Timely boost from the government for the property market!

“When you speak with any home owner the hardest part about buying a home or getting into a position to buy a home is raising the deposit. We live in a society today where for the average person your cost of living is so high you do not have enough money to save as much you would require each month (especially in London). For a lot of aspiring homeowners they are in a tough predicament where they are paying rent on their current property that in hindsight would be a lot more than the monthly repayments on a mortgage of their own home. The only thing they lack is the deposit to commence the buying process”.

By the government allowing this scheme to launch to both first time buyers and current home owners this will allow the market to continue to move. This will provide assurance to current home owners who need to sell and/or move along with also giving faith to those aspiring to own their own home and get on the ladder.

“As a Property Expert working during these estranged times it was such a blessing and a boost to benefit from the stamp duty holiday. However, as the government gave the market a blessing with one hand, the banks took away with another by taking away all 95% mortgage products and temporarily removing 90% products. Over the summer and autumn of 2020 we went through a phase where we had an abundance of properties available but a lack of buyers given the requirement of a larger deposit”.

“The scheme rolling out until the end of 2022 this fills the property market with a lot of faith and confidence until then along with keeping the economy moving which will be vital for the United Kingdom to drive forward”

“We have property experts ready to speak with you about the pricing in their areas and will be able to advise now and into the future. We also have Mortgage partners on hand who we can refer you to, who work with the whole of market and will be able to advise you about the best mortgages tailored to your needs.

“Feel free to get in touch”.

0330 043 0002

Truuli.co.uk

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Should I fix my mortgage for five years?

News / Michael Fyffe

Should I fix my mortgage for five years?

Historically two year fixed rate mortgages have been the go to product when taking out a new mortgage or re-mortgaging.

In my opinion, the main reason for this choice is historically the price difference between a two and five year fix has been wide enough to not make it worthwhile paying the extra money. Over the past couple of years in a low interest rate climate and signs that the base rate is only likely to go up, people like myself are asking the question “should we now consider fixing our mortgage rate for 5 years?”

Gap between the average two year and five year fixed rate mortgages.

***Please note this is an average rate and not broken down by loan to value (LTV)***

	June 2016	June 2017	June 2018
Two-year average fixed rate	2.57%	2.30%	2.52%
Five-year average fixed rate	3.17%	2.86%	2.92%
Difference	0.60%	0.56%	0.40%

Source money facts. Assessed 10 July 2018

Difference in cost between a 2 and 5 year fixed mortgage product.

***Based on mortgage amount of £300,000 and a mortgage period of 25 years***

	June 2016	June 2017	June 2018
Two-year average fixed rate	£1,356	£1,316	£1,349
Five-year average fixed rate	£1,449	£1,401	£1,410
Difference	£93	£85	£61

Cons of long term fix rate mortgages:

Interest rates fall: One of the cons of fixing your mortgage rate for a long term is if interest rates fall your mortgage rate may look expensive. With the base rate at 0.75%, it’s unlikely we will see any further falls and the base rate is likely to raise in the near future.

Early repayment charges: While initial rates are low, whether you should fix for five years will depend on your individual circumstance. If you need to pay off your mortgage early it can be expensive and is usually subject to early repayment charges.

For example; if you want to move house before the end of the fixed period, you may need to pay a percentage of you loan as a fee.

Below is an example of typical fee charges:

Year 1 Year 2 Year 3 Year 4 Year 5

5% 4% 3% 2% 1%

You may be able to avoid early repayment charges by porting your mortgage but you will need to weigh up the pros and cons of taking this route, which is not covered in this article.

Want more information or advice? Give the expert team at Truuli a call on 0330 043 0002 or request a callback.

Should I fix my mortgage for five years? Read More »

Has today’s interest rate increase made things difficult for aspiring homeowners?

News / Michael Fyffe

The Bank of England’s Monetary Policy Committee has announced today that interest rates will increase by 0.25% to 0.75%, in a unanimous vote.
Today’s news will be welcomed by savers in general but not for those saving to get on the property ladder as any increase in savings rates won’t bridge the gap on rising house prices.
Homeowners not on fixed term mortgages will see an average rise of around £270 on their yearly mortgage payments.

