Anyone that is already the owner of a property, whether they own a family home or a buy to let in Beverley, will likely see it as an investment. It’s more than just giving yourself a home, it’s the largest asset in your name, something you can perhaps later sell or pass to your children and beyond.
The property market is always going through changes and moving up and down. There will be times where you may see property prices at major highs.
During these sorts of peaks, it can be worthwhile taking a look at the remortgage options available to you, as you may find that you are actually able to access more favourable loan to values, and in turn much better rates of interest as well.
The Loan to Value (LTV) ratio represents the proportion of a mortgage loan compared to the market value of the property, expressed as a percentage. For instance, if you buy a property worth £100,000 with a deposit of £10,000 (10%), you will require a 90% LTV mortgage.
LTV ratios are usually divided into tiers by mortgage lenders. The tiers usually range from 60% to 95%, but this can vary depending on the mortgage lender.
A lower LTV ratio can result in access to mortgage deals with more favorable interest rates. For example, let’s say that after a few years, the value of your property increases to £110,000 and the mortgage balance decreases to £80,000.
This results in a new LTV ratio of 73%. If you were to remortgage in Beverley, you would be looking for a 75% LTV mortgage, which should have a more favorable interest rate. However, other market conditions can also impact the interest rate at the time of remortgaging.
Mortgage lenders offer more competitive interest rates for lower LTV mortgages because they pose a lower risk.
To get better interest rates or favorable terms, you need to determine the worth of your property in comparison to what you paid for it. This requires a property valuation.
When you remortgage in Beverley, you switch to a new mortgage lender, as opposed to a product transfer, where you obtain a new mortgage with the same mortgage lender.
Since you are working with a new mortgage lender, they will want to know the value of the property being used as collateral. Typically, there are two types of property valuations: Automated Valuation Model (AVM) and physical valuation.
An AVM, also known as a desktop valuation, is an automated process that cross-references similar properties in the same area to determine the value, without a physical inspection of your property.
On the other hand, a physical valuation involves a professional visiting your home to inspect both the interior and exterior, to determine the true value of the property.
This is particularly useful if you have made any home improvements or extensions that other properties in the area might not have, which an AVM might overlook. If you prefer a physical valuation, you can discuss this with your mortgage advisor in Beverley during your free appointment.
While you can leverage the equity in your home for better deals, you might also choose to remortgage in Beverley to release that equity. People do this for various reasons, such as for funding home improvements.
When it comes to a remortgage in Beverley for releasing equity, it’s important to be cautious. Essentially, you are taking out a new mortgage to replace the old one, but this time, at a higher loan to value. Because of this, your monthly mortgage payments may increase.
The goal for many is that by investing in home improvements, they can increase the value of their property, resulting in a lower loan to value when they remortgage again.
It’s crucial to consider market conditions and have a well-planned strategy when dealing with such a significant financial investment as your home. A mortgage advisor in Beverley can provide the best advice for your specific situation.
In some situations, you may consider remortgaging in Beverley prior to the end of your fixed term. Although remortgaging early is usually ahead of the end of your fixed term, you may have the opportunity to remortgage even earlier, a year before, for instance.
That said, be aware that you may have to pay an early repayment charge (ERC) if you choose to break your contractual terms. Predicting house prices is uncertain, and it may not be financially feasible for you to remortgage early.
Early remortgaging is typically only considered if there is a compelling reason to do so. It is strongly recommended to seek the advice of a mortgage broker in Beverley if you are considering this option.
One example could be during the COVID-19 pandemic when the Bank of England base rate dropped to an all-time low. As a result, people who were set to remortgage in Beverley at the end of their fixed-rate mortgage period had the opportunity to secure these low interest rates.
If you were a year away from this scenario, you might not be able to take advantage of this unless you remortgaged early and locked in a longer term. While this is a specific example from a unique time, it highlights how early remortgaging can lead to financial benefits.
