Before a lender will provide a mortgage offer they will conduct the underwriting process. This will involve checks on the property and the borrower. During the inspection of the property any issues identified may involve an undertaking. An undertaking means that the building is basically in good repair but the lender requires the borrower to undertake to carry out minor repairs to bring the property up to the standard of an average property. This must be completed within 3 months of the offer and is a condition of the mortgage.

A Cashback mortgage  offers a genuine non repayable sum that is either a fixed amount or a percentage of the amount borrowed. The amount is not added to the loan and does not need to be paid back as long as the borrower stays with the lender for a set term. The lower the LTV, the higher the cashback. 

When a lender offers a high LTV mortgage they often require a HLC. This is often used to buy a mortgage indemnity insurance guarantee (MIG) policy that is designed to protect the lender if the property is repossessed and sold for less than the outstanding mortgage. The MIG policy is provided by an insurer who then has the right to sue the borrower for the amount paid to the lender under their rights of Subrogation.

An endowment is a regular savings target investment with inbuilt life cover. They are offered by Life assurance companies and are used as an interest only repayment vehicle and are designed to pay off the mortgage whether the person lives or dies during the term. A Full With profit endowment is a fixed term and fixed premium savings option that will pay off the mortgage by the end of the term or earlier if death occurs. They are very inflexible in respect to early repayment and can be very expensive.

A capped rate mortgage is a variable interest rate mortgage often set at the lenders SVR and will move up and down, but will not exceed the cap within the special deal term. The Cap is the highest the rate will go.

With a capital repayment mortgage, the borrower pays part capital and part interest throughout the term to clear the debt. A repayment vehicle is not required. A decreasing term insurance is required to pay off the outstanding debt if death occurs before the end of the mortgage term. It is a pure protection policy where the sum assured (death benefit) reduces as time goes by.

When an adviser gathers the information to provide a mortgage recommendation they must first establish affordability. A self-employed borrower will have to provide information confirming their income and expenses using their self-assessment details and the Net Profit figure is used. This is calculated using: The record of  the turnover (income from the business activity) and expenditure. Gross profit = Gross turnover less raw materials and goods purchased to sell (i.e. stock). The Net profit = Gross profit less expenses.

Within the FCA Mortgage Conduct of Business sourcebook the rules state the definition of a regulated mortgage. Only mortgages that meet certain criteria will be regulated by the FCA and will be covered by the FOS for complaints as well as FSCS protection. The definition of a regulated mortgage states that the borrower or a family member must occupy at least 40% of the dwelling for residential purposes.

In 2015 the government introduced a 3% stamp duty surcharge across all bands on 2nd properties whether purchased as a buy to let or holiday home. The surcharge is only payable if the buyer is purchasing a residential property which is not a replacement for their main residence and the property is valued at more than £40,000.

Within the 3 main Land Law Acts of 1925 the borrower has the right to "Let" a property, but must state to the lender that the mortgage is for Buy to let purposes. If a person buys a property for their own residence and then subsequently Let the property without notifying the lender this is a breach of the mortgage terms. Borrowers must request a "Consent to Let" if they want to Let out their property.