Why use a mortgage broker?

How many times does the average person in the UK move house? Surprisingly, according to a recent poll from Zoopla it’s only once every 23 years. This has risen dramatically since the late 80s when the average was a little under nine years. Given this and the fact that about 85% of current mortgage stock in on fixed term deals, the average person’s experience of finding a new mortgage is limited. For something as important as a mortgage it makes sense to get expert help from someone who deals with them day in, day out.

So, what is stopping more people from using mortgage brokers? One reason is that it is now for more straightforward to get mortgage quotes. The rise of comparison websites has made it possible to get the rates for a wide variety of mortgage deals in a matter of few minutes.

However, when it comes to mortgages, rates are just part of the picture. Each lender has their own underwriting criteria, which is often extensive. According to Experian, lenders reject a third of customers using comparison sites as they do not meet their full lending criteria. A mortgage broker will gather all the information necessary and only present deals that you qualify for, preventing any unnecessary disappointment or delays.

This is just one reason to use a mortgage broker, here are four more.

Removes the hassle

Mortgage consultants at Springtide Capital take the time to fully understand the needs of each client, so they get to know what you need not just now but in the future. They do all the hard work for you, gathering the required information and documentation to conduct research with more than 100 lenders to find the most suitable deal for you.

No one enjoys completing forms, especially for something as involved as a mortgage. Once you’ve made an informed choice based on a complete picture of the options available, your consultant will prepare and submit your application for you. They’ll follow this up with a personalised report setting out and confirming their reasons for their advice and recommendations.

Dedicated support

Alongside your mortgage consultant, Springtide Capital will allocate you a dedicated case manager. They will ensure your application proceeds as smoothly and speedily as possible, they follow up with lenders through every step of the process. They can also liaise with third parties, such as solicitors, saving you valuable time and reducing additional worries at this already stressful time.

Providing peace of mind

When there are so many uncertainties in the world, understanding how you can protect your mortgage payments and safeguard your home if the worse should happen is vital. Our in-house protection specialist can review and arrange the appropriate cover for personal and/or business customers ensuring you are completely aware of the risks and how best to mitigate them.

Superior service

Springtide Capital has one overriding objective – to make sure you never pay more than you need to. Your mortgage consultant’s role doesn’t stop once a deal is complete, this a long-term partnership. It is their job to always be looking forward, proactively monitoring rates ahead of your renewal date to ensure you act quickly, at the right time, to get the right price.

At Springtide Capital our experts monitor all market indicators closely, helping clients to find the best possible options for their circumstances. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.idealhome.co.uk/news/zoopla-average-brit-moves-home-181281

https://www.ftadviser.com/mortgages/2022/12/22/the-outlook-for-mortgages-in-2023/?page=2

https://www.mortgagesolutions.co.uk/news/2019/08/19/lenders-decline-a-third-of-customers-using-comparison-sites-experian/

Mortgage Outlook for 2023

All experts are predicting a bumpy ride for the economy in 2023. However, even just a few weeks into the year, we are beginning to see more positive signs that the picture won’t be as gloomy as was forecast at the end of last year. While consensus is that the UK will go into recession, the hope is this won’t be as deep as was feared. The Bank of England base rate, currently at 3.5%, will probably still rise, but HSBC have revised their forecast, predicting it won’t go higher than 3.75%.

The outlook for the housing market is similarly uncertain for 2023.There is consensus across the board that prices will drop, but by how much is still very much up for debate.

House prices fell in the last four months of 2022 and this trend is expected to continue, but the fall between November and December was just 0.1%. The market was quiet at the end of last year, as many people decided to wait and see what would happen with mortgage rates.

How much they will continue to fall in 2023 is uncertain. The most pessimistic warn the fall could be between 15% and 20%, but most believe it will be much less drastic than that. The Nationwide are predicting a slide, rather than a crash with a 5% reduction in prices.

What is clear is the housing boom fuelled by measures taken during the pandemic is over. British banks and building societies expect to lend 23% less to homebuyers in 2023 and the number of properties being sold is likely to be around 1 million, down from 1.27 million in 2022. However, there are reasons to back the more optimistic view of the year ahead and that the fall will be softer than some forecast.

