Mortgage Prisoners

Customers are classed as mortgage prisoners by the FCA if they took out a mortgage with a lender who is no longer accepting new applications or product transfers for parts of their mortgage book (closed book lenders) and they are now unable to remortgage to a cheaper new deal with another lender, as a result of policy and criteria changes across the market. New rules from the FCA will now allow lenders more flexibility to consider remortgage applications from these customers.

Customers who are classed as mortgage prisoners will receive a letter from their existing lender referring them to the Money Advice Service website which has further information and a basic eligibility tool.

Brits spend over £40bn making their house a home

Over the last five years homeowners have spent a hefty total of £41bn doing up their homes – an average of £1,875 each, according to NAEA Propertymark. There is a growing trend for home owners to improve their current homes instead of climbing up the property ladder.

Nearly three quarters (73%) of all homeowners have done work to their homes in the last five years. The most popular improvements were redecorating (73%), over half landscaped the garden (54%), over one third added new flooring (39%) and nearly one in three refreshed the bathroom (31%).

This doer-upper era has come from growing house prices making it increasingly difficult to move up the ladder – one in 10 homeowners making improvements do so because the price of moving is too expensive. Homeowners, instead, are looking to add value to what is already theirs.

With a conservatory typically costing £4,310 and extending into the loft or basement costing around £3,244, home improvements can be a lower cost alternative to moving house. The majority of those who have made improvements did so to improve the look of their home while a quarter did so as an investment to add value.

Should I remortgage my property to make home improvements?
Remortgaging could be a good option for you if you wish to capital raise to make your home improvements. Renovating, extending or converting your home can add value for when you decide to sell up and move on. According to Barclays an average of £14,000 return on investment can be made by building a 30 square metre extension in the UK. If you were to do this in London, this would be a staggering average return investment of £156,000.

So, if you have some equity in your home and are considering making changes to your property, then remortgaging to raise capital could be an option for you. But, it is important to seek advice from your adviser before making a decision so you can assess if this decision is right for you.

So, what to do next? If you have made major home improvements, it is likely that the value of your home will have increased. This means it is a great time to remortgage to get a better mortgage deal that could reduce your monthly mortgage payments.

Is climbing the ladder really too expensive?
Despite the upwards trend of homeowners making improvements instead of trying to move up the property ladder there are many options available to help you keep on climbing.

So whether you’re ready to take the next step, or just want to find out more about what options are open to you, contact your adviser today to arrange a meeting.

7 Great Reasons to Contact Your Adviser

1. Your circumstances have changed
In a very short time your circumstances can change significantly. Many life events can come and go without you considering the implications they could have on your mortgage or on your protection needs. If you think something may have changed that is of importance, such as marriage, having children, a change of job or even changes to your health, let us know so we can revisit your mortgage and protection options.

2. You aren’t fully protected
We want to make sure you are protected should the worst happen. If you didn’t take out any protection when you took out your mortgage it may be a good idea to revisit this decision. Your financial position may have also changed since you first took out your mortgage. This means you could now have more money in the budget to build on your existing cover or start protecting yourself, your family and your lifestyle.

3. You could be saving money on your mortgage
If your current mortgage deal is coming to an end you will automatically be transferred on to your lender’s standard variable rate. This means you may end up making higher monthly repayments. If you want to check you are not paying more than you need to on your mortgage, then we are here to help you.

4. You are considering investing in another property
There are many ways you can invest in property. If you are thinking of investing in a buy to let property, a holiday let or another property investment option, then give us a call and we will be able to advise you along the way.

5. You want to help your children buy their own home
If your children are now all grown up, they may be looking to fly the nest and purchase their very own property. We would love the opportunity to help them find the right mortgage. We can also give you advice on all the different ways you can help children take their first step onto the ladder.

6. To discuss the mortgage and protection market
The mortgage and protection market is constantly changing. We would be happy to discuss changes in the market that could affect your mortgage, protection or future plans.

7. You were declined for a mortgage in the past
You may have previously been declined for a mortgage. However, there are now many more specialist lenders available to us. This means we have more options to help those with complicated borrowing scenarios. So, if you have been declined in the past it doesn’t mean the door is shut forever!

Don’t forget you can refer your friends and family to us– we are always happy to help!

A Beginner’s Guide to Remortgaging

What is remortgaging?

Remortgaging is the process of switching a mortgage to a different lender without moving homes. For many borrowers, it is also the ideal opportunity to review their personal and financial circumstances and to consider whether their current mortgage and lender is the most suitable for them.

