AMAZINGLY HELPFUL
INFORMATION…

A mortgage is a loan secured against your property. You will own the property, but you will have to repay the loan to your lender by making a monthly payment to them according to an agreed schedule. If you don’t make these payments, the lender will have a right to repossess your property. This would only ever be as a last resort, but it’s something that’s very important to keep in mind, so you don’t agree to something you feel you can’t afford.

When your mortgage first begins there will be a period, usually lasting two or five years, where you can choose to ‘fix’ your rate. This means the rate of interest you are paying will not change during that time, even if the Bank of England base rate (against which lenders set their interest rates) changes.

You may feel that having a fixed rate can give you peace of mind and more security about the amount you’ll pay during the first few years of your mortgage.

Variable interest rates are set in line with the Bank of England base rate. If you choose this option, as this base rate increases or decreases so will your payments. A few questions you should consider:

In the current climate is a variable rate a good idea? Would I be able to afford my payments if the rate did increase? And how important to me is budget stability (knowing exactly what I’ll pay each month)?

A mortgage term is the length of time (often 25 years although it could be more or less) between the lender giving you the money to buy the house and you having to repay that amount in full. Your monthly payments will be calculated based on this term.

These are charges you will have to pay to your lender if you choose to come out of your mortgage early. Either because you want to sell the house, or you want to pay off all, or some of the mortgage you owe. Sometimes you can make overpayments without penalty – be sure to ask your adviser about this.

Also known as a Decision in Principle (DIP). As part of the application process, the lender will ask questions about you and the mortgage you’re applying for. They will carry out a credit check and then they will make a decision about whether they are likely to be able to offer you a loan for the amount you need. The AIP is the document you will receive to confirm this.

Assuming nothing changes and you’re able to provide the correct evidence for everything requested, there should be no nasty surprises later on when we come to submit your application.

A credit check is a facility used to check your past credit, payment habits and any existing loans and credit you have. It can also be used to assess how risky it is likely to be to lend you money.

Credit checks can either be ‘soft’ and not impact your report, or ‘hard’ which will leave a search on your report. You should avoid allowing too many hard credit checks to happen in a short space of time to make sure your credit score is not impacted. Your TMP adviser will be able to tell you what kind of check will be needed in your case, as each lender has different requirements. We will never give permission for a lender to carry out a credit check without your consent.

If you want to check your credit in advance, the one we use pulls together data from all four credit reference agencies. Get a free Check My File credit report by using their 30 day trial. Click here (it’s subsequently £14.99 per month and you can cancel at any time).

£12 will be paid by Check My File to TMP The Mortgage People Ltd which is an appointed representative of Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited. Mortgage Advice Bureau Limited and Mortgage Advice Bureau (Derby) Limited does not receive a share of this commission and has no direct affiliation with Check My File.