Mortgage Broker

This post discusses the various types of surveys available to home buyers available at http://www.mortgagebrokeradvice.co.uk/

WHAT IS A MORTGAGE VALUATION ?

A mortgage valuation ( or sometimes known as a valuation report )  is not a survey as such – lenders want to know how much the property is worth and to be notified of the property’s present condition.

Lenders will either use their own valuers or a valuer from their chosen panel to do a valuation report – with the valuer making comment to any repairs / reports required ie, structural report, timber and damp, electrical etc.

Unless the lender is offering a free valuation you will have to pay for the cost of this basic report on application of the mortgage.

If any further reports are required such as Timber and damp these usually have to be arranged and paid for by the purchaser unless the vendor of the property is prepared to pay / go halves on these costs.

WHAT IS A HOMEBUYERS REPORT ?

A Homebuyers report is a more detailed survey than the mortgage valuation / report.

It will advise on any major problems such as subsidence, and obvious rot etc.

However the surveyor will not lift up floor boards or drill any holes but provides a more in-depth report than a valuation report – it also costs more.

Again any defects will require more detailed reports as mentioned above.

WHAT IS A BUILDING SURVEY ?

These cost the most but are a more comprehensive detailed report and are usually for very old, timber framed, unusual , listed or thatched properties with the surveyor going in the attic, checking behind walls and looking between floors and ceilings.

They will usually contain estimates and costs and advice for any defects found.

WHAT TYPE OF VALUATION SHOULD I HAVE ?

As everyone has different levels of experience within the house buying process speak to your mortgage broker who will be able to advise you on what report / survey in your particular circumstances should undertaken bearing in mind the condition and age of the proposed property to be purchased. 
 
WHAT IF LENDER WILL NOT LEND THE FULL AMOUNT REQUESTED ?

If after having one of the above reports / surveys done and repairs / work has to be done to the property the lender will require written estimates for the full cost of said repairs – in certain cases the lender will then place what is called a RENTENTION on the mortgage.

For example if you are buying a property for £ 125,000 and require a mortgage of £ 110,000 with you putting in a deposit of £ 15,000 and repair costs are £ 5,000 the lender will reduce your mortgage to £ 105,000 meaning on completion you will have to increase your deposit to £ 20,000.

The lender will then normally give you up to 6 months to have the repairs / works done and will either accept receipts / guarantees provided by the companies who have done the work or send a valuer back to re-inspect your property ( usually for a fee ) and will then increase mortgage back up to £ 110,000 and forward you the £ 5,000 which was previously retained. 
 
Please ensure you fully discuss your valuation / survey requirements with your mortgage broker prior to submitting a full mortgage application to the lender.

1. DEPOSIT

A deposit for the property this can be as little as 5% but the bigger the deposit the better the rate, and proof that you can afford the mortgage over the selected term.

The deposit can come from various sources IE savings, Gift from Close relatives (Parents/Grand Parents) or in some case equity within the property ( you would need to seek advice before committing to purchase the property).

2. INCOME

Lender will want you to be able to prove that you can afford the mortgage in every case and they do that by looking at your income whether you are employed or self employed.

They will then look at what credit commitments you have already and will usually deduct these from your income to establish affordability.

It is vitally important that when you apply for a mortgage that you can prove your income.

Typically what lenders will look for is the following:

• Proof of Identification typically Passport or Driving Licence
• Proof of residency of current address
• Last three years address history
• Payslips (usually last three if paid monthly but could be more dependent on how you are paid)
• If Self Employed SA 302’s and Tax overviews (These can be obtained by you accountant or directly from HMRC).
• Bank statements
• Mortgage Statement if already a homeowner.
• Details of existing credit commitments (which could include credit card statements, Loan Agreements)
• Or any other document that they feel is necessary.

Therefore it is vitally important that when applying for a mortgage or any other loan for that matter you are able to prove you are the person(s) applying and that you can afford the loan.

You will need to be able to provide to the Bank,Building Society or Specialist lender the original documents.

If using a broker you can usually provide the original documents to them and they will forward certified copies to the lender.

Record keeping is essential and throwing away important documents could result in a long delay in applying for a mortgage or in some cases refusal.

So if you are at the point of thinking about applying for your first mortgage or are thinking about buying your next property ensure that you have got all the correct documentation as the lenders will want to see them.

People may want to remortgage their property for a variety of reasons, Better interest rate, Borrow more money for home improvements or to consolidate existing credit commitments. If you are unsure of what a remortgage actually is, click this link for an explanation http://www.learnmoney.co.uk/mortgages/remortgage.html

If say for example your fixed rate has just ended and you want to fix the rate again for a period of time the lender will take into consideration the value of your house and the outstanding mortgage and generally offer you another rate as long as your mortgage account has been conducted satisfactorily and your income is still sufficient to service the mortgage.

