Tag Archives: mortgage calculator

Later life lending market has grown substantially

 

According to the latest report from the Equity Release Council, the total value of equity release lending in Q3 2016 grew more than a quarter (26%) year-on-year.

In an ever-ageing population, lenders have found themselves providing over £2bn in 2016 in lifetime mortgages, increasing the market share to 33%. The report went on to identify that one-off payments were often used for clearing outstanding mortgages or other debts in addition to funding home improvements, travel or providing a living inheritance.

High-street lending criteria

FACT: Many people are turning to specialists in providing later life lending as they fall outside of high-street lending criteria.

Rather than simply looking at the age of the applicant, later life lending specialists understand the need for this type of funding (for those aged 55 or over), and base funding on the value of the property it is secured against.

There are many reasons why someone would need funding later in life and although they include a lump sum or equity release for holidays, they are usually for house repairs, gardens, accessibility improvements and the awareness that their income may not be sufficient in their retirement.

The simple fact is that specialist lenders have spotted a need, and they are responding by helping people. Whether it’s to help a family member on the property ladder, enriching retirement income or making much-needed home improvements – Springtide Capital offers tailored lifetime lending solutions from a number of lenders.

A viable alternative

With a lifetime mortgage, the amount a person can borrow depends on their age and the value of their property and they won’t have to make any repayments before the end of the plan whilst still owning their home.

How it works:

  • The interest payable on a mortgage is usually rolled up and added to the loan
  • Funds can be accessed through either a lump sum or by using the drawdown functionality on the mortgage
  • The loan is paid back in the event of death or when moving into permanent long-term care

Please be aware that taking out a lifetime mortgage could reduce eligibility for means-tested benefits and affect a person’s tax position. Taking out a lifetime mortgage may also reduce the options for moving or selling a home and carry consequences concerning inheritance.

To understand the features and risks of a lifetime mortgage, speak to one of our qualified specialists, who will provide you with a personalised illustration.

A lifetime mortgage will reduce the value of your estate, will not be suitable for everyone and may affect your entitlement to state benefits.

Gross mortgage lending reaches £20.4 billion in December, up 4% year-on-year

 

According to the latest Council of Mortgage Lenders’ (CML) Market Commentary, gross lending for December was estimated at £20.4 billion.

In fact, lending during 2016 was up 12% year-on-year in comparison to 2015, finishing up at £246 billion in total.

Other report highlights included:

  • Marginally higher property transactions in 2016 at 1.23 million
  • Buy-to-let sector lending lower compared to a year ago
  • The Housing White Paper will deliver homes in 2018 onwards

THE UK ECONOMY

The economy fared well in 2016, with 2.1% growth overall, supported by low unemployment at 4.8% and growth in weekly earnings at 2.8%.

Still below the Bank of England’s target of 2%, inflation reached a two-year high in December of 1.6%. However, the CML expects this to increase as food, energy and import prices rise. This forecasted increase is the reason for lower forecasted growth in 2017, as consumer spending decreases from pressure on earnings.

HOUSING MARKETS

The UK mortgage market ended 2016 at a healthy £246 billion, despite the ups and downs during the year including an acceleration in buy-to-let transactions in March before the stamp duty change and the post-change slump in activity. Brexit also caused a summer slump in activity, with confidence then returning towards the end of the year as the Bank of England took action – a roller-coaster to say the least.

First-time buyer activity continued to increase during 2016, reaching 337,000 in the 12 months to November 2016, according to the CML report. There were 1.23 million property transactions in 2016, slightly higher than 2015.

The re-mortgage market gained pace in 2016, as competing lender rates and a low interest rate incentivised activity.

The market is still being held back by the lack of available and affordable property, an issue which the Housing White Paper is set to address. However, it is unlikely that this will come to fruition until 2018.

Henry Knight, Director, Springtide Capital commented: “2016 was not only an historical year but has shown how resilient we are as a country, with the Bank of England coming into action to allay fears and bolster the economy. All in all, 2016 was a good year for mortgage lending, despite the political and regulatory cards that were dealt. That said, the changes to stamp duty and buy-to-let taxation have had a particularly negative effect on the London market.”

