Mortgages - frequent asked questions

How long should I get a mortgage for?

Most people have traditionally got mortgages over 25 years.

Now house prices have risen relative to income, some lenders will lend over 35 years to allow buyers to spread the cost over a longer timeframe.

The longer the mortgage repayment period, the lower the monthly repayment costs will be.

The most common issue buyers have with these mortgage repayment lengths is if the mortgage repayments would still be due past your retirement. So if you’re 50, you may find that most lenders will not lend you money over 25 years and will want it paid back over 15 years (as they want the mortgage paid off before you retire).

How much money do I need for a deposit?

Most lenders offer multiple mortgage products.

Some lenders will offer a 0% deposit mortgage - this is also known as 100% loan to value (LTV).

The reason why most people try to save up as much as possible before buying is that the larger your deposit, the more mortgage products you will have available to you. This leads to you being able to get a better (lower) interest rate.

What does the term “loan to value” mean?

Most lenders offer mortgage products that have a minimum loan to value ratio. A loan to value ratio of 95% would require that for every £95 the bank will lend you, you would need to contribute £5 deposit.

So for a house costing £200,000, if you were to get a 95% loan to value mortgage, you would need to have £10,000 deposit.

Can I borrow the money I need to pay my stamp duty?

Yes, so long as you still meet the banks loan to value ratio to qualify for the mortgage product that you have chosen.

When to apply for a mortgage?

It’s best to contact a mortgage broker early in your search for a new home so that you know what you can afford. After all, there is no point in finding your dream home only to realise you can't obtain a suitable mortgage.

Estate agents (and the seller) like to see your mortgage offer before accepting any offer and taking the house off the market.

How long does it take to get a mortgage offer?

From application to the decision being made can take as little as 2 weeks but can be substantially longer if you have a tricky application.

Mortgage applications can take longer if you can’t utilise mainstream lenders due to previous credit (debt) issues, being self-employed or you need to rely on inconsistent income like bonuses etc.

What is a decision in principle?

A decision in principle is a one page document that allows you to prove to an estate agent or the vendor (i.e. the homeowner) that you are in a position where you are able to afford to buy the property at the price you have offered.

What is the advantage of using a mortgage broker?

Your bank will only offer you mortgage products that they sell - they will not suggest the best mortgage product available to you as they won't consider any other mortgage lender even if they have a lower interest rate.

A mortgage broker on the other hand, is not tied to a single mortgage lender and so searches a lot of lenders to find you the best deal. Using a mortgage broker is a bit like using a price comparison website (they both try to find you the best deal).

Soft credit check versus a hard credit check?

A soft credit check happens when a business uses a credit ratings agency to check your credit history.

Certain credit checks only trigger a soft check (i.e. a decision in principle) but applying for a full mortgage triggers a hard credit check.

If you have lots of hard credit checks on your file (your credit checking history), it can negatively impact your credit rating so we don't recommend applying for the mortgage before you are sure you need it and will go through with it (a mortgage broker will be able to advise exactly when you should apply for the mortgage).