What to do Pre-Application

For you or your loved ones getting a mortgage may seem a little bit like climbing Everest. The summit is incredibly far away and it’s going to be a long journey that requires a lot of commitment. That’s because the process of buying a home doesn’t start by selecting a property that’s within your budget – it can take months, even years of preparation to get fully mortgage-ready.

There are a number of things you can do in advance to prepare for a mortgage application that will make the whole process a lot easier and smoother for you. These include but are not limited to:

Saving for a deposit
This might sound like a simple and obvious piece of advice but it is still incredibly important. The more you’re able to save for a deposit means the less you will need to borrow from the lender, which means that you’re taking on less debt.

This means that you will have a smaller loan-to-value which will generally allow you access to lower mortgage rates so you will be paying less interest across the mortgage term. Ultimately having a larger deposit can save you money in the long run and your adviser will be able to help you secure the deal that’s right for you dependant on the size of your deposit.

Register to vote
Registering to vote, if you’re not already on the electoral register, is the easiest thing you can do to get yourself mortgage-ready. Without being registered it’s almost impossible to get a mortgage as the majority of lenders use the electoral roll data for identity checks – for this reason, it’s also important that you make sure your address history is up to date and that your forms of identification are accurate.

Build up your credit score and review your credit history
Check your borrowing history in advance. This will allow you to dispute any inaccuracies so that lenders will receive the correct information on your ability to repay your debts. Your credit score, on the other hand, will give an indication of how creditworthy lenders may find you. If your score is low, you may want to see if there are any credit habits that you need to improve on before making a mortgage application. It’s important to note, though, that scoring bands can vary among different credit reference agencies which is why seeking professional advice is important.

Clear your debt or reduce your debt-to-income ratio
Your debt-to-income ratio is the proportion of debt that you have in relation to the money you earn – the higher this number, the more debt you have. Lenders typically prefer applicants with a lower ratio as it means you’re more likely to have the funds to make your monthly mortgages repayments. If you’re in a position to be able to clear your debts completely this will make you more attractive to potential lenders.

Saving for other fees
Whilst saving for a deposit is somewhat obvious, there are also a number of other fees and costs that you realistically need to be saving for before applying for a mortgage. There are conveyancing fees, paid to your solicitor to cover all of the legal work associated with buying a home, and moving costs that, among other things, need to be considered.

While this is only an overview of just some of the things you can do to get yourself mortgage-ready your mortgage adviser will be able to give you more detail on how to fully prepare yourself.

If you want more advice on how to become mortgage-ready contact your adviser today. If you’d like to discuss the options available to you, contact your adviser today.

If you’d like to discuss the options available to you, contact your adviser today.

Most first-time buyers don’t know when the Help to Buy ISA ends

First-time buyers are living in a time when it appears to be much harder to get that first step onto the property ladder than ever before. House prices have increased by a massive 554% in the last 30 years and the time it now takes so save for a deposit has also substantially increased.

According to Nationwide, a decade ago it would take the average first-time buyer in the UK less than five years to save a 10% deposit of £14,080. Contrast that with today when it takes on average six and a half years to save a 10% deposit of £18,480.

This is why many first-time buyers have turned to the government Help to Buy ISA – launched over three years ago, the Help to Buy: ISA offers first-time buyers the opportunity to save up to £200 a month with the government topping up their contributions by 25%, up to a maximum of £3,000.

But… many first-time buyers aren’t aware of the scheme’s details. Almost two thirds of prospective first-time buyers are unaware of the cut-off date for the Help to Buy ISA, research by specialist bank Aldermore has found.

The deadline to open a government Help to Buy ISA is 30 November this year but contributions can still be made until November 2029, and the cut-off date to claim the bonus is 1st December 2030 – so there’s still time for your loved ones to open an account and start claiming their 25% bonus for their first home.

Over four fifths of potential first-time buyers don’t know what the minimum government bonus is either, while 80% don’t know what the maximum is. There is also a lack of understanding about the scheme from parents too.

Almost nine in 10 parents of first-time buyers are unsure what the minimum government bonus is, while a similar proportion are unsure what the maximum bonus is. But, when the parents were given an explanation of what the Help to Buy ISA is, 86% said they would encourage their child to save into a Help to Buy ISA.

