range for the property. Inquire about any previous offers that may have been made and declined prior to presenting your own offer.
Marking a specific date on your calendar will provide you with a clear timeline to organise various tasks in advance. This includes actions like hiring a conveyancing solicitor, packing your belongings, and arranging for a removal van to transport your possessions to your new home.
Exploring the world of mortgages in Lincoln might introduce you to terms like “mortgage in principle,” also known as “agreement in principle” or “decision in principle.”
This tool holds significance as you ponder over obtaining a mortgage, offering an early estimate of your potential borrowing capacity before you formally apply. To secure an agreement in principle, the lender usually evaluates your credit details.
This assessment entails a “soft” credit check, which has minimal impact on your credit score. Importantly, this step doesn’t entail any commitment on your part. At Lincolnmoneyman, we typically arrange an agreement in principle within a day following your initial mortgage consultation.
Notably, this agreement remains valid for approximately 30 to 90 days, affording you ample time to explore suitable properties. Should this validity period elapse without finding a property, there’s no need to fret.
We can help you in renewing your agreement in principle, ensuring you’re well-equipped for your mortgage journey.
In Lincoln, securing a mortgage agreement in principle involves two primary avenues. You can directly engage with a mortgage lender or choose to connect with a reputable mortgage broker in Lincoln, such as ourselves.
Leveraging our experience as a mortgage broker in Lincoln, we can liaise with the lender on your behalf to procure this pivotal document. Initiating contact with our mortgage advisors in Lincoln is straightforward. You can opt to complete our Get Started form online or give us a call.
This initial interaction facilitates scheduling a complimentary mortgage consultation. During this session, you’ll engage with a specialist and obtain your agreement in principle within just 24 hours.
To progress and obtain this document, you’ll need to furnish proof of your income, employment specifics, credit history, and other personal details.
These particulars play a pivotal role in evaluating your eligibility for a mortgage in Lincoln. Additionally, this process furnishes an estimate of the potential borrowing amount.
Before embarking on your property search in Lincoln, it’s prudent to consider obtaining a mortgage agreement in principle.
This preliminary document offers a rough estimate of your potential borrowing capacity. This empowers you to focus your attention on properties within a feasible budget, avoiding the disappointment of exploring homes beyond your financial reach.
Moreover, possessing an agreement in principle can confer an advantageous position when making an offer on a property. Sellers and estate agents often perceive applicants with an agreement in principle as committed and earnest buyers.
This could give you an edge over other potential buyers who haven’t taken this proactive step. While an agreement in principle doesn’t guarantee immediate mortgage approval, it serves as an invaluable tool during the home-buying journey.
It equips you with a clearer financial outlook and signals your sincerity to both sellers and agents, enhancing your negotiation stance.
When a mortgage advisor in Lincoln helps you in securing an agreement in principle, they will require specific personal information from you.
This data is vital for communication with the mortgage lender, aiding them in evaluating the potential amount they can lend you. The essential details encompass:
It’s essential to note that mortgage lenders might also request additional information, such as bank statements or proof of income, particularly if you’re self employed in Lincoln. These documents could be necessary before the lender finalises their decision regarding your loan application.
An Agreement in Principle (AIP), also known as a mortgage in principle, is a document issued by a mortgage lender in Lincoln. It offers an estimate of the amount they might be willing to lend you, based on the information you’ve supplied.
It’s crucial to understand that an AIP does not guarantee a mortgage offer, and it does not establish a legally binding contract. On the contrary, a mortgage offer signifies an official commitment from a mortgage lender in Lincoln.
This offer demonstrates their intention to provide you with a mortgage, following the requisite assessments. Receiving a mortgage offer marks a pivotal step in the mortgage process, indicating that you’re approaching the final stages. Once accepted, the offer becomes a legally binding agreement.
The offer outlines the agreed-upon terms and conditions for your mortgage, including the interest rate, mortgage term, and any associated fees.
