News

Help to Buy continues to grow and could be extended beyond 2023

The number of homes bought through the Government’s flagship Help to Buy scheme increased by 9% in the 12 months to March 2019 with the figures also rising for first time buyers.

The data published by the Ministry of Housing, Communities and Local Government (MHCLG) show that 52,404 home sales were completed under the scheme during the 12 month period, the first time it has reached over 50,000 in a year.

Some 43,248 of these homes were bought by first time buyers using the Help to Buy scheme, a rise of 11% year on year, dispelling the myth that it does not help those taking their first step on the housing market.

In London there were 6,115 purchases using Help to Buy, up 30% year on year and first time buyers made up 95% of sales in the capital, some 5,838 homes.

The average price of properties bought through the scheme across England reached £300,487, up 4% from £288,462 at the same point in 2018.

Since it was launched in April 2013 some 221,405 homes have been bought using the scheme with 81% of them going to first time buyers. The mean purchase price of a property bought under the scheme since the start was £260,218, with buyers using a mean equity loan of £56,257.

Help to Buy offers buyers who have a deposit of 5% an interest free Government loan of up to 40% of the purchase price of new build homes in London and 20% in the rest of the country.

Now it could be extended beyond its current end date of 2023. The newly appointed Secretary of State for Housing, Robert Jenrick, said it will be considered. ‘This is a new administration, a new Chancellor, I think all options are on the table. I intend to have further discussions with Sajid Javid in the weeks and months to come,’ he said.

 

PropertyWire

26^th July 2019

 

 

Mortgages: switch now to cut your payments

Homeowners could save £200 a month thanks to competitive rates and higher prices, says lender

Rupert Jones 

The Guardian

Sat 20 Jul 2019 07.00 BST Last modified on Mon 22 Jul 2019 10.58 BST

More than £26bn worth of mortgage deals are due to mature in October, the largest monthly volume of the year, according to new figures released this week.

So if one of those thousands of home loans is yours, you might want to start thinking about looking for a new deal now – particularly as you may be able to make a chunky saving on your monthly payments.

Yorkshire building society – which came up with the figure after analysing market data – says some homeowners whose deals are coming to an end this autumn could save about £200 a month by remortgaging.

That is partly as a result of the current competitive mortgage rates, but also reflects the rise in house prices across much of the UK during the last few years.

Mark Harris at mortgage broker SPF Private Clients says: “Those coming off five-year fixes will find that rates are now considerably cheaper, which should mean you can make a significant saving on your monthly payments.”

He adds: “You may also find that your property has appreciated in value, meaning you qualify for a lower, cheaper, loan-to-value [LTV] band.”

Official Land Registry data shows that the average UK house price in October 2014 was £191,855, and had risen to £229,431 by May this year (the latest month for which figures are available) – an increase of just under 20%.

The Yorkshire says a homeowner who initially borrowed 85% of a £200,000 property in October 2014 at a market-average five-year fixed rate of 4.25% could benefit from a lower LTV of 65% and take advantage of the society’s two-year fix priced at 1.54%, which would save £201 a month in repayments. (However, this deal does involve paying a £1,495 product fee).

If you want to take out a five-year fix, decent rates now available for those remortgaging include:

• 1.77%from Skipton building society, where you can borrow up to 60% of the property’s value, with a £1,995 product fee
• 1.94%from Platform up to 60% LTV with no product fee
• 1.83%from Barclays up to 75% LTV with a £999 product fee

Often with remortgages, the lender will throw in a free valuation and/or free legal services.

Harris says if your mortgage deal is coming to an end, be prepared. “Speak to a mortgage broker a few months beforehand, though if you have a broker, they should be getting in touch with you. If you are looking for extra cash for home improvements or debt consolidation, you should mention this so it can be factored into the sums.”

People need to make sure they consider all the options available. “Your existing lender may be in touch offering another deal for you to slip on to, but make sure you compare this with what else is on the market rather than assuming it is the best option for you,” he adds.

Nick Morrey at broker firm John Charcol says remortgaging to a new lender is likely to be the cheapest option, since the likelihood of your existing lender offering you a product that is also the cheapest of all that are out there is slim. However, the latter route will be quicker than a remortgage, as it will not involve any underwriting or legal work.

