How To Get A Mortgage After Being Bankrupt

Having poor credit history and especially being registered as bankrupt can make it difficult to get approved for a mortgage. However, there are still some options available and the longer ago that the bankruptcy occurred, the more chance you have of being approved for a mortgage.

In this article

What does bankruptcy mean?
Can I get a mortgage after bankruptcy?
How long after bankruptcy can I get a mortgage?
How will bankruptcy affect my interest rate?
How to get a bankruptcy mortgage?
If I get apccepted for a mrotgage, can it still be declined?
How long will I have to pay high interest on a mortgage for?
What does bankruptcy mean?
Should I wait longer before applying for a mortgage after bankruptcy?


What does bankruptcy mean?

The term “bankruptcy” refers to the legal process that allows someone with significant debts to clear their debts when they cannot pay their debt back. Some people apply for bankruptcy for themselves but in some cases a creditor will ask a court to make a debtor bankrupt.

Bankruptcy affects your credit rating for six years and if you want to take out a loan of over £500, you are legally required to tell the lender that you are bankrupt. 

Can I get a mortgage after bankruptcy?

Yes, it is still possible to get a mortgage after bankruptcy, but you may have to pay a higher interest rate. Many lenders will automatically decline somebody with a recent bankruptcy, but some specialist lenders will be prepared to provide a mortgage loan.

You might be able to get a conventional mortgage, buy-to-let, second charge or remortgage even after a bankruptcy, under certain circumstances.

How long after bankruptcy can I get a mortgage?

You cannot apply for a mortgage until you have been discharged.

This will usually be for a period of 12 months, but the length will depend on the court’s decision. Even when you have been discharged, it will take years of making payments on time to improve your credit score.

After being bankrupt, the length of time that it will take to be eligible for a mortgage will depend on the lender. Some lenders will approve a mortgage immediately after your bankruptcy is discharged but will request a larger deposit than a standard mortgage and will also have a higher interest rate. You may also have to pay larger mortgage arrangement fees for a mortgage straight after you have been discharged.

Most lenders will decline a mortgage application from someone who has only just been discharged after bankruptcy, so you would need to find a mortgage lender who specialises in lending to people who have been declared bankrupt.

The majority of lenders will want to see several years of building up good credit behaviour by making sure you pay all bills on time and would therefore be deemed trustworthy to lend to.

How will bankruptcy affect my interest rate?

It is very likely that you will be charged a higher interest rate than if you did not have bankruptcy on your credit record. Generally, the longer it has been since you were discharged, the better an interest rate you will be able to get.

If you are applying for a mortgage 1-2 years after you have been discharged, then you are more likely to be required to pay a large deposit and have a higher interest rate of up to around 4-8%. 

If you are applying 5-6 years after being discharged and have had no more adverse credit during this time, you should be able to get a mortgage approved with a 10% deposit. Other factors will also be considered when the lender is deciding how much deposit they require from you.

How to get a bankruptcy mortgage?

When you have been registered as bankrupt, you will be treated similarly to if you had other types of poor credit. 

For bankruptcy specifically, there are a few actions you can take to improve your chances of getting a mortgage, including:

Use a specialist mortgage lender

Using a standard mortgage lender will usually not be an option and you also risk having your mortgage application declined, which could further affect your credit report.

By choosing a specialist bankruptcy mortgage lender, you know that they provide mortgages to people who have been declared bankrupt.

Boon Brokers can find a specialist mortgage lender who is prepared to approve mortgages after being discharged.

Check your credit reports

You should check your credit reports to see if there are any irregularities. For example, the date of discharge could be incorrect, which could prevent you from having your mortgage approved.

If there are any irregularities on your credit report, you should get them corrected before you apply for a mortgage.

Have a large deposit

Having a large deposit is beneficial for any mortgage but particularly for bad credit and bankruptcy mortgages, as the lender will be looking to reduce the risk by requiring a large deposit.

Many lenders will request between 20-40% as a deposit, with very few lenders being prepared to lend over 70% of the property value to someone who has been registered bankrupt.

As well as being more likely to get your mortgage application accepted if you have a bigger deposit, you will also have a better chance of getting a deal with a lower interest rate.

Check eligibility

Before applying for a mortgage, you should check whether you meet the eligibility criteria. For example, some lenders require you to have been discharged from bankruptcy for at least three years and you must also have clean credit during that time.

Use a mortgage broker

A mortgage broker, such as Boon Brokers, will be able to review your circumstances to see which lender will be likely to provide a mortgage to you.

They will take into account how long it has been since you were discharged, how much deposit you have and all other relevant factors to find the most suitable mortgage deal.

It is easier to get any type of specialist mortgage where there are a limited number of available lenders when you use a broker to find the specialist lenders.

While some brokers will charge a fee for using their services, Boon Brokers does not charge client fees.

Rebuild your credit score

If you are not eligible for a mortgage yet, you should work on rebuilding your credit score by making sure your bills are always paid on time. You should also register for the electoral roll if you have not already.

Other ways to improve your credit score include keeping credit to a minimum and to limit the number of credit applications that you make.

You should avoid taking out payday loans, as this will make getting a mortgage more difficult.

Any type of adverse credit on your file after a bankruptcy will affect your chances of getting a mortgage approved, so it may be a better option to spend time rebuilding your credit score before applying for a mortgage.

You should also close any dormant credit accounts that you have because lenders will assess how much credit you have available, even if you have not been using the credit.

If I get accepted for a mortgage, can it still be declined?

Generally, if a bankruptcy was discharged more than six years ago, this should not show up on your credit file. However, there is a database called the National Hunter that holds details of people who have experienced bankruptcy.

When you apply for a mortgage, you might pass all of the initial checks but then when you submit your full application, the lender could check the Hunters Report and then decide to decline your mortgage application.

This is why it is a good idea to choose a mortgage broker who will review your specific circumstances to identify a lender that will accept your application, if there is one available.

How long will I have to pay high interest on a mortgage for?

After six years of being discharged, your credit report will no longer show bankruptcy and if you have had a healthy credit report since then, you should be accepted for standard mortgages with lower interest rates.

If you are in a position where you need to get a mortgage and only have the option of deals that have high interest rates, you should try to make sure that you are not fixed to the rate for a long time. 

It is better to take out a short fixed term, for example, for two years and then look for a better deal after those two years.

You should also check that there is no early repayment charge that would prevent you from switching to a better deal in a few years’ time.

There are other factors that will determine whether you can get a better deal in the future, such as your income and what other outgoings you have to pay.

You should try to reduce any other outstanding debt as much as possible before you look to switch mortgages, to have a better chance of getting a lower interest rate.

Should I wait longer before applying for a mortgage after bankruptcy?

This depends on your specific situation, as you might be able to get a mortgage without paying a very high interest rate.

Even if you are paying a high interest rate on a bankruptcy mortgage, you might be in a better financial position by buying a house instead of renting, for example. 

If you want to find out more about getting a mortgage after bankruptcy, contact our whole-of-market mortgage advice team and we can discuss your options. Boon Brokers is a fee-free whole-of-market mortgage and insurance brokerage.


How Much Equity Can I Release From My Home?

In recent years, equity release products have become more popular, as homeowners aged over 55 review ways to release equity in their property without the need to sell their home. 

If you are considering taking out an equity release product, this article should answer many of the questions you have and help you to decide if it is the best financial option for your circumstances.

In this article

How much equity do people typically release?
How does property condition affect equity release
What are my options with equity release?
Lifetime mortgages
Home Reversion plans
How to calculate the amount of equity you can release
Can I release more money if I already have an equity release plan>
What can equity release money be spent on?
What are the alternatives to equity release?


How much equity do people typically release?

The maximum amount you can borrow

In terms of the maximum amount you can borrow, you can usually borrow up to 60% of the value of your property. The exact amount that you are able to release will depend on a variety of factors, including the value of the property, whether there is any money still outstanding on the mortgage and the age of the homeowner. 

The condition of the property and even the property construction materials can also determine how much you are able to release.


Usually, applicants will release between 20% and 60% of the market value of their property through equity release. Most equity release companies will have a minimum equity loan available, to ensure that it is financially profitable for them.

Some homeowners may only require a smaller sum and do not want to take out the maximum amount, as they want to leave more inheritance to their family. The amount you want to release will depend on the plans you have for the future and whether leaving inheritance is a priority.

How does property condition affect equity release

If your property is in poor condition and is likely to require a lot of work before someone would buy it then this could impact how much you are able to release. Some lenders may even ask that you use some of the money to pay for repairs as a requirement of the agreement.

The lender will want to ensure that it is easy to sell the property when you die or move into care, so a property in poor condition may not be deemed as suitable by an equity release provider.

In a similar process to when you buy a property and the mortgage lender requires a valuation, the provider will require an assessment of the property to check its condition. They will be checking for any reasons that would make the property difficult to sell, such as it being an unusual type of property or if it is an area affected by flooding, for example.

What are my options with equity release?

There are two main options for equity release products:

Lifetime Mortgage

Lifetime mortgages are the more common type of equity release and generally you will never have to pay anything back while you are alive. This type of equity release involves a loan being secured against your property and when you die or go into long-term care, the loan is repaid when the property is sold. 

You retain ownership of the property and are able to stay living there until you die or move into long-term residential care. If you take the lifetime mortgage out in joint names, the last living person is able to stay in the property after the other dies or moves into residential care.

What is the minimum age for a lifetime mortgage?

The minimum age that you are able to take out a lifetime mortgage is usually 55 and some lenders have a minimum age of 60 or 65. When a lender is deciding how much to lend, the age and health of the homeowner are a vital considerations. 

The longer that the homeowner remains living in the property, the longer it will take the lender to receive the repayment of the loan, which is why some lenders stipulate a higher minimum age. 

Some lenders will be prepared to lend a larger amount if the homeowner has a health condition or a lifestyle habit such as smoking that is likely to reduce their lifespan.

With a lifetime mortgage, interest rates must be fixed or have a cap, as this condition has been set by the Equity Release Council. Years ago, the equity release market was not as well-regulated but if the lender is a member of the ERC, homeowners are more protected from mis-selling, for example.

An additional benefit of taking out a lifetime mortgage is that the product has a no negative equity guarantee, which is another level of protection. Historically, without the guarantee in place, situations could arise where the loan escalated to more than the price that the property was sold for. 

This meant that beneficiaries of the estate would be required to repay the outstanding amount after the property was sold. The no negative guarantee ensures that this situation is no longer possible.

Home Reversion plans

Home reversion allows you to sell a part, or all, of your property to an equity release provider. The minimum age for this type of product is usually higher than for lifetime mortgages. Providers usually only offer a home reversion product to homeowners who are aged over 60, or over 65 with some providers.

