News & Views

Coronavirus Advice

Following on from speculation at the back end of last week that the Chancellor will use his Budget speech on Wednesday to announce an extension to the stamp duty holiday, this weekend's news also suggests Wednesday's Budget statement may have more glad tidings for buyers.The past 12 months have made the housing market a challenging place for first time buyers to do business as lenders steadily withdrew or limited the available deals at the higher end of the Loan to Value spectrum.Until the pandemic arrived, 95% home loans had become relatively commonplace, and even the odd 100% loan – all but extinct for a long time – cropped up on some lenders’ product lists, though these were still rare.Then the UK went into lockdown and the housing market was effectively closed for three months. When it opened for business again at the back end of June into early July, those 95% loans began to disappear as mortgage providers took an increasingly pragmatic approach to lending.Over the last six to eight months, first time buyers will have needed to find a minimum of 10% of the purchase price – and in many cases 15% - to put down as a deposit on their new home.The Chancellor’s stamp duty holiday, which is now expected to be extended until the end of June this year, breathed new life into the market, but that hasn’t really helped first time buyers with small deposits.Now Rishi Sunak is widely expected to underwrite a mortgage deposit guarantee for first time buyers which is designed to encourage lenders to reintroduce the 95% loans which the Treasure says ‘virtually disappeared’ during the pandemic.Under the scheme, which will be available to lenders in April if the measures are passed into law by MPs when they debate the Chancellor’s Budget after he presents it to the Commons on Wednesday, the Government will guarantee a proportion of a home loan up to £600,000.What this means in all practical sense, of course, is that the Government is making a financial investment into the market.According to the Financial Times, this will inject confidence into the sector on the grounds that if the Treasury is financially exposed then the Government is more likely to act to prevent house prices from falling.Indeed, one analyst quoted by the FT suggests the move could lead to a repeat of the spike in house prices that was triggered in part by the stamp duty holiday last summer.The deposit guarantee scheme is said to resemble a similar scheme that ended in 2013 and helped an estimated 100,000 people to get a foot on the housing ladder.Crucially, the proposed new scheme will also be available to existing homeowners who want to move but who may not have built up enough equity in their current home to represent 10% or 15% of the value of the home they might want to buy.It’s too early to know exactly how the mortgage sector will react to the proposals and there is not yet any detail on how the scheme will be integrated into the mortgage application process.However, subject to the Wednesday’s Commons announcement being confirmed, it seems that buyers with small deposits might want to start putting the wheels in motion for a post-April mortgage application.With the stamp duty holiday expected to be extended to June, there will be an 8-week window in which to benefit from the new mortgage deposit scheme and the potential stamp duty savings that may be had if a transaction can be completed by June 30.If you’re considering buying a first home or you’re an existing homeowner looking to move with a small deposit to put down, come and talk to us.As a professional mortgage adviser, we can help you to be in the best possible position to take advantage of the Government’s incentives and secure the keys to your new home.  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.

