Over recent times, tax changes have delivered a sharp blow to the buy-to-let market and yet it has simply rode out the punch and stood firm. This is a pretty clear reflection of the strength of the market, which is essentially based on the fact that the UK has a chronic shortage of housing of all varieties, coupled with a large pool of people for whom renting is clearly the most appropriate choice, such as students and mobile young adults. With a significant rise recently in the cost of renting, it may seem and attractive investment. If you are considering incorporating buy-to-let into your portfolio, here are some questions to ask. Do I really want to be a landlord/landlady? Even if your first thought is that you’re going to use an agency, ultimately responsibility for the property and tenants therein still rests with you. The agency will simply be acting on your behalf and, of course, they will be charging a fee for this. Are the financial practicalities of buy-to-let investment are right for me at this point? Even if you opt for an interest-only mortgage, you are very likely to need a deposit and that deposit could be in the region of 25% or more. That money stays in your mortgage lender’s possession until either the mortgage is paid off or the house is sold. Selling houses tends to be a relatively slow process even in the hottest of markets (at least when compared to selling other forms of investment such as shares) and if a market is slow, it can take an extended period for a property to sell and in a worst case this could even be at a loss. Your mortgage has to be repaid regardless, hence you are the one who has to absorb any loss. Does BTL investment fit in with my overall aims/goals? As a rule of thumb, BTL is all about generating income, the fact that you may end up with an asset is an extra bonus and it should be noted that in some situations BTL investment can still be worthwhile even if it involves using an interest-only mortgage with the result that you never actually own the house. In other situations, BTL may be an inappropriate investment, even if you can afford a repayment mortgage, meaning that you will end up with an asset. Everything depends on each individual’s particular situation. Do the sums really add up? If you’re still interested in buy-to-let then you need to make sure you do a very thorough job of checking your sums. In addition to the total purchase cost of the house (including transactional costs and stamp-duty surcharge), you will also need to account for all the associated costs, such as insurance, remembering that there are likely to be different rates for BTL products as compared with their residential counterparts. You will then need to see if you can feasibly recoup these costs in the form of rental income and make a profit. You may also wish to leave yourself a substantial margin of breathing space in case of future tax changes. Of course, while you can investigate BTL in general, you will only be able to go into specifics once you start looking at a particular property and you will only find out whether or not your projections about rental income were accurate when you actually start letting out the property. There’s more to investment than property and more to property than BTL BTL can be a very good investment for some people in some situations, but it can be useful to remember that there are other ways to invest in property, for example investing in property development. These can be more appropriate choices for some people. Likewise, there are many other investment options out there. With such a wide range of possibilities, you may find that your best starting point is to get some unbiased, professional financial advice If you are considering a buy to let venture, I will be happy to have a chat. The FCA does not regulate development finance and we act as introducers for it The FCA does not regulate some forms of buy to let mortgages

Even if you’re not a homeowner, you’ve probably noticed that the Bank of England raised interest rates in both December and this February.  Given the state of inflation, there may well be more rises on the cards and they may be sooner rather than later.  With that in mind, here are some thoughts on how to plan for a situation when interest rates are trending upwards. Take care of your credit record Your credit matters regardless of what happens with interest rates. The higher interest rates go, however, the more important it is to take good care of your credit record. This is because prices are going to rise across the board (although some prices may rise more than others). It, therefore, becomes even more important to qualify for the best possible deals. If you manage your money responsibly then, for the most part, your credit record should take care of itself. With that said, however, it’s advisable to check it at least once a year for mistakes. It’s better to check it more often (ideally once a month). This will not only ensure that mistakes are caught quickly but also protect you against identity theft. Review your consumer debt Regardless of whether you’re already a homeowner or a potential buyer or plan to be a tenant for the foreseeable future, it makes sense to get on top of your consumer debt. Again, this applies regardless of what’s happening with interest rates. It is, however, most important when interest rates are rising and/or high. There are two big differences between consumer debt and mortgage debt. The first is that