Blue Q Mortgage

An interest only mortgage will allow you to make monthly payments just to cover the interest on the money you have borrowed. Unlike a traditional repayment mortgage where payments consist of both capital and interest, with an interest-only mortgage, you will only pay the interest and the balance of the loan will therefore not decrease.

There are various reasons why an interest only mortgage may be appealing:

1. Lower monthly payments: this means the loan would be more affordable on a monthly basis
2. Short-term purchase: the borrower may be planning to sell the property in the short term and downsize to a cheaper property
   
3. Investment purposes: the borrower could be planning to invest the money that would be used to pay the capital payments elsewhere

Risks and considerations

1. Balance of mortgage will remain outstanding at the end of the term: as you are only paying the interest on the mortgage, the mortgage balance will remain the same and will be repayable at the end of the term
2. Equity Building: as no capital is being paid during the term of the mortgage, the equity for the borrower will not increase unless the property value increases. This means they may have less equity available for the future, which could be problematic if the value of the property decreases
   
3. Interest Rate Adjustments: if the interest rate loan is variable, borrowers may find their monthly payments increase if mortgage rates rise
4. You will not fully own your own home at the end of the term: A lender will require you to pay the mortgage balance at the end of the term.  This may mean you need to sell your property to repay the loan
5. Investment Returns: if you choose to invest your capital repayments in an investment policy, the growth may not be enough to repay your mortgage at the end of the term
   
6. Part interest only and part repayment: Many lenders will offer a two-part loan which means you can have part of the mortgage on interest only and part on repayment. This allows you to build up some equity in your property whilst keeping your monthly payment low

Interest-only mortgages may not suit everyone, and it is important to fully understand the terms, risks and long-term financial implications.

Our friendly team of professionals are on hand to answer any of your concerns, so please do not hesitate to get in touch: 01245 218018 or team@blueqmortgage.com.

There are several potential sources you can consider when it comes to getting together a deposit to buy a property. Providing proof of the source of your deposit is a key requirement in the application process and will need to be given to both the lender and the solicitor.

Each mortgage lender will have their own criteria as to what they deem as an acceptable source of deposit. These include:

• Personal savings

This is the most traditional and straight-forward way to fund a deposit for your home deposit. Lenders are happy to accept deposits funded by the applicant’s personal savings, although they may want to see bank statements to show the balance increasing over time.

• Inheritance

Lenders are usually fine to accept a deposit funded by inheritance you may have received. You will be required to share legal documents from the Will’s Executor showing details of the amount, as well as evidence the money in your account.

• Gifted deposits

Most mortgage lenders are happy if your deposit was gifted to you by a close relative. Some lenders even allow gifts from friends or more distant relatives. You will need to provide a signed legal agreement declaring that the money does not need to be re-paid.

• Deposit from selling a property

If you are already a homeowner and you are moving home, you may be using the “equity” in your current property as a deposit for your new one. The solicitor will deal  with this for you when the sale and purchase complete.

• Equity from another property

If you own another property, you may have enough equity to be able to release by way of a re-mortgage to make up a deposit to buy another property.

• Gifted Equity
  Some lenders allow family members or associates selling property to gift some of the equity to the buyers, in leu of a cash deposits.

Landlords are now able to gift equity to tenants as part of a mortgage transaction, so be sure to ask if this is an option if you landlord is selling

• Government schemes
  There are government-backed schemes on offer, this includes the First Homes scheme where the deposit required is a minimum of 5% of the discounted purchase price. This has been introduced in a bid to get first time buyers on the property ladder by offering a lower deposit and a 30-50% discount on the house itself.
• 100% Mortgages

Finally, if you simply cannot raise funds for a deposit, it looks like 100% mortgages are returning – so you may not need one anyway!

If you have further questions about mortgage deposits, please get in touch with our team of experts.

Times are tough at the moment with the rising cost of living such as energy bills, food, and petrol. We’ve come up with some tips to help you save a few pennies. Even if you’re not feeling the strain, it is always good to put some of these into practice.

1) Budget
Keep a monthly budget to track your spending and set a limit. This will allow you to see your income, outgoings, spending habits, and understand your overall financial position.

2) Eat In
Keep eating out for special occasions and try cooking at home as much as possible as it can be a cost-effective way to save money. Go one better and plan your meals in advance buying ingredients in bulk where you can save money.

3) Reduce Energy Usage
Turn down your thermostat, turn off lights when you leave a room, and use energy-efficient appliances as reducing energy usage will reduce your monthly utility bills. Also, switching appliances off standby can save around £40 a year.

4) Shop for Deals
Be sure to look for deals in the supermarket, offers on the high street, and voucher codes/ money-off coupons when shopping online to get the best deals. It’s also worth seeing if you can lower your phone bill, or broadband by contacting your provider and haggling for a better deal.

