Purchasing a Property | What You Need to Know

From everyone here at My Mortgage Experts, we hope you’re staying safe during this time. As government guidance is allowing estate agents to go back to work, this means you can start thinking about moving house or buying your first property again. Hopefully, this will be sooner rather than later.

As things are moving so fast at this time, we wanted to create an informative blog about purchasing a property. One that will hopefully explain everything you need to know. From applying for a mortgage to house insurance. And remember, even if you don’t plan on purchasing a property soon, it doesn’t hurt to plan. Plan: this is one of the best tips we can offer you.

So, without further ado, let’s get started:

Mortgage deals may not be available and lending is subject to individual circumstances and status.

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Applying for A Mortgage

If you want to buy anything you need to have the right amount of funds. Obvious, right? When it comes to purchasing a property, however, it isn’t so simple.

To buy a flat or a house will cost more than most of us will have in our bank account at one time ever. So, how does anyone buy a property at all? The answer is with a mortgage.

A mortgage is a type of loan you take out against the value of the property you’re purchasing. You can take out a mortgage to buy either land or a house or flat. We’re going to discuss the different types of mortgages on offer and the benefits available. But, the general idea is you pay back a certain amount of the loan monthly over time. How much will vary depending on the type of mortgage you have taken out.

This can sound daunting if you’re purchasing a property for the first time, right? Of course, such a big financial commitment is going to feel intimidating initially. However, there are First Time Buyer Mortgage Schemes available and Guarantor Mortgages to assist first-time buyers. Help is also at hand to guide you through the whole process by speaking with our qualified and professional Mortgage Broker team.

Deposits

Typically, mortgages are available from 95% i.e. you put in a deposit of 5% for the property that you want to purchase. The deposit funds need to be available but are only put into the transaction when completing the purchase transaction (so right at the very end).

There are also schemes available such as ISA’s to assist you with saving for a deposit.

It should be noted, that generally the higher the level of deposit, the better the interest rate offered by the lenders will be. So, therefore, if you have a deposit of 10% compared to 5%, the 10% deposit would generally attract a better deal from the lender.

It should be pointed out that during the Covid-19 pandemic; Lenders have been more risk-averse. This means that they have generally wanted to see higher levels of deposits i.e. 10-15% as a minimum. As the markets gradually return to normality, we should see the return of 95% loans in due course.

First-Time Buyer Mortgage

If you’re purchasing a property for the first time have a look at our mortgage eligibility checker. This allows you to have an instant indication on whether you’re eligible for a mortgage. Without even having to speak to someone. The decision will be based around your financial position and a financial assessment.

If you’re eligible, one of the mortgage schemes that can help you to purchase a home is Help to Buy. A lot of young people trying to break out on their own will need financial assistance to purchase their first property. This is the reality of the world today for first-time buyers.

Help to Buy is a government scheme to assist first-time buyers to get mortgages for new build homes. As long as the value of the property being purchased is below £600,000. The scheme allows a first-time buyer with a deposit equivalent to 5% of the property value to be eligible for a mortgage.

So as an example, if you had a 5% deposit you would arrange a mortgage for 95% of the property value. The Help to Buy loan scheme (if eligible) contributes a further 20% deposit to your purchase. You therefore only need to apply for a 75% loan, meaning generally a better deal and a higher chance of application success.

The remaining money is paid for by a government loan. This is an interest-free loan for the first five years. At the end of the five-year period, you will need to either repay the loan or start paying interest on it.

Please note that we have focused the information on the Government-backed scheme for those buying in England. There are different schemes available if you are purchasing in Wales, Northern Ireland or Scotland.

Please note, this is only available for new build properties. Speak to one of our experts if you need further information.

This scheme is available in England only. The Scottish Government, Welsh Government and Northern Ireland Housing Executive run similar schemes – check out their websites.

Home Movers

Definitely, there is positive movement in the market and a lot of activity with properties now available to view.

Again, generally, the biggest deposit that you have the better as this will generally benefit you with a lower interest rate.

