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How to get a mortgage

It sounds simple: "I'll get a mortgage." But if you've never done it before, you probably don't know where to start. Even people who already have a mortgage can be uncertain what to do when they need another one.

So, your very first step when you want a mortgage is to choose whether you'll do it yourself or ask a mortgage broker for help. A mortgage broker already knows the market inside out and is on top of the latest & best mortgage deals available. A broker takes the hard work out of finding the best mortgage for you and handling most of the paperwork.

The DIY route involves finding a lender among the dozens in the market. And then deciding what type of mortgage you want from the thousands of different mortgages to choose from.

Whether you are researching the market yourself or talking to a broker, it helps if you understand the sort of decisions you'll be making so we explain more about this below to help you on your way.

Decide what type of mortgage you want.

There are several different types of mortgage to suit people's different situations. The main ones are:

  • • fixed rate mortgage
  • • tracker mortgage
  • • discount mortgage
  • • flexible mortgage

Fixed rate Mortgage

Fixed rate mortgages have a fixed rate of interest and last for a fixed number of years. The big advantage of them is that you know exactly how much it'll cost you each month for the life of the mortgage, which is usually two, three or five years.

Whatever happens to other mortgage rates in that time, your rate will stay the same. This is good if mortgage rates generally go up but not if they go down. For people who need to budget carefully, the advantage of knowing how much you'll pay out every month is worth the risk that you'll miss out if mortgage rates fall.

Tracker Mortgage

Tracker mortgages have competitive interest rates and last for a fixed period of a few years. The interest rate is linked to the Bank of England base rate by a set percentage. The amount depends on the particular mortgage deal. Whenever base rate goes up or down, so too will the cost of your mortgage.

Discount Mortgage

Lenders have a basic standard variable rate (SVR) mortgage - a discount mortgage is a discount on that rate for a set period of years. It makes the mortgage cheaper to start with, although the cost will go up if the SVR goes up.

Flexible Mortgage

Flexible mortgages allow you to make changes to your repayments if your circumstances change. You can choose to pay in more than your agreed payment if you can afford it. In fact most mortgages allow this.

But, unlike other mortgages, for a short time you can pay less or even take a payment holiday and stop paying altogether for a few months.

You need to know that there is a price to pay for this flexibility - the mortgage rate will be higher. So only pick a flexible mortgage if you're likely to need the option to underpay because most other mortgages allow you to overpay anyway.

Save your deposit

It's worth saving as big a deposit as you can. The more you put down as a deposit means the less you need to borrow and it also gives you a bigger choice of good mortgage deals.

You'll need to have saved up at least 5% of the price you're paying for your home but if you can manage 10% or more, you'll get a better mortgage deal.

First time buyers and indeed anyone who's struggling to save a deposit for property worth up to £600,000 should think about the government's Help to Buy scheme.

There's more information in our Help to Buy page and our First Time Buyer page.

Budget for extra charges

Before you can move in, you'll have to pay out for some if not all of these expenses:
Mortgage arrangement fee

