Help and guides for moving home

A mortgage, in simple terms is a loan provided by a bank in order for a borrower to purchase a property. Not many of us have the money to buy a home outright, so we have to borrow some of the money in the form of a mortgage.

As with any other loan, with a mortgage you borrow money and pay it back in instalments. The instalments include interest and are paid over a period of time which has been agreed between you and your lender. This period of time is known as the mortgage term and is typically 25 years.

The way in which a mortgage differs from other loans such as a bank or credit card loan is that it is secured against your property. This means that during the term of the loan, your property provides the lender with security so if for any reason you cannot repay your mortgage, the lender can sell your home to recover their money. This is why it is vital that you only borrow what you can afford.

A mortgage is split into two components – the capital and the interest. The capital is the amount you have borrowed, and the interest is the amount the lender charges you for borrowing the money. As well as how much you borrow, how you choose to pay off your mortgage is one of the key decisions you will have to make during this process.

Usually you have three options for paying off your mortgage:

A repayment mortgage

If you choose a repayment mortgage your monthly payment will cover the interest you need to pay, as well as a percentage of the original loan, i.e. the capital. This means that you will reduce the sum of money you have borrowed (the balance) and so the mortgage will be fully repaid when the mortgage term ends (providing you meet your regular monthly payments of course).

An interest-only mortgage

If you choose an interest-only mortgage your monthly payment will only include the interest you need to pay. This means at the end of the mortgage term you will still need to repay the amount you originally borrowed, as well as any additional borrowing you may have taken out. So, you’ll need to think about how you intend to pay this off at the end of the mortgage term, for example you could set up an investment plan, this is called a repayment plan.

With Virgin Money, for residential mortgages you can borrow up to a maximum of 75% of the property value with an interest only mortgage. Residential borrowing above 75% must be on a repayment basis, so you should consider a part and part mortgage (see below).

To take out a Virgin Money residential mortgage on an interest only basis, your total household income must be at least £75,000 (including 100% of additional income such as bonuses, overtime etc.)

We do not currently offer interest only mortgages to first time buyers.

Virgin Money accepts the following repayment vehicles for Residential mortgages:

• Endowment
• Managed Investment Plan
• Personal Pension Plan
• Sale of main property – maximum 65% LTV. Minimum £300,000 equity required. Lending into retirement not allowed if repayment vehicle is sale of property
• Sale of other property – not main residence – to cover 110% of the interest only element (maximum 65% LTV on residential)
• Managed share portfolio (this must cover 110% of the interest only part of your mortgage at the time of application)

You will need to provide evidence of the repayment vehicles and we may, periodically, ask you to provide us with information on the performance of your repayment strategy.

Virgin Money does not accept the following repayment vehicles: inheritance, dividends, regular overpayments, remuneration and intention to convert to repayment at a future date.

If you are capital raising to consolidate debt you cannot do this on an interest only basis.

A part-and-part mortgage

A part and part mortgage is a combination of the above. So your monthly mortgage payment will be split into two parts; one part will work as an interest only mortgage so you only pay the interest on that portion, and the other part works as a repayment mortgage so you will pay the interest plus some of the original loan (i.e. the capital) on that portion. When the mortgage term ends, you will still need to pay off the interest-only part of your loan, however the repayment part will be paid off (again, providing you have met all of your regular monthly payments).

With Virgin Money, you can borrow up to a maximum of 75% of the property value with the interest only part of your mortgage.

To take out part of your Virgin Money mortgage on an interest only basis, your total household income must be at least £75,000 (including 100% of additional income such as bonuses, overtime etc).” The maximum LTV for residential customers taking a part and part mortgage is 85%, of which up to 75% LTV can be on interest only.

We do not currently offer part-and-part mortgages to first time buyers.

It is really important you think carefully about how you want to repay your mortgage as you are responsible for keeping up your monthly payments. Remember, if you are unable to make your agreed payments, you run the risk of your property being repossessed.

If you are capital raising to consolidate debt you cannot do this on an interest only basis.

