Are high LTV mortgages good or bad?

Friday, 28th June, 2019
high ltv mortgage

In many ways, the mortgage market is similar to the fashion industry.

Just as denim jackets seem to make a comeback every decade or so, high loan to value (LTV) mortgages seem to be widely available once again.

For those of you who may not remember the impact of the financial crash of 2007/8, such as young first time buyer mortgage hunters, then I’ll just say that it was a very challenging time and one that went from lenders offering very high LTV mortgages to lending almost nothing at all.

However, high LTV mortgages are on the rise and it hasn’t gone unnoticed by the Prudential Regulation Authority, which has raised concerns about lenders’ willingness to increase their risk in order to maintain profit margins.

For example, Moneyfacts recently reported that the average two-year fixed-rate at 95% LTV has fallen from 5.33% to 3.25% over the past five years. Similarly, at 60% LTV, average two-year rates have fallen from 2.96% to 1.90%, making both 90% and 60% LTV mortgages more accessible.

As the debate opens up around ‘risky’ high LTV mortgages, here’s Complete Mortgages’ view.

1. Apples and pears

Lenders often talk of income multiples in order to ascertain a mortgage applicant’s affordability threshold – and the current debate around the acceptability of lending six times income is gathering momentum. However, given how low the Bank of England base rate currently is, then a multiple of six times income based on today’s available mortgage rates requires lower monthly mortgage payments than five times income based on the interest rates prior to last decade’s financial crash.

2. Helping the next generation of homeowners

Getting on the property ladder has become increasingly difficult. Property values have outstripped salaries, the result of which has priced out young people from getting a first time buyer mortgage. High LTV mortgages, which typically only require a 5 – 10% deposit, help first time buyers become homeowners, which is important.

3. Current earnings don’t necessarily reflect future earnings

First time buyers, who are relying on buying a property with only a 5 – 10% deposit, may have to go down the high LTV mortgage route as their earnings may be small in relation to the sum they’re looking to borrow. However, it doesn’t take young professionals long to move up the career ladder and increase their salaries, thus reducing their level of mortgage risk by default.

4. Post-crash regulation

Despite what is being reported in the news, structures imposed by regulatory bodies, such as the Mortgage Market Review, make it very difficult for mortgages to be handed out to those who are unable to afford the repayments.

High LTV mortgages may have increased, but so too have the number of variables and considerations that mortgage applicants are now assessed on. It is, of course, important to note that the Bank of England base rate is very low and could change at any time, however any changes to interest rates are quickly integrated within lenders’ affordability tests.

If you’re about to apply for a mortgage, looking for a professional mortgage adviser in Guildford or think you need to apply for a high LTV mortgage but are concerned by the potential risks, then contact the team at Complete Mortgages, who can assess your affordability levels prior to your mortgage application going to the lender.

We help our clients secure high LTV mortgages, buy to let mortgages, limited company buy to let mortgages, equity release mortgages and adverse credit mortgages.  Contact 01483 238280 or email info@complete-mortgages.co.uk for more information.

By Mark Finnegan, Director at Complete Mortgages


Six top tips on equity release mortgages

Wednesday, 20th March, 2019
Equity Release Mortgages

If you’re considering going down the equity release mortgage route, then you’re probably aware of the overall concept behind them, how they work and the benefits of releasing equity from your home – particularly if you’re 55 years old and above and looking to free up capital.

If that’s not the case, then read our ‘Are equity release mortgages good or bad?’ article, which provides a quick and easy guide to equity release.

However, if you are further down the line and are now thinking about the wider implications, then these six tips may be of interest.

1. Consider the alternatives

Equity release mortgages are effective and their growing popularity reflects this, however it’s always good to know your options. When it comes to alternatives, then the most cost effective way of raising capital is to downsize. However, if space is important to you and you want to stay in your home and have more money at your disposal, then applying for an equity release mortgage could be a more suitable route.

2. Keep your family in the loop

Equity release is a big decision and one with a number of potential repercussions for children and family members later on down the line. Our advice, when it comes to equity release mortgages, is to make your intentions clear to all those who may be affected by an equity release contract in the future.

