Mortgage Retention Explained: A Quick Guide

What Is Mortgage Retention?

Mortgage retention occurs when a lender decides not to release the full mortgage amount upfront. Instead, they hold back a portion of the funds until certain conditions are met. 

This usually happens when a surveyor identifies essential work that needs to be done on the property to bring it up to the expected standard or value.

How Does Mortgage Retention Work?

Let’s break down the mortgage retention process to give you a clearer picture of what to expect if you find yourself in this situation.

When you apply for a mortgage, the lender will typically arrange a valuation survey of the property. 

If the surveyor spots significant issues that need addressing, they’ll report this to the lender. Based on this report, the lender might decide to impose a retention.

For example, let’s say you’re buying a house for £200,000 and you need a mortgage of £180,000. The surveyor identifies £10,000 worth of essential repairs. 

The lender might then offer you £170,000 initially, holding back the remaining £10,000 until the work is completed.

Once you’ve carried out the necessary improvements, you’ll need to provide evidence to the lender. 

This could be in the form of invoices, receipts, or even a follow-up inspection. If the lender is satisfied, they’ll release the retained funds to you.

It’s important to note that you’ll still need to pay the full purchase price to the seller at completion. 

This means you’ll need to find a way to cover the retained amount in the short term, which can be a significant challenge for many buyers.

Image showing how mortgage retention works

What Can Trigger A Mortgage Retention?

You might be wondering what kinds of issues can lead to a mortgage retention. 

While every lender has their own criteria, there are some common culprits that often crop up:

  • Damp and mould. This is one of the most frequent reasons for retention. Lenders are particularly wary of damp issues as they can indicate more serious structural problems.
  • Structural defects. Any issues with the building’s integrity, such as subsidence or major cracks, are likely to raise red flags.
  • Electrical problems. Outdated or faulty wiring can be a major safety concern and often needs addressing before a lender will release full funds.
  • Roof repairs. A damaged or ageing roof can lead to numerous other issues, so lenders often want to see these fixed.
  • Central heating and boiler issues. An inefficient or broken heating system can significantly impact a property’s value and livability.
  • Japanese knotweed. This invasive plant can cause serious damage to buildings and is a common cause for concern among lenders.
  • Asbestos. While not always immediately dangerous, the presence of asbestos can be a major issue that lenders want addressed.

It’s worth noting that minor cosmetic issues or small repairs are unlikely to trigger a retention. 

Lenders are primarily concerned with problems that could significantly affect the property’s value or safety.

Image showing all the issues that triggers a mortgage retention

What Are Your Options If Faced With Mortgage Retention?

If you find yourself in a situation where a lender is proposing mortgage retention, you have several options to consider:

  1. Accept the retention. If you’re comfortable with the lender’s terms and have the means to cover the shortfall and carry out the work, you can proceed with the purchase. Remember, you’ll need to fund the repairs yourself before the retained amount is released.
  2. Negotiate with the seller. You could try to renegotiate the purchase price based on the survey findings. The seller might agree to a lower price or offer to complete the work themselves before the sale.
  3. Find alternative funding. If you’re set on the property but can’t cover the retention, you might consider other funding options like personal loans or credit cards. However, be cautious about taking on additional debt.
  4. Seek a different lender. Not all lenders have the same policies. You might find another lender who’s willing to offer the full amount without retention.
  5. Walk away. If the issues are too significant or you can’t find a workable solution, it might be best to withdraw from the purchase. While you’ll lose some upfront costs, it could save you from a potentially costly mistake.

Each option has its pros and cons, and the best choice will depend on your circumstances, financial situation, and the specifics of the property in question.

Image showing all the options when faced with mortgage retention

How Can You Avoid Mortgage Retention?

While you can’t always prevent mortgage retention, there are steps you can take to reduce the likelihood of it happening:

  • Get a full structural survey. This is more comprehensive than a basic valuation and can highlight potential issues early on. It might cost more upfront, but it could save you from nasty surprises later.
  • Do your homework. Before making an offer, try to gather as much information about the property as possible. Ask the seller about any known issues or recent repairs.
  • Budget for potential work. When saving for your deposit and other costs, try to set aside some extra funds for possible repairs. This can give you more flexibility if retention does occur.
  • Choose your property carefully. If you’re risk-averse, you might want to focus on newer properties or those that have been recently renovated, as they’re less likely to have significant issues.
  • Work with an experienced mortgage broker. They can help guide you towards lenders who might be more flexible or have different policies regarding retention.

Remember, while these steps can help, they don’t guarantee you’ll avoid retention. It’s always best to be prepared for the possibility.

What If The Lender Imposes 100% Retention?

In some rare cases, a lender might impose 100% retention. This means they’re not willing to release any funds until certain conditions are met. 

It’s an extreme measure usually reserved for properties with severe defects or those deemed uninhabitable in their current state.

If you’re faced with 100% retention, your options are limited. You could try to negotiate with the seller to have them complete the necessary work before the sale, or you might need to consider withdrawing from the purchase altogether.

In these situations, it’s crucial to seek professional advice. A mortgage broker or solicitor can help you understand your options and the potential risks involved in proceeding with the purchase.

Consult a mortgage broker after mortgage decline

The Bottom Line

Mortgages being retained by lenders shouldn’t derail your property purchase. 

Understanding what mortgage retention is, why it happens, and how to navigate it will equip you to tackle this challenge if you encounter it. 

Remember, buying a property is a big investment, and retention is ultimately a safeguard for both you and the lender. 

A good mortgage broker can be an invaluable ally in dealing with retention issues. They can find flexible lenders, explain your options, negotiate better terms, and provide market insights.

With their expertise, you’ll be well-prepared and supported throughout your property purchase, making the process as smooth and stress-free as possible.

Need the right broker? Get in touch. We’ll connect you with a qualified mortgage broker who can guide you through the process and ensure you have the best advice and support.

