The Mortgage Market Q3, 2018

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information contained in them may no longer be current and therefore much of the information/figures quoted could be out of date and shouldn’t therefore be used as an indication of the current situation.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.

According to figures from UK Finance, buy to let lending remains subdued as a result of recent tax, regulatory and legislative changes. In addition, demand for house purchases for both first-time buyers and home movers has also lessened as affordability constraints continue to present a barrier to property ownership and refinancing.

Lenders signed off 58,800 mortgages in September, a fall of 6.5% compared to the same time last year, according to figures from UK Finance. This is the lowest number of mortgages lent in the month of September since 2014.

In particular, there has been a fall in the number of new mortgage issued over the last 12 months due to the new tax rules on buy-to-let properties, and the wider property market shows signs of slowing down.

Although there was an overall drop in the number of mortgages signed off, this was due to the large fall in buy-to-let purchase mortgages approved due to rule changes in the past few years, which increases the amount of tax purchasers must pay. In fact, buy to let mortgages fell faster than other types of borrowing with the number dropping by 18.8% since September 2017 to 12,300. The total value of lending for these types of loans also fell by just over 22%. There could also be further declines in the purchase of buy-to-let properties after changes announced last month’s budget which will affect landlords

Similarly, mortgages issued to those moving home dropped by 8.4% which is the lowest level since 2010. First time buyer numbers fell too but the total value of lending remained the same year on year. The average first time buyer taking out a mortgage in September this year was aged 30.

In the latest Budget, Chancellor Philip Hammond unveiled plans to reduce the time period in which homeowners can claim relief on capital gains tax by half, meaning they will have a larger bill when they decide to sell.

Talk to us at Derngate to find out more about the mortgage market, and to find the best mortgage deal for your individual circumstances.

Read more: https://www.independent.co.uk/news/business/news/uk-house-prices-mortgage-interest-rates-brexit-halifax-index-a8434251.html

How Old is Too Old For a 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.

Have you ever wondered what the maximum age for a mortgage is?

Not too long ago, the aim of the average Brit was to be mortgage free by the age of 55. That was during a time when people were able to buy a property when just starting out in the world, but with lending criteria becoming much stricter, people are getting onto the property later in life. The average age of someone in the UK buying their first home is 30 years old, compared to 23 in the 1960s.

The world’s population is ageing at such a rate that 10% are now over the age of 60 and this is likely to rise to over 20% by 2050. But what does this mean for older home buyers trying to secure a mortgage?

Most banks and building societies are adapting to these changing times and as a result, it’s now possible to get a mortgage later in life.

In the past, banks required customers to prove they could, in theory, afford a more expensive repayment mortgage where you pay back some of the capital as well as interest each month. This was possible for many borrowers because banks only allowed them a mortgage term up to their 65th or 70th birthday. Given that the repayments due were spread over a short period, those borrowing would have faced monthly bills of thousands of pounds making it unaffordable. However, under the new Financial Conduct Authority rules, customers could only need to show only that they can meet interest-only repayments.

Retirement

If you should retire before you have finished paying off the mortgage, you won’t have the same regular salary and your income is likely to go down. This will result in lenders being unsure that you’ll no longer be able to meet your repayments. Therefore, the older you are the more of a risk you are. Lenders are required  to follow Mortgage Market Review (MMR) rules, which mean they have to make sure you can keep up with repayments over the full term of the mortgage.

The maximum age

There isn’t a maximum age for a mortgage application. However, many lenders have their own age limits. When you take out the mortgage there is usually a maximum age of 65 to 80. When the mortgage term ends there is usually a maximum age of 70 to 85.

This means that even if you are below the maximum age for a mortgage, its term could be limited by how old you are e.g. If you are 60 and want a mortgage that must be paid off before you reach 70, its term could be no more than 10 years. You have a better chance of being accepted if you have a strong credit history if your income is high enough to easily cover the mortgage repayments.

