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Different Help to Buy Schemes for Buying a Home in Leicester

It can be tough saving money for a deposit, particularly if you’re paying rent as well. To help those struggling to get on the property ladder in Leicester, the government introduced various help to buy mortgages

This article will include the Help to Buy Equity Loan, Help to Buy Shared Ownership, Help to Buy Armed Forces and the Lifetime ISA Scheme. All aimed to help those struggling to get to where they want to be on the property ladder. 

Help to Buy Equity Loan

The Help to Buy Equity Loan scheme is popular amongst first time buyers in Leicester. To qualify for this scheme, you will need a minimum of a 5% deposit, and you can only purchase a new-build property. 

How does the scheme work?

Once you have saved up for a 5% deposit or more, the government will loan you 20%; if you have a 10% deposit, which makes up a 25% deposit. 

You will be left with a 75% mortgage and a government equity loan to pay off. You get five years to pay off this equity loan interest-free.

If you can’t meet the 5-year cut off point, you will start receiving interest in the outstanding loan amount. 

How our mortgage advisors in Leicester help

As a mortgage broker in Leicester, we understand the challenges of balancing your mortgage payments and the equity loan repayment at the same time. 

There are ways around this. For example, you may be eligible to remortgage to raise capital for this loan, however, doing so may lead to your mortgage payments increase.

Help to Buy Shared Ownership

The Shared Ownership scheme allows applicants to purchase a percentage of a property and then pay the rest back on rent.

The percentage of the property that you own usually needs to be between 25-75%, though this can change. The remaining portion is likely to be owned by the housing association. 

The way that your payments work is that you will have both your mortgage plus rent outgoings. So, you are paying 100% of the ground rent and service charge on the property. 

Help to Buy Armed Forces Scheme

Following the success of the Help to Buy Equity Loan scheme, this scheme had a similar concept as its predecessor, except you have to work in Armed Forces.

If you fit into the criteria, it could be an excellent option for you. The good news is that the government has now extended the deadline/review date of the scheme to December 2022.

Lifetime ISA

The Lifetime ISA can be still beneficial, and it can help you secure a property as a first time buyer in Leicester. Essentially it’s a savings account where the money grows tax-free. 

The government will also top up your savings by an extra 25%, so if you meet the £4,000 maximum amount, you will receive a nice £1,000 bonus.

You have to pass specific criteria to gain access to this scheme. All of the details will be on the Government Lifetime ISA page.

Lifetime ISA Explained in Leicester

ISA Mortgage Advice in Leicester

The Lifetime ISA (independent savings account) is a great addition to the government-led mortgage schemes. In theory, it’s not really a scheme, it’s an independent savings account that builds up overtime through help from the governement. These funds can help you purchase your first home.

The Lifetime ISA is not to get confused with the Help to Buy ISA, they are similar but there are some differences. Let’s take a look at the Lifetime ISA, how it works and why it could benefit you.

What is a Lifetime ISA?

In your Lifetime ISA, your savings will grow interest-free. Each year, your total amount saved in the ISA will be increased by the government by 25%.

The maximum that you can deposit each year is £4,000. This may seem like a lot, however, at the end of the year, you’ll receive an extra £1,000 in your ISA account.

ISA Infographic

Where can I use my savings?

Your ISA savings can be used for two different things. Firstly, you can use it to buy your first property. If you are thinking about starting your buying a home journey as a First Time Buyer in Leicester, this scheme could be perfect for you. Lifetime ISAs can especially be useful if you’re thinking of holding off your mortgage journey for a little while longer.

Alternatively, you can use the Lifetime ISA for later in life savings. Unfortunately, as a Mortgage Broker in Leicester, we can only help clients looking to utilise the savings account to fund a deposit for their first home. If you are thinking of using the Lifetime ISA for this second reason, you can find out more information on the Lifetime ISA government website.

Are there any restrictions?

Like most government schemes, you will have to qualify for the ISA before you can use it. Here are the requirements:

Buying a home

  • This has to be your first home purchase
  • You can only save a total of £4,000 a year
  • The house that you’re purchasing must cost £450,000 or less
  • You must be under the scheme for a least a year before you can make a purchase
  • You must be over the age of 18 but under 40

Further information on the Lifetime ISA can be found on the official government’s official page here: https://www.gov.uk/lifetime-isa.