“If your current product expires in October, you have approximately three months to tee up a remortgage, should that be the best option. Given that it takes on average up to two weeks to get an offer of advance from the new lender, and four weeks for the legal work to be done, this should be enough time to have everything in place to go the day after your current deal ends, he adds. “Considerable savings can be made compared to the deals available this time in 2014.”

According to Harris, if you have savings earning next to nothing in interest but you want to hang on to them rather than paying down the mortgage, it may be worth considering an offset home loan. These mortgages link your savings, and in some instances your current account, to your home loan.

“This will enable you to reduce the interest you pay while still retaining access to your savings in case of emergency.”

Meanwhile, Kevin Roberts, a director at Legal & General Mortgage Club, says a competitive mortgage market and slower house price growth are helping more first-time buyers make home ownership a reality.

However, he points out that HSBC found that people now expect to be on average 39 years old before they buy their first home. “There are clearly still challenges facing people trying to take their first step, particularly if they don’t have the support of a Bank of Mum and Dad.”

Banks are approving more loans, rates are low and there’s even an option where you don’t need to borrow

Marc Shoffman

July 6 2019, 12:01am, The Times

• Housing market
• Banking
• Economics
• London

 

First-time buyer mortgage approvals are on the rise, but many people are still struggling to get on to the property ladder because of demands for high deposits and wages.

Lenders approved 7.8 per cent more mortgages for first-time buyers in April compared with the same month last year, according to UK Finance, the industry trade body.

The average interest rate on a typical 90 per cent loan-to-value (LTV) two-year fixed rate mortgage is 2.65 per cent, compared with 2.73 per cent in July 2018, according to Moneyfacts, a data company. The average rate on a 95 per cent LTV mortgage over the same period has fallen from 4.04 per cent to 3.25 per cent.

Five-year fixed rates have also fallen. The average five-year fixed rate mortgage at 90 per cent LTV is 3.02 per cent, compared with 3.2 per cent this time last year, while 95 per cent LTV deals have dropped from 4.37 per cent to 3.64 per cent. “For those who can afford it, there is a plentiful supply of mortgage deals on the market that have been tailored to suit the needs of first-time buyers,” says Rachel Springall of Moneyfacts.

Deposit differences
Mortgage rates may be low, but raising a deposit can still be difficult for first-time buyers. There are still big regional variations in house price inflation, which affects requirements and the size of deposit needed. Research by Zoopla, a property portal, found that the average deposit first-time buyers need to purchase a property in one of the UK’s main cities is £38,418, but can range from £18,449 in Liverpool to £119,000 in London.

New mortgage borrowers are benefiting from falling prices in the south, according to Zoopla, particularly in London where prices fell 0.4 per cent in the 12 months to May.

This drop means the average annual income required to buy a home has also fallen to £84,000 in London, which Zoopla says is the lowest in four years. In contrast, rising prices in cities such as Manchester and Leicester have pushed the average income needed to buy up by 19 per cent and 20 per cent respectively. Richard Donnell, research director at Zoopla, says: “While affordability in London has improved, first-time buyers will still need to earn more than three times the minimum income required to buy in Liverpool.”

Is now a good time to buy?
Mortgage brokers insist the market is ripe for first-time buyers despite uncertainties such as Brexit.

Joshua Gerstler, director of the Orchard Practice Financial Services, an adviser, says: “We always think that it is difficult for first-time buyers and that people had it much easier ten years ago. Then a decade goes by and they realise they were lucky to buy their first property when they did.

“If you are buying a home for the long term, Brexit should not have any influence on your decision.” Jane King from Ash-Ridge Private Finance, a mortgage adviser, says: “With interest rates low, lenders wanting to lend and a slight relaxation of criteria in the past year or two means now would be a good time to buy, especially with prices falling in some parts of the UK.”

Best buys
NatWest is offering the lowest rate on the market for a two-year fix at 1.38 per cent with a £995 fee, but you will need a 40 per cent deposit. Skipton Building Society offers a market-leading five-year fixed rate of 1.77 per cent with a £1,995 fee also at 60 per cent LTV. Yorkshire Building Society offers a 90 per cent LTV two-year fixed rate at 1.79 per cent with a £1,495 fee.

Some lenders are offering zero- deposit deals. Barclays relaunched its Family Springboard mortgage in May, which lets homebuyers borrow deposit-free at 2.95 per cent over five years as long as a family member or friend puts 10 per cent of the property value into a savings account as security.

