When it comes to mortgages, having the right answers that allow you to make smart decisions can mean that you keep those monthly payments lower and the associated costs affordable.
How Much Money Can I Borrow to Buy a House?
It’s a general acceptance that you can borrow between three and four and a half times your salary.
Not all lenders work to the same criteria but in general, they will look at both your income and your monthly outgoings.
Lenders will want to assess your bank statement and perhaps your wage slips too. It’s best to be completely honest about your outgoings as a mortgage is probably the biggest financial commitment you will ever make.
Fixed or Variable?
It really is just as it says on the tin. A fixed rate mortgage will stay fixed for as long as the arranged term. So if you signed for a three year deal for example, you will not see an increase in your monthly payment for that term,
A variable mortgage will go up and down as per the Bank of England base rate. So, if these rates rise, so will your mortgage payments and if they decrease so will your payments.
A fixed rate gives you that peace of mind, that as long as you are still within the arranged term, you will pay the same, making it simpler to manage your monthly outgoings.
Can I Pay My Mortgage Off Early?
Often times, people find themselves in the enviable position of being able to clear their mortgage, or up the monthly payments. You should check your lender’s terms and conditions. A lot of lenders will only allow you to pay up to 10% extra per year without facing a financial penalty. Make sure that you understand your lenders policy when it comes to your mortgage arrangement. It’s aways good to know, even if you can’t see any way that you’d be able to pay it off early. We never know what is just around the corner.
I’ve Heard About Help to Buy ISA’s – How do They work?
Help to Buy ISA’s are tax-free savings accounts that are designed to help you save for a deposit. If you start with £1,200 and are able to save £200 a month the Government will then top up your savings by 25% up to a maximum bonus of £3,000, when you have saved £12,000.
How Much Deposit Will I Need to Put Down?
The minimum deposit for a mortgage in the UK is usually 5% of the property’s value. But in order to secure a better a deal, you’ll probably want to try and put 20% down. Lenders vary as always.