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
by admin | Sep 17, 2021 | Mortgage News
It’s lovely if you can pay off your mortgage before you retire. In reality, however, that isn’t always feasible. This means that it can be useful to look at your options for dealing with a mortgage while in retirement.
Downsizing
If you want to move to a smaller property anyway, then astute downsizing can go a long way towards dealing with an outstanding mortgage. The key word in that sentence, however, is “astute”.
To make downsizing work financially, you need to find a suitable property at a suitable price. This price needs to be low enough to make it worth your while to pay all the expenses associated with moving. Ideally, the property should also have low running costs. If not, then it should have the potential to be upgraded and this should be reflected in the price.
If all these conditions are met, then downsizing can be a way to release equity from your current home while still allowing you the benefits of home ownership. Even if it doesn’t pay off the mortgage completely, it should lower your repayments and hence make them easier to manage.
Selling up and renting
This is essentially a variation of downsizing. You swap mortgage repayments for more affordable rent payments. You also release the equity in your old home to use as you wish. Although you might feel hesitant about returning to renting it does have its advantages.
In particular, disposing of your property can make a significant difference to a future Inheritance Tax bill. If you choose to make gifts out of the equity now and live for a further 7 years, those gifts are excluded from IHT calculations. Even if you die within 7 years, the gifts may still be eligible for taper relief.
Equity release
Equity release plans come in two main forms. With a lifetime mortgage, you borrow against the value of your home. The interest can be waived until you die, at which point it is paid out of your estate. Alternatively, you may be able to make repayments during your lifetime.
With a home reversion plan, you essentially sell a stake in your home. When you move on, the proceeds from the sale of your home are split between you and the lender in an agreed percentage.
Although the basics of both products are simple, using either form of equity release can have major financial implications. For example, the cash you receive by releasing your equity can affect your entitlement to means-tested benefits. It’s therefore essential to get professional advice before making any decisions.
Retirement mortgages
Retirement mortgages are essentially variations of regular interest-only mortgages. The key variations are that there is no set term and that there is no need to have a plan to repay the capital. Instead, you make interest payments each month for as long as you remain in the property and then when you move on, the property is sold to pay off the capital.
It is, however, important to note that, as with regular mortgages, your home may be at risk if you do not keep up repayments. You can, however, exit the mortgage by selling the property. If you do, you could potentially benefit from capital appreciation although this is not guaranteed.
Monetising your property
If you don’t want to give up your property, you might want to consider turning it into a source of income. Possibly the most obvious way to do this would be to take advantage of the government’s “rent-a-room” scheme. Depending on where you live and the type of property you own, there may be others.
The disadvantage of this approach is that it could put you to some inconvenience you’d rather avoid. For example, you might not particularly want to have lodgers in your home. You may, however, decide that overall the pain is worth the gain.
For equity release products we act as introducers only
by admin | Aug 26, 2021 | Mortgage News
Life may not be easy for first-time buyers. You do, however, potentially benefit from several government schemes. That said, it’s vital to understand what these mean in practice. They have potential drawbacks as well as advantages. With that in mind, here is a quick rundown of the main options.
The Lifetime ISA
The Lifetime ISA is essentially a government-boosted savings scheme. You can save up to £4K each (tax) year and get a 25% bonus added. In other words, you can get up to an extra £1K per year.
Lifetime ISAs can only be used either for the purchase of a first home or to finance retirement. If you withdraw funds for any other reason, there is a 25% penalty applied to the whole sum. This means that you are effectively charged to withdraw the money you put in.
For example, you pay in £4K and get the £1K bonus. You then need to withdraw your money. The 25% penalty is £1250 so you lose £250 of your own money. This may be amended in future. For the time being, however, it is a consideration you should keep in mind.
The Mortgage-Guarantee scheme
This is often known as the 95%-Mortgage scheme and is essentially a reboot of the old Help-to-Buy scheme. It works along the same lines. If buyers can put down a 5% discount, the government will guarantee up to 15% of the remaining mortgage. This means that the effective loan-to-vehicle rate is 80% rather than 95%.
Keep in mind, however, that this guarantee is for the lenders rather than the borrowers. In other words, if you default, they will be protected to the extent of the guarantee. You will still have to deal with the standard consequences of default.