consumer debt tends to have much higher interest rates. The second is that it tends to be much easier to move. For example, if you want to transfer a credit-card balance, you generally just need to fill in a form and get an approval. If, however, you want to remortgage, you need to go through a much more thorough assessment with more paperwork. You are also likely to need your house to be revalued and this will come at a cost. This means that you should generally review your consumer-debt products at least once a year if not once every six months (especially if interest rates are rising). Make sure your mortgage never falls onto the SVR When you take out a mortgage, you sign up for a deal that lasts for a certain period of time. Once this deal runs out you will be placed onto your lender’s standard variable rate (SVR). This could be a lot more expensive than even an average deal let alone a market-leading one. As a result, letting your mortgage fall onto the SVR is one of the worst mistakes you can make, even when interest rates are low. When interest rates are high, it’s a lot worse. Possibly the worst situation of all, however, is when interest rates are rising. This puts you in a situation where you know you could probably have got a (much) better deal if you had just been quicker. If you’re put off remortgaging out of concern that your finances will have been too badly damaged by COVID19, then at least speak to a mortgage broker. Remember, if it’s been a while since you last took out your mortgage, there’s a good chance you’ve built up a decent bit of equity since then. This could be enough to secure you a new mortgage. Consider making overpayments Your ability to make overpayments will depend on both your mortgage and your circumstances.  If, however, you are able to do so, then it’s well worth considering.  Remember only to overpay money you can afford to be without.  If in doubt, keep the money in cash to use as you need it.  You should get a somewhat better return on it. It's a great time to review your mortgage, so please do get in touch.

Last year, saw 408,379 people collect the keys to their first home. It was the first year the number of first-time buyers had exceeded 400K since 2006. If you were one of those first-time buyers, you might be feeling somewhat nervous about the future. Here are some tips to guide you. Prepare for interest-rate rises It’s fine to hope for the best as long as you prepare for the worst. If the Bank of England raises interest rates to combat inflation, then lenders will almost certainly charge more for mortgages. If you’re on a fixed-rate mortgage then this will not impact you immediately. If you’re on a variable rate, it will. As the increase is only slight, however, you should hopefully still have room to manoeuvre. Regardless of whether your rate is fixed or variable, it’s vital to avoid landing on your lender’s Standard Variable Rate (SVR). This means that if you bought early last year and had a one-year introductory rate, you need to move quickly to secure a new deal. If you bought later in the year and/or had a longer deal, you have a bit more time on your side. Be careful not to let it go to waste. Put a note in your calendar so you remember to do your research and administration in good time. Look after your credit record When your current deal comes to an end, you’ll need to remortgage. This essentially involves going through the process of mortgaging all over again. Usually, your home will be revalued, your income and outgoings will be reassessed and your credit record will be rechecked. The fact that you got a mortgage in the first place means that your credit record was at least in passable shape. You should, therefore, be able to keep it looking good just by keeping up the good habits. In particular, do everything you can to pay your bills in full and on time. Additionally, check your credit records at least once a year for mistakes and signs of fraud. In either case, you want to take action as quickly as possible. The quicker you act, the more time you give yourself to deal with issues before they become a potential problem. Be careful what changes you make to your house One of the benefits of being a first-time buyer is that, for the most part, you can do what you like to your house. There are, however, two key points to keep in mind. Firstly, even as a homeowner, you need to stay on the right side of planning regulations. If you’re in any doubt as to whether or not a change you make needs planning permission, check until you are sure. Secondly, updating your home may not actually add any value to it. Even if it does, it may not add as much as you spent. In principle, this is fine if it brings you joy and you can afford it. In practice, it may mean that you miss out on an opportunity to improve your loan-to-vehicle ratio. In other words, if you’d saved the money you spent on home renovations and remortgaged for a lower amount, you could have been better off financially. Which is more important is entirely a judgement call. What matters is that you think through any decisions carefully and make them mindfully. Make sure you have the right insurance Insurance is not “set-and-forget”.  Check your cover at least once a year.  Make sure that you have the right type of cover as well as the right level of cover.  This can save you from nasty financial shocks that could seriously derail your finances. Please contact me for advice or to make your mortgage application.

