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Mortgage frequently asked questions
At Bank of Scotland we are proud to offer our customers mortgages provided by the Halifax, also part of Lloyds Banking Group, who have over 160 years' experience helping people own their homes.
General
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1.
How much could I borrow?
You can use the Halifax online calculator to get an idea of how much you could borrow. Or, to get a better indication we can provide you with an Agreement in Principle (AIP).
We'll start by asking about your income, for example your basic salary and any regular overtime or bonuses. We'll also ask about your regular outgoings, for example credit card or personal loan repayments, and we'll take these off your income. After that, we make a further allowance for average day-to-day living expenses. This allows us to see how much we think you can afford for your mortgage payment each month.
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2.
What type of properties will you lend on?
Different types of property in the UK can be considered for a mortgage.
You may be asked to provide a bigger deposit on some types of property than others. Any loan we make will be subject to the property valuation contained in the Home Report (for properties in Scotland) or a satisfactory property valuation by a surveyor of our choice.
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3.
Is there a minimum purchase price?
While many types of property can be considered, we've a responsibility to ensure that a property is suitable security for a mortgage. As a result, properties where the valuation or purchase price is below £40,000 are not acceptable.
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4.
What should I consider when applying for a mortgage?
Mortgages can last for a long time, so it's important you get the one that's right for you. You'll need to think about such things as the type of loan, how long you want it for and what type of product you'd like.
Methods of repayment - there are three different ways of repaying your mortgage. These are repayment, interest-only, and a combination of repayment and interest-only.
Mortgage terms - mortgage terms of up to 40 years are available. How long the mortgage lasts will affect your monthly payments and the total cost of the mortgage. With a repayment mortgage, the longer the term, the lower the monthly payment. However, it'll take you longer to pay off the loan so you will pay more interest. This means it'll cost you more over the life of your mortgage.
With an interest-only mortgage, the length of the term makes no difference to the monthly payments because these are only paying off the interest charges and not the loan itself. With an interest-only mortgage your mortgage term needs to match the time when you will have enough money in your repayment plan(s) to repay the loan.
Mortgage products - different types of mortgage products with different types of interest rates may be available. These change from time to time and we'll give you details of the current range when you apply.
Special offers - from time to time we may offer mortgage products that include an incentive. The interest rate for products with incentives may sometimes be slightly higher than for products without incentives. So you'll need to consider whether the special offer available at the start of the mortgage is more important to you than the slightly lower interest rate you may get during the product rate period without the special offer.
Your mortgage adviser will ask you about your preferences and discuss your needs and circumstances before deciding which mortgage to recommend to you.
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5.
What are the risks I should be aware of?
A mortgage has one key difference to other loans - it's secured against your home. If you can't keep up with your monthly repayments or you get into financial difficulties you should get in touch straight away so you can receive the help you need.
Remember, house prices can go down as well as up. If you owe more than the current value of your home, you will be in negative equity. If you need to move home and sell your property, and if its value has dropped below what you paid for it, there may be a shortfall between the amount you owe on your mortgage and the amount you get for the sale which you will need to repay.
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6.
Will I be charged any fees?
Depending on the mortgage product, there may be a product fee to pay. You'll need to check the current rates for full details. Any product fees can be added on to your mortgage on completion.
There could be other charges and standard costs which you may have to pay during the course of setting up your mortgage and those you may have to pay during the life of your mortgage.
We’ll tell you of any charges in advance, so you’ll have agreed to them before they become payable. These charges and standard costs can change from time to time.
You’ll be charged interest on any fees, charges and standard costs added to your loan.
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7.
What happens at the end of my mortgage deal?
When you take out your mortgage, you arrange to have a fixed or variable rate product for a period of time. At the end of this time, the product will end and your loan will usually be transferred to a lender variable rate. At this point, you may choose to move it to a new product for a further period of time.
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8.
What happens if I want to move home in the middle of my mortgage deal?
It's sometimes possible to take a product rate with you to a new mortgage - we sometimes call this 'porting‘. Your Illustration and offer letter will say if any of your product rates can be taken to a new mortgage.
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9.
What insurance will I need?
You are required to have buildings insurance, you may also want to give consideration to your contents and life insurance needs as well.
Buildings insurance covers the bricks and mortar, fixtures and fittings.
Contents insurance protects all your possessions in your home, from furniture to jewellery.
You may want to look into insurance to protect your mortgage for example Life Cover and Critical Illness Cover.
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10.
Are there legal costs when buying a property and taking out a mortgage?
Whether you’re buying or selling a home, or releasing equity from a property that you currently own, you’ll need to appoint a conveyancer to carry out the legal work for you.
Visit the Halifax website for more help and guidance on our Conveyancing Service.
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First Time Buyer
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1.
How much will I need for a deposit and other costs?
We will only lend you a percentage of what the property is worth, so you will need to put down some of your own money towards the cost. We call this a deposit. Your deposit should be at least 5% of the property’s value. If you can put down more than 5%, you can often get a lower initial interest rate.
