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What is a Tracker Mortgage?

Tracker Mortgage Advice in Birmingham

Before we get onto what exactly a tracker mortgage is, first of all you may be wondering just how many different kinds of mortgages are out there for home buyers and homeowners alike.

There are a lot of different types of mortgages available to customers, with each of them being unique and demonstrating their own list of pros and cons.

Throughout our article here, we are going to take a focus on the tracker mortgage, what it is, how it can help and why it may be a better option for you to take when you are looking at all of your mortgage options in Birmingham.

What is a tracker Mortgage? | MoneymanTV

What is a Tracker Mortgage?

If you have a tracker mortgage, this means that your interest rate will follow alongside the Bank of England’s base rate, with an additional percentage of interest being added on by the mortgage lender.

Your lender will not have the choice of how much they add on top of the base rate, as it is an external rate that they must follow.

For example, the Bank of England’s base rate might be somewhere around the region of 1%, with your lender being required to add on an additional 1%. So, depending on what the Bank of England base rate is, your mortgage will always be slightly higher than that.

Will a Tracker Mortgage benefit me and my situation?

Remember, a mortgage deal is only as good as the situation that it is put up against.

For example, you could get a tracker mortgage, only to figure out later on that you would be much better suited for working with fixed payments (utilising a fixed-rate mortgage), but you are already locked into a legal agreement with a mortgage lender.

It’s for reasons like this why we will always advise that you do plenty of research ahead of the mortgage process or look to obtain expert Mortgage Advice in Birmingham, to make sure that you are on the best deal for your circumstances.

Tracker Mortgages Historically

A Tracker Mortgage will work out well for you if the Bank of England’s rate is low. It will generally sit somewhere around 0-1%, though it will rise and fall as the year progresses. When the credit crunch happened, the market crashed and interest rates rose.

The highest point that it ever went up to was about 5%. Bearing in mind what we said earlier about your lender adding on an additional amount, you could’ve had 6% interest on your monthly mortgage payments!

If we head into more recent territory with March 2020, the mortgage market gave many in the industry deja vu. This time the panic surrounding interest-rates was brought in because of COVID-19.

This time though, things went a little differently, as the Bank of England’s rate dropped significantly, going down to a miniscule 0.1%. If you happened to be on a tracker mortgage during this time, it was likely that you went down to a 1.1% interest rate.

As you might expect during this time, it wasn’t possible to get a tracker mortgage. The reasoning for this, is that in reality, mortgage lenders are a business and need to make money too. This type of practice would’ve been poor business on their end.

As time has passed (as of December 2021), they have become readily available for customers, though they tend not to be as popular as they used to be.

Tracker mortgages rely heavily on the economy, so if the market is performing well, it’s a solid choice to go with. If the market is performing poorly, it’s probably not the best option for you to go with.

Different Types of Mortgages in Birmingham

There are all-sorts of different types of mortgages out there for homeowners and home buyers in Birmingham, it’s all just about finding the right one for you and your circumstances.

Before you jump into something that might be harmful to you, it would be within your best interests to speak to an expert Mortgage Advisor in Birmingham about what your mortgage options might be.

They will be on hand to help you shop around for unique and suitable deals, ensuring that you have the best one you can possibly get for the situation that you are in.

Perhaps you are a First Time Buyer in Birmingham? Maybe you are looking to Remortgage in Birmingham or at your options for Moving Home in Birmingham? In any case, we believe that you will truly benefit from the mortgage advice of our experts here at Birminghammoneyman.

There is rarely a situation we haven’t come across. Utilising our knowledge and experience within the mortgage industry, we will be able to guide you onto the right path for what you are looking to achieve. Book your free mortgage appointment online and speak to a dedicated mortgage advisor in Birmingham today.

The Costs of Buying a Home in Birmingham

Buying a property can be the most expensive commitment of your life, therefore, it’s important that you know exactly what you’re paying for. All of the different costs can blend into one if you’re not careful, and you may be paying more for some parts of the process than you originally thought.

Let’s take a look at how much it costs to buy a home and the costs involved with property investment.

First Time Buyer Mortgage Advice in Birmingham

If you’re a First Time Buyer in Birmingham, you’ll find this article particularly useful as it will break down each cost for you and show what each one means.

On the contrary, if you’re Moving Home in Birmingham, it’s still useful to remind yourself of the costs involved so that you can prepare accordingly.

Valuation Fees

Once you’ve had an offer accepted, your lender will carry out a valuation on the property to make sure that your offer matches the true value of the property. Factors that could affect your valuation include structural damage, property age, the local market, etc.

Prices will vary for the valuation will vary from free of charge to several hundred pounds. Sometimes, you will be offered one for free as the price is incorporated into another cost or it could be a bonus for taking out a certain product.

