First Time Buyers
If you are a first-time buyer, it can be a daunting task getting a mortgage. If you have not borrowed money before, you may not have built up enough of a credit history to satisfy lenders.
But a change in the way that credit reports are calculated might help you out.
One of the UK’s three credit reference agencies is set to take consumers’ rent payments into account in credit reports. Experian is launching Rental Exchange to include tenants’ rental history, in the hope that it will strengthen their credit ratings. (Rent payments will only be included in reports with consumers’ permission).
This means that if, like most first-time buyers, you have been renting for some time – that could now count towards your credit history.
Of course you need to pay your rent on time, although Experian have said that in the case of genuine disputes over a missed payment, the information will not appear on a tenant’s record until it is resolved. The company will also safeguard credit records from being affected by late payments of housing benefit.
This is a positive move from Experian. For many people who have not yet built up a credit profile, this is a chance to improve their ranking. It will also emphasise to tenants the importance of paying rent on time. Their payments will, in effect, be like a mini mortgage.
For more advice and help getting a mortgage for the first time, contact us at Limetree. We are happy to help in any way we can.
No Comments »
We always stress the importance of involving your accountant as early as possible in the house buying process. This has not changed – if anything it has become even more essential for the self-employed.
Now, when you apply for a mortgage, there are even more back office checks being done. For example, the Mortgage Verification Scheme (MVS) kicked in fully this month. Under the MVS, mortgage lenders send details of borrowers to HM Revenue and Customs who crosscheck it against their tax returns.
It is a good thing that a variety of fraud systems, such as the MVS, are in place. Our only worry is that a mortgage lender might be fixated on a self-employed person’s net profit, without understanding their income situation properly.
For example, a client might have a contract go wrong and end up losing £50,000 of her net profit, but this could clearly be a position that will not repeat itself the next year.
As a general rule if you are self-employed it helps to request an SA302 in advance of your mortgage appointment. This is your tax calculation from HMRC.
Individual circumstances are the reason to involve an accountant early on. An accountant may be able to shed some light on your ongoing financial situation where the black and white of a computer system fails.
For more information contact Limetree Financial Services.
No Comments »
Last week my colleague Andrew Beer tried to raise some Christmas cheer for first-time buyers. Although deposits for house prices are high, we are seeing a shift in the loan-to-value percentage that lenders are prepared to offer.
While first-time buyers are working hard to raise the money up front, lenders are beginning to offer higher proportions of the property value as a loan. The more you can borrow, the less deposit you need.
True, many of these higher LTV mortgages come with restrictions. But the picture is definitely improving. Rates on these products are getting more competitive too.
Woolwich is a good example. It has recently extended its range of fixed-rate mortgages to 90% loan-to-value. This still leaves a buyer needing to find 10% deposit. But if that can be done, the 3-year fixed mortgage comes with a rate of 4.99%. What’s more, there are no fees to set it up.
As for restrictions, Woolwich set a minimum loan amount of £50,000 and a maximum of £500,000.
Products like this are not just important for first-time buyers. We are convinced at Limetree that improving the first-time buyer market is key to getting the whole property market active again. Woolwich’s latest move is a positive one.
I hope that this brings a bit of festive cheer not only to first-time buyers but also to everyone hoping that the mortgage market improves for them. If you need any advice, or to find the best mortgage deal for you, get in touch with Limetree.
No Comments »
The Financial Times Adviser contacted me recently for a comment on recent research from Santander. The research suggests that first-time buyers have to work much harder to raise a deposit for their first home – or have resigned themselves to never being able to afford one.
But times are slowly changing and you may be surprised what you can afford.
No room at the inn
Average house deposits have reached £37,375 or 17% of the overall property value. The FT article highlights that almost one third of aspiring homeowners have taken second jobs or are working overtime to save up this sort of money.
27% of those who want to buy in the next 5 years would consider taking out a personal loan to raise a deposit, compared with only 4% in 1999. And a third of all people who do not currently own a home think that they never will.
This is no surprise to us at Limetree. As I told the Financial Times, it has become very difficult for first-time buyers to finance their deposit. In our area, there has been a huge increase in inheritance money being used to pay for a home deposit. About a quarter of our business finances the deposit this way, compared to a fifth who rely on savings.
Good tidings of great joy
All is not doom and gloom. The market is slowly brightening up. A few lenders now require only a 5% deposit and others have moved from 15% to 10% deposits within the last couple of weeks. Santander themselves have a range of 10% LTV mortgages.
Also, the rates on high loan-to-value products have started to soften since earlier in the year as more lenders enter this market. These mortgages are often restricted in size and lending areas and will require the applicant to be of a good quality. But better deals are beginning to come through.
Perhaps if you’ve been despairing about unattainable deposits it is time to review your options? If you want to find out, give us a call.
No Comments »
Ever wondered why you need a mortgage broker?
Can’t you just walk into a high street bank for a loan, or phone the number you saw on the TV?
Of course you can, but your choice will be severely limited. There are thousands of mortgages out there, for people in all sorts of different situations. Fixed rate, variable rate, tracker mortgages, capped and collared…
With interest-only mortgages, you only pay back interest on the loan. With repayment mortgages, you pay back both the interest and the capital that you borrowed over the term of the loan.
Ah yes, the repayment term – how long should that be? And do you want a short term discounted deal or something that you don’t have to look at again in a few years?
What about up-front fees and the all-important deposit question – how much loan-to-value do you need to borrow?
There are other considerations too. Some lenders offer cashback. You might want flexibility in your payment schedule. If you have a decent amount of savings then now might be a good time to offset your mortgage.
The possibilities are vast. You might know what you need and are just trying to find it, or you might not know what – if anything – suits your situation the best.
We know. And that’s the point of mortgage brokers. We understand how all these different mortgages work. We know the different lenders – the ones that are hidden from sight as well as the ones on the high street.
In fact, there are thousands of mortgage products that are only known to mortgage brokers. In the last half a year alone, 3,900 new products have become available to us – products that you can’t get directly as a borrower.
Brokers find the best deal from all of the mortgages available.
So if you want real choice, talk to a broker. We can find the best mortgage for your unique situation, and get it set up as smoothly as possible. We are impartial, and the advice is free. Let us know what you need and we will do our best to help.
3 Comments »
