Mortgage Light

0% Deposit Mortgage UK: How Renters Are Buying Homes Without Saving for a Deposit

Thu, 15 May 2025 09:18:00 GMT

Saving for a deposit is the biggest hurdle for many first-time buyers in the UK. But with the introduction of the 100% Loan-to-Value (LTV) mortgage , also known as the no-deposit mortgage , that barrier has been removed for eligible renters. First launched in 2023, this mortgage product allows qualified buyers to purchase a home without needing to save for a deposit.

What Is a No-Deposit Mortgage?

A no-deposit mortgage is a five-year fixed-rate mortgage designed for first-time buyers who have a strong rental payment history. Instead of relying on savings, lenders assess whether applicants can afford monthly mortgage payments based on their past rental affordability .

This product reflects the reality of today’s housing market: many renters can afford a mortgage but are unable to save due to rising living costs. By using rental history as proof of affordability , this mortgage provides a direct route to homeownership.

Who Is Eligible?

Applicants must meet this criteria:

Be aged 21 or over
Have not owned a property in the UK within the last three years
Have made at least 12 consecutive months of rent payments within the last 18 months
Have no missed credit payments in the last six months
Be applying for a property up to £600,000
Mortgage payments must be equal to or lower than the average rent paid over the past six months

No guarantor or family assistance is needed. Eligibility is based solely on the applicant’s financial history and rental payment record. You’ll also need to be a British Citezen or have Settled Status / Indefinite Leave To Remain.

No-Deposit Mortgage for Shared Ownership

This 0% deposit mortgage is also available for certain shared ownership properties. Buyers can purchase a portion of a home, rather than the full market value, combining mortgage payments with rent on the remaining share. This makes it a viable option for buyers pursuing a part-buy, part-rent approach.

Think this could be right for you? Contact Mortgage Light today to speak with an adviser who can guide you through the options available and assess your eligibility.

For more insights, head over to our TikTok , Instagram or Facebook , where we share how first-time buyers are getting on the ladder in ways you might not know about.

Can I Remortgage With Credit Card Debt?

Mon, 03 Jun 2024 12:56:00 GMT

It is possible to remortgage with credit card debt, as 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 lend to 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’ll look at 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 a lender. Lenders will want to understand the nature of any debts you may have and they may ask questions such as:

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 and therefore they may 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 view applications on a case-by-case basis. Some lenders will have very strict policies on personal debt whereas other lenders are more willing to consider lending to applicants with higher levels of credit card borrowing. You might find that, because you have credit card or other debts, that you may be a little more limited in choice. The positive news is, because the mortgage market is vast, 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 approach 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 of recent credit card debt outstanding. However, maybe you are due a bonus from work or maybe you’re about to sell your car which will raise funds to repay or substantially reduce this. A lender may then accept this and consider you a viable applicant for a remortgage.

One thing to consider is if, on the other hand, 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 to a lender

Some lenders may automatically reject your application in these circumstances, because 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, and an experienced mortgage broker will know the right lenders to approach.

I have never missed a credit card payment but I’ve maxed out my available credit

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. But 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? ’

I have missed some credit card payments – will this affect my 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 could use this 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, spreading the debt over a much longer term.

It’s important to note that the overall cost of this might ultimately be higher in the long run. The reason for this is 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 all 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?

If you’re 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, email remortgage@mortgagelight.co.uk or call 01908 597655 today.

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

How to Get a Mortgage Without Payslips

Mon, 03 Jun 2024 10:06:00 GMT

There used to be a time where you could obtain a ‘Self Certification Mortgage’ which didn’t require any proof of income, however this is generally now not 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.

In some cases, however, you may not have any payslips to offer, or you may find they don’t fully evidence all of your sources of income. This may be because you are self-employed, or you are a high net worth individual with multiple sources of income, or perhaps you have very recently started work in a new job or position.

In this article, we’ll highlight some of the obstacles you might face if you are trying to get a mortgage without payslips and how you may be able to overcome these.

What proof of income is required for a mortgage?

Firstly, let’s start by explaining how a mortgage lender would typically ask you to prove your income. This varies from lender to lender, but you will generally be asked to provide any or all of the following documentation along with your application:

If you are a UK PAYE earner, proving your income should be fairly straightforward using the above documents.

I’m self-employed – what proof of income is required for a mortgage?

If you are self-employed, the chances are you probably won’t produce any payslips for yourself. Therefore, proving your income can be a little trickier – but certainly not impossible. Self-employed applicants will need to provide different types of evidence to demonstrate their personal financial situation and to show how their business is doing. In these situations, you may be asked to provide:

If you are newly self-employed, providing enough evidence of the above can be difficult. Having only one year of Accounts is a common problem for a self-employed person applying for a mortgage. There are, however, options for those who have only been trading for one year. Lenders base mortgage assessments around risk so the longer you have been trading for, the more reliance can be placed on your earning history. Therefore, the stronger your application will look.

To assess your application, a mortgage lender may look at:

Your previous salary when employed
How long you were employed for
How long you have been self-employed for
Your current business strategy (start-up, stable, expanding)

When self-employed and applying for a mortgage, it’s important to be careful which lenders you approach – particularly if you have not been self-employed for long. We recommend getting in touch with a specialist mortgage broker and advisor, such as us here at Mortgage Light , as we will know exactly which lenders to turn to, to help you avoid ending up with a declined mortgage application on your record.

Find out more here – ‘ Self-employed mortgage - how does it work?

I am a contractor – how can I prove my income?

If you are a contractor and you do not have CIS payslips to support a mortgage application, lenders may ask for a copy of your work contract as proof of earnings. This should document how much you are being paid, how long for and the terms of payment.

Some lenders may even allow you to evidence your earnings by providing copies of your invoices for work completed. These should include the following details:

A lender will also look at your line of work. If you are in a profession that operates primarily on contracts and you can evidence a track record of rolling over contracts, or moving from one contract to another, then they will generally deem the likelihood that you will have continuous employment to be higher and consider you less of a risk.

Again, if you are a contractor without payslips, make sure you approach a specialist mortgage advisor and broker such as ourselves. They will know exactly how to help you get a mortgage without payslips by finding the lenders who are most likely to be understanding of your circumstances.

Proving your income with a limited company

As a director and owner of a limited company, it may be a little more challenging to evidence all of your earnings from your business. Unlike salaried employees, most company directors will not have a simple, straightforward contracted income that can be easily evidenced with monthly payslips and a P60.

A director’s income will often vary depending upon the company’s performance. For this reason, the majority of lenders will base their assessment on an average of the income earned by the applicant over a number of recent years, rather than relying upon the earnings figure from just the last set of company Accounts.

In this situation, you may be asked to provide the following documentation as proof of income:

In some circumstances, applicants may want a lender to consider their company’s retained profits towards their earnings or potential earnings, in order to support a mortgage application. In these cases, lenders will want to do additional due diligence on the company to satisfy themselves as to the merits and validity of this approach.

A high net worth individual with no payslips

A high net worth individual, also known as an HNW, is someone who has a personal income of more than £300,000 a year or liquid assets of more than £3,000,000. If you are a HNW individual then you may not be able to fully evidence all of your income purely with payslips.

This is because high net worth individuals often have a complex structure to their finances and multiple sources of income available to them. Most high street lenders will struggle to process a mortgage application from a high net worth individual. This is because lenders use standard mortgage underwriting criteria and the HNW individual’s personal finances often do not fit comfortably within it.

The good news is that there are specialist mortgage lenders out there. They know how to assess applications from such individuals and will take a more flexible and understanding approach. These lenders can be difficult to come by as they don’t often have a high street presence. At Mortgage Light, we have the access, experience and know-how to put you in touch with the right lender for your circumstances.

Find out more – ‘ What are high net worth mortgages? ’

Getting a mortgage when you have just started working

Of course, if you have recently changed job, or have only just started working, then you may not have the usual minimum three months’ worth of payslips typically required to prove your income. To combat this, lenders will often want to obtain a copy of your employment contract to see whether you have started the job. They will also want to confirm that it is a full-time position.

In some cases this is all the lender requires, however they may like to see the first month’s wage slip to further support an application.

We would always recommend enlisting the help of a mortgage broker and advisor, even for what might appear to be the most straightforward of applications. However, if you are trying to get a mortgage without payslips or with a complex income, then the need for an expert on your side is even greater.

At Mortgage Light, we have the experience and knowledge that you need to secure the right mortgage. Let us help you by contacting us today via our website or by calling 01908 597 655. Our advice is free.

Bank statements
Payslips (usually covering the last three months)
Evidence of bonuses (if applicable)
P60
Proof of deposit (eg, from savings / gifted from family)

A minimum of 2–3 years of accounts for your business, prepared by an accountant (some lenders may, in certain circumstances, accept only one year’s accounts)
2–3 years of personal tax returns (ideally 3 years SA302s and a tax overview from HMRC)
Last 3 months’ personal and business bank statements
Proof of the cash deposit you have available

Your name
Your National Insurance (NI) number
Your unique tax reference (UTR)
The name of the company that you are invoicing
The date of the invoice and the period of work being invoiced
The gross payment due and the work it relates to
Any deductions including 20% CIS tax
The net income you will be paid

Accountant certified company accounts (normally a minimum of the last three years)
Copies of personal bank statements for at least the last six months
Generally wo years SA302s and overviews (some lenders may accept 1 years depending on your circumstances)

Making criteria work

Tue, 01 Nov 2022 16:39:00 GMT

We’re specialists in ensuring our clients have the right mortgage for their circumstances. And even when faced with difficult or unusual circumstances, our friendly, experienced team pull out all the stops to do everything we can to get our clients their dream home.

Here is a selection of case studies which demonstrate where we’ve helped our clients in particularly difficult circumstances

Problem A :
We had a client who had the deposit money coming from Turkey. Unfortunately lenders do not allow deposit money to come from this country at the moment, due to FCA sanctions

Solution:
We recommended a mortgage with Santander as they would accept the deposit coming from a loan

Problem B:
A client was buying an apartment but wasn’t sitting with most lenders’ affordability

Solution:
We went to the Bank of Ireland as they ignore service charges

Problem C:
We had a client that wanted to buy a house, but the monthly payments were too high (90% lending)

Solution:
We got the builder to pay 5% toward the deposit. This attracted a lower interest rate and reduced the loan – and in addition to this Santander will also allow a part of the loan to be on interest-only which meant we got the monthly payments in budget for the client

How to Get a Mortgage on a Low Income

Sat, 20 Aug 2022 07:00:00 GMT

If your income is below the national average (which currently sits at around ( £38,500 full time 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. This being said, there are low deposit options which can help first time buyers make their first step onto the property ladder.

Find out more – ‘ Low / No Desposit Mortgages ’ & ‘ 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. You can get your full credit report for free using the CheckMyFile 7 day free service.

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.

Use a Joint Borrower Sole Proprietor (JBSP) mortgage

If you have a family member who is willing to support you, then a Joint Borrower Sole Proprietor (JBSP) mortgage could be a helpful way to get onto the property ladder with a low income.

A JBSP mortgage allows you to apply for a mortgage alongside a parent or close family member, combining incomes to increase how much you can borrow. Unlike a traditional joint mortgage, only your name will be on the property deeds , meaning you remain the sole owner of the home.

Your supporting borrower must meet the lender’s eligibility criteria. They will need to have a good credit history and sufficient income to support the mortgage application, as they will be jointly responsible for the mortgage repayments.

Essentially, a JBSP mortgage provides comfort to a lender by strengthening affordability through combined incomes. If you are unable to make the mortgage repayments, the joint borrower is also legally responsible for covering them.

Just be aware that not all lenders offer JBSP mortgages. And of course, becoming a joint borrower is a significant financial commitment, as it creates a legal link to the mortgage and could impact the supporter’s ability to borrow in the future.

Find out more – ‘ What is a Joint Borrower Sole Proprietor mortgage? ’

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.

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? ’

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 .

5 Reasons to use a Mortgage Adviser

Mon, 08 Aug 2022 10:26:00 GMT

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.

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.

Can You Remortgage to Buy Another Property?

Sun, 24 Jul 2022 07:00:00 GMT

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? ’

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:

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.

To rent it out and become a landlord
Holiday home
Second residence on another location if you work away from home a ot
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

How to Save Money on Bills

Tue, 19 Jul 2022 16:12:00 GMT

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.

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 household water bill in England and Wales is around £600 per year . 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?

Wed, 13 Jul 2022 07:00:00 GMT

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.

What is a Standard Variable Mortgage?

Thu, 07 Jul 2022 07:00:00 GMT

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.

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 Happens if I Can’t Pay my Mortgage?

Wed, 29 Jun 2022 14:38:00 GMT

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’re worried about your mortgage payments, 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:

Does Getting Rejected for a Mortgage Affect a Credit Score?

Fri, 20 May 2022 08:45:00 GMT

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:

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.

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 copy of your full credit file from CheckMyFile for free using their 7 day free trial.

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.

A large number of credit applications in the past 6 months resulting in multiple hard searches against your report
Recent missed or late credit payments
A County Court Judgement (CCJ)
Large amounts of exiting debt
Not registered on the electoral role - this helps lenders verify your address
Failed mortagage affordability based on your current income and expenditure
Insufficient proof of consistent income - self employed / contract workers
Mistakes on documents eg. different addresses on docs, spelling mistakes
Payslip income not matching bank statements
Insufficient deposit available
Failing to meet the income criteria for the size / type of mortgage applied for
VISA status does not meet the lenders requirements

How do Joint Mortgages Work?

Sat, 16 Apr 2022 07:00:00 GMT

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 children 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 an additional borrower on their childs mortgage for the 'Joint borrower, sole proprietor' mortgage. For this mortgage type you can use another persons income to boost your affordability without them being on the deeds of the property. Speak to an advisor about what the joint borrower sole proprietor mortgage could look like for you.

Find out more – ‘ What is a Joint Borrower, Sole Proprietor mortgage? ’

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.

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. There are lenders now who will even lend up to 6x your annual income if you meet the criteria.

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.

What Does LTV Mean?

Fri, 01 Apr 2022 09:52:00 GMT

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.

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-to-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?

Sat, 19 Mar 2022 07:00:00 GMT

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.

Why have I been refused a mortgage?

There are a number of possible reasons why you may see your mortgage application rejected. If it happens to you, you should try and find out which ones have been applied to you. Bear in mind that each lender has its own set of criteria when assessing a mortgage application. Because of that, the same application rejected by one lender may get approved by another.

Whilst not an exhaustive list, here are some of the common reasons why mortgage applications cold get declined:

Can a mortgage be declined after a mortgage in principle?

When you begin the mortgage process, you may obtain a mortgage in principle, or ‘agreement in principle’ from a mortgage lender. This is given to provide confirmation that a lender has agreed ‘in principle’ to provide you with a mortgage. This is subject to the information you have provided being verified and the property you want to purchase being suitable to lend against.

Having a mortgage agreement in principle can be really useful to have under your belt when you begin househunting. Not only does it give you an idea of what you can afford, but it also provides comfort to estate agents and sellers that you are in a good position to make an offer. Some estate agents and sellers may even refuse you a viewing on some properties unless you have a mortgage agreement in principle available.

That being said, a mortgage agreement in principle is not a formal mortgage offer. It does not guarantee that you will be granted a mortgage. It is possible for the lender to reject your application after further consideration and an inspection of all of the supporting information which they will require you to provide.

If your mortgage application is declined after you have been issued with an agreement in principle, then you should try to find out the reason/s for this. Lenders are not obliged to give any explanation for their decision. However, most will provide some feedback if requested.

A mortgage agreement in principle is issued on some fairly basic information provided by the applicant. An applicant will state how much income they earn, how much they feel they can afford in repayments and confirm that their credit history is good. This information is taken on trust by the lender and forms the basis for their mortgage offer in principle. To then take this to a formal offer, the applicant will have to provide a full application along with evidence to back up their statements. This is often where problems arise.

Perhaps the applicant was not entirely honest about having a good credit history. Perhaps there is adverse information recorded against them that they are unaware of. Maybe they over-stated their income and included occasional overtime or bonuses in their basic salary. Once a lender is in full receipt of all the applicant’s information, they will undertake a detailed assessment. They consider whether the applicant has been honest, is a good risk and should be able to afford to repay the mortgage facility that they are being asked to provide. Only then will they make a formal mortgage offer.

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

Does a mortgage rejection affect my credit score?

Technically no, the mortgage rejection itself won’t affect your credit score. However, each mortgage application (and any other application for credit, such as loans, credit cards or store credit) will leave a hard search on your report – and having numerous hard searches can affect your credit score, usually in a negative way.

This is because lots of credit applications within a short space of time can be an indication that you are relying on credit or that you are having financial issues. They are a signal to lenders that you may be a higher risk. Therefore, if a mortgage lender sees multiple hard searches on your report, they may assume that you are struggling financially or being rejected by other lenders, which will, in turn, raise a red flag.

Any applications for credit stay on your file 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.

My mortgage application has been rejected – now what?

Don’t panic. Yes, a mortgage application rejection may slow down your home-ownership plans, but it’s not the end of the road. Try speaking to the mortgage lender to find out why you were refused. It’s not always easy to get a specific answer, but it’s well worth a try. This could help you to address any issues and improve your application for the next time around.

However, don’t rush into trying again. One of the worst things you could do is immediately apply for a mortgage with another lender. As we mentioned, another rejection and an additional hard search on your credit report may damage your chances further.

Instead, speak to a mortgage advisor and broker such as us here at Mortgage Light . As experts in the mortgage market, we can help you pinpoint any issues. We can guide you on the right path to success. When the time comes to apply for a mortgage again, we can match you with the most suitable lenders and contact them on your behalf to give you the best possible chance.

In the time between your rejection and your next application, make yourself as attractive as possible to future lenders. Try and pay off any existing debts. Keep up with your regular payments, paying them on time and in full. It’s also worth checking for any errors on your credit report. You can get them removed or corrected by the creditor in question.

Perhaps you were stretching your finances a little too much the first time around. Could you use this time to increase your deposit amount or find a home that’s less expensive to reduce your borrowing? Again, speaking to a mortgage advisor and broker will help you work out what is realistic based on your financial situation.

Lastly, you could consider utilising a government scheme such as the Shared Ownership scheme . With these schemes, the amount you’ll need to borrow in order to purchase a home is smaller. Less borrowing generally means less risk to the lender and your chances of being accepted may be greater than purchasing the traditional way.

Find out more – ‘ Is shared ownership a good idea for first time buyers? ’

If you have been rejected for a mortgage, it’s time to turn to the experts to help you move forward. At Mortgage Light, we are always on hand to offer a friendly face and helpful advice to those struggling to make the next move.

Just get in touch with us on 01908 597655 or contact us via our website .

Poor credit history
Recently missed or late credit payments
A County Court Judgement (CCJ) or other adverse judgement on your record
Large amounts of existing debt
A large number of credit applications in the past six months, resulting in multiple hard searches recorded on your credit report
Not registered to vote on the electoral roll. This is important. It allows lenders to check some of your personal information and to 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

Do Shared Ownership Properties Increase in Value?

