It can be tough saving money for a deposit, particularly if you’re paying rent as well. To help those struggling to get on the property ladder in Leicester, the government introduced various help to buy mortgages.
This article will include the Help to Buy Equity Loan, Help to Buy Shared Ownership, Help to Buy Armed Forces and the Lifetime ISA Scheme. All aimed to help those struggling to get to where they want to be on the property ladder.
The Help to Buy Equity Loan scheme is popular amongst first time buyers in Leicester. To qualify for this scheme, you will need a minimum of a 5% deposit, and you can only purchase a new-build property.
Once you have saved up for a 5% deposit or more, the government will loan you 20%; if you have a 10% deposit, which makes up a 25% deposit.
You will be left with a 75% mortgage and a government equity loan to pay off. You get five years to pay off this equity loan interest-free.
If you can’t meet the 5-year cut off point, you will start receiving interest in the outstanding loan amount.
As a mortgage broker in Leicester, we understand the challenges of balancing your mortgage payments and the equity loan repayment at the same time.
There are ways around this. For example, you may be eligible to remortgage to raise capital for this loan, however, doing so may lead to your mortgage payments increase.
The Shared Ownership scheme allows applicants to purchase a percentage of a property and then pay the rest back on rent.
The percentage of the property that you own usually needs to be between 25-75%, though this can change. The remaining portion is likely to be owned by the housing association.
The way that your payments work is that you will have both your mortgage plus rent outgoings. So, you are paying 100% of the ground rent and service charge on the property.
Following the success of the Help to Buy Equity Loan scheme, this scheme had a similar concept as its predecessor, except you have to work in Armed Forces.
If you fit into the criteria, it could be an excellent option for you. The good news is that the government has now extended the deadline/review date of the scheme to December 2022.
The Lifetime ISA can be still beneficial, and it can help you secure a property as a first time buyer in Leicester. Essentially it’s a savings account where the money grows tax-free.
The government will also top up your savings by an extra 25%, so if you meet the £4,000 maximum amount, you will receive a nice £1,000 bonus.
You have to pass specific criteria to gain access to this scheme. All of the details will be on the Government Lifetime ISA page.
Suppose you fall into the category of military personnel. In that case, you might have heard that Army Families Federation Defence Secretary Ben Wallace has chosen to extend the existing Help to Buy scheme.
Thanks to this scheme, military personals have more time to decide if they want to put their foot onto the property ladder.
The scheme was initially brought into prominence back in 2014. The £200 million scheme’s purpose is to provide a boost to anyone from the forces who needed help buying a property.
The project was not intended for the long term, though, as this scheme was due to end in December 2019.
As a thank you to everyone’s commitment to their Queen and country. The government decided to extend this until the end of 2022.
If at any point, you served in the military and can meet the criteria, you will have access to this scheme. You can borrow a deposit of up to half your annual salary (maximum of £25,000) without any interest added.
If eligible, you can use the scheme to purchase your first home. The perks of this are that you do not need to have any current savings to take that first step onto the property ladder.
The money you will be using is raised from the Forces Help to Buy loan and spent for anything, from your deposit to any additional costs.
These can include but are not limited to stamp duty costs, estate agent fees or even the costs of finding a solicitor.
This government scheme tends to be a little more relaxed than some other schemes, as the Forces Help to Buy loan can be drawn out and paid back over a term of 10 years.
It helps give you room to breathe and not feel so rushed at any point.
With all this in mind, the Forces Help to Buy loan is a lifeline to those who never even thought they’d be able to own their own home.
Bear in mind that you’ll still have to qualify for eligibility based on if you have served your country and can meet the correct criteria (length served, service term left, and medical categories).
Click here to read additional information on this scheme from the government.
With the assistance of a dedicated and experienced mortgage advice team in Leicester, your mortgage process may go quicker and smoother than it would be going alone.
Your advisor will walk you through every step you need to take. From the start of your mortgage process, when you get in touch, right through until your mortgage journey has ended.
Your dedicated mortgage advisor in Leicester will make sure you are cared for and hopefully end up with the best result for your circumstances.
