Mortgages – FAQ’s

Frequently asked mortgage questions

Worries about debt is often an area of concern amongst prospective borrowers, especially since many ask about whether a mortgage is obtainable with an overdraft or large sums on their credit cards.

What happens if your lender goes bust?

There will be a procedure in place to help and protect you in this instance. The first port of call will be to contact your lender and ask for information and advice on what happens next. Sometimes the lender will continue to honour the product until the end of your mortgage term with the help of another lender who may purchase the portfolio of mortgages from your initial lender. If another lender takes on your mortgage, nothing will change regarding the loan itself.

Can I get a mortgage if I have bad credit?

Many people assume that if they have adverse credit on their file, then they won’t be able to get a mortgage which isn’t the case at all. There are options available to people with bad credit but the worse your situation is, the fewer products there are available to you and the interest rate you will be paying will most likely be higher. Lenders may also require larger deposits if you have adverse credit.

Can you get a mortgage with an overdraft?

You are able to get a mortgage whilst using your overdraft but the lender will need to assess how much of your monthly income is used to pay loans, credit card bills, student finance and other commitments to ensure you aren’t overstretching yourselves by taking out a mortgage.

Can you get a mortgage if you’re self-employed?

Although it is a slightly different and more difficult process, self-employed people are still able to get a mortgage. You will most likely need 2 to 3 years’ worth of financial documents which you have submitted to HMRC although a few lenders may accept 1 year’s figures. Make sure you are registered on the electoral roll, to help lenders confirm your identity.

What happens to your mortgage when you move house?

Sometimes it is possible to swap your mortgage from one house to another. This is called ‘porting’ and if you wish to do this, it may be worth asking your lender or a mortgage broker if this is feasible for you. Your property and the new property will both need to be valued and if your new property is valued at a larger amount to the current one, you may require additional funds and you will need to provide evidence that you can afford the higher repayments. If you are unable to ‘port’ your mortgage, you will need to pay the early redemption charges on your current mortgage and take out a new mortgage on your new home.

It is advisable to speak to a mortgage broker about all of the above situations and questions in order to find the best result for your personal circumstances.