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The Different Types of Mortgages Explained

Mortgage Advice in Doncaster

Whether you are a first time buyer in Doncaster looking to buy a property, moving house, or are ready to remortgage, you’ll soon begin to realise there are many options out there for you when it comes to taking out your mortgage.

This article will feature a comprehensive list of the most popular mortgages available to customers currently on the mortgage market.

If you have any questions regarding any of the mortgage options below, please do not hesitate to get in touch. You can now book yourself in for a free mortgage appointment to speak with a dedicated mortgage advisor in Doncaster, at a time that suits you and your lifestyle.

What is a fixed rate Mortgage?

What Is A Fixed-Rate Mortgage?

A fixed-rate mortgage will mean that your monthly mortgage payments will stay the same for the duration of your mortgage term.

The length you want to fix your payments is your choice, with typical options being around 2, 3 or 5 years or longer.

No matter what happens to inflation, interest rates or the nationwide economy, you know that your mortgage payment, which is usually your single biggest outgoing, will not change.

What is a tracker mortgage?

What Is A Tracker Mortgage?

A tracker mortgage will provide you with an interest rate that mimics the Bank of England’s base rate.

That means neither you nor the mortgage lender will set the rate and change as and when the base rate does.

You will be paying back at a percentage that is above the Bank of England base rate. If we use this in an example, the base rate is 1%, and you are tracking at 1% above the base rate, which means you will be paying back your interest rate of 2%.

Even though these deals aren’t as popular anymore, consider that your mortgage payments will increase if the base rate increases. If it goes down, yours will go down too. Of course, this will benefit you.

What is a repayment mortgage?

What Is A Repayment Mortgage?

When you take out a repayment mortgage, you will be paying back a combination of both the interest and capital each month.

Going off the basis that you can keep your payments going for the mortgage term duration, you will be guaranteed to have paid it off in full and own the home of your dreams by the end of it.

That said, this is generally considered the most risk-free way to pay your capital back to the mortgage lender across the industry. Early in your term, the amount you’ll be paying will be mostly the interest, with your balance reducing at a slower rate, especially if your period is 25, 30 or 35-years.

The process quickens up within the last ten years or so of your mortgage, where you will be paying back more capital than interest, with the balance reducing at a far quicker rate.

What is an interest only mortgage?

What Is A Interest Only Mortgage?

While we do still regularly encounter many buy to let mortgages being set up on an interest-only basis (this is an option that works out much better for many landlords), it is increasingly difficult to get a residential property on an interest-only basis mortgage.

The reason for this is because once you reach the end of your term, you will still have the entire mortgage amount to pay off all in one go, with no additional income to fund the amount you’re required to pay.

There are various unique circumstances where this can be a suitable option for customers, including downsizing when you are older or if you happen to have other investments you can use to pay back the capital.

Lenders are often stringent when offering these products now, and the loan to values tend to be much lower than they were in previous years.

What is an Offset Mortgage?

What Is An Offset Mortgage?

The way an offset mortgage works is that your mortgage lender will set you up with a savings account that will work in tandem with your mortgage account.

For example, let’s say that you have a mortgage balance of £100,000 and you deposit £20,000 into your savings account, you will only be paying interest on the difference between those figures, which would work out at £80,000.

This can be a very efficient way of managing your finances, especially if you want to be paying higher rates of tax.

What is a capped rate mortgage?

What Is A Capped Rate Mortgage?

Like fixed-rate mortgages, capped rates have a maximum amount that a customer will pay each month with a maximum interest rate. With that in mind, if you’re capped at, say, 5%, you’ll never go higher than 5%.

These can be more beneficial if interest rates start to drop, so, for example, if the rates drop to 4%, 3% or 2%, then your mortgage will do the same.

What is a flexible mortgage?

What Is A Flexible Mortgage?

Flexible mortgages allow you to underpay and overpay by unlimited amounts. Underpayments are only allowed if you’ve overpaid first and have agreed with a lender to do so.