The percentage of the market value you are able to release will usually increase the older you are. You also have the right to live in the property until you die or move into permanent residential care, like you do with a lifetime mortgage.

People tend to opt for a lifetime mortgage rather than home reversion because the home reversion product does not provide the homeowner with the home’s market value. The other factor to consider is that you will no longer own your home and it can cost you a lot more to buy your home back than the amount you received in the equity release.

How to calculate the amount of equity you can release

The two main factors in the calculation are age and property value.

Examples based on a lifetime mortgage:

A 55 year old with a property value of £200,000 might be able to release £57,000.

To compare this to an older homeowner:

 A 75 year old with a property value of £200,000 might be able to release £100,000.

These figures will vary depending on the provider and the other contributing factors used in the calculations, but these two examples give an idea of how age affects the amount you could release.

If the property was valued at double the amount used in the figures, at £400,000, you could expect to be able to release double the amount.

For example, at 55 you could release £114,000 on a property valued at £400,000.

At 75, you could release £200,000 on a property valued at £400,000.

Can I release more money if I already have an equity release plan?

Yes, you may still be able to release more money if you have already taken out equity release, although this will depend on the type of plan you have and how much equity remains in your property.

If you think that you may want to release more money in the future, a drawdown policy may be more suitable for you. A drawdown policy allows you to take an initial lump sum and then you can take smaller amounts over time, in addition to the lump sum.

What can equity release money be spent on?

One of the main attractions of equity release is that you are able to spend the money on anything you want. With other products such as a loan or remortgage, there is stricter criteria around what you are allowed to spend the money on. For example, you may only be able to take out a loan against your home if you are spending it on home improvements, so it is adding value to your property.

With equity release, your money can be spent on whatever you want to spend it on. You could spend it on holidays, a car, a holiday lodge or simply have regular payments to allow you to live a bit more luxuriously.

You can even use your equity release money to provide financial support to your family while you are still alive, instead of as inheritance. They may require a lump sum to use as a deposit to buy a home and equity release will enable you to provide this for them.

What are the alternatives to equity release?

When you are deciding if equity release is right for you, you should consider whether there are any alternative options that could be more suitable. One of the key benefits of equity release is that you do not need to repay the loan until after you die, so there are no monthly repayments to make. 

With other types of finance, such as a standard loan, you would usually be required to make monthly repayments. You could also struggle to find a lender who will provide you with a standard loan if you are no longer working and earning a salary.

You should also consider whether you want to leave a certain amount of inheritance to your family. With a lifetime mortgage, you are usually able to ringfence a certain amount that is guaranteed to go to your beneficiaries.

Downsizing is generally the main alternative to equity release. If you are happy to sell your home and move into a cheaper property, then this could be a better option for releasing equity from your home. However, if you do not want to move home, then you may prefer the equity release option, as you can live in the property until you die.

If you are worried about how equity release could impact your family’s inheritance, it is a good idea to discuss it with them before you make your decision. They may be happier to get some financial support now rather than later, or they may want you to spend your money however you choose to. 

Equity release can provide you with the money to enjoy your later life in a way that you probably would not be able to without the released money. Before you make any decisions, you should speak to a specialist broker about your financial circumstances.

Boon Brokers provides free, impartial advice on financial products and we have a specialist team who help to arrange the best equity release products to suit your needs. 

Contact our team to discuss which options are available and to receive expert advice on how equity release would affect you and your family.


What Proof Of Income Is Needed For A Mortgage?

In this article

What do you need to apply for a mortgage?
What do your payslips need to show?
What do your bank statements need to show?
What kind of photo ID do I need?
Proof of address
Proof of income
Getting a mortgage with a new job or your own business
Declaring your outgoing finances
Proof of employment
Can I still get denied if I provide all of the required information?
How to improve your chances of getting a mortgage


One of the key factors that will determine whether you will have a mortgage application approved and how much you will be able to borrow, is your income. Mortgage lenders calculate mortgage affordability based largely around your income and outgoing finances. They will request to see proof of your income and additional documents before approving your mortgage. 

This article explains all of the information and documents you are likely to be asked for when you submit a mortgage application and what you can do to improve your chances of having your mortgage application approved.

What do you need to apply for a mortgage?

Mortgage lenders will request a set of specific documents as part of your mortgage application process. It helps to speed the application process up if you have all of the required documents ready to provide to the lender.

While the full set of documents that are required can vary from one lender to another, generally these are the documents you will be required to provide:

Bank statements and payslips

Many lenders will request you to send between 3-6 of your most recent payslips. You may be required to send the originals, or electronic copies may be accepted. The number of payslips required is likely to depend on how often you get paid. So, if you get paid weekly, for example, you will need to provide more payslips than if you are paid monthly.

Even though many lenders require at least 3 months of payslips as proof of employed income, there are some lenders that only require your most recent payslip or even a signed employment contract. If you do not yet have 3 months of payslips from your new job, you should contact a broker, such as Boon Brokers, to find a lender that can accept your contract or most recent payslip as proof of income.

Likewise, your most recent bank statements for the last 3-6 months will usually be required too. If you are self-employed, the lender may ask for your business accounts.

If you are unable to find your original bank statements, you can order more from your bank and your employer should also be able to provide you with replacement payslips on request. 

What your payslip must show (as required from the majority of lenders):

  • The same employee’s name as the name on your mortgage application.
  • Your net pay.
  • Pay date and tax period.
  • Any bonuses, overtime or commission 
  • The address that matches your application (if your address is included).

What your bank statements must show (as required from the majority of lenders):

  • A full month’s statement for however many months are requested from the lender.
  • Bank account and sort code numbers.
  • A running balance.
  • The logo of the bank/building society. 
  • Name of applicant(s) with full address

Other sources of income

If you are relying on any other sources of income for your application, then you must also show the appropriate proof of this in payslips or bank transactions.

Some lenders will also be happy to consider certain types of benefits such as:

  • Child tax credit
  • Working tax credit
  • Child benefit
  • Disability living allowance
  • Pension credit

If you receive any types of benefits, you should check with the mortgage lender you are applying with to see if they take benefits into account and which ones are accepted. 

Some lenders will be more flexible when it comes to accepting benefits as proof of income, so speaking to a broker can help you to find the ones that suit your type of income.

Photo ID

You will need to provide some form of photo ID, which enables the lender to comply with money laundering regulations and also to protect them against fraud.

The types of photo ID that are generally accepted are:

  • UK passport or photocard (signed).
  • EU photo-card driving licence (full or provisional). 
  • A national identity card.

Proof of address

The lender will also require documents that provide evidence of your address. Some lenders will require at least two of the following:

  • Latest utility bill.
  • Bank or building society statements (less than three months old).
  • Latest council tax bill.
  • Your latest HMRC tax demand.
  • Photocard driving licence or an older format driving licence. 
  • Council tax demand letter (the most recent).

Proof of income

Your proof of income is an important piece of evidence to provide to the lender and the following items are usually acceptable:

Getting a mortgage with a new job or your own business

If you are unable to provide the required number of payslips, either because you have recently started a new job, or you have set up your own business, there are lenders who will accept other types of proof of income. 

You may find that it is better to work with a broker who specialises in mortgages for self-employed workers, or can help with any other reason that you are unable to provide payslips for your application. 

Outgoing finances

When the lender is calculating how much you can afford to pay for your mortgage, they will need to check all of the details of your outgoing finances. This incorporates any regular payments that you are making, as well as other spending. 

Since the Mortgage Market Review in 2014, mortgage lenders in the UK must have much more accurate methods of calculating affordability, taking all outgoings into account. 

Previously, income was the main factor in approving mortgage applications and determining loan amount calculations, which resulted in a high number of mortgage holders missing payments. This is why the review took place, to ensure applicants could truly afford the mortgages they were applying for when all other relevant factors are considered.

The types of outgoing finances that lenders will request details of are:

  • Loan repayment plans (including car loans, credit cards, bank loans, overdraft payments etc.)
  • Any insurance policies such as life insurance, car insurance, home insurance etc.
  • Utility bills.
  • Food/grocery bills.
  • Any other type of debts you are repaying.

The lender will review your bank statements to see what the disposable income is each month. Expenditure such as socialising, buying clothes and other outgoings will be reviewed to determine how much you can afford to pay for your mortgage each month.

In the months leading up to your application, you should try to cut down unnecessary spending, so that you are able to show how much you can afford to pay when you do get your mortgage. 

However, it is important to be realistic about your outgoings, so your spending must be sustainable for the foreseeable future, at least until a point where you are earning more money.

Proof of employment

When you are applying for a mortgage, the lender will request your employer’s contact details. They may contact them to confirm that you are currently employed by them, and your employer may also be asked to verify your salary and any bonuses or allowances that have been claimed on the application.

Any discrepancies could lead to the application being declined or the lender could reduce the amount that they are prepared to lend.

The mortgage lender will usually also ask for confirmation regarding:

  • How long you have been employed by them.
  • What your job position/role is at their company.
  • Job security including factors such as whether you are on a short-term contract or are on a probationary period. 
  • If you have worked for the employer for under two years, the lender may also request information from your previous employer too.

Can I still get denied a mortgage if I provide all of the above information?

Providing all of the required documents will help you to get a mortgage approval but the details provided in the documents you give to your mortgage lender could result in your mortgage getting declined.

Mortgage applications can be declined for a wide range of reasons, such as:

The details you provided in the application are not matched by the proof

If you state a certain amount of income and the proof you provide does not match the amount you claimed, your mortgage could be declined, or the loan amount could be reduced. 

Sometimes, details such as bonuses that you regularly receive but are not guaranteed in your contract can be seen as a lower income because the lender wants to see guaranteed income.

Outstanding debt

One of the main considerations when lenders are calculating affordability is your current outstanding debt. If you have a large amount of debt, even if you are repaying loans consistently on time, it can still impact your application. 

If you have a large amount of outstanding debt, lenders will see you as a bigger risk than if you had little or no outstanding debt. If you have any store cards, credit cards, car loans or bank loans, these will be factored into your affordability. 

Therefore, in the time leading up to submitting your mortgage application, if you can reduce your outstanding debt, you are more likely to have your mortgage application approved.

Having outstanding debt will not automatically mean that your mortgage application will be declined. If your income sufficiently covers your debt repayments, bills, other outgoings and your new mortgage, there is a good chance your application will be approved.

Credit rating/financial history

One of the other significant factors in your mortgage application decision is your credit rating and financial history. If you have any missed payments, CCJs or bankruptcy on your credit file, this will affect your application. 

A few missed payments may not necessarily result in a declined application but may mean that you need to go with a mortgage lender with a higher interest rate, as you will be seen as a higher risk borrower.

Recent adverse credit will have a larger bearing than historical adverse credit. For example, if you had a missed payment over a year ago and have made every payment on time since then, it will be seen as lower risk than several recent missed payments. 

