FREQUENTLY ASKED QUESTIONS
Your Questions Answered
WHAT IS A SUB-PRIME MORTGAGE?
A prime client is someone who is considered a low risk, and generally someone with a high credit score, who pays their bills on time. A sub-prime Client is usually classed as someone who has a few credit blips such as Missed or late payments on their credit cards/loans or utility bills.
WHEN SHOULD I REFINANCE?
Refinancing usually occurs when the client's existing deal runs out. The customer usually has a 6 months date for their mortgage offer to expire. They should consider speaking to their Broker 120 days before their existing mortgage expires, as to lock in a new rate.
SHOULD I GET A FIXED RATE OR ADJUSTABLE RATE LOAN?
This entirely depends on the current market and your plans over both the long term and the short term. If you are happy for monthly payments to remain the same, a fixed option may suit you better.
WHAT DOCUMENTS DO I NEED?
When you are going for a mortgage, you will always need the following documents.
​
Employed:
Proof of Address/ID
3 months Payslips
3 months Bank Statements
Credit Report dated within 3 months
Contract of Employment
​
Self Employed:
Proof of Address/ID
2-3 Sa302s (Tax Return)
3 months Bank Statements (Business and Personal)
Credit Report dated within 3 months
Company Accounts
WHAT IS THE PROCESS FOR GETTING A MORTGAGE?
The process for getting a mortgage is an often misunderstood process. There are a few steps involved that shouldn't take too long, with others that can take weeks or months, particularly near the end of the process at solicitor stage.
​
Broker Stage (1 week)
​
All documents are submitted to the Broker/Bank
​
Broker looks for the best deal based on your docs and circumstances, liaising with BDMs and Banks
​
Recommendation Stage (3 days)
Broker recommends the most suitable mortgage for your situation.
​
Valuation & Offer Stage (2 weeks)
​
If the terms of the mortgage are accepted, once affordability checks are done, the client accepts the recommendation and pays an App fee.
​
The Lender instructs a valuation on the property.
​
Once the valuation is complete the offer is sent out to the solicitors and the Borrower.
​
​
Solicitors Stage and Completion. (2 months)
​
The clients solicitor does the necessary checks to ensure the house can be sold to the buyer, or the bank can take "a charge" on the property.
​
The completion date is agreed when all checks are complete and fees are paid.
​
​
DO I NEED A SOLICITOR WHEN BUYING OR SELLING A PROPERTY?
In my opinion, you should always use a Solicitor when buying or selling a property, because it takes the risk out of your hands and allows the 'expert' to deal with your case. It also can help the process, as they should be in regular contact with your lender or Estate Agent once they are instructed to act on your behalf. The process can be tedious when involving Solicitors, but it is a vital part of the process and any outstanding queries should be chased up immediately, in writing and over the phone.
DO I NEED A DEPOSIT WHEN PURCHASING A PROPERTY?
A deposit is not always necessary depending on how you are purchasing. It can help to reduce the cost of the finance over a period of time (The higher deposit, less interest you pay). Purchasing a Below Market Value property with a bridge, may mean you do not need a deposit, but going onto a Term Mortgage, might mean you will need between 5-10% deposit to put down for your new property.
HOW DOES A BRIDGING LOAN WORK?
A bridging loan is known as short-term finance, and is used as such. Often, buyers use it to "bridge the gap" between selling their house and buying a new one. It can and had now been used in more innovative ways, such as, to purchase land and develop on it. The finance usually lasts 3-18 months and the interest is in three types (serviced, rolled up, retained). The term depends on whether you're using the bridging loan for a personal build or to develop houses, and sell them on.
Serviced: The monthly payments are made much like you would for a mortgage.
Rolled up: The interest is "rolled up" month to month including all fees and paid at the end of the term. The interest is effectively added to the loan and paid in one.
Retained: The interest is added together than taken at the end of the term. This can be more costly though as the interest is compounded over the term and paid in a lump sum.
Bridging finance is often used for development projects on BTL properties and commercial portfolios.
Rates are calculated monthly as I stressed earlier, and they also allow you to pay it all off at once.
WHAT IS A VARIABLE RATE?
Variable rates are ever more important in a climate where fixed rates are going up and mortgage payments are costing more.
A Variable rate is a rate that moves up and down according to the Bank Of England base rate. It is the Bank of England base rate + the rate the bank wants to charge you and is often called a "Tracker Rate". The variable rate moves up and down depending on what happens with the Base rate, they are usually a few points above that rate.
Often these rates are suitable for clients who want to change their mortgage options quickly, without incurring mortgage "Early Repayment Charges (ERCs)", which can often be up to 5% of the full balance of the mortgage left.
The rates aren't always suitable when the client needs to understand what their monthly payments they will be on a tight budget.
WHAT IS A FIXED RATE?
A fixed rate is a rate given to the client by the Lender. It is a rate fixed for 2, 3, 5 and even 10 years. When the Bank of England rate increases, this protects you against any rate rises from your own Bank. Around 2.4m people are coming off the fixed rates in the next year and need to fix back into a new rate.