Mortgage Redundancy Insurance: Is It Worth It?

What Is Mortgage Redundancy Cover?

Mortgage redundancy cover, also known as redundancy insurance or mortgage protection insurance redundancy, is a financial safety net designed to help you keep up with your mortgage payments if you lose your job. 

In today’s uncertain job market, many homeowners worry about how they’d manage their mortgage if they were made redundant. 

This type of insurance can provide peace of mind and financial protection during challenging times.

How Does Redundancy Cover Work?

When you take out mortgage redundancy cover, you’re essentially buying a policy that will step in to cover your mortgage payments if you’re made redundant. 

Here’s how it typically works:

  • You pay regular premiums to maintain your cover.
  • If you’re made involuntarily redundant, you make a claim with your insurer.
  • After a waiting period (usually 30-90 days), the policy starts paying out.
  • The insurance covers your mortgage payments for a set period, often up to 12 or 24 months.

It’s important to note that most policies won’t cover you for voluntary redundancy or if you knew redundancy was likely when you took out the policy.

Image to show how mortgage redundancy cover works

Why Might You Need Redundancy Cover for Your Mortgage?

Losing your job can be stressful enough without the added worry of potentially losing your home. 

Mortgage redundancy cover can provide a financial buffer, giving you time to find new employment without falling behind on your mortgage payments.

Consider this cover if:

  • You work in an industry with a higher risk of redundancies.
  • You don’t have substantial savings to cover your mortgage if you lose your job.
  • You’re the primary earner in your household.
  • You want extra peace of mind about keeping your home if you face unemployment.

Remember, your home is likely your most valuable asset. Protecting it should be a priority.

What Does Mortgage Protection Insurance Redundancy Cover?

Typically, mortgage protection for redundancy covers your monthly mortgage payments if you’re made involuntarily redundant. 

Some policies offer additional benefits:

  • Coverage for mortgage-related costs like buildings insurance
  • Contributions towards utility bills or council tax
  • Option to cover other debts like personal loans or credit cards

Most policies will pay out for a maximum of 12 to 24 months, giving you time to secure new employment. However, it’s crucial to check the specific terms of any policy you’re considering.

Image to remind them to read the fine print

What Are the Types of Redundancy Cover Available?

When looking at redundancy cover mortgage options, you’ll typically find three main types:

  • Unemployment Only – This covers you solely for involuntary redundancy.
  • Accident and Sickness Only – While not strictly redundancy cover, this protects you if you can’t work due to illness or injury.
  • Accident, Sickness and Unemployment (ASU) – This comprehensive cover protects you against redundancy, as well as being unable to work due to accident or illness.

Choose the type that best fits your needs and budget. If you’re primarily concerned about redundancy, an unemployment-only policy might be sufficient.

Image of three types of redundancy cover available.

How Much Does Mortgage Redundancy Insurance Cost?

The cost of redundancy cover varies depending on several factors:

  • Your age
  • Your occupation
  • The amount of your monthly mortgage payment
  • The level of cover you choose
  • The length of the payout period

As a rough guide, you might expect to pay between £4 and £8 per £100 of monthly benefit. So, if your monthly mortgage payment is £1,000, you could pay between £40 and £80 per month for cover.

Always shop around and compare quotes from different providers to ensure you’re getting the best deal.

What Are the Pros and Cons of Mortgage Redundancy Cover?

Like any financial product, redundancy cover has its advantages and disadvantages:

Peace of mind knowing your mortgage is protected
Time to find new employment without risking your home
Can cover other bills beyond just your mortgage
May be tax-deductible (check with a tax advisor)


Can be expensive, especially if you’re in a high-risk occupation
Policies often have exclusions and waiting periods
May not pay out if you take voluntary redundancy
Usually only pays out for a limited time (12-24 months)

Consider these carefully when deciding if redundancy cover is right for you.

When Might Redundancy Cover Not Be Suitable?

While redundancy cover can be valuable, it’s not right for everyone. You might want to reconsider if:

  • You’re self-employed or on a temporary contract (many policies won’t cover you)
  • You have substantial savings that could cover your mortgage for several months
  • You’re close to retirement and could potentially take early retirement if made redundant
  • You work in the public sector or another area with low redundancy risk
  • Redundancies have already been announced at your workplace (insurers won’t cover you)

Always assess your personal circumstances before committing to a policy.

How Do You Choose the Right Redundancy Cover?

Selecting the right redundancy cover for your mortgage requires careful consideration:

  • Assess your needs: How much cover do you need? For how long?
  • Check the exclusions: What situations aren’t covered?
  • Look at the waiting period: How long before the policy pays out?
  • Consider the payout period: How long will the policy cover your payments?
  • Compare quotes: Don’t just go with your mortgage provider; shop around.
  • Read the small print: Understand exactly what you’re signing up for.

Remember, the cheapest policy isn’t always the best. Look for cover that offers the right balance of cost and protection for your situation.

Can You Get Redundancy Cover if You’re Already Worried About Your Job?

If you’re already concerned about potential redundancy at your workplace, it might be too late to get cover. Most insurers have exclusion clauses that prevent you from claiming if:

  • You knew your job was at risk when you took out the policy
  • Redundancies had already been announced
  • You take voluntary redundancy

Be honest when applying for cover. If you withhold information, your policy could be invalidated when you need it most.

What Are the Alternatives to Mortgage Redundancy Cover?

If you decide redundancy cover isn’t right for you, consider these alternatives:

  • Emergency savings fund – Aim to save 3-6 months of living expenses.
  • Income protection insurance – This covers a portion of your income if you can’t work due to illness or injury.
  • Critical illness cover – This pays out a lump sum if you’re diagnosed with a specified serious illness.
  • Mortgage payment holidays – Some lenders offer temporary breaks from payments, though this will increase your overall debt.
  • Government support – Understand what benefits you might be entitled to if you lose your job.

These options might provide similar protection without the specific focus on redundancy.