Overpayments can be reasonably beneficial, though, as you could end up paying off the mortgage early and with significantly less interest. Mortgage flexibility is usually a feature of offset mortgages.

Mortgage Broker in Doncaster

Agreement in Principle | Mortgage Advice in Doncaster

What is a Soft Credit Search for a Mortgage?

What is an Agreement in Principle?

There seems to be a rise in awareness of credit scoring from first time buyers and other consumers. This is from the increasing attention credit rating is getting from the general public. Our team has also found that when people get in touch with us, the majority have already viewed their credit reports online.

Experian or Equifax seems to be the two most common credit reference agencies but there are more out there. Check My File is something we do recommend to new clients. When they sign up, they get a 30 day free trial and after the 30 days will then be £14.99 a month, however, this can be canceled anytime. The color-coded report provides an easy-to-follow document that collates a range of information.   

We find that clients have become more aware of the fact that too many credit searches can negatively impact their credit score. Therefore, our clients often ask if our mortgage advisors in Doncaster will do a credit search on them. Even though lenders always carry out credit checks, your dedicated advisor will require the client’s permission before doing any checks.

Banks provide two types of credit searches; hard search or soft search.

What is a Hard credit search?

A hard credit search is when they take an in-depth look at your credit report and any financial institution carrying it out soon as you permit the financial institution to do so. The advantage of a hard credit search would be that the lender is looking into your situation quite carefully and if you pass the credit score, you increase your mortgage application’s chance of success.

As long as you have provided satisfactory documentation to back up the information you have disclosed and you haven’t provided false details, the search can be a success.

The footprint doesn’t state if your application was successful or not, however, if you have carried out a number of searches over a few weeks, this could cause the lenders’ system to decline.

Another benefit is that your credit file will have a record kept stating that you have carried out a hard credit search which is good when someone needs to look at your report. However, a credit file that states that there have been multiple searches carried out in a short period of time isn’t great because it could looks like you have applied for a vast amount of credit at the same time. 

Having the odd hard footprint on your record isn’t bad. That’s why you shouldn’t worry too much about it, it’s just best to be cautious in having too much.

What is a Soft credit search?

Unlike hard searches, a soft credit search provides a ‘lighter’ look at your financial situation. This type of search would normally be used on price comparison websites to provide which options you have or it could be used as a source to verify your identity. You may find some mortgage lenders carry out soft searches and it seems that more lenders are changing to this type of search.

With soft searches, you don’t get offered as much information as you would if someone carried out a hard search. A soft search wouldn’t leave any impact on your credit file if you fail. A lender will obtain less information compared to if they carried out a hard credit search. If you come out with an agreement in principle, the difference between the two doesn’t matter. 

One factor that is helpful is that even though you would be able to see soft searches that got carried out on you, these searches are not visible to other financial institutions like banks. Therefore, you can apply for an agreement in principle without damaging your credit score regardless of if it is successful or not.

In the case where you are wanting to make an offer on a property, our mortgage advisors would suggest having an agreement in principle in place prior to you contact the estate agent. You should give yourself the chance to get the property you want at the lowest possible price. 

A big advantage you can have on your part is if you have demonstrated that you have finances in the right place. Having an agreement in principle can also deter the agent from attempting to ‘cross sell’ their in-house mortgage services to you. 

Mortgage Advice in Doncaster: Should I use a Mortgage Adviser?

No matter your mortgage situation, it’s essential to seek mortgage advice in Doncaster at the start of your mortgage journey, whether you are a first time buyer or looking to remortgage in Doncaster

Getting expert mortgage advice can be the difference between an application getting accepted and being rejected. Taking matters into your own hands can work against you as you aren’t as experienced in looking for certain things.

Our team can search through thousands of mortgage deals for you, which will hopefully save both your time and money during your mortgage process.

What does a Mortgage Advisor in Doncaster do?

