by admin | Apr 18, 2021 | Mortgage News
If you don’t like the term “haggling”, think of it as “negotiation”. That’s essentially what it is. In simple terms, the seller (or their agent), is trying to achieve the highest possible price for their home. You are trying to achieve the lowest possible price for the property. This is not about “win/lose”. It’s about reaching an agreement. Here are some tips to help.
Prepare thoroughly
Guide prices are a guide to what a seller (or their agent) wants for the property. You should therefore regard them as sources of information rather than as instructions. What you really need to know is the state of the local market and the seller’s situation. You can find out a lot about the first point with some thorough digging around the internet.
The key point to understand is that you need recent, local data. Recent data tells you what the market is doing now, not what it did in the past. Local data tells you how the market is performing in the locations which interest you. To take an extreme example, there’s no real point in looking up data from London if you want to buy property in Aberdeen.
In fact, if you’re looking at buying in a city, then you want data at local-authority level if not postcode level. Be aware that there can be significant differences in property prices in different areas of a city. You need to be sure that you’re comparing like with like.
Get preapproved for a mortgage
If you need a mortgage, then get preapproved for one. This marks you out as a serious buyer and reassures sellers. Think about whether or not there are any other steps you could take to make a seller’s life easier. For example, can you be flexible with your move date?
Understand the seller
It’s always safer to deal with a seller who has a clear reason to move. This reduces the chances of them pulling out of the sale, leaving you high and dry (and possibly out of pocket). The more motivated a seller is to move, the more chance there is that they will be willing to accept a lower price in return for a quick and convenient sale.
There are, however, a couple of caveats here. Firstly, a seller may have a baseline price below which they cannot, or just will not, go. For example, they may need (or just want) enough to clear their mortgage. Secondly, the more competition there is for a property, the more likely it is that someone else will offer both a higher price and a quick and convenient sale.
Keep a clear head
Until the sale is complete, in fact, arguably until you’ve moved in, you’re buying a property. It may be someone else’s home, but it is not yours. Keep that in mind at all times.
Obviously, you should only be looking at properties where you would be happy to live. You must, however, avoid getting emotionally attached to them. Your attitude needs to be that you want a good deal for your money and will go on looking until you get one.
If any given property is out of your budget (or just overpriced) and the seller is not prepared to reduce the price, then just move on. If you really liked the property, then keep an eye on the listing. If the seller does not get a sale, they might become more flexible on price further down the line.
By the same token, however, be careful about focussing so much on getting a bargain that you lose out on a great property you could have afforded.
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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by admin | Mar 12, 2021 | Mortgage News
The latest budget was, unsurprisingly, a lot more focussed on COVID19 than on the housing market. It is, however, also important for property professionals. Here’s a round-up of the key points.
An extension to the Stamp Duty holiday
Arguably it was almost inevitable that the chancellor would need to grant some sort of extension to the Stamp Duty holiday. After all, the logic behind this is, fundamentally, exactly the same as the logic behind the recent extension of the current Help to Buy scheme. The construction industry has been badly hit by COVID19 and now also has to deal with the full impact of Brexit.
This has resulted in delays both to the construction of new-build properties and to the legal completion process. Rather ironically, the Stamp Duty holiday may have exacerbated the latter problem by stimulating activity in the housing market.
With buyers facing the prospect of losing out on the Stamp Duty holiday through no fault of their own, arguably, the government had to act. If it hadn’t then, at best, it could have had a lot of upset buyers on its hands come election time. At worst, it could have led to buyers pulling out of sales due to being unable, or unwilling to pay the increased Stamp Duty.
What is interesting is that Rishi Sunak chose to extend the holiday until the end of June. Then there will be a further three months where the threshold is set at £250K. This means that even new entrants to the market could potentially benefit from it. It also means that there could be another “cliff-hanger” in three and then six months time.
Help for “Generation Buy”.
Back in October 2020, at the (virtual) Conservative party conference, Boris Johnson announced his intention to turn “generation rent” into “generation buy”. He indicated that the government would achieve this by introducing a scheme to guarantee mortgages of up to 95% of the property price.
Fast forward to March 2021 and the chancellor has now indicated what this means in practice. Essentially, the government is bringing back David Cameron’s Mortgage Guarantee scheme. Like the old scheme, it will be available to onward movers as well as first-time buyers. It will also be available on purchases of existing property. The current limit is set at £600K.
ISAs stay untouched
Given that the adult ISA limits have been the same since 2017, it was always highly unlikely that the chancellor was going to feel under any obligation to increase them. The one change was that the penalty for making irregular withdrawals from the Lifetime ISA will be going back up to 25% in April. It was temporarily reduced to 20% to help those affected by the pandemic.
