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 following:
All aimed to help First Time Buyers in Leicester who are struggling to save for a larger deposit to get onto 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.
During the start of your mortgage journey, you’ll most likely have to deal with an estate agent. If you end up in conversation with a larger estate agent, they will want you to use their own in-house team of mortgage advisors & conveyancers.
A lot of first time buyers in Leicester fall into this and are persuaded to use their services, usually spending more money than they otherwise would’ve had to.
The good news is that you don’t need to use their advisor at all, a point we’ll expand upon later on, and you may also open yourself up the either the same deals or better by going elsewhere.
Speaking to a Mortgage Advisor in Leicester outside of the estate agent could be a much better route for you to follow. The advisor working for the estate agent will give you a biased view that only benefits them and their profit.
A dedicated mortgage broker in Leicester will help you see the positives and negatives of each side. If you do still choose to go with the estate agents mortgage advisor, that is okay, though it’s important to remember that you have options.
We always aim to be transparent & efficient, looking to give the best possible experience and the best advice for our customers personal and financial circumstances, whilst providing a fast & friendly mortgage advice service.
If you do opt to use the services of your estate agent’s in-house mortgage advisor and conveyancer, have a good think about where their service cost is coming from.
They could potentially be charging you for their services without asking you and adding it onto the costs of other services, hoping you won’t notice.
Taking on expert mortgage advice in Leicester will reduce your concerns of this, as you will be well informed and aware of what you’re paying for. Your dedicated advisor will break down the cost of everything for you.
Even though it is highly illegal for them to do so, if you have opted not to use their services, they may refuse to put your property offers forward.
For example, you could be instead using the services of a mortgage broker and they may push forward someone else’s offer to completion over yours, purely out of spite that you didn’t use their services. Once again, this type of practice is illicit behaviour.
Estate agents may get even attempt to charge their customers extortionate fees for in-house conveyancing. Even with a straightforward purchase, you may find yourself being charged somewhere within the realm of £1,500, which is far too much.
Any time this occurs, you have full consumer rights to be given a full breakdown of exactly why it costs this much and where their calculations came from.
An experienced mortgage broker in Leicester will only want to do right by the customer. By coming to us for mortgage advice, you can avoid the tactics mentioned above.
Making sure you use the right Mortgage Advisor can be difficult; but can you make it easier?
From time to time, mortgage cases may require specialist care from a trusted mortgage advisor in Leicester. The in-house mortgage advisors from the estate agents don’t care for the details, so long as they can make a profit from it, even if it’s detrimental to you.
Speaking to an expert mortgage broker in Leicester you’ll find yourself matched up with an appropriate advisor with experience in a situation that’s at least similar to yours. They will work with you to ensure you get the right outcome.
An example of this would be the buy-to-let mortgage experts we have on hand for any landlords, new or experienced, looking to get a mortgage.
Once you’ve completed your free mortgage appointment and obtained an agreement in principle (we can normally get this for you within 24 hours of your appointment), your mortgage process can finally get underway.
We utilise our many collective years of providing open & honest mortgage advice in Leicester, helping thousands of customers achieve their home owning goals and dreams. Our customer reviews are a great inside look at how much of a difference our service makes to homeowners.
Some people would rather take on the world of mortgages by themselves, and this is okay! The internet is a wonderful place and you can now do most of what you would need to do, by yourself on your browser.
By utilising price comparison websites, you may be able to find the best mortgage deal for your circumstances through your own research and understanding.
An obvious benefit to doing this would be that you’d save money on additional fees. Providing you have confidence in what you’re doing and understand the process, you could get through it awfully quick, more so than someone going to their bank.
The catch is that online mortgage shopping is quite difficult to do. Before you make any agreements, you should always make sure you have the best fit for your circumstances. Here are some tips if you’re doing this;
Making an appointment with a bank to speak to a mortgage advisor may be challenging. This isn’t always the case, though it also may just be the wrong choice for you to make. Here are a few things to look out for;
Taking on the services of a mortgage broker that has no association with any estate agents ensures that you, as an inexperienced first time buyer in Leicester, have someone there to do the hard work for you, without any conflict of interest risks.
We work for you and only you, with no external ties. Whilst we do have mortgage lenders on panel, we don’t work for them, we simply match customers up to their various unique deals.
Our team do what they can to make sure you’re happy with your mortgage journey and the outcome you end up with. Managing Director Malcolm Davidson is here to explain both the positives and negatives of using a trusted mortgage broker:
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.
Critical Illness Insurance is a type of insurance policy that specialises in covering an individual who potentially could suffer with an illness listed in their policy in the future.
When taking out the policy, you must mention any underlying medical conditions due to some illnesses not being in the cover. The policy could void in the event of a claim if you fail to disclose any underlying medical conditions.
The one-off payment could go towards finances for your mortgage, medical or home modifications, if this is needed.
Critical Illness Insurance will cover pay out of specific medical conditions or injuries that are stated in the policy.
Not all instances of a particular illness will be covered. In the policy, it will state certain conditions that are covered and define these in the policy documentation.
Some customers confuse themselves with critical illness cover with life insurance. The difference between them is what they cover but both insurances can be purchased together.
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Permanent disabilities resulting from injury or illness and other illness not stated will be considered within the policy.
