Guide to home buying and remortgages Contents 1. Buying a new home • Introduction • How much can you borrow? • Can you afford it? • Decision in principle • Starting to look for your new home • Your offer has been accepted • Applying for a mortgage • Finding a solicitor • Arranging a survey or valuation • Exchanging contracts • Arranging removals • Arranging buildings and contents insurance • Moving in! • Key dates • Who to inform, now you have moved 2. Remortgaging • How does it work? • How much does it cost? • When should you re-mortgage? • Can you borrow more? • Will you need a solicitor? 3. Glossary of terms Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 2 No matter what stage you're at in the home buying process the one thing you'll need is advice and guidance to help you make the right decisions. Buying a home and arranging a mortgage can seem like daunting tasks but if you take it one step at a time, you can make it as smooth as possible. At Teachers Assurance we've been providing products and services to the education sector for over 130 years. That's why when we launched our mortgage service we designed it to suit you:- • It's run via our UK based call centre so you don't need to trawl the high street or search the internet - we'll do all the hard work for you and search from our selected panel of lenders • We're open at hours to suit you and will arrange an appointment around your busy schedule • We'll help you budget and work out what you can really afford • We'll guide you through the whole buying (and selling) process • We've included check lists and action plans that will help you make sense of the jargon and paperwork • We won't charge you a fee and we will check that the rate you've got is the most suitable for your circumstances from our panel of lenders Our mortgage service has been designed to help you whatever your current position is by offering you a comprehensive mortgage service by phone. We’ll recommend the type of mortgage that best suits your needs, and explain how they work:- • If you've already got a mortgage but want to borrow more we'll help guide you as the best way to do this, subject to lenders terms and conditions. • If you're a first time buyer looking for a competitive loan • If you're not sure whether the rate you're currently paying is competitive in the market place • If you are buying through a Shared Ownership or Shared Equity scheme we can explain how it works and help find the most appropriate product for you Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 3 Buying a new home How much can you borrow? Before you start looking at property you will need to know how much you can borrow and how much it will cost you. The amount you can borrow is usually based on 2 components:- The amount you have as a deposit The amount of income you have As a rough guide the average amounts you can borrow on your income will be: • A single applicant may be able to borrow up to 4.5 times salary. • Joint applicants may be able to borrow up to 4.2 times salary. For your deposit you will usually need deposit of between 10% and 20% of the property value. All mortgage lenders have specific terms and conditions which is where our mortgage team will be able to advise you before you start. When you speak to our Mortgage Consultant on the number shown below we will be able to tell you how much a lender will be likely to lend to you and how much it will cost. They will also be able to provide you with professional advice on the different types of mortgage available to you. They will also be able to approach a lender to get a decision in principle for you (See Page 6 for more information). Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 4 How much can you afford to borrow? The following budget planner will help you to think about how much it will cost you to buy a new property and, how much your monthly expenses will be once you have moved in. Cost £ Anticipated outgoings £ Deposit Mortgage payment Stamp Duty Life cover Estate agents fees Buildings/contents insurance Valuation/survey fee Endowment policy Solicitors fees Payment protection Lenders legal fees Ground rent / service charge Local authority search Council tax Land registry search Electricity Home renovations Gas Moving/removal costs Water / sewage Storage Telephone Other TV licence Other Loans Total Credit cards Store cards Budget Planner Food / housekeeping Monthly income £ Transport Main wage Holidays Main wage Entertainments Commission bonus Total Investment income Other Total Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 5 Decision in Principle Our Mortgage Consultant will discuss your requirements with you over the phone and advise you on the most suitable lender, mortgage type and interest rate deal for your particular circumstances. Once you've discussed your initial plans and to help you establish what you can borrow before you go looking for your new home, our Mortgage Consultant can then obtain a Decision in Principle for you, from a suitable lender. A Decision in Principle will confirm how much your chosen lender is happy to lend to you - subject to survey and underwriting checks. To arrive at this decision, our Mortgage Consultant will give the lender details of how much you are looking to borrow, the value of the property and your income details. The lender will then look at your credit history and make their decision. You can then confirm to estate agents and vendors that the lender has confirmed your borrowing, subject to conditions and this will put you in a better bargaining position than a purchaser that does not have their mortgage already agreed. It is important not to have too many credit checks done in a short period of time, as this could work against you when applying for a loan or mortgage. We offer a range of mortgage deals from a panel of lenders, including many High Street names. We do not charge you a fee for the advice you receive or for arranging your mortgage. Instead, we receive a fee from the lender, once your mortgage is completed. The Lender may charge you an arrangement or booking fee. Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 6 Start looking for your new home Once you've established what you can afford to borrow then the fun begins. Register with a selection of estate agents in your area and discuss what you are looking for in your new home. At this point your estate agent may ask to see details of the amount that has been agreed and evidence of the decision in principle from your lender. It's also a good idea to write down a list of the things that are essential to you in your new home such as how many bedrooms, whether you require a garden or a garage. You'll then be able to give the estate agent a detailed specification of what you are looking for. It is advisable to look at a few properties before making an offer - even if you fall in love with the first property you view! Remember that when you visit an estate agent you are not obliged to take their own financial adviser's products or services. Once you have decided that a particular property is for you, the next step is to make an offer. There are no rules as to how much you have to offer, but it is a good idea to work out what your maximum offer would be before you start. Have a look at what similar properties may have sold for in the local area. At this stage it is a good idea to put forward any other factors that may be in your favour. For example if you are a first time buyer you could be in a position where you can move more quickly than other buyers that are part of a chain. Your offer has been accepted Once your offer is accepted get in touch with our Mortgage Consultant, they will then process your full mortgage application. It's at this stage that you will also now need to arrange and instruct a solicitor. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 7 Applying for a mortgage Our Mortgage Consultant will complete the paperwork for you, over the telephone, so you can arrange your mortgage from the comfort of your own home, at a time to suit you. You will be asked to send in some documents, such as your passport or driving licence, to check your identity. Our Mortgage Consultant will explain what is required. These documents will be returned to you in a secure manner and without delay. Finding a solicitor When looking for your solicitor, ask friends or family if they have used a solicitor that they can recommend - this is important as the solicitor could have the biggest impact on how quickly or smoothly your purchase goes. As well as conducting your searches the solicitor will provide you with a list of fixtures and fittings for the house that you are buying. Check this carefully to ensure that you are getting what you expected as far as fixtures and fittings are concerned. Arranging a survey or valuation Now is also the time to arrange your survey or valuation. The lender will carry out their own basic valuation (often called a valuation for mortgage purposes). You will also have the option at this stage to take out a more in depth survey for your own purposes. Our Mortgage Consultant will be able to advise you on the different types of survey available and how much they will cost. There are different surveys available to suit your needs, budget and the peace of mind that you require. Exchanging contracts Once your solicitor has completed all of your searches and the contracts have been drawn up your solicitor will exchange contracts for you. At this point the sale becomes legally binding and your deposit will be payable. You should be able to arrange your completion date. Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 8 Arranging removals Once you know the date that you'll be moving, make your moving arrangements. If using a removal firm, shop around as prices can vary considerably and if arranging a self drive van or similar make sure you hire one big enough - people are often surprised at how much they have when it's all packed up! It is also an idea to get removal quotes as early as possible as they can become booked up quite quickly - especially if you are moving during the school holidays. At this stage it's worth getting in touch with the Post Office to arrange for your mail to be re-directed and establishing what the processes are for the utility companies to transfer accounts. Arranging buildings and contents insurance You will need to make sure that you have adequate buildings insurance from exchange of contracts and before you can complete your purchase. Our Mortgage Consultant can assist you with this. It is also important to look at insuring your contents and it is possible to cover some of your contents for accidental damage during the move. If you would like a quote for our comprehensive buildings and contents insurance which has been designed specifically for teachers then ask our Mortgage Consultant to pass your details to our Home Insurance team or you can call them direct on 0800 378722 or visit our website www.teachersassurance.co.uk to request a quote. Moving in! Moving in day - you are likely to get the keys to your new home some time in the afternoon on your