We’re supporting the Government’s mortgage guarantee scheme, if you only have a deposit of at least 5% but less than 10%. The scheme is expected to accept applications until 31 December 2023, however, it may be withdrawn earlier. You can apply for a mortgage under the scheme by following our usual application process.
If you’re planning to put down a deposit between 5% and 10%, to qualify for the Mortgage Guarantee Scheme you’ll need to be:
- a first-time buyer
- thinking about borrowing less than £570,000.
- buying a property which isn’t a new build flat
- buying a property which isn’t Shared Ownership, Shared Equity, Right to Buy or buy to let
- thinking about getting a repayment mortgage and not interest only.
Lending is subject to an affordability assessment, credit score and a full mortgage application.
You must be at least 18 years old to apply for a mortgage, and your mortgage must usually end before you reach 80 years of age. If your mortgage term extends past your 70th birthday or when you plan to retire - whichever happens sooner - we'll look at your retirement or employment income to make sure that you can afford the monthly payments. If you’re taking out a joint mortgage, we take the age of the oldest person into account.
As well as your deposit, there are other costs associated with buying a property and taking out a mortgage. Typical ones that apply to most buyers include conveyancing fees, Stamp Duty Land Tax/Land and Buildings Transaction Tax (properties in Scotland), valuation fees and Land Registry fees. There are often unexpected costs too in buying a property, so it's a good idea to have a reserve fund to cover them.
Halifax supports a range of government backed initiatives to help customers to buy their home.
Use the Halifax mortgage calculator to see how much you could borrow and what your monthly payments might be. Or, to get a better indication we can provide you with an Agreement in Principle.
You can use the Halifax Conveyancing Service to compare quotes from our approved panel of up to 200 conveyancing professionals.
Need help saving for your deposit?Have a look at our savings tips page and view our savings range to help you get started.
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2.
Can I apply for a first time buyer mortgage?
As long as one person applying has never owned a property before, you can apply for a first time buyer mortgage with the Halifax.
- You must be buying a UK property
- You must be a UK resident or have full rights to reside in the UK
- You must be at least 18 years old to apply for a mortgage, and your mortgage must usually end before you reach 80. If your mortgage term extends past your UK State Pension age or your expected retirement age – whichever happens sooner - we'll look at your retirement income or your employment income, if you are still working to work out whether we think you can afford the monthly payments. If you’re taking out a joint mortgage, it’s the age of the oldest person that’s taken into account.
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3.
How does an Agreement in Principle differ from a mortgage offer?
An Agreement in Principle, also known as a 'Decision in Principle' or 'Mortgage Promise', is useful if you haven’t found a property you want to buy but would like to know how much you could borrow. All we need is a few personal details about you and anyone else who will be named on the mortgage. Then we’ll contact a credit reference agency for a soft credit check.
Soft credit checks do not affect your credit rating or ability to borrow from lenders in the future. Soft credit checks are not seen by other lenders and can only be seen by you on your credit report.
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Home mover
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1.
How much will I need for a deposit and other costs?
We will only lend you a percentage of what the property is worth, so you will need to put down some of your own money towards the cost. We call this a deposit. Your deposit should be at least 5% of the property’s value. If you can put down more than 5%, you can often get a lower initial interest rate.
We’re supporting the Government’s mortgage guarantee scheme, if you only have a deposit of at least 5% but less than 10%. The scheme is expected to accept applications until 31 December 2022, however, it may be withdrawn earlier. You can apply for a mortgage under the scheme by following our usual application process.
If you’re planning to put down a deposit between 5% and 10%, to qualify for the Mortgage Guarantee Scheme you’ll need to be:
- a home mover
- thinking about borrowing less than £570,000.
- buying a property which isn’t a new build flat
- buying a property which isn’t Shared Ownership, Shared Equity, Right to Buy or buy to let
- thinking about getting a repayment mortgage and not interest only.
Lending is subject to an affordability assessment, credit score and a full mortgage application.
As well as your deposit, there are other costs associated with buying a property and taking out a mortgage. Typical ones that apply to most buyers include conveyancing fees, Stamp Duty Land Tax/Land and Buildings Transaction Tax (properties in Scotland), valuation fees and Land Registry fees. There are often unexpected costs too in buying a property, so it's a good idea to have a reserve fund to cover them.
You can use the Halifax Conveyancing Service to compare quotes from our approved panel of up to 200 conveyancing professionals.
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2.
What is a Home Report?
A Home Report (required for properties in Scotland only) is a report which provides interested parties with more information on the property. Sellers have to provide one of these before the property can be put on the market.
A Home Report is made up of three documents:
Property Questionnaire - sellers provide details of the property such as recent improvements and alterations, Council Tax band, repairs (due to flooding, rot etc) as well as any arrangements with neighbours for access to the property.
Survey - a detailed survey carried out by a qualified surveyor. Provides information on the condition of the property, potential repairs required and a valuation.
Energy Report - this provides details of how energy efficient the property is.
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