Habito Weekly: The Sun will come out….tomorrow.
There’s been so much drama this week. First Brad and Angelina, then Mary Berry and now the Help-to-Buy Scheme. But with every dark cloud, there’s a silver lining. The Council of Mortgage Lenders (CML) reported mortgage lending rose 15% compared to last year and 7% month-on-month. With all the Brexit blaming of late, it’s encouraging to see that the housing market is not the Armageddon it’s been made out to be. Long may it continue, we say.
Here’s what you need to know this week:
Don’t be discouraged, Help-to-Buy isn’t the only answer.
This week, the Bank of England explained why it’s ending its Help-to-Buy scheme later this year. Surprisingly, it’s because it’s under used. In 2014, it accounted for 70% of lending in the first three months of the year, but that’s dropped to 25% this year. While many people see it as a blow to first-time buyers trying to get on to the property ladder, there are actually several options out there. The government still has many Help to Buy schemes, lenders (Santander, Accord Mortgages among others) offer 95% mortgages and new entrants like us can help you find the best deal.
But if you’re not quite at the 5% mark, Shared Ownership is a great alternative. It allows you to provide a 5% deposit on your share of the purchase. CML put together a helpful guide outlining what you need to know when going into homeownership with others. And while it’s primarily government or council landlords, private shared ownership options are on the horizon.
Homes are important, but so is your future
Only 8% of adults under 35 consider saving for their retirement. Why? Britain’s lucrative property ladder. It’s a greater priority for young people than retirement. It shouldn’t come as a surprise as the average age of today’s first time buyer is 31, but, in our view, you shouldn’t have to choose. Unfortunately, the primitive mortgage industry doesn’t make it easy, but if you’re amongst the majority maybe it’s time to look at ways to do both. Here’s a great guide from Money Saving Expert to get you started.
And if you already have a mortgage and are still paying your lender’s Standard Variable Rate (SVR). Remortgaging could save you up to £4000 a year on average, giving you a little cushion to invest in retirement. Trust us, your 65-year old self will thank you!
Even a casual landlord can incur additional costs
Generation rent and the rising house prices have resulted in several homebuyers looking for lodgers as a way to offset their mortgage costs. While it’s a perfectly reasonable way to pay off your mortgage faster, many people don’t realise you need to notify your lender and HMRC as you could be in breach of your mortgage terms and incur additional tax depending on the rental charge. The Guardian’s homebuying expert Virginia Wallis breaks it down further here. It’s worth a read before you consider becoming a casual landlord.
#MortgageFacts: is the newest edition to the habito weekly. There’s an overwhelming amount of mortgage jargon, acronyms and myths out there, so every week we’ll break one down and leave you with a little extra knowledge to drop into conversation at the pub this weekend.
First up, LTV or loan-to-value: It is the ratio of your mortgage to the value of your property. The higher the LTV ratio, the more expensive your mortgage will be. Mortgage bands move in 5% increments from 95% down, with each threshold presenting a better rate. So if you’re borrowing 60% or less, you’ll get a good deal.
Spoiler Alert: If you’re taking the tube, train or bus to work next week. Look out for us :)
Habito is the UK’s digital mortgage broker, using technology to bring the mortgage application process into the 21st century. Honest, transparent and easy, homebuyers can be sure they’re getting the best mortgage on the market for the first time. No jargon, no fees and no misinformation. Visit habito.com.