Finding the right mortgage

Mortgages are the biggest expense most people ever commit to, yet the mortgage market remains fairly mysterious to many. And although it would take a lengthy article to cover all the different types of mortgages currently being offered, there are some things everyone should be aware of…

Capital repayment versus interest only

Interest-only mortgages are popular with landlords and property investors, since they minimise monthly repayments. The amount borrowed is never paid back, but it’s generally covered by the property’s increased value compared to its original purchase price 20 or 25 years ago. An alternative though, are capital repayment mortgages which gradually whittle away the sum you borrowed. The quantity of interest in every monthly repayment dwindles as the lump sum reduces until everything’s repaid and you own the property.

Interest rates

Mortgage rates tend to be either fixed for a set period, or variable according to changes in the Bank of England’s base rate. Fixed rate deals allow you to guarantee monthly repayments for a period of several years, whereas variable rate mortgages are affected by interest rates going up and down. A five-year fixed-rate deal would probably represent a good choice given today’s low rates, but a qualified mortgage advisor will be able to talk you through the various options.

New-build mortgages

Some lenders offer specialist new-build mortgages, which are ideal for people buying off-plan or with a long entry date. New homes are valued differently to resale properties, while entry dates occasionally slip due to issues like extreme weather. New-build mortgages enable buyers to exchange contracts well before the date of entry, though these deals may come with more restrictive lending criteria. Nonetheless, it should still be possible to acquire one if you’re self-employed, or have had periods off work.

Loan-to-value

New homes are very desirable, with brand-new fittings and appliances alongside the immaculate finishes of a property that’s never been lived in. Like new cars, you pay a little extra for the prestige of being the first owner. Mortgage loan-to-values on new-build properties are generally capped at 85 per cent for a house, and 75 per cent for a flat. This used to require a substantial deposit, until the Help to Buy (Scotland) Affordable New Build scheme came along…

Help to Buy

In Scotland, househunters can use a Government-funded scheme which provides up to 15 per cent of a new-build property’s purchase price. You’ll need to have a repayment mortgage and deposit to cover the remaining balance, with a ceiling price of £200,000 for each property. Cruden Homes is currently marketing homes eligible for Help to Buy at developments across Scotland. Enquiries about specific plots should be directed to the sales teams at each site.

Overall fees

Consider each mortgage offer as a whole. Some lenders add early repayment fees, which might involve paying thousands of pounds to move house. Many mortgages are portable, but how much would it cost to transfer your policy to another home if you needed to relocate? Most lenders accept periodic overpayments, where homeowners use cash windfalls or savings to slash total repayment costs, but not every mortgage company will do this. The best loan for you might not necessarily be the one with the lowest monthly repayment costs…

Independent, impartial advice

We recognise navigating your way through the mortgage minefield might seem daunting, that’s why on each and every one of our developments we are there to assist you. We work closely with an independent mortgage broker who is on hand to provide you with impartial, no-obligation and free whole of market advice about the best options available to you.

Cruden Homes does not provide mortgage advice and will always refer you to a fully qualified mortgage expert. YOUR HOME MAY BE REPOSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY DEBT SECURED ON IT.

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