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What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Harrogate

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Harrogate will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Harrogate & those who are Moving Home in Harrogate. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

How to Improve your Credit Score in Harrogate

Mortgage Advice in Harrogate

Ways to improve your credit score | moneymanTV

What is a credit score?

A credit score is a tool that lenders use to measure whether or not an applicant can afford a mortgage or not. The higher your credit score, the more likely it is that you’ll get accepted for a mortgage. Which means that if you have a low credit score, your chances of getting a mortgage are lowered.

Having a high credit score may sound great, however, it doesn’t guarantee you a mortgage in any way. Each lender has their own unique lending criteria and it’s more than likely that you won’t meet all of them. Sometimes it’s down to your circumstances and not just your score.

Matching lender’s criteria

It is more than likely that each lender will have completely different lending criteria. Lenders have almost carved out their own niche market. You could end up matching with lots of lenders or it may only be a couple, but all that matters is that you match with one and get an amazing mortgage deal from it!

Whether you receive help from a Mortgage Broker in Harrogate or go solo and use your bank, it’s their job to help you compare deals and match you with a lender. As a Mortgage Broker in Harrogate, we would always recommend taking up our free mortgage consultation offer. This way, we can evaluate your situation and compare deals for you straight away. If you go to a bank, you could just be added to a waiting list.

If you are struggling to match a lender’s criteria, it could be down to multiple things or maybe just one. The most common reason why people don’t match their lender’s criteria is that they have a low credit score. If this is your situation, then you need to find some ways to improve your credit score.

Improving your credit score

Avoid unnecessary credit searches

Having unnecessary credit searches on your file could negatively impact your credit score. Lenders don’t particularly like seeing repeated credit checks; they may think that there is a reason behind it and they may even start asking you questions about it. Even using price comparison websites could damage your score.

On another note, if you are applying for a mortgage, it is unwise to apply for any form of extra credit in the meantime of your application. If you manage to pay back owed money before your application, it will look good on your file, however, if you are borrowing/paying back money during your application, it will have a reverse effect. If you borrow credit, some lenders’ could think that you cannot afford the deposit and are relying on the credit to help you.

How to Improve Credit Score Harrogate, UK

Are you registered on the Voter’s Roll?

A great way to improve your credit score is to register onto the Voter’s Roll. Lenders love seeing applicants that are registered on it as it indicates stability. It’s really easy to get yourself registered and the fact that it can boost your credit score surely means that you have to sign up if you haven’t before!

Even if you are already registered, it’s always a good idea to double-check that you have entered all of your information correctly. If you have an old address on their system, lenders will easily spot this mistake and it could go against your score.

Don’t run too close to your maximum limit

Maxing out your card each month will have a detrimental effect on your credit score. If you are using a credit card, a lender would much rather that you pay off the full balance each month rather than cutting it short. Showing you can meet set payments each month shows reliability and can help your chances of being accepted for a mortgage.

On the other hand, if you are doing the opposite and exceeding your credit limits or overdrafts, your lender will think that you don’t take your finances seriously. This could massively impact your credit score, especially if you get declined by a lender due to this reason.

Check that your address is up to date

Your address should always be up-to-date. People usually get caught out when they move out from their parent’s house and forget to update all of their address’. If you forget to change your address on things such as credit accounts, it will appear that you are living in two separate places. This can hurt your credit score once lenders see this so make sure that you are keeping on top of what address’ are linked with each of your accounts.

Close down your unused credit accounts

If you have any store/credit cards that are no longer in use, you should contact the provider and get them to fully close down your old account(s). These types of accounts are probably doing more damage than you think.

However, if you manage to close your account(s) it could still have a negative effect on your credit score as the credit reference can’t really tell if it’s you closing the account or the provider. Don’t worry about this, if they ask, you will have to explain and it could work in your favour as you are proving that you want to improve your chances of being accepted. Remember that it’s always good to check up on these types of things just in case. For example, you could’ve lost a card and you didn’t realise, then you fall victim for fraud. This could end up having a worse effect on your score.

Remove your financial link to others

People often don’t know that they are still financially tied to a family member or ex-partner. If this is the case, it can have a negative effect on your credit score without you even realising.

