Top Tips on Preparing Your Property for Viewing

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.

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. 

Common Reasons Why Mortgage Applications Get Rejected

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. 

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.

Using Equity Release To Buy A Second Home | How Much Do You Need?

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. 

Top Tips For Remortgaging Your Home

Once you have been living in your home for a few years, you may want to consider remortgaging. Switching mortgage providers is actually quite common and there are a number of different reasons why people choose to remortgage, such as; their circumstances have changed and they need to reduce their mortgage repayments, their current mortgage is no longer competitive or they’re interested in releasing some of the capital tied up in their home. 

Regardless of your reasons for wanting to remortgage, there are a few things you can do to make the whole process of switching mortgage providers as easy as possible. Below we have put together a list of our top tips for remortgaging your home. 

Work with an experienced mortgage adviser 

There are so many different things to consider when choosing a new mortgage product and finding the right deal isn’t always easy. When you enlist the help of an experienced mortgage broker, you can ensure that you’re opting for a mortgage that meets all of your specific requirements and that has the most competitive terms. 

Ultimately, a mortgage broker can shop around for you, saving you a lot of time and stress, and they can help you get the best new mortgage deal. In addition to providing you with sound and impartial advice, some mortgage brokers may even have access to exclusive schemes which aren’t currently available on the high street. This is undeniably advantageous. From start to finish, a good mortgage broker can make the whole remortgaging process as smooth as possible. 

Always check for penalties you may incur

Whilst you can switch mortgage providers at any time, you may find there are some penalties associated with remortgaging your home at certain times. If you have a fixed rate deal, for example, remortgaging midway through this deal can sometimes be quite costly and you need to take into consideration any additional costs when weighing up your options. Depending on your circumstances, it may be beneficial to wait a little bit longer to switch providers. 

You can generally expect to come across fees such as; Early Repayment Charges, valuation fees, arrangement fees and legal fees, when you’re remortgaging. A mortgage broker will explain all of these extra costs to you and they will help ensure there aren’t any nasty financial surprises when you decide to switch mortgage providers. 

Plan ahead before remortgaging 

When remortgaging, you need to make sure that you’re finding a new mortgage deal far enough in advance. When you currently have a fixed-rate mortgage, if you don’t plan ahead you may be moved to your lenders’ standard variable rate, which will likely increase the cost of your monthly mortgage payments. So, you should ideally start comparing the options on the market three to four months before you plan to switch mortgage providers. 

It’s important to note that when you remortgage, affordability and stress testing will still be undertaken. All of the information that was required when you took your original mortgage will be required again at this time and it’s useful to get prepared. If you’re not sure what a mortgage lender will want to see, a mortgage broker can inform you of standard requests. 

Switching mortgage providers

If you’re interested in remortgaging your home and you’d like some assistance when doing so, don’t hesitate to contact us here at Mortgage Required today. Our team of experienced mortgage brokers will gladly provide you with the guidance you need when switching mortgage providers and you can rely on us to make the whole process as hassle-free as possible. Since 2001, we have been helping clients get the most competitive mortgages available to them and we review the whole market, comparing hundreds of products to ensure you find the right solution for your individual needs. What’s more, our advice is free, so get in touch with our team of experts to find out how we can help you remortgage

What Can Stop You From Getting A Mortgage?

People tend to assume that getting a mortgage as a first-time buyer will be really straightforward and, for the most part, this is true. However, some will find it much more difficult to get mortgage offers from lenders. If you’re looking to buy your first home and you’re wondering what can potentially stop you from getting a good mortgage deal, we have looked into some of the most common factors to be aware of. 

It is worth noting from the outset though that it isn’t necessarily impossible to get a mortgage should you relate to any of the below and the right mortgage advisor can still help you to get on the property ladder.

Bad credit history or a low credit score

You probably won’t be surprised to hear that if you have bad credit history then you may struggle to get a mortgage. There are a number of different things that can negatively affect your credit score and ultimately, every time you make a late payment on financial commitments, such as electricity bills and mobile phone contracts, it can count against your credit score. Thankfully, there are ways that you can improve this score and specialist mortgage advisers can help you get a mortgage on competitive terms with a bad credit history too. 