5) Subscriptions
Take a look at your subscriptions and see if you can cut back on any of those you don’t currently use or need. This could be streaming services, magazine subscriptions, and gym memberships.

6) Entertainment
Now more than ever we don’t want to lose doing things that bring us joy. However, there’s no harm in getting creative when looking for entertainment options, this could include; visiting local parks, attending community events, or having a games night!

7) Mortgage
If you don’t have an early redemption penalty to pay – contact us straight away to see if we can save you money on your mortgage payments. Despite the turbulence in the market – mortgage rates are currently falling. Call us on 01245 218018 or email team@blueqmortgage.com.

8) Insurance
Make sure you are getting the best deal on your insurance policies. Contact your car and Pet insurers to see if they offer discounts for existing customers. 

Selling your house can be a stressful time, there are several key tips you can do to help maximise your chances of selling successfully.

• Improve curb appeal

Invest some time and effort in enhancing the exterior of your home – ensure the lawn is mowed, garden maintained and the front of the house is clean and tidy.

• Make necessary repairs

Address and fix any obvious maintenance issues before listing your home. Repair any broken windows, cracked tiles, or leaky taps! A well-looked-after home will give the buyer confidence.

• Stage your home

Be sure to showcase your home’s best features. For example, arrange furniture in a way that maximises space and lets plenty of light in. You could even hire a professional home stager.

• Declutter and depersonalise

Remove excess clutter and personal items – buyers want to be able to envision them living in the house. Keep the décor neutral, organised, clean, and welcoming.

• Price it right

Overpricing can put buyers off, while underpricing may result in lost revenue. It’s important to set a realistic and competitive price for your home based on its condition, location, and market trends. Consult an estate agent for guidance.

• Market effectively

Make sure you use different channels to market your home. Include online listings, professional photography, virtual tours, and social media platforms as this will gain a larger reach and wider audience. Ask your Estate Agent about their marketing approach.

• Highlight unique selling points

Identify and emphasise the unique features and benefits of your home. Showcase any recent renovations, energy-efficient upgrades or desirable amenities.

• Be flexible with showings

Try to accommodate potential buyers’ schedules by being flexible with times – the more accessible your home is for viewings, the higher the chances of attracting serious buyers.

• Respond promptly

Answer enquiries quickly, or any communication related to the sale – this shows commitment and professionalism.

• Negotiate wisely

Be prepared for offers or counteroffers. Work closely with your Estate Agent to evaluate each offer and consider various factor beyond the sale price.

One last tip – remember to have your mortgage agreed so that you are ready to move. Selling a house can take time, so be patient and remain proactive and responsive throughout the whole process.

At the end of September 2022, during the Growth Plan statement, the Chancellor announced some changes to Stamp Duty Land Tax (SDLT) in England and Northern Ireland. These changes have been a welcome relief to people planning to buy residential property and with mortgage interest rates rising, many are happy to know that they won’t have to pay as much SDLT. 

It’s not uncommon for people not to know what SDLT is until they purchase their first home, however, this type of tax can have a big impact on how much it costs you to buy a property. Below we have looked into SDLT in more detail and explored how the recent tax reduction can help people who want to buy a new home.  

What is SDLT?

When you buy a property that is over a certain amount, you are liable to pay Stamp Duty Land Tax. This tax is a percentage of the price of the property you’re purchasing and how much you have to pay differs depending on several factors, such as whether; you’re a first-time buyer, you’re buying a second property or you’re eligible for relief or an exemption.

This type of tax needs to be paid to HMRC within 14 days of completion. More often than not, your solicitor pays SDLT on your behalf and then adds it to their fees, so this is one less thing to worry about during the purchase process. You can use HMRC’s Stamp Duty Land Tax calculator to work out how much tax you’ll pay on the purchase of your next property. 

What are the new SDLT thresholds?

Over the years, SDLT has gone from being a relatively small payment to a significant tax and the SDLT you pay can make purchasing a property much more expensive. The recent Growth Plan revealed major cuts to Stamp Duty Land Tax and the thresholds changed immediately after the announcement on the 23rd of September, so they are relevant to all new purchases.

The new SDLT thresholds are as follows for existing homeowners; 

• Properties up to £250,000 0% 
• The next £675,000 (the portion from £250,001 to £925,000) 5% 
• The next £575,000 (the portion from £925,001 to £1.5 million) 10% 
• The remaining amount (the portion above £1.5 million) 12% 

The SDLT for first-time buyers has changed too and the thresholds are now; 

• Properties up to £425,000 0%
• The next £500,000 (the portion from £425,001 to £925,000) 5%
• The maximum purchase price for first-time buyer SDLT relief has also increased to £625,000.

What does this reduction mean for homeowners?

