Mortgage Information
What is a mortgage?
A mortgage is a loan you take out to buy property. Most banks and building societies offer mortgages, as well as specialist mortgage lending companies. If you change lenders but don't move home it's referred to as a 're-mortgage'. The Financial Services Authority (FSA) regulates the way most mortgages are sold, but not second-charge and most buy-to-let mortgages. This means firms must follow certain rules and standards when dealing with you.
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Choosing a mortgage in the UK - where to start?
You can get a mortgage direct from the lender (banks, building societies and specialist mortgage lenders), or you can use a mortgage broker. You can buy based on 'information' only or get advice and recommendation on a mortgage that suits your particular needs.
With hundreds of mortgage deals on the market, it's hard to know where to start. You can use a mortgage broker, or shop around yourself and go direct to the lender. Whatever you decide, it's important to understand how mortgages are regulated and sold.
Using a broker in the UK
Mortgage brokers must be authorised by the Financial Services Authority (FSA) or must be agents for authorised firms. The FSA is the UK's financial regulator set up by government to regulate financial services and protect your rights. Its standards require firms to be competent, financially sound and to treat their customers fairly.
This means mortgage firms have to give you certain documents with the 'Keyfacts' sign. Keyfacts documents are set out in a standard format to help you compare different services and products with each other. The two mortgage keyfacts documents are: 'Keyfacts about our mortgage services' and 'Keyfacts about this mortgage' (sometimes called a key facts illustration or KFI). Check that your adviser is authorised.
Provided you deal with an FSA-authorised firm or the agent of an authorised firm, you will have access to complaints and compensation arrangements. To check whether a firm is authorised you can use the FSA's 'Check our register' service.
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Shopping around and buying from a lender in the UK
Instead of using a broker or financial adviser, you can shop around and arrange a mortgage directly with a building society, bank or specialist mortgage company. A useful starting point might be to compare what's on offer on the FSA's impartial mortgage tables.
Of course lenders will only recommend from their own mortgage range - but may have several you can choose from. You'll still receive the Keyfacts documents described above.
The difference between mortgage 'advice' and 'information'
If you get written information about mortgage products, it doesn't mean you've had advice. Getting advice means that the adviser looks at your particular circumstances and recommends a mortgage that's suitable for you. Buying with advice puts you in a stronger position to complain and get compensation if you later discover that the mortgage is unsuitable.
If you take out a mortgage over the internet, by phone or by post you might not have the option to get advice. Consider whether you need to get advice before you buy.
The Keyfacts document 'About our mortgage services' will tell you whether you're being offered information or advice. (See link at Direct Gov website)
Types of mortgage in the UK
When you choose a mortgage, you'll need to think about the repayment method, interest rate deals and special features of some mortgages. The best one for you will depend on your circumstances - so it's important to understand your options and shop around.
Repayment methods in the UK
The two main ways to repay your mortgage are 'repayment' and 'interest only'. With a repayment mortgage you make monthly repayments for an agreed period (the 'term') until you've paid back the loan and the interest.
Click here to apply for the best rate repayment mortgages.
With an interest only mortgage you make monthly repayments for an agreed period but these will only cover the interest on your loan (endowment mortgages work in this way). You'll normally also have to pay into another savings or investment plan that'll hopefully pay off the loan at the end of the term.
Click here to apply for the best rate interest only mortgages.
Flexible features
Some mortgages offer you options to vary your monthly payments, or to combine your mortgage account with savings and other income - these are called flexible, current account and 'offset' mortgages.
Tracker mortgages in the UK
Tracker rates are linked to the Bank of England rate or some other 'base rate'. This means they'll always go up or down in line with changes to the base rate.
Sometimes it's good having options. A tracker mortgage might be ideal for you if you want a mortgage that moves in line with interest rates. So when your Bank's Base Rate falls, your monthly repayments fall. If the rate rises, so will your monthly mortgage repayments.
Click here to apply for the best rate tracker mortgages.
Fixed rate mortgages in the UK
You pay a fixed rate of interest for a set period, so you know exactly what you'll be paying each month during that time. When the fixed period ends, you'll usually move to the lender's standard variable rate. There are usually penalties if you pull out early.
Our Mortgage providers can arrange fixed rate mortgages, these give you the security of a set monthly repayment for a specified period, and this amount does not change regardless of how interest rates perform; the perfect solution if you're planning ahead or working to a budget.
Click here to apply for the best rate fixed rate mortgages.
Capped or cap and collar in the UK
With a capped rate you pay a variable interest rate, but there's a ceiling so your payments won't go above a certain amount for a set period. Some deals include a collar too - this is the lowest rate you'll get. If interest rates fall below the collar, you'll lose out.