It is a good idea to check your current credit information using credit reference agencies such as Equifax, Experian or TransUnion. These companies are the ones that supply credit history information to mortgage lenders, so you will get a good idea of whether your credit history will affect a mortgage application.

If there are any adverse credit issues, you could delay submitting your mortgage application, to give you some extra time to improve your credit rating, to show that you have been making consistent, regular repayments.

Financial association

Another factor that could result in a declined mortgage application is if you are financially associated to someone who has CCJs, bankruptcy or missed payments on their credit history. To be financially associated to somebody, you will usually have a financial connection such as a joint account, loan or other type of finance.

We’ve created a separate blog post detailing many other reasons why your mortgage application may be denied, so for further details please refer to it.

How to improve the likelihood of having your mortgage approved

If you have poor credit, then it is better to try and improve your more recent credit history by making your payments on time and delaying the application for your mortgage. 

Your income plays a huge factor in how much you will be allowed to borrow, so if you are due a salary increase in the near future, it would be better to wait until the increase is applied and you have payslip evidence for the required number of months.

Saving up a larger deposit will also significantly help you to get your mortgage approved and it can also reduce the interest rate on your mortgage. Mortgage interest rates are largely based on your LTV (loan-to-value), so if you have a deposit of 20%, you can generally get a better deal than if you had a 10% deposit.

Your outgoings will also be scrutinised by the lender you are applying with, so try to reduce unnecessary spend and avoid what could be considered as high-risk transactions such as gambling, from showing on bank statements.


There are many different factors that are taken into account by mortgage lenders when they are deciding whether to approve a mortgage. By speaking to a mortgage broker such as Boon Brokers, you will be able to get advice on what proof of income is acceptable and how to find the best deals based on your income and other affordability calculation details.

Contact Boon Brokers today for free, whole of market, impartial mortgage advice.

Getting A Joint Mortgage With Parents

In this article

Gifting vs Loaning a deposit
Parents remortgagng for a deposit
Buying a home together with your parents
Guarantor mortgages
Tips for parents who want to help their child buy a house
Speak to a mortgage expert
Understand the tax implications
Update your will
Understand what you’re committing to
Have many discussions with your child about the mortgage
How long does a parent stay on a joint mortgage?
Is a joint mortgage right for our family?


With mortgage lenders requiring large deposits and having strict lending criteria, plus the added complication of high house prices, it can be very difficult for first-time buyers to get onto the property ladder. The average first-time buyer requires a £16,000 deposit, which many people are not in the financial position to provide in the early stages of their adult life.

Fortunately, there are options other than taking out an individual, standard mortgage that can help people to buy a home. As well as the government Help-to-Buy schemes and guarantor mortgages, another option for first-time buyers is to get a joint mortgage with parents.

While the idea of buying a property with your parents might not be ideal, if it is the most suitable option then it is worth considering if your parents are happy with the terms of the joint mortgage.

Gifting vs Loaning a deposit

Before you explore the idea of taking out a joint mortgage, an alternative option to consider is your parents gifting or loaning your deposit, rather than taking out the mortgage with you.

If your parents are able to provide the required deposit, this could help you to get your mortgage approved. Generally, lenders will prefer the deposit to be gifted, so that you are not accumulating additional debt that will need to be repaid. The mortgage lender will take the repayments into account when assessing your affordability.

There are some potential tax implications to be aware of if your parents pay your deposit. For example, if your parents die within 7 years of the payment, it could be subject to inheritance tax. This would only be applicable if their estate is valued at over £325,000.

Another tax consideration is that parents are able to give you £3,000 tax free per year, with an additional £5,000 on your wedding year. Additional payments would usually be subject to tax.

Parents remortgaging for the deposit

If parents do not have the money readily available to gift or loan, there are some other ways they can raise funds for the deposit. One possibility is to remortgage their own property to access their equity  and receive a lump sum for the deposit.

This will generally be a last resort because it would mean that parents have to make repayments on the remortgage loan. It could also potentially put their own home at risk, if they were unable to make the repayments for any reason.

Buying a home together

While being given a deposit from parents is an ideal option for some situations, this will not work for all circumstances. For example, you may need to borrow a larger sum than the lender is prepared to approve for a sole application in your name. If you apply for a joint mortgage with your parents, you could be able to buy a higher value property if they have income to boost your affordability.  

Another reason some people take out a joint mortgage with their parents is to make it easier to get an application approved. Many applicants who have been living at home with their parents up to the point of applying for a mortgage do not have much credit history. 

If they have never had bills to pay or taken out any credit, there will be no evidence of making regular payments or repaying debt. This lack of credit history can often result in individuals being declined for a mortgage application, as the lender will want to see evidence that the applicant is reliable at repaying finance.

We mentioned the tax implications of parents paying your deposit in the previous section and there is also a tax implication when parents take out a joint mortgage. As the property you are buying would usually be classed as their second property, parents could be subject to capital gains tax if the property gets sold in the future.

Joint mortgages can be a good option but lenders will generally only allow parents who are still employed to be on a joint mortgage, so their age and employment status will usually determine whether it is an option for you.

Guarantor mortgages

An alternative option to taking out a joint mortgage is to apply for a guarantor mortgage.  A guarantor mortgage is where a parent provides collateral to secure the mortgage loan. This could be in the form of using savings as collateral, or it could be secured against the parents’ home.

Lenders are more likely to approve these types of mortgages compared to the individual applying on their own, as there is less risk for the lender. This is an option that carries more risk for parents, as they could potentially lose their savings or even their home, if their child missed some mortgage repayments.

If the child defaults on their mortgage, the parents would be held responsible for the debt, which could result in the lender using their savings or in a worse-case scenario, repossessing their home.

Guarantor mortgages tend to have higher interest rates than standard mortgages, so this is one of the main disadvantages of choosing this type of mortgage.

Tips for parents who want to help their child buy a house

Taking out a joint mortgage with your child is not an easy decision and it should be given careful consideration before committing to it. If you have paid off your own mortgage, you were probably looking forward to having more financial freedom and taking out a joint mortgage will jeopardise this.

Before you make the decision, here are some tips:

Speak to a mortgage expert

Before taking out any large financial commitment, it is always a good idea to get advice from an expert. A broker such as Boon Brokers will be able to talk through the risks of taking out a joint mortgage and explain the tax implications and other details that you should be aware of. A broker will also be able to discuss what other options are available to determine whether a joint mortgage is the best choice.

A whole-of-market mortgage broker like Boon Brokers will also be able to find the best joint mortgage deals that are available on the market, which could save you a considerable amount of money. They can also prevent you from taking out a mortgage that is riskier than alternatives that are available.

Understand the tax implications

It is important that you understand how taking out a joint mortgage or paying a deposit will affect your tax liabilities. By seeking expert advice, you should be able to find a solution that has minimal tax implications.

Update your will

If you do decide to take out a joint mortgage, you should also update your will to indicate what you want to happen to your share in the property. If you have multiple beneficiaries, it is important that this is clarified.

Make sure you understand what you are committing to

Taking out a joint mortgage is a huge financial commitment and even though you will want to help your child to buy their own home, it might not be the right choice for your own financial circumstances. 
You should consider what would happen in the event that your child lost their job and was unable to continue repaying their mortgage. If you would not be in the position to cover the payments for a length of time, then you could end up in a really difficult financial situation.
Before you agree to take out a joint mortgage, talk through all of the terms and conditions with your mortgage broker, so that you know exactly how you could be financially affected by different scenarios.

Have many discussions with your child about the mortgage

It is important that you are clear about the details of the arrangement and that your child understands the consequences of missing a mortgage payment. If your child is not used to making monthly payments, this will be a big change to their financial management.  

If they have not been making rent payments, then they may find it hard to adjust to the new financial responsibilities of mortgage repayments. In the lead up to taking out the mortgage, you could ask your child to put the same amount into a savings account to show that they can afford the payments.

They can then use the money saved up to put towards the mortgage or solicitor’s fees, while giving you more confidence that they can adjust their lifestyle to make sure the mortgage payments are made each month.

It is also important to be clear about whether a deposit is being loaned or gifted, to avoid difficult conversations in the future. If you are providing the deposit on a loan basis, you will need to agree a repayment arrangement so there are no misunderstandings.

If your child has a partner who will be living in the property, or may even be on the mortgage, you should also discuss protecting your deposit in the event that they split up. You can pay for a solicitor to draw up a ‘Deed of Trust’ that will protect your money by showing how the equity in the house would be divided if they split up.

How long does a parent stay on a joint mortgage?

In an ideal situation, the joint mortgage would run for a couple of years (usually the fixed rate period to avoid early repayment charges). After this period, the child would hopefully be able to be approved for a new mortgage as a sole applicant. 

However, it could take longer than this and factors such as whether their income increases and whether they take on any additional debt will impact whether they are able to get a mortgage in their sole name. 

Another possibility could be that they are with a partner who wants to be added to the mortgage, which could mean lenders are willing to provide a joint mortgage based on their joint incomes. So, the parents could be taken off the mortgage and replaced by the partner.

Is a joint mortgage right for our family?

There are many factors to consider when deciding whether a joint mortgage is right for your family. Parents will need to decide whether they can take on the risk and the additional financial impact of taking out a joint mortgage. For example, it could mean that they are unable to take out a loan for something else like a car or buy a holiday home.

Parents might also need to consider what would happen if another child wanted to buy their own property and asked for financial support in the future. Taking out a joint mortgage with one child could mean you are unable to support another child, which could cause family problems.

If your child is unable to make repayments on the mortgage, this could also negatively affect your relationship and it could potentially cause a lot of arguments. However, if there are no issues with repayments, it could all go smoothly and you have been able to support your child in buying a home with no disruption to your own finances.

It is not just parents who need to evaluate the decision, children should also think about how a joint mortgage could affect their relationship with their parents. If being independent is important, having this financial tie to parents could be problematic. If parents stand to be financially impacted by missed mortgage repayments, they are going to take a bigger interest in how their child is spending money. Parents might have more opinions on their child’s financial decisions because of their vested interest. 

Contact Boon Brokers for expert advice on joint mortgages

If you are considering taking out a joint mortgage as a family, you should speak to a mortgage expert. Boon Brokers is an impartial, fee-free broker with whole-of-market access who can help you to decide whether a joint mortgage is the right choice for your family’s circumstances.

How Will Equity Release Affect My Family?

In this article

Does equity release diminish inheritance?
Different types of equity release plan
Minimising your interest
Home reversion
Will my family inherit any debt?
The non-financial impact of equity release on your family
The benefits of equity release
Utilising downsizing protection
Is equity release the right option for you?


