The mortgage products available can change on a daily basis as lenders review the market, decide which products to offer and at what rates.  Choosing a mortgage that suits your circumstances is easiest if you have a whole of market mortgage adviser to help you.

There are literally thousands of mortgage products on the market at any one time, so it’s important to research what’s available.

100% mortgage

Although popular with first-time buyers, it’s now unusual to find a lender who will advance 100% of a property’s purchase price. Most lenders ask for a minimum of 10% of the property purchase price as a deposit. You’ll need to be aware that, if the property market hits a downturn and the value of your home decreases, you could have ‘negative equity’ on your house – meaning that you owe more than your property is worth.

Buy-to-let mortgage

If you’re looking at a property as an investment to rent it out rather than as your home, then you’ll need a buy-to-let mortgage. Lenders usually ask for a larger deposit – around 25% – and ask that the monthly rental income exceeds the mortgage repayments that you will make. Some buy-to-let mortgages can include ‘payment holidays’, to help landlords cope with any tenant-free periods of time. If you’re thinking about buying your first buy-to-let property, you might also like to read the letting property page.

Offset mortgage

An offset mortgage balances the interest you earn on your savings, against the interest charged on what you owe on a property. If you have significant savings (perhaps in excess of £30,000) this kind of mortgage could be right for you. Offset mortgages calculate interest on a daily basis, so the more you can keep in the account – the better. A mortgage IFA or whole-of-market mortgage adviser will be happy to explain in more detail how offset mortgages work, as each lender’s approach to offsetting can be slightly different.

Current account mortgage

A current account mortgage is similar to an offset mortgage, but takes the concept one step further. All of your finances are combined in one bank account. For example, instead of having three accounts (a mortgage debt of £100,000, savings of £10,000 and a current account balance of £1,000), you’d have just one – with a balance of £89,000 owed to the lender at that point in time. When you pay money in, such as your salary, your debt reduces – and then gradually increases again over the month as you spend money.

Self-certification

Self-certification mortgages are harder to find these days, as lenders are less willing to take a risk without evidence the loan can be repaid. If you can find a ‘self-cert’ mortgage, then you’ll need to provide evidence of earnings over a period of time – usually the last three years – and generally be asked to pay a larger proportion of the property purchase price as a deposit. Interest rates charged on a self-certified mortgage are usually slightly higher than standard mortgages.

Commercial mortgages for businesses

Commercial mortgages are loans for business purposes. They’re usually secured against the premises from which the business runs, although in some cases a residential property may be used as security. Successful repayment of the mortgage relies on the success of the business, so the rates and fees are often higher, reflecting the higher levels of risk involved.

First-time buyer

It’s not easy to get onto the housing ladder, but the first step is to find a ‘first-time buyer’ mortgage. These often have incentives attached, such as cash back or lower fees. They’ve led to a good deal of innovation in the mortgage market – with lenders offering guarantor mortgages (where a parent or other responsible person guarantees the debt) and shared mortgage schemes (where friends group together to buy a house). There are also government schemes aimed at helping first time buyers – including affordable housing schemes for key workers and first time buyers.

Shared ownership

Depending on the property you’re buying, and the arrangements you’re making with the seller, you could be eligible for a shared ownership mortgage. In most cases, these are arranged for people moving into property through a housing association scheme. With shared ownership, you may only have to buy between 25% and 50% of the house initially and you may have later opportunities to acquire a higher percentage. This makes it much more affordable, although you’ll also have to pay rent on the portion that you don’t own. On the downside, you may not benefit from an increase in property prices as any increase in equity will be shared in proportion to the amount of the house that you own.

Adverse credit mortgage

There are several names for adverse credit mortgages: sub-prime, credit impaired, non-status, bad credit or a non-standard mortgage. They all refer to the same thing: a mortgage that’s designed for someone with a poor credit history. Products vary in the criteria the lenders use for deciding whether to accept a borrower, and rates can be higher than normal, so it’s important to get expert advice from an IFA or whole-of-market mortgage adviser.

We can put you in touch with mortgage IFAs and whole of market mortgage advisers across the country. You may like to speak with a number of IFAs or mortgage advisers about the types of mortgage available through their services before choosing one.

Questions you might like to ask your mortgage adviser…

What will I have to pay you?

What is the timeline involved with getting a mortgage, how long does it take?

What type of mortgage should I apply for?

How can I improve my chances of qualifying for a mortgage?