They are also different types of valuations, and you will pay more depending on which one you need. For example, if you need a full building survey as you’re purchasing an older property, you may have to pay a lot more than someone who’s bought a new build.

Mortgage Arrangement Fees

Some lenders may charge you for taking out a mortgage with them. This type of fee usually comes with the products with the cheapest rates. It’s worth mentioning that not every mortgage will come with an arrangement fee, however, when they do, you may be expected to pay a large fee, such as £999, depending on the product and lender.

You may be asked to pay this fee upfront or have the option to add these to your mortgage balance. If you choose to add them to your mortgage, you may incur further interest charges. As a Specialist Mortgage Broker in Birmingham, we can compare 1000s of mortgage products on your behalf, trying to find a suitable one for your situation with minimal additional costs.

Solicitor’s Fees

You’ll need a solicitor to arrange the legal side of the mortgage process. The fees quoted by various firms may differ enormously. An estimated amount for a low-value property would be £600. You will provide the solicitor with the new property’s address, whether it’s leasehold or freehold. You’ll also need to provide the purchase price to obtain quotations.

You need to make sure that:

  • The firm includes VAT
  • The cost of any “disbursements are included.” These are fees such as Land Registry Fees and Local Authority Search Fees
  • Is your solicitor on your mortgage lenders panel?

Estate Agency Fees

You’ll only face estate agency fees when you are selling a home in Birmingham. Estate agency fees are rising alongside property prices; you can expect to pay between 1-2% of the property price. The minimum amount is usually £500 to sell your home. Prices may also rise when you look for a more personalised service.

Stamp Duty

Stamp duty is a tax that the solicitor will collect upon the competition of the property purchase, in addition to your solicitor’s fees and disbursements.

More stamp duty details can be found here: https://www.gov.uk/stamp-duty-land-tax.

Broker Fees

A Mortgage Broker in Birmingham will usually charge a fee for their service. These fees will be disclosed upfront so that you know what you’re paying for and how much it’s going to cost. 

We recommend trying to use a trusted company that charges upon completion only. Avoid any application fees where your money will be at risk.

Removal Fees

The cost of moving all of your household items to another property can vary, it mainly depends on what service you want, how far you’re moving and how much stuff you have!

If you are happy to hire a van and transport your belongings to your new house by yourself, the service may cost significantly less. It can cost less than £500 in some situations. However, some people will prefer to pay for the full service and get someone to pick up their belongings and help them move. This service can be £1,000 plus.

If you want to speak to a Moving Home Mortgage Advisor in Birmingham, feel free to get in touch and book your free appointment online today.

Moving Home Mortgage Advice in Birmingham

Difficulties Getting a Mortgage in Birmingham

Specialist Mortgage Advice in Birmingham

We often find that there are a lot of questions within the mortgage industry that crop up regularly with our Mortgage Advisors in Birmingham. So, we have compiled a list of some of the more popular subjects to ease customers worries:

The Impact of Childcare costs

Usually, there is no risk of getting turned down for a mortgage if you have childcare costs involved, as most people who Remortgage in Birmingham would tend to have had children after Moving Home for a bigger space.

When you submit a mortgage application, you will need to provide evidence of your income, as well as details of all your outgoings, such as your childcare costs and utility bills.

If your childcare costs are enormous, then this is likely to have an impact on the maximum amount you’ll be able to borrow.

When it comes to childcare costs, lenders affordability assessment varies. Meaning that your maximum borrowing capacity will differ from lender to lender, this is where a Mortgage Broker in Birmingham can help you.

Some lenders will also consider child benefits and other state benefits, sometimes squeezing up the maximum mortgage allowable.

Choosing us to help you in your mortgage journey, our Mortgage Advisors in Birmingham can search thousands of deals and find you the most suitable lender who is likely to take a more flexible approach to your circumstances.

Mortgage Advice following Divorce/Separation

Nobody takes out a mortgage with their partner only to end up separating further down the line, and the process can be pretty upsetting. Unfortunately, not everything works out, and you end up in this situation. You will need to sort out many things, mainly sorting out your financial situation.

Being linked with one another, you will need to remove that link and prove you can be financially independent, and this isn’t as easy as it sounds; removing your financial relations from others can be complicated.

As a Mortgage Broker in Birmingham, we’ve seen many different situations where a divorce or separation has impacted a mortgage. You need to prove to the lender that you are financially stable and can keep up all the repayments by yourself.

When people come to us for Specialist Mortgage Advice in Birmingham, here are usually the questions we receive regarding this topic:

  • How do I remove my ex-husband/wife from my mortgage?
  • How do I remove my name from my ex-partner’s mortgage?
  • Can I have two mortgages?

Just bear in mind that it’s all about the risk as far as lenders are concerned. They ideally look to avoid repossession situations at all costs.

We recommend you get in touch for Specialist Mortgage Advice in Birmingham. Please book your free mortgage appointment to speak with one of our fantastic mortgage team today.

