Can I Get a Mortgage on Universal Credit?
Making the decision to buy a house and apply for a mortgage is never something to be taken lightly. Choosing to take out a mortgage is a huge financial commitment that you need to make fully sure you are ready for.
This decision can be made a little more difficult – or even taken out of your hands completely – if you are in receipt of Universal Credit. However, it is still possible to take out a mortgage if you are on Universal Credit as other factors influence lenders' decisions about providing mortgages.
Find out all you need to know about getting a mortgage if you are on Universal Credit with our Octagon Capital guide:
How To Get a Mortgage on Universal Credit
While it can be significantly more difficult to get a mortgage if you are on Universal Credit, it is not impossible. Not all lenders accept benefits towards an income, so it's important to find one that does. Once you have found a suitable lender who accepts Universal Credit towards your income, they will need to conduct various checks to make sure you are suitable for a mortgage product.
Lenders will assess your income amount and type – as they do with anyone applying for a mortgage – as well as your dependency on your Universal Credit payments. They are also likely to take into consideration if you are in receipt of any other types of benefits.
As with any loan products, it's absolutely essential to only ever borrow what you know you can afford to pay back – the same applies to mortgages.
What Checks Will a Lender Conduct?
When attempting to ascertain whether or not you are a suitable candidate for a mortgage, the lender will assess your application against a number of criteria. They will be looking to see whether or not you will be able to repay the mortgage on time. This will include checking your income to see what it consists of, how reliable your income is, and how dependent you are on any benefits you may be in receipt of.
- Your Income & Assets – Lenders will assess what your monthly income is, and what it is made up of. They will also be interested in any other assets you have. Here, additional income sources aside from Universal Credit and other assets will support your mortgage application.
- How Much of a Deposit You Have – Your deposit amount can be the difference between a lender accepting your application or not. Smaller deposits such as 5% or 10% may prove difficult to sway a lender, but higher amounts such as 20% and beyond will work in your favour.
- Which Type of Mortgage You Are Applying For – Certain types of mortgage may be easier to secure on Universal Credit. Some mortgages like Buy to Let don't usually have minimum income requirements.
- How Dependent You Are on Universal Credit – Lenders will be interested in whether or not you are totally dependent on your Universal Credit payments to get by. If you aren't 100% dependent on them, and you have other sources of income, your chances of being approved for a mortgage will be higher.
- If You Receive Any Other Benefits – Lenders will also want to know whether or not you are receiving any other benefits as well as Universal Credit. If you are receiving other benefits and you choose a lender that accepts benefits as a form of income, this can benefit your application.
While it is likely to be more difficult to take out a mortgage if you are on Universal Credit, it is certainly possible. To better your chances of being approved for a mortgage, opt for a lender who accepts benefits as a form of income.
You should only ever take out a mortgage – or any type of loan – if you are sure you will be able to meet the scheduled repayments. Defaulting on payments can damage your credit score and leave you in greater financial difficulty.
What Happens if a Couple Decides to Separate But They Have a Joint Mortgage?
When a couple decides it's best for them to separate, it can be an emotional and confusing time. What can make this situation even more tricky to deal with is if the couple have a joint mortgage. Adding in financial matters to an already difficult situation can seem daunting to say the least.
We've broken down everything you need to know about what happens to a joint mortgage when a couple separates in this guide.
What is a Joint Mortgage?
Before we get into what happens to a joint mortgage when a couple separates, we need to establish what a joint mortgage actually is.
Put simply, a joint mortgage is a mortgage that you take out with other people, whether they be a partner, friend, or family member. In a joint mortgage, all owners share a joint responsibility for making the mortgage repayments. It's a good idea to only ever take out a joint mortgage with someone who you know will be able to keep up the repayments, to avoid your credit score being damaged.
Am I Able to Stop Paying My Joint Mortgage After a Separation?
No, you should not stop paying your joint mortgage after separating from your partner. While it may be a highly emotive and anxious period in your life, it is essential that you keep on top of your scheduled joint mortgage repayments, so as not to negatively impact your credit score and your ex-partner's.
While your mortgage may be at the bottom of your list of priorities during a separation, it's important to continue with your regular payments. Unfortunately, the numbers don't take into account your personal circumstances when it comes to your credit rating. A low credit rating can make it more difficult to take out any kind of loan, not just mortgages, in the future.
