By releasing equity from a property, it is possible to clear the debt, meaning a homeowner can live there until they die or go into long-term care.

In the past, those whose homes were not mortgage-free had limited options for equity release.

Mortgage Solution has many schemes that could help homeowners remortgage onto a lifetime mortgage on an interest only basis with the option to pay the interest, many lenders now provide borrowers with payment flexibility. This includes the right to make monthly interest payments before switching without penalty to a roll-up loan.

For more information Click HERE to see if you qualify for a lifetime mortgage or call

Complete our request a callback HERE

or call us on 01305 776311

The post Can equity release help to pay off interest-only loans appeared first on Mortgage Solutions.

Who is eligible?

Before 2015 it was only council tenants who had the right to buy the homes they had previously rented, but housing association tenants now have that same right.

As a scheme was rejected by the Scottish and Welsh governments, who wish to preserve publicly-owned housing stock, it is also emblematic of the different directions being taken by different parts of the United Kingdom.
Potential buyers must have been tenants for at least three years, the same as with council tenants.

In Wales, the government is planning to abolish Right to Buy entirely, and in Scotland, it was phased out in August 2016. A separate scheme exists in Northern Ireland.
How much of a discount will be offered?

For those eligible, discounts start at 35% on a house and 50% on a flat. The maximum is 70%, but that is currently capped at £77,900 outside London, and £103,900 in the capital. For example, someone who has been a public sector tenant for ten years could buy a £100,000 flat for just £40,000 – using a 60% discount.

Right to buy

Right to Buy allows most council tenants to buy their council home at a discount. Use the eligibility checker on the Right to Buy website to find out if you can apply.

Joint applications

You can make a joint application with:

• 1. Someone who shares your tenancy
• 2. Up to 3 family members who’ve lived with you for the past 12 months (even if they don’t share your tenancy –  proof of residency will be needed).

Ex-council homes

If your home used to be owned by the council, but it was sold to another landlord (like a housing association) while you were living in it, you may still have the Right to Buy. This is called ‘Preserved Right to Buy’. Ask your landlord if this applies to you.

With Right to Buy discounts at an all time high and mortgage interest rates at a record low, there has never been a better time to buy your council home.

• 100% MORTGAGES are available for people taking up the Right to Buy scheme so you don’t even need a deposit!
• borrow additional funds for HOME IMPROVEMENTS – if you’re considering a new kitchen, bathroom, loft extension or driveway…
• interest rates are at an all time low – FIX YOUR MORTGAGE PAYMENTS peace of mind

We are here to help

Talk to one of our qualified mortgage advisers 01305 776311

Complete our request a callback HERE

The post Right to Buy – Mortgages upto 100% available appeared first on Mortgage Solutions.

A stress test is the calculation lenders use to determine how much they will lend to the borrower. Here is an explanation of how it is calculated, why it is getting tougher and what the change ultimately means for borrowers.

A lender may require the rent to cover the interest payments and set a rate of 5% although your actual pay rate could be lower also they will set an interest cover rate “ICC” say 125%

Here is an example:  if you are taking a mortgage of £100,000 then the monthly interest payment based on a rate of 5.5% will be £458 per month. However, as they need the rent to be 125% of this figure, the rental income would actually need to be £573 per month for the numbers to work.

For a few years, the average stress test used by buy to let lenders haes been 125% at 5-5.5% but this is changing.

So What is Rate & Margin?

1. The rate: Lenders calculate the monthly cost on what we call a notional rate (so in the above example, 5.5%) even if this is not the rate the mortgage will be on. The reason for this is to make a proviso for if interest rates go up.

2. The margin: The margin (125% in the above example) is to ensure that the borrower has surplus cash flow from the property which would be used to cover additional costs – services charges, repair costs, building a slush fund for rental voids and so on.

What is changing?

We are currently going through a period of change with regards to the calculations lenders use. We saw these start to go up last year – this was based on a very real concern from the banks that their calculations were not factoring in a sufficient cushion for interest rate rises.