Additional mortgage borrowing in the UK
Occasionally everyone needs a bit of financial flexibility, if you need to raise extra funds and if you already have a mortgage you may not need to look any further for some extra cash. There are a number of options available for borrowing against the equity in your home or against your existing mortgage, always be clear about why you need to borrow the money, and how much additional money you can afford to borrow. Of course our Mortgage professionals will be pleased to advise you before hand on the cost of borrowing, and the amount you could borrow.
First-time buyer mortgages in the UK
Buying your first home is really exciting but it might seem a little scary. With our mortgage providers you're on solid ground with our first-time buyer mortgages. The following benefits are designed to make budgeting easier for the early years in your new home.
With our first-time buyer mortgages can get:
- No higher lending charge.
- The reassurance of knowing exactly how much you´re paying each month for the fixed rate period.
- The opportunity to buy together with another person increasing the amount you can borrow.
Please Note: An early repayment charge may apply for the fixed period.
Our Mortgage providers can offer all products to all customers, including first-time buyers.
Click here to apply for the best rate first time buyer mortgages.
Buy to Let in the UK
Owning a Buy to Let property is not just like buying your own home; it's more akin to running a business; so you need to ensure that you have done your homework properly, that is, to ensure you buy the right property, in the right location in order to give you the best possible chance of success. You should also give consideration to the impact a Buy to Let might have on your taxation affairs and you should seek some professional advice with respect to pension and inheritance tax planning.
Buying to Let: Quick glance
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Researching the area
Speak with letting agents about levels of demand in their area and likely rental income you could expect before actually deciding upon a location. Choose a property that matches your target market or ideal tenant. Consider appointing a letting agent to collect rent, organise tenancy agreements, find tenants for you, and deal with routine issues like maintenance. -
Budgeting
When you've found the right property in the right location always work through the sums carefully to ensure your Buy to Let project looks feasible. Remember in addition to your mortgage repayments always consider the other costs you will need to account for such as stamp duty, solicitors' fees, insurance, service charges. Remember also to account for on-going maintenance and repairs. Also, don't forget to take into account exactly how you will pay your Buy to Let mortgage if there is a rise in interest rates, or if the property is tenantless. -
Legal considerations
Before you rent out a property, always check your legal responsibilities. If you use a letting agent they will be able to advise you. However under no circumstances should you rent out a property without an appropriate tenancy agreement, agreed, signed and in place. This is important as it is a legally binding document that sets out the rights and responsibilities of both you the landlord and the tenant. Be aware that as a landlord you do have a 'duty of care' to make sure your Buy to Let property is entirely safe for tenants. Some of the areas you need to consider are electrical and gas safety checks and compliance with fire regulations; again if you use a letting agent they will be able to guide you. We offer a selection of Buy to Let mortgages. Choose a fixed rate or tracker deal; make interest-only or capital repayments.
Click here to apply for the best rate buy to let mortgages.
Re-mortgage in the UK
Re-mortgaging really could save you significant cash and it is easier than most people think. It is really worth considering re-mortgaging with a new lender if the discounted or fixed period of your current mortgage is coming to an end, or perhaps if your home has risen in value and you need to release some equity. Switching to a cheaper mortgage provider can also be a really cost-effective way of borrowing larger sums of money at lower interest rates.
Our Mortgage lenders have a fantastic range of re-mortgage deals to choose from, see if one of them could be right for you.
When you re-mortgage, you are switching your current mortgage loan to another mortgage deal often this is to a new lender. Or you may be re-mortgaging in order to take out a bigger mortgage to cover home improvements or some such thing.
It's often a way to pay off your existing higher interest debts, but be careful that you don't end up using the value of your home to cover short-term spending such as credit card bills.
If your current deal is coming to an end we can search the market to see if there is another attractive deal out there for you. Remember we can start looking early and you can occasionally reserve a rate around months in advance of your current deals expiry.
Re-mortgaging is not unusual and is something that almost all mortgage borrowers have to do, apart from those with enough money to pay off the entire loan, or perhaps borrowers who choose long term fixed rate mortgages and are therefore unable to switch.
The process is relatively simple, and sensibly many borrowers re-mortgage once every couple of years to get the best rates in order to save money.
Therefore it is not surprising that those who re-mortgage regularly to the cheapest deals are likely to spend less on interest over the life of their home loans compared to those who allow their mortgage to revert to standard variable rate, usually considerably higher than any special or introductory deal they might have once enjoyed.
Click here to apply for the best rate re-mortgage deals.
Flexible, current account and offset mortgages in the UK
With an Offset mortgage, the more you save…… the more you could save on your mortgage payments. An offset mortgage is a flexible way of using what's in your savings and current accounts to reduce the mortgage balance you are charged interest on. By offsetting you could reduce your mortgage term or your monthly mortgage repayments and still keep instant access to your savings.
