When we speak to customers for the first time, especially if they are a First Time Buyer in Hull or a Home Mover in Hull, are wondering whether or not they can get a mortgage in the situation they are in, and how much can they borrow for a mortgage.
In 2014, the Financial Conduct Authority (FCA) launched something called the Mortgage Market Review (MMR). This was a completely brand new way for mortgage lenders to do business, with new guidelines that they had to follow, in order to stop the “Credit Crunch” from happening once again.
The modern way of reviewing a customers credit history, includes looking at your spending habits, going more in-depth in making sure you can afford a mortgage. In the past, it was commonplace to borrow much more than your annual income, which thankfully is no longer the case!
Nowadays you can only borrow a multiple of your annual income, making it much less risky to lend and to borrow. Speaking of income, that’s the biggest factor in determining how much you can borrow. If you are a high earner, you are likely going to be able to borrow more than a lower earner.
Everyone’s situation is different, and those differences can also determine how much you can borrow. Some have childcare costs, student loans, other costly credit commitments. In this case, you will very likely be borrowing less than someone who has the same income, but is without those costs.
Credit history is a big factor in obtaining a mortgage too. Whilst it doesn’t necessarily directly affect the amount you can borrow, applicants with a poor credit score or adverse credit may either be declined altogether, or have to pay more on interest, to cover the risk to the lender.
Because of the interest-rates, you’ll be paying a larger sum per month to the lender. Let’s say your monthly payments are a specific amount, but you can only afford half that amount per month.
This could mean you aren’t able to borrow as much as you would’ve liked, due to a cause and effect of having adverse credit.
Additionally, how a mortgage lender assesses your income could determine how much you can borrow. Some will see something like pension contributions as a fixed outgoing, so may lend less to an applicant than another lender might, who wouldn’t factor in that outgoing into their assessment.
There’s a lot that goes into assessing affordability, as each mortgage lender will have their own unique lending criteria. You might have a good deposit and sufficient income, and still find that one lender may lend less than another, purely down to the smallest factor.
As a mortgage broker in Hull, we are able to take a look at your case and determine what you may be able to afford, prior to speaking with a lender. We’ll search through thousands of deals, matching your criteria up with the most appropriate product.
Whilst it’s helpful to take a look at how things are now, it’s also important to understand why they are like this now. In the 90’s, before credit scoring existed, mortgage applications would be manually underwritten.
This meant that the process of approving a mortgage wasn’t based on a streamlined, near foolproof algorithm on a computer, as it was instead looked at by real people, at their own discretion.
It was quite easy to just book an appointment with a bank or building society, sitting down with the manager and discussing your mortgage case. From there it would more or less be a sales pitch, in which they would push a savings account until you’re “creditworthy”.
From this point, you would be granted the previous equivalent of an Agreement in Principle, as well as mortgage advice regarding the amount you were able to borrow. This might sound personalised, straightforward, easy… Perhaps too easy.
The reason it was as such, was down to it once again, being that person’s discretion. The manager of that establishment could interpret the lending manual in any way that they saw fit.
What this means is not only were a lot of wrong decisions made, but you could have walked into any bank or building society branch, anywhere in the country, and received a different outcome each time.
To stop this from being the case and to cut unnecessary costs, mortgage lenders opted to use automated affordability. This meant that instead of the bank manager choosing your affordability and maximum borrowing, you were now only limited to a multiple of your annual income.
Skipping ahead to the early 2000’s, mortgage lending got a little too relaxed. Automated affordability checks were still in place, but these mortgage lenders were allowing customers to self-certify for a mortgage.
Self-certification was where an applicant can sign a document to self-certify their earnings, without having to provide evidential documents, such as payslips or tax returns.
Not only this, but mortgage lenders were also allowing for 100-125% loan-to-value mortgages, meaning not only were you self-certifying your income (sometimes with a falsely inflated figure), but you were also borrowing much more than the property itself was worth.
As you can probably expect from this information, or as you may have even experienced during 2007-2008, the economy crashed and we entered the infamous “Credit Crunch”. The years following, especially between 2008-2010, were very challenging indeed.
These challenges extended to the home buying market too, as people attempting to get onto the property ladder for the first time, found it near impossible to do so.
Mortgage lenders had to change, their lending habits had to change, strict criteria needed to be put in place to fix the mess that had been made. As such, the government introduced the Mortgage Market Review in 2014 that we mentioned earlier, and the market eventually recovered.
As an open & honest mortgage broker in Hull, we believe you will benefit from our expert mortgage advice service, especially if you are a first time buyer in Hull.
We pride ourselves on helping customers find their footing on the property ladder. We can search through 1000’s of mortgage deals, reviewing your case against lender criteria, finding the best one for your circumstances.
