The Financial Conduct Authority does not regulate some types of commercial or buy to let mortgages in London.
When it comes to the world of mortgages, there are many different routes that a property purchaser can take. From first time home buyers making their first steps onto the property ladder, to homeowners remortgaging, as well as holiday lets and even HMO’s, there’s a lot you can achieve!
One particular mortgage area that we frequently encounter when we speak to customers, is for a buy to let mortgage in London.
A buy to let in London will be classed as an investment property; You are prohibited from personally residing in it, it is solely there for profit. If you have privately rented previously, you will have likely been living in a property with a buy to let mortgage attached to it.
In order for a property to count as a buy to let in London, it has to be intentionally mortgaged as such, with the landlord making clear their plans to rent it out. The tenant will pay a monthly rental cost, that should be able to cover the monthly mortgage costs, plus a little more.
There are a lot of different areas that you can look at, to figure out whether or not you are eligible for taking out a buy to let mortgage in London.
Some of these factors can include what type of property it is that you are looking to buy, how old you are (there will typically be a limit of between 21 and 75, with mortgage lenders who work past 75 for a buy to let in London being limited), as well as your buy to let landlord experience.
The biggest factors that will be looked at by a mortgage lender are your affordability, the minimum deposit requirements and the current status of your credit score.
So that you can prove order to prove your eligibility for taking out a buy to let mortgage in London, you must first prove your affordability to the mortgage lender. The vast majority of mortgage lenders will have their basis for this centered around your projected rental income.
Projected rental income is the amount that your mortgage lender feels you should charge in rent, in order to cover all of your monthly mortgage payments, plus additional funds. They will have a specific requirement for this, and the mortgage lender will calculate it using the properties value.
As well as using what they deem is the projected rental income, some buy to let mortgage lenders will also have their own minimum income requirement, which is typically around £25,000, though this is entirely dependent on the mortgage lender you will be borrowing from.
An expert mortgage broker in London with experience in working with buy to let mortgages in London, such as our team here at Londonmoneyman, will help you find the most suitable mortgage lender for your plans and on the most suitable mortgage deal.
As will generally be standard with most purchases, you must put down a deposit for your buy to let mortgage in London. Typically speaking, the minimum for this is around 20-25% of the value of the property, though this can differ depending on your mortgage lender.
This is so that the mortgage lender has a reduced risk. By having a much higher deposit, you’re borrowing less funds against your property. This in turn will open you up to between a 75-80% loan to value, which gives you access to much better interest rates.
If you do fall into the category of a high risk purchase, say if you’re looking to take out a buy to let mortgage in London with bad credit, you may be asked to put down a deposit that is even higher than that.
You may be eligible for taking out a buy to let mortgage in London if you have a low credit score or a history of bad credit, though your choice of mortgage lenders will be greatly reduced. There are plenty out there, who may not even lend at all to someone with bad credit.
For the mortgage lenders who are still willing to help customers in these kinds of situations, they will be looking at factors such as, how serious your bad credit actually is and why it is that way. You may also be required to put down a bigger deposit.
Before you make an application for a buy to let mortgage in London, you will of course first need to find a property you would even like to make a purchase on.
Once you have done that, book a free mortgage appointment and speak with an expert buy to let mortgage advisor in London, as they can confirm whether or not you are eligible, find the best deals out there for you, and find you a mortgage agreement in principle.
Following this stage, you will have the freedom to go and make an offer on that property, which will kickstart your full mortgage application process, providing you have had your offer accepted.
As a general rule, you will find that buy to let mortgage investors will take out their buy to let in London as an interest only mortgage. This means you only pay the interest per month, drastically lowering your monthly outgoings.
Once your term has reached its conclusion, you will owe the capital balance that remains. This is usually either paid off by selling the property or taking out a remortgage and moving it onto a repayment mortgage. You may also be required to set up a repayment vehicle, in order to cover the cost.
Whilst an interest only mortgage tends to be the more tax-efficient and popular of the mortgage types for a buy to let in London, you are still also able to take out repayment mortgages on your properties. This means you will be paying a combination of capital and interest per month.
Though this of course will increase your monthly mortgage payments, it will mean that equity can grow within your property. At the end of your term, you would own your property outright, without the need to make any capital payments back to the mortgage lender.
As mentioned previously, a mortgage lender will want to stress-test your projected rental income, to review the amount you need to be charging in rent, so that you are able to cover the cost of your monthly mortgage repayments.
