JOHN CHARCOL INDEPENDENT MORTGAGE ADVICE

If you’ve got 6 months left on a fixed rate, and you don’t want to pay an ERC (early repayment charge) to switch to a new rate now, you can fix a deal 6 months in advance of the end of your rate with most lenders - this is possible as most mortgage offers are valid for 6 months. That way, if rates continue to decrease between now and then you can look at switching to a lower rate in that time. On the other hand, if rates continue to increase you’ll have secured your rate and won’t be affected by any impending rate increase in that time. A win-win in any outcome.

For those in a fixed rate with a year left or longer, wondering whether it’s worth paying an ERC (early repayment charge) to tie in for a new deal now - rather than reviewing in 6 - 9 months’ time when rates may have increased -  you need to take into consideration the costs of this decision, the ERC percentage and other associated fees the lender may have for clearing the loan early.

It's best to speak to a broker if you’re in this situation. They’ll be able to establish whether the savings you’ll make by switching to a new deal early are worth the ERCs.

The main things that dictate how much you – and your partner if you’re buying together - can borrow are your income and your current credit commitments. Every lender has a different way of calculating how much you can borrow. To find out the maximum mortgage you may be able to secure, contact John Charcol’s advisers on 0330 433 2927 for a no-obligation assessment.

You’ll need a minimum of 5% of the purchase price in deposit. Typically, the greater your deposit, the better the interest rates and deals available to you. This means a 15% deposit will generally help you secure a better rate than a 10% or 5% deposit.

Your monthly payments will vary depending on the type of mortgage, the loan amount, the term of the mortgage and the interest rate.

The main difference between a repayment mortgage and an interest-only mortgage is to do with the way they’re paid back.

With a repayment mortgage, you make monthly payments that go towards capital (the loan amount) and interest. This means that – assuming you make all of your monthly payments – you will have paid off your mortgage be the end of your mortgage term.

With an interest-only mortgage, you make monthly interest payments only; you don’t make a capital payment. Therefore, your loan amount remains the same until the end of your mortgage term. You pay back the loan amount at the end of the mortgage term, either by selling the property or finding another source to repay the loan.

You need buildings insurance on your property to take out a mortgage. You normally arrange this during the conveyancing part of the mortgage process, making sure it will be in place from exchange. John Charcol also recommend that you insure the contents within your home and arrange protection for you and your family. We can help you with buildings insurance, content insurance and protection.

You can switch to a better mortgage interest rate with a new lender by remortgaging. It’s best to wait until your current introductory rate ends, otherwise you risk facing ERCs (early repayment charges) which can make remortgaging expensive. You can start arranging your new mortgage up to 6 months before your current rate ends.

Talk to one of our advisers on 0330 433 2927 to find out more about your options.

It is possible to pay off your mortgage before your introductory deal ends, however you may face ERCs which can make doing this expensive and often more money than it’s worth.

Your credit score is a 3 digit number that’s scored out of 1000 and is based on your financial behaviour and borrowing from the past 6 years. You can find out your credit score by using a credit reference agency – such as Equifax or Experian.

Lenders don’t actually use the credit scores provided by credit reference agencies. Instead, they use the information credit reference agencies hold about you to put together their own credit score for your mortgage application.

You can use your credit score from a credit reference agency as a guideline should you want to try and improve your credit history so you can access better mortgage deals.

A variable rate “varies”. It moves up and down, depending on the Bank of England base rate or market rates.

“Variable rate” is an umbrella term for trackers, lifetime trackers, discount rates and SVRs (standard variable rates). You wouldn’t actually take out a product called a “variable rate mortgage”, but you might take out a tracker or discount mortgage which are types of variable rate mortgage.