by admin | May 3, 2020 | Mortgage News
Stamp duty may not be the most exciting topic in the housing market, but it can make quite a difference to how much you end up paying for your home. Here’s a brief guide to what it is, how it works, what that means in practice and what the future might bring.
Stamp duty is actually a shorthand for different taxes
In England and Northern Ireland, Stamp Duty means Stamp Duty Land Tax and there is an online calculator here. In Wales, it means Land Transaction Tax and there is an online calculator here. In Scotland, it means Land and Buildings Transaction Tax and while this in no official calculator, you can find the current rates listed here.
Stamp duty works along essentially the same lines in all parts of the UK, but the bands are different (plus they are subject to change), hence you always need to check the rates in force at the time of your intended purchase and in the location of your intended purchase.
You should also be aware that different rates of tax may apply depending on what kind of purchase you are making, e.g. a first home, a main home (but not your first home) or an additional home.
How and when you pay stamp duty
From a buyer’s perspective, the process itself is actually quite easy. You just send the money to your solicitor and they send it on to HMRC when the property completes.
What stamp duty means in practice
In simple terms, you need to work out if you are due to pay stamp duty (if you are a first-time buyer you may not be) and if you are then you need to work out how you are going to pay it.
Basically, the two approaches are either to add it to your mortgage or to pay it out of your cash savings. In either case, you would need to meet the appropriate lending criteria regarding Loan To Value ratio (LTV) and affordability. You would also have to accept the fact that either way you are going to impact your LTV ratio and this may impact your ability to get the very best deals.
Having said that, while mortgages are sold as long-term products, there is absolutely nothing to stop you re-mortgaging at a later date when you have built up equity in your home and this fact may be enough to prevent you from needing to as it may encourage your lender to agree to negotiate an improved rate in acknowledgement of your improved situation (re the LTV ratio and possibly increased income as well).
For the sake of completeness, the example of stamp duty is a good reminder to think about all the possible transaction costs involved in buying a home and the importance of making sure that you have funds to pay them.
The future of stamp duty
Interestingly, there are proposals to switch stamp duty to a tax paid by the seller.
The argument behind this change is that people who are moving from smaller homes to larger ones would pay stamp duty on the smaller home (they are selling) rather than the larger one they are buying, while people moving into smaller homes will be paying less for the property they are buying.
This may sound good in theory, however, it’s hard to see what would deter sellers of any description from simply incorporating the cost of the stamp duty into the sales price of the property. If they did so, then, rather ironically, the buyer (who is the person ultimately paying for the property) might end up paying more as the property could be pushed into a higher stamp duty band, so you’d effectively be paying stamp duty on the stamp duty.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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by admin | Apr 19, 2020 | Mortgage News
The havoc being wreaked by the Coronavirus is not being contained within the walls of hospitals or even with the walls of people’s homes. It’s spreading into all aspects of life in the UK and hurting people emotionally and financially even if it is not impacting them physically. While there is little the government can do about the virus itself, at least for the time being, it is trying to help people manage their finances during this difficult time and, in particular, to allow them to stay in their own homes.
Help for renters
As of 26th March all proceedings for, and enforcement of, possession orders has been suspended for a period of 90 days. Also since 26th March landlords have been obliged to provide tenants with three months’ notice in advance of starting eviction proceedings. This measure is due to last until 30th September. Both measures could potentially be extended if necessary. Landlords themselves can apply for a payment holiday on their mortgage in the same way as people with residential mortgages.
Help for homeowners with mortgages
The Bank of England cut interest rates on 11th March (from 0.75% to 0.25%) and then again on 19th March (from 0.25% to 0.1%). This may not be great news for savers, but it could help borrowers who can “just about” make ends meet.
Borrowers who have been able to make ends meet (i.e. who are up-to-date with their payments) but who have experienced a loss of income due to the Coronavirus, can contact their lender and request a payment holiday of up to three months. They will need to self-certify that their request is due to being impacted by the Coronavirus.
Help for borrowers
At the moment, help for borrowers is largely being provided by the lender themselves, which means it’s variable depending on what product you have and with which lender. The Financial Conduct Authority (FCA) is, however, attempting to bring some level of standardization to what is on offer. They have contacted lenders with the following suggested changes:
Customers who have already been financially affected by the coronavirus should be able to use arranged overdrafts on an interest-free basis for up to three months and all overdraft customers should be left no worse off than they would have been prior to the recent changes made to overdraft pricing.
