Mortgage Light, Author at Mortgage Light

How to Get a Mortgage on a Low Income

August 20, 2022 By Mortgage Light Leave a Comment

If your income is below the national average (which currently sits at around £31,772 per year), then buying a house and taking on a mortgage which may run for the next 25 years or more, may feel like a pretty daunting financial commitment. Having a low income can make getting a mortgage large enough to buy a reasonable property a challenge. But it certainly isn’t impossible and it doesn’t have to be scary!

The level of your annual income is one of the most important factors in your mortgage application. It’s a major driver for a lender in their assessment of the mortgage they might be comfortable in offering to you. Lenders will look at your income because this is ultimately what will be used to repay what you’ve borrowed and meet your monthly mortgage repayments.

If I have a low income, will I struggle to get a mortgage?

If you have a low income it doesn’t necessarily mean you’ll struggle to find a lender who’ll offer you an affordable mortgage. By using an experienced mortgage broker or adviser you will have the best chance of finding the right mortgage for you.

How will a lender assess my mortgage application?

Firstly, let’s explain a little about how lenders generally assess mortgage applications. Whilst it’s true that most lenders will assess each mortgage application on a case-by-case basis, most of them will also have a set of basic lending criteria that they will apply as an initial assessment of a borrower’s affordability and suitability. This often includes an income multiplier. This helps to determine the maximum level of lending that they are willing to advance to an applicant.

Alongside your income, a lender will also want to look at your outgoings. This includes things like bills, food and travel costs. Lenders may also want to try to ‘futureproof’ your application. They do this by considering how you’d manage if interest rates were to rise or if you were to have a change in personal circumstances, such as starting a family for instance. Would you still be able to meet the monthly mortgage repayments?

In addition to the above, mortgage lenders will also consider:

The size of your cash deposit
Any savings you may have available as a safety net
Your credit history
The type and condition of the property you wish to purchase

Don’t feel discouraged by the lack of size of your income when looking for a mortgage. There are a number of options available to those on a low income which might help you secure the property you are after. Let’s look at a few of those options now.

Apply for a joint mortgage

Arguably, the easiest way to get a higher mortgage offer when you are on a low income is to apply for a joint mortgage with somebody else. This could be a partner, friend or a family member. Remember, however, that buying a house and taking out a mortgage is a legal contract and a long-term commitment. Consider very carefully who you enter into a joint mortgage with.

A joint mortgage allows you to borrow money jointly with another person. This means you not only share living costs, making the mortgage more affordable, but it means that there are two incomes coming into the household from a mortgage assessment point of view. This means that you will be able to borrow more. When you purchase a property with someone else, you will be joint owners with a legal claim to the ownership of the property. You will also both be liable for the entire mortgage and its monthly repayments.

With a joint mortgage application, lenders will take into consideration both applicants’ incomes in their income multiplier. So, let’s say that you both earn £18,000. The level of mortgage will be based on a joint income of £36,000. Using a 4.5x income multiplier, this could generate a mortgage up to £162,000. Combining incomes not only helps make the cost of owning a house more affordable and therefore helps you get accepted, but it could also secure you a much larger mortgage offer.

Find out more – ‘How do joint mortgages work?’

Put down a large deposit

Easier said than done, we know. If you are on a low income, how are you meant to put down a large deposit? Well, perhaps you have inherited enough money to be able to do this. Perhaps you are lucky enough to have some help from your parents. In fact, The Bank of Mum & Dad is up there amongst the most common ways that first-time buyers raise a house deposit.

Whilst it’s possible to use cash from a loan to put towards your deposit, our advice would be to use this option wisely. It’s important to be sure you’re able to afford the loan payments together with your mortgage repayments and other outgoings. You should also be mindful that the mortgage lender will take the loan into account when considering your affordability for the mortgage.

Maybe combining your savings with someone else and applying for a joint mortgage will help achieve the strongest application.

Your deposit will form a percentage of the purchase price of the property that you are buying. You will then need a mortgage to cover the remainder of the purchase price.

Let us explain; if the property you want to buy is £180,000 and you put down a deposit of £18,000, your deposit will be 10% of the property value, meaning you’ll need a mortgage for the 90% which would be £162,000.

Ultimately, a larger deposit should bring your mortgage borrowing and therefore your monthly repayments down. A deposit of between 10-20% is considered a good-sized deposit. 20%+ is considered to be a large deposit and will unlock better mortgage deals with lower interest rates.

Find out more – ‘What is the minimum deposit on a mortgage?’ & ‘How to save for a house deposit’

Improve your credit score

Alongside your income details, your personal credit score is another major factor that lenders will take into consideration when assessing your mortgage application. It could influence the type and size of any deals they may offer you. Looking into your credit history is one of the ways in which a lender will gain information on how reliable you have been at paying back loans and borrowing in the past.

If you have borrowed money in the past and kept up with repayments, then you’re likely to have a good credit history. Having ‘good’ credit is a sign that a creditor can trust you. This will generally work in your favour. On the other hand, ‘bad’ credit could signal a history of missing or late repayments. This will serve as a warning to potential lenders. Bad credit coupled with a low income is likely to make it much more difficult to get accepted for the mortgage you want.

It’s good practice to find out your credit score ahead of applying for a mortgage. That way, you’ll have a good picture of how a lender is likely to view you as a potential customer. Find out more on the Experian website.

If you have never borrowed money previously and therefore do not have a credit history, then this can also present a challenge. It gives lenders nothing to go on. Therefore, they can’t be sure whether you are a responsible borrower or not. As a consequence, they are likely to take a cautious approach to your application.

Prior to applying for a mortgage, it’s a good idea to build up some level of good credit history. Perhaps take out a credit card with a small limit and use it fairly regularly. Ensure that you keep on top of repayments and ideally repay the balance in full each month. This will demonstrate that you are financially responsible and will help to build a positive credit score or improve a previously poor credit score.

Find out more – ‘How does bad credit affect a mortgage?’

Use a mortgage guarantor

If you know someone who is willing to be a mortgage guarantor for you, then this could be a helping hand in getting a mortgage on a low income. A mortgage guarantor is usually a parent or close family member who takes on some of the mortgage risk by acting as a safety net for your borrowing.

A mortgage guarantor must meet the eligibility criteria of the lender. They must also have sufficient disposable income available to cover your monthly mortgage commitment and/or have cash savings or equity in property available to offer as security in case you default.

Essentially, a mortgage guarantor may provide comfort to a lender. If you are unable to make the mortgage repayments, there is someone else that they can rely on to make these for you. Just be aware that not all lenders accept guarantor mortgages. And of course, being a mortgage guarantor is no small matter. It’s a big commitment and a legal tie.

Find out more – ‘What is a mortgage guarantor?’

Use a government scheme

It’s no secret that getting on the property ladder can be difficult – especially for those on a low income. The good news is that there is help out there for those who would like to utilise it. The government run a number of schemes that make purchasing a home that little bit easier.

Help to Buy

Let’s first talk about Help to Buy. Exclusive to first-time buyers, when using this scheme you are given an equity loan from the government to put towards the cost of a new build home (up to 20% of the property price). As a result, you will only need to provide a 5% cash deposit, which means lower upfront costs. There is no interest to pay on your equity loan for the first five years and you are likely to qualify for a wider range of mortgage deals with cheaper rates as your mortgage borrowing is likely to be sub 80% of the property value and therefore less of a risk to the lender.

It’s important to note that you will be limited by the price cap in your region. This means that you can only use the scheme to purchase a home costing no more than the specified property price cap in your region. This is in place to ensure that the scheme reaches the people who need it most. You can view the property price caps in your region here. This scheme will end in December so submissions will only be accepted up to the end of October.

Shared ownership

The shared ownership scheme is the most popular of the government schemes designed to help people get on the property ladder. When you utilise the shared ownership scheme, you purchase a share of a property. The remaining proportion is retained by a Housing Association which then charges you monthly rent. It’s essentially a cross between buying and renting.

By purchasing a share of a property (typically between 30-50%), your deposit and your mortgage borrowing (and therefore repayments) will be much smaller than if you had purchased 100% of the property. Additionally, the rent you’ll be charged is typically less than the rate charged on the traditional rental market. It’s important to note that because you won’t own 100% of the property, you may encounter a few restrictions when it comes to some home improvements. Essentially, you are a tenant when you live in a shared ownership property. This could mean that in the very worst of cases, you might even be evicted if you fail to pay the rent, for instance.

Over time, you can follow the process of ‘staircasing’. This allows you to purchase further shares in the property and, eventually perhaps, reach 100% ownership. If you reach 100% ownership, you will no longer pay rent to the Housing Association.

Staircasing can be an expensive process, however. This is because you will need to get your house valued each time you do it. This incurs a valuation fee. You will have some legal expenses to pay as you’ll need to involve a solicitor. You may also incur some mortgage fees each time you rearrange your mortgage.

Find out more – ‘Is there a minimum income for shared ownership?’ & ‘Shared ownership – how does staircasing work?’

Mortgage Guarantee Scheme

A fairly new government-backed scheme, the Mortgage Guarantee Scheme is also known as the 5% mortgage scheme. It allows first-time buyers, home movers and previous homeowners to get a 95% loan-to-value mortgage. This means that you will only need to put down a 5% deposit on a property.

Ordinarily, the majority of lenders require a minimum of 10% for a house deposit. With the Covid-19 pandemic and the cost of living making raising deposits much harder for people all around the country, this scheme has been temporarily introduced to offer the opportunity to purchase a property with a much smaller deposit. This scheme is running until December 31st 2022 and is only available amongst participating lenders.

Use a mortgage adviser and broker

Lastly, if you are looking to get a mortgage on a low income, we would strongly advise you to use a mortgage adviser and broker to help you navigate the mortgage market. At Mortgage Light, we’ve helped people with all kinds of different financial situations secure the mortgage that they need.

Using a mortgage adviser and broker also significantly decreases your chances of getting rejected by a lender. No one likes getting rejected, but having a mortgage application rejected could actually set you back in the long run.

This is because each mortgage application will leave a hard search on your credit report. Having multiple hard searches in a short space of time can be an indication that you are relying on credit, having financial issues or your application has been rejected by other lenders. This could well be a red flag for any mortgage lender that you apply to. It signals that you may be a high-risk applicant.

Rest assured it is possible to get a mortgage on a low income. However, it may require a little forethought and planning. It’s all about finding the most suitable lenders and making your application the most attractive it can be.

Of course, this can be tricky to do alone. The Mortgage Light team are on hand to help you when you are ready to start exploring this exciting next milestone in your life! Our advisers are just a phone call away with plenty of friendly advice to offer. Give us a call on 01908 597655 or contact us via our website.

How Much Money can I Borrow for a Mortgage?

August 14, 2022 By Mortgage Light Leave a Comment

If you feel that you might be ready to go out and purchase your first home – congratulations! Or perhaps you’re already a homeowner and you are looking to move onto the next property in your homeownership journey. Whatever your reason for reading this blog, if you’re ready to start looking for a property, you’ll find some useful information below.

But how can you start house hunting if you don’t know what you can afford? Before you get carried away on Right Move, it’s important to speak to a mortgage adviser. They’ll help you find out how much you might be able to borrow for a mortgage and therefore how much you might be able to spend on a property.

To give you an idea of how much you might realistically be able to borrow for a mortgage, we’re going to explain a little about how lenders calculate affordability, how much your mortgage might cost and what your next steps should be.

Speak to a mortgage adviser and broker

We would always suggest that the first step in this process should be to speak to a mortgage adviser and broker, such as us here at Mortgage Light. We will be able to guide you on the level of mortgage borrowing that you may be able to successfully apply for. This will give you an idea of what the monthly repayments are likely to be.

This should save you from applying for mortgages that you can’t afford or won’t qualify for. This can result in your application getting rejected. Bear in mind that evidence of rejected mortgage applications can affect your credit rating. This might hinder you from obtaining the mortgage deals that you do qualify for. It’s better to try and get it right the first time with the help of an experienced adviser.

Our advisers will take a look at your current income and your expected level of expenditure. That, together with the amount of the cash deposit you are able to provide, will help us work out what size of mortgage borrowing you might qualify for and therefore the price range of property you might consider looking at. We will also be able to give you an idea of the other costs you are going to need to cover. These can include valuation fees, legal fees, stamp duty and possibly lender’s facility fees.

Once we have guided you through all of this and you’ve found the property you wish to purchase, we will scan the mortgage market and make recommendations to you on the most appropriate mortgage deals. After discussing these recommendations, we’ll work with you to complete your mortgage application. We’ll then present it to the most appropriate lender. We’ll look for one which we feel gives your application the best chance of being approved.

Find out more – ‘How do I apply for a mortgage?’

How do mortgage lenders assess affordability?

When you apply for a mortgage, the first thing a mortgage lender will do is assess whether your application falls within their basic mortgage affordability criteria. Most mortgage lenders base the maximum amount they are willing to lend on a simple multiple of the applicant’s current basic annual income.

As a general rule, you can expect to be offered a mortgage up to four and a half times your annual salary. In some cases, this can be stretched higher. This is only a guide, however, and some lenders may take a more cautious approach and adopt a lower multiple. Some may be willing to go a little higher where they feel circumstances justify it. This means that if you earn £30,000 per year, you might reasonably expect to secure a mortgage of up to £135,000.

If, however, you make a joint application with your partner who also earns £30,000 per year, then this could potentially take you up to a joint mortgage of £270,000. This could be lower if you have loans or independents.

Assuming you meet this initial income multiple criteria, your application will then need to pass some further basic checks before being looked at in any detail. The next thing lenders will check is your credit history. All lenders subscribe to one or more of the major credit reference agencies.

These agencies collect detailed information about everyone’s personal credit history. From this information, they allocate everyone a personal credit score. The higher the score, the lower the credit risk you represent. The lower the score, the higher the risk you’re considered. Each lender will set a minimum score that all applicants must achieve before they will consider lending you money.

Find out more – ‘Am I eligible for a mortgage?’

What will my mortgage cost?

So, you know how much money you might be able to borrow for a mortgage. You know the budget you’ll be considering for your future property. But what does this actually mean in terms of your monthly repayments? This will depend on a few things:

The amount of borrowing you will need
The length of the mortgage term you choose
The interest rate offered to you

Once you have found the property you want, let your mortgage adviser know. They will search the mortgage market for the most suitable deals available. Then, they will provide an illustration of what the monthly mortgage repayments will look like on different mortgage deals across a few different mortgage terms.

