Mortgage frequently asked questions

A mortgage is the loan that you take out which is secured against your property that enables you to purchase your home.

The mortgage lender has the option of taking possession of the property and selling it on if the mortgage repayments aren’t made to try and recoup any losses it has suffered.

The lender will charge you 'interest' in return for lending you the money. Therefore over the term of the mortgage you will need to pay the lender interest, and repay the amount you originally borrowed fully before the mortgage ends.

Every lender will be different in their approach to what you can borrow and unfortunately there is no set calculation. The actual amount you’re eligible to borrow will be determined by the cost of the property you wish to purchase, the size of deposit you have, your income and affordability (taking into account your monthly financial commitments and any future commitments). Refer to our Mortgage Calculator to get an indication of what your monthly mortgage repayments could be.

This is simply swapping the mortgage you have on your current property for another mortgage with a different lender. You may consider this option if your existing mortgage deal has expired and you wanted to see if a more competitive deal was available. You could also consider this if your circumstances have changed and you want to borrow more. There are many reasons why you would remortgage but this does not involve moving home. 

Conveyancing refers to the legal work completed by the solicitor or conveyancer you choose when buying or selling a property. It’s important to have either a conveyancer or a solicitor already lined up because as a buyer or a seller, you will need this in place to start and complete your transaction. Reeds Rains can help with your selection should you require some assistance. 

If you are employed, you will need to provide at least your last 3 months payslips as a guide and sometimes your P60.

If you are self employed, the easiest way to prove your income is via SA302s which can be obtained from HMRC. Alternatively at least 2 years' trading accounts may also be acceptable to lenders. Some lenders may have other requirements.

You will also be required to provide your bank statements for the last 3 months. 

If you have any other form of income, eg tax credits, then written evidence from the provider will be required. 

The answer to this is simply down to what you can afford. We would always advise speaking to mortgage adviser to ascertain what term is suitable to your circumstances. 

One of the most difficult aspects of organising a mortgage is sorting through the hundreds of mortgage deals currently available. Different mortgage schemes will often cater for different needs. To establish what is suitable for you it is important to take into account your current circumstances as well as your priorities and long term plans. We recommend speaking to a mortgage adviser as soon as possible as they will be able to guide you.

Typically the list of fees could include:

Valuation fee – charged by the lender to value the property and generally paid up front with your application

Solicitors fees – charged by the solicitor to complete the conveyancing transactions on the property. Part of this is paid up front when the solicitors are instructed but the remainder is paid upon completion.

Stamp duty land tax – a tax levied by the government on any property purchase in England or Northern Ireland above £125,000

Land Transaction Tax - is a tax you're liable to pay when you buy a residential property, or a piece of land in Wales, costing more than £180,000 for your primary residence and more than £40,000 on any additional properties.

Land & Buildings Transactions Tax - is a tax you have to pay when you buy a residential property in Scotland over a certain price. 

Lender arrangement fees – charged by the lender for arranging the loan. This can be added to the loan in most circumstances but will therefore increase the size of the loan.

Booking fee – charged by the lender for booking the funds for your mortgage and typically charged up front with your application

Broker fees – may be charged if you are using a broker and payable either up front or on completion

The answer to this is simply down to what you can afford, although in some cases it might be a lender's condition for the loan. We would advise speaking to a mortgage adviser to ascertain what term is suitable to your circumstances.

Both of these rates are variable which means that they may change as the Bank of England changes the base rate. A standard variable rate is the lenders normal mortgage rate, ie does not include any discounts or deals. It tends to follow the Bank of England rate, but not exactly. A tracker mortgage is linked to a particular base rate, which it moves up and down with ('tracks'). Two of the most common rates that may be tracked are the Bank of England Base Rate, and LIBOR (London Interbank Offered Rate).

The higher lending charge, formerly known as a mortgage indemnity guarantee (MIG), is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the value of the property. This fee may be used by the lender to purchase an insurance policy designed to protect it (the mortgagee) against loss in the event of you defaulting and ceasing to repay your mortgage. 

