So you are “Generation rent”. 4 ways to still win by rent reporting.

Huuti- rent reporting

So you are “Generation rent”. 4 ways to still win by rent reporting.

 

Owning a home in the UK has become more of a challenge in the past 10 years. The financial crisis of 2008 led to a review on how people could be ascertained to have  “mortgage affordability”. Wages took a sharp decline, inflation rose and to top it up house prices rose faster than ever.

 

One will think that was where all the bad news ended but no, fewer jobs became available for recent graduates, competition for those jobs rose and a lack of credible government support led us down to where we are today. Fewer first-time buyers are able to get on the property ladder for a variety of those reasons listed above but there is an even bigger problem.

 

For those who could find a job, cope with  inflation and manage to rent a suitable apartment to live in there was a great injustice. Albeit their monthly rent matching what most homeowners were paying per month for their mortgages and their rent payments being a contractual financial commitment, there was no upside to paying rent aside from having a roof over your head.

 

This is in contrast to the benefits of repaying most financial products and showing creditworthiness by such behaviour. These rent repayments were not being taken into account on tenants credit files. Tenants with good rental payment histories could therefore not see any effect on their credit scores which will no doubt have led them having more access to other financial products on the market such as “Mortgages”. Therein lays the unfortunate catch 22 scenario which is to build credit you need credit and so without credit how do you build credit? This endless loop is easily breakable though.  A simple phone contract for a minimal amount over 12 months might help you establish a credit file.

 

Paying and reporting your rent could however boost your mortgage affordability and put you in a position where getting on the property ladder becomes more of a reality. Through experian and the Big issue invest a solution named “the rental exchange” has arisen whereby tenants can now volunteer to report their rental performance data to experian which is then reflected in their experian credit score.

 

This means tenants can now begin to see the same benefit as others with financial commitments who display good payment performance.

 

So here are 4 reasons you should still win.

1)Your payment performance should indicate your creditworthiness

Paying your mortgage on time gets you nowhere aside from a happy landlord and a guaranteed roof over your head for that month. In truth this should reflect your credit worthiness. Rent reporting is now such a vital part of every prospective first time buyer as they can get to “mortgage affordability” faster by improving their credit score and building an in depth credit history with proof of long term financial commitments such as paying rent.Rent reporting helps you indicate your creditworthiness, so why not report it?

 

2) The cost of your rent in some cases is more than you would pay monthly for a typical 20% deposit mortgage on the same property

 

Paying rent guarantees you a roof over your head for that month at least but paying into a mortgage guarantees you equity which you can sell.You cant sell last month’s rent. In most big cities such as London the average monthly rent being paid by tenants far outstrips the monthly mortgage costs being paid on similar homes.If this is the case then why should you not receive as much credit for keeping up to your financial responsibilities in the same fashion a mortgaged homeowner does.

 

3)Rent reporting is New and picking up pace

With just around 10 companies world-wide who currently take rental data and report this to the credit bureaus, it is relatively a new thing and as such there is some fascination about rent reporting.Whilst there isn’t any downside to joining and reporting your rent much later(maybe apart from the fact that historic rent isn’t currently being reported and all your current and would be past good  rental payment performance might not get recorded) there is quite a lot of upside in reporting your rent as soon as possible. You can begin to see the points increase in your credit score in as little as 2 months. Now that’s pace.

 

4)There is no downside

 

Well, what’s the downside?

If you regularly fail to pay your rent on time then you might consider rent reporting a bad thing but beware, this might become a legal requirement to report tenant payment performance so your bad behaviour will have to stop at some point. Why not report your rent as a means to help you get rid of this bad payment behaviour by motivating you to pay your rent on time. In any case, currently you can request for your rental performance data to be deleted from the credit bureau.

 

Our mission here at Rentroster by Huuti is to ensure every tenant gets rewarded for the rent they pay so they can have a fair playing ground when trying to get on the property ladder and access to other financial products which can increase their standard of living.

 

 

This information is up to date as of 18/02/2018

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Build your credit history by paying rent

Huuti- Rent reporting

Build your credit history by paying rent

 

Credit is a funny thing to most but at some point or the other in most of our lives we will need it, it might be for short term or long term, for entrepreneurial  motivations or for that shopping spree we have so desired down on regents street… or it might just be for an emergency.

 

Credit, credit history, credit scores all have a great irony about them. To get or build your credit score you will need financial products or commitments. In most cases to access these you will need a credit score. So here comes the dilemma for most teenagers and new undergraduates. I can’t get a phone on contract because my credit file is too thin or non existent. So just how do I boost my credit score or plumo up my thin credit history.

 

Financial commitments… well that’s a whole lot easier typed than achieved. Firstly you must cater for the simple things which don’t require any commitment whatsoever. E.g registering to vote. This is hands down the simplest thing you could do to establish a credit file. Opening a bank account also helps you build up a history as this is noted on your file with a start date. In some cases you may be able to get a phone contract without much need for a credit file. Luckily, most phone contract providers report your payment history to the credit bureaus who stick this in your credit file. With little steps like this you can begin to build a credit file.

 

More importantly than most, rent. Renting is hands down the biggest recurring monthly  cost most teenagers will have and you should get credit for paying your rent on time. The rental exchange has been implemented to cater for this exact scenario. By reporting your rent payments to the credit bureaus you will gain benefits similar to what those who pay a mortgage or repay a loan will get on their credit file. You credit file will be more in depth and your credit score will rise if you make “on time” payments.

 

So how does it all work?

 

At this point out of the 3 credit bureaus in the UK, only 1( Experian) is offering this solution at the moment. Experian collects rental performance data from credit reporting agencies such as Rentroster by Huuti. This data is then stored on your Experian credit report which you can view at any time.

 

To report your rent you simply have to sign up to Rentroster, input your tenancy details and your landlords details, choose a method by which you want to pay your rent and that’s it. Done. It is not possible to report your rent directly to the credit bureaus.

 

Your rent will be collected on its due date and sent to your landlord instantly.

 

Rentroster will then update its records and send this to Experian on the 1st of Each month.

 

Paying your rent on time is important as paying late will have a negative effect on your credit file. You should do your best to ensure you pay your rent in full every month.

 

As you can imagine, the benefits of reporting your rent payments are good as of now but should be immensely better as soon as the remaining two credit bureaus( Equifax and Callcredit) sign up to the rental exchange and begin collecting rental performance data.

 

In the meantime the benefits of reporting your rent can only be felt through lenders who use an Experian credit scoring model to assess your creditworthiness before offering you credit.You must be sure to enquire from the lender prior to making an application so you are certain you reap the benefits of reporting your  “on time” rent payments.

 

Rent reporting is relatively easy to do and could just boost your mortgage affordability and open the door to cheaper rates and access to more financial products.

 

This information is up to date as of 14/02/2018

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Introducing Rentroster by Huuti- A Debt-Free Way to Build Credit

Huuti- Rent reporting Rent roster

Introducing Rentroster by Huuti- A Debt-Free Way to Build Credit

 

Rentroster is  a brand new way for tenants to report their rental payment performance to credit bureaus. Rent is reported to the credit bureaus in the same way Mortgage and loan repayments are reported by lenders to the credit bureaus. Rentroster is a credit reporting agency which collects valid rental performance data from tenants and reports this to the credit bureaus.

rent reporting

So its a  Debt free way to build credit?

Yes. Unlike traditional methods credit is built such as loan or mortgage repayments, paying rent does not involve getting a loan and showing your ability to repay your loan which then gets recorded on your credit file. Rent payments just as mortgage payments or utility payments are financial commitments and as such your payment performance history indicate your ability to adhere to your commitments.

Unlike loans, credit cards etc rent reporting requires you to opt-in for your rent performance data to be recorded and reported.Reporting your rent will allow you to build your credit history and credit score.

You can of course always opt out of reporting your rental performance data to the credit bureaus. In the future this might become a legal requirement to report your rental performance data.

 

Can anyone report rent payments?

In practice, to report rent you need to be a tenant and your landlord cannot be your close family members or friends.You can easily sign up to Rentroster with your tenancy details and begin reporting your rent to boost our credit score and history. In rare cases we may ask you to upload certain pages on your tenancy agreement.

Your landlord does not need to be signed up to Rentroster for you to report your rent payment.

 

How does rent reporting help?

Rent reporting will help you have a more indepth credit history and boost your credit score if you make on time payments and are not behind on your rent. This will allow you to qualify for better interest rates on loans or credit cards which will save you a lot of money in interest rate charges. At this point in time in the UK, Only Experian collects and stores rental data on a tenants credit file. This means that the lender you take your loan out will need to be using an experian service to find your credit file (and credit worthiness) for you to see much benefit from rent reporting at the moment. This will undoubtedly change in the future as the remaining two credit bureaus( Callcredit and Equifax) begin to collect and store rental payment performance data on tenants credit files.

At the moment there are five core sections that affect how your credit score is generated. These are your payment performance history on loan products, credit cards etc, your debt utilization on your overdraft or credit cards, Hard searches by lenders, how long you have had each account on your credit file open for and the types of accounts you have. Your payment performance history usually represents a significant factor with a weighting of at least 35% of how your score is generated. It isn’t very clear how rent payment will be ranked but we suspect is it being taken into account as payment performance history and this should be the very reason every tenant reports their rent payment via Rentroster.

Younger tenants have much to benefit from rent reporting as they usually have thin credit files meaning they could graduate from uni without a strong enough score or in depth credit history to attain credit products such as credit cards.

For those who don’t even have a credit file, this opens the door for them to build up their scores and file gradually.

 

Rent is usually the largest  monthly expenditure for most tenants. Why not get credit for it?

 

This information is up to date as of 12/02/2018

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Can​ ​I​ ​save​ ​for​ ​my​ ​deposit​ ​and​ ​maintain​ ​my​ ​lifestyle?

When it comes to saving for our first home deposit we see it is as a massive hurdle to climb, especially with London prices! Whilst every goal this big does require some level of discipline and sacrifice, a lot of young people today are pushing back the thoughts of saving for a deposit. Which is partly due to the fact that 72% of millennials believe that they have to completely sacrifice their lifestyle in order to save for a deposit.

This has lead to many putting off the commitment of saving for their deposit. We were really surprised to hear that millennials had such little confidence in their ability to save up.

We don’t plan on sitting here, telling you the basics of saving like putting some money away as it enters your account rather than waiting to the end of the month, because you should already know that 😉

But instead we will show you  two facts we found on UK millennials. Which might help to get you thinking more about how you handle your finances.

Fact​ ​one:
Millennials spend an average of 50% of their disposable income on going out and other non-essential items

Fact​ ​two:
On average millennials spend a total of 6 days a month going out. This includes cinema, live events, eating out and other forms of leisure.

We always get comments thrown at us from older generations saying that we want to have avocado toast more than saving for a deposit! This made us think do we really want to enjoy life more than we want to own our own home and is every single moment worth the spend?

As we mentioned before, every achievement requires a level of sacrifice, but you can always find a healthy balance! So don’t deny yourself of too much and make sure to always put a little away for your future 🙂

Renting; A quick guide to reporting rental payments to credit bureaus

Huuti- Rentroster

Renting; A quick guide to reporting rental payments to credit bureaus

 

Good credit scores open up doors, It’s that simply. A good credit score will allow you access to financial products and at competitive rates than those with less impressive scores. It’s not just about your credit score though, your credit history also defines the kind of rates you will be able to access.  

 

A good credit score is monumental for mortgage affordability. Mortgages in particular are of great scrutiny in regards to credit scores and history.Lenders will look for borrowers with an extensive credit history and a minimum credit score.

 

Credit scores and data reporting

 

Your credit score is engineered based on a few fundamental things such as your repayment history, you handling or utilisation of short term debt e.g overdraft or credit card, the amount of financial accounts you have etc

 

Your credit history as it states is just a timeline of your past affairs which are recorded on your credit file such as your repayment history, the amount of accounts you had open  etc. A long credit history is good as it ensures Lenders you have been able to manage financial products and accounts in the past.

 

Information received by the credit bureaus is supplied by lenders and credit card companies. This information has a high percentile of accuracy(hence accurate) as it is being validated by the reporting entity (lender or credit card company) whom has been vetted by the Credit bureau.

 

Data validity is a huge requirement for credit bureaus as they need to ensure what is being reported accurately reflects each person’s scenario. For this reason not everyone can just report data to the credit bureaus as they will struggle in auditing so many different reporting sources. Due to the fact that lenders base their lending decisions on your credit score, this is a very important jigsaw in the financial world as if too many people who didn’t qualify for a certain financial product such as mortgages were given mortgages and couldn’t keep up with their payments, they could potentially put the economy in a recession.

 

Rent reporting

 

Rent reporting then creates a unique challenge. As there isn’t one body collecting rental payments and then reporting the data to the credit bureaus there is no way for credit bureaus to ensure they data they are receiving is credible.

 

Rent reporting is therefore a new solution due to firms like Rentroster by Huuti which allow tenants to report their rent payments to the credit bureaus. Tenants can continue to make their rent payments as they have always done or choose more new methods of paying rent which then gets reflected on their credit file. Rentreporting can only be done by reporting agencies such as Rentroster who have been vetted and verified by the credit bureaus to ensure the transmission of your data is secure and the data being transmitted is accurate.

 

On time rent payments can help boost a tenants credit score just as on time loan repayments will.

 

Rentroster ensures each tenant is verified and onboarded correctly. This means, verifying who you say you are and ensuring an actual legal agreement exists between yourself (the tenant) and your landlord. The process is swift and allows Rentroster to retain a high level of integrity and compliance standards.

 

Rent reporting is that easy, signup, get verified and that’s it. This way you get the credit boost you deserve whenever you pay rent

 

Rent Reporting to Build a Credit score: Every Tenant’s Legal Right?

Rentroster

Rent Reporting to Build a Credit score: Every Tenant’s Legal Right?

 

If you have a car on finance and miss a payment, the repercussions are easily identifiable and detrimental to your credit score. However if you make on time payments, you simply boost your standing to lenders as you appear more creditworthy and build a credit history over months or years. This helps you get future loans at better rates because you had a financial obligation or commitment to pay a certain amount over a certain time frame which you adhered to.

 

The same goes for your mortgage, credit card, mobile phone contract or utilities.

rent reporting

So why not for your rent?

 

Well… some might argue that at first rent does not appear as a financial commitment. Butw with over £14bn banked by landlords in rental income and over 4 million tenants. Surely somebody should be keeping count of who is being naughty by missing their rent payments and who deserves a credit boost for making said rent payments  on time.

 

Rent payment is afterall a financial commitment from the tenant to the landlord in  similar fashion in which your phone contract is a commitment between you and your phone data provider. It is also the biggest expense most people will have per month, so why shouldn’t tenants be rewarded for keeping this commitment for months and months at a time.

 

We think you should! As a tenant you should get rewarded. Your credit score should reflect your payment performance with your landlord.

 

So just why has it taken so long for Rent reporting to hit the  mainstream?

 

Well, it’s really two things.

 

  1. Lack of technology
  2. Poor quality of data/data verification

 

Technology has always lagged behind but now there is Open banking… oh wait Open banking is just a regulated tag given to technology that always existed in the form of screen scraping. Open banking however will allow more trust from end users, the tenants and allow more innovation in a space where technology can really solve pesky problems such as rent reporting.

 

Poor data quality has also been an issue. The credit bureaus have not had any idea who to trust as a reliable source for data. The tenant? The landlord? The estate agent?  

The issue of trust has kind of vanished slowly due to technology allowing for audits and accurate reporting to be in place.

 

So what does the future hold?

 

Rent reporting is here and if you are just about to get into uni and rent your first accomodation from the university. You should consider it. Rentroster by Huuti will be knocking at your door asking you to report your rent and begin to build your credit score.

 

This will help you avoid the catch 22 scenarios  many graduates find themselves in. They have got their degree and now it’s time to go buy their first car on finance or rent their first property outside of Uni and they cant pas a simple credit check as their credit histories are non existent or they have thin credit files. Don’t be this person, report your rental payment history now!

 

Law is being discussed to make this a legal right of every tenant.We hope this comes in to fruition so younger generations have a fairer playground to start from.

 

Rentroster by Huuti was founded with the mission to help people build credit without going into debt. In the eyes of our CEO, Osei Downes, this is a massive problem for not just tenants, but also for society. A socioeconomic problem.Debt plays a big part in financial growth. Without access to debt the uphill climb might be a bit steep for some. But even without short term  debt, a thin or non existent credit file might close the door for you just when you think you are mortgage ready.

 

Rentroster by Huuti is a great way to build your credit score without the need to take on any debt. Now that’s fair!

 

Prospective first-time buyers can now build their credit score up to a point of mortgage affordability whilst they gather their finances to save for that big mortgage deposit.

 

This information is up to date as of 06/02/2018

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Need some more help with Rentroster? Let us know your thoughts  or questions in the comments

 

Financial Freedom – How hard are we willing to work for it?

How hard are we willing to work for our financial freedom

For many of us young people the world is our oyster, with modern technology powering billions of smartphones we have literally been given the world at our fingertips. This coupled with the rising shared economy, has given us the power to have access to almost everything instantly, from cabs and hotels to entertainment, we have been given the luxury to request these services whenever we please.

For some people the instant gratification received from many of these services has spilled over and influenced their financial expectations. Leading to unrealistic financial goals, expecting to reach financial freedom without the willingness to commit to achieving these goals.

This has been the case for a surprising number of UK millennials, a recent report has shown that:

“Only 36% of people aged 18-34 believe that they will achieve financial freedom by working their way up the career ladder”

To some extent we understand, I mean it’s hard not to get distracted by your flashy mates on instagram or all these get rich quick stories from people who invested in Bitcoin. Sometimes making us feel like our current career path is not the one.

It’s important to not let these stories effect you as many others have said previously, comparing your chapter 1 to someone else’s chapter 20 is pointless and will only make you question yourself. This leads to setting unrealistic expectations which can block your true potential.

But don’t get me wrong, you can reach a level of extreme wealth whilst you are still young, but you’re gonna have to work hard for it and understand that it’s not gonna be an easy ride. Ask yourself ‘Am I ready for this journey?’ if so, start taking action!

There are tons of ways to invest into your financial future that are flexible to all incomes. It just takes you to be committed. If you are interested in how to get started check out our guide here.

Why your spending habits are important to mortgage lenders

You may be thinking, why are my spending habits so important to mortgage lenders?

Created by Freepik

Well ever since the financial crisis mortgage lenders have been placed under strict new regulations, leading to extremely thorough mortgage applications just to see if the person applying can really afford it.

Aside from checking your deposit, credit history and salary, lenders must also check that you can be trusted with your own money before deciding to approve your mortgage.

There are many reasons for this, but at the core it’s about how risky you are as a borrower. Giving them reason to ask to see your bank statements from up to 6 months ago to prove your income and review your spending habits.

Don’t worry though, this is not so that they can expose anything embarrassing about your spending, but just so they can fully understand how you manage your finances to determine whether or not you are a high risk to lend to.

Key things that stand out to them are:

How much do you spend on luxuries?
This includes spending money on socialising and entertainment which is fine as it basically tells them that you are a normal person. Having too many expenses in this category isn’t necessarily a bad thing as it is just a matter of quitting a habit without any strings attached. Other items in this category include:
-Eating out
-Hotels
-Alcohol
-Gym membership

How much do you spend on gambling?
This can be good or bad depending on your circumstances. For example if you are just spending a little bit every now and again it can be seen as you having spare cash to play with for entertainment. On the other hand if you are putting over half of your salary down each month, then this may be a problem and you will be seen as a risky person to lend to.

How much you are spending on existing debts
Being tied into too many credit commitments can negatively effect your application. Unlike luxury spends, you have a commitment to pay these back within a specific time frame. In some cases having too many debts will mean you won’t have enough to pay back your mortgage on top of it so it can really hurt your application.

Do you have any dependents?
This mainly includes people you care for or any children you have as it is a key living cost you must bare and can effect your ability to pay back your mortgage. This can also be relevant to any pets you have, depending on how much they cost you a month to feed, groom and look after it may effect the success of your application!

As you can tell lenders can look at some of the weirdest expenses to help them make a decision so it is important to make sure that everything is in top shape. If you believe you’re guilty of having bad spending habits all hope isn’t lost, as it only takes a short while to get things in order and ready for your mortgage application.

Here’s where Huuti helps you get mortgage ready. Breaking down how your spending habits would shape up in front of lenders, week by week, keeping you one step ahead of the game.

How many ISAs can I have?

How many ISAs can I have?- Huuti

How many ISAs can I have?

 

The current rules allow you to have or open one of each type of ISA every year.

 

There are four types of ISA – Cash ISAs, Stocks and Shares ISAs, Innovative Finance ISAs and Lifetime ISAs. Each individual  is allowed to open one of each type of ISA each tax year. The maximum combined amount you can put across all types of ISA each tax year is known as the ISA allowance and the current 2017-18 tax year ISA allowance is £20,000 per individual.

 

Please note that there is also a separate type of ISA, the Junior ISA, available for those under 18.

If you mistakenly  open more than one cash or shares ISA in a single tax year, it is important to notify your fund manager or bank right away. In some cases, the ISA may be allowed to remain open, once you have consulted with HM Revenue and Customs.

 

The rules for stocks and shares Isas are the same as with cash Isas. You can only pay into one each tax year, but can open a new Isa with a different platform each year if you wish to.

If you have multiple stocks and shares Isas open, you are only allowed to pay into one of them in each tax year.

So, if you only wanted to invest a portion of your Isa allowance via the second Isa provider, this could be difficult  as it will mean you are not able to add any new money to the original Isa in the same tax year.

The other option to consider is transferring your existing portfolio to the other provider, although the cost needs to be carefully considered.

 

This information is up to date as of 31/12/2017

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Why we started Huuti

Huuti

Why we started Huuti

 

We started Huuti because we were strong believers of efficiency, companies being open and users having complete control and confidence throughout their journey.

 

In order for Huuti to reflect these beliefs we have set out three objectives that we intend to fulfill. Today we have shared these 3 with you below.

 

To be a lighthouse of information for individuals

 

Mortgages are complex things and researching them brings many challenges for us first time buyers. Like where do I start?  What’s important to me? And what’s preventing me from qualifying?

 

We aim to be a brand that eliminates this confusion for millennials. Interactively providing them with the information that’s relevant to them about mortgages and where they stand financially. So there is no more need to have 20 tabs open trying to find the right answer!

 

To enable users to take control of their financial affordability

 

What’s really important to us is that we empower millennials financially, everyone has made mistakes in the past, some of which have massive impacts on us financially.

 

We are going to help many individuals overcome these barriers through the insights that we provide, giving them the plan to reshape their affordability and ultimately their future!

 

To create a platform that enables users to effortlessly secure a mortgage loan instantly after applying.

 

The mortgage industry has been too inefficient, especially for the age that we live in. A new generation is taking over and we have much different expectations. Applications need to be simple and decisions need to be instant.

 

As a young person growing up in London I have gotten used to the luxury of having instant access to services and information. We see this everyday with social media, Uber, Deliver Roo, and even public transport, why should loans be any different? We are going to say goodbye to this long winded process!

 

Thank you for joining us on this journey!

Do you pay ground rent on shared ownership?

Do you pay ground rent on shared ownership? - Huuti

Do you pay ground rent on shared ownership?

 

Yes, In most cases the shared ownership will be on a shared ownership lease agreement where there is a freeholder who after the lease term surpasses the right to the property returns to. In this case you might have to pay ground rent.

 

Ground rent is the rent you pay for the piece of land that your flat or house is built on. It is usually a small amount  around £100  to  £200 a year. Details of how much your ground rent is, and how often you need to pay it  will be included in your lease agreement. Your landlord will usually notify you when a ground rent is due.

 

Rent review

 

The rent paid to the Housing Association(if being paid to a housing association) on the share not owned by you will be reviewed periodically, usually every year, and will be increased in line with any proportionate increase in inflation. Note that the rent is only reviewed on an “upwards only” basis and will not go down when reviewed. Your shared ownership lease will provide an example of how this works. Unfortunately this review is not in place for ground rent.

 

This information is up to date as of 31/12/2017

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How is rent calculated on shared ownership?

How is rent calculated on shared ownership? - Huuti

How is rent calculated on shared ownership?

 

Rent for shared ownership schemes are generally calculated as 3% of the equity owned  by the landlord. E.g if the property is worth £150,000 and the share owned by the leaseholder is 70% the rent will be 3% of the remaining shares held by the landlord. In this case it will be 3% of the 40% share held by the landlord. In this case it will be £1350 per year.

 

Most agreements have a provision that allow the klease to move in line with inflation.

 

This information is up to date as of 31/12/2017

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Can you buy a shared ownership property outright?

Can you buy a shared ownership property outright? Huuti

Can you buy a shared ownership property outright?

 

Yes, You can own 100% if the shares in a property but this doesn’t always mean you will own the freehold of the property.

 

Most shared ownership homes are flats which are on shared ownership leasehold. This are very similar to a conventional lease agreement but have some core components which make them particular to a shared ownership property. These components are registered with the lease at the land registry.

 

As leasehold buildings have a freeholder who owns the actual freehold to the building a leasehold shared ownership property will usually have a lease of between 99-125 years after which the  term expires and the freeholder can do as he pleases with his home. In that term however you are the owner of the property within certain restrictions. E.g you can make alterations to the home without informing the landlord(or freeholder).

Can you buy a shared ownership property outright?

For 100% ownership where you also become the freeholder  you will have to buy shared of a shared ownership property where the agreement between yourself and the landlord is not a leasehold  agreement  and a freehold can be transferred to you upon staircasing to a 100% ownership.

 

This information is up to date as of 31/12/2017

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Do you have to pay stamp duty on shared ownership?

Do you have to pay stamp duty on shared ownership? -Huuti

Do you have to pay stamp duty on shared ownership?

 

What is stamp duty?

Stamp duty in short is a tax payable on all property transactions in the UK.

 

A new stamp duty relief for first- time buyers gives them a 0% charge on properties up to £500,000. With 0% charged for the first £300,000 and 5% between £300,001 and £500,000. There will be non relief for those paying above £500,000.

 

Stamp duty might be due when you buy  through a shared ownership scheme. You will have the option to  make a one of payment (market value election)or pay your stamp duty in stages.

 

Market value election:

 

With a market value election you pay stamp duty on the full value of the property at the time of your initial purchase of shares. E.g the property is worth £300,000 and you are a first time buyer. In this case you will not be due any stamp duty as you are a first time buyer. If you weren’t a first time buyer you would have paid  £5,000 in stamp duty. 2% between £125,000 to £250,000 and another 5% between £250,000 and £925,000.

 

Paying in stages:

 

You can pay in stages. You will have to pay stamp duty on your initial purchase amount if this amount is above the stamp duty threshold. If your rent over the lifetime of the lease(net present value) is above £125,000. You will have to pay 1% of this amount in stamp duty.

 

Buying more shares

 

If you purchase more shares you won’t have to submit a return until you own a minimum of 80% of the shares and further transactions after that.

 

Conclusion:

 

You solicitor will advise you on the best way to proceed on regards to stamp duty and will assist you in filing a return.

 

This information is up to date as of 31/12/2017

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Can a shared ownership property be freehold?

Can a shared ownership property be freehold? - Huuti

Can a shared ownership property be freehold?

 

To answer this question we must first make the distinction between freehold and leasehold.

 

A freeholder is someone what owns the property, the ground it stands on and the air above it. You can make alterations to your property at any time. You can sell it to anyone and it belongs to you completely until you decide to sell it. Freehold is the common legal structure for which most UK homes are sold under.

 

A leasehold is a different structure which is very common with flats. With a leasehold you become the owner of  the property for the duration of the lease which generally is between 80 to 125 years. Properties with below 80 years worth of lease remaining are considered as short lease properties and a  buyer could struggle getting a mortgage on this sort of properties.

 

Leasehold properties are uniquely different from freeholds as you pay quite a few charges throughout the term of your lease.

 

Some of the charges you pay include

 

  • Ground rent
  • Service charges
  • Building insurance

 

Alterations cannot be made to leasehold properties without first consulting the leaseholder which will be your landlord.

 

So how do shared ownership lease  work out?

 

Shared ownership properties are usually leasehold flats regardless of if they are flats or houses. This will usually be for 90-125 years.The leaseholder( you, first-time buyer) can purchase further shares(within 3 steps-see staircasing ) in the property to take them to 100%

 

The lease is per usual but with some more provisions including

 

  1. There are certain processes which must me adhered to by your mortgage lender( If your shared ownership property is mortgaged) if they want to repossess your property based on you defaulting on your mortgage payments.
  2. You cannot just sell your property when you have less than 100% ownership and your landlord(housing association etc) might have a first refusal right on your property.
  3. Rent  you pay on the unowned shares of the property must be reviewed

 

You can view a copy of the lease at the land registry and it will include above provisions as well as information on your mortgage(if you have any).