Offsetting could be a good idea whatever the level of interest rates. When rates are low and affecting the returns you get on your accounts, as they are now, you may find your savings work harder for you with an Offset mortgage. If you would like more information, please speak with our mortgage advisors who will be pleased to give you more details.
How our offset mortgages work
If you had say, an offset mortgage of £150,000 and a total balance of £30,000 in your current and savings accounts to offset against your mortgage. Our Mortgage providers will calculate your mortgage interest on the remaining balance of £120,000 only – this would potentially save you thousands of pounds in interest payments over the mortgage term.
You can then choose to use this saving to either:
- Reduce the term of your mortgage or
- Reduce your mortgage repayments.
The good news is that you will still have instant access to your savings for as long as you have your Offset mortgage.
Click here to apply for the best offset mortgages.
Interest rates in the UK
You'll also find a range of interest rates to choose from. For example, 'variable' and 'tracker' rates change in line with Bank of England rates, 'fixed' rates are fixed for a set number of years, and 'capped' rates have a variable interest rate with a ceiling so your payments won't go above a set amount.
Insurance in the UK
A lender may require you to take out life insurance to pay off your mortgage should you die, known as Mortgage Protection Life cover. You can also get insurance to protect your income or just your mortgage payments if you become ill or disabled, or lose your job, known as Mortgage Payment Protection Insurance (MPPI).
Standard variable rate in the UK
With a variable rate mortgage your payments go up or down with the lender's standard interest rate. This often changes following Bank of England base rate changes.
Standard variable rate with cashback in the UK
With these deals you get a cash lump sum as well as the loan when you take out the mortgage. You're usually tied into the variable rate for a set period.
Discounted rate
You pay a lower interest rate to begin with then move to another rate (usually the lender's standard variable rate) after a set period.
Which type of interest rate from the UK is suitable for you?
Suitability of different deals will depend on your personal circumstances and any tie-ins or penalties that may be attached. For more information on the pros and cons of different interest rate deals visit the Money Advice Service website.
You'll also find information on how the 'APR' (annual percentage rate), which is always quoted alongside interest rates, can help you compare deals.
Mortgage application process in the UK
Once you know roughly how much you want to borrow and have identified your preferred lender, there are key steps to follow to get a mortgage. These are the same whether you're borrowing for the first time or changing lender.
Key steps in the mortgage application process; If you understand the application process you can be ready with everything the lender needs. This can help speed up your mortgage application.
Agreement in principle
A lender or mortgage adviser may offer to give you an 'approval', or 'agreement in principle'. This sets out what the provider will probably be willing to lend you based on certain terms and conditions. This can be helpful when you have chosen your mortgage and are ready to make an offer on a property.
Never be tempted to overstate your income. You could end up with a mortgage you can't afford.
Choose a solicitor or licensed conveyancer in the UK
You'll need someone to carry out the legal side of things - local searches, drawing up contracts and other legal paperwork. You could use a conveyancing solicitor or a licensed conveyancer - or even do part of it yourself (but make sure you know exactly what you're taking on). Some lenders have preferred solicitors, or you may be able to get a personal recommendation. You can also search online or in the phone book. (The lender will insist on a professional conveyancer to carry out the valuation.)
Make a full mortgage application in the UK
When you've decided to buy a property, you make a full mortgage application by completing and returning the lender's form (you can sometimes do this over the phone). They'll usually also want to see evidence of your income, your identity, your current address and (where relevant) a previous lender or landlord's reference. They may also want a non-refundable fee to cover their costs and perhaps to pay for a valuation.
If you can't prove you've got a regular income (maybe because you're self-employed and don't have enough proof) you may be able to get a self-certification mortgage. This usually requires a larger deposit and the lender may still want some evidence of your ability to pay.
Reference checks
Your lender may get written references from your employer and bank (or accountant if you're self-employed) and your current lender or landlord. They'll also run credit checks to make sure you've paid off your debts in the past.
Property valuation in the UK
Your lender will usually have the property valued to make sure it's worth the price you've agreed to pay. If it's not, it could affect how much they'll lend you. It's advisable to get your own survey done too or to upgrade the lender's valuation survey to a more detailed one.
The mortgage offer
If the lender is happy with the valuation and references, you'll be made a formal offer - usually sent to you and your solicitor. Once you (or your solicitor on your behalf) have signed and returned the offer documents, your lender is committed to providing the money. The mortgage offer usually requires you to take out buildings insurance, in case something happens to the property before you've paid off the mortgage.
Exchange and completion
If you're buying, once you've got a formal mortgage offer, your solicitor can agree a date for exchanging contracts with the seller's solicitor. At this time you usually pay a percentage of the purchase price as a non-refundable deposit and commit to paying the rest on the agreed completion date (when the property becomes yours).
Applying for a mortgage online in the UK
You may be able to apply for your mortgage and track its progress online.