Fri, 11 Mar 2022 07:00:00 GMT

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.

What happens if my shared ownership property increases in value?

If the value of your shared ownership property increases, then so will the value of your share of the property. You won’t benefit from all of the increase in value. This is because this will be split between you and your third party property owner (usually a housing association) in accordance with the split of ownership.

For example, let’s say you have purchased a 50% share in a property originally valued at £300,000. Your share of the property at the time of purchase was therefore worth £150,000. If the property’s value has subsequently increased by 10%, then the property’s new market value will be £330,000. Your share of ownership still remains at 50%, but this will now be worth £165,000 (50% of £330,000).

In essence, you have benefitted from 50% of the growth in the property’s value, because you own 50% of the property.

Find out more – ‘ What happens when you sell a shared ownership property? ’

How do I know if my shared ownership property has increased in value?

As with any property, the best way to obtain an accurate estimate of its current market value is to arrange for it to be valued by a local estate agent (which they will usually do for free). They will give you an idea of what they feel your property will sell for based on their knowledge of similar property transactions in the area.

Alternatively, you could pay for a professional property valuation by a qualified surveyor. They will provide a more detailed report on the property and usually provide some evidence for the valuation figure they provide. If your home was purchased via the shared ownership scheme, then you can get a professional valuation via shared ownership valuation . This is where a Chartered Surveyor visits and assesses your property to get an estimate of what it is worth. They look at the features and location of the property, along with similar properties in the area.

Unless you are planning on selling your property or staircasing up your share of ownership, it probably isn’t worth going to the expense and trouble of obtaining a formal valuation of your property. You can, however, get a reasonable idea of its current value by keeping an eye on what similar properties have sold for in your area by using Rightmove’s sold house price information .

How does an increase in value affect staircasing?

You will need to get your house valued if you are planning to sell or staircase your shared ownership property. Staircasing is when you purchase further shares in your property. In turn, you increase the proportion of it that you own and therefore reduce the proportion owned by the housing association.

Staircasing generally has the effect of reducing the amount of rent you pay. However, this is normally offset by the increased cost of mortgage repayments, assuming you have funded the cost of the additional property share by increasing your borrowing.

If your property (and therefore your share of it) has increased in value, then this can have some implications when it comes to staircasing. Purchasing further shares will become a little more expensive. This is because the price of the additional share will be based on the new valuation price of the property.

If your property is valued higher than you were expecting, you may need to take out a larger shared ownership mortgage . Alternatively, you may have to purchase a smaller share than you were planning.

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

What if my shared ownership property decreases in value?

Whilst most residential properties have generally increased in value over time, they may also occasionally decrease in value. This was seen in many areas during the economic slump which followed the financial crash of 2008.

Some properties have also lost value as a result of major developments such as the new HS2 rail link, particularly if the proposed route passes close by the property. In addition, if a property hasn’t been well maintained or has suffered damage through flooding or subsidence, then this is also likely to adversely affect its market value.

If your property has suffered a fall in value, then you may find yourself in a negative equity situation. This is when the value of your property (or your share of it) is worth less than the amount you currently owe on your mortgage. If you should find yourself in this position, then it may make sense to wait it out until house prices recover before you look to sell or staircase.

How can I protect myself from negative equity?

You may be able to recover some of your property’s lost value. You could undertake some home improvements and/or a property extension. However remember, you will need the cash to fund this. Your mortgage lender will normally be unwilling to add this to your mortgage until the work is complete and the property revalued.

Ensure that you speak to a local estate agent before undertaking this type of work. Make sure it will actually add value. You must also obtain the agreement of your Housing Association before doing any work. They will generally need to approve any proposed property alterations before you start. You may be restricted with any changes that change the structure and footprint of your property.

So, how else can you protect yourself from getting into negative equity? You could put down as large a deposit as you can when you purchase a property. Not only will this mean you won’t need to borrow as much money, but it also means that if house values go down for any reason then you will have a larger buffer before you hit negative equity.

You might also consider overpaying your mortgage if you can afford it. You do this by paying more than the minimum required mortgage repayment each month. This will have the effect of reducing your borrowing more quickly and ultimately paying off your mortgage borrowing sooner. Not all mortgage lenders allow you to overpay your mortgage, however – particularly during any fixed-rate period. It’s important to check with your lender before doing this.

Find out more – ‘ How much can I overpay on my mortgage? ’

How can Mortgage Light help?

Are you a shared ownership property owner and curious about the value of your property? Are you thinking of staircasing this year? Or perhaps you are thinking of utilising the scheme in order to get onto the property ladder.

Wherever you are in your journey, let our Mortgage Light shared ownership specialists help you. Contact us via our website or give us a call on 01908 597655.

Difference Between Fixed and Tracker Mortgages

Tue, 01 Mar 2022 07:00:00 GMT

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.

Should I get a fixed or tracker rate mortgage?

There are a few differences between fixed and tracker rate mortgages. In fact, they basically sit on two opposite ends of the spectrum. Which is best will totally depend on your personal circumstances and preferences. Whilst a fixed-rate mortgage will generally make budgeting a lot easier month-to-month, a tracker mortgage may save you money over time.

Let’s talk about how each of these mortgages works in a little more detail.

Fixed-rate mortgage

As the name suggests, a fixed-rate mortgage has a fixed interest rate. That means it is guaranteed to stay at that same level for an agreed fixed period. This period could be anything from one year up to fifteen years.

Generally speaking, the longer your fixed-rate deal lasts, the higher the interest rate will be. Once the agreed fixed period of your deal ends, your borrowing will normally be transferred onto the lender’s SVR. Alternatively, you may be offered a new fixed-rate deal.

Although more expensive initially, fixed-rate mortgages are attractive because you know exactly how much your mortgage repayments will be each month, regardless of market conditions. 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.

This can be particularly attractive when you first buy a property and have to budget for this substantial monthly commitment, along with the other household bills, plus the cost of furnishings, decoration or undertaking any minor alterations/improvements you may want to make to the property.

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

Tracker mortgage

A tracker mortgage is a type of variable mortgage. It has an interest rate that moves up and down in line with external market conditions. They are linked to a fixed external economic indicator, usually the BoE base rate or Libor (London InterBank Offered Rate). They move up or down along with changes in these rates, regardless of what the lender’s SVR is.

Whilst tracker mortgages have variable interest rates, they have a fixed element too as they float at a fixed rate above base rate or Libor. For example, the current base rate is 0.5% (as of February 2022) and a tracker mortgage may be set to track at the base rate plus 1%. This means your mortgage rate will currently be at 1.5%. This compares with the average SVR which currently sits at around 3.6%.

Similar to fixed-rate deals, tracker deals will be fixed for an agreed term, usually anywhere from two to ten years. You can even find trackers that last the full term of your mortgage, referred to as a ‘lifetime tracker’. The longer your deal, the higher your agreed interest rate above the base rate is likely to be. Once the fixed term ends, your borrowing will generally move to the lender’s SVR. Alternatively, you may be offered another deal.

Tracker mortgages are pretty popular – particularly in times of low or falling interest rates, as repayments will immediately reflect these. Plus, they are attractive due to their transparency, in that they move in line with economic conditions rather than the commercial decisions of your lender.

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

Which is best – fixed or tracker?

So, we’ve explained the major differences between these two mortgage types. Now for the more difficult part – deciding which is best suited to your circumstances.

In a nutshell, a fixed-rate mortgage offers security and stability, with consistent repayments month-to-month for the entirety of the fixed period of your deal. You may be restricted by early repayment charges and penalties for overpayments, but it makes budgeting easier. This might be important to you, particularly in the early years of homeownership when budgets can be tight.

The monthly cost of a tracker mortgage on the other hand is rather more unpredictable. If interest rates rise, so do your mortgage repayments and this could lead to some financial hardship if they rise significantly. On the other hand, you will immediately benefit if interest rates fall, allowing you to save money.

The best way to work out which is best for you would be to talk to a mortgage advisor and broker, such as us here at Mortgage Light . We know the ins and outs of these types of mortgages and are able to tell you all you need to know to make a fully informed decision and ensure you avoid any nasty surprises later down the line. With your financial situation in mind, we can offer unbias advice on which type of mortgage may be better suited to you.

Need our help? We’re just a phone call away. Get in touch on 01908 597655 or contact us via our website .

How to Save For a House Deposit

Tue, 01 Feb 2022 07:00:00 GMT

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.

What is a house deposit?

Unless you can afford to purchase a property outright, you will need to borrow money (get a mortgage) to help pay for a property. Most mortgage lenders will require you to make some level of cash contribution towards the property cost. This is referred to as your deposit.

You will generally need to provide proof to your mortgage provider that you have cash savings available to provide your deposit. This acts as your contribution to the property purchase. It also provides some evidence that you have the ability to save and therefore the ability to manage your finances properly.

The larger your deposit you are able to provide, the less you’ll need to borrow by way of a mortgage. Therefore the smaller your monthly mortgage repayments might be. Deposits are normally calculated as a percentage of the property’s value, such as 5%, 10%, 15% etc. So £15,000 may represent a 10% deposit on a £150,000 house, but only a 5% deposit on a £300,000 property. You can put down as much of a deposit as you’d like to, so long as it is above the minimum 5% usually required by most lenders.

How much should I save for a house deposit?

There are now options on the market where you might not even have to put any deposit down if you qualify however the minimum deposit you are normally required to put down is 5%. Providing a larger deposit, such as 10% or 15%, can unlock more mortgage deals and lower interest rates. This is generally because a larger deposit makes you less of a risk to lenders. For this reason, they will offer more attractive deals to get your business.

Lenders usually apply interest rates to their mortgage products in tiers against the level of deposit being provided. These tiered rates generally reduce in 5% intervals. So, a higher rate is charged where just the minimum deposit of 5% is provided. A slightly lower rate is normally available with a 5-10% deposit. The rate reduces further still for deposits between 10 and 15%, and so on.

For this reason, there is often little advantage in increasing your deposit size by just a few per cent here and there. It’s only worth it if it takes you up to the next tier. For example, if you increase your deposit from 15% to 17%, you’ll probably still only have access to all the same deals as you were offered before you provided the extra 2%. Of course, you will reduce the amount you need to borrow by 2%. It might still be worth doing if you have the cash available. To access the cheapest borrowing rates, however, try to stick to hitting the 10%, 15% and 20% milestones.

As a guide to how much you should be saving for a house deposit, it’s a good idea to look into property prices in your area. This will give you an idea of how much you will need to pay for the sort of property that you are after. Speak to a local estate agent or check Rightmove or Zoopla for the latest prices.

You should also think about how much you can realistically afford to spend on your mortgage payments each month. From there, a mortgage advisor and broker, such as us here at Mortgage Light, can help you work out what value of properties you should be looking at. This will help you determine how much deposit you will need to provide.

The cash deposit will probably be the biggest expense you will have to cover when buying a house. However, it isn’t the only expense that you will need to cover upfront. In most cases, you will also need to pay for a house valuation, solicitors fees, mortgage or broker fees and where appropriate, stamp duty. You will need to have savings set aside to cover some or all of these expenses, in addition to your deposit.

Tips for saving for a house deposit

Saving for a house deposit usually takes some time and planning. Here are our top tips on how to save for a house deposit.

Budget

Working out a budget is always a really good place to start when saving for anything. It’s especially important for a house deposit. Start by making a list of all your major incomings and outgoings. Place income on one side of the page and outgoings on the other. Outgoings are always a longer list!

It’s usually best to work on monthly figures. You may have to make some allowance for irregular expenses such as holidays, car service and Christmas. Try to be realistic and not to under or overestimate the true costs by too much. Total up both sides and subtract one from the other to give you a monthly surplus (or deficit).

Going through the figures in this way might highlight where you can cut back and trim to make saving easier. You can then decide how much realistically you can set aside towards your house deposit savings each week or month. Treat this amount just like another necessary bill that must be paid. You could even set up a standing order for a couple of days after payday. This will ensure that the money goes straight into a savings account.

Set yourself savings goals

As with any goal, putting it in writing or having someone hold you accountable for reaching it can really help motivate you to do what you can to get there. Additionally, breaking your savings goal down into manageable targets can help you work harder to get there.

For instance, knowing that you want to save up £20,000 can seem an impossible dream. However, saving £2,000 by the end of the year might seem more feasible. As you tick off each milestone, you’ll feel more motivated to reach your end goal.

Look for a good savings account

It makes sense to shop around for the best savings account to keep your savings in. Some offer better interest rates or perks than others. You could even look into a lifetime ISA . You can put up to £4,000 a year into one of these until you are 50 years old. The government will then add a 25% bonus to your savings, up to a maximum of £1,000 a year.

Take advantage of financial help from family

Perhaps you are lucky enough to have family willing to help you financially by contributing towards your deposit. Not only will this help you to reach your savings goal quicker, but it might also mean that you can put down a larger deposit and access those lower interest rate mortgages.

Look into government schemes

If you are struggling to save a deposit, then there are support schemes available that might help you get onto the property ladder without waiting to save a significant cash sum as a deposit. The government Shared Ownership scheme is an options that might be attractive in such circumstances.

Speak to a mortgage broker and advisor

Before buying a property, we would always recommend speaking to a mortgage broker and advisor such as us here at Mortgage Light . We can help you to understand the options available to you, including schemes such as shared ownership and low deposit mortgage products hat you might want to take advantage of. We can advise on the value of property to look at once you begin house hunting. We’ll then guide you through the entire mortgage process when the time comes to approach a lender.

For a first time buyer especially, the mortgage market can seem rather daunting. Having an experienced mortgage broker on your side can save you a lot of time, money and headaches!

If you’d like to speak to one of our advisors at Mortgage Light about saving for a house deposit and getting on the property ladder, just give us a call on 01908 597655 or contact us via our website .

How to Get a Mortgage as a Business Owner

Tue, 11 Jan 2022 07:00:00 GMT

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.

Why is it more difficult to get a mortgage as a business owner?

Generally speaking, the income taken by a self-employed business owner can be more variable and less predictable than that of a contracted employee. As a result, lenders will assess the affordability of any mortgage facilities they might offer in a slightly different way. Sometimes a little more stringently.

The way business owner’s take their remuneration can also vary. The amount taken will often be dependent upon the underlying performance and profitability of their business. Understanding and being able to explain this can be key to a successful mortgage application.

The way a business owner takes their remuneration is often designed to minimise their personal tax charges. There’s usually nothing suspicious going on here. These remuneration methods will generally have been recommended to them by their Accountant. However, this can sometimes make things a little harder for a mortgage lender who is trying to assess an applicant’s income and outgoings.

Evidencing an applicant’s income is often the biggest difficulty for a lender when assessing a mortgage application from a business owner. Enlisting the help of a specialist mortgage advisor and broker, such as us here at Mortgage Light , who understands the different remuneration structures used by business owners and who also knows the right mortgage lenders to turn to, could make the difference between a successful mortgage application and a rejection.

How will I evidence my earnings as a business owner?

Business owners’ income can vary year by year. For this reason, the majority of lenders will want to base their assessment of your earnings on an average of the remuneration taken over a number of recent years, rather than base their assessment on the figures in the last year’s financial Accounts.

They will usually ask for at least three years’ finalised Accounts and/or tax returns to work out this average. If you are the owner/director of a limited company, then a brief breakdown of how you take your remuneration may also be useful.

You can expect to be asked for any, or all, of the following in support of any mortgage application:

In most cases, you will need to have been trading for a minimum of 12 months to be able to get a mortgage as a business owner. You’ll also need a minimum 5% cash deposit, just like any other buyer. However, putting down a larger deposit of 15% or more will give you access to a fuller range of specialist lenders who may be better placed to help you.

It’s also worth noting that the way a lender assesses a business owner’s income can differ. It will depend on what type of legal structure they operate under. Lenders will generally approach things slightly differently for a sole trader, a partner in a partnership, or a director of a limited company.

As a company director, your Accountant may have recommended that you take a minimal salary up to the amount of your individual personal tax-free allowance and then take the rest of your remuneration in dividends.

What if my business is growing?

Perhaps you have a business – and therefore an income – that is growing. You may want a lender to base their assessment of your mortgage application on a higher income than that averaged in the last three years.

You’ll need to support your application with an explanation of why you believe a higher income will be sustainable going forward. This may be evidenced by new contracts secured or growth in the sector. Bear in mind that lenders generally take a very cautious approach. Whatever evidence you offer will need to be fairly robust.

Generally speaking, if you are looking for underwriters to take a view on future earnings, you will need to access specialist lenders. This may mean paying a small premium for their bespoke approach and products. A good mortgage broker will know the best lenders to approach and how to present your application to them.

What happens if I have changed my business legal status recently?

It is not unusual for a business to change its legal status during its lifetime. This commonly happens when sole traders incorporate into a limited company as they grow and take on additional employees and liabilities. If you don’t have a full year’s trading under your new legal status, however, then this can make getting a mortgage as a business owner a little trickier.

This is because lenders will often consider a business under a new legal status as a new business. They will require one to three years’ worth of trading Accounts to establish profitability. This can be frustrating if you have basically been running the same business for a number of years.

As mentioned above, there are specialist lenders out there who will be more flexible and open in this situation. They may be happy to consider the operation of the business under the previous legal status as evidence of earning potential, even though it technically will have ceased trading.

There’s a lot to consider when getting a mortgage as a business owner. It’s important that business owners turn to a qualified and experienced mortgage broker and advisor to help them. At Mortgage Light, we understand your business. We know how to present your financial records to a prospective lender in order to give you the best chance of getting a mortgage. Just contact us and we’ll put you in touch with a member of our team.

Generally the last two years Accounts for your business and/ or the last two years SA302's and tax year overviews
Copies of your personal bank statements covering a minimum of three months

Sole trader – a mortgage lender will base your income on the net profit generated by your business as evidenced by your Accounts or your annual tax return
Partnership – a mortgage lender will base your income upon your share of the net profit of the partnership as detailed in the partnership agreement, or by dividing the profit by the number of partners
Limited company director – a mortgage lender will base your income upon salary drawn and dividends taken, as evidenced by the Company accounts and your annual tax return. They also may consider retained profits.

Is Shared Ownership a Good Idea For First Time Buyers?

Tue, 28 Dec 2021 07:00:00 GMT

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.

How does the shared ownership scheme work?

The shared ownership scheme is a cross between renting and buying. Instead of purchasing a property, you purchase a share of a property. The remaining proportion is retained by a Housing Association. They then charge you a monthly rent for occupying its share of the property.

Generally you do still need to put down a deposit (typically between 5-10%). However, the actual amount is based on the share that you are purchasing. For example, if you want to purchase a 25% share of a £300,000 home, the value of your share will be £75,000 (25% of £300,000). If a 5% deposit was required, you’d need to put down a £3,750 deposit. You would then raise a mortgage for the remaining value of your share (£71,250) and pay rent on the rest. If you qualify, there is an option to put down 0 deposit.

