FAQs

A mortgage is a “secured” loan used to buy property or land, where you repay the loan over time, usually with interest. The lender holds a legal claim often called a “charge”, on the property until the mortgage is fully repaid.

This depends on your income, outgoings, credit history, and the lender’s affordability criteria. To gain a quick understanding of your affordability, please use our affordability calculator, or to fully understand your borrowing capacity, please contact us and we will be able to arrange a full assessment.

You can find information on the types of mortgages available here. Common types include fixed-rate, tracker, variable-rate, and interest-only mortgages. The right one depends on your financial situation and goals.

With a repayment mortgage, you pay both the interest and some of the capital each month. With interest-only, you pay just the interest and repay the loan at the end of the term. You can find more information here, under the Repayment Types section.

A DIP – Decision in Principle, or AIP – Agreement in Principle, is an agreement from a lender to offer you a mortgage, based on your information that we submit, but without a full underwriting assessment of your situation being completed.

It’s highly recommended that you obtain a DIP prior to starting your house hunt, as it shows sellers and estate agents that you’re serious buyers and more importantly, gives you an idea of your budget.

It is important that the information submitted is as complete as possible to avoid being refused a mortgage later on at Full Mortgage Application stage. Engaging with a mortgage professional such as us here at Hobb’s will ensure the best possible outcome at all stages, from understanding your budget through to avoiding disappointment later on.

No.

• All estate agents will request evidence of your ability to actually be able to afford any offer you make on a property.
• Most will usually do this by asking if you have been “financially qualified” by a professional. They will then offer the assistance of their “Trusted In-house” mortgage advisers.
• Some may even insist you use them.
• You may choose to accept their offer of help, but it is your prerogative to refuse their offer and choose for yourself who you want to trust with your sensitive financial information.

Being “financially qualified to make an offer” simply mean being able to demonstrate proof of funds to support your offer. Most commonly achieved with a DIP from any mortgage professional or going directly through your preferred lender – such as your current bank or building society

Please speak with one of our advisers if you feel pressured at any point in your house buying journey. Even if you haven’t spoken with us yet, we are always happy to listen to your situation and walk through your options, with no obligations to use our services thereafter. At Hobb’s we look to foster lasting relationships with our clients, with trust being one of the strongest pillars.

Typical fees include arrangement fees, valuation fees and legal fees. Some deals come with incentives like cashback or free legal work.

• Arrangement, or Product Fees are often paid to access a lower percentage rate of interest, reducing your monthly repayments for the initial offer period of a mortgage. This can sometimes make the overall deal cheaper – an adviser will be able to help you decided if it is in your interest to opt to pay an arrangement fee for a lower rate.
• Valuation fees, charged to you by the bank, to assess the value of the property – the security they are lending against.
• Legal fees, are charged to cover any conveyancing costs incurred by the bank.

Other typical fees, although not charged by all lenders, include:

• CHAPs or money transfer fees, to transfer the monies to you Solicitors.
• Discharge/Disbursement/Exit fee, charged by the bank to complete the necessary work at the end of your term to close your mortgage. Paid either upfront or at the end of your mortgage.

It’s not all fees though, some deals come with incentives like cashback or free legal work, making them a more attractive option.

LTV, or Loan To Value, is the ratio of the outstanding mortgage balance against the value of the property. Usually expressed as the percentage of balance outstanding. E.g. A mortgage of £240,000 with a property value of £300,000 will give an 80%LTV. This is important to understand when determining how much deposit you will need.

As a general rule, most lenders will only lend to maximum of 95%LTV, meaning you will need a minimum of 5% of the property value as a deposit. Some lenders will offer mortgages to higher LTVs all the way up to 100%, provided certain criteria are met, such as new build properties where the builders offer a reduced price, and similarly, landlords selling to sitting tenants.

Lenders also offer better (lower) interest rates to those with larger deposits. These normally become accessible at 5% increments, so with a 10% or 15% deposit, and the best offers being available to those with a 40% deposit or equity within the property when re-mortgaging.