To learn more about how much you may be able to borrow, or to get started on your mortgage journey, book a free mortgage appointment online today using our online booking feature. A trusted and dedicated mortgage advisor in Hull will review your case and answer all of your mortgage questions as best as they can.
If you are getting ready for moving home in Hull, taking the next step in your homeowners story and moving further up the property ladder, you will need to think about selling the home you already have.
Once you have gotten to the point where you have sold your home, the equity that is sitting within your property (equity is the difference between the value of the property and the amount on your mortgage balance), will be used as a deposit for your new home purchase.
This can be topped up by something like savings or a gifted deposit from a family member.
The way your home is presented and marketed to potential buyers will depend on a variety of factors. If you get it right, you could sell your home very quickly. If you get it wrong, you could be waiting for a sale.
In order to make the most out of your sale, you’ll need to do some research. Here are our top tips for selling your home quickly;
When it comes to deciding the asking price for your property, you’ll of course have a minimum in mind, but it’s also important to make sure it isn’t unreasonable and over the odds locally. An estate agent may tell you the potential highest price it could sell for, but it isn’t necessarily going to sell for that much.
Within the first few weeks of your property being listed, you’ll want to get as many eyes on it as possible. If you aren’t getting as much interest as you’d hoped, it’s most likely because your asking price is too high.
If at this point you have already found the place you would like to move to, you’re going to need to try and sell it as quick as possible. As such, getting the asking price right is the best way to start off your process of moving home in Hull.
We have been hard at work as a Mortgage Broker in Hull for over 20 years now. One of the main things we hear brought up from home buyers on a regular basis, is how the property looked externally.
Making sure your home looks appealing from the outside will be the best way to make sure your potential buyers are engaged. You’re making a first impression on them, so it needs to be a good one.
Sometimes, it’s the simple things that make the most difference. A neatly cut front lawn, your driveway being jet-washed and clean, things like that.
They show a potential buyer that your home is well looked after and that you want people to be impressed by the quality of it. If the outside looks good enough, you may be more likely to attract attention to the inside.
Remember, you only get one shot to make it count, you might never get this moment again. So in order to maximise your chances of selling your home quickly, definitely pay some attention to the outside and make it look as appealing as possible.
Before you start allowing people to come in and view your home, you’ll need to make sure that everything is clean and tidy on the inside!
The idea is to ensure that the viewer feels a sense of welcoming, that they feel comfortable. After all, this is potentially their next home, so you want them to envision that potential.
Take away anything you have lying around, especially items left around the front of your property. Once again, it’s back to that first impression. This will be their first instance seeing the inside of your home in person, you want them to know you’ve looked after it.
Little things like buying a new doormat, cleaning any light fixtures, ensuring the doorbell works if you have one. This will all add up in the eyes of a viewer. People tend to remember negatives a lot more than positives, so reducing the amount of negatives they encounter ensures for a higher chance of a sale.
After your hallway is all clean and tidy, it’s time to take the cleaning supplies on tour, going room by room to ensure the whole place is looking as spotless as you can possibly make it. Cupboards and wardrobes are a go-to for most people, they will definitely want to see storage potential, so make sure they’re all neat and tidy.
Make sure you give the kitchen and bathroom a good look over too, as they are going to be some of the most important areas in the house. If you happen to be a smoker, get rid of any lingering smells as that will definitely put people off. Air out the property and remove items that may still smell of smoke.
Tidying up clothes, new bedding, cleaned windows and things like that, will all leave a positive impression. New carpets will also go down well with possible buyers.
All of the interior doors should be painted and any fixtures should be polished. Also make sure that they definitely work, as you won’t want a potential viewer to see something like a broken door handle to a room.
Light is a big factor too, so you’re going to want to see that all the rooms are well lit. If there are curtains and blinds, you’ll want them open. The room should feel nice and warm but also not too hot. If it’s a hot day, you perhaps want a window open, so they feel comfortable.
Also make sure that your lightbulbs are working everywhere. Some have said before that the smell of “baking bread” will attract people to a room. This is an old fashioned approach, make sure it doesn’t smell of any food whatsoever.
You will need to plan accordingly for each home viewing. The idea each time is to allow them to feel as relaxed and at home as possible. This means keeping kids or pets out of the way whilst they’re walking around.
On the other hand, if they’re a young family or they are making plans to be, having family pictures or any paintings dotted around will serve to remind the viewer that this is a family home.
Don’t be afraid to let them explore your home by themselves, but also don’t stray away from them too often. You’ll want to make sure they’re not crowded so they can discuss amongst themselves, but also be on hand to answer any questions.
