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Furlough Explained

Before March this year, many people hadn’t ever head of the furlough scheme. With the onset of the coronavirus pandemic it has become something that we are all now familiar with. Whether you have been furloughed by your employer or want to know more about it, here’s our brief guide.

If your company cannot give you work due to the coronavirus outbreak, you are likely to have been furloughed and your employer would have written to you explaining the situation. If you were made redundant after February 28th, your employer can choose to rehire you under the scheme.

Over the next few months, millions will rely on the furlough scheme although it doesn’t apply to employees who had already signed a contract or switched jobs after the cut-off date 28th February.

What is furlough?

Furlough supports businesses that have been hit by the effects of the Coronovirus (COVID-19) crisis. These include companies within industries that have come to a standstill including pubs, restaurants, cafes, travel firms, hotels, airlines, estate agents, retailers, several service providers and more. Only essential businesses are currently still open. A recent poll by YouGov suggested that 14% of workers had already lost their job due to Coronovirus.  The treasury expected 10% of private firms to use the scheme but 44% of those polled have indicated that they will place at least half of their staff on furlough.

Furlough provides temporary help to pay 80% of the average annual wage of those who cannot do their jobs. The aim is to help companies retain employees and keep them on the payroll rather than make them redundant, even if they aren’t working.

How much will you receive?

The amount that companies can claim back from the government is 80% of an employees salary, up to £2,500 per month before tax per employee. The company can choose to top this up to the full monthly amount. You are required to have been on the payroll of the company since at least 28 February 2020 and can be full time, part time, or on a flexible, zero-hour or agency contract. The minimum amount of time you can be furloughed for is three weeks. The scheme operates for three months from March 1st although most people won’t receive furlough until the end of April in the first instance.

If your wages vary each month, your salary will be based on either your average monthly wage from the previous tax year or the same salary as the previous year for that particular month – whichever is higher.

Does it include bonuses?

You will receive up to 80% of your core salary and it doesn’t include any bonus or commission payments you were due to receive. It will also cover the minimum automatic enrolment pension contributions made by your employer, along with their National Insurance contributions.

Employment rights

If you are on furlough you will have the same employment rights. If you become unwell, you will be placed on statutory sick pay and placed on furlough when you recover. If you are shielding, you are also eligible.

Restrictions

If you have been furloughed, you cannot do any work for your employer. If you have more than one employer, you can receive furlough from any of them up to £2,500. You can also continue working for any employer that still requires your services and you can still volunteer for your company as long as you aren’t creating revenue or providing a service.

You can’t do any work for your employer if you have been furloughed.

When furlough ends

When furlough ends your company is under no obligation to keep on employees, but the government has indicated that the scheme will be extended beyond the end of May if required. However, the hope is that when furlough ends, restrictions will have been lifted and businesses can operate as normal enabling companies to pay their employees as before.

We are still here and on-hand to help you to navigate this difficult time. Whether you want to find out more about taking a mortgage break, proceeding with a mortgage offer or remortgaging, talk to our team today.

Several Lenders Retain Their Mortgage Offering

Following the news that several lenders, including Halifax and Barclays, are withdrawing mortgage products with a high Loan to Value (LTV), Mortgage Solutions has revealed that other lenders have no plans to follow suit.

In the last few days, Barclays announced that it will only accept applications on 60% LTV mortgage products and Halifax revealed that they had made the same decision.

Other lenders are holding firm at present and have revealed that they have no plans to do the same although they have indicated that this will be under constant review.

Some of the largest lenders including Nationwide and Santander are still offering 95% LTV mortgage products as of March 26th. Nationwide has also stated that it will continue to support the market within the very unusual constraints in this present situation as a result of COVID-19. It does not have any immediate plans to withdraw mortgage products but admitted that applications could take longer to process. Similarly, Santander is monitoring the situation to see how this crisis is affecting the mortgage market.

At present all of the major lenders are offering mortgage holidays for anyone who’s income has been affected by COVID-19 as a way to support existing customers and if this is pre-agreed, it should not have any adverse effect on your credit file.

If you feel that you need a mortgage repayment holiday, make sure you agree this with your lender first or talk to us for advice. We are still working hard to provide the same level of service, albeit remotely, so please don’t hesitate to contact us.

 

Mortgage Payment Holidays

Mortgage lenders over the last couple of days have set out how they will provide payment holidays for up to three months for those who are financially affected by Coronovirus (COVID-19).

Mortgage payments are often the largest outgoing for homeowners and lenders want to reassure them that they are working towards measures to support them during this very difficult and uncertain time – especially as we don’t know how long this may go on for.

