Affinity Finance Independent Financial Advisers

Text Box: Understanding Mortgages…

Whether you’re a first-time buyer, moving home or staying put,
we can help you choose a suitable mortgage – if you need one!
Find out how mortgages work, how much it might cost, and what’s available.

What is a mortgage?

A mortgage is like any other kind of loan – you borrow the money now so you can buy the house you want now, and then you pay it back with interest over a period of time. But it has one key difference: it’s secured against your home. So if for any reason you can’t repay it, the lender can force you to sell your home so they can recover their money. For this reason, mortgages are also referred to as a First Charge Secured Loan.

You may also wish to consider what is commonly called a Secured Loan. This is often used to top up an existing Mortgage to finance home improvements or other significant borrowing needs. In reality, this is simply a secondary mortgage and is formally called a Second Charge Secured Loan because it sits behind and takes second place priority to your main mortgage.

How mortgages work

·       You take out the loan you need based on how much you can afford, the value of the secured property, and the length of time required.
·       You are charged interest on the loan, usually based on the Bank of England base rate which is reviewed monthly.
·       You then pay the mortgage back by the end of the agreed term and at the agreed rates and amounts.

Types of mortgage

You can choose to pay your mortgage back in the following ways:

                   · Repayment                    · Interest-Only                 · Mixed

We can help you decide which is best for you.

Repayment Mortgage

Every month, your payments to the lender go towards reducing the amount you owe as well as paying the interest charge. So each month you're paying off a small part of your mortgage.

           For: It's a simple, clear approach - you can see your loan getting smaller.
           Against: In the early years your payments will be mainly interest, so if you want to repay the mortgage or move house in the early
           years, you'll find that the amount you owe won't have gone down by very much.

Interest-Only Mortgage

As the name suggests, your monthly payment only pays the interest charges on your loan - you're not actually reducing the loan itself. This is why it's very important to have some other way of repaying the loan by the end of the term; for example, either from the eventual sale of the property or from some other source of capital.

           For: Because you're only paying off the interest, and not the loan itself, your monthly payments will be lower.
           Against: That debt is not going to go away. Throughout the life of the mortgage, you'll need to check that you are still on track to
           repay your loan at the end of the term. If you can't repay it at the end of the term you could lose your home.

So, choosing a repayment or interest-only mortgage is one decision. The other choice you have to make is the type of interest rate you prefer.

Text Box: Final Factors
Having made all these decisions, the remaining factors are:

·     Affordable ?         Can you afford your regular mortgage premiums
·     Attainable ?         Can you find the mortgage you want
·     Achievable ?         Can you get the mortgage you need

Affordable

Ultimately, only you can decide what you can and want to afford, but if it helps we will be happy to work through our budgeting process with you for added peace of mind. You might also like to try the Mortgage Calculator to give you something to work to.

Attainable

With upwards of some 4,000 different mortgages to choose from this can be a very daunting task. Even with your own search and select facility, such as the Mortgage Tables provided here, it can still be too time consuming, confusing, and incomplete. But don’t despair.. that’s what we do for a living – we provide you with right advice and the right recommendation.

Achievable

Last but not least, you now have to present yourself to the lender in the best possible way, and hope for a positive reply. Again, we can help you here.

The way you manage your borrowing commitments is a key decision factor for any potential lender. They will assess your credit worthiness by checking your entire credit file. Generally they would prefer a clean credit record, but may also accept you as long as you fully declare any poor credit history. For this reason it may be advisable for you to obtain a copy of your credit report in advance of making a mortgage application. Simply complete the attached Credit Report Application and send it to them with your fee of just £2.00 per applicant. It usually takes upto 10 days but you can speed up the process by completing it online at Experian

Please let us have a full copy of your Credit Report once you receive it so that we can help you complete and submit your Mortgage or Loan Application in the best possible way; and follow it all the way through to a successful Offer.

Text Box: It’s clear that choosing the right mortgage is not simple, particularly when there are so many providers and products.
Among the decisions you need to make are:

·             How much should I borrow?
·             How long should it last?
·             How should I repay it?
·             Which product is right for me?
·             Which provider is the most appropriate?

Mortgage Advice

Last but not least is the value of good advice. It’s well worth knowing that:

·             It won’t usually cost you a penny more to take our advice than if you had bought directly from the manufacturer!
              This is because we can fund the cost of our service via a commission offset agreement with you – which amount would otherwise
               have simply been profit for the product provider.
·             There are often exclusive products, which may be unavailable to you directly, but which you can take advantage of through us.
·             And in addition to this, we can assure you that we’ll help you find the right product, from the right provider, at the right price!

Mortgages & Loans

Savings & Investments

Pensions & Annuities

Terms of Business

Interest Rates	How does it work	Early repayment charges	What does it mean for you?
Standard Variable Rate (SVR)	A variable interest rate which moves up or down with the lender's own mortgage rate, which itself is usually driven by the Bank of England (BOE) Base Rate.	No None usually	· Usually you can leave your lender , or make repayments without any penalty costs · Unlimited variable payments which will probably be expensive compared to other deals.
Base Rate Tracker (BRT)	A variable rate which tracks (moves up or down with) the BOE Base Rate plus or minus an amount added or subtracted by the lender.	Yes Usually during the tracker bonus period	· May be beneficial if you can afford to pay more when interest rates go up, in exchange for benefiting when they go down.
Discounted Rate	Another variable rate but which tracks the lender’s own rate less a percentage discount which may be more significant than a Base Rate Tracker Discount.	Yes Usually during the discounted bonus period	· It gives you a gentler start to your mortgage, at a time when money may be tight. But you must be confident you can afford the payments when the discount ends.
Fixed Rate	Fixed at a certain level for a certain period of time. Usually reverts to the Standard Variable Rate afterwards.	Yes Usually during the fixed bonus period	· Your payments will stay the same even if interest rates go up or down so you can budget accordingly.
Capped Rate	Tracks the lender’s standard variable rate but with a maximum limit at which it is capped for a certain time period. Usually reverts back to the SVR afterwards.	Yes Usually during the capped bonus period	· You know the maximum you will pay for a set period of time. · Useful if you want the security of knowing that your payments can't rise above the set level, but still benefit if rates fall.

Tel: 0845 8736627