Frequently asked questions:
Residential mortgages
Buying your first home, moving, improving your property or planning for retirement can bring very different mortgage questions.
These FAQs explain the main options and considerations at each stage. Lenders take different approaches, so understanding your circumstances and future plans is an important part of finding the right mortgage.
“Should I choose a two-year or a five-year fixed-rate mortgage?”
First-time buyers
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Many first-time buyer mortgages are available with a 5% deposit, although some applicants or properties will require more. Specialist arrangements may allow a smaller deposit, subject to additional conditions.
A larger deposit can improve your choice of lenders and rates. However, you should also allow for buying costs and keep a suitable financial reserve rather than committing every available pound to the purchase.
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The amount depends on your income, financial commitments, household expenditure, credit history and proposed mortgage term.
An income multiple can provide an indication, but lenders do not all calculate affordability in the same way. Bonuses, self-employment, childcare costs and other commitments can produce very different results between lenders.
Our Complex Income knowledge hub explains how different earnings can be assessed.
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A missed credit card payment several years ago is different from recent mortgage arrears, and lenders assess the type, age, amount and circumstances of any credit problems.
Some applicants can still qualify with mainstream lenders, while others need a more specialist approach. An expert mortgage adviser can show you how to obtain your credit report and discuss any issues with you before submitting applications, identifying lenders whose criteria fit your circumstances.
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An Agreement in Principle is usually the first stage of the mortgage application process. It is generally based on basic information about your circumstances, income and commitments, without supporting documents being reviewed at that stage.
It gives an initial indication of what a lender may be prepared to lend, based on the information provided and its preliminary checks.
You do not normally need one simply to view properties, although an estate agent may request it when assessing an offer. It does not guarantee a mortgage: the full application must still satisfy the lender’s underwriting, documentation and property requirements.
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A mortgage offer may take a few weeks, although straightforward applications can be quicker and more complex cases can take longer. The lender’s workload, valuation and any additional underwriting queries affect the timing.
You will usually need identification, proof of address, income evidence, bank statements and evidence of your deposit’s source. Self-employed applicants may also need accounts and tax documents.
Receiving a mortgage offer is separate from completing the purchase, which also depends on the legal work and any property chain.
Using our first-time buyer checklist to prepare may save you time during the full mortgage application stage.
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Alongside your deposit, allow for solicitor’s fees, searches, a survey, lender and adviser fees, moving expenses and any property purchase tax that applies.
You may also need money for insurance, furnishings and immediate repairs. Your solicitor can explain any additional legal costs, including indemnity insurance where required.
A lender’s valuation is for its own purposes and should not be treated as a substitute for an appropriate survey.
“Can I buy a house for a family member to live in?”
Help buying a home
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Many lenders accept gifted deposits from family members, although the relatives they accept can vary.
The donor will normally need to confirm that the money is a genuine gift rather than a loan and provide identification and evidence of its source. Tell your adviser if the donor expects repayment, ownership rights or to live in the property.
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Some arrangements allow parents to support a mortgage using their income, savings or equity in their own property.
The options work differently. Savings may be held as security, a property may provide additional security, or a parent may join the borrowing without becoming an owner.
The supporting family member needs to understand their obligations, what could be at risk and how they can eventually be released from the arrangement.
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A joint borrower, sole proprietor (JBSP) mortgage allows another person to support the borrowing without becoming a legal owner of the home.
The lender assesses the borrowers’ combined financial position, including their other commitments. All borrowers are responsible for the mortgage, even those who do not own or occupy the property.
Independent legal advice is commonly required for the supporting borrower. Their age and existing commitments can also influence the available mortgage term and borrowing amount.
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Shared ownership allows you to buy a share of a property and usually pay rent to a housing association or another provider on the remaining share.
The mortgage deposit is generally calculated against the price of the share you buy. For example, a 5% deposit on a £100,000 share would be £5,000, subject to lender requirements.
Your budget must also cover the rent, service charges and other ownership costs. Eligibility and the terms of the scheme need to be checked separately.
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With shared ownership, you buy a share of the property and usually pay rent on the remainder. You may be able to purchase further shares later, subject to the scheme’s rules.
With shared equity, you generally own the property but receive additional lending linked to a proportion of its value. The amount repayable can therefore rise or fall with the property’s value.
