Mortgage Basics Every Bristol Buyer Should Know

Mortgage Basics Every Bristol Buyer Should Know

In this handy article, we’ll explain how to get a mortgage in a simple, no-pressure, easy-to-understand way (we hope).

First, work out your budget

Knowing what you can afford to repay is an absolute must.

Rough figures will do to start. (You can refine them later.)

Work out your monthly income after tax.

Work out your monthly living expenses.

Find out how much you have left each month to repay a mortgage.

You can then find out what size mortgage you might get and what deposit you need. (Many lenders have an online calculator to work this out.)

Get your paperwork ready

Have these documents and more ready, so you’ll be ready to roll when you apply.

Proof of ID: A passport or a driving licence will usually do.

Proof of address: Such as recent utility bills.

Proof of income: Recent payslips. You might be asked for bank statements, too.

Evidence of your deposit: A bank statement or a letter confirming that someone is gifting it to you. (Thanks, Mum, and Dad.)

Know these important terms

Base rate: This is the Bank of England’s interest rate. (Lenders base their mortgage rates on it, but the two rates are NOT the same.)

We publish regular updates on the B of E base rate to help you understand what’s going on.

•    The next B of E interest rate decision is on 5 February (next week) – check out our website or social media channels for more information.

APRC or annual percentage rate of charge: The yearly cost of a mortgage, including the interest and any fees the lender charges.

It allows you to compare the cost of different mortgages back-to-back.

LTV or loan-to-value: How much the mortgage is as a percentage of the property’s value. For example, a £240,000 mortgage on a £300,000 house would be 80% LTV.

All mortgages have a maximum LTV.

Fixed-rate mortgage: With these, the interest you pay stays the same for the period stated, such as 2 or 5 years. (Many mortgages today are fixed-rate.)

Variable rate mortgage: AKA standard variable rate or SVR. With these, the interest rate can change whenever the lender decides to. (Yes, really.)

Fixed-rate mortgages generally become variable when the fixed rate ends.

Now go mortgage hunting

Places to find mortgages include high street lenders and online lenders.

Also, check out the listings on mortgage comparison sites.

When you find a mortgage that suits, ask for an agreement in principle (AIP) or an AIP letter.

This shows how much they are likely to lend you.

Now the fun bit – you can start house hunting in earnest.

Be warned - don’t be bullied

Some unscrupulous agencies will really push their preferred mortgage providers. This can sometimes take the form of ‘conditional selling.’

Conditional selling is when an estate agent implies a buyer’s offer on a property will only be accepted if they use the agent’s preferred mortgage provider, which is unethical and against industry rules.

Buying and selling the ethical way

We are proud members of the Ethical Agent Network (EAN).

A national group of independent agents who have been independently tested to ensure we meet strict standards of honesty, service, professionalism, and community care.

To find out more about what we do and why we passed the EAN and are the only local agency in the network, contact us today.

We hope you found this article useful. If you did, please share it with others.

PS. As we said, mortgages are complicated. So, take expert financial advice if you need it. (This article is a general guide, not financial advice.)