The Help-to-Buy Equity-Loan scheme V2
This is essentially the same as the original Help-to-Buy Equity Loan scheme. The two main differences are that it is only open to first-time buyers and that it has regional price caps. In short, if you can put together a 5% deposit, you can borrow up to 20% of the purchase price of your home from the government. You need to get a standard mortgage for the reminder.
There are, however, three key points to remember. Firstly, the Help-to-Buy Equity-Loan scheme V2 is only available on new-builds. Secondly, the government will own an equivalent stake in your home. This means that any increase in your home’s value will result in you paying more to buy out the government’s stake in it.
Thirdly, if you can’t repay the loan within 5 years, you will have to pay interest on it. Currently, any repayment has to be at least 10% of the home’s market value at that point. If you can’t afford that, then you will have to keep paying interest on the full amount until you can (or you sell).
The First-Homes scheme
The First-Homes scheme currently only applies in England. It offers first-time buyers a discount of 30%-50% on new-build properties. The standard discount is 30% but local authorities have the option to increase this to a maximum of 50% as long as they can justify the decision. The discount must be passed on to any future buyers.
There is a price cap of £250K outside London and £420K inside London. There is also an earnings cap on candidates of £80KPA outside London and £90KPA inside London. Local authorities have the option to prioritize certain groups of first-time buyers for the first three months of property marketing. After this, they must allow any qualifying application.
The main potential disadvantage of the First-Homes scheme is that it may be very hard for regular first-time buyers to qualify for it. For example, local authorities may use it to encourage key workers to stay in higher-cost areas.
For advice, please get in touch.
by admin | Aug 6, 2021 | Mortgage News
The saga of mortgage prisoners has been rumbling along since 2014 (when the recommendations of the Mortgage Market Review were implemented). Understandably, it has rather taken a backseat to both COVID19 and Brexit. It now appears to be back on the agenda with the industry, the FCA and the houses of parliament.
News from the mortgage front
Back in April, the plight of mortgage prisoners was highlighted, again, due to a brief skirmish between the government and the house of Lords. When the Financial Services Bill was presented to the Lords, they backed an amendment calling on the government to cap the Standard Variable Rate (SVR) lenders could charge mortgage prisoners.
This amendment was, however, rejected by parliament, leaving mortgage prisoners stuck with the status quo. In July, however, both the Treasury and the FCA made public statements indicating that the matter was still very much in their sights. In fact, the FCA is due to submit a review to parliament in November.
What will the review contain?
Obviously, the exact contents of the review will only become public when it is complete. It is, however, safe to assume that it will include an estimate of the size of the problem. The FCA previously estimated that there were around a quarter of a million mortgage prisoners (in July 2020). It now acknowledges that the number may be greater.
The FCA has also indicated that it will look at the effectiveness of the steps already taken to release mortgage prisoners. Presumably, this will provide some level of insight as to what is and is not working at the moment. It may therefore inform any changes the government may choose to make.
What changes could the government make?
Realistically, the government only has two options. The first is to change the affordability criteria, at least for mortgage prisoners. The other is to take steps to make it easier for mortgage prisoners to satisfy standard affordability criteria. Both options raise clear questions and potential issues.
The first option raises the question of who will be responsible if a former mortgage prisoner defaults on a mortgage they would never have given under current rules. If this risk is placed on the lender, then lenders might choose to play it safe and decline the application. This would therefore effectively send mortgage prisoners right back to square one.
The government could get around this by offering some kind of guarantee to lenders. There is certainly precedent for them doing so. The government already offers support to first-time buyers and certain other buyer groups. They could extend this to mortgage prisoners.
The issue here is that subsidising one group of buyers effectively gives them an advantage over other groups of buyers. This does not necessarily go down well with those other buyers, especially not if they are paying for the subsidy through their taxes.
What options are likely?
The government has to deal with the financial consequences of COVID19 and Brexit along with wider issues such as social care and major projects such as HS2. It, therefore, seems safe to assume that it will wish to avoid taking on any more financial commitments than it can help.
This would suggest that the path forward may be to restructure affordability rules albeit with heavy caveats. For example, the government may allow lenders to relax affordability rules if a borrower is already making repayments of the same amount or more. Obviously, the borrower would need to demonstrate a consistent track record of making those repayments.
Another option might be to insist that borrowers have some form of insurance to cover their repayments at least for a certain period. This requirement could potentially be waived for borrowers who have a minimum level of equity in their homes.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage
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