What is a Mortgage Prisoner?

‘Mortgage prisoners’ are people who are unable to switch mortgages to a better deal, despite being up-to-date with their mortgage payments.

Where does the name come from?

As the name suggests it is a situation where homeowners are ‘trapped’ in their existing mortgage, unable to switch to a deal with better terms, or rates. The term ‘mortgage prisoner’ surfaced during the financial crisis of 2008.

How does someone become a mortgage prisoner?
Mortgage prisoners often arise due to a combination of factors such as changes in economic downturns, lending practices, and regulatory constraints.

Below are a couple of scenarios which could lead to a borrower becoming a mortgage prisoner:

  1. High Loan-to-Value (LTV) Ratio: if you have taken out a mortgage with high LTV ratios, which means you borrowed a large portion of the property’s value. If the value of the property declines, or if your financial situation deteriorates, you may find yourself in a position where you owe more on your mortgage that the property is actually worth. This can make it difficult to refinance or switch lenders.
  2. Tightened Lending Criteria: following the financial crisis, lenders have implemented stricter lending criteria, making it more difficult for borrowers to secure new mortgages. This means, some existing homeowners who were previously able to get a mortgage do not meet the new criteria when trying to switch to a new lender or negotiate terms.

Unfortunately, mortgage prisoners may be stuck with higher interest rates and unable to benefit from any lower interest rates on the market. There are regulations and policies in place which provide initiatives to provide relief and potential solutions for those affected and facing financial hardship.

Out team will be happy to talk further about Mortgage Prisoners with you. 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.

Moving and Packing Tips for a Stress-Free Move

Are you moving into a new home soon? Despite being very exciting, it can also be an incredibly stressful time trying to pack all your belongings, book moving vans, and tie up any loose paperwork such as bills and change of address. Check out our list of tips to get you ready for the big day.

Start packing early

Quite often the thought is worse than the deed! If you break it down into smaller tasks, such as focusing on a room at a time or packing away items you definitely won’t be needing, it can feel a lot less daunting. Alternatively, you can always pay someone to pack up your house for you!

Disassemble furniture in advance

Disassembling anything that may not fit through the door in advance, will save you a lot of time and stress on moving day.

Have a clear-out in advance

You’ll have enough to take with you so you don’t want to be taking anything you don’t want to keep. It can be quite satisfying to clear unwanted belongings and donating them to charity – of throwing anything that is no good!

Who will be helping you move

Depending on your budget and how much you need to move, you’ll need to figure out which service you require – do you have friends or family to help you, or will you be relying solely on a man and a van? It is always good to book vans in advance and shop about for the best quote offering the best service to suit your needs.

Boxes and labels

Large zipped laundry bags are inexpensive and great for moving linens, shoes, and clothes. Labelling boxes may sound very obvious but clearly marking boxes will make life so much easier when you come to unpack them.

Which room?

Create an inventory of furniture and mark which room it will be going in – this makes it easier for those moving heavy, bulky items. It will also determine whether your furniture will fit through the doors!

Essentials box

Packing the kettle, tea, coffee, and loo roll last will mean you will unpack this first – these are likely to be a necessity when you arrive! It’s worth keeping remote controls, phone chargers, and anything you may need to find quickly in the same box. Be sure to keep jewellery and valuables in a safe place.

Make your bed

Knowing where your linen is and making your bed early on, will mean you can crash at the end of the day without having a further job to do before you can relax! You have made it to your new home, you can now relax and take time to unpack the rest of the boxes!

Parking Rules Explained

When you’re looking to buy a home, and you own a car, you ideally want to know you’re going to be able to park your car either on your own driveway or at least close enough so that you don’t have to walk two miles carrying a week’s food shopping!

Parking rules can be confusing, even for the most experienced of drivers! This is why we have written this blog to help you and prevent any nuisance parking.

On-street parking

Be sure to look for signs and information on your local authority’s website as this will indicate whether you are in a Controlled Parking Zone, a Restricted Parking Zone, or you have the freedom to park there.

Permit holder only

Some streets only have parking for residents who hold a permit, or a temporary visitor permit. These rules may be 24 hours a day, or they may be for set periods during the day. There will be signs nearby to establish whether you can park there or not.

Can you park on a dropped kerb?

