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Refinancing a buy-to-let portfolio is tougher but we can assist

26.04.2018

It is two years since the introduction of a stamp duty surcharge for landlords purchasing property, with many investors rushing to buy back in April 2016 to avoid having to pay the extra 3 per cent.

Many of these landlords will have taken out two-year deals and be coming up to remortgage only to find that lenders have tightened their criteria, with more restrictive rent to borrowing rates.

And new rules introduced at the end of September 2017 – requiring lenders to apply more detailed underwriting principles when evaluating portfolio business from landlords with four or more mortgaged properties – mean there are now fewer lenders to choose from.

It is no surprise that buy-to-let remortgaging rose by 20.5 per cent in February to 14,100, according to UK Finance, while new purchases of buy-to-let properties fell by 8.8 per cent year-on-year. As far as many potential new landlords are concerned, the gloss has come off the sector. Changes to mortgage interest tax relief are starting to filter through, making it harder to get the numbers to add up. If you add in a raft of other new legal responsibilities, and the threat of an interest rate rise as early as next month, making sure your portfolio works as hard as it possibly can, is crucial.

Refinancing is worth a look, making sure you are not paying more than you need to. While there is less choice available for portfolio landlords, we can help you find the most competitive terms – from specialist lenders if required – and make the whole process easier.

Jonathan Harris
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Jonathan Harris

The rise of the green mortgage

06.04.2018

Barclays has launched a Green Home Mortgage, offering lower rates of interest for borrowers purchasing an energy efficient new-build home. Customers will get 10 basis points off Barclays’ standard mortgage range.

This comes off the back of the Government’s Green Finance Taskforce recommending that lenders should work towards promoting awareness and mainstreaming a consideration of green factors into their mortgage lending decisions.

With such a large lender offering a discount to encourage borrowers to choose an energy efficient house, this is a real boost for environmental campaigners. However, there are some limitations – it is only available on new-build properties as they have to be A or B EPC Energy Efficiency Rated – and initially only a handful of house builders will partner with Barclays on the scheme. On it’s own, it is certainly not a reason to choose a new-build home over an older property but if you are buying one anyway and the 10bp difference makes Barclays the cheapest lender available to you, then  borrowers may be tempted to opt for it.

If a lender as mainstream as Barclays is jumping on the green bandwagon, it will only be a matter of time before other lenders follow suit, which will focus buyers’ minds on a property’s Energy Efficiency Rating like nothing else.

Adrian Anderson
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Adrian Anderson

Essential tips for first-time buyers

22.03.2018

Getting a mortgage can be daunting if you’ve never done it before but the good news is that there are people out there who can help so that you avoid the worst of the pitfalls. Here, Anderson Harris suggests a few key points that you may not have thought about:

  1.  Begin with a conversation with an independent mortgage broker to find out how much you can realistically borrow, before you start your property search. A ‘decision in principle’ from a lender, setting out how much it is prepared to lend you, is a useful tool and will convince agents and vendors that you are serious because you have checked out how much you can borrow beforehand.
  2. Buy for the long term. Buying and selling are expensive so considering properties that you can stay in for slightly longer could save you money. We had a client who bought a one-bed flat a year ago because she was desperate to get on the housing ladder and it was all she could afford. However, now she is pregnant and needs more space but the property hasn’t gone up in value and there are early repayment charges on the mortgage so it’s going to cost a lot for her to move.
  3. Avoid the temptation to overstretch yourself and borrow more than you can really afford. Mortgage rates are low and while lenders stress-test the loan against a higher rate to protect against rate rises, a sharp increase in the rate you’re paying when you’ve already maxed out your borrowing potential would come as a shock when it’s time to remortgage. Borrowers tend to stretch themselves to the limit but that’s not a good idea.
  4. Get to grips with the legal side – understand the limitations of a leasehold and shorter leases, and what they mean. There is a reason why those types of property tend to be cheaper.
  5. Be aware that lenders can be more reluctant to lend on certain properties, such as studio flats. flats above commercial premises, certain construction types, and ex-local authority property. Even if you really like it and you can find a mortgage to buy it, think about how easy it will be to sell on again in the future.
  6. Make sure you have enough of a credit file for banks to see evidence that you are paying your debts in full every month. You may think it’s in your favour not to have a credit card but if you have one, and pay off the balance in full every month, this will better demonstrate to a lender that you are a responsible borrower.’
Jonathan Harris
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Jonathan Harris

Getting a mortgage on an unusual property

28.02.2018

Many borrowers have fairly straightforward mortgage requirements – they are employed and can easily prove income, while the property is of a standard type and construction. Lenders are usually happy to lend to these borrowers so obtaining a mortgage is not too difficult.

