Category Archives: Uncategorized

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.

Remortgaging Dominates the Market

Last month was the second busiest month for mortgage searches since November 2019, with remortgaging dominating the market.

The latest report released by Twenty7Tec has found that the housing market has continued upwards despite the end of the stamp duty (LBTT in Scotland) holiday earlier this year.

Over the last two years, the only other month that has been busier than November this year was March 2021 as we all started to come out of the winter restrictions imposed on us following high Covid19 numbers in January and February. In fact, remortgages accounted for nearly half of the total mortgage searches in 2021 rising to nearly 57% when product transfers are taken into account. On November 4th, remortgage documents overtook purchase document volumes for the first time since November 2020.

In October there was much chatter in the industry about a rise in interest rates and mortgage companies putting their interest rates in anticipation of this move by the Bank of England. Due to this, there was a 7% increase in searches for fixed rate mortgages with other mortgage types falling in search numbers.

The busiest day was November 2nd with and that seventeen of the top 20 days this year for buy-to-let searches were in November.

House prices in 2022

According to Zoopla, the total value of British homes has risen by an incredible 20% over the last five years

This means that nearly 12 million homes have increased in value by the national average of £49,000 or more since 2016.

House price growth has been underpinned by historically low mortgage rates and with the pandemic resulting in a huge number of homeowners reassessing if their home meets their needs including new home working arrangements. Limited supply has only fuelled house price growth.

Looking to remortgage?

If you are seeking a mortgage on your property talk to us at The Mortgage Hub. You may be looking to move home, switch to a better mortgage deal on your existing home, release equity to consolidate debts or carry out home improvements. We can look at either remortgaging with your existing lender, or depending on your circumstances and current deal, move to another lender for a more competitive rate. Many mortgage deals come with a discounted rate for a set amount of time, so it’s common to find that you may be about to move onto your lenders Standard Variable Rate- if this is the case you may be able to remortgage several months before the end of your deal.

Contact us on 01698 200050 to find out more from one of our friendly mortgage specialists.

Green Mortgages

Climate change and the issues surrounding our homes is big news at present especially with the protests currently taking place each day in London to highlight the issue of insulating our homes – along with reports of an impeding fuel crisis. In the past, taking an interest in the future of our planet was seen as something carried out by a minority. However, concerns over the future of our planet are now considered one of the most serious issues facing Britain today.

Green mortgages are still something that many consumers don’t appear to be aware of. A YouGov poll carried out in June of this year revealed that environmental problems ranked as one of the country’s top-three concerns, along with health, the economy, immigration, and crime. In fact, 30% of people questioned believe that environmental issues are one of the three biggest problems facing the UK. For those aged 18 to 24 this rises to 40%.

As we are being made aware at present with the current protests to highlight climate change, residential properties are one of the UK’s biggest generators of pollution and millions of properties are lacking a ‘green’ provision with older inefficient boilers, poor insulation and old windows that don’t contain the heat generated.  According to figures published by the Business, Energy and Industrial Strategy Committee, residential homes account for 30% of Britain’s energy use and 19% of greenhouse gas emissions. Although there are many old properties, all houses can improve their energy performance by simple changes including energy-efficient light bulbs, turning off unused appliances and having intelligent schedules for heating and hot water usage.

In response, green mortgages have been launched by several lenders including Barclays, Nationwide and NatWest, but they are still lacking in popularity.

A green mortgage means that a bank or lender will offer preferential terms such as a lower interest rate if you can demonstrate that the property you are seeking lending for meets certain environmental standards. This could be a new build home with a sustainability rating, or where the borrower will invest in renovating an existing building to improve its energy performance. This offers an incentive to homeowners to buy a green building or bring it up to scratch to make it greener – offering a lower interest rate or an increased loan amount.

Talk to us at The Mortgage Hub to find out more about the availability or eligibility of a green mortgage.

What’s Happening in the Buy-to-Let Sector?

There has been a recent rise in buy-to-let remortgaging with this sector increasing every year from 2009 to 2019, representing a decade of growth.

Figures from UK Finance show that in 2008 there were 114,740 remortgages but in 2009 cases fell sharply to 32,850. Since then, the buy-to-let market has increased and in 2019 remortgaging peaked at 187,900 loans. When the pandemic started, we saw a fall in lending across all markets, with buy-to-let remortgaging numbers falling to 163,300 in 2020. However, in the first quarter of this year we saw a rise in numbers compared to the last quarter of 2020, as 39,700 loans were issued.

Equity release

There has also been a rise in property investors remortgaging to release equity from a property either to grow their investment portfolio or to carry out improvements to maximise the rental income and property value. House prices are rising meaning that Loan to Value rates are lower, providing an opportunity for equity release.

Since all rental properties have required an Energy Performance Certificate (EPC) rating of at least E, but the government has its sights on all homes being rated C or above by 2030. This has resulted in landlords wanting to carry out home improvements such as new windows, heating systems or improved insulation. Many lenders are now offering green mortgages as an incentive for this.

The Scottish buy-to-let market

According to the latest Nationwide House Price Index, Scotland has recently been shown to have the UK’s best rental yields in the UK with an average yield of 5.8%. In addition, according to a survey by the National Residential Landlords Association, over two thirds of landlords surveyed were confident about the market in the coming year.

Last year, according to Zoopla, five out of the top ten hot spots where landlords could find the best rental returns were in Scotland – with Glasgow and Stirling providing typical yields of 7.6% and 7.5% respectively.

If you are considering taking out a buy-to-let mortgage or would like to discuss remortgaging, talk to us at The Mortgage Hub. We can find the right deal for your individual circumstances and needs.

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.

 

House Prices Rise Steadily

According to the latest House Price Index for August, house prices are steadily rising against the backdrop of the Coronovirus pandemic.