Starting a New Job – Can I get a Mortgage?

Some lenders require you to have been at work continuously for a particular time, whereas others are more lenient with this.

If you are at the stage of starting a new job shortly, you may still be eligible to obtain a mortgage if you have a signed contract and job offer letter. Although it’s essential to remember that gaps in employment may be a problem with lenders – probationary periods are usually okay.

Proving your deposit

These days, Anti-Money Laundering precautions are pretty stringent. To abide by these precautions, all lenders will need you to evidence your deposit and where the money originated. Your lender, solicitor and the estate agent you are buying from may ask you for this too.

Cash is not acceptable. The bank will question any significant cash deposit, which could lead to a rejection of your application.

All of your deposit coming from a gift can be a regular occurrence and is possible. There needs to be written evidence from the person gifting you the money that it is a gift, not a loan.

Open and Honest Mortgage Advisors in Birmingham

As an experienced Mortgage Broker in Birmingham, we have lots of valuable experience, and we know what lenders are looking for in mortgage applicants.

They are constantly relying on credit scoring, which most high street lenders now do to save them time and money and produce consistent decisions.

If you find it challenging to match with lenders criteria, it could be the perfect time to speak to a Mortgage Broker in Birmingham, like us. We can talk you through some simple steps you can take to improve your chances of your mortgage application being successful.

Speaking to a Mortgage Advisor in Birmingham could get you a couple of steps closer to securing a mortgage deal. These steps can be straightforward to do. We will help you all of the ways through the mortgage process. Get in touch to speak to an expert Mortgage Advisor in Birmingham today.

How Much Deposit Do I Need to Purchase a House in Birmingham?

How Much Deposit Do I Need to Purchase a House | MoneymanTV

First Time Buyer Mortgage Advice in Birmingham

What you are trying to achieve and how your financial situation looks determines how much deposit you need to put down to purchase a property in Birmingham. Here your open and honest Mortgage Broker in Birmingham will break down how much you might need given your situation.

The times of 100% and 125% mortgages are now firmly in the past. Now that the Credit Crunch is a thing of the past, lenders seem more confident about offering customers the ability to take out a 95% mortgage. Before being eligible to take out your mortgage, it is necessary that you prove to the lender that you can keep up your monthly repayments responsibly and on time. 

Proving to do so will assure the lender that they can trust you and that you are not a risk to them in the future. The last thing a lender will want to deal with is for a borrower to be reckless with their income and fall into arrears, which would mean the lender has to repossess the home.

Saving for a deposit is often viewed as the most challenging part of the process for many First Time Buyers in Birmingham and one of the biggest hurdles in the property market. Along with this, various factors could make it seem even more intimidating to someone without experience in this field.

There are often many questions about deposits, so here at our Mortgage Broker in Birmingham, we try and answer as many as we can for our customers in need.

Why do I need a deposit?

Pre-2007, before the market crashed and we entered the Credit Crunch, 100% mortgages were readily available for First-Time Buyers in Birmingham. In some cases, mortgage lenders were even offering 125% loan-to-value mortgages. What this means is, if you were buying a property valued at £125,000, they would lend you up to £150,000.

To reduce their lending risk, lenders will need you to put down a deposit. If they lend you 100% of the purchase price and, unfortunately, fall into arrears, they would need to repossess the property. It would only take a slight fluctuation in that area’s house prices, which would be a loss on their end.

Also, if you haven’t invested some money, whether it be from your income or a relative’s, into your home, then suddenly encountered any hurdles during your term, it would be too easy for you to “walk away”. Not to mention that if you cannot save up a deposit of at least 5% of the property purchase price, you may not be financially ready for such a significant commitment just yet.

What about putting down more than a 5% Deposit for a Mortgage?

If you happen to put down a larger deposit than the usual standard, then more often than not, you’ll find that your lender may offer you a lower interest rate. Again, this all comes down to risk because they will lend you less, making you less of a risk. It is essential to know that products are offered in different bands of 5%, with 95% of Mortgages being the most costly of the lot.

Can I take out a Personal Loan for the deposit?

You might find that this is indeed a possibility in some cases, though it is not very common. Your mortgage lender will consider it as a monthly payment and therefore put it down as an additional credit commitment on your part. As this is the case, you will likely be granted a smaller mortgage rather than the one you originally would have qualified for if you had not borrowed the deposit from a credit provider.

Mortgage lenders widely dislike this because although part of the payment will be going to another party, you are essentially borrowing 100% of the purchase price, plus interest on both the mortgage and the loan individually.

Do lenders accept a Gifted Deposit for a Mortgage?