As a company that prides itself on a reliable and efficient customer experience, it aims to take the stress away and, most importantly, loves and respects the nation’s forces.
Don’t hesitate to get in touch with us today. We will take a look at how we can help with your home-owning dreams.
Please bear in mind that the Forces Help to Buy is not the same as the standard UK Help to Buy schemes.
Gazumping is a term that is used to describe a situation, whereby a seller accepts a better offer from another buyer before the sale of a property, has gotten complete.
Gazumping is not uncommon, part of the property-buying process in England and Wales. This is because an agreement to buy or sell a property doesn’t become legally binding.
Until the lawyers exchange written contracts. Until that point, you only have a verbal agreement.
Gazumping can be a very traumatic experience for first-time buyers in Leicester. You may think you are about to purchase the property of your dreams when the sale comes hurtling down.
You may also be part of a chain that breaks and, as a result, you have to move your moving date back. It can be much more painful if you lose money as a result.
The reason for this is that you can sometimes be left out of pocket by non-refundable survey costs, conveyancing fees, and mortgage arrangement fees.
As we have mentioned, an agreement to buy or sell a property does not become legally binding until written contracts get exchanged.
Regrettably, there can be delays of up to several weeks between a seller accepting your offer and the exchange of deals taking place.
It can be due to having a property survey undertaken, your conveyancer carrying out the necessary searches and you have received your mortgage offer.
During this period, other First Time Buyers in Leicester may make a better offer on the property. Which the estate agent has to pass on to the seller.
Still, these preferable offers are not always better in terms of financial value. They may offer a faster sale or not have the burden of a chain.
Hence why the phrase ‘gazumping’ covers any preferable offer the seller decides to accept.
Sadly, certain things won’t happen until you have decided to make an offer, namely the property survey, conveyancer searches, and mortgage offer.
Nevertheless, you can decrease the time between making an offer and the contract exchange. Methods for doing this may include:
Also, there are a couple of tactics you could use that may help out. Add more security to the deal ahead of the exchange of contracts.
Firstly, as part of your offer, ask the seller to take the property off the market as this reduces the risk of other people seeing the property.
There is no obligation for them to agree, but it isn’t uncommon for them to respect this request, especially if they’ve struggled to receive offers in the first place.
Secondly, you could try to put in place a Lock-in Agreement that sees both parties put up a deposit as part of a binding agreement.
If either party attempts to change the deal or back out completely, then the other side takes their deposit.
These arrangements can incur costs such as legal fees to set it up, but you might feel it is worth the price for the security.
Finally, there are options to take out insurance to protect yourself against gazumping. These policies agree to pay you a set fee in the event of being gazumped.
A gifted deposit is either the full amount or a portion of the assurance you need, granted to you as a gift with an agreement that you don’t have to repay the person who has given it to you.
Gifted Deposits come in useful when you have been able to save enough for your monthly repayments but have been struggling to afford the initial deposit, something that’s common for people on smaller incomes.
Obtaining more gifted deposits available may also allow you to receive potentially better rates from a mortgage lender.
We frequently find that it is mainly parents (birth and adopted) and carers who can gift you the deposit. You may see this referred to online as the “Bank of Mum & Dad”.
Other extended family members could also get considered when looking at the option of a gifted deposit. It is significantly much dependent on individual lenders so your dedicated mortgage advisor in Leicester would need to be cautious.
We frequently find that customers have no idea that their parents can help them out with their mortgage, or they don’t feel like they can ask them to help out.
In truth, most parents are more than pleased to be able to help their children, wanting them to get on the property ladder and live a comfortable life in a property they possess.
Statistically, taking out a mortgage often will work out better than renting, due to the potential for you to pay less per month.
The deposit usually comes from inheritance, although parents can sometimes gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their own home.
Most lenders won’t agree to accept a loan to pay off your deposit. It will be down to the lender being unsure that you’d have enough disposable income to pay back both the loan and the mortgage simultaneously.
There is no limit on the amount that someone can give you as a gift, with more deposit often giving you better rates, though we are aware of at least some lenders will insist you put in at least 5% deposit from your income.
