2020 – Blue Q Mortgage

Support for Mortgage Interest (SMI) Explained

SMI or Support for Mortgage Interest is a loan paid by the government to your mortgage lender in order to help qualifying applicants to pay all or part of the interest accruing on their mortgage during times when they are unable to do so.

In order to qualify for SMI, applicants will normally already be in receipt of another qualifying benefit. You can eligible to apply for this loan:

from the date you start getting Pension Credit
after you’ve had 9 consecutive Universal Credit payments
after you’ve claimed any other qualifying benefit for 39 consecutive weeks

You might still be able to get SMI if you apply for one of the qualifying benefits but cannot get it because your income is too high. You’ll then be treated as getting the benefit you applied for.

The interest covered is currently assumed to be 2.61% of the mortgage sum and the interest you will pay on the SMI loan is currently 1.3%. This may vary but will not change more than twice per annum. You’ll need to repay the money you get with interest when you sell or transfer ownership of your home. You can also make voluntary payments beforehand if you wish.

SMI is capped at interest on a sum of £200,000 if you are working or £100,000 for pensioners or you started claiming another qualifying benefit before January 2009.

Documents Needed When Selling Your Property

It’s easy to assume that once you’ve agreed to sell your home, it’s just a matter of your solicitor or conveyancer ‘doing the legal stuff’ and that’s that. Unfortunately, your job is still only partly done – there’s more to selling a property than many first time buyers realise.

Once you are in a position to instruct your conveyancer, you are going to need to provide them with proof of your address and ID. This is required in accordance with anti-money-laundering legislation and you will be required to provide a specific proof before your solicitor can proceed. They will also write to you setting out their terms of business.

Once your solicitor is engaged, make sure that they are fully briefed on the terms of the agreement you’ve reached, especially with regard to pertinent facts like a timetable for the exchange of contracts, etc. If your purchase is strictly constituent on this timetable make sure your conveyancer is bought into it – or there may be tears later! Also, be sure to react swiftly to all requests your conveyancer makes of you, returning paperwork properly completed and by return.

What paperwork will be needed?

Title Deeds

The title deeds consist of paperwork that details the ‘demise’ being sold and sets out how the property is owned (its tenure), together with other information regarding various rights of way or other ‘easements’. It will also illustrate an unbroken chain of ownership from the past.

Nowadays, most properties in England & Wales are registered meaning that the title deeds have been scanned and the information is kept on a central database. However, some information detailed on the deeds may still be required, so the deeds will be needed.

In most cases, where a property is owned subject to a mortgage, either the lender or the solicitor you used when purchasing the property will have the deeds. Your solicitor will need to make inquiries for them to be presented.

Energy Performance Certificate (EPC)

You must have a valid Energy Performance Certificate (EPC) before you start marketing your property. All properties that are built, sold or let must now have a valid EPC. EPSs are valid for 10 years. You should be sure to keep the EPC safe when you buy your property. If it has expired when you come to sell it, you’ll need to commission another inspection. They usually cost between £50 – £100 plus VAT.

If you lose your EPC, there is a central register you can visit to obtain a copy. Where can I get an Energy Performance Certificate?

Property & Information Form (TA6)

The TA6 is a standard form which details lots of information about the property. As the owner, in many cases, you will be best placed to answer the questions contained within. It is very important that you are truthful when completing this form as any misrepresentation can have serious consequences. Completion of form TA6 forms part of what is sometimes referred to as ‘enquiries before contract’.

Fittings & Content Form (TA10)

As the name suggests, this form details what is included in the sale of the property. For example, carpets, curtains, blinds, garden shed, etc. Again, make sure to be clear when completing this form and, if something has not been agreed, it will probably save time if you clarify with the buyer before completing the form and returning it. Always take advice from your solicitor here, as there are specific legal definitions that relate to fixtures & fittings.

Leasehold Properties: Additional Information

If you are selling a property subject to a lease or a leasehold property, then you’ll need to provide further information, usually in form TA7.

Everything Else (Including Special Circumstances & Additional Paperwork)

If you are selling a rented property or perhaps you are managing a sale of property forming part of probate (the estate of a deceased person) then you may have various other obligations to provide information such as proof of grant of probate, gas and electrical certificates, etc.