Zero hours working contracts

Due to the unpredictability of zero hours contracts, they can sometimes make it more difficult for you to get a mortgage offer. Lenders like to have peace of mind that you will make all repayments on your mortgage, but there is a higher risk that you will fall behind on mortgage payments when you’re not guaranteed a set number of hours at work each week/month. You may find that if you have worked for the same employer for a long period of time and your Loan To Value is not too high, you may still be able to get a competitive mortgage.

Asking to borrow too much 

Simply put, Loan to Value is the amount that a lender will consider loaning you as a percentage of the property’s value and if you’re asking to borrow too much, then they won’t provide you with a mortgage. Generally speaking, the larger your deposit, the better when applying for a mortgage as this will reduce the amount that you need to borrow. Typically, most lenders require a deposit of 10%, however, some lenders allow mortgages with as little as a 5% deposit, which can be reduced further when taking advantage of the Government’s Help to Buy Scheme

The term of a mortgage

The term of a mortgage can vary from 5 years up to 40 years. Lenders will take your age into consideration when deciding how long a term they’re willing to offer you and typically, most lenders won’t extend a loan past your retirement age. Unfortunately, this means the older you are, the harder it will be to get a mortgage with a long term on a standard mortgage, although there are more and more mortgages for older applicants coming to market as people are tending to live and work longer. You do of course have the option to accept a mortgage with a shorter term which will mean your monthly payments will increase.

Monthly spending habits 

When deciding whether or not they’re happy to give you a mortgage, there are lots of different aspects of your lifestyle and financial situation that lenders will consider. One of these factors is your monthly outgoings and if you spend too much, you might not get the mortgage you were hoping for. Again, this is due to the fact that lenders like to know you can afford your mortgage payments and they prefer their customers to be sensible. So, simply cutting down your outgoings and living within your means can improve your chances of getting a mortgage. 

Looking for a Mortgage Advisor in Chelmsford?

Should you require the assistance of an experienced mortgage advisor in Bracknell, don’t hesitate to contact us here at BlueQ. We provide a whole of market mortgage service to our customers and our expert mortgage advisors will gladly answer any questions that you may have. We are proud to be our customer’s first choice for all of their mortgage planning needs and we can assure you that you will be in the very best hands when you turn to our team for hassle-free mortgage advice. 

To discuss your mortgage requirements in more detail, book a free consultation with a qualified mortgage adviser today. Simply use the booking calendar on our website to select an appointment type and time that is convenient for you, it couldn’t be easier to get the tailored advice and guidance that you need. 

Securing A Mortgage On A Low Income – How To Approach the Situation?

Getting a foot on the property ladder is becoming more and more difficult for people of all ages. Not only is the price of property in many parts of the UK continuing to rise, but the majority of businesses still only pay their employees minimum wage, so many fear that they will never be able to own their own home. Thankfully, there are lots of different options available to explore if you’re a first-time buyer trying to get a residential mortgage on a low income:   

Look into the different Government schemes available 

There are a few ‘help to buy’ schemes available that are specifically designed to help people get on the property ladder. A new Government scheme was introduced in April this year and it is set to run until March 2023. Simply put, this scheme involves the Government lending buyers up to 20% of the value of their new home, and 40% in London. 

This scheme provides buyers with the opportunity to pay a 5% deposit rather than a 10% deposit, which makes saving for this initial payment much easier when you’re on a low income. With a lack of 95% mortgages available these days, this scheme is really beneficial. 

Opt for a ‘part rent, part buy’ solution  

Another scheme that falls under the help to buy umbrella is shared ownership. For lots of people, this is a great option to consider and simply put, with shared ownership, you will own part of a property and pay rent on the remainder. This significantly reduces the deposit you need to save and also the amount you need to borrow from a lender. 