  • • valuation fee
  • • legal fees
  • • stamp duty
  • • moving costs


How do I Remortgage my home
  • • How do I remortgage my home?
  • • People choose to remortgage their home for a number of reasons.
  • • Some want to reduce their monthly repayments or reduce other debts. Others want to change the terms of their mortgage to make it more flexible and suit their current needs. Others may want to release equity built up in their home.
  • • There are many factors involved in getting a new mortgage, and the process may seem complex and time consuming but don't worry, we don't expect you to take it all on yourself – we are here to advise you at every step of the way and to do most of the work for you. Simply give us a call and we can guide you through your remortgage from start to finish.
  • • Still, it is always good to get clued up... so read on to find out more about what is involved in remortgaging, and how to ensure you'll find a new mortgage that is right for you and your circumstances.
  • • Working out how much you can afford to pay
  • • The first step in getting a remortgage is working out how much you can afford to pay. And this involves getting all the relevant remortgaging paperwork together.
  • • You'll need to find your recent mortgage and bank statements to see what your current interest rate is and how much you are paying each month.
  • • This is also a good time to consider what you could afford if your monthly repayments increased.
  • • Although many people change lenders to reduce their monthly repayments, others want to make their mortgage more suitable to them – perhaps switching from a variable rate to a fixed rate. In some cases, your monthly outgoings could increase when you choose a new lender so it's important to know what you could afford.
  • • You should also factor in how much you can afford to spend on additional fees, which we will come to next.
  • • Investigating what costs are involved in remortgaging
  • • There are usually some costs involved when switching your mortgage to a new lender. These include an arrangement fee paid to your new lender for setting up the mortgage, as well as potential valuation and legal fees. You may have to pay an exit fee for leaving your current lender.
  • • Certain fees can be added to your mortgage balance, but remember that you'll be paying interest on them if you do. If paying them up front, make sure you budget for them.
  • • Fortunately, many remortgage deals will have low or sometimes even no set up costs – as part of our advice, we always check that any new deal is worthwhile based on both the interest rate and any fees involved.
  • • The good news is that whether there are set up fees to pay or not, you won't pay a fee for our advice.
  • • Checking if your current mortgage has restrictions Don't assume that you're free to leave your current deal whenever you want. You may be tied in with Early Repayment Charges (ERCs) and these can be costly. Check with your current lender whether you have ERCs, how much they are and when they end.
  • • Looking around for a new mortgage
  • • When looking for the best mortgage deals to suit you, you're likely to find a lot to choose from and selecting the right one may seem daunting. This is where using an independent mortgage broker is your best option as they'll do all the research for you.
  • • If you approach your current bank for advice on good mortgage deals, they're likely to only suggest their own rates.
  • • A broker, however, will compare offers from across the market – helping you find the best possible deal for you.
  • • Checking what your current lender is able to offer
  • • Before you commit to a new mortgage agreement, we'd advise you to check what your current provider what they can offer you – they may have some good deals available for existing customers.
  • • You can then compare what they offer with what you can get by switching to a new lender.
  • • Submitting your application
  • • Once we've researched everything for you, found a good deal and you've decided that a new mortgage is right for you, it's then time to submit your application.
  • • Before you do that, we'll send you a Key Facts Illustration (KFI) for the deal we've recommended which sets out all you need to know about the mortgage, what it costs and what fees are involved.
  • • At this point you should get together the documents that a lender will ask for when assessing your application, such as ID, recent payslips and bank statements.
  • • In most cases, we'll submit your application on your behalf – we can take the information from you over the phone, saving you the hassle of lengthy application forms.
  • • Getting your mortgage offer
  • • Once your application has been submitted, we'll assign you a case manager who will help you get your new mortgage up and running. Your new lender will be assessing both you and the property (by way of a valuation) before issuing a mortgage offer and we can liaise with them on your behalf to make the process as smooth as possible.
  • • There's also the legal work to be done – lenders will often appoint their own solicitors or conveyancers for a remortgage but if you need to appoint one, we can recommend one for you.
  • • Once your mortgage offer has been issued, double check the information the lender sends you and make sure everything is correct before you complete. If you're unsure of anything, we're happy to discuss with you.
  • • We hope this guide has helped you understand how to remortgage your home. I know this may see an extensive list, but don't be alarmed, we will do all this for you. If you'd like some further advice or perhaps you've even already decided that it's time for you to find a new lender and you'd like to get started, give one of our expert mortgage advisers a call.

How does a landlord mortgage work?

A buy to let mortgage is a loan secured against a property which you own and intend to rent out to a tenant. You're buying to rent it out, or in other words, you're buying to let.

As with a normal residential mortgage, it's your responsibility to meet the mortgage repayments each month. The big difference is that with a buy to let mortgage, how much you can borrow is based mainly on how much rent the property can earn, rather than your own income – our calculator can give you an idea of what you could borrow . When you have a tenant paying rent, the rental income should cover the cost of the mortgage, ideally with some left over, but that's not guaranteed.

Becoming a landlord is not for everyone, and there are multiple things to consider before getting a buy to let mortgage.

Still, if you want to know how to get a buy to let mortgage, then all you need to do at this stage is scroll down...

