A Guide to Offset Mortgages in Lincoln

Offset Mortgage Advice in Lincoln

Overall the popularity that surrounds taking out an offset mortgages has dipped since the rise of that mortgage type during the 1990s, though thankfully for customers who want this, they can still be a great option for home buyers.

They can especially be useful if you believe that you are due to receive a lump sum at any point in the near future, perhaps from say an inheritance.

How can an offset mortgage help?

When your offset mortgage begins, you will have a savings account opened in your name by the mortgage lender, with the aim of that being to run alongside your mortgage and help to pay it off. Rather than garnering any interest, it will instead offset your savings against the balance of your mortgage.

To provide an example of how this might work, let’s say that you had a mortgage that is worth £100,000 and you have saved up £15,000 with your savings account, then you will only pay interest on the £85,000 that is remaining on your balance.

Offset mortgages are considered to be much more flexible options for home buyers. The reason for this, is that until your mortgage has been completely offset, you are able to take out and put in as much into your savings as you see fit.

This provides you with an emergency backup, as you are able to take out funds at any point if you need to do so, though it’s important to note that withdrawing money will increase your balance, thus increasing your overall cost.

One of the positives around offset mortgages, is that it saves interest, as opposed to adding it on, so you won’t be paying any tax on any amount of funds that you put into your savings. Higher rate taxpayers are a big fan of these types of mortgages!

Things You Need to Know About Offset Mortgages

If you are due a lump sum at any point, such as an inheritance through perhaps a family member’s equity release, an offset mortgage can be a really great option. This is because it allows you to store your funds until you want to do something with it, free from interest.

You may also want to put any annual or quarterly bonuses you receive from your job into your savings, if you have no dependance on them. The more that is sitting in your savings, the better off you will be throughout your mortgage.

Thanks to the flexibility of this mortgage, you can freely dip into savings if you need extra funding, whilst leaving some still in to offset against your mortgage. It’s crucial to remember that you will need a substantial amount of money in there, to make an offset mortgage worth it.

An offset mortgage is a great choice for first-time buyers in Lincoln who are planning on overpaying their mortgage throughout their term. Looking ahead to the future, once you have finished your current mortgage period, overpaying could potentially allow for reduce interest rates or monthly payments.

With other mortgages that you could take out, any money that you put towards your mortgage cannot be taken back out once it has been paid. At this point, you may have limited mortgage options. This is certainly not great if you change your mind once you have overpaid or need emergency funds.

Of course an offset mortgage counters this, due to the freedom you have to put in and take out funds. So if you’re looking to overpay on your mortgage, this could also come in really handy.

In Conclusion

Before diving into a mortgage, it is important to consider all of the options you have available. Speaking to a qualified mortgage advisor in Lincoln is a great way to make sure you are on the right path when it comes to your mortgage.

We often find that any customers who opt for an offset mortgage, are more likely to continue with said mortgage, as opposed to remortgaging like other homeowners at the end of their fixed period.

As an open & honest mortgage broker in Lincoln, you will be assigned a dedicated mortgage advisor who will show you the impact of offset mortgages and how it could possibly save you money over the duration of your mortgage term.

For further questions regarding offset mortgages, or if you would like to remortgage in Lincoln, feel free to book online today and take advantage of the free mortgage appointment we offer to all customers, no matter their situation.

Types of Mortgages in Lincoln Explained

As a first time buyer in Lincoln taking on your first ever mortgage process, you will probably want to do a bit of research first. During that research, you will quickly realise the variety of options at your disposal.

Below you will see a list of the most popular types of mortgages available on the market and hopefully, our short MoneymanTV videos will give you a better understanding of what each option has to offer.

If you have any questions regarding any of the below mortgage options, then please do not hesitate to get in touch and we will do our best to help.

What is a Fixed Rate Mortgage?

A fixed-rate mortgage will mean that you will benefit from having consistent mortgage payments for a duration of your choosing. Typically first time buyers in Lincoln will select somewhere between 2 to 5 years.

The reason for this, is if interest rates were to drop below what you’re paying and you’re still tied in for a few more years, you could be paying more than you would need to, without a way to get out early (unless you were to pay a charge).

