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Help to Buy ISA announced

Chancellor George Osborne was about to close his Budget address, when he announced a new scheme to help would-be first-time buyers to save for a deposit.

The Help to Buy ISA allows would be buyers to save up to £200 a month, with the Government adding a further £50. This means that if the person saves the maximum allowed in a Help to Buy ISA – £12,000 – the Government will top it up to a maximum of £3,000 tax-free.

Another benefit is, the accounts are assigned to each person, rather than per house, meaning a couple buying together could receive up to £6,000 from the Government.

The product will be available for four years from the Autumn, but there is no time limit on filling up the ISA – this is ideal if you cannot set aside the maximum amount each month.

This initiative has been received warmly by the industry, and it is thought that the new product could boost demand among would-be homeowners.

As with most things, the true effects are likely to be determined by where home seekers are looking to buy – for example the £3,000 bonus will not go as far if the buyer is purchasing in London as it would if purchasing elsewhere in the country.

While the benefits of the scheme are obvious, without a substantial increase in the production of new homes, this is likely to act as another factor pushing up house prices.

The Government has promised an additional 275,000 homes by 2020, but this will still not be enough to stem price rises.

For more help and advice please do not hesitate to contact us at Hoskin Mortgages.

Stay on top of your mortgage

As the UK economy continues to improve, an increase in interest rates is now widely expected at some point in 2015.

Higher rates will be welcomed by savers, who have had a lean time over the past few years. Having reached a recent peak of 5.75% in July 2007, rates rapidly plummeted to an all-time low of 0.5% in March 2009, where they have remained ever since.

Conversely, higher interest rates spell bad news for borrowers. A rate increase will drive up monthly repayments for those mortgage holders who do not have a fixed mortgage rate and, while those who have fixed their mortgages will not feel the initial impact of a rate rise, when their fixed period comes to an end, remortgaging is likely to result in a sizeable increase in monthly repayments.

Anybody taking out a mortgage should always assess not only whether they can afford their repayments now, but also whether they would be able to afford them in an environment of higher interest rates. A rate rise is now seen as a foregone conclusion and, although rates are not expected to rise as far or as quickly as before the financial crisis, even a relatively small increase could have a relatively substantial effect on your monthly repayments.

According to a recent survey published by mortgage lender Halifax, two fifths
(41%) of mortgage holders are worried about the prospect of higher interest rates, with 13% concerned they might find themselves unable to meet their repayments if they were to rise by up to £50 a month. Meanwhile, if their monthly mortgage payments rose by as much as £100, 30% of mortgage holders fear they will have to cut spending on essential items such as food, energy and insurance.

If the terms of your mortgage allow, it may be worth considering overpaying on your mortgage while rates remain low.

It may also be worth negotiating a new mortgage now – perhaps moving from a standard variable rate to a fixed rate. That said, mortgage lenders are already poised to implement a rate increase once it takes effect and are therefore likely to take account of this when offering another deal.

Make sure you check the terms of your current deal – you could incur penalties from your current lender if you switch to a new one – and, above all, do take expert advice.

For more details and advice please contact us @HoskinMortgages.

Bank of England Interest rate rise getting closer

Bank of England governor Mark Carney says an increase in the base interest rate is “getting closer” but will not return to pre-crisis levels.

UK economy is beginning to “normalise” and suggested interest rates could soon follow suit. With many of the conditions for the economy to normalise now met, the point at which interest rates also begin to normalise is getting closer.

Carney added that due to a variety of economic factors, including uncertainty in the Euro area and current levels of household debt, interest rates are unlikely to rise to levels seen before the credit crisis.

The latest forecasts show that, if interest rates were to follow the path expected by markets – that is, beginning to increase by the spring and thereafter rising very gradually – inflation would settle at around 2 per cent by the end of the forecast

The committee voted last week to keep the rate at its current historic low of 0.5 per cent for the 66th consecutive month.