How do I get a buy to let mortgage?

Getting a buy to let mortgage can be simple... not easy.

The difference is that it takes a bit of research, time and patience to make the right decision at every phase of the process.

The good news is that you'll learn all about that process on this page. The better news is that we can do most of the hard work for you.

How to choose a buy to let property

There's a high chance you already have a city or town in mind for your property at this point. A lot of landlords prefer to own properties near where they live themselves.

Of course, there are more profitable places in the UK than others. However, if you're living in Manchester then it may not be so wise to buy a property in London. So, you need to consider the balance between feasibility and profitability.

That's where a letting agent comes in.

You can give them your shortlist of preferred cities/towns, your preferred property type and even your preferred type of tenant.

In return, they advise on the most suitable areas and properties for you.

-- Note: If you don't already know what location, property type and tenant type you'd prefer, don't worry - the letting agents are prepared to help you figure those things out too. --

Here are some questions you can expect to nail down (for each potential area) when working with a good letting agent:

  • • Does the area have good transport links? Are there any plans to improve these?
  • • What about schools, shops and local amenities (cinemas, restaurants, parks etc.)?
  • • Is the area 'in demand' right now? Is that demand expected to grow long term?
  • • What type of tenants are living in this area today (married couples, students, families on housing allowance etc.)?
  • • Is that demographic expected to change any time soon?
  • • What type of properties do tenants in this area desire most?
  • • Is there a benchmark level of rent I can expect to receive here?
  • • Are the majority of letting properties in this area furnished by the landlords?
  • • Is there a certain property type which is expected to grow in this area, potentially even to a point of oversupply?
  • • Are there any major developments due to begin here within the next 10 years?
  • • What's the crime rate like in this area?

Once you know the answers to the above questions (and you'll find there are even more questions when you sit down with the agent), not only will you be able to make a more informed decision on your investment, but you will also have the knowledge to pitch your property to future tenants.

Getting a buy to let mortgage with a broker

The best way to get a buy to let deal is to seek advice from an independent mortgage broker. We would say that because that's what we do, but hear us out for a second... It's our job to know the buy to let market inside and out and to use that knowledge to help find you the right deal with the right lender. As independent advisers, we search across the market, giving you a clear picture of the very best offers available right now.

The 5 step process of getting a buy to let mortgage

  • 1. Do some initial research on the type of property you want to buy and the area you want to buy in
  • 2. Think about your budget including how much you deposit you can put down and how much rent you might be able to earn.
  • 3. Compare the best buy to let mortgages.
  • 4. Get in touch with us free on the number 01482 870668
  • 5. Then all you need to do is discuss the details with us, and make a decision about whether or not you want to proceed. There's no obligation for our advice.

If you're happy to go ahead, we'll also help you apply for and set up your new mortgage, saving you time and hassle.

Please note: although Mortgagecube is authorised and regulated by the Financial Conduct Authority (FCA), the FCA does not regulate most Buy to Let mortgages

More faqs

What is a fixed rate mortgage?

What is a tracker mortgage?

What is a lifetime tracker mortgage?

What is a discount mortgage?

What is a standard variable rate mortgage?

When will interest change?

How does let to buy work?

What is an offset mortgage?

What is an interest only mortgage?

What is a repayment mortgage?

What is a freehold?

What is a leasehold?

Can I buy a leasehold?

Will Brexit have an immediate effect on house prices?

Is this the end of big house price increases?

Will house prices plummet at some stage?

I'm looking to buy, how do house prices affect me?

I'm looking to sell, how do house prices affect me?

Frequently asked questions

What is a fixed rate mortgage?
With a fixed rate mortgage, the interest rate stays the same for a set period of time. This means that for every month during this set period, your mortgage repayments will remain the same, even if there are changes with changes to the Bank of England base rate, or your lenders’ standard variable rate (SVR).The term of a fixed rate mortgage usually lasts between two to five years, but can be much longer. 7 and 10 year mortgages have become popular in 2016, with very competatvie mortgage deals. When this period comes to an end, your lender will typically transfer you automatically onto its SVR.