The good side is that no matter what happens to inflation, interest rates or the economy you know that your mortgage payment, which generally speaking is your biggest outgoing, will stay the same.

What is a Tracker Mortgage?

A tracker mortgage is a type of mortgage wherein the interest rate will follow alongside the Bank of England’s base rate.

So in other words, the mortgage lender that you are with will not be setting the interest rate themselves. Typically you will instead be paying a percentage above the Bank of England base rate.

For example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying an interest rate of 2% on your mortgage.

These were much more popular back in the mid-2000s, due to the interest rate only being a fraction above the Bank of England base rate.

They aren’t as popular as they used to be, though it is important to remember that it is a variable rate mortgage. This means that if the Bank of England base rate goes up, your mortgage payments will increase.

What is a Repayment Mortgage?

When you take out a repayment mortgage, you will be paying both capital and interest combined on a monthly basis.

So as long as you maintain your monthly payments for the duration of your mortgage term, the mortgage balance is guaranteed to be paid off at the end, with you retaining full ownership of your property.

This is considered to be the most risk-free way to pay your capital back to the lender.

Early into your mortgage, it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term.

This situation works differently in the last ten years or so of your mortgage in Lincoln, where your payments are paying off more capital than interest, and the balance will come down much quicker than it otherwise would’ve.

What is an Interest Only Mortgage?

Whilst you will find that a lot of buy to let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on this type of mortgage in Lincoln.

Back in the ’80s and 90s interest-only mortgages were a lot more prevalent. As the name suggests, you would only be paying back the interest per month, which creates lower monthly repayments.

The idea was that you would take out a separate investment vehicle, such as an endowment policy or pension, in order for you to pay the balance back at the end of the mortgage term.

Whether or not there is going to be enough money to pay the balance of your capital will depend on the performance of your investment vehicle.

During the 00s some of these investments didn’t perform as well as people may have expected them to and some borrowers were left with a shortfall.

It is much less likely for lenders to offer an interest-only product to a residential purchaser nowadays, however, there are certain circumstances where this can be an option.

For example, if you are going to downsize when you are older or have other investments what you will use to pay the capital back, an interest-only mortgage may be viable for you.

Mortgage lenders are very strict when it comes to offering these products now and the loan-to-values are a lot lower than they were in years gone by.

What is an Offset Mortgage?

With an offset mortgage, the lender will set you up a savings account that will be left to run alongside your mortgage account.

How this works is that let’s say you have a mortgage balance of £100,000 and you were to deposit £20,000 into that savings account. You would actually only pay interest on the difference, so in this case £80,000.

This could actually end up being quite an efficient way of managing your money, especially if you are a higher rate taxpayer.

It is also very useful if you are looking at reducing your mortgage term, because your mortgage term will shrink as the money sits within your savings account.

Importantly, if you remove any funds from that savings account (which you are allowed to do at any point), your balance will go back up.

What this means, is if you deposited that £20,000, then paid off a further £5,000, bringing it down to £75,000 left to pay, then you drew out £15,000 for something, your balance would go all the way back up to £90,000, no matter what you have paid back.

This mortgage option was popular in the late 90s and early 00s, originally coming from Australia and becoming very popular in the UK when introduced by mortgage lenders.

Currently, however, this is not a very popular mortgage option. This could arguably be down to people not saving up as much money anymore. That being said, in the right circumstances, this could be a great option for you.

Costs of Buying a Home in Lincoln

One of the more frequently encountered questions we hear from prospective first time buyers in Lincoln, is them wondering how much their mortgage process is going to cost them.

To answer this, we have compiled a short list of all the fees you can expect to pay when you are looking to purchase a new home, and when they will become payable.

Estate Agency Fees

This will only apply if you are selling your home. With a surge in popularity of online estate agencies, you can be looking at the mid-to-low hundreds for a standard website listing.

That being said, for a more localised service, you could be looking at a fee around 1-2% of the property price.

Valuation Fees

Your mortgage lender will need you to have a valuation carried out on the property you are purchasing to ensure that the property is worth the amount you are looking to borrow from them.

Prices for a property survey can vary anywhere from nowhere (for a basic valuation with some lenders) up to several hundred pounds for a much more in-depth Home Buyers’ Report, maybe even more than that for a Full Building Survey.