It goes without saying that paying less tax on your purchase is incredibly beneficial and the Government doubling the level at which people begin paying SDLT could have a huge impact on a large number of buyers. Hundreds of thousands of people may now be able to purchase a property without having to pay any SDLT at all. 

Not having to pay SDLT, or having reduced SDLT costs, could help you to get a more competitive mortgage deal. You could put the money that you would’ve spent paying this tax towards your deposit and this can help you to lower your Loan to Value (LTV) ratio. Your LTV ratio has a direct impact on the mortgage deals you’re offered by mortgage lenders and simply put, the higher your LTV ratio, the higher risk you are to lend to and therefore, you would be charged higher interest rates. 

Lowering your LTV means you could get a more competitive mortgage offer and with the cost of living crisis on everyone’s minds, getting a good mortgage deal is of the utmost importance. Reducing your mortgage loan amount can make the monthly repayments on your mortgage more affordable too and this can take some of the financial pressure off at this difficult time.

The new SDLT thresholds for first-time buyers are equally beneficial and they could help to make purchasing a house more realistic for many. Getting on the property ladder has become more difficult over the years and not having to pay as much tax could help people who have been renting for a while to buy bigger family homes. 

Getting some tailored mortgage advice 

If you’re in the process of buying a home or you need to remortgage, our team at Blue Q will be happy to assist you. We have many years of experience helping people get mortgage deals that meet all of their needs and we will explore the whole market to find the best products for you. We pride ourselves on being a local team of dedicated, independent mortgage experts and you will be in very capable hands when you turn to us for mortgage advice. 

Whether you’re buying a home or remortgaging, taking out a new mortgage is a big responsibility and it’s crucial to ensure you’re choosing the right mortgage deal. It’s highly recommended that you speak to a mortgage adviser before making a mortgage application, they have in-depth knowledge of the mortgage market and can help you find the right deal for your circumstances. Regardless of how long you plan to fix into your next mortgage, the support and guidance a mortgage adviser can provide is invaluable. 

There are so many mortgage advisers out there, it can be difficult to know who to turn to for assistance with your mortgage. One piece of advice we would give to first-time buyers and homeowners alike is to use a ‘whole of market’ mortgage adviser and below we have looked into the importance of this in more detail. 

What is a ‘whole of market’ mortgage adviser?

Simply put, whole of market mortgage advisers have access to a vast panel of lenders and they aren’t ‘tied’ to one specific lender. Although not all whole of market advisers are able to look at all of the mortgages available from UK lenders, they have access to a range of lenders from each sector of the mortgage market. 

You do need to be careful when choosing between different whole of market mortgage advisers as some have a smaller panel of lenders than others. We would suggest that you ask an adviser for a list of their lenders before you decide to use their services. This way you can ensure you’re enlisting the help of a truly independent mortgage specialist with access to several deals from a vast selection of UK lenders. 

Why you should contact a whole of market mortgage adviser 

The mortgage adviser you choose to assist you with your next mortgage application will have a direct impact on the final mortgage deal you take out and it’s key to ensure you’re turning to the right experts for help. Some of the biggest benefits of using a whole of market mortgage adviser include; 

View all available mortgage products 

Since whole of market mortgage advisers have access to a selection of different lenders, you can compare a wide range of mortgage products. Once they know key details, such as how much you need to borrow and what your current income is, they will search their panel of mortgage lenders to find the best mortgage deals for you. This can make the process of getting a new mortgage much easier and you won’t have to contact several different lenders yourself, having the same conversations over and over again, to enable you to compare different mortgage products. 

Get honest and impartial advice

As you may expect, when mortgage advisers are tied to a lender or they work specifically for a small selection of lenders, they will try to convince you that they have the best mortgage deals for you, but this isn’t necessarily the case. When you use a whole of market adviser, they will provide you with honest and independent advice about the different mortgage products on the market. You can trust they will have your best interest in mind and they won’t try to talk you into taking out a mortgage that isn’t right for you. 

Secure the best possible mortgage deal 

There is such a huge range of mortgage products on the market and it’s almost impossible to find them all yourself. Using a whole of market mortgage adviser is by far the best way to secure the best mortgage deal, whether this is a residential mortgage or a buy-to-let mortgage, and the mortgage advice they provide will be second to none. Ultimately, when you use a whole of market adviser, you can have peace of mind knowing that you haven’t missed out on a great mortgage deal because you weren’t told about it. 

Finding a whole of market mortgage advisor 

If you’re searching for a whole of market mortgage advisor to assist you with your mortgage needs, feel free to get in touch with our team at Blue Q. Since being established back in 2001, we have been searching the whole market to find the best mortgage products for our customers and we have the experience required to advise on all aspects of the mortgage market. We pride ourselves on delivering first-class customer service and saving our customers time and money. You can trust we are the best team to contact when you need a mortgage.

