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The Rising Availability of 95% Mortgages

According to the latest figures from Moneyfacts, the 95% mortgage market tripled in the last month. At the start of May there were 112 mortgage deals requiring just a 5% deposit whereas at the start of April there were just 34.

Last month we saw the introduction of the Mortgage Guarantee Scheme – the aim of the scheme was to encourage banks to reintroduce high LTV mortgage products after they were largely withdrawn from the market as a result of the pandemic. The scheme enables buyers to purchase a property up to the value of £600,000 with just a 5% deposit and is available to all buyers not just those purchasing their first home. However, buyers using the scheme do need a very good credit rating and many of the 95% mortgages are not available to new-build buyers.

Although there are currently 112 banks offering 95% mortgages, only 40 are using the Mortgage Guarantee Scheme indicating that confidence in returning to low deposit lending has vastly increased and that the scheme was seen as a sign of confidence in the property market, while some lenders decided to launch low LTV products independently from the scheme. In addition to the 95% mortgages, there were also 41 new products launched for 90% mortgages bringing the current total to over 480 compared to just 100 this time last year. Comparing the number of available mortgage products, it is currently around three quarters of pre-pandemic levels. For those with a 20% deposit, there has been an 18% increase in products available compared to the same time last year.

Across all types of mortgages, interest rates are still historically low and borrowers with big deposits can fix for five years at 1.27%. The Bank of England has shown that net mortgage borrowing in March reached the highest level ever recorded. Moneyfacts has reported that the number of residential mortgages increased for the seventh consecutive month in May, while the average two-year fixed rate dropped very slightly to 2.57 per cent while the average five-year fixed rate increased very slightly to 2.79 per cent.

Finally, more good news – deals are on the market for longer with the average shelf-life of a mortgage deal increasing by three days to 32 in April giving buyers longer to secure the right home and mortgage product.

Talk to us at The Mortgage Hub if you would like to find out more about securing a high LTV mortgage. We can scour the whole of the market to find deals that you may not have access to from high street lenders, and can advise you on the best deal for your individual circumstances.

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.

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.

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.

COVID-19 Property Market Update 

Many existing and potential homeowners are wondering whether to move now or delay their plans until they have a clearer picture of how long the pandemic will last. 

Since the market reopened here in Scotland in June, people have flocked to estate agents to purchase a new home. Properties are going to closing date, achieving record offers overs and competition is fierce as pent up demand combined with government incentives and a re-evaluation of our priorities has resulted in a mini property boom. 

The recent tax break announcement created a flurry of interest from buyers and gave an immediate boost to the housing market – according to The Telegraph, the lockdown resulted in £27bn of lost sales and buyers and sellers have been making up for this ever since.

The prime rural market has benefitted the most as people search for more space and better value. Buyers appear to be prioritising larger properties with more outside space, and they have re-evaluated the importance of proximity to transport links, local amenities and the ability the work from home. 

According to Zoopla, agreed sales fell by 92% during lockdown. Buyer demand, which is measured by the number of property enquiries, has jumped to 46% above pre-lockdown levels with a significant rate of recovery.

The prime rural market has benefitted the most as people search for more space and better value. In July, asking prices reached a new high of £320,265 – a rise of £7,640 (Rightmove) and Zoopla has forecast price growth of between 2% and 3% by the end of the year. Here in Glasgow house prices were 2.3% higher in August compared to 2% in August 2019.

 What is the outlook?

 With few distressed sellers just now – which is usually what drives house prices down in a crisis – it appears that the property market is holding strong. This is due to job and payment retention schemes and the availability of mortgage holidays. In addition, the eviction ban is protecting tenants who can’t pay their rent. 

At its peak, there were 1.9 million homeowners that took a mortgage repayment break – a sixth of all mortgaged homeowners. However, lenders have reported that only a small number of these requested an extension. If these people were to become forced sellers at the end of their mortgage break, but this would still not top pre pandemic property transactions. In addition, Hansen Lu, of Capital Economics, said that when the mortgage break scheme ends, regulatory changes mean that lenders’ own internal forbearance procedures will be more generous than they were ten years ago, and the impact will be reduced.

What’s more, according to the Bank of England, mortgage approvals reached a 13-year high in August as the rush to buy homes continued. The number of mortgages approved hit their highest level since October 2007 with a total of 84,700 mortgages  approved in August, a 28% increase on the previous month’s total.