You may also need to provide subsidence/damp guarantees and/or warranties, party wall agreements, specialist asbestos surveys, listed building consent, conservation area consent, Japanese knotweed management plans, planning permissions and window certification to name but a few. These can be covered in a comprehensive building survey.

The key is to be organised from the outset so that you are not delaying matters trying to find important information. And don’t forget to ensure that your new mortgage is agreed before exchanging contracts.

How to Speed Up Your Buy to Let Mortgage Application

Buying to let requires a specific mortgage product designed for the purpose. But in large part the process is very similar. Mortgage lenders will tend to concentrate on things like the rental income and less on your own earnings, largely because the loan is likely to be supported by the rent generated from the property.

Many buying to let will find themselves competing against buyers with significant cash resources and with cash comes the ability to act swiftly. Something which is appealing to most sellers. Therefore, if you are buying at auction if there is a tight time constraint, arranging an interim bridging loan might be a better short term funding option.

In most cases, the process of obtaining a buy to let loan usually takes between 4 – 6 weeks, although, as with all purchases, there are a variety of steps to the process which will delay or even stall the process.

The Buy to Let Mortgage Process.

First, sit down with us so that we can better understand your situation and be better informed of your needs. We can also give you a general overview of the market, how much you are going to be able to borrow based on property type and rental income and your own circumstances.
Then, we’ll trawl the market and source suitable lenders and rates for your consideration. Each lender has their own strict criteria, so one lender might be perfect for one investment but not be interested in funding another.
Once we have selected the most attractive mortgage lender and product, we will apply for a Decision/Agreement in Principle (AIP) from the chosen lender. This will necessitate us compiling a good deal of information on your behalf.
Once the AIP is agreed, we’ll help you complete the lender application.
Once received, the lender will instruct a valuation on the property. This will confirm the buy to let property’s value, rental income and overall condition of the property.
Once the valuation is complete and satisfactory, the lender can process your application. At this point you will need a solicitor or conveyancer involved to act for you (and probably also the lender) in the conveyance and the mortgage offer.
When the lender is satisfied, they will issue a formal mortgage offer which outlines the terms and conditions of the loan. If happy with the terms, you’ll instruct your solicitors to complete the legal requirements.
Once contracts are exchanged, you can agree on a date for completion and your solicitor will liaise with your lender to arrange for funds to be made available. If you’re remortgaging, your solicitor will request the funds from your lender.
Completion! You are now the legal owner of the property and can get the keys.

For this process to run smoothly, it is important that no problems that might cause delays are ignored. Possible causes of delay include;

Failure to provide all necessary information accurately and promptly, when requested by us. It might seem obvious, but if the lender needs information to make a decision or to issue a mortgage offer, a few days getting information to them can easily cost a week or more.
Inefficient conveyancing! Yes, you heard right. Choosing your advisors wisely will save you time in the long run. Many people stick with who they know. If you don’t know anyone, don’t be afraid to ask friends and family who’ve had good and bad experiences of conveyancers and lawyers. At Mortgage Required we are happy to help.
Poor communication. Especially during the holiday season, it can be very hard juggling between several parties’ diaries. Maintaining good avenues of communication so that delays are not incurred whilst your advisors and perhaps yourself or the seller are away sunning themselves can pay dividends.
Make sure to transfer funds to your solicitor in good time and make sure they have funds for agreed expenses incurred on your behalf.
Make a list of all the information you need to provide and start bringing together the information efficiently. Grabbing P60s, payslips, copies of tenancy agreements, etc can be time consuming and tedious, but it has to be done. We’re here to help you through the process.

To speak to an adviser about buy-to-let mortgages or make an appointment please call us on 01245 218018.

How To Get a Mortgage on a Zero Hour Contract

Many people believe that it’s impossible to obtain a mortgage if your sole income is derived from employment on a zero hours contract. Whilst this is a more precarious type of employment and does make obtaining a competitive mortgage offer more difficult, it is possible.

With the growth of zero hours contracts in the UK over the last decade or more, lenders appreciate that more and more people are likely to be employed on these less predictable contracts of employment. However, just because your employment contract might not guarantee hours of work every month (and therefore income) many employees on zero hours contracts might well be earning a respectable income month in – month out, despite the lack of formal hours in their contract.

