Top tips for securing a mortgage

With the UK property market now entering its busiest period of the year, leading property finance specialists, we have put together some top tips for homebuyers when it comes to securing the best deal on a mortgage. While the affordability of mortgage products remains at almost record lows, there are still plenty of ways to make your mortgage even more cost-effective, although your broker might not always disclose these methods. While some tips will save you money, it really is a case of spending money to make money with some of the others. When combined they should place you in the best position when buying in the current market.

Deposit thresholds

More often than not, increasing your deposit by just a small amount can boost you into the next Loan to Value band, meaning a better rate and even potentially less onerous credit scores with lenders. Always work on 5% increments as these are where the best deals are for your price band.

Seek a no-fee mortgage broker

Pretty simple but many of us fail to do it. All brokers are paid commission on the product they sell you, but around 80% will also charge an additional fee – typically £500. May seem minute in the grand scheme of buying a house, but it all adds up.

Life cover

With the cost required to get on the ladder, many of us can be forgiven for skipping the add ons a broker may suggest. If there’s one cost you don’t want to skip on, it’s life cover. Understandably, many of us today can only get on the ladder with the help of our partners as a joint income is required. However, if the worst were to happen and illness or even death strikes, the lack of any form of protection cover can result in the whole deck of cards coming crashing down immediately. This is the last thing you need in this situation, so make sure your life cover is in place and up to date.

Don’t restrict your options

It’s common knowledge that your bank isn’t the best place to start as they only offer their rates and products. But you would be surprised as to how many brokers and advisers can only offer products from a restricted panel of lenders. As a customer, this means you are missing out on potentially the best deal for you so make sure your broker has access to the entire marketplace.

Get your personal details in order

Such a simple one, but if you’ve failed to update documents to your married name, or you aren’t registered to your current home address, the lender’s computer will literally say no as it won’t be able to find you. This is a shortcut route to having your application declined.

Electoral roll

Once your details are correctly registered, register for the electoral roll. You might not know it, but this has a huge bearing on the scoring system of lenders credit. If you aren’t registered it’s another minor little detail that can see you fall at the first hurdle of a mortgage application.

Forward your post

The £60 it costs to have your mail forwarded for a year will be the best money you’ve ever spent without even realising it. This doesn’t necessarily apply to your mortgage but it will save you money. All too often a client moves house and ended up with a default notice on their phone bill or credit card as they’ve not received the reminder and forgot to pay it.

Overpayments

Again, sounds obvious right? But many of us plod along without even considering it. If your mortgage product allows overpayments – make them! You would be surprised at how much even a small overpayment can make on a monthly basis when it comes to the total interest over the lifetime term of your mortgage.

Lock it in

We’re currently in the middle of an artificially low, interest rate cycle and mortgage product affordability is close to record lows. Great news but make sure you lock in on a fixed rate mortgage to make the best of the current climate. A longer term of a fixed five-year rate is probably the best option however a three year fixed might be a happy middle ground for many between a two and five-year product. However, be aware of any 10 year plus fixed rate products. The fee might be great but over the years we’ve seen best-laid plans fall by the wayside and clients are then hit with huge early exit fees if they need to move or pay their mortgage early.

Working overtime

Any overtime worked can be beneficial towards mortgage eligibility but try and ensure that this overtime is consistent as possible. If there are drastic swings in the hours worked, lenders will often work from the lowest figure when deciding your position in the market.

Credit score

If you’re looking to buy right now and your credit score is no good, then you’ve probably already had a few lenders say no. Your credit score is everything to a lender in this day and age and poor payment history or a low score will put you at a severe disadvantage from the offset. Do all you can to cultivate a healthy score starting now and as most lenders base their judgement on Experian, it’s worth the small investment.

Important things to know about Help to Buy ISAs in 2019

The Help to Buy ISA was launched on the 1st December 2015 and runs until the end of November 2019, with all bonuses having to be claimed by the 1st of December 2030. With just under a year left to open and start saving, now could be a good time to consider one. They offer an alternative to taking out a loan to help fund an initial deposit for your first home along with other benefits, with the way they work and how you can take advantage of them.

