How a Debt Management Plan Can Benefit You and Your Mortgage in Hull
Debt Management & Mortgage Advice in Hull
A Debt Management Plan or a DMP is a formal agreement between you and your creditors to help you pay off your debt. The plan usually starts with you declaring how much debt you’re in then your creditors can get a picture of how severe the situation is.
They will then want to know all about your income and your expenditures. This will help them work out your spending habits and see whether there are things to cut back on.
Once they have these details, you will be put on a DMP tailored to you and your finances. To repay your debt, you will receive monthly payments at a reduced and more affordable rate.
In this article, we are going to look at how a DMP can benefit you and your mortgage in Hull.
Improving your credit
Believe it or not, being on a DMP can improve your credit. If you have poor credit at the time of taking out a DMP, meeting your monthly payments and slowly paying off your debt can have a positive effect. If you think about it, you’re clearing debt from your name, therefore, with time, it’s only fair that you start to gain points on your credit score.
Having a higher credit score can potentially open you up to better mortgage rates. You will still need to provide a much higher deposit as usual as you’re still in debt.
Avoiding defaults
By working on a DMP and keeping with it, you may be able to avoid a default, unless you’re already associated with one. Once you are issued with one, it will not be removed from your file for 6 years, regardless of whether you’ve paid off the debt.
Having a default that is in your name can have an adverse effect on your credit score. As a Mortgage Broker in Hull, we would highly recommend avoiding a default if it is possible.
If you speak to an expert, such as a Specialist Mortgage Advisor in Hull, you may be able to get a quick DMP together and avoid a default. Every lender will ask lots of questions when seeing a default in your name. Ideally, you don’t want to be in this situation.
If you’ve already been issued with a default, you may be able to incorporate the amount owed into your DMP. The default will still appear on your credit file, which can negatively affect your chances of being accepted by most lenders.
Reorganise your finances
Having a DMP in place can help your sort out your finances and get you back where you need to be financially. Re-evaluating your finances, particularly in the lead up to a mortgage/remortgage application, is always a recommended option. This includes your DMP payments and your current outgoings.
To provide an example for this situation, you could cut back on gambling during the lead-up to your mortgage application to ensure that you’re looking reliable and managing your finances responsibly. Your lender will see it as irresponsible if you’re on a DMP and are going out and spending large chunks of your income on gambling.
Debt Consolidation Mortgage Advice in Hull
In some circumstances, you may not want to take on a DMP and would prefer to incorporate some of your owed debt into your mortgage. Your total mortgage amount will increase, but you’ll be ensuring that your unsecured debt becomes secured against an asset.
Debt consolidation is a specialist subject and you may need assistance from a Mortgage Advisor in Hull during the process. We would never recommend that you consolidate your debt into your mortgage without conversing with a professional.
You can book a free mortgage appointment with an expert online. Follow our Get Started process to choose a date and time best suited to you.
Planning to Get a Mortgage in Hull?
Getting ahead of the mortgage game
Planning your mortgage journey is essential, it’s the first step that you should take before starting your process. In some cases, starting your process early can put you in front of other buyers. One example of this is preparing a mortgage agreement in principle before you start viewing properties.
There may be some cases where it is impossible to plan for a mortgage; for instance, if you and you’re partner decide to part ways. It’s unfortunate when this happens, however, if it does, you may need to take out a mortgage of your own with no time to plan.
As a Mortgage Broker in Hull, we suggest that you start planning your mortgage up to six months before you want to move house in Hull.
Why planning for a mortgage is important
Planning and preparing for all possible situations can prove extremely beneficial further down the line. If you encounter a problem that you’ve prepared for, you should be able to figure out what to do to resolve it.
20+ years of experience within the sector has allowed us to come across all different kinds of mortgage problems. When it comes to the final part of the mortgage process, some different things could go wrong and they can sometimes be rectified if you prepare right.
Here are some last-minute problems our customers frequently come across.
- Not enough deposit for their mortgage
- Previously ignoring your credit score because it wasn’t important
- Being too relaxed with the way you conduct your bank account
- You are self employed and your latest accounts don’t look too healthy
With up to six months of preparation and planning, you may be able to avoid some of these problems.
Deposit
We understand that saving up for a deposit is hard, especially if you’re still renting. Saving up for a deposit can often take years, especially for first time buyers.
It can also be difficult to save up for a ‘5% deposit’ as you don’t know the exact amount that you need until you find a property that you want to make an offer on. Each 5% total will vary from property to property.