Dropped kerbs are there for a reason – to improve access for:

  • Pedestrians – particularly those using wheelchairs or mobility issues, as well as people with limited sight
  • Vehicles – for those entering or exiting a driveway

The Highway Code states that you must not park where the kerb has been lowered.

Can you park opposite a dropped kerb?

As long as it is safe to do so and vehicles can get in and out of their driveways easily you are allowed to park opposite a dropped kerb.

 Can you park in front of a driveway?

Parking in front of a driveway is sure to upset the neighbours! Often there will be dropped kerb in front of the driveway to enable vehicles to access them, which as we have already read is a no-go. Even if a driveway doesn’t have a dropped kerb, you should still avoid blocking it, again for visitors who have mobility issues or young children, unless you have permission from the occupiers.

Can you park on someone else’s drive?

It is a civil offence of trespassing on private property if you opt to park on someone else’s driveway unless you have been given permission to park there. Although it is not a crime (civil matters are enforced in different types of courts), so the police aren’t likely to get involved. Also, if your vehicle is taxed and insured you won’t be classed as an ‘abandoned vehicle’ so the council may not help either. But technically you get sued and most definitely ruffle some feathers!

Of course, it’s always good to refer to the Highway Code (rule 239) for any confusion on parking, but a lot of the time sensible parking comes down to common sense!

Debt Consolidation into a Mortgage

We are often asked if it’s good advice to consolidate “unsecured” debt (credit cards and loans etc) into your mortgage, the answer is, sometimes.

As long as you have sufficient equity built up in your property, you can borrow additional funds to pay off any of the following:

  • Loans
  • Credit cards
  • Hire purchase agreements
  • Overdrafts
  • Student finance

This would typically be by either re-mortgaging to a new lender and increasing your loan amount or taking a further advance from your existing lender. If neither of these are possible you may be able to arrange a second charge loan from another lender

It is true that paying off credit and adding it to your mortgage will reduce your monthly income initially. However, before you go ahead it is very important to go through each item of credit with your Mortgage Adviser and ask them to calculate how much it will cost you overall if you consolidate it into the mortgage vs how much it will cost if you leave it as an unsecured debt. This will help you to decide what to consolidate and what to leave as it is.

As a rule of thumb, any credit with a balance under £1,000 or where there are less than 12 months remaining on the term should not be considered, as this is not good advice!

The main benefit of taking this course of action is clearly that it will reduce your monthly outgoings. As well as this, the interest rates on secured borrowing are typically much lower than on unsecured borrowing and you will only have one payment to manage.

On the downside, additional secured borrowing puts your home at greater risk if you become unable to make the repayments and you will likely be making repayments for longer as you are spreading the costs over a longer-term

I want to re-mortgage, what do I do next?

If you feel that debt consolidation into a mortgage is for you, you’ll want to compare a range of lenders. The best way to find the most suitable deal for your personal circumstances is to seek help from a mortgage broker. This is where we can step in and guide you through the process. 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.

Mortgage Tips To Help With Rising House Prices

Over the years, properties have become more and more expensive. If you speak to your parents or grandparents, they likely paid a fraction of what house prices are nowadays when they first purchased their own home. This has made it much more difficult for people to get on the property ladder and houses are less affordable than they were a decade or two ago. 

Although house prices are rising, purchasing a property is still cheaper in the long run than renting and it’s always worthwhile trying to get on the housing ladder. If you’re in the process of looking for your first home and you’re concerned about the rising house prices, below our team of mortgage advisers have put together some information you may find useful. 

What’s happening to the property market?

According to the latest Rightmove House Price Index, the average price of property has risen by 0.9% (+£3,398) in October to a new record of £371,158. For many first-time buyers, this average house price is simply unaffordable and first-time buyer demand is down by 21% when compared to this time last year. 

Experts expect house prices to drop in November and December, as they usually do each year, and there is a chance that first-time buyers may be able to find properties within their budget as we head towards 2023. The uncertain economy is still a concern for many though and it is making it difficult to predict what next year has in store for house prices. The repercussions of the Government’s mini-budget are still to unravel too and there may be more changes to come to the housing market in the near future. 

