Mortgage
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Your home may be repossessed if you do not keep up repayments on your mortgage
Most Buy-to-Let mortgages are not regulated by the Financial Conduct Authority
First time buyers
Buying a home for the first time is a big step! Here are some key tips to help guide you through the process:
Check Your Financial Readiness:
Credit Score: Get your report: You can get a copy of your credit report from the three major credit bureaus—Equifax, Experian, and TransUnion—once a year at AnnualCreditReport.com.
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Check for inaccuracies like late payments, incorrect credit limits, or accounts that don’t belong to you. Dispute any errors, as they could negatively affect your score.
Budgeting: Know how much you can afford. It is important to budget each month with realistic outgoings. Don’t forgot to incorporate the costs for that gym membership that you do not wish to cancel or for the fuel you use on a monthly basis and even your savings pot each month.
Get Pre-Approved for a Mortgage:
Before you start house hunting, meet with a broker and get pre-approved. This will give you a better idea of how much you can borrow and make you a more competitive buyer when making an offer.
Company buy to let
A Company Buy-to-Let (BTL) mortgage is a mortgage specifically designed for purchasing a rental property through a limited company (or other business structure), rather than as an individual. This type of mortgage is often used by property investors who want to buy one or more properties with the aim of renting them out, and it has several distinct benefits and considerations compared to individual buy-to-let mortgages.
Unlike a standard buy-to-let mortgage, where the property is purchased in your personal name, a Company Buy-to-Let mortgage involves buying the property through a limited company (typically a Special Purpose Vehicle (SPV), which is a specific type of company used for property investment).
A Company Buy-to-Let mortgage is a great option for property investors seeking tax efficiencies, limited liability, and better long-term financial management. However, it comes with additional complexities and potentially higher costs, so it’s important to weigh the pros and cons carefully.
It is important to seek professional advice from accountants and financial advisors before proceeding with this route.
New build
Buying a new build property comes with its own unique advantages and considerations. It can be an exciting option for first-time buyers, investors, and home-movers but it's important to understand both the pros and cons before diving in.
Advantages of Buying a New Build Property
Modern Features and Customization Options
Brand-new fittings and fixtures: New builds typically come with modern interiors, including contemporary kitchen designs, bathrooms, and energy-efficient heating systems.
Customisation: Some builders offer you the chance to choose finishes like countertops, flooring and bathroom tiles. This can be appealing if you want your home to reflect your personal style.
Lower Maintenance Costs
Warranties: New homes usually come with a 10-year warranty (in the UK, this is often provided by the NHBC or similar organizations), meaning that for the first few years, major structural repairs and issues are covered.
No Repairs Needed: Unlike older homes, there’s no immediate need for expensive repairs, as everything is brand new and under warranty.
Energy Efficiency and Sustainability
Energy-efficient: New homes are built to comply with modern building regulations, which means they are generally much more energy-efficient than older homes. Features such as better insulation, double glazing, and energy-efficient heating systems (e.g., air source heat pumps) can reduce utility bills and carbon footprints.
Lower running costs: Many new builds are much more efficient when it comes to heating and cooling, leading to reduced costs for things like electricity and gas. This can be a major advantage in the long term.
Buy to let
A buy-to-let (BTL) mortgage is a type of mortgage specifically designed for individuals who want to purchase property to rent out, rather than to live in. Essentially, it allows you to buy a property with the intent of generating rental income, while the mortgage is generally repaid using the rent you collect from tenants.
Mortgage and Financing Options:
Buy-to-Let Mortgages: These generally require a larger deposit (typically 25-40%) compared to residential mortgages. Make sure you qualify for a BTL mortgage and understand the terms, interest rates, and fees.
Affordability: Lenders typically want the rental income to cover 125% to 145% of the mortgage payment. Make sure the property's expected rental income aligns with these requirements.
Rental Yields and Return on Investment (ROI):
Calculate Rental Yield:
Gross Yield = (Annual Rent ÷ Property Price) × 100
oNet Yield takes into account additional costs like management fees, maintenance, insurance, and mortgage interest.
Average Rental Yields: Compare the yield in your area with the national average (typically around 4-6% in the UK). Higher yields in certain areas may offer better returns, but you’ll also need to weigh up other factors like tenant quality and property price growth.
Capital Appreciation: In addition to rental income, assess whether the property is likely to increase in value over time
Legal and Regulatory Considerations:
Landlord Responsibilities: As a landlord, you have legal responsibilities to your tenants, including ensuring the property is safe and habitable, providing an Energy Performance Certificate (EPC), and protecting tenant deposits in a government-approved scheme.
Regulations: Familiarise yourself with the local housing laws, including tenant rights, eviction processes, and rules around rent increases. Regulations like right-to-rent checks in the UK are also critical.
Licensing: In some areas, you may need a licence to rent out a property, especially if it's a House in Multiple Occupation (HMO). Check the local council’s regulations.
Safety Standards: Ensure that the property complies with safety standards such as gas and electrical safety certificates, fire alarms, and escape routes.
Remortgage
What is Remortgaging?
Remortgaging refers to the process of switching your existing mortgage to a new deal, either with your current lender or a different one, without moving home. This can be done to get a better interest rate, access additional borrowing, or consolidate debts. Essentially, it’s refinancing your mortgage to suit your current financial situation.