If the account that you are still tied to is still active, you must know that you will not be able to remove your link just yet. If you want to remove any of these links, then you should get in touch with the credit reference agencies and make a request.

Summary

As a Mortgage Broker in Harrogate, we know that some applicants see credit scoring as an unfair way of determining whether or not you’ll get accepted for a mortgage. For example, you may have a low credit score due to personal circumstances that couldn’t be prevented. As a Mortgage Broker in Harrogate, we mostly see that it’s people that are Moving Home or Self Employed struggle with their credit score. However, if this isn’t your mortgage situation and you still need help with improving your credit score, you know to get in touch with.

Sending an up-to-date credit report to your expert Mortgage Broker in Harrogate could prove extremely beneficial to your mortgage journey. A great tool that we always recommend to our customers is checkymyfile.com.

Credit Report Harrogate

The more your advisor knows about your finances the better. There are still some lenders out there that prefer to do things the old-fashioned way and will manually assess your application. They will still have rules that they stick by about the number of defaults and CCJ’s that they will allow.

A Mortgage Broker in Harrogate, like us, likes to do things the new way and will always aim to deliver you the same fast and friendly mortgage advice service that you are all used to. We hope to hear from you soon.

In need of a Mortgage Agreement in Principle in Harrogate?

What is an Agreement in Principle?

The purpose of an Agreement in Principle (AIP) is to determine whether or not you pass a Lender credit score to qualify for a potential mortgage. Sometimes this is also referred to as a Decision in Principle.

By obtaining yourself an Agreement in Principle, you are ready to support any potential offers you make as a First-Time Buyer in Harrogate. Having one of these may also put you in a place to negotiate a lower price as it shows the seller you are serious and have the means to proceed with the purchase.

Will obtaining an Agreement in Principle impact my Credit Score? 

Common practice these days seems to lean more towards soft searches, though even these could still affect your credit score. Usually this would be more likely with a hard search, with soft searches generally leaving your credit score unaffected.

The difference between the two, is that a soft search won’t dig as deeply as a hard search. You can always rest assured though that the lender has chosen either with the best of intentions.

Should I stay away from hard credit checks? 

Now and again a hard search or two should be fine. It becomes slightly more problematic if you start having multiple hard searches over a short amount of time. Soft searches won’t show up on your credit report, but a hard search will. This looks bad, especially if you don’t pass the different criteria.

Don’t let this put you off however, as if you know you know you have a good credit score and taking a hard search with that lender is the best deal, you’ll most likely be fine.

Does my Agreement in Principle a guarantee that I will get the Mortgage? 

We really wish it were the case, but sadly no, there are no guarantees that having an Agreement in Principle will get you a mortgage. You still need to present the lender with your documents and it’s only then, that the underwriter will make the final decision on your case.

A regular occurrence here at Harrogatemoneyman, is customers getting in touch after being declined at application stage. This is often down to missing some of the small print mentioned in their Agreement in Principle. You will need to provide identification for proof of who you are, payslips for proof of income, and bank statements for proof of handle your finances the right way. Without these, your case won’t go to offer.

Can I make an offer without having an Agreement in Principle? 

If we were to get technical, the answer is yes you can. However, it is highly unrecommended and any credible estate agent will not proceed without proof that you can proceed.

How long does is the process of getting an Agreement in Principle? 

Within 24 hours of speaking with a mortgage advisor in Harrogate it is possible to obtain an Agreement in Principle.

How long will an Agreement in Principle last?

Generally speaking, an Agreement in Principle will expire around the 30-90 days mark. The good thing is though, that this doesn’t mean you should just apply for the first house you find. If your Agreement in Principle expires, it is relatively straightforward to have it refreshed when you are ready to make an offer on a property.

Finding a mortgage only to be declined a mortgage can be a major disappointment, we get that. We recommend getting an Agreement in Principle as early as you can to avoid that disappointment.

Why Isn’t it Easier to Get a Mortgage in Harrogate?