Getting your finances in order and any mortgage requirements pre-agreed is sensible. Whatever the market conditions, it is really important to ensure that you are in the strongest possible position so that you can move quickly to strike a deal. We would highly recommend, complete our mortgage eligibility check or even better speak with one of our professional advisers to get your mortgage agreed in principle.

handing over keys to a new property

Life assurance

At My Mortgage Experts, we believe that it is important to protect you and your new home. You will have had to work and save for your deposit. Therefore, once you have bought your new home it is vitally important that you protect your most valuable asset. We can assist, by providing you with a full personal mortgage protection review.

Insurances to consider are, protecting your income, life assurance, critical illness, unemployment cover and home insurance. Just imagine a situation where for whatever reason yours or a partner’s income were to stop? What implications would this have? Insurance will give you valuable peace of mind, ensuring that if the worst happens, you have provisions in place to protect you.

Income protection insurance isn’t a conventional house insurance policy. This type of insurance plan is available in a variety of policies. The purpose of an income protection scheme is to cover your costs in the event your income falls. This could be due to an accident at work or becoming unemployed. This insurance policy will protect your interests and allow you to continue to repay your mortgage.

To find out more about purchasing a property, get in touch with us today:

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Give us a call on 01604 300033 or please feel free to fill in the enquiry form on our contact page today.

How Does a Mortgage Work?

Let’s take things back to basics. Here is a step by step guide to the mortgage process.

But the thing is, there is more than one type of mortgage. In this blog, we’re going to go through different types of mortgages. As well as guide you through how a mortgage works. Here are some examples of different mortgage options on the market.

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What is a Mortgage?

A mortgage is a loan you take out to help you buy a property or land. For most lenders, you will have to put down a minimum of a 5% deposit and the rest of the money you need will form the loan. Typically, most mortgages are taken out for a period of 25 years (Some mortgages may have longer or shorter terms) and the mortgage loan is secured against the value of your property.

You will pay back this loan monthly over an agreed period of time. You will also pay interest on the amount you have borrowed alongside your monthly payments. This is either a fixed interest rate or a variable rate of interest. Fixed interest rates are unchangeable payments you agree to. Whereas variable interest rates will fluctuate depending on the current interest rate set by the lender.

Affordability

The interest rate of your mortgage is something you have to consider when planning your monthly payments. It’s important that the mortgage applied for is affordable and Lenders have strict criteria concerning affordability.

 With affordability being a key consideration it is important that you work out your outgoings. Include financial commitments such as HP, loans or credit card bills, tax, food bills, and household bills. These are all things your lender will consider when calculating your affordability when you apply for a mortgage. Mortgage lenders require proof of your monthly income and specific expenditure information. As well as if you have any debts to repay.

happy couple signing for a mortgage


Mortgage Interest Rates

Typical interest rates are the lender’s variable rate (often known as the standard variable rate), fixed rates, tracker rates and discounted rates.

Variable-rate mortgages. A variable-rate is set by the individual lender. As the name suggests, with a variable rate mortgage your interest rate and mortgage payment could go up or down from month to month. If you choose a variable interest rate, this can be beneficial if interest rates drop.

Fixed-rate mortgages set the interest rate at a fixed amount for a period of time. This is normally a period of 2 to 5 years, however, there are longer-term fixed rates around sometimes up to 10 years in term. The advantage of the fixed-rate is a known monthly payment, however, if interest rates drop below your rate, then you will be potentially paying more than you need to.

Tracker rates, follow the Bank of England base rate. The rate could be described as “base rate +2%, this means that your interest rate would be the Bank of England base rate +2%. However, if the Bank of England base rate changes, the rate you pay will change, up or down.

Discounted mortgages follow the lender’s standard variable layer rate. The lender sets the variable rate and typically when the Bank of England changes the base rate, up or down. Then the variable-rate will generally follow suit plus or minus a margin for the lender. This again means that the monthly payment can change up to or down.

With most mortgage deals, all your rate will revert to the lender’s variable rate when your initial scheme comes to an end. So, as an example, if you have opted for a two-year fixed rate, at the end of the 2 year period your mortgage would revert to a variable rate.

