Mortgage FAQs

Mortgages

What is the maximum amount that I can borrow?

How do I ensure my deal doesn't have an extended tie in period?

What paperwork is required for a remortgage application?

How long does the process of remortgaging take?

What fees are involved in remortgaging?

What are self certification mortgages? 

What is the maximum amount that I can borrow?

Lenders generally work in one of two ways when calculating how much they will lend.

They either apply what is called an affordability calculation which takes into consideration a number of factors including income, credit commitments, the monthly mortgage payment and any other associated outgoings. From here an automated system provides a maximum borrowing figure.

The second method is simpler and uses what are called income multipliers. These vary depending on the lender but can be as little as 3 x salary and as much as 5 x salary. As a general rule of thumb, most lenders average at 4 x annual salary but it's best to consult a financial advisor to obtain an accurate figure.

^ back to top 

How do I ensure my deal doesn't have an extended tie in period?

This is a very important question as mortgage offers with extended ties can lead to a prolonged period of time on an uncomfortably high rate.

All mortgage lenders and brokers must issue what is called a key facts document if they discuss any mortgage offers with you. This document clearly states in Section 10 the length of tie in.

If you think you might need to repay the mortgage early, it is critical that the early repayment charge period does not exceed the length of the incentive as this could trap you into paying a high rate of interest with no way of moving to another deal without paying costly redemption penalties. At moneyQuest, we can talk you through the pit falls.

^ back to top

What supporting documentation is required for a remortgage application?

This question is specific to each individual lender.  Your financial advisor will confirm the exact documentation required by the lender you have chosen.

Some providers only require a signed application from with no other documentation, whereas others will request further documentation as proof of your identity and income. 

Generally, a lender will want a copy of a passport, a utility bill and a couple of wage slips.

If we look at extreme ends of the spectrum then supporting documentation can range from;

• nothing
• 2 forms of address verification / 2 forms of identity verification (Utility bill, driving license and Passport)
• 3 wage slips and 3 bank statements.

^ back to top

How long does the process of remortgaging take?

Again this question is specific to the individual lender.

It is possible to complete a transaction on the same day of application. However, the industry average is between 4 and 6 weeks. If you select a good broker they can use their relationship with a lender to press an application through more quickly.

^ back to top

What fees are involved in remortgaging?

When you remortgage, you may be required to pay a remortgage arrangement fee to the lender.

Some lenders offer mortgage deals with no set up fees but this question relates specifically to your loan size.

If you have a small mortgage then it's very important to consider whether any arrangement fee is actually pushing up the true cost.  The APR will give you a figure for comparison with other rates.  

If you have a large mortgage, you may be able to justify paying a higher setup fee.

^ back to top

What are self certification mortgages?

Self certification mortgages are available to people who may be unable to provide documentary evidence to verify their income.

This may be the case for contract workers and the self employed.

These types of mortgage are only available if you have sufficient equity in your property. Generally, a self certification mortgage offers a higher rate and possibly higher set up costs as the risk to the lender is higher than that offered by a normal mortgage.

^ back to top