What Can I Do When My Partner and I Have Separated But We Have a Joint Mortgage?
When you and your ex-partner signed up for a joint mortgage, you each took on an equal share of the ownership of the property. This means that even in the case of a separation, both you and your ex-partner have the legal right to remain living in the property should you choose to do so. It also means that you are both liable to pay the mortgage.
Thankfully, you do have some options when it comes to your joint mortgage with an ex-partner. Here, we'll go through some of your options:
One Person Can Buy Their Ex-Partner out of The Mortgage
If one person is keen to remain living in the property and has sufficient funds to pay the mortgage repayments alone, they can buy their ex-partner out of the joint mortgage. In cases like these, it's important to contact your lender to make sure they are happy for this to happen, and for the mortgage to be moved into just one person's name. Before this can happen, checks similar to those before you took out your mortgage will likely be made, including making sure the person can afford to keep up the repayments by themselves.
The logistics of how one person buys the other out of the mortgage are largely individual, and depend on various factors, including whether you use a solicitor or not. If the former couple decide to split things evenly, they would work out how much of the mortgage has already been paid, and half this amount. This would then be added to the deposit amount paid by the other person initially, and paid to the individual.
To illustrate, if a former couple wanted to have one buy the other out of their joint mortgage, they would follow the steps outlined above. If they have paid £50,000 towards their mortgage in a 50/50 split and each paid a deposit of £10,000, one person would have to pay the other £35,000 (£25,000 + £10,000) to buy them out of the joint mortgage.
One Person Takes On The Mortgage with a Guarantor
If one person wants to remain in the property and buy the other out of the joint mortgage, but they cannot afford to do so alone, they can use a guarantor. In this instance, the guarantor (usually a friend or family member) will sign a declaration agreeing to pay the mortgage repayments should the individual be unable to do so. The guarantor will have to pass the affordability checks set out by your lender.
Pay Off The Mortgage and Move On
If you and your partner separate when you are close to paying off your joint mortgage, an option is to continue making your scheduled repayments to pay off the remainder of the mortgage, then split the profits. This is likely only a viable option if the former couple are on good terms.
Sell Your Property and Split The Proceeds
Another option for how to deal with a joint mortgage when a couple separates is to sell the property. Once the property has been sold, the ex-couple will need to pay off the remainder of the mortgage, and split any profits – or debt relating to your equity – between you equally.
What is a Housing Disrepair Claim?
Housing disrepair claims can be made against your landlord if any aspect of the property or building that you live in has not been fixed or upgraded and has caused detrimental issues to your health or quality of live. The process essentially involves seeking compensation from your landlord or property owner either through the court or via legal action.
When living in rent accommodation, the tenant has a right for the property to be in a certain condition and maintain a certain level of standard - and it is the landlord's responsibility to maintain this, unless there are viable e
Housing disrepair is defined as the ‘poor condition of a building or structure due to neglect’. This means that work needs to be carried out in order to make the property safe to live in, and can include problems such as lack of heating, mould, and broken toilets. If you rent and your landlord isn’t providing you with safe accommodation, you could be eligible to claim for housing disrepair compensation.
There are 76,814 “non-decent” properties in the UK, according to the English Housing Survey, and 1 in 7 Council Homes do not meet the National Standard. With the current cost of living crisis, more and more rentals are slipping under the minimum standards of safety. If your landlord is refusing to safely maintain your home, you could be entitled to claim compensation.
What is Housing Disrepair?
Housing Disrepair is when your landlord does not carry out repairs on your rented property, resulting in your home being of an unsafe living standard. Legally, by paying rent, tenants are entitled to a clean and safe property to live in.
The definition of disrepair is broad, and it covers problems such as pests, dampness, mould, lack of heating, and unsafe floors and stairs. Any type of rental property is eligible, including flats, houses, council homes, and even Airbnb properties.
Tenants renting homes in a state of disrepair may face ill consequences to their lives. For example, a house infested with mould can cause health problems, as well as damage to a tenant's personal belongings such as clothes and bedding. It could even leave rooms unusable.
If your landlord is refusing to carry out necessary repairs, you can claim for Housing Disrepair. A lot of the time, court proceedings are not even required, as this process can put pressure on landlords to act quickly to do the right thing.
Am I eligible to claim for Housing Disrepair?
