Category Archives: Mortgages

Treherne

Overpayment – is it something worth considering?

With the ongoing mortgage rate war, there is some debate over whether now is a good time to pay off your mortgage early. Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, discusses the ins and outs of early repayments and overpayments.

“Credit cards and unsecured loans are prime examples of debts that charge high rates of interest, with some having interest rates that are much higher than that of your mortgage. It is always more beneficial to pay off these sorts of debts before considering paying off your mortgage, being mindful to not revert back to them once you have paid them off,” said David Treharne from Mortgage Advice Bureau.

Those contributing to a pension scheme may also be considering using their savings to pay off their mortgage a little earlier. The government now tops up your contributions with tax relief, and if the company you work for participates in specific pension schemes, they may also match your payments into a pension pot.

David added, “The sooner you begin to pay into a pension pot, the quicker your retirement pot will grow. So, if you find yourself with money to spare, it may be worth considering using your savings to add to your pension for the future rather than pay off your mortgage early.”

Have you thought about what the monetary consequences would be for your family if you were to pass away? If you have dependants who rely on your income to cover your mortgage, life insurance can help provide for them if you were to die, so this may be something worth putting your spare money into instead of paying off your mortgage.

If you are serious about overpaying your mortgage then it is important to consider any charges that may be incurred. Ensure that you check your mortgage deal carefully, you may need to pay an Early Repayment Charge (ERC), though some lenders allow you to overpay by up to 10% a year without any penalties.

“When interest rates are as low as they are now, overpaying on your mortgage will mean that you will have a smaller amount to be charged on when rates do eventually rise. It doesn’t just mean that you may have to pay less in the future, you could possibly pay off your mortgage completely – sometimes years earlier than the original end date. With prices constantly changing, it is important that you seek the advice of a professional mortgage adviser who can talk you through what is right for your personal circumstances,” concluded David. Continue reading

Oliver Adair MAB

The lowest inflation rate on record – How could it affect you?

Sitting at its lowest point since records began, inflation in the UK now sits at 0%. In the short term, this could be good news for most of us – we feel richer and, technically, we are, but we are also teetering on falling into deflation, which wouldn’t be good at all. Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, explains why.

“With inflation announced as zero, interest rates are likely to be set lower for longer and there is, of course, the possibility that the record low base rate could also fall even closer to zero. The low interest rates will encourage people to continue borrowing money, helping the economy to grow and inflation to increase,” said Oliver Adair from Mortgage Advice Bureau.

Inflation is affected by a number of factors, ranging from household goods and video games to transport. However, with the prices of oil rising slightly from their lowest in six years in February, the price of fuel didn’t really affect the rate of inflation in the UK. That particular trait fell to the ever-increasing strength of the sterling against the euro, thus reducing the cost of imports.

“If these low prices continue for too long, we could find ourselves in deflation,” explains Oliver. “If this was to happen, we could become accustomed to tumbling prices, meaning we wouldn’t spend as much, as we hope that the item we were going to buy today will be even cheaper tomorrow. This could create a ‘chain reaction’ effect as the economy would then become motionless and we could be facing another recession before we know it.”

With oil prices continuing to pick up, we still have a slight cushion against deflation at the moment. For now, average wages are growing by just under 2% per year, and with the Consumer Price Index (CPI) showing that prices haven’t risen at all, you will find that your wages will go further.

The rate rise is also likely to be delayed as the Monetary Policy Committee (MPC) will no doubt want to see how much zero inflation affects wages.

“With the delay in the rate rise, now could be a good time to consider your next steps, be it looking for your first home, remortgaging on your current property or adding to your portfolio. Whatever the case, professional advice should always be taken from an independent mortgage adviser,” concluded Oliver. Continue reading

Treherne

First-time buyers to receive help with deposit for first home

In light of the 2015 Budget, David Treharne of Mortgage Advice Bureau discusses the new Help to Buy savings accounts announced by Chancellor George Osborne.

First-time buyers will get £50 for every £200 they save towards a deposit for their first home.