Customers that are struggling to meet that initial deposit total will often get help from their parents through a gifted deposit. A gifted deposit does not have to be the full 5%, it could only be a small portion of it; this extra cash boost may give you the perfect amount that you need in order to reach that minimum deposit.
You could also look at applying for one of the Help to Buy schemes if you need a deposit boost. Schemes have been made specifically for applicants that need help. If you’re a First Time Buyer in Hull looking for help getting onto the property ladder, one of these schemes could be perfect for you.
Credit score
Your credit score is very important when it comes to applying for a mortgage. Having a poor credit score can lower your chances of getting accepted for a mortgage. Of course, it depends on what is the cause for you having a low credit score. If it is because of a CCJ or bankruptcy, your chances of being accepted can be lowered further, depending on how long ago these issues occurred.
If you want to take a look at your credit score, we would recommend using Check my File. This will allow you to get a copy of your credit report, and once you have this, feel free to send it to us and we will take a look at it free of charge.
Bank accounts
During the approach to your mortgage application, you need to think about how you conduct your finances. Lenders will be carefully analysing your bank statements and will be able to see everything that’s going in and out of there. An example to look out for would be gambling transactions. Lenders may be put off if they see frequent and erratic gambling transactions on your bank statements. They will see gambling with large sums of money unreliable and possibly turn you away.
If you’ve been lucky enough to receive a gifted deposit, we would advise that keep that sum of money in the gifter’s account. This is because your lender will be able to see a large bank transfer into your account and will question why it’s been transferred; sometimes it’s better to leave the gifted deposit inside of your family member’s or friend’s account.
Self employed?
The self employed often have a hard time when it comes to getting a mortgage. Usually, this is because they are required to evidence more than a usual mortgage applicant.
You will have to submit at least one year of accounts’ and three months of bank statements to prove your income and affordability. Depending on the lender, you may be asked to provide even more evidence if they are unsure of your affordability.
Other mortgage hurdles
You may encounter all different kinds of mortgage hurdles, some may hold up your purchase completely, for example, a break in the property chain. In situations you can’t prepare for, just know that a Mortgage Broker in Hull like us is here to help. We have availability 7 days a week.
Getting Mortgage Advice in Hull is not a bad thing; people encounter all different types of specialist and complex situations. We offer a helping hand so that you don’t have to go through this process alone!
Can I Have Two Mortgages in Hull?
Second Mortgage Advice in Hull
Dealing with one mortgage can be difficult enough, never mind two!
There are many different reasons why someone may want more than one mortgage, some are more common than others. As a Mortgage Broker in Hull, we see that the most popular scenario is when a landlord wants to take out another mortgage for a Buy to Let.
Whether you’re in this situation or something similar, our mortgage advisors in Hull are able to help you through your second mortgage journey.
Lenders will look at your current mortgage affordability, income and expenditures before accepting your second mortgage offer. They will need to know that you can afford another mortgage.
They may also require you to put down a higher deposit on this mortgage. This will not be around the 5% mark; it could be anywhere between 15-40%.
Why would you take out a second mortgage?
- Are you looking to purchase a new property to rent out as a Buy to Let?
- Do you want to buy a property to rent out your current home as a Let to Buy?
- Are you buying a second home for your children to help them get onto the property ladder?
- You want to take out a second mortgage to raise additional funds for your current property?
- Is your name associated to an existing mortgage and you want to buy a property in your own name?
These are the most common mortgage situations that our team come across. During our years of working within the mortgage industry, we’ve come across all of these situations and managed to help many customers through them. Our team of Mortgage Advisors in Hull have in-depth knowledge and experience with Buy to Let mortgage criteria.
Second mortgage for a Buy to Let
A Buy to Let is a property that you rent out and do not live in. They’re usually bought by current or aspiring landlords.
Buy to Lets will likely require you to put down a higher deposit amount. For any Buy to Let, you’re going to have to put down an amount between 25-40% loan to value rate.
Buy to Let mortgage repayments work the exact same way as your current mortgage. You will be issued with monthly bills and interest rates will apply.
If you’re taking out a second mortgage for a Buy to Let property, it may benefit you to speak with a professional Buy to Let expert. Our advisors have been working with local landlords in Hull for many years now, building up strong relationships with them and helping them with their remortgages on their property’s.
Second mortgage for a Let to Buy
Let to Buy works in the same way as a Buy to Let, however, you are moving home into the property that you’re purchasing and renting out your current one. Deposits and payments will remain the same as a Buy to Let as you’re still taking out two mortgages.
