FREQUENTLY ASKED QUESTIONS
We pride ourselves on working closely with all of our clients throughout the process to ensure they're fully informed and understand everything, whilst knowing that we're always on hand to answer any questions.
We've helped a lot of people with their house-buying and mortgage needs and we've put together some of the more common questions we're asked......
WHAT'S AN AGREEMENT IN PRINCIPLE?
Also referred to as an AIP, Decision-in-Principle or DIP, this is a provisional agreement from a lender to grant a mortgage of a specified amount to a borrower.
It's highly advisable to obtain an AIP Certificate before viewing properties to reassure Estate Agents that the offer you make for a property is credible.
WHAT'S THE DIFFERENCE BETWEEN A SURVEY AND A VALUATION?
Nothing, it's just different terminology for the same thing.
Lenders require a basic survey for their own reassurance about the condition and value of the property before agreeing your mortgage. You could opt for a more in-depth Home-Buyers or Structural Survey for additional peace of mind.
WHAT ARE THE MAIN COSTS INVOLVED IN BUYING A HOUSE?
We can discuss & provide you with an indication of the costs based on your circumstances. The main costs are;
Stamp Duty Land Tax payable to HMRC, Conveyancing - the legal work involved,
Survey - to check the value & condition of the property, Lender Arrangement Fee and Mortgage Broker Fee
WHAT TYPE OF MORTGAGE RATES ARE THERE?
The most common two rate types are:
Fixed rates which provide the security of fixed mortgage repayments for a set time - e.g. 2, 3 or 5 years, no matter what happens to interest rates.
Tracker rates are variable interest rates that track the Bank of England base rate at a set margin above or below it.
When your rate expires you'll default to the Standard Variable Rate unless you review your options and secure another rate with that or another lender
ARE MORTGAGES FLEXIBLE?
Mortgages can be really quite flexible.
If you move house and are still tied into a mortgage product, most lenders will allow you to "port" the mortgage to the new property. The majority of mortgages allow you to make overpayments up to 10% of your balance in any one year without incurring penalties.
DO I NEED A SOLICITOR OR CONVEYANCER IF I'M BUYING A HOUSE?
Yes, you'll need a solicitor or licenced conveyancer to complete the legal work involved whether you're buying or selling a property or remortgaging to another lender.
We don't provide legal advice ourselves but can refer you to a solicitor firm we know and trust to help.
WHAT IS THE GOVERNMENT HELP-TO-BUY EQUITY LOAN SCHEME?
The scheme is currently available to first time buyers purchasing a new build property in England & Wales.
The government lends up to 20% of the purchase price (40% in London), interest free for 5 years, leaving you to provide a deposit of 5% and obtain a mortgage for the remaining 75%.
We recommend discussing your options with us as there are other factors to consider.
AS A FIRST TIME BUYER, DO I HAVE TO PAY STAMP DUTY?
There may be exemptions in place, meaning that when buying your first home, you may either pay no stamp duty at all or a reduced amount. This is dependent upon your purchase price, your circumstances and the Stamp Duty rules at the time.
Your advisor will be able to calculate this for you and explain in more detail.
We don't believe in jargon and go to great lengths to ensure our clients understand everything in a simple and straightforward way.
Because we know jargon and unfamiliar terminology is all around us, we've provided a guide to some of the common acronyms and terms you may come across in the house-buying and mortgage process
For a lender to establish how much they will lend someone, they have their own affordability calculation based on their income, their current credit commitments and the amount of deposit / equity they have.
The length of time you agree to repay the mortgage over. This tends to be a maximum of 35 or 40 years depending on the lender.
LOAN TO VALUE (LTV):
The size of your mortgage as a percentage of the property’s value.
The cheapest deals tend to be available to people who are borrowing 60% or less.
The amount of the property that you own outright. Put simply, your property value minus your mortgage balance.
An assessment of a person’s likelihood of keeping up – or otherwise – on the repayments on their loan. A credit score is usually based on a person’s credit history
KFI - KEY FACTS ILLUSTRATION
This document contains key mortgage information which is designed to help you compare the costs and features of different mortgages from one or more lenders. It is designed to make it easy to compare mortgages at a glance
EARLY REPAYMENT CHARGE (ERC):
Penalty fees you have to pay if you want to leave your mortgage during a specified period, usually the period of the initial deal.
REPAYMENT / CAPITAL & INTEREST
With this type of mortgage, you pay off both the interest and a portion of the capital debt, so by the end of the term, you will no longer owe anything to your lender.
With this type of mortgage, you only pay the interest on your mortgage during the term of the loan, and not the capital. This has to be repaid at the end of the term, in one go.
Another name for the seller of a property
As the freeholder, you own the building and the land it stands on
This means you have the right to live in a property for a set number of years but don’t actually own the building. Flats are typically leasehold. It’s likely that you’ll pay a service charge and / or ground rent to the freeholder to help maintain communal areas and the exterior of the property.
EXCHANGE OF CONTRACTS
This is when the buyer and seller's conveyancers have exchanged contracts and the deal becomes legally binding
This is the point at which the transaction (purchase or remortgage) is finalised by the conveyancers and money changes hands. The purchase has been made and you can pick up the keys and move in.
The official body responsible for maintaining details of property ownership.
Your conveyancer will send your signed Mortgage Deed to the Land registry after completion to register your purchase / remortgage.
What you need to know
There may be a fee for arranging a mortgage, typically £199, payable prior to your mortgage application.
Your home may be repossessed if you do not keep up repayments on your mortgage. Some buy to let mortgages are not regulated by the Financial Conduct Authority.
The guidance and/or advice contained within this website is subject to the UK Regulatory Regime and is therefore targeted at consumers in the UK.
MHC Mortgage & Protection Ltd is an appointed representative of HL Partnership Ltd, which is authorised and regulated by the Financial Conduct Authority. HL Partnership Ltd is entered on the FCA register under reference 303397
MHC Mortgage & Protection Ltd is registered in England and Wales - 12067840 – Registered address – 13 Aurum Close, Whitstable, Kent. CT5 3FN