The majority of mortgage lenders will accept a gifted deposit, and these can come from a variety of people. Generally speaking, this is from friends and family. There are specific rules that the ‘donor’ will have to adhere to, such as confirming that it is purely a gift and not a loan that is needed to be paid back at any point in time. They must also provide ID and proof of funds to help the lenders out with anti-money laundering regulations.

We can safely say that if it weren’t for the ‘Bank of Mum and Dad’, the property market would look completely different.

Evidencing the deposit

As mentioned earlier, various specific forms of ID and documents are needed to evidence where your funds came from, as lenders like to see how your income has been built up and how you have saved up.

If it is showing in your account that you have had any large deposits moved into your bank account recently, then you will need to provide the lender with documents to evidence exactly where it came from. 

For example, if you have recently sold something expensive like a car or something highly valued that you’ve been holding onto, you will need to provide the receipt and how much you sold the asset for, which should match the amount shown in your bank account.

Large cash deposits usually present themselves as a significant problem, especially when it comes to audit trials. Unfortunately, this can sometimes be one of the trickiest parts of the application. The longer the funds have been in your account, the easier life will be for you and the lender.

If you are selling your home or a property in your portfolio, then the Memorandum of Sale provided by the Estate Agent will be sufficient proof.

Help to Buy Equity Loan & New Build Mortgages

If you qualify for the Government’s Help to Buy Scheme, the minimum deposit required will still be 5%. You can top this up to 25% via the equity loan, which will allow you to obtain a lower rate mortgage. A vital factor to bear in mind is that if you consider this option, then the 20% deposit provided by the Government is to be seen as a loan. Whereas a Gifted Deposit is a gift, the Government Loan will need to be paid back.

Buying as a Sitting Tenant/Buying from a Family Member – Is a deposit still needed?

You may not always necessarily need a deposit for a property. If the house is worth £100,000, and you have been offered it at some form of discount, for example, £90,000, then some Lenders will accept this as your deposit. This works well if you have the Right to Buy Scheme from your Local Authority or other social landlords, as you may be offered a discount here too.

Shared Ownership Mortgages in Birmingham | Shared Ownership Advice

Shared Ownership is a scheme that helps first time buyers and home movers purchase a percentage of a home. Partial homeownership is a great way to get onto the property ladder if you cannot afford a 100% mortgage.

Shared Ownership Mortgage Advice in Birmingham

What is shared ownership?

Shared Ownership let’s take out a mortgage on/purchase a percentage of a property and then pay the remainder through rent. Depending on the building society, the percentage that you can own will change. Some will allow you to own as little as 10%, whereas others will need you to own 25%-75%.

Since you’re taking out a mortgage based on a percentage of a property, the initial deposit that you have to put down should be less. This can make it easier to get onto the property ladder.

How does the scheme work?

First of all, you need to put down a deposit on the property. The minimum deposit that you have to put down can vary on different factors. It can change with the percentage that you’re buying, your credit score, and your personal and financial situation.

You’ll still be taking out a mortgage through this scheme, but only on the percentage that you’re buying. For example, if you’re buying 50% of a property that is worth £250,000, you’ll only need to take out a £125,000 mortgage. Furthermore, rather than providing a deposit that is based on the full house price, you’ll only have to put down a deposit based on the mortgage that you’ve taken out. So, in this example, a 5% deposit would be £6,250.

Once you’ve had your offer accepted and have moved into the property, you’ll start paying off your mortgage. As mentioned before, you will have to also pay rent on the remaining share of the property. Despite having two sets of payments, your overall monthly costs shouldn’t be as expensive as if you had taken out a 100% mortgage.

Costs and fees

When taking out any type of mortgage, there are going to be lots of different costs that you’ll need to consider. Shared Ownership mortgages will likely come with set-up/arrangement charges, booking and solicitor fees. You may receive stamp duty tax too, so make sure that you’re aware of these costs.

Costs can increase depending on the property that you’re buying. Deposit size, monthly payments, arrangement fees can differ from property to property.

How can I apply?

You’ll have to meet the requirements for the Shared Ownership scheme before you can access it:

  • You have to be at least 18 years of age.
  • If you live out of London, your total household annual income must be less than £80,000. If you live in London, this is changed to less than £90,000.
  • You can’t own another property during your Shared Ownership application. You must be a first time buyer in Birmingham or in the process of selling your current property.
  • If you can afford to purchase a property on the open market, you will not be able to access this scheme. It was designed to help struggling applicants.
  • You must prove that you are not in any kind of arrears, this includes mortgages and rent.
  • You must provide evidence that supports a good, clean credit history. This means that you will struggle if you have a CCJ (county court judgement) associated to your name or have had previous credit problems.


Although this may appear like a lot, it’s only the same as most Help to Buy schemes. Each schemes’ requirements will differ, as they are targeting different applicants.

If you have credit problems, you may need to look at other ways to get a mortgage. There are lots of different government mortgage schemes out there that could help you get a mortgage.

