Hallowes Mortgages offers a range of mortgage services in Sheffield and across the UK, including buy-to-let mortgages, remortgaging, equity release and options for first-time buyers. Our expertise ensures you receive the right support for your home financing journey, whether you're looking to invest, refinance, or build your dream home. Contact our experts for confidence and clarity regarding the mortgage process.
Please note that because a mortgage is secured against your home, it could be repossessed if you do not keep up with the repayments.
Our Mortgages
Mortgages are secured loans designed to help buyers purchase residential properties, with the property itself as collateral. When assessing mortgage applications, lenders consider several factors, including affordability, deposit size, valuation and survey fees, property type, and the repayment time frame. Affordability is crucial, as potential buyers must budget for rising interest rates, which can significantly impact monthly payments. Typically, first-time buyers need at least a 5% deposit, while 20% offers access to the most competitive rates. Lenders require a valuation to ensure the property is worth the purchase price, and valuation fees vary accordingly. Specific properties, such as flats over commercial buildings or listed structures, may limit lending options due to perceived risks. Lastly, mortgage providers set a maximum loan term and can repossess the property if repayments are not maintained, emphasising the importance of careful financial planning.
First Time Buyer
Buying your first home can be daunting and confusing, but we guide you through the process. The mortgage market constantly changes, with lenders assessing loan suitability based on property type, employment status, and financial commitments. Affordability and expenditure are now crucial, not just income multiples. We stay up-to-date with regulations and market trends to match your needs with lender requirements, ensuring protection for you and your dependents. First-time buyers often benefit from being chain-free, and substantial deposits are typically required, though 95% of mortgage deals and government assistance are available.
Remortgaging
Remortgaging can improve your financial health by moving your current mortgage to a new arrangement, either with your existing lender or a new one. It allows you to consolidate debts, raise money for home improvements, secure better monthly payments, or restructure loan terms. Many borrowers review their mortgage every few years to take advantage of new rates, potentially saving money and shortening their mortgage term.
Core reasons to consider remortgaging:
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Avoid Moving Home: Enhance your property instead.
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Save Money: Secure better rates or repay sooner.
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Obtain A Lump Sum: Fund special expenses like weddings or education.
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Consolidate Debts: Combine high-interest debts into a single, lower-rate mortgage.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
You may have to pay an early repayment charge to your existing lender if you remortgage.
As with all insurance policies, conditions and exclusions will apply.
Buy-To-Let Mortgages
A buy-to-let mortgage is a type of mortgage specifically designed for individuals who want to purchase a property with the intention of renting it out to tenants rather than living in it themselves. These mortgages differ from standard residential mortgages in several key ways. Often the loan to value is lower, for example you typically require a 25% deposit to be eligible with some small exceptions. The rental income in most cases is used to assess the borrowing levels rather than the individuals earned income. You can select your repayment type to suit your individual needs. You can also use a company to purchase a property, and this is becoming more popular with rising tax implications. Not all buy to let mortgages are regulated by the Financial Conduct Authority.
Mortgage Repayment
Once your mortgage application is accepted in principle, you can choose between repayment and interest-only options. A repayment mortgage covers both capital and interest in your monthly payments, ensuring the loan is fully paid off by the end of the term, provided you make all payments on time. In contrast, an interest-only mortgage only covers the interest, meaning the total loan amount remains unchanged, and you must have the funds available to repay the capital at the end of the term. While investing can help generate these funds, growth is not guaranteed.
Other Types Of Mortgages We Offer
Standard Variable Rate Mortgages
In a Standard Variable Rate (SVR) mortgage, the lender sets the interest rate, which can change at any time, regardless of the Bank of England's base rate. Rates typically range from 2% to 5% above the base rate. SVR mortgages may have lower arrangement fees and no early repayment charges, but monthly payments can fluctuate unpredictably.
Fixed-Rate Mortgages
In a fixed-rate mortgage, the interest rate is set for a specific period, ensuring consistent monthly payments regardless of changes in other rates. This stability helps borrowers plan their finances. Once the fixed term ends, the lender's standard variable rate applies.
Tracker Mortgages
With a tracker mortgage, the interest rate is linked to a specified index, usually the Bank of England’s base rate. As the base rate changes, so does the tracker’s interest rate and the borrower’s monthly repayment. While low interest rates mean lower monthly payments than fixed or standard variable-rate mortgages, high rates can increase payments. The lender’s margin is added to the base rate to determine the mortgage rate. Tracker mortgages often have a minimum rate and typically last between one and five years, after which they switch to a standard variable rate.
Cashback Mortgages
A cashback mortgage provides a sum of money or financial benefit to the borrower upon completion or later. This cashback can help cover property purchase costs like legal fees, surveying costs, stamp duty, removals, or home improvements. The cashback amount depends on the lender's terms, either as a percentage of the mortgage or a fixed amount. Some lenders require the borrower to hold or open an account to qualify. Typically linked to standard variable rate or tracker mortgages, cashback mortgages might have higher interest rates. Early repayment may incur a charge, including repayment of the cashback.
