What is the best mortgage rate?

The best mortgage rate for you will depend on your personal circumstances and the wider economic situation. Throughout 2022 and 2023, mortgage rates have risen significantly compared to previous years. However, there are still mortgage deals out there. It's important to be aware that sometimes the lowest initial interest rate may seem like the cheapest but make sure you factor in additional product fees before choosing one as they can make your mortgage more expensive overall. A mortgage broker can explain any additional fees to you to make sure you're getting the right deal for you.

How much could I borrow?

The amount that you can borrow for a mortgage is based on a number of factors, including your salary, your monthly outgoings, your credit score, and any existing debt or loan agreements you may have in place. Normally you can borrow around 4 - 4.5 times your annual income. You can use our calculator to get an idea of how much banks and other mortgage companies may be willing to lend you.

How much will it cost to buy a house?

On top of your deposit and mortgage, there are many fees and costs associated with buying a home, including solicitor fees, arrangement fees, property surveys and Stamp Duty. It's worth budgeting for all the fees that are involved, to make sure you have enough money side. It's also wise to include an emergency budget for unexpected costs.

Do I need a new mortgage if I move house?

It depends on your mortgage. Most mortgages are portable, meaning you can keep them if you move. However, this isn't always the cheapest option and you may be able to find better mortgage rates if you switch. If you're planning on moving and locked into your current deal, it could be worth speaking to a mortgage adviser as they can likely advise you on the best option for your circumstances.

Is it better to buy or to rent?

Knowing whether you should rent or buy a home depends on your personal situation, there are pros and cons to both. In terms of monthly payments, renting is typically more expensive but buying has more upfront fees, such as stamp duty and solicitor fees. Also with buying, you'd have to factor in paying for urgent repairs that can put a strain on finances. But at the end of the day, buying a house means your monthly repayments are going towards the house you own and not a landlord's pocket.

How can I save up a deposit?

It can be really hard to save up a house deposit, particularly as a first-time buyer. If you're struggling, consider opening a Lifetime ISA. The government will boost your savings by 25% (you can save a maximum of £4,000 per year) as long as you use the money for your first home or retirement. There are terms and conditions involved though so do your research before deciding if it's right for you. If you haven't already, it's also worth setting up a standing order to divert money into savings as soon as you get paid. Plus, it may be worth doing a financial review to see if there are any expenses you could cut back on.

Can I get a mortgage with no deposit?

Yes, it is possible to get a no deposit mortgage but it can be difficult to find a mortgage lender who will offer this. Also known as a 100% loan to value (LTV) mortgage, you're more likely to get approved for this type of mortgage if you have a high credit score. Some lenders may also insist that you have a guarantor as extra security if you miss any repayments.

What are the costs involved with getting a mortgage?

When comparing mortgages, it's important to look for the best mortgage rates but don't get caught out by additional mortgage fees that can end up making your mortgage more expensive. Not all of the following charges will apply to all mortgages, but some of the main costs involved with getting a mortgage include: Broker fee - Some mortgage brokers charge for their services, but if you compare mortgage rates with Mojo they offer their expert advice free of charge. Booking fee - This is a non-refundable upfront charge that secures your loan when you make a mortgage application. Arrangement fee - Also known as a completion fee, this is the amount you pay your lender to set up your mortgage. This can typically cost up to £2000, which you can choose to pay upfront or add to your mortgage. If you decide to add the fee to your mortgage, remember that you'll have to pay interest on it. Valuation fee - The lender values your property to ensure it's worth the amount you're borrowing. Some mortgage lenders won't charge a fee, others will, and the cost varies depending on the value of the property. Solicitor fees - Is the amount your solicitor charges to handle the legal side of buying the property. This includes services such as transferring title deeds and arranging contracts. The fee can be anywhere from £850 - £1,500.

How do mortgage repayments work?

With a repayment mortgage, each monthly payment pays off some of the capital (the loan itself) and some of the interest applied to the loan. This means that by the end of the mortgage term, you should have repaid the entire loan plus interest so will own the property outright. With an interest-only mortgage, you'll only repay the interest each month. The amount you borrowed won't be repaid until the end of the mortgage term. The vast majority of residential mortgages are on a repayment basis. This is because interest-only mortgages are much riskier. Buy-to-let mortgages are, however, often interest-only, so if you're purchasing a property to rent out, this may be a good option for you.