Speak to a Shared Ownership Mortgage Advisor in Birmingham

Our mortgage advisors in Birmingham have helped many buyers secure a mortgage through the Shared Ownership scheme. We have been helping applicants for over 20 years now!

If you are looking for Help to Buy mortgage advice in Birmingham, we are here to help you too. We can check whether you match the requirements for any of the schemes.

Take advantage of our free mortgage consultation by booking your own appointment today.

What is a Gifted Deposit Mortgage?

One of the most important points at the start of your property journey, before you even get ready to make your purchase, is to ensure you have enough saved to cover the deposit. We regularly hear first time buyers in Birmingham that this part can sometimes be a little tricky.

Quite a common way around this, however, is for someone close to you to help you cover either a portion of the deposit or the full amount. This is called, quite aptly, a gifted deposit. In order for a gifted deposit to work, there will need to be an agreement that this is purely a gift and not a loan to be paid back.

How can a gifted deposit help get me a mortgage in Birmingham?

For many, they benefit a lot more from buying a property and obtaining their own mortgage, than they do when renting from a landlord or local authority. There are lots of reasons for this, with one being that your monthly payments could be a lot less than you might have been paying per month on rent.

If you have worked out that you’ll be able to afford these monthly mortgage payments but can’t afford the initial deposit, then this is where a gifted deposit can become useful. In some cases we even see a gifted deposit being added onto an already saved deposit, increasing the amount.

The more deposit that is put down initially, the better rates you are going to open yourself up to. This in turn offers quite the benefit to home buyers, as you are guaranteed to lower your monthly mortgage payments in doing this.

Who can gift the deposit?

We usually find that it is people’s parents, whether that be their birth parents, adopted or sometimes even carers, who are the ones that will gift a deposit. Across the industry, online and in person, you may see this with the tagline “The Bank of Mum & Dad”.

There are a few lenders out there who will possibly allow deposits to be gifted by some other family members such as aunties & uncles, though this will require your dedicated mortgage advisor to take more care when searching for the right mortgage lender to use.

If anyone over the age of 55 is willing to give you a hand, they may have the option of taking out an equity release in Birmingham as a means of gifting you a deposit.

Do your parents know you need help?

When we have our primary chats with customers who are in the situation where they are struggling to save for a deposit, we will usually ask if they are able to be gifted the deposit from someone they know.

In those instances we either hear that they didn’t even know their parents could help, or they do know but don’t feel like they can approach them about the topic.

The reality is that if they are able to do so, most parents are more than happy to help their children if they can. Inheritance can help them achieve this, with some parents opting to gift it early if they have enough saved. We have also had cases where equity release has been used to help them out.

Gifted Deposit vs Loans

Lenders are not particularly keen on working with customers who take out loans for a deposit. The reason for this is because it is an additional financial commitment that could possibly get in the way of your mortgage repayments.

It’s not like there aren’t lenders out there who will accept this, because some of them will, it just makes for a more difficult process.

Is there a maximum or minimum gifted amount?

The majority of lenders out there won’t give you a mortgage unless you have at least a 5% deposit. Some may want more than this though and is entirely dependant on the lender and the situation. Bad credit, for example, will usually mean you have to put down at least a 15% deposit.

When it comes to gifted deposits, there is usually no limit to the amount that can be gifted. As mentioned earlier, the more you have, the better the rates you open yourself up to and the more likely you are to save money on your monthly payments.

Who can benefit from a gifted deposit in Birmingham?

Gifted deposits will mostly be beneficial to a first-time buyer in Birmingham or a home mover in Birmingham. It can also be a helpful tool to use alongside the Help to Buy Scheme in Birmingham.

Depending on the lender that your mortgage advisor in Birmingham selects for you to go with, the required 5% deposit can be paid via gifted deposit.

What proof is required?

As a general rule of thumb, all mortgage lenders will require a gifted deposit form. You may be asked to provide additional proof and ID (such as a donor ID or bank statements).

This all depends on the lender that your mortgage advisor in Birmingham feels is right for you and your personal circumstances.

Gifted Deposit Mortgage Advice in Birmingham

Fixed-Rate Mortgage Advice

Some people prefer to know how much their monthly mortgage payments will be. If this applies to you, then a fixed-rate mortgage would be better suited for your circumstances.

What is a fixed-rate mortgage?

A fixed-rate mortgage is when your monthly mortgage payments will be a set amount every month. You need to be aware that the longer you fix for, the higher the rate becomes. But this will not change the duration of your term, which can vary anywhere from 1-10 years.

What is a Fixed-Rate Mortgage | MoneymanTV

Which is the cheapest fixed-rate mortgage?

If you are looking for a cheaper fixed-rate mortgage, make sure to avoid taking out a longer rate. Otherwise, you could face much higher interest rates if you take one out any longer than 2 years.