It is, therefore, important to make sure that you make the best case possible when making your mortgage application. For example, some lenders might want to see at least three months proof of income. Others might need 12 months. Making an application to the wrong lender for your needs could be time consuming and costly, involving you in wasted effort and perhaps even damaging your chances of obtaining a mortgage elsewhere if you are rejected by a lender that was never likely to fit your circumstances.

Mortgage lenders will want to reduce their risk. This means that higher earners with skills are likely to be a more attractive proposition. So are lenders with a larger deposit, especially those with a Loan To Value of 80% or less. Having worked in the same industry for a decent period of time or, better still, for one employer for a good while, will help.

It’s also worth noting that many people borrow as a couple and if one borrower has a salary and the other has an income through a zero hours contract the impact might be less relevant. Also, where you are buying a property to let as an investment your income might have little or no relevance as some lenders in the buy to let market assess their lending criteria on other factors such as LTV and net rental income.

Therefore, when on a zero hours contract, it’s important to make sure you apply to the right lender for your circumstances and present your application in the most favourable light.

For an initial chat and a no-obligation consultation contact BlueQ, today.

Negotiating Tips When Buying a Property

Surveys have shown that the group of buyers least likely to offer less than the asking price or to enter into negotiations when buying their home are first-time buyers. This is hardly surprising given they have, by definition, no experience in this field.

In contrast, the estate agent is selling property for clients all day, every day. They do this for a living. They also have another huge advantage. It’s not their money, it’s not their decision and it’s not their dream home!

This puts a motivated buyer at a significant disadvantage. This is where being organised, having a plan of attack and doing your best Meryl Streep or Kenneth Brannah-style acting performance can help you!

As with other things in life, being spoilt for choice will enable you to approach the negotiation in a stronger position. If you have three properties that you like you’re going to be a lot better placed to be a tough negotiator. And even if you don’t, if the seller’s agent thinks you do, that can’t hurt!

What can you do to improve your negotiating position? Here are a few simple tips that too many people ignore;

Remember, the agent is acting in the best interests of the seller and the seller pays his fees. The agent is not your friend, and certainly not your confidant. Don’t disclose your budget or your circumstances, unless doing so will benefit your attractiveness as a buyer.
Whilst the agent is not on your side, it does no harm to foster an amicable relationship. Whilst she’s not acting for you, she is keen to make a sale, so sometimes making a good case can help the agent pitch it favourably to her client. An agent is a ‘deal-maker’ after all.
Be prepared. Make sure you can ‘perform’ if your offer is accepted and illustrate this to the agent and to the seller. Offering more than anyone else is one thing, but being a credible buyer is more important. Have your mortgage offer agreed in principle and, if at all possible, have your own property sold or sold subject to contract.
Visit the property several times at different times of the day and on weekdays and weekends so as to properly understand the neighbourhood.
Don’t be afraid to ask searching questions of the seller. “What are your neighbours like?” “Is broadband good?” “have you had any structural problems with the roof?” Especially if you have suspicions.
Take time to understand what motivates the seller and his agent. This will enable you to put forward the best offer for their needs. Offering an extra £5,000 might seem sensible, but if the seller is more interested in selling quickly, a few thousand pounds will make little difference. What do they want?
Keep in contact. Between viewings, make sure you keep the agent appraised of your interest. But stay cool. Don’t gush about how much you love the place. But make sure the agent knows you might be in the running. That way, he should contact you if he receives other offers, meaning you won’t miss opportunities.
Make your offer clear and unambiguous. If it is conditional upon anything then state it in the offer (i.e. subject to your house sale) and if you are worried about defects, like the property’s wiring or damp, etc then make sure to mention this. That way, if a home survey highlights a need to do work, you have a credible case for reducing the price later. After all, other buyers will incur the same costs, so you are only reflecting the condition of the property.
Try to circumvent the agent. This is a little controversial. After all, the agent is tasked with selling the property and she’s probably better at negotiating than her client. But, either way, the agent will be paid, so if you are able to build a good relationship with the seller directly, it should pay dividends.
Don’t get too personal. Many people will take a low offer as a personal slight. But that doesn’t mean you shouldn’t try. Just remember, if you are too cheeky and clearly ‘trying it on’, you might blot your copybook when it comes to later offers. If you are offering low, make sure to have a good case as to why. You’re a cash buyer that can act fast. Whilst you like their home, it has several problems, like no garage, one too few bedrooms, it needs re-wiring. You get the drift. Try to keep things civil and be straight-talking, but considerate of the seller’s pride. It’s their home you’re criticising!
Keep things in perspective. Yes, you might love this place, but there will be plenty more fish in the proverbial sea.
Remember, if you can save £5,000 in a phone call, that’s probably £7,000 to £10,000 you haven’t had to earn. Keep your eye on the prize. And be creative. If you need carpets and curtains, maybe ask for them once you are in the final stages of agreeing on a deal. Or maybe lobby for that fantastic garden shed that was excluded from the sale to be ‘thrown in’. Sometimes the savings to you will exceed the cost to the seller.