If you are concerned about your current financial situation, we can help. We can talk to you about any implications a mortgage payment break could have, liaise with your lender or inform you of what you need to ask them when you do speak to them.

In the meantime, here’s a brief guide to taking a mortgage break: BLOG

Taking a Mortgage Payment Holiday

A mortgage payment holiday means that your mortgage repayment is deferred for a set period of time during which you won’t make any repayments. Interest will still accrue whilst you are on your mortgage payment holiday.

You may want to take a mortgage payment holiday due to a shortfall of income that you believe is a temporary situation. This isn’t a permanent solution because you will need to carry on making your full mortgage repayments once this period is over – usually three months. The shortfall will be made up in the future, which could be over the remaining term.

How does it work?

While you take a mortgage holiday, the capital sum of the loan remains the same while the interest accrues. At the end of the payment holiday the rules re-apply and your lender will assess your circumstances and come to an arrangement regarding repayment of the arrears. Any arrangements will minimise the risk of repossession.

Will there be a blanket repayment holiday?

At this point in time lenders are helping people on an individual basis so an automatic payment holiday for all customers isn’t necessary as not all customers will be unable to meet their repayments.

Will it affect my credit score?

Lenders have stated that because of the very unique circumstances we are facing due to COVID-19, they will be talking to credit references agencies to ensure that it will not impact their credit score. However, we advise that you check with your lender before making the decision to take a mortgage break. Each lender has a different approach for reporting to credit reference agencies, but they have made assurances that a repayment holiday won’t result in an adverse impact on your score.

How do I apply?

Lenders are offering customers who are up-to-date with their mortgage payments and impacted by COVID-19 the ability to self-certify. Usually, a lender will assess your individual finances and consider what options are suitable. However, with the sheer volume of people asking for help they have waived this for a more straightforward process.

If you believe that you have been impacted by COVID-19, talk to your lender at your earliest convenience to find out if this is a suitable option. At The Mortgage Hub we can help you so get in touch if you would like advice on applying to your lender.

Am I eligible?

If you have been in arrears with your mortgage repayments and aren’t up to date, the Financial Conduct Authority (FCA) rules state that lenders must ensure that any forbearance offered enables recovery through full repayment of arrears, minimises the long-term impact of arrears, and that the mortgage remains affordable and sustainable in order to ensure that your home won’t be repossessed in the future. That’s why payment holidays are a short-term solution and will not be offered if you aren’t currently up-to-date.

Renting

We advise that you contact your landlord or managing agent if you are worried about meeting your rental payment. Your landlord may be able to talk to their mortgage lender to discuss the options which could allow you to take a break in payments.

Get in touch if you’d like any advice. We’re here to help.

Interest Rate Cut – Should You Remortgage Now?

With the interest rate cut announced earlier this week, should you remortgage now?

Following the interest rate cut, you may wonder how it will affect your mortgage rates and if you should remortgage.

The Bank of England cut interest rates this week in a bid to support the economy during the Coronovirus outbreak. Rates were reduced from 0.75% to 0.25% taking borrowing costs down to the lowest level in history.

What is remortgaging?

Remortgaging is when you take out a new mortgage on a property you currently own. This would be to replace your existing mortgage or to release money from your equity. At present, around 30% of home loans in the UK are remortgages.

Your mortgage is a huge financial commitment and by having the cheapest mortgage deal available to you can save £1000s each year.

Why remortgage?

There are several reasons you may consider remortgaging:

  1. Your current deal is about to end. Your mortgage deal is likely to be fixed for two or five years, after which you will be put onto the lender’s standard variable rate which is likely to be higher. Start looking for a new mortgage around three months before your current deal is about to end.
  2. You want a better rate. If you’re tied to an initial deal, you may have to pay a large early repayment charge which can be as much as 5% of your outstanding loan and you may have an admin fee to pay on top. However, the savings could outweigh this so get the correct advice.
  3. Your home’s value has gone up. You may find that if you have more equity you qualify for a lower loan to value band, and eligible for a better rate.
  4. You are concerned about interest rates rising. If you’re on a variable rate you may want to fix it for peace of mind.
  5. You want to overpay. Your current mortgage may not allow you to make overpayments.
  6. You want to borrow funds. If you want to release equity, make sure this is the most efficient form of borrowing. We can help you to work out if this is the most affordable and cost-effective option.

What will happen to mortgage rates now?

As a result of this cut in interest rates, some mortgages will get cheaper – for example if you are on a tracker mortgage, your repayments will be lower. These people will save around £25 per month per £100,000 or mortgage whereas those on a fixed rate won’t notice any change.

It will take a few weeks to filter through, and we will see the rates of new mortgage fixes drop making a good time to remortgage.

