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.
As could likely be predicted, we personally feel like there are some really great reasons why you should use a mortgage broker in Leicester. This isn’t born out of bias, however, as we understand there are pros and cons to both, no matter if you’re a first time buyer in Leicester, looking to remortgage in Leicester, or have another situation.
Regardless of if you’re going via a branch or online, you are still able to go direct to the mortgage lender yourself. Below are all the pros and cons to either of your options.
When thinking about going direct to a bank or building society, the first thing that springs to mind is that you won’t be required to pay a broker fee, which in turn would possibly save you money. In the past, another positive that people thought of was “the bank manager knows my finances inside out”, though after credit scoring systems were introduced, this no longer became a factor.
On top of this, some mortgage lenders will have exclusive mortgage products on offer, that can only be obtained by going direct. They offer these as a way of attracting a good spread of business from their consumers and other brokers, turning exclusive products on and off whenever they believe it to be necessary. On the other side of the coin, some products may only be accessible by going to the broker and not by going direct to the lender.
From 2014 onwards, lenders were restricted from selling their mortgages on a non-advised basis to any customers of their services (those with bank accounts, for example). Up until that point, some applicants felt like members of staff who were not qualified for giving advice, were pushing their services on them.
They also felt like they weren’t able to benefit from some of the consumer protection that would normally come with mortgage sales performed by professionally trained mortgage advisors in Leicester.
The changes took a long while for lenders to come to terms with and towards the back end of 2014, it was not uncommon for customers to have to wait a long time to get a mortgage appointment. This is unfortunately still the case today sometimes. When you have had an offer accepted on a house, this is the last thing you need or want!
Because of the issues present with going direct, much like the wait for an appointment, more and more applications were made with mortgage brokers who could freely offer a same day service, something we are able to do ourselves. When you get in touch with us, we get you booked in with a mortgage advisor in Leicester as quick as we can, either on the same day or at your earliest convenience.
Affordability is an important factor too, as the quality of a lenders deal won’t matter if you have no way of affording it. Buying a house is such a large step in people’s lives, that they often would rather get professional and personal advice from a qualified and experienced mortgage advisor in Leicester.
Nowadays we find that a lot of mortgage applications aren’t as simple anymore. For whatever reason it may be, there are so many things that can make a case more complicated. Some examples of these are:
In the past, mortgage lenders were able to stand head and shoulders above the competition by simply offering a deal that was similar to one offered by another lender, but with slight differences to make it more appealing. Fast forwarding to where we are now and it is all so much more different, with lending criteria being the difference maker between deals and lenders.
An example of this, is that some lenders may lend more than other lenders might have to Self Employed applicants. Some also take a more sympathetic view on previous discrepancies that are showing on your credit report.
Your situation will be unique to you. It may be similar, but it will never be the same as another case. When you explain your position to an experienced mortgage broker, it is highly likely that there will at least be at least something similar that we have encountered before, allowing for a more personalised service. Hopefully, our hard working mortgage advisors will be able to get you a favourable deal with good interest rates.
It’s more than just getting a mortgage though. Even if the application itself is fairly easy, our customers who are first time buyers in Leicester rely on our experience and knowledge for more insight into the mortgage process.
For example, we are able to sit and discuss how much they are going to offer on the property they are buying. From there, our team of mortgage advisors in Leicester can recommend our customers other necessary professional services such as solicitors, whilst also explaining the different types of property survey and protection that is available to them.
One of the main pros of using a mortgage broker in Leicester, we believe, is that we are a lot more responsive than the mortgage lenders have been known to be. Our team work from early until late, all throughout the week (including out of hours), dedicated to our customers and ensuring the process is as speedy and stress-free as it can be.
Something that does get overlooked from time to time when looking at why customers may prefer to use a broker, is that everyone nowadays everyone has such a busy schedule. You might need a mortgage but don’t have the required time to sort it out. In these cases, your mortgage advisor can take the weight off your shoulders and work through it for you.
Professional applicants especially will see the benefits of this service, as they have clients of their own that they charge out their services to and often don’t have the time to work through it themselves. The customers we deal with regularly appreciate the benefits of having an expert on their side.