Something that doesn’t always cross the mind of people moving home in Hull and selling their home, is that empty space can actually be a good thing too.
Showing empty space allows for potential property buyers to visualise what their home could look like. A buyer could see an empty wall and picture putting up a canvas on there, or sitting a bookshelf in front of it, that sort of thing.
Another big factor in purchasing a home, sometimes even the deciding factor, is how the garden looks. Not only do people like their own piece of green to relax in, but it’s generally the last thing the viewer will see.
Your last impression is just as important as the first impression. The viewer will remember exactly how they felt when they entered and when they left. Just like the inside, make sure there is nothing laying around outside, tidy everything away that doesn’t need to be out.
Don’t just pile it all into the shed though, as if you have one of these, the viewer will more than likely want to see what kind of garden storage space they could be working with.
Make sure that your fences have slats correctly in place, with the wood either freshly painted or creosoted. People also love to see a colourful garden, so some bright, newly planted flowers could really sell someone on your home.
Liven up the place, remove any dead plants laying around, ensure the grass is neatly cut and that all grass clippings are binned. Do all of this well, and it could be the factor that plays the biggest part of selling your home.
People like people and you will also be leaving an impression on them. Be warm, be welcoming, but also be yourself. They are one of hopefully many potential buyers, so don’t worry if they don’t make an offer.
You’ll want to give a balanced view of the property, being transparent about different problems you have had, how easy it was to fix the issue and giving them full reassurance that they are unlikely to occur again.
Examples of this would be if you had a leak fixed. They’ll need to know of anything reoccuring too if there is something, as the last thing you want is for them to buy your home from you and then be riddled with surprise problems!
Estate agents will no doubt want to take on the property viewings themselves, so that they can earn their commission, but remember that nobody knows your home like you do. You’ve lived there, you’ve grown there, you know it better than any outside party could.
As such, don’t be afraid to jump in and make your own comments every now and again, filling in the blanks where an estate agent salesperson may not.
Last but not least, remember the emotions that will be tied to the purchase of your home. This could be a family looking for their forever home, a first-time buyer looking to purchase their first ever home, and so many more scenarios.
Point out that it has been a happy home, speak fondly of the place. If you’re speaking to a young family or find out that they are looking to start a family, make sure you talk about yours as this is sure to rub off on them and plant the seeds of potential.
Remember that moving home in Hull can also be a stressful experience. Let a dedicated and expert mortgage broker in Hull like Hullmoneyman take the stress away, by getting in touch today.
Our team of mortgage administrators and mortgage advisors in Hull will do everything they can to keep you informed and up-to-date throughout your process, ensuring that your mortgage goes as smoothly as it can.
Book your free initial mortgage appointment using our online booking feature and we’ll see how we are able to help with your mortgage needs when moving home in Hull.
We tend to find a lot of buy to let landlords in Hull like to create a property portfolio as a means of funding their retirement. Not everybody likes to use a pension plan, but they do understand how the property market works. I know that over the past 20 or 30 years it has been a very strong long-term investment, despite the ups and downs.
In this case study, we will take a look at one way we helped a customer to take her initial steps to become a Landlord.
Carol is a self-employed mum with two children, and she is a Director of two small businesses in the Hull area. She and her partner had quite a lot of equity in their home and were interested in raising some capital in order to purchase a low value buy to let property, potentially at an auction. Carol felt that she was able to get some bargains at auctions, but she never had the money to attend one of these as a cash buyer.
She looked into Remortgage Advice in Hull for the possibility of Remortgaging her property. But had been told previously that it wasn’t possible unless they could provide an address for property they were looking to buy once they’d done this – a proverbial “chicken and egg” scenario.
Carol also mentioned that once or twice a year, she would receive a dividend somewhere within the region of £3000, from one of the companies she was in partnership with. She also mentioned that she had been prone to wasting some of that cash when she received it, perhaps unexpectedly.
I could tell that Carol was always very busy, but also a very savvy businesswoman. The dividends she received could easily be put towards an investment, as there was never anything she was specifically spending it on. I recommended that she take out an offset Remortgage in Hull that Carol and her partner could secure against their home.
I found a Lender who was more than happy to release funds on completion, in order for it to be assigned to a future Buy to Let mortgage in Hull (without wanting to know the address of the specific property). Carol simply deposited the additional funds into the offset savings account that you get with that type of mortgage, and left the money to sit there until she needed it.
The offset savings accounts will not attract interest, though it is instead offset against your mortgage balance. To clarify, Carol had £85,000 surplus funds from a overall remortgage of £215,000. While the money is sitting in the savings account, Carol only has to pay interest on the £130,000 difference between the two figures. The £85,000 is on instant access and was available to jump into at any point in time.