You could be eligible to claim if your property hasn’t been safely maintained by your landlord and fall under any of these categories::
- You rent a council house
- You rent a housing association property
- You are in private rented accommodation
Living in unsafe properties can take a toll on tenants’ physical and mental health, which is a viable reason to claim for Housing Disrepair. This can include personal injury, medical bills, sickness from mould, or even depression.
If you believe you fall under any of these categories, you could be eligible to claim for Housing Disrepair. You can also check here to see if you are eligible by filling out a short form.
How does it work?
You are legally entitled to live in a safe home. If you have already reported safety issues to your landlord which they have failed to fix, you could claim Housing Disrepair and force them to complete the work and potentially even win yourself financial compensation.
Before filing a claim, you must notify your landlord of the problem and then wait 21 days. This gives landlords time to rectify the problem on their own. Make sure to do this in writing (such as a text message or an e-mail) so that you have a record of it.
You must also collect evidence of disrepair. This includes photos, medical bills, professional reports from surveyors, and the aforementioned request to your landlord. Any proof you can collect might be helpful.
If your landlord has not started the process of fixing the property’s safety issues within the time period, you can claim for Housing Disrepair. A typical claim can take around 9 to 12 months, but larger or more complex claims can take up to a year, or a year and a half. The average amount of money rewarded is £1,200.
What are the benefits of using a mortgage advisor when moving house?
Summary: An informative and comprehensive guide that informs readers on the many reasons why it's beneficial to use a mortgage advisor when moving house, including to save stress and ensure that the process is completed correctly. Also includes statistics about mortgages in the UK.
Whether it's a first-time property or you're just moving from one property to another, moving house is an important milestone that can carry a lot of stress. That's why many people opt to employ the services of a local mortgage advisor. But why do so? Here are just a few of the various benefits of hiring a mortgage advisor when buying a property:
Saves you money
Mortgage advisors have an extensive network of contacts including real estate agencies, solicitors and more. This means that they can scour for the latest and best properties within your budget without resorting to going above budget. The best mortgage advisors not only find properties at low prices, but they also take into consideration all of the additional fees and find great deals so you can get as much as possible for your money.
Saves you time
Mortgage advisors are skilled at what they do. Successful mortgage advisors are backed by years of experience, which means they're incredibly proficient at their job. While the average house hunting period takes place for anywhere between 3 to 6 weeks, a mortgage advisor can help to lower this stage by finding properties through their network quickly and efficiently. Their specialist tools can take all of your requirements and circumstances into consideration to filter properties swiftly.
You can read more about the house hunting stage of buying a property here.
Saves you stress
Mortgage advisors have helped hundreds of clients buy houses over the years. They understand how stressful the house-buying process is and are on hand to help make the process as easy as possible for you. Hiring a mortgage advisor means the work that would normally have to be done completely by you can now be split between yourself and a professional backed by formal training and practical experience. They can also take care of the paperwork so there's no risk of incorrect applications.
Other benefits of mortgage advisors
Alongside the above benefits, mortgage advisors also:
- Provide generalised financial advice
- Know the best lenders in your local area
- Chase up your application as deadlines approach
Whether you're buying a house with chain or no-chain circumstances, mortgage advisors can simplify and streamline the process. It's an extra cost to consider but it can be well worth the money due to the many benefits they offer.
Contact Octagon Capital now
If you need assistance with equity release on an existing property, get in touch with our team here at Octagon Capital today. We can help you release between 20-60% of your property's value to receive money in a single lump sum. We also offer services relating to development finance and can help you find a viable solution if you need to take out a bridging loan.
Which Mortgage Can I Afford?
The mortgage you can afford will depend on many different factors and will vary from borrower to borrower. Additionally, different lenders will have different lending criteria. Mortgage affordability is typically calculated based on monthly outgoings and income.
What Is a Mortgage?
A mortgage is a type of home loan and acts as an agreement between borrowers and lenders in which a property is used as a guarantee. Once the mortgage transaction is made, borrowers will receive money and agree to a repayment plan with interest paid back to the lender over a set time period.
What Mortgage Can I Afford?
Before taking out a mortgage, lenders will look at a borrower to see if they want to lend them the money. Through this process, they will take into account the following details:
- Income
- Monthly outgoing payments (including any debts)
- The amount of savings available to put down as a deposit
Experts suggest that a good rule of thumb is for your total mortgage not to exceed 28% of your pre-tax monthly income.