Perhaps in the future we’ll see lenders wanting to limit their links to brokers and wanting to take their business back. If this does happen, we don’t see it being likely that they will hire more staff in their branch networks. The future of all industry seems to be based around technology and the mortgage market may very well be heading this way too.
That may work for customers who are more than happy to do business with a “robo-advisor”, especially for cases that are easy and don’t require a thorough analysis. For the majority of people, however, there’s an element of “realness”, that “human touch” that can’t be obtained by going this route, and can only be found by speaking to a real mortgage advisor in Leicester.
To find out more information on our service or to present any mortgage queries that you have, please Contact Us and we’ll book you in for an appointment with a mortgage advisor in Leicester as soon as we can.
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.
The circumstances you find yourself in will dictate the amount of deposit you will need for a property that you set your sights on. In this article we will take a look at how much deposit may be required, based on your personal situation.
Previously, it would be quite a common sight to find 100% mortgages. Before their eventual fall, even Northern Rock were offering their customers 125% loan to value mortgages. What that means, is if you were buying a property valued at £100,000 they would still lend you up to a whopping £125,000, and yet people wonder what went wrong…
The reason that these mortgage lenders will need you to put down a deposit, is to reduce their lending risk. If they lend a customer exactly 100% of the purchase price and that customer unfortunately falls into arrears, they would then have to repossess the property.
From there, lets say property prices dipped; now they’re trying to sell a house that’s worth even less, in order to make their money back. Naturally, with lower house prices, that’s not going to happen and they will be at a financial loss. Because of this reason, the higher percentage you’ll find is a 95% mortgage, requiring only a 5% deposit from you.
It’s also believed throughout the mortgage world, that if you haven’t invested some of your own or your family’s money into your home, then you are likely to be less attached and more willing to give up if making payments becomes challenging.
As well as this, many lenders feel that if you can’t save up at least a 5% deposit for a property, or even find someone to gift you this amount, then you probably aren’t quite ready to join the property ladder.
Not directly, however, if you are able to find 5% of the deposit required from your own saved income, then you may happen to qualify for the government Help to Buy Equity Loan Scheme.
This government scheme only applies to new build properties, with the idea being that you put in 5% and then the government will loan you up to 20%, making up a total of a 25% deposit. After 5 years, you need to look at paying back the equity loan back, sometimes through a remortgage or from savings you have been able to make during that time.
In most cases, you’ll find that 5% is considered enough to put down for a deposit on a property, however, not all lenders will offer 95% mortgages, which can leave you with limited options. Saving up for a larger deposit, for example, 10% deposit, will open the door to more products and most likely at a lower rate of interest.
With the majority of 95% deals, you will normally need a good credit score to qualify. There are lenders out there that may consider you for a 95% mortgage with a fairly average credit score, but you would probably incur a much higher rate of interest.
In the event of a poor credit history, the majority of the specialist lenders will require a minimum of 15% deposit if you have a poor credit history. As mentioned earlier on in this article, the reason the lender will need a deposit is simply to reduce their risk in case a repossession occurs.
It has always been a requirement to put down a larger deposit for buy-to-let mortgages and the majority of lenders at the moment are looking for at least 25%.
Technically, this could be possible, though pretty much all lenders will not allow this, as essentially this would still be 100% lending. Again, this no longer exists due to the aforementioned risk involved with such a financial process.
Yes, this happens all the time. We will often see this being called the “Bank of Mum and Dad” (both birth and adopted parents, as well as carers & legal guardians) gifting their loved ones the deposit, or other family members such as any Aunties & Uncles.
We have even seen instances where family friends are able to gift you money. These are all perfectly acceptable options, providing they are able to evidence the funds, prove who they are and confirm they are not expecting repayment of the gift in the future. We have written a detailed article all about Gifted Deposits in Leicester.
If you are buying as a sitting tenant and your landlord or family member has given you a discount from the properties value on the open market, or if you qualify for a discount to buy from your local authority (housing association or council) under the Right to Buy Scheme, then you will typically not need to put any of your own money in as deposit. This is due to the existing equity being already “built-in” to the mortgage deal.
Please bear in mind that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice in Leicester.
