This quick guide gives you possible mortgage options for each type of

borrower. Please note that this is a general guide and we should

emphasize that you are always better off talking to a specialist

mortgage adviser.

General

One thing that applies to many types of mortgages is the choice of a fixed rate mortgage

or a variable rate

mortgage.

The best choice depends upon your own circumstances and, to a

degree, interest rate levels at the time, but thoughts to

consider are

• Can you afford to have your payments increase each month? This could

occur with a variable rate mortgage.

• Are rates generally low at the moment? It could be a time to get

locked into a fixed rate mortgage.

• Do you want the security of a fixed monthly payment for several

years? Fixed rate periods from 1 to 10 years are available.

• Are you having problems borrowing enough money? An interest only

mortgage can mean lower monthly repayments, i.e., you can borrow more

against your salary. But there are drawbacks.

To understand which choice will suit your circumstances, discuss your

choices with a UK mortgage specialist, who will advise you on

worthwhile choices.

Here are some specific tips depending on your particular

mortgage needs:

First Time Buyers

As a first time buyer, you are most likely to have some specific needs.

You will probably have a very small deposit to pay down or possibly no

deposit at all. You may be having to push your budget to the limit just

to be able to pay for a mortgage, but are determined to get a foot on

the property ladder.

There are several suitable solutions:

• 100% mortgages to many lenders offer 100% mortgages directed

at first time buyers. These are normally repayment mortgages and can be

a good option to get you started.

• If you have a deposit, but can't afford large monthly

payments, a possibility to consider might be an interest-only mortgage,

where your monthly payments only involve payment of interest, and you

don't make any payment towards the capital principal.

• Choose a mortgage term greater than 25 years. Though it may

seem daunting, many lenders will offer mortgages with terms up to 40

years.

Any of these options can be a good way to get started in home

ownership, with a goal to moving to a better deal in 2-5 years time

when you have some equity in your property and are perhaps able to

afford bigger monthly payments. Remember, very few people stick with

the same mortgage for 25 years anymore. It is normal to change

mortgages for a new deal every 2-5 years.

Self-Employed Mortgages

Getting a mortgage for self-employed people has always been a

bit more of a challenge. Even if your business is well established, it

can be hard to prove your income, and since mortgage lenders evaluate

your ability to pay based on net income, you could find that they

underestimate your ability to borrow.

So what are the choices?

• Self-Certified Mortgages. It is not necessary to provide

audited accounts and to substantiate your income, although you will

still be required to provide evidence that you can afford the monthly

payments.

• If your business is well-established, and you can provide 3

years or more of audited accounts, showing a regular income, you should

not have too many problems. Lenders are a lot more flexible than they

once were.

As with other specialist mortgages, it can be worth getting the advice

of an Independent Financial Adviser to make sure you get the right deal

for you.

Already a Homeowner?

If you are already a homeowner (with or without a mortgage) then you

might want to release some equity from your home to give you a cash

lump sum.

This means that if you have paid off a significant amount of your

mortgage and/or property prices have increased, you can benefit from

some of the "profit" that is locked into your house without having to

sell the house.

Lenders provide a variety of ways for doing this, but they are

generally described as "equity release" mortgages.

Typically you will be able to get up to 95% of the equity in your home,

given to you in a lump sum which you then pay back like a regular

mortgage. This can be used to pay for home improvements, lifestyle

changes, home repairs to

almost anything, really.

Get a Better Mortgage Deal

Don't forget that just because you have a mortgage, it doesn't mean

that you can't get a better one that will cost you less, or

alternatively a mortgage with a shorter term so that you can pay it off

sooner.

Check to see whether you want to find a more competitive interest rate,

a long-term fixed rate deal or you want to decrease or increase the

remaining duration of your mortgage. You will probably locate a lender

who is able to offer just what you want, and could save you a

significant amount every year.