It’s the job of your dedicated Mortgage Advisor in Doncaster to find you the mortgage deal that is the most appropriate for your circumstances. Some say that there’s no significant difference between an advisor and a broker, which is partially true and untrue.

Mortgage advisors are trained professionals working either for a mortgage broker, independently or for more prominent banks or building societies. The difference comes into play when looking at the companies those advisors work for, compared to Doncastermoneyman.

However, here at Doncastermoneyman, we can tell you our team of specialist mortgage advisors in Doncaster are authorised and regulated by the Financial Conduct Authority and have access to a large panel of various mortgage lenders pick and choose a deal depending on how appropriate it is. 

Many of those advisors working directly for the lender will only offer their products, along with biased advice.

Our mortgage advisors in Doncaster have in-depth knowledge of lending criteria and experience providing expert advice to customers with all types of individual situations.

Why do people get Mortgage Advice in Doncaster?

For first time buyers looking to take that first step onto the property ladder, the process can be confusing. 

It’s here where our dedicated mortgage advisors can take the reigns and walk you through every step, supporting you through the most stressful moments, leading up to when you get your keys and, if necessary, beyond.

It may be that you need mortgage advice in Doncaster because you are looking to remortgage for home improvements/release equity or purchasing your next property to move into or add to your portfolio.

Our team of specialist mortgage advisors in Doncaster in Doncaster can help find suitable mortgages for a landlord looking at buy Let mortgages.

Benefits of using a Mortgage Broker in Doncaster

One of the many benefits of using a mortgage broker in Doncaster is that the process will likely go a lot smoother than it would’ve been if you had opted to go alone. Buying a home can be a very stressful experience, and our customers like to know they have got someone on their side to answer all their questions and queries. Here are some other ways we are also able to help:

  • Elaborate On the various mortgages available and the different types of deals.
  • Help you get ready for your application to increase your chances of success.
  • Try and save you money by searching for a mortgage with lower interest rates and fees.
  • Give you advice on how much you could afford to borrow.
  • Have access to special mortgage deals that are not available on the open market.

Our mortgage advisors in Doncaster job is to ensure you have the highest chance of being accepted the first time possible. Nothing is ever guaranteed, but with our help, you’ll hopefully be one step closer.

Opening Times

We are proud to have the quality of service we provide to our customers seven days a week.

We put our people at the heart of our business and always aim to exceed their expectations. Get in touch with your mortgage broker in Doncaster today and benefit from a free mortgage consultation with a member of 

Mortgage Advice in Doncaster | Mortgage Payment Holidays

At the beginning of the Coronavirus pandemic, the Government made a promise that all borrowers would be allowed a three-month mortgage payment holiday if deemed necessary. Most lenders followed along with the Government’s guidelines and did what they could to help their borrowers during what was a difficult few months.

We felt it appropriate to write a summary of what mortgage payment holidays are, what lenders are doing and who will be able to provide help and guidance through these next few months.

We feel that it is best to summarise what mortgage payment holidays are, what lenders are doing, and who can provide you with help and guidance through these next few months.

What is a Mortgage Payment Holiday?

Mortgage payment holidays are an agreement entered into with your bank, building society or mortgage lender to defer your monthly mortgage payments for a set period. In this case, 3-months.

It does not mean you never have to pay the amount back, but the interest you defer is added back onto the loan amount, while your capital balance will not decrease. In other words, your mortgage amount will increase slightly, and you will continue to attract interest on the whole amount.

When you are ready to continue the payments, this could mean that either your monthly payments are recalculated at a slightly higher level, or your mortgage term is increased somewhat. Most lenders will probably prefer not to extend your mortgage term as this could take you past their standard retirement ages, but the detail on this will follow in due course.

Dependent on your mortgage deal, you may be able to pay off a lump sum later in the year to bring your mortgage back to where it would have been.

Mortgage Payment Holidays are available both for those with residential or buy-to-let mortgages, which means landlords also have assistance if rental payments are affected.

