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Getting your house ready to sell in Winter

Getting your house ready to sell in Winter

It is a little bit of wives tale that selling your property or home in the winter is not a good time. And while there is some real common sense thinking behind that; it is  not necessarily true. When speaking with estate agents, it is hard to tell as they have a tendency to say, anytime is a good time to sell as they want business quickly.

So is it a good time to sell in Winter? Well if we go by that a “good time” to sell is based on the the number of days it takes to sell. With less days being a good time to sell and lots of days being a bad time to say, we can have a look at statistics and get an answer.

Common negative factors of selling in the winter:

Its dark later – When it comes down to it, people can see houses after work or towards the end of the day and it’s dark then. Meaning its tough to get a feeling of the outside of the property.

Gardens don’t look great – In the winter a lot of the plants have died, its muddy, and grubby and cold. And once again the house just doesn’t look its best from the outside.

Christmas – leading into Christmas the general focus is on that, not on changing house, meaning if people are thinking of buying, they will have a tendency to do this “in the new year”.

But do the statistics back this up.

According to The advisory statistics, during the months on September to December it takes over 70 days to complete a sale on the house of is under offer. And from March to July it takes around 50-65 days. So not a huge amount of difference. If we are talking days the biggest difference is around three weeks. In the world of house selling is not a huge amount really.

Please see full article here.

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)

So by the statistics, selling your house towards Christmas is not the greatest time no. The property will not look its best, but people do understand that. With the best months coming in March, waiting from November to march seems a little superfluous when the only difference is to be around three weeks.

Always make sure you speak to someone you trust, selling a house, and then buying a house is difficult and stressful, so having good, trustworthy advice is invaluable.

 

 

 

The family mortgage. Could it become a trend?

The family mortgage. Could it become a trend?

There is a lender in Epson called “The Family Building Society”. They offer a series of options for a someone looking to get a mortgage for the first time. The idea being that younger people are struggling to afford the deposit for a mortgage. This was a lender that really pushed this idea of not being able to put together a deposit for a home and used it as a unique selling point. And unfortunately it is not a niche market anymore. Particularly in London and the South-East, where even 10% deposits can be close to £50,000. With the rates of pay for the average person this sum of money is just unimaginable.  What has become common is that the Bank of Mum and Dad has come into play. They will lend a young person or couple the money for deposit with the angle that they will get the money back.

A lot of lenders have jumped on this bandwagon and realised there is an opportunity here. They will offer a scheme for the bank of mum and dad (BOMAD). This offer goes like this: They will hold the “deposit” for the BOMAD and after a certain set period of paid mortgage payments will get their money back. So as long as the people who get the mortgage pay each month, the BOMAD will get their money back. It is a great system, and for those who want to help their family with a deposit can ensure that the money will be safe. It also helps those Mums and Dads, that cannot possible afford to lose that money, that money might be for their retirement, so a sort of safe box, where they are guaranteed their money.

Some lenders have now taken this a step further and it is being referred to as the family mortgage. It maybe that BOMAD  cannot  front up that initial hit of £50,000 or whatever the deposit may be. There is a solution for this, and that is to  offer the scheme up to multiple donations , the family mortgage. This means that many people can contribute to the deposit to accumulate to what is needed. For example if you are a young couple looking to raise £50,000 for a deposit, you could ask your Mum and Dad, Granny and Grandpa, Auntie and Uncles all to contribute. The lender will set up multiple accounts for each of the contributions and hold them just as they would a single amount.

It really is just another opportunity for people to be able to get a little bit of their foot onto the ladder. What is worrying is that a lender has seen this opportunity in the market. That a generation of people are having to rely on the wealth of those before them. What does this mean for the economic impact. And it is always to do with house prices and wages. Both need to increase mutually and evenly. Though wages are increasing it has not been enough and with the housing market recovering it means that they are at the moment affordable for a lot of couples.  Meaning different ways for people to own houses need to arise. And maybe the family mortgage is a good step forward?

Please make sure you speak to someone you trust and understands, when using one of these schemes. The point of a deposit is that it is a down payment on the house. If the lender is holding that money until a certain period of time. It needs to be questioned, how much of the home you actually own!

 

Can you expect to retire mortgage-less at 65?

Can you expect to retire mortgage-less at 65?

It used to be part of the plan; you are born, you go to school, college and university. Then you get a job, you meet someone, get married, get a house, have children and retire at 65 having paid off your mortgage. And live out your golden years, in retirement.

