The issues facing first time buyers, homeowners and potential movers!

To say that the government is currently under a substantial amount of pressure is something of any understatement. Keeping political points of view or persuasion on the sidelines, the handling of the coronavirus pandemic and Brexit remain huge issues which are dominating time, resources and attention.

I fully appreciate the importance of tackling these concerns and the major toll they are having on the health – physically, mentally and financially – of the UK population. However, there are also a number of other areas which the government can ill-afford to ignore across the housing and mortgage market.

The problems facing mortgage prisoners are mounting and a recent report from the London School of Economics (LSE) has put the onus and ethical responsibility on the government to solve the mortgage prisoner crisis quickly and recommended a package of measures to do so.

Another situation which is cause for great concern revolves around cladding, and finding appropriate solutions for such deputes should also be high on the government’s agenda. Through no fault of their own, all too many people continue to find themselves in a position where it is neigh on impossible to sell certain property types or even remortgage them - which is an unacceptable outcome.

There are also question marks in the air around whether the government will extend the stamp duty deadline in light of some lending, survey and conveyancing backlogs which are having knock-on effects on a growing number on housing chains. A trend which will only intensify in the coming weeks.

These are just some of the issues facing first-time buyers, existing homeowners and potential homemovers. In the current economic climate, there are many extra layers of complexity for all those involved in the mortgage journey. And this really does outline the importance of impartial, independent financial advice when it comes to  overcoming a growing number of challenges and ensuring that people have access to the right kinds of financial options to match their current, and future requirements.

So, speak to a specialist, impartial, independent adviser about your property related needs in this increasingly uncertain marketplace.

Completing a fact find and be mortgage ready!

First time buyer or home mover?  Either way know the process and be mortgage ready!

On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance. At this point you can shop around and should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you.  Advisers are required to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any charged for advice or consultation.

A good adviser will complete a financial fact find ensuring that they fully ‘know and understand their client’s financial position and requirements.’  This is necessary before any ‘advice or recommendation’ can be provided.  Be patient as this process can be lengthy.  It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements. Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually online with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score.  We’ve had a few customers contact us for a mortgage recently who have been totally unaware that they have had a number of credit searches carried out having recently searched for competitive renewal quotes on their home or car insurance via comparison sites.  This, in a small amount of time can have a marked affect on your credit score, and as such, affect your ability to obtain finance, so read the small print and be aware! 

DIP decisions are normally instantaneous.  Assuming success, it is then up-graded to a full application. Payment for survey is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements.  Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitor’s conveyancing process, you are now on the road to completing your mortgage process!

In January, the average mortgage interest rate was 2.53%. How does that compare to yours?

Some eye watering statistics from The Money Charity this week.  The Charity has reported that total mortgage lending stood at £1.37 trillion at the end of January.  This is up from £1.32 trillion in 2017.  Averaged over the 11.1m households with a mortgage, this equates to £123k per home in January.

The average interest rate was 2.53% at the end of January.  Product offerings now exceed 11,000 across the market and rates start from circa 1%.

There were 24,840 loans approved for house purchase in January, according to UK Finance, 5% lower than a year earlier.  The average loan approved was circa £189k.

This decrease is interesting as it is a common knowledge that owning a home can be cheaper than renting.  The report goes on to suggest that inclusive of all benefits, private renters spent an average of 34% of their income on rental payments.  In comparison, people who owned their home only spent on average 18% of income.

The Ministry of Justice reported that 47 mortgage possession claims were issued every day, throughout quarter four 2017.  31 mortgage possession orders were made every day.  18 properties were repossessed every day.

And just because this caught my eye - Child Poverty Action Groups ‘The Cost of a Child in 2017’ report estimates that couple families now spend £155,142 on raising a child to their 18th birthday - £23.61 a day!  This is up 2.4% compared to last year.

This will go some way towards why the report suggests that around 9.45m (35%) households have no savings, while a further 2.97m (11%) have under £1,500. 

I know, stark figures indeed.  But sometimes we do just need to review what we have, where we are at and how can we change things.   It always surprises me how few people know what rate they are on, the type of mortgage, i.e., fixed rate, tracker rate, etc, and whether they are paying interest only, or capital repayment.  Unsurprisingly, almost everyone knows what it costs per month to the nearest penny! They will haggle for a £10 discount on a new washing machine, or sky TV,  but will stay with the current lender when their ‘promotional rate’ period comes to an end, ‘brush it under the carpet’, and deal with it ‘tomorrow’. But, we all know tomorrow never comes.  A review of what’s on offer from other Lenders could give you a nice surprise and probably a few extra pounds in your pocket!