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Mortgage Myth Busting

stansherlocstg on January 29, 2024

Rate Switch Product Transfer
  • Mortgages

Mortgage Myth Busting

Buying a property is a significant milestone for most of us, and often involves a mortgage. However, misconceptions about mortgages can create unnecessary anxiety and confusion. In this article, we aim to bust common mortgage myths and help you separate fact from fiction.


Myth 1: You Need a Perfect Credit Score


One of the most prevalent misconceptions is that you need a flawless credit score to secure a mortgage. While a good credit score is desirable, it doesn’t have to be perfect. Lenders consider your income, employment history, and debt-to-income ratio. Even with a slightly lower credit score, you can still qualify for a mortgage.


Myth 2: A 25% Deposit is a Must


Contrary to popular belief, you don’t always need a 25% deposit. A higher deposit does have advantages, like lower interest rates, but it’s not a requirement. Many lenders offer options for lower deposits. There are also Government-backed loans for those struggling to save a deposit.


Myth 3: You Must Stick with a 25 year Term


This is simply not true! While 25 year term mortgages are popular, they’re not the only option available. Mortgages are available in various terms, ranging from 5 to 40 years. Shorter-term mortgages may have higher monthly payments, but can often reduce the overall interest. Consider your financial situation, long-term goals, and monthly budget to determine the term that suits you best.


Myth 4: You Should Always Choose the Mortgage with the Lowest Interest Rate


While securing a mortgage with a low interest rate is desirable, it shouldn’t be the sole factor driving your decision. You need to evaluate fees, loan terms, and the overall package offered by different lenders to make an informed decision.


Myth 5: Paying Off Your Mortgage Early Is Always the Best Strategy


The idea of being debt-free and paying off your mortgage early may seem appealing, but it’s not necessarily the best financial strategy for everyone. Mortgage loans typically come with relatively low interest rates, and the interest paid may be tax-deductible in some cases. Instead of solely focusing on paying off your mortgage early, it may be more advantageous to consider other financial goals. Assessing your overall financial situation is crucial.


Navigating the world of mortgages can be overwhelming. By debunking common mortgage myths, we hope to provide clarity and empower you to make well-informed decisions. Remember, there is no one-size-fits-all approach when it comes to mortgages and financial planning.


YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.


Approved by The Openwork Partnership on 21/12/2023.

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Get mortgage fit for 2021!

stansherlocstg on January 28, 2021

  • Mortgages

Get mortgage fit for 2021!

Estimates suggest that well over one million borrowers have lapsed onto their lender’s default standard variable rate (SVR). Has this happened to you? If so, now could be the perfect time to consider a remortgage, to get your finances in good shape for the year ahead.

Do you know your mortgage rate?
 If your current tracker, fixed rate, or discount mortgage deal has ended, you are likely to be switched onto your lender’s SVR and could be paying way over the odds, perhaps without even realising. It has been found that borrowers on an SVR could save an average of £1,602 a year, that’s over £133 every month!

Sound familiar?
 Even with a potentially sizeable saving to be made by remortgaging, it’s surprising how many people just stick with their SVR. Why is that?

“I didn’t realise my mortgage deal had ended” – your lender should have let you know, but always remember to make a note of the end date of a new mortgage deal so you don’t forget.

“My lender contacted me, but I didn’t understand”- mortgage jargon can be confusing, but it pays to check out important mortgage correspondence.

“It’s too much hard work to find a new deal”- it’s true that the mortgage market can be bewildering as there are so many deals to choose from. That’s where we can get involved – to help find you a suitable deal. You can then choose what to do with any savings made!

Time to remortgage?
 It’s important to regularly review your mortgage. Particularly now, when mortgage rates are at record low levels, it makes sense to consider your options to see if you can get a more cost-effective mortgage deal.

Are you still covered?
 If you’re thinking of changing your mortgage, remember to review your protection policies at the same time – especially if you don’t already have cover in place, or your circumstances have changed since you last reviewed your cover.

To discuss your remortgaging options and to see if you could save money, please get in touch. Rest assured we are here to help if you have any questions about your mortgage or your protection requirements.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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Need help getting to know your SVR?

stansherlocstg on January 25, 2021

  • Mortgages

Need help getting to know your SVR?