Commonly, the shares offered in a property are between 25% and 75% of the value, and you often have the ability to buy a larger share in the future; this is known as staircasing. Not to mention, you can also sell back your share later down the line and use this money as a deposit for a new property. 

Consider a family mortgage

Many don’t realise that family mortgages, like the Family Springboard Mortgage from Barclays, exist and they are another brilliant solution for anyone who is on a low income. With this type of mortgage, you won’t need to save for a deposit and instead, a family member will put 10% of the purchase price into a savings account with the lender.  

After a set period of time, which is usually 3 to 5 years, if you have kept up with your mortgage repayments then your family member will get their money back, along with any interest accrued during this time. With a family mortgage, you will still own the property in the same way you do with any other type of mortgage too. 

Ask for a guarantor on the mortgage 

Another option to consider when you’re on a low income is a guarantor mortgage. This is a similar concept to a family mortgage, however, it involves a family member underwriting your mortgage repayments. You will need to save for and put down a deposit as normal on a property when you opt for a guarantor mortgage though. 

The good thing about this type of mortgage is that you will often be able to get a bigger loan when you have a guarantor than you would independently. Due to the fact the guarantor provides the lender with the added comfort that they will always get the mortgage repayments, they’re more likely to offer mortgages with a higher Loan to Value. 

Trying to find a mortgage broker in Essex?

Since being established back in 2001, here at BlueQ we have been providing professional and friendly mortgage advice to our customers. If you’re looking for a Mortgage Adviser in Chelmsford who can help you get a mortgage deal, regardless of your current circumstances, be sure to get in touch with our team and we will do all we can to assist you. Unlike other mortgage brokers, we provide a whole of market service for mortgage deals and we are dedicated to delivering first-class customer service. 

Why not book a free mortgage consultation with a qualified Mortgage Adviser today via our website? You can either meet us in one of our offices or we can arrange a telephone meeting, whichever is more convenient for you. Whether you’re buying your first home or looking to upsize your current home, we look forward to hearing from you. 

What is a Property Chain and How Does it Work?

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.

The New 2021 Help to Buy Scheme Explained

The UK Government’s new ‘Help to Buy’ equity loan scheme allows first-time buyers to purchase a new-build property with just a 5% deposit. The lender will lend up to 75% Loan to Value (LTV) and the Government will chip in the missing 20% as an ‘equity loan’. This equity loan can be up to 40% of the property’s value in London.

Unlike the previous Help to Buy Scheme, this scheme is only open to first-time buyers. A first-time buyer is defined as someone who does not currently own or has never owned a property or residential land, either in the UK or abroad.

The new Help to Buy Scheme also introduces regional price limits, with new buyers not able to use the initiative to purchase a home costing more than 1.5 x the average first-time buyer property price in their region.

These price caps range from £186,100 in the North East to £437,600 in the South East and £600,000 in London.

EGION2021 PRICE CAP
London£600,000
South east£437,600
South west£349,000

The equity loan element is provided by the Government, interest-free for the first five years. Borrowers will only pay a management fee of £1 a month for the life of the loan. Once the first five years are over, interest is charged at an initial rate of 1.75%. This will rise each year by inflation as measured by the Consumer Prices Index, plus 2%.

The loan, which is secured as a second charge against your home, does not have to be repaid until you sell the property, pay off your mortgage or reach the end of your mortgage provider’s loan term. You can even start repaying the loan sooner, but your repayments must be equivalent to at least 10% of the value of your home at that time, with the option to repay 10%, 20% or 30% at a time if you are in London and took out a 40% equity loan. There is also an administration fee.

The equity loan rises and falls in line with your property’s value, so you may have to repay more than you borrowed when you first purchased your home. Of course, the good news in this scenario is that your mortgage has remained the same or reduced in size but your property has gone up by 20% in value, most of which you own after the equity loan and mortgage is deducted.

The Help to Buy Scheme is administered by Help to Buy agents such as BlueQ. The scheme is open until the 1st of April 2023, so if this is of interest, contact us quickly to find out more information.