The Help-to-Buy Scheme in Leicester is a widely known way for many first-time buyers to find their footing on the property ladder, though it can be confusing for many who are researching for the first time. There have been various different aspects that come under the terminology, so you may not fully understand what you’re getting into.
The most common one that is still around and the one you would be using as a first-time buyer, is the Help-to-Buy Equity Loan Scheme. You can rest assured that you will have us to support and guide you throughout your mortgage process. Not only will we assist you with understanding the scheme, but we will scour the market until we find the best mortgage deal for you and your personal circumstances.
You will find that having our brilliant mortgage advisors in Leicester on hand is not only incredibly helpful in securing your mortgage but also in working through the sometimes complicated processes of the government Help-to-Buy Scheme.
The scheme was set up by the government, primarily to help homeowners, including first-time buyers. If you decide to make use of the scheme, the following will apply to you and your mortgage process:
If you think that you qualify to use this scheme but are not sure whether or not you will have the ability to do so, simply get in touch with us and one of our dedicated mortgage advisors in Leicester will take a look at your circumstances. Once we have gotten a measure of your situation, we will be able to check whether you fall within the criteria of the offer.
Our mortgage service is tailor-made specifically to suit you and your needs regarding a mortgage. The Help-to-Buy Equity Loans apply to new-build properties up to a maximum value of £600k. The purchase price of the property gets made up of your 5% deposit, 20% government loan, and 75% balance covered by the mortgage that we will locate for you.
Once you get in touch, we will take the time to talk you through the whole mortgage process. If the property that you wish to buy fulfills the terms, we can discuss the scheme with you in larger detail. Whether you are purchasing from a builder or via an estate agent, we can communicate with them on your behalf.
As soon as you contact us, we will arrange a convenient time to suit you for your free, no-obligation mortgage consultation. If you are not clear on the figures and how the process works, we will go through the calculations with you until it is all understood.
We will take the time to ensure that not only are you happy with the figures but that they are affordable and fit in well with your financial circumstances and levels of income.
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%.
This article was originally published on 30th March 2020 and as of the 20th May 2020 the property market has now resumed and this information has become outdated. Everything was 100% accurate at the date that this article was published.
The mortgage market has endured thanks to the coronavirus. Everything has come on a bit fast, and we thought we should catch you up to speed.
Our intentions aren’t to scare you, but explain what has happened to the mortgage market and do our best to help you through the problems you may face during these difficult times.
The central dilemma for the mortgage market is that surveyors and mortgage valuers can’t go out and visit properties because the whole property market is on hold. Lenders need to know what they are lending against, so require some sort of valuation before accepting your application.
Some lenders rely on AVM’s (Automated Valuation Model) for valuations on a property. The reason being it’s a way for lenders to receive an estimate without actually going out to the property.
However, when they don’t need to send someone out to look at the property physically, these types of mortgages get restricted and to lower loan-to-values only.
During the last couple of days, as of March 28th, some lenders have been restricting their maximum loan-to-value down to 60%. So, they are continuing to process these types of applications but not necessarily ones at higher loan-to-values.
Each lender is taking a different approach. So far, no mortgage offers got withdrawn, and we think that it is just a waiting game at the moment, lenders are just putting everything on hold before rushing into accepting more mortgages.
We have whiteness that some lenders have decided to extend the periods of their mortgage offers from six months up to nine to allow the economy and the mortgage market to get back up and running again.
Following our recent article about Mortgage Payment Holidays, we want to remind you that you should only take one if you need to. Do your research, talk to a Mortgage Advisor in Leicester, evaluate your options, and see whether it is the right thing for you.
It is more than likely that they will extend the period of your mortgage anyway, so it could be better just to hold off. You should contact your lender if you are questioning your ability to meet your monthly mortgage payments.
If you decide that this is your best option, lenders are asking for you to get in touch online due to the sheer volume of calls they are receiving.
If you are going to request a payment holiday, check that it won’t affect your credit rating or mark any arrears against your account. Also, don’t just cancel your direct debit and remember that you will need to seek permission from your lender to take a payment holiday.
The main thing is not to panic. We are here to help you with all of your mortgage problems and get you and your mortgage through these next couple of months. At some point in the coming weeks or months, someone is going to press play again.
