Following on from the infamous UK credit crunch in 2007-08, the government needed a way to try and bring some life back to the mortgage market.
In order for them to achieve this, they set about introducing new ways to help first time buyers get onto the property ladder. They called these Help to Buy Schemes.
There are a large variety of different Help to Buy Schemes that are available out there to customers. You may find that whilst you match with some of them, you also may not match with others.
Here is a list we have compiled, summarising each of the Help to Buy Schemes and a bonus scheme we feel would be beneficial to some customers out there.
The Help to Buy Equity Loan is by a country mile, the most popular of all the schemes out there. If you are a first time buyer in Lincoln and are looking to set your mortgage process in motion, then this scheme could be just what you need.
First of all, in order to make use of this scheme, you must be a first time buyer, with the property in question being a new-build property. You will be required to have at least 5% saved for a deposit.
This scheme works in a way that allows you to use your own funds, as well as the governments, to give you access to a better deal.
You will put down your 5% deposit (or more if you have it) and then the government loan you 20% to bring the total up to a 25% deposit.
So, if you have saved up a 5% deposit, they will loan you 20%. If you have managed to save for a 10% deposit, they will loan you 15%, and so the cycle goes on.
Overall this means you’ll be left with a 75% mortgage to pay off, as well as the government equity loan. This equity loan is interest-free for 5 years.
After those first 5 years, if you haven’t paid it back, interest will build up. The interest rate for this starts at 1.75%.
As a dedicated, fast & friendly mortgage broker in Lincoln, we know that balancing your mortgage payments and the equity loan repayment alongside each other can be quite a challenge.
There are ways to combat this. An example of this would be that you can sometimes remortgage to raise capital for this loan, although this will also increase your monthly mortgage payments.
The Help to Buy Shared Ownership Scheme was brought into the mortgage world with the intention of allowing applicants to purchase a percentage of a property and then pay off the rest of the cost as monthly rent.
For the most part, the percentage of the property that is owned tends to be between 25-75%, though this can differ.
The percentage that is left over will more than likely be owned by the local housing association. If you come into more money at a later date, you can increase the percentage of which you own.
Your payments will be a combination of both your mortgage payments plus your rent. This means you are more or less paying 100% of the ground rent and service charge on your home.
Even if your share is the minimum amount, this is still the case.
The Armed Forces Help to Buy Scheme was brought forward in 2014 coming hot off the heels of the success that the Help to Buy Equity Loan Scheme had achieved.
This scheme worked in a similar way to its predecessor, though solely targets members of the Armed Forces.
If you are eligible for the criteria of this scheme, it could be quite the difference maker in your mortgage goals, especially with the government extending the scheme until December 2022.
We sincerely hope that this mortgage scheme stays around, as the Help to Buy Armed Forces Scheme is a massive help to existing members of the Armed Forces who need a boost to get onto the property ladder.
The Lifetime ISA is often a scheme left out of the conversation. It’s not everybody’s cup of tea, though it is handy to keep yourself aware of its existence, as it can help you secure your dream home as a first time buyer in Lincoln.
The Lifetime ISA is basically a fancy savings account where your money can grow free of tax. The government provides a nice little boost to your savings, giving you an extra 25%.
This means that if you are able to meet the £4,000 maximum amount, you will receive a pretty handy bonus sum of £1,000.
There is a catch of course, and it’s that you will have to pass specific criteria in order to utilise this scheme. You can find more information about this scheme on the Lifetime ISA website.
When customers get in touch with us for Mortgage Advice in Lincoln, more often than not, the first thing that we get asked, especially when we are speaking with First Time Buyers in Lincoln, is “How much can I borrow for a mortgage?”
Let’s reflect upon the background of affordability assessments and how they apply to the mortgage world post-2014.
Prior to the methods of modern credit scoring, your mortgage would’ve been manually assessed by your local building society manager. Lenders gradually moved towards more uniformed methods of income assessment, in order to provide a consistent approach as we headed into the 1990s.
Maximum lending “caps” were introduced to prevent customers from borrowing any more than three to four times their annual income. As we grew closer and closer to the infamous credit crunch in the mid-to-late 2000s, these income multipliers were relaxed, with lenders being more generous.
A handful of those mortgage lenders were allowing their customers to “self-certify” their incomes without subjecting them to any background checks, such as an analysis of their payslips. This, as you may be aware, caused the market to crash and getting onto the property ladder from 2008-2010 was quite difficult.
