All posts by Holley Samuel

Thinking of selling? Improve Your EPC Rating

Energy bills are on the rise, and we are facing unprecedented times with another energy price cap rise due in October. With this in mind, now could be a good time to improve your EPC rating. Buildings with higher EPC ratings are more popular with those buying or renting.

Rising energy costs

In April this year, the energy price cap increased by 54%, meaning a typical household’s energy bills went up by around £700 a year from £1,300 to £2,000. In October that price cap is set to rise again, taking the average household’s energy bills to just under £3,000. After October, Ofgem is set to change the price cap every three months and bills are expected to remain high until October 2023. Ensuring your home is as energy efficient as possible is now more important than ever, whether you’re looking sell, rent or stay put. A few improvements now could save you hundreds of pounds in the long run.

What is an EPC certificate?

The Energy Performance Certificate (or EPC) rating on your home shows how efficiently your property uses energy. When a property is being sold or rented, this certificate is required and must be made available. It’s valid for ten years.

The EPC certificate is graded from A (the highest) through to G (the lowest) and all properties should aim for a C or higher rating. New build homes usually have the highest rating and are around 60% more efficient than older homes. The average EPC rating in the UK is D.

As well as a property costing less money to run, homes with a higher EPC rating command higher asking prices and sell quicker.

From 2026, landlords must make sure the property they are renting out to tenants has an EPC rating no lower than A, B or C.

Understanding and Improving Your EPC Rating 

The EPC rating of a property is assessed and set by a government-approved energy assessor.  They look at the amount of energy a property uses per square metre and its carbon dioxide output. They look at the heating system, lighting, hot water and the current running cost of the home. It also assesses the savings that could be made when energy-saving improvements are implemented.

The following will be assessed:

  • Windows – are they double or triple glazed?
  • How old is the boiler?
  • Is the boiler energy efficient
  • What thermostat is used?
  • Which fuel source is required for fires – coal, wood or gas
  • Is the property insulated sufficiently?
  • Are pipes and the water tank insulated?
  • Does the property have a renewable energy source or air/ground source heat pumps?
  • Are there water saving systems in place?
  • Are the light bulbs energy efficient?

Improve your rating

  • There are several things you can do to improve the EPC rating of your home.
  • Insulate your loft to prevent 25% of heat escaping.
  • Cavity wall insulation to prevent 35% of heat escaping.
  • Replace your boiler with an energy efficient one and consider using a renewable energy system such as a ground or air source heat pump.
  • Install energy efficient lightbulbs
  • Replace windows with double or triple glazing
  • Seal any draughts.
  • Replace original floorboards with a wood, vinyl or carpet with good quality underlay.

Some energy companies and local authorities will provide funding for insulation, glazing or new boilers depending on your income and the age and efficiency of your current heating system. Contact your local authority to see if you are eligible for a grant under the Green Homes Grant Local Authority Delivery Scheme.

Changing your EPC rating

If you believe your rating is incorrect, talk to the assessor – their name will be on the certificate issued. You can ask them to reassess the property based on why you think there are errors and, as a last resort, you can appeal to the assessor’s accreditation scheme – details will be on your EPC certificate.

 

A Lifeline for First-Time Buyers?

The UK Government recently pledged to turn ‘Generation Rent’ into ‘Generation Buy’ with a review of the mortgage market. The aim is to help people to buy their first property against a backdrop of rising house prices and interest rates, a sharp spike in the cost of living and high deposit requirements – all of which are preventing many buyers fulfilling their dream of home ownership.

The current Prime Minister recently made a speech in which he announced that the government is looking at ways to help first-time buyers access low-cost finance including low deposit mortgages.

As part of his speech, Boris Johnson stated “First-time buyers are trying to hit a continually moving target. By the time they’ve put aside money to secure their mortgage, prices have risen and it’s no longer enough.

“And of course, the global rise in the cost of living is only making life harder for savers. So, we want it to be easier to get a mortgage. Reporting back this Autumn [the review] will look at how we can give our nation of aspiring homeowners better access to low-deposit mortgages.”