Mortgage Advice in Harrogate

During our 11 years of working as a Mortgage Broker in Harrogate, we have come across almost every single mortgage hurdle that you could think of. there are many different reasons to why a mortgage may be hard to obtain, let’s take a look at some of the most common reasons:

Passing lenders credit score

One of the first and many struggles of getting a mortgage is being able to pass a lenders credit score. Every single lender has their own individual requirements and criteria that you need to pass before they will offer you a mortgage. Each criteria is unique and it is more than likely that you won’t match every single one, even if you have a high credit score.

As a Mortgage Broker in Harrogate, we often find that people don’t realise that lenders have these strict criteria and end up applying to a lot of them. This can often have a negative effect as the more that you apply for, the more likely it is that you will get declined by some. If you are declined by a lender it can sometimes end up damaging your credits score.

This is why we always tell borrowers, especially First Time Buyers, not rushing into anything. If you are unsure on how to apply for a mortgage or don’t want to risk getting declined if you have had a bad credit history, it may be within your best options to approach a Specialist Mortgage Broker in Harrogate. A second opinion from a mortgage expert may be exactly what you need to get the ball rolling. In fact, we have over 38 different lenders on panel that we can access for you, there is most likely a deal waiting for you amongst them!

Improving your credit score

Another mortgage obstacle that applicants commonly face is being declined a mortgage due to having a low credit score. What most people don’t realise is that having a low credit score is quite common and there are ways to boost it back up.

There are many different things that could cause someone to have a lower credit score, but remember, the only way is up! In some cases, it’s fairly easy to improve, however, in other cases it can be quite tricky and you may require a Specialist Mortgage Advisor in Harrogate to help you out.

How To Improve Your Credit Score | moneymanTV

Remortgaging

A First Time Buyer mortgage isn’t the only mortgage scenario out there, there are lots of different situations that we come across as a Mortgage Broker in Harrogate. Occasionally, it can be hard to get a mortgage arranged in all circumstances, however, one other mortgage situation that stands out is remortgaging.

Basically, remortgaging is just renewing your mortgage contract, this can be on the same deal or a completely different one if you are open to switching products. In most cases, people remortgage as their deal is approaching its end, however, it can be done midway through a deal if the homeowner wants to remortgage for home improvements, etc.

Remortgaging can be quite stressful, searching through lots of different deals can catch up on you. We do encourage in doing this though, searching through deals through external lenders could allow you to land an even better rate. We always recommend shopping around before rushing into renewing your deal.

If you are struggling to find a better remortgage deal or just don’t want to shop around, you can always try a Mortgage Broker in Harrogate like Harrogatemoneyman. We will sort out everything for you and search through 1000s of remortgage offers in order to try and find you a competitive deal that will be worth your time. 9/10 times we get it right and we find our customer a great mortgage deal that they thought they could never get.

It’s not always the applicant’s fault…

Sometimes, we find that it’s not always the applicant’s fault. A major factor that could determine the outcome of your mortgage is how the economy is performing during the time of your application.

For example, during the coronavirus pandemic, we saw 90% for several months which eventually eased towards 95% with time.

A suffering economy and getting a mortgage do not go hand in hand. In terms of saving money and making the most of your mortgage journey, it may be best to wait it out.

If you take a look back to the mid-2000s (just before the credit crunch), it was ridiculously easy to get a mortgage, anyone could get accepted. Now times have changed and the credit crunch has made lenders realise that they should be much more careful when accepting applicants for a mortgage.

Struggling yourself?

If you are struggling to get your mortgage application started and need some help from an expert Mortgage Advisor in Harrogate, we are always here to offer a helping hand. We know that the mortgage process can be daunting in sometimes scary, so don’t ever hesitate to call us.

Whether you’re a First Time Buyer, Home Mover, Self Employed, looking at Remortgaging or a Buy to Let landlord, we are here to help. Our amazing team of Mortgage Advisors in Harrogate are available from 8am-10pm, 7 days a week and will be ready to answer all of your mortgage questions. Contact us today for a free mortgage consultation.

Which Property Survey to Choose? Mortgage Advice in Harrogate

What is a Property Survey?

Normally, when an offer is accepted on a property the next step is to arrange a property survey. This will re-enforce or adjust the price of the property in relation to the condition that it is in. If something is found on the survey then the buyer is in a position by law to approach the seller to negotiate a price for the works required.

