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What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Lincoln

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Lincoln will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Lincoln & those who are Moving Home in Lincoln. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

The Pros and Cons of Using a Mortgage Broker in Lincoln

The Pros and Cons of Using a Mortgage Broker in Lincoln

Why Should I use a Mortgage broker in Lincoln? | MoneymanTV

Deciding to buy your first property is a challenging task. Therefore, you must take your time, look around for various options thoroughly and make an informed decision.

As you might anticipate, we believe there are some excellent reasons to use a mortgage broker in Hull. Whether the brokerage service is online, you can still pay a visit directly to the lender. Even in technological advancement, we find that most people still refer to a mortgage broker. Hence, we will take you through the pros and cons of both methods.

Advantages and Disadvantages

Firstly, a well-versed mortgage broker will take the time to have an initial conversation with the applicant to help him decipher if you are mortgage ready to make an application. When contacting us and gathering the necessary details, one of our mortgage advisors in Lincoln will make sure to shop around and get the best deals possible.

One of the most notable advantages of going with a mortgage broker is valuable expertise in the home buying or refinancing process. Mortgage brokers have ample industry experience to lean on when offering mortgage solutions to their customers.

Similarly, our mortgage broker in Hull also has access to try and find wholesale rates on home loans. These rates can be lower than the retail interest rates, helping borrowers save a substantial amount of money over the life of a home loan.

Most importantly, a Mortgage broker can be your point of contact from the time you first call them right up to when you finally get the keys of your house in your hands, and we will guide you through the entire process.

Bank vs Broker

On the contrary, going to a bank helps save you a broker fee, saving yourself a reasonable amount. In earlier years, another significant advantage of a bank was that the branch manager knows an individual’s finances in and out. However, that all went by the wayside when credit scoring came in and is no longer the factor.

Likewise, some Lenders offer exclusive ‘direct-only’ deals that a broker would not have any access. Lenders do this to attract a wide range of applicants to make a good spread of business from consumers and brokers alike, turning exclusive products on and off when deeming necessary. On the other side, some products may only be available via the broker and not direct with the lender.

From 2014 onwards, lenders got restricted to sell mortgages on a non-advised basis to just anyone. Up until that point, many applicants felt like the non-advisors had been trying to force actual advice on them. They weren’t able to benefit from some consumer protection that goes with mortgage sales conducted by professionally trained mortgage advisors.

Lenders were coming to terms with and hence the issues present in these services led to a significant shift towards more applications getting made via mortgage brokers who are quick enough to offer you same day mortgage service.

You also need to check carefully if a lender is willing to lend you a considerable amount of money. It does not matter how good a lender’s deal might seem, but he should lend a significant amount. For this reason, people opt to go to an apt and professional mortgage broker in Lincoln.

Handling Difficult Cases

Nowadays, mortgage applications are no more straightforward. Many factors make a case more complicated. A few of the examples are as follows:

– Poor credit history
– Too much debt
– Payday loans
Self-Employed Income
– Mixed source of deposit (savings/gift)
– Let to Buy (keeping your current house and buying another)
– Contract workers/zero-hours contracts
– Affordability

In the past years, lenders could stand out from the competition by offering a better deal to the applicants. In the current era, this is different because the lending criteria vary from one lender to another. Some lenders lend more to Self Employed applicants or take a more empathetic view of their credit report’s previous discrepancies.

When you explain your case to an experienced mortgage broker in Hull, there is a possible chance that they have encountered the same thing earlier in the past, allowing them to personalize their service and help you through the process. With extensive experience in the field, your mortgage advisor will hopefully be able to recommend the most suitable lender for you at the lowest rate possible.

More than that, it is not just about getting the Mortgage. Even if the application itself is self-explanatory, we offer extensive experience and knowledge to our clients. For example, we will discuss how much we will deliver on the property they are buying. Our team of mortgage advisors in Hull can recommend other professional services such as Solicitors and explain the different types of protection and survey available.

