Product transfer mortgages have become more popular in recent years. Reports by UK Finance show that in 2023, 88% of homeowners preferred product transfers over external remortgaging due to affordability constraints.

A product transfer is an easy and cost-effective way to get a new deal on your mortgage.

A mortgage is one of the most expensive investments, and accessing the most competitive deals can help you stay on top of your finances.

A product transfer is usually quick to complete and can help you save money and avoid the complications of remortgaging.

Here’s everything you need to know about product transfers to help you determine whether it’s a smart move.

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What Is a Product Transfer Mortgage?

A product transfer mortgage involves changing your current mortgage deal with the current lender instead of remortgaging with a different lender.

If your current deal is about to end and your lender has advertised a new rate or deal with a cashback incentive or lower fees, you may want to consider transferring your mortgage.

A product transfer can help you avoid rolling onto the lender’s standard variable rate, which is usually higher.

You can also ask the lender what other deals they have and switch to them to avoid paying higher on the standard variable rate.

How Does a Product Transfer Mortgage Work?

Product transfers are usually quick and straightforward to complete if the amount borrowed remains unchanged and you’re not revising the mortgage terms.

Some homeowners can switch their deal in a few days if the mortgage term and loan amount don’t change.

You can switch to a better agreement quickly because most product transfer mortgages don’t have any complexities.

Unlike external remortgages, such agreements don’t involve measures like eligibility assessments or house valuations, helping save a lot of time and avoid legal red tape.

The lender will also not conduct a credit check since you’re not changing the terms of the mortgage agreement. This can be beneficial if your circumstances have changed from when you initially took out the mortgage.

What Are the Pros and Cons of a Product Transfer Mortgage?

Weighing the pros and cons of product transfer mortgages can help you determine whether it’s the best option for you.

Pros of Product Transfers

• Highly Competitive Rates – You can access better rates with a product transfer mortgage, as some lenders reserve the best deals for their existing customers.
• Fewer Fees than A Remortgage – With a product transfer, you can avoid legal fees since you don’t need the services of a solicitor. You also don’t need to worry about valuation fees or exit fees, which are common in remortgages.
• No Affordability Checks – If you’re not borrowing more money or changing the terms of the mortgage, the lender will likely not perform any affordability checks. It can be helpful if you’re struggling to be accepted elsewhere and will not leave a mark on your credit report.
• Less Paperwork – A product transfer features less red tape and can be relatively straightforward, provided you’re not changing the mortgage terms or borrowing more money.
• Quick and Easy Applications – You can easily do a product transfer online or over the phone, and acceptance can take a few hours or days. Alternatively, you can use a mortgage broker to arrange the deal.

Cons of Product Transfers

• The Best Rates Aren’t Guaranteed – You shouldn’t simply take up your current lender’s offer without checking for better deals elsewhere. Your lender doesn’t have to offer you the best deal simply because you’re an existing customer, and you can find better rates with rival lenders.
• Limited Choices – You may not find a deal that meets your needs or requirements since your lender can have a limited number of product transfer deals to choose from.
• Can’t Borrow More – You’ll not be able to borrow more money or change the term of the deal with a standard product transfer. If you’re refinancing with your current lender to borrow more, it will be a different product transfer called a further advance, which involves more eligibility assessments.

How Do You Compare Product Transfer with Remortgage Deals?

You can compare product transfers with remortgage deals through the following steps:

Step 1 – Determine Your Current Lenders Best Deals

Find out the product transfer rates your current lender is offering by asking them about all the deals they’re offering.

Step 2 – Determine What Deals You Can Get from Other Lenders

Finding out what other lenders are offering allows you to evaluate your options and determine which one is better suited to your circumstances.

A mortgage broker can help you search the entire market to determine what’s available.

Some brokers offer access to exclusive deals and can advise you on lenders who are likely to accept your request or the products that have the features you’re looking for.

You’ll be in a better position to determine which option is better for you after determining how deals from other lenders compare to deals from your current lender.

In some situations, a product transfer will make more sense even when you find a better rate with a different lender.

For example, if you don’t want to go through the entire remortgaging process, including affordability checks and paperwork, a product transfer with slightly worse rates can still be suitable.

What Fees Will I Pay with A Product Transfer Mortgage?

Although product transfers don’t feature as many fees as remortgages, you’ll likely still pay an arrangement fee. Most lenders allow you to choose how to pay the fee.

You can pay it upfront if you have the cash and avoid paying any interest on the fee. You can also add it to your mortgage balance.

However, this will increase your monthly repayment slightly since you’ll be paying off the fee plus interest.

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Final Thoughts

Product transfer mortgages can offer various benefits and help streamline the refinancing process. However, it also features a few drawbacks you must consider before deciding.

Whether or not a product transfer is the best option for you will depend on your circumstances and personal situation. Ensure you shop around and use a mortgage broker to get access to numerous deals available in the market.

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

According to a 2023 article in The Independent, in 2015, most mortgages in the UK were in just one name.

Nowadays, in 2023, the statistics show us that two-thirds of first-time buyer mortgages are in joint names.

How things have changed! But just as things have changed to push people into applying for joint mortgages, things can change again, giving homeowners viable reasons to want to get out of the shared contract.

Split-ups, divorce, and going separate ways happen for married couples, long-term partnerships, siblings, and friends.

The most important thing is knowing how you’ll remove someone from a shared mortgage when that happens and what it will cost you!

Top reasons for wanting to remove someone from a UK mortgage include:

• Separating or getting divorced
• Removing an investor
• Buyout

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How to Remove Someone from a Joint Mortgage UK

Removing someone from a UK mortgage is a two-part process.

The Legal Part

The legal part of removing someone from a joint mortgage in the UK can be simple if everyone agrees.

If all parties agree, you must hire a professional conveyancing solicitor to ensure all the legal aspects of the process are correctly managed.

Once you’ve got a conveyancing solicitor in your employ, there isn’t much for you to do except provide them with the paperwork and information they request.

At the start of the process, you’ll receive paperwork from the solicitor, which you must complete and return to them.

The cost is usually between £100 and £200, which is the average cost of remortgage processing.

That’s easy. 

