As we head into April 2021 the U.K’s property market has a very different feel to it compared to this time last year, when the world's economy ground to a halt! Banks stopped lending, estate agents were closed, property viewings were cancelled, and people were more concerned about surviving than moving house. Everyone in the property market was holding their breath for a miracle, and then it was announced that a stamp duty holiday would commence from July 8th 2020 until 31st March 2021. The wheels began turning almost overnight.
The industry received a further reprieve in Rishi Sunaks second budget when it was announced the holiday would be extended a further 3 months until July 2021, with an additional 3 month taper period. It was also reported that 95% LTV mortgages would soon be making a return. Government support would begin this month and come to the aid of first-time buyers and homeowners, wishing to purchase a property of up to £600k, with only a 5% deposit.
It was not all plain sailing for buyers though, the crisis that was unfolding drastically changed the lending criteria that all Banks and Building Societies adhere to. The multiples of income that quickly give an idea of potential borrowing were reduced. Extra income from revenue streams such as overtime or bonuses were soon removed. ‘Deposit’ became a key word, and only those with a healthy amount of cash available were able to proceed. As previously mentioned, the lending conditions are slowly returning to normal and we are seeing more appetite from lenders in the 80-90% loan to value area, making 10-20% deposits more acceptable.
You want a mortgage – what can you do?
Enlist a ‘whole of market’ mortgage broker. We get to see products not accessible to the general public and can look at the whole of the market on any given day. Our aim is to find you the best deal available.
Be in the best financial shape possible.
Have a healthy credit rating, pay off small amounts of credit and loans to raise the score.
Reduce the amount you have on credit cards, stay under your limit and never miss a payment. Always pay off a healthy amount and not the minimum required, ideally settle the full amount.
Present stability and make sure you have been in an existing job for at least 3-6 months.
Deposit, always put down as much as you can. Lenders like applicants with more cash and will reduce the interest rate to attract their business, a bigger deposit gets a better deal.
Find out how much you can borrow before finding your dream home. This can avoid disappointment later.
Provide proof of income or up to date accounts if you are self-employed. Affordability is one of the main criteria so it can help to apply with a partner, but always make sure you are in the right place as a couple to do so.
Working hard to find the best mortgage for you is only half the story. We want to be able to keep you in your home and give you peace of mind whatever life may throw at you. If sickness, Covid, personal injury, critical illness or unemployment strikes, you want to be able to stay in your home and keep your family safe. It is astonishing how many people will insure everything, mobile phones, tablets, TV’s and bikes, but not themselves or their situation. We can put in place a simple and relatively low cost insurance policy that can often save an individual or family from financial catastrophe. The previous 12 months are testament to never knowing exactly what is around the corner. The cost of one less meal out per month could give you and your family the peace of mind that whatever goes on, you are covered.
Here is an example of a recent quote provided for a young couple that have recently bought their first home. They decided a joint life/1st death decreasing term assurance policy providing £315K was correct for them. This was provided for only £21.00 per month with the premium guaranteed to remain the same for the duration of the mortgage.
Some additional cover was also required for extra piece of mind. The couple were surprised how easily an income protection policy providing up to £1500 per month could be secured. The policy was deferred for 8 weeks and now commences once their current employers sickness allowance ends. The protection was purchased for only £10.28 per month.
Each policy is on a case by case basis but the above couple were in their mid 30s with no adverse health conditions. The enquiry was made in March 2021.
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