The UK economy has been badly affected by Covid. So why are house prices still rising? We look at the factors and ask whether now is the right time to buy.
On the face of it, it really doesn’t make sense: coronavirus has left many businesses struggling. Redundancies are rising. These are uncertain times and perhaps not the obvious moment to make big financial decisions.
And yet, the average price for a house in Britain just hit a record high. During September, prices rose in every region of England and Wales except the South West and the North East (where they held steady). In a year, UK prices have risen by 2.5% and in the North West that rise is even greater at 3.5% (making it one of the most buoyant regions of all right now).
As you might expect, there seem to be several factors at play.
Pent up desire: The three months of near total lockdown earlier this year put the brakes on virtually everyone’s moving plans. Once restrictions began to lift, people resumed their house hunting. Only now, with lots of people squeezed into the market at once, demand rose – and so did prices.
Race for space: The pandemic has clearly changed the way some people have felt about their previous living arrangements. After three months effectively locked in their homes, some have realised that it’s not the home for them. They are looking to move so that, when the next pandemic arrives they have more space inside and perhaps some space outside too. Some have even made the decision to switch town for country.
We’ve certainly spoken with many more people who have found themselves reassessing their life goals in the light of the past few months. Where they choose to live is, of course, a crucial element in that.
Independent living: Lots of young people raced back to mum and dad’s at the start of the lockdown seeking company, security and (almost) rent-free living. Post-lockdown, many of those same young people are now eager to have their own space again.
Boosted savings: 2020 was the year holidays went unbooked, big celebrations were postponed till next year and money that would usually be spent wasn’t. For some people saving for a deposit, that meant savings grew far quicker than expected.
Low interest rates: Interest rates have been low for a long time, so we can’t say they are a new factor in driving rising house prices. But what is different is that there is little ‘noise’ about rates rising anytime soon. In fact, we’ve recently seen the Bank of England exploring the idea of negative interest rates. That doesn’t mean we’ll see them, but it does indicate there’s no major desire to see rates rise. And the longer they stay low, the more affordable your mortgage is.
Stamp duty freeze: Last year, if you had bought a house for more than £125,000, you would have paid Stamp Duty Land Tax on it. Rates increase depending on the cost of the house. For a £300,000 house, for example, you would have paid £5,000 in duty. Right now, however, the freeze means you pay no stamp duty on a first home up to the value of £500,000. This arrangement ends on 31 March 2021, however, further encouraging buyers to buy now.
Stability and security: We won’t revisit the renting vs owning arguments here, but it’s certainly true that the past few months have left more people feeling as though they want greater stability and security, and they are looking for that by buying rather than renting.
Buying in a booming market doesn’t sound like a great idea, but this market isn’t like any other. The stamp duty freeze combined with low rates may offset some or all of the increased price you pay for any property. Buying habits are continuing to change and, whilst none of us has a crystal ball, what may seem like an inflated price right now may look like great value in just a few months’ time – especially in the areas that have been most sought after.
And if you are eager for more space, independence or security following the past few months, chances are you’ll be willing to stand an additional percentage point or two, providing you can find an affordable mortgage to help you buy.
And for that, talk to us.
You’ve saved for what felt like forever, found the perfect property, got the mortgage agreed and have a completion date decided. Now is the perfect time to start thinking about insuring your new home. Here's what you need to know:
There are two parts to home insurance - buildings and contents. As a general guide, anything you could remove from the house without using power tools (down to the carpets and curtains) comes under contents, and everything else would be covered by your buildings insurance. If the structure of your home were to be damaged in a fire or flood, for example, you could call upon your buildings insurance to cover the cost of repairs. Any belongings damaged in an event such as this could be claimed for too, on your contents insurance.
Buildings insurance is a must-have, as it will be stipulated in your mortgage contract. Contents insurance is optional, but it's always a good idea to get cover.
It used to be the case that you had to buy buildings cover from your mortgage provider, but this is no longer true. You can get both buildings and contents insurance from any company you like. Don't just go with the first one you see, either. Shopping around for your home insurance cover could save you up to £200 per year! If you need a hand deciding on the best cover, our experts can help - get in touch.
Don't leave buying your home insurance until the last minute - at the point you exchange contracts with the seller, you're legally obliged to buy buildings insurance - it's best to have it in place beforehand.
Even with contents insurance, you will want to make sure you have your policy in place before you start moving, as items could be damaged in transit.
Most contents policies will cover your belongings against damage whilst in transit, but only if you use a professional removals company. Alternatively, the removal firm itself may offer 'goods in transit' insurance.
When buying buildings cover, you'll be asked to provide the cost to rebuild your home. This is the cost of building it from scratch if it were completely demolished.
Remember: the rebuild figure and the price you paid for the property are not the same. to get a rough idea of what your property might cost to rebuild, you can use this calculator from the Association of British Insurers.
When buying contents insurance, it's simply a matter of estimating the value of each of your possessions (the cost of replacing each item rather than what it is currently worth) and adding it all up to reach a total. The average value of a household's contents is around £40,000. Certain high-value items, such as jewellery or computer equipment may need to be identified specifically when you apply.
The price of insuring your contents will depend largely on the total you're insuring and the postcode of your new home. Any extras you may decide to add to your policy (such as accidental damage cover) will also incur a cost. Like most other forms of insurance, you can earn a no claims discount by being covered without claiming. If you've had contents insurance before, check to see if you're eligible for a discount.
When it comes to buildings insurance, the price will depend mainly on your property's rebuild value and whether you live in an area prone to flooding. The higher the risk to the insurer, the higher the premium will be.
For free, expert advice on insuring your home, book a consultation with one of our team.
More and more lenders are adding 95% mortgages to their range of available loan products. In fact, 95% mortgages are the only product which has increased in availability so far in 2019.
As a result, those looking at loan-to-value ratios of 90% and below now having fewer deals to choose from than they did last year.
But what does borrowing 95% of your home's value mean in the long term? And is it worth it to get on the property ladder faster?
A 95% mortgage allows you to borrow up to 95% of the purchase price of a property you want to buy and put down just 5% as a deposit.
Only needing a 5% deposit means you don't need as much cash to hand and can shave years off the time you need to spend saving up.
Typically, the best mortgage deals are reserved for borrowers with big deposits of 40% or more, but there are plenty of competitive rates available to buyers with just 5% to put down.
As more lenders look to enter the market, competition should mean that rates for 95% mortgages stay low, at least for now.
Having a bigger deposit will allow you a wider choice of mortgages, usually at lower rates. So if you're not in a rush, saving for a little while longer will usually mean you're better off in the long run.