If you’re already feeling as if this is right for you, get in touch with a Mortgage Broker in Leicester like us and we can help you get your Lifetime ISA journey started.

Trusted Mortgage Advice in Leicester

If you’re curious about more government-led mortgage schemes, now could be the perfect time to take a look and find out what’s available. There are lots of different schemes available, so it’s definitely worth the look! Starting off your mortgage journey through a government scheme could massively boost your chances of being accepted for a mortgage.

Get in touch with our brilliant Mortgage Advisors in Leicester and book your free mortgage appointment today. We don’t just specialise in Lifetime ISAs, we work with the Self Employed, Remortgages and Buy to Lets; any mortgage situation, we will try our best to help! We love a good challenge and we would love to try and help you make that first step onto the property ladder.

The Pros and Cons of Using a Mortgage Broker in Leicester

As could likely be predicted, we personally feel like there are some really great reasons why you should use a mortgage broker in Leicester. This isn’t born out of bias, however, as we understand there are pros and cons to both, no matter if you’re a first time buyer in Leicester, looking to remortgage in Leicester, or have another situation.

Regardless of if you’re going via a branch or online, you are still able to go direct to the mortgage lender yourself. Below are all the pros and cons to either of your options.

Pros & Cons

When thinking about going direct to a bank or building society, the first thing that springs to mind is that you won’t be required to pay a broker fee, which in turn would possibly save you money. In the past, another positive that people thought of was “the bank manager knows my finances inside out”, though after credit scoring systems were introduced, this no longer became a factor.

On top of this, some mortgage lenders will have exclusive mortgage products on offer, that can only be obtained by going direct. They offer these as a way of attracting a good spread of business from their consumers and other brokers, turning exclusive products on and off whenever they believe it to be necessary. On the other side of the coin, some products may only be accessible by going to the broker and not by going direct to the lender.

From 2014 onwards, lenders were restricted from selling their mortgages on a non-advised basis to any customers of their services (those with bank accounts, for example). Up until that point, some applicants felt like members of staff who were not qualified for giving advice, were pushing their services on them.

They also felt like they weren’t able to benefit from some of the consumer protection that would normally come with mortgage sales performed by professionally trained mortgage advisors in Leicester.

The changes took a long while for lenders to come to terms with and towards the back end of 2014, it was not uncommon for customers to have to wait a long time to get a mortgage appointment. This is unfortunately still the case today sometimes. When you have had an offer accepted on a house, this is the last thing you need or want!

Because of the issues present with going direct, much like the wait for an appointment, more and more applications were made with mortgage brokers who could freely offer a same day service, something we are able to do ourselves. When you get in touch with us, we get you booked in with a mortgage advisor in Leicester as quick as we can, either on the same day or at your earliest convenience.

Affordability is an important factor too, as the quality of a lenders deal won’t matter if you have no way of affording it. Buying a house is such a large step in people’s lives, that they often would rather get professional and personal advice from a qualified and experienced mortgage advisor in Leicester.

Handling Difficult Cases

Nowadays we find that a lot of mortgage applications aren’t as simple anymore. For whatever reason it may be, there are so many things that can make a case more complicated. Some examples of these are:

  • Mixed source of deposit (savings/gift)
  • Poor credit history
  • Let to Buy (keeping your current house and buying another)
  • Affordability
  • Contract workers/zero hours contracts
  • Self-Employed Income

In the past, mortgage lenders were able to stand head and shoulders above the competition by simply offering a deal that was similar to one offered by another lender, but with slight differences to make it more appealing. Fast forwarding to where we are now and it is all so much more different, with lending criteria being the difference maker between deals and lenders.

An example of this, is that some lenders may lend more than other lenders might have to Self Employed applicants. Some also take a more sympathetic view on previous discrepancies that are showing on your credit report.

Your situation will be unique to you. It may be similar, but it will never be the same as another case. When you explain your position to an experienced mortgage broker, it is highly likely that there will at least be at least something similar that we have encountered before, allowing for a more personalised service. Hopefully, our hard working mortgage advisors will be able to get you a favourable deal with good interest rates.

It’s more than just getting a mortgage though. Even if the application itself is fairly easy, our customers who are first time buyers in Leicester rely on our experience and knowledge for more insight into the mortgage process.