In terms of the amount that you would like to borrow, as long as your projected income can cover the amount that you are asking for, you will typically not be limited. That being said, a mortgage lender will want to see your projected rental income is more than your monthly payments by a certain amount.
For you to be able to apply for a buy to let mortgage in London, you will also need to give your mortgage lender a selection of documents, before you proceed. These usually include, proof of your income, deposit, ID, address, any bonuses and commission, as well as your current or most recent P60.
If you are a self employed mortgage applicant, you will generally need to provide your SA302 tax returns. Existing landlords may also be required to give proof of rental income, which usually comes in the form of an ARLA-regulated report, as well as a mortgage statement of all your existing properties.
By making sure you have as much of this with you as you can, ahead of taking out a buy to let mortgage in London, you will find that your mortgage application progresses much quicker than it otherwise would have. It is definitely within your best interests!
Of course, much like there would be with any mortgage, you will have basic costs involved. You will obviously need to put down a deposit, so that is a larger cost. Then there are mortgage arrangement fees, application and broker fees, as well as monthly mortgage payment costs.
On top of this, you may also have other fees that you will need to pay. Some of the more frequently encountered fees you will have to pay, include valuation fees, product fees and mortgage exit fees. Additionally, there may be solicitors fees and disbursement fees, as well as stamp duty.
Your open & honest mortgage advisor in London will be able to provide more accurate advice on the potential stamp duty rates you will be paying. If you ever wish to exit your buy to let in London early, you may have to pay an early repayment charge (ERC), which may be quite expensive.
Lastly, you will have to think about the types of costs that will go beyond what you would be already paying. Landlord insurance is also something that you will have to think about, as well as any letting agent fees, income tax and the general upkeep of the property, such as making repairs.
All the different costs included with a buy to let mortgage in London can be different, depending on mortgage lender, as well as your own personal and financial situation. Not all of these will be factored, though your mortgage advisor in London will make sure you are aware of every cost involved.
Yes, you will almost always be able to remortgage a buy to let in London. We typically see landlords looking to take out a buy to let remortgage in London as a way of releasing equity from the property, with the intention of putting a deposit down on another property.
The equity that is in your buy to let property will work a little differently than a standard residential property, if you currently have an interest only mortgage. Normally your balance and the interest will come down together, creating a much larger gap between value and balance.
When you have an interest only buy to let in London, only the interest will decrease. That means the equity in your property depends on how much deposit you put down and what the value of the property now is. Speaking of interest only mortgage, you may wish to also pay the capital balance as well.
To achieve this, you would be remortgaging your interest only buy to let mortgage in London onto a repayment mortgage, which would increase your monthly mortgage payments but give you the option of paying both capital and interest at the same time.
Though you may have limited options, it may actually be possible to get a buy to let mortgage in London as a first time buyer in London. When you look at first time buyer buy to let mortgage options, your deposit will likely need to be bigger, so that you can borrow the amount you need.
Additionally, please also bear in mind that in doing this, you would lose out on other benefits that first time buyers would get, such as stamp duty, because it is not a main residence for you and generally, buy to let landlords will be paying stamp duty.
For many first time buyers in London, becoming a landlord can actually be a really useful way to give a boost to your income, prior to affording a mortgage of your own on a residential property that you would like to live in.
Always remember that in situations like these, a mortgage lender will assess you on your second purchase, knowing that you already have a mortgage to your name, which in turn could affect future affordability or reduce how much you could borrow.
Whether you are looking for first time buyer mortgage advice in London, thinking of moving home in London or looking to remortgage advice in London, overpaying, even by a small amount, can make a difference in the amount on the interest you pay back over your mortgage term.
According to a survey, 56% of homeowners with a mortgage never get around to overpaying. This is very interesting data because almost all mortgage applicants start off their mortgage journey with every intention of doing so (or at least that’s what they tell me!).
All Homeowners know that overpaying, even by relatively small amounts, can make a big difference to the amount of interest paid back over the term. The earlier you start overpaying the better too as the extra payments have a longer period to have an effect.
The survey by Compare the Market suggests that Homeowners cannot afford to make extra payments, but I feel the main reason is that life simply gets in the way. We know overpaying is the “right” thing to do but let’s face it, there’s always something else you can be spending your money on and plenty of those things are more exciting!
Part of the problem here is actually remembering to overpay. It’s not something that’s particularly likely to cross your mind too often, except perhaps when your mortgage only has a few years left.
So, if you can see something of yourself in the above and would like to overpay so that, perhaps you can retire a year or two early then what should you do?
I would recommend setting up a standing order payable to your lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st.
