Getting mortgage-ready

Buying a home takes careful preparation and planning. As well as finding a property you like, you need to get your finances in good order before lenders review them and assess your ability to make repayments on your loan.

Save up
During the recent lockdown, many lenders pulled their ‘high loan-to-value (LTV)’ products which typically only require a deposit of 5% or 10% (often first-time buyers) to take out a mortgage. The good news is that lenders are returning to the high LTV market, but you may need to act quickly to secure the deals. This is where we can help as we have our finger on the pulse.

Save as much as you can towards a deposit. Open a dedicated savings or investment account and make sure it’s paying a competitive interest rate.

Check your credit score
Even if you’re remortgaging or moving up the housing ladder your credit history will be important. A good credit rating can help you secure a better mortgage deal, with a lower interest rate.

The general rule is the higher the score the better, and the more likely you’ll be accepted for a mortgage or other credit. If you’re looking to take out a mortgage or remortgage, check your credit score regularly. You can usually get a simple overview for free and it pays to check with several different sources. Credit Karma, Equifax, clear Score and Experian all offer a service to help you understand your rating.

If you find it is lower than expected there are ways to improve it:

  • Pay more than your minimum payments on credit cards
  • Bring your overdraft down
  • Close unused credit accounts
  • Register for the electoral roll

Budgeting
It’s important to review your income and outgoings. If you have accounts, memberships or subscriptions that you no longer use, it makes sense to close them down.

Prospective lenders will also look at the debt you currently have, including whether your current account is in credit. If you have any savings, it makes sense to pay off loans and credit cards but be sure to leave yourself enough saved to cover emergencies.

Support from families
Research carried out suggests the bank of Mum and Dad or even the bank of Gran and Grandad will help to buy 175,000 homes during 2020 by lending or giving you cash to help with a deposit or acting as a guarantor.

Get some good advice
As qualified and professional mortgage advisers we know what a good deal looks like, we know the market and we’ll do the hard work for you

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Mortgage affordability in a post-COVID world

Back in March, the Bank of England slashed interest rates to an all-time low of 0.1%, in a bid to alleviate the severe economic pressure caused by coronavirus. As the base rate cut fed through to mortgage rates and with the continuing pressure of a closed mortgage market, lenders responded by withdrawing mortgage offers, increasing rates and pulling products from the market.

Between March and May:

  • 2,656 mortgage products were withdrawn, many of which were high loan-to-value (LTV) deals (i.e. those requiring a smaller deposit).
  • 396 two-year fixed and 374 five-year fixed deals at 90% and 95% LTVs were pulled from the market

Lenders make a cautious return
As certain social distancing restrictions began to be lifted in May and the property market reopened for business, lenders began relaunching higher LTV deals and products aimed specifically at first-time buyers, such as Help to Buy loans.

With the property market still in the early stages of recovery, it’s worth being pro-active and following some of these tips to maximise your chances of mortgage approval:

  • Save as much as you can – while many people are experiencing financial difficulties during the pandemic, many of us are also spending a great deal less than usual. Getting your deposit as high as possible will increase your chances of mortgage success.
  • Clear your debt – when considering your application, lenders will look at any outstanding debt. Clearing as much debt as possible, as well as closing any unused accounts, will increase lenders’ confidence in your ability to repay your mortgage.
  • Understand your credit score – the better your credit rating, the higher the likelihood you’ll be accepted for the best mortgage deals. Understanding your credit rating and how to improve it is key to moving forward with a successful mortgage application.
  • Keep excellent records of self-employed earnings – providers can be more nervous about lending to self-employed people, so having excellent records of your earnings over the past two or three years (depending on the lender) can really improve your chances.

Consult the experts
We’re on hand to make sure you get a great deal for your circumstances, and one that gives you the highest chance of success. Whether you’re a first-time buyer or a second stepper, we’re here to guide you through this difficult period.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Mortgage affordabilty

KEY TAKEAWAYS

  • The BoE base rate cut has led to mortgage lenders cutting products from the market, particularly high loan-to-value (LTV) deals
  • This has had a particular impact on the prospects of first-time buyers and people with smaller deposits
  • Since the reopening of the property market, we are seeing signs of recovery and new high LTV products being launched, however due to high demand some of these are now being withdrawn
  • The market is still early in recovery, but there are things you can do to improve your chances of getting a mortgage, including saving as much as you can for a deposit, clearing outstanding debts and getting in touch with us.

Why you should get insurance now

When you get wrapped up in the excitement of buying a new home the last thing you probably want to think about is if you pass away what will happen! Most of the time life just ‘gets in the way’ of organising important things like life cover. However, for a very cheap price you could be saving your loved ones from financial distress.

Young homeowners – The biggest mistake most people make is not insuring themselves while they are young. This is mostly because you don’t think anything will happen to you. I always say the best time is now and you will never get a cheaper quote than you will right now at this age!

