Mortgage in the UK

Mortgage in Great Britain - Legal support

Whatever your goals: buying a home for the first time, moving or simply refinancing your mortgage loan, there are many options from different lending institutions in the UK. Taking out a mortgage is a significant financial commitment, and any mistake can be costly. If you are not yet ready to make a long-term commitment, a bridge loan (short-term loan) will be an ideal option. It allows you to get additional time for processing a standard mortgage.

What is a mortgage?

A mortgage is a loan granted for the purchase of real estate or land. Usually, a mortgage is issued for a term of up to 25 years, but both shorter and longer terms are possible. Your house serves as collateral for the loan until the amount is fully repaid. If you can't pay the entire debt, the creditor has the right to take your home and sell it to get their money back.

Types of mortgage payments

Percentage only

Every month you pay the lender only interest, while the total amount of the debt does not decrease. In order to pay off your mortgage before the end of the term, lenders need to understand how you plan to do so. Eligible options may include property sales, retirement savings, benefits and savings. This type of mortgage is more difficult to arrange than a mortgage with regular payments, and the approval process is very complicated.

Capital and interest

Every month, you pay the lender both interest and a small portion of the principal, reducing the amount of your debt until it is paid off in full. The term of mortgage payments can be up to 35 years, provided that the mortgage is closed before you reach 70 years of age. This is the preferred option for most borrowers.

Possible types of mortgages in Great Britain

Types of mortgages

The world of mortgage loans can be difficult for newcomers. We aim to clarify all the terms and different types of mortgages so that you can confidently make an informed choice when applying for a mortgage.

Mortgage loan refinancing

It is common practice for borrowers to take out a new mortgage without moving. Refinancing can have various reasons, such as extracting capital from the property, consolidating debts, switching to better terms or saving money. This can be applied to any type of mortgage, including fixed or floating rate mortgages. It is important to plan refinancing 6-8 weeks before the expiration of the primary interest rate.

Fixed rate mortgage

The interest rate is fixed for a certain period (usually 2, 3 or 5 years, but it can be other). Regardless of changes in the market, you pay a fixed rate during this period. At the end of the fixed rate term, you switch to the lender's standard variable rate, which may require a new contract.

Floating rate mortgage

The rate varies depending on various indicators, such as the Bank of England refinancing rate or LIBOR, and can fluctuate both upwards and downwards. You can choose a fixed periodic rate change or a dynamic rate throughout the entire term of the mortgage.

Mortgage at a preferential rate

The lender provides a discount from its standard variable rate. The preferential rate can be valid for a certain period (2, 3 or 5 years) or for the entire term of the mortgage.

Mortgage with the provision of cash

The borrower is given a one-time amount of cash when taking out a mortgage. It can be a fixed amount or a percentage of the mortgage amount. This type of mortgage can be useful for financing additional expenses, such as buying furniture or renovations, but usually has a higher interest rate.

Threshold

This type of mortgage sets a maximum interest rate for variable rates, such as floating or prime. If the threshold is set at 5%, your rate will not exceed this level even if the base rates change.

Mortgage with protection against rising rates

This is a floating rate mortgage that allows you to switch to a fixed rate if the base rate starts to rise. This allows payments to be fixed at an acceptable level when rates rise. However, finding such a mortgage can be difficult, as many lenders do not use this concept.

How to choose a bank with the best conditions for a mortgage

In Great Britain, only a few financial institutions provide mortgage loans to citizens of Ukraine and the CIS countries due to difficulties in verifying borrowers' incomes. However, it is still possible to get a mortgage. With the help of mortgage brokers, you can choose the appropriate bank or company with the most favorable credit terms and submit an application.

HSBC Private Bank, HSBC Premier Bank, EFG Private Bank, Coutts Bank, Lloyds Bank, Barclays, Deutsche, Credit Swiss and others are among the leading banks with favorable mortgage offers. Each case is considered individually, and terms depend on the circumstances of the borrower. Usually, for non-residents, British banks can count on financing from 40 to 80% of the real estate value.

Before choosing a bank and signing the contract, you should pay attention to the following aspects: fixed or floating rate, repayment schedule (repayment mortgage, interest-only mortgage), terms and amounts of payments, possible commissions, fines for arrears and mortgage refinancing options.

Documents for mortgage registration

To obtain a loan for the purchase of real estate in Great Britain, the following documents, translated into English and notarized, must be submitted to the bank:

• copies of passports (foreign and domestic)
• statements from bank accounts for the last 6 months with an indication of receipts confirming the borrower's regular income (salary, rental income, other dividends)
• completed mortgage loan application form
• certificate from the place of work on company letterhead confirming salary for the last 6 months
• documents confirming the permanent place of residence (address) and utility bill receipts

The bank may request additional financial documents confirming ownership of real estate, securities or investments. The more information about income the borrower provides, the higher the probability of a positive decision by the bank and obtaining a loan on more favorable terms.

The importance of ordering legal support when applying for a mortgage in Great Britain

Ordering legal support when applying for a mortgage in the UK is key to protecting the borrower's interests. Legal and legal analysis of the situation allows you to check the terms of the contract in detail, taking into account interest rates, payment terms and possible sanctions for late payment, which helps to avoid hidden risks. A legal audit ensures compliance of documentation with legislation and reveals potential inconsistencies, while a legal audit of the situation reduces the risk of legal errors and ensures transparency of the entire process.

Get in touch with a UK mortgage solicitor

Getting in touch with a UK mortgage solicitor is an important step in ensuring your rights and interests are protected. A lawyer will help check all legal aspects of the contract, including the terms of interest rates, payment terms, possible sanctions for late payment and other financial risks. It will also help to avoid mistakes and hidden problems that may arise due to an imperfect understanding of legal terms or loan conditions.

For advice and a solution to your problem, contact professional lawyers from the website consultant.net.ua. Our lawyers have extensive experience in cases related to mobilization and will help you protect your rights and interests, call the indicated number +447418377298.