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Essentially Mortgages Winter 2020

4th January 2020

WHAT DOES 2020 HOLD IN STORE FOR THE PROPERTY MARKET?

Last year, activity in certain areas of the property market was subdued, with political and economic uncertainty causing both buyers and vendors to hesitate. However, recent market sentiment indicates an expectation of a pick-up in sales and prices throughout 20201.

First-time buyers continue to dominate

First-time buyers (FTBs) dominated the market in 2019, with those entering the property market accounting for more than half (51%) of homes purchased with a mortgage. The latest available figures show that over 32,000 FTB mortgages completed in October, which together with predicted figures for November and December, mean that the number of people who took their first step on the property ladder last year is estimated to have reached its highest level since 20072.

This trend is expected to continue as FTBs benefit from low interest rates, Help-to-Buy schemes, Stamp Duty relief (not applicable to Land Transaction Tax in Wales) and reduced competition from purchasers such as buy-to-let landlords.

Longer-term borrowing

The trend for longer-term mortgages looks set to continue in 2020. Longer-term mortgages allow borrowers to lower their monthly outgoings and gain access to larger loans, even with stricter affordability rules limiting how much can be borrowed. Data indicates six in 10 mortgage deals now come with a standard maximum term of 40 years. Lenders have also been extending their maximum age limits, meaning that many current borrowers won’t pay off their mortgage until they are in their eighties.

We can help

Are you planning to move, get a buy-to-let, remortgage, downsize, release equity or just review your current mortgage deal? Whatever your intentions for 2020, we can advise you on all aspects of your mortgage and protection requirements. As experts in the ever-changing mortgage market, we will ensure you have the best mortgage deal to suit your requirements and the most suitable protection policies for your individual needs.

1Royal Institution of Chartered Surveyors, Nov 2019
2UK Finance, Dec 2019


SELF-EMPLOYED? SECURING A MORTGAGE NEED NOT BE MISSION IMPOSSIBLE

Being self-employed is an option for an increasing number of the population, for a whole host of reasons, including the pursuit of a better work-life balance and the appeal of being your own boss. Despite common misconceptions, being a ‘selfie’ does not need to be a barrier to getting on the property ladder. In many cases it simply requires a little organisation.

One size doesn’t fit all

To be satisfied that you can afford to make the repayments on your mortgage, potential lenders will want reassurance of a steady income. While this is straightforward for those in employment, it is trickier for self-employed people, who are more likely to earn an irregular income. Although criteria can vary between lenders, typically you’ll be asked to provide proof of earnings in the form of three years’ worth of accounts, before an offer is made, although some may lend on less. It pays to keep your accounts up to date and prepared by a qualified accountant.

Be on top of your figures

Understandably, lenders will want to carefully analyse your figures to ascertain affordability. In addition to your accounts, be ready to have your business and personal bank statements scrutinised. Your monthly bills, your spending on socialising, credit card bills and any loan repayments will be reviewed too.

Keep saving!

Having a substantial deposit behind you is a great starting point, not only for obtaining the mortgage itself, but also for getting access to better deals and potentially reducing your monthly repayments.

We are here to help

Getting a mortgage when you’re self-employed can seem like a daunting task, but we are here to help you find the right lender and mortgage to suit your circumstances. Owning your own home does not need to be mission impossible.

FIVE THINGS TO REMEMBER WHEN YOU MOVE HOME

Moving home is often cited as one of life’s most stressful events, alongside other major events including getting married, having a baby, starting a new job and getting divorced, so it’s easy to lose track of everything you need to take care of when you move home.

1 Insurance

It’s a condition of most mortgage lenders that buildings insurance is in place. It’s advisable to have insurance cover in place for the day you exchange (when the contracts become binding) to avoid the property being uninsured for the days, or even weeks, before the transaction is complete and you move in.

2 Electoral register

As well as ensuring you can vote, being on the register is important for maintaining a good credit score in the future.

3 Energy suppliers

You will need to take meter readings in your old home to get a final bill. Take a quick picture on your phone. Remember to take readings in your new home as well and this is a perfect time to consider switching energy suppliers if you aren’t on the most competitive deal.

4 Check everything works

The last thing you want is to move in, unpack and then realise that something like the boiler isn’t working. Find out where important things such as the fuse box and stopcock are when you first move in.

5 Change the locks

The previous owner may have forgotten they gave a spare key to someone. Arrange to have a locksmith call out to the house on the day you move in and get the locks changed, just to be safe.

With these and other things ticked off your moving checklist, you can put the stress of the house move behind you, take some time to relax and look forward to the next chapter of your life.

IN THIS ISSUE

THINKING OF REMORTGAGING IN 2020? YOU’RE NOT ALONE

Competition among lenders during the last quarter of 2019 was good news for anyone looking to remortgage. Latest figures show remortgage approvals were almost 13% higher in October 2019 than the same month of 20183.

The trend looks likely to continue into 2020, as mortgage rates have decreased over recent years and many borrowers are coming to the end of a fixed term and looking to access lower rates. April is predicted to be a big month for remortgages, accounting for around 11% of the £184bn mortgage maturities in 2020. The biggest month for remortgages this year is likely to be December when £25.6bn worth of mortgages mature.

If you are looking to save money by remortgaging in 2020, get in touch.

3UK Finance, Nov 2019

YOUR CHANGING PROTECTION NEEDS FOR EVERY LIFE STAGE

Life is full of surprises and not all of them good.

With this in mind, having the right level of protection in place is essential to avoid financial exposure. Once protection is in place, it’s worth reviewing it regularly to ensure you have the right cover as your circumstances change over the years.

A recent survey4¬†reveals that just 27% of consumers are confident of the levels of protection they have in place. The results also show that people tend to overlook potential health issues, instead thinking that an early death is more likely than a serious health condition. Participants indicated that they think it’s twice as likely they will die during their working life than have an accident that could stop them from working.

Financial pressures can cause huge strain. More than 50% of 18 to 35-year-olds say if their health prevented them from working, their savings or investments would last them less than three months.

Trigger points

Discussing your protection requirements with us will ensure you have the correct level of cover in place for you and your family. Certain trigger points, such as getting married, having children, moving home and taking on greater financial liabilities, are great prompters to reviewing the suitability of the cover you may already have in place.

4Royal London, 2019

It is important to take professional advice before making any decision relating to your personal finances. Information within this document is based on our current understanding and can be subject to change without notice and the accuracy and completeness of the information cannot be guaranteed. It does not provide individual tailored investment advice and is for guidance only. Some rules may vary in different parts of the UK.
For more information Contact Us or view our Newsletter.   The information and content within this website is subject to the UK regulatory regime, and is therefore targeted at consumers based in the UK.