For example, we are able to sit and discuss how much they are going to offer on the property they are buying. From there, our team of mortgage advisors in Leicester can recommend our customers other necessary professional services such as solicitors, whilst also explaining the different types of property survey and protection that is available to them.

Responsive Service

One of the main pros of using a mortgage broker in Leicester, we believe, is that we are a lot more responsive than the mortgage lenders have been known to be. Our team work from early until late, all throughout the week (including out of hours), dedicated to our customers and ensuring the process is as speedy and stress-free as it can be.

Something that does get overlooked from time to time when looking at why customers may prefer to use a broker, is that everyone nowadays everyone has such a busy schedule. You might need a mortgage but don’t have the required time to sort it out. In these cases, your mortgage advisor can take the weight off your shoulders and work through it for you.

Professional applicants especially will see the benefits of this service, as they have clients of their own that they charge out their services to and often don’t have the time to work through it themselves. The customers we deal with regularly appreciate the benefits of having an expert on their side.

Perhaps in the future we’ll see lenders wanting to limit their links to brokers and wanting to take their business back. If this does happen, we don’t see it being likely that they will hire more staff in their branch networks. The future of all industry seems to be based around technology and the mortgage market may very well be heading this way too.

That may work for customers who are more than happy to do business with a “robo-advisor”, especially for cases that are easy and don’t require a thorough analysis. For the majority of people, however, there’s an element of “realness”, that “human touch” that can’t be obtained by going this route, and can only be found by speaking to a real mortgage advisor in Leicester.

To find out more information on our service or to present any mortgage queries that you have, please Contact Us and we’ll book you in for an appointment with a mortgage advisor in Leicester as soon as we can.

Help to Buy Armed Forces Mortgage Scheme

Forces Help to Buy Mortgage Advice in Leicester

Suppose you fall into the category of military personnel. In that case, you might have heard that Army Families Federation Defence Secretary Ben Wallace has chosen to extend the existing Help to Buy scheme.

Thanks to this scheme, military personals have more time to decide if they want to put their foot onto the property ladder.

The scheme was initially brought into prominence back in 2014. The £200 million scheme’s purpose is to provide a boost to anyone from the forces who needed help buying a property. 

The project was not intended for the long term, though, as this scheme was due to end in December 2019. 

As a thank you to everyone’s commitment to their Queen and country. The government decided to extend this until the end of 2022.

Who Can Apply For Forces Help To Buy Scheme?

If at any point, you served in the military and can meet the criteria, you will have access to this scheme. You can borrow a deposit of up to half your annual salary (maximum of £25,000) without any interest added.

If eligible, you can use the scheme to purchase your first home. The perks of this are that you do not need to have any current savings to take that first step onto the property ladder.

The money you will be using is raised from the Forces Help to Buy loan and spent for anything, from your deposit to any additional costs. 

These can include but are not limited to stamp duty costs, estate agent fees or even the costs of finding a solicitor.

This government scheme tends to be a little more relaxed than some other schemes, as the Forces Help to Buy loan can be drawn out and paid back over a term of 10 years. 

It helps give you room to breathe and not feel so rushed at any point.

With all this in mind, the Forces Help to Buy loan is a lifeline to those who never even thought they’d be able to own their own home. 

Bear in mind that you’ll still have to qualify for eligibility based on if you have served your country and can meet the correct criteria (length served, service term left, and medical categories).

Click here to read additional information on this scheme from the government.

How a mortgage advisor in Leicester may be able to help

With the assistance of a dedicated and experienced mortgage advice team in Leicester, your mortgage process may go quicker and smoother than it would be going alone. 

Your advisor will walk you through every step you need to take. From the start of your mortgage process, when you get in touch, right through until your mortgage journey has ended.
Your dedicated mortgage advisor in Leicester will make sure you are cared for and hopefully end up with the best result for your circumstances.

As a company that prides itself on a reliable and efficient customer experience, it aims to take the stress away and, most importantly, loves and respects the nation’s forces. 

Don’t hesitate to get in touch with us today. We will take a look at how we can help with your home-owning dreams.

Please bear in mind that the Forces Help to Buy is not the same as the standard UK Help to Buy schemes.

