mortgage

Understanding the difference…

Photo source: https://bit.ly/2Go4PME

When searching for the ideal property to buy, aspiring homeowners may be faced with a choice: leasehold vs. freehold. What are the differences?

 

 

Leasehold vs. freehold: the basics

The main difference between leasehold and freehold is that if you buy a leasehold property, you own the property but not the land it stands on. With a freehold property, you own both the building and the land.

In England and Wales, the majority of flats are leasehold, while houses are usually sold as freehold properties.

 

Buying a leasehold property

With leasehold properties, the land the building stands on is owned by a landlord, also known as the freeholder.

You will own the property for the length of a lease agreement with the freeholder. After the lease expires, ownership of the property will revert back to the freeholder.

You’ll pay ground rent to the freeholder, although this usually won’t be very much. The freeholder will also be responsible for maintaining and running the building, so you can expect to pay a service charge to contribute to the cost of this.

 

 

Buying a freehold property

When you buy a freehold property, you’ll own the dwelling and the land it stands on outright.

There will be no time limit on your ownership, so you won’t have to worry about a lease running out.

You’ll be responsible for maintaining the building and any related costs, but this will mean you’ll be free to do whatever you like to the property (subject to planning permission).

 

Leasehold vs. freehold: a summary

Buying a home is an exciting step, but it is very important to understand any impending issues surrounding property ownership.

When it comes to leasehold vs. freehold, the main difference is that as a freeholder you’ll own your property outright from the get go, while as a leaseholder your ownership will be limited to a set length of time.

If you want to know more about buying a home, get in touch with our team today; we are more than happy to help!

Read more

Photo source: Flickr https://bit.ly/2HaW8uD

What is remortgaging?

Remortgaging is the act of moving your loan from one lender to another or negotiating a new rate with your existing lender. You might be able to find a cheaper deal elsewhere, letting you save a bit more each month and pay it off faster. Or you could extend the length of your mortgage, allowing you to pay less each month (but taking longer to pay off completely and paying more interest over the length of your mortgage).

So if you’re looking to pay off other debts*, shorten the length of your mortgage or simply reduce how much you’re paying, you may want to consider remortgaging your home.

The process of remortgaging is fairly simple, but figuring out whether it’s the right financial decision isn’t. We do recommend speaking to a financial adviser further before making a final decision.

Why you may consider remortgaging:

  • The value of your property has increased (significantly) since you took out your mortgage, putting you in a lower ‘loan-to-value’ band that opens you up to lower rates.
  • Your existing lender won’t allow you to pay more towards your mortgage, even when you can afford it.
  • Your existing deal is coming to an end and your lender will place you on an SVR (standard variable rate).
  • The Bank of England rate is going to increase, as this can affect your mortgage.

Why you may consider staying with your current lender:

  • You’ve suffered credit issues or failed to pay debts (since starting your mortgage).
  • If an early repayment charge payable on an existing product exceeds the cost of any savings that could be made by remortgaging.
  • You’ve only got a small amount left to pay; switching lenders so late on in the process means you may not save that much.
  • Your work situation has changed; perhaps you’re now self-employed or no longer working. This could affect a lender’s decision either way.

What to do when deciding to remortgage

Do your research

Comparison sites are handy for finding current deals, but they don’t always explain in certain terms what’s right for you and your particular circumstances. If you are unsure, we suggest consulting with a mortgage adviser who can make the process as easy as possible and find the right rate for you.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Read more

 

According to a recent report, the UK has seen growth in the number of mortgages for non-standard borrowers, such as for buy-to-let landlords and lifetime mortgages. Since 2009, there has been a 19% increase each year to the value of the mortgage lending companies annual lending. These companies have seen their lending amounts increase to £17 billion per year in 2016, a significant increase on the £5 billion that was recorded in 2009.

The specialist lenders are said to be in a very strong position despite the previous ever changing nature of the market, and that they are capturing the ongoing growth in the number of the UK’s non-standard borrowers that mainstream lenders may not look to work with.

Read the full introspective article that explains the growth in mortgages the UK is seeing lately on Property Division.

