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Birmingham’s resolute housing prices until 2020.

Birmingham’s resolute housing prices until 2020.

This is not a blog about nice places in Birmingham or the surrounding areas. That would be good. But this blog is about a report from Knight Frank, an estate agent in London, about the house prices in Birmingham showing their resoluteness in not responding to the housing crisis since 2009.

In that I mean the average price of houses around Birmingham have not only kept their value but have increased by 45% since 2009, and not only that but have risen 5%-10%, year on year, since 2015. In theory if you had a house that was worth £178,000 and it rose by 5% a year for 5 years. You would have made over £50,000. Which is not bad.

The report shows why this has happened. You can read it all 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). Its quoted to say the following:

“– its relative affordability compared to other markets in the UK, especially those in the South of England. As the UK’s second-biggest business hub, Birmingham draws comparison with London, the financial centre of Europe. However, when looking at residential property prices, the difference is striking, with newbuild development prices in some central zones of the capital ranging from £1,000 to £2,000+ per sq ft, compared to around £300 to £450 per sq ft in central Birmingham. The affordability trend dovetails with the improvement in amenity and lifestyle in the city, making it a destination for young workers and families alike.”

It’s funny, because it is pretty simple social economics, affordable housing, a place where you can get a decent job, things to do and make your life more richer (in more ways than one) means that the price of housing goes up.

So where does it end. Well we are not sure, do we end up with another London, where house prices get beyond the average earner. Possibly. The idea of a free market is that it will in theory sort itself out. Competition in a free market, means as house prices increase, sales go down and then therefore prices go down a little, everything becomes more affordable, inflation catches up, peoples pay catches up. House prices go up. So on and so forth.

It doesn’t always work like that. At the moment, in terms of buying a house to hopefully increase in price, will always be a risk. It may happen, it may not, so make sure you understand what you are doing, and the risks involved.

But at the moment the report forecasts a growth from now until 2020 in the Birmingham area, so it is always worth a look.

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

 

Getting a longer mortgage. Make sure you know the facts!

Getting a longer mortgage. Make sure you know the facts!

There was an interesting article in the Observer last week or so. The main crux at the beginning of the article was about the fact that people getting approved for mortgages with a length of 40 years was increasing. Or more importantly had increased. And this was a real symbol of the times we live in today.

I have quoted it below:

“The growth in lenders offering mortgages of much longer terms has been swift. Just five years ago, less than 36% of mortgage products had a maximum time of 40 years, according to financial website Moneyfacts.co.uk. This has now risen to almost 51%.” Find the full article here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

So what does this mean. Well it’s part of the issue that has been plaguing everyone with a standard job, a standard life. They cannot afford to buy property! Especially in London. The problem is it means that lenders are not getting the new customers they need to maintain growth. You know normal business stuff.

So the lenders in a desperate attempt to make mortgages much more affordable are offering mortgages at a much longer term. They used to average around 25 years. But now they are offering mortgages of up to 40 years. So what does it mean for people on these longer mortgages?

Well firstly, if you stay in the home you have bought and you pay your general mortgage payments for 40 years rather than a standard 25 years. That means if you bought it when you were 30 – The mortgage wont be paid off until you are 70!

Secondly if you want to move, how much equity will you own in the house? Take the following scenario: Your life and pay may have improved, and you had been in your original house for 12.5 years, on an average 25 year mortgage you would have been 50% through your mortgage. On a 40 year mortgage that is only around 25%. That’s a big difference. And if your house has not increased in value. Well you may struggle for that deposit when you sell. So you have to save again. And we have not even taken in interest rates.

And finally we get to interest rates. A longer term in your mortgage means more interest paid over time. Which essentially makes the product of the mortgage just flat out more expensive. So not only can you not afford a standard length mortgage and therefore go for something that is longer; to either reduce the monthly repayments or be accepted by the lender under the strict rules. The mortgage you can get accepted for is more expensive over time. Its really tough spot for people and families desperate to own their own home.