The reason for the above is that very quickly you will start to “feel” that your mortgage is actually £575pm and you will get used to that within a matter of months.
The beauty of doing a standing order is that, unlike a direct debit, a standing order is controlled by the payer, not the receiver. That means that if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out next month.
Whilst it would be regrettable to have to stop overpaying, at least you would have benefitted from the overpayments made up until that point. Some mortgages will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though it’s important to check with your lender that you are eligible to do so to avoid a negative mark on your credit report.
Overpaying your mortgage is a great habit to get into, you don’t need to go hell for leather at it unless you feel so obliged but even shaving a year or two off will be very welcome when you near the end of the term.
If you have been doing your research on the world of mortgages or more specifically have been having a look at what your potential options for taking out a remortgage in London, you may have come across the term “capital raising” before.
Understandably, some may be confused as to what capital raising actually is. Simply put, capital is money, which means that capital raising is the financial terminology for the act of raising money.
There are a variety of different ways that this can be achieved and it is used for all manner of reasons.
As a general theme amongst conversations we have with existing homeowners, is that they would not only like to remortgage, but they would like to do so as a way to release equity for things like home improvements, to gift a deposit or something else.
If you are not too sure what equity is; Equity is the difference between your remaining mortgage balance and the amount that the property is valued at.
If during your term your property has increased in value, rather than enquiring about a remortgage to release equity, you may have the option of utilising something called a further advance.
This type of mortgage allows homeowners to take out an additional mortgage on their property to borrow an additional amount, as a way to release a portion of equity they have built up over time.
Further advances are typically taken over longer terms and have lower interest rates than standard personal loans, though you will also have to bear in mind that you will not only be paying back your primary mortgage, but also this as well.
Both these mortgages are separate from one another, the further advance is not added onto the first mortgage. This is two individual mortgages with the same lender, on the same property, with their own interest rates.
This mortgage type is something that can be a really good option for homeowners who perhaps don’t wish to remortgage or are tied into a deal so can’t remortgage. Remember the risks though, one of which being that there will be a higher risk of repossession if you cannot keep up your payments.
A second charge mortgage is a little similar to a further advance, allowing you to once again having another smaller mortgage running alongside your existing one, allowing you to release some equity.
The biggest difference between a second charge and a further advance, is that second charges are actually with a different mortgage lender and also have different interest rates.
If you were in an unfortunate circumstance where you were faced with repossession, your initial mortgage lender will be paid back from your homes sale, with any funds remaining from that sale then going to the second lender (but again, only after the first mortgage lender is completely paid back).
There are quite a few different reasons as to why you may find yourself in the market for something that allows you to capital raise against your home.
Popular options for achieving this include to fund any home improvements you would like to make, such as an extension, new home office or maybe even loft/garage conversions. We also often hear people wanting to consolidate unsecured debts against their home **.
Other instances where a homeowner may look to capital raise, is to perhaps gift a deposit to their children so they can get onto the property ladder, to buy a second home/property (common with those looking to start with a Buy to Let in London), and to pay for larger purchases.
If you have any portion of equity sitting within your property and are in the market for a capital raising mortgage, then you could be most suited for a remortgage to release equity. Of course our trusted mortgage advisors in London will make sure this is right for you before proceeding.
Book your free mortgage appointment and we will review your case to determine the most appropriate course of action. If a remortgage isn’t right for you, there may still be an alternative that fits what you are looking to achieve.
If you are aged 55+ and have a property worth at least £70,000, you may find yourself better suited for the option of equity release in London.
To understand the features and risks of equity release, ask for a personalised illustration. Our typical advice fee is up to £1,495 only payable on completion.
A lifetime mortgage may impact the value of your estate and it could affect your entitlement to current and future means tested benefits. The loan plus accrued interest will repayable upon death or moving into long term care.
** With Debt Consolidation there are some risks to bear in mind. That is why we always recommend you speak with a qualified Mortgage Advisor in London, before you look at consolidating any unsecured debts against your property.
Regardless of whether you are a first time buyer in London who is looking to find their dream first home, or you are looking to go through the process of moving home in London, it will soon become apparent that there are a lot of mortgage options out there for you.
There will be some mortgage options that are more popular than others, with some that are a little difficult to encounter altogether.
Below we have put together a comprehensive list of the different mortgage types that we come across. Each of these sections will also be accompanied by one of our video guides that explains them in more detail.
You can find many more useful mortgage guides here on moneymanTV. To learn more about the types of mortgages, go directly to our “Mortgages Explained” playlist here.
