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.
by admin | Nov 19, 2021 | Mortgage News
In one sense, completing on a property is “job done”. Emotionally and financially, these are the most significant parts of moving. However, this is just the start, and there is a long list of other considerations that are, yes, you’ve guessed it – costly. Moving your possessions from A to B. Getting settled into your new home. Updating your contact details with relevant parties. Read on to learn more…
Moving your possessions
If you have anything more than a car boot’s worth of belongings, you’ll probably need help getting them from one home to another. This typically means either renting a van or getting movers. If you’re offered the chance to borrow a vehicle, make sure that you’re adequately insured to drive it.
If you’re using movers, it’s advisable to look at their reputation and headline price. Quality of service is worth paying for, especially in a potentially stressful situation, like a house move. However, you may be able to save some money by booking in advance and timing your move strategically. For example, move mid-week instead of at the weekend.
Also, only move what you need to move. Use up consumables (like food) as much as you can. Declutter anything you’re not using and not going to use. If you can start this process well in advance, you may have the option to sell some of your unwanted belongings. Even if you can’t, however, moving them on will reduce the amount of stuff you need to move.
Do you need temporary storage?
If you’re moving to a bigger home, you should be able to get all your possessions inside it. If, however, you’re downsizing, you might want to consider using temporary storage. Generally, you want this to be near your new home so you can access it easily. This may require you to move your stuff and have the movers deliver it to two locations.
Using temporary storage allows you to do the bulk of your decluttering after you move. This can be a better option if you have many personal items to deal with. It puts you under less pressure, but the fact that you’re paying for storage can be motivation to tackle the job.
The insurance issue
You should have insurance on your new home from when you exchange contracts. The buyer will be responsible for any issues with the property from that point. You should also ensure that you have insurance coverage for the moving process. If you use professional movers, check that they are insured. Likewise, if you’re using temporary storage, it’s advisable to have insurance cover for that too.
Redirecting post
You probably do just about everything online these days. Even so, it can be worth setting up a postal redirect, at least for the first month, if not the first quarter. Some organizations do still use letters for certain forms of communication.
What’s more, there may be a delay between you informing them of your move and them updating their systems. If letters were already in the pipeline, they might still be at your old address. A postal redirect will catch them.
Think about cleaning
This one is a personal decision, but it’s worth considering. If you want your new home given a proper deep clean before moving into it, you either need to do it yourself or pay someone to do it for you. There is a relatively strong argument for hiring professionals as they may have tools, products and skills you don’t.
Budget for new purchases
Assume you will have to buy some new items for your new home and budget for them. It’s better to have the budget and not use it than to find yourself needing to spend money on unplanned expenses.
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 | Sep 30, 2021 | Mortgage News
Babies are a lot of work. That’s a large part of why parental leave is so valuable. It allows parents to concentrate on parenting. At the same time, life goes on, and new parents need to keep on top of life admin and payments. With that in mind, here is a quick guide to mortgaging, remortgaging and parental leave.
Lenders are concerned about affordability
The first point to tackle is the elephant in the room. Lenders are required to examine a borrower’s ability to repay a mortgage. Parental leave and the expenses of having a baby can significantly impact a borrower’s ability to pay. They can therefore make it harder to get a mortgage.
There is, however, a clear difference between “harder” and impossible. In general, the key to success is understanding the obstacles you are likely to face. Then you can work to overcome them. In general, and as is often the case, the better your planning, the easier the change is likely to be.
Planning impresses lenders
When lenders assess your ability to pay, headline figures are only part of the story. They also look at your ability to manage your finances. In the context of mortgage applications, this means a lot more than “just” paying your bills in full and on time. That said, this is an excellent place to start. It also means showing you’ve thought about what the future might bring.
For example, if you’ve been planning on starting a family, have you been saving hard to build up a significant “cash cushion”? Once your parental leave is over, do you have a plan in place for childcare? If so, how are you going to finance it? Be very careful about relying on family help. Your family may be willing, but they are not guaranteed to be able, especially regarding grandparents.