So, with only six months to go, if you or your loved ones would like to discuss the Help to Buy ISA so that they can start boosting their savings for when they’re looking to buy a home in the next three, five or even ten years, you should seek professional advice today.

More lenders are offering 95% loan-to-value mortgages

Since the financial crisis in 2008 lenders have been reluctant to offer high loan-to-value mortgages which has resulted in many of us being unable to afford our dream homes or take our first step onto the property ladder.

Without the help of high loan-to-value mortgages some will have spent years saving for a deposit, are still living with parents, or are stuck in the rental cycle. The dream of owning our own homes seems somewhat in the distance.

But are times changing?
The number of mortgage providers that include a maximum 95 per cent loan-to-value product in their range now stands at 60*, up from 53 a year ago and 13 more than five years ago, according to Moneyfacts. This is great news for potential first-time buyers and home movers.

A decade ago a borrower with a five per cent deposit had just three products from three mortgage providers to choose from. Today, you have a choice of a massive 405 products, including 67 variable deals, from a huge total of 60 providers*.

More than four fifths of mortgages available at a maximum 95% loan-to-value are fixed rate mortgages, accounting for 338 products of the 405 available.

These deals enable you borrowers to have the certainty of knowing what your monthly repayment amount will be. This is perhaps of particular importance to those you who are taking their first steps onto the property ladder.

With the number of high loan-to-value options now available it’s important to seek professional advice. Your adviser will be able to find the right mortgage for you, or your loved one’s specific circumstances should they want to take that first step onto the property ladder, which can be invaluable.

If you, or someone you know, would like to take advantage of the high loan-to-value mortgages available, please contact your adviser today.

* Number of products correct as of 16/04/2019

British first-time buyers struggle with mortgage jargon

Buying your first home. What an exciting time in your life! It’s the start of a new chapter, but it doesn’t come without its struggles. Getting a mortgage can be hard enough, but add in the technical jargon and it can become the first-time buyers Mount Everest. 

Data released by Aldermore highlights the fact that many first-time buyers don’t understand mortgage terminology, and could be missing out on schemes that are designed to help them.

But what terms do people struggle with and what do they actually mean?
Slightly over half of respondents weren’t aware of the ‘Help to Buy equity loan’ – this is where the government lends you up to 20% of the cost of your newly built home, interest free for the first five years, so you’ll only need a 5% deposit and a 75% mortgage to make up the rest!

Just under half didn’t understand what a ‘lifetime ISA’ was and slightly over one third didn’t know what a ‘Help-to-Buy ISA’ was. These ISAs allow first-time buyers to get a 25% government bonus on their savings for a first home, each with different rules which is why seeking professional advice is worthwhile.

35% of respondents also didn’t understand ‘shared ownership’ – where first-time buyers own a share on their home and pay rent at a reduced rate on the remaining share.

These figures suggest that many first-time-buyers could be missing out on various benefits and pathways that these schemes can provide for those wishing to enter the property market, which is why obtaining professional advice can be invaluable.

Your adviser will be able to help you understand these terms and explain the benefits of the different schemes.

If you or your loved ones want to discuss the options available to you, or talk through any of the schemes in more detail, contact us today.

First-time buyers reach 10 year high

In recent times it appears to be harder than ever to get that first step onto the property ladder. In the last 30 years house prices have increased a staggering 554%, so it may come as a surprise that first-time buyer mortgage figures have hit their highest level in a decade, according to data by Yorkshire Building Society.

The building society collected its data until October 2018, with November and December projected within the analysis.

The firm estimates that 367,038 first-time buyers secured mortgages in 2018, up drastically from the financial crisis in 2008 where just 192,300 first-time buyers were able to get their foot on the property ladder.

The data also revealed that in most regions in the UK, first-time buyer numbers have risen progressively over the last 10 years, despite property prices growing faster than wages. First-time buyers now represent a whopping 50% of all homes bought with a mortgage.

