How much can you Borrow?

Each lender will have their own calculation formula when assessing the maximum amount that they will lend. Typically, they will use 100% of any basic income, guaranteed overtime, and shift allowance.

When looking at none guaranteed overtime, none guaranteed bonus payments etc lenders will tend to allow 50% of this income.

Some lenders allow child benefit payments, universal tax credits and other income variables, however this can differ greatly between lenders, it will therefore be better to talk to your adviser if this is something thing you need to use to validate affordability.

First Time Buyer

Find the Best Mortgage Deals for First-Time Buyers

Buying your first home should be fun – not frightening. It’s easy to see why some people can feel overwhelmed though.

There are a lot of different terms thrown at you from the second you start looking at mortgages – repayment mortgage, fixed rate, standard variable rate, etc. – not to mention the fact that you might not know much about the property-buying process in general.

You do not have to figure it all out by yourself. Not only do we find you the best mortgage deal for your situation, we explain the different mortgage options available to you as a first-time buyer and assist you at every stage of your homebuying journey.

Remortgage

How Does Remortgaging Work?

Remortgaging is where you take out a new mortgage with a new lender on a property you already own and have a mortgage on. The new mortgage takes the place of the mortgage you originally had on the property.

Who May Want to Remortgage?

You may want to remortgage if:

· The introductory deal on your current mortgage is due to end soon and you’d like to avoid being transferred onto your lender’s SVR (standard variable rate)
· You want to consolidate multiple other debts
· You need money to fund home improvements
· You have a large expense coming up – like a wedding or school fees, or you want to help your children with a deposit, etc.

Remortgaging may be unsuitable for you if:

· You need a small mortgage below £25,000
· You need to borrow a very high percentage of your property’s value
· You took out your current mortgage very recently
· Your mortgage has high ERCs (early repayment charges)

Home Mover

Mortgage Advice for Home Movers

Moving home is a really exciting time. There are a lot of fun parts you get to enjoy – such as viewing houses, exploring local areas, choosing new furnishings – but these are sometimes overshadowed by the more stressful parts, like arranging a mortgage.

Commodore Finance Ltd. is an independent mortgage broker with access to the whole of the market. We not only provide mortgage advice for moving home, we manage your entire property-buying journey so you can enjoy this experience – like you’re supposed to.

Buy To Let

What Is a Buy-to-Let Mortgage?

A buy-to-let or buy to rent mortgage is a type of mortgage specifically for properties that are owned or purchased with the intention of renting them out.

They’re often set up on interest-only basis, which means you only make monthly interest payments each month. The outstanding loan balance – i.e. the amount you borrow – is paid back at the end of the mortgage term via a suitable repayment vehicle, like the sale of the property.

If you rent out a property on which you only have a residential mortgage, you’ll be in breach of your mortgage agreement which could put your property at risk of repossession.

Capital Repayment Mortgage

(Also known as a capital and interest mortgage). With this type of mortgage, you repay part of the capital each month plus interest on the outstanding amount over an agreed number of years and at the end of the term the mortgage will be repaid in full.

Interest Only Mortgage

It must be noted that obtaining an interest only mortgage on your residential main dwelling will prove very difficult, that is not to say that this cannot be achieved, as a general guide, lenders will want a large amount of equity in the property e.g. 50% and they will require that applicant to be on a high salary level. They will further look for a very robust exit strategy as to how the mortgage will be redeemed at the end of the mortgage term.

An interest-only loan is a loan which is set for a specific set term, the borrower pays only the interest on the principal balance, with the outstanding balance remaining unchanged throughout the full mortgage term. Hence you would need to demonstrate a robust strategy as to how you are going to repay the remaining mortgage balance at the end of the mortgage term.

If you were looking to implement an interest only mortgage on a property that will be your main dwelling, you will note that lenders will have some extremely strict criteria that would need to be met. Please discuss this with your adviser if this is something where you want further information.

Once you have selected the repayment strategy you want to use, you will need to advise your lender if you want a fixed rate of interest for a specific period, a tracker rate, a standard variable rate, a discounted rate, or an offset mortgage scheme: – please find below some further information on some of the main schemes: –

Tracker Mortgages

Tracker mortgages usually track the Bank of England base rate, HSBC base rate, Barclays base rate, Bank of Scotland Base rate or Bank of Ireland base rate, as a result, your mortgage repayments will change when the base rate moves up or down. Before applying for a tracker mortgage, you should therefore assess whether you would be able to afford  your repayments if interest rates were to increase – if you wouldn’t be able to, a tracker mortgage is not the best option for you.

