General mortgage questions.

What exactly does APR mean?

APR is the true cost of borrowing and allows you to compare the cost of mortgages, loans and credit cards on a like for like basis. The APR will include the interest rate on the loan together with any charges for setting up the mortgage.

Do I have to have life insurance to become eligible for a mortgage?

No you do not need to have life assurance in order to get a mortgage. Life assurance is an important consideration when you are taking on the commitment of a mortgage especially if you have dependents.

Is there a charge for paying my mortgage off early?

When you pay off your mortgage either to become mortgage free or to move to a different lender, there is likely to be a fee lenders usually charge a deeds release fee which can vary from £25 to over £200.

Additionally, if you are taking advantage of a special interest rate (for example a fixed rate) there is usually a penalty payable if your redeem the mortgage before the end of the fixed rate period this will vary from lender to lender so it is important to seek further information.

What is the oldest age at which I can apply?

Each lender will have a different maximum age to take out a mortgage. Lenders need to know that you can afford your mortgage repayments and therefore if you take out a mortgage that will take you into retirement they will need confirmation that you will have sufficient income in retirement to continue paying your monthly repayments.

I currently save with an ISA - should I keep this or plough it in to my mortgage?

Our financial advisers will learn all about what savings plans you hold and review whether it would be best to keep your ISA or reduce your mortgage. It is recommended that between 2 to 3 months net salary is kept in an easily accessible account in case of emergency. A Cash Mini Individual Savings Account (ISA) is particularly useful for this, as it currently allows you to save up to £3000 in each tax year without any tax liability.

Can I borrow more than the cost of my house?

All lenders have different lending criteria. Depending on the lender you can potentially borrow up to 130% of the value of the property.

I have been made bankrupt - will I be able to take out a mortgage still?

The Lender will judge customers with previous or existing adverse credit in a flexible manner and every case will be judged on its individual merits. Along with the customer's ability to keep up repayments on the mortgage, taking into account his/her existing liabilities. However your bankruptcy will have needed to been discharged.

How can I keep track of interest rate changes that might affect my payments?

Once your interest rate changes a lender will issue you a letter in inform you of your new repayments and chargeable rate.

Do I have to take out my insurance with the same people who I get my mortgage with?

It is compulsory with all lenders to have building insurance in place, although most lenders do not insist that you have the insurance with the same company as the mortgage. However if you do not take the insurance offered by your mortgage provider, it is usual for them to charge an administration fee in the region of £25.

As a Scottish customer, what differences are there in the mortgage process, if any?

Buying a home in Scotland follows different rules. For a start, solicitors can act as estate agents and properties are sold by bidding on an offers-over or fixed-price basis.

Unlike the system south of the border, buyers tend to offer over the asking price rather than below it and bids are made in secret. As a buyer you ask your solicitor to register your interest with the seller of a property who will then notify you of the closing date for bids.

Potential buyers have their survey done before they make an offer and once an offer has been accepted it is a binding agreement (called conclusion of missives).

If you or the seller backs out after that then compensation becomes due. As a result there's very little gazumping in Scotland once an offer has been accepted. Searches and enquiries are carried out using a central system of property registration, instead of via local authorities, so the process is much quicker. No money is handed over until the final settlement day so no deposit is required.

You may also be restricted on choice of lenders.

The house I wish to buy is lease-hold - will this change my mortgage options?

Leasehold property will not affect the type of mortgage that you can apply for. However properties with short leases may be a problem as lenders will require that the lease should run for at least the term of mortgage + 20 years.

I'm thinking of buying abroad - will you offer me a mortgage?

Yes, we have a link up with a company that specialises in mortgages for Holiday homes, or those planning to relocate abroad.

I'm changing jobs and having trouble with this month's payment - what should I do?

Speak to your lender immediately; it is in their interest as well as yours to ensure that you do not get behind with your payments. If you explain your situation to your lender they will explore your options and find a way that is amicable for both of you.

I've had insurance with Endsleigh before, is there any incentive to choose you for my mortgage as well?

The main incentive is that you have already experienced some of the services our company can offer, and therefore you already know of our efficiency and personal service.

Mortgage variety questions.

Which type of loan is best if I plan to pay it off before the term is up?

If you are planning to repay your mortgage before the end of the term then it is important that you seek independent information before setting up your mortgage. If, for example you will be receiving a lump sum at a specific time in the future then you can set up your mortgage on an interest only basis and use the lump sum to pay off the mortgage when you receive it. An interest only mortgage means that you pay interest only to the lender each month and the capital sum borrowed does not reduce. If you are unsure of the lump sum amount or whether it will be paid then it might be better to set up the mortgage on a repayment basis initially whereby you are paying interest and capital each month and gradually reducing the outstanding mortgage balance.

Whichever method of repayment you choose, it is important to ensure that you are able to pay of the mortgage before the end of the term without being charged an early repayment penalty by the lender - this usually happens if you have a special mortgage product such as a fixed rate or discount mortgage.

Can I change between interest-only and repayment if my financial circumstances improve?

Most lenders will allow you to change between interest-only and repayment, however there may be an administrative charge by the lender.

Are Endowment Policies relevant anymore, and what is the risk involved?