To reach this stage, you’ll need to provide the mortgage lender (potentially through your chosen mortgage broker in Lincoln) with more comprehensive information and undergo a thorough credit assessment.
Additionally, the mortgage lender usually requires a property valuation. Upon obtaining your mortgage offer, you’re ready to proceed with your property purchase, provided you meet any conditions specified in the offer.
In essence, an agreement in principle serves as a valuable tool for estimating your potential borrowing capacity, while a mortgage offer is a formal commitment from the lender, legally binding both parties to the stipulated mortgage terms and conditions.
In the majority of cases, obtaining an agreement in principle for a mortgage is unlikely to have a substantial impact on your credit score. This is primarily due to the fact that most mortgage lenders opt for a soft credit check during the AIP process.
Soft credit checks do not leave a visible mark on your credit report. Nevertheless, it’s essential to be aware that certain mortgage lenders might conduct a hard credit check as part of the agreement in principle procedure. Unlike soft checks, hard checks can leave a visible record on your credit report.
This has the potential to influence your credit score, particularly if you’ve applied for multiple AIPs with different mortgage lenders within a short timeframe. It’s crucial to remember that an actual mortgage application usually entails a hard credit check, which can indeed impact your credit score.
Considering these factors, it’s generally prudent to be mindful of the number of mortgage applications you initiate. It’s advisable to seek an agreement in principle only when you are genuinely committed to proceeding with your property purchase.
This approach can help you in effectively managing and preserving your credit score.
Securing an agreement in principle brings forth a host of advantages when navigating the process of applying for a mortgage in Lincoln.
First and foremost, acquiring an agreement in principle offers you a clear grasp of the potential borrowing amount at your disposal. This empowers you to refine your property search within a practical price range.
In doing so, you steer clear of squandering time and the possibility of disappointment that might stem from considering properties that surpass your financial means. Secondly, an AIP provides you with a substantial edge over other aspiring buyers when it’s time to put forward an offer on a property.
Sellers are more inclined to view offers from individuals with an AIP favourably, as it showcases a sincere commitment and proactive pursuit of mortgage approval. Lastly, holding an AIP in Lincoln can expedite the mortgage application procedure once you’ve identified a property you wish to purchase.
This is owing to the fact that the mortgage lender has already undertaken an initial assessment of your financial standing and eligibility. Consequently, they might be able to fast-track your mortgage application in a more efficient manner.
All in all, possessing an agreement in principle delivers noteworthy advantages for those embarking on a property purchase. It doesn’t just provide clarity regarding your potential borrowing capacity, but also positions you ahead of other potential homebuyers, significantly streamlining the mortgage process.
Obtaining an agreement in principle typically comes without any associated costs. Essentially, it involves receiving a statement from a mortgage lender that offers an estimated lending amount based on the information you’ve provided.
It’s worth highlighting that securing an agreement in principle does not entail any financial commitments on your part.
If you find that your application for a mortgage agreement in principle has been declined, it indicates that the mortgage lender has deemed you ineligible for the requested mortgage amount. Various factors can contribute to this outcome.
When faced with this scenario, it’s imperative to comprehend the reasons behind the decision. You might need to assess your financial situation or credit history, and in certain cases, furnish additional information to the mortgage lender.
In some instances, this could involve exploring alternative options and seeking a mortgage lender whose lending criteria align more closely with the amount you wish to borrow. It’s important to note that being declined for an AIP does not automatically result in rejection for a full mortgage application.
During a comprehensive application, the mortgage lender conducts a more thorough evaluation of your financial circumstances and credit history. This may lead to an offer for a different amount or a different type of mortgage.
Furthermore, it’s noteworthy that submitting multiple agreement in principle applications with different lenders can adversely impact your credit score. Thus, conducting thorough research before making applications is prudent.
Having a mortgage broker in Lincoln in your corner can greatly help in identifying the right mortgage lender, potentially saving you from multiple attempts.
