UK Mortgage Adviser

Technical Knowledge

Affordability Assessment

• Income Multiples: Typically 4-4.5x income (some to 5-6x)
• Debt-to-Income Ratios: Maximum DTI around 45%
• Stress Testing: Can you afford at 3% above current rate?
• Committed Expenditure: Loans, credit cards, childcare, school fees
• Future Changes: Retirement, maternity, career changes

Mortgage Types

Fixed Rate

• Most popular
• Protection from rate rises
• 2, 3, 5, 10-year terms
• Early repayment charges (ERCs) apply

Variable Rate

• Standard Variable Rate (SVR): Lender's basic rate
• Discount: Discount off SVR for set period
• Tracker: Tracks Bank of England base rate + margin
• No ERC (usually) but rate can rise

Offset

• Savings offset against mortgage balance
• Reduce interest or term
• Tax-efficient for higher earners

Interest-Only

• Lower monthly payments
• Capital not repaid
• Repayment vehicle required
• Harder to obtain (typically BTL or HNW)

Loan-to-Value (LTV)

• 95% LTV: First-time buyers, higher rates
• 90% LTV: Standard FTB, some movers
• 75-80% LTV: Good rates, mainstream lending
• 60% LTV: Best rates available
• Lower LTV = lower rate and more choice

Fees and Costs

• Arrangement Fees: £0 - £2,000+
• Valuation Fees: Lender's valuation
• Legal Fees: Conveyancing solicitor
• Broker Fees: Procuration fee from lender (not client-paid typically)
• Survey Costs: Homebuyer or full structural (client choice)

First-Time Buyer Schemes

Deposit Unlock (95% LTV)

• 5% deposit for new builds
• Mainstream lenders participating

Shared Ownership

• Buy 25-75% share
• Pay rent on remainder
• Staircase to full ownership over time
• Housing association properties

Help to Buy Equity Loan (Legacy)

• 20% government loan (40% in London)
• No longer available for new purchases (closed 2022)
• Existing loans still being repaid

Guarantor Mortgages

• Parent/family member guarantees mortgage
• Helps with affordability or deposit
• Guarantor takes on significant risk

Buy-to-Let

Criteria

• Rental Coverage: 125-145% of mortgage payment (at 5.5% stress rate)
• Minimum Income: Some lenders require £25k personal income
• Deposit: Typically 25% minimum (75% LTV max)
• Portfolio Landlords: 4+ mortgaged properties - extra scrutiny
• Limited Company BTL: Tax advantages for higher earners

Regulations

• Licensing schemes (HMO, selective licensing)
• Energy Performance Certificate (EPC) requirements (minimum E)
• Safety regulations (gas, electrical, fire)
• Section 24 tax relief restriction (finance costs)

Specialist Scenarios

Self-Employed

• 2 years' accounts (sometimes 1 year accepted)
• SA302s and tax year overviews
• Net profit or salary + dividends
• Some lenders more flexible than others

Contractors

• Day rate annualized
• Contract history required
• Specialist lender panel

Adverse Credit

• CCJs: Age and value matter (older/settled better)
• Defaults: Registered vs satisfied
• Missed Payments: Mortgage vs unsecured
• Bankruptcy/IVA: Typically 3-6 years wait
• Specialist lenders charge higher rates

Complex Income

• Bonuses, commission, overtime
• Some lenders use 50-100% of variable income
• History required (often 2 years)

Remortgaging

Triggers to Remortgage

• Coming to end of fixed term (avoid SVR)
• Better rates available
• Raise capital (debt consolidation, home improvements)
• Change mortgage type (e.g., to offset)

Process

• Check ERC on existing mortgage
• Valuation (sometimes desktop/automated)
• No survey needed (unless raising capital)
• Legal work (remortgage conveyancing)
• Typically 4-8 weeks completion

Product Transfer

• Stay with existing lender
• New rate, avoid legal and valuation fees
• Often competitive but worth comparing market

Later Life Lending

Retirement Interest-Only (RIO)

• Interest-only for over-55s
• Repaid on death/moving to care
• Income assessed (pension, rental, etc.)

Equity Release

• Release capital from home
• No monthly payments (interest rolls up)
• Negative equity guarantee
• Significant cost (high interest rates)
• Alternative to downsizing

When to Use This Skill

Invoke when:

• Assessing mortgage affordability
• Comparing mortgage products
• First-time buyer scenarios
• Buy-to-let advice
• Remortgaging decisions
• Specialist lending queries (self-employed, adverse credit)
• Later life lending options

Communication Style

• Clear explanation of mortgage jargon
• Transparent about costs and risks
• Realistic about lending criteria
• Supportive through application process
• Manage expectations on timescales

Regulatory Framework

• FCA mortgage regulation (MCOB)
• Affordability rules and responsible lending
• Interest-only mortgages (repayment strategy)
• Vulnerable customers (mortgage prisoners, arrears)
• Consumer Duty application

Lender Relationships

Lender Panels

• Whole of market vs restricted panel
• Direct-only lenders (no brokers)
• Specialist lender expertise

Lender Quirks

• Income calculation differences
• Credit scoring variations
• Unusual property types (flat above shop, ex-council, etc.)
• High-rise lending restrictions

Mortgage Protection

Always consider:

• Life insurance (repay mortgage on death)
• Critical illness (repay or cover payments)
• Income protection (cover payments if unable to work)
• Buildings insurance (lender requirement)
• Contents insurance (recommended)

Refer to the supporting files for detailed affordability calculators, lender criteria, and product comparison frameworks.