Offset mortgages are not as popular as they were in the past. The demand for these types of mortgages has reduced drastically because people aren’t as good at saving as they used to be. However, these mortgages are a fantastic option for customers who are able to put some money aside each month or if some money is inherited or used as a gifted deposit.
When you take out an offset mortgage, the lender opens a Savings Account at the same time which is linked to your mortgage. Whilst the Savings Account won’t gain any interest, the money ‘offsets’ against the mortgage balance, e.g. if you owe £100,000 on your mortgage and you have £18,000 in your Savings Account then you only pay interest on £82,000.
This means Offset mortgages are extremely flexible, and money can be put in until the mortgage is completely offset. Any money that is put in the account is instantly accessible so it’s an ideal place for your ‘rainy day’ emergency fund. The Savings Account saves interest on your mortgage and doesn’t attract tax on anything that’s put in there which is particularly attractive to higher rate taxpayers.
If there is a reason that a lump sum will soon be acquired such as a possible future inheritance then an Offset Saver can be a good place to deposit the money until what is decided to use it on. The same applies to any bonuses that are received through work.
Consequently, there are some negative factors because of the availability to these flexible features. Offset mortgages tend to hold slightly higher mortgages rates and fees than other mortgages. Therefore, if the flexible features aren’t been put to use then it’s best to go with a standard mortgage.
Customers who like Offset Mortgages tend to stick with them and are less likely to remortgage as opposed to other customers. These types of mortgages can sometimes be tricky to understand but are worth looking into with a Mortgage Advisor in Derby. Many people often plan to overpay their mortgages when they first take them out but don’t seem to get round to it, this is often due to being uncertain about paying too much off their mortgage so that little is left for future capital requirements.
So if this sounds familiar then it may be best getting in touch with a Mortgage Advisor in Derby to make sure that the right mortgage is obtained and fitting to the situation that is being sought after.
The perception of renting a home can often be seen as wasting money. However, many people do seem to be renting nowadays than buying but there are pros and cons to whichever decision a person chooses to go with.
The property market never stays the same and with prices being everchanging no-one is ever sure what is round the corner. It can be really disappointing if a property is bought and it suddenly goes down in value. This has happened to thousands of UK Homeowners over the years but there is always a chance for the value to go higher at some point.
We can reflect on situations as proof of this. The Credit Crunch which was one of the worst economic periods of our times yet less than a decade later, UK property values had reached a new all-time high.
Furthermore, if a property is sold at the wrong time such as needing to move because of a relationship breakdown then there is the possibility that money can be lost. If this is happening then a chat with a Mortgage Advisor in Derby can mean that all possible avenues can be overviewed before a property is purchased to reduce the chances of it happening in the future and proper protection is in place.
The most important thing about buying a property is not just that it is an investment but that it is a property which is suitable for a person’s individual circumstances.
Mortgage payments will often be cheaper than rent despite interest rates going up and down. Though this will mean your Mortgage payments could also fluctuate. If this is a concern then it may be worth talking to a Mortgage Advisor in Derby about a Fixed Rate Mortgage which will mean that mortgage payments remain the same for a set period of time. On the other hand, rent will either stay the same or go up – it is unlikely that it will ever go down but will not go towards the benefit of home ownership.
Some people purchase a property to create a more stable situation for themselves and their family. If a property is rented, the landlord is able to revoke this tenancy and can mean that within a short time a person may have to find somewhere else fast. When a person owns a property, no-one can force them out.
There are some forms of protection in place as a tenant which includes such things as how much notice a Landlord will need to offer a tenant but if the tenant wishes to reside for longer then there’s not much they can do to sway the landlords decision and this can have an adverse effect if the tenant has a steady job in the local area.
All is not lost if this happens when renting though as landlords are able to offer their tenants first refusal so that they have the opportunity to purchase the property, which would save on Estate Agents fees.
