Advice On Financing Your Property

About this guide

The thought of saving money for a house deposit can be daunting, but it’s important to be aware of the help and methods available. There are many options to help with financing a property, from government Help to Buy schemes to receiving a gifted deposit from family. 

It’s vital to plan for financing your property, otherwise, it will delay the whole process. Compare My Move work hard to share advice and tips on finding the best way to finance a property to suit every buyer’s situation. 

  • 1. What is a mortgage?

    A mortgage is a loan taken out to buy a house. Your mortgage will be secured against the value of the home you plan to buy. You pay the mortgage back in monthly installments with added interest until the full amount is paid off. The typical repayment period is 25 years, although you can get shorter or longer terms.

    Most people will need a mortgage to buy a house as it is a significantly large amount of money to borrow. There are many different types of mortgage that come with varying interest rates, too.

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  • 2. What are mortgage affordability checks?

    The largest amount most people can borrow is 4.5 times their annual income. Note that this is the maximum you can borrow – many people will only be eligible for much smaller loans.

    Mortgage lenders will consider the size of your deposit, your income, your outgoings and any factors such as debt that could affect how you pay back your mortgage. It’s important you are sure you can afford to pay your monthly mortgage payments along with other regular bills such as utilities, broadband and council tax.

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  • 3. Saving for a mortgage deposit

    Creating and sticking to a budget is one of the best ways to save for a deposit. Take a look at your outgoings to see how much you’re left with each month after all essentials bills.

    Boost your savings with savings accounts such as the Lifetime ISA and consider getting a second income. Flat sharing while you save can also be highly beneficial.

    Be sure to make a clear and achievable plan for how much you need to save and how you plan to do so.

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  • 4. How long does a mortgage application take?

    You will need to apply for a mortgage when you buy a house. The average time for a mortgage application to be processed is between 18 to 40 days, although it will vary for every home buyer.

    In this guide, Compare My Move's experts explain the mortgage process, from application to acceptance, including how long each step will take.

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  • 5. What credit score do i need?

    When it comes to getting a mortgage, there isn’t a particular credit score required by mortgage lenders. The higher your credit score, the more likely you are to be accepted for a mortgage. An excellent credit rating can make you eligible for a wider range of mortgages and better deals.

    Essentially, lenders want assurance that the person taking out the loan will be able to make their monthly repayments without issue. To ensure the person applying for the mortgage is financially responsible, lenders will run a credit check on the person.

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  • 6. Zero-hour contract mortgages

    It is possible to be approved for a mortgage if you are working a zero-hour contract, however it can be more difficult.

    Zero hour contract workers have no minimum hours or income and lenders will largely make their decision on your financial stability and some lenders won’t lend to zero-hour contract workers at all.

    However, there are steps you can take to strengthen your mortgage application whilst on a zero-hour contract.

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  • 7. What is a mortgage agreement in principle?

    An agreement in principle (AIP) is a written estimate stating how much you may be able to borrow from a particular mortgage lender. It is not a formal mortgage offer or a guarantee. It is also referred to as 'a mortgage in principle', 'an approval in principle' and also 'a decision in principle'.

    With the help of our property and finance experts, Compare My Move have created this article to explain the purpose of an AIP and why it’s an important element of the house buying process.

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  • 8. What are the different types of mortgages?

    With so many different types of mortgages available, the legal and financial jargon, interest rates and small print, it is easy to feel lost and overwhelmed. With the help of our finance and property experts, we'll take you through the different types of mortgage available and break down what each of them offers.

    To help you begin your research, it's important to note that there are two main types of mortgage: Fixed-rate and Variable-rate. Don't forget to plan a realistic budget before completing a mortgage application as, if you don’t keep up with your mortgage repayments, the lender can potentially repossess your home.

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  • 9. How to get a mortgage for buying a house at auction?

    If you're not a cash buyer, you will need to get a mortgage for buying a house at auction. Getting a mortgage for a house at auction will work the same as the traditional way. You will have to contact a mortgage provider, either in a branch or through a mortgage broker to let them know your situation.

    Your provider or broker will have dealt with a similar situation before, and will know how best to help you.

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  • 10. What is a buy-to-let mortgage?

    Buy-to-let mortgages are designed for those buying property as an investment to rent it out to tenants. They work similar to residential mortgages, but there are a few key differences between buy-to-let mortgages that this article will cover.