Responsive Service

Another significant advantage of using a mortgage broker is that the brokers are far more responsive than some lenders. Delivering personalized service is the differentiating factor between the broker and a lender.
Besides, another significant reason for hiring a mortgage broker is that it helps you save time. Most customers prefer a broker because they are too busy nowadays. they might need a mortgage but have no time to get it done so that our advisor will take the weight off for you.

You only need one application with a mortgage broker rather than individually filling out forms for every lender. Your mortgage broker can also provide a comparison of any loans recommended; guiding you to the information that accurately portrays cost differences, with current rates, points, and closing costs for each loan reflected.

What do lenders look for on bank statements in Lincoln?

Whether you are looking to Remortgage or are a first-time buyer, when lenders ask for your bank statements you can expect them to look for various different things. However, their one objective that stands above all, is their job to assess whether you are the sort of person who manages money responsibly and therefore likely to maintain regular mortgage payments.

So, with regards to gambling, what questions do we need to answer in particular?

  • What has it got to do with the Lender whether l gamble or not?
  • What can I do to improve things?
  • I’ve got gambling transactions on my recent bank statements – is it still possible to get a mortgage?
  • Is there anything else Lenders wouldn’t want to see on my bank statements?

What has it got to do with the Lender whether l gamble or not?

Whether you have an annual flutter on the Grand National or a regularly use internet betting sites, clearly there is nothing illegal about properly licensed gambling.

With many of the bookmakers advertising on mainstream TV and radio, a lot of people see gambling simply as a mainstream hobby or pastime similar to many others.

However, it shouldn’t be forgotten that even the gambling advertisers urge customers to “please gamble responsibly”. This is the key to bear in mind when applying for a mortgage.

Thus, whilst it is not a lender’s job to tell you how to live your life. How to spend your money or indeed to moralise on the ethical rights and wrongs of gambling. They do have a duty (underscored by mortgage regulation) to lend responsibly. 

Lenders need to prove to the regulators that they are making prudent lending decisions. So it isn’t entirely unreasonable of them therefore to expect the people to whom they lend to adopt a similar approach when it comes to their personal finances.

I’ve got gambling transactions on my recent bank statements – is it still possible to get a mortgage?

As touched upon previously, it is not illegal to gamble. Just because you have the odd gambling transaction on your bank statements, you won’t necessarily immediately be declined for a mortgage.

It is however, up to lenders discretion as to whether or not these transactions are reasonable and responsible. Thus they will particularly look at the frequency of these transactions, the size of the transactions in relation to the person’s income and the impact upon the account balance.

If these transactions are infrequent small amounts that make no significant impact on a regular credit bank balance, then they are not likely to be regarded as important.

Is there anything else Lenders wouldn’t want to see on my bank statements?

As we’ve seen, basically lenders are looking at your bank statements to show how you manage your money. To help them establish whether this gives them either the confidence that you are financially prudent or the evidence that you are not.

Remember, lenders are financial institutions. They, either directly or as part of a wider group, often sell current accounts, overdraft facilities credit cards and personal loans. So they understand that these things can all play a part in prudent financial planning.

The key for a mortgage applicant is how these facilities are managed. For example, having an overdraft facility and occasionally using it, is not inherently a bad thing; regularly exceeding the overdraft limit – not so good.

Thus, lenders will look for excess overdraft fees or returned direct debits. This is because these would normally show that the account is not being well conducted.

What can I do to improve things?

The simple answer is – be sensible and, if possible, plan ahead. Typically, a bank would ask for up to three months of your most recent bank statements that show your salary credits and all your regular bill payments.

Thus, if you know you’re likely to want to apply for a mortgage in the not-too-distant future, try to make sure that you avoid any of the above pitfalls.

Take a break from gambling for a short while and work on presenting your bank account in the best possible light. Your mortgage broker can help you as there are some lenders who may ask for fewer bank statements than others or indeed some may not even ask for them at all.

Sole Name Mortgage Advice for a Married Applicant in Lincoln

Most married couples would rather make joint mortgage applications as opposed to a sole name mortgage. Over the years house prices have been on the rise and with house price inflation outstripping wage increases over the years, in most cases, you can only afford a house if you have two salaries coming in.