Equity release has become an increasingly popular product in recent years, but it once had a bad reputation for having the potential to leave a person’s family in an adverse situation. Historically, many people who took out an equity release product ended up with a poor outcome, such as being in negative equity, leaving their family responsible for repaying the debt.

These days, stricter regulations in the financial sector ensure that equity release providers are more accountable for preventing the negative situations that used to be commonplace.

However, due to the poor reputation in the past, many people still associate negative connotations with equity release and this can prevent them from taking out a financial product that would be  suitable for them. 

There are lots of myths about equity release that are slowly being broken down, as people learn more about the improved regulations and terms of the products that are on the market today.

One myth that people worry about is they will not be able to move home or that the accumulated debt could exceed the value of their property. Fortunately, most equity release products now have a no negative equity guarantee and you are able to take out downsizing protection to ensure you are able to move home.

Equity release diminishing inheritance

The biggest concern for most people when taking out equity release is the financial impact that it will have on their family when they inherit their estate.

In the case of a lifetime mortgage being secured against a property, what most commonly occurs is that the property is sold to repay the debt. Then, if there are any funds remaining from the sale once the loan has been repaid, they would be passed onto the beneficiaries. There is no option for the beneficiary to keep the property, unless they pay off the outstanding loan amount. Aside from sale of the property, an equity release lifetime mortgage is most commonly repaid from a re-mortgage or savings.

It is important to know that even if you allow the interest on your lifetime mortgage to compound, this does not guarantee that the equity in the property will diminish. If the property grows in value, which is known as inflation, at a higher rate than the interest rate of the lifetime mortgage, the equity in your property will grow instead of diminish. Therefore, you should discuss with an equity release broker, such as Boon Brokers, the property inflation rates of your local area to understand how your property’s value may increase in the future. However, even if property inflation has followed a particular trend historically, this does not mean that it will continue in the same vein in following years.

Different types of equity release plan

There are two main types of equity release plan and it is important to understand the details of both, so that you know how each one will affect your family. 

Lifetime mortgages

A lifetime mortgage is the most common type of equity release plan, which is essentially a mortgage taken out and secured against your property. You still own the property, and you are able to continue living in the property until you die or move into permanent care accommodation.

If you are married or in a civil partnership, you can take out the mortgage in joint names. The benefit of doing this is that if one of you dies or goes into residential care, the other would be able to continue living in the property until they die or go into care accommodation. 

As well as protecting your spouse by taking out a joint lifetime mortgage, you may also be concerned about the financial impact that an equity release plan will have on your children and/or grandchildren.

Some people choose to take out equity release to be able to provide some money to their family, for example, to put down a deposit on a house. In this scenario, it is worth having a discussion with your children to discuss how an equity release plan would affect their inheritance.

You may even want to involve your children in any consultation that you have with a financial adviser, if your main concern is how the plan will impact them. In some cases, taking out equity release will significantly reduce the amount of inheritance that beneficiaries receive. How much their inheritance is affected will mostly depend on how large the loan is and how much interest accrues over time.

With a lifetime mortgage,  if you choose not to make interest payments, interest builds until you die or move into care accommodation. If this interest accumulation exceeds your property’s inflation, it will result in less inheritance for your beneficiaries.

There are some options that will help to ensure your children’s inheritance is less impacted. One choice, as mentioned, is to take out an interest payment plan, so that you are paying off the interest on the loan each month. Another option with equity release is to ringfence a certain amount of inheritance, so that you know they will definitely receive a certain amount.

No negative equity guarantee

As we mentioned earlier, a no negative equity guarantee will help to ensure that the situation does not arise where the outstanding loan is an amount higher than the value the property sells for.

All reputable lifetime mortgage providers should offer a no negative equity guarantee, so you should not have any trouble finding one who does. Depending on how much you borrow, the worst-case scenario for your family would be that you owe as much as the property is worth.

Minimising Interest 

If you want to ensure that your equity release plan leaves as much inheritance as possible, the drawdown option can help you to minimise interest. A drawdown option is where you only release money when you need it, rather than choosing regular payments or an initial lump sum.

By doing this, you are only paying interest on the drawdowns that you make and you can keep the interest down, as you will not be paying interest on the whole loan amount from the start.

This is one of the reasons that many people choose the drawdown option, to have a better chance of leaving an inheritance to their family.

Home Reversion

The other type of equity release plan is called home reversion. This is a more complicated arrangement than the lifetime mortgage plan, as you sell part, or all, of your home to the provider.

You are still able to remain living in your home until you die or move into residential care but in return for the benefit of this, the amount you receive will be significantly less than the property’s market value.

The key advantage of choosing a home reversion plan instead of a lifetime mortgage is that it enables you to ringfence an amount to ensure that your family receives the amount of inheritance intended for them. With the lifetime mortgage, it is not possible to accurately calculate how much inheritance will be left, as the interest accumulates until the date of death or moving into residential care.

Home reversion plans only account for 1% of the equity release market, indicating that it is much less attractive than the lifetime mortgage. Even though you are able to ringfence an amount of inheritance, your family is still likely to lose out financially due to them not benefitting from the true value of your property.

Will my family inherit debt?

Any company that is a member of the Equity Release Council must provide a no negative equity guarantee, which will protect your family and ensure that they do not inherit any debt.

There are some providers that are not part of the Equity Release Council that may not offer the guarantee, so it is important to check whether they are part of the ERC.

While your family will not inherit any debt when you use a reputable provider, they may have been expecting to receive some inheritance. In the event that the house sale is enough to pay off the loan but there is no money left over, this could upset your family, so you should carefully consider your choice. 

However, taking out an equity release product is your personal choice and may be the best option for your circumstances, regardless of how it affects your family. 

Non-financial impact of equity release on your family

You should also consider other ways that taking out an equity release plan will affect your family, as the executor of your will would have to make arrangements to sell your property. Therefore, it is a good idea to have a conversation with them so they know what to expect and what they will need to do upon your death.

Talking about your reasons for taking out equity release will help them to understand your choice. For example, rather than never knowing how their inheritance will benefit them, perhaps you want to see your beneficiaries benefit from their inheritance money whilst you are still alive if you decide to gift all/part of it to them. Or perhaps you want to enjoy luxurious holidays that you would otherwise be unable to have due to a lack of funds.

Maybe you want to enjoy the rest of your life without worrying about money. If you discuss your reasons with your beneficiaries, then your family will have less of a shock than if they were to find out at the reading of your will.

Discussing the benefits of equity release

Explaining to your family the main benefits of equity release can give them a better idea of your thought process. If you want to access the value in your home, usually the choice is between selling your property and downsizing, or taking out equity release. If you want to stay in your home and have the option to do so for the rest of your life, this is an important benefit to you.

Moving home can be stressful and you probably have an emotional attachment to your home. You will be familiar with your neighbourhood and may have a good local support network of friends, family and neighbours. If you move house to access the equity in your home, you would stand to lose all of that, unless you move to find a smaller property  nearby.

When you have worked hard all your life to pay off your mortgage, you have earned the right to spend your money, including the equity in your home, however you choose to. Accessing the value in your home could allow you to have a better quality of life, rather than not being able to afford things that make you happy.

You might even be able to prolong your life by being happier, joining a gym, taking holidays or accessing private medical care that helps to improve your quality of life, for example. 

Downsizing protection

If you choose a product with downsizing protection, you could have the best of both worlds. You could access the value in your property through a lifetime mortgage but later along the line, you could downsize. If the difference in the property sale and buying the new house covers the outstanding loan, you could then choose to repay it.

This way, your beneficiaries would still inherit your property, but it would be the smaller property that you moved into. In this situation, your family would not be required to sell the property after your death. They could keep it, or arrange the sale a few years later. They would have much more flexibility because there would be no loan secured against the property.

When you take out your equity release loan, one detail you should look out for is whether there is an early repayment charge. Just like with standard mortgages, many lifetime mortgages will apply an early repayment charge (ERC). So, in the scenario where you downsized and paid off your loan, you could be hit with a big financial penalty.

Your broker should be able to find you an equity release plan that offers you the most flexibility and security. The type of plan they should be able to find is one with a no negative equity guarantee and downsizing protection that allows you to sell your home without paying an ERC.

Circumstances can unexpectedly change and even if you do not think that you will need to downsize your property, you might need to, so having downsizing protection could turn out to be crucial.

Is equity release the right option?

There are many factors that determine whether equity release is the right choice for you and your family, and you should give the decision a great deal of consideration and seek expert advice. It is advisable to talk through your plans with your family if you are worried about how they will be affected.

Boon Brokers is a trustworthy fee-free broker who can help you to make this important decision by explaining all the pros and cons of taking out equity release and making sure that the terms suit your needs. 

Our experience in the equity release market, as demonstrated by our Equity Release Council membership, will enable us to find you the right finance product for your needs and it may be that a different product is more suitable. We will discuss your current financial circumstances and work out the best way to access the finance you need. If your main priority is to try and protect your family’s inheritance, then we can find the best product to enable you to do that.

Contact us today for free, impartial advice on equity release plans and any other financial products you may be considering. 


Can I Sell My House if I Have Equity Release?

In this article

Benefits of equity release
Moving with an equity release plan in place
How selling a home with equity release works
How does porting equity release work
Are there any alternatives to porting?
Types of equity release plans
What is downsizing
How does downsizing protection work?


Equity release products provide homeowners with financial options that may suit their needs as they get into retirement age. An equity release loan can boost regular income, or provide a lump cash sum, when other types of financial product would not be suitable at this later time in life.

In recent years, equity release plans have become very popular, with people looking to access the value of their property while they are still able to enjoy using the money. Some people use equity release payments to supplement their living expenses during retirement, or to pay for a luxury holiday, buy a caravan or have home improvements completed. 

When you take out an equity release plan, you can choose between regular payments, a lump sum of cash or a combination of both. You can then use the money however you choose, which could be to provide financial support to your family now, rather than waiting until you die. 

There are two main requirements that equity release providers require from applicants. The first part of criteria is that the applicant is at least 55 years old, although some providers will only provide equity release plans to people aged 60 and over. 

The second requirement is that the applicant has paid off their mortgage, or at least most of it, when they take out an equity release plan. There are additional criteria, which can vary between different equity release product providers, including the type and value of property they will accept.

Benefits of equity release 

One of the main benefits of taking out equity release is that there are no monthly payments to make, unlike most other types of loan. Therefore, if someone is retired and no longer has salary to cover monthly loan repayments, they are still able to access money if they want to. The loan is not repaid until the property is sold, which would be upon the death of the homeowner, or when they go into long-term care accommodation.

The other key advantage of getting an equity release plan, is that you are able to continue living in the property, while accessing the equity in it. The alternative option would be to sell the property and move into a smaller property to access the equity. 