by Oliver Whitehead  -  27 February 2021

Mortgages

There has been speculation in the national media in recent days that the Chancellor will use his Budget statement on March 3 to announce a 3-month extension to the Stamp Duty holiday.The initiative was introduced in July of last year to counteract the three-month hiatus in housing transactions between March and June caused by the anti-Covid restrictions implemented by the Government on March 23 last year.Under the terms of the holiday, which is currently in place until March 31, residential buyers paid no Stamp Duty – or Stamp Duty Land Tax (SDLT) to give it its proper name – on transactions up to a value of £500,000.It was intended to give the UK residential property market a kickstart and, by many measures, it had the desired effect – though there are also those who believe that further inflating what was an already buoyant pre-Covid market will only serve to steepen what they see as an inevitable fall.According to Sky News, HMRC figures show that just under 130,000 property transactions were concluded in December 2020 compared to 87,000 in the same month six years earlier.The same report suggests that under the scheme, the average time it took to sell a property fell to 49 days in November 2020 compared to 67 days in November 2019.The reports suggest the Rishi Sunak will act now to extend the scheme to enable buyers to complete transactions and benefit from the holiday – with property website Rightmove predicting that without an extension up to 100,000 buyers could miss out.Regardless of the consequences, what this now means for buyers is that there are now an additional 12 weeks – 84 days – in which to get a home purchase over the line and save up to £15,000 in tax.This is almost certain to be good news for both buyers and sellers alike, at least in the short term.It may mean that demand will remain at a high level and with supply unlikely to meet it, many buyers may well be prepared to invest some of their expected tax savings in paying slightly more for a property than they might have done otherwise in order to secure the purchase.If you were considering moving but decided to shelve those plans because it was becoming increasingly unlikely you would get the deal over the line by March 31st, the prospect of having the extra time to complete a transaction may spur you back into action.The key question, of course, is are you ready?As I have written previously, the biggest factor in any house purchase is often in securing the mortgage you need to buy your dream home.It’s a barrier that isn’t just limited to whether or not a mortgage broker will lend to you – it’s also about your credibility as a buyer.If you call an estate agent and ask to view a property they’re marketing, the chances are you’ll immediately be asked two questions: Do you have something to sell and if so, is it on the market? and Do you have a mortgage in place?If you do have something to sell there are some agents won’t even consent to a viewing unless you can answer ‘yes’ to one or, preferably, both those questions, and that’s because in a seller’s market – which is a market where demand for property outstrips supply – they can afford to turn away anyone who isn’t what they consider define as ‘proceedable’.Having your current property on the market (or, even better, already sold) and having a mortgage agreed in principle tells the agent that you’re serious about the transaction and that all other things being equal, you’re more likely than not to complete the purchase.Getting a mortgage in principle is not the same as having a mortgage offer. An in-principle agreement simply says that based on your headline income, outgoings and debt, and subject to more in-depth financial checks, a lender would be prepared to offer a certain amount as a loan.By working with a professional mortgage adviser, who will have a much better understanding of the product and lender options in the market, you have a better chance of getting an agreement in principle that is likely to translate into a concrete mortgage offer.A professional mortgage broker will be able to advise you on which lender and product is best suited to your needs, and will be able to organise your agreement in principle whilst at the same time getting to work collating all the documentation that will be needed to support your formal mortgage application.With this in place, and ideally with a conveyancer waiting in the wings to start the legal process as soon as you have an offer on a property accepted, you’ll have a much better chance of completing your move before June 30 and reaping the benefits of the Stamp Duty holiday.So, if you think a decision by the Chancellor to extend the holiday scheme is likely to be the deciding factor in whether or not to move, it might be worth talking to a mortgage adviser now – it won’t cost you anything, but it may just put you ahead of the curve.  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.

by Oliver Whitehead  -  24 February 2021

Coronavirus Advice

With average house prices at their highest level for 7 years, many people are beginning to look ahead to the spring and summer and assessing their options when it comes to their current home.Recent data shows that average house prices ended 2020 at their highest levels since 2014, a trend driven by both the Stamp Duty holiday, which saw the Government suspend Stamp Duty Land Tax on the first £500,000 of any house purchase and a lockdown which prompted many to reassess what they need from their homes.With demand outstripping supply, house values hit a premium, driving growth in a year which, at the start of April 2020 and the effective closure of the housing market, many would have thought unlikely if not impossible.But while there are many people who took advantage of the incentives on offer, others who found themselves in less certain financial situations were forced to put any plans they may have had on hold for a few months.At the time of writing the Government has extended the Job Retention Scheme – or furlough scheme, as it has become known – to the end of April and those who have been part of the scheme but are now preparing for a return to work may well be reconsidering their options.One of many hurdles to overcome in a house move is securing the mortgage to buy your new dream property.Two questions we’re regularly being asked at the moment is whether it’s possible to get a mortgage if you’re on furlough or if having been on furlough is likely to make it tricky to get a mortgage once you return to work.There’s no binary answer to either question because it’s more complex than a simple yes or no allows. But I’ll try to answer both questions like this:First and foremost, you need to bear in mind that what mortgage lenders are looking for when they’re presented with a mortgage application is as much assurance as possible that the person they’re lending the money to will be able to afford the repayments.That, in a nutshell, is their first and only interest.To gain that confidence in you as a borrower, they need to be satisfied that you have a solid financial history, that you live where you claim you live and that your income arrives regularly and exceeds your outgoings sufficiently to cover your mortgage repayment.So, in that context it’s already clear that your being on furlough or having been on furlough is going to be a consideration for any lender because a) your income has reduced to 80% of its previous level and b) your job and income may be affected by further events in the pandemic story.However, every borrower is different, so the whilst the fact you are on furlough or have spent time on furlough may raise a flag, each lender who is prepared to consider applicants in your situation will look at your individual circumstances on their own merit.Assuming all other things are equal – that you have a good credit history, that your fixed outgoings don’t exceed your income and that you have a good record of employment – then there’s no reason why you should automatically be declined a mortgage.But you shouldn’t be surprised to find there’s greater scrutiny over your application and perhaps a more extensive process as the lender assesses your future financial security.I would always recommend homebuyers work with a professional mortgage adviser simply because it makes the application process much smoother and an adviser can ensure your application contains the correct information, presented in the right way.However, that advice is especially important when your circumstances fall outside the norm since an adviser will have a greater understanding of each lender’s policy and approach with regard to lending that may be considered to be a greater risk.An adviser will have a much better understanding of which lenders will be more likely than others to approve your application, making the whole process less stressful and less onerous for you. 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 AuthorityYour 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.