Lender response 

Several lenders have already said that they will offer their customers a 3 month mortgage holiday for those affected by the Cornovirus and people could try to create a small cash-buffer by seeing if they can save money by switching their mortgage.

The extent of the impact of Coronavirus on the housing market is yet unknown, although the Bank of England governor suggested that the UK economy could shrink in the coming months.

For savers, the news isn’t so welcome as saving rates have been low for a long time and this cut could lead to further reductions in rates.

Talk to us if you want to find out if this new rate could save you money. We offer phone appointments at a time to suit you.

Prepare Your Property for a Sale

If you are thinking of buying a property and selling your existing home, it pays to make sure you get the best price possible and without your property languishing on the market. Therefore it’s important to present your home in the best light possible in today’s competitive market. This could mean more than a quick dust, hoover and tidy-up before viewers come round. Here are some other proactive steps to take when preparing your property for sale.

Online listings

Take a bit of time to choose an agent who markets their properties well online, as these days, this is where most buyers start their property search. Good, representative photos are crucial and you can make the most of this process by making sure your home is clean, tidy and dressed in a way that helps people imagine living in the space. This might mean removing pieces that are overly personal, such as photographs or artworks that are to your personal taste, and considering steps like dressing a dining room table or bedroom. Again, a good estate agent will be able to advise on this and the process should be shaped by who they advise your target market should be, whether you’re in  popular area with young families or sitting in the ideal first home of a young professional couple. Property descriptions and floor-plans also need to be accurate so viewers aren’t left disappointed when it comes to visiting.

Kerb appeal

Following on from the first impressions given online, kerb appeal is very important when potential buyers make it for a viewing. Practical steps you can take to boost your property’s kerb appeal are basic things like making sure the outdoor areas are tidy and gardens are well-kept. Depending on the season, you can consider doing a bit of planting to brighten things up. Cleaning windows and doors and making sure paintwork is fresh can all make a huge difference. Making access to your property as easy as possible is also a good idea – ensure there’s a parking space, keeping pathways clear and communal closes clutter-free too.

Property presentation

The same rule of thumb applies as when taking your marketing photos in terms of making your property as appealing as possible, keeping it tidy and clutter free. Think about the atmosphere of your home when someone walks in and consider how lighting, smells and temperature all affect this. This might mean replacing or cleaning overhead light bulbs, airing out unused rooms or asking friends and family to look after noisy pets or children! Give rooms the right purpose, so if you are marketing your property as three bedrooms, but one is currently a dining room or storage space, it might pay off to set it up as a bedroom for viewings. Don’t put off those repairs needing done any longer, but get things fixed up in advance of viewings, otherwise you are leaving opportunities for viewers to pick fault with your property. Any refresh to painting or decorating should be kept as simple and neutral as possible too. It’s all about creating an inviting space; somewhere people can imagine living and putting their own personal stamp on to.

Get advice

Talk to us at The Mortgage Hub about the best mortgage product for your circumstances. We can look at the whole of the market and talk you through the process, whether you’re upsizing or downsizing.

Remortgaging Figures Rise by 13% Compared to Last Year

If you are considering remortgaging, you will be among a soaring number as homeowners are taking advantage of lenders’ end-of-year price war. In fact, we have now hit a two-year high.

You could lock in a good deal in time for 2020. In October, a total of nearly 38,000 mortgages were approved for those switching to a new deal – this is up 12.7% on October 2018 according to UK Finance. In addition, the number of mortgages approved for house purchases has risen 3% year-on-year to nearly 47,000 against an Election backdrop.

As we move towards 2020, lenders are competing for the business that’s out there and as a result, there are some incredible deals to be had. The last quarter of the year is typically busier for remortgaging as banks and building societies try and win over new customers and hit their lending targets. This encourages people who are on the lenders’ standard variable rate (SVR) to remortgage and because people have previously taken out a fixed deal at the end of the year many people are coming to the end of a fixed term.

This uplift in the mortgage market tends to offset a subdued market for lending to people buying a home at the end of the year and waiting until more homes are listed for sale in the spring.

Several lenders are offering incredible fixed two year deals for those with a 40% deposit as well as great deals if buyers have a 25% deposit. Rates are slightly higher for those who want to fix for five years and several lenders have five year fixed rates below 1.6%.

Although the housing market has been more muted than previous autumns due to Brexit and the General Election, the housing market has shown signs of a slight autumn bounce. However, high property prices and stretched affordability in many areas are pulling down the market – especially in southern England.

Activity is expected to pick up once Brexit is finalised.

Talk to us at The Mortgage Hub if you would like to talk to us about remortgaging and taking advantage of the current deals available.