A fixed-rate mortgage will mean that a homeowner will have mortgage payments that stay the same for the duration of a specific period.
It is entirely up to you how long your payments are fixed for, with many of them choosing to have between 2 and 5 years. This is to protect against any changes to inflation, interest rates or the economy, leaving you with the knowledge that your payments are safe and consistent.
You may wish to fix in for longer than this, however, a lot can change between 5 and 10 years, so it is entirely possible that fixing in for that long could leave you at a disadvantage at that point in time.
The Bank of England will have a set base rate, of which a tracker mortgage will follow alongside. This means that neither you or your mortgage lender will be setting the interest rate of your mortgage.
It will typically be at a percentage above the Bank of England base rate. If the base rate was sat at 1% and you were tracking 1% above that base rate, then you would be on an interest rate of 2% on your mortgage.
These types of mortgages don’t tend to be as popular as fixed-rate mortgage, as they can often fluctuate throughout your introductory period.
This is the “standard” type of mortgage that you may think of. When a homeowners has a repayment mortgage, they will be paying a combination of capital and interest.
So long as you continue to keep up your mortgage payments for the length of the mortgage term, you will be guaranteed to have paid off your entire mortgage balance by the end of the term and you will own your home outright.
On the topic of your mortgage payments, a repayment mortgage is considered to be the most risk-free way to pay your capital back to the mortgage lender. In the early days of your mortgage, you will be paying more interest than capital.
By the end of your term, you will be paying back more capital than interest, which will make your balance reduce much faster than it would’ve done near the start.
Nowadays it is mostly modern buy-to-let mortgages that will be set up on an interest-only basis. It is much less likely for someone to obtain a residential property on an interest-only basis.
Though it is not so likely for a mortgage lender to obtain an interest-only product on a residential property, it may still be possible in some cases, such as if you were looking to downsize at an older age or if you have investments you can use to pay back the capital.
Mortgage lenders have very strict mortgage product rules and the loan to values tend to be much stricter now than they were in years gone by.
When you have an offset mortgage, your mortgage lender will set you up a savings account that will run alongside your mortgage account.
How this works is, for example, if you have a mortgage balance of £100,000 and you deposit £20,000 into this new savings account, you will only be paying interest on the difference, so in this case, £80,000.
This is often considered to be a fantastic way to save yourself some money, especially if you are a higher rate taxpayer. That being said, it’s not for everyone. As is the case with all these options, speak to a trusted mortgage broker in London to see which option is best for you.
Whether you are local to the London area or are moving from outside of London, one of the main factors when moving home in London is knowing more about the area you are looking to live in.
Of course this is beyond just simply looking at where you would like to live. You will also need to look at how the area currently looks, what any of the nearby facilities are, what would be included in your dream property?
To help you to create a better understanding of the type of area that you would prefer to live in, we have put together a detailed list of the different types of factors that you, as a home buyer, need to look out for when you are looking to find a new home in London.
Make sure to come up with an idea of the type of area you would like to start living in, after all you will likely be living within that property for a long time.
Seeing as London is mostly made up of city properties, it is perfect for those who prefer a more urban lifestyle. Of course if you prefer the country life, that’s going to be a little more challenging, as you may need to move slightly further afield towards the outer areas of London.
Tying into the previous point, if you are looking to move more to the outside of London, rather than closer to the center, you will of course need to make sure there are plenty of transport links, especially if you do not drive.
Whether it is for work, to see family and friends or for the night life, transport is key to any area. Fortunately, because of the significance of London, you will find plenty of transport links allowing you to commute to and from the city itself.
Whilst that in itself is a positive, there is a cost element. What type of public transport are you taking? How much does it cost to get there and which method is most cost effective?
If you are driving, how much fuel will you need to pay for per week? These are all important things to bear in mind before making a decision.
If you are a home buyer who has their own children, you should do some research on what the nearest schools are. Review the school league tables and any Ofsted reports, in order to get a better idea of what they may be like.
If you currently don’t have any children, whether it’s on the cards for the future or not, it’s always worth checking this just in case, as a way to future proof yourself.
When you are making plans to live within a certain area, it is important to prepare for various facilities you would like to have nearby. Making a list of this is always handy, noting which ones are essential and which ones you just really want.
For example, if you would like to have any nearby shops or gyms, take a look at the local area to see what is there. Closer to the center of London, you are likely to find most of what you are looking for. The downside is that these things may be busier or cost more.
