Category Archives: Mortgages

Mortgages

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.

 

A Rise in Buyer Demand

The latest House Price Index from Zoopla shows that UK city house price growth has hit a two year high of 3.9%. In addition, figures show that housing demand was up 26% over the first few weeks of this year compared to the same period in 2018 and 2019.

This means that city house price growth is at a 2 year high. HMRC data shows that in December last year sales were 11% higher than the same period in 2018

Northern regions registered stronger price growth throughout 2019 than many of the southern cities, although there are signs that the spread of price growth across the country has been narrowing in the last few months.

A summary of factors including house affordability, position in the current housing cycle, time to sell and price achieved indicate cities where the momentum in growth over the last quarter of last year will carry into next year.

According to Zoopla, Nottingham, Edinburgh and Glasgow rank as the top three cities with the strongest prospects for 2020 indicating that they will be towards the top of a relatively narrow range of price growth this year.

An examination of market fundamentals by city – including housing affordability, position in the current housing cycle, discounts to asking price and time to sell all indicate cities where the momentum in growth over the final quarter of 2019 will likely carry over into 2020. The ranking for all cities is shown in Table 2 along with the current annual growth rate.

Nottingham, Edinburgh and Glasgow rank as the top three cities with the strongest prospects for 2020, indicating they will be towards the top end of a relatively narrow range of price growth this year. During the four weeks to January 20th this year, the demand for housing has ‘bounced’ with a 26% more people looking for a home than the same period in 2018 and 2019. In fact, all cities apart from for Belfast have recorded an increase in demand compared to the last 2 years.

Demand for housing in Edinburgh remains strong overall with 6% annual growth in prices over 2019. However, demand has levelled out in the first 4 weeks of the year compared to the last 2 years.

If you would like to take advantage of the predicted growth this year by investing in property in Edinburgh or Glasgow, talk to us at The Mortgage Hub about securing the best mortgage for your circumstances.

Factors that can affect the value of your home

A recent study of 3,000 property buyers by research company The Advisory found some surprising ways in which your property could be more appealing and sway people to make an offer on your home.

Some of the findings were out of the property owner’s control. These include living on a tree-lined street (which added 15% to the value) and being close to one of the UK’s top schools (adding an average £52,000), being waterside (adding 10 – 15%), living near a Waitrose (adding £40,00) and a Carluccio’s (adding 18%), or having a blue plaque (5%). However, there are several aspects that are within your control and changes you can make before you put your home onto the market.

Energy efficiency

Making your home energy efficient can add 14% to the value of your home. Make sure you are on the best possible tariff using utilities comparison websites and invest in an energy efficient boiler if the existing one is in need of replacement. Draft proof your home and make sure you have sufficient insulation.

Greenery

Surprisingly, having trees and greenery surrounding your home and even a wisteria growing on the property façade can add up to 5% to the value of your home.

Broadband speed

Many people would be much more interested in a property if it had faster broadband, especially as many of us now work from home and rely on on-demand services for home entertainment.

Making improvements

If you make home improvements, it’s imperative that you get all permissions granted otherwise you could find that there are legal issues that can put off potential buyers. In addition, niche improvements that aren’t to everyone’s taste can be a huge turn-off, so think carefully about what you are doing to your home and who it will appeal to.

Check for damage

Water damage or structural problems will put buyers off so get the experts in to make sure everything is in order.

Clutter

According to research from Zoopla, house hunters take just ten seconds to decide if they want to live in the property. If your home is dirty, full of clutter or has an unpleasant odour this is likely to be the outcome. Make sure it’s clean, tidy and clutter free!

There are also several factors that can negatively affect the value of your home. These include Japanese knotweed which as wiped almost £20bn off UK house prices (and can affect the value by 10%). Other factors include living at a number 13, an unpleasant history, living close to a McDonald’s or living in a high crime area. These are factors to consider when you purchase a property because although these may not be an issue for you, it’s important to consider the resale aspect.

Talk to us at The Mortgage Hub if you would like advice on the best mortgage for you.

Two-Thirds of Buyers Choosing Houses Over Flats  

According to the latest research from Zoopla, two thirds of first time buyers across the UK are choosing to purchase three bedroom houses over one and two bedroom flats. In addition, a quarter of buyers in Northern Ireland are looking to buy a four bedroom home.

This latest research shows that first-time buyers are not compromising on the size of their property or the price tag that goes with it, demonstrating that they are taking a long term view of their first home. This could be because of the higher age bracket of those buying their first home and knowledge of the cost of upsizing, taking into account mortgage fees, estate agent fees and LBTT. In addition, buyers are finding that it’s more affordable when they opt for longer mortgage terms with the typical first time buyer taking out a 29 year mortgage term compared to a 25 year term ten years ago.