Maybe you are married and are looking for a specialist to apply for a mortgage. Sometimes there will come a time where an applicant need to make an application in their sole name as one salary may very well be enough. There are also other other reasons why one of the applicants doesn’t want to go on the application. Here we will take a look at some of these.

Previous credit problems

One of the applicants may have had a credit problem in the past, something like a bankruptcy or a CCJ. This could get in the way of them obtaining a mortgage. With this in mind, providing the spouse or partner is not connected to that issue, then you could possibly take this as an option.

The person looking to do this would need to be careful to try and avoid creating a financial association with their partner. If not, they could risk their credit score being affected by it, harming their chances of obtaining a mortgage themselves.

Mortgage Borrowing capacity

Couples generally get a lower maximum borrowing capacity, as opposed to if the working applicant took out the mortgage in their sole name. This sort of thing can occur if only one member of the couple is working.

The mortgage calculation can also depend on age. For example, if you have a 50 year old who is buying with a younger partner, then it’s possible that if they have a good income, the younger partner could go down as the sole applicant.

Lenders will look at the type of mortgage you are applying for and the deposit you are able to put down for it. If you have a large deposit, 30% or more as opposed to 5%, this may work in your favour for the mortgage application.

Tax implications

Stamp duty or other tax implications can often be the driving force behind someone opting to take out a mortgage in their sole name.

Sole Name Mortgage Advice – We can usually help

Some Lenders have stricter rules about married applicants doing mortgages in a joint name, meaning some have to be a sole applicant against their own wishes. The likely reason for this is because they are concerned that this could in some way affect their security in the future, especially if a couple were to split up down the line. Luckily not all Lenders share this unpopular view.

How to Improve Your Credit Score in Lincoln

Mortgage Advice Lincoln

How to Improve Your Credit Score UK | MoneymanTV

We advise all our customers new/existing customer, especially First Time Buyers, in Lincoln the importance of having a ‘good’ credit score. Potentially the higher the score, the better of a chance of getting accepted and being successful with your application.

However, you need to be aware that Lenders have their internal scoring system meaning you might not be guaranteed acceptance.

Every lender has their criteria which they have developed over the years. Don’t waste your time troubling if you’ve been unsuccessful with one lender. Other mortgage lenders might be willing to be more relaxed.

It is down to our Mortgage Advisors in Lincoln to match you with the lender that is right for you. End of the day we want the same thing as you – to get the best deal accessible to you.

There are several credit reference agencies in the UK; these include Experian and Equifax. It’s a good idea to look into many of these agencies as possible in advance, to give you a more particular view of your credit score.

Furthermore, it is also plausible that some of these agencies hold inaccurate information. Therefore, by checking with multiple agencies, you can be sure that your information gets appropriately amended.

Keep Credit searches to a reasonable amount

Numerous credit searches can have a negative impact on your credit score. Be on the lookout of using price comparison websites which are known to be significant credit culprits searching on individuals.

If you are applying for a mortgage soon, it may be wise to apply for additional credit afterwards.  Whilst having some credit and paying it back is a good thing for your score in the long run. Lenders prefer to see you control your borrowings right before setting up a mortgage application.

Check you are on the Voter’s Roll

Make sure that you have remained enlisted on the electoral roll, and it improves your credit score. It implies stability which lenders like.

Ensure your name spelt correctly and that it’s your current address which is registered online. If you aren’t registered, it’s straightforward and comfortable enough to do this online.

Know your Maximum Limit:

If you reach your peak your card each month, your score will get reduced. Using a credit card to keep on top of your payments each month is a preferred approach.

It is a good indicator of your lender that you are good at controlling your money. The main red flag in a lenders eyes is if you go above an agreed card limit or overdraft. The reason lenders watch over this is because they want to know you’re able to take your finances responsibly.

Check your Address History gets input correctly:

You might notice on your credit report that you are living in two different places at the same time if providers have yet to get informed that you have moved houses.

It is pivotal that the addresses which you’re updating get spelt correctly; If you have been residing in a flat, this can be a bit more complex as these address can get formatted in different ways.