Over time, you will normally have the option to buy further shares and own more of the property. This is known as ‘staircasing’. The more of the property you own, the less the Housing Association owns and therefore the rent you pay decreases. In many cases, you can eventually staircase up to 100% ownership. This means you would own all of the property and no longer have to pay any rent.

Am I eligible for the shared ownership scheme?

The shared ownership scheme is designed to be accessible and so is open to a wide range of people. That being said, there are a few eligibility criteria that you must meet. Firstly, you must be at least 18 years old and able to take out a mortgage. You must also not already own a home.

You must also have a household income of less than £80,000 (or £90,000 in London). This maximum income threshold is in place to ensure that the scheme is restricted to those who actually need it, rather than those who could otherwise afford to buy a house on the open market in the usual way.

Find out more – ‘ Who is eligible for shared ownership? ’

Shared ownership advantages

The shared ownership scheme comes with a number of advantages for certain buyers. Let’s run through the main advantages that make the shared ownership scheme attractive to first-time buyers in particular:

Shared ownership disadvantages

Of course, the shared ownership scheme also comes with its potential downsides. Let’s run through the main ones that you should be aware of:

Find out more – ‘ Shared ownership pros and cons ’

Find out your options today

When asking yourself the question of whether shared ownership is a good idea for first-time buyers, it will depend on your personal circumstances. Ultimately, however, there is a reason why this scheme has been popular since the 1980s. It is a very attractive option for many first-time buyers struggling to raise a deposit.

Do you have further questions about the shared ownership scheme? At Mortgage Light, we have shared ownership experts ready to help you. Contact us today.

You are more likely to be approved for a shared ownership mortgage than a traditional mortgage because the amount you need is generally lower
It can sometimes work out cheaper than renting. The rent that you do pay is generally at a lower rate than would normally be charged on the open market.
You may be bale to purchase a bigger house or live in a more desirable area than you would have been able to afford if you were buying outright
Shared ownership properties are often built in private developments, helping to put affordable housing in the heart of sought after areas

Staircasing and buying additional shares in your property can be expensive. There are costs involved each time you do it. These include the cost of a property valuation, legal fees and potentially some remortgaging costs.
You may encounter a few restriction with what you can do with your property. You are technically a joint owner with, and a tenant on, the Housing Association. For instance, you maybe unable to add an extension to your home or even make some alterations to your property without the prior approval of the Housing Association
You could potentially be evicted from the property if you fail to pay the rent or if you display nuisance behaviour. If this does happen, then you could lose some, or all of the portion of the home that you have already bought.

Is There a Minimum Income for Shared Ownership?

Mon, 20 Dec 2021 07:00:00 GMT

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.

Am I eligible for the shared ownership scheme?

The shared ownership scheme is designed to be accessible. For this reason, it is open to a huge number of people. However, there are a few eligibility criteria you must meet.

Firstly, you must be at least 18 years old and not already the owner of a property. And whilst there is no minimum income criteria for shared ownership, there is a maximum income threshold of £80,000 a year (£90,000 in London) per household. This maximum income threshold is in place to ensure that the scheme is restricted to those who actually need it, rather than those who could afford to buy a house on the open market.

Find out more – ‘ Who is eligible for shared ownership? ’

Can my partner and I combine our incomes to purchase a shared ownership home?

Yes! The shared ownership scheme has proven popular with both individual buyers and couples. As mentioned previously, the maximum income threshold to be eligible for the scheme is per household.

This means that as long as you and your partner meet all the eligibility criteria for shared ownership and jointly earn under the maximum income thresholds, then you can combine your incomes to purchase a shared ownership home.

Can I use the shared ownership scheme if I am unemployed?

Purchasing any home when unemployed can be problematic, including purchasing a shared ownership property. That being said, it is not impossible to use the shared ownership scheme if you are unemployed.

Housing Associations will allow the individual to buy their percentage as cash as long as they are able to meet the affordability requirements needed for the rent. In some cases, retired customers have purchased their share as cash and used their pension in order to afford the rent.

Can I purchase a shared ownership home if I am on benefits?

If you are to buy your share with cash, the Housing Association should be able to accept your benefits as a suitable way to pay for the rent.

If you’re unable to purchase cash and need a mortgage, it will be down to lenders criteria. Currently, every lender requires the applicant to be employed. They will use benefit income to help with affordability, but it can’t be the only form of income.

Benefits can be a little tricky to navigate. Each lender has a different view on which they view acceptable for an application. They also may decline benefit income depending on your individual circumstances and your children’s ages (if applicable).

If you are on benefits and are interested in using the shared ownership scheme, it is a good idea to enlist the help of a specialist mortgage advisor and broker who will be able to approach the right lenders for you.

Got more questions about the shared ownership scheme? We’d love to help you out and take the next step with you! Get in touch with our shared ownership specialists today.

How do I Apply for a Mortgage?

Mon, 20 Sep 2021 07:42:00 GMT

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.

Firstly, speak to a mortgage advisor and broker

Although enlisting the help of a mortgage advisor and broker is not mandatory, we would always recommend it, rather than trying to go it alone. Mortgages can appear quite confusing. Whilst you may have friends and family around you offering advice, it could well have been some time since they last went through the process. It is quite likely that the mortgage market and some of the processes will have changed since then. Also, your personal circumstances will almost certainly be different from theirs and so you will have different priorities and options to consider.

A mortgage advisor and broker, such as us here at Mortgage Light , will not only help you to understand how mortgages work but will also point out some of the different finance options you might want to consider. We can help you work out your budget in the early stages of the process.

We base this budget on your income and expected level of expenditure. Our advisors look at the level of deposit you can afford. From that, they guide you as to the level of mortgage borrowing you should be able to apply for. This allows you to house-hunt with realistic expectations. We can even secure you a mortgage agreement in principle from a lender. This means sellers and estate agents should take you more seriously as a potential buyer.

Once you have found the house that you’d like to purchase, we will search the mortgage market to find you the best and most suitable deals available. We will even approach lenders on your behalf, as well as help you complete an application and pull together all the supporting paperwork that might be required to accompany it.

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

Prepare your mortgage application documents

Tour mortgage advisor and broker can help you complete a large proportion of the mortgage process. However, you will need to supply them with all the correct information, as well as any supporting documents needed. They then pass these onto your lender.

These supporting documents serve as evidence of who you are, where you live, how much you earn and the proof of your deposit. You may be asked to provide:

Your mortgage advisor will also need to give your lender a breakdown of your current and anticipated outgoings. This includes details of other borrowings you may have on credit cards or other loans. It can also include an estimate of any childcare costs you have.

Remember, the information on your application needs to match the supporting documentation you provide. Names and addresses should match (including the spelling of names). Don’t round up your income if this doesn’t match your payslips. If you have recently changed your name, due to marriage for example, then you will need to provide evidence of this via a copy of your marriage certificate. It is often these details that lead to queries that can cause delays in processing. In some cases, it can even lead to applications being rejected.

Apply for a mortgage

So, you’ve got your mortgage advisor and broker’s guidance. You’ve obtained a mortgage agreement in principle. Your offer has been accepted on your chosen property and your mortgage application documentation is all ready to go. Now it’s time to formally apply for a mortgage and start the actual house buying process.

The good news is that there’s nothing for you to do at this point other than giving your mortgage advisor and broker the green light to submit your application on your behalf. If you are not using a mortgage advisor and broker, then you will need to approach your chosen lender and apply for the mortgage yourself. Most lenders will usually allow you to do this online or via the phone.

Once you have submitted your application, the lender will carefully check through all of the paperwork provided. They will assess whether you meet their lending criteria. An important part of this assessment will be an examination of your personal credit file. Here, they will be looking for any adverse information.

Such information might indicate you have a poor record of repaying debt and therefore are potentially a risk. If the lender rejects your application for this, or for any other reason, it’s always worth trying to find out why so that you can attempt to put these things right. You should also then wait a little while before applying to another lender. Making several mortgage applications very close together could have a detrimental effect on your credit score. This should be avoided if possible.

Using a mortgage advisor and broker will dramatically decrease the chances of any application you make being rejected. They will be aware of your personal financial situation and be able to match this to various lender’s criteria. This gives you the best chance of securing the offer you need the first time around.

Receive a formal mortgage offer

Hopefully, you will then receive the formal mortgage offer you want following the submission of your application. This generally happens within 2-4 weeks of making your mortgage application, so long as there aren’t any issues or queries. Most mortgage offers are usually valid for six months. It is then all-systems-go to get your purchase (and sale if applicable) over the line and completed within that timescale!

Whilst it certainly is possible to undertake this process yourself, it is generally quicker, smoother and usually a lot less stressful with the help of a mortgage advisor and broker to guide you.

Here at Mortgage Light, helping people find a mortgage deal that they are happy with is what we do day-in-day-out. Plus, with whole-of-market access, we have visibility of deals that you as a consumer might not otherwise be able to find.

Photographic ID, such as your passport or driving license (note that having an old address on your driving license or an expired passport can lead to complications and delays, so try and make sure all documentation is up to date and accurate)
Three months’ payslips showing details of employee name, pay date and tax period, gross pay, net pay, any bonuses, overtime or commission, and any additional payments received such as car allowances etc)
Bank statements of your current account covering the last 3-6 months (don’t leave any gaps in the history, as this may look suspicious)
Proof of your deposit in the form of cash savings and the source of these funds.
This is usually done via bank statements, which should be in your name. If your deposit is being gifted to you, perhaps by a relative for example, then you may need to provide some evidence of this.

Can You Remortgage at Any Time?

Thu, 09 Sep 2021 14:57:00 GMT

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.

Why should I remortgage?

When done correctly at the right time, remortgaging can save you money. There are many reasons why you might choose to remortgage. For example:

You might also choose to remortgage to raise additional money against the security of your home. This could be for:

Find out more – ‘ How to remortgage your home ’

When should I remortgage?

Just because you can remortgage at any time, it certainly doesn’t mean that you should. If you want to remortgage before your fixed term ends, you’ll likely be subject to early repayment fees. These can be costly, amounting to as much as several thousand pounds, depending on how far into your current deal you are.

With this in mind, it’s not worth remortgaging if you’ll end up spending more on fees than you’d save with a new mortgage product. It’s always worth speaking to a mortgage advisor and broker, such as us here at Mortgage Light, about what these fees could look like and when might be a good time for you to remortgage to get maximum benefit from the process.

Generally speaking, it is advised to begin the remortgaging process 3-6 months before your current deal ends or when you are looking to put the new financial structure in place. That way, you will have enough time to speak to your mortgage advisor and broker, find a suitable new deal and secure it, with some time to spare for the inevitable hiccups. That being said, it’s also a good idea not to lock in any new deal too early, as better deals may emerge in the meantime.

Find out more – ‘ Can you remortgage early? ’

How long does remortgaging take?

The remortgaging process usually takes between 4 and 6 weeks if you are switching to a new lender and enlisting the help of a mortgage advisor and broker to ensure the process is smooth and speedy. This is because your new lender will need to undertake credit checks, an affordability check, the property valuation and legal work.

At Mortgage light, we can get you a remortgaging offer issued in as little as five days. If you are involving a third-party, such as Help to Buy or a Housing Association, then the process can take longer, perhaps up to 8-12 weeks.

If you were to switch to a new deal with your current lender (otherwise known as a product transfer), this is a much quicker process and can often be processed in as little as 30 minutes. This is because your current lender will already have much of your important information on file, and may not require you to undergo any new credit checks or affordability checks.

If you are not sure when the best time to remortgage is and you help finding your next mortgage deal, speak to us at Mortgage Light. We know the remortgaging process inside-out, so you’ll be in the most capable hands with us in your corner.

Pick up the phone and give us a call today on 01908 597655 or contact us via our website .

Home improvements
Buying a car
A deposit on a second home
Paying off a help to buy loan
Staircasing out of shared ownership
University costs
The consolidation of debts

Your current mortgage deal is ending, and you’ll soon move onto your lender’s standard variable rate, which may be less competitive than other options available to you.
You want to secure a mortgage with lower monthly payments due to increased financial commitments or a change in your personal situation.
You’re on a variable rate mortgage and would prefer a deal that offers more predictable repayments.
You’ve received a lump sum and would like to use it to pay off part of your mortgage.
Your financial circumstances or the mortgage market have changed since you first took out your mortgage, and better deals may now be available to you.

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

Tue, 03 Aug 2021 09:24:00 GMT

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.

The low deposits are arguably what makes shared ownership such an affordable option for those struggling to purchase a home outright on the open market. You might also be able to buy with zero deposit if you qualify for this mortgage product - find out more about it here . Let’s explain a little more about shared ownership and how it works.

Firstly, how does shared ownership work?

Quite simply, you purchase a share of a property, usually with the support of a shared ownership mortgage . The remaining proportion of the property is retained and owned by a Housing Association who will then charge you monthly rent for occupying their share of the property.

Rent is generally charged at a little below the normal market rate, at around 2.75% per annum of the value of the remaining share. This makes shared ownership a cross between buying and renting, so it is often referred to as ‘part rent part buy’. This though can change depending on the housing association but your consultant will be able to advise you.

The initial property share generally offered under shared ownership schemes is usually between 25 – 75%, although most commonly people initially purchase between 30-50% of a property. Once you have owned your initial share for an agreed fixed period of time, you often have the option to ‘staircase’ up and buy further shares, enabling you to own more of the property and potentially own it outright in the future.

By staircasing up and purchasing a larger percentage share of the property, you will be reducing the share owned by the Housing Association. As a result, the rent you pay to them each month will decrease. Some shared ownership schemes will allow you to staircase up to owning the full 100% of the property. This means the property is wholly yours and you will not need to pay any further rent.

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

How much lower are the deposits for shared ownership?

Ordinarily on the open market, if you wanted to purchase a home costing £250,000, you would need to provide a minimum cash deposit of £12,500 (5% of the total value of the property). You would then need to obtain a mortgage for the remaining 95% of the purchase price (£237,500).

If however, you found a shared ownership property costing £250,000 and you wanted to buy a 25% share of this property, your share would cost you £62,500. A 5% deposit on this share would be £3,125 (5% of 62,500). This leaves you to raise a shared ownership mortgage of £59,375 to complete the purchase of your 25% share.

This is clearly a significantly lower deposit and mortgage requirement than would be needed if you were to purchase the property outright, as in the above example. The drawback is, however, that although you will live in the whole property, you will only own 25% of it and will have to pay rent on the other 75%.

How do I know if I am eligible for shared ownership?

Although shared ownership mortgages are common amongst first-time buyers, you don’t have to be a first-time buyer in order to utilise the scheme. It is open to anyone who does not currently own a home. You must also be unable to afford to buy on the open market. You must be at least 18 years old and your household income must be less than £80,000 a year (£90,000 in London) to qualify.

It’s also worth noting that you cannot get a shared ownership mortgage on just any property for sale on the open market. It is only applicable to certain homes and these are usually specifically purpose-built.

Find out more – ‘ Who is eligible for shared ownership? ’

What other costs are involved with shared ownership?

In addition to raising the initial cash deposit, and of course, being satisfied that you can service both the monthly shared ownership mortgage repayments as well as the monthly Housing Association rent, you will also need to budget for some additional costs when entering into shared ownership.

Solicitors fees

Firstly, you will need a licensed conveyancer or property solicitor to carry out all the necessary legal work. There is additional legal work required when purchasing a shared ownership property. Subsequently, the legal fees will be higher than you might normally pay for a standard purchase to reflect this.

Solicitors will often quote you a fixed price for doing the work, which can help with budgeting. Costs will vary depending on geographic area and the complexity of the deal. You should probably budget around £2,000 for this. You may want to take a look at Share to Buy’s shared ownership solicitors and conveyancing panel to get some quotes.

Stamp duty land tax

You may also need to pay stamp duty land tax on the value of the property you are purchasing. First-time buyers may be able to get relief from this tax, subject to certain limitations. You will need to check out the rules for your particular circumstances.

This tax can run into several thousand pounds. You should go to the Government website to get an idea of this cost and whether it applies to your purchase. Your conveyancer or solicitor will be able to confirm exactly what you have to pay once you have secured a property.

As a first-time buyer purchasing a shared ownership property, you will have the option of paying stamp duty either on the full value of the property being purchased, as if you owned it all outright, or just on the value of the share you are initially purchasing.

The advantage to paying up-front for the whole property is that you won’t have to pay stamp duty again if you subsequently purchase additional shares. The disadvantage is that this can be quite a considerable cost to pay up-front. It isn’t worth doing this unless you have the clear intention of ultimately staircasing up towards full ownership.

You can find more information about stamp duty and shared ownership here .

Mortgage broker fees

It is wise to enlist the help of a mortgage advisor and broker when taking out a shared ownership mortgage. Shared ownership mortgages are not quite as straightforward as a standard mortgage. Additionally, not all lenders will offer them. It is a good idea to have someone in your corner who knows the market and can advise you accordingly.

Mortgage brokers will usually charge a fee for their services. This will generally be either a fixed amount or a percentage of the purchase price. A mortgage broker should explain clearly what their fee is before they undertake any work on your behalf. At Mortgage Light , we usually charge £595 for a Shared Ownership Purchase and £495 a Standard Residential Purchase.

Moving costs

You may need to pay for the cost of a removals service. The cost of this will vary greatly between companies. It will depend on how much you have and how far you need to move your possessions from one property to another.

Insurance

It is recommended – but not compulsory – that you take out contents insurance. This will cover all of your furniture, carpets, white goods and personal belongings within your home.

You will also need buildings insurance, however this is often the responsibility of your Housing Association. If so, this cost will normally be included within your service charge.

The low deposits are a hugely attractive part of the shared ownership scheme. They make homeownership affordable and accessible to those who need it. If you need a hand navigating your way through purchasing a shared ownership property, let us at Mortgage Light help.

We have helped so many people find their perfect shared ownership property. We have even helped them staircase up to owning their property outright. Contact us to find out more.

How to Apply for Shared Ownership

Thu, 17 Jun 2021 08:18:00 GMT

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.

Who do I contact to apply for shared ownership?

The first step in applying to be considered for shared ownership is to register with your local Help to Buy agent. To find out how to do this, head to the government’s Help to Buy website . There are different Help to Buy agents for different regions of the country.

To view shared ownership properties available in Milton Keynes, please click here. You can also speak to Paradigm Housing Association or Hightown Housing Association . These are both wonderful housing providers that we work with here at Mortgage Light.

Once you have contacted your Help to Buy agent, they will be able to guide you through the application process and outline how shared ownership works. You’ll also be asked a few questions to assess your eligibility for shared ownership around things such as:

In order to be eligible for the scheme, you must be at least 18 years old. You must have a household income of less than £80,000 a year (£90,000 in London). You must not already own a property and you should be able to obtain suitable mortgage funding.

What financial checks do I need for shared ownership?

Once you have registered, you can begin to look around for a shared ownership property that you’d like to purchase a share of. When you have found a property that you are interested in, you will need to go through a full financial assessment with the relevant Housing Association’s designated financial advisor. They may also run a credit check on you.