Buying a New House in Leicester

Mortgage Advice in Leicester

Obtaining a home as a first time buyer in Leicester will be one of the biggest purchases you will ever make. It’s best to take your time when buying a home, as you need to be sure that the property you are looking at ticks all the boxes for you. Therefore, you must ask important questions that will help you make a decision.

If you are unsure of what to ask the seller, have a look at our shortlist of questions you could ask:

1. How much interest has been shown in the house?

In many cases, a new home that has been recently added to the property market can spark a lot more interest and become high in demand. Therefore, it’s best to act quickly to secure the plot. To have an insight into the amount of attraction there has been towards the house, you could ask the seller how many people have already viewed the property to see the amount of ‘competitors’ you may have.

2. Is there a chain?

A property chain is when you are waiting on the occupant that is in the property you are buying off to move out to their new property which they have to wait for. When it comes to a chain, it can mean that it will take longer to move due to the property already being occupied, however, if there isn’t a chain, this could mean you will be able to move in quicker.

From a seller’s point of view, a first time buyer in Leicester or someone who is not in a chain could be seen as more desirable as this could lead to a quicker sale. From a buyers point of view, these points can be a huge advantage and something to mention during your ‘negotiations’. 

3. Is there anything extra included in the sale?

In some cases, new homes can come with ‘extras’ that could persuade you to buy the house. Sometimes this is intentional and other times, the seller may simply wish to leave their older furniture behind. If you’re looking at buying an older home, you may find that there are unwanted items included, such as outdated furniture or well-used appliances.

It’s wise to check just to clarify, are things like cookers, fridges, and carpets, for example, could be included in the sale (or offered at an additional price). Make sure you clear as you may be left with unwanted items that you then need to remove and dispose of.

4. What are your new neighbours like?

Your experience with neighbours can make or break owning your own home. You risk losing enjoyment if you are stressed all the time with the people next door. Gaining an understanding of the neighbours can give you a good indication of what living there will be like, saving you that stress down the line.

5. What is the local area like?

Your personal criteria for the local area when hunting for a home, could be that you need a shop nearby or somewhere that’s only a short commute to work

Asking what the local area is like could mean you wanting to know about any leisure spots nearby e.g bars, gyms and restaurants or wanting to know what are the schools like if you are thinking of having a family in the future.

It’s best to do your research about the local area before committing yourself to any purchase. As people’s opinions are subjective so it’s best to make your own judgement.

6. Are there any running costs?

Associated costs such as heating, council tax, water (newer homes tend to have a water meter) are something to ask as it is part of running a home that you need to know. Many people are more aware of the running costs involved in owning a home or if not, you could ask a family member or friend.

7. What is the garden like?

Even though the British weather isn’t always sunny, some people still like spending time in the garden. Therefore, you may want to ask if the garden gets as much natural light and whether it’s south-facing etc.

8. Will any home improvements be needed?

When you move into your new home, you will often find that you will want to decorate it to your tastes. Home improvements can be essential to some older properties due to many needing ‘fixes’ or repairs. You may want to make improvements on the property such as insulation, efficiency, or garden work.

9. Are there any remedial fixes?

Buying an older property can come with repairs on some items. The seller can fix these issues if you have requested it to happen before the sale goes through or, in some cases, the seller may reduce the price. There can be some minor repairs if you are looking at a new build because of settlement or simple faults you identify after you moved in.

To make you aware of the remedial fixes that would be needed on a property, you may want to look into the different types of property surveys. Our mortgage advisors in Leicester can help recommend the most suitable survey for your property. Generally speaking if it’s a new build property, you will only need a basic valuation as you would hope with the property being new, that it is structurally sound. Whereas, if you are purchasing an older property, you may want to look into a home buyer’s report or full structural survey which should outline any defects with the property such as damp, subsidence etc.

When you are buying a new home whether it’s a new build or older property, make sure you ask the questions you need to know about the house. Asking the right questions, may be the difference between you buying the property or not.  

MoneymanTV | Types of Property Survey

How Much Deposit Do I Need To Buy A House in Leicester?

Deposit Mortgage Advice in Leicester

The circumstances you find yourself in will dictate the amount of deposit you will need for a property that you set your sights on. In this article we will take a look at how much deposit may be required, based on your personal situation.

Why do I need a deposit for a mortgage in Leicester?

