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Mortgage Matters Direct is one of the largest mortgage specialists in the UK. Part of Arun Estate Agencies Ltd, we specialise in mortgages and mortgage-related protection and have helped arrange over £20 billion in home loans.
Speak to one of our experts
01634 731 555
Speak to one of our experts
01634 731 518
Email us
What does Income Protection Insurance cover?
Income Protection pays a regular monthly sum while you’re unable to work. It would normally kick in as soon after your employer stops paying you sick pay to ensure a cost-effective solution based on your particular needs.
There are different levels of Income Protection that you can opt for. It can be used to replace your full income until you retire or it can be tailored to protect your mortgage and associated costs for a specified period.
You can significantly reduce the cost of this protection by limiting the payout for a maximum of 2 years of a claim. There are a range of additional benefits with this that your mortgage advisor would be happy to discuss with you.
Should I take out Income Protection Insurance?
In the UK, it is estimated that the average family is just 32-days away from the breadline.
23% of families don’t save anything on a monthly basis, so they could be even closer to a financial disaster if income tap was turned off. Even if you do save, the UK average is £321 a month, so it would take over 8 years to save the equivalent of the average UK gross salary of £27,600.
If your income stopped coming in, then it would only be a matter of weeks before your family’s finances started to creak. Income Protection can give you the cover you need at a time when you need it the most.
There are two main types of policy you can opt for:
● Level Term pays a fixed sum that’s agreed with your insurance provider.
● Decreasing Term pays out an amount that depreciates until your policy ends. This is commonly used to cover your repayment mortgage balance which will, of course, decrease as the years go by. This type of policy is considerably cheaper than the Level Term since the pay-out figure is steadily going down.
What does Life Insurance include?
● Sudden death by natural causes.
● Murder.
● Manslaughter or accident.
● Suicide – with some policies.
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Common Life Insurance exclusions:
Insurers are unlikely to pay out if the policy holder’s death is determined to be a result of putting themselves at obvious risk. However, higher-quality products may also cover suicide after 12 months of premiums being paid.
Should I take out Life Insurance?
It’s not nice thinking about what will happen after we die, but it’s important to be practical – especially if dependents share your home. A Life Insurance policy will ensure that your mortgage will be paid if the worst should happen.
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If you’re an employee, mortgage providers use your income as proof of their earnings and ability to afford mortgage repayments. However, if you’re self-employed, things work a little differently.
For sole traders
Mortgage lenders will first look at whether your income has increased or decreased in recent years. If it’s trending upwards, an average income will be determined based on the past few years’ figures. However, if your income is currently lower than previous years, this is the figure which will be used as a basis of their mortgage offer.
For contractors
Mortgage lenders are becoming more familiar with the income structure of contractors, with many now using daily rates of pay to calculate the amount they’d be happy to lend. Obviously, the longevity and stability of the income will be used to determine the borrowing allowed, so make sure that you keep adequate records.
For partners or company directors
Mortgage lenders will first look at whether your income has increased or decreased in recent years, they will also read your accounts to see how the turnover is being accounted for. Many lenders now look at not just net profit, but also retained profits, salary and dividends.
What documents do I need?
To apply for a self-employed mortgage, you usually need to have your accounts – prepared by a chartered accountant – or your self-assessment SA302 year-end tax calculation to hand, as proof of your income.
How much can I borrow?
As a rule of thumb, lenders tend to allow you to borrow up to five times of your annual income for all mortgages. So, the fact that you’re self-employed shouldn’t get in the way with how much you are allowed to borrow.
However, if you’ve been self-employed for less than three years, this may affect how much you can borrow. If you only have one year’s accounts, you may need to have a deposit of at least 10% or a guarantor. To find out how much you can borrow based on your self-employed annual income, use our handy mortgage calculator.
Mortgage calculator
How we work
Since 2000, we’ve helped more than 100,000 homeowners find the right mortgage for them. How? By listening. We understand that everyone is different. Whether it’s your lifestyle or how you earn a living, no two applicants are the same – so why should your mortgage be?
Before recommending anything, we like to get to know you, starting with your current financial situation and future aspirations. We’ll also like to know a little bit about the home you hope to buy. Will you live there yourself or rent it out? Is it a house or flat? Only then can we apply our years of knowledge and expertise to negotiating the best deal for you.
We use cutting-edge mortgage sourcing software to deliver up-to-the-minute information, rates and products from all of the major lenders – on and off the high street. And our expertise doesn’t stop there. Once we’ve connected you with the right mortgage, we’re on hand right up until your completion date – answering your questions and offering our assistance, helping you through the tough bits.
No two buyers
are the same – so
why should your mortgage be?
Ask us anything, get us to jump through all of the mortgage hoops on your behalf and it won’t cost you a thing.
And what’s more, our advice is completely free.
That’s right. Ask us anything, get us to jump through all of the mortgage hoops on your behalf and it won’t cost you a thing. It’s only when we’ve successfully processed your mortgage at the exchange of contracts stage that we’ll ever make a charge.
We also may receive a fee from the mortgage lender – the exact amount will be on your mortgage illustration. To find out which mortgage lenders we have a fee arrangement with, just ask us.
Reach us any way you like –
at any time
However you’d like to chat through your mortgage options – whether it’s in person, over the phone or by email, we’re here to help. Simply get in touch to get the ball rolling.
Talk to a team member
Get in touch
Get in touch
Mortgage Matters Direct is one of the largest mortgage specialists in the UK. Part of Arun Estate Agencies Ltd, we specialise in mortgages and mortgage-related protection and have helped arrange over £20 billion in home loans.
Speak to one of our experts
01634 731 518
Email us
Select your calculator
How much is my home worth?
