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, they 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.
The Easter holidays and the enforced suspension of Parliamentary business gave us all a welcome break from the wall-to-wall coverage of the ongoing Brexit saga – but with return of MPs to Westminster came the return of the uncertainty that has dogged the process for much of the past year. Lack of certainty is always unsettling and is always more likely to provoke stagnation than it is growth. When questions arise over the future of a football club’s manager or its star player, the history books suggest form dips and nervousness prevails until the situation is resolved. The same is true in politics, and the unsettling effect of the protracted Brexit talks across all sectors from business to leisure and travel to finance has been well-documented as 'business as usual' has spiralled into a holding pattern while we wait for some clarity. The same is true in the housing market. Latest analysis from Which? suggests that house price growth has declined slightly since a period of stagnation immediately after the Referendum. Transactions, though, were slightly up in February of this year than in 2018. Somewhat simplistically, what that means is that right now housing is a buyer’s market, with the increase in transactions suggesting there’s a level of opportunism at play in a falling market. To what extent, though, can the state of the UK property market in 2019 be attributed to the uncertainty created by Brexit? The answer is undoubtedly that it has played a part. Many property professionals and market commentators, including the Royal Institute of Chartered Surveyors, believe the ongoing deadlock in Parliament is dragging the housing market into a slump, but there are also those who believe some of the trends we’re seeing are a product of the market undergoing a long-overdue correction. If true, then that could have the beneficial side-effect of serving to make property ownership more accessible to first time buyers – something that has been a concern to many people for some time. It’s certainly true that many people are playing a ‘wait and see’ game and it’s likely that this is more to do with the terms of our departure – in other words, whether Britain leaves Europe with or without a deal – and how interest rates might be affected by that. The Bank of England Governor, Mark Carney, has previously warned that a no-deal Brexit will have a significant negative impact on the UK economy, so it’s hardly surprising that potential house buyers might be cautious about taking the plunge until there’s confidence around the stability of interest rates. But that’s not to say there aren’t deals to be had in the market or that buying a house would necessarily be a rash move at this stage. Clearly, affordability looks different for everyone and regardless of the political climate we’d always advise would-be buyers to consider carefully the potential consequences of what is, for most people, the most expensive purchase they’ll ever make. But for those who do enjoy the confidence of being able to buy, there are some good fixed rate mortgage deals out there – many of them for 5 years or longer – which would offer some insulation against any initial rise in interest rates as a result of leaving the EU. It’s hard to imagine that anyone would argue the Brexit process has been a good thing, but although it’s left a mark on the housing market, there are still good deals to be done for many people who are looking to move. If you’re one of them, why not come and talk to us about how our award-winning mortgage advice could help to see you into your dream home this summer? Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story! 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. 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.
If you search on the web for advice on the things you should do when choosing a mortgage, you’ll get a lot of information back. Some of it’s good, some of it not so good. But as important, if not more so, is what you should avoid doing. Here’s our guide to the mistakes you’d do well to avoid making. Don’t approach your hunt for a mortgage in the same way you would if you were buying a washing machine We know that sounds obvious, but you’d be surprised at the almost laissez-faire way a good many people approach the business of securing the finance to buy their home. Put simply, buying a home is a huge investment – and almost certainly the largest single purchase you’ll have made in your life at that point. It’s fine to buy a washing machine from Amazon or another online retailer. If it doesn’t work, you send it back. If you realise there was a better model you could have bought, it’s not a calamitous financial mistake to have to live with. Choose the wrong mortgage provider or product, however, and you could be paying for it – literally – for years. Don’t obsess about the interest rate We’ve said this before, but it’s worth repeating. If the only thing you’re looking at is the interest rate, then the chances are you’re missing a trick. Yes, how much you’re going to pay each month is important and so that means the rate is a factor in your decision – but it’s not the only factor. Is the rate fixed or variable? If it’s fixed, how long is it fixed for? Are there early exit fees? Is there an arrangement fee? Will you be able to overpay if you want to, and if so, by how much? Just as importantly, is the mortgage provider reputable and do you believe you’ll get good support and care during the lifetime of the loan? The days of personal 121 contact with an account manager may be over, but your relationship with your lender remains just as important today as it always did. Don’t chase lower rates at the expense of lender reputation Even if you do put a lot of store by the interest rates on offer from lenders, they don’t always tell the whole story. If you saw what looked like two very similar cars on offer from two different dealers, and one was significantly cheaper than the other, you might be tempted to buy the cheaper of the two. But it’s always worth taking pause for thought. There could be legitimate reasons for two apparently identical mortgages being offered at different rates of interest. It could be that one lender is squeezing as much margin out of the loan as possible to maximise profit. Equally, it might be that they’re a bigger, more well-established and reputable lender, with bigger overheads and a better overall service. Don’t take a mortgage from an unregulated lender If you do nothing else (and we hope you’ll do a lot more than this), don’t take a mortgage with an unregulated lender, because when things go wrong, you have no easy recourse to get them put right. Unregulated lenders aren’t subject to the same lending standards as regulated banks and building societies and don’t offer the same protection. Do your homework and ensure your lender is reputable and regulated by the Financial Conduct Authority. If you’re in any doubt at all, hit the pause button and reconsider. Use a professional mortgage broker If you only follow this final – and, we’d obviously argue, most important - rule, you’ll also avoid making the first four mistakes, too. A good, professional mortgage broker will also be regulated – giving you protection against bad advice – and will know the market inside out. They’ll know what deals are available, what products will best suit your circumstances (not just today, but in the longer term, based on your priorities and ambitions) and the lenders who can offer you the best options for buying your home. At Oportfolio, we’re mortgage experts regulated by FCA and with years of success behind us – so if you’re ready to take the next step in your property journey, we’re ready to help you. Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story! 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. 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.