But there are times when it’s not easy. Sometimes, one party wants to be removed from a joint mortgage, and the other party doesn’t agree.

Or one party wants another to be removed, and they refuse. That’s when things can become a little tricky. If all parties don’t agree, you could face time-consuming complications.

If you cannot come to a compromise with the other party, such as settling on a buyout amount or specific terms, you could go the route of legal challenge.

If you’re trying to save on costs and hassles, it’s safe to say that you’ll find this route stressful, time-consuming, and expensive.

Most people choose the legal route as a last resort if all parties seriously cannot agree.

The Mortgage Process Part

Removing a person’s name from a joint UK mortgage is similar to remortgaging.

Before you start the process, take the time to scrutinise your existing mortgage to determine if it’s still the best deal for you.

Sometimes, there are better deals with other lenders, and switching makes financial sense. 

Of course, if switching is going to add fees that push the cost of your overall mortgage higher than your existing one, you will want to avoid that.

Because removing someone’s name from a mortgage requires a new mortgage application, it makes sense to shop around for potential deals that might outshine your existing one.

The requirements to remove a name from the mortgage and keep it under one name throw the remaining party into the spotlight.

The lender must assess your ability to afford the mortgage independently, which can be tricky for some people. 

What Lenders Want to Know When You Apply

• What your credit score is
• What your income is (affordability)

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Supporting Documents to Accompany Your Application

When removing someone from a joint UK mortgage, you’ll need to provide documents that prove you’re eligible for a new mortgage with just your name on it.

You will need to provide the following documents to support your application:

• 3 months of bank statements
• 3 months of payslips
• Proof of address (utility bills)
• Latest P60 tax form
• Proof of ID (driver’s license or passport)

If you are self-employed, you may need to provide financial documents for 6 months instead of just 3.

You can prove your income with a letter from your accountant or your latest tax returns. 

Once the lender receives your application and supporting documents, they will review your application.

If you are switching lenders, the new lender may require you to re-evaluate the property, and a new credit check will be run.

Recommended guides: 

• Remortgage for home improvements.
• How long does mortgage approval take?
• Remortgage with bad credit.
• Remortgage for help to buy.
• How to sell a house.
• Repayments on £80,000 mortgage. 
• Interest-only mortgages.
• Zero deposit mortgage.
• The first mortgage explained.
• What stops you getting a mortgage in the UK?

Must I Buy Someone Out to Remove Them from Our Joint Mortgage?

The short answer is no. You don’t have to buy someone out to remove them from the mortgage.

If the other party agrees to bow out and the lender agrees that you can afford the mortgage alone, you can remove the person from the mortgage without a buyout.

In this case, you will process a “transfer of equity” involving your chosen solicitor handling the paperwork.

You can expect it to take approximately 30 days to complete, but some lenders take a little longer to finalise processing.

The amount of equity each party has in the property is determined by the type of joint mortgage you have.

For instance, a “joint tenants” mortgage means that both parties have equal equity in the property.

A “tenants in common” mortgage doesn’t imply a 50/50 ownership but rather an agreement in place that stipulates each party’s share in the property.

This means one may have more equity than the other, possibly due to a higher deposit amount or higher portion paid towards the monthly mortgage instalments. 

In both instances, you will apply for a new mortgage as a sole owner or add someone new in a joint application. 

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A Word of Warning

Removing someone’s name from a mortgage in the UK comes with financial implications.

The remaining party will be liable for the mortgage, which may significantly increase their monthly financial responsibilities.

Before deciding to remove someone from a mortgage, it’s a good idea to do some budgeting and see if it’s the right course of action for you. 

Using a Mortgage Advisor

To ensure that you don’t put yourself in a poor financial position and to ensure that the mortgage lender you approach is most likely to assist you, it’s recommended to use a professional mortgage advisor or broker.

A mortgage advisor can present the options to you, prepare your application for the best possible outcome, and assist you every step of the way. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

There’s no need to bang the drums or sound the horns for this one – it’s not really a surprise!

According to Statista, a 2022 survey found that around 70% of people in the UK used a broker when buying property.

And 91% of them rated it as a good experience. It’s not surprising when you consider that mortgage brokers can get better rates than the average person.

If that comes as a surprise to you, it’s time you find out more.

Life, as we know it, is fraught with choices, even when deciding how to find the best price and funding for a new home.

When you apply for a mortgage, you’ll either use a mortgage broker or try doing all the legwork yourself by going directly to the bank.

Before deciding which approach is right for you, you’ll need to understand how using a mortgage broker can save you time, money, and frustration.

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Which is Better, Going Straight to the Bank or Using a Mortgage Broker?

A mortgage broker is a blessing for those who want to access a broad selection of products without approaching each mortgage provider.

Mortgage brokers have access to the entire market, and they’ll know just what to do if you’re working with a tricky application, such as having bad credit or being self-employed.

Using a mortgage broker is usually recommended if you’re the average Brit looking for a good deal and the least hassle and complexities. 

Now, on the other hand, if you’re a financial expert or have gone through the mortgage application process so many times that you could do it in your sleep, then approaching the bank, lender, or building society yourself is possibly worth your time. 

Navigating the course of a UK mortgage application alone can be challenging and stressful, but with a mortgage broker on your side, you can benefit in several ways.

Some of these ways include:

• Mortgage brokers don’t just focus on one product. They have access to a wide range of products, which allows for comparison and real consideration.
• Your credit report can be efficiently optimised and your application correctly prepared with the help of a mortgage broker.
• A mortgage broker will have a broad overview of your financial situation and in-depth knowledge of your requirements, helping them to shop for the best deal and negotiate better rates for you.
• You won’t find yourself scrambling for an unexpected document during the application process because your mortgage broker will furnish you with a comprehensive checklist of required documents prior to starting the process.
• You’ll get access to a range of affordable insurance options to accompany your mortgage deal.
• If you have an unusual situation or your application isn’t considered a “run of the mill,” a mortgage broker can provide specialist advice and guide you through every step. High risk, bad credit, and self-employed applicants can get assistance finding the right product for them with help from a mortgage provider.
• Mortgage brokers can help you avoid tarnishing your credit record by applying for credit with the wrong mortgage providers and being rejected. The idea is to find the right lender for you as quickly as possible.

