Can I Get A Mortgage With My Credit Rating?

An interest-only mortgage is an attractive proposition for a first-time buyer as they keep the monthly repayments low. However, it’s important to understand that they are rarely a long-term solution. If, for example, you stay on an interest-only mortgage for the duration of your deal, the full value of the property would still be owed at the end.

Still the most popular form of mortgage. This is when you pay for the value of the property and the accrued interest at the same time. The amount owed gradually decreases during the term of your repayment mortgage, and the property is paid off in full at the end.

This is when funding for a mortgage comes from an alternate source to the usual channels (i.e a high street bank or building society). If a specialist mortgage is the only route available to you, you will find that the investor will have a much stricter set of requirements for you to meet before they are prepared to hand over any monies.

A re-mortgage is where you have an existing mortgage and wish to change it, and this could be for a variety of reasons. This may happen because the mortgage you currently have is reaching the end of its terms and conditions and you need to find a replacement, or it could be that market conditions have changed, and your payments have increased. Re-mortgaging can also happen when you have a change in personal circumstances. For example, you may have built up your credit score since taking out your initial mortgage and now wish to transfer it to a mortgage that gives you more favourable terms.

Also known as a business mortgage, a commercial mortgage is a way to let business owners borrow the money they need to purchase land or property for their business.

A tracker mortgage means that your payments will rise and fall with the Bank of England base rate, so if there is a sudden spike in this figure, your monthly repayments will shoot up accordingly. Before you take out a tracker mortgage, make sure that you will be able to afford the monthly payments if this were to happen, or you could be at risk of losing your home if you don’t keep up the repayments.

This will keep your mortgage payments at one set rate for up to 10 years. Once the fixed-rate period has ended, your mortgage will switch to a standard variable rate (SVR) with that supplier, so this is when most people choose to search for an alternate mortgage deal as the SVR will usually be much higher than the fixed rate you are used to paying

Discounted variable-rate mortgages usually last between two and five years and are a fixed fee set just below your lenders SVR. However, if your lender's SVR increases, so will your mortgage payments.

Offset mortgages are linked to your savings account. The idea behind them is, that instead of earning interest on your savings, you pay less interest on your mortgage instead. It goes without saying that this mortgage option is usually only effective if you have substantial savings to offset in the first place.

There are numerous grants and schemes available to first-time buyers to help them get their first step on the property ladder. Some of these schemes include up to a 30% discount on the price of a new-build home, while some lenders will only require a 5% cash deposit as opposed to the usual 25% required when buying a property. You may also escape paying the stamp duty tax which is normally an additional cost that you pay before taking ownership of your new property. However, if you already own another property, then there are conditions that will make you ineligible for most of these schemes, so it’s best to check before applying for a first time buyer mortgage.

Buy-to-let mortgages are when you buy a property with the intention of renting it out. This may be a residential property or a commercial business unit, but the principle remains the same. Usually, with a buy-to-let mortgage, you will have to show evidence of having additional savings in case something goes wrong with the property. By law, you must keep your property to a habitable standard for your tenants, so buy-to-let mortgage lenders will want to see that you have the funds available to do this.

An equity release mortgage is when you wish to withdraw some of the value in your property as a lump sum. For example, you may have bought your property for £250,000 and its current market value is now £320,000. This means that there is £70,000 worth of equity in your property. You may wish to use £20,000 of that equity to do home improvements, buy a car, put a deposit down on another property, or go on holiday. Your monthly mortgage payments will then increase in line with how much equity you have taken out.