The key to working around the cost, is that you always have an element of choice in the level of detail your survey goes into, with your decision depending on the age and property type, as well as any concerns you may have.

Mortgage Arrangement Fees

Sometimes you may have a product with a cheaper rate, but the benefit can be outweighed by the payable arrangement fee to the mortgage lender.

This cost doesn’t exist with every mortgage lender, so you may not have to pay anything at all, though in some cases it could be upwards of 3 figures, depending on the mortgage lender in question.

You may find that these costs can be paid upfront, though you may also be able to add these onto the balance of your mortgage. It is worth noting though, that this would mean incurring further interest charges.

As a team of expert mortgage advisors in Lincoln, helping with first time buyers and people moving home in Lincoln alike, we are able to compare deals for you in order to find a suitable one for your needs.

Solicitor’s Fees

You will need to hire the services of a qualified solicitor. The cost of this service can be quoted very differently depending on the firm you are speaking to. An estimation for a straight forward purchase with a local company is likely within the mid-hundreds.

You will need to give the property address, whether it’s leasehold or freehold and how much you are purchasing it for, in order to receive accurate quotations.

The key points to cover when asking for a quote are:

• Ensure the firm includes VAT.
• Ensure the firm includes the cost of any “disbursements.” These are fees such as Land Registry Fees and Local Authority Search Fees.
• Is your solicitor on your mortgage lenders panel?

Stamp Duty Fees

In addition to the costs and disbursements involved in paying your solicitor, depending on your circumstances, you may also be required to pay this tax which the solicitor collects on completion of the property purchase.

This doesn’t apply to everyone. The government have been known to change the criteria on Stamp Duty, with the latest change being in favour of first time buyers in Lincoln. The latest Stamp Duty updates can be found here.

Mortgage Broker Fees

A mortgage broker in Lincoln will typically charge for their service. The cost of this will vary from company to company.

In our case, your dedicated mortgage advisor in Lincoln will discuss this in more detail with you during your free initial mortgage appointment.

We would definitely recommend choosing a local company such as ourselves, rather than a big organisation. They are more likely only to charge on completion, as opposed to any application fees and additional costs that could be incurred.

Moving/Removal Fees

Of course if you are moving home in Lincoln, the cost of doing so in regard to the actual moving aspect, can be quite costly. This will depend on the level of service you are looking for.

Hiring your own van and doing the work yourself can be quite cheap. Opting for a local man with a van can be only slightly more than hiring your own van. A professional van service can be in the high hundreds, early thousands.

To further discuss the costs involved in buying a home, including anything we may have missed, book your free mortgage appointment today. A trusted mortgage advisor in Lincoln will be more than happy to discuss this with you.

The Top 5 Mortgage Hurdles in Lincoln

Guide to Mortgage Hurdles | Mortage Advisor in Lincoln

Every now and again we encounter hurdles that our customers are faced with, whether they are a first time buyer in Lincoln or looking to remortgage in Lincoln.

Though these potential qualms can lead to some slight disruptions in the process, perhaps halting any further action until they’re ironed out, the process doesn’t necessarily need to end there.

In utilising the experience of a trusted and knowledgeable mortgage broker in Lincoln, you have the best possible chance of overcoming these hurdles, hopefully being able to once again proceed with your mortgage goals.

Below we have put together a list of the 5 most commonly encountered hurdles we have faced, when either helping customers to buy their property or remortgage their home.

Divorce/Separation

When relationships come to an end, it can be awkward enough making arrangements between you, without having to factor in a mortgage as well.

If you made any joint financial commitments during your time together, such as your mortgage, you need to cut these ties as quickly as you can, to avoid running into any trouble.

Customers regularly ask us the following 3 questions when it comes to divorce and separation.

1. How can I remove my ex’s name from my mortgage?
2. How do I remove my name from my ex’s mortgage?
3. Can I have 2 mortgages?

Removing your own name or your ex’s name is imperative, as failing to do so could see your credit score drop if you move out and they handle their finances poorly.

The key to achieving this is to prove affordability, as the mortgage lender will be hesitant to lend to one name, when they previously had the security of two names. If you can afford it on your own and your ex agrees to leave the mortgage, it should theoretically be smooth sailing.

