In essence a mortgage is just a large loan secured against your property. There are 3 parts. The capital is the money you borrow from the lender. The interest is what the lender charges you for borrowing the money. The protection is split into 2 parts. The banks protection is your property, if you failed to make the monthly mortgage payments they could repossess the property ie take it back. Your protection is to ensure this does not happen, for example life insurance, critical illness cover, income protection. We will look at these is more detail as part of your mortgage application.

In essence a mortgage is just a large loan secured against your property. There are 3 parts. The capital is the money you borrow from the lender. The interest is what the lender charges you for borrowing the money. The protection is split into 2 parts. The banks protection is your property, if you failed to make the monthly mortgage payments they could repossess the property ie take it back. Your protection is to ensure this does not happen, for example life insurance, critical illness cover, income protection. We will look at these is more detail as part of your mortgage application.

Most people pay their mortgage back on a capital & interest basis. The same as a loan you will make the monthly mortgage payment of which some is reducing the capital borrowed & some is interest. The longer the term the more interest you pay. Providing you make all the monthly mortgage payments the mortgage is guaranteed to be repaid at the end of the term.

You can also pay back on an interest only basis, however you will always owe the capital amount borrowed as you are only paying interest. These types of mortgage require something to pay the mortgage back such as an investment or a pension.

Most lenders have a minimum term (normally 3 years) and many lenders have a maximum term of 35 or 40 years although there are some lenders that have a max age limit. As already mentioned, the longer the mortgage term the more interest you will pay. It would be good to consider how much you want to pay per month as the advice on term can be tailored to this. E.g if your budget was £1000pm we could fit the term to meet this. You also need to consider your retirement age & would you want the mortgage repaid prior to this.

Base rate is reviewed monthly by the bank of England & has a direct impact on variable rates & also influences fixed rates.

There are really only 2 types of interest rates, fixed & variable.

• A fixed rate (commonly for 2 or 5 years) means you know exactly what you are paying for the 2 or 5 years whatever happens to interest rates. You will benefit if rates rise but wont if they fall.
• A variable rate which can be a tracker or a discounted rate (again normally for 2 or 5 years) will move up or down if base rate moves up or down. You will benefit if rates fall but not if they rise.

Don’t worry as we will advice the right product & term of product based on your priorities & circumstances.

The standard variable rate is the lender default rate which nobody should really be on. Once your 2 or 5 year term of product ends you should pick another deal, but if you don’t you would revert to the lender standard variable rate. At Grosvenor May as a lifetime customer we will contact you 6 months prior to your deal ending so we can again look at the whole of market to get you the best deal with no additional broker fee’s.

This is the amount you contribute towards the house purchase. At the moment the minimum deposit is 5%. Normally the more deposit you contribute the better interest rate you get. Deposits can come from numerous sources e.g savings, inheritance, gift from family. It is not normally acceptable for the deposit to be a loan or drawn from credit cards.

This is driven by many factors but the main 4 are :

• Income
• Commitments – things you have to pay eg loans, credit cards.
• Your credit history – its always a good idea to check out your credit report via Equifax or Experian. A top tip is to make sure you are on the electoral register at your current address.
• Deposit – the credit scoring does alter the lower the deposit contribution as the risk is higher.

Yes there are potential additional costs you need to be aware of. These can be:

• Solicitors costs – these can vary but an aprox cost could be £1500.
  
  
• Lender fees – There may be an application fee to secure a lower rate.
  
  
• Stamp duty/land tax – This is a tax charged by the government for buying a property. Depending on where you are buying a property the costs will be different. Stamp duty – In England as a first time buyer there is no stamp duty up to £425k. Land tax – In Wales there is no first time buyer allowance & it is paid on properties over £225k. As the above is ever changing it is always wise to visit the government website & use the stamp duty/land tax calculator.
  
  
• Valuation/survey – many lenders carry out a basic valuation survey for free or a minimal cost. This is more for the lender rather than the buyer. It will confirm the property is worth what you are paying for it & is suitable security for a mortgage. Sometimes these are completed without even visiting the property.
  
  It is always wise to consider a Level 2 RICS (home report) which is a detailed survey where a qualified professional will complete a 2-3 hour physical inspection of the home and produce a report that uses a traffic light system to report on overall condition of the property. These are:
  
  Condition Rating 3 – Defects that are serious and/or need to be repaired, replaced or investigated urgently.
  Condition Rating 2 – Defects that need repairing or replacing but are not considered to be either serious or urgent.
  Condition Rating 1 – No repair is currently needed.

At Grosvenor May, we can assist with arranging any of the above additional services if required. Contact us for a quote for any of the above services.