Previously, it would be quite a common sight to find 100% mortgages. Before their eventual fall, even Northern Rock were offering their customers 125% loan to value mortgages. What that means, is if you were buying a property valued at £100,000 they would still lend you up to a whopping £125,000, and yet people wonder what went wrong…

The reason that these mortgage lenders will need you to put down a deposit, is to reduce their lending risk. If they lend a customer exactly 100% of the purchase price and that customer unfortunately falls into arrears, they would then have to repossess the property.

From there, lets say property prices dipped; now they’re trying to sell a house that’s worth even less, in order to make their money back. Naturally, with lower house prices, that’s not going to happen and they will be at a financial loss. Because of this reason, the higher percentage you’ll find is a 95% mortgage, requiring only a 5% deposit from you.

It’s also believed throughout the mortgage world, that if you haven’t invested some of your own or your family’s money into your home, then you are likely to be less attached and more willing to give up if making payments becomes challenging.

As well as this, many lenders feel that if you can’t save up at least a 5% deposit for a property, or even find someone to gift you this amount, then you probably aren’t quite ready to join the property ladder.

Can the government pay the deposit for me?

Not directly, however, if you are able to find 5% of the deposit required from your own saved income, then you may happen to qualify for the government Help to Buy Equity Loan Scheme.

This government scheme only applies to new build properties, with the idea being that you put in 5% and then the government will loan you up to 20%, making up a total of a 25% deposit. After 5 years, you need to look at paying back the equity loan back, sometimes through a remortgage or from savings you have been able to make during that time.

Is a 5% deposit enough?

In most cases, you’ll find that 5% is considered enough to put down for a deposit on a property, however, not all lenders will offer 95% mortgages, which can leave you with limited options. Saving up for a larger deposit, for example, 10% deposit, will open the door to more products and most likely at a lower rate of interest.

With the majority of 95% deals, you will normally need a good credit score to qualify. There are lenders out there that may consider you for a 95% mortgage with a fairly average credit score, but you would probably incur a much higher rate of interest.

How much do I need to put down if I have a poor credit history?

In the event of a poor credit history, the majority of the specialist lenders will require a minimum of 15% deposit if you have a poor credit history. As mentioned earlier on in this article, the reason the lender will need a deposit is simply to reduce their risk in case a repossession occurs.

How much deposit do I need for a Buy-to-Let property?

It has always been a requirement to put down a larger deposit for buy-to-let mortgages and the majority of lenders at the moment are looking for at least 25%.

Can I take out a loan for the deposit?

Technically, this could be possible, though pretty much all lenders will not allow this, as essentially this would still be 100% lending. Again, this no longer exists due to the aforementioned risk involved with such a financial process.

Can someone gift me a deposit?

Yes, this happens all the time. We will often see this being called the “Bank of Mum and Dad” (both birth and adopted parents, as well as carers & legal guardians) gifting their loved ones the deposit, or other family members such as any Aunties & Uncles.

We have even seen instances where family friends are able to gift you money. These are all perfectly acceptable options, providing they are able to evidence the funds, prove who they are and confirm they are not expecting repayment of the gift in the future. We have written a detailed article all about Gifted Deposits in Leicester.

Are there any circumstances where I don’t need a deposit?

If you are buying as a sitting tenant and your landlord or family member has given you a discount from the properties value on the open market, or if you qualify for a discount to buy from your local authority (housing association or council) under the Right to Buy Scheme, then you will typically not need to put any of your own money in as deposit. This is due to the existing equity being already “built-in” to the mortgage deal.

Please bear in mind that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice in Leicester.

Help to Buy Mortgage Advice in Leicester

Make the most of Help-to-Buy Scheme in Leicester

The Help-to-Buy Scheme in Leicester is a widely known way for many first-time buyers to find their footing on the property ladder, though it can be confusing for many who are researching for the first time. There have been various different aspects that come under the terminology, so you may not fully understand what you’re getting into.

The most common one that is still around and the one you would be using as a first-time buyer, is the Help-to-Buy Equity Loan Scheme. You can rest assured that you will have us to support and guide you throughout your mortgage process. Not only will we assist you with understanding the scheme, but we will scour the market until we find the best mortgage deal for you and your personal circumstances.

You will find that having our brilliant mortgage advisors in Leicester on hand is not only incredibly helpful in securing your mortgage but also in working through the sometimes complicated processes of the government Help-to-Buy Scheme.