We will all be back to normal in the given time. You can still get in touch with a Mortgage Advisor in Leicester from 8am – 10pm, 7 days a week. Business is as usual. We can’t wait for you to get in touch and help you with all your mortgage needs.
Mortgage Protection Insurance is a term used to encompass various types of cover designed to protect borrowers from events that could severely impact their ability to maintain mortgage payments.
There are different variations, but when connected to a mortgage in Leicester, they are all there to provide peace of mind and usually fall into the following categories:
• Life Cover
• Critical Illness Insurance
• Income Protection
• Accident, Sickness, Unemployment (ASU) Cover
• Family Income Benefit
As a rule, if the policyholder dies within the term, then the sum assured should be enough to pay off the outstanding mortgage balance and ensure the borrower’s dependents get left with a debt they might not otherwise be able to manage.
Our Mortgage Advisors in Leicester can run through all the different types of life cover and recommend the most suitable plan for you.
There’s a debate that says that life cover gets taken for the benefit of other people – i.e., your dependents – because sadly, you won’t be around to see any interest yourself.
However, these days, thanks to improvements in the sort of medical treatment available, many people now survive conditions that once might have been fatal.
Nevertheless, while undergoing what may be long spells of treatment and recovery, it could have a marked effect on your ability to meet your financial commitments. The decision has led to the development of Critical Illness Insurance.
Critical Illness Insurance works similarly to Life Assurance in that it is usually taken for a specific term of years and can have different options such as level/increasing etc.
It gets designed to pay out a lump sum and, like Life cover, for borrowers, it is typically taken on a decreasing term basis in line with the reduction of your mortgage balance.
The key is that the benefit gets paid if you fall victim to one of some specified critical illnesses and pays out whatever the long term prognosis of that illness.
The type of illnesses covered vary from company to company, that’s why this type of insurance cannot be solely price-driven, and advice highly recommended.
In practice, many companies will offer Life and Critical Illness Critical cover as a combined policy.
They would usually payout on the “first event,” i.e., whatever happens first – either death or a serious illness – the payout gets made. They can also get written on a single or joint life basis.
Whereas Life and Critical Illness cover pay out a lump sum, “Income Protection” pays out a monthly amount designed to replace your wages in the event of you being unfit to work.
Unlike Critical Illness cover, there are no restrictions on the illnesses or injuries covered, the only factor being whether they make you unsuitable to work.
There are, however, restrictions on how much you can cover and how quickly benefits would start to get paid.
Like Life and Critical Illness cover, these policies are underwritten based on your health and lifestyle at the time you apply.
All income protection policies get written on a single life basis.
Similar in many ways to Income Protection, these policies also cover you should you be made unemployed. Benefits are usually linked to your mortgage and other costs (rather than necessarily your wages) and would often be paid one month “in arrears” after a successful claim.
These policies get only underwritten at the time of an application rather than at the outset. Which can sometimes mean there can be some confusion/delay as to whether a claim would get met.
They are a useful safety net if you get made long-term unemployed, but be sure to check the details of how/when any unemployment benefits would get paid out, as it may be that you would have returned to work before any money becomes due.
Probably the least common of the “mortgage protection” type policies but can often be valuable – particularly for those with young families.
The plans get taken to cover Life and/or Critical Illness and get underwritten on the application the same was we mentioned earlier.
However, unlike the traditional forms of policy, rather than pay out a lump sum, the cover would pay an annual or monthly income for the remainder of the term of the plan.
Thus it can replace the income of the primary breadwinner for several years, dependent upon a particular client’s circumstances and, because of this, would usually be written on a level or basis or an index-linked basis designed to keep up with inflation.
There’s an adage that says you can never have too much insurance. Indeed, many people have one or more of the different types of policy, and it would be wrong to think of Mortgage Protection Insurance as just an “either/or” choice.
However, in the real world, affordability plays a massive part, so while it would be fantastic to cover yourself for every potential opportunity.
A good Mortgage Advisor in Leicester like us will sit down with you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.
If you do take more than one type of policy, however, your advisor would usually place all the cover with one provider.
To save you the additional policy administration charges which individual policies carry but which get reduced when bringing all the systems under one plan.
Please give us a call or fill out our enquiry form to speak with one of our Dedicated Protection Specialists.