This steady increase could be in part thanks to government initiatives such the removal or reduction of stamp duty for first time buyers depending on their circumstances, the Help-to-Buy equity loan scheme and Help-to-Buy Isas that can boost your savings by £3,000, as well as an increased appetite from lenders to offer 95% loan-to-value mortgages and lower rates.

The strong competition amongst the lenders makes it important to seek specialist advice to ensure you get the best deal for yourself, and they can also help you decide which of the government’s help-to-buy schemes could benefit you.

If you or your loved ones are thinking about getting onto the property ladder or want to discuss your buying options, contact on of our advisers today.

Do your loved ones need a helping hand onto the property ladder?

Compared with a decade ago, today’s first time buyers are older, more likely to buy with a partner and more likely to have dependent children. This highlights how it is becoming increasingly hard for younger borrowers to get on the property ladder. But, lenders are always introducing new propositions to ensure there are solutions in place to help prospective homeowners buy their first property. It could be you that helps them!

Past and present
The 1980s, perhaps best known for its music and the invention of Super Mario. But it was also a time when the average house price was £22,676 and the average deposit was £3000. Fast forward to 2018 and we see a completely different picture, the average house price is £224,353 and the average deposit costing you £34,000. This shows a whopping growth of around 890% in house prices! However, wage growth hasn’t seen the same hike and so it comes as no surprise borrowers are continuously finding it harder.

For many, the Bank of Mum and Dad seems like the only option. According to the Social Mobility Commission, over 30% of UK households with dependent children hold assets that could be used towards a deposit for the purchase of a home. This could lead to an increase in the number of first time buyers turning to help from their family. The Social Mobility Commission’s research suggests this could rise to nearly 40% by 2039/40. Do you hold assets that could provide the gift of a life time for your loved ones?

How can I help my loved one get on the property ladder?
Improving affordability
Joint borrower, sole proprietor mortgages are one solution that may help. They’re aimed at bridging the gap between salaries and house prices and geared towards helping close family members get onto the property ladder or move home.

Lend a helping hand to your children’s plans of purchasing their first home! Joint borrower, sole proprietor mortgages allow you to support your family by adding your name to the mortgage, essentially increasing income and increasing the maximum loan available to them. Your name will only be on the mortgage and not the deeds so you will therefore be exempt from the 3% stamp duty surcharge for second properties.

Raising a deposit
Affordability is not the only challenge to first time buyers and joint borrower, sole proprietor mortgages may not be the best solution for everyone, so there are other options you may want to consider. If your loved ones cannot raise a deposit, you can still help. You can use your property or savings as security for their mortgage, as opposed to gifting them a deposit. Many lenders are offering these types of products.

So if you want to talk about how you can take your first steps onto the property ladder, or to discuss your options, call one of our advisers today.

£2m prize offered for rent check tool

A competition to develop a tool to record rental payments on credit histories has been launched by the Government,
with a £2 million prize going to the winning technology firm.

The competition was announced in the 2017 budget, as a part of the Government’s strategy to help more people onto the housing ladder.

What is it and how will it work?
Known as the Rent Recognition Challenge, the competition is looking for budding entrepreneurs to develop an application to enable the 11 million renters in the UK to record and share their rent payment information.

The six most promising proposals will receive grant funding to turn them into workable products, before being
narrowed down again to several teams who will develop the ideas into market-ready products.

How will it help turn renters into first-time buyers?
With the number of people renting increasing, and affordability issues still hampering first-time buyers, there have
been several requests for lenders to begin taking into account rental payments when assessing an applicant’s credit
score.

Monthly rent is a tenant’s biggest outgoing payment, which makes it logical to use when assessing a mortgage
application. But lenders are currently unable to use this information and take rental data into account, just because
it is not accessible.

After vigorous campaigning and a Westminster debate on the issue, development on solving the problem is finally
underway. The Treasury’s competition will begin this year, with initial applications being accepted.

Give the gift of a deposit this Christmas!

What is a gifted deposit?

A gifted deposit is a sum of money that is given by somebody, usually a family member, which forms all or part of a deposit for someone buying a property.

What do you need to know?