How Mortgages Work When Moving Home

Depending on your mortgage deal, you may be able to transfer an existing mortgage loan onto your new property. This will depend on the value of your current property and your new house. You may be asked to take out more money to afford your new property. But, you may also be able to pay off your existing mortgage by scaling down in home size.

Types of Mortgages

There are three main types of mortgages:

● First-Time Buyer – This a mortgage specific for people taking their first step onto the property ladder. If you’re buying your first home, this is the mortgage that you will benefit most from.

●     Remortgage – Remortgaging can be a great way to save money and find a better interest rate for a similar mortgage type where there is no additional borrowing. It is always important to consult a mortgage advisor when you consider remortgaging. This way you ensure you find the best deal for you based on your needs, circumstances and preferences. You may have to pay an early repayment charge to your existing lending if you remortgage.

● Home-Mover – This type of mortgage helps you to move from one property to another. For people who have already brought their first home.

Whenever considering which mortgage is right for you and your circumstances, it is vital to consult a mortgage advisor. For more information from our mortgage experts, get in touch with our team today:

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Give us a call on 01604 300033 to enquire about all the mortgage options available to you. If you have any questions, please contact us to discuss your options – https://www.mymortgageexperts.co.uk/request-a-callback/

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“A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.”

Moving house during the coronavirus outbreak

Moving house during this time will require new processes and adaptations to ensure that everyone is safe and the risk of spreading coronavirus reduced as best as possible. Here is our quick step guide on how to stay safe and protect others when moving during this time.

To view the full guide, please click the image below

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Coronavirus – The Impact on Mortgages and Property Purchases

With the impact of Coronavirus affecting almost every industry, mortgage applications are no exception. Mortgage providers are still working hard to help applicants, but naturally there will be some disruption.

This guidance document aims to provide some additional information on
the impact the current situation has on any existing mortgages, as well as
highlighting some key considerations if you are in the process of applying
for a mortgage.

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Interest Rates

The Bank of England base rate has dropped to the lowest in its history,
which means that mortgage interest rates will also reduce. If you have
a tracker rate mortgage, then the rate you are charged will also reduce
because the interest rate you are charged tracks the Bank of England base
rate. In this scenario, your mortgage provider will be writing to you in due
course, to confirm how this will affect your monthly mortgage payment.
Even if your mortgage is not deemed a ‘tracker’ mortgage, you may be
on a variable deal. Although variable deals do not specifically track a base
rate, variable deal interest rates are set by your mortgage provider, and
can fluctuate in line with market conditions.
If your mortgage is on a Standard Mortgage Rate (SMR) or Standard
Variable Rate (SVR) then it is likely that your lender may reduce your
interest rate moving forward and will write to you shortly to confirm
how this will affect your monthly mortgage payment.

Mortgage Payment Holidays

In line with the UK Government announcements to assist mortgage
borrowers, mortgage providers are offering payment holidays in
an effort to assist those who have been financially impacted by the
Coronavirus outbreak. If you are facing financial difficulty and wish to
apply for a payment holiday, most mortgage providers have requested
borrowers contact them directly, as opposed to going via a broker.

The Financial Conduct Authority (FCA) wants to reassure that if you
request a payment holiday, there will be no impact on your credit
score and that companies should not be investigating the reason
for requesting the payment holiday. This guidance is specific to
mortgage borrowing, therefore if you are concerned about financial
difficulty linked to any other borrowing, e.g. credit cards or loans, it is
recommended that you contact your credit provider to discuss how
they can help you at this time. You can also contact the Money Advice
Service at www.moneyadviceservice.org.uk, which provides free and
impartial support to anyone concerned about financial difficulty.

The method to apply for a mortgage payment holiday varies
from lender to lender. Owing to the high volume of calls, it is
recommended that you check your mortgage provider’s website for
further instruction before telephoning. To avoid high telephone call
volumes, some mortgage providers have set up an online application
form for customers who wish to request a payment holiday.

If you are in financial difficulty, it is important you do not simply
cancel your monthly mortgage direct debit without contacting your
mortgage provider as this could have a detrimental impact on your
future credit history.