Choosing a shorter mortgage term will mean you’ll pay less interest back overall. However, spreading your borrowing out over a shorter time period will mean you’ll have larger monthly repayments. 35 years has always been considered to be the normal mortgage term. It helps to make those initial mortgage payments more affordable. Lenders are generally reluctant to provide mortgages that extend beyond the applicant’s normal retirement age. This can sometimes limit the mortgage term you are able to apply for.

Getting a mortgage in principle

Before you start house hunting, we usually recommend that you try to obtain a mortgage in principle. This is also known as a Decision in Principle (DIP) or an Agreement in Principal (AIP). It is an indication from a lender that you meet their basic lending criteria. It also gives you an idea of how much they may be willing for you to borrow for a mortgage. This ‘offer’ is based upon an initial and very basic assessment of your information. This is usually submitted by your mortgage adviser and broker.

Having a mortgage in principle under your belt before house hunting shows estate agents and sellers that you are a serious buyer. It shows that you are actually in a strong position to make an offer on a property. A mortgage in principle is not compulsory. However, many estate agents and sellers will refuse to let you view a property unless you have one.

A mortgage in principle is usually valid for between 30 and 90 days from issue. The most important thing to remember is that it is not a mortgage offer. It is only based upon that very basic assessment of your information. It’s not in any way a commitment on the part of the issuer to eventually provide a mortgage to you once you submit a formal application. If you fail to meet the lender’s criteria for any reason during their assessment process, they may well reject your application.

Find out more – ‘Mortgage in principle – what can go wrong?’ & ‘What do I need for a mortgage application?’

Ultimately, if you are wondering how much money you can borrow for a mortgage, we recommend that you speak to a mortgage adviser and broker, such as us here at Mortgage Light. It’s the first step on the road to getting a mortgage.

We’ve helped hundreds of people just like you to get their dream home. To get started, pick up the phone today and book a free consultation with us on 01908 597655 or contact us via our website.

5 Reasons to use a Mortgage Adviser

August 8, 2022 By Mortgage Light Leave a Comment

Let’s face it – the mortgage market can feel pretty daunting. If you don’t know exactly what you’re doing (and most people don’t), then all the different lenders, deals and jargon can make your head spin! This is exactly why mortgage advisers exist – it’s because mortgages can be complex and people need help navigating them.

Whilst you could go directly to one of the lenders you already know when you are looking for a mortgage, you’d be significantly restricting your options if you did. Lenders will only be able to advise you on their own products. There’s a huge selection of mortgages out there – but how do you know which one is right for you?

That’s where a mortgage adviser comes in. We can help you navigate the mortgage market and select the best mortgage deals for your circumstances.

If you’re wondering exactly what a mortgage adviser can do for you, here are 5 of the main reasons we recommend using one:

We save you time

It is quite possible for you to search the mortgage market yourself. You can compare different deals and then organise your own mortgage application. However, it can be rather time-consuming and a little confusing. You need to know what you’re looking for, as well as how to make accurate comparisons between one deal and another. That’s why we’re here.

Using a mortgage adviser will save you a huge amount of time doing research. We’ll help to highlight what is important to you in a mortgage. We’ll be able to explain the different options to you in straightforward terms. Through discussion with you, we’ll narrow down those options to a simple choice.

As part of our service, we scour the whole of the mortgage market for the best deals for you. We have access to exclusive deals that consumers cannot access directly themselves. We’ll work with you to collate all the documents you’re going to need, such as pay slips, bank statements and photo ID. Then, we speak to lenders on your behalf, ultimately submitting and managing your application until you secure an offer. We can even liaise with your solicitor on mortgage-related matters.

Not only that, but because this is our job and we know the house buying process inside out, we can move through it quickly. This means that you will get your mortgage offer fast which could help you secure the property you are after. Given the property market is currently a seller’s market, being able to move quickly can make all the difference between having an offer accepted or losing a property. At Mortgage Light, we aim for all mortgage offers to be issued within 7-14 working days, as long as we have all the requested documentation from you.

We save you money

Buying a property is a very costly business. The great thing about using a mortgage adviser is that we can help to save you money. Our knowledge and experience can help you avoid making costly mistakes. An important part of our role is to find you the most appropriate mortgage deal for your circumstances. One that’s not going to cost you unnecessary money in the long run.

As we mentioned previously, we often have access to a range of deals that aren’t available directly to consumers. That is because at Mortgage Light, we’re recognised by banks and building societies as providing a valued service in the way we package and present deals for them. This means that we’re able to offer bespoke products that aren’t always accessible elsewhere. This allows us to potentially secure you an exclusive deal that just wouldn’t have otherwise been possible!

We’ll also take all the costs and features of a mortgage into account when finding you the cheapest and most suitable deal. We don’t just compare interest rates. We take into account fees, such as arrangement fees, booking fees and deal breakage fees in case you need to move to a new property. Being unaware of such fees and restrictions can be a pitfall for many people who search for a mortgage themselves.

We can also explain to you just how much impact a small difference in interest rate can have over the length of a mortgage term. For example, let’s say you take out a £300,000 mortgage over 25 years at an interest rate of 2%. You’d pay £1,271.56 per month in mortgage repayments and pay £81,468.90 in interest across the whole mortgage term. If that interest rate was to increase by just 1% to 3%, your monthly mortgage repayments would increase by £151.07 per month and you’d pay an additional £45,321.28 in interest over the same 25-year term.

Find out more – ‘How much interest am I paying on my mortgage?’

We’re experts

Did you know that all mortgage advisers and brokers in the UK need to hold a certificate in ‘mortgage advice and practice’ before being able to give professional mortgage advice to clients? There’s a lot that goes into getting these certifications. We work hard to maintain ongoing professional development to retain the qualification.

Our adviser’s work is continually monitored by compliance officers to ensure standards are being maintained. You can rest assured that your adviser is qualified and an expert in their field.

We’re also regulated by the Financial Conduct Authority (FCA). So, not only do we want to find a mortgage deal that’s right for you and that you can afford, but it’s a regulatory requirement of our services! We have a duty of care to provide you with the right financial advice, so we’ll always be in your corner. We take our services very seriously and we care about what we do. We’re professional at all times, whilst remaining friendly and approachable, ensuring each client receives the best support possible. We’re proud to have received 4.9-star rated reviews from our clients, with 98% saying they’d recommend us.

We educate you along the way

We work with first-time buyers, as well as people who are on their third or fourth home purchase. We’ve learned that no matter where someone is in their homeownership journey, many people don’t truly understand their mortgage deal and the opportunities that might be open to them.

Of course, part of the motivation in hiring a mortgage adviser is having consistent support from an experienced mortgage professional. This means you don’t have to get bogged down in the detail. But on the other hand, a mortgage is one of the biggest financial commitments you’ll ever make. We want to empower you to understand how it works.

When we find you a mortgage, we’re not just comparing the best deals. We’ll take the time to get to know you and your needs to ensure that we find the right product for you. And once we have, we’ll make sure you understand why we believe that this is the right product for you. Mortgages can be confusing, but we promise we’ll break it down and make it as straightforward as possible!

We offer long-term support

Your mortgage term is likely to be a 25+ year commitment. We plan on sticking around with you throughout! Most people tend to change their mortgage arrangements a number of times during the term of their borrowing and that’s why we work on building a relationship with you so that we can help you throughout your homeownership journey. We’re proud that 80% of the mortgages we arrange are for clients reusing our services to remortgage.

When you work with a Mortgage Light adviser, they’ll keep in contact with you from time to time to see if your circumstances have changed. They will review with you to consider if it’s time to remortgage to a more appropriate deal. We’ll be here when you’re ready to move house too. Working with a mortgage adviser who has experienced your homeownership journey with you has huge advantages as they will truly understand your needs and situation.

Whether it’s remortgaging, moving, adjusting your mortgage repayments, investing in a second property or taking out life cover, Mortgage Light are with you every step of the way.

Are you in need of a mortgage expert? Look no further than Mortgage Light. With a mixed dynamic of skill sets across our team, we cater for all aspects of the mortgage and assurance market. We’re confident that we can help you, no matter what your financial situation.

Get in touch with us today on 01908 597655 or contact us via our website.

Could Milton Keynes be Your City of Dreams?

July 27, 2022 By Mortgage Light Leave a Comment

Milton Keynes has fast become a popular place to live in recent years and now has around 287,000 people living in the area. MK, as it’s commonly referred to, received its city status as part of the Queen’s Platinum Jubilee celebrations in June 2022.

One of the main draws for living in Milton Keynes has got to be the Buckinghamshire city’s fantastic location, with direct links to London; commuters can get there in as little as 30 minutes by train, with Birmingham possible in around 45 minutes. Or perhaps it’s the city’s abundance of bars, restaurants and shopping options that entice home-movers to live here; whatever the appeal, it’s true to say that if you’re thinking of moving to a location that arguably has it all, then Milton Keynes is worth considering.

What are the job opportunities in Milton Keynes?

Whilst London is easily commutable, Milton Keynes itself has many employment opportunities. Home to many large national and international employers including Mercedes-Benz, Argos, Domino’s Pizza and more, the city ranks highly in the UK for one of the top places for business commerce outside of London.

What about schools?

There are so many considerations when you’re thinking of moving home. And if you have children, then no doubt reputable schools will be high on your list of priorities. The good news is Milton Keynes’ schools boast impressive results above the national average. The city also has a choice of private schools for various age groups. In terms of adult learning, The Open University has its headquarters in Milton Keynes and also has a campus within the town – there are universities in the surrounding areas too.

A modern city with a whole lot of history

Milton Keynes is not only a modern city; it boasts an exciting and interesting history too.
During World War Two, Bletchley Park was the home of the enigma machine code breakers who played a significant role in ending the War. The Park was a secret until the 70’s, becoming famous during the 90’s and is now open to visitors. Its popularity has significantly grown over the years with visitors from all over the world – the location has even been used in the Oscar-winning film The Imitation Game, starring Benedict Cumberbatch and Keira Knightley.

So even though London is a short train journey away, there is much to do in Milton Keynes too. With a huge choice of bars, restaurants, parks and attractions (and not to mention the shopping at Centre:MK) there’s a never-ending supply of things to keep the family entertained.

What else is the city famous for?

The town boasts more than 200 works of public art – although the Concrete Cows are perhaps the best known to those from outside Milton Keynes. The sculpture, which includes three cows and three calves, was created by Canadian-born artist Liz Leyh and gets its name from the materials used to construct it – left-over building materials.

Probably one of the most recognisable facts about Milton Keynes is the number of roundabouts – there are over 130. The city also has an American-style grid system where main roads are designated H or V depending on whether they run horizontally or vertically.

Perfectly placed for key transport links

With an average train time to London of 39 minutes, there has been an influx of movers to Milton Keynes who regularly use the convenient railway links and road network.

Milton Keynes is just 50 miles from London, 60 miles from Birmingham, and equidistant from Oxford and Cambridge. Major towns and cities such as London Euston, Birmingham New Street and Coventry are easily accessible thanks to direct train services running from Milton Keynes Central. Major airports are easy to reach too – London Heathrow and Birmingham International airports are both around an hour’s drive away, with London Luton even closer.

If coach travel’s your preferred way to get around the country, hop on a National Express coach at The Coachway, Junction 14 of the M1. MK Coachway has 350 parking spaces which are free of charge if you’ve parked there to go on a coach.

For electric car drivers, Milton Keynes is a great place to drive an electric vehicle thanks to a range of programmes making it easier for drivers to go green. The city has over 1,500 EV parking spaces for drivers holding a green parking permit. Another benefit to electric car drivers is that they can park for free in any EV bay, even if they’re not charging their vehicle.

Need to charge quickly? There are now over 65 rapid charge points across Milton Keynes which are suitable for drivers needing a quick charge to get them on their way.

What’s the average property price in the area?

If you’ve read this far and the appeal of moving to Milton Keynes is growing on you, you may be wondering what the property prices are like in the area.

The average property price in Milton Keynes is £316,000, with average prices ranging from £301,000 for a terraced home to £505,000 for a detached property. With convenient links to motorways and rail lines, the location of this modern city is highly desirable. And with housing developments and projects in the pipeline for the coming years, there’s no question that Milton Keynes is prime investment for anyone looking to relocate. This appealing destination has all the amenities and employment opportunities London has to offer, but without the price tag.

Spotlight on village-living near Milton Keynes

If you like the idea of living in Milton Keynes but perhaps your heart yearns for a more rural lifestyle within easy access to the city, you may want to consider one of the quaint villages around the area. Set in the Buckinghamshire countryside, Great Horwood is a perfect example of one of the region’s very desirable villages. It’s situated between the two popular destinations of Milton Keynes and Buckingham and offers the appeal of country living whilst having the amenities of a city on its doorstep.

With only a small population of around 1,000 people, Great Horwood offers a plethora of schooling options and outdoor experiences, with a family leisure centre located nearby too.

If you’re house-hunting with an aspiration for village-living, one development you may like to consider is Horwood Chase at Great Horwood. This is a small development of modern 2, 3 and 4 bedroom houses, all of which come with electric vehicle (EV) charger points. The development is being created by Lodge Park Homes who can be contacted on 01604 926150 or visit lodgeparkhomes.co.uk for more information.

Here at Mortgage Light we’re only a phone call away for friendly, professional mortgage advice. Simply give us a call on 01908 697 655 or visit our website.

Can You Remortgage to Buy Another Property?

July 24, 2022 By Mortgage Light Leave a Comment

Yes, you can remortgage to buy another property. You may wish to purchase a holiday home somewhere or a property to fix up and then resell for a profit. Perhaps you’d like to have a buy-to-let property as an investment. Whatever your motivation, there’s no reason why some of the equity that you’ve built up in your current home can’t be used to put towards purchasing another property.

So, how can you remortgage to buy another property? In this article, we’ll explain how it works, the reasons why you might want to do it and whether it is a good idea.