What is the Government Proposal?

The full proposal is in detail below:
• Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.

• The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that COVID-19 impacts them.

• This means that lenders will not complete an income and expenditure assessment, or evaluation of alternate payment options as ordinarily required under MCOB.

• This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where COVID-19 also impacts the operation of collections teams made.

• Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.

• Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

Mortgage Payment Holidays | How do I apply?

We would recommend speaking to your Mortgage Advisor in Doncaster. They will asses your financial situation first before looking to defer your payments as your situation may not yet be pressing.

Approaching a Mortgage Broker in Doncaster like us will allow you to explore all of your current mortgage options and could make things feel a lot less stressful.

For a customer, up to date with payments, not in arrears and impacted by COVID-19:

• The customer would contact the lender and inform them that they are affected by COVID-19.

• The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.

• no evidence will be sought from the customer.

• The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.

• At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.

• The lender notifies the customer that if they wished to complete a full assessment now, there might be other forbearance options more suitable to the customer.

Mortgage Payment Holidays | What does this mean for my Credit Score?

In some cases, a mortgage payment holiday can have a negative impact on your credit score, but most lenders have now said that for cases linked to the virus, they will ensure that this is not the case.

You must ask this question to your lender directly and record the response, including the date and the name of the person you are speaking to avoid confusion later. Different lenders are doing different things.

Will I still be able to remortgage or take a Product Transfer with my lender?

At first, everything seemed like it would remain exactly the same and you would still be able to make changes to your mortgages as normal. This has changed in the last couple of days and lenders have been asking borrowers to avoid making changes whilst you are within a mortgage holiday period. So, at the moment they are not allowing mortgages and product transfers.

Borrowers nearing the end of their existing product may be forced to move on to the higher lenders variable rate. This could mean that borrowers who act too early could find themselves on a mortgage payment holiday that accrues interest on a costly variable rate.

We would highly recommend speaking to your Mortgage Advisor in Doncaster they will determine the best course of action based on your personal and financial situation. If possible, arranging your mortgage transfer first then asking for the holiday would seem to be the most sensible way forward.

My Mortgage got Offered Will my Lender Withdraw the Offer?

At the moment, no Lenders have withdrawn mortgage offers; in fact, some are extending offers past the standard six-month expiration date. 

Should I Pull out of my Purchase?

You should not pull out of your purchase unless, for example, you are worried about losing your job as a result of Coronavirus. We are advising everyone to proceed as usual for now and “wait and see” – you are not committed to completing your purchase until contracts get exchanged.

What “Other Options” are available?

In some cases, lenders can offer you a temporary switch to interest-only in order to reduce your monthly payments but not to add any further to the loan amount by still servicing the interest payments each month.

It may not be necessary to convert all your mortgage to interest only, and it may be that putting part of the mortgage on this basis could give you the breathing space you need.

People with savings may find that remortgaging onto an offset basis could give them a helping boost they were looking for, they will be cutting down on their monthly payments whilst keeping hold of their savings.

For example, someone with a £400,000 loan and £100,000 in savings would only pay interest on £300,000. This will massively reduce their monthly mortgage payments.

For others, a straight remortgage to another lender, calculating the cost of any early repayment charges, may well be enough to ease the burden or simply extending the term of your mortgage.

If you still have any other questions on mortgage payment holidays or just want general Mortgage Advice in Doncaster, give us a call today. We want to help you and your mortgage journey through these tough few months ahead. Speak to an experienced Mortgage Advisor in Doncaster today.

Stamp Duty Cut: Summer Statement 2020

To kick-start the property market during post-lockdown, the Government announced a stamp duty holiday which will run until March 31st, 2021.

Paying stamp duty acts as a barrier to some people purchasing a property, so the Government plans that this move will inspire more people to do so as the housing market is a crucial part of the UK’s economy.

The Government stated the temporary move would mean 9 out of 10 people buying a home during the exemption period won’t need to pay any stamp duty at all.

