First Time Buyers are on the rise

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The reported number of first time buyers was on the rise in May, whereas the number of approved buy-to-let approved mortgages fell.

This could be because tax changes and policies have changed recently, making it more difficult and less profiatable to become a landlord, and so rebalancing the housing market.

According to financial services lobby group, UK Finance, in May there were 8.1% more first time buyers compared to the same time last year, and lending was up by 12.5%.  In addition, the average first time buyer has an annual salary of £42,000 and has a 15% deposit, with an average age of 30.

The Help to Buy scheme and shared ownership initiatives have all played their part in helping people to buy a property, and without these they would not have been able to afford to buy their own home.

In contrast, the buy-to-let market fell by 9.8% and lending was 22% lower than it was the same time last year. This is due to regulatory and tax changes, and the buy-to-let market could further suffer as the full effect is felt by landlords.

One of the biggest changes was the stamp duty being increased for those buying a second home, making a buy-to-let property unaffordable for some people.

Despite this rise in first time buyers, it’s still difficult for some people to get onto the property ladder. Affordability is a stumbling block for some, and this is reflected in the increase in loan to income multiples.

If you would like advice on buying a property for the first time, contact Derngate Wealth today.

Read more: https://www.theguardian.com/business/2018/jul/12/first-time-buyers-on-the-rise-as-buy-to-let-mortgage-market-falls

July 15, 2018adminBlog

First time buyer myths

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

If you’re a first time buyer, the mortgage process can be overwhelming and confusing. There are often many myths surrounding buying a property for the first time.

Buying a home involves more than getting just a mortgage, it’s about having a place of your own when you can relax and shut the world out.

Here are some of the most common myths:

My salary isn’t big enough

There are many different types of mortgages available, and so it’s not a case of ‘one size fits all’. As well as standard mortgages, there are also specialist mortgages available that you may not be aware of that are suitable for those with complicated circumstances, and an independent mortgage broker has access to these.

My deposit isn’t large enough

One of the biggest worries when it comes to getting a mortgage is having a deposit that’s large enough. We all know that the more you can pay up front the better, as it will keep your monthly outgoings down and secure you a much better rate. However, not everyone will have a large sum saved, especially if you’ve been paying rent, but it’s good to remember that some mortgages only require 5% deposit.

I need a good credit rating

Many people bury their head in the sand when it comes to credit ratings, but there’s nothing to worry about it. You won’t need a perfect score, and there are many factors that will affect your overall score. The key things are to ensure you’re on the electoral register, you don’t miss any credit card or loan payments, you don’t max out your credit cards without repaying them and you don’t apply for too much credit.

I can’t afford the fees

Many mortgages let you spread the cost of the fees as part of your borrowing, and when you talk to a mortgage advisor they will go through all of the fees that you’ll have to pay including legal fees, stamp duty and mortgage arrangement fees. You won’t have to pay more than you can afford.

I don’t know what house to buy

That’s where a good estate agent comes in! They will be able to advise you on the house prices, the local market, what you can realistically get for your money and guide you as to the process of buying a property.

If you would like advice on buying a property for the first time, contact Derngate Wealth today.

First-time Buyer: Hit and myths of buying your home

 

June 25, 2018adminBlog

Could you cope with a mortgage base rate rise to 2%?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

The Bank of England’s rate-setting committee has hinted that homebuyers could see the base rate rise to 2% in the near future. Rate rises will be gradual, so do you know what will happen to your mortgage repayments if there is mortgage rate rise?

At present the base rate is 0.5%, so a rise to 2% means 1.5% percentage points on your annual interest repayments. Although it sounds low, it equates to an additional repayment of £138 a month if you are an average British homebuyer with typical outstanding mortgage of £175,000.

If the base rate rises to 3%, things could get more difficult as it could mean £238 per month more each month for the average homeowner.

Over 55% of borrowers are on a fixed rate deal, which means that monthly repayments will stay the same until the borrower reaches the end of your current mortgage deal. This is when borrowers could be in for a shock as the rise could be difficult to manage as the borrower will automatically move on to the lender’s variable rate.

There are already signs that lenders are increasing their new fixed-rate deals in anticipation of this rate rise.

The Resolution Foundation has found that one in 10 households will be immediately affected by a rate rise because home ownership has declined, and so many of those with mortgages are now on fixed rates.

House prices will also be affected, as a turn in economic confidence will result in a fall in house prices. In fact, house prices have already started to fall in London and parts of the south-east. A rate rises could push the decline further north.

