All posts by Holley Samuel

The Mortgage Guarantee Scheme for First Time Buyers

In his Budget last month, Chancellor Rishi Sunak confirmed that the 95% mortgage scheme would boost the market and bring back the low-deposit mortgages that were largely withdrawn as a result of the pandemic. Most lenders were offering a maximum 90% loan to value mortgage. This made it difficult for many buyers to get onto the property ladder as they were unable to save a sufficient deposit. In addition, the market was largely closed during the first lockdown and by the time it reopened, a pent-up demand and a re-evaluation of buyer’s requirements resulted in a buoyant market and rising house prices. This further priced first time buyers out of the market.

The new government-backed low-deposit mortgage guarantee scheme is now available to lenders meaning that more options are available to first time buyers with a small deposit. What’s more, the scheme is open to all buyers, not just first time buyers and is available for all properties costing up to £600,000 and is not limited to newly built homes. According to figures from Rightmove, this accounts for 86% of all homes currently for sale.

The aim was “a policy that gives people who can’t afford a big deposit the chance to buy their own home.”

Until now, first time buyers have been unable to find a 95% LTV mortgage deal although one or two lenders would release products for a few days or weeks at a time and they would be restricted to certain postcodes.

Following the budget announcement, Rightmove reported that the use of their mortgage calculator jumped by 85% within half an hour of the announcement and traffic to the site jumped by 16%.

Mortgages under the scheme will be available until 31 December 2022. The affordability checks will remain the same with most mortgage lenders offering loans of up to 4.5 times the buyer’s salary.

If you are considering taking advantage of this new scheme, talk to us at The Mortgage Hub. We can advise you as to whether this is the best option for you and the costs involved.

Are You Paying Over the Odds for Insurance?

A large number of homeowners could be paying over the odds for their home insurance according to the latest research.

A third of homeowners have taken out insurance from their mortgage lender for ‘ease’ at the time of their house purchase rather than searching for the best deal, according to Compare the Market. When surveyed, 29% of respondents said that they felt it was the easiest option and 10% felt pressured into taking out the insurance policy in order to secure the mortgage. What’s more, 14% felt that they were required to use a specific insurance company by the lender and 15% of homeowners took out the insurance policy offered rather than trying to find a better deal.

Many mortgage companies cross-sell other products when you find a mortgage directly from a lender rather than using a mortgage broker, who could help you to find a cheaper and/or more suitable deal. Buying a home is a stressful event with many things to sort out including utilities, broadband, TV, removals etc. so many homeowners want to make the process of insurance as quick and simple as possible.

Buildings insurance covers the building itself should the home suffer damage, for example by flood or fire. Contents insurance helps cover the cost and damage of personal possessions and items such as TVs, laptops and furniture.

Although mortgage lenders offer these insurance policies, you should not feel obligated to take this out along with your mortgage. It’s essential that you find the deal that best suits your circumstances even if it means spending a bit more time to find the right policy. It’s worth remembering that some lenders have targets they have to meet and under no circumstances will you penalised for not taking out their policy. In fact, TSB and Nationwide have stated that they do not put their customers under any pressure to take out their home insurance policy and do not impose any financial penalty for arranging insurance elsewhere.

Many of the home insurance policies offered by lenders are also available via brokers, so it could be that your lender does offer the best policy. But by using a broker you’ll have peace of mind knowing that it’s the best and most affordable policy for you and your family in comparison to others that are available.

Talk to us at The Mortgage Hub – we can find the best insurance policy for your circumstances by searching the whole of the market.

Applying for a 95% Mortgage? What You Need to Consider

It was announced in the spring budget earlier this month that the government will be introducing a new 95% mortgage guarantee scheme from April 2021, which will run until December 2022. The scheme has been introduced in response to a large-scale withdrawal of low LTV mortgages following the pandemic, pricing many first time buyers out of the market. As the Prime Minister put it, the new scheme will help ‘generation rent become generation buy’.