Announced in the budget, first-time buyers are to receive a new ‘Help to Buy ISA’, which will see the government add £50 to every £200 buyers manage to save towards a deposit.

Only available for the next four years and being introduced in the autumn, the new savings account will only be available to consumers who are yet to buy their first home and will have no limit to how long people can use the accounts for.

The account will also be available per person rather than per home, which means that couples looking to buy their first home will receive double the amount.

The accounts will come with no minimum monthly payment, though it should be noted that a maximum of £200 can only be saved in a month. The government has also capped the bonus they will pay in at £3,000.

First-time buyers based in London will be able to use the savings to buy properties worth up £450,000, whilst the rest of the UK will see a ceiling of £250,000.

An example of how the scheme could work was given by the chancellor George Osborne delivering his Budget: “A 10 per cent deposit on the average first home costs £15,000, so if you put in up to £12,000 – we’ll put in up to £3,000 more.

“A 25 per cent top-up is equivalent to saving for a deposit from your pre-tax income – it’s effectively a tax cut for first time buyers. We’ll work with industry so it’s ready for this autumn and we’ll make sure you can start saving for it right now.”

Head of lending at Mortgage Advice Bureau, Brian Murphy, believes that the Help to Buy ISA is a: “crowd-pleasing move and another sign of greater commitment to improving accessibility in the housing market.

“First time buyers will welcome the measure. But in many cases, their next step will be to ask which of the many schemes and incentives on offer is the best suited to their needs?

“Offering the savings bonus on purchases worth up to £250,000 outside London or £450,000 in the capital looks far more sensible than the maximum £600,000 limit that currently applies to house purchases through the Help to Buy equity loan or mortgage guarantee.

“The £600,000 cap has proved unnecessary for the vast majority of homebuyers using either scheme to secure a mortgage. The new ISA is a welcome innovation – but the fact that different rules and timescales exist for the various elements of Help to Buy has the potential to cause confusion, and first-time buyers will want to understand how they work in tandem.

“We are sure to see more pre-election policy ideas to support first time buyers, and politicians must work closely with industry to ensure new measures are as clear and accessible to first time buyers as possible.

“Anyone confronting the array of choices is likely to find that expert advice is essential to make headway and ease their path towards homeownership.”

David Treharne is from Mortgage Advice Bureau – for further information call: 07501 720320 E mail: davidtr@mab.org.uk or visit: www.dawsonsproperty.co.uk

Chris Hope

Swansea estate agent reveals positive impact of Stamp Duty changes on the wider market

According to a recent estate agency survey, revised changes to the UK Stamp Duty Land Tax, as outlined by the Government in December, have already had a positive impact on the housing market.

In December 2014, the Government announced it had cut Stamp Duty Land Tax for the majority of homebuyers, with the aim of making payments fairer. The Government estimates the tax reductions will help 98% of those who are liable to pay for the duty.

In a national survey conducted among its members, Relocation Agent Network found 66% of respondents said that the tax cuts have had a positive impact on the market.

When asked to explain the ‘positive impact’, the majority of survey respondents (68%) indicated the number of buyers entering the market had increased by up to 10%.

Interestingly, aside from the Stamp Duty changes, respondents said that ‘consumer confidence’ was another positive trend impacting the market (63%).

The national network of independent estate agents also asked its members whether the revised Stamp Duty changes has led to price increases for properties that were traditionally around the £250,000 threshold. Indeed, 75% said that they had. When asked to specify on the price increase, a resounding 91% reported up to a 10% rise.

Chris Hope from Dawsons, a member of Relocation Agent Network in Swansea, said: “As Relocation Agent Network reports a rise in the number of buyers entering the UK housing market, this survey brings good news for sellers.

“If you have a property to sell, contact us today. We’re Relocation Agent Network’s appointed Local Expert for Swansea which means we have access to out of town buyers moving into the area.”

Oliver Adair MAB

Will the stamp duty reformation have an impact on your property buying habits?

