Mortgage questions answered by experts (Source: lovedublin)
At Oportfolio mortgages, we pride ourselves on being a font of knowledge and a guiding hand for anyone who has queries or concerns around all things mortgages and property. In this blog, we will answer a few of the internet’s most commonly searched mortgage questions to hopefully put some of your minds at ease. Without further ado, lets get stuck in!
How much can I borrow?
This is something that a mortgage advisor will be able to work out for you. It is a carefully calculated figure that takes into account a lot of things like your age, income, and outgoings. But, generally a mortgage lender will be able to lend you between 4.5 and 5.5X your income as a rough guide. We have a free mortgage calculator on our website here to give you an idea of what you might be able to borrow.
How can I find the best mortgage deal?
The most sure-fire way of getting the best possible mortgage deal is by speaking to a mortgage advisor who has access to the whole of market. A mortgage advisor like Oportfolio has access to over 90 different lenders and will compare and contrast the best deals available on the market at the moment and help you find the most competitive deal. Sometimes these deals and lenders are only accessible through a mortgage advisor, so you really benefit from speaking with one.
What is a decision in principle?
A decision in principle, sometimes called a mortgage in principle, is a credit check that is carried out prior to applying for a mortgage. Your mortgage advisor will run this check through a specific mortgage lender’s online credit check system to make sure that there are no credit issues on your file that could cause a problem further down the line. It is an essential part of the mortgage process to help boost a mortgage lender’s confidence in lending you money. If your credit check declines, your mortgage advisor will be able to advise you on the best way to proceed.
Is interest only or repayment mortgage best?
This really depends on what you are wanting to achieve with your mortgage. A repayment mortgage is a loan that you repay per month over a set period of time. You will also pay back interest on top of the loan that the lender will charge. At the end of the mortgage term, you will have paid back everything that you owe to the bank. An interest only mortgage does not actually allow you to pay back the loan at all.
All you pay per month is the interest on the loan. At the end of the mortgage term, you will not have paid off any of the loan so you will need to pay the loan back from your savings, selling the property, or another method. Most people who have a residential mortgage will choose a repayment mortgage because they want to own the property eventually. However, an interest only mortgage may be more appealing for some people as the monthly payments are often a lot less than a repayment loan.
Most people who have buy-to-let mortgages will opt for an interest only mortgage because it means that the monthly payments are lower and you will have a higher profit from the rent that you are being paid by your tenant. If you are unsure which option is best for you, give our advisors a call today.
How long should I take a mortgage for?
You are allowed to take most mortgages up until retirement age. That is between 70 and 75 nowadays. An average mortgage term is normally between 25 and 40 years as long as your age is not above 75 at the end of the mortgage term. For example, if you get a mortgage when you are 25, you could easily get a mortgage term of 40 years as you would be 65 at the end. However, if you were 50 and getting a mortgage, you would only be able to get a mortgage for a maximum of 25 years. You can take a mortgage for shorter than 25 years however, the mortgage will have to still be affordable for you. Your mortgage advisor will be able to help you with deciding this.
Can I pay off my mortgage early?
Yes, potentially. You are able to pay off your mortgage at any time with most lenders. However, as mortgage lenders want you to be a long term customer and keep paying them, sometimes they will charge you a fee to exit your mortgage deal early. If you are planning on staying in your property for a long time, you advisor can help you choose a deal where you don’t need to worry about any exit fees. Likewise, if you are only planning on staying in the property for a short period of time and want the option of paying off the mortgage early, your advisor will be able to help you choose a deal where there are no exit fees.
Can you get a mortgage with a low credit score?
As a lender is putting their trust in you by providing you with multiple thousand pound or even multiple million mound mortgages, they want to have as much insurance as possible that you will be able to pay them back. That’s why the insist that everyone has a credit check before they lend money to you. However, this does not mean that your credit needs to be absolutely perfect with every lender.
With the majority of high street lenders like Halifax, NatWest, Santander, your credit will need to be pretty spotless. However, some lenders such as smaller banks or building societies or specialist lenders will be more lenient and understanding of credit issues. Always speak to your mortgage advisor about any credit issues you might have had before applying for a mortgage. It is also wise to check your credit file through a company like experian, equifax or credit karma.
If you have any other questions about mortgages that aren’t listed here, call our team today and we will be more than happy to help.
