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Mortgages

We have divided our mortgage guide into the following sections. Click on the icon of each for in-depth information.

Interest Only

With interest only mortgages only the interest is actually paid off with each mortgage payment. But you do also need to have a ‘repayment vehicle’ in place to satisfy the lender that you can pay off the capital.

Repayment Mortgages

Here the monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest. Read about the advantages and disadvantages of this type of mortgage.

Remortgages

Replace your existing mortgage with a new one. You can take out a mortgage at a lower interest rate thus reducing your monthly mortgage or loan payments. This is the most popular reason for remortgaging.

Buy-to-Let Mortgages

As the housing market continues to inch ahead, so does the popularity of property as an investment. But if you’re buying to let, it pays to do your sums beforehand.

Flexible Mortgages

Flexible Mortgages are unlike the traditional UK mortgage model. A flexible mortgage is adaptable to fit your circumstances. You can overpay, borrow back overpayments, underpay, offset against current accounts and take payment breaks.

Frequently Asked Questions

What is a mortgage?

A mortgage is quite simply, a loan that is secured against a property. The lender has a “legal charge” which is registered against the property and this gives them additional rights should you (the borrower) default on the loan. For example if you are unable to make your monthly payments on the mortgage then the lender has the right to apply to the court to repossess the property (if all else has failed) and sell it to recover the amount that you owe against the mortgage.

We hope that it never comes down to this and as well as giving you advice on your mortgage, we will be able to explain to you how to protect yourself against any unforeseen circumstances.

Life cover is designed to repay the mortgage in the event of the death of a borrower and Critical Illness cover is designed to repay the mortgage on the diagnosis of one of a specified number of illnesses. The benefits speak for themselves. How would you be able to pay your mortgage payments if you had to give up your job due to ill health and you did not have any cover? What would happen to your partner if the main bread earner died? Could they keep up the mortgage payments if you did not have any life cover?

It is also worth considering Mortgage Payment Protection Cover which is designed to help you make your monthly mortgage payments if you were unable to work through illness or being made redundant.

We will be able to provide you with a full breakdown in costs and give advice to help you decide which types of cover will be beneficial to you.

How much can I borrow?

Subject to status and the value of the property, the majority of lenders use an “income multiple” calculation to ascertain how much they will be willing to lend you.

Firstly the lender will look at your income but this can take into account many different factors:

  • Gross annual basic salary
  • Guaranteed overtime, bonuses & commission
  • Regular overtime, bonuses & commission
  • Allowances
  • Net Profit
  • Drawings
  • Dividends
  • Investment income
  • Maintenance received
  • State Benefits received
  • Cash earnings
  • Income from a second job

The income that will be taken into account in the “multiple calculation” differs greatly between lenders and thus some will lend considerably more than others.

However, income is not the only thing taken into consideration when applying the “multiple calculation”. The Lender will annualise any loan, hp and credit card payments that you have and deduct this figure from your income.

They will now apply the “multiplier” which is usually at least 3.25 X adjusted main income + 1 X second income. Alternatively, they will combine adjusted joint income and multiply this figure by at least 2.5.

If this doesn’t appear enough for what you need, don’t despair as there are a few lenders who will even lend beyond 4 X main income or even those that use an “affordability” calculation instead of income multiples.

We will be able to seek out the lender that will be able to offer you the most suitable loan for your specific circumstances. Click here for one of our advisors to contact you to discuss your specific circumstances.

Can I get a mortgage?

Mortgages are a mystery to the majority of people and many do not have the most suitable product for their circumstances. Many are under the misconception that they will not be able to get a mortgage for one reason or another.

Whether you do not feel that you are earning enough, have no deposit monies available, have adverse credit registered against you, are self employed, a director, or on a fixed employment contract, Mosaic Mortgages will be able to find a mortgage to suit your individual circumstances.

Find out all you need to know about getting a mortgage by selecting one of the links on the navigation panel on the left hand side of the home page. The First Time Buyer guide contains a lot of useful information for home owners moving house as well.

What are early redemption charges?

This is a fee charged by the lender should the borrower want to remortgage elsewhere or pay off the mortgage in full before the end of a special rate period (pre-determined at the outset). This is designed to ensure that the borrower stays with the lender for the specified period of time.

There is generally a balance between the rate that is offered to the borrower and the length of time that the borrower will be tied in to that lender with a penalty. If the rate is exceptionally low, the lender will tie the borrower in for longer than the offered rate. For example:

  • 1.49% rate fixed until 1/6/05 but there are redemption penalties until 1/6/09 and the lender’s standard variable rate is 5.65%. If you were to remortgage a £100,000 capital and interest repayment mortgage in the third year, you would be charged a penalty of £6,530.25
  • 3.54% rate fixed for 2 years with redemption penalties only during the fixed rate period. If you were to remortgage a £100,000 capital and interest repayment mortgage during the fixed rate period, you would be charged a penalty of around £2,600. Obviously, there would be no penalty if you remortgaged after the fixed rate had ended.
    3.99% rate fixed until 1/7/05 with no redemption penalties whatsoever.

How the lender calculates the penalty does vary from a number of months interest penalty (usually calculated at the lender’s variable rate) to a percentage of the amount of mortgage redeemed.

Does my employment status effect my ability to get a mortgage?

There is a misconception usually amongst the self employed or Company Directors that they will not be able to get a mortgage. This is not true.

However, a lender will always take into account the stability of an applicant’s employment when making a decision whether to lend.

Typically, for the self employed, there is a minimum trading requirement with mainstream lenders of 2-3 years but there are those lenders who will lend to you after the first trading year or some will even lend when you have only been trading for just 6 months.

For those in employment, the applicant must have been in their current job for at least 6 months or have been in continuous employment for 6 months but there still lenders who will go outside these guidelines and Mosaic Mortgages will be able to source from the entire mortgage market to find a lender who is sympathetic to your individual circumstances.

If you are concerned that your employment status will cause you a problem obtaining a mortgage then click here for one of our specialists to contact you to discuss your individual circumstances.