When you take out a mortgage with an initial deal on an e.g. fixed, tracker or discounted rate basis, should you repay the mortgage in full or part before the deal ends, you usually will have to pay an Early Repayment Charge which, in most cases, is charged as a percentage of the loan.  Some mortgages will offer a ‘portability’ option which means that if you move house when you are still tied into your deal, you can ‘port’ the mortgage to the new property and avoid the Early Repayment Charge. 

In the first instance you should seek permission from your Mortgage Lender. Your lender may increase the interest rate to reflect the change in risk. A mortgage adviser can provide you with advice on your mortgage and insurance options. Remember that you may also need to change the type of building insurance you hold on the property to ensure it is appropriate for this purpose.

The first and most important thing to do is contact your lender as soon as possible. Lenders are required to treat borrowers in this position "sympathetically and positively".

Some lenders also have telephone helplines and debt counselling facilities which may be able to help you.

Your mortgage lender will insist buildings insurance is in place as you move into your new home. Home insurance combines buildings and contents insurance to cover your most valuable asset. We would recommend that when you take out a large debt, you should also consider protecting it against the unthinkable like death, injury or long term illness.

An AIP will tell you whether your credit score is good enough for your mortgage application to be accepted by them, and the level of borrowing they may be willing to consider. It does not oblige you to go to a particular lender any more than it obliges them to provide you with a mortgage offer but it does enable you to get an early indication of what value properties you can be looking at.

The most important thing is affordability. If you have a stated budget we will recommend going up to that to keep the term short enough that you do not have to pay more interest than you should. If your payments would take you over your budget we will recommend a longer term as over time you will have various other options as the amount owed goes down, you owe less, earn more, or the LTV adjusts over time as well over paying options available on most mortgages. The important thing is to know that your obligations over a fixed period will remain and it may cost you to come out of such an arrangement, but you can revise your arrangements when you re-mortgage so the important thing is to keep your affordability manageable.

This would be based on income and expenditure which would need to be assessed with you based on payslips and bank statements.

Some fees may be payable on application and some when you complete on the property, and some may be refundable. At your appointment your adviser will go over all fees that could be payable and explain when they would be due and if they are refundable or not. Your adviser will always provide you with an illustration for any mortgage they talk to you about and this will show you the breakdown of any fees and when they are due.

Depending on circumstances we can look at mortgages from 10% deposit. Generally the larger the deposit you can afford the cheaper the mortgage repayments.

Embrace Financial Services have access to some mortgage deals that are not available direct from lenders on the High Street. Lending policies differ from lender to lender, and some may lend more than others; Embrace Financial Services need to sit down and discuss affordability to see which lenders criteria you meet and how much you can borrow. 

It’s not a legal requirement to take out mortgage protection insurance. However, it will protect your asset for the mortgage term and give you the peace of mind that your family would be able to remain in the property in the event of your death, or should you suffer a critical or long term illness.

Embrace Financial Services have a comprehensive range of products from across the market; this includes products to help people that may have had issues with credit in the past. 

Embrace Financial Services can advise you on the Help to Buy scheme mortgages.

Whilst the recent Help to Buy Equity Loan scheme that launched in 2013, came to an end on 28^th February 2021, there remains the Help to Buy Equity Loan (2021-2023) scheme which is available for purchases from April 2021, and will run until March 2023. This is only available to first-time buyers.

Consideration prior to purchasing at Auction:

• Ensure mortgage approved in principle prior to bidding.

• Seek advice from a mortgage broker who access to lenders service standards for quick mortgage offers.

• Be aware that you will need to provide deposit at auction, not at mortgage completion.

• Obtain a copy of the property legal pack at earliest opportunity, prior to bidding.

You have to have a valuation if you are buying with a mortgage but do not need to have a survey. However, in most situations it is advisable. Your adviser can explain about the different types of survey available.

A repayment mortgage is where you pay the interest as well as the capital borrowed, so your mortgage balance is reduced every time you make a payment. In the early years you will pay mostly the interest and a little towards your capital but in the later years you pay more towards the capital.