3. Big decisions require good mortgage brokers

As a Guildford mortgage broker, we’ve seen – and helped people through – the effects of poor equity release decisions made on the back of bad advice. Getting an equity release mortgage is a significant decision and one that needs to be backed up by sound advice. Make sure that choosing a good mortgage broker is on your list of priorities before committing yourself to anything.

4. Know the numbers

Fees and compound interest form part of equity release mortgage deals. It’s no different from any other mortgage agreement in that regard, however this may have more implications on those who, as they get older, are likely to work and earn less. Know where you stand and how much it’s going to cost you before you sign the paperwork.

5. Equity release is convenient…

…but it can also be an expensive way to borrow. If, after getting good advice from a mortgage broker, you decide to apply for an equity release mortgage, then make sure you don’t take out more than you need, as any excess money will be accruing interest up until the point that your property is sold.

6. Lowest isn’t always the best

Choosing a mortgage with the lowest possible rate is pretty much a priority for everyone. However, when it comes to equity release, lowest isn’t necessarily the best. Equity release mortgage deals often include special features, such as offering the borrower the ability to make monthly repayments to avoid interest rolling up. Whilst the premium for this may be a slightly higher interest rate, it may work out more beneficial on a long-term basis and provide a greater degree of flexibility.

Still unsure about equity release mortgages? Contact one of our equity release mortgage specialists on 01483 238280 or email info@complete-mortgages.co.uk to find out more. Remember, we’re not just specialists in equity release mortgages but also first time buyer mortgages, buy to let mortgages and commercial mortgages, too.

By Mark Lucas, Equity Release Specialist at Complete Mortgages


A guide to commercial mortgages

Tuesday, 8th January, 2019

There’s never a shortage of debate around residential mortgages and buy to let mortgages. Even equity release mortgages are currently basking in the sunlight after the amount of equity released from the properties of UK homeowners hit over £1bn. However, one type of mortgage that often gets overlooked is the commercial mortgage.

According to the Federation of Small Businesses, there were 5.7 million private sector businesses at the start of 2017 – up 197,000 from 2017 and 2.2 million more than in 2000.

It stands to reason, then, that whilst the process of applying for a commercial mortgage doesn’t get as much airtime as residential mortgages (there are less UK businesses than UK properties, after all), commercial mortgage applications are on the up.

As a mortgage broker in Guildford, an area where there is a high concentration of business owners, we have seen an increase in the number of people interested in getting a commercial mortgage over the years. Yet when comparing applicants’ knowledge of commercial mortgages with residential mortgages, there are huge gaps.

So, here’s our brief guide to the commercial mortgage in the hope that it provides you with enough information to get you started.

1. What is a commercial mortgage?

Commercial mortgages are used to buy land or property for a business. Equally, a commercial mortgage can be used to expand an existing business or for property development. It’s generally a long-term loan spanning 10 to 20 years and lenders are generally willing to lend up to 70% of the total value of the property, although they can consider lending more where they are happy with the overall circumstances. The remaining funds are expected to come from the business.

2. What are the benefits of taking out a commercial mortgage?

If you run a business and want to protect yourself against escalating rental costs, then owning a business premises is a great way of controlling this particular overhead. Also, just like residential properties, commercial property values can increase, the equity of which can give you an added buffer in fallow periods or when cash flow is poor.

3. Are commercial mortgages easy to get?

There are many lenders offering commercial mortgages. The trick is finding the one that works for you and your business. As a commercial mortgage specialist, Complete Mortgages can help you identify a lender from a wide pool of commercial mortgage lenders that we work with and that can support your short and long term objectives.

4. What about commercial mortgage rates?

They are typically higher than residential mortgage rates and tend to vary. A good mortgage broker will help you identify a commercial mortgage that best suits your needs.

5. Is my credit rating still important in order to get a business mortgage?

Yes, it is important. However, rather than just looking at your personal credit rating, a lender will also be able to get a good indication of whether or not you’re a ‘safe bet’ by looking at your business as a whole, which is a good thing.

