Tag : First Time Buyer Mortgages

Interest Rates

Interest Rate Rise

Interest Rate Rise

In 2007 Bulgaria and Romania joined the European Union, Lewis Hamilton got his first drive in Formula 1 partnering with Fernando Alonso at McLaren, the final book in the Harry Potter series was published and England played their first match at the new Wembley Stadium.

It was also the year in which the Bank of England last raised interest rates, when they went up by 0.25%.

That all changed on 2 November 2017 when The Bank of England voted to raise UK interest rates for the first time in over a decade, to 0.5%.

So how could an interest rate rise of 0.25% affect you?
In the short term, both borrowers and savers could see a modest effect on finances. Savers are likely to be pleased with the welcome boost even if the increase is small. Borrowers however will be less pleased as they could see their mortgage repayments rise.

Impact on borrowers
Higher interest will mean that those on Standard Variable Rates (SVR) or Trackers Rates will see their mortgage repayments rise. On a mortgage of £125,000 an increase of 0.25% would result in payments increasing by £15 a month (£185 a year).

Those with larger mortgages will in turn see a larger payment increase. Those with a mortgage balance of £250,000 will see their monthly payments increased by £31 (£369 a year). However, the 57% of borrowers on a fixed rate deal will be unaffected during their fixed term.

These figures might not seem much in isolation, but borrowers should also be aware that higher interest rates could impact other borrowing, like credit cards, car credit or unsecured loans.

There’s also the prospect that rates could continue to rise over the long-term. If we hit 1%, the monthly repayments on a £125,000 mortgage would go up by £78.48, and £161.69 if the rate doubled to 2%.

If you’re concerned about the impact of higher interest rates on your mortgage repayments you may want to consider a fixed-rate deal, especially if you’re currently on SVR. Remember, if you’re already on a fixed-rate deal you may face higher repayments when the term ends. Make sure you diarise when that’s due to happen and get in touch so that we can discuss whether the best option is to remortgage.

Impact on savers
According to research there’s no standard savings account on the market that can outpace inflation, in fact the average easy-access savings account is currently paying 0.35% interest.

If the Bank of England increases the base rate savers may be able to find better returns to keep up with rising inflation. However, as with mortgages, those already on a fixed rate will not see higher rates until the term ends.

Whether you’re a saver or a borrower, we’d love to help you make more of your money. Get in touch to find out how.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

Mortgage Advice

The value of our advice

The value of our advice

Good financial advice and planning helps people to protect and build their assets, make the most of their investments and help to achieve the goals and lifestyle they desire.

Establishing priorities
Every client we meet has a unique and varied range of financial planning needs, so it’s important to establish priorities right from the start if we are to create a meaningful and relevant plan.

As time passes, your financial plan will need to evolve, and regulatory changes can impact the effectiveness
of any structures already in place. That’s why we recommend a regular review to ensure that your plans remain on track and relevant.

The importance of ongoing advice and service
If you choose to receive ongoing advice and service from us, we’ll invite you to regular meetings where we will monitor the progress of your plans and discuss any adjustments required in the light of changing circumstances.

We believe that ongoing service can help you continue to make well-informed choices and give you the best chance of achieving your goals through key life stages.

Five promises we make to our clients

  1. We will help you arrange your finances so that they work as effectively as possible towards funding your life goals.
  2. We will help you take steps to ensure your income, assets and family are protected from the impact of long-term illness, disablement or death.
  3. We will advise you on how your investments can benefit from relevant tax reliefs and allowances. We will also advise you on the most effective way of withdrawing income or capital from your arrangements when the need arises, or how best to pass wealth to your intended beneficiaries.
  4. We will help you keep your plans in focus by regularly meeting with you to review and refresh arrangements. This might be a result of changing personal circumstances, legislation, new opportunities and any other factors relevant to your situation.
  5. We will be accessible and responsive whenever you wish to contact us with queries or requests.

For more information about any of our services, please get in touch.

Financial Advice

The value of mortgage advice

The value of mortgage advice

With so many mortgage lenders offering their products on the high street and online, it can be tempting to cut out the middleman and ‘go direct’.