In order for you to get a mortgage from a lender they will typically require you to provide a deposit. The value of your deposit may influence the mortgage deals that are available to you, and we’ll explain how:

As you progress with your search for a mortgage you will no doubt come across the term ‘loan-to-value’ or LTV. This refers to the amount you are looking to borrow as a percentage of the value of the property, so is essentially determined by the deposit amount you are able to put down. It’s probably easier to understand this using an example:

Your property is valued at £100,000. You have a deposit of £20,000 so need to borrow £80,000 (80% of the property value) so your loan to value is 80%

So, if you can increase your deposit you will lower your LTV. You will find that the lower your LTV, the better the mortgage rate you will be able to get.

There are two main types of mortgage, a fixed mortgage and a tracker mortgage:

Fixed Mortgages

A fixed rate mortgage pretty much does what it says on the tin – fixes your mortgage payments throughout the term of the deal, which is typically 2, 3 or 5 years, sometimes as long as 10 or 15 years.

A fixed mortgage would work for you if:

• You want to know what your repayments will be every month
• You want the security of knowing your payments will never go up during the fixed rate period

Tracker Mortgages

A tracker mortgage is linked with the Bank of England Base Rate so whatever that does, your mortgage rate also does. For example, if the Base Rate increases by 0.5% your mortgage rate will also increase by 0.5%. If the Base Rate goes down 0.5% then your mortgage will decrease by 0.5%.

A tracker mortgage would work for you if:

• You want to take advantage of reductions in BBR (Bank of England Base Rate)
  
• You don’t mind the potential change in monthly payments, up or down

All Virgin Money residential mortgages revert to our Standard Variable Rate at the end of the mortgage deal (the mortgage deal is also referred to as the ‘special rate’ period).

Standard Variable Rates

With most mortgages, when the term of your deal comes to an end your rate will refer to the lender’s Standard Variable Rate (SVR). Standard Variable Rates tend to roughly move with the Bank of England Base Rate, however it doesn’t have to and so any lender can change their SVR at their discretion.

There is no right or wrong mortgage to choose. Everyone’s circumstances will be different so for one person a fixed product may be more suitable, and for another a tracker could be better. The key is to understand your own financial commitments both for the short and long term, then weigh up your options to work out which is better for you.

At Virgin Money we offer a range of fixed rate mortgages, so let’s explain those in a bit more detail:

Everyday range

Our everyday range has both fixed rate and tracker products, the key features include:

• Some of our lowest priced mortgage rates
• You can make overpayments of up to 10% per calendar year, customers can pay off more but this is subject to their Early Repayment Charge
• You can apply for a payment holiday, subject to your terms and conditions

Flexible range

Mortgages from our flexible range provide you with more flexibility than those from the Everyday range, key features include:

• You can make unlimited charge-free overpayments meaning you can pay off your mortgage quicker
• You can make underpayments or borrow back the money you’ve overpaid (subject to our agreement)
• You can apply for payment holidays subject to your terms and conditions

Our Flexible range is currently not available to new customers.

Cashback

Some of our products offer cashback. If you take a cashback product you will receive the money on completion of your mortgage. You can use the money in any way you choose: you may want to use it to cover legal costs or valuation fees, or perhaps to help decorate your new home.

Product fee

With some mortgage products there may be a fee to pay as part of the deal. This is often referred to as a product fee and it forms part of the terms and conditions of your mortgage deal. You have the option to pay the product fee at point of application or add it to the mortgage. If the fee is added to the mortgage you will incur interest charges on this fee at the prevailing interest rate for the term of the mortgage until it has been paid. The fee will be refunded if the mortgage does not complete.

Product fees may vary depending on the product, and some products don’t carry a fee. These are referred to as ‘fee free’ or ‘fee saver’ products, however they tend to come with higher rates.

Application fee

An application fee is typically a non-refundable fee that may be charged when you take out a mortgage. There are no applicable fees when you apply for a new Virgin Money mortgage. Full details of any fees will be outlined within your Mortgage Illustration.

Before you formally agree to buy your new home you need to make sure it is a sound investment, so you’ll need to arrange to have your property valued. There are three main reports to choose from: a Mortgage Valuation Report, a Homebuyers' Survey and Valuation and a Building Survey, which is formerly known as a Structural Survey.

