FAQ

What should I do if I have a complaint about a lender

The first port of call should be the lender themselves. Under the Financial Services Authority rules, it is necessary for the lender to respond to any complaint within five working days. If you remain unhappy with the lender’s response, it is possible to take the complaint to the Financial Services Authority directly and, as a last resort, to the Financial Ombudsman.

What regulations exist for buy to let mortgages

Beware. Although pressure has been put on the government to introduce legislation, currently there are no regulations in place for buy to let mortgages. However, it is still possible to make complaints in the same way as you would for a traditional mortgage.

What is the maximum term of mortgage obtainable

Every lender varies regarding the maximum number of years for which they are prepared to lend. Generally, the maximum length of time for a mortgage is 35 years. Most lenders will not be prepared to lend beyond retirement age, unless the borrower can prove that they have sufficient income to make the repayments. In any event, it is highly unusual to find a lender that is prepared to allow a mortgage to run beyond the age of 75, unless it is a specialist equity release mortgage.

If my income is insufficient to obtain the mortgage that I want, should I consider a self-certification mortgage

Mortgage limits and caps are in place for the protection of the borrower to ensure that the repayments can be made even if interest rates rise in the future. Although a self-certification mortgage may offer slightly more flexibility, do bear in mind that it is a criminal offence to declare a higher income than you actually earn when trying to obtain a self-certification mortgage.

What should I do if I get into financial difficulty

One of the first things that you should do when you start to struggle financially is to get a statement of affairs produced detailing all of your income and expenses, both regular and occasional. Once you have a clear idea of your position, arrange a meeting with your lender BEFORE you get into arrears.

During the meeting, inform them of your difficulties and suggest a suitable plan for the future. Typical ideas may include a payment holiday to deal with a short-term drop in income, e.g. through maternity leave, reversion to an interest only mortgage to deal with a more unpredictable drop such as redundancy or even an equity release package for those who are older and require additional income to assist with retirement costs.

As a result of the government’s response to the effects of the credit crunch, a lender must now follow revised court protocols to show that all possible alternatives to repossession have been considered, before a repossession order will be approved by the courts.

What is a mortgage indemnity premium

This is a source of some disconcertion for many borrowers as it is often an added cost that the borrower will have to meet, but it doesn’t actually offer the borrower any protection whatsoever. The purpose of this mortgage indemnity premium is to protect the lender if the borrower is unable to make the payments.

Bear in mind that the cost of these premiums will vary depending on the perceived risk level of the borrower, so the premiums for a 100% mortgage will be considerably higher than those for an 80% mortgage.

Can I switch mortgages

Yes, although there may be a restriction preventing you from switching during a fixed or discounted period. Bear in mind that there may also be early redemption charges which means that you will have to pay your current lender in order to redeem the mortgage.

In an increasingly competitive market, some lenders will offer to cover the redemption charges on your behalf, so if you have a large potential charge, look for this type of deal. Most borrowers will consider swapping when a fixed or discounted period is about to come to an end.

What is the difference between a mortgage redemption statement and a balance statement

A balance statement simply shows how much of the capital is still left to be repaid at any give point in time. This does not take interest payments and early redemption fees into account. Most lenders will show the balance as part of their monthly statement. This figure should be available free of charge to borrowers on request.

A redemption statement normally carries a fee and is generally only requested when the property is due to be sold or the borrower is considering changing lenders. The redemption statement states the exact amount that has to be paid on the given date to redeem the mortgage including interest due, the capital and any early repayment charges.

Can I obtain a mortgage on a build project or a renovation project

Yes, some lenders provide the option of a mortgage specifically aimed for a build project. This way, you can agree a total amount for the mortgage and draw down sections at the time, as the project progresses. One of the main advantages is that you only generally start paying interest on the money once you have drawn it down, so you can continue your build safe in the knowledge that the cash is available, but without having to pay for it until you actually need it.