6. Is there anything I need to be aware of?

The commercial mortgage journey is arguably less predictable than that of a residential mortgage. Residential mortgages are quite linear; you need somewhere to live and once you’re on the property ladder, the chances are you won’t get off. Businesses are different. Many grow, many fail and sometimes businesses owners simply decide to go and do something entirely different. As a result, you need to be aware of the financial commitments of a commercial mortgage and have a good idea of what you’re looking to achieve before taking out a commercial mortgage.

This is only a brief guide to commercial mortgages. If you’re interested in finding out more information then contact the Complete Mortgages team on 01483 238280 or email info@complete-mortgages.co.uk to find out more.


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


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 get the best equity release mortgage advice

Thursday, 24th May, 2018

Equity release mortgages have well and truly arrived.

As recently pointed out in our last equity release article, which includes a five point guide as to what you need to know about equity release loans, it is estimated that the value of UK equity release mortgages increased by £10bn last year.

However, it’s important to note that wherever there’s an opportunity, there are always opportunists, which was my first thought on recently watching a series of equity release adverts on TV.

One advert was proudly selling access to equity release mortgages for a fee of ‘only’ 1.95%. Whilst this doesn’t sound that high, it typically equates to around £1,395 – £1,495, which is, in fact, a relatively high charge.

As a Guildford mortgage brokerage that specialises in helping our clients to get an equity release mortgage, we believe that our fees are much fairer and transparent. For example, our flat fee structure means that we can help you apply for an equity release mortgage for only £699 – regardless of the complexity of the mortgage and value of the loan amount.

What’s more, our team of Guildford mortgage brokers now includes three equity release specialists. All three advisers have secured the highly coveted Certificate in Regulated Equity Release (CeRER) qualification, which ensures that Complete Mortgages can offer a wider selection of equity release mortgages to a wider section of the population.

It also means that we can help those who have traditionally taken out interest-only mortgages – and who are on an interest-only mortgage right now – to transition to an equity release deal without having to refer to a third party.

Whether you’re currently on an interest-only mortgage and thinking of switching over to equity release, or you’re simply considering your options and think that equity release could be a route you’d like to take, the first thing you need to do is contact a trusted – and qualified – mortgage brokerage.

Why not contact us 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 self-employed people, mortgages for teachers, adverse credit mortgages, buy to let mortgages and limited company buy to let mortgages.

By Mark Lucas, Equity Release Adviser at Complete Mortgages


What is an equity release mortgage?

Tuesday, 6th March, 2018
lifetime_mortgage

It’s a big year for equity release mortgages.

In fact, estimates by one UK equity release specialist suggest that the value of UK equity release mortgages increased by a staggering £10bn last year.

So, what’s happening?

Essentially, the cost of living has grown whilst wage growth has slowed down. However, as we all know, the one thing that has also grown over recent decades is property prices, the result of which means that those who have owned a home for many years have amassed significant equity.

However, what good is equity when a) it’s locked within bricks and mortar and b) you could do with the money right now?

It seems as though the UK’s public is asking similar questions.

The Equity Release Council has revealed that the total amount of housing wealth unlocked by the over 55s reached £3.06bn in 2017; the first time equity release lending has exceeded £3bn in a single year.

And the appetite for equity release borrowing shows no signs of slowing down as Legal and General research highlights how one in five homeowners would consider using equity release as a way in which to unlock funds.

As a mortgage adviser in Guildford we are seeing more and more people apply for an equity release mortgage. There was a time when only a handful of people would consider this approach. However, as people increasingly live longer and money needs to stretch further, homeowners are now viewing equity release mortgages as a viable way in which to continue enjoying a high quality of life without making compromises.

Although before you consider it an option you’ll need to know how it works, so here are five things to know about equity release mortgages.

1. What is equity release?

A way of freeing up money tied up in your property as equity. You can spend it however you wish and there are no mortgage payments to make; the lender is repaid through the sale of your property.

2. Who can access equity release deals?

Those over 55 – all the way up to 95 – and who typically own a property worth £70,000 and above.