The majority of people require a mortgage to purchase a property, especially now that house prices have skyrocketed. Whenever you’re browsing the property market, it’s useful to know how much you’re able to borrow from a mortgage provider and lots of buyers use mortgage salary multiples to get an indication of how much they’re able to spend on a new property. 

You shouldn’t solely rely on the rough estimate from a salary multiplier though and this could result in you falling in love with a property that is actually out of your budget. It is more beneficial to speak to a mortgage advisor and get an accurate estimate for lending. Below we have looked into mortgage salary multiples in more detail. Whether you are a first time buyer, or moving house and remortgaging, it is important to understand how your maximum loan is calculated.

What is a mortgage salary multiplier?

The term ‘mortgage salary multiplier’ is used when referring to multiplying your income to calculate the maximum amount a mortgage provider would lend to you. All mortgage providers want to know that you’re able to pay back the money you’re borrowing, as well as any added interest, so your income is really important to them. 

Generally speaking, when you’re borrowing by yourself, a mortgage lender is happy to lend you around 4 times your salary. If you’re borrowing with a partner, they would lend you approximately 4 times your joint income. However, these figures differ from one mortgage lender to another and some have higher or lower multipliers. 

Factors that affect how much a lender would offer you 

Mortgage salary multipliers are useful because they give you a rough figure that you can use when browsing the property market, yet there is a chance this figure would change. There are lots of different factors that impact how much a mortgage provider would lend you and these factors could have a significant impact on your future mortgage offers. 

In fact, more and more mortgage lenders are moving away from using mortgage salary multipliers and instead, they apply affordability rules. They take into consideration various other financial factors when deciding how much they’re willing to lend. So, two people with exactly the same incomes could borrow different amounts from mortgage providers. 

Some of the factors that influence how much you’re able to borrow when taking out a mortgage include; 

Number of hours worked

Whether you have a full-time or part-time job, or you’re self-employed or on a zero-hour contract, could impact your mortgage. Ultimately, the more secure your job seems, the less risky you are to lend to and having a fixed and reliable salary is desirable to mortgage providers. If you’re guaranteed a certain amount of money every month, you’re more likely to be able to make your mortgage payments and you shouldn’t fall behind on them. 

Overtime, commission and bonuses

If you frequently receive overtime pay, commission or bonuses, these would sometimes be taken into consideration by mortgage lenders. Generally speaking, if these additional payments make a big difference to your basic salary and you have been receiving them for a considerable amount of time, mortgage providers would class them as regular income. Often, a few months’ averages of these extra payments would be used when providing a mortgage offer. 

Monthly expenses and disposable income

It’s not just your income that mortgage providers are interested in, they look at your expenses too. Your regular monthly outgoings, such as car finances and other loans, would be considered by a mortgage lender as they may impact your ability to make mortgage repayments. Any outgoings that reduce your disposable income may be taken into account when you’re applying for a mortgage and they could impact your mortgage rates. 

Finding out how much you could borrow on a mortgage

Should you be curious about how much you could borrow from a mortgage provider and you would like to speak to a mortgage advisor, don’t hesitate to contact us at Blue Q. We will be happy to help you and we provide whole of market mortgage advice to our customers. We understand how important it is to know how much you’re able to borrow when you’re browsing the property market and we can help you to get the mortgage agreement in principle you need. We pride ourselves on delivering first-class customer service and we can assure you that you will be in the best hands with our expert team. 

Before a mortgage provider agrees to lend you the money you need to purchase a property, they will conduct a mortgage valuation. This compulsory assessment is generally paid for by the borrower, but sometimes offered free. This is very different to a Homebuyers Report or building survey and its purpose is to essentially confirm how much the property is worth and if it is suitable security for the lender. 

If you’ve never heard of a mortgage valuation report before and you’re wondering how this could impact a future mortgage, keep reading. Below we have covered all of the basics you should know before you start your mortgage application. 

What is a mortgage valuation report?

A mortgage valuation report is essentially a ‘risk assessment’ for mortgage lenders and it helps them to ensure the property you’re purchasing provides sufficient collateral for the loan. This means, should you be unable to repay the mortgage and your property gets repossessed, the lender can make enough money from selling the property to cover the original loan amount.

The lender’s mortgage valuation report looks at the basic market value of the property. It comments on the general condition of the property and focuses on the parts of the property that most affect its value. It’s worth noting that whilst the borrower usually pays for this assessment, the mortgage lender might not share the valuation report with you once it has been completed. This isn’t abnormal and this type of report isn’t really of any use to you as the buyer, it’s solely for the benefit of the mortgage provider. 

How in-depth is a mortgage valuation report?