For more information on the pros and cons of fixed rate mortgages give our experts a call and they can advise on the best option for your circumstance.

What is a tracker mortgage?
A tracker mortgage is a type of variable rate mortgage. The interest rate usually tracks the Bank of England base rate at a set margin (for example, 1%) above or below it. Tracker mortgage deals can last for as little as one year, or as long as the total life of the loan. Once your tracker deal comes to an end, you’re likely to be automatically transferred on your lender’s standard variable rate (SVR). Typically, this will have a higher rate of interest.

For more information on the pros and cons of tracker mortgages give our experts a call and they can advise on the best option for your circumstance.

What is a lifetime tracker mortgage?
A ‘lifetime tracker mortgage’ is a mortgage where the rate you pay back the loan at ‘tracks’ the bank of England base rate for the entire span of the mortgage, for example the base rate +1%. This is different to a typical tracker mortgage where the rate tracks the base rate for a set time period i.e. two years and then reverts back to the lender’s standard variable rate.

What is a discount mortgage?
A discount mortgage is a type of variable rate mortgage. The term ‘discount’ is used because the interest rate is set at a certain ‘discount’ below the lender’s standard variable rate (SVR) for a set period of time. For example, if a lender has an SVR of 5% and the discount is 1%, the rate you’ll pay will be 4%. And if the SVR is raised to 6%, your discount rate will also rise – in this case to 5%.Discount mortgage deals typically last between two and five years. When your discount mortgage deal comes to an end, your lender will typically transfer you automatically onto its SVR.

For more information on the pros and cons of discount mortgages give our experts a call and they can advise on the best option for your circumstance.

What is a standard variable rate mortgage?
A standard variable rate mortgage (also known as an SVR or reversion rate mortgage) is a type of variable rate mortgage. The SVR is a lender’s ‘default’ rate – without any limited-term deals or discounts attached.

When a fixed, tracker or discount mortgage deal comes to an end, you will usually be transferred automatically onto your lender’s SVR.

It can be risky to stay on your lender’s standard variable rate mortgage. A lender can raise or lower its SVR at any time – and as a borrower you have no control over what happens to it. Standard variable rates tend to be influenced by changes in the level of the Bank of England’s base rate. However, a lender may also decide to change its SVR while the base rate remains unchanged.

If you are on a tight budget and relying on your SVR to remain low, you’re in a very vulnerable position. In this case, it is very important you try to remortgage onto a fixed rate deal (which offers rate stability) before it’s too late.

For more information on the pros and cons of standard variable rate mortgages give our experts a call and they can advise on the best option for your circumstance.

When will interest change?
Interest rate rise
It’s impossible to predict with any certainty when interest rates will rise again – there are no hard or fast rules about when exactly it will happen. The most important thing for borrowers is to be sure that if you’re on a tracker, discount or other variable rate mortgage – you could still afford your repayments if rates went up by 2%. Although it’s unlikely that rates would rise by 2% in a short period, it’s not impossible.

On Black Wednesday back in 1992, the Chancellor raised interest rates by 2% in one day, and a further 3% shortly thereafter. Although this was an extreme event, it goes to show that movements in interest rates can be unpredictable.

For more information about how interest rate changes could affect your mortgage give our experts a call and they can advise on the best option for your circumstance.

How does let to buy work?
Each person’s let to buy arrangement will work slightly differently but broadly it works like this:

Stage 1: Remortgage your current property onto a new mortgage deal. You could do this with your existing lender or a new lender. If you own enough equity in the property remortgaging will allow you to release some money.

Stage 2: The new mortgage will either need to be a buy to let mortgage or you will need to agree consent to let with the lender, which allows you to rent your property out but not to remortgage. Be aware that some lenders will increase their interest rate or charge an admin fee in order to grant consent. You would then let out your existing property to cover your mortgage repayments.

Stage 3: Use the equity you have released or existing savings as a deposit to take out a new mortgage and move into a new home.

Stage 4: Keep letting your existing property until you would like to sell it.

What is an offset mortgage?
Rather than trying to help people with their money needs, banks, building societies and other firms spend their time trying to sell you products. There’s often little thought put into what other products you may already have – the salesmen’s job is simply to pile another one on top.

