Next Time Buyers
It used to be considered to be the preserve of the super-rich or of clients willing to take very high risk positions. However, in recent years, we’ve seen the market for bridging finance expand rapidly.
Bridging finance is usually an interim loan, arranged quickly to cover the gap between expenditure (such as buying a house) and the next stage of financing (such as selling). It is becoming a convenient way of making a deal work. Although the costs are still relatively high, the opportunities it can open up mean we are seeing more enquiries for bridging from people in all sorts of situations.
Traditionally bridging has always been seen as a chain-breaker in property sales. However, more and more we are seeing it used for:
- Investment purchase
- Short-term cash flow
- Home improvements
- Business use
These days there is a wide variety of bridging products available:
- Loans from £30k to £5 million
- Rates from 0.85% pm
- 1st and 2nd charges available
- Daily interest, with interest payable monthly or effectively borrowed as part of the loan
- No exit fees
- Terms from 1–23 months, with one lender even offering a 3-year bridge
Bridging finance is not for everyone, but is more versatile than it used to be. Why not call us to find out if it could help you with your next property move or development?
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There is a growing increase in the number of homeowners leasing their roof space to specialist companies for the installation of solar panels. But is this arrangement making their property un-mortgageable?
The Council of Mortgage Lenders (CML) has issued guidance on what solar panel leases should, and should not, contain, if they are to be acceptable for mortgage purposes.
One crucial detail: if a property has a solar panel lease which does not contain a mortgage break right, then lenders will be unable to accept the property as security.
Because some situations are in doubt, all cases subject to solar panel leases will not therefore be eligible for the free standard legal fees that CML currently offer to remortgage customers. The reason is that these cases will require their panel solicitors to review the lease first to check that it complies with CML guidance.
If you are leasing your roof to a solar panels company, or are intending to do so, and want to remortgage, we recommend that you obtain this information as early as possible in the mortgage application process.
For further information on solar panel leases read the CML guidance.
For further information on mortgaging, and finding the best deal for you from the many available, contact Limetree Financial Services. It’s free to find out.
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If you are sitting on an interest-only mortgage with a low tracker rate, you might be in for a double shock.
Everyone expects interest rates to rise at some stage. Many clients will then look to remortgage. But when they do, the monthly repayments are likely to be much higher, as lenders restrict the ability to borrow on an interest-only basis.
To make matters worse, Santander announced recently that they will not accept applications for interest-only mortgages for over 50% of the property value, which is low. And other lenders are also restrictive – lending a maximum of 66%, or at most 75%, loan to value.
Another problem is that many interest-only lenders also require that the equity is over £150,000. (Equity is the amount of money that you would have left if you sold your property and paid off the mortgage).
Case study: interest-only remortgage
Let’s say you have a £250,000 property with a £150,000 interest-only mortgage, and as the rates rise you want to remortgage to find a better deal.
You would not be able to remortgage interest-only with Santander because you would be borrowing 60% loan-to-value.
And although this would be a LTV below 66% or 75%, the following lenders also would not (currently) lend to you: Nationwide, Woolwich, Cambridge Building Society, to name just three. That’s because you would fall short of £150,000 of equity.
The double whammy awaiting interest-only borrowers is the rise in rates combined with an increase in monthly repayments – as many of them will not qualify for interest-only and will have to start repaying capital as well.
But all is not lost. Contact Limetree for a free chat about your mortgage options. We are truly independent brokers who find the best mortgages from across the whole market, and may be able to find you a way to continue with interest-only.
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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.
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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.
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