A new year means a new set of decorating trends. Like all trends, they’re best treated as a source of inspiration rather than as rules you need to follow. With that said, here’s a quick guide to what industry insiders expect to be popular in 2022. DIY/upcycling/sustainability Technically, those are three trends but they are similar enough to be grouped together. All of these trends have been around for a while now. They are, however, showing no signs of fading, quite the opposite in fact. Both DIYing and upcycling tie in with the general desire (and need) to lead more sustainable lifestyles. Upcycling has grown in popularity as a way to give old furniture pieces a new lease of life. It is, however, now being increasingly used as a way to get more out of relatively new furniture. IKEA has long encouraged buyers to upcycle its pieces. Recently, it has been very publicly ramping up its support for “IKEA hacks”. This not only helps to boost IKEA’s sustainability credentials. It also helps to give its furniture more perceived value. Instead of being viewed as disposable “fast furniture”, it’s now seen as up-cyclable. Upcycling newer furniture tends to be a lot easier than upcycling older pieces. This is because newer pieces tend to need less in the way of restoration. They usually just need a facelift. It’s, therefore, safe to assume that this trend is just going to keep on growing over the foreseeable future. Also, look out for 3D art and incorporating sustainability with unusual design features. Plants and nature This is another trend that has been around for a while and shows no sign of fading away. People who’re lucky enough to have gardens have been making the most of them. The old trend of concreting them over for parking seems to have vanished. If it comes back in any form, it will probably be in a less permanent one such as using gravel instead of concrete. “Hard” gardens (with decking and gravel and no lawn) are still popular. They are, however, definitely not the only option for small gardens. People are increasingly appreciating lawns (or at least AstroTurf) and beds, often raised ones. Where people have space, outdoor offices and s/he sheds are looking like they will remain popular investments. When people don’t have gardens, they will be making the most of any outdoor space they do have, even if that’s just a windowsill. Regardless of whether or not they have outdoor space, people will be bringing the outdoors inside. Houseplants are famously huge with millennials. They actually appeal to people from many generations. For people who don’t have the time or energy (or lifestyle) to manage real plants, faux plants are getting more realistic all the time. There is also a lot of plant-based decor and household items made from natural materials. These also tie in with the sustainability trend. Colour Again, colour never really went away completely but it has taken something of a back seat over recent years. This isn’t necessarily because it fell out of favour but because homes have been getting smaller and smaller. Many people played safe and kept large areas such as walls and floors in neutral colours, particularly whites and creams. This not only kept everything cohesive but also blurred the boundaries between different parts of the home thus creating the illusion of more space. This year could bring back the boldness of the 60s & 70s in terms of colour. Space considerations are still likely to play a major role in decor for well into the future. People do, however, seem to be getting more comfortable with them. This is reflected in a growing willingness to be more adventurous with colours even over larger areas. Green is definitely having a moment. Again, this ties in with the trends of nature and sustainability. It’s all about being calm and relaxing especially with natural lighting. As with all DIY, it’s worth checking that your insurance covers you, just in case of any unforeseen accidents!

The Bank of England recently made headlines with its first interest rate rise in three years.  This increase is now being passed on to people with variable-rate mortgages.  It is also being factored into new fixed-rate products.  What’s more, further increases are definitely a possibility.  This raises the question of where the housing market goes from here. A brief history of interest rates Between July 2007 and August 2016, the UK’s base rate went down and down without a single increase. Over the course of nearly 10 years, it fell from 5.75% to 0.25%. The Bank of England finally raised the base rate again in November 2017, taking it from 0.25% to 0.5%. Their action received a lot of media attention. In August 2018, the Bank of England raised the base rate again, taking it from 0.5% to 0.75%. It stayed at 0.75% until March 2020 when it was cut twice in quick succession. The first cut took it back to 0.25%. The second cut took it to 0.1%. It stayed there until December 2021 when the Bank of England moved it back up to 0.25%. How the rate increase will impact existing mortgage holders The effect of the rate increase is likely to come as a trickle rather than a flood. First, it will be passed on to people with variable-rate mortgages. Then it will feed through to people on fixed-rate mortgages as their fixed-term deals come to an end. People on variable-rate mortgages who can remortgage now are still in a relatively strong position. Although they have missed out on the very best deals, interest rates are still low by historical standards. People on fixed-rate mortgages will only feel the impact when their existing fixed-rate deal comes to an end. If that is soon, they may be able to remortgage now and protect themselves against potential increases. If it is further into the future, then they have breathing space. They can use this breathing space to build up equity and lower their loan-to-vehicle ratio. How the rate