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Gavin Richardson, CeMAP, Cert II, Head of Residential mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 01732 471 613
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Question
Can my parents go on my mortgage but not pay stamp duty?
I am getting help to buy my first property from my parents. Because my earnings are modest, although expected to rise in the next five years as I am in a professional job, they will need to become joint owners with me. We understand that because they will be helping me buy my property and already have their own home, they be liable for the stamp duty on a second property. Is there any way to avoid this?
Answer
Yes! You would need a Joint Borrower Sole Proprietor mortgage. This means that your parents take on the mortgage with you but don’t go on the deeds of the property – so, they share the responsibility of the loan but do not own the property (neither are they entitled to any capital gains from the property). This means that they won’t be liable for the stamp duty – only you. Not all lenders offer these products, so do get in touch if you would like help in finding one which suits your situation.
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Question
Will bad credit stop me getting a mortgage?
I am saving for a deposit on my first home. However, I am a little concerned because of some debt I accumulated nearly three years ago. I was made redundant and although I moved back with my parents, so managed to avoid rent arrears, I was unable to repay my credit card bill for three months. Although I have since repaid the bill and do my best to repay the full amount each month, I wonder how this will affect my mortgage application? Will lenders take into account the fact I have been reliable for the last three years? I hope to have saved enough by the beginning of next year. I am buying with my partner and will be looking at putting down a 10% deposit on a property worth £180k to £200k. Thank you.
Answer
Most lenders will ignore credit misdemeanours that are more than three years old as long as they have been settled and you have no other unauthorised outstanding debt. You don’t say how much you and your partner earn, so as a guide, you should be able to borrow around 4.5 times your joint income. Do get in touch if we can help. If you allow, we’ll take a look at your credit record to make sure we find a lender that is suited to your profile.
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Question
How to Early Repayment Charges work?
I wonder whether you would mind explaining how early repayment charges (ERCs) work please? I have been researching mortgages and keep seeing this crop up in searches. I get an annual bonus at Christmas so was hoping to top my mortgage up with this once a year. It would only work out as £3,000 or £4,000 but I wondered if I should bother looking for products without ERCs or just put up with the charge?
Answer
An Early Repayment Charge is a financial penalty imposed by the lender should you choose to repay some, or all, of your mortgage early. The ‘early’ bit mostly relates to the initial rate period, so if you have a five-year fixed rate mortgage, there is likely to be a penalty for the first five years. The amount you are charged depends on the terms and conditions of your mortgage but usually represents a percentage of the outstanding loan (often reducing, on a yearly sliding scale until you are out of the initial term). Having said that, many lenders have products where you can overpay by up to 10% of the mortgage balance each year without being charged.
We recommend overpaying if you can afford to do so. It will mean that you pay off your mortgage more quickly. However, if you have any other debts at a higher rate of interest than your mortgage, then it may be worth repaying those first. Do get in touch if you would like to talk through your specific circumstances as we can help you find a mortgage to match your requirements.
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Question
Do I need a valuation when remortgaging?
I am just coming to the end of my two-year deal and I would like some advice on remortgaging. Should I get my house valued myself or will the mortgage lender or broker do this? Will they need access to my property?
Answer
All lenders carry out their own valuations (or instruct an agent to do it for them), so there is no need for you to do it. If you live in a fairly normal house or flat you may find that the lender does either a desk top or drive-by valuation. This means that you won’t even need to provide access to the property.
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