The new scheme means that some of the UK’s major lenders will be able to offer low-deposit mortgages on all residential properties valued up to £600,0000. The announcement was welcome news for many people, including those wanting to move up the property ladder or remortgage their existing home as the scheme is open to all. You don’t even technically need to be a first-time buyer to apply.

However, it’s important to understand that obtaining a 95% mortgage isn’t an easy or simple process, as you will still need to be prepared and meet the lender’s criteria especially in terms of affordability. In fact, affordability tests have not been relaxed as part of the scheme, which will catch out some buyers without prior experience of mortgage applications.

Here’s what to consider if you are thinking of applying:

Credit history

A good credit score is essential when looking to secure a good mortgage deal. If you’re a first time buyer applying for a low-deposit mortgage you will need a good credit score for your application to be accepted. It’s important to keep up with your credit card, utility bill, mobile phone, loan and other payments to show lenders that you are able to repay your debts. You should also be on the electoral register. It’s important you aren’t financially tied to someone with a bad credit score as this can negatively impact you.

Affordability

Even though the mortgage guarantee scheme means you only need a small deposit, you’ll still have to prove that you can afford the monthly repayments. Mortgage lenders have to adhere to restrictions whereby no more than 15% cent of their new business can be through offering mortgages that are over 4.5 times over the applicants’ annual income. This means that lenders won’t typically lend to higher LTI (loan to income) applicants for those with a 5% deposit. This is something to be aware of when applying, especially if you’re buying alone.

COVID19

Have you been impacted by the pandemic? Lenders will be cautious about lending to people who have been financially adversely affected by the pandemic. If you have been furloughed, taken a mortgage holiday, or have had your days or hours reduced, you could find it more difficult to secure lending. You will need to provide bank statements, P60 and proof of deposit or income to accompany your application.

Get the right advice

It’s essential that you talk to a whole of market mortgage broker if you would like to apply for the new mortgage guarantee scheme. At The Mortgage Hub, we can talk you through the application process and find out if you are eligible for a mortgage without it impacting your credit score. We can also find the best mortgage for your circumstances and work out what your repayments will be.

The Spring Budget – New Mortgage Scheme Open to All Buyers

Chancellor Rishi Sunak has now announced the much-anticipated Spring Budget after a challenging year across the globe. He announced a raft of changes including several that will affect the property market and home buyers at all stages. The first change is a government-backed mortgage scheme and the second is an extension to the stamp duty holiday in England and Northern Ireland, which has since been adopted by the Welsh government.

Stamp duty

The temporary stamp duty holiday has been extended until the end of July with a tapered period running until September. In July last year the threshold at which Scottish house buyers start to pay LBTT was increased from £145,000 to £250,000, affecting around 80% of home buyers whereby they would not pay anything.

The policy announced was in response to the stamp duty holiday in England and Northern Ireland whereby no tax would be paid on properties up to the value of £500,000. It was also adopted by the Welsh government.

However, as of today, buyers in the middle of a property purchase will lose out after the decision not to extend it beyond the end of the March. Finance Secretary, Kate Forbes, has said that the temporary reduction to LBTT will end as planned at the end of this month. We hope that pressure from the property industry will push for a change to this proposal.

Mortgage Guarantee Scheme

The spring budget also included an announcement about a 95% LTV mortgage guarantee scheme to enable those with small deposits to purchase a home. This scheme is open to all buyers regardless of whether they have owned a property before. The scheme is due to launch in April and will enable buyers to purchase a home priced up to £600,000 with a 5% deposit.

Since the pandemic many lenders have withdrawn low deposit mortgages as they waited out the economic effects of the last 12 months. As a result, many first-time buyers who had raised deposits before the pandemic found that they were unable to proceed with their home buying plans – even though there was some relief by way of the stamp duty holiday to boost their deposits. They were still faced with raising deposits of 15-20% in order to secure a mortgage.

The scheme is being backed by many of the high street lenders including Lloyds, Santander, Barclays and HSBC.