Lenders very quickly battened down the hatches and created a massively careful (arguably over-corrected) lending environment. No matter if you were directly approaching a lender or opting to speak with a mortgage broker in Lincoln, the outcomes would mostly always be the same.
The Mortgage Market Review (MMR) was introduced off the back of the market recovering after the credit crunch. From here, lenders were given a new set of guidelines that they had to follow. The income multiplier methods of yesteryear were phased out and replaced with new, more complicated affordability calculators.
These new calculators gave the lenders a more detailed analysis of an applicant’s spending habits and net disposable income. What this meant, was that the lender could take a deeper look into your bank statements to make sure that unaffordable mortgages were not given out to customers as they had been in the past.
There is still a “lending cap” in place and it is roughly about 4.75 times your annual income, but your expenditures will also be looked at. Something that is worth noting, is that lenders seem to penalise low-earners and even things like gambling can have an adverse affect on your chances of being able to borrow.
When it comes to your bank statements, mortgage lenders will keep an eye on various factors, so during the months leading up to your application, be careful as to what exactly your expenditures are. Occasionally lenders take pension contributions as a fixed outgoing so would often lend to, for example a public sector worker with a big pension deduction less than a private sector, and things of a similar ilk.
If you are looking to maximise your borrowing capacity in order to help your mortgage application, then we believe you’ll benefit from speaking to a Mortgage Broker in Lincoln.
You’ll receive a free initial appointment, where a Mortgage Advisor in Lincoln will take some information, before heading off to research the market on your behalf, working to find a deal that best suits your needs and circumstances.
Getting Mortgage Advice in Lincoln before taking out a mortgage could be crucial in helping you understand the mortgage process better. By speaking to a mortgage broker like us, you will have your own Mortgage Advisor in Lincoln who will explain how everything works and support you from the beginning, right through to the end of your mortgage journey.
The majority of people out there maybe only think about their mortgage goals or existing mortgages every few years. Here at Lincolnmoneyman, we think about mortgages every day.
There is never a minute of our working hours where we aren’t engrossed in a case, working hard to try and help someone find a favourable outcome.
Because of the time and effort we put into being so efficient and valuable to the customer, we are well versed in lender criteria, understanding which of those on our panel would be most likely process your mortgage application.
We also like to ensure you are on the best rate available to you, eliminating any stress and long delays as best as we can.
Here are the 3 main advantages of seeking mortgage advice in Lincoln:
Long before you could just Google the answers, comparing mortgages was a long and tedious process. Customers would use up their Saturday mornings going from bank to bank, to building society and so on, looking around to try and find the best deal on offer.
Although most of this can be cut out now, it’s still not completely straightforward, especially for those who are maybe first time buyers in Lincoln. With all the fees and charges and exit penalties from existing deals, it can be very confusing.
We use daily-updated mortgage sourcing software so that your dedicated mortgage advisor can recommend the most suitable mortgage for you, the customer. It’s our goal as a company, as a team, to save both your time and your money.
You may be able to source a good deal, but it’s an entirely different ball game when it comes to actually being accepted for that deal. It’s not as simple as finding and asking for it, as you’ll have to match the lenders criteria for it.
There are lots of different reasons why people get declined for a mortgage nowadays, including low credit score, length of time they have been employed or self-employed (self-employed mortgages in Lincoln are always becoming more popular, so it’s important to do research ahead of time if you are your own boss), and failing the affordability calculator.
There are even more than that, but what is important to take away from this, is it is not something to be taken lightly. If you jump into the unknown, unprepared and ultimately unmatched, this could lead to a damaged credit rating. Every time you apply for a deal, the mortgage lender will carry out a credit search.
Too many applications to deals you don’t qualify for can come across to other lenders like you’re constantly being declined for something, which in turn could lead to the right lender with the right deal declining you as well. Your best bet is to speak with us first, so we can try and match you up with the right lender the first time.
It has been said that other than dealing with the loss of a close family member or going through a divorce, that moving house is the most stressful experience you will face in your lifetime. This is especially the case if you’re selling a property and trying to complete your new purchase at the same time.
It’s our job to reduce your stress levels and work hard to make sure your mortgage application runs as smoothly as it possibly can. The best advice we can give, is to suggest getting in touch and speaking with a mortgage advisor in Lincoln, prior to finding a new home. In doing so, you will know roughly how much you are able to borrow and what your monthly mortgage repayments will be.
