In 2014 and 2016 new mortgage lending rules were put into place to ensure that lenders assess a borrower’s affordability before they were offered a mortgage. Beforehand, your borrowing was based on your earnings but it’s now based on what you’ve got coming in verses your monthly expenditure. Lenders will also be looking at what costs you will have in the future, and if you could cope if interest rates went up or your income went down.

For those who took out mortgages some time ago and want to move onto a new deal could find themselves unable to meet the lending criteria today. This means that they could be forced onto the lender’s Standard Variable Rate (SVR), which is invariably higher than a fixed or tracker rate deal. As a result, those who are on the lender’s SVR deal are unable to move to a new one, which means they are paying more than they need to.

In addition, some people have found that their personal circumstances have changed, for example they may have a larger family and increased childcare and living costs.

Alternatively, you could be self-employed which can make it more difficult to obtain a mortgage as will be asked for firm evidence of past, present and future earnings.

Finally, it could be something as simple as your age! Traditionally mortgage lending went up to around age 65, but nowadays many people need to borrow much later  – even into retirement, which carries more risk for lenders in terms of income, and a 25-year mortgage may be harder to come by.

How can you change the situation?

There are several ways you could get out of being a mortgage prisoner. First, if you have a good credit score and payment history with no late or missed payments your lender will see that you are a reliable borrower. This can really work in your favour when it comes to remortgaging, so it’s essential to keep your credit score healthy.

 Second, try and look at how you can reduce your outgoings. For example, do you need to pay a gym membership? How much do you spend on luxuries that you can cut back on? By cutting back and building up savings for a few months you can protect yourself against any monthly increases and appear to be less risk.

Talk to an independent mortgage broker who can look at your circumstances and look at the whole of the market to find the right deal for you, and assess whether or not you are likely to be offered a mortgage. They can also advise on what to do going forward in preparation for applying for a mortgage further down the line. 

Speak to one of our independent mortgage advisors for impartial help and advice, as well as access to the widest selection of competitive mortgage deals in the UK.

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.

The post Are You Trapped in Your Mortgage? appeared first on The Mortgage Hub.

There are several lending options available to you if you are a business owner or self-employed. Every lender will have its own criteria and will asses your unique situation, and you may find that there is more flexibility or discretion taking into account any other factors that may affect the amount you can borrow, for example your credit score, the deposit you can put down and the accounts available to use as evidence in your application.

Difficulties faced by business owners

The days of self-certification mortgages are long gone. This type of mortgage required little or no proof of income, making it a very straightforward process. The rates were competitive, and although they were aimed at the self-employed, the ease at which these mortgages could be obtained was a contributing factor to the financial crisis, and they were dubbed as ‘Liar Loans’. Self-certification mortgages are no longer available and this has left those who are self employed or running their own business excluded from a portion of the mortgage market.

Although it’s not impossible to secure lending if you are a business owner or self- employed, it’s certainly a much more difficult process as lenders need to carefully assess the risk of those with a non-standard income.

Partnership

Partners in a business are usually treated the same way as those who are self-employed. Lenders may also look at your share of net profit when calculating how much you can borrow.

Director

A director of a limited company may have income from both a basic salary and dividend payments. Lenders will consider both of these elements depending on your share of the ownership.

A director of a limited company may have retained the profits within the business, rather than taken out as salary or dividends and some lenders may be prepared to consider some retained profits.

Self-employed

In theory, self-employed borrowers have access to the same range of mortgage products as everyone else provided you have the necessary deposit and can prove they will be able to meet the repayments.

There are a handful of specialist lenders who offer products designed specifically with the self-employed in mind. Mainstream mortgage lenders routinely lend to the self-employed too, so you may not need to use a specialist. 

If you are self-employed, you will need to prove your income by way of supporting accounts or an accountant’s reference prepared by a qualified accountant. The standard requirement is 2-3 years’ proof of income, but in some circumstances you may find some lenders will accept one year. Most lenders will take self-employed earnings into account if you can produce a SA302 (tax return) form which you will have if you file your taxes by self-assessment. If you have permanent employment, but have additional income, this could be classed as self-employed income and is likely to be treated in the same way.

If you are a business owner or self-employed, it’s beneficial to do the following:

• Keep all accounts up to date
• Use a certified accountant to file your accounts
• Ensure you have your SA302 to hand – hard copies can take few weeks to arrive. Lenders will now accept accountants tax return and online print off of your tax year overview that can be obtained from the HMRC web portal.
• Retaining too much profit within the business could restrict the amount you can borrow so try and plan ahead when considering the dividend payment. Most lenders will take an average of the last 2 years’ income.
• Switching from a sole trader to limited company can have an adverse effect, so get advice before you do this. Some lenders will accept this however they are likely to request a full years accounts on the limited company to be produced.
• Keep an eye on your credit rating and make sure you retain a good score.