Interest, fees and repayment conditions vary between arrangements.
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Some family-assisted mortgages, joint borrower arrangements and affordable home ownership schemes are available to previous homeowners.
Eligibility depends on the lender, scheme, location and your current circumstances. For example, someone buying after separation may qualify for assistance even though they have owned a home before.
It is worth exploring the available routes rather than assuming that all help is restricted to people making their first purchase.
“Can I rent out my current home and buy another one?”
Your next mortgage deal
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It is sensible to start reviewing your mortgage around six months before your current deal ends. The point at which you can apply or reserve a product depends on the lender and the validity of its offer.
Starting early gives you time to compare options and prepare documents. Completion can then be coordinated with the end of any early repayment charge period.
Our remortgage section explains how we approach that review.
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Unless you arrange another deal, your mortgage will normally move onto the follow-on rate specified in your mortgage offer, often the lender’s standard variable rate.
Your payments may change, and that rate can usually change again in future. You can explore a new product with your existing lender or a remortgage elsewhere.
The end of your fixed rate is not normally the end of your overall mortgage term.
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Neither option is automatically better.
A product transfer with your existing lender may involve less administration and fewer upfront costs. Remortgaging elsewhere may provide better pricing, more suitable criteria or greater flexibility.
The comparison should include rates, fees, incentives, any early repayment charges and the changes you want to make. Your existing lender’s offer is a useful option to assess alongside the wider market.
Our expert advisers can guide you through the assessment of your options.
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A new lender will usually assess your current income, commitments and circumstances, which may affect the amount available.
A straightforward product transfer with your existing lender may be possible without a full new affordability assessment, depending on its rules and the changes requested.
Changes such as parental leave, self-employment or a different income structure need to be understood properly rather than treated as an automatic barrier.
If your income or circumstances have changed, an experienced mortgage adviser can assess the options currently available to you.
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A two-year fix gives you an earlier opportunity to review your mortgage, but also exposes you sooner to whatever rates are available at that point.
A five-year fix provides longer payment certainty, although leaving during the fixed period may involve early repayment charges.
The choice should reflect your budget, plans to move or repay borrowing, and the rates and fees available. Predicting future interest rates should not be the only consideration.
By speaking with a mortgage adviser, you can take an expert recommendation, instead of having to choose an option on your own.
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Possible costs include a product fee, valuation, legal work, an adviser fee and any charges for leaving your existing mortgage.
Some products include a valuation or legal package, or offer cashback, but the overall cost still needs comparing. A fee-free deal is not necessarily the cheapest option.
If you add a fee to the mortgage, you will normally pay interest on it as well.
“How does a bridging loan work when buying a house?”
Moving home
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Your existing mortgage is normally repaid from the sale proceeds. You then arrange borrowing secured against the new property.
If your product is portable, you may be able to retain its rate and terms on some or all of the new borrowing, subject to approval. Otherwise, you may need a new deal with your current lender or another lender.
Our moving home spotlight explains the main considerations.
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Many lenders allow this where the total borrowing is affordable and the new property meets their requirements.
The amount transferred may retain your existing deal, while additional borrowing is usually arranged on a separate product. This can leave you with different rates and deal end dates.
An experienced adviser can compare the combined arrangement with the cost of replacing the whole mortgage, including any early repayment charges.
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The mortgage arrangements need checking before you commit.
You may be able to port your existing deal, or you could repay it and take a new mortgage. Early repayment charges may apply if you leave the product or reduce the borrowing.
Porting is subject to approval, and special conditions can apply if your sale and purchase do not complete together.
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It may be possible using available savings, borrowing that your income can support, or bridging finance.
The right approach depends on how much equity is tied up in your existing home and how the borrowing will be repaid. Allow for the cost of owning both properties and any additional property purchase tax.
The plan should also remain workable if your sale takes longer or achieves less than expected.
Find out more about regulated bridging finance.
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A bridging loan provides short-term funding, often allowing a purchase to proceed before an existing property is sold.
The lender needs a credible repayment route, usually a sale or suitable longer-term finance. Interest may be paid monthly or included within the arrangement, depending on the product.
Fees, interest and potential delays must be considered together. Our bridging loans section explains how this funding is structured.