As with any government statement, there were a few surprises in George Osborne’s Autumn Statement, and not least was the reformation of stamp duty as we know it. In what was his last statement before the general election, Osborne announced that there is to be a complete overhaul of the system.

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, explores the changes in stamp duty and how it will affect buyers across the nation.

Introduced in 2003, Stamp Duty Land Tax (SDLT) is a transfer tax charged when purchasing a property. The old way of calculating stamp duty was by using what was known as a ‘slab system’. It would begin when a homebuyer purchases a property valued over £125,000. Any properties bought for up to £250,000 would then be charged at 1%.

The stamp duty charges then rose to 3% for properties worth more than £250,000 and up to £500,000, and continued to rise to 4% up to £1million, 5% up to £2million and 7% over £2million.

“The problem with this system was that, if a buyer paid just one penny over the £250,000 threshold, they would be charged triple the amount of stamp duty than if they were a penny under,” said Oliver Adair from Mortgage Advice Bureau.

So what’s changed? Under the new system, the amount of stamp duty owed will work in a tiered way, much like income tax. For example, if you bought a property worth £130,000, you would pay £100 stamp duty as you are only paying 2% on the £5,000 over the stamp duty free threshold of £125,000.

If you bought a property worth £255,000, you would still pay the 2% stamp duty on the £250,000 as it is still in the 2% bandwidth of £125,001-£250,000. This purchase would equate to £2,500 in stamp duty charges.

Oliver added, “The new rules will undoubtedly affect all buyers. In fact, 98% of homebuyers could potentially save thousands of pounds when purchasing a property. However, homes that cost over approximately £937,000 may see their stamp duty increase.”

The new thresholds mean that when purchasing the average family home of £275,000, a buyer will save £4,500. The changes affect the whole of the UK until April, which is when the Scottish parliament unveil their own tax reforms.

“With any introduction or change in the housing industry, it is advised that you speak to professional independent mortgage adviser to discuss how you will be affected,” concluded Oliver.

For further information please contact Oliver on 07917 146430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

David Treharne

As the government introduces 100,000 new homes, could the Starter Home initiative be your ticket to an affordable first time buy?

Since the credit crunch of 2008, housebuilding has notoriously wilted. It is no secret that, whilst the number of new homes in construction has slowly improved since then, the market is still some way off where it really needs to be.

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, explores how the new government scheme will help first-time buyers in the New Year.

“Although there are no quick fixes, increasing the supply of homes on the market needs to be a focus in 2015 if conditions are to improve, specifically for first-time buyers. This is why the new Starter Home initiative announced by the Prime Minister on the 15th December should be welcomed with open arms,” said David Treharne from Mortgage Advice Bureau.

As part of the push to help people onto the property ladder, the Starter Home scheme will offer new homes with 20% discounts to 100,000 first-time buyers. New home builders currently face an average bill of £15,000 in Section 106 affordable housing contributions and tariffs when building properties, often adding tens of thousands to the final cost of a property.

However, under the scheme, which starts early this year, the properties will be built on under-used land, which will allow developers to build the homes free from any planning costs or levies thus lowering the price.

David added, “The homes will not be able to be resold at full market value for a fixed period of time which means that the savings should then be passed onto the next home buyers. The scheme is exclusive to first-time buyers who are under the age of 40. Prospective homeowners who are interested in the initiative will be asked to register from the beginning of this month – six months earlier than originally planned.”

Increasing the supply of housing is not a simple process, but by bringing forward more available land whilst assisting first-time buyers at the same time, the scheme is certainly another positive move by the government in an attempt to combat the shortage.

Saying this, the initiative will not solve the housing crisis on its own. The initiative should be viewed as another short-term solution that has been brought in to bring brownfield land back into use in a way that will provide an almost instant relief to the market by increasing the number of available homes, something that is so desperately needed.

“What the next government plan to do to attempt to end the crisis is yet to be seen, but in the current climate this scheme should be seen as a helping hand in what is currently a severe problem throughout the UK market,” concluded David.

To find out more information about the Starter Home initiative is it advised that you seek independent mortgage advice from a professional financial adviser.