It really doesn’t look good, but when going for mortgage there is options, there always is. Make sure you speak to someone you trust and understands the mortgage market.

Making sure the lender says yes for your mortgage.

Making sure the lender says yes for your mortgage.

There is no sure-fire way for mortgage application to be approved. You just never know what a lender is looking for. There are lots of specified reasons you may not get accepted or actually get accepted for a mortgage. Based on income, what you want to lend, what your credit report is, how long you have been working, if you are working, what your job is, your age… the list is endless, well not endless but long. So making sure you can definitely get accepted is not a sure thing. But like anything worth doing, you have to make sure you can give yourself the best chance.

1 –

If you are going direct to the lender, make sure you speak to them about what they need, that the information you need to prepared. You have prepared. Most lenders have comprehensive information on the website about their requirements for a mortgage. Now things will be different per lender but often it will be things like proof of income, payslips, a comprehensive budget (this is explained deeper in the next point).

2 –

Make sure you have developed a comprehensive budget. Most times we do not put down everything but to develop a comprehensive budget you really need to identify exactly your income and outgoings are.

Here is an example of a things to consider in your budget.:

All income – look at the following

  • Income from your job
  • Your job may have overtime, bonus shifts etc,
  • Freelance work
  • Income from assets

Anything you consider, you need to take in the general amount of money that you have come into bank each month. You cannot really take in yearly bonuses as these are not a stable income. But say if you are a nurse and on average take three additional shifts a month, then these will absolutely be taken into account.

All Outgoings

  • Rent (yes they will look at your rent and how you are managing it so far)
  • Food
  • Car, petrol, transport
  • Entertainment and Leisure
  • Utility bills
  • Telecommunications
  • TV (license and things like Netflix)
  • Clothing
  • Hobby spends
  • Children and dependents
  • Debts and credit cards.
  • Savings
  • Any thing else you can think of.

It really is worth taking the time to work this out.

  • A mortgage broker. Does not accept and deny you a mortgage so they can take the time to get to know you. Yes they will get you to go through all your ingoings and outgoings. But the great thing is they will be able to give a professional opinion about your chances; but not only that, but will help you find the right lender for you. The issue with mortgage applications is once you apply for one, if you get rejected, this stays on your credit report and can harm future applications.
  • Make sure your credit report is tip top. This is true for most financial applications but do all you can to ensure your credit report is working for you. It is always checked for an application and it is always taken into account.

As always speak to someone you trust and make sure when getting a mortgage take the time to make the right decision for you. Speak to different people, speak directly to lenders as well as brokers. All of these hoops to jump through for a mortgage is all about the lender making sure you can payback everything given to you plus interest.

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

How can you get “trapped” into a mortgage.

How can you get “trapped” into a mortgage.

Helping people move up in the world of mortgages.

Recently there have been reports about the FCA allowing people to get onto “cheaper” mortgage rates, after being “trapped” into their current deal.

The Mirror reported the following

“…In fact, an estimated 150,000 people are currently trapped in a bad deal – long after their initial rate ended – but banned from switching to a new one. On average, it costs them around £550 a year more compared to the cheaper product.

But that could soon be about to end, after banking watchdog the Financial Conduct Authority revealed its plan to help them escape.

“We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners – who are currently unable to switch,” said Christopher Woolard, executive director of strategy and competition at the FCA.” See full article here

(By clicking this link you are departing from this regulatory site, neither Coleshill Mortgage Services nor Quilter Group are responsible for the accuracy of the information contained within the linked site.).

But what does that mean? How do people end up being trapped?

Basically when you sign up for a mortgage you may want a fixed rate for your payments. This is often the best way to go, as you then know exactly what your mortgage will cost. Often these fixed rates are only for a set period of time. You will hear quotes like a “five year fixed rate mortgage”. What that means is your rate of paying back will be set at 5 years. So if you pay £500 a month it will not change across that full 5 year period. But then what can happen after that! Well it really does depend on your deal but it can then change to a variable rate; which means the lender will use the current rate of mortgages that it sets. This can mean that it goes up, possibly it could go down!