First Time Buyer? Lenders Reduce Rates for Buyers with Small Deposits

Competition for first-time buyers has intensified among banks and building societies. The average cost of a two-year fixed rate mortgage for those borrowing 95% of the property value has gone down by 0.02% compared to the previous month of November.

If buyers have a 10% deposit the typical rate has fallen even further dropping by 0.04% compared to the previous month of November according to Moneyfacts.co.uk.

In addition, the average mortgage rate for those with a 15% or 20% deposit have gone up month-on-month.

According to these latest figures first-time buyers or those looking for higher Loan to Value mortgages have benefitted the most over the last few months. Providers are competing for this share of the market and are driving down interest rates in a bid to attract customers. In addition, competition among banks and building societies tends to intensify during the last quarter of the year as lenders focus on meeting their end of year targets.

A reduction for people borrowing a larger proportion of their property’s value were more subdued following a warning from the Prudential Regulation Authority that the Bank of England was keeping a close eye on mortgage rates.

But lenders have now turned their attention to first-time buyers, with renewed competition in this area of the market leading to them slashing their rates.

During the summer months, competition was centred around people who had larger deposits, who represent a lower level of risk.

These rate reductions will save borrowers money on their monthly repayments and make it more likely to pass lenders’ affordability tests.

There are some very competitive rates available, so it’s pays to talk to a mortgage broker from The Mortgage Hub to get a full view of the market and the deals available. We can also look at your individual circumstances and find a deal that reflects your requirements now and in the future.

Autumn Property Market Update – The Signs Are Good!

There’s good news for the UK property market as buyers appear to have returned to the business of buying and selling homes rather than holding off until after Brexit which has been delayed yet again.

According to HMRC, in September there were 101,740 homes bought and sold, a rise of 5% compared to August this year and 2.3% higher than in September 2018. This signals an end to subdued activity in what has been seen as a suppressed housing market.

There is usually a summer lull in the housing market as people put their plans on hold whilst children are off school and they go overseas on holiday. This usually results in a September increase in activity once the schools are back on and life gets back to the usual routine.

However, with the UK now facing a January Brexit deadline combined with a slowing economy this uplift in transactions hasn’t been as strong as it has been in previous years.

A return of buyers to the market will encourage more people who are thinking of moving up the property ladder and increasing the choice for those who want to buy a home.

Data suggests that the market is dominated by first-time-buyers as their numbers hit a 12 year high in August of this year. This demand will encourage people to trade up.

According to the latest Zoopla Cities House Price Index, house prices in UK cities rose by an average of 2.4% but this was 3.1% in Glasgow. In addition, property sales were fastest in Glasgow and Edinburgh with homes taking only around five weeks to sell.

In addition, Glasgow was one of only two cities in the UK (alongside Edinburgh) not to register a discount, with properties typically marketed as ‘offers over’ and selling for 6% to 7% above their asking price.

If you are considering your next move and would like mortgage advice you can trust, talk to us at The Mortgage Hub. 

Are You a Landlord? Make Sure You’re Insured!

If you’re a landlord, you need to make sure you have a contingency if things go wrong. The likelihood is that at some point you’ll need to carry out repairs and if your tenants don’t pay their tent on time, you could find yourself in dire straits.

That’s why it’s essential to have the right insurance in place to cover you for every eventuality. But what sort of insurance do you need?

Landlord insurance will include many useful features including buildings insurance, accidental damage cover and financial protection. It isn’t compulsory (although buildings insurance will be a requirement from your mortgage lender) but some lenders do make certain other insurances compulsory before approving your buy-to-let mortgage.

We outline the different types of cover below. It may look expensive but don’t panic – different types of cover can be combined into one policy from a single provider. It’s important to do your research and talk to us at The Mortgage Hub – and remember, a policy may seem cheap, but it could end up costing you more in the long run.

The bottom line is that renting your home to people you don’t know is risky, so it’s important to be properly covered should something go wrong.

Buildings insurance

This is one of the main types of cover that you will need as a landlord. This is an essential policy to have in place because it protects your investment from flood, fire and damage from adverse weather – covering the rebuilding costs. Without this you could face losing your property should the worst happen. You’ll need to know the rebuild cost of your property before you take out a policy.

This policy will usually include replacing kitchens units and bathroom suites and some policies will also cover sheds, garages and other outbuildings. It’s important to talk to us at The Mortgage Hub as we have access to insurance policies that will suit your individual requirements rather than a ‘one size fits all’ policy.