When compared to other property surveys, like full structural surveys, a mortgage valuation report is much less in-depth. Often, this report would only include an open market valuation and any recommendations for further investigations, if required. Some are even done on line without a visit to the property.

The lender’s qualified surveyor would usually inspect the property both inside and out if they do go to the property, however, this is normally a very short visit. They then provide the mortgage lender with a report for them to consider. 

Will a mortgage valuation report affect your mortgage offer?

As mentioned above, a mortgage valuation is a compulsory step when applying for a mortgage and the report provided directly impacts the mortgage lender’s decision to lend. Simply put, when the property is suitable security for the mortgage amount, a mortgage provider would be more likely to lend you the full amount of money you need to buy a property. 

However, should the property valuation be less than expected, this could negatively affect the mortgage offer you receive from a mortgage provider. All lenders have their own criteria in terms of Loan to Value Ratio and if the mortgage valuation finds that the property isn’t worth enough to meet these criteria, you may not be able to borrow as much. 

In addition to not being able to borrow as much, the interest rates you’re offered by a mortgage provider could be affected by the mortgage valuation report too. So, it is crucial to ensure that when you put an offer in on a property, you’re not paying above the current market value. This could end up causing lots of problems when you try to get a competitive mortgage offer. 

Speaking to a mortgage advisor about mortgage valuation reports

Hopefully, you will now know more about what a mortgage valuation report is and how it may affect the mortgage you’re applying for. If you would like to get some advice from an experienced mortgage advisor about applying for a mortgage, don’t hesitate to contact our team at Blue Q. We provide whole of market mortgage advice to a range of buyers, from first-time buyers to landlords, and we will be happy to assist you. We pride ourselves on delivering first class customer service and assure you that our team will go the extra mile to help you find the best mortgage for the property you’re purchasing. 

With Summer coming many will be considering selling their home with a view to moving onto pastures new.

Late Spring and Summer is recognised as a great time to sell, largely because the weather is better, the days are longer, the garden looks brighter and we are all coming out of quasi hibernation, especially this year! As with all things, first impressions count and presenting your home well is so much easier on a sunny spring day.

Here are some other things to consider before placing your house on the market;

• Undertake a full spring clean! This has several benefits. First of all, it’s amazing how easily we get used to grubby door frames, piles of kids’ toys and broken blinds. Take a full inventory of what needs to be tidied, fixed or refreshed and get to it!
• Clean your carpets and curtains. This action is worthwhile anyway, but before you present your home to strangers why not give your home a thorough deep clean? If you have pets or smokers in your home then the improvement in odour alone is worthwhile.
• Make sure to clean all the windows inside and out. Clean windows make a huge difference to the appearance of a place, especially from inside on a sunny day.
• Tidy the garden, perhaps invest £30 – £50 in some attractive early flowering plants and make sure the lawn is well cut and trimmed. Clean all paths free of moss and make sure the front garden and pathway are tidy and well-presented.
• If the front door could benefit from a refresh or even redecoration, do it. And perhaps consider investing in an attractive door knocker (if you have a handsome front door).
• Make sure that oxidation on bathroom taps is no more. Nothing tarnishes a home more than that ‘grubby, lived-in look’.
• Make sure the kids keep their rooms tidy (OK, maybe that’s too big a task) or at least make sure they help tidy before viewings.
• The cliche of making bread, boiling coffee and fresh flowers in the entrance hall and living room are cliches for a reason. They help set the scene.
• Don’t redecorate entirely. Tastes vary too much. But do consider a refresh of doors, door frames and scuffed walls, where needed. Use neutral colours.

So there is a start for you. In addition, make sure to make ready the following;

• Evidence of the average energy bills – very important since the rise in energy prices
• The broadband connection speed available where you are
• The council tax bill
• Have evidence of what other homes locally have sold for. You might not mention it, but if a potential buyer starts down that route, at least you’re prepared.
• Get all your paperwork together for the conveyancer. This will include any warranties you might have for work done and for white goods you might be leaving. If you are likely to need a new mortgage then you should be collating all your PAYE information, etc.

If your home has particular features such as an open fire, a large kitchen or a spectacular garden, make sure to present them well. Let the features sell for you.

The whole process of applying for a mortgage can be quite stressful and your hopes of getting on the property ladder or purchasing your next home can instantly be ruined by your mortgage application being rejected. The vast majority of people rely on a mortgage in order to purchase a property and whilst there is a range of mortgage products on the market, getting accepted by a lender might end up being more difficult than you anticipated. 

If you’re keen to make your first mortgage application but you’re concerned about getting rejected by mortgage lenders, we have listed some of the most common reasons why people are unable to get the mortgages they’ve applied for. Hopefully, this information can help you to ensure your application is accepted the first time round. 