Whether you’re contemplating first time buyer mortgages in Lincoln or exploring home mover mortgages in Lincoln, engaging with a mortgage broker in Lincoln is a recommended approach. This allows you to secure your agreement in principle before initiating any property offers.
Typically, we can secure an AIP for you within a mere 24 hours following your initial mortgage consultation. This efficient process offers invaluable support as you embark on your mortgage journey.
Book your free mortgage appointment today, and we’ll diligently work to ensure you receive your agreement in principle promptly. Start your mortgage journey with the guidance of a dedicated mortgage broker in Lincoln by your side.
Overall the popularity that surrounds taking out an offset mortgages has dipped since the rise of that mortgage type during the 1990s, though thankfully for customers who want this, they can still be a great option for home buyers.
They can especially be useful if you believe that you are due to receive a lump sum at any point in the near future, perhaps from say an inheritance.
When your offset mortgage begins, you will have a savings account opened in your name by the mortgage lender, with the aim of that being to run alongside your mortgage and help to pay it off. Rather than garnering any interest, it will instead offset your savings against the balance of your mortgage.
To provide an example of how this might work, let’s say that you had a mortgage that is worth £100,000 and you have saved up £15,000 with your savings account, then you will only pay interest on the £85,000 that is remaining on your balance.
Offset mortgages are considered to be much more flexible options for home buyers. The reason for this, is that until your mortgage has been completely offset, you are able to take out and put in as much into your savings as you see fit.
This provides you with an emergency backup, as you are able to take out funds at any point if you need to do so, though it’s important to note that withdrawing money will increase your balance, thus increasing your overall cost.
One of the positives around offset mortgages, is that it saves interest, as opposed to adding it on, so you won’t be paying any tax on any amount of funds that you put into your savings. Higher rate taxpayers are a big fan of these types of mortgages!
If you are due a lump sum at any point, such as an inheritance through perhaps a family member’s equity release, an offset mortgage can be a really great option. This is because it allows you to store your funds until you want to do something with it, free from interest.
You may also want to put any annual or quarterly bonuses you receive from your job into your savings, if you have no dependance on them. The more that is sitting in your savings, the better off you will be throughout your mortgage.
Thanks to the flexibility of this mortgage, you can freely dip into savings if you need extra funding, whilst leaving some still in to offset against your mortgage. It’s crucial to remember that you will need a substantial amount of money in there, to make an offset mortgage worth it.
An offset mortgage is a great choice for first time buyers in Lincoln who are planning on overpaying their mortgage throughout their term. Looking ahead to the future, once you have finished your current mortgage period, overpaying could potentially allow for reduce interest rates or monthly payments.
With other mortgages that you could take out, any money that you put towards your mortgage cannot be taken back out once it has been paid. At this point, you may have limited mortgage options. This is certainly not great if you change your mind once you have overpaid or need emergency funds.
Of course an offset mortgage counters this, due to the freedom you have to put in and take out funds. So if you’re looking to overpay on your mortgage, this could also come in really handy.
Before diving into a mortgage, it is important to consider all of the options you have available. Speaking to a qualified mortgage advisor in Lincoln is a great way to make sure you are on the right path when it comes to your mortgage.
We often find that any customers who opt for an offset mortgage, are more likely to continue with said mortgage, as opposed to remortgaging like other homeowners at the end of their fixed period.
As an open & honest mortgage broker in Lincoln, you will be assigned a dedicated mortgage advisor who will show you the impact of offset mortgages and how it could possibly save you money over the duration of your mortgage term.
For further questions regarding offset mortgages, or if you would like to remortgage in Lincoln, feel free to book online today and take advantage of the free mortgage appointment we offer to all customers, no matter their situation.
As a first time buyer in Lincoln taking on your first ever mortgage process, you will probably want to do a bit of research first. During that research, you will quickly realise the variety of options at your disposal.