First-time buyers can also get on the ladder through the government’s shared-ownership scheme, where you take out a mortgage for a share in the property that you own (usually between 25 and 75 per cent) and pay rent on the rest. Another option is the Help to Buy equity loan scheme, which provides a 20 per cent government loan (40 per cent in London) to those with a 5 per cent deposit to put towards the purchase of a new- build property.

The government has confirmed this week that the scheme will run until at least 2021.

King says that first-time buyers can get good deals with a 10 per cent deposit. “Don’t just look at the headline rate. Buyers should also consider added fees and charges and whether these are refundable if the sale falls through.”

She adds: “They should also check specifically that the lender will agree a loan for the type of property that they want to buy.”

 

 

Cheaper mortgage rates for new buy-to-let landlords

The week Barclays joined the slew of lenders cutting rates on buy-to-let mortgages.

Buy-to-let mortgage rates are tumbling as lenders unveil cheap deals in a bid to keep landlords in the market.

Figures released by Mortgage Brain, a platform used by brokers, show the average 40%-deposit tracker mortgage is 3% cheaper than it was three months ago, and a 30%-deposit tracker deal is 2% cheaper than in March. This means a landlord taking out a £150,000 mortgage would save £234 a year with a 40% deposit and £144 a year with a 30% deposit.

On Thursday, Barclays joined the slew of lenders cutting rates, including a reduction from 1.59% to 1.55% on its two-year fixed-rate deal to landlords with a 40% deposit. It also cut its 1.88% five-year fix to 1.83% with a minimum 25% deposit.

This followed moves by Halifax on Tuesday, which cut buy-to-let rates on some deals by 0.45 percentage points, and by Nationwide, which trimmed rates on its broker-only products.

Over the past two years, landlords have had to adjust to stricter lending criteria, as well as the phasing out of tax relief on mortgage interest payments by April 2020.

“The buy-to-let market has taken a real hit — there simply is not as much interest from landlords as lenders have been used to over the years,” said Aaron Strutt of broker Trinity Financial .

Lenders have been targeting the buy-to-let remortgage market to drum up some business and, incredibly, they keep cutting rates to tempt landlords in.”

There are also a record number of deals available to new landlords, a sign that lenders are targeting first-timers into the rental market.

There are 1,405 first-time buy-to-let mortgages, up from 645 in 2014, according to Moneyfacts, the price comparison website. The average rate for a two-year fix has plummeted from 4.01% in 2014 to 2.97% this month.

“Entering buy-to-let hasn’t been without its hurdles,” said Rachel Springall of Moneyfacts. “Rules designed to tighten lending don’t seem to have shaken up attitudes to attract first-time landlords.”

The Sunday Times

July 7 2019 12.01am

 

 

Why income protection is important in your 20s and 30s

It’s easy to dismiss income protection as something you’ll need later in life when age-related illnesses and conditions become more prevalent. However, recent statistics from healthcare and protection insurer, The Exeter, show an increase in the number of people claiming for income protection in their 30s.

Income protection not only protects you and your family if a physical condition means you can’t work, but it also pays out if you suffer with mental ill health. In 2017, mental health was the most common cause of claim on income protection policies in the UK, according to the Association of British Insurers.

Big life events are often a trigger for people to think about their cover.

Here, Peter Hamilton, head of retail protection at Zurich, reveals why you should consider income protection and other types of cover as you reach major life milestones.

Buying a house

It goes without saying that anybody buying a house should protect their home and the ability to make monthly mortgage payments against the risk of being unable to work.

Income protection cover provides monthly replacement income if somebody is unable to work because of long term illness or injury while a critical illness policy would provide a one off lump sum payment if a customer is diagnosed with a number of illnesses covered by the policy.

As well as the financial benefits of cover, most income protection policies provide speedy access to treatments such as counselling or physiotherapy to help people recover and ideally get back to work.  Critical illness policies also usually offer additional support services including access to counselling and advice on anything from sourcing childcare to money management.

This is especially important where people have no savings to act as a buffer to help with life’s ups and downs.

A recent Zurich report showed that despite more than half of UK adults having had unplanned leave from work including sickness or injury, they had no financial provision in place in case it happened again.  One in eight admitted they would need to sell their home if they lost their income, one in six reported having no disposable income and a quarter had no savings.