Affordability is also a factor in whether or not you can have 2 mortgages, as you will need to have enough income to live, but also afford two different mortgage payments.

The best way to determine your affordability is to speak with an experienced mortgage advisor in Lincoln. We have spoken to many customers in situations like these, so will do our best to help you overcome this issue.

Childcare Fees

In our experience as providers of mortgage advice in Lincoln, we find that families are typically not turned down for a mortgage because of childcare costs, though you may be offered a lower mortgage amount.

The reason for this is because with parents often working and forking out for childcare, their outgoings can often be in the hundreds of pounds on a monthly basis.

Many mortgage lenders would consider this type of cost as an outgoing, much as they would for a car loan or hire purchase agreement.

Even taking away the element of nursery fees that a parent may pay, parents are still generally offered less of a mortgage amount than their contemporaries, who perhaps have no children of their own running up costs.

The good news, however, is that if you have any childcare costs regularly going out, you may be in receipt of tax credits. There are mortgage lenders out there who will bear this in mind, along with child benefit too.

There are other mortgage lenders out there with an alternative approach, not treating childcare costs as a specific outgoing and relying more so on Office of National statistics data for typical outgoings and this often leads to a higher maximum mortgage amount.

New Job

Usually if someone is starting a new job, they will be in receipt of a bigger salary, being able to put their additional income towards a new or existing mortgage.

That being said, if there have been any gaps in employment, a new job can present itself as more of a problem than a blessing for some mortgage lenders out there.

Luckily there are a selection of mortgage lenders out there who will be able to work with a newly signed employment contract, even if you are only a month into your job or are yet to start. Probationary periods are usually also okay.

Benefit Income

Benefit income and how much of it can be assessed will be entirely dependant on the mortgage lender, as many of them take different views towards this type of income.

On a positive note though for customers with this type of income, benefits such as child tax credit, working tax credits, disability benefits, pension income can usually be taken into account by a mortgage lender.

It is in situations like these where speaking to a reputable and experienced mortgage broker in Lincoln will be of benefit to you, as they will be able to take a look at your case, review your circumstances and look to find you a mortgage lender where you are more likely to achieve mortgage success.

Evidencing your Deposit

For any type of purchase, all mortgage lenders and mortgage brokers alike will be required to evidence the source of all of the borrowers’ (the person buying a house and/or looking to take out a mortgage) deposit funds.

This is done in order to satisfy UK Anti-Money Laundering Legislation, which is incredibly strict and designed to protect against fraud. Additionally, your solicitor and estate agent may ask for evidence of your deposit.

It’s the belief of our team, that this is often one of the most complicated parts of the mortgage application process.

Whether you have put down a deposit from savings, premium bonds, the sale of another property, gifted from a family member or friend, from overseas family, or from taking out a personal loan, you are required to have the paper audit trail to show exactly where these funds came from.

Book a Free Mortgage Appointment

In order to be best prepared for your mortgage in Lincoln and to reduce the risk of potential hurdles, it is recommended that you speak with a mortgage advisor in Lincoln.

They will be able to best advise on how to handle your situation and will search through 1000s of mortgage deals to match you up with the most appropriate one.

Book a free mortgage appointment today and get started on your mortgage journey.

Please note that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

Do Gambling Transactions Look Bad on My Bank Statements?

Why does the lender need my bank statements? 

Whatever the mortgage route that you choose to take, you will always be asked to provide a copy of your bank statements. Whether you’re a First Time Buyer in Lincoln, looking at Moving Home to Lincoln, or wanting to know your Remortgage Options, this will never change. Furthermore, they won’t just ask for your bank statements, they’ll ask for other pieces of evidence to support your mortgage affordability, and calculate the maximum amount you can borrow for a mortgage.

There are multiple different reasons why your lender will want to see your bank statements. They need to know whether you can afford a mortgage or not, make sure that you’re reliable, and know if you’re someone who manages their finances responsibly.

Planning your mortgage journey is essential. As a mortgage broker in Lincoln, we always recommend that applicants think about their bank statements and what’s going to show up on them a few months before their application. When a lender is looking at your bank statements, one of the main things that they will look for is gambling transactions, and here’s why.