How Do You Make a Claim on Your Redundancy Cover?

If you find yourself in the unfortunate position of being made redundant, here’s how to claim:

  • Contact your insurer as soon as possible after being made redundant.
  • Provide evidence of your redundancy, such as a letter from your employer.
  • Complete any claim forms required by your insurer.
  • Wait for the claim to be processed and approved.
  • Payments typically start after the waiting period (usually 30-90 days).

Keep paying your mortgage during the waiting period if possible. If you’re struggling, contact your lender to discuss your options.

Is Mortgage Redundancy Cover Worth It?

Whether redundancy cover is worth it depends on your personal circumstances. Consider:

  • Your job security
  • Your savings
  • Your ability to quickly find new employment
  • The cost of the cover versus the peace of mind it provides

For many homeowners, knowing their biggest monthly expense is protected if they lose their job provides valuable peace of mind. However, it’s a personal decision based on your individual situation and risk tolerance.

The Bottom Line

Mortgage redundancy cover can be a valuable safety net, protecting your home during uncertain times. 

Here’s how to decide if it’s right for you:

  1. Understand the details. Learn how redundancy cover works, its advantages and disadvantages, and how it fits your situation.
  2. Get expert advice. An expert advisor can help you by:
    • Tailoring advice to your situation.
    • Comparing policies to find the best deal.
    • Demystifying complex terms.
    • Guiding you through the application.
    • Supporting you with claims if needed.
    • Reviewing your policy regularly.
    • Negotiating lower premiums (potentially).
    • Taking the stress out of the process.
    • Keeping you up-to-date with regulations.
    • Offering an objective perspective.

Remember, your home is more than just a financial asset – it’s your sanctuary. Protecting it is an investment in your future security and peace of mind.

Still confused? Get in touch. We’ll connect you with a helpful advisor who can explain your options and see if mortgage redundancy cover is right for you.

What To Do If Your Mortgage Offer Is Withdrawn?

What Is a Mortgage Offer?

Let’s break it down simply: a mortgage offer is a formal letter from a lender saying they’re ready to lend you money to buy a house, but with strings attached.

Here’s what it usually includes:

  • The amount they’re willing to lend you
  • The interest rate and whether it’s fixed or variable
  • The length of the mortgage term
  • Any special conditions or requirements
  • Details of any fees or charges

Remember, a mortgage offer isn’t the same as a mortgage in principle or an agreement in principle. Those are just initial signals that a lender might lend you money, based on some basic info. 

A formal mortgage offer comes after they’ve dug deep into your full application. It’s detailed and specific.

Receiving a mortgage offer is a major milestone on your journey to homeownership. It means you’re almost there, but not quite. 

Until the purchase is complete and the money changes hands, there’s still a chance for changes.

 So, stay focused and keep pushing forward. You’re almost at the finish line. 🎉🏁

Image that  shows the definition of mortgage offer

Can a Mortgage Offer Be Withdrawn?

Yes, a mortgage offer can be withdrawn, even after acceptance. It’s rare, but until you’ve completed the purchase, the offer isn’t guaranteed.

Lenders have the right to withdraw under certain conditions detailed in the offer terms.

If this happens to you, don’t panic. 

While it’s stressful, it doesn’t mean the end of your home buying journey. There are steps you can take to resolve the situation or find other options. ⬇️

Why Might a Mortgage Offer Be Withdrawn?

A mortgage offer can be withdrawn for several reasons. Knowing these can help you avoid potential pitfalls:

  • Changes in Your Financial Situation. If your circumstances change significantly between receiving the offer and completing the purchase, the lender may reassess your application. This includes job loss, reduced income, or taking on new debts.
  • Credit Issues. Lenders often perform a final credit check before completion. If they spot new negative items on your credit report, like missed payments or new credit applications, they might withdraw the offer.
  • Expired Offer. Mortgage offers typically have an expiration date, usually around 3-6 months from issue. If your purchase takes longer than expected, the offer could expire before completion.
  • Property Problems. If issues with the property come to light during surveys or valuations, the lender might view it as too risky. This could include structural problems or a lower valuation than expected.
  • Suspicious Activity. Lenders are vigilant about fraud. If they spot anything suspicious in your application or financial history, they may withdraw the offer pending further investigation.
  • Inaccurate Information. If the lender discovers you’ve provided incorrect or misleading information on your application, they’re likely to withdraw the offer.

What Happens After a Mortgage Offer is Issued?

Once you receive a mortgage offer, several things typically happen:

  1. You’ll review and accept the offer if you’re happy with the terms.
  2. Your solicitor will continue with conveyancing, including property searches and preparing contracts.
  3. You’ll agree on an exchange date with the seller.
  4. Final checks may be carried out by the lender.
  5. You’ll exchange contracts, making the agreement legally binding.
  6. A completion date will be set.
  7. On completion day, the funds will be transferred, and you’ll become the legal owner of the property.

However, it’s crucial to remember that the lender can still withdraw the offer at ANY point before completion if they have valid reasons to do so.

What Can Go Wrong After a Mortgage Offer?

Even after receiving a mortgage offer, several things could potentially go wrong:

  • The lender could withdraw the offer for any of the reasons mentioned earlier.
  • The property survey might uncover issues that affect the property’s value or suitability as security for the loan.
  • There could be delays in the purchase process, potentially causing the offer to expire.
  • Legal issues might arise during the conveyancing process.
  • The seller could pull out of the sale.
  • You might experience a change in circumstances that affects your ability to afford the mortgage.

To minimise these risks, stay in touch with your lender, be quick to respond to requests, and collaborate closely with your solicitor. Keep things moving smoothly.

Can a Mortgage Offer Be Withdrawn After Exchange?

Yes, it can happen, though it’s rare. 

After exchanging contracts, a withdrawn mortgage offer is a stressful blow since you’re legally bound to buy the property.

If this happens, act quickly. 