The people who reap the most advantages from this tend to be First Time Buyers and Home Movers. It can also be beneficial when used in combination with the Help to Buy Scheme. As the required 5% deposit, depending on the lender, can be paid via gifted deposit.
First and foremost, all lenders will require a gifted deposit form. Dependent on the lender, you might get asked to provide additional proof and ID.
As a trustworthy Mortgage Broker in Leicester, we always aim to provide an outstanding level of customer service. Through a fast and friendly service, to be responsive at all times.
We always rise above and beyond for our customers, no matter their mortgage situation. When someone approaches us for Mortgage Advice in Leicester, we still consider every case that we get faced with.
If you want to see more of our fantastic customer reviews, feel free to check out our reviews page. We take pride in our customer service, and it’s what keeps us moving forward as a business.
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Customer service is at the heart of our company, and we work solely for you. For a free mortgage consultation. Please fill out our form on the contact us page or give us a call. We can’t wait to hear from you!
At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday if they needed it. Most lenders followed the Government’s guidelines and did their best to help out their borrowers during these hard few months.
We feel that it is best, to sum up, what mortgage payment holidays are, what lenders are doing, and who can deliver you with help and advice through these next few months.
Mortgage payment holidays are an agreement entered into with your bank, building society or mortgage lender to defer your monthly mortgage payments for a set period. In this case, 3-months.
It does not mean you never have to pay the amount back, but the interest you defer gets added back onto the loan amount, while your capital balance will not decrease. In other words, your mortgage amount will increase slightly, and you will continue to attract interest on the whole amount.
When you are ready to continue the payments, this could mean that either your monthly payments recalculated at a slightly higher level or your mortgage term increases to some extent.
Most lenders will probably prefer not to extend your mortgage term as this could take you past their standard retirement ages, but the detail on this will follow in due course.
Dependent on your mortgage deal, you may be able to pay off a lump sum later in the year to bring your mortgage back to where it would have been.
Mortgage Payment Holidays are available both for those with residential or Buy-to-let Mortgages in Leicester, which means landlords also have assistance if rental payments are affected.
The full proposal is in detail below:
We would recommend speaking to your Mortgage Advisor in Leicester. They will asses your financial situation first before looking to defer your payments as your situation may not yet be pressing.
Approaching a Mortgage Broker in Leicester like us will allow you to explore all of your current mortgage options and could make things feel a lot less stressful.
For a customer, up to date with payments, not in arrears, and impacted by COVID-19:
In some cases, a mortgage payment holiday can harm your credit score, but most lenders have now said that for matters linked to the virus, they will ensure that this is not the case.
You must ask this question to your lender directly and record the response, including the date and the name of the person you are speaking to avoid confusion later. Different lenders are doing different things.
At first, everything seemed like it would remain the same, and you would still be able to make changes to your mortgages as usual. Leading to a change over in the last couple of days, and lenders have been asking borrowers to avoid making changes while you are within a mortgage holiday period. So, at the moment, they are not allowing mortgages and product transfers.
Borrowers nearing the end of their existing product could get compelled to move on to the higher lenders variable rate, which means that borrowers who act too early could find themselves on a mortgage payment holiday that accrues interest on a costly variable rate.
We would highly recommend speaking to your Mortgage Advisor in Leicester, and they will determine the best course of action based on your personal and financial situation. If possible, arranging your mortgage transfer first then asking for the holiday would seem to be the most sensible way forward.
At the moment, no Lenders have withdrawn mortgage offers; in fact, some are extending offers past the standard six-month expiration date.
You should not pull out of your purchase unless, for example, you are worried about losing your job as a result of Coronavirus. We are advising everyone to proceed as usual for now and “wait and see” – you are not committed to completing your purchase until contracts get exchanged.
In some cases, lenders can offer you a temporary switch to interest-only to reduce your monthly payments but not to add any further to the loan amount by still servicing the interest payments each month.
It may not be necessary to convert all your mortgage to interest only, and it may be that putting part of the mortgage on this basis could give you the breathing space you need.
People with savings may find that remortgaging onto an offset basis could give them a helping boost they were looking for, and they will be cutting down on their monthly payments while keeping hold of their savings.