3. Can I still benefit from equity release if I currently have a mortgage?

Yes, as long as the funds you release can clear any outstanding borrowing.

4. Is equity release safe?

The Financial Conduct Authority regulates equity release, however, you should make sure that the lender is a member of the Equity Release Council, which can help ensure that you don’t find yourself owing more than the value of the property at the end of the term.

5. Will I need to move?

Not at all. You can downsize in order to release equity but if you would rather not move, then this could be a win-win situation. Some lifetime mortgages now allow you to manage interest charges by making monthly repayments.  Or, instead of making monthly mortgage repayments, the interest can be rolled up and, when the plan finishes, the interest plus the original loan is paid pack to the lender via the sale of the property.  If you are moving home, many of the plans are portable.  The only thing to consider here is that it will decrease the value of your estate.

Still need more information? We understand that equity release is a big decision. So, for expert advice and guidance from a team of award winning mortgage advisers and equity release experts contact 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages


Why the sudden interest in interest only mortgages?

Friday, 23rd February, 2018
interest only mortgages

First it was the interest rate rise. Now it’s the interest only mortgage. So, what’s with the sudden interest in all things interest-related?

Well, an interest rate increase is always enough to create debate (and keep an eye out for more articles from us on this topic as we watch – with interest – to see whether another interest rate rise happens in spring), however the debate around interest-only mortgages is a reoccurring one.

It wasn’t until the financial crash of 2007/8 that interest rates found themselves under scrutiny. Up until that point it was assumed that property prices – and therefore equity – was going to continue growing, leaving the homeowner with a pot of gold when they sold their property.

Now, with property prices beginning to slow, it would seem that the opportunity to make money on property like days of old is no longer a sure thing and this has the potential to leave homeowners exposed. On that basis, it’s no doubt one of the reasons why the Financial Conduct Authority has brought the interest-only mortgage back into focus.

According to Which?, new research has revealed that there are three points over the next decade-and-a-half whereby a large number of the UK’s interest-only mortgages will reach maturity, with more recent borrowers most at risk of a shortfall.

If you are currently on an interest only mortgage deal and concerned by the recent media coverage surrounding them, then our advice would be to contact a good mortgage adviser, who will be able to go through the pros and cons of interest only deals in relation to your own circumstances. However, for now, here are a few things you will need to consider.

1. Place your head in the future – not the sand

Will you be able to repay your mortgage at the point of maturation based on your current circumstances and income? If the answer’s ‘no’, then maybe it’s time to switch to a repayment mortgage. There really is little point in ignoring the issue or putting it off until tomorrow. Besides, the sooner you address it the sooner you can apply for a repayment mortgage or remortgage.

2. Seek mortgage advice

As a Guildford mortgage broker, helping people to establish the right mortgage for them is what we do well. And given how it’s our job, we know the mortgage landscape inside out as well as the best alternatives to interest only mortgages currently available.

3. Equity release mortgages may be an option

Even if you’ve come to the conclusion that you’ve gone too far and for too long on an interest only mortgage to be able to pay the balance, there are still options. Applying for an equity release mortgage is one of those – and one that may mean you don’t have to compromise your current standard of living. As an equity release mortgage specialist Complete Mortgages can guide you through this process.

Regardless of mortgage type, we always recommend that you speak with a reputable and trusted mortgage adviser – even if it’s not us. By doing so, you will be able to shortcut the process, save time and energy on researching the market and get professional guidance and advice when it comes to making a decision that’s right for you.

If you’d like to discuss your options when it comes to switching from an interest only mortgage to a repayment mortgage, contact Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk.

By Mark Finnegan, Director at Complete Mortgages


New Year, New Mortgage (but don’t leave it too late)

Monday, 29th January, 2018

Now that the New Year is fully underway, we’re urging our clients to start taking steps towards getting a new mortgage.

Whilst there are still a few lenders that are yet to increase their rates in line with the recent interest rate rise, the majority have already done so. Now, if you’re on a fixed rate mortgage then this won’t affect you.

However, if you’re currently on the standard variable rate (SVR) – or are about to enter the realms of the SVR – then this may be of interest.

