HOME TRUTHS

ABSOLUTE BEGINNER

I am thinking of leaving home and taking my first steps onto the "property ladder". Where do I start?

The start point has to be "what can I afford and what can I borrow?". Most lenders, and there are plenty of them, operate along broadly similar lines for determining how much they will lend. Typical criteria include:

Income levels

Normally three times earnings or, alternatively, two-and-a-half times joint salaries.

Age

Typical ranges start at 18 and look for repayment by the age of 65. Percentage of the value of the property sought by way of loan (known as loan to value).

Affordability

For affordability some attempt needs to be made to forecast the future as well as assessing the present. Current monthly commitments could change markedly if children are on the horizon! As for the present, don't forget to factor in the additional costs of buying a house and raising a mortgage into your calculation. These can include valuation fees, legal fees, arrangement fees and, in the case of higher loan to value cases, mortgage guarantee fees.

It is always worth finding out what documentation the lender will require to support your application, for example, pay slips or P60s to clarify income levels. Having the right documentation at the outset can ease the process considerably and speed things up.

The most important thing to do is to seek professional advice from a fully qualified mortgage adviser who can give you appropriate advice on what is right for you.

IF THE CAP FITS

I have come to the end of my current fixed rate and I am considering various options with my existing lender. I would be interested to know what the difference is between a fixed- and a capped-rate mortgage

A fixed rate is where you choose an interest rate that is fixed for a set period of time. This means you can budget with certainty for that period and even if base rate changes, you will pay the same monthly amount.

With a capped rate, your interest rate goes up and down with the lender's variable rate, but there is a maximum (capped) interest rate which it cannot go above. This means you will always know the maximum amount you will have to pay.

DRIVING AMBITION

I am planning to build a garage onto the side of my house. What sort of information do I need to forward to my mortgage company?

You will normally need to send a copy of the plans, planning permission and buildings consent (where necessary) to be placed with the title deeds. Your buildings insurance sum may need to be increased and your insurance company needs to be advised before work start.

STUDENT LOAN

My son is at university and most of his grant is swallowed up in rent. How easy is it to borrow money to buy a second property for him to live in?

You should approach your current lender to assess the feasibility of this proposition. Normally, the loan will be secured against your current main residence and your property will need to have sufficient equity available to cover your existing mortgage and the new amount you want to borrow.

However, if you do not have sufficient equity in your current property your lender may consider other options based on the property you want to purchase for your son. These could include unsecured lending, shared- ownership or a low start mortgage, but your personal circumstances will determine whether any of these are appropriate.

George Wise is managing director of NatWest UK Mortgage Services