 

 

 

Can a shared ownership property be freehold?

 

Yes and No.

 

If a shared ownership property is a leasehold whereby there is a freeholder who the right of the property transfers back to after the lease term expires then no however  under the leasehold reform Act 1967, if here is a provision for  the freehold to be transferred to the leaseholder once they have purchased all the shares in the property then this is possible.

 

Other exemptions apply if the leasehold house was provided for the elderly or within a designated area referred to as a protected area.

 

A shared ownership leaseholder of a flat only qualifies for the statutory right to extend their lease as the holder of a “long lease” if they have “staircased” up to 100% ownership. However, the landlord may have their own policy of allowing lease extension where there is less than 100% ownership. You will need to confirm with your landlord to see if such provisions exist.

As rent is paid on that part of the equity not owned by the leaseholder, a landlord can take action to repossess the property for rent arrears in the county court in the same way that a landlord of an assured shorthold tenancy can under the provisions of the Housing Act 1988. If the property is repossessed in these circumstances no compensation is payable to the leaseholder to take into account the balance, between the leaseholder’s debt and the market value of the leaseholder’s share in the property.

 

If the shared ownership property is a freehold property whereby the agreement between you and your landlord( the freeholder) is one of a shorthold tenancy agreement and not a lease then you should be able to acquire the freehold to the property when you have acquired 100% of the shares in the property.

 

This information is up to date as of 31/12/2017

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Shared ownership: 4  things you don’t know!

Shared ownership - Huuti

Shared ownership: 4  things you don’t know!

 

  1. Shared ownership schemes are not hard to qualify for and are easily accessible. The Shared ownership  scheme is   not exclusively run  by the Government but by Banks and building societies as well. Your deposit requirement is therefore less as it is a shared ownership property.                                                                                                                                                                                                                                                                                                                  
  2. The Shared ownership scheme is not unique to those on housing benefits or council tenants. Anyone can purchase a shared ownership home as long as you earn less than £80,00 outside london(£90,000 in London) and don’t own a property.                                                                                                                                                                                                                                                                                                                                       
  3. Shared ownership does not mean you share your home with another person: Shared Ownership does not mean this but rather it means that you share the ownership with your landlord, this could be a bank, housing association or a company. You can then buy bigger shares in your shared ownership property by a process called staircasing.                                                                                                                                                                                                                                            
  4. Shared ownership can allow 100% ownership or not: You are not required to buy out your landlord’s share in the property. You can simply own your shares and continue paying rent on the rest for as long as you want without any restrictions. The other option is of course that you slowly buy out your landlord’s share of the property. Be aware that you buy your landlords shares at market value so timing the market might be the best chance of you getting a discount.

 

This information is up to date as of 31/12/2017

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Shared ownership Staircasing: FAQs

shared ownership staircasing - Huuti

Shared ownership Staircasing: FAQs

 

Staircasing seems to be a very confusing process to most first-time buyers sp in this brief guide we will go through some of the most common asked questions the community has received.

 

  • Firstly, What is staircasing ?

 

Staircasing is the process of increasing homeownership in shared ownership homes. This involves buying more shares in the home. This can only be done 4 times, including the intial purchase of shares.

shared ownership staircasing - Huuti

 

  • What is the shared ownership scheme?

 

 

Shared Ownership scheme is a government scheme which allows  more first-time buyers to get on the property ladder. First-time buyers can buy part of the home and pay rent on the rest. They can then increase their ownership in their home up to 100% in different steps known as staircasing.

 

 

  • Do you have to staircase?

 

 

You don’t have to staircase but it is a means to full home ownership. You might find it a cheaper option in the long term rather than paying rent on the unowned shares of the property.

 

 

  • How do you staircase?

 

 

Staircasing is somewhat straightforward.

 

  1. Contact your landlord
  2. Your landlord will send you the application form which you will fill and return to them
  3. Pay the valuation n fee after which your landlord will send a RICS surveyor to your home to inspect the property and provide a valuation with comparable properties.(valuation lasts for 3 months)
  4. Once the purchase is complete your landlord will send you your new costs

 

 

  • How many times can you staircase?

 

You can staircase 3 times. So if you want 100% ownership you will have to be conscious about this.

 

 

  • What happens to my mortgage?

 

 

If you have a current mortgage you can simply ask for a further advance or you can get a new mortgage with a new lender..hence a remortgage.

 

 

  • Will I need a solicitor?

 

 

Yes, a solicitor will be needed to assess your new lease.

 

  • Are there any costs involved with staircasing?

 

Yes the valuation cost, the mortgage fees and solicitor fees are the most common fees.

 

 

  • Will home improvements made to my home by me increase the valuation?

 

 

Any improvements  you make will not be taken into account for the valuation.

 

 

  • Can I staircase to 100%?

 

 

Yes you can!

 

Once you reach 100% ownership you will not owe any more rent but may  have to continue paying service charge and maintenance costs if you are on a lease. If  you are on a lease you will not be transferred the freehold but rather given a lease  and continue your lease agreement with the freeholder.You should request for the transfer of the freehold to you if your property is not a leasehold  property.  Don’t forget once you own 100% you will now be liable for the insurance of your home.

 

 

  • Are there any restrictions with staircasing?

 

 

In some cases your landlord might have restrictions on how you staircase. This is why it is important to get a solicitor to review your current agreement with your landlord before you begin the staircasing process.

 

 

  • Can I sell my home?

 

 

If you own less than 100% then you will have to sell to someone approved by the shared ownership scheme. If you own 100% then you can sell to whoever you want to.

 

This information is up to date as of 31/12/2017

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Short term fixed rate mortgages

Short term fixed rate mortgage- Huuti

 

Short term fixed rate mortgages

 

To discuss short term fixed rate mortgages, we must first discuss what fixed term mortgages are.

 

Fixed rate  mortgages are mortgages where the interest rate does not rise or fall on the mortgage but is rather fixed for a set term. This keeps your monthly mortgage payments the same and allows first-time buyers to budget and plan accordingly.

Fixed rate mortgages usually have low interest rates in comparison to other mortgage products on the  market and hence are very desirable by first-time buyers.

Fixed term mortgages come with expensive mortgage  arrangement fees(usually between £1000- £2000)  and usually have high early repayment costs attributed to them due to their low interest nature.

 

Fixed rate mortgages also offer little value when interest rates fall as the borrower will not be able to benefit from a fall in interest rate and so their  mortgage payments will remain the same.

 

Short term fixed rate mortgages are those which are issued for just the initial period of a mortgage as a way of enticing more borrowers n to the mortgage product. They offer a fixed term interest for between 1-5 years of the initial mortgage term after which the interest rate will usually switch to the lenders standard variable rate( a more expensive rate).

 

For this reason short term fixed rate mortgages should usually be switched towards the end of their term to prevent your mortgage interest rate from increasing and pushing up your monthly repayment. A suitable mortgage management platform will inform you of when you should switch in time.

 

In conclusion

 

Short term fixed rate mortgages offer value for just the short term(usually).Plugging your mortgage into a suitable free mortgage management platform will help you avoid overpaying and always seek the services of a professional free digital mortgage broker if confused.

 

This information is up to date as of 31/12/2017

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How mortgages work

How mortgages work - Huuti

How mortgages work?

 

Mortgages, are loans given by lenders for individuals looking to borrow money to purchase their home. The lender recoups his money plus profit by charging interest on the amount borrowed. In the UK, the Lender registers an interest on the property and can repossess the property if the mortgage repayments are not being made.

 

There are different types of Mortgages available today, from fixed rate mortgages, variable rate mortgages and discount rate mortgages.

 

To obtain a mortgage you will need between a 5-20% deposit of the property price at the very minimum at which point the lender will be willing to lend you the remaining value. This is called the Loan to value(LTV). The higher the LTV the more expensive a mortgage is as the lender is lending you much more and hence is at a higher risk of losing more money if you default.These mortgage products will therefore come with a higher interest rates and therefore higher monthly repayments by you.

 

Cheaper interest rates are however available to those with larger mortgage deposits.

how mortgages work

Mortgages also have arrangement fees, these are the costs of the lender to arrange a mortgage for you. The costs are taken  care of by  you and can range between £500 – £5000 depending on the size of the mortgage.  Mortgages are offered by lenders but traditionally most people will go to digital mortgage brokers who serve as the middleman in the industry. Digital mortgage brokers are important as they have access to more than one lenders product and in some cases “a whole of market lending panel”, hence products from most of the market.

 

Please note: “Whole of market” does not necessarily mean all the products on the market but rather it is a term used to describe a digital mortgage broker with access to wide variety of mortgage products available on the market.

 

 

 

How does mortgage  interest work?

Your mortgage is made up of  debt you have borrowed and the interest the mortgage lender is charging on it. There are two formats of mortgage repayment.

 

The first is repayment mortgage- This is where you repay both the interest and capital over a term e.g 25 or 30 years. With this format your debt reduces as you make your monthly repayments which  means you have less debt to pay interest on and hence your monthly payments at the beginning of the mortgage usually contain more interest rate repayments than capital but as you make those monthly payments this balances off and you end up paying most of the capital towards the middle and end of the mortgage term.For this reason, remortgaging at the initial term of your mortgage is usually where the best savings can be found.

 

The second is interest only mortgage- With this repayment model you don’t repay back any capital over the term of the mortgage but  just interest charges. This means that the debt you borrowed remains constant throughout out the term of the mortgage and you will have to repay the capital in one large sum at the end of the mortgage term. This mortgages are harder to get as their affordability assessment requires you to prove to the lender that you have a suitable repayment plan for the capital at the end of the mortgage term. This repayment option is favoured mostly by Buy to let investors who are looking for short term capital appreciation as a means of paying back the mortgage debt.

 

 

Finally,

Your home may be repossessed if you do not keep up with your mortgage payments. Seek the services of a professional digital mortgage broker.

 

 

 

 

 

 

 

This information is up to date as of 31/12/2017

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Low deposit mortgages

Huuti- Low deposit mortgages

Low deposit mortgages

 

So what are low deposit mortgages?

 

Low deposit mortgages are just as they sound, mortgages with the minimum possible deposit. These can be 95% mortgages or even mortgages with government schemes such as the help to buy equity loan where the borrower is essentially putting down just 5% while the government loans them an additional 20% outside London and 40% in London.

 

Low deposit mortgages could also be in the form of a mortgage lender simply requesting a very low deposit. Usually these will only be offered to borrowers with good credit whom have passed the lenders affordability requirements easily.

low deposit mortgages

The benefits of Low deposit mortgages?

 

Low deposit mortgages allow first time buyers to get on the property ladder without too much financial commitment. This means first-time buyers can save for less and get on the property ladder quicker.

 

With rising house prices and stable interest rates it presents a great option for a lot of first-time buyers who typically would have had to save an extra 10-15%.

 

The drawbacks of Low deposit Mortgages?

 

Low deposit mortgages leave borrowers exposed incredibly as they own very little of their homes. If interest rates rose borrowers will be exposed as those whom are not on fixed rate mortgages will see their monthly mortgage repayments rise and could see first-time buyers fall back on payments and risk their homes being repossessed. At best, they could see a negative record marked on their credit file which will not help when it’s time to remortgage their current mortgage deals.

 

Low deposit mortgages have a high risk of negative equity due to their high LTV. Negative equity is when the debt on a property is more than the property is valued. This means that the borrower owes more on their mortgage than the property is worth. This makes it incredibly hard for borrowers to remortgage their current mortgage deals and in some cases discourage borrowers from paying back their mortgage.

 

Low deposit mortgages also tend to be very expensive  as they come with high  arrangement fees. They are also notorious for having high interest rates which make the risk of negative equity even greater.

 

Conclusion

 

Although low deposit mortgages do offer a path on to the property ladder, It should be approached with great care, almost like an investment. Because in truth it is one. A very risk one. Seek the services of a professional digital mortgage broker.

 

This information is up to date as of 31/12/2017

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Can I save for my deposit and maintain my lifestyle?

Huuti- Can I save for my deposit and maintain my lifestyle?

Can I save for my deposit and maintain my lifestyle?

 

When it comes to buying your first home saving for your deposit is seen as a massive hurdle to climb, especially if it’s in London!

 

While every target as big as this does require some level of discipline and sacrifice, many millennials today are pushing back the thoughts of saving for a deposit. Mainly for the reason that they are still trying to enjoy life as research shows that 72% of millennials believe they can’t own a home, without completely sacrificing the things that they enjoy in life.

 

This combined with only 36% of UK millennials believing that they will improve their finances through promotions and new jobs. (The other 64% are hoping for events including winning the lottery, receiving inheritance and having their debts cleared). Has lead to many avoiding the financial commitment of saving for a deposit.

 

This really surprised us as many young people are not confident in their financial future at all, but they can still take control!

 

We are not going to sit here and tell you the basics of saving, like putting some money away as it enters your account rather than waiting to the end of the month, because you should already know that 😉

 

What we are going to do is show two facts we found on UK millennials. Getting you to rethink about how you spend your money on leisure activities.

 

Fact one:

Millennials spend on average 50% of their disposable income on going out and other non-essential items

 

Fact two:

On average millennials spend a total of 6 days a month going out. This includes cinema, live events, eating out and other forms of leisure.

 

The older generation has thrown comments at us millennials saying that we want to have avocado toast more than saving for a deposit! This left us to think do we really want to enjoy life more than we want to own our own home and is every single moment worth the spend? Like we said earlier every achievement in life requires some level of sacrifice, but you can always find a healthy balance! So don’t deny yourself of too much and make sure to always put a little away for your future 🙂

 

This information is up to date as of 30/12/2017

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How much rent should I charge?(Mortgage management)

Huuti- How much rent should I charge?

 

How much rent should I charge?(Mortgage management)

 

So you’re considering a buy to let property but not sure how much rent you should actually charge. Too high and you will deter possible tenants, too low and you will have managed to work out a bad deal for yourself.

 

A well thought out rental amount will also allow the lender to deal with your buy to let mortgage application without to many questions and hence faster.

 

So how do you figure out how much rent you should charge?

 

Location. Location. Location. Certain details about a location will make it more admirable, e.g locations which are next to transportation infrastructure such as underground stations or bus stops in an area where bus stops aren’t within a 20 minute walk A location with  a short supply of property to rent and overwhelming demand will naturally require a marginal rise in rent prices to match demand in the area.

 

In areas where supply outweigh demand then your best bet might be to undercut rental prices for similar properties in the area. How do you know when supply outweighs demand or when demand outweighs supply?

 

To know when supply outweighs demand you can simply look at how many properties are available on the market for a 90 day period. If over 60% of those properties remain available you can reasonably assume that there isn’t huge demand. You can also make about 10 calls to different estate agents working in the area to get their opinion as most requests for homes ( renters and landlords)will come through them.

 

Your target market and their disposable income will also generally determine how much rent you can charge. If the area you have your buy to let property in is dominated by students then you will have to adjust your target rent price to their expected disposable income.

How much rent should I charge?

Level of property

 

The level and general quality of the property on offer will also determine how much you can charge for it. If the property requires a lot of renovations then you can’t expect tenants to pay  typical prices.

 

Level of service

 

If you look after communal areas, or provide a management service or have bills included then you should charge more for this service to cover your costs.

 

In some cases your lender will insist you charge a specific rate for them to lend to you. Ensure you will find a suitable tenant at this rate.

 

If you are plugged into our mortgage management platform(like ours) our technology will send you an update towards the end of each tenancy agreement with a rent review report detailing proposed future rent, market trends etc.

 

This information is up to date as of 29/12/2017

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Resales scheme

Huuti - resales

Resales

 

If you can’t afford to buy a whole home, you could buy the share of a home bought by its current owner when they used a shared ownership scheme (part rent/part buy). These homes are advertised by housing associations as ‘Resale’.

The share you would buy would be between 25% and 75% of the home’s value and you would pay rent on the remaining share to a housing association. You could buy bigger shares later when you can afford to.

You could buy a shared ownership resale home in England if:

  • your household earns £80,000 a year or less, or £90,000 a year or less in London.
  • you are a first-time buyer, you used to own a home but can’t afford to buy one now or are an existing shared owner looking to move.

Only military personnel will be given priority over other groups through government funded shared ownership. However, councils with their own shared ownership home-building programmes may have some priority groups, based on local housing needs.

 

This information is up to date as of 28/12/2017

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HOLD – Home Ownership for People with Long-Term Disabilities

Huuti- HOLD – Home Ownership for People with Long-Term Disabilities

HOLD – Home Ownership for People with Long-Term Disabilities

 

What is the Home ownership for people with long term disabilities scheme?

 

The Home ownership for people with long term disabilities scheme is a home ownership scheme for people with long term disabilities. The scheme is a type of shared ownership scheme which allows you to own between 25% – 75% of the home and pay rent on the remaining equity.

 

Who is eligible for the home ownership for people with long-term disabilities?

 

  • People who have less than £80,000 of combined income outside london and £90,000 outside London are eligible.
  • You have a long term disability
  • You are a first time buyer
  • You used to own a home  but can no longer afford to buy a home
  • You don’t currently own a home
  • You have special needs which ordinary shared ownership homes don’t meet your needs

 

You can get a priority list for the Home ownership for people with long term disabilities scheme if you are ex military or the council deems your situation as such.

 

For more information see here.

 

This information is up to date as of 28/12/2017

 

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OPSO – Older People’s Shared Ownership

OPSO – Older People’s Shared Ownership - Huuti

OPSO – Older People’s Shared Ownership

 

What is the older people’s shared ownership?

 

The older people’s shared ownership is a government scheme for people aged over 55 who are based in England. The scheme allows you to buy any home which is available on a shared ownership scheme.

 

Shared ownership schemes work by allowing you to buy a share of the home then paying rent on the remaining equity, you can then buy up the remaining equity through a  process called staircasing.

 

How does the older people’s shared ownership work?

 

The older people’s shared ownership scheme works a bit differently than the conventional shared ownership scheme. Firstly, you are allowed to own a maximum of 75% then pay rent on the remaining 25%.

 

If the property is sold the 25% must be returned back to the council.

 

You can buy a home if you are over 55 and meet the below requirements.

 

  1. Your combined household income is less than £80,000 outside London or £90,000 in London
  2. You are a first time buyer
  3. You are not a first-time buyer but don’t own a home and can’t afford to buy one.
  4. You are currently on a shared ownership and want to move property
  5. You cannot own any property to be eligible for this scheme

 

You can be added to a priority list if you are ex military or if your council chooses to add you based on your situation.

 

This scheme is also used fairly by pensioners looking to downsize. Always seek financial advice!

 

For more information see here- https://www.helptobuyese.org.uk/help-to-buy/opso

 

 

This information is up to date as of 28/12/2017

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Self Build Portal

Huuti- Self Build Portal

Self Build Portal

 

So you can’t afford a mortgage deposit, Cant get a shared ownership scheme and for some reason can’t find an affordable housing at your local council or housing associations.

 

To start this process check out the self Build portal website.

Considering a self build? Get in touch with these folks.

 

 

This information is up to date as of 28/12/2017

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Discounted sales

discounted sales- Huuti

Discounted Sales

 

What is a discounted sales scheme?

 

This is a scheme operated at random by housing associations or councils. The scheme works by allocating  some properties including those built by property developers at between 25-50% discounts of their property value.

 

Who is eligible for discounted sales?

 

Discounted sales are set by the local councils and therefore the eligibility criterias are all different for most councils.

 

You will need to contact your local council to see what properties are available for this scheme and what the council’s eligibility requirements are. In most cases you will need to have some association with the council who offers the discounted sales scheme. Not all councils offer the discounted sales scheme and the scheme is only available in England.

 

The typical criteria includes

 

  • You must live or work in the area where the property is located
  • Your household income must not be more than £60,000
  • You have a deposit for the property
  • You must be employed
  • You qualify for a mortgage
  • You can show that you are not in mortgage or rent arrears or in breach of your current tenancy agreement
  • You are aged 18 or over and have a bank, Post Office or building society account

 

How do you apply for the discounted sales scheme?

 

  • To apply you must first find a property with a discounted sale scheme available for it.

 

  • You must now apply using the discount sales application form. You should receive a confirmation on the process and if you have been accepted.

 

  • You should then seek advice on how to acquire the property and begin the home buying process.

 

Selling the property

 

Finally, If you choose to sell the property the original discount is passed on to the next person. For example, if you bought the property with a 25% discount you can only sell the property at 75% of the market value. You must inform the Housing Association you bought the property from before you sell.

 

This information is up to date as of 28/12/2017

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Right to Acquire; All you need to know

Right to acquire - Huuti

Right to Acquire; All you need to know

 

What is the right to acquire scheme?

 

The right to acquire scheme is a government scheme which allows housing association tenants to buy their homes at a discount. To apply, simply contact your landlord who will provide you with an application form. Once returned, your landlord will have 4 weeks to get back to you or 8 weeks if they have been your landlord for less than 36 months.

 

If your landlord agrees to sell the property to you they must send you an offer within 8 weeks or 12 weeks if the property is a leasehold property.

Right to Acquire

The offer stage

 

Once your landlord gives you an offer, the offer should contain how they came to those figures, any issues with the property, how much your discount is, any known issues found with the property and any future costs you may owe to them such as ground rent or maintenance for leasehold properties.

 

You will have 12 weeks to inform the landlord of your decision. The landlord will usually send two reminders labelled RTA4 and RTA5 reminders.If you don’t get back to your landlord within the time set in the reminders, your application can be binned.

 

If for any reason  you don’t accept your landlord valuation, you can ask for an independent valuation to be carried out after which you have 12 weeks to accept the offer.

 

Who is eligible for the right to acquire scheme?

 

  • To  be eligible you would have  have a had a public sector landlord for a minimum for 3 years.

 

  • The property must have been built  or bought by the housing association after 31st March 1997 and funded through a social housing grant funded by a housing corporation or council.
  • The property must have been transferred from a local council to a housing association after 31st March 1997

 

  • Your Landlord must be registered with the homes and communities agency

 

  • Your home must also be a self contained property and your only home

 

  • You will be able to make the application with someone who shares your tenancy and up to 3 family members who have lived with you for the past 3 months
  • You won’t be eligible if a court order has been made against you to leave your property

 

  • You won’t be eligible if you have been made bankrupt

 

  • You won’t be eligible if you are a council tenant

 

  • You won’t be eligible if you have preserved right to buy

 

What discount is eligible with the right to acquire discount?

 

You will be eligible for a discount of between £9000 to £16000 and this is based in location. Your landlord will let you know how much discount is available to you. You can view a list of discounts by region hereIf you have used the scheme before there might be a deduction on the amount of discount available to you.

 

Selling your home

 

If you wish to sell your home within 10 years you must first offer it to your landlord.Your landlord will agree on a price with you. If you disagree on the price you can request an independent valuation at no cost to you.

 

If you sell your home within 5 years you will have to pay some or all of the discount.You will pay back the discount amount you get in relation to your property sale price.

 

For more information you can contact the citizens advice bureau.

 

This information is up to date as of 28/12/2017

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Preserved Right to Buy: All you need to know

Preserved right to buy - Huuti

Preserved Right to Buy: All you need to know

 

What is the preserved right to Buy?

 

The preserved right is a legal right given to former tenants of local authority tenants with a secure tenancy to buy their home.If you were a secure council tenant and your home was transferred from your council to another landlord such as a housing association then you might have  a preserved right to buy.

 

This only applies if you were living in the home when it was transferred. Your current landlord should be able to tell you if you have the preserved right to buy.You will not be eligible if you moved to a home owned by a different type of landlord.

 

The Right to Buy only applies if you were a tenant with these local authorities on these dates: West Berkshire District Council 4 December 1989 Christchurch City Council 28 March 1991 Vale of White Horse District Council 9 February 1995 Basingstoke & Deane Borough Council 20 March 1995 .

 

The preserved right to buy scheme is only available in England and you can get a maximum discount of £78,600 outside London and £104,900 in London.

preserved right to buy

Properties not included in the Preserved right to buy

 

Not all types of properties are included in the preserved right to buy. Some of these include:

 

  1. Specialist housing for the elderly
  2. Housing for the disabled or  those with mental issues
  3. Temporary housing
  4. Lettings in connection with employment
  5. Properties scheduled for demotion

 

To be eligible yow would have had to:

 

  • have spent a minimum total period of 2 years in social housing or armed forces accommodation

 

  • You occupy your house as your only or principal home

 

  • A housing association owns the freehold, or has sufficient interest in your current property to grant a lease There are some other cases where the right to buy may apply covering the following types of cases:

 

  • If you are a joint tenant of someone who may be able to exercise the preserved Right to Buy

 

  • If you were assigned the tenancy by a member of your family who immediately before the assignment would have been eligible; or

 

  • If you became the tenant of your house under divorce legislation in place of a person who would have been eligible; or

 

  • If you are a family member of a previous sole tenant who would have been eligible and inherited the tenancy

 

  • If you are the partner of a deceased tenant who acquired the preserved Right to Buy by succession

 

  • Please note a family member can join in the preserved Right to Buy if they can prove they have lived in your home for at least 12 months before you apply. This 12 month period does not apply to spouses or civil partners.

 

Who is not eligible for the right to buy under the Voluntary sales policy?

 

You may not exercise the right to buy if one or more of the following applies to you:-

 

  • A housing association  is not your landlord

 

  • You have not spent a minimum total period of 2 years in social housing or armed forces accommodation (or 5 years if you were a public sector tenant for the first time on or after 18th January 2005)

 

  • You do not occupy the property as your only or main home

 

  • Your home is let to you in connection with your employment

 

  • Your home is designed for people who are physically disabled, for people with a mental health problem, or who have other special needs, and is one of a group of such properties.

 

  • Your home is particularly suitable for elderly residents. Please ask for more details  from your landlord of whether this applies to your home.

 

  • Where you have been served   a notice that your landlord  intends to demolish your home within a specific period

 

  • Where a court order is made which means you have to leave your home by a specific date, or if the terms of a suspended court order are breached
  • If you are bankrupt

 

  • If your tenancy has been temporarily demoted to an assured shorthold tenancy in the case of anti-social behaviour.

 

How do you begin the right to buy process under the voluntary sales policy?

 

  • Your landlord will supply you with an application form which you must complete and return to them to start the process.

 

  • They will let you know in writing if you qualify for the preserved  right to buy within 4 weeks of receipt of your application (8 weeks if the qualifying period includes time with another landlord)

 

  • If you qualify for the right to buy a valuer will contact you and arrange to visit your home to carry out an open market valuation. It is worth noting that any improvement you have made to the property will not be included in the valuation.

 

  • Within 8 weeks (if you live in a house) or 12 weeks (if you live in a flat) your landlord will send you a written offer notice(section 125 notice) setting out the sale terms. This offer will usually describe the property, the price it is offered for and any defects found on the property during the valuation.The offer notice will also include any discount you are entitled to which allows you to buy the property under market value.

 

If you are told that you are not eligible for the preserved right to buy then you can contact the citizens advice bureau for more advice or engage the services of a solicitor. Alternatively you can write to the Residential Property Tribunal Service, 10 Alfred Place, London, WC1E 7LR.

 

You must also return your decision to buy or not to buy within 3 months if not you will lose your right to an independent district valuer. The housing association will usually send you a reminder before this timeline elapses.

 

If the housing association  delays the sale by not sending you the acceptance form and your offer notice within the times mentioned above, or they delay the sale in some other way, you may be allowed a reduction in the purchase price. To receive this you must complete the initial notice of delay (Form RTB6) giving them 28 days to issue a counter notice and resolve any delay. If the delay remains after this period, then you may serve an operative notice of delay (Form RTB8). This allows any rent that you pay during this period of delay to be taken from the purchase price if you still go ahead and complete the sale.

 

How is pricing worked out for the preserved right to buy

 

  • Your landlord will instruct an independent valuer who will produce a valuation on the property

 

  • Your landlord will then calculate how much discount on the price you are entitled to

 

  • You must have lived in the property for a minimum 2 years . This could be a local authority or armed forces accommodation (or 5 years if you were a public sector tenant for the first time on or after 18th January 2005). The initial 2 year period entitles you to a 44% discount if your home is a flat or 32% if your home is a house. For each additional year above the minimum qualifying period you are entitled to further 2% discount for a flat and a further 1% discount for a house.

 

  • The discount can be no more than 70% of the open market value if it is a flat and 60% if it is a house. However, discount entitlement can never be more than a maximum determined by the Government, which varies according to the region in which your home is located. Your landlord will dvise you of the maximum discount available to you  in your area on request.

