Mortgages for Low Income Families

A guarantor mortgage is a type of mortgage that involves a third party, usually a family member or close relative, guaranteeing the mortgage repayments on behalf of the borrower. This arrangement is more commonly now known as joint borrower sole proprietor as the guarantor essentially is included as part of the mortgage application but not included on the title deeds to the property.

Shared ownership is a form of home ownership that enables buyers to purchase a share in the property and pay rent on the remaining amount. The buyer usually pays an initial deposit, which is between 5% to 10% of the price of the share being purchased, and then pays a reduced rent on the remaining portion owned by a housing association or other organisation.

A joint mortgage is a type of mortgage that two or more individuals take out together to purchase a property. It allows multiple borrowers to combine their incomes and share the responsibility of repaying the mortgage loan.

The loan-to-value ratio (LTV) is a financial term that represents the ratio between the loan amount and the appraised value or purchase price of an asset, typically a property. It is commonly used by lenders to assess the risk associated with a loan.

Repayment and interest-only mortgages are two different types of mortgage repayment structures. Here’s an explanation of each:

• Repayment Mortgage: A repayment mortgage, also known as a capital and interest mortgage, is a type of mortgage where your monthly payments cover both the interest on the loan and the repayment of the principal amount borrowed. Over the term of the mortgage, typically 25 to 30 years, your monthly payments gradually reduce the outstanding balance. At the end of the term, assuming all payments have been made, the mortgage is fully repaid, and you own the property outright.
• Interest-Only Mortgage: An interest-only mortgage is a type of mortgage where your monthly payments only cover the interest charges on the loan. Unlike a repayment mortgage, you do not make any principal repayments during the term of the mortgage. As a result, the outstanding balance of the loan remains the same throughout the mortgage term. Therefore your monthly payments are less. However, lenders may restrict the maximum loan to value on an interest only basis – generally between 50% to 75%.

With an interest-only mortgage, you are required to have a separate plan or investment vehicle in place to repay the principal amount at the end of the mortgage term for residential mortgages. This could involve savings, investments, or other arrangements that aim to accumulate sufficient funds to pay off the loan. It’s crucial to ensure that the repayment plan is robust and will be able to cover the loan amount. For Buy to Let mortgages lenders will typically accept sale of the security property as the investment vehicle.

Consider a longer-term mortgage if:

• You prefer lower monthly payments to manage your budget.
• Affordability is a priority, allowing you to allocate funds to other financial goals.
• You plan to sell or refinance in the near future.

Opt for a shorter-term mortgage if:

• Minimizing total interest payments is important.
• Building equity quickly is a priority.
• You plan to stay in the property for an extended period.
• Ultimately, the decision should align with your financial circumstances and goals.

Consulting a mortgage advisor can provide personalized guidance.

Yes, it is possible to get a buy-to-let mortgage as a first-time buyer, but it can be more challenging. As a first-time buyer lenders may view you as a higher risk and will also base their lending decision on both rental income and your own personal affordability. However, if you have a good credit score, a stable income, and a solid business plan for your rental property, you may be able to secure a buy-to-let mortgage. It’s important to shop around and compare different lenders to find the best deal for your individual circumstances which is why contacting a mortgage broker for the right advice is a good solution.

Yes, you can get a first-time buyer mortgage if you’re self-employed but most lenders would require a 2 year minimum trading history. However, additional requirements may apply. You’ll need to provide evidence of income, such as business accounts and tax returns. Lenders may request an accountant’s certificate and consider your trading history. A larger deposit may be required. Specialist lenders may cater specifically to self-employed borrowers. It’s best to consult with a mortgage advisor or lenders directly for personalized guidance.

Apply for a first-time buyer mortgage when you have prepared your finances, saved for a deposit, and are ready to commit to homeownership. Consider obtaining a Decision in Principle before house hunting. Consult with a mortgage advisor for personalized guidance.

When budgeting for homeownership, consider the following costs: –

• Deposit: Set aside funds for the down payment on the property.
• Stamp Duty or LBTT: Pay the property tax based on the purchase price.
• Solicitor or Conveyancer Fees: Budget for legal services.
• Valuation and Survey Costs: Account for property valuation and survey expenses.
• Mortgage Fees: Consider arrangement or booking fees associated with the mortgage.
• Home Insurance: Plan for building and contents insurance.
• Moving Costs: Budget for expenses related to moving your belongings.
• Ongoing Costs: Include mortgage repayments, council tax, utilities, maintenance, and service charges.

Ensure you research and estimate these costs to create an accurate budget. Our advisors are always available to assist you in finding the most suitable deal for your unique situation.