Are equity release mortgages good or bad?

Tuesday, 11th December, 2018
equity release

The simple answer to what is a rather broad question is that it all depends on where you are in life in terms of finance, goals and objectives.

What can’t be avoided, however, is that the equity release mortgage is growing in popularity.

According to the latest Equity Release Council figures, homeowners released over £1bn of equity from their homes in the third quarter of 2018 – and £11m of property wealth is being ‘cashed in’ on a daily basis. As a Guildford mortgage broker we’ve certainly seen equity release mortgage applications rise.

Whilst the figures are compelling, we are regularly asked, ‘Is releasing equity in my property a good thing?’ So, to help you make your own mind up, we’ve provided a list of equity release pros and cons.

However, before we look at the fors and against equity release, let’s start by briefly explaining how equity release works (note: for a more in-depth equity release mortgage Q&A click here).

What is equity release?

If you’re a homeowner aged over 55, equity release enables you to release money from your property – without having to move. You can take a lump sum, as a drawdown (taking smaller amounts at different times) or as a home reversion plan (selling part of your property to the lender in exchange for money).

The pros 

1. Staying put

If you don’t want to leave your property, but need more money in order to continue living there, then equity release mortgages enable you to stay where you are whilst providing you with the funds required to do so.

2. No negative equity – guaranteed

Lenders who are members of the Equity Release Council – and Complete Mortgages tends to only work with those that are – have to include a no negative equity guarantee, which means that if there ever was a crash and the value of the property became less that the value owed, the lender would cover it, not you.

3. Beat inheritance tax

Nobody really likes the idea of being taxed on inheritance, so releasing equity against the value of your property can represent a way in which to pass on your wealth in a tax efficient way.

The cons

1. Compound interest

Equity release mortgages do not work in the same way as residential mortgages. Whereas homeowners with residential mortgages typically pay off the interest charges on a monthly basis, equity release mortgage interest is typically added to the overall debt. This means that the outstanding equity release mortgage balance can rise quickly.

2. Hard to go back

If you thought early repayment charges on fixed mortgages were high, then you might be surprised to learn that early repayment charges on equity release mortgages can be as high as a quarter of the amount borrowed. As a result, you need to be absolutely sure that equity release is for you before going down that route – and also that your mortgage broker goes through everything with you in detail.

3. Benefit or no benefit?

Those who receive means-tested benefits may find that a sudden cash injection results in these being taken away. Make sure you understand the wider financial implications before committing to a long-term decision.

Still not sure? Why not contact the Complete Mortgages team to find out more on 01483 238280 or by emailing info@complete-mortgages.co.uk.

Complete Mortgages also specialises in other mortgages over and above equity release mortgages. We can also arrange mortgages for the self-employed, mortgages for teachers, adverse credit mortgages, buy to let mortgages and limited company buy to let mortgages.

By Mark Finnegan, Director at Complete Mortgages


A stress-free mortgage zone

Tuesday, 27th November, 2018
mortgage advice

It’s always bittersweet on reading research that indicates that the mortgage sector – and those working within it – could be doing better.

It’s bitter in the sense that as a mortgage professional, I would like to see the sector working as efficiently and as proactively as possible. When it appears that in some quarters this isn’t the case, then I can’t help but feel disappointed.

However, it’s also sweet as whilst it may reveal failings by others, it also reinforces my view that Complete Mortgages, as a Guildford Mortgage Broker, is amongst the mortgage brokers who are operating at the highest level when it comes to standard setting.

Research recently published by a UK mortgage broker* revealed that stressful mortgage applications are not only causing homeowners anxiety, but also putting them off remortgaging – something that can save homeowners money in the long-term.

It also revealed that approximately 2.5 million people suffered stress during their mortgage application, that 14% of homeowners said they rarely understood where they were in the mortgage application process and that 13% claimed that the way deals were advertised was confusing.

Whilst the research has been commissioned by a mortgage broker to reveal findings that no doubt support their own objectives, we can’t overlook the fact that it’s revealed that there are a phenomenal number of people suffering from mortgage stress when they simply don’t need to.

For those who read Complete Mortgages’ news pages, then you’ll know that we’re not ones to blow our own trumpet, opting instead for guides, mortgage tips and general content that we feel adds value to those who read it. However, in light of this research, we feel that it’s important that brokers who pride themselves on excellent communication and delivering an impeccable service should also be heard.

So, by way of a response to the findings, here’s Complete Mortgages’ own mortgage promise.

Whether you’re looking to apply for a residential mortgage, a buy to let mortgage, equity release mortgage, or even if you want to apply for bridging loans and commercial mortgages, Complete Mortgages will:

  1. Handle 100% of the mortgage paperwork on your behalf
  2. Proactively chase ALL mortgage applications and update you at every step of the way
  3. Talk you through the process at every stage of the mortgage application

Our customer satisfaction survey, based on the feedback of over 250 clients during the past 12 months, has given us an average customer satisfaction score of 98.82%.

Not only are we really proud of it, but it also demonstrates that there are excellent mortgage brokers out there – and that you really shouldn’t need to settle for second best, nor put up with mortgage stress at any point.

For stress-free mortgage advice contact the experienced Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk. Remember, we also specialise in specialist mortgages in Guildford and the surrounding areas such as self-employed mortgages, adverse credit mortgages and limited company buy to let mortgages, too.

*Trussle

By Mark Finnegan, Director at Complete Mortgages


Should I remortgage?

Wednesday, 10th October, 2018
Guildford mortgage broker

This is a question that we hear time and time again. Thankfully, as a Guildford mortgage broker, it is one that we can answer.

However, before we get into the detail, it’s worth pointing out that recent data released through UK Finance revealed that 46,900 new homeowner remortgages were completed in July – over 23% more than the same period in 2017.

Furthermore, the value of renewed borrowing in July was £8.7 billion, which equates to more than 26% than in July 2017.

Is the UK a nation of intuitive homeowners, given how The Bank of England raised interest rates to 0.75% the following month? Or were these homeowners simply savvy and preparing themselves for an interest rate rise on the basis that, after years and years of low interest rates, it was only ever going to go up?

The simple fact is that there’s nothing like an interest rate rise – or even the threat of interest rates rising – to sharpen the focus of those with mortgages. After all, nobody wants to be caught short and faced with increased monthly mortgage payments that stretch the realms of affordability.

Recent interest rate rises do seem to have pushed the amount of remortgaging in the UK to a new high. However, regardless of interest rate rises – real, impending and possible – here are a number of reasons why you should consider remortgaging:

1. Beat further interest rises

As I’ve just covered, remortgaging – particularly when it comes to fixed rate mortgages – could protect you from interest rate rises and ensure that your outgoing monthly mortgage payments remain fixed in line with your monthly income (or at least fixed at a level you’re comfortable with). With many fixed rate mortgage options covering periods of up to 10 years, those who like to know where they are when it comes to mortgage payments my find this appealing. But remember, The Bank of England can also lower the interest rate at any time, too.

2. Avoid the SVR

If your current mortgage deal is about to end then you are likely to be switched over to the lender’s standard variable rate (SVR), which is highly likely to be higher than the one you’re on right now. Remortgaging is a great way of arranging a mortgage with a preferred rate and avoiding the SVR.

3. The equity in your property has grown

If the value of your property has increased since you took out a mortgage, then you may fall under a different loan to value bracket. If the loan to value ratio is smaller, then you might qualify for lower rates.

4. You’re tired of the inflexibility of the fixed mortgage

Whilst the fixed rate mortgage is great for those wanting security and consistency, they often come with a few negative aspects, too. For example, they tend to place limits on how much you can overpay – and penalise you if you pay more than is allowed each year. For example, if you were to receive an inheritance that would, in theory, pay off a significant amount of your mortgage, you may find yourself unable to do so without incurring fines. As part of the remortgaging process, you can wrap any windfalls into the new agreement, thus avoiding fees and arranging a new mortgage with a much smaller balance.

5. You are looking to borrow more, not less

People are always looking to move into bigger and more expensive properties. If that’s you, then there may be competitive mortgage deals available that enable you to borrow more capital without the monthly repayment being as big as you might think it would be.

As with these five reasons to remortgage and the countless others not covered here, the best way of understanding how you can benefit from remortgaging is to contact a mortgage broker. As an award-winning mortgage brokerage in Guildford that deals with remortgages on a daily basis, we can help. Simply contact the team on 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages


Beware the SVR mortgage trap

Tuesday, 2nd October, 2018

This definitely sounds more sinister than it really is, however the standard variable rate (SVR) mortgage trap surprisingly affects a high number of people every year.

It’s a bit like household energy deals or ISAs: you are drawn in by the competitive rates, be they cheap – and fixed – energy or a high rate of interest for the first 12 months, only to find yourself paying twice as much for home heating or receiving half as much interest as soon as that period is over.

It’s arguably more difficult to overlook increases in your monthly mortgage payments than it is the rate of interest on your ISA, generally because the stakes are higher and the increases more noticeable, however people do tend to find themselves on the SVR and subject to higher monthly payments – and there’s really no need for it to happen at all.

When it comes to finding yourself on your lender’s SVR rate, there are two scenarios:

a) You’ve sorted the mortgage and you’ve lost track of when your preferred mortgage rate ends and the SVR begins – and your lender either hasn’t reminded you, or they have, but you’ve put off sorting it for another day

b) You use a mortgage broker and they’ve failed to remind you to consider your options as you approach the end of what seemed like the best mortgage deal when you took it out 18 to 24 months ago.

As a Guildford mortgage broker the advice we have covers both points, and that’s don’t just use a mortgage broker – but a good mortgage broker.

Firstly, using a mortgage broker doesn’t mean handing over money to someone who you feel does just as good a job as you. In return for getting a mortgage broker to apply for a mortgage on your behalf, you will be working with someone who’s qualified, bound by stringent regulation and who often has access to the best mortgage deals on the market at any given time.

More importantly, in the context of the SVR trap at least, it takes the responsibility of keeping on top of your mortgage off of you and places it firmly at your mortgage broker’s door.

Secondly, good mortgage brokers should know your mortgage as well – if not better – than you. As a result, they should not only be aware of key dates, such as the date your mortgage is due to switch to the SVR, but also proactively contacting you with a list of options when it comes to doing something about it.

That’s what we do, at least, and it’s an approach that prevents the majority of Complete Mortgages’ clients from having to experience the SVR.

Don’t get caught in the SVR mortgage trap. Contact a member of the team at Complete Mortgages on 01483 238280 who can manage your mortgage on your behalf and make sure that you’re aware of all the best mortgage rates available to you in advance. Alternatively, email info@complete-mortgages.co.uk.


The holiday let mortgage has well and truly checked in

Friday, 7th September, 2018
holiday home mortgage

Buy to let mortgages for short-term holiday lets are no longer just a seasonal thing. In fact, it would seem that they’re here to stay – whatever the weather.

Until recently, lenders have tended to prefer to award a buy to let mortgage to those with plans to let out their property on a long-term basis and not the short-term. This has now changed – particularly in the wake of companies like Airbnb, which have transformed the holiday accommodation sector.

However, as we approach the end of summer, and as many of us get back to normality after enjoying what has been the finest summer we’ve had in years, there will no doubt be a selection of people looking to buy a UK holiday home – and who may already be considering a holiday home mortgage.

The good news is that holiday home mortgages are now more accessible than ever and this, combined with high short-term holiday rental yields, makes owning – and letting – a holiday home an appealing prospect.

According to the Residential Landlords Association, seven per cent of landlords are moving their properties from long-term to short-term lets – a factor that has undoubtedly been prompted by changes in tax relief on buy to let properties.

As furnished holiday lets are treated as businesses and not investments they are taxed differently, which enables those who have a mortgage on a holiday let property to qualify for entrepreneurs tax relief and even claim the cost of furnishing the property!

The recent shift in attitude towards Airbnb by lenders has also changed things considerably. Beforehand, borrowers had to request permission from the lender to let their property out on a short-term basis and many lenders ruled it out completely. However, the mortgage market is moving forwards and against the backdrop of recent tax changes to buy to let properties, the short-term let mortgage is gaining popularity.

Whilst we can’t advise on the tax implications of arranging a holiday let mortgage, as a Guildford mortgage broker we certainly can advise on the right mortgage that could help you to not only own your dream holiday home, but also potentially make a nice profit on it, too.

To speak with a Guildford mortgage specialist contact the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk. One of our buy to let mortgage experts will be able to talk you through your options and find a short-term buy to let mortgage that suits you. We’re also specialists in standard buy to let mortgages, limited company buy to let mortgages and commercial mortgages, too.

By Mark Finnegan, Director at Complete Mortgages


How will the second interest rate rise affect my mortgage?

Tuesday, 7th August, 2018
mortgage broker guildford

After much speculation the second interest rate rise has happened.

As of now, the interest rate is 0.75% following only the second rise by the Bank of England in a decade. In fact, the last time the base rate sat around this region was in 2009 – so it’s no surprise that it’s heading on an upward trajectory.

But what everyone wants to know – particularly those on either a standard variable rate mortgage or a tracker mortgage – is how the interest rate rise affects mortgage repayments.

As per our last interest rate rise article, we’re going to keep it simple and say that the increase of 0.25%:

  1. Increases a £100,000 repayment-based tracker mortgage that matches any rise in the base rate by £12 a month
  2. Increases the monthly payments on a £200,000 mortgage loan by £25

For some, a rise of 0.25% may be manageable. For others, this increase and the possibility – or, if we’re honest about it, the probability – of others further down the line may be unsettling. On this basis, many will now be viewing the fixed rate mortgage as a safer bet given the consistency and stability it represents.

The good news is that there is still a raft of competitive fixed rate mortgages on the market.

Inevitably, in the wake of this week’s news, lenders across the nation will be looking to reflect the rate rise in their products, so those considering applying for a new mortgage or remortgaging will need to move relatively quickly if they are to agree a deal before any changes are implemented.

According to the Guardian, the number of people on a variable mortgage has fallen to 35% from 70% in 2001, so there is a clear move towards the security offered via fixed rate mortgages.

As a mortgage broker in Guildford, we’ve seen countless people switch to a fixed rate mortgage since the first interest rate rise in November and we now expect to experience a sharp rise in fixed rate mortgage applications in the coming weeks. And, as a Guildford mortgage broker with access to a comprehensive selection of mortgages that includes some of the most competitive deals on the market, our advice is don’t waste time.

If you’re either about to apply for a mortgage or are thinking of switching your mortgage from variable to fixed, then contact us on 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages


Second Countrywide broker joins Complete Mortgages

Monday, 6th August, 2018
Mortgage Broker Knaphill

Guildford mortgage broker, Complete Mortgages, has lured yet another high-flying mortgage specialist from the UK’s largest single mortgage brokerage, Countrywide, as part of its continued growth plan and following a series of national mortgage industry award wins.

Sam Man, who takes the Complete Mortgages team to 14 people, spent one-and-a-half years at Countrywide after taking over the role of mortgage and protection consultant from Lee Cousens when he left the firm to join Complete Mortgages in 2017.

Prior to working at Countrywide, Sam established his career as a senior banker and protection consultant at Lloyds TSB and Natwest.

Building on Complete Mortgages’ relationship with Surrey’s network of 17 independent estate agents, Seymours, which has seen senior Complete Mortgages brokers permanently located in the estate agent’s offices, Sam will operate out of Seymours’ Knaphill office from August 2018.

On joining the team, Sam comments: “Complete Mortgages is a Guildford Mortgage Brokerage with a national reach and a growing reputation for securing great mortgage deals for its clients. This, combined with its award-winning service levels, makes Complete Mortgages a great company to work for and an opportunity that I’m looking forward to develop as I make it the ‘go-to’ mortgage broker in Knaphill.”

Complete Mortgages has grown significantly since it was established in 2005 and become nationally renowned for providing access to a diverse range of mortgage products, from first time buyer mortgages and buy to let mortgages to adverse credit mortgages and equity release mortgages. It also continues to win prominent Mortgage Intelligence Awards year after year.

Mark Finnegan, Director at Complete Mortgages, adds: “We’re delighted to have once again appointed a high-profile broker from a high-profile brokerage and we now look forward to building on our success, growing our client base and continuing to deliver an award-winning mortgage broker service.”

If you are looking to arrange a mortgage in Knaphill contact Sam via sam@complete-mortgages.co.uk or call 01483 238280.

 


How to increase your chances of getting a mortgage

Saturday, 28th July, 2018
guildford mortgage broker

Firstly, this isn’t a cheat or a piece that advocates – or even encourages – you to try and pull the wool over a mortgage lender or broker’s eyes, and that’s for the very simple reason that it’s impossible and won’t work.

You will not be able to trick a lender into giving you a mortgage or awarding you with the best mortgage deal.

However, just as an athlete prepares for an event, there are a number of things that you can do to help get you mortgage fit. Here are a few pointers to get you started.

1. Score points with your credit score

One way a lender can check if you have what it takes to repay your mortgage and honour your commitment is to check if you have good credit history.

In general, your credit report is what it is and made up of a number of sources including credit card history, loans taken and overdrafts used.

Before you apply for a mortgage it’s worth checking to make sure it’s a) up to date and b) correct.

If you spot anything glaringly inaccurate then at least you have the opportunity to fix it in the short term before it scuppers your chances long-term.

2. No vote, no chance

If you’re not registered to vote than you’re unlikely to get a mortgage. This one’s really easy to prepare for, too. If you’re going to fall down at one of the hurdles then don’t let it be this one. Click here to register to vote.

3. Don’t let the past affect your future

Joint current accounts, loans and other commitments carry joint responsibility. If you’re linked to any of these via an ex-partner – and the ex-partner has defaulted on a payment or done something that would have a negative consequence – then you’re going to be affected, too.

The best way forward in this instance is to check if you’re still linked in any way and, if you are, get yourself disassociated.

4. Be careful with your credit

Just because you have a credit limit of £12,000 doesn’t mean you need to spend £12,000 on credit. At least that’s the view of lenders, who would typically prefer your overall credit card debt to be no more than 50 per cent of the amount available (the lower the better).

When it comes to credit card debt, then it’s better to pay it off – however don’t leave yourself with zero debt and huge credit limits; lenders worry that you may one day go one a huge spending spree!

5. Be diligent with your admin

We’ve all had accounts that we don’t use and rather than close them down, we’ve simply cut the associated cards up and thought that that was it.

Having multiple bank accounts open with nothing in them isn’t advisable, especially if the details attributable to those accounts are out of date and could be disadvantageous to you.

6. Don’t apply for credit just before you apply for a mortgage

The more credit searches you have on your file in a short space of time, the more chance a lender has of thinking you’re in desperate need of credit – even if you’re not.

We would advise that you get a mortgage before you get the new car!

7. Bills don’t pay themselves

So make sure you pay yours – on time.

Not paying a bill on time stays on your records for six years, so don’t let an innocently missed payment result in a missed mortgage offer.

8. Use a mortgage broker

This one really is simple.

As a Guildford mortgage broker, we see people battling with mortgage applications on their own day in, day out, all when they could let us do the legwork on their behalf. As mortgage brokers do this every day and know what’s required (and, importantly, what’s not) they can simply fast-track the process.

Why waste your time when you can hand it over to a professional!

If you’re thinking of applying for a mortgage, or if you’ve been struggling to get a mortgage, contact the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk. We can help with first time buyer mortgages, buy to let mortgages, commercial mortgages and adverse credit mortgages.

By Mark Finnegan, Director at Complete Mortgages


Are interest only mortgages good or bad?

Tuesday, 3rd July, 2018

Interest-only mortgages are a bit like life. They’re not simply all bad or all good, they’re not clear-cut and they’re often right for some people, but not others.

However, from recent reports that suggest that the interest only mortgage is making its comeback, you could be forgiven for thinking that UK homeowners are about to revert to the pre-crash days and readopt the interest-only approach to home ownership.

In fact it wasn’t that long ago that interest only mortgages were commonplace.

It was only the financial crisis of 07/08 that provided what is now seen as a much-needed reset. Up until that point, people were applying for a mortgage on the strength of what they said they could afford as opposed to what they really could afford.

What made this palatable was that house price growth created a safety net as interest-only homeowners were banking on significant equity growth to pay down their mortgage when the time came. However, given the slowdown in property growth over recent years, this is less of a dead cert.

So what’s the difference this time, then?

Well, first of all a little context is needed. Data recently published by Moneyfacts, the financial analyst and comparison site, has revealed that 33 lenders now offer interest only mortgages – up from only 12 offering the product in summer 2013.

However, as stated by a Moneyfacts finance expert in a recent interview with industry title Mortgage Strategy, there were 73 lenders offering interest only mortgages back in June 2008, which reveals we have a long way to go before we reach those levels.

Furthermore, unlike days of old, to apply for an interest only mortgage today you have to have a low loan to value ratio – something that rarely got in the way of a deal pre-crash and certainly before the introduction of the Mortgage Market Review, which resulted in a severe tightening up of the mortgage market after it was put in place.

Yes, interest only mortgages seem to be gaining ground once again – however this type of interest only mortgage seems reserved for those who aren’t banking solely on property growth to pay for their mortgage decades down the line, as you will need to have a repayment strategy in place at the outset that is acceptable to the lender. Evidence also suggests that in addition to a large deposit, those looking to get an interest only mortgage will also need to earn a large salary.

Back to the original question, then: are interest only mortgages good or bad?

As a Guildford mortgage broker that has witnessed the ups and downs of the mortgage market both pre and post-crash, I’ll say that it completely depends on the individual’s circumstances. And for that reason, we would always advise that anyone thinking of applying for a mortgage – of any kind – appoints the best mortgage brokerage they can to help guide them through that process and provide that peace of mind.

If you’re considering applying for an interest only mortgage contact a member of the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk. Remember, we also specialise in buy to let mortgages, commercial mortgages, adverse credit mortgages and limited company buy to let mortgages, too.

By Mark Finnegan, Director at Complete Mortgages


Is the robo-adviser redundant already?

Thursday, 28th June, 2018

At a time when there is continual debate around whether or not the human workforce will eventually be replaced by robots, I have to admit that I experienced a degree of pleasure this week upon reading an article that called into question the efficacy of robo-advisers.

The Financial Conduct Authority has issued a warning that robo-advisers could be misleading customers over fees and the nature of the advice offered – something that those applying for a mortgage should now be taking note of.

In a world where apps are standard fare, automation has become de rigueur and the perception that automation equates to better, this warning shot from the city’s watchdog pulls into focus the delicate – and often complex – nature of mortgage guidance.

It also raises the question of whether or not a service so nuanced and personal, such as that offered by experienced mortgage brokers, can simply be replaced by apps or web-based platforms.

As a Guildford mortgage broker we are all too aware that getting a mortgage is a big decision – and one that is underpinned by many variables, most of which cannot be expressed or picked up on through an automated process. A personal approach, such as that available via face-to-face meetings or even via a telephone call, enables the mortgage adviser to pick up on the small aspects that make up the bigger picture.

It also enables the adviser to ascertain the mortgage applicant’s own understanding of their obligations and commitments with respect to the nature and size of the mortgage they require. An automated platform is a standardised approach and one that doesn’t take into account swathes of people who, for example, may be more vulnerable when it comes to making big financial decisions and who, therefore, would benefit from a conversation with an expert.

I’m not anti-automation. In fact, I wholeheartedly believe that there are many services and aspects of modern life that have improved since becoming automated. However, in my opinion, mortgage advice and mortgage brokerage services do not – and should not – fall within this category.

If you want to speak with actual people when it comes to getting a mortgage in the UK, contact Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk. We specialise mortgages for the self-employed, mortgages for teachers, adverse credit mortgages, buy to let mortgages and limited company buy to let mortgages.