 

  • If you are not happy with the open market valuation you can ask your landlord to instruct the District Valuer to undertake a final valuation, within 3 months from the date of your offer. The District Valuer’s valuation is final and will be the value used to calculate the purchase price even if it is higher than the first valuation.

 

  • If your home is a flat (or a house that benefits from communal facilities) you will also pay service charges. This is for your contribution to day-to-day expenses (lighting, cleaning etc), and any contribution you may have to make to substantial major works and improvement costs (lift repairs, roofing repairs etc) that will add to the value of your home. Your offer notice will contain details of service charges, and for certain service charges there are limits for the first 5 years of your ownership.

 

  • You must pay any outstanding debts owed to your landlord during the sales process if not they are within their right not to complete the sale with you.
  • You will have to arrange a mortgage if you are not paying in cash. There will be costs involved with this such as mortgages fees, conveyancing fees, property surveys, home insurance and stamp duty.
  • You will also have costs associated with running your home all taken care by yourself including your regular mortgage payments, council tax, any ground rent or maintenance

 

You will no longer be eligible for any housing benefits as you now own and occupy your own home. You might be able to claim income support but this usually takes 9 months before a payout is received once you have applied. Elderly people will have the value of their homes taken into account when considering if they are eligible for financial help in regards to their residence.

 

Your right of appeal

 

If your preserved right to buy application is refused you have the right to appeal within 56 days. Details of how to apply will be included in any offer letter sent to you by your landlord

 

Selling your home

 

You can sell your home at any time you want, If you sell it within 5 years of buying it you will have to repay some of the discount.

  • If you sell within the first year you will have to pay all the discount.
  • If you sell in the 2nd year you will have to pay ⅘ of the discount.
  • If you sell in the 3rd year you will have to pay ⅗ of the discount.
  • If you sell in the 4th year you will have to pay ⅘ of the discount.
  • If you sell in the 5th year you will have to pay ⅕ of the discount.

 

The discount will be taken as a percentage of the property value when resold. You will not be required to pay any discount after 5 years of owning the property.

 

You will have to offer the property to your previous landlord if you sell it within 10 years and it is in an area of natural outstanding beauty. If your landlord takes up the offer they will have to pay you the full market value.

 

You can find further information by contacting the Department for Communities and Local Government or at www.communities.gov.uk

 

This information is up to date as of 28/12/2017

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5 little unknown ways to buy or rent

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5 little unknown ways to buy or rent

 

Buying or renting in the Uk can be incredibly costly, you might know the typical schemes such as right to buy and the help to buy equity loan. Here are 5 unknown ways to buy or rent.

 

Discounted market sale

 

Under this route the local council will usually let you buy land and then build on said land. You will however only own part of the land and the rest belonging to the council. When you sell the property, the council will expect to receive its share of proceeds. This is an especially good route for first time buyers who struggle with mortgage affordability due to rising house prices and you should contact your local council or any council where an available undeveloped land exists to inquire further.

 

There is an option to buy more equity, hence staircase but this is totally at the discretion of the council. You also don’t pay any rent to the council on their equity of the property which allows you to save more through suitable schemes such as the Lifetime ISA.

 

Finally,As with most affordable housing schemes, you can generally only purchase a property under the DMS scheme, in a Local Authority you have a link to; for example an Authority that you either live or work in and your household income must be below the limit stated.

 

Starter homes scheme

 

The starter home  scheme allows first time buyers between the age of 13-40 with a combined income of less than £80,000 outside london and £90,000 in london to buy homes at 80% of their value. Essentially receiving a 20% discount. This is great news for first-time buyers.

 

House prices are capped at £450,000 in London and £250,000 outside London.

You cannot sell the property within 15 years of buying if not you might owe the Government the 20% discount made from the sale.

 

The Government has made brownfield sites(old commercial and industrial sites) available to property developers for this scheme to work. The 30 councils signed up to deliver the first homes are as follows: Blackburn, Blackpool, Bristol, Central Bedfordshire, Cheshire West and Chester, Chesterfield, Chichester, Lincoln, Ebbsfleet, Fareham, Gloucester, Greater Manchester, Lincolnshire, Liverpool, Luton, Mid Sussex, Middlesbrough, North Somerset, Northumberland, Pendle, Plymouth, Rotherham, Rushmoor, Sheffield, South Kestevan, South Ribble, South Somerset, Stoke-on-Trent, West Somerset and Worthing.

 

Discount Full Ownership

This scheme is provided by a private property developer called pocket whom in association with the local councils builds 15-50 one bedroom apartments on small urban sites. The homes sell for at least 20% below market value. You will need to get a mortgage for the house just as any other and take into account the maintenance & charges paid to pocket for the communal areas of your home.

 

Intermediate Market Rent

Intermediate Market Rent (IMR) is an Affordable Rent Scheme designed to assist working households who are unable to afford the cost of renting a home on the open market or cannot access social rented housing.

  • Intermediate Market Rent is usually set at around 80% of the market rent value of similar property in the local area.
  • The service charge is included in the rent.
  • After entering a six month assured shorthold tenancy it is then renewed on a monthly basis, although some initial rental periods can be longer. All rentals will be subject to a credit check and referencing.
  • Deposits are held within the deposit protection scheme and provided the home is returned to the landlord in the same condition as when it was let to you, the deposit is returned.
  • Each rental development will have eligibility criteria. This can be based on the type of accommodation and the area in which a potential tenant currently lives or works.
  • Tenancy can be terminated with one month’s notice. Should the landlord wish to terminate, they are required to give two months’ notice.

 

Rent to Save

The rent to save scheme is a life save for first-time buyers who don’t have enough deposit for a mortgage. The scheme works by renting at a highly discounted rate whilst putting the savings earned from the rental discount into a savings account in the hope of paying down a mortgage deposit in as little as two years

To achieve this the  housing provider will discuss with you your savings goal prior to accepting you on the scheme and discuss how they intend to help you achieve your goals.They will  also explain how they will  review your savings goal regularly to ensure you are on track.

The key features of the product are:

  • Let at up to 80% of the equivalent market rent for that property, with a fixed rate of inflation.
  • The property would be let on an assured shorthold tenancy for a fixed term, up to five years, linked to (but not necessarily the same as) the required savings period. The period can be extended if you still want to buy but need a bit more time.
  • The tenancy can be ended, subject to the terms of your tenancy agreement and initial fixed terms being spent, at any point.
  • A savings plan will be put in place to help you raise a sufficient deposit to purchase on either shared ownership or equity loan terms within five years.
  • The housing provider will discuss with you their regular reviews to check your progress in saving for a deposit.
  • You can purchase on shared ownership or equity loan terms at any point in the tenancy, subject to still being eligible.

 

This information is up to date as of 27/12/2017

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Discount mortgages explained

Discount rate mortgages - Huuti

Discount mortgages explained

Discount mortgages are a type of variable rate mortgages. They work by being discounted a certain margin below a lenders standard variable rate mortgage. E.g 1% below the lenders standard variable rate.

discount rate mortgages - Huuti

Advantages if discount rate mortgages

 

  • If interest rates fall and your mortgage lender decides to reduce its standard variable rate, the interest rate on your mortgage will fall as well.

 

  • Discount rate mortgages usually have low arrangement fees

 

Disadvantages of discount rate mortgages

 

  • If interest rates fall your rates might not even move as unlike tracker rates the standard variable rate of a lender moves only at the mortgage lenders discretion.

 

  • The interest in your mortgage will always be below the mortgage lenders  standard variable rate till your discount mortgage term ceases.

 

  • If your discount mortgage term is only an introductory offer which lasts between 1-5 years. Once this is over you will then move on to the lenders standard variable rate which is much more expensive.This means your monthly mortgage  payments will rise.You need to be comfortable that you will be able to cope with the rise in your monthly mortgage payments.

 

  • Discount mortgages will usually have high early repayment charges which means you will not be able to remortgage your deal without high costs.If you manage to get a lifetime discount mortgage which means the discount will continue till the end of the mortgage term. In this case the early repayment charge will be reduced after an initial term based on your mortgage lender.

 

In conclusion

 

Discount mortgages are not always the best deal., A suitable fixed mortgage might represent better value. Consult the services of a suitable digital mortgage broker before continuing.

 

This information is up to date as of 26/12/2017

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What is a tracker mortgage?

What is a tracker mortgage - Huuti

What is a tracker mortgage?

 

A tracker mortgage is a type of variable rate mortgage  which follows the bank of England base rate. These are in contrast to capped rate mortgages where there is a maximum  cap on how much interest can be charged in  your mortgage and hence how high your monthly mortgage repayments can be. Tracker rate mortgages do not match the bank of e=England base rate exactly but rather they are the basis on which a margin is placed e.g England base rate plus 1.5% = tracker rate.

 

You can get a tracker rate mortgage for 1- 5 years or a lifetime tracker rate mortgage which will last the whole term of your mortgage. In most cases a lender will offer a tracker rate mortgage as an introductory offer for the first 3-5 years of the mortgage after which the interest rate will switch to a more expensive standard variable rate or another tracker rate with a higher margin

 

Tracker rate mortgages can have a positive or negative margin. So can be lower or higher than the base rate which they follow. Tracker mortgages which have a negative margin may also come with a collar rate which is a minimum rate to which the mortgage lender will allow the interest rate on your mortgage to fall.

 

Advantages of a tracker mortgage

 

Tracker mortgages are good if interest rates fall as these would provide you with significant savings. When you are on a standard variable rate and the interest rate falls it is not a certainty that your interest rates on  your mortgage will fall as the mortgage lender has a discretion on if to reduce the interest rate on your mortgage or not.

 

Arrangement fees for a tracker rate mortgage tend to be quite low.

 

Most mortgage lenders will offer a switch and fix feature which essentially allow you to switch to a fixed rate mortgage in their mortgage product suite if the tracker rate goes up to a level you cant cope with. They will allow you switch at no cost to you.

 

Disadvantages of a tracker mortgage

 

If interest rates rise you could find yourself in a position where you can afford your monthly mortgage repayments.

 

Due to how favourable tracker rate mortgages are they will usually have high costs to settle. E.g the early repayment charge

 

Tracker rate mortgages with collar rates will not allow you to fully benefit if interest rates fall

 

Tracker mortgages might not allow you to overpay on the mortgage as well.

 

Conclusion

 

Tracker rate mortgages provide good value. Seek the services of a digital mortgage broker to asses the best  tracker mortgage  market deals.

 

This information is up to date as of 25/12/2017

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95% mortgages explained

Huuti- 95% mortgages

95% mortgages explained

What is a 95% mortgage?

 

Just as it sounds,with a 95% mortgage you only get a 95% mortgage and have to  put down a 5% deposit. This means you will have a 95% LTV. As with the 100% mortgages this mortgage product was very popular before the financial crisis but has decreased in demand.

 

First time buyers who meet the mortgage lenders affordability criteria for a 95%  mortgage will be able to take one out.95%  mortgages can also be compared with other mortgage schemes such as the help to buy ISA and the shared ownership scheme.

To qualify for this mortgage you will need a good credit record and if not it might be worth taking steps to increase your credit file.

You will also need a good amount of regular income for lenders to consider you for this mortgage.Mortgage lenders will typically loan 3 times your income.

Advantages of the 95% mortgage

The advantages of the 95% mortgage is that the deposit requirement is low.

Disadvantages of the 95% mortgage

With a 95% mortgage you will barely own any equity in your property and if prices fall any more you will find yourself owing more on the mortgage than the property is worth.

95 mortgages explained - Huuti

In conclusion

 

Whilst 95% mortgages seem good you could find yourself in  a bad position if interest rates rose or property prices fell as you will either struggle to make the monthly repayments on your mortgage due to the high interest rates or you will be stuck in negative equity if property prices fall and hence no way to remortgage as your LTV will be very high.

 

This information is up to date as of 25/12/2017

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100% mortgages explained

100% mortgages - Huuti

100% mortgages explained

What is a 100% mortgage?

 

A 100% mortgage is one where you put no money down as a deposit and the lender gives you the whole property price as a mortgage. These used to be very common before the financial crisis but they are very rare now.

 

100% mortgages are very similar to guarantor mortgages as they lender will usually request some collateral upfront.Your guarantor will need to put their house down as collateral or a huge amount of savings in a bank account controlled by them.

 

Advantages of 100% mortgages

 

  • 100% mortgages give an avenue for first time buyers to get on the property ladder but these

Disadvantages of 100% mortgages

 

These mortgages are very risk

 

If property prices fall you will end up owing more than your property is worth( negative equity)

 

The interest rates on 100% mortgages are known to be very high

 

There are very few of these products and hence it will be hard to compare against other products

 

These mortgages are usually  expensive to arrange. The lender will also request a Mortgage indemnity guarantee which protects the lender in a case you default. This will be at a cost to you.

 

In conclusion

Although this mortgages appear cheap, they consequences might end up being way too much. Request the services of a good digital mortgage broker.You should also consider other mortgage schemes such as the help to buy equity loan and the shared ownership scheme.

 

 

This information is up to date as of 25/12/2017

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Capped rate mortgages explained!

Capped rate mortgages explained! - Huuti

Capped rate mortgages explained!

 

What is a capped rate mortgage?

 

A capped rate mortgage is a type of standard variable rate mortgage whereby a maximum interest rate cap is placed on the mortgage. If interest rates rise your mortgage interest rate cannot rise past the maximum capped rate.

 

If interest rates fall your lender might at their discretion reduce the interest rate on your mortgage.

 

Capped rate mortgages are usually part of an introductory offer to new borrowers as a way of enticing them on to a mortgage deal.

capped rate mortgages explained - Huuti

How do capped rate mortgages work?

 

Capped rate mortgages are the only mortgages aside from fixed rate mortgages where there is some guarantee on the maximum interest rate and hence the maximum monthly repayment on the mortgage.

 

Capped rate mortgages are usually unfavourable and hence the capped rate server as a way to get more borrowers on the product. Due to the capped rate the mortgage is also very costly to settle as almost all mortgage lenders will levy a high early repayment charge.This makes it hard to remortgage from this deal, even after the capped rate term has ended and you are most likely now on a high standard variable rate.

 

Some lenders will give you the option to also go on a tracker rate which follows the bank of England rate.

 

Advantages of capped rate mortgages?

 

You have a guaranteed maximum interest rate and hence monthly payment payment for a set period of time.

 

Disadvantages of capped rate mortgages?

Once the capped rate period finishes you will no doubt be on a more expensive rate.

 

The costs of settling the loan and remortgaging will be high. E.g early repayment costs

 

In conclusion

 

Capped rate mortgages do provide some value but be sure to fully compare them against other products on the market. A good digital mortgage broker will help you achieve this.

 

This information is up to date as of 25/12/2017

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Stamp duty break for first time buyers

Huuti- Stamp duty break for first-time buyers

Stamp duty break for first time buyers.

 

Stamp duty break for first time buyers.

 

So what is the stamp duty break for first time buyers?

 

The stamp duty break for first time buyers is a first-time buyer government scheme introduced by chancellor philip Hammond on December 2017 as a way to make getting on the property ladder more affordable for first-time buyers.

 

The stamp duty break for first-time buyers essentially exempts first-time buyers of paying stamp duty on the first £300,000 of any property worth up to £500,000.

 

The price of the home above £300,000 and up to £500,000 will be charged stamp duty at a rate of 5% for first -time buyers.

 

The stamp duty will only apply in Wales till April 2018 when twill  be dissolved and replaced with the land transaction tax.

 

The tax does not apply in Scotland as the stamp duty has been already replaced with the land and buildings transaction tax as of April 2015.

 

The stamp duty break for first time  buyers applies in Northern Ireland just as it does in the UK.

 

So who is a first-time buyer?

 

A first time buyer is anyone who resides in the UK and has never owned a property via any means. E.g inheritance, trust etc.

 

To be considered a first-time buyer the property you are buying must be for residential purposes.

 

Will the stamp duty break for first-time buyers really help?

Yes, somewhat but it doesn’t tackle the biggest issue of rising house prices which then results in higher deposit requirements. You should always consider other government schemes in tandem with the stamp duty break.

 

Other key points.

 

  1. If you have paid your stamp duty and should have claimed for a relief or break you can do so by following the guidance here-   Your solicitor will have to do this for you.

 

  1. Unfortunately if you have completed your home purchase by November 22nd 2017 you will not be eligible for the stamp duty break for first time buyers. This is the case even if you haven’t paid your stamp duty yet.

 

  1. The stamp duty break for first time buyers only applies for completed property transactions completed after 22nd November 2017.Completion of a property purchase is not define by the exchange of contracts. Seek specific advice on when you completed or would complete from your solicitor.

 

  1. If you are buying a shared ownership scheme you will have have to pay the stamp duty tax upfront to be eligible for the stamp duty break for first-time buyers

 

  1. The stamp duty break applies to both leasehold and freehold as long as the leasehold has a minimum of 21 years to run.

 

Further advice

If you have any questions about this change, please contact the HMRC SDLT Helpline on Telephone: 0300 200 3510 (from abroad +44 1726 209 042).

Read more

You can read more detailed guidance here.

 

 

 

 

 

This information is up to date as of 25/12/2017

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Help to save scheme: A quick guide

help to save scheme - Huuti

Help to save scheme: A quick guide

 

So what is the help to save scheme?

The help to save scheme is a government scheme aimed at helping low income workers or those on universal credit to save more and hopefully put that towards a mortgage deposit.

The scheme will offer over 3.5million people who save the maximum amount(£3600) will have  access to a bonus of £1200 over four years. The scheme is expected to be releases in October 2018.

 

help to save scheme- Huuti

How does the help to save scheme work?

 

You are able to save up to £50 per month for 2 years initially after which if you have saved the maximum amount you will qualify for a £600 bonus which is 50% of your current savings.You are then allowed to continue saving which would qualify you for another £600 bonus if you have saved the maximum amount over two years of £1200.

Your account can be managed via a GOV.UK account which will allow you to monitor transactions, check your balance and pay in money to the account.

You can withdraw your money at any time but this may nfact affect the size of your bonus after the 2 year period

 

Are you eligible for the help to save scheme?

To be eligible you will need to receive working tax credits or universal credit with an individual or household income of £542.88 in your last month before you apply.

If you qualify for the scheme and during your term your situation changes and you no longer qualify. You will still receive the bonus at the end.

 

How does it compare to other government schemes ?

The help to save scheme really will not help many first-time buyers get on the property ladder. And in comparison to other schemes the bonus received per year isn’t much. E.g the Lifetime ISA pays a bonus of £1000 per year in a maximum deposit of £4000.

The Help to save scheme is however targeted towards low income individuals or households. Those considering getting on the property ladder should look into government backed schemes such as the help to buy equity loan or the shared ownership scheme as a way of taking their first steps on the property ladder.

 

 

 

 

 

 

 

 

This information is up to date as of 25/12/2017

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Flexible Mortgages: A Quick guide

Huuti- What is a flexible mortgage

Flexible Mortgages: A Quick guide

 

What are flexible mortgages?

 

A flexible mortgage is a type of mortgage that could allow you to make overpayments, underpayments and take payment holidays without any additional cost to you.

Flexible mortgages are especially good as they allow you to overpay on your mortgage and save on interest rate payments.

 

Most flexible mortgages will include

  • Allow you to make Overpayments
  • Allow you to make Underpayments
  • Allow you to take Payment Holidays
  • Provide a  reserve account from which you can access overpayments you have made
  • Ability to offset savings and reduce the amount of mortgage debt you pay interest on

 

Advantages of Flexible mortgages?

 

Flexible mortgages give you the option to overpay or underpay which can drastically reduce

The cost of your mortgage.

 

Flexible mortgages allow you to manage your financial life especially in times when your financial situation becomes worse. You can take payment holidays at no cost to you

 

Disadvantages of flexible mortgages?

 

Flexible mortgages will usually have higher interest rates than typical mortgages due to their flexibility.

 

In conclusion.

Flexible mortgages sound like a great idea but watch out for the higher interest rates. Consult a good digital mortgage broker who will assist you compare all suitable products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This information is up to date as of 24/12/2017

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Cashback mortgages: All you need to know

Huuti- Cashback mortgage

Cashback mortgages: All you need to know

 

What is a cashback mortgage?

A cashback mortgage is a mortgage whereby the mortgage lender gives you a cashback upon successful completion of the mortgage. This offers are of course usually offered with mortgages which most borrowers are not interested in and for good reason. Cashback mortgages might have unfavourable terms and it is worth using a digital mortgage broker to fully understand.

The mortgage lender will let you know how much in cash back you will receive and  what will trigger the cashback.In some cases the lender will request you make your first mortgage repayment before they begin the cashback or usually the cashback will be paid immediately the mortgage has completed.

 

In some cases your bank will offer you a cashback mortgage where the cashback is done from  everytime you make a monthly mortgage repayment.

 

Are there any real benefit of cashback mortgages?

Yes, cashback mortgages can offer enough sum to recover the mortgage fees which you have paid initially. In some cases the lender will offer to pay your council tax for a set period of time or your stamp duty.

 

Disadvantages of cashback mortgages?

The interest rates on this products will of course be incredibly high and could end up costing you a lot of money than a similar mortgage product even with the cashback.

Cashback mortgages will also have high costs such as early repayment costs or long lick in  periods where you are stuck with an unfavourable rate for a long period of time. Cashback mortgages will also discourage overpayments by levying high charges of up to 5% on overpayments.

 

In conclusion

Cashback mortgages might seem like a good deal at first but you must always work out the full cost and compare it with similar products.

 

 

 

 

 

 

 

 

 

This information is up to date as of 24/12/2017

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Fixed vs variable rate mortgage

Huuti- Fixed vs variable rate mortgage

Fixed vs variable rate mortgage

 

What is a fixed rate mortgage?

A fixed rate mortgage is one where the interest rate is fixed for a set term. This could be 3, 5 or usually up to 10 years at the very maximum. The fixed rates are usually introductory rates offered to lock  new consumers in for a set amount of time. During a fixed rate mortgage the cost to settle(early repayment cost) the mortgage is usually at its highest. The fixed rates stay constant throughout their fixed period and give the borrower some stability in regards to predicting their monthly payments. However if interest rates fall the borrower will not benefit from this fall.IN the case interest rates rose a a borrower will however be protected from this increase in monthly payments throughout the fixed term.

At the end of the fixed rate mortgage the interest rate gets switch over to a variable rate. This will  either be  a tracker rate or a standard variable rate

 

Advantages of a fixed rate mortgage Disadvantages of a fixed rate mortgage
fixed rate mortgages give certainty over the monthly mortgage repayments. If interest rates go up yours wont. If interest rates fall you will not benefit from that fall as you would on a tracker rate mortgage.
Fixed rate deals give first-time buyers a certain means on the property ladder whilst they attempt to climb the career ladder and earn higher wages. The costs to settle a fixed rate mortgage are very high and the mortgage fees associated with getting a fixed rate mortgage are just as high

 

What is a variable rate mortgage?

A variable rate mortgage will either be a standard variable or tracker rate. This are mortgages that can either go up or down. A tracker rate mortgage is one which tracks the Bank of England base rate whilst the standard variable rate mortgage is set by the bank or mortgage lender and can be moved at their discretion.

The standard variable rate are loosely based on the Bank of England  base rate as they are usually one percentage point above.So you will see them  follow each other but unlike the tracker rate which is solely based on the bank of England base rate the standard variable rate can be move up and down at any time by your bank or mortgage lender based on the interpretation of economic affairs and their bottom line. Standard variable rates are typically the most expensive rates.

 

Advantages of a variable rate mortgage Disadvantages of  a variable rate mortgage
There are typically no early repayment costs and mortgage fees for  variable rate mortgages tend to be cheaper. Standard variable rate mortgages are known to be some of the most expensive although tracker rates are somewhat cheaper
If interest rates fall your monthly payment may fall if you are on an svr but will definitely fall if you are on a tracker rate. If interest rates rise your payments will almost  certainly rise and this could leave you unable to afford your monthly mortgage repayments

 

 

Final thoughts

This information is up to date as of 24/12/2017

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Interest only mortgage vs repayment mortgage

Huuti- Interest only mortgage vs repayment mortgage

Interest only mortgage vs repayment mortgage

 

What is an interest only mortgage?

 

An interest only mortgage is one where the monthly repayments are only inclusive of the interest payments whilst the capital is deferred until the end of the mortgage term. You will need to make arrangements on how you repay the capital at the end of the mortgage term. Interest only mortgages are very risky as if interest rates rise or house prices fall the debt on the property will be more than the property is worth which will make it hard for any remortgages. You should always seek professional advice before taking on an interest only mortgage.

 

What is a repayment mortgage?

 

A repayment or capital mortgage is where you repay the capital plus interest over the term of the mortgage in monthly repayments.

 

Your monthly repayments include both capital and interest. As you repay your capital, the interest you pay on your mortgage decreases. Initially most of your monthly repayments will go towards the interest on the mortgage but in time this settles off and becomes a similar  percentage of each.With a repayment mortgage you repay the mortgage in full by the end of the term and as you are slowly repaying the capital every month you begin to own more equity in the property and can remortgage to a better deal in a few years as you will have a better LTV than when you originally got the mortgage. In a scenario house prices have risen(your property price), you will even have a better LTV and hence better rates for you.

interest only mortgage vs repayment mortgage- Huuti

What are the key differences between the interest only mortgage vs the repayment mortgage?

 

Interest only vs repayment mortgages
Interest-only mortgage Repayment mortgage
Monthly payments? Your monthly payments will only include interest payments and no capital Your monthly payment will include interest payments and capital payments.
What happens at the end of the term? At the end of the term you will have to pay the capital in one lump sum. At the end of the mortgage term you will own the property in full.
What is the monthly interest calculated on? The interest is calculated on the capital which does not change throughout the term of the loan The interest is calculated on the capital which is constantly reducing as the monthly payments are being made which include  capital payments.
Are there any risks? At the end of the mortgage term you will have to repay the capital in one large sum. If interest rates increase then your monthly payments will increase and may become unaffordable.If the property price falls then you will be in negative equity and this means you will not be able to remortgage.Your home may be repossessed if you do not keep up on your monthly repayments. Your home may be repossessed if you do not keep up on your monthly repayments.

 

This information is up to date as of 24/12/2017

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Interest only mortgage: Quick guide

Huuti- Interest only mortgage

Interest only mortgage: Quick guide

 

 

So what is an interest only mortgage?

 

An interest only mortgage is a mortgage whereby the monthly mortgage repayments include only interest rate payments and not capital repayments. The capital is repaid at the end if the mortgage term in one lump sum. This is contrast to a repayment mortgage where you repay both the interest and capital over the term of the mortgage in monthly repayments.

 

Interest only mortgages are loved by buy to let investors as they do not have to repay the capital but simply the interest and this allows them to gain more short term income and asset appreciation.

interest only mortgage- Huuti

How does an interest only mortgage work?

 

With an interest only mortgage the lender will require you make separate arrangements for paying back the capital at the end of the term and the affordability assessments are different to those of a repayment mortgage.

 

An interest only mortgage is more risky as there is a large capital requirement at the end of the term. And whilst it might seem like a much cheaper option in the short term it is actually a more expensive option as you never reduce the amount of debt you have borrowed during the term of the mortgage and so you are paying interest on a constant debt amount rather than a decreasing debt amount with a repayment mortgage.

 

Is an interest only mortgage right for you?

 

In the past interest only mortgages were repaid with endowment policies but as the performances of these became worse it is now a less common method and probably will be rejected my a mortgage lender as a suitable repayment strategy.

 

The risk for most first-time buyers or investors with interest inly mortgages is that if the property price were to fall they will find themselves with negative equity and non way to remortgage  but rather stuck with a debt that is much larger than their property price.

 

Another big risk is the rise in interest rates which could skyrocket the monthly repayments and put first-time buyers in serious debt.

 

An interest only mortgage should only be taken where there is a credible plan to repay the debt and there is some plan to deal with a drastic rise in interest rates.

 

First-time buyers seeking interest only mortgages as a short term option should be very careful as they might find themselves with no home and lost property.

 

In conclusion.

 

Although interest only mortgages seem like a foot in the door for most first-time buyers and investors, the risks should be laid out before going forward. Suitable plans should also be out in place to mitigate the consequences of any fall in house prices or rise in interest rates.

 

Putting a large sum in a secure savings pot which can grow at the same or faster rate of interest which you are paying on your mortgage will go a long way to mitigate any risks down the road.

 

Older borrowers may also have the option to take a large sum out of their pension to pay for the interest only mortgage capital requirement at the end of the term.