There’s a lot to work through with the legal aspects of your property purchase, packing and dealing with estate agents. We regularly hear from customers that they were glad to have a Mortgage Advisor in Lincoln by their side throughout the mortgage process. Get in touch and we’ll see how we are able to help you!
Regardless if you are a First Time Buyer in Lincoln with a keen eye on the property market or you are a Home Mover in Lincoln looking to sell your existing home and settle down in another, over time it will likely have become common knowledge that estate agents and builders have a reputation for driving a hard sale.
During your process, they would much rather that you use their in-house mortgage advisor and any other services they have to offer.
Throughout our tenure as a longstanding, hard working mortgage broker in Lincoln, with zero ties to estate agents, banks or building societies, we regularly find that those who get in touch have been pressured by an estate agent at some point during their process, trying to get them to use their in-house financial services.
Here are just some of the stories we have heard from customers;
Though it may seem shocking to hear, there have been a lot of instances with estate agents out there refusing to put through an offer forward, specifically if you opt to use an external mortgage broker, rather than using the estate agents’ in-house advisor.
They have also been known to refuse putting offers forward to the vendor, because they have received an offer from someone else who did in fact use their in-house services.
Something else that we hear all too often, is estate agents quoting largely overpriced conveyancing fees to their customers. We have seen many of our customers over the years come forward to say they have been subject to that same tactic
One customer we had was quoted more than £1,500 for a basic, straightforward purchase with an estate agent. By enlisting the help of one of our dedicated mortgage advisors, we were able to recommend another conveyancer in the nearby area and get the cost down to £750.
That figure is exactly half of the quoted price from the estate agent, showing the difference between going in-house and exploring your options.
Let’s say that you have made an offer and are waiting to see if a seller will accept your offer. Generally, you’d expect a phone call either saying yes or no – that would be the logical outcome. Instead, what we often see happen with some cases, is the estate agent will call up and demand you tell them who you went with for conveyancing.
What happens following that, is the estate agent may even refuse to take the property off the market, unless you agree to use their in-house service. As touched upon earlier, their quotations will be tremendously overpriced and completely unfair, but they will apply the pressure and make you feel like you’ll lose the house if you don’t.
As a trusted and loyal mortgage broker in Lincoln, these kinds of scenarios are definitely something we can help you prepare for. So then the questions that remain are…
No, all of these tactics are highly illegal. You have the freedom to go with any company you choose when it comes to your mortgage process. Use any broker, any conveyancing, any solicitors that you want to use.
At the end of the day, it’s your choice and you are under no obligation to use the estate agent’ services. Their main purpose is to simply foresee the sale between yourself and the seller of the property in question.
Please consider, when negotiating on the price you wish to pay for, is it really within your best interests for the person handling the sale to know your financial situation and the amount you may be able to borrow? This is something they could use against you down the line when trying to convince you to use their services.
Keep on your toes and make sure that if you really don’t want to use it, you stand your ground and don’t give in to their pressure. It’s your mortgage, your offer, and if all goes well, your future home. Please Get in Touch with a trusted mortgage advisor in Lincoln today, and we will ensure you are prepared for these tactics ahead of your mortgage process.
To help first-time buyers get the most out of their mortgage process, we have put together a list of the 10 steps involved for first-time buyers in Lincoln. It is our hope that with this, you can be as prepared as possible ahead of your own mortgage journey.
There are 10 main steps you’ll go through in the process of buying a home and obtaining a mortgage. These are as follows;
So let’s say you’ve decided to take that next big step in your life and purchase your very own home, taking out a mortgage as a first-time buyer in Lincoln. It probably goes without saying that this will probably be the biggest financial choice you ever make. Once you realise this, the concept can be a little daunting, especially when you have no experience in any of this.
It’s at this point where a dedicated mortgage broker in Lincoln may be able to step in and provide assistance to you. We always strive to take the stress away from our customers, working hard to make sure they all are all happy, have a favourable mortgage deal and their very first home.
Once you Get in Touch with a dedicated mortgage broker in Lincoln, we’ll book you in for a free initial mortgage consultation with an experienced and loyal mortgage advisor. From here, we’ll take some details from you and take a look at your plan, before we eventually kick off your mortgage process.
During your free mortgage consultation, a trusted mortgage advisor in Lincoln will be able to run through a Mortgage Affordability Assessment. The process for this is pretty quick and is very important, as this is where your dedicated mortgage advisor will run through your monthly income with you, looking at your regular expenditures.