Families – Losing your partner at any stage in life can be devastating, but it may be particularly devastating when children are involved because of the financial pressures of raising a family. Ensuring your children and other dependants are provided for in case you die should be a top priority but less than a third of people in the UK have life insurance.

Keep it simple
Many products are available but a simple level-term policy, where a pre-decided lump sum is paid out should you die within a stated period, is among the simplest to arrange and is typically not very expensive. As a rule of thumb, life cover should provide ten times the main breadwinner’s income. The amount should cover any outstanding debts, including mortgage, regular outgoings, potential university fees and so on. The term should reflect the needs of your dependants; Children will probably need support until they leave education and a partner may need it until pensionable age.

Joint or single cover?
A joint policy will cover you and your partner, paying out on the first death within the term. Alternatively, you can have separate single-life policies; a little more expensive but potentially two payments. A young, fit individual should find life cover affordable. Be open about your lifestyle, especially if you have existing medical issues. Premiums rise with age, lifestyle factors, such as smoking and other factors that affect your life expectancy.

Keep under regular review
Reviewing your protection needs helps make sure you have the right cover in place for your financial circumstances, giving you the peace of mind that you’ve got things covered.

As with all insurance policies, conditions and exclusions will apply.

Home improvements to add value to your home

Evidence suggests that many more of us are putting down roots and choosing to stay in our current homes for longer. The average time a homeowner in the UK stays in their property is 21 years.

This contrasts with the 1980’s, when a fast-rising property market encouraged a move every eight years on average.

However, high prices in some regions, Stamp Duty and the other costs of moving, are now encouraging us to stay put and spend money improving our properties.

With so many more people staying put and embarking on some home improvements, it’s a good idea to select improvements and renovations that will add value to your property in case you do decide to move on one day.

Some of the best improvements to add value to your property include (plus potential value added):

  • Converting your cellar — 30%
  • Converting your garage to living space — 15%
  • Extending the kitchen — 15%
  • Loft conversion to add a bedroom — 15%
  • Increase living space with a conservatory or similar — 10%
  • Kerb and garden appeal — up to 10%
  • Fitting a new bathroom — 5%
  • Making the living area open plan — 3-5%

Here are some useful tips to bear in mind before embarking on your chosen project:

Check your deeds
There could be restrictions on what you can do, you may require planning permission, especially if it affects a boundary or external modifications are involved.

Check your policy
If you’re going to make any major changes to your home, you should contact your buildings and contents insurance provider first to avoid unintentionally invalidating your policy and check your policy covers you for accidental damage.

Get your paperwork in order
If you are looking at a large undertaking such as converting your loft, ensure you have the correct paperwork and certification, otherwise the money you spend may not be realised in the sale price.

Preserve bedroom space
Try not to reduce your bedroom count, you may want to convert a third bedroom into an en suite, but by losing a bedroom you will reduce the value of your property.

Be commercially-minded
Consider the neighbourhood you live in and the types of buyers likely to want to live there, for example spending money landscaping your garden may not appeal to a younger professional couple who want low-maintenance outside space.

Avoid personalisation
Unless you are prepared to redecorate when you come to sell, use a neutral colour scheme, introduce colours in soft furnishings and accessorises and personalisation with pictures or photos.

Hire a professional
Avoid a DIY disaster by only taking on projects you are confident you can complete.

I can help
Please get in touch if you are looking to fund your home renovations with a remortgage or second charge loan.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Managing mortgage stress – I’m here for you

Whether you’re a first-time buyer, a second- stepper or further up the housing ladder, buying a home is always a big move and can feel a bit like a roller coaster ride at the best of times. Now there is the added complications and worries that the COVID-19 pandemic may have caused for people’s lives, finances and general wellbeing.

Here are some tips that can help you navigate the home moving process as smoothly as possible.

Smooth sailing
Taking advice will save you time, money and stress. We are on your side, we know the industry and the most appropriate lenders, to be able to recommend the most suitable mortgage for you and we can offer useful advice on all aspects of the house buying process. More now than ever, the value of professional advice is immeasurable. As the mortgage market changes, it’s our job to keep our finger on the pulse. We’ll be able to help you get a decision in principle from a lender, which will give a seller the confidence that you are a serious purchaser.

Expert navigation
We can help you familiarise yourself with all the stages involved in getting a mortgage. We’ll explain important things like how affordability checks work, what paperwork you’ll need to provide to a lender in support of your application, and what costs and fees you should budget for. You will need to have saved a deposit – in most cases the bigger the deposit you can put down, the lower your interest rate is likely to be.

Check out your finances in advance
Start by taking a look at your income and outgoings; any lender considering your mortgage application will expect you to be on top of all your bills and be comfortably able to afford your monthly mortgage payments. It makes sense to cut back on things like unused subscriptions and watch how much you spend on things like eating out. Lenders will want to see a healthy credit score – a higher score usually means you are a lower risk; the more points you score the better the chances that you’ll be offered better interest rates. Being under time pressure can increase your stress levels, so it pays to have your finances in order before you start looking for a property and a mortgage.