If you would like any details Contact BlueQ for an initial chat on 01245 218018.

Budget 2016 – Key Points For You

Insurance Premium Tax

The standard rate of Insurance Premium Tax (IPT) will be increased from 9.5% to 10%. This ensures that the impact of the rate increase is spread broadly across the entire general insurance industry.

IPT is a tax on insurers. However, if they do pass the cost of this rate increase onto their business and household customers, the average combined home and contents insurance would only increase by £1, and the average motor insurance premium by £2 per year.

All the revenue raised from this increase in IPT will be invested in flood defence and resilience measures.

Stamp Duty

Residential additional properties

As part of the government’s commitment to support home ownership and first-time buyers, the Autumn Statement 2015 announced that from 1 April 2016, higher rates of Stamp Duty Land Tax (SDLT) will apply to purchases of additional residential properties, such as second homes and buy-to-let properties. The higher rates will be 3 percentage points above the current SDLT rates and will apply to purchases of additional residential properties in England, Wales and Northern Ireland.

Following consultation, the government announced in Budget 2016 that it has decided that:

  • To help those moving in difficult circumstances, purchasers will have 36 months rather than the originally proposed 18 months to either claim a refund from the higher rates or before the higher rates will apply, in the event that there is a period of overlap or a gap in ownership of a main residence; and
  • There will be no exemption from the higher rates for significant investors, and the higher rates will apply equally to purchases by individuals and corporate investors

Income Tax

Personal Allowances

From 6 April 2016 there will be no higher age related personal allowance for people born before 6 April 1938 which means that the basic personal allowance for everyone will be £11,000. This will increase to £11,500 from 6 April 2017.

Capital Gains Tax

From 6 April 2016, the Capital Gains Tax (CGT) rate of 18% for non, starting rate and basic rate tax payers will be reduced from 18% to 10% and the 28% rate for higher and additional rate taxpayers (and most trusts) will be reduced to 20%.

The annual exempt amount will remain at £11,100 (for individuals) and £5,550 (for most trusts).

Inheritance Tax

The nil rate band will continue to be frozen at £325,000 until 2020/21.

The rate of IHT during lifetime remains at 20% and the rate on death remains at 40%.

Individual Savings Accounts

Adult ISAs

In 2016/17, the annual ISA allowance will remain at £15,240. From 6 April 2017, the annual ISA allowance will then increase to £20,000.

The Lifetime ISA

From April 2017, people under the age of 40 will be able to open a Lifetime ISA and contribute up to £4,000 in each tax year. The government will then provide a 25% bonus at the end of the tax year on the contributions that have been made. This means that anyone who saves the maximum amount in the tax year will be subject to a £1000 bonus. Savers will be able to make contributions from the age of 18 up to the age of 50.

The Lifetime ISA aims to help young people save flexibly for the long-term throughout their lives. It will help them to simultaneously save for a first home or for their retirement, without having to choose one over the other.

Opening a Lifetime ISA will work in the same way as opening any other ISA, as will saving into one. Individuals will also be able to transfer their Lifetime ISA in line with the existing ISA rules.

There will however be some additional rules to consider:

  • Individuals will be able to contribute into a Lifetime ISA and receive the 25% Government bonus up to the age of 50.
  • The Government Bonus will be paid on contributions of up to £4,000 per year. This is essentially £1 from the Government for every £4 the individual invests.
  • Individuals will be able to transfer funds from other ISA’s as a way of funding their Lifetime ISA.
  • Where people choose to withdraw savings from the Lifetime ISA to make a first home purchase, they will be able to withdraw up to 100% of their balance including the Government bonus. Their withdrawal can be put towards a first home located in the UK with a purchase value of up to £450,000. There will be an initial holding period of 12 months from the account opening before withdrawals can be made for a home purchase.

Whilst the purpose of the Lifetime ISA is to encourage long term saving for buying a home or saving for retirement, the Government have also stated that they want to ensure that people can access their money for any other purposes. This will however incur a 5% charge.