However, if you're renting while saving, there's a good chance you feel like you're wasting money - especially with interest rates being relatively low. It's also worth noting that if property prices were to rise, you may end up having to save for even longer.
It's worth considering all your options and weighing up the pros and cons of each strategy, before deciding on your next move.
Lenders will take your income, outgoings and credit score into account when deciding how much they’re prepared to lend you. These factors will also influence whether they're prepared to offer you a 95% mortgage or not.
An independent mortgage advisor can tell you how likely you are to be accepted before you apply. This will save your application being rejected, which can hinder future attempts to secure a mortgage loan.
When choosing a 95% mortgage, you’ll have fixed-rate and variable-rate deals to choose from:
A fixed-rate mortgage usually has an introductory term of between two and five years, during which time your interest rate (and therefore your repayments) will stay the same. This is a popular option as it offers peace of mind, in that you don't need to worry about rates going up.
At the end of your introductory period, you will be switched onto your lender's standard variable rate (SVR), which is almost always higher. This is often when people look to remortgage.
There are two main types of variable-rate mortgage - tracker and discount mortgages. Tracker mortgages follow the Bank of England's base rate and discount mortgages offer a discount on the lender's standard variable rate. When it comes to discount mortgages, the rate you will be offered will depend upon your circumstances and the lender's individual criteria - this will vary from lender to lender.
The government has several schemes in place for potential first-time buyers, all of which can be a huge help if you're struggling to save a big deposit.
From the Help to Buy ISA to the shared ownership scheme, you'll find all the information you need here.
There are a lot of 95% mortgage products on the market and more being introduced every month. This can mean it gets a bit confusing when it comes to deciding which one is best for you.
If you're struggling, an independent mortgage advisor can offer you expert advice on which products offer the best value and which you're most likely to be accepted for.
Even better, if you get in touch with Key Mortgage Advice, we'll guide you through the process for free!
Guarantor Mortgages are a way of securing a mortgage loan when you don't have a deposit or your credit history is putting lenders off. Someone agrees to act as guarantor for you, committing to make the repayments on your mortgage if you fail to do so. This is most commonly a parent or grandparent, which is why these products are often referred to as family-assisted mortgages.
A guarantor owns no share in the property purchased, nor are they named on the deeds. They simply sign a legal document stating that they agree to cover the mortgage repayments if the borrower cannot pay themselves.
To act as a guarantor, lenders usually require that you meet the following criteria:
A guarantor must possess sufficient assets to offer as part of the legal guarantee to the lender. Acting as a guarantor on a mortgage may mean you have to sign over a charge on your own property, giving the lender the authority to repossess it if repayments are not met.
If a guarantor doesn't own a property or has enough put away, cash savings can be offered as a guarantee. The agreed funds are put into a savings account with the lender and are released once a specified portion of the mortgage has been paid off. Typically, a guarantor is released from the mortgage agreement once the loan-to-value (LTV) has been reduced to around 80%, although it will vary depending on the lender and the applicant's circumstances. During this time, the guarantor will not be able to access the funds. They will usually, however, be eligible to earn interest on them.
Missing a mortgage repayment is never ideal, but with guarantor mortgages, it's especially important that you're aware of the consequences.
Each lender will have their own policy, but there are several things that could happen:
If you continue to miss repayments, the lender may take further action:
If you still owe the lender money after the property has been repossessed, they may go on to take further action to recover what they are owed.
Be honest. It's important that the borrower and guarantor are open with each other and consider all possible outcomes before entering into a contract.
Set boundaries. If you're acting as a guarantor for someone, it's important to remember that the property will be the borrower's home. Relationships could be damaged if you try to impose rules or have a say in matters beyond the mortgage agreement.
Seek professional advice. Financial matters can be complicated and entering into a mortgage agreement is a big deal! Formal agreements remove any grey areas and could save you from running into difficult situations in the future.
Think a guarantor mortgage might be the right option for you? Key Mortgage Advice can guide you through the process for no fee! We have offices in Southport, Preston and Garstang, or we can assist you over the phone if you prefer. You can find all of our contact details here.
Whether you're a first-time buyer, moving home or looking to remortgage, sifting through the thousands of available mortgage deals can seem daunting. If you’re feeling overwhelmed, it might help to talk to a mortgage broker.
A mortgage broker (or mortgage advisor) will search the market for you. They're there help you to choose the best possible mortgage deal. While banks will only offer you a mortgage loan from their own range, an independent mortgage advisor will look at all available options from hundreds of lenders, ensuring you get the best rate according to your circumstances.
Yes; with thousands of mortgage deals on the market, it can be hard to work out which one is right for you. Therefore, it's a good idea to speak to a mortgage broker at the beginning of your search.
A good broker will be able to look at your financial situation and sort through the deals available to you. They'll be able to find the ones which best match your needs and also be able to tell you which of the deals you're most likely to be accepted for - this can be advantageous, as a rejection can mean that you have to wait a period of time before you can apply again, which can significantly hold things up.
Once you’ve found the mortgage loan that's right for you, a mortgage broker can also help you with the application process. They'll make sure you fill out the forms right the first time and let you know what paperwork you'll need to complete your application.
Some advisors will offer additional services for a fee, even negotiating the purchase price for you in some cases.
A good mortgage broker should also be able to offer advice on other products, such as home and life insurance.
There are three main types of mortgage broker:
Tied: Brokers offering mortgages from a single lender
Multi-tied: Brokers offering mortgages from a particular group of lenders
Whole-of-market: Brokers offering mortgages from the entire market
If a broker says they are "independent", they should be offering you a whole-of-market service.
It is usually better to go with a whole-of-market or independent mortgage advisor as they have access to the widest range of products, missing out on only the direct-only deals offered by some lenders.
As well as finding out whether they are whole-of-market or tied to certain lenders, you should also check your chosen mortgage broker is regulated by the Financial Conduct Authority (FCA). This will ensure you receive a certain standard of advice. It will also mean you're able to complain to the Financial Ombudsman should anything go wrong.
Finally, make sure you ask how your broker will be paid.
All mortgage brokers will need to give you a document called a Key Facts Illustration (KFI) about their services. This document will detail how your broker will get paid, usually one of two ways:
Fees: Some brokers charge a fee for their services. They can charge a flat fee or an hourly rate, which will be agreed beforehand.
Commission: Others provide their services free of charge and receive a commission from the lender.
It’s best to ask up front how much you’ll be charged or whether the broker will receive a commission, so you can plan your finances accordingly.
Still unsure? Get in touch or drop into our offices in Preston, Garstang or Southport for more information on what an independent mortgage broker could do for you!
Back in September 2018, the government launched its Help to Save scheme. The scheme offers low-income earners the opportunity to boost their savings by 50%.