But when you’re making such an important financial commitment, the guidance you can get from a qualified mortgage adviser can be invaluable. Here are five ways we can make a difference to your mortgage search:

  1. We know what a good deal looks like
    We have access to a wide range of well-known lenders and thousands of mortgage deals, so we can find a
    rate that suits you. But we also look beyond the rate. Lender administration and booking fees, length and
    type of loan, valuation costs and repayment methods can all affect the total amount you pay. By considering
    all these elements, we can recommend a solution tailored to your individual circumstances.
  2. We know the market
    If your needs or circumstances are ‘out of the ordinary’, it may be much harder for you to find a mortgage now than it was a few years ago. This is particularly true if you’re self-employed or a small deposit, or are
    borrowing into retirement. We can save you the time and hassle of trawling the market, and help you find a
    lender willing to provide your loan.
  3. We’ll do the hard work for you
    Selecting the most appropriate mortgage is just the start. We’ll work with you to complete all the necessary
    application forms, liaise on your behalf with solicitors, valuers and surveyors, and help to make the
    process as smooth as possible.
  4. We’re professionally qualified
    Unlike many branch and telephone-based mortgage sellers in banks and building societies, we’re qualified
    to advise you on a broad range of lenders and products. This means you benefit from genuine choice coupled with quality advice.
  5. We go beyond the mortgage
    We can help you safeguard your investment in your home by advising on a range of products that can
    financially protect your home, and your family, should the worst happen.

If you’re looking for a new mortgage, we’d love to help.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

Mortgages

Mortgage-savvy millennials

Mortgage-savvy millennials

When it comes to their mortgage, are younger people making better financial decisions than their older counterparts?

The term ‘millennial generation’ applies to people born somewhere between 1980 and 2000, a 20-year span which also saw a huge rise in property prices. At the start of 1980, the average house price was £22,677, but by the end of 2000 this had risen to £81,628. Today the figure stands at £209,971.

A recent study shows the dramatic rise in property prices means just one in five 25-year-olds can afford to buy a property, and the average age of a first-time buyer in the UK has been pushed up to 30. Despite the financial challenges, almost three quarters of UK millennials intend to buy their first home in the next five years.

Repayment vs interest-only
The millennials who’ve bucked the trend and already made the first rung of the housing ladder obviously prefer the concept of reducing their loan month by month, with the vast majority (92%) of 18-34 year olds choosing a repayment mortgage, compared with 68% of those aged 55 and over.

Fixed rate
Younger borrowers also seem to prefer to know what their mortgage repayments are going to be, with nearly 70% opting for a fixed-rate deal compared with 35% of their older counterparts. They also seem happy to shop around, with a quarter remortgaging to potentially reduce their monthly payments, whereas 82% of those aged 55 and over have stuck with the same mortgage.

Offset mortgages also appear to be more attractive to younger generations with one third of 18-34 year olds taking out an offset mortgage (where they will use their savings to either reduce the term or repayments on their mortgage) compared to just 11% of over 55s.

If there is a conclusion to be made from these statistics it could be that millennials are more savvy when it comes to their mortgage, but remember, interest rates have remained at record lows for nearly ten years; something that’s very much in their favour.

Figures correct as at September 2017

Whatever age you are, whether you’re looking to buy for the first time, remortgage or move up the housing ladder, please get in touch to see how we can find the right mortgage for you.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

conveyancing

Do you know your credit rating?

Do you know your credit rating?

If you’re looking to take your first steps onto the housing ladder you may have sacrificed your takeaways and holidays to save the deposit and scoured hundreds of houses online. But have your checked your credit history?

Even if you’re remortgaging or moving up the housing ladder your credit history will be important.

What is a credit score?
A credit report includes details of your credit history including any credit you’ve applied for (like loans,
credit cards, and overdrafts), credit you’ve been given and how you’ve managed the repayments. Also included are your address details (current and previous), public records such as county court judgments and financial associates (someone who is financially linked to you eg. a joint mortgage or bank account).

All the details in your credit report are analysed to calculate your credit score. This score is used by
lenders as an indication of how you’ll manage and repay the money you borrow.

Scores on the doors
The general rule is the higher the score the better, and the more likely you’ll be accepted for a mortgage or other credit.

If you’re looking to take out a mortgage or remortgage, check your credit score regularly. You can usually get a simple overview for free and it pays to check with several different sources. Noddle, Equifax, ClearScore and Experian all offer a service to help you understand your rating.

According to research from Experian, when the home buyers who were surveyed checked their
credit 18% found their score was lower than expected. The good news is that there are ways
to improve a low score:

  • Pay more than your minimum payments on credit cards
  •  Bring your overdraft down
  • Close unused credit accounts
  • Register for the electoral roll

Happily, 54% of those surveyed found their score was higher than expected and 25% were surprised
by their score. Given that 43% of people haven’t checked their credit score it may be that many are unaware of the impact it may have until they come to apply for a mortgage.