Three months after her remortgage had completed, Carol found a suitable property that was in a state of disrepair. It was likely not able to have a mortgage on it itself, but Carol had saved up enough funds to buy the house outright.
Carol secured the property at a knock-down price of £55,000, but this amount needed to be brought up to the total of £70,000 to cover all of the legal costs and a refurbishment program of works.
A further nine months went by, and with all of the work completed, Carol had no trouble finding a tenant to start paying rent. The house was now worth around £90,000, and we were able to raise a remortgage of £67,500 against it to help fund the purchase of a second buy to let property.
Carol has no intention of changing career paths and becoming a full-time Landlord, but she can now see a way into the future where she might own three or maybe even four properties in the future, as a way of funding her retirement plans.
She loves the flexibility that her offset mortgage allows her to have, and while she may still ‘squander’ some of her dividend from time to time, which she is free to do, without fail, half of it at least is deposited back into her offset savings account each time. This means her money will essentially “do the work for her”, reducing the overall amount of interest that is repayable on the mortgage.
If you are interested in offset mortgages or building your investment property portfolio, please feel free to book a free mortgage appointment. Our Mortgage Advisors in Hull will be happy to help you in any way they can.
As could probably be predicted from us, we firmly believe that there are some great reasons for customers to use a mortgage broker in Hull.
As a fair counter argument though, whether it’s via a branch or online, it is still completely viable to go direct to the lender yourself. Luckily we find that most people prefer to make use of a mortgage broker.
Here we will take a look at the pros & cons to both sides.
When talking about the option of going directly to a bank or building society, the first thing that immediately springs to mind is that you’ll be free from any broker fees. This of course will save you money.
Whilst that may be a point for, an immediate point against comes to mind too. In previous years, you may have thought “the bank manager will know my finances inside and out”, though when credit scoring was introduced, this no longer became a factor in the process.
One reason why going direct could be preferable, is that some lenders offer exclusive mortgage products that are only available by going direct. This is done so to attract a good spread of business from consumers and brokers alike, switching these exclusive products as they see fit.
On the contrary to this, some products may only be available by going with a mortgage broker. In this case, you’re not only able to see potential exclusive deals from your bank, but other lenders as well. A bank can only offer their own products!
In 2014, the market changed and lenders were no longer allowed to sell mortgages on a non-advised basis to anyone who walked through their door.
Previously, it had been believed that non-advisors were trying to push actual advice on customers. This means they weren’t able to benefit from some of the consumer protection that comes with speaking to a professional mortgage advisor.
The changes meant lenders had to adjust. Heading towards the end of 2014, it was commonplace to be kept waiting over a month just to speak with an advisor. Sometimes today this situation still occurs, which is of course less than ideal when you have had an offer accepted and are ready to go!
Because of the issues that were occuring with these services, applications being made via mortgage brokers went on the rise. This is because many brokers out there, like ourselves, are able to offer customers a more flexible service, at times that best suit them.
When you book your free mortgage appointment with us online, you’ll be able to choose a timeslot that best suits your personal and work life. Oftentimes, your appointment can be booked in for the same day. There is no waiting around for somebody to get back in touch!
Affordability is definitely something that factors into people’s decisions to use a mortgage broker. No matter how good a lender’s deal might seem, you won’t get very far if they won’t lend you enough money!
Buying a house is so important to people, that many customers will opt to go with a trusted and dedicated mortgage broker for professional and personalised mortgage advice in Hull.
Nowadays we find that a lot of mortgage applications aren’t as simple as they once were. For one reason or another, there are a lot of contributing factors that can make the mortgage process a lot more challenging now.
Some examples of these are, but are not limited to:
In the past, it was a lot easier for lenders to stand out from the competition by simply offering a deal that was similar to, but better than another mortgage lender on the market. In modern times this is very different, with lending criteria being the big difference between one option and another.
An example of this is the differences in leniency towards those who are looking to obtain a Self-Employed Mortgage in Hull. Some lenders are willing to be a bit more sympathetic towards previous discrepancies on your credit report. Others, not so much.
Your situation is unique to you, it is very unlikely that someone will have the exact same circumstances as you. You could be looking for First-Time Buyer Mortgage Advice in Hull, ready to take the first step towards being a homeowner.
You might be in a tight spot and need some Remortgage Advice in Hull, ahead of consolidating some debts (something that definitely requires an expert opinion). When you explain your position to an experienced mortgage broker, they may have dealt with something that is at least similar in the past.
This allows them to personalise your mortgage advice service and guide you along each step. With a little luck and a lot of hard work, your mortgage advisor in Hull will hopefully be able to recommend the most suitable mortgage, at the lowest rate available to you.
