MORTGAGES
Whether you are a first-time buyer, looking to sell up and move on, purchase a second home or even re-mortgage – no matter what your circumstance - Top House can help. And make things even easier, we will not only liaise with your chosen mortgage provider, but also with your solicitor and estate agent.
Our aim… to make your transaction as stress-free as possible.
We will work with you to fully understand your exacting requirements, enabling us to offer you completely personalised options, ensuring you choose the mortgage that is right for you.
Priding ourselves on our mortgage knowledge, we offer practical solutions and excellent customer service. Our client relationships are long-term; looking after you from start to finish, updating you every step of the way.
Types of Mortgage
There are so many different types of mortgages on the market it can be a minefield trying to determine which is best, so let us guide you through the various options out there.
Standard Variable Rate (SVR)
This varies from lender to lender; each with their own standard variable rate (SVR) that can be set at whatever level they want and change by any amount at any given time - especially if there are rumours of the Bank of England base rate increasing in the future.
In November 2020, the average interest rate on a 2-year fixed rate mortgage was 2.53%, while the average SVR was 4.44% - meaning repayments on a SVR mortgage could be far more expensive.
An SVR is higher than most mortgage deals currently on the market, so if you're currently on an SVR, it's definitely worth shopping around for a new mortgage.
To find out more, get in touch with our team of specialist advisers at Top House.
Fixed Rate
A fixed-rate mortgage means you pay the agreed interest rate – regardless of interest changes elsewhere - for a set period of time. You will know exactly how much you need repay each month.
There are usually far more fixed-rate mortgages available than any other type of deal, albeit this number of has fallen significantly since the start of the COVID-19 outbreak.
The most common terms are two-and five-year deals. At the end of which you'll usually be moved on to your lender's standard variable rate (SVR).
Discount
A discount mortgage means you pay the lender's standard variable rate (a rate chosen by the lender, that rarely changes) with a fixed, discounted amount.
For example…
If your lender's standard variable rate is 4% and your mortgage came with a 1.5% discount, you'd pay 2.5%.
Standard variable rate 4% - Discount 1.5% = 2.5%
Discounted deals can be ‘stepped’ – this means that if you take out a three-year deal but pay one rate for six months and then increase the rate for the remaining two-and-a-half years.
Some variable rates have a 'collar' – a rate below which they can’t fall – or are capped at a rate that they can’t go above.
Top House can help you with these features when choosing your deal.
Tracker
A tracker mortgage, ‘tracks’ the Bank of England base rate, which currently stands at 0.1%.
For example, you might pay the base rate plus 3%
Base rate 0.1% + 3% = 3.1%
In the current mortgage market, you'd typically take out a tracker mortgage with an introductory deal period, usually of 2 years. After that period, you would be moved on to your lender's standard variable rate.
However, there are a small number of 'lifetime' trackers where your mortgage rate will track the Bank of England base rate for the entire mortgage term.
Capped
A capped rate mortgage moves in line with the lenders standard variable rate (SVR), but being capped means the rate wont increase above a certain level.
Offset
An offset mortgage is where you have savings and a mortgage with the same lender and your cash savings are used to reduce – or 'offset' – the amount of mortgage interest you're charged.
Specialist
Everyone’s circumstances are different and for some it may mean that you need a specific type of mortgage.
Self-Build
There are two main types of self-build mortgages - arrears stage payment and advance stage payment.
Most commonly, funding will be released in stages after the construction of each section is completed. A valuer will normally visit the site before the payment is released. With an arrears stage-payment you may need a loan to cover the work before your mortgage is released, so you must factor this into your decision.
Sometimes it’s possible to get a self-build mortgage where the lender releases the money before you pay each bill. This is not usually offered by mainstream lenders so you may be limited to specialist providers.
Self-employed
Without an employer to vouch for your income, being self-employed means you’ll need to pass the lender’s affordability tests in the same way as any other borrower by providing additional evidence of your income than other borrowers.
First time buyer
As a first time buyer it can be difficult to save enough money to qualify for a mortgage, so help get on the property ladder, the Government schemes in place to help buy your first home.
‘Help to Buy’ can assist you getting a mortgage with a small deposit – they offer equity loans, meaning that when they lend you money, you can use that towards your deposit and repay it later.
‘Shared Ownership’ offers shared ownership – you buy a share of your homes value (between 25-75%) and pay rent on the portion you don’t own. This enables you to purchase a home with a smaller mortgage, which in turn means a smaller deposit too.
‘Lifetime ISA’ – if you are over 18 and under 40, you can consider a Lifetime ISA – this government incentive helps you buy your first home and save for your future. Under the rules, you can add £4,000 a year into the ISA until you are 50. The government adds a 25% bonus to the money you save yourself, to a maximum of £1,000 per year.
Retirement Interest Only (RIO)
Retirement-interest only mortgages (RIOs) are a relatively new set of products designed to help older borrowers who may struggle to get a standard residential mortgage. They allow you to borrow against your property and only pay back the interest (and not the loan itself) each month.
Buy to Let
Property is a great investment and with the If you are seeking rental yield or capital growth, property is great investment - especially given the lettings market – and a Buy-to-Let mortgage
Bridging Loan
A bridging loan is a short-term finance option for buying property. It 'bridges' the financial gap between the sale of your old house and the purchase of a new one.
If you're struggling to find a buyer for your old house, a bridging loans could help you move into your next home before you've sold your current one.
This would mean that you'd own two properties for a short time, potentially leaving you with a large amount of secured debt if it takes a long time to sell your existing property, if the buyers withdraw completely, or you sell your home for less than you expect.
Re-mortgage
If your current deal is coming to an end – or if you haven’t changed lender in a while – now is the time to think about changing to a more cost-effective mortgage deal.
A mortgage is a loan secured against your home. You home may be repossessed if you do not keep up repayments on your mortgage or another other debt secured on it.