Below you will see a list of the most popular types of mortgages available on the market and hopefully, our short MoneymanTV videos will give you a better understanding of what each option has to offer.
If you have any questions regarding any of the below mortgage options, then please do not hesitate to get in touch and we will do our best to help.
A fixed-rate mortgage will mean that you will benefit from having consistent mortgage payments for a duration of your choosing. Typically first time buyers in Lincoln will select somewhere between 2 to 5 years.
The reason for this, is if interest rates were to drop below what you’re paying and you’re still tied in for a few more years, you could be paying more than you would need to, without a way to get out early (unless you were to pay a charge).
The good side is that no matter what happens to inflation, interest rates or the economy you know that your mortgage payment, which generally speaking is your biggest outgoing, will stay the same.
A tracker mortgage is a type of mortgage wherein the interest rate will follow alongside the Bank of England’s base rate.
So in other words, the mortgage lender that you are with will not be setting the interest rate themselves. Typically you will instead be paying a percentage above the Bank of England base rate.
For example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying an interest rate of 2% on your mortgage.
These were much more popular back in the mid-2000s, due to the interest rate only being a fraction above the Bank of England base rate.
They aren’t as popular as they used to be, though it is important to remember that it is a variable rate mortgage. This means that if the Bank of England base rate goes up, your mortgage payments will increase.
When you take out a repayment mortgage, you will be paying both capital and interest combined on a monthly basis.
So as long as you maintain your monthly payments for the duration of your mortgage term, the mortgage balance is guaranteed to be paid off at the end, with you retaining full ownership of your property.
This is considered to be the most risk-free way to pay your capital back to the lender.
Early into your mortgage, it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term.
This situation works differently in the last ten years or so of your mortgage in Lincoln, where your payments are paying off more capital than interest, and the balance will come down much quicker than it otherwise would’ve.
Whilst you will find that a lot of buy to let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on this type of mortgage in Lincoln.
Back in the ’80s and 90s interest-only mortgages were a lot more prevalent. As the name suggests, you would only be paying back the interest per month, which creates lower monthly repayments.
The idea was that you would take out a separate investment vehicle, such as an endowment policy or pension, in order for you to pay the balance back at the end of the mortgage term.
Whether or not there is going to be enough money to pay the balance of your capital will depend on the performance of your investment vehicle.
During the 00s some of these investments didn’t perform as well as people may have expected them to and some borrowers were left with a shortfall.
It is much less likely for lenders to offer an interest-only product to a residential purchaser nowadays, however, there are certain circumstances where this can be an option.
For example, if you are going to downsize when you are older or have other investments what you will use to pay the capital back, an interest-only mortgage may be viable for you.
Mortgage lenders are very strict when it comes to offering these products now and the loan-to-values are a lot lower than they were in years gone by.
With an offset mortgage, the lender will set you up a savings account that will be left to run alongside your mortgage account.
How this works is that let’s say you have a mortgage balance of £100,000 and you were to deposit £20,000 into that savings account. You would actually only pay interest on the difference, so in this case £80,000.
This could actually end up being quite an efficient way of managing your money, especially if you are a higher rate taxpayer.
It is also very useful if you are looking at reducing your mortgage term, because your mortgage term will shrink as the money sits within your savings account.
Importantly, if you remove any funds from that savings account (which you are allowed to do at any point), your balance will go back up.
What this means, is if you deposited that £20,000, then paid off a further £5,000, bringing it down to £75,000 left to pay, then you drew out £15,000 for something, your balance would go all the way back up to £90,000, no matter what you have paid back.
This mortgage option was popular in the late 90s and early 00s, originally coming from Australia and becoming very popular in the UK when introduced by mortgage lenders.
Currently, however, this is not a very popular mortgage option. This could arguably be down to people not saving up as much money anymore. That being said, in the right circumstances, this could be a great option for you.
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.