 

If you would like to speak to a Springtide Capital Mortgage Consultant please call 020 3040 4400.

 

Source: https://www.cml.org.uk/news/news-and-views/market-commentary-january-2017/

 

Six secret steps to mortgage success for the self-employed

 

For some, obtaining a mortgage when you’re self-employed, may seem like walking up the down escalator – fruitless. We’re sharing our experience with you, to give you a smoother ride to success – your mortgage isn’t a dream, it’s a spreadsheet and SA302 form away from reality.

Why is it so tough?

It boils down to two things: the mortgage market review (MMR) which made all borrowing rules tougher (to protect you) and proving your income.

When you’re salaried, it’s easier for banks, as you represent less of a risk, with a steady income each month – if you’re self-employed, this is often not the case, with busier and quieter income periods. The banks will also be looking at how quickly people pay you, forecasted income and how much profit you make.

It’s responsible to ensure you can afford a mortgage

On a positive note, it’s good that a lender or bank ensures that you can afford the mortgage in the first place, it’s no different to an employed person in that respect – the rules are there to protect you.

We submit many successful mortgages for self-employed people, it’s all in the preparation and choosing the right lender for your circumstances, which may or may not be a mainstream bank.

In order to allay the worst fears of self-starters everywhere, we’ve put together the following checklist for self-employed mortgage applicants.

  1. Get your SA302 form

self-employed-mortgage-application-documents

We’ve written about the SA302 form before. This is the one page tax calculation document you get from HMRC after you’ve submitted your tax return each year. You can also find out how to access it by visiting the HMRC’s website.

It’s common for lenders to request SA302 forms dating back three years in some cases. The good news is, if you submit your return online, you can usually print off what you need quickly. If you still submit via post, you may need to wait a few weeks for it to arrive after requesting it.

  1. Get your income figures ready

You’ll no doubt be asked to go through a mortgage interview: a process of discussing your income and personal outgoings and talking through the details of the mortgage. Our biggest tip is to get your figures ready before the call, it will save both you and the interviewer a great deal of time, do the work before hand to make it painless.

Ensure you have your accounts to hand, with profit and tax for the last three years. You’ll also need details of any other income such as a partner freely available. The majority of lenders will require accounts and personal tax returns to be within the last 18 months, so do not delay if you are thinking of arranging a mortgage.

  1. Stress test yourself

Don’t just base all your calculations on the here and now. The drum beat for interest rate rises at the Bank of England grows louder by the day and most of the indicators point to a gradual increase in rates which takes place over a number of years.

Which means you could be facing higher base rates when you come to the end of any fixed rate period.

Use a mortgage repayment calculator to model such a scenario based on your projected income and check that you’ll be able to handle the extra interest burden.

  1. Gather your documents

Lenders will want to see proof not only of your recent income but might also want to see evidence of your future income, so be prepared to present formal offers or signed contracts for future work. And remember your SA302!

  1. Survey your outgoings

The new guidelines require that mortgage advisers assess the affordability of a particular product based not only on your income but on your outgoings too.

While this is a much more thorough method for checking affordability than the old income multiple calculation, this financial probing can get down to quite a granular level.

The questions can vary depending on lender, you’ll definitely need details of household bills, savings, personal expenditure, existing loans, pensions – basically any money that goes in or out of your bank account/s.

This is no time for back of the envelope scribbling – this kind of financial planning calls for a spreadsheet. Our advice then is to note down all your expenditure in great detail in advance, the better prepared you are, the quicker it’ll be over.

    6. Talk to a mortgage broker

With the introduction of the new rules, banks are scrambling around to recruit sufficient mortgage advisers to handle the demand. This has lead to long waiting times for appointments with banks and the length of the application process itself.

Fortunately, mortgage advisers at banks aren’t the only ones who can perform these new checks: FCA authorised mortgage brokers can do it too. So, by making use of a broker you’ll not only receive help on gathering the figures together, you’re also maximising your chances of a successful application and cutting down the amount of time it takes to apply.

To speak to a specialist mortgage broker at Springtide Capital, get in touch today.