For many people, the idea of remaining in their home is more appealing than selling and moving into a new property. Therefore, equity release can be a great solution for some homeowners once they reach 55 years of age and want to access the value they have built up in their property.

However, before taking out an equity release product, it is important to check that the terms of the agreement will not result in an unwanted situation later down the line, if your circumstances change. For example, if one person in a couple dies or moves into long-term care accommodation, the other person may want to sell the house. 

Moving with an equity release plan in place

The majority of equity release plans allow you to transfer the loan over to a different property, as long as certain criteria is met. The new property must meet the current lending criteria, which can be a problem for some people looking to move. Some lenders will not transfer a loan onto a property that is cheaper, for example, so downsizing can be difficult or even impossible.

There are lots of reasons why a person may wish to sell their property. They might want to re-locate to be closer to relatives, or they may want to reduce the amount of maintenance and upkeep by moving to a smaller, lower maintenance property. Many people choose to downsize as they get older and their children move out of home, as they no longer need as much space.

How selling a home with equity release works

Before agreeing to an equity release plan, you should check the details regarding whether you are able to move the loan to a new property, should you want to in the future. Another detail to check is whether there is a no negative equity guarantee, as without this, your beneficiaries could end up in situation where there is still money owed, even after the property has been sold.

A lender should allow you to move to what they deem to be a suitable alternative property, a term that they put in place to ensure they will not lose out financially by you moving to a new property.

In the same way that your original property was assessed to check whether it was suitable for securing an equity release plan against, the new property that you are looking at buying will be assessed for suitability.

If the equity release provider is happy with the suitability, you will be allowed to transfer the loan to the new property, otherwise known as ‘porting’.

How does porting equity release work

Before you start looking at new homes, you should speak to your equity release provider about the criteria they have for acceptable properties. They will usually refer you to a specialist equity release adviser or broker, who will discuss the types of properties that will be accepted for porting. They will also explain which type of properties you are not able to buy under the terms of the equity release plan.

The types of properties that are usually unacceptable include specialist retirement properties, as well as studio and basement flats. They will also generally decline properties such as static and mobile homes, farms or house boats. They do not want to take on a property that may be difficult when it comes to selling.

When you use a broker, as well as explaining which types of properties are going to be acceptable to your equity release provider, they will also take care of a lot of the work involved in porting. Therefore, using a broker who specialises in equity release will help to make the process much simpler and straightforward for you. 

A whole-of-market broker like Boon Brokers will also be able to find every single equity release plan on the market to recommend the one that is most suitable for your circumstances. They will be able to find you the most flexible options for equity release plans, so that you are able to move home and you will not be financially penalised for doing so.

Using a broker will also ensure that you receive expert advice regarding what happens in terms of the process of moving property and how it will affect your equity release plan.

Are there alternatives to porting?

Yes, there are some alternatives to porting and which option is the best one will depend on your specific circumstances.

When you speak to an equity release adviser, they may explain to you that porting is not the best option. In some cases, they might recommend that you repay the lifetime mortgage with the proceeds of the sale of the house and take out a different plan, with a cheaper interest rate.

There may be more equity release products available on the market now compared to when you took your original plan out and the new terms and details may suit you better. A broker will be able to find the best solution based on your existing loan terms and what else is now available on the market.

If you decide to repay your loan and take out a new equity release plan, it will generally take a lot longer than porting with your existing provider. You will go through the entire application process again with a new equity release provider, as well as the work involved in repaying and settling your existing loan. Your broker will usually perform a lot of the administration work involved in this, but it will still take longer than porting.

One of the key factors in deciding whether it is worthwhile repaying your existing loan to switch to a new one, is whether there is an early repayment charge to pay. If there is an early repayment charge, moving onto a new plan with better terms might not be financially beneficial, so a broker can calculate this for you.

Types of equity release plans

When you are looking at different types of equity release plans, you should be able to find some that offer more flexibility in terms of being able to move house. 

There are two main types of equity release plans, which are lifetime mortgages and home reversion plans. With lifetime mortgages, you take out a loan that is secured against your main residence, while you remain the owner. 

With home reversion, you are selling some, or all, of your property in exchange for a lump sum payment or regular payments, or both. The more common type of equity release plan is the lifetime mortgage, which provides more flexibility.

One option that has become popular is a downsizing protection plan, which you can take out with some lifetime mortgages. 

What is downsizing?

Downsizing is a very common process for people later in life, where they have lived in a large family home with multiple bedrooms, and they decide to move into a smaller property. 

There are many benefits of doing this, such as reducing the amount of housework, gardening and property maintenance. Larger properties generally have more expensive maintenance than smaller properties. For example, getting a new roof is considerably cheaper for a property with a roof that is half the size and redecorating a home that is half the size, is usually half the cost.

Another reason that people might downsize is so that their utility bills are lower, as smaller properties generally consume less gas and electricity than larger properties. People sometimes downsize into a property that is more suitable for older people, without steep stairs, for example. They may consider moving into a bungalow, so they do not have to worry about getting up and down the stairs as they get older.

The original home may have been purchased when there were children still living at home and now they have grown up and moved out, so the additional bedrooms are no longer required. There are plenty of reasons people look at downsizing later in life, so it is a good idea to keep these possibilities in mind when you consider taking out an equity release plan.

How does downsizing protection work?

Downsizing protection allows you to downsize your property and repay your equity release plan. By doing this, your beneficiaries will not have to arrange for the loan to get paid off when you die, and it should ensure they get more inheritance.

Around half of the equity release plans on the market now offer downsizing protection, which gives you the flexibility to downsize your property at a time that suits you.

Each lender has slightly different criteria for their downsizing protection. For example, some lenders will only allow you to move home at least five years after the start of your lifetime mortgage. 

Once you speak to your equity release plan provider about downsizing, they will arrange for your new property to be valued by an independent valuer. They will then assess whether the new property is acceptable to transfer the lifetime mortgage over to.

If the property is not acceptable to them, the lender will usually allow you to sell your property, repay the lifetime mortgage loan and you would not be required to pay the early repayment charge.

Equity release plans can be a great option for people later in life, but it is important to check that the plan you choose will not restrict you from selling your property. 

Call Boon Brokers today for free, impartial whole-of-market advice and we can find you the best equity release plans, while ensuring you have the flexibility to move home in the future.


How To Avoid Mortgage Early Repayment Charges

In this article

What is an early repayment charge?
What is a typical amount for an early repayment charge?
Can I get a mortgage without an early repayment charge?
How can I avoid paying an early repayment charge when I remortgage or move house?
Can I make overpayments on my mortgage without paying an early repayment charge?
Why do lenders charge an early repayment charge?
Should I remortgage?
Additional fees to consider


Before you take out a mortgage, it is important to identify any hidden costs or charges that could be applicable at a future date. Many mortgage deals have an early repayment charge, which could end up costing you a lot of money that you were not expecting to pay. 

In this article we explain what an early repayment charge is and how you can avoid paying it, as well as other factors you should consider if you are thinking about remortgaging your property.

What is an early repayment charge?

An early repayment charge (ERC) is a fee that is applied by your mortgage lender if you pay off all, or over a certain amount of, your mortgage loan earlier than the agreed period. For example, an ERC may apply if you remortgage. An early payment charge might also be applied if you overpay on your mortgage, so you need to check what the terms of your mortgage deal are and see if there is an early repayment charge applicable.

Most early repayment charges will only be applicable for a set number of years, for example, if you have a fixed rate for three years, an early repayment charge would apply if you pay off all, or over a certain amount of, your mortgage in this period. Paying off your mortgage does not just mean paying off the loan if you have enough money to do so. If you re-mortgage with another lender, this is classed as paying your existing mortgage off early.

What is a typical amount for an early repayment charge?

The amount of an early repayment charge will vary depending on the lender and the type of mortgage deal you have but typically, it will be a percentage of the outstanding mortgage and will usually be between 1% and 5%.

This might not sound like a huge amount when you are scanning through your mortgage terms, but you should calculate how much it will be before you take out your mortgage. As an example, if you were to borrow £200,000 to buy a property, then a 5% ERC on that loan would be £10,000. Even with a 1% ERC, the amount would still be £2,000, so it is quite a considerable charge. 

So, if you are thinking about re-mortgaging in that time, you must consider the financial impact of the ERC to decide whether it is worthwhile switching lender or waiting until there is no ERC to pay. 

In some mortgage deals, the percentage of the loan that is applied as the ERC will reduce over time. For example, you might have a 2% ERC in the first year and a 1% ERC in the second year. On an outstanding loan of £150,000, the ERC would be £3,000 in year one and £1,500 in year two. 

Some mortgages have a set ERC amount, such as £1,000 rather than a percentage of the mortgage loan.

Can I get a mortgage without an early repayment charge?

There are mortgages that have no ERC, but these will usually be tracker or standard variable interest rate mortgages and these products sometimes have higher interest rates than the mortgages available that have an ERC.

A mortgage broker, like Boon Brokers, should be able to help you  find a mortgage without an ERC, if you decide that you want to completely avoid the scenario of paying an early repayment charge.

Fixed rate mortgages change to a standard variable rate once the initial product period ends, which is when you usually won’t have to pay an ERC. This is why many people wait until the initial product period ends before remortgaging.

You can often save money by switching to a new mortgage deal but if you have a large ERC to pay, your new deal could end up costing you more than your existing one. You should ask a mortgage broker to perform the necessary calculations before making any decisions.

However, if you stay on a standard variable rate, it is likely that you are paying a lot more in interest than you would if you remortgage, so once your SVR kicks in, this is usually the best time to switch to a new mortgage deal. In some situations, the amount you save on interest can outweigh the amount of an ERC.

How can I avoid paying an early repayment charge when I remortgage or move house?

Generally, you will not be able to avoid paying the ERC unless you wait until your initial deal ends and the fee no longer applies. In some cases, you might be able to complain to the Financial Ombudsman. For example, if you were not informed about an ERC when you were advised about paying off your mortgage, you may have grounds for a complaint.

It is worth noting that an ERC is usually applicable if you choose to sell your house, or even if it is repossessed. When you first buy a property, you might not think that you will be selling it anytime soon, but your circumstances can change. You might lose your job, or need to move for work purposes, or a relationship could break down.

When you are taking out a mortgage, you should consider these possibilities because if you are in a position where you have no option but to sell your property, you may need to pay a large ERC. So, even if you think you will not be selling your property and the ERC does not affect you, there could be a chance that it will, if your circumstances change.

For this reason, it is better to try and find a mortgage where there is a low ERC, just in case you are in the unexpected situation of needing to sell your property.

If you are moving home, you might be able to avoid paying an ERC if your current mortgage deal allows you to move your mortgage to your new property, which is known as mortgage porting. Some lenders will offer this option, while others will not, so this is another detail to check before you agree on a mortgage deal.