How to get a mortgage when house prices are rising 

Not only are house prices rising, but interest rates are rising too and getting a competitive mortgage has become more difficult, particularly in the last month. Unfortunately, when applying for a mortgage now, you would have to borrow more to purchase the property you’re interested in and due to higher interest rates, you would pay back more over time as well. That being said, there are a few things that can help first-time buyers get a mortgage even though house prices are rising. 

Speak to a mortgage adviser 

It’s highly recommended that all first-time buyers speak to a mortgage adviser before searching the property market for a new home. A mortgage specialist can give you an indication of how much you’re able to borrow in the current financial climate and this is incredibly helpful when you’re searching the property market. 

Some mortgage providers removed mortgage products from the market immediately after the mini-budget was announced, but they are gradually starting to release new mortgage products for buyers. When you speak to mortgage advisers, they can review the mortgage market for you and help you to find the best mortgage offers. They can also tell you more about the different help-to-buy options available that could help you to get on the property ladder. 

Check your credit score 

All mortgage lenders have their own mortgage affordability tests, also known as stress tests, and they would undertake checks before offering you a mortgage. These tests are designed to ensure borrowers would still be able to meet their monthly mortgage repayments, even if their circumstances change or interest rates rise again over the period of the loan.

Several factors impact the outcome of mortgage affordability tests, one of which is your credit score. Having a good credit score could help you to get the mortgage you need and it’s key to check your credit score before applying for a mortgage. There are a few things you could do to improve your credit score too and it’s worth looking into these in more detail.  

Consider a lower LTV 

Loan to Value (LTV) refers to the ratio between the loan amount and the value of the property. Most mortgage lenders have a minimum LTV of 95% and you would be required to put down a deposit of 5%. However, you are often considered ‘high-risk’ to lend to when you have a high LTV and ultimately, it would cost you more to borrow the money you need. 

Whilst this isn’t an option for everyone, if you have some additional savings that you could put towards your house purchase, this could be advantageous. Having a higher deposit would lower your LTV and this could help you to get a more competitive mortgage. You may have more mortgage options to choose from when you have a lower LTV too. 

Getting a new mortgage 

When you’re trying to get a new mortgage deal, don’t hesitate to contact our team at Mortgage Require for some assistance. We can make the process of getting a mortgage completely hassle-free and we offer whole of market, friendly mortgage advice to customers on all aspects of the mortgage market. Regardless of what type of mortgage you need or what your specific requirements are, we will do all we can to assist you.

How Will The Proposed EPC Changes Impact Landlords?

Back in April 2018, the MEES regulations came into force and any property in the UK private rental sector now requires a minimum rating of Band E on an Energy Performance Certificate. It became unlawful for landlords to rent properties that didn’t have a minimum Band E rating unless there is an applicable exemption. Currently, a new bill is making its way through parliament to update these energy performance requirements.

If you’re a landlord and you’re unaware of the proposed upcoming legislative changes or you’re interested in buying a buy-to-let property and you’d like to find out more, below we have looked into how this new bill could impact the UK rental market. 

What is an Energy Performance Certificate?

Simply put, an Energy Performance Certificate, commonly referred to as an EPC, summarises the energy efficiency of a building and each certificate is valid for 10 years. 

An EPC contains information about the energy consumption of a property and provides cost-effective recommendations about how to improve energy efficiency. It also gives a property an overall energy efficiency rating too and EPC ratings vary from Band A, being the most efficient, to Band G, being the least efficient. 

What are the proposed changes?

More pressure is being placed on people to improve their energy efficiency. The government is implementing various policies and proposals to decarbonise all sectors of the UK economy in an attempt to meet its net zero target by 2050. 

The bill making its way through parliament proposes that all rental properties will need to have a minimum EPC rating of a Band C. It is proposed that this update to the existing MEES regulations will come into effect from the end of December 2025 for new tenancies and the end of December 2028 for existing tenancies. 

What should landlords be doing now?

Although this bill hasn’t yet been passed by parliament, it is predicted that the government will be keen to implement this new legislation to improve the energy efficiency of properties. Should this change to regulations come into effect, landlords will be solely responsible for ensuring their rental properties have an EPC rating of Band C or above, unless they meet the criteria for an exemption, and many are already starting to make changes to their rental properties. 