Asking prices have been on an upward trajectory since the property market opened at the end of June 2020. The national asking price for a first-time buyer property is currently 3.6% higher than in February 2020 and since the Help to Buy mortgage scheme was introduced in 2013, national asking prices have increased by 36%. Our advice is to move quickly before prices rise again following yesterday’s news.

Get advice

Talk to us if you would like to discuss this scheme and to find out more about the mortgage options open to you.

Mortgage Choice at Highest Level Since March 2020

Those looking to move currently have the highest number of mortgage products to choose from since the first national lockdown last March. At present, there are 3,215 mortgages to choose – the highest number for 11 months. Before the lockdown, there were 5,222 mortgages in the market.

Since October 2020 there has been a 42% increase in the number of mortgage deals available. This is the highest four-monthly rise in choice since 2007, according to Moneyfacts. This is a sign that the mortgage market is now stabilising after a difficult year and good news for borrowers looking to secure a good deal on their new home or for those looking to remortgage.

The impact of the pandemic

When the pandemic hit and we went into lockdown, mortgage choice fell sharply, and this continued on several months. Lenders withdrew many products as they waited to find out what the true financial impact of the pandemic would be. Borrowers with smaller deposits were very hard as lenders withdrew many high LTV products, leaving those with smaller deposits very few options. What’s more, many house builders put their release dates on hold impacting those who had a mortgage offer using Help to Buy. In fact, nine out of 10 mortgages for people with a 10% deposit were withdrawn between March and July.
Fast forward to 11 months later and choice is once again improving, particularly for those with small deposits. Lenders are less risk averse as the property market seems to have fared well with rising house prices and stable interest rates.

Options for first time buyers

First time buyers with a 10% deposit saw the number of mortgage deals available rise to 288,88 in January 2021. Not only was there a rise in product choice but the number of deals available quadrupled from October to February. In addition, there has been a fall in interest rates on mortgages. Competition among lenders appears to be returning, with the average cost of a two-year fixed rate for those with a 10% deposit falling 0.09% over the last month, while the cost of a five-year fixed rate deal fell 0.07%.  For those with a 5% deposit, the choice is still very limited and dependant on your circumstances.

Existing homeowners

For those looking to move home or remortgage, the number of deals available to choose from has significantly increased and there are currently around 500 different mortgages available for those with at least 40% equity in their home. In addition, the cost of a mortgage has fallen.

Interest rates charged on a two-year fixed rate mortgage for these borrowers have fallen 0.05%, while rates on five-year fixed rate deals have fallen 0.07%.

At The Mortgage Hub we have access to the whole of the market and will be able to match the right deal to your circumstances. Contact our team today.

Purchasing a New Home? Get Mortgage Ready!

The recent LBTT threshold change, combined with a re-evaluation of homeowner priorities has led to a surge in demand for property in Scotland. The current levels of market activity looks set to continue for the foreseeable future.

In today’s busy market, it’s important that when buying your first or second home, you are prepared and have everything in order – including your finances. This will help to avoid any unnecessary delays when buying your new home.

Your credit score

Lenders will take a look at your credit score to get a general picture of how you manage your finances. It will tell them how much debt you are in, whether you repay the debt, if you have faced any financial difficulty and how much available credit you are using. Take a look at your credit report to make sure it’s accurate, giving yourself time to sort out any problems, and consider how you can improve your score.

In the six months before applying for a mortgage, try not to apply for too many credit cards or loans. Pay your debts on time and if you can, pay your credit card bill in full rather than just meeting the minimum payment. Missing any scheduled payments will impact your credit score and deem you ineligible for certain mortgage products or rates so make sure you don’t miss any payments such as your mobile phone bill, credit card, loans, car payment and any other dents. Your lender needs to view you as financially responsible.

Another simple way to improve your credit score is to make sure you are listed on the electoral register.

Save your deposit

At present lenders are asking for a minimum deposit of 10% when buying a home (less if you are using a government scheme such as Help to Buy (Scotland). The more you can save, the better, as this means you can secure a more competitive rate which will keep your monthly repayments down. Proof of being able to save money is also a good indiction to lenders that you are good with finance. Although gifted deposits are still acceptable.

