In this mortgages guide:

Mortgages and coronavirus

The mortgage world has recently been rocked by the outbreak of coronavirus (Covid-19).

Following the economic shock caused by the virus, the Bank of England decided to cut the base rate from 0.75% to 0.25% on 11th March 2020.

As of 19th March 2020, it's now been reduced further, down to an all time low of 0.1%.

This change may impact those looking to buy as well as some existing homeowners, depending on their mortgage type.

Read our coronavirus guide to learn more about how it may affect a home purchase or remortgage.

First time buyers and anyone looking to buy

If you're looking to buy or going through the mortgage process it's recommended you speak to a mortgage adviser to see how the recent changes could impact you.

Remortgaging

Now is a good time to remortgage as mortgage rates rates are low.

Check with your lender or with a mortgage adviser to find out about potentially better deals.

Variable rates

Tracker and discount variable rate mortgage customers may have seen their mortgage rates drop recently as a result of the lower base rate.

Check with your lender to find out if your mortgage rate has changed.

Fixed rates

If you're on a fixed rate mortgage you won't see a change in your rate as it's locked in until the end of your fixed rate term. Your monthly repayments will stay the same.

We'll update this guide if lenders announce any changes to their mortgage rates.

Applying for a mortgage when you've been furloughed

If you’ve been furloughed, it may change things for you when looking to get a mortgage.

The scheme means you may be paid less than your usual salary. 

The government is paying up to 80% of furloughed employees’ salaries. 

Most lenders will only consider the furlough amount when calculating what you can afford to borrow.

Being furloughed can also mean that your employment status isn’t secure. This could make lenders unsure about whether they should lend to you.

Applying for a mortgage after returning from furlough leave would improve your chances of being accepted for a mortgage.

Find out more about furlough and how it can affect your mortgage application on our coronavirus guidance page.

Explore mortgage deals, guides and calculators

What is a mortgage?

A mortgage is a loan you use to buy a property. You usually pay back the amount you borrow as well as interest.

The amount of interest you pay depends on:

  • the interest rate you’re on

  • how long your mortgage is for

The interest rate you pay can be affected by:

  • the size of your deposit

  • how you’ve managed debt in the past

  • the type of mortgage you choose

You pay back part of your mortgage every month for a certain number of years. Most people take out their first mortgage for 25 to 30 years.

You won’t have the same mortgage lender all that time.

This is because many mortgages have a reduced rate for a certain period, often for at least two years.

When that period ends, people tend to switch to another mortgage that has an initial reduced rate.

Switching mortgage lenders is called remortgaging.

If you don’t pay your mortgage, your lender could take your home from you.

If they did, it would be much more difficult for you to get another mortgage.

How to get a mortgage

It can take from a few weeks to several months to get a mortgage. Here’s how.

Step 1. Work out how much you can borrow

Use our mortgage calculator to work out how much you could borrow. 

You’ll need to put in:

  • salary

  • deposit

Once you know how much you could borrow add up the other costs such as:

Some brokers, like Trussle, don’t charge a fee. 

A broker can give you a much more accurate figure of what you could afford than a mortgage calculator.

Read our mortgage broker guide to find out more.

Step 2. Get a Mortgage in Principle (MIP)

This is also called an Agreement or Decision in Principle.

It’s a statement, from a lender or a broker, saying that a lender could lend you a certain amount of money.

When you make an offer on a home you’ll probably need to show your MIP to the estate agent. It shows them that you could, in principle, get a mortgage.

Get a free Mortgage in Principle from Trussle online in minutes.

Step 3. Look for a home

Use websites such as Zoopla or Rightmove to find homes you can afford and go and see them.

Don’t wait for the perfect property as you may never find it.

Make an offer that suits your budget.

Step 4. Choose your mortgage

Get in touch with your mortgage broker or lender when a seller accepts your offer.

A broker has a much wider choice of deals than a lender. A lender can only offer you their mortgages.

Trussle works with 90 lenders offering about 12,000 deals.

Step 5. Find a solicitor

A solicitor who deals with buying a home is also known as a conveyancer.

It’s a good idea to ask around for a recommendation as there can often be problems when buying a property.

And some solicitors are much more expensive than others.

Your mortgage broker or estate agent may also suggest one, but you don’t have to use them.

Step 6. Apply for your mortgage

Give your broker the documents they need so they can apply for your mortgage.

As well as bank statements, they’ll need proof of:

  • address

  • ID

  • income

  • deposit

The lender will look at your application and do a credit check.

Read our credit score guide to learn more.

Step 7. Get a valuation

A lender needs to value the property to see how much it’s worth in case they have to sell it if you don’t pay your mortgage.

There’s a chance they decide the property isn’t worth the price you’re paying for it.

This is known as a downvaluation and it could affect your mortgage.

The lender also needs to make sure that your home meets certain rules set out in your mortgage.

Speak to your broker if you’d like a more detailed survey done.

Step 8. Get your mortgage offer

This is when the lender agrees to give you the mortgage you asked for.

Step 9. Exchange contracts

Your solicitor and the seller’s solicitor will exchange your contracts. The only thing you need to do is sign yours.