However, not everyone is in this position, which is where mortgage brokers such as Anderson Harris come in. If you have a mortgage application that is even slightly out of the ordinary – you are buying a studio flat, for example, or a flat above a shop, then we can identify the lender most likely to lend.

As far as lenders are concerned, the main issue is resale value. You may be prepared to buy a studio flat or one above commercial premises, but would someone else feel the same if the lender had to repossess your property and sell it on? Anything with a limited resale market, such as properties with short leases or those with shared access, ring alarm bells for lenders.

If you are buying a property of unusual construction, such as a thatched cottage or converted barn, smaller building societies, who consider applications on a case-by-case basis, will be a better bet than high-street lenders. It often comes down to the individual case. A flat above a pub in Chelsea or another prime location may be acceptable to a lender due to high demand for the area and potential ease of reselling the property. The same cannot be said of ex-local authority properties and those with unusual characteristics.

Lenders often make clear stipulations regarding what they will and won’t lend on but increasingly they will rely on the mortgage valuer’s comments regarding value, desirability and resale. Borrowers will require a specialist lender in many of these instances and should use a broker to identify the one most likely to be sympathetic to their particular situation.

Adrian Anderson
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Adrian Anderson

Are interest rates set to rise sooner rather than later?

12.02.2018

The Bank of England has warned that interest rates may have to rise more quickly, and perhaps more steeply, than markets had thought. Subsequently, the majority of City analysts now expect a rate rise in May, with some expecting interest rates to rise to 1 per cent by the end of this year.

However, despite this hawkish turn, there is no need for borrowers to panic. At the same time as making the above comments, Governor Mark Carney also suggested that a return to normal interest rate levels of around 5 per cent, may never happen. And mortgage rates are still at record low levels, which means there has never been a better time to fix your mortgage. Five-year fixed rates can be secured at around 1.7 per cent and represent better value than shorter terms deals for borrowers whose circumstances are unlikely to change in the near future. Although shorter term fixes and trackers are more competitively priced, the benefit is likely to be short lived with the need to re-finance again in a climate of rising rates.

The problem may arise for those borrowers on their lender’s standard variable rate who can’t remortgage elsewhere. With lenders such as Santander introducing lower SVRs for new borrowers there is a case for arguing the toss for being allowed to move onto a lower rate in the interests of ‘treating customers fairly’.

Whatever your situation, seeking advice is crucial.

Jonathan Harris
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Jonathan Harris

Joint borrower sole proprietor mortgages set for take-off in 2018

26.01.2018

It may not be the catchiest of names but if you haven’t yet heard of a joint borrower, sole proprietor (JBSP) mortgage, chances are this year you will. The JBSP mortgage has been around ever since first-time buyers struggled to purchase property on their own and had to turn to their parents to help, combining two deposits and incomes.

But they really started to grow in popularity from April 2016 when a 3 per cent stamp duty surcharge on second homes was introduced. Suddenly, parents buying homes with their children found they had to pay an extra 3 per cent stamp duty on top because they owned another property, even though their child was a first-time buyer. The JBSP mortgage got round this by allowing two incomes to be taken into account for mortgage purposes but with only the child’s name going on the property deeds so there was no extra stamp duty to pay.

However, demand for JBSP mortgages has really taken off since last November when the Chancellor announced in his Budget that first-time buyers would not pay any stamp duty on properties costing up to £300,000 (or the first £300,000 of a £500,000 property in more expensive locations such as London). Once again, a first-time buyer purchasing with someone who is not a first-time buyer, such as a parent, would otherwise miss out on this tax break but the JBSP mortgage gets round this in a completely legitimate way.

Since the beginning of this month we’ve noticed a steady increase in enquiries from people looking for the solution of a JBSP mortgage. This increased demand is resulting in more lenders coming into this market, so rates are increasingly competitive, which is great news for borrowers. We expect this situation to only improve so do get in touch for more information.