Beyond that though, it’s about more than just getting a mortgage. Even if the application itself is pretty simple to run through, our clients rely on our expertise and industry experience for so much more.
We are able to run through how much the applicant is willing to offer on their potential new home. Our trusted team of mortgage advisors in Hull are able recommend other professional services such as solicitors and property surveys.
Another reason why using a mortgage broker in Hull could be preferable, is that we tend to be far more responsive than the lenders might be.
Our hard working team quite regularly work late into the evening, outside of normal hours, giving maximum effort on customer cases to ensure the service is prompt but also effective.
Something that is often overlooked when looking at why customers may prefer a broker, is that people’s day-to-day lives are so much busier. A mortgage might be important, but you may have no free time! A mortgage advisor in Hull will take the weight off your shoulders.
Professional applicants especially see the benefits of using a mortgage broker, as they have clients of their own that they charge out their services to and they appreciate having an expert to do the work for them whilst they keep busy.
Mayhap in the future we will see lenders wanting to take business back from the brokers. In the event of this, we may see a more technological approach from them. The world seems to be more focused on that these days.
That’s great news for customers who are fine with speaking to bots or using automated systems. Even more so when the case is straightforward.
For most of us though, there’s an element of “realness” when speaking to a real person. We are getting that “human touch” that only speak to a mortgage advisor in Hull can provide for you.
Book your free mortgage appointment online now using the “Get Started” button. Time slots are available every day, from early until late, at a time that best suits you (subject to availability).
There are thousands of interest-only mortgages across the nation that are maturing every year and the homeowners who have one of these may be caught off guard when it comes to having to pay off the capital sum that is owed.
In this article, we take a look at what interest-only mortgages are and what can be done when situations like this occur.
Back in the ’80s and ’90s, it was actually really common for residential mortgages to be set up this way. The purpose of these mortgage types, was that you would only pay back (over the course of your term) interest on the amount that you borrowed, with the remaining capital lump sum being paid back once the term ended.
For anyone who had previously taken out an interest-only mortgage, it is likely that you will have been advised to set up a repayment vehicle, perhaps something like a low-cost endowment policy.
The policy would mature over time and was designed with the purpose of helping you to repay the capital balance in full, whilst also giving you sufficient life cover for the duration of your mortgage term. Unfortunately, there are a lot of people who weren’t made aware of the risks attached to this type of product.
One of the risks that cropped up, was that there was no guarantee the policy would actually mature enough to cover the costs of your mortgage debt, which in turn led to many applicants being compensated for them being mis-sold a product.
Nowadays, interest-only mortgages tend to be a popular option for customers who are looking at their options for Buy to Let Mortgages in Hull. These types of people are landlords who buy properties to earn some extra income.
It is not very common to come across customers who have taken out an interest-only residential mortgage in recent memory, as they are considerably difficult to obtain unless you can prove that you have a very solid strategy for paying back the capital at the end of your term.
For customers who took out an interest-only mortgage at any point in the late ’80s or ’90s and have not switched it to a capital repayment, then you should absolutely look to take action sooner rather than later.
If you happen to be in this sort of position, the chances that your mortgage lender will send you a letter or give you a call, asking how you plan to pay the capital back will be slim.
It is important to always keep open a line of communication with the mortgage lender, remaining honest and open with them. Contrary to the belief of some, a lender truly does not want to take your property into possession and will only do so if they have no other choice.
Instead of letting things get to that point, here are some other things that you could look to do instead;
The retirement mortgage market is an area of the world of homeowners that is currently thriving, largely due to the amount of interest-only mortgages that are reaching the end of their terms, without any concrete plans in place to actually pay back the capital.
There are a lot of retirement products available to customers across the country nowadays, and some providers may even possibly let you service the interest element by way of regular monthly repayments.
Creating this sort of agreement means that when you die, the capital balance that is left to pay, is repaid from the house sale and the surplus can be given out to your family.
Interest-only mortgage are still in existence and can be obtain, though there are limitations as to who can obtain one. For example, you may possibly be a landlord with an extensive property portfolio or have some other investments in place, which you can use to help you repay the balance.
Lenders will now take an in-depth look at your strategy for repaying the loan, analysing a lot more deeply than they would’ve done in the past.
They do this in order to ensure that they are only lending for a property that they are confident won’t default. In addition to this, they will also want a much larger deposit to go down, potentially as much as 50%.
They will also want to future proof any of your plans before going ahead. An example of this would be checking that you have enough equity in your home to potentially downsize to a reasonable property down the line.