Problem is, it’s not working out like that anymore, people are ten years older when they get their first mortgage. With over half of mortgages taken on by people older than 34. With average house prices now above £200,000 and wages not keeping up with the cost of living, it has made it really hard for people to get on the housing market. Therefore it takes longer to get there. It is not all bad, we are living longer, have healthier lives but do we really want a mortgage past 65?

The other part of this, is that mortgages are longer, they used to 25 years (well the average was), but if you read here , in our blog we spoke about how the term of mortgages has increased, and 40 year mortgages are not uncommon. So lets do the sums. If people are generally taking mortgages at 34, and they are on average mortgage term at around 30+ years even 40. Then if all that worked out for you, you would be paying right up to 64 years old. That is cutting it fine, so if you took a 35 year mortgage, unfortunately you are 69 when your mortgage ends. So I do hope you have a good pension or those first four years could be a real struggle in your retirement.

Another element is that people are looking to get mortgages much older, they are working later in life, so may be looking at new houses or to change and this maybe getting a new mortgage. Mortgages for people later in life (55 years or older), has increased over the last few years.

It may be just one of those things, that the way of life has changed, this capitalist dream may be a bit different now. Working later, as our health is better (thanks NHS), and its not all bad. We stay active, we keep social contacts and stay engaged. Working beyond 65 maybe your nightmare, and all I can say is that you either need to get on the property ladder earlier, or make sure your pension is going to pay out enough to afford mortgage payments each month. We did a blog to help saving for deposit here.

Make sure whenever you are looking for a home, speak to someone you trust.

What is a normal term for a mortgage?

What is a normal term for a mortgage?

It looks like the 25 year mortgage is over!

There is no “set” term for a mortgage. In theory it can be any length, the longer a mortgage… well the longer you pay it back for. But usually a longer mortgage means cheaper monthly payments, and more interest for the lender! Generally though mortgages have been 25 years. That is the “standard” I suppose.

But recently there has been research about the different length of mortgages that have been taken on and it looks like the “standard” of 25 years, is declining. At the moment the “standard” only contributes to 2.97%. Which is hardly anything really. Then looking at the nearest as the 30 year and the 35 year mortgage, they make up around 45% of mortgages in 2019. With 40 year mortgage making up the rest, which is over 50%. Source  (you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)

This is a huge shift in ideals, what products are on offer and shows the change in the market. And not only that but you can get mortgages when you are older now.

A part of this is the slow down in the market overall. Lenders need to lend so they have to make their products available to as many people as possible. It needs to be accessible, so allowing longer mortgages, with potentially less payments is a good start. Allowing older people to take on these longer mortgages, also opens up that market to people to get mortgages.

What are the potential downsides to a longer mortgage then. Well the issue is to do with retirement. If you say get a mortgage at 35 years old at 40 years. That means that you will not have paid off your mortgage until you are 75 years old. If all goes to plan in your life, you probably want to retire at 65. So you have an additional 10 years of mortgage payments. Can you and your pension afford that? That is the risk, and its hard to think about that at 35. You want a house, this is an option you can afford. But truly think of where you will be at 65. Can you afford those payments then.

With the market constantly changing, and what is the norm 30 years ago, is not the same as it is now. Make sure you understand what sort of mortgage you get, what ramifications there are for you. And think for the future.

Always speak to someone you trust. And someone who understands the market now!

Your home may be repossessed if you do not keep up repayments on your mortgage.

What you need for a deposit. Tips on how to save!

What you need for a deposit. Tips on how to save!

The deposit for a house is usually what you have to put down as an initial payment to apply for a mortgage. It usually sits around 10-20% of the value of the mortgage/property. So the average price of a home in the UK at the moment is £234,853. That means if you are going for 10% that comes to £23,485. Bearing in mind the average wage in the UK sits around £36,000 a year. Which means saving to £23,485 as a lump sum is quite a lot. So if you take out all your bills, rent, food and social spending; what do you have left?

If you were saving 10% a month, after tax you would have around £2583 a year (hugely depends on your personal tax code, pension contributions etc). So to get to the required deposit you need to save for around 9 years.

Wages are increasing, the average wage was £29,000 last year. This means it is getting better for people. So there is hope, 6.5 years is not too long and can be helped if you are doing it with a partner.

So tips for saving for your first home, or even your next home.