It’s also worth noting that there is still a misconception out there that renters don’t need protection but ultimately, if people are unable to work through illness or injury, the bills still need to be paid if tenants want to remain in their homes.

Getting married

Tying the knot is another trigger for investing in some sort of protection cover and the same goes for couples choosing to cohabit as married.

It’s important to think about it where partners are dependent on each other for splitting their outgoings. If one were to be hit by unexpected illness, having protection in place could mean the difference between staying in their home or having to sell up and/or move.  In the worst case scenario, if one half of the partnership were to die, having life insurance would lessen the blow – at least financially – for the remaining partner.

Interestingly, Zurich analysis has shown that more than 2.4 million cohabiting families across the UK (or 73 per cent) – the fastest growing family type in the country – do not have life insurance, potentially leaving their relatives open to financial problems once they pass away.  This compares to 56 per cent of married couples.

Having a child

Each year, we pay out millions of pounds in claims to customers and their families whose lives have been turned upside down by illness and worse still, by the loss of loved ones.  Income protection and critical illness can help to provide financial support for those affected by illness or injury, while life insurance means that financial support is in place for children and any dependents left behind.

Some critical illness policies also include children’s cover as an additional feature and will pay out up to around £25k if they are affected by a range of illnesses covered by the policy.  This can help families with any financial impact such as having to take time off work or help pay towards treatments or any changes that have to be made to the home.

Written by:Joanna Faith at YourMoney.com

17/06/2019

Joanna is an award-winning journalist with more than ten years’ investment and personal finance experience. She is editor of YourMoney.com.

Help to Buy or a Lisa? You should have both

Marc Shoffman outlines the differences between the schemes and how you can get two bites of the savings cherry

Marc Shoffman, The Times

June 21 2019, 5:00pm,

The government’s tax-free savings schemes, aimed at helping younger people to save or get a foot on the property ladder, have been a big hit. Almost 300,000 people have opened a Lifetime Isa (Lisa) since the accounts were introduced in 2017, and a similar number have bought homes using a Help to Buy Isa over the past three years.

Both schemes let you use your Isa allowance to build a tax-free savings pot, with the government chipping in a 25 per cent bonus. But which is better if you want to buy a home? Help to Buy Isa’s close to new applicants on November 30, so should you grab an account before they disappear? We compare the two schemes.

How much can you save?
You can save up to £4,000 each year into a Lisa to put towards a house deposit or retirement, until you are 50. The government will add a 25 per cent bonus to your savings once you have held the account for at least 12 months, up to a maximum of £1,000 a year. You can use your Lisa to buy a property anywhere in the UK up to the value of £450,000. If you use it for any other purpose than retirement or buying a house you pay a penalty that effectively forfeits the bonus.

The Help to Buy Isa can be used only for a deposit on a first home worth up to £250,000 (£450,000 in London). You can save £1,200 in the first month and £200 thereafter. The minimum government bonus is £400, so you will need to have saved at least £1,600 before you can claim. The maximum government bonus you can receive is £3,000, for which you need to have saved £12,000.

Age restrictions
You have to be aged between 18 and 39 to open a Lisa, and you can only pay into it until 50 (or when you buy your first home).

A Help to Buy Isa can be opened from age 16. You can continue saving into the account until you buy your first home, but you only have until December 1, 2030, to claim the government bonus.

Product choices
The money you put into either scheme comes under your annual Isa allowance of £20,000. You can hold cash Isa versions of either account, but the Lisa also has a stocks and shares option.

You can’t hold a regular cash Isa and Help to Buy Isa at the same time, unless your bank or building society allows this under a single product. Help to Buy Isa interest rates are higher than those of the Lifetime Isa. Barclays is offering 2.55 per cent and you can get 2.5 per cent through Nationwide. Penrith Building Society is offering 3 per cent, but you can only manage the account in branch or by post.

The best rate on a Lisa is 1.1 per cent from Nottingham Building Society or 1 per cent with Skipton Building Society. Savings in a Lisa can be invested through an investment platform, such as AJ Bell or Nutmeg, but this is not advisable if you are looking to get on the property ladder quickly.

Holly Mackay, the founder of Boring Money, a comparison website, says: “You can open a stocks and shares Lisa and get the potential benefits of the stock market as well as the bonus, but I would not consider this unless you have at least a five-year plan because markets can be volatile in the short term.”