How to remortgage to buy another property

Depending on your circumstances, you can remortgage your current home with a larger mortgage and use the extra funds released from this process to help you buy another property. During the time that you have owned your home, it’s quite likely that the equity available in the property has built up. This is due to a combination of your mortgage borrowing reducing each month as you make monthly mortgage repayments and also as a result of the value of your property increasing due to general house price rises. You could borrow against this equity and use the funds for another purpose, such as putting towards another property purchase.

People often remortgage to release some of their property’s equity. They sometimes use the cash released to help purchase another property. They may use it to cover home improvements, a wedding or to pay off credit cards and other personal debts.

It’s important to remember that when you remortgage to release equity, you will be repaying your existing mortgage and replacing it with a larger mortgage. This will normally have higher monthly repayments. Depending on your age, you may be able to mitigate some of this increase by extending the mortgage loan term.

You’re unlikely to be able to release enough equity to buy a second property outright. In most cases, the cash released will form your cash deposit and you will need to use savings or take out another mortgage on the second property to fund the rest of the purchase price. You need to make sure that you can afford both mortgages if you do this.

Find out more – ‘Can I remortgage to release equity?’, ‘Can you remortgage to pay off debt?’ & ‘Extending your mortgage term’

How do I know how much equity I have in my home?

So, how do you know how much equity you have tied up in your home? You can work it out by taking the current value of your property and deducting the amount outstanding on your mortgage. The difference between these two figures represents your equity.

Let’s say for instance that your home is worth £350,000 and you have £100,000 left on your mortgage. The difference between these two amounts is £250,000. This is your equity. You’re unlikely to be able to release all of this cash from your property, however. Lenders will usually restrict mortgages to a maximum of 80% of your property’s value. In this case, that’s 80% of £350,000 which is £280,000. After repaying the existing mortgage of £100,000, this could release £180,000 towards a second property.

Why buy another property?

Here are a few of the most common reasons why you might buy another property:

To rent it out and become a landlord
Holiday home
Second residence in another location if you work away from home a lot
As a gift for a family member, such as a grown-up child or retired parents
Business use, such as an office, shop or warehouse
A project to renovate and sell for a profit

If you are planning on remortgaging to buy another property, you need to let your mortgage advisor know so they can find the right mortgage for you. Mortgage lenders will want to know what the funds will be used for.

If it is for a second property purchase, this will naturally raise additional questions. Will you be taking out a second mortgage somewhere to help fund the remainder of the property purchase price? Will you need additional funds to renovate or convert the new property for your purposes? Are you going to be relying on any income generated from the second property to help service your new borrowing?

Taking out a second mortgage on another property

So, what are the implications of taking out a second mortgage or an additional mortgage on another property? Well, there are definitely a few important things to note as it’s likely to be quite different from when you borrowed money to finance your current property.

Type of mortgage

Depending on why you are purchasing another property, your second mortgage will probably be a different type of facility from your first. If you are planning on renting out the property, then you’ll need a buy-to-let mortgage. This is because you will have a third party living in the property as tenants. These tenants will have legal rights which may impact the mortgage lender. This needs to be taken into account in the lender’s risk assessment and the legal documentation used. If you are buying as a fixer-upper to sell, then this might be considered more of a commercial arrangement and require funding via a commercial loan, particularly if you are doing this on a regular basis.

If you are buying a holiday home which will be rented out for some or all of the year, then you may need a specialist holiday home mortgage. However, if your intention is to simply use the property for personal family use, then you may be able to use a regular residential mortgage. A good mortgage advisor, such as us here at Mortgage Light, will be able to advise you on the type of facility you need and the most appropriate lenders to approach.

Tougher affordability criteria

Lenders will generally apply stricter criteria when assessing applications for second mortgages. Not only are you likely to be substantially increasing your current level of borrowing, but you are also taking on the costs of maintaining a second property.

You may well be relying on income generated by this second property and lenders will want to fully understand the reliability of this income before committing to lend to you. Will you still be able to service all your commitments if you get into a dispute with, or lose your tenants for any reason? If you are renovating a second property to sell on, how will you manage any unforeseen costs or building delays?

For this reason, you may have to work harder to prove that you can afford the mortgage repayments on both mortgages. You may also need to put down a higher deposit on the second property purchase.

Stamp Duty Land Tax

When purchasing another property, you’ll also have to pay higher Stamp Duty Land Tax charges. Stamp Duty is the tax you have to pay when buying any property valued at over £125,000. It is calculated as a percentage of the property purchase price and can be a considerable amount of money. When purchasing a second property, you’ll usually have to pay 3% on top of the standard amount of stamp duty paid.

You can use the Gov.UK Stamp Duty Land Tax calculator to get an idea of how much Stamp Duty you can expect to pay, or speak to your mortgage advisor and broker.

Should I remortgage to buy another property?

If you are considering buying a second property, then it may make sense to borrow against the equity you have available in your current home. After all, domestic mortgage borrowing is one of the cheapest forms of borrowing. It’s almost certainly cheaper than any loans you might be able to take out.

It’s important to remember that the equity in your home is not the same as savings. It isn’t free for you to access and spend. It is an asset that you can borrow against. Releasing equity is achieved by increasing your mortgage and this could significantly change your financial situation. Not only will your monthly mortgage repayments increase, but quite possibly so will the term of your mortgage, meaning you will be borrowing for longer. This could be a major consideration, especially if you are approaching retirement age.

Curious as to how much equity you have in your home and whether you’ll be able to afford the new monthly repayments if you remortgage to buy another property? Speak to our friendly team at Mortgage Light. We’re passionate about helping people reach their financial goals and would love to help you on your journey to second homeownership!

Just give us a call on 01908597655 to book an appointment with one of our experts, or fill out the enquiry form on our website.

How to Save Money on Bills

July 19, 2022 By Mortgage Light Leave a Comment

We’re certain that no-one would want to pass up an opportunity to save some money on their regular bills – particularly in the current economic climate. Sadly, however, there isn’t a magic wand that you can wave to simply reduce your monthly outgoings. Although, there are plenty of ways that you can potentially reduce your bills if you devote a little time and effort to devote to the cause.

One of the best ways to save money on bills, of course, is to reduce your usage across the various services you are contracted to, such as gas and electricity. But what else can you do? Here are some quick(ish) wins that might assist in bringing those bills down and keeping you in the black.

Use a comparison site

It sounds obvious but use an internet comparison site. This will help find the cheapest deals available on things like your car, home and health insurance, loans and credit cards, energy providers, mobile phone and broadband services. Even if it’s just a few pounds saved each month here and there, this can all quickly add up to quite a substantial saving across the year. Ofgem estimates that the average customer could save around £305 a year by switching to a better energy and gas deal.

Put aside some time to go through all your regular bills. Then, see what other deals are out there that you could switch to in order to save money. Remember that not all companies are represented on price comparison sites. Extending your search a little might also prove beneficial. Make sure you compare all deals carefully. Ensure that you are still getting the level of protection and service you need. Be mindful that some deals are cheaper because they provide fewer or restricted benefits.

Also, be aware of any fees that might be applied by your existing service provider if you choose to exit any contract with them early. Generally, the best time to switch providers is when your existing contract is expiring or when renewal is approaching.

Ask your supplier for a cheaper rate

Let’s say you have found a cheaper deal for your electricity elsewhere. Give your supplier a call and let them know. In many cases, they will be prepared to match the cheaper rate in order to keep your business. Even if you haven’t found a cheaper rate yet, what is the harm in calling your supplier and asking them for a better price? Suppliers often have special deals available for new customers, which they may be willing to offer to you to prevent you from switching your business to a competitor.

Check you haven’t duplicated your cover

These days, many companies and some employers and trade unions provide additional benefits ‘free’ to their customers/employees/members as part of a package of facilities. For example, many banks now offer ‘packaged accounts’. This is where for a small monthly fee, you get their standard bank account facilities, plus a range of additional benefits. These can include annual family travel insurance, emergency breakdown cover for your car, mobile phone insurance as well as discounts on a range of other services.

Make sure you aren’t paying twice for the same services. Take care to check the level of cover these ‘free’ policies provide as they are usually just the basic level.

Review ALL of your regular outgoings

Look at all of your outgoings to see if you still need them. Do you use that gym membership? Could you be on a better deal that reflects when you actually use the gym? Are you getting value out of that regular wine/beer/food subscription you pay for? When did you last review your broadband contract and your various TV packages? It’s all too easy to ignore these regular commitments because it’s too much trouble to change them. However, an occasional review could put £100’s back into your budget.

Remortgage your home

Your mortgage repayments are probably your biggest monthly outgoing. In the same way that you should explore cheaper car insurance deals each year when your policy is coming up for renewal, it’s important to regularly review your mortgage deal to ensure that it remains competitive and matches your personal financial circumstances.

This is particularly true if you have a tracker or fixed rate mortgage deal which is about to expire and your lender is looking to move you onto their standard variable rate (SVR). This could prove to be less suitable for you and more expensive than alternative deals available on the market.

Remortgaging allows you to move the mortgage that you currently have to either a different deal with the same lender (usually referred to as a product switch) or to a new deal with a different lender. If you are interested in exploring the opportunities and savings that a remortgage might be able to offer, then speak to a mortgage advisor and broker such as ourselves here at Mortgage Light. We’ll help you find a deal that best suits you and your financial circumstances.

Find out more – ‘Remortgage – how does it work?’ & ‘Can I remortgage early?’

Pay your bills on time

Sure, it’s obvious advice, but pay your bills on time and keep your borrowing within agreed limits! Late payment and excess borrowing fees are other costs that can very quickly mount up if you don’t control your finances. Your bills are amongst the most important of your outgoings and how you manage these will be reflected in your personal credit score. This may, in turn, impact the cost of any future credit you might apply for.

We recommend trying to pay your bills as soon as you get paid each month and by Direct Debit if possible. If you have bills that come out at different dates throughout the month, see if your supplier will move the payment date to a date nearer your payday. That way, you will know that they have been paid and it will help you monitor how much you have available for the rest of the month.

Make necessary changes to your insurance policy

Life looks a little different for everyone since the Covid-19 pandemic. Do your insurers still have an accurate idea of your lifestyle? For instance, perhaps you are using your car much less as a result of working from home more. Check your vehicle insurance policy to ensure that your reduced annual mileage is noted. This may help you reduce your annual premiums. Does your home insurer know that you are working from home a lot more now? They should be made aware of this. It could help reduce your annual premiums because the house is no longer left unoccupied for much of the time.

Install a smart meter or water meter

If you aren’t sure what a smart meter is, it’s basically a digital online, gas and electricity meter. It measures and displays how much gas and electricity you are using and how much this is costing you. It helps households closely monitor their energy use and encourages them to economise by choosing what appliances to have on and when. Doing your laundry at night using cheaper electricity, for example, is an easy way to save energy and help keep bills down.

One of the most attractive parts of a smart meter is that it takes the estimation out of measuring your energy usage. It automatically sends your meter readings to your supplier at least once a month. This ensures that the bills you receive are based on your actual usage and not an estimate.

Water meters work in a similar way. The average UK water bill in England and Wales is just over £400 pa. There is no way to switch water suppliers, but you can potentially reduce your water bills by installing a water meter. If you don’t have a water meter, you pay a fixed price for your water based on the rateable value of your property, regardless of your actual usage.

If you think your household may have a low water usage, then a water meter could be beneficial. You’ll only pay for the water you use. In most cases, it is free to have a water meter installed. Be careful, however, as households with a high water usage may find a water metre pushes their annual water bills up.

Switch to energy-efficient appliances

It’s not just showerheads that can be more efficient. You can find a number of energy-efficient appliances on the market; washing machines, dishwashers, fridge freezers, kettles and much more.

Of course, splashing out on a host of new energy-efficient appliances may seem like an expensive option, however investing in these items can save money in the long run. It’s been estimated that you could save £3,360 over 10 years by switching to more energy-efficient appliances. Look for that all-important A-rating next time you need to replace or buy a new household appliance.

Check that you are in the right council tax band

You may be interested to learn that 100,000s of households are in the wrong council tax band due to something referred to as ‘second-gear valuations’. This is a result of the council tax system launch being rushed back in 1991. Could you be one of those households? It’s certainly worth doing a little research to find out. This should only take a matter of minutes. If you suspect that you are, then contact your local council to challenge this.

At Mortgage Light, we are mortgage experts – but that doesn’t mean that we can’t help with your overall financial health. Offering good advice is what we do best.

If you are looking for ways to reduce your bills and want to make your mortgage work better for you, let’s chat. Pick up the phone and talk to us on 01908 597655 or contact us via our website.

Can you Fully own a Shared Ownership Property?

July 13, 2022 By Mortgage Light Leave a Comment

Yes, in most cases you can fully own a shared ownership property. You do this through a process called ‘staircasing’ which involves purchasing additional shares in your property over time, usually in batches of 10% or larger. You can do this gradually until you reach 100% full ownership.

In this article, we’re going to explain a little more about purchasing 100% of a shared ownership property and any limitations you may come across on your staircasing journey.

How much of a shared ownership property can you buy initially?

In many cases, your initial purchase of a shared ownership property will be somewhere between a minimum of 25% and a maximum of 75% of the property’s agreed market value. These maximum and minimum limitations may vary between different Housing Associations and properties.

How large a share you purchase will ultimately depend on what you can realistically afford, and a good mortgage advisor and broker, such as us here at Mortgage Light, will be able to help you work this out after conducting a financial assessment.

Find out more – ‘How much of a deposit do you need for shared ownership?’

When can I start staircasing with shared ownership?

It is usually the case that you can only begin staircasing after you have owned a share of the property for an agreed minimum fixed period of time. If this applies, it will be detailed in your lease contract. Once this initial restricted period is up, you are free to make an application to purchase further shares in your property and go through the staircasing process.

Before changes were made to staircasing in September 2011, you could only make three applications to buy more shares in your home. Today, however, you are usually free to staircase as often as you’d like to. But be aware that staircasing can be an expensive and lengthy process. Therefore, you may not want to go through it too many times. It’s generally advisable to save up and staircase less often, but purchase larger chunks on each occasion.

Find out more – ‘Shared ownership – how does staircasing work?’

What happens when I staircase to 100% ownership?

When you finally staircase up to 100% ownership, you no longer share the property with your Housing Association and you become the outright owner. You therefore no longer need to pay any rent. Instead, you will solely be paying towards repayment of your mortgage. As a result, it is likely that your mortgage borrowing will have increased to fund the larger share of the property that you own. Once you achieve 100% ownership of your property, should you want to sell and move on, then in most cases you can do so through the open market without the involvement of the Housing Association.