First time buyers are expected to be the largest purchasing group this year given that they accounted for 36 per cent of all sales last year.

Data from Zoopla shows that the gap between the average price paid between first time buyers and other buying groups has narrowed over the last twenty years. Last year, first time buyers were purchasing homes that were 8 to 12 per cent cheaper than the average, compared to 20 to 25 per cent before 2007.

The largest barriers to buying a home is meeting the affordability criteria and raising the deposit required, even though they are currently putting down 23 per cent of their home’s value compared to 9 per cent before the crisis.

Despite stringent affordability checks, according to the House Price Index figures from Zoopla (to the end of July), Glasgow is currently the most affordable place to buy property with average house prices at just 3.1 times the average wage.

Talk to us at The Mortgage Hub if you would like advice on the type of property you can afford to purchase.

House Prices and Letting – Glasgow Bucks the Trend!

Homeowner confidence

Despite the uncertainty surrounding Brexit, according to Zoopla confidence in the housing market remains high with property owners expecting prices to rise by 4.8% during the rest of 2019. In addition, 81% of people think that the value of property in their area will increase.

However, it appears that there is significant regional variation with homeowners in the northern regions feeling the most optimistic with over 90% of homeowners in Scotland expecting house prices to increase. In contrast, those in southern regions were much more pessimistic and expected a downturn in prices.

In addition, home owners in Scotland were expecting the biggest gains on 5.5% over the next six months. This is followed by homeowners in the North East and the Midlands.

The least pessimistic homeowners are in London, where just 32.8% believed that house price rises would stop in the next six months and actually fall by 6.7% with people in the south east also feeling very downbeat.

Letting

In other news announced this week, rents in the private rented sector (PRS) rose in Q1 of this year despite other sectors being impacted by Brexit uncertainty. The average property to rent in Scotland rose by 1.7% and in Glasgow, although tenants have been shopping around before renting a property, rents are up 2.9% with three bed properties rising 8.6% compared to last year. The demand for one and two bedroom properties posted strong growth at 5.3% and over half of all of Glasgow’s properties were let within just one month.

House prices

Glasgow posted the strongest gains in the UK with property values rising by 5.1% during the last year. Compared to the rest of the UK, house prices growth has fallen to its lowest level in seven year with the average property selling for 3.9% under the asking price, according to Zoopla.

In London homes are selling for 5.7% less than the asking price, but in Glasgow and Edinburgh homes are still being sold for more than the original asking price.

Talk to us at The Mortgage Hub if you would like independent advice on the best mortgage product for your needs.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.

Buying a Fixer Upper? What You Need to Consider

As we reported recently, if you purchase a second home that is uninhabitable you can avoid the LBTT surcharge. Not only can you avoid this additional tax payment, you could also maximise your return on investment.

According to recent research from Rightmove, over 90% of people would consider buying a property in a state of disrepair. If you’re among them and decide to purchase a property in need of renovation, what should you consider?

Get the right advice

The first step is to get the right advice from the off. Talk to architects, builders and your local council to find out what you need to be aware of and what the common pitfalls are. Also talk to your local estate agent and find out how much value certain projects will add to your property as this is very much dependent on the area in which you’re buying. For example, spending money on a driveway in a rural area may not add any value whereas a driveway in an urban area where there are parking charges could make a huge difference. Talk to us at The Mortgage Hub about how you can get the best mortgage deal as soon as you see a property you are interested in buying – getting the right mortgage deal can make a huge difference to your budget and return on investment. There are many factors to consider so talk to the experts.

Work out your budget

Work out your purchase price, cost of all associated fees and get a clear picture of how much you have to spend on the renovation. Don’t work your way up – work your way down starting with the must-haves and finishing with the would-likes. Don’t forget to include a buffer as renovation projects often go over budget. Don’t try to stretch your budget by cutting corners and if you do need to cut costs apply this to your decorating and décor rather than building work. You won’t get your value for money by skimping on quality building.

Consider the type of property

It’s important to consider whether the property is located on a World Heritage Site or is a listed building. This will greatly impact the renovations that you can undertake. There could be stipulations that some original features need to remain intact, you may not be able to change the layout and any works may need to be in keeping with the design of the home. Don’t forget the outside – are there any protected trees in your garden that are at odds with your plans for landscaping? If you do opt for an older property it may be worth paying extra for a structural survey – we can advise you on this.

Don’t forget the garden

There’s no point in spending all your time and money on the inside of your property if you have no kerb appeal! Make sure you consider the outside of the property and factor in any costs to get this area up to scratch. Research has shown that outside space can add up to £22,000 to your home (Zoopla 2018) so it could be well worth the extra investment.

