Best Mortgage Deals
A mortgage is comprised of two ingredients: the capital which is the amount of money you borrow from your lender to buy your home, and the interest the lender charges on the capital until you pay it back. Your lender has many various types of mortgage available, using various methods of repaying the capital and the interest.
And then you also have different options depending on how you want the interest on the loan to be charged. This is where the fixed rates, discounts and trackers come in.
Confused? Actually it's very straightforward - just scroll down the options here and all will be revealed.
Bridging Loans
Mortgages
As the name suggests, people can take out bridging loans to tide them over for a short period, usually when they're buying property or a building plot.
For instance if you buy a property before selling your current property you can take out a bridging loan. The average bridging loan term is six months, although some providers will lend for between three and nine months.
All bridging loans are secured on either property or land and the typical maximum amount you can borrow is 85% of the market value of the property.
Obviously you pay a higher interest rate for the loan than you would for a mortgage but they are a handy thing to know about should you need to access this type of funding.
Buy to Let
Many of us have been tempted into the buy-to-let market, where you buy property specifically to rent out.
The rising value of property, as well as the monthly rental prospects, was viewed as being more attractive and safer than putting your money into the stock market or other investments.
However, in the current environment many buy-to-let landlords are struggling financially and the number of lenders willing to lend on this type of property has fallen.
That does not mean that this form of investment should not be avoided. Indeed, with the falling house prices there are many opportunities out there for those of you prepared to research the market.
The main difference with a buy-to-let mortgage is that the lender can take account of the rent you will earn, as well as your income from your job.
Some lenders allow you to add the rent to your salary while others base the loan entirely on rent. As a rule the rental income should be around 125% of the mortgage payment. So if your monthly repayments are £500, the rental income you should be getting from property would be £625.
How much you can borrow depends on the lender, but the maximum ranges from £150,000 to £1m per property, and the most lenders will lend has traditionally been 85% of the property price. Obviously you get a greater choice of buy-to-let mortgage if you can put down more and rates with a higher deposit are likely to be more competitive.
Some lenders will also set rules on multiple properties, only accepting people with, say, three or five BTL mortgages. Some may also set an upper limit on the overall amount you can borrow.
Fees are broadly in line with those on conventional mortgages. There is no direct tax relief on buy-to-let mortgages, but you can offset interest payments on your mortgage against tax on rental income, along with other expenses such as agents' fees and maintenance costs.
Since April this year, all private landlords have had to register with a tenant deposit scheme (TDS). These basically prevent landlords from holding on to all or part of a tenant's deposit at the end of the tenancy for no good reason. There are three government-approved TDSs run by the Dispute Service, an independent, not-for-profit organisation.
Landlords also need to insure their building and its contents (if the property is let furnished) and comply with specific legal requirements on safety. Issues such as damp, faulty electrics, poor security and noise levels are all assessed by local councils under a ratings system if a tenant complains. If there is a serious problem, you can be forced into making repairs or renovations. You will need an annual gas safety certificate, even if the gas supply only consists of a capped pipe, and all furnishings and fittings must meet fire and safety regulations.
Certain types of property in some areas may also require a licence before you can let them out - any property of at least three storeys housing at least five people has to be licensed, for example. The local authority in your chosen rental area will be able to advise whether a licence is required for other property types. You will also need to provide an Energy Performance Certificate whenever a home in the social or private rented sector is let to a new tenant.
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