The increase will be manageable for most homeowners, those that have stretched themselves financially to get on the property ladder or those aspiring homeowners may find the interest rate increase a bit more difficult to absorb.

Has today’s interest rate increase made things difficult for aspiring homeowners? Read More »

Economists predict an interest rate rise in the near future

News / Michael Fyffe

With the royal wedding and recent record temperatures boosting the UK economy in May, economists predict an interest rate rise in the near future.

The UK economy grew by 0.2% in the three months leading to May, compared with the previous three-month period, the latest figures from the Office for National Statistics (ONS) show.

However, wages rose more slowly over the same period, wage growth, excluding bonuses, slipped to 2.7% from 2.8% in the three months leading to May, whilst unemployment decreased by 12,000 to 1.41 million.

For some, that means we could be in for higher borrowing costs as economists expect interest rates to go up next week. The predictions come as doubt was cast on a possible increase earlier this month. That came after inflation held tight at 2.4 per cent, instead of rising to 2.6 per cent as economists predicted.

It is likely to be relatively small, from 0.5% to 0.75%, and for the large majority of homeowners, not particularly painful, however, it would be the highest it has been since March 2009, when it was reduced from one per cent to 0.5 per cent during the financial crisis.

Like in all situations, there will be both winners and losers. The winners could include 45 million savers, who have seen some interest rate improvements after the previous rise in November. But at least four million households with variable or tracker rate mortgages are likely to see their payments increase once again.

Variable-rate mortgages
Throughout the UK, roughly 9.1 million households have a mortgage. About half of these are on a standard variable rate or a tracker rate, amounting to between four and five million households.
These are the people who would be most affected by a rate rise, as their monthly payments would increase.
According to the Nationwide, a 0.25% rate rise means someone on a £200,000 mortgage would face paying around an extra £25 a month, or about £300 a year.

Fixed-rate mortgages
The large majority of new mortgage loans (96%) are on fixed interest rates of two or five years. Currently half of all outstanding loans are on fixed rates, equating to about 4.5 million households.

Such rates have already started to rise since November’s rate increase.
When borrowers reach the end of their term, they may find they have to make higher monthly payments or be required to move lender to keep the mortgage affordable.
That said, they could, depending on when they took out their loan, end up on a cheaper deal. The lenders offering fixed rates tend to be especially competitive.

A recent survey of nine economists by website Finder concluded all of them predict a base rate rise, mostly because they believe the economy has strengthened, inflation is set to go up and so are wages, despite having stagnated so far.

But while there seems to be agreement over an improvement of the economy up to now and positive expectations about wages in the coming months, some economists were concerned about housing affordability and the rise in the cost of living.

Andrew Wishart of Capital Economics said: ‘The Monetary Policy Committee held off raising rates in May because it wanted to see evidence that the weak patch in economic activity at the start of the year was just a blip. ‘The official data and business surveys released since then suggests that growth did indeed recover in Q2. ‘With little slack left in the labour market, robust growth is likely to lead to a further increase in wage inflation. ‘Alongside the MPC’s ambition to return interest rates to a level from which they can be cut to help in the next downturn, we think that provides reason enough for the MPC to raise interest rates in August.’

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Potential Costs When Buying A Home

Buying, Buying Guide / Michael Fyffe

Purchasing a property should be a joyful occasion, however, it can be a stressful process without the correct planning and preparation. As well as a mortgage, there are other costs too…

Mortgage Deposit and Interest rates

The amount of money you have saved towards your home purchase can have a big impact on your future monthly mortgage repayments. The more you have saved the better the mortgages on offer will be. The deposit required to purchase a property is usually a minimum of 5% of the cost of the property you are looking to buy, however, a deposit equating 15% of the property price will you will get a much better deal. The average UK property price is currently around £177,000 that’s £8,850 or £26,550 for a 15% deposit just to get started.