Applying for a mortgage in Scotland
In Scotland, you arrange your mortgage before you make an offer on a property.
Mortgage arrears or payment difficulties in the UK
If you can't meet your mortgage repayments, or you're worried you might fall behind, you should contact your lender as soon as possible. Making early contact means that there may be more options available to you.
Contact your lender and agree a plan
If you are having difficulties paying your mortgage, contact your lender. Don't worry - lenders have special departments to help with payment problems, and they have methods that may help sort out your payment difficulties.
If you're struggling to pay, or are already in arrears, depending on your payment history, your circumstances and whether your difficulties are likely to be long or short term, your lender might agree to:
- Reduce your payments for a set period.
- Charge you interest only for a while if you've got a repayment mortgage (usually you pay capital and interest.)
- Allow you to pay off the arrears gradually, alongside your usual payments.
- Give you a 'payment holiday'.
- Extend your mortgage term to reduce your payments.
- Add your arrears to your mortgage and pay them back over the term.
- Let you stay in your home while you try to sell the property and find somewhere else to live.
- Suggest other assistance, such as one of the government schemes to help with mortgage difficulties.
If you have other debts on top of your mortgage payment problem, speak to a money adviser. You may find that your best option is to agree to a reduced payment arrangement for any unsecured debts that you have, such as credit cards or personal loans. This will then free up some of your money to pay more towards your mortgage.
Always pay what you can
Pay as much as you can manage every month. Keeping up regular payments shows that you're committed to paying your mortgage and doing the best you can. Your lender is more likely to treat you sympathetically, and you'll minimise the arrears charges too.
Help with your mortgage in the UK
There are schemes that may help if you're in difficulty with your mortgage payments.
Mortgage Rescue Schemes in the UK
The Mortgage Rescue Scheme may help if you are having serious difficulties making your mortgage repayments and are in danger of becoming homeless if repossessed.
Homeowners on certain benefits may be able to get help towards mortgage interest payments called Support for Mortgage Interest (SMI).
Help from Support for Mortgage Interest. From January 2009, if you are getting benefits (including income support, income-based jobseeker's allowance (JSA), or income-related employment and support allowance) you may qualify for help with your mortgage interest.
You can get help with a mortgage of up to £200,000 after a 13-week waiting period. If you are on pension credit you may be able to get help immediately, but only for a mortgage up to £100,000. There is no help available for mortgage capital payments.
Benefits that might increase your income, It's worth checking if you're entitled to benefits such as Working Tax Credit, Child Tax Credit or Council Tax Benefit. They can make a real difference to your income and help with your mortgage payments.
If you're unhappy about the way your mortgage lender has treated you in the UK
The Financial Services Authority (FSA) regulates most first mortgages taken out on or after 31 October 2004.
Under FSA rules, lenders must treat you fairly and send you regular statements to keep you informed about your current arrears position. There are also rules covering what the lender must do if it intends to repossess your home.
If you think you have been treated unfairly by a lender, you can complain to the Financial Ombudsman Service.
If you don't keep up your repayments in the UK
It's very important that you don't ignore any payment problems. Mortgages are 'priority debts', which you should pay off first as your lender could go to court to try and repossess your home and sell it to get their money back.
If you have other debts you should seek advice on which are the most important, and how to negotiate with different kinds of lenders.
Working out how much you can afford in the UK
Your lender, or a money adviser, can help you work out how much you can afford - but you may prefer to do this yourself. A good starting point is to write down all your income and outgoings (apart from the mortgage) and see what you've got left.
Organisations that can give you free advice in the UK
You can get free independent advice about mortgage difficulties from several organisations. They'll help you work out what you can realistically afford.
Planning for buying a home in the UK
Buying a property will probably be your biggest single investment. So it's important to work out the total cost - not just the mortgage - and how much you can really afford. You also need to plan for increases in your future outgoings, like a rise in interest rates.
Deposit
Lenders are increasingly expecting you to have a large sum to put down as a deposit. You will need to save up for this and other mortgage costs.
How lenders decide how much you can borrow
When you take out a mortgage, lenders look at a number of things to work out how much you can borrow. These include your earnings and outgoings, the property value and your credit history. Whatever you borrow, you need to be sure you can afford the repayments.
Your earnings
Lenders have in the past offered to lend an amount based on earnings. Recently it has become more common for lenders to make an affordability assessment when calculating how much they will lend you.
What can you afford in the UK?
It's important to give your lender as much detail as you can about your earnings and outgoings so that you're offered a mortgage you can afford. You also need to remember to budget for the one-off costs of buying a property such as administration and solicitor fees and Stamp Duty.
The Money Advice Service website has a range of easy-to-use calculators to help you work out what you can afford and the likely monthly cost of a mortgage.