If you take out a mortgage for ten years at a certain percentage, interest rates might have risen during your term, leaving the lender out of pocket whilst you’re sitting comfortably on a lower percentage.

That presents a higher risk to the lender, so longer terms tend to come with higher rates. In sticking to a shorter-term fixed-rate mortgage, you will find yourself with a better rate, but only for that two years.

Those two years will eventually come sooner rather than later, implying that you will have to start searching again for more deals at the end of the mortgage.

If the interest rates have risen during the duration of those two years, then you could be faced with higher payments than you were used to at the start of renewal.

Should I fix my mortgage for five years?

If you prefer to limit searching for new deals every two years, then maybe you would better suit a 5-year rate. By fixing it for five years, you would have a stable recurring payment for a much longer time.

As previously discussed, being on a fixed-rate mortgage for 5 years will mean that you will be paying more per month than you necessarily would on a two-year rate.

Should I take out a long term fixed-rate mortgage?

When people consider taking out a long-term, they usually range anywhere from 7-10 years. Long term fixed-rate mortgages were never a popular choice to choose, and they aren’t something we would recommend. But, like most mortgages, there are both pros and cons to taking out a long term fixed-rate mortgage.

Anything could happen within a decade, so committing to a fixed payment for as long as 7-10 years may create problems with lenders. If the rate suddenly drops below your current rate, instead of rising. You may end up paying well over what you otherwise would’ve been, and once you are in the deal, you cannot get out of it.

Early Repayment Charge (ERC)

A Repayment Charge (ERC) is where something happens that affects your financial situation. This leaves you having to repay your mortgage earlier than you had initially expected and, your lender may present you with a charge.

How they calculate the charge is they calculate a percentage of the remaining that you owe. An example would be if you manage to pay off your £100,000 mortgage early and your ERC is 4%. You would be charged a £4,000 penalty as you have broken the fixed-rate contract.

Nobody can get away with not fullying paying off their fixed rate and will still be charged with an ERC. For example, if someone is aware that their fixed rate is due to end soon. But start looking up deals for their next fixed-rate mortgage.

If they find a great deal and think that the rate may increase, they may look to pay off the rest of their fixed-rate payments to switch to this new deal, even though this, of course, comes with additional charges.

We advise that you avoid chasing “headline” deals advertised. Chances are, your circumstances may have changed, and you’re not guaranteed to get it at the rate you were hoping to achieve.

If you are a first time buyer in Birmingham or moving house and would like more information or some help with a fixed-rate mortgage, our experienced team of mortgage advisors will be on hand to provide any assistance they can.

Remember that the lowest rates come with the highest setup fees, which some customers are keen to avoid. Get in touch today for more fixed-rate mortgage advice in Birmingham.

Getting Organised for a Mortgage in Birmingham

First Time Buyer Mortgage Advice in Birmingham

Once you have gotten the hard part out of the way, that being saving up for your deposit (or if you’ve utilised a gifted deposit) and have decided you are ready to buy your first property as a first-time buyer in Birmingham.

The next step is to get yourself prepared for the mortgage process that is about to follow.

Know Where You Stand

In our experience as a mortgage advisor in Birmingham, we have found that customers benefit the most by getting in touch with a mortgage broker as early on in your process as you can.

Your dedicated advisor will help you to work out an outline of the amount you could be looking to borrow for a mortgage and how much your monthly mortgage costs could be.

Before anything else, your top priority should be to obtain an up-to-date credit report. You ideally don’t want any credit issues such as a missed phone contract payment, to hold you back from a mortgage. A credit report will be able to show you potentially harmful factors.

Following these steps will give you a realistic overview of the likelihood that you’ll succeed with a mortgage and what your budget could be. This will help you to organise your accounts, such as any existing credit cards or phone contracts.

Getting Organised For a Mortgage

Our hard working and dedicated mortgage advisors in Birmingham are able to obtain a fully credit-checked agreement in principle for you, within 24 hours of your primary mortgage appointment.

There’s a lot of important paperwork for you to gather for your process, so it’s a good idea to start organising what you will be required to have ahead of looking for your mortgage. In doing this, you possibly enable yourself to go through the process quicker.

Proof of ID

We need to be able to prove your identity. With this, you’ll need to provide us with some photo ID such as a driving license or passport, so that we can prove who you are.

Proof of Address

On top of this, you’ll need to prove where you are living. To achieve this, you need to send us a utility bill or original bank statement that has been dated within the last 3 months of your current home address.

Last 3 Months’ Bank Statements

One of the most important factors when seeing if you qualify for a mortgage, is analysing your income and spending habits. This can can be a big difference maker in whether or not you obtain a mortgage. Your bank statements should show your income and what you having regularly going out.

Lenders will not be too thrilled to see gambling transactions on your account. They also won’t be too happy if you go over an agreed overdraft limit or if your direct debits regularly bounce.