However, uptake of this cash-boosting incentive has been slow, with only 81,000 of the eligible 3.5 million people taking advantage of the scheme. John Glen MP, economic secretary to the Treasury, revealed the unimpressive figure in response to a parliamentary question on January 10th 2019.
So, who is eligible for the scheme and how does it work?
Those receiving working tax credit or universal credit are eligible to open a Help to Save account. If you and your partner are both in receipt of either of these benefits, you can both open an individual account. If you both take advantage of the scheme, you're effectively doubling the available savings boost.
The scheme will only affect your benefits if you or your partner already have savings in excess of £6,000. However, for those in receipt of working tax credit, having over £6,000 in savings won't affect your eligibility.
Compared to the savings accounts offered by banks (which tend to have an interest rate below 1%), the 50% bonus offered through the Help to Save scheme is extremely generous.
Once you've opened your Help to Save account, you can use it for four years. You can put away up to £50 a month and the government will top it up by 50%. The bonus is added on the two-year anniversary of the account being opened and again at the four-year mark. If you were to save the maximum amount each month for four years, you'd put away £2,400 and receive a respectable £1,200 bonus - meaning you'd end up with £3,600 in total.
Even if you're not able to put away the maximum amount each month, it's worth saving what you can. If you saved just half the maximum each month (£25), you'd receive a £600 bonus and have £1,800 in savings after four years.
The Help to Save scheme is intended to allow those on lower incomes to build an emergency fund. Having some money to assist in an emergency provides security and is much more cost effective than lending from a payday loan company.
If you want to take advantage of the Help to Save scheme, you can check your eligibility and set up an account on the government website.
Want to save for a mortgage? There are several other government initiatives you may be eligible to take advantage of. Have a look at our guide on Help Available to First Time Buyers.
Recent research suggests that it can now take up to 18 years for a person to save up for a deposit on their first home – no wonder so many young people turn to the bank of mum and dad to help them get on the property ladder! But the government is trying to help, with several schemes in place to assist with saving for a deposit. Also, there are many mortgage options available to first-time buyers which can make the process of buying a home seem a lot less daunting:
In December 2015, the government introduced the Help-to-Buy ISA. This is a savings account designed to help first-time buyers to save for a deposit. The scheme allows you to save up to £200 per month, although you can kick-start your savings with a lump sum of up to £1,200.
When you withdraw your savings to purchase your first property, you receive a 25% boost to your savings from the government, receiving up to £3,000 (on a £12,000 balance). There is a maximum property purchase price of £250,000 (or £450,000 if you’re buying in London).
Recent figures show that the Help-to-Buy ISA helped in almost 170,000 property purchases between December 2015 and June 2018.
However, from November 2019 the scheme is set to change with the introduction of the Lifetime ISA and changes to the maximum property purchase price. You can find details of the upcoming changes in our “How is Help-to-Buy Changing?” article.
Under the Help-to-Buy loan scheme, the government lends you up to 20% of the cost of a newly built property (40% if you’re buying in London) – so you can get a 75% LTV mortgage with only a 5% deposit. Even better, you’re charged no interest on the loan for the first five years.
According to the latest report, the government has provided £9.9bn in Help-to-Buy equity loans since the scheme began in April 2013. Almost 184,000 properties have been bought with these loans in England, with first-time buyers accounting for 81% of those purchases.
In the year to 30 June 2018, the number of first-time buyers purchasing properties under the Help-to-Buy loan scheme increased by 16% compared with the previous year, showing a major increase in its popularity with young people.
The shared-ownership scheme allows you to purchase between 25% and 75% of a property and pay rent on the rest of it. Homes being offered under this scheme are usually new-builds or those being resold by housing associations. Over time, you can purchase more of the property, increasing your share until you own 100% of it.
In England, you’re required to be a first-time buyer or someone who used to own but can't afford to now. Your annual household income has to be below £80,000, (£90,000 if you’re in London).
It is estimated that 200,000 UK households live in shared-ownership properties.
In 2017’s budget, it was announced that stamp duty (the tax applied when people buy a property above a certain value) would be scrapped for first-time buyers. This was extended to include shared-ownership properties last year (2018). HMRC estimates that more than 180,500 buyers have received the tax relief so far.
The shared-ownership scheme does have some risks. Mainly the fact that until you own 100% of the property, you’re seen as a tenant in law. This means that you could lose your property if you fail to keep up with rental payments. You’re usually also required to pay a maintenance or service charge on the entire value of the property, which could potentially be quite expensive.
Back in 2014, the government announced the starter-homes initiative. The plan is to build new homes and offer a 20% discount to first-time buyers between the ages of 23 and 40.
Construction on these starter homes is yet to begin, but when it does, they’ll mostly be on brownfield sites – land previously used for commercial or industrial purposes.
To be eligible for the discount, you’ll need a household income of under £80,000 (£90,000 if you’re buying in London).
On the starter-home initiative, housing minister Kit Malthouse has said: "Starter homes are part of this mission to build more, better, faster but it's important we get them right. We are working with the industry on the next steps as we move forward with development."
In addition to these government schemes, there are several mortgage options which can make it easier for you when buying your first property. From multiple-proprietor mortgages to gifted deposits, you can find out about all of the available options in our “Mortgage Options for First-Time Buyers” article.
If you’d like to discuss your options for getting a mortgage, you can speak to one of our friendly expert advisors, who will be happy to help you find the most affordable solution, usually at no extra cost. Visit our “Contact Us” page for details on how you can get in touch.
Trying to get a mortgage can be a daunting proposition, however, it’s not that difficult and there are several things you can do to improve your odds of being accepted. To have the best chance of securing the cheapest deals, you’ll need to have your finances in order before you apply.
Lenders all have their own set of criteria and what makes you attractive to one may not satisfy them all. Generally, they look at the following:
If you’re not registered to vote, you’ll find it very difficult to get a mortgage, even if you meet all the criteria. Lenders use electoral roll data to run identity checks: to check you are who you say you are, that the address you give them is legitimate and that you’re not laundering money.
Check with your local council if you’re unsure. If you’re not registered, get yourself on the electoral roll as soon as possible.
Lenders check your credit report to ensure that you’re financially responsible. They need to know that you're able to pay back what you borrow. Your credit report shows any overdrafts, credit cards, loans, and mortgages you’ve had in the last six years. It may also include any mobile phone contracts you’ve had and some utility accounts. You can access your credit report for free via Experian, Equifax, or CallCredit.
If there are any errors in your report, talk to the lender(s) associated with the erroneous data and they should be able to amend it for you. If that doesn’t work, contact the free Financial Ombudsman and they will step in to order the necessary changes.
