Residential mortgages FAQs

A lender will take into account your income and expenditure. This will include committed expenditure such as credit cards and loans, and spending such as bills, shopping and travel. Lenders have different ways of calculating what someone can borrow.

Contact us at Model Financial Solutions and will be able to advise you on this.

You will need a minimum of 5% (of the value of the property you want to buy) as a deposit. The more deposit you put in, the better the interest rates will be. This is because the lender takes less risk when you put in a higher proportion of the money. If you put down a 15% deposit, it is likely that you will get a better rate than if you only put down 10%.

The three factors that affect how much you pay each month are: the loan amount, the term of the mortgage and the interest rate.

A repayment mortgage is guaranteed to pay off your mortgage by the end of the term if all payments have been made.
With an interest-only mortgage, you only pay the interest on the loan each month – leaving the loan itself outstanding. At the end of the term, you still owe the money you borrowed, so it is important that you have a strategy in place to repay the borrowing.

As a condition of the mortgage, you will need buildings insurance. We usually recommend that you also insure the contents within your home and it is common to take a policy that would cover both buildings and contents. Other insurances we recommend are life insurance and income protection insurance. We look at the whole of the market to find the right insurer for you.

Yes. You can “remortgage” to another lender to take advantage of their better interest rates. If you are within your current mortgage’s initial rate period (i.e. a two-year fixed and you’re only 12 months into it) it’s likely that your lender will charge a penalty to repay that mortgage, so although there may be better rates they may not save you money. We can advise you whether it is beneficial to remortgage.
As part of our service, we will contact you as you approach the final few months of your existing mortgage deal to provide you with details of the options available to you. We don’t expect you to stay on the lender’s standard variable rate unless there are special circumstances that would determine this is best for you.

There are various costs associated with buying a property:
• Stamp Duty Land Tax (SDLT): Current percentages payable can be found at https://www.gov.uk/stamp-duty-land-tax
• Solicitor’s fees: These are based on the purchase price and whether you are buying a freehold or leasehold property.
• Valuation fees: With most lenders, these are also based on purchase price. Many lenders offer free basic valuations as an incentive, but you may wish to have a more detailed valuation – a home-buyers report or a buildings survey. We can offer guidance on what they cover and how to find a surveyor.
• Lender’s arrangement/product fees: These can usually be added to the mortgage or paid up front. On average, the cost is about £999.
• Mortgage broker fees: We do not usually charge a fee for our advice but if you have a complex situation we reserve the right to charge for the extra research and admin required- our typical fee is £150. We are paid commission from the lender.

Yes. However, you could have early repayment charges to pay if you are still within the initial rate period.

Yes. Most lenders allow up to 10% of the mortgage balance to be overpaid each year without incurring any penalties.