Mortgage FAQs

A mortgage is a loan that allows you to borrow money from a lender to purchase a residential property or land. Most buyers do not have the full price of the property on hand, which is where a mortgage comes in to help them borrow the money to buy their home.

Remortgaging means switching your existing mortgage to a new deal, either with your current lender or a different one. It can help you get a better interest rate, release equity, or change your mortgage terms. Essentially, you’re replacing your old mortgage with a new one.

A decision in principle, also known as an “agreement in principle” or a “mortgage in principle”, is a written document from a lender stating how much it might be willing to lend you. While it isn’t a formal offer, it does help you get a rough (but realistic) idea of your property budget. It will typically be valid for 30 to 90 days.

Loan-to-Value (LTV) is just a way of showing how much of your home’s purchase price (or value) you’re borrowing, and it's usually shown as a percentage. 

For example, if your home costs £200,000 and you borrow £180,000, your LTV is 90%. That means you’re covering most of the cost with the mortgage and putting in 10% as your deposit

Typically, you can borrow around 4 to 4.5 times your gross annual income, though this will be affected by other factors like outstanding debts or credit history.

All mortgage lenders assess income and expenditure differently to calculate how much you can borrow, so we will assess your specific circumstances and work out your affordability.

An Early Repayment Charge (ERC) is a penalty fee that your mortgage lender may charge if you repay your mortgage early or make an overpayment exceeding your overpayment allowance.

The ERC amount varies by mortgage product and lender. Typically, you can expect to pay between 1% and 5% of your outstanding balance if you repay in full early.

If you overpay beyond your annual allowance (usually 10%), you may be charged between 1% and 5% of the extra amount you pay. 

Standard Variable Rate (SVR) is the rate you usually move on to once your initial mortgage rate finishes, unless you remortgage to another mortgage deal. SVR is a type of variable-rate mortgage whose interest rate can fluctuate and is set by your mortgage lender. If the interest rate falls, your monthly mortgage repayment will decrease, but if the interest rate rises, so will your monthly repayments.

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A mortgage broker is someone who specialises in mortgages. They’re also known as mortgage advisers – the term is interchangeable.

As a rule, they have lots of experience and a wealth of knowledge that homeowners can take advantage of, and they will often scour all available deals so you get the one that is best suited to you.

Yes, you can so long as your sale price equals or exceeds the amount left to repay on your mortgage loan (including any early repayment charges).

Yes. It's called "porting" and most mortgages have this facility.

Yes. There will be different costs depending on whether you are keeping the same level of borrowing, increasing it or decreasing it.

Porting your mortgage deal means staying with your existing lender. It can be a good money-saving option especially if you are part way through a deal which carries exit fees and early repayment charges since you could avoid having to pay (or at least be refunded for) these when you move.

Yes, however you could have early repayment charges to pay if you have only had your mortgage product for a short amount of time.

A second home mortgage is for someone who already owns a home and is looking to buy another property.

Your reason for taking out a second home mortgage is important as it will affect the type of mortgage you need.

Lenders’ criteria for mortgages to buy a second home are much the same as they are for any mortgage – but the affordability checks are more stringent. With two mortgages, lenders are likely to consider you as a higher risk.