Contact your solicitor and mortgage broker immediately. They can help you explore your options, such as:

  • Negotiating with the lender to reinstate the offer
  • Finding alternative finance urgently
  • Asking the seller for more time to complete the purchase
  • In the worst case, losing your deposit and facing legal action

To avoid this, be completely honest in your mortgage application and keep the lender updated on any changes in your circumstances right up to completion.

What Happens If a Mortgage Offer is Withdrawn on the Day of Completion?

Having a mortgage offer withdrawn on the day of completion is extremely rare but can happen. 

This is one of the most stressful scenarios in the homebuying process. If this occurs:

  1. Inform all parties immediately – Contact your solicitor, estate agent, and the seller’s representatives.
  2. Understand the reason – Ask the lender for a detailed explanation of why they’ve withdrawn the offer.
  3. Explore emergency options – Your solicitor or mortgage broker might be able to negotiate with the lender or find alternative finance quickly.
  4. Consider the legal implications – You’re legally bound to complete the purchase, so failing to do so could result in losing your deposit and facing legal action.
  5. Negotiate for more time – If possible, try to negotiate with the seller for more time to resolve the situation.

Remember, this scenario is extremely uncommon. Lenders are typically reluctant to withdraw offers at such a late stage unless there’s a very serious issue.

Can a Lender Cancel Your Mortgage?

Yes, a lender can cancel your mortgage. But they can only do so under specific circumstances and usually before completion. 

Once your mortgage has been funded and you’ve completed the property purchase, the lender can’t simply revoke the mortgage. 

At this point, you have a legally binding agreement with the lender.

However, if you breach the terms of this agreement—for instance, by failing to make payments or breaking other conditions of the mortgage—the lender can take action. 

This might include:

  • Charging late payment fees
  • Reporting missed payments to credit reference agencies
  • Starting repossession proceedings

If you’re struggling to meet your mortgage payments, it’s crucial to contact your lender as soon as possible. 

Many lenders have programs to help borrowers who are experiencing financial difficulties.

It’s also important to read your mortgage offer carefully and understand all the terms and conditions.

If you’re unsure about anything, ask your solicitor or mortgage broker for clarification.

Can I Take Out a Loan After a Mortgage Offer?

While it’s technically possible to take out a loan after receiving a mortgage offer, it’s generally NOT advisable. 

Here’s why:

  • Change in circumstances. Taking on new debt changes your financial situation, which could lead the lender to reassess or potentially withdraw their offer.
  • Final credit checks. Many lenders perform a final credit check just before completion. A new loan application would show up on this check and could raise red flags.
  • Affordability concerns. The new loan payments could affect your ability to afford the mortgage in the lender’s eyes.
  • Breach of terms. Some mortgage offers specifically state that you shouldn’t take on new debts before completion.

If you absolutely need to take out a loan during this period, it’s crucial to inform your mortgage lender first. They can advise whether this might affect your mortgage offer and how to proceed.

What Should I Do If My Mortgage Offer is Withdrawn?

If you find yourself in the unfortunate situation of having your mortgage offer withdrawn, here are some steps you can take:

  1. Don’t panic. While it’s stressful, there are often solutions available.
  2. Understand the reason. Ask the lender for a detailed explanation of why they’ve withdrawn the offer.
  3. Consult a mortgage broker. They can help you understand your options and potentially find alternative lenders.
  4. Consider appealing. If you believe the lender’s decision is unfair or based on incorrect information, you may be able to appeal.
  5. Look for alternative finance. There may be other lenders willing to offer you a mortgage, even if your circumstances have changed.
  6. Inform other parties. Let your solicitor and estate agent know about the situation. They may be able to negotiate more time if needed.
  7. Review your finances. If the withdrawal was due to affordability concerns, you might need to reassess your budget or look for a less expensive property.
  8. Improve your application. If you need to reapply, think about how you can strengthen your application. This might involve improving your credit score or saving a larger deposit.

Remember, having a mortgage offer withdrawn doesn’t necessarily mean you can’t get a mortgage at all.

Many people successfully secure new offers and go on to complete their property purchases.

The Bottom Line

Having a mortgage offer withdrawn is a setback, but it’s not the end of your home buying journey. 

Understand why it can happen, take steps to prevent it, and know what to do if it does. 

Be honest with your lender, keep them informed of changes, and seek professional advice when needed.

A good mortgage broker can be your greatest ally. 

They understand complex mortgage requirements, have relationships with various lenders, and can foresee and address potential issues. 

Working with a skilled broker can save you time, reduce stress, and increase your chances of securing a favourable mortgage deal, even if you face setbacks.

Need a good broker? Get in touch. We’ll connect you with a qualified mortgage broker to guide you and help you succeed.

How To Get Mortgages in Northern Ireland? A Guide

How Do Mortgages Work in Northern Ireland?

Mortgages in Northern Ireland are quite similar to those in the rest of the UK. You borrow funds from a lender to buy a home and repay them over 25 to 35 years. 

Your home is the collateral, meaning if you miss payments, the lender can take it back.

Here’s the twist: fewer lenders operate in Northern Ireland. This means your choices might be a bit limited. 

And yes, some lenders have postcode restrictions. But don’t fret. 

Specialist brokers are out there. They know the Northern Irish market inside out and can help you snag the best deals.

So, while the process might seem daunting, you’ve got experts ready to guide you every step of the way.

Consult a mortgage broker after mortgage decline

What Makes Northern Ireland’s Mortgage Market Unique?

To be specific, here’s what makes Northern Ireland’s mortgage market distinctive:

  • Limited lender options. As discussed, fewer mortgage providers operate in Northern Ireland compared to other parts of the UK. This can impact the variety of products available to you.
  • Local lenders. Some building societies and banks specifically cater to the Northern Irish market, offering tailored products.
  • Postcode restrictions. Some UK-wide lenders may have restrictions on which Northern Irish postcodes they’ll lend to.
  • Property types. Northern Ireland has a higher proportion of newer builds and fewer period properties than some other UK regions, which can affect lending criteria.