As a nation, we aren’t great with our financial acronyms and terminology. Life is busy and our heads are often full of important things to get done to make it through the week, without having to worry about whether we know our LTV from our ERC!

You’re certainly not alone if you’re feeling financially flustered. Recent research has found that more than a fifth of British adults are confused by everyday financial terms.

Worth taking the time to review your mortgage
 When you do find some time to settle down on the sofa with a cuppa or a glass of wine in hand, if you are a mortgage holder, it could be a good time to become familiar with one important acronym worth knowing – SVR or Standard Variable Rate.

You may find that you are automatically switched to an SVR when your existing mortgage deal, whether that be a tracker, fixed rate or discounted mortgage, comes to an end. Unfortunately, this could mean you’re paying over the odds, perhaps without even realising.

SVR rarely offer the most competitive rates and the SVR interest rate is usually linked to a percentage above the bank’s base rate, meaning the rate can rise and fall, which makes you more vulnerable to potential interest rate rises in the future.

Take advantage of record low mortgage rates
After two Bank of England base rate cuts earlier this year, mortgage rates have remained at record low levels, so it makes sense to see if you can save money by switching to a better rate.

Good advice that cuts through the jargon
 In a complex environment, getting good, clear advice can really pay – so get in touch and we’ll guide you through the process, without using jargon.

Don’t worry if you’re currently locked into a mortgage deal that has exit charges, you don’t have to wait until it has come to an end as your adviser can help you find a deal three or six months before your lock-in period finishes.

Incase you were wondering….
 LTV – Loan-to-value
ERC – Early repayment charge
SVR – Standard variable rate

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

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Mortgage Payment Holiday Update November 2020

stansherlocstg on November 18, 2020

Second Charge Loans
  • Mortgages

Mortgage Payment Holiday Update November 2020

On 17 November the FCA confirmed guidance for homeowners struggling financially due to coronavirus. The mortgage payment holidays scheme, first announced in March and then extended in May, has been further extended until 31 March 2021.

How does it work?

Those who have not yet had a payment holiday will be eligible for payment holidays of 6 months in total.
Those who currently have a payment holiday will be eligible to top up to 6 months in total.
Those who have previously had payment deferrals of less than 6 months will be able to top up, as long as total deferrals don’t exceed 6 months. This includes those receiving tailored support and those who are behind on payments.
Borrowers who have already had 6 months of payment holiday will not be eligible for a further payment holiday. Firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.
The FCA has also confirmed that no one should have their home repossessed without their agreement until after 31 January 2021.

Interest only
Borrowers with an interest-only (or part-and-part mortgages) that matures between 20 March 2020 and 31 October 2021 can delay the repayment of capital until 31 October 2021, providing they continue to make interest payments.

Tailored Support
Some lenders have offered tailored support to borrowers. Lenders will discuss your individual circumstances to support customers in a way that reflects the uncertainties and challenges many customers will be experiencing due to coronavirus.

Who to talk to
You should try to maintain your mortgage payments if you can afford to do so. If you want to apply for or extend an existing payment holiday, it is crucial that you speak to your lender. You must not stop making mortgage payments without speaking to your lender first as this could adversely affect your credit.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE

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Update on mortgage payment holidays…

stansherlocstg on October 11, 2020

House key in the door
  • Mortgages

Update on mortgage payment holidays…

On 17 March 2020, as the country teetered on the brink of lockdown, the Chancellor announced that homeowners struggling financially due to coronavirus would be able to take a three-month mortgage payment holiday.

What does this mean for me?
 The extended application deadline now coincides with the end of the furlough scheme. This means, if your workplace makes you redundant as the furlough deadline approaches, you will still be able to apply for a mortgage holiday, giving you some breathing room while you search for another job.

One issue with the original scheme was that borrowers were likely to see their monthly repayments increase immediately following the holiday period, as the mortgage term remained the same. The new flexibility introduced into the scheme means that you’ll now have the chance to extend your mortgage term instead of stopping payments altogether, meaning that your outgoings will remain more level (albeit over a longer duration).

Is a mortgage payment holiday right for me?
 A mortgage payment holiday does not equate to free money. The capital outstanding does not reduce, and interest will continue to accrue on your remaining debt. This will make your repayments larger once the holiday period ends or, if you’ve chosen to extend your mortgage term, you’ll end up paying more interest than you would have across your original term.

