Finding the right mortgage for you

With thousands of providers offering a bewildering range of options, how do you decide which one is right for you and how do you avoid the pitfalls? For example, some lenders favour only certain types of borrowers so you could spend a lot of time only to discover you don’t fit their criteria, or the lender decides to accept you but charges you more. Thankfully, you avoid these problems at Equity & General because our experts select and unlock only those mortgages for which you will be accepted without penalty or premium.

Staying abreast of the market

Mortgages change, deals come and go but we keep on working to ensure you always have the best option. For example, if you have a fixed term or fixed cost mortgage, we’ll look for better alternatives when that arrangement ends. This could mean recommending that you stay with your existing lender or move to another. As a client of Equity & General, you can be sure we’ll always work to find you the best available deal.

Getting started

We’ll start by looking at your income, your overall financial situation and your personal circumstances to give you an idea of how much you can expect to borrow and the likely mortgage repayment. Once that’s done we’ll start a detailed search of all the suitable products available, discuss the options with you, then make a final recommendation. If you decide to proceed with our offer, we’ll handle the application process for you from start to finish and keep you properly informed every step of the way.

Choosing the best option

We’ll help you decide the best option based on your individual short term and longer term needs -

Buy to Let

These mortgages are available to buy property that you intend to let for a rental income and for the future potential growth in its value. So, if you’re planning to rent out your property you will need a Buy-to-Let mortgage. Many lenders consider these to be higher
risk so eligibility means you may have to meet certain conditions. These differ from lender to lender and may include the following - that you already own your own home (with or without an outstanding mortgage), that you have a good credit record without extended borrowing on e.g. credit cards. You may have to provide evidence of employment income or earnings separate from rental earnings and this is typically
around £25,000+ a year. If you earn less you may struggle to secure your Buy-to-Let mortgage. Lenders have a maximum age requirement of around 75 and

the loan to value ratio (LTV) is usually at least 75% so you’ll need a minimum 25% deposit. The amount you can borrow is based on the monthly rental you are likely to receive and should cover 125% of your mortgage repayments.

The Interest Only Mortgage

Your monthly repayments will only cover the interest on the loan and they do not pay off any of the capital sum. Therefore it is imperative that you set up a separate savings or investment vehicle to build up a lump sum sufficient to pay off the mortgage at the end
of the term. It is solely your responsibility to ensure you have enough money to repay the mortgage.

The Capital + Interest Mortgage

Your monthly repayments are designed to gradually pay off the amount owed as well as the interest charged over the term of the loan. Providing that all the agreed repayments are met the loan and interest will be completely paid off at the end of the mortgage term.

The Offset Mortgage

This mortgage allows the balances of linked savings & current accounts to be offset against the outstanding loan so the interest amount is reduced. Savings held in a linked bank account are subtracted from the amount of mortgage on which you pay interest meaning that you can either pay less each month or completely pay off your mortgage more quickly.

Mortgages for Poor History or Credit Score

It is possible to obtain a mortgage with a less-than- perfect credit history but your options may be limited. Lenders conduct a credit check on every applicant. Some adverse marks on your credit history will carry more weight than others depending on the amount of money involved and how much time has passed. If you have bad credit history some lenders may refuse a mortgage. However, there are specialist bad-credit lenders, some of whom cater specifically for people who have faced illness, divorce or other difficult life events. Specialist lenders tend to be more flexible

when assessing your application but will often charge higher-than-average interest rates and may require larger deposits.

Interest Rate Variables

Lenders offer a variety of interest rate calculations as part of their mortgage offers or deals which include the following -

• Discounted Interest Rate

  The lender’s recommended standard variable rate interest rate will be discounted for a pre-determined period. However, the rate payable may increase or decrease as the lender’s recommended standard variable rate itself increases or decreases.

• Tracker Interest Rate

  This interest rate will be set at a fixed percentage above the Bank of England Base Rate and so may rise or fall in line with the Bank’s Base Rate.

• Capped Interest Rate

  This interest rate will be capped meaning that the interest rate you pay cannot go higher than the rate that has been set. This ensures you know the maximum amount your monthly repayments will be. However, any fall in the basic rate of interest below the capped rate will still entitle you to a corresponding fall in your monthly repayments.

• Capped and Collared Interest Rate

  This interest rate will be linked to the recommended lender’s standard variable rate but with a guarantee that it won’t go above a set level (the cap) and won’t go below a set level (the collar).

• Fixed Interest Rate

  This interest rate is guaranteed to remain unchanged for a pre-determined period and at the end of that period, the interest rate will usually change to the lender’s standard variable rate

• Variable Interest Rate

  This interest rate will vary in line with the standard interest charged by the lender meaning that the interest rate can go up or down at the lender’s discretion meaning that your repayments will similarly go up or down.

Help & information

If you would like further information on how E&G can help you arrange a mortgage, please call us on 020 8396 0486 or email us at admin@eandgfs.com.