It’s a seller’s market, so the advice is to sell now and for buyers, there are still some exceptional mortgage deals available. Even with the strict guidelines surrounding house sales, people are still encouraged to go on house viewings especially as initially it can be done virtually as agents increasingly embrace technology. Although many buyers tried to negotiate discounts when the market reopened, agents instead are seeing competitive bidding. Estate Agency is still subjected to social distancing measures and a change in the way they conduct themselves with restrictions on viewings to one member of a household, a ban on open houses and vendors vacating the property during the measuring, photography and viewings. However, this doesn’t appear to have dampened appetite.

Talk to us at The Mortgage Hub on 01698 200050 if you would like to discuss your mortgage options and for general advice about the property market here in Scotland.

Should You Continue With Your House Purchase?

This week it was announced that the UK is officially in recession. So, what does this mean for you if you’re planning to move?

During a recession when finances are tight job security is in question, many are cautious about buying a new home. However, this is a very unusual time for everyone in the UK – the likes of which we have never seen before.

The property market came to a standstill in March and went off with a bang when it reopened on June 29th . It was feared that house prices would crash but to date, the opposite has happened. The recession is a result of a public health crisis and not a financial one, so the financial system isn’t at a standstill as it has previously been. The government has taken unprecedented steps to protect jobs and prop up the housing market. Estate Agents have reported a huge upsurge in interest in properties and new seller enquiries and property portals have reported incredible visitor stats since the start of July.

What’s more, in July it was announced that LBTT would be waived for all properties up to £250,000 until March 2021 to further incentivise those considering moving and the Help to Buy scheme has been extended. There has been restored confidence in the market and transaction figures have rebounded – with a particular rise in the purchase of first homes and newly built properties.

The concern surrounding buying a home during a recession is that house prices may fall after a property purchase leaving buyers in negative equity. There’s also a fear that the Furlough scheme has delayed the number of job losses and that when the scheme ends there will be a raft of redundancies.

One thing is for sure – house prices are steadily rising and mortgage companies are bringing back products. House prices fell in 2018 due to a very specific lack of funding in the mortgage market. This isn’t the case this time so we believe that property will still be one of the strongest investments you can make. At present, there is an imbalance between demand and supply which is putting upward pressure on prices at the moment, and as a result we have seen the price growth for UK homes rise to 2.7% in June, up from 2.4% in May. We see this trend continuing for the foreseeable future.

If you’re buying a new home, you may prefer to delay your  purchase and wait to see how the recession plays out but the danger is that if your job is secure and you have the funds and meet the lending criteria, now is a great time to secure an attractive mortgage rate.

If you are thinking buying, make sure you have the right advice and don’t miss out on the LBTT break and low mortgage rates. Talk to us to discuss your circumstances before making a decision as we may able to help you decide what’s best for you.

Life In Lockdown Has Dramatically Changed Buyers’ Priorities

It appears that nearly four months in lockdown has changed home buyers priorities with outside space, large kitchens and high-speed broadband taking priority over location and links to public transport.

According to a survey commissioned by UK housebuilder Redrow, over 25% of prospective buyers have changed their minds over what aspects of their new homes are most important to them – and are seeking outside space with larger terraces and gardens, spacious kitchens and energy efficiency.

Since the COVID-19 pandemic hit the UK back in March, parents and those expecting children have been most likely to shift priorities. The survey found that 60% of respondents had access to private outdoor space, such as a garden, terrace area or balcony at the top of their property wish list – no doubt following months of home schooling and trying to keep children entertained. The importance of outside space during the lockdown with the great weather has made people reassess the importance of being able to access a garden or terrace.

Meanwhile, 40% of those surveyed were looking for a property with a larger kitchen and 29% were looking at the energy efficiency of the property which could have been prompted by those who are looking towards spending more time working from home going forward. People are also considering that there could either be a second wave or new pandemic and have now seen the reality of being in lockdown and feel that it’s happened once, it could well happen again.

High-speed broadband was also important to house hunters with 27% looking for a high-speed connection to enable efficient home working and home schooling.

Rather than looking at the proximity to public transport and road links, there was also a marked shift of people looking to live within walking or cycling distance of where they work – with 22% placing this as a priority. Access to green open spaces was also a priority for 35% of house hunters, proximity to small convenience stores was 33% and doctor’s surgery was 32%.

A quarter of those surveyed said that living in an area with a strong community was key, while 23% said they would make a concerted effort to get to know their neighbours when they move.

More time spent in the home has made us reconsider how we use the space that we have, and how our homes can adapt to more permanent change in the future.

If you are house hunting and would like to find out what you can afford which mortgage products are best for your circumstances, talk to us at The Mortgage Hub.

Lowest Ever Mortgage Rates

The average interest rate for two-year and five-year fixed rate mortgages has dropped to the lowest levels since records began in 2007 according to the latest figures from Moneyfacts. That makes it a great time to remortgage.