If your home value has increased, it may also be a good time to remortgage early to access lower loan-to-value rates, even though you may have to pay the early repayment charge.
In addition to this, however, you will likely have to pay arrangement, valuation, and solicitor fees for your new mortgage, in addition to the early repayment charge (which may be waived by your current mortgage lender if you opt for a product transfer).
Before making a decision, it’s important to speak with a mortgage broker in Beverley to understand your options and determine whether your savings will outweigh the costs.
Over the years, property price inflation has far outstripped wage increases. These days you will find that mortgage applicants, especially first time buyer in Beverley, are in difficulty when it comes to affording to purchase a home at the prices they are at.
When a home buyer is in this circumstance, they usually explore the option of moving in with someone else as a way to cut costs. A joint mortgage can be helpful for this because you will have two incomes for a mortgage lender to take into account when working out the maximum amount you can borrow.
Sharing the costs with someone can help you out when managing your monthly mortgage payments. On the flip side, it’s not as straightforward as moving in with someone instantly.
The process involves meeting a large amount of mortgage lending criteria and things to think about before you make a decision. As a reputable mortgage broker who has years of experience providing trusted mortgage advice in Beverley, we are asked about a joint mortgage on a regular basis.
Below are the most common questions we get asked and will hopefully help you throughout your mortgage journey.
There is a possibility that you can have up to four names on a mortgage to co-own a property, however, this comes down to the mortgage lender. Please keep in mind though, the more names linked to a mortgage deal, the more the likelihood that someone may drop out.
In the case where someone did drop out of the mortgage, the remaining joint owners are still legally able to keep living in that property, unless a court overruled it. Therefore, you will need to be very careful about who you decide to buy a home with.
If the option is available to you, now and again homeowners with a joint mortgage might think about increasing the mortgage, however, all parties present on the contract will have to agree to this. Again, you will need to consider your future plans for the property.
Through our experience as a mortgage broker in Beverley, we regularly see that married couple or applicants in a civil partnership will go for the option to go with a joint tenancy in which you have equal ownership of the property. In the event that one party passes away, the other owner would get the property.
With this in mind, for those considering remortgaging in Beverley at any point, or selling it down the line, either party would have to agree to this before you resume the process.
You may find that tenants in common usually are applicants who are relatives or friends. You both have equal ownership of the property but are not forced to do so in shares.
Usually, this circumstance happened when one party is making a bigger financial input than the other. If you are a tenant in common. For instance, you can sell or give away your share of the property to someone else.
One of the disadvantages of being a property co-owner is if a party stops paying their share of the property, which is, unfortunately, more likely with multiple people attached to a property. Obviously, as with any mortgage, you have to keep up with the payments you contractually agreed to.
In the case where one party is finding it particularly struggle to keep up with their monthly mortgage payment and decides to not pay, the other party will need to make up the shortfall.
If that payment isn’t made, you could all end up in arrears, which can negatively impact your credit score and may create issues with obtaining another mortgage in the future.
It definitely is an option to look into if you don’t own 20%, 50%, or whatever the percentage is. You’re a combined entity and own 100% jointly.
Removing a person’s name from a mortgage can sometimes be a difficult process and this is due to a range of reasons.
One of the more popular reasons that we do encounter is that the mortgage lender is hesitant that the applicant left on the mortgage will be able to manage their monthly payments. In the case where you are unable to do so, they are unlikely to allow you to do so.
A mortgage is a significantly large financial commitment and that’s why it can be complicated to make alterations to something that has already been contractually agreed upon.
Even though you may be able to manage to keep up with your payments since your ex moved out, they will still need to carry out an affordability assessment on you (just the same as they did at the point of purchase), to make their own judgement on whether or not you can afford it.
The majority of mortgage lenders don’t favour the idea of allowing applicants to put their mortgage into a sole name, like having more names on a mortgage reduces the chance of arrears coming up. This is due to having more than one source of income.
