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Our property investment expert is Neil Bishop, Head of Residential Mortgages at
Mortgages for Business
www.mortgagesforbusiness.co.uk/
Tel: 0345 345 6788
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Question
Can I remortgage to make home improvements
Two months ago I bought my house outright, with the sale of my previous house, for £205,000 with no mortgage.
Now I would like to remortgage to raise approximately £20,000 to £25,000 for home improvements. Please can you advise?
Answer
That’s fantastic – congratulations. Some lenders require you to have owned a property for six to 12 months before arranging a remortgage, but some lenders will offer to you within this period.
It’s worth speaking to a whole of market broker to see which lenders can assist you. It’s worth noting at this stage that, when seeking a capital raise, your lender may request a breakdown of the works you plan to carry out.
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Question
Help to Buy: Can I still use this scheme?
I’ve been saving for a deposit for my first house which I am buying with my girlfriend, whose also been saving.
We were hoping to use the Help to Buy government scheme to support our application but I’ve heard it’s closing in March. Do we have time to apply and, if not, what’s the alternative?
We have saved £16,000 between us and new builds near us are roughly £300,000 so I can’t imagine we’d get on the housing ladder without a Help to Buy equity loan.
Answer
That’s right, the Help to Buy scheme finishes on 31 March 2023 and closed to new applications on 31 October 2022.
To be eligible for the loan, you must complete on the property by no later than 6 pm on 31 March 2023. However, if this doesn’t work for you, some other options are available.
The First Homes scheme is designed to help local first-time buyers get onto the property ladder with at least a 30% discount against market prices on new-build properties.
This scheme is relatively new, so it’s best to check in advance with the builder of the development you’re interested in to see if they offer the scheme.
There’s also the option of Shared Ownership, which allows you to purchase a percentage share of the property and then pay rent on the remaining part.
Or, if you’re after a 95% loan-to-value mortgage, there is The Mortgage Guarantee Scheme which was put in place to help the supply of 5% deposit mortgages. The Mortgage Guarantee Scheme currently runs until 31 December 2022. Whichever scheme you choose to go for, I wish you both the best of luck!
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Question
Thinking of not remortgaging to avoid interest rate hikes
I’ve been watching the recent mortgage news unfolding and I must admit I am really worried. I own a four-bedroom property where I live with my wife and three children. Our two-year fixed rate is due to end in June next year.
Currently we are paying 1.99% for our mortgage. But I can see interest rates are rising and expected to get higher and I really don’t think I can afford an additional 6% on top of this.
Would it be better for me to not remortgage when my deal ends in June and wait for interest rates to calm down? I realise I will pay a bank rate which is variable but
I’d rather do this than fix into something too high and be trapped for two years.
Any advice?
Answer
I completely understand your concerns, and I know that many people will be worried about their mortgages right now. My advice is to consider every option available to you, speak to a whole-of-market mortgage broker for some tailored advice, and see how they could help you.
Firstly, it’s great that you’re looking at your mortgage early. As you mentioned, you will automatically go onto the lender’s Standard Variable Rate (SVR) if you do nothing when coming off your fixed product.
Each lender has complete control over their SVR pricing, and this can change at any time. Usually, SVRs will be higher than the fixed rate you’ll be coming off, but with how interest rates are rising, this may not now be the case.
As fixed rates track SWAP rates and most SVRs track the Base Rate, it may be that coming off onto your SVR may be right for you for now. However, you need to be aware that this may not be the case by the time your deal ends, and SVRs could have climbed higher.
If you chose to remortgage away from your current lender, you could access an offer up to six months in advance, ready to go live when your current deal ends.
This means that in January, you could secure a rate that may seem expensive now but could be highly competitive by June when your deal ends. Speak to a broker to see what rates may be available to you.
Another option is to complete a product transfer with your current lender. In this scenario, your current lender can offer you a new rate, and you can move seamlessly onto this new product at the end of your current deal.
The rate will typically be a fixed product from their current range, and some lenders could allow you to secure this rate up to 180 days in advance.
As I mentioned, speak to a whole-of-market mortgage broker to discuss your options, and get clear advice. I hope it all goes well.
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Question
What will happen if I cannot make my mortgage repayments?
I bought my first home last year (2021) and my mortgage is due for renewal in December 2023. I am incredibly worried about whether I will be able to afford repayments when I come to renew the deal since interest rates seem to be hurtling upwards.
I am also struggling with the cost-of-living increases and have noticed things like my shopping bill are increasing. Even my hairdresser has increased her charges. What would happen if I couldn’t pay my mortgage? Can lenders give short respites to borrowers, as per the mortgage holidays during Covid?
Answer
Many people are in your situation right now and are incredibly worried about what the next few years are going to look like. I’m really sorry to hear about your concerns and I hope that you can find the right solution.
The very first thing to do if you are struggling to pay your mortgage is to speak with your lender. They have specialist teams who look at each case individually and will do everything they can to help you with your situation.
Your lender may be able to look at potential ways to help you reduce the cost of your monthly mortgage payments. This could include increasing the overall mortgage term to reduce monthly costs, allowing reduced payments for a set time, or allowing you to take a payment holiday.
These last two options are usually granted if you’ve made previous overpayments. Another option could be for you to switch to an interest-only mortgage, but this will mean paying back the full remaining value of the loan and the end of the mortgage term.
One thing I will say is please don’t let it get to the point where you miss a payment. This could cause lasting damage to your credit file, so please, speak to your lender as soon as possible to see what arrangements could be made.
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