For example, someone with a £400,000 loan and £100,000 in savings would only pay interest on £300,000. Meaning their monthly mortgage payments will massively be reduced.
For others, a straight remortgage to another lender, calculating the cost of any early repayment charges, may well be enough to ease the burden or simply extending the term of your mortgage.
If you still have any other questions on mortgage payment holidays or just want general Mortgage Advice in Leicester, give us a call today. We want to help you and your mortgage journey through these tough few months ahead. Speak to an experienced Mortgage Advisor in Leicester today.
This insight provided by UK Finance from June 2019. The overall number of First Time Buyer in Leicester is still increasing meaning numbers are topping numbers from when they were at their highest in 2007, before the Credit Crunch.
External economic factors such as Brexit are sometimes less likely to deter first-time buyers than Home Movers in Leicester. It is also apparent that Home movers are never normally 100% certain that they ought to move.
So when you add in extra factors such as political uncertainty it’s completely natural for them to say, “Let’s just wait and see what happens”.
Things are more straightforward for first-time buyers. The hard bit is the deposit but if this is available then the choices are clear-cut, they can either:
Most of our customers often go down the more popular route of buying, the number of First Time Buyers has increased by over 130% when reviewing statistics from the past ten years.
This is because more options such as the 95% Mortgages are more available and there is also further access to Help to Buy Equity Loan Mortgages.
Over half of all homes purchased with a mortgage consist of first-time-Buyers with the remainder being Home Movers and Buy-to-Let in Leicester Investors.
The last time first-time buyers had more than 50% of market share was in 1995 when only a small number of Buy to Lets were taking place. The percentage of first-time buyers has been rising nicely for almost 20 years.
When reviewing properties in terms of value, homes in the North East of England the homes seem to hold the lowest in value. The average sits currently just shy of £140,000.
We have found that first-time buyers really value trusted advice from a Trusted Mortgage Broker. It’s not just simply about finding the cheapest deal.
We understand their appreciation of having support available whenever it is needed when in the process of buying their first home. They want straightforward advice.
What protection insurance to buy, the right amount to pay for a deposit, and many more questions.
We love helping First-Time Buyers in Leicester achieve their goals and we’d love to hear from you, feel free to contact us for a Free Mortgage Consultation to find out more.
First-time buyers in Leicester making an offer on a property is an exciting part of the process. However, it’s a little tricky. You want to be able to obtain the house at the lowest possible price. But then again, you might feel uncomfortable about making an offer so low as to upset the seller.
The first thing to understand is that this is a negotiation process. It’s unlikely that your first offer will be accepted unless you go in at very close to the asking price.
Most sellers (aka Vendors) aim to maximize their selling price. They have plans of their own, and perhaps they need every penny possible to secure a new home for themselves. Whatever their intentions, you are also trying to find the “magic number.” That is to say, the lowest possible price they are willing to accept so that you can move forward.
This number is often slightly lower than they ideally wanted to achieve and slightly more than you ideally wanted to pay!
To help you get to this point before you offer, you need to get organized to give yourself the best possible chance of success. The matter of being organised is especially important if the property is new to the market or you are in competition with another prospective purchaser.
Here are some of the things you can be doing to help yourself:
Any decent Estate Agent will want to check whether you are a cash buyer or if otherwise, that you have funds in place. No one wants an agreed sale to fall through, so it’s reasonable for them to check you have the means to proceed.
They also have their anti-money laundering checks to run, so you may also get asked to prove your identity and address. Some corporate Estate Agents exploit this diligence (aka Offer Qualification) to cross-sell other products and services to you.
They prey on purchasers who have fallen in love with a property by intimidating them by stating they have a greater chance of success by using an in-house Mortgage Advisor in Leicester. However, this isn’t true; most people see right through it, and it is a poor practice that ought to be banned.
Sending in your Agreement in Principle and other documents should be proof enough that you can go ahead, and if not, tell the Estate Agent, you will bypass them and approach the vendor directly.
If you have a property to sell to raise a deposit for your purchase, it is far more effective to have sold it before making an offer. The issue sometimes is that you might not be looking for a new home until a specific one comes up for sale!