Advantages

The rates on the leading tracker mortgages can sometimes be lower than on fixed rate schemes. Although trackers are variable rate mortgages, it’s easy to understand what rate you’ll be paying because they are directly linked to one of the base rates. Therefore, the rate, and your monthly payments, will only change if the base rate you are aligned to changes.

Disadvantages

You do not have the same security with a tracker mortgage as opposed to a fixed rate mortgage arrangement. This is because the rate is variable. This means you must be prepared for the fact that your monthly repayments could go up – and it is important to make sure you will be able to still afford your mortgage if this happens. If money is tight and you need to budget carefully, a fixed rate mortgage will probably be a better option.

Discount Mortgage

Trackers are not the only type of variable mortgage. Discounts are another. However, unlike trackers the interest rate is not linked to the Bank of England base rate. Instead, it is linked to the lender’s standard variable rate (SVR) and this is a significant difference because lenders can change their SVR even if there has been no change in the base rate. Many lenders have done this over the past year or so and have increased their SVRs. This means their customers with discount mortgages have seen their repayments go up even though the Bank of England base rate hasn’t changed since March 2009. Discount mortgages are available over different terms – typically one to five years – and as with trackers and fixed rate deals you will probably be charged a penalty if you want to get out of the deal during the term.

Advantages

As with tracker mortgages, the rates tend to be lower than those on fixed rate mortgages. And because discounts are variable, the rate could fall as well as rise. If the rate were to fall, your monthly mortgage payment would reduce.

Disadvantages

The way discount mortgages are priced is not as transparent as tracker mortgages. Because the rate is linked to the SVR, not the base rate, the lender can theoretically change the rate at any time. So, you may find your monthly mortgage payments rises when you are not expecting it. Before you take a discount mortgage out, make sure you would still be able to afford your repayments if the rate were to go up. If it would be a struggle, opting for the security of a fixed rate would be a better option.

Offset Mortgage

This is a more complicated mortgage as it links your savings to your mortgage debt. Rather than earning interest on your savings, that money is set against your mortgage, so you pay less interest on that debt. For example, say you have a £100,000 mortgage and £20,000 in savings; you would only be charged interest on £80,000 of the mortgage.

However, your monthly mortgage repayments will have been calculated as if the debt was £100,000. This means you end up paying more than you need off your mortgage each month. As a result, you clear your mortgage off more quickly and save yourself thousands of pounds in interest.

Advantages

As well as enabling you to knock years off your mortgage and save you thousands of pounds in interest, offset mortgages also offer a significant tax benefit. Ordinarily, you pay income tax on any interest you earn on your savings. However, if you offset you have an offset you do not earn interest on your savings so there is no tax to pay. An offset can therefore be particularly attractive for people in the higher or top rate tax brackets.

Disadvantages

The rates on offset mortgages tend to be higher than those on standard mortgage products so if you only have a small amount in savings, you may be better off just taking a normal mortgage and finding the most competitive savings rate you can. 

Fixed Rate Mortgages

As the name suggests, a fixed rate mortgage has an interest rate that is fixed for an initial term – say 2, 5 or even 10 years. This means your monthly mortgage payment will remain the same over the period, giving you certainty and allowing you to budget for a major item of expenditure. At the end of the fixed rate period, the mortgage usually transfers to the lender’s variable rate – although it makes sense to shop around at this point to secure the best deal. To compare the UK’s best fixed rate mortgage deals, have a look at our independent best buy tables. We have all the latest rates and those all-important terms and conditions.

Advantages

Your mortgage payments will remain the same, even if interest rates changed. This makes it great for budgeting.

Disadvantages

You are tied in for the length of the deal, so if interest rates fall you cannot take advantage of them. For example, if you opt for a five-year fixed-rate deal, you will be tied in until the fixed term ends. If you want to get out of the mortgage before then, you’ll be charged a hefty penalty – often thousands of pounds.

So before you apply for a fixed rate mortgage, think about how long you are happy to be locked in for.