A mortgage Q&A

Patrick Bunton of London & Country answers your questions on mortgages.

---

Samantha in Newcastle is a first-time buyer, but she's finding the range of mortgages bewildering. Any advice?

There are more than 4,000 products out there.

But the most important thing she must consider is what her monthly budget is. By that I mean not just the budget for the mortgage itself but any other costs she might have. A lot of first-time buyers will also be stacking up the interest-free credit on sofas and TVs and hi-fis, so be very realistic.

When you've worked out your budget then you're in a position to choose the type of mortgage.

If your disposable income is going to be stretched by all your monthly outgoings then look for the security of a fixed or a capped interest rate. And shop around - there are some belting deals out there but there are also some duds, so make sure you get the right one.

Tony and his partner have a low credit rating and have been turned down by several lenders. They're using a mortgage broker but are worried about hidden clauses and why the broker seems so keen to help them.

The key thing with a mortgage broker is that as long as you choose an independent broker - and you must make sure they are independent - they will survey the whole marketplace for you.

If you go to one particular lender then you are going to be tied by their own underwriting criteria. What a broker will do for you is to widen the net.

Brokers make their money by arranging mortgages for customers. Obviously they want to get the best deal for the customer, but if you are using a broker make sure you're aware of any fees they may charge.

Mel from Swansea is disabled and gets various allowances. She would like to buy her own home and wants a mortgage of up to £15,000 to top up her deposit of £10,000. But there's a good chance she won't work again - will any lender give her a mortgage?

It comes back to shopping around. A lot of lenders won't lend in this situation because a mortgage is a long-term commitment and while you might be eligible for state benefits now, if the eligibility criteria change in the future you might fall out of that net.

But there are lenders that will do it. She's got a lot of deposit to put down which helps, but it comes down to shopping around, or getting a broker to do it for you.

Could Isa mortgages suffer the same problems as endowments, in that they might not provide enough to pay off your mortgage?

With an Isa mortgage, the money is being invested into the market and you are completely dependent on the performance of those underlying stocks and shares as to whether the mortgage will be repaid at the end of the term.

So I think they are only for people who are prepared to take that element of risk.

Is remortgaging difficult to do, asks Nigel in Sheffield?

It's really easy these days. Lenders are falling over themselves to pinch each other's customers and I think the first thing you've got to

By moving constantly during the course of the mortgage term, you'll save thousands

Patrick Bunton

do is check with your existing lender to see if you have any redemption penalties.

If you don't have penalties, you're in a prime position to move elsewhere and get a better deal. If you do have penalties, depending on their size it might still be worth moving. You'll have to factor in any costs of the penalties and any other moving costs you might have versus the savings you'll make at the other end.

But lenders are making it easy and will very often pay all of the costs for you. By moving constantly during the course of the mortgage term, you'll save thousands.

Mark Phelan from Maidstone is thinking of buying a property in Florida. Would he be better using the equity in his home here to remortgage or try to get a mortgage in the US?

You need to look at the rates you would get in the US and speak to an expert out there because the property and tax laws are very different.

Then you can compare that to the sort of rates you'll get in the UK. If you've got a lot of equity in your property in the UK, releasing some of that to effectively be a cash buyer abroad could be a very good idea.

Clare and her husband took out a mortgage with a two-year fixed rate. They didn't realise that after the two years, they would be tied to the standard variable rate for another three.

Can they challenge this? Or will any other lenders pay their redemption fee?

Firstly, new lenders won't pick up the redemption penalty from the old lender. The second issue is were they told about this at the point of sale?

If they feel they have been mis-sold this product then they should certainly put a complaint in writing to the lender. That could then go all the way through to the ombudsman and they could find in their favour. Lenders are pretty canny though, and you will normally find in the documentation that was issued that this would have been documented. If a rate looks too good to be true, look at the small print.

Mr Pattison says the deeds to his house contain a covenant saying he can't use the property for breeding animals. When our cat had kittens, we must have breached this, he says. Should he get it removed?

I think the point of the covenant here is to prevent the commercial breeding of animals, so if he had any intention of setting up a cattery in the back garden then yes, he should remove it, but otherwise I wouldn't worry about it.

---

The opinions expressed are those of Patrick, not the programme. These answers are not intended to be definitive and should be used for guidance only. Always seek professional advice for your own particular situation.