It’s best to plan ahead regarding your bank statements. The more organised they appear to be, the more likely you are to be accepted by a mortgage lender.

Proof of Deposit

You will have to prove you have the financial capability to pay for the deposit and also evidence where this came from for the purpose of anti-money laundering.

Try not to move money around your accounts too often as it will make auditing where everything came from a little complex. Lenders like to see you build up your savings, so you’ll need to provide individual proof for any large financial deposits into your bank account.

We regularly see that money for deposits has been given as a gift by a member of your family. The gifted funds also need to be evidenced, with the “donor” needing to sign a letter to confirm it is a gift and not to be paid back as a loan.

Proof of Income

Regarding being able to afford a mortgage, the most important thing is to be able to prove your that you are financially capable to keep up monthly mortgage repayments.

If you are a regular employee, the proof you will be required to provide is the last 3 months’ payslips and most recent P60. Lenders can take into account frequent overtime, commission, shift allowance and any potential bonuses.

If instead you are an applicant who is self-employed in Birmingham, then you’ll need to enlist the help of your accountant. They will help you request your last 2 or 3 years’ tax overviews and tax calculations documents from HMRC, which you can use for proof of income.

A list of Your Expected Outgoings

When taking out a mortgage in Birmingham, it really is a good idea to prepare yourself ahead of the process starting. Make note of what you expect your outgoings to be after you move and work out what you are able to afford.

Factor in costs like council tax and utility bills, food, drink and leisure activities. This will demonstrate how much money you actually have free to put towards monthly mortgage repayments.

It may seem like a difficult process, but without taking the steps we mentioned above, it is not possible to proceed with any lender or broker. Once you have taken the necessary steps, you’ll be just that little bit closer to your home owning dreams.

It’s better to prepare yourself in advance, making a collection of everything a mortgage lender might wish to see. This saves both your time and frustration further along the process, especially if it’s something that could’ve easily been arranged at the start.

Self-Employed Mortgage Advice in Birmingham

Wanting a Mortgage Agreement In Principle in Birmingham?

What is an Agreement in Principle? | MoneymanTV

Agreement in Principle Mortgage Advice in Birmingham

A mortgage agreement in principle is basically an obtainable document or certificate of confirmation that proves to the estate agent or seller of the property that ‘in principle’, the bank is willing to lend you a certain amount for a mortgage. You may also see this called a decision in principle.

This is something that we will always look to obtain for of our customers if they don’t have one already, and something we can usually get within 24 hours of your initial appointment.

In order to obtain an agreement in principle, you will have to pass the lenders credit score. This works out well because in almost all cases, this is a very good sign to the lender that you are creditworthy and could be trusted with a mortgage.

If you are in the market for buying a new home as a first time buyer in Birmingham, then an estate agent will often want to check again and again in order to make 100% sure that you are ‘mortgage ready’ when it comes to making any offers on a property.

In having this certificate on hand, you will prove to the seller that you are able to obtain a mortgage for the amount you will need to purchase the property and are ready to proceed with the sale.

A mortgage agreement in principle will not be a definitive guarantee of being able to obtain a mortgage, as the rest of your full application will require further background checks (such as evidencing your income) and having a property valuation undertaken on the property you’re looking to buy.

As an experienced mortgage broker in Birmingham, we highly suggest that all customers try to obtain an agreement in principle at the earliest opportunity. This is because of the following reasons:

1.   Negotiating Power.
2.  Avoid Disappointment.
3.  Knowing Your Limits.

Negotiating Power

Once you reach the point of being able to make an offer on a new home, the majority of estate agents will undertake the necessary steps to ensure that you can go forward with a mortgage on the property.

Generally speaking, they will require you to provide them with evidence that you are able to afford the purchase of the property, prior to listing the property as sold and taking it off the market.

If you have already managed to have a mortgage agreed prior to making an offer on the property, you’ll come off as more appealing to the seller.

This will also prove to the seller that you’ve put a lot of careful thought about your mortgage journey and not just decided to purchase out of the blue, with no preparation.

This might persuade a seller to accept any offers that you make that are lower than the initial asking price. Make sure not to make offers too low though, as you don’t want to insult the seller.

Avoid Disappointment

When it comes to making a purchase on a property, we often find that customers can go full steam into the process, making an offer on a property without making sure that they can afford to actually buy the property in the first place.

This could lead to customers facing potential disappointment if the mortgage application happens to fail, as by that point they may have already had their heart set on that property.

By getting in touch with a mortgage advisor in Birmingham early on, the potential disappointment that you otherwise would’ve faced could potentially be avoided.

Often, there are various factors that are causing a mortgage to decline that can be overcome with a little time and the guidance of a trusted mortgage broker.