At the Mortgage Hub we can search the market to find a the right mortgage deal for you, and can look at the more complicated affordability calculators that lenders use to work out how much a self employed person or business owner can afford to borrow.

Speak to one of our independent mortgage advisors for impartial help and advice, as well as access to the widest selection of competitive mortgage deals in the UK.

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.

The post Securing a Mortgage if You Are a Business Owner appeared first on The Mortgage Hub.

This dynamic market requires sellers to be prepared to avoid anything happening that could cause your sale to fall through. Although some delays are outwith your control, if both you and your solicitor get the relevant documents together at the very beginning of the selling process, you’ll avoid some of the most common delays.

Documentation required

It’s essential that you have gathered all the relevant documents you need when selling your home. This includes your mortgage loan information, the sale agreement from when you bought your home, a copy of the deed and title report, property tax information including recent bills, any appliance or home structural building warranties, survey reports and details of your home insurances.

Property alterations

If you have carried out any work to your home, such as an extension, layout change, cavity wall insulation or even treatment for dry rot, it’s important that you have the guarantees to hand – these would have been given to you when the work was completed. Your solicitor will need these so it’s a good idea to get everything in order to save trying to get copies when time is of the essence.

With structural alternations, you’ll need proof of consent i.e. planning permission documents. You should also be able to show a building warrant, completion certificate along with the approved plans for all structural alterations that have been carried out in the last 20 years. If you don’t have these, or they were never given to you, make sure you let your solicitor know as soon as you can. There are ways to remedy the situation but it can take some time and it’s best to start sourcing these as early in the process as possible.

Title Deeds

It’s essential that you know where your title deeds are. The likelihood is that if you have a mortgage, your lender will have them. However, it’s important to double-check where these are and who holds them if it’s not you. If your title deeds are with the lender, your solicitor will need details of your lender and account number so that they can request a copy. Some lenders can take weeks to get this information to your solicitor, so the sooner you do this the better.

Fortunately Glasgow was one of the first regions to register property in the Land Register, so it’s likely that your solicitor can download a copy of the title deed whilst they wait for the principal deed.

Talk to us

Speak to one of our independent mortgage advisors for impartial help and advice on gathering the correct documentation to avoid any delays to your property sale, and for access to the widest selection of competitive mortgage deals in the UK.

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.

The post Save Valuable Time – Get Your Paperwork in Order! appeared first on The Mortgage Hub.

According to recent trend reports, mortgage lending for first-time buyers, home movers and remortgages increased in February 2018 compared to the previous year, with the total homeowner purchases, which combine both home movers and first-time buyers, reaching 50,000 across the UK, at the highest level for February since 2007. (source)

In Scotland, as reported by RICS (Royal Institution of Chartered Surveyors) in their latest UK Residential Market Survey, the demand is fueling competition amongst buyers and as a consequence is driving prices upwards with the average price increase of property (6.2% in February 2018 compared to last year) outpacing the average UK rates (4.4% on the previous year).

Which means that most likely if you are selling this spring you will achieve a good price on your property, as we see many of our clients’ homes going to closing dates and selling above Home Report values.

RICS expect property prices as well as the number of sales to continue to rise not only over the next three months but also for the entire rest of the year.

If you are looking into helping children or other family members step up the property ladder, you should also read this recent blog post guiding you through the various options for raising the required deposit.

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.

The post Local Property Market Update appeared first on The Mortgage Hub.

Help Children Save with a Lifetime or Help to Buy ISA

When helping first-time buyers build their deposit it is worth looking into Lifetime or Help to Buy ISAs. With the Help to Buy ISA, you can save up to £1200 on the first month and up to £200 in the following months and the government adds 25% tax-free on top of your savings plus interest (up to £3,000). It is by far the first port of call for anyone looking into saving for a deposit on their first home.

Last year the Lifetime ISAs have been introduced, that allows you to save up to £4,000 a year and offer a 25% bonus on everything you save each tax year.

Reduce Mortgage Payments with an Offset Savings Account

With the minimum deposit of 5%, repayments can reach a rather high amount. That is why the family can land a helping hand by setting up an offset savings account. The way it works is that you put your savings in an offset account and while the money does not incur an interest they will be deducted from the total mortgage amount when calculating interest. To give you an example, for a £100,000 mortgage with an offset deposit of £20,000 your children will only pay interest on the remaining £80,000.

While the money in the offset savings account still belong to you, they help by reducing interest payments

Guarantor Mortgages

As a parent or family member, you can help younger relatives by guaranteeing their mortgage debt.

There are other solutions available – like joint ownership or flexible family mortgages and new financial products come to the market all the time. If you are wondering what the best solution for you and your family could be, please get in touch with our friendly advisors. Our team have helped many first time buyers achieve their dream to secure the first step up the property ladder so we can offer you impartial advice on what the most suitable solution is for your circumstances and 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.

The post Help Children Purchase Their First Home appeared first on The Mortgage Hub.