  1. Switch bank account. There are lots of perks for switching accounts. Some banks offer cash back for switching, or even cash for putting money in there each month, or high interest rates for a certain time. It’s not a huge amount but it is a good start.
  2. Look for deals. You don’t have to be a social pariahs, but if you look at 2 for 1 deals, coupon meals, go on special nights (curry night in the pub etc). You will find that saving is a little easier.
  3. Switch energy providers. This is a simple one, you are probably most likely paying a little bit too much if you have been with the same provider for years. Get it changed, the energy market is much more competitive than it used to be.
  4. Get rid of short term debts. Credit cards, short loans, PCP deals etc. These are all at high interest values, so if you are able to get rid of at least some of these, if not all of them, then this will save you money in the long run. Even if it means not saving for the first couple of months, if you are able to clear those debts it will help.
  5. Get rid of things you don’t need. Do you need all those computer games, all those clothes, all that furniture, all those kitchen gadgets. Anything you have not used in a year. Sell!
  6. Follow the people you like to buy from on Twitter or on their social channels. Most will advertise their deals through these channels and you can get your hands on them first.
  7. Can you get it for free? For things like white goods and furniture you might be able to get them for free. There are websites like Freecycle where people are selling all sorts for free. So if you desperately need that sofa or fridge, get if for free!
  8. Plan your meals, take food into work, it really helps. If you are getting a little meal deal every work day, is it really worth it. You genuinely could make better sandwiches at home.
  9. Get rid of the services. Netflix, Amazon Prime, Xbox game pass, Gousto… All of these services, cost money. I’m not saying get rid of all of them, but limited yourself. Set a budget – £20 a month, so what can you lose.
  10. Get into the saving spirit. This is about mind set, you need a budget for the week and then the weekend. Take that out in in cash, once it is gone, it is gone.

You cannot just do one of these things, it needs to be a multitude of little things that result in you making those savings. And that means you can put away your 10% every month.

And really they should be habits you keep for life, throw off those consumable traits and look at saving 10% every month for the rest of your life. You could even put it into a pension!

Why on earth would you go for an interest-only mortgage: Pro’s and Con’s

Why on earth would you go for an interest-only mortgage: Pro’s and Con’s

Is it worth that risk on an interest-only mortgage.

There are sort of three types of mortgages you can get for a house. There are more, but these are three of the main types. There are Fixed Rate, Variable Rate and Interest-only. We have spoke about variable rate and fixed rate mortgages in reasonable detail here. 

But we have not always spoke about interest only. Its not as common, or as risk averse as the other two types of mortgages. So what is an interest only mortgage.

What an Interest Only mortgage is.

An interest only mortgage, like any other mortgage is a loan. Its a loan to pay for a house, so typically, you place down a deposit, than the lender looks at your credit history and financials and you get the mortgage. Difference comes in what and how much you pay back. When you get a mortgage there is a percentage that is placed on top of that mortgage. You may lend £180,000 for a mortgage but you pay back more, because like every loan, there is interest placed on it. This is often where lenders can be competitive, offering you better interest rates, or a certain percentage over a set period of time.

When you get a fixed rate or variable mortgage, you pay back a portion of the mortgage plus the interest. Is the different in an interest only mortgage? Yes it is!

Very simply on an interest only mortgage, you only pay back the interest part of a mortgage. This means you are not paying back any of the actual loan, just the interest part. So in theory at the end of the term of the mortgage, you will have not paid any of the actual loan part left. You will own no more or the property of what you put down as a deposit. So I hear from the rafters “That seems like a silly idea!”

Well there are some reasons to do it, but as always there are risks attached to it.

Here is your list of Pro’s and Con’s

Pro’s

  • The repayments are low, much lower than if you were paying back another type of mortgage.
  • If your house increases in value, and you can sell it, in theory you can make money off of the sale.
  • Through inflation your debt depreciates in value over time.
  • After the general term of your mortgage, you can move onto a Fixed rate or Variable rate, but you will have increase mortgage repayments

Con’s

  • If by the end of the term of your mortgage, you may not approved for another mortgage, then you quite large debt, or which, none has been repaid.
  • Property prices may not have increased, so if you were looking to sell your property you may not be able to get what you lent back.
  • Some people who take on interest only mortgages chose to add money into an investment or endowment, with the idea that this develops and gives you a lump at the end of your mortgage. But if this has not matured how you would like then you can struggle with paying the rest of the mortgage back.