This basically just means looking at what you spend your money on, and is done so they can determine whether or not you are financially capable of affording the monthly repayments of the mortgage amount you’re looking to borrow.
The reason we look to get this done prior to putting you forward with a lender, is to give us a level of confidence in you regarding your ability to afford your repayments. In doing this, we can try to avoid the risk of arrears and any future repossessions that may crop up, as this is something the lender will definitely want to avoid if it can be controlled.
A Mortgage Affordability Assessment will also usually be taken out by the lender themselves, so the initial checks we undertake will help save the lenders time, our own time, but most importantly of all, your time. The last thing any of us need is an application that may be declined in the future due to failing on affordability.
The following step in your mortgage consultation will be to get a hold of, on your behalf, a document called an Agreement in Principle. If you have done some of your own research on mortgages before receiving first-time buyer mortgage advice in Lincoln, you may come across this under a handful of different names.
Standard names used for this can include ‘Decision in Principle’, ‘Mortgage in Principle’, as well as ‘DIP’ & ‘AIP’. These are all exactly the same thing; the only difference is the name people may choose to use.
The reason you will need to have obtained an Agreement in Principle is to demonstrate that you have passed a lenders initial credit scoring system, either by way of a hard credit search (this leaves a credit footprint) or a soft credit search (this generally does not leave a credit footprint).
Even though this does help a great deal, there is still no guarantee you will be accepted for a mortgage. Still, it is a necessary and incredibly beneficial step to take, as it will also show the seller of a property that you are making a serious enquiry, possibly creating room for any potential negotiations with them when it comes to your offers.
The standard length of an AIP is usually anywhere between 30-90 days, and once it has expired, a mortgage advisor can easily renew this for you. Our brilliant team can usually get one of these turned around for you within 24 hours of your primary appointment with a dedicated mortgage advisor in Lincoln.
After you have gotten an Agreement in Principle, you will need to start looking for a conveyancer to help you with the legal dealings of homebuying. The term conveyancing is the name for the transfer of legal ownership of property between the different parties, whether you’re either the buyer or the seller.
Your conveyancing solicitor will handle the contracts for you, provide you with any necessary legal advice, conduct local council/authority searches on your behalf, help make arrangements with Land Registry and lastly transfer the funds you have acquired, so that you can pay for the property. As is likely evident from these tasks, this is a vital role in your process, so you must choose the right one carefully.
Something else you should know here, is that licensed conveyancers are property specialists and can’t deal with more complex legal issues, whereas a more general solicitor will be able to offer a full range of services, which can make them sometimes seem more costly. Whilst we do not offer these services directly, we do have an internal list of trusted companies that we will happily refer you to, if you need us to.
Once you have spoken to a fast & friendly mortgage broker in Lincoln, have passed the Mortgage Affordability Assessment, gotten your Agreement in Principle and carefully found yourself a trusted conveyancing solicitor to help process the legal elements of your home buying experience. This means you’re halfway to the finish line! Your next step is to make an offer for your desired home.
As touched upon earlier on, with an Agreement in Principle now in your possession, you will have better success in negotiating with the seller regarding price. Be sure not to make an offer that could insult the seller, but also don’t be afraid to try and negotiate for a lower price.
Knowing you have an AIP, you are more likely to have an offer accepted, as you are prepared for the process, rather than someone who is willing to pay the asking price but hasn’t even gotten themselves in a position to start their mortgage journey.
Worst case scenario, the seller will say no, but it’s at that point you can either come to an agreement on a better price or walk away and find yourself another property with a price that suits you a lot better. Once you’ve had an offer accepted, it’s time to get back in touch with your mortgage advisor and move onto the final steps of your mortgage journey.
A step now that is crucial to the process; submitting the required documents to go ahead with a mortgage. As can probably be expected when it comes to such large financial commitments, a lender will not just give money to anyone who gets in touch, wanting a mortgage. This has happened in the past and if you cast your minds back to 2007-08, it was disastrous.
The mortgage lender will require lots of different documentation to prove that you are who you say you are, your current income amount, where you live at the moment and how well you conduct your finances on a monthly basis. If you’re applying for a joint mortgage, they will need this same documentation from all involved.
The types of documents you will need to submit to the lender, include; proof of identification, proof of address, the last 3 months’ of your pay slips and latest P60 (employed), proof of any income such as state benefits or maintenance, proof of deposit, the last 3 years’ proof of earnings and Tax Year Overviews (self-employed in Lincoln) and the last 90 days of your personal bank statements.