Offset mortgages are a worthy attempt to address one consequence of that – the fact that people who have both cash savings and a large mortgage are not planning their finances in the most efficient way.

Savings rates compared to mortgage rates
This isn’t a difficult concept. Traditionally, most savings accounts have paid lower rates of interest than tended to be payable on mortgage borrowing (not surprisingly, since lenders use savings to lend to customers who need a mortgage). But if you’re earning less money on your savings than you’re paying out to service your mortgage interest costs, your overall wealth is effectively going backwards.

The simplest solution is to use your savings to pay a chunk off your mortgage – and to use all future surplus cash to pay down your home loan debt as quickly as possible. But that’s an option that doesn’t suit most people. They may have particular uses in mind for their savings – or, very sensibly, feel more comfortable with a rainy day fund on which to fall back in the event of an emergency.

Offset mortgages attempt to square that circle. They require you to pool your savings in one account with your mortgage debt. You can still draw down on the money when you need to, but in the meantime every penny of savings you have is used to reduce the total value of your outstanding mortgage – the sum on which your interest payments are calculated.

Over time, thanks to the benefits of compound interest, that can have substantial benefits, enabling you to pay off your mortgage in full much earlier than expected – and at a much lower total cost of borrowing than originally envisaged.

Offset mortgages are out of favour
Still, this approach doesn’t suit everyone. For one thing, it can prove complicated keeping track of your finances. While offset mortgage providers will ensure you get information on which pool of money is savings and which is mortgage debt, many people feel happier keeping them separate.

Also, in the current low interest rate environment, with base rates at all-time loans, the argument for the offset approach is not so clear cut. The difference between mortgage and savings rates is barely discernible.

There are also other things to consider when looking for the best mortgage deal. When thinking about which mortgage type would suit you the best you may find you would prefer a tracker, discount or fixed rate mortgage deal.

Interest only or repayment mortgages
There’s all sorts of jargon to get to grips with when considering mortgages, but one of the most crucial matters to grasp is the difference between an interest-only and a repayment mortgage.

What is an interest only mortgage?
An interest only mortgage is where you only repay the interest on the loan each month, rather than paying off the money you borrowed. This means at the end of the mortgage term you still owe the full amount that you originally borrowed and so you will need to ensure you have a way of paying off the entire mortgage all in one go at the end.

What is a repayment mortgage?
With a repayment mortgage, on the other hand, you pay interest charges each month but also make a small repayment of the original advance. At the end of the term of the mortgage – usually 25 years – as long as you have kept up repayments, you’re debt-free with no more to pay.

Interest only mortgages are more risky
So which type of deal is best? Well, there’s no right answer to that question – it really depends on your attitude to risk.

With an interest-only loan, the additional savings you make are invested in order to get you to the final total required. The returns on these investments plus, very often some tax breaks, may mean repaying the capital borrowed costs you less in total monthly contributions. And on the day the mortgage finally falls due, you may even find you have additional cash left over – a lump sum to spend as you see fit.

Interest-only mortgages got a bad name during the endowment scandal. Many borrowers were sold endowment funds they thought were guaranteed to repay their mortgages, only to find many years down the line that they actually faced a shortfall.

That is the risk of an interest-only mortgage. If the investments you make disappoint, you may not have enough money to cover your debt. In which case you’ll have to make additional payments you weren’t expecting.

In practice, such a shortfall should not come as a horrid last-minute surprise. If you do opt for the interest-only route, your mortgage lender will expect to see evidence that you are making provisions to repay the capital. And the provider of the savings vehicle you are using should provide you with regular updates on your progress – including warnings if it thinks you are in danger of falling short of the sums required (and advice on what to do to make up the ground).

Moreover, you may be able to get a little extra help from the taxman. If you use tax-efficient saving products to save for the final payment, such as individual savings accounts or even pension schemes, you’ll get a boost from their tax-free status.

Fewer interest only mortgages available
Even so, interest-only products are not for the faint-hearted. Where interest-only mortgages sold with an endowment policy were once the most common type of home loan, the majority of people these days prefer the security of a repayment mortgage.