How does the Help-to-Buy Equity Loan Scheme work?

The scheme was set up by the government, primarily to help homeowners, including first-time buyers. If you decide to make use of the scheme, the following will apply to you and your mortgage process:

  • You will require a minimum of 5% deposit.
  • Up to 20% of the property’s value get treated as an equity loan from the Government.
  • The balance will be covered by a specialised Help-to-Buy mortgage.

How do you qualify for the Help-to-Buy Scheme in Leicester?

If you think that you qualify to use this scheme but are not sure whether or not you will have the ability to do so, simply get in touch with us and one of our dedicated mortgage advisors in Leicester will take a look at your circumstances. Once we have gotten a measure of your situation, we will be able to check whether you fall within the criteria of the offer.

Our mortgage service is tailor-made specifically to suit you and your needs regarding a mortgage. The Help-to-Buy Equity Loans apply to new-build properties up to a maximum value of £600k. The purchase price of the property gets made up of your 5% deposit, 20% government loan, and 75% balance covered by the mortgage that we will locate for you.

Help-to-Buy mortgage advice in Leicester

Once you get in touch, we will take the time to talk you through the whole mortgage process. If the property that you wish to buy fulfills the terms, we can discuss the scheme with you in larger detail. Whether you are purchasing from a builder or via an estate agent, we can communicate with them on your behalf.

As soon as you contact us, we will arrange a convenient time to suit you for your free, no-obligation mortgage consultation. If you are not clear on the figures and how the process works, we will go through the calculations with you until it is all understood.

We will take the time to ensure that not only are you happy with the figures but that they are affordable and fit in well with your financial circumstances and levels of income.

Which Property Survey? We’ll Help You Choose in Leicester

What is a property survey?

There are three main types of property surveys that are available to you. We have put together a short guide outlined with a general look at which property survey would be a more suitable option for you.

As a First-Time Buyer in Leicester, your next step after being accepted for your offer on a property is to arrange a survey to establish the sort of condition that the property is in as well as the value of it, as this will give the lender confidence that it is worth what you are paying for it.

If anything of concern is found on the survey, you are then in a position by law to approach the seller and negotiate a price for the work that will be required to rectify it.

Choosing the right survey in Leicester

Here’s a short video from the Royal Institution of Chartered Surveyors (RICS) that explains the different types available to you.

Property Survey Types in Leicester

There are 3 main types of property survey available to you in Leicester:

  1. Mortgage Valuation
  2. Homebuyers Report
  3. Full Structural Survey

Mortgage Valuation

A fundamental valuation will be the cheapest option for a property survey, and you will be required to have one of these before you are able to receive your mortgage offer. This is not to be confused with a full survey. The mortgage valuation confirms to the lender that the property is worth the amount they are going to be lending you.

Your mortgage lender may even offer you a free fundamental valuation as part of your mortgage deal. A Mortgage Valuation will not highlight any repairs that are needed, though it may still point out any apparent defects and recommend that you take a closer look at them yourself.

Homebuyers Report

A Homebuyers report will cover structural safety and highlight any apparent problems for you, including damp, as well as anything that doesn’t meet current building regulations. This kind of survey will give you an independent report of your property by an expert in surveying.

It’s important to make sure you aren’t paying for two surveys as well. It is advisable to ask the mortgage lenders surveyor to carry out this report on your behalf – it will usually take a couple of hours for the surveyor to complete.

Full Structural Survey

A Full Structural Survey is a survey type more advisable for older properties and those of non-standard construction. Depending on how large and the type of the property in question is, a full structural survey can take up to a full day to complete.

A full structural survey provides a detailed report on the current state of the property and highlights any issues that should absolutely looked into prior to going ahead with the purchase, providing you with peace of mind about the general condition of your potential new home.

You can find a surveyor to carry out a Homebuyers report or building survey through the Royal Institution of Chartered Surveyors.

The Different Types of Mortgages Explained in Leicester

The different types of Mortgages in Leicester we provide

When you start your mortgage process in Leicester, you will come to realise that there are lots of different options available to budding homeowners and existing homeowners alike.

Whether you’re a First-Time Buyer looking for your first home, are Home Movers looking for your next home or are looking to Remortgage in Leicester, there are many different routes you could take.