Work with a good estate agent
It’s worth taking the time to get to know a reputable estate agent. Explain your circumstances to them so that they can pass on relevant information to sellers. First-time buyers with a mortgage offer in place are in a strong position as they can proceed more quickly than another buyer who has yet to sell their property.

Getting a survey done can be useful
Most lenders will do a basic valuation on your potential purchase for free. However, having a survey carried out on a property before you commit to buying it makes good sense. It can save you thousands of pounds in repair bills and a lot of stress in the future. There are various options available, and we will be able to offer help and advice on choosing the type that meets your needs.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Key Takeaways

  • Moving home is a stressful process, even at the best of times, without the added complications and worries of the COVID-19 pandemic
  • A new cross-industry guide to re-opening the housing market and enabling people to move safely has been published
  • We can guide you through the requirements before you embark on your move.
  • Taking advice will save you time, money and stress – the value of professional advice is immeasurable
  • Take advice for help with all the stages involved in getting a mortgage
  • Review your finances and credit score to put yourself in the best position
  • Working with a reputable estate agent is important
  • Have a survey done to save future unexpected repair costs and stress.

Take the fuss out of remortgaging

Are you at the end of your deal?

When your current mortgage deal comes to an end you might be tempted to do nothing and simply move on to your lender’s Standard Variable Rate (SVR). However, by doing so you could risk your mortgage rate more than doubling.

According to Moneyfacts, fixed mortgage deals taken out two years ago attracted an average rate of 2.31 per cent, thanks to increased competition between lenders. Two years on and with average SVRs sitting at or around 4 per cent, the jump in mortgage payments at the end of your deal could mean your repayments increase by £279.34 a month, or £3,352.08 a year on average. That’s a payment shock you’ll want to avoid.

Remortgaging to a better deal
Finding a new mortgage deal is a lot easier than getting your first mortgage. You don’t have the stress of finding a home, working with estate agents, negotiating contracts or worrying about onward chains.

When it comes to remortgaging you could choose to stay with your current lender, and they might offer you something tempting to stay with them, but you don’t have to. Switching to a new lender may seem like hassle you don’t need, but it’s worth the effort as it could mean you get a better rate.

Whether you’re staying with your current lender or moving to a new one, just as with your initial deal it can pay to get advice to help find the most suitable mortgage for your needs. That’s where we come in.

The value of our advice
We’ll look at your current deal and work out if there are any exit fees or early repayment charges.

We’ll discuss your needs and future plans; whether you want to pay off your mortgage early or you’re looking for lower monthly repayments.

We’ll check any changes in circumstances and how they impact your financial plans; have you started a new job or reduced your hours to care for a new baby?

What’s more, we’ll complete your mortgage application and take care of the legwork for you. As part of Openwork Ltd, one of the UK’s largest financial adviser networks, we can access competitive rates from most of the UK’s best-known lenders.

You may be able to save money if you switch to a new deal. Don’t leave it too late and end up paying more than you have to. Contact us today to discuss your remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage

Why you should get mortgage advice

Taking out a mortgage could be one of the biggest financial decisions you’ll need to make in your entire life, so it’s important to get it right.

You could ‘go direct’ to find the right mortgage for your circumstances – as long as you’re prepared to spend time and effort scouring a very competitive market for the lender and deal you feel most comfortable with.

You’ll also need to consider things like lender administration and booking fees, the length and type of mortgage you need, valuation costs and repayment methods, all of which can affect the total cost of your loan. And you’ll need to take out insurance; for buildings and contents and to protect your mortgage payments if you have to stop work.

Advice from your lender
Lenders will, of course, be able to give you guidance on any mortgages they offer, but you won’t necessarily know how their deals compare to other deals on the market.

Advice from us
Unlike lenders, I don’t have a vested interest. In fact, as part of Openwork, one of the UK’s largest financial adviser networks, I can access competitive rates from most of the UK’s best-known lenders, many of which aren’t available on the high street.

I pride myself in making the process as comfortable as possible, ensuring that you understand what we’re doing.

What’s more, I will take the time to get to know you, your circumstances, and your overall financial position. I will also want to understand what type of mortgage you believe is right for you and talk you through the pros and cons of each option.

Using expert knowledge and a database of several thousand mortgages, I will find the ones most suitable for your needs.

I will also help you and work with you to complete the relevant paperwork and liaise on your behalf with solicitors, valuers and surveyors. We can also talk you through the features and benefits of financial protection for your new property and you can rest assured that I will stay in touch throughout the process – and into the future.

If you’d like more information, or you need help planning your first, or next, property purchase, please get in touch.

Your home may be repossessed if you do not keep up repayments on your mortgage