The amount the borrower can contribute towards the cost of buying a property — the ‘deposit’ — is a major consideration. Because most mortgage loans are secured on the value of the property, mortgage providers prefer borrowers who can provide large deposits: the smaller the loan, the lower the lenders’ risk. And the larger the deposit, the lower the borrower’s monthly repayments will be, which reduces his or her outgoings and improves the affordability criteria from the lender’s point of view. In the current financial climate, most lenders expect borrowers to deposit at least 5% of the property’s purchase price.
Mortgage providers lend against the value of the property, not the agreed purchase price. To avoid lending more than is absolutely necessary (and therefore increasing their financial risk) most mortgage providers will insist on having the property in question valued by a qualified surveyor.
Some lenders will not consider mortgaging certain types of properties. Leasehold properties, properties below a certain price, a property being purchased through an assisted purchase scheme or under a Right to Buy scheme, or where a property is being purchased ‘off plan’, may not be acceptable to the mortgage provider.
Mortgage providers generally have a maximum number of years over which they lend and will set a date when the mortgage must be repaid in full.
At SG Rayner Homes we don’t offer mortgage advice, however, we do recommend Blestium Financial Services who have been providing expert mortgage advice for the past 20 years.