Understanding these unique aspects can help you navigate the mortgage application process more effectively.

Who Can Get a Mortgage in Northern Ireland?

To be eligible for a mortgage in Northern Ireland, you generally need to meet the following criteria:

  • Age – You must be at least 18 years old. Many lenders have upper age limits, often around 70-75 at the end of the mortgage term.
  • Residency – You should be a UK resident with the right to live and work in the country.
  • Income – You need a stable income to demonstrate you can afford the repayments. This could be from employment, self-employment, or other reliable sources.
  • Credit history – A good credit score is beneficial, but some lenders specialise in helping those with poor credit.
  • Deposit – Most lenders require at least a 5-10% deposit, though larger deposits often secure better rates.

Remember, meeting these basic criteria doesn’t guarantee mortgage approval. Each lender has its own specific requirements and will assess your application individually.

Image of mortgage criteria.

What Types of Mortgages Are Available in Northern Ireland?

Northern Ireland offers a variety of mortgage types to suit different needs:

  • Fixed-rate mortgages – Your interest rate stays the same for a set period, usually 2-5 years.
  • Variable-rate mortgages – The interest rate can change, usually in line with the Bank of England base rate.
  • Tracker mortgages – The interest rate tracks a particular index, often the Bank of England base rate, plus a set percentage.
  • Standard Variable Rate (SVR) mortgages – The lender’s default interest rate which can change at any time. Typically higher than other rates but with no early repayment charges.
  • Discounted mortgages – This offers a discount on the lender’s standard variable rate for a set period.
  • Flexible mortgages – Allow you to overpay, underpay, or even take payment holidays if needed.
  • Interest-only mortgages – You only pay the interest each month, but need to repay the full loan amount at the end of the term.
  • Buy-to-let mortgages – Specifically for properties you intend to rent out.
  • First-time buyer mortgages – This often comes with special incentives or lower deposit requirements.
  • Guarantor mortgages – Where a family member or friend guarantees the loan, making it easier for those with limited credit history to get a mortgage.
  • Self-build mortgages – This is designed for those who want to build their own home. Funds are released in stages as the build progresses.

Each type has its pros and cons, so it’s worth researching thoroughly or seeking advice to find the best fit for your situation.

How Much Can You Borrow in Northern Ireland?

The amount you can borrow for a mortgage in Northern Ireland depends on several factors:

  • Income multiple. Lenders typically offer 3-4.5 times your annual income, though some may go higher in certain circumstances.
  • Affordability assessment. Lenders will look at your income versus outgoings to ensure you can afford the repayments.
  • Deposit size. The more you can put down, the more you might be able to borrow.
  • Credit score. A higher credit score could increase your borrowing potential.
  • Property value. The amount you can borrow will be capped at a certain percentage of the property’s value (typically 90-95%).

To get a rough idea of how much you might be able to borrow, you can use an online mortgage calculator. However, for a more accurate figure, you’ll need to speak directly with lenders or a mortgage broker.

How Do You Apply for a Mortgage in Northern Ireland?

Applying for a mortgage in Northern Ireland involves several steps:

  1. Check your credit score – Ensure your credit report is accurate and take steps to improve it if necessary.
  2. Save for a deposit – Aim for at least 5-10% of the property value, more if possible.
  3. Gather necessary documents – This includes proof of identity, address, income, and outgoings.
  4. Get a mortgage in principle – This gives you an idea of how much you might be able to borrow.
  5. Find a property – Start house hunting within your budget.
  6. Make a full mortgage application – Once you’ve had an offer accepted on a property, submit your full application.
  7. Property valuation – The lender will arrange a survey of the property.
  8. Receive your mortgage offer – If approved, you’ll receive a formal offer detailing the terms of the mortgage.
  9. Complete the purchase – Your solicitor will handle the legal aspects of the purchase.

Throughout this process, it’s crucial to be honest and accurate with all information you provide. Any discrepancies could lead to your application being rejected.

How to get a mortgage in the UK
>> More about How To Get a Mortgage?

Are There Schemes for First-Time Buyers in Northern Ireland?

Yes, there are several schemes designed to help first-time buyers in Northern Ireland:

  • Co-Ownership – This scheme allows you to buy between 50% and 90% of a property and pay rent on the rest.
  • Help to Buy: ISA – While the Help to Buy equity loan scheme isn’t available in Northern Ireland, you can still use a Help to Buy ISA if you opened one before November 30, 2019, to save for your deposit.
  • Rent to Own – This scheme lets you rent a new-build home for up to three years with the option to buy it later.
  • Mortgage Guarantee Scheme This UK-wide scheme allows you to buy a home with a deposit as low as 5%, with the government providing a guarantee to the lender on a portion of the mortgage. It supports properties valued up to £600,000 and is available to both first-time buyers and existing homeowners. You can apply for this scheme until June 30, 2025​.

These schemes can be particularly helpful if you’re struggling to save for a deposit or meet standard mortgage criteria.

Mortgage Guarantee Scheme

What Should You Consider When Choosing a Mortgage in Northern Ireland?