However, it’s good news for savers as the interest paid on savings rates will finally start to rise, although banks do have a habit of delaying passing on any rise in interest rates. 

If you would like advice on how any rate changes could affect you, contact Derngate Wealth today.

https://www.theguardian.com/money/2018/apr/20/what-would-base-rate-rise-mean-average-homebuyer-mortgage-repayment

 

 

May 12, 2018adminBlog

City regulator proposes changes to help borrowers

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage

The Financial Conduct Authority has said that buyers need more help to find cheaper mortgage deals, given that one in three people fail to find the cheapest deal, and these borrowers could save £550 a year.

The FCA is also looking at ways to help mortgage prisoners (those longstanding customers who are trapped in their existing deal) switch to a better deal.

It published an interim report into the mortgage market, and found that competition was working well for many people. However, it also identified ways in which the market could work better. As the UK anticipates a rate rise, it’s important for homeowners to get the best deal they can.

Mortgage debt accounts for over 80% of the UK’s household debt, so according to the FCA it’s really important that borrowers get it right.

Although the regulator said that there was little evidence that lenders were giving lenders the worst deal, there was no easy way for consumers to know what deals they could qualify for. There is a difficulty faced by borrowers in shopping around, with 30% of borrowers failing to find the cheapest deal and as a result paying £550 per year needlessly.

One suggestion by the FCA is that lenders make the relevant eligibility and other qualification criteria available to other market participants consistently at an earlier stage. This will not only help brokers but will also create other opportunities for new online tools. It also suggested that it’s made easier for people to compare mortgage brokers to find the best deal.

The FCA outlined how mortgage prisoners (many of whom took out an interest-only mortgage before the financial crisis) could be better helped, Because of stricter lending practices since the credit crunch, it has been much more difficult to find a cheaper mortgage. The FCA has suggested there could be an industry-wide agreement for all lenders to approve applications for a new mortgage deal from existing customers whose most recent mortgage was taken out before the financial crisis, and who are up to date with their payments.

The FCA is due to publish a report at the end of the year after consulting with lenders.

If you would like advice on how you could find the best mortgage deal for your circumstances, contact Derngate Wealth today.

https://www.theguardian.com/money/2018/may/04/uk-mortgage-buyers-more-help-find-cheaper-deals-fca

 

 

April 12, 2018adminBlog

Do you have an interest only mortgage?

These blogs and the information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation. If you require any further clarification please contact Derngate Wealth.

Your home may be repossessed if you do not keep up repayments on your mortgage.

It is estimated that 600,000 interest-only mortgages are due to expire by 2020, so it’s important to put plans in place tackle the shortfall as soon as possible if you are one of these people.

Interest only mortgages have historically been popular because it has kept monthly repayments to a minimum and enabled buyers to own a larger home or a home in a preferable area. It means that they had lower monthly outgoings given that they aren’t repaying the loan.

Since the credit crunch, interest only mortgages are much less common as lenders have much more stringent lending criteria. Ten years ago, buyers could obtain an interest only mortgage without having to provide evidence of an investment plan to enable them to repay the shortfall at the end of the mortgage term.

The majority of policies were likely to have been sold with mortgage endowments, providing a way for buyers to repay the loan but this could have been underperforming and still leave a shortfall. Others may have relied on an inheritance or other windfalls to cover the final bill.

If you come to the end of an interest only mortgage and cannot repay what is owed you could be at risk of losing your home, and that’s why it’s seen as a ticking time bomb.

The Financial Conduct Authority (FCA) consumer groups are working with those with an interest only mortgage to help them resolve the situation they may find themselves in.

According to Which? buyers need to assess their financial plans to see if they can pay the amount in full. Check how much of your endowment will be available when the policy ends because if you act early enough you may be able to switch to a repayment mortgage or overpay on your repayments.

Remortgaging your property is possible with the same lender, or they may even extend the term of your existing mortgage (although you may need to move to a higher rate). But remember that your existing lender is allowed to offer you a new deal provided it doesn’t involve increasing the amount you borrow, aside from the switching fees.

In some cases, people are unaware that they have not been paying off the capital – for example a window or widower may not know details of the type of mortgage taken out.

If you have an interest only mortgage the key is to get advice as eraly as possible to give you time to plan. Talk to us at to Derngate Wealth today to find out the best course of action.

https://www.theguardian.com/money/2018/mar/19/interest-only-mortgages-payment-shortfall-remortgage-lenders

March 23, 2018adminBlog