    Compare My Move explain what a Buy-to-let mortgage is, who can get one and how much deposit you'll need.

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  • 11. What is a let to buy mortgage?

    Let-to-buy mortgages are for those looking to let out their current property and buy a new one at the same time. You will need to take out two different mortgages, one so you can let out your current property, and the other to purchase a new house. The criteria differs slightly to traditional mortgages and you’ll need to come up with a bigger deposit.

    Compare My Move work with a team of property industry experts to bring you the most up to date and accurate advice on moving house. This guide explains what a let-to-buy mortgage is, the required criteria and the advantages and disadvantages.

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  • 12. Guarantor mortgages

    A guarantor mortgage is when a family member becomes a guarantor and agrees to cover your mortgage payments if you’re unable to. It can help you secure a mortgage if you’re struggling to save for a deposit or have financial circumstances that may dissuade mortgage lenders.

    Parents and family members often offer to help out when someone is struggling to get onto the property ladder. One way to do so is to become a guarantor for a mortgage. However, there are risks to consider when agreeing to this type of mortgage and so it’s a decision not to be taken lightly. This is why Compare My Move have worked with property and finance experts to create an article explaining what a guarantor mortgage is, how it works and what the pros and cons are.

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  • 13. Porting a mortgage

    Porting a mortgage is when you sell a property, repay your existing mortgage and then resume it on the same terms after you move to your next property. Many mortgages are portable but it’s worth discussing the process with your mortgage lender to see if it’s possible and if it’s the right decision for you.

    Compare My Move works with experienced finance and property experts to provide quality content that will help you through the buying and selling process. In this article, we will discuss how porting a mortgage works and what factors to consider before deciding it’s the right thing for you.

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  • 14. What is remortgaging?

    Remortgaging is the process of switching your existing mortgage to a new deal. This is often a good way to find lower interest rates and better mortgage terms. Remortgaging can be done via your current lender or through a new lender.

    Many people remortgage to either replace their existing mortgage with a better deal and lower interest rate, or to borrow money against their property.

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  • 15. What is a gifted mortgage deposit?

    A gifted mortgage deposit is a cash gift, usually from a family member, which will cover part of or all of the deposit for a house. Many first-time buyers rely on a gifted mortgage deposit to buy their first home.

    The experts at Compare My Move share their knowledge and advice on buying a house with a gifted mortgage deposit.

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  • 16. Mortgage interview questions

    A mortgage interview is arranged so that lenders can ensure that you qualify for a loan. In this meeting they will explore how much mortgage you can afford to take out and you will also be able to discuss the types of mortgages available to you.

    During you mortgage interview a lender will want to get an idea of your financial situation and employment status, looking into everything from your credit score to your spending habits.

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  • 17. Do i need a mortgage broker?

    A mortgage broker, or mortgage adviser, can be a huge benefit to potential homebuyers looking to secure a mortgage. Although it is not essential to hire a broker, their advice and knowledge could be invaluable. Your mortgage broker will work on your behalf to find the right lender for you, finding deals and interest rates that best suit your needs.

    However, you may find this service comes with a fee and you should be aware of the role of a mortgage broker before proceeding.

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  • 18. Mortgages for over 50s

    As the retirement and living age is getting older in the UK, it is possible to get a mortgage when you’re over 50. In this guide, we will explain everything you need to know about getting a mortgage if you’re over 50, from the lending criteria to the types of mortgage.

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  • 19. How long does a mortgage offer last?

    Once you have secured a mortgage, you have a limited time to complete the property purchase, usually 3-6 months from the time the mortgage is offered.

    We've reviewed the latest and most relevant information on mortgages to provide you with everything you need to know about the length of mortgage offers and what to do if your mortgage offer expires.

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  • 20. Interest-only mortgages

    With an interest-only mortgage, you pay back interest each month and not capital. You’ll pay back the full value of your home at the end of the mortgage loan. This guide will explain what an interest-only mortgage is, how it works and what the advantages and disadvantages are.

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  • 21. Standard variable rate mortgages

    A standard variable rate mortgage is a type of mortgage where the interest on your mortgage repayments is set at your lender’s standard variable rate (SVR).

    In this case, the interest rate you pay, and thus your monthly payments, can potentially increase or decrease each month. Although the lender’s SVR will be influenced by changes to the Bank of England base rate, the SVR is ultimately down to the lender’s individual discretion.

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