Select one of the following below to take you through some basic facts
regarding mortgages in general.

Borrowing Limits
Repayment Schedules
Deposit
100% Loans
Initial Costs
What You Will Have To Pay

BORROWING LIMITS

The first step towards buying your home is to find out exactly how much money you
can borrow to buy your home. This is worked out according to your income, using
certain income multiples. These are usually three times your annual salary before
Tax and National Insurance are taken away.

If it is to be a joint loan, the lender is likely to offer you either three times the annual
income of the higher earner plus the total second income, or two-and-a-half times the
total joint income.

You can add your own savings to the amount offered by your lender in order to
estimate the range of house prices suitable for you.

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REPAYMENT SCHEDULES

With the large number of discount products in the marketplace offering very attractive
(low) headline rates, and some short term fixed rates which are below the lender's
standard variable base rate, you will need to be aware of how much your monthly
payments will increase at the end of the initial period.

In simple terms, if the initial rate of a discount product is 2%, and the lender's
variable rate is (say) 8%, then your monthly payments are going to increase 4 times
at the end of the discount period.

Make sure you are aware of the figures before you make a commitment.
The 'Find A Mortgage' area within this site will provide details of
your monthly payments over the full mortgage term.

Of course, the figures will assume that current interest rates stay the same, and you
will need to think about your financial situation should interest rates rise significantly
in the future.

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DEPOSIT

Remember that the majority of lenders offer mortgages of up to a maximum of 95%
of the value of the property, or its purchase price, whichever is lower.

Therefore you will need to save up a deposit of at least 5% of the price.

Check the loan to value (LTV) in the product criteria found in either
the 'Mortgage Tables' or 'Quick Search' area.

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100% LOANS

100% loans are available but those of you who are considering taking out such a loan
should think before you leap. You must weigh up the pros and cons and look into all
the costs involved before making your decision.

The main expense of choosing a 100% mortgage is the extra interest you will pay on the
loan. Although you automatically pay more by borrowing the full amount, many lenders
actively charge you additional interest on 100% loans.

Another major cost to take into account is the mortgage indemnity guarantee (MIG)
premium. This fee covers the lender for the added risk of advancing larger loans.
It usually kicks in when the loan is for more than 75% of the property's value and
rises with the amount you borrow. On loans over 95% it is usually substantial.

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INITIAL COSTS

Deposit

As well as the deposit, there are other costs to take into consideration when working
out how much you can afford to pay for your home. This section explores these costs
in more detail.

Legal Expenses

You pay for a solicitor or licensed conveyancer to make sure that the property deeds
are transferred into your name. This should also include carrying out a local search
of the area the property is in, to ensure that there are no special building restrictions
or any plans to build a motorway through it.

In addition there are Land Registry fees making you the legal owner of the property,
and Stamp Duty (1% tax on properties over £60,000) so your rights as the legal
owner of the property are recognised.

Mortgage Indemnity Guarantee Premium

This is payable if the mortgage is for more than 75% of the property's value.
It covers the higher risk that the lender is taking by advancing a larger loan.

Property Valuation & Survey Fees

This must be carried out so the mortgage lender can ascertain the size of loan it is
prepared to make for the property. It usually costs around £130 but depends on the
size of the property and detail you require within the report.

Since there is no recourse once you have bought your home, a full survey is
recommended before buying it to make sure the property is not suffering from
structural problems such as subsidence, dry rot or vermin.

The Home Buyers' Survey and Valuation (HBSV) report is likely to cost from £250
upwards according to the size and value of the property. It may be possible to
arrange for an HBSV report to be undertaken by the lender's surveyor at the same
time as the valuation report, possibly saving part or all of the valuation fee.
Most larger lenders offer this service, which can save as much as £100 - £200
compared with commissioning both reports separately.

The Building Report is a full structural survey and therefore the cost is likely
to vary from around £325 for a two or three-bedroom terraced house upwards,
according to the size and value of the property.

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WHAT YOU WILL HAVE TO PAY

Roughly, total costs could amount to as much as 3 or 4 percent of the purchase price.
In some cases the costs are based on a fixed scale; in others they are variable.

The figures illustrated in the 'Find A Mortgage' area have been calculated based upon
the lenders own fee scales.
The fees include:-

· Valuation Fee (For Basic Valuation Only)
· Mortgage Indemnity Guarantee Premium
· Arrangement Fees
· Booking Fees

In addition, information is provided to indicate whether or not fees can be added to the loan.

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