Errors in the application 

One of the most common and often the most frustrating reasons why mortgage applications are rejected is because there is an error on the application form. It is important to ensure that you’re taking your time and checking that absolutely everything is correct whenever you apply for a mortgage. Even the smallest error, such as an incorrect spelling or house number, could result in your application being rejected and mortgage lenders are really particular when they’re considering your application to prevent any problems in the future. 

Low credit score 

All mortgage lenders use their own credit score to predict how risky you are to lend money to. If you have a really low credit score, this may result in them rejecting your application. Lenders have their own score level which they do not publish when it comes to your application, but it is beneficial to check your credit score before applying. This will provide you with the chance to improve your score  If you do have a low credit score, there are special lenders available to help with poor credit mortgages too. 

Asking to borrow too much 

Whenever you apply for a mortgage, in addition to looking at the Loan to Value ratio you require, you also need to find out how much you’re able to borrow from a mortgage lender. As a very rough guide, most leaders would provide you with a mortgage that is 4.5 times your salary, however, every lender is different and this is something you need to check. Mortgage lenders want to ensure that you’re able to make the repayments on your mortgage if the interest rate increases, so if you apply for a large sum of money but you have a low income, your mortgage is likely to get rejected. 

If you would like to find out how much money you could borrow from a mortgage lender, it is beneficial to speak to a mortgage advisor. They can give you a much better idea of how much you could borrow and, in turn, how much you’re able to spend on a property. 

Self-employed worker 

Unfortunately, when you’re self-employed or on a zero-hour contract, getting a mortgage can be more complicated. You will need to satisfy additional lender checks when making an application.

For example, self-employed applicants will need to provide tax documents and some lenders might want to see twelve months’ proof of income. Some mortgage lenders are more likely to accept your application than others when you’re self-employed too, so do some research or speak to a mortgage advisor to ensure you’re making an application to the right lender for your individual needs. 

Applying to the wrong lender 

Simply put, not all mortgage lenders accept the same applications and depending on their lending criteria, your application might get rejected by one lender but accepted by another. If you don’t know much about the mortgage market, you might be unsure which mortgage lender you should apply to and this can result in you wasting a lot of time applying for unsuitable lenders. To prevent multiple applications from being rejected, which can reduce your credit score and make it even harder to get a mortgage, it is useful to get some tailored advice before you make your first application. 

Looking for a mortgage advisor in Bracknell?

If you’ve had a mortgage application rejected and you would like to get some professional advice before you make another application, don’t hesitate to contact us at BlueQ. Our specialist team of mortgage advisors near Bracknell can provide you with the sound guidance you’re looking for and we have experience advising on all aspects of the mortgage market. As whole of market advisors, we will do all we can to help you find the perfect mortgage products for you at this moment in time. 

Using Equity Release To Buy A Second Home 

Equity release is known for being a brilliant way to release some of the money that is tied up in your home. The lump sum you receive through an equity release plan can be used in several ways, from paying for a luxury holiday to carrying out home improvements and lots of people will use equity release to boost their pension pot as an additional retirement income.

If you’re over 55 years of age and have considerable equity in your home, you may be wondering; ‘can I use equity release to buy a second home?’. The simple answer to this question is yes and equity release can be a great way to get a deposit for a new property. However, there are some things you will need to take into consideration when using equity release to buy a second house and below we have explored this in more detail. 

The amount of equity you need to release 

To make the process of buying a second, perhaps holiday home easier, it may be beneficial to release enough equity in order to buy the new property outright. This can prevent you from having to get another mortgage and, in turn, pay two lots of mortgage repayments every month. Not to mention, mortgages on second properties are often considered higher risk by lenders. So, in order to be able to afford the second home that you’re interested in, you need to make sure that you’re actually able to release enough equity from your existing property.  

If you can’t afford to be a cash buyer and you’re happy to take out another mortgage for your second home, you may not need to release as much equity, but there are still a number of other costs to take into consideration. In addition to paying the deposit required for the new property, you will also need to pay for things like legal fees and enhanced stamp duty charges. People commonly require more equity than they initially realise to buy another property. 

How you’re going to use the second home 

If you will require a mortgage on the second home that you’re buying, how this property is going to be used will be taken into consideration by lenders. For example, if you’re going to use the second property as a personal holiday home and you require a residential mortgage, a lender will question whether you’re able to pay for this new loan as well as your existing mortgage. 

Similarly, if you want to rent your second home, a mortgage lender will want to ensure that the rental income will cover the mortgage repayments. Buy-to-let mortgages can be quite complicated too and the rental income is subject to tax.