  • It is important to remember that if you gift a deposit, it is just that, a gift. This means you will be required to sign a written declaration that states it is a gift and that the home buyer is not required to pay it back.
  • If you plan to give a gifted deposit you should seek independent advice to ensure you understand you will not have an interest in the property or the right to get your money back.
  • Most lenders will accept gifted deposits from close family members and a few will even accept gifted deposits from more distant relatives and friends.
  • The lender or solicitor may request to see a bank statement or other documentation to evidence where the gifted deposit has originated from.
  • A gifted deposit can be used alongside the applicant’s own savings or the Help to Buy scheme.

What are the alternatives to gifting a deposit?

There are many other ways parents can support their children when purchasing their first home and different ways borrowers can maximise their savings for their deposit.

  • Low-deposit mortgages – the availability of products that offer a 95% or 90% LTV has substantially increased. This means that mortgages are now more accessible for buyers with smaller deposits.
  • Guarantor mortgages – parents can be named on the mortgage to enhance the affordability for the first time buyer. They can also offset their savings or even take out a joint mortgage with their children.
  • Government schemes – if the buyer can’t be helped by their family, government schemes such as Help to Buy or Shared Ownership could be good options.
  • Help to Buy ISA – as well as the government schemes listed above, a Help to Buy ISA could assist the buyer in saving a larger deposit. The Help to Buy ISA provides a 25% bonus to first time buyers on a limited amount of savings when it is being used to purchase a house.

If you would like more information about giving a gifted deposit or other options for first time buyers then speak to one of our advisers today.

What Protection Do First-Time Buyers Need?

When first-time buyers are taking their opening steps into homeownership, protection may not be at the top of their mind. But discussing cover with an adviser is an important step in the mortgage process. This is the ideal time to ensure all possible circumstances are covered, to protect against worst-case scenarios.

Some protection is mandatory for lenders, such as building insurance. Other insurance is common sense, such as including contents insurance as part of your plan. But this is not the same thing as being “essential”. An adviser will look at each person’s circumstances and their budget, then explore any scenarios that would leave them in a financially or emotionally difficult situation. Life insurance can help to pay off the mortgage and protect loved ones from losing their home. But what about all the other bills and goods that a family requires? What about the time the spouse will need to spend with children during a difficult time? This may not be covered by life insurance alone, especially if the remaining spouse is forced to increase their work hours to compensate for the drop in income. Suitable cover A key consideration when an

A key consideration when an adviser reviews your protection needs is ensuring the cover is appropriate for your situation. For instance, it could be argued that for a single adult with property-owning parents and no dependants, life cover may not be the best option. Instead, a menu plan solution including critical illness cover and income protection, is more likely to provide the long term security you would need during the mortgage term. The value of cover has increased, as the likelihood of being unable to work or being diagnosed with a critical illness is higher. A person with a young family to look after will almost certainly need some form of life insurance. Furthermore, it is important to consider family income benefit, which can provide secure and long term payments to the family left behind to cover the mortgage and help with other costs. Some providersalso offer free life cover for the first year you have a new born child, as well as benefits such as counselling services and health and legal advice. If you would like to find out more on

If you would like to find out more on cover for first-time buyers, talk to us today to arrange a meeting with our adviser.

Does the Millennial Generation Still Plan Homeownership?

Despite prevailing assumptions about homeownership, three quarters of millennials from around the world still intend to buy their first home in the next five years. A study of over 100,000 young people from nine different countries revealed that millennials still have a generally positive attitude towards buying a home, even in the face of high house prices.

But how does the UK compare? Out of the nine countries surveyed by HSBC, the UK came eighth with 74% of millennial non-owners intending to buy in the next five years, just under the three-quarters average.

31% of millennials in the UK already owned a home, 9% lower than the global average of 40%. For those who don’t but intend to buy, nearly half (47%) would consider spending less on social events and leisure to help save for a deposit.

This challenges the idea that UK millennials have become apathetic towards homeownership. Instead, it seems the security and satisfaction of homeownership is still attractive to those renting or living at home saving for a deposit. Putting that first step onto the property ladder is a challenge, but low interest rates and long term security still makes homeownership a desirable goal for many people.

If you or someone you know would like to find out more about the schemes and support available for young people dreaming of homeownership, contact one of our advisers today.