Now that you’ve had your mortgage agreed in principle, and had an offer accepted from the seller, we can go ahead and submit your full mortgage application. At a point where you’re now prepared and everything has been checked by your mortgage advisor in Lincoln & their team of mortgage administrators, we are ready to submit your application to the lender, hopefully obtaining you a mortgage.
Your advisor will send off all the collected evidence for this, and then it is just a matter of waiting for them to respond with either an accepted application or a declined one. Whilst there isn’t a specific time frame, our team will be able to chase the lender and find out an answer for you, until it has been made clear.
In-between your mortgage application and being offered a mortgage, the lender will need you to have a property valuation survey taken out. This will usually be carried out by accredited companies nominated by the lender (someone that the lender knows they could trust).
The reason they do this is to gain an understanding of the true value of the property, against what you’re paying for it. If you’re paying above its market value, the lender may be less willing to lend to you. This is because if any arrears were to occur at a later date, they would lose out on their money. The act of refusing based on its actual value is usually referred to as a ‘down valuation’.
There are many different types of survey available, with differing prices on each of these. Some will just want to check how much the property is worth, whereas some may let you know of any structural concerns, as well as possible repairs that may be worth looking out for in the future. Your mortgage advisor in Lincoln will be able to give you a good indication as to the right property survey to have done.
We’re almost at the end now. Your lender has analysed your case and performed an assessment of all the documented evidence. Once this has been done, you will receive a mortgage offer.
Our caring and committed mortgage advisors and administrators in Lincoln, that you’ve surely gotten to know fairly well throughout your mortgage process, will check over the offer on your behalf to ensure everything is correct and as you wanted it. After your mortgage offer has been received, it’s down to your conveyancing solicitor to take your purchase all the way through to completion.
A big congratulations to you, you’ve now officially gone from first-time buyer in Lincoln to a first-time homeowner in Lincoln, with their own name attached to a property. At this point we hope your worries are now firmly behind you, and that you’re both happy and ready to begin your new life in your very own home.
All that is left is for you to get your keys and start moving in! We hope you enjoyed speaking to our team along the way and were given a fast & friendly mortgage advice service. If you have chosen a fixed rate mortgage, we will Get in Touch towards the end of your journey to help out with your remortgage!
If you are a first time buyer in Lincoln and have some money to spare every month then maybe you could consider making overpayments to your mortgage. Looking to make additional payments on your mortgage can make a significant difference overall to the amount of interest you will be paying back over the term of the mortgage.
The sooner you begin overpaying the better, as the extra payments have a longer period of time to have an effect.
Some homeowners cannot afford to make extra payments. We feel that the reason is that for many, life simply gets in the way. We know overpaying is the “right” thing to do but let’s face it, there’s always something else you can be spending your money on and plenty of those things are more exciting!
The best approach is probably not to make ad-hoc additional payments. (You will likely not get round to it or miss months of additional payment). Take action today and plan ahead. I would suggest setting up a standing order, payable to your mortgage lender each month. Set up the standing order to go out on the same day as your regular mortgage payment. E.g. your mortgage payment is, say £500pm and is collected on the 1st of the month. You can afford to pay an extra £75pm, so set up a standing order for £75pm to go out of your bank also on the 1st.
The reason for the above is that very quickly you will start to “feel” that your mortgage is actually £575pm and you will get used to that within a matter of months.
The beauty of doing a standing order is that unlike a direct debit, a standing order is controlled by the payer, not the receiver. That means that if you have a financial emergency you can quickly log into your online banking and cancel the standing order so that it doesn’t go out next month.
Whilst it would be regrettable to have to stop overpaying, at least you would have benefited from the overpayments made up until that point. Some mortgages will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though it’s important to check with your lender. Make sure that you are eligible to do so to avoid a negative mark on your credit report.
Overpaying your mortgage is a great habit to get into. You don’t need to go hell for leather at it unless you feel so obliged. Even shaving a year or two off will be very welcome when you near the end of the term.
A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender.
Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.
This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Lincoln will be able to look at, to see if you qualify.
All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.
95% mortgages are usually accessible by both First-Time Buyers in Lincoln & those who are Moving Home in Lincoln. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.
A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.
Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.
Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage.
When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation.
Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.
Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.
Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not.
There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as.
A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property.
So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future.
Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.
The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.
This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!
The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.
When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.
Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.
The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.