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Overview: Pros and Cons of Applying for a UK Mortgage with the Bank Directly

There are, of course, some pros to going directly to the bank for your mortgage application:

• In some instances, it can be quicker to finalise the process but there’s still the risk of higher interest rates as you’ll have no one to negotiate for you.
• There are no broker fees.

Some cons of a mortgage application UK directly via the bank:

• The bank won’t present a selection of products for you to compare and choose from. Instead, you will only have their set of products.
• You’ll be presented with limited products and expected to make the decision yourself, unaided by someone with background knowledge of your financial situation. 

Overview: Pros and Cons of Applying for a Mortgage with a Mortgage Broker UK

With a mortgage broker, you can expect some pros and cons too. The pros are:

• You’ll get access to the entire market.
• The advice from a mortgage broker UK is unbiased as none of the products are “in-house.”
• You’ll likely get helped by a highly qualified and experienced advisor who can provide you with specialist advice and guidance. 

Some cons of using a mortgage broker:

• Buyers pay mortgage brokers fees, but these are usually minimal, and the trade-off is that you’ll most likely save quite a bit on interest.
• Sometimes it takes a little longer to get the right deal set in place because you’ll review multiple products on the market to find the right one for you.

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Do UK Mortgage Brokers Get Better Rates for Their Clients?

In most instances, professional mortgage brokers can arrange lower interest rates for their clients than if those same clients approached the mortgage provider themselves.

This isn’t because the lender is trying to pull the wool over your eyes but because a mortgage broker will access options from multiple lenders to compare instead of approaching just one or two lenders and getting access to a few limited products.

By considering your circumstances and financials, a mortgage broker can present you with all the deals you qualify for, and you’ll most likely discover more affordable options with professional help. 

What Are Broker-Exclusive Deals?

What a mortgage provider in the UK offers you when you apply for a mortgage and what your mortgage advisor may be able to negotiate for you could be worlds apart.

Some lenders will go as far as only dealing with brokers, meaning you cannot access their products directly but will need to go through a broker.

These are broker-exclusive deals usually made up of discounted and specialist offers.

Broker-exclusive deals and the help of a specialist mortgage broker are certainly ideal for borrowers who are considered high-risk.

Common high-risk borrowers who can benefit from broker-exclusive deals include:

• Self-employed or non-formally employed individuals
• Low income earners
• Expatriates
• Retired individuals

A mortgage broker can ensure that you present your application in the right way and have all the correct paperwork to prove affordability and apply for the amount you’re most likely to qualify for.

Using a mortgage broker in these scenarios could be the difference between getting the funding you need or being turned away or saddled with an exorbitant interest rate.

Are Mortgage Brokers Expensive?

One of the top concerns for home buyers is that they’re spending too much when purchasing property. Mortgage broker fees are at the top of the list when buyers want to cut back on costs.

But here’s the deal: mortgage broker fees aren’t always expensive.

Some charge a fee, but this may be negligible when you consider how much a mortgage broker can save you in the overall cost of your mortgage.

You’re most likely to find a better deal with a broker, and the overall savings will make the cost of the mortgage broker seem irrelevant. 

Going directly to the bank may seem like you’re saving money in the short term, but when you add the interest and the fact that you may be missing out on a better deal with another provider that the bank will never tell you about, do you stand to benefit?

Start a Relationship with Your UK Mortgage Broker Today

Mortgages in the UK last a lifetime. You can expect to pay off your property for some 20 to 30 years.

That’s a large chunk of your time, and you undoubtedly want to know that you’re getting yourself into a good deal now, as it’s a commitment you won’t easily get out of.

By teaming up with a UK mortgage broker, you can rest assured that you’re selecting from the best mortgage deals you qualify for and have someone on your side, fighting to get you the best financing possible for your money!

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

A large number of homeowners in the UK would prefer to renovate a home rather than move from it.

One in 10 respondents said the cost of buying and selling was off-putting, even though they may wish to sell their property.

This alone shows us that the desire for renovation is there – and a mortgage can make it possible. 

For those with creative flair or those who can see the potential of a property that’s up for sale, renovation mortgages are often the aim.

New builds with perfect finishes and modern charm aren’t everyone’s cup of tea, and if you’re more the type who likes to personalise a home to reflect your own style while capitalising on designs of the past, buying a property to renovate may seem exciting.

Other scenarios where renovation mortgages make sense are:

• When you’re already in a home but want to make alterations (remortgage)
• You’re an investor who wants to flip a property

But…how do you go about getting a mortgage that covers the cost of the property purchase and renovations?

What is a Renovation Mortgage and How Does it Work in the UK?

In short, a renovation mortgage provides funding to purchase a property that needs to be renovated.

The property can be bought on the open market or at an auction.

These mortgages are usually very useful when purchasing property that lenders won’t finance.

Think of a derelict house that needs extensive repairs or properties without electricity or running water.

Most lenders and High Street banks view such properties as “unmortgageable.”

Enter the spotlight, renovation mortgages.

Renovation mortgages are granted based on the loan size and the property’s anticipated value after renovations are completed.

This can result in a higher mortgage than a mortgage based on a property’s current value.

Unfortunately, mortgage lenders aren’t always overly keen to provide renovation mortgages in the UK, and this comes down to the risk.

For instance, a buyer may start renovations and run into delays or find that certain processes and renovations are more expensive than initially calculated.

This could mean delays, which results in a slower return, or it could mean that the renovations can’t be completed at all. In such instances, the mortgage provider stands to lose.

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Costs That Renovation Mortgages Cover

UK renovation mortgages are intended to cover the following: 

• The cost of the property
• Repairs 
• Remodelling and renovations

What Credit Score is Required for Renovation Mortgages in the UK?

It goes without saying that the better your credit score is, the more chance you have of getting approved for a renovation mortgage.

A good credit score tells the lender that you’re responsible with your bills, pay your debts, and are less of a risk.

hat said, it doesn’t mean all lenders will reject you outright. Sometimes, specialist lenders provide funding to borrowers with poor credit scores.

There’s a catch, though. Mortgages for bad credit borrowers usually come with higher fees and are typically provided in smaller, easy-to-manage amounts. 