Of course if you’re living further away from London, you may need to prioritise what is essential, but you will have the benefit of these possibly costing less. Remember that shops probably outweigh facilities like a gym, due to the needs of general living.
Some people will factor in how far away their family and friends are, into where they are looking to live. Many will want their family and friends nearby, especially if they have kids. Others may prefer a quiet life, only socialising sporadically.
This relates back to the transport links topic too, as even if you are a little bit away from family and friends, you may still be within viable travelling distance, due to the amount of transport options around the area.
Everyone wants to have something that is worth the money they are paying for it. This will entirely depend on the area you are looking to live in, especially when you consider London property prices.
Generally some people may look to go for a cheaper property initially, compromising on features and facilities they would’ve liked, in order to save some money, before moving later down the line.
With London being as expensive as it is, one of your compromises may be the area itself, if you would prefer the urban life. This is because these houses tend to be at a premium cost, and you are probably getting more value for money further out of the city.
An area is often defined by the local community. Some may prefer a quieter life, staying to themselves, whereas others may prefer to have a much busier community. It’s always worth speaking with an estate agent to learn more about what it’s like.
Additionally, there may be a community Facebook page or local newsletter to take a look at, as those have become more popular over recent years. Once again, because of London and the wider areas significance, a lot of information and opinion can likely even be found online.
A lot of home buyers will be looking for a new home because they will have found or will be on the search for a new career. It is important to look at the level of distance between your new home and your new workplace.
As touched upon, many people will commute to work in London from the outskirts, with plenty of transport links to choose from. This makes quieter, more affordable living a much more viable option. Some people prefer to work from home, so this may reduce the need to travel to work.
There are various different types of property that are available on the property market, with the area you are looking to buy in being a factor in which type is more prevalent.
Some will prefer to live on an end-terrace with a garden to relax in on a sunny day, whilst others would much rather live in a modern flat or a studio apartment.
Make sure you review all of the different options that are out there for you. Look at the viewings to get a good idea of what sort of property you would prefer to live in.
Any information you can obtain regarding future improvements in the area you’re looking to live in is also useful to have, especially if you’re looking to build a life within that new home and stay there for a number of years.
Online research will definitely be worth your while when you are looking to find any future investments. It’s important to consider whether or not these will be beneficial to you and your lifestyle.
If you prefer a quiet country life, your ideal perfect world may be turned upside down if there’s any plans for a sudden big housing development nearby.
When the time comes to start making offers on a property and getting yourself a mortgage, it is worth getting yourself booked in for a free mortgage appointment. Our fast & friendly mortgage advisors in London will be glad to help!
We work from early until late, every day of the week and including some weekends and bank holidays, subject to appointment availability.
Whether you need help as a first time buyer mortgage in London or are moving home in London, we will be more than happy to help you along with your mortgage journey.
Fixed-term contracts were once considered to be more of a less conventional form of income, though nowadays they’re a lot more commonly found.
As a general rule of thumb, the only difference between this fixed-term contract employment and regular employment, is how the contract that you have is structured.
Regular employment generally will typically mean you have to sign a contract at the start of your employment, which will remain in effect until you are either terminated or you hand in your notice to the employer.
If you are employed on a fixed-term contract, this will mean you are only a contracted employee for a specific length of time, as opposed to permanently. That being said, you’re still classed as PAYE, which is similar to what a teacher on a per year contract.
Yes, it is absolutely a potential option. It may be a little challenging if you are looking for a first time buyer mortgage in London, though we do still have mortgage lenders on panel who will consider these types of circumstances.
How long your current contract length is can have an impact on whether or not you can obtain a mortgage. If your contract is a short-term one, you may find it even more difficult to take out a mortgage.
The reason for this, is because you are not guaranteed any sort of long-term employment. Coupled with a large, long-term outgoing such as a mortgage payment, this could be a risk to a mortgage lender.
Most mortgage lenders will want to see consistent, longer term contracts one after another. This will showcase to the mortgage lender that you are likely to keep on with regular contracted work, which in turn will help you in maintaining your mortgage payments.
In addition to this, you can further increase your chances of having a mortgage application accepted by having written confirmation from your employer that once your contract has ended, it will be renewed with the same employer.
If you have had or are currently having any breaks in employment, mortgage lenders may see this as a problem due to their uncertainty of whether or not you can maintain your monthly mortgage payments.
On the off chance you have had any significant employment gaps over the course of the last 12 months, you may not be able to get a mortgage. This is dependant on the mortgage lender and their own criteria, though a more sustainable income may work in your favour more with some lenders.