Keep up to date with Credit Accounts:

If you no longer use individual store/credit cards, you should get into contact with the providers to close the account for extra security. In the short term, this could be seen as having a brief impact on your score as the lender can’t tell who’s closing the account, e.g. you or the provider, but this will be for the better and an advantage to you in the long run.

It’s a great thing to do to reduce your chance of becoming a victim of fraud if you don’t notice you have a lost a card which you may use regularly.

Look out for Financial Links to others:

By having, family members or ex-partners connected to you financially could mean that they’re affecting your credit score unknowingly. However, you won’t be able to get the financial association removed if the account is still active though.

To remove the links between you and another individual, you should contact the reference agencies and make a request. The sooner you do this, the more beneficial it will be.

Many consumers feel that credit scoring is an unfair way of applications getting evaluated, Lenders themselves are indifferent to this idea as it makes their overall job more manageable.

It is more expenditure for them to operate this way, and computers give secure outcomes. On the other hand, some lenders do still do it the old-fashioned way but still apply the same rules about the number of defaults and CCJ’s they will allow.

When setting up your application, be sure your report is up to date to increase your chances of being accepted the first time. The more in-depth information which your Specialist Mortgage Advisor in Lincoln has at hand, the better.

Mortgage Advice in Lincoln | Mortgage Payment Holidays

At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday on the condition that they needed it. Most lenders followed the Government’s guidelines and did their best to help out their borrowers during these hard few months. 

We felt that it is best, to sum up, what mortgage payment holidays are, what lenders are doing, and who can deliver you with help and advice through these next few months. 

What is a Mortgage Payment Holiday?

Mortgage payment holidays are agreements you make with your bank, building society or mortgage lender, allowing you to take a break from your monthly mortgage payments for a set period. In the case of the current COVID-19 crisis, homeowners are being granted 3-months relief.

The 3 months will be added on at the end of your term or your payments will be recalculated at a slightly higher level, meaning you will still have to pay those 3 months back eventually.

Your interest, however, carries on as normal, meaning you’ll technically be paying an additional 3 months of interest on top of what you’ve paid already.

Most lenders would likely prefer to not extend your mortgage term, as you may end up going beyond their standard retirement age. There’ll be more information on this over time.

Depending on the mortgage deal you have in place, you may be able to pay off a lump sum later on in the year to bring your mortgage in line with where it would’ve been had you not taken a holiday.

Mortgage Payments Holidays are available for those with residential mortgages and Buy to Let mortgages, meaning landlords will also have help if their payments are affected.

What is the Government Proposal?

The full proposal is in detail below:

  • Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.
  • The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that they are impacted by COVID-19.
  • This means that lenders will not complete an income and expenditure assessment, or an assessment of alternate payment options as ordinarily required under MCOB.
  • This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where the operation of collections teams made be also impacted by COVID-19.
  • Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.
  • Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

Mortgage Payment Holidays: How do I apply?

To discuss your options for Mortgage Payment Holidays, we would recommend speaking to a Mortgage Advisor in Lincoln to start with and not jumping straight into taking a holiday.

We’ll be able to take a look for you first and see if this option is something worth your time. Lenders will no doubt be facing an influx of calls, needing to be free to speak with the most urgent matters over everyone else.

We’ll look through your personal situation and see if there are any other options for you first before you decided to take a Mortgage Payment Holiday.

For a customer, up to date with payments, not in arrears and impacted by COVID-19:

  • The customer would contact the lender and inform them that they are impacted by COVID-19.
  • The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.
  • No evidence will be sought from the customer.
  • The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.
  • At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.
  • The lender notifies the customer that if they wished to complete a full assessment now, there may be other forbearance options more suitable to the customer.

Mortgage Payment Holidays – What does this mean for my Credit Score?

Generally, these can show up on your credit score as a negative mark, but most lenders have said if your case is linked to the virus, they’ll make sure it doesn’t affect your credit score at all.

