by admin | Dec 20, 2021 | Mortgage News
When it comes to getting a mortgage, it helps a lot to prepare in advance. Firstly, you need to build your deposit. That can take several years. Secondly, you must make sure you make yourself an attractive mortgage candidate. Ideally, you want to allow at least six months for this. Then you need to put in the proper mortgage application correctly.
Building your deposit
Everybody is different, so it’s impossible to say how long you should allow for this process. It is, however, possible to say that you should learn about lenders’ rules on deposits. Firstly, you need to know what percentage of a property’s price you will need to have to be even considered for a mortgage.
Secondly, you will need to know what sources of funds you are allowed to use to build it. In particular, research the rules around gifted deposits and ensure that you comply with them in letter and spirit. If you don’t, then there is a strong chance that your future mortgage application will be turned down, even if you are a perfect candidate in every other way.
Making yourself an attractive mortgage candidate
You want to allow at least six months for this. Your first step is to make sure that you have ID. If necessary, get or renew your passport and/or driving licence. Next, check and see if you need to do any administrative cleaning. Before applying for a mortgage, you want to be on the electoral roll at the address on your financial statements.
At a minimum, ensure that your current account and payslips/accounts all show the same address as your electoral-roll listing. Ideally, check the details of all financial products you hold. This may be a nuisance, but you should be doing it anyway.
Check your credit records with TransUnion, Equifax and Experian. Make sure that they are all complete and accurate. If there are any mistakes, contact the agency immediately to have them corrected. Similarly, if you have failed to mark accounts as closed, do so promptly. For example, if you have an old credit card you never used, call the lender and close it down properly.
During this period, think about your finances with particular care. Remember that your lender will scrutinise your bank statements, so think about how they are likely to appear to an objective third party. If necessary, get an objective third party to look at your bank statements as they currently stand. Ask them if they think you should change your spending habits, at least for now.
Putting in the proper application in the right way
You might find it very helpful to use a mortgage broker. They can guide you to the best deal for you and advise you on how to apply for it. The critical point to keep in mind is that lenders want to know the answer to three key questions. These are:
- Can you afford the mortgage?
- Will you repay the mortgage without any hassle?
- Can they recoup their money from selling the property if there are any problems?
The more convincingly you can answer yes to all three questions, the more options you are likely to have. With that said, you don’t need to give up in despair if you’re not a “perfect” candidate. You may still find a more niche lender who will take you on.
As a final point, when you submit your application, as obvious as this may sound, ensure that you follow all the instructions. Answer all questions fully and accurately and upload/send any requested documents. Administrative errors might not get your application declined, but they may get it delayed.
Why use Coombes & Wright Mortgage Solutions?
We are an award-winning mortgage & protection broker providing local, flexible, friendly advice. Our head office is in Brookmans Park, Hatfield, and we have advisers in Abbots Langley, Hertfordshire, London and Dover and Canterbury in Kent.
Our team has over 100 years of combined property and mortgage industry experience. Jointly, we have helped and advised thousands of people at all levels of the property ladder. We pride ourselves on personalised service, exceptional customer care and a friendly approach.
by admin | Dec 10, 2021 | Mortgage News
Two trends are combining to create what could be a significant issue for the mortgage market and, indeed, for the UK as a whole. Firstly, people are waiting longer to get on the housing ladder (or being forced to do so). Secondly, mortgage lenders are now offering multi-decade fixed-rate mortgages.
A new mortgage time bomb?
If you buy your first home in your mid-thirties and take out a forty-year mortgage (fixed-rate or otherwise), it will end in your mid-seventies. Of course, this assumes that you never change your mortgage. In reality, people who bypass starter flats and make their first purchase of a family home may well choose to downsize once the children have flown the nest.
Then again, they may not. Even if they do, they may not be able to pay the total price in cash. From a financial perspective, downsizing isn’t as cut and dried as it might appear. There are a lot of variables to consider. It has the potential to save people money, but this is not guaranteed.
It also needs to be acknowledged that some relationships come to an end. When they do, the two halves of a former couple both need to find suitable accommodation. This has clear implications for personal finances in general and mortgages in particular.
This means that, whatever way you look at it, there is at least a strong potential that people will still be paying off their mortgages well into their later years. Whether or not this means that they will be paying them off post-retirement will depend on individual circumstances. The most obvious of these is when, or indeed if, the individual retires.
What and when is retirement?
Retirement used to be pretty cut and dried. If you had bought a house, you had paid off your mortgage (or were at least very close to it). You had a defined benefits pension and/or a pension pot you used to buy an annuity. This gave you a liveable income for your (relatively short) retirement years.
Retirement is a combination of what any given individual says it is and what they can afford. Some people are able and willing to continue working indefinitely, at least in some capacity. Some people can work but do not wish to do so. Some people are not able to work indefinitely regardless of whether or not they want to do so.
Realistically, despite modern science’s benefits, age is more than just a number. Anybody can be rendered incapable of working even if they would like to. What’s more, even if you’re willing and able to work, the work might not be there for you to do. This means that it’s precarious to rely solely on continued income from work to pay your mortgage at any time. It’s particularly risky in your later years.
Mitigating the risk
The most obvious way to mitigate the risk of carrying a mortgage into retirement is to do as much as possible to pay it off before you retire. This may involve making sacrifices in the present to benefit your future self. For example, you might choose to let out a room in your house (even if it means the children sharing rooms for a while) and forgo treats like holidays.
You should protect your income so you can continue to pay your mortgage if hit by one of life’s curveballs. If you’re employed, you could look at payment protection insurance. Regardless of your employment status, you could look at critical illness cover, income protection insurance and life insurance.
Last but not least, you should maximise your savings and income for retirement. One potential strategy would be to use your Lifetime ISA to build up a pot you could use to pay down your mortgage upon reaching retirement age. They use a pension and/or other savings/investment vehicles to save for your living expenses.
Why use Coombes & Wright Mortgage Solutions?
Coombes & Wright Mortgage Solutions is an award-winning mortgage & protection broker providing local, flexible, friendly advice. Exceptional customer service is at the heart of everything we do. We simplify securing and completing your mortgage and protection cover from initial enquiry to completion. Our flexible and friendly format is built around you. We ensure you get professional advice, without jargon, at a pace and time to suit your needs.
We act as introducers for pensions, savings, investments, and payment protection insurance.
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