You will then be offered a rate dependent on the loan to value.

What loan to value means is what percentage is the mortgage outstanding to the value of the property.

IE £150,000 mortgage and a £200,000 Property value would represent 75% loan to value.

The loan to value is quite important as this will determine the rate and product a lender would offer.

Dependent what lender you are currently with simply switching interest rate can either be time consuming or simple.

Lenders like the Halifax plc allow mortgage brokers to arrange the switch and this can be done very simply without having to have a 2/3 hour appointment in the branch.

However you may want to borrow more money than you currently have outstanding , so what happens then ?

This is the point when the services of a professional mortgage broker will assist you greatly in the process.

A mortgage broker like myself will be able to look at what your existing lender will offer you and what is also available from the rest of the market.

All lenders have varying criteria for additional borrowing depending on what that additional borrowing is for.

If it is more advantageous to switch lenders the mortgage broker will look at what are the best interest rates, what charges and costs are involved.

Lenders now offer incentives for people to switch their mortgage to them and in many cases can offer better rates than your existing lender.

So whatever your circumstances speaking to a trusted mortgage broker who is independent to your existing lender should be the first place to start because they will be able to look at the full mortgage range and match the correct product/lender to your personal circumstances.

Remember a mortgage is a long term commitment and by taking the correct advice when there are changes to the mortgage could save you £1000’s of pounds in unnecessary interest payments.

What Is A Mortgage ?

Getting A Mortgage

Firstly, I had to make the decision of getting a home for myself. I had to make the decision of acquiring a home. This step was a matter of choice and decision. Next, I had to figure out how much I needed to borrow from the mortgage broker. I had to loan what I was able to afford. In order to estimate affordability, I put a lot of things into consideration so I create a worthwhile budget. I considered my income level and my debts. I had to make sure my income will be able to cover my common debts as well as finance the repayment of the mortgage. I also made sure I repaid as much of my debts as possible. I had to analyse my debt to income ratio. I also had to analyse my expenses. Make an estimated cost of my living expenses to make sure my mortgage choice and plan does not seriously counter act with my day to day living. I also had to save income for a deposit. A deposit is the initial amount paid at the time of purchase. Mortgage loans are of different types and vary depending on the type of mortgage you want. For example those seeking to acquire mansions should apply for a jumbo loan. As for me I was applying for a loan to get my first house I had to apply for a first time home-buyer loan. The conditions here were more favourable. Never go for a jumbo loan if you wish to acquire just a first time buyer home. The next thing I had to do was where to get my mortgage. I had a list of destinations from which to choose: mortgage broker, specialist mortgage provider (eg. the Halifax, Northern Rock etc), a retail bank (Barclays, HSBC etc). In the end, I had to go with a mortgage broker in order to facilitate the granting of my loan.

Choosing a Mortgage Broker

Choosing a mortgage broker was difficult because most of them seemed strange and charged extravagant prices. I had to keep searching thoroughly till I bumped into a certain broker (a lady) who fitted the bill so effectively and offered her services at a fee more affordable. Despite the difficulty I faced in finding a broker, the moment I got the right one everything went fair and smooth. First she did all the paper and legal work required when obtaining a mortgage, asked me what home plan I pursued. She then suggested me the right loan which was suited to my plan. I thank God for her. The advantage with getting a mortgage broker is that your work load and time is being reduced. This applies to a good broker. That is why you have to be careful when selecting a broker. With going solo it is good because you get to do all research alone and get some good knowledge. However it is very time consuming and confusing as it involves a longer and larger process. After getting in touch with a good broker, I had to go to my bank in order to verify my credit history to make sure my transactions where intact and do the necessary corrections. Luckily for me, everything was fine and void of errors. Evidently the process was extremely difficult and strenuous. However, everything went in my favour and I was financially sufficient to apply for the mortgage. What I had left was to compile the necessary documents. Below are the list of documents I compiled

• Government Identification

• Bank information

• Credit history

• Investment statements

• Proof of income and source of income-proof of employment. This is to show I am able to finance the repayment of my loan within the time range.

• Tax returns

• Debts

• Proof of assets.

Having gathered all of these documents, I was given a pre-approval document by my lender. A pre-approval document is not an approval for the mortgage. It is some kind of document which puts you in the waiting list. It puts your situation on hold, while the lender reviews your credit history capacity capability, financial statements and all other relevant documents at his disposal to determine your viability and capability.

Other people have different experiences when obtaining a mortgage. Some people fin theirs difficult and strenuous just like my experience for others it was simple as mastering the letters of the alphabet. Bottom line is difficult or easy, when approved we all wear smiles on our faces.