When obtaining a mortgage, depending on the amount you have borrowed and the percentage provided within the deposit you may be accountable for paying a higher lending charge. This is essentially a charge for your lender to insure themselves in case you fail cover the repayment costs and they become forced to sell your house at a loss. In this event the lender retains the right to request the money lost from you. In most instances, the higher lending charge is usually around 1.5% on the amount borrowed.

Whilst not all products will incur this fee, another potential upfront cost to consider when organising your mortgage is the arrangement fee. This can cost you in excess of £2,000 but can be added to your mortgage amount, however doing so can incur interest and increases the costs involved throughout the duration of your mortgage. Setting up any mortgage may also incur costs, with some lenders charging you a booking fee of between £100 to £250 – this is often refundable if your mortgage application is unsuccessful.

Account Fee

This is usually a one of fee covering the costs of running your mortgage account from the initial set up to the day of its closure. In most instances paying an upfront account fee means you won’t have to pay an admin fee when repaying it.

On most occasions the mortgage lender will not charge an account fee but they may cover this in the form of an exit fee. The exit fee may be charged in the event you leave your lender prior to the end of the arranged mortgage whether it be to re-mortgage, sell the property or obtain another mortgage for a new property. Account fees usually range from between £100 and £300.

Solicitor Fees

Having a competent conveyancer can sometimes make or break a sale. Most conveyancers offer a ‘no sale, no fee’ service meaning you will only be billed after a successful purchase. Make sure you ask any potential conveyancer if there will be any additional costs as some may charge for the length of the transaction and/or for sending letters and communicating with estate agents. At an additional cost, your conveyancer will organise the relevant checks with the council including a search of any planning and local issues that may affect the property as well as a search of the drains. They will also raise property queries with the selling solicitor and review your mortgage offer once the bank has confirmed the property purchased is suitable for lending.

Valuation & Surveys

When lending you money for a home purchase the mortgage provider will ascertain the amount you are eligible to borrow and will want to know the property being purchased is suitable for lending. In order to do this, they will undertake a valuation survey of the property.

You may choose to get obtain an additional survey of the property at additional cost, this may be cheaper if conducted at the same time as your valuation. Surveys vary in cost depending on how extensive they are; a straightforward valuation starts at around £150, however, a home buyer report for which you will have a professional assessor visit the property in question and carry out a structural survey and a far more in depth assessment can cost as much as £1500.

Stamp Duty

In England and Northern Ireland, you are liable to pay Stamp Duty when you buy a residential property, or a piece of land, costing more than £125,000 (or more than £40,000 for second homes). This tax applies to both freehold and leasehold properties – whether you’re buying outright or with a mortgage.

If you’re buying a property in Scotland you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty.

There are several rate bands for Stamp Duty. The tax is calculated on the part of the property purchase price falling within each band.

For example, if you buy a house for £275,000, the Stamp Duty Land Tax (SDLT) you owe is calculated as follows:

0% on the first £125,000 = £0

2% on the next £125,000 = £2,500

5% on the final £25,000 = £1,250

Total SDLT = £3,750

Moving

Ensure you have booked a removal firm and calculated the time it will take to move from one property to another. Some removal companies charge by the hour so ensure you know what time you are due to collect keys from the previous owners; most completions take place between 12-2pm.

If you have any further questions or would like to arrange a free ‘Cost of Move’ appointment with a Mortgage Expert call us 0333 043 0002 or e-mail s[email protected].

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What are the different types of mortgage available?

Buying Guide / Michael Fyffe

What are the different types of mortgage available?
Selecting a mortgage can be tricky. We would always recommend speaking with a qualified mortgage expert who can ensure you have not only sourced the best deal, but also that you have taken out the best mortgage for your needs, both now and in the long-term future.