Additionally, some lenders had reversion rates (the rate the mortgage defaults to after the initial period is up) of up to 6.74% which the borrower may end up paying if they didn’t renegotiate their deal.

This meant that some borrowers could have ended up in a negative cash flow position.

In addition to this lenders are now looking forward to the tax changes which are being phased in over the next few years, which reduce the amount of mortgage interest some landlords can offset against their rental profit. For many personal borrowers (in particular higher and high rate tax payers), the calculations used historically would have meant a negative cash flow position so lenders are looking to increase their stress tests to make provision for this.

This year we have already seen The Mortgage Works, Keystone Property Finance, Foundation Home Loans, Barclays and Newcastle Building Society upped their stress test calculations for individual borrowers to 145% at 5.5%.

It is worth noting that both Keystone and Foundation will consider allowing individual borrowers to use 125% at 5.5% (which applies to limited company borrowers), if they can demonstrate that they are, and are likely to remain, basic rate tax payers.

How will this affect borrowers?

In short what this means is that you get less bang for your buck. Whereas you used to be able to borrow £19,200 (on average) for every £100 of monthly rent, the average calculation now means this has reduced to £16,500.
This means that some borrowers will be unable to remortgage, or at least be restricted in terms of the deals available to them, and new purchasers may well need to put in a bigger deposit than before.

Solutions

For remortgage clients simply looking to get a new rate, your existing lender is very likely to be able to offer you a new deal without revisiting the numbers so it is always worth talking to them about what they can offer you.

If you have used an intermediary only lender, we can negotiate with the lender on your behalf.

Some lenders are still working on lower calculations (for how long remains to be seen) so it is worth speaking to a broker who has an overview of the market to see whether the numbers can work from across the market.

We are also seeing an increase of lenders using ‘top slicing’ which although complicated, involves a bit of lateral thinking from the lenders so well done to those guys!

For borrowers financing their buy to lets through limited companies, the very good news is that as the new tax rules won’t apply to you, lenders are not necessarily bringing the increased stress test across to their corporate rates.

So it really is worth considering operating your portfolio via a limited company but of course, do take professional advice in this regard either from a qualified accountant or a tax specialist.

The post What is meant Interest rate stress tests appeared first on Mortgage Solutions.

I’m sure you would agree there has been a lot of News about the new btl rules. Many of the Lenders in the marketplace have now released their approach to the new rules and not surprisingly they all have a slightly different way to meet these rules whilst remaining competitive with their products. We won’t try to cover all the changes but below we have highlighted the areas we think will be of interest to anyone thinking of buying a BTL property or existing owners thinking of raising money on their existing portfolios.

• 125% Rental Calculation available on selected products
• Limited Company SPV Schemes
• Consumer BTL based on rental calculation
• Personal Taxation Levels ignored
• Maximum Borrowing Calculators
• Portfolio Lending
• First Time Landlords
• No Maximum Age

There will be lots of questions over the coming weeks about these new rules.
But don’t worry, that’s what we are here for, to answer your questions and help you place your cases.
So, rather than fret over all these changes you just need to remember one number 01305 776311
CALL US TODAY and let us take the strain out of placing your Buy To Let purchases

Struggling with affordability

We can help increase your chances of achieving their dream.

• Ignore dependents when calculating affordability
• Retained profit considered
• Self-employed only trading for 1 year
• Asset rich, money poor clients considered
• Self-employed for 2 years trading and projections considered
• State benefits considered

We have lenders that manually underwrite with a common sense approach

Did you know… under the old calculations £900 PCM rent on market leading BTL rate would have given borrowing power of over £262,000.
Under the new rules, this would reduce to £135,000. That’s almost a 50% reduction in the amount of borrowing!