If this happens to you, then go ahead and view the property and express an interest. At this point, sellers are trying to agree on a price at this point, though it is to negotiate from a position of weakness. Even if you ignore this advice and agree on a purchase price, the vendor will be advised by their Estate Agent to keep the property on the market, so it doesn’t achieve very much.
Make sure to get all your paperwork in order. When you apply for a mortgage. You will get asked to provide proof of income, ID, address, deposit, and three months’ bank statements.
Start to pull all your documents together into a folder. So that the second your offer is accepted, you can put the wheels of your formal mortgage application in motion.
Emotions can run high when it comes to selling a home. If you are buying a house for your family and the seller has raised their own family in that house. Then it might well resonate with them if you tell them your plans. It will help build empathy.
Telling them about all the shortcomings of the property is unlikely to get you very far when negotiating. For example, if the property is not double-glazed. Then the vendor already knows that so pointing out the obvious will not help you.
Finding out a little bit about the seller’s plans doesn’t do any harm at all within reason. Have they already found a house to buy themselves? What are the reasons they are moving? Have they had many offers?
Answers to these questions and others may signal how likely the vendor is to take a low offer. Generally, people can’t wait to talk about themselves, and if you listen carefully. You could easily find yourself in a better negotiating position.
One final thing – if your first offer is accepted, then chances are your opening bid was way too high! Always offer less than you are truly willing to pay.
A Mortgage Agreement in Principle (AIP) is essentially a document to prove you have a mortgage in place. To the Estate Agent, it shows you are creditworthy as you have passed the lender’s credit score.
However, it is not a guarantee that you will get a mortgage as a full application. It will require further background checks.
How having your mortgage agreed at the outset can help you negotiate on an asking price. A Mortgage Agreement in Principle is essentially a document to prove you have a mortgage in place. It is something we obtain for all of our clients, and almost all Lenders offer them.
A Mortgage Agreement in Principle is not a guarantee that you will get a mortgage. As your full application will require further background checks. Such as evidence of income) and a satisfactory valuation of the property itself.
However, it is a good idea to get one done at the earliest opportunity for the following reasons:
When you are ready to make an offer on a new home most Estate Agents will undertake due diligence. This will result in them asking you to produce evidence that you have funds available to complete the purchase.
It will take the form of bank statements and also an Agreement in Principle certificate that we can provide for you. Once you have provided them with all this documentation, the Estate Agent will then frequently stop marketing the property and put a “Sold” or “Sale Agreed” board up.
If you already have a Mortgage agreed before you make an offer you are making yourself appear as an attractive proposition. In any case, this proves you are not making an offer on a “whim”, you’ve thought about how you’re going to fund the purchase and do something about it.
However, this might persuade a seller to accept an offer you put forward on their property underneath the asking price.
When it comes to buying a house, some clients have always “put the cart before the horse.” They go full steam ahead and make an offer on a property without first checking that they can proceed. It can lead to terrible disappointment if the mortgage application fails.
By that time, they have got their heart set on their new family home. This disappointment can get avoided by contacting us at an early stage.
Sometimes some things are causing a mortgage to decline that can get overcome given a little time.
For example, there may be a niggling issue on your credit report, perhaps a disputed mobile phone bill that can get easily rectified.
Maybe you thought you were on the Voter’s roll, and you’re not – once again, that can get sorted out given a few weeks.
Or maybe you can’t get a mortgage at all! But if that’s the case, it’s better than you know now rather than mess people about and we’ll be able to tell you what you need to do to improve your credit-worthiness for the future.
Ok, so you know you’ve got a good credit rating because you’ve never get turned down for credit, register on the Voter’s roll and you’ve always made your credit card payments on time.
You could approach ten different Lenders these days and get ten different maximum mortgage amounts!
They all calculate affordability in their unique ways. If you’re Self-Employed in Leicester, it is a minefield: some Lenders take your net profit, others your salary and divided. Some use your latest year, others an average over three years.
Knowing your borrowing limits is essential as then you know for sure what your price range is. We’ll be able to advise you of the maximum mortgage available to you.
Also, more importantly, together, we’ll work out how much you can afford to pay back each month.