Here is a list of all the different types of mortgages available in the UK:

repayment mortgages interest-only mortgages fixed rate mortgages
variable rate mortgages tracker mortgages discounted rate mortgages capped rate mortgages cashback mortgages offset mortgages
95% and 100% mortgages flexible mortgages first time buyer mortgages
buy to let mortgages

Repayment mortgages
This is the basic way of repaying all mortgages, however specialised they are, apart from interest only loans which are different. With repayment mortgages, each month you repay some of the interest you owe plus some of the capital you’ve borrowed. At the end of the period, most commonly 25 years, you’ll have paid back everything you owe and you’ll own your home outright.

In the instance that you move prior to the end of your 25yr term, you may be able to take the mortgage with you (‘porting’ your mortgage) or you can repay the original loan and take out a new one.

Interest only mortgages
With interest-only loans, you only pay the interest month by month and repay the capital at the end of the full mortgage term period meaning monthly repayments are lower than with any other mortgage. This is quite different from a repayment mortgage because at the end of the loan you are required to repay the whole debt in order to retain ownership of the property; some mortgage lenders may insist you show them how you intend repaying the loan at the end before granting an interest-only mortgage.

With an interest-only mortgage you may be able to switch to a repayment loan at a later date at the discretion of your lender.

Fixed rate mortgage
A fixed rate mortgage is where the rate is fixed for a set number of years – usually 2, 3 or 5. The benefit of a fixed mortgage is that you know exactly how much you’ll be paying each month for that length of time, regardless of what happens to interest rates on other mortgages.

Should you be in a fixed term and notice interest rates are much lower on other mortgage products, you can get out of your fixed rate mortgage but there’ll be an early repayment charge to pay. When the mortgage comes to an end, you will be placed on the lender’s standard variable rate (SVR).

Variable rate mortgages
Every lender has a standard variable rate (SVR) mortgage. The rates for these are partly influenced by the Bank of England base rate but other factors may influence these as well. The interest rate you pay on an SVR mortgage can change even without the base rate moving and similarly the base rate might come down but your mortgage rate stays the same.

Tracker mortgages
Tracker mortgages move in line with a nominated interest rate which is usually the Bank of England base rate. The actual mortgage rate you pay will be a set interest rate above or below the base rate. When the base rate goes up, your mortgage rate will go up by the same amount, and vice-versa when the base rate comes down.

Some lenders set a minimum rate below which your interest rate will never drop but there’s no limit to how high it can go. With the base rate at 0.5% and an add-on rate of 2.0%, your mortgage rate will be 2.5%.

Discount rate mortgages
The discount is a reduction on the lender’s standard variable rate (SVR). Mortgages with discounted rates are some of the cheapest around but, as they are linked to the SVR, the rate will go up and down when the SVR changes. Discount rate mortgages tend to have fixed periods, typically between 2 and 5 years.

Capped rate mortgages
This mortgage offers a variable rate mortgage but one with a ceiling on how high the interest rate can rise. As both interest and mortgage rates have generally been low in recent years, the majority of lenders have not been offering capped rate mortgages.

Cashback mortgages
When you take out this particular mortgage the lender will give you money back, typically a percentage of the loan. These mortgages generally do not tend to offer the most competitive rates and you should look carefully at the any additional fees that may be incurred.

Offset mortgages
Offset mortgages are linked to a savings account and combine savings and mortgage together. Each month, the lender looks at the mortgage balance and then deducts the amount you have in savings. You pay mortgage interest just on the difference between the two. For example, if you have a mortgage of £100,000 and savings of £5,000, your mortgage interest is calculated on £95,000 for that month. This helps to reduce the amount of interest you pay but the mortgage rate is likely to be more expensive than on others on offer. You can still access your savings if you need to but the more you offset, the quicker you’ll repay your mortgage. In the instance you use your savings to reduce your mortgage interest, you would not earn any interest on them but you will not pay any tax either.

95% mortgages
With 100% mortgages now being pretty much non-existent, a mortgage with a 5% deposit is usually the next best option. Rates offered with a 95% mortgage tend to be quite high and with such a small deposit you are potentially at risk of falling into negative equity if house prices go down.

More information for people with 5% deposits is available on the government’s Help to Buy scheme website.