How Important Is Salary When Determining What Mortgage I Can Afford?
There are different opinions when it comes to factoring in your salary when calculating your mortgage. Many recommend that mortgages should be based on around four times your annual income. However, it will also depend on your income source. A fixed monthly income will always be more compelling for lenders than someone whose monthly income is dependent on benefits.
One of the most important factors that should be taken into consideration when calculating mortgage affordability is an individual’s “debt-to-income” ratio which is a person’s salary relative to the amount of debts they owe. Greater debts means a higher volume of monthly outgoing payments for an individual to pay. This in turn may mean they are less eligible for a mortgage or are subject to less favourable terms such as higher interest rates.
In addition to salary, the majority of lenders will require proof of employment with many specifying a minimum of two years of past employment. Individuals who are self-employed, between jobs or who are not in full-time employment will find it more difficult to demonstrate their financial history.
Will My Credit Score Impact Which Mortgage I Can Afford?
Lenders will look at credit score in order to evaluate if the borrower is a good candidate for a loan. Credit scores are based on spending history including any borrowing behaviour and can see whether an individual makes repayments on time and their amount of debt. The higher the credit score, the better someone is as a candidate for a loan.
If you have a higher credit score, you may be more likely to be approved for a loan as it shows that you can reliably meet payments. This in turn may mean that you can qualify for better loan terms including better interest rates and fewer fees.
It is still possible to get a mortgage if you have a poor credit score, however it is usually more difficult and the terms tend to be less favourable.
Does the Amount of Deposit Affect Mortgage Affordability?
The standard down payment for a mortgage is 20% of the property’s value with 80% funded by the lender, but this varies between lenders and different mortgage products. If a borrower is able to put down a bigger deposit, it could save them money in the long term. It is also less of a risk for the lender meaning that they may be able to offer better loan conditions such as lower interest rates and shorter repayment period.
How Much Does a Mortgage Cost?
The cost of a mortgage will depend on how much you have borrowed, the interest rate and the length of the mortgage term.
What Is a Mortgage?
A mortgage is a type of loan used to finance the purchase of a property. When buying a home, a buyer will need to put down a deposit and pay for the rest over a long-term payment plan with money borrowed from a bank or building society; this borrowed money is the mortgage. The mortgage is then paid back, plus interest, in monthly instalments over a fixed period of time.
There are different types of mortgage deals available, including:
- Fixed-rate mortgages
- Tracker mortgages
- Discount mortgages
- Offset mortgages
The type of mortgage that you choose will depend on a few factors including the amount of deposit you are able to put down, the length of time you want to repay the mortgage, and how much you can afford to pay back per month.
What Is the Average Cost of a Mortgage in the UK?
According to a study carried out by Boon Brokers, the average UK mortgage payment is £723 with an average interest rate of 2.48%. However, there is a great deal of variation between different regions due to the difference in house prices.
What Factors Will Influence the Cost of a Mortgage?
Mortgage cost will be determined on a case-by-case basis, based on both the mortgage provider chosen and the personal circumstances of the borrower. In general, there are many factors that go into the decision of how much a mortgage costs.
Key factors are the type of mortgage that you choose (i.e. interest-only, repayment or a mix of the two), the length of the mortgage term and the interest rate. Additionally, the amount of deposit that a buyer is able to put down will have a big impact. The value of the property will also affect the cost of the mortgage.
What Mortgage Can I Afford?
Before taking out a mortgage, lenders will look at a borrower to see if they want to lend them the money. Through this process, they will take into account income, monthly outgoing payments including any debts and the amount of savings available to put down as a deposit.
Experts suggest that a good rule of thumb is for your total mortgage not to exceed 28% of your pre-tax monthly income.
How Do Mortgage Lenders Calculate How Much You Can Borrow?
The amount of money that you can borrow will depend on the amount of income you have as well as your monthly outgoings.
Lenders will typically determine the size of the mortgage based on total annual income, be it that of a sole applicant or combined annual income for joint applicants.
Generally speaking, the higher the annual income, the higher the amount that you can borrow although there is variation between lenders with some willing to offer up to as much as six times your salary.
Will My Salary Influence the Cost of My Mortgage?
