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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Remortgaging to release money for business
I currently have around 80% equity in my property and have three years left to run on a five-year mortgage. However, an opportunity has arisen and I am now considering remortgaging. My boss has asked me if I would like to buy into the business as a ‘partner’.
We don’t have the finances available for this in savings or investments. So I am thinking of remortgaging the house to provide the £200k required to invest in the business. Would a lender consider this and what information would I need to provide? For your information, my wife is also a joint borrower with me on the mortgage and her circumstances would not change.
Answer
For your situation, it’s all about how you phrase it. Lenders don’t like to lend money for ‘business purposes’, however, this tends to be borrowers who have a business which needs a cash injection, so they want to pull money out of their home to cover this. This isn’t what you are looking to do.
What you are looking to do is raise funds to invest them, which in principle is acceptable to lenders.
In terms the of information that you would need to provide, if you think back to when you took your original mortgage out, it would be the same again – proof of ID and address, proof of income and bank statements.
It would be worth speaking to your existing lender to see if they will give you a top up loan and the cost of this, then comparing this to a full remortgage – as you will invariably incur early repayment charges for breaking your deal early. I would recommend speaking to a broker who will be able to look all at the options available to you and do the maths on which works out the best option financially.
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Question
Fees and charges: What do I need to know?
We are currently looking for a mortgage to buy our first house. I would be interested to know exactly what fees and charges we might be looking at paying on top of the mortgage so we can budget in advance. Is it normal to pay the lender or mortgage broker a fee for the loan and are there any other charges to consider?
Answer
The fees vary, quite literally, from mortgage to mortgage, so you always need to consider each mortgage rate after adding all the fee costs. Fees that you may pay are the application fee, valuation fee, lenders arrangement fee, telegraphic transfer fee, broker fee and legal fees.
In terms of whether it is normal to pay a broker fee, the answer is that yes – many brokers will charge a fee.
The broker fee will vary from a couple of hundred pounds to in the thousands, depending on which firm you use and the complexity of your case. My advice would be to speak to several companies, then line each option up side by side and add up all the fees. Add in the cost of the interest on the mortgage for the first two or five years (depending on what type of deal you are taking).
The one with the lowest end number is probably the cheapest but do check that it has all the features that you need.
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Question
Over-40: Can I get a mortgage?
I am saving for my first home but, realistically, it’s looking like I won’t get the deposit together for a few more years which means I will be 42 when I am ready to buy!
I have heard it’s tricky to get a mortgage when you are aged 40 or over.
Is there really any point in me bothering? I am 39 and have been saving for some time – I have about £20k so far but live in London so probably need to double this. I also work for the NHS so I have considered shared ownership, but I think my age – once again – could be against me.
Answer
The bad news is that you aren’t expected to retire at 65, its 67. The good news is that you would therefore, be able to get a 25-year term.
Indeed, many lenders will go even further than this, if you are planning to work beyond this age. So… please don’t be disheartened and keep on saving!
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Question
Mortgage newbie: Please help me choose a good deal
I have decided to take the plunge and buy my first property. I have been saving for a long time and I think I have enough to buy a house or flat priced at around £175,000 with a 10% deposit.
Now what do I do? I literally don’t know where to start. Do I get a mortgage first, and then search for a house? Or do I get my mortgage when I have found somewhere and put in an offer? I am worried the estate agent or seller won’t take me seriously if I don’t have a mortgage.
I also would like to know how I am getting a good deal? How do I know the mortgage lender is offering me the best value rate?
Answer
As you have a good idea of how much you want to pay for a property, now is the perfect time for you to go and speak to a whole of market mortgage broker.
They will be able to look the hundreds of deals on offer from all the different lending institutions and advise you on not only the cheapest, but the one which is most appropriate to you and your situation.
Once you have agreed on the mortgage, they will be able to obtain an ‘agreement in principle’ certificate for you, which you can then present to the estate agent when making an offer and will give you real credibility.
If you want to do a bit of background checking to see if the deal the mortgage broker is offering you is actually a good one, either speak to more than one broker, or do a bit of Googling… moneysupermarket.com is often a good place to do a sense check.
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