For further information please contact David on 07501 720320 or email davidtr@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

David Treharne

As record low interest rates continue, should you get onto the property ladder sooner rather than later?

We are now familiar with the headline ‘Bank of England keeps interest rates at record low of 0.5%’, in fact it’s been the same story since March 2009, some 68 months ago. But with this news comes a greater responsibility for the buyer.

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, explores how the prolonged interest rates could mean that sooner could be a better time to buy than later.

In a survey by the Money Advice Service, 69% of people said that they did not have a plan for when interest rates do eventually rise despite 84% thinking that an increase would have an impact on their finances. But right now, homeowners and prospective buyers have other things on their minds as they have been presented with an opportunity to obtain some extremely cheap mortgages as a result of the Bank of England’s decision to delay the rate rise.

“The new lower rates come as a result of the UK’s low inflation levels, the stagnation of the Eurozone and the slowing of the national housing market. The aftermath of the introduction of the Mortgage Market Review (MMR) also seems to have calmed as lenders begin to try and meet their yearly targets – hence the wave of lower rates – with some deals falling as low as 1.49%,” said David Treharne from Mortgage Advice Bureau.

Existing homeowners who do decide to take advantage of the current low rates need to consider the penalties that come with exiting their current deal. Many lenders will enforce fees and charges. Under the newer mortgage rules, application timescales are also longer than before, so homeowners will need to ensure that they are financially prepared for a lengthier process.

“Deciding when to take out a mortgage is always going to be a risk. The low rates that are with us at the moment may stay with us for a while, but there is a greater chance of them disappearing as quickly as they appeared. With the rise of interest rates being a popular topic for debate and opinions frequently changing, it is important to get advice from a professional mortgage adviser when discussing your next steps,” concluded David.

For further information please contact David on 07501 720320 or email davidtr@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

 

We are now familiar with the headline ‘Bank of England keeps interest rates at record low of 0.5%’, in fact it’s been the same story since March 2009, some 68 months ago. But with this news comes a greater responsibility for the buyer.

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, explores how the prolonged interest rates could mean that sooner could be a better time to buy than later.

In a survey by the Money Advice Service, 69% of people said that they did not have a plan for when interest rates do eventually rise despite 84% thinking that an increase would have an impact on their finances. But right now, homeowners and prospective buyers have other things on their minds as they have been presented with an opportunity to obtain some extremely cheap mortgages as a result of the Bank of England’s decision to delay the rate rise.

“The new lower rates come as a result of the UK’s low inflation levels, the stagnation of the Eurozone and the slowing of the national housing market. The aftermath of the introduction of the Mortgage Market Review (MMR) also seems to have calmed as lenders begin to try and meet their yearly targets – hence the wave of lower rates – with some deals falling as low as 1.49%,” said David Treharne from Mortgage Advice Bureau.

Existing homeowners who do decide to take advantage of the current low rates need to consider the penalties that come with exiting their current deal. Many lenders will enforce fees and charges. Under the newer mortgage rules, application timescales are also longer than before, so homeowners will need to ensure that they are financially prepared for a lengthier process.

“Deciding when to take out a mortgage is always going to be a risk. The low rates that are with us at the moment may stay with us for a while, but there is a greater chance of them disappearing as quickly as they appeared. With the rise of interest rates being a popular topic for debate and opinions frequently changing, it is important to get advice from a professional mortgage adviser when discussing your next steps,” concluded David.

For further information please contact David on 07501 720320 or email davidtr@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

 

Oliver Adair MAB

How will the new loan-to-income cap affect first time buyers?

Increasing house prices, restrictive lending and rising deposits have all been problems faced by first-time buyers in recent years. So, with the new loan-to-income cap now in place, how are newcomers to the market going to be affected?

Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals how the cap will impact on the currently thriving first time buyer market.

“Recent figures released by the Council of Mortgage Lenders (CML) showed that first-time buyer numbers were at a six-year high, showing that a once impossible market has rebuilt itself to become a competitive arena once again,” said Oliver Adair from Mortgage Advice Bureau.