Many lenders have also decided to stop offering interest-only mortgages or will only offer them to certain customers. So the range of mortgage deals available to you may be more limited if you opt for an interest only mortgage. A Which? Mortgage Adviser will be able to advise you on whether an interest only mortgage is the right option for you.

There are other things to consider too when you’re looking to get the best mortgage deal. You should also think about whether you would like a fixed rate mortgage or a variable rate mortgage.

Freehold and Leasehold
Most property in England and Wales is owned on a freehold basis. If you own a house you will usually own the freehold and with a flat or an apartment you will typically own a lease instead.

Scotland has its own version of freehold, called ‘feuhold’, and leasehold property is very rare.

Whether you own the freehold, or just the lease, affects your property rights and who is responsible for maintenance costs.

What is a freehold?
If you own the freehold it means you own your property and the land it is built on. This means, subject to planning laws, you can do what you like such as adding an extension or changing the garden. You can also pass it on to your heirs when you die.

But as the freeholder you are also responsible for any maintenance or repairs that need doing to your property – although of course you can decide whether to do them or not.

For more information about how a freehold could affect your mortgage selection give our experts a call and they can advise on the best option for your circumstance.

What is a leasehold?
Under a leasehold agreement, you are effectively buying the right to live in and moderate the interior of a property for as long as the lease lasts. However, you will generally not own any communal parts of the building – such as lobbies and gardens in a block of flats – and you won’t own the land that your property is built on. Broadly speaking, this means you own everything within the walls of your property, including the floorboards and plaster but nothing outside of it, including the roof.

If you buy a leasehold property you are only able to live there for as long as the lease lasts, once this runs out, the property returns to the freeholder. If there is less than 70-80 years left on a lease you may struggle to get a mortgage for that property, or to sell it. But, once you have been living in a property for two years you can apply to extend the lease by up to 90 years – although you will have to pay to do this.

The freeholder will charge you ground rent to live in your property. You will also need to pay service charges to cover the cost of maintenance and repairs to communal areas of the building. The freeholder might manage this or employ a property management company to do it.

One of the risks of owning a leasehold property is that the freeholder may have the right to demand large sums of money to pay for external renovations to your property. This is particularly common in older blocks of flats, so it’s important to ask about scheduled and anticipated works before you buy a leasehold property. For more information about how a leasehold could affect your mortgage selection give our experts a call and they can advise on the best option for your circumstance.

Can I buy a leasehold?
It is possible to purchase the freehold of a leasehold property under certain conditions, but this process, known as enfranchisement, can be lengthy and costly. You should seek advice from a solicitor or the Leasehold Advisory Service for more information.

Another option, if you live in a building with several flats in it, is to buy a share of the freehold along with the other leaseholders in the building, known as commonhold. In order to buy under a commonhold arrangement over half of the people living in the building must agree to buy a share. The owners will then collectively own the freehold and be responsible for its upkeep.

For more information about how a leasehold could affect your mortgage selection give our experts a call and they can advise on the best option for your circumstance.

Fixed rate mortgage or variable mortgage
Whether to choose a fixed or variable interest rate is a difficult choice all borrowers have to make when picking a mortgage product. But in the current economic environment, that decision is more finely balanced than ever.

The certainty of a fixed rate mortgage
A fixed rate give you absolute certainty about the cost of your monthly mortgage repayments during the term of the deal – two to five year fixes are most common, though longer-term deals are available. So for anyone worried about their ability to cope with rising repayments, the security of a fixed-rate deal is therefore very attractive.

The risk of a variable rate mortgage
Variable rate mortgages, such as tracker mortgages, offer the prospect of cheaper repayments in the event that interest rates fall, but the flipside is that you’ll pay more in the event of a rate rise.

Since rate changes can be difficult to predict, it’s important to be sure that you could afford your mortgage payments if rates were to rise. Our mortgage repayments calculator will give you an idea of what your repayments would be at different interest rates. Over the longer term, forecasts are harder to make, so the decision gets even more difficult.