What has it got to do with the lender whether l gamble or not?

We are not saying that it’s illegal to gamble during the upcoming months of your application, however, lenders do seem to judge applicants less favourably if they can see large amounts of gambling transactions on your bank statements.

Spending a little bit here and there on your gambling app won’t make a huge difference to your mortgage application. It can start to impact your application when you are consistently gambling and putting in large amounts of money each time. The number one rule is to always remember to ‘gamble responsibly’.

A mortgage broker in Lincoln like us, nor a lender/building society can tell you how to live your life. We can give you advice though. All we can ask of you is to be careful as lenders do have a duty to lend responsibly. 

Lenders need to prove to their regulators that they’re lending to responsible applicants. If you’re a frequent gambler and losing out on money every so often, they may not think that you fit into the ‘reliable category’. They want people to take good care of their finances. Would you lend to someone who is a frequent gambler or someone who hardly gambles?

Will gambling affect my chances of getting a mortgage?  

Moreover, infrequent gambling transactions are unlikely to your ability to get a mortgage. It’s all down to the size of the transactions and how frequent they are.

A big factor is how these transactions affect your overall account balance. Does gambling result in you dipping into your overdraft? Are you borrowing money to gamble/gambling money that you don’t have?

Acting irresponsibly with your money during the lead up to your mortgage application may put off a lender. Lenders notice gambling transactions straight away.

What will lenders be looking for on my bank statements? 

It’s not just gambling transactions that lenders will look for on your bank statements. Here are a couple more things that they’ll be looking for:

• Loan repayments
• Exceeding into your overdraft
• Other current accounts
• Credit cards
• Recurring payments

They need to be certain that they’re lending to a reliable applicant. From monitoring your accounts to asking you questions about your transactions, lenders need to know that they can trust you.

On the contrary, if you do fall into your overdraft now and again, it shouldn’t cause too much detrimental effect on your mortgage application. When you are always dipping into your overdraft or struggling to get out of it, that’s when it may hurt your mortgage application.

What can I do to show the lender I am reliable? 

Every lender will look for someone who is reliable and sensible. Get ahead of the game, plan your mortgage application nice and early in the process.

Since you’ll be asked to provide bank statements (typically 3 months’ worth), you could make them appear the best that they can. Ensure that these bank statements make you look reliable. A way to enforce this could be to reduce gambling and outgoings for these three months.

If you gamble regularly, it could be an idea to stop for a little while. There are usually spending limits on betting apps; this could be something to look into. As well as helping your mortgage application, this may also be good for your mental health. 

Get in touch with a mortgage broker in Lincoln

Our job as a mortgage broker in Lincoln is to hold your hand through the entire mortgage process. We will be with you from the very start! Firstly, we’ll take a look at your evidential documents with you, making sure that you are presenting yourself in the best way possible in front of a lender.

Our mortgage advisors in Lincoln are available 7 days a week, so don’t hesitate to book your free mortgage appointment today. They cannot wait to hear from you.

Can You Have Two Mortgages in Lincoln?

Mortgage Advice for Homeowners in Need of Multiple Mortgages

Can I Have Multiple Mortgage? | MoneymanTV 

There are multiple reasons why some homeowners in Lincoln may look to obtain a second mortgage. One example of this would be if you are looking to expand your property portfolio and you need to obtain a mortgage to do this.

Alternatively, you may find that you need to take out a second mortgage if you have a family member who is unable to qualify for a mortgage themselves, obtaining a mortgage in your name and allowing them to live in the property.

If the lender can see that you cannot afford the costs involved with a second mortgage, then your application will be denied.

Why would I want a second mortgage?

As a trusted Mortgage Broker in Lincoln, we have seen people apply for a second mortgage for all kinds of different reasons. Here are a few reasons to consider one.

Raise Money

If you are over five years into your mortgage term, then by now, you should have built yourself up a reasonable amount of equity in your home.

This situation is known as a further advance. A further advance is when you borrow more from your current lender to fund something like home improvements or a second mortgage.

What you do with that money is completely your choice, after all, it’s the equity you have built up in your own home. Some people use it to fund the deposit of another mortgage, whilst others may use it to take their dream holiday. There are no limitations once you’ve withdrawn that equity.