Interest only mortgages are usually used for people wanting the develop property, low repayments, have it for a short time, develop it, rent it out for a few years and sell it at a profit. But with all business ventures there is a risk.

As always speak to someone you trust, make sure you understand what you are doing and why you are doing it.

100% mortgage. What’s the catch?

100% mortgage. What’s the catch?

Last week Halifax released a 100% mortgage. They are not the first bank to do this, but its a good indicator that lenders are more keen to encourage people to take mortgages.

So what does a 100% mortgage mean? Well essentially you get a mortgage for a home without having to put down any money for a deposit. Usually lenders are looking for 10% or 20% of the value of a house and they will then lend you the rest. That is the more traditional way of getting a mortgage. So 100% mortgages means that a potential house buyer needs not to put down anything at all and the lender will provide you with the full amount. Saving a deposit can often be a huge part of stalling the buying for a house. Bearing in mind there are always other costs to put on top. So if you are looking for a house around £200,000, just for 10% you need £20,000. Plus all the additional fees, estate agent fees, solicitors etc. So this is an offer on the table from the lenders to get people to purchase a house. Ease the pressure.

So 100% mortgage is a good right? Well it comes with a few downsides.

  • Its not completely 100% most of these mortgages need you to provide a family member to provide you with a deposit. They don’t lose the money but if the the people with the mortgage miss payments then this “deposit” is potentially at risk. It’s a guarantor really but with a huge pledge in the home. With the Halifax deal, the family member, or guarantor does get their money back but only after three years. (this could change, so please check with someone you trust before embarking on this deal)
  • You don’t own any part of your house at all. When it comes down to it, there are a few advantages of putting down a deposit. Firstly if you can put down 20% you will have a better rate of mortgage. Meaning the repayments back will be less each month and the length of your mortgage will be less. Not everyone can afford 20%, but even if you have 10% it means you own 10% of your home. It is yours. So that’s a big advantage too.

It always not as easy as that. A house down in London, even a modest one can be £300,000, so 10% deposit is £30,000. This is higher than the average annual wage. So not really a obtainable amount for a lot of people.

100% mortgage then could be the only option for some people. So in that respect it is a good thing. But as mentioned above, you need a reasonably well off family to fork out the guarantee. With someone who has this option to get on the property ladder, has a family member willing to give up the money for 3 years as a guarantee, then great, As always with these things, if it works for you. It works for us.

Remember please speak to someone you trust and make sure the decision is right for you.

Your home may be repossessed if you do not keep up repayments on your mortgage.

A new 15 year fixed rate mortgage released. What could go wrong?

A new 15 year fixed rate mortgage released. What could go wrong?

Is security the most important thing?

Security is a strong feeling, its something you want for your job, for your health and for your family. And a big part of managing your security is making sure you can manage your money. To be able to do that is knowing what you are going to spend each month. What your food will cost, your savings, petrol costs etc. But the biggest and most important one is your roof over your head. Your mortgage repayments! And a fixed rate mortgage can ensure what you are going to pay each month.

Fixed rate mortgage means that the interest on your mortgage doesn’t increase over a certain amount of time. Which means your mortgage repayments don’t increase or decrease.

Most fixed rates have a set time until they go onto the lenders standard interest rates. This is usually set by the lender or the Bank of England. To find out more about interest rates and variable mortgages and how they effect your mortgage payments, read more here.

Most fixed rate mortgages have a fixed rate of around 5 years, last week both Virgin Money and Yorkshire Building society have released a 15 year fixed rate mortgage. And that’s a good thing?

Thing is 15 years fixed rate mortgage means that your mortgage payments will be exactly the same for…well…15 years. Pretty self-explanatory. So for all you security lovers, you have payments, you know what they are, and they are set for 15 years. And that’s great.

There are some drawbacks though, firstly quite often the general interest rates are a little higher than usual. Meaning over that long time you will be paying back quite a lot. At the moment with the economy being so up and down, that may be a safe bet. Yes you are paying back more over time. But with variable rates you could be paying back even more.

The other issue is fixed rate mortgages always have a early repayment charge. Quite often it’s the length of the fixed rate period or there and thereabouts. For a 15 year fixed rate mortgage, it is a much longer period. And the cost of leaving is often higher than usual too. So if you choose to leave the mortgage it will be a costly endeavour

Virgin Money’s 15 year fixed rate mortgage has a early repayment time of up to 2025 at 8%. That means that at a mortgage of £400,000. That’s a cost of £32,000. Which is quite a chunk of change. But if you are in your “forever home” and you don’t need to leave earlier than 15 years then there really is not an issue. As you have that security.