From there, they will discuss with you the size of the share of the property that you can afford to purchase. From that, they can calculate the rent payments that you will need to pay for the remaining share of the property. The Housing Association will own this share. Your affordability will need to be assessed for each property that you are interested in, as different properties will often have different rent and service charge rates. This depends upon the type of property and the different Housing Associations administering them. This will affect the monthly cost of ownership for each one.

Once you have been approved by the Housing Association for the property that you’d like to purchase and paid your reservation fee (typically £200, but this can vary), it’s time to find a shared ownership mortgage product. A mortgage advisor and broker that specialises in shared ownership mortgages can help you with this, such as us here at Mortgage Light.

In order to find a suitable shared ownership mortgage, your mortgage advisor and broker will take you through a similar process of financial checks to the ones you did with the Housing Association. They will ask you for:

Once your advisor and broker has found you a suitable mortgage product, they will submit your application to the lender and you must then await your mortgage offer.

What next?

The rest of the process is very similar to the process of buying a house with a standard mortgage. A valuation will need to be carried out on the property. You will also need to instruct your solicitor so that the legal work and searches can be carried out.

Once your solicitor is happy and all of their enquiries have been answered, you will receive a contract and mortgage document to sign, along with the full copy of the solicitor’s title investigations and a list of all fixtures and fittings included in the property. You must sign and return these documents and arrange to send the deposit funds to your solicitor.

At this point, it’s time for your solicitor to exchange contracts and fix the date for completion. Upon completion day, you can collect your keys and officially become a homeowner!

Mortgage Light has been helping people with shared ownership mortgages for years and we pride ourselves on our expertise. We’re ready to guide you through the process and help you secure your shared ownership property. Give us a call today on 01908 597655 or contact us here .

Different Types of Mortgage

Wed, 09 Jun 2021 09:13:00 GMT

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.

Fixed-rate mortgages

A fixed-rate mortgage is a mortgage product where the interest rate is fixed at a certain level. It is guaranteed to remain at that level for the initial agreed fixed period. They are one of the most popular options for mortgage borrowers, offering security and peace of mind to the borrower that their monthly repayments will remain unchanged throughout the initial fixed period and should therefore remain affordable.

It does mean, however, that borrowers won’t benefit should market rates happen to fall and borrowing becomes cheaper during that time. Additionally, borrowers are tied into the fixed-rate contract and cannot leave the deal early without incurring an early repayment charge. This can often amount to several thousand pounds.

Fixed-rate mortgages are generally available as either 1yr, 2yr, 3yr, 5yr, 10yr or sometimes 15yr deals. Most commonly though, they are either 2yr or 5yr deals. During the initial fixed term, the interest rate charged on your borrowing is fixed at the agreed rate. Therefore, your monthly repayments will also be fixed.

When this initial period comes to an end, your fixed-rate deal will expire. You’ll still have the same mortgage, but your interest rate will no longer be fixed. Instead, you will either be given the option to move to a new alternative deal, or you will be transferred to the lender’s standard variable rate (SVR).

Variable-rate mortgages

With a variable rate mortgage, the interest rate is floating. This means that it can change at any time in line with market forces. The major, but not the only cause of rates rising or falling, is in response to changes in the UK economy and movements in the Bank of England base rate.

Possible changes in interest rates is something you must be prepared for when you set your original budget. It’s a good idea to either have enough spare capacity within your finances to absorb any increase in monthly cost or have sufficient savings set aside to supplement your income if needed.

If interest rates do go up, then so too will the cost of your monthly repayments. If interest rates were to fall, then you will benefit from the reduced monthly repayments required.

Variable-rate deals fall into these categories:

Offset mortgages

Offset mortgages work by linking your savings to your mortgage and offsetting one against the other. The amount of your savings is deducted from the amount owing on your mortgage and you pay interest on the difference. This will have the effect of reducing your interest charge and therefore your repayments based on the level of savings you have.

For example, if you have £15,000 in savings and a mortgage worth £180,000, you’ll only pay mortgage interest on the net balance of £165,000.

With an offset mortgage, you will not earn any interest on your savings. Given saving rates are generally a lot lower than borrowing rates, this is not a great sacrifice. You can still withdraw money from your savings account with an offset mortgage. However, it will no longer be available to offset against your mortgage borrowing. Therefore, your mortgage interest charge will go up and so will your monthly repayments.

Interest-only mortgages

Mortgages will either be interest-only repayment or a capital and interest repayment mortgage. Occasionally, you can take out a combination of the two. With an interest-only mortgage, you don’t actually pay off any of the mortgage capital. You simply pay the interest due each month on the outstanding borrowing.

Whilst your monthly payments will be quite a bit lower than if you took a capital and interest repayment mortgage, your monthly payments won’t contribute towards the repayment of the loan itself. The capital of the loan will need to be paid off in full at the end of the mortgage term. This can either be from the sale of the property or from another source such as investment proceeds.

Interest-only mortgages have become much less common and very few new facilities are now being offered.

Repayment mortgages

Repayment mortgages are far more common than interest-only mortgages. They are designed to ensure that, in addition to paying the loan interest charge each month, the borrower also repays an element of the capital borrowed. This means the loan will be repaid in full by the end of the agreed term.

Repayment mortgages are also known as capital and interest repayment mortgages. This is because borrowers repay part of the capital and all of the interest accrued each month.

Specialist mortgages

At Mortgage Light, we have an expert team with a diverse range of specialties. We can help you find the right fixed-rate or variable-rate mortgage for you, right through to catering for those with bad credit and high net worth – and everything in between.

Contact us today by calling 01908 597655, or fill out our online enquiry form . You can also reach us via the live chat, which you should find in the bottom right-hand corner of your screen.

Navigating the mortgage market can feel overwhelming, especially if your circumstances don’t fit the traditional mould - here’s a quick guide to some common specialist mortgage types.

Self-Employed Mortgages
Self-employed mortgages are designed for people who run their own business or work freelance, using alternative proof of income such as tax returns instead of standard payslips.

CIS Worker Mortgages
Mortgages for CIS (Construction Industry Scheme) workers take into account contract-based income and payments received under the CIS scheme, making it easier for tradespeople to secure lending.

Visa Mortgages
Visa mortgages are tailored for non-UK residents or those on work visas, helping them buy property despite having limited residency history in the country.

Green Mortgages
Green mortgages reward buyers purchasing energy-efficient homes or improving a property’s environmental performance, often offering lower interest rates or incentives.

Low or No Deposit Mortgages
Low or no deposit mortgages are aimed at buyers who may struggle to save a large deposit, allowing them to get on the property ladder with minimal upfront costs.

Bad Credit Mortgages
Bad credit mortgages are designed for individuals with a less-than-perfect credit history, focusing on affordability and current financial stability rather than past issues.

SVRs – this is the standard interest rate your mortgage lender charges homebuyers and your borrowing will be charged at this rate for as long as you have your mortgage. There are normally no early repayment charges associated with SVR deals, so they provide flexibility allowing you the freedom to move between different deals and lenders without penalty and also allow you to make overpayments if you wish. The caveat is that your interest rate can go up or down at any point during the term.

Tracker mortgages – tracker mortgages move directly in line with another interest rate, typically the Bank of England’s base rate. If the base rate increases by 1%, so will the interest rate on your borrowing. Tracker mortgages usually have a short life of typically 2–5 years before you are moved onto your lender’s SVR. Like the fixed-rate facilities, you may have to pay an early repayment charge if you wish to repay the borrowing or switch to another facility before the deal ends.

Discount mortgages – this type of mortgage offers a discount off the lender’s SVR. Again, it only applies for an initial fixed length of time. This is typically 2–3 years. For example, if your lender’s SVR was 4% and your mortgage came with a 1.5% discount, you’d only pay 2.5% interest on your borrowing for that initial fixed period. Discount mortgage rates start off cheaper, making monthly repayments lower. However, the rate is variable. Rates can go up or down at any time – although you will enjoy a discount to the standard rate during those important first few years.

Capped rate mortgages – with capped rate mortgages, once again your interest rate moves up and down in line with your lender’s SVR. There is, however, a cap on the rate. This means that rates and therefore monthly repayments cannot rise above a certain level. Capped rates are normally only available for an introductory period, typically 2–5 years. Whilst this might sound attractive and offers some protection against rising interest rates, the cap does tend to be set quite high. You will still need to be prepared to afford some increase in repayments if interest rates rise to the level of the cap

Am I Eligible for a Mortgage?

Tue, 27 Apr 2021 10:00:00 GMT

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.

Every lender is slightly different, and each will have its own specific criteria and lending appetite. In this article, we will talk generally about the factors that you can expect a mortgage lender to look at when deciding whether to give you a mortgage and how you can improve your chances if you are struggling.

How do mortgage lenders assess affordability?

Before approving you for a loan, a mortgage lender will want to assess the ‘affordability’ of any proposed new mortgage borrowing to you. This process determines the strength of your finances and therefore your ability to pay back the borrowing you take out with them. With this in mind, one of the biggest factors they will consider is your income.

Lenders will be looking for evidence that you have a strong, secure source of income that can be relied upon for the term of your borrowing. To evidence this, they will be looking for confirmation that you are either in some form of permanent employment, have ongoing contracts, history of continuous work, or have self-employed income. They will ask you to provide a minimum of three to six months’ worth of recent payslips or evidence of other income. This can vary depending on how you receive your income.

If you are permanently employed, your wage slips should show that your income is relatively steady and consistent. These payslips will need to include:

Providing evidence of your income can be more difficult if you are self-employed as you probably won’t be able to provide payslips and your income may fluctuate more than someone who is directly employed.

Don’t worry though, there are a number of mortgage lenders willing to provide facilities to self-employed borrowers. Advisors, such as us here at Mortgage Light , have plenty of experience in sourcing self-employed mortgages for those that need them. The process usually just requires more financial evidence and some extra checks.

Lenders will generally also request to see 3-6 months’ worth of recent bank statements from your main current account. This is so that they can get an idea of your spending habits to determine how your current expenditure fits with your income. They will take the following into account:

It may be that you are showing signs of struggling to manage within your current budget. In this case, you will need to build a convincing case to explain how you will manage the additional cost of a new mortgage, should they grant you one.

Do mortgage lenders look at your credit rating?

All mortgage lenders will usually look at your credit rating. This is so that they can get an idea of your financial history and assess how much of a risk you might be. They will look at how regularly you keep up with any credit payments, and if you have ever missed any or had any arrears. They will also want to see if you have had any applications turned down by other lenders for similar facilities recently. This generally serves as a warning sign.

Before you approach a mortgage lender or mortgage advisor, it might be an idea to take a look at your own credit rating to see what it looks like. There are three main credit reference agencies in the UK – Experian , Equifax , and TransUnion . We recommend that you get a copy of your credit report and examine it carefully to make sure there is no incorrect adverse information recorded. If there is, contact the relevant company to get this corrected as soon as possible.

If you have a poor credit score, this does not necessarily mean that you won’t be eligible for a mortgage. It may, however, make the process more challenging. Any mortgage offer you do get is likely to be more expensive as a result. We recommend enlisting a qualified mortgage advisor and broker to help you if this is your situation.

At Mortgage Light, we regularly help customers with low credit scores find a mortgage. We know the best lenders to approach. Some lenders place great reliance on an individual’s credit score, but whatever yours is, there will be a lender that will consider your application or put you in a position where it will be possible in the future.

Do I need a house deposit?

If you've been renting for 12 months and have strong credit history you could potentially buy with zero deposit - other low deposit options include £5000, and £10,000, providing you meet the lenders criteria. Many lenders now are generally offering a minimum deposit of at least 5% of the property.

Your deposit goes towards the cost of the property that you are buying. The bigger the deposit that you have saved, the smaller the mortgage you will need. This ought to make you more likely to be approved for a mortgage. This is because the lender is taking less of the risk with a smaller loan. That being said, the main factor in the assessment should always be the affordability of the proposed borrowing to you.

What other factors affect my mortgage eligibility?

Alongside your income, expenditure, credit rating and your deposit, there are other factors that your lender may take into consideration when assessing your eligibility for a mortgage. These may include:

What documents will I need to provide in order to prove eligibility for a mortgage?

This will depend on your individual circumstances and the lender in question. Generally, however, most lenders will want to see the same basic information. Here are the documents you can expect to be asked to provide in support of your mortgage application :

Remember, the information on your application needs to match the supporting documentation you provide. Names and addresses should match (including the spelling of names). Don’t round up your income if this doesn’t match your payslips. Additionally, don’t claim commission or bonuses if this is not a regular and expected part of your remuneration package.

If you have recently changed your name, due to marriage for example, then you will need to provide evidence of this via a copy of your marriage certificate. It is often these details that lead to queries, delays and sometimes even the possible rejection of applications.

When working out your eligibility for a mortgage, don’t go it alone. Turn to a mortgage advisor and broker. We will walk you through the entire process. We’ll let you know exactly what documentation to provide and advise on a suitable budget for your future property purchase. We will also liaise with mortgage lenders on your behalf to present your application in the best way possible to try to avoid any confusion or rejections.

Finding out your mortgage eligibility could not be easier with Mortgage Light. Give us a call today on 01908 597655 or contact us here .

The strength of your employment status and how long you've been in your job
What are your longer term employment prospects? How secure is the sector you're in
Your life stage - are there any life events on the horizon that might impact your financial situation? Are you likely to want to start a family soon, or are you approaching normal retirement age for example?
Whether you have any dependants that rely on your income and is the cost of this likely to increase or decrease in the short to medium term?

Your name
Pay date
Tax period
Gross pay
Net pay
Any bonuses, overtime, and /or commission
Any additional allowances such as car allowance, etc

Outstanding loans
Credit cards
Household bills
Insurance policies
Child or spousal maintenance
School fees
Childcare
Travel costs

Photographic ID, such as your passport or driving license (note that having an old address on your driving license or an expired passport can lead to complications, so try and make sure documentation is up to date)
Minimum of three months’ recent payslips
Bank statements of your main current account covering the last 3–6 months (try not to leave any gaps in the history, as this may look suspicious)
Proof of your deposit in the form of cash savings and the source of these funds. This is usually done via bank statements, which should be in your name. If, however, your deposit is being gifted, by a relative for example, then you may need to provide some evidence of this.

What Happens When You Sell a Shared Ownership Property?

Wed, 21 Apr 2021 15:02:00 GMT

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.

How does shared ownership work when you sell?

If you wish to sell, you must first contact your Housing Association and let them know. This is because they have the option to try and find a suitable buyer for your home first, known as ‘right of first refusal’. This means that you cannot simply put your house on the open market yourself straight away.

Once you have informed your Housing Association of your intention to sell, you will need to have your house valued by a suitably qualified RICS surveyor. This is so that you can determine the value of your share of the property. You will be responsible for meeting the cost of this valuation. You can generally choose the surveyor that values your home, although your Housing Association will often provide you with a list of surveyors acceptable to them for you to choose from.

Once the valuation report has been prepared and you are happy with it, you and your Housing Association will be able to agree on the value of your share of the property. The Housing Association will then offer the property to any potential purchasers they have on their waiting list. Alternatively, they can go straight to the general housing market to find a buyer.

This process exists to ensure that shared ownership properties remain available to those in need of affordable housing. Your property will be put on the market as a shared ownership property and a suitable buyer will need to be found to buy your share of the house.

Let’s say for example that you own 50% of the property. Your buyer must purchase at least that 50% share. The Housing Association will continue to own their 50% share and the new buyer would take up the rent payments on this, as well as the mortgage payments on the share they have purchased from you – in the same way you did when you first bought the property.

To make your property attractive to more potential buyers, you may be able to sell some or all of the Housing Association’s share of the property at the same time as selling your own share. This is through a process known as back-to-back staircasing. You will need the Housing Association’s agreement to do this in advance.

Effectively, on the day of completion of the sale, you buy the additional share from the Housing Association and then sell it immediately to your buyer. The buyer pays you for both shares and you then pay the Housing Association from these funds. Through this method you may be able to offer 100% ownership of the property to a new prospective buyer, thus getting around the shared ownership eligibility criteria requirement for the new owner.

What happens if the Housing Association cannot sell my property?

If the Housing Association is unsuccessful in finding you a buyer for your share of the property within the specified nomination period stated in your lease, then you can approach an estate agent and put it on the market yourself, or sell privately if you wish.

If you have not staircased to 100% ownership at the time of wishing to sell, you will still need to sell your home on a shared ownership basis. This means that your buyer will need to meet all the relevant shared ownership eligibility criteria and be approved by your Housing Association. They will be required to purchase a share equal to or higher than the share you currently own.

If you have staircased to 100% ownership, then it is likely that you will be able to go straight to the open market without the involvement of your Housing Association, and your buyer will not need to meet the shared ownership eligibility criteria. Again, you will need to check your lease in advance to see if this is the case.

How long does it take to sell a shared ownership property?

Typically, the Housing Association will have around six to eight weeks to sell your property before it falls to you instead. Every case will be different, but most Housing Associations maintain a list of all the people who have expressed an interest in buying a shared ownership home. This means they can often find a suitable buyer quite quickly. In fact, one of the largest housing providers in London and South Eastern England reported finding a shared ownership buyer within the eight-week period the majority of the time.

If you do find that your housing provider is unable to find a suitable buyer and your property does have to go onto the open market with an estate agent, then it may prove slightly more difficult to sell than a regular property. This is because you will be restricted to finding a buyer who meets all the shared ownership eligibility criteria. The buyer will need to be assessed by the housing provider, and a suitable mortgage product will also need to be sourced.

What costs are involved in selling a shared ownership property?

The costs you will encounter when selling your shared ownership property will depend on where you live and the value of your property. Generally though, here are the costs you should budget for:

Although you will face some restrictions when selling your shared ownership property, your Housing Association will do a lot of the work for you. Provided they are successful in finding you a buyer, as they are in most cases, then it shouldn’t prove too painful.

Need advice on the next step of the journey with your shared ownership property? Whether you are sticking with the scheme or purchasing your next property without the scheme, we can help you with your mortgage. Give us a call on 01908 597655 or contact us via our website.

Housing Association marketing fee – otherwise known as a ‘nomination fee’. This is a fee for the Housing Association’s marketing costs. This fee will depend on the Housing Association but can vary up to around £350.

Valuation fee – as previously mentioned, you will be required to cover the cost of a suitable valuation. This will depend on the location and size of your property but you can expect it to come in at around £250–500.

Legal fees – you will need to cover your solicitors/conveyancers’ fees and any legal fees incurred by your Housing Association. Budget around £1,000–2,000 for this.

Leasehold Information Pack – your buyer’s solicitor may request a Leasehold Information Pack which contains details of your obligations as a leaseholder. This generally costs around £200.

Energy Performance Certificate (EPC) – you will need to provide a valid EPC before your house goes up for sale. Your Housing Association may charge you between £50–100 for this.

Assignment fee – if your Housing Association sells your share of the property within the initial nomination period, then they may take a small percentage of the sale price of your share as their assignment fee. This can be around 1.5% of the sale price of your share but they vary and can be set fees.

Estate agent fee – if, however, you end up selling through an estate agent, then you will pay estate agent fees instead. It is recommended to book three estate agents to come and take a look at your property before enlisting one, as all their costs are set differently.

