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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.

So….How is the housing market in 2019 looking.

So….How is the housing market in 2019 looking.

We take a look at what the powers that be are saying about the housing market, mortgages and the market in 2019.

 

What grand expectations, coming to this blog, you would have. We are not fortune tellers and we don’t really know what will happen in the future. But we did read a report that is making some well informed predictions…

Firstly let Coleshill Mortgage Services say a Happy New Year and we all sincerely hope that you have had a cracking Christmas, or festive period. Ok, that’s the pleasantries out the way, it is unfortunately, time to get down to business. That business is the housing market and the current predictions from online news sources.

So is it it good news. Well unfortunately not.

RICS – which is the Royal Institute of Chartered Surveyors, released a report in December regarding what they feel number of sales will be in 2019 and how sales will change within different locations. Firstly the biggest point is the number sales of houses across the UK. Now obviously these are all predictions and told in a lot more detail in the report (link to it at the bottom of the blog). RICS reported that in 2019 they felt that the number of sales will fall by 3% to 1.19 million, thats from 1.22 million in 2018. And a much bigger fall from the 1.7 million in 2006.

This can have a lot of affects over the market. We have mentioned quite a few times how sales is really what drives, well any market but particularly the housing market. When it comes down to it there is only a limited amount of houses (though we will talk about that later), so if houses are not being sold, then people are not moving into houses and property is either not exchanging, or in the case of new builds going into peoples hands.

So what affect will a drop in sales have? Remember these are all predictions. Not set in stone.

Find the full report 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).

Prices

What is the first thing that happens if sales slow down. What happens is prices go down. It’s simple supply and demand. If the supply is higher than the demand then prices always remain low. This is not always a bad thing. In previous blogs we have spoke about the affordability of housing for young couples. So prices of houses becoming more affordable maybe what the market needs. Though the RICS report thinks not.

New Builds.

Last year the government removed the cap for local authorities in their ability to lend for the building of new houses. New houses in the market gives young couples and first time buyers the opportunity to have options to buy houses. There is also the “help to buy” scheme which will also assist people in the purchase of new builds.

Rents

With more demand on rents (as there are less sales) and therefore less availability, there will most likely be a little nudge on rents throughout the country.

So nothing positive?

Well we have tried to place a positive spin on things but with a market that often the sellers of a product are also its consumers it is always hard to please everyone. With wages, though getting better but not keeping with inflation, it means no matter what happens, someone loses out. If house prices go down, first time buyers and younger couples and families will be able to afford those houses. But it means that people who own the houses main lose equity in the house and not be able to move on in the market.

It really is a tough one. But the future is not written and things may change. We have Brexit to weather yet!

 

 

 

When is best to remortgage?

When is best to remortgage?

To some people remortgage is a little bit of a mystery. So when is it best to take the plunge?

A mortgage is like any long term agreement – you need it to revisit it every now and again to see if its still working for you. And that’s what a remortgage is; it’s looking at this agreement you made some time ago and seeing if it stills works for and your family.

So when is this fabled time?

  1. When interests rates are low. Lenders are always trying to maintain their competitiveness by making sure their interest rates low. This can save you a whole heap of your monthly expenses, if you have had your mortgages for a few years. You can then achieve a new interest rate and lock that in as a fixed mortgage and keep the same rates. Be careful though and speak to a mortgage adviser you trust – your existing mortgage could be a special deal which may not allow a change.
  2. When you own enough equity in your home – When  you only own a portion of your home – the deposit and what you have currently paid off, the rest is mortgaged. The proportions are called the loan to value ratio (LTV). If the price of your house has gone up, your mortgage will be a smaller percentage of the property’s value than it was when you started. So imagine your mortgage is 75% of your home, that means you own 25%, if you remortgage you could get a better deal.
  3. Your fixed rate ends – Fixed rate mortgages are on a set rate for typically 2-10 years. Once this ends your mortgage is moved onto a standard variable rate, which could be higher or it could be lower. So at this point you have an opportunity to shop around for different deals. Make sure you understand when your fixed rate ends, or if it does. To do this speak to your mortgage provider/lender.
  4. If it’s right for you – All of the above could be happening none of the above could apply that doesn’t mean it’s not the right time. Remortgaging is about your time to get the right deal.

With remortgaging it can be tricky business and if you leave your current deal too early or in the wrong way then it may cost you and you could end up getting charged. So ensure that it is the right time for you to remortgage, make sure the next deal works for you. Do you want it to be cheaper? Do you want a shorter term on the mortgage? All different needs for different people.

So make sure you speak to someone you trust and ensure you are making the right decision for you, your finances and your family.

Do you need to get advice for a mortgage?

Do you need to get advice for a mortgage?

Is having a mortgage adviser something that YOU need?

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

Mortgages can be a complicated thing. There are many different variables to consider and lots of pieces that need to be put in place. There are different types of mortgages, different lenders and they all have different rates, different advantages and disadvantages.  So where do you start?

Well its difficult to say exactly. But there are options that you can go for.

 

The lenders.

You could go directly to a lender, usually a bank or building society, who must offer you advice when recommending a mortgage to you. They will assess what you can afford based on your own personal finances. They will look at all elements of your budget to understand what repayments you can make, including where your credit rating stands and many more. They will help you get a mortgage with the bank or lender that they are associated with.

The other thing you could do, is look to an independent mortgage broker. An independent mortgage broker is specialist trained and qualified to give you advice in finding the right mortgage for you.  There are different mortgage advisors; those attached to lenders (often banks/building societies), those that have a limited list of lenders and those that look at the whole market.

All FCA advisors have a duty of care to ensure that they give you the correct advice and that they maintain correct standards. Please see the FCA website on how your rights are protected when receiving mortgage advice – 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).

 

Why do I need independent advice?

Well you don’t need it is the the truth of it. You can go direct to a bank or lender or work and work with. Absolutely no problem with. But is it the best way? Well that is up to you really. Coleshill Mortgage Services is a whole of market lender. Meaning that the advice they give is based on what is going on in the market right at that time. They are not necessarily constrained by certain products or rates that can be offered to you.

A broker also works for you. Not for anyone else, they work to all the FCA regulations, but they work for their customers. So the advice you get is the right advice for you and no one else. Which means you can make the right decision and hopefully are never confused or unclear about what you are signing up for. And if you are ever not sure. Advice is not to do it. If you are looking at a 25 year mortgage, please don’t take that.

 

Other Advantages.

There are other advantages of taking on a mortgage advisor either independent or not.

They will speak to lenders on a day to day basis, meaning that they can move things along a little quicker than you might be able to. They may help you to complete the paperwork correctly meaning that the movement and acceptance of your mortgage may happen sooner. They also may have exclusive deals with certain lenders that could help you get an offer that you may not be able to get on your own. This is specifically related to independent mortgage brokers.

Its hard to pin down all elements of getting advice for a mortgage and tell you exactly what you need to do as everyone’s needs are different. The only advice we can give is make sure you make the decision right for you and consider all your options. This means talking to both independent advisors and those advisors attached to a lender (like a bank/building society) to make sure you get the right mortgage for you.

Please look round all the rest of our website to find out more information on what we offer.

Click here.

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