The bonus
This is paid at different stages of the home-buying process under the two schemes.

You can use your Help to Buy Isa savings as a deposit on exchange of contracts, but you won’t receive the bonus until the house purchase completes. You can use the bonus money to reduce your mortgage. Lisa savers get their bonus at the end of the first year and then monthly from that point onwards, so it can accrue interest. Both schemes let you put money back into the accounts if the sale falls through. You can also use the Lisa to save for your retirement and access your money from age 60, but you can only use the government bonus once.

Exit penalties
You can withdraw money from a Help to Buy Isa at any time, but if you make a contribution in the same month the total can’t exceed £200. Don’t close a Help to Buy Isa unless you’re buying a home, or you will lose the government bonus. The Lisa is more punitive. You will pay a 25 per cent charge on any withdrawals made before you reach age 50 unless you use them to buy a house. Some feel that this is unfair. Tom Selby, a senior analyst at AJ Bell, an investment manager, says: “Lowering the exit charge and scrapping the age restrictions would supercharge the Lisa for future investors.”

 So what should I do?
Savers can hold a Help to Buy Isa and Lisa at the same time, but can only use the bonus from one to buy a house with. However, you can combine your bonus and savings if you buy property with someone else who also uses the schemes.

Mackay says: “Lisa’s are great options for younger people who can afford to save up to £4,000 a year. Help to Buy Isa’s won’t get you such high bonuses, but are probably a better bet for those who won’t be able to save so much, don’t want to go near shares and who want the flexibility of possible withdrawals. If you are under 40 I would probably have both to keep my options open. The best Help to Buy Isa rates are up to 2.5 per cent, so what is there to lose? You won’t get your bonus if you withdraw, but the Lisa will pay a 25 per cent bonus.”

Marc Shoffman

The Times

 

 

MORTGAGES are often one of the greatest expenditures a person will ever make, which is why many people will be keen to find the type of mortgage which suits them the best. What is a fixed-rate mortgage?

By JESS SHELDON, The Express

PUBLISHED: 13:56, Tue, Jun 18, 2019| UPDATED: 13:56, Tue, Jun 18, 2019

When applying for a mortgage, the type that you choose will likely come down to what suits your circumstances. The mortgage types are split into two: either fixed-rate or variable. Of the latter, mortgages are split into three different categories: known as trackers, standard variable rates (SVRs) and discounts. As it may be inferred from its title, a fixed-rate mortgage has a fixed interest rate, which doesn’t change for the length of its deal.

“You’ll see them advertised as ‘two-year fix’ or ‘five-year fix’, for example, along with the interest rate charged for that period,” the Money Advice Service explains.

Deborah Vickers, channel director and financial expert at personal finance comparison site moneyguru.com, also shared some insight into this type of mortgage.

She said: “Regardless of the mortgage deal, do your research. There are so many different types of deals. “Fixed rate mortgages are great as you know exactly what your mortgage will cost, so this can help you with budgeting,” Ms. Vickers said.

“The rates on a fixed deal are normally higher than variable products and if the interest rates fall, you won’t see your payments drop. “The channel director also suggested doing some research before committing to one type of deal.

She said: “Mortgage fees can add up, so look around. If you like to budget and know what you are paying, then fixing could be a good idea. “It’s difficult to predict future of rate moves. The rates may fall, but you still have fees to pay. “It is worth checking all rates and fees when reviewing mortgage deals.”

The Money Advice Service explains that an advantage of a fixed-rate mortgage may be the peace of mind that monthly payments will stay the same for the deal period – which may help some people to budget.

It does point out though that fixed-rate deals may tend to be slightly higher than variable rate mortgages. Additionally, a borrower on this deal would not benefit if interest rates fall. It may also be that they face charges should a person want to leave the deal early.

Ms. Vickers warned borrowers about simply going for the cheapest rate, telling Express.co.uk: “When looking for something cheap, you have to be careful. When it comes to mortgages there are lots of rates and fees to watch out for.

“Something that looks ‘cheap’ and affordable monthly may come with a higher arrangement fee, a longer term, etc. You have to understand all costs associated with a mortgage product.”

