Mortgage Guide
Getting a Mortgage can be a tough process. Our free guide can make the process much easier. Giving you helpful tips on securing your mortgage. This guide is for all those looking to Purchase, Remortgage or move house. Don't be scared by jargon our guide will go over any complicated sounding language and simplify it for you.
Who we work with
With over 80 lenders on our panel we are confident we can get you the best available deal.
Need Advice?
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Benefits of being a First Time Buyer
It is not easy buying your first property but help is at hand. First Time Buyers can benefit from Specialist Products and Incentives to get their foot on the property ladder.
5.5x Income
Some lenders will boost affordability for First Time Buyers allowing you to borrow as much as 5.5x your income. For those who are in proffesional roles some lenders will look up to 6.5x your income!
Why use Rocket?
Options
We work with over 80 lenders on a daily basis.
Experience
Over 20+ Years of helping people just like you.
Price
We compare with all lenders to get you a price you can afford.
Service
We do our best to ensure you have a stress free experience.
How to get a better Mortgage Rate
Your mortgage rate depends on a lot of different factors check out what you can do to boost your chances of getting a lower rate.
Higher Deposit
Having a larger deposit will mean lenders can typically offer you a better rate.
What type of mortgage are you after?
There are four main types of mortgages, please select the one that suits what you are hoping to achieve.
A first time buyer is one who is looking to purchase a property for the first time. Click here to see the benefits of being a First Time Buyer.
A remortgage is for those looking to take out a mortgage, usually when their fixed product has come to an end.
A buy-to-let is for those who are looking to purchase a property with the intention to rent it out in order to make a profit.
For those who currently own their own home and are looking to purchase a new property.
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How much can I borrow?Generally-speaking, you may be able to borrow between three and four and a half times your salary. So, if you earn £30,000 a year, that means you could borrow between £90,000 and £135,000. But be aware that lenders decide how much they’ll lend based on your particular circumstances, such as your income and your outgoings. You'll need to be prepared for lenders to assess your bank statements to work out if you can afford a mortgage. Your credit score can also have a big impact.
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What is a standard variable rate?A standard variable rate (SVR) is an interest rate set by your mortgage lender that you’ll usually move to when your current mortgage deal ends – unless you take out a new deal. Unlike a fixed rate mortgage, an SVR can change, which means your monthly payments could go up or down; your lender will always notify you of a change before it happens. An SVR is usually more expensive than other mortgage deals. But, early repayment charges may not apply, allowing greater flexibility to make overpayments. Check with your lender before making an overpayment. If you don’t want to move to an SVR, you’ll usually have the option to switch to a new deal or remortgage to a different mortgage provider.
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What does a decision in principle mean?A decision in principle shows what a lender could be prepared to lend you. It’s also known as a mortgage in principle or an agreement in principle. It’ll give you an idea of what you can afford – handy for when you start house hunting. However, you have to complete a mortgage application form to secure a formal mortgage offer. That bit comes once you’ve found the home you want to buy.
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What is LTV ( Loan to Value)The loan to value – often shortened to LTV – is the size of the mortgage compared to how much your property is worth. It’s usually expressed as a percentage figure. For example, if a mortgage is offered at 90% LTV, you’ll need to find a deposit of 10%. The lower the LTV, the lower the mortgage interest rate tends to be.
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How much can I borrow for my Buy-to-let?With a buy-to-let you can borrow up to 75% of the property value. The mortgage amount is then dependant generally on two things: Anticipated rental income and your tax band. Being in a higher tax bracket will mean you can borrow less this only applies for those looking to purchase in their personal name. Lender will then assess the rental income in connection to the property value to see if it passes their ICR ( Income Cover Ratio ) which is a stress test that they use to see if the rent is high enough.
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Interest only or Repayment for my Buy-to-let?Interest Only mortgages have for a long time been popular with Buy-to-let Investors. The lower monthly repayment can allow Landlords to generate cash flow each month which can then be used to build a deposit for another property purchase. Inflation will overtime erode the loan amount and Landlords will benefits from the assumed increase in property value. Repayment Mortgages don't offer as much surplus cash flow each month but are still a fantastic option. Slowly building equity in the property each month is a fantastic way to generate capital. Both options make sense, but are dependant on your personal circumstances.
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Are Buy-to-let Mortgages more expensive?Compared to a residential mortgage buy-to-let mortgages are generally higher in interest rates and in fees. This is due to the risk associated with the type of borrowing. Buy-to-let Mortgages Inherently have a higher risk for lenders due to the fact that it is not the borrowers main residence, and due to tenants not paying their rent. Borrowing through a limited company is eve more expensive compared to a buy-to-let in personal name and residential mortgage, for the same reasons above.
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Is it better to borrow in Limited Company or Personal Name for Buy-to-let?This depends entirely on each individuals circumstances and we would always recommend independent tax advice, if I need click here. Borrowing through a limited company is more expensive than borrowing in ones personal name and will generally have higher product fees. Having a limited company will involve set up costs and on going accountancy fees. The greatest benefit of borrowing in a Limited Company is because you can deduct interest payments as a tax expense, reducing your tax bill. Borrowing in your personal name, could mean better rates, less fees but could also result in you paying more in tax if it changes your tax rate. For example if someone had an Income of £35,000 from their employment, and then had a rental income of £20,000 their total income would be £55,000 moving them from a basic rate tax payer paying 20% to a higher rate tax payer paying 40%, a huge difference.
Mortgage Basics
We know getting a mortgage may seem like a daunting and stressful time, but it really doesn't have to be. A mortgage is a contract with a lender who will give you a loan on a secured asset such as a house, that you live in. These loans are secured against the asset meaning if you cannot pay your mortgage your property may be repossessed. Once you enter in a contract with a lender you are agreeing to pay them back over an agreed period of time, could be anything from 10 years to 40. If you opt for a repayment mortgage then you pay Capital and Interest each month until your mortgage is paid off. Fixed Products are particularly common and popular these days as most borrowers appreciate the safety that is given with them, these can be from 2 years up to 10 years!There is a lot to think about with mortgages and if you would like to speak to an advisor please use the contact form for us to get in touch.