by Oliver Whitehead  -  12 February 2021

Home Improvements

In my last article, I looked at some of the trends we might be seeing in the residential housing market over the coming year and looked at some of the commentary and analysis from market specialists about what might be around the corner.You can read that article in the News & Views section of the website, but the broad conclusion that most commentators seemed to draw is that while there will be growth in house values, there is also likely to be some caution in the market as people wait to see what economic trends the global pandemic and our future relationship with the EU bring.There is no certainty in predicting the future, but if we do see a slowdown in the activity and demand we’ve seen since June (thanks, largely, to the Stamp Duty holiday), then what are the options for those who want to move but are looking for greater economic stability before they take the plunge?The easiest option, of course, is to simply do nothing and put any plans to move on hold until we’re in a position to be able to accurately forecast trends around employment, base and mortgage interest rates, inflation, and industry growth.That may well suit some homeowners, but it may not be a viable option for those who have a pressing need to gain more space – perhaps because of a growing family or, in this burgeoning climate of entrepreneurialism and remote working, because the home has also become the workplace.For those who fall into the category of needing to move but being wary of significantly increasing their borrowing and, therefore, debt, remortgaging might well be the answer.What is remortgagingRemortgaging can take a number of different forms.Sometimes it’s just about moving your existing loan to another lender in order to take advantage of a product with a better interest rate when your current deal expires (depending on the products that may be available to you, staying with your existing lender isn’t always the smartest or most cost-effective move).When you move your mortgage in this way, you’ll have to fill in a new full mortgage application, providing quite a lot of personal and financial information and documentation to satisfy the lender’s underwriters that you’re going to be able to repay the loan.The other way to remortgage is to borrow more money against your home in order to release cash to pay down other debt or to fund home improvements.What are the pros and cons of both types of remortgage?The obvious benefits if you’re just moving your existing loan to a new lender is that you won’t be increasing your capital loan and depending on the mortgage product you move to you may also end up reducing your monthly repayments because of the equity you’ve built up and the fact the lower-risk loan to value (LTV) that delivers is more attractive to lenders.For those who are happy in their current home and simply want to fix their deal and their payments and maybe end up slightly better off as a result, this is obviously likely to be the most sensible solution.The advantages of releasing cash from your home by borrowing slightly more against it are twofold.First, it gives you a tax-free lump sum to either invest in extending your property or making other improvements to it.This may have the twin benefit of not only delivering the extra space you need but also potentially increasing the overall value of your home for when you do decide to move, possibly helping you to take a bigger step up the housing ladder.Second, because you are unlikely to be borrowing at the level you would have done had you been buying a new home, you are mitigating your debt liability a bit more.You will also be limiting the increase in monthly repayments and, of course, avoiding the additional costs associated with selling your home and buying another one.With estate agency fees, conveyancing costs, Stamp Duty (when the holiday expires on Match 31st), survey costs, removal fees and ancillary costs, you could be facing £30,000 or more in fees and other costs before you’ve even started house hunting.Do you have to use any proceeds from a remortgage to pay for home improvements?There’s no obligation for you to use a remortgage to pay costs associated with improving or extending your property.However, we would always urge caution if you are planning to offset existing debt against your home. It’s a risky strategy because your property may be repossessed by your lender if you find you’re unable to meet your monthly repayments in the future.For that reason, we’d always recommend that you speak to a professional mortgage adviser or independent financial adviser before you tie debt into your home.In the end, whether to move or improve is a personal choice and is dictated by your personal circumstances. Knowing what your options are is the key to making an informed choice about the solution that best fits your own personal circumstances.So, if your current fixed deal is coming to an end or you’re looking for more space but are worried about taking on the financial burden of a significantly larger mortgage, why not come and speak to our friendly team of advisers and see how we can help you to find the best option for today and beyond?  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 AuthorityYour 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. 

by Oliver Whitehead  -  30 December 2020
Disclaimer

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 of £395.
Our Product Transfer fee is £295.

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