Can I make overpayments on my mortgage without paying an ERC?

This will depend on your specific mortgage deal, but most mortgage lenders will allow you to pay up to 10% of your outstanding loan back each year, without paying any early repayment charge. For example, you could theoretically pay off £20,000 extra on a mortgage of £200,000 without incurring a charge but you will need to check the conditions of your mortgage.

When you overpay on your mortgage, you can pay it off much quicker, which will mean that the overall interest you pay can be significantly less. If you have the opportunity to overpay on your mortgage, this could be very beneficial to your long-term financial position. 

There are different ways that you can arrange to overpay on your mortgage. You could pay off a lump sum, for example if you inherited some money. Alternatively, you could increase your monthly mortgage repayments so that you are paying back more than the minimum amount required. If you are paying £500 each month but you have some disposable income, you could decide to pay £600 each month instead.

You could reduce your mortgage term by several years by doing this and save a lot of money that you would have paid in interest to the lender.

Why do lenders charge an early repayment charge?

The simple reason for lenders including an ERC is to make sure that they are able to make a sufficient profit from their mortgage deals. The work involved in processing the mortgage, performing finance checks, arranging property valuations and other parts of the process take time. As a result, they want to make sure that they do not put all of this work in and then the mortgage holder switches to a new lender.

The early repayment charge locks people into the mortgage for a set period, by which time the lender will have received enough interest to have recouped the cost of the work involved in processing the mortgage and will have made a good profit from the deal. 

If the mortgage holder does want to redeem their loan, either because they are selling the property, or want to move to a new deal, they will pay the ERC as a penalty. That ERC amount compensates the lender to ensure that they have made an adequate amount of profit from providing the mortgage, given that they would not be receiving the expected interest over the mortgage term.

Without an ERC in place, someone could move from one lender to another whenever they choose to, and the lender would lose out financially. Some mortgage deals allow unlimited overpayments but apply an ERC if you switch to a new mortgage deal with a new lender, the rules vary greatly between lenders and the different deals that they offer.

If you are thinking about overpaying on your mortgage, as well as possibly having to pay an early repayment charge, you should consider any other outstanding finance that you owe. If you have a personal loan or a car loan that has a high interest rate, or a credit card, it is probably going to be financially better for you to pay the outstanding debt rather than overpay your mortgage.

Should I remortgage?

There are lots of factors to take into account when you are deciding whether remortgaging is worthwhile but if you have moved out of a fixed rate period onto a standard variable rate, then it is generally a good idea to switch to a new mortgage deal. This is primarily because it can result in a significantly reduced interest rate.

Another time that it could be worthwhile moving over to a new mortgage deal is if you have paid off enough of your mortgage to bring your loan to value (LTV) into the lower bracket. This will usually mean you can get a mortgage deal with a better interest rate. 

For example, when you took your original mortgage loan out, you might have been on a 85% LTV mortgage. This means that you have a loan that is 85% of the value of the property, as you would have paid a deposit of 15%.

After several years of repaying your mortgage and possibly overpaying too, you could find that your LTV drops to 80% or even less, which will usually enable you to obtain a mortgage with a better interest rate. Your loan-to-value percentage can also fall if your propery’s valuation increases. In this case, you would still need to consider any ERC that is applicable to work out whether it is better to switch to the new deal.

Additional fees to consider

Comparing your existing mortgage deal to a new one is not particularly straightforward, especially if you are making calculations based on early repayment charges and other fees that are applicable when you switch to a new mortgage deal. 

You may need to pay a deeds release fee to your existing lender, as well as a booking fee, arrangement fee and valuation fee to your new lender, and any conveyancing fees that are applicable. Therefore, it is important to review every single cost involved in switching to a new mortgage before you decide to go ahead with the remortgage.

The best way to ensure that you make the right decision, is to work with a whole-of-market broker, who will be able to work out the financial comparisons to get you the best deal or advise you against remortgaging until a later date. Some brokers will charge a client fee for their services, which could again mean that you could be financially disadvantaged by remortgaging.

However, Boon Brokers provides a a free expert mortgage advice and arrangement service, as we charge mortgage lenders our fees instead of our clients. We would be happy to talk through your options to find the best mortgages with no ERC, or with a low ERC. Or if you have an existing mortgage, we can help you to decide whether it will be financially beneficial for you to remortgage. 

Get in touch today for free impartial and whole-of-market mortgage advice. Our consultations are free of charge.

What is a 100% Mortgage and How Does it Work?

In this article

Why are 100% mortgages so rare?
The new 100% mortgage
Temporary deposits
Using a home as security
Advantages of a 100% mortgage
What are the risks of a 100% mortgage
Potential negative equity
Higher interest rates
No guarantor
What alternatives are available?
Low deposit mortgages
Help to Buy or Shared Ownership
Deciding if a 100% mortgage is right for you


A 100% mortgage is a mortgage loan that is for the entire value of the property, rather than for a percentage of the value, such as 90%. Essentially, you do not need to save up any money to put down as a deposit.

Just over a decade ago, 100% mortgages were offered by many mortgage lenders, including standard high street banks, not just specialist lenders. By offering 100% mortgages, more people were able to afford to buy a property without the need to have saved up a large sum of money for a deposit. However, the mortgage market has changed, and 100% mortgages are now very rare.

When you are searching for a mortgage product, you will see that the majority of lenders will require a deposit of at least 5% or 10%. For a property valued at £300,000, this would mean that the mortgage applicant would need to be able to put down a 10% deposit of £30,000. 

For many people, that size of deposit is unachievable, which would mean they would have to look at lower value properties or try to find an alternative mortgage that does not require as large a deposit.

Prior to 2008, lenders would offer 100% mortgages, so no deposit was required from the applicant and in some cases, the lender would even loan more than the value of the property.

Why are 100% mortgages so rare? 

In 2008, mortgage regulations became stricter, as regulators identified that high numbers of applicants were being approved for 100% mortgages that they could not afford and then ended up missing payments and even losing their property. 

The stricter regulations have forced lenders to perform a more comprehensive affordability check on applicants and the request for a deposit helps to prevent a situation where there is negative equity. Negative equity, where the outstanding mortgage loan amount is higher than the value of the property, is a bad situation for both the lender and the homeowner, as they both stand to potentially lose out financially.

The new 100% mortgage

Most mortgage lenders now request a minimum of 5% deposit before they will approve a mortgage, which in the UK is an average sum of £10,000.

However, there are some 100% mortgage products but they are not as straightforward as the lender providing 100% of the loan, in the way that lenders historically did. The current 100% mortgage deals on the market do offer a 100% mortgage loan but there are certain requirements that must be met.

One of the requirements will be that you have a good credit score and also that you have somebody such as a relative, who is prepared to act as a guarantor to put down a temporary deposit on your behalf.

Temporary deposits

There are a few lenders who will provide a 100% mortgage on the basis that a temporary deposit is put down by a guarantor who will usually be a parent or other relative. The deposit is then placed into a savings account that is used to offset against the mortgage. 

The deposit must remain in the account until a set date, usually when the mortgage holder has paid off the same amount of the loan as the value of the savings. The guarantor would not be able to withdraw any money from the account for the set period, but in some circumstances, they may be able to earn interest on their savings while it is held in the offset account.

Using a home as security

Instead of using savings to offset against a 100% mortgage, another option for a guarantor is to use their home as security. This is a more complicated arrangement and if the 100% mortgage holder misses loan repayments, by law, the lender could demand that the guarantor’s house is sold to repay the missed payments.

Usually, the guarantor will need to own the property outright or at least have paid off the majority of their mortgage to be considered for this option.

Advantages of a 100% mortgage

There is one key benefit of being able to obtain a 100% mortgage, which is that you will not be required to save up a large deposit. For many people, a 100% mortgage supported by a guarantor is their only realistic way of owning their own property or being able to afford a property in the price range that they want.

What are the risks of a 100% mortgage?

The reason that lenders now place requirements such as offset savings or another property as security against a 100% mortgage, is to manage their risk. Rather than the risk lying with the mortgage lender, with these types of 100% mortgages, the guarantor accepts the risk instead.

The risks to them are that they could lose some or all of their savings, or they could even lose their home, if they have agreed to secure the loan against that. Before a guarantor decides whether to agree to the terms of the 100% mortgage, they should consider how big the risk is to them.

They should decide whether the person they are acting as guarantor for will be able to manage their mortgage repayments and will not put their savings or home at risk. If the homeowner defaults, the parent or relative may never get their savings back, so it is a decision that must be taken cautiously. 

Even if the guarantor trusts the mortgage applicant to be responsible with their financial commitment to paying the mortgage, a change of circumstances could mean that they were unable to make the repayments. 

For example, they could lose their job, or their contracted hours could be reduced, lowering their salary. They could split up with a partner who was contributing towards paying the mortgage and then couldn’t afford the mortgage on their own. All of these scenarios should be taken into account.

If the homeowner defaults on their mortgage, as well as losing out financially, the guarantor could also have a difficult situation to deal with, in regards to damaging their relationship with their child or relative.

Potential negative equity

Other risks with a 100% mortgage include that the potential for there to be negative equity is higher. If the outstanding loan amount is £250,000 and the property market dips, the property could very quickly lose value and after six months, the loan would still be close to £250,000, while the value could be £235,000, for example.

The quicker that you pay off your mortgage, the less chance of negative equity, unless there is a dramatic crash in the property market.

Higher interest rates

One of the disadvantages of taking out a 100% mortgage is that most of these products are only available at higher interest rates than standard mortgages. You might also find that it is much more difficult to find this type of mortgage, so you could spend a while trying to find one, unless you work with a whole-of-market broker, such as Boon Brokers.

No guarantor

The main dependency of being able to obtain a 100% mortgage is that you have somebody who agrees to act as a guarantor and take on the risk themselves.

Even then, they will need to meet the criteria to make them eligible for being a guarantor, including good credit history and having enough savings or equity in their property to offset against the loan.

If you do not have someone willing to be a guarantor and who qualifies to be one, then you will not be able to obtain a 100% mortgage.

What alternatives are available? 

There are a number of additional options still available even if you are not able to have a 100% mortgage approved, including:

Low deposit mortgages

If the idea of saving up a 20% deposit is out of the question, there are mortgage deals for lower deposits of either 5% or 10%. The mortgage lending market adapts frequently to reflect the strength of the economy and to protect lenders from new risks that may appear, such as the COVID-19 pandemic. In one or two years, there could be more low deposit mortgage deals available. There might even be more 100% mortgage options if you choose to wait a while.

The other factor that could help you to buy a house is if the housing market dips and house prices start to come down. If you are still earning the same amount, you will find it easier to find a property you like at a lower value, which would also mean a smaller deposit would be required. For example, if a property was worth £250,000 in 2021 but in the next year sees a decline in value to £230,000, a 5% deposit would be £11,500 instead of £12,500.