Every now and again we encounter hurdles that our customers are faced with, whether they are a first time buyer in Lincoln or looking to remortgage in Lincoln.
Though these potential qualms can lead to some slight disruptions in the process, perhaps halting any further action until they’re ironed out, the process doesn’t necessarily need to end there.
In utilising the experience of a trusted and knowledgeable mortgage broker in Lincoln, you have the best possible chance of overcoming these hurdles, hopefully being able to once again proceed with your mortgage goals.
Below we have put together a list of the 5 most commonly encountered hurdles we have faced, when either helping customers to buy their property or remortgage their home.
When relationships come to an end, it can be awkward enough making arrangements between you, without having to factor in a mortgage as well.
If you made any joint financial commitments during your time together, such as your mortgage, you need to cut these ties as quickly as you can, to avoid running into any trouble.
Customers regularly ask us the following 3 questions when it comes to divorce and separation.
Removing your own name or your ex’s name is imperative, as failing to do so could see your credit score drop if you move out and they handle their finances poorly.
The key to achieving this is to prove affordability, as the mortgage lender will be hesitant to lend to one name, when they previously had the security of two names. If you can afford it on your own and your ex agrees to leave the mortgage, it should theoretically be smooth sailing.
Affordability is also a factor in whether or not you can have 2 mortgages, as you will need to have enough income to live, but also afford two different mortgage payments.
The best way to determine your affordability is to speak with an experienced mortgage advisor in Lincoln. We have spoken to many customers in situations like these, so will do our best to help you overcome this issue.
In our experience as providers of mortgage advice in Lincoln, we find that families are typically not turned down for a mortgage because of childcare costs, though you may be offered a lower mortgage amount.
The reason for this is because with parents often working and forking out for childcare, their outgoings can often be in the hundreds of pounds on a monthly basis.
Many mortgage lenders would consider this type of cost as an outgoing, much as they would for a car loan or hire purchase agreement.
Even taking away the element of nursery fees that a parent may pay, parents are still generally offered less of a mortgage amount than their contemporaries, who perhaps have no children of their own running up costs.
The good news, however, is that if you have any childcare costs regularly going out, you may be in receipt of tax credits. There are mortgage lenders out there who will bear this in mind, along with child benefit too.
There are other mortgage lenders out there with an alternative approach, not treating childcare costs as a specific outgoing and relying more so on Office of National statistics data for typical outgoings and this often leads to a higher maximum mortgage amount.
Usually if someone is starting a new job, they will be in receipt of a bigger salary, being able to put their additional income towards a new or existing mortgage.
That being said, if there have been any gaps in employment, a new job can present itself as more of a problem than a blessing for some mortgage lenders out there.
Luckily there are a selection of mortgage lenders out there who will be able to work with a newly signed employment contract, even if you are only a month into your job or are yet to start. Probationary periods are usually also okay.
Benefit income and how much of it can be assessed will be entirely dependant on the mortgage lender, as many of them take different views towards this type of income.
On a positive note though for customers with this type of income, benefits such as child tax credit, working tax credits, disability benefits, pension income can usually be taken into account by a mortgage lender.
It is in situations like these where speaking to a reputable and experienced mortgage broker in Lincoln will be of benefit to you, as they will be able to take a look at your case, review your circumstances and look to find you a mortgage lender where you are more likely to achieve mortgage success.
For any type of purchase, all mortgage lenders and mortgage brokers alike will be required to evidence the source of all of the borrowers’ (the person buying a house and/or looking to take out a mortgage) deposit funds.
This is done in order to satisfy UK Anti-Money Laundering Legislation, which is incredibly strict and designed to protect against fraud. Additionally, your solicitor and estate agent may ask for evidence of your deposit.
It’s the belief of our team, that this is often one of the most complicated parts of the mortgage application process.
Whether you have put down a deposit from savings, premium bonds, the sale of another property, gifted from a family member or friend, from overseas family, or from taking out a personal loan, you are required to have the paper audit trail to show exactly where these funds came from.