Work out what buyers want

Buyers want to see lots of space, plenty of natural light and a well-considered internal layout with plenty of storage to put clutter out of sight. A renovation that delivers sparkling clean kitchens and bathrooms with a hint of luxury will be a winner.

Talk to us at The Mortgage Hub about purchasing a second home or a property that needs renovating.

Our Tips for a Successful Buy-To-Let

Buying property to let has proven to be a wise investment for many, especially when carefully planned and researched. Here we take you through the key steps to consider when getting into the property investment game and becoming a landlord.

Researching buy-to-let mortgages

Have a look at all the different deals available at present. Borrowing rates in recent times have been historically low but it’s always good to remember and prepare for mortgage terms changing in the future and you need to be confident that any rental income will comfortably cover the cost of your mortgage. Many lenders require that rental income will in fact cover 125% – 145%, giving you a comfortable buffer. As with any mortgage application, you will need to prepare to give a lot of evidence of your current financial situation as well as having a decent sized deposit, usually between 20-30% of the property value. Take to our experts at The Mortgage Hub and we can guide you on the best available buy to let mortgage for your circumstances.

Finding the right letting agent

Working with a reputable and experienced letting agent in the area you are looking to invest will help from the get-go. You could develop a great working relationship that could see you through all stages of the process, from finding the right property, marketing your property in order to find the right tenants to the management of the rental property in the longer-term. Online agents can look costs-effective, but remember they may not have that all-important local knowledge or presence.

Budgeting

As this is likely to be one of your biggest investments, it makes sense to plan it out carefully and thoroughly. Calculate whether now is the right time to invest and what your long term aims are. Are you looking to increase monthly income, or put your money into bricks and mortar to watch it grow? If you can only afford a smaller property right now, prepare for a higher turnover of tenants who will potentially outgrow your property more often. This could also mean more instances when the property is empty and you are short on paying tenants. Larger HMO properties ideal for students are usually always easier to fill and give great returns as you can proportion the cost per room, this can be more costly to set up and there are many restrictions to factor in with HMO’s. This will all be shaped by your location…

Deciding on location

If you live near to a college or university, a flat suitable for students could be a great investment. You may not need to spend as much doing up a property, as it will only need to be comfortable and safe rather than a more permanent home. Smaller properties in central, urban locations could be ideal for professionals or young couples. If you are more rural, you might be able to rent out a larger family-sized home but pay attention to things like good schooling and amenities that all impact desirability and your potential for a successful let. Speaking to your letting agent about areas that are up-and-coming can help establish where people are increasingly looking to live and whether property value is likely to increase long-term.

Property type

Are you open to an older property that might need updating? You can pick up this type of property for an attractive price but go in with eyes wide open on what any renovations will mean in terms of time and budget. It’s important to not get carried away with renovations as you will not be living in the property yourself. Rental properties need not always have the latest most attractive kitchens and bathrooms, but should be clean, fresh, and safe for tenants. Newer, ‘walk-in’ condition properties will be easier to get on the market from the get go, but may cost more and perhaps have fewer unique selling points.

Work out your monthly rental income

Remember that rental price is often the key factor for tenants, so trying to recoup the costs of a newly installed kitchen by hiking up rent will only drive many potential tenants away. Be clear on how much you will be able to realistically charge for rent per month by speaking to your letting agent and doing research in the area – ideally before you buy. This will help you keep on track financially and ensure the best outcomes for your buy-to-let investment in the long run.

Talk to our experts and see if becoming a landlord is a viable option for you and your goals.

Is Your Fixed Rate Mortgage About to End?

With many property purchasers buying homes with a two, three or five year fixed rate deal, every moth there are hundreds of thousands of borrowers who are reaching the end of their fixed rate mortgage deal.

When your mortgage deal ends, you can choose to do nothing and move on to a higher SVR rate or remortgage onto a better deal. If you do nothing you could find that your mortgage repayments jump up by a lot. However, you can avert these higher costs by moving onto the best possible rate.

Fixed rate mortgages

By taking out a fixed rate mortgage you are locking your rate for a set amount of time – usually two, three, five or 10 years. This means that the amount you repay each month is guaranteed regardless of what happens to interest rates during your deal, this gives a level of certainty so you know how much your outgoings will be each month, helping you to budget and plan ahead.

Moving to a SVR

When the term ends you will move onto a standard variable rate or SVR mortgage. These are usually far higher than your fixed rate deal – and could be as high as four or five per cent. SVR mortgages don’t track the Bank Rate directly but are set by individual lenders and can go up and down usually in line with wider interest rates.

A lender will often contact you before our current mortgage deal expires, but many may find themselves moved onto the SVR without realising. You may receive an offer from your current lender, but it’s important to get advice to make sure this is the best deal available to you.