completion day after your solicitors have received and passed on the funds from your lender. This also gives you, and your vendors, time to move belongings and clean up, during the morning. The day you move will be very hectic and once you're in you may not be able to find packed items easily, so it's wise to put a few things aside when packing the night before. Here is a list of items that you may need to hand on the day. • Money and identification • A basic medical kit • Telephone numbers of your estate agents and solicitors • Toilet paper • Directions if you are moving far • Light bulbs • A kettle, teabags and mugs etc. • Mobile phones and chargers • A bottle of water • Household cleaning products. • Snacks to keep you going • Glasses and the bottle of bubbly! • Pet food, if you have pets Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 9 Key Dates 1. Check how much you can borrow, by speaking to our Mortgage Date Consultant. 2. Our Mortgage Consultant will then get you a Decision in Principle Date from the lender. 3. Register with some estate agents and start looking for your new Date home. 4. Make an offer on the property that you have chosen. Date 5. Once your offer is accepted, you will need to choose and instruct Date your solicitor and give their details to the vendor's estate agents. 6. Speak to Our Mortgage Consultant in order to process your full Date application to the lender. 7. Our Mortgage Consultant can also now discuss the different types Date of valuation / survey and arrange your preferred survey with the lender. 8. Our Mortgage Consultant will also now be able to advise you on Date your insurances, particularly buildings insurance which you will need prior to completion of the house purchase. 9. Once your valuation has been returned and the lender has finished Date any underwriting, you will receive your Mortgage Offer. 10. Your solicitor should be near completing the necessary searches, Date once this is done your solicitor will exchange contracts. 11. Now you have exchanged contracts you will be able to arrange a Date completion date with your solicitor and the vendors. 12. When you know of your completion date you can start getting Date quotes from removal firms or for van hire. 13. Now is also a good time to make any other arrangements, such as Date obtaining boxes etc for packing and someone to look after pets or children on moving day if necessary 14. Completion day! You should be able to collect the keys at some Date stage in the afternoon and will be able to move in to your new home. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 10 Who to inform when moving Keeping a list of who you need to tell about your new address and contact details is a good idea as it means you won't forgot anybody! We've prepared the following as a start:- Name Contact details Notes Bank or Building society Telephone provider Satellite or Cable TV provider TV Licence Local Council (council tax) Credit card companies Loan companies Food/catalogue delivery companies Dentist Doctor DVLC Employers Gas company Electricity company Water company Inland revenue Insurance providers home Insurance providers car Insurance providers other Mobile phone company Optician Pension provider Royal mail Clubs, societies and gyms Schools Vets Family Friends Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 11 Remortgages To re-mortgage means to switch your mortgage from one lender to another. People typically do this to obtain a lower interest rate and thereby lower the amount that they are paying each month. You don't have to be moving home in order to change your mortgage. How does it work? Re-mortgaging can be well worth it, as it could save you hundreds of pounds per year. You will firstly need to check with your current lender to see if you are tied in on your current mortgage and if so, how much they will charge you (this is called an early redemption charge) if you close your mortgage account. Then speak to our Mortgage Consultant, who will guide you through the process and advise you on the most suitable mortgage for your needs. Our Mortgage Consultant will tell you how much you could save. Don't worry if you are still tied in to your existing mortgage, our Mortgage Consultant will let you know whether or not if you can save money by remortgaging. They will only advise you to do so if it is in your best interest. We would always recommend that you contact your current lender as some lenders offer competitive rates for existing borrowers which we may not be able to access. How much does it cost? Re-mortgaging need not be expensive. There are many lenders that will cover the initial costs for you by way of a free valuation and free legal costs. Our Mortgage Consultant will be able to search for the most suitable deal for you and will not charge you a fee for the advice that you receive. When should you remortgage? There is no wrong time to see if you can save money. The most popular time to look for a remortgage is when a special interest rate deal on your current mortgage ends. At the end of any special rate, such as a fixed, discount or capped rate, your lender will automatically move you to their Standard Variable rate, which can be higher than the one you were paying before. So if you don't remortgage you could end up paying their higher rate, which could result in much higher mortgage payments than you might pay elsewhere. Can I borrow more? It is possible to borrow more when remortgaging than you currently owe, subject to the lender's criteria. This could free up money for things like home improvements, holidays or to pay off other existing debts, such as loans or credit cards. This could lower your overall monthly payments if you are clearing other debts, although doing so could cost you more in the long term - our Mortgage Consultant will be able to discuss this with you. Will I need a solicitor? You will need a solicitor or conveyancer in order to remortgage, the costs for which are lower than when buying a property. The majority of lenders would not expect you to arrange your own solicitor for a remortgage and many will offer free legal costs if you are prepared to use their chosen solicitor. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 12 GLOSSARY OF TERMS THAT YOU MAY HEAR: • Higher Lending Charge (HLC). A fee charged by the • Annual percentage rate (APR). An interest rate quoted lender, if the mortgage amount is above a specified by lenders to help compare the true cost of different percentage of the property's value. Used to be known as mortgages. The APR takes into account all fees and a Mortgage Indemnity Guarantee (MIG), or High Loan To charges as well as the monthly payments over the whole Value Fee (HLTV). term of the loan. • Loan to value (LTV). The amount of loan expressed as a • Base Rate. The interest rate from which lenders set their percentage of the property value. For example a loan of rates for lending. It is usually based on the Bank Of England £90,000 on a property valued at £100,000 would be a LTV Base Rate. Some lenders may also have their own base rate of 90%. or SVR. See SVR Below. • LIBOR. London Inter Bank Offered Rate - The rate at • CHAPS. Clearing House Automated Payment System. The which banks lend to each other. system that enables money to be transferred from one • Mortgagee. The mortgage lender. bank account to another on the same day. • Mortgagor(s) Borrower(s). The individual(s) taking out • Completion. The date normally agreed at exchange of the mortgage. contracts (for purchases), upon which the funds are • Offer Letter. A formal offer of a mortgage provided by transferred to complete the purchase of the property. In the lender, stating the terms of the loan. the case of a remortgage the completion date is the date that the mortgage is transferred from one lender to • Portable. A mortgage that can be transferred to another another. property if you move home. • Conveyancing. This is the legal work involved in the • Redemption. The process of paying off your mortgage in purchase and sale of land or property and the transfer of full. This occurs at the end of the mortgage term, when a mortgage, usually carried out by a solicitor or licensed changing lenders or when moving house and taking a conveyancer. new mortgage. • Disbursements. Legal and administrative costs payable • Retention. This is when a lender holds back (retains) part to the solicitor or conveyancer, related to the purchase or of the mortgage until certain conditions have been met. remortgage of a property. Including stamp duty, search An example of this is when a lender retains funds until fees, HM land registry fees and CHAPS fees. particular improvements have been made to the Disbursements do not include the solicitor's own fee for property. their legal work. • Stamp Duty. A tax paid by the buyer when purchasing a • Early Redemption Charge (ERC). A fee imposed by the property. The amount payable works on a sliding scale lender if all or part of the mortgage is paid off before the dependent on the purchase price of the property. expiry of a special rate, i.e. fixed or discounted. • Standard Variable Rate (SVR). The default interest rate • Equity. The difference between the market value of a charged by lenders, normally applied at the end of a property and the owner's mortgage on that property. special rate period such as the end of a fixed rate. • Exchange of contracts. The stage in the house buying • Vendor. The person or persons that are selling a process when the deposit is paid and the sale of the property. property becomes legally binding. This is usually when the completion date is then set. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 13 Contact Us Your Teachers Assurance Mortgage Consultant will speak with you at a time to suit you, to discuss your needs. OUR MORTGAGE PLANNING SERVICE: • You will have your own, dedicated Mortgage Consultant • We'll help you work out how much you can borrow and for how long • We'll explain the risks • We'll recommend the most suitable deal for you • We'll advise you on the suitable plan(s) to protect your mortgage • And we'll help you apply for a mortgage when you're ready. At Teachers Assurance, we've been providing financial advice to the education profession for over 130 years. As a mutual organisation, with no shareholders to pay, we dedicate our time and resource to providing the services and products that our customers require. Our mortgage consultant provides information and advice on mortgages, from our selected panel of lenders. Your home may be repossessed if you do not keep up repayments on your mortgage. Call our mortgage consultant now on 0800 373352 to arrange your appointment or visit our website www.teachersassurance.co.uk - mortgages 14 Teachers Management Services Limited (TMS) No 3401641 is an Appointed Representative of Mortgage Support Network Limited which is authorised and regulated by the FSA, TMS, trading as Teachers Assurance is a wholly owned subsidiary of Teachers Provident Society Limited, an incorporated Friendly Society No 372F. Registered in England and Wales.
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