What are common reasons to remortgage?

  • Your mortgage deal has already come to an end and you have been placed on your lender’s standard variable rate (SVR)
  • Your existing deal is nearing its end and you will soon be placed on your lender’s SVR
  • Reduce monthly repayments and gain extra flexibility on your mortgage term
  • Borrow more money, possibly for home improvements or to pay off other debts
  • Release equity from your home
  • The value of your home has increased substantially
  • Ensure your mortgage meets your personal and financial needs
  • To change to a different type of mortgage

What if you want to stay with your current lender?

If you wish to stay with the same lender when your current deal comes to an end, you can simply complete a product transfer. This means you will be placed on a new product with your existing lender.

Remortgage jargon

Bank of England Base Rate- A rate of interest that is set by the Bank of England. If the base rate rises and your mortgage has reverted to SVR then your mortgage payments are likely to increase.

Early repayment charges (ERCs)- Fees you may have to pay if you wish to leave your mortgage at a specific time, for example, during the period of the initial deal.

Fixed-rate mortgage- The initial period of the deal which is usually between one and ten years where the mortgage interest rate remains the same. As a result, you can be certain that you will be paying the same amount each month for your mortgage.

Standard Variable Rate (SVR)- A mortgage deal will usually revert to this interest rate when the initial mortgage deal comes to an end. The SVR is decided by the lender and your payments may increase or decrease depending on interest rate movements.

Tie-in period- The period of time that you are tied in to your mortgage deal. If you want to leave your mortgage deal during this time you will usually have to pay early repayment charges.

Tracker Mortgage– A mortgage where the interest rate tracks the Bank of England base rate or London Interbank Offered Rate (LIBOR), depending on the lender

Want to discuss your current mortgage? To find out whether remortgaging is right for you and your circumstances, you can speak to our adviser today. We will assist you in reviewing your current mortgage and finding the best deal for you.

Is Your Interest-Only Mortgage Coming to an End?

If you are on an interest-only mortgage that is nearing its end, you may be considering the next step. The good news is, you won’t be alone. Nearly 136,000 interest-only mortgages are due to mature in 2017, with a combined value of almost £16 billion. Fortunately, lenders are innovating their products and making more options available for those with maturing interest-only mortgages.

Making plans
A study of those with interest-only mortgages revealed that some borrowers have no plan in place for how to take care of their mortgage reaching maturity. Borrowing into later life can be a complicated scenario and one that needs careful consideration. As your adviser, we would love to help you plan your next step and look through your options.

To get you started, here are just a few ways that lenders can help those borrowing later in life…

Specialist options
There are many specialist lenders that cater for those that require bespoke borrowing options later in life. Several have been working to innovate their over 55s range of mortgage products. These include residential interest-only mortgages, specifically designed for those aged 55 and over, and other tailored older borrower solutions. Some building societies and smaller lenders want to ensure that age is no longer a problem for those that want to borrow into retirement. One lender recently launched as many as 28 new older borrower products, which includes several interest-only options. Specialist lenders often don’t use computers to decide whether you should have a mortgage, and want to help those that need to consider a more nuanced post-retirement borrowing option.

Later life lending
The percentage of people aged over 66 when their mortgage ends climbed from 22% in 2012 to 39% in 2016, a significant increase in just a few short years. Mainstream lenders are now extending their maximum age limits to follow the trend.

Several high street lenders have recently increased their maximum age to 80 and in some cases 85. In their determination to help older borrowers, some lenders even have no maximum age limit whatsoever. Contact us today to arrange a meeting!


Remortgage Market Expected to Continue Growing

According to the Council of Mortgage Lenders, both residential and buy to let remortgaging is expected to continue to grow in the second half of 2017. Low mortgage rates has continued to encourage borrowers to refinance and move away from their lender’s SVR amongst tough competition between lenders.

But despite the continuing strength of the remortgage sector, homeowners are being warned not to be complacent. For those still considering the options and weighing up the benefits, the time to remortgage could be now.

A surprise result at the Bank of England
Nearly three in five people that remortgaged in May said they believed the average mortgage rate would be unlikely to change over the next 12 months. But June’s vote on interest rates from the Bank of England’s Monetary Policy Committee (MPC), kept rates at 0.25% by only five votes to three.

Despite some signs of a possible economic slowdown, three members of the committee voted for an interest rise amidst rising inflation. It has been a full decade since the Bank of England last raised the base rate and this result has ruffled several feathers in the industry.

