Residential Mortgages

Residential mortgages are the largest, and one of the most common, forms of credit in the UK, and make it possible for millions of us to buy our homes.

If you are going to buy a new home to live in you will require a residential mortgage. There are so many mortgage options out there that deciding what you want is like ordering a coffee nowadays – a series of choices that blow your mind, when all you want is a cup of coffee! Your monthly mortgage payments will be one of your largest outgoings and one that will last a long time. It is important that you get the right advice to allow you to keep up your future payments.

Xpress Mortgages will give you the advice that you require to ensure that you have the appropriate finance arranged so you can, not only buy your first home, but also make sure it stays yours if the worst was to happen.

Key areas you will need to cover when considering a residential mortgage.

Deposit

When choosing a mortgage, you need to have a minimum deposit. The more deposit you can put down, the lower the rate of interest you will be charged.

How will you repay the mortgage?

Capital repayment

Capital repayment is where your monthly repayments pay back both the amount you borrowed, known as capital as well as the interest charged by the lender. This is a good method and most common because at the end of the mortgage term your mortgage will be paid off as long as you keep up repayments on your mortgage.

Interest only

The other method is interest only, this is where you only pay off the interest to the bank or building society so at the end of your mortgage term, usually 25-30years you would still owe the amount you borrowed as you have only paid back the interest.

Interest Rates

Once you have chosen your method of repayment, you need to consider whether you want a fixed or variable rate of interest. A fixed rate means your rate is fixed at that % and your monthly repayments stay at that amount for the period of the fixed rate. The other types of interest rates are discounted or variable rates.This is where the rate could go up or down based on what the Bank of England or bank or building society decides to do. This would mean your monthly repayments could go up or down. A lot of first time buyers chose a fixed rate because they want to budget and know how much they are paying back each month and be certain that the mortgage payments do not increase.

Charges and fees

Lenders charge arrangement fees. The size of these fees depends on the rate of interest, typically the lower the rate of interest charged the higher the fee.There are also other fees to pay when purchasing a property. These include solicitor fees, valuation fees and stamp duty. It is not just the fees the mortgage lender will charge you.

Residential properties Stamp duty * charges

You’ll pay: ‍

• Nothing on the first £250,000 of the property price
• 5% on the next £675,000 (the portion from £250,001 to £925,000)
• 10% on the next £575,000 (the portion from £925,001 to £1.5 million)
• 12% on the rest (above £1.5m) (the portion above £1.5 million)

Example:

If you buy a property for £295,000, you’ll pay £2,250 of SDLT (Stamp Duty Land Tax)

This is made up of:

• 0% on the first £250,000 = £0
• 5% on the final £45,000 = £2,250
• total SDLT = £2,250

Use the SDLT calculator to work out how much tax you’ll pay

*Correct at the time of writing (23/08/2023). Ensure you check with your solicitor on the exact amount payable. Please note these figures may differ if you own more than one property.

Source : www.gov.uk/stamp-duty-land-tax/residential-property-rates

How much can you afford?

For many buyers they can make the mistake of trying to borrow as much as they can and really stretch themselves, leaving themselves exposed to interest rate increases. When this goes up, your mortgage payments may also increase. This would also leave you exposed to life’s general uncertainties. The amount a bank/building society will loan you in the way of a mortgage will often differ from lender to lender.They will also take into consideration the affordability of the mortgage.

The amount you can borrow will depend on your salary or combined salary if you are buying with someone. These are typical calculations and may differ from bank/building society to bank/building society. As a rule of thumb, the lender will offer you 4.5 times your income.

Are you ready to buy a home?

Xpress Mortgages will search from a comprehensive range of mortgages from across the market. Xpress Mortgages are regulated by the Financial Conduct Authority . Get in contact with us to finance your next home purchase.