increase will impact new buyers The rate increase will be priced into mortgage products. It will therefore impact affordability. This could mean that some buyers move from just qualifying for mortgages to not qualifying for mortgages. Future rate increases could see the bar move even higher. On the other hand, if rate increases slow (or stop) price inflation in the housing market, new buyers could actually benefit. A cooling in the housing market coupled with a strong job market could help wages to catch up with house prices. How the rate increase will impact the housing market Like all other markets, the housing market is driven by supply and demand. If demand remains high, then house prices should at least remain stable. They may even rise. If, however, demand reduces, then house prices will, at best, remain stable. They may even fall. For practical purposes, “demand” means “demand from people who are willing and able to pay”. A rate increase may not impact people’s willingness to pay. As previously mentioned, however, it may impact their ability to pay. With that said, interest rates are definitely not the only factor that impacts a person’s ability to afford a mortgage. Their income is also a factor as is the overall cost of living. This means that the potential direction of the housing market is likely to depend greatly on the UK’s economy. If it recovers quickly and grows, then it may carry on as usual. In fact, over the long term, the decision to raise interest rates may turn out to be a blessing in disguise.  If it cools inflation then everyone could end up with more disposable income regardless of whether or not they have a mortgage. For mortgage advice, please get in touch

The UK’s base rate is currently just about as low as it can go (and stay in positive numbers). This means that, realistically, there is far more scope for it to go up than down. It’s likely that a lot will depend on the direction of inflation. Mortgage holders should, however, think carefully about how they would manage if interest rates were to start moving upwards. Understanding interest rates In basic terms, the UK government’s target inflation rate is 2%. It allows for a +/-1% deviation from this. If inflation drops too far below target, the Bank of England can either lower interest rates or instigate quantitative easing (or do a combination of both). If, however, inflation rises too far above the target, then the BoE’s only option is to raise interest rates (or accept excessive inflation). This means that all current and prospective mortgage holders should very definitely be considering what would happen in the event of interest rates going up. How far and fast could interest rates rise? Currently, there is no limit on how far interest rates could rise. The UK has had double-digit interest rates in the past (albeit not this century). Similarly, in principle, there is nothing in law to stop the Bank of England from taking rates from (almost) 0 to double-digits (or higher) without any notice. That said, just because they can, it doesn’t mean that they will. At the end of the day, the Bank of England’s job is to keep inflation on target (or at least within acceptable limits). This means that any interest-rate rises (or reductions) are always going to reflect and be in proportion to the challenge posed by inflation. The October 2021 consumer price index put year on year inflation at 4.2%. This is more than double the government’s target but not that far above its tolerable boundary. It’s certainly well short of hyperinflation. That being so, it’s reasonable to assume that the BoE will start with small increases to the base rate. If those have the desired effect, the Bank of England may stop there. If they don’t, there could be further increases but again, these will be in proportion to the problem. In other words, unless inflation really starts to get out of control, interest rates will increase gradually rather than suddenly. What this means for (prospective) mortgage holders Depending on your point of view, it could have huge implications or mean absolutely nothing. If you have (or are considering getting) a mortgage, you should always be on the lookout for the best deal. You should also be making a point of being ready to switch to a new deal as soon as any current special offer comes to an end. In other words, you should do everything possible to avoid winding up on your lender’s standard variable rate. If you’re currently on an introductory deal for a variable-rate mortgage, then do your sums to see if the cost of remortgaging is financially justified by the benefit. If it is, then you have a clear signal to remortgage. It may or may not be a signal to remortgage at a fixed rate. That is a separate question. If it isn’t, then you need to ask yourself if you’re willing to pay a premium for the security of a fixed-rate mortgage. If you’re on a variable-rate mortgage then think carefully before changing to a fixed-rate one. In particular, think carefully about how long you want to fix for. On the one hand, in principle, longer-term fixes offer more security. On the other hand, this security usually comes at a price. It’s up to you to decide if that price is worth it. Whatever type of mortgage you choose, it’s worth thinking about how to protect your home if you find yourself in one of life’s tough patches. This could include getting insurance for your home, its outbuildings and its contents. You could also look at payment protection insurance (for the employed), income-protection insurance and critical-illness cover. For home and contents insurance and payment protection insurance we act as introducers only On clicking the third-party website links, you will leave the regulated site of The Mortgage Network. Neither The Mortgage Network nor Sesame Ltd is responsible for the accuracy of the information contained within the linked site.