UK’s Specialist Lenders See Non-Standard Mortgages Growth

Read more

Photo source: Property Wire http://bit.ly/2xR0h2h

There have been a lot of whispers about Bank of England lately and the assumed raise of interest rates.

Any type of raise would clearly influence home owners, but here’s an example of how a small increase can look like for a monthly budget: a 0.25% rise of rates would mean that a typical variable mortgage repayment could cost an extra £13 a month. However, switching to a fixed rate deal could save borrowers £119 per month.

But, as the latest research suggests, the homeowners are not prepared for a raise in this sector. 68% do not actually know how a base interest raise can affect them.

Research suggests many British home owners are not prepared for interest rate rise

Knowing the risks and the implications is vital to choosing rightfully, at least when it comes to money.

Read more

The mortgage market is in continuous move and it can affect you as well.

If you’re one of those shopping for a house soon and you are considering a mortgage, you should carefully analyse a couple of factors before making a decision. The location, the time you are going to spend in your new home (if it is temporary or, hopefully, for the rest of your life), the purpose of the investment (for your own living or if it is a buy to let), and other life circumstances should be considered when choosing a type of mortgage.

However, even with all these cleared up, there is still one more factor that might influence your decision. The mortgage market is in continuous move and it can affect you as well.

The analysis after the first quarter of 2017 proves that some types of mortgages are increasing, while other products for loans are remaining unchanged. For example, the number of contracted mortgages rose in the first three months. These are bank products offered for self-employed people, people with complex incomes or other underserved segments of the buyers’ market. Looking closely upon the offer of bank products, you may see that banks will speculate this moment and will come with new and improved offers. You will just have to pick the most advantageous for you.

The mortgage market also seems to be improving since the number of completed applications  for first time buyers is rising. 67% of first time mortgage applications were completed in the first quarter of 2017, up substantially from 48% in the same period of 2016. Intermediaries have eased up the applications because of the struggle to obtain a mortgage that was intensely publicised last year.

And one of the most important news that the mortgage market received at the beginning of this month is that the lending rates reached their lowest point. The figures from the Bank of England showed that this year’s borrowers received the lowest mortgage rates ever.

These effects are sometimes connected and influence one another, but paying enough attention to the movements of the market might pay off eventually.

Sources:

http://www.propertywire.com/news/uk/brokers-see-demand-specialist-mortgages-less-buy-let-forecast/

http://www.propertywire.com/news/uk/uk-mortgage-applications-intermediaries-successful-year-ago/

http://www.propertywire.com/news/uk/mortgage-lending-rates-uk-reaching-lowest-rates-ever/

 

Read more

A petition that has so far gathered 144,343 signatures and argues that making rental payments is proof of ability to meet mortgage repayments is to be considered for debate in Parliament.

The petition creator, Jamie Jack Pogson, says he wants “paying rent on time to be recognized as evidence that mortgage re-payments can be met”.

Jamie had this to say: “Since living on my own I have paid £70,000+ in rent on time yet still struggle to get a mortgage. Unless you’re getting handouts, wealthy or in receipt of inheritance it’s almost impossible.”

Recent research from Lloyds Bank found that home affordability – as measured by the ratio between average house prices and gross local earnings – across UK cities is at its worst level since 2008.

Yet buying still remains more affordable than renting in all 12 UK regions. Halifax data shows that on average, first-time buyers are making annual savings of £651 compared to those who rent.

Buying is most affordable compared to renting in London, with the typical first-time buyer paying £161 (10%) a month less than the average renter (£1,420 against £1,581) an annual saving of £1,927.

Source: http://www.propertyreporter.co.uk/finance/should-rental-payments-be-proof-of-mortgage-affordability.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-198062-Campaign+-+16%2F03%2F2017+MT 

Read more

 

The latest research from Connells Survey & Valuation shows that, during February, first-time-buyer activity soared to a market share of 36% – an 8% rise against February 2016.

The near zero base rate has ensured that mortgages remain more affordable than ever – with gross lending at its highest level since 2008.

First-time buyers have seized the opportunity to get on the property ladder. This group now accounts for a third of activity in the property market during February (36%) – the highest proportion of first-time buyers since July 2011 and the highest February since 2010.