He also mentioned that over 50% of those who are renting a property in the UK can also afford their repayment mortgage, especially given the high cost of renting. However, out of that number only 6% could secure a typical mortgage as a first-time buyer due to lending constraints.

According to the recent House Price Index from Zoopla, monthly rental payments have gone up by 40% compared to a decade ago, whilst at the same time the average monthly mortgage payment has increased by just 11%. In addition, the average asking price of a starter home is currently £223,117 – this is 56% higher than a decade ago.

The review could take some time to complete so this isn’t a short-term lifeline for those looking to buy their first home now, but it does point towards a more positive outlook. If you are currently saving for a deposit and thinking of buying your first home, talk to us about the budget you’ll need and how things may change in the long-term should affordability rules change. Being able to confirm your budget can really help you to focus.

Every lender in the UK has a different way of calculating how much they are willing to lend their customers. This includes things like your expenditure, mortgage term, your debts, income, size of deposit, whether you are buying alone or in a couple and credit rating.

Call our team to get the latest advice on securing a first-time buyer mortgage on 01698 200050.

Preparing for the Mortgage Rate Rise

This week, the Bank of England once more raised interest rates in a bid to combat inflation, warning inflation could reach 11% by October. Members of the Bank’s monetary policy committee voted to increase the base rate by 0.25%, taking it to 1.25%.

Mortgage costs and interest rates are rising and if you are one of the 1.3 million mortgage holders due to see their deals end in 2022, it’s important to be prepared and take action now.

Although the ultra-cheap fixed rate mortgage deals have all but disappeared, they are still historically low.

What the rate rise means for mortgages

An increase in the interest rate means that borrowing is more expensive, resulting in less borrowing and more saving. The reason for these rate rises is that with less demand for goods and services, prices fall and inflation will cool.

This latest increase in the Bank of England’s base rate means that over 850,000 people on tracker mortgages and 1.1million on variable deals will see their mortgage rate go up. This accounts for around a quarter of all UK homeowners.

However, most homeowners are currently on a fixed-rate mortgage and won’t notice any changes to their mortgage payments. Those who have a fixed rate deal ending this year, or those with a variable-rate mortgage, are probably wondering if now is the time to remortgage.

If your deal is due to end before December 31st, we would recommend that you start looking now. You can often remortgage within 6 months of your deal ending, but check whether you have any exit fees and determine if these can be offset by any rate rises between now and December.

If you are on your lender’s standard variable rate, you will typically be paying much more than if you were on a fixed rate deal. If you do remortgage, you won’t have any exit fees so it’s worth looking to lock into a fixed deal. According to Moneyfacts a two-year fixed deal is typically 1.66 percentage points cheaper than the average variable rate. Although many lenders have pushed up their variable rate with an average rise of 0.5% percentage points since 2021, not all providers have passed on the rise to their customers.

Moving to a fixed-rate mortgage

At present, the most popular fixed-rate mortgage term is five years, especially as the margin between the average two- and five‑year deal is the narrowest it’s been for nearly ten years.

Ten-year fixed-rate deals are also competitive with rates as low as 2.73 per cent. However, we would advising considering very carefully if you want to be tied in for ten years as you could face large financial penalties if you need to end your mortgage term early. Ten years is a huge commitment.

It’s important when considering whether to end your variable rate deal early to consider how much more you will pay as rates go up again, how much longer your mortgage has left to run and any penalties for leaving.  Mortgages that are linked to a lender’s standard variable rate and tracker mortgages can incur early repayment charges.

Overpaying

If you can, overpaying on your mortgage can make a big difference. An extra £30 a month would reduce the interest bill on a £150,000 mortgage taken over 25 years by over £4,500 based on a 3.25% rate. It will also help you to clear your mortgage early and access better rates in the future. You could also consider an offset mortgage whereby your savings are held in an account linked to your mortgage. Rather than earning interest, it is used to reduce what you owe on your home loan.

Get advice

There are four more Bank of England base-rate announcements this year. The next one is in August, then September, November and December. We can help you check that you’re on the best possible deal and if not, compare the whole market for the most suitable mortgage. Talk to us at The Mortgage Hub for more information and advice.