Property Survey Types

You probably didn’t realise that they were different property survey types and if you are a First Time Buyer, you may have not even heard of them! There are three main types of property survey available to you:

  1. Mortgage Valuation
  2. Homebuyer’s Report
  3. Full Structural Survey

Mortgage Valuation

The basic valuation option which is the cheapest available. It will be a requirement to have one of these before the mortgage offer is received. This is not to be confused with a full survey. The mortgage valuation confirms to the lender that the property is worth at least what they are lending to the buyer. Sometimes the mortgage lender may even offer a free basic valuation as part of your deal.

A mortgage valuation will not highlight any repairs that are needed. However, it may point out obvious defects that is recommended to be investigated further.

Homebuyer’s Report

A Homebuyer’s report will cover the properties structural safety and highlight any problems, including damp, as well as anything that doesn’t meet current building regulations. This kind of report will give you an independent report of the property in question by an expert.

To ensure that two surveys aren’t being paid for, it is advisable to ask the mortgage companies surveyor to carry out this report – on average, it takes about a couple of to complete.

Full Structural Survey

A Full Structural Survey is advisable for older properties that are being considered and those of non-standard construction. Depending on the property size and type – a full structural survey can take as long as a day to complete.

This type of survey provides a detailed report on the condition of the property and highlights all issues that should be investigated further before going ahead with the purchase, providing peace of mind about the condition of the property.

You can find a surveyor to carry out a Homebuyer’s report or building survey through the Royal Institution of Chartered Surveyors.

Why Should I Use a Mortgage Broker in Harrogate?

There are multiple reasons as to why you should use a Mortgage Broker in Harrogate. However, there is still the chance to go direct to a lender if you wish to, with the added option of doing it either in branch or online. Within this article we will include the pros and cons of both methods.

Pros and cons

When choosing the option of going direct to your bank or building society, you won’t have to pay the Broker fee, so that is an advantage in itself. Years ago, the bank manager would know your finances better than anyone but that is not the case since credit scoring was introduced.  Another advantage of doing this would be the fact that some lenders offer exclusive mortgage products that would only be available by going direct. They also use this technique with Brokers too, so that exclusive offers are only available through them. This is put into place to maintain a good spread of business from both customers and brokers.

From 2014, lenders were banned from selling mortgages on a non-advised basis when customer interaction is involved. Up until this point, some applicants were under the impression that they had received advice when in fact they hadn’t and as a result of this, they weren’t able to benefit from parts of the consumer protection that goes along with proper advised mortgage sales.

This change had meant that lenders had to get used to a different system which meant longer waiting times for an appointment and this can still be the case in contemporary settings. This can be a struggle if you’ve just had an offer accepted on a house. The frustration that came with waiting for an appointment led to a rise in applications being made via Brokers due to the same day mortgage service being available.

Before the days of credit scoring and such it was much more difficult to compare mortgages whereas nowadays it’s a lot easier to find a competitive mortgage online. On the other hand, there is an increased difficulty in finding a lender whose criteria and mortgage product is tailored to your circumstances. It is important to keep in mind that the deals with the lowest rates tend to carry high arrangement fees.

Affordability

Affordability is another key point to take on board. A lenders deal could be amazing for you but if they won’t lend you enough money then it’s useless. Most mortgage applications these days aren’t straightforward, for example, you may have:

· Poor credit history 

· Self Employed Income 

· Mixed source of deposit (savings/gift) 

· Let to Buy (keeping your current house and buying another) 

· Contract workers/zero-hours contracts 

· Affordability

Will lenders be lenient?

Most lenders try to stay relevant in the mortgage market by offering a better deal than their competition. The way they do this is by differentiating themselves on Lending Criteria. For example, some will be more lenient with Self Employed applicants or take a more sympathetic view on faults on a credit report.

Every mortgage situation is unique but if you approach an experienced Mortgage Broker in Harrogate then they will be able to reflect on past cases to see if there is a similar solution to decide the best outcome and hopefully find the lowest rate that’s available. 

