Getting on top of your mortgage payments and having a mortgage plan of action could help save you £10,000’s over the term of your mortgage. Speak to an independent mortgage broker to help you with the process, but below are some helpful facts that will make your mortgage plan come together easier.
How Much Can I Borrow?
What you can borrow depends on your deposit/existing equity, the amount you want to borrow, which lender you choose and much more. However a general rule of thumb is that the maximum you can borrow is 4 to 5 times your income.
I’m A First Time Buyer, What Deposit Should I Have?
Gone are the days of 5% deposit. Banks are looking for more security. They are also prepared to reward you with record low rates if your deposit is big enough. As a general rule of thumb, the absolute minimum is 15%, but really you should aim for 20% +. If you want to access the best rates in the market, unfortunately you are talking 40% deposits. Don’t forget to budget also for stamp duty. This is a tax you pay each time you buy a house. The amount you pay depends on the purchase price of the property. Click on this link to calculate what your stamp duty would be http://www.hmrc.gov.uk/tools/sdlt/land-and-property.htm
Interest Only Mortgages Are So Much Cheaper, Are They OK?
The reason they are cheaper each month is because you are not paying back any of the debt i.e. if you borrow £100,000 at the start, you will owe £100,000 at the end. So if you would like to eventually not have a mortgage, then the answer to your question is simple. NO, interest only mortgages are not OK for you. If you would like to own your house one day, you need a capital repayment mortgage. This means you pay extra on top of the interest. The quicker you want to pay off the mortgage and the more you borrow the more your monthly repayments will be. Interest only mortgages are becoming a thing of the past for your residential mortgage because of these reasons. So be prepared if you are currently on an interest only mortgage because if you wish to switch rates, you are more than likely to be forced to change to a repayment mortgage.