Shared Ownership – How Does Staircasing Work?

Tue, 30 Mar 2021 07:50:00 GMT

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.

How do you staircase in shared ownership?

If you want to begin staircasing, you first need to contact your housing provider. You need to give notice that you intend to staircase. Your housing association will arrange for an independent surveyor to value your home, or give you a list of approved surveyors for you to choose from. You will be responsible for paying for the cost of this valuation report.

You need to have your home valued each time you staircase. This is because the price of any additional shares will be based on the current market value of the property. Let’s say for example that you purchased 25% of your home, and pay rent on the other 75%. You wish to buy another 25% share, enabling you to own 50% of your home. If the new survey values your home at £200,000, for instance, then the additional 25% share of the property will cost you £50,000 to purchase.

You will also need to appoint and pay for a solicitor to act on your behalf during the process purchase. They will make the changes to your existing lease, and help to ensure that the legal side of the process is properly completed and goes through smoothly. Once you receive a copy of the surveyor’s valuation report, you’ll be given the opportunity to either proceed with the share purchase or leave things as they are. You have three months to take up the option. After that, your valuation expires leaving you to start the process again.

Paying for the additional shares in your property will usually involve extending and/or remortgaging your existing mortgage facility. To help you arrange this, you should speak to a mortgage advisor and broker who specialises in shared ownership mortgages , such as us here at Mortgage Light. We will be able to guide you through the process. We will also review the funding options available to you, ensuring you get the most suitable mortgage product for your circumstances.

Cost of staircasing in shared ownership

There are other fees involved in staircasing, additional to the price of the shares. You can typically expect to pay around £1000 – £2000 in additional expenses. This cost will vary depending on where you live, the value of your home, the size of the share you are purchasing and cash backs from lenders.

You will need to cover the cost of the valuation report, prepared by a qualified RICS surveyor, in order to determine the current market value of your property. There will also be legal expenses due to your solicitor for the work they do for you.

You may also incur some mortgage fees for increasing or remortgaging your share of the property to help raise the additional funds needed to pay for the staircasing. The cost of this will depend on the deal you obtain and your circumstances.

Stamp duty may also be payable. When you first purchase a shared ownership property, you have a choice about how you pay any necessary stamp duty. You can make a one-off payment based on the total market value of the property. Alternatively, you can choose to pay what is owed for the initial share you buy. You’ll then need to pay again when you own more than an 80% share of the property. If you choose the latter, this cost should also be factored into the total cost of staircasing if applicable.

It makes sense to buy as big of a share as possible each time you staircase, due to the admin fees. Housing Association lease terms will vary but usually, you can staircase up to three times to take you up to 100%.

If you purchase additional shares, you may find that you are struggling with the mortgage payments. In this case, you may be able to sell your shares back to the Housing Association. This is known as downward staircasing. Again, check the terms of your lease to see if this option is available to you.

Should I staircase in shared ownership?

You don’t have to staircase with your shared ownership property. You could just continue with the share you purchased, paying any mortgage you have and the rent on the remainder. It is still more secure than renting, and you are still building up equity in a property.

So, what are the benefits? The obvious benefit is that by purchasing more shares, you put yourself on track to staircase up to 100% ownership. This gives you more control and security as a homeowner. You’ll have the option to switch from a shared ownership mortgage to a wide range of more standard products. These tend to be cheaper and give a greater variety of deals to choose from.

100% ownership also gives you the freedom to sell your house on the open market. If you own less than 100% of the property, the Housing Association generally holds the right to find a buyer for your share of the property first. Any purchaser of your share would need to be eligible for the shared ownership scheme .

Additionally, the more you staircase, the less rent you will pay each month to your Housing Association. This could make sense, even if you don’t intend on staircasing to 100%, or are restricted in doing so. Although the rent you pay with shared ownership is generally less than the rate charged on the open market, it often makes more financial sense, if you can afford it, to be putting your money towards paying off your mortgage.

You could reach a point where you have fully repaid your mortgage and own 80% of your home. You may only be paying rent on the remaining 20% share of the property at a reduced market rate. This could be particularly attractive as you enter retirement and possibly a restricted income.

However, be mindful that if you don’t intend on staircasing to 100% ownership, you may not want to purchase too much in shares. Let’s say for example that you staircase to 80% ownership. If you then decide to sell the property, you or your Housing Association may struggle to find a buyer willing to purchase this large of a share.

At Mortgage Light, we have helped many people staircase up to 100% property ownership through the shared ownership scheme. We have specialists ready to help you purchase more shares if this is what you would like to do.

Give us a call and let’s chat it through, on 01908 597655 or contact us via our website.

Can I Remortgage to Release Equity?

Wed, 24 Mar 2021 14:50:00 GMT

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.

If you release some of the equity in your property, you can generally use the cash generated for any purpose you like. Perhaps you’d like to put it towards some planned home improvements, a new car, or a wedding? Maybe you want to pay off debt or to offer some financial help to loved ones. So, how do you go about releasing equity from your home, and what are the pros and cons?

What is equity in property?

Firstly, let’s explain a little more about equity. Equity refers to how much of your property’s value actually belongs to you. It is the difference between your house value and any mortgage borrowing you may have against it.

For example, if the current market value of your house is say £300,000 and you owe £200,000 on your mortgage, then you have £100,000 of equity available in the property. You can usually only access this equity by selling your property. However, you may also be able to access some of it by borrowing against it via remortgaging.

Often, the equity in your property will have increased as a windfall following a general increase in property values locally or nationally. But remember, property values can go down as well as up. The property you bought ten years ago for £200,000 may now be worth £280,000, increasing your equity by £80,000.

If at the same time, you have paid down your mortgage from, say, £180,000 to £130,000, then you have added a further £50,000 to your equity. Combined with the increase in value, this gives growth in equity of £130,000. Add this to your initial £20,000 cash deposit when you purchased your house, and it gives you total equity of £150,000.

A local estate agent will often provide you with an indication of the current market value of your home for free. In addition, your mortgage lender will also be able to confirm the amount outstanding on your mortgage at any time.

The difference between these two figures will then give you a good idea of how much equity you have available in your home – some of which you might be able to access.

Remortgaging to release equity

To explain how you can remortgage to release equity, let’s use the above case as an example. We have assumed that you bought your property for £200,000 with a £180,000 mortgage ten years ago. Since then, the amount you owe on your mortgage has fallen to £130,000. The value of your property has increased to £280,000. As a result, the equity you own in the property has increased from £20,000 at the time of purchase, to £150,000 now, (the difference between £280,000 – £130,000 = £150,000)

Generally, when people remortgage, it is to secure a better or cheaper mortgage deal. In this case, you would look to borrow £130,000 (the amount outstanding on your current mortgage), against your property currently valued at £280,000. This gives a proposed loan to value (LTV) of around 47%. This LTV is particularly beneficial, as the lower the LTV, the lower the interest rates that are usually offered by mortgage lenders. This means cheaper monthly repayments.

However, if you are looking to release some of the equity in your property at the same time, you would need to remortgage for a larger amount than you currently owe, so that there is surplus cash available to be released to you. In order to release £30,000 in equity, you would need to remortgage for £160,000. This takes your LTV up to 57%, however, this is still quite low.

It is adding £30,000 to your current mortgage, (from the example above, £130,000 owed to the lender adding on £30,000, making your new debt £160,0000). This would mean the equity in your house would reduce from £150,000 down to £120,000, (£280,000 – £160,000 = £120,000 equity). Of course, this is not ‘free cash’. You have added it to your mortgage, so will be paying it back over the remaining term of your loan.

Interestingly, your monthly repayments may not necessarily increase by much if you manage to secure a remortgage deal at a better interest rate than you were previously on, and/or if you extend the mortgage term by a few extra years.

Remortgaging to release equity to buy another property

There are a number of reasons why you may want to release equity to buy another property. You may wish to:

To buy a second home, for whatever reason, most people will need to raise a large amount of cash. This is to either purchase the property outright or to provide a significant deposit to go alongside an additional mortgage. One solution to raising this cash might be to remortgage your current residential property. This can release some of the equity you have available.

Perhaps you are looking to buy and rent out an investment property with the assistance of an additional mortgage. You will need a specialist buy-to-let mortgage, as the purpose of the transaction is to obtain a rental income, and the mortgage product is assessed differently.

It is important to note that a typical deposit for a buy-to-let mortgage is generally a minimum of 25%, so you will need to ensure that you can raise this deposit, as well as cover the cost of the repayments on the new mortgage, plus meet the additional cost for purchasing the investment.

Should I remortgage to release equity?

Whether or not you should remortgage to release equity will depend on your individual circumstances. If you have enough equity built up, remortgaging to release it can be a good way of putting it to use.

However, don’t lose sight of the fact that you are increasing the size of your mortgage to do so. Your monthly repayments may increase as a result. In addition, it might also take longer to fully repay your mortgage if you have extended the loan term to make borrowing more affordable.

Remortgaging to release equity is essentially just another way of borrowing money. You should only do it if you have a good amount of equity built up in your property. You should also be fully satisfied that you can afford the new monthly repayments.

Also, remember that there are some upfront costs to remortgaging. These include valuation charges, legal fees and mortgage arrangement fees. With these in mind, it may not be worth doing an equity release to raise just a small amount of cash. There will almost certainly be more cost-effective ways to borrow small amounts of money.

You need to also be aware of any potential early repayment charges when remortgaging. These generally only occur when your current mortgage deal is still in its initial preferential fixed term. An early repayment charge is normally calculated as a percentage of the outstanding loan amount, so can be quite a significant sum.

Early repayment charges will eat into the equity you want to release by remortgaging. It’s generally advisable to wait for your fixed term to end before remortgaging. Some lenders may also seek to charge an exit fee to get out of an existing mortgage deal. This is usually a smaller sum of around £100.

If you are unsure whether you should remortgage to release equity, speak to a qualified mortgage advisor and broker that you trust, such as us here at Mortgage Light . We’ll take a look at your financial situation and your remortgaging options, and help you decide what is best.

Why not contact us for a chat? Just call 01908 597655 or contact us via our website.

Purchase a buy to let property as an investment
Purchase a holiday let as an investment or for personal use
Purchased an investment property to renovate and sell on
Purchase a commercial property for your own use or as an investment
Or purchase a second residential property for the use of a family member

What is a Shared Ownership Mortgage?

Thu, 04 Mar 2021 08:22:00 GMT

A shared ownership mortgage is the borrowing you take out to help you purchase the share of a property that you purchase using the shared ownership scheme – usually between 25 – 75%. The mortgage covers the share that you own, and the Housing Association owns the remaining share, which you will pay below-market-value rent on.

A shared ownership mortgage is only required on the percentage of the property that you purchase, the amount borrowed is often much lower compared to purchasing a property outright.

Over time, you can ‘staircase’ out of shared ownership by buying some, or all, of the share of the property owned by the Housing Association. This reduces the amount you pay them in rent and increases your share of ownership in the property up to the full 100%.

Shared ownership eligibility

The shared ownership scheme has been around since the 1970s, and today there are more than 200,000 shared ownership properties in the UK. It was designed to help those who are struggling to save for a deposit to get onto the property ladder or low-income earners.

Shared ownership mortgages are available to first-time buyers, or to anyone who used to own a home and now cannot afford to buy a new one. You must be at least 18 years old to qualify and your household income must be less than £80,000 a year, and £90,000 in London.

Aside from the above criteria , anyone can apply for shared ownership. It is not available on every property however and is only applicable to certain homes. These are usually specifically purpose-built for the scheme. That’s generally why you will find most shared ownership properties on new build developments.

Taking out a shared ownership mortgage

It’s always worth speaking to a mortgage advisor and working out your shared ownership budget, once you have been approved for the shared ownership scheme and found the property you’d like, you will need to put down a reservation fee. This is typically for the sum of £500, but it can vary geographically. Then it’s time to find a shared ownership mortgage .

Not all mortgage lenders offer shared ownership mortgages, so using a mortgage broker, such as us here at Mortgage Light, will make this process much easier. To begin the process, we will ask you for the following information so that we can carry out the necessary financial checks:

From there, we will search the market to find you the most suitable deals available to meet your personal circumstances. We will then help you to complete a mortgage application and submit this, along with all the supporting documentation required, to the lender for their consideration.

Benefits of shared ownership

If you are struggling to save the usual 10%+ deposit generally needed to purchase a home, then the shared ownership scheme may be a suitable option to help you take that first step onto the housing ladder.

Low-income earners are often more likely to obtain a mortgage offer under a shared ownership scheme because the amount of borrowing required is usually much smaller and is, therefore, more affordable. You may also be able to buy a property without any cash deposit being required, leaving you to just have to budget for your solicitor’s fees and any other mortgage-related costs.

Using shared ownership might also enable you to purchase a bigger house or live in a more desirable area than you might otherwise be able to afford. A certain number of shared ownership homes are now often required to be built as a condition of obtaining planning permission for a new housing development, thus helping to put affordable housing in the heart of sought-after areas.

If you are currently renting your home, then making use of the shared ownership scheme can often work out as a comparable or even cheaper alternative. Yes, you’ll still be paying some rent, but only on the share of the property owned by the Housing Association. And remember, the rent rate is generally less than the rate charged on the open market, at typically only 2.75% of the property value per annum. The rest of the money you pay each month will be going towards paying off your shared ownership mortgage.

Let Mortgage Light help you

Shared ownership isn’t complicated, but not every lender offers shared ownership mortgages. That’s why it can be beneficial to have an expert on your side who knows where to turn to find the right mortgage deal for you, saving you time and effort.

At Mortgage Light, we have dealt with shared ownership mortgages since we began trading. We have helped many people to own 100% of their shared ownership property after only a few years, depending on their circumstances. If you are hoping to make use of this affordable scheme, contact us today.

Your last three months payslips and proof of any commision / bonuses
Your last three months bank statements
Proof if ID and proof of address
Evidence of any cash deposit you have available

What is a Mortgage Agreement in Principle?

Thu, 25 Feb 2021 16:20:00 GMT

If you are looking to purchase a property, you may come across the terms ‘mortgage agreement in principle’, ‘mortgage in principle’, or ‘agreement in principle’. These three terms all refer to a statement from a lender saying that they agree ‘in principle’ to provide you with the borrowing you require subject to your information declared being verified, and the property you find being suitable to lend against.

A mortgage in principle is designed to give borrowers a strong indication of how much they may be able to borrow and some reassurance that they meet the lender’s basic lending criteria. As soon as you’ve made up your mind to start home-hunting and have an idea of what you may need to borrow, it’s generally a good idea to apply for a mortgage in principle.

This way you can start to search the property market with the confidence that you should be able to obtain the level of mortgage borrowing that you will eventually need to support a property purchase in the property price range you are looking at.

How does a mortgage in principle work?

When you or your mortgage broker apply for a mortgage in principle, the lender will require data to be inputted into one of their application forms, upon submission of that form the bank or building society will do a credit check to confirm the information on your credit file is correct, and also they check the conduct of your finances.

This is so that they can establish whether you are a suitable borrower and whether you meet their eligibility criteria. They will use the income information you provided to determine how much they may be willing to lend to you. At this stage, most lenders do not require any additional proof of income or affordability before giving an outcome, of pass , refer or decline . Having a mortgage in principle will put you in a good position to make a firm offer on a property once you find the one you like.

When a lender has issued a mortgage in principle, they may provide you or your mortgage broker with a certificate. What this certificate includes will differ between lenders, but it could be a statement confirming that:

It is important to remember that a ‘mortgage in principle’ is not binding. The lender could still refuse you a mortgage on those terms. Don’t confuse an ‘agreement in principle’ with a ‘formal mortgage offer’. To get a formal mortgage offer, you will need to submit a detailed mortgage application with your full personal and financial details and supporting documentation to a lender – something that a mortgage broker and advisor such as us here at Mortgage Light will be happy to help you with. You should only really do this once you have an offer accepted on a property.

Do you need a mortgage in principle to make an offer?

No, there’s generally no requirement to get a mortgage in principle in order to make an offer on a property, but it can encourage sellers and estate agents to take you more seriously when house-hunting. In fact, some agents may even refuse you a house viewing unless you have a valid mortgage in principle in place, to show that you are a serious purchaser.

An ‘in principle’ offer also gives you a clear idea of what you can afford so that you know what property price points you can start exploring. You may even end up being offered a higher amount than you were expecting, giving you a little greater scope in your property search. Plus, by knowing what you can realistically expect to borrow, a mortgage in principle reduces the risk that you’ll end up applying for a mortgage that is too big, resulting in a potential rejection. If you are rejected for a mortgage then this will be recorded on your credit file and it can make it more difficult if you reapplying elsewhere.

How do I get a mortgage in principle?

You can apply directly to most lenders for a mortgage in principle, however, you may prefer to enlist the help of a mortgage broker and advisor. They will guide you towards lenders with the most suitable products for your circumstances and an appetite for meeting your borrowing requirements. At Mortgage Light, we will ask you for some personal and financial information to support your application, such as:

All of this information will be needed later anyway in order to complete your full mortgage application , so gathering this information saves us a bit of time later down the line and may also help to identify and tackle any potential issues early.

Once we have all the information that we need, and after discussions with you, we’ll go away and speak to, what we feel are the most appropriate lenders. Our experience and knowledge of the market means that we know exactly where to go to find you the best potential mortgage deal straight away, saving you time that you may have otherwise spent searching. We can generally get you an agreement in principle back within as little as 24 hours, and this agreement is usually valid for between 60 and 90 days, depending on the lender.

There should be no charge from either a lender or a mortgage broker for obtaining a mortgage in principle offer for you. At Mortgage Light, we only charge for our services once you have found a property you wish to buy and have agreed to a purchase price. Our fee is due upon you instructing us to apply for your mortgage – but only if you are happy with our recommendation.

Does a mortgage in principle affect your credit rating?

A mortgage in principle offer does require lenders to undertake a credit check. Some lenders will do a soft search on your credit file, and others will do a hard search. A soft search checks against your file without leaving a ‘footprint’, which means the check will not be visible to other lenders and so shouldn’t affect your credit file. Any eventual formal mortgage offer, however, will require a hard search.

A hard search shows on your file as an application for credit. The search itself should not affect your credit rating, however, if a lot of hard searches are made on your file within a short space of time, then this can have a negative impact on your credit score, as it could signal that you are struggling to get accepted by other lenders. It also means that lenders looking at your credit history later for your full mortgage application may think that you have been rejected for credit several times. This may be taken as a red flag, which may prompt them to choose to refuse you for mortgage facilities.

There are three main credit reference agencies in the UK – Experian , Equifax , and TransUnion . We recommend that before you apply for any type of mortgage facilities, that you obtain a copy of your credit report and examine it carefully to make sure there is no incorrect adverse information recorded. If there is any incorrect information recorded, then you should contact the relevant company to get this removed or put right.