These rate increases will only affect a limited proportion of the market. Around 85% of mortgage balances are on fixed interest rates, so they will be only affected by rate increases once they come up for renewal. According to the latest figures from the ONS, 1.4 million households in the UK are facing the prospects of interest rate rises when they renew their fixed term mortgages in 2023, but it is looking like their payments will go up substantially less than was feared.

While there will be some who will struggle to cover their mortgage payments, it is predicted that a relatively low number of people will be forced into moving in 2023. This is due to rising wages in the private sector, currently up to 7.2%, covering much of the price hikes caused by inflation. The unemployment rate is also predicted to increase only marginally, up to 5% from the current 3.6%, still low by historic standards.

There is no pretending 2023 will be a bumper year for the housing and mortgage markets. However, commentators believe that the decline will be temporary and modest growth will return in 2024.

At Springtide Capital our experts monitor the market closely, helping clients to find the best possible options for their circumstances, considering not the current situation but likely future outcomes. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.reuters.com/business/finance/hsbc-cuts-uk-terminal-rate-forecast-375-425-2022-11-04/

https://www.reuters.com/world/uk/uk-house-price-growth-slows-december-nationwide-2022-12-30/

Nationwide predicts 5% house price falls in 2023 – Your Mortgage

UK lenders see 23% slide in mortgages for home-buyers in 2023 | Reuters

https://www.ftadviser.com/mortgages/2022/12/22/the-outlook-for-mortgages-in-2023/?page=2

How increases in housing costs impact households – Office for National Statistics (ons.gov.uk)

Average weekly earnings in Great Britain – Office for National Statistics (ons.gov.uk)

https://www.cbi.org.uk/media-centre/articles/no-new-year-cheer-for-uk-economy-with-productivity-and-business-investment-weakening-cbi-economic-forecast

 

Securing a mortgage in a volatile climate

On September 21st, the Bank of England raised the base rate to 2.25% which in turn has increased mortgage rates. The Bank of England may continue to increase interest rates in a bid to stem surging inflation to reach its target of 2%. The continued rises are unsettling both first-time buyers and those remortgaging, with mortgage deals being removed from the market at a pace.

How do base rate increases affect my mortgage?

The amount a rise in the base rate of interest will cost you will depend on what type of mortgage you have.

A Tracker mortgage: an increase to the base rate means your monthly mortgage payments will increase.

A Standard Variable Rate mortgage: your lender decides how much, if any, of the increase they would pass on.

A Fixed Rate mortgage: you will only see a change in your repayments when your fixed term ends. If your fixed-rate deal is coming to an end soon, you ought to plan ahead, as acting quickly to secure rates is advised as rates could be pulled and replaced with new higher rates at any time.

What can I do?

Firstly, don’t panic. Lenders are keen not to be caught out by a sudden rate rise and so are taking a cautious approach, lenders still want to lend and they have the money to do so.

Henry Knight, Managing Director of Springtide Capital commented:

“Given the current ongoing situation, it’s vital that people are aware of the terms of their mortgage and the details of their current deal. This is especially important given that the cost of living is increasing so rapidly and may play a part in meeting mortgage payments. Being prepared and looking ahead will be vital in securing the best possible rate and protecting from payment increases.”

If you are a first-time buyer, it is clearly a very challenging time. One of the key things, particularly for first-time buyers is to make sure that your credit record and your finances are in as good a state as possible. Be in a position to supply all the requested supporting documentation for your mortgage application as quickly as possible.

The benefits of choosing a mortgage broker

Brokers will play an integral part in helping buyers through the technicalities and financials of their mortgage process, beyond simply accessing products. In a quickly changing market they are best placed to keep up with product variations and will be in close contact with lenders. By contacting a mortgage broker early, you can explore your options and potentially lock in a more favourable rate before future increases. Over the coming months, both lenders and brokers will be dealing with high volumes of business as economic uncertainty is set to continue.

Henry Knight comments: ‘It is a complicated time in the mortgage market and the place for advice has never been more vital. The role of the adviser has never been so important, and as always, regulated financial advice will help individuals make an informed choice. At Springtide Capital we are with you every step of the way.”

