With the uncertainty of the mortgage market it is imperative that each client gets sound advice regarding their finances, The JNP Partnership introduce mortgages and protection products to LSLi Ltd. LSLi Ltd can offer 'whole of market' mortgage products. Their Advisers can see you at a convenient time to suit you.
It is also very important that when negotiating on the sale of your home that your buyer is financially qualified to make sure that the sale does not falter at the last hurdle and we are one of the very few estate agents that can offer this service.
A mortgage is a loan secured against your home. Understanding the many different mortgages can be a confusing business unless you take professional advice.
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Obviously you’ll want to know which mortgage is suitable for your needs. It isn’t quite as simple as choosing the lender who is offering the lowest initial interest rate at the time. You also need to think about other factors such as - Do you plan to move again soon? Do you want your repayments to remain fixed? Do you want your repayments to stay below a certain interest rate? All of which could make a big difference to the amount you pay in the short and long term.
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Below is some definitions regarding different types of mortgages
Repaying your Mortgage
There are basically two alternatives: Repayment (or capital and interest), and interest only
Repayment Mortgage
With a Repayment mortgage you pay part interest and part capital repayments to the lender each month and in this way the capital debt outstanding is reduced until the loan is repaid.
Interest-only Mortgage
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With an interest only mortgage, you make no capital repayments until the end of the term. Instead, payments may be made into an investment designed to repay the loan at the end of the mortgage term. With this type of mortgage there is a risk that the value of the investment may not be enough to repay the debt. The most common forms of investment used are ISAs or certain types of pensions. During the mortgage term you pay only the interest to the lender on the outstanding balance.
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Combination
Some lenders are able to offer a combination of the above which may be more suited to your individual circumstances.
Interest rates
In addition to the standard variable interest rate, there are many different schemes available; fixed, discount, capped and collar, flexible or even a combination of some of the above!
Standard variable rate
With this type of mortgage your payments will go up or down when the lender’s mortgage rate changes. Most standard variable rates tend to move in line with the Bank of England base rate but there is sometimes a delay and there is no guarantee that the lender will pass on the full effect if the increase rates come down.
A “Tracker”
This is a variable rate where the interest rate is a set amount above or below the Bank of England or some other base and so always “tracks” charges in that rate.
Fixed rate
The rate is fixed for specified for a number of years, so you know what your payments will be over that period. Following this period, the rate will usually revert to the lender’s standard variable rate.
Discounted rate
A discounted rate gives you a reduction of, for example 1% off the varible rate for a specified period. So, although the rate may rise and fall, you will be paying less than the variable rate for this period.
Capped rate
Your payments are variable, but they are guaranteed not to rise above a set level (the “cap”) during a specified period. These schemes may sometimes include a “collar” or minimum rate level which is the level the rate will not fall below. Following this period, the rate will usually revert to the lender’s standard variable rate.
Flexible mortgages
These are various benefits which usually include the ability to pay monthly payments in line with your changing circumstances. They may also allow you to take payment holidays and to borrow back any overpayment you have made. Because of their flexible nature and the variety of schemes available it is not possible to give a full description here, but your mortgage advisor will provide more detail if you are interested in this type of loan.
Current account mortgage
This is a flexible mortgage linked to your current account. Some companies in this sector also link savings accounts, credit cards, mortgages and personal loans together into combined accounts. With this type of mortgage, you are only charged interest on the net amount you owe the lender, after netting off savings or current account balances against the amount of your mortgage.
Cashback
Some loans offer a lump sum which is paid out following completion, with a mortgage charged at the lenders variable basic rate. Smaller cashbacks may be offered with reduced rates and other incentives as a combination package. These type of mortgages will typically have early redemption charges which would apply if you redeem within a specified period after completion.
Buy to let mortgages
A buy to let mortgage enables you to buy a property with the purpose of renting it out. A deposit of at least 15% of the property’s value may be required. In general, Buy to Let mortgages are not regulated by the Financial Services Authority.
What is APR?
All lenders have to quote an Annual Percentage Rate (APR) in addition to their standard interest rate. This is to help you compare different schemes. The APR can be confusing but, as the calculation of APR takes into account other costs such as the arrangement fee and indemnity premium, it gives a more accurate indication of which mortgage is likely to be most expensive. Although the principle is the same, different lenders use varying assumptions for their calculations.
LSLi Ltd charge a typical broker fee of £299 which is payable on application.
Your home may be repossessed if you do not keep up repayments on your mortgage.
The JNP Partnership is a trading name of JNP Estate Agents Ltd registered in England at St Trinity House, 3-4 Kings Square, York, YO1 8ZH company No. 4842186. the JNP Partnership introduces to First Complete Limited for the provision of advice in relation to mortgage and non- investment insurance products who will arrange for a financial consultant to assist the customer. The financial consultant to whom the customer is introduced will be employed by LSLi Limited which is an associate of First Complete Limited and which is registered in England at Newcastle House, Albany Court, Newcastle upon Tyne NE4 7YB company registered number 06029502. LSLi and JNP Estate Agents Ltd are appointed representatives of First Complete Limited which is authorised and regulated by the Financial Services Authority (FRN: 435779) for mortgage and non- investment insurance advice. Registered in England at Newcastle House, Albany Court, Newcastle upon Tyne, NE4 7YB (company number 05416236). We are members of The Property Ombudsman, there to protect your interests.