Help to Buy or Shared Ownership 

Other options that can help you to get onto the property ladder include the government schemes Help to Buy and Shared Ownership. There are a few different schemes available, such as the Mortgage Guarantee Scheme launched in April 2021, where a 5% deposit is required. There is also the Help to Buy: Equity Loan, where the mortgage applicant buys a new-build property that is available under the scheme and the government lends up to 20% of the purchase of the property. A 5% deposit would be required under this scheme too.

Shared ownership allows you to purchase a percentage of a property. You would search for the properties where this option is available and typically, you could own 60% of the property and you would pay rent on the 40% share. This arrangement can get a bit complicated if you want to sell the property, but it is a good way of getting onto the property ladder without saving up a big deposit.

Deciding if a 100% mortgage is right for you

A 100% mortgage can be the ideal option for people who have a guarantor but there are many risks to consider, especially the consequences of missing payments on the mortgage. Instead of facing the financial repercussions yourself, your guarantor would also be negatively impacted, so you have to decide between you whether that is a risk you want to take.

If you are not in an urgent situation where you need to buy a property immediately, waiting for more mortgage products to become available could work in your favour. It could also give you more time to save up some deposit, so that you have more options available in 12 months or however long you decide to wait.

The mortgage market can change quickly, so just because there are no options for you right now, that does not mean that you will never be able to afford your own home. 

Before you consider applying for a 100% mortgage, or any other financial product, it is advisable to talk to an independent broker for advice. They will be able to explain all of the current options available to you, including government schemes and they will be able to make you aware of any potential risks that you may not have considered.

Contact the Boon Brokers mortgage team for expert, fee-free and impartial advice on whether a 100% mortgage is right for you or whether another product would be more suitable.


Mortgage Broker Costs 2021: How Much Do Mortgage Brokers Charge?

By choosing to work with a mortgage broker to find your mortgage deal, you can benefit from their in-depth expertise in the market, which can help to find you the best mortgage deal available to suit your specific circumstances.

Whether you need to use a specialist broker due to having adverse credit or any other circumstances that standard mortgages are not suitable for, or you just want to find the best financial mortgage deal, a broker will help with this.

There are many different brokers available to choose from, but they do not all offer the same level of service and the pricing structures can vary significantly.

In this guide, we provide a comprehensive review of the mortgage broker fees across the market, answering some of the most frequent questions about the subject of mortgage brokers.

After reading this guide, you should be able to decide which type of mortgage broker is more suitable for your budget and to match you with the right deal for your requirements.

In this article

What fees do mortgage brokers charge?
How much do mortgage brokers charge in fees?
Mortgage broker fees or commission- which is better?
Is fee-free mortgage advice too good to be true?
How much commission do mortgage brokers receive?
Is a mortgage broker fee worth the money?
How many homebuyers use a mortgage broker?


What fees do mortgage brokers charge?

A broker fee is a fee charged by a broker to execute transactions or provide their services. Brokers charge broker fees for a multitude of service, such as consultations, delivery, purchases and negotiations.

The pricing models from one broker to the next can be very different, so you should ask about, or research, the costs before you agree to use your mortgage broker and you should ask for their prices in writing.

These are the different pricing models that brokers operate with:


Some mortgage brokers do not charge any fees at all to the mortgage applicants, as they make their money from charging commission to the mortgage lenders instead. This means that you get their service without any cost to yourself, which will be very welcome when you are paying fees for solicitors and other costs associated with buying a property and moving house.

Hourly rate

There are also some brokers that will charge by the hour, where costs can quickly escalate if there are any complications that they need to spend more time on. You should try to get an estimate of how many hours they are going to charge you for, as this should be fairly standard.

Fixed charge

Brokers with a fixed charge provide a more transparent approach to their fees but you will still need to make sure that there are not going to be any further costs that are not included in the initial quote. Typically, a fixed fee mortgage broker cost will range between £300-£600, with the average cost in the UK currently sitting at £500, according to the Money Advice Service. This is backed up by recent research we undertook with mortgage brokers across the UK, which revealed that the average amount charged was £559, but with some brokers charging more than £1,000. This fee may be charged upfront or on completion of the mortgage transaction.


With this model, the broker charges a percentage of the mortgage that the applicant is taking out. Therefore, with higher value properties you could end up paying a lot more than the average mortgage broker fee. For example, if you are taking out a mortgage for £250,000 and they are charging 1%, you will be paying them £2,500, which is significantly higher than the average mortgage broker cost.


There are also a number of brokers who will use a combination of these models, for example, they might charge you an hourly rate and then also get commission from the lender. However, it is worth noting that all mortgage brokers receive the commission from the lender. This means that any client fee charged will be in additional income for the broker.

How much do mortgage brokers charge in fees?

All mortgage lenders pay a mortgage broker a commission or procuration fee, typically being 0.35 percent of the full loan size. Any additional fees charged to the client are optional and are individual per broker. Some brokerages, such as Boon Brokers, operate on a fee-free basis for their clients.

Mortgage broker fees or commission – which is better?

There is not a simple yes or no answer to this question, as it all depends on the quality of your mortgage broker.

According to our recent research, 59% of mortgage brokers across the UK charge fees, therefore most mortgage brokers do charge fees for advice.

However, the price that each mortgage broker charges does not always correlate to the level of service that you will receive.

There are some excellent mortgage brokers that will charge fixed client fees, just like there are some exceptional brokers that operate by not charging the client a penny.

To keep your costs down, the ideal option is to find a reputable broker that will not charge you any costs for their services. At Boon Brokers, we’re proud to offer an exceptional service without any cost to the mortgage applicant.

A good way of finding out whether your mortgage broker is of high quality is to research any feedback and reviews provided by previous clients through a third-party review site such as Trust Pilot.

Sometimes the best approach to deciding on your mortgage broker is to talk to the advisor that you will be working with to see whether you get on with them and trust them to provide you with the best advice.

You don’t want to appoint someone and then feel that they are difficult to work with or are not putting your best interests first. Your gut feeling might just steer you away from a broker that isn’t going to deliver a good level of service.

You should also make sure that any broker that you select is authorised and regulated by the FCA (Financial Conduct Authority), either through a network or directly, as this will provide you with protection if you are given poor mortgage advice.

Is fee-free mortgage advice too good to be true?

When you are provided with something for free, the natural instinct is to wonder whether it is too good to be true.

Of course you would prefer to pay no costs but if the reality is that you are using a poor broker, you could end up worse off financially than if you paid a fee and used a better broker.

However, due to the fact that brokers can operate on a commission basis through the lender, mortgage brokers such as Boon Brokers can give you the highest level of service without incurring you any costs.

Typically, brokers that apply costs will do this because they have large overheads such as employee salaries and office costs to pay for.

At Boon Brokers, business operation costs are kept to a minimum by utilising cutting edge technology that reduces the cost of running the business.

There really isn’t a catch when it comes to fee-free brokers, but as we mentioned previously, you really do need to be confident in the quality of the service that the broker will deliver.

When you are looking at the different broker options available to you, you should be looking for brokers that offer whole-of-market access. This means that they have access to every lender on the market, so they can find the best possible deal available to suit your needs. The survey we at Boon Brokers conducted* found there was a general lack of understanding around what mortgage brokers can or should offer. Worryingly, one in seven of those who have used a mortgage broker didn’t know if they had whole of market access.

You should remember that the financial implication of obtaining a mortgage deal with a better interest rate can be very significant. Over a 25 or 30-year term, even a small percentage of difference could end up costing you thousands of pounds more or less over the full term.

However, you can move to a new mortgage deal once your fixed rate ends, so this is another factor to consider when you are thinking about whether to go with a fee-free broker or one with a charge.

If you are paying an additional £500 or more every two or three years when you switch mortgages, you are going to end up paying a huge amount in mortgage broker costs.

This is why it is a good idea to try and find a high-quality fee-free broker that you trust, so you can go back to each time you want to find a new mortgage deal.

How do mortgage brokers get paid?

Mortgage advisors are paid on a commission basis paid by the mortgage lender. The mortgage lender will give a commission of around 0.35 percent of the full loan size after the mortgage is completed by the advisor on behalf of their client.

So, for a £100,000 loan, this would calculate at £350, or for a £200,000 loan, they would be receiving £700. The lender will benefit from providing a larger loan, so it makes sense for them to give the broker a higher fee for the work that they do in arranging the mortgage.

However, for the mortgage applicant, the mortgage broker will not be doing more work (If any) to find a good deal on a £200,000 loan compared to a £100,000 one for the same applicant. Therefore, they cannot justify charging you a percentage of the loan.

Mortgage commission is a topic that has been heavily scrutinised in the past by regulators, with concerns that high commission fees can lead to brokers recommending specific products that might not offer the best deal to their clients.  Research Boon Brokers undertook with 2,000 mortgage holders showed that 13% of people worry a broker will push you into a deal they want you to take because they get better commission*.

However, if the commission was completely removed then it could lead to brokers charging high fees for their services, so this is another reason to make sure the broker you choose is regulated by the FCA.

Is a mortgage broker fee worth the money?

In many cases, using a broker will enable the mortgage applicant to get a mortgage deal that they couldn’t find on the market themselves.

With a lower interest rate deal, mortgage applicants can quickly recoup the £500 that they pay on their broker costs. Usually, the deals a broker can find are much better than the ones you will find with a high street lender, so financially, working with a reasonably priced broker can definitely be worth the money.

However, that isn’t taking into consideration that there are numerous brokers who will find you the best mortgage deals on the market, saving you a large amount of money, while providing that service for free.

If you are planning on going with a broker that charges a fee, you need to look at how their fee stacks up against the savings that you will make by using them, to determine whether they are worth the fee or not.

You should also ask your broker why they apply a charge in addition to the commission, as this will also indicate whether it is worthwhile paying that fee or not.

One broker can go above and beyond what is expected, doing all of the work for you, while other brokers might do the bare minimum of work for their fee.

You should ask the broker what their fee covers before you agree to work with them, so you will know what you are getting for your money. There is a lot of paperwork and other admin tasks involved in arranging a mortgage deal, which can be really time consuming, so choosing a broker that is going to do a lot of the work for you will definitely be a big advantage.

A good mortgage broker will be able to identify the best mortgage deal to suit your circumstances but they should also be able to make the process much smoother.

They will know which lenders will provide a loan to you and for how much, by assessing the information that you provide them with. The better knowledge they have of the mortgage market, the quicker and easier the application process should be for the applicant.

A mortgage broker should also be able to advise the applicant on the requirements of the lender, for example, which documentation they will request.

If they already know what each lender will require from you, before the lender asks for it, this will significantly speed up the process.