The decision to apply for a mortgage holiday should therefore not be taken lightly. If you think you can afford to continue making repayments, then it is probably best to do so to avoid a longer-term impact on your finances.

Talk to us
 If you are experiencing financial difficulties, talk to us before making the decision to apply for a mortgage holiday. We can help you assess your finances and assist you in creating a plan for getting through this difficult period.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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The world is changing – so should your insurance!

stansherlocstg on September 1, 2020

  • Financial Planning, Home & Life Insurances, Mortgages

The world is changing – so should your insurance!

The world is changing rapidly in a way that nobody could ever have expected, meaning your personal and financial circumstances are likely to have changed. It is important to regularly review all aspects of your finances and that includes reviewing your protection insurance, to make sure your policy provides adequate cover for your changing needs.

Underinsured
If you don’t regularly review and update your policy, any pay-out you do receive from your claim may not be enough to cover you and your family’s needs if you were to die or if you are unable to work due to illness.

Say you took out a life insurance policy covering you for a certain amount. After several years, you may have children, resulting in a move to a larger house. If you take a larger mortgage, your monthly outgoings would increase, and you would have bigger bills to pay. Therefore, the lump sum paid out to your family upon your death would no longer be sufficient to sustain their lifestyle and might leave them facing financial hardship.

New policies offer better protection
Like any industry, the insurance industry has evolved over time. Modern policies can offer you better protection and more extensive cover.

When comparing a critical illness policy sold in 2007 with one sold in 2017, the more modern policy may have better claims wording, provision for part-payment and other advantages.

If you have simply been paying your premiums on the same policy for years, it is likely that, as well as facing the risk of being underinsured, you also won’t be benefiting from the kind of comprehensive cover offered by today’s policies.

Let us protect you
With so many different types of protection insurance on the market, it’s not surprising that many people just stick with the cover they have.

It may not be the best cover for them. We can assist you in finding the very best policies for your circumstances, so you have the peace of mind that you, and your family, will be protected should the worst happen.

Please note: Older policies may cover illnesses which modern policies do not. Premiums may be cheaper due to the age of the policy. Certain cover may be excluded on a new policy due to pre-existing conditions.

Always get professional advice when reviewing your insurance policies. As with all insurance policies, conditions and exclusions will apply

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As mortgage advisers we often get asked about house values… Well here are some tips on home improvements to add value to your home:

stansherlocstg on July 3, 2020

Home DIY
  • Mortgages

As mortgage advisers we often get asked about house values… Well here are some tips on home improvements to add value to your home:

Evidence suggests that many more of us are putting down roots and choosing to stay in our current homes for longer. The average time a homeowner in the UK stays in their property is 21 years.

This contrasts with the 1980’s, when a fast-rising property market encouraged a move every eight years on average.

However, high prices in some regions, Stamp Duty and the other costs of moving, are now encouraging us to stay put and spend money improving our properties.

With so many more people staying put and embarking on some home improvements, it’s a good idea to select improvements and renovations that will add value to your property in case you do decide to move on one day.

Some of the best improvements to add value to your property include (plus potential value added):

  • Converting your cellar — 30%
  • Converting your garage to living space — 15%
  • Extending the kitchen — 15%
  • Loft conversion to add a bedroom — 15%
  • Increase living space with a conservatory or similar — 10%
  • Kerb and garden appeal — up to 10%
  • Fitting a new bathroom — 5%
  • Making the living area open plan — 3-5%
  •  

Here are some useful tips to bear in mind before embarking on your chosen project:

Check your deeds
There could be restrictions on what you can do, you may require planning permission, especially if it affects a boundary or external modifications are involved.

Check your policy
If you’re going to make any major changes to your home, you should contact your buildings and contents insurance provider first to avoid unintentionally invalidating your policy and check your policy covers you for accidental damage.

Get your paperwork in order
If you are looking at a large undertaking such as converting your loft, ensure you have the correct paperwork and certification, otherwise the money you spend may not be realised in the sale price.

Preserve bedroom space
Try not to reduce your bedroom count, you may want to convert a third bedroom into an en suite, but by losing a bedroom you will reduce the value of your property.