1. Some lenders still haven’t raised their rates

For those who haven’t been thinking about their mortgage and what the interest rate rise means for them over the last few weeks, there’s still time to switch to a pre-interest rate rise mortgage deal – but you’d better be quick.

2. Beat the New Year rush

Whilst 2018 is in full swing, it can often take a few weeks before people start to really think about their next mortgage move. In fact, sometimes it’s February before the mortgage market really gets going. Put simply, if you act fast we can get you ‘mortgage-ready’ before everybody starts to want to do the same thing.

3. To rise or not to rise

There is already speculation that the next interest rate rise could come as early as May 2018, which means that if you haven’t already noticed the difference to your monthly mortgage repayments, then you may well do if the next interest rate rise comes as early as spring.

As a Guildford mortgage broker that has been in business since 2005, we’re still amazed to see the reaction on our clients’ faces when we explain how easy it is for them to remortgage. It’s even easier if you let a reputable mortgage adviser manage the process on your behalf.

So, if any of the three points raised here are relevant to you and you feel that you’re ready to remortgage – or at least you’re thinking about remortgaging in 2018 – then call us so that we can get your mortgage application underway.

Even if you aren’t looking to remortgage and simply need to arrange a mortgage, either for the first time or on a new property, then call us on 01483 238280 or email info@complete-mortgages.co.uk.

Remember, we also specialise in buy to let mortgages, commercial mortgages, limited company buy to let mortgages, equity release mortgages and adverse credit mortgages.

By Mark Finnegan, Director at Complete Mortgages


How will the interest rate rise affect my mortgage?

Monday, 27th November, 2017
complete mortgages

Well, it’s finally happened.

We knew it was coming, of course; or at least we had an inkling. Those of you who follow the news may even say we had fair warning.

The thing is, a rise in interest rates had to come at some point. Especially when you consider how the base rate dropped to 0.50% way back in April 2009 and maintained that level until August 2016, when it dropped a further 0.25%. The recent announcement was, in fact, the first interest rate rise since 2007.

And whilst it’s good news for savers, those on standard variable rate mortgages and tracker mortgage products are likely to notice the difference, particularly if their level of mortgage borrowing is substantial. As a result, there will undoubtedly be many people wondering how much more expensive their monthly mortgage repayments will become following the hike.

Rather than provide a breakdown of costs based on mortgages valued at X, Y and Z (particularly when there are countless mortgage calculators online that can give you the exact difference to the pound), I’d like to use this article to reassure homeowners with mortgages and let them know that there are still hugely competitive fixed rate mortgages available.

First of all, the 0.25% interest rate rise equates to a monthly mortgage repayment increase of around £18 based on an average 25 year repayment mortgage of £150,000 – or £216 a year. However, perhaps the most important thing to consider is the likelihood of a continued rise in interest rates – something that none of us can predict.

For example, if we take that average mortgage amount of £150,000 and add another 0.25% rise, and then another 0.25%, monthly repayments begin to climb by £36 and £54 respectively; £432 and £648 if we approach it on an annual basis.

And whilst nobody knows when the next interest rate rise will be, it is our job to make our clients aware of the financial implications of further incremental raises.

Our advice is as follows: –

1. Find an online mortgage calculator and understand the implications of further interest rate rises in increments of 0.25% (for many people, this hasn’t been a consideration for almost a decade!)

2. Review your current mortgage; even if the recent rise isn’t enough of a shock to make you switch your mortgage, there’s no harm in reviewing it and weighing up your options.

3. Contact a member of the Complete Mortgages team to find out how we can help you benefit from some very competitive fixed rate mortgages – before they become less competitive. Don’t delay – we have access to some great 5 year fixed mortgage rates which won’t be around forever – speak to one of our advisers now.

Contact Complete Mortgages on 01483 238280 or email info@complete-mortgages.co.uk to find out more. Remember, we also offer specialist mortgages including limited company buy to let mortgages, equity release mortgages and adverse credit mortgages.

By Mark Finnegan, Director at Complete Mortgages