• Meeting with a mortgage / financial adviser
• Finalising Mortgage Arrangements
• Mortgage Valuation
• Homebuyers Report
• Full Survey
• House buying process - what are the costs
• Mortgages explained - your options

Meeting with a mortgage / financial adviser
A meeting with an ocean financial adviser will help you to decide which type of mortgage is best suited to your requirements. He/she will help you to consider how much you can afford to spend, the amount of deposit you have available, repayment methods and a favourable interest rate. You will also need to find out how much a building society/bank will be prepared to lend you. This amount is determined by your income, employment status and the size of your deposit. When you have agreed on the type of mortgage you want our adviser can apply for an agreement in principle on your behalf. This means that the building society/bank are prepared to lend you the funds up to a certain amount. However this will be dependent on certain checks they will carry out on you as buyers and also upon the condition and mortgage ability of a property which will be determined by a valuation/survey. Obtaining this agreement in principle will save time at a later stage. 

Finalising Mortgage Arrangements
Once you have found a property and your offer for the purchase has been accepted you need to contact our financial adviser with a view to finalising your mortgage arrangements, and he/she will help you complete an application form. Most lenders will usually want to see evidence of your earnings (recent pay slips), P60 and bank statements. They will then instruct a valuation on the property to determine whether the property will be suitable security against the loan. If you wish you can have a more detailed survey that may point out any defects with the property in more detail. Ocean Surveyors can help with this if necessary and would be happy to provide a free no obligation quote. info@ocean-survey.co.uk 

Mortgage Valuation
In order for a building society or bank to lend on a property they require a mortgage valuation. Its purpose is to confirm that the property is adequate security for their requirements and is required to assist the lender rather than the buyer. Any fee required for the valuation is paid to the lender, who will then instruct a surveyor to carry out the report. It is therefore legally carried out for the lender and not the purchaser. 

Homebuyers Report
All purchasers are advised to obtain a report on the condition of any property they intend to buy. The Homebuyers Report is the most common report obtained. It is carried out by the surveyor and provides comment on the various elements of the building outlining significant defects and any further investigations required. It does not cover minor items and is intended to be less technical and more readily understood than a full survey. 

Full Survey
A full survey is a detailed condition report providing extensive advice on all elements of the property, including their condition and any repairs required. It is the most thorough form of survey but is longer and more technical than a Homebuyers Report and therefore more expensive.

It is important that you obtain a survey on any property you intend to purchase. The importance of proper investigation cannot be overstressed. If you wish to discuss any of the above in more detail please do not hesitate to contact one of our surveyors.  

House buying process - what are the costs

A mortgage is normally the biggest expenditure when purchasing a property. However, there are other costs which need to be considered. These include:  

Deposit
When contracts are exchanged a deposit is usually required and paid through your solicitor. This is a percentage of the purchase price, usually between 5% and 10%.

Valuation / Surveys
To ensure that the property is an acceptable security for the loan, the mortgage lender's surveyor will need to inspect and value the property. The cost, if any, of this valuation depends upon which lender you choose and will be pointed out to you by an Ocean financial adviser at your initial meeting.

Legal Costs
A solicitor or licensed conveyancer needs to be appointed to deal with the legal aspects of selling and or purchasing a property. This will incur costs. An estimate of these costs can be requested before you instruct one. Ocean Property Lawyers can assist with this and are more than happy to provide a free no obligation quote. info@ocean-propertylawyers.co.uk

Local Authority Search
Your legal adviser will apply to the local authority to ascertain if there are any plans for future developments in the area surrounding your chosen property that could affect the value and purchase price.

Land Registration
This verifies legal ownership of the property and registers the owner at that address.

Stamp Duty
This is a government tax based on the property's purchase price and is calculated as follows:

Up to £125,000 - Nil, £125,000 - £250,000 - 1%, £250,000- £500,000 - 3%, £500,000 - 4%.

As you can see this can be a large amount and needs to be considered whilst deciding the upper limit of your price range.

Arrangement Fee
Some lenders charge an arrangement or application fee for a mortgage. Some lenders will allow you to add this to the mortgage and the fee varies depending on the lender chosen and the mortgage offer. Your financial adviser will be able to discuss these options with you.

Higher Lending Fee.
This is an insurance policy designed to protect the lender against losses incurred if the property needs to be taken into possession because of arrears. This insurance is commonly used for high loan to value mortgages, where the value of the property is not much more than the requested amount of the loan. This charge is usually passed on to the borrower but it is important to remember that this is insurance for the lender, not the borrower, but paid for by you.  