UK average house prices increased by 2.5% during the year to August, up from 2.1% in July. On a monthly basis, this was a rise of 0.7 per cent, and an improvement on the 0.3 per cent monthly increase seen in August 2019.

According to the latest Rightmove House Price Index, the national average of a property coming to market is 1.1% higher than the previous month and 5.5% higher in September than a year ago with prices predicted to rise by 7% by December. It also reported that the average time to sell a property was 31 days in Scotland and 50 days across the UK and the number of active buyers is 66% higher than a year ago.

These figures show that prices are rising steadily due to a return to the market after the housing market ground to a halt in April. Following the reopening late June, the level of activity has been nothing short of exceptional.

ONS said house price growth had generally slowed down since 2016 but noted activity seemed to pick up again this year once the property market reopened in May.

Not only did we see a backlog of people who were in the early stages of a move but following lockdown there has been a re-evaluation of buyers’ priorities as many people are now working home full or part time and require additional inside space. With lockdown restrictions in place, the only part of our homes we can currently socialize in is our gardens and so this has led to a flurry of interest in three and four bedroom homes with gardens and less demand for apartments with no outside space.

There has also been a shortage of suitable housing stock coming on to the market leading to greater demand which drives up prices, combined with the effect of the stamp duty holiday for properties up to the value of £250,000.

It is predicted that September will see an even sharper upswing once the figures are all in and that the impact of the stamp duty will start to be seen.

Mortgage rates are at an all time low which means there are some great mortgage deals available at present – further driving people to consider a house move.

Talk to us at The Mortgage Hub if you would like to find out about available mortgage deals suitable for your circumstances.

Homes Selling at Fastest Rate in 10 Years

According to Rightmove (4 September) one in seven properties are under offer within a week of going to the market following what can only be described as a buying frenzy.

The number of homes selling within one week has hit a 10-year high and since the threshold change for Stamp Duty (LBTT) was announced across the UK in July, the number of sales agreed is up 125% on the same period last year and 28% up on February 2018, Rightmove’s previous high. The stamp duty holiday has accelerated the moves of second steppers seeking larger family homes with space to enable more home working. In addition, the lockdown has highlighted the importance of outside space.

Whilst Scotland has the UK’s fastest selling market, London is the slowest with only one in nine homes sold within the first week that it went to market.

In the 10 years in which Rightmove has been tracking data, they have discovered that more properties are selling now than at any time. The fastest selling properties are three-bedroom semi-detached houses. In London the share is a fifth of agreed sales but in Scotland it’s a third of all sales.

It is believed that the current property boom is being driven by transactions of larger three and four-bedroom family homes as buyers rush to save on LBTT.

Chancellor Rishi Sunak’s decision to raise the nil-rate band from £125,000 to £500,000 for homes across England and Northern Ireland means that buyers are able to save as much as £15,000 when purchasing their home before the March 31st 2021 deadline. The move was followed by similar measures in Scotland and Wales.

However, at entry level, buyers are finding it increasingly difficult to get onto the property ladder as larger deposits are required compared to pre-lockdown.  Lenders have withdrawn several low deposit mortgage deals due to fears of falling house prices and the limit on surveyors being able to conduct physical property valuations. However, these are slowly being introduced back into the market by lenders. High loan-to-value mortgages are still available but have more restrictions.

The good news is that first time buyers can still take advantage of the First Home Fund and Help to Buy (Scotland) to get onto the property ladder with just a 5% deposit, making buying a first home a reality for many.

If you are considering moving, it’s important to act now as there are currently some delays following lockdown – so even if a sale is agreed quickly the sale could take longer to complete.

If you are seeking a mortgage or would like advice on mortgage availability for first time buyers talk to us at The Mortgage Hub and we will endeavour to help.

House Prices Set to Rise

According to Zoopla, the surge in demand for property following the easing of lockdown restrictions will carry strong house prices until the end of the year.

Even though the rebound in activity in the housing market is expected to subside in the coming weeks in England and after an expected spike here in Scotland, the elevated demand combined with stock levels 15% lower than in 2019 will create upward pressure on house prices.

Zoopla’s latest data and analysis shows that this surge may delay the fall in house prices until at least the end of this year.

The analysis of house prices comes from sales agreed before we went into lockdown. The data on pricing for new sales agreed in the last four weeks is starting to feed through already and this points to the continuing upward pressure on house prices that we saw from January to the beginning of March.

For the first three months of the year prices were rising at 7% and in England over the first two weeks of June, they have returned to registering a similar growth. The majority of these sales are likely to complete between August and October this year in England and slightly later here in Scotland. Zoopla predicts that these should result in a sustained UK house price growth of between 2% and 3% over the next quarter.

There will be an initial rebound, but demand will weaken over the summer months as the economic impact of the coronavirus lockdown starts to become evident. Last week the ONS indicated an acceleration in unemployment resulting in caution amongst lenders and the limited availability of 90% loan to value (LTV) mortgages which will reduce demand particularly amongst first-time buyers who have driven the housing market.

Last year around 20% of all homebuyers purchased a property with a deposit of up to 10% and so a decrease in the availability of 90% mortgages could prevent first-time buyers entering the market and reducing demand.

Almost 20% of homeowners have taken a mortgage payment holiday and they can extend this up to the end of October this year which means support is extended for the rest of the mortgaged sector up until April next year.

UK house price growth is up 2.4% on the year and has increased from 1.6% at the start of 2020. This rebound in housing market activity has taken many in the industry by surprise but is welcome news.

Here in Scotland, where the market reopens on Monday 29th June has seen demand rise back to pre-COVID levels, but sales remain more than two thirds lower and are expected to rebound in the coming weeks.

Talk to us at The Mortgage Hub if you would like to discuss your next move.