One thing that is key to bear in mind is to consider when your current
mortgage deal may end. If your mortgage deal is ending soon, it is
important to speak to your mortgage provider before requesting
a payment holiday as some mortgage lenders will not allow you to
review your deal whilst you are in a payment holiday period. This is
particularly important to consider, as once your deal ends it is likely
your interest rate will automatically revert to a Standard Mortgage
Rate (SMR) or Standard Variable Rate (SVR). These SMR and SVR
interest rates are likely to be higher, and if you are unable to review
your deal until the end of your payment holiday i.e. in 3 months, the
interest you will be charged will be a higher amount, and you may end
up paying more overall.

Mortgage Protection Payment Insurance

In addition to mortgage payment holidays, it is worth checking if
you hold Mortgage Payment Protection Insurance (MPPI). This is an
insurance policy which provides monetary support to pay your mortgage
if you are off work for a long period of time, as a result of illness, or in
some circumstances, through unemployment.
These types of policies will typically require you to be off work for at least
30 days before your claim can be submitted, but it’s worth checking to
confirm if you have cover and what your cover provides.

Remortgaging or Switching Your Deal

As mortgage interest rates have dropped, remortgaging your home to
a new provider could be a good opportunity to save money. It is worth
noting however that some mortgage providers are now limiting the
amount a customer can borrow and in some cases, not taking new
mortgage business at all in the current climate.
This does not mean you cannot still switch your mortgage deal with your
current lender to a more competitive interest rate. For borrowers who
are not currently locked into a deal, the option of a ‘product transfer’,
where you exit your current deal but remain with your existing provider
on a lower interest rate, could save you money. Please contact your
mortgage broker to discuss this further.

Moving Home

If you are thinking about buying or moving home, it is still possible to
obtain a mortgage, however timeframes may be significantly impacted.
The simple logistics of property viewings and valuations are severely
limited at present owing to social distancing obligations. Whilst this may
mean certain re-mortgages will still be possible, it could potentially have
a detrimental effect on purchases, as those involved in the process will
understandably want a property to be sufficiently valued, especially if
home improvements have been done.

Clarification from the Government about whether home purchases and
home moves should continue at the current time have said:

• Home buyers and renters should, as far as possible, delay moving to a
new house while emergency measures are in place to fight coronavirus.
• If moving is unavoidable for contractual reasons and the buyers and
vendors are unable to reach an agreement to delay, people must
follow advice on social distancing to minimise the spread of the virus.
• Anyone with symptoms, self-isolating or shielding from the virus,
should follow medical advice and not move house for the time being.

I am awaiting a valuation for a property I am wanting to buy, how will this be affected?

Some lenders are able to do desktop valuations on properties, as
opposed to physically going out to view them. If this is not possible, in
some instances larger estate agencies are offering video valuations to
mortgage providers to help avoid delay with mortgage applications.
This is not an option for all companies or all mortgage transaction
types. Some providers have postponed physical valuations until
further notice, however all other work pertaining to your mortgage
will be going on in the background to help avoid any further delay.
Once it is deemed safe for valuers to proceed with physical valuations
and visit the property, then your mortgage lender will be able to
assess and progress your application accordingly.

I have instructed a HomeBuyers Report on the property I am purchasing, how will this
be affected?

In line with UK Government guidance, it is likely all homebuyers
valuations will be suspended, with the situation assessed again at a
future date. Any booked surveys will be cancelled and then rescheduled
following the outcome of the latest Government advice at that point.

I want to apply for a further advance on my mortgage to help with reduced income at this
time, can I do this?

Some mortgage lenders are not currently accepting any new applications
at this time. This is to help ease any backlog of ongoing applications,
and simply to protect themselves and borrowers at this uncertain
time. However should your mortgage provider still be accepting new
applications, and subject to their satisfactory assessment of your income,
then applications for further borrowing may be possible.

Please be aware that should your lender require an up-to-date physical
valuation of your property, then the application may be subject to the
delays mentioned above, until such time valuers are able to gain access
to the property in line with UK Government advice.

I work in an industry severely affected by coronavirus, will my application be declined?

