Frequently Asked Questions (FAQ)

What is a mortgage?
A mortgage is a loan taken out from a mortgage lender to pay for a property. The loan is divided into capital, i.e. the amount of money you borrow to purchase the property, and a mortgage interest rate, i.e. the amount the lender charges for lending you the money.
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What is a mortgage broker?
In the UK, there are over 50,000 mortgage brokers qualified to give advice on buying a mortgage. Many operate as part of a one or two man band operation, or are tied to estate agent. Some mortgage brokers work from home and rely on referrals from intermediaries such as accountants and solicitors for business, while others work online, using the Internet to generate business.

With around 10,000 mortgage products on the market, it' a good idea to consult a mortgage broker for help in finding the right product. They will be able to tell you about the best deals currently available, including some that are exclusive to advisers. They will also be able to offer advice about how to repay your mortgage, home insurance and other financial matters.

What does 'independent' mean?
An independent mortgage broker has access to every lender in the industry and every single mortgage product on the market. Sometimes an independent mortgage broker will also have access to exclusive products not available to other brokers or intermediaries such as solicitors or accountants.

The intense competition between lenders can be confusing, especially if you are a first time buyer. In fact, according to research by the Skipton Building Society, one in five would-be buyers admits to delaying buying their first property because they are confused by contradictory mortgage advice. Based on the information you provide, an independent mortgage broker will be able to choose the product best for you in the long term.

How much can I borrow?
How much you can borrow will depend on the value of your property, your earnings and what you can comfortably afford to repay each month. It will also depend on the mortgage lender you choose as each has its own guidelines. Some mortgage lenders may only lend you a multiple of three times your income while others may stretch to four, five or even six times.

If you are buying as a couple the mortgage calculation multiples will be different. Some mortgage lenders will lend you two and a half times both annual incomes while others will offer three to three and a half times the greater income plus one times the second income.

How do I prove my income?
If you are employed, the mortgage lender will request written evidence from your employer such as payslips and/or your P60.

If you are self-employed you may need to show a mortgage company three years' audited accounts or a letter of confirmation from an accountant if you have not been in business long enough to prove that you can afford the mortgage repayments.

Many mortgage companies have a variety of criteria, some willing to be more flexible than others. It is a good idea to speak to an independent mortgage broker, like Mortgage Beaters, whose advisers know all the top lenders well and can provide impartial advice.

Where's the best place to get a mortgage?
There are over 10,000 mortgage products on the market and all lenders - banks building societies and financial institutions - offer a wide range of mortgages to suit your needs. An independent mortgage broker or financial adviser can guide you through the many options and give you the best expert advice.

How do I know which is the best mortgage for me?
When you speak to your mortgage broker or financial adviser he will discuss your particular financial circumstances and mortgage requirements, e.g. whether you want a repayment mortgage, an interest only mortgage, or a combination of the two; the length of time you would like the mortgage to run etc. Having agreed on what you are looking for, your mortgage adviser will research the market and source the best product to match your needs.

At Mortgage Beaters, we have access to every mortgage product on the market, and being a completely independent broker means that our mortgage advisors will provide you with the best mortgage for your circumstances.

What is a 'mortgage in principle'?
A 'mortgage in principle' is a conditional offer of a loan from a lender. Assuming the information you have provided, either via your mortgage broker or direct, is correct, they will in principle offer you the loan you have requested. The lender won't make a formal mortgage offer until a valuation has been carried out on the property you wish to buy.

It's a good thing to have a mortgage in principle before you start house hunting as it can give you a head start over others looking at the same property. Both estate agents and sellers will view you as a serious buyer.

What mortgage interest rate will I be charged?
The rate you will pay is the Standard Variable Rate or the individual mortgage rate for the product you buy. If you are taking a discount, capped or fixed rate product, the lender will advise you of the rate you will be paying and for how long you will receive that rate.

What happens at the end of the discounted, capped or fixed rate period?
Your rate will revert to the Standard Variable Rate or the lender may offer you another product.

What is the Standard Variable Rate?
This is the rate of interest you pay on your mortgage if you have not taken a discounted, fixed rate or other special products.

Our website provides a range of tools for checking competitive interest rates and calculating the savings you could make by switching to a more competitive mortgage. You can also contact us to discuss potential savings you could make by switching mortgages by calling 0845 458 2766 or emailing enquiries@mortgagebeaters.co.uk.

Why do the best mortgage deals vanish so quickly?
When a lender offers a special mortgage e.g. a large discount, it allocates a certain sum of money to be lent on that particular product. With very attractive deals this first allocation may be taken up very quickly on a first come, first served basis.

