Threshold Mortgage Advice

What’s changed in the mortgage market?

Mortgage customers and future homeowners alike have concerns about the market right now and whether changes to the economy and the subsequent reduction of lenders could affect their ability to take out a mortgage.

The good news is that some lenders have returned their rates to pre-Covid figures meaning that for eligible borrowers, LTV rates of 90% could be achieved in the right circumstances.

Nevertheless, finding the best deal for your mortgage is reliant on good advice, so we’ve listed the key changes to the mortgage market as well as where you can turn to for reliable advice.

Need to knows:

Stamp Duty changes

As a temporary measure to help boost the economy and more specifically, the housing industry, the Government announced on the 8th of July that homebuyers won’t pay stamp duty on the first £500,000 of a property’s purchase price.

The new adjustments to Stamp Duty in England end on the 31st of March 2021, so until then, many buyers could benefit from a substantial saving when moving home.

Previously, the threshold where you start paying stamp duty in England and Northern Ireland was £125,000, or £300,000 for first-time buyers (if they were buying a property worth less than £500,000).

However, with the new threshold set at £500,000, many buyers who would have previously faced Stamp Duty charges, will now pay a significantly reduced charge or in fact no charge at all, depending on the value of the property they are purchasing.

Product availability

The amount of mortgage products on the market has been reduced as some lenders have concerns about a potential economic downturn.

That being said, there has been a gradual upturn with some lenders keen to meet the demand and appetite for mortgages.

If applicants have any issues on their application that could hinder their chances of approval such as bad credit or bankruptcy, the choice of lenders is likely to further decrease.

However, there are specialist lenders who may be more open to approval due to their experience in niche mortgage lending.

First-time buyer mortgages

Depending on the circumstances, first-time buyers could face some limitations regarding how much they can borrow because some lenders have capped their loan-to-value (LTV) rates to 85%.

That means that they’re only willing to loan 85% of the property’s value, leaving buyers in the unenviable position of finding 15% for their deposit.

Deposit size

A 15% deposit criteria won’t be necessary for all applicants because there are an abundance of factors that affect how much any given lender requires.

Credit score, income, job type and even age can result in either a higher or lower deposit, so ask a broker to assess your circumstances before you apply for a mortgage.

This can help you to avoid accidentally applying to a lender that is likely to reject you, potentially saving you money in application fees as well helping you steer clear of a credit rejection.

Where to go:

Comparison websites can be a handy tool if you want a quick overview but be aware that the quote displayed may not represent an accurate figure for you specifically.

A lender needs detailed information about your affordability and circumstances before they can provide you with a quote because ultimately, that’s what affects the rate you’re offered.

Not all lenders feature on comparison sites which can make the search for the cheapest mortgage product even more frustrating, especially if you’re already unsure about where to find a lender willing to approve your application.

If the fuss of comparing hundreds of lenders doesn’t appeal to you, thankfully there’s another (much quicker) option.

Can a mortgage broker help me navigate the new changes to the market?

A mortgage broker’s job is to do the research on your behalf, scouring the market and negotiating the best deal.

More importantly, a mortgage broker won’t just compare interest rates as a factor for consideration, they’ll also look at exit fees and the term-length of each agreement to pinpoint the most suitable option for you and your circumstances.

They’ll also:

  • Manage any paperwork relating to your mortgage, ensuring it’s sent to the right place in good time
  • Communicate and coordinate with other parties involved in the mortgage process (saving you the trouble of chasing up anyone causing delays)
  • Carefully check all contracts and paperwork for any terms and conditions that could affect your finances in the future
  • Do their best to avoid mortgage jargon! We know how tedious the terms can be, so our advisors speak like real people

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