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.
Here at AGA Mortgages we guide you through the maze offering expert mortgage advice through the whole process.
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 around 4 to 4.5 times the gross income of borrowers. These multiples do vary from lender to lender and lenders are more generous in certain circumstances so it is worth talking to us to find out what is available.
Once we have factored in your own deposit towards the property purchase we can establish a maximum property purchase price.
Some lenders offer very good deals for first time buyers and a minimum deposit of 5% is required. It is also worth factoring in all associated costs with buying a property such as legal fees and lenders setup fees and a survey fee. The biggest cost when buying is likely to be stamp duty.
Stamp duty is a government tax and must be deposited with your solicitor at the time of exchanging contracts. Stamp duty bands are as follows:
This is best described via a worked example. A house purchase at £500,000 would be liable for £15,000 in stamp duty. This is derived from paying £0 on the first £125,000 then 2% on the element between £125,000 and £250,000 and finally 5% on the part of the property value that exceeds £250,000.
If you are a first time buyer however, then new rules took effect from late 2017 which are now as follows:
You can claim a discount (relief) so you don’t pay any tax up to £300,000 and 5% on the portion from £300,001 to £500,000.
You’re eligible if:
If the price is over £500,000, you follow the rules for people who’ve bought a home before.
Higher rates of stamp duty if buying additional properties also apply in many circumstances, please contact us for further details.
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 shall aim to respond within 24 hours.
Your mortgage payments will depend on the following factors:
A Key Facts Illustration or an European Standardised Information Sheet detailing what your monthly payments would be, can be provided once we have discussed your case.
There are broadly four types of mortgage products available:
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.
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.
Typically lenders will require your latest 3 month’s personal bank statements, latest 3 month’s wage slips and P60 (if overtime and bonus are being used) or 3 years accounts if self employed. They will also require proof of identity and proof of current address. If buying a property, proof of your deposit would be also be necessary. Other documentation may be required although this varies amongst lenders.
If you are having trouble finding a mortgage because you’re self-employed or have an irregular income, then the chances are remote you will be able to acquire a mortgage. Since the credit crunch took grip of the mortgage market, lenders now require to see evidence of income in the form of wage slips or accounts for the self employed. If these are unavailable then getting a residential mortgage will be impossible. Please contact me direct for the latest situation with regards to this requirement.
It is important to get expert advice so that you are given the option of being able to consider mortgages from a varied range of sources whilst also taking into consideration your own specific requirements.
We are not tied to any bank or building society and will 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.