Residential Mortgages, Buy to Let Mortgages, Equity Release Mortgages.
Borrowing money is a big decision whether it’s for your ideal home, investment property, a second home or commercial property. Lending has got more difficult to navigate and lenders have new rules. We can guide you through the lending process from start to finish.
Mortgages are one of the largest single transactions in most people’s lives. Buying a property can be a stressful and time consuming experience, although nowadays the financing of a mortgage is a case of finding and selecting the most suitable mortgage, rather than simply accepting a lender’s offer.
Banks, building societies, and smaller niche lenders compete for your business, all offering a variety of interest rate deals, associated fees and other enhancements to attract borrowers.
There are two main methods of repaying a mortgage, capital and repayment and interest only. It is also sometimes possible to set this up using a combination of the two. A description of these methods is provided below.
Repayment (capital and interest) Method
Under the repayment method your monthly repayments consist of both interest and capital hence, over time, the amount of money you actually owe will decrease. In the early years your repayments will be mainly interest and therefore the capital outstanding will reduce slowly in the early years.
This method ensures that the mortgage is repaid at the end of the term providing all payments are made on time and in full.
As the name suggests, with the interest only method you only repay the interest on the amount borrowed. At the end of the term the capital is still outstanding. Therefore you will usually need to take out some kind of investment policy to save up enough money to repay the mortgage at the end of the term.
Traditionally the preferred product for repaying the capital of an interest only mortgage was a mortgage endowment policy (which included a set amount of life cover) – although more recently customers are using Individual Savings Accounts (ISAs) and pensions to build up a sufficient sum and taking advantage of the tax breaks offered by these products.
As a mortgage is secured against your home, it could be repossessed if you do not keep up the mortgage repayments. There will be a fee for mortgage advice. The precise amount will depend on your circumstances but we estimate that it will be £500.
Equity Release Mortgages
Equity release mortgages are specific mortgages designed for older clients who are looking to release equity from their property. They fall into two categories; Lifetime Mortgages and Home Reversion Schemes. To provide advice on either of these products an adviser needs specific accreditation and here at HFL we have an adviser licensed in this particular area.
This is where money is released from the value of the property and you make no repayments, the interest is rolled up and repaid on the sale of the property. The risk is that you do not know how much you will owe, or what your property will be worth when the mortgage is due to be repaid, however, nearly all lenders have a No Negative Equity Guarantee, meaning you cannot owe more than the value of the property.
To understand the features and risks, ask for a personalised illustration.
Home Reversion Schemes.
Home reversion schemes are where you “sell” a percentage of your home, generally to a life assurance company, for either a regular income or a lump sum. The benefit is that you know exactly how much you are selling and therefore guaranteeing an inheritance to your chosen beneficiaries. The risk is that you initially sell a larger percentage of the property than the lump sum you receive.
CHECK THAT THIS MORTGAGE WILL MEET YOUR NEEDS IF YOU WANT TO MOVE OR SELL YOUR HOME OR YOU WANT YOUR FAMILY TO INHERIT IT. IF YOU ARE IN ANY DOUBT SEEK INDEPENDENT ADVICE.
Neither Buy to Let mortgages nor Commercial Mortgages are regulated by the FCA