 

In a worse case scenario the capital requirement could be paid of by selling the property. This of course only applies if the property price is higher than the outstanding debt and even at this it would have been a waste of time and money if your plan was to actually own a home.

Look at other mortgage schemes and use a suitable digital mortgage broker to assist you.

 

This information is up to date as of 24/12/2017

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Offset Mortgages explained

Huuti- Offset mortgages

Offset Mortgages explained

What is an offset mortgage?

 

An offset mortgage is a simple way of  using your savings to reduce the amount of interest you pay on your mortgage. Interest on an offset mortgage is calculated by subtracting the funds in the savings account from the  outstanding amount on the loan.

 

The funds in the linked account can be deposited by friends of family.

 

An offset mortgage can help you

 

  1. Pay your mortgage off quicker
  2. Reduce your monthly payments now or in the future

 

How does an offset mortgage work?

 

An offset mortgage works by linking a savings account to your offset mortgage. Interest is charged on the difference between your mortgage and the offset savings account. The more you deposit in  the savings account the less interest you have to pay. You can withdraw the funds from your savings account at any time as there is  no lock in period. This will ofcourse increase your interest payments.

 

Is an offset mortgage right for you?

 

It is worth getting advice before choosing an offset mortgage from a qualified digital mortgage broker.

 

  • An offset mortgage will not pay you interest on your savings and should really only be used when interest rate earnings on your savings will be less than the interest rate repayments you will have to make on your mortgage in the same time period.
  • You can get a fixed offset mortgage or a tracker rate.
  • You can repay the offset mortgage at any time but the same early repayment charges with other mortgages still apply.
  • An offset mortgage can be incredibly cheaper and allow you to pay off your mortgage quickly

 

In conclusion

 

Offset mortgages can be a key way to get more first-time buyers on the property ladder. Consider it!

 

This information is up to date as of 23/12/2017

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What happens after my fixed rate mortgage ends (Mortgage management)

Huuti- what happens after my fixed rate mortgage ends

What happens after my fixed rate mortgage ends (Mortgage management)

 

So what is a fixed rate mortgage?

 

A fixed rate mortgage is essentially a mortgage where the interest rate is locked in for a set period of time.This is usually done as an introductory rate discount to attract new first-time buyers and provides certainty on monthly payments if interest rates rise.  However if interest rates fall you will not benefit from this reduction in costs.

 

Fixed rates are different from tracker rates which move in line with the bank of England rate.

 

What you should do when your fixed rate mortgage ends:

 

Once a fixed rate mortgage ends you will usually move on to a standard variable rate. This rates are usually 3% higher than the fixed rate and can be increased or decreased at a lender’s discretion.

 

Remortgaging at the end of a fixed rate will usually get you to a cheaper rate by shopping you out to all current lenders who will see you good history of mortgage repayments(which help  boost your credit score)over the past few years and be eager to lend to you.

 

You can contact your lender first to see if they will offer you a  better deal but you will be better served with a mortgage management platform which will analyse your possibilities and the best lender to switch to for the ultimate savings.

 

Mortgage management platforms will look into your equity in your property, if your property price has increased and the LTV ratio you will be using to approach mortgage lenders. A lower LTV will give you cheaper mortgage rates and hence less monthly payments.

 

It is worth noting that you will have to pass a mortgage lenders affordability test again and this will heavily affect on what sort of rates you are offered. A good mortgage management platform will ensure your complete affordability always stays at is best to ensure you are always eligible for the best mortgage rates.

 

In some cases your lender might wave the mortgage fees associated with a remortgage as a way to get you to get a new mortgage with them.This might not always be best for you and a good mortgage management platform will be able to analyse your total savings by comparing all possible outcomes.

 

What is a mortgage management platform?

 

A mortgage management platform is an AI powered hub which monitors your current mortgage to ensure you never overpay on your mortgage. It looks into factors such as your property price, your equity in your home, the cost of switching, your early repayment charges if any, your current mortgage including term & rate  and provides insights on several possible outcomes where money can be saved in monthly mortgage repayments.This is a free service provided by your digital mortgage broker. This is an AI assisted service where a broker will notify you as soon as savings can be made.

 

In conclusion

 

You should always be on the lookout for mortgage savings to avoid overpaying on your mortgage.

 

This information is up to date as of 23/12/2017

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Let to buy mortgage: Quick guide (Mortgage management)

Huuti-Let to buy mortgage

Let to buy mortgage: Quick Guide (Mortgage management)

What is a let to buy mortgage?

Let to buy mortgages are mortgages where a borrower rents out their current property and uses the proceeds to qualify for another mortgage.Doing this means a borrower will need to change their current mortgage to a buy to let mortgage and then get a residential mortgage. Borrowers may get a let to buy mortgage for a variety of reasons including;

 

  • They think their property is a good investment
  • They don’t want to miss out on their new house
  • Its a bad market to sell and they don’t want to lose money
  • Borrowers struggling to find a new mortgage deposit for their homes may remortgage their current home to extract funds and then use a let to buy mortgage to increase their mortgage  affordability

 

How does a Let to Buy mortgage work?

 

As described above a Let to buy mortgage allows you to remortgage your current property to extract cash for a mortgage deposit and then rent out the property to cover its costs and the cost of your new mortgage.

 

Some lenders will allow you to rent out your property on a residential mortgage for a short period of time after which you will need to switch to a buy to let mortgage.Buy to let mortgages usually require a larger deposit(30%+) and are usually more expensive than residential mortgages.Your rent will need to cover your mortgage repayments on the buy to let mortgage.

 

Where can I get a Let to buy mortgage?

 

Contact a good digital mortgage broker who will be happy to assist and point you towards the right lender.

 

Let to buy vs buy to let:

They are both similar but don’t expect lenders to have similar affordability assessments.The only differentiation is that a buy to let is when you want to simply buy out a property for rental gains while rent to buy is a situation where you have a residential property you which to convert to a buy to let for a short, medium or long term whilst you acquire another residential property.

 

Conclusions

The let to buy mortgage  can provide great value but it is worth thinking about how it changes your tax status and the  legal responsibilities of a landlord

 

 

 

This information is up to date as of 23/12/2017

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Bad credit mortgages? A quick guide

Huuti- Bad credit mortgage

Bad Credit Mortgages? A quick guide

What is ‘bad’ credit?

If your credit score is low, Most lenders will not offer you a  loan. Your credit score could be low because of missed repayments in the past, no credit history or filing bankruptcy. This makes you appear less  favorable amongst lenders as you seem less likely to repay the loan.

 

What is a bad credit mortgage?

 

Bad credit mortgages don’t exist. In fact, the mortgage affordability assessment of a bad credit mortgage is the same as any. They are only termed as bad credit mortgages due to the fact that the applicants will most likely fail credit checks with most mortgage lenders.

 

The term adverse mortgages or subprime mortgages allow first-time buyers with little or no credit history to get on the property ladder.Bad credit mortgages usually have high-interest rates but after a few years of paying their mortgage in time, a first-time buyer will be able to remortgage to a better deal as their credit score will have likely increased in this time.

 

So can you get a mortgage with bad credit?

Due to the risk of bad credit borrowers, the interest rates are incredibly high and the mortgage lender will usually request a larger mortgage deposit.Due to the nature of bad credit mortgages, the borrower will not qualify for any first-time buyer mortgage schemes such as help to buy equity loan or the shared ownership mortgage scheme if they have been declared bankrupt within 6 years.

 

To qualify for the schemes above You will need a large deposit- 15% minimum and your credit file will need to be okay with no defaults or bankruptcy.

 

How do you get a bad credit mortgage?

 

First, check your credit score.It might need some boosting!

Secondly, follow a pre-mortgage application guide.

Thirdly, seek the services of a well known digital mortgage brokerage to assist you.

Most digital mortgage brokers will know what mortgages will suit your situation and will prevent you from applying to too many lenders and making your credit situation worse after being rejected.

Your digital mortgage broker might recommend specific mortgage products such as a guarantor mortgage which allows a third party to guarantee your mortgage repayments and potentially allow the first-time buyer to be offered a mortgage with cheaper interest payments.

 

As a first step you should always try to improve your mortgage affordability so you become more eligible for cheaper mortgage rates.

 

In Conclusion:

  • You’re considered a bad credit risk if you have a thin credit file, a history of defaulting on your debts or you’ve been adjudged bankrupt.
  • Mortgage lenders will offer you a mortgage even though your credit might just meet their affordability assessment but they will charge you high-interest rates.
  • Making regular repayments on your mortgage will allow you to remortgage for a better deal as your credit file will be better after continuous repayments.
  • Don’t make too many mortgage applications in a short space of time. This will damage your credit file and potentially reduce your credit score.

 

 

This information is up to date as of 23/12/2017

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What is the Right of First Refusal? (Freehold)

Huuti- What is the Right of First Refusal? (Freehold)

What is the Right of First Refusal? (Freehold)

“If you want to sell the freehold of a property containing flats, as a landlord you are legally obliged to offer the freehold to the qualifying tenants before disposing of it. To do this you must provide any qualifying tenants with the Right of First Refusal (‘RFR’).

RFR is served in the form of a Section 5 Notice. It is a written notice that notifies tenants of your intention to sell and the price the freehold is being offered for. RFR is provided by Part 1 of the Landlord and Tenant Act 1987 (the 1987 Act) as amended by the Housing Act 1996.

RFR is only applicable if the freehold contains at least two flats, no more than 50% of the building is in non-residential use, and more than 50% of the flats are held by ‘qualifying tenants’*.

What are the consequences of not providing notice?

It is a criminal offence to sell a freehold without first offering RFR to the qualifying tenants as it is a breach of the obligations set by Landlord and Tenant Act. Not providing the proper notice to tenants can result in criminal conviction and a fine of up to £5,000.

Following the disposal of a freehold, the leaseholders have the right to demand information on the sale, and the option of forcing the new landlord to sell the freehold to them at that price, if the landlord did not comply with their obligation to offer RFR.”

Fore more information on the right of the first refusal please see https://www.lease-advice.org/fact-sheet/right-first-refusal/  and https://www.lease-advice.org/advice-guide/right-first-refusal/#

 

This information is up to date as of 23/12/2017

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Freehold vs Leasehold; A deep dive

Huuti- Freehold vs Leasehold

Freehold vs leasehold; A deep dive

 

There are several means of home ownership, these include freehold, leasehold or leasehold with a share of the freehold.

freehold vs leasehold- Huuti

So What is freehold?

 

A freehold is where you own the property outright and are completely responsible for its maintenance. If your property is mortgaged, you ofcourse don’t own it outright as the mortgage lender still has an interest in it.

Advantages of having a freehold property:

  • You own the whole property
  • You have no lease holder cost such as ground rent or maintenance
  • You don’t have to deal with a freeholder (a landlord) because you are the freeholder!
  • You don’t have to pay ground rent, service charges or other landlord charges.

 

Buying a share of a freehold

 

You can own a share of the leasehold if at least half of the leaseholders agree to buy in.

This will mean you can extend your lease with much ease and control costs.

 

To do this you will need to serve a section 23 notice to your landlord.Be mindful as this might be quite an expensive process and you might need legal advice.In most cases, you will need to set up a company or have a  managing agent to manage the building. For more specific information about buying a share of the freehold see The Leasehold Advisory Service website.

 

If the majority of leaseholders in the building get together, you can collectively exercise your ‘right to manage’ – i.e. to appoint new managing agents.  Or you can collectively try to buy the property from the landlord.This is known as ‘collective enfranchisement’. Each flat then owns a ‘share of freehold’. You manage the maintenance and insurance of the building yourselves, and there is no need to ever again renew the lease

 

So What is leasehold?

With a leasehold, you essentially own the property for a fixed amount of time and when this ends the ownership is then transferred back to the freeholder except you can extend the lease.

 

Before you buy a leasehold property you should consider how many months are left on the lease and how this might affect you getting a mortgage. You should also consider any costs such as service charge.

Mortgage lenders will prefer to lend on a property where there is another 25 years after your mortgage term will finish or the intended finish date of your mortgage term.Mortgage lenders will usually stay away from leasehold properties that have less than 70 years left to run.

 

Benefits of a leasehold property:
  • There is less responsibility with this tenure type because the freeholder has to maintain the common parts of the building which can include entrance area, staircases, lifts, exterior walls, roofs, and gardens.
  • You can extend the lease for up to 90 years after you have resided in the property for 2 years and are a qualifying tenant.To be a qualifying tenant your original lease would have had to be for 21 years or more.If any issues arise during this process you can take your case to the leasehold valuation tribunal.

 

Disadvantages of a leasehold property:
●There are costs  such as maintenance fees, ground rent and other charges which you must consider. You can lose the lease( the property) f you do not pay these charges.
The leasehold property of course diminishes in value as the term of the lease decreases.
●You must seek the freeholder’s permission before making any changes to the property.You will also not be allowed to sublet and may be guided b a set of rules throughout your tie at the property.

 

So what is the difference between a Freehold and a Leasehold?

 

Freehold vs leasehold: what’s the difference?

With a freehold, you own the whole property and the ground beneath it whilst with a leasehold the ownership reverts back to the freeholder after your lease term expires.

 

 

Final thoughts

You can extend the lease or buy the property from the freeholder. This is not cheap option and you may require legal advice.

 

 

Flying freehold

Flying freeholds are a bit more complicated.  For example, if part of your home extends, because of the way the properties were divided, over land owned by your neighbor, this could result in a flying freehold.  Take legal advice from a conveyancing solicitor on how this might affect you.

 

 

This information is up to date as of 23/12/2017

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Gazumping insurance? Homebuyer protection insurance? Quick read.

Gazumping insurance- Huuti

Gazumping insurance? Homebuyer protection insurance? Quick read.

 

What is Gazumping?

 

Gazumping occurs when a seller pulls out of a sale at the very last moment and accepts a higher offer from a different buyer.This leaves the initial buyer with loss of upfront costs such as mortgage fees, conveyancing fees, and a property survey cost.

 

Note; Gazumping insurance and Homebuyer protection insurance are the same thing.

 

What is Gazumping insurance or Home buyers Protection Insurance?

Gazumping insurance essentially covers you in the event the seller pulls out of a sale. You will be able to get a payout to recover some or all of the upfront costs of buying the home. Gazumping insurance is usually purchased once an offer has been accepted on a property but at the very latest within 2 weeks of conveyancing work starting on the property.The cover can last up to 6 months from most providers. Gazumping insurance costs up to £70 in most cases and is paid upfront, not in installments.

 

Gazumping or home buyers protection insurance will cover you as long as you reside in the Uk and the property you are buying is within the UK.

 

Gazumping insurance will not pay out for retrospective costs hence costs incurred before the insurance was purchased.Gazumping or home buyers protection insurance will also not pay out for situations caused by you e.g you decide you no longer want the property.

 

What does Gazumping insurance or home buyers protection insurance cover you from?

Gazumping insurance essentially covers you from a  few scenarios but this is all dependant on the insurance provider.

 

The main scenarios include

 

  • Discovery of negative factors in the conveyancing process or property survey
  • When a seller accepts a higher offer and leaves you with unrecoverable costs
  • Seller pulling out of the transaction for a variety of reasons such as a chain transaction failing. E.g the seller couldn’t move into their new home because the seller couldn’t get a mortgage to buy a new home.
  • Mortgage lender insisting on ratification work or Mortgage lender valuation is lower than the property offer the seller accepted.

 

Do you really need Gazumping insurance?

 

Well, that’s really up to you but with thousands of pounds on the line, a £70 Gazumping insurance might represent great value.

 

This information is up to date as of 23/12/2017

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Gazumping! What is it? And how do you avoid it?

Huuti Gazumping

Gazumping! What is it? And how do you avoid it?

 

 

What is Gazumping?

 

Gazumping is when a seller accepts an offer to sell from a buyer but then towards the end of the process accepts a higher price from someone else. Gazumping can also be when a seller requests a higher price towards the end of the transaction process.This is usually bad for the first-time buyer as they lose out on some costs which they have incurred already such as mortgage fees and conveyancing fees.

 

 

 

Is Gazumping Legal?

Well,  gazumping certainly isn’t illegal and although a bit unfair, It is very much legal and there is nothing a first-time buyer can do to get recourse.

This is simply because, until exchange of contracts, there really is no binding agreement in place. Verbal agreements! I hear you scream. Yes, verbal agreements are not strong enough to secure the property and so a seller is fully within their right to walk away from a verbal agreement to sell at any time until the exchange of contracts.

 

Before contracts are exchanged you will usually employ the services of a conveyancer to carry out searches on the property and then manage the exchange of contracts.This is truly the crucial part of the home buying process as it tends to make or break a sale.If conveyancing takes too long a seller might begin to shop for a better offer with other buyers and as a result gazumping could end up being a first-time buyers fate. To prevent this it is recommended to use a conveyancer who technology plays a key part in their day to day work. This will at least give you some confidence that typical communication delays or ancient methods of doing things will not cost you your first home.

 

Another reason for Gazumping could be the real estate agents who desire to take as much profit in commission from the property and therefore will continue to market it even after a buyer has been found in the hope that they get a better price for it and therefore a higher commission for themselves.

 

Gazumping doesn’t necessarily mean a higher offer has been accepted. The seller might just have run out of patience with you or the process and accepted a buyer at an advanced stage of the home buying process.

 

How to avoid Gazumping?

Ensure the seller takes the property off the market; The easiest way to avoid gazumping is if the seller has agreed to take the property off the market and instructed their real estate agent to stop seeking more buyers.This will indicate a level of seriousness to you from the seller.

 

Swift actions.

We have already mentioned getting a conveyancer who understands how swift things have to be and use technology to ensure they are as efficient as possible.Your conveyancer might also be able to assist you in getting insurance which would cover you in the case of being gazumped.

If You want to get a property survey you must also consider do this well in advance to prevent any further delays and of course to allow you negotiate prices if need be.You can find suitable surveyors here.

 

 

Agreement in principle.

Getting a mortgage or agreement in principle not only marks you as serious to the seller but of course speeds things up once you have an offer agreed.

 

 

Finally, You could get an exclusivity agreement.

This is a binding agreement between you and the seller which stipulates that the seller cannot negotiate with anyone during a set timeframe whilst you continue the buying process. This prevents you from being gazumped during that time frame but ultimately the seller can just delay the process and still end up gazumping you after the agreement comes to an end.The agreement works by both the seller and buyer paying a percentage of the property price e.g 1%. This amount will be lost by any party who tries to back out of the agreement or ignores the agreement.There will also be some conditions at which the price can be shifted or negotiates e.g survey reports or search reports.

 

The future.

The Communities Secretary, Sajid Javid has announced a call for evidence to improve the experience of house buying and selling, making it ‘cheaper, faster and less stressful.He plans to prevent sellers from walking away from a home sale after a certain point.There is some hope after all!

 

This information is up to date as of 22/12/2017

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What is Gazanging

Huuti- Gazanging

 

What is Gazanging?

 

Every conveyancer will tell you they dreamt up the word “Gazanging”.

 

Gazanging is a new problem faced by over 50,000 home buyers each year. It is the term used to describe when a seller abruptly pulls out of a house sale usually towards the end of the process. This leaves the buyer with costs which cannot be recovered such as solicitors costs, mortgage fees and general expenses. In most cases it also leaves the borrower with a mortgage offer  which they then need to quickly find a property for before the offer expires.

 

This usually occurs when sellers who don’t really intend to sell but rather intend to see how much they could realistically get enter the market. In some cases a seller will inflate their property price in the hope a buyer will come and make an offer. At this stage the seller should inform the buyer that they really do not intend to sell but this rarely happens and eventually ends up leaving prospective buyers & first time buyers out of pocket.

 

So what can you do to avoid gazanging as a first-time buyer?

 

The first step when you meet a serious seller is to ask them t take the property off the market and off all marketing websites. This is a stipulation most serious sellers will adhere to. In some cases and for good reason a seller will not agree to this until you can prove serious intent to them.

 

  • A good conveyancer will also go a long way to reduce the chances of gazanging happening to you. This is because they will be fast and will carry little costs of the sale didn’t go through.These are referred to as no sale no fee conveyancers.Over 15% of sellers get nervous with slow conveyancing and this can contribute to the likelihood of gazanging. It worth noting that regardless of how fast your conveyancer is, if you are in a chain: hene your seller is waiting on their conveyancer to check the home they want to buy or waiting on the conveyancer of their sellers home to check another home. This will  of course be completely out of your hands..

 

 

  • Over 30% of sellers will usually not find an “appropriate home” to move into, so it is worth asking the seller what plans they have in regards to that and how far they are. This will allow you to gauge their level of seriousness.

 

  • Look for a property where the seller will not need to buy  – some real estate agents now advertise properties with no onward chain separately. This could include:
    • repossessions – but they usually want a quick exchange
    • executor’s sales, where the owner has died
    • owner emigrating or moving into a nursing home
    • buy a new house – fewer new homes are being built, but it is often possible to buy properties that are already completed, rather than having to wait months for builders to finish them.
    • buy at auction – the sale date is fixed

 

Goodluck!

 

This information is up to date as of 22/12/2017

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Right to Buy Scheme: Do you qualify?

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Right to Buy Scheme: Do you qualify?

 

So what is right to buy?

 

The right to buy scheme allows council tenants to buy their homes at a discount price if they have been council tenants for a minimum amount of time.This scheme has also been piloted for council housing association tenants.This scheme was initially introduced by  Margaret Thatcher.right to buy

 

The scheme applies for people who;

 

  • Who don’t share any rooms with people outside your household
  • It is your main and only residence
  • A legal contract exists between you and the landlord
  • Your landlord has been a public sector landlord for at least 3 years, which necessary doesn’t have to be consecutive.
  • If your home was owned by the council previously  and they sold it to another landlord whilst you were living in it, you may still qualify for the Right to Buy scheme. This is called ‘Preserved Right to Buy’. Ask your landlord if this applies to you.

 

You can make joint applications or applications with family members who have lived with you for the preceding 12 months.

This is especially good for first time buyers who will not be able to afford a mortgage deposit in most of England.

 

The scheme is only available in England. The welsh Government plan to cease the scheme from operating by 2021 and the discount available is half the size as in the UK. The scottish government has ceased operating the Right to Buy scheme.

 

The right to buy scheme extended

The right to buy scheme has been piloted to be extend to all housing association tenants. This scheme will allow housing association tenants to receive the same benefits as council tenants and make it easy for more people to get on the property ladder.

How does the Right to Buy scheme work today?

 

Right to Buy is available to tenants of council authorities, registered social landlords with secure tenants, fire authorities, passenger transport executives, Government Departments, the NHS and most  public bodies.

The Right to Buy scheme allows tenants  who have lived in their accomodation for a minimum 3 years to buy their home at a minimum discount of 35% of the  property value.Tenants who have had occupancy for more than 5 years will receive an additional discount of 1% for every extra year up to a maximum discount of 70%.This discount rises to 2% for those who have lived in flats. The maximum discount is £78,600 across England and 104,900 in London boroughs.

To begin the process contact your landlord after which you will need to fill in an application form to start the process.

 

Can I get a  Right to Buy mortgage?

 

You should firstly be aware that you will not receive any housing benefits  once you become a homeowner. There is no specific mortgage for a right to buy scheme. The mortgage process is the same and you will need to meet the affordability criteria set by the lenders as well as have a suitable mortgage deposit to purchase a property under the right to buy scheme.Always check your credit score as it might need a little boosting before you apply for a mortgage.Try a right to buy calculator to see what your costs are likely to be. Costs like stamp duty, conveyancing costs, property survey costs are definitely worth considering before thinking of a mortgage.

Don’t forget, If you buy a flat you will be responsible for ground rent and maintenance.

 

For more detailed information on eligibility and exceptions to the Right to Buy you can download Your Right to Buy Your Home – A Guide (PDF).

 

The future of Right to Buy

Voluntary Right to Buy pilot

The Government announced in the Autumn Budget 2017 that there will be a voluntary right to buy pilot. More details will follow in the coming months. You can view the Housing associations which were involved in the pilot below.

 

Housing association Local authority areas
L&Q London boroughs:

  • Croydon
  • Enfield
  • Greenwich
  • Haringey
  • Lambeth
  • Lewisham
  • Newham
  • Southwark
Riverside
  • Liverpool City Council
  • Halton Borough Council
  • Knowsley Metropolitan Borough Council
  • Sefton Metropolitan Borough Council
  • St Helens Metropolitan Borough Council
  • Wirral Metropolitan Borough Council
Saffron South Norfolk District Council
Sovereign
  • Cherwell District Council
  • West Oxfordshire District Council
  • Vale of White Horse District Council
  • South Oxfordshire District Council
Thames Valley
  • Guildford Borough Council
  • Hart District Council
  • Runnymede Borough Council
  • Rushmoor Borough Council
  • Woking Borough Council

This information is up to date as of 13/12/2017

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Getting A Mortgage In Principle: 2-minute guide

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Getting  A Mortgage In Principle: 2-minute guide

 

What is a Mortgage In Principle?

 

A mortgage in principle is the second step in the Mortgage process, It comes right after checking your credit score to understand your current affordability.Sometimes your credit score will need a boost before you can even consider visiting a digital mortgage broker.

 

A Mortgage in principle, also known as an agreement in principle is essentially a guide on if a lender will loan to you and how much it will loan on your desired property. This gives you much authority in the property market. You can get a mortgage in principle by visiting a digital mortgage broker. The Mortgage in principle is given to you based on specific lender criteria. It usually involves a credit check and basic affordability checks. A digital mortgage broker will be able to provide you an affordability report in the first instance before you even apply for a mortgage or agreement in principle.

 

Once you have had an offer accepted on a property you can then go ahead to make a full mortgage application to the mortgage lender.

 

How long will a mortgage in principle last?

 

A mortgage in principle will last between 60 to 90 days on average.You should not apply for multiple mortgages in principles as whenever they are generated a lender will most likely do a hard credit search on your credit file and too many of these will appear negative.

 

Using a mortgage calculator will assist you in understanding your affordability before even inquiring with a digital mortgage broker.

 

What will you need for a Mortgage in principle?

  • You will need proof of your income
  • You will need your address history

 

PROS

  • A mortgage in principle will make you look serious amongst other buyers
  • A mortgage in principle will let you know if a lender will consider you

 

CONS

  • A mortgage in principle does not reflect on what sort of rates or monthly payments you will eventually qualify for when you apply to receive a mortgage offer from a mortgage lender.
  • There is no guarantee the lender will give you a mortgage

 

Conclusion

Mortgage in principles have lost their value as of recent. A digital mortgage broker should always be your first point of contact when considering a mortgage as they can figure out your mortgage affordability quicker and with no detrimental effect.

 

This information is up to date as of 13/12/2017

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Property Survey report: A 3 minute guide

Property survey report- Huuti

Property Survey report: A 3-minute guide

 

What is a home or property survey report?

Home surveys allow you to ascertain the true value of a building and any potential structural issues.It is usually carried out before exchange of contracts and in some cases insisted upon by a mortgage lender to be carried out before a mortgage offer is made.

property survey report

 

Who does the home or property survey?

The home or property survey should always be carried out by a qualified surveyor who is an active member of the Royal Institute of Chartered Surveyors( RICS) or the Residential Property Surveyors Association(RPSA).

 

Why should I get a home or property survey?

As with anything a home or property can come with expensive surprises.

Getting a home or property survey will allow you to negotiate prices with the seller for a better deal or decide if you really want the property based on its condition. It will also give you an insight into what your home insurance costs will be and allow you to evaluate if to go ahead or not.A home property is different from the work a conveyancer will carry out as it is more focused on the structural part of the home rather than the legal.

Old properties, properties with timber frames and listed properties seem to be at most risk of issue. Most lenders will insist on a basic valuation report before giving you a mortgage offer to ensure they are not lending on a risky asset.

 

What should I do if I discover issues in my home or property survey?

Your report might find issues and this is fairly normal.

 

  • Find out if you are covered by any guarantee
  • Check replacement costs and get quotes from different builders.
  • Renegotiate with your seller now you have costs in hand

 

What are the types of home or property survey?

When buying a home it is usually recommended you get a home or property survey but there are many different types of surveys. Here are a few and how they can help you.

 

A Royal Institute of Chartered Surveyors Homebuyers Report(RICS)

This is a more focused and detailed report that highlights specific structural problems such as damp.The survey will not be so detailed whereby the surveyor will move things around but rather one where he will simply observe what is in plain sight(such as unregulated builds or structures)and compile a report as well as any repair, maintenance, and replacement costs.This survey usually comes with a property valuation to give you an idea of if you are overpaying or getting a good deal(Keep that to yourself now!).

