The Mortgage Shop NI - Frequently Asked Questions

General

• Can I borrow money to build a house?

  Yes, all lenders have different lending criteria, however you can borrow the full cost of building a property, subject to income. If you are looking to buy a site to build your dream home on then this could be the way to do it.

• Do I need any insurances with my mortgage?

  For insurance business we arrange policies exclusively from Legal & General.

  Life Cover

  Life cover provides a lump sum if you die during the policy term which can help pay off your mortgage. Therefore your family will not have to worry about repayments on your mortgage.

  Critical Illness Cover

  Critical Illness Cover is designed to help cover those critical illnesses which could have a severe impact on your lifestyle. It will pay out if you are diagnosed with one of the specified critical illnesses or disabilities listed on the policy or on death during the period of cover and you are eligible to claim. All illnesses covered by this plan are consistent with the current view of critical illness held by the medical profession and the Association of British Insurer's list of critical illnesses.

  We can arrange cover for you for 35 specified critical illnesses that could change your life in such a way that you would need financial help to repay your mortgage.

  Mortgage Payment Insurance (MPI)

  Mortgage Payment Insurance (MPI) provides a monthly benefit to help protect mortgage repayments if you are unable to work due to incapacity caused by an accident or sickness resulting in a loss of earnings. Benefit is payable until you are fit enought to return to work or no longer suffer a loss of earnings, reach retirement age, reach age 69, die or the plan ends - whichever happens first.

  Mortgage Payment Protection Insurance (MPPI)

  Mortgage Payment Protection Insurance (MPPI) provides a benefit for up to 365 days to help pay your mortgage repayments if you are unable to work due to an accident, sickness or involuntary unemployment.

  Buildings Insurance

  This will cover items that cannot be removed if you move home. These include the property structure such as roof, walls, windows and permanent fittings.

  Contents Insurance

  This will cover your household goods, personal posessions and valuables within the home.

   

• How much can I borrow?

  Your current income (which includes commission, bonuses, overtime - i.e. any additional money that is subject to tax) will determine how much you can borrow. Some lenders calculate borrowing ability by a straightforward multiple of your income while others will work out your net disposable income and then allow you borrow a percentage of that. We will help you calculate how much you can borrow.

• How much does getting a mortgage cost?

  (1) Fees & Charges

  There are some standard fees and charges that you will come across, these will be explained fully to you by your Mortgage Advisor before any decision is made to proceed with a mortgage.

  Valuation Fee

  All lenders require a Valuation to be carried out on your property to confirm its market value (as opposed to its structural soundness).

  This is done for the lender's benefit, to confirm the property is adequate security for the loan. It should tell you if there's something seriously wrong with the property, but it doesn't involve a detailed inspection.

  Buildings Survey

  This would usually only apply to a second-hand house and consists of a complete and thorough inspection of the property by a qualified Surveyor or Engineer. It is not compulsory but recommended if the property has not been well maintained or if you have any doubts whatsoever about the soundness of the house you are thinking of buying.

  The cost of this survey, which can range quite a bit in price, is borne by you and is non-refundable in the event you do not go ahead with an offer for the property. However, it will highlight expensive repairs that, if not turning you off the sale, could help with negotiations on the purchase price.

  Higher Lending Charge

  This is a lender insurance that protects the lender against loss in the event of repossession or a fall in property prices where the loan amount owed exceeds the sale price of your property. It is normally applied where the loan is in excess of 75% of the purchase price and is only applied to the loan amount over that threshold. Not all lenders charge this insurance.

  (2) Legal Fees & Outlay Costs

  Costs now vary as solicitors are becoming more aware of competition. On top of that, you will bear all outlay costs. These, again, will vary depending on whether your deeds are registered with the Land Registry or Registry of Deeds. Ask your solicitor to outline all costs to you at the outset. Your legal fees will amount to a substantial sum so it is well worth shopping around for a competitive solicitor.

  We can advise you of the solicitors in your area who will be competitive with fees, if you do not have a family solicitor. Please ask a member of our staff to advise you with regard to legal costs and they will be glad to help you.

   

• Is a fixed rate right for me ?

  The answer to that depends on your own personal circumstances. If interest rates going up would leave you uneasy and feeling under pressure, it may be best to fix your mortgage for peace of mind. The benefit is that your monthly mortgage repayments are fixed for the duration of the fixed term so you can plan ahead without fear of rising mortgage repayments. At the end of your chosen fixed rate term, you will normally revert to the lender's current variable rate but you may be able to choose another fixed rate from the selection available at that time. You may have to pay an early repayment charge to your existing lender if you repay your mortgage within the fixed rate period.

• What is a repayment mortgage?

  This is the standard mortgage - simple, straightforward and effective. You make a monthly repayment, made up of capital and interest (like any personal loan) and, provided all payments are made on time, the original capital borrowed will be repaid by the end of the mortgage term.

• What is a tracker mortgage?

  The rate is normally determined by the BOE's (Bank of England) base rate. The Tracker Mortgage is a variable rate of interest with a fixed margin set on top of, or sometimes below, the BOE rate. When the BOE rate changes, the mortgage rate will change accordingly i.e. it is always tracking the base rate plus or minus the lender's pre-set margin. Many of these types of mortgages have a "collar" which means they cannot drop below a certain level. Always be sure to ask your advisor about this. An early repayment charge may apply to this mortgage.

• What is an interest only mortgage?

  Your monthly repayments to the lender cover only the interest portion of the loan (i.e. you do not repay any of the capital borrowed). This means that your debt does not reduce. You will therefore need to arrange a separate savings vehicle which will be designed to repay the original capital at the end of the mortgage term.