New Record High for House Prices

According to the latest House Price Index from Zoopla, house prices in April of this year hit a record high with the average cost of a UK property exceeding £250,000 for the first time, reaching £250,200.

During the year to the end of April 2022, the average cost of a UK home went up 8.4% compared to the annual rate of 9% recorded in March – showing that market could be finally slowing down. The time taken to sell a home in the UK has increased and even though the market is stabilising, it is not anticipated that house prices will fall.

Average UK property values went up by only 0.2% in April compared to monthly gains of 0.7% at the beginning of 2022. Wales saw the strongest house price increase at an annual rate of 11.6% in April – in February it was 13%. In Scotland, house prices went up by nearly 7%.  Growth in London was the lowest in the UK at just 3.6%.

Although the market is showing signs of slowing, demand is still outweighing the current supply of properties for sale. The number of buyers is still 61% higher than the five-year average. In contrast, the number of homes for sale is currently 37% lower than normal. However, this is starting to increase – the number of new property listings in the month to 22nd May were 7% higher than the give-year average. In addition, homes took longer to sell than they did in the previous month – and this applies to all property types.

There has also been an increase in the number of properties that have been reduced in price by at least 5%.

The latest House Price Index shows that the market is calming down and as a result, sellers are more realistic about how much their property is worth. The number of properties for sale is increasing which is providing more choice.

For those looking to trade up the property ladder it’s also good news as there is more choice and more willingness for sellers to reduce their price.  Similarly, if you are selling first, you may have to reduce your price if your home is not getting much interest.

It is expected that during the second half of this year, higher interest rates and rising living costs will act as a break on the property market. Mortgage rates are currently higher than they were at the end of last year and the average income required to secure a mortgage on a property worth £250,000 has increased by £4,500 when putting down a 30% deposit and borrowing 4.5 times your salary.

The time taken to sell a property is rising and this is expected to increase further.

With mortgage rates going up, now could be the time to talk to us about your options. Give us a call on 01698 200050.

Is Now Really the Right Time to Buy a House?

The housing market appears to be at its peak. We are seeing record house prices after two years of unprecedented demand and high competition among buyers. Many people are starting to wonder if they should wait until prices fall to purchase a property.

Since December 2021, interest rates have gone up three times now standing at 1% following last week’s rise from 0.75%. There are signs that the property market will start to slow down or even fall, and the latest interest rate rise can already be felt in the mortgage market as mortgage costs have risen.

With inflation eating away at savers nest eggs, a drop in incomes and the rising costs of energy, fuel and food, we are in a cost-of-living crisis.

Does this make now a bad time to buy a home and should you wait for prices to fall?

House price growth, according to Nationwide, stood at 14.3% in February and 12.1% in March. The recent rate rise has caused mortgages to be more expensive and this should slow down house price growth in the coming months. Predictions from Capital Economics show that mortgage rates could rise from 1.8% in March to 3% next year. How much it will fall is difficult to predict – with many market commentators believing it will be a modest fall and simply a price correction.

Although interest and mortgage rates would still be low in historical terms, it will come as a shock to those who are relatively new to the property market and used to very low rates.

Just as there are forecasts that house prices will fall next year many believe that the market will simply slow down progressively over the next few years. The strong employment market and mismatch in supply and demand will continue to underpin property values.

First-time buyers

Any fall in house prices is usually an indicator of a wider economical downturn and first-time buyers are usually the hardest hit in these market conditions. Even if homes are cheaper, mortgage rates and associated costs will be more expensive. According to analysis by Hamptons, the average first-time buyer purchasing a typical home worth £229,000 with a 10% deposit will be paying an extra £612 compared to when the interest rate was 0.75%. So even if property prices drop, monthly repayments will be higher. It’s important to get sound advice from a mortgage broker who can work out the numbers – because waiting to buy could cost more in the long run.

Renters

For those who are renting, continued high levels of demand are pushing rents up even further. Therefore, for anyone who believes they will be better off buying than renting, now should be as good a time as any to make the transition to home ownership. Waiting for a house price crash could end up costing a first-time buyer in the long run if this doesn’t happen. In addition, Capital Economics predicts that inflation will hit 8.7% this year, eating into any deposits buyers have managed to save.