Ultimately, landlords will be unable to begin new tenancies from 2025 unless they make energy-efficient improvements to their rental properties and increase their EPC rating. This is concerning for both landlords and tenants, and there is a risk that a lot of properties will become ‘unrentable’ in the next few years if required changes are unaffordable. There will likely be an increase in landlords applying for bridging finance to help them cover the cost of any renovations required to make their property more energy-efficient. 

It is advised that all landlords start looking at the recommendations about how to reduce energy use on their current Energy Performance Certificate. They can then start to implement some of the most straightforward and cost-effective improvements to their rental property, helping to ensure it will be rated Band C or above in 2025. 

Getting some tailored mortgage advice 

Whether you’d like to find out more about bridging finance or buy-to-let mortgages, feel free to contact our mortgage consultants at Blue Q. We have a brilliant team of mortgage advisors in the Twickenham area that can provide you with tailored advice on all aspects of the mortgage market. We assist everyone from first-time buyers to landlords with huge portfolios of properties and we pride ourselves on providing honest and sound advice, helping borrowers find the best mortgage deals. We can make the whole mortgage process much less stressful and we are here to help in any way we can. 

Feel free to explore our website today to find out more about the mortgage products we can assist you with and don’t hesitate to book an appointment with a member of our team to discuss your mortgage requirements in more detail. 

Useful Tips For Switching Mortgage Providers

If your current mortgage deal is no longer competitive and you think you could save money by taking out a new mortgage product, you will have two options to consider; switching mortgage deals or switching mortgage lenders. 

It is actually really common for homeowners to remortgage with a new mortgage provider and this could be a great way to save a considerable amount of money every month. Searching the whole mortgage market for a new mortgage product is always a good idea, even if you’ve been with the same mortgage provider for many years, and switching your mortgage could be beneficial for several reasons. If you’re keen to switch mortgage providers but you’re not sure where to start, below we have put together some useful tips to help with the process. 

Get some assistance from a mortgage advisor

Whilst switching mortgage providers isn’t necessarily a complex process, it is highly recommended that you get some mortgage advice before doing so. Speaking to an experienced mortgage advisor can help you to ensure you’re making the right decision about your mortgage and that nothing important is being overlooked. 

A mortgage advisor can help you to better understand the options available on the mortgage market too. Terms and conditions vary considerably from one lender to another and your mortgage is often the biggest loan you’ll take out, so it’s best to seek some expert advice. 

Double-check how much switching providers would cost 

If your existing fixed rate deal hasn’t yet come to the end of its term and you’re planning to switch mortgage providers, it is likely that you would have to pay an Early Redemption Charge and exit fee. These fees differ depending on a number of factors, but it’s crucial to find out how much you’ll have to pay before you start the switching process. Don’t forget to inquire about other costs involved such as; arrangement fees and legal fees as well.

Often, if you’re switching mortgage lenders to save money, switching and incurring the costs would still be cost-effective in the long run, yet you need to learn more about the fees you’ll have to pay in order to ensure this is the case. 

Speak to your existing provider about their other offers

Whenever you’re considering switching mortgage lenders, it is worthwhile looking into simply switching mortgage deals too. Your current provider may have other deals available that meet all of your needs and sometimes, sticking with your existing provider is the best option. If you choose to switch deals, you might not have to pay as many fees and it would usually be a quicker process too. A mortgage advisor can help you to compare the mortgage products you’re being offered if you’re unsure whether they’re the right choice for you. 

Get your paperwork in order for the new mortgage application 

During the switching process, you need to apply for the mortgage product you’re interested in with a new lender and you have to complete an application. To make doing so as hassle-free as possible, organise all of the required documents in advance. Generally speaking, switching mortgage providers takes a few weeks and you can prevent the process from dragging on by being prepared and efficient with your application. 

Consider reducing your LTV ratio

Before you start looking at the different products on the mortgage market, it’s worth considering whether you’re able to reduce your Loan To Value (LTV) ratio. Reducing the amount you need to borrow from a lender could help you to get a more competitive mortgage with lower interest rates and it could make a big difference to the mortgage deals you’re offered. 

There are a few ways you could reduce your LTV ratio, for example; you could carry out some home improvements to increase your property’s value or you could use some of your savings to contribute towards the existing amount of equity you have. 

Looking for local mortgage advisors?