 

A Royal Institute of Chartered Surveyors Report(RICS)

This is a basic report that does not go into detail but simply ranks the property with a traffic light system. The ranked areas give you an insight into if further investigation is needed.

 

A Mortgage Lender’s Valuation report

A mortgage lender’s valuation is not a  house survey.

It’s carried out on your mortgage lender’s behalf and you usually pay for it. It serves to highlight any major known issues the property has as well as give some insight into the properties true value by confirming an independent valuation. This allows the lender to assert how much to lend to you in relation to their valuation of the property.

Your Mortgage lender will request this report before they make you a mortgage offer so its a cost you will incur before you get any real confirmation that you can qualify for a suitable mortgage product. This is why a good digital mortgage broker is essential to guide you through this part.

 

A Royal Institute of Chartered Surveyors  Building survey(RICS)

This survey is hands down the best and most detailed survey available. It goes into detail on the properties structure and condition. The surveyor will spend a few hours looking into every corner, removing floorboards, going into the roof, investigating any issues or red flags and at the end, he/she will compile a report on the repair cost, replacement cost, and maintenance cost. The surveyor will give you advice on what to do next.

 

SAVA conditional home survey

This is similar to the Rics HomeBuyers report However it does not include a market valuation. You can download an example of a SAVA home condition survey here.

 

New Building snagging survey

This survey is essentially for new homes to ensure they are structurally sound and to allow the buyer to get recourse from the property developer. Issues such as structural or small cosmetic issues should be given to the property developer before you move into the property so they can be sorted quickly and under your two-year developer warranty.Every new home buyer should consider this survey.

 

 

 

Conclusions

You should always consider a property survey as its benefits far outweigh the cost. A local surveyor with local knowledge will be better and seek advice from your digital mortgage broker in regards to what surveyors/surveys are best suited to certain property types. E.g  listed properties might be more suited for a RICS homebuyer report etc.

 

 

This information is up to date as of 13/12/2017

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Can I overpay on my Mortgage? (Mortgage Management)

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Can I overpay on my Mortgage?

Yes, In most cases you can overpay on your mortgage. Mortgage overpayment simply means paying more than your lender sets as your monthly repayment. You can pay this in a lump sum or by simply paying more every month.

 

Here are the benefits:

 

  • You save more on mortgage interest payments than you will earn on interest by leaving the money in your account
  • You don’t pay interest on the amount you overpay
  • You will owe less on your mortgage and own more equity in your property quicker.
  • You will shorten your mortgage term

 

Overpayment on your mortgage isn’t always the best idea though.

 

  • Some lenders will restrict you to 10% overpayments per year and fine you for any extra overpayment. The fees can be between 1-5% of the amount overpaid.
  • Overpayments might be costlier than remortgaging as you might end up overpaying at a higher rate than you would if you had remortgaged first and gotten a cheaper rate due to a lower LTV and your mortgage affordability increasing.

 

So when you should you overpay

 

  • Overpayments should be made in line with when your lender charges you interest(the most interest). This might be daily, monthly or quarterly. You can time your payments to be made a day or 2 in advance of when the interest rates are charged.

 

And when should you not overpay

 

  • Your lender might not allow overpayments and fine you.
  • If interest rates are higher than your mortgage rate interest charges then your money is better served in an appropriate savings account.
  • If you have other debts with higher interests rates then you are better off clearing these debts first.Mortgages with flexible fixtures such as offset, current account mortgages or those with a borrow-back facility will allow you to overpay and then borrow the money back without any penalty.
  • Overpaying should really only be done when you have spare disposable income in case of unexpected emergency costs.
  • Don’t have a pension? You might want to consider https://www.pensionbee.com/ for a start.

 

The aim of Mortgage overpaying

Mortgages repayments are calculated using the amount you owe, the term of the mortgage and the interest rate the mortgage is charged at.

 

Mortgage overpayments simply mean paying more than your lender stipulates as the monthly payment. The aim of this is to reduce the amount of interest rate payments you have to make towards the mortgage. Mortgage overpayments can be done in one large sum or in regular overpayments. To see how much you can save please use a mortgage overpayment calculator.

 

Steps to overpaying on your mortgage:

 

  1. Call your lender and inquire about overpayments. Ensure you understand your limits.

 

  1. Your lender will give you the option to reduce your term or your monthly payments.Always choose to reduce your term if not your overpayment might be less effective.Be clear to your lender that all your overpayments should go towards reducing the term of your mortgage.

 

  1. You can then set up a standing order to your mortgage account to overpay each month

 

Conclusion:

Always seek professional advice from a digital mortgage broker before overpaying. Mortgage management platforms such as ours will automatically suggest ways in which you can save the most money on your mortgage and notify you.We use a combination of Incredible algorithms and smart mortgage managers.

 

This information is up to date as of 10/12/2017

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New Build Mortgages: 3 minute guide

Huuti- New build mortgage

Mortgages for New Build homes: 3-minute guide

Applying for a  new build mortgage?

Getting a mortgage for a new build can be tricky especially for flats. Problems can arise with completion time for the new build and this can spiral costs. New builds are especially awkward due to the demands of the property developers. E.g Developers can place strict deadlines on the exchange of contracts which restrict lenders from carrying out proper due diligence and eventually leads to the mortgage offer collapsing.Some property developers expect the exchange of contracts to be concluded within 28 days!

new build mortgages

 

Timing is also a key issue when applying for a new build mortgage. As most new builds aren’t completed and you will have to get your new build mortgage early to avoid any delays. The risk then becomes that your mortgage offer(usually valid for 6 months: although some lenders will give extensions) will expire before the property is completed or a drastic change in the property e.g its price changes or structural changes. This could mean the lender withdraws its Mortgage offer.

This could then leave you with a situation where you have entered into an agreement to purchase with no means to do so and most likely already accumulated some mortgage costs.

 

Apart from these facts to consider, applying for a new build mortgage is very similar to applying for a mortgage but here are some more key differences to consider which some lenders might impose.

 

Key facts for New Build mortgages

 

 

  • Developer cashback offers: Some developers will offer cachbacks to reduce the cost on the buyer. Lenders will consider these cashbacks up to a certain amount and make necessary adjustments on how much they loan.

 

  • New build mortgage deposit: New build mortgage deposits usually range between 15-20% which means most first-time buyers will have to put a lot down before they can even consider a mortgage. The good news is Government backed mortgage schemes such as the Help to buy equity loan can reduce the amount of deposit a first time buyer will need upfront to 5%.Always seek advice from a digital mortgage broker to see how this scheme might affect you further down the line.

 

  • New home build Guarantee: New home build mortgage lenders will expect to see a 10 year NHBC or Zurich certificate guarantee before they lend. Different lenders might have a more  lenient or severe requirement. Your digital mortgage broker will know of these and advise you accordingly.

 

  • Future resale value: All lenders are concerned about future resale value. This is for your sake and for theirs in the case they have to repossess your home and sell it to recoup what you owe them. For this reason, lenders will have different criteria on what sort of buildings they will not lend on. E.g buildings in commercial areas

 

  • Reservation fee: Some developers might ask for hundreds if not thousands of pounds in reservation fee to hold the building for you. If you fail to close on the building you may lose your reservation fee.

 

  • Shared ownership New builds: Shared ownership is not available on all new builds so do get in touch with your local authority who will provide more guidance.

Goodluck with your shopping and remember your home may be repossessed if you do not keep up your mortgage repayments!

 

This information is up to date as of 10/12/2017

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What is a Guarantor Mortgage?

Guarantor mortgage - Huuti

What is a Guarantor Mortgage?

A guarantor mortgage (also described as a family or springboard mortgage)guarantees you will repay your mortgage by appointing a guarantor such as a family member to take on full responsibility if you fail to make your regular payments.

In a scenario where you default on the mortgage, your guarantor will be responsible for paying the whole mortgage debt in full. In some cases, the lender will place a time limit or an amount to which the guarantor will be liable.

guarantor mortgage

 

How do Guarantor Mortgages work?

A guarantor mortgage will allow a first-time buyer to borrow up to 100% of a property value (100% LTV )as long as their guarantor guarantees a minimum 75% of the mortgage. A guarantor mortgage will usually rely on the guarantor placing their property as collateral against the mortgage. Their property could then be repossessed to recoup any losses the lender might incur due to the borrower defaulting on the mortgage.

The cost of a guarantor mortgage is the same as with any other mortgage. The same mortgage fees apply.

 

Guarantor mortgages are good for people with

 

Who can be a guarantor?

A mortgage guarantor can be a family member or occasionally a close friend but different lenders have varying policies on this.

A  guarantor will need to:
  • Have a good credit score
  • Own assets which can be liquidated to cover the cost of the mortgage in case of a default

Other Alternatives( Guarantor mortgage alternatives)

 

There are other alternatives aside from a guarantor mortgage which may assist in getting first-time buyers on the property ladder, they include:

 

Flexible family mortgages:

The family mortgage is a scheme offered by the family building society, it assists first time buyers who have a 5% deposit with three options.The family building society will then provide a 95% mortgage.

 

  1. A family member can put 20% or more in a savings account which pays interest.This serves as a collateral for the mortgage.This helps reduce the amount of interest a borrower has to pay although they still get a 95% mortgage.
  2. A family member can place a value of the mortgage in an offset savings account which reduces the amount of the mortgage which interest is charged on.This is also known as a family offset mortgage.
  3. A family member can use some of the equity in their property as collateral for the mortgage.This is also known as the family deposit mortgage.

 

Final thoughts

 

Guarantor mortgages are very risky and hence both parties must always seek advice from a digital mortgage broker before applying for a guarantor mortgage. There are other mortgage schemes which can assist in getting a first-time buyer on the property ladder including the Help to buy ISA and the shared ownership scheme.

 

This information is up to date as of 10/12/2017

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Japanese Knotweed and your Mortgage

Japanese Knotweed- Huuti

Japanese Knotweed and your Mortgage

Japanese knotweed has been ruining homes and mortgage aspirations for quite a while now but just what are they

Huuti- Japanese Knotweed

What is Japanese knotweed?

 

Japanese knotweed was introduced into the Uk as an ornamental shrub but soon began destroying properties by destroying tarmac, destroying other plants, blocking or breaking drains etc. It can grow up to 7 meters high and 3 meters deep.Due to its very destructive nature, it can reduce a property value immensely.

 

What does Japanese knotweed have to do with mortgages?

 

Due to its nature as a property wrecker.Japanese knotweed can drastically reduce a properties value, grow into neighboring properties and cause damage which you may be liable for and hence lenders tend to steer clear of properties with Japanese knotweed.

 

The damage a Japanese knotweed could cause to a property will reduce a lenders appetite for it as the cost of repairing the damage might put a borrower in debt and worse off devalue the property if the damage becomes substantial. This, of course, means the asset a lenders mortgage is based on might be worthless. A nightmare for any asset-backed lender.

 

Most lenders will decline a mortgage application if Japanese knotweed is found during a property survey or in a neighboring property from the property you want to buy. They will request a full evaluation of the property and assurances that the Japanese knotweed is gone and at least by 7 meters away from the property before they lend. They will also want a minimum term(e.g 10 years) insured guarantee from a suitable professional eradication specialist.

Each lender has their own policy on Japanese knotweeds so it is best to speak to an established digital mortgage broker to get suitable advice on what lender will most likely accept a property with Japanese knotweed. So yes, you can get a mortgage with a property infested with Japanese knotweed but it will need substantial work and might cost more including the standard mortgage fees.

Your conveyancer may request you to take out indemnity insurance to help the mortgage complete if the property has a history of Japanese knotweed. The indemnity insurance will provide protection for you and could cover the cost of any legal defense against neighbors, the cost of a survey report and cost of treatment and eradication of the Japanese knotweed.

 

Treating Japanese Knotweed

 

Treatment for Japanese knotweed can be incredibly expensive.You should report Japanese knotweed as soon as you find it and inform your neighbors they might assess their properties too for any signs of the knotweed. Home insurance which includes Japanese knotweed will be very useful in scenarios where they knotweed continues to persist and would have cost you thousands in eradication costs. Some lenders who lend on properties with a history of Japanese knotweed may choose not to give you a mortgage if you can’t find suitable building insurance which covers Japanese knotweed.

 

 

This information is up to date as of 09/12/2017

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What is Mortgage porting

Mortgage porting- Huuti

What is Mortgage porting

 

Porting is the process of moving your mortgage from one property to the other. Although the process is described as such, porting usually involves paying off your mortgage with the sales proceeds of your home and then starting a new mortgage on your new property with the same terms and lender. Porting your mortgage might not always represent the best value so be sure to shop around first.

mortgage porting

 

So what are the fees involved with mortgage porting?

 

Porting your mortgage avoids most but not all of the typical mortgage origination fees but you may also be liable for an early repayment charge if you are still within your introductory rate period. You may also be liable for an exit fee and new mortgage origination fees based on your lender.

 

Will I qualify for mortgage porting?

 

Due to the new mortgage market review affordability requirements have changed and are now much stringent. This means you might not qualify for a mortgage if your credit score is low (you can boost this )or your general mortgage affordability isn’t at a satisfactory level.

 

It is worth checking your current mortgage affordability before applying to port your mortgage. If you find that you won’t qualify then it is best to boost your affordability before applying to port to avoid a rejection.

 

You can always port your mortgage to a cheaper property or a more expensive one but this will be all based on if you pass the affordability check for the amount you want to mortgage. If you want to move to a more expensive property and your lender refuses to loan you any more than you currently borrow you might need to find the extra amount and pay it down as a deposit.

 

There are other reasons why you may not qualify for porting, they include:

  • The lenders’ affordability criteria has changed
  • The lender cannot borrow you more as it has reached its individual lending limit
  • The lender can port you but you will have to get a second mortgage to fill the gap on the more expensive home you want to move to. Be aware that if the introductory periods end at different times; your monthly payments will sharply increase.
  • You might be able to borrow from your current lender but at a higher rate due to economic situations changing since your initial mortgage.

 

When porting your mortgage it is always advisable to seek the services of a credible Digital mortgage broker.

 

This information is up to date as of 09/12/2017

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Mortgage Conveyancing: A 3-minute guide

Huuti conveyancing

Mortgage Conveyancing: A 3-minute guide

 

What is conveyancing?

Conveyancing is a legal process undertaken by a solicitor, lawyer or legal professional who specializes in property.This process can often take weeks or even months in the UK.This could be due to things such as an unverified source of mortgage deposit, remortgages, survey delays, title and search delays.

Another thing which can increase the conveyance time is the “chain”. A chain exists when a buyer has to sell their home or a seller is buying a new home and all transactions are dependant on each other.

 

In a scenario where you don’t need a mortgage to buy a property, conveyancing can be incredibly quicker due to a lot of the mortgage delays vanishing.

 

To ensure you conveyancing gets handled efficiently and in the quickest time possible you will need to hire a suitable conveyancer from a firm where technology is as much a focus as the quality of work. If the solicitor does not have a conveyancing quality scheme then you should think twice.

Technology will play a key role in informing you with updates and making the process faster. It will also reassure a seller as they will know things are moving on forward.

Ensuring you hire a suitable Digital mortgage broker will enable your mortgage funds to be in place on time and avoid that being a source of delay.

 

So to recap

 

  • Hire a suitable conveyancer
  • Technology is key
  • Use a reputable digital mortgage broker

 

Whats included in a conveyancing fee

 

Conveyancing fees will include the cost of hiring the conveyancer as well as costs which are not paid directly to the conveyancer but are part of the conveyancing(these are called disbursements) such as search costs, stamp duty, and land registry fees.

Ensure this costs are included in your quote and are VAT inclusive before proceeding to avoid getting blindsided.

If the property purchase falls through some solicitors offer a “’no move, no fee’ deal. Be sure to confirm this is included before hiring a conveyancer and ensure disbursements mentioned above are included in this deal.

 

So how does conveyancing work?

Once you receive and sign a letter of engagement from your solicitor, your conveyancer will inform all parties involved that they are now working on your case.

 

  • After receiving the memorandum of sale your conveyancer will review the property information form and then begin searches on the property.

 

  • If they are satisfied they will then confirm the mortgage details with the lender.

 

  • You conveyancer will then request you to sign the contracts and then begin the exchange of contracts process.You lender will usually require you to have building and contents insurance before signing the contracts. Once the contracts have been exchanged the sale becomes legally binding.

 

  • Your deposit is then sent to the seller’s conveyancer or solicitor after which you will need to pay your conveyancer.After your payment has been received your conveyancer will draw up a transfer deed which you will sign for completion.

 

  • And then its completion, this will require your conveyancer ensuring nothing goes wrong at this point after which keys are dropped off and you can get into your new home.

Complain about your conveyancer

If you are not satisfied with the service you have received from your conveyancer then the Legal Ombudsman or the  Law Society will welcome your complaints and take any necessary action.

 

This information is up to date as of 09/12/2017

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What is Negative equity(Mortgage) and what does it mean for your home

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What is Negative equity(Mortgage) and what does it mean for you

 

So just what is negative equity?

Negative equity is simply when you owe more on your property than its worth.This can be for a variety of reasons but it’s usually caused by falling property prices.There are over 500,000 properties in negative equity in the UK, especially in Northern Ireland where 2 out of every 5 bought after 2005 is in negative equity.

 

What does Negative equity mean for you?

You won’t be able to move houses or buy a new house on a mortgage when your current one is in negative equity. Except you can generate the shortfall in equity by increasing your sale price or using your savings to cover the shortfall.

 

A Mortgage  Lender will also not offer you a remortgage on the property as at things stand you are already in negative equity and essentially in debt.

 

However, there are some Mortgage lenders who will accept borrowers with negative equity. A few mortgage lenders will accept borrowers with negative equity by lending over 100% LTV against your property. This will be incredibly costly and may only serve to put you in more debt.

 

Negative equity and LTV(Loan to Value)?

 

Firstly Loan to value simply means how much you owe on your property in regards to its value. E.g you owe £500k on a £1m property. The loan to value is 50%. In negative equity you owe more than the property is worth so e.g you might owe £600k and the property is worth £500k, therefore, your loan to value is 110%.LTV is always more than 100% for negative equity.

 

What causes Negative equity?

 

Negative equity can be caused by a few things(even when you are paying your monthly mortgage payments every month), they include:

  • Dipping house prices: Unfortunately even when you are doing everything right, a dip in house prices could leave you owing more on your mortgage than your property is worth. This is especially true for borrowers on interest only mortgages as they do not repay the capital but just the interest on the mortgage over the mortgage term.If property price dip slightly these borrowers are at more risk due to their huge debt not being repaid. Borrowers who borrow the maximum amount and pay a minimum deposit which in turn leaves them  with a high loan to value e.g 95% are of course at a great risk of negative equity if property prices fall.

 

 

  • Missed mortgage payments: Missing payments can ofcourse put you at risk of negative equity but you will need to have an already high LTV  and be doing either of the above or below for any real risk.

 

 

 

  • Borrowing on your mortgaged property: Taking a second charge mortgage or a home improvement loan secured on your home could put you in negative equity by pushing your LTV up.

 

 

How to get out of negative equity?

 

Wait it out: You can simply continue paying your mortgage and wait It out if your negative equity came as a direct result of your property price falling and not you missing payments or taking on extra borrowing.Negative equity will only become a real problem when you want to move homes and sell your current property or remortgage.

 

Pay it off: You can simply use your savings(or borrow- but do get financial advice before taking on any extra debt commitments) to make overpayments on your mortgage to prevent negative equity. Check with your lender to see if you will be allowed to make overpayments. In any case, if you find yourself in a serious debt position you might want to contact the citizens’ advice bureau. You won’t necessarily have to pay it all of in one go, in some cases lenders will allow you to sell your home and make regular payments towards the negative equity still owed on the previous mortgage.

 

Negotiate your lender: Some lenders will agree to extract the negative equity and bundle this in an unsecured loan which you can then payoff without it affecting your property by being secured against it. The lender might even write off the debt but be sure to inquire about the consequences of this for you and any future borrowing. Some lender actions such as this will be negatively marked on your credit score which might make it harder for you to be accepted for a mortgage in the future.

 

Rent out your home: You can rent out part of your home to generate more income to pay off the negative equity. Be sure to advise your lender as this could violate the terms of your mortgage.

 

This information is up to date as of 09/12/2017

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Shared ownership(Mortgages): A breakdown

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Shared ownership(Mortgage) scheme: A breakdown

 

 

So What exactly is Shared Ownership?

Shared ownership is a government scheme to get more first-time buyers o the property ladder. It works by allowing you to buy a share of the property(25-75%) and then paying rent on the rest. The rent you pay is charged at a discount rate and the properties are usually leasehold properties which means you pay ground rent which covers maintenance, insurance etc.You can then go on to buy more additional shares or equity in your property by doing what is known as staircasing. You, of course, will pay less rent as you own more of the property after staircasing.

 

To be eligible you will need:

To have an annual maximum household income of £80,000 outside London and £90,000 in London and a monthly income which is at least 65% more than the cost of the shared ownership property you intend to purchase. This, of course, depends on the price of the property and how much you want to purchase(which will directly affect the rent you pay).

 

So whats involved?

Well, you have to pay rent on the percentage of the property you don’t own. You will also have to pay a monthly service charge and ground rent as you will do in a lease. You can decorate the house as you please but anything that might alter the value of the property such as home improvements should be check by the housing association or property developer who owns the rest to ensure they agree.

You will also be only able to sell your share of the property but of course, you will still benefit in any rise in property value since you bought it. You can’t just sell the property to anybody, the person must be approved by the Shared ownership scheme.

 

You won’t be allowed to rent or sub-rent your shared ownership home.

 

How do I apply for the shared ownership scheme ?

For brand new Shared Ownership homes, you must first apply through the regional Help to Buy Agent for the area the property is located in. You must complete the application with them first, so they can check you meet the main eligibility criteria. You would then browse properties that you are eligible for, contact the provider and then the buying process begins!

 

 

Share ownership schemes are not all rosy, here are typical complaints from people in shared ownership homes.

shared ownership- Huuti

  • Increasing your ownership can be costly

This is because you essentially have to get another mortgage to cater for the cost of buying more shares. The mortgage fees as well as other costs you need to put into consideration when staircasing can amount to a lot.

  1. Stamp Duty: You might be liable for stamp duty
  2. Solicitor costs: These will prove essential to understand your current obligations and then amend the agreement once the staircasing is complete.
  3. Valuation costs: You will need to get a property valuation from a qualified surveyor registered with the Royal institute of chartered surveyors.

 

  • Ownership restrictions: Your housing association or property developer might place restrictions on how and when you can purchase extra shares in your shared ownership home. Always check before you sign on the dotted line. An investment n a solicitor will likely save you a lot of headaches further down.

 Your  Housing association or property developer might also place restrictions on how you decorate or what you can do to the property. Always consult them before making any structural changes as this might violate the terms of your agreement.

 

 

  • Issues when selling your home

 

 

Selling your home can come with a few problems.

It might be difficult to get rid of your property due to it being a shared housed home. Your housing association or property developer will likely have the right of first refusal on your property(even if you have purchased 100% of the property). This will insist you wait a certain period of time for them to find a buyer before you can sell it on the open market. This isn’t where the delays stop as you will need to find a buyer who is eligible for the shared ownership scheme and is able to get a shared ownership mortgage.

 

 

You could also face being in a position of negative equity as new homes usually include an extra premium on the sale price that, like a new car, depreciates as soon as you move in. If house prices fall, you may fall into negative equity.

 

 

  • You don’t have greater protection under shared ownership

Your rights have not increased due to shared ownership so make your payments on time and follow the terms of your agreement.

 

 

 

 

This information is up to date as of 08/12/2017

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Staircasing(Mortgages): What is it ?

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Staircasing (Mortgages): What is it ?

To explain staircasing(mortgages) we must first explain shared ownership.

So What is Shared ownership?

People who can afford for an outright mortgage on a property can opt to buy a proportion(25%- 75%) of the property and pay rent on the remaining to the housing association or property developer who owns the building.

 

In most cases, after you have lived in the home for a minimum period of time (as stated in your agreement) you can then purchase more shares of the property(usually in 10% increments). This will allow you to own more of the property and pay less rent consequently. It is called “staircasing” and is usually only allowed 3 times on each agreement or property you have a shared ownership scheme. It’s always a good idea to consult a legal assistance before attempting staircasing to ensure you understand your rights and obligations in full.

staircasing mortgage - Huuti

 

What are the terms of staircasing?

Staircasing will usually depend on the lease agreement you have with your property developer or housing association. Ensure you check before you proceed.

The typical requirements include:

  • Shared owners may purchase the entire property with a maximum of 4 steps including the initial purchase. This means you can only staircase on a maximum of 3 occasions to acquire the whole property.

 

  • The  valuation carried out on a property will be valid for 3 months and must be carried out by a RICS(Royal  Institute of Chartered Surveyors) personnel approved by the property developer or housing association.The report must also be accompanied by two comparable property valuations.
  • Any additional equity purchase must be at the current market value of the property when purchased.
  • The shared owner must pay any rent or service charge owed during and up until completion of the staircasing.
  • The valuation costs, legal fees and any , mortgage fees including those brought about as a result of the developer or housing association disputing the valuation report will be the responsibility of the shared owner.
  • The conditions surrounding the staircasing will depend on the terms of the  lease.
  • The leaseholder is required to buy a further share of a minimum of 10% and in multiples of at least 5% above this percentage except in the third and final share which would take the shared owner’s equity up to 100%.

 

 

Is  staircasing good?

Staircasing allows first time buyers to get on the property ladder and then purchase their home in increments as their incomes rise.The rent being paid whilst on a shared ownership is subsidized (& much lower than rental rates) and therefore creates an interesting alternative in comparison to just renting outright.

 

 

  Shared ownership allows you to become a 100% owner thereby allowing you to benefit from  any house price increases.

  • By staircasing you reduce the amount of rent you have to pay.
  • If you own your property outright (become 100% owner) you can sell your property at any time and to anyone rather to those who need to be approved and registered for the scheme.
  • If you sell your home you will get to take a higher proportion  of any increase in house prices

 

 

 

 

 

 

 

This information is up to date as of 08/012/2017

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Stamp duty in the UK: A brief history

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Stamp duty in the UK: A brief history

So how did Stamp duty come about?

Stamp duty was born in 1694, It was used as a means to finance the war against France. The plan was for it to last 4years but fast forward to 2017 and it is still present.

At this point, the lowest SDLT band was £60,000, meaning anyone purchasing a property over this amount was required to pay the tax. However, in 2005 this was raised to £120,000, increasing to £125,000 the following year.

So what’s wrong with the Stamp duty land tax?

Although tax breaks have been put in place to assist first time buyers, the stamp duty brackets are not reviewed regularly in line with rising house prices and income. This, of course, leaves families struggling to move up the housing ladder.

 

History of Stamp Duty Taxes

Although the history of stamp duty goes back to the 1600s the current system for house purchases was largely introduced in the 1950s. Below are the historic rates and property threshold limits for homes in the UK.

 

The Stamp duty tax was extended to property sales in 1808 and its present-day  history goes something like this:

 

Historical Rates

The changes are effective from the date shown.

13th March 1984

The following rates covered years 1984, 1985, 1986, 1987, 1988, 1989, 1990, and 1991.

Rate Charge Band
0% Up to £30,000
1% Over £30,000

20th December 1991

As the country went into recession  Chancellor Nigel Lawson increased stamp duty bracket and push demand for properties.

Rate Charge Band
0% Up to £250,000
1% Over £250,000

20th August 1992

Those rates were then put back to initial figures as demand picked up.

Rate Charge Band
0% Up to £30,000
1% Over £30,000

16th March 1993

The basic threshold was then doubled again to stay in line with rising house prices.

Rate Charge Band
0% Up to £60,000
1% Over £60,000

Fast forward to 17th March 2005

The base threshold was then doubled again to avoid pricing out first-time buyers from the property ladder.

Rate Charge Band
0% Up to £120,000
1% Over £120,000 and under £250,000
3% Over £250,000 and under £500,000
4% Over £500,000

Rates from 25th March 2010

To again further assist first-time buyers and keep up with the property ladder, the rates were introduced as 0% for properties up to £250,000 and other bands remaining the same.

 

Rates from April 2010

A new rate is introduced for homes over £1,000,000. up to 31st December 2011.

Rate Charge Band
0% Up to £125,000
1% Over £125,000 and under £250,000
3% Over £250,000 and under £500,000
4% Over £500,000 and under £1,000,000
5% Over £1,000,000

Rates from 1st January 2012

The first time buyer rate is taken away.

Stamp Duty structure changes-  Structure from 3rd December 2014

Stamp duty is now only payable on the portion of value of the bracket it falls into. Effectively, the first £125,000 of a property purchase is completely free of tax. The next £125,000 is payable at 2% (or £2,500) etc.