Existing homeowners

For existing homeowners, there appears to be a rush to fix mortgages for 5 or even 10 years. According to Twenty7Tec, last month almost 7,000 people searched for a 10-year fixed rate mortgage – a 72% increase on the same month last year and a 25% increase in those looking for a 5-year fixed rate. The number of people who were looking for 2- and 3-year fixed rate mortgages fell by more than 50%. With borrowers’ outgoings rising every month – and set to increase further when the fuel price cap rises in October – borrowers are seeking stability with their mortgage outgoings.

We strongly advise you to get independent mortgage advice if you’re not sure whether to wait or buy now – we can look at your circumstances and help you work out how much you will be paying now, and how much you could pay if interest rates continue to rise but the housing market simply slows down rather than seeing big house price falls. Contact us today.

The Spring Mortgage Market

The days are longer, and the weather is warmer – but are we in a new phase for the mortgage market? The latest figures from Google Search reveal that there has been a 400% rise in searches over whether mortgage rates will go up, showing that this is a huge concern for many people looking to purchase a property.

Some recent statistics

According to the government house price index, house prices in the UK have increased 10.9% on an annual basis, with the average property in the UK being valued at £276,755. House prices in the UK have risen by 0.5% since January this year.

In February 2022 the estimated number of property transactions of residential properties with a value of £40,000 or above was 112,240, which is a 20.8% decrease compared to the previous year. Between January and February 2022, UK transactions increased by 4.4% on a seasonally adjusted basis.

In addition, Knight Frank has estimated annual growth of 5% in 2022, with just a 1% growth the year after. It said higher mortgage rates, the cost-of-living squeeze, and increased supply will slow house prices.

The mortgage market

We have now had the removal of the last of the Covid-19 restrictions, but we are seeing the rise in cost of living, interest rate rises and rising inflation. These changes are causing concern among borrowers, but it’s worth noting that we are reverting to pre-pandemic rates, and this is very much an expected and much needed correction. However, borrowers are worried about what this all means for the future of the mortgage market.

If there’s anything that previous crises have shown us, it’s that the mortgage market is resilient and able to adapt to change. When the stamp duty holiday ended, many existing and aspiring homeowners believed that the mortgage market would slow down and prices would fall, but demand just kept on rising. We saw an imbalance between supply and demand with not enough properties to satisfy the number of buyers wanting to buy their first home or move up the property ladder. Following the pandemic we saw a huge shift in buyer priorities with a move away from city centres to homes with more space inside and out, and more rooms to allow for home or hyprid working.

The start of this year has continued the trend of high demand and rising prices despite the interest rate rises – with demand 6% up on the same period last year. In addition, the buy-to-let market has remained strong, and we have seen a shift towards product transfer and remortgaging.

But will the high demand continue into this year? One challenge is the rise in our cost-of-living. Economists from Experian have estimated that the NI rise, energy and fuel price rises, interest rate rises, and the removal of the Universal Credit uplift could add as much as £4,500 a year to the expenses of the average UK household. However, the mortgage market has remained resilient because those with mortgages, including fixed-rate options, are more likely to react when they feel the true impact of rising costs. In addition, those with mortgages are possibly impacted proportionally less than those on lower incomes. In addition, estate agents are continuing to report that demand for new homes is still there.

The latest research from Mortgage Strategy shows that borrowers are taking a more proactive approach to their mortgage needs with Google search data revealing a 3,500% increase in those searching for mortgage broker in their area and are also researching the mortgage market in advance of speaking to an advisor.

If you are considering buying a new home or coming to the end of your current fixed rate deal, talk to us at The Mortgage Hub to find out more about your options and to get advice on the property market in your area.

How to Help Your Children onto the Property Ladder

Over the last few years, it has been increasingly difficult for first-time buyers to get onto the property ladder. Following the pandemic, demand for homes skyrocketed as people’s priorities changed. Instead of wanting to be close to public transport links and amenities, there has been increased demand for homes with more space inside to accommodate home working, and larger gardens or better access to green spaces. The lack of supply combined with the stamp duty (LBTT) holiday and historically low interest rates has continually pushed up prices.

