Residential Mortgages: A Comprehensive Guide
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Why Choose Us
Mortgages can be intimidating, especially when you’re making a significant financial commitment. Whether you’re buying your first home or looking for a new property to invest in, understanding residential mortgages can help you make informed decisions.
As a leading, experienced mortgage broker, Ascot Mortgages Ltd aims to simplify this process. We will guide you through the complexities of the residential mortgage journey, making it less intimidating and more straightforward.
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Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
08.10.2023
Written by:
Alison Gibson
Ascot Mortgage Expert
Last Updated:
08.10.2023
How a Residential Mortgage Works
A residential mortgage is a long-term loan that allows you to purchase a home. The property acts as collateral, providing security to the lender. If you fail to make repayments on time, the lender has the right to take possession of your property.
How Much Deposit Do I Need for a Residential Mortgage?
In the UK, a standard residential mortgage requires you to provide a deposit of a minimum of between 5 – 10% of the property’s value. However, this could vary depending on your financial circumstances and the lender’s criteria.
Ascot Mortgages Ltd offers free initial financial advice, helping you understand what deposit might be required for your own unique situation. We’ll guide you through the abundance of options, helping you find the perfect deal.
What is Loan to Value (LTV) for Residential Mortgages?
The loan to value ratio (LTV) refers to the amount you wish to borrow compared to the value of the property. It’s a crucial factor lenders consider when assessing your mortgage application. The higher your LTV, the higher the risk you pose to the lender.
How Does Interest on a Residential Mortgage Work?
Interest is the cost of borrowing money, and it’s calculated as a percentage of the loan. For a residential mortgage, interest can be applied in various ways, such as fixed, variable, or tracker rates.
What are the Different Types of Interest Rate?
There are primarily two types of residential mortgage rates – fixed and variable.
Fixed rates mean your interest rate will remain the same for a set period, while variable rates fluctuate according to the lender’s standard variable rate (SVR) or external factors like the Bank of England’s base rate.
Ascot Mortgages Ltd can help you navigate these complex terms, ensuring you get the best residential mortgage rate tailored to your needs.
Monthly Repayments Explained
Monthly repayments are essential for any residential mortgage, as they allow you to repay the capital borrowed and the interest accrued over the term.
How are My Payments Calculated?
Your monthly repayments will depend on the amount borrowed, the term of the loan, and the interest rate. It’s important to understand how these payments are calculated to budget effectively.
Capital and Interest Repayments
Most residential mortgages in the UK operate on a capital and interest repayment basis. You pay back a part of the loan (capital) plus the interest accrued each month.
Interest-Only Repayments
In an interest-only mortgage, you only pay the interest each month. The loan’s capital is repaid in full at the end of the term.
What Happens if You Don't Make Your Monthly Mortgage Repayments?
Missing monthly repayments could lead to severe consequences. The lender could charge you late fees, and persistent failure to pay may result in the lender repossessing your property. This can also have an adverse effect on your future ability to borrow money.
At Ascot Mortgages Ltd, we make it our priority to provide simple, fast, and hassle-free service to ensure you understand your obligations.
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How Can You Find the Best Residential Mortgage?
Finding the best residential mortgage involves considering your individual circumstances, market trends, and various lenders’ offerings.
Ascot Mortgages Ltd stands out as a residential mortgage broker who will search across the market for you. We are committed to offering honest, reliable mortgage advice, tailored to your circumstances. We take the time to cut through the various rates, features, and fees, securing the right mortgage for you.
In conclusion, understanding the intricacies of a residential mortgage can be a daunting task, but it doesn’t have to be. At Ascot Mortgages Ltd, we’re here to help you navigate this complex landscape, simplifying the process, and securing the best residential mortgage for you. Trust us to help make your dream home a reality.
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FAQ
The amount you can borrow typically depends on your income, credit history, and current financial obligations. Most lenders offer up to 4-4.5 times your annual income. However, when you’re ready, we can provide a more personalised estimate.
Typically, you’ll need proof of identity, proof of address, last 3 months’ bank statements, and proof of income (e.g., payslips or accounts if self-employed). We’re here to help you gather the necessary documentation when you’re ready.
Yes, it’s possible to switch from a buy to let mortgage to a residential mortgage, though you’ll need to meet the lender’s affordability criteria and may face early repayment charges on your buy to let mortgage. Reach out when you’re ready, and we can guide you through the process.
Yes, you can have more than one residential mortgage, for example, if you’re buying a second home or helping a family member purchase a property.
To get consent to let on your residential mortgage, you’ll need to apply through your mortgage lender. They may set certain conditions and may increase your interest rate or charge a fee.
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Legal
Ascot Mortgages authorised and regulated by the Financial Conduct Authority and can be found on the FCA register (www.fca.org.uk) under reference 776062. The FCA do not regulate some forms of mortgages. The guidance and advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK. There may be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate it will be £399 per mortgage account. Ascot Mortgages Ltd give you the option to pay a non-refundable fee of £879 payable with the application. If this option is taken, Ascot Mortgages Ltd will refund any procuration fee received by the lender.
Ascot Mortgages Limited is registered in England and Wales and have their registered office at 8 Webster Court, Westbrook, Warrington, WA5 8WD. The company’s registration number is 06764971.
We are a credit broker, not a lender. We work with the whole of the lending market. We may receive commissions that will vary depending on the lender, product, or other permissible factors. The nature any commissions model will be confirmed to you before you proceed.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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