As always, our team of dedicated mortgage advisors in Hull, here at Hullmoneyman, are always happy to run through the options that are available to you as a home buyer or existing homeowner in Hull. Book your free mortgage appointment online today and we will see how we are able to help you.
Customers will always receive an Agreement in Principle from the lender before they can obtain a mortgage on a property. The reason for this is so that you know the lender will agree, in principle, to let you borrow from them.
This part of the process is carried out before the final checks and whilst even with this we cannot guarantee that you will get a mortgage, being given this is certainly a good sign that you’re on your way to mortgage success.
You’ll often see this online being called a Mortgage in Principle and a Decision in Principle. Sometimes it will be shortened to AIP and DIP. Though the collection of names can be confusing to home buyers, worry not as they’re all exactly the same thing.
Once you have gotten an Agreement in Principle, you will be ready for the next steps of the process, fully prepared to support any offers that you look to make as a First Time Buyer in Hull.
By having this document, you may also give yourself room to negotiate with the seller of the property on a lower price.
This is because it will showcase to the seller of the property in question, that you are a serious buyer and have the necessary funds to move on with the mortgage process.
We tend to find that a large amount of lenders these days are choosing to go with soft searches instead of doing hard searches. As a standard rule of thumb, a soft search will not affect your credit score, as they don’t usually leave a footprint.
Hard searches will leave a footprint behind, so having lots of them done can be quite damaging, especially if you fail it each time. That’s not to guarantee a soft search will have no effect, but it is very unlikely.
Soft searches offer less in-depth information than you would get from hard searches, though worry not as no matter which one the lender opts to use, they will be doing it for the right reasons.
If you are not getting hard searches taken out on you regularly, then having one done should be pretty harmless. The problem arises is if you start having multiple hard searches taken out on you in quick succession.
Always remember that if you fully know that you do have a good credit rating, there is no need to be put off by the idea of getting a hard search done, especially if it will be the best option for you to go with.
Though it would be nice for us to say yes and lift your spirits, unfortunately even with an Agreement in Principle to hand, a mortgage is not always a guarantee at the end of the process.
The mortgage lender still needs to take a look at all of your documents and only after their checks are complete will a mortgage underwriter be able to make their final decision.
Customers often get in touch with us after they have previously been declined at the point of application, as they have neglected to read the small print that is stated within their Agreement in Principle.
You are required to provide your mortgage lender with proof of identity, the last 3 months payslips and bank statements to demonstrate your financial capabilities, before a mortgage lender will offer your case.
The required documentation is a little bit different for Self-Employed Mortgage applicants in Hull.
Whilst yes, you would be able make an offer without an Agreement in Principle to hand, you would be much better off for getting one prior to making any property purchase offers.
Whether you take the document, a lender will always have to agree in principle before the mortgage itself can proceed.
Any estate agent with credibility will want to see an AIP before they do business with you, as they need concrete confirmation that you have the funds to proceed and won’t be wasting anyone’s time.
A trusted mortgage advisor in Hull will usually be able to obtain an Agreement in Principle within 24 hours of your free mortgage appointment.
An Agreement in Principle tends to expire somewhere between 30-90 days. Always be mindful though that you don’t just have to make an offer on the first house you encounter within your price range. Take as much time as you need.
If your Agreement in Principle expires, your mortgage advisor in Hull will easily be able to get you a new one, in order to help you make offers when you are ready to.
Finding the home of your dreams, only for a lender to decline you, can be both frustrating and crushing. To counteract this feeling, we would highly suggest that you get an Agreement in Principle as soon as you can, to make sure you’re wholly prepared for the mortgage process.
To gain a better understanding about what an Agreement in Principle is and how they can be useful, take a look at our helpful YouTube video guide.
You may not be married, nor do you have any intentions in the near future to settle down with kids, but that doesn’t mean you wouldn’t benefit from looking into life insurance in Hull. Even for those of you who are single homeowners, there are still plenty of completely valid reasons to take out life cover.
Having a life policy in place can be a huge support to your family in dealing with any debts that may arise, such as outstanding mortgage payments, if something untimely were to happen.
Generally speaking, the purpose of life cover is to cover any mortgage debts. The policy will usually be set up to pay out a lump sum, equivalent to the cost of the current home loan, should the policy holder (the person with the life cover) pass away whilst still making monthly mortgage payments.
If you are living with a partner or have had any children, the cover might even get extended as a means of providing your dependants with an income boost to cover any living costs for the time being.
The extra protection here likely won’t be necessary for single cover applicants, but taking out some insurance to cover your mortgage is still something we believe is worth doing.
If a single homeowner dies at any point prior to their mortgage getting paid off, their bank or building society can look to pay back the mortgage loan from their late customer’s estate, i.e., their collective belongings (accumulated assets is a term you might see used for this), such as a car or something else of worth.