If you want the mortgage application to go through quickly, so that you don’t miss out on a property, then this type of insight will come in very useful.

Your broker should have exclusive access to the best deals on the market, deals that you would not be able to get hold of if you were looking directly for lenders. They might have worked with specific lenders for years and agreed a special type of deal that will save you a large amount of money.

What you want from your broker is vast knowledge about the market, as well as their guidance and support to get your mortgage processed as smoothly as possible.

Again, taking a look at reviews of each broker you are considering using, will help you to get a better idea of how much work and effort your broker will provide in order to save you a lot of the hard work.

The reviews on sites such as Trust Pilot should also show you how easy it is to get hold of your broker, as this can be a very frustrating part of the mortgage application process; not being able to ask questions when you need to can hold up the application.

If a client has been unable to contact their broker when they’ve needed to, there is a good chance that they will mention that in their review. You should ask your broker what their working hours are and the best way to contact them.

We also have a full dedicated article based on choosing the perfect mortgage broker for you, if you’d like to learn more before beginning the mortgage process.

How many homebuyers use a mortgage broker?

Despite the fact a good mortgage broker is likely to be able to find homeowners a much better product than they could secure themselves, well over a third of mortgage holders (39 per cent) have never used one.

We conducted an independent survey of almost 2,000 mortgage holders* to ask how many had used a mortgage broker when securing a mortgage in the past. We discovered that on average 39 per cent of homeowners had never used one, but the number rose to half (49 per cent) of over 55s. This means many homeowners could have reached full ownership of their property – having now paid off their mortgage – without ever having had professional advice to help them secure the best deal. Over a lifetime of mortgage payments that potentially means they’ve been paying out thousands of pounds on unnecessary interest and fees.


Younger homeowners are more likely to consult an expert, with three out of four (74 per cent) of 25 to 34s saying they have used a broker for a home loan.

Regionally, those in the South East and Wales are most likely to have used a mortgage broker, whereas those in Northern Ireland, Central England and Scotland are least likely. Edinburgh was the city where people were least likely to have consulted a broker, followed by Belfast and Norwich. Southampton was the city where homeowners were more likely to have taken advice from an expert, followed by Manchester and London.


Buying a property is usually the biggest outlay that you will ever have and as well as the price of the property, there are many additional costs such as mortgage arrangement fees, interest fees, solicitors’ fees, valuation fees etc.

Therefore, you should be as financially savvy as possible and the more expertise and help you have with your mortgage application process, the better chance you will have of getting the right deal for your specific requirements.

If there are any factors such as poor credit history, or you are self-employed or any other reason that makes it harder to get a standard mortgage, a broker will be the best option for finding deals for your situation.

You shouldn’t get put off with the idea that a free service means is a lower quality service, because brokers like Boon Brokers can give you the best level of service but make their money by charging the lender rather than the mortgage applicant.

However, you should do enough research about the broker to find out whether they are going to be the best option for you. A broker that has many years of experience working in the industry will be able to save you a considerable amount of money because they will know exactly which deal works out best financially, so you should take your time in selecting one.

If you want to save yourself some money then you should select a broker that has a fee-free model but make sure you don’t just pick any fee-free broker, find out as much information about them as you can. Recommendations from friends, online reviews and other online research will help you to form an idea of whether a broker has a good reputation, or if you should stay well clear.

How Much Does The Average Mortgage Cost?

Mortgage rates

Calculating the cost of a mortgage is not a quick, straightforward task, as there are lots of different types of costs and variables that must be considered. As well as varying costs such as the interest rate on loans, there are different loan term lengths and there are often fees applicable to mortgages. When calculating the average cost of a mortgage, the following areas should be reviewed:

In this article

Average UK mortgage interest rates
Average UK mortgage length
Average mortgage payment in the UK
How to lower monthly mortgage payments
Average total cost, including interest, of a mortgage

Average mortgage interest rates as of May 2021

Rate TypeAverage Interest RateSource
2 year fixed rate, 95%
2 year fixed rate, 75%
3 year fixed rate, 75%
5 year fixed rate, 75%
10 year fixed rate, 75%
Standard Variable

Please note that mortgage rates vary greatly from one lender to another, as well as there being different deals available with the same lender for different circumstances e.g. Loan to Value amount, applicant’s credit history, etc. 

interest rates

Therefore, the mortgage interest rates are very attractive for mortgage applicants right now, although there are other factors that are not as attractive, such as the requirement to provide a deposit in order to get a mortgage loan and higher house values. 

The current market shows that Halifax are offering an initial rate as low as 1.23% (2 year fixed with 75% maximum LTV). At the other end of the rates scale are the bad credit mortgages, with Kensington providing an initial rate of 5.59% (5 year fixed and 85% maximum LTV). So there really is a huge gulf in the interest rates that are available, depending on the applicant’s circumstances and the details of the loan.

The average mortgage length

The length of the mortgage is another contributing factor in the cost of the mortgage. In the UK, mortgage terms start from as short as six months and can be as long as 40 years. The most common length of the mortgage is 25 years but 30, 35 and 40 years are now available with some lenders. 

People choose to take out longer terms to allow them to lower their monthly payments, as they are spreading their loan repayments out over a longer period. However, this means that they will end up paying more interest throughout the lifetime of the mortgage (we show the typical calculations for this further on in the article).


With house prices have risen dramatically since 2009, mortgages over longer terms have increased in popularity, as applicants look for solutions to affording the house that they want. The average UK house price in March 2009 was £154,452, as published by the Office of National Statistics, compared to the much-increased average price of £234,853 in 2019. This has made it much more difficult for people to buy property, particularly with bigger deposits required now too. The government’s Help to Buy scheme has been introduced to help improve house affordability.

House prices also vary massively depending on the area of the UK, with people in London facing the most expensive house prices and therefore the biggest mortgage loans.

What is the average mortgage payment in the UK?

The average mortgage payment in the UK is £723, with an interest rate of 2.48%. This is based on the most recent study conducted by Santander in 2018.

This study was based on first-time buyers and the monthly payments are broken down into the following regions:

  • London £1,280
  • NI £451
  • North West £537
  • Scotland £510
  • Yorkshire £521
  • West Midlands £596
  • South West £723
  • South East £935
  • Wales £535
  • North East £450
  • East Midlands £577
  • East of England £862

Monthly payments generally include the mortgage interest payments, the capital repayment of the mortgage and any mortgage protection premiums. The huge range in different monthly payments by region is largely down to the house prices in each of the areas. If a mortgage arrangement fee has been charged (typically around £1,000), this could also be added into the loan repayments, although you can usually choose to pay this separately instead.

It’s also important to note that the monthly payments on a mortgage depend on a large number of variables, such as:

  • Type of mortgage i.e. interest only, repayment or a combination of the two
  • The interest rates that the applicant is eligible for
  • Length of the mortgage term
  • Amount of deposit paid
  • House price
  • Interest rate type (fixed or variable)

In order to get the lowest monthly payments, the applicant would need to be approved for a mortgage with the lowest interest rates. Applicants with a bad credit history will often have to work with a specialist lender that will apply higher interest rates and therefore higher monthly payments. The amount of the loan and the length of time it is taken out over will also have a significant bearing on how much the monthly payments are.

How to lower monthly mortgage payments

Choosing an interest-only mortgage would be much cheaper each month than taking a repayment mortgage out, as you are only paying off the interest on the loan and not any of the loan. 

This is another way that people can afford homes but it means that after the mortgage term finishes, the loan is still outstanding, therefore you wouldn’t own your home. Interest-only mortgages have become more difficult to get approved, with other solutions such as Help to Buy mortgages becoming more popular.

lower payments

Putting down a larger deposit will considerably lower the monthly payments, or extending the term length can always bring the payment down. 

It is also possible with some mortgages to make overpayments so that you can pay the mortgage off quicker, reducing the amount of overall interest that is paid.

Average mortgage cost (including interest)

The average total mortgage repayment in the UK, based on the average house price and average mortgage rates, would be between £285,000 and £385,000 – this is dependant on whether housing prices and interest rates increase or decrease however. Therefore, it’s vital that you keep track of current pricing trends when it comes to considering a mortgage.

Furthermore, the current average mortgage debt in the UK is currently around £130,000, with an average monthly repayment of around £700. The average outstanding mortgage term in the UK is 20 years.

The total cost of a mortgage includes a number of factors, including the amount of loan, the mortgage term, interest rate and any fees for arranging the mortgage (if applicable). When you are provided with a mortgage illustration, the provider will show you exactly how much you will be paying off over the full term of the mortgage. 

To see the difference in how the term length and interest rates affect the overall cost, using the average house price indicated by HM Land Registry of £227,000 these are the overall costs:

25 years with interest rate of 1.70% = £284,247 (which includes £54,247 in interest)

30 years with interest rate of 1.70% = £295,522 (which includes £65,522 in interest)

25 years with interest rate of 4.33% = £381,018 (which includes £151,018 in interest)

As you can see from these calculations, the high-interest rate of 4.33% that is typical for someone with bad credit, would result in paying nearly £100,000 more over a 25-year period. Based on the1.70% interest rate, by choosing a 30-year term rather than a 25-year term, there would be over £10,000 more interest to be paid. 

Many homebuyers do not fully consider how much interest they will be paying off on a mortgage, as the interest rate seems quite small. However, a mortgage is a huge sum of money and 25 or 30 years is a long time to pay interest on a loan, which is why the interest accumulates to such a significant amount.

So, that gives you an insight into how critical it is to find the lowest mortgage rate possible and that it is often a better option to spend some time improving your credit score in order to ensure you are not paying much higher amounts of interest over the term.


Before applying for a mortgage, you should check your credit score to look for any issues that may impact the interest rates that you are eligible for. Saving up a bigger deposit and choosing a smaller loan term will also help to ensure that you are not paying as high a total amount of interest.

There are some ways you can help to boost your credit score before you apply for a mortgage, such as updating your records on the electoral roll and ensuring you make your payments on time. Your debt-to-credit ratio will be taken into account, so paying off any credit cards can significantly improve your credit score. If you have any missed payments or have CCJs then it may be better to wait until these are cleared from your credit history, so that you can get approved for a mortgage with a lower interest rate.


The cost of mortgages varies greatly depending on the variables outlined above but the good news is that there are plenty of options available to suit people’s different circumstances. There are solutions for homebuyers who want to be able to afford a home, or for those who are looking to ensure that their overall interest amount is as low as possible. 

For people who would otherwise struggle to afford a home, the option to choose a longer-term can be their best solution. However, for those looking to keep interest payments to a complete minimum, a shorter-term and finding the lowest possible interest rate is the best solution for that situation.

If you would like any advice on the available mortgage solutions for your requirements, call Boon Brokers today.