How to get a mortgage loan in the UK is not as difficult as many people assume. The mortgage system in the UK treats every borrower as an individual and focuses on three primary factors: affordability, household income, and property value. Most UK mortgage lenders will approve you for a loan that is between two and four times your yearly income, but rarely more than four times your annual income. Before you can be approved for a mortgage, you must complete an affordability assessment, which outlines your monthly income and expenditure.
Interest-only mortgages require the borrower to pay back only the interest of the loan
Although the financial world has been trying to rein in the risks associated with adjustable-rate mortgages, interest-only loans continue to endure. They are common in the high-end real estate market, where buyers defer paying the mortgage loan principal as part of a larger financial strategy. Although interest-only loans have some disadvantages, the benefits outweigh the drawbacks.
An interest-only mortgage doesn’t build equity in the home until the borrower starts paying off the principal. That means the home value will decrease over time, canceling out any equity you might have built up from the down payment. Refinancing may be more difficult if the home value has decreased significantly. Moreover, low monthly payments are only temporary and don’t completely eliminate the possibility of repaying the loan. Once the interest-only period ends, payments will rise to cover the principle balance.
An interest-only mortgage is a great option for home buyers who want to put the extra funds they have in retirement accounts and 401(k) funds into investments instead of paying off the entire principal. But the downside is that mortgage rates could rise again after the interest-only period has expired, so interest-only mortgages may not be suitable for everyone. So, if you are thinking of taking out an interest-only mortgage, consider your circumstances.
Shared ownership mortgages allow you to buy a share of a newly built property or a housing association property
Shared ownership mortgages allow you to buy your share of a newly built or a housing association property. The amount of your share must be between 10% and 75% of the value of the property. By purchasing a smaller percentage of a property, you can qualify for a smaller mortgage. Usually, shared ownership properties are newly built, but resales are becoming more common as the scheme becomes more established.
Once you’ve bought a share of a property, you can then sell your share if you want to move out at a later date. However, selling a Shared Ownership property can be complicated, stalling your progress on the property ladder. The housing association or local authority will have the right to buy your share through “first refusal” if you fail to sell it within the first eight weeks.
Offset mortgages allow you to pay off the interest of the loan only
Offset mortgages let you pay off the interest only on the amount of the loan, not the entire loan. This option works best for borrowers with large savings and no urgent need for cash. This mortgage can be paid off in one lump sum if you have sufficient cash to repay it over time. However, it is important to note that offset mortgages have higher interest rates than standard mortgages. Therefore, they are best for borrowers with a high cash balance or who are self-employed and can save large tax bills.
One of the major benefits of an offset mortgage is that it does not require a deposit. Instead, you can use your savings to lower your LTV. A low LTV will ensure you can access the best mortgage deals. However, you should also know that an offset mortgage is not as common as a standard mortgage. In fact, it is a niche product. As such, not all mortgage lenders offer it.
Arrangement fees and survey fees are components of the cost of moving house
A home survey is an important component of the cost of moving house. A home survey goes into more detail than valuation fees, and its purpose is to provide peace of mind, as well as potential costs to relocate. For example, salt mining can result in landscape subsidence, which could increase your moving costs. A full survey costs between PS250 and PS600, and it may even cost more depending on the surveyor.
The cost of moving house can vary greatly, and the most significant factor is the price of your home and the services you choose. You can also shop around for removal services, insurance, and utility bills, and negotiate with estate agents to get competitive fees. When choosing a removal company, do your research and read independent reviews to ensure you get a quality service at an affordable price. These costs will vary depending on your home’s size, type, and value.