Fiducia Wealth Management
Posted in Fiducia News, Guest Editor on 15.03.21
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This month’s guest blog post comes from Howard Reuben, principal and founder of HD Consultants.

While the content for first time Buyers might not be relevant to the majority of clients it may well be for children and grandchildren.

In an ideal world, you could buy a property for cash, with no restrictions on purchase price, location or credit issues.

However, in the real world, for most people, the type of property, its location and the value, is determined by how much can be borrowed, the upfront costs and ongoing affordability required in order to pay the monthly mortgage, mortgage cover, property insurance and premiums too. Buying a house for the first time is anything but simple.

And let’s add to these costs, the amount to be saved for a deposit, and the Stamp Duty cost on top of the purchase price as well.

So, how can you plan to be a successful First Time Buyer?

The number one action to be carried out is to check your credit file.  There is no point in applying for a mortgage if the credit reference report includes missed payments, arrears, County Court Judgments, bankruptcies, defaults etc.  In these circumstances, the amount you can borrow compared to the value of the property (also known as the Loan to Value) would be significantly reduced. This could mean much higher deposit requirements, or indeed a situation where you may not be approved for any mortgage at all until the credit report was ‘clean’ again and that could take 6 years from the last adverse entry.

The second action would be to ensure that you have saved enough for a deposit (the difference between the purchase price and the mortgage amount), and also enough to cover any possible Stamp Duty, moving costs, furniture purchases, utility connections and other ancillary costs as well. At HD Consultants, we recommend leaving sufficient cash for an emergency fund in the bank too.

When you know that your credit report is sound and you’re on your way to achieving the required deposit, the third action is to work with a professional mortgage adviser who can provide you with access to the widest range of banks and lenders.  Mortgage advisers also have access to a range of banks who only lend via the intermediary market, giving you the best choice of lenders and products overall.  And, in addition, mortgage advisers will also be able to show you exclusive mortgage deals – provided by the same High Street banks that you can visit directly – but which (by the definition) are only available exclusively via your adviser.

To summarise, check your credit file, check your affordability, secure your best value and most flexible mortgage arrangement via a professional mortgage adviser.

In the 3rd March 2021 Budget, the Chancellor mentioned two major announcements.  The first being that the underlying Stamp Duty tax waiver / holiday would be extended until 30th June for all purchases up to £500,000.  The threshold reduces to £250,000 until the end of September, from which point the pre-Covid19 rate of £125,000 would then be reintroduced.

The second major announcement is the new Mortgage Guarantee scheme whereby the Government will support the mortgage lenders to reintroduce 95% LTV mortgages again, by providing an underlying guarantee for these mortgages.  Lloyds, NatWest, Santander, Barclays and HSBC have already confirmed their part in this new launch with Virgin Money readying to launch in May. All mortgages will need to be repayment, not interest-only, on a loan to value of between 91 to 95 per cent and are subject to the usual affordability rules. All participating lenders will also be required to offer a five-year fixed rate product as part of its guaranteed range of mortgages.

So, being a successful First Time Buyer means taking some time right now to do a bit of forward planning.  Working with a mortgage adviser also means that you will be supported throughout the process and will have access to the most suitable products for which you are eligible.

Howard Reuben is Principal and Founder of H D Consultants and a specialist in property investor-focused Buy to Let Mortgages. To speak to Howard or arrange a meeting with him or one of his team, please email howard@hdconsultants.net.

Fiducia Wealth Management
Posted in Fiducia News, Guest Editor on 15.03.21

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