Contents insurance

This is another vital insurance policy that we would recommend – especially if your property is rented out on a furnished basis. This will protect any electrical items, soft furnishings and furniture including carpets, sofas, TVs and beds from damage or theft. It’s also worth including accidental cover if you have items that are in good condition because tenants are often less worried about items belonging to someone else.

It’s advisable to take out insurance with a ‘new for old’ policy. The policy will only cover items belonging to you, if your tenants want their own items insured, they will need to take out their own insurance policy.

Landlords’ liability insurance

Most policies will allow you to add liability insurance to your policy at an additional cost. This is usually a requirement if you are renting your property to students or social housing tenants. This covers you against a tenant who might sue you for an accident, injury or even death that takes place in your property. For peace of mind it’s better to have this cover in place.

Void rental periods & unpaid rent

If your property is inhabitable for any reason and you are unable to rent it out, you could lose your property especially if your mortgage payments are reliant on rental income. We can talk you through the policy wording and exception to make sure you know exactly what you are and aren’t covered for.

Legal expenses insurance

If you have any legal costs following a dispute with tenants for example in trying to obtain unpaid rent, it’s a good idea to have legal expenses insurance. This will help with any costs associated with evicting tenants and repossessing your property from squatters. It will also cover the cost of defending you against criminal action.

Landlords’ home emergency cover

This type of cover will protect you against any emergency repairs that need to be carried out such as a leak, burst pipe, break in or infestation that needs to be dealt with. Qualified tradesmen will come to your home to deal with any emergencies 24/7 which can be costly if you are uninsured.

This type of cover will include call out, labour, materials and any follow up repairs. It usually covers you for around £500 per claim but there are different policies that we can look at to suit your requirements.

Talk to us at The Mortgage Hub about the right insurance policy for you.

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.

How to Invest in Property

Are you looking to invest in property but don’t know where or how to start? Here are some do’s and don’ts that you should be aware of when investing.

Here in the UK bricks and mortar is seen as a great way to provide an income and could even provide a welcome change in your career. However, it doesn’t come without any risk and these need to be carefully considered before you make any life-changing decisions.

First, ask yourself what you intend to do with your investment property. Are you intending to let it to the short or long term letting market or are you intending on renovating it to sell on for a profit?

Ultimately the route you choose will be based on your personal situation, resources and the time you have available.

Buy to let

When you embark on a buy to let journey, you’ll be purchasing a property to rent out and manage. Over time your investment will deliver a net cash flow known as your rental yield. In addition, you’ll also benefit from any capital growth.

With affordability still a barrier to ownership for many people, the rental market is strong. In fact, according to a recent report from Citylets, Scotland is the fastest location in the UK to recoup your buy to let investment costs in the UK, for both property price and Stamp Duty charges, based solely on the average annual rental return, with annual rent repaying costs in the fastest time at 17.7 years. Northern Ireland was the second fastest, at an average of 18.9 years, followed by England, at 25 years, and Wales, at 26.4 years.

Building a portfolio isn’t easy and should be seen as a long term plan and the upfront costs carefully considered. You’ll need to pay for a survey, mortgage arrangement fees, solicitor fees and LBTT.

Margins will be tight when you start to invest so you’ll need to be patient in building a successful portfolio before seeing a return on investment (ROI).

You’ll also need to factor in extra costs such as maintenance, management and insurance/ You also need to work out the income from the short term lettings market compared to finding a longer term tenant. With a short term let, the income will be much higher, but you have to consider the time involved, the additional running costs and increased wear and tear. This could be a profitable option if your property appeals to the tourist or business accommodation market. Be aware that running a short term let can take as much as 40 hours a month and involves a lot of work. On the flip side, a long term tenant will require less time and work, but you have less flexibility and your income could be lower.

The other direct property investment route is to buy a property to renovate and sell on for a profit. By adding value, you need to be aware that whilst renovating the property will stay empty and the longer it takes, the more it will eat into your profits.

With this approach you not only need to take into account the renovation and decorating costs but also the costs of buying and selling the property too, all of which will impact your profit. However, with the right property you can potentially make large sums of money when you sell. You will be taxed on any gain so seek professional advice.

If you decide that property investment is for you, you’ll also need to consider:

  • Can you fund the purchase and associated costs?
  • What are the tax implications?
  • How do you feel about risk?
  • What type of property are you going to buy?
  • What is your location?
  • Who is your market – long or short term tenants?
  • Are you doing this alone or with financial support?
  • Have you fully researched property prices and what rents well?
  • Do you know the rental income you can expect?

Talking to the right property professionals is key – these include an independent mortgage broker, an estate agent and solicitor.

At The Mortgage Hub we can offer independent expert advice on the best Buy to let mortgage to suit your circumstances and can offer advice on property investment and the implications.

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.