Standard variable rate (SVR)

A Standard variable rate is the normal interest rate which a lender charges homebuyers, and will last as long as the mortgage, or until another mortgage deal is taken out. “Changes in the interest rate might occur after a rise or fall in the base rate set by the Bank of England,” the Money Advice Service states.

It also points out that while this may give a person freedom to overpay or leave, their rate can be changed at any time. “Each Lender has an SVR and [they] are dependent on the Lender – they can be anything from two or five or more percentage points above the base rate,” Ms. Vickers said.

“They can be cheap in some circumstances, if the base rate drops, on the reverse of this, they could go up. The main thing to consider with this is the uncertainty, you may be better to remortgage.”

Discount mortgages

A discount mortgage is where a discount is offered off the lender’s SVR, for a particular length of time. This means that the rate may be cheaper, meaning monthly repayments in that period are lower. The amount one pays may also be reduced if the SVR is cut too.

That said, it may not be preferable for some, as the lender may raise the SVR at any time, and these borrowers could be affected if Bank of England base rates rising. Other options are tracker mortgages, offset mortgages and capped rate mortgages, which could be of interest to some borrowers. When it comes to picking mortgage deals, Ms. Vickers continued: “Looking at what type of deal you want is a big choice and it is never easy. There are two distinct camps, fixed or variable.

“With a fixed you know exactly what your mortgage will cost, your payments will not change, no matter how high the rates go. The downside is that rates are normally higher than variable products.”

 

From deals to interest rates and your own finances, there can be a lot for a first-time buyer to take into account when finding the right mortgage.

LOULLA-MAE ELEFTHERIOU-SMITH 

HOMES & PROPERTY WEBSITE

Thursday 23 May 2019 16:51 BST

 Getting your foot on the property ladder is a big step – and there are countless factors to consider, from your personal finances to pinning down your dream home

But while it can be a complex process, it’s one that first time buyers across the UK are navigating in increasing numbers.

New data from UK Finance shows that in the first three months of 2019 the number of first-time buyer mortgage completions rose in London by 1.6 per cent compared to the same period last year, while Scotland and Wales also saw increases, with the biggest recorded in Northern Ireland.

Before you even start looking you’ll need to have an idea of your budget, which will depend on how big a deposit you have saved and how much you will be able to borrow to fund your purchase.

 How many times my salary can I get a mortgage?

Mortgage lenders will lend anything between four and five times a person’s salary. But there are a range of things to take into account.

“One of the key points is dependent on how much of the deposit you’re putting into the property,” Richard O’Reilly, mortgage expert at Habito told Homes and Property.

“For example, Virgin Money will lend five times your income if you earn over £30,000 and have a 15 per cent deposit as a minimum, subject to credit checks and factors that will deduct from borrowing.”

It’s important to remember that outgoings such as credit commitments, personal loans, student loans, car loans “will start eating away at what you can borrow,” says O’Reilly, which is why a thorough evaluation of your income and outgoings is needed before applying for a mortgage.

Each lender has different criteria to stress test what they believe you will be able to afford if circumstances change, such as interest rates increasing.

Big commitments such as dependent children or dependent adults will be taken into account when checking your ability to afford a mortgage.

Getting your finances in order is a must. Being overdrawn at the bank can be viewed the same as having a credit card balance, while missing or defaulting on payments will also affect how willing a lender is to lend to you.

“Your credit file covers the last six years – make sure you pay your bills on time and always stay in the black if you can,” says O’Reilly.

 What is the maximum mortgage-to-income ratio?

Some lenders will go up to 5.5 times your salary, but that tends to be reserved for those with a six-figure income, according to O’Reilly.

 What is the minimum mortgage amount you can borrow?

This depends on the lender and many will have thresholds of anything between £25,000 and £75,000. Some, such as Halifax, have no minimum value for borrowing, but will assess each individual case on its merit.

If you find yourself in a position where you don’t need a big mortgage, O’Reilly suggests looking at a personal loan, though these tend to get capped at £15,000 and may have a higher interest rate.

 How long should I get a fixed-rate mortgage for?

It is possible to get a fixed interest rate on your mortgage for between two and five years, but there are increasingly options for seven or 10 years, too. The general advice is to shop around to find the best deal for you.

“For first-time buyers we recommend only a two-year deal,” Owen Cook, chartered independent financial adviser at Ablestoke Wealth Management says.

“After that deal ends you’re free to remortgage with another bank. If you go into a fixed-rate mortgage for five years but want to move after two you might have a penalty on that.”

