DMC

What is A Mortgage ?​

In simple terms, a mortgage is a funding or loan required to buy a property, as most people cannot afford to buy their property with cash, they will need to request a mortgage from banks or building society. Usually, the property owner will be required to put down some deposit towards the purchase of the house while the lenders will provide the rest of the funds.

A mortgage is a contractual obligation between the borrower (property owner) and the lender (banks or building society) over an agreed period of term (Mortgage Term) with the property owner making regular monthly contribution (Mortgage Payments) to the lender based on the applicable mortgage rates.

What are the Different Types of Mortgages ?

You will have a variation of choices to consider for the types of mortgages you want to secure.

01

FIRST TIME BUYER

One of the biggest changes in the employment market is the change from the traditional PAYE type to self-employed.

02

REMORTGAGE

Our advisors are not just experienced in arranging mortgages but also the products that protect your home, your health, your income and your family.

03

HOME MOVER

The ability to obtain a mortgage will largely depend upon when the bad credit was registered and the value of your purchase.

04

BUY TO LET

The ability to obtain a mortgage will largely depend upon when the bad credit was registered and the value of your purchase.

05

SELF EMPLOYED

The ability to obtain a mortgage will largely depend upon when the bad credit was registered and the value of your purchase.

06

COMMERCIAL

The ability to obtain a mortgage will largely depend upon when the bad credit was registered and the value of your purchase.

Buy To Let Mortgage

To explain the different types of mortgages, it is often simpler to categories them based on the stage of the applicant and the purpose of the mortgage lending. Most common types of mortgages are:

01

Fixed Rate Mortgage

02

Variable Rate Mortgage

03

Tracker Mortgage

Fixed Rate Mortgage

A fixed-rate mortgage means your repayments will continue to be the same for a certain time period. There are currently between 2 – 10 years fixed rates options. These rates will be fixed regardless of what interest rates are doing through the mortgage market which means your interest and repayments will remain stable. However, if rates change you will lose out on the benefit of a lower rate.

Variable Rate Mortgage

The rate paid on a variable-rate mortgage can increase or decrease in line with the Bank of England base rate. If you choose a variable-rate mortgage, then the interest rate you pay will move up and down depending on the market. Your interest and repayments are then fully dependent on the market at the present time.

Tracker Mortgage

With a tracker mortgage, the rate of interest is set above the variable rate. It is tracking the Bank of England’s base rate. If this rate
fluctuates, so too will your mortgage. Currently, the Bank of England interest rate is 0.10%, which is the lowest ever base rate historically.

Different Types of Mortgage Repayment ?

You will have a variation of choices to consider for the types of mortgages you want to secure.

1

REPAYMENT MORTGAGE

A repayment mortgage is where you pay both the interest and part of the capital off every month. At the end of the mortgage term, you should be at a point where you have paid off the total amount originally borrowed plus the interest, and therefore you own your home, mortgage free.

2

ONLY INTEREST MORTGAGE

Interest-only mortgages mean you only pay the interest on the mortgage loan. This, however, means you will pay nothing off the capital (the amount you
borrowed). The advantage here is that your monthly interest payments will often be lower than any fixed rate repayments.

These types of mortgages are becoming rare for the residential property. This is because as you are only paying off the interest, you will be left with a debt that could potentially stay with you without the means to repay it, especially as people get older or get into retirement and the earning potential is quite reduced.

However, if you are in retirement, you may be able to qualify for Retirement Interest-Only Mortgage, which is a special type of mortgage tailored to the older generation who may be categorised as ‘mortgage prisoners’ due to their inability to move away from previous interest-only mortgage and cannot afford to pay off the outstanding capital.

This means that these mortgages are becoming much harder to come by as lenders and regulators are worried about homeowners being left with a huge debt and no way of reducing it.

If you do get an interest-only mortgage, you will have to have a separate repayment plan. This plan will decide how you repay the original loan (capital) at the end of the mortgage term.

Most buy-to-let mortgages are usually on an interest-only basis. 