An Endowment mortgage is a type of interest only mortgage, where monthly interest payments to the mortgage lender and monthly payments into an endowment policy are made. By taking out an endowment policy over the full term of your mortgage you should hopefully generate enough cash to pay off your mortgage and possibly have some money left over. Depending on the performance of the investment, the capital growth may exceed the value of the mortgage capital or fall short. If the lump sum does not cover the mortgage capital at the end of the mortgage term you will be liable to make up the shortfall yourself. In recent years as interest rates have been very low and therefore endowment mortgages have not been hugely successful.

What exactly does offsetting involve?

In simple terms the lender deducts the amount you have in savings from the amount that you owe them, and you only pay interest on this lower amount. This is especially useful for any Higher Rate Taxpayers as they pay 40% tax on their savings. This will usually enable you to dramatically reduce the term of your mortgage. You can add to your savings, or withdraw your savings at any time.

I'm improving my house and the value has gone up - is it worth remortgaging?

It is always worth considering remortgaging to see if better interest rates are available. If you are planning to raise capital for home improvements then remortgaging is an option we can discuss.

I am a doctor - do you do any particular mortgages for 'professionals'? I believe they are sometimes referred to as Key Worker Mortgages too?

Yes - often lenders are willing to offer 'professionals' more than they would normally lend, as it is expected that your income will rise dramatically in the early years of employment.

I'm hoping to buy a second property to let out - what do I need to consider?

You need to consider is the property in an area where people want to rent, who would you want to rent to (students, professionals, a family), are you going to let the property furnished or unfurnished, who is going to maintain the property, do you have a deposit, are you going to use a letting agent, are you going to use an accountant, do you understand how the rental income will be taxed and what you can claim against your tax. We have advisers that are very experienced in Buy-to-Let properties and can guide you every step of the way.

First time buyers questions.

I haven't found a house yet, but I want to arrange a mortgage so they're ready at the same time - is this possible?

It is a good idea to find out how much you can borrow and be sure that a lender is prepared to lend money to you before you find a house. We can help you to apply for an AIP (application in principle) where the lender will check your income and credit history etc and provide you with a certificate confirming how much they are prepared to lend to you. It is not possible to obtain a formal mortgage offer without property details, though, as the lender will need to check that the property is a sound mortgage investment - they will do a valuation for mortgage purposes when you find a property.

What personal debts will be taken in to account when working out my eligibility - will my student loan count against me for instance?

Lenders need to make sure that you can afford your monthly mortgage repayments before they will give you a mortgage. Some lenders base your mortgage on your income less any regular commitments (loans, maintenance payments etc) whilst others lend on an affordability basis - taking into account your net monthly income and regular commitments. Not all lenders take student debt into account and when you come to Efit we will ensure that we find the best lender for you. WE have excellent relationships with lenders who will be sympathetic to graduates - understanding that they will have not only student loans but bank overdrafts and credit card debt too. The most important thing, is to ensure that you always make your repayments as lenders do not like to see missed payments and defaults on your credit file.

My income doesn't stretch to a very large property, can I use a parent as a guarantor?

Sometimes it is possible to have a close relative as a guarantor, however they can be other options available, all of which we can discuss with you. The most important thing we need to do is to make sure that the mortgage will be affordable to you, both now and in the future.

I'm thinking of buying a house with three friends - what information can you give us?

Think very seriously about it. You are all friends now, but what will happen when you receive a very large bill and you disagree about who is going to pay it, what happens if one of you becomes unemployed and can't afford their part of the rent, what happens if one of you wants to leave or worse still what would happen if one of you was to die? When you sign a mortgage as a group, or even as a couple, you are each responsible for the whole debt, not just 'your percentage' of the house. These things all need to be agreed in advance, that way you all know where you stand.

Will you recommend Solicitors to me, and if not, where do I find them?

We do not normally recommend individual solicitors for conveyancing (the name for the legal work), it may be better to talk to your friends or to your Estate Agent for a recommendation. It is usually better to use a local solicitor, or Licensed Conveyencer, as they will have a particular knowledge of your area. It is always a good idea to get quotes from several local firms, as some are more competitive than others.

We can recommend a very competitive firm of solicitors to you for Will writing and we would be pleased to pass your details to them upon request.

Is there any financial advantage to being married as opposed to living together, when it comes to applying?

Mortgage lenders do not treat married couples and couples who are living together any differently - they will usually lend based on both incomes combined or if one partner earns significantly more than the other, they may lend a multiple of each income.

When the mortgage is set up, your solicitor will advise you whether to set up the mortgage on a joint tenancy (where in the event of either death, the other partner inherits the property and the mortgage debt) or on a tenants in common basis (where you each own a share of the property and debt and on death, your share will fall into your estate).

I mainly do contract work - will this affect my offer?

If you work on contract then we will recommend lenders who are happy to lend based on contract income and are not concerned about you being in permanent employment. It is important to seek informationas some lenders do not like lending to people on contract.

What other costs will I incur whilst taking out my mortgage?

If you are buying a property, here are the costs you are likely to incur:

• Estate agency costs for selling your current property
• Solicitors costs for selling your current property
• Solicitors costs for purchasing your new property
• Stamp duty on purchase
• Valuation costs for new property
• Arrangement fees - some mortgages require you to pay a booking or arrangement fee.
• Removal costs.