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Best Mortgage Advice from Bright Money Independent

If you’re a First Time Buyer or climbing the Property Ladder, our Advice will help you understand the new requirement for mortgage lending.

How much can you borrow?

safe calculation is 4 times income; however some lenders will let you borrow 5 times income. This is dependent on age, term, outgoing's and how your income is made.

e.g. I earn £18,000 per annum + my wife earns £22,000 so the total income is £40,000

The maximum we could borrow is £40,000 x 4 = £160,000

The term of a mortgage can be between 5 and 35 years.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

What affects your borrowing?

DEBT: if you have loans, credit cards or HP payments, benefits or child minding costs your maximum loan amount will be reduced.

I have a personal loan with a monthly repayment of £180 and a Credit card with a minimum monthly payment of £60, therefore my current outgoing's total £240 before paying a mortgage or any household bills.

These outgoing's will have the effect of reducing my income by £2,880 = £240 x 12 months. The Maximum we could then borrow is £37,120 x 4.5 = £167,040.

How much deposit do you need?

large deposit (relative to the value of the property) will increase your choice of mortgages and lower interest rates as the risk to the lender is low. Since the "2008 mortgage crisis" banks will lend a maximum of 95% but these loans will be at a much higher interest rate.

If you wish to buy a house valued at £240,000 you would require a minimum deposit of £12,000 (5%).

Mortgage Rates vs Deposit:

5% Deposit = interest rate circa 4% - 6%
10% Deposit = interest rate circa 3.5% - 4%
20% Deposit = interest rate circa 2.5% - 3.5%
40% Deposit = interest rate circa 1.3%

You can buy a brand new home with just 5% deposit, the Government will then assist with a further 20% (see Help to Buy) therefore giving you a deposit of 25% to get a better interest rate.

Affordability Calculations

All lenders will assess you for "Affordability". This is your outgoing's for day-to-day living like transport, school/nursery payments, loans and credit cards. If you are looking to purchase a lease hold property your ground rent and maintenance costs may be included. For shared equity mortgages your rent payments will be included

Banks ‘stress test’ your ability to make the repayments, some ensure you can afford to repay your mortgage even if rates jump to 6.99%

Every lender is has different criteria and vary on their assessments. Before making an application we will check the lenders Affordability criteria having instant access to underwriters for complex circumstances.

YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Other Costs to Consider

Mortgage application fee / arrangement fee

Stamp duty - New rules for 2015

valuation fee [every property is independently valued by the lender, however this is charged to you, You have the option to have a Home Buyers Report or full Structural Survey completed if you’re willing to pay the difference]

Solicitor Fees (conveyance) [average cost to buy = £500-700   average cost to buy and sell = £ 850-1000]

Agreement in Principle

Before you look into buying a home, our mortgage advisors will assess your individual circumstances and advise the best mortgage product based on your circumstances and maximum loan amount. We can arrange for a decision in principle within hours which clients use to demonstrate a serious offer to estate agents.

How to Proceed

Our advice is Free and non-obligation. If you speak to us early in your house buying process we will be in a better position to proceed once you find your new home.

Please prepare your figures for income and outgoing and how much you’re looking to spend. We suggest getting an Experian Credit Report to ensure you have a good credit history especially with a high loan to value mortgage.

We will then compare and source the best deals for you by searching the whole of market with the aim of saving you time and money.

Call our team on 01844 390910

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Services are you interested in?

You can choose how Bright Money Independent Ltd are paid for mortgages; typically we do not charge however, you can pay a fee, usually 1% of the loan amount,
in cases that more work is required we may agree a fee upfront before any work is undertaken.
For Equity Release we are typically paid by the lender, however we offer a fee only service which is 1.5% of the loan amount.
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