|
How to secure the best mortgage
In this month's edition, we start off by offering our top tips on securing the best mortgage.
There's also news on an increase in the average price of properties across the country in April, the market appears to be in rude health after the latest Brexit delay and we offer our guidance on how you can make your search for a new home easier.
How to secure the best mortgage
It’s practically step one on every homebuyer’s to-do list; get your mortgage approval so you know what your budget is for your property search. However, don’t just stick with your own bank or jump at the first mortgage which is offered to you; follow our tips to help you to get the best deal on your mortgage.
Deposit
Often the biggest hurdle to buying is the deposit itself, but spending more here should save you money in the long-run; the general rule is that a larger deposit will result in a more favourable rate as well as having a favourable impact on credit scores with lenders. With mortgages categorised according to their loan-to-value (LTV) – the percentage of the mortgage as a value of the property – the more equity you have, the lower risk you are to the bank.
Shop Around
It may seem like the easiest option is to simply take out a mortgage with the same bank that you conduct your personal accounts with; however, this will restrict your view on the mortgage market to a single lender. Looking around independently will help you to learn about the mortgage jargon and understand exactly what kind of proposition will suit you best. Comparison services will do a lot of the legwork for you, but remember that some of these require services charge, so if you can, find a no-fee broker.
Avoid bumps in the road
Having your documents in order seems like common sense, but a sure-fire way to having your application declined is to have inconsistencies in your paperwork. If you have recently married or changed address, for example, ensure that your documents reflect the correct details. Whilst you’re updating and verifying your documents, it’s certainly worth registering for the electoral roll as this has a huge bearing on the scoring system for lenders.
Fixed rate or tracker?
Put simply, a fixed rate mortgage locks in an interest rate for a specified time period, whereas a tracker mortgage has a variable interest rate which follows, or “tracks”, an external interest rate – frequently the Bank of England’s base rate. Deciding on which mortgage variant to take out depends on your financial situation; if you can afford to potentially pay higher mortgage amounts should the rates rise, then taking out a tracker mortgage could give you a lower starting rate to begin with. Alongside this, it also allows the opportunity that over the duration of the mortgage, you end up paying cheaper than if you had a fixed rate. If you need to know exactly how much you will be paying each month, then a fixed mortgage could be the best choice to avoid any unwelcome surprises – even if the initial rate is higher than other offerings.
Credit score
Having a great credit score is a huge help when it comes to getting an attractive mortgage rate, as lenders are keen to lend to those with a good history. Also, if you have a smaller deposit then it is essential to have an impeccable credit score, whereas having a larger deposit will result in more leniency if you have a lesser credit score (although you may struggle to achieve “high street” rates). If you want to cultivate the best credit score possible then there are a few steps you can take immediately; ensuring any outstanding debts on credit cards etc. are paid in full each month to show a strong payment history and clearing any outstanding debt are a good place to start.
Five ways to make your search for a property as easy as possible
We all know that searching for a home can be quite a long process. Studies have shown that it can take up to 3-4 months, with most buyers viewing a total of 8 houses on average before finding the house that’s right for them. The only way to make it easier for yourself is by doing a little research and preparation before you dive in, so with that in mind, we’ve put together 5 simple steps to make your hunt for a home that little bit easier.
Figure out your finances
Before your search begins, you absolutely must figure out exactly how much money you have to play with, taking into consideration the full cost of buying a home. It’s not just the cost of the property, but also the cost of surveys, stamp duty and more.
There is no such thing as ‘too early’ when it comes to looking at mortgages and speaking with financial advisors. While setting up meetings and discussing your finances with a mortgage advisor can be time-consuming in itself, once you’ve determined your maximum spend it allows you to greatly refine your search and also puts you in a stronger position further down the line when it comes to negotiating.
Separate your wants from your needs
You probably already have an idea in your head of what your dream home looks like, what features it has and the type of area its located in. Unfortunately, for most buyers finding your dream home takes a lot of luck or a lot of money, so you need to decide early on which features are the ‘must haves’.
Every buyer’s criteria is different, whether it is the size of the kitchen, being close to a good school or the number of bedrooms. A successful home search does require a little bit of compromise; separating your wants from your needs allows you to begin your search with a lot more focus, saving you time in the long run as you won’t need to book an endless series of viewings.
Take advantage of all the information available to you
In the past, a lot of property information such as how much it previously sold for, floor plans and general statistics for the area were not as easily accessible as they are today. There are plenty of websites that allow you to do that extra bit of research, allowing you to make more educated decisions throughout the process.
Find out what the average price is for homes in your favourite area and delve a little deeper; take a look if a home you have your eye on has a surprisingly high flood risk, for example. Buying a home being the biggest purchase you’re ever going to make, so the extra research you put in could not only protect you from hidden disasters in the long term, but also means you’re able to be a little more brutal with your shortlist as you take advantage of the wealth of information available online.