Rate Charge Band
0% Up to £125,000
2% Over £125,000 and under £250,000
5% Over £250,000 and under £925,000
10% Over £925,000 and under £1,500,000
12% Over £1,500,000

 

The stamp duty as of today.

 

The latest budget now exempts first-time buyers from paying a stamp duty land tax on any property worth up to £300,000 and then 5% on properties worth £300,001 up to £500,000.

.

How do you pay your stamp duty?

Once you have completed on your home purchase, your solicitor will complete your stamp duty land return and submit it to HMRC within 30 days. You will typically pay your stamp duty on the property price but it can also be based on the total cost to you for obtaining the property e.g estate agents cost. This includes any purchase of the contents of the building except it falls below £100.

You may also be liable for Stamp duty land tax if you are receiving shares of a property even without exchanging any money. Always consult your solicitor on the matter and seek legal advice if necessary

 

This information is up to date as of 08/12/2017

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Are you thinking about buying a property and worried about your stamp duty obligations? Let us know your thoughts, experiences  or questions in the comments

 

Why Mortgage applications have not succeeded

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Why Mortgage applications have not succeeded

Whilst researching the industry we were constantly told how complex lenders criteria could be and why it was going to be a pain to work with them. During this research, we heard many peculiar examples of why people were denied, even when they had more than enough money for a mortgage deposit in some cases.

Fresh from the lenders who denied them, here are 5 weird reasons people were denied their mortgage applications.Stay away from these to boost your mortgage chances.

Having a dodgy lift

This tends to be a problem exclusively for tower blocks and council flats as they can frequently require lift maintenance which, in the eyes of the lender can affect the property value.   

Because of your Ex Boyfriend/girlfriend

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It’s common to hear someone carrying emotional baggage from a past relationship, but what about financial baggage?

In some relationships people prefer to have joint credit and bank accounts, creating a financial link between them. However once separated they may still have these existing links to one another. So any negative actions they take also affects the other. Meaning if their credit score is bad, then it is likely going to make yours worse than it should be.You should not re-apply and consider ways to boost your credit score.  And only re-apply when your credit score is good enough for the Mortgage you are applying for.

 

Being aged over 40

Huuti- Mortgage rejection

Lenders will be sure to scrutinize every aspect of your application to verify your suitability to pay back the loan and your age is not exempt in this!

It was previously found there is a pattern between unsuccessful mortgage applications and your age. It is a concern for them if your mortgage loan continues into your retirement. As chances are you will be less likely to keep up with the payments.

Online Gambling

Lenders are not fond of seeing you taking risks with your cash, whether you are a high roller or just a humble beginner. Seeing consistent deposits into specific gambling sites can harm your application as lenders like to be as risk-averse as possible. We recommend staying as far away from online gambling as possible, before and during your application…

There are a variety of reasons why applications could have failed but your best bet of avoiding a failed application and a negative impact on your credit file due to being rejected by a lender is to engage the services of a great mortgage broker, Understand the mortgage basics and take full advantage of every mortgage schemes such as the help to buy equity loan that could reduce the Lender’s perceived risk in you.

 

This information is up to date as of 23/09/2017

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When remortgaging becomes a must do!

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When remortgaging becomes a must do!

 

Mortgages are the biggest debt most of us will take on in our lifetime. So it makes perfect sense for us to be constantly on the lookout for ways to reduce the amount of interest we have to pay. A smart way to do this without FOMO(Fear Of  Missing Out)  is to plug your current mortgage into a Mortgage management and switching service which will compare all the variables concerning your mortgage and let you know when to switch to a cheaper deal which could save you thousands of pounds per year.

There are a few times when remortgaging is a bad idea But let’s take a look at the few times when remortgaging is a must:

 

Huuti- remortgage
    • You want to overpay: In a scenario where you want to overpay it might be worth looking into remortgaging and using the overpayment as an additional deposit. This will work especially if your current Lender does not accept overpayments or the overpayment limit is incredibly less than the amount you want to overpay.  By doing this you will essentially reduce your loan size and be eligible for a much cheaper rate as your LTV will fall.
  • Your house value has risen: This is always a good time to remortgage as you essentially have reduced your loan to value and will fall into a cheaper LTV bracket and hence be eligible for cheaper rates. Be careful not to rush things as your new Lender must agree with this new rise in value for any of this to go through smoothly.
  • Your fixed rate introductory phase just finished: This is another good time to remortgage as you could potentially be walking straight into a high SVR due to your introductory period ending.It is worth checking if there are cheaper rates than you are currently on and if the exit fees and early repayment charges outweigh the benefit of switching. Mortgage management and switching services should handle this for you.They will indicate if switching is worth it and with which lender and product.                                                                                                   
  • You want a flexible mortgage: Flexible mortgages might allow you miss payments, combine your savings account as an offset mortgage or even bring in a guarantor which may allow you to borrow more.Flexibility might, however, come at a cost so be mindful of this.                                                                                             
  • You are on a variable rate: Variable rate mortgages move along with the interest rate set by the bank of England. If you are worried that interest rates are going to rise or there has been some indication by the bank of England that the interest rate is going to rise then moving to a fixed deal might be a good idea. Be sure to check with your current Lender first as this might be the cheapest option.                                                                                                                                     
  • You want to borrow more: borrowing money from your current mortgage lender is common for things such as home improvements and buying  a new car. Your lender will ask to see evidence of what the money is being used for and may reject your request if they don’t feel comfortable.In this case, you can always remortgage to a new lender.You should always consider the fees the new lender will charge you for a new mortgage.

Remortgaging should always be planned weeks, if not months in advance. As it involves the same steps you took when planning a mortgage. Your credit score is critical and you must check this to ensure it is good enough.If it isn’t then taking steps to rectify it.

This information is up to date as of 25/09/2017

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Considering a remortgage? Let us know your thoughts  or questions in the comments

 

Mortgage Loan to Value

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Mortgage Loan to Value

You will often hear the term  LTV (loan to value) ratio. This is the percentage of the property value you’re loaned as a mortgage – in other words, the proportion you’re borrowing in relative to the property value.

Huuti- Loan to VALUE

To calculate this, simply subtract your deposit/equity as a percentage of the property value from 100%. So if you’ve got a £50,000 deposit on a £250,000 home, that’s a 20% deposit. This means that you owe 80%- so the LTV( Loan to Value) is 80%.

Similarly, if you’re remortgaging, and you own 40% of the value of your home, you’ll need a remortgage deal for the remaining 60% – this is your LTV.

The loan to value format is easily understandable and can be applied for mortgages or REmortgages.

LTVs are not just affected by the amount you put into a house, but also by house prices. E.g by owning a house, you’ve invested in an asset where the price moves(hopefully up).

A practical example: let’s say when you first bought, you had a £50,000 deposit on a £500,000 house – that meant you owed £450,000 at the start. That’s an LTV of 90%. After a few years you’ve paid a little off and now owe £250,000. You’re ready to remortgage and the house’s value is the same, so your LTV has become 50%.

Yet if the house is now also worth more, say £750,000, then your LTV is around 65% (as it’s £250,000 divided by £750,000 multiplied by 100). This means you’ll be likely to get a much better remortgage deal. However, if the house’s value had dropped to £400,000, you’d now owe more than it’s worth (negative equity) and you’d be unable to remortgage as you have no equity in the asset( your house)

Huuti Mortgage Loan to value

Loan to value bands are usually affected by your affordability hence your credit score and your net monthly income to start.If your credit score needs a boost, see here.

Tip: The LTV bands displayed by mortgage calculators can be really deceiving. Always check with an actual broker or lender for more viable figures.

This information is up to date as of 23/09/2017

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Still confused? Let us know your thoughts  or questions in the comments

 

The True cost of remortgaging explained

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The True cost of remortgaging explained:

As important as remortgaging is, One must always be conscious of the fees involved with remortgaging.

remortgaging explained

We break it down into two bits:

  1. Costs of leaving your current mortgage
  2. Costs of getting a new Mortgage

So what are the costs of leaving your current Mortgage:

Exit fees: These are the fees you pay to the Lender on clearing the debt of a current mortgage in full before the initial term.It is also known as a “deeds release fee”.It is, in essence, an admin charge and some lenders do collect this payment at the beginning of your mortgage. If you are charged an exit fee when paying off a current mortgage then it is worth checking that you haven’t already paid it at the beginning.

You should also refer to your key facts illustration which will have more specifics on how much you will be paying and other relevant information regarding the exit fee.

In summary:

  • How much? 1%-5% of your outstanding mortgage
  • When do I pay? If you exit your current tie-in deal early
  • Who do I pay? Your existing lender
  • Will I always have to pay this fee? No
  • Do I need to pay upfront or can I add it to my mortgage? Either

Early repayment charge: Early repayment charges are as they imply, charges for paying early. This charges usually reflect when a borrower(you) have overpaid more than your agreed monthly amount. This is, of course, the case when you end your loan agreement as you essentially settle the debt in full by overpaying the outstanding debt in a shorter time frame than agreed thereby denying the current lender of interest earnings. This charge is usually implemented where introductory offer deals are given to borrowers and can be especially high if you are still in the introductory offer phase of your mortgage.It is also prominent for fixed rate mortgages.

The early repayment charge can either be paid by funds you have or by increasing the mortgage you are getting from your new lender.

To avoid paying the early repayment charge you can usually simply wait until the term which the charge covers has passed and then remortgage.

Just be aware that increasing the loan size to cover the cost of this charge will increase your loan-to-value ratio, which could push you into a more expensive band.

In summary:

  • How much? 1%-5% of your outstanding mortgage
  • When do I pay? If you exit your current tie-in deal early
  • Who do I pay? Your existing lender
  • Will I always have to pay this fee? No
  • Do I need to pay upfront or can I add it to my mortgage? Either

Costs of getting a new mortgage:

Arrangement or product fee: This is usually added to the mortgage for illustration purposes and spread over the term of the loan so as to reflect the true cost of the mortgage and make it easy to compare.

Lenders will usually give you the option to pay that fee upfront or add it to the loan. Be aware that adding it to the loan will incur interest charges on that fee for the lifetime of the loan.

But a swift way to outsmart the lender on this occasion is to overpay on your monthly payment for your mortgage in your first few months as lenders typically allow you to overpay 10% of the outstanding debt per year.

In summary:

  • How much? £0-£3,500
  • When do I pay? Either on mortgage application or add it to the loan
  • Who do I pay? Your Lender
  • Will I always have to pay this fee? No
  • Do I need to pay upfront or can I add it to my mortgage? Either

Valuation fee:

This fee you paid when you get a new mortgage.This fee is sometimes covered by your new lender or if it isn’t you can pay between £200-£500.

Lenders always carry out a valuation on the property but in a remortgage, it could be less strict and therefore cheaper.

In summary:

  • How much? On average £200-£500
  • When do I pay? When you apply (often together with the mortgage booking fee and mortgage arrangement fee)
  • Who do I pay?  new lender
  • Will I always have to pay this fee? No, most lenders will pay it for you.
  • Do I need to pay upfront or can I add it to my mortgage? Pay upfront

Booking fee

Some lenders may charge a mortgage booking fee to secure a fixed-rate, tracker or discount deal – it’s sometimes also called a non-refundable application fee or a reservation fee. It usually ranges around   £200-£400.

In summary:

  • How much? £100-£200
  • When do I pay? On mortgage application
  • Who do I pay? Your new lender
  • Will I always have to pay this fee? No, not all lenders charge them
  • Do I need to pay upfront or can I add it to my mortgage? Pay upfront

Solicitor fee-

To transfer deeds and change the name on a property legal work is required. Your solicitor will also carry searches out on the property to ensure everything is fine. Most remortgaging deals will usually offer a free solicitor package so you may not have to pay for this.

In summary:

  • How much? Usually around £300
  • When do I pay? Could be anytime during the remortgage
  • Who do I pay? Your solicitor
  • Will I always have to pay this fee? No. Usually, your new lender will pay
  • Do I need to pay upfront or can I add it to my mortgage? Pay upfront

This information is up to date as of 21/09/2017

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The Mortgage Jargon Buster: Quick guide

Huuti Jargon Buster

The Mortgage Jargon Buster

Mortgages are confusing and so are the terms used to describe key things. Always ensure you understand everything on a mortgage contract before agreeing to it.As a first time buyer, it is vital to understand the mortgage basics, the mortgage schemes, if your credit score is good enough for the mortgage you want, mortgage fees and what to do to boost your mortgage prospects.

APR: APR is the Annual Percentage Rate on the total charge of the loan. This helps us to understand the interest rate and lets us easily compare how much we will pay different rates.Your APR is usually dependant on what LTV band you sit in.

Bank of England Base Rate: The Bank of England Base Rate is the rate that other banks and building societies have to pay for loans taken out with the Bank of England. These rates then have an effect on the interest rates paid for loans.

Capital Repayment: A capital repayment mortgage uses each monthly payment to pay off the capital and interest parts of the loan simultaneously. By the end of the mortgage, the full balance would have been paid off.

Interest Only is where you pay the monthly interest only and must have a suitable repayment vehicle in place to repay the loan at the end of the term.

Conveyancing:

You need a solicitor or licensed conveyancer each time you buy and sell a property to carry out the legal process. This is because the level of work required when transferring a property to someone else is extremely detailed and needs to be done correctly. Some lenders will only work with specific solicitors.

Disbursements: These include the fees that are part of the total conveyancing fee. Your solicitor will pay these on your behalf and include costs such as Stamp Duty and Land Registry.

Discount Rate: This rate offers you reduced repayments for a specific duration of time. This is agreed before the start of the mortgage.  The standard rate can fluctuate, but the discount will remain the same through the period set.

Equity: This is a positive balance you hold when the value of the property begins to exceed the loans against it which are outstanding. For example, if your home was worth £500,000 and the mortgage was £200,000 then your equity would be £300,000

Exchange of Contracts: At this stage, both the buyer and seller have fully committed to this transaction and are legally obliged to continue with this phase.

Fixed Rate: A mortgage rate where an agreed interest rate is set at the start of the mortgage and remains the same throughout the whole term.

Freehold: This title means that you have sole ownership of the land you are residing in.

Interest Charges: Charges made on the total loan value. It is calculated as a percentage of the total amount you borrowed for your mortgage.

Interest Only: A rate where the borrower will only pay the interest on the principal balance for a set period of time. During this period the principal balance is unchanged. With this option, you must make sure you have sufficient funds available to repay at the end of the term.

Leasehold: Having a leasehold on a property means that the property is still owned by the freeholder. This is used when you want to own a property for a set period of time and specific terms and conditions are set out for this period.

Legal Fees: Fees charged to complete all necessary legal work with buying a property.

Mortgage Rate: The rate you pay on the mortgage loan.

An offer of Loan: The formal mortgage approval document that you receive from your lender. This document will outline all of the terms and conditions for the term of your mortgage.

Re-mortgaging: Is a term used when moving your mortgage loan from one rate to another. This can be a different lender or with the same one. This is usually done to save money and must be only done when there is value.

Searches: making inquiries with land registry local authorities and land charges register to make sure there are no complications with having title to the land you are trying to buy.

These are the inquiries made, usually by your solicitor, at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about the title to the land and the property you intend to buy.

Stamp Duty: Stamp Duty Land Tax (SDLT) is a tax that is charged on land and property transactions. The amount charged depends as there are different thresholds.

Title: This is the legal right to the ownership of your property

Tracker Mortgage: This a mortgage rate that directly links the interest rate you pay to the to the Bank of England Base Rate. So as this rate fluctuates so will the rate that you pay by the same amount. Take a look here for other types of Mortgages.

Valuation:

A valuation is an assessment of the property to see how much it is worth. Lenders need valuations to be carried out on all properties as they use this to decide how much they would be willing to lend.

Variable Rate: This is a rate that can increase or decrease depending on the lender’s variable rate.

Have you found value here?then you will love our ISA Jargon Buster.

This information is up to date as of 23/09/2017

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The Lifetime ISA  for first-time buyers 

Huuti Lifetime ISA

The Lifetime ISA  for first-time buyers 

So what is a lifetime ISA? The lifetime ISA is a financial product that allows you to put a maximum of £4000 a year in it compared to the Help to buy ISA which allows you only £2400( excluding your initial first mount limit of £1000 extra). The Lifetime ISA can either be shares & stock ISA or a cash savings ISA. The lifetime ISA is designed to help first-time buyers with a deposit for their first home or for retirement savings.

Huuti-Life time ISA for first-time buyers

How does it work

The Government pays a 25% bonus on savings every year and if you have the maximum of £4000 deposited in your account you will earn £1000 for that year. The bonus is however only paid on contributions you put into the account( the government bonus is also considered a contribution by you) and not on interest gained by the account or any capital growth. Taking advantage of the Lifetime ISA is a must for all first-time buyers so it is better to start off with £1 today that not take advantage. Struggling to find that £1 ? have a look at our savings tips.

The bonus payments cease when you are 50. The maximum bonus you can receive from the account is £33,000. To be eligible for a Lifetime ISA you have to be between the age of 18-40 on opening.

  • So who is a first-time buyer?     A first-time buyer is someone who’s NEVER owned a property anywhere in the world before- this also includes properties in trust or in a will.

  • For a first-time buyer to be eligible for the scheme you must be buying a property that costs a maximum of £450k in the UK.The scheme is available per person and if you are buying a house with someone who is also in the scheme the max limit of £450k does not double.                                                                        
  • You can mix the Lifetime ISA with other government schemes such as the help to buy equity loan or the London help to buy. The same rules apply to those schemes so you cannot rent or sell the property within 5 years and you will begin paying interest rates on either of those loan schemes after year 5.
  • Your Lifetime ISA can only be used towards your new home as a qualifying first-time buyer if you have had your lifetime ISA account open for 12 months.

So whats the difference between the help to buy ISA and the Lifetime ISA                                 

Huuti Lifetime ISA

                                                   

  • You can have a Help to Buy ISA and a LISA.

    • However, you can only use the bonus from one of them towards buying a home.
    • Use the Help to Buy ISA for the 25% bonus and you’d have to pay a penalty to use your LISA savings for a property. Though you’d still be able to use it and get the bonus for retirement savings.
    • The Help to Buy ISA was launched in December 2015, and like the LISA, it has a 25% bonus that’s added to what you save, if you use it towards a first home.

    • While the LISA allows you to save more, the Help to Buy ISA wins for some as this table  shows:

  • LIFETIME ISAS VS HELP TO BUY ISAS – WHICH IS BETTER?
  • LIFETIME ISA (FOR HOME PURCHASE)
  • HELP TO BUY ISA
  • Max contribution?
  • £4,000/yr
  • £2,400/yr (£3,400 in year one)
  • Lump sums?
  • Yes
  • No, need to save monthly
  • Max bonus?
  • £33,000 (assumes max contribution every year from 18-49)
  • £3,000 (assumes max contribution over four years and eight months)
  • When’s the bonus paid?
  • First year’s bonus paid in April/May 2018; after which it’s paid monthly
  • On completion when you buy a home
  • Investment option too?
  • Yes, via stocks & shares LISAs
  • No. Cash savings only
  • Max property price?
  • £450,000
  • £250,000 (£450,000 in London)
  • How quickly can you use it?
  • After the LISA’s been open 12mths
  • Once you’ve £1,600+ saved (can be done in min 3mths)
  • Who can open it?
  • Anyone aged 18 to 39
  • Any first-time buyer aged 16+
  • What can it be used for?
  • The home deposit and mortgage deposit
  • Just the mortgage deposit
  • Can I withdraw money if not buying a home?
  • Yes, at age 60+; if earlier you don’t get the bonus and will pay a penalty
  • Yes, at any time, you just don’t get the bonus
  • So can you transfer your Help to Buy ISA into your LISA? Yes, but you should seek independent financial advice before transferring your help to buy ISA into your LISA as the jargon can be somewhat confusing.

 

This information is up to date as of 25/09/2017

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The Home purchase timeline- Just how long will it take to get your new home?

The Home purchase timeline- Just how long will it take to get your new home?

This is a typical time frame but every now and then issues pop up that are beyond your control. It should usually take 6- 16 weeks to complete your home purchase.

home purchase timeline

So here we go:

  1. Finding a Property: set your goals, get your savings and mortgage deposit ready(including any mortgage schemes), identify your targets and approach sellers.
  2. Put in a sensible offer: don’t go too low and of course never too high
  3. Once your bid is accepted you now need to get a property survey and instruct your solicitor to carry out checks for any legal issues.
  4. If everything is fine you will need to pay your deposit and after which there is no turning back without a huge cost
  5. It’s time for completion: Your lawyer will hand over the rest of the money owed on the property and the exchange of contracts process takes place after which the property is legally yours.

Further thoughts:

 

Huuti- Home purchase timeline

 

 

  • Mortgages:

 

  1. The mortgage process is somewhat straightforward. You will apply to a lender ( via a broker or directly) and if accepted the Lender will provide you with what’s commonly known as the mortgage in principle. This is usually only valid for 30-90 days and so you must be conscious of when you apply to the Lender and how long it will take for you to accept the offer which is dependant on how long your search for the perfect home takes. If you miss the time frame then don’t worry, if you followed our Mortgage guide you should be just fine.Most lenders will provide extensions on the mortgage offer as long as you still meet their affordability requirements.

In any case, there is no guarantee that the lender you have the Mortgage in Principle with might have the best rate for you as things might have changed within your search period. So definitely do another whole of market check. It’s always a good idea to use a broker as they can offer whole of market checks but if you are feeling confident then check out an up to date exclusive mortgage table.

Do not forget to get and store your mortgage illustration away: this document essentially explains the key features of your mortgage and you will need it later on.If there are jargons you don’t understand be sure to ask for a clear explanation before moving on.

2) Watch of for the last minute surprise

Gazumping and gazanging are big problems in the home buying process as the deal is legally obliged until you have exchanged contracts so any party can walk away albeit at a cost sometimes.

Gazumping usually involves the seller making a decision not to sell because he or she has received a better offer  while

Gazanging is when the seller decides to stay in the property and abandon the deal. This could be for a variety of reasons but usually because they foresee a future price rise and want to get more value.

In any case, some of his tactics are just in place to drive more money out of your pocket so be mindful!

Congratulations – You are home!

This information is up to date as of 25/09/2017

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Starter Homes mortgage scheme

Starter homes mortgage scheme huuti

Starter Homes mortgage scheme

The starter home mortgage scheme is designed for first-time buyers and home movers under the age of 40 to purchase new build homes.

How does it work? The starter homes are sold to borrowers for  80% of their current value(LTV) with a maximum price of £450,000 in all London boroughs and £250,000 outside London.

 

You must be between 23 and 40 years to qualify for this scheme.

 

You must have a combined income of less than  £80,000 or £90,000 in London.

 

How do I apply: Properties are not always available for this scheme so you will need to register your interest here to make sure you get updates on when properties become available.

Once you purchase the property via the starter home mortgage scheme you will not be able to sell or let it on the open market for at least 5 years. This is of course put in place to discourage investors from exploiting this discount.In any case, an application for a starter home mortgage scheme does not guarantee your acceptance.

 

The 30 councils signed up to deliver the first homes are as follows: Blackburn, Blackpool, Bristol, Central Bedfordshire, Cheshire West and Chester, Chesterfield, Chichester, Lincoln, Ebbsfleet, Fareham, Gloucester, Greater Manchester, Lincolnshire, Liverpool, Luton, Mid Sussex, Middlesbrough, North Somerset, Northumberland, Pendle, Plymouth, Rotherham, Rushmoor, Sheffield, South Kestevan, South Ribble, South Somerset, Stoke-on-Trent, West Somerset and Worthing.

 

For more information on more mortgage schemes please click here.

This information is up to date as of 25/09/2017

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Social HomeBuy Mortgage scheme: Quick guide

Huuti Social homebuy scheme

social HomeBuy Mortgage scheme: Quick guide

is social home buy

To be eligible for this scheme you would have had to live in a social housing property for 5 years minimum after which you would be able to own a share of the property and pay subsidized rent on the other share.

Who qualifies for the social Homebuy? Those who have lived in social housing for at least five years and your landlord must be a member of the Social HomeBuy scheme.

Discount available: You’ll get a discount of between £9,000 and £16,000 on the value of your home, depending on where your home is and the size of the share you’re buying. You buy a minimum 25% share of your property. You then pay a subsidized rent on the rest. When you can afford to, you can increase the share of equity that you own.

Property: The property must be owned by the council or housing association.

How to apply for the social HomeBuy scheme:  some housing associations and councils have not joined the schemes. Aside from this, you should be able to apply for the scheme. Make sure to confirm if your council or housing association is part of the scheme first.

Huuti- Social HomeBuy Mortgage scheme
Huuti- Social HomeBuy Mortgage scheme

The fine details:

The HomeBuy scheme provides a discount so a tenant can buy the property. The council will allow you to continue to rent the remainder at an affordable cost.

That being said. The property price will always be assessed at the time you want to purchase more proportions on the property.

Tip: Consider the fees involved.

This information is up to date as of 25/09/2017

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Renters get a mortgage boost! The rental exchange.

Renters get a mortgage boost!

If you pay rent..on time then there is a free scheme which could just boost your mortgage chances by improving your credit file: The rental exchange scheme,

The Rental Exchange scheme records your rental payments and sends the results to Experian: the credit reference agency.

In this brief guide we explain;

  1. How it works
  2. How it affects your credit file
  3. and how to sign up

So how does the rental exchange scheme work and affect my file?

Huuti- renters exchange
Huuti renters exchange

The rental exchange scheme is simply a way for tenants to improve their credit files by recording on-time payments.

  1. You pay your rent  via Huutis “rentroster”( rather than your landlord directly)
  2. Your rent is sent directly to your landlord in real time  and we  inform Experian if it was an “on-time” payment
  3. Experian logs the data in your file( this can be negative or positive based on if you made the payment on time)

It’s only a good idea to sign up if you are sure you will make payments on time.Anyone can sign up for the rental exchange scheme and it will always be free. This does not guarantee your landlord will not charge you an “admin fee”.(although they really shouldnt)

Why should I sign up?

The rental exchange scheme is especially helpful for prospective house buyers as it increases your credit score( if you pay your rent on time) and displays to the Lender that you are capable of making payments which essentially boosts your mortgage prospect.

For those with a  little or bad credit score, this is a great way to increase your credit score apart from the tips we mentioned previously and this could essentially put you in a cheaper LTV band and lower your monthly mortgage repayments.

It is worth noting that Experian is the only credit reference agency currently collecting the data from the rental exchange scheme.

How to sign up

  1. Visit Huutis website( duh!)
  2. Register to Huutis’ rentroster with information such as: Landlord details, when rent is due and how much. Huuti  verifies the information   and sets you up even if your landlord is not  happy to.
  3. Huuti serves as the payment processor and pays your landlord  on the same day and notifies you.

If the terms of your rent change at any point. You must notify credit ladder who will then validate the changes with your landlord.

Tip: don’t forget to register to vote as this boosts your credit score too.

This information is up to date as of 24/09/2017

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Currently renting? Let us know your thoughts  or questions in the comments

 

Remortgage:5 times you shouldn’t.

Huuti

Remortgage: 5 times you shouldn’t.

It’s not always a great idea you know.

Huuti- Remortgage:5 times you shouldn’t.

Here are a few times when it’s best to put your time to better use:

  • Your Mortgage affordability has changed: This is when your credit score has gone down or your net income per month has fallen.It is always worth checking your credit file and following a strict pre mortgage guide before approaching a new lender so to avoid causing a more detrimental effect to your already bad credit score. It is worth following a few tips to get your credit score up before seeking a remortgage.Your mortgage affordability could have changed due to a few things such as new commitments e.g family, cars or maybe it’s that annual trip to Marbella.  Whatever the case the lender no longer sees you worthy of a new loan. In any case, it might not be your situation has changed but rather the Lenders criteria have changed due to new regulation or economic factors.                                                           
  • Negative equity: Seeking a remortgage with negative equity isn’t really going to get you places.This can occur due to your house price dropping below the current value of your home.Unfortunately, in this case, you only have to ride out the storm.                                                                                                                                                
  • Little equity: If you don’t have enough equity in your current home then it might not be worth remortgaging as the LTV will not move significantly. In any case, it is worth plugging your mortgage details into a Mortgage management and switching service that currently monitors your mortgage and your current affordability to let you know if switching to a cheaper deal is worth the hassle.           
  • Your exit fees and early repayment charge is high: This can be the case if you are on a fixed rate mortgage or have a mortgage with an introductory offer. In this case, there is little you can do but wait out the time frame where the charges apply.It is worth comparing the cost of remortgaging to the savings made to see if you have net savings. In this case, it totally depends on just how much the net savings are and if it’s worth your time. It is worth seeking a better deal or remortgage with your current lender. Just try not to get locked in for too long again…in case a better deal is around the corner from a different provider.                                                                                                        
  • Your debt is too low: Beleive it or not.Lenders have a baseline which they will not lend beneath. In the case, your debt is too low the fees incurred with remortgaging might be too much in comparison with a debt.                                                 
  • You are already at an excellent rate: Well, this really speaks for itself. If you are already on the best rate possible then you can only wait for rates to go down. In any case, it is worth lugging your mortgage to a mortgage management and switching service to monitor and switch your deal when a cheaper one becomes available.