That doesn’t sound horrendous. But some lenders have an introductory offer and then look to increase the rates of the mortgage after the set deal.

So how do people get trapped. Well after the 2009 house crash, the FCA made changes to the rules of who lenders could offer mortgages too. They made sure that people could afford the repayments and that they were not over extending themselves. Before then there were lots of irresponsible lending that meant people got mortgages they flat out could not afford. With the new rules it was a little more stringent, on what could be lent out. So people on older mortgages, where the deal is not fantastic for them, are not qualifying for a remortgage under the new rules. Which often means they are trapped in the deal they have. As they cannot afford or are not accepted for a new one.

Hence the new rules. These are to potentially relax these new rules for people that are up to date with their current mortgage payments. Almost rewarding them for staying to the deal.

Remember always speak to someone you can trust and make sure you understand the deal you have.

 

 

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

What on earth is a leasehold?

What on earth is a leasehold?

Are leaseholds an unattractive purchase?

There was an article this last week from the BBC, regarding leasehold and the government possibly stepping in to help regulate leasehold dealings.

One of the quotes of the article mentions that people do not quite understand the difference between a leasehold and a freehold.

So very simply – A freehold:

This is when you buy a house and the land it sits upon, you get a mortgage (or buy it outright if you are Mr moneybags) and bid for the house, buy it and it’s yours! Very simple. Beyond planning permissions you can do what you want to that property.

A leasehold is you lease the building or property as such and the owner of the land that the building is on and sometimes the building itself is someone different. A true landlord and tenant relationship.

Leases can be 99 – 999 years, so we are not talking 6 month rentals. In some parts of Italy there are these old piazzas where the surrounding buildings are all built up on top of each other, going up a mountain, and the state owns the building and families lease the building for 1000 years. It’s a strange concept but has been around for a long time. It is often found for commercial properties, so a large commercial company may lease a building, say a Marks and Spencers and they may have a long lease and keep their shop there for 99 years.

The issue with leaseholds is often it can not just be houses but flats aswell. A company will own the building and the land, then leasehold the flats inside the building. What can come with any leasehold is often additional fees. So there can be ground fees, upkeep fees, and then when selling you may have to pay the company for the paperwork needed to sell the property. The problem with this is these fees can be large and therefore make the property an unattractive offer for potential buyers. The leasehold company is also free to increase the fees as they see fit.

There are some advantages, the company is responsible for the upkeep of the land and the building itself, but in terms of what they have to do is very much up to the company.

In government there is a Housing, Communities and Local Government committee and in the article linked below said, regarding leaseholds, the following.

“Elements of the current system, which the committee highlighted as needing attention, include claims of onerous ground rents, high and unclear service charges and one-off bills, unfair permission charges, imbalanced dispute mechanisms, inadequate advisory services, and unreasonable costs to extend leases.”

See full article here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

If you have a leasehold or looking to purchase a leasehold make sure you understand all the terms and conditions of what you may have to pay and how you are able to extend the lease. Remember a house, building or flat, you may want to pass onto a loved one when you are gone and this may be difficult, or extending the lease may be costly. Just make sure you understand!

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

Help to buy is working!

Help to buy is working!

First time buyers issues have often been in the news, I mean, we have often reported on how hard it is for people to get on the property ladder. It was a little bit of a crisis and was a real sore point for young people and couples. People in their thirties living at home because they just could not afford to get a home, especially in London. The government did react and they brought in the scheme help to buy.

There are a few schemes that are branded under the help to buy; there is the help to buy ISA, where the government will help support your savings within an ISA. The other is where the government will “lend” you money towards a deposit and help you get that leg up to put an offer in for a house. I have very much given a brief overview of what the help to buy scheme is, there is a lot more to them.

