It’s been a few months since I last wrote about Brexit and its likely impact on interest rates, the mortgage sector and the residential property market. That was not long after the deadline for the UK to leave the EU was extended to the end of October. So, now that we’re roughly halfway between the last deadline and this one, what’s changed? On the one hand, nothing much has changed at all. There’s no more clarity now on how we’ll leave the bloc (or even, perhaps, if we’ll leave) than there was three months ago. But politically-speaking, on the other hand, everything has changed. We have a new Prime Minister working with an even more slender majority than his predecessor and leading a party that, if anything, is more divided than it has been at any point since the EU referendum. He chairs a cabinet that is loudly pro-Leave and, publicly at least, completely aligned to taking the UK out of Europe on October 31 come what may. Outside the inner sanctum of the cabinet, former senior ministers warn of chaos ahead if Britain is allowed to crash out of Europe without a deal, while the apparatchiks of central and local government ramp up their preparations for No Deal. Labour is said to be planning a vote of no confidence in a bid to force a General Election. The Liberal Democrats have a new leader in Jo Swinson, and her fiercely pro-Remain party is attracting membership applications from former Tory MPs, disillusioned with their brief stint as part of the Change UK party. All in all, things have certainly been better within Great Britain PLC. But what does the uncertainty mean if you’ve got a mortgage or you’re thinking of buying and/or selling your home? Naturally, it depends on what you read, who you listen to and whether you’re on the Winnie the Pooh or Eeyore side of the optimism/pessimism divide. But amid the more outlandish crystal ball-gazing, there have been some interesting and well-informed hypotheses doing the rounds recently. The general consensus seems to be that a No Deal Brexit would substantially increase the chances of an economic downturn. Some commentators have stopped short of predicting a full-on recession, but others haven’t been quite as shy. According to the Guardian’s personal finance and consumer correspondents, this may not be a bad thing for homeowners where interest rates are concerned. Their joint article talks of mortgage interest rates returning to their sub-1% levels of 2016 and even of the Bank of England imposing a zero rate to ease the transition to a new trade arrangement with the rest of the world. Such a move would undoubtedly be welcomed by homeowners who suddenly find their mortgage rates significantly reduced. But the other side of that coin, of course, is the resulting misery for savers and investors. As for house prices and whether now is the time to buy or sell, the same article suggests that trying to predict whether to move before or after October 31 is more likely to be a lottery. Having said that, the fact remains that if you consider your finances to be insulated from the immediate impact of Brexit – whether with or without a deal – then when you move is less of an issue. The only question at that point is whether you can sweeten the process by winning out on the price at which you agree to buy and securing the market value of the house you sell. The Daily Mail’s financial website This Is Money reports that there’s been a growth in the appetite for long-term mortgage deals, including the recently-trending 10 year fixed product some lenders are offering. As I said in our recent article on whether you should fix your mortgage rate, we’d advise caution when it comes to locking on to a long-term deal. They tend to be more expensive and if rates do come down – which is a distinct possibility over a period of a decade – then you’re going to lose out in the long run. There are circumstances where a long-term fixed product might be right for you – but I would strongly advise getting advice from a professional mortgage expert before you commit. And then there are the conflicting calls in the Express and Times for the Bank of England to either raise interest rates and demonstrate its commitment to – and confidence in – Brexit (Express), or cut rates ahead of Brexit to ease the impact on the economy (Times). So, even the papers are divided on the best approach to fiscal policy. The fact is, we won’t have true clarity until October 31 arrives. In the meantime, the world keeps turning and life goes on. My advice is always that you should take any long-term financial decision – such as buying a house – in the context of your long-term financial security, and ultimately that comes down to the answer to the question of whether your potential financial exposure is controllable. Any investment is a risk – but calculated risks, where you’ve looked at the worst-case scenarios and demonstrated you can survive them, are always going to be preferable to walking into a commitment blind. The best thing you can do if you’re thinking about moving in the next three months is get some advice from a professional broker and a financial adviser – and factor that advice into your decision. Need more information about your mortgage options? Take a look at our short guide to remortgaging. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
Nothing in life stays the same. The plans we make for today and tomorrow can change over time and new plans will need to be made. That’s certainly true when it comes to buying houses. There are all sorts of reasons for moving. It may be that you originally bought the biggest house you could afford and now find yourself in a better financial situation that allows you the scope to get your dream home, or put you on the next step towards it. You may have bought when you lived alone but have since found a long term relationship and, perhaps, a growing family and a need for more space. Maybe you’ve become empty-nesters or perhaps have unexpectedly found yourself on your own again and simply don’t need the space you once had. But when it comes to moving to somewhere new, there are some tactics that can serve you well, whatever your reasons for leaving where you currently are. Find a potential buyer first On the assumption you’re set on upping sticks come what may, it’s worth considering either completing the sale of your existing home before you buy, or at least finding a potential buyer for it. Why? Because it puts you on the front foot when it comes to negotiating a deal on your next property. Of course, selling up before you start house-hunting in earnest means being prepared to rent for a time, and there are downsides to that, too – not least of which is the ‘dead’ money you’ll spend on renting that might otherwise be earning you interest. But if you do the sums and are realistic about how long the whole process will take – and, consequently, how long you may need to rent for – you may find it’s an option that could work for you. There’s a good chance the person you end up buying your new home from is trying to move up the ladder themselves, meaning