If your circumstances are likely to change, it’s worth considering your options.

“If you’re buying your family home you’re much more aware that’s where you’ll be for 20 years, but if you’re a first time buyer you could be in a part of your career where you salary will likely rise, or you might meet a partner and be able to afford a bigger property elsewhere. Two years comes round quite quickly.”

But for people worried about interest rates increasing, for example, there are a number of seven and 10 year products on the market that let you fix for longer.

“And most lender’s products are portable so you could take that mortgage and use it on another property if you think you’ll move within five or seven years,” says O’Reilly.

 How much should I aim to have for a deposit?

You usually need to have at least five per cent of a property’s value saved, but essentially, the bigger the deposit the better.

“You’ll get a better interest rate, and if you’re in a position to make overpayments on your mortgage a lot of lenders will let you do this without giving penalties,” says O’Reilly. “If you can overpay by £300-£500 a month you can knock a good six or seven years off the mortgage.”

But Cook adds that it’s important to look at your finances holistically, as other personal factors can take precedent in finding the right mortgage.

“If someone has an inheritance, should they put some of it down on a deposit, borrow more and invest the rest? It depends client by client, but if you have debts in the background such as a student loan, paying that off first might be better than having a bigger deposit.”

 What can I do if I am on a low income or have a small deposit?

Having a lower income or only a small deposit to start off with can make getting a mortgage feel impossible, but there are schemes to help you on your way.

First-time buyers saving for a mortgage can open a Help to Buy ISA, where you earn interest on your savings and the Government will top up your money with a 25 per cent bonus.

The amount you can get a bonus on is capped at £12,000, which means you can get as much as £3,000 added to your savings pot, to put towards a home costing under £450,000 in London.

There is also a Lifetime ISA, which has been created for people to save for their first home or for their retirement, and also provides a 25 per cent bonus.

Paying into it is more flexible than the Help to Buy ISA, but either product will make getting on the ladder that little bit easier.

The Help to Buy scheme offers an equity loan, which is only available for new builds, where the Government will lend you up to 40 per cent of the cost of a London home, which will bring your cash deposit down to five per cent and your mortgage to 75 per cent of the purchase price.

And if you can’t afford to buy 100 per cent of your home you can buy a share of it through the Shared Ownership scheme. You can get a mortgage on between 25 per cent and 75 per cent of the property and pay rent on the rest.

 

Many borrowers unaware of role of mortgage advisers

Almost a third (31%) of consumers who went direct to a mortgage lender didn’t understand how an independent mortgage adviser could help with their search.

According to new research from Legal & General Mortgage Club among 2,000 UK homeowners, more than two-thirds (69%) of borrowers who went straight to a lender hadn’t remortgaged in the last five years and nearly three-quarters (74%) stayed put because they felt they had ‘a good deal’.

Legal & General Mortgage Club says that without seeking mortgage advice, these individuals would have missed out on the thousands of extra mortgages deals that are only available through a mortgage adviser.

 Customer misperceptions

Legal & General Mortgage Club plans to use the research to tackle the misperceptions about mortgage advisers and raise awareness about how they can help borrowers to find the right mortgage for their needs.

The analysis showed that the mortgage industry still needs to demonstrate the value of mortgage advice for borrowers – just 30% of those who went direct to the lender said that they would likely speak to a mortgage adviser next time.

Three in every five (60%) who didn’t seek advice when they took out their last mortgage didn’t know mortgage advisers were there to help the borrower, and just over a third (34%) thought a mortgage adviser was there to support the lender.

  More choice through a broker

Borrowers going through a mortgage adviser have access to thousands more mortgages than those going direct to the lender, including specialist mortgages for the self-employed and later life lending solutions such as lifetime mortgages.

Data from mortgage sourcing platform Twenty7Tec shows that almost 12,000 mortgages are available through mortgage advisers, compared to just over 2,000 directly on offer from lenders to consumers.

Homeowners who benefitted from a mortgage adviser searching the market for the best mortgage deal were more likely to have switched in the last five years (29%), compared to just one in five (19%) of those who went direct.

These borrowers would have benefitted from opportunities to pay less interest as rates on mortgages fell, with the average rate on a 2-year fixed term mortgage falling from 2.6% in June 2014 to 1.48% in June 2017.