How do they work?

Help to Buy ISAs work in a similar way to regular ISAs, the only difference is, the government will top up any contributions made by 25% (up to a limit of £12,000). A minimum amount of £1,6000 is required to qualify for a government bonus and you can start with a deposit of anything up to £1,000. After the initial deposit has been made you can only save up to £200 a month, so you can’t simply transfer £12,000 across, for example. Then when it comes to buying your first home with the ISA, 25% will be added to it as long as its between the minimum and maximum contributions.

Qualifying Criteria

In order to open and use a Help to Buy ISA you simply need to be a first-time buyer over the age of 16. The good news is that they are available to each first-time buyer and not each home, so if you have a partner or want to buy a property for a friend, you can combine savings and get up to £6,000 from the government towards your home. Any home worth under £250,000 (or 450,000 in London) is eligible and it can be used with any mortgage, not just a Help to Buy one.

Limitations to Help to Buy ISAs

Within all the criteria mentioned, there are a few further restrictions. Help to Buy doesn’t work if you are wanting to buy a property overseas or open more than one. Technically you can’t buy a property and rent it out with one, but if your circumstances change and you have to work away, for example, you will be able to rent it out.

Should I open one in 2019

Any first time buyers will be looking into getting a good financial position before purchasing a property by ensuring they fulfil their financial obligations. If you are considering buying a house in the years should seriously consider open one. As long as you meet the qualifying criteria and open one before the 2019 deadline then theres little reason to not open a Help to Buy ISA.

The economic benefit of development to the local community

Some people call us greedy and some call us ruthless, but really developers helps communities grow which fuels economic growth. A lot of people fail to recognise how far the economic benefit stretches with the creation of new developments. Many people just assume that it is merely a percentage of housing that is allocated to the council for social housing, under the section 106 affordable housing act, but really it’s so much more than that. For many property developers it is very frustrating, as they are penalised for being greedy and bringing too much change into a community, but people do not see the bigger picture and the economic growth we create.

The house building industry is a massive driver of the UK economy and makes a huge
contribution to communities across the country. While delivering much needed new homes of all tenures, house builders are quietly creating and sustaining jobs, boosting investment in infrastructure and amenities in village, towns, and cities. As well as becoming ever more reliant on private builders to deliver affordable housing through planning agreements, vast sums are ploughed into new roads, schools and community facilities each year. Below we talk about the economic footprint provided in the UK of the property development industry.

1. Before a site has even been acquired, a company has many employees working in
house, depending how large the company is. As you can see already there are jobs
created and business rates paid even before the development takes place, this could be
anything from graduate to apprenticeship jobs helping the community grow.

2. Acquiring a development site is a key stage and the beginning of the property
development process, there are many systems in place to help to source a site, which is
normally done in house. Once this is found, each party has to have a legal
representative which they will outsource to a local law firm.

3. Development appraisal forms the backbone of the financial side of property
development and is arguable the most important step within the property development
process. A developer will know their appraisals inside and out and be able to quickly and efficiently put together an initial site appraisal and cash flow. This will be done in house, and is the deciding factor as to whether the site is worth purchasing, where many different considerations will be taken into account. This is the start of outsourcing the project to different expertise in the field. This could be a planning consultant, architect, solicitor, engineer. This changes from site to site, but there is always lots of jobs to go around in the local community.

4. A development cannot happen or go ahead without funding. Money is one of the 3
pillars of property development and is an area new and inexperienced developers struggle with the most. For each site that you look at, you need to understand how you
will fund it and how to structure the financial side. Each site is different and will require
a different set of funding criteria, and because it’s become increasingly difficult for
developers to get funding, they have to sometimes work with different funding
partners, this can lead to inefficiency and become very expensive.

5. One of the 3 pillars of property development is planning, and the required permissions to actually be able to start and finish a development project. As a property developer, we need to manage the process to ensure all the permissions are in place and that we have a scheme designed that is viable. A developer will know how to optimise and maximise every single square foot on a site to achieve the maximum amount of profit the sit can yield, which in fact means more affordable housing due to being a percentage measurement. There are many other permissions required, not just
planning. For example, building control and party walls. These all need to be managed
along the process to ensure that a development can actually go ahead and happen.

