Finding the Right Mortgage in the United Kingdom


Use this fast reference to learn about the various mortgage options available. Remember that this is just a rough outline and that you should see a professional mortgage expert before making any significant decisions.


You can choose between a mortgage with a fixed interest rate and one with a variable interest rate, which is true of nearly every mortgage.

The best option is conditional on your specific situation and, to some extent, the prevailing interest rate.

Can your monthly budget handle a higher payment? A mortgage with an adjustable interest rate can experience this.

Are interest rates currently historically low? A fixed-rate mortgage might be a good idea right now.

Is it necessary to you to have a reliable monthly income for years? There are options for 1-10 year fixed rate periods.

Is it hard for you to get the money you need from lenders? With an interest-only mortgage, you can borrow more money against your income because your monthly payments are more minor. But it’s not without problems.

Talk to a UK mortgage expert about your alternatives to determine your best choice.

Here are some pointers that are more tailored to your mortgage requirements.

Newcomers to the Market

You, as a first-time buyer, probably have particular specific needs. You may have nothing at all to put down as a deposit. You may stretch your finances thin to qualify for a mortgage, but you still want to own your home.

Several viable options exist:

Many mortgage companies cater specifically to first-time buyers by offering 100% mortgages. Repayment mortgages fall into this category and can be an excellent place to start.

An interest-only mortgage, in which the borrower makes monthly payments consisting only of interest and no cost towards the capital total, is one alternative to consider if the down payment is high. Still, the monthly payments are too much to handle.

Although it could be intimidating initially, several mortgage companies now offer terms of up to 40 years.

Any of these options can be helpful for first-time homeowners who plan to upgrade their financing in two to five years once they’ve built up some equity in their home and are financially stable enough to handle higher monthly payments. Remember that nowadays, a mortgage is unlikely to be held for 25 years. Getting a new mortgage every two to five years is the standard.

Individual Borrowers’ Mortgages

Self-employed people’s mortgage application processes have traditionally been more rigorous. Mortgage lenders evaluate your ability to pay based on your net income, so it may be challenging to show your payment even if your company has been there for a while.

Which options are available then?

Independently Verified Home Loans. Although audited financials and proof of income are not required, you must still show that you can afford monthly payments.

If your company has been around for at least three years and you can offer audited financials demonstrating consistent revenue, you shouldn’t run into too many issues. The lending market has become more accommodating recently.

Consulting an Independent Financial Adviser will help you get the best possible terms for this and other specialized mortgages.

Current Property Owner?

If you are already a homeowner (whether or not you have a mortgage), you may wish to take out a home equity loan to obtain a lump sum of cash.

If you have paid off a large portion of your mortgage and home values have increased, you can access part of the “profit” locked inside your home without selling it.

Different lenders offer different products for this purpose, but they all fall under the umbrella term “equity release” mortgages.

You can get a lump amount equal to 95% of your home’s equity and pay it back like a regular mortgage. This can finance everything that adds value to your property or alters your way of life.

Improve Your Mortgage Rates

Just because you already have a mortgage doesn’t mean you can’t refinance into one with a lower interest rate or shorter term and pay it off faster.

If you shop around for a mortgage lender, you may be able to find one that offers the terms you’re looking for, such as a lower interest rate, a longer-term fixed-rate deal, or the option to shorten or lengthen the remaining time of your mortgage.

The best mortgages, occasionally offered by relatively modest building societies, can often be uncovered by discussing your needs with an IFA.

Gainful bonuses but a pitiful starting wage?

If this describes you, finding a suitable repayment mortgage may prove challenging. This is because mortgage lenders typically do not count bonuses and overtime pay toward qualifying income because of these factors. This could result in a significantly lower mortgage offer than you anticipate receiving.

A mortgage with some wiggle room could solve this problem. Similar to an interest-only mortgage, a flexible mortgage requires only interest payments each month but lets you pay down the principal whenever you like.

If you receive a bonus once every three months, for instance, you might use that money toward paying down your mortgage principal instead of just the interest.

Anyone whose income isn’t consistent and who receives lump sum payments rather than a regular salary may benefit from a mortgage with flexible terms.

What Kind of Expat Are You?

Your mortgage requirements will change slightly now that you’re an ex-pat. Some high-street lenders, especially in Spain, have partnered with international lenders to make it easier to get a mortgage in other countries. However, using a UK mortgage to buy property abroad is still challenging.

On the other side, many people who have lived abroad for an extended period are looking to purchase a home in the UK in anticipation of a return. This is less complicated, and several significant lenders are available to help you.

Find an independent financial advisor (IFA) who has previously dealt with this type of mortgage and see what advice they can provide you. There could be obstacles, but it should be done overall.

What is a Buy-to-Let Investment?

Investing in real estate to rent it out has exploded in recent years. It’s not hard to get a buy-to-let mortgage if you’re a professional landlord or even if you want to buy a second home to rent out as an investment.

There are a few key distinctions between home loans and commercial mortgages:

Only about 75% of the property’s worth is available for borrowing.

In many cases, mortgages have a maximum length of 25 years, and interest-only loans typically have even shorter maturities.

Mortgages require a credit check and proof that the property will generate sufficient income (either through renting it out or your resources) to cover the monthly payments.

Need A Short-Term Tenant For Your Home?

Sometimes, homeowners need to find a short-term tenant because they are relocating temporarily (outside of the UK or for a year or two) but still need to make mortgage payments on their primary residence.

Lenders’ specific policies on this matter may vary, but generally, as long as you let your mortgage servicer know you want to rent out your home, they should cooperate.

Need a Mortgage that Accords with Islamic Law?

Getting a mortgage in the UK that complied with Sharia law used to be next to impossible, but that’s changed in the last five years. Getting an Islamic mortgage for your home is just as easy as getting a conventional mortgage from several major high-street institutions.

There are two primary types of Islamic mortgages in the UK. Ijara-based mortgages are prevalent. Even if mortgages based on the Murabaha concept are available, most borrowers, especially younger persons just starting, will find that they are too expensive.

Need Two Mortgages Because of Divorce?

Divorce is stressful for many reasons, not the least of which are the financial ones. As a result, even those with spotless credit histories may find it challenging to qualify for a mortgage after a divorce.

Some financial institutions now provide mortgages tailored to the needs of recent divorcees, with perks including lower down payments and more flexible repayment terms.

Up to five years with a guaranteed interest rate

Interest-free for the first few months

Maintenance payments (alimony) will be counted as income by the lender for computing the loan amount.

You can get a loan for up to the total value of your home.

Mortgages with the option to pay principal and interest or with only interest

The process of locating a new house and re-establishing one’s financial condition after a divorce can be stressful, but packages like the one offered by the Yorkshire Building Society can be a tremendous assistance.

MortgageSorter is a website dedicated to UK mortgages that has been educating the general public for over five years. It features the most up-to-date, best-buy UK mortgages and a section dedicated to UK mortgages for persons with poor credit.

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