But it’s not just about getting the mortgage. Even if an application itself is straightforward, we find that our customers rely on us for many other things. For example, we sit down and discuss how much they are going to offer on the property that they are buying. We often recommend other professional services too such as Solicitors and explain the different types of survey and protection available.

Speak to a Mortgage Advisor in Harrogate

Another key aspect which benefits customers is responsiveness which you are guaranteed with one of our Mortgage Advisors in Harrogate, with our Mortgage Broker in Harrogate we make sure that out of hours and weekend appointments are available along with responding to clients’ emails on an evening outside of office hours.

An overlooked factor of why a Mortgage Broker in Harrogate might be preferable is purely for the fact of time. Everyone is prone to have periods in their life when they’re just too busy and a mortgage application can sometimes be stressful and time-consuming. Our Mortgage Advisors in Harrogate aim to take this stress away and handle the full transaction for you. Professional applicants see the real extent of the advantages of this as they have customers of their own that they charge out their services to so they see the reasons to have an expert on board.

Lenders are on par with Brokers in some departments but in others they are yet to step up. Perhaps lenders may want to advance ahead of Mortgage Brokers and will most likely avoid staffing up their branch networks and instead make investments in technology to transact with customers online which may be a disadvantage for customers who prefer a more face to face approach that’s available with our Mortgage Advisors in Harrogate.

How to get a Mortgage if You’re Over 40 

Surveys carried out by the Nottingham Building Society revealed that almost half had stated that they had experienced a high majority of turned down Mortgage applications from clients in their 40’s. 

When customers, aged between 45 & 54, were directly asked they had said they thought it was down to their age. There are various factors as to why I people are experiencing this and what positive steps a person can make if an application is made later in life. 

To delve into this deeper, it’s best to look at the days of computerised credit scoring and increased regulation. If a customer went into their local Building Society for a mortgage, then they would speak to a Mortgage Advisor. The Advisor would individually assess personal details which are brought forward and then decide on the outcome of the application.

If an application was approved, then the next step would be overseeing the amount which is allowed to be borrowed. The way this will be worked out would be expressed quite simply as a multiple of your gross salary, e.g if you were earning £20,000 per annum and the lender’s income multiple was 3.5x then the allowed mortgage amount would be £70,000. 

However, this income multiple method didn’t take account of age. Therefore, it didn’t matter if a person was 30 or 50 years of age, the same amount of money is allowed to be borrowed. 

But by looking into this further if two applicants consisting of the ages of 30 and 50 years of age were both due to retire at the age of 65 then the first applicant would be granted a mortgage term of up to 35 years, whereas the second applicant would only hold 15 years to be able to make their monthly payments which would make them much higher. 

Example

Let’s take the above £70,000 mortgage and use that as an example, using a notional interest rate of 5%:

  • Applicant one mortgage payments on £70,000 over 35 years: £252pm approx. 
  • Applicant two mortgage payments of £70,000 over 15 years: £395pm approx. 

So here now there are two identical earners with the same mortgage debt, but applicant two’s monthly payment is considerably higher. If interest rates went up, then the risk of arrears is increasingly higher for applicant two than applicant one. Therefore, modern mortgage calculators now consider the maximum term of the mortgage as well as your income and expenditure.

You’ll have to borrow a lower amount

It’s not so much that older customers are being turned down but that they are being told the amount they are able to borrow is lower than the amount they had in mind. Of course, the general public is constantly being reminded that we are going to have to work until a later age by the Government before qualifying for our State Pension. It is clear that banks don’t seem to be taking this into account when granting mortgages. This can be explored further:

Firstly, some occupations involving manual work won’t be fit for a person to work into their seventies and beyond.

Also, lenders are closely monitored by the Regulator in terms of repossessions and arrears cases which means they want to minimise this risk. The process of taking a property into possession can be very costly and may attract bad press for the lenders reputation. Therefore when after approving mortgages for mature applicants they don’t want to be seen kicking a vulnerable older person because they couldn’t afford their payments. 

