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Gavin Richardson, CeMAP, Cert II, Head of Residential mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 01732 471 613
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Question
There is a house for sale in our road and myself and two of my neighbours are considering clubbing together to purchase the property, refurbish and then sell on. Between us we have about 20% to put down as a deposit, so we would need quite a high LTV. Are there any products available which allow three parties to take out a mortgage and what length of term would you advise us to sign up for? We have spoken to a couple of builders who have both estimated it would take six months to refurbish (although we will allow a year to include the sale). We each have mortgages on our own properties and one of us has a buy-to-let as well.
Answer
As none of you intend to live in the property or retain it as a second home, it will be very difficult to fund with a standard residential mortgage. This is because most lenders will view your intentions as a way to avoid getting development finance to carry out the project. Also you would find it very difficult to get insurance for the property lasting longer than 28 days.
However, you could consider raising finance against your own homes (remortgage) to purchase the property and carry out the refurbishment. Lenders will always want to know how you intend to use any funds raised in this way, so if you choose to go down this route, do get in touch so that we can help you find lender that accepts this type of scenario.
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Question
I hear tracker rates are pretty low at the moment. I am now in two minds about whether to fix my rate when my deal expires in December. I currently have a two-year fixed-rate deal with an interest rate of 1.99% and have about 80% equity in my property. Would I be foolish to switch to a tracker with interest rates likely to go up this year? Or would I still benefit from the risk?
Answer
Only you can determine how much risk you are prepared to take and no one really knows if or when interest rates may rise. What I would say is that currently there is very little difference in pricing between fixed and tracker rates, so for many fixing has been an easy choice.
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Question
My husband is a serving member of the Royal Air Force and we are considering buying our first property which we are very excited about! We don’t actually have very much money saved up but we heard we can get a loan through the Forces Help to Buy scheme. Would the loan from the scheme be enough for our deposit or would we need to have a bit of savings put by ourselves? We are looking at purchasing a house worth £225k and our joint salaries amount to £62,000. Also would you recommend we used a broker?
Answer
I would always recommend using an independent broker that has access to the whole market so you can be sure you are being recommended the most suitable products for your circumstances.
As I don’t know how much your husband earns, I can’t answer your question directly. However, I can tell you that the Forces Help to Buy scheme allows serving members to borrow up 50% of their salary, up to a maximum of £25,000, on an interest free basis to use as a deposit. The loan is then repaid over ten years and deducted directly from the member’s salary. So, if your husband earned say £22,500 that would be sufficient to get a loan of £11,250, which would be a 5% deposit on a property priced at £225,000. As first-time buyers you could probably borrow around 4.5 times your joint income, although the exact amount would depend on your other commitments, including repayment of the Forces loan which would cost around £166 per calendar month. If you’re interested in using this scheme, do get in touch and we’ll happily help.
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Question
I am currently on my lender’s SVR and it’s quite a low rate. I want to change to a new deal. How easy would it be?
Answer
As long as you have a good credit rating, remortgaging is very straightforward. However, your first action should be to contact your current lender to find out what product switching deals are available as these can often save you money and are usually the cheapest and quickest method of changing rate if you don’t need to raise any additional finance. Having said that, it is always worth shopping around so do get in touch if you would like us to carry out a free mortgage health check which could ascertain the most suitable rate for your circumstances.
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