With many variables to consider, whether you’re a first-time buyer or experienced property owner speak to one of our experienced, friendly advisers today to discover the right option for you.

Contact Springtide Capital on 020 8154 7280.

Sources:

Bank Rate increased to 2.25% – September 2022 | Bank of England

https://www.msn.com/en-gb/money/other/which-lenders-have-removed-their-mortgages-as-hundreds-more-deals-pulled/ar-AA12Fz7w

About mortgages | Springtide Capital

 

The current mortgage market – our brief overview

The present uncertainty around mortgage rates and the general economic outlook has understandably caused some nervousness amongst buyers and homeowners.

What is happening to mortgages?

The Bank of England recently raised the base rate to 2.25% and made it clear that it is prepared to continue to raise rates in order to reduce inflation to its target of 2%.

In response to this, mortgage lenders have increased their rates, therefore making it more expensive for homeowners to borrow money. Furthermore, many lenders temporarily withdrew some of their mortgage products from the market as they wait for the economic situation and interest rates to reach a more stable position.

Lenders are cautious by nature and will take some time to take into account the current and future expected rate rises and, until new products are released which reflect the new cost of debt, there is likely to be a tightening of lending until early 2023.

If a lender has processed the application of a borrower and formally offered them a mortgage, these offers are being honoured. Despite some media reports, lenders are not withdrawing mortgage offers from applicants that have already been approved.

What is expected to happen next?

It seems pretty certain that, with inflation still close to 10%, mortgage rates will rise over the coming months and this will make it more expensive to buy a property with a mortgage. This will undoubtedly deter some would-be buyers from buying at all and cause others to re-think their budget.

Around 300,000 people come out of fixed rate mortgages every three months. These people will need to remortgage at a higher rate than they were previously fixed into. For some, this may not be affordable, and they may need to sell their property and buy something that is less expensive. Others will choose to restructure their borrowing by doing things like utilising ‘interest-only’ mortgages or extending the term of their mortgage to reduce repayments.

During the 2008 global financial crisis and the recent pandemic, lenders worked with borrowers to avoid default or serious financial stress by offering them a raft of temporary reliefs such as payment holidays and penalty-free switches to interest-only mortgages. If necessary, we would expect lenders to do the same again in response to the rapid rate rises.

What should you do?

The property market is cyclical in nature and it is almost impossible to buy or sell property at exactly the ‘right’ time, and the vast majority of people buy and sell based on their personal and financial situation. The market over the next few months will be very different from what we have experienced over the past couple of years, but people will continue to buy and sell property regardless of whether prices are going up or down.

We are here to help.

By engaging with clients early, mortgage brokers can help set expectations, help create a clear understanding of affordability and risks. And while brokers cannot drive down costs, they do have up to date information and visibility on the whole range of products that are available in the market. At Springtide Capital in addition to accessing products, your broker supports you through the whole process, completes the administration for your application and you have access to a case manager who is with you every step of the way. We offer a personal service and are here to help every client find the best possible deal at the best possible rates. Speak to one of our friendly and experienced advisers today.

Contact Springtide Capital on 020 8154 7280.

Sources

https://www.bankofengland.co.uk/monetary-policy-summary-and-minutes/2022/september-2022

Banks withdraw hundreds of mortgages: the best rates still available for home movers and first-time buyers – Which? News

https://www.bankofengland.co.uk/monetary-policy/inflation

Experian plc – Switch and save: New Experian data finds households could save up to £5,200 on existing credit

 

House Price Update

Despite the general doom and gloom around the UK economy, the housing market continues to buck the trend. According to the Nationwide House Price Index, house price growth was up again in July, standing at 11% compared to 10.7% in June. After considering seasonal effects, prices rose 0.1% month-on-month, representing the twelfth successive monthly increase.

Since the market reopened after the first national lockdown, prices have boomed. This was fuelled largely by the stamp duty holiday and the mortgage guarantee scheme. The Rightmove House Price Index shows the average asking price reached £369,968 in June, a record high.