When this happens lenders generally return to the money markets to get another batch of funds for further lending. By the time this process is complete, economic or competitive circumstances may have changed enough so it is no longer possible to offer the original product.

With new mortgages being made available on the market all the time, Mortgage Beaters is able to search the entire market to find the best mortgage deal for you. Being an entirely independent mortgage broker, we're not tied to a single lender and offer you the best interest rates for your circumstances.

What is a flexible mortgage?
Flexible mortgages are loans which allow you to increase or reduce the size of your repayments within certain limits. This may help you cope with changes in your income or spending, and reduce your outstanding commitments without penalty if, for example, you receive a bonus.

Many self-employed people whose income varies from one month to the next find these products helpful. They can make overpayments when earnings are at the annual peak and cut payments when earnings fall again. Some flexible mortgages allow you to withdraw sums you have overpaid into your mortgage account for emergencies

What is a buy to let mortgage?
Buy to let mortgages are designed for those wanting to buy a property and let it to tenants. They are a popular way for private landlords to invest as they provide income from the tenant's rental payments and growth from any increase in the property value

Do I need a deposit for a mortgage?
Not necessarily, as some mortgage companies try to be as helpful as they can particularly to first time buyers. Generally speaking however, it does make life easier if you can find a deposit and the more you can put down the better, as you will be able to enjoy a cheaper and better interest rate.

To whom will most lenders give mortgages?
You must be over 18 to have a mortgage and most lenders generally recommend the mortgage term does not extend beyond your retirement age. You will not be discriminated against because of your colour, race, ethnic or national origin, your sex or if you are disabled. However, you will need to have the right to reside and work in the UK for at least the duration of the mortgage.

Up to four people can be joined in an application. At least one applicant is required to have an acceptable form of income and all should have a good credit history. Your application will be subject to a credit check and you will need to prove your income.

Which mortgage scheme is best?
All mortgages have their benefits and which is best for you depends very much on your personal circumstances. An independent mortgage broker like Mortgage Beaters can give you the best advice for your particular situation.

Do companies lend to 'Right to Buy' council tenants?
Yes and often up to 100 per cent of the discounted price. It is also possible to borrow for home improvements. A Right to Buy mortgage is a loan taken out by applicants who currently rent, usually from the council, and are entitled to buy the rented property at a discounted price.

Can I get a mortgage if I have a county court judgement against me, if I've been declared bankrupt or if I've been in arrears?
Yes. There are numerous schemes from lenders that cover most circumstances, however each case is treated on merit. Today adverse credit mortgages now account for an increasingly respectable and specialist section of the mortgage market.

How long can the term of the mortgage be?
The usual term is 25 years but your loan can be for any term from five to 30 years. It should ideally end on or before your normal retirement age.

Do lenders charge interest daily, monthly or annually?
Each lender is different. With some, interest is charged daily on the balance outstanding at the end of each day. With others it is charged monthly or annually. As a general rule it is cheaper if it is daily.

What is the valuation?
The mortgage valuation is solely for the purposes of a mortgage lender to satisfy itself property provides sufficient security for company to lend on it. The mortgage valuation does not give any indication whether the property is worth what you are paying, nor does it provide a comprehensive list of any repairs required.

What is a valuation fee?
Lenders need expert guidance on what the property in question is worth as security for them to lend on it. They instruct a valuer to assess the property for this purpose.

What are the different kinds of survey?
Detailed inspections of properties are designed to help you choose your home. A HomeBuyer Survey, carried out by the lender at the same time as the mortgage valuation, highlights any urgent and important matters before you commit to buying the property.
A Building Survey is more detailed and includes technical information on construction and materials, as well as details of any major and minor defects.

What is conveyancing?
Conveyancing is the legal work involved in buying and selling a property, usually carried out by a solicitor. As a buyer, you must have a solicitor for the seller's estate agent to contact immediately your offer is accepted. It is important therefore to appoint a conveyancing solicitor before you get to this stage.

What is credit scoring?
This system helps mortgage lenders assess whether an applicant is likely to be able to repay the loan. For a small fee of (£2) you can obtain your credit details held on file by one of the two main credit reference agencies, Experian and Equifax.

Estimates suggest that one in five people in the UK has been refused a mortgage because of past problems. Payment for household bills and credit cards can easily be overlooked resulting in county court judgements being issued against your name, or arrears showing on your credit file. In the past you may have fallen behind on your mortgage payments or even had your home repossessed.