Both solicitors will also find a date when you get the keys to your new home.

This is when the property is finally yours and is known as completion.

Step 10. Move into your new home

Pick up the keys from the estate agent and make yourself at home.

Learn how to get a mortgage with Eva, a Trussle mortgage adviser

How much mortgage can I get

You can usually borrow around 4 to 5 times your salary.

Lenders have different rules and the amount they times your income by can depend on a number of things.

Find out more about how much mortgage you can get.

How much mortgage can I afford

Mortgage calculators will give you some idea of how much you might be able to borrow.

But there are some things that mortgage calculators don’t take into account.

Get a much more accurate figure of how much you could afford to borrow.

Mortgage calculator

Most basic mortgage calculators, including our mortgage calculator, are affordability calculators.

They tell you how much you may be able to borrow with a mortgage.

Try our mortgage calculator to see how much you could borrow.

How much a mortgage costs

The true cost of your mortgage is your monthly repayments, plus fees and charges, minus any cashback.

You can calculate your monthly repayments with our mortgage calculator.

Before choosing a mortgage, it’s very important to know exactly how much you’ll pay for it in the long run.

Here are some of the fees and charges you might have to pay.

Early repayment charge

You might have to pay a charge if you remortgage before your current deal ends.

Cost: up to 5% of your mortgage balance

Arrangement fee or product fee

This is what you have to pay simply for taking out the mortgage.

Cost: often around £1,000

Booking fee/reservation fee/application fee

This is the cost of applying for a mortgage.

Cost: £100 to £200

Valuation fee

A lender has a valuation done to check what your house is worth in case it needs to sell it if you stop paying your mortgage.

It also needs to make sure that your home meets certain rules in the mortgage.

Cost: free or around £300

Chaps fee (or funds transfer fee)

This is for sending the mortgage funds to you or your solicitor.

Cost: around £30

Deeds release fee/mortgage completion fee/redemption administration fee/discharge fee

This is for ending your mortgage.

Cost: from £50 to £300

Conveyancing fees

These are the legal fees.

Cost: £850 to £1,500

Broker fees

Unlike Trussle, some brokers charge a fee. It can be a set amount or a percentage of your mortgage.

Cost: free or around £500

Stamp duty

Stamp duty is a land tax. How much you pay depends on how much you pay for your home and where it is.

It’s often the second biggest cost of buying a home after your mortgage.

See our stamp duty calculator guide to know more.

And use our stamp duty calculator to find how much stamp duty you need to pay.

Mortgage types and products

If you’re buying a property there are a lots of different types of mortgages and products you can choose from.

The best for you will depend on things like:

  • whether you plan to live in the property or rent it out

  • how long you plan to live there if it's your next home

  • affording your mortgage if it goes up

If you’re not sure which mortgage or product is right for you speak to a mortgage broker.

Fixed rate mortgage

A fixed rate mortgage lets you fix your mortgage rate from between 2 to 15 years.

This means that your repayments will stay the same during that time.

You’ll need to think carefully about how long to fix your mortgage rate. What’s best for you will depend on your personal situation.

The interest rates of fixed deals are usually higher than those of discounted variable rate deals.

See our fixed rate mortgage guide to find out more.

Variable rate mortgage

A variable rate mortgage, like a tracker mortgage or a discounted variable rate mortgage, has an interest rate that can change.

This means your repayments can go up or down.

Usually the rate is higher than the Bank of England’s interest rate.

Read our variable rate mortgage guide to learn more.

Tracker mortgage

Tracker mortgages follow the Bank of England’s interest rate and are often a certain percentage above it.

Your monthly repayments can go up or down.

Discounted variable rate mortgage

Discounted variable rate mortgages are linked to your lender's standard variable rate (SVR).

The rate is discounted, usually between 2 and 5 years.

These mortgages usually have the lowest interest rates and smallest monthly repayments.

Your monthly repayments can go up or down.

First time buyer mortgage

First time buyers usually take out the same type of mortgages as everyone else.

But lenders often give first time buyers special deals, such as cashback and fee free mortgages.

See our first time buyer guide to find out more.

Buy to let mortgage

If you buy a home to let, you’ll need a buy to let mortgage.

And if you rent out the home you normally live in, you may have to switch to a buy to let mortgage from a residential one. 

There are important differences to a buy to let mortgage:

  • the fee the lender charges to get one is usually higher

  • interest rates are normally higher

  • the minimum deposit is normally around 25% of the property's value

See our buy to let mortgage guide to find out more.

Bad credit mortgage

There’s no such thing as a bad credit mortgage. But there are lenders who specialise in helping people with bad credit get a mortgage.

These mortgages can be more expensive.

If you’ve got bad credit you apply for a normal mortgage.

Lenders will look at your credit score, and other information, and decide whether to give you a mortgage.

Read our bad credit mortgage guide to find out more.

Interest only mortgage

With most mortgages you pay back part of the loan each month, as well as interest.

If you take out an interest only mortgage, you only pay the interest each month.

This means your monthly payments will be smaller than if you take out a normal repayment mortgage.