The amount that salary influences mortgages will depend on the lender, with many operating on the basis that a mortgage should be around four and a half times your annual income.
Arguably more important than salary is the debt-to-income ratio that an individual has; this is the amount of monthly debt they have relative to the amount of income they receive. If a borrower has more outgoings than incomings, it shows that a mortgage may not be affordable for them.
Along with income, a lot of lenders will require a borrower to show proof of employment, factoring in the amount that they earn as well as how long they have been in that position. For that reason, those who are self-employed, between jobs or who are not in full-time employment may find it more difficult to secure a mortgage.
Can Poor Credit History Make My Mortgage More Expensive?
Credit score is an important factor when trying to secure a mortgage; lenders will look at this in order to determine if the borrower is a good candidate for a loan. Credit scores are based on spending history including any borrowing behaviour and can see whether an individual makes repayments on time and their amount of debt. If an individual has a higher credit score, they will typically be a better candidate for a mortgage.
If you have a higher credit score, you may be more likely to be approved for a loan as it shows that you can reliably meet payments. This in turn may mean that you can qualify for better loan terms including better interest rates and fewer fees.
You could still secure a mortgage if you have no credit history or a poor credit score but it may be more difficult and also may be subject to less favourable rates.
Are Mortgages Cheaper With a Higher Deposit?
The standard deposit amount for a mortgage is 20% of the property’s value with 80% funded by the lender, but this varies between lenders and different mortgage products. Normally, if a borrower can put down a bigger down payment, it could save them money in the long term. It is also less of a risk for the lender meaning that they may be able to offer better loan conditions such as lower interest rates and shorter repayment period.
How Do I Repay A Mortgage?
The repayment of a mortgage is done over time, and the duration and terms of the loan repayment will be agreed up front between the lender and the borrower.
What Should I Do at the End of My Mortgage Term?
As the mortgage is paid off in monthly instalments over the course of many years, there is not something specific you need to do at the end. However, there may be small administrative tasks such as requesting a copy of your Title Deeds.
For homes purchased after 1990, they will be listed with the Land Registry so deeds can be requested directly from them. If for any reason your home is not registered with the Land Registry, you can request the deeds from your mortgage lender.
Aside from that, the only responsibility is ensuring the maintenance of the home and making sure that you have a valid home and contents insurance policy.
What Happens at the End of a Repayment Mortgage?
At the start of any mortgage agreement, terms are agreed between the borrower and the mortgage provider. As part of this, they will agree on the amount of the mortgage, the interest rate, the monthly repayment plan and the duration of the loan. Both parties agree to uphold their end of the arrangement and affordability checks are carried out at the start to ensure that this is a realistic and affordable plan.
A typical mortgage is repaid over 25 years but will depend on the specific loan terms you have with your particular lender. At the end of this term, the borrower is expected to have repaid the full amount of the mortgage plus any interest.
After achieving this, the mortgage holder will be the owner of 100% of the property’s equity and the mortgage lender will have no charge against the property. With this, the owner has full flexibility with the property meaning that, should they choose, they could release some equity from the property.
There may be some variation about the mortgage repayment if, for example, the borrower has chosen to make overpayments on their mortgage in the past. Conversely, you may have been unable to meet certain payments or taken a mortgage holiday which would mean that your payment plan is behind. It may also be that you have extended the term of your mortgage.
What Happens at the End of an Interest-Only Mortgage?
If you have taken out an interest-only mortgage, although these are increasingly less common, you will only need to pay interest on the loan during the mortgage term. This means that at the end of the agreed term, you are left to pay the full original amount that you have borrowed in one big lump sum.
With interest-only mortgages, it is advisable to use savings, investments or inheritance to help pay off the lump sum at the end of the agreed term. You can also sell your house or get a new mortgage deal in order to make this an affordable option. The option to sell is especially relevant if your home has increased in value since its initial purchase.
If you are unable to pay your interest-only mortgage, for whatever reason, you should speak to your lender as soon as possible to see if they can make any provisions.
Another option could be switching to an alternative mortgage type (a repayment mortgage) with your current lender to introduce the concept of monthly repayments and make the mortgage more affordable. You can also choose to switch only a part of your mortgage to repayment.
How Can I Repay My Mortgage Early?