In the circumstance where your sole-name mortgage request is declined by your mortgage lender, we do recommend that you get in touch with a mortgage advisor in Beverley about your situation. Obtaining specialist mortgage advice in Beverley could be beneficial to your circumstance and help you get a sole-name mortgage.
As well as this, we do advise that you speak to family members to see if they are able to help out. There is a possibility that they could help by replacing your ex on your mortgage or by gifting you a lump sum that could help reduce the amount you owe on the mortgage balance.
If you and your partner split up and you are the one to leave the property, you are still responsible for meeting your monthly mortgage payments, regardless of if you and your ex have agreed that they will be the ones making the payments.
Similar to removing an ex’s name off a mortgage, the same principle applies to removing your name. The only circumstance where the mortgage lender will only allow you to remove your name is if they are sure that your ex is able to afford the payments through their affordability assessment.
We do find that some may arrange with their partner to send them money each month, however, they do need to keep an eye on your own credit report to ensure that they are paying their portion too. If they default on payments, this can result in harming your own credit score.
In the circumstance where you are still on your ex’s mortgage and are looking at moving home in Beverley into another property as well as getting a new mortgage, your mortgage lender should account for your circumstances. This could result in you not borrowing as much as you’d like.
In any case, there is a risk when it comes to buying a property as situations can change. As a mortgage broker in Beverley, we would recommend going into the home buying world with an open mind. Don’t worry if your plans change drastically there is normally a way to solve your problem.
In the situation where you are having a challenging time with your joint mortgage, it may be best to book a free mortgage appointment with a knowledgeable mortgage broker, to get mortgage advice in Beverley.
The term ‘gazumping’ is a term that may be familiar to you, however, have you may not be sure of what it is about. The word ‘Gazumping’ is terminology for when the seller of the property you are interested in accepts another offer from another party, prior to your purchase being completed.
Originating from the Yiddish word ‘Gezump’, it was used to describe when someone swindles or cheats someone out of something, being primarily used way back in the 1920s.
Now ‘Gazumping’, it is a word prominent in house buying and was regularly used in the 1970-80s.
Through our experience as a mortgage broker in Beverley, we have been able to speak with customers regularly on the topic of Gazumping. We’re often asked if Gazumping is illegal, and the unfortunate answer to this, is that it’s not.
This is something that many home buyers may be asking when they go through the home buying and mortgage process across the country. Nobody quite understands how this type of practice is legal, despite how immoral it is.
The reason that Gazumping is deemed to be completely fine and legal, is because you and the seller are not contractually bound, no meeting with lawyers has taken place. As such, they have no obligation to sell to you, as your agreement has only been verbal.
The idea of being gazumped can be a scary one for first time buyers in Beverley especially, even if it may be less likely to occur. It’s an understandable feeling, as this gives you the risk of losing your dream home and nobody wants that to happen, especially if you are in a property chain.
Another factor that can affect home buyers is the idea that they may lose money from being Gazumped. Non-refundable expenses that are involved with the home buying process such as property surveys, conveyancing fees and mortgage arrangements fees.
As touched upon above, the agreement between both parties to buy or sell a property, whilst you may want it to be honoured, is not legally binding. This only happens when lawyers exchange contracts to make it official.
It is not a simple process to make this happen. The mortgage process can often take several weeks, with the point between an offer being accepted and the contracts being exchanged taking quite a while to happen.
It’s generally during this step where an eager first time buyer in Beverley may jump in whilst your process is going on, and make a much more preferable offer to the seller of the property. They can do this either by speaking with the estate agent or going directly to the seller themselves.
The more favourable deal may also include things such as a higher purchase price, a faster sale or a particular buyer who is not going through a property chain. Gazumping covers all these circumstances wherein a seller may prefer another buyer over you, despite giving their word.
One factor that could impact the chances of being Gazumped by a seller is the type of market that is currently happening, such as a sellers market or a buyers market.