Flexibility is more of an option that comes along with renting rather than owning. There’s nothing stopping a tenant to give your landlord notice if there is a better offer that the tenant wants to chase up, such as a better job in a different area for example. This is not something which is easy as a homeowner, in this instance the decision will be whether the homeowner will want to rent out the home or sell it. The process of selling a home and buying a new one can be very time consuming and expensive.
If there’s uncertainty on the decision to buy on the terms that factors will change such as a new job or a desire to relocate then the decision to buy should be thought through thoroughly because buying a property should be seen as a long term investment.
As a tenant, landlords should be responsible for any major repairs. Some Letting Agents and landlords are better than others in terms of repairs but sometimes some minor maintenance will be the tenants’ responsibility. As a Homeowner this is not anyone else’s responsibility and the same can be said for insuring the property so if this is forgotten about it could lead to a disastrous situation for the homeowner.
Some people may choose to buy a home but sometimes, it isn’t for everyone. At some stages of a persons’ life will mean that buying a property just simply isn’t the right fit such as the first time moving out of a parents’ house will mean that renting may be a better option.
It can be hard to get removed from a mortgage which is why it’s important to remember that buying a home is an enormous financial commitment and everyone should consider all options before diving in. If the decision of renting is taken then it will take a lot longer to save up a deposit.
In most cases at our Mortgage Broker in Derby, we see that the majority of people would prefer to buy rather than rent. Whether a mortgage is being paid for or a property is being rented monthly payments are still going towards living somewhere. The only difference is that if a person is buying then they are seeing them payments going towards their own benefit rather than someone else’s. The main factors ultimately make up the decision are timing and financial position.
The higher your credit score the more chance there is for your mortgage application being accepted although this doesn’t guarantee that an applicant will be accepted due to lenders having their own internal scoring systems.
Each Lender has developed their own niche which means you won’t fit in every lenders criteria, so don’t worry if you fail with one lender. If you do fail to meet a lenders criteria then there will always be another one who will be more forgiving.
It is our job as a Mortgage Broker in Derby to match you to the right lender and hopefully getting it right first time but sometimes that doesn’t always happen due to the lender. Despite this, both you and your Mortgage Advisor want the same thing which is that you end up with the best deal available to you so we are sure our Mortgage Advisors in Derby make this happen.
There are several different credit reference agencies in the UK, including Experian and Equifax. It is a wise idea to check as many of these agencies as possible so you gain more clarity of your current credit score. Additionally, it is also possible that one of the agencies might hold incorrect data by checking with multiple agencies, you’ll be able to identify any such discrepancies.
There are some good practices listed below in regard to things you can be doing to improve your credit rating:
Multiple credit searches are able to produce an adverse effect on your score. Keep this in mind when using price comparison websites as these are often the ones who carry out credit searching on individuals. If you know you want to apply for a mortgage soon then you’re better off trying to avoid applying for any other credit.
Some credit is great to have and paying it back is great for the long run, however, lenders don’t like to see you increasing your borrowings just prior to making a mortgage application.
Being on the electoral roll will help your score drastically as it shows stability and lenders favour this. Ensure that your name is spelt correctly and your current address is registered at. If you are not registered it’s easy to do this online.
Your score can further be reduced if you max out your credit cards regularly. Using a credit card and paying off the balance in full each month is preferable. This indicates that you are good at managing your money. Worst of all would be exceeding an agreed card limit or overdraft. Lenders want to know that you take your finances seriously.
It may appear that you’re living in two places at the same time on your credit report. This occurs for a variety of reasons, perhaps that you may have forgotten to tell one of your credit providers that you have moved. Check all addresses are updated and are correct. If in the past you have lived in a flat this can be tricky as the flat/apartment number can be formatted in different ways.
Make sure to contact the providers of store/credit cards that you no longer use in order to get the account closed. In the short term this can have a negative effect on your score briefly as the credit reference doesn’t really know if it’s you closing the account down or the provider. This is also a good thing to do to so that you reduce your chance of becoming a victim of fraud of a card you don’t use regularly.