Why are prices still increasing?

There are several factors that are continuing to push prices up. Low unemployment is a contributing factor and the main factor that continues to push prices up is the shortage of housing stock. For some time now simply not enough houses have come onto the market to meet the demand. This means first time buyers can’t find properties and prospective sellers can’t find suitable places to move to. There are indications from estate agents that listings are beginning to pick up now, which should ease this pressure and slow down prices increases. Despite the recent rise in interest rates, the base rate is at 1.75%, low by historic standards.

When Covid restrictions were lifted last year, there was a sense that life would revert to “normal”. This hasn’t been the case in many areas of life and the economy, and the housing market is certainly one of these.

Will prices continue to rise?

There is a debate over how long the market can stay this strong. There is a growing feeling that the cost-of-living crisis will begin to make an impact soon. As of 10th August, the inflation rate stands at 9.4%, the highest it has been for 40 years. With many people already feeling the squeeze on their finances, demand is expected to fall. Rightmove has stated that the combination of this and more properties coming onto the market is likely to see prices fall slightly in the second half of 2022.

Affordability becoming an issue

While house prices have been rising rapidly over the past few years, wages have grown at a much slower pace. This has increased the house price income ratio significantly. According to the Halifax, between the beginning of 2020 and the end of the first quarter of this year, house prices rose by 16.8%. Over the same period, average incomes increased by only 2.7%. This means the cost of buying a typical home in the UK is now 7.1 times average earnings, its highest ever level.

At Springtide Capital our experts monitor all market indicators closely, helping clients to find the best possible options for their circumstances, considering not just what’s happening now but what is likely to happen in the future. Speak to us today to see how we could help you find the solution that’s right for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.propertynotify.co.uk/news/nationwide-house-price-index-twelfth-successive-monthly-house-price-increase-is-a-slowdown-on-the-way/

https://www.rightmove.co.uk/news/house-price-index/

https://www.which.co.uk/news/article/whats-happening-to-house-prices-aVCwI8I22pBe

Home | Bank of England

https://www.whatmortgage.co.uk/news/housing-affordability-hits-all-time-lo

Think about refinancing well in advance

On 4th August, the Bank of England announced interest rates would rise by 0.5% to 1.75%. This is the largest increase in 27 years. The decision was taken to try and curb the sharp hike in inflation, which stood at 9.4% in the 12 months to June 2022. With predictions this could rise to as high as 13% by October, further increases to the base rate are likely to follow in the coming months.

What does this mean for mortgage rates?

Following this rate rise, many of the lenders and banks increased their rates for customers immediately, which affected anyone on a variable mortgage rate. Those on tracker mortgages, that follow the base rate, will also see an increase in their payments now.
Those on fixed rates are insulated from this rise for the moment. Currently, more than 80% of mortgages are on fixed-rate deals, so the impact will be limited for many people now.

Mortgage rates already on the rise

Even before this latest rise, mortgage rates had begun to creep up. According to financial specialists Moneyfacts, the average cost of a two-year fixed rate mortgage has gone up from 2.59% last June to 3.25% now. The average cost of a five-year deal has gone up from 2.82% a year ago to 3.37%. Independent research organisation Capital Economics have forecast the sharpest rise in mortgage rates since 1990.

Given the current situation, it’s important that people are aware of the terms of their mortgage and the state of their current deal. Being prepared and looking ahead will be vital in securing the best possible rate, protecting themselves from payment hikes, which is especially important given that the cost of living is increasing so rapidly.

Henry Knight, Managing Director of mortgage brokers Springtide Capital, said forward planning is essential to get the best deal:

“When the Bank of England Monetary Policy Committee next meets on 15th September, all the indications are that base rates are likely to rise again and possibly by a larger margin than previously experienced. Lenders will react to this and adjust their products accordingly. It is our role to work with lenders and encourage them to stay as competitive as possible in the current climate. We’ll be flagging this with our clients to help them secure the best possible deal. It is possible to secure rates up to six months before the end of a current plan. We urge anyone coming to the end of their current deal to start talking to a broker at least seven months prior to that deal finishing. Acting early and decisively will be hugely beneficial and could save them a significant sum of money.”

