Guides

Contents insurance

This insurance protects items that can easily be removed from a property. Cover can be for risks such as fire, theft or accidental damage. The amount you have to pay towards any claim is called an excess, and can vary depending on the item covered and what it is being insured against (e.g. accidental damage, theft).

Conveyancer

The job of a conveyancer (or solicitor) for a purchase is to help: Carry out a search of local planning information for items that may impact the value (e.g. upcoming land developments, new roads) Prepare a fixtures, fittings and contents list – this makes it clear what you are buying (e.g. kitchen appliances, lights, carpets) Confirm from the vendor whether they are aware of any material, structural or other defects to the property that you should know about Obtain proof that the property legally belongs to the person you are buying it from Research and find the property’s legal boundaries […]

Credit reference agencies

These agencies hold information on most UK adults. That data helps lenders assess the risk of lending to a specific person. There are a number of agencies in the UK, the main ones being Experian,

Credit score

To help a lender assess your application, it is usual that they will use a form of scoring system to decide whether to accept your application. Different lenders give different levels of importance to your circumstances, and some set a higher pass mark than others. It is normally based on three core areas: Public record information (e.g. the electoral roll), Credit account information (e.g. records of amounts of loans and your payment history), and Search information (e.g. the number of applications you have made for credit). This means that care is required to ensure you approach the most suitable lenders, […]

Critical illness cover

This is insurance that pays out when a defined medical event occurs. For example, following a heart attack, stroke, cancer or some other specifically defined critical illness. Cover is for a set term, which may be equal to a mortgage term, for when children have grown up, until retirement or another life stage milestone. It may be worth considering having one policy for a set term to cover the mortgage, and another that will provide money to help provide for your different lifestyle if a serious illness happens. Most people choose a lump sum to be paid out. There is […]

Deposit

Lenders have become more cautious about taking on all the risks associated with buying a property. While 100% mortgages have re-emerged in specific circumstances, most lenders still require a deposit. If you are unable to pay your mortgage in the future, the lender needs reassurance that it can sell the property to recover the loan. This increased caution often results in lower loan-to-value (LTV) ratios, requiring personal deposits that may be larger than in the past. The source of your deposit could be from your current property, savings, inheritance, or a gift. However, some lenders may not accept loans from […]

Disclosure

It is a legal requirement that you disclose your circumstances fully and accurately. Also, non-disclosure of credit commitments, missed payments, County Court Judgements (CCJs), accurate address history, and number of dependents will have a big impact on your application now and also on any future application for financial services (as evidence of this may be loaded onto fraud databases). Disclosing any issues to a lender does not automatically mean the application will be declined – indeed many lenders have provision for this type of business. You may wish to consider obtaining a credit report to identify any historical or current […]

Drawdown

During the completion stage, this is when funds are released from your lender to be used for the property purchase.

Early repayment charge

This is normally shown as a percentage of the loan but can also be a fixed fee. They apply if you repay your loan during any special incentive periods (e.g. discount). Some products extend that time beyond the initial period so be aware. Part payments can also sometimes trigger this, although most lenders allow a small percentage a year to be repaid without this happening.