Although low-deposit mortgages returned last year, banks are still wary of lending to those seen as higher risk especially with the current rise in living costs.

We now find ourselves in a situation where many first-time buyers have been priced out of the market and unable to secure borrowing. This is where the Bank of Mum & Dad can step in.

According to Legal & General, over 80% of parents have helped their children with a gift or a loan towards a deposit to purchase a property. However, banks have become increasingly aware that parents are unable to help their children or grandchildren to buy a first home with cash. There are other options as banks have made available schemes to help parents who wish to enable their children to buy their first home.

There are various schemes to help parents assist with a property purchase for their children – guarantor mortgage, family mortgage, joint mortgage, and joint borrower sole proprietor mortgage. All of these make it less risky for the lender and enlist the help of a family member to help a first-time buyer to purchase their first home. With these schemes, the bank will allow parents to provide collateral on the loan either by a charge over an existing property or by putting money into a specific savings account. There may be an age limit for a guarantor, which is usually 75 years old.

Parents will effectively loan their savings for a set period of time as collateral and will be able to access to the money at a later date with interest – this means that they aren’t left out of pocket by helping their children. In this case, parents will need to consider where else they would put their money and whether they’ll miss out on valuable interest. In addition, this type of lending can be more expensive than other standard loans, but in some instances having a guarantor can be enough to reassure lenders in offering high LTV mortgages. It’s also worth considering whether there will be any tax implications which is why we would strongly recommend getting independent financial advice (and something lenders will insist upon).

Some loans, such as joint mortgages, enable parents and children to buy a property together, but both parties will need to appear on the deeds of the property too. This can have tax consequences if the guarantor already owns a property such as their own home which is highly likely. This will mean that they will have to pay a stamp duty (LBTT) surcharge of 3%. To avoid this, you could opt for a joint borrower, sole proprietor mortgage. This names the guarantor on the mortgage but keeps their name off the property deed which then avoids additional capital gains tax and stamp duty liabilities.

If you are considering a specialist mortgage when helping your children onto the property ladder, then talk to The Mortgage Hub today. We can talk to you about the options.

The Mortgage Guarantee Scheme Gains Popularity in Scotland

The latest data released this week shows that a total of 6,535 homes were purchased using the government’s help to buy mortgage guarantee scheme in the six months between April and September last year. First time buyers account for 84% of those taking out this type of mortgage and the total value of mortgages supported by the Mortgage Guarantee Scheme was £1.2bn.

What is the Mortgage Guarantee Scheme?

The Mortgage Guarantee Scheme was introduced in April 2021 and gave borrowers the opportunity to purchase a new home with a deposit of less than 10%. It can be used to buy both new build and existing homes and unlike Help to Buy it can be by both first-time buyers, home movers and those looking to remortgage. It isn’t available on buy-to-let properties, or second homes and it is only available on properties with a value up to £600,00.

Who’s using the scheme?

The number of people using this scheme has increased significantly with data showing when comparing the total mortgage completion in each region, the scheme appears to have supported a larger proportion of mortgages in the South East and Scotland, but is lower in London, Northern Ireland and the North East.
The average value of a property purchased or even remortgaged through the Mortgage Guarantee Scheme was £196,702. The national average house price stood at £269,945. In terms of value bands, 27% of mortgage completions were in the lowest value band, 63% were on prosperities valued less than £200,000 and 24% were on properties valued above 250,000.

As for house types, the figures show that 34% of mortgages using the scheme were terraced, 28% were semi-detached and 22% were for flats or maisonettes. Detached properties accounted for only 8%.

Housing supply on the rise

According to Propertymark, January 2022 saw a sharp increase in the number of properties that were being listed for sale. The number of new instructions per estate agency branch went up from five in December to nine in January. After three months of decline, this is an 80% increase. Registrations from house hunters also went up and the good news for sellers is that, according to Rightmove, 37& of properties sold above asking price in January compared to 25% in the previous month. In comparison, January 2020 saw only 9% of properties sell above asking.

Whether you are a first time buyer, a second stepper or looking to remortgage talk to us at The Mortgage Hub. We can assess whether you are suitable for the government scheme. Even if you are, it might not be the best deal for you so talk to us to get an idea of the most suitable product available.