It’s important that you speak directly with your lender to ask them this, recording their response. Also take the date and time, as well as the name of who you spoke to, to avoid any confusion later on. Different lenders will handle these things differently than one another.

Will I still be able to remortgage or take a Product Transfer with my lender?

Controversial for some, but there is now evidence that lenders are asking borrowers to try and not make changes to their mortgage whilst within the holiday period. This means, for the time being, you can’t take out a remortgage or product transfer.

In simpler terms, borrowers reaching the end of their current product may be forced to move to the higher lenders variable rate. This means many borrowers who act too quickly could find themselves on a Mortgage Payment Holiday that gains interest on a more expensive variable rate.

This is another reason why we highly recommend speaking to a Mortgage Advisor in Lincoln first, to determine the right path for you to take. If possible, try arranging a transfer prior to asking for a holiday, as that seems like a more sensible option.

What “Other Options” are available?

Some lenders are offering a temporary switch to interest-only, in order to reduce monthly payments by a large amount, while not adding on any further amount to the loan, by still servicing the interest each month.

You may not need to convert the entire mortgage to an interest-only mortgage and it may be that putting only a portion of this mortgage on that basis could give you room to breathe.

Those who have savings may prefer remortgaging onto an offset basis. This would reduce their monthly payments whilst keeping their savings safe and intact.

For example, someone with a £500,000 loan and £100,000 in savings would only pay interest on £400,000 reducing their payments accordingly.

For others, remortgaging onto another lender, calculating the cost of any early repayment charges, maybe all you need to ease the pressure you currently face. You could also simply extend your current term, thus spreading your payments across a longer time frame.

To discuss any of these options, or to just have a helpful chat about your current situation please contact us and we’ll see how we can be of assistance.

The Top 5 Mortgage Hurdles in Lincoln

Guide to Mortgage Hurdles | Mortage Advisor in Lincoln

Occasionally, we come across some slight hurdles in the mortgage industry. from first time buyers to remortgaging. The process can end up delayed, but they’re not completely impossible to workaround. Below is a list of the top 5 hurdles we’ve come across.

Divorce/Separation

It ‘s a sad, unfortunate day when you and your partner decide to call it quits. You may have made joint financial commitments, and unwinding that side of things does not always run as smoothly as you’d like.

Here are the three main questions we get asked on a regular basis;

  1. How can I remove my ex’s name from my mortgage?
  2. How do I remove my name from my ex’s mortgage?
  3. Can I have 2 mortgages?

Often there is a solution of some sort with the help of a local mortgage expert, providing that you have enough income available and also are young enough for the mortgage payments to be affordable. 

Childcare fees

In our experience, families are not normally turned down for a mortgage for this reason, but it is extremely common for a lower mortgage amount to be offered.

It becomes most apparent when parents have gone back to work and are paying out for childcare costs, as these can run into hundreds of pounds per month.

These costs are considered by lenders as an outgoing, the same as they would treat a car loan or hire purchase agreement.

Even if there are no nursery fees to pay, parents on lower income still tend to be offered less than their peers without children.

There is, however, some good news, as the amount this type of family can often be in receipt of tax credits. Some lenders will take these into account, as well as child benefit.

There are lenders out there that take a different approach and don’t treat the nursery costs as a specific outgoing and rely more upon Office of National statistics data for typical outgoings and this often leads to a higher maximum mortgage amount.

New Job

Often with a new job comes a bigger salary and the extra income to put towards a new mortgage. Gaps in employment and a new job can prove to be problematic for some mortgage lenders.

There are lenders who will work from a newly signed employment contract though even in month one or if your new job is about to start. Probationary periods are usually ok. 

Benefit income

All lenders take a different view on benefit income and how much of it can be assessed.

The good news is that all benefit income such as child tax credit, working tax credits, disability benefits, pension income can be taken in to account in one way or another. 

This is where the help of a reputable mortgage broker can prove invaluable and can help solve any problems you may be up against.

Evidencing your Deposit

For any purchase, all mortgage lenders and mortgage brokers like us are required to evidence the source of all of the borrowers’ deposit funds.