Our Buy to Let Mortgage Advisors in Hull are also experienced in working with Let to Buys. Book your free mortgage with one of them and find out whether you can qualify for one.
Second mortgage to purchase a home for your children
This scenario is becoming more and more popular, particularly in recent years. Parents are becoming aware of the struggle to get onto the property and the costs of a mortgage.
With the constant rise of inflation and property prices, First Time Buyers in Hull are needing a helping hand to move home. Sometimes people require just a little bit more than a gifted deposit.
Applicants receiving help from grandparents and parents is not unusual. It’s likely that they’ve already paid off their mortgage and can afford to offer their help. The family member offering the help will have to pass lenders affordability checks to make sure that they can afford to pay for their child’s or grandchild’s mortgage.
Second mortgage to raise funds
When it comes to taking equity out of your home to raise funds, people normally use the money for home improvements, debt consolidation, to buy something such as a car or to fund a wedding etc. Another option that people sometimes choose is to release equity and take out another mortgage.
This situation could also be known as a further advance. A further advance is when you borrow more from your current lender to fund something like home improvements or a second mortgage.
The amount you can borrow would be entirely dependent on the amount of equity in your property and you would still need to prove that you can afford the additional mortgage amount on top of your existing one.
The amount that you can borrow from them will depend on the amount of equity in your property. Also, you will still need to prove that you can afford a second mortgage.
Named on an existing mortgage and want to buy a new home?
Often, it can be difficult to get your name removed from a mortgage, therefore, sometimes people leave their name on. Even though you’re still named on a mortgage, it can be possible to take out another one in your own name.
When this situation comes about, it’s usually because of a recent divorce or separation. Unfortunately, the financial complications must be addressed sooner rather than later in a scenario like this.
When you want to take out a second mortgage in your sole name, it may be a little harder to get accepted. Your lender knows that there’s just one applicant and you’re still linked with another mortgage. Even if you’ve made agreements with your ex-partner that you’re not going to contribute to their mortgage payments, they will still see it as a potential liability.
This situation can get very complicated and stressful, therefore, we recommend that you speak with a Specialist Mortgage Advisor in Hull. Our advisors are very experienced in dealing with divorce and separation Mortgage Advice in Hull. For help and advice, book your free mortgage appointment online and speak with an expert.
What is a Property Chain & How Can You Avoid Them?
Moving home mortgage advice in Hull
During your process of moving home in Hull, it’s likely that you’ll come across lots of different hurdles and obstacles; if you don’t consider yourself lucky! It could be something completely random that gets in your way, something you never thought would affect your moving home journey.
A recurring problem that trips up a lot of mortgage applicants in Hull is the property chain. Getting caught up in the property chain can slow down and in worse cases, put your moving home process to a stop!
Here is all about property chains, how you may end up getting wound up in one and how to avoid them.
What is a property chain?
A property chain is a string of transactions that are each dependent on all purchases and sales completing. If one of the transactions breaks down, this can have a knock-on effect on the rest of the transactions in the chain. For example, let’s say you are selling your home and purchasing a new one.
Then let us say that the person who was looking to purchase your home suddenly pulls out. You were dependant on this sale to fund your new purchase, which you are now no longer able to make, which means you could possibly be holding up any transactions in front of you too.
Imagine it as an actual chain linking houses together. If one property purchase falls through, the chain potentially breaks and your property purchase may not go through.
Depending on the property chain that you’re linked with, the chain size could be endless. If you’re lucky, you may not have that many purchases in your property chain.
How long will the process take in a property chain?
This answer can change from chain to chain. It all depends on what situation your’s, your seller’s and your seller’s seller situation is! It’s very complicated… we know.
Property chains can run smoothly or badly, there’s no real in-between. You may be in a property chain without even knowing. If the process is fast, you can assume that everyone ahead of you in your chain had their purchase go through fine.
If things don’t work in your favour, you may get stuck in a waiting scenario. As a mortgage broker in Hull, we would strongly recommend starting the moving/buying a home at least six months before you’re wanting to move in.
This amount of time allows room to find your dream home and time just in case you get caught up in a property chain.
What happens if my property chain breaks?
When a property chain breaks, it’s quite unfortunate as there’s not a lot that you can do about it, especially when it’s further down the chain. You may be forced to wait or look for a new property.