If you find that you have a low credit score, it is often worth making sure that your personal details are correctly recorded on the electoral register at your current address, this may help to offset, in part, a poor credit rating.
Lenders use information from the electoral register to confirm things like your name, address, and residential history. They need to check that the basic information about you is correct and up-to-date before they think about offering you a mortgage.

With most lenders, it adversely affects eligibility for borrowing if they can’t find your details on the electoral register. Some might even choose to simply refuse your application if they can’t match the personal details you have given with the electoral register.

Get the house hunting process off to the right start by turning to us here at Mortgage Light. We have helped thousands of people get the mortgage that they want, meaning that they can purchase the property that they want. And very often, it all starts with a mortgage in principle.

What are you waiting for? Get in touch with our expert team today and let’s get started.

They are willing 'in principle' to lend the amount applied for
The maximum sum they may be willing to lend based on the info provided
That your 'mortgage in principle' application has been accepted

Basic personal information, information, including your previous addresses (usually going back 3 years)
Proof of earnings - payslips & bank statements or accounts if you're self employed
Details of your monthly outgoings such as credut cards, bills & subscriptions
A breakdown of any credit agreements you may have
Confirmation of the size and availability of your deposit

What Fees are Involved in Buying a House?

Thu, 31 Dec 2020 16:30:00 GMT

Whether you are a first-time buyer, or selling your current property and moving on to the next, there are a number of fees and charges that you will need to factor into your overall budget when considering the cost of purchasing a house. It’s a good idea to make a note of all these potential fees and charges when you begin the process of buying a house so that you can budget accordingly.

So, what are these fees and charges, why do you need to pay them and how much can you expect them to cost? Here’s a rundown of some of the most common extra costs you may incur (aside from your deposit) that you should budget for when looking to take out a mortgage.

It is important to note before we begin that each lender will set their own range and scale of fees for the mortgages they provide and these will differ from lender to lender and also between the different mortgage products offered. All lenders should, however, clearly detail all of the fees and charges relating to the mortgage you have applied for in a mortgage illustration document or an enhanced key facts illustration, which you should check carefully to avoid any surprises.

Mortgage fees

Many mortgages come with some level of arrangement fee and other charges for setting up the loan. The arrangement fee exists to cover a lender’s administration costs in processing your application, and can typically range from anywhere between £100 and £1,500. Whilst you can obtain mortgages with no fees, you may find that these deals come with slightly higher interest rates to compensate the lender.

If you choose a mortgage with a fee, you may be given the option to either pay this charge upfront or add it on to your loan. It’s generally non-refundable, so if you pay it upfront and something went wrong with your purchase later down the line, you won’t get it back. Also be aware, however, that if you add it onto your loan, you will be increasing your total borrowing and will have to pay interest on that extra amount for the term of the loan, which will end up costing you a little more in the long-run.

You may also come across a booking fee (otherwise known as an application fee), typically costing £100-200. This pays for ‘booking’ the mortgage product while your application goes through. Lenders will often charge this to secure a fixed-rate, tracker, or discount deal. This fee is due to your lender as soon as you submit your mortgage application, so can only be paid upfront.

Valuation fee

Your mortgage lender will want to value the property you are buying before lending against it. This is to determine what the actual market value of the property is, as opposed to the price you may have agreed to pay. Just because you are willing to pay a higher price to secure the property, does not mean the rest of the market would be willing to pay a similar premium. The valuation gives the mortgage lender a professional estimate of the current market value of the property, should they have to repossess it. They will base their lending criteria upon the lower of either the valuation or purchase price.

You will normally be responsible for paying the cost of this valuation, which can be between £200 and £1,500 depending on the size and type of the property. Your lender will arrange the valuation and the fee is usually charged upfront. Some lenders may offer a free valuation as part of their mortgage deal, which could be an attractive option.

Surveyor’s fee

It is important to note that the above valuation produced for your mortgage lender is a very basic report (normally just one page) and is provided for the mortgage lender’s purposes only. It will not make any structural inspection, although it should comment on any clear or suspected structural issues.

If you are buying a particularly old or unusual property, or if you have any concerns at all regarding the condition of the property, then it is a good idea to get your own, more detailed survey, from a suitably qualified surveyor. This should help to pick up on any issues with the property before you commit to the purchase and may save you a lot of money in the long run.

The cost of this report will depend on the scale of the investigation required and could vary from £200 to £2000 for a full structural and/or environmental survey. The most common types of survey are:

Stamp Duty Land Tax fees

Stamp Duty Land Tax is an important cost to be aware of, as it can add thousands of pounds to a homebuyer’s expenses. As of 2026, you generally have to pay Stamp Duty on properties costing more than £125,000. However, first-time buyers do not pay Stamp Duty on properties up to £300,000 (as long as the property is worth £500,000 or less)

There are several rate bands for Stamp Duty and the tax is calculated on the part of the property purchase price falling within each band. Here are the current rate bands for Stamp Duty rates in England and Northern Ireland:

This tax is paid by your solicitor on the completion day of the purchase and you will have to make sure they are provided with the funds in advance of this happening. It is usually paid over a couple of weeks ahead of completion, along with any cash deposit required and with the solicitor’s own conveyancing fees.

Conveyancing fees

When you purchase a property, you’ll need to engage a suitably qualified property solicitor or licensed conveyancer to handle the legal aspects of buying a property. There are a few different fees involved with the conveyancing process that are usually added together and charged to you by your solicitor upon completion of your property purchase:

Early repayment charge

This charge only applied if you have an existing mortgage deal that you are repaying early from the sale proceeds of your current property. It generally only applied where you have taken out a fixed or discounted interest rate deal and you will be repaying this before its agreed expiry date. This charge can sometimes be avoided by transferring or 'porting’ the mortgage deal across to your next property.

Early repayment charges can be between 1% – 5% of the mortgage amount, so can run to several thousand pounds. You could check your current mortgage deal carefully first to see if this applies, before calculating the cost of moving. It may make good sense to delay any house move until the deal has expired if it saves you paying this cost.

Mortgage broker fee

Purchasing a property is probably the biggest financial commitment you will ever make, so getting the right advice and support can be vital to help avoid making costly mistakes. For this reason, it often makes sense to engage early with a qualified and experienced mortgage broker, such as us here at Mortgage Light, who will guide you through the process, help to identify and schedule all the fees and charges involved, as well as search the mortgage market for the best deals for your particular circumstances.

Mortgage brokers will generally either charge you a fixed fee for their work, or a percentage of the loan amount. Either way, they will be upfront and transparent about exactly how and how much they are being paid for the work they do.

If you turn to us here at Mortgage Light, we will explain the mortgage process in clear and simple terms and provide you with a range of the best solutions available to suit your particular circumstances. We start this process by listening to you and understanding what your priorities, concerns and aspirations are, and then tailoring our service to suit you.

Want to know more about how we can help? Contact us when you are ready to begin the exciting process of purchasing a new home.

Homebuyer RICS valuation – examines the general condition of the property and is suitable for modern homes in reasonable good condition. It should highlight any major issues identified regarding the property and surrounding area and may recommend further, more detailed inspections and reports if appropriate. This usually costs around £350.

A building survey – also known as a structural survey, provides a more in-depth analysis of the condition of the property, its structure and the condition of the materials used in its construction. This survey will not involve any intrusive investigation such as removing roof tiles, floor or wall fittings, wall plaster, or any groundwork, but should recommend further specialist reports where necessary to fully identify the scale of any potential issues. This can cost anywhere from £600 upwards.

Specialist surveys – if the surveyor is concerned about a specific point of area, they may suggest additional specialist surveys such as rot, subsidence, collapsed drains or contamination. This can potentially run into several thousand pounds.

Property or lease premium or transfer value - SDLT rate

Up to £125,000 - Zero

The next £125,000 (the portion from £125,001 to £250,000) - 2%

The next £675,000 (the portion from £250,001 to £925,000) - 5%

The next £575,000 (the portion from £925,001 to £1.5 million) - 10%

The remaining amount (the portion above £1.5 million) - 12%

Legal fees – your solicitor will either charge you a flat fee or a percentage of the value of the property you’re purchasing. You might pay anywhere between £500 and £1,500 depending on the type of the property, its location and how complex the transaction is.

Land Registry fees – your solicitor will register your property with The Land Registry, a government department that keeps records of all registered properties in England and Wales. This is required whenever a property changes ownership and the process incurs a fee of between £90 and £140, depending on the purchase price.

Searches – a number of local searches are carried out by your solicitor in order to identify anything that might negatively affect the home you’re buying, such as flood risks, risks of subsidence and as a result of coal mining in the area and proposed planning applications, such as new roads or rail lines. The cost for searches typically comes in at around £200–300.

Money transfer fees – this covers transferring cash between mortgage lenders, solicitors, buyers and sellers. Expect to pay around £30 for each transfer required in the transaction.

Scheme fees – there may be an additional cost depending on if you are buying on a scheme (Shared Ownership or Help to Buy) or if you are buying a new property. Your conveyancer will make you aware of this at the point of engagement.

What is a Fixed-Rate Mortgage?

Tue, 22 Dec 2020 16:03:00 GMT

A fixed-rate mortgage is a mortgage product where the fixed interest rate is guaranteed to stay the same for an agreed fixed period. It pretty much does what it says on the tin! Unlike with a variable rate style mortgage, you’ll know exactly how much you’ll need to repay each month during the agreed fixed period.

Before you are enticed by a fixed-rate mortgage, make sure that you are aware of how they work, what happens when they end, and the pros and cons.

Let’s first understand interest rates

It might first be useful to understand how financial institutions set their interest rates for both borrowers and depositors. Interest rates are generally all linked to the prevailing Bank of England ‘base rate’, which is the single most important interest rate in the UK. It determines the rate of interest paid to Commercial Banks that hold money with the Bank of England.

If the Bank of England increases the base rate, then it makes money more expensive to borrow and lenders will similarly increase both their borrowing and deposit interest rates in line with the increase. Likewise, if the Bank of England reduces its base rate, then the money is considered cheaper, reducing interest rates for borrowers as well as for depositors. The Bank of England uses this mechanism to help control inflation in the UK economy.

Each financial institution will set its own base rate or ‘Standard Variable Rate’ (SVR) for mortgage borrowers, based on the Bank of England’s base rate and this will generally move up or down in line with the movement in base rate. This means that if you are a borrower with one of these institutions, then the cost of borrowing will go up or down in line with their SVR. This can make budgeting unpredictable. To help remove this uncertainty, many lenders started offering fixed interest rate deals, where they guaranteed to keep the interest at a fixed rate during an agreed term, regardless of what they, or the Bank of England, did with interest rates.

So, how does a fixed-rate mortgage work?

There are a wide range of fixed-rate mortgages available on the market, and around three-quarters of homeowners are on one, making them the most popular option for mortgage borrowers. They offer both security and peace of mind to the borrower that their monthly repayments will be stable and should therefore remain affordable.

Fixed-rate mortgages are generally available as either 1yr, 2yr, 3yr, 5yr, 10yr or 15yr deals. Most commonly though, they are either 2yr or 5yr deals. Generally speaking, the longer your fixed-rate deal lasts, the higher the interest rate will be. For some, the prospect of locking into a fixed rate of interest for as long as five years can be attractive, however, you’ll need to think carefully about whether you want to commit to one deal for that long. If you choose to remortgage or move house during the fixed interest period on your mortgage, you’ll have to break your current fixed deal and this generally triggers an early repayment charge. This charge can often amount to several thousand pounds. Some lenders will allow you to move the mortgage and rate onto a new property. This is known as mortgage porting and will avoid you paying penalties.

During the fixed term, your interest rate and therefore your monthly repayments will be fixed. When this initial period comes to an end, your fixed-rate deal will expire. You’ll still have the same mortgage, but your interest rate will no longer be fixed and instead, you will usually be transferred to the lender’s SVR.

At this point, it is often advisable to take a look at the mortgage market to see what alternative deals are available. You could choose to remain on your lender’s SVR, or perhaps sign up for another fixed-rate deal with your current lender. You may decide to remortgage onto a facility with a different lender who has better deals available.

Fixed-rate vs standard variable rate mortgages

Whether you choose a fixed-rate deal or go with a lender’s SVR will depend upon your personal circumstances and preferences. In the early years of borrowing, you may consider it worth paying a slightly higher interest rate for the certainty of borrowing costs during the initial term whilst your finances settle down. Alternatively, you may simply want the cheapest interest rate available and be prepared to live with a little uncertainty with regards to the future movement of interest rates, so the SVR might be more attractive to you. There is no right or wrong answer to this, so it is entirely down to personal preference.

SVR deals do provide more flexibility, as you are not tied into any deal and therefore have greater freedom to move between different deals and lenders at any time without penalty. They are also generally much more accommodating about allowing lump sum reductions or monthly overpayments if your circumstances allow. Fixed deal arrangements generally only allow a fixed annual allowance to overpay. Anything more than this will incur penalties.

Pros and cons of fixed-rate mortgages

Of course, the big draw of a fixed-rate mortgage is that your interest rate and therefore your repayments stay the same during the agreed period of the deal. Whatever happens in the wider market to affect interest rates generally, your mortgage repayments will not be impacted. And, although uncommon, you can find 15-year maximum fixed-rate deals, meaning you won’t need to think about your mortgage repayments for a long time. Interest rates on long deals like this will, however, be quite a bit higher than those for shorter fixed periods and of course, you are tied in with your lender for the whole of the agreed fixed term.

Some borrowers may look at the general economy and feel that interest rates are likely to go up in the future so think it best to lock into a fixed rate to protect themselves from the expected future interest rate rises.

It can also work against you if rates fall and you are locked into a higher rate, as we saw in 2008 when the financial markets crashed, leaving some borrowers trapped into what then looked like very expensive fixed-rate deals.

It is also important to remember that once you are tied into a fixed-rate mortgage deal, you’ll generally be faced with early repayment charges if you decide to move house or if you want to remortgage. If you then factor in arrangement fees, valuation, and solicitor’s fees, then either option can become really quite expensive. So before opting for a fixed interest deal, be confident that you are settled in your home and won’t be looking to move in the foreseeable future – at least for the term of the deal – and that the deal you are signing up to does exactly what you want it to do.

You may also find it difficult to make overpayments on your mortgage if you are on a fixed-rate deal. Most mortgage lenders impose restrictions limiting overpayments during any initial introductory fixed, tracker, or discount rate periods. If you do expect to be in a position where you can make lump sum reductions or regular overpayments, then you’ll generally find this much easier on a variable-rate mortgage.

Many people try and take out fixed-rate mortgages with the intention of staying in the deal until the fixed period ends, and then perhaps remortgaging to another lender in order to avoid being placed on their current lender’s SVR. To discourage people from doing this, some lenders have begun to introduce clauses into their loan agreements whereby you are compelled to stay with them for a certain ‘tie-in’ period after the fixed-term has ended. Again, this is something to be aware of before you commit to a fixed-rate deal.

When taking out a mortgage or switching deals, enlisting the help of a professional mortgage advisor and broker, such as us here at Mortgage Light, can make navigating fixed-rate and standard variable rate mortgages plain and simple. There’s no need to get bogged down in the jargon. Our friendly experts will guide you through each step of the way, explaining how these different types of mortgages work, and which your circumstances are best suited to.

If you need our help, contact us today. You can fill out our online enquiry form, or give us a call on 01908 597655 .

What is a Joint Borrower, Sole Proprietor mortgage?

Thu, 10 Dec 2020 14:55:00 GMT

To qualify for a standard mortgage, lenders typically look for a strong credit history, stable income, and a deposit of at least 5% of the property’s value. If you meet these criteria, lenders assess your affordability based on your financial situation and employment.

However, many buyers, especially first-time buyers, struggle to meet affordability requirements on their own. This is where a Joint Borrower Sole Proprietor (JBSP) mortgage can help.

A JBSP mortgage allows you to apply for a mortgage with another person (usually a parent or close family member), combining incomes to boost borrowing power. Crucially, only you (the main applicant) will own the property and be named on the title deeds , while both parties are named on the mortgage.

Why consider a JBSP mortgage?

Lenders carefully assess whether you can afford monthly repayments. For many people, this can be a barrier.

You might benefit from a JBSP mortgage if:

You’re early in your career and earning a lower starting salary
You’re self-employed with fluctuating income
You have limited credit history
You’re a first-time buyer struggling to borrow enough
You’ve had past credit issues affecting affordability

By combining incomes with a family member, a JBSP mortgage can significantly increase how much you’re able to borrow - making homeownership more achievable.

How does a JBSP mortgage work?

With a JBSP mortgage:

Both you and your chosen supporter are jointly responsible for the mortgage repayments
Only you own the property (your name is on the deeds)
Your supporter does not have ownership rights to the home

This setup is particularly attractive for families who want to help a loved one onto the property ladder without becoming co-owners.

This varies by lender, but typically includes:

Parents or step-parents
Grandparents
Siblings
Occasionally close relatives or family friends

To qualify, the joint borrower will usually need to:

Have a good credit history
Demonstrate sufficient income to support repayments
Meet the lender’s age criteria (some lenders cap the mortgage term based on the oldest applicant’s age)

Lenders may also require the supporting borrower to take independent legal advice to ensure they understand their financial responsibilities.

Key benefits of a JBSP mortgage

1. Increased borrowing power

By combining incomes, lenders may offer a higher loan amount than you could achieve alone.

2. Sole ownership

Unlike a traditional joint mortgage, the property is owned entirely by you. This can simplify future ownership and financial planning.

3. Stamp duty advantages

Because the supporting borrower is not on the property deeds, they typically avoid second home stamp duty surcharges , which can otherwise be costly.

4. Family support without gifting cash

JBSP mortgages allow family members to help without needing to gift large deposits or tie up savings.

It’s important to distinguish between these two options:

Joint Mortgage

Both parties are on the mortgage and the property deeds
Both legally own the home
May trigger additional stamp duty if one party owns another property

JBSP Mortgage

Both parties are on the mortgage
Only one person owns the property
No additional stamp duty for the supporting borrower (in most cases)

What are the risks?

While JBSP mortgages can be extremely helpful, there are important considerations:

The joint borrower is fully liable for repayments if you cannot pay
Missed payments will affect both parties’ credit scores
The arrangement may impact the joint borrower’s ability to take out further credit or mortgages

This is a significant financial commitment, so all parties should fully understand the responsibilities involved.

What happens if repayments are missed?

If repayments are missed:

The lender will contact you to resolve the issue
If unresolved, they will expect the joint borrower to cover the payments
Continued non-payment could lead to serious consequences, including repossession

Because both parties are named on the mortgage, both are equally responsible for maintaining payments.

Can a joint borrower be removed later?

Yes, but only with the lender’s approval.

This usually happens when:

Your income has increased enough to support the mortgage alone
You’ve built sufficient equity in the property
You pass affordability checks independently

In many cases, this involves remortgaging into a standard mortgage in your sole name.

A JBSP mortgage can be an excellent solution if you’re struggling with affordability but have family support available. It provides a structured and often more flexible alternative to older guarantor-style arrangements.