Have you been able to build up an income stream outside of employment? If so, can you feasibly continue with it while also caring for a baby? How much income can you realistically generate from it? Do you have other assets you can monetise, even temporarily, such as a spare room?
Don’t blow your deposit on the baby
You’ll undoubtedly need some items for your baby, especially if you’re a first-time parent. Keep in mind, however, that new parents are prime targets for advertisers. Ignore paid-for promotions. Visit parenting groups and find out from other parents what you actually need and don’t need. Also, try to buy pre-loved as much as possible.
Consider your timing
This may not be an option for everyone on parental leave. It is, however, at least worth considering if you can. The last trimester of pregnancy and the first three months of a newborn are both joyous and exhausting. If you can’t sort out your mortgage before that time, it might be easiest to wait until later.
Usually, babies start to develop a more predictable rhythm when they are about three months old. They also tend to sleep for longer at a time, particularly at night. These changes can make it much easier for parents to organise non-baby-related aspects of their lives. It will also give a potential lender a better idea of how you’re managing your finances now that you’re parents.
Use a mortgage broker
Even if you tick every box as an ideal mortgage candidate, it can still be worth using a mortgage broker. Firstly, it can save you time. For new parents, there’s probably nothing more precious. Secondly, mortgage brokers can suggest deals you might never have found yourself. For new parents, this can be invaluable.
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. We offer flexible appointments at a time and location to suit your – and your baby’s – busy lives!
by admin | Sep 24, 2021 | Mortgage News
You may need a mortgage for decades but you don’t necessarily have to stay on the same mortgage for all that time. In fact, you should make periodic checks to determine whether or not you’re still on the best deal. If you’re not, you should move as quickly as possible. Here is a brief guide to help.
Plan ahead
This is probably the single most important tip of all. When you sign up for a mortgage you will be told when your initial deal ends. That basically gives you a deadline to work towards. Be sure to allow yourself ample time to do thorough research before your current deal ends. Remember to allow extra time for holiday periods such as Christmas.
Keep your credit rating in good order
There are all kinds of reasons why this is important. Maximising your options for remortgaging is just one of them. At a minimum, try to avoid putting yourself in a situation where you’re going to have to repair damage to your credit rating. Where possible, take proactive steps to boost it. For example, make sure that you’re on the electoral register at your current address.
Check your credit record for errors before you start applying for new mortgages. Do this well in advance so you have plenty of time to get mistakes corrected. Remember, a lot of businesses (and organisations) are probably going to be working through the backlog of COVID19 for quite some time to come.
If you know your credit rating has taken a hit, possibly due to COVID19, then commit to seeing a mortgage broker. They may be able to find you a deal you wouldn’t have been able to access yourself. In any case, you have nothing to lose by trying – and potentially a lot to gain.
Aim to minimise your LTV ratio
The LTV ratio (or loan-to-vehicle ratio) describes the value of your loan as compared to the value of your home. This is where remortgages can have a massive advantage over regular mortgages. If you’ve been in your current home for a while, you’ll have paid off some of your mortgage. There’s also a decent chance that your home will have increased in value.
This means that even if you haven’t been able to make savings over the last year or so, you could still be an attractive prospect to a lender. If you have been able to make savings, you might want to consider putting them towards reducing your mortgage.
You would have to move carefully here. If you leave yourself short of savings, you could end up having to take out consumer credit. This could leave you worse off than if you’d just paid extra on your mortgage. On the other hand, if you can reduce your mortgage principal and maintain a decent “cash cushion” you could save yourself a lot of money.
Speak to your current lender
Never just assume that your current lender will offer you the best deal on your remortgage. At the same time, never just rule them out either. Find out what they can offer you so that you can compare it with your other options.
Check-in with a mortgage broker
It is literally a mortgage broker’s job to know the mortgage market inside out. Even if you’re a highly desirable customer, using a mortgage broker can save you a lot of time. If you know that you have hurdles to overcome, then a mortgage broker can help move them out of your way.
In particular, if you’ve seen your credit rating and/or finances damaged by COVID19 definitely speak to a mortgage broker about your options. They may still be able to find you a much better deal than your lender’s Standard Variable Rate.
For more information, please get in touch
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