Stable income

Lenders will look at your employment status, income and employment history when you apply for a mortgage. If you have a regular income you will eligible for more products. If you are considering a job move or career change, you might want to wait until after you have secured a mortgage and bought a home. It can also be harder to prove stable income if you work for yourself so get everything in order if you are self employed including bank statements and tax returns submitted to HMRC.

Get the right advice

As with all major financial decisions, it is important to talk to the experts to find out what you need to do to prepare for your mortgage application. A mortgage broker will not only help you work out the deposit required and the cost of your mortgage  but also the other costs you will need to consider. These include the property valuation, surveyor fees, legal and estate agents’ fees, removal costs, maintenance charges and regular bills once you have moved. Whilst some of these are one-off costs, others are a long-term commitment. Make sure you are aware of all the costs before you even consider taking out a mortgage so that you can plan ahead. Finally, make sure you use a mortgage broker who can look at the whole of the market to secure the right mortgage for your circumstances and will often have access to deals that aren’t available from high street lenders.

If you are considering a mortgage now or in the future, talk to us at The Mortgage Hub and we can help you to prepare.

The Property Market Remains Open

It was announced earlier in the week that Scotland is entering into a new lockdown to curb the spread of Covid-19. Although many businesses have been instructed to close, one industry remains open – the property market.

The current guidance states that all activities in connection with moving home, including property viewings, are permitted to take place. It also includes maintenance, purchase, sale, letting or residential property. The full guidelines are available here.

Marketing your home

Under the current guidelines you are able to put your home up for sale and seek a property to either purchase or rent. However, if you or any member of your household has either symptoms of COVID-19 or a positive test, you must not leave your home for any reason.

Estate agents can take photographs, measure for floorplans and take video footage of your home for marketing purposes and all conveyancing solicitors and mortgage brokers/lenders are still working as usual in order to enable the sale or purchase of a property.

Buying a home

For those looking to buy a home, it is recommended that you first look at the details online and take advantage of online tours. Only if you are seriously considering making an offer, should you visit the property in person and speculative viewings are strongly deterred.

If you do need to arrange a physical viewing of a home, make sure you wear a mask throughout the viewing, avoid asking any questions in person, avoid touching any surfaces and door handles (all doors should be open) and you should wash your hands before and after entering the property. It’s advisable that you visit the home with no more than one person from your household and avoid taking any children with you. Make sure you make an appointment as ‘open houses’ are not permitted. When in the property with an agent, make sure you retain a two-metre distance at all times.

All lenders are working as per usual so you should still be able to seek and apply for a mortgage. Talk to your broker to find out the timescales and to discuss any likely delays.

Selling a home

If you are selling a property during this time, make sure that you keep all doors and windows open when a viewing is arranged. Make sure you are not at home and reiterate to the agent that prospective buyers should not touch any door handles or surfaces. It is a good idea to leave hand sanitiser at the entrance or ask your agent to provide this to prospective buyers.

Moving home

You can still book a removals firm to help you move home, but to minimise any transmission of Covid it is recommended that you pack your belongings yourselves to avoid your items being handled by anyone else. When the removals team is in your home, keep a safe distance of at least two metres and wash your hands regularly. Try and book as early as possible as they are very busy in many areas and could be short staffed due to the isolation rules. When you unpack make sure everything is wiped down.

Are there delays?

If you’re moving home during lockdown there could be delays in the conveyancing process because some solicitors and agents may be operating at limited capacity or clearing a backlog caused by not only the pandemic but also the festive period. If you are about to enter into a legally binding contract, you should discuss the possible implications if someone has to self-isolate or quarantine.  Ask about the protocols in place to manage these risks. Should anyone in your household experience symptoms just as you’re about to complete, you should postpone things by a few weeks.

Can tradespeople come out to my home to carry out work?

The current rules allow tradespeople to carry out essential work in your home, provided they have no coronavirus symptoms, do not have a positive Covid test result and are following all the necessary safety guidance. However, if you are due to have a tradesman enter your home, ask if they have symptoms and double check that they will be using PPE.

