Blog Archives

Mortgage approvals pick up in September, says Bank of England

31.10.2016

Mortgage lending picked up in September with 62,932 approvals compared with 60,984 in August, according to the Bank of England.

With lenders continuing to cut mortgage rates in order to boost their balance sheets before the end of the year, there are lots of attractive deals on the market to attract borrowers. For example, Yorkshire Building Society last week launched a record low two-year discounted rate of 0.98 per cent for those remortgaging. The downwards pressure on rates looks no sign of easing, which is great news for borrowers.

Jonathan Harris
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Jonathan Harris

Mortgages for older borrowers

24.10.2016

Tougher mortgage rules, introduced as part of the Mortgage Market Review, have made it harder for older borrowers to get a mortgage. Thankfully, in recent months the situation has eased with a number of lenders prepared to be more flexible towards older borrowers, extending the maximum age at which they are prepared to lend.

More innovation is also coming into this market, with the Family Building Society this week launching a ‘retirement lifestyle booster’ mortgage, that can be taken out up to the age of 79. Unlike equity release, the debt is repaid during the borrower’s lifetime. There is a maximum term of ten years and it is paid as a monthly income rather than a lump sum. The idea is that after a decade you repay the loan by downsizing or drawing on other savings or investments.

It is aimed at those who are at the age where their children have left the nest but they aren’t ready to downsize and move to a smaller property. However, they do want to boost their income and do plan to move in circa ten years’ time. The advantage of this product compared with equity release is that interest doesn’t roll up, although it is worth noting that the new generation of equity release products enable you to pay the interest after the first 12 months.

One big downside of this product is that this mortgage needs repaying in ten years which may mean selling the family home or remortgaging onto an equity release product if you don’t want to move and don’t have the funds to pay off the mortgage. It is also worth considering equity release and a conventional mortgage alongside this product.

Seek advice from an independent adviser.

Adrian Anderson
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Adrian Anderson

Will your mortgage be paid if you die?

14.10.2016

Death may not be a particularly uplifting subject but the devastation it can cause from a financial point of view means it must be addressed. Many joint mortgages are built on the income of one applicant so ensuring that debt is repaid in the event of that person passing and the home can be kept rather than sold to pay back the mortgage, is vital.

It is also worth purchasing life cover for a spouse who doesn’t work because if they were to die, and leave young children who need looking after, the ability of the surviving spouse to work the same hours and generate the same level of income may be compromised.

When deciding what protection you need, life cover really should be at the top of the list. It is relatively inexpensive but provides an incredible amount of peace of mind. As you might imagine, life cover goes well alongside a mortgage and particularly if you are taking out a high-value home loan, it is essential.

At Anderson Harris we are well versed in putting life policies in place, accessing the best insurers in the market. Even clients who already have life cover can benefit from a health check as premium costs have fallen significantly in recent years as average life expectancy has increased.

For example, one client took out £1.2m of life cover five years ago at the age of 42. It was a 33-year level term policy with a monthly premium of £164. He asked us to find something better – we were able to negotiate a new policy with the same level of cover but a reduced monthly premium of £121. That equates to a saving of £43 a month or £14,448 over the course of the 28-year policy. There was no cost to the client and minimal paperwork, with the new policy in place within two weeks of the case being presented to the insurer.

Many of our clients may think they don’t need life cover because they have death-in-service benefit, usually to the tune of four times their basic salary, which pays out a lump sum if they die while employed by the firm. But with many of our clients receiving bonus income as well as borrowing high multiples, these policies are often inadequate and were never designed to cover mortgage debt in the first place so a specific life cover policy is strongly advised.

Please get in touch for more information.

Adrian Anderson
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Adrian Anderson