At Springtide Capital we offer a personal service and are here to help every client find the best possible deal at the best possible rates. Speak to one of our friendly and experienced advisers today.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources

https://www.bbc.co.uk/news/live/business-62406689

https://www.theguardian.com/business/2022/jun/26/covid-couldnt-cool-house-prices-but-the-economic-chill-might

https://www.theguardian.com/business/2022/jun/16/bank-of-england-base-interest-rate-rise-mortgages-savings-annuities-house-prices-rents-effects

https://www.mortgagesolutions.co.uk/news/2022/04/28/next-year-will-see-sharpest-rise-in-mortgage-rates-since-1990-capital-economics/

Attitudes to Later Life Finance change as we move into 2022

A study by the Equity Release Council of 5,000 UK adults’ financial experiences highlights that 43% of mortgaged homeowners under the age of 40 relied on financial help from family or friends to get onto the property ladder. Just 23% of those aged above 40 relied on a similar level of support to buy their first home. The rise of this delayed homeownership for nearly half of buyers means for those helping family financially, having a mortgage in later life is likely to become more common.

Jim Boyd, CEO of the Equity Release Council, comments:

“The realities of delayed homeownership are prompting people to reassess their attitudes to secured debt in later life. There are clear signs that paying a mortgage in retirement is no longer a taboo: for many people it can make the difference between financial hardship and enjoying a more comfortable lifestyle while also supporting family members. Our findings suggest Later Life Finance products are likely to be even more important for future generations of retired homeowners than they are today”

Equity Release such as a Lifetime mortgage, allows individuals aged 55 and older to release money from the property they live in without having to make any monthly repayments. With a number of factors including the rising cost of living having an impact on household spend, equity release could provide homeowners with the opportunity to supplement their retirement income and help family buy their first homes.

As there are no restrictions on how the money is spent, Later Life Finance can be used in other ways such as home improvements, holidays, supporting your family, to more pressing needs, such as income supplement or paying for long term care.

Later Life Finance products are regulated by the Financial Conduct Authority (FCA) and could offer a safe way to unlock capital from your home.

Results from the recent study by the Equity Release Council show that one in three mortgaged homeowners (33%) feel financial services providers are getting better at offering mortgages to people in retirement.

The study also highlights the need for clear and straightforward information in this area. Findings quote a high 36% of those surveyed say they are confused about what mortgages are available to people in later life.

Henry Knight, Managing Director of Springtide Capital commented:

“For more people to feel confident and informed enough to consider a Later Life Finance solution, such as a Lifetime mortgage, it is important that we remove any associated misconceptions and confusion that the consumer may have. It is a complicated area that can be daunting, especially for homeowners who have historically worked toward having no debt in later life as their main objective.

An experienced advisor can review your options, consider all of your options and discuss the advantages and disadvantages fully before you decide the right choice for you.”

At Springtide Capital we offer a personal service and are here to help. With many features available within Later Life Finance products, speak to one of our friendly and experienced advisers today to discover if it is the right option for you.

Call Springtide Capital on 020 8154 7280

Sources:

https://www.equityreleasecouncil.com/news/delayed-homeownership-hits-nearly-half-of-buyers-under-40-as-attitudes-to-later-life-borrowing-change/

https://www.equityreleasecouncil.com/what-is-equity-release/

https://www.fca.org.uk/

Encouraging signs in the Spring property market

We may not be quite out of the Covid-19 woods yet but the easing of the related lockdown rules across the UK has brought a smile to the faces of many. There is much to celebrate in the property market too – with positive sales figures reflecting the ongoing trend for strong market conditions. According to Rightmove, the current market is now the fastest-selling market it has measured since its records began.

Government led initiatives such as the stamp duty tax break, and the re-introduction of 95% mortgage products supported by the government mortgage guarantee scheme , has meant that despite challenging conditions due to the Coronavirus pandemic, buyers are still purchasing, moving and climbing the property ladder.