If you want to improve your credit score, you can:

• Regularly access your credit report to ensure that the information is correct.
• Make payments on time.
• Contest notes of missed payments etc, that are incorrect.

Are Regular Mortgages Available for Fixer-Uppers?

No law or rule stipulates that you cannot use a regular mortgage to purchase, repair, and renovate a property.

In fact, if the property is habitable, then this can be an option. If you’re on a budget or are a first-time buyer, this may seem the best route.

In such instances, the buyer will intend to carry out the repairs and renovations themselves instead of hiring professionals to handle them. 

This option is often opted for because affordability shows that only a limited amount can be borrowed.

Some buyers and investors may even opt for a regular mortgage now and then, later on, take out an additional loan to cover repairs and renovations.

How Much Deposit is Required for UK Renovation Mortgages?

All mortgages in the UK require the buyer to provide a deposit. Some buyers save up for years to get to around 15% of the amount they need to purchase a home.

Renovation mortgages typically require deposits between 15% and 20% of the total amount needed. 

The deposit can come from your personal savings, the sale of an asset (property, car, etc), or a gift from a family member. 

Mortgage providers consider an individual’s financial circumstances when deciding whether to approve or deny a mortgage request.

Your unique circumstances may even make you eligible for a lower deposit.

The best thing to do is to check your eligibility before you make a formal application. 

When a mortgage application is declined, it could show up on your credit profile, causing other lenders to wonder what got you declined. 

Can People with Debt Still Get Renovation Mortgages in the UK?

Bad credit may get you instant denial from some lenders, but several others in the UK offer mortgages and other loans to people with debt.

The lender will likely assess your finances to determine your debt-to-income ratio. This is the amount of debt you have compared to your income.

The process aims to determine if your current debt is affordable and if adding any additional debt to the situation will strain your budget and cash flow. 

A mortgage advisor or broker can help you with calculating your debt to income ratio so that you know what a mortgage provider will be looking at. 

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Getting Renovation Mortgages for Properties You Already Own

If you own a home and want to carry out renovations, remortgaging the property is recommended.

Remortgaging for renovations may carry limitations on the funding amount, and how much you qualify for may depend on:

• How much the property’s value will increase once renovations are complete.
• How much is left to pay on the mortgage
• Your current income and credit score

Remortgaging for renovations may have terms ranging from 5 to 40 years, with more interest expected the longer the term.

Also, you must go through an affordability assessment, as each mortgage, even remortgaging, requires a new credit check.

If your financial situation has worsened, you may not get a good interest rate or could be denied the loan.

Consult with a Mortgage Broker

By consulting with a mortgage broker about the ins and outs of renovation mortgages, you can get a better idea if you’ll qualify and which lenders in the UK are the best approach. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

You may want to buy someone out of a house for several reasons. Some are going through a divorce or separation, while others might have siblings that form part of their inheritance but don’t particularly want to share the home.

Whatever your reasons for wanting to own another person’s share in the home, you’ll need to know more about buying someone out of a house before you attempt it.

Most people’s first assumption is that it’s complicated to calculate equity and then buy someone out of their share of a property in the UK, but the truth is that it doesn’t have to be.

By acquiring the assistance of a professional mortgage broker and understanding the process, you can and will find a buyout solution that caters to the requirements of all parties involved.

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Definition of a Mortgage Buyout

If you own property with another person (or more than one other) and wish to purchase their share of the property, it’s called a “mortgage buyout.”

If you’d like to remove another person’s name from the mortgage and deeds and essentially own their equity in the property, you’ll need to buy them out. 

The process of a mortgage buyout UK is the same whether you own property with a spouse, ex-spouse, brother, sister, other family member, or friend.

Is a Mortgage Buyout UK a Lengthy Process?

There’s no hard and fast rule about how long buying someone’s share of a property will take. The process is quick for some, and for others, it can take months.

Those with a speedy process recommend being organised and having the required paperwork readily available before starting.

Of course, the help of a mortgage advisor with experience in UK mortgage buyouts can also speed up the process.

With a professional on your side, there’s no need to flounder around, wondering what to do next – the process will be laid out for you, and the broker/advisor will assist you every step.

Steps to Remortgaging to Buy Someone Out of a Property in the UK

Your first step with a mortgage buyout in the UK is to consult a specialist mortgage broker who can advise you on several ways to increase your chances of approval.

Mortgage brokers can assist you in the following ways with mortgage buyouts in the UK:

• Understanding the remortgage process for a buyout
• Providing a checklist of documents required
• Accessing your credit reports and ensuring they’re correct and optimised
• Connecting you with a lender most likely to provide you with the best possible deal

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The Legalities of a UK Buyout

Not all mortgage buyouts are the same. Some go smoothly because all parties agree and want to get the process finished as quickly as possible and others are fraught with hurdles because both parties don’t agree and pose as stumbling blocks. 

The buyout process is treated the same as a mortgage application in the UK. Conveyancers or solicitors will set up the legal charge with a lender and the names on the land registry.

The mortgage advisor and solicitor will understand that this particular mortgage application is a transfer of equity in the property.

The conveyancers typically send you the transfer documents along with a remortgage pack, which you’ll have to complete.

Depending on the situation, you’ll need to pay a charge for this, which can range between £250 and £300.

If all parties agree, the process can take hours. Sometimes, the entire process is complete within a day if all the documents are ready before applying.

If both parties don’t agree, legal proceedings usually follow, which can be lengthy and costly. If parties cannot agree, the property usually ends up being sold.

Of course, it’s best to avoid this scenario if you cannot afford it and don’t have time to wait for the process to take its course.

The Tricky Part: Calculating the Mortgage Buyout Amount

The first step is to determine the property’s worth on the UK market. Then, you’ll deduct the mortgage balance from that to determine the joint equity in the property. 

Both parties must agree on what percentage they own in the property’s equity.

In the case of ex-spouses or people divorcing, the norm is to pay the other party 50% of the equity you share in the property.

This can get messy if parties don’t agree on how much each party has paid towards the mortgage instalments or the initial deposit.