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You will need your existing lender’s permission to let the property or a suitable replacement mortgage.
Keeping your home as a rental while buying a new main residence is commonly called let-to-buy. Rental income, available equity and affordability for the new home all need to work together.
Our let-to-buy guide explains the borrowing, costs and coordination involved.
“Is a further advance better than remortgaging?”
Improving your home
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Many lenders consider additional borrowing for improvements, subject to affordability, available equity and the proposed work.
Options include a further advance from your current lender, remortgaging or a second charge mortgage. The most suitable route depends partly on your existing rate and any early repayment charges.
Major structural work may require specialist funding rather than ordinary additional borrowing.
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A remortgage can replace your current loan with a larger mortgage, with the additional funds used towards the extension.
The lender will assess affordability and will generally base ordinary remortgage borrowing on the property’s current value. You should not assume it will lend against the anticipated value after the extension.
Plans, permissions, costs and the scale of the work can also affect which lenders will consider the application.
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A further advance can allow you to keep your existing mortgage deal while borrowing an additional amount from the same lender on separate terms.
Remortgaging replaces the existing borrowing and may give access to a different lender or structure.
An experienced adviser can compare the cost of the entire arrangement, including fees and early repayment charges. A cheaper rate on the additional amount alone does not necessarily produce the best overall result.
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A second charge mortgage is an additional loan secured against your property, allowing the existing first mortgage to remain in place.
It may be useful where changing your first mortgage would mean losing a favourable rate or paying substantial charges. However, the second loan has its own pricing, fees and affordability assessment.
Both loans are secured against your home, which could be repossessed if the required payments are not maintained.
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It depends on the property’s value, existing secured borrowing, the lender’s maximum loan-to-value and what you can afford.
Equity is the difference between the property’s value and the borrowing secured against it, but lenders will not necessarily allow you to borrow all of that difference.
For example, a £400,000 valuation and an 80% lending limit would allow total borrowing of £320,000 before deducting your existing mortgage and relevant costs.
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Some properties needing work are acceptable for an ordinary mortgage; others require specialist finance because of their condition or the intended alterations.
A renovation mortgage, staged facility or bridging loan may be appropriate where substantial work is required. Lenders will assess the budget, permissions, property condition and eventual repayment arrangements.
Contact our mortgage advisers to talk through your situation and ascertain your best route to funding.
“What happens when my fixed-rate mortgage ends?”
Building your own home
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A self-build mortgage usually releases money in stages as construction progresses, rather than advancing the entire loan at once.
Depending on the lender, it may help fund the land purchase as well as the build. The assessment covers your affordability, plans, permissions, construction method, budget and expected completed value.
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There is no single deposit requirement across the market. The amount depends on the lender, land value, build costs, completed value and how funds are released.
You may need a larger contribution than for a standard house purchase, although equity in land you already own can sometimes help.
You also need enough accessible money for professional fees, costs between mortgage releases and a realistic contingency.
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Many self-build lenders can take account of equity in land you already own when assessing your contribution to the project.
Its value, any borrowing secured against it and the planning position will matter. Some lenders may release funds against the land to help start the build.
However, land equity is not the same as available cash: the funding schedule must still cover payments as they fall due.
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Many lenders release funds in arrears, after agreed work has been completed and their inspection or valuation requirements have been met.
Some specialist arrangements release funds in advance. The amount available at each stage may depend on the property’s value or an agreed cost-based schedule.
Our article You can afford to build it. But can you fund it? explains why the timing matters as much as the total borrowing.
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Some specialist lenders consider conversions and demolition followed by rebuilding as part of their self-build or renovation lending.
They will assess planning consent, the construction method, costings, professional oversight and the finished property. Existing buildings or borrowing can introduce additional considerations.
Do not assume that an ordinary residential mortgage permits demolition or major structural changes; discuss the project before buying or starting work.
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It may be possible, provided the lender is comfortable with the combined commitments and the project’s funding.
You will need to account for your existing mortgage, self-build borrowing and other costs throughout construction. If selling your current home forms part of the plan, the timing and expected proceeds must be realistic.
Keeping the property after completion may require a different long-term arrangement, particularly if you intend to let it.
“Can I get a mortgage while on maternity leave?”
When life changes
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Both borrowers remain responsible for the mortgage until the lender formally releases someone or the loan is repaid.