Adrian Anderson
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Adrian Anderson

Lending options increase for self-employed borrowers

19.01.2018

The self-employed can find it harder to get a mortgage than those in employment because lenders don’t really understand their income streams or they are new to their self-employed career so don’t have much of a track record of earnings.

However, some lenders are becoming more sensitive to self-employed borrowers and their needs. Newcastle Intermediaries, which lends via mortgage brokers, this week launched an attractive two-year fixed-rate deal pegged at 2.2 per cent, on mortgages up to 60 per cent loan-to-value. There are no reservation or completion fees and a free standard valuation, further keeping initial costs down.

Another funding option for self-employed borrowers, of which we deal with a growing number, is extremely welcome, particularly as Newcastle will look at applications from those who have been trading for less than two years. Applying individual case assessments to these borrowers is a sensible move as one self-employed client is very different from another and one size does not fit all.

Jonathan Harris
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Jonathan Harris

Lenders herald new year with rate cuts

08.01.2018

The January sales haven’t just hit the high street as a number of lenders have reduced their mortgage pricing in the past few days. Barclays launched a two-year fix pegged at 1.28 per cent with £999 fee for borrowers requiring a maximum loan-to-value (LTV) of 50 per cent, while the lender also reduced a number of other fixed-rate deals, including a two-year fix pegged at 1.65 per cent for those borrowing 85 per cent LTV.

Meanwhile, Yorkshire Building Society has launched a market-leading five-year fix pegged at 2.03 per cent for those borrowing 85 per cent LTV, with a £995 fee. Accord has launched some discounted standard variable rates while Leeds Building Society has added some new mortgages with £1,000 cutback to its Help to Buy range.

Despite a quarter-point increase in Bank of England base rate in November, mortgage deals show no sign of getting more expensive, which is great news for borrowers. With £28 billion of mortgages expected to mature in the first half of this year, according to Virgin Money, lenders are keen to lend and attract some of that business with some tempting deals. This is great news for borrowers, who should seek advice from an independent mortgage broker to ensure they get the right deal for their circumstances.

Adrian Anderson
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Adrian Anderson

What’s in store for mortgages in 2018?

20.12.2017

The mortgage market held up surprisingly well in 2017 with some of the cheapest fixed-rate mortgages ever seen. Even the first rise in base rate in a decade, taking it to 0.5 per cent, didn’t lead to a significant increase in mortgage pricing. First-time buyers were back with a vengeance (albeit many with some help from the Bank of Mum and Dad) as lenders offered high loan-to-value deals at tempting rates, while the Chancellor did his bit with a stamp duty exemption on properties up to £300,000.

But what lies in store for 2018? Firstly, we don’t expect another interest rate rise anytime soon, as the economic recovery remains tentative at best. On the mortgage front, lenders remain keen to lend and we expect those keenly-priced deals to be with us for a while yet.

Much depends on what happens with the Brexit negotiations and this may continue to impact people’s decisions to buy and sell their homes. Independent advice will be crucial, particularly if borrowers believe themselves to be mortgage prisoners, unable to remortgage to another deal. It may be that there is an option available so it is worth checking this out, particularly if you are on your lender’s standard variable rate, and therefore paying over the odds.

Jonathan Harris
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Jonathan Harris

Why the Budget means the future is brighter for first-time buyers

27.11.2017

In his Autumn Budget, the Chancellor of the Exchequer announced that first-time buyers would no longer have to pay stamp duty on properties costing up to £300,000 – or on the first £300,000 of properties costing up to £500,000.

Abolishing stamp duty for the vast majority of first-time buyers is a welcome move but while it will result in some savings, affordability is still the real issue for many. It might enable a first-time buyer to purchase a new sofa but will it really make the difference between being able to buy a home or not?

The reality is that most first-time buyers cannot get on the housing ladder without significant financial assistance from the Bank of Mum and Dad. Practically all of the first-time buyers we assist at Anderson Harris have had some help with the deposit from their parents. The alternative is to save for many years because the gap between incomes and property prices is simply too great. Until that issue is addressed, home ownership will remain just a dream for many people.

However, lenders are being more flexible towards those with relatively small deposits. Barclays announced last week that it will now lend at up to 95 per cent loan-to-value, which means less time needed to save for that crucial deposit. We expect other lenders to do the same in time.

If you are a first-time buyer, get in touch to find out more about the schemes and products available to you.

Jonathan Harris
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Jonathan Harris