Post Office Mortgages

Choosing the right Post Office Mortgage Deal

The Post Office offers a wide range of mortgage types:

• Fixed rate mortgage deals – Post Office Fixed Rate Mortgage deals could be suitable for you if you want your monthly repayments to stay the same for a set period. At the end of your fixed rate period, the rate reverts to the Post Office’s own rate, which is the Bank of England Base Rate currently 0.5%) plus 3.99% for the rest of the term. The Post Office offers fixed rate mortgages and remortgages ranging from 60% to 95% loan to value LTV).

• Tracker mortgage deals – Post Office mortgage tracker mortgage deals follow the Bank of England Base Rate (currently 0.5%), plus an additional percentage. This additional percentage rate is set by the Post Office for the first two years. After that, the rate will always be the Bank of England Base Rate (currently 0.5%) plus 3.99% for the rest of the term. Because the Bank of England Base Rate fluctuates over time, your mortgage rate and your repayments will also go up and down accordingly – so if you do not mind your payments fluctuating, a tracker mortgage deal could be something to consider. The Post Office currently provides tracker mortgage deals at 60% and 75% LTV.

• Help to buy mortgage deals for first time buyers – The Post Office is participating in the Government’s Help to Buy scheme, which allows people with a deposit of as little as 5% to buy their own home. The scheme offers mortgage lenders the chance to lend to people with low deposits with the Government acting as a guarantor for the loan. As well as the specific criteria that are in place for the Help to Buy scheme, you will also need to meet the Post Office’s standard mortgage lending criteria.

• Buy to let mortgage deals – If you want to buy a property to rent out to tenants, the Post Office could help, with a range of fixed rate buy to let mortgage deals ranging from 2 to 5 years in duration at 60% LTV.

• Retirement mortgages – PO offer mortgage products for borrowing in retirement. You can take out a mortgage up to age 80 on an interest only basis or on a repayment basis up to age 90. It is available to people who are mortgage free (unemcumbered) and the loan represents no more than 30% of the property value for interest only and 50% LTV for borrowers who opt for a capital repayment strategy.

Why choose a Post Office Mortgage Deal?

Some of the features and benefits of Post Office mortgage deals include:

• Portable mortgage options – take your Post Office mortgage with you when you move home
• Flexible mortgage deals – Make overpayments at any time (conditions apply)
• No higher lending charge payable – these are paid by the lender
• Simple arrangement fee system – Post Office mortgage products are either fee-free of have one fee of £999

Buying Your First Home

Post Office a number of options to help you buy your first home.

1. Post Office First Start Mortgage

Saved enough deposit but limited based on your earnings on how much you can borrow?

Post Office First Start Mortgages allow you to include a family member’s income when assessing affordability to borrow.

The maximum loan you can borrow on this basis is £500,000 with affordability calculated on the combined incomes of you and your sponsor. You and your co-borrower are liable for the total loan and monthly repayments. There is an option for the co-borrower to become a joint owner of the property.

Direct debits need to come from one account however you can decide on the contribution split between you the sponsor. The co borrower will need to be a close relative (normally a parent or step parent).

2. Post Office Family Link Mortgages

Post Office offer a type of shared ownership mortgage which allows parents to use the equity in their home to help get their children onto the property ladder.

This mortgage is suitable for people who can afford a mortgage but do not have the deposit saved required to qualify for a mortgage in their own right.

How does the “Family Link Mortgage” work?

Post Office will lend 90% of the value of the property you wish to purchase. The 10% balance is secured against your parent’s home or a close relative’s home (assistor). This property needs to be mortgage free.

In the first 5 years you make two repayments. The first one is towards your assistor’s mortgage which is interest free. The second repayment is towards your own mortgage which is subject to interest repayments.

For the remaining mortgage term you make a monthly mortgage  repayment.

Am I eligible for this mortgage?

You need to be a first time buyer to qualify, 18 years old or older and the maximum loan should not exceed £500,000. Household income needs to be at least £20,000 pa.

The assistor to the mortgage needs to be mortgage free and have a household income of £20,000 or more. They need to be under the age of 75.

As with all Post Office Mortgages after the initial period the interest rate will revert back to the Bank of England Base Rate.

While many prospective buyers choose to make lifestyle compromises as they save towards their first home, there is no ‘right way’ to reach your deposit goals. Some FTBs will prefer to take longer saving for a deposit rather than cut back on their monthly spending (23%), whereas others will be willing to compromise on the property itself (17%). Half of all FTBs (56%) will also turn to their family for financial assistance to help build their deposit.

One inevitable element of the house hunt that all buyers will need to contend with is finding an affordable area in which they can invest their hard-earned money.

Post Office Money has also launched a new online tool, allowing new buyers to map out their deposit plans based specifically on property affordability in their chosen area: www.postoffice.co.uk/mortgages/this-is-my-home .

Ross Hunter

Post Office Money

Remortgaging Your Home

PO offer fixed and tracker mortgage rates. These rates are offered from 60% to 95% loan to value. Fixed rates can be taken out on a 2 year, 3 year or 5 year fixed term basis. Tracker rates are available over a 2 year initial rate term.

Post Office Retirement Link Mortgage

You can borrow into later life with Post Office with the option of borrowing either on an interest only or capital repayment basis.

You can borrow up to age 90 on a repayment basis and age 80 on an interest only basis.

As with any mortgage how much you borrow will be based on your income and the equity you currently have in your property. The maximum loan you can take out is £500,000. On an interest only basis you may borrow up to 30% loan to value (property must be valued at least at £250,000) and on a repayment basis 50% LTV (property must be worth at least £100,000.

As part of the assessment process PO will ensure the loan is affordable in the event of death of one party. Independent legal advice will be required for this type of mortgage to be taken out.

Buy To Let Mortgages

Post Office offer a range of competitive buy to let mortgage products for landlords. PO have a maximum of 3 properties per applicant with total borrowing not exceeding £1.5m. Properties need to be on the UK mainland.

Rates are offered on 2 and 5 year fixed basis and 2 years on a tracker basis. The maximum loan to value is 75%. Depending on the mortgage product you can opt to make repayments on either a repayment or interest only basis. With the latter you will be responsible for repaying the full capital amount originally borrowed back.

Interest Only Buy To Let Mortgage Deals

• 2 Year Fixed
• Valuation fees paid by Post Office

Call Post Office FREE on 0808 178 6813

Go to Post Office Website »

The current Post Office representative example of typical costs associated with one of their mortgages is.

With all mortgages taken out through the Post Office you are required to have buildings insurance (Post Office will want their interest noted on the policy)

Post Office Money Mortgages are provided by the Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority. Post Office Ltd is registered in England and Wales.