Should you be interested in switching mortgage providers, contact our team here at Blue Q today. Regardless of what your reasons may be for wanting to get a new mortgage deal, our expert team will do all they can to help. We pride ourselves on providing professional and sound mortgage advice to customers, and we can help you to ensure you’re not wasting money on an uncompetitive deal. We also offer whole of market advice and we are dedicated to making the process of finding a new mortgage product as stress-free as possible. 

Why Do People Take Out Secured Loans? | What Are The Benefits?

When they require quick access to funds, most people will consider taking out a loan. Loans can be useful for a number of reasons and there are lots of different ways you can borrow money these days. Typically loans will fall into one of two categories; secured loans and unsecured loans, and whilst each of these options have advantages, secured loans are often the first choice for homeowners when they need to borrow a considerable amount of money. 

Simply put, secured loans are loans that are secured on your property and they will essentially be a second mortgage. You may also hear secured loans referred to as second charges and this type of lending may be beneficial for several reasons. Below we have explored some of the reasons why people take out secured loans in more detail. 

Why do homeowners take out secured loans?

Usually, homeowners wishing to borrow further funds against their homes would either take a further advance from their existing lender or remortgage to a new lender who would offer more money. If for whatever reason this option is not available, or if they require funds quickly, they may be advised to go down the second charge route. 

Common reasons for 2nd charges include:

  • To carry out home improvement projects, such as an extension 
  • To purchase additional buy-to-let or holiday-let properties 
  • To pay for a big life event, like a wedding
  • To consolidate lots of other debt 

Generally speaking, homeowners take out secured loans when they require more than around £25,000. An unsecured loan would probably suffice for anything less. When you take out a secured loan, because this is a charge on your property just like your existing mortgage, the lender has the right to take possession of your property if you don’t make all required payments. 

What are the benefits of secured loans?

When compared to the other options available for people who require quick access to funds, secured loans are a very popular choice. Some of the biggest benefits of this particular type of loan include; 

Borrow more money 

It isn’t uncommon for the amount you can borrow with an unsecured loan to be quite low and you might not be able to get as much as you need through remortgaging with a mortgage lender. However, depending on the circumstances, the amount of money you can borrow with a secured loan is usually much greater. Generally, interest rates are more competitive than unsecured loans, reducing the amount you have to pay back to the lender. 

Longer loan period 

Due to the fact that the loan is secured on your property, lenders won’t be as apprehensive about offering you a longer loan period. Often, secured loans can be for a period of up to 30 years, or more in some cases, and you won’t have to worry about paying the amount you borrow back in a couple of years. This means your monthly repayments would be much less too, making this type of loan more affordable. 

Avoid early repayment charges 

You usually have to pay a significant early redemption fee to your existing lender if you choose to remortgage. A secured loan is a way of raising capital whilst avoiding those fees. You may still incur other costs, such as arrangement fees and legal fees, that you wouldn’t have to pay if you opted for an unsecured loan, but the benefits of taking out a second charge on a property often outweigh these additional costs. 

Taking out a secured loan 

If you’re looking for a way to raise funds and you would like to speak to someone about secured loans in more detail, get in touch with our team at Blue Q today. We are a local team of dedicated, independent mortgage experts and we will be happy to provide you with the advice and guidance you need. We pride ourselves on delivering first-class customer service and we can help you find the right mortgage lender and mortgage product, regardless of what your circumstances or needs may be. With experience in all aspects of the mortgage market, you can trust that we are the best team to turn to. 

How Covid-19 Has Changed What Property Buyers Want

The last 18 months or more have been a strange experience for many of us. Those that have continued to work have had to adjust, in many cases, to a new way of working. This has meant the home being more crowded than usual, especially when the kids aren’t at school and when lockdown was at its strictest.

Perhaps an unexpected by-product of this is that many people have changed their priorities when it comes to ‘must-haves’ and ‘nice-to-haves’ in their dream new home. So, what do buyers want?

Whereas short and easy commutes by road or rail and being close to local amenities were once highly prized, research suggests that this is now a priority for between 14% and 17% of people. Working from home and fast home delivery have, it seems, changed the needs of home buyers.