John Bagshaw, corporate services director of Connells Survey & Valuation, said: “Continued affordable mortgages have provided first-time buyers with an ideal opportunity to take their first step onto the ladder in February. Lending to aspiring homeowners continues to rise, while the base rate remains so low. For those with enough savings for a deposit, now is a great time to buy. Many are taking advantage of the opportunities on offer.”

John said: “The stamp duty surcharge has succeeded in helping first-time buyers at the expense of landlords. But this may well be temporary. Less competition for today’s first-time buyers comes at the expense of tomorrow’s. Most people rent as they save for a deposit, but the steady investment into the rental market is running dry. With limited new homes being built for the PRS, rents will soon start to rise. This will devour tenants’ disposable income which would otherwise have been saved for a deposit. The problem will be exacerbated next month as mortgage tax relief is removed, forcing more landlords to exit the market or ramp up rents.

In the Housing white paper, the Government announced plans to boost build-to-rent and institutional landlords, but it will be years before anyone can move into the accompanying new homes. Rents remained relatively stable following the influx of investment before the stamp duty surcharge but tenants could soon feel the full force of recently announced Government policies.”

However, the increase does not mean the Government has succeeded in boosting the prospects of first-time buyers long-term, says Connells Survey & Valuation. The surge from 28 per cent last February to 36 per cent this February is only marginally higher than the 10 year average.  Over the course of the last decade first-time buyers have been responsible, on average, for 35 per cent of the market. And the 36 per cent of valuations that first-time buyers represented in February 2017 pales into insignificance compared to the 41 per cent peak in February 2010.

John continues: “The rapid growth in first-time buyer activity is a recovery from a lower position, rather than a substantial improvement in market conditions. It’s important to not just look at the snapshot numbers but take into account the long-term trends. It’s still incredibly difficult to get on the property ladder. Most aspiring home owners will tell you about the Herculean challenges they face to save for a deposit. Despite all the Help to Buy programmes, first-time buyer activity is only 1 per cent higher than it has been, on average, over the last decade.

We may be in the eye of the storm in Britain’s housing market – a brief period of calm before the turbulence begins again. The base rate can’t stay on the floor forever. With Brexit approaching, economic conditions may get tougher. First-time buyers may need to board the ladder now before it’s hoisted up again.”

 

Source: http://www.propertyreporter.co.uk/property/ftbs-storm-the-property-ladder-in-february.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-197729-Campaign+-+15%2F03%2F2017+CT 

Read more

People in the UK looking for a new mortgage now have even more choice with a number of lenders launching new rates and products.

The TSB has reduced interest rates by 0.10% on selected mortgages for home movers, first time buyers and remortgage borrowers. These include five year fixed rates and two year fixed rates for remortgagers.

‘We want to help more people to borrow well and today’s rate cuts are good news for those with a higher deposit,’ said Roland McCormack, TSB mortgage distribution director.

Accord Mortgages has launched a selection of competitive fixed rate mortgages for borrowers with a 35% deposit and there are added features such as cashback, free standard valuation or free legal fees.

The intermediary only lender, which is part of Yorkshire Building Society, has also made rate reductions by up to 0.25%. These include a 2.99% five year fixed rate at 85% LTV which is available to both home buyers and remortgage customers and has no upfront product fee.

‘By refining our product range we have a greater ability to ensure our core mortgages remain competitive and appealing to borrowers. However, as always we will monitor the market and listen to brokers to ensure our product range continues to meet a variety of customer needs,’ said David Robinson, Accord national intermediary sales manager.

The Chelsea Building Society has launched a variable rate two year tracker mortgage with no early repayment charges (ERC) with an interest rate of 1.15%, the lowest variable tracker mortgage rate currently on the market, and it is available to both home buyers and those looking to remortgage with a 35% deposit. It comes with a £995 product fee.

The new mortgage, which tracks the Bank of England base rate, is designed to provide homeowners with flexibility to exit their mortgage early without paying an ERC should their circumstances change over the next two years.

‘Our new tracker doesn’t tie borrowers into their mortgage, giving them breathing space to review their options on a regular basis with the bonus of not being subject to early repayment charges. As it is the lowest variable rate tracker mortgage currently available on the market it will appeal to customers who are keeping an eye on interest rates,’ said Richard Barker, mortgage product manager at the Chelsea Building Society.