When can I not staircase to 100% ownership?

Sometimes, the terms of the shared ownership lease will not allow you to staircase up to full 100% ownership. However, this is fairly uncommon. Such a restriction may be imposed because the property has been adapted. The restrictions are put in place to ensure that these properties stay within the shared ownership market and don’t later get sold into the general open market.

Always check the details of your lease to see if you will be restricted on the maximum share of the property that you can staircase to. Restrictions will differ from provider to provider and the Housing Association should provide a summary of these to you if you are interested in purchasing. Your solicitor should also outline the full lease terms to you during the legal process of your purchase before you complete.

Do you dream of owning your shared ownership property? Speak to us here at Mortgage Light. We have guided so many people just like you to 100% ownership and helped them with every step of staircasing.

Get in touch today to speak to our shared ownership specialists via our website or call 01988 597655.

Cost of Living Crisis – How is This Impacting the Housing Market?

July 11, 2022 By Mortgage Light Leave a Comment

The current and much-talked-about cost of living crisis is starting to cause people all over the UK to really feel the pinch in both personal and household budgets. It’s arguably one of the biggest financial squeezes the country has felt since the 1950s. No matter what your salary, you are likely to have seen rises in your energy bills, food, clothing and fuel costs, resulting in a dip in your disposable income.

The cost of living crisis may make buying, selling or remortgaging your home seem difficult for the foreseeable future. But how exactly? And what could you do to alleviate some of the financial pressures? Let us explain.

What has caused the cost of living crisis?

There are a few factors that have played into the emergence of the cost of living crisis. Firstly, inflation. This has continued to rise throughout 2022 with the cost of food, fuel and energy all increasing whilst wages and salaries have largely stayed the same.

The world is still feeling the pressures and after-effects of the Covid-19 pandemic. Governments have pumped billions into their economies over the past couple of years to mitigate some of the effects of the pandemic. However, this has inevitably led to inflationary pressure.

Not only this, but global supply chains have struggled to recover from the forced shut-downs and staff shortages caused by the pandemic. This has resulted in shortages of all sorts of essential products and materials. These shortages, along with a sharp increase in global shipping costs, have added to the cost of finished goods and raw materials when they have eventually been delivered.

The first quarter of 2022 also saw the start of the war in Ukraine and the imposition of sanctions by the EU, UK and US on Russia. As a consequence of these sanctions, we have seen energy prices rocketing due to restrictions on the supply of Russian gas and oil. This has increased the demand for, and cost of, supplies from other sources worldwide.

How have house prices been affected by the cost of living crisis?

2022 was set to be a ‘bumper year’ for the property market with cheap, easily accessible mortgages available. There was also the promise of an increase in the supply of new houses following a relaxation of some of the planning rules.

However, the significant rise in the rate of inflation at the start of this year has caused the Bank of England to increase its Base Rate. This has made borrowing more expensive. Combined with this, there has been a major increase in the cost of raw materials for house builders, such as steel, timber and bricks. This has caused the cost of new homes to rise significantly.

The Covid-19 pandemic brought about something of a change in house buying activity. Home working fuelled an increased demand for out-of-town homes and properties with larger gardens and home office facilities. However, this post-pandemic rise in buyer activity has begun to dwindle. Workers have started to return to the office commute and are feeling the financial pressure of the cost of living crisis. Many people are deciding that now is not the time to commit to large property purchases.

That being said, there does still seem to be a disproportionate number of people looking to buy a property compared to those selling. With the number of available properties low, we are continuing to see an imbalance between demand and supply. This imbalance is helping to maintain high house prices. This is expected to continue to be the case throughout the rest of the year. This might be good news for sellers, but not so great for buyers. Particularly not for first-time buyers.

Cost of living crisis and mortgage rates

Inflation has been one of the major causes of the current cost of living crisis. The increase in the rate of inflation has caused the Bank of England to increase its Base Rate. This in turn has caused mortgage lenders to increase their borrowing rates. This makes getting on the property ladder increasingly difficult for some first-time buyers.

Mortgage lenders are having to look more closely at borrowers’ personal outgoings when calculating mortgage affordability. The rise in fuel, food and energy prices is likely to have increased the amount of money coming out of your bank account each month and therefore restricted your affordability. Lenders will also be mindful that interest rates may need to rise higher still during the year if inflation continues to rise. They may need to factor a greater margin into some of their affordability calculations to allow for this possibility.

Whilst lenders will be adjusting their criteria in line with the increase in living costs to ensure that deals offered will remain affordable to borrowers, there are some things you can do to help make your application more attractive. Whilst it is much easier said than done, it’s a good idea to try to provide a larger deposit. Perhaps you could seek help from family members. This could allow you to access cheaper mortgage deals with a lower loan-to-value threshold, making your borrowing more affordable. You might also consider extending your mortgage term. This should see your monthly repayments come down, improving your affordability.

Will my mortgage be affected?

If you already have a mortgage, you may be wondering whether you will be affected by rising mortgage rates. For most borrowers, the answer to this is yes, you will. Although when you will be affected will depend on the type of mortgage that you have.

Those borrowers with tracker mortgages or with variable rate deals will feel the effects of rising mortgage rates first. Their interest rates tend to move up and down in line with the Bank of England’s (BoE) Base Rate. Tracker mortgage deals will respond immediately to interest rate raises. Variable-rate deals may respond a little more slowly. Lenders might take a little while to decide when and by how much to amend their variable rates.

Those on fixed rate deals will initially be protected from rising rates. However, once those deals expire, those borrowers will then be subject to the prevailing market rates at that time. If you are looking to get a mortgage or looking to remortgage, it may be worth considering securing one of the current fixed rate deals. Just be mindful of the possible early repayment charges when remortgaging your current deal.

What does the future hold?

There is much speculation about what the future will hold for the economy for the remainder of 2022 and beyond. House prices are likely to continue to creep up but eventually, level out eventually as the cost of living forces many wannabe home-movers to pause their plans to buy a property.

UK interest rates, although currently the highest they have been since 2008, are still well below historic average rates. They could well rise further if inflation is seen to continue its current upward trend. This could start to cause severe hardship for borrowers, particularly for those who took out large borrowing commitments on the basis of historically cheap rates.

Our advice on easing the strain on your pocket

It’s impossible to predict the future with any degree of accuracy, but we advise you to future-proof your finances as much as possible by ensuring that your current arrangements are robust.

Here are our tips:

Pay off any short-term debt you have as quickly as possible. We suggest prioritising the ones with the highest interest rates.
Restrict any new borrowing wherever you can.
Review your longer-term borrowing such as existing mortgage commitments to ensure that you are on the best deal for your circumstances and that it is appropriate for your budget. A good financial adviser and mortgage broker such as us here at Mortgage Light will be able to support you with this assessment and advise on possible alternative funding options.
Shop savvy – make a list of all your regular outgoings such as the weekly food shop and see if you can buy cheaper elsewhere. Making little changes can help make a difference to your finances.

If you are worried about getting a mortgage or managing your mortgage during these difficult times, you’re not on your own. Whether it’s just a friendly chat with an expert who can break down and explain these confusing market changes to you, or maybe you need some help and guidance on how to make your mortgage work better – we’re just a phone call away. Remember, Mortgage Light are always here to help.

Just call 01908 597655 or contact us via our website and one of our friendly team members will be in touch.

What is a Standard Variable Mortgage?

July 7, 2022 By Mortgage Light Leave a Comment

One of the most common mortgages around is a standard variable mortgage. Standard variable mortgages run on a standard variable interest rate – or SVR as it is often referred to. It is generally the rate that you’ll usually be moved to once your existing fixed, tracker or discount mortgage ends.

Most mortgage providers have an SVR, so it’s useful to know how a standard variable mortgage works. In this article, we explain what you need to know about a standard variable mortgage.

Standard variable mortgage explained

A standard variable mortgage falls under the category of a variable rate mortgage. With a variable rate mortgage, the interest rate charged on your borrowing can vary at any time. The rate is set by the mortgage lender. Whilst lenders generally try to keep their interest rates stable and competitive, these rates can change at any time in line with market forces such as the UK economy and any movements in the Bank of England Base Rate.

The standard variable rate is the standard, or basic interest rate, that your mortgage lender charges homebuyers. Unless you have opted for a specific mortgage deal, your borrowing will be charged at this rate for as long as you have your mortgage.

There normally aren’t any early repayment charges associated with SVR deals. This gives you flexibility and freedom to move between different deals and lenders if needed without worrying about penalties. You can generally also make overpayments, or take repayment holidays if necessary.

Whilst this all sounds great, many people are put off by standard variable mortgages. This is because the interest rate can increase or decrease at any point during the term. This can make it difficult to budget. If you are on an SVR mortgage, then it makes sense to factor in the cost of a possible modest increase in interest rates into your budget to ensure that you can still manage if one comes along.

Find out more – ‘Different types of mortgage’

How does a standard variable mortgage work?

Let’s talk a little more about how a standard variable mortgage works. It’s important to note that although the SVR can be influenced by changes in the Bank of England Base Rate, SVRs do not track the Base Rate at a set percentage. Therefore, they do not have to strictly follow the Base Rate. This means that they differ from tracker mortgages, as these mortgages move directly in line with another interest rate (typically the Bank of England’s Base Rate).

So, what does affect a lender’s SVR? Often, it’s the lender’s cost of borrowing. It may also be influenced by the lender’s appetite to lend. For example, if the lender is trying to attract more business, it may want to keep its SVR low to attract borrowers. But if it’s already heavily lent, it may decide to increase its SVR to restrict the flow of new applications for a while. A lender can choose to raise or lower its SVR whenever it wants, although it’s not normally advisable for them to change it too often as this causes uncertainty for borrowers and may put them off taking out mortgages with them.

As an example, let’s assume that the Base Rate rose by 1%. If you have a fixed mortgage deal, your repayments would not change because you have contracted to a fixed interest rate. With a tracker mortgage, your interest charge would increase by 1% to match, or track, the change in Base Rate. With a standard variable mortgage, however, whether or not your interest rate and repayments change would depend on your lender.

Find out more – ‘What is a fixed-rate mortgage?’

If you are currently on a fixed-rate or tracker deal, you will usually be moved automatically to your lender’s SVR once your existing deal expires. This is often a good time to review the mortgage market. Your lender’s SVR may not be the most competitive deal available to you. Shopping around for the best deal at this time will help to ensure that you aren’t paying more for your mortgage each month than you need to.

Speak to a mortgage advisor such as us here at Mortgage Light and we’ll help you review your options across the whole of the mortgage market. We’ll compare hundreds of different deals to find the one best suited to your personal circumstances

So, should you get a standard variable mortgage? The choice is yours. However, this is not a choice to be made lightly. Why not speak to one of our experts here at Mortgage Light? We’ll learn about your situation, weigh up your options and help you make the right decision. Contact us for free advice on 01908 597655 or head to our online enquiry form.

What Type of Mortgage Should I Get? 2022 Guide

July 3, 2022 By Mortgage Light Leave a Comment

With the vast amount of mortgage options currently out there in the market at the moment, deciding what type of mortgage you should get is no small feat. In 2022, with the cost of living crisis causing households all over the UK to really feel the pinch, it’s even more important to ensure that you choose the mortgage that is going to work best for you.

In this article, we’re going to talk through the different types of mortgages available, what’s good about them and what to look out for in 2022.

Should I get a fixed rate mortgage?

We are currently in a period of rising energy, food and fuel bills. Alongside this, mortgage rates have also risen recently and for those on variable or tracker mortgages, this is likely to have resulted in higher monthly mortgage repayments. For this reason, a fixed rate mortgage may start to look like a more attractive option in 2022.

A fixed rate mortgage deal will generally be a little more expensive than a tracker or variable rate facility initially, however it provides peace of mind that your mortgage repayments and interest rate will stay the same for the duration of your deal; be that 2 years, 10 years or anywhere in between.

This will allow you to budget for one of your biggest household expenses each month with no surprises, which could be a welcome relief, especially at a time when other bills are rising and money can feel a little out of control.

Find out more – ‘What is a fixed rate mortgage?’

Should I avoid tracker mortgages?

Tracker mortgages have an interest rate that moves up and down in line with the Bank of England’s (BoE) Base Rate. For instance, a lender may offer a tracker mortgage which always remains at 0.75% above the BoE Base Rate. This means that if the BoE Base Rate increases, so too does your mortgage interest rate and your monthly mortgage repayments. In turn, if the BoE Base Rate decreases, your mortgage interest rate and your monthly mortgage repayments would decrease.

In May 2022, the BoE Base Rate increased from 0.75% to 1%. This was the third increase so far this year. Each time this happens, the interest rate and therefore the monthly repayments on any tracker mortgages will have increased too. That being said, tracker mortgages do often start out with a lower interest rate than fixed rate mortgages, and for this reason, a tracker mortgage may still be a good option for you. It will depend on your personal finances and whether you have sufficient spare income to cover any repayment increases.

Of course, tracker mortgages come into their own when interest rates are falling. This is because borrowers can immediately benefit from lower interest charges with each reduction in the Base Rate. If the UK economy should start to fall into a recession, then the Bank of England may decide to reduce its Base Rate to try to stimulate economic activity and this would then benefit borrowers with a tracker facility. We wouldn’t generally recommend speculating on likely economic trends when choosing a mortgage facility, however.

What are the other types of mortgages?

Of course, there’s a lot more than just fixed rate and tracker mortgages out there on the mortgage market. Let’s run through a few of the other types of mortgage that you might come across.

Standard variable rate mortgages

Standard variable rate mortgages are similar to tracker mortgages in that the interest rate – and therefore your monthly repayments – can change at any time. The interest rate is charged and referred to as the standard variable rate (or SVR) and it’s generally the rate that you’ll be moved onto once any fixed, tracker or discount mortgage deal ends.

The SVR is set by your mortgage lender. Lenders will generally try to keep their interest rates stable and competitive, but ultimately rates can change at any time in line with market forces such as the BoE Base Rate and the lender’s own appetite to lend.