The good news is lenders will consider granting mortgages past normal retirement ages if sufficient evidence is showing affordability can be kept up with after retirement. This could include a letter from your Pension provider with a projection of your future income. An issue here is that most people will likely take a reduction in income at retirement. Therefore, you will need to prove that the mortgage monthly payments can still be paid from that reduced income. In practice, this hardly ever works unless a very small mortgage is granted. 

Retirement

The default retirement age was scrapped in 2011 and employers can no longer force an employee to retire. As such whilst lenders use the State Retirement age as the age that the mortgage must be paid off, it has become more normal for them to let the intended retirement age be self-declared.

If you find yourself in this position then you must prepare to be questioned on how you will afford your mortgage in later years. The consumer protections and regulations are in place to protect consumers and encourage prudent lending. If you need the mortgage term to run past your normal state retirement age you will need to demonstrate how you will sustain payments and provide proofs if requested. 

Our Specialist Mortgage Advisors in Harrogate will be able to talk this through with you and find the best way for your mortgage application to go ahead and the best options available to you.

Remortgage For A Home Office in Harrogate

The rise of COVID-19 has meant that a lot of people are now having to change the way they work whilst at the same time, warming up to working from home due to the benefits that it holds. Certain benefits can include:

– Home Workers are often more productive

– No lost travelling time 

– Less travelling is also better for the environment

– Telephone and Video meetings tend to be shorter, again good for increased productivity

– Flexible 

– Better for families

In the past, relocating for work or for a better living environment isn’t an uncommon situation. However, now that the general public are realising that working from home means this doesn’t have to be the case means that they are able to shape their home to fit in a new workspace such as a home office which will help shape their home around this situation. This brings more value to the statement of ‘improve, not move’.

The price of converting an existing room can be somewhat low cost and can range between £5 – 15,000. Recently interest rates have been dropping for a considerable amount of time and remains to be low which could mean that upcoming monthly mortgage payments will increase by an affordable amount.

Assuming an interest rate of 2% is possible over 25 years it might cost you:

– £21pm for £5,000

– £64pm for £15,000

How to remortgage for a home office

You will have to remortgage a property to be able to raise additional funds in order to remortgage for a home office. These funds will let whichever room is chosen to be converted. The most common choice is a spare room or a garage.

The first step of the process will be to find a remortgage deal. If you choose to go on your own and go directly to a bank, you will only be allowed to access deals that are offered by them. By going further than your bank you’ll be opened up to more deals that could potentially mean that you’re better off in the long term.

Our Mortgage Broker in Harrogate is able to be on hand to be able to look through thousands of remortgage deals so that you end up with the one that will suit you the most. We make it so as our Remortgage Advisors in Harrogate only keep your best interests at heart.

The costs of a home office

For the cost of a home office, you will need to find out an estimate of how much the work that will be carried out will cost. Such things as room size and how much work will be needed on the room in order to get it in shape will also be needed to be taken into consideration.

Some of the lowest rates that have been present in the mortgage market are present right now and so the money that you are able to save by converting will extend further than your remortgage.

Are you looking to remortgage for home improvements?

If you’re thinking about setting up a remortgage then our Mortgage Advisors in Harrogate have accumulated experience from numerous years of been in the mortgage field. By approaching our Mortgage Broker in Harrogate, we’ll assist you with the process as you may find the lender might extend the time frame of your remortgage process.

The Different Types of Mortgages Explained in Harrogate

When you start out looking for a mortgage/remortgage in Harrogate, you will soon realise that there are lots of different options available and each has advantages and disadvantages depending on your individual situation. 

What is a Fixed-rate Mortgage? 

What is a Fixed-Rate mortgage? | MoneymanTV

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. And no matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.

What is a Tracker Mortgage?

What is a Tracker mortgage? | MoneymanTV

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%.

Back in the mid-2000s, these deals were very popular, as the rate you where tracking was a fraction above that of the base rate. These deals aren’t as attractive anymore, however always remember that it is a variable rate so if the Bank of England base rate goes up, your mortgage payments will also increase.

What is a Repayment Mortgage? 

What is a Repayment mortgage? | MoneymanTV

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.

What is an Interest-only Mortgage?