If the value of your property has gone up since you bought your property, you could be eligible for a much lower rate with another lender, which is something the Mortgage Hub can assist you with.

Once you have found the best deal you will need pass the usual credit and affordability checks before receiving a binding offer. Your solicitor will take care of the paperwork and a signed deed will be sent to your new mortgage provider. Your existing mortgage will be repaid and you will start making repayments to the new lender.

However, if you want to make considerable mortgage overpayments a SVR might be beneficial because there won’t typically be any early repayment charges attached, allowing you to repay the mortgage without any penalty. In addition, if you have a relatively small mortgage for example £50,000 or less, it might not be worth remortgaging as the new mortgage fees could outweigh the potential savings. Some lenders won’t take on small mortgages.

What will it cost to remortgage?

Remortgaging will cost money as there are several charges you could be liable for including product fees, valuation fees, solicitor fees, transfer fees and valuation fees so it’s worth weighing up whether it is right for you in the short and long term.

Talk to us at The Mortgage Hub about remortgaging and let us find the best deal suited to your circumstances.

What Can I Do to Improve My Mortgage Affordability? 

The rules surrounding mortgage affordability have become stricter over recent years meaning that those starting out on their property journey need to save as much as possible for their deposit. But what does this mean in reality?

There was a time when you could simply select the right mortgage, tell the lender that you can afford the repayments and wait for the cash to appear in your account. Lenders were offering self-certification mortgages whereby you simply needed an accountant’s letter backing up your self employed income and some buyers could even secure a 95% interest only mortgage with a cash back option! However the days of irresponsible lending are (thankfully) over.

The financial crisis — when the legacy of unaffordable mortgages caused a chain reaction that caused house prices to crash – prompted an overhaul of the mortgage application process known as the mortgage market review. When anyone talks about mortgages the word ‘affordability’ seems to go hand in hand. This protects consumers from being sold loans that they can’t afford to repay – and although this has many advantages that will be felt for generation, it has also locked a large number out of the property market especially those who are self employed or have unique circumstances that don’t conform to the profile of a typical borrower and ’safe bet’.

So how can you improve your affordability?

Cut unnecessary costs

By cutting your monthly outgoings by just £100 you could add up to £10,000 to your maximum loan. This could mean ditching the morning coffee and lunch out, staying in rather than going out or cancelling subscriptions that you can do with out such as a gym membership, an expensive TV package or memberships you don’t use. Check you have the best deal available and try and switch to a different deal or provider if possible. When you come to the end of a contract – such as a mobile phone or cable TV, renegotiate the monthly fee. By making a few small changes you can make a big difference to your outgoings and ultimately the amount you can borrow, or the extra saving can be put towards a deposit.

Plan ahead

Some lenders only want three months of statements and payslips whereas another may want six, it’s best to plan for the worst and hope for the best to give yourself the best chance of getting a mortgage. Some lenders interpret unsecured credit card and overdraft debt differently so it’s better to try and pay these off in advance of applying for a mortgage even if that means delaying buying a property.

Your deposit is key

The size of your deposit is half the battle. The larger the loan to value you need, the more difficult and expensive to obtain so it’s important to prioritise saving for your deposit.

Analyse your lifestyle

Lenders may also look for red flags such as payments to gambling companies, significant one-off payments and overspending. Take a good look at your lifestyle and how you manage your accounts as this can affect your affordability rating with the lender and you can dramatically improve your chances of being accepted by making changes to the way you spend your cash.

Reduce debts

You could find it’s more beneficial to put off purchasing your own home until you can reduce your debts – this will improve your affordability and the amount you can borrow. If you are one of the millions of people who permanently live in their overdraft, now is the time to get back into the black. If you have a student loan it could be treated differently by various lenders.

Keep an eye on your credit score

It’s essential to keep a close eye on your credit score throughout the preparation, application and buying process particularly in case of any errors that could affect a good score. As soon as there’s a change make sure it’s correct and that nothing is adversely affecting your score. 

Lenders won’t take future prospects into account

It’s worth noting that one of the changes in lending attitudes has been that lenders won’t take future prospects into account. Saying you should get a pay rise next year or more freelance work won’t carry much weight. You need to secure the increase before your application is considered.

At The Mortgage Hub we can help give you the best chance of securing a mortgage and purchasing your home. Preparation is key so talk to us today for advice from our friendly, professional team.

The Mortgage Hub is an independent mortgage advisor serving the greater Glasgow area. Whether you are planning to buy your very first home and need the right first time buyer mortgage, or are looking to re-mortgage due to a house move or to growing family – we understand your journey is so much more than a financial process, it’s a journey to achieve your dreams, improve your lifestyle and achieve your true potential.