The chancellor did announce the introduction of new NS&I “green bonds”. These are intended to help the UK meet its target of becoming carbon neutral by 2050. At present, it’s unclear whether or not these will have any direct impact on the housing market.
It is, however, worth noting that the government’s commitment to its “net-zero” target requires a switch to electric vehicles. This in turn requires the development of mass-scale charging infrastructure. Areas that get ahead of the curve here could see local house prices rise accordingly.
Widespread tax adjustments
The chancellor’s largesse on Stamp Duty has not extended to other personal taxes. Capital Gains Tax exemptions, Inheritance Tax and the Pensions Lifetime allowance all stay at 2020/2021 levels. The tax-free personal allowance and the higher-rate income tax threshold both stay at 2021/2022 levels.
At present, these freezes are scheduled to stay in place until 2025. This effectively means that people could find their take-home earnings eroded over time. In itself, this does not augur well for affordability. On the other hand, much will depend on how well the economy performs overall.
by admin | Aug 14, 2020 | Mortgage News
If you have a mortgage, then it’s likely to be a significant part of your monthly outgoings. This means that getting the very best product for your situation can make a real difference to your finances and can definitely be worth making a bit of effort to obtain it. At the same time, remortgaging is not necessarily the right decision for everyone, so it’s important to think carefully before you decide whether or not it’s right for you. Here are some points to consider.
Can you exit your current mortgage?
As always, before you consider whether or not you should, it’s advisable to check whether or not you can, or at least whether or not you can without penalty. If you got a special deal on your mortgage then you may find that there is a lock-in period during which you can only exit the product if you pay a penalty. You might still want to do your sums to see if there is a case for remortgaging, but you should be realistic about the impact such a penalty might have.
Could you get a mortgage now?
The affordability criteria have been in place for several years now, however, these are minimum standards, not targets. In other words, there’s nothing whatsoever to stop lenders from tightening up their acceptance criteria beyond the minimum requirements. It’s, therefore, a good idea to do some research on what deals are available now and who is likely to qualify for them.
You also need to be realistic about how you’ve managed your finances since you’ve had your current mortgage. If you’ve found yourself in challenging financial times and that has been reflected in your payment history, then you may find it difficult to find a lender who will take you on now. Your situation may be somewhat easier if you took an arranged payment holiday due to COVID19-related issues. It does, however, very much remain to be seen how lenders are going to deal with these over the long term.
Be aware, however, that a good mortgage broker may be able to find deals which you would never have found on your own, so don’t give up if the market looks tough.
Are you able to cope with the current practicalities of remortgaging?
When you remortgage, you basically go through the standard mortgage application process all over again. This means getting a valuation and this means getting a surveyor on-site. This means dealing with all the COVID19 protocols. Are you able to implement them? If you’re not confident about this, then it’s safer to hold off remortgaging until you are (or until COVID19 ceases to be an issue). At the end of the day, while remortgaging can save you a lot of money, nothing can compensate you (or anyone who visits you) for the damage COVID19 can do.
Can you get a better deal from your current lender?
Before you make a final decision on whether or not to go ahead with the remortgaging process, it may be worth checking in with your current lender to see if they can make you a better offer. That could give you the benefits of remortgaging without the cost and paperwork.
Are you remortgaging for the right reasons
Last, but very definitely not least, it’s important to be scrupulously honest with yourself about why you’re remortgaging. There’s a big difference between remortgaging to save money on a mortgage you’re confident you can afford and remortgaging to try to make ends meet.
If your finances are that tight, then you really need to get financial advice and look at all your options very carefully. You may find that you can keep your home, but even if you can’t, you can vastly improve your chances of selling and moving on our own term, rather than waiting for foreclosure.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Jul 3, 2020 | Mortgage News
The UK has been in some form of lockdown since 23rd March. It’s impossible to know for sure what impact that had on the spread of the Coronavirus. It is, however, very clear that it has had a significant impact on people’s finances. The challenge now is to transition back into “business as usual” while still supporting those who need a bit of extra help.
The economic impact of COVID19 (so far)
Over 10 million people have received financial assistance through the Coronavirus Job Retention Scheme (about 8 million) or Self-Employed Income Support Scheme. The CJRS was due to close at the end of July but has now been extended until the end of October. That said, the nature of the scheme is due to change slightly.
At present, the government is paying 80% of salaries up to £2500 per month and employers may (or may not) top this up to the full amount. Employers cannot ask furloughed employees to do any work for them, but employees can take second jobs and/or freelance. From August, employers will start to have to make contributions towards the scheme, but they can also start bringing employees back to work on a part-time basis. Alternatively, they could make them redundant.