If you have a family member or ex-partner connected to you then this could also affect your score. However, you won’t be able to get the financial association removed if the account is still live. To remove one of these links contact the credit reference agencies and make a request.
Many consumers feel credit scoring is unfair but lenders’ attitudes are indifferent. It is much cheaper for them to operate this way and computers offer a more consistent outcome.
Send an up to date copy of your credit report to a Mortgage Advisor in Derby upfront and you will increase the chances of being accepted first time. The more the Mortgage Advisor knows about your finances the better. Also, there are still some smaller Lenders that do not credit score. These Lenders do it the old-fashioned manual way, yet they will still have certain rules about the number of defaults and CCJ’s allowed.
Credit problems can impact a successful mortgage application and may hinder your chances at some point down the line but Sally and Peter’s situation got slightly more complex when Peter decided to go down a new career path in order to pursue his hobby as a writer.
In this case study, we discuss the importance of taking Mortgage Advice in Derby as early as possible to get you ahead of the game when it comes to your application.
Peter had moments of confliction due to not liking his job, but the salary was adequate enough for him to not want to take the leap and quit.
He started writing more frequently on a weekend, enough to see it as a viable career in itself. He decided for a better work/life balance, self-employment was the way forward, and so he decided to look into self employment mortgages in Derby.
With the additional hours, he could now put to use to develop his own start-up business, this made sure that Peter was seeing profit and after the first year of trading, it was profitable enough for him to consider purchasing a property for himself, Sally and their children so they could invest in a family home instead of renting.
Unfortunately, Peter’s younger years caught up with him and some faults were highlighted on his credit record. Although he had improved his credit score over the past few years, the old defaults were becoming an obstacle.
This brought forward two issues at hand when the customers sought a Mortgage Broker in Derby such as ourselves for Mortgage Advice.
These consisted of finding a lender who would be more lenient than others with past poor credit, whilst also finding the same lender who would allow lending based on the years’ trading figures.
Peter realised that his application would not be easy from the get go and took the sensible approach of seeking mortgage advice in Derby with us early on in the process, even as early as seeking mortgage advice before viewing properties.
Instantly whilst looking over Peter’s Experian report, it was clear to us that a specialist lender would need to be approached. On the upside, his small business didn’t require too much investing financially and he was able to quickly save up a 15% deposit over time with a portion of the savings coming from the ‘bank of Mum and Dad’.
Some lenders who put themselves under ‘specialist’ have made a niche for themselves when it comes to lending and customers who haven’t been Self Employed in Derby for a long period of time.
There is sometimes quite a risk for these lenders as some businesses go bust quite soon after they start out. In order to protect themselves from this, they prefer customers to put down a 15% deposit which successfully helped Peter’s application early on.
From this, we were able to obtain a mortgage agreement in principle and Peter and Sally went on to purchase a family home.
A downside with specialist lending is because they are working with niche customers, they do tend to charge higher rates of interest than you might see within establishments such as high street banks.
Just because these rates are higher in no means does it mean extortionate, overall in many cases, it is still cheaper than renting.
If you go with a specialist lender for your first mortgage, this does not mean that you are frozen out of other competitive mortgage rates in the future.
While it’s likely that you’ll have to sign in for at least two years, if you can prove a good payment history, then a remortgage to a more well-known lender offering a better deal after a while should be achievable.
It’s likely you may have to sign in for at least two years, but if you’re able to prove a good payment history, then a remortgage to a different lender, who is offering a more suited deal for you, should be achievable later on down the line.
This doesn’t faze specialist lenders as they expect that this is what may happen when they take some cases on. These lenders perceive themselves as ‘stepping stones’ and when you move to a different lender, they tend to lend the funds that have been repaid and seek to lend it back out to future customers.
Overall, a vital part is played in the mortgage market by specialist lenders as they help customers that a lot of banks usually will not. However, this does not mean that they will lend to just anyone, as you will have to be able to fit their criteria.