Step 1: Approach an estate agent for a valuation of the property. In most instances, this is provided free. If you want something more formal, you can hire a chartered surveyor, which can usually come with a charge anywhere up to £1,000 and can take several weeks. Estate agency estimates can be provided within hours.

Step 2: Subtract the amount left to still pay on your mortgage from the figure provided by the estate agent or chartered surveyor. For instance, if it’s estimated that your home is worth £240,000 and the lender gives you an outstanding balance statement of £140,000, you essentially have £100,000 equity in the house.

Step 3: Calculate 50% of the equity in the home, which in this example is £50,000. In some instances, the other party will be willing to negotiate a lesser amount.

Step 4: Pay the other party the agreed-on amount, and their details will be legally removed from the property deeds and mortgage. The mortgage transfer, aka transfer of equity, is now complete.

Of course, this is one way to buy someone out of a property in the UK. There are other ways to do it!

Alternative Ways of a Mortgage Buyout in the UK

Because the type of mortgage buyout detailed above is treated like a remortgage, not everyone will qualify for it.

In such instances, you may want to know what alternatives you have. 

Continue Joint Ownership

If the separation or divorce is amicable, you may want to maintain joint ownership and share in the associated costs of the property. 

Sell the Property and Split the Profits

Selling the property and sharing the profits is undoubtedly the easiest alternative. Of course, if you’re a resident on the property, you will have the challenge of finding a new place to live.

Raise Money to Process the Mortgage Buyout

If you have the option of acquiring funds from somewhere else, such as from a family member or the sale of an asset, you can accrue the funds and use this to buy the other party out.

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Get the Help of a Mortgage Advisor

The process of a mortgage buyout in the UK can be straightforward, but they can also be quite stressful.

When going through a separation or divorce, you may be distracted and stressed by more than just the mortgage buyout.

With the help of a mortgage advisor with experience with UK mortgage buyouts, you can rest assured that someone is on your side, taking care of the finer details of the process for you. 

A mortgage advisor will assess your unique situation and determine what your needs are.

They can then advise you on the process and ensure that the right lender is approached if one is required.

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

According to Statista, mortgage lending in the UK in 2024 is forecast to be worth around £247 billion, with house purchases making up the largest share at around £122 billion.

This means that billions of pounds are processed through multiple mortgage types, with various options available. Which mortgage type is right for you?

You’ve heard about repayment mortgages, and you’ve heard about interest-only mortgages, but have you heard about part-and-part mortgages?

You’ve probably already guessed it; this type of mortgage combines the two.

Defining a Part-and-Part Mortgage UK

Part and part mortgages split the repayment of the mortgage between capital and interest.

It’s essentially a repayment mortgage that pays down capital only and an interest only mortgage that focuses on paying down just the interest. 

Essentially, with a part and part mortgage, you will be chipping away at both the outstanding debt and interest.

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Advantages of Part and Part Mortgages

Some of the benefits of part and part mortgages in the UK include:

• The monthly repayments tend to be slightly lower than other types of mortgages
• Often, part and part mortgages are more flexible
• You’ll pay off both interest and capital debt at the same time
• Borrowers need less money to purchase the property outright when the mortgage term comes to an end
• Interest amounts reduce as the mortgage is paid down and the outstanding amount reduces

Disadvantages of Part and Part Mortgages

• Some lenders consider part and part mortgages to be riskier than other mortgage types
• Not all lenders offer this type of mortgage
• The repayment schedule can be complicated and you may need to consult with a professional who can provide you with guidance and advice

How Part and Part Mortgages Work

When you apply for a part and part mortgage, you’re actually asking the lender to divide your mortgage into two parts.

The first part is the repayment, and the second part is the interest.

Mortgage providers won’t stipulate what percentage of your monthly instalments go to each part – this is a decision for the borrower.

Of course, some lenders will stipulate what they would prefer in your lender’s agreement.

In most instances, lenders prefer borrowers to pay more towards their repayment than their interest amount.

Applying for a Part Interest Part Repayment Mortgage in the UK

In most instances, the application for a part interest part repayment mortgage is the same as any other mortgage application.

The process involves meeting the lender requirements and ensuring that you have a deposit available, earn enough income, and submit to a credit check. 

Mortgage providers will generally put together a finance arrangement that they feel will suit your financial situation.

Most providers will focus the mortgage payments mostly on the repayment portion (paying down the capital debt) with a small focus on the interest part.

And the end of your mortgage term, you will have some interest and some capital debt to pay.

The lender will want a detailed explanation of how you plan to pay this amount.

The more detailed you are with this information, the more likely you are to get approved.

Accepted Forms of Repayment Vehicles

Commonly acceptable repayment vehicles considered suitable by most mortgage lenders in the UK include:

• Sale of another property
• Sale of current property
• Stocks and shares ISA or equity investments
• Self-invested personal pension or a private pension
• Bonds or gilts
• Endowment policies

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Can You Remortgage Mid-Term with a Part and Part Mortgage UK?

Mortgages span many years of life, so it stands to reason that, at some point, financial situations may change.

You may find that your income changes during the mortgage or your repayment strategy no longer seems well-suited.

You may even want to settle your mortgage earlier. In such instances, you can remortgage your part and part mortgage mid-term. 

When this happens, the borrower often wishes to switch to a repayment mortgage.

If you do switch, you can pay more into your mortgage and have nothing to pay over at the end of the term if you haven’t missed payments.

What to Do if Your Income Reduces

If your finances change and you can no longer afford your current mortgage payments, you may struggle to qualify for a remortgage.

Every time you switch to a different mortgage deal, the provider will assess affordability.

If your finances are under pressure, you may find that the lender determines the loan is ill-affordable.

In such instances where finances change for the worse, it’s best to consult with a mortgage advisor first before taking any action.

Requirements/Criteria to Apply for a Part and Part Mortgage in the UK

To apply for a part repayment part interest mortgage, you will need to meet these requirements:

• 18+ years old
• Valid ID
• UK citizen or resident (legally)
• Have at least a 15% deposit available
• Earn between £75,000 and £100,000 per annum
• Good credit score (although, there may be some poor credit score options available)
• Proof of your payment vehicle

Alternative Options to Part and Part Mortgages

Sadly, not all applicants in the UK will qualify for part-and-part mortgages.