Whatever the problem, adverse credit mortgage companies are willing to take on your case, although it's always worth trying a mainstream lender first as their rates are keener. If you have any problems related to credit scoring, call Mortgage Beaters on 0845 458 2766 or email enquiries@mortgagebeaters.co.uk.

What is an intermediary?
Only around 50 per cent of mortgages in the UK are obtained directly through a high street branch of a bank or building society. The remainder are purchased though intermediaries which recommend lenders' mortgage products to the public. Intermediaries can be mortgage brokers, solicitors, estate agents or financial advisers who are connected with the housing market.

Is it safe to transmit my mortgage application over the Internet?
Security of your personal information is a prime concern to all mortgage lenders and intermediaries. Online mortgage application forms enable you to enter your application details and transmit them electronically to the lenders in a secure environment. Lenders use the most up-to-date security techniques to ensure the details of your online mortgage application is received securely.

Are there charges for paying off your mortgage early?
Some companies charge for paying off your mortgage early or switch to another lender within a set period, and should make you aware of what you may have to pay. Some lenders offer flexible mortgages that allow early repayment without penalty.

What happens if I repay my mortgage early?
The charges made will depend on the type of product and lender you have chosen and when you decide to repay your mortgage. Some mortgage products may include an early repayment charge. Some lenders offer flexible mortgages that allow early repayment without penalty.

Can I make a capital repayment to my mortgage?
Yes, but check first to see if any early repayment charges will apply to your mortgage scheme as you may incur an extra charge for making a capital repayment in the early years of the loan.

What happens if I can't afford to make my monthly mortgage payments?
Always call your lender straight away. They will do all they can to help you overcome your difficulties and work with you to find a solution. With your co-operation they can develop a plan for dealing with your financial difficulties and clearing any arrears.

What can I do to protect my monthly payments?
Subject to eligibility, there are various policies designed to protect you if your income is unexpectedly reduced. Most will meet your monthly mortgage commitments for up to 12 months should you be unable to work due to accident, sickness or unemployment.

What is re-mortgaging?
Re-mortgaging is changing your existing mortgage to another deal, often from another lender, to reduce your monthly repayments and save money. Mortgage Beaters can offer advice and quotes on re-mortgaging your property.

I have a repayment mortgage. Can I change to an interest only mortgage?
Generally speaking, yes, but please discuss this possibility with your lender, mortgage broker or adviser first.

I have an interest only mortgage. Can I change to a repayment mortgage?
Yes, but please contact your mortgage broker, adviser or lender who will be happy to assist you.

I would like to pay off my mortgage but I'm not sure what to do with the deeds of my property. Can a lender help?
Many mortgage lenders offer borrowers a scheme for the safekeeping of their deeds, sometimes known as Deeds Care. The mortgage balance is maintained at £1.00, and the scheme is often free for borrowers who arrange insurance through the lender. Borrowers arranging insurance elsewhere will be charged a nominal sum, e.g. £10.00 initially and an annual fee of around £25.

Can I have a further advance added to my mortgage for home improvements?
Most lenders are happy to discuss your requirements and their lending criteria. We would advise you to arrange quotations for the work to be carried out in advance.

I pay my mortgage by direct debit. Can I change the payment collection date?
Yes, most lenders will be happy to amend the payment collection date for you.

How does an endowment mortgage work?
The most common endowment mortgage is an interest only mortgage built around an endowment policy.

The policy serves two purposes. Firstly, your monthly endowment premiums paid direct to the insurance company are invested on your behalf. After a given period the policy matures and you must then repay your mortgage. It's important to make sure the policy you have chosen will generate enough money to pay off your loan and it is advisable to check how it is performing on a regular basis.

Secondly, the endowment policy provides you with life insurance cover. If you should die before the policy ends the insurance company will repay your endowment mortgage. This is the minimum death benefit and will be shown on your policy.

I already have a mortgage with one lender and want to move house. What happens?
You will have to pay off (redeem) your existing mortgage and may have to pay any early repayment charge. It is possible that some or all of these charges can be waived if you take out a new mortgage with the same lender.

When moving home, it's worth carrying out mortgage comparisons to see if you can find a better deal with another lender. Mortgage Beaters can help you do this.