Moving out or agreeing that one person will make the payments does not remove the other borrower’s liability. Missed payments can affect both credit records.
Options may include selling, transferring the property and mortgage to one person, or retaining the arrangement temporarily. Mortgage advice and legal advice should be coordinated.
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Potentially, with the lender’s agreement and the necessary legal arrangements.
The lender will normally assess whether the remaining borrower can afford the mortgage alone. Removing someone from the borrowing often accompanies a transfer of their ownership interest, but these are separate matters requiring coordination.
If the current lender cannot agree, another lender may take a different view, depending on your circumstances.
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A remortgage may allow you to replace the existing loan and raise additional money to buy out your former partner’s interest.
The total borrowing must fit the lender’s affordability and loan-to-value requirements. Your solicitor will advise on the ownership transfer and agreed settlement.
Establishing the available borrowing early can help ensure that any proposed settlement is financially achievable.
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You may be able to add your partner through your existing lender or by remortgaging into joint names with another lender.
The lender will assess your combined income, commitments and credit histories. Legal work will usually be needed to add your partner to the property ownership, commonly called a transfer of equity.
The best route depends on your current mortgage terms, any early repayment charges and the options available. Your solicitor can explain any tax implications and how to record ownership where you have contributed different amounts or want to protect existing equity.
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Many lenders consider applications during parental leave and may use your expected salary after returning to work.
They may request an employer’s confirmation, return date and details of any changes to hours or pay. Savings and income during leave can also matter.
The affordability assessment should reflect your future household spending, including childcare, rather than assuming everything returns to its previous position.
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Some lenders accept a new employment contract or applications during probation, while others require more history.
New self-employment is assessed differently. Many lenders want completed accounts or tax figures, although some accept a shorter history where the circumstances support it.
Our guide to mortgages for self-employed people explains trading history, income calculations and recent changes in more detail.
“How does a self-build mortgage work?”
Second homes
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Some lenders offer residential mortgages for an additional property used personally by you or your family.
They will assess why you need the property, how it will be occupied and whether you can afford both homes. A second home is different from a property bought for letting.
Being clear about the intended use helps identify the appropriate lender and mortgage from the outset.
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Deposit requirements vary between lenders and may be higher than for a main residence.
The property, intended occupation, existing borrowing and overall affordability all influence the options. A lender offering high loan-to-value mortgages for main homes may apply a lower limit to second homes.
You should also budget for legal costs, ongoing expenses and any additional property purchase tax that applies.
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Lenders assess your existing mortgage alongside other commitments and the costs associated with both properties.
They also consider whether the first home will remain available for your use, be sold or be let. These situations can produce different affordability calculations.
A strong income does not automatically support a second mortgage of the same size as the first; the complete financial position needs assessing.
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You may be able to raise additional borrowing against your current home and use the proceeds towards another purchase.
The lender must accept the purpose, and both the additional borrowing and any new mortgage need to be affordable. Using equity increases the debt secured against your existing home.
If you intend to rent out that home and move into the new one, see our let-to-buy guide.
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A property used privately for holidays or during the working week may be suitable for a second-home residential mortgage.
A property let to paying guests needs a lender that accepts that use. Holiday letting, personal occupation and a mixture of the two are not treated identically.
Explain the full intended arrangement, including occasional letting, before choosing a mortgage. Lease restrictions and occupancy conditions also need checking.
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It may be possible, but the mortgage depends on who owns the property, who borrows and whether rent will be paid.
Some lenders accept residential arrangements for family occupation. Others require a specialist structure, and ordinary buy-to-let products may exclude letting to close family.
Where the family member will own the home, a gifted deposit or joint borrower arrangement may be worth considering instead.
“Can I get a mortgage for a barn conversion?”
Downsizing
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Your existing mortgage is normally repaid from the sale proceeds. You can then buy the smaller property outright or arrange a new mortgage if borrowing is still required.
You may be able to port your existing product, subject to approval. If you reduce or clear the borrowing, early repayment charges may apply.
Allow for selling, purchasing and moving costs when calculating how much equity the move will release.
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There are circumstances where you can carry your existing mortgage product across to a cheaper property.