We are currently averaging lower rates than last month’s record low rate following two emergency cuts made to the basic rate in response to COVID-19 – this is the interest rate that the bank sets for lending to other banks. The fall in the official cost of borrowing impacts swap rates upon which fixed-rates mortgages are based – and lenders have passed on the reduction in borrowing costs to their customers.

However, some banks and building societies have reviewed the level of risk they take in lending – this is due to the impact that COVID-19 is having on the UK economy.

With these record-breaking fixed rate deals, now is a great time to remortgage, especially if your deal is coming to the end. In addition, if you’re still sitting on your lenders’ SVR, you could save thousands per year by switching to an average two-year fixed rate deal. The gap between the cost of a two-year and a five-year fixed-rate deal has also narrowed so you could pay a lower premium for the peace of mind knowing what your mortgage repayment will be for the next five years.

However, the number of mortgage products to choose from has more than halved – from over 5,200 products to 2,500.

There are currently less products available to borrowers with a low amount of equity or small deposit – those with 5% can choose from 22 products compared to 279 previously available and the choice for those with a 10% has dropped from 563 to 50. That’s why it’s essential to talk to a mortgage broker to find the right deal.

Although lenders have increased rates on loans for people borrowing 95% of their home’s value, this is only a small rise of 0.04% for a five-year fixed rate and 0.1% for a two-year fixed rate and they are still open for business for this sector of the market.

Because lenders have cut rates for people borrowing 90% of their property’s value this shows that competition is still strong in this area even though there are fewer products available.

At The Mortgage Hub we can scour the whole market on your behalf and help you find the best deal and find out if your application will be accepted. Talk to us for advice – we are currently closed but still working remotely until it is safe to open.

 

Buying and Selling Property During COVID-19

Everyone in the property industry is working hard to keep things moving during the coronavirus pandemic.

Even though we are social distancing, working from home and home-schooling our children, it doesn’t mean you can’t look for a new property. With many properties still for sale since the lockdown lots of estate agents are still working remotely in order to give you advice, property information and even hold virtual viewings and appraisals.

According to the latest figures from Zoopla, property sales have continued since the lockdown began and although, as you would expect, the number of available properties is lower, many people have kept their home on the market. In fact, figures show that the number of homes currently for sale is only 1% lower than on March 7th.

This stock is essential in order for the market to bounce back.

People are still searching

There were 70% fewer property sales since the start of coronavirus restrictions but there was an increase in the number of people browsing online for property in the second week. People are using this time to socialise online, look towards the future and being at home, many have started to see their surroundings in a new light. According to Zoopla, browsing levels have increased by 16% week on week.

The market will be affected by first time buyers keen on having their own space after lockdown, families looking for more outside space as the restrictions have made them realise the importance of a garden and we may even see some couples either make the decision to move in together or part – as the lockdown will have made people reassess their personal relationships.

Don’t withdraw your home from the market

With the number of people in lockdown and relying heavily on Internet browsing for things to do, this could be a good time to have your home on the market. If you’re already on the market – there’s no reason to withdraw it. The government hasn’t stopped property transactions from proceeding and empty property purchases can progress as normal. What’s more, mortgage brokers, lenders, solicitors and estate agents are all still working, albeit remotely. If your home is already listed with an estate agency, they can continue to market your property even though buyers won’t be able to view it in person until the current social distancing measures are lifted.

If you receive an offer on your property, there is nothing to stop you negotiating and accepting it, but you will need to be aware that the process will take longer than usual. There will be delays with the process including surveys, exchanging contracts and getting a mortgage approval.

New listings

Estate agents are still working remotely even though the branches are temporarily closed. Although they cannot come to your home for photographs and measurements, they can still provide valuations and help prep your home for sale for when the restrictions are lifted. It’s a good idea to get ahead of the game and get in touch now before they do open up again and their diaries are full. They can also talk to potential buyers about your property before it is on the market and arrange viewings for when the lockdown is over.

Searching for a home

If you are looking to buy a property you can still do things during the lockdown to get ahead. Browse homes online and take virtual tours if possible. Talk to your local agents and tell them what you are looking for – they may know of properties that will be listed for sale once the lockdown is lifted.

Talk to a mortgage broker to find out what you can borrow and the products that are currently available.

If you do find a property you can put in an offer for it, although as mentioned above, the conveyancing process is likely to be slower than usual.

Get your home market-ready

Spend this time getting your property prepped for a sale. Declutter, make repairs, tidy up the garden (gardeners are still working) and consider whether there’s any furniture you could remove from rooms and store in the loft or garage to help make the space look bigger or more appealing.

We are still helping customers to find the right mortgage during this time here at The Mortgage Hub. Talk to us today – we are here to help.