There are many different options to repay a mortgage ahead of time, although you should always check whether this is possible with your mortgage lender as sometimes it can incur a fee. Here are some of the possible ways to pay off your mortgage early:
- Make extra mortgage payments
- Refinance your mortgage
- Make lump sum payments
- Recast your mortgage
Make Extra Mortgage Payments
Rather than monthly payments, you can speed up the pay off process by making biweekly mortgage payments or an additional payment per month. Overall this leads to 13 months of mortgage payments annually instead of 12 meaning that you are reducing the length of time you will be paying off your mortgages.
The other option would be to pay more in each monthly instalment meaning that you can make a greater dent in the total amount owed.
Refinance Your Mortgage
Refinancing your mortgage to achieve an earlier repayment is only a logical solution if you can get a lower interest rate. The option to refinance usually comes with associated fees so you need to make sure that this is actually logical from a cost point of view.
It is also possible to refinance to gain a shorter-term loan which will also mean that you are paying off less interest in the long run.
Make Lump Sum Payments
Whenever you have more money accessible, you can make lump-sum payments to your principal. For example any work-related bonuses, inheritance or even the sale of valuable personal items can provide funds which can be used as extra cash to advance your mortgage.
You can check with your mortgage provider that you are able to do this and will need to specify that you want to apply the lump-sum payments to be put towards the principal. This could be a good option for avoiding the associated fees of refinancing or recasting.
Recast Your Mortgage
When you recast your mortgage, you keep your existing loan but pay a lump sum towards the principal. Following this, your lender will adjust the amortisation schedule resulting in a shorter loan term. This can work out as a cheaper option as it incurs lower fees than refinancing.
How Big a Mortgage Can I Get?
The size of the mortgage that you will be able to afford will depend on different variables including income, monthly outgoings and the value of the property you want to purchase.
What Is a Mortgage?
A mortgage is a type of home loan and acts as an agreement between borrowers and lenders in which a property is used as a guarantee. Once the mortgage transaction is made, borrowers will receive money and agree to a repayment plan with interest paid back to the lender over a set time period.
What Size Mortgage Could I Afford?
The size mortgage you can afford will depend on your circumstances. Before taking out a mortgage, lenders will look at a borrower to see if they want to lend them the money. Through this process, they will take into account the following factors:
- Income
- Monthly outgoing payments including any debts
- The amount of savings available to put down as a deposit
Experts suggest that a good rule of thumb is for your total mortgage not to exceed 28% of your pre-tax monthly income.
How Do Mortgage Lenders Decide How Much You Can Borrow?
The amount of money that you can borrow will depend on your income (most likely your salary) as well as your monthly outgoings.
Mortgage providers, including banks and building societies, will most likely determine the size of the mortgage based on the total annual income of the borrower or the joint annual income if there are multiple borrowers.
The general rule of thumb is that the higher the annual income, the higher the amount that you can borrow although there is variation between lenders with some willing to offer up to as much as six times your salary.
How Does Salary Influence the Size of Mortgage I Can Get?
The amount that salary influences mortgages will depend on the lender with many operating on the basis that a mortgage should be around four and a half times your annual income.
Arguably more important than salary is the debt-to-income ratio that an individual has; this is the amount of monthly debt they have relative to the amount of income they receive. If a borrower has more outgoings than incomings, it shows that a mortgage may not be affordable for them.
Along with income, a lot of lenders will require a borrower to show proof of employment, factoring in the amount that they earn as well as how long they have been in that position. For that reason, those who are self-employed, between jobs or who are not in full-time employment may find it more difficult to secure a mortgage.
Will My Credit Score Impact How Big a Mortgage I Can Get?
Credit score is an important factor when trying to secure a mortgage; lenders will look at this in order to determine if the borrower is a good candidate for a loan. Credit scores are based on spending history including any borrowing behaviour and can see whether an individual makes repayments on time and their amount of debt. If an individual has a higher credit score, they will typically be a better candidate for a mortgage.
If you have a higher credit score, you may be more likely to be approved for a loan as it shows that you can reliably meet payments. This in turn may mean that you can qualify for better loan terms including better interest rates and fewer fees.
You could still secure a mortgage if you have no credit history or a poor credit score but it may be more difficult and also may be subject to less favourable rates.
How Does Deposit Affect Mortgage Affordability?
