AGA Mortgages - Free independent UK mortgage advice

FAQ's

'Here at AGA Mortgages, there are several questions that prospective clients typically ask us. We have highlighted some of these below which you might find useful…'

Still unsure?
Then please contact our senior adviser, Alex Groom on:
01279 721706 / 07796 271 801 or email us for expert, impartial advice

What is a mortgage?

In a nutshell a mortgage is a type of loan used to buy a property. This loan is usually taken out with a lender, such as a bank or building society.

How do I go about buying my first property?

Buying your first property and choosing the right mortgage can be rather daunting, so do contact us and we can advise you on the mortgage options available to you. In the meantime, we hope you find the following information useful.

The amount of mortgage you can get depends on your income.
As a rough guide the usual multiples are 3.25 times the gross salary of single borrowers. A couple can get 3.25 times the first income plus one times the second income. However, you could get 2.5 times the combined income of both of you. These multiples do vary from lender to lender so it is worth talking to us to find out what is available.

Once you add to this the amount that you can afford to pay as a deposit, you have the amount you can pay for your first property. Some lenders offer very good deals for first time buyers, where for example there is more flexibility, and no deposit required. It is also worth remembering the additional costs, on top of your deposit and mortgage that you will be expected to pay.

For example, you will have to pay stamp duty, which is 1% of the purchase price for properties between £125,000 and £250,000, then 3% up to £500,000 and 4% over that amount.
Plus you will have to pay for the survey and the valuation on the property, plus solicitor’s fees.
You may also have to pay an arrangement fee for the mortgage and a Higher Lending Charge - which is insurance for the lender for you defaulting on your payments when your property is worth less than the loan. Add all these costs to the cost of your property and you may need a mortgage of 105% or more, which is possible.

How much can I borrow?

How much you can borrow will depend on your income and whether or not you have any other financial commitments, i.e., loans, credit cards, maintenance payments. It will also depend on how much deposit you have to put down as an initial down-payment on your property. For further information please contact us, we guarantee a response within 24hrs.

How much will my monthly repayments be?

Your mortgage payments will depend on the following factors:

·	The actual amount of the mortgage
·	The interest rate applicable to the mortgage
·	The term of the mortgage (years over which the mortgage will be repaid)
·	Whether the mortgage is a repayment or interest only mortgage

A Key Facts Illustration detailing what your monthly payments would be, can be provided once we have discussed your case.

It is also worth bearing in mind that there will be additional costs involved that you will need to factor in when budgeting for your mortgage. Such as:

·	Valuation fee, which will be paid to an approved surveyor who has carried out an independent assessment of the value of the property you intend to buy
·	Arrangement fee, this is charged by your lender, ie bank or building society, when arranging the mortgage
·	Solicitor’s fees for carrying out the conveyancing work on your property
·	Life Assurance and Buildings & Contents Insurance

What are the products available and how do they work?

There are broadly four types of mortgage products available:

Fixed: This is a mortgage rate where the interest rate is agreed at the start of the mortgage and will not change during the term of the fixed rate. So you know exactly how much your monthly payments will be each month during the fixed rate period.

Discounted: A discounted rate mortgage offers you reduced repayments for a given term. This interest rate is discounted from the published bank standard variable rate, or 100% standard variable rate if applicable, for an agreed period from the start of the mortgage. What this means for you the borrower is that you are guaranteed to pay a set amount below the standard variable rate for the period of the discount. The standard rate can go up and down, but the discount amount remains fixed during the agreed period.

Tracker: This is a variable rate mortgage where the interest rate is linked directly to the Bank of England Base Rate. Therefore when the Base Rate changes, the rate on your tracker mortgage changes by the same amount. For example, if the Base Rate increases by 0.25% then your mortgage payments will increase by the same amount.

Capped: This is a type of loan where a maximum rate of interest is set at the start of the mortgage term. During the capped rate period the interest rate can fall below the capped rate but will never rise above it. What this means for you the borrower is that you know how high the mortgage payments could rise but are guaranteed the rate will not go any higher, therefore making home loan budgeting easier.

What is a mortgage in principle?

This is a conditional offer made by a mortgage lender that - provided the information you give them is correct - they will "in principle" give you the loan you have discussed with them. A lender would need to carry out a credit score in order to obtain this.

It's very useful to have one before you even start looking for a house to give you the edge over any competition. Having one means you should be able get the actual mortgage quicker when the race to buy your chosen home begins. Once we have found a suitable lender and product for you we can arrange for a mortgage in principle if you wish.

How long will it take to get a mortgage?

The time scales can vary considerably when applying for a mortgage and are dependent upon many factors, such as whether you are purchasing a new property or remortgaging.
If you are remortgaging this can take around a month but this does depend on how quickly your solicitor acts, which can delay the process. We do however have an exclusive rapid remortgage service which could speed things up considerably for you, so do give us a call to find out more.

What documents are required?

Typically lenders will require your latest bank statement, last 3 wage slips or 3 years accounts if self employed. They will also require proof of identity and current address. Other documentation may be required although this varies amongst lenders.

I can't prove my income. What are my options?

If you are having trouble finding a mortgage because you’re self-employed or have an irregular income, then a self certification mortgage may be the mortgage option for you. But how do you know if you qualify for this type of mortgage?

A self cert mortgage, as its name implies, allows you the borrower to certify your own earnings without having to supply proof of income documentation, such as pay slips or fully audited accounts. Self cert mortgages are ideally suited to those who are self-employed, or employed but have an irregular income, due for example to bonuses and commission. They are also ideal for those who have several jobs, are seasonal wage earners or those who regularly undertake contract work.

The overall cost for comparison is 6.5% APR

Why is it important to get impartial advice?

It is important to get impartial advice so that you are given the option of being able to consider the whole mortgage market place and all the mortgage options available to you.

As we are not tied to any bank or building society and give totally impartial advice, we can work with you to get the right mortgage to suit your unique personal circumstances. It’s worth bearing in mind that if you approach a lender direct they are only going to give you advice on their particular products.