Residential Mortgages
Buying a property
Buying a property to live in will likely be one of the biggest, if not the biggest purchases you will make in your lifetime. This type of mortgage is called a residential mortgage and is where a loan is taken out against the purchased property that you plan to live in.
This property must be used as a residence by at least one of the borrowers, not rented out to tenants or used for any other commercial purposes.
If you’re looking to rent out your property, you will require a buy-to-let mortgage instead.
Your home may be repossessed if you do not keep up repayments on your mortgage.
How do mortgages work?
This type of mortgage is usually taken out over a relatively long period of time, with the loan being paid back monthly until you own the property outright. Interest is added on top of this by the lender and is charged at a certain percentage of the outstanding mortgage value.
Typically, the minimum deposit required for a residential mortgage is 5% LTV (loan-to-value), but most lenders will offer a lower mortgage rate if a higher deposit is given.
If you’re a UK expat currently living abroad and are planning to purchase a home for your UK based family, you may be looking for an expat residential mortgage.
What repayment types are there?
For residential mortgages, there are two broad types of mortgage products available: repayment and interest-only mortgages.
A repayment mortgage is where your monthly payments consist of a portion of the actual value of the mortgage capital, plus interest. However, an interest-only mortgage consists only of the interest added to the borrowed amount, with you paying the remaining capital at the end of the term.
Dependent on the loan you choose, interest is charged in three ways, which are fixed-rate, variable rate, or tracker rate mortgages.
Process of acquiring a UK residential property
1. Speak with our advisers
Begin your journey by getting in touch with our expert mortgage team who will be able to answer any questions, discuss your options and provide possible next steps.
2. Get an agreement in principle
Our friendly advisers will apply for your Agreement in Principle (AIP), which is where our great relationship with lenders comes in. Your AIP is an indication that the lender will allow you to borrow the specified amount, based on the condition all submitted information is correct. Once you have this, you can begin property hunting and put an offer on the property you wish to purchase.
3. Assign us as your mortgage brokers & choose a conveyancer
Once your offer is accepted, we will support you with your mortgage application and liaise between the lender and you. The lender will now assess your application and arrange a valuation of your property.
4. Receive your mortgage offer
If your lender is happy, they will send both us and you an approved mortgage offer. Your chosen conveyancer will now complete any required legal work. You should look to speak with us at this stage about protection planning, and buildings and contents insurance, so it’s all in place at the point of exchange.
5. Exchange and completion
If you’re remortgaging, your conveyancer will confirm a date when the funds will be drawn. If you’re purchasing a property, when contracts have been exchanged, you are then legally tied to the purchase of the property. A date will be agreed upon for you to complete and collect the keys—congratulations is also in order.
What optional planning services do Fidelius offer?
When purchasing a home, you’ll need to consider protection, such as life and property insurance. During your mortgage application, your adviser will look at your needs and situation to offer you appropriate optional services, so you’re protected and insured for when you complete. At Fidelius, we offer the below:
Life insurance
Our friendly team will tailor your life insurance quotes to suit you, finding a policy that meets your needs now and for the future.
The two types of life insurance cover available, are:
- Life Insurance: A lump sum is paid out if you die while covered by the policy.
- Decreasing Life Insurance: A repayment mortgage, so the amount of cover reduces in line with the decrease of a repayment mortgage.
Buildings and contents insurance
Property insurance can cover you in the event of damage caused by water, fire or extreme weather. Depending on your policy, it can also mean your possessions are covered if your home is damaged or possessions are stolen during a burglary.
- Buildings Insurance: Covers the structure of your home and any permanent fixtures, such as roof, bathroom suite and kitchen units
- Contents Insurance: Contents inside your home, such as carpets and curtains, electricals, clothes, and personal possessions are covered, in case of burglary or damage by fire or water
If you’re unsure which protection will suit you best, our friendly team will be able to discuss this with you during your consultation.
Why Fidelius Mortgages?
Fidelius Mortgage are an independent, experienced, yet forward thinking Financial Services company, committed to providing the very best advice through our top-quality team.
Our experienced team can offer mortgage services for first-time buyers, house moves and those who need to remortgage.
We remain on hand every step of the way, taking away the strain and worry that can come with buying or raising finance from a property. As we are independent, we can source you the best lender options for your circumstances, while offering optional services to ensure you’re covered.
Fidelius Mortgages believe in establishing a lifelong commitment to our customers with a service that is cost effective, valuable, and able to deliver total peace of mind. From our support teams, right up to management, we pride ourselves on having the correct work ethos and culture needed to provide excellent customer experience.
FAQs
Can you switch from a buy-to-let mortgage to a residential mortgage?
Yes, you can, but it may require you to remortgage with another lender who is happy to offer you a residential mortgage on the property. Some lenders will allow you to perform a ‘product transfer’, which is where you remortgage onto another of their products better suited to your needs.
What are typical fixed-rate periods?
There are typically 2, 3, 5, 7 and 10-year fixed rates. Some rates can be fixed for the lifetime of the mortgage, dependent on circumstances.
How are interest rates offered on a residential mortgage?
Each interest rate can vary on a residential mortgage, depending on the lender and personal circumstances of those applying. A lender will look at several factors when making a decision, including income, deposit size, age, and property type.
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