Home decoration has always been popular. Since the pandemic began, it’s become more popular than ever. The Christmas season tends to give some good pointers to what’s likely to be popular over the coming year. With that in mind, here are some of the top trends emerging for Christmas 2021 and what they could mean for 2022. Sustainability Concerns over sustainability have now been around for so long that it seems unfair to describe them as a trend. It’s probably more accurate to say that concerns about sustainability manifest themselves in different ways and that these can be described as trends. Two trends that have been steadily growing are the use of fake Christmas trees and the use of LED lights. In fact, these trends have increasingly been going hand-in-hand as fake Christmas trees come with integrated lights. Outside of Christmas fake plants are also a growing trend. These work for people who don’t have green fingers and/or enough space to keep real plants. Some people are going for realistic fake plants. There is, however, a growing market for fake plants which are obviously fake. These essentially combine the popularity of plants with the popularity of art. Outside of trees and plants, however, it’s natural all the way. Using natural materials for decor now goes way beyond cut flowers. Rustic and rural themes are popular. There’s a growing appetite for handmade decorations either shop-bought or made at home. Decorations are openly reused “as is”, sometimes at other times of the year. Tradition With hindsight, it was probably inevitable that the 2020s would draw style inspiration from the 1920s. Add in the effects of the pandemic and it’s easy to see why people would want to immerse themselves in the comfort of tradition. As with sustainability, this trend is manifesting itself in all kinds of ways. For Christmas, vintage and vintage-look decorations are very much back. What’s more, people are going “all in” on traditional customs such as stockings, tree decorations (which now go right down to the base of the tree with tree collars making a big comeback) and outdoor decorations (e..g wreaths). Other seasonal decor looks set to follow much the same basic trend even if it’s less elaborate for most of the year. The big exception here is tablescapes. These are huge all year round. This is possibly in part due to the restrictions imposed in the earlier part of the pandemic. Customisation The last key trend is the trend towards customisation and personalisation.  Possibly in a reaction to the “influencer” world of social media, people have increasingly been moving away from “following the herd”. One clear sign of this has been the growing trend of people making or buying decorations made from unusual materials. For example, there are now Christmas wreaths made of pompoms. These also often tie into the trends of sustainability and tradition. For example, pompom wreaths are often made from scrap material, they’re reusable and they can still have a traditional feel. A word of caution In general, you’ll only need to inform your home insurer if you’re making significant changes to your home. That’s unlikely to be the case when you’re changing out basic seasonal decor. With that said, if your decorating journey starts leading you down the path of larger-scale home improvements, make sure that your insurer knows about them. Also, remember that the more you change seasonal decor, the more likely it is that you’ll have a minor accident during the process. For example, you could knock something over and have it break something else. This type of damage is generally only covered if you specifically have accidental damage cover on your home insurance. Accidental-damage cover is well worth considering, especially if you have children and/or pets. Even if you don't, the extra money can literally be a small price to pay for the protection it gives you. For home insurance products we act as introducers only

The UK mortgage market has a wide selection of both variable-rate and fixed-rate mortgages. It also has other niche mortgage products such as offset mortgages. One of the more recent entrants to the market is the 40-year mortgage on a fixed rate. In principle, this offers long-term certainty. In practice, it has significant, potential drawbacks as well as benefits. Understanding long-term fixes Possibly the most important point to understand about fixed-rate mortgages, in general, is that they are not necessarily more affordable than variable-rate mortgages. In fact, they can work out more expensive than variable-rate mortgages. The reason for this is that lenders have to factor in the possibility of increases to the base rate over the lifetime of the fixed-rate term. Obviously, the longer the fixed-rate term, the harder it is to predict what will happen with the base rate. Lenders, therefore, have a clear motivation, if not a duty (to their shareholders) to make sure that they are covered if the UK undergoes an extended period of high-interest rates. This means that longer-term fixes are likely to be (much) more expensive than shorter-term ones. Then, of course, there is the complication of people exiting their mortgage early. For example, a customer might choose to keep their fix when interest rates are high but move to another product if it looks like the UK will have an extended period of low-interest rates. This risk would also need to be factored into the price of the product. Last but definitely not least, there is the question of how the borrower will fund the later years of the mortgage. Borrowers would need to be very young at the start of the loan to pay it off before their retirement years. Younger borrowers, however, could potentially go through some very significant life changes which could negatively impact their ability to make repayments. Again, this