What are the additional costs in taking out a mortgage?
Costs vary considerably depending on the type of deal you choose, but you should be aware of the following:

  • Valuation fee (payable on application). This can be free depending on the deal
  • Booking fee (payable on application), depends on the deal
  • Arrangement fee (usually added to the mortgage or payable on completion), depends on type of deal you choose
  • Legal costs to cover land registry fees and various searches. Sometimes these can be free or payable by the lender depending on the deal you select
  • Stamp duty, a government tax on purchases over £60,000
  • MIG (Mortgage Indemnity Guarantee), payable on loans normally over 90 per cent loan to value but can vary depending on the deal
  • Term assurance, recommended, but not always compulsory
  • Accident sickness and unemployment insurance, recommended, but not compulsory
  • Building insurance, either from the lender or third party
  • Contents insurance, recommended, but not compulsory

Must I clear my mortgage by a certain age?
Mortgages are usually designed to be repaid no later than the borrower's normal retirement age, usually 65 for employed people (male and female) and 70 for self-employed. Most mortgage companies will consider a longer term providing the borrower has enough income after retirement.

Can I get a mortgage offer before I find a property?
Yes an 'agreement in principle' can be offered to start the process, but the lender won't make a formal mortgage offer until a valuation has been carried out on the property you wish to buy or re-mortgage.

An agreement in principle is useful to have before you start house hunting as it can give you a head start over others looking at the same property. Both estate agents and sellers will view you as a serious buyer.

What is a self-certification mortgage?
Self-certification mortgages are ideal if you are self-employed and have not been in business for the required three years or cannot produce accounts for a three-year period but can demonstrate through an accountant's reference you can service the mortgage payments. These loans usually require a bigger deposit of around 15 per cent of the purchase value. For re-mortgages this cannot usually exceed 85 per cent loan to value (LTV). Interest rates are usually higher but from time to time there are some good deals around.

Do county court judgments (CCJs) always disqualify me?
If a county court rules against you for defaulting on a debt, that listing is listed on your credit rating. Having such a judgment listed against you may mean it is difficult to obtain a mortgage through most lenders. However there are a number of increasing specialist lenders who will lend to people with a CCJ or other credit problems.

Should I rule out redemption penalties?
Most cashback, capped and fixed rate mortgages, and also discount mortgages, have redemption penalties. With fixed rate mortgages, capped and discount mortgages these penalties will usually last as long as the special rate but quite often they also apply after the special rate has finished. Mortgages with penalties extending beyond the special period are said to have 'redemption tail' or 'tie in' beyond the special rate. These redemption penalties can typically last six years especially on cash back mortgages.

For most people it is best to avoid a mortgage with a redemption tail. This allows you to keep your options open at the end of the special rate period to look for another deal without incurring what might be a very expensive penalty, which can equal as much as five per cent of the mortgage loan.

How do I repay capital with an interest only mortgage?
If you have an interest only mortgage, your monthly payments will pay off the interest on your mortgage but not the money you initially borrowed. You can pay off the original loan you borrowed in any way you choose, but you often have to inform the lender at the start how you intend to do this. Most people often set up and save money in a separate plan designed to pay off the capital when the interest only mortgage term is complete. The main options for saving in this way are in an ISA, an endowment policy or a pension plan.

Do I always need life insurance?
Some mortgage companies insist you buy life cover. We can provide an independent view together with quotations, and discount the commission from leading providers making it cheaper than going direct. You may also want to consider taking out critical illness cover to pay your mortgage if you suffer an illness affecting your earning power, such as a stroke to cancer.

What happens if I lose my job?
If you lose your job and cannot make your mortgage payments your house could be at risk. It is strongly recommended you take out a mortgage accident sickness and redundancy policy in connection with your mortgage, which will pay your loan repayments for up 12 months, while you get back on your feet.

What is MIG and will I have to pay it?
MIG (Mortgage Indemnity Guarantee Insurance) is a one off premium paid usually by the borrower to an insurance company on high loan to value (LTV) mortgages, so in the event of the property being repossessed and sold at a loss, the lender can recoup any losses incurred from the insurance company.

This cost is ether added to the loan or repaid in monthly instalments usually over a 12-month period after completion. The majority of lenders only charge MIG to borrowers where the mortgage is over 90 per cent of the value of the property (LTV 90 per cent). However there is a wide variation, with some lenders not charging at all, even on 100 per cent loans, whereas others will charge on loans as low as 70 per cent LTV.

What evidence does Mortgage Beaters need to confirm my identity and earnings?
For a typical mortgage application, documents we might need include:

  • A copy of your passport or driving licence to confirm your identity
  • Three months' wage slips or banks statements, or accounts if self employed, to prove your income

What outgoings should I include on my mortgage application?
The only information we normally need is information on current credit or loan commitments which have more than six months to go before they are paid off. General living expenses such as utilities, groceries and general household bills need not be included.


For friendly independent advice call us on
0870 99 88 777