Guides

Mortgage arrangement fees

Unless you choose a lender’s standard variable rate mortgage you can expect to pay an arrangement fee for your mortgage. Arrangement fees vary wildly, and may be expressed as a fixed fee or as a percentage of the loan. This means it is difficult to give an accurate estimate but it is not unusual to pay something in the range of £500 – £2,000 or more. You will usually have the choice of paying the arrangement fee up front or adding it to the loan. Adding it to the loan may ease your cash flow but will cost you more […]

Offer

You will make an offer for the new property and hopefully that will be accepted. Obtaining a legal mortgage offer is the next important part. This is where the lender starts their assessment (underwriting) process of you and the property. A mortgage offer is normally required by your conveyancer before moving to the next stage. Please note, that although extremely rare in reality, a lender reserves the right to withdraw your offer at any point prior to completion.

One-off costs

When you buy a property you incur certain one-off costs that can add up to a significant amount of money. These include land taxes (stamp duty), legal fees, valuation/survey fees, and mortgage arrangement fees.

Personal income

Most lenders will first look at the rental income, yield and property value to assess your application. They are also likely to look at your personal income and expenditure to satisfy them that mortgage payments can be met in the event of a rental void.

Private medical insurance

This is insurance that pays the hospital or Doctor for your treatment. It can include treatment in a private ward, or being seen earlier in an NHS ward. Some plans also allow you to claim if you are not able to be seen by the NHS within a set period. Other plans may charge a little more and don’t have any link to NHS waiting times. You are either medically checked and underwritten at outset (so you know what you’re covered for and what you won’t be), or have no medical checking at outset (but conditions that occurred two years […]

Property type

Some properties such as flats over commercial properties, studio flats and ex-local authority premises can be viewed as having reduced future attractiveness and as such some lenders may not operate in that market. This may restrict your lending options. Listed buildings (e.g. Grade 1, Grade 2) may have restrictions on how you can maintain or alter the property as well as buildings near to it (e.g. garage). Some unlisted properties can also be subject to similar restrictions (e.g. in an area of outstanding natural beauty).

Regulation

Buy-to-let mortgages are not regulated. There are best practices that any reputable mortgage adviser or lender will follow and these are based on the practices and processes that apply in the residential mortgage market. The Mortgage Credit Directive (2016) has also included Consumer buy-to-lets as a regulated product. Consumer buy-to-let is defined as a contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower. The legislation sets out a series of circumstances that would constitute a buy-to-let customer acting for the […]

Rental voids

You need to ensure you have enough personal income and resources to maintain payments if your property becomes vacant. This is because your monthly payments to the lender will continue irrespective of your rental situation. Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority.

Rental yields

What may be a suitable return for you, may not be seen the same way by a lender. Typically minimum rental yields are formulaic and driven by two things: the rate used to calculate the mortgage payment a percentage over-ride to allow for any rental void or increases in short-term interest rates which might impact your personal finances (these range between 100 – 130%). Some Buy To Let Mortgages are not regulated by the Financial Conduct Authority.