If you’re always in your overdraft, lenders may see this as a sign that you’re not financially responsible. Some lenders may not accept you if you’ve been in your overdraft at any time within the last three months, so it’s best not to dip into it at all, if possible.
As for your credit cards, lenders prefer you to be using less than 50% of your available limit. Yet, they may also penalise you for having too much available credit, as there’s a chance you could suddenly spend it and rack up debt. Try to strike a balance; if you have £5,000 available credit, stay below the £2,500 mark. If you have £10,000 available credit and aren’t using any, consider reducing it a little to reduce the perceived risk to potential mortgage lenders.
Each time you apply for a new line of credit, the provider searches your credit file and this search is registered on your report. Having lots of searches on your file may look like you’re desperately trying to borrow money, and this will turn lenders off. If you must apply for credit, you’ll probably get away with one application, as long as it’s affordable. Don’t use payday loan companies, as some lenders will decline your mortgage application if you’ve used such a company within the last year.
If you have old, inactive credit accounts, these can be seen as a fraud risk. It’s worth closing any account you haven’t used within the past twelve months.
Long-term, stable credit relationships are seen in a positive light by lenders. So, if you’ve had a credit card for a while but recently stopped using it after getting a new one, it’s probably best to keep the account open until after you’ve applied to get a mortgage, as it could be giving your credit score a boost.
This might sound obvious, but did you know that missing just one payment will count against you for at least a year and will be visible on your credit report for the next six?! This could make it extremely difficult for you to get a mortgage.
Set up direct debits for all your accounts to make sure they’re always paid on time. If you’re struggling to keep up with payments, contact the lender before the next instalment is due and often they’ll be able to help and save you from defaulting.
Lenders need to see proof of your income before they can offer you a deal. They may want to see all or any of the following:
Lenders often want original bank statements (not copies printed out at home) so go into your local branch and ask for originals. These can take a couple of weeks to arrive, so it’s best to do this in advance.
It makes sense to have all these things ready to go, as it will save you time and reduce the number of people your application is reviewed by.
Make sure your application form is filled out honestly and accurately. Declare all your debts and give your exact income (don’t round up), as dishonest answers will mean a rapid decline of your application.
For example, if you have £20,000 to put down on a property worth £100,000 (making your loan-to-value 80%), it may be worth coughing up an extra £100 as it will make you more attractive to potential lenders. All mortgages have a maximum loan-to-value. Borrowing just below this will boost your chances of being accepted and may give you access to better rates.
If you get rejected, don’t apply for another mortgage straight away. As with applying for credit, more searches on your credit file will reduce your chances next time and you could end up making the problem worse. It’s best to contact the lender and find out their reasons for rejecting you. They may have their own reasons, but if it was your credit file, go through this guide again and tidy it up before trying to get a mortgage again.
Key Mortgage Advice are an independent mortgage broker with over 17 years’ experience in the market. We can help you through every step of your application and give you the best possible chance of being accepted for a loan. Contact us via the button below to arrange a free consultation. We’ll assist you in getting the key to your dream home:
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To save time and make it easier for you to find out if we can help with what you're looking for, we thought we'd list our services in a handy little blog!
For our new followers, keep reading to find out how Key Mortgage Advice can help you with finding the best possible deal, whatever your needs and circumstances:
Whether you’re looking for your first or fifth property, we can help you get the right mortgage. Every lender has a unique set of policies and criteria, which must exactly match the circumstances of the borrower. Therefore, arranging a mortgage has never been more complex. Our wealth of experience and knowledge of the underwriting criteria for each individual lender allows us to successfully direct applications and complete on over 95% of all mortgage cases. We have access to the whole market of mortgage products, meaning we are truly independent and will help guide you to the most competitive and suitable mortgage product for your circumstances.
Many lenders now offer discounted interest rate deals for an introductory period – normally for two, three or five years. At the end of the introductory period, they’ll usually revert to a higher rate. However, that doesn’t mean you have to stick with the higher rate; like most things nowadays it is important to shop around to see if you can save some money. If you want to know more about how we can help you to save money on your monthly mortgage payments, or to swap to a better interest rate, then contact us and we’ll see if we can get you a better deal.
If you’re a homeowner, you may have seen the value in your home increase over time. Lifetime Mortgages allow you to tap into some of this value and release a cash sum. A lifetime mortgage is designed for people over the age of 55 and allows clients to either buy a new home or release money from their current property without the need to make any monthly repayments during the lifetime of the loan. This is because the loan and interest are rolled up and repaid by the sale of your property when the plan ends; this is normally when you die or move into long-term care.
In many cases, we can visit you in your own home or, if you prefer, we can provide a telephone consultation. If you wish to proceed with a recommendation, we offer full support with the mortgage application, legal forms and completion matters to ensure the process is as straightforward as possible. In addition, we will offer you our full support going forward, should you require any further advice.
Buy-to-let mortgages are specifically designed for investors who want to buy a property and rent it out. These are usually more expensive than normal mortgages, but they could help you to become a property investor. If you don’t own your own home outright, or with a mortgage, finding a buy-to-let mortgage may be difficult.
Most buy-to-let mortgages are interest-only, meaning that you won’t be paying off the mortgage itself and you’ll have to pay the outstanding capital at the end of the mortgage term. The other key differences from normal mortgages include:
However, any rental income you earn from a property can be offset for tax purposes against the interest only mortgage payment, so owning buy-to-let properties can be a tax-efficient investment product.
Since March 2016, buy-to-let mortgages have come under greater scrutiny. New affordability tests were implemented which mean that older home-owners may struggle to get a buy-to-let mortgage as lenders often require borrowers to repay the whole loan back before they retire.
Obtaining a commercial mortgage relies heavily on the attractiveness of the proposition to a lender. Therefore, the involvement of an experienced and well-connected advisor is hugely important. As independent specialists, we negotiate business mortgages with a range of lenders including major banks, commercial building societies, regional and local building societies, and specialist commercial asset lenders. The appropriate commercial lender is purposefully selected to meet your needs. Terms for business mortgages are not set in stone and our role in the transaction is to negotiate the best mortgage rate and terms. Our wealth of experience and market knowledge means we understand what is likely to be achieved given a specific set of circumstances. We are able to assist with transactions for purchasing premises to trade from or for investment opportunities for commercial landlords.