Stamp Duty Cut 2020 | MoneymanTV

Here’s we have assembled a list on how the changes which have taken effect immediately and how it may affect you:

First Time Buyers

Most First Time Buyers don’t pay stamp duty as they are already exempt up to £300,000. The holiday applies to properties up to £500,000 though so if you are a First Time Buyer in Doncaster buying at that maximum figure, then you would save £10,000 in stamp duty.

Home Movers

Home movers moving up or down the property ladder are likely to be the biggest winners here. If you are moving and your purchase completes before March 31st 2020, then you will not pay Stamp Duty at all as long as the purchase price is <£500,000. The Government predicts that the average stamp duty bill will fall by £4,500, but for properties priced at £500,000 the saving will be £15,000.

Buy To Let Investors/ Additional Homes

The stamp duty surcharge still applies (this got brought in to curb the number of investors buying homes that traditionally would have been bought up by First Time Buyers), but you will still be better off than before.

Under the old system, if you bought an investment property for £250,000, you’d have paid 3% on the first £125,000 and 5% on the second £125,000, resulting in a stamp duty bill of £10,000. During the holiday you will only pay 3% stamp duty on the total purchase price, meaning a bill of £7,500.

Malcolm was on BBC Radio Humberside on 09/07/20 to talk about the stamp duty statement and what was his thoughts, here was his response:

Mortgage Advice in Doncaster

Can I Have Two Mortgages in Doncaster?

Possibly, there are many situations that require a person to have more than one mortgage… We can help with this!

We’ll try and run through reasons for 2 mortgages here:

  1.  Do you want help to raise money on your existing home?
  2. Are you looking to rent out your existing home and purchase a new one?
  3. Are you looking to help your children out?
  4. Do you require help with purchasing a buy to let property?
  5. Are your name on an existing mortgage and you are looking to buy a new property?

Raising Money with Two Mortgages

If you have equity in your home and are looking for a second mortgage to release some of this to fund a purchase or anything else then we can help.

For this purpose it can also be referred to as a secured loan.

Quite often at this time if you are currently on a lenders standard variable rate, we are able to shop around and find a more competitive deal at the same time as releasing capital. A further advance with your current Lender is also an option.

Renting Out Existing Home to Purchase a New one

If you are looking to move house but keep hold of your existing property with the view to let it out we may be able to help.  Mortgage number 2 will be a new residential one.  This type of move is known as a let to buy and is becoming increasingly popular in recent years.

Purchasing a Home for your Children

If you are exploring the options available to you of helping your children or grandchildren with getting on the property ladder there are now many products that we can run through to achieve this.

Buying to Let

If you are looking to purchase a buy to let in Doncaster, we may be able to help. You will be asked to produce a higher deposit for this than a residential mortgage. 

Named on Existing Mortgage and Want to Buy a New Home

Are you currently named on another mortgage and would like to purchase a new property to live in?  This is a situation that I come across on a regular basis especially due to divorce or separation and can often help.

Whatever your situation being to get a second mortgage, being a Mortgage Broker we am able to search 1000’s of mortgage deals on your behalf and recommend the most suitable product for you based on your individual situation.

Can I Port my Mortgage to a New Property in Doncaster?

Most mortgages are actually portable these days. Portable means that it is often possible to transfer a mortgage from one home to another if you’re moving home in Doncaster, without a penalty. Ideal if you are in the middle of a fixed rate and decide you want to move.

Not all mortgages are portable

Not all mortgages are however portable though, so you should check with your Lender or Broker before putting your house on the market to clarify. If you have an older mortgage or if it is with a specialist lender there is a chance it might not be portable.

Porting a Mortgage to a More Expensive Property

Some customers decide not to affect the porting option even when it is available to them. There are several potential reasons for this. Maybe the new Lender will not lend them the extra money they need to fulfil the move.

When you port a mortgage there is a restriction in that it is on possible to port the amount currently owed. Any additional borrowing needs to be from the deals currently available from the lender’s range and might not be competitive.

