Below you will find direct answers to some of the typical mortgage FAQs we encounter on a regular basis.
What will I need to obtain a mortgage?
The simple answer is typically:
- evidence of regular income or some other form of financial reserve which confirms your ability to be able to meet the repayment of the sums you are looking to borrow. That will also be a major factor in defining the properties you’ll be able to target by virtue of the affordability calculations;
- a review of your existing financial commitments against your income. That is another factor that lenders might use to assess the affordability issue. It isn’t just an income level issue;
- the ability to prove your identity and current place of residence;
- evidence that you have conducted your financial affairs responsibly in the past – typically, that will mean some form of credit history check. However, don’t assume that problems on your history files are automatically going to be showstoppers. With advice and help, there may be ways to overcome them and minor glitches are typically rarely an issue anyway;
- to be looking at a property price that is sensible when measured against generally accepted market norms for similar properties in the same area.
Please note though that this is not the same thing as stating what you will need in order to find a suitable mortgage that’s a good match to your individual circumstances.
You may find that specialist advice will be extremely useful in helping to achieve that objective.
How fixed are lenders’ criteria in terms of affordability?
All lenders operate under a regulatory requirement that demands they protect consumers’ interests through avoiding lending sums that might result in a debt the borrower could not service through their repayments.
Taking that into account though, lenders do interpret the facts of an application differently. Some may have extremely rigid qualification criteria, which they rigorously apply, whereas others may have a certain degree of tolerance in their assessments which they will use in appropriate circumstances.
For example, in some parts of the UK, property prices are such that some lenders recognise the need to be as flexible as realistically possible. As an example, for mortgages, Cambridge buyers may require a little more flexibility from mortgage providers than might be the case with buyers in lower-cost areas of the country.
Are buy to let mortgages still available?
However, the overall position has changed significantly in the very recent past.
Changes in both taxation and the legislation covering things such as the role of landlords mean that old assumptions about purchasing any property, anywhere, for any price, then letting it out for profitable income generation, may no longer hold true.
Specialist market knowledge and property intelligence have never been more important before making the decision to purchase a property for letting purposes. That applies to finding a suitable mortgage too.
There are potentially significant opportunities here but being very selective about your target properties and your funding model is essential.
I’ve read that the banks have become risk-averse. Are they still advancing mortgages?
Yes, they are.
It would be advisable though to avoid assuming that the conventional banks are your only source of mortgage funds.
There are many new entrants and specialist providers in the market today. Some might specialise in different types of property or specific locations. For example, for mortgages, Cambridge residents might be advised to look at one potential source or type of source whereas if you were buying in say Central London, there may be potentially more suitable options available.
It is important to look at a variety of options for your prospective mortgage provider, and that is where at Fogg Financial will be delighted to help.