This calculator is based on a capital repayment mortgage. This figure should only be used as a guide, please contact us for personal and accurate advice. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
How much can I borrow?
The salary calculator is based on Gross salary x 4.5 times salary allowed and is an indicator of what some lenders my lend. We haven’t taken into account any current commitments they may reduce this amount. This figure should only be used as a guide, please contact us for personal and accurate advice.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
What will my mortgage cost?
This calculator is based on a capital repayment mortgage. This figure should only be used as a guide, please contact us for personal and accurate advice.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
Stamp Duty calculator
This calculator is based on first time or single house ownership different rates apply for a second home.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
How much can I borrow for a Buy-to-Let
This calculator is based on a capital repayment mortgage. This figure should only be used as a guide, please contact us for personal and accurate advice.
Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured upon it.
Why use a mortgage broker?
Choosing your mortgage is perhaps the most important financial decision you’ll ever make. The only thing which stands between you and saving – or spending – thousands of pounds in extra interest, is what you do now. Researching the different types of mortgages, comparing mortgage interest rates – it all takes time and let’s be frank, when you’re looking for your new home or looking to remortgage, time is often at a premium.
This is where we come in. A mortgage broker will do all of the leg work for you, taking the time to understand your own specific situation and pointing you towards the mortgages which would work best for you.
We understand the market, inside and out – after all, we do this every day – and we’d never recommend anything which we weren’t completely confident was in your best interest. You don’t even have to take our advice.
Come and speak with us, our advice and consultations are completely free.
So, even if you already have a mortgage in mind, it’ll cost you nothing to run this by our mortgage advisors – we are confident we could secure you an even better rate.
When you go with Mortgage Matters Direct and you’ll have access to:
Thousands of different mortgages from over 75 lenders.
Exclusive mortgages which aren’t available on the high street.
Genuine advice from a network of industry leading mortgage experts.
Mortgage interest rates explained
Fixed rate mortgage
With a fixed rate mortgage, the interest rate is fixed. So, regardless of what happens to the variable rates, your rate and monthly payment will be fixed for a limited period. The key benefit for this type of mortgage is the consistency which it offers. The amount which you pay back will remain the same each month, irrespective of rising – or falling – interest rates.
Talk to us about our fixed rate mortgages
Variable rate mortgage
Choose a variable rate mortgage and the interest rates set by lenders will rise and fall throughout your mortgage term – and so will your mortgage payments. If your income is bonus-based or if you want to make unlimited overpayments, then a variable may suit your needs more than a fixed rate would.
Talk to us about our variable rate mortgages
Discounted mortgage
Some lenders offer a discount on their standard variable rates as an incentive for their new borrowers. The discounts are usually for a short period after which time the standard variable rate is applied. With a discounted mortgage, your monthly payments can rise or fall, in line with rising or falling Interest Rates.
Talk to us about our discounted mortgages
Base Rate Tracker
The Bank of England sets its base rate each month independently from mortgage lenders. The interest charged on a tracker mortgage is linked directly to – and will rise and fall in line with – the Bank of England base rate.
Talk to us about our base rate tracker mortgages
Capped mortgages
Capped mortgages set a maximum limit on the interest rate charged. Payments and rates may rise or fall, but will not exceed this maximum limit. The maximum limit will usually last for a limited period only.
Talk to us about our capped mortgages
What is an interest only mortgage?
With an interest only mortgage, you do not make any capital repayments. Your monthly payments are correspondingly lower but the original capital sum remains outstanding at the end of the term.
Bear in mind, there are risks associated with this type of mortgage and your home may be repossessed if you can’t make the final repayment. It’s up to you to make arrangements to cover the final balance – for instance an ISA, investment fund or pension. This is otherwise known as a repayment vehicle. Without a repayment vehicle in place, you may have to sell the property to repay the mortgage balance.
Advantages
of an interest only mortgage
Lower monthly repayments.
Flexibility – With lower monthly repayments, you are free to decide which type of repayment vehicle or strategy suits you best.
Profit – Okay, so it’s not guaranteed but being in control of how the remainder of your mortgage is paid can allow you to make savvy investment choices which could even result in you making a profit after you’ve paid back your mortgage.
Disadvantages
of an interest only mortgage
You pay more overall – because you’re only paying the interest on your mortgage, the original sum which you’ve borrowed will remain the same – and accruing interest – until you clear your mortgage.
You could lose your home if you fail to repay the whole amount – we can’t stress this enough. It’s up to you to ensure you have a repayment vehicle to cover the actual cost of your home and to monitor the risk involved with this.
What is a capital repayment mortgage?
A capital repayment mortgage requires you to repay both the interest and the original capital sum gradually over the term of the mortgage. Provided all payments are made in full and on time, the full loan is guaranteed to be repaid at the end of the term.
Advantages
of a capital repayment mortgage
Peace of mind – you can’t put a price on the peace of mind that comes with the knowledge that your mortgage will be repaid in full at the end of the mortgage term.
Less risk – There’s always risk involved in borrowing such large sums of money. However, compared to interest only, capital repayment has less risk attached to it.
Reduce your borrowing – because each month you’re paying off some of the loan, your loan value is decreasing every month – and so is the interest you’ll have to pay.
Disadvantages
of a capital repayment mortgage
Higher monthly payments.
Although the pros for a capital repayment mortgage far outweigh the cons, you should think carefully about your options. Also, bear in mind, you could always choose a combination of the two.
What is a part-and-part mortgage?
Some lenders will allow you to combine interest only and repayment plans. This may be useful if you have a repayment vehicle already in place or if you require short term funding and are able to make a capital repayment from a yearly bonus, for example.
Just how much of your mortgage is capital repayment and how much is interest only will depend on your lender. If you’re interested in finding out more about this kind of mortgage, pick up the phone and we can talk you through it.
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