When selecting a mortgage in Northern Ireland, keep these factors in mind:

  • Interest rate – Compare rates from different lenders to find the best deal. Even a small difference can save you thousands over the life of the mortgage. Look at both introductory rates and the rate after any initial period ends.
  • Fees – Look out for arrangement fees, valuation fees, and early repayment charges. These can add significantly to your costs. Some lenders may offer fee-free deals, but check if the interest rates are higher.
  • Fixed vs. variable rates – Decide whether you want the security of fixed repayments or the potential benefits of a variable rate. Fixed rates offer stability, making it easier to budget, while variable rates might be lower initially but can fluctuate.
  • Term length – A longer term means lower monthly payments but more interest overall. Consider what you can afford monthly. Shorter terms reduce total interest paid but require higher monthly payments. Find a balance that fits your financial situation.
  • Overpayment options – Some mortgages allow you to pay extra, helping you clear your debt faster. Check if there are limits or penalties. Overpaying can significantly reduce the amount of interest you pay and shorten your mortgage term.
  • Portability – If you might move house in the future, check if you can transfer your mortgage without incurring penalties. Portability allows you to take your current mortgage to a new property, avoiding early repayment charges.
  • Insurance requirements – Some lenders may require you to take out specific insurance policies, like buildings or life insurance, as a condition of the mortgage. Ensure you factor in these costs and understand what coverage is mandatory versus optional.
  • Lender reputation – Research lenders’ customer service and reliability. Reviews and ratings can provide insights into their service quality. A lender with good customer service can make the mortgage process smoother and more pleasant.
  • Mortgage flexibility – Look for features like payment holidays, the ability to switch between repayment types, or options to extend the mortgage term if needed. Flexibility can give peace of mind and adaptability if your financial situation changes.

The Bottom Line

Mortgages in Northern Ireland are broadly similar to the rest of the UK, but there are some key differences to be aware of. 

Local lenders and specific schemes can affect your options, so research is important whether you’re a first-time buyer or remortgaging. 

A mortgage broker who specialises in the Northern Ireland market can be a big help. They can explain the different options and find the best deal for you, including exclusive offers not available to everyone.

Need a good broker? Get in touch with us. We’ll connect you with a qualified broker to guide you through your mortgage application in Northern Ireland.

Mortgages with No Early Repayment Charges Explained

What Are Early Repayment Charges?

An early repayment charge is a fee your lender may impose if you pay off your mortgage earlier than the agreed term. 

This can happen if you: 

  • overpay by more than your lender allows
  • switch to a new lender during your current deal, or 
  • need to sell your home and terminate the mortgage early.

ERCs are typically calculated as a percentage of your remaining loan balance, usually ranging from 1% to 5%. 

For instance, if you have £100,000 left on your mortgage and face a 5% ERC, you could be looking at a hefty £5,000 charge. That’s why it’s crucial to understand ERCs before you commit to a mortgage deal.

Image that shows the definition of ERCs or explains when you need to pay an ERC.

Why Do Lenders Charge ERCs?

Lenders want to protect their interest.

When you take out a mortgage, the lender expects to earn a certain amount of interest over the agreed term. If you repay early, they miss out on that interest income.

ERCs act as a deterrent, discouraging borrowers from switching lenders every time they spot a slightly better deal. 

However, most lenders do offer some flexibility, typically allowing you to overpay up to 10% of your outstanding balance each year without incurring an ERC.

It’s worth noting that some lenders reduce their ERCs over time. 

For example, you might start with a 5% charge that drops to 1% after a few years, eventually being waived altogether. 

As a general rule, the longer you have left on your introductory deal, the higher the ERC is likely to be.


Can You Get a Mortgage Without ERCs?

The good news is that yes, you can find mortgages without early repayment charges. 

These are often referred to as “no ERC mortgages” or “flexible mortgages”. 

While they’re not as common as standard mortgages with ERCs, several UK lenders offer these products.

No ERC mortgages can be particularly appealing if you think you might want to pay off your mortgage early or if you’re uncertain about your future plans. 

However, it’s important to weigh up the pros and cons before deciding if this type of mortgage is right for you.

What Types of No ERC Mortgages Are Available?

When it comes to no ERC mortgages, you have several options to choose from. Let’s explore some of the most common types:

  • No ERC Fixed-Rate Mortgages. While less common, some lenders do offer fixed-rate deals without ERCs. Be prepared for potentially higher arrangement fees to offset the lack of ERCs.
  • No ERC Tracker Mortgages. These are quite common, especially once you’ve moved onto the lender’s standard variable rate (SVR). This is often a good time to remortgage without facing an ERC.
  • No ERC Equity Release Mortgages. These are less common due to the nature of equity release products, but some lenders may offer them or waive ERCs after a certain period.

What About Buy-to-Let Mortgages with No ERCs?

If you’re a landlord or considering investing in property, you might be interested in buy-to-let mortgages with no early repayment charges. 

These products do exist, although they’re less common than residential no ERC mortgages.

Buy-to-let mortgages without ERCs can be particularly beneficial for landlords who:

  • Plan to sell properties within their portfolio
  • Want the flexibility to remortgage frequently to take advantage of the best rates
  • Expect to receive lump sums that could be used to pay down mortgage debt

    However, as with residential mortgages, buy-to-let mortgages without ERCs often come with higher interest rates. 

    You’ll need to carefully calculate whether the flexibility justifies the potential extra cost.

    What Are the Benefits of No ERC Mortgages?

    Opting for a mortgage without early repayment charges can offer several advantages:

    – Flexibility. You have the freedom to make overpayments or pay off your mortgage entirely without penalty. This can be especially beneficial if you receive a bonus, inheritance, or other lump sum.
    – Potential interest savings. By making overpayments, you can reduce the overall interest you’ll pay over the life of your mortgage.
    – Easier to remortgage. Without ERCs, you can switch to a better deal as soon as one becomes available, rather than waiting for your initial deal period to end.
    – Sell your property without penalty. If you need to move house unexpectedly, you won’t face additional charges for paying off your mortgage early.
    – Peace of mind. Knowing you’re not locked into your mortgage can provide a sense of financial security and control.

    Are There Any Drawbacks to No ERC Mortgages?

    While no ERC mortgages offer great flexibility, they’re not without their downsides:

    – Higher interest rates. To compensate for the lack of ERCs, lenders often charge slightly higher interest rates on these mortgages.
    – Limited fixed-rate options. Most no ERC mortgages are variable rate products. If you’re looking for the security of a fixed rate, your options may be more limited.
    – Shorter deal periods. Some lenders only offer no ERC deals for shorter periods, such as two years, after which you might need to remortgage.
    – Stricter lending criteria. Because these mortgages are riskier for lenders, you might face stricter eligibility requirements.
    – Potential for higher overall costs. If you don’t make use of the flexibility, you could end up paying more in interest over the life of the mortgage compared to a product with ERCs.