Further to this, what is defined as a gap in employment will vary per mortgage lender. Some will see a week as a gap of employment, whereas others may deem 4 to 5 months as a gap.
An expert mortgage broker in London will be able to check lender criteria and match you up with the most appropriate one.
In order for a mortgage lender to consider accepting your application for a mortgage, you will need to provide them with multiple pieces of identification.
The types of documentation you will need to submit to a mortgage lender, include;
An expert mortgage advisor in London will be able to take a look at your documents in advance, to make sure it is all suitable for passing along to a mortgage lender.
If they require any other forms of ID from you, they will let you know so that you are more prepared for your mortgage journey ahead.
It is very likely that, providing you have a solid history of consistent employment, with very few or no gaps and a contract with a good amount of time left on it, you will be able to apply for a 95% mortgage, only putting down a 5% deposit.
Unfortunately, because it is deemed to be a risk to the mortgage lender, if your contracts are more short-term or you have some gaps in your employment, you may need to put down a much larger deposit in order to secure a deal with a mortgage lender.
Perhaps you are already a homeowner. If this is the case and you are on a fixed-term contract, heading towards the end of your fixed mortgage period, you may be curious of the options you have present.
It is at this stage that we would greatly recommend getting in touch with remortgage experts like ourselves and benefitting from remortgage advice in London.
This is because on top of the possibility of new deals that you may be able to access, there may well have been a change in your income. Maybe you aren’t working as often as you were in the past? Is your average income lower than it used to be?
It is elements like this that can have an effect on your ability to remortgage your property. Depending, you may have limited options, perhaps even with extra costs.
Enquiring for remortgage advice in London with expert mortgage advisors is definitely recommended ahead of jumping in to remortgage your home.
For anyone who is curious about whether or not it is possible for a home buyer or homeowner to obtain a mortgage whilst on a fixed-term contract, the simple answer to this question is yes, it is.
In order for you to have a much better chance of getting a mortgage with these circumstances, book a free mortgage appointment today with a dedicated mortgage broker in London and we’ll see how we are able to help you.
Taking your initial step towards finally owning your own home as a first time buyer in London can be quite a stressful activity to undertake, especially if you don’t quite know what you’re doing.
Whilst this thought process commonly occurs amongst first time buyers and even some home buyers, though it’s our job to reassure you that this doesn’t always need to be the case!
You should always make sure that you’re ‘mortgage ready’, so that you’re best prepared for your home buying experience.
Below we have compiled 9 questions that you may want to ask when you are buying a house as a first time buyer in London.
It’s always better for you to seriously think about a property before you commit to a purchase, as taking out a mortgage in your name, will likely be the most significant financial commitment that you’ll ever make.
One thing that you should definitely find out more information about, is how much interest has actually been shown in your potential new home. If it isn’t very popular, you can probably take some time to decide.
If on the other hand, it is a popular property, you may have to decide a lot quicker than you otherwise would’ve liked to.
If there happens to be multiple property transactions happening at one time, completely reliant on every sale and purchase being completed in order to proceed, you have found yourself a property chain.
Your mortgage process can be affected by a property chain if you find yourself in one, as this could slow down your ability to get a mortgage or potentially mean you lose out on the sale of your own property if you are moving home in London.
Luckily if your home is a new build, you won’t have to worry so much about a property chain, and you may be likely to move along the process a lot quicker, due to not having to wait for people to move out.
First time buyers in London will have the advantage even more so, as even if a small chain occurs, they won’t be selling a home to move into one. This is a good thing to mention when discussing property price with the seller.
You’ll quite frequently find that when some homes are purchased, the previous owner will have chosen to leave some items behind.
Items that tend to be left for the next owner, include electronic goods such as washing machines, fridges or freezers, as well as sometimes finding that a shed has been left in the garden.
This won’t apply to new build properties, as they are generally built on the conditions that are agreed upon before the work commences.
The advantage of this for first time buyers in London, is that you’re getting free items that often will be working just fine. The downside is having to pay to remove them if you don’t want them.
If you happen to be buying a new build property, there might additional items you can ask to be put in ahead of time, so they’re ready for when you move.
Another factor to think about, is what the neighbourhood is like. Do you have good neighbours or are they unfavourable? Things like this can impact your decision to actually move to an area.
If you are moving into a property that is on a new build estate, then you and your neighbours will be the building up an entirely new community, which could be a risk as it presents an unknown element.
The running costs of the property can often affect whether or not you decide to buy a property. These costs will be dependant on the area you are looking at, so it’s always best to ask in advance.