risk would have to be baked into the price of the product. The benefits of long-term fixes Long-term fixes have the benefit of stability. A borrower knows exactly what they are going to pay from one month to the next for the entire lifetime of the mortgage. This can make it easier for people to budget and forecast what their finances will look like even into the long-term future. Even if long-term fixes are not the most affordable options, they can be the most reassuring ones. Many people will pay a premium for value-add services. You could make a case for arguing that delivering peace of mind is one of the most valuable services there can be. The disadvantages of long-term fixes Paying a premium for stability is fine in theory. In practice, however, too much stability can weigh you down. Realistically, if you’re young enough to take on a 40-year mortgage then you’re young enough to have at least one major change in your life during that time. You may have several. Any one of these could require you to update your housing in some way. For example, you could form a couple, have children and then have those children fly the nest. You could have your parents move in with you or you decide to go and live with them. You could switch between working on-site and working at home. Likewise, you could switch between employment and self-employment. Paying the premium for a super-long-term fix may, therefore, simply be a waste of money.  What’s more, it could be a waste of money which has serious implications for your later years.  In simple terms, if you pay over the odds for your mortgage then you will reduce the amount of money you can put aside for other purposes such are paying down debts and saving for your later years. For mortgage advice, please get in touch

The pandemic has created a rather contradictory situation in the housing market. On the one hand, sales of residential property have been booming. On the other, the pandemic has created, or exacerbated, financial challenges for many homeowners. This could lead to some interesting times over the next year or two. Here is a quick guide to what you need to know. COVID19-specific measures have ended For the time being, COVID19-specific support measures have ended. This means that mortgage-holders in financial difficulties need to use standard processes for resolving them. Hopefully, in most cases, this will simply mean applying to their lender for some form of support rather than insolvency, bankruptcy and/or foreclosure. It is, technically, possible that the government could reintroduce COVID19-related support measures. It is, however, difficult to see any circumstances in which they would do so other than a significant upsurge in cases. Quite bluntly, the UK must hold a general election by 2nd May 2024. It, therefore, seems reasonable to assume that the government will want the country to be back to normal in plenty of time for the start of the next election campaign. This means dealing with the economic effects of the pandemic (and Brexit) and getting the economy rolling again. Interest rates could rise again If the combined impact of COVID19 and Brexit leads to price rises, then the Bank of England will be faced with a hard choice. Option one is to raise interest rates to take inflation even though this would hurt borrowers. Option two is to allow inflation to rise above its designated margin of error even though this would potentially hurt everyone. With the base rate currently at 0.1%, the Bank of England may decide to put borrowers under (more) pressure to spare the economy the wider effects of inflation. This approach would presumably go down well with those who had managed to save during the pandemic. How much it would hurt borrowers would largely depend on their situation. Borrowers on fixed rates would only see their mortgage repayments go up at the end of the fixed term. They could, however, still find themselves under pressure if they also had variable-rate debt such as credit-card debt. Borrowers on variable rates or coming to the end of their deal would feel the impact much more quickly. That said, the real-world impact of this would depend largely on the bigger economic picture. If price inflation was mirrored by wage inflation then borrowers in work should break even (or thereabouts). Of course, that will not help borrowers out of work or borrowers on fixed incomes (e.g pensioners). If it’s not, then lenders could find themselves dealing with a lot of distressed borrowers. Lenders may become more cautious The UK is, hopefully, now on the road to recovery from COVID19 (and Brexit). The problem is that, as yet, nobody really knows whether that road is going to be a superfast highway or a pothole-filled off-road track full of sharp bends and dangerous bumps. Similarly, nobody knows if the UK is going to have to navigate it in good conditions or bad ones. If the UK can set itself on a clear path to recovery, even if it’s a long one, then everyone, including lenders can make plans with reasonable confidence. Until then, however, lenders are essentially going to have to feel their way forward, responding to circumstances. It would therefore hardly be a surprise if they chose to proceed with great caution. This might not be a problem for those with large deposits and/or plenty of equity in their current home.  It could, however, become a major problem for borrowers in less fortunate positions.  In particular, more recent buyers with minimal equity could find themselves unable to remortgage and hence stuck on their current lender’s standard variable rate. At the moment, it appears to still be time for optimism, though with new variants and talk of lockdown measures, considering a fixed rate could be a conversation to have sooner rather than later. Please get in touch if you'd like advice.

