Anyone can take out a mortgage in order to buy a property providing they have lived in the UK for a minimum of six months and can provide the documents listed below. 

To arrange a UK residential mortgage, for an employed person typically you will need:
• Proof of income, usually by way of payslips and your p60
• Bank statements
• Proof of identity and address

It will generally take about three weeks from the application to the formal offer being made by the mortgage lender.  As a general rule mortgage repayments should not exceed a third of your disposable income.

What mortgage options are available to me?

Variable rate mortgage
With this popular mortgage the monthly payment varies to reflect the lender’s mortgage rate, which in turn is based upon the Bank of England base rate as well as competitors’ rates.  This can cause budgeting problems in times of increasing interest rates.  Some lenders offer an annual review so that the amount you pay only changes once a year with the difference adjusted into your outstanding mortgage.  Lenders also offer a version where your monthly payment fluctuates in line with the Bank of England Base Rate, usually by paying a percentage above the base rate.  This is often referred to as a ‘Base Rate Tracker’ or ‘Tracker Mortgage’.

Fixed rate mortgage
With this mortgage the monthly payment is fixed over an agreed period of time and will remain the same regardless of whether interest rates rise or fall.  The advantage is that the borrower knows exactly what the mortgage payments are going to be for the agreed period of time.  Some lenders may offer an attractive low fixed-rate for a short period of time to attract new business but this does not necessarily mean that it will work out to be the better deal in the long run.  At the end of the fixed-rate term the interest usually reverts to the lender’s standard variable rate or you may be offered the choice of another product.  The lender may charge an arrangement fee for arranging a fixed rate deal. 

Discounted mortgage
The lender offers a true initial discount for a given period, after which the rate usually reverts to the lender’s standard variable rate.  No interest is deferred so the outstanding mortgage will not increase. 

Cashback mortgage
Some lenders offer a cash payment on completion of the loan, often as an incentive to new buyers.  The cash payment will either be based on a percentage of the total loan or a flat amount.  In some cases, if the loan is redeemed early, a proportion of the cashback may have to be repaid to the lender.  The cashback feature can apply to both fixed and variable rate mortgages. 

Capped and/or collared mortgages
With a capped rate mortgage the interest rate is guaranteed not to go above a certain level throughout the capped rate period, which can be from one to ten years, though you will still benefit from any reduction in interest rates.  A ‘collared’ mortgage means the rate will not fall below a certain percentage. The two can also be applied together, so that rates are guaranteed to be between an upper and lower limit for a given period.  The lender will generally charge a fee for arranging capped/collared loans and early repayment charges may also apply.

Flexible mortgages
These schemes allow you to overpay, underpay, or even to take a break from your payments altogether.  They can also allow you to make lump sum payments, or to make 10, or 13 payments, over a 12 month period, subject to terms and conditions.  Any unpaid interest will be added to the outstanding mortgage and any overpayment will reduce your outstanding mortgage.  Some have the facility to draw down additional funds to a pre-agreed limit.  This type of mortgage will not be available to everyone and is generally given to those with an above average income or to the self-employed.  The lender will generally charge an arrangement fee for this type of mortgage, early repayment penalties are common as well.    

Early repayment penalties
Lenders that offer any type of fixed-rate, discount or cashback facilities to attract custom, usually require the mortgage to stay with them for a period of time to recoup their costs.  They do this by imposing an early repayment charge for a given period, which can extend beyond the benefit period.  They will usually make an early repayment charge if you want to redeem your mortgage early. 
Early repayment penalties will be charged if you die within the early repayment period so you should consider building this in to the level of life cover you have.  You should also make sure you can afford the standard variable rate that will be charged at the end of the discounted or fixed-rate period.

Getting help from an adviser and using the ‘Keyfacts’ document.
Most people will want to take some form of professional advice when taking out a mortgage, whether you decide to use a mortgage adviser or a mortgage broker there are some things you should bear in mind. 

• Some advisers offer products from a limited number of lenders and some from the whole of the market.  Please go to our Openwork Wheel if you would like to see the providers we use. 
• There is generally a fee involved when advice is sought and the way you pay for a broker or adviser’s advice can differ enormously.  Details of any fee you will have to pay or whether the adviser is paid by commission, will be set out in a "Keyfacts - fees and costs" document. 
  
• You may need advice on other products, such as investment products.  There is a difference between advising on mortgages and advising on investments.  An interest only mortgage for instance, requires advice on an investment or savings plan to pay off the loan at the end of the term – this is investment advice.  You should check to see whether your adviser is able to advise on both.  Paying two sets of advisers can be expensive.
• If we, or any other firm, provide you with information or advice on other products in addition to mortgages, you will get a combined ‘Keyfacts – about our services’, document setting out the level of service, fees and other information that you can expect to in relation to each. 

Don’t forget…
1. The Keyfacts document contains all the important information you need to know, read it!
2. Give the full facts to your adviser so they can recommend the right mortgage for you.
3. Ask questions if something is not clear.

Mortgage and Financial Calculators

For further general information on mortgages see the FSA’s Moneymadeclear

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Our fee is a maximum of £500 or 1% of the loan amount if greater. Typically this will be £395.00

Openwork Limited offers insurance and investment advice on products from a limited number of product providers and advice on mortgages representative of the whole market.