With the imminent interest rate rise. How many current borrowers were in the market when base rates were above 5 per cent? Many of those who are on pre-2007 rates will be vulnerable to modest rises because they are on 2.5 per cent floating rates or lower. For interest-only borrowers in this situation a 1 per cent rate rise will represent a 40 per cent increase.

Help to Buy schemes have introduced many to home ownership, accelerating a process that might have seen them not entering the market until 2015/16. It is a similar story with home movers who have upgraded a year or two early with help from the schemes. This situation is not too dissimilar to former chancellor Nigel Lawson removing tax relief for unmarried couples and giving them five months’ notice, creating a rush and establishing a false market. To this, add the Mortgage Market Review, which is making it impossible for some borrowers to move sideways, let alone upgrade, because they find they are offered lower mortgage amounts than they currently have.

Many interest-only borrowers have become mortgage prisoners, with lenders ignoring or reinterpreting FCA rules. Many are forced to switch to repayment loans when negotiating a new rate or looking to re-mortgage or move. Those not on fixed rates will be the hardest pressed when rates rise.

For more help and information please do not hesitate me.

Clare Allen @ Hoskin Mortgages




Getting a Mortgage After The new Mortgage Market Review April 26th 2014

  • ·         What you need to know when you get a new mortgage or
  • ·         change your existing mortgage.
  • ·         New mortgage rules that will affect you

New mortgage rules that will affect you

In the past, some people were allowed to take out mortgages they couldn’t afford. This meant they fell behind with their payments or lost their homes.

The Financial Conduct Authority (FCA) sets the rules for mortgage lenders and advisers in Read the rest of this entry

Borrowers may have to wait weeks for branch adviser meetings

Borrowers could be forced to wait weeks for an appointment with lenders’ mortgage advisers after the Mortgage Market Review as firms race to get qualified staff in place.

Last week, a business development manager at one of the UK’s biggest lenders warned brokers at conference that customers could expect waiting times of up to a month to see a lender’s in-branch mortgage adviser.

The BDM also told brokers that lenders’ face-to-face meetings could take between three and three-and-a-half hours from 26 April, when the rules come into place. Read the rest of this entry

Nearly two-fifths of British house hunters fear mortgage rejection

Nearly two-fifths (38 per cent) of house hunters are concerned they will be rejected for a mortgage, according to new research by TSB. The survey of 2,014 people showed younger buyers – those under the age of 35 – are particularly concerned about obtaining a mortgage, with 66 per cent fearing rejection. On a geographical basis, Londoners are most worried about their mortgage applications with 54 per cent expressing fears, compared with 19 per cent in the North East – the lowest in the country. According to the results, the biggest perceived obstacle to consumers’ applications is their level of income, with 41 per cent of respondents citing this as Read the rest of this entry

Borrowers fear interest rate hike above anything else in 2014

More than one in four borrowers say their biggest concern for the housing market in 2014 is the threat of rising interest rates, according to the Building Societies Association.

Read the rest of this entry

Help to Buy

Help to Buy

Are these new 95% LTV Help to Buy mortgages available throughout the whole of the UK?

Unlike Help to Buy 1 (the new build shared equity scheme), mortgages on Help to Buy 2 can be arranged on properties in any part of the UK, subject to the lender’s criteria. Read the rest of this entry

Look beyond Help to Buy at all the options

The Help to Buy mortgage guarantee scheme is making the headlines at the moment given its earlier-than-expected launch at the Conservative Party conference. But it may not be suitable for everyone and there may be alternatives especially as many regional building societies already offer 95 per cent loan-to-value mortgages. Read the rest of this entry

Barclays is set to introduce its lowest ever fixed rate mortgage at 1.79 per cent.

The two-year ‘mass affluent’ fixed rate is available to 65 per cent loan-to-value and is available for loans between £500,000 and £2m. It has a £1,999 fee. Read the rest of this entry