The amount that you can borrow from them will depend on the amount of equity in your property. Your lender will need strong evidence to prove that you can afford both mortgages. Our mortgage advisors in Lincoln can access competitive second mortgage deals and options through our large panel of lenders. 

Rent Out a New Property (Buy to Let)

Whether you are a landlord with experience within the market already or someone new looking into making their first investment on a property, you will need more than one mortgage to achieve your goals.

Buy to let landlords will likely use a suitably extensive portfolio to the process of getting more than one mortgage. For those starting as a landlord, sometimes you need Mortgage Advice in Lincoln to make sure everything gets sorted.

Second mortgages work similarly to other mortgages. You still need to put down a deposit (usually around 15%-25% of the property) and pass the lenders’ affordability checks. Affordability does not always come down to your income, and some lenders will look into the predicted rental income.

No doubt, once the landlord has found tenants and they have moved in, the costs of your mortgage payments should be sufficiently covered. Initially, though this might prove challenging, you need to cover the expenses until the income starts to flow.

For Buy to Let Mortgage Advice in Lincoln, please feel free to book yourself in for a free mortgage appointment to speak with one of our Mortgage Advisors here at Lincolnmoneyman.

Rent Out an Existing Home to Purchase a New One (Let to Buy)

This sort of process is what is known as a let to buy mortgage. Some homeowners will have an option to get a second mortgage on a newly purchased home, allowing them to rent out their current home and move into a new home for themselves.

Let to buys are of course very similar to buy to lets, it just works a little bit differently. In this case, you need to find a tenant for your current property, in order to move out yourself. Landlords may do this if they want to move into a bigger family home.

Our buy to let Mortgage Advisors in Lincoln have a lot of experience and knowledge in working with let to buy mortgages, so get in touch if you would like an advisor to help you with a let to buy second mortgage.

Purchase a Home For Your Children/Family Member

If you have any children or other family members who are having some difficulty getting themselves onto the property ladder, you may have the option to take out a mortgage in your name and allow them to move into it as their new home.

Going down this route will likely land you with a guarantor mortgage. Another popular option that some people go with is to gift the person in need their deposit. Gifted deposits are crucial to the property market and are always a fond option for helping a loved one find their footing on the property ladder.

Are you named on an existing mortgage and want to buy a new home?

There are various reasons why you can be listed on two mortgages. Sometimes it’s something you’ve planned for, but in other cases, it can be completely unintentional.

Through our work as a mortgage broker in Lincoln, we regularly find that one of the most common reasons for someone taking out a second mortgage is divorce or separation.

The tricky part here is that it can be hard to remove your own or your ex-partner’s name from the mortgage you share. Once again, this is down to affordability and to both parties having to agree mutually. Though it may come with challenges, obtaining a mortgage post-divorce or separation is not entirely impossible.

If you have your name on an existing mortgage for a home you no longer live in, we recommend you look at getting your name removed sooner rather than later.

Having any financial ties to someone may lower your overall credit score, especially if the other person is terrible at managing their finances and getting into arrears regularly.

How Much Can I Borrow For A Mortgage in Lincoln?

How much can I borrow for a mortgage in Lincoln?

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.

Historic rules when borrowing for a mortgage

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.

Nowadays approach to how much I can borrow

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.

How can a Mortgage Broker in Lincoln like us help?

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.

What is a 95% Mortgage?

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. 

95% Mortgage Advice in Lincoln

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.

Can I get a 95% mortgage?

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.

Improving your credit score

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 

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.

Can my family help me get a 95% 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. 

How do I choose the right 95% 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.

How can a bigger deposit help with my mortgage? 

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. 

The Pros and Cons of Using a Mortgage Broker in Lincoln

The Pros and Cons of Using a Mortgage Broker in Lincoln

Deciding to buy your first property is a challenging task. Therefore, you must take your time, look around for various options thoroughly and make an informed decision.

As you might anticipate, we believe there are some excellent reasons to use a mortgage broker in Hull. Whether the brokerage service is online, you can still pay a visit directly to the lender. Even in technological advancement, we find that most people still refer to a mortgage broker. Hence, we will take you through the pros and cons of both methods.