Whether you are looking to Remortgage or are a first-time buyer, when lenders ask for your bank statements you can expect them to look for various different things. However, their one objective that stands above all, is their job to assess whether you are the sort of person who manages money responsibly and therefore likely to maintain regular mortgage payments.
So, with regards to gambling, what questions do we need to answer in particular?
Whether you have an annual flutter on the Grand National or a regularly use internet betting sites, clearly there is nothing illegal about properly licensed gambling.
With many of the bookmakers advertising on mainstream TV and radio, a lot of people see gambling simply as a mainstream hobby or pastime similar to many others.
However, it shouldn’t be forgotten that even the gambling advertisers urge customers to “please gamble responsibly”. This is the key to bear in mind when applying for a mortgage.
Thus, whilst it is not a lender’s job to tell you how to live your life. How to spend your money or indeed to moralise on the ethical rights and wrongs of gambling. They do have a duty (underscored by mortgage regulation) to lend responsibly.
Lenders need to prove to the regulators that they are making prudent lending decisions. So it isn’t entirely unreasonable of them therefore to expect the people to whom they lend to adopt a similar approach when it comes to their personal finances.
As touched upon previously, it is not illegal to gamble. Just because you have the odd gambling transaction on your bank statements, you won’t necessarily immediately be declined for a mortgage.
It is however, up to lenders discretion as to whether or not these transactions are reasonable and responsible. Thus they will particularly look at the frequency of these transactions, the size of the transactions in relation to the person’s income and the impact upon the account balance.
If these transactions are infrequent small amounts that make no significant impact on a regular credit bank balance, then they are not likely to be regarded as important.
As we’ve seen, basically lenders are looking at your bank statements to show how you manage your money. To help them establish whether this gives them either the confidence that you are financially prudent or the evidence that you are not.
Remember, lenders are financial institutions. They, either directly or as part of a wider group, often sell current accounts, overdraft facilities credit cards and personal loans. So they understand that these things can all play a part in prudent financial planning.
The key for a mortgage applicant is how these facilities are managed. For example, having an overdraft facility and occasionally using it, is not inherently a bad thing; regularly exceeding the overdraft limit – not so good.
Thus, lenders will look for excess overdraft fees or returned direct debits. This is because these would normally show that the account is not being well conducted.
The simple answer is – be sensible and, if possible, plan ahead. Typically, a bank would ask for up to three months of your most recent bank statements that show your salary credits and all your regular bill payments.
Thus, if you know you’re likely to want to apply for a mortgage in the not-too-distant future, try to make sure that you avoid any of the above pitfalls.
Take a break from gambling for a short while and work on presenting your bank account in the best possible light. Your mortgage broker can help you as there are some lenders who may ask for fewer bank statements than others or indeed some may not even ask for them at all.
Most married couples would rather make joint mortgage applications as opposed to a sole name mortgage. Over the years house prices have been on the rise and with house price inflation outstripping wage increases over the years, in most cases, you can only afford a house if you have two salaries coming in.
Maybe you are married and are looking for a specialist to apply for a mortgage. Sometimes there will come a time where an applicant need to make an application in their sole name as one salary may very well be enough. There are also other other reasons why one of the applicants doesn’t want to go on the application. Here we will take a look at some of these.
One of the applicants may have had a credit problem in the past, something like a bankruptcy or a CCJ. This could get in the way of them obtaining a mortgage. With this in mind, providing the spouse or partner is not connected to that issue, then you could possibly take this as an option.
The person looking to do this would need to be careful to try and avoid creating a financial association with their partner. If not, they could risk their credit score being affected by it, harming their chances of obtaining a mortgage themselves.
Couples generally get a lower maximum borrowing capacity, as opposed to if the working applicant took out the mortgage in their sole name. This sort of thing can occur if only one member of the couple is working.
The mortgage calculation can also depend on age. For example, if you have a 50 year old who is buying with a younger partner, then it’s possible that if they have a good income, the younger partner could go down as the sole applicant.
Lenders will look at the type of mortgage you are applying for and the deposit you are able to put down for it. If you have a large deposit, 30% or more as opposed to 5%, this may work in your favour for the mortgage application.
Stamp duty or other tax implications can often be the driving force behind someone opting to take out a mortgage in their sole name.
Some Lenders have stricter rules about married applicants doing mortgages in a joint name, meaning some have to be a sole applicant against their own wishes. The likely reason for this is because they are concerned that this could in some way affect their security in the future, especially if a couple were to split up down the line. Luckily not all Lenders share this unpopular view.