    Before choosing a no ERC mortgage, carefully consider whether the flexibility justifies any potential extra costs.

    How Can You Avoid ERCs on Standard Mortgages?

    If you already have a mortgage with ERCs, there are still ways to minimise or avoid these charges:

    • Time Your Repayments. Plan your overpayments or full repayment towards the end of the mortgage term or at the end of a fixed-rate period. ERCs often decrease or are eliminated after the initial fixed period or as the mortgage term progresses.
    • Use Your Overpayment Allowance. Most lenders allow you to overpay by up to 10% each year without incurring ERCs. Take advantage of this if you can.
    • Port Your Mortgage. If you’re moving house, you might be able to take your current mortgage with you, avoiding ERCs.
    • Switch to a More Flexible Mortgage. When your current mortgage deal ends, consider remortgaging to a new product that offers more flexibility with early repayments. Some lenders offer flexible mortgages with lower or no ERCs after an initial period.
    • Wait it Out. If you’re close to the end of your ERC period, it might be worth waiting until it expires before making any changes.

    Image of clock or Hourglass

    Which UK Lenders Offer No ERC Mortgages?

    Several UK banks and building societies offer mortgages without early repayment charges. 

    This includes:

    • Leeds Building Society
    • Newcastle Building Society
    • Axis Specialist Finance
    • Clydesdale
    • Coventry for Intermediaries

    These lenders typically offer no ERC mortgages as Bank of England tracker rates or discounted variable deals. 

    It’s worth noting that while standard variable rate (SVR) mortgages usually don’t have ERCs, their interest rates tend to be much higher than other products.

    Is a No ERC Mortgage Right for You?

    Deciding whether a no ERC mortgage is right for you depends on your circumstances. You might consider a no ERC mortgage if:

    • You’re unsure about your future plans and want maximum flexibility.
    • You think you might come into a lump sum of money that you’d like to use to pay off your mortgage.
    • You’re self-employed or have a variable income and want the option to make large overpayments without penalty.
    • You’re a buy-to-let investor looking to regularly refinance your properties.

    However, if you’re confident you won’t need to repay your mortgage early and you’re looking for the lowest possible interest rate, a standard mortgage with ERCs might be more suitable.

    How Can You Find the Best No ERC Mortgage?

    Finding the best no ERC mortgage requires some research and potentially professional advice. Here are some steps you can take:

    • Compare Offers. Look at products from different lenders, comparing not just the interest rates but also any fees and the overall cost of the mortgage.
    • Check the Small Print. Make sure you understand all the terms and conditions, not just the lack of ERCs.
    • Think Long-Term. Consider how your circumstances might change and whether the flexibility of a no ERC mortgage is worth potentially higher costs.
    • Consider a Broker. A mortgage broker can help you navigate the market and find deals that might not be directly available to consumers.
    Consult a mortgage broker after mortgage decline

    Are There Alternatives to No ERC Mortgages?

    If you’re attracted to the flexibility of no ERC mortgages but put off by the potentially higher interest rates, there are alternatives to consider:

    1. Mortgages with limited overpayment allowances – As discussed, many mortgages let you overpay up to 10% each year, helping you clear your debt faster and become mortgage-free sooner. This avoids Early Repayment Charges (ERCs).
    2. Offset mortgages – These allow you to use your savings to reduce the interest you pay on your mortgage, potentially allowing you to pay it off early without ERCs.
    3. Shorter fixed-rate periods – By choosing a shorter fixed-rate period, you’ll have the opportunity to remortgage sooner without facing ERCs.
    4. Split mortgages – Some lenders allow you to split your mortgage, with part on a fixed rate with ERCs and part on a variable rate without ERCs.

    These options might provide a middle ground, offering some flexibility without the potentially higher rates associated with full no ERC mortgages.

    The Bottom Line

    No Early Repayment Charge (ERC) mortgages offer flexibility, allowing you to overpay without penalty. 

    However, these mortgages might not be the cheapest option due to potentially higher interest rates or fees.

    While valuable for some borrowers who prioritise flexibility, no ERC mortgages aren’t a one-size-fits-all solution.

    To make an informed decision, consult a qualified mortgage broker. They can assess your situation, compare mortgage options, and help you find lenders offering no ERC mortgages if it aligns with your goals.

    Ready to explore your options? Simply contact us, and we’ll connect you with a reputable mortgage broker to guide you through the application process.

    Does Furlough Affect Mortgage Application?

    What is Furlough and How Does it Impact Mortgages?

    Furlough, part of the UK government’s Coronavirus Job Retention Scheme, allowed employers to keep staff on payroll while reducing their hours or pausing their work entirely. 

    While on furlough, you received up to 80% of your salary, capped at £2,500 per month. This reduction in income is what primarily affects your mortgage application.

    Lenders are particularly interested in your income stability when assessing mortgage applications. 

    Being on furlough introduces an element of uncertainty that some lenders may view as risky. 

    However, each lender has its own criteria for assessing furloughed applicants, and some are more flexible than others.

    Does Furlough Affect Mortgage Applications?

    Yes, being on furlough can affect your mortgage application. But it doesn’t automatically disqualify you. 

    Here’s how it might impact your application:

    • Reduced borrowing capacity. Lenders typically use your current income to calculate how much you can borrow. If you’re still on furlough, this could mean a lower mortgage offer.
    • Increased scrutiny. Lenders may ask for additional documentation to verify your employment status and future income prospects.
    • Limited lender options. Some lenders may be more cautious about approving mortgages for furloughed applicants, reducing your choices.
    • Potential delays. Your application might take longer to process as lenders assess the impact of furlough on your long-term financial stability.

