20 Mortgages FAQs
1. What does LTV mean?
LTV stands for Loan to Value. It is calculated by dividing the loan by the value of the property. If you have a £150,000 mortgage on a £200,000 property, your LTV is 75%. The lower the LTV, the less risk it is for the bank. The lower the risk for the bank, the better the interest rate for you.
2. What is equity?
Equity is the value of the property that you own. If you have a £150,000 mortgage on a £200,000 property, you have £50,000 of equity.
3. How long does it take to buy a house?
From having an offer accepted on a property, to completion can be anywhere between one to three months. The best thing to do is to start the process as early as possible so that there are no surprises along the way.
4. How long does a mortgage application take?
From a mortgage application being submitted to a mortgage offer being produced can be as quick as same day to as long as a month. The best thing to do is get all of your paperwork in order, be open and honest about your situation and plan for all eventualities.
5. What is a mortgage offer?
A mortgage offer is produced by a bank or building society once they have completed all of their underwriting on you and a property. They are usually valid for three to six months, but can be longer in certain scenarios such as buying a new build property.
6. What documentation do I need to produce as part of a mortgage application?
You will need to provide proof of ID and address, proof of income, proof of outgoings, and proof of deposit on purchases. Each bank and building society is different, but this is a good place to start.
7. How much can I borrow?
Most lenders will have their own affordability calculators, but in reality, you will be limited to 4.5-5 times your income. Some building societies will lend more than this in certain scenarios.
8. When is the best time to buy?
The housing market reaches a peak at Easter and continues throughout the year before tailing off in November. Adam bought his last home in December, so they can complete at any time.
9. Should I use an estate agent or should I sell the property myself?
Adam and Pete have bought and sold property using both estate agents and themselves on online portals. With an estate agent, you are using their experience and knowledge to get the best possible price for your property. They typically charge a fee based on the price they sell your property for. If their fee is 2% you would want them to sell the property quickly and for 2% more than you could sell the property yourself.
If you know your property will sell quickly and don’t need any help, you may wish to spend a relatively small amount of money to put the property online and manage the sale yourself.
10. Will I need a solicitor?
Yes. Regardless of your situation, you will need a property solicitor, known as a conveyancer. We are happy to recommend both local conveyancer’s or national firms, depending on your situation and budget.
11. I’m tied in to a fixed rate, but I can see the rates are lower now, should I remortgage?
Fixed rates tie you in for the 2, 3 or 5 years that they run for. There will be an early repayment charge to repay the mortgage before the end of this time. We will happily go through the figures and calculate for you if it makes sense to remortgage early.
12. What is the SVR?
SVR stands for standard variable rate. It is set by the bank or building society and usually is loosely related to the Bank of England Base Rate. It is usually higher than the fixed rates and tracker rates offered.
13. When the fixed rate ends, the SVR is quite high. Is this normal?
This is normal. It is to prompt you to remortgage with the bank or building society you are with or to move your mortgage to a new lender. If you don’t do anything you will revert back to the SVR which can be very expensive. We always put in our diaries to contact you several months before the end of your tie in period to prevent you falling on to the SVR.
14. How do I remortgage?
Remortgages are very simple. Just like when you purchase, the best thing to do is to contact us a few months in advance of when you want to proceed so we can put you in the best possible position. Some lenders will allow you to remortgage six months in advance of when your mortgage is up for renewal.
15. Do I need protection?
Apart from buildings insurance, you are not legally required to have any life insurance, critical illness cover or income protection. That being said, your mortgage is the largest debt you will ever have and it is wise to make sure you have the correct insurance in place, should the worst happen. Pete and Adam have been advising on insurance since 2009 and are happy to go through any questions you may have to make sure you are comfortable with what is being recommended.
16. Do I need a will?
Although it isn’t a legal requirement to have a will, it is prudent to make sure your affairs are in order should you pass away. If this is something that you are interested in, let us know and we can put you in touch with the right people.
17. Will I have to pay stamp duty?
Stamp duty is paid within 14 days of completion of a house purchase. The threshold for First time buyers is £300,000. If you aren’t a first time buyer, purchasing a property valued at less than £300,000, you will have to pay stamp duty. https://www.stampdutycalculator.org.uk/ has a really easy to use calculator to see how much stamp duty will cost.
18. What is an arrangement fee?
An arrangement fee is payable in some cases to the bank or building society to get the best interest rate available. Typically arrangement fees are £995 and can be added on to the loan or paid at completion. If you need a mortgage of £150,000 and add the fee on to the mortgage, you will pay interest on £150,995 over the term of the mortgage. This will make it more expensive than paying the fee upfront in the long run. We will calculate whether it is cheaper to proceed with a product with an arrangement fee or a product without a fee, but a higher interest rate to make sure you always get the best mortgage for you.
19. How much will the survey cost?
Most lenders will now pay for a free basic survey. They can send a surveyor out to survey the interior and exterior of a property. They can send a surveyor out to complete a drive by survey, where they don’t enter the property, but get the information they need from the roadside. They can complete an electronic survey using information readily available online via the properties postcode.
The lender doesn’t have to provide a copy of the survey to the applicant.
If you want a more detailed survey such as a home buyers report or full structural survey, let us know and we can provide you with a quote.
20. What is a whole of market mortgage broker?
We are a whole of market mortgage broker and it means that we can access high street and specialist banks and building societies. We have a panel of 60-70 different lenders that we can approach on your behalf. We are not limited to small panel of lenders and it makes it very likely that we will be able to get you the perfect mortgage for you.
With so many options available when it comes to mortgage, we’d be happy to talk to see if we can help fit the pieces together. Give us a call on 01174 520 330. Our initial conversations usually last around 15 minutes.
Alternatively, you can email email@example.com and let us know how we can help you.
We will discuss:
- How much you can borrow
- What that will cost
- What fees can you expect
- How Lloyd Wells Mortgages work
- What insurances you will need
- What documentation you will need to provide
- Next steps
Your home may be repossessed if you do not keep up repayments on your mortgage.