However, because of the shared financial responsibility, it’s important to:

Carefully assess affordability
Consider long-term implications
Seek professional mortgage advice

With a passion for making mortgages manageable and allowing you to take control of your financial situation, Mortgage Light is perfectly placed to help you take your next step. Contact us today by calling 01908 597655 , or fill out our online enquiry form . You can also reach us via the live chat, which you should find in the bottom right-hand corner of your screen.

Who can be a joint borrower? does a JBSP mortgage work?

JBSP vs Joint Mortgages:

What’s the difference?

Is a JBSP mortgage right for you?

Get in touch to look at your options

Self-Employed Mortgage – How Does it Work?

Tue, 27 Oct 2020 14:14:00 GMT

When you are self-employed, you may wonder how much you can borrow when taking out a mortgage. The nature of being self-employed often means that your income is not fixed each month/year. Without the security of a contract of employment, you may find it difficult to persuade some lenders that your income is stable enough to allow them to approve you for the mortgage that you want.

Sure, assessing the mortgage affordability for a self-employed person can be a little more difficult than for an employed person, but it’s by no means uncommon. Many lenders are well-versed in helping self-employed applicants get the right mortgage.

How will I be assessed by a mortgage lender?

All lenders want to see is that you have a steady, reliable income to prove that you will be able to meet the monthly mortgage commitment that you are looking to take on. It is important to try and present the evidence to support this. If you have been self-employed for a number of years, then you should be able to produce prepared financial statements that show that you’re able to generate a reliable income. This is usually in the form of accounts, annual tax returns, and bank statements.

If you are newly self-employed, it may be more difficult to prove your earnings and provide a big enough picture of your finances. Having only one year of accounts is a common problem for a self-employed person applying for a mortgage, as many lenders require two or three years’ worth. Lenders base mortgage assessments around risk, and the longer you’ve been trading for should in theory make your application stronger. With this in mind, you may also have some difficulty if you have had a big increase in your income or uneven income over the last few years. In these cases, lenders may average out the last two or three years to calculate your affordability or ask you to provide proof of your future income. This could include new clients or contracts, or a significant amount of savings.

If your business is quite young or expanding, then it might be that your income has shown a big increase over recent years as profits have increased with your success. Lenders will generally average out the last few year’s income, meaning you may not be able to borrow quite as much as you might based on your last year’s figures.

And of course, accounts are produced several months after the year-end, so won’t necessarily reflect the current year’s performance. In these cases, it might help to show evidence of contracts secured by your business to prove that a higher income is now sustainable. Financial projections of income based on secured contracts might also help persuade lenders of future earnings. Ideally, these should be prepared and supported by a qualified Accountant.

Generally, the more years of accounts you can provide, the better placed you’ll be to get the right mortgage for you. Lenders will be on the look-out for consistent or increasing profit over a number of years, as they will normally assess you via your net profits, rather than your turnover.

Types of self-employed applicants

As a self-employed person, you’ll typically fall into one of four categories; a Sole Trader, a Partnership, a Limited Company, or a Limited Liability Partnership. Limited Companies and Limited Liability Partnerships are generally treated the same way for income assessment purposes.

Let’s take a look at how they differ:

What documentation do I need to provide?

When self-employed, you may need to provide a substantial amount of evidence to show how your business is faring and to shed light on your financial situation. It’s a good idea to have the following to hand:

You may also be required to provide a statement showing your deposit funds and/or any evidence of life insurance you have in place to cover the mortgage.

How can I give myself the best chance of getting approved for a mortgage?

Assessing a self-employed person’s income can be a difficult and subjective thing. To give yourself the best chance of securing the mortgage you need, there are a few things that you can do to prepare. Firstly, it’s a good idea to speak to us here at Mortgage Light at an early stage. We’ll review your options and to identify the information you’ll need to collect in order to have the strongest application. We know that not all lenders have the same criteria, so we can help to match you with the most suitable lender and let you know what they will need in order to assess your affordability.

When applying for a mortgage – whether you’re employed or self-employed – having your accounts in order and up to date is important. Perhaps ask an accountant to prepare your accounts if possible. Many mortgage lenders want self-employed mortgage applicants to provide business accounts that have been drawn up or approved by a chartered accountant. Make sure that everything is paid on time where possible, adhere to the conditions that you’ve agreed to, and close any credit accounts that you no longer use.

It is also a good idea to take a look at your credit score using a website such as Clear Score . Check that there aren’t any adverse entries against you, and if there’s any that you think might be incorrect then contact the relevant company and ask for them to be corrected.

It’s also a good idea to make sure that you are on the electoral roll. Lenders use information from the electoral roll to confirm things like your name, address, and residential history. They need to check that the information about you is up to date before they think about offering you a mortgage or loan. With most lenders, it will actually hurt your credit score if they can’t find your details. Some might even choose to simply refuse the application if they can’t find you at the residential address that you’ve given.

In conclusion, there is no black or white answer for how much you can borrow for a mortgage when you are self-employed. Lenders will look at many different factors when assessing you; your net profits, your lifestyle spending, your financial commitments, and any dependents.

To get a personalised calculation of how much you can borrow, it’s always best to speak to a mortgage advisor. Contact us at Mortgage Light and speak to one of our experts. We are here to help you take the next step.

Who is Eligible for Shared Ownership?

Wed, 16 Sep 2020 14:10:00 GMT

The Shared Ownership scheme was introduced in the 1970s to help low income and first-time buyers get onto the property ladder. Today, it’s the most popular option for more affordably buying a home, and there are over 200,000 Shared Ownership properties in the U.K. Even though the scheme is popular, there are many people who don’t realise that Shared Ownership is an option for them. So, how does it work and who is eligible?

What is Shared Ownership & how does it work?

If you’re on a low income, that certainly doesn’t mean that you’ll never be able to own a house. The Shared Ownership scheme is one available option designed to help those who may be struggling to scrape together the deposit for a home. This could be first time buyers, or those who were once on the property ladder and now can’t afford to get back on. You’re often able to buy into a Shared Ownership with no deposit – the only money needed is for solicitors and any mortgage fees.

Think of Shared Ownership as a middle ground between buying and renting. You buy a share (usually 30-50% initially) of a property owned by the Housing Association, and they keep ownership of the shares you haven’t bought and charge you monthly rent. Often this rent works out cheaper than renting a property from a landlord on the open market. The rent price is usually around 2.75% of the value of the property per year.

You can buy more shares over time, which is called ‘staircasing’. The more of the property you own, the more your monthly rent will decrease, until you eventually buy the final shares and own 100% of the property. Staircasing out of a Shared Ownership can take a little bit of time, but it enables you to buy a home without a big upfront cost.

Who is eligible for Shared Ownership?

Quite simply, if you are at least 18 years old with an income of less than £80,000 a year (£90,000 in London) and you don’t already own a property, then you will be eligible for Shared Ownership. You must also be able to obtain a mortgage.

If you’re over 55 and interested in the Shared Ownership scheme, you can go through the OPSO scheme (Older People’s Shared Ownership Scheme) to buy up to 75% of your home. Once you own 75% you won’t pay rent on the last 25%.
If you’re disabled you can of course go through the Shared Ownership scheme to own your own home, or you have an additional option of applying for the Home Ownership for People with a Long-term Disability (HOLD).

Who isn’t eligible?

The Shared Ownership scheme is designed to be accessible, so you generally shouldn’t encounter many barriers. If you earn over £80,000 a year (or £90,000 in London) or you already own a home that you can’t/won’t sell, you may not be eligible for the scheme.

Even if you have unsettled county court judgements (CCJs) in your name or if you’ve been made bankrupt or had an IVA (Involuntary Arrangement) in the last 3 years, so long as you can still obtain mortgage then you are likely to be eligible for Shared Ownership. Speak to us at Mortgage Light to see where you stand.

How can Mortgage Light help you?

Not every mortgage lender will offer Shared Ownership mortgages. Whilst they’re becoming easier to find, they’re not quite as simple as traditional mortgages.

Here at Mortgage Light, we know where to go for Shared Ownership mortgages and which lenders will be able to offer you the best options for your situation. With access to the entire market and years of experience dealing with Shared Ownership mortgages, we can help you make use of the scheme and own your first home after only a few years, without huge upfront costs. Contact us today and put yourself in the best hands.

Shared Ownership Pros and Cons

Sat, 08 Aug 2020 09:51:00 GMT

Getting on the property ladder isn’t always easy. For many people, putting down a 10-15% deposit on a home can simply be out of reach. That’s why there are government schemes available to assist people in becoming homeowners. One of the most popular is the Shared Ownership Scheme .

Shared Ownership is the most common affordable purchase option. It’s incredibly popular, with 200,000+ Shared Ownership properties throughout the UK. So, how does it all work?

How does Shared Ownership work?

When you make use of the Shared Ownership scheme, you simply purchase a share of a property with the remaining proportion retained by a Housing Association who then charges you a monthly rent. Think of it as a cross between buying and renting.

Shared Ownership mortgages are available to first-time buyers , or to someone who used to own a home and now cannot afford to buy a new one. You must be at least 18 years old and your household income must be less than £80,000 a year (£90,000 in London) to qualify. It’s also worth noting that you cannot get a Shared Ownership mortgage on any property. It is only applicable to certain homes and these are usually specifically purpose-built.

Usually, you would purchase between 30-50% of a Shared Ownership property and over time, you can buy further shares enabling you to own more of the property. This is known as ‘staircasing’. The more of the property you own, the less the Housing Association owns and therefore the rent you pay decreases. Eventually, you will be able to staircase out to the full 100% share, meaning you would own all of the property and not pay any rent.

Shared Ownership Pros

The Shared Ownership scheme is designed to help you. If you’re on a lower income and struggling to save for a 10%+ deposit to buy a home, Shared Ownership opens up a door to the housing market for you. Low income earners are much more likely to be approved for a mortgage with Shared Ownership because the amount that will be lent to them is much smaller. You are able to buy with zero deposit money – you simply need enough money for solicitors and any mortgage related costs. The scheme is designed to make buying a home affordable and then you can work your way up in shares over time should you want to.

If you’re currently renting, you may actually save money per month on a Shared Ownership scheme. It can often work out cheaper, and those monthly payments will be going towards paying off your mortgage instead of your landlord’s. And although you will still find yourself paying rent (to the Housing Association), it’s generally less than the rent charged on the open market. You would usually be looking at 2.75% of the property value per annum.

Not only this, but you may be able to purchase a bigger house or live in a more desirable area than you would have been able to afford if you were buying outright. Shared Ownership properties can often be found in private developments as a certain number of Shared Ownership homes will often be required as a part of the planning permission for a development. This can help to put affordable housing in the heart of sought-after areas.

Shared Ownership cons

As with anything, Shared Ownership has its potential downsides that you should be aware of. Firstly, buying increased shares in your property can be a little more expensive than you might first think. When you decide to increase your shares, the property must be valued and this will incur a valuation fee. (Via a RICS surveyor). You’ll also have some legal expenses as staircasing involves a solicitor making changes to your existing lease, and you may have mortgage fees.

As you don’t 100% own a Shared Ownership property straight away, you will find yourself with a few restrictions. For instance, you are unable to rent a Shared Ownership property out to someone else. There may be rare instances where it is okay to sub-let but in the majority of cases, until you are the sole owner of the property, it is not allowed.

Although you will be on the property ladder, it’s important to remember that when living in a Shared Ownership property, you are still a tenant. This means that you can still be evicted from the property if you fail to pay the rent or display nuisance behaviour for example. If you are evicted, you could lose the portion of the home that you have already ‘bought’ as the Housing Association is not legally obliged to reimburse you for this. You are only legally entitled to be paid for your share upon the sale of the property.

And similarly, just as you would when renting, you might find yourself needing permission to make certain home improvements to a Shared Ownership property. Decorating and modernising your home is usually unproblematic and does not require the need to inform your Housing Association. Larger changes such as extending or changing the footprint of your home will likely need approval from your Housing Association however if approved, any improvement value will eventually be allocated to you at the point of sale.

How can Mortgage Light help you?

If you’re interested in making use of the Shared Ownership scheme, you might find it more difficult to find a mortgage lender who offers Shared Ownership mortgages. It’s certainly becoming much more commonplace now, but it’s not quite as straightforward as traditional mortgages.

This is something that we can help you with here at Mortgage Light . We have access to the entire market and know exactly where to turn for Shared Ownership mortgage lenders. We have dealt with Shared Ownership mortgages since we began trading and have helped many people to own 100% of their house after only a few years, depending on their circumstances.

We’re on hand and waiting to help you make use of this affordable scheme. Contact us today and put yourself in the best hands.

Remortgaging on Maternity Leave

Sat, 27 Jun 2020 10:34:00 GMT

With thousands and thousands of babies born each year in the UK, remortgaging whilst on maternity leave is a common concern. Remortgaging during this period can sometimes cause confusion and worry. If you’re having a baby, your life and your financial situation is likely to have changed a lot since your last application.

It doesn’t need to be a headache though. We’ll talk you through how and why being on maternity leave affects a remortgaging application and the best way to approach this to make sure you can successfully remortgage your home.

Why does being on maternity leave affect remortgaging?

How much you can borrow for your mortgage is directly linked to how much money you and your household earn. This is because all lenders have a responsibility to ensure that your total monthly income can cover all of your household’s financial outgoings, including your mortgage repayments.

Let’s say that your income is £40,000 a year. When remortgaging, lenders will make their affordability assessments based on that figure. When on maternity leave however, you’re likely to be on reduced pay for some or all of that period, which puts you in a different financial position. Lenders will need to make assessments based on this reduced income figure and this could make it difficult to meet their affordability criteria.

That being said, there are many lenders that will accept your income prior to going on maternity leave as long as they can obtain a letter from your employer stating when you will be returning to work and what those new terms will be. Remortgaging whilst on maternity leave is possible – you just need to find the right lender for you. To avoid a string of declined applications, enlist the help of a mortgage broker. We have access to the entire market and the know-how to find you the right lender for your situation.

How does being on maternity leave affect remortgaging?

This will depend a lot on a lender’s approach, and each is likely to be different. Some lenders might base their assessment on your maternity pay at the time, which reduces the amount they’ll lend you. Others might take your assurance that you will return to full time employment, at your previous salary, and that you have sufficient savings to tide you over.

A lender is unlikely to directly ask you if you are currently on maternity leave or whether you will be soon. You may be asked on your application if there are any circumstances that may affect your ability to repay a mortgage. Maternity leave certainly falls into this category, so it’s vitally important to be upfront and honest about this at the point of any application.

Keeping things from a lender can be classed as ‘non-disclosure’. Being on maternity leave does not necessarily mean that you will be unsuccessful in remortgaging, but providing false information or failing to provide material information is likely to have consequences.

How can I remortgage on maternity leave?

It’s a good idea to do what you can to show lenders that your decrease in salary is only temporary and you’ll soon be back to full salary. Give a lender confidence by providing past payslips as proof of income, current payslips to show that you are receiving maternity pay, and if possible a letter from your employer that details your return date (if that has been decided yet), and what your salary will be upon your return to work.

This may be enough information and reassurance for many lenders to go ahead with the application using your previous or projected salary. However, if you are going back to work on reduced hours, or into a different role, it’s important to remember that this is likely to affect your pay and therefore could have an impact on your affordability and borrowing capacity.

If your remortgage application is in the joint names of you and your partner, then lenders will make their affordability assessment based on the combined income of both applicants. It may be that the income of the one applicant remaining in full time employment is sufficient on its own to meet the bulk of the lenders affordability criteria, in which case the remortgage should be a fairly straightforward process.

If you are finding it difficult to get accepted with a different lender, then you may find it easier to move to a different deal with your current lender – a ‘product transfer’. You’ll already have an existing relationship and track record with your current lender and they will not need current wage slips.

What about if I’m self-employed?

Remortgaging on maternity leave when self-employed is a slightly different story. In these cases, most lenders will use your year-end accounts or SA302 to assess the level of lending that you will be eligible for.

Depending on your circumstances, the type of business you run and whether you have employees to run the business for you in your absence, you may be able to argue that your business won’t be very affected during your leave and therefore neither will your income. If however, your presence is essential to continue to generate the same level of business income, then remortgaging could be slightly more challenging.

Can I wait until I am back at work before remortgaging?

You don’t have to remortgage as soon as your mortgage term ends, so you could always wait until you’re back in full time employment. Just be aware that during the interim period, you may drop onto your current lender’s standard variable rate (SVR), which might mean you may be paying more than you were previously.

Once you are back at work and have a regular wage coming in you can remortgage to come off this rate and find a more suitable deal. Each lender will have a different approach to maternity leave and each applicant will have a different set of circumstances regarding their employment status and plans for the future.

When remortgaging on maternity leave, using the expert guidance of a mortgage advisor or broker means you can explore the entire market to find a lender and deal that works for your new circumstances. We at Mortgage Light will walk you through this process and do the deal-searching for you, meaning you can focus on the things in your life that matter most right now.

If you’re on maternity leave and confused or concerned about remortgaging, get in touch with us at Mortgage Light today. We’ve helped so many people just like you to get a suitable deal on their remortgage at this time.

Can You Remortgage With The Same Lender?

Tue, 23 Jun 2020 09:57:00 GMT

Remortgaging allows you to make sure you always have the best mortgage product available for your current personal circumstances. Although you don’t have to remortgage , it’s always worth exploring your options when the opportunity arises to see what deals are out there. You might find a more suitable mortgage product with an alternative lender, or you may be able to simply switch to a better deal with your current lender.

Remortgaging might give you a better interest rate, more flexible mortgage terms, and/or a chance to borrow more money if you need to. When remortgaging, there could be advantages to staying with the same lender, as well as some advantages to moving to a new one. It’s important to weigh up all of the factors before making your decision.

Should I remortgage with the same lender?

It is possible to remortgage with your current lender, although this is usually referred to as a ‘product transfer’. A product transfer is not normally considered to be new lending (unless you take the opportunity to borrow an additional amount), whereas remortgaging with a different lender would be. This means the process can be slightly different.

The advantages of remortgaging with the same lender are:

The disadvantages of remortgaging with the same lender are:

How about remortgaging with a new lender?

You are never obliged to stick with the same lender throughout the course of your mortgage. It’s not a one-time purchase. Many people will swap to a handful of different lenders over the years in order to secure the best deals.

The advantages of remortgaging with a new lender are:

The disadvantages of remortgaging with a new lender are:

Why use a mortgage advisor or broker?

So, should you consider a remortgage with your current lender, or would you be better off looking for a new deal with an alternative lender? This is the question that we at Mortgage Light will be able to help you answer.

As independent mortgage brokers , we have access to the whole of the financial market and can access deals that a consumer might ordinarily not see. This expands your horizons when searching for your perfect mortgage product. After assessing your circumstances, we will only show you the deals which we think will work for you, saving you both time and energy and possibly avoiding confusion and a string of rejected applications.

We are also here to offer as much independent advice as you need. We’re completely unbiased and our focus is on what’s going to work best for you and no one else. Your mortgage is likely to be one of your biggest household expenses, so it’s important to make it work for you. Get in touch with our team of experts at Mortgage Light for impartial advice and guidance on remortgaging.