Be commercially-minded
Consider the neighbourhood you live in and the types of buyers likely to want to live there, for example spending money landscaping your garden may not appeal to a younger professional couple who want low-maintenance outside space.

Avoid personalisation
Unless you are prepared to redecorate when you come to sell, use a neutral colour scheme, introduce colours in soft furnishings and accessorises and personalisation with pictures or photos.

Hire a professional
Avoid a DIY disaster by only taking on projects you are confident you can complete.

We can help
Please get in touch if you are looking to fund your home renovations with a remortgage or second charge loan.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

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An update on mortgage payment holidays – three month extension

stansherlocstg on June 10, 2020

Hackney & Leigh for sale sign in the Lake District
  • Mortgages

An update on mortgage payment holidays – three month extension

The Government has announced the requirement for lenders to extend the initial three-month mortgage payment holiday scheme by a further three months. They felt that the extension was necessary because it would be too sudden and soon to end the scheme now for those currently experiencing financial difficulties.

This means help and support will continue for those currently struggling with their mortgage repayments, providing borrowers already taking a holiday with the ability to extend their holiday period until 31 October 2020. Customers who haven’t yet requested a payment holiday, will be able to ask their lender for one up to this deadline.

If you can afford to repay your mortgage, it is in your best interests to do so. This is because interest will continue to build during the re-payment holiday period which you will still need to pay back at a later date – effectively meaning you will pay back more in interest in the longer-term. In addition, your monthly repayments after the payment holiday ends may also be higher, or your mortgage may take longer to repay.

However, if you are struggling to make your mortgage repayments because of Coronavirus, the new measures, which came into force from 4 June 2020, should provide much needed help.

Please remember:

  • If you can afford to repay your mortgage, it is in your best interests to do so
  • It is only a payment holiday if it has been agreed directly with your lender
  • Cancelling your direct debit is not a payment holiday and counts as a missed payment. It could also show on your credit file – affecting your credit score and possibly impacting your ability take out credit in the future

Next steps:

You’ll need to deal directly with your lender if you wish to apply for a mortgage payment holiday or extend an existing one. But, there may be other options. So please speak to us first if you can, particularly if you are considering a mortgage holiday and are nearing the end of your current mortgage deal.

Before anything is agreed, your mortgage lender will have to provide you with enough information, so you can make an informed decision. Also, you should be aware that your lender will need to ask you questions about the changes in your circumstances, even if you are extending your mortgage holiday. So make sure that you have up-to-date information easily to hand and ready for this conversation. Lenders have committed to responding as quickly as possible, but due to high levels of demand and staff working from home, service levels might be slower than usual.

If you have any questions or want to discuss your situation further please don’t hesitate to get in touch, we’ll be more than happy to help.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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Our Expert Advice Can Help Reduce Your Mortgage Stress

stansherlocstg on June 1, 2020

Hackney & Leigh now let board outside of a house
  • Mortgages

Our Expert Advice Can Help Reduce Your Mortgage Stress

Moving home is known to be one of life’s most stressful events. In fact, a survey earlier this year, found the process can cause us more stress than other major life events such as having a baby, getting married, starting a new job or getting divorced.

Sorting out your finances

The biggest cause of worry for many is arranging finance for the move. First-time buyers need to save up funds for a deposit, as well as finding the right mortgage and an affordable property. Low- deposit mortgages and saving schemes, like the Help to Buy ISA (which closed to new accounts on 30 November 2019), appear to have helped with the challenge of saving a deposit to some extent. It pays to save a large deposit as in most cases, the bigger the deposit you can put down, the lower your interest rate is likely to be.

As well as saving for a deposit and budgeting for costs like legal fees and surveys, you should review your income and outgoings; any lender considering your mortgage application will expect you to be on top of your bills and to be able to afford your monthly mortgage payments.

A challenging process?

Research from Aldermore’s First Time Buyer Index reveals prospective first-time buyers view buying a home as challenging, with over a quarter (29%) saying getting on the property ladder is ‘very difficult’. This research also showed nearly two thirds (61%) of recent first-time buyers found the house buying process ‘confusing’ and two in five (39%) say the stress of it actually made them feel ill.

Understanding the mortgage process

With such a vast number of mortgage deals available, it can be difficult to know which one is right for you.