If this is the case, other mortgage options are available, and it might be worth considering:

• Interest-only mortgages: these are suited to those who want a lower monthly instalment.
• Full repayment mortgages: if you don’t have a repayment vehicle but can afford to pay fairly high monthly instalments, this is a viable option.
• Joint mortgages: dividing the cost of a property with one other, or a group of people, can ease the financial burden and help you qualify for a higher mortgage amount.

Consult with a Mortgage Broker or Advisor

In the UK, mortgages can become complicated, especially if unfamiliar with the processes and requirements.

If you’re interested in applying for a part-interest, part-repayment mortgage in the UK, consulting with a mortgage advisor or broker is a step in the right direction.

They can advise you on your options and requirements and guide you through the process. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

If there’s ever a time in life when it’s important to prove yourself, it’s when trying to purchase property.

Mortgage providers in the UK will want to know everything about the property you’re interested in and everything about your finances too.

Enter the ever-important bank statement. 

A large part of the mortgage application process is documentation. And it will feel like there’s piles of it.

Whether you’re using a mortgage broker/advisor or approaching the mortgage provider directly, you’ll need to gather documentation to provide evidence of your financial situation. 

One of the best tips when buying property is to ensure that you have all your documents organised before you make the initial application. This will smooth the process and speed things along.

According to the UK Government’s website providing advice on How to Buy a Home, you’ll need to provide several documents to get the process started, including those that help prove who you are and what sort of income you receive. 

Documents Required When Buying a House

It stands to reason that UK mortgage providers aren’t keen to hand over hundreds of thousands of pounds to someone who cannot repay the amount.

Therefore, they require several documents proving you can afford to repay the loan comfortably without putting your cash flow situation under duress.

Below is a list of documents you’ll be expected to provide when applying for a UK mortgage.

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Importance of Bank Statements

Your bank statements are some of the most important documents you will provide when applying for a UK mortgage. 

Bank statements prove more than just your income. Bank statements give lenders a better idea of your financial situation by also indicating what amounts go out of your bank account each month.

When purchasing a property, mortgage lenders in the UK usually request up to 6 months’ bank statements. 

If you’re purchasing the property as a business, you may need to provide up to 12-24 months of bank statements and financials. 

In addition to proving your income and expenses, your bank statements are also used to prove you have the deposit required to purchase the property.

This can be bank statements from your personal account, savings account, or investments.

If you’re receiving the deposit money as a gift, you will need to complete a form noting the gift and possibly even provide the bank statements of the person offering the deposit as a gift. 

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Other Documents to Provide When Applying for a UK Mortgage

• Valid ID, which can be your ID, driver’s license, passport, or EEA member state ID card.
• Proof of income, which can be your last 3 payslips, tax return documents, or your P60 form from your employer. If you have proof of commission or overtime, it’s important to include this too. If you happen to receive other forms of income through freelancing or a side hustle, you should also indicate this as it all works in your favour for proving affordability.
• Proof of address, which can be a recent utility bill (no older than 3 months), bank statement, or your driver’s license. You can’t use your mobile phone bill as proof of address. 

It’s also a good idea to check your credit score before you process your first application so that you know what lenders will be thinking when approving or denying your mortgage application.

Your credit score can directly impact the interest rate you’re offered.

Documents Required When Remortgaging Property in the UK

If you have an existing mortgage that you’d like to remortgage, you will need to provide additional documentation as follows:

• Proof of identity
• Proof of income
• A current mortgage statement from your mortgage provider

If your financial situation has changed since your mortgage was first approved, the new mortgage provider will be interested in knowing the details of this.

Also, if you’ve changed jobs, become self-employed or started a business, this is of interest to providers when you choose to remortgage your property.

ID Checks When Purchasing Property in the UK with a Mortgage

You’ll need to prove your identity when applying for a mortgage in the UK.

You may think it’s as simple as providing a copy of your driver’s license, passport, or similar document to your mortgage provider, but it’s more than that.

UK mortgage providers, lawyers, and estate agents are legally required to verify your identity at various stages during the transaction. This is done to prevent fraud and money laundering. 

Along with your ID, you’ll need to provide your bank statements to verify your source of funds.

Several people will check that the information is legally valid and that your transaction is safeguarded. 

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What Documents Are Required for a UK Mortgage if You’re Self-Employed?

If you’re self-employed, you’ll be bound by the same conditions as other applicants. Some mortgage providers in the UK may require you to provide more bank statements.

There’s a misconception that self-employed individuals will pay higher interest or mortgage rates, but that’s not the case.

The rate you’re charged will depend on factors other than your employment type or status, such as your provable income and how big your deposit is. 

A quick overview of the documents required to apply for a UK mortgage include:

• 6 months bank statements (possibly 2 years depending on the lender)
• ID (passport or driving license)
• Evidence of your deposit if your bank statements don’t prove this
• Proof of address (utility bills)

In addition to bank statements, self-employed individuals can prove their income with their SA302 forms or an HMRC tax year overview for 2 to 3 years.

Two or more years of certified accounts provided by a professional accountant can also help prove your income and affordability of the mortgage.

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Mortgage Bank Statements UK Conclusion

If you’re in the market for a new mortgage application in the UK and want to ensure that your bank statements and other documents are sufficient, it’s a good idea to consult with a mortgage broker or advisor.

A professional advisor can provide you with a list of required documents and ensure that all your paperwork is relevant and in order to speed your mortgage application along. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

With so many mortgage types available on the market, it can seem a little overwhelming.

Two popular mortgage types in the UK are undoubtedly interest-only mortgages and repayment mortgages. 

According to a report by Statista, in 2022, interest-only mortgages in the UK made up 12% of the market share with an even split between fixed-rate and variable interest options.

The same report tells us that in the same year, 86% of mortgages were repayment mortgages, with 73% on a fixed rate and 13% on a variable rate.

Property buyers, especially first-time buyers, may wonder if they should look for a capital repayment mortgage or an interest-only mortgage, and that’s what you’re about to find out!

Repayment Mortgages and Interest-Only Mortgages in the UK at a Glance

What’s the Difference Between Repayment Mortgages and Interest-Only Mortgages?