In addition to the services listed above, we can also assist and advise on a whole host of other products, including:
If you need expert advice on any of the above, click the button below and book a free consultation with one of our expert advisors:
It’s no secret that in today’s climate, more and more young people are turning to the bank of mum and dad when looking to get their foot on the property ladder. House prices have increased steadily over the last few years, with the average UK property costing a whopping £226,071 as of November 2017 – an increase of 5.1% over the previous year. [1]
With interest rates looking set to increase in the near future, first-time buyers face the prospect of further difficulties when applying for a mortgage. However, all is not lost. There are several options available to new buyers which may allow you to purchase a property with only a small deposit, or even without a deposit at all:
Multiple proprietor mortgages allow up to four people to purchase a property together. All are responsible for the loan and all own a stake in the property. This is a great option if you have a group of friends who are all looking to purchase a property and don't mind sharing a space. Mortgages for multiple proprietors take into account the income of all applicants, meaning that you’re much more likely to be accepted for a loan.
There are different ownership options depending on your relationship to the people you’re buying with, most common are joint tenants (everyone owns an equal share of the property) or tenants in common (each own a different share of the property). The best option for you will be dependant on your personal circumstances.
This type of mortgage allows an applicant to receive support from a friend or relative, without the other party owning a stake in the property. This usually requires a deed of trust to be written up, outlining what will happen should you fall behind with payments and who is liable if the deed of trust is broken. A will is also required for both parties, to establish what will happen to the property if either person should pass away.
The deed of trust should include a clause whereby the non-legal owner can give notice of their intention to leave the agreement, allowing them to move on should they wish. In this case, the legal owner would be required to remortgage or agree to sell the property.
Guarantor mortgages allow a relative or friend to guarantee the mortgage debt. This will often increase the amount a person is able to borrow. In most cases, the guarantor offers their property as collateral, meaning that they could lose their home if the legal owner of the new property were to fall behind with payments and they were unable to cover the cost themselves. However, if no repayments are missed, the guarantor incurs no fees.
This option enables a third party to gift the buyer a deposit. Essentially, a person (often a parent) pays the deposit on behalf of the buyer and signs a deed of gift, meaning that despite partly financing the purchase, they own no stake in the property. There is also the option of a deed of trust, whereby the third party may recoup the money gifted upon the sale of the property.
It is possible to purchase a property from a relative at lower-than-market value and use the equity as a deposit. This is also known as a concessionary purchase or gifted equity. This option is becoming increasingly popular as house prices have risen to the point where it is often possible for parents to use gifted equity to enable their child to purchase the property whilst still making a profit. This, of course, will depend upon personal circumstances.
As with purchasing a property from a relative, it is also possible for tenants to buy their home from the landlord, using gifted equity as the deposit, should the landlord be willing to sell the property for lower-than-market value. For example, if the property is worth £100,000, the landlord can choose to sell to the tenant for £90,000 and the £10,000 equity may be used as a deposit.
Shared ownership allows you to purchase a percentage of a property (usually 25-75%), with the remainder being owned by a housing authority or private developer. This typically means that a smaller loan is required and hence a smaller deposit. You will, however, be required to pay rent on the portion of the property you do not own.
If down the line, you want to increase your share in the property, the cost of the additional share will be priced depending on the value of the property at the time. This means that you will pay more for the additional share if your property’s value has increased since you bought the first share, and less if the value has decreased. It’s also worth bearing in mind that shared ownership properties are always leasehold.
The government has several “help to buy” schemes in place, including a shared ownership scheme (which works as outlined above), an equity loan, and a help to buy ISA. Details on how each of these schemes work can be found on the Help to Buy website.
If you’re considering using one of these methods to purchase your first property, or would like to discuss your options, don’t hesitate to contact us. We’d be delighted to offer you a free consultation, where we can discuss your individual circumstances and provide you with a range of options tailored to your specific needs. Our contact details can be found on the Contact Us page.
When it comes to buying a first home, an increasing number of people are opting for a new build. This is largely due to government incentives such as the help-to-buy scheme as well as the perceived ease of purchase.
As with everything, buying a newly-built property also has its downsides. There have been several high-profile horror stories in the news and this has caused some concern for first-time buyers. To help you decide whether a new build is right for you, we’ve had a closer look at the pros and cons:
Government Incentives – The UK’s help-to-buy scheme was introduced in 2013, and has helped thousands of first-time buyers get a foot on the property ladder. There are two options in the form of a mortgage guarantee and an equity loan, both available on new-build homes. The scheme does have its problems and, as with any investment, involves an element of risk. It is recommended that you speak with an independent advisor before committing to the scheme.
You can find a breakdown of the different help-to-buy options in this handy explanation via Money Supermarket.
Guarantees – Newly-built properties come with a 10-year structural warranty, protecting the buyer from any defects in the property’s structural integrity. This means that for the first decade (if you stay in your new home) you will have peace of mind in knowing that any structural issues will be covered.
Minimal Running Costs – Generally speaking, a brand new home will be more energy efficient than an older one. This will mean that your energy bills should stay relatively low, provided you’re conscientious when it comes to power consumption.
You are also less likely to encounter any repair costs, as fixtures and fittings should be in perfect condition when you move in. As long as you care for the property, maintenance and running costs should remain low for several years.
Ease of Purchase – Since you are purchasing a new home with no current tenant, the process tends to be a lot faster to complete once the property has been built. Since there’s no chain, you can be in your new home in as little as 6 weeks! Of course, this is no guarantee and you may experience delays.
Personalisation – In some cases, purchasers are able to choose the fixtures and fittings that will finish their new home. This gives you a fantastic opportunity for personalisation and some people see this as a huge benefit, especially if they plan to remain in the property for a long time.
Buying from a Plan – Often when purchasing a new build, you are buying a proposed property, not a bricks-and-mortar home. It can be difficult to visualise what the finished product will look like and the show home will rarely be an exact copy of the property you are buying. This can occasionally lead to feelings of disappointment if it doesn’t meet initial expectations.
Delays – Inevitably, most new-build projects experience delays. This can cause a problem depending on the length of validity on your mortgage offer. If the build is not complete by the time your offer expires, you will have to apply again.
Sizing – New builds are generally smaller than older homes; this is something to consider before committing to purchasing. Whilst your belongings may fit into a small space in theory, in practice it can be a whole different story!
You might also want to think about whether you have any plans to expand your family in the near future. A small home may be cosy for a couple, but add another little person into the mix and you could be struggling for space.
Living Conditions – Buying a property on a new development comes with another (rather noisy) price – you could find yourself living on a building site. It’s rare that all houses in a development are completed at the same time, so if yours is one of the first, you might be moving in whilst construction continues over the road.
After-Sales Service – If something does go wrong with your new property, you’ll likely want it repaired fast. Unfortunately, not all contractors are quick to respond to repair requests, despite having an obligation under warranty. This will largely depend on the contractor you choose, so it is definitely worth researching a company’s customer service record before buying from them.
