Five tips to help secure the best mortgage for you.

As experienced mortgage brokers we’ve spoken with many people with very different financial situations. There are five things that everyone should do, regardless of how deep your pockets are, to maximise your chances at getting the best mortgage.

  1. Save the biggest deposit you can: Mortgage lenders reserve the best rates for people who can deposit the largest amount.  The loan-to-value is the proportion of the property’s value that you are borrowing. Mortgages are priced by the loan-to-value – the higher this figure is, the more expensive the mortgage will be. E.g. If you can put down a 15% deposit, instead of a 10% deposit you may be rewarded with a lower mortgage interest rate. To get the most competitive mortgage deals on the market, you will usually need a deposit of 25% upwards.
  2. Know your credit score: When you make an application for a mortgage, lenders will refer to your credit score. This is to help them decide if they think you’re a risk worth taking – as a borrower, they need to assess as a borrower you will be a responsible and reliable and likely to repay the debt. Usually, a higher score means you’re seen as lower risk – the more points you score, the more chance you have of being accepted for a mortgage, and at better rates. If you have a low credit score there are things you can do to improve it, we can advise and guide you to get your score back up to where it needs to be.
  3. Pay off unsecured debt and closed unused accounts: If you’re not using an account or credit card it is worth closing it. Lenders will look at the total amount of current and available debt and deduct any credit you have open – even if you aren’t using it.  Because you have the potential to use the credit or an overdraft facility they have to take this into account and this could reduce the amount they will lend you for your property purchase. Additionally leaving open old accounts that you aren’t monitoring could mean that you be a fraud risk, and could also mean some of your details may be out of date which can affect your credit score.
  4. Get on the electoral roll: Lenders need to identify you.  The easiest and more reliable way they can do that is by checking the electoral roll. Your mortgage application may well be refused if you are not registered on the electoral roll at your current address. This is easily remedied. Contact your Local Authority and ask for a registration form or sign up online.
  5. Be prepared with all your documents: A mortgage lender will also require further identification to prove who you are, so make sure you have a current passport and that the address on your driving licence is correct. Other documents you will need to provide include payslips and bank statements for the last three months. You will also need P60s for the last two years, and for employees who receive a bonus must provide evidence of this too. If you receive any other income, such as benefits or maintenance payments, you’ll also need documents to prove this.  If you bring these documents (or send secure copies) to your meeting it means we are armed with all the information we will need to move forward quickly with finding you the best mortgage.

We hope you found those tips useful, if you have any questions or want more information contact us directly or visit the website.

James Hammond

Managing Director

Limetree Financial Services

01223 266140

jhammond@limetreefs.co.uk

Posted in First Time Buyers, Mortgages, Next Time Buyers, Remortgaging, Uncategorized

Dispelling the “Help to Buy” Myths

Many people are confused or uncertain about the basics concepts around the government’s Help to Buy (HTB) scheme.  In our experience, HTB presents a fantastic opportunity for home buyers to take their first step or move up a rung on the housing ladder.

As mortgage brokers we are asked a lot of questions about HTB and our attitude is –  there are no silly questions about mortgages.  Buying a property is a major commitment, you should always feel confident that you know as much as you can and that you don’t have unanswered questions around finances.

Here are just a few of the common myths and questions that we often hear or asked by clients. And of course our responses, we want to help clear up any confusion you may have about HIB. 

  1. Is HTB just for first time buyers?         

Help to Buy is NOT just for first time buyers. However, there are some other restriction you must be aware of: it is exclusive to new-build properties and on completion of your purchase it must be the only property you own. 

  • I think I earn too much to qualify for HTB.         

There is no limit on income. There is a simple affordability calculator which assesses income,  property purchases can be no more than 4.5 x income up to a maximum purchase price of £600,000.

  • Is Help to Buy to stop at the end of the decade?        

No, it has been extended until 2023.  However property purchases after 2021 will only be first time buyers and for homes with a set price cap based on the region you buy in.

  • Am I only able to put a 5% deposit down on HTB?         

5% in the minimum deposit. You are able to put down a bigger deposit to qualify for potentially cheaper mortgage rates.

  • I am not a British citizen so assume I cannot use the HTB scheme.        

It doesn’t matter if you are a UK national or foreign national, as long as you have a UK Visa you can consider using the HTB scheme. 

We hope this article was useful and you feel more informed about HTB.  We aim to support home buyers as best as we can, we will be publishing a Jargon Buster aimed at First Time Buyers soon. In the meantime if you would like to know more about the Help to Buy scheme and how it could benefit you in your next house purchase please contact Limetree Financial Services.

Michael Taylor-Brown

Director

01223 266140

mtaylor-brown@limetreefs.co.uk

Posted in First Time Buyers, Next Time Buyers

Get Ready to Beat the Rate Hikes

Last month Mark Carney warned that a base rate increase is likely towards the end of this year or very early in 2016. Although it’s expected to be a minor increase, it’s the general trend that home owners need to prepare for – it may be worth taking steps soon to get ahead of the game.

With lenders also expected to up interest rates on mortgages, making monthly mortgage payments more expensive, it makes sense to start looking for new fixed-rate deals before banks and building societies take action.

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Posted in First Time Buyers, Mortgages, Next Time Buyers, Remortgaging

Landlords Can Now Cover Rental Shortfall With Personal Income

Back in February our blog included a story about Barclays’ plans to let landlords cover rental shortfalls with personal income. We can now update you on recent developments: the bank has just scrapped its old B2L mortgages to make way for this new approach.

Now, Barclays puts landlords through an affordability assessment to find out whether rental will be met. Where there’s a shortfall, landlords can still potentially get a mortgage if they have enough disposable income to plug the gap. If applications were not completed by July 24th, landlords need to re-submit under this new assessment criteria.

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Posted in Buy-to-let, First Time Buyers, Mortgages, News, Next Time Buyers, Remortgaging

New Demand for Interest-Only Mortgages

If you thought interest-only mortgages perished during the financial crisis, be prepared for a revival in this area of borrowing. But this time, banks have tightened their lending criteria, narrowing the amount of people who can use them.

Take Leeds Building Society for instance. It’s among the first of the lenders to return to interest-only, offering customers an option to only pay the interest on the loan, and pay off the rest of the capital at the end of the mortgage term.

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Posted in Mortgages, News, Next Time Buyers, Remortgaging