Mortgage valuation report

Most lenders require a Mortgage Valuation Report on your new property which is carried out by a valuer employed by the lender, or an independent panel valuer. Its main purpose is to help the lender to assess the property as security for your mortgage.

For your own peace of mind you’re advised to obtain a HomeBuyer Report or Buildings Survey which are more detailed surveys. Below is our valuation fee scale:

Valuation costs

A surveyor may be asked to carry out a physical valuation or a remote valuation without visiting the property. The cost to Virgin Money may differ from the fee charged. There is an administration fee included within the valuation fee.

HomeBuyer Report

This report is approved by the Royal Institution of Chartered Surveyors (RICS) and includes the following:

• information on the state of repair and condition of the property
• a valuation
• it highlights parts of the property needing urgent attention
• it will advise of any ongoing repairs and maintenance that may affect the value of the property

For this report you’ll need to agree separate Terms and Conditions with the valuer/surveyor preparing the report.

Building Survey

This is the most detailed survey report and includes an investigation and assessment of the construction and condition of a property. It will not normally include advice on value or a valuation, therefore we will still require a Mortgage Valuation Report in all cases.

For this report you’ll need to agree separate Terms and Conditions with the valuer/surveyor preparing the report and the cost of the survey will be subject to specific agreement between you and the surveyor.

Whatever survey type you ask for, we’ll advise you to speak to the surveyor first and find out what each one involves both in terms of cost and the checks carried out.

When you buy a home, you will need to pay a solicitor or qualified conveyancer for the legal work required. This will include checking the title to the property, preparing the mortgage documents, receiving the money to pay for the purchase, paying it to the seller's solicitor, and negotiating with the seller's solicitor in the event of any dispute.

If you need help finding a solicitor, we’ll be happy to recommend one from our panel.

What is stamp duty?

Stamp duty (Land and Building Transactions Tax in Scotland) is a tax charged by HM Revenue & Customs (HMRC) on certain house and land purchases and some transfers of property.

You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland.

The tax is different if the property or land is in:

• Scotland - pay Land and Buildings Transaction Tax.
• Wales - pay Land Transaction Tax if the sale was completed on or after 1 April 2018

For more information on rates and thresholds, visit HMRC or gov.scot for Scotland and gov.wales for Wales.

It’s important to protect you and your new home so you’ll need to consider buildings insurance. All mortgage lenders will need to know that your property is suitably insured, but your property may already be covered by a management company of the freeholder if it's leasehold. Your solicitor should be able to confirm whether this is the case. It’s also likely that you’ll need contents insurance to cover any fixtures, fittings and valuables in your property.

Once you’re into your new home there will be ongoing bills to pay which you should factor into your future outgoings as early as possible.

These include:

Council Tax
It’s worth checking this for your new area before you move.

Utility bills
Don't forget to do your homework on utility providers, e.g. gas, electric, water, TV subscription, Internet. There are lots of comparison websites that will help you to spot the best deals.

TV licence
You’ll also need to make sure your TV licence is set up in your new home.

Mail
Finally, don’t forget to redirect your mail so anything you need to receive gets to you. Royal Mail offers redirection services.

• Direct gov home and community Link opens in a new window
• www.tvlicensing.co.uk Link opens in a new window
• Royal Mail redirection service Link opens in a new window

Completing your admin

In the week leading up to the move, take care of all your admin work and make sure you’ve notified key contacts such as your bank and any lenders, energy and water companies of your change of address.

Notify the local council too so they can arrange your council tax payments. Remember you’ll get a discounted rate for single person’s allowance if you’re moving in on your own. And make sure you also update your details on the electoral register.

Understanding your finances

Buying a house is a huge financial commitment, so it’s important to have everything in order as soon as you get the keys. Your monthly outgoings will include mortgage payments, buildings and contents insurance, council tax and utility bills, along with life insurance if you choose to take it, so you’ll need to set a budget and stick to it.

Learn more about managing your finances in your new home.

