As well as finding the best deal you need to think about any penalties that may apply to your existing mortgage – Is it better to transfer or ‘port’ your existing mortgage or is it better to pay this off and start over from scratch? If you do stay with your existing lender, do you need additional funds by ‘topping up’ your mortgage? If so, this will normally be from rates available from the lender’s current range.
Affordability and Eligibility
Another thing to consider is whether your existing lender will still accept you or will lend you enough to buy your next property. There can be a big difference between the affordability calculations of different lenders and some may not be willing to lend on the new property you are buying or you may have become ineligible e.g. because you now have poor credit or more commitments.
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Deposit
Being Part of a Chain
Buy to Let Agreement
Transfer of Equity
Some customers ask if they can take on the mortgage on their own e.g. if another party is moving out? This can happen and normally involves a ‘transfer of equity’. The remaining borrower needs to be able to afford the mortgage on their own and in most cases the other parties need to obtain independent legal advice. We can help you to arrange this.
Types of Mortgages
Standard Variable Rate
This is a standard interest rate, which a lender will set and can go up or down in line with market rates (such as the Bank of England’s base rate).
Advantages:
• You have more flexibility and can usually repay your mortgage without any early repayment charges.
Disadvantages:
• Your monthly payments can go up and down and this can make budgeting difficult.
• Standard variable rate mortgages are not usually the lowest interest rates lenders offer.
Discounted/Tracker Rates
Some lenders offer mortgages where the initial interest rate is set at an amount below their standard variable rate for a set period of time or tracks the Bank of England base rate. At the end of your discounted rate period, your lender will usually change your interest rate to their standard variable rate (SVR). It’s a good idea to review your mortgage at this stage because the lender’s SVR may not be the best deal around.
Advantages:
• Your payments should cost you less in the early years, when money may be tight. But you must be confident you can afford the payments when the discount ends. These types of mortgages are more likely to have no early repayment charges if you want to be able to make large over payments without penalty – but not always.
Disadvantages:
• Your monthly payments can go up or down which can make budgeting difficult.
• If you want to repay the loan early, there could be early repayment charges.
Fixed Rates
With a fixed rate mortgage, your monthly payment won’t change for a set period. At the end of your fixed rate, your lender will usually change your interest rate to their standard variable rate (SVR). It’s a good idea to review your mortgage at this stage because the lender’s SVR may not be the best deal around.
Advantages:
• You know the exact amount you’ll need to pay each month, which makes budgeting easier.
• Your monthly payment will stay the same during the fixed period, even if other interest rates increase.
Disadvantages:
• Your monthly payment will stay the same during the fixed period, even if other interest rates decrease.
• If you want to repay your loan early, there could be early repayment charges. Most lenders will allow some overpayments without penalty.
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Stamp Duty
Rate of Stamp Duty
- £0 – £125,000 – 0%
- £125,001 – £250,000 – 2%
- £250,001 – £925,000 – 5%
- £925,001 – £1.5 million -10%*
Estate Agent Fees
Conveyancing
You will need to use a solicitor or conveyancer when you move. Normally they will work for the lender as well but occasionally you may need to have separate representation, e.g. if your chosen conveyancer is not on the lender’s panel. Standard conveyancing costs on a sale and purchase of an average house are often in excess of £3,000 or £4,000 plus VAT although that tends to include disbursements (local authority searches etc).
Valuations and Surveys
There are three types of valuations and surveys – valuation reports,
homebuyer’s reports and building surveys:
• Basic valuation report – This is a basic report paid for by you but completed by the valuer for your lender. Your lender will use this report to help them decide whether they’ll lend you the amount of money you need to buy your property.
• Homebuyer’s report – This is a more detailed report that a surveyor completes for you. There’s an important difference between a basic valuation report and a homebuyer’s report. The valuation report belongs to the lender and the valuer completes the report for them. With a homebuyer’s report, the surveyor works for you and they’re responsible to you if they fail to spot things. Whilst this costs more than a basic valuation, you should consider asking for a homebuyer’s report as it will give you a lot more information about your property. It’s particularly useful if you’re buying an older property. Your lender will normally use the homebuyer’s report to help them decide whether to lend on your property, so you won’t normally need more than one report. Your lender can arrange this.
• Building survey previously known as a full structural survey – This is the most detailed type of survey that’s completed by a surveyor working for you.
The surveyor is responsible to you if they fail to spot things. Building surveys are normally asked for by those who are looking to buy:
• an older property or
• one which needs substantial refurbishment or
• where there have been structural problems in the past.
A mortgage valuation is often paid for by the lender whereas a homebuyer’s report could cost in the region of £300 to £800 depending on the value of the property. A building survey will cost more again.
Additional surveys or reports may be needed by your lender before they’ll make you a mortgage offer.
Removal Firms
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Contact us today for any questions and a free initial consultation or book
an appointment online. We can help to guide you through every aspect of buying a home.