Advantages and Disadvantages

Firstly, a well-versed mortgage broker will take the time to have an initial conversation with the applicant to help him decipher if you are mortgage ready to make an application. When contacting us and gathering the necessary details, one of our mortgage advisors in Lincoln will make sure to shop around and get the best deals possible.

One of the most notable advantages of going with a mortgage broker is valuable expertise in the home buying or refinancing process. Mortgage brokers have ample industry experience to lean on when offering mortgage solutions to their customers.

Similarly, our mortgage broker in Hull also has access to try and find wholesale rates on home loans. These rates can be lower than the retail interest rates, helping borrowers save a substantial amount of money over the life of a home loan.

Most importantly, a Mortgage broker can be your point of contact from the time you first call them right up to when you finally get the keys of your house in your hands, and we will guide you through the entire process.

Bank vs Broker

On the contrary, going to a bank helps save you a broker fee, saving yourself a reasonable amount. In earlier years, another significant advantage of a bank was that the branch manager knows an individual’s finances in and out. However, that all went by the wayside when credit scoring came in and is no longer the factor.

Likewise, some Lenders offer exclusive ‘direct-only’ deals that a broker would not have any access. Lenders do this to attract a wide range of applicants to make a good spread of business from consumers and brokers alike, turning exclusive products on and off when deeming necessary. On the other side, some products may only be available via the broker and not direct with the lender.

From 2014 onwards, lenders got restricted to sell mortgages on a non-advised basis to just anyone. Up until that point, many applicants felt like the non-advisors had been trying to force actual advice on them. They weren’t able to benefit from some consumer protection that goes with mortgage sales conducted by professionally trained mortgage advisors.

Lenders were coming to terms with and hence the issues present in these services led to a significant shift towards more applications getting made via mortgage brokers who are quick enough to offer you same day mortgage service.

You also need to check carefully if a lender is willing to lend you a considerable amount of money. It does not matter how good a lender’s deal might seem, but he should lend a significant amount. For this reason, people opt to go to an apt and professional mortgage broker in Lincoln.

Handling Difficult Cases

Nowadays, mortgage applications are no more straightforward. Many factors make a case more complicated. A few of the examples are as follows:

– Poor credit history
– Too much debt
– Payday loans
– Self-Employed Income
– Mixed source of deposit (savings/gift)
– Let to Buy (keeping your current house and buying another)
– Contract workers/zero-hours contracts
– Affordability

In the past years, lenders could stand out from the competition by offering a better deal to the applicants. In the current era, this is different because the lending criteria vary from one lender to another. Some lenders lend more to Self Employed applicants or take a more empathetic view of their credit report’s previous discrepancies.

When you explain your case to an experienced mortgage broker in Hull, there is a possible chance that they have encountered the same thing earlier in the past, allowing them to personalize their service and help you through the process. With extensive experience in the field, your mortgage advisor will hopefully be able to recommend the most suitable lender for you at the lowest rate possible.

More than that, it is not just about getting the Mortgage. Even if the application itself is self-explanatory, we offer extensive experience and knowledge to our clients. For example, we will discuss how much we will deliver on the property they are buying. Our team of mortgage advisors in Hull can recommend other professional services such as Solicitors and explain the different types of protection and survey available.

Responsive Service

Another significant advantage of using a mortgage broker is that the brokers are far more responsive than some lenders. Delivering personalized service is the differentiating factor between the broker and a lender.
Besides, another significant reason for hiring a mortgage broker is that it helps you save time. Most customers prefer a broker because they are too busy nowadays. they might need a mortgage but have no time to get it done so that our advisor will take the weight off for you.

You only need one application with a mortgage broker rather than individually filling out forms for every lender. Your mortgage broker can also provide a comparison of any loans recommended; guiding you to the information that accurately portrays cost differences, with current rates, points, and closing costs for each loan reflected.

Mortgage Advice in Lincoln | Mortgage Payment Holidays

At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday on the condition that they needed it. Most lenders followed the Government’s guidelines and did their best to help out their borrowers during these hard few months. 

We felt that it is best, to sum up, what mortgage payment holidays are, what lenders are doing, and who can deliver you with help and advice through these next few months. 

What is a Mortgage Payment Holiday?