If the property chain breaks at your purchase, acting quickly could save the chain from breaking. It can also help everyone else behind you. For example, if you’re selling your property, you can contact the applicants who want to buy your property by contacting your estate agent; this way, you can inform them of the situation as early as possible. As long as you act quick, you may be able to resolve the issue that broke the chain.
There are ways to prepare for a break in the property chain if the break is not on your level; this includes, you could try and buy a property that isn’t in a chain or in a small chain, sell your property and rent temporarily or buy a new-build property, etc.
For more moving home mortgage advice in Hull, contact our experienced mortgage team in Hull today.
How can a property chain break?
You’ll discover that there are many different reasons why a property chain could break. It could be at any level during the chain:
- The buyer’s mortgage application was declined
- A seller decides that they don’t want to sell their property
- A buyer/seller loses their job or becomes ill
- The property survey that was carried out on the property lightened some major damages and structural issues.
This is just a small list of examples, there are many more. Sometimes it’s just down to the length of the property chain to how drastically these situations will impact your ability to move home.
How can I avoid a property chain?
It’s hard to ‘avoid’ a property chain, even more so if you’re buying during a busy time of the year.
We would always advise that you do your research and talk to your estate agent and arrange your finances sooner rather than later. This puts you in the best position if a break in the chain were to happen. The more you are prepared, the better.
If you avoid property chain (‘chain-free’), you should be able to move straight on through the moving home process.
However, you must remember that you’ll need to provide evidence that you can afford a mortgage and provide a deposit for the property.
Thinking of moving home in Hull?
Are you thinking of buying and selling your home? If so, let our moving home mortgage advisors in Hull help!
Arrange your own free mortgage appointment online. Begin your moving home journey today and we will help you get through it stress-free! Our advisors can’t wait to hear from you.
Remortgage for Home Improvements in Hull
Remortgage Advice in Hull
First of all, what actually is a remortgage? A remortgage is when you swap out your current mortgage product for a new one. People usually do it to try and get a better rate of interest.
A remortgage can also be known as a product transfer. The difference between a remortgage and a product transfer is that when you remortgage you take out a new mortgage with a different lender, whereas when you transfer products, you take out a new mortgage with your current lender.
There are many different reasons why someone may want to remortgage/transfer products. At the end of the day, it’s all down to what the homeowner wants. Through a remortgage/product transfer you may be able to get a better rate of interest, consolidate your debts into your mortgage, raise capital for things such as home improvements or for something else.
In this mortgage guide, we are going to cover how you can remortgage/transfer products for home improvements.
How does it work?
Before remortgaging, you’ll have to calculate the intended costs for the home improvements being made. Depending on how you want to improve your home, the costs may not be quite as much as you expected them to be. This is because when you remortgage to improve your home, the costs are incorporated into your mortgage. This means that your current monthly payments will include both your mortgage and your costs for home improvements. Your overall payments may only increase by a small amount (e.g. as little as an extra £60 per month), depending on how big the home improvements are.
You must consider all of the costs that come with remortgaging for home improvements. Here are some factors that people miss:
- Architect’s plans and services
- Planning permission (Neighbours etc.)
- Building costs (Materials, Workers etc.)
- The VAT
- Building regulation inspections
Why would I want to remortgage for home improvements?
We’ve seen that the most popular reason for people wanting to remortgage for home improvements is to make more living space. This may be because the homeowners are growing/starting a family or just want more space in general.
The process is simple, can be carried out easily and also saves you from moving home in Hull. Rather than wading through the whole moving home process, if you already love your current home, why move? It often works out much cheaper to remortgage than to move home.
Here are various reasons why you may want to remortgage for home improvements:
- Kitchen conversion – If you want a new, modern kitchen, you can remortgage to incorporate the costs for one into your mortgage.
- Conservatory – Conservatories are a great place to sit and enjoy the view of your garden without even leaving your home. This is the most popular reason for people remortgaging for home improvements.
- Loft conversion – Lofts are also very popular amongst homeowners looking to remortgage for home improvements. A loft allows space for storage or for another bedroom.
- Garage – If you need more storage space or want more room for an extra car, a garage extension could be what you need.
- Garden extension – Many people don’t realise that it’s possible to extend their garden through remortgaging. If you want a change of scenery in your back garden, this option could be perfect for you!
Remortgage for home improvements summary
If you are thinking of taking the remortgage for home improvements route, feel free to contact us, we would be more than happy to help. Our team are experts and will give you remortgage advice in Hull exactly when you need it!