Beware mortgage fees
Choosing between a fix and a variable rate is not the only consideration when you’re picking a mortgage. There are a number of other things you need to think about to make sure you’re getting the best mortgage deal. This includes arrangement fees, which can run into thousands of pounds, muddy the waters when comparing deals. Furthermore, mortgage providers do not base their interest rates solely on the Bank of England rate. Fixed rates, for example, vary according to movements on gilt markets, while all rates change in relation to the banks’ ability to borrow from the funding markets. This has recently become more of an issue, with concern amongst banks about the creditworthiness of each other during the sovereign debt crisis.

It is possible to purchase the freehold of a leasehold property under certain conditions, but this process, known as enfranchisement, can be lengthy and costly. You should seek advice from a solicitor or the Leasehold Advisory Service for more information.

Another option, if you live in a building with several flats in it, is to buy a share of the freehold along with the other leaseholders in the building, known as commonhold. In order to buy under a commonhold arrangement over half of the people living in the building must agree to buy a share. The owners will then collectively own the freehold and be responsible for its upkeep.

For more information about how a leasehold could affect your mortgage selection give our experts a call and they can advise on the best option for your circumstance.

Fixed rate mortgage or variable mortgage
Whether to choose a fixed or variable interest rate is a difficult choice all borrowers have to make when picking a mortgage product. But in the current economic environment, that decision is more finely balanced than ever.

The certainty of a fixed rate mortgage
A fixed rate give you absolute certainty about the cost of your monthly mortgage repayments during the term of the deal – two to five year fixes are most common, though longer-term deals are available. So for anyone worried about their ability to cope with rising repayments, the security of a fixed-rate deal is therefore very attractive.

The risk of a variable rate mortgage
Variable rate mortgages, such as tracker mortgages, offer the prospect of cheaper repayments in the event that interest rates fall, but the flipside is that you’ll pay more in the event of a rate rise.

Since rate changes can be difficult to predict, it’s important to be sure that you could afford your mortgage payments if rates were to rise. Our mortgage repayments calculator will give you an idea of what your repayments would be at different interest rates. Over the longer term, forecasts are harder to make, so the decision gets even more difficult.

Beware mortgage fees
Choosing between a fix and a variable rate is not the only consideration when you’re picking a mortgage. There are a number of other things you need to think about to make sure you’re getting the best mortgage deal. This includes arrangement fees, which can run into thousands of pounds, muddy the waters when comparing deals. Furthermore, mortgage providers do not base their interest rates solely on the Bank of England rate. Fixed rates, for example, vary according to movements on gilt markets, while all rates change in relation to the banks’ ability to borrow from the funding markets. This has recently become more of an issue, with concern amongst banks about the creditworthiness of each other during the sovereign debt crisis.

What is a mortgage in principle?
Also known as a ‘Decision in Principle’ (DIP), ‘Mortgage Promise’ or an ‘Agreement in Principle’ (AIP), a mortgage in principle is a certificate or statement from a lender to say that ‘in principle’ they would lend a certain amount to a particular prospective borrower or borrowers based on some basic information.

In almost all cases a Decision in Principle will be undertaken by a lender prior to any application being made. The information that you provide will allow the lender to check your credit file helping them establish whether you are mortgageable and if they are happy to lend the amount you require.

A Decision in Principle can be submitted at any point in your journey in obtaining a mortgage.

If you are looking to purchase a house then an estate agent will often want to ensure that when you are making your offer that you will be able to obtain a mortgage and for the amount you require, on top of your deposit, in order to proceed to completion. It is important that you have taken advice on products and lenders that you might proceed with as a DIP can leave a soft or hard footprint on your credit file.

In terms of remortgaging there is less external requirement to have this information so a DIP would be submitted once the right lender and product has been recommended to you.

DIPs can be confusing, but Which? Mortgage Advisers can provide you with completely independent and impartial advice, tailored to your individual circumstances, about when and who you should look to be completing a DIP with. As completely independent mortgage brokers, if you decide you’d like to take out a DIP we can also arrange one for you.

