Higher Lending Charges
Self Employed
Credit Problems
Hidden Costs
Free Advice
First Time Buyer
Early Repayment Charges
Large Loans
Cashback Mortgages
Mortgage Options
What are Higher Lending Charges?These
are fees that lenders will charge for loans over a certain amount (usually
80%). The premium buys cover for the lender which will protect them if you
were to default on a loan. In this instance, following the repossession and
sale of the property any loss is reimbursed by the Higher Lending Charges.
The important point here is that although you the borrower pay the premium
on the policy it is of no benefit to you. If the lender calls upon the policy
to recover his losses the insurer who provided the guarantee can still come
after you for the amount that they have paid out.
I
am self-employed. Can I get a mortgage?Yes. Whilst
many high street lenders will exclude them We specialise in finding the best
deals around for the self employed. A number of lenders will want two years
of full accounts but this is not the case throughout the market and we should
be able to solve any difficulties you may have encountered. Contact us with
your individual circumstances and let us find you your mortgage.
I
have had financial difficulties in the past. How will this affect me?It
depends on what those problems were and how long ago they occurred. Some
lenders will deduct the annual payments to creditors or in respect of any
debts outstanding, before applying their income multiples. In the case of
mortgage arrears most lenders will want to see that they have been brought
up to date and maintained for 6-12 months. County Court Judgements (CCJ)
may pose a problem and again, it will depend on whether there is more than
one, the size of the judgement and whether they have been satisfied. In some
cases a lender may accept a suitable explanation for your CCJ.There
are also a number of lenders who specialise in this area of the market and
they will often lend where other mortgage companies may decline. If you contact
us with your circumstances we will be able to find the best option available
for you.
There
are a large number of very attractive deals available. What are the catches?There
are a number of points to watch out for and we would always suggest that
you speak to one of our dedicated team of mortgage specialists. There are
however things to watch out for. A number of the deals that may be offered
are designed to attract new business to the lenders, who then hope to keep
you as a customer beyond the initial incentive period so they can recoup
their costs. You will therefore find that some of the most attractive deals
around will impose early early repayment charges if you wish to repay the
mortgage within the incentive period and beyond. The key is to find the lowest
penalties that apply over the shortest period of time. This will then allow
you to reassess your options when the initial period is over and, if it makes
sense to do so, move your mortgage to another lender to attract a further
incentive deal. Lenders will also in a number of cases charge an arrangement
fee to access these deals. With some mortgages the lender may also require
you to take out insurance products as a condition of the loan. These may
include buildings and contents insurance or accident/sickness policies. If
this is the case and the lender’s
rates are not attractive then you may be paying an enhanced cost. With such
a bewildering array of options open to you the easy alternative is to allow
Just to search the market to find the mortgage that is right for you and
will save you money.
Will
Flexible-Finance charge me a fee to find my mortgage?
Flexible Finance tries wherever possible not to charge mortgage-finding fees.
As we are not tied to any particular mortgage lender you can count on our
advice being useful and valuable. We will however charge you when we arrange
your mortgage for you. You only pay us if you appoint us as your mortgage
advisers. Our fee structure is available here.
I
am a first time buyer and I suspect I may need a 100% mortgage. What are my
options?You will almost certainly be better off if
there is any way you can find a 5% deposit to put down. However, if this is
not possible there are a number of options available for consideration in
this area and you will need expert advice before deciding which may be appropriate
for you. The following points are worth bearing in mind.
As
a 100% mortgage is considered by lenders to involve a higher risk to themselves,
the deals on offer are not as attractive as those generally available.
Stricter lending criteria are imposed and anyone with poor credit history
will find their choices restricted. You will also have to pay a Higher
Lending Charge which is used to buy cover for the lender which will protect
them in the event that you default on the mortgage, and following the sale
of the property there is a shortfall against the amount owed. Whilst this
fee (which could amount to £1,800 on a £60,000 mortgage) can
be added to the loan you will then start your mortgage owing more than
the value of your property.
If
you are able to find the 5% on a temporary basis then you could consider a
cashback mortgage. These offer you a deal whereby you will receive a cash
payment possibly amounting to 5% or 6% of the mortgage which is paid on completion,
thus repaying the 5% deposit. Your Higher Lending Charge premium should be considerably
reduced using this method.
Another
possibility is to consider a top up mortgage through a second lender for the
balance over 95%. You should therefore benefit from cheaper rates on the bulk
of your mortgage although you may have to pay more on the 5% top up. It is
important with this type of arrangement to be very clear about any fees you
may be incurring.
How
do Early Repayment Charges affect me?
Generally
an early repayment charge will be charged if you cash in a fixed, discounted
or capped rate mortgage during the first few years. They are usually a few
months interest payments, which can run into thousands of pounds. Talk to
your Flexible-Finance mortgage specialist about any charges/penalties that
may apply on loans you are considering.
I
am looking for a large loan – in excess of £500,000? What
problems will I face?
Those
who are looking for larger mortgages will have larger earnings, possibly
made up of a package of salary, bonuses and share options. This is an unfamiliar
client profile to most high street lenders and you will need some help
as you will not fit most companies standard criteria. Many mortgage products
set a maximum loan of £250,000 so you will need to be able to research
the whole market for the best deals.
Most
larger mortgages need the flexibility to allow chunks to be paid off early
when, for example, bonus payments are received, and without big penalties
for doing so. Another option favoured can be shorter term mortgages over periods
of as little as 5 years enabling rapid repayment of the loan.
Frequently
people seeking large mortgages are keen to have absolute privacy of their
affairs and a rapid response from lenders, and Flexible-Finance always aims
to ensure that the borrower receives the personal service of a specialist
in this area to provide the information they require.
Are
cashback mortgages a good idea?
There
are certainly a number of very attractive cashback products on offer and you
need to decide whether they meet your personal situation and requirements.
Most of the largest offers rely on the fact that that the lender is offering
you the initial cash in return for charging the normal variable rate (or sometimes
a slightly loaded rate). As long as you are prepared to accept a variable
rate and could meet your repayments if interest rates rise it may well be
suitable.
Bear
in mind also that the lender will impose early repayment charges on you which
will normally require repayment of the cashback if you were to move to another
lender in the first few years. Also compare the cashback being offered with
discounts available. If you can obtain a cashback of 5% or a discount off
the variable rate of 2% over three years then your total discount will amount
to 6% so it is a question of whether you would prefer your money over a period
of time or receiving a reduced amount up front.
A
final point to bear in mind, particularly for large mortgages, is that the
cashback proceeds could be liable to Capital Gains Tax. For most people, the
annual exemption will cover their cashback amounts, although it is worth remembering
that if any other gains are made during the tax year a liability could arise.
Please contact one of our specialists for more details.
What
type of mortgage should I go for? Endowment, Repayment, Interest Only?
There
is no one easy answer to this question. Much is written about the merits of
the various types of mortgages (see our Mortgage
Guide) but the simple fact is that you will need advice as to which option
best suits your circumstances. But that’s where we can help. Contact
one of our dedicated team of advisers and they will ensure that you have
all the information you need to make an informed choice.
For
a mortgage secured on a property, insurance may be required. Written quotations
are available on request. APR may vary.