Fundamentally, there is only one way to get a yes from a mortgage lender. That is to convince them that you are able and willing to pay back whatever they lend you. Part of this depends on your general situation, especially your financial situation. Another part of it depends on what lender you approach and how. With that in mind, here are some tips on how to get a yes from a mortgage lender. Polish your credit rating If COVID19 has ravaged your credit score then you need to put right the damage as quickly as possible. This may seem disheartening but the sooner you get started the sooner you’ll have it back in the sort of condition lenders want to see. Even if you’ve been holding your own through COVID19, it’s still important to check your credit record. First of all, mistakes happen and if they do you want them corrected before you apply for a mortgage. Secondly, your credit record can alert you to any fraud involving your identity. Again, if this happens, you want it sorted before you apply for a mortgage. Think about what your financial statements say about you Assume that any prospective lender is going to want to see six months worth of financial statements. They may want to see less but it’s highly unlikely that they’ll want to see any fewer than three months worth of statements. Take a cold, hard look at your bank statements and see what impression they give of your spending. In general, the lower your deposit, the more important it is to show that you’re managing your money well. For example, if you have a 20% deposit then a lender may not worry too much if your bank statements show that you like to socialize. If, however, you only have a 5% deposit and a trail of restaurant meals on your bank statements, then a lender may question your priorities. If you’re spending money because you’re building up a side-hustle then it’s advisable to get a credit card specifically for that purpose. A standard personal one is fine (assuming you’re working as a sole trader). Just make sure that it’s kept for your business so you can separate out the transactions easily for a prospective mortgage lender (and HMRC). Do your best to build up a solid deposit If you can put together a deposit of at least 5% then you may be able to qualify for the government’s Help to Buy Mortgage Guarantee Scheme. It’s certainly worth checking this out as it effectively boosts your deposit by up to 15%. In other words, it essentially turns a 5% deposit into a 20% deposit and hence can open up a lot more deals for you. If you can’t (or don’t want to) for the government’s Help to Buy Mortgage Guarantee Scheme, then you may still be able to get a mortgage. You are, however, almost certainly going to need to work with a specialist lender. This means that using a mortgage broker is highly advisable. Aim for stability This may seem like an odd comment but the key point to remember is that your lender is trying to predict your ability and willingness to repay your mortgage. The only information they have to go on is what you’ve done in the past. Having a decent financial track record over an extended period is likely to make you far more attractive than having a stellar track record part of the time and an awful one part of the time.  Similarly, try to avoid making significant changes just before applying for a mortgage.  For example, if you’re thinking of a career change, wait until after you’ve been approved. For advice and help please get in touch.