Getting the builders in

If you’ve bought a property that requires some renovation, you’ll need to work out whether this should be done before you move in or afterwards. You may not have a choice but to move in first as paying both rent and a mortgage may be impossible. But if you do have the option to move in with family or friends for a short time, it could help free up your finances for those important building works and limit any potential disruptions during the first few weeks in your new place.

At this stage it’s helpful to weigh up essential renovations against those which are just cosmetic. This will help prioritise what you should be spending your money on and in which order.

As you’re finding your feet in your new home, try to start small and think big later on when you’re settled in. There’s plenty of time to turn your new house into your perfect home.

Decorating

If the only change you want to make is a lick of paint, it can be helpful to consider which rooms need to be decorated first. Could you start with the living room and master bedroom – the places where you’ll be spending most of your time? You can then decorate the rest of the house as and when your time and budget allows.

Think about whether you’re going to decorate the house yourself or get professionals in to do it. While DIY is undoubtedly cheaper, it could prove costly in the long run if you’re not confident in your own ability.

Everything has been building up to the big day – the most rewarding and exciting part of buying a new home. To cope with the demands the day will bring, make sure you’re fully prepared.

Moving your furniture

You might already have a lot of furniture of your own if you’ve been renting an unfurnished property. Think about how you’re going to transport it. Choosing the services of a removal company can make life easier as they do all the packing, or a man with a van can help you lift and carry if you’ve done the packing yourself.

The other option is to get a self-hire van. It’s a good way to save money but you’ll need another pair of hands for any heavy lifting. Consider how much furniture you have and make sure you hire the appropriate sized vehicle to save making multiple trips – something which could be very time consuming depending on the distance between your old and new home.

If you’re moving from a furnished rental property, you probably won’t have larger items such as beds or sofas, so think about whether you can transport everything in your car, or if you’ll still need to hire a bigger van. Whichever way you choose to move your property to your new home, it’s always a good idea to check that your items are insured whilst on the move.

Essential items

Moving day can be long and tiring. The last thing you’ll want to do is go to the supermarket to buy food for the first night in your new home. So, before you start the move, get together all the essentials you’ll need including some basic food items, a couple of plates, some cutlery, the kettle, milk, tea and coffee, and some cups.

How things work

As soon as you’re in, it’s time to familiarise yourself with how everything works. Find out where the water shut off valves are – these can usually be found in the kitchen cupboard under the sink – as well as where the boiler is located and how the central heating operates. It might also be worth bleeding the radiators straightaway to make sure they’re working at full capacity.

Meter readings

When you’ve located the gas and electricity meters, find the shut off valves and circuit breakers, and familiarise yourself with the trip switch in case you ever lose power.

Taking meter readings for both your gas and electricity is one of the first things you should do. Providing up-to-date meter readings to your utility companies will make sure your bills are accurate from the start, and will avoid expensive estimated bills. Cutting down on any unnecessary expenses when you first move in is essential for your finances and small things like this can make a real difference.

Buying furniture

Once you’re settled, you might need to start getting some additional items for your new place. If you need to save money, consider buying second hand from sites like Gumtree or eBay or you may even get something for nothing on sites like FreeCycle where items are offered for free so long as you’re willing to collect them yourself.

Once you’re in you can look forward to making your new house a home. But this is just the beginning of your journey. To learn more about managing finances in your new place, read our helpful guide.

Yes (subject to Lending Policy at the time of application), in order to transfer your mortgage to a new property you need to speak to one of our mortgage advisers on 0345 602 8301.*

*Lines are open 8am to 7pm weekdays and 9am to 1pm Saturdays.

If you are buying a new home then you will have to pay for a valuation of the property.

If you are remortgaging, then you don’t have to pay for your valuation.

You may also want to consider instructing a separate survey to provide you with a more detailed assessment of the condition of the property.

More information on the types of survey available can be found on the ‘Home Surveys’ section of the Royal Institution of Chartered Surveyors website.

Please note that if you do instruct your own survey, this will be a separate contract between you and your chosen survey provider with separate fees applying. We will always rely on the mortgage valuation for the purpose of agreeing the mortgage. Please be aware that a physical valuation may not take place on all cases.