The good thing about standard variable rate mortgages is that they are flexible. You can generally cancel your mortgage deal at any time and move to a different deal or lender without being hit by penalty charges. You can often also make overpayments, make lump sum reductions or apply for repayment holidays if needed. Therefore, standard variable rate mortgages can be a good option if you have the financial means to be able to deal with any potential fluctuations in interest rates.

Find out more – ‘What is a standard variable rate mortgage?’

Discount mortgages

Discount mortgages are another type of variable mortgage. A discount mortgage offers a discount off the lender’s SVR for an initial fixed length of time, typically 2-3 years. Let’s say for example that your lender’s SVR was 3% and your discount mortgage came with a 1.5% discount. You’d only pay 1.5% interest on your borrowing for that initial fixed period.

It’s important to note that discount mortgages still have a variable rate. This means that your monthly repayments can go up or down at any time depending on the lender changing them. You will, however, get a discount off the standard rate for your fixed period.

Offset mortgages

Offset mortgages link your savings to your mortgage to offset one against the other. The amount you have deposited with the lender as savings is deducted from the amount owing on your mortgage and you pay interest on the difference.
For example, if you have £10,000 in savings and a mortgage borrowing of £200,000, you’ll only pay mortgage interest on the net balance of £190,000.

The idea of an offset mortgage is to reduce your mortgage interest charge and therefore your repayments by using your savings to reduce your net balance. You still have access to your savings at any time, but whilst they are available, you can use them to reduce your mortgage charge. It is important to note, however, that you won’t earn interest on the savings that you have with the lender and these mortgages also tend to attract slightly higher interest rates.

Find out more – ‘Different types of mortgage’

Speak to a mortgage advisor

No matter which mortgage you think might be right for you, we would always recommend speaking to a mortgage advisor before making a final decision. At Mortgage Light, we are experts in the mortgage market with a passion for helping people find the right mortgage for them. We’re constantly abreast of all market changes and are able to offer unbias and informed advice on the type of mortgage you should get in 2022 and beyond.

Speak to one of our friendly advisors today and let us help you. Call 01908 597655 or contact us via our website.

What Happens if I Can’t Pay my Mortgage?

June 29, 2022 By Mortgage Light Leave a Comment

We’re in the midst of a cost of living crisis in the UK. With inflation on the rise, 30% of homeowners and renters are struggling so much that they cannot afford housing costs and 3% are falling behind on their debt repayments. With the cost of food and fuel peaking, household budgets have not been this under pressure for 40 years.

If you can’t pay your mortgage, it is important to speak to someone early. As mortgage experts and advisors, the door is always open at Mortgage Light. We offer help and guidance if you are struggling. With this in mind, we’re here to offer some information on what you should do if you can’t pay your mortgage and what the potential implications of this could be.

In this guide on what happens if you can’t pay your mortgage, we’re going to cover:

Missed repayments and arrears

Your mortgage is likely to be one of your biggest monthly costs. If you are currently on a variable-rate mortgage, your repayments may have increased with the recent rise in the Bank of England Base Rate. Perhaps they have increased to the point where you are struggling to make the repayments alongside your other financial commitments and bills.

If you miss a repayment on your mortgage, your lender will initially report this to a credit reference agency as a ‘missed payment’. This information is shared amongst the various different credit agencies. It will then remain on your records for at least six years. Unfortunately, this will negatively affect your credit score and therefore may not act favourably to obtain further finance. The longer you go without catching up on your mortgage repayments, the greater the impact on your credit score.

Missed repayments will also trigger an ‘arrears’ issue. This can be a scary time, as your lender may start exploring the possibility of repossessing your home. However, this is an absolute last resort and there are always other options to first explore if you’re struggling financially. The majority of lenders will work with you where possible to get you back on track.

Repossession

Let’s talk a little more about repossession. It’s the last case scenario if you cannot meet your mortgage repayments. It should be noted, however, that lenders do not want to repossess your property if they can help it. It’s a very time-consuming and expensive process for them.

Repossession is where the lender obtains the legal right, through the courts, to take your home away from you so that they can sell it in an attempt to recover their mortgage debt. This might be inevitable if you cannot afford your mortgage. However, before a lender can repossess your home, they must:
- Tell you how much you owe
- Consider any request from you to change the way you pay your mortgage
- Respond to any offer of payment you make
- Provide a reason for turning down your offer of payment within 10 days of you making the offer
- Give you a reasonable amount of time to consider any proposal they might make
- Give you 15 days’ written warning if they plan to start court action
- Tell you the date and time of a repossession hearing
- Let your council know within 5 days of getting notification of the date of the court hearing, in case you need to apply to the council as homeless.
Once a lender has done all of these things and you have not been able to reach an alternative solution, then the court may grant legal possession of your home to the lender. Having done this, the lender will often put the property up for auction in order to get a quick sale. This doesn’t necessarily result in the best price. If the sale doesn’t cover what you owe, the lender can still chase you for any shortfall.

What’s important to remember here is that a lender will always work with you to find an alternative solution before they repossess your home. It can be scary, but make sure you communicate with your lender as soon as possible, preferably before you fall into arrears. The majority of lenders won’t commence repossession proceedings until at least three months of arrears have occurred. They will always try to contact you first to try and find some sort of a solution. Ignoring the problem can feel like the easiest option, but working together with your lender is always the best thing to do

Speaking to someone

This leads us nicely to our next point – speak to someone. Ideally your lender. Lenders cannot start repossession proceedings whilst you are actively trying to resolve the situation with them. If, however, you chose to ignore their communications and hide letters under the sofa cushions, they can argue that you have failed to respond to their efforts to negotiate and therefore they have little alternative but to commence repossession proceedings. Missed repayments have far less impact if you’ve flagged them with your lender proactively.

Remember – lenders will usually be open to discussing your options and offering temporary and sometimes longer-term solutions that might help to avoid you being forced down the repossession route. These might include:
- Forbearance – reducing or even suspending your monthly mortgage payments for a period of time until you are back in a position to be able to resume your regular payments
- Repayment plans – these are designed to reschedule your arrears into an affordable plan to help you catch up on the missed payments
- Refinancing your loan – if your credit is good, you may be able to refinance your mortgage borrowing onto a better deal or lower interest rate, bringing your monthly repayments down to a more affordable level
- Lengthening the term of your mortgage – spreading your payments out over a longer time period will generally bring the monthly repayments down, making them more affordable
- Debt settlement – the lender may agree to accept less than the full amount owed on the loan in full settlement of your debt, however, this will be recorded in your borrowing history and will reflect negatively on your credit rating
- Switching temporarily to interest-only repayments – sometimes known as a repayment holiday. Your lender might agree to only charge you the interest cost on your mortgage for three or six months, giving you time to resolve your financial issues. This holiday period is usually then added to the end of the original loan term.
You may want to speak to a mortgage advisor before speaking to your lender. At Mortgage Light, we’re always willing to help our customers in whatever way we can if they are struggling. Whether it’s offering help on getting on top of your finances or guidance on the next steps to take with alerting your lender, do not hesitate to get in touch with us.

It may also be worth seeking some help from the various advice services available to you. They are free to access and there is no shame in reaching out. Plus, if your situation ever means you end up in court facing repossession, proving that you have been actively trying to solve your financial problems by speaking to a debt counselling agency can be very helpful in preventing or delaying repossession. Check out Shelter, National Debtline and StepChange.

Selling your home

It may sound extreme, but if you are facing serious financial troubles then you may need to consider a longer-term fix such as leaving your home. It may just not be feasible to stay and try and make the mortgage repayments work.

Sometimes, taking control of the situation and putting your property on the market yourself can be a good solution. That way, you can agree to a sale at the best price and repay your mortgage debt in full, plus arrears. Taking this action proactively will avoid having a repossession order registered against you, which could severely affect your chances of getting a mortgage again in the future.

If however, you owe more than your home is worth, you may have to consider a short sale. This is where you agree with the lender that they will accept the amount you sell your home for as full repayment of their loan, even though it is less than the amount you actually owe. Your lender would have to agree to write off the shortfall amount.

You could also explore something called ‘Deed in Lieu of Foreclosure’. With this option, your lender agrees to release you from your mortgage in exchange for you giving them the deed to your home. Both this option and a short sale will have a negative impact on your credit rating.

Government support

If you are currently receiving income support, income-based jobseeker’s allowance, income-based employment and support allowance, universal credit or pension credit, then you may be eligible for Support for Mortgage Interest (SMI).

With this scheme, the government makes interest payments on the first £200,000 (or £100,000 if you are getting pension credit), of your outstanding mortgage for the time that you cannot afford to pay. The government usually makes these payments directly to the mortgage lender, who will then lower your monthly mortgage repayments accordingly. The support is paid as a loan. You’ll need to repay this with interest when you sell or transfer ownership of your home. You can only use SMI towards your mortgage interest, not towards missed mortgage payments. Find out more about how the scheme works here.

It is always worth checking to see whether you are entitled to any government benefits that could help boost your income to meet your mortgage payments. Check your eligibility using here.

Finance tips

The cost of living increases can feel totally out of your control. However, there may be things that you can do to make money easier to manage during these difficult times.

Budgeting

The more organised you can be with your money, the better. Break down your incomings and outgoings. You may be able to unlock some spare cash. Cancel any direct debits you may be able to live without, such as streaming services and gym memberships.

Budgeting is all about understanding your money. Perhaps it could be useful to use an app that’s linked to your bank account and constantly tracks your money, such as the Emma app. Apps like Emma even show you where your bills have increased and comparisons of where you can get cheaper services.

Be proactive

Try to be organised with good visibility of your finances. That way, you should spot any potential financial issues looming. Don’t sit back and wait for the financial pinch to happen. Be proactive and take action early to seek advice and explore your options. It’s a good idea to get in touch with your lender at this point and see what support they might be able to offer.

Take out insurance

Income Protection pays out a regular pre-agreed amount based on your income if you are unable to work due to an accident or sickness. Check these policies carefully, however, as they will usually include some restrictions.

Speak to your council

You may be surprised at just how much support there is out there for those struggling financially. Your local council may be able to help with vouchers. These are designed to cover day-to-day essentials such as a hot meal, second-hand furniture and household appliances.

This support is known as ‘welfare assistance’ or the ‘Household Support Fund’. Each council runs their own scheme with its own criteria. You don’t have to already be claiming benefits in order to qualify for this support. If you do receive benefits, they won’t be affected. Find your local council and see what help they could potentially offer you.

Remortgage onto a fixed rate deal

Are you within the last 6 months of your current mortgage deal? If you are on a variable rate mortgage, it may be time to remortgage. Switch to a fixed rate deal if possible. It will allow you to budget for your mortgage costs each month. You know that your repayments won’t change for the duration of the deal.

In a time when your finances can feel out of control, a fixed rate deal may help. No matter how high the base rate or the lender’s SVR goes, your interest charge and therefore your monthly repayments won’t change throughout the agreed fixed period with a fixed rate mortgage.

As qualified mortgage advisors, we at Mortgage Light are on hand to help you with any aspect of your mortgage – including being unable to pay it. If you need a friendly face to speak to, then look no further. We can help you decide what to do next and advise on the best way to approach your lender. Financial struggles are not something you have to face alone. Simply get in touch with us and let’s take the next step together.

Mortgage in Principle – What Can go Wrong?

May 30, 2022 By Mortgage Light Leave a Comment

A mortgage in principle is an indication from a lender of how much they may be willing to lend to an individual, based upon an initial and very basic assessment of an applicant’s information. It’s often a good idea to secure a mortgage in principle before you start househunting. It shows estate agents and sellers that you are a serious buyer and in a good position to make an offer on any property you wish to view.

Sounds straightforward, right? Yes, but there are a few things to be aware of when it comes to a mortgage in principle. In this article, we cover everything you need to know.

How reliable is a mortgage in principle?

A mortgage in principle is a good indication that you will be able to secure a mortgage with a particular lender. However, the most important thing to note is that it is not a formal mortgage offer. It is not a promise or guarantee. A mortgage in principle offer can be withdrawn at any time. It will only be formalised after the lender has conducted their thorough financial checks and risk assessment, otherwise known as underwriting. These checks will include an assessment of:

Your personal financial situation
The supporting documentation you have provided to verify the information detailed in your application
A detailed review of your credit history
Checks on the property that you’d like to buy, in order to confirm the property’s condition and value

If a lender comes across any issues during the underwriting stage or if you should fail to meet their criteria for any reason, then they may well reject your mortgage application. If your mortgage application does get rejected, this could potentially have a negative effect on your credit score. This could impact any subsequent mortgage application you may make.

Find out more – ‘What happens if a mortgage application gets rejected?’ & ‘Does getting rejected for a mortgage affect a credit score?’

Is a mortgage in principle a good sign?

Yes, a mortgage in principle is a good sign that you’ll be able to secure the mortgage that you need. It also gives you a good idea of the price range of properties that you should be exploring. This is because it gives you a strong indication of what you can realistically expect to borrow. Having a mortgage in principle should help you to avoid applying for a mortgage that is too big or that you don’t qualify for. Therefore, it helps to avoid having your application rejected.

Estate agents and sellers like potential buyers to have a mortgage in principle offer in place when enquiring about a property. And in fact, some agents may even refuse you a house viewing without a valid mortgage in principle in place to show that you are a serious buyer. For this reason, you may find not having a mortgage in principle could potentially be an obstacle to the house buying process.

Find out more – ‘What is a mortgage in principle?’

How long is a mortgage in principle valid for?

A mortgage in principle is usually valid for anytime between 30 and 90 days. This will differ from lender to lender. It’s important to be aware of when your mortgage in principle will expire. This will potentially be before you are ready to make an official mortgage application.

You don’t need a valid mortgage in principle in place before you formally apply for a mortgage. If you are still house hunting, however, and your current offer expires, then it’s generally a straightforward process the renew. If your personal circumstances or the economy have significantly changed since your initial mortgage in principle, then you may need to submit new information.

Additionally, if your circumstances change during the validity period of your mortgage in principle, then you should check with your mortgage broker or lender to ensure that it is still valid. It might be that you have changed jobs or received a change in your income. Dependent on any changes, this may require you to submit a new application.

What happens after a mortgage in principle?

