7 Mortgage Frequently Asked Questions

Are you thinking of mortgaging for the first time? Do you have some questions that need answering? Then look at our list of 7 FAQs!

1. Must my mortgage be repaid by a certain age?

Your bank will probably want you to have fully paid off your loan by your retirement age, but if you have a lot of pensions due to come in, then the bank might consider these as suitable income. Also, some older people are now mortgaging their property to raise cash, with the intention that the house is sold on their death to clear the mortgage.

2. Should I find my house first?

You cannot get the mortgage fully agreed until the bank has seen the house to make sure that it is suitable security, but you will also want to make sure that you will get a sufficient mortgage before making an offer. Therefore, approach the bank first, get an offer in principal and then find a house in your budget.

3. What is a self cert mortgage?

A self cert mortgage is a mortgage where you do not have pay slips, normally because you are self employed. Instead you certify for yourself how much you are earning, usually via accounts.

4. What is a flexible mortgage?

Again, this can be popular with self employed people, plus those who have large bonuses or are seasonal workers. Basically you have a current account with a huge overdraft. The overdraft initially pays for the house and as you are able to pay money in, your overdraft reduces. When you receive bonuses etc you can pay off a large chunk of the mortgage, or for seasonal workers you can pay off a lot and then reduce payments when you are earning less.

5. What is a fixed mortgage?

This is a type of mortgage in which you and your lender have agreed that for a fixed length of time you will be paying a fixed interest rate. Regardless of what happens with the base rate, your payment stays the same.

6. What are redemption penalties?

If you have agreed a special offer with your bank, they are going to want you to stay with them for a minimum period to make sure that they make a profit on lending you the money. Therefore, there is an enforced minimum mortgage period and if you try to quit the mortgage before the end of this period, then there are charges. For example, 3% in year 1, 2% in year 2 and 1% in year 1.

7. Is insurance compulsory?

It will depend on the bank lending you the money and your precise circumstances. But even if it is not compulsory, if you have dependents then it is a very good idea to have life and maybe critical illness insurance. This way, if you are taken seriously ill or even die, the mortgage is paid off instead of your dependents possibly losing your home as well as you.

If you are considering a mortgage there are no doubt loads more questions that you might want to ask, but these are just some more popular questions to get you started.