A cheaper purchase does not automatically mean a lower loan-to-value, particularly if you want to retain a substantial mortgage and release cash from the sale.
If you port only part of the existing balance, the amount repaid may attract an early repayment charge. The lender’s valuation and affordability checks may also affect approval.
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An ERC may be payable if you reduce your mortgage balance by more than your overpayment allowance.
Porting the remaining borrowing does not necessarily remove the charge on the portion you repay. Some lenders also have specific rules where the sale and purchase complete on different dates.
Ask for a calculation based on your proposed transaction and timing before deciding how much borrowing to retain.
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Selling your home and using part of the proceeds to repay the mortgage can be a workable strategy if enough equity remains for a suitable replacement home and moving costs.
Some lenders accept downsizing as an interest-only repayment strategy, subject to their criteria.
It is important to review the figures periodically. Property values, the cost of the replacement home and your needs may change significantly before the mortgage ends.
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The outstanding capital becomes due, so contact your mortgage adviser and seek advice well before the end date.
Possible options include using other assets, selling, moving to repayment, refinancing or considering suitable later-life borrowing. None is guaranteed, and extending the term requires the lender’s agreement.
If no workable repayment arrangement is reached, your home could be at risk. Early action gives you more time to assess the alternatives.
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Sometimes. Savings, borrowing supported by income or bridging finance may allow the purchase to proceed first.
If repayment depends on selling your existing home, allow for delays, a lower sale price and the costs of owning both properties.
The amount of equity available matters, but so does when you can access it. The funding needs to remain manageable until the sale completes.
“What costs do I need to budget for when buying my first home?”
Later life lending
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Yes, some lenders offer mortgages to retired applicants where the borrowing meets their criteria.
They assess sustainable retirement income, existing commitments, the property and the repayment arrangements. Options can include standard repayment or interest-only mortgages, retirement interest-only mortgages and specialist later-life products.
Retirement does not automatically mean equity release is the only option. The starting point is speaking with an expert later life lending adviser to establish your income, assets and objectives.
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There is no single maximum age across the mortgage market.
Mainstream lenders tend to set limits at application or at the end of the mortgage term, while others take a more individual approach. Different limits may apply to standard mortgages and later-life products.
Age affects lender choice, but income sustainability, affordability and the proposed repayment strategy are also central to the wider assessment of your options.
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Many lenders accept established pension income, including State Pension, workplace pensions, personal pensions and annuities.
Income drawn from a SIPP may also be considered, although lenders assess drawdown sustainability differently. An undrawn pension fund is not automatically treated as income, but some lenders can assess it under specialist criteria.
Our non-standard income spotlight includes further information about pensions and other income sources.
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A retirement interest-only (RIO) mortgage is designed for older borrowers. You pay the interest each month, while the amount borrowed remains outstanding unless you make capital repayments.
Unlike a conventional interest-only mortgage, a RIO normally has no fixed end date. The loan is usually repaid from the sale of your home when you die or move permanently into long-term care. For joint borrowers, this normally applies when the last borrower dies or moves into care.
You must demonstrate that you can afford the monthly interest payments throughout retirement. Unlike a lifetime mortgage where interest can be added to the loan, a RIO requires regular interest payments, so unpaid interest does not build up while those payments are maintained.
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With a RIO mortgage, you must make monthly interest payments and demonstrate that they are affordable.
A lifetime mortgage is a form of equity release. Depending on the product, interest may be paid or added to the balance. Unpaid interest can compound, increasing the debt over time.
Both are usually repaid following specified events such as death or permanent entry into long-term care, but their eligibility, payment obligations and costs differ.
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With a lifetime mortgage, interest added to the loan can significantly increase the balance and reduce the equity available for inheritance or future needs.
Equity release can also affect means-tested benefits, involve fees and early repayment charges, and limit flexibility when moving. Home reversion arrangements work differently and involve selling part or all of your home.
Specialist advice should compare the arrangement with alternatives and consider its longer-term effect on you and your family.
“What is the difference between shared ownership and shared equity?”
“Can I add my partner to my mortgage?”
“What happens to a joint mortgage when you separate?”
“How much deposit do I need as a first-time buyer?”
“What is a joint borrower, sole proprietor mortgage?”
“Can I get a mortgage offer while changing jobs?”
“How does a self-build mortgage work?”
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