If you’re interested in purchasing a new-build property or would like to discuss the pros and cons in more detail, Key Mortgage Advice are here to help. One of our independent experts would be happy to provide you with more information and assist you on your journey to purchasing a new home.
You can contact us via phone, email, or pop into our offices in Preston and Garstang. All contact information can be found here.
We understand how disheartening it feels to be rejected for a mortgage, but don’t delete those RightMove email alerts just yet. There is a reason behind a lender’s decision not to grant you a loan and often those reasons can be addressed. Here are some common problems when it comes to your mortgage application, and what you can do to help.
I have a lower income
Lenders take your income into account when calculating the affordability of your loan repayments. Some look more favourably on lower salaries than others and a mortgage broker like Key Mortgage Advice will recommend which lenders are the best match for your income. If you’re still struggling, you could continue saving for a larger deposit so you wouldn’t need as large a mortgage, or you could look into buying with a friend, partner or family member. There is also the option of finding a relative to be a guarantor if their income could support your mortgage as well as their own. Alternatively, you could consider shared ownership schemes, where you only need to take out a mortgage on 25 per cent of the property’s value.
I don’t have a big deposit
You will usually need a deposit of at least 10 per cent but there’s no denying that saving can be tough. The Help to Buy scheme is useful for first time buyers who have a smaller deposit, so long as you are buying a new-build and can put down 5 per cent of the property’s value. There is also the new Help to Buy ISA to consider, where the government will give you £50 for every £200 you save, meaning you could receive up to £3,000 towards your deposit. Generally, it helps to put together a savings plan – work out exactly how much you need to put aside each month to reach your goal and consider any unnecessary expenditure you could cut from your outgoings. If you have a target, timescales and a plan in mind, saving can seem much more achievable.
I have a poor credit rating
Lots of people assume poor credit history means a mortgage is a write-off, but it isn’t always the case. There are mortgage products available which are aimed at those with bad credit, known as adverse credit mortgages, and again a broker like Key Mortgage Advice can help you with this. However, adverse credit mortgages usually cost more so it might be better to wait and improve your credit rating. You can do this by paying debts on time, closing any inactive accounts, making sure your credit cards aren’t at their limit and staying out of your overdraft. Check your credit report for errors and correct any you find, and ensure you aren’t financially linked to any ex-partners whose credit score might negatively impact yours. Get yourself on the electoral register if you haven’t already, you’d be surprised how much it impacts your credit score.
I’m self employed
Securing a mortgage when you’re self-employed can be more difficult but is by no means in possible. Make sure your tax returns from the past two to three years are up-to-date and your most recent accounts aren’t older than 10 months. It’s a good idea to use a chartered or certified accountant for these. You should also do a self-assessment using a SA302 form, which you can get from an accountant or the HMRC. Some lenders do ask for a larger deposit if you’re self-employed, but this varies from lender to lender and Key Mortgage Advice can advise. Our blog on self-employed mortgages has more information.
If you would like to discuss this topic in more detail or discover how Key Mortgage Advice can assist with your mortgage application, please contact us on 01772 620 000 or email [email protected]
Our blog on how to make yourself more attractive to mortgage lenders may help, too.
The government has promised to build a million new homes by 2020, making it likely that more and more people will be buying new build properties. In most cases, applying for a mortgage on a new build will be no different from any other property, but there are a few things you should be aware of.
The price
With a new build, you’ll usually pay the price advertised and it’s unlikely that you’ll be able to negotiate. New homes are often considered to be more expensive because, obviously, any fixtures and fittings included are also brand new, and in some cases, you can choose elements within the home which are personal to you – a bit like buying a new car. Be aware that if the first phase of a development sells well a developer may put up the price of the next phase. By the same token, if it sells slowly you may be able to negotiate extras or discounts. You’ll also need to put down an initial deposit to secure your plot, usually £1,000-£2,000.
The timescales
One of the key things to be aware of when buying a new build is that the timescales are incredibly tight. It’s likely that you’ll be expected to exchange within 28 days which can sometimes be a challenge for mortgage lenders. The best thing to do is to make sure you have everything in place for your mortgage application in advance so that you can move quickly once you’ve secured your plot.
The mortgage offer period
New builds can be bought off-plan (before the home has actually been built), but this shouldn’t present a problem for lenders. Mortgage offers are typically only valid for six months though, so be wary if the property is going to take longer to complete. In those cases, there will probably need to be a re-assessment and if there’s been a change in circumstance since your initial application the lender could refuse to extend your mortgage offer. Some lenders do offer longer validity periods, a mortgage broker such as Key Mortgage Advice will recommend the best product for you.
The incentives
It’s less common nowadays, but some developers offer freebies to incentivise buying a house on their development, such as paying your stamp duty or legal fees for you. Lenders will take this into account and it may affect how much they are willing to lend.
Help to Buy
If you’re a first time buyer purchasing a new build, you may wish to consider the Help to Buy scheme. The government will provide a 20 per cent equity loan to help those who are struggling to get a deposit together. You must put down a five per cent deposit, and the remaining 75 per cent will be funded through your mortgage. The loan is interest-free for five years and most lenders will have specific products available for Help to Buy – again, this is something Key Mortgage Advice will help you with.
If you would like to discuss getting a mortgage on a new build property, or how we can help with any mortgage queries, please get in touch.
In 2015, the government launched its Help to Buy ISA, with the aim of helping people onto the property ladder by offering a bonus of 25 per cent of the amount you save. However, many people are still unclear about what the scheme is about and how it works, so we’ve answered some of your questions.
How does the Help to Buy ISA work?
Basically, for every £200 you save the government will give you £50, which amounts to an extra 25 per cent of tax-free savings. The most you can get from the government is £3,000, meaning the maximum you can save in the Help to Buy ISA is £12,000. The bonus goes straight to the mortgage lender, so you’ll never actually see it in your account and it doesn’t accrue interest (although your savings will, just as with any regular ISA.) If you don’t buy a home, you don’t get a bonus.
Who is eligible for the Help to Buy ISA?
Any UK resident aged 16 or over who is buying a property for the first time is eligible, and the Help to Buy ISA can be used to buy any UK property, not just new builds. However, you can’t be buying a property to let, and the cost of the home you buy can’t exceed £250,000 (or £450,000 in London.) You can only hold one Help to Buy ISA but the ISA is per person rather than per property. It means that if you were buying a property with a partner, for example, you could each hold a Help to Buy ISA and receive up to £6,000 from the government which could be used for a single property purchase.
When can I get a Help to Buy ISA?