The standard deposit amount for a mortgage is 20% of the property’s value with 80% funded by the lender, but this varies between lenders and different mortgage products. Normally, if a borrower can put down a bigger down payment, it could save them money in the long term. It is also less of a risk for the lender meaning that they may be able to offer better loan conditions such as lower interest rates and shorter repayment period.
Do I Need A Mortgage Broker?
Working with a mortgage broker can potentially save homebuyers a great deal of time and money. Before deciding if you want to work with a broker, there are a few things to consider to ensure that this is the right choice for you.
What Does a Mortgage Broker Do?
A mortgage broker is the middleman between the homebuyer and the mortgage lender. They work on the behalf of the borrower to find the best mortgage to suit their personal circumstances.
Mortgage brokers are specialists in their sector and, subsequently, can offer expert impartial advice about the best mortgage products, regardless of whether the borrower is hoping to buy a home or refinance.
They work to find the most competitive rates and prices on the market as well as making sure that the mortgage product matches the client’s needs. Mortgage brokers can also help borrowers assess the size of mortgage they are able to apply for.
It is important to note that the mortgage broker does not supply the mortgage funds. Instead, they source the funds on behalf of the borrower and then match the borrower and the client.
Benefits of Working With a Mortgage Broker
There are many advantages to working with a mortgage broker and can be a great choice for homebuyers, especially first time buyers who lack market knowledge. The housing market can be overwhelming and with so many mortgage offers available, it can be difficult to know where to begin. Mortgage brokers help simplify the process and can take away the headache of research.
One of the key benefits of working with a mortgage broker is that they look for the most competitive mortgage rates on the market, both in regards to interest rates and fees. Brokers typically have access to a broad range of mortgage products and lenders meaning that they have a bigger pool available and can find deals that you may otherwise not have been able to find.
A key advantage of working with a broker is the huge amount of time they can save you. Researching the best mortgage on the market can be a never ending process with so many options available and every lender claiming to have the best deal. Brokers are able to cut through the many different options available to find you the most suitable product to suit your personal circumstances. In addition, they can negotiate on your behalf and keep track of the mortgage process through the different stages.
For mortgage situations which are less straightforward, for example those with poor credit history or seeking mortgages for unusual properties, brokers have access to a greater range of lenders who may be able to loan money in specialist circumstances or with more flexibility.
Disadvantages of Working With a Mortgage Broker
There can be certain drawbacks when it comes to working with a mortgage broker. For example, not all lenders work with mortgage brokers meaning that even though the broker may have access to a range of loan products, there are some programs unavailable to them which can only be accessed directly through a financial institution.
In some scenarios mortgage advisors are free, however in others, working with a mortgage broker will mean that the borrower has to pay for the service. This will vary from broker to broker and often the broker fee is covered by the lender. However, if the mortgage broker charges a fee, this is an additional payment that the homebuyer will need to take into account. This may be a flat rate, hourly rate or a percentage of the total loan amount.
The other disadvantage of working with a mortgage broker is that there is a potential for conflict of interest. If a mortgage broker is being paid a commission by the lender, it could be that the broker is favouring the lender and therefore not working in the best interest of the client. If this is the case, it is possible that the broker is not offering the client the best deal available.
Factors To Consider When Working With a Mortgage Broker
If you do decide to work with a mortgage broker there are a few important factors to take into account.
Who Is Responsible for Paying the Mortgage Broker?
Before working with a mortgage broker, you need to know how they will be paid and if the cost will be covered by the lender or paid by the homebuyer. Checking this information up front will avoid any surprises at the end of the process. If the lender is covering the fee, take into account the potential conflict of interest.
Which Lenders Does the Mortgage Broker Work With?
Different mortgage brokers have a different pool of lenders that they work with.
Before deciding which mortgage broker to work with, it's good to consider the following factors about them:
- Level of experience
- Licence
- References or referrals
If you are looking for a particular type of mortgage product, you should make sure that the mortgage broker you choose has access to these.
Level of Experience
Before deciding to work with a mortgage broker, make sure that they have sufficient experience, particularly if you are interested in a specific loan type.
Licence
If you are working with a mortgage broker you must check that they are licensed to work. If you are looking to work with a mortgage broker in the UK, they need to be registered by the Financial Conduct Authority (FCA) or be the agent of a regulated firm.