In most cases we find that in order to pay off the remaining mortgage balance, the property will get sold at auction. If the home has fallen into negative equity, the lender has the right to demand that the estate must make up the difference.
Alternatively to this, the lender can demand that the property be sold and any surviving family members are not able to make up any shortfall. Making things worse here, if the probate process happens to be drawn out (the probate is the time of which the individual’s estate is sorted out), the lender can actually continue to add interest charges, increasing the total amount to be paid. Immoral? Potentially. Illegal? Unfortunately not.
Taking out life insurance will help to prevent these problems from occurring.
If you are looking at your options for potentially taking out life cover at some point, please get in touch and speak to one of our dedicated protection advisors in Hull. If you have any plans of becoming a first time buyer in Hull or you are already a homeowner with a change in circumstances, it makes sense financially and personally to get on top of it now rather than leaving it too late.
A life insurance policy means that an inheritance can be left to children or grandchildren, regardless of if there is any equity left in the home at the point of passing.
Many can see the concept of being self-employed as a barrier when it comes to credit, especially when it’s getting a mortgage. With the help of an experienced mortgage broker in Hull working by your side, that doesn’t have to be the case.
The first thing that you should be aware of is that there isn’t a specific uniformed style of lending criteria for sole traders and limited company directors. Each individual lender has their own policy that is unique to them and the amount they will allow you to borrow can largely differ to that of another lender.
Looking at sole traders (also known as partners), the amount that you will be able to borrow for a mortgage will be an amount based on your net profit.
You’ll find that the majority of lenders average your last 2 or 3 years’ net profit but there are lenders out there that can consider using your latest year. If your net profit has decreased the lender will usually go off the latest year and will require you to provide them of an explanation as to why this has happened.
If you are a limited company director who is in ownership of 20% or more in company shares, then in the eyes of mortgage lenders, you will be classified as self-employed and similar rules will apply as above in terms of averaging. The figure that they tend to average will be your salary (typically this can be equivalent to the tax-free allowance) plus declared dividends.
You’ll find that there are different circumstances where a limited company may be performing well in terms of net profit, but the directors are not drawing their dividend. These type of applications can often face hurdles when it comes to the maximum borrowing capacity, as there is not as much income that can be declared by the applicant.
It’s not the end of the road, however, because there are lenders out there that will consider using your share of the net profit, rather than salary plus dividends.
The minimum trading period for people who are self-employed in Hull or limited company directors is one year, though in some cases there are mortgage lenders who will want to see more than that. If you have recently formed a limited company after a period as a sole trader, under the advice of your accountant, then there are lenders who can look at this as long as it is within the same field of work.
As you can see from the information listed, obtaining mortgages for the self-employed can easily be seen as difficult business, though the hardest part is simply evidencing your income. If you would like to talk about your situation please feel free to Get in Touch and we’ll talk you through your options, as well as send you a form for your accountant to complete. This will help us tailor-make a recommendation designed to meet your exact circumstances.
Sometimes people prefer the comfort of knowing exactly how much their monthly mortgage payments will be. If this is the type of situation you would prefer to be in, then you would be much better suited for a fixed-rate mortgage in Hull. A fixed-rate mortgage is where your monthly mortgage payments are arranged to be a set amount every month. This won’t change for the duration of your term, which can vary anywhere from one year to ten. The longer you fix for, the higher the rate becomes.
If you are looking for a more cheaper fixed-rate mortgage, then you should probably shy away from taking out a rate longer than two years. The reason why we say this, is that it could come with much higher interest rates if you take one out for longer.
If you take out a mortgage for 10 years at a certain percentage, during your term interest rates could have risen, leaving the lender out of pocket whilst you’re sitting comfortably on a lower percentage. That presents itself as a higher risk to the lender, so longer terms tend to come with higher rates. In sticking to a shorter term fixed-rate mortgage, you will find yourself with a better rate, but only for that 2 years.
Believe us when we say it, the end of the two years will come around very quickly, meaning that you will have to search for even more deals towards the end of the mortgage. If the interest rates have risen at any point during the 2 years, then you may be faced with higher payments than you’re used to at the point of renewal.
If you would prefer to limit searching for new deals every two years, perhaps a 5-year rate would suit you better. This is a common occurrence in the mortgage world. By fixing it for 5 years, you would have a stable recurring payment for a much longer length of time. Remember, as touched upon earlier, being on a fixed-rate mortgage for 5 years will mean that you will be paying more for each mortgage payment per month than you necessarily would on a 2-year rate.
