According to figures from Rightmove, the second half of 2020 saw the Cotswolds surge in popularity amongst people looking online for property, so escaping to the country. Admittedly, there is a long way between search and completion. There is also a big difference between six months and a long-term trend. The figures do, however, give food for thought. Can the UK really give up city life? The question of whether or not the UK can really give up city life is, arguably, very much connected with the question of whether or not remote-/hybrid work is here to stay. With the caveat that remote-/hybrid working is not yet suitable for every job or every employer, the answer to that question appears to be yes. According to figures from LinkedIn, remote job listings are on the rise. Furthermore, it’s entirely possible for jobs to go remote-/hybrid without being advertised. It would simply require an agreement between the employer and the employee. The more work becomes an activity rather than a location, the less need there is for people to be concentrated in cities and commuter belts. Of course, there is a difference between need and want. Everybody has their own idea of quality of life. Post-COVID19, however, people could be reassessing their priorities. City life versus country life Cities, literally by definition, are places with high population density. This means that space is at a premium and this is reflected in property prices. In cities, those on the lowest incomes may only be able to afford a very small living space. This might be a room in an HMO, a bedsit, a shared flat or a studio. Tiny living spaces may not be an issue when you have all the facilities of a city open to you. COVID19, however, plainly demonstrated what can happen when those facilities are curtailed. Technically, once COVID19 is fully brought under control, this should not be an issue. In practice, the situation is a bit more complicated. Firstly, it’s simply impossible to guarantee that the COVID19 situation will be a one-off. Secondly, even if there were, there’s still the fact that living small has its inconveniences as well as its benefits. For example, if your home is too small for a washing machine, then you need to use a laundrette. This costs extra money and can be a drain on your time. How much of an issue this is, does, of course, depend on the individual. Only time will tell if the general attractions of cities remain strong enough to keep people there even when they don’t need to be. Similarly, only time will tell if the lure of more space will be enough to compensate people for the loss of easy access to city attractions. What does this mean for the property market? The answer to this question probably depends on your perspective. If you’re a first-time buyer, it probably means very little. You would simply go ahead and choose your first home based on your own criteria. If you’re a homeowner, then you could find the value of your home changing based on the overall perception of your local area. If that change is downwards, it could reduce the level of equity you have in your home. Again, how much impact this would have would probably depend on your ability to wait and let general inflation do its work. If you’re an investor, then the next few years could be a challenge to navigate. One option would be to sit out the residential property market. You could look at student property, retirement property and/or short-let property as an alternative. Another option might be to look at areas just outside regular commuter belts, e.g. at the far end of train lines. These could appeal both to commuters and remote-/hybrid workers.

If your home is worth more than your existing mortgage then you have “equity” in it. That equity has a monetary value. It, therefore, makes sense to leverage it as much as you can. Here are some points to consider. Stay open to remortgaging Remortgaging can be very useful even if you currently have no interest in releasing equity from your home.  There are three main reasons for this.  Firstly, the best deal available to you when you (last) took out a mortgage may not be the best deal available to you anymore. In fact, your great deal may only have been a great deal due to an introductory offer. If this has now expired, you should certainly investigate remortgaging as soon as possible. Secondly, your financial situation may have improved opening up more deals to you. For example, your credit rating may have increased thanks to your track record of punctual mortgage repayments. Thirdly, you may be able to apply for a mortgage with a lower loan-to-vehicle ratio. Even if your home’s value has remained flat, your repayments will have reduced the amount you owe. If your home’s value has increased, the differential will be even greater. You may be able to leverage this to reduce your repayments and save even more money. Remortgaging versus getting a personal loan For clarity, in the UK, if you own a home, any debt you take out can be secured against it. The only question is how the lender goes about the process. With some debts, like mortgages, the lender and borrower mutually agree that the debt will be secured against the property. With other debts, the lender has to apply for a charging order to secure the debt against an asset. This is not an argument against taking on further debt if you own a home. It is, however, intended to highlight the fact that as a homeowner, failure to repay any debt could put your home at risk. It is therefore vital that you do thorough research and take all decisions mindfully. The maths of remortgaging When comparing the costs and benefits of remortgaging versus getting a personal loan, you need to analyse both the setup costs and the ongoing costs. Remortgaging is, literally, taking on a new mortgage. This means you should expect it to involve all the usual set-up costs of taking out a mortgage such as having your home valued. The ongoing costs will be determined by the amount borrowed, the interest rate and the duration of the loan. This is where you need to be very careful to think about what you are likely to do rather than what you theoretically could do. For example, if you compare a mortgage with a 20-year term to a personal loan with a 5-year term, you could find that the mortgage works out more expensive. Even though its headline interest rate could be lower, the longer term means that you end up paying more - if you keep the mortgage for the full term. If, however, the 20-year mortgage allows you to make overpayments without penalty and you are in a position to make those overpayments, then it could work out more affordable. Effectively, you would treat a part of your 20-year mortgage as a low-interest, five-year personal loan. Of course, this approach would only work if you actually did make those overpayments. Finding the right deal Navigating your way through financial products can be complicated at the best of times.  Adding in the need to make sure you do potentially complex sums accurately can make the process even more complicated.  If that’s putting you off from making a decision that could have a significant financial benefit, then get help from a professional such as a mortgage/loan broker. If you need advice please do not hesitate to contact me. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