References or Referral
Working with a mortgage broker who has been personally recommended is a great way to ensure that you are working with someone trustworthy. If you are working with someone who has not been recommended, make sure to check references, read client reviews or try to speak to someone who has had personal experience with that broker.
Can You Get a Student Loan for a Master’s Degree?
You can receive a specific loan when studying a master's degree in order to help with course fees and living costs.
What Is a Postgraduate Master’s Loan?
A Postgraduate Master’s Loan can help with course fees and living costs while you study your master’s degree.
How Much Can I Get for a Master’s Loan?
The amount that you can receive for a master's loan will depend on when your course starts. If you start your course after the 1st August 2021, you are entitled to receive £11,570.
This amount is independent of your personal income or household income. However, the Department for Work and Pensions may take into account any benefits you receive.
Your loan will be paid directly into your bank account and is at your disposal to use for course fees and living costs. Should your course last for longer than a year, the loan will be divided equally across each year of the course.
When Will You Start Receiving Payments for a Master’s Loan?
You will not receive the first payment of your loan until after your course start date and your university or college will need to confirm that you have successfully registered.
Usually, the loan will be paid in 3 instalments across the year (representing 33%, 33% and 34%).
Once your application has been approved, a letter will be sent to you confirming your payment dates.
Who Is Eligible for a Master’s Loan?
Your eligibility to receive a master's loan will depend on the course you are applying for, your age and your nationality or residency status.
If you are already receiving payments from Student Finance England for another course that you are studying, you will not be able to apply for a Postgraduate Master’s Loan.
Similarly, if you have already received a loan or grant for a master’s course in the past, or already hold a master’s degree or the equivalent or higher, you cannot apply. However, if you have a PGCE or postgraduate diploma or certificate, you will still be eligible.
If you are currently behind on your repayments for any previous loans from the Student Loans Company, you will not be able to take out a Postgraduate Master’s Loan.
The course that you are studying must be provided by an eligible UK-based university or college. You can check with your university or college before applying in order to check that your course is registered.
You can be eligible to receive a Postgraduate Master’s Loan regardless of whether you are planning to study your master's on a full-time or part-time basis.
You must be under the age of 60 on your first day of the first academic year of your course in order to get a Postgraduate Master’s Loan.
How Can You Apply for a Student Loan for a Master’s Degree?
The easiest way to apply for the Postgraduate Master’s loan is to apply online via www.gov.uk/studentfinance.
You will first need to set up a Student Finance England account, if you do not already have one from a previous loan. If you are applying for the first time, you will be assigned a unique Customer Reference Number and will need to create a password and secret answer.
Once you have done that, you can fill in and submit an application. To do this, you will need to provide proof of identity, usually by entering your UK passport details. At this stage, you will also be asked how much Loan you want to receive up to the maximum available for your course. If your course is longer than one year, you will be asked how much you want to receive in your first year.
Importantly, you will need to apply no more than nine months after the first day of the final academic year of your course if you want to receive a Postgraduate Master’s Loan.
Finally, you may need to send any evidence to support your application. This may be a non-UK passport or a UK birth or adoption certificate. Sending these off as quickly as possible will help avoid any delays in processing.
How Do I Repay My Master’s Loan?
Repayments of your master’s loan will not start until the April after you finish your course, and this will only be if your income meets the national repayment threshold (currently £21,000 a year before tax and National Insurance).
Payments will be taken in different ways depending on your employment status. If you are employed, repayments will be taken automatically from your salary along with National Insurance and tax. These payments will stop automatically if you stop working or if your salary does not exceed the threshold.
If you are self-employed, you will need to include the repayments as part of your self-assessment at the same time as paying tax.
If you move away from the UK, you will need to advise Student Finance England and organise direct payment to them.
The amount that you repay will not depend on how much you have borrowed but on your income. In general, you will be expected to repay 6% of your income over £21,000 (annually).
Do I Need To Pay Interest on a Student Loan for a Master’s Degree?
Interest will be charged on your Postgraduate Master’s Loan starting from your first payment from Student Finance England and building until the loan is fully repaid or cancelled.
The interest rate will most likely be charged at the Retail Price Index (RPI), which is a benchmark of UK inflation, plus 3%.
If the Postgraduate Master’s Loan balance is not paid 30 years after the repayment is due, it will be cancelled.