We are on-hand to offer advice on all aspects of obtaining a mortgage or remortgaging your home. Talk to our friendly team today.

 

Understanding Home Insurance

Understanding Home Insurance

Having the right insurance is vital – it can protect your home, your income and your belongings. However, once you’ve gone to the effort of obtaining the right policy for you it’s important to make sure you don’t do anything to invalidate your policy.
 
That’s why you need to talk to an independent advisor who knows the policies inside and out – and who can give you advice on the exclusions so that you know your policy pays out when it should, and that you’re aware of what can cause any issues should you need to make a claim.
 
Here’s an example of what can invalidate a house insurance claim:

Locks

If you tick the wrong box when you declare the type of lock you have in your home, and it’s wrong, your policy may be voided as this can have an effect on the premium you pay. The stronger your lock, the more secure your home is deemed to be. In addition, if you have window locks but don’t use them, your insurer can reject a claim if your home is broken into.

Alarms

 If you state that you have a house alarm fitted at your property and it either doesn’t work properly or isn’t used and your home is broken into, your claim could be denied.

Securing your home 

If your home is broken into and there is no sign of forced entry then your insurer may not pay out, even if there is evidence that you have been burgled. In the small print of your policy there should be some guidance in ‘forced or violent entry’ which can indicate your cover. The same goes for your car should that get broken into too.

Vacant property

If you go on extended holidays – usually classed as such if it’s longer than 60 days – then your home is seen as unoccupied and your policy may be invalid, and a claim could be rejected. This goes for both break-ins and any damage due to flood or fire. Some insurers will even stipulate that it cannot be vacant for more than 30 days so check your policy before you take a long trip.

Advertising that your property is vacant

In today’s world of social media, we often post our holiday photographs whilst we are away. However, if you do this and your home is targeted by burglars whilst you’re away, it could invalidate your cover. Many thieves will scour social media to see who’s away and when and use this to gain entry into your home. This could be deemed as reckless by your insurer. If you do want to post holiday snaps wait until you are home stating that you ‘had’ a great holiday or make all of your posts private with a limited audience to close friends and family.

Specify your valuables 

If you have expensive personal belongings and valuables in your home such as jewellery, watches or expensive electronics, it could exceed your insurer’s ‘single item limit’ and you will need to list them separately. Many insurers impose a £2,000 to £3,000 limit. If you fail to specify items worth more than this amount, you may not be covered for these items.

In summary: 

Install high quality working locks.
Make sure your house alarm works and is used.
Ensure your home is locked when you leave.
Specify valuable items.
Don’t leave your home for extended periods of time without telling your insurer and consider using a house sitter.
Don’t advertise the fact that you are away.
Read your policy carefully and be aware of any exclusions.
 

Can I Still Move During Tier 4 Restrictions?

It was announced that from Friday November 20th 11 local authority areas across central and western Scotland, including Glasgow, will be placed in Tier 4 restrictions until December 11th. This means that more than two million people will return to near-lockdown conditions with non-essential retail, hospitality and entertainment venues closed. People will be encouraged to only work from home, avoid public transport and to only leave home for essential purposes such as work or exercise. It will be against the law to travel to a different council district even if it has is in the same tier unless it is for essential purposes.

Many people who are either in the process of moving home or looking to move are understandably anxious as to whether they will need to put their plans on hold. The good news that all aspects of moving home are permitted with the housing market essentially open with people able to move across all protection tiers. In addition, people can move to and from different areas placed in different tiers.

Although agents and office workers have been asked to work from home where possible, businesses can support people to move home in all areas, following the relevant guidance on social distancing.

Mortgage applications and approvals are still going ahead. Here is some of the relevant guidance you may need to be aware of:

In all instances, you must self-isolate if displaying symptoms, have had a positive test, and have been asked to isolate by the Track and Trace service. This means that no-one must visit your property for the purposes of moving home or preparing your property for sale and you must not leave your home until permitted to do so.