If you do port a mortgage and borrow extra monies, the additional borrowing creates something called a “sub-account”. In other words, you have one mortgage but with two different rates of interest applying to it.

This can be a real pain because almost certainly the two products will “overlap” each other and as such it’s difficult to get these to line up without having to let one drift onto the standard variable rate for a while.

Customers tend not to like having to change their mortgage deals as often as this and some of them decide to take the “hit” and pay an early repayment penalty to swap Lender and get it all lined up.

Porting a mortgage is more difficult than it sounds sometimes and you would be wise to enlist the help of a Mortgage Broker for their opinion on the options.

Why use a Mortgage Broker in Doncaster?

Benefits of Using a Mortgage Broker in Doncaster

Why use a mortgage broker in Doncaster? | MoneymanTV

The main reason home movers and first time buyers in Doncaster like yourself choose to contact a mortgage broker in Doncaster is to have someone trusted by your side to help the process of buying a home go as smoothly and as quickly as it can go. 

After all, the home buying process can be a stressful experience, and for our customers, it’s a soothing relief to know they have got someone on their side to deal with the complex parts, with availability to answer any questions they may have.

Your mortgage advisor will work hard to try and ensure that you obtain the cheapest or at least most beneficial mortgage outcome for your personal needs. This level of dedication and passion for our work applies no matter the mortgage type. 

Whether you’re making your first purchase, a second purchase, or you wish to remortgage, we put everything into our service to ensure our customers have the best outcome available to them.

When should I get mortgage advice in Doncaster?

If you’re looking at taking out mortgage advice when buying a home, we would personally recommend talking to a mortgage advisor in Doncaster as early on in the process as you can.

Your committed member of the Doncastermoneyman team will be able to help you work out roughly how much you’ll be able to pay per month, as well as how much you may be able to borrow.

Different lenders each have other criteria, so speaking to an expert in the field with a wealth of knowledge surrounding these criteria will significantly benefit you. If you know what you can afford well in advance of making an application, it may help you avoid any potential future disappointment. 

Communication and responsiveness are also a large part of what we do. We aim to ensure all of our customers are kept informed about the progress of their mortgage application, making sure you are fully aware of what is going on and where the process is headed next. 

If something ever goes wrong or you have any questions, we are always available at the end of the telephone, ready to help you out in any way we can.

Free From Estate Agents, Banks or Building Societies

We will work for the customer and not the lender. This is important to remember throughout your process. Our team is firmly in your corner, sometimes having to argue how strong an application may be to ensure it goes through. Thanks to our initial checks, we find that we get an in-depth understanding of our customer’s financial situation. 

Additionally, the company process of requesting and checking your proof of income and bank statements ahead of time allows us to avoid any hurdles that may arise carefully, hopefully before they can become a factor. 

We also can help you choose the right type of survey for your property transaction, as well as instruct a Solicitor on your behalf to carry out the legal aspects of your final transaction. 

We have completed a lot of application forms on behalf of our brilliant customers, again working hard to ensure complete accuracy and giving your application the best chance of achieving in the end. 

Building Customer Relationships

Finally, our motivated and caring Mortgage Advisors love to build up customer relationships, to assist with future mortgage enquiries, be this as a buy-to-let landlord with your portfolio or to remortgage when your term ends. 

Your journey starts with an affordability assessment and Agreement in Principle before you even get to the part where you find a house.

Once your purchase is complete, your advisor will still keep in regular contact via email, and in the six months running up to the initial mortgage product coming to its end, we will get in touch once more to discuss your Remortgage options. 

We are then able to compare the market on your behalf as we did before, to help you obtain the best remortgage deal available for your circumstances. 

Doncastermoneyman.com & Doncastermoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

© 2021 Doncastermoneyman

Doncastermoneyman, 3 Cavendish Court, South Parade, Doncaster, DN1 2DJ.

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