Make sure you ask about the costs of Council Tax, as well as the typical utility costs and other things like that. This can help you budget as you go around looking at properties.
The way that your house is facing can also have an impact on your decision to buy a property. Some would much prefer to be able to relax during the summer evenings in their garden, reading a good book or enjoying a nice beverage.
You’ll often find that south facing gardens will cost a lot more money, due to the fact they’ll be getting much more sunlight during the day.
The amount of work that may be required after you have moved in might also affect your budgeting for the property. Here are some of the most common things that home buyers should keep their eye out for;
The house buying process will, generally speaking, begin with property price negotiations between you and the seller. It is important that you are prepared for this so that you are in with the best chance of your offer being accepted on a home you really like.
If you would like to learn further about the best ways to improve your chances during negotiation, please do not hesitate to get in touch. As soon as you are “mortgage ready”, you can begin making offers on properties you wish to buy.
The best way to learn whether or not the offer you are planning to make is too high, it to have a conversation with the seller themselves or even the estate agent, to discuss other offers that may have been made and rejected.
Having a date in mind for when you can move in will allow you to plan everything else around it. You may need to instruct a conveyancing solicitor, pack up your belongings and then finally move them.
Speaking to the seller and finding out the earliest date that you could move in will allow you to be much more organised and prepared for the journey that lies ahead.
At present, there are over a million people in the UK now working in the ‘gig economy’ as contracted workers. Considering this career is technically freelance and they’re working short term contracts, a lot of these people aren’t entitled to many benefits that permanent, full-time employees get like any sick pay or holiday pay.
We’re finding that most of these workers are either operating in some form of professional service, are both skilled and unskilled manual workers (e.g., carpenters, electricians etc.), and due to the increase of internet based shopping, many are now taking up careers as couriers and delivery drivers.
Unfortunately, gig economy workers will naturally find it a lot more difficult when trying to obtain a mortgage, because the mortgage lenders will be treating them as Self Employed Mortgage applicants.
For you to increase your chances of having a successful mortgage application, an applicant will need to demonstrate a strong history of employment. One year’s history is probably the minimum that will be required to qualify for a mortgage, unless you have an upcoming contract set to last for quite a long duration. If your contract is due to last a few years with the same company, you may not be seen as self-employed, depending on the lender.
If a lender opts instead to treat a mortgage applicant as a sole trader, then you will need to provide the lender with proof of your net profit. This is the amount that is earned in total, with expenses taken off. For this, you may find that you need the services of an accountant.
If the person applying for the mortgage has set up their own limited company, then the majority of lenders will be making their calculations based on the total of declared salary plus dividends.
The way that mortgage lenders are choosing to assess contract workers seems to be a lot more flexible now, likely due to the high number of them currently existing within the economy. If a person has been working this way for a while and currently holds a contract, then depending on the industry, some may have their incomes assessed through their ‘day rate’.
If day rate is assessed, they will take that amount and then times it by 5 and times that total by 46. The reason for this, is lenders know that a Contractor is unlikely to work 52 weeks a year, even if they are not paid for any holidays they take. As such, they work off a 46 week basis. This method of calculating works well for IT contractors especially, as they have the options to choose what contracts they take and when.
If an applicant is Self Employed in London, it is advised to be organised as best as you can, collating what is needed in advance prior to applying for a mortgage in the same way that a contractor applicant would. It’s also important to remember that if you are wanting to apply for a mortgage, a potential lender will be wanting to see healthy levels of earnings that are sustainable. As such, you may end up paying a bit more tax.
Regarding the place of zero-hour contracts in all this, it is possible for someone with these who is applying for a mortgage to obtain one too. Once again, a mortgage lender will want to see 12 months’ earnings before it is possible to apply for a mortgage. They will consider taking an average of earnings, rather than a full year.
Once you have completed all of the required exams and can proudly shout about becoming a Newly Qualified Teacher, it’s time to look at the next step. For you, this will be to make use of your new skills and find yourself a job using your well-earned qualification!
Depending on whereabouts you are going to be working, you may need to start exploring the different options that are available for you with Moving House in London, as you could possibly be working further away from where you currently live.
Soon enough you will find yourself looking to live elsewhere, perhaps maybe finding it a little more challenging than you would’ve expected to create a balance between homeownership and getting into your new role.
This is not something only you will be feeling, however, as we have worked with a lot of home buyers and homeowners throughout our time as a mortgage broker, all of whom needed someone to take the stress away whilst they keep their minds on their new career.