Remortgaging can be a smart move if:
1. You want to reduce your monthly payments.
2. You’re currently on a variable rate or standard variable rate (SVR), which can be higher than other deals.
3. You’re looking to lock in a fixed rate or switch to a different type of mortgage.
4. You’re coming to the end of your current mortgage deal (e.g., your initial fixed-rate or tracker mortgage term is up, and you’re now on a higher standard rate).
Types of Remortgages:
Like-for-Like Product Transfer:
This is when you simply switch from one deal to another with the same lender
Remortgaging to a New Lender (Switching Lenders):
You can also remortgage with a new lender if they offer a better deal. This process can involve more paperwork, as you'll need to go through a full application process with the new lender, including affordability checks and potentially new fees.
Debt Consolidation Remortgage:
This allows you to consolidate debt by taking out a larger mortgage and using the extra funds to pay off credit cards, loans, or other financial obligations. While this can lower your overall monthly payments, it could increase the amount you owe over time, and the total interest paid may be higher.
Think carefully before securing other debts against your home.
Consolidating debt may reduce your outgoings now, however you may pay more interest over your mortgage term.
Your home may be repossessed if you do not keep up repayments on your mortgage
Things to Consider Before Remortgaging:
Early Repayment Charges (ERCs): If you’re still in the middle of your fixed-rate deal, there may be early repayment charges (ERCs) for paying off your mortgage early. These fees can be significant, so make sure to weigh the cost of any ERC against the potential savings from remortgaging.
Remortgaging can involve several costs, such as:
Arrangement fees: Some mortgages come with a fee to set up the deal, which can be a few hundred pounds or more.
Valuation fees: You may need to pay for a property valuation, especially if you’re switching to a new lender.
Legal fees: If you’re changing lenders, you may have legal fees to cover.
Broker fees: If you use a mortgage broker, they may charge a fee for helping you find the right deal however a good broker can be worth their weight in gold in ensuring you are getting the best mortgage deal available to you.
Brokers often have a deep understanding of lenders’ criteria and can help you avoid applications that would likely be rejected. For example, if your credit score is less than ideal, they can find lenders more likely to approve your mortgage, saving you from unnecessary credit checks that could negatively impact your credit score.
Changing Your Mortgage Term:
You can opt to change the length of your mortgage term during a remortgage. If you want to reduce your monthly payments, you could extend the term, though this would result in paying more in interest over time. Alternatively, shortening the term can save interest, but your monthly payments will increase. A broker will consider all of your monthly expenditure to ensure that the mortgage is affordable to you each month.
Shared ownership
Shared ownership is a government-backed scheme designed to help people get onto the property ladder, especially first-time buyers who may struggle to afford the full price of a home. It allows you to buy a share of a property (typically between 25% and 75%) and pay rent on the remaining share, which is owned by a housing association or a private developer.
How Shared Ownership Works:
Purchase a Share of the Property:
You buy a percentage of the property (usually 25% to 75%) and pay a mortgage on that portion. The remaining portion is owned by a housing association or other shared ownership provider, and you’ll pay them rent on that portion.
Example: If the property is valued at £200,000 and you buy 50%, you’ll pay £100,000 for your share. You’ll then pay rent on the remaining £100,000.
Rent on the Remaining Share:
The portion of the property you don’t own (the other 25% to 75%) is rented to you by the housing association or provider. The rent is usually lower than market rent and often calculated as a percentage of the value of the share you don't own.
"Staircasing":
One of the key benefits of shared ownership is the ability to increase the share you own over time, known as staircasing. You can buy additional shares (usually in increments of 10%) until you own 100% of the property. As you increase your ownership share, your rent decreases proportionally.
Eligibility:
Income Limits: Shared ownership is generally aimed at those who can't afford to buy a home outright. There are often income caps though these can vary by region.
First-time Buyers: While shared ownership is often aimed at first-time buyers, it can also be available to those who used to own a home but can't afford to buy a new one.
Advantages of Shared Ownership:
Lower Initial Costs:
By purchasing a smaller share of a property, your initial deposit and mortgage payments will be much lower than if you were buying the full property. This makes it more accessible for those struggling to raise a large deposit.
Gradual Ownership:
You can start by owning a small percentage and increase your share over time. This gives you the flexibility to gradually increase your stake in the property as your financial situation improves.
Affordable Rent:
The rent you pay on the share of the property you don’t own is often lower than market rates. This can make it more affordable than renting privately or owning a full property.
Potential for Full Ownership:
The option to increase your share (through staircasing) gives you the potential to fully own the property, which is a major advantage if you're looking for long-term security.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Registered in England and Wales
Blue Herring Mortgage & Protection Services Ltd is an Appointed Representative of PRIMIS Mortgage Network, a trading
name of First Complete Ltd. First Complete Ltd is authorised and regulated by the Financial Conduct Authority.
The guidance contained within this website is subject to the UK regulatory regime and is therefore primarily targeted at
consumers based in the UK
Registered office address: 29 Corrie Close, Wellingborough, England, NN8 1GA
Registration number: 13049151
Trading address: 29 Corrie Close, Wellingborough, England, NN8 1GA
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For our advice services, we will charge a fee of between £0 minimum and £999 maximum.
Our typical fee is £399. The amount charged is dependent on the amount of research and administration required and
will be discussed and agreed with you at the earliest opportunity. The fee is payable on application.
If we charge you a fee you will not receive a refund if your mortgage or loan does not go ahead.
We will also be paid a procuration fee by the lender.
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