Mortgage Essentials

We have access to a panel of major UK lenders with a wide choice of products including some that exclusive to Openwork.  We are continually aware of new mortgage products that lenders bring the market and aim to have the solution to fit your needs.  You can get details of the lenders by speaking to one of our advisers.

Our Adviser’s will provide you with advice and recommendation. In addition to finding the right mortgage we can also help you in other areas associated with buying your home.

How does a Repayment Mortgage Work?
Monthly payments are made up of interest charged on the amount borrowed and a portion of the capital to repay the mortgage. During the early years most of each month’s payments are interest and it is only later on that you start to repay any significant element of capital.

How does an Interest Only Mortgage Work?
Monthly payments to the lender consist of interest only and the outstanding mortgage remains the same. You make payment to a separate investment with the aim of producing enough capital to repay the mortgage in full at the end of the term. There are a number of different investments that can be used. You can also use a combination of them.

What types of Interest Rate Schemes are there?
Variable Rate – The monthly payment fluctuates in line with the lender’s mortgage rate. This can cause budgeting problems in times of increasing interest rates.

Fixed Rate – The monthly payment is fixed over an agreed period of time and will remain the same regardless of whether interest rates rise or fall. At the end of the fixed-rate term the interest rate usually reverts to the lender’s standard variable rate or you may be offered the choice of another product on the terms available at the time.

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Discounted – The lender offers a true initial discount for a given period. At the end of the discounted period, the rate usually reverts to the lender’s standard variable rate. No interest is deferred so the outstanding mortgage will not increase.

Cashback – Some lenders offer a cash payment on completion of the loan, either based on a percentage of the total loan or a flat amount. In some cases, if the loan is redeemed early a proportion of the cashback may have to be repaid to the lender.

Capped Rate – The interest rate is guaranteed not to go above a certain level throughout the capped rate period, which can be from one to ten years but you will benefit from any reduction in interest rates.

Collared Rate – The interest rate will not fall below a certain level for the collared rate period.

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Flexible Mortgages – These schemes allow you to overpay, underpay or even take a payment holiday. Any unpaid interest will be added to the outstanding mortgage. Any overpayments will reduce your outstanding mortgage. Some have the facility to draw down additional funds to a pre-agreed limit.

Lenders that offer these facilities usually require the mortgage to stay with them for a period of time to recoup their costs. This is done by imposing Early Repayment Charges for a given period.

What costs and fees are there likely to be?
Valuation Fee – this may include a non-refundable administration fee and is normally payable on application. The type of valuation you choose will depend on factors such as the age and condition of the property.

Arrangement Fee – This may be payable at application or added to the mortgage. All or part of this may be non-refundable if the mortgage doesn’t proceed.

Legal Costs & Fees – The fees charged by a solicitor include the conveyancing charge (transfer of ownership of land), the cost of legal registrations and miscellaneous costs (disbursements), for example, Local Search Fees and Land Registry. We would recommend obtaining a quote as early as possible in the process or ask one of our adviser’s to provide quotations for you.

Stamp Duty

For details of the current thresholds and information on the changes for first time buyers please click on the following link:

 http://www.hmrc.gov.uk/sdlt/intro/rates-thresholds.htm

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Higher Lending Charge – This may apply if you borrow more than, typically 75% of the value of the property. In these cases the lender requires additional security on the amount in excess of their threshold and will do this in the form of an insurance policy.

The policy is used to protect the lender in a situation where a property is repossessed and the loan plus any unpaid interest exceeds the value of the property. The lender arranges this insurance and the premium is paid by you, in some cases it can be added to the loan. In the event that a claim is made you will still owe the insurance company any payment made.

Repayment Charge – There may be an Early Repayment Charge on the product selected. This could be payable if you paid off your mortgage before the end of the term.

Your home may be repossessed if you do not keep up repayments on your mortgage.