It’s not always so easy trying to search for a mortgage lender who will be happy to offer a mortgage to someone who is a newly qualified teacher.
Problems tend to crop up due to either the fact that there isn’t really any work history they can look at or because they only have a temporary contract.
Although these can be an issue, there are still plenty of options for Newly Qualified Teachers who are looking to obtain a mortgage. Our dedicated team of Mortgage Advisors have helped many NQTs in their quest for obtaining a mortgage over our time as a mortgage broker.
Every once in a while, you may find that there are some mortgage lenders out there who have preferrable deals specifically suited to public sector workers such as teachers.
The key to making sure everything goes to plan here, is ensuring that you are with the best mortgage lender for your situation, which in this case is usually what would be the most challenging part of the mortgage process.
When issues like this arise, our experienced mortgage advice team in London will step up, taking the time to search through thousands of mortgage deals for you, doing everything we can to find you the perfect deal for your situation.
You should always bear in mind that whilst yes, mortgages can be complex for Newly Qualified Teachers, you are not completely restricted in what is available to you on the mortgage market.
Here are some of the types of mortgages that we find that crop up the most when we are working with cases referring to Newly Qualified Teachers:
The lender may look at a handful of other factors as well regarding to NQT mortgages. There are some known mortgage lenders out there who do not need to see previous employment and may allow you to obtain up to a 95% LTV (loan-to-value).
Depending on the mortgage lender that you go with, you may find that a 12-month first contract is treated the same as a permanent job role, rather than it just being seen as a temporary contract.
Finally, there may be a selection of mortgage lenders around the country who are willing to get started on your mortgage before you officially start your job, though to do this you will have to provide evidence of a signed contract and a confirmation of your start date.
This can come in quite handy, as you may potentially be prepared to start making your first mortgage payments at the time when you are due your first months wages from your new job, by the time your mortgage has completed.
Our open & honest team of dedicated mortgage advice experts in London have extensive knowledge and experience of helping customers across the mortgage and property markets, providing help to lots of first time home buyers with their mortgage needs
There are a great deal of benefits to using the services of a trusted Mortgage Broker in London. We always strive to take away your stress, looking through thousands of different and tailored mortgage deals for you, our customer, suggesting possible conveyancing solicitors for you to use and more.
Find out what you may have available to you as a first time home buyer, by getting booked in online for a free mortgage appointment with an experienced and reputable mortgage advisor in London, who will collect information from you and help you onto the next step of your journey.
Mortgage Protection Insurance is a term used to encompass various types of cover designed to protect borrowers from events that could severely impact their ability to maintain mortgage payments.
There are different variations but when connected to a mortgage they are all there to provide peace of mind and usually fall into the following categories:
As a rule, if the policyholder dies within the term, then the sum assured should be enough to pay off the outstanding mortgage balance and ensure the borrower’s dependents aren’t left with a debt they might not otherwise be able to manage.
Our Mortgage Advisors in London can run through all the different types of life cover and recommend the most suitable plan for you.
Critical Illness Insurance works in a similar way to Life Assurance, in that it is usually taken for a specific term of years and can have different options such as level/increasing etc.
It is designed to pay out a lump sum and, like Life cover, for borrowers, it is typically taken on a decreasing term basis in line with the reduction of your mortgage balance.
The key is that the benefit is paid if you fall victim to one of a number of specified critical illnesses and pays out whatever the long-term prognosis of that illness.
The type of illnesses covered vary from company to company, that’s why this type of insurance cannot be solely price-driven and advice is recommended.
In practice, many companies will offer Life and Critical Illness Critical cover as a combined policy and would usually payout on the “first event” i.e. whatever happens first | either death or a serious illness | the pay-out is made. They can also be written on a single or joint life basis.
Whereas Life and Critical Illness cover pay out a lump sum, Income Protection pays out a monthly sum designed to replace your wages in the event of you being unfit to work.
Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered, the only factor being whether they make you unfit to work. There are however restrictions on how much you can cover and how quickly benefits would start to be paid.
Like Life and Critical Illness cover, these policies are underwritten based on your health and lifestyle at the time you apply. All income protection policies are written on a single life basis.
There’s an adage that says you can never have too much insurance. Certainly, many people have one or more of the different types of policy and it would be wrong to think of Mortgage Protection Insurance as just an “either/or” choice.
However, in the real world, affordability plays a massive part, so whilst it would be fantastic to cover yourself for every potential opportunity, our Mortgage Advisors in London will help you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.