Can I get a mortgage with bad credit?

The best mortgage offers are typically given to borrowers who are seen as low-risk and can prove to the lender that they are responsible with money. That means, having a high credit rating will really help you secure a good mortgage rate. There are a number of ways to build your credit score, such as: Checking for mistakes and cancelling any unused credit accounts Making sure you keep your address up-to-date Registering on the electoral roll Getting a credit card which you pay back in full each month Setting up direct debit payments so you don't miss any payments Limiting credit applications over a short period of time That's not to say if you have bad credit you can't get a mortgage, you just might not get the best deals.

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Can buying a repossessed property save you money?

Can buying a repossessed property save you money?

Written by Hannah Maundrell, Former Editor in Chief28 December 2018

If you can put aside the emotive mental images conjured up by the words 'repossessed property', then there are some real bargains to be had. You just need to know where to look and how to go about buying.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

What is a repossessed property?

A repossessed property is a home that has been seized by a lender after the previous owner defaulted on a mortgage or other finance arrangement.

Once a lender has taken ownership of a property, they will seek to sell it quickly in order to recoup the money loaned to the previous owner.

Why are repossessed properties cheaper?

This comes down to the way lenders approach their sale. That is, whilst they are legally obliged to seek the 'best possible price' in order to serve the interests of the previous owner, they will rarely do anything to prepare the property for sale.

Lenders want to shift repossessed properties quickly, so will usually price them below the market rate and offer them for sale immediately. As a result, repossessed properties often sell for up to 30% less than might be expected through a private sale.

What are the downsides?

It is likely that properties offered for sale after repossession will require some serous TLC. It is not uncommon for previous occupants to strip out all fixtures and fittings before handing over the keys, so some refurbishment is likely to be necessary.

It is important to factor the costs of this work into the overall cost of buying the home.

Where can I buy repossessed properties?

The favourite hunting ground for property investors is the property auction but auctioneering is a skill in itself. Auction sites offering repossessed houses for sale include:

In addition, the recession and related rise in repossessions has seen a number of specialist websites spring up. These include:

Finally, it is worth keeping an eye on the local papers and making contact with estate agents. Estate agents may well sell repossessed properties, but not advertise them, so drop in or call to ask what is available.

How do I select the right property?

The process of finding and checking out a repossessed property is really no different to investigating a home for sale on the open market.

It is vital that you do your research to make sure there are no nasty surprises down the line. Here are some key pointers:

Get a mortgage agreement in place

As with any property purchase, it is best to get a mortgage agreed in principle before you start your search in earnest.

Start by finding a mortgage deal that works for your circumstances or seeking advice from an independent, whole of market broker if you are not sure where to start.

Once you have found a deal that you are eligible for and that you are satisfied with, start the application process. This will give you a good idea of how much you will be able to borrow, whilst having a mortgage agreed 'in principle' will give you a head start if you find a property you want to buy.

You might also want to consider bridging loans for contingency auction finance.

Understand the risk of being 'gazumped'

In most cases, repossessed properties will not be taken off the market even after you have an offer accepted. It is important to understand that the lender will have no qualms about accepting a higher offer, even after you pay for surveys and legal work.

Get a thorough survey carried out

It is possible that a hidden and serious defect has prevented the previous owner from selling, and that this has ultimately led to repossession. It's vital that you have a full structural survey carried out before committing to buy a repossessed home.

Factor in any 'reconnection costs'

In many cases gas, electricity and telephone services will have been disconnected. Remember that you may have to pay to have them reinstated.

Stay protected

Buying a property, whether it is in need of modernisation, refurbishment or if it's in perfect condition, will require you to take out a policy to match. You can compare prices here for a home insurance product that will keep you from forking out for any unexpected expenses that might come your way.

Check your credit rating after you move in

Whist unlikely, it is possible for your credit record to become mixed up with that of a previous occupant. Given that they have probably defaulted on a mortgage, this would be certain to have a detrimental effect on your ability to access credit. Check your record a few weeks after moving in, just to be sure. Not sure how to check your credit rating? Read our guide to find out.

Whether you are looking to move up the property ladder, downsize or just relocate we can help you find the right mortgage when you move home.

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Getting a mortgage can be more difficult when you get closer to retirement. Here is how to find one whether you want to move house or remortgage your current home.

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About Hannah Maundrell

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