In order to be best prepared for your mortgage in Lincoln and to reduce the risk of potential hurdles, it is recommended that you speak with a mortgage advisor in Lincoln.
They will be able to best advise on how to handle your situation and will search through 1000s of mortgage deals to match you up with the most appropriate one.
Book a free mortgage appointment today and get started on your mortgage journey.
Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.
Whatever the mortgage route that you choose to take, you will always be asked to provide a copy of your bank statements. Whether you’re a first time buyer in Lincoln, looking at moving home to Lincoln, or wanting to know your remortgage options, this will never change. Furthermore, they won’t just ask for your bank statements, they’ll ask for other pieces of evidence to support your mortgage affordability, and calculate the maximum amount you can borrow for a mortgage.
There are multiple different reasons why your lender will want to see your bank statements. They need to know whether you can afford a mortgage or not, make sure that you’re reliable, and know if you’re someone who manages their finances responsibly.
Planning your mortgage journey is essential. As a mortgage broker in Lincoln, we always recommend that applicants think about their bank statements and what’s going to show up on them a few months before their application. When a lender is looking at your bank statements, one of the main things that they will look for is gambling transactions, and here’s why.
We are not saying that it’s illegal to gamble during the upcoming months of your application, however, lenders do seem to judge applicants less favourably if they can see large amounts of gambling transactions on your bank statements.
Spending a little bit here and there on your gambling app won’t make a huge difference to your mortgage application. It can start to impact your application when you are consistently gambling and putting in large amounts of money each time. The number one rule is to always remember to ‘gamble responsibly’.
A mortgage broker in Lincoln like us, nor a lender/building society can tell you how to live your life. We can give you advice though. All we can ask of you is to be careful as lenders do have a duty to lend responsibly.
Lenders need to prove to their regulators that they’re lending to responsible applicants. If you’re a frequent gambler and losing out on money every so often, they may not think that you fit into the ‘reliable category’. They want people to take good care of their finances. Would you lend to someone who is a frequent gambler or someone who hardly gambles?
Moreover, infrequent gambling transactions are unlikely to your ability to get a mortgage. It’s all down to the size of the transactions and how frequent they are.
A big factor is how these transactions affect your overall account balance. Does gambling result in you dipping into your overdraft? Are you borrowing money to gamble/gambling money that you don’t have?
Acting irresponsibly with your money during the lead up to your mortgage application may put off a lender. Lenders notice gambling transactions straight away.
It’s not just gambling transactions that lenders will look for on your bank statements. Here are a couple more things that they’ll be looking for:
They need to be certain that they’re lending to a reliable applicant. From monitoring your accounts to asking you questions about your transactions, lenders need to know that they can trust you.
On the contrary, if you do fall into your overdraft now and again, it shouldn’t cause too much detrimental effect on your mortgage application. When you are always dipping into your overdraft or struggling to get out of it, that’s when it may hurt your mortgage application.
Every lender will look for someone who is reliable and sensible. Get ahead of the game, plan your mortgage application nice and early in the process.
Since you’ll be asked to provide bank statements (typically 3 months’ worth), you could make them appear the best that they can. Ensure that these bank statements make you look reliable. A way to enforce this could be to reduce gambling and outgoings for these three months.
If you gamble regularly, it could be an idea to stop for a little while. There are usually spending limits on betting apps; this could be something to look into. As well as helping your mortgage application, this may also be good for your mental health.
Our job as a mortgage broker in Lincoln is to hold your hand through the entire mortgage process. We will be with you from the very start! Firstly, we’ll take a look at your evidential documents with you, making sure that you are presenting yourself in the best way possible in front of a lender.
Our mortgage advisors in Lincoln are available 7 days a week, so don’t hesitate to book your free mortgage appointment today. They cannot wait to hear from you.
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UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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Lincolnmoneyman.com & Lincolnmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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