Our hardworking team are available 7 days a week so that you can get in touch at a time that best suits you. If you also want to remortgage for another reason, we are still able to help you!
The Costs of Buying a Home in Hull
Moving Home Hull
There are lots of different things to think about before you move home, one of them is the costs involved. Whether you’ve moved home before or this is your first time in the market, you need to be fully aware of all of the costs of buying a home.
The Costs Involved in Buying a Home
Estate agency fees
You will only have to converse with an estate agent when you are looking to sell a property. If you’re going down the purchase route, your Mortgage Broker / Bank / Building Society can sort these things out.
Estate agency prices can vary. If you end up dealing with one, you should make sure that you’re getting the best price and service available. Make yourself certain before committing to anything. Sometimes, the cheapest estate agents may have the poorest service.
If you aren’t too fussed about the costs and just want a personalised, simple and secure service, it’s likely that you’ll have to pay an extra 1-2% of your selling price. Usually, these fees are negotiable; particularly in a seller’s market where agents are fighting for your instruction because of the lack of houses on the market.
Property survey fees
During your mortgage application, the lender will need to know whether the property you’re buying is worth what you are paying for it. They calculate this by carrying out a property survey. In some cases, your lender may offer this service for free, however, they may not send you a copy of the report.
If you do not get offered a free valuation, you may need to pay, on average, a few thousand pounds for one. If you want to take it another step further, you can upgrade to an in-depth Homebuyer’s Report. This survey is at the top of the range and you should expect to pay a four-figure sum for them.
A great thing about going to a Mortgage Broker in Hull like us is that we will break down each survey and help you make a decision on which one is the best for you. If the property that you’re buying is old or not in the greatest condition, you should maybe consider switching to a more detailed property survey, just to make sure that you know exactly what you’re paying for. You will also know what needs replacing/repairing as soon as you move in.
As a Mortgage Broker in Hull, we’ve often found that the cost to upgrade a property survey is a fraction of what it would cost you for repairs over the years. So rather than buying a property blind, you could upgrade and end up saving yourself a fortune in the future.
Mortgage arrangement fees
Usually, mortgages that come with lower interest rates often come with high set-up fees. Some lenders will charge you a mortgage arrangement fee for… well, arranging your mortgage.
This fee can range anywhere from zero to a few thousand pounds. If you choose to go with a Mortgage Advisor in Hull, they will work with you and recommend you with the best and cheapest product that will meet your mortgage needs. They will consider all of the other costs that come with getting a mortgage and try their best to save you money.
When you are taking out a mortgage, you’ll always want to try and get the lowest interest rate possible. If you know how interest rates work, your payments will only increase at an exponential rate.
Lenders can also add an arrangement fee to your mortgage. If this happens, you should know that this is now a part of your mortgage so it will also start receiving interest and add up over your mortgage term.
Solicitor fees
A solicitor will be needed to help your mortgage application progress through the legal parts of the process. They will check things such as, does the seller actually own the property that you’re buying, who is responsible for maintaining adjoining fences, walls etc and whether anyone has lodged any plans (for example to build future transport links). These sorts of things need to be confirmed as if there is anything wrong with the property, it could affect your ability to sell it in the future.
The pricing for each solicitor varies, some may be around a thousand pound, some may be more, some less. You will also need to remember to check whether the quote includes VAT and local searches.
As a Mortgage Broker in Hull, we always advise that you be careful when selecting a solicitor as not all of them will work with every single lender. You want to choose the best lender that will save you time and money, let us help you find them!
Stamp duty
Stamp duty is a tax that comes with purchasing a home within a certain price range. The way that it usually works is that the more that you pay for your house, the greater the stamp duty tax you’ll receive.
The stamp duty guidelines and property price thresholds change from time to time, so if you are wanting to find out whether you’ll have to pay it or not, you should check the stamp duty government page.
If you fall into a stamp duty tax bracket, it’s likely that you’ll pay it upon completion to your solicitor. They will then make the payment to the government on your behalf.
Mortgage broker fees
A Mortgage Broker in Hull will charge you for their services. Most of them will not charge you an upfront cost and will offer a free mortgage consultation like us!
When they charge you for their work, the cost of the fee will typically be a percentage of what the lender pays the broker for the work they do on their behalf. Most Mortgage Brokers will only charge you if your mortgage application is successful and you receive a formal offer.
Removal fees
Moving Home can be stressful enough, so don’t make it even worse! Have you thought about how you are going to transfer your furniture and your household items between properties?