When we say “Long-term”, we don’t mean 5-6 years, we mean anywhere from 7-10 years. There are both positives and negatives for taking out a long term fixed-rate mortgage. Long term fixed-rate mortgages have never been a widely popular option in the UK. As a trusted Mortgage Broker in Hull, we don’t usually recommend fixed-rate mortgages of such a length.
Again if we hearken to aforementioned points, we know that a lot can change within a decade so committing to a fixed payment for as long as ten years creates problems with lenders. It also may not work in your favour either. Once you are in the deal, you cannot get out of it and if rates drop below your current rate, rather than rising, then you may be paying well over what you otherwise would’ve been.
If something happens and your financial situation changes you could end up having to repay your mortgage a lot earlier than you had initially expected to. In doing so, you may be presented with a charge by your lender. This is known as an Early Repayment Charge (ERC).
The ERC is calculated as a percentage of the amount that you owe. For example, if you manage to pay off your £100,000 mortgage early and your ERC is 2%, you would be charged £2,000 penalty as you have essentially broken the fixed contract.
We regularly witness people being given an ERC because they think that they can get away with paying off their fixed-rate early, not realising that they will in-fact be charged. For example, people who know that their fixed rate is due to end soon may start to look up deals for the next fixed-rate mortgage they wish to move onto.
If they find a great deal and they think that the rate may increase, they may look to pay off the rest of their fixed-rate payments in order to switch to this new deal, even though this of course comes with additional charges.
We also advise that you avoid chasing “headline” deals, those glamorous looking deals you see widely advertised. Chances are your circumstances may be different anyway and you’re not guaranteed to get it at the rate you were hoping for.
Remember that the lowest rates come with the highest setup fees which some customers are keen to avoid. Get in Touch today for more fixed-rate Mortgage Advice in Hull. If you are First-Time Buyers or Moving House in Hull and would like more information or some help with a fixed-rate mortgage, our dedicated mortgage advisors will be on hand to provide any assistance they can.
The reason a lender will need to see your bank statements is to learn more about you as a person and what your spending habits are like. How you have acted lately and the presentation of this on your bank statements can be the difference in how much a lender will let you borrow, if anything at all.
This is down to risk. A lender needs to know you’re responsible with your money and can be trusted to handle finances appropriately. After all, a mortgage is likely the biggest financial commitment you will ever make in your life and is not something to be taken lightly.
Your bank statements are easily obtained either in the post from your bank, over the counter from your local bank, or as often seen these days, as a printable version from your bank’s online platform.
So down to the main question now. What will they actually be looking for? What might flag up in their eyes?
Well as mentioned above, they need to know you’re being responsible with your finances. One of the things they’ll be looking at is if there are any overdrafts. Using this every so often is not necessarily a bad thing, but if you are exceeding your limit on a regular basis, this is going to put your level of trust into question.
More factors to be careful with are potential returned Direct Debits, which could show a lender you are not consistently reliable, and not disclosing loans at application stage, as it won’t look good if the lender finds outgoings on your bank statements that you failed to mention. Once again, this is a process of trust.
Other things to be aware of are missed payments for personal loans and things such as credit cards. If you can prove you handle your money well and are able to meet monthly payment deadlines, a lender will be more likely to lend you an amount closer to that which you would like to borrow.
This is a question we find ourselves being asked on a regular basis. All too often do customers find themselves stuck when they have a history of gambling behind them. The occasional bit of fun is harmless, but if you are frequently betting large amounts of money, whether you’re making it back or not, a lender will not look at your situation favourably at all.
To learn more, please see our article on “Do Gambling Transactions Look Bad on My Bank Statements?”
From our experience in working with many First-Time Buyers in Hull & Home Movers in Hull, we have found that most mortgage lenders will want at least three months bank statements from an applicant.
With that in mind, it’s time for you to forget the past and think about the future. You have at least three months to work on your finances. The first thing we’d suggest is if you are a frequenter of the local bookmakers or online gambling scene, you take a break for some time. This not only benefits your financial state but can also benefit your mental health too.
The next steps we would recommend taking are to trying to save money. For example, cooking in as opposed to eating out, treating yourself to unnecessary purchases and cancelling unneeded subscriptions are great ways of freeing up additional cash to ensure bills can be paid on time.
What this boils down to is simply being sensible and planning with plenty of time ahead of what you’re looking to do. The further away you find yourself from bouts of debt and financial uncertainty, the better your chances will be with a lender.
Whether you’re a First-Time Buyer, Moving Home or Self-Employed, it’s always important to keep on top of your finances. If you have a bad credit history and are unsure of what to do, you can always enquire for Specialist Mortgage Advice in Hull by Getting in Touch with us today. We’ll advise as best as we can, to further you through your mortgage journey.