Flexible mortgages
With a flexible mortgage you can choose to pay in more than your regular amount when it is convenient for you (this option is also available on many other types of mortgage). And, unlike other mortgages, if you have already overpaid you can pay less if you hit a difficult patch or even take a payment holiday and miss a few payments altogether. Due to the flexibility offered, the mortgage rate will often be higher than on other deals available.

Buy to let mortgages
Buy to let mortgages are for those who want to purchase a property and rent it out rather than occupy it themselves. The amount you can borrow with this particular mortgage is partly based upon the amount of rent you expect to receive. In most cases a first-time purchaser is unlikely to be accepted for a buy to let mortgage.

Our mortgage experts will assist in sourcing the mortgage that suits you best. There’s no obligation and no charge for our service, call us on 0300 043 0002 or e-mail [email protected]

What are the different types of mortgage available? Read More »

Choosing your mortgage

Buying Guide / Michael Fyffe

There are many options available in terms of mortgage choice. Be sure to do your research to secure the best advisor for obtaining your mortgage…

Finances
In order for agents to take your enquiry seriously, we recommend that before you even start your property search, you make sure you are in a position to obtain a mortgage.

The best place to start is by undertaking a credit check on yourself in order to see what position you could be in financially and also to ensure there are no unpleasant surprises like that old phone contract you forgot to cancel. New rules have seen lenders become more stringent with lending money based upon what you earn against your outgoings. Sorting your finances before you start your search can also save you time when battling against all those unwanted sales pitches from the agents you register your details with.

The Deposit
The deposit required to purchase is usually a minimum of 5% of the cost of the property you are looking to buy, however the more deposit which is available, the much better the deal you are likely to obtain from your mortgage lender. A deposit of 25% of your property price would be an ample amount to ensure you were offered some of the best mortgage rates available.

With house prices having increased dramatically over the past few years, coupled with increase living costs, many first-time buyers have struggled to raise suitable deposits for a home purchase. To aid, there is a government Help to Buy Scheme which is a two-part scheme designed to help buyers get that foot on the property ladder. The initial part comes in the form of an interest free loan which can increase the percentage you can afford on your deposit, resulting in a better mortgage deal. The second part of the scheme offers your bank or building society a guarantee of 20% on your property value, again only with the input of 5% from the homeowner. This essentially allows a homeowner who can only afford a 5% deposit to secure a mortgage deal based on a 20% deposit of the property value. This latest scheme has helped those at the lower end of the deposit scale to secure better deals.

Sourcing a mortgage broker
Whilst there are a number of comparison sites which can be used to source mortgage rates, we would always suggest speaking with a qualified professional who is listed by the Financial Conduct Authority, meaning they are unauthorised to provide you with mortgage advice.

When making a final decision on a mortgage broker try and decide upon one whom
has access to rates across the whole market rather than one whom is tied to a group of lenders. Mortgage brokers whom are not whole of market are similar to those at your bank, they will only sell you a range of particular products meaning you may potentially miss out on better deals elsewhere.

Don’t be afraid to ask any broker you are considering using how they are paid and how extensive their range of offers are. Some mortgage brokers will work on a percentage fee (of the loan amount), and others will charge an upfront fee. Be sure to ask when the fee is payable, whether it is still payable if your purchase does not go ahead and also whether there will be further charges for re-mortgages and future home moves. Many brokers offer a life time service meaning their fees are a one off.

Other things to consider are….

How long have they been a qualified mortgage broker?
What qualifications do they hold?
Are they offering information only or advice?
What lender do they conduct most business with, and why?
What is their complaints procedure should you encounter an issue?

If you require any help, or just have a query, call us on 0330 043 0002 or email us at [email protected]

Choosing your mortgage Read More »

mortgages

Timely boost from the government for the property market!

Should I fix my mortgage for five years?

Has today’s interest rate increase made things difficult for aspiring homeowners?

Economists predict an interest rate rise in the near future

With the royal wedding and recent record temperatures boosting the UK economy in May, economists predict an interest rate rise in the near future.

Potential Costs When Buying A Home

What are the different types of mortgage available?

Choosing your mortgage

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