Whether you are a first-time buyer, moving home, remortgaging or looking to release equity from your property we can help. Our qualified mortgage advisers have access to a wide range of mortgage deals and can help you understand all aspects of the home buying process.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE 

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Coronavirus & Mortgages Q&A’s

stansherlocstg on April 2, 2020

Hackney & Leigh for sale sign in the Lake District
  • Mortgages

Coronavirus & Mortgages Q&A’s

 Some common questions you may have regarding your current mortgage position:

I have exchanged on a new property, but not moved in. What should I do?

The Government has stated that they do not want you to move during the lockdown, unless it is in exceptional circumstances. If you can therefore delay your move then you should. Mortgage lenders are now extending the expiry date on offers by three months to hopefully allow more time, while many solicitors are adding new clauses into contracts in case purchases don’t progress.

I have completed on a new property, but not moved in. What should I do?

As with exchanges, the Government is requesting that moves don’t occur unless there is no option. If you do have to move, then take extra precautions to adhere to the social distancing rules.

Can I qualify for a repayment holiday?

All lenders are required by the Government to offer borrowers the opportunity to take a three-month payment holiday. This is true for all homeowners, Buy to Let mortgages and for clients who have used the Government’s Help to Buy scheme. The repayment holiday is available to borrowers who are up-to-date on their mortgage payments and not already in arrears.

Should I take a repayment holiday?

We believe that over 1 million borrowers have already requested a holiday and if you are in a position where you will struggle to meet your monthly mortgage payments, then it is a sensible thing to do. You won’t need to go through a means test or demonstrate your income drop. There also isn’t a fee to pay. However, I would stress that this is not free money and that you will need to make up the missed payments in due course. Instead at the end of the three month holiday, you will need to agree higher repayments moving forward with your lender or extend the term of your mortgage. As such, taking a holiday will cost you more in the longer-term. My recommendation would therefore be to not take a holiday unless you really need to.


Also, if you are coming up to the end of term on your existing mortgage deal, then be aware that taking a repayment holiday could impact on whether or not you can qualify for a re-mortgage or a new deal with your existing lender. Please therefore talk to me first before applying.

It’s important that you don’t cancel your direct debit to the lender. Simply cancelling the direct debit may cause issues later down the line when you come to the end of your payment holiday and could cause you to miss a mortgage payment in the future. A missed mortgage payment will show on your credit file.

I can’t get through to my Lender. What should I do?

All of the lenders have been swamped with calls from borrowers about repayment holidays at a time when they were also trying to move significant numbers of staff to remote working. Many have consequently struggled to cope, leading to long waiting times. I would therefore encourage you to wait a few days for things to quieten down and try again or alternatively look on the lenders website. Most have detailed information on their response to COVID-19 and how to request a repayment holiday.

I am coming to the end of my current mortgage deal. Should I re-mortgage?

A significant number of products, particularly trackers and those at higher loan to value’s, have been withdrawn by the lenders in recent days. However, over 10,000 products are still available and rates remain at historically very competitive levels. Funding may become more constrained in future, so if you are within six months from the end of your current deal, please get in touch and we’ll talk you through the options available.

My income has dropped. How will this impact on my ability to get a mortgage?

All lenders look at your current income and any expected or known changes when they assess whether you can afford a mortgage. With access to a comprehensive range of lenders from across the market, we can help you find a mortgage that’s right for you and that is affordable based on your income and expenditure.

I am looking to buy a property. Should I continue?

The number of property transactions are dropping fast and we expect the market to be in a state of suspended animation for at least the next two to three months. As such, even if you wanted to make a purchase you would find it difficult, unless it was a property you already knew and therefore didn’t need a survey and were buying with cash only. There are plenty of commentators predicting a big fall in house prices, but in reality this is guesswork and it will be many months before it is clear whether or not prices have been impacted. Most property purchases are made for a reason – perhaps clients need more or less space, or they are changing work location – so on that basis alone I expect the market to gradually re-start once the immediate lock-down eases.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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The value of investments and any income from them can fall as well as rise and you may not get back the original amount invested.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Some buy to let mortgages are not regulated by the financial conduct authority. 

Approved by The Openwork Partnership on 01/11/2023

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