For example, if the market is currently a sellers market, this means that there is a very popular, busy market. Commonplace occurrences are high demand, fewer properties, people wanting to buy and bidding wars between buyers that could see property prices rise.
In this instance, you will find that Gazumping is much more likely to happen, because someone may jump in with a higher bid for the seller, who at that point may be likely to accept.
On the other side of the coin, if the market is currently a buyers market, this means there are more houses than buyers, and a seller may not be receiving a lot of offers. This means you have less chance of someone Gazumping you and there is more space for price negotiations with the seller.
One of the reasons why you may experience a delay between your offer being accepted and the contract exchange, could be because you need a property survey to be carried out.
Below are some useful ways in which you could increase the possibility of you achieving higher mortgage success and avoiding being Gazumped.
We would recommend that you first ask the seller to remove the property from the open market. They’re under no obligation to do this, but doing so means the property is not as visible to potential Gazumpers.
We typically find a lot of sellers will honour their buyers request and indeed remove it from the open market, especially if it is a buyers market and they aren’t receiving many offers.
Putting in place a lock-in agreement, where both sides will make a deposit towards a binding agreement between one another, can be another handy trick. If any one party chose to withdraw or alter their deal, the other party would keep that parties deposit.
This can be costly due to the legal fees involved, though it may very well be worth the money saved and security provided to you during your mortgage process.
You could also look at insurance products, as having something in place to protect you from Gazumping can be a useful way to save yourself from losing money.
Even though Gazumping can never be 100% prevented, there are lots of ways to protect yourself as a buyer. As an open & honest mortgage broker in Beverley, we are here to help.
Book a free mortgage appointment today and see how our helpful team are able to help you on your mortgage journey as a first time buyer in Beverley.
Having the best help and support from an expert team can help your mortgage journey run smoothly. Obviously, in some cases, it’s not all plain sailing. Here at Beverleymoneyman, we have helped many customers overcome a range of hurdles to get towards their homeowning goals. Below are just a few of the most common mortgage hurdles we have encountered as an expert Mortgage Broker in Beverley.
It’s very likely that you would be declined for a mortgage because of childcare costs. One thing to keep in mind though is that your borrowing capacity may be reduced because of these costs usually being such a large sum of money.
You will find that most lenders will view childcare costs as a loan or credit commitment. Therefore, regardless of if you have these costs or not, having children, in general, would still be seen as a larger outgoing each month.
If you are in this circumstance, you may be likely to borrow less than a mortgage applicant with the same income but with no children. Depending on the mortgage lender, you may find that some take child care costs into account so could mean your amount is increased but this isn’t always the case.
Usually, you buy a home with your partner with no intention of going through a divorce or separation. Unfortunately, this can happen and can result in a significant change in shared financial commitments.
This all comes down to the mortgage lender. One may require you to have been in work consistently for a certain period of time though some may have different criteria.
On the other hand, you may still be able to get a mortgage if you are beginning your new job very soon . You may need to have a signed contract and a written job offer in order to achieve this.
Keep in mind that having gaps in employment could make the process challenging as this will be bought up by some lenders. However, probationary periods should be fine.
Anti-Money Laundering precautions are really strict. This is why you will need to provide evidence of your deposit to your lender as well proving the origin of your savings. As well as your lender, an estate agent or solicitor estate agent or solicitors may ask you for this as well, it just comes down to who you go with.
When it comes to cash deposits, these are not ideal! Parts of your bank statements that are worrying to a lender could be questioned and could result in your mortgage application being rejected.
There is a possibility for you to go down the gifted deposit route where you are gifted a part or all the deposit from family or friends. It’s important that the person gifting the deposit states in writing that is not intended to be paid back as a loan and, like the name, is a gift.
If you are finding the mortgage journey difficult as a First Time Buyer in Beverley or are finding the Moving Home in Beverley journey stressful, book your free mortgage appointment to connect with one of our Mortgage Advisors in Beverley.