So, you’ve got your mortgage in principle in place. Now it’s time to start the most exciting part of the process – househunting. Once you’ve found a property that you love, you can make an offer with the confidence that a lender has already indicated that you meet their basic lending criteria. If your offer is accepted, then it’s time to start the official mortgage application process.

A mortgage advisor and broker, such as us here at Mortgage Light, can help you prepare all the relevant documentation that you’ll need to support your mortgage application. We’ll also submit your mortgage application for you if you like. This way, we can ensure that everything is in order to help maximise your chance of success and get an offer through as quickly as possible.

Once your formal mortgage application has been submitted, the lender will carry out their usual underwriting procedure. This is to assess your suitability for a mortgage against their lending criteria. They will also want to assess the property that you are planning to purchase via a mortgage valuation survey. This is to ensure that the property is suitable as security for their loan and that its market value is sufficient to cover their advance to you.

If successful, you should expect to receive your mortgage offer within 2-6 weeks. This will often depend on the complexity of your application and property transaction. Your mortgage offer will usually be valid for 6 months. During this time, your solicitors will go through the legal process and eventually exchange contracts and complete the purchase.

Find out more – ‘What do I need for a mortgage application?’ & ‘How to buy your first home’

If you are in a position to begin your househunting journey, whether it’s your first home or you’re selling up and moving – speak to us at Mortgage Light. We can help you get a mortgage in principle secured so you can view properties with confidence.

Get in touch with us via our website or call 01908 597655.

Does Getting Rejected for a Mortgage Affect a Credit Score?

May 20, 2022 By Mortgage Light Leave a Comment

The short answer is, no, getting rejected for a mortgage will not directly affect a credit score. However, the long answer to this question isn’t quite as black and white as that. Whilst rejection of a mortgage application itself won’t harm your credit score, the lender you have approached will have conducted a ‘hard search’ on your credit file as part of their assessment process. The record of this search may then have an impact on your score. If you have numerous hard searches on your credit file in a short period, then this can affect your credit score in a negative way.

So, what can you do to try to ensure that your credit score doesn’t get negatively affected when applying for a mortgage? In this article, we offer our top tips on keeping your credit score in check.

Common reasons for a mortgage rejection

Firstly, let’s talk about some of the reasons a mortgage application might get rejected. Whilst this is by no means an exhaustive list, it does contain a few of the more common reasons:

A large number of credit applications in the past six months, resulting in multiple hard searches recorded on your credit report
Poor credit history
Recent missed or late credit payments
A County Court Judgement (CCJ) or other adverse judgement on your record
Large amounts of existing debt
Not registered to vote on the electoral roll. This is important as it allows lenders to check some of your personal information and link that in with your credit history
Failed the mortgage affordability assessment based on your current income and expenditure
Self-employed or a contract worker with insufficient proof of consistent income
Mistakes or inconsistencies on your application form and in supporting documentation, such as the incorrect address or spelling of names. Perhaps the payslips provided don’t match up with the claimed annual income
Insufficient deposit available
Failing to meet the income criteria for the size or type of mortgage applied for
You’ve lived in the UK for less than three years
They didn’t like the house that you were buying

If you do get rejected for a mortgage (or any other credit), it’s a good idea to try to find out the reason why. Mortgage lenders are not obliged to give any explanation for their decision, however, most will provide feedback if requested.

Find out more – ‘What happens if a mortgage application gets rejected?’

Why is my credit score so important when getting a mortgage?

When you apply for any type of credit, but particularly a mortgage, lenders will start by looking at your credit score to help them decide if you are creditworthy enough for them to lend to. This is because your credit score is a reflection of how you’ve managed credit facilities previously and is, therefore, an indication of how you are likely to manage your finances now and in the future.

A high credit score is generally an indication that you can be considered creditworthy and therefore lower risk to lend to. Applicants with a lower credit score will generally be considered a higher risk. They may find it harder to secure credit facilities. A low score is a warning to potential lenders that you may have a history of poor personal financial management. It may suggest a risk of future missed or late payments.

Although not all lenders will reject an application based simply on a poor credit score, they are likely to restrict any offer they make to mortgages with a less desirable interest rate. This is to compensate them for the increased perceived risk that they are taking in lending to you.

Find out more – ‘How does bad credit affect a mortgage?’

Why does a hard search affect a credit score?

A hard search on your report is evidence that you’ve applied for a credit facility of some sort. A lot of hard searches over a short period of time might suggest that you have a high reliance upon credit to fund your lifestyle or perhaps that you’ve had applications for credit rejected several times and are struggling to secure the mortgage you need.

This is generally taken as a warning sign and will negatively affect your credit score for at least the next six months. As we know, a poor credit score is likely to reduce your ability to get approved for credit in the future.

How to avoid mortgage rejection due to a poor credit score

Of course, no one wants to see their mortgage application get rejected. Especially because of a poor credit score. Luckily, there are some things that you can do to try and keep your credit score healthy and minimise the chance of your mortgage getting rejected.

Avoid applying for credit

Applications for credit usually stay on your file for a minimum of 12 months. However, they can stick around for a maximum of two years. With that in mind, it’s a good idea to avoid applying for too much credit in the months ahead of making a mortgage application in order to minimise the number of hard searches on your report.

If you do need to apply for credit, make sure that you only apply for credit you have been pre-approved for or that you are confident that you are eligible for. Some credit lenders will allow you to do a soft search before applying for credit to see if you are likely to be accepted. A soft search will generally not affect your credit score. Additionally, try not to make more than two or three applications for credit every few months. It’s a good idea to try to space them out as this may also help to protect your credit score.

Keep on top of your financial commitments

It may seem obvious – and we know that it’s easier said than done – but try and keep on top of your financial commitments at all times, but especially before applying for a mortgage. Make sure that all repayments on any loans, credit and utility bills are made on time and in full.

Ensure that credit card payments are also made on time. If possible, pay off outstanding balances each month. If you have any credit cards that aren’t in use, then it may be a good idea to close these down. Ironically, it can help your score to maintain and use at least one credit card. However, only if you keep well within the approved limit and clear the outstanding balance in full each month.

Ensure you are on the electoral roll

Lenders use information from the electoral roll to confirm details such as your full name, address and residential history. These details must match up to what you have put on your mortgage application. If they don’t match or you cannot be found on the electoral roll, then some lenders may choose to decline your application at this point.

If you are not on the electoral roll, try to get this rectified before applying for a mortgage. Check that all your details are recorded correctly, including spellings etc.

Check your credit file regularly

Obtain a copy of your personal credit file to make sure that the information recorded is accurate and up-to-date. Mistakes can and do occur. If you spot any errors then contact the lender concerned to get this corrected as soon as possible.

It is important to do this regularly to try and spot possible identity theft. This is where fraudsters use your personal details to fraudulently obtain credit. They then default on this credit, leaving you with adverse history on your credit file. This is becoming increasingly common. It can have a devastating impact and take a huge amount of time and effort to get corrected. You can obtain a free copy of your credit file from companies such as ClearScore.

Speak to a mortgage advisor

Lastly, speak to a mortgage advisor before you actually make any mortgage applications, particularly if you have concerns. No one will be better placed to help you than a professional.

A mortgage advisor, such as us here at Mortgage Light, will be able to help pinpoint any potential issues and put you on the path to success when applying for a mortgage. We’ll match you with the most suitable lenders for your situation and contact them on your behalf when we are confident that you are in a good position.

We’re here to give you the best possible chance. Need our help? We’re available to chat on 01908 597655 or you can contact us via our website.

How do Joint Mortgages Work?

April 16, 2022 By Mortgage Light Leave a Comment

There can be many advantages to purchasing a property jointly with somebody else. For example, by pooling your resources together, you might be able to provide a larger initial cash deposit. This would reduce your loan to value (LTV) and therefore getting access to lower interest rate mortgage deals.

Combining incomes could also help you get a larger mortgage offer, allowing you to purchase a more desirable property. And of course, having more than one household income should make owning a home more affordable. It means you can share the cost of mortgage repayments and household bills, etc.

To achieve these benefits, you would need to take out a joint mortgage. You may choose to purchase a property jointly with your partner, a friend, a group of friends, a business partner, your parents or a family member. Perhaps you yourself are a parent looking to take out a joint mortgage with your adult child to help them get onto the property ladder.

There may be many motivations for taking out a joint mortgage. In this article, we’re going to explain how a joint mortgage works.

What is a joint mortgage?

A joint mortgage is simply a mortgage that allows you to borrow money jointly with another person. You can then purchase a property that you will own jointly. With joint mortgages, all applicants must be over 18. They will be joint owners with a legal claim to the ownership of the property. They will all be liable for the entire mortgage and its repayments. This means that if one person is unable or unwilling to pay their share of the mortgage repayments, then it falls to the other person (or people) to pay the full amount due.

Joint mortgages can be very attractive, however, because they allow you to combine your savings with another person. You may then be able to put down a larger mortgage deposit than you would have been able to do alone. This could give you access to better mortgage deals, given the lower LTV represented. It should also mean that all of the costs involved with purchasing and maintaining a home can be split between those on the joint mortgage, as opposed to falling to just one person.

Who can take out a joint mortgage?

Most commonly, joint mortgages are taken out by just two people. This is usually couples in a relationship. You don’t need to be a married couple to take out a mortgage and in fact, cohabiting couples are the fastest growing family type in the UK.

Unmarried couples have a few different options when it comes to taking out a joint mortgage. They can opt to be joint tenants. This means that both parties have equal ownership of the property. If one person were to die, the joint tenant and partner will automatically inherit the other’s share of the property.

Another option is to be tenants in common. Again, this is designed for unmarried couples, but who perhaps have different earnings and would like to contribute different amounts to the mortgage. It protects the difference in contributions should the relationship break down. It also means that in the event of one partner dying, the surviving partner would not automatically inherit the other partner’s share of the property.

It’s not just couples that joint mortgages appeal to. Depending on the lender, you can take out a joint mortgage with up to three other people. The maximum number of people who can be on a joint mortgage is normally four. This can make it an attractive option for groups of friends living in an area where property prices are higher, such as London, who want to combine their resources to purchase a property together. It might also appeal to business partners who want to invest together in a buy-to-let property. However, this is something of a specialist area and subject to other rules and opportunities.

Perhaps two parents want to help their adult offspring take their first step onto the property ladder. They may take out a joint mortgage in all three names. Parents should be aware that if they already own a property, they may have to pay an additional 3% Stamp Duty Land Tax charge when purchasing a second property. There may also be capital gains tax to pay on their share of the property if and when it gets sold in the future.

If this is a concern, parents may decide to act as mortgage guarantors instead of taking out a joint mortgage. This way they can still provide security for their child without having to be named on the mortgage or title deeds. They would also, therefore, avoid some of the tax implications.

Find out more – ‘What is a mortgage guarantor?’

How much can you borrow with a joint mortgage?

Generally speaking, you can borrow more when you buy with someone else. A lender will take into account your combined income when assessing your mortgage affordability. When a lender assesses affordability, they normally multiply the applicant’s income by a set amount (usually around four times). This will determine how much they are willing to lend.

Clearly, joint incomes will be greater than a single applicant’s income. This will generate a higher mortgage offer. At the same time, having two incomes supporting a mortgage application will provide greater comfort to a lender. If one person lost their income, there will still be another person to provide financial support.

Let’s say you earn £25,000 a year. The person you are taking out a joint mortgage with earns £30,000 a year. This puts your combined income at £55,000. If a lender is offering a mortgage up to four times your combined income, this would mean you could be able to borrow up to £220,000.

Determining affordability is not quite as cut and dry as that, however. A lender will also want to take a close look at your incomes. They will also look at your individual credit records, any debts outstanding, your personal incomings and outgoings and any other liabilities or financial responsibilities you may have. If you would like to find out how much you could potentially borrow on a joint mortgage, speak to us here at Mortgage Light.

Can I get a joint mortgage with bad credit?

This will depend on the level of any bad credit you have. It will also depend on the criteria of the lender you approach. Of course, when you apply for a joint mortgage, a lender will run the usual credit checks and take the combined credit histories into account. If one of you has a particularly good credit score, this can benefit the overall application. Similarly, an applicant with a poor credit score could bring down a joint application.

If you have a particularly low credit score, it may work to your advantage to apply for a mortgage jointly with someone who has a good score. Your combined score may be strong enough for you to get mortgage deals that would otherwise have been denied to you if it was your name alone on the application. Of course, your poor score will negatively impact your joint applicant. However, as long as your combined score is sufficient to be accepted, then having your joint incomes and therefore access to possibly higher borrowing may offset this.

If you are worried about getting a joint mortgage when you have bad credit or with a joint applicant who has bad credit, then we recommend you speak to a mortgage advisor and broker for guidance. At Mortgage Light, we know how best to structure applications. We know exactly which lenders to turn to when working with people who have a less than perfect credit score.

Find out more – ‘How does bad credit affect a mortgage?’

How to get out of a joint mortgage

The problem with joint mortgages is that you may come to a point where one person would like to be removed from the mortgage. Perhaps you took out a joint mortgage with a partner and you’ve decided to separate or divorce. Perhaps you took out a joint mortgage with a friend. They’ve now decided they’d like to move away or get a joint mortgage with their partner instead. These situations can be challenging, but there are a few different options available to you.

You could sell the property, all move out, pay off the mortgage and split any net sale proceeds between you. Alternatively, one person could seek to buy the other out by taking out a new mortgage in their sole name (or jointly with a new partner). They would then fully refinance the existing mortgage and pay off the leaving partner with their share of the property’s equity. It’s worth mentioning that all owners must agree to whatever course of action is taken. All joint owners have a legal right to remain in the property unless a court order rules otherwise.

Unfortunately, joint mortgage separation can be complicated. It’s never quite as easy as simply taking a name off the mortgage. Always seek professional advice before settling on a route to go down. It’s important to ensure that the process is handled correctly.

A huge proportion of homeowners take out joint mortgages. It is often the most practical route to buying a property. If you are interested in getting a joint mortgage, let us at Mortgage Light advise you and help secure the perfect mortgage deal. We have access to the whole mortgage market and are confident we can find you exactly what you need.

Simply call 01908 597655 or contact us via our website to speak to one of our friendly advisors.

Can I Remortgage With Credit Card Debt?

