FAQ with Paul Little of Sussex Mortgage Services
The team at Sussex Mortgage Services Ltd. (SMS) are our in-house, local independent advisors. They can help take away the pressure of finding and comparing the best mortgage products by accessing the whole market to find the best providers for your needs.
We asked Director, Paul Little, about some of the questions the team are most commonly asked in relation to finding a mortgage, whether you’re a first time buyer or looking to remortgage your home.
1. I’m a first time buyer and don’t know where I should begin
My recommendation for the best place to start the property buying process is to see a qualified Mortgage Adviser or Broker to establish your affordable borrowing capabilities. Typically, most first time buyers will visit their existing bank or building society adviser and, whilst this is a good place to start, they can only advise you on their own products and criteria. Therefore, I would advise that you see a local independent broker, who will have access to the whole of the market and can advise you on all lenders to ensure you get the most competitively priced all-round mortgage package to best suit your needs.
2. There are so many different mortgage products – how do I know which is best for me?
Mortgage products will generally vary in their rates, periods of fixed-term interest, your total mortgage term, set-up fees charged, and how much you can borrow. With so many mortgage products and interest rate types to choose from, it is very important to seek the advice of an independent broker who will be able to discuss all the products and options in detail with you from an objective point of view, and advise the most appropriate option to meet your personal needs, requirements, and preferences.
3. How much can I borrow?
This can vary significantly from one lender to another, and very much depends on your income and proposed/existing outgoings, as well as your credit rating. Every lender has different lending criteria and affordability calculators which determines the maximum they will lend to a client based on their circumstances. An independent broker will be able to advise the maximum borrowing available to you from a range of lenders, offering the most competitive products that meet your needs.
4. What deposit will I need?
The minimum amount of deposit needed, which is the difference between the amount you borrow and the purchase price, can be as little as 5% of the purchase price, especially for first time buyers. However, this will be subject to status and qualification.
Generally, lenders will offer better interest rates the bigger the deposit and lower the Loan to Value ratio. The deposit can be from savings, a gift from relatives or a combination of both, and you will need to prove where you have obtained this from.
5. What extra costs are there?
The costs will obviously vary depending on several factors, including the purchase price and the lender. If you are purchasing a property, the costs associated with the purchase will be Stamp Duty, solicitor costs, lender application fee, survey fee, broker fee (if using a professional broker) and removal costs.
At SMS Ltd, we complete a ‘Full Cost of Moving’ form with every client to ensure you are fully aware of all the costs associated with your proposed house purchase, and don’t have any nasty surprises when you reach completion!
6. What happens if I need to move out of the home I buy?
If you need to sell your house and move during the term of your incentivised mortgage product, such as a two, three or five year fixed/discounted rate period, most lenders will allow you to do this without incurring any ‘Early Repayment Penalty’ costs (ERP) by simply transferring the existing mortgage to the new property.
Any additional borrowing will be offered to you, subject to criteria and assessment, on a rate pertaining at the time of the transaction. If, however, you need to temporarily move out of the property for 6-12months, perhaps for work relocation, visiting family abroad or travel, you can ask the existing lender for consent to let your property, which most lenders will grant for a maximum of 12 months.
7. Why do I need to remortgage?
A remortgage is the process or term that is commonly referred to when you need to review your existing interest rate at the end of your two, three or five year fixed/discount period. All lenders offer remortgage products to attract your business away from your existing lender, and will normally offer free valuation and solicitor costs for the switch. There will, however, generally be a lender product fee charged. By completing a remortgage product review, you will ensure you remain on a competitively priced interest rate, thus avoiding a jump to the lender’s standard variable rate (SVR) and face an increased monthly payment.
The alternative to a remortgage is a product transfer review with your existing lender. There will be no solicitor costs and normally no re-valuation costs although you may find that lender product fees may still apply. However, the rates offered on product transfers are rarely as competitive as a remortgage rate switch to a new lender.
If you would like to find out more about searching for the right mortgage product for you, Sussex Mortgage Services offers the experience and resources to help you find the right mortgage to fit your personal circumstances. Read more on our website or get in touch on 01273 906706 to book a Free No Obligation ‘Cost of Moving’ consultation meeting.