You will have access to a lot more deals. Your current lender’s deals are only a tiny fraction of the overall mortgage market. Swapping lenders might not be as straightforward as sticking to the same one but it can certainly be a better move financially if you find the right deal. If shopping around seems daunting, we can help you find the best option for your circumstances.

Switching lenders sometimes comes with a perk or two, such as cashback, a free valuation or free legal fees. A new lender will often use incentives to attract new customers, such as introductory offers. Your current lender probably won’t offer the same sorts of incentives in order to keep you.

A valuation will be carried out on your property. Even though there is usually a fee involved with this, a valuation can be a positive for you, because you might find you now have a better Loan to Value (LTV) ratio than when you last checked. Generally speaking, the lower the percentage LTV, the better the mortgage rates you will be offered.

There will be fees involved. When switching mortgage lenders, you may need to pay an exit fee to your current lender. You will need a solicitor specialising in conveyancing (property law) to produce the legal paperwork needed, which will incur legal fees. You will almost certainly need a new valuation of your property which you will usually have to pay for. However there are mortgage products that will offer these facilities free of charge. And, if you are in a fixed rate agreement with your current lender and you leave before the fixed term ends, you may also need to pay an early repayment charge.

It’s more time consuming, as you will have to submit a new application and start the remortgaging process from scratch. A new lender will have to carry out all of their usual affordability checks and assess your financial situation before making an offer.

There are generally less fees to pay as you are able to avoid legal costs and valuation fees. Your current lender will do an internal index valuation of your property to give an approximate value of your home at the current time. Depending on the new valuation, the lender will give you a choice of products to choose from. This could be at a new loan to value threshold, due to changes in the market and equity built up.

As you are not purchasing a new property, your current lender ought to have your details to hand from your original application, so the application process should be simpler. It is just a simple swap of mortgage products.

If your situation has changed since taking out your last mortgage an existing relationship with the lender could work in your favour if, for example, your financial situation has changed (perhaps you have changed your job and you now earn less money). Your current lender won’t ask for wage slips or any documentation – all they will do is ensure you have kept up with your mortgage payments and check that you aren’t in arrears.

It’s generally faster, although remortgaging is never something to rush. A simple product transfer could be processed in 30 minutes, whereas remortgaging with a new lender generally takes a minimum of 4–6 weeks due to credit checks, an affordability check, the property valuation and legal work.

You might not get the best deal available. Limiting yourself to just one lender means you may potentially be missing out on better deals available out there in the mortgage market from other lenders. We’d always recommend at least shopping around to see what else is out there – something that a mortgage broker such as Mortgage Light can handle for you.

You may receive biased advice. Your lender may encourage you to stick with them because they don’t want to lose your business, which might leave you feeling confused.

Shared Ownership Made Easy for First-Time Buyers

Fri, 29 May 2020 09:59:00 GMT

Like many first-time buyers, Aimee Brown and her partner Lauren Howard didn’t consider themselves experts on purchasing a home when they started their property hunt this year. By the time they’d picked up the keys however, they felt like professionals…and their purchase couldn’t have gone more smoothly.

Aimee and Lauren were each living with their parents when they found their perfect home – a new two-bedroom, end-of-terrace house at Kingfisher Place in Aylesbury, available through shared ownership with housing association Hightown. As long-term professional partners of Hightown, the Mortgage Light team were on hand from the very beginning.

Aimee says, “Hightown put us in touch with their recommended broker Mortgage Light and from the start, we knew they were the right people to help us. Our consultant Clare Dwyer supported us completely from start to finish and made sure we understood every step of the process. Everything was simple and easy to understand thanks to Claire’s guidance. We came away feeling like mortgage professionals!”

Clare worked with Aimee and Lauren to secure the right mortgage deal for a 50% share of their new home quickly and smoothly. Even when Clare wasn’t available, the wider team at Mortgage Light were on hand to help instantly. Aimee says, “Clare’s colleagues knew everything about our situation and could respond instantly. Everyone was extremely helpful, approachable and happy to help.”

Aimee and Lauren are also considering their options for buying more shares in their home in the future, a process known as staircasing. “Clare discussed this with us and we will definitely contact Mortgage Light when we’re ready to increase our share,” says Aimee. “The support we received was amazing. We can’t thank Mortgage Light enough for everything they did for us and we would highly recommend to anyone!”

Siobhan Holbrook, Director of Mortgage Light said: “Buying your first home is really exciting and at Mortgage Light we don’t think it should be complicated – whether you’re buying outright in the traditional way or using a scheme such as shared ownership or Help to Buy . For clear, simple mortgage services, do please give us a call!”

Can You Remortgage to Pay Off Debt?

Wed, 20 May 2020 14:52:00 GMT

People remortgage for many different reasons. It could be to secure a better interest rate, to shorten or lengthen your mortgage term, to move onto a fixed rate mortgage or to pay off a lump sum of your mortgage. You might also choose to remortgage to pay off debt.

Like many homeowners, your home is likely to have gone up in value in recent years. Remortgaging can allow you to release cash from the equity in your property. Equity is the difference between what your house is currently worth and what you owe on your mortgage. You could put this cash towards home improvements, a new car, a wedding or in this case, consolidating debt. This might seem like easy money, but will remortgaging to consolidate debt really put you back in the black?

What is debt consolidation?

Let’s say for instance that you have a couple of credit card and store card debts, and a loan outstanding. Each month, you are making individual payments towards reducing these debts. By consolidating, you are combining them all into a single loan to one lender. The theory is that you will end up paying less each month in debt repayments, taking away some of your monthly financial pressure.

Having debt can eat away at you and accumulating interest on these debts can make the situation feel out of control. It might seem like the easy option to ignore debt, but this is never a good idea. Consolidating it can sometimes be a good alternative solution to make money feel manageable again.

This might all sound pretty simple, but debt consolidation is not always going to be the easy option. Alongside the short term benefits, there are pitfalls that come with it that you should be aware of.

How can remortgaging help?

If you have accumulated debt, you may be able to release some cash from the equity that has built up in your home since you purchased it. By remortgaging, you can consolidate most or all of your outstanding loans into a single loan secured against your house.

For example, let’s say you have a £100,000 mortgage. If you wanted to release £10,000 of equity from your home to pay off your debts, you would then need to take out a new mortgage for £110,000. Whilst it may seem like you have paid off your debts, you have actually moved those debts onto your mortgage instead. Consolidating your loans does not reduce the amount you owe, it just restructures it in what might be a more efficient way.

Is remortgaging to pay off debt a good idea?

Possibly. This will depend a lot on your individual circumstances, such as:

If you have a lot of outstanding debt, consolidation could be a good idea. Credit and store cards for example are an expensive way to borrow money with generally high interest rates – particularly compared to mortgages. Mortgage rates have fallen to record lows in recent years, and consolidating your debts into a remortgage would almost certainly reduce your monthly repayments and interest costs in the short-term, making it more manageable. In the long-term however, the total credit charges could be higher. This is because mortgages are typically structured over 20-35 years, so you would be repaying your current debt for a much longer time.

Remortgaging to pay off debt will only be beneficial if you don’t go on to run up more debt in the future. Debt consolidation can be beneficial once or maybe even twice but remember, you are effectively storing up debt as opposed to solving it.

What to consider before remortgaging to pay off debt

It is so important to look at the bigger picture when thinking about remortgaging to pay off debt. There are a few things to consider before making this move, because it is not as straightforward as it might first seem.

There are costs involved with remortgaging which you should account for. These might include deeds release fees, legal fees, valuation costs and potentially early repayment charges. If you aren’t sure how much money to allow for these costs, get in touch with a mortgage advisor who will be able to help you plan for this. You may be able to add some of these costs onto your remortgage if you are unable to pay them upfront. Bear in mind though, this will of course increase your overall debt slightly.

It’s important to remember that by consolidating debts onto your mortgage, you are bringing your property into the equation. Generally, your credit/store cards and other loans will be unsecured, but by moving them onto your mortgage, this turns them into a secured debt. If you fail to keep up the new mortgage repayments, the lender could repossess your property and you could lose it. Is consolidating your debts worth putting your home at risk?

Lastly, if you are in debt, then there is a possibility that your credit rating will have been negatively affected – particularly if you have a history of missed or late payments and arrears. This might make it difficult to get a good remortgage offer. Don’t worry though – it is still possible to be accepted, particularly with the help of a mortgage advisor. We have plenty of experience in helping people remortgage with bad credit.

If remortgaging to pay off debt is something that you are considering, it’s really important to speak to a qualified mortgage advisor such as us here at Mortgage Light. We’ll be able to assess your situation and explore the options available to you to help you deal with your debts in the best way. If you would like some advice and would like to speak to one of our remortgage specialists, please get in touch.

How much debt you have
How much interest you pay on your various debts
Whether you have sufficient equity in your property
Whether you can afford your current debt repayments

How Remortgaging Works

Thu, 07 May 2020 09:52:00 GMT

Mortgages aren’t as complicated as they seem – and the same can be said for remortgaging. It can feel like something you’re locked into for life, but this isn’t always the case. A mortgage isn’t a one-time purchase and should instead be considered as something you can review every few years, or when circumstances change, in order to help your mortgage work for you.

What is remortgaging?

Remortgaging means to take out a new mortgage on a property you already own, to replace your current deal. This can be done up to six months before your mortgage deal expires and it gives a mortgage advisor a chance to research the mortgage products on the market to see if there is a better fit for you.

At the point of remortgage, you can revisit your budget and the new mortgage product that replaces your current one can be changed to suit your current situation.

A mortgage product is bespoke to each client and their current financial situation. When your deal is coming up to expiry, a broker can research raising additional money against the security of your house if you require extra money.

Raising additional money can be for:

If your situation doesn’t allow you to remortgage, your mortgage advisor can speak to your current lender and see what product they can offer you, and you’ll be able to swap within their product range without producing any documentation. It’s a simple substitution. It doesn’t have to be intimidating – especially if you go through a broker or an advisor.

How does remortgaging work?

The remortgaging process can be very simple if you go through an experienced advisor or broker. It will be quicker than buying the home, as you are already the owner.

Here’s the process…

Stage one :

Speak to your advisor to complete a fact find, or you can download and complete a fact find online here. This is the process of getting an idea of where you stand financially by assessing factors such as your incomings and outgoings.

Then, you’ll need to supply relevant documentation to support the information gathered in your fact find. This includes:

The mortgage advisor will recommend your options, and you’ll discuss what your preference would be.

Stage two:

The mortgage advisor will complete a decision in principle with the recommended lender and then submit a full application. A lender will do a valuation (often remotely, without needing to go the property), and assess the documents needed for the application. If all is accepted, an offer will be issued.

Stage three:

The solicitor paperwork is complete and a date is set for the new mortgage product to be activated. If you’re remortgaging to pay off a Help to Buy loan or staircasing out of a shared ownership, there is an extra stage and the remortgage process will be longer due to the third party involvement.

You need to obtain a RICS valuation report to supply to the third party so that you and them both know the amount that is to be raised to repay them. If you are paying back a loan, you also need to contact Help to Buy or the Housing Association to let them know that you want to repay the loan, so they can complete the paperwork in-house.

When should I remortgage?

You should be looking into your remortgage up to six months before your current deal ends. That way, your mortgage can be approved and is ready and waiting to replace your current deal once your product with the existing lender has expired.

If you speak to your advisor and they recommend that you stay with your existing lender, you could be moved onto the new mortgage product before your current deal ends without any early redemption fees.

Here at Mortgage Light, we have staff that specialise in remortgaging and we aim to make the whole process easy and stress-free for you. We believe that mortgaging and remortgaging should be simple, and we want to make transactions as smooth as possible. Get in touch with us today.

Home improvements
Buying a car
A deposit on a second home
Paying off a Help to Buy loan
Staircasing out of shared ownership
University costs
Consolidating debts

If you require cheaper monthly payments, a mortgage can be extended out over a longer period of time. This could be over 25/28/30/33/35 & up to 40 years (age permitting)
Alternatively, you can reduce your term down from 23 or 22 years to 15 or 10. This would result in paying it off early.

Passport (or another accepted form of ID)
Proof of address
Current mortgage details
3 months payslips, or accounts and tax returns if you're self employed
Proof of any commission or bonuses
Bank statements

Can I Remortgage With Bad Credit?

Thu, 07 May 2020 09:43:00 GMT

There are a few different reasons why you might decide to remortgage . It’s a great way to release some capital from your home and put some cash towards let’s say a new car, a wedding, a holiday or perhaps even to consolidate your debts. You can often also find yourself a better mortgage deal at the same time, so it’s a win-win.

But what about if you have bad credit?

Your credit score is the result of an assessment of financial and other information gathered about you from both public records and lending companies that have agreed to share data about their customers. This data includes how much a customer might be in debt to that particular company, how promptly they pay their bills, if they are meeting the terms of the repayment, and whether they are maximizing and using all the credit that is available to them.

When dealing with a bad credit history, it’s a good idea to start with understanding why you are in the position that you’re in. A bad credit history can be a result of a few different factors that get reported to a credit agency. These include:

More severely:

All of these factors have different levels of seriousness. For instance, missed and late payments are not the end of the world. Defaults and recent CCJs may mean that you can’t go with high street lenders, but there may be other options for you. A lender will also take into account when these issues were registered, along with how much equity you have sitting in your property. Your credit history is important because if you’ve had problems in the past, lenders are likely to assume that you’ll have them in the future, which can be a tricky cycle to get stuck in.

Can I improve my bad credit?

There’s plenty of things you can do to improve your bad credit and increase your chances of getting approved now, and in the future. Firstly, make sure you are on the electoral roll. Lenders use information from the electoral roll to confirm things like your name, address and residential history. They need to check that the information about you is up to date before they think about offering you a mortgage or loan. With some lenders, it can actually hurt your credit score if they can’t find your details. Some might choose to simply refuse the application as they’d have to find an alternative way to confirm your identity.

It goes without saying, but make sure you pay your bills on time and adhere to the conditions you’ve agreed to, and close any credit accounts that you no longer use. Keep an eye on your credit report regularly to make sure that all the information on there is correct. You can access your credit report for free using Clear Score . Errors do happen and if you spot any, you can contact the relevant company and ask for them to be corrected.

Most of all though, time is the best remedy for a bad credit score – so long as you’re keeping on top of everything in the interim. It takes a little while but eventually your credit score will improve and recover. Focus on your money management, regardless of whether you manage to remortgage with bad credit or not.

Where should I turn if I have bad credit?

Although a lot of lenders might be reluctant to lend you money or only offer a subprime rate, the UK mortgage market is vast and there are deals out there for all kinds of borrowers – from those with clean credit to those whose record is less than perfect. Lots of lenders understand that for many people, having bad credit doesn’t mean that they shouldn’t be able to remortgage or purchase a home.

You might have heard of a bad credit mortgage. Bad credit mortgages follow the same principle as any other mortgage, however they are designed specifically to help people with a history of poor credit. With these types of mortgages, it usually means that you may have to pay a slightly higher interest rate than you would get with some of the other high street lenders, as the lenders who specialise in these mortgages will deem you to be a higher risk.

As we mentioned previously, time is the most important thing when it comes to improving your credit rating. If you keep up repayments on a poor credit mortgage, your credit rating should improve, and this might mean you can move to a preferential high-street mortgage at a lower rate after a few years.

Ultimately, lenders will have different rules and criteria around applicants with bad credit, so don’t let one experience or lender put you off. It’s a good idea to turn to a mortgage broker, who will do the research to find the right mortgage to suit your situation. This also means you’ll avoid being turned down by multiple lenders in a short space of time, which can further damage your credit score.

At Mortgage Light, we’ve helped so many people with bad credit either purchase their first home, or remortgage, and also make their first purchase with bad debt. Let us put in the time and energy to find you a deal you’re happy with. Pick up the phone and contact us , or come in and meet us for a free consultation and we can talk through the options available to you.

Late payments
Mortgage arrears
Address history jumping
Not being on the electoral roll
Payday loans
Gambling online

Defaults
CCJs (County Court Judgements)
Debt management plans
IVA (Individual Voluntary Arrangement)
Bankruptsy
Reposession

Can You Remortgage Early?

Thu, 30 Apr 2020 10:11:00 GMT

Mortgages can seem difficult to navigate, and they can sometimes feel like you’re locked into the same product for years and years – but this isn’t the case. Just as you’d review your car insurance each year to ensure you’ve got the best deal, you should ensure you have the best mortgage product to suit you.

Switching to a more suitable deal on your mortgage is called remortgaging , and can be done at any time. It’s undeniably one of the biggest loans you’re likely to take out, so it’s important to make it work best for you.

When should you remortgage?

You can look into your mortgage options up to six months before your current mortgage product expires.

If a remortgage is deemed affordable by the lender, it could:

Please contact us if you need to raise finance for other reasons, or use our live chat on the bottom right hand corner of our website.

Perhaps you want to remortgage , but you’re not sure if you can due to a change of circumstances since taking out your previous mortgage. For instance:

A mortgage advisor will search a lender’s criteria to try and find a product that matches your new situation. If however you are unable to move to another lender, your current lender will be able to switch you onto another product within the lender’s range. This should be at a cheaper rate than the variable that you will revert onto.

How does remortgaging work?

The remortgaging process can be very simple if you go through an experienced broker and advisor.

Stage one:

Speak to your advisor to complete a fact find, or you can download and complete a fact find online here . This is the process of getting an idea of where you stand financially by assessing factors such as your incomings and outgoings.

Then, you’ll need to supply relevant documentation to support the information gathered in your fact find. This includes:

The mortgage advisor will recommend your options, and you’ll discuss what your preference would be.

Stage two:

Stage three:

Any legal paperwork is completed if it’s required and a date is set for the new mortgage product to be activated. If you’re remortgaging to pay off a Help to Buy loan or staircasing out of a shared ownership , there is an extra stage and the remortgage process will be longer due to the third party involvement.

If you are paying back a loan, you need to contact Help to Buy or the Housing Association to let them know that you want to repay the loan, so they can complete the paperwork in-house. You need to obtain a RICS valuation report to supply to them so that you both know the amount that is to be raised to repay them.

If you would like more information or would like to speak to one of our remortgage specialists please get in touch with us here at Mortgage Light today. We have staff that specialise in shared ownership, new build, remortgage and buy-to-lets. We understand the timescales that are imposed on buyers and work alongside you to try and make the transaction as smooth as possible.

Ensure you have the best interest rate
Reduce the number of years left on your current mortgage
Extend your mortgage term out to make your mortgage more affordable
Allow you to take out further borrowing for home extensions or windows
Pay off a help to buy loan
Allow you to buy more shares in a shared ownership
Enable you to buy a second home
Enable you to consolidate other finances

You have changed jobs
You've missed some credit payments
You're on maternity leave
You now have children
You have child care costs
You are now self employed
You have new loans or credit cards

Passport (or another accepted form of ID)
Proof of address
Current mortgage details
Last 3 months payslips, or accounts and tax returns if you're self employed
Proof of any commission or bonuses
Bank Statements