This is to satisfy UK Anti-Money Laundering Legislation, which is, shall we say, rather stringent! Your solicitor and estate agent may ask for evidence of your deposit also.

We believe, that this is the most complicated part of applying for a mortgage.

Whether your deposit is from savings, premium bonds, the sale of another property, gifted from a family member or friend, from overseas family, or is from a personal loan, you are required to have the paper audit trail for the accumulation of funds. 

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Why Don’t People Overpay their Mortgages in Lincoln?

If you are a first time buyer in Lincoln and have some money to spare every month then maybe you could consider making overpayments to your mortgage. Looking to make additional payments on your mortgage will allow you to pay off your mortgage earlier, paying less interest over the term of your mortgage.

Many people think about doing this but according to a recent survey, some 56% of homeowners with mortgages never get around to putting it into action. This is very interesting data because almost all mortgage applicants start their mortgage journey with every intention of doing so (or at least that’s what they tell me!). By overpaying, even small monthly amounts can make a significant difference overall to the amount of interest you will be paying back over the term of the mortgage.

The sooner you begin overpaying the better, as the extra payments have a longer period of time to have an effect.

A Compare the Market survey suggests that homeowners cannot afford to make extra payments. My feeling is that for many life simply gets in the way. We know overpaying is the “right” thing to do but let’s face it, there’s always something else you can be spending your money on and plenty of those things are more exciting!

Your Action Plan

The best approach is probably not to make ad-hoc additional payments. (You will likely not get round to it or miss months of additional payment). Take action today and plan ahead. I would suggest setting up a standing order, payable to your mortgage lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st.

The reason for the above is that very quickly you will start to “feel” that your mortgage is actually £575pm and you will get used to that within a matter of months. 

You’re Still In Control

The beauty of doing a standing order is that unlike a direct debit, a standing order is controlled by the payer, not the receiver. That means that if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out next month.

Whilst it would be regrettable to have to stop overpaying, at least you would have benefited from the overpayments made up until that point. Some mortgages will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though it’s important to check with your lender. Make sure that you are eligible to do so to avoid a negative mark on your credit report.

Overpaying your mortgage is a great habit to get into. You don’t need to go hell for leather at it unless you feel so obliged. Even shaving a year or two off will be very welcome when you near the end of the term.

Problems Getting a Mortgage in Lincoln

Occasionally, we come across some slight hurdles in the mortgage industry. and people looking for specialist mortgage advice. The process can end up delayed, but they’re not completely impossible to work around. Below is a list of the top 5 hurdles we’ve come across.

Divorce/Separation

It ‘s a sad, unfortunate day when you and your partner decide to call it quits. You may have made joint financial commitments, and unwinding that side of things does not always run as smoothly as you’d like.

Here are the three main questions we get asked on a regular basis;

  1. How can I remove my ex’s name from my mortgage?
  2. How do I remove my name from my ex’s mortgage?
  3. Can I have 2 mortgages?

Often there is a solution of some sort with the help of a local mortgage expert, providing that you have enough income available and also are young enough for the mortgage payments to be affordable. 

Childcare fees

In our experience, families are not normally turned down for a mortgage for this reason, but it is extremely common for a lower mortgage amount to be offered.

It becomes most apparent when parents have gone back to work and are paying out for childcare costs, as these can run into hundreds of pounds per month.

These costs are considered by lenders as an outgoing, the same as they would treat a car loan or hire purchase agreement.

Even if there are no nursery fees to pay, parents on lower income still tend to be offered less than their peers without children.

There is, however, some good news, as the amount this type of family can often be in receipt of tax credits. Some lenders will take these into account, as well as child benefit.

There are lenders out there that take a different approach and don’t treat the nursery costs as a specific outgoing and rely more upon Office of National statistics data for typical outgoings and this often leads to a higher maximum mortgage amount.

New Job

Often with a new job comes a bigger salary and the extra income to put towards a new mortgage. Gaps in employment and a new job can prove to be problematic for some mortgage lenders.

There are lenders who will work from a newly signed employment contract though even in month one or if your new job is about to start. Probationary periods are usually ok. 