Last but not least, remember the old adage, ‘don’t ask and you don’t get’. You’d be amazed at what’s negotiable. Happy house-hunting!

Government’s New Green Homes Grant

The government’s new Green Homes Grant is part of the Government’s £3 Billion ‘Green Investment’ package which was announced by Rishi Sunak in the 2020 summer statement. The £3 Billion investment is aimed at improving energy efficiency and also to help stimulate the economy post-Covid19 lockdown.

The government initiative will start in September 2020 and will allow homeowners to apply online to receive help from the government in the form of vouchers to pay for as much as ⅔ of the expenditure incurred for work such as double glazing, insulation, the installation of heating systems, draft proofing and the installation of renewable energy.

Vouchers will be available for up to £5,000, with the poorest homes sometimes eligible for vouchers of up to £10,000.

In order to qualify for this help you must first request an assessment from a Green Deal Assessor.

The assessor will consider the following when making his/her assessment;

Whether you own or rent the property
your home is a listed building, in a conservation area, built before 1900 or constructed in a non-traditional way
there are access issues, such as access to your loft
you can provide bills showing your recent energy use
When the assessor visits

You may be asked:

how many people live in your home
what type of heating and appliances you use
how often you use your heating
what energy-saving measures are already installed
After the visit

You’ll get a document, called a Green Deal advice report, that contains:

an Energy Performance Certificate (EPC) that rates your home for energy efficiency
an occupancy assessment that measures how much energy you and other occupiers are using
improvements your assessor recommends
an estimate of the money you could save on your annual energy bills
a statement on whether the improvements will pay for themselves through reduced energy costs

A Green Deal advice report is valid for 10 years, or until you make changes or energy saving improvements to the property, for example you build an extension or change the windows.

Stamp Duty Holiday – Stamp Duty Scrapped On Houses Under £500,000

The chancellor has announced a temporary holiday on stamp duty up to £500,000 as part of a number of measures to help stimulate the economy. We have listed below the key facts following this announcement.

Prior to the announcement In England and Northern Ireland stamp duty was paid on land or property sold for £125,000 or more. First-time buyers paid no tax up to £300,000 and 5% on any portion between £300,000 and £500,000. For people who have bought a home before, stamp duty rates are 2% on £125,001-£250,000, 5% on £250,001-£925,000, 10% on £925,001-£1.5m, and 12% on any value above £1.5m. Following the decision no stamp duty will be paid on purchases up to £500,000

Prior to the chancellors decision someone purchasing a property at £495,000 would pay £14,750 in stamp duty, a first time buyer would pay £9,750. Assuming completion takes place before the 31^st of March 2021 the stamp duty is now zero.

People buying second homes and buy-to-let properties will also benefit, but will still have to pay the 3% extra duty due on the entire price.

The holiday applies from the 8^th of July, which unfortunately means if you completed on your property purchase yesterday or before you will have to pay the full usual stamp duty.

For homes costing more than £500,000, buyers will pay 0 % on the first £500,000, five per cent between £500,001 and £925,000 and 10 per cent between £925,001and £1.5 million. This increases to 12 per cent for homes costing more than £1.5 million.

With 81% of all residential property stock for sale in England priced under £500,000 this could be a real boost the housing market, although with lenders still reluctant to release 90 and 95 percent products many first time buyers may not be able to take advantage of this offer. Fortunately there are some excellent schemes available to help buyers purchase their first home and your friendly Blue Q Mortgage Adviser will be happy to discuss these with you.

Yearly Archives: 2020