At this moment there are no widespread limitations from mortgage
providers restricting the occupations of customers they will lend to.
There are a few instances of mortgage lenders who will currently not
consider mortgage applications from customers who work in travel,
retail, hospitality and entertainment. However this is an exception, and
not the generic stance across the board.

I have already submitted my application, will I receive the interest rate deal I applied for?

Once your mortgage lender has received your application they should
honour the deal. Even if that interest rate deal is now no longer
available, you will have reserved the product and the rate at the time
your application was submitted.

A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME OR PROPERTY. YOUR HOME OR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

How Does a Remortgage Work?

Remortgaging is something that people go through all the time. But what does a remortgage mean in practice? What are the actual benefits of remortgaging a property – and when can you remortgage at all? Some of the processes can seem a little confusing at first, which is why we’re here to help break things down a little for you.

Continue reading “How Does a Remortgage Work?”

Covid19 Update – April 2020 – Here to Support our Clients

In these difficult times we wanted to let you know that we’re still busy working to help meet the needs of our clients, and are available to discuss any borrowing and protection requirements you may have.

We have ability to communicate via telephone, email, social media, and video-conferencing.

In this bulletin, we set out some of the financial support offered to help tackle the impact of Coronavirus. However, if you’re keen to consider your borrowing needs, there are some excellent mortgage deals on offer – further aided by the reduction in the Bank of England’s Base Rate to 0.1%!

Stay at home, protect the NHS, save lives

The Legal Bits

■ The contents of this bulletin are believed to be correct at the date of publication (March 2020).

■ Every care is taken that the information in the COVID-19 UPDATE is accurate at the time of publication. However, all information and figures are subject to change and you should always make enquiries and check details and, where necessary, seek legal advice before entering into any transaction

HOMEBUYER REGRETS, THEY’VE HAD A FEW

Thousands of people move home every year and settle happily into their new property, but some experience buyer remorse. Here are some of the problems that can occur and how to avoid them.

FAILING TO CONDUCT A STRUCTURAL SURVEY

Poor quality building work or a previous owner’s neglect can mean expensive repairs, so a structural survey is important. More serious problems like subsidence can leave a house uninsurable and potentially unsellable.

MAKING A RUSHED DECISION

Buying a property is a huge commitment and needs careful consideration. However, it’s easy to put yourself under pressure to buy, especially if it’s your first home. Take time and think carefully before agreeing to purchase a property and be sure it’s right for your needs.

PAYING TOO MUCH FOR YOUR PROPERTY

It can be tempting when faced with the property of your dreams, to spend more than your budget. The excitement of finding a home that you like can lead to you overstretching financially and then regretting this afterwards. Have a clear price in mind and be prepared to widen your search area in order to keep within your budget.

SHOULD POLICY REFORM REPLACE THE BANK OF MUM AND DAD?

The House of Lords Committee on Intergenerational Fairness and Provision has called on the government to make society fairer by supporting younger people in employment and the provision of housing, rather than leaving many to rely on help from the Bank of Mum and Dad.

The Committee’s recommendations included requiring better-off workers over the State Pension age to pay National Insurance Contributions while they work, and a review of the triple lock on State Pensions, free TV licences, free bus passes and winter fuel subsidies.

SELF-STORAGE FACILITIES: IF IT’S WORTH STORING, IT’S WORTH INSURING

Self-storage units have become a popular way of finding extra space for possessions between house moves, during renovations, or just because there isn’t room for them at home. If you’re putting items into a self-storage unit, you’ll need an insurance policy to protect them.

Nearly all of the major storage companies offer their own form of storage insurance, and many make it compulsory to have insurance in place before the storage unit can be rented.

When you’re rushing through the paperwork and arranging a storage unit, it’s easy to just tick the box and set up the storage company’s own insurance policy. However, you need to be aware that this might not be your best option and you should take advice. Recently, MPs have raised concerns about the policies sold by storage companies as they may not be value for money or provide sufficient cover.

GETTING THE RIGHT COVER

Home insurance policies can provide cover for ‘items temporarily removed’ from your home, although you’d need to check as there may be a time limit, typically 30 to 90 days, and you will need to inform your insurer when you put items into storage.