Customers facing financial difficulties as a result of coronavirus should be offered a payment holiday for loans and credit cards. This should last for up to three months.
Customers who access these temporary measures should not see their credit rating adversely impacted.
While the FCA’s list is phrased as “proposals”, it’s rather hard to see how lenders could refuse, particularly since they could probably take it as read that these proposals could be turned into emergency legislation if they did. They could also reasonably expect a sharp backlash against their business given that the industry benefited from a taxpayer-funded bailout in 2008.
That said, the FCA’s proposals, while undeniably welcome, do raise further questions, particularly with regard to those in persistent debt. The FCA has already advised that credit card lenders should refrain from suspending the cards of people who’ve been in persistent debt for more than 36 months, which, in principle, offers them a lifeline. In practice, however, it could lead to them having to pay back even more interest, thus placing them in an even worse position further down the line.
Similarly, if people in persistent debt take payment holidays, but the interest continues to be applied to their account, then they could also end up substantially worse off, especially if they are near their credit limit and the interest pushes them over it so that further fees are applied, if not immediately, then later on.
The FCA does not regulate some forms of buy to let mortgages
Your property may be repossessed if you do not keep up repayments on your mortgage
by admin | Apr 3, 2020 | Mortgage News
Although the budget was dominated by the Coronavirus, it actually contained a much broader range of content.
With the situation as it is, some of this may change, but here is a quick guide to what it means for mortgages and property.
Interest rates have been cut from 0.75% to 0.25% (and have since been cut again to 0.1%)
Strictly speaking, this decision was taken by the monetary policy committee of the Bank of England, rather than the Chancellor Rishi Sunak, but the announcement was made on the same day and also influenced by the “economic shock” caused by the Coronavirus. This decision obviously has implications for mortgages and property, but as yet it’s unclear what they will be.
On the face of it, cutting interest rates should be good for borrowers, which includes anyone who has a mortgage and, in principle, should add stimulus to the property market. Certainly, anyone who currently has a tracker mortgage should see their repayments go down per their lender’s schedule for implementing changes to the rate charged. Fixed-rate mortgages, however, will stay as they are, basically, that’s the gamble you take with them.
In principle, if you already have a fixed-rate mortgage then you could take this as an opportunity to take out another fixed-rate deal. In practice, however, this may not be as straightforward as it sounds. First of all, it’s anyone’s guess how long this rate will last, which means that lenders are likely to take a cautious approach to offering fixed-rate mortgages at a rate which could leave them very exposed when interest rates go up. Secondly, you would have to go through the full remortgaging process.
Low-interest rates can feed into high inflation
If low-interest rates weaken the Pound, then imports will become more expensive. This could lead to higher prices for key consumer products, including food.
In principle, a weak pound could benefit exporters and the inbound tourism industry, but in practice, the Coronavirus (plus Brexit) could negate them.
High inflation is not necessarily totally bad news for homeowners, especially when it occurs alongside low-interest rates. If it increases the paper value of a property, it may make it easier for homeowners to remortgage at more attractive rates (or to get a better deal on equity release) but this, of course, does assume that the borrower’s own financial circumstances are good. In other words, that they meet the affordability criteria and can realistically service their mortgage.
There is a commitment to spending on infrastructure
Although HS2 was given the go-ahead before the budget, Chancellor Rishi Sunak had plenty of other infrastructure announcements to make. Probably the headline announcement is that he will commit £600bn to the improvement of roads, rail, broadband and housing by the middle of 2025. There will be a £1bn fund to remove all unsafe combustible cladding from all public and private housing higher than 18 metres. This has been dubbed the “Grenfell fund” and while some might criticize the government for taking so long, at least it has acted now, so credit where it is due.
There will also be £27bn for motorways and other arterial roads, including a new tunnel for the A303 near Stonehenge and £2.5bn to fix potholes and resurface roads in England over five years. Infrastructure improvements tend to boost the value of property in the vicinity, so all this is likely to be good news for homeowners. Property owners in rural areas may be particularly happy to hear that the Chancellor has committed £5bn to getting gigabit-capable broadband into the hardest-to-reach places.
There will be a 2% stamp duty surcharge on international property buyers
As of April 2021, anyone not domiciled in the UK will pay an extra 2% stamp duty if they buy a property in England or NI.