These are only just a number of situations so if you don’t apply to any of the ones above, there is a chance we have helped someone in your situation before. Get the help and support you need for your mortgage application from one of our open and honest Mortgage Advisors in Beverley.
At the end of your mortgage journey, you will have fully fulfilled your mortgage goals whether that be living in your dream home for you and your family, occupying a property that was perfect for you to get onto the property ladder but you are now wanting to leave in the future or a buy to let investment property.
Whatever path you took initially, you will eventually find that your fixed period is ending. You might be thinking of looking at the option of moving into a property that is either bigger or smaller. In some cases, a landlord may look to sell up their portfolio.
Through our experience as a Mortgage Broker in Beverley, we usually find that many people will look at taking out a remortgage.
Firstly, let’s look at the definition of a Remortgage in Beverley. In summary, a remortgage is when you use funds you have raised from taking out a new mortgage in order to pay off an existing mortgage in your name. There are many different options to do this and many benefits for each.
With over 20 years of experience in the mortgage industry the ‘Moneyman’ Malcolm Davidson (host of MoneymanTV, our YouTube channel), has collated a helpful guide to all the remortgage options that are fitting for homeowners.
When it comes to your fixed period, this will usually be around 2-5 years. You may find that the fixed rates or potential discounted rates are usually lower. In some cases, homeowners might find themselves in a situation where they are placed onto a tracker mortgage, which will follow the inconsistent Bank of England’s base rate.
At the end of your fixed period, it’s likely that you will be placed onto the lenders Standard Variable Rate (also known as SVR). In short, an SVR is a mortgage with an interest rate and can completely change to whatever the lender wants to charge.
Even though this mortgage type does not fluctuate with the Bank of England’s base rate, a tracker mortgage would. Usually, the changes can happen when the base rate or the market changes. For instance, if the base rate increases, your lender may choose to increase their rate too.
Due to this, Standard Variable Rates are usually seen as a costly option to stay with, which can be one of the reasons why many homeowners generally go for a remortgage on their property for better rates. They do this in the hopes of having money down the line.
If you have lived in your home for a couple of years, you may be looking at giving your home a makeover. Instead of finding a new place to live that covers your house preferences, you could have the option to remortgage in order to release equity. By doing this, you could use these funds to upgrade your current home.
Through our time as a Mortgage Broker in Beverley, we have customers do a range of things in their homes. One of the most common things is to get more space in their properties. Some are interested in giving their kitchen a revamp and one that has become popular is converting the loft into another room or something else.
For many homeowners, taking on a large project that involves lots of planning and managing and will include getting permission can seem like a nerve-wracking task. We have found that many customers find this option a lot less stressful and more rewarding than moving into a new house.
Making changes and developments to your home could be really beneficial down the line because you are creating more space and modernising a well-built home which, in turn, can increase the property’s worth. Therefore, if you do decide to move home, this could help you out.
In some cases, homeowners do go down the route of taking out a remortgage in Beverley as a way to access better rates. This can be done by reducing the duration of your mortgage term or by switching to a more flexible product.
If you decide to reduce your mortgage term, you won’t be paying back, nor will you be restricted for as long. Therefore, you may find that the mortgage payments are higher for you. You would be paying less per month, the longer you have your mortgage term.
In many cases, customers decide to go for a more flexible mortgage term around remortgage time. You could have the option to overpay beyond the average amount (this usually comes with a cap), so you could pay off your mortgage quicker. If you decide to move, you could be able to pass the mortgage onto a new property.
This may be the best option, but these will usually come in the form of tracker mortgages. As seen before, this will correlate with the Bank of England’s base rate. This could result in your monthly payments being a bit unreliable, as they may change.
In the potential event of another momentous market crash, each homeowner will have a particular amount of equity existing within their home. This is usually calculated with the difference between what you will owe on the mortgage and the value of the property.
As previously stated, the common reason why people look at taking out a remortgage to release equity is so they can fund home improvements, however, you may have another reason to use the equity.