April 8, 2022 By Mortgage Light Leave a Comment

It is possible to remortgage with credit card debt, so long as you are generally able to prove that you can afford your monthly repayments. Assuming you are able to do this, you may still face some restrictions on the amount lenders are willing to offer you. You could also find that any mortgages offered will be subject to a slightly higher interest rate than you might otherwise have been given.

In this article, we discuss how credit card debt and other debts can affect the remortgaging process and what to do if you are struggling to find a lender who will accept your remortgage application.

How does credit card debt affect a remortgage?

This all depends on the level of your credit card or other debts. Of course, the larger the debt, the larger the warning signs are likely to be to any lender. Lenders will want to understand the nature of any debts you may have. They may ask questions such as:

How long have your debts been outstanding?
Are you struggling to repay them?
Has the overall level of debt been increasing?
Are your debts properly structured?
Have you met all the repayments on time?
If your debt has occurred recently, what was the reason for this?

The answers to these questions could potentially present some ‘red flags’ to a lender. This might cause them to view your application as being a higher risk. This may cause them to decline your remortgage application outright. This could then adversely impact your credit score or it may restrict what they are willing to offer you.

If you are meeting your regular payments on time and managing to reduce the outstanding credit, then a lender may be willing to look upon your application more sympathetically. Remember, all lenders approach applications on a case-by-case basis. Some lenders will have very strict policies on personal debt. Other lenders are more willing to consider lending to applicants with higher levels of credit card borrowing. You might find that you may be a little more limited in choice, but the mortgage market is vast and there are deals out there for all kinds of borrowers, including bad credit mortgages.

It’s a good idea to enlist the help of a mortgage advisor and broker, such as us here at Mortgage Light. We know which lenders to turn to in order to have the best chance of getting approval on the first attempt. We have access to the whole mortgage market, including lenders that only we can access as mortgage professionals.

Find out more – ‘How does bad credit affect a mortgage?’

How much credit card debt is too much?

There is no cut and dry answer to the question of how much credit card debt is too much. It depends on your personal circumstances and your debt to income ratio. For instance, you might have £3,000 worth of recent credit card debt outstanding. However, maybe you are about to sell your car or due a bonus from work that will repay or substantially reduce this. A lender may then accept this and consider you a sound applicant for a remortgage.

On the other hand, if you have had this level of outstanding credit card debt for some time and there is no evidence of you being able to reduce it, then this could be a sign of poor financial management and therefore a warning sign.

Some lenders may automatically reject your application in these same circumstances, simply as a result of the level of your credit card debt. Each lender will have its own assessment criteria. It’s important to understand which lenders are likely to be more sympathetic to your situation.

It’s safe to assume that if you have maxed out your credit card/s and you have used up the majority of your available credit, lenders are less likely to look upon your application favourably. Even if you have never missed a credit card payment, high levels of credit card debt can be an indication that you are reliant on credit cards. Even if a lender is willing to accept a remortgage application from you, they will probably have a number of questions for you to try and fully understand the story behind your credit card and general borrowing history.

Find out more – ‘What happens if a mortgage application gets rejected?’

Will missed or late credit card payments affect a remortgage?

If you have missed any credit card payments, this is likely to be a red flag to any mortgage lender. They may think carefully before accepting or processing an application from you. If you have a missed payment that has been outstanding for more than one month (therefore meaning you owe more than any current month’s repayment), you will be in arrears. This is considered a more major red flag.

Late payments are generally considered less severe and as long as the payment is caught up within the same month that it is due, most lenders won’t report it as a missed payment to the credit agencies. If not though, reported late and missed payments will inevitably lower your credit score. And a low credit score can make getting a mortgage a little more of a challenge.

There are, however, a number of specialist lenders who are willing to lend to applicants with lower credit scores. The remortgage market needn’t be closed to you if you have been impacted in this way.

Find out more – ‘Can I remortgage with bad credit?’

Can I remortgage to pay off credit card debt?

You may be considering a remortgage as a way to pay off some or all of your credit card or other debts. You could potentially do this by remortgaging. Remortgaging could allow you to release some cash from the equity that has built up in your home since you purchased it. You to pay off your outstanding personal credit.

This would effectively consolidate your personal borrowing with your mortgage into a single loan secured against your house. By doing this, you are transferring unsecured short term debt into secured long term borrowing. This will generally reduce the interest burden on the short term debt and also your monthly repayment costs. These will now be spread over a much longer term.

The overall cost of this might ultimately be higher in the long run. You will be repaying your borrowing over a much longer period. However, it should provide some relief to your monthly budget. A good financial advisor, such as us here at Mortgage Light, will be able to guide you on the value of your options if this is something you are considering.

Let’s say for example that you currently own a property worth £300,000. You have a £200,000 mortgage outstanding. You want to release £15,000 of equity from your home in order to pay off your credit card debts (or any other debts). You’d therefore need to take out a new mortgage for £215,000. This will refinance your existing mortgage and provide the additional cash to pay off your credit cards.

This is called debt consolidation. It’s important to note that this simply moves your debt onto your mortgage, rather than actually paying it off. Consolidating your loans doesn’t reduce the amount you owe. It instead restructures it in what might be an efficient way of borrowing.

Find out more – ‘Can you remortgage to pay off debt?’

What should I do if I can’t get a remortgage accepted because of credit card debt?

Struggling to know where to turn when remortgaging with credit card debt? Speak to an experienced mortgage advisor and broker. They should be able to provide guidance and help you to secure the deal you need. At Mortgage Light, we have helped many people just like you achieve what they need from their remortgage – even with credit card debt or adverse credit history.

Our experts know the mortgage market like the back of their hands, including which lenders are more accepting of credit card debt and other financial issues such as low credit scores. We will always do our best to find a suitable lender that will accept your remortgage application.

Let’s start your remortgaging process together. Get in touch with us via our website or call 01908 597655 today.

What Does LTV Mean?

April 1, 2022 By Mortgage Light Leave a Comment

Loan-to-value, otherwise known as ‘LTV’ is a phrase that you’ll quite often hear used within the housing and mortgage market. It’s something that lenders look at when assessing the level of risk attached to any secured loan they may be considering offering. It will often drive the level of interest rate being charged.

It’s an important part of the mortgage process, but what does LTV actually mean? In this article, we explain everything you need to be aware of regarding loan-to-value.

What does LTV mean on a mortgage?

In the mortgage world, LTV is a calculation used by lenders use to describe the relationship between the outstanding mortgage balance and the market value of a property. It refers to the percentage of your property’s market value that is being funded by your mortgage.

For instance, let’s say you put down a 20% deposit on a property. You take out a mortgage to cover the remaining 80%. Your LTV ratio would be 80% because 80% of your home is being paid for by your mortgage.

The higher the LTV, the higher the risk profile for the lender. This is because, in the event of you defaulting your mortgage for any reason, a higher LTV means there is a smaller buffer between what is owed on the mortgage and what the market value of the property might be.

Your LTV ratio will change over time. This is often a result of you paying down your mortgage borrowing each month. This reduces the mortgage amount against the property value. It may also change as a result of the market value of your property changing. A rise in the value of your house will reduce the percentage of your property funded by your mortgage. As a result, it will reduce your LTV.

For example, a £200,000 house with a £160,000 mortgage will have a loan-to-value of 80%. If the market value of the property increases to £220,000, and the mortgage remains at the same level, the LTV will reduce to around 73%. Remember, however, that houses values can go down as well as up. A fall in your property’s market value could result in the LTV increasing.

How does LTV affect interest rates?

To compensate lenders for the higher risk associated with providing higher LTV mortgages, these mortgages generally attract a higher interest rate. Similarly, mortgages with lower LTVs are usually offered at lower interest rates. This means that it can be much cheaper to borrow the same amount of money if there is a lower LTV.

Are higher LTV mortgages really more risky to the lender? Well, think about it this way. A home bought with a 90% mortgage would only have to lose 11% of its value to go into negative equity. This is where the market value of the property isn’t sufficient to cover the balance outstanding on the mortgage. As a result, if the lender were to have to repossess the property for any reason and then sell it to try and recoup the amount outstanding on the mortgage, the sale proceeds wouldn’t be enough to get all of their money back.

Lenders also know from experience that properties that get repossessed tend to have suffered neglect for some time prior to this. Very often, they fail to reach their full market value at auction. As a result, the reduction in value seen in such properties will see them not get all their money back.

A lower loan-to-value mortgage of 60% however, means that the market value of a property can fall by over a third before the lender faces any real risk of loss. This is why lenders save their more attractive mortgage deals for customers with lower LTV borrowing.

Find out more – ‘How much interest am I paying on my mortgage?’

How to calculate LTV

LTV is expressed as a percentage. It is calculated by dividing the value of the mortgage outstanding by the value of the property. There are plenty of online LTV calculators to help you do this.

Let’s say for example that you wish to purchase a house for £200,000. You intend on putting down a 20% deposit of £40,000. To complete the purchase, you will need a mortgage of £160,000. By dividing the required mortgage (£160,000) by the property value (£200,000) and then multiplying by 100, you get the LTV which is in this case 80%.

What is a good LTV?

So, we now know that low loan-to-value mortgages are generally preferable and often come with lower interest rates. High LTV mortgages are considered higher risk and often come with higher interest rates. But what exactly is considered low and high for LTV?

As a general rule, anything below 80% LTV is considered low. Anything higher than 80% is considered high. For that reason, it’s a good idea to try and put down at least a 20% cash deposit. Of course, this can be difficult for first-time buyers. It’s not uncommon to have a higher LTV mortgage when you purchase your first property. As you build up equity in your property, you could then look to move on to lower loan-to-value deals later on.

For first time buyers, it can still be worth taking on the more expensive higher loan-t0-value borrowing just to take that first step onto the property ladder. After all, house prices might be going up faster than the value of your savings! If you start off with a high LTV mortgage, then you can always look to remortgage onto a cheaper facility later, once you have seen your LTV start to reduce as a result of either house price rises or your borrowing reducing (or most commonly, a combination of both).

Got more questions about LTV? Just give us a shout! Our friendly and experienced mortgage advisors would be happy to help you. Contact us via our website or call 01908 597655.

What Happens if a Mortgage Application Gets Rejected?

March 19, 2022 By Mortgage Light Leave a Comment

Buying a new home can be a really exciting process, but it can also be pretty nerve-wracking. One of the most important parts of the entire process is securing your mortgage. If your mortgage application gets rejected, however, this can be really disappointing and a major setback.

A rejected mortgage application need not be the end of the road, however. In this article, we are going to talk about the reasons why a mortgage application may be rejected and what you can do to move forward from it. [Read more…]

Do Shared Ownership Properties Increase in Value?

March 11, 2022 By Mortgage Light Leave a Comment

It’s quite normal for house prices to go up as well as down. This is due to changes in market conditions and shared ownership properties are no different in this regard. Property prices will be impacted by various factors. These include changes in the supply and demand for housing in an area. This is often caused by changes to local transport links or employment opportunities. They are also affected by larger influences such as the nation’s economy and the cost of borrowing.

If your shared ownership property increases in value, then you will benefit from some of that increase. In this article, we explain a little more about house price changes and how these impact shared ownership properties. [Read more…]

Difference Between Fixed and Tracker Mortgages

March 1, 2022 By Mortgage Light Leave a Comment

There are a number of different types of mortgages available. It’s important to try to make sure you choose the right one for you. After all, a mortgage is probably going to be one of the biggest and longest-running financial commitments you ever make. It’s well worth getting it right!

Chances are, you’ve heard of both fixed and tracker mortgages. But what exactly are they and how do they differ? In this article, we’ll discuss the difference between fixed and tracker mortgages to help you decide which, if either, is best suited to you. [Read more…]

How do Shared Ownership Mortgages Work?

February 14, 2022 By Mortgage Light Leave a Comment

If you need a little helping hand getting onto the property ladder, you may be considering making use of the shared ownership scheme. The scheme has been around since the 1970s. Today, the shared ownership market is well established and is really quite strong. Mainstream lenders such as Nationwide, Halifax, Santander and many more all offer shared ownership mortgages, making the scheme more accessible than ever.

So, how do shared ownership mortgages work? In this article, we explain all you need to know about a shared ownership mortgage. [Read more…]

How Does Bad Credit Affect a Mortgage?

February 8, 2022 By Mortgage Light Leave a Comment

When it comes to getting a mortgage, your credit history is a pretty important factor. It plays a big part in how a lender will assess your affordability. Looking into your credit history is one of the ways in which a lender will gain information on how reliable you have been at paying back debts and loans in the past. After all, a mortgage is likely to be the biggest loan you’ll ever have! A lender needs to be confident that you’ll be able to keep up with your repayments across the whole lifetime of the loan.

So, how does bad credit affect a mortgage application? Is it still possible to get a mortgage with a bad credit history? In this article, we explain all you need to know. [Read more…]

How to Save For a House Deposit

February 1, 2022 By Mortgage Light Leave a Comment

So, you’ve decided to begin planning your first step onto the property ladder. For many, the largest obstacle you will face is saving up enough cash for a house deposit. A house deposit is usually required by most mortgage lenders as your initial contribution towards the cost of your property purchase. For a first time buyer, saving for a house deposit can be particularly difficult – especially if you are currently paying out a large part of your income in rent for your existing accommodation.

Before you begin saving for your house deposit, it’s a good idea to have an idea of roughly how much you’ll need to save and the options available to you if you are struggling to reach this goal. Here is a guide and some tips on how to save for a house deposit. [Read more…]

How to Remortgage Your House

January 18, 2022 By Mortgage Light Leave a Comment

Most homeowners with a mortgage will consider remortgaging at some point – just as you might regularly compare the market to secure the best deal for your car or home insurance.

Remortgaging your house is essentially the process of switching your mortgage from one mortgage deal to another. The new deal that you choose may be with your existing lender, referred to as a ‘product transfer’. Alternatively, it might be a new deal with an entirely different lender.

In most cases, the idea of remortgaging is to shop around and ensure that you have the best mortgage product available to you. But what’s the process and how do you get started? In this article, we will explain how to remortgage your house. [Read more…]

How to Get a Mortgage as a Business Owner

January 11, 2022 By Mortgage Light 2 Comments

Running your own business comes with a wealth of benefits and freedoms. However, when it comes to getting a mortgage as a business owner, you may need to jump through a few more hoops than someone who is a contracted employee.