Your property may be repossessed if you do not keep up repayments on your mortgage
by admin | Mar 20, 2020 | Mortgage News
We wanted to ensure that our clients and others that may have concerns right now have information that they need, so we’re sharing some ways in which we can help.
The Bank of England has slashed interest rates to combat coronavirus ‘shock’ – what it means for you.
The Bank of England has cut the base rate to 0.1% in an emergency response to the “economic shock” of the coronavirus outbreak. This makes the interest rate the lowest ever in the Banks 325-year history. In a dramatic move by the new governor, Andrew Bailey, the surprise cut was a response to the “economic shock” of coronavirus and would “help to support business and consumer confidence at a difficult time, to bolster the cash flows of businesses and households, and to reduce the cost, and to improve the availability, of finance”. In response, many lenders have reduced their rates, and we are seeing incredible low fixed and discounted rate products. Now is a great opportunity to look at taking advantage of the rate cut and potential to re-mortgage to a lower rate, to provide a saving on your monthly payments and some certainty for your payment amounts in the challenging weeks and months ahead.
Protecting your health and income
Having a mortgage that is covered and will be paid in the event of you not being able to work or if you have a critical illness or worse is so very important. I am / we are very happy to discuss your needs over the phone so there is no need to travel to come in to see me/us and if there are plans we can help to arrange for you we can manage everything for you from here.
As the situation develops, understandably, we have received many questions in relation to protection policies and customer queries. We have tried to generally summarise some of them below, in a format you can share with customers:
If I am diagnosed with Covid 19 – Do I have to tell my existing Insurers?
Life Insurance Policy owners
No – you advised Insurers at the time of your application about your health situation. As long it was accurate, then no further action is needed.
Reports currently show that the vast majority of fit and healthy people recover. If sadly you passed away from Covid 19 – the Insurers will payout as per any other valid claim.
Check if your plan was written into trust. If so, your trustees need to be notified. Also, please check any wills made are up to date.
Critical Illness Policy owners
No – you advised Insurers at the time of your application about your health situation. As long it was accurate, then no further action is needed
Covid 19, specifically, is not classed currently as a critical illness, so you cannot claim. Reports currently show that the vast majority of fit and healthy people recover.
However, if for whatever reason associated health issues occur that your Critical Illness policy could then cover, then you could make a potential claim.
If sadly you passed away from Covid 19, the Insurers will payout as per any other valid claim if your plan is also combined with life insurance.
Income Protection & Accident Sickness Policy owners
Covid 19 is classed currently as a valid income sickness claim.
Check if your policy offered cover starting at Day 1 or after 1 week waiting claim period ( often the most expensive option )
Alternatively, if it was after 4 or 8 or 13 weeks etc; you may still be able to claim if your health situation is ongoing.
Sadly if you then pass away from Covid 19, some Insurers will payout as per any other valid claim if your plan also included any life insurance element.
If I have to self isolate – Do I have to tell my existing Insurers?
Income Protection & Accident Sickness Policy owners
Yes – Coronavirus self-isolation is classed currently as a valid income sickness claim for some Insurers.
If your policy offered cover starting at Day 1 or after 1 week waiting claim period, you may be able to make a valid claim.
Alternatively, if it was after 4 or 8 or 13 weeks etc; you may still be able to claim only if your situation is ongoing.
Note: many Insurers are now excluding self-isolation on their new plans
Negative Mental Health impact of Covid 19 – Stress & Anxiety
Psychotherapists and charities such as Mind have said that the coronavirus outbreak may be having a negative impact on
our everyday mental health and wellbeing ( especially for those who have currently or previously mental health conditions ).
The World Health Organisation (WHO) also acknowledged that this Pandemic is causing stress. They advise people to avoid news that causes feelings of stress and anxiety.
Many protection policies may offer mental health helplines or provide health information services as part of the premium.
What if I temporarily lose my income & livelihood – I may not be able to pay for my Protection Policy & have to cancel it?
Millions of people across the world it seems are going to be in the same situation, as this is unprecedented for most in our lifetime.
