Things you need to know before buying a property in the UK using mortgage

Things you need to know before buying a property in the UK using mortgage.

 

There are over 300 regulated mortgage  lenders and administrators in the UK. The Financial Conduct Authority (FCA) is responsible for prudential supervision of all other types of firm including mortgage administrators and other lenders which do not take deposits. During the last quarter of 2016 (October – December) , the FCA reported that  £62.8 billion worth new residential loans were advanced to clients all over the UK eventhough the figure represented a slight drop of 2.6 percent compared to the previous quarter (July – September).Meanwhile, the  value of all outstanding residential loans was at £ 1,337.8 billion and 31 percent of these still pay interest at rates of BBR + 3 percent or higher.

 

This stats clearly shows that folks are relying on mortgage lending across the UK to acquire new homes for their families and it is crucial to understand some of the key decisions you need to know when you want to borrow money to buy a house.

1.Mortgage lending – There are two types of loans in mortgage lending, regulated and non-regulated loans. Regulated loans are those  loaned to individuals and are secured by a first charge on residential property to be used by the borrower or a close relative.Non-regulated loans are all other mortgage lending to individuals that are not regulated such as buy-to-let lending. Mortgage lenders use two main measures when they are lending to their clients.The first one is the loan-to-value where the loan is calculated as a percentage of the value of the property while the second measure is the income multiple where the loan is defined by the borrowers main income.Credit history is also now being used more and more as well when determining a new loan application.

 

2.Communications – Always communicate to your lender in writing and keep copies as evidence of notification and authorisation.

 

3.Other occupiers – You must always provide a list of people who are not party to your mortgage but will live at the property .It’s also important to obtain a signed deed or form of consent from all occupants who are 17 years old or over.Usually rights and interests of persons who are not party to a mortgage but will be in occupation of the property always affect the rights of building societies and lenders so it’s important to disclose upfront.

 

4.Valuation – Double check the valuation report and ensure that there are no discrepancies in the way the property has been described and the property title in other conveyance documents. Assumptions stated by the valuer like tenure , easements, boundaries and restrictions are vital information that you need to be sure about.

5.Properties let at completion – People take mortgages to buy new homes which they live in with their families or let to others and earn income on them.When you want to take a  buy-to-let property using mortgage , always let your lender know the purpose of the mortgage so that they can help you comply with a sea of different policy guidelines.