Your property in the UK
The property value, Your lender will arrange a valuation to check how much the property's worth.
Special types of property, Some lenders limit the amount they'll lend on certain types of property, for example timber-framed. It's worth shopping around to compare deals.
Your credit history in the UK
Your lender will check your credit history and ask previous lenders or landlords for references. If your record shows you've had difficulty with loans or rent payments in the past, it may affect how much you can borrow.
Don't be put off if a lender refuses you a mortgage or offers you an expensive deal - it's still worth shopping around.
Self-certification mortgages in the UK
If you can't prove your income (perhaps because you're self-employed and don't have accounts going back far enough), you may be able to get a 'self-certification' mortgage. Although you may not have to offer proof of income to the lender, the lender will still want to be sure that you can afford the repayments so may ask you to provide evidence of your other outgoings.
Surveyor's fees in the UK
You'll usually need to pay for the lender's basic valuation survey - the cost varies by lender and property value but is usually a few hundred pounds. To check the property's condition you'll need a more detailed survey for which you'll need to compare quotes.
Stamp Duty in the UK
If the purchase price is over £125,000 you pay Stamp Duty Land Tax of between one and four per cent of the property value. However, if you are a first-time buyer or the property's in a designated 'disadvantaged' area, you may not have to pay any Stamp Duty Land Tax at all. With some new builds the developer will pay your Stamp Duty Land Tax for you.
Solicitor's or conveyancer's fees in the UK
These cover searches and legal paperwork. Costs vary by area and/or the property value (or loan amount if it's re-mortgage) and include:
- Legal fees.
- Land registry fees.
- Local authority searches.
- Drainage and environmental searches.
- Administration costs.
- Lender's arrangement fees.
- Arrangement or completion fee (can often be added to the loan).
Lender's insurance premium
If you have a high percentage loan you may need to pay a one-off fee called a 'higher lending charge'. This protects the lender if you can't repay your mortgage. It depends on how much you borrow and how much deposit you put down. The premium can be high; ask your lender or mortgage adviser. You can usually add it to the mortgage if it doesn't take you above the lender's maximum loan for the property value, but this will increase your interest charges.
Removal and moving in expenses in the UK
These vary according to:
- Where you live.
- The size of your property.
- How much furniture you've got.
- How far you're moving.
- How much packing you'll do yourself.
It's best to get several quotes, and always check that your remover's properly insured.
On-going monthly costs in the UK
Mortgage repayments in the UK
You'll need to budget for your monthly mortgage repayments - and take into account what effect a future change of interest rates would have on these.
If you have an 'interest only' mortgage, you'll usually also need to budget for monthly payments into an investment to pay off the loan at the end of the term.
Life insurance/mortgage protection cover in the UK
You might need to take out a life assurance policy such as 'term insurance' or a 'mortgage protection policy'. The monthly payments can be relatively low and the insurance pays off what you owe if you die before you've finished repaying the loan. Ask your mortgage adviser for more details. (If you have a mortgage endowment policy, this includes life cover.)
You can also take out insurance that pays your monthly repayments if you're ill or out of work - but this can be expensive.
Buildings and contents insurance in the UK
Once you exchange contracts for your property you're responsible for insuring it. Your lender can insist that you have buildings insurance - but they can't make you buy their own. But in some cases, lenders insist that you take out their insurance on completion.
Council Tax, utility and other regular bills in the UK
Don't forget that when you move, your monthly bills might go up.
What you can do to avoid repossession in the UK - a guide
There are several things you can do to make sure your home isn't repossessed. It's never too late to get advice, so don't walk away or hand over your keys to your lender. Find out how to get help to keep your home if you are facing repossession.
Talk to your lender about your situation
Speak to your lender as soon as you think you have a problem making your mortgage repayments. Put together a simple action plan to help you keep your home.
Your lender will treat you fairly
Generally, lenders are willing to talk about your situation and help you find a solution. There is a set of conditions called the 'pre-action protocol', which your lender must full fill to give you every chance to keep your home. If your case goes to court, you and your lender have to prove you have followed the pre-action protocol to the judge. Your lender must:
- Tell you how much you owe and any interest charges you'll have to pay consider a request from you to change the way you pay your mortgage.
- Respond to any offer of payment you make.
- Give you their reasons for turning down your offer of payment within ten working days.
- Give you 15 working days' written warning if they plan to start court action because you haven't kept to a repayment agreement.
How your lender can help in the UK
To help you manage your repayments, your lender may:
- Agree to change or lengthen the term of your loan.
- Accept reduced payments from you in the short term.
- Add any repayment debt to the amount you have borrowed.
You need to:
- Show you are willing to make repayments you can afford.
- Pay what you can, when you can, if you can't afford the full payments at the moment.
- Get a written copy of any repayment arrangement you make with your lender.