You can of course still go ahead with a remortgage disregarding the above but it is worth noting the true cost of a remortgage prior.

This information is up to date as of 21/09/2017

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Rejected for a Mortgage?

Rejected for a Mortgage?

If you’re rejected – STOP!  Take a deep breath, Do not continuously apply again with different lenders.

Too many applications will destroy your credit score ( especially if your credit score isn’t good enough for the lender)and you will have to spend so much time boosting your credit score up again. Instead, the first thing to do is to check your credit file again. Could you have missed something?  

A good Mortgage broker will always point you towards Lenders you are certain to get accepted with… so maybe take a look at your Mortgage broker as well. Services like Huuti will only show you, Lenders, you qualify for.

Huuti Mortgage spiral

The rejection Spiral

At all costs, avoid the rejection spiral. It looks like this:

  • You apply AGAIN
  • You get rejected( might be an error from the lender) and this leaves a mark on your credit file
  • You apply elsewhere desperately and well… you guessed it
  • You get rejected again
Huuti Mortgage rejection!

This spiral continues until you ditch your old Mortgage broker or check your credit file and spot the error …but wait

  • You apply again
  • You’re rejected because of recent ‘searches’ by multiple  Lenders who searched for your credit file when you got desperate and kept applying.

Don’t make this mistakes as this will take quite a while before everything gets corrected and you can then go ahead and make a new application.You must always consider reasons why your mortgage might have been rejected.

It’s always a good idea to ask the lender for a reason for refusal but always do your homework before applying.

You should also know what you need for a Mortgage before applying for one and more specifically what type of mortgage you need…

This information is up to date as of 23/09/2017

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Register to Vote or getting a Mortgage could be harder

Huuti- Register to vote

Register to Vote or getting a Mortgage could be harder

register to vote

Registering to vote is no doubt the easiest thing you can do to save yourself from a mortgage headache. A mortgage headache.. oh let’s not get into that.  

It is possible to have an almost perfect credit score without being on the electoral roll but it is nearly impossible to get a mortgage without this. Lenders view your registration on the electoral roll as undeniable proof of address as well as a measure of stability. It’s also a way to ensure you are not laundering money.

Your status on the electoral roll will usually be displayed on your credit file but a quick call to your local council. Do this at least a few months before you plan to apply for a mortgage. While you can usually be added within a month, in late summer and early autumn it could take longer due to the demand from others.

If you’re not on it, you can register on the electoral roll for free. If you’re not a UK or EU national and thus can’t get on the electoral roll to vote, then you can put a notice of correction on your file, saying you have other proofs of address and ID you can offer lenders (assuming that you do).

Huuti register to vote

Register to vote to boost your credit score

You must register to vote to increase your chances of being approved by a lender.This especially true if you are self you are self-employed as lenders consider self-employed borrowers a higher risk. It is important to do this at least a few years in advance as it shows your address history over a much longer timeframe.

There are also other methods to give your mortgage prospects a boot such as registering for the rental exchange scheme if you are currently renting.

 

 

This information is up to date as of 23/09/2017

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Payday Loans affect your Mortgage chances?

Huuti Mortgage after payday loan

Payday Loans affect your Mortgage chances?

The short answer; YES

Payday loans are designed to be short-term loans of £ 100 to £1000 that are essentially designed to see you over to your next payday. Payday loans are usually used in emergency situations where costs are too high for your monthly salary. The lender will usually recover their funds from your next paycheque. Payday loan companies, although they might lay traps for you, possess a credit license issued by the FCA.

Payday loans will destroy your chances of getting a mortgage as they are viewed by Lenders as poor behavior from borrowers.The payday loans can be of course seen on your credit file.( if the loan is active or default)

Payday loans may also limit your credit score if credit bureaus begin to score it badly. It is best to avoid at all costs.

Payday loans can hit your ability to get a mortgage – even if you make on-time payments

Lender scorecards have changed dramatically from 5 years ago. They are a lot smarter and used credit reference data more intelligently. Payday loans are naturally in a different section on your credit file and Lender systems can detect them with much better accuracy, as well as how many times you used them and might be able to guess what sort of APR you took on.  It is best to avoid them.

Huuti Pay day loans
Huuti Pay day loans

Tips:

  1. stay away from payday loans, the could greatly damage your credit file and you will need a good while to boost your credit score.

This information is up to date as of 24/09/2017

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Mortgages- The Basics

Mortgages- The basics

So let us get started then…

What is a mortgage?

A mortgage is a loan you have take out to purchase a property. Most commonly for you to buy a house, but they are also used for commercial properties if you are running a business.Mortgages do come with a variety of fees and you might have to get your Mortgage glossary out to break through the jargon.

 

 

Huuti -Mortgage Basics
Huuti Mortgage basics

 

Types of mortgages

There are two main types of mortgages that are primarily used. The fixed rate and variable rate. The type of mortgage you take out can affect how much you are able to borrow as they will provide you with different monthly payments.

Fixed rate – will set a specific interest rate and only charge based on that. It is very unlikely to change throughout the period of your mortgage. This can be good for someone looking to spread out a large cost through smaller predictable payments but over a longer period of time.

Variable rates – are able to change at any moment as they reflect the interest rate. So each time the interest rate changes your monthly payment will change to reflect it, whether it is higher or lower. Forms of variable rates include:

Standard variable rate – The rate that the lender chooses to charge that will be applied throughout the length of the mortgage, this rate may change depending on the Bank of England base rate.

Discount mortgage – the same standard rate as above, however, the lender would have applied a specific discount for a set period of time usually under five years.

Tracker rate – follows the Bank of England’s base interest rate (may also follow another rate), but with a few percent added on top.

As you can tell variable rates are slightly more complex and unpredictable than the fixed rate, however, there is potential to be charged less over the life of your mortgage. You just need to make sure that in a case where interest rates rise, you are able to afford it.

 

How can I apply

You can apply either through a broker or directly through the lender. It is often good to apply through a broker as they have access to a wider range of offers from more than one lender. However many brokers charge fees so make sure you are aware of them. It is always worth giving your credit a boost before applying.

You will, of course, need a deposit- this is usually 20% of the total property price. With average house prices at over £200,000, you will need sizeable saving stashed away somewhere but don’t worry we have your back.

In any case, the Government also has your back with its help to buy equity loan and a few other mortgage schemes which you should familiarize yourself with at the beginning of your mortgage journey.

How will they know which product is best for me?

Lenders will pay close attention to your monthly spending and make their own calculations on how much ‘room’ you have to fit in paying off your mortgage. They will take into account your essential spending alongside your lifestyle spending such as groceries, phone and utility bills, direct debits etc. They will use this total to understand how comfortable you could pay back the loan with your current monthly income. For a deeper dive into how lenders work out your affordability see here.

Whether you apply through a broker or a lender you will always be provided with an adviser to guide you properly so you will always be in safe hands. Independent brokers have been known to offer the most support and assistance during a mortgage process.

What if I fail to keep up?

There are ways to cover yourself and the lender in the event that you are not able to pay your mortgage. Once completing your mortgage application you have the option to take out extra products such as mortgage protection. This will safeguard you and your family if you were to become unemployed or seriously ill. It is not compulsory, but definitely worth some thought. Mortgage arrears can raise a big issue for future credit.

What next?

Understanding your affordability? Mortgage affordability is incredibly complex as different Lenders have different criteria which change very often with little notification.Plug into Huuti to get a better understanding of your current affordability and what steps you need to take to get you home!

You will also need a basic understanding of the home purchase timeline and how to boost your mortgage prospects if you are self-employed.

 

 

This information is up to date as of 23/09/2017

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Mortgage schemes

A complete list of Mortgage schemes

Huuti Mortgage schemes
Huuti Mortgage schemes

For a deeper dive into the mortgage schemes please click the labels

  1. Social Homebuy: To qualify for this scheme you need to have lived in social housing for more than 5 years after which you can own a share of your rented property
  2. Help to buy shared ownership: This scheme is for first time buyers or previous homeowners who earn less than £90,000 in London or £80,000 elsewhere.You will need to have 10% deposit to cover your share of the property and pay a subsidized rent on the remainder.
  3. Starter Homes scheme:  This is a scheme for first-time buyers under 40.It is only available for new build properties.
  4. Help to buy ISA: This is a tax-free IS for first-time buyers which will pay 2.7% interest and the Government will add 25% up to a maximum of £3000.
  5. Help to buy London Scheme: This is an extension of the help to buy scheme but focused on London. You still need a minimum 5% deposit.
  6. Armed forces help to buy: Similar to the help to buy scheme but targeted at the armed forces.
  7. Help to buy equity Loan scheme: here the government lends you 20% of your deposit interest-free for 5 years. You just need to find the remaining 5%  deposit.

 

This information is up to date as of 23/09/2017

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Mortgage Fees

Huuti- Mortgage fees

Mortgage fees: are hefty and you need to be prepared adequately so as to avoid any surprises.

Here’s a list of the most common charges you are likely to pay. It is important to prepare as many people often overlook these as they only focus on the large loan they are taking out and are caught guard by the fees as some are required upfront.If you see any term you do not understand your mortgage documents you should ask for more information before signing… or look up a jargon guide.

 

Mortgage fees- Huuti
Mortgage Fees Huuti

Below is a list of fees you are likely to be charged during your mortgage application:

Arrangement fee – Due to the robust checks and processes in completing a mortgage there’s a lot of paperwork involved. This fee pays for the costs that the lender has accumulated through maintaining and setting up your mortgage application.

The valuation fee – this pays for the lender to carry out a basic inspection of the property you wish to buy to ensure that it is secure in the right areas so that it meets their criteria. Most importantly they need to verify that it is worth the money they are lending you.

Solicitor/Legal fees – typically to handle the hefty paperwork and more commonly conveyancing of the property.

Broker fees – We If you go with a broker they may charge a fee for organizing the deal and completing the application on your behalf.

Stamp duty – this is paid on completion of purchasing your home and is only applicable to homes worth over £125,000. This is not associated with your mortgage application, but purchasing the house itself.

Once your mortgage has begun you may incur further costs. We have listed below two fees people are commonly charged.

Early Payment fees – regardless of the type of mortgage you have you will be charged for paying it off earlier. You should keep a lookout for sometimes this fee can be up thousands of pounds as it is charged as a percentage of the loan.This charge is usually relevant when you intend to remortgage with a new lender. You must always consider if it is worth remortgaging before going ahead.

Exit fees –  you will be faced with this fee by closing your mortgage account. This will occur during completion of your mortgage, switching to another deal or switching to another lender. The fee varies from lender to lender but is generally under £250. If a remortgage becomes a must do then you cannot avoid this charge.

 

 

This information is up to date as of 23/09/2017

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Think the fees are too high? Let us know your thoughts  or questions in the comments

 

Mortgage applications: Just what documents do you need to have?

Huuti - Mortgage documents

Mortgage applications: Just what documents do you need to have?

Get your paperwork in order to save time.

Mortgage lending is now highly regulated and lenders now require to see proof of your income before they can offer mortgages. To make sure you save time during your mortgage process and to avoid the prospect of a rejection then you must get your paperwork together in advance.

Original documents are the only type Lenders will accept. Your documents must be original documents rather than printouts or photocopies. As a rule of thumb, you must ensure your bank sends you original documents weeks in advance of you applying.

Huuti- Mortgage applications
Huuti – Mortgage applications

Here is a list of documents a lender may request:

  • Your last three months’ bank statements: if you are self-employed this will include your business bank accounts as well.
  • Your last three months’ payslips
  • Proof of bonuses/commission
  • Your latest P60 tax form (showing income and tax paid from each tax year)
  • Your last three years’ accounts or tax returns(usually for self-employed)
  • Proof of deposits (eg, savings account statements)
  • ID documents (usually a passport or UK driving license)
  • Proof of address (eg, utility bills or credit card bills)
  • A gift letter. If you’re getting deposit help, the lender needs to know it is a gift (not a loan), and that the giver won’t part own the home.

Failing to comply and submit the right documents to your lender might lead to your mortgage application being rejected.  If this unfortunately happens you should stop and consider why this occurred. This might be because your credit score isn’t good enough for the Mortgage or Lender you are after and needs a boost.

This information is up to date as of 23/09/2017

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Managing your credit allowance

Huuti Credit Allowance

Managing your credit allowance

 

Huuti- Credit allowance
Huuti – Credit allowance

This is all about how much credit you have available to spend on credit cards and overdrafts. It’s the difference between your combined debt balances on your cards and bank accounts and your combined credit limits/overdraft limit.

You need to find the fine line between not having too much — as lenders may think you could rack up more debt by spending it all — and not getting too close to your limits, which makes it appear as if you are in desperate need of cash.

The general rule of thumb is that if you have debts, Mortgage lenders prefer that they make up less than 50%  of your available credit. So if you have a combined credit limit of £20,000, they’d rather you use less than £10,000 of it.

If you are already following this rule it’s also wise to avoid lowering your credit limit so not to appear as if you are using it all up and hence seem desperate.

It is also best to avoid having lots of credit available than you necessarily need or ever use. e.g tens of thousands of pounds.

There is no perfect guide in this case as all lenders look at things differently, As always, it’s best to use less than 50% of available credit.It is also unclear how credit agencies such as Equifax score this.   

 

This information is up to date as of 24/09/2017

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Lower LTV(Loan to value ratio) = Cheaper Mortgage rates

Huuti Loan to value ratio

Lower LTV = Cheaper Mortgage rates

Does a cheaper Loan to Value rate for your mortgage really bring about cheaper rates?

Mortgage Deposit

So it’s time to cough up your deposit, the minimum you can put up is 5% but for a good mortgage rate you will ideally need a 40%+ deposit. This also helps increase your affordability to the Lender and makes a favorable decision on your application more likely.see how Lenders workout your affordability here.

  • 5% gets you over the line
  • 15% gives you a better chance of being accepted by most Lenders
  • 20% is typically the standard mortgage deposit requirement
  • 40% gets you the good rates

So, the more the deposit… the better the rate…usually

LTV bands

Mortgage and remortgage rates are priced in LTV bands – and the bigger deposit/equity you have, the lower the interest rate will usually be. Mortgage lenders have different mortgage rates for loan-to-value bands at 60%, 70%, 75%, 80%, 85%, 90% and 95%. Read more about LTVs here.

60% LTV is usually the cut off mark for cheaper mortgage rates. Borrow anything above 60% above and the rates start creeping up.

It’s always a good idea to wait a bit longer, negotiate a better house price or save more to get into a favorable LTV band

 

Huuti- Loan to value
Huuti- Loan to VALUE

Getting cheaper Mortgage rates

1.Getting into a cheaper LTV band– borrow less

increase your deposit to get a cheaper rate.( It’s a good idea to always calculate how much interest rate that will save you per year)

Another idea would be to overpay your mortgage and remortgage as soon as you have enough equity in your property to fall into a cheaper LTV band.

 

Get your property valued higher vs purchase price

A higher valuation essentially means you own more of the property( after purchase) and essentially your loan to value ratio is much lower.

Tips: 1)Boost your credit score before applying for a mortgage.

2)Register to vote to increase your credit score.  Analyse if your credit score is good enough so as to reduce your chances of getting rejected.

3)Analyse if your credit score is good enough so as to reduce your chances of getting rejected. If your renting, try registering for the rental exchange scheme.

4)Go through a Mortgage checklist to be well prepared.

 

 

This information is up to date as of 24/09/2017

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London Help to Buy: The past

Huuti- London help to buy

London Help to Buy: The past

The London help to buy can be viewed as an expansion of the present help to buy equity loan scheme to help first-time buyers get on the property ladder faster.

Huuti- London help to buy
Huuti- .London help to buy

Who qualifies for a London help to buy?

As long as you have a 5% deposit for your property purchase and the house costs no more than £600,000 and is a new build situated in a London borough then you can apply for the London help to buy scheme.

The scheme was previously available with a Government 20%  interest-free loan for 5 years but this has now been lifted to 40% of the property price.

You will not be allowed to sell or rent the property within 5 years of purchase and the  Government interest will kick in after 5years of ownership at which point you will have t make only interest payments back to the Government.

If you choose to sell the property after 5years they government will be entitled to 40% of the property in return for the loan it first issued you when you purchased the property. The scheme was brought in to tackle the increasing unaffordability of London homes for first-time buyers caused by increasing prices. The increasing prices of London properties are however due to strong demand for London properties by overseas investors.

Little known tip:

You do not necessarily have to use a mortgage to pay the outstanding 55% of the property. Let us assume you had 60% of the property price you will still qualify for a London help to buy. You can read more about the newly refreshed London help to buy scheme here.

 

This information is up to date as of 25/09/2017

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London Help to Buy: A must read-refresh

Huuti- London help to buy

London Help to Buy: A must read-refresh

Due to the rising house prices in London, the Government has decided to increase the loan amount it gives prospective buyers from 20% to 40%. This kicked in back in February 2016 but not so many people are yet aware of it.

So is it any different? Well no, the mortgage scheme is pretty much the same apart from the limit being raised. If you have 5% of your deposit the Government will give you 40% of the property as an interest-free loan for 5 years.

Huuti- London Help to Buy

Example from the Government’s help to buy page: for a home with a £400,000 price tag

“If the home in the example above sold for £420,000, you would get £252,000 (60%, from your mortgage and the cash deposit) and you would pay back £168,000 on the loan (40%). You would need to pay off your mortgage with your share of the money”.

There is no interest charge on the loan for the first five years but after which you begin to pay just the interest charge of 1.75%. This then rises each year by the retail prices index (RPI) inflation measure + one percentage point. Assuming RPI is 4%, the interest rate would rise by 5% (4% + 1%).

Where can I find it?

Most major banks including, Barclays, Natwest, Santander, and Lloyds offer the London help to buy.

Eligibility?

The  London help to buy scheme is available to first-time buyers and homemovers and can only be used to purchase a new build home with a maximum price of £600,000.

The property must not be sublet and you cannot own any other property at the time of purchase.

How to apply

The London help to buy scheme is somewhat different in its application process. see here for full details.

There are of course other schemes which you could qualify for based on your situation.

 

This information is up to date as of 25/09/2017

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Considering a London help to buy? Let us know your thoughts  or questions in the comments

Jargon Buster: savings…. ISAs

Jargon Buster ISA

Jargon Buster: savings…. ISAs

The financial world is full of so many words and there are as many savings tips as there are abbreviated and hard to decipher phrases. We have produced this jargon buster to lend you a hand.The jargons are mostly specific to saving and investment terms. For Mortgage, jargon busters see here.

ISA (Individual Savings Account)

A savings account which is not taxed by the government.The government sets a limit on the amount of money you can save in any one tax year. The tax year runs from 6 April one year until 5 April the following year.For first-time buyers, the Help to Buy ISA guide might be more specific.

Junior ISA

Junior ISAs can be open from the age of 16, otherwise, a person with parental responsibility can do it. They are available to those who are under the age of 18 and do not have a Child trust fund.

Maturity

The day when an account reaches the end of its term.

Unit Trust

A type of collective investment. Unit trusts allow you to invest an initial lump sum, or regular contributions, or a combination of the two. The trust is divided into units; each unit is worth an equal fraction of the total assets that the trust owns. As the value of these assets increases (or decreases), so does the value of your units. You can purchase more units if you want to.

Unlike Open Ended Investment Companies and Investment Trusts, Unit Trusts may be ‘dual priced’ where those selling units get a lower price than those buying have to pay.

With profits investments

“With profits” refers to the way the investment grows. In a with-profits scheme, you share in the profits of the issuing company. Each year you are normally paid a bonus on your investment (although there is no obligation for a bonus to be paid if the company has not done so well).

Companies that operate a with-profits scheme may keep back some profits in a good year so that they can pay bonuses in years that aren’t so good. This process is called smoothing. There may also be an end or terminal bonus paid when the investment matures.

Tracker bonds

A tracker bond is a type of savings account where the interest rate follows (tracks) the movements of another rate – most commonly the bank of England base rate. This means that your savings interest rate can go down as well as up.

You will normally have to keep your money in the account for a set term. You may not be able to get earlier access to your funds and, if you can, you will probably have to forfeit some interest in that privilege.

Taxation of savings interest

Any interest earned from a savings account over your Personal Savings Allowance is subject to income tax. If you are a taxpayer you would have to pay tax on your savings interest according to your income tax banding. Basic rate taxpayers have to pay tax at 20%. Higher rate and additional rate taxpayers must pay a further 20% or 25% respectively, either through Self Assessment or by contacting HM Revenue & Customs.

Tiered interest

Some savings accounts reward you for having a higher balance by offering tiered rates of interest. This is where a higher rate of interest is offered the more you have in the account.

For example, an account might offer 1.00% interest for balances between £1 and £10K, then 2.20% for balances of £10K or more. The higher interest rate is normally paid on your entire balance – so if you had £10,001 in the account we’ve just mentioned, you’d earn 2.20% on the whole lot, not just the £1 that’s above £10K.

Structured products

Structured products are a kind of investment, often marketed towards more cautious investors and savers. They are usually for a fixed term and are linked to the performance of an index – such as a stock market index (like the FTSE 100), or inflation.

Structured products are usually quite complicated so it’s important you understand how the investment works – and any risks you are taking with your money.

Products can vary greatly and can have different degrees of risk – it’s possible that you could lose some or all of your original investment.

Standing order

A standing order is an automated payment that you can set up from your current account. It will send a regular payment (normally monthly, quarterly or yearly) to the person or company you wish to pay. In the context of savings accounts, some will let you set up a regular standing order or direct debit to your savings account so you don’t have to remember to physically transfer the money yourself.

The main difference between a standing order and a direct debit is that with a standing order you have full control over how much you pay and when. With a direct debit these details can be changed by the person or company you’re paying.

Retail Prices Index

The Retail Prices Index (RPI) is a key measure of inflation used by the Government. It uses a “basket” of goods and services to monitor how the cost of living is going up or going down annually.

In contrast to the other main measure of inflation, the consumer price index (CPI), RPI includes housing costs such as council tax and mortgage interest.

RPI is calculated using a “arithmetic mean” which basically means that RPI will always give a higher (or equal) figure than CPI, which is calculated using a “geometric mean

Bank of England base rate

By Bank of England Base Rate we mean the Bank of England’s official dealing rate (the Official Bank Rate) as set by the Monetary Policy Committee.

Cash ISA

An Individual Savings Account (ISA) is a savings account where you don’t pay tax on the interest you earn. As your earnings are tax-free, this means you get to keep everything that you invest and earn.

There are four different types of ISAs: Cash ISAs which are available to people aged 16 or over, Stocks and Share ISAs and Innovative ISAs which are available to those aged 18 years and over. And Lifetime ISAs available to people aged between 18 – 40.

Cash ISA allowance

Each tax year, everyone aged 16 and over in the UK gets an annual tax-free ISA allowance of £20,000. And the tax year runs from 6 April to 5 April the following year.

With an ISA you can save money as cash (in a cash ISA), invest in the stock market (in a Stocks & Shares ISA), lend your money to other individuals or companies as a loan (in an Innovative ISA), or save towards your first home and/or retirement (in a Lifetime ISA) or any combination of the four. This is based on HM Revenue and Customs UK taxation law and practice which may change.

An ISA, or Individual Savings Account, allows you to invest up to £20,000 each tax year without you having to pay a penny of tax on any interest or gains you make.

You can only subscribe to one of each ISA type, Cash ISA, Stocks & Shares ISA, Innovative Finance ISA and Lifetime ISA (maximum £4,000) in each tax year, up to the combined annual subscription limit of £20,000.

 

Huuti- Jargon Buster ISA

FTSE 100 Index

This stands for the Financial Times Stock Exchange 100 Index, which is made up of the 100 largest firms quoted on the London Stock Exchange.

Notice period

This is the time you have to give to notify the bank or building society that you want to withdraw your money without paying a penalty. 60 , 90, 120, 180 days are common notice periods.

P60

An annual summary of all your payslips. Your employer gives you one at the end of every tax year, if you still work for the employer. Keep it safe.

Tax year for cash ISAs

A tax year runs from 6 April one year until 5 April the following year. The current ISA subscription limit is £20,000 for the 2017/2018 tax year.

Variable

Interest rates offered by banks and financial institutions on loans or deposits which are liable to change according to circumstances. For example, a movement in the Bank of England Base Rate which is set by the Monetary Policy Committee.

AER

AER stands for the Annual Equivalent Rate and shows what the interest rate would be if interest was paid and added to the capital balance each year. The higher the AER, the better the return you will receive.

Capitalised Interest

The interest your money has earned, which is added to your original investment.

Flexible ISA

With a Flexible ISA, you’ll be able to withdraw money and put it back without affecting your ISA allowance, as long as it’s done in the same tax year and the account remains open.

Gross Interest

Interest paid before the deduction of income tax.

This information is up to date as of 25/09/2017

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Is your credit score good enough for a Mortgage?

Huuti credit score

Is your credit score good enough for a Mortgage?

  It is a well-known fact that Lenders will check your credit score whenever you apply for a financial product. So just what is a good credit score?

The first thing we do know is that the higher the credit score = the higher your chances of being approved for most financial products. Different Lenders use different credit scoring criteria that now take more into account other than just your credit score.It is hard to say what exact credit score you will need for particular products as Lender credit score criteria are tightly guarded secrets but what we can say is a minimum score of 400 regardless of the credit reference agency is what you should be aiming for( and 3 for Call credit). To increase your credit file it might be worth checking out our credit hacks.

But for a more in-depth look, these are the general benchmarks.Each credit reference agency has a different scoring mechanism and a different max or min score.

Equifax

Very poor: 0-279

Poor: 280-379

Fair: 380-419

Good: 420-465

Excellent: 466-700

Experian

Very poor: 0-560

Poor: 561-720

Fair: 721-880

Good: 881-960

Excellent: 961-999

Callcredit

Very poor: 1

Poor: 2

Fair: 3

Good: 4

Excellent: 5

So why is your credit score important?

Your credit score is at its simplest your ability to comply with the terms of financial products. It monitors your repayment history and whether you make payments on time or not. Your credit file also looks at other data points which make up your score e.g the number of products on your file or your level of stability which can be determined by the number of addresses registered on your file or how often you tap into your credit file. In truth, there are so many data points that it is currently not completely clear how each credit reference agency works out your exact score.

Your credit score is important because it significantly affects your ability to get a mortgage and at best can leave you with bad rates and cost you more in  Monthly payments or cause you to get rejected by the mortgage lender. Someone with a great credit score and record might get a 1.9% rate whilst someone with an average score might get a 3.5% rate and that affects the monthly payments by almost 50%  when comparing like for like Mortgages. It is worth following our best practice list when considering a Mortgage so to ensure you do the right things months before you make your mortgage application as this will let you know how likely you are to be accepted and when you need a mortgage boost.

Huuti- Is your credit score good enough

SO what affects your credit file:

Some of the factors which affect your credit file include:

  1. Little or no financial history: You might call it unfair but your credit score will usually be low or average  once it is first generated as there will be no history of how you cope with financial products as you have never had any or have had such little history that it isn’t credible enough to warrant a higher score.                  
  2. Multiple recent credit applications: It’s always a bad idea to apply for too many credit applications in a short space of time…especially if you keep getting rejected as the rejection is recorded on your file as well. Making too many applications in a short time is regarded as a desperate behavior by the credit referencing agency and so indicates some sort of financial trouble which in turn indicates bad financial planning. This, of course, might not be the exact case in every situation but credit references register it this way as a general rule of thumb.                                                                                                                                
  3. Late payments: You should know that making payments after deadlines will certainly leave a negative impact on your file as you clearly are not keeping to the terms of your credit file. Making the minimum required payments to your credit card will also affect your credit score as the credit referencing agency will view you as just being able to make the minimum and the minimum only.                  
  4. Bankruptcy, CCJ or IVAs: Any of this will certainly push your credit score low and even if they aren’t low enough that lenders stay away from you they will stay on your file for 6 years meaning you will almost certainly never get good rates over that time frame.

