General Mortgage FAQs:
What documents do I need for a mortgage application?
Proof of ID, proof of address, bank statements, proof of deposit, and proof of income
What is the difference between a fixed-rate and a variable-rate mortgage?
Fixed rates stay the same for a set period, while variable rates can change based on the lender’s standard variable rate or market factors.
Can I get a mortgage with bad credit?
Yes, some lenders specialise in adverse credit mortgages, but you may need a larger deposit.
How do lenders assess my affordability for a mortgage?
Lenders review your income, outgoings, credit score, and the property’s rental income for Buy-to-Let mortgages.
How does the Bank of England base rate affect my mortgage?
The base rate impacts variable-rate and tracker mortgages, causing monthly payments to rise or fall.
Should I use a mortgage broker?
Brokers can provide access to a wide range of products and offer personalised advice.
What are arrangement fees for mortgages?
These are fees charged by lenders to secure a specific mortgage product, often included in the total loan amount.
Buy-to-Let (BTL) Mortgage FAQs:
What is a Buy-to-Let mortgage?
A mortgage designed for purchasing property intended to be rented out.
Are interest rates higher for Buy-to-Let mortgages?
Yes, BTL mortgages typically have higher interest rates than residential mortgages due to perceived risk.
How do lenders calculate the maximum loan for BTL mortgages?
Using the rental income and stress testing based on the borrower’s tax bracket.
Why do some lenders have high arrangement fees for BTL mortgages?
To keep interest rates low and improve rental calculations while covering their costs.
What is rental yield, and how do I calculate it?
Rental yield is the return on your property investment, calculated by dividing annual rental income by the property purchase price and expressing it as a percentage.
What are SWAP rates, and how do they affect BTL mortgages?
SWAP rates influence fixed-rate mortgage pricing. Higher SWAP rates often lead to higher lender costs, passed on through higher rates or fees.
Can I get a BTL mortgage in a limited company?
Yes, but the rental calculation will differ, and arrangement fees or rates may be higher.
Self-Employed Mortgage FAQs:
What is an SA302, and why is it important for self-employed applicants?
It’s a tax calculation document from HMRC that proves your declared income to lenders.
How do I download my SA302?
Log into your HMRC account, access your Self-Assessment, and download the Tax Calculation and Tax Year Overview.
Can I get a mortgage with only one year of accounts?
Yes, some specialist lenders accept one year of trading history, but terms may be stricter.
Insurance FAQs:
Life Insurance:
What is life insurance, and why is it important for property owners?
It provides financial support to cover mortgages and living costs for dependents in the event of death.
What are the types of life insurance?
Level term, decreasing term, whole of life, and joint life insurance.
Do I need life insurance for a mortgage?
While not legally required, it’s highly recommended to ensure mortgage repayments are covered.
Income Protection:
What is income protection insurance?
A policy that provides monthly income if you’re unable to work due to illness or injury.
Why is income protection important for self-employed individuals?
Self-employed workers don’t have access to statutory sick pay, making this coverage essential for financial stability.
Property Investment FAQs:
What is a rental yield?
A measure of return on investment for a rental property, expressed as a percentage.
How do I calculate rental yield?
Divide annual rental income by the property purchase price and multiply by 100.
Why is understanding rental yield important?
It helps investors compare returns across properties and assess profitability.
What’s the difference between gross and net rental yield?
Gross yield doesn’t account for expenses, while net yield deducts costs like maintenance and mortgage payments.
Miscellaneous FAQs:
What is unoccupied building insurance, and who needs it?
A specialised policy for properties left vacant for over 30 days, ideal for landlords or homeowners during renovations or between tenants.
What is landlord insurance?
A policy tailored for landlords, covering buildings, contents, and liability specific to rental properties.