6. Reaching the construction step along the property development process is a major
milestone and there will have been some serious work, effort tune and money invested
into the project. There are many ways to contract with a builder, and this will also
depend on the role you are taking during the construction process.

7. Once the development is finished, it will then be sent off to different estate agents
around the area, but also the development company itself may choose to market the
properties. Sometimes they may hire private marketing companies around the area to
give it that extra push, or work with local newspapers and PR companies.

As you can see from the above, no matter what angle the development is going there is always a need for outsourcing jobs in certain expertise. What people do not understand is the idea of job creation for so many local businesses from development companies. It being a major boost for the local economy, providing modern and attractive spaces for businesses, creating new jobs and encouraging more visitor numbers into the town throughout the year. Below you can see some statistics put together from Litchfield’s of the economic footprint of developers around the UK.

• A total of £38 billion for the economy is generated by house building each year.

• A total of £4.2 billion is either given from developers to help provide affordable housing
in the local area.

• There are over 698,000 jobs created each year from a variety of fields of expertise.

• There is an around £2.7 billion in tax paid each year, which comes from a Council tax, Stamp Duty tax, Corporation tax, National Insurance, Pay As You Earn tax.

• A total of £5.9 billion spent in local shops and services by residents of new homes.

• A total of £1.2 billion is spent on tenants making their houses feel like home
i.e. furniture

 

 

New homes developers say higher interest rates and Brexit isn’t a threat for first-time buyers

This year has left much uncertainty in the housing market, with not only the interest rates being pushed up by the Bank of England but also the countries uncertainty around the Brexit ‘no deal’. In turn, this has led to mortgages rates sky high and UK wage development low, this is thought to of made it increasingly difficult for aspiring homeowners.

The increase in borrowing will have an immediate impact on households and is expected to dampen economic activity over the coming months. However, with scarcity at risk, there has been a high growth of first-time buyers, cashing in on the governments Help-to-Buy governments scheme. Estate agents across the UK, have not only seen a significant increase in new build homes being sold, compared to last year. But also housing asking prices across the market have also fallen by 2.3 pc this month according to Rightmove.

Mortgage approval rates for July showed another month of growth, which shows first-time buyers are still finding their way onto the property ladder. On the other hand, re-mortgage approvals fell by 7.3% July, showing that it’s becoming difficult to upgrade your home, rather than buy your first home.

Richard Carr chief executive of Fortitudo says this is a positive direction for the housing market for first-time buyers and Fortitudo will continue to help the housing market to grow, with our new build developments continuing to be associated with the Help-to-Buy Government schemes.

Richard Carr tells his 7 top tips for buying investment property

Buying an investment property continues to one of the smartest areas to invest your money. An investment property should be about increasing your wealth and securing your financial future. However, you need to keep in mind how effectively you are with managing your investment, which will determine whether or not the investment helps you reach your financial goals. The cost of owning an investment property can be surprisingly low after you take into account your rental income and tax deductions you’ll be entitled too. Check out Fortitudo’s tips for helping you bag a feasible investment…

1. Choosing the right property at the right price

Investing in property is usually about capital gain, so choosing the right property is vital. It is about choosing the property that is most likely going to increase in value and is appealing to rent out. The key is to do your research, work out what everything is selling for in and around the area and then you’ll discover that you will be very good at working out what the property might be worth.

Lenders and mortgage insurers have valuable data on different locations and property developments. This information can easily be accessed to assist you to avoid picking the wrong investment property. Ensuring you have a steady rental income stream is also vital because this cash flow will see you through the holding of the asset, providing an income and become a safety net of cash if anything needs maintaining within the property.

There are many different types of property you can buy, which all have their pros and cons, These are worth overlooking potential investments. It’s important to note that your property needs to suits the demographics of the chosen area you intend to invest in.