Benefit income

All lenders take a different view on benefit income and how much of it can be assessed.

The good news is that all benefit income such as child tax credit, working tax credits, disability benefits, pension income can be taken in to account in one way or another. 

This is where the help of a reputable mortgage broker can prove invaluable and can help solve any problems you may be up against.

Evidencing your Deposit

For any purchase, all mortgage lenders and mortgage brokers like us are required to evidence the source of all of the borrowers’ deposit funds.

This is to satisfy UK Anti-Money Laundering Legislation, which is, shall we say, rather stringent! Your solicitor and estate agent may ask for evidence of your deposit also.

We believe, that this is the most complicated part of applying for a mortgage.

Whether your deposit is from savings, premium bonds, the sale of another property, gifted from a family member or friend, from overseas family, or is from a personal loan, you are required to have the paper audit trail for the accumulation of funds. 

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Wanting a Mortgage Agreement in Principle in Lincoln?

What is an Agreement in Principle?

The Value of a Mortgage Agreement in Principle

How having your mortgage agreed at the outset can help you negotiate on an asking price

A Mortgage Agreement in Principle is essentially a document to prove you have a mortgage in place. It is something we obtain for all of our clients and almost all Lenders offer them. It also proves that you are credit-worthy because for the Agreement certificate to be issued you must pass the lenders credit score.

A Mortgage Agreement in Principle is not a guarantee that you will definitely get a mortgage as your full application will require further background checks (such as evidence of income) and a satisfactory valuation of the property itself.

However, it is a good idea to get one done at the earliest opportunity for the following reasons:

1.   Negotiating Power
2.   Avoid Disappointment
3.   Knowing your Limits

Negotiating Power with a Mortgage Agreement in Principle

When you are ready to make an offer on a new home most Estate Agents will undertake due diligence and ask you to produce evidence that you have funds available to complete the purchase. This will take the form of bank statements and also an Agreement in Principle certificate that we can provide for you. Once you have provided them with all this documentation the Estate Agent will then normally stop marketing the property and put a “Sold” or “Sale Agreed” board up.

If you already have a Mortgage agreed before you make an offer you are making yourself appear as an attractive proposition as this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and done something about it. This might persuade a seller to accept an offer you put forward on their property underneath the asking price.

Avoid Disappointment with a Mortgage Agreement in Principle

When it comes to buying a house some clients have always “put the cart before the horse”, that is to say they go full steam ahead and make an offer on a property without first checking that they are actually in a financial position to proceed. This can lead to terrible disappointment if the mortgage application fails because by that time they have really got their heart set on their new family home. This disappointment can be avoided by contacting us at an early stage because sometimes there are things that are causing a mortgage to decline that can be overcome given a little time.

For example, there may be a niggling issue on your credit report, perhaps a disputed mobile phone bill which can be easily rectified. Maybe you thought you were on the Voter’s roll and you’re not – once again that can be sorted out given a few weeks.

Or maybe you can’t get a mortgage at all! But if that’s the case it’s better that you know now rather than mess people about and we’ll be able to tell you what you need to do to improve your credit-worthiness for the future.

Knowing your Limits with a Mortgage Agreement in Principle

Ok, so you know you’ve got a good credit rating because you’ve never been turned down for credit, you’re registered on the Voter’s roll and you’ve always made your credit card payments on time – so what can go wrong?!

Well, you could approach 10 different Lenders these days and get 10 different maximum mortgage amounts! They all calculate affordability in their own unique ways. If you’re self-employed it really is a minefield: some Lenders take your net profit, others your salary and divided. Some use your latest year, others an average over 3 years.

Still think it’s simple?

Knowing your borrowing limits is important as then you know for sure what your price range is. We’ll be able to advise you of the maximum mortgage available to you and, even more importantly, together we’ll work out how much you can afford to pay back each month.

Lincolnmoneyman.com & Lincolnmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

© 2021 Lincolnmoneyman

Lincolnmoneyman, Commerce House, Outer Circle Road, Lincoln, LN2 4HY.

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