  • Valuations and floorplans can be undertaken at the property but where possible, services should be undertaken remotely.
  • Professional photographs and video footage may be taken of your property and you should vacate the property whilst this is being undertaken.
  • The legal requirement for an Energy Performance Certificate (EPC) when a property is built, sold or rented remains.
  • Home reports must still be obtained prior to any property being marketed for sale.
  • Tradespeople are allowed to enter a property for repairs, renovation or building works.
  • When selling your home viewings must be conducted virtually before a physical viewing can take place. Speculative viewings are not permitted.
  • Agents must not drive buyers to the property and only one household can view the property at one time – with only two adults (plus the agent) attending, and children discouraged from attending. Open viewings are not allowed.
  • Viewings must not be carried out by the occupier and if an agent accompanies a viewing, they must adhere to all social distancing rules, wear a face covering and wash or sanitise their hands upon entering and leaving.
  • The estate agent must assess any risk and ensure that the party viewing a property, nor the occupier are displaying any symptoms and have not had a positive coronavirus test.
  • During the viewing all internal doors must be left open and it is advised to open windows.
  • You are advised to clean all door handles and surfaces between viewings and all viewings must be contactless.
  • The length of the viewing must be kept to a minimum.
  • Offers can be accepted and a property reserved in the usual manner.
  • It is advised that you are flexible with moving dates and that contracts have explicit terms to manage the timing risks in the event of coronavirus. All parties must be able to decide on a new moving date if one of the parties should fall ill with coronavirus.
  • Keys must be cleaned before handover.

We are still fully operational so please don’t hesitate to contact us if you have any questions or queries about obtaining for a mortgage.

How to Buy or Sell Your Home as Quickly as Possible

With restrictions looming along with the deadline for the stamp duty holiday ending in March next year, many people want to get moving as soon as possible. Although much of the selling and buying process is out of your control, there are some things you can do to mitigate delays.

Prepare paperwork

Get your paperwork in order as early as you can – instructing a solicitor at the point of putting your home on the market is key. Complete all property forms and supply everything you will need further down the line including building warrants, building regulation certificates, energy performance certificate, title deeds and any warranties or guarantees. This can save time trying to get hold of the right documentation.

Buying a home

Find a solicitor that has capacity – your mortgage broker will be able to assist you with this. As soon as you have found a property to purchase, ask them to organise any surveys and searches that are required.

Organise your mortgage

Using a mortgage broker can save a huge amount of time as they are aware of which lender offers the best rate and will know not only which mortgage provider offers the best deal but what their timeframe is likely to be. Going to a single mortgage provider can be limiting and cost you money in the long run. By talking to a broker at the start of the process – even before you’ve made an offer – can save up to 2/3 weeks. A mortgage broker can also find out your chances of your application being accepted. Make sure you have all the documentation required, this is something your mortgage broker can advise on. This could include payslips, documentation for self-employed mortgages, bank statements, evidence of any benefits, proof of address and identity, tax returns, company accounts, upcoming tax calculations, details of overtime and bonuses, proof of funds and details of the deposit and where it has come from. The great thing about a mortgage broker is that they can tell you in advance what will be required and help you to prevent any delays.

Something that seems to be potentially causing delays at present is that given the recent pandemic, lenders are asking self-employed applicants for 2019-20 tax calculations so doing your tax return early can be sensible and save up to a month in the mortgage processing time.

Understand your buying chain

The shorter the chain, the lower the risk of delays or even sales falling through. Ask your estate agent to assess how prepared and serious your prospective buyers are and whether they have the relevant documentation and a mortgage in principle. It may be more beneficial to take a lower offer from a buyer that has everything in order than face delays and miss out on any savings.

First time buyers obtaining a mortgage can cause lengthy delays as some lenders have withdrawn low lending of late, so chains are more secure if they first time buyer has a mortgage in principle.

Talk to us at The Mortgage Hub if you are concerned about the time it could take to buy or sell your home and secure a mortgage.