Get in touch with us!
While the internet does hold plenty of useful information on the property market, if you’re looking for in-depth knowledge of the local area, then your local estate agent is always your best bet. By speaking to your agent, you can get some more information on the current state of the local market, which is incredibly valuable information if you’re moving to a new area.
If your essential property criteria include the commute to work or the good local schools, a good agent will be able to bring even more focus to your search and help you avoid any homes that are unsuitable to your needs.
Be thorough, be brutal
Once the viewings begin it’s important that you gather as much information as possible during your time in the property. Take notes, take photos and ask plenty of questions. After a few viewings you may find that all the properties begin to blur together in your memory, so the more information you collect the first time round, the more time you save from not having to make repeat viewings to feel the place out.
At this point, you’ve already made a list of the things you can’t live without, so to speed up the process, you should also create a list of things you can’t live with. If your shortlist only contains 3 or 4 properties, then it may be best to take a slightly more lenient approach when discovering a room will need completely redecorating. However, if your shortlist of homes is in the double digits, you’d be wise to be thorough and spot any deal breakers early as a long list of homes will require you to be brutal, unless you want to spend months going from viewing to viewing.
Overall, the key to a successful property search is to make sure you’ve done your homework and have as much information as possible to make an educated decision when you see ‘that’ property and your heart takes over. Being able to determine exactly what you want early can be a massive help and by combining the online information with the knowledge of your local expert, you can make finding a home a much smoother process.
Property prices in the UK experienced an increase in April
Recent research from mortgage lender Nationwide has shown that house prices picked up in April, with the average asking price for homes now standing at £305,449. This is a jump of £3,500 from the previous month, marking the largest month-on-month increase for over a year and indicating that the market is now experiencing some uplift from the delayed Brexit outcome.
There is some sentiment in the market that buyers and sellers are now fed up with all things Brexit, hence the uptick in market activity following the delay of Brexit which had previously been scheduled for March 29th.
Robert Gardner, an economist with Nationwide, said first-time buyers appeared to be defying the jitters around Britain’s still uncertain departure from the European Union, helped by low interest rates and the lowest unemployment rate in more than 40 years.
“While the ongoing economic uncertainties have clearly been weighing on consumer sentiment, this hasn’t prevented further steady gains in the number of first-time buyers entering the housing market in recent quarters,” he said.
Estate agents often note a ‘spring bounce’ at this time of year thanks to the market entering a period of buoyancy, but the increase seen this year is still the biggest increase for the month of April for three years.
Brian Murphy, Head of Lending for Mortgage Advice Bureau, said: “It's not exactly surprising to see that according to this set of data, the family homes market remains resilient.
“After all, for those who need more room to accommodate growing offspring, or indeed have to relocate due to schooling, the decision to move is rarely a discretionary one.
“Regardless of any ongoing Brexit uncertainty, today's report points to the right time being now for these particular purchasers. This is, of course, understandable as, if you ask most parents, there comes a point when quality of life becomes the priority, rather than the consideration of political headlines.
“The good news is that in areas of the country where asking prices appear to have remained steady - or as the Rightmove report suggests, vendors are pricing keenly in order to attract a buyer - the competitive lending market continues to provide support."
Supply and demand for housing is outstripping Brexit concerns
With the Brexit date being pushed back once more, it would appear that supply and demand for property is now the driving factor in the market, with Brexit taking the back seat in terms of market-driving factors.
In a recent survey from property investment company SevenCapital, nearly 69.5% of investors continued to invest in the United Kingdom despite the spectre of Brexit. Indeed, this confidence in the United Kingdom property market is echoed by international investors, with nearly 95% of the Hong Kong respondents believing that Brexit isn’t a critical factor in their investment decision.
SevenCapital points out that the Sterling has risen in value – a better indicator of fiscal stability – and this outweighs any potential impact that Brexit may have levied upon the market. With the average price of properties increasing last month by over 1% or £3,347, according to Rightmove, then house prices are also reflecting this upturn in the market.
In terms of the rental market, rental yields have also grown in recent months with the best performing areas in Birmingham and Manchester seeing yields driven up as much as 10%. With new changes in the rental sector such as the Tenant Fee Ban and Section 21 changes, tenants and potential tenants should be feeling more empowered in terms of their rights which should encourage more renters into the market.
Despite the headlines that Brexit has provided of late, it is evident that other factors are driving the property market, both sales and lettings. A key point to note is the lack of housing supply and increased demand of late with this duality keeping the market buoyant, despite any political uncertainties. With first-time buyers now at record levels and keen to buy, there is a whole new swathe of potential buyers entering the market which is creating an extremely competitive sales environment.
<< News
|
|