questions & answers

Am I under any obligation by filling in the enquiry form?

NO. You are under no obligation whatsoever by asking us for assistance with your mortgage requirements. We will be happy to discuss your situation and recommend suitable products to meet your needs at no cost to you.

How much can I borrow?

Although many lenders still use income multiples to work out how much they will lend more companies are utilising sophisticated software to underwrite on an 'affordability basis' taking into account numerous factors to produce a tailored income multiple. This method often leads to higher income multiples for professionals, those borrowing at lower loan-to-value ratios, those with no dependents or other credit commitments and those whose credit score is higher than average. As a rough guide most people can borrow 4 times a single income plus the second income (if a joint application) or 2.75 times joint incomes. Income is generally treated as annual income less the annualised repayments to other credit commitments. Because each case is different we would advise you submit your details via the enquiry form.

Can I consolidate other debts when remortgaging?

As long as your borrowing is within the lenders limits you can raise funds to consolidate other loans and credit cards, home improvements, a deposit for a second property, divorce settlement or for virtually any legal purpose.

Over what period can I take my new mortgage over?

Many lenders offer mortgages with terms up to 30 years and some go to 40 years. Age at retirement can be a restricting factor, with some lenders only lending up to age 65.

How do I get a decision in principle?

Many lenders these days accept mortgage applications online and the initial part of this procedure normally results in a 'decision in principle'. That is to say the lender will agree to lend you the amount you have applied for assuming all the information provided electronically can be verified at the time the full application is made. You should bear in mind that applying for a decision in principle may affect your credit score and your ability to obtain a mortgage elsewhere if you do not proceed. If you want to know how much you are likely to be able to borrow we suggest you submit an enquiry, especially if your circumstances are such that your chosen lender would be unlikely to issue you with a positive decision.

Can I borrow more than the purchase price?

Some mortgages are available up to 125% of the purchase price, however, there are not many to choose from. These schemes are useful if you are purchasing a property with little or no deposit and need funds for home improvements, etc. You should bear in mind that you will in effect have a negative equity situation which may take several months if not years to clear and may restrict your mortgage options for a while.

What is APR?

This is the Annualised Percentage Rate and aims to show the actual annual interest rate charged by a lender over the term of the mortgage. It differs from the published rate for several reasons the main ones being as a result of introductory discounts or fixed rate periods and the method by which the lender calculates the interest it charges you. The latter is often referred to as the 'rest period' which can be daily, monthly or yearly. Lenders using a yearly rest period apply your schemes interest on the balance outstanding at the start of the year. Quite clearly, as the year progresses each monthly payment you make will reduce your mortgage debt but the lender does not use this reducing balance to calculate the interest it charges you. As a result the APR, the actual rate at which you have been charged is higher than the scheme rate. At the opposite end, a daily rest period will ensure that whenever there is a change to your mortgage balance, either as a result of monthly payments or a lump sum payment, it will be taken into account immediately. APR has several shortcomings not least in the fact that it assumes you make every payment on time and you stay with the same lender on the same scheme for the life of the mortgage......something of a rarity these days!

What fees might I have to pay?

When applying for a mortgage the following fees may become payable;

Valuation fee: Paid to the lender on application.

Booking fee: Usually in association with fixed rate deals, paid to the lender on application to reserve funds on a particular scheme.

Arrangement fee: Charged by many lenders these days, it can be payable on application, on completion or be added to the amount borrowed.

Broker's fee: Paid to a broker either on application or on completion by deduction from the mortgage advance. Usually in the region of 1-3% of the loan amount, i.e. £1,000 to £3,000 on a £100,000 mortgage. Mortgage & Property Centre DO NOT charge a brokers fee.

Compliance levy: This fee is charged by Mortgage & Property Centre to help cover the cost of compliance procedures imposed on us by the Financial Services Authority. We have to pass this cost on to our customers as we do not charge a brokers fee. The compliance levy is currently set at between £195.00 and £595.00 depending on case type and is payable on application and refundable if we are unable to obtain you a mortgage offer.

Several lenders market schemes which have valuation fees refunded or free valuations. Many remortgages are available with both free valuations and free conveyancing and are often referred to as 'fee-free' remortgages. Other mortgages are available which offer varying amounts of 'cash-back' which may be used to cover the various fees involved. If you are applying for a small mortgage it is essential that you choose, if at all possible, a scheme which has minimal fees as you would be unlikely to recover any substantial fee element even with the biggest of discounts. If you are at all unsure how to make an accurate comparison of mortgage schemes we suggest you submit an enquiry to us and we will be happy to help.