Other popular reasons include using the equity to cover long-term costs, as a way to provide an income boost, fund towards a large holiday, pay off an interest-only mortgage or to just to have extra disposable income.
Our team do work with Buy-to-Let landlords who will look at remortgaging to release equity from one of the properties in their portfolio and a way to cover the deposit for a future purchase.
We have found that some homeowners look to remortgage to release equity in order to pay off any built-up, unsecured debts.
These may seem like a simple solution to debts, but it all depends on the amount you can borrow for a debt consolidation remortgage which does depend on the amount you owe a creditor, the value of your home and the current state of your credit rating. Because of these factors, you could be limited in the amount you are able to borrow.
On top of this, to pay your previous mortgage off entirely, along with the debts you have built up, you will need to borrow more than you actually require for a mortgage. Therefore, this will most likely mean higher monthly payments.
This is not the best situation, however, you will rest assured in knowing that if you are struggling, there are options out there that you can take.
For those who have a damaged credit rating, there are some routes for you to take. This would be a complex case though which is why you will need to seek Specialist Remortgage Advice in Beverley prior to proceeding with it. Be aware, that this doesn’t guarantee you a mortgage.
We do recommend that you obtain the advice of a Specialist Mortgage Advisor in Beverley before they consolidate any debts against their home.
Towards the end of your initial fixed period, you may be looking into the options and routes you could take. This is where a Remortgage in Beverley can help.
To connect with an expert Mortgage Advisor in Beverley, book your free remortgage review today. We provide a helpful, tailored service with availability 7 days a week from early in the morning until late at night. This means you can book your appointment around your schedule.
Your designated Mortgage Advisor in Beverley will be able to go through your case and get to know your mortgage goals to build a suitable option for your mortgage journey. Our team work hard in making the process as fast as it was your last process.
Beginning the mortgage journey as a First Time Buyer in Beverley can be an exciting but daunting experience, especially if you have little to no knowledge of the process. With a Mortgage Broker by your side, this doesn’t have to be the case. To make the most out of your house buying journey, it’s best that you are prepared. Here is 9 questions to ask yourself when purchasing a house as a First Time Buyer.
Getting a mortgage could be one of the biggest financial commitments in your life is it’s best that you give yourself some thinking time about a property before proceeding.
To determine how much thinking time you have, it’s best that you ask how much interest the property has got so then you aren’t missing your chance of potentially getting a property. For example, if the property has had a lot of interest, it’s likely you will need to come to a decision quickly.
A property occurs when there are a number of transactions happening at the same time for every sale purchase to be completed.
The mortgage process can be affected if the property is part of a property chain.
If there is no onward chain like a new home, bereavement or emigration, there is more chance that you would be able to move in quickly considering that you are not part of a chain yourself. In the case where you don’t need to sell your own property first, you will have more of an advantage because you won’t be disturbing the buying process.
This is something that can benefit you when negotiating property prices.
In some cases, the previous owners may leave some previous items behind, which can be a benefit for you. Items like washing machines, fridges, freezers or a shed may be left for the next occupant.
Providing that the appliances work, it can be perfect for new buyers who are looking to save a bit of cash to get something new and modern in the future. If you don’t want these items, it’s the new buyer’s responsibility to dispose of them.
For new properties, you may have the option to purchase any extras that are brand new and others for you on your moving day.
When it comes to deciding on a property, it’s best to see what your neighbours are like. Having a good or bad neighbour can be a key component in your decision. This is important if you are moving into an area you don’t know much about.
Neighbours can be an element that many people factor in when they are deciding to move into a new home. First impressions are not always key, however, it can be good to get on with the as you may live there for a while.
This can depend on where the property is in Beverley. Because of this, it’s good to ask about this as well as do some research yourself. Questions could include how much the council tax is or the average spends on utilities which you could ask your seller or look into. This can be useful information to know and can also be helpful when managing your budget for each property.