The Help to Buy ISAs became available in December 2015, but you will need to make an initial deposit of £1,000 to open one. You’ll also need to have saved £1,600 before you can claim your bonus, but once you’ve reached that amount you can claim at any time. If you want to claim the maximum amount of £3,000 you would need to save for just over four and a half years. You’ll also need to get a solicitor to apply for the bonus cash for you when you come to buy a home.
How long are Help to Buy ISAs available for?
You must open your Help to Buy ISA by 30 November 2019. After that, they won’t be available to new savers, but if you’ve already opened one you can continue to save. You must claim your bonus by 1 December 2030 though.
Am I guaranteed a great deal?
Not necessarily. Obviously, the amount you receive from the government remains the same no matter who you save with, but the amount paid to you by the ISA itself varies between savings providers. Some are far more generous than others, so make sure you shop around for the best deal.
Update (21/02/19): From April 2021, the rules surrounding the Help to Buy scheme are changing. You can find out more about these changes in our recent article, "How is Help to Buy Changing?"
If you would like to discuss Help to Buy in more detail or talk about how Key Mortgage Advice can assist with your mortgage application, you can find our contact details here.
Many of you were interested in our blog about different things that could devalue your home, so we thought we’d explain how you can add value too. From extensions to kitchen upgrades, here’s 10 of the best ways to make your house more appealing to buyers.
1. Install a loft conversion
A loft conversion can mean an extra bedroom which is always appealing to buyers and can bump up a property’s value by 10 – 15 per cent according to Savills. Just make sure that the conversion fits with the rest of the house and you’ll likely increase your house’s value by more than you spend.
2. Give your kitchen a makeover
Kitchens sell houses so if you only improve one room, make it the kitchen. An efficient, stylish and easily manoeuvrable kitchen with up-to-date equipment can add 4.6 per cent onto the value. Be careful though, kitchens are expensive so make sure yours doesn’t cost more than it adds.
3. Upgrade the bathroom
The bathroom is another showpiece when it comes to selling, and giving it a facelift is surprisingly easy and relatively inexpensive. A set of new taps, a shower rail and a glass shower door instead of a curtain can make all the difference.
4. Add a conservatory
Conservatories are still a selling point and add valuable space and light. They can cost anywhere between £5,000 and £30,000 but add 7 per cent in value. Again, make sure it matches the rest of the house, and conservatories are probably best avoided if you already a small garden.
5. Freshen up your exterior
In the digital age where buyers are scrolling through hundreds of properties on their smart phone, kerb appeal has never been more important. Paint the house, clear the driveway and unblock the gutters. You should also consider changing the windows if they’re in a poor state or make your house look less attractive.
6. Build an extension
It will take time and investment, but an extension will add significant value in the long run. Buyers are usually more attracted to space than number of rooms, so think about how an extension will be most effective. For example, extending your kitchen might be more appealing than, say, adding a study room.
7. Convert your garage
You’re probably sensing a pattern here, but space really is at a premium. How many people keep their cars in a garage? Apparently only around 10 per cent of people in the UK, making them a wasted asset. Turn your garage into an extra bedroom or even a games room.
8. Put in central heating
If you don’t have it already, install central heating. If the house needs a new boiler, get one. It’s a bit like trying to sell a car without an MOT, and you’ll spend around £1,000 - £3,000 but add closer to £5,000.
9. Create off-street parking
Off-street parking is still one of the first things people look for when buying property so it can make a big difference to the value. Create a parking space if you can, even if it means sacrificing part of your front garden. Most people will prefer an attractive driveway over a garden they don’t use – but check you don’t need planning permission first.
10. Fix cosmetic defects
Technically, small problems like peeling paint and loose tiles won’t directly affect the value of a property, but altogether they could stop you achieving the sale price you’re hoping for. Fix anything that looks unappealing like ceiling cracks, mouldy sealants and broken fixtures.
If you would like to discuss this topic in more detail or discover how Key Mortgage Advice can assist with your mortgage application, please contact us on 01772 620 000 or email [email protected]
Buying commercial premises is a big step for any company, but it’s one that more and more business owners are taking. Here are five benefits to owning a commercial property.
For many business owners, buying a commercial property can give the company the boost it needs to blossom. In fact, a survey revealed that while 40 per cent of UK businesses which were between six and 10 years old still lease their premises, 70 per cent believe owning the property would encourage the business to grow. Buying bigger premises naturally makes expansion more physically possible, but the financial benefits can also spur growth.
So what are the financial benefits? Well for starters, interest payments on a commercial mortgage are tax deductible, but owning a commercial property could actually make you money. If you pay a fair price and make your purchase with the long-term in mind, it’s likely that the property will increase in value making it a potentially lucrative investment. You could also let out parts of the property to other businesses, providing you with an additional income stream.
If you buy a commercial property the building is yours to do with that you will, it’s as simple as that. Redevelop and redecorate to your heart’s content, change the layout, even extend the building if you have the space and can get permission – when you own the building you hold all the cards. You won’t have to wait for a landlord to carry out repairs, or wear your winter coat indoors because the central heating doesn’t go on until mid-December, and there’s no risk of a landlord disrupting your business with renovation work.
Rent increases are a thing of the past when you own your own property which means you can forecast your costs with more certainty, particularly if you have a fixed-rate mortgage. Planning for the future is a lot easier when you know how much you’ll be spending each month, so a mortgage on a commercial property provides a strong basis on which to base your company’s financial decisions. Owning business premises also removes any worry about a landlord deciding not to extend your lease, while at the same time you aren’t tied to a fixed term contract so you can move when you choose.
Pensions are often seen as ‘dead money’, but if you use a Self Invested Personal Pension (or Sipp) to help buy a commercial property, the tax benefits are considerable. The Sipp can borrow up to 50 per cent of its net asset value, and once the Sipp owns the premises it leases it back to the business. It means the business pays rent to into the pension, which goes back into your pension pot tax-free. You can’t use a SIPP to buy residential property, but by purchasing commercial premises you have the opportunity to use your company’s earning potential to boost your retirement savings.
If you would like to discuss this topic in more detail or discover how Key Mortgage Advice can assist with your mortgage application, please contact us on 01772 620 000 or email [email protected]
Shake-ups to the rules, fears of a new housing bubble and tightening of lender purse strings have made it more difficult to get a mortgage, which is a scary prospect for anyone looking to buy their dream property.
Home loans aren’t off the table by any stretch, but criteria is certainly tougher and the lower-risk you seem, the better. Here are some simple ways you can make yourself more attractive to mortgage lenders.
Lenders are going look at your credit record, so make sure you know how it reads. Your credit file lists all credit cards, loans, overdrafts, mortgages – even phone and utility bills – that have been open over the past six years, and lenders will use it to find out if you have a good repayment history. You can check it yourself online using services like Equifax or Noddle.