Endowment shortfalls

At the end of the 80's the Government instigated an 'endowment review' which was carried out by all those insurance companies who had previously sold such policies. At the time of applying for an endowment the insurance companies were provided with estimated figures for future investment growth to enable them to calculate the premium you would need to pay to reach a particular maturity value. The review involved insurance companies recalculating every policy holders estimated maturity proceeds using significantly lower growth rates. As the premium was to remain the same the lower rates would clearly lead to lower estimated maturity values and hence the term 'endowment shortfall' became popular. You should bear in mind that this was a Government initiative and nowhere in the calculations is your providers actual investment growth rate used, i.e. their investment returns could be better or worse than the figures quoted in the review letters many have received. There are several ways to deal with possible shortfalls and they will differ in each case. Our recommendations are to act sooner rather than later if you have been presented with a shortfall letter and secondly do not cancel any endowment or other policy used to support your mortgage until you have submitted your enquiry to us to examine further. Finally, do not panic, in our experience most cases are easily sorted.

Home insurance

We recommend all homeowners affect a quality buildings and contents insurance policy to protect their home and possessions. You should ensure you have cover for accidental damage and personal possessions away from the home. Up to five years no claims discount is available and we are able to obtain 2 years complimentary no claims discount with certain providers for first time buyers. Various terms and conditions may apply.

Landlords insurance

This type of policy is designed to cover properties which are let to tenants. Such policies cover landlord's fixtures and fittings as well as loss of rent which are not part of standard domestic home insurance policies. Various terms and conditions may apply.

Mortgage protection

We recommend clients affect a suitable life policy to cover their mortgage debt in the event of death, critical illness or permanent disability. If you are taking out a buy-to-let mortgage life cover is normally compulsory and a condition of the mortgage offer. On the other hand, those with no dependents may wish to affect only critical illness and disability cover. Various terms and conditions may apply.

Payment protection

We recommend all clients ensure they will be able to meet their mortgage commitments should they be made redundant or unable to work due to accident or sickness. You can choose between two types of policies; the first are short term providing a monthly benefit for 12 - 24 months starting immediately following an accident or sickness which prevents you from working, or your involuntary unemployment. The other type is designed to come into effect after a waiting period of between one and six months and will normally pay out the monthly benefit, in the event of you being unable to work due to sickness or accident, for as long as it takes you to recover or until your mortgage ends, whichever comes first. This cover is ideally suited to those who may have some income protection already, such as from their employer, and who wish to extend it to cover their full mortgage term. Various terms and conditions may apply.

Conveyancing

This is the term for the legal work involved in buying and selling property or when changing your mortgage lender. There is clearly more work to be done when buying a new property especially if you also have a property to sell at the same time. The work carried out by solicitors includes preparing contracts of sale and purchase, negotiating with solicitors acting for other involved parties and administering the movement of mortgage funds between the parties concerned. They also check the ownership and title of the property at the Land Registry to ensure you are buying what you think you are buying and that the vendor is entitled to sell it to you and whether there are any debts secured on the property and what restrictions may be attached to the property such as listing, rights of way and restrictions on use. The conveyancing carried out during a remortgage consists mainly of checking the title at the Land Registry, carrying out a Local Authority search and administering mortgage funds, hence many lenders will cover the cost of the legal work on their remortgage schemes as an incentive to borrowers.

Surveys & valuations

There are three main types of survey;

Full Structural Survey; this is carried out by a qualified structural engineer and will examine in detail all aspects of the structural integrity of a property. This type of survey is a must for those buying properties of unusual construction or situated in unusual locations. The cost will be dependant on property type and location but expect to pay in excess of £1,000.

Homebuyers Report; this goes into more detail than a basic valuation and contains information concerning energy conservation. They tend not to be a popular choice and they cost around £650 depending on property size and location.

Basic Valuation; this is the valuation that will be instructed by the lender should you not wish a more detailed survey to be carried out. It should highlight most problems commonly found in average properties and if needed the valuer will recommend further, more detailed, surveys be carried out prior to release of funds. Typically this may be for damp, wood rot, electrical circuits, drains, etc. This is the most common survey carried out when purchasing a property. If conditions requiring more serious investigation are uncovered during the standard survey then you can instruct a structural engineer to carry out a 'condition specific' report e.g. if the property roof is found to have a sag in it. This will look at just the highlighted query and often comprises cause, remedy and estimates of repair costs. For most properties this route will be more cost effective than a full structural survey on the entire property. If you submit an enquiry we will be happy to discuss which type of survey may be most appropriate for your situation.

