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Mortgage FAQ's

Here we have further information regarding:

• General Mortgage Questions
• Mortgage Variety Questions
• First Time Buyers

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.