Mortgages need a repayment strategy, and that’s why choosing the right type of mortgage is important.

If you cannot pay your monthly instalments, the lender may repossess the property! Understanding what sets interest-only and repayment mortgages apart is important. 

Interest-only mortgages cater to paying off only the total interest charged on the mortgage. 

Repayment mortgages focus on paying back the total amount, including a portion of the interest and capital amount. 

You may find that interest-only mortgages have lower monthly instalments attached, but that doesn’t particularly mean that interest-only mortgages are the best route.

If you don’t have a lump sum available at the end of the loan to pay off the capital amount, you’ll find yourself in a financial pickle.

A Closer Look at an Interest-Only Mortgage in the UK

While interest-only mortgages in the UK come with lower monthly instalments, they come with a big downside: the large lump sum you’ll have to pay towards the capital amount borrowed at the end of the term.

Applying for this type of mortgage is only recommended if you’re certain you’ll have the lump sum available at the end of the term.

Most borrowers have an asset or an investment they plan to sell or withdraw from at the end of their interest-only mortgage to settle the outstanding amount.

Popular investments to pay off an interest-only mortgage’s capital amount include a pension, investment fund, or ISA.

The sale of an asset, such as property or using an inheritance, is also accepted. 

It’s important to note that a mortgage provider won’t grant such a loan to someone who doesn’t have a definitive repayment strategy to present. This will be checked for viability during the loan application. 

It’s hard not to be attracted to an interest-only mortgage in the UK.

After all, you’ll be paying a lower monthly instalment, which provides a bit of breathing room, and you’ll enjoy greater control over your investments and how you’ll save towards the final payment.

There’s always the risk of your intended repayment plan for the capital amount falling through or not performing, which means that interest-only mortgages aren’t suited to people who don’t have a solid repayment strategy. 

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A Closer Look at a Repayment Mortgage in the UK

One of the perks of a repayment mortgage in the UK is that with each monthly payment, you’re reducing the total amount you owe. At the end of the term, there’s no lump sum to worry about.

You’ll have paid off the total loan and the property will be yours – no additional fees required. 

With repayment mortgages, the amount of interest you pay over the total term of your loan is less because you’ll be actively reducing the total amount owed each month.

As the term of your mortgage progresses, you may even find that you’re eligible for lower interest rates as the total outstanding has reduced. 

There’s less risk involved as you won’t need to have a repayment strategy for a large lump sum at the end of your loan term. Instead, you’ll own the property outright. 

Switching Between Mortgage Types

It’s fairly common for buyers on an interest-only mortgage in the UK to consider switching to a repayment mortgage.

While this can be tricky because you will be moving into a much higher monthly instalment, some lenders will approve such a switch.

The options are varied, including:

• Opting for a part and part mortgage where you can make payments towards your outstanding capital amount as well.
• Keep the same term and interest rate while switching to a repayment mortgage with your existing mortgage provider.
• Opting to apply for a new repayment mortgage deal with your current mortgage provider. 
• Approaching a new lender to remortgage your existing deal onto a repayment mortgage option.

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Using a Professional Mortgage Broker

If you intend to switch between mortgage types, it’s always best to acquire the assistance of a professional mortgage broker or advisor who can advise you on the mortgage providers to approach, what to do to increase your chances of approval, and also, to help you search the market for better deals that may save you money in the long run.

Consulting with a mortgage broker may save you time and hassle, making the process of buying a property or switching from one mortgage type to another less of a headache.

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

There are several ways that you can buy property in the UK. If you wish to buy property and take personal residence, you may wonder if there are ways you can purchase that property that helps you cut back on costs and taxes.

You could buy the property through a personal mortgage or opt for another type of mortgage, with limited company mortgages being a popular option.

According to the Office for National Statistics in 2021, around 62.5% of households own the accommodation they live in with around 37.3% renting property. 

If you have a limited company in the UK that owns property, you may wonder if you can take residential occupation of the property.

The answer is yes, you can live in a house owned by your limited company, but it’s not recommended. 

If you don’t understand tax and how mortgages work, you may want to consult a mortgage advisor before purchasing a property through your limited company for personal occupation. That’s because things can get a little tricky. 

Understanding how to purchase property through a limited company will help you better understand if it’s a process that’s worthwhile for you financially or not.

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Benefit in Kind (BIK)

One of the first things you need to know is that if you’re residing in a property that’s acquired through your limited company, it may be seen as some kind of perk.

The one you need to know about is the “Benefit in Kind” scenario.

Benefit in Kind is something that may apply to you if you choose to live in a property that you purchase through your limited company.

As an employee of your company, living on the property may be seen as notional pay or fringe benefits by the HMRC. And fringe benefits and notional pay are taxed at a rate between 20% and 45%.

Of course, you can get around this taxation, but you’ll then need to pay full commercial rent to the limited company.

25% corporation tax will also apply if you choose to sell the property in the future, where this tax amount doesn’t apply to a personal property sale.

Is it Possible to Buy Investment Property or a Buy to Let Through a Limited Company?

Many people use their limited company to buy a buy to let property or investment property. There are some benefits to expect.

For instance, when buying such a property through a company, the corporation tax is 25%, whereas when you buy a private property personally, the tax is 45%.

Private landlords can no longer subtract the cost of a mortgage from rental income, whereas this is possible with a company.

Disadvantages of Buying Property Through a Limited Company

One of the biggest challenges you’ll face is that not many mortgage companies are keen to offer limited companies mortgages.

In some instances where it is possible, the mortgage company may expect the company directors to provide personal guarantees on the home loan. 

Mortgage companies see mortgages for limited companies as a higher risk than a personal mortgage, which may be reflected in the higher interest rates.

There’s also the possibility of incurring capital gains tax if you have to sell a property to your new company and that property has increased in value.

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Overview of Pros and Cons of Buying Property Through a Limited Company

A general understanding of the pros and cons of buying property for personal use through a limited company can help you determine what the best course of action is for you.

Pros:

• Tax savings

Buyers can cut back on tax by buying property through a limited company.

For private landlords, the profits are taxed through income tax, shares, dividends, and salaries between 20% and 45% whereas property bought through a limited company comes with lower corporation tax at 25%.