Other fees that you may encounter will include;

Solicitors fees: Solicitors are used to convey the title of a property from one owner to another and to carryout other legal work for you, and sometimes the lender, during a purchase or a remortgage. Fees vary from company to company and are usually expressed in two parts; the fee for the solicitor's time and the disbursements which include costs for local searches, money transfers etc. The disbursements apply to the property you are buying and will generally be the same no matter which solicitor you choose.

Solicitors which utilise the internet and communicate with you by post and email tend to offer the most competitive service and you have the added advantage or not needing to take time off work to visit their offices.

Stamp Duty: This is currently payable on all purchases of £120,000 and above and is 1% of the purchase price from £120,000 and 3% of the purchase price on properties over £250,000. The duty is payable on completion via your solicitor.

Deeds Release Fee: Also referred to as a completion fee, this is charged by the lender when your mortgage is redeemed either at the end of the term or when you change from one lender to another. It is normally a nominal fee and included in the redemption figure obtained from the lender by the solicitor.

I do not have a solicitor, can you help?

Yes, we can instruct a competitively priced firm of solicitors for you who will deal with you by post and email so as you do not have to take time off work to visit their offices. In such cases we would be happy to provide assistance with completing any of their paperwork should you need it.

What type of survey should I opt for?

There are three main types of survey that you can select from when purchasing a property. The basic valuation for mortgage purpose is what the lender will organise in every case. If you feel you need a more in depth survey then you can opt for a full structural report or a homebuyers report, which is a sort of half way house between the two. See our Tell Me More page for more information on each type.

Can I pay off my mortgage early?

If you would like to be able to pay off your mortgage early, either following a windfall or an inheritance, or by increasing your monthly payments or paying occasional capital sums then you need to make sure that redemption penalties will not apply at the time. It is possible to overpay by 10% of the original amount borrowed without incurring redemption penalties on some schemes. If you need the ability to reduce your balance more than this then you should opt for a mortgage which has no redemption penalties whatsoever which will enable you to pay any amount off the balance at any time. You should also refer to the APR section and take note that overpayments will be most effective on a mortgage which has daily interest calculations. If you are not sure of your figures you should submit an enquiry and we will be happy to help.

What happens when my chosen scheme comes to an end?

If you have opted for a discount, fixed or capped rate then it is likely to apply for only a number of years of the mortgage term. Your 'mortgage key date' is the date when your scheme benefits come to an end and you are free to consider changing to another lenders discount, fixed rate or whatever is most appropriate for your circumstances at the time. You should contact us 6-8 weeks before your current deal ends and we will be able to arrange, if appropriate, a new scheme to suit your situation. Reviewing your mortgage in this way will ensure that you will always have the most appropriate and financially beneficial mortgage at all times. You can contact us to get your review started by sending an email to admin@mpcuk.com or by calling our customer service number which is 0115 983 5797.

How long will it take for my mortgage to complete?

A remortgage takes approximately 6-8 weeks from application to completion. Purchases can take from 6 weeks onwards depending on any other buyers/sellers in the property chain. The time it takes can depend on several factors including how quickly you supply any documentation required and how quickly paperwork is returned to us. Most mortgage applications are submitted online and in many cases the decision to offer is given within seconds. All that remains is to get the valuation carried out and the relevant paperwork forwarded to the lender. Submit your enquiry now to get the ball rolling.

What consumer protection do you offer?

Mortgage & Property Centre is authorised by the Financial Services Authority who regulate the way in which we carry out our business and have a policy of 'treating customers fairly' which we have to comply with. It is also a stipulation that we hold professional indemnity insurance to levels set by the FSA to cover our advising and arranging of both mortgages and insurance contacts. Further to this, should you have a complaint which you feel we have not dealt with fairly you may ask to have it referred to the Financial Ombudsman Service whose decision on such cases is independent and binding on us as a company. We hope such cases never come about and we provide all our customers with contact numbers for their personal adviser so that they may be contacted 24-7 should the need arise.

What parts of the country do you cover?

We provide our services to people living in all parts of the British Isles. If we are unable to visit you because of your location we have procedures in place to handle your enquiry by post, fax or email.