A legal agreement by which a bank, building society, etc. lends money at interest in exchange for taking title of the debtor’s property, with the condition that the conveyance of title becomes void upon the payment of the debt”
(Oxford English Dictionary)
Most people, when they buy a house, have to borrow some money in the form of a residential, or ‘owner-occupier’ mortgage. These are long-term loans typically provided by bank or building societies, which are secured against the property itself.
Generally, the capital sum borrowed and any accrued interest are repaid over a fixed ‘term’ which was traditionally over 25 years or up to state retirement age. However, in recent years the rise of ‘flexible’ and ‘offset’ mortgages has meant that they can often be paid off early.
In today’s environment there are once more an ever-increasing number of products offered by a wide variety of lenders, both high-street names and private banks.
Not only can the choice, at times, seem daunting, but these days arranging a residential mortgage or remortgage isn’t as straightforward as it seems.
Of course there are the usual questions, such as the type of loan you should go for — fixed or tracker, for example — but in the current market lenders are far stricter with their lending criteria and competitive rates can be harder to obtain.
Most residential mortgage providers these days will require a deposit of at least 10% of the total value of the property, although many lenders are once again lending at 95% Loan-To-Value, (LTV). The very best products, however, are still preserved for those borrowing 60% LTV or below.
The amount you can borrow will depend not just on the deposit you offer but also your credit history and income (or, if you are applying for a mortgage with a partner, your joint income).
In many cases, lenders will stick to strict ‘income multiples’, for example, 4x main income for a sole applicant or 4x joint income for joint applicants. However, they can be more generous if they are confident you will be able to meet the monthly repayments after looking in detail at your current, and likely future, levels of affordability.
When applying for a residential mortgage, it’s vital to not only get a competitive interest rate but also to find a product that suits your lifestyle and needs. For instance, if your income fluctuates from month to month, or you receive hefty annual bonuses, you may wish to consider a flexible mortgage that will allow over- and under-payments.
However, if you prefer to know exactly what your mortgage payments will be from one month to the next, you may prefer a fixed rate mortgage, as this provides a degree of financial security.
If, on the other hand, you’re confident that the current level of interest rates may remain for some time, you might opt for a tracker mortgage that will follow the Bank of England base rate.
The problem is that there are still many different mortgage providers offering thousands of products, which can make finding the right mortgage extremely difficult.
Because of this, the knowledge and contacts of a professional mortgage broker such as Coreco can be the difference between a costly mortgage and a competitive one. Importantly, Coreco has access to mortgage products that may be unavailable elsewhere on the market, which can make a real difference.
This is especially important for people who are coming towards the end of their initial mortgage term and facing the prospect of reverting to a higher variable rate.
For those of you who may be looking at a larger than average mortgage, Coreco’s consultants have many years’ experience in the high-net-worth arena and are able to offer bespoke products made to fit your unique requirements. In fact, everything you would expect from a leading London Mortgage Broker and more.
Because many of our clients are busy professionals, we are happy to co-ordinate the entire mortgage process on their behalf, maintaining control over the application procedure.
In addition, our stated policy of transparency means our clients are made aware of any introduction fees we may be paid for introducing them to the lender, while our excellent consultant to support staff model guarantees a level of service that is second to none.
For more information on residential mortgages, remortgages, let-to-buy loans or buy-to-let funding, click here or call one of our consultants on 020 7220 5100.