• Mortgage tax savings

Limited companies that own property can treat interest charged on the mortgage as an operating expense, which means you could get a 100% relief on the income.

Cons:

• Fewer options

Not all mortgage providers will approve loan applications for property through a limited company.  With fewer options, it’s harder to find a mortgage package that perfectly suits your situation. 

• Tax

When you take money out of the limited company, you’ll face a few challenges in terms of withdrawals and tax implications. The money needs to be taken out as dividends or a salary.

In terms of dividends, the first £2000 is free from tax, but anything above that will come with costs between 8.75% and 39.35%. This is tax over and above corporation tax.

Reduced dividend exemptions are expected from April 2024.

In terms of salaries, PAYE and national insurance contributions are expected and these can be higher than the tax fees charged on dividends. 

• Property transfer costs

If you own private buy to let properties, you won’t be able to transfer them to your company cost-free.

The transaction is seen as a regular buy/sell, which means the traditional costs involved will apply, including mortgage repayment costs, legal fees stamp duties, and capital gains tax.

Can I Live in a House Owned by My Limited Company? Conclusion

Deciding whether to purchase a property privately or through a limited company is a decision that affects you financially for the long term.

It’s a good idea to speak with your account or tax consultant and to also get some guidance from a professional mortgage broker or advisor with experience in the field.

With the right advice and guidance, you’ll be able to decide what type of mortgage route is best for you in your current situation. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.

The idea of getting a mortgage to buy your first home in the UK may be exciting until you see the deposit requirements!

Many potential buyers find themselves able to afford mortgage repayments but can’t drive up the funds to put down the initial deposit. 

In most instances, mortgage providers require the borrower to put down a 5% deposit, meaning you’d need to shop around to find a mortgage provider who can front you the remaining 95%. 

The good news is that some lenders offer 100% loan-to-value (LTV) mortgages, sometimes called no-deposit mortgages.

LTV mortgages in the UK are based on the buyer borrowing the entire amount to purchase the property. 

While 100% LTV mortgages are available, it’s important to note that lenders view borrowers who can provide a deposit more favourably.

And the more deposit you can drum up, the more likely you will get approval from a UK mortgage provider. 

While 5% to 20% are the most common deposit amounts provided by buyers, the bigger the deposit, the more likely you are to get funding and, of course, the better the interest rate offered may be.  

But what if you don’t have a deposit available or don’t necessarily want to pay one? 

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Getting a 0% Deposit

While 0% mortgages aren’t impossible, they are rare. This type of mortgage is best suited to people who cannot save up enough to put a deposit down on a new home.

During the financial crisis between 2007 and 2008, most lenders stopped offering 100% mortgages. 100% mortgage options only recently returned to the regular mortgage market. 

The best candidates for 100% mortgages are people who:

• Have an excellent credit score
• Can prove their regular, sufficient income
• Have minimal or no existing debt

Mortgage providers look for affordability, so it’s also important to apply for a mortgage amount that you can realistically afford.

Along with the major perk of getting a mortgage with no deposit, it’s important to understand the possible drawbacks of a 100% mortgage, aka a 0% deposit mortgage. These include the following:

• Higher interest rates than regular deposit-based mortgages
• Establishment and application fees may be higher
• The possibility of negative equity if the value of your new home drops

What Are the Alternative Options to a No-Deposit Mortgage?

It stands to reason that many people who apply for no deposit mortgages in the UK may be rejected/denied.

If that’s the case, you may wonder what your alternative options are.

Below are a few avenues you should consider if your application for a 0% deposit mortgage is rejected:

1. Guarantor Mortgages UK

You may be able to increase your chances of a 0% deposit mortgage in the UK if you have a guarantor.

In such instances, a family member or friend who has their own mortgage (or is a homeowner) and a good credit score with regular income must elect to co-sign the mortgage contract with you.

This increases your chances of approval because the guarantor’s home is used to secure the loan.

This is risky for the guarantor as their home can be repossessed if they default on the terms of their home loan.

Alternatively, the guarantor can use their savings to help you secure the mortgage. The mortgage provider will require the guarantor to provide a lump sum, which they will put into a savings account as security.

The guarantor can only access their savings again when you have settled a certain amount of your mortgage.

2. Shared Ownership Mortgages

Another viable alternative to no-deposit mortgages is the shared ownership mortgages available in the UK. With a shared ownership mortgage, you can purchase a certain percentage of a home.

This amount usually ranges from 25% to 75%, with the developer or the local authority owning the balance. You’ll pay a rental amount on the percentage you do not own.

The perk of such a deal is that the required deposit is usually small, between 5% and 10%, and the mortgage amount is smaller.

3. Right to Buy Mortgages

If you’ve been living in council housing, you may be able to take advantage of a right to buy mortgage.

This applies to people who have lived in council housing for 3 or more years, entitling them to reduced rates.

For some, the discount can be as high as 70% of the home’s total cost. Sometimes, mortgage providers may even consider the discount you receive as a deposit amount.

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4. Joint Mortgages in UK

If you have a partner or family member you’d like to invest in property with, a joint mortgage in the UK may be the option for you.

The upside of a joint mortgage is that the mortgage provider will consider your combined income for affordability and you can then split the monthly instalment, making your personal responsibility less demanding on your budget. 

Can I Get a No Deposit Mortgage if I am Self-Employed?

Most self-employed people worry they cannot get a mortgage because they don’t have a payslip to prove their income.

The reality is that the same criteria apply to self-employed people as traditionally employed people.

If you’re applying for a mortgage of any kind as a self-employed individual, you will need to provide two full years’ worth of financials for the mortgage provider to consider.

You’ll also need to meet the usual requirements, such as being of legal age, proof of paying your rent for the past 12 to 18 months, and proof of affordability.

Most mortgage providers will allow borrowers to apply for up to 4.5 times their income.

Deposit Free Mortgage UK Conclusion

Applying for a mortgage in the UK is a big step for anyone.

If you’re not entirely sure of your options or want some assistance calculating what you can afford and determining which lenders are best to approach, acquiring the advice of a professional mortgage advisor is advised. 

Call us today on 03330 90 60 30 or contact us to speak to one of our friendly advisors.