In our experience, we can tell you that hiring a removal van may cost a little extra but will make your Moving Home process ten times easier. They are experts at the end of the day and they will help you move everything from A to B.
Moving Home Advice in Hull
For Moving Home Advice in Hull or First Time Buyer Mortgage Advice in Hull, make sure to get in touch with our team. We offer a free mortgage consultation in Hull, so feel free to take advantage of it.
What is a 95% Mortgage?
A 95% mortgage is what it says on the tin; you are borrowing against 95% of a property’s price, covering the remaining 5% with your deposit. An example of this is if you looked at buying a property worth £150,000 with a 95% mortgage, you would put down £7,500 as your deposit and borrow the remaining £142,500.
95% Mortgage Advice in Hull
With the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for Lenders, making 95% mortgages more readily available from the big banks.
This is great news for both first-time buyers and home movers as this will run until December 2022. Certain terms and conditions will apply, your Mortgage Advisor in Hull will be able to see if you qualify.
All our customers receive a free, no-obligation mortgage consultation where we will be able to recommend the best mortgage deal based on your individual situation.
Can I get a 95% mortgage?
95% mortgages are generally available to both First-Time Buyers in Hull & people who are looking at Moving Home in Hull. Whilst the idea of saving for a 5% deposit sounds easy enough, you’ll still need to have a sufficient credit score and prove that you can afford your monthly mortgage repayments, in order to be granted a 95% mortgage.
Improving your credit score
A good credit score is the key to obtaining any mortgage, especially a 95% mortgage. Things like paying any existing credit commitments on time, ensuring your addresses are up-to-date and that you’re on the voter’s roll, can all help build this up. For a more in-depth look at what you can do and why, please see our How to Improve Your Credit Score article.
Affordability
Affordability is another one that is key. By providing details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will get a good idea of whether or not you are able to afford this type of mortgage.
Can my family help me get a 95% mortgage?
It’s very popular these days for family members to help each other get onto the property ladder, especially parents looking to further their children. This can be achieved by gifting the person looking to find their home, the deposit required for the property. Known by some as the “Bank of Mum & Dad, Gifted Deposits work purely as a gift, and not as a loan. The lender will need proof that this is the case, before it can be used towards your mortgage.
How do I choose the right 95% mortgage?
When looking for a 95% mortgage, you want to make sure you’re on the right one. Each different mortgage type works in its own unique way, allowing you to find one that is best suited for your personal and financial situation.
You could find that you prefer Fixed Rate or Tracker Mortgages, wherein you either keep interest rates at a set amount for the term or have your interest rates follow the Bank of England base rates.
Alternatively, you might find that you’re better suited for an Interest-Only or a Repayment Mortgage. The former of which allows cheaper payments until you need to pay a lump sum at the end (more suitable for Buy-to-Lets) and the latter of which means you’ll be paying interest and capital combined per month.
You can read more about these in our Different Types of Mortgages article, with accompanying videos.
How can a bigger deposit help with my mortgage?
As with anything involving such a large financial outgoing, you need to be prepared and need to be wary. Things that might crop up, include higher interest rates, remortgaging difficulties due to less equity and then negative equity.
The good news here is that all these can be avoided if you’re savvy enough with your initial process. The more deposit you put down, the less risk you are to the lender.
A larger deposit, of say 10-15%, would not only lower your interest rate significantly but would also put more equity in the property and reduce the risk of negative equity as you would be borrowing less against the property in question.
So, whilst the risks seem daunting at first, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a definite lifeline and something you’ll be able to reap the rewards from.
Budget 2021 Mortgage Market Overview
Following the 3rd March 2021 Budget, we got a handful of positive news and found out how the economy is going to recover from the effects of COVID-19.
Chancellor Rishi Sunak provided some information on how he’s going to get the mortgage market back on its feet. It’s news that we’ve been looking forward to for quite some time; the only way is upwards now!
95% mortgages are coming back!
90% mortgages crept back into the market in October 2020. During this time, it seemed like it wouldn’t be a while until you could access 95% LTV mortgages.
However, after the recent 2021 Budget, we learnt that 95% are making their return to the market once and for all. The name of the scheme is a tiny bit misleading as not everyone that applies is going to be guaranteed a mortgage. Lenders are still going to assess your credit score and make sure that you are going to be able to afford a mortgage alongside all of your other financial commitments. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements.
The Chancellor announced that both First Time Buyers and Home Movers will have access to this scheme. It can also be used on any property too, not just new builds.