The other options for buying a second property

Sometimes, instead of releasing some of the equity in their home with an Equity release mortgage, people will decide to simply remortgage to buy a second house. This can be a great option to consider and it can sometimes be more suitable than equity release, depending on your individual circumstances. However, when you remortgage, you will need to be able to prove that you can afford the larger loan you’re taking out. Remortgage rates are generally lower than equity release interest rates 

Often, the cost of borrowing will increase the more money you want to release by remortgaging too and mortgage lenders will increase the price of the loan to reflect the risk of lending to you. It is also important to remember that remortgaging will generally involve various additional costs, such as; valuation and arrangement fees, legal fees and there may be an early redemption fee to redeem any existing loans.

Speaking to a mortgage advisor about equity release

Should you have any questions about equity release or buying a second property, our team at BlueQ will be happy to assist you. Since being established back in 2001, our mortgage advisors have been providing whole of market advice to customers and we are experienced in all aspects of the mortgage market. We pride ourselves on delivering first-class customer service and we can help to make the process of getting a new mortgage as hassle-free as possible. We look forward to assisting you with all of your mortgage needs. 

A Debt Management Plan is a mechanism by which you can have a third party negotiate with the people to whom you owe money and set out a plan by which you will make a single, affordable monthly payment each month.

Debts that can be included in a DMT are referred to as non-priority debts and include;

• Overdrafts
• Personal loans
• Bank or building society loans
• Money borrowed from friends or family
• Credit card, store card debts or payday loans
• Catalogue, home credit or in-store credit debts

Unfortunately, some debts can’t be included in a DMT. These include;

• Court fines
• TV Licence
• Council Tax
• Gas and electricity bills
• Child support and maintenance
• Income Tax, National Insurance and VAT
• Mortgage, rent and any loans secured against your home
• Hire purchase agreements, if what you’re buying with them is essential.
• These debts are known as ‘priority debts’.

Whilst a Debt Management Plan is not specifically registered on your credit file, the fact that the implementation of a DMP will almost always be the result of you struggling to maintain (or miss previous payments to creditors) may have an effect on your credit score. However, just because you have a DMP does not necessarily restrict you from obtaining a mortgage as long as your credit history and other factors are still within parameters.

Whilst anyone can set up a Debt Management Plan, if you use a third party business then they must be properly registered with the FCA. The advantage of using a third party is that they do all the negotiating with your creditors, taking away that pain and hassle. You then pay one single agreed payment plus a once-a-month charge to your Debt Manager.

You may qualify for a Debt Management Plan if you have unsecured debt equivalent to between 15% and 39% of your annual income and you’re finding it hard to maintain repayments. It’s also usual to be on a steady income that should allow you to repay the outstanding debts over 5 years or less.

A DMP can take just a few weeks to set up and can give you the flexibility needed to repay your creditors over time.

It’s a little known fact that pretty much all land and property owned in the UK is actually the property of the Crown. Really! But don’t worry, in practical terms, if you own the freehold interest in land or property then for most intents and purposes, you are the ‘owner’ of the property and everything above and below it.

Of course, there are sometimes limitations on even our Freehold ownership. These limitations might take the form of retained rights, such as mineral rights or rights of way (easements) or restrictions, such as positive or negative covenants restricting use or requiring action (such as undertaking maintenance or not using land for specific purposes).

But, if you own the freehold interest, you will own that interest in perpetuity, until you sell it or, if it is mortgaged, the mortgagee repossesses it.

An alternative way to occupy or own an interest in the property is by way of a lease. This can be like a freehold in that you might still enjoy exclusive use of the property and have rights to it. However, leases are time-limited and therefore you will not hold the property into perpetuity. You might also have more restricted rights, such as being required to maintain the property and not allow certain uses, etc. However, you will enjoy specific rights in common law, as a tenant (or lessee).

In some cases, modern statutes have allowed tenants the right to renew their lease on similar terms or even to buy the freehold interest or the freehold interest of the building containing their flat, plus a long lease on their flat.

Of course, a flat can’t be owned freehold in the true sense of the word as this would mean owning the property above and below it, which would mean you also owned flats above and below you, plus any car parking! In order to get over this problem, it’s usual for flats to be sold on long leases of say 99 or 125 years.

In some cases, these leases might even be for say 999 years! These long leases are sometimes referred to as ‘virtual freeholds’. The owner of such a lease might not own the freehold but he does have most of the rights associated with ownership of the freehold, such as the right to exclusive possession and quiet enjoyment. In such circumstances, it is usual for the lessee (the owner of the leasehold interest) to have limited obligations under the lease, other than to perhaps pay ground rent or pay into a sinking fund. Even then, some ground rents are rarely demanded or paid, or could be for something innocuous like one peppercorn per annum.

There are a few reasons why you might be buying a property with a tenant still in occupation (a sitting tenant). Usually, it’s because you are buying what is known as a ‘Buy to Let’ investment. In these cases, the presence of a tenant has several benefits. You will likely be receiving rent from day one, which will improve your return on capital and internal rate of return. You should also if you’ve done your homework, have a reliable tenant already in-situ.