Property Demand in 2022

Over the last two years we have witnessed an unprecedented property market. At the start of the pandemic no one could have predicted how the market would be affected by being forced to essentially close from March to June.

During the pandemic, if you weren’t a key worker you were confined to your home to work, home school your children and socialise. Everything was taken online, and gardens were the must-have feature of any home.

The announcement that there was a stamp duty (LBTT in Scotland) gave people an incentive to search for a property that better suited their new lifestyle, and low borrowing rates and the mortgage guarantee scheme gave people further opportunities to move. Many people were spending less money on travel and commuting whilst still working and so they had more savings to put towards a property.

Now, nearly two years on, the housing market has enjoyed its largest New Year figures in five years with demand for all types of properties at a record high. Demand from buyers went up by an impressive 49% in January 2022 with house prices rising at an annual rate of 7.4%, pushing the average price of a property up to £242,000.

There has been a lack of supply across the market over the last 18 months which has pushed up prices. According to Zoopla’s latest house price index, record demand was recorded for all property types with buyers searching for both houses and flats. Although more homes are coming to the market, there is still a significant imbalance in supply and demand.

House prices

In 2021, property prices went up by 7.4% with higher gains for houses compared to flats. The cost of detached, semi-detached and terraced houses increased by 8.8% over the year to £289,500. However, the price of flats went up by just 2.2% to £175,700.

Three-bedroom homes outside of London were the most sought-after property type – with demand four times higher than the average calculated over the last five years.

Supply and demand

The number of homes on the market is currently 44% below the five-year average, but at the end of 2021 this was 47% down. Demand continues to outstrip supply, but the good news is that there is growing correlation between the types of home buyers most want and those that are available.

We saw a rate increase today, but this is not expected to have a big impact on the property market, as, by historical standards, mortgage rates remain low and the majority of people will be protected from any base rate rises as three-quarters of homeowners are currently on a fixed rate deal.

The number of homes coming onto the market is good news for first-time buyers – at present flats offer better value as the price rise for this type of property has been modest compared to houses. For house owners wanting to move up the ladder, it’s great news as demand for two- and three-bedroom houses is high and with more properties being put up for sale, you’ll have more choice.

If you are looking to move this year – or want to check your mortgage deal is suitable for your circumstances, talk to us at The Mortgage Hub.

Will Lending Rules be Relaxed?

The Bank of England has announced that it plans to relax mortgage lending rules in 2022, removing the requirement for borrowers to prove that they can meet the repayments should rates go up by 3% on the lender’s standard variable rate.

At present, borrowers need to prove that they can afford the monthly repayments via affordability checks but the Bank’s Financial Policy Committee (FPC) has decided this affordability rule is no longer needed and will consult mortgage lenders and industry experts about relaxing the rules, bringing about more opportunities for first time buyers.

In 2014, new affordability guidelines were introduced which protected the banking system from people who had overstretched their borrowing and were unable to repay mortgages, loans and unsecured debt.

The new rules meant that lenders would limit the number of mortgages they offered to people borrowing 4.5 times their income and to ensure that borrowers could afford repayments when their fixed rate deal ended.

At the time, it was expected that interest rates would rise to 2.25% over the next few years, but today the base rate is just 0.25%. Although rates look set to rise, these will be very slow and gradual.

This change is likely to offer better mortgage opportunities to first-time buyers as previously, people buying their first property have lower salaries and smaller deposits.

However, the FPC has decided that limits on number of high loan-to-income mortgages they can provide to borrowers will remain.

Another positive development is that the average cost of a mortgage for those with just a 5% deposit has fallen, with the typical cost of a two-year fixed rate mortgage for someone borrowing 95% of their home’s value fell for the eighth month in a row in November to 3.09%. The cost of a five-year fixed rate deal dropped to 3.39%. These are the lowest reported rates that Moneyfacts has recorded since records began in 2011.

Finally, the number of different mortgages available is at the highest level in 14 years with more than 5,300 deals to choose from at the end of 2021.

Talk to us at The Mortgage Hub if you are considering your next move – or getting onto the property ladder for the first time. We’d be happy to help. Call today on 01698 200050.