The policy may not list more severe forms of cancer and conditions as they might not get covered. Potential health conditions that you weren’t aware of won’t be covered before you took out the insurance, also this type of insurance doesn’t pay-out if you pass away.
The policy details will provide you with what is covered and what’s not to make you fully aware and check all documentation to make sure they protect your needs.
Many insurance products can provide you with peace of mind should something go wrong. You can find out more in the links below:
???? Do you need life insurance? This product will provide some financial support to your dependents if you die.
???? Do you need income protection insurance? This type of insurance provides regular payments if you’re unable to work due to illness or injury.
???? Do you need mortgage protection insurance? This umbrella term is used for various types of cover to help protect borrowers from any unfortunate events or circumstances that would prevent them from keeping up their mortgage payments.
Insurance is always a massive benefit. All our customers are offered a free, no-obligation protection review where we’ll assess the suitability of the existing policy we have for you.
Our Mortgage Advisor in Leicester can design the type of cover that will be most suitable for your family’s priorities and budget especially when affordability can be key in your situation.
There are three main types of property surveys that are available to you. We have put together a short guide outlined with a general look at which property survey would be a more suitable option for you.
As a First-Time Buyer in Leicester, your next step after being accepted for your offer on a property is to arrange a survey to establish the sort of condition that the property is in as well as the value of it, as this will give the lender confidence that it is worth what you are paying for it.
If anything of concern is found on the survey, you are then in a position by law to approach the seller and negotiate a price for the work that will be required to rectify it.
Here’s a short video from the Royal Institution of Chartered Surveyors (RICS) that explains the different types available to you.
There are 3 main types of property survey available to you in Leicester:
A fundamental valuation will be the cheapest option for a property survey, and you will be required to have one of these before you are able to receive your mortgage offer. This is not to be confused with a full survey. The mortgage valuation confirms to the lender that the property is worth the amount they are going to be lending you.
Your mortgage lender may even offer you a free fundamental valuation as part of your mortgage deal. A Mortgage Valuation will not highlight any repairs that are needed, though it may still point out any apparent defects and recommend that you take a closer look at them yourself.
A Homebuyers report will cover structural safety and highlight any apparent problems for you, including damp, as well as anything that doesn’t meet current building regulations. This kind of survey will give you an independent report of your property by an expert in surveying.
It’s important to make sure you aren’t paying for two surveys as well. It is advisable to ask the mortgage lenders surveyor to carry out this report on your behalf – it will usually take a couple of hours for the surveyor to complete.
A Full Structural Survey is a survey type more advisable for older properties and those of non-standard construction. Depending on how large and the type of the property in question is, a full structural survey can take up to a full day to complete.
A full structural survey provides a detailed report on the current state of the property and highlights any issues that should absolutely looked into prior to going ahead with the purchase, providing you with peace of mind about the general condition of your potential new home.
You can find a surveyor to carry out a Homebuyers report or building survey through the Royal Institution of Chartered Surveyors.
When you start your mortgage process in Leicester, you will come to realise that there are lots of different options available to budding homeowners and existing homeowners alike.
Whether you’re a First-Time Buyer looking for your first home, are Home Movers looking for your next home or are looking to Remortgage in Leicester, there are many different routes you could take.
This article will cover a list, alongside related videos, of the most popular types of mortgages available on the market to customers. If you have any further questions mortgage-related, then please do not hesitate to contact us and speak to one of our dedicated Mortgage Advisors in Leicester.
A fixed-rate mortgage means that your mortgage payments will remain as they have been for a set period. You can set the length of the fixed term yourself, with common options typically being 2, 3, or 5 years or longer.
No matter what happens to inflation, interest rates, or the economy, you can rest assured that your mortgage payment, usually your biggest outgoing, will not change at any point during your term.
A tracker mortgage means that your interest rate will follow on with the Bank of England’s base rate. This means that the lender that you are with does not set the rate themselves.
You will be paying a percentage above the base rate of the Bank of England. To provide an example of this; if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a scale of 2%.
When you take out a repayment mortgage, you are paying capital and interest together. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end, with the property becoming yours.
It is the most risk-free way for your capital to be paid back to the lender, in the early years it is mainly the interest that you are paying, and your balance will go down at a slower rate, especially if you have taken out a 25, 30, or 35-year term.
This situation will switch up in the last ten years or so of your mortgage, where your payments are paying off more capital than interest, and the balance will come down at a much quicker rate.
While many Buy to Lets in Leicester get set up on an interest-only basis, it is much more challenging to get a residential property on that same basis.
It is a lot less likely for lenders to offer an interest-only product nowadays. However, there are certain circumstances where this may be a viable option.
These include downsizing when you get older or having other potential investments that you will use to pay back the capital. Lenders are being a lot more stricter when it comes to offering these products now, and the loan to values are a lot lower than they once were.
With an offset mortgage, the lender will set you up a savings account alongside the mortgage account you have with them.
This works in a way where, let’s say you have a mortgage balance of £100,000 and £20,000 gets deposited into your savings account, you would only pay interest on the difference, so in this case it would be £80,000. It can be a very efficient way of managing your money, especially if you pay higher rates of tax.
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.
Your Mortgage Broker in Leicester is available from early until late, seven days a week! Don’t ever feel free to get in touch; our advisors will be waiting by the phone for your call.
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.
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.