they’re going to be part of an upward chain – and house chains can be the cause of nervousness for vendors. If you’ve sold, you’ll automatically be of value as a buyer because there will be no downward chain – and that makes the person you want to buy from a valued buyer, too. One possible outcome from this is that the person selling your next home may well be prepared to accept a lower offer from you simply to strengthen their own chances of successfully completing their onward move. And if your circumstances mean you can’t sell up before you buy, having your house on the market and being able to prove genuine interest in your property still strengthens your buying hand. Get a mortgage agreed in principle! We hear lots of tales of estate agents who seem less interested in you if you haven’t sold your own property and don’t have a mortgage in place. They may be true, they may not be – but having a mortgage agreed before you ask an agent for a viewing of your dream home will certainly benefit you. Being able to show you have secured the necessary funding for your intended property gives the agent confidence in you as a buyer and means they are much more likely to recommend your offer to their client. A mortgage approval in principle is usually valid for around three months (some lenders offer longer terms). By working with a professional mortgage broker like Oportfolio you can reduce the stress that can be associated with the mortgage application process, because your broker should take on the job of completing the application for you – leaving you to simply check and sign the forms – and then managing the application through to a decision. Having a mortgage in principle doesn’t guarantee your offer on a new property will be accepted – in the end, it has to be the right offer for the seller – but it certainly makes you more attractive as a buyer. These two simple tactics together prove you’re serious about buying and that alone has significant value to the people selling a property and those who represent them. If you’re thinking of moving house this year, come and talk to us about getting a mortgage in place. You can also watch our short video on the ins and outs of moving to get some insight into the things you might want to consider as you take your next step up or down the ladder. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
We often talk and write about the importance of making sure you start to plan early when it comes to managing your mortgage. Although the stricter regulatory environment that’s evolved since the economic crisis began in 2008 has resulted in much greater protection for borrowers and lenders alike, those who already have a home loan can still be tripped up by failing to plan for the end of a fixed deal. Typically, your lender may give you between 8- and 12-weeks’ warning of your fixed loan coming to an end. Fixed deals give homeowners certainty over their payments and, as a result, can prove cheaper over the long run if a rise in interest rate would otherwise result in higher repayments. But while the post-2008 regulatory changes have brought changes in the way banks and building societies lend and the criteria they use to assess affordability, it’s still the responsibility of borrowers to look for a better deal at the end of their fixed term – your lender won’t do it for you. The danger for borrowers in delaying is that when your existing mortgage deal does come to an end, your lender will simply move you to their standard variable rate (SVR), which may well be more expensive than the one you’re currently on. The result of that is you’re going to pay more over the lifetime of your loan than you would do if you switched at the end of your existing deal. The reality, though, is that for many people the prospect of remortgaging to a new deal – either with your existing lender or a different one – can be a source of some anxiety. Most lenders now treat a remortgage as a new application, so the days of ringing up your lender and simply asking to be moved to their cheapest rate are long gone. As a result, people worry about all sorts of issues from whether they’ll meet the stricter affordability criteria to whether they’ll be able to find or provide the paperwork they need to complete their application. In fact, a 2018 survey suggests 41% of people find the application process to be stressful, so it can end up being one of those things people keep putting off until tomorrow. The truth is the application process can be quick provided you have all the information you need easily to hand, but leaving everything to the last minute is likely to simply increase your stress levels rather than reduce them. So, we always encourage our clients to take early action to ensure they transition smoothly from their existing mortgage product to a new one. And working with a professional mortgage broker can relieve most of the stress anyway, because your broker should be working with you to ensure you have the right documents and to pre-assess your financial circumstances to ensure you have the best possible chance of your application being approved. If you’re currently within six months of the end of your existing fixed deal, this is a good time to begin thinking about switching. Some lenders – Barclays, Nationwide and Santander among them – are trialling schemes that allow their existing customers to agree a new fixed deal up to 6 months before their current one ends. Clearly that’s more to do with lenders improving their customer retention rates than it is altruism on their part, and it’s not necessarily the case that the deals they offer will be right for you. As is the case with any financial commitment you make, it’s wise to consider carefully whether the deals available from your existing lender are right for your particular needs and circumstances. A good mortgage broker will be invaluable to you in making that decision. But if you decide those products are appropriate for you, then agreeing a deal now that will be come into effect in the New Year could make some sense. Given the likelihood of interest rate rises in the future, one of which could arrive before we see in 2020, even fixed mortgages could be more expensive in January than they are now. Having a clear plan to ensure you enjoy the benefit of the best possible mortgage deal is crucial if you want to futureproof your repayments and ensure you don’t end up paying far more than you need to. At Oportfolio, we’re mortgage experts and can help you to make decisions about your finances that not only suit your circumstances today, but also take into account your plans and aspirations for the future. Why not give us a call to talk to us about your current mortgage arrangements and find out how our experience, expertise and access to products you won’t find on the High Street or online can help you to make the most of your mortgage. And to learn about some of the things you’ll need to consider as you plan, take a look at our short guide to remortgaging. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage.
