Mortgage FAQs
Here we have answered some of the most frequently asked questions about mortgage and insurance. We have explained various terms in simple English. You can use our Mortgage Calculators to calculate your mortgage payments, how much you can borrow and the stamp duty with our and plan your finances better.
If you need more information or want to discuss your case, please feel free to contact us or visit our Facebook page and send a message.
How Much Can I Borrow?
The amount you can borrow depends on various factors, including your income, expenses, credit score, and the lender's criteria. Typically, lenders will offer a mortgage amount based on a multiple of your annual income. For more details, check our mortgage FAQs.
What Does Loan to Value or LTV Mean?
Loan to Value (LTV) is the ratio of the loan amount to the value of the property. It is expressed as a percentage. For example, if you have a £200,000 mortgage on a £250,000 property, the LTV is 80%. Learn more in our mortgage FAQs.
What does affordability mean?
Affordability refers to your ability to repay the mortgage based on your income, expenses, and other financial commitments. Lenders assess affordability to ensure you can manage the mortgage payments without financial strain. See our mortgage FAQs for more information.
My offer on a property has been accepted. Am I legally bound to buy it?n a Property Has Been Accepted. Am I Legally Bound to Buy It?
No, you are not legally bound to buy the property until contracts are exchanged. Until then, either party can withdraw from the transaction without any legal consequences. For more insights, visit our mortgage FAQs.
What does vendor mean?
A vendor is the person or entity selling the property. In a property transaction, the vendor is the seller. Check our mortgage FAQs for more questions and answers.
What Does Credit Report and Credit Score Mean?
credit report is a detailed record of your credit history, including loans, credit cards, and payment history. A credit score is a numerical representation of your creditworthiness, based on the information in your credit report. Learn more in our mortgage FAQs.
What Does Equity in the Property Mean?
Equity is the difference between the market value of the property and the outstanding mortgage balance. For example, if your property is worth £300,000 and you owe £200,000 on your mortgage, you have £100,000 in equity. See our mortgage FAQs for more information.
What does mortgage term mean?
The mortgage term is the length of time over which you agree to repay the mortgage. Common mortgage terms are 25 or 30 years, but they can vary. Lenders offer upto 35- 40 years term depending on the intended retirement age of the applicant. For more details, check our mortgage FAQs.
What is APR and APRC?
APR (Annual Percentage Rate) is the annual cost of borrowing, including interest and fees, expressed as a percentage. APRC (Annual Percentage Rate of Charge) is similar but includes the total cost of the mortgage over its entire term. Learn more in our mortgage FAQs.
Why should I use a mortgage broker?
A mortgage broker can help you find the best mortgage deals, provide expert advice, and guide you through the application process. They have access to a wide range of lenders and can save you time and effort. See our mortgage FAQs for more information.
What is a mortgage?
A mortgage is a loan used to purchase a property. The property serves as collateral for the loan, and the borrower agrees to repay the loan over a specified term with interest. For more insights, visit our mortgage FAQs.
What is remortgaging?
Remortgaging is the process of switching your existing mortgage to a new lender or product, usually to get a better interest rate or release equity from your property. Check our mortgage FAQs for more details.
What are the different types of mortgages?
There are many types of mortgages, but some of the main types are:
- Fixed-rate mortgages: The interest rate is fixed for a certain period, so the monthly payment remains the same throughout that period. Typically, rates are fixed for 2, 3, or 5 years, but some lenders offer up to 10 years of fixed-rate deals.
- Variable-rate mortgages: In this type of mortgage, the interest rate can change at any time, which means the monthly payment can also vary. The interest rate is influenced by market conditions and can go up or down.
- Tracker mortgages: The interest rate tracks the Bank of England base rate, meaning it can go up or down in line with changes to the base rate.
- Discount mortgages: These offer a discount on the lender's standard variable rate (SVR) for a set period. The rate can still change, but the discount remains constant.
- Offset mortgages: These link your savings and current account to your mortgage. The balance in these accounts is offset against your mortgage debt, reducing the amount of interest you pay.