Insurance
Lenders insist that the property is adequately insured with a suitable buildings insurance policy, covering against the usual risks. In addition to this you will need contents insurance to cover theft, fire, damage etc.
Another form of insurance is a mortgage payment protection plan that is designed to offer income protection against unemployment, sickness and redundancy. 

Life Assurance
Most lenders require Life Assurance to be taken out to cover the value of the loan if you die.
One of the following is usually necessary.
Term Assurance is the cheapest and simplest form of life cover, providing life assurance for a fixed term only. The sum assured is payable only if the life assured dies within that period. There is no investment value to the policy at any time.
Level Term Assurance the sum assured does not change during the term of the policy. Such policies are generally used to repay a loan on the death of the borrower (the life assured). Level Term Assurance is most suitable when the loan has a fixed capital value that remains unchanged throughout its term. Policies can be written on a single life or on a joint life basis.
Decreasing Term Assurance policies are ones where the sum assured decreases over the term of the policy in step with the reducing balance of the loan. This type of policy is commonly used to protect a capital & interest repayment mortgage, where the outstanding balance reduces each year. 

Mortgages explained - your options

Fixed rate mortgage
If you choose a fixed rate mortgage your monthly repayments will not change for the period of the fixed rate, regardless of the interest rate in the market place. This may be important to you if you have a limited budget as you are protected from rising interest rates. However, if the variable rate falls below the fixed rate level, your repayments will not fall. At the end of the fixed rate period your mortgage will usually be converted to a variable rate.

Capped rate mortgage
A capped rate mortgage has a maximum interest rate for a given term. The interest rate you pay cannot go higher than the agreed capped rate, thus you know the maximum amount your monthly repayments could rise to. However, if the basic interest rate falls below the capped rate, repayments will also reduce.

Discounted rate mortgage
A discounted mortgage offers you reduced repayments for a given term. The lender gives a discount off a variable rate. For example, the variable rate may be 5% with a discount of 1% making your initial interest repayment rate 4%. If the variable rate on which your discount rate is based falls, your repayments will fall. However, if the lender's standard variable rate rises, so will your repayments. Whilst a discounted rate may be helpful initially, you should consider how much your repayments will be when the discounted period ends.

100% Mortgage
A 100% mortgage offers you a borrowing of 100% of the value of the property, i.e. no deposit is required. Rates may be fixed, variable, discounted or capped. Opting for a 100% mortgage means that you could risk facing a negative equity situation if house prices fall. You may also be charged an above-average interest rate and a mortgage indemnity premium.

Self-certification mortgage
Self-certification mortgages are available for contract workers and the self-employed. The lender will ask for details of the borrower's income but they will not require to see proof of total earnings. Other terms will depend upon the lender's requirement at the time and in accord with the rates prevailing in the market place.

Variable rate Mortgage
A variable rate mortgage is one in which the amount you repay increases or decreases in line with any interest rate changes. This means that you cannot predict the monthly cost of the borrowing, which could cause financial concerns within the mortgage period.

Buy-to-Let Mortgage
Buy-to-let mortgages are provided for property purchase for investment in the private rental sector. They are assessed as though they are ones for residential occupation. Assessment of borrower affordability can be based on projected rental income and/or earnings dependent on the lender's individual policy.

Current Account and Offset Mortgages
A current account mortgage allows you to operate your mortgage borrowing through a current account. This method enables you to save interest as your normal cash flow will alter the outstanding debt. You will be required to pay your salary into the account.
An offset mortgage allows you to keep your balances e.g. mortgage, savings, current account etc in separate accounts but all balances are offset against each other thus allowing the possibility of reducing the interest paid and could result in the mortgage being repaid early.

Base Rate Tracker Mortgage
A base rate tracker mortgage will be based on the Bank of England base rate and a possible loading for a set period or for the term of the loan. The rate payable will alter in line with any change to the Bank of England base rate.
Cashback Mortgage A cashback mortgage provides a cash rebate on completion of the purchase. The sum is either a percentage of the advance or fixed. This cashback could help you to cover some of the expenses of setting up home but, this bonus is often subject to higher repayment rates and may include penalties for repaying the loan early.

Flexible Mortgage
The main feature of a flexible mortgage is the facility to make extra payments when you have extra money. You may also be able to reduce monthly repayments or even take repayment holidays, although you will normally have to build up a reserve through making overpayments before this arrangement is allowed. Such mortgages are usually offered on a daily interest basis. Flexible mortgages usually provide a loan drawdown facility that allows you to borrow extra funds at a set predetermined rate.