Mortgage payment holidays are agreements you make with your bank, building society or mortgage lender, allowing you to take a break from your monthly mortgage payments for a set period. In the case of the current COVID-19 crisis, homeowners are being granted 3-months relief.

The 3 months will be added on at the end of your term or your payments will be recalculated at a slightly higher level, meaning you will still have to pay those 3 months back eventually.

Your interest, however, carries on as normal, meaning you’ll technically be paying an additional 3 months of interest on top of what you’ve paid already.

Most lenders would likely prefer to not extend your mortgage term, as you may end up going beyond their standard retirement age. There’ll be more information on this over time.

Depending on the mortgage deal you have in place, you may be able to pay off a lump sum later on in the year to bring your mortgage in line with where it would’ve been had you not taken a holiday.

Mortgage Payments Holidays are available for those with residential mortgages and Buy to Let mortgages, meaning landlords will also have help if their payments are affected.

What is the Government Proposal?

The full proposal is in detail below:

• Mortgage lenders will offer an automatic 3-month mortgage payment holiday for customers impacted, directly or indirectly, by COVID-19.
• The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that they are impacted by COVID-19.
• This means that lenders will not complete an income and expenditure assessment, or an assessment of alternate payment options as ordinarily required under MCOB.
• This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where the operation of collections teams made be also impacted by COVID-19.
• Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future.
• Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

Mortgage Payment Holidays: How do I apply?

To discuss your options for Mortgage Payment Holidays, we would recommend speaking to a Mortgage Advisor in Lincoln to start with and not jumping straight into taking a holiday.

We’ll be able to take a look for you first and see if this option is something worth your time. Lenders will no doubt be facing an influx of calls, needing to be free to speak with the most urgent matters over everyone else.

We’ll look through your personal situation and see if there are any other options for you first before you decided to take a Mortgage Payment Holiday.

For a customer, up to date with payments, not in arrears and impacted by COVID-19:

• The customer would contact the lender and inform them that they are impacted by COVID-19.
• The lender would accept these details from the customer and offer an automatic 3-month mortgage payment holiday.
• No evidence will be sought from the customer.
• The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances.
• At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, while ensuring that the mortgage remains affordable and sustainable.
• The lender notifies the customer that if they wished to complete a full assessment now, there may be other forbearance options more suitable to the customer.

Mortgage Payment Holidays – What does this mean for my Credit Score?

Generally, these can show up on your credit score as a negative mark, but most lenders have said if your case is linked to the virus, they’ll make sure it doesn’t affect your credit score at all.

It’s important that you speak directly with your lender to ask them this, recording their response. Also take the date and time, as well as the name of who you spoke to, to avoid any confusion later on. Different lenders will handle these things differently than one another.

Will I still be able to remortgage or take a Product Transfer with my lender?

Controversial for some, but there is now evidence that lenders are asking borrowers to try and not make changes to their mortgage whilst within the holiday period. This means, for the time being, you can’t take out a remortgage or product transfer.

In simpler terms, borrowers reaching the end of their current product may be forced to move to the higher lenders variable rate. This means many borrowers who act too quickly could find themselves on a Mortgage Payment Holiday that gains interest on a more expensive variable rate.

This is another reason why we highly recommend speaking to a Mortgage Advisor in Lincoln first, to determine the right path for you to take. If possible, try arranging a transfer prior to asking for a holiday, as that seems like a more sensible option.

What “Other Options” are available?

Some lenders are offering a temporary switch to interest-only, in order to reduce monthly payments by a large amount, while not adding on any further amount to the loan, by still servicing the interest each month.

You may not need to convert the entire mortgage to an interest-only mortgage and it may be that putting only a portion of this mortgage on that basis could give you room to breathe.

Those who have savings may prefer remortgaging onto an offset basis. This would reduce their monthly payments whilst keeping their savings safe and intact.

For example, someone with a £500,000 loan and £100,000 in savings would only pay interest on £400,000 reducing their payments accordingly.

For others, remortgaging onto another lender, calculating the cost of any early repayment charges, maybe all you need to ease the pressure you currently face. You could also simply extend your current term, thus spreading your payments across a longer time frame.

To discuss any of these options, or to just have a helpful chat about your current situation please contact us and we’ll see how we can be of assistance.