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Taking out a mortgage is one of the biggest financial decisions you’re likely to make, so it’s important to get it right.
Here at Ocean, we have access to a wide range of remortgage deals – so if you’re coming to the end of your current mortgage offer or just looking for a better deal, we could save you money! We can also help if you’re one of the 1.7 million people with an interest-only mortgage and looking to switch to repayment.
How much can I borrow for a mortgage?
The amount you can borrow depends on several factors, such as your income, your outgoings, your credit score, the creditor’s lending criteria and how much you want to borrow versus how much the property is worth (this is called the loan-to-value or LTV ratio).
Use our handy online mortgage calculator today to see how much your monthly repayments could be.
What are mortgage interest rates?
A mortgage interest rate is what you're charged for taking out the loan, and this can make a big difference to the total cost of your mortgage. Therefore, the lower your interest rate, the better. But it's not always that simple as there are many factors that can determine your interest rate - such as your credit history and ‘loan-to-value’.
The interest rate is also affected by the type of mortgage you take out. With a fixed-rate mortgage, it's decided by your lender and it won't change for a set period of time. With a variable rate mortgage, it can go up and down at the lender's discretion.
What types of mortgages are there?
If you want complete security that your monthly payments won't change for a certain period of time, a fixed-rate mortgage is probably best. If you would prefer a lower initial monthly payment and you're confident you could afford a change in the interest rate, a tracker or variable-rate mortgage may be better for you.
The interest rate on a fixed-rate mortgage is guaranteed to stay the same for the duration of the fixed-term product. So if you choose a 3-year fixed-rate mortgage, you won't have to worry about your payments changing for three years. After that you'll start paying the lender's 'standard variable rate' (SVR) – or you could consider remortgaging to a new deal.
Tracker mortgages generally start with lower interest rates than fixed-rate deals, but the interest rate (and your monthly payments) could change at any point. The interest rate is based on the Bank of England's base rate - this could go down, but it could also go up.
Variable-rate mortgages are similar to tracker mortgages in the sense that the interest rate could change, but they don't track the Bank of England’s base rate. Instead, the interest rate is normally determined by your mortgage lender. So let's say the Bank of England’s base rate increased by 0.5%, your lender can choose to increase your rate too, keep it the same or even decrease it.
What does LTV mean?
LTV stands for 'loan-to-value'. It tells you how much of the property's value you are able to borrow on a certain mortgage deal. For example, a mortgage deal with 80% LTV means you could borrow up to 80% of the property's value. So if you're buying a property, you would have to provide the remaining 20% (your deposit) in this example.
If you need more help understanding how much you can borrow, call our expert mortgage advisers on 0161 672 7575
Can I remortgage before the end of my current deal?
Yes, you can. However, with some types of mortgage, such as fixed-rate or tracker deals, you might have to pay an 'early repayment charge' (ERC).
If you find a mortgage deal that you like before yours has ended, you can usually reserve it for 3 months. That means we can get everything sorted for you and have the new mortgage ready to start when your current deal comes to an end. If have any questions, please ask one of our expert mortgage advisers for further help and advice.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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Call us if you have any queries, no matter how small, and we’ll be ready to lend an ear.0161 672 7575
Ocean Mortgages arranges mortgages and re-mortgages from a panel of lenders.