Anyone who’s looking to get their foot on the first rung of the housing ladder or has just managed to find their way onto it will know that being a first-time-buyer can be an extremely challenging and stressful time. You’d almost have had to have been living under a rock to have missed the fact that the turbulence of the last post-financial crisis decade has made the lending environment a darned sight tougher than it was for the previous two or three generations. But it’s not just the rigour of affordability tests that you’ll have to contend with as a first-time-buyer. You’re also going to feel hamstrung by your lack of experience in the market, and that’s something that many people underestimate when they set out to buy their first house. But first things first. Let’s deal with the first obstacle. Deposit & Affordability The simple fact is that whether this is the first house you’ve bought or the fiftieth, you’re going to have to prove to prospective lenders that you can pay back the money you want to borrow. This is the first and most important hurdle you’ll need to clear – if your lender decides you can’t afford the repayments, then everything else is immaterial. And if you can’t buy the house on your own? Well, there are still options available to you. Some lenders now offer products that allow a family member to guarantee or underwrite the repayments. Or, it could be that you know other people who might be prepared to buy the property jointly with you and view their share of the ownership as a long-term investment. In both cases, though, it’s wise to get professional advice to make sure you don’t find yourself under pressure to sell quickly and unexpectedly in the future. There are now more mortgage products on the market that will allow you to borrow the entire cost of a property – these are known as 100% mortgages. But attractive as these may be, consider them carefully because there are downsides (e.g. it’s easier to fall into negative equity if you have no capital tied up in your home). In any event, the more attractive mortgage products that will be available to you are likely to require you to put up some of the cost yourself in the form of a deposit – and having something to put down also reassures the lender that you recognise scale of the financial commitment you’re making. Making a mortgage application You could apply for your mortgage online or in a lender’s branch. But it would probably serve your best interests to talk to an independent mortgage broker to get access to products you won’t be able to find yourself. There are very clear benefits to working with a professional mortgage broker. At Oportfolio, for example, we’ll advise you on affordability, the best way to structure your loan and the benefits of each product you might want to consider – but we’ll also look after your application from the point you start to the point you receive your mortgage offer and beyond. You’ll need to have quite a bit of personal information to hand to complete your application, but your broker will walk you through that, too. If you’ve already found a property you love, the estate agent you’re dealing with may push you to make an appointment with their in-house or preferred mortgage adviser. The only thing to know here is that there’s no obligation for you to do that unless you want to. It’s a good idea to get a mortgage offer in principle before you start house hunting. Most agreements in principle are valid for between 60 and 90 days, giving you a good amount of time to find a property and make an offer. Making an offer So, you’ve got a mortgage agreed in principle and you’ve found your dream home. How do you work out what to offer? To some extent, of course, you’re going to be constrained by the amount you’ve been told you can borrow. If you’re like most of us, you’ll probably have been including in your search properties that are slightly out of your budget in the hope you might be able to get a lower offer accepted. This is where your agreement in principle comes in handy, because as a first-time-buyer with no chain and a mortgage already approved, you’re going to be more attractive to a seller who needs to shift their property to get the upper chain moving. To get a real sense of how much the house you want is worth, do some research. Find out what similar properties in the area have sold for in the recent past. What motivates a homeowner to sell is hard to guess. They may need to sell their property at the very top of its value to make their own step up the ladder. They may have priced their home to sell quickly because they’ve seen something they like and want to move fast. Or they may just be testing the market and are prepared to wait for the right offer. In the end, though, a house is only ever worth what someone’s prepared to pay for it – so knowing your own limit will allow you to make a confident offer. Oh no – my offer has been rejected! You really want the house, but the current owner has said no to your offer. Although this is disappointing, it’s not the end of the world. You have two options – either increase your offer if you can afford to (but it’s good practice to know the price beyond which you will not go) or walk away and find something else you love. The survey suggests there’s a problem This can be a minefield. If the problem is serious, it may prevent you from securing your mortgage (which will have been offered in principle on the basis the property you want to buy is sound). If it’s not a problem so serious as to be a dealbreaker, then can you afford to make the necessary repairs? Alternatively, can you use the problem to renegotiate your offer and then talk to your mortgage lender to see if you can use part of the loan agreed in principle to carry out the repairs. Again, a professional mortgage broker can help you here. There are few problems which are insurmountable in a property deal, but knowing how to circumnavigate the bumps in the road is easier when you have sound advice to work with. Remember, too, that you will need to appoint a solicitor or specialist conveyancer to take care of the legal stuff related to your purchase. Your mortgage broker will probably know someone they’re happy to recommend – but also ask for recommendations from friends and family. Above all, enjoy yourself – finding and buying your dream home should be an adventure, not a chore! Watch our video for first-time buyers and get a headstart on the things you need to consider when you start looking for your first home. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.