The scheme will be available from April 2021 and will run until December 2022, and according to Sunak, many credible and huge lenders are already backing the scheme.
As a Mortgage Broker in Hull, we are delighted to hear this news and are excited to see what the market has to offer over the next month.
Stamp duty holiday extension
On top of 95% mortgages making their way back into the market, the stamp duty holiday has been extended until 30th June 2021.
When the stamp duty holiday was introduced last year, we all hoped that life would be very much back to normal by now, however, things didn’t pan out the way that they were expected to. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the objective of trying to push people to carry on progressing their Moving Home journey.
To keep the property market running and to carry on home purchases, the government have decided to extend the stamp duty holiday. Property purchases up to £500,000 will remain tax-free until 30th June 2021 and those up to £250,000 will remain tax-free until September 30th 2021.
Current stamp duty rates
- Property value < £500,000 – no stamp duty
- Property value £500,001 – £925,000 – 5%
- Property value £925,001 – £1,500,000 – 10%
- Property value > £1,500,000 – 12%
Mortgage market update
Now that the market is getting back on track and 95% mortgages are slowly making their return, we’re hoping that this is the sign that we needed that things are returning to somewhat normal for us. In no doubt, there’ll still be a while before things completely turn back to “normal”, but this is a start for the property market. The Government certainly sees the property sector as an area that can play a big part in our economic recovery.
The government seem keen on wanting people to transition back into buying over renting by introducing this new “mortgage guarantee” scheme. Seeing this news as a Mortgage Broker in Hull brings us nothing but hope and positivity.
Remember that we are still open and here to answer all of your mortgage questions. In Hull, we are available 7 days a week so don’t hesitate to get in touch and get your process started.
How To Make An Offer On A Property In Hull
Getting prepared to make an offer
So you have your heart set on a property in Hull and you are ready to put an offer down on your dream home… but where do you get started?
Placing an offer on a property is not as easy as it seems, you have to get lots of things prepared before you can do anything. Firstly, you’ll have to make sure that the seller or estate agent knows about all of your personal and financial circumstances. At this point during the process, you are putting yourself in the best position possible in order to get your offer accepted. Before you put in your offer for the property, the seller or estate agent needs to know everything so that you are covered if anything pops up in the future.
Tips for making an offer on a property
Get a mortgage agreement in principle
Getting a mortgage agreement in principle (also known as an AIP) is an essential part of the home buying process. It is usually a written statement of approval from a lender/building society to say that they are willing to lend you a certain amount for a mortgage. This is why you need one of these to make an offer on a property, the seller/estate agent needs to know that you can actually get a mortgage on the house.
After the outbreak of COVID-19 in 2020, an agreement in principle was even needed at the house viewing stage. This was to put a limit on the number of people taking up viewing who haven’t even been accepted for a mortgage as of yet. As a Mortgage Broker in Hull, this is another reason why we always recommend that you get in front of other buyers and get an agreement in principle nice and early.
In the majority of cases, you will never compete with a cash buyer. Lenders love it when someone can provide you with the cash there and then. However, to increase your odds against cash buyers and even other potential buyers, you should get an agreement in principle arranged. If you have one at the ready, you are showing your lender that you are well-prepared and know what you are doing. It also puts you ahead of other home buyers who haven’t got one in place.
This is another benefit to approaching a Mortgage Broker in Hull, like us. As part of our service, we aim to turn around an agreement in principle within 24-hours of your application! Depending on your situation, it could be within a much shorter timeframe!
Be prepared to negotiate with the seller
Buying a property is a negotiation process. If your initial offer is rejected, you will be asked whether you want to increase it. If you really think that the property is worth more and you want it, you may have to bump up your initial offer. Don’t be shocked if your initial offer is declined, many First Time Buyers in Hull have had this happen to them and yet it doesn’t stop them from securing the property further down the line.
If your second offer is also declined, you may have to pay the asking price. This is where doing research comes into play. Before making an offer on a property, you should always research what similar properties in the local area are selling for on Rightmove and Zoopla. This may give you a vague idea as to how much your initial offer should be.
Another thing to look out for is how long the property has been on the market. If it’s just been listed, the seller may want the asking price, whereas, if it’s been on for a while, the seller may be lenient or there could be something wrong with the property. If you come across houses that have gone for less than they’re worth, don’t worry as there will be a reason for it. It could’ve been repossessed, sold to a tenant at a discounted price or an inter-family sale.