- Keep in regular contact with your lender and let them know about any changes in your circumstances.
Mortgage arrears - dos and don'ts in the UK.
Watch a video explaining what you can do if you are in mortgage arrears by visiting www.direct.gov.uk website.
Seek free and independent money advice in the UK
Speak to an adviser immediately if you can't reach a repayment agreement with your lender or can't pay at all.
A trained money adviser from an independent agency, like the Citizens Advice Bureau or Shelter, can give you free and impartial advice about:
- Talking to your lender.
- Managing your debt.
- Creating a budget.
- Any government-backed schemes you may be eligible for, like Mortgage Rescue.
- Any benefits or financial help you may qualify for, like Support for Mortgage Interest.
Considering selling your home in the UK
If you are very behind with your mortgage repayments, in order to avoid repossession, you may want to consider selling your home. You can do this independently or in some cases with help from your lender. This could result in you getting a better price for your property than if it were repossessed.
If you decide to sell your property, you should discuss the matter with your lender first. They may offer an Assisted Voluntary Sale scheme. This is where you put your property up for sale with the involvement of your lender. Sometimes they can help with some of the costs of the sale or move.
You should always get advice from an independent money adviser to discuss what is right for you.
You should also get legal advice on how a decision to sell your house might affect your legal rights, in case you need assistance from your local authority.
Read any letters you receive from your lender
If you have fallen behind with your mortgage payments, your lender will send you a letter called a 'notice of default'. Make sure you read this letter – it will give information about how much you owe and any action your lender plans to take. You need to:
- Speak to your lender straight away - you could still reach an agreement with your lender at this stage.
- Get help from an independent adviser - take the letter with you.
- Mortgage advice - who to see and what to take(see below).
Your lender can start legal action to repossess your home if you don't respond to the letter or can't reach a repayment agreement. Even at this stage you can still get help to avoid repossession.
See 'What to do if your mortgage lender takes you to court' for information about:
- Where to get independent, impartial advice.
- How you'll find out about the hearing.
- When repossession could be postponed.
- What to do if your mortgage lender takes you to court (see below).
Get ready for the hearing, if you have a court date in the UK
Repossession doesn't happen automatically. Even if you have been given a date
to attend court, you can still get help to keep your home.
See 'Preparing for the hearing' for further information including:
- Where to get advice.
- What you need to take with you.
- Help to estimate your legal costs.
Go to your court hearing in the UK
It is vital that you go to your court hearing. It's your opportunity to explain your situation to the judge. If you don't go, it's much more likely the judge will decide you have lost the right to keep your home.
See 'Going to court for repossession – what happens on the day', to find out what the hearing will be like.
Legal advice on the day of the hearing
If you haven't received any advice before the hearing, you can get free representation in court on the day. Follow this link for more information.
Respond to any eviction notices and seek advice
If you get a court notice that says you are being evicted, seek legal and money advice straight away. You may be able to delay or stop the eviction. Preventing homelessness
Mortgage advice in the UK - who to see and what to take
If you are worried about making your mortgage repayments or losing your home, an independent adviser can help. Find out how to contact an adviser, what they can do and what to take with you.
How an adviser can help
An adviser at a free and independent advice agency can help you:
- Put together a plan for managing your debt.
- Create a budget.
- Prepare to speak to your lender about making a new repayment arrangement.
- Understand any letters you receive from your lender.
- Find legal advice or representation, if you have a court date.
Financial support in the UK you may be eligible for
The adviser will also help you explore all the options available to keep your home, including:
- Financial support, like the Mortgage Rescue scheme.
- Benefits or financial support you may be eligible for, like Support for Mortgage Interest.
Mortgage Rescue scheme in the UK
Ask your adviser if you are eligible for the Mortgage Rescue scheme. It can help if you have tried everything but still can't pay your mortgage and your lender is taking action to repossess your home.
Support for Mortgage Interest in the UK
If you are unemployed or working fewer than 16 hours a week, ask about Support for Mortgage Interest (SMI). SMI helps you make the interest payments on your mortgage for up to two years.
Other benefits and financial support in the UK
Your adviser will also look at whether you are eligible for other support, like Council Tax Benefit or tax credits. For more information see link.
List of approved money advisers in the UK
The independent agencies listed below have been approved by the government to give advice about HMS and mortgage and debt problems.
- The Citizens Advice Bureau (CAB) can offer face-to-face advice in one of their local offices.
- The Consumer Credit Counselling Service (CCCS) has a helpline providing free and impartial advice. Phone 0800 138 1111 or visit their website for more information.
- In England, Scotland and Wales, you can get help over the phone from National Debtline by calling 0808 808 4000.
- Payplan can offer advice over the phone for people throughout the UK. Phone 0800 716 239 or visit their website.