The government has now unwound most of its COVID19-specific support and relief measures. There is, however, one unofficial support measure still remaining. That is the 0.1% interest rate set by the Bank of England way back at the start of the pandemic. This too is expected to be rolled back shortly with further increases possibly to come. Inflation is a pressing problem Right now, inflation is running at about 3%. The Bank of England’s target is 2%, with a 1% margin of error in both directions. Over the course of the pandemic, this target was largely ignored. In simple terms, there was really no point in trying to apply normal controls to a completely abnormal situation. Now the UK is returning to some form of normality (even if it is a “new normal”), the Bank of England is going to have to start returning to “business as usual” with regard to its role in managing inflation. This does not necessarily mean that it’s going to start implementing major hikes in short order. The Bank of England is likely to be well aware that interest-rate hikes will hurt the UK’s many borrowers, especially those on low incomes. A more likely outcome is that the Bank of England will do the absolute minimum necessary to keep inflation within the boundaries of its margin of error, if only just. It may even allow inflation to go slightly outside these boundaries as long as it is only just outside and there appears to be no danger of it getting out of control. Mortgage holders may be best to fix Fixing your interest rate now may not actually cut the overall amount you pay back on your mortgage. In fact, you could end up paying more than if you stuck it out with a variable-rate mortgage. It does, however, let you know exactly how much to budget for your mortgage each month. It also eliminates the stress of wondering just how high-interest rates could go. Going for a longer-term fix, such as three to five years would give you security while you (continue to) build up equity in your home. Hopefully, by the end of that time, the UK should be very much over COVID19 (and Brexit) and genuinely back into business-as-usual mode. Even if it isn’t, you should have built up more equity in your home and hence be in a better position when you come to remortgage. If you’re really struggling, then you might want to consider switching to an interest-only mortgage. This would, however, usually only be a stop-gap measure. You would need either to find a way to improve your finances and return to an interest-only mortgage or sell your home and rent until you were able to reenter the property market. People with other debt also need to prepare If your credit record is good, you may still be able to shift debt onto a 0% balance-transfer card. You could then continue your repayments at their current level but have more of them go towards repaying the principle rather than paying interest. If this is not possible, then you could try consolidating your debt into a personal loan with more manageable repayments. As with fixed-rate mortgages, this would not necessarily reduce the amount you owe. It would simply give you more breathing space over the short term. You could then review as the UK really does return to economic normality. Your last option is to grit your teeth and start increasing the repayments you make on your debts even if this is painful in the short term.  Paying just a few pounds extra each month may seem pointless but actually, it really isn’t.  Over time, these extra payments will add up and could potentially save you a lot of money. For mortgage advice, please get in touch

Although nobody has a crystal ball, everybody can read numbers or, more accurately, ratios. Currently, interest rates are at historic lows while inflation is well above the government’s 2% target. This means that mortgage holders should be making absolutely sure that they’re on the best deal for them and may wish to give particular consideration to fixed-rate mortgages. If you can remortgage, look at your options If you’re coming to the end of your introductory deal, then you should definitely be researching your options. This is advisable at the best of times. Now, it’s arguably vital. Currently, your big decision is whether or not you’re happy to take your chances with a variable-rate mortgage. Including variable-rate mortgages in your search criteria will, of course, give you a greater selection of products than just sticking to fixed-rate deals. On the other hand, if you do opt for a variable-rate mortgage, you have to accept the risk of being locked into a deal while interest rates go up, possibly indefinitely. If you go for a fixed-rate deal, you run the risk of lenders pricing in the risk of an interest-rate increase which never materializes. This could leave you paying more than you would have done on a variable-rate mortgage. On the other hand, even if this did happen, you would still have the stability of knowing what you were going to be paying from one month to the next. Whatever you do, you almost certainly want to avoid finding yourself on your lender’s standard variable rate. This is highly unlikely to be the best deal available to you. If you do wind up on it, then it should only be as a short-term option. For example, if you aren’t sure what your plans are, you may wish to hold off remortgaging until you have clarity. If you can’t remortgage see what you can do If you’re still within a lock-in period, then you may find that buying your way out of the lock-in just isn’t financially viable. You could try asking your current lender if they will switch you to another deal. If they say no, then just make a note to start the remortgaging process as soon as you can. In the meantime, see what you can do to protect yourself if interest rates do rise. For example, could you make overpayments? If not, could you put money aside so that you have extra cash in hand if your monthly mortgage payments do rise? If you don’t have the money is there any way for you to get it? For example, could you take on extra work, start a side hustle or monetize your home in some way, such as by using the “rent-a-room” scheme? Also, do everything you can to polish your credit record until it gleams. This isn’t the be-all-and-end-all of mortgage applications. It is, however, most certainly one of the key factors lenders will consider when assessing your application. Review your insurance Although the UK economy is currently heading back towards normality, there’s never any harm in being on the safe side. In other words, consider what would happen if you were unable to work for any reason, even if only temporarily. Your first resort might be cash savings but these will only take you so far. With that in mind, it might be a good idea to look at supplementing cash savings with at least some form of insurance. If you’re in paid employment, you should certainly look at what your employer offers. This may be sufficient, but then again it may not. If it isn’t then, as an employee, you could look at income protection insurance. Regardless of your employment status, you might (also) want to consider income protection insurance and/or critical illness cover.  These could both help to cover your mortgage if you went through a financial rough patch. For help and advice please get in touch