If you want to find out more please access the main governments website on Help to Buy. Click Here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

This has been around for some years and recently it has been reported that first time buyers is the highest it has been for 12 years.

BBC reported the following:

“There were 370,000 new first-time buyer mortgages completed in 2018, 1.9% higher than a year earlier, according to industry body UK Finance.

It says this is the highest number of first-time buyer mortgages since 2006, when there were 402,800 first-time buyers.”

See full article here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

I mean no matter what you say about government schemes, the numbers peak for themselves. The idea was to increase first time buyers and it has done that.

If you are interested about your options it’s always best to speak to someone you trust.

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

Remortgage. Are you ready?

Remortgage. Are you ready?

With today’s tumultuous political climate, it is impossible to plan for the future. Or at least very hard. This week I read an article saying how much UK’s economy is going to boom after Brexit and an another, barely a day later, saying how much we will lose in the economy. It just makes me think that no one has a clue. And with the economy, if no one has a clue then that generates a lack of confidence and that is never good.

At Coleshill Mortgage Services we work with people every day helping them remortgage and get a better deal. We wanted to put together a list of things for you to think about or get ready when looking at remortgaging.

  1. Make sure your credit report is as good as it can be.

Sign up to one of the many credit companies, that will help you understand what you need to do to sort out your credit report. It is often very simple things, but they can take time. So looking at making sure your are on the electoral roll, keeping bills in line, making sure your credit card is in a good place (only half of the credit used is often good), having been at your address for a good while, having no defaults on your bill etc. These are just a selection so use a decent company that will give you the right advice. This will be the first thing any lender will look at when you remortgage.

  1. Start looking early.

You can have a remortgage deal in place months before it is to happen. You should be looking around 14-16 weeks before you are thinking of doing so. This gives you time to get all in order and to look at the best deal. Remember this is to potentially save you thousands of pounds so its worth taking your time. Even if you get a deal approved and offered by a lender, there is often an expiry date on the offer so you can have a good think about it.

  1. Avoid fees

Many mortgages have an initial incentive period that means if you remortgage and leave the deal you will incur fee. You will need to check with your lender when this period ends. There is often never a good reason to get a bill this large. Especially if you can wait. Speaking to your lender first may mean you have to wait some time and that can give you

  1. Get a value of your property

Things can change quickly in the property market, they can also move slowly, get an understanding of what your property is worth now. And then work out how much you own of the property. Every time you pay back part of the mortgage it means you own a little more. When you understand how much your property is worth you can then work out a loan to value rate. It’s easy too get this figure – divide what you owe on the mortgage by the value of your property and then multiply the result of that by 100. That’s your LTV.

  1. Try to drop an LTV band.

If your property has gone up in price – doing that action above and working out your LTV, you will realise that your LTV has gone down. This is brilliant as it means when you get a new deal on your mortgage you may have gone down a band in LTV – the lower the band the cheaper the payments on your new mortgage could be. Main pricing LTV bands are as follows – 95%, 90%, 85%, 80%, 75%, 65%, 60%.  If you are close to a lower band it may be a consideration to put in some extra money and get closer to that band. Only if it is affordable.

As always speak to someone you trust regarding all these elements. Getting proper advice will mean you can get the right deal that works for you.

 

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

100% mortgage. Don’t panic, Don’t panic.

100% mortgage. Don’t panic, Don’t panic.

 

A few months ago we wrote a blog about the bank of mum and dad. We looked at a worrying trend where a huge amount of first time buyers were relying on their mum and dad or other close relatives to provide the cold hard cash for their deposit. With the cost of living just rocketing and wages barely keeping pace, young people are forced to rely on their wealthier family members to get their toe on the property ladder.

Now I hear you ask, what does this have to do with the 100% mortgage. Well all in good time. In the last week it was reported that Lloyds have released a 100% mortgage. So no deposit, the mortgage would cover the full amount of the property. You are not even buying a house, the bank (or lender) is and you are living in it and you are paying rent. Well you will own it after so many years. This was how it was reported on the headlines. 100% MORTGAGE is back!!!!. Very exclamatory.