The buying frenzy caused by the SDLT holiday looks likely to come to an end soon.  In fact, it may start fading relatively soon given the time needed for completion.  This may actually be good news for buyers, especially first-time buyers and the self-employed.  You will, however, need to approach the mortgage approval process in the right way.  Here are some tips. Prepare as much as possible If you haven’t yet filed your tax returns for 2020-2021 see if you can push the process forward. That will give a prospective lender the most up-to-date information on your financial standing. If you need to renew your ID then definitely get this ball rolling as quickly as possible. Make sure that you have a copy of your current document and all the details of the application. That way if anything does go wrong (e.g. it’s lost/delayed), you’ll have the information needed to chase it up. As always, do everything you can to make your credit score look good. At a minimum, check it for errors. This is particularly important now because the challenges of working under COVID19 may have made it more likely that companies would make mistakes. It certainly makes it more likely that records would not have been updated in a timely manner. If you can do anything to raise your credit score then do so if you possibly can. If you’re thinking that a few extra points won’t make any difference then you may be right. Then again, however, you may not. Sometimes decisions come right down to the wire and that little extra can make a difference. On similar logic, see if there’s anything you can do to raise your deposit. Be aware, however, that lenders often have rules around gifted deposits. Consider focusing on properties in need of work Making predictions is always dangerous. That said, it’s also dangerous to ignore general trends. Since July 2020, average house prices have been on a clear and steep upward trend. While coincidence does not equal causality, given the timing, it’s hard to see how this could be unconnected with the SDLT holiday. This, therefore, raises the question of what will happen to house prices once the SDLT holiday ends. Further growth is certainly not impossible although the rate of growth may be slower. Flatlining is also possible. The last possibility, however, is that house prices decline. This could potentially leave more recent buyers in negative equity, albeit potentially only temporarily. Big deposits are reassuring for lenders but they can be challenging for buyers to put together. It may therefore be more strategic to look for properties in need of some work. Then you can get a mortgage on the purchase price and update the property as funds allow. If you go down this route, however, make sure that you are very realistic about what is involved. Use a mortgage broker One of the keys to understanding the mortgage market is to understand that each lender has its own way of operating. For example, the Mortgage Market Review obligates lenders to check affordability. It is, however, down to each lender to work out how they are going to do that. In the real world, minor details can make a major difference. For example, slight differences in the way your income is assessed could mean that a borderline candidate is a no to one lender but a yes to another. Right now, lenders also have to navigate their way through assessing the impact of COVID19. This is another ticklish situation for them. They don’t want to turn away viable candidates. At the same time, however, they don’t want to get on the wrong side of the regulators. Mortgage brokers may be able to help you to present yourself in the best way to get a yes. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

If you’re selling a home, it makes sense to highlight its most attractive features. To do this, you need to understand what today’s buyers want. With that in mind, here are some property selling points you should consider. Location You’re selling a place to live so be sure to let potential buyers know why they would enjoy living in your area. Be as specific as you can. For example, instead of just saying “there’s a great range of gastropubs nearby”, drop in a few names and any key points like awards. If you’re selling a family home, then be sure to highlight child-friendly facilities. Good schools are an obvious point to mention but there are others. Think about pre-school children and post-school/school-holiday activities. It might also be worth mentioning pet-friendly facilities. In fact, these can be of interest to buyers even without children. Have a look on social media and see if you can find any accounts relevant to your area. Instagram can be particularly good here since it’s based on pictures and shorter videos. This can be an easy way of showcasing your locality to buyers without you having to go out and take a lot of pictures/videos. Private space The amount of private space you have will be defined by your property deeds. The attractiveness of the private space you have will be determined by various factors. One of these is presentation and that is very much within your control. If you have any outdoor space at all, make the most of it. Even a tiny patio or balcony can be a selling point. Parking space can be especially valuable. If you can’t get any beside your home, you might want to try and see if you can buy any near your home. Having a short walk isn’t as convenient as parking at your door but it can be a lot more convenient than having to fight for a parking space. You’re definitely going to have indoor space so make the most of that. Read up on interior design tricks for making spaces look bigger. See which