Generally, to be classed as a first-time buyer, ALL parties to the mortgage, must have never held a mortgage or owned a property before. This is true whether it is a sole application, a couple, or anyone else named on the mortgage. For example on a Joint Borrower Sole Proprietor mortgage, all borrowers need to fit this criteria.

Some lenders will consider you to be a first-time buyer if you have not held a mortgage or owned a property for at least 3 years.

There are schemes available to assist people to get on to the property ladder. These include, Help to Buy (now replaced by First Homes in England), Shared Ownership, and Lifetime ISAs scheme. Whilst we can not advise on the suitability of these schemes we do understand them and can guide you through their various features.

At the end of your initial interest offer period, if you do not switch your mortgage you will revert on the your lenders, Standard Variable Rate, their SVR. This is usually considerably higher than the rate you will have been used to paying and your monthly payments will go up inline with your “new” interest rate.

Re-mortgaging means switching your mortgage to a new deal, either with your existing lender or a new one.

If you have previously arranged your mortgage through us, this is a really straight forward process: we will reach out to you before the end of your current term, confirm a few details and search for the latest and best deals, before completing your switch application. 

If you are new to Hobb’s, we will conduct a more thorough factfinding process to understand your situation, before sourcing you the best deals and taking care of the application process.

Usually when your current deal ends or if you have already rolled on to the lenders standard variable rate. It is also the ideal time if you wanted to arrange further borrowing, for example, building works, or if you were in a position to repay some of your loan, without incurring any Early Repayment Charges, ERCs to reduce your mortgage term. 

Yes, many people do this to fund home improvements, pay off debts, or invest in property. 

This will normally be subject to more thorough check by your lender, who want to re-assess your ability to repay the mortgage.

It’s a mortgage specifically for properties you plan to rent out. It differs from a standard mortgage in deposit requirements and lender criteria. 

Yes – typically at least 20–25% of the property’s value. 

For experienced landlord with multiple properties, or a portfolio, it may be possible to leverage any excess equity in the combined portfolio and a good Income Coverage Ratio or ICR, to obtain a mortgage for your next property with less than a 20-25% deposit.

Some lenders allow it, but it’s more difficult and specialist advice, such as that offered by Hobb’s is essential here. 

First-Time Buyer, First-Time Landlord is a niche area. It may be an option to consider for someone who has considerable saving, who isn’t yet ready to put down roots, but who would also like to get on to the property ladder. It is also an option for those who have inherited and not be able to afford the running cost of a property on their own. 

Fixed-rate mortgages protect you from rate changes. While you are on a fixed rate, your monthly payments will be the same each month, until the end of the fixed term deal.

As with all credit commitments, the higher your rate of interest, the larger your monthly repayments will be. This is especially true if you’re on a Variable (SVR), or Tracker (BoEBR) mortgage.

On a variable or tracker mortgage, your monthly repayments will fluctuate with any changes in the measure of interest your payments are calculated on, whether that be the Bank of England Base Rate, BoEBR for tracker mortgages, or your lenders Standard Variable Rate, SVR for variable mortgages. Your payments may go up as well as down. 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

If you are on a Tracker or Variable rate mortgage and you are finding that you are struggling to maintain your payments, speak to your lender immediately. You can also contact us for advice and we will endeavour to help you resolve your situation.

Fixing you rate offers stability for a set period. It’s a good option if you want predictable payments, especially when rates are expected to rise. 

The good news is that if you are on a Variable rate mortgage, that they often don’t have any ERC’s attached, so moving to a fixed rate can be done very quickly, avoiding the financial shock of having your monthly payments increase suddenly and becoming potentially unaffordable.

You should contact your lender immediately. Missing repayments can harm your credit score and may lead to repossession in serious cases. Lenders will always look to work with you to resolve any issues in the first instance.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE