Headlines are ablaze with reports detailing the intensifying cost of living crisis. The surge in inflation, escalating interest rates, and soaring energy prices impose a significant financial burden that even the most financially prudent households cannot overlook.
In light of this economic turbulence, many families are seeking strategies to navigate these challenges and regain control of their finances. Amidst the uncertainty, there exists a potential solution – remortgaging.
Remortgaging presents itself as an effective maneuver to alleviate monthly expenses while awaiting economic recovery. This financial strategy involves transitioning from an existing mortgage to a potentially more cost-effective one on the current property.
Given that a mortgage typically represents the most substantial financial commitment, remortgaging mirrors the significance of the initial mortgage decision. With numerous options available and a commitment period spanning several years, it is essential to comprehend the intricacies of remortgaging and the pertinent factors to consider.
Various reasons may prompt a homeowner to contemplate remortgaging:
The current mortgage term is nearing its conclusion, necessitating a transition from the lender's standard variable rate (SVR), typically associated with higher interest rates.
To reduce monthly repayments and manage finances more effectively without additional borrowing.
Desire to overpay due to changes in financial circumstances, constrained by the current mortgage provider's restrictions.
Need to increase borrowing for significant expenses like moving house, home improvement projects, education fees, Buy-to-Let investments, or debt consolidation.
The property's value has appreciated, potentially qualifying for a cheaper mortgage due to a lower loan-to-value (LTV) ratio.
Changes in the Bank of England base rate prompt a search for a more competitive rate, especially if currently on a variable rate mortgage.
Seeking stability in payments by transitioning to a fixed-rate deal, ensuring predictable monthly expenses amidst changing circumstances or anticipated rate hikes.
Selecting the opportune moment to remortgage is crucial. Periodic review ensures securing the most favorable deal and payment terms. Planning in advance, preferably six months before the fixed deal ends, allows ample time to explore the market and facilitate a seamless transition to a better deal.
While remortgaging can potentially reduce monthly interest payments and offer competitive deals, switching before the current mortgage deal ends may incur penalties. It's essential to conduct a comprehensive cost analysis to determine if potential savings outweigh associated penalties.
Navigating the remortgage process typically takes between 18-40 days from application to mortgage offer, although timelines can vary. Evaluating the current mortgage terms, including type, interest rate, remaining repayment period, and monthly payments, is critical in determining potential savings. Legal assistance is necessary unless remortgaging with the current lender, necessitating the engagement of a conveyancing solicitor.
Arrangement fees can be paid upfront or added to the loan, but the latter may increase overall costs over the mortgage term due to accrued interest.
For homeowners locked into a specific mortgage deal but seeking to access equity or reduce monthly payments, remortgaging with the current lender over a longer term is an option. However, this approach may elevate the overall cost of the mortgage over its lifetime.
With the rising population of individuals aged over 60 in the UK, more are exploring the option of obtaining mortgages to mitigate Inheritance Tax (IHT) burdens. This financial strategy aims to potentially lessen the IHT obligations when passing down assets or properties to family members upon death, if deemed appropriate.
IHT is a tax imposed on the overall value of an individual's estate following their demise, encompassing all assets such as property, possessions, and cash. Presently, the standard IHT rate stands at 40%, applicable solely to the portion of the estate surpassing the tax-free nil-rate band threshold of £325,000.
There are circumstances under which an estate can be exempt from this tax:
If the estate's total worth falls below the £325,000 threshold or nil-rate band.
If everything exceeding the threshold is bequeathed to a spouse or registered civil partner.
If everything exceeding the threshold is bequeathed to an exempt beneficiary, like a charity or a community amateur sports club.
An increase in the tax-free threshold occurs when gifting your home to children or grandchildren, raising it to £500,000. For instance, if an estate is valued at £525,000 and the IHT threshold is £325,000, the taxable portion would amount to £200,000 (£525,000 - £325,000), resulting in a tax liability of £80,000 (40% of £200,000).
The transfer of a home to a spouse or registered civil partner upon death doesn't trigger IHT. However, if the property is passed on to another individual, it contributes to the estate's total value. An exception to this is the Residence Nil-Rate Band (RNRB), which boosts the tax-free threshold when leaving the home to children or grandchildren.
Obtaining a mortgage has the potential to diminish the amount of Inheritance Tax (IHT) by decreasing the size of an estate. This strategy proves advantageous for individuals possessing property exceeding the threshold amount, yet wish to spare their family from the associated IHT expenses. For instance, a parent owning a house valued at £400,000 could secure a mortgage of £150,000 and designate the property to their child in their Will. As a result, the estate's size would shrink from £400,000 to £250,000, well below the threshold figure. Consequently, no IHT would be levied on this asset when transferred to the next generation.
In certain scenarios, individuals aged over 60 who opt for mortgages can secure more favorable interest rates compared to what they would have obtained earlier in life if they had pursued loans or mortgages. This results in the reduction of potential Inheritance Tax (IHT) liabilities, diversification of their investment portfolio, and a more efficient utilization of their financial resources.
Consequently, obtaining a mortgage later in life can be advantageous for those seeking to minimize their IHT obligations and maximize their financial assets. Nonetheless, it is imperative for individuals to thoroughly assess all implications before committing to such agreements, as borrowing entails inherent risks regardless of age. Seeking professional mortgage advice is indispensable in navigating this decision.
In the wake of the mini-budget announcement by the Liz Truss government back in September 2022, the housing market entered a period of significant instability. This turbulence led to a surge in mortgage expenses, with the average first-time home buyer shelling out a hefty £1,218 per month towards their mortgage by October of that year.
Crafted by former Chancellor Kwasi Kwarteng, the budget presented several tax cuts and spending commitments without clear funding sources. This lack of clarity spurred uncertainty in the market, causing many lenders to retract their mortgage offerings. Consequently, this move, coupled with predictions of escalating interest rates, fueled the hike in mortgage expenses.
Recent data indicates that first-time home buyers now spend nearly £200 more per month on their mortgage payments compared to the previous year. This increase stems from both a record average asking price and elevated mortgage rates.
Presently, first-time buyers with a 15% deposit are facing an average monthly mortgage payment of £1,056, a significant leap from the £865 seen just a year ago. Despite this uptick, it remains notably lower than the peak average of £1,218 observed in October.
This analysis considers the average asking price for properties typically sought by first-time buyers—those with two bedrooms or fewer—and the average rate for a five-year fixed, 85% Loan-To-Value (LTV) mortgage spread over 25 years. As of the current writing, the average rate for such a mortgage stands at 4.44%, down from 5.89% in October but up from 2.76% in May of the previous year.
Meanwhile, the average asking price for a property suitable for first-time buyers has surged to a new record of £224,963. Despite these financial hurdles, demand from first-time buyers remains robust, with a current 11% increase compared to 2019.
Factors propelling this determination among first-time buyers include stabilizing mortgage rates and a brisk rental market. The average asking rent for properties suitable for first-time buyers has climbed to £1,120 per month, marking an 11% increase from last year.
As mortgage rates begin to stabilize, the average monthly mortgage payment for homebuyers is starting to level off. For instance, someone purchasing a property at the current average asking price of £366,247, with a five-year fixed, 15% deposit mortgage, would now pay £1,720 monthly. This figure is lower than the £2,012 per month recorded last October and slightly less than the £1,799 monthly recorded in January.
Despite the rising cost of homeownership, the decline in mortgage expenses suggests that the market is gradually adapting to the changes introduced by the mini-budget. Despite these challenges, first-time buyers who manage to gather their deposit still find the prospect of buying a home compelling.
Potential buyers must carefully evaluate their circumstances and consider their affordability in light of current rates, balancing this against the potential costs of waiting or continuing to rent.
Getting a mortgage as you get older can be more difficult, but not always impossible- especially if you have Windsor Hill Mortgage experts to guide you through it and find the most appropriate deal for you and your situation.
If you are over the age of 60, you can (Depending on your personal situation) get a mortgage, however, the term of your mortgage will likely need to be shorter than ‘typical’ mortgage terms.
Getting a mortgage as you get older can be more difficult, but not always impossible- especially if you have Windsor Hill Mortgage experts to guide you through it and find the most appropriate deal for you and your situation.
If you are over the age of 60, you can (Depending on your personal situation) get a mortgage, however, the term of your mortgage will likely need to be shorter than ‘typical’ mortgage terms.
How to get a mortgage in your 60s
Each lender has different requirements that need to be met to be eligible for each mortgage, this is where a Windsor Hill Mortgage advisor comes in. Our advisors work from a comprehensive panel which is representative of the whole of the market with access to over 70 lenders, this enables them to find the most appropriate mortgage for you and your needs.
You will need to agree to pay the mortgage off before reaching the lender’s age limit, this is the maximum age you are allowed to be at the end of the mortgage term. Each lender will have different maximum age limits and your mortgage adviser will be looking to find you a mortgage with a lender that will fit your personal circumstances. Particularly for more complex mortgages using a mortgage adviser is strongly advised. The advisers will be able to carry out detailed research for you and be able to support you throughout.
Preparing for retirement
The lender will want to know your plans for your finances, and a large thing that will impact these will be when you will retire. Some lenders may allow lending to retirement, whereas some may require the mortgage to be paid prior to reaching retirement.
As with every person looking to get a mortgage, the lender will run affordability tests on you to ensure the amount borrowed is affordable for you and your life circumstances, this is to ensure their loan will be paid back protecting themselves as well as you, not lending irresponsibly. Lenders will do the same with retirement income and will assess if your mortgage is affordable with your retirement income, taking into account state pension, private pensions, investments, savings, any property you own and if you will still work another job. By looking over these and running their affordability assessment they can see if it is appropriate to lend to you.
It is in many cases, possible to get a mortgage later in life- and with the right help and advice, you can find the most appropriate mortgage for you.
Your home may be repossessed if you do not keep up repayments on your mortgage’ and ‘Equity Release will reduce the value of your estate and may affect your entitlement to means-tested benefits and tax status. You are strongly advised to register a lasting power of attorney to mitigate the risks associated with managing financial affairs in the event of cognitive decline.
The information contained within was correct at the time of publication but is subject to change.
Have you found the home of your dreams, but are concerned that it is a listed property? Purchasing a listed property can come with a number of different requirements and considerations to take into account that purchasing a property that is not listed simply does not have. However, this shouldn’t mean you have to let your dream house pass you by.
What is a listed Property?
Most importantly, what is a listed property?
A Listed property is a building or structure that is seen to be of national importance. If they are deemed to meet these requirements then they will be placed on a special register known as the List of Buildings Of Special Architectural or Historical Interest. If a property is listed then this will cover a number of different aspects of the property from the surrounding areas, interior and exterior.
Properties are given this status to ensure they are protected and to reduce damage coming to them by having these requirements for maintaining and looking after them in place.
There are different grades for listed properties that help to determine a number of factors.
How to know if your property is listed?
If you have any confusion on if your property or the property you are looking to purchase is listed then you can contact your local authorities planning department and they will be able to inform you of the information regarding the property. You can also go to your local reference library where there is a database on your local area and the information can be obtained from this. It is common for properties that are built prior to 1840, these are likely to be listed. If you are still not able to locate this information you can find it by using the listed building search- this carries out a search online to find you the definitive answer.
What do the different listed property grades mean?
There are different grades a listed property can receive and these categories help to determine the importance or impact of the property, taking into consideration the design and structure.
Grade I
A Grade I listed property is classified as a building that is of exceptional historical/architectural significance. This is very rare for properties to be classed as Grade I listed with only 2.5% of Listed properties falling into this category. Most of the properties that fall into this category are non-residential buildings.
Grade II
Most listed properties are likely to fall into this category with both residential and commercial properties included.
Grade II*
Like Grade I, this grade is rare, with only 5.5% of listed buildings within this category. To be classified this way a building must be seen as being of special historical or architectural interests and significance.
What do I need to take into account before buying a listed property?
Unlike purchasing a property without the listed property status there are things to take into account. There are restrictions that can impact the work you can do to the property and being aware of these factors can help you make an informed decision.
If you buy a listed property it comes with an interesting historical significance, making it a unique and exciting opportunity to own a slice of history. Although it is very exciting it can come with a number of costs and factors to evaluate.
For example, if you want to make alterations or carry out certain/any renovations you will need to get formal permission before carrying out any work. Additionally, you may be faced with a ‘repairs notice’ which can be at any point requiring you to carry out works to restore or upkeep the property due to its historical importance and this will be at your own expense. There are some grants that can be accessed if you are eligible to cover these costs if you are finding it a financial burden. Taking into account the additional costs that will come with maintaining the property over the years is an important thing to take into account.
Living in a listed property is an exciting opportunity but considering your long-term happiness is important. Would you be happy living in the conditions of the property? This is important to consider as making changes is hard to guarantee if possible at all so could you be ok without making changes and renovations? If you are unsure this should be considered as it is not as simple as with a property that is not listed.
Making changes:
As previously stated a crucial part of owning a listed property is ensuring that you follow the conditions that come with this. This includes making changes to the property.
If you wish to make changes to the property’s structure or appearance then you will need to have Listed Building Consent.
This will need to be in place prior to any work being carried out and cannot be obtained after work has started or been completed. You can obtain this by contacting your local planning authority for consent. It is a criminal offence to make changes to any listed building without consent and can cause you to face prosecution.
For further information regarding this, your local authority planning office can guide you and be the best port of call for support and guidance.
What do you need to look out for before purchasing a listed property?
Before purchasing any property there are many things you need to check prior to going forward. In the case of buying a listed property, there are some specific areas to take note of. Arguably one of the most important areas is checking no non-approved work has been carried out by the previous owners. This is important to check ahead of time so that you can raise the issue and not face any repercussions when you are named owner of the property.
Due to the properties being old, the same things you would be looking out for in any other older property still are to take into consideration. This would include looking for dampness, signs of cracking or bulging walls.
Before purchasing the property it is highly advised that you have a survey carried out by a specialist in listed properties. This will show up any areas of concern and highlight concerns prior to finalising your purchase.
Buying a Listed Property comes with many considerations- but if you do decide to go forward with your purchase owning a slice of history is certainly a wonderful and exciting purchase
If you are ready to purchase your dream home, contact us today on 01225 962456.
You’ve bought a property you thought would be your home for many years to come- but of course with life changes, this might not be the case for a whole host of reasons.
When getting a mortgage you are typically looking at a commitment of 15+ years, and over that period of time life can change drastically.
Sadly, we cannot tell you what will happen in this time period and if life changes then you may want to make a move to a new property that better meets your needs.
So the big question is- can I sell my property before my mortgage ends?
The simple answer is- yes….if you can afford to! Selling your property before the mortgage deal ends
Good news is that you can sell your property before your mortgage deal ends- but how.
The first thing you need to ensure is that the sale price of your mortgaged property is going to be greater than the mortgage amount you have left. This means if you owe £175,000 on your mortgage you would be looking to sell your property for more than this.
Another important factor to take into account would be any ERC, Early repayment charges, and fees such as using a mortgage broker are also covered.
A mortgage broker will help you look over the numbers, ensure this is a viable option for you and guide you through the process.
You will need to find out your mortgage documents, they will contain all the information you should need. This includes finding out your early repayment charges and if you are still in the period and will incur these. Additionally, this will show you your full and final mortgage settlement. This will be different if you are overpaying your mortgage, lenders tend to allow customers to overpay their mortgage by roughly 10% of the outstanding balance each year.
By using a mortgage broker, they will be able to guide you through this information and answer any questions you may have.
Financial penalties may be incurred; these typically would be between 3-5% of the total amount that is left to pay if you are still within the specific deal term.
Do I need to let my mortgage lender know?
You will need to inform your lender that you are selling, but this will only need to be done when you are 100% certain you are going to be selling your mortgaged property. By speaking to your lender they will be able to talk to you more about porting your mortgage if you choose to do so.
What is porting?
Want to move your existing mortgage to a new property- this is called porting. Most mortgages are portable and this means you can transfer your old deal over to your new home. This could be a positive option for you, depending on your current situation.
Sadly porting a mortgage is not as simple as it first may sound. You cannot simply change your address there is a lot more work that will go into assessing if this is an option for you.
Porting a mortgage will require a process similar to applying for a new mortgage or the process you’d go through if you were switching lenders. This will involve having your affordability assessed and reapplying before being accepted. Our advisors will be able to help you through this and do the hard work for you. If porting your mortgage is the most appropriate option for you, assessed by our experts, and you decide to go ahead with this route our advisors can ensure the process goes as smoothly as possible.
If you are accepted and all goes through you will be able to keep your existing deal, keeping all the terms. By doing this you are able to keep the same interest rate as you currently pay, this can be an option you are keen on particularly in the current financial climate that has seen interest rates on the rise.
Our advisors will talk you through your options after carrying out a detailed fact find and using this to speak to our panel of lenders and finding the most appropriate deal for you and your personal situation. Using a mortgage broker ensures you have an expert to talk you through your options and provide you the support you need to have one less worry for you.
What happens to my mortgage when I sell my property?
When you sell your mortgaged property, the money received from this will go to pay off the loan and any outstanding repayment charges that you may have incurred through selling. This will be done by your conveyancer ( solicitor) requesting a redemption statement from your mortgage provider and they will deal with the settlement on your behalf. By doing this your mortgage deal will come to an end. You will be mortgage free and can continue mortgage free or if you choose to get another mortgage you can go down the route of doing this.
For our mortgage advice services, we will charge a fee of between £395 and £995. For standard residential purchases or remortgages the fee will be up to £395, for standard But To Let purchases and remortgages the fee will be up to £495, for mortgages utilising a scheme including Right To Buy, Help To Buy, Shared Ownership, Joint Borrower Sole Proprietor or other schemes, the fee will be up to £595, for more specialist advice such as Limited Company Buy To Let Mortgages, Portfolio Landlord Mortgages (over 4 rental properties), Adverse Credit (missed payment or worse within the last 6 years) and Bridging Finance the fee would be up to £795 and finally for self-build and debt consolidation the fee will be up to £995.
The fee is payable on offer. You will not receive a refund if your mortgage or loan does not go ahead.
Whatever your dream is, our team is here to help you achieve it. Do not hesitate to contact us today