‘The market continues to benefit from buoyant demand for Buy to Let remortgage as landlords take action to minimise costs and manage profitability. This market has become even more active since the changes to stamp duty came into effect last March and ahead of the impending changes to tax relief,’ said Jaedon Green, Leeds Building Society’s director of product and distribution.

Leeds Building Society introduced new criteria on 01 January following changes to underwriting standards for buy to let by the Prudential Regulation Authority (PRA).
New criteria includes an income covering ratio (ICR) of 140%, reducing the stress test rate for remortgages with no additional borrowing to 5%, and removing the minimum income requirement.

Source: http://www.propertywire.com/finance-update/choice-added-mortgage-deals-uk-home-borrowers/?utm_source=Property+Wire+News&utm_campaign=bff7d979c4-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_cb0fe1dd73-bff7d979c4-108361813&goal=0_cb0fe1dd73-bff7d979c4-108361813

Read more

The latest report from Halifax has shown that more first-time buyers climbed on to the property ladder in 2016 than in any year since 2007.

However, it comes at a cost as the lender revealed would-be home owners now need to raise more than £32,000 for a deposit.

Deposit sizes have more than doubled over the last decade. In 2006, the average first-time buyer deposit across the UK was £15,168. Now it is £32,321 – around 16% of the price of a typical first home.

According to the report, those buying their first property can expect to pay more than £200,000 across the UK generally and an “eye-watering” £400,000 in London. On average, in the capital, a first-time buyer’s deposit is more than £100,000, assuming they can also cover moving costs and stamp duty.

First-time buyers in London put down a 25% deposit on average in 2016, amounting to £100,445.

Halifax also revealed that during 2016, the average house price paid by first-time buyers was £205,170 – the highest on record. This average has grown by 7% over the last year, pushing it over the £200,000 mark.

In London, first-time buyers can expect to pay £402,692.

The number of first-time buyers is estimated to have reached 335,750 in 2016. This is the highest figure since 359,900 in 2007, and marks the third year in a row that the number has topped 300,000.

Halifax said the number of first-time buyers in 2016 was 75% higher than a low point in 2009, but 17% below a pre-crisis peak of 402,800 in 2006.

As the cost of housing has increased, first-time buyers have been taking out longer mortgages. In 2006, just over a third (36%) had mortgages lasting beyond the traditional 25-year period. In 2016, 60% of mortgages were for 25 years or more.

More aspiring first-time buyers are also having to factor stamp duty into their costs. Less than a third (29%) of first-time purchases in 2016 were below the £125,000 stamp duty threshold. This share was 45% in 2013.

The average age of a first-time buyer is 30, ranging from 27 in Carlisle in Cumbria and Torfaen in South Wales to 34 in places such as Slough in Berkshire and the London boroughs of Barnet and Ealing.

   Martin Ellis, a housing economist at Halifax, said record low mortgage rates, high employment levels and Government schemes such as Help to Buy have helped first-time buyers. The UK-wide Help to Buy mortgage guarantee scheme ended in 2016, but other schemes are still available.

   He added: “Across the regions there is a contrasting picture. In London – which has one of the youngest populations in the UK – the average house price for a typical first-time buyer is now more than an eye-watering £400,000 with an average deposit of over £100,000 – more than twice that in the South East, the next most expensive region.”

   Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: ’The Halifax’s findings are good news in terms of the increase in number of first-time buyers but are also indicative as to what parents and grandparents put themselves through so that they can afford those deposits – with more than £100,000 required in London.

If the housing market is going to function properly, as the government has told us so many times it should, then we need to protect first-time buyers. First-time buyers are the life blood of the market as they tend to buy at the bottom and trade up whereas investors buy at one level and stay there.

Although lenders are supposed to be providing support via Help to Buy now that the mortgage guarantee element has been withdrawn, on the ground we are finding it is not happening in all cases and more flexibility on lending criteria at higher loan-to-values is required.’

Source: http://www.propertyreporter.co.uk/property/ftbs-at-10-year-high.html?utm_source=Email+Campaign&utm_medium=email&utm_campaign=21136-188156-Campaign+-+13%2F01%2F2017+MC
Read more