Only time will tell, but, at present, it is impossible to rule out the possibility that the requiring employers to contribute directly to the furlough scheme (as opposed to indirectly through taxes) will lead to businesses reassessing their staffing needs and potentially deciding to cut back. This means that lenders may need to be prepared for more borrowers getting into difficulty, if only temporarily.
FCA measures to protect mortgage holders
Since March, both residential and buy-to-let mortgage-holders have been able to request mortgage holidays (provided that they were up-to-date with payments). Initially, these were for up to three months. In June, the FCA extended the respite period to the end of October.
Although payments are stopped, interest continues to accrue (unless the lender agrees to waive it which they are not obligated to do).
Provided that borrowers follow the correct procedure (i.e. agree the holiday with their lender rather than just cancelling payments), the payment break will be ignored by the credit-scoring agencies.
At the end of the holiday period, the borrower and the lender have to agree on a way forward. In particular, they need to establish whether the borrower can afford to go back on a standard repayment plan. If so, they need to determine how the borrower will make up the missed payments (e.g. by adding them to their regular payments or by extending the mortgage term). If not, they need to work out what potential solutions are available.
A cautious note of optimism
Although the post-Coronavirus environment could be a challenging one for lenders to navigate, it does not have to be a disaster. There are grounds for at least cautious optimism. For example, according to statistics from the Bank of England, during April, consumers paid back a record £7.4 billion in consumer credit and also increased deposits in banks and building societies by £37.3 billion.
The fact that people were able to make these payments shows that some people at least had some level of income over and above what they needed to cover their basic necessities.
There are still people in work and as more businesses reopen more people should be able to get back into earning money through active employment (as opposed to through support schemes). Even where jobs are lost, the employees in question may have savings and/or insurance to help tide them over. They may also receive redundancy payments to ease the transition.
Your property may be repossessed if you do not keep up repayments on your mortgage.
The FCA does not regulate some forms of buy to let mortgages.
The FCA does not regulate letting agents and we act as introducers for them.
by admin | Dec 27, 2019 | Mortgage News
All things considered, it’s probably fair enough that the news has been dominated by the question of what Boris Johnson’s election victory means for Brexit. It’s probably also fair to say that Brexit will have a huge influence on the UK over the coming years, if not decades.
It is, however, also important to note that Brexit is only one issue among many. The economy in general and the housing market, in particular, are also key issues for UK residents and while they will almost certainly be influenced by Brexit, they will also be influenced by various other factors, not least of which being government policy and practice. With that in mind, here’s a quick overview of what the election could mean for mortgages.
The Brexit issue
Having just said that Brexit is only one issue among many, there’s no getting away from the fact that it is likely to be a very important issue. Given that the Conservative win makes a hard Brexit massively more likely, it’s probably safe to assume that this will have an adverse impact on the Pound, at least over the short term. This assumption can be supported by a look at the way the currency markets have reacted to Brexit-related news and, in particular, the way the Pound has dived since it was announced that Boris Johnson intended to try to make it illegal to delay Brexit any further.
In and of itself, a weak Pound is bad news for some and good news for others. It does, however, have the potential to push up inflation and if that happens there will be one of two outcomes. Assuming that the government sticks to the current rules on inflation (i.e. a target of 2% with a 1% margin of error either way), this would effectively force the Bank of England to raise interest rates, which, of course, is bad news for borrowers. That being so, borrowers might want to look for a fixed rate, possibly a longer-term fixed-rate, to give themselves reassurance.
Any remortgaging decision should be taken with care and not just because there tends to be quite a bit of upfront expense and paperwork. Fixed-rate mortgages can be relatively expensive, partly because they are still something of a niche market and partly because they essentially combine two products, a mortgage and an insurance policy. At the same time, however, while there is a limit to how far interest rates can drop (unless you believe the government would use negative interest rates), they can rise indefinitely.
The affordability issue
Whatever your views on Brexit, hopefully, you will benefit from the fact that the saga appears to be coming to a close and that, one way or another, we can all move on. As is always the case in life, this is likely to be easier for some people than others. For example, people in professions for which there is high demand globally may feel confident about their ability to “keep calm and carry on”, whereas other people may feel rather more vulnerable.
If you already own your home and are having concerns about how to pay your mortgage over the long term, then it might be a good idea to speak to a professional financial adviser. They might be able to help you find options you might otherwise have overlooked, which could be anything from taking advantage of the rent-a-room scheme to looking for a mortgage product with some degree of flexibility, such as an offset mortgage.
If you are looking to buy your first home and are concerned that Brexit could make it harder for you to get a mortgage, then you may want to look at products such as the Lifetime ISA and/or the Help-to-Buy scheme, to see if they could make it easier to build a substantial deposit and thus increase your attractiveness to lenders.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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