Remortgaging
I contributed to the Financial Times Adviser recently in a story about a lender improving its remortgage product for pensioners.
National Counties has reduced the completion fee of its 10-year fixed rate mortgage to £495 and expanded the available repayment term, as well as granting the ability to repay up to 10% of the original advance each year.
At Limetree we normally only recommend products longer than five-year fixed when the client has a fixed income. But this product from National Counties suits people with 10 or 15 years to run on their mortgage even as they enter retirement. It could even allow them to use part of their pension to pay it off a bit sooner.
The age limit for the remortgage is 75. There are not many products like this for senior homeowners, so the enhanced deal is very welcome. They are offering a rate of 4.19% up to 25% loan-to-value.
National Counties is a small niche lender that has always seemed thoughtful. If you have built up 75% equity in your home and are into your retirement, remortgaging with them will allow you to pay off the rest of your mortgage at a superb rate.
Contact Limetree to find out more about the conditions.
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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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We have had an increase recently in enquiries regarding military mortgages. If you work for the armed forces, the good news is that lenders are finally beginning to understand your situation when it comes to property.
Because of the amount of time spent on service overseas, lenders can be dismissive of the needs of the military. One Army member expressed the problem this way:
I recently wanted to remortgage my family home but was frustrated to find that, because I am presently letting it due to service overseas, that most mortgage lenders would only offer buy-to-let products, which incur far inferior terms (rate and LTV).
I argued that it was my main family home and as only my military service compelled me to let it for a short period, I should qualify for residential terms.
Lenders are beginning to get it, however. We have found a number of lenders that allow armed forces personnel who are posted overseas on operational duties to rent out their property, or remortgage it, without change or having to switch to a buy-to-let mortgage.
It is also apparent that these very same lenders also accept deposits via the Long Service Advance of Pay scheme – a long-established MoD scheme under which the government provides a loan for the deposit on a property.
If you are in a similar situation and would like to know which lenders can help you, give Limetree a call.
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