Discussing your needs with an IFA can often help reveal the best

mortgages, which sometimes come from quite minor building societies.

Big Bonuses, but a Small

Basic Salary?

If this is you, then you might find it rough to get a repayment

mortgage that meets your requirements. This is because bonuses and

overtime are challenging to predict, not guaranteed and are normally

excluded from your assessed income by mortgage lenders. This means you

could end up being offered a much smaller mortgage than you think you

can afford.

The answer to this could be a flexible mortgage. A relative of the

interest-only mortgage, flexible mortgages have monthly payments which

are interest-only, but enable you to make ad-hoc repayments towards

reducing the capital sum.

For example, if you receive a quarterly bonus, every 3 months you could

make a payment towards reducing the capital sum of your mortgage,

whilst paying smaller, interest-only payments each month from your

salary.

Flexible mortgages like these can be useful for anyone with an unevenly

distributed income who gets occasional large payments, rather than

solely receiving salaried income.

Are You An Expatriate?

As an expatriate, your mortgage needs are a little different. Buying

real estate abroad is difficult with a UK mortgage, although there are

some high street lenders that are affiliated with foreign lenders,

particularly in Spain, to provide easy access to mortgages in some

other countries.

On the other hand, many expatriates look to secure a property in the UK

in preparation for their eventual return. This is more straightforward

and there are several large lenders who can help with this.

The best approach is probably to find an IFA who has experience of

setting up this type of mortgage and see what they can offer you. There

may be some complications but it should certainly be workable.

Buying to Let?

Buying to let has become very popular in recent years. Whether you

count yourself a professional landlord or are just looking to buy a

second property to rent out as an investment, buy to let mortgages are

fairly mainstream now and as such are quite widely obtainable.

You may notice some differences to residential mortgages:

• Can only borrow up to around 75% of property value

• Mortgage terms may not be extendable beyond 25 years, often

less still for interest-only deals.

As with all mortgages, you will have to submit to a credit check and

will have to submit some evidence that the property you are buying is a

suitable business proposition, i.e., you can rent it for a

suitable amount and/or can make the payments yourself if needed.

Want to Let Out Your Home

Temporarily?

There are times when homeowners want to let their home on a temporary

basis or perhaps they are moving abroad for a year or two, or elsewhere

in the UK, but want to maintain their principal home and rent it out to

cover the costs of their mortgage.

Most residential mortgages will allow you to do this although precise

terms and conditions will vary from lender to lender, but as long as

you give notice to your lender you want to let, you will probably find

they are happy for you to do so.

Are You a Muslim, Looking

for a Sharia-Compliant Mortgage?

Islamic mortgages used to be nearly impossible to get in the UK, but in

the last 5 years, the number of lenders that offer mortgages that

comply with Sharia law has grown greatly. It is now possible to get an

Islamic mortgage for your house from several high street lenders with

no more difficulty than a regular mortgage.

Islamic mortgages available in the UK fall into two primary categories.

By far the most popular are mortgages based on the Ijara principle.

Also available are mortgages based on the Murabaha principle but these

tend not to be affordable to many borrowers, especially younger people

just starting out.

Getting Divorced, Need

Two Mortgages?

Getting divorced can be a tough and disturbing experience, often not

least because of the financial problems. These can cause people with

previously exemplary financial records to get into problems, and can

sometimes make it challenging for the divorced individuals to get

mortgages.

A few lenders now offer mortgages targeted at the wants of the

newly-divorced, with a number of features designed to help people back

onto their feet, financially:

• Fixed interest rate for up to 5 years

• First few months at 0% interest

• The lender will include maintenance payments (alimony) in

their assessment of your income when determining the amount that can be

borrowed.

• Can borrow 100% of property value if needed

• Choice of repayment or interest-only mortgage There are not

many of these packages around (Yorkshire Building Society offers one

example), but they can really help divorced people through the hard

process of finding a new home and re-establishing their financial

situation.