Offset Mortgages
​An offset mortgage allows homeowners to pay a lower interest rate by offsetting their savings against their mortgage balance. For example, on a £200,000 mortgage with £20,000 in savings, the homeowner pays interest on £180,000. This can be more advantageous as mortgage interest rates are usually higher than savings interest rates. Offset mortgages can either reduce monthly repayments or shorten the mortgage term. Additionally, savings this way do not earn interest, potentially reducing income tax. Offset mortgages are available with fixed or variable rates and may include higher interest rates than standard variable-rate mortgages. Tax treatment varies according to individual circumstances and is subject to change.
Second-Charge Mortgages
A second-charge mortgage, also known as a homeowner loan, is an additional mortgage secured against a homeowner’s property, distinct from their main mortgage. It allows homeowners to raise funds by borrowing against the equity in their home, calculated as the property’s value minus the outstanding mortgage. Lenders assess the available equity and the borrower’s ability to manage repayments on both mortgages. Interest rates for second-charge mortgages are typically higher than those for first mortgages. If the property is sold, the first mortgage must be fully repaid before any amount is paid off the second mortgage. Second-charge mortgages are by referral only.
Self Build Mortgages
Self-build mortgages are designed for individuals looking to construct their own homes, as conventional residential mortgages are unsuitable. These mortgages typically come with higher interest rates and require detailed plans, accurate cost projections, approval of building regulations, and outline planning permission. Lenders may also require a professional builder or project manager to oversee the construction. Funds are released in stages based on the build's progress, with the initial advance often covering land purchases. Borrowers usually need a larger deposit, as lenders typically only advance up to 75% of the property's value or construction costs.
Equity Release
If you're over 55, equity release allows you to access your home's value for various purposes, such as providing additional income, gifting to relatives, home improvements, purchasing a holiday home, or funding long-term care. It's crucial to seek independent legal advice before entering any equity release contracts, as it can be expensive and may impact your estate's value and eligibility for means-tested benefits. Consider alternative options, like selling your home or checking your benefits, to ensure equity release suits your needs and circumstances.
Please Note: Equity release, lifetime mortgages, and home reversion plans will reduce the value of your estate and can affect your eligibility for means-tested benefits.
Equity releases will be done on a referral/introduction basis only
Types Of Equity Release
​Equity release schemes fall into two main categories: lifetime mortgages and home reversion plans. These schemes allow homeowners to access their property's value through various features, such as protected equity, which guarantees a minimum percentage of your home's value remains for inheritance. Other options include impaired life schemes for those with health conditions, income release in staged payments, and flexible drawdown for cash reserves. It's important to note that equity release can reduce your estate's value and impact eligibility for means-tested benefits.
Lifetime Mortgages
A lifetime mortgage is an equity release scheme where a loan is secured against your property, providing a tax-free cash lump sum or regular income without monthly repayments. Interest accrues over time, compounding on the original loan amount. Typically, you can release 18-50% of your home's value. Advantages include retaining home ownership and potential growth, while disadvantages include reduced inheritance, higher interest rates, and the possibility of early repayment charges. The loan is repaid when the home is sold or upon death.
Please Note: You can get interest-only lifetime mortgages that require monthly interest payments, but most lifetime mortgages are offered with 'rolled-up' interest, which is paid off in a final payment along with the loan amount when the property is sold.
Home Reversion Plans
A home reversion plan involves selling part or all of your home to a reversion company for a tax-free cash lump sum while retaining the right to live in your home rent-free or for a nominal rent. You can guarantee an inheritance and share in any property value increase for the portion you still own. Advantages include no monthly repayments and the potential for higher funds at a younger age. However, you won’t receive full market value, and the plan typically cannot be reversed, impacting your tax position and benefits eligibility.
Drawdown Lifetime Mortgage
A drawdown lifetime mortgage allows you to release a maximum amount of equity in stages rather than all at once. This offers similar advantages and disadvantages to a standard lifetime mortgage but provides more control over cash flow. You retain full ownership of your home and only pay interest on the amount drawn, which may accumulate more slowly. However, interest rates are typically higher, and increasing the equity released requires a further advance application, which isn't guaranteed.
Home Income Plan
A home income plan allows you to release equity through a lifetime mortgage or home reversion plan, which is then invested in an annuity to provide a guaranteed income for life. While a cash lump sum may also be available, it could be limited. The income is based on annuity rates, age, and gender. Advantages include guaranteed lifetime payments and potentially higher income compared to standalone annuities. At the same time, disadvantages involve a commitment to the annuity, potential loss of funds if you pass away early, and possible impacts on state benefits.
Costs
When entering any equity release scheme, it’s important to consider the associated setup and ongoing costs. These may include arrangement fees to the lender, legal fees, and valuation fees. Additionally, you remain responsible for property maintenance and must maintain adequate building insurance to protect your investment and comply with lender requirements.
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