Speak to a Mortgage Advisor in Hull today
For further advice on this specialist subject, feel free to get in touch with our excellent Mortgage Advisors in Hull. If you need any help on making an offer on a property as a First Time Buyer in Hull or just want an expert Mortgage Advisor in Hull by your side to help you secure that property and get you a great mortgage deal, you should know that we are here to offer a helping hand.
We have Advisors in Hull available 7 days a week, so if you ever have any mortgage questions, you know who to call. Receive a free mortgage consultation today with your expert Mortgage Broker in Hull.
Top 5 Mortgage Hurdles You May Come Across
Specialist Mortgage Advice in Hull
There’s always going to be a chance that you’re going to come across some sort of problem when dealing with a mortgage. They can get quite complicated at times!
As a Mortgage Broker in Hull, we encounter all different kinds of mortgage hurdles. Having had over two decades of experience, we have faced most of these complex situations before and know exactly how to deal with them. However, if one that we haven’t come across before catches us off guard, we will still do everything within our power to get by it and help you along your mortgage journey. You may be unaware of the majority of these hurdles if you are a First Time Buyer in Hull, we hope that we can help!
Since there are so many different types of mortgage hurdles, it would be impossible to cover them all. Here is a breakdown of the top five mortgage hurdles that you may face during your mortgage application.
Common mortgage hurdles
Childcare fees
It’s uncommon for your mortgage application to be turned away due to you having children, however, your offer is likely to be a little higher than if you didn’t have children.
Lenders have to be 100% certain that you can afford all of your mortgage payments on top of your current expenditures. Childcare costs are considered a part of your expenditures each month. They have to compensate for these costs as they can sometimes run into hundreds of pounds per month. At the end of the day childcare costs don’t go down, they only really go up! They treat this financial commitment the same way as they would treat a car loan or hire purchase agent.
Even if you don’t have to pay nursery fees to pay, if you have children, you may still be offered less than other buyers who don’t have children. The good news is though that this type of family can often be in receipt of tax credits and some lenders will take these into account as well as child benefit.
Divorce/separation
It’s very sad when it happens, but if you decide to call it a day with your partner, you may come across some financially related problems, particularly your mortgage if you have one together.
Lenders may struggle to accept your application if you are still financially linked with someone else. They don’t want you to have two different sets of mortgage payments to meet each month, it could be too much for you to manage.
When people need help with their mortgage in this situation and they come to us for Specialist Mortgage Advice in Hull, we often get asked the same questions:
- How can I remove my ex’s name from my mortgage?
- How do I remove my name from my ex’s mortgage?
- Can I have two mortgages?
When facing mortgage hurdles like these, it can get very complicated, very quickly. More often than not, there is a solution to these scenarios, it’s just knowing how to get around them. With a Mortgage Broker in Hull by your side, you will have all of the stress taken off your back during these hard times.
Benefit income
Different lenders will have different viewpoints on benefit income, this includes how they are going to assess it. On the plus side, all benefit income such as child tax credit, working tax credits, disability benefits and pension can all be taken into account in one way or another. Therefore, it’s up to your lender to consider it or not.
If you need further advice about mortgages and benefit income, feel free to get in touch with our team. We will look over your situation for you and try to link you with a lender that will consider your benefit income, we aim to get it right the first time!
New job
Usually, with a new job comes a bigger salary and this extra income is often put towards something like a new mortgage. Naturally, you would expect that this means that you are more likely to get a mortgage, however, this is sometimes not the case.
Normally, when you start a new job you’ll have a probationary period. Probationary periods are usually okay, however, there will no doubt be some uncertainty there. Some lenders may only accept you once you have job security, it’s just down to the lender and mortgage costs.
Lenders will also look at your previous places of employment to determine your work patterns. They need to be sure that you aren’t just dipping in and out of work. Gaps in employment can have a negative impact on your application.
There are lenders who will work from a newly signed employment contract though even in month one or if your new job is about to start.
Evidencing a deposit for a mortgage in Hull
For any purchase, all mortgage lenders and mortgage brokers legally have to evidence the source of the borrowers’ deposit funds. This is to battle money-laundering and prove that the applicant has raised funds legally. Your solicitor and estate agent may ask for evidence of your deposit also.
We believe, that this is the most complicated part of applying for a mortgage and could cause some slip-ups if not done correctly. Whether your deposit is from savings, premium bonds, the sale of another property, gifted from a family member or friend, from family overseas, or from a personal loan, you are required to have the paper audit trail for the accumulation of funds.