But if the rates go significantly down over the years then you could be out of pocket.

It really is about what is important to you. What do you value more?

As always make sure you speak to someone you trust, when applying for a mortgage. Get the right advice and ensure that you understand the decision you are making.

Your home may be repossessed if you do not keep up repayments on your mortgage.

What is the advantage of a variable rate mortgage.

What is the advantage of a variable rate mortgage.

Making sure you make the right choice for your mortgage.

Mortgage’s can be very different from one to the next. They can have different lengths, for different amounts, different interest rates and different payments. There are lots of factors that affect this, your income, your outgoings, if you are married, where you live, how much you want to lend, how old you are. Lenders need to be so much more understanding and insightful to who they are lending too.

There are, however, generally two types of residential mortgage you can get. There is a fixed rate mortgage, and there is a variable rate mortgage. Fixed rate mortgage, is usually a set amount of time where on your mortgage you pay exactly the same amount. Hence the fixed rate. For example you may have a fixed interest rate on your mortgage for five years. Meaning all your mortgage repayments each month will be exactly the same for five years. No change.

The other is a variable rate, a variable rate mortgage means the interest rate on the mortgage can vary during the mortgage. This means that the cost of your mortgage monthly repayments can change throughout the time of your mortgage or agreed time. This doesn’t sound great but there are some advantages.

Within variable rate mortgages there are two subsections of mortgages. Tracker rate and Standard Variable Rate (SVR). A tracker rate mortgage follows the Bank of England base rate, so if they increase this rate then your mortgage rate goes up. But if the base rate drops then so does your mortgage. On a SVR you are at the behest of the lenders interest rate. So this can go up or down completely based on the lenders whim, quite often it follows the trend of the base rate set by the Bank of England. But it really is up to the lender.

With an SVR there are some additional advantages, and these are based on the market, as with the tracker rate they can go up and also down. But usually what ends up happening is if there is a high demand for mortgages, then the rate can go up, as its in the lenders best interest to do this. But if demand is low then the rate can be low. Which means a lower mortgage repayment.

The final advantage is that, it’s generally easier to get out of a variable rate mortgage. Most fixed rate mortgages have a set time you have to remain on the deal, or you will incur a fee. We are not saying there is no earlier charge on all variable rates, but they are usually shorter if they are there at all.

With getting a mortgage make sure you speak to someone to trust, and make sure you can afford if the rates go up as well as if they are currently low.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Why you may need to remortgage now.

Why you may need to remortgage now.

We have had quite a few blogs on how to get yourself ready for a remortgage, the idea behind our blogs is to help people to get the right advice to help get them ready for all elements of mortgages.

Last couple of weeks, there have been reports about why it is a good time to re-mortgage. In October, over £26bn worth of mortgages deals are due for renewal. Which is the largest for the month this year. So why are we telling you this. Well anyone who’s mortgage deal is up means that you could potential save a lot of money on your mortgage.

At the moment there is scope to save hundreds each month on your monthly mortgage payments. With much more competitive rates these days people coming out of a 5 year mortgage maybe looking at something much better than what they are on now.

On top of that your mortgage value could be better. If your house has appreciated in value. It means your loan to value ratio will be better and you may qualify for an even better rate:

Official Land Registry data shows that the average UK house price in October 2014 was £191,855, and had risen to £229,431 by May this year (the latest month for which figures are available) – an increase of just under 20%.

The Yorkshire says a homeowner who initially borrowed 85% of a £200,000 property in October 2014 at a market-average five-year fixed rate of 4.25% could benefit from a lower LTV of 65% and take advantage of the society’s two-year fix priced at 1.54%, which would save £201 a month in repayments. (However, this deal does involve paying a £1,495 product fee).”

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are not responsible for the accuracy for the linked site)

Please see the full article here

What should you do then? Well with remortgage it is always a very individual situation so it is hard to tell you what to do, but its always worth checking your deal and when it expires, most have a period before when you can move out of the deal to another without incurring costs.

Then speak to someone you trust. It is the best way for you to make sure you see the whole of the market and get the best deal you can. Don’t just speak to your lender. They have a limited amount of products they can offer. So for a potential of £200 savings per month, it is worth spending the time to get the right deal for you.

 Your home may be repossessed if you do not keep up repayments on your mortgage.