A warning of complacency amidst low rates
There are currently millions of people sitting on their lender’s Standard Variable Rate (SVR). In fact according to the BSA, 2.5 million mortgage borrowers have never experienced a base rate rise.

Homeowners are therefore currently being urged to be wary of complacency and to take advantage, especially as lenders compete for new customers, helping drive down the cost of mortgages. Data from the Mortgage Brain shows that the cost of a five-year fixed rate loan at 70% LTV is now only 2.04%. This is a full 2% lower than it was at the start of April 2017.

But many experts are saying that after the MPC’s latest vote and due to rising inflation, we are as close to a rise in base rate as we have ever been in recent years.

If your current deal is reaching its end or you would like to find out whether you could be saving money on your mortgage, contact one of our advisers today to arrange a meeting and discuss your options.

Are You Thinking of Improving Your Home?

Home improvements can add substantial value to your home. According to Barclays an average of £14,000 return on investment can be made by building a 30 square metre extension in the UK. If you were to do this in London, this would be a staggering average return investment of £156,000.

So, what can you do to improve your home?

Working on the inside of your home can increase the appeal to potential buyers whilst also making it a better space to live in if you aren’t considering moving. A good place to start may be to upgrade your bathroom or kitchen. It is possible to do this in small steps, for example, you could change the taps, add in a heated towel rail or update the appliances. Buyers are likely to pay more for a property that is complete with a modern kitchen and bathroom, as it saves them the expense and hassle of upgrading the home themselves.

Another way you could improve your home is by creating extra space. This has the potential to increase the value of your home and is a great way to create more room for a growing family without the stress and cost of moving. A great option is to extend out by building a decent sized room that fits the style of the current house. Another option to consider is extending up by converting the loft in to an extra bedroom. You could even update the layout of your home by moving walls, for example, making your kitchen and living area open plan to give the property a modern appeal.

As we all know first impressions are extremely important, so improving the outside of your home could be a major selling point. Research by Barclays shows that a well looked after garden is one of the most desirable outdoor features. Small investments such as decking or outdoor lighting will also increase the appeal of your garden.

If you have a garage and don’t use it to park your car in, you could enhance your home by converting it in to an extra living space. Great options to consider are a games room, a children’s play room, an office or even a gym.

Remember if you are planning a conversion or extension it is important to consult with your home insurer and to explore if you will need to attain planning permission.

I can’t afford to make any home improvements, what are my options?

There may be the option for you to remortgage in order to borrow money for home improvements. You will probably be required to outline why you are applying for the additional funds when applying for a further advance. It is also easy to slowly make small changes at a low cost, such as painting rooms, to considerably increase the value of your home over time.

What can you do now you’ve made your home improvements?

Selling your newly improved home may be an attractive option if the value has increased significantly, allowing you to move to a bigger house or a better area. If you have made major home improvements, it is likely that the value of your home will have increased. This means it is a great time to remortgage to get a better mortgage deal that could reduce your monthly mortgage payments.


Could you be saving money on your mortgage?

If your mortgage is on a standard variable rate then you may be missing out on an opportunity to save money on your mortgage payments. So why not shop around for your mortgage as you would with your other monthly outgoings, it might even be the biggest saving you make.

Data from Virgin Money has stated that as many as 70% of homeowners could reduce their monthly outgoings by transferring from a standard variable rate product to a fixed rate mortgage*. This is due to the attractive low mortgage rates the market is experiencing currently.

Depending on your needs and mortgage requirements, reviewing your finances and remortgaging could also give you extra flexibility on your mortgage term and how you pay your mortgage. As an intermediary we offer advice on a variety of remortgage options, so you can receive the right product for you in what may seem like a mortgage maze.

So what are the main reasons to consider a remortgage?

  • Reduced monthly repayments
  • Extra flexibility on your mortgage term
  • So you can borrow more money, possibly for home improvements or to pay off other debts
  • Your current deal is about to end
  • The value of your home has increased substantially
  • Ensure your mortgage meets your personal and financial needs

Throughout our lives our circumstances often change which means that the level and type of insurance you need may need to be reviewed. Therefore, whilst considering your mortgage options it is always worth discussing your protection needs to make sure they match your requirements.

Speak to our advisor today to find out more about remortgaging and how we can help you protect your home and lifestyle.

*Based on Virgin Money assumptions as to the new business interest rates available to, and savings achievable by, borrowers remortgaging away from a standard variable rate. This uses stock residential mortgage data from the CACI mortgage market database, 31 January 2017.