Stamp Duty Holiday

The scheme has been extended throughout the Spring to the end of June with a staged withdrawal to follow. From 1 July 2021 to 30 September 2021 the nil band rate will apply to properties valued at £250,000 or under. From 1 October 2021 the figure will revert to £125,000 – the pre-Covid valuation.

Following Chancellor Rishi Sunak’s Budget speech at the beginning of March which detailed the extension of the stamp duty holiday to June 30th, buyer demand spiked by 24%.

95% Guarantee Scheme

Introduced on the 19th April, the Government will guarantee all mortgage products on residential properties valued at £600,000 or under where the loan is worth 91% – 95% of the total.

This has been introduced to bolster the lower rungs of the housing market by allowing first time purchasers to enter the market without the need for prohibitive deposits. Existing mortgage owners will also be eligible for the mortgage deal enabling them to take the next step in their property journey, or for example make home improvements.

A good time to move

Henry Knight, Managing Director of mortgage brokers Springtide Capital, said the market was looking good going into spring.

“There is a real air of positivity about the marketplace as we enter the spring months. There’s no doubt that the Government’s extension of the stamp duty holiday, combined with the newly introduced 95% loan-to-value guarantee scheme, have given buyers increased confidence.

“Combined with those people who have chosen to make a lifestyle change on the back of living at home for most of the last year, and those who are looking for more space in more rural locations, we have seen increasing numbers making enquiries in the market and taking up mortgage offers.

Spring Market

 A recent Rightmove survey found that March 2021 saw the greatest excess of demand outstripping supply over the past ten years. The number of potential buyers enquiring about available properties is at a record high, and 34% higher than the same period in 2020.

In April 2021, Rightmove have reported in their house price index that prices hit a record high and that properties are selling at the fastest pace ever recorded. The number of sales agreed up by 55% on same period two years ago, reducing the stock of properties that are available to buy to the lowest proportion ever recorded with two- and three-bedroom semi-detached homes selling fastest.

Zoopla’s research and insight team reported that while the impact of coronavirus will continue to be felt for some time to come the property market remains strong. It also predicted other Government strategies are to be expected that will continue to support the housing market, a positive for buyers and sellers alike.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.financialreporter.co.uk/finance-news/house-prices-hit-new-high-as-properties-sell-at-fastest-pace-ever-recorded-rightmove.html?SRC=MC

https://www.gov.uk/stamp-duty-land-tax/residential-property-rates

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

Buyer demand soars as stamp duty holiday is extended – Zoopla

House Price Index | Property blog (rightmove.co.uk)

7 factors that will shape the housing market in 2021 – Zoopla

Government Launch 95% Mortgage Guarantee Scheme

A new raft of 95% loan-to-value mortgage products are being introduced to the market that are backed by the Government’s new mortgage guarantee scheme. Prospective homeowners – particularly those looking to take their first step on the home ownership ladder, will be able to access 95% loan-to-value mortgage products guaranteed by the government.

Chancellor Rishi Sunak unveiled the new 95% scheme last month (early March) in his Budget speech. It is intended to boost the property market in the aftermath of the Covid pandemic by reducing the amount of deposit needed to secure a property. It will also increase competition among lenders. By taking on the financial risk of the higher loan-to-value mortgages, the Government want to give lenders confidence to relaunch their 95% deals which were mainly scrapped last year at the onset of the global Corona pandemic.

The scheme launched on 19th April is aimed at both first-time buyers and current homeowners who wish to purchase properties valued at up to £600,000 – with just a 5% deposit. Many of the UK’s largest banks including HSBC, NatWest, Barclays, Lloyds and Santander are offering the new mortgages – guaranteed by the Government – with other lenders expected to offer their own products in the following weeks.

Chancellor Sunak said the Government intends to fully support the housing market on the back of the Covid crisis and by guaranteeing the new 5% deposit mortgages, it is hoped more people will be able to take their first step on the housing ladder and become homeowners.

Boost for homeowners

Mortgage products delivered under the new 95% scheme will:

  • Be as simple as possible for lenders to administer
  • Be introduced as rapidly as possible
  • Focus on helping borrowers
  • Ensure lending remains affordable and will not incentivise irresponsible lending

Henry Knight, Managing Director of Springtide Capital, said the move was a fabulous initiative to allow people to access mortgages who may not have been able to do so before.