• Some apartment units have a very low maintenance cost, but can be slightly higher than the generic home.
• Houses are more expensive to maintain but can be offered to students and families, depending on the client you wish to cater to.
• Land can provide no rental income but may appreciate more quickly if purchased in an area with limited supply.

2. Do your sums – Cash flow is always king

Investing in a property should be considered a medium to long-term investment, so you need to make sure you can afford to maintain your mortgage repayments over the long term. Once you own your investment property it can become quite inexpensive to keep, this is down to the tax reduction on many of the expenses and the rent that is earned. It is also important to note that rents tend to increase over time, leading to higher income. Don’t forget to take taxes into consideration when doing your calculations. These can change all the time, Stamp Duty, Capital Gains Tax, and Land Tax all need to be taken into consideration.

3. Finding a good property manager and let them take control

A property manager is usually a licensed estate agent and a professional in their field. They can give you ongoing advice, manage your tenants, maintain any issues, review rents, find you the right tenant from checking and referencing. Some estate agents offer this at a small percentage of a deduction of your rental price.

4. Understand the market and its dynamics

If you’re investing your hard earned cash into something, you need to know everything about it. Treat the list below as a starting point of considerations before investing.

• Do your research on other properties in the area.
• Speak to as many locals as possible.
• Visit local estate agents.
• Always consult professionals to do things you’re not sure on.
• Research independent information for online; average rents, property values, demographics and suburb reports.

5. Make the property attractive for renters

Always keep to neutral tones and keep the kitchen and bathroom both modern and in good condition. This will always attract better quality tenants, and also gives them the opportunity to make it their own. Remember this is not your home, it is simply an investment, therefore do not risk getting too involved into what it looks like.

6. Use the equity of another property

Leveraging equity from your personal loan or another property investment can be a great way to purchase your investment. It also displays to mortgage lenders that you are a good candidate to lend too, considering previous payments haven’t been missed.

7. Always look at the long-term goal

Remember to always look at the bigger picture, property prices do not always rise straight, having patience is vital in any investment. The longer you can afford to commit to a property, the better the investment will be for you.

At Fortitudo we have many different new builds that are available to buy off-plan, which will be a good investment for first-time buyers or buy to let investors. For more information please visit our website.

Richard Carr talks about Fortitudo’s investment into Poole

For the first time in 12 months, it looks as though House prices are on the rise down south, especially in Poole, rising by 8.3% in the last 12 months. According to the National Statistics, the average property in the area sold for £317,561, which is nearly 50% higher than the UK average of £226,906. This is, however, making it increasingly difficult for first-time buyers to get themselves onto the property ladder.

Throughout the whole of the UK, there is an increase in house prices. However, the strongest growth regionally has shifted from London to the south west of England. Christchurch houses have risen by 5.9% in the last 12 months and April saw a 3.1% leap, selling their average property for £350,696. Whereas Bournemouth houses have risen by 3.6% since June last year and 0.2% in April. Although these properties will increase in value for current owners, it makes it even harder for first-time buyers to even think about saving for a deposit, not to mention all the other fees and extra’s that come with owning a home.

At Fortitudo we try to make property assessable for everyone and create property ownership possible for first-time buyers. There are a number of developments currently under construction in Poole and Bournemouth which will all be associated with Help-to-Buy. The government scheme allows first-time buyers to purchase a new home with just a 5% deposit, the scheme also recommends mortgages that would work with them to get everything done efficiently and less costly as possible. Most of our sites are associated with Help-to-Buy, you can find which development is most suitable to you below!

Help to Buy – Key points

– The fifth anniversary of the Help to Buy loan scheme is this year.
– You can borrow interest-free for five years.
– You can get on the housing ladder sooner.
– You could buy with a smaller deposit but get better mortgages rates.
– Your mortgage payments are likely to be less than your rent.

Fortitudo Developments that intend or currently feature Help-to-Buy

The Highlands, Fareham
Willow Park, Havant
Black and White Cars, Commercial Road
West Quay Road, Poole
Wootton Mount, Bournemouth
30 Tower Road, Branksome Park
– Canaway Court, Poole
– Poole Pottery, Poole