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Mortgage in the UK- questions and answers (part 3)

mortgage in the uk Q&A part. 3

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The pool of the most common ones is slowly being depleted, which is the perfect opportunity to look at slightly less popular but equally important questions. Planning to take out a mortgage? Be sure to take a moment to read our post.

mortgage in the UK- questions and answers part 3

1. First time buyer status and property abroad

Many of our clients question whether their home ownership in Poland stands in the way of First time buyer scheme assistance. Unfortunately, despite the extremely rare factual verification, foreign property owners are not eligible for the First time buyer scheme. It is worth bearing in mind that, when using this scheme, you make an official declaration clearly stating that you do not own any property.

You can read more about this in our article on First time buyer scheme.

2. What is shared ownership?

In the simplest terms, shared ownership is where the borrower buys only part of the property and pays a monthly rent for the rest of the share. It is customary to purchase between 25% and 75% of a share of the property in this way, although in rare cases it is possible to purchase as small a share as 10%.

Shared ownership is particularly beneficial for people for whom a mortgage for the full amount needed to buy a property is unaffordable or almost unachievable. Joining the scheme is not available to all UK residents, but the terms and conditions are so affordable that it is definitely worth finding out more about it. To do this, simply use the government website or our article on shared ownership.

3. What is remortgage?

Remortgage is the process of taking out a mortgage to pay off an existing obligation. It also often involves changing lender. We use this option, for example, when a more favourable solution for us has appeared on the market that can save us some money on the repayment.

A remortgage is also worth thinking about if you have had your mortgage for a long time, as the banks’ offers depend on their share of the financing for the whole property. If your initial contribution was 10 per cent, the LTV (loan to value) is 90 per cent, so the bank has quite a high risk. When you repay, for example, 25% of the capital, the LTV decreases noticeably and with this the interest rate on the loans offered to you decreases. In other words – if you repay the capital regularly, many lenders will offer you their products on really good terms. Of course, as Extend Finance we are in the business of helping you with your remortgage.

4. Can a foreigner buy a house in England?

The answer is obvious: absolutely yes. Although your country of origin is not irrelevant, you can both buy a property in the UK and take out a mortgage here. No visa, citizenship or residency status is required, but the last is very important for raising your credit score.

5. How to apply for a council house in the UK?

For those who are unable to buy or rent a property on standard terms, a council flat or house is an interesting option. To take advantage of this opportunity, an application must be made to the local council. Even though it is not imposed top-down, you usually have to wait for your allocation and there is still no guarantee that you will be able to get a property for yourself. Your chances increase if:

  • You are a homeless person
  • Your health has deteriorated noticeably due to poor housing conditions
  • You have lived in a small flat or with a large number of flatmates for many years

You only need to use the government website to apply for a council house.

If your financial situation has improved and you are able to take out a mortgage, it is worth considering buying social housing and using the Right to Buy scheme. As well as the obvious benefit of owning a freehold property, you could save a really great deal of money compared to buying on the open market.

6. Where to get money for a deposit in the UK?

In the previous Q&A we already mentioned that the minimum deposit for buying a property is 5%. While this seems like a mere fraction compared to the total amount, in practice it is a really large amount, often in excess of £15,000, not even mentioning the additional costs of the purchase.

In some cases, it is possible to cover the down-payment with an unsecured loan or with funds that family, such as siblings, will lend. However, it is worth remembering that by far the safest way to raise this money is to simply save and the Help to Buy schemes we described in the article ‘The end of the Help to Buy scheme‘.

mortgage in the UK- where to get money for a deposit?
mortgage in the UK- where to get money for a deposit?

7. How much does a solicitor cost when buying a house in the UK?

Buying a property is not just about the mortgage and the procedures involved – there are also a number of legal matters that are generally outsourced to specialists in this area. In the UK, these matters (conveyancing) are handled exclusively by solicitors. They deal with, for example:

  • Determining the legal status of properties
  • Checking local development plans
  • Paying stamp duty land tax
  • Paying Land Registry fees

In the vast majority of cases, you will pay between £800 and £1,500 for such services. Of course, this depends on the number of issues that need to be addressed or the location of the property. For more information, see the moneysavingexpert website.

8. At what age can you take out a mortgage in the UK?

As mortgages are long-term in nature, banks will not give a mortgage to someone of any age. The lower limit in the UK is quite low – you only need to be 18 to get a residential mortgage, while a buy-to-let mortgage can be taken out when you turn 21. There is also an upper limit – most banks won’t lend you money if you’re 70 or over retirement age.

Of course, even if you are over 70, there is still a chance of getting a loan, although it will certainly be much more difficult due to the risk of death. In such situations, banks will only accept applications that are backed up by adequate collateral, such as a high pension. For those younger than 18, nothing can be done – this is due to UK regulations.

Source: Barclays.

If you are planning a mortgage, it is worth using an adviser no matter what. As a whole-of-market broker, we will help you choose the right product for you. We will tailor the terms and conditions of the offer to your personal needs and answer any burning questions that you have not been able to find the answers to on our blog. You are more than welcome to an initial consultation!

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Our team is here to assist you. Contact us by completing the form below.

Think carefully about securing other debts against your home. Your home or property may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services and some forms of Buy to Let mortgages are not regulated by the Financial Conduct Authority.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts
secured on it.

Your Home (or property) may be repossessed if you do not keep up repayments on your mortgage or any other debts secured on it. Conveyancing services are not regulated by the Financial Conduct Authority.

Extend Finance nor The Right Mortgage Limited can’t provide advice regarding Personal Pensions, Pension planning or investment planning advice. You must seek independent financial advice from a suitably qualified professional financial adviser who may charge you for advice.

Wills, Will writing, Trusts and Trust planning are not regulated by the Financial Conduct Authority.

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