In the beginning of the mortgage process, you’ll very quickly realise that there are lots of different options available to you as a customer. Below we have put together a list of the most popular types of mortgages available on the market, hopefully answering any questions that you may have. If you would like to speak further with a mortgage advisor in Middlesbrough regarding any of these, please do not hesitate to Get in Touch.
A fixed-rate mortgage is a simple form of mortgage wherein your monthly payments are going to stay the same for a set period of time. You are able to set the length of which you want to fix your payments for yourself, with standard choices being 2, 3 or 5 years or sometimes longer. Even if there happen to be any major changes to inflation, interest rates or the economy, you know that your mortgage payment, usually your biggest outgoing, will stay consistent.
A tracker mortgage will follow the Bank of England’s base rate. What this means is that the lender that you are with does not actually set the interest rate themselves, thus making it potentially unpredictable due to the potential for it to change. You will likely be paying a percentage above the Bank of England base rate. An example of this would be if the base rate is 1% and you are tracking at 1% above base rate, that means that you will be paying a rate of 2%.
By taking out a repayment mortgage, this means that each month you will be paying back a total combination of capital and interest. Providing that you keep your payments going for the full length of the mortgage term, the mortgage balance is almost certainly going to be paid off at the end and the property will become yours.
This is widely considered to be the most risk-free way to pay your capital back to the lender, especially as in the early years it is mainly the interest that you are paying and your balance will reduce at a slightly slower pace, especially if you have taken out a term over 25, 30 or 35 years. Your circumstances will change within the last ten years or so of your mortgage, as your payments will be paying off more capital than interest and the balance will come down at a quicker pace.
Whilst many Buy to Let mortgages in Middlesbrough are set up on an interest-only basis, taking out a regular residential mortgage in the form of interest-only is a lot more difficult and not seen as often.
It is a lot less likely for lenders to offer an interest-only product to applicants these days. That being said, there are very particular circumstances where this can be an option. These options can include downsizing later in life or to use the capital to pay off other investments. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than they used to be.
With an offset mortgage, the lender will set you up a savings account to run in tandem with your mortgage account. This is quite in an interesting one in how it works. Let’s say you have a mortgage balance of £100,000 and £20,000 is transfered into your savings account; you would only be paying interest on the difference between the two amounts, so in this case it would be £80,000. This can be a very efficient and financially savvy way of managing your money, especially if you are a taxpayer with higher rates.
If you have been residing in a council property for a certain amount of time, then you may qualify for a Right to Buy mortgage. If you are granted a Right to Buy Mortgage, then you will be able to receive a discount from open market value if you decide to purchase the residence. The discount you receive will act as your deposit. The only cash you will need within the process will be for fees. Additionally, some Lenders will allow you to borrow additional money for Home Improvements – The local authority must grant you permission to do the works for this to be applicable.
The popularity of the Right to Buy Scheme in Middlesbrough was prominent in the 80’s but has seemingly been controversially political. The main reason that a segment of the general public were against this scheme would be down to the matter that it was taking homes out of the public sector when a housing shortage was already happening. Though many mature homeowners got onto the property ladder via Right to Buy and as such many of the homes on council Estates are now privately owned.
If you want to obtain a Right to Buy Mortgage, you will need to check that you do actually qualify to purchase the property or not. You will need to get an application form (RTB1) and from there, your Local Authority will send someone so that they can value your property and inform you of how much it is worth. A percentage will then be calculated for the discount that you are entitled to and will write you an offer to proceed with the application.
If you do indeed wish to proceed, then the next step is to sign and return the form within the pack which is forwarded to you by the Local Authority and then you will need to set about trying to get a mortgage.
The amount that you are eligible to borrow is calculated in around the same way as any other mortgage would be; based on your income and expenditure. It is important to remember this fact so you are aware that you should cut out any unnecessary spending such as unused subscriptions and existing memberships which were set up before making an application. You should also check your credit score regularly online.
The fees that you may have to pay to progress with your application would normally be:
Right to Buy Scheme in Middlesbrough was not brought in for the intention for tenants to profit from it. You must reside within a property for a certain number of years before you’re able to sell it. If for any reason the property is sold within the set time period then a penalty will be enforced. This is expressed as a percentage of the discount that you benefitted from in the first place.
Not all tenants within council properties exercise the advantages of having a Right to Buy as some do not want the responsibility that home-ownership brings or knowing they would have to do their own repairs. On the other hand, for the ones that do want to invest in the Right to Buy scheme, it offers the opportunity for First Time homeowners to take their first step onto the property ladder.
For some time now in England and Wales council house tenants have been able to buy the house they have been living. And in many cases, this can prove to be a substantial discount. The Right to Buy Scheme in Middlesbrough also applies to Housing Association tenants – is implemented via accessing a special Right to Buy mortgage.
The amount of discount you will receive as a tenant is determined by several factors, such as how long you happen to have been a council tenant for, the cost of the house you intend to purchase and what type of property it is ie a semi-detached house, apartment, studio flat etc.
The great benefit of this type of scheme is that you are buying a house you have already lived in for sometimes, is that you don’t have to buy any new furniture or fixtures and fittings since they’re already there!
A further advantage is that if you’ve been wanting double glazing, a new front door for some time now then you may be able to arrange to get this put onto the cost of your Right to Buy mortgage. That’s because you’ll already have equity available on the property.
And finally, in most cases, there’s no need to save up for a deposit if you qualify for a Right to Buy scheme as the equity already in your property can be used towards your deposit.
The first step towards getting your mortgage is pretty obvious – but it’s a crucial one. And that is to check with the council or housing association that your home is registered with. They will have a record of how long you have lived there and whether you qualify for the scheme.
Next, do some online research to find out how much similar properties in your street or area have sold for recently. That way you’ll be able to get a rough valuation of how much your house is worth. This can be clarified at a later stage with the help of a professional surveyor.
At our Mortgage Broker in Middlesbrough, we’ve been securing Right to Buy mortgages for hundreds of homeowners. Every experience member of our team knows the process inside out so that your mortgage goes through as smoothly as possible and will be able to offer top-quality Mortgage Advice in Middlesbrough.
Keen to find out what type of Right to Buy Mortgage you can access? Then wait no longer. Simply get in touch with one of our Mortgage Advisors in Middlesbrough today and we’ll discuss the options with you.