    Which Lenders Accept Furlough Income?

    The landscape of furlough mortgages is constantly evolving, but many lenders are willing to consider applications from those who have been furloughed. 

    Some of the more flexible lenders include:

    • Nationwide – They may consider your full salary if you have a return-to-work date.
    • Halifax – They might use your full salary if you’re back at work or have a confirmed return date.
    • Barclays – They may consider your application if you’re back at work or have a return date within three months.
    • NatWest – They might use your furloughed income but may require additional documentation.

      Remember, lender policies can change quickly, so it’s best to consult with a mortgage broker who can provide up-to-date information on which lenders accept furlough income.

      Consult a mortgage broker after mortgage decline

      How Can You Improve Your Chances of Getting a Furlough Mortgage?

      While being on furlough presents challenges, there are steps you can take to improve your mortgage prospects:

      1. Wait until you’re back at work. If possible, delay your application until you’ve returned to full-time employment. This can significantly boost your chances of approval.
      2. Get a return-to-work letter. If you’re still on furlough, ask your employer for a letter confirming your return-to-work date and full salary. This can reassure lenders about your future income stability.
      3. Save a larger deposit. A bigger deposit can offset some of the risks associated with furlough income, potentially opening up more lender options.
      4. Check your credit score. Ensure your credit report is in good shape. Address any issues before applying for a mortgage.
      5. Reduce existing debts. Lowering your debt-to-income ratio can improve your affordability in the eyes of lenders.
      6. Seek professional advice. A mortgage broker can help you navigate the complexities of furlough mortgages and find lenders most likely to approve your application.
      Wait until you've fixed the issues

      What Documents Do You Need for a Furlough Mortgage Application?

      When applying for a mortgage after furlough, you’ll likely need to provide additional documentation.

      Be prepared with:

      • At least 3-6 months payslips for both pre-furlough and during furlough
      • 3-6 months bank statements
      • Your most recent P60 form
      • A proof of return to work (employer letter with return date & salary)
      • Furlough letters: Any official documentation related to your furlough period
      • For self-employed: 2-3 years of SA302 or self-assessment tax returns

      Ensure to show proof of income with every penny you earn. This will improve your chances of getting a mortgage, making you more attractive to lenders.


      Can You Remortgage if You’ve Been Furloughed?

      Remortgaging after furlough is possible, but it may be more challenging if you’re still on furlough or have recently returned to work. 

      Lenders will assess your current income and job stability when considering your remortgage application. 

      If you’ve returned to work, you might need to provide evidence of several months of full income before some lenders will consider your application.

      If you’re coming to the end of your current mortgage deal, it’s worth speaking to your existing lender about product transfers. They may be more flexible as they already have a relationship with you.

      What About Joint Mortgages with a Furloughed Partner?

      If you’re applying for a joint mortgage and one partner has been furloughed, some lenders may only consider the non-furloughed partner’s income. 

      This could significantly reduce your borrowing capacity. 

      However, other lenders may be willing to consider both incomes, especially if the furloughed partner has a confirmed return-to-work date.

      In this situation, it’s crucial to shop around and potentially seek the help of a mortgage broker who can identify lenders most likely to consider both incomes.

      Should You Wait to Apply for a Mortgage After Furlough?

      Whether to apply for a mortgage now or wait depends on your circumstances. 

      If you’ve recently returned to work, waiting a few months can demonstrate income stability to lenders. 

      However, if you’re confident in your job security and financial situation, and you find a lender willing to consider your application, there’s no reason to delay.

      Keep in mind that mortgage rates and property prices can change, so waiting isn’t always beneficial. It’s about balancing your current situation with your long-term goals.

      What To Do After a Mortgage Decline Due to Furlough?

      Facing a mortgage decline due to furlough can be disheartening, but it’s important not to lose hope. 

      There are steps you can take to improve your chances and reapply successfully. 

      Here’s what to do next:

      Understand the Reasons for Decline. First, ask the lender for specific reasons why your application was declined. This will help you address the issues directly and make necessary improvements.

      Review Your Financial Situation. Take a close look at your current finances. Ensure that you have a stable income and that any outstanding debts are manageable. Reducing your debt-to-income ratio can significantly boost your application.

      Improve Your Credit Score. Check your credit report for any errors or discrepancies and correct them. Pay off small debts, avoid taking on new credit, and ensure all payments are made on time to improve your credit score.

      Save a Larger Deposit. A bigger deposit can make you a more attractive candidate to lenders. Aim to save at least 10-20% of the property’s value. This shows lenders that you are financially responsible and reduces their risk.

      Obtain a Return-to-Work Letter. If you’re still on furlough, ask your employer for a letter confirming your return-to-work date and salary. This document can reassure lenders about your future income stability.

      Consider a Different Lender. Not all lenders have the same criteria. Some may be more flexible with furloughed applicants. Research and consider applying to lenders known for their lenient policies towards furlough income.

      Seek Professional Advice. A good mortgage broker can provide valuable insights and guide you to lenders who are more likely to approve your application. They can help you understand the market and find the best options available.

      Steps to take after a mortgage rejection

      The Bottom Line

      While being on furlough can complicate your mortgage application, it doesn’t make it impossible. 

      Many lenders are adapting their policies to accommodate furloughed applicants, recognising that furlough was a temporary measure during an unprecedented situation.

      The key is to be prepared, gather all necessary documentation, and consider seeking professional advice. 

      A good mortgage broker can be invaluable in navigating the complexities of furlough mortgages and finding the right lender for your situation.

      Remember, your financial situation is unique, and what works for one person may not work for another. 

      Take the time to assess your options, improve your financial position where possible, and don’t be discouraged if your first application isn’t successful. 

      With patience and perseverance, you can achieve your goal of homeownership, even after furlough.

      Need a good broker? Get in touch. We’ll connect you with a qualified mortgage broker to help with your mortgage application after a furlough.