Whilst perhaps more challenging, it’s certainly not impossible to secure a mortgage as a business owner. There are plenty of lenders out there who are familiar with business owners and willing to lend. In this article, we are going to explain a few things that you should know about how to get a mortgage as a business owner. [Read more…]

What is the Minimum Deposit on a Mortgage?

January 4, 2022 By Mortgage Light Leave a Comment

One of the first steps after deciding you’d like to purchase a house is to begin saving up for your house deposit. Your deposit is usually the most expensive part of getting a mortgage.

Typically, you need to put down a deposit of at least 5% of a property’s value. With the average UK house price sitting at around £265,000 as of August 2021, the minimum deposit amount that you would need for the average house in the UK is £13,250 – 5% of £265,000.

In this article, we are going to explain a little more about the minimum deposit on a mortgage, how to save for one and what to do if you don’t have one. [Read more…]

Is Shared Ownership a Good Idea For First Time Buyers?

December 28, 2021 By Mortgage Light Leave a Comment

Getting on the property ladder can feel like an enormous feat for a first-time buyer. Often, the biggest obstacle facing first-time buyers is raising a large enough deposit to purchase a property.

Luckily, there is support out there for those that are struggling to overcome this – such as the shared ownership scheme. If you aren’t sure how the shared ownership scheme works or if it is a good idea for first-time buyers, we’re here to explain. [Read more…]

How to Get The Best Rate on a Mortgage

December 24, 2021 By Mortgage Light Leave a Comment

The UK finance market offers a broad range of mortgage products to borrowers. The interest rate charged on those products can vary quite widely for different borrowers. Generally, the interest rate charged by a lender is a reflection of their view of the risk the borrower poses and the scale of loss the lender might run into should that happen.

As a result of these different risk profiles, some of the preferential deals that may be available to one borrower may not be available to another – and vice versa. So, what are some of the factors that affect the interest rate that you may be offered on your mortgage and how can you get the best rate for your personal circumstances? [Read more…]

Christmas Opening Hours

December 21, 2021 By Mortgage Light Leave a Comment

Merry Christmas and a Happy New Year!

This year the office will be closed from the 23rd.
We will then be back in on the 29th, 30th & 31st open 10am until 5pm.

Best wishes from everyone at Mortgage Light

Is There a Minimum Income for Shared Ownership?

December 20, 2021 By Mortgage Light 2 Comments

Good news – there is no set minimum income requirement for the shared ownership scheme. Each home available under the scheme will have its own valuation. This will determine the minimum income required to both rent and purchase a share of that property.

The shared ownership scheme was introduced to make homeownership more accessible for those who may be struggling to raise a full deposit, or do not have enough income for a full mortgage. In this article, we are going to answer some of the common questions asked. [Read more…]

How to Get a Mortgage Without Payslips

December 15, 2021 By Mortgage Light 2 Comments

Whilst there used to be a time before the last recession, where you could obtain a ‘Self Certification Mortgage’ which didn’t require any proof of income, this is now largely no longer the case. Today, proving your income is an essential part of getting a mortgage.

Mortgage lenders will use your proof of income to help determine your affordability for a mortgage. This also determines the maximum amount that they might be willing to lend to you. Most lenders will ask you to provide a number of recent payslips (typically a minimum of three), along with your mortgage application as evidence of your earnings. [Read more…]

Mortgage Costs Increase – Now is Time to Act!

November 4, 2021 By Mortgage Light Leave a Comment

It’s been an eventful few weeks in the mortgage world, with Rishi Sunak’s announcement of the Budget 2021, mortgage rates on the rise and inflation increases all dominating the financial press.

So, what does all this mean for our Mortgage Light customers? We’re here to explain all. [Read more…]

What are High Net Worth Mortgages?

October 28, 2021 By Mortgage Light Leave a Comment

High net worth individuals are those considered to have accumulated or acquired considerable wealth. Many of these individuals will find that ‘off the shelf’ mainstream mortgage products are not suitable or appropriate for their circumstances. Instead, they will need something more bespoke, such as the flexibility offered by a high net worth mortgage.

According to the UK’s Financial Conduct Authority (FCA), you meet the criteria for a high net worth mortgage if you have a personal income of more than £300,000 a year or if you have liquid assets of more than £3,000,000. These assets can include a variety of investments, as well as equity built up in residential property. Such individuals will generally benefit from a more tailored and personalised underwriting process and mortgage product. [Read more…]

How Much Interest am I Paying on my Mortgage?

October 21, 2021 By Mortgage Light Leave a Comment

Most mortgages these days are standard capital and interest repayment mortgages, also known as ‘repayment mortgages’. This means that each month you repay all of the interest charged on your borrowing for the month, plus a small amount of the capital that you originally borrowed.

Over the term of your loan, you will eventually repay all of the capital you borrowed via your monthly repayments so that your loan is fully paid off. The interest that you pay each month is effectively the fee you pay to your lender in return for borrowing the capital from them. It is how lenders make their profit. [Read more…]

Getting a Mortgage With a Limited Company

October 11, 2021 By Mortgage Light Leave a Comment

Getting a mortgage offer when you are the director and owner of a limited company can sometimes be challenging. This is particularly true when trying to evidence your earnings. Unlike most salaried employees, the self-employed and most company directors will not have a simple straightforward contracted income that can be evidenced via monthly payslips and a P60. [Read more…]

How do I Apply for a Mortgage?

September 20, 2021 By Mortgage Light Leave a Comment

Where do you start when you need to apply for a mortgage? The whole process can feel overwhelming, especially for a first-time buyer – but that is why mortgage advisors exist!

We’re here to advise and guide you through the entire process. We’ll highlight some of the different options you might want to consider and take away a lot of the leg work you would otherwise have to do yourself.

Let’s talk through the steps you’ll need to take when applying for a mortgage. [Read more…]

Can You Get Shared Ownership With Bad Credit?

September 14, 2021 By Mortgage Light Leave a Comment

Purchasing property can sometimes be a difficult ride, even for those with a seemingly strong financial record. It can be especially difficult for those burdened with a poor credit history for whatever reason. Don’t let a bad credit history put you off trying to buy a property, however. Mortgages of all kinds can still be sourced, provided you adopt the right approach.

Bad credit is far from uncommon. People in the UK owed £1,742.1 billion at the end of June 2021. Inevitably, some percentage of this will have fallen into arrears, or be in default to some degree. [Read more…]

Can You Remortgage at Any Time?

September 9, 2021 By Mortgage Light Leave a Comment

Whilst you can remortgage at any time, it’s a good idea to remortgage at a time when you’ll reap the benefits of doing so. Remortgaging usually comes with financial implications and generally has some upfront costs, so it doesn’t always make initial sense for your bank balance.

Remortgaging gives you the opportunity to shop around and secure the best mortgage deal for your circumstances. Let’s look at the reasons why you might choose to remortgage, and the best time to undertake this process. [Read more…]

How Much of a Deposit do you Need for Shared Ownership?

August 3, 2021 By Mortgage Light Leave a Comment

Shared ownership is designed to make getting on the property ladder more affordable for those who need it. With shared ownership, the amount of deposit you will need to get together in order to purchase a shared ownership property is considerably lower than the deposit you would need to purchase a property outright on the open market.

This is because the deposit you will need to provide is based on the value of the share of the property that you are purchasing, rather than the market value of the whole property. Whilst the deposit required for a shared ownership purchase will vary from property to property, it is typically between 5-10% of the value of the share being purchased. [Read more…]

How to Buy Your First Home

July 27, 2021 By Mortgage Light Leave a Comment

If you are a first-time buyer, the process of purchasing a home can feel daunting. Purchasing a property is likely to be one of the biggest financial decisions you will ever make, so it’s important to get it right.

We’ve put together a handy step-by-step guide to buying your first home – from saving for your deposit to getting the keys and moving in. We hope it will help you get an idea of the process you will need to go through from start to finish. [Read more…]

What Happens to my Mortgage if I Lose my Job?

July 26, 2021 By Mortgage Light Leave a Comment

If you are in employment and have a mortgage, it’s probably safe to say that you rely on your monthly wage to meet your mortgage repayments and keep the roof over your head. So, what happens to your mortgage if you lose your job and therefore your income?

Losing your job can be a real shock that can turn your finances upside down. If you do find yourself in this situation and you are worried about how you can continue to pay your mortgage, there are temporary solutions out there to help you get by. [Read more…]

What is a Mortgage Payment Holiday?

June 24, 2021 By Mortgage Light Leave a Comment

A mortgage payment holiday is when you temporarily stop or reduce your monthly mortgage repayments in order to obtain some short-term financial relief. Not all mortgages offer the option of a mortgage payment holiday. It generally depends on your mortgage product’s terms and conditions as to whether they will be available to you.

You may request a mortgage payment holiday from your mortgage lender to help you with short-term or unexpected changes to your financial situation. This could be due to changes to your employment such as redundancy, maternity or paternity leave. Perhaps your finances are stretched due to large unexpected costs such as major house repairs.

[Read more…]

How to Apply for Shared Ownership

June 17, 2021 By Mortgage Light Leave a Comment

Since its introduction back in the 1970s, the shared ownership scheme has become incredibly popular. The scheme has seen some changes along the way, the latest coming into effect in April 2021. Today it remains one of the most popular options for affordably buying a home.

If you are interested in purchasing a property using the shared ownership scheme, then there is a process you will need to follow. In this article, we will outline this process; from who to initially contact, through to collecting the keys and moving in.

[Read more…]

Different Types of Mortgage

June 9, 2021 By Mortgage Light Leave a Comment

Once you begin looking for a mortgage, you’ll come to realise that there are many different types of mortgages out there on the market. It can quickly become confusing. However, there are essentially two main types of mortgages: fixed-rate and variable-rate mortgages.

In this guide, we are going to explain how each of these mortgage types work. We will also cover other common types of mortgage and some specialist mortgages that you may come across.

[Read more…]

What Happens to Your Mortgage When You Move?

May 11, 2021 By Mortgage Light Leave a Comment

When you move house, you may have the option of taking your current mortgage deal with you to your new property, known as mortgage porting. If you choose not to take up this option, or it isn’t available to you, then you will need to repay your existing mortgage deal from the sale proceeds of your house and take out a new mortgage to help you buy your next property. You can do this with either your existing lender or with a new one.

It’s important to note that mortgage porting only applies where you currently have some sort of special mortgage deal. This could be a fixed interest, tracker or discounted rate facility with your existing lender. It does not apply where you have a standard variable rate facility.

[Read more…]

Am I Eligible for a Mortgage?

April 27, 2021 By Mortgage Light Leave a Comment

To determine whether you are eligible for a mortgage, a mortgage lender will want to assess a number of different factors before giving their approval to lend to you. Taking out a mortgage generally involves borrowing a significant amount of money over a fairly long period of time. Lenders will want to look at the bigger picture of your personal situation and finances. This is to satisfy themselves that you will be able to afford this commitment.

To help with this assessment, lenders will have their own set of lending criteria. They will apply this to mortgage applications as a guide to determining their appetite to lend. As a borrower, you will generally need to meet these criteria to be eligible for a mortgage from them.

[Read more…]

What Happens When You Sell a Shared Ownership Property?

April 21, 2021 By Mortgage Light Leave a Comment

If you have a shared ownership property, you will encounter some restrictions if and when you want to sell it on. If, however, you have staircased to 100% ownership, then these restrictions may not apply to you, as you are generally considered the sole owner of the property. It’s important to check the details of your lease to see if this is the case for you.

If you do not own 100% of the property, however, then there is a process you must follow when it comes to selling up. This process will be detailed within your lease, but here’s a guide to what you can expect when selling your shared ownership property.

[Read more…]

Shared Ownership – How Does Staircasing Work?

March 30, 2021 By Mortgage Light 1 Comment

If you have bought a share of your home using the shared ownership scheme, the process of ‘staircasing’ enables you to gradually own a greater proportion of the property by purchasing additional shares. The more of the property you own, the less rent you will pay to your Housing Association. If you eventually staircase up to 100% ownership, you will own the property outright. You will no longer need to pay any further rent.

Generally, you can’t begin staircasing until you have owned your share of the property for an agreed fixed period of time. This initial restricted period will be detailed in your lease. It’s also important to check the terms of your lease. Getting up to 100% ownership is not always possible. Some housing providers limit the share of the property you can staircase up to.

[Read more…]

Can I Remortgage to Release Equity?

March 24, 2021 By Mortgage Light Leave a Comment

By remortgaging, you may be able to access some cash against your home. This is known as equity. It’s the difference between your home’s current value and the amount owed on your mortgage.

Over time, you may find that the value of your property has increased as property prices go up, or following some home improvements you may have carried out. At the same time, you may have paid down your mortgage borrowing. Either of these events will result in an increase in the amount of equity available in your home. Combined, they can have quite a significant impact on the amount of it.

[Read more…]

Mortgages and Divorce

March 18, 2021 By Mortgage Light Leave a Comment

Going through a divorce or legal separation can be a very difficult and stressful process, even if the separation is amicable between both parties. Untangling personal finances and separating joint assets fairly can be tricky and is often far from straightforward, particularly if you own significant assets such as the matrimonial home. This can be even more difficult and contentious where there are dependent children involved in the relationship. The decision on how to deal with the family home will, in most cases, have an impact on these children in many ways.

Unfortunately, 42% of marriages end in divorce, however one consequence of this statistic is that mortgage lenders are familiar with these types of situations. There are generally options available to you when it comes to refinancing an existing joint mortgage on the family home or getting a new mortgage facility to buy a new home.

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Extending Your Mortgage Term

March 11, 2021 By Mortgage Light Leave a Comment

If you have a standard repayment mortgage, you may be able to reduce your monthly payments by extending your mortgage term. Your mortgage term is the length of time that you have agreed to fully repay your mortgage within. The term will have been agreed with you at the time you originally took your mortgage out, or last remortgaged it.

For a long time, a 25-year mortgage term was the standard go-to option. In recent years, however, as the size of the average mortgage has increased, there has been a move towards longer repayment terms in an attempt to make the higher borrowing needed to buy a property more affordable. In fact, data suggests that the number of first-time buyers opting for a mortgage term of between 35 and 40 years has doubled over the past decade.

So, how does extending your mortgage term affect your payments, and is it something you should consider?

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