Earlier on in the week, we welcomed our newest member, Joe Dewsbury, to our Mortgage Advisor team.
Joe was introduced to the company by his father Wayne, who is also one of our leading Advisors with 36 years of legal experience behind him – you may recognise him from one of our social media posts or have interacted with him when popping into our office.
Prior to starting with us, Joe worked at a high street bank for 3 years but has already shown in the few days he has been with us a keen interest to dive headfirst and take on the exciting challenges of the company.
After spending a vast amount of time being mentored by our very own Matt Collinson, shown the ins and outs of each department, and been told where the good coffee is – we hope you’ll have a great connection with Joe, just like our customers have had with Wayne.
Another month has come to an end and it seems another milestone has been hit – our employees have been hard at work by keeping up their fantastic work ethic and it’s paid off!
By sticking to our five core company values each of our employees have shown amazing 5 – Star service, from their open and honest advice to their positive and responsive attitude, it has paid off and shown on our customer reviews that a caring attitude goes a long way.
We would be nothing without all who interact us – from our generous customers who go out of their way to give us amazing reviews and much appreciated constructive criticism, to our hard-working employees who don’t offer anything but their best every day.
“From the first call Leo’s service was exceptional. The service has been one of the best I have received and I would always go back for in future years. Thank you, your friendly professional approach helped massively” – Christina S
“Excellent service from start to finish. I dealt with Leo and Rachael who were great.” – Lewis
Once the hurdle of saving for a mortgage is surpassed, the next step with your Mortgage Broker in Derby is paperwork. Here are some of our best tips on how to get ready and ahead of the game and speed up your process.
An up to date credit report is crucial and should be one of your main priorities. By doing this there will be no surprise of finding previously unpaid payments setting you back from a successful mortgage.
Our Mortgage Advisors in Derby look at what Lender is best for you, so it’s best to make sure all your information is up to scratch so that you’re put with the one most helpful towards your current needs. Certain things you can do to help yourself is to go onto the voter’s roll and make sure that credit cards you no longer use are discontinued.
To show your Mortgage Broker in Derby that you are who you say you are, you’ll need photo ID. This can either be a Driving licence or Passport.
If your Driving Licence is being used for your proof of address, you’ll need to find another alternative for your Proof of ID. If you’re working within the country and using a Visa, then you’ll need to also provide this too.
As mentioned earlier, you will also need to provide a proof of address. This can be a Driving Licence if you’re using your passport. Otherwise, a utility bill or bank statement dated within the last 3 months will do.
The bank statements you provide validate what your income is and provides an insight to your regular expenditures. This highlights the importance of thinking ahead and choosing wisely what you’re spending your money on. Some lenders won’t ask for your bank statements, but the ones who do want to make sure you’re on top of your finances.
Your deposit is saved but you still have to provide evidence for this for anti-money laundering purposes and prove that you have everything in place for the deposit. A useful tip is to make sure your finances are stable and in one place, so the audit trail is easier to get over and done with.
To prove to Lenders your affordability, proof of income will be needed. If you’re in employment then 3 months’ payslips will most likely be sufficient, although some lenders do like to see a recent version of a P60. Lenders will also take in other factors such as overtime, commission, bonuses and earnings from other employers.
If like many other applicants you are Self Employed in Derby, then you’ll need help from your accountant who will acquire your last 2 or 3 years proof of earnings. If you submit your own accounts, then we are happy to advise you on what you’ll need from the government gateway.
By planning your budget out, you will oversee where’s best to spend your money and what is what. It is best to include such items as council tax, utility bills and regular expenditures such as food and drink to see how much disposable income you will have leftover. If you’re having trouble with this then we are able to send you a template budget planner to get you started.
So, preparation is key to getting your mortgage sorted as quickly and efficiently as possible and will be easier by using the Mortgage Advice in Derby. The quicker you put time aside to gather all the essential information you need, the easier it is to speed up the process and getting closer to gaining a successful mortgage.