“Now, thanks to the Mortgage Market Review (MMR), responsible lending is at the forefront of the industry and each lender has been monitoring their affordability limits closely in light of the recovery of the sector.”

Enforced at the beginning of October, the loan-to-income (LTI) cap began when the Bank of England stated that loans over 4.5 times the income of the buyer must account for no more than 15% of a lender’s new lending total.

“Affordability remains the most important factor when assessing a potential borrower and every lender will have its own procedures to carry out to determine how the caps are implemented,” added Oliver.

Despite the added regulatory changes, the number of first time buyers rose by 27% in the first half of this year, and with the Help to Buy scheme, increasing employment levels and growth in higher loan-to-value lending, the confidence in the market may potentially overpower any effects the LTI cap will have in the coming months.

“The effect of the cap on the market and on the first-time buyer arena in particular will continue to be a topic of discussion until the cap has settled and we can see what difference, if any, it will have made,” concluded Oliver.

For further information please contact Oliver on 07917 146 430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

Oliver Adair MAB

How will the new loan-to-income cap affect first time buyers?

Increasing house prices, restrictive lending and rising deposits have all been problems faced by first-time buyers in recent years. So, with the new loan-to-income cap now in place, how are newcomers to the market going to be affected?
Here the UK’s leading independent mortgage broker, Mortgage Advice Bureau, reveals how the cap will impact on the currently thriving first time buyer market.
“Recent figures released by the Council of Mortgage Lenders (CML) showed that first-time buyer numbers were at a six-year high, showing that a once impossible market has rebuilt itself to become a competitive arena once again,” said Oliver Adair from Mortgage Advice Bureau.
“Now, thanks to the Mortgage Market Review (MMR), responsible lending is at the forefront of the industry and each lender has been monitoring their affordability limits closely in light of the recovery of the sector.”
Enforced at the beginning of October, the loan-to-income (LTI) cap began when the Bank of England stated that loans over 4.5 times the income of the buyer must account for no more than 15% of a lender’s new lending total.
“Affordability remains the most important factor when assessing a potential borrower and every lender will have its own procedures to carry out to determine how the caps are implemented,” added Oliver.
Despite the added regulatory changes, the number of first time buyers rose by 27% in the first half of this year, and with the Help to Buy scheme, increasing employment levels and growth in higher loan-to-value lending, the confidence in the market may potentially overpower any effects the LTI cap will have in the coming months.
“The effect of the cap on the market and on the first-time buyer arena in particular will continue to be a topic of discussion until the cap has settled and we can see what difference, if any, it will have made,” concluded Oliver.
For further information please contact Oliver on 07917 146 430 or email olivera@mab.org.uk. Alternatively, please visit www.dawsonsproperty.co.uk

 

Chris Hope, Dawsons Senior Director

Nationwide survey settles the debate on buying versus renting

According to a recent estate agency survey, with interest rates still at an all-time low at the moment, buying a property is still cheaper than renting one.

Conducted by Relocation Agent Network, of which independent agent Dawsons is a member, the survey revealed that not only is it cheaper to buy, but you could make significant savings. Relocation Agent Network, a national network of independent estate agents, asked its members whether it was cheaper to buy or rent a property over the course of a calendar year. 87.5% said that it was cheaper to buy.

Christopher Hope, Property Partner from Swansea Relocation Agent Network member Dawsons, said, “This survey shows us that buying really is the preferred option when it comes to making cost savings.”

The national survey also looked at the possible savings you could make when buying a property instead of renting.

Based on a three-bedroom house, members were asked what they estimated the annual saving was from buying a property instead of renting. Over a third (33.85%) stated that it was possible to save up to £1,500 a year by purchasing a three-bedroom house instead of renting.

“At Dawsons, we understand that some people are renting because it’s their favoured method. Whilst others simply can’t get onto the property ladder – the so called ‘trapped tenants’ – but we’re here to help and actively guide all our clients through the buying process. Contact us today to discuss your options.”