- Shelter, In England, call 0300 3300 515 for advice about HMS, or 0808 800 4444 if you want general advice. In Wales, call 0845 075 5005.
- Your local council will be able to help if you are facing repossession or homelessness. They can give you money advice and help you find alternative accommodation, if needed.
- Contact Community Legal Advice for confidential and independent legal advice and help finding a solicitor. Phone their helpline on 0845 345 4 345 or visit their website.
Checklist – what to take to the adviser
The following is a list of the sort of documents you should take when you see an adviser:
- Any court papers.
- Wage/pay slips.
- Benefit/pension award letter or book.
- Full details of your mortgage, including the account number and type and your lender's name and address.
- Rent book/card, including details of ground rent and service charges, if you pay them?
- Bills, like Council Tax, water, fuel (e.g. gas and electricity), telephone (landline and mobile), satellite TV and for anything you rent, like appliances.
- Bank statements, including details of any loans or overdrafts.
- Credit card details and any letters from the credit card company.
- Details of any hire purchase loans and correspondence.
- HM Revenue and Customs (HMRC) and National Insurance bills.
- Details of other expenses and housekeeping costs, like travel costs and schools meals.
If you speak to an adviser over the phone, have the documents on hand. If you don't have some of the documents, or they don't apply to you, find out what else you could bring before your appointment.
What to do if your mortgage lender takes you to court
Find out how you know your mortgage lender is taking you to court, and how repossession of your home can be postponed. Also find out about preparing to go to court, and what happens on the day.
Falling behind with mortgage payments
Your mortgage lender may take you to court if you haven't come to, or don't keep, an agreement to pay off your mortgage arrears. Before your lender begins court action, they will send you a letter called a 'notice of default' saying you are behind with your payments.
Make sure you read and respond to this letter. You may be able to reach an agreement with your lender and prevent court action.
If you don't reach an agreement, your lender may ask the court to evict you. This is called making a 'claim for possession' and you'll receive paperwork from the court. There is always a court hearing for court cases about mortgage arrears that could end in eviction.
Keep talking to your lender in the UK
Keep talking to your lender even though they have started court action. You may still be able to come to an agreement. Make sure you get any agreement in writing and continue preparing for the hearing. Only change your plans if the court sends you a letter saying the hearing has been cancelled or postponed.
See an independent adviser in the UK
An independent adviser can help you speak to your lender and complete the court paperwork. They will explore the options available to keep your home, like support from benefits or a government-backed scheme, e.g. the Mortgage Rescue scheme. If you find a solution, you'll still need to attend court to inform the judge.
What the court will send you
The paperwork from the court will include:
- Copies of the claim for possession forms, completed by your lender.
- A court hearing date.
- A blank defence form and guidance on how to fill it out.
- The court's contact details.
- Information about organisations offering free advice on repossessions.
You'll be called the 'defendant' or 'mortgagor' and the mortgage lender will be described as the 'claimant' or 'mortgagee' in the paperwork.
Filling in the defence form
The defence form has questions about things like you're:
- Income.
- Other debts.
- Spending on electricity, food and transport.
Return the completed form to the court within 14 days. The information you give could affect the court's decision at the hearing.
When repossession may be postponed
There are certain situations where repossession action may be postponed.
Making a claim on your mortgage protection payment policy
If you have a mortgage payment protection policy, you could postpone repossession by making a claim. This type of insurance policy covers your mortgage repayments, or a percentage of them, if you become ill or lose your job.
To avoid repossession, your lender must agree that you'll be able to meet your monthly repayments, including any amount that isn't covered by the policy.
Taking steps to sell your home in the UK
If you can show that you are trying to sell your home, your lender may agree to delay repossession. You'll need to keep your lender up to date on the progress of the sale. If your lender doesn't agree to you selling your home, they should tell you at least five working days before starting any action.
Making a complaint about your lender in the UK
If you feel your lender has treated you unfairly, you can refer your complaint about unfair treatment to the Financial Ombudsman Service. If the court hasn't yet granted the lender permission to repossess, the ombudsman may ask the lender to either:
- Delay court action temporarily.
- Stop court action.
During this time the ombudsman will investigate your complaint. In most cases, the Ombudsman Service won't consider a complaint about a lender's decision to repossess a property where a court has already granted permission for repossession.
Going to the court hearing
If your lender doesn't postpone taking you to court, you must prepare for the hearing. It's vital you go to the hearing. This allows you to tell the judge why you have had difficulties paying your mortgage and how you could repay arrears in future. If you don't go, it's very likely the judge will decide that you lose the right to keep your home.
After the court hearing
After the hearing, the court will send you a copy of the judge's decision. Even at this stage, you may still get help to keep your home. Find out what happens next and how you might be able to appeal.
