The current pandemic has had a contrasting effect on the U.K’s housing and mortgage market. House prices have continued to rise for the past year while interest rates have been dropping month on month.
Average house prices are now almost 10% higher than last summer, meaning an increase of over £20,000 in the last 12 months. The amount of mortgage products available to borrowers as of the 1st of June 2021 stands at 4243, this is up from 2810 exactly one year ago. As a mortgage advisor you get to see the whole market and one of the hardest areas to enter is still the first-time buyer sector. The problem many young home buyers struggle with is the deposit, and this hasn’t been helped by the increase in house values. There are now several lenders that offer 95% L.T.V products, but the rates associated with these loans are very high. One of the main things we suggest to help improve your chances is to provide the largest possible deposit you can, this will increase the number of products on offer. The slightest help can make a huge difference and there are several ways to boost a deposit.
Lifetime ISA’s offer savers a 25% bonus on all savings of up to £4000 per year, that means an extra £1000 from the Government each year you save the full amount. To qualify you have to be aged 18-39, so always check you pass all the requirements to benefit fully.
A Help to Buy equity loan is available to first-time and second-time buyers in England and Wales to buy a new build property. The Government will add up to 40% of the property’s value, depending on the location, and you will need at least a 5% deposit to qualify. The Government loan is a five-year interest free loan, after which it will incur interest. You will need to repay the loan and when you do, the amount to be repaid will be the percentage L.T.V you borrowed at the value of your property at the time, not when you purchased the property. If your property has increased in value, so will the amount of your Government loan. A new scheme now runs from April 2021 to March 2023.
Guarantor mortgages can be a good option as they allow a friend or family member to use their savings as your deposit. These are held in an account by the lender and are not accessible until you have paid off an agreed sum or after a set period of years. There is also the option for those who own their property outright to use some of its equity as security for the lender and therefore acting as your deposit. Guarantors also agree to be responsible for making repayments should you fail to do so. If they do not keep this commitment, then their savings or property will be at risk.
At the other end of the scale home owners have seen the value of their properties soar, many are now sitting on substantial amounts of equity and this is the perfect scenario for lenders. If you have a fixed rate mortgage deal that expires this year now is the time to speak with a mortgage advisor. Mortgage products currently have some of the lowest rates ever. The cause, a perfect storm: Extremely low interest rates in the UK. A buying boom fueled by a stamp duty holiday. Current accounts filled with pandemic related savings mean Banks have excess cash to lend. Not everyone will qualify for the lowest rates offered so the aim is to find the cheapest mortgage product that is available, and that is where we can help you. Loan to value (LTV) is calculated by dividing the value of your mortgage by the value of your property. The LTV level will influence the mortgage rate you pay, so those lucky enough have benefited from the surge in house prices will see this ratio drop. That in turn could mean substantial savings and a cheaper monthly payment.
As a whole of market broker Hoskin Mortgages speak with over 100 lenders operating in the U.K market. Regardless of your situation our aim is to always provide the cheapest and most suitable product that is available to you.
If you are currently considering your mortage options then please get in touch. Initial enquiries are free and you are under no obligation.
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