If you’re a first-time buyer looking for a mortgage or a homeowner looking to remortgage, please get in touch to see how we can help find the right mortgage for your circumstances.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

conveyancing

How to choose a good conveyancer

Conveyancing is an important part of the home buying process, and it’s important to note it’s required when both buying and selling a property.

So what should you consider when choosing a property solicitor to carry out your conveyancing? It’s important to use a qualified property solicitor who’ll be able to take care of a range of issues on your behalf, including:

fixed rate mortgage

Thinking of fixing your mortgage?

Thinking of fixing your mortgage?

If you think an increase in your mortgage repayments could have a negative impact on your lifestyle or financial wellbeing, you may want to consider fixing your mortgage.

With a fixed rate mortgage, your payments are set at a certain level for an agreed period, regardless of whether your lender changes its Standard Variable Rate (SVR). Such an increase typically occurs when the Bank of England Base Rate starts to climb.

Fixed rate mortgages can offer protection from rate rises for an agreed period, but there are several considerations you’ll need to think about before making your decision.

Predictable repayments – but you won’t benefit from rate cuts
With a tracker mortgage, your monthly payment fluctuates in line with a rate that’s equal to, higher, or lower than a chosen Base Rate (usually the Bank of England Base Rate). The rate charged on the mortgage ‘tracks’ that rate, usually for a set period of two to three years.

Tracker rates might be more appealing if you don’t have a fixed budget and can tolerate higher mortgage payments if rates rise, whilst being able to benefit from reduced monthly mortgage payments if rates go down.

But with a fixed rate mortgage, the rate (and therefore your repayments) will stay the same for an agreed period. A fixed rate mortgage makes budgeting much easier because your payments will not change – even if interest rates go up. However, it also means you won’t benefit if rates go down.

Longer fixed terms will be more expensive

If you choose a fixed rate mortgage, you’ll need to decide how long you want your fixed rate to last. Two-year fixed rate mortgages typically offer the lowest initial interest rate. If you want to fix your interest rate for longer, you will probably pay more
for that longer-term security. This may be worthwhile in return for predictable repayments, or you might choose to take the lower rate for a shorter timeframe if you expect that your financial position will improve by the time the deal ends.

A change in circumstances could cost you
Do you have any known changes on the horizon that will have an impact on your mortgage?

With a fixed rate mortgage, you could face an early repayment charge if you repay all or a certain percentage of the mortgage during the fixed rate period.

If you have no known changes and want to benefit from a longer period of security, then a longer term fixed rate of five years may appeal. It might cost more initially, but you’ll benefit from knowing that your budget is fixed for that period.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

Don’t be drawn into trying to second guess what will happen with interest rates over the coming years. We can help you come to the most appropriate decision for your next mortgage.

Mortgages

The ninth largest lender

The ninth largest lender

34% of first-time buyers relied on their parents for financial help, making the bank of mum and dad’, the equivalent of the UK’s ninth largest lender in 2017.

If you’re trying to get on the housing ladder, you’ll know how hard it can be
• The average price of a first home is over £200,000 in the UK (and £400,000 in London)
• The average first-time buyer deposit has more than doubled over the past decade from £15,168 in 2006 to £32,321 in 2016
• Only 29% of all first-time buyer purchases in 2016 were below the £125,000 Stamp Duty threshold.
• 28% of all first-time buyers with a mortgage opted for a 30 to 35 year mortgage term (in 2016)

With numbers like those left it’s little wonder that so many first-time buyers turned to their parents for financial support in helping them buy their first home. In fact, according to a recent report from Legal and General, the bank of mum and dad could lend more than £6.5bn in 2017, a massive 30% increase on 2016.

The money will help to buy £75bn worth of property and puts parents on a par with the UK’s ninth largest mortgage lender, the Yorkshire Building Society.

Is parental support sustainable?
The bank of mum and dad makes an average financial contribution of £21,600 for each property. And of the buyers who received support from their family, 57% received it in the form of a gift while just 5% were given the money as a loan with interest.

According to Legal and General a loan by the bank of mum and dad could wipe out just over half of a family’s available net wealth, raising the question of whether this type of support is sustainable over the longer term.

Your home/property may be repossessed if you do not keep up repayments on your mortgage.

If you’re looking to buy your first house with help from your family, we can help you find an appropriate mortgage deal for you.

If you’re still in the process of saving your deposit (typically 16% of the value of an average first home), we can help you explore the different ways to invest for your near, mid and long-term plans.