You need a plan in place to pay off all the loan when your mortgage ends, such as selling your home or an endowment.

Find out more with our interest only guide.

Combined repayment and interest only mortgage

With this sort of mortgage you pay the interest each month and only part of the loan.

You have to pay the rest of the loan in one go when your mortgage ends.

Flexible mortgage

Some mortgage deals let you pay more or less each month.

Paying more than you need to can be a good idea as you’ll pay less interest in the long term.

Sometimes you can stop paying your mortgage for a while, which is called a payment holiday.

Lifetime mortgage

A lifetime mortgage is a loan you take out of your home.

The loan, and the interest, is paid off when your home is sold when you die or you’re moved permanently into residential care. 

See our lifetime mortgage guide to find out more.

Offset mortgage

With an offset mortgage your mortgage is linked to your savings account.

Instead of earning interest on your savings, you pay less interest on your mortgage.

If you have a £150,000 mortgage and £30,000 in savings, for example, you’d only pay interest on £120,000.

Your monthly repayments will probably be based on the full £150,000, so you’d overpay each month and pay off your mortgage quicker.

Benefits include:

  • pay off your mortgage quicker

  • pay less interest in the long run

  • pay less tax because you don’t earn any interest if the money is offset against your mortgage

Best mortgage deals

It can be difficult to work out which mortgage deal is best for you.

Read our compare mortgage rates and deals guide to help you find the right one.

The UK’s best mortgage lenders

There are around 90 mortgage lenders in the UK offering around 12,000 deals.

They range from the big six, such as HSBC and Barclays, to smaller lenders such as Kensington and Skipton.

See our mortgage lenders guide for our review of the best lenders in the UK.

House deposit

A house deposit is the money you pay towards your home before you start paying the mortgage. 

It’s a percentage of the total house price and you usually have to pay at least 5%.

It is possible to get a mortgage with no deposit.

Read our house deposit guide to find out more.

Remortgaging

When the initial period of your deal ends, your lender will move your mortgage onto their standard variable rate (SVR).

This will usually make your monthly payments higher.

Research for the Trussle Mortgage Saver Review 2018 found that the difference between a market leading deal and the average SVR is around £4,700 in interest a year.

It’s a good idea to start looking for a new mortgage deal 3 to 6 months before your lender moves your mortgage onto their SVR so you’ve lots of time to switch.

See our remortgage guide to find out what to do.

Government Help to Buy scheme

Help to Buy is one of a number of schemes the government offers to help you buy a home.

They include:

  • Help to Buy Equity Loan

  • Lifetime ISA

  • Shared Ownership

Use our government homeownership tool to find out which one would suit you best.

And read our government homeownership guide for more information about each one.

Mortgage with arrears

Talk to your lender if you fall behind paying your mortgage.

They might allow you to:

  • pay your mortgage for longer

  • pay just the interest

  • have a mortgage holiday

Pay your mortgage for longer

If you took out your mortgage for 25 years, for example, extending it to 30 could reduce your monthly payments enough for you to manage them.

If you extend your mortgage, you’ll pay more interest in the long term.

Pay just the interest

You may be able to switch to paying just the interest for a short amount of time, rather than the interest and loan which is how most mortgages work.

This will also make your monthly payments lower, but you’ll need to decide how to afford the payments when they go up again.

Payment holiday

Your lender might offer you a payment holiday, which means they'll let you stop making payments for a certain period of time.

This isn’t possible with all mortgages.

When the holiday ends, your mortgage balance will be higher because you haven’t been paying it off, so your payments will be higher too.

How many months in mortgage arrears before repossession

Lenders normally write to you 15 days after you’ve missed a payment.

Often they give you at least three months to sort out your payments.

If you’re still behind on payments by this time, your lender will consider other ways of getting their money back.

This includes repossessing your home.

If they decide to repossess your home, they’ll go to court to get a possession order.

If the court gives your lender an outright possession order your lender has a legal right to own your home on the date given in the order.

If you don’t leave your home by that date, your lender can ask the court to evict you.

If they’re given a suspended possession order you’ll be able to stay in your home as long as you keep up with the payments set out in the order.

Can I sell my house with mortgage arrears

You can sell your home rather than risk your lender taking you to court.

When lenders sell a home, they prefer to do it quickly, so you may be able to get a better price doing it yourself.

You’d also avoid having a repossession on your records, which could affect your chances of getting a mortgage in the future.

If you want to put your home on the market speak to your lender to make sure you’re allowed to.

You can’t sell your home if your lender’s already been granted a repossession order by a court.

All mortgage guides, calculators and deals

Get a mortgage with Trussle today

  • Fee-free online mortgage broker

  • Rated 4.9/5 on Trustpilot - the UK's top rated online mortgage broker

  • Thousands of deals from 90 lenders

  • Straightforward online application process

  • No waiting for appointments

  • No paperwork

  • Free ongoing mortgage monitoring

Your home could be repossessed if you don't keep up repayments on your mortgage.

You may have to pay an early repayment charge to your existing lender if you remortgage.

Trussle holding phone icon

What people are saying about Trussle...