When you looked into it more you realised the mortgage that was on offer was not quite 100% mortgage. The BBC took a more balanced view on the new mortgage.

“…However, a new mortgage launched by Lloyds, aimed at first-time buyers, actually requires a 10% deposit – but instead the money is put into a three-year fixed savings account by a family member.

Experts say that the deal is competitively priced and may grab the attention of young potential buyers who have the help of the Bank of Mum and Dad.”

Find the full article here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

The sad thing is that it has come to this. Though this is not a new product, it shows that lenders are looking at any way they can encourage people to take out a mortgage. And that must be relied on the bank of mum and dad.

As always if you are looking to get on the property ladder make sure you speak to someone you trust and get the right advice for your situation. And if you need help then so be it. A lot of people are doing the same.

 

 

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

Mortgage and property news… in one place for you.

Mortgage and property news… in one place for you.

As part of a new idea from our wonderful marketing team, ahem. We want to collect together the most interesting news relating around mortgages, property and little bit of the financial market. It’s to keep you up to date, maybe give you an insight you may not have had before. Its a quick fix for those on a busy schedule.

The Independent:

Private landlords given incentive to sell homes to tenants in new proposal.

A report from the Independent about the governments possible new proposal to remove capital gains tax for landlords who sell their house to long term tenants

Read full article here

(You are now departing from the regulatory website, neither Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

 

The Guardian:

The Guardian looks at how Brexit has moved lenders to be more competitive to encourage borrowers. Responding to the RICs report on their sales predictions. Something we talk a little about in our own blog here

Read full article here

(You are now departing from the regulatory website, neither Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

 

The Mirror:

London’s cheapest house! A lighter report, though still a little rubbish. The Mirror reports on London’s cheapest, which is the size of a bouncing castle, and still costing £100,000. You must see the pictures

Read full article here

(You are now departing from the regulatory website, neither Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

 

We will do this every month just to give you an a view of what is going on. We will try and pick the most interesting, has the most impact on our customers and hopefully a lighter news in the UK. 

 

 

 

 

Is overpaying on your mortgage worth it!

Is overpaying on your mortgage worth it!

It has been a tough time for people to try and get the mortgage and property that they want/need. But once you get a mortgage it means getting the house you need but you do not officially or fully own it until the mortgage payment term is finished, and you have paid all of your repayments of course.

When paying for a mortgage you are given set payments that you have to give to your mortgage lender. You have taken a loan therefore you have to pay it back, in instalments, and of course interest. Mortgage lenders don’t just give out money for free they are a business after all.

Most mortgages are a loan with a fixed period. Usually 20-30 years. Which is quite a chunk of time if you think an average person lives to around 70-80. So speeding up the paying back of a loan could be pretty useful, don’t you think.

To shorten a mortgage you can in theory pay more than what you have to. This is called over payments. Not all mortgages allow this but if it is something you can do, then you are able to pay more than your set mortgage payments. This means that you are paying more of your loan back, quicker than planned. which means that not only do you pay off your mortgage quicker but also you will be able to save money in interest payments over time.

The Mirror reported that 46% of people over paid on their mortgage, and not only that but 18 – 24 year olds are really steaming ahead with overpayments, with 70% of them paying more than they were asked in their mortgage agreement.

Please see the full article here

(you are now departing from the regulatory website, Coleshill Mortgage Services or Quilter Group are responsible for the accuracy for the linked site).

The interest rates which can be a really small amount each month really add up, so shortening the time you have to pay, can mean real savings over a long time. With interest rates changing over time, especially if it’s variable rates it could be in the thousands you end up saving. Could be!

It does sound wonderful – but please ensure you speak to your lenders, everyone’s mortgage is different and lenders have different rules to how you can pay it back.

If this is something that you could afford, and please make sure that you can afford to pay more, work your budgets out people. Then speak to your lender and organise what you can.

And it could save you a lot of money in the future.