Be sure to check your credit file

As a prospective first time buyer, you must check your credit file so to ensure the details held for you are 100% accurate. E.g your addresses, your full name and the credit products you have currently or in the past.You should check with all 3 credit reference agencies: Equifax, Experian and Callcredit. If you spot any mistake in your credit file, you must ask for a correction from the credit agency.

The Consumer Credit Act gives you the right to obtain your full statutory credit report at any time at a cost of £2 per report, so the total outlay should be no more than £6.

Tip: If you are a prospective first-time buyer currently renting then it is worth reading about and registering for the rental exchange scheme.  

Bad behavior such as excessive gambling, excessive use of credit such as payday loans can also affect your credit file and destroy your chances of getting a mortgage. So do try and stay away or utilize this in a stable manner.

 

This information is up to date as of 25/09/2017

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Introducing Huutis’ Prospective First-time buyer app.

Introducing Huutis’ Prospective First-time buyer app.

Last week we launched our Beta list. A new tool that is making a big impact for thousands of young people across the UK, by helping them get onto the property ladder faster!

At Huuti we promise to deliver on these three areas:

Telling you what you need to know about mortgages, Showing you exactly how you could improve financial position and Showing you how you will be viewed from the lenders’ side.

Here’s how we do it:

Education

Mortgages are hard to understand and researching them sometimes only brings more confusion for us, first-time buyers. Like where do I start? What’s important to me? And what’s preventing me from qualifying?

Huuti eliminates this confusion by providing you with the information you want to see in the way that you want to see it. So there is no more need to have 20 tabs open trying to find the right answer!

Financial Barriers

We have all made mistakes in the past, some that can even affect us financially. We don’t believe in letting them hold us back.

Huuti helps individuals to overcome these barriers through the insights that we provide, giving every individual their personalized action plan to reshape their affordability and ultimately their future!

Transparency

Lenders criteria are very strict and specific. Huuti uses this to help you plan, showing you from day 1 what could potentially hold you back and how to fix it. Putting you in the strongest position possible to secure a mortgage.e.

We have an open door policy and love to hear from the community, please ask us any questions you may have at Hey@huuti.co.uk. Be sure to sign up for our beta here

 

Huuti
Huuti- Product

Self-employed. Can I get a Mortgage?

Huuti- Self employed Mortgage

Self-employed: Can I get a Mortgage?

self employed mortgage

If you are self-employed or would fight to demonstrate your long-term income, perhaps you have worked overseas or you’re on a contract or run your own business then getting a mortgage is difficult due to your affordability assessment being much different.

You’ll require cast iron evidence of your income, which is not easy. You must display Business accounts showing a steady income as well as any proof of long-term stability. You will need to show preferably 3 years of accounts, although two may suffice based on the lender signed off with a chartered accountant. If you cannot show business accounts then a couple of years tax returns are the next best choice.

If you cannot show business accounts then a couple of years tax returns are the next best choice and this will have to be sent along with any personal bank accounts you have.

How will I be assessed?

Your affordability will be will be assessed based on your yearly net profit, not turnover.In cases like this, it’s best to get a mortgage broker with a whole of market coverage and experience dealing with self-employed borrowers to look at your case. If this is very likely to be complicated,  a mortgage broker could assist as they will know which lenders need what evidence.

Even though this could work for all those in established companies, to be realistic, it might signify individuals who’ve lately started working for themselves might not be capable to get a mortgage. If you are self-employed and your partner is not, your mortgage could be calculated with their income only.

In any case, if you have a business account, you should ask them to prepare your accounts so a Lender can view them in time and prevent your application being delayed.  If you are newly self-employed with little history of trading or no revenue than getting a mortgage could be incredibly hard and you might find the process a waste of time. However, if you have a partner then who has a paid job and can show regular incomings from their job then it is best to gift your savings to them and for them to apply solely for the Mortgage whilst you ensure the Lender lists you as a party on the Mortgage deed.

The lender will consider your application as it does other but it is important you have a good credit score and if you don’t make efforts to improve your credit score as the lender will require sufficient proof you can make those repayments.

Note: Be aware that self-cert mortgages, mortgages in which you declare your very own income and the creditor doesn’t require proof are no longer available.

 

This information is up to date as of 23/09/2017

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Are you self-employed? Let us know your thoughts  or questions in the comments

How Lenders work out your mortgage affordability

How Lenders work out your mortgage affordability

Before:

Lenders used to use a multiple( 4 or 5 )  of your wage to work out the maximum loan they could give you. Things have changed since then as mortgage regulation has now become more stringent and therefore yearly wage multiples are no longer good enough to work out your Mortgage affordability. Instead, Lenders are now checking your affordability by looking deep into your finances.

It’s not just that, the stricter guidelines now mean Lenders must not just check borrowers for their current affordability but rather analyze them in different situations e.g.  if interest rates shot up to 7-9%.

Huuti- Mortgage affordability

Now:

Lenders can now do a complete deep dive into your finances and highlight key points of interest such as how many times you dine out, the type of restaurants you dine at, if you are a gambler, if you take holidays often and all sorts of data points. It is not clear what underwriting procedures all Lenders use as they are all different but as a rule of thumb if you wouldn’t lend money to someone with a particular factor then your mortgage lender won’t lend to you too

But

Don’t get too worried though, Lenders will usually only highlight financial trends which seem to push you over the limit or they deem out of your means. You know the ones! Just stop browsing the fashion websites. Stop!

Either Ways most Lenders only look at your bank history for the past 3 months, so if there is any time to bring out your good behavior it is then.

 

This information is up to date as of 24/09/2017

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Help to buy- Guarantee scheme

Help to buy guarantee scheme

Help to buy- Guarantee scheme

 

Help to buy Huuti

This scheme is no longer operational: Help to Buy – guarantee scheme

This scheme was designed for those who could only raise a 5%  mortgage deposit.It ended in December 2016.The home would have had to be less than £600,000 and £300,000 in wales.There were no restrictions on the property.e.g new build.

In this case, the property would be owned outright by the borrower. The monthly payments were somewhat higher as the loan provided by the government was not interest-free.

How the help to buy  guarantee scheme worked:

The scheme was essentially an insurance from the government which committed to cover some of the costs of any borrower default. This did not take the responsibilities away from the borrower. The Lenders were essentially able to lend at between 80%- 95% LTV.

How did I get the help to buy guarantee scheme?

This scheme was obtained simply by applying.Whilst this scheme is no longer available it is still possible to obtain loans with similar LTVs

Example:  

Buying a £100,000 home would have initially required a £5000 deposit and if at any point you defaulted the government would have stepped in to cover some of your arrears.

The help to buy equity loan scheme is however still available as well as other mortgage schemes.

 

This information is up to date as of 24/09/2017

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Help to Buy ISA: Who is eligible and what is it

Huuti Help to Buy ISA

 

Help to Buy ISA: Who is eligible and what is it

The help to buy ISA is a Government-backed ISA which is especially targeted towards first-time buyers.The government will give you a 25% bonus for every £200 you save and will pay you up to a maximum of £3000. So just who is eligible

To be eligible for the Help to buy ISA you will need to be:

  1. Be of 16years of age  or over
  2. Be a first-time buyer
  3. Be a UK resident
  4. Not own any property on Planet earth
  5. Have a valid National Insurance number (NINO)
  6. Not have any other active ISA accounts in the same tax year

It is worth noting that the Help to Buy ISA is available for those employed(self-employed) or nonemployed.

In some cases, if you have a current IS which was opened in the current tax year you may be able to switch to a help to buy ISA.

Huuti- Help to Buy ISA
Huuti- Help to Buy ISA

Switching to a Help to buy ISA

You can switch to a help to buy ISA  by transferring your current Cash ISA to a help to buy ISA. There s currently a limit of £1200 which you can transfer to your Help to Buy ISA from your Cash ISA.

Everything over the £1200 can be moved to any other ISA product such as an innovative finance ISA or shares and stocks ISA.

You must not exceed your total limit for ISA, so be sure to ensure you stay within your total limit by adding p all your ISA products.

In some cases, some specialist ISA  managers offer their ISA portfolio in a CASH ISA bundle which allows you to hold multiple ISA PRODUCTS but total personal ISA limits will still apply.

so you have some questions… Head over to our Help to buy Q&A post where we delve a bit deeper.

 

 

This information is up to date as of 20/09/2017

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Help to Buy ISA Q&A

Huuti Help to buy ISA

Help to Buy ISA Q&A

In this post we tackle the frequently asked questions in regards to the Help to Buy ISA.

  1. Can I open a Help to Buy ISA ? Yes. As long as you are over 16 and a UK resident. To open your Help to Buy ISA just walk into any bank (preferably your bank) and get started. You can find a list of Institutions that currently have the scheme available here.  You can also switch your Cash ISA to a Help to Buy ISA even if you have already opened a Cash ISA in the current tax year.
  2. Can I open a joint Help to Buy ISA with my friend or family? No, you cannot. If you both plan to buy the same property then you can both benefit from the scheme. This includes the Government bonus and savings.   You can’t open an account on behalf of someone else either.
  3. Can I open more than one help to Buy ISA? No, you cannot. You are only eligible for one Help to Buy ISA account per year. This  does not affect your right to switch your Help to buy ISA between different providers.
  4. When does the Help to Buy ISA come to an end? You will not be able to open a Help to Buy ISA account after 30/11/2019. You will however still be able to pay into your Help to Buy ISA and claim the benefits of the Help to Buy ISA until 30/11/2029 if you opened a Help to Buy ISA account before 30/11/2019.The Bonus from the help to Buy ISA will cease on  1/12/2030 so be sure to claim it before then.  The Help to Buy ISA allows you to save a maximum of £200 every month with an extra £1000 for the first month.
  5. How do I qualify for the Government bonus? To qualify for the government bonus you must be considered a “first-time buyer“.(check out our jargon buster here) The property you plan to purchase must also cost less than £250,000 outside London and £450,000 in London.
  6. How does the Government define a first-time buyer? A First-time buyer is someone who has never and does not currently own any property in the UK or anywhere in the world.It is worth noting that if you have property in a trust even if it is one created by a will or divorce then you do not qualify as a first-time buyer.                                                                                                                                                                                     However, you are still a first time buyer if: (a) you are named as a beneficiary of residential property in the will of a person who is still living; or, (b) if the trust to which you are or were a beneficiary was only created for the purpose of selling the property and other assets following a death or divorce, and the title of the residential property was never transferred to your name or to a trust which you are an ongoing beneficiary; or (c) if you are only acting in a trustee role and will not be entitled as a beneficiary in the future, (and do not have any other interests in residential property).
  7. Can I combine Government Mortgage schemes? Yes, you can indeed as long as you qualify for the other schemes. You can get a Help to buy ISA and also still get a Help to buy Equity Loan.
  8. Does transferring the Help to Buy ISA account to a new provider qualify me for another initial bonus deposit allowance of  £1000? No.
  9. How do I claim my bonus? To claim your bonus you need to inform your ISA manager that you intend to withdraw all your money and close your account. After which a closing statement will be issued which you can then use to claim your bonus.You must claim your bonus within 12 months of closing your account.
  10.  How do I apply for my Bonus? Your solicitor ( who deals with the exchange of contracts during the mortgage process on your behalf) will apply for the Help to buy bonus on your behalf. You must ensure you acquire a closing statement from your ISA provider or manager as your solicitor will need this. You need to have saved at least £1600 to qualify for the government’s minimum bonus of £400.

 

 

This information is up to date as of 20/09/2017.

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Are you considering a Help to Buy ISA ? Let us know your thoughts  or questions in the comments

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Help to Buy equity Loan scheme

Help to Buy equity Loan scheme

The Help to buy equity loan scheme is one of the schemes that get you on the property ladder with a relatively low deposit.There are quite a few Mortgage schemes and they can be a bit confusing. Check out this jargon buster if the terms do frighten you.

 

Help to buy equity loan scheme
Huuti- Help to by equity loan scheme

Help to Buy Equity Loan scheme

The Help to Buy equity loan scheme is a few years old and is specifically for new builds and frustratingly differs in its structure dependant on where you live in the UK.

In England, it’s only available for those buying a new build worth less than £600,000 (£300,000 in Wales, and £230,000 in Scotland). The scheme was set up to increase the supply of affordable housing in the UK.

So how does it work

If you meet the criteria and have a 5% deposit, the Government will give you an interest-free loan ( for 5years)of 20% to put you in an affordability band which  Mortgage Lenders will like to lend to. This, of course, reduces your loan to value which allows you to access affordable rates.

The important factor in all of this is, of course, the interest-free Government loan

  • Interest-free for five years in England & Wales.
  • For the first five years, the government loan is interest-free after which it is 1.75%. It is important to note that you only pay the interest from year 6 and not the loan repayments itself.
  • Interest-free for life in Scotland.
  • The Scottish Government are more generous and will never charge any interest.
  • 20% Payable when the property is sold.
  • The Government will take a 20% cut when the property is sold. This means that if property prices rise the government can make some money from that rise and vice versa.

There are quite a few schemes available to get you on the property ladder.

If you need more information on Help to Buy, shared ownership, or any of the other Government schemes, see our Mortgage scheme list here as a directory to more info.

Paying the Government back

You can also pay back some or all of your equity loan without selling your home. You can make a partial payment called staircasing’. This will only be accepted if it is 10% of the current property value or you are clearing the whole of the loan with the lender.

Which lenders offer Help to Buy mortgages? Most lenders are offering Help to Buy mortgages.

Example.

A home costs £ 400,000. You provide a 5% deposit of £20,000 and the government loans you another £80,000. You, therefore, take a loan out for £300,000- 75%. This effectively pushes down your LTV  and ensures the loan is affordable.

Tip: combine the Help to buy Equity loan with the Help to Buy ISA  for maximum chances.

 

This information is up to date as of 24/09/2017

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Are you considering a help to buy equity loan? Let us know your thoughts  or questions in the comments

Credit hacks:  5 tips  to improve your credit score

Huuti Credit hacks

Credit hacks:  5 tips  to improve your credit score

Your credit score is a number that describes how likely you are to repay a loan. Lenders will use this number to see what shape you are into borrow from them. The higher the number the more likely they are to grant you credit. So in this case, the bigger the better!  Your first step should be getting to grips with the mortgage basics as a low credit score will hamper any chances you have.

 

Why it matters:

It’s important to take care of your credit score as it can literally cost you, a lot! Having bad credit can be a pain because lenders see it as being similar to you getting an ‘F’ in an exam and they will use this to charge you higher interest rates meaning you will pay more :(. This will push you in a bad Loan to Value band and will cost you thousands of pounds per year.

How to improve it:

 

Find a family member with good credit and ride the wave

You never have to use their card, but once authorized on the account all of their payment histories will be replicated in your credit report even if you never use their card,  giving you a quick win. (note, make sure they are paying on time and keeping their balances low as negative marks will also affect you)

Make a 5-minute phone call and Increase your credit limits

This is not for you to indulge in more retail therapy, but to improve a key aspect of your score, your debt ratio. To put it simply it compares your total credit debt in relation to how much you have available. If you spend the same amount as usual with a higher credit limit, your score will be boosted.

Huuti- Credit hacks
Huuti – credit hacks

Ask your landlord to report you!

Before you panic, this is going to help you, promise. With a little charm, your landlord can officially report all of your rental payments via the ‘Rental Exchange Scheme’. By sending these results to credit reference agencies your score can be given a healthy boost. Just make sure that you have been paying on time!

Mix things up a little

Like your partner credit bureaus like to see you mix things up a little bit. By this, we mean that a proportion of your credit score is ranked by how diverse the different types of credit you have been utilizing. Examples include:

Revolving accounts (i.e. credit cards, store cards…)

Installment accounts (i.e. home equity line of credit, auto loans)

Open accounts (utility  accounts)

Be vigilant!

Look out for mistakes that can be easily fixed to boost your score and get on the phone with them ASAP. This is very easy to do and can be corrected quite quickly!

 

Side note:

Before we go our last piece of advice.  See if any companies giving you a negative mark on your score are willing to forgive you and make an amendment. This can be a long shot, however, some companies can actually be quite forgiving and willing to work out a reasonable compromise with you. Because at the end of the day they’re people too and have a credit score that also affects them.

Once you’ve improved your score the key thing is to do no harm! Don’t wreck all of your hard work before applying for anything. The next step for you is to check out if it makes sense to refinance your existing loans to reduce your current outgoings and improve your net income. Chances are you could save money on a cheaper interest rate.Improving your credit file will do good to improve your mortgage prospects.

 

 

This information is up to date as of 23/09/2017

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Have you had any luck boosting your credit score? Let us know your thoughts  or questions in the comments

Considering a Mortgage scheme: Read this

Considering a Mortgage scheme: Read this

If you’re a struggling first-time buyer trying to put together a mortgage deposit with no luck so far. You will be glad to know that the Government is here to help you via its Mortgage schemes.

Government schemes may well get you o  the property ladder faster than you thought but first what should you consider.

There are too many schemes – which is best for your situation?

Before we go any further you must first consider the parameters that will define any success. Firstly you should have a deposit of 5% at least. This will open so many doors and allow you to compare options. However, if you don’t have this then there are still other routes to the property ladder.You should also consider the mortgage types you want to go with.

Which Mortgage scheme is right for you? Well, that depends on the answers you give to the below questions.

  • How much is your mortgage deposit?

  • If you have a 5% deposit then a help to buy mortgage is right up your alley and should be the first mortgage scheme considered.
  • If you are a London resident then the  London Help to Buy scheme should  work too

And if you’re a first-time buyer with savings then  Help to Buy ISAs will help you get more out of your savings as they are tax-free and offer up to £3000 in matched funding from the Government.          

              

  • Are you happy buying a new build?

  • If yes, then both of the Help to Buy schemes above work even better. are Another option is the  Starter Homes scheme which is only available for those under 40 years old and new builds.
  • Are you happy just owning a share of a property and paying subsidized rent?

  • If you are happy owning a minimum 25% of the property then the social HomeBuy scheme will work perfectly fine. It allows you to own a minimum 75% which you get a £9000- £16,000 discount on and pay a subsidized rent on the remaining share of the property which is owned by your council or housing association.
Huuti Mortgage schemes
Huuti Mortgage schemes

Mortgage schemes available

Click here to see the various Government mortgage schemes and always check the mortgage fees concerned.

This information is up to date as of 25/09/2017

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Considering a  mortgage? Let us know your thoughts  or questions on the comment

Choosing a Mortgage type

Huuti Mortgage types

Choosing a Mortgage type: Firstly, it is important to understand there are two main types of mortgages: repayment mortgage and interest only Mortgage

So what is a repayment mortgage?

A repayment mortgage is essentially one where at the end of the term you owe nothing as you repay both the debt and the interest with every monthly repayment.

In the first few years of the mortgage, most of your monthly repayments go towards the interest owed on the mortgage rather than the actual debt. This is why in the first few years you are usually able to save more on interest repayments by switching to a cheaper rate in contrast to towards the middle or end of a mortgage.

So what is an interest-only mortgage?

An interest-only mortgage is essentially a mortgage where your repayments are interest-only and the debt has been deferred and is paid in one installment at the end of the mortgage term. Interest only mortgages are only offered where there are feasible plans to pay the mortgage debt. If the Lender is not satisfied with your plans you will get denied.

Most first-time buyers will not qualify for an interest-only mortgage as you will unlikely be able to show how you plan to repay the original mortgage debt.

As a first-time buyer repayment mortgages are your best bet as you actually get to pay off some of the debt you owe and hence you pay less interest on the outstanding debt. Remortgaging will also provide value for you as you’ll have paid off more of the debt so you’ll be able to get a mortgage with a lower LTV and hopefully a lower interest rate.

But that’s not all…

You now have to consider if you want a fixed rate or a variable rate.

So what is a fixed rate mortgage?

Fixed rate mortgages are mortgages where the interest rate will not move and remains fixed. Lenders will usually offer this mortgage as an incentive to borrowers for an initial period such as 3, 5 or 10 years so to entice you.Your rates will usually rise after this initial period is over and that’s a good time to look into switching.

Fixed rates do sound good and while they offer certainty they do have some issues

  1. If interest rates fall you will not benefit as you are locked in
  2. If you want to switch deals to a better rate it will cost you early penalty charges

So what is a variable rate mortgage?

A variable rate mortgage as the name sounds varies and can vary at any time.This is the rate set by the bank of England and can fluctuate based on economic performance.

To complicate things even further, variable rate mortgage deals fall into three categories: tracker rate mortgages, standard variable rates (SVRs) mortgages and discount rate mortgages.

Tracker  rate mortgages

In this case, the rate tracks a fixed economic indicator – usually the Bank of England base rate. This doesn’t mean it’s the same rate but rather it moves in line with it.

Standard variable rate mortgages (SVRs)

The Standard variable rate is just like the tracker rate but the discretion on when and how it moves is in the hands of the Lender. In reality, they tend to move in line with the bank of England base rate. It is worth checking across a whole of market panel before making a decision as the rates very incredibly between lenders.

Critically, they’re the rate that most borrowers end up on after the end of an incentive period such as a two-year fix or two-year discounted variable rate. But they’re risky as you don’t know when the lender will move its rates  and it can move rates for commercial and economic reasons:

SVR mortgages are rarely available to new customers nowadays, and even if they are, they’re usually they’re not as competitive as other rates.

Huuti- Mortgage types
Huuti- Mortgage types

Discount rate mortgages

Discount rate mortgages are essentially SVR mortgages with a discount on them. This might be 1% etc. This discount is usually offered for a limited time but some lenders do offer lifetime discounts.

Be careful in your interpretation of the rate as people have been known to confuse the discount as the actual rate being paid. Always ask your lender specifically what the rate being paid will be and if you get lost in the mortgage jargons then look them up before you continue.

Quick note: Capped deals used to be quite popular. This was essentially deals where there was a maximum rate. The starting rate was typically more expensive than what was on the market but they did offer some certainty for some. Capped deals come in the format of a variable rate, discount or tracker rate. The rate will usually move in line with the SVR.

So now you know the kind of mortgage you want but how flexible do you want it?

Well, there are different ways in which a mortgage becomes flexible…

  1. Overpaying– a good way to reduce your interest payments but you need to do the maths to see the benefit as every case is different. Lenders will typically place a fine for overpayment or give you an allowance of 10% of outstanding debt per year and anything over that will constitute a fine. Does the mortgage have a ‘borrow back’ facility? If you’re overpaying, a few lenders will allow you to get the overpayments back if needed – though they don’t always shout about it, making it a hidden bonus.   If your lender allows you to do so, then you can effectively use your mortgage as a high-interest savings account. If you leave money in it temporarily, the net effect is the same as earning interest tax-free at the mortgage rate – very few savings accounts will beat that right now.                                                                                                                                                                                                    
  2. Payment holidays– Most lenders will allow you to take a payment holiday where you miss a few payments but usually, this would only be done if you had made overpayments in the past. If you haven’t then your missed payments are usually just recalculated and spread across the lifetime of your remaining term.Watch out for the admin charges that come along with this though.                      
  3. Offset mortgages are another interesting element. They essentially allow you to reduce your monthly payments by putting some savings with the Lender which you have gotten your mortgage from. The savings essentially act as an overpayment on the debt and reduce the debt owed so you pay interest on a lower amount. E.g you get a mortgage for £100,000. If you put savings of £20,000 with the same lender then you essentially only pay interest on the £80,000. The great thing about this is that your savings are yours to withdraw at any time but of course they will no longer offset your debt and therefore your payments will rise to reflect that. The savings are however not paid any interest on by the Lender.                                                                                                                      
  4. Guarantor Mortgages– A guarantor mortgage as the name implies requires a guarantor who essentially commits to take on the debt if you fail to make payments. Your guarantor must seek independent advice as they could lose their assets if they can’t make the payments in the eventuality you fail to make them.Guarantor mortgages may suit self-employed first-time buyers who struggle to display a level of Mortgage affordability sought to by the lender.

This information is up to date as of 21/09/2017

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Are you still confused on what type of mortgage you need? Let us know your thoughts  or questions in the comments

Can I move homes with my Mortgage?

Can I move homes with my mortgage? (porting a mortgage)

 

If your current home is mortgaged and you plan to move home then read on.

Moving your mortgage from one property to the other is known as porting.( see other jargons and their meanings here) In theory, you should be able to do it but this is all dependant on your lender agreeing to it and even if they agree to it you may not qualify for the same rate.

So many factors may affect this including:

  1. Your lender has changed its lending criteria
  2. Your affordability has changed( as you will be reassessed)
  3. You might need to borrow more and end up with two loans
  4. You may not be able to borrow more from your lender as it might have reached its maximum allowance it is able to borrow you
  5. You may be forced to borrow at a higher rate than usual

It is always a good idea to pre-qualify for porting with your lender before committing to buy a new home.Beware that you will need to provide your lender with the exact property details rather than ballpark figures.

Huuti -porting a mortgage
Huuti Move homes with my Mortgage

So you cant switch. What are your other options?

You can certainly leave your existing Mortgage and get a lender who will let you port your current mortgage.

This is highly unlikely but will most certainly cost you a lot of money. Some of the costs you must consider include:

Charges for a new Mortgage: As you know Mortgages come with fees and a new mortgage will come with the same sort of fees your initial mortgage came with.

An early repayment charge: These charges will be even higher if you are within your introductory offer phase. These are usually 1%-5% of the outstanding debt depending on how long you have left of your introductory deal.

An exit fee: If you pay off your mortgage debt in full you will usually be charged an exit fee. This is supposed to represent an admin charge. It might also be called a deeds release fee or a final fee and you may have already paid it upfront when you took out the mortgage, so do check before paying it again.

 

This information is up to date as of 21/09/2017

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Boosting your Mortgage Prospects

Huuti- Mortgage

Boosting your Mortgage Prospects

Since enhanced regulations, lenders are increasingly cautious about approving loans to applicants who may not be able to afford it. To avoid this they thoroughly scrutinize the history of your finances and your application. So you as the borrower will need to make sure everything is on point and that you are financially ready.  As being denied has its negative impacts.You must also consider if your credit score is good enough before you apply.

So what’s important

In this guide we will quickly cover the main categories lenders look at that and what you should prepare for three months in advance. These categories are your affordability, your spending habits, your credit and other loans.

Your affordability

Your affordability is key in determining how well you are able to keep up with the payments if you are approved. This essentially boils down to the lender seeing a consistent yearly income that is enough to keep up with your monthly payments. There are a few tools you could use to monitor your affordability e.g The huuti app which is specific to mortgages.

 

Huuti- Mortgage
Huuti- Mortgage prospects

What you should do:

Use our affordability calculator to get an understanding of how much you could borrow, how much you would be paying back monthly and how this reflects your affordability. If your mortgage payment makes up more than 35% of your combined monthly income then many lenders will not be willing to lend you. As the amount you are paying each month could be too much of a strain.

If this is the case for you then you should either continue saving to increase your deposit or look to cut back on unnecessary luxuries.

Your spending habits

Like we said earlier lenders like to avoid risk, so when it comes to your spending there are two habits that can severely ruin your chances. 1.) Not paying your bills on time and 2.) Not having a history of ‘normal’ spending habits. e.g random betting.

What you need to do:

If you haven’t been doing so already then start paying your bills on time! If you do not have a track record of doing this running up to your application it may severely harm your chances.

Review your bank statements for any transactions that would raise concerns or require an explanation. For example, blowing cash on online gambling and betting may make lenders think you are a risk to lend money to. If this is the case then see if you can do without these for a few months to clear it up a bit.

Keep your Credit score in check

The lender you use is 100% likely to check your credit score so you need to get in ahead of them. You can do this by using a free service to check your credit score online. If Your credit score is high then you are all good you just need to see if there are any mistakes or blemishes that you can fix.

If your score is low then find out what is holding you back and begin to take action on each one ASAP. It can take up to 6 months to fix some blemishes on your credit score depending on the severity so it is best to correct them instantly. You can find ideas to boost your credit score here. Being on the electoral

 Being on the electoral roll is an easy win for boosting your credit and is extremely vital to your application as it is one of the main ways lenders are able to validate your address. This can take a few months to register so the sooner you get this done the better!

If you currently pay rent then the rental exchange scheme is definitely something you should consider in regards to boosting your credit score.

Do not apply for a loan before

It sounds simple, but others have made this mistake before. This can negatively affect you in two ways. Firstly each time you apply for a loan a footprint is left on your credit score lowering it for a period of time which will affect your mortgage application. Secondly, another loan will show that you are increasing your liabilities and the financial burden on yourself which lenders may not take kindly to.

This information is up to date as of 23/09/2017

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Considering a mortgage? Let us know your thoughts  or questions in the comments