This is another aspect of property hunting that many people see as an important requirement to them. You may fancy relaxing in the garden in late summer evenings as well as reading in natural light. Having this feature can mean you pay a more premium price so you have a south-facing garden with sunlight shining on you for most of the day.
The work that may need to be done on the house might need to be factored into your budget. Some topics you may want to consider include:
Negotiating a property price is a standard part of the house-buying process. With this, you need to be as prepared as possible to make an offer on a property that you like.
Speak with the seller or estate agent if you want to get an idea of how low in price the seller would want to go. Furthermore, it’s good to ask if any other offers have been made and rejected before your bid.
It’s good to have a moving date set out so you can plan what you need to do before that date. You will need to plan tasks like instructing a conveyancing solicitor, packing your belongings, and organising a removal van to transport your belongings to the new property.
Most people have heard of the Lifetime ISA, however, how does it exactly work?
As a Mortgage Broker in Beverley, it’s not unusual for applicants to present us with a Lifetime ISA or for them to have an interest in it. This new ISA replaced the Help to Buy ISA in 2020, creating a new way for First Time Buyers to get onto the property ladder. It is a new, modern approach to saving for a mortgage deposit.
An ISA is an independent savings account where your saving builds up over time. A Lifetime ISA is the same, however the government top it up by an extra 25% at the end of the tax year. This 25% applies to the amount that you have saved in that year.
The maximum that you can save is £4,000 per year, therefore, you will end up with a total of £5,000 when combined with the government’s 25%.
The funds inside of your ISA can only be used to purchase your first home. You cannot use these savings on anything else.
A Lifetime ISA is meant to be built up over time so that you can maximise your total deposit amount.
There is one other use for the Lifetime ISA, and that is to help you save for later in life. As a Mortgage Broker in Beverley, we do not offer our services with this version of the Lifetime ISA. If you are a First Time Buyer in Beverley looking to buy your first home with the Lifetime ISA, we are more than happy to help.
Here are the requirements that you will have to meet in order to qualify for the Lifetime ISA:
If you are more than happy with continuing with the Lifetime ISA and want to speak to a Mortgage Advisor in Beverley, feel free to get in touch with our team.
You can find more information on the government’s Lifetime ISA at ownyourhome.gov.uk.
As a First Time Buyer in Beverley, it can be difficult to know where to start the mortgage process; we are here to help! The Lifetime ISA could be the perfect option for you and help you save for a deposit.
First of all, we can check whether or not this is the right scheme for you. There are different Help to Buy schemes available and you may find that these will benefit you more. Our team will tell you if this is the case.
Most government-led schemes have been designed for First Time Buyers, therefore, if you are moving home, there may be another route that you will need to go down. We can discuss this with you and explore your options.
A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender.
Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.
This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Beverley will be able to look at, to see if you qualify.
All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.
95% mortgages are usually accessible by both First-Time Buyers in Beverley & those who are Moving Home in Beverley. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.
A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.
Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.
Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage.
When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation.
Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.
Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.
Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not.
There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as.
A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property.
So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future.
More and more people these days pay much closer attention to their credit rating, especially First Time Buyers as they tend to worry about being accepted. Consumer awareness of credit scoring is higher now than ever before. We’d say at least half of the people who contact us for the first time, have already looked at their credit report online.
There are many different credit reference agencies out there. Most people will have heard of Experian or Equifax, but we recommend potential new clients to use Check My File for a 30-day free trial, which is £14.99 a month thereafter and can be cancelled at any time. This is because of this report “sweeps” several of those reference agencies and collates the information into an easily understandable colour-coded report.
Often, clients ask if we will be doing a credit search on them, because they are aware that too many searches can have an adverse effect on their credit score. Lenders always run credit checks but we always seek a client’s permission before doing so. There are 2 different types of credit searches that Banks can run on a customer: hard searches or soft ones.
A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is the lender is looking into your situation quite closely. If you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on, is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed. Either that, or it turns out you have provided false details.
