We asked our highly trained team of mortgage advisers for some of their favourite or frequently asked questions on mortgages, and collated them all together into a handy series of articles for you to read!
READ MORE: Mortgage FAQ Part 1
Does my mortgage monthly payment include utilities?
No – your mortgage payment is just the repayment of the loan for borrowing the money to buy your house. Your utility bills and council tax bill etc are all separate bills, and you should make sure you calculate the amounts for them when factoring in how much a house will cost you to run each month.
Why is my mortgage payment increasing every year?
If you have a tracker mortgage, you’ll be paying a repayment sum linked to the standard base rate as set by the Bank of England. That means your repayment amount can go up as well as down depending on the economy and the interest rate. If you’re on your lenders SVR (standard variable rate) mortgage, they can and do change the % amount you repay to take into account external factors and so you could see rate increases over time.
If you think you’re on an unfavourable repayment rate, or you’ve seen your repayments rise, talk to us about a re-mortgage and we’ll see if we can help.
How much is an average mortgage payment per month?
That completely depends on how much you’ve borrowed, what type of mortgage repayment you chose (variable, fixed, tracker) and, if your introductory or special rate has come to an end, how much your lenders SVR (standard variable rate) mortgage is.
What is a quick way to estimate my monthly mortgage payment?
Before we can help you with a mortgage application we’ll look at your finances with you and make sure you’re only applying for an amount you can afford to repay each month.
It’s important to make sure that you only apply for an amount you can afford to repay, and also to only apply within your budget as lenders will not be willing to consider you for an unaffordable amount.
By knowing your budget, you’ll also know your mortgage repayment amount per month too. Once we know what your options for a mortgage lender are, we’ll be able to show you the exact repayment amounts per month so that you can complete your monthly budget plans.
What are deferred mortgage payments?
A deferred interest rate mortgage allows you to make lower repayments than the actual rate of interest charged for an agreed period of time. The difference between what you would have paid normally and the amount you actually paid, is then added to the capital sum of your mortgage.
How do I pay my mortgage off early?
Firstly, dependant on your mortgage type, you should be cautious of incurring early repayment or overpayment penalties. Always check that your lender allows you to make overpayments without penalties before beginning.
Once you’ve checked for repayment penalties, here are four possible ways to pay your mortgage off early.
- Shorten your mortgage term. Shortening your mortgage term will mean you are debt-free sooner.
- Overpay your mortgage as lump sum extra payments.
- Remortgage (for a shorter term and/or higher monthly repayments).
- Pay fees upfront rather than add them to the mortgage repayments.
Can I pay a lump sum off my mortgage?
Many mortgages will allow you to make overpayments – again though, always check for hidden charges before you do this. An overpayment is an amount you can pay in addition to the contractual monthly payment on your mortgage. You can usually do this on the same direct debit as your mortgage, or by paying off a lump sum.
What are the consequences of a late mortgage payment?
Firstly, if you think you’re going to be late for a mortgage payment one month you should always contact your lender to discuss the issue and your proposed solution. It’s far better to ring them and talk it through than to pretend it isn’t happening, as they’re likely to have systems in place to assist you.
If you only miss your payment by a few days, chances are that you won’t have any kind of late fee or reporting to the credit bureau because most lenders generally give you a “grace period.” You should contact your lender to find out what your exact grace period is, but many lenders will give you 15 days to pay your mortgage without penalty.
A late payment after 15 days will result in a late fee, but a late payment after 30 days will result in even more consequences—like being reported to credit bureaus.
Missing a mortgage payment by more than 30 days can drop your credit score, but the question is: How much can it drop? Well, this depends largely on your overall credit history as well as the scoring system that your particular lender uses. The drops also tend to be higher if you have an “excellent” credit score (780 or above) and have never missed a payment before. Having a missed mortgage payment on your credit file will have an adverse effect and will decrease your chances of being accepted for future credit applications, especially another mortgage.
What happens in the UK if I can’t pay the mortgage?
That depends on whether you’re talking about not being able to pay the mortgage on just one occasion, or whether there’s bigger problems with you paying the amount every month.
Either way, your first port of call should be to contact your lender to discuss the problem and to try to work out a solution. If remortgaging to a better deal would help you, it’s important that you contact us before you miss or get behind in your monthly payments because you may find it more difficult to remortgage once you’ve got late payments registered against your name.
Eventually, your home could be repossessed if you don’t keep up your mortgage payments, so it’s vital to prevent that from happening by addressing any problems as soon as they arise.
How many years does an extra mortgage payment take off?
That depends entirely on how much you’ve overpaid by, and on how many occasions. If you do make a large lump sum over-payment, your lender will help you to work out your new loan repayment end date (i.e. how much time you’ve saved by overpaying your mortgage).