What is an Interest-Only mortgage? | MoneymanTV

Whilst many Buy to Let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis. Back in the ’80s and 90’s how a mortgage would work is that you would take out an interest-only mortgage, a mortgage were you just pay the interest. And the idea was that you would take out a separate investment vehicle, such as an endowment policy or pension to pay the balance back at the end of the mortgage term.

Whether there is going to be enough money to pay the capital balance will depend on the performance of your investment vehicle. During the 2000s some of these investments didn’t perform as well as expected and some borrowers were left with a shortfall. 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 if you are going to downsize 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.

What is an Offset Mortgage?

What is an Offset mortgage? | MoneymanTV

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. This also is a way of reducing the mortgage term because as that money is sitting in that savings account your mortgage term shrinks.

This mortgage option was popular in the late ’90s and early 2000s, it originated in Australia and became popular in the UK when introduced by lenders such as The Yorkshire Bank. Currently, this is not a very popular mortgage option, The reason for this is that people don’t save as much as they used to anymore, however in the right circumstances an offset can be the perfect solution.

Preparing for a Mortgage Application in Harrogate

Applying for a Mortgage | Mortgage Advice in Harrogate

So, you’ve saved up for your deposit (or got the green light from “Bank of Mum and Dad”) and made the decision to move home in Harrogate. What’s the next step? It’s time to get prepared for your mortgage with our Mortgage Advisors in Harrogate.

Know where you stand

Speaking to an experienced Mortgage Broker in Harrogate as early on in the process as possible will be beneficial as you know how much you can borrow for a mortgage and how much it will all cost. Obtaining an up to date credit report should also be at the top of your list, you don’t want a meaningless squabble with your mobile phone provider holding you back from buying a home. Taking the above two steps will give you a meaningful expectation of how possible this is going to be and what your budget is.

Getting Organised

Your Mortgage Broker in Harrogate will obtain a fully credit-checked Agreement in Principle on your behalf but you’ll have to prove who you are, where you live and how much you earn. There really is loads of paperwork for you to get together so it’s a good idea to open a file for yourself and start collecting everything in advance.

Proof of ID

In terms of proving who you are you’ll need to produce some photo ID such as a Driving license or passport, if you’re a non-UK national working over here on a Visa you’ll need that too.

Proof of Address

In addition to the above, you’ll need to prove where you live. You’ll need to produce a utility bill or original bank statement dated within the last 3 months.

Last 3 months’ bank statements

Further to the Mortgage Market Review of 2014 the analysis of your spending habits has become one of the most important determining factors in whether you’ll qualify for a mortgage or not. Your bank statements should evidence your income and regular expenditures. Lenders will not be happy to see gambling transactions on your account and nor will they like it if you go over an agreed overdraft limit or if your direct debits bounce regularly.

Proof of Deposit

You will have to prove you have the funds in place for the deposit and also evidence this for anti-money laundering purposes. Try not to move monies around your various accounts too much as it will make evidencing the audit trail more difficult. Lenders like to see your savings building up so you’ll need to account for any large credits into your accounts.

Quite often money for deposits has been gifted by family members. These funds need to be evidenced also and the “donor” will need to sign a letter to confirm it’s a non-refundable gift, not a loan.

Proof of Income

In terms of affordability, the most important thing is to be able to prove your income. If you are employed this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account regular overtime, commission, shift allowance and bonus.

If you are Self Employed then you’ll need your Accountant’s help to request your tax year overview.

A list of your expected outgoings

It’s a good idea to do your homework and write down an estimate of your anticipated outgoings after you move house. You can work out an idea of how much the council tax and utility bills will be plus your regular expenditures such as food and drink and demonstrate how much disposable income you have available to pay your mortgage from.

As you can see from the above, it’s a real paper trail when you are applying for a mortgage but if you want your application to run like clockwork you’ll need to put the time aside to get everything together.

It’s better to get all this at the outset and collate everything that the Lender could possibly ask for. As this saves time and frustration later down the line if you’re subsequently asked for paperwork you could have had ready at the outset.

Harrogatemoneyman.com & Harrogatemoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

© 2021 Harrogatemoneyman

Harrogatemoneyman – Workhub Harrogate, C/O Umbrella Property Group, 12 Station Parade, Harrogate, HG1 1UE.

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