- Interest-only mortgages: You only pay the interest on the loan each month, not the capital. At the end of the mortgage term, you must repay the full loan amount.
What is a Decision in Principle (DIP) or Agreement in Principle (AIP)?
Also known as an Agreement in Principle (AIP), a Decision in Principle is a provisional agreement from the lender indicating that they may be willing to lend the specified amount, subject to a full application and meeting underwriting requirements. A DIP is useful when making an offer on a property, as it assures estate agents that the buyer is serious about purchasing the property.
What is a survey or valuation?
When deciding on lending, lenders need to know if the property they are lending against is adequate security. To make an informed decision, the lender will appoint a qualified surveyor to visit the property and submit a report on its value and suitability. This report helps the lender determine whether the property meets their criteria for the loan amount.
Who pays the valuation survey fee?
Although the valuation survey is conducted for the lender’s benefit, it is the borrower who bears the cost. This fee is typically non-refundable. To attract potential buyers, some lenders may offer a complimentary survey. The valuation survey assesses the property’s value to ensure it meets the lender’s criteria for the loan amount. It’s an essential step in the mortgage approval process, providing both the lender and the borrower with a clear understanding of the property’s worth.
What expenses should I expect when buying a house?
When buying a house, several costs may be incurred:
- Conveyancing Costs: Payable to solicitors for legal work and property searches.
- Stamp Duty Land Tax: Payable to HMRC. Your solicitor will calculate this, collect it from you, and pay it to HMRC on your behalf. There are exemptions for first-time buyers.
- Survey Fee: Payable to the lender for the property valuation survey.
- Mortgage Arrangement Fee: Payable to the lender. Some lenders allow you to add this fee to the loan amount.
- Mortgage Broker Fee: Payable to your mortgage advisor.
I have a poor credit history; can I get a mortgage?
If you have a low credit score, you may still qualify for a mortgage loan. Some lenders are willing to work with borrowers who have financial challenges. We can assist you in finding a suitable lender for your needs. Reach out to explore your options.
What mortgage term should I choose?
The mortgage term depends on your age, intended retirement age and affordability. In most cases, your mortgage should be paid off before your intended retirement age. We will discuss this with you during our fact-finding meeting to determine the best term for your situation. A shorter mortgage term means higher monthly payments but less interest paid over the life of the loan. Conversely, a longer mortgage term results in lower monthly payments but more interest paid over time. It’s essential to balance your monthly budget with your long-term financial goals.
Can I repay my mortgage early?
Yes, you can repay your mortgage loan at any time. However, if you have a fixed or special deal, the lender may charge you an Early Repayment Charge (ERC). Your mortgage offer letter will have details of any such charge. It’s important to review these details carefully to understand any potential costs. Early repayment can save you money on interest in the long run, but it’s essential to weigh the benefits against any charges.
How do I know what deal is best for me?
There is no simple answer to this. Your current circumstances, priorities, plans, affordability, lender criteria, and costs of lending all need to be considered to determine the best solution for you. As your mortgage advisors, we are here to help you find the best solution.
DISCLAIMER :
ZAS Mortgages & Protection Limited is Authorised and regulated by the Financial Conduct Authority (FCA reg.992843). The company is registered in England (Reg 12383115 ). Our registered office address is 555 Alfreton Road, Nottingham, NG7 5NJ. Contact No 0800 061 4173. E-mail: info@zasmortgages.co.uk
YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. YOU MAY HAVE TO PAY AN EARLY REPAYMENT CHARGE TO YOUR EXISTING LENDER IF YOU RE-MORTGAGE.
ALL MORTGAGES ARE SUBJECT TO STATUS AND LENDER CRITERIA. MOST BUY TO LET MORTGAGES ARE NOT REGULATED.
A PROTECTION PLAN WILL HAVE NO CASH IN VALUE AT ANY TIME, AND WILL CEASE AT THE END OF THE TERM. IF PREMIUMS ARE NOT MAINTAINED, THEN COVER WILL LAPSE AND YOU MAY NOT BE COVERED IF A CLAIM IS MADE.