Borrowers who used a mortgage adviser were also overwhelmingly in favour of doing so again. Nearly all (98%) said that they found the support of a mortgage adviser ‘valuable’ and a further 95% said they would recommend using a mortgage adviser to family or friends.

Kevin Roberts, director, Legal & General Mortgage Club commented: “Whether someone is taking out their very first mortgage or unlocking housing wealth in retirement, the value that mortgage advisers can bring to borrowers can make a huge difference when it comes to moving onto and up the property ladder.

“Yet, our research shows that potentially thousands of borrowers still don’t know how a mortgage adviser can help with their mortgage search and as a result they could be missing out on a better deal.

“The figures speak for themselves. Those who used a mortgage adviser when they took out their last mortgage would overwhelmingly recommend their family and friends to seek independent, professional advice.

“They’re also more likely to switch their mortgage product and when they do borrowers can have access to nearly six times the number of products available than if they went direct.”

By admin in Lending news

Mortgage Finance Gazette

3rd June 2019

Local demand for property, pricing and your home’s kerb appeal can all affect how quickly a house sells in a sluggish market.

LOULLA-MAE ELEFTHERIOU-SMITH

HOMES & PROPERTY Wednesday 8 May 2019 15:26 BST

If it feels like selling your home is taking forever you’re not alone. New research from Rightmove has found that more than a quarter of properties currently for sale have been on the market for at least six months.

The property website found that 28 per cent of properties have been on its books for half a year or more, while eight per cent of properties have been listed for at least a year.

House sales have been sluggish for the past few years thanks to tax changes, mortgage restrictions and high prices being compounded by Brexit uncertainty. Rightmove said 26 per cent of properties were on the market for six months or more in 2018, and 27 per cent were in 2017.

While there are always a number of factors at play in the market, from overall demand in a particular area to the price and presentation, there are changes a seller can make to entice potential buyers — without dropping the asking price.

“If you’ve failed to find a buyer after several months of marketing, then it could be that overall demand in your area is low due to local market conditions. However, if some properties are selling and yours is not, then you either have a property with limited appeal or the price is too high,” said Rightmove’s Miles Shipside.

“After six months or more on the market, your property will appear pretty stale and could be ignored by some prospective buyers. A price reduction will be required to make them take notice, or if you do a makeover then make sure new photos and an updated description show it off.”

Here are eight ways to get your home in the best state to avoid reaching that six-month mark.

1. Don’t rush to put your home on the market

If your listing isn’t ship shape then it could affect your ability to sell the property.

The majority of listings will receive 70 per cent of interest in the first two weeks of being on the market, so know who you want to sell to and make sure you have at least five good quality photos, a floor-plan and a well-crafted description of the property before it goes online.

2. Give the best first impression

First impressions really do count for buyers and anyone coming to the door will make an initial assessment before they’ve even walked through yours.

Be sure to spruce up the outside of your house if you need to – think painting the front door, hanging a few baskets or giving the garden a tidy.

3. Use the professionals

Use whatever tools you or your agent may have at your disposal. If you’re able to use a photographer or your agent can offer one to take pictures of your home, then take advantage to make sure buyers looking online or in estate agents’ windows see it at its best from the get go.

4.Clear some space

It’s important to help buyers picture themselves in your home, but that can be hard to do if there are toys lying around or family photos covering the walls. De-clutter your home and let potential buyers imagine themselves making it their own.

5.Not everyone likes animals

Pets and property viewings rarely mix – make sure any dogs, cats or hamsters are well out of sight when potential buyers are around — and don’t forget to hide the litter tray, too.

6. Listen to advice

Estate agents may not give you the advice you want to hear when you’re preparing your home for sale, but it may well be the advice you need.

Don’t forget, they deal with dozens of sellers each month and should be giving you honest and impartial help to best market your property.

7. Be accommodating

When it comes to viewings it can sometimes be hard to have the owner in the property when buyers are taking a look around.

It helps to be as accommodating as possible, which sometimes means simply going out and leaving your agent to it.

8. Plan your price

Pricing your home depends on a number of factors, from how much work you’ve put into the place to how quickly you want to sell it, but it’s always key to have a strategy.

Researching how much you can reasonably expect for a home in your neighbourhood, pricing competitively and ultimately being prepared to negotiate is more likely to make the odds of selling in your favour.