Talk to us at Derngate to find out more about the mortgage market, and to find the best mortgage deal for your individual circumstances.

Read more: https://www.zoopla.co.uk/discover/buying/maximum-age-for-mortgage-lending/

Self Employed? You CAN Get a 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.

There has been a steady rise in the number of self-employed workers in the UK. According to the Office for National Statistics (ONS), over 4.8 million people are self employed. This is a rise of 1.5 million people since 2001.

There are a number of benefits to being self employed, such as being your own boss, having control of your work life balance, having time off, flexible working hours and locations…but there are also so drawbacks to working for yourself. The main risk of course is that you are no longer in receipt of a guaranteed income (although some would argue that there is also no risk of being made redundant!). However, guaranteed income is one of the main criteria for obtaining a mortgage offer, so many assume that being self-employed means they won’t be able to buy a property.

Many people who are self-employed are amazed to discover that they do have options, even if they have a small deposit.

There are some new lenders that have entered the market in recent years and this has increased competition and resulted in an era of more relaxed lending criteria.

The market has moved on so much in the last six years that there are even lenders that would consider someone that had a default or CCJ over three years ago and with just a 5% deposit. However, it’s worth remembering that interest rates are typically higher for applicants, averaging 5.18% APR for a two year fixed deal compared to 2.9 per cent for an applicant with a bigger deposit and a clean credit history.

If you have the desirable 40% cash deposit and two or three years of accounts for your business, there are even more options available to you.

The average mortgage loans are four to five times income, although some lenders will consider six times, and lenders will even consider applicants with just one year’s trading history, though accounts should be detailed

If you have been self-employed for over a year and have a clean credit record, you may qualify for a 95% loan to value (LTV) mortgage with a 5% deposit, but you will need to have a clean credit record for the past three year.

If you would like advice on buying a property if you are self employed, contact Derngate Wealth today.

Read more: https://inews.co.uk/inews-lifestyle/money/how-self-employed-people-can-get-a-mortgage/

 

 

Fixed mortgage rates fall to an all time low

These blogs and the information contained in them is no longer current and therefore much of the information/figures quoted may 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 on the number above.

Fixed mortgage rates fall to an all time low

According to Bank of England figures, Fixed rates have fallen as low as 1.07%, making them the lowest rates we have ever seen. Could this be your opportunity to lock in a great deal?

Mortgage lenders have been steadily cutting interest rates since the end of summer 2014, leading to the lowest fixed rates we have ever seen.

At the time of writing, Bank England figures show that for borrowers able to put down a 25% deposit on a home, the average five-year fixed deal is just 2.98%, while the two-year deal is as low as 1.99%.

These aren’t even the best rates. Home buyers can fix their mortgage at 1.07%, and less than 3% if you are prepared to fix for ten years. Depending on your circumstances, you may find these deals too long or short and, therefore, opt for the five-year fix at 25%, making them a good middle-ground for many.

The best rates go even lower than this. Homeowners can fix for two years at just 1.07% and up to ten years at less than 3%.

For some, those may feel too short or too long, but a five-year fixes at below 2.5 per cent – and one at just 1.99 per cent – might look a very tempting middle ground.

Just twelve months ago the prediction by some industry experts was that interest rates would start to rise towards the end of 2015 and into 2016 but so far we haven’t seen any indications of this. If anything, it was felt by some analysts felt that rates would rise after the general election but this hasn’t been the case so far.

This is because of low inflation, a slowdown in world growth, a slump in oil prices, and problems with the Eurozone to name a few.

With the fall in fixed rates, home buyers have been able to obtain so exceptionally cheap mortgages. Rates could still fall, but the time to act is now because these deals could disappear overnight.

Britain’s economic recovery could still be halted if base rates rise over the next few weeks, and meanwhile the oil prices are falling, prices of food are much more competitive and energy costs are reducing this has all contributed to inflation being pushed down to well below the 2% target.

The general consensus is that rates won’t rise until at least this time next year.