Contact your Bank, Mortgage Lender, Loan Company, Credit card etc; immediately – about how Coronavirus is impacting your family finances
All lenders currently have already implemented some backup support systems to help ordinary people out financially in the short term
https://www.lloydsbank.com/help-guidance/coronavirus.html#manage
https://home.barclays/news/2020/03/supporting-customers-affected-by-coronavirus/
https://www.halifax.co.uk/helpcentre/coronavirus/Default.asp
https://supportcentre.natwest.com/Searchable/1459340472/I-m-worried-about-Coronavirus.htm
https://www.tsb.co.uk/coronavirus/
https://www.business.rbs.co.uk/business/support-centre/service-status/coronavirus.html
https://www.santander.co.uk/about-santander/media-centre/press-releases/santander-uk-outlines-support-for-customers-during-coronavirus-outbreak
https://www.bbc.co.uk/news/business-51817947
https://www.british-business-bank.co.uk/ourpartners/supporting-business-loans-enterprise-finance-guarantee/
https://protectionguru.co.uk/coronavirus-updates/
What if I cancel my Insurance Protection policy temporarily… and then intend to take it out again when things improve financially?
If you sadly become ill or pass away from Covid 19, your protection insurance policy would not payout, as you have no cover at the time of claim (i.e; Catch 22 as you have cancelled it).
Should you then be diagnosed with Covid 19 or in ‘self-isolation’, your Insurers may postpone allowing you to buy any new insurance policy until you fully recover.
Any associated symptoms resulting from Covid 19 could mean any new protection policy is more expensive, or in the worst case, insurers decline to offer another protection policy.
Unrelated to Covid 19, if your health, lifestyle or age changes between taking out the previous policy and any new one, then this will affect the cost of taking out another policy.
Some Insurers may decline to offer another protection policy based on this information or on any market conditions at that time.
Please note: Your current policy may have no surrender cash-in value. Check the small print T&C’s of your policy.
We hope that this answers some of the questions you have. For policy guidance on specific situations, you should contact your provider’s helpline.
So please don’t hesitate to contact us to see how we can help you generate some real certainty in these unprecedented times. We are available by many non-face to face means to talk, as many of us work from home and have some additional time to plan for the future, contact us today to see how we can help.
Additionally, as the impact of the outbreak affects those around us in our extended families, companies and communities, please share this message through conversation and social media we are here to help, support and offer guidance.
by admin | Mar 7, 2020 | Mortgage News
If you’re planning on selling your home in 2020, you’ll presumably be hoping for the best price in the shortest time. Here are some tips on how to make this happen.
Start by pulling your paperwork together
This may seem like a dull tip, but it really does matter, so it’s as well to get it over and done with before you go into full “house-selling mode”. Basically, gather together any and all paperwork which could be relevant to the sale of your home.
First of all, you will need to pull together any legal paperwork, which may have been mothballed since you moved in (especially if you have lived in a property a long time). You might want to have a lawyer double-check it to see if there are any issues which could be red-flagged by the current generation of buyers and see if there are any steps you can take to remedy them before you put the property on the market.
After this, you will need to compile any administrative documents regarding your home and its contents. This could include your EPC, warranties for any building work you had done, receipts and warranty information for any white goods you are selling with the house and so on.
For bonus points, you could take this a step further and create a folder containing all the factual information a buyer could reasonably be expected to want to know about your home and the local area.
Focus on presenting what you have rather than upgrading your home
Unless you are selling a property as in need of refurbishment, you will want your property to be in its best “move-in” condition. What that means in practice is that you want to take care of any maintenance issues (if they’re not spotted on the viewing they may well be picked up later and delay the sale) and you want to take all reasonable steps to keep your home clean, tidy and odour-free during the sales period.
It is unlikely to be in your best interests to do any major home improvements. First of all, they may not increase the value of your home by as much as the vendor might have suggested. Secondly, if they do, they could end up putting your home out of the budget of some potential buyers and/or increasing the Stamp Duty payable on it. Thirdly, if they go wrong, they could be a serious hindrance to the sales process.
What you could do is look at potential improvements a buyer might want to make to your home, see if they would need planning permission and if so see if you can either obtain permission for the change or give a compelling reason why permission would be likely to be granted.
Let the estate agent do the selling
There are two good reasons for having your estate agent take charge of the actual sales process. The first is that it is literally how they earn their living, so they will get a lot of practice at it and will probably do a far better job than the average homeowner. Even if you work in sales, home sales is a specialist niche and benefits from specialist knowledge
Secondly, potential buyers may be more inclined to talk freely in front of an estate agent, who will not have an emotional connection to a property, than to a homeowner, who probably will. If buyers have concerns about a property you want them to feel able to voice them so that they can be addressed, rather than have them walk away and look at another property instead.
Your property may be repossessed if you do not keep up repayments on your mortgage.
For estate agents we act as introducer only
The FCA does not regulate estate agents
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