The Government launched Help to Buy equity loans to mortgage applicants back in 2013. The property market got prolonged to recover from the credit crunch. This was one of many schemes designed to give it a boost. The interest-free period of the equity loan was for 5 years. So many of these are now due for repayment to avoid interest accumulating.
If your 5-year period is ending soon or has already completed. You should consider speaking to a Mortgage Broker in Leicester like us. We may be able to reduce your monthly payments or re-organise your finances.
The scheme works by the Government typically loaning the applicant up to 20% of the property’s value. There is no interest payable for 5 years. If the property increases in value. Then the amount you owe to the Government increases also, so in that instance. The zero % could be quite misleading to some people.
The buyer is only required to put down a 5% deposit, and that is what made the scheme so famous.
We have seen of Help to Buy; many borrowers are unsure of what they signed up to when they bought the house. The reasons being the scheme was not explained adequately to them. Or they got a little carried away with the excitement of purchasing a home. Either way, it comes as a nasty shock when the letter arrives. Asking what action you intend to take to repay the loan.
In any case, it’s a loan, not a gift, and the Government owns a percentage share in the borrower’s home. The borrower has 25 years to repay the loan unless they sell the house beforehand. At the end of the interest-free period, the interest gets charged at 1.75%. In year 6 should the borrower not repay the loan at that time. The interest rate then goes up each year after that.
When the interest repayments kick in, some customers may struggle to keep up their payments. Most customers look to try and remortgage at some point.
Not all lenders will accept remortgaging applications from Help to Buy customers. There are restrictions on the maximum loan to value when raising the capital to repay an equity loan. Some Lenders can consider going up to 95% though. The significant advantage of repaying the equity loan in full is that any future increase in the value of the property will be 100% to the homeowner’s benefit and won’t be shared with the Government any longer.
If a Lender cannot get found who will lend you the full amount to repay the Government loan when you come to remortgage, then another option could be “staircase”. In any case, this is when you gradually pay off the loan in instalments over some time, thus reducing the percentage of your home the Government owns. You can only use the staircase in multiples of 10%.
Offset mortgages are by no means as accessible as they were in the 1990s. The demand has dropped because people aren’t as good at saving as they used to be. However, they are a fantastic option for customers who can put something aside each month. They are also ideal if you think you may receive a lump sum soon.
In terms of how they work, when you take out an offset mortgage, the Lender gives you a Savings Account at the same time. The Savings Account gets linked to your mortgage. While the Savings Account does not attract any interest, the money in their “offsets” against your mortgage balance. E.g. if you owe £100,000 on your mortgage and you have £18,000 in your Savings Account then you only pay interest on £82,000.
Offset Mortgages are very flexible arrangements. You can put as much money in there as you wish until the mortgage is completely “offset”. Any money you put in there is instantly accessible, so it’s an ideal place for your “rainy day” emergency fund.
Because the Savings Account saves interest on your mortgage rather than attracting attention, there is no tax to pay on anything you put in there. In any case, this is particularly attractive to Higher Rate Taxpayers – they love Offsets!
In terms of negative factors, you do pay for a few of these flexible features. Offset mortgages tend to have slightly higher interest rates and fees than other mortgages. Therefore, if you are not going to use the adjustable features, you’ll be better off with a more standard mortgage.
If you are due a lump sum for some reason such as a possible future inheritance, then an Offset Saver can be an excellent place to deposit the money until you decide what to do with it. The same applies if you get annual or quarterly bonuses in your job that you are not relying upon.
Consumers who like Offset Mortgages tend to stick with them and are less likely to remortgage as other customers. They can be hard to get your head around so you should consider all options available when you speak to a Mortgage Advisor in Leicester. Your Advisor will be able to show you the impact of how an Offset Mortgage can save you money over the course of the full term.
Many people plan to overpay their mortgages when they first take them out but never actually get around to it. Sometimes this is because they are nervous about paying too much off their mortgage, leaving behind little for future capital requirements. Again, Offsets are an excellent solution for this type of borrower as you can drawback your money at any time, but every day that your cash is in the Savings Account it’s working for you.