Paying debts on time, closing any inactive accounts and staying out of your overdraft will all improve your credit score. Make sure you aren’t financially linked to any ex-partners whose credit score might negatively impact yours and correct any errors you notice on your report. Make sure your credit cards aren’t at their limit either (even if you’re making regular repayments) as this suggests you’re at the edge of your finances.
It sounds so obvious, but you’d be surprised how many people don’t realise that not being on the electoral roll is a dealbreaker. Lenders use the roll to verify your identity so if you haven’t registered to vote it’s almost impossible to get a mortgage. Check with your local council and register as early as possible – you should be added within a month but in late summer and early autumn it could take longer.
Run your bank account as though you already have a mortgage for at least three months before you apply. That means cut all unnecessary spending and think about where your cash is going and how that might look to lenders. Betting, for example, should be avoided because lenders don’t look favourably on it, and it goes without saying that you should steer well clear of payday loans. In fact, you shouldn’t apply for any loan or credit in the three months before getting a mortgage because lenders could assume you’re desperately seeking finances.
Most lenders want to see that you’ve been with your current employer for a decent amount of time so if you’re itching to change jobs, it’s better to hang on until your mortgage is in place. Similarly, if you’ve recently joined a new company, it’s a good idea to have been there for at least three to six months before applying for a home loan because some lenders will be wary of lending if you’re still in your probationary period.
The bigger the deposit, the wider the choice of mortgages available to you. Lenders also often give their best rates to the people with the largest deposits so if you can put up a good amount at the start your monthly repayments are likely to be lower. In the long run, it’s usually worth taking the extra time to save the largest deposit you can because you’ll qualify for a better deal.
Having your paperwork ready not only speeds up the process, but also means you can send everything off in one go which reduces the chances of your application being reviewed by multiple people who all have the potential to say ‘no’. You’ll likely need to provide three months’ worth of pay slips and bank statements, your latest P60, proof of any deposits and the relevant ID documents.
Finding the right mortgage deal isn’t easy and it can be difficult to work out what you’re eligible for and how much you can borrow. A mortgage broker or advisor can help you navigate the market, assist with the application process and can find the most suitable rate for you. At KMA, for example, we have access to the entire market as well as exclusive products which are only available through certain advisors.
If you would like to discuss this topic in more detail or discover how Key Mortgage Advice can assist with your mortgage application, please contact us on 01772 620 000 or email [email protected]
If you’re selling a property, it’s useful to be aware of the things that could shave some value off your asking price. That way, you can rectify the areas that can be fixed and be prepared for those that aren’t.
If you’re buying, it’s good to know what to keep an eye out for as chances are you might want to sell the house yourself at some point. We’ve put together a list of ten of the most common things that might devalue a property.
First impressions are everything and a property’s outer appearance – otherwise known as its kerb appeal – can make or break your property’s value. The good news is that it’s easily fixed; fresh paintwork, guttering and a refresh of the front garden can make all the difference.
Semi-permanent bad taste, like an ugly conservatory, can knock between five and 10 per cent off a property value. The same goes for shoddy workmanship and in particular, any home improvements that have been made without proper planning permission. Buyers will need to factor in the cost of rectifying the problem.
There’s little you can do if your property is on a flood plain, but with the changing climate and increasing cases of high profile flooding, it will almost certainly wash away some of your home’s value. How much will depend on the property’s flooding history and preventative measures taken by the local council.
Even if you can get over the fact that they aren’t all that pretty to look at, lots of people see electricity pylons as a health risk. Others say they can hear a buzzing sound emitting from the wires. According to experts, properties located close to pylons can expect their value to decrease by as much as 30 per cent.
In today’s fast-moving digital world, a good broadband connection is essential. In fact, according to a survey, fast broadband is now ranked higher than off-street parking in terms of buyer priorities. A weak connection could cost you five per cent of your asking price.
Something like a mobile phone mast or a wind farm popping up can significantly devalue your home. If it’s happening in the area you live in, you can register objections with the council but it can often be to no avail. If you’re buying, you can carry out research into planning permissions in the area.
Living in a ‘good catchment area’ is the holy grail of property locations, even for people who don’t have children. According to RICS, a good Ofsted report can add around eight per cent to the value of a property, while a bad report can wipe almost £20,000 off the cost of a home.
Anyone who has anti-social neighbours probably can’t wait to see the back of them, but they can also be a black mark against your property if your buyer catches on. Halifax says bad neighbours can reduce the average property’s value by an eye-watering £31,000.
While living near a train station can be a plus point for people who commute, factor in noisy trains rattling past your home in the middle of the night and it can actually adversely affect the value of a property. The same goes for living near noisy pubs.
It’s one of those urban legends that turns out to be true – a messy child’s room really can devalue your home. According to one mortgage provider, it can create such a bad impression on potential buyers that it could lop £8,000 off the asking price.
If you would like help or advice regarding commercial or residential mortgages, please contact us on 01772 620 000 or email [email protected]
Although it’s by no means impossible, it’s fair to say that organising a mortgage when you’re self-employed can be a bit of a headache. We’ve answered some commonly asked questions about self-employed mortgages and explained some of the options available.
Just like with a regular mortgage, how a self-employment mortgage is calculated will depend on the lender. Some will calculate your mortgage using your previous year of trading alone, while others will set the amount you can borrow based on a number of years. If you’re a sole trader or a partnership, lenders will take net profits as income and for limited companies they will usually look at salary and dividends. The problem faced is that some lenders find it more difficult to assess self-employed people for mortgages.
Most lenders will want to see your accounts or tax returns from the past two to three years, so make sure these are up-to-date. Your most recent accounts cannot be more than 18 months old and it’s a good idea to use a chartered or certified accountant. You can also do a self-assessment to prove your income using a SA302 form, which you can get from an accountant or the HMRC, and nearly all lenders will take this into account. It goes without saying that you should ensure your credit rating is high by paying off any debts and checking you’re on the electoral register at your current address. It’s wise to keep tabs on your spending and regular outgoings too, and you’re likely to need a deposit of up to 20 per cent.
Generally speaking, you have access to the same mortgage products as everyone else so long as you can put down a good deposit and prove you can make the repayments on the loan. You should have the choice between fixed and variable rate mortgages and although specialist lenders exist, mainstream mortgage lenders lend to the self-employed too. Some lenders do ask for a larger deposit if you are self-employed but again this varies lender to lender. The best advice is to shop around for the best rate, or speak to a broker who can do this for you.
If you would like help or advice regarding commercial or residential mortgages, please contact us on 01772 620 000 or email [email protected]