The bad news about a hard search though is that it leaves a “footprint” on your credit file. This means anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing, but if you have several footprints registered in a short period of time then it could look like you applying for lots of credit at the same time.
The footprint does not state whether your application was successful or not. However, if you have several searches over a few weeks, then lenders’ systems could wrongly assume you are being declined on the basis of; “Why else would you go to lender number 2 unless lender number 1 had said no?”.
The odd hard footprint on your record from time to time is no big deal. There’s no need to worry too much about this, just be careful not to have too many.
A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites. This would give you an indication of what products might be available to you. It can also be useful if someone wants to verify your identity.
Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.
You will be able to see that someone has carried out a soft search on you if you check your credit file. The good news though, is that these searches are not visible to other financial institutions like banks. This means that you can apply for an agreement in principle for a mortgage, without it damaging your credit score. This is irrespective of whether it is successful or not.
If you are wanting to make an offer on a property, we always think it is an excellent idea to have your mortgage agreement in principle in place prior to contacting the estate agent. You want to give yourselves the best possible chance of securing the property you want at the lowest price so if you can present yourselves as having your finances in place then you are definitely putting yourself in a stronger position. Having the agreement in principle also sometimes puts the agent off trying to “cross-sell” their own in-house mortgage services to you.
According to the Office of National Statistics, the UK is going through a bit of a self-employed “boom”. The number of self-employed individuals rose from 3.8m in 2008 to 4.6m in 2015. This could be down in part to people being inspired to become the new Peter Jones on Dragon’s Den or Richard Branson. More realistically it’s just that work patterns have been changing for several years now.
No longer would someone be expected to leave school at 18 and work for one employer all the way through to retirement. The rise in new engineering and digital occupations, in particular, give rise to self-employed roles and short-term contracts. However, the uncertain nature of this type of work can make Banks nervous about issuing mortgages.
It’s not impossible to get a mortgage if you are Self Employed by any means but it certainly is a specialist area so here I take the opportunity to help you get prepared if you are in this position and thinking of buying a house.
At the moment it’s a minimum of one year’s trading with some lenders wanting a minimum of two. The reason for this is that so many businesses fail in the first year Banks aren’t willing to take on that level of risk.
Most lenders take the average of your last 2 years’ earnings. Some go off the latest year. This could be good news for you if your profits are increasing.
Yes and no. Yes, you are employed but no, the lenders do not assess you as an employee unless you own less than 25% of the shares. Most lenders add your salary to your declared dividend to calculate your annual earnings with the odd one using net profit (this can be good if your business retains some profit).
This is a familiar question but there’s not much that can be done. Your mortgage application is assessed on the income declared (net profit or salary/dividend) to the Revenue. If you want to get a mortgage then you need to have paid some tax.
This is the same as an employed applicant. A minimum of 5%, although it may be more if you only have one year’s accounts.
The more deposit you are able to put down the better deal the lender is likely to offer you. This means you will have a wider choice of lenders, in terms of the maximum mortgage that will be made available to you. Although this doesn’t make a massive difference.
Yes, it can be. Lenders do seem to like Contractors at the moment. If you’ve built up a good track record then the lenders can consider taking your “daily rate” and applying a multiplier to this, rather than your net profit. I have seen lenders offer bigger mortgages to contractor applicants using this method, especially for IT contractors.
Unfortunately, “self-certs” were widely abused in the pre-credit crunch days and there is no sign of this type of mortgage returning.
Taking out a mortgage as a sole trader, partner or Company Director can certainly be more complicated. More so than it would be for an employee. Some lenders are more flexible than others. In my opinion, it’s a good idea to get a reliable Mortgage Broker in Beverley on your side early on in the process. This is so you have realistic aspirations from the start. Long gone are the days when a Bank Manager could “take a view” on your circumstances just because you are a loyal customer. The lenders lean increasingly upon their computerised credit scoring systems. Like lots of things, it’s just knowing where to look.