Additional space for a ‘proper’ home office is also high on the new buyer’s agenda as is a decent outside space or garden. If a nice garden is not available then proximity to green space is desirable. More space seems a common theme. Gardens have greater value now, and many people are will to pay a premium on a larger than average garden.

One can imagine that fast, reliable broadband that enables multi-user streaming services will quickly become a necessity for many, especially if a large part of the workforce continue to work from home at least for part of their work-week.

The Government’s Mortgage Guarantee Scheme Explained

The Budget of 2021 saw the UK Treasury announcing another state-funded scheme aimed at helping to keep the UK housing market fluid. Known as The Mortgage Guarantee Scheme, the newly announced initiative launched officially in April 2021.

The scheme offers lenders to both first-time buyers and those that have previously owned a home a government-backed guarantee, meaning that should the home reduce in value and need to be sold, the lenders are effectively insured for any loss. This scheme has resulted in the increased availability of 95% Loan to Value mortgages coming back in the first two quarters of 2021.

This is good news for borrowers with only small deposits. It means that even if you only have a 5% deposit, you may be able to obtain a mortgage on the remaining 95% of the purchase price, up to £600,000.

Several major mortgage lenders are already offering mortgages on this basis, but more are now expected to join the market.

The government plan is to close the scheme in December 2022, so interested parties should get their skates on if they wish to take advantage!

Can I Remortgage my property to buy a Second Home?

Yes. Probably.

Equity release is simply a way to realise some of the value in your existing home by increasing and/or extending the existing loan on your existing home and using that loan capital raised for other purposes. This can be used for a variety of reasons and the purchase of a second home is one.

If you increase the loan on your primary home, the mortgage lender will want you to be able to prove that you can afford the larger loan. Your personal circumstances will dictate whether you stay with your existing lender or decide to remortgage the property with another. Remember that this may involve additional costs including valuation and arrangement fees, early redemption fees and legal fees.

The more money you release by way of a remortgage, the more likely that the costs of borrowing will increase. Certainly, over say 60% LTV (Loan to Value) you can expect the new loan to be priced higher to reflect the risk the lender is perceived to be taking.

The next thing to consider, is what sort of property are you buying? If it’s a holiday home the affordability question will be asked again and unless you are buying it entirely from cash, any lender is going to need to see that your personal circumstances are such that you can afford both loans. In most cases, lenders will expect a LTV on your primary residence of 80% or less.

If the property is for investment purposes and you expect to buy to let, then the mortgage lender on the second home will want to know that the rent will cover the mortgage payments in the right ratio. You will also need to declare to the lender that this is a buy to let investment and the terms for lending are likely to be less favourable.

It’s also worth remembering that when buying a second property you will be accruing additional costs such as legal fees, loan arrangement fees and enhanced stamp duty charges. Allow for these costs when making your decisions about how much equity you need to release from your primary home.

What You Need to Know About Remortgaging

First of all, what is remortgaging? Well, it’s when someone that already owns a home with a mortgage, decides that they want to take advantage of more favourable terms, such as a lower interest rate or to borrow more money. They would find the best deal and a solicitor will draw down the new mortgage and repay the outstanding one.

The mortgage that you secured when buying your property may not be the best deal after a few years, especially if your home has gone up in value, which reduces your percentage loan. This might enable you to negotiate a lower interest rate with your new or even existing lender.

Alternatively, you might have been on a lower fixed rate that is about to come to an end. When this happens, the interest rate you are charged usually changes to the lender’s Standard Variable Rate (SVR) although sometimes the new rate might be directly linked to other variable datums such as LIBOR or the Bank of England’s Base Lending Rate.

You can remortgage at any time but you may incur penalties if your initial mortgage agreement stipulates fees in certain circumstances. Early repayment may well incur a penalty. There may also be costs such as legal, valuation fees and arrangement fees, (although sometimes lenders pay these for you). So it’s important to allow for these costs when evaluating the benefits of remortgaging.

Many people remortgage so that they can extend their property or otherwise improve it, perhaps by installing a new kitchen. Others want to raise some cash for a child’s education or to give them for the deposit on their new home. It is also possible to remortgage so as to consolidate loans, although in such circumstances you really should talk to your mortgage adviser before doing this. A mortgage may be cheaper on the face of it, but a mortgage over 25 years will likely cost you more than an unsecured loan over say 5 years. The legal ramifications of non-payment also differ between secured and unsecured loans.