In general terms, there are a few pros and cons to taking out a mortgage/decision/agreement in principle:
The pros of getting a Decision in Principle
• Having a Mortgage in Principle to show that you can in theory afford to buy a property could make you a more attractive buyer and stand you apart from other prospective buyers

• If you have had credit problems in the past, or if you have a limited credit history and aren’t sure what a bank or building society might lend to you, a DIP could give you added reassurance around your borrowing prospects

The cons of getting a Decision in Principle
• A DIP is not a guarantee, and when you go through the full application process and the lender looks at your earnings and credit history in more detail they may decide not to lend to you

• Some lenders can offer DIPs that only leave a soft imprint on your credit file, which does not have an impact on your credit rating. But most credit application searches will leave a hard footprint, and although one or two may not impact your score too much, if you have several credit application searches over a short time period this could be detrimental to your credit score and negatively impact your chance of getting a mortgage.

• You might secure a mortgage in principle from a particular lender as they have a good deal on offer, but then not be at the point of taking out a mortgage until 2-3 months later when their rates could have changed or a different lender is offering a better deal

Other factors to take into account
Your Estate Agent might encourage you to get one so that they can be sure that they are prioritising prospective buyers who have the best chance of being secured a mortgage

What’s going to happen to house prices?
Whatever you’re hoping will happen to property values, it is a key issue when deciding whether now is the right time for you to buy or move house.

Will Brexit have an immediate effect on house prices?
It is unlikely that house prices will take a hit straight away but it is possible that we will see slower price growth and fewer transactions going through in the coming months. This is due to economic uncertainty as buyers and sellers tend to adopt a ‘wait and see’ attitude. There is already evidence of a drop in transactions in the weeks leading up to the referendum even though prices remained stable.

Is this the end of big house price increases?
There is a possibility of house price increases, but this is ultimately speculation. Talk of the housing market caving in may be off the mark, but Brexit could potentially mean the end of the double-digit growth that some areas have enjoyed in the recent years. It’s still too early to tell.

Will house prices plummet at some stage?
This may not be the case as there are still too many people competing for too few homes; it’s all about supply and demand. House prices could remain stable as homeowners remain uncertain about selling and the possibility of construction rates slowing down. Now that the Bank of England has chosen to cut their base rate to 0.25% more cheap mortgage deals could become available and lead to greater demand at the lower end of the market.

I’m looking to buy, how do house prices affect me?
If you’re considering buying a home it’s really important to get to grips with the property market in your local area – speaking to an estate agent can help with this. The most important thing to consider when you buy a property is whether you can afford the mortgage both now and in the future. It’s important to make sure you would still be able to afford it if circumstances changed, if for example you were to take a cut in income, were unable to work, or interest rates went up. For many buyers high house prices can make saving for deposit feel like a struggle. Lower prices would make it a little easier for first time buyers to get together the deposit they need, but if prices fall only slightly it will still be tough. But, there are options available to you which may bring the size of the deposit you need down. Shared equity and shared ownership schemes can allow you to purchase a home without saving up a large deposit. There are also a growing number of mortgages where parents can help first time buyers such as guarantor mortgages and family offset mortgages. Every situation is different, call our advisers on 0333 3331517 and speak to one of our advisers about your circumstances and get advice completely tailored to your needs.

I’m looking to sell, how do house prices affect me?
When it comes to selling the focus is of course on getting the best possible price for your property at a point in time. In a relatively slow housing market it’s really important to be realistic about how much you’re going to get. Looking at local property listings should give you an idea of how much other houses in your area are selling for. A good estate agent, with experience of selling homes like yours in a slow market, will be able to offer advice about what a sensible selling price is. However, be aware that advertised property prices are not the same as sale prices. To find out what properties have actually sold for, you can look on websites such as the government’s land registry. The latest data may be a few months out of date. You may not be able to sell your house for as much as you would like – but, remember, you may also be able to buy your next property for a lower price than what the seller wants. If you’re really worried about the selling price then one option worth considering is let to buy. With a let to buy arrangement you let out your current property until you’re ready to sell – and take out a new mortgage to purchase another property. The let to buy process is considerably more complex than the process for a standard residential or buy to let mortgage; our advisers can talk you through the risks and potential benefits.