Mortgage Rescue scheme
The Mortgage Rescue scheme may help if you are having serious difficulties making your mortgage repayments and are in danger of becoming homeless if repossessed. Find out if you are eligible for help to stay in your home and how the scheme works.
What is the Mortgage Rescue scheme?
The Mortgage Rescue scheme is a government scheme, which is run by your local housing authority - the organisation that manages housing for your council. If you are eligible, you could get financial help to stay in your home. You make your application for help from the scheme to your local council.
The Mortgage Rescue scheme is only available in England. Separate schemes are either in place, or being developed, in Scotland, Wales and Northern Ireland. Search your local council's website for more information about these schemes.
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Who can get help from the Mortgage Rescue scheme around the UK
To be eligible for the scheme your household must include someone in 'priority need'. This could be:
- A pregnant woman.
- Someone with dependent children.
- Someone who is vulnerable because of old age or a physical or mental impairment.
You'll also need to meet the following criteria:
- Your household earns less than £60,000 a year.
- You don't own a second home, including a home abroad.
- The value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home.
- The value of your home isn't higher than certain levels set for each region – ask your council about the level for your area.
When you apply for the scheme, your local housing authority will talk you through some other criteria that you'll need to meet.
How the Mortgage Rescue scheme works in the UK
You can be referred to the scheme by:
- Advice agencies, like the Citizens Advice Bureau or Shelter.
- Your mortgage lender.
- The courts.
You can also contact your local council directly to get advice about the Mortgage Rescue scheme.
When you apply for help from the scheme:
- The council will arrange for you to meet with their money advisers, if you haven't already seen an adviser.
- You'll get advice and a plan to help you manage your debt or some other way that you can meet your housing costs.
- The council may arrange an assessment of your home.
- You may get financial help, either with a 'shared equity loan' or through a 'Government mortgage to rent', depending on your circumstances.
- The council will involve a Registered Social Landlord (RSL) - an independent housing organisation registered with the Tenant Services Authority.
Shared equity loans in the UK
The RSL can provide an equity loan to reduce your monthly repayments. You'll pay a low monthly interest-only charge on the loan. You'll need to have at least 25 per cent equity in your property to qualify for the equity loan. This means your mortgage isn't worth more than 75 per cent of the property's value.
Government mortgage to rent in the UK
The RSL may suggest a Government mortgage to rent, which means the RSL will buy your home for 90 per cent of its market value. You'll stay in your home and pay rent to the RSL as their tenant. The rent will be 20 per cent less than the market rate for your area.
You'll continue to receive advice after you have entered the scheme to help you manage your finances.
The following guide is for information only and is reproduced from Direct.Gov www.direct.gov.uk. Complying with the requirements of acknowledgement of authorship and of crown copyright.
This is intended as general information, it is not intended as advice, and is correct as of 25th August 2011. Therefore details within could alter without notice. You are strongly advised not to rely on any statement, but to seek independent professional advice. For information with links to partner sites you are directed to the government website above.
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Mortgage FAQ's:
I live in the UK area, but why should I consider UK Fast Loan Finance?
Fast Loan Finance in the UK have teamed up with a whole of market Mortgage Company who we have selected on the basis of being able to offer fantastic service, a mortgage company who are able to search the entire market of lenders and bring you together. This means they are able to find you the best rates possible for your individual circumstances.
Will there be someone to talk to if I have any questions or problems during my application in UK?
You will be assigned a personal advisor who will be a dedicated point of contact right throughout your application; they will always be there if you need further assistance or advice.
Are mortgage price Comparison web sites a good idea?
They can be, that's why Fast Loan Finance in the UK has a best buy mortgage table so that you can see at a glance what is on offer from certain lenders. The only thing to bear in mind is the comparison or best buy tables do not show the unadvertised lending rates that lenders sometimes offer. So to be absolutely sure you have the best deal for your individual circumstances you need to speak to a mortgage advisor who is able to check what mortgage deals are available for you.
Is this why the UK Fast Loan Finance offers both services?
Absolutely, you have best of both worlds with Fast Loan Finance, a quick glance best buy mortgage table showing you what is generally available, and the facility to speak with a mortgage advisor who will conduct an individual personalised search for you.
If I choose to ask for an individual personalised quote, what do I need to do?
Either call us on our free phone number or fill in a quick email request form and we will contact you, it is as simple as that.
How soon will you contact me?
As soon as possible, normally the same working day.
Are the mortgage quotes without obligation?
All our mortgage quotes are without obligation, you just decide if it is right for you.
Do you charge for providing a mortgage quote?
There is no charge from us for providing this service; however like other mortgage companies we do receive a fee for arranging your mortgage.
You are called Best Fast Loan Finance does this mean you can get better mortgage deals than anyone else?
No we do not pretend to be able to do that. What we aim to do is to find the best mortgage deal for your individual circumstances in the UK, and give you a great stress free service.