Firstly, check that your mortgage lender is happy that you are purchasing the property with a tenant in situ, as most prefer the property to be unoccupied on completion.

Of course, if your tenant has been in occupation for a while, he or she may be paying a low rent that should be reviewed. This can involve negotiation and it’s important that you know the terms of the tenancy prior to purchase.

Some tenants may occupy under an old tenancy or a longer lease and in these cases, your rights as the property’s ‘owner’ may be significantly curtailed. You might not be able to gain occupation whilst the tenancy remains in place and you may even have to grant the tenant a new lease in such circumstances. It is critical that you take legal advice.

In any event, make sure that as a bare minimum you undertake the following;

1. Make sure you and your legal representative have read the lease or tenancy agreement and that you understand all the terms.
2. Establish whether the landlord or tenant have ever breached any of the terms of the agreement.
3. In the case of a short tenancy, make sure that any surety deposit is properly held by an authorised third party in accordance with the law and make sure that this is addressed and accounted for when you purchase the property.
4. Make sure to undertake a full survey and inspection of the premises before the exchange and completion of the purchase and, in the case of furnished property, undertake a detailed inventory.
5. If possible, speak with the tenant. Establish whether they are happy there and what, if any, problems they know about. This can save you a lot of money post-purchase!
6. If you expect to increase the rent, it might be worth floating this past the tenant to see their reaction. No-one wants to pay more but if the tenant is reasonable and happy where they are, they may be expecting a rent increase anyway.
7. If you plan to regain possession, either to live there yourself or to refurbish and re-let or resell, make sure that you are legally entitled to do so and allow for the fact that if the tenant is uncooperative, there may be a delay and a cost implication to build into your figures.
8. Make sure that the tenant is who they say they are and check that all necessary statutory obligations have been undertaken, such as annual gas safety inspections, electrical inspections, the installation of fire and gas alarms, where required and that any furniture is properly tagged as safe for tenanted accommodation.
9. Make sure to check that no-one else lives in the property or has acquired rights over the property during the previous ownership. This is usually done through various searches and the completion of a TA6 form that is filled out by the seller.

Last, of all, remember that tenants are people too! It’s amazing what you can agree if you make the deal appealing to their interests. Perhaps in return for you fixing a few taps and replacing a carpet, you can get them to sign a new tenancy or increase the rent on their existing one?

For more information, book a free appointment to speak to one of our specialist buy to let mortgage advisers/

If you’re new to buying a home, you may hear lots of familiar phrases that you don’t fully understand. One of these phrases commonly used is ‘the property chain’. If you’re unsure what this is and why it’s talked about so much, we explain here.

As a first-time buyer, purchasing a new home is relatively straightforward. Once you have your deposit and, perhaps, your government-funded Equity Loan, you just need a valuation for the mortgage and a mortgage offer and your lawyer will do most of the rest. The housebuilder finishes the home and then sells it to you. Simple.

But what about when you are buying a home from someone other than a housebuilder?

Well, in this instance things can get more complicated. In most cases, the person you are buying from is likely to be selling to move to another property and the person they are buying from might be doing the same – and so on. This can sometimes result in a long chain of transactions, each dependent on the completion of the one before.

Most experienced home owners will be wary of long chains, simply because if just one buyer pulls out of their transaction it can cause all the other transactions to stall or even fall through completely. For this reason, buying from a housebuilder or selling to a first-time buyer with no house to sell, can be a very attractive proposition. Cash buyers are also attractive for the same reason, as is selling at auction, although this brings with it its own drawbacks.

For a chain of transactions to work well, it’s important to have a good understanding of everybody else’s needs and desires. For example, one buyer in the chain might be moving conditional upon relocating for a new job, or another might be an investor that must sell before the end of the tax year. If you don’t understand these pinch points, chains can collapse and you may all be left with what is referred to as abortive costs for work undertaken by your conveyancer, solicitor, etc.

In a successful chain, all the people involved in the transaction will understand the needs of each other and will communicate difficulties honestly and promptly. An element of flexibility might also go a long way. Especially on timescale. When everyone is sure they can ‘perform’ as required (in other words, they know they will be in funds for the purchase, etc) they will exchange contracts for the sale or purchase. At this point all the terms are set, including move dates, etc.

It’s unwise to exchange on a contract unless you know you can fulfill its terms, although sometimes it’s necessary to exchange based on the exchange of contracts with another. If at some later stage you cannot fulfill the terms of your contract because of the breach of another contract made with you, there is a route by which you can pursue a claim for damages incurred as a result of these breaches. Hopefully, it never gets to that stage.