This article will cover a list, alongside related videos, of the most popular types of mortgages available on the market to customers. If you have any further questions mortgage-related, then please do not hesitate to contact us and speak to one of our dedicated Mortgage Advisors in Leicester.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage means that your mortgage payments will remain as they have been for a set period. You can set the length of the fixed term yourself, with common options typically being 2, 3, or 5 years or longer.

No matter what happens to inflation, interest rates, or the economy, you can rest assured that your mortgage payment, usually your biggest outgoing, will not change at any point during your term.

Fixed Rate Mortgage Explained | moneymanTV

What is a Tracker Mortgage?

A tracker mortgage means that your interest rate will follow on with the Bank of England’s base rate. This means that the lender that you are with does not set the rate themselves.

You will be paying a percentage above the base rate of the Bank of England. To provide an example of this; if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a scale of 2%.

Tracker Mortgage Explained | moneymanTV

What is a Repayment Mortgage?

When you take out a repayment mortgage, you are paying capital and interest together. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end, with the property becoming yours.

It is the most risk-free way for your capital to be paid back to the lender, in the early years it is mainly the interest that you are paying, and your balance will go down at a slower rate, especially if you have taken out a 25, 30, or 35-year term.

This situation will switch up in the last ten years or so of your mortgage, where your payments are paying off more capital than interest, and the balance will come down at a much quicker rate.

Repayment Mortgage Explained | moneymanTV

What is an Interest Only Mortgage?

While many Buy to Lets in Leicester get set up on an interest-only basis, it is much more challenging to get a residential property on that same basis.

It is a lot less likely for lenders to offer an interest-only product nowadays. However, there are certain circumstances where this may be a viable option.

These include downsizing when you get older or having other potential investments that you will use to pay back the capital. Lenders are being a lot more stricter when it comes to offering these products now, and the loan to values are a lot lower than they once were.

Interest Only Mortgage Explained | moneymanTV

What is an Offset Mortgage?

With an offset mortgage, the lender will set you up a savings account alongside the mortgage account you have with them.

This works in a way where, let’s say you have a mortgage balance of £100,000 and £20,000 gets deposited into your savings account, you would only pay interest on the difference, so in this case it would be £80,000. It can be a very efficient way of managing your money, especially if you pay higher rates of tax.

Offset Mortgage Explained | moneymanTV

Should I overpay my mortgage in Leicester

Mortgage Broker in Leicester

You could be a First-Time Buyer in Leicester looking to get onto the property ladder, a Home Mover in Manchester or a homeowner at the end of your term, looking to Remortgage for Home Improvements. In any of these cases, overpaying, even by a small amount, can be incredibly useful when it comes to the amount on the interest you pay back over your mortgage term. The earlier you begin to overpay on your mortgage, the better the effects it will have.

Some homeowners prefer not to do this, some cannot afford to. Quite often though, it will come down to life just getting in the way. Regardless of the circumstances, overpaying is definitely a good habit to get into when you take out a mortgage, but in reality, there’s always something else we’d rather buy, as opposed to making an extra payment on our monthly mortgage.

Put the Plan into Action | Mortgage Advice in Leicester

Part of the dilemma here is remembering to make those extra payments. It’s unlikely to cross your mind too often, except perhaps when your mortgage only has a few years left to run.

So, if you can see something of yourself in the above and would like to be making those extra payments so that, perhaps you can retire a year or two early, then what should you do?

It’s highly recommended 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 £575pm and you will get used to that within a matter of months.

You are Still in Control |Mortgage Advisor in Leicester

The big advantage of setting up a standing order to a direct debit, is you (the payer) are completely in control, unlike a direct debit where this is the receiver.

Therefore, if you find yourself a little tight with money for one month. You can easily log in to your online banking and pause the standing order so that it would cancel any future payments from going out until reactivated.

Up until the point of stopping the payments, at least you have benefited from the additional payments made until that point, and as mentioned above, this does not stop you from reactivating your standing order in the future when you are more financially comfortable.

Some mortgages will even let you make reduced payments or take a Mortgage Payment Holiday in Leicester if you have been overpaying for a while. Before choosing a payment break though it’s essential to check with your lender that you are eligible to do so to avoid a bad mark on your credit report.

Whether a First-Time Buyer or going for a Remortgage in Leicester, 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.

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