Knowing your limits

If you know you have a good credit rating because you’ve never been turned down for credit, have paid everything on time and are registered on the voters roll etc, it is still worth getting in touch with us for mortgage advice in Birmingham.

You might find that you could approach various different lenders and each time get a different max mortgage amount back from them. These lenders all calculate affordability in their own unique way, with their own individual criteria.

If you are self employed in Birmingham, though the mortgage process is not completely impossible to navigate, it can be very complex for self employed applicants, without the assistance of a mortgage broker in Birmingham by your side.

Some lenders will take your net profit, others are known to use your salary and dividends. Some use your latest year, whereas some others will use an average over three years.

Think it’s simple?

Being aware of your borrowing limits is very important when it comes to applying for a mortgage, as then you have a realistic idea of what your price range on a property is going to be.

Our team of mortgage advisors in Birmingham will be able to give you a guide of the potential maximum mortgage available to you and help you to work out an estimate of the amount you’ll possibly be paying back per month for your mortgage.

Specialist Mortgage Advice in Birmingham

Agreement in Principle and Soft Credit Searches in Birmingham

What is an Agreement in Principle? | MoneymanTV

Agreement in Principle explained

Consumer awareness of credit scoring appears to be higher than ever before, and a large majority of people who get in touch with our team appear to have already reviewed their credit reports online.

There are lots of different credit reference agencies to choose from, with the two most commonly heard of companies being either Experian or Equifax. We personally would recommend that new clients use Check My File for a 30-day free trial. If you do not cancel, this will change to £14.99 a month, though you can cancel this at any point in time. This report offers our clients a collaborative look at the information produced in an easy to understand the color-coded credit report.

Often our customers will ask if our Mortgage Advisors in Birmingham will be doing a credit search of their own, because they are aware that too many searches can cause problems for their credit score. The lender always runs credit checks, but our Mortgage Advisors in Birmingham will ask the client for their permission beforehand.

What is a Hard Credit search?

A hard credit search will provide a much more in-depth look at your credit report. Any financial institution that looks to carry one of these out should seek your permission before doing so. The advantage of a “hard” search would be that you have a much higher chance of succeeding with your mortgage if you pass the credit search, as they will have already gone quite deep into your details.

The only thing that can go wrong from then on is if, for some reason, you cannot provide satisfactory documentation to back up the information you have disclosed, or it turns out you have provided false details.

Another benefit to the hard search is that it leaves a ‘footprint’ on your credit file, meaning that anyone who looks at your report can see that it you’ve already been under the microscope so to speak. This isn’t inherently a bad thing but if for example, you have multiple searches included in your credit file in a short period, then it could be perceived as you are applying for lots of credit at once, which the lender may feel is suspicious activity.

The footprint does not state whether your application was successful or not but if you have several searches over a few weeks then lenders’ systems could wrongly assume you are being declined on the basis that “Why else would you go to Lender number two unless Lender number one had said no?”.

The odd hard footprint on your record is no big deal so this doesn’t give reason to worry a whole lot about it. The main lesson to take away here, is take precaution in having too many hard searches, as this could negatively affect your process.

What is a Soft Credit Search? | MoneymanTV

What is a Soft Credit search?

On the other side of the coin, we have a soft credit search. This is a much ‘lighter’ search which looks at your financial situation and would be the type of search that would be carried out on price comparison websites to let you know what may be available to you. It may also be used from time to time, in order to verify your identity. Many mortgage lenders carry out soft searches, and we’re always seeing more lenders switching to this type of search.

While less information is offered to who is carrying out a soft search, as opposed to what they would receive if it were a hard search, you can still get a good idea as to whether or not you’ll find mortgage success by obtaining an Agreement in Principle. If you get this, you’re theoretically in with a good shot anyway.

One of the most beneficial things about soft searches is that while you will be able to see soft searches that have been carried out on you, if you check your credit file (people are usually surprised by how many have been carried out on them) these searches are not visible to other financial institutions like banks, building societies or other mortgage lenders. This means you can freely apply for an Agreement in Principle and it is unlikely to damage your credit score, whether it is successful or not.

How our Mortgage Advisors in Birmingham can help

If you are in the market for making an offer on a property as a First-Time Buyer in Birmingham or are maybe Moving Home in Birmingham, our trusted Mortgage Advisors in Birmingham would highly recommend that you have a Mortgage Agreement in Principle in place before getting in touch with the seller.

You want to be able to give yourself the best possible chance of securing the property you want at the lowest possible price, so if you can demonstrate that you have your finances in a good place, you are effectively giving yourself the upper hand. Having an Agreement in Principle could also mean that any estate agent may be put off trying to ‘cross-sell’ their other in-house mortgage services to you.

Birminghammoneyman.com & Birminghammoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited registered in England, registered number 6789312 and registered office 10 Consort Court, Hull, HU9 1PU.

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