• New rental calculations will be changing from 125% at pay rate to 145% at a 5.5% charge rate
• Many lenders have already changed their calculations to reflect these changes
• Have you considered LTD Company options for your Landlord Clients?
• We still have lenders offering 125% rental calculation pay rate
• Is Consumer BTL an option for you?
  

  CALL Mortgage Solutions ON 01305 776311 TO DISCUSS YOUR ENQUIRIES NOW

The post Understanding the new Buy to Let Rules appeared first on Mortgage Solutions.

The greater variety of products, such as interest-only lifetime mortgages and flexible repayment, has attracted a whole new market to the benefits of equity release.
Equity release has provided an invaluable lifeline for thousands of pensioners who have found that their pension income is not sufficient to fund their retirements.

Call Mortgage Solutions for more information 01305 776311

The post More homeowners use equity release to increase income in 2016 appeared first on Mortgage Solutions.

In a separate survey, Standard Life Bank canvassed 1000 adults in the UK to gauge their propensity to buy a prefab home.

The data revealed an enlighteningly positive response.

Three out of 10 people in the UK would consider buying a prefabricated or self-build home with young people aged 34 and under the most likely age group to do so.

People living in rented accommodation see prefab or self-build as a way onto the property ladder with 33% saying they would consider it.

The post Prefabricated Houses – Can they be Mortgaged? appeared first on Mortgage Solutions.

The scheme’s aim is to help the Government hit its ambitious housing target of building 1 million houses by 2020.
It is understood the buildings, known as ‘modular homes’, will be aimed at youngsters looking to get their feet on the property ladder.
The boom in prefab houses will draw comparisons to the scenes seen in Britain in the wake of World War Two.

The post Prefabricated housing to help the housing problem appeared first on Mortgage Solutions.

However the MPC now expects inflation to rise to the 2% target within six months – quicker than expected – after rising to 1.2% in November.

In the November Inflation Report, the Committee said that output was expected to grow at a moderate pace in the near term, but slow from the beginning of next year.

The post Bank of England holds bank rate appeared first on Mortgage Solutions.

The provider’s flexible lifetime mortgage product now offers an interest rate of 3.71%, compared to 5.19% in April this year.
According to L&G’s figures, a flexible lifetime mortgage of £100,000 taken out today could see the amount owed after 15 years drop by £40,901 compared to one taken in April, from £213,608 to £172,707.

The current lifetime rate is also lower than the average standard variable mortgage rate of 4.27%. This means that customers over 60 on their lender’s SVR could potentially save money by switching to a lifetime mortgage at a lower interest rate.

The Equity Release Council said that even before the latest reductions, lifetime mortgage rates dropped faster than any other form of lending in first six months of 2016.

The post Are the rates are good value for Equity Release mortgages appeared first on Mortgage Solutions.

As the name suggests, the 55+ Mortgage is exclusively for those aged 55 and above. The product is standard mortgage where you pay the interest on the loan each month and retain 100% ownership of your property.

Unlike a lifetime mortgage, where the loan lasts for the rest of your life, with the 55+ Mortgage you select the term over which you want it to last. This allows you to match the term of the loan to your future plans. John Charcol have been working with Hodge Lifetime for a number of years and are just one of a few selected mortgage brokers to offer this unique product to the market.

How is income assessed for the 55+ Mortgage?

As part of the assessment process for the 55+ mortgage Hodge lifetime will take a number of different sources of income into account. These sources of income include:

• Income from employment or self-employment
• State, personal and company pensions, whether in payment or not
• Investment income
• Rental income on a buy to let properties you may have

What happens at the end of the mortgage term?

At the end of your mortgage term you have to be in a position to repay the loan. To do this during the application process Hodge Lifetime ask you to identify your repayment strategy. This can include:

• The sale of your property when you downsize
• The sale of other property that you own
• The sale or maturity of your investments, including any endowments or lump-sums you are entitled to when taking your pension

The post The 55+ Mortgage: a flexible way to borrow into retirement appeared first on Mortgage Solutions.