“The Government’s guarantee scheme will enable lenders to offer higher loan-to-value rate mortgage products. This will allow new homeowners to access the market which is vital to ensure the British housing market remains robust – especially following on from the impact of the Covid pandemic.

“Existing homeowners who are struggling to remortgage or move due to low levels of equity in their property will be able to access more competitive offers. The scheme will generate far more movement in the marketplace which is brilliant news.”

95% loan-to-value mortgage criteria

A mortgage being offered under the scheme must meet certain criteria:

  • Only residential mortgages are applicable – not second homes or buy-to-lets
  • The mortgage must be taken out by individuals, not an incorporated company
  • The property must be in the UK and have a purchase value of £600,000 or less
  • It can only be a repayment mortgage, not interest only
  • The mortgage can have a loan-to-value ratio of between 91% and 95%
  • Any lender taking part in the Government’s scheme must offer a five year fixed rate product to give borrowers the security of making predictable repayments.

Commitment to the housing market

The new scheme has been hailed as the next step in the Government’s pledge to support homeownership. Other initiatives introduced include:

  • A temporary cut to the Stamp Duty Land Tax to encourage confidence in the property market. Properties valued at under £500,000 are exempt from stamp duty until June 30th.
  • First time buyers are eligible to access the Lifetime ISA (LISA), a long-term savings product intended to support younger people saving for their first home, or for later life.

With new mortgage products becoming available all the time, speak to one of our advisers today to discover the right option for you.

To discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280.

Sources:

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

https://www.which.co.uk/news/2021/03/first-time-buyers-can-now-get-95-mortgages-again-should-you-apply/

Budget: Sunak confirms 95% LTV mortgage guarantee scheme | Financial Reporter

Rishi Sunak tries to support the housing market – FTAdviser.com

https://www.gov.uk/government/publications/the-mortgage-guarantee-scheme

Stamp Duty Land Tax: Residential property rates – GOV.UK (www.gov.uk)

https://www.gov.uk/lifetime-isa

Government plan to rectify unsafe cladding

The Government’s pledge in February 2021 of an additional £3.5billion to help rectify unsafe cladding on high-rise buildings has been welcomed. Supporting people who find themselves living in a situation impacted by unsafe cladding could not be more important. There is understandably much keenness to implement the initiative quickly.

In the wake of the Grenfell tragedy on the 14th June 2017, the combustible cladding used on Grenfell and on buildings across England was identified as a major fire-safety concern which needed to be rectified.

Government commitments:

Five-point plan to bring an end to unsafe cladding

  • Government will pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres and over (6 storeys) in England
  • Finance scheme to provide reassurance for leaseholders in buildings between 11 and 18 metres (4 to 6 storeys), ensuring they never pay more than £50 a month for cladding removal
  • An industry levy and tax to ensure developers play their part
  • A world-class new safety regime to ensure a tragedy like Grenfell never happens again
  • Providing confidence to this part of the housing market including lenders and surveyors

Housing Secretary Rt Hon Robert Jenrick MP said:

“This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again. Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding.”

It is encouraging to see the government taking the lead as the right place for debating this kind of vital legislation is at a senior government level.  The plan will mean also that surveyors can accurately value properties and that leads to banks being able to support homeowners with the mortgage solutions they need.

Henry Knight, Managing Director of Springtide Capital commented: ‘The measures announced last month will mean people living in homes which they have been prevented from selling, or re-mortgaging, through no fault of their own, will finally be able to push forward. What happened at Grenfell Tower is an absolute tragedy and rectifying the problem with poor cladding on other buildings must be a national priority lead by the government, outlining a clear way forward.’

The government will work closely with industry on the next steps and further details on the scheme will be provided in the coming weeks. There is a huge challenge to be met by the government to bring about the biggest changes to building safety in a generation. The Government is expected to agree the Building Safety Bill this spring.

Sources:

Government to bring an end to unsafe cladding with multi-billion pound intervention – GOV.UK (www.gov.uk)