It’s important to be aware that all the usual information will be required when remortgaging as when you took your original mortgage. Affordability and stress testing will also be undertaken, so make sure that you plan ahead, perhaps 3 or 4 months before you need to remortgage. This will give you time to get all your information together and search the market for the best deal available. This, of course, is where employing a specialist such as Mortgage Required can pay dividends. We can advise you on the best options and make the process smooth and painless.

Contact our remortgage experts today or book a free online appointment.

How does a Gifted Deposit Affect a Mortgage?

If you’re looking to buy a new home, it’s likely that you’ll need to put down a deposit. These days, the minimum deposit is usually equivalent to 5% of the value of the property. A 5% deposit will mean you have a 95% LTV (Loan to Value) ratio.

With house prices in the UK currently at a staggering 8 x average earnings, just getting on the housing ladder can be very difficult. This is where a gifted deposit might help.

A gifted deposit is a sum of money given to you by someone else, usually a member of your family, so that you can put down enough of a deposit to buy a home. Importantly, the money you are gifted must be given by way of a gift and not a loan.

Many mortgage lenders will accept a gifted deposit as all or part of the proof of deposit and borrower provides when requesting a mortgage. However, in order for the deposit to be accepted, the lender will normally require that the following questions are addressed;

  1. What is the relationship between the mortgage applicant and the gifter
  2. What is the amount of money they wish to gift;
  3. Confirmation that the gift is non-refundable;
  4. That the gifter will hold no legal charge over the property

It’s not unusual for the gifter to be requested to provide a statement of account for where the money has originated. This is usual, for protection against money laundering. Also, should the gifter die within 7 years of giving the money, and the estate is in excess of the current Inheritance Tax (IHT) allowances at the time, there may be some IHT to pay on the gift, usually on a sliding scale.

For more information, book a free appointment with one of our mortgage advisers now.

Jason and James Mortgage advisers

What is a Second Charge Mortgage?

Most of us know that a mortgage is simply a secured loan, usually secured on a property such as a house or flat. If you fail to keep payments or don’t keep to the terms of the mortgage you may incur penalties, the most severe of which might result in the mortgagee (the lender) applying to the courts for a possession order. 

Your mortgagee will have the first claim on the property in such circumstances and they will hold a charge on the property, registered on the deeds or, in most cases these days, on the registered title kept at the Land Registry. This will prevent the property being sold without any mortgage first being paid off.

second mortgage, as the name suggests, is a second loan that is also secured on a property. However, being the second loan, it is normal that the rights enjoyed by the second mortgagee (lender) are subject to the prioritised rights of the first lender. For this reason, second mortgages will usually be more expensive to the borrower in terms of interest rate, although there are other benefits over other funding options such as a remortgage.

For example, if your first mortgage is subject to a significant early redemption fee, it might be cheaper to take a second mortgage, perhaps for a shorter period of time, rather than incur the redemption charges on the first mortgage. Other borrowers apply for 2nd charges when their existing lender cannot offer any further borrowing, for whatever reason.

Any second mortgage will still need to meet the usual tests in relation to affordability, advice and loan to value/equity. In any event, the borrower should check first with the original lender to make sure that they will allow a second charge to be taken on the property. It’s therefore, important to know the terms of the first loan.

It might be worth taking advice on a second mortgage if you’re struggling to get some form of unsecured borrowing, such as a personal loan or because you’re self-employed. Also, if your credit rating has gone down since taking out your first mortgage, remortgaging could mean you end up paying more interest on your entire mortgage. Here, a second mortgage might be a better option.

Second mortgages are regularly used to fund home extensions and home improvements. New kitchens being a favourite! Contact Blue Q about the best course of action for you.

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.

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.

keys to new home

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;

  1. 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.
  2. 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.
  3. 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.
  4. Visit the property several times at different times of the day and on weekdays and weekends so as to properly understand the neighbourhood.
  5. 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.
  6. 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?
  7. 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.
  8. 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.
  9. 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.
  10. 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!
  11. Keep things in perspective. Yes, you might love this place, but there will be plenty more fish in the proverbial sea.
  12. 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!

uk chancellor Rishi Sunak

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 31st 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 8th 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.