3

COMBINATION OF REPAYMENT AND ONLY INTEREST MORTGAGE

There are mortgages out there which will allow you to split your mortgage repayments between both repayment and interest-only mortgage.

What is Loan to Value

Loan to value (LTV) is the ratio of your mortgage borrowing vs how much your property is worth. A percentage of your home is mortgaged and therefore technically owned by the bank. The other is percentage is owned by yourself which is your equity in the property.

Using a real case example: if you have a £80,000 mortgage on a property that’s valued at £100,000, you have a loan-to-value of 80% – therefore you have £20,000 as equity. The loan-to-value will partly control what mortgage products you have available to you when you come to buy or sell your home, remortgage or release equity. Having a lower loan to value ratio will mean you have a greater number of competitive rates available to you and therefore more flexibility.

Mortgage FAQs

1

WHAT LEGAL INFORMATION WILL I NEED TO GET A MORTGAGE ?

The information you need varies depending on which bank or building society you are getting a mortgage from however here is a list of information that will always be required from you as a starting point: –

  • Passport 

  • Driving licence

  • Proof of name & address

  • Proof of income 

  • Proof of deposit

  • Latest 3 months bank statements

2

how do we find you the best mortgage ?

Applying for a mortgage can be a complex and often confusing aspect of your dream home journey, however, at Dartford Mortgage Centre, we work with trusted mortgage expert who will give honest straight-forward and jargon-free mortgage advice.

We take care of all the mortgage administration and liaise with estate agents, mortgage lenders and solicitors to make sure the process is as smooth and hassle free for you as possible.

Our mortgage brokers will find the best deal for YOU!

Being a local based and independent business, we provide a service based best in class standards. We offer appointments at a time and place most convenient for you – call us today to book a daytime or evening appointment at either our office or your home (physically or we can connect with you virtually in the comfort of your own home).

3

how do i work out what mortgage i can afford ?

Mortgage Affordability is one of the main criteria that you will be assessed on before you can get a mortgage. It is important you know how much you can afford to borrow. It is not advisable to stretch yourself if you are likely to struggle to keep up with the mortgage repayments.

We will go over your options in a clear and understandable way and help you feel confident in what is achievable for your situation. We will work through a mortgage affordability calculator to obtain the level of affordable lending that you can get.

All mortgage lenders will want to see proof of your income, certain expenditure and any debts you may have. They will also ask for information about other household bills, child maintenance, and personal expenses.

Mortgage lenders require this information in order to prove that you can keep up with the mortgage repayments if interest rates rise.

You will also need to consider your costs of owning a home such as household bills, council tax, insurances and flat costs (if applicable).

Lenders may refuse to offer you a mortgage if they don’t think you’ll be able to afford it or if your credit score isn’t high enough. We highly recommend that to make sure you a mortgage ready by speaking with our qualified mortgage advisers.

4

how can i make sure i have a good credit rating ?

When it comes to getting a mortgage, it’s best to have a clean and strong credit history but we understand that this isn’t always the case. Most mortgage lenders look back at your past 6 years credit history therefore you want to make your credit file is well taken after. You can achieve this by ensuring/having/areas to focus on/focusing on these areas:

  1. No Defaults and late payments
  2. No to Pay Day Loans
  3. No to Gambling
  4. Your Overall Credit Score & Debt

5

how much do i pay for mortgage advice ?

Mortgage advice will usually vary between £495 – £2,000 depending on the complexity of the mortgage application and any adverse mortgage consideration. Typically, our mortgage advice and readiness plan will be £495, however, we provide free mortgage assessment on our initial discovery call which will help you clarify your likelihood to secure a mortgage.

Only when we are satisfied that you are mortgage ready and that we can help you, then we discuss the option of mortgage fees. This gives you enough confidence to know if we can work together to achieve your dream home purchase or remortgage.

For complete transparency, mortgage advisers are paid a commission
directly by lenders for overseeing the clients mortgage application
process to fulfilment.

The relevant total fees charges will be discussed and documented in the
Mortgage Illustration document.