When you start out looking for a mortgage you will soon realise that there are lots of different options available. Below you will see a list of the most popular types of mortgages available on the market and hopefully. If you have any questions regarding any of the below mortgage options, then please do not hesitate to contact us.
A fixed-rate mortgage means that your mortgage payments are going to stay the same for a set period of time. You can set the length of which you want to fix your payments for, typically this being 2, 3 or 5 years or longer. No matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.
A tracker mortgage means that your interest rate will track the Bank of England’s base rate. So in other words, the lender that you are with does not actually set the rate themselves. You will be paying a percentage above the Bank of England base rate. In an example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.
When you take out a repayment mortgage this means that each month you are paying capital and interest combined. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end and the property becomes yours.
This is the most risk-free way to pay your capital back to the lender, in the early years it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term. This situation switches in the last ten years or so of your mortgage, where your payments are paying off more capital than interest and the balance will come down much faster.
Whilst many Buy to Let in Derby mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis.
It is much less likely for lenders to offer an interest-only product now. However, there are certain circumstances where this can be an option. These include downsizing when you are older or have other investments what you will use to pay the capital back. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than back in the day.
With an offset mortgage, the lender will set you up a savings account to go alongside your mortgage account. How this works is that let’s say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, so in this case £80,000. This can be a very efficient way of managing your money, especially if you are a higher rate taxpayer.
In order to help us recommend the most suitable mortgage lender for you and build up a full picture of your financial situation, we strongly suggest you obtain a copy of your credit report.
When you have the PDF you are able to call, email or cancel on-line anytime to avoid a charge should you not wish to continue as a member
Once we receive your report we will contact you (when you state) to discuss your mortgage options in more detail.
We have in-depth knowledge of mortgage criteria from a large number of mortgage lenders, including specialist ones. From the information in this report, we will know which lender is most suitable for you and your personal situation.
More people realise the importance of having a good credit rating and the importance it holds.
After getting in touch with us, we found that a large majority had already researched online and found a copy of their credit report.
There are various credit reference agencies to choose from, but the two most common companies you may have heard of are Experian or Equifax.
We would highly recommend to new customers to use Check My File. In doing so, you will find an easy to understand report that offers customers a collation of information from various sources.
Check My File offers a 30-day free trial. After 30 days, the monthly fee is £14.99 a month, although you can cancel this at any time.
Often, clients ask if we will be doing a credit search on them because they know that too many searches can harm their credit score.
The lender will always run their credit checks, but our mortgage advisors ask the customer for permission first.
You will find that credit searches will come in two forms; hard searches and soft searches. Here we will delve into the difference between the two and how they can help.
A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is that because the lender is looking into your situation quite closely if you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed or it turns out you have provided false details.
The bad news about a hard search though is that it leaves a “footprint” on your credit file. So anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing. However, several footprints registered in a short period of time could look like you applying for lots of credit at the same time. The footprint does not state whether your application was successful or not. If you have several searches over a few weeks then lenders’ systems could wrongly assume you are being declined on the basis that “Why else would you go to lender number 2 unless Lender number 1 had said no?”.
The odd hard footprint on your record from time to time is no big deal so there’s no need to worry too much about this, just be careful not to have too many.
A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites to give you an indication of what products might be available to you. A soft search is also carried out if someone wants to verify your identity.
Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. The financial institution doing a soft search obtains less information about you than if they had done a hard search. However, an agreement in principle from one of these lenders is usually still an extremely strong indication that your full application will be accepted.
The really good news about soft searches is that whilst you will be able to see that someone has carried out a soft search on you if you check your credit file (people are often very surprised how many soft searches have been carried out on them!) these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage without it damaging your credit score irrespective of whether it is successful or not.
Looking to make an offer on a property? I always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price. That way you can present yourselves as having your finances in place. You are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.