Meanwhile house prices are rising, and so there’s a renewed confidence in the housing market. We are now in the midst of a ‘sweet spot’ for mortgage rates, and if you do want to secure a cheap fixed rate mortgage now then you need to check the following:

Arrangement fees – work out if the cheap deal is actually cheap once you have paid the arrangement fee on top. It might be worth going for a slightly higher rate with a lower arrangement fee.

Long and short term plans – are you thinking of moving in a year or two or are you thinking of staying put? Can you be sure that everything will go to plan? A good five-year fixed mortgage will be portable, but check with your mortgage broker as you might need to borrow more money and your lender could turn you down. If you do have to pay a redemption fee, it could end up not being the good deal you once thought!

Talk to a us, as we will be able to advise you as to what you need in order to be prepared for your application but remember, low rates today will be here for a while, but once they have gone, they have gone!

Your home may be repossessed if you do not keep up repayments on your mortgage. Rates and offers are correct at the time of posting, May 2015.

Help to Buy ISA Scheme Announced

These blogs and the information contained in them is no longer current and therefore much of the information/figures quoted may 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 on the number above.

Next month on December 1st, the Help to Buy ISA will be launched which will allow ISA buyers to claim a bonus.

The Help to Buy ISA scheme was first announced by Chancellor George Osborne back in March this year, with the aim of providing people with a major tax break if they are saving for a deposit for a property. Many people including industry and economic experts have welcomed the new Help to Buy ISA, although many still believe that it isn’t a solution to the ongoing housing crisis.

Many banks and building societies are on-board with the scheme and are committed to offering Help to Buy ISAs. Their rates will be set by them and differ just as with normal cash ISAs, so you will earn interest like a normal cash ISA as well as getting the bonus at the end. Those offering the ISA include Barclays, Lloyds Banking Group, Nationwide, NatWest, Santander and Virgin Money but as yet no rates have been set.

So how does it work? Here’s our quick guide to the Help to Buy ISA scheme:

  1. Pay money into a Help to Buy ISA account.
  2. Once you are ready to purchase a home, you can close your account and receive a closing letter from your ISA manager.
  3. This closing letter is passed to your conveyancing solicitor.
  4. The solicitor will then apply online for the government bonus.
  5. The solicitor receives the bones, and this is added to your existing funds to complete the purchase. It doesn’t need to be your sole deposit money; you can combine it with other savings for a deposit.

The bonus will only be available on homes worth up to £250,000, or £450,000 in London. Unlike some other government schemes, you’re not restricted to buying a new build, any property works and you can use it with any mortgage product available

How much will you receive?

The Help to Buy ISA scheme will give first-time buyers saving for a deposit the opportunity to put away £200 a month (you can save £1,200 in the first month) in a dedicated ISA that the government will top up by 25%, up to a maximum of £3,000.

As a first time buyer, you can also open an account with a one-off lump sum of up to £1,000. This is in addition to the monthly maximum.

If you are buying a home with a partner or friend, you can combine your personal bonus, which could add up to £6,000 towards a deposit for your first home. Help to Buy ISAs are for individuals, not couples, so you can open one even if your partner you’re buying a home with isn’t a first-time buyer. And if you’re buying with another first-time buyer, you can both have a Help to Buy ISA.

Although you’re only allowed to get one Help to Buy account, you can transfer it between different providers to chase the best interest rates.

Therefore it’s important to monitor the interest rate you’re getting and, if it drops, find a new Help to Buy ISA provider paying a better rate.

The government has realized that it’s still difficult for individuals and couples to get their foot on the housing ladder, and this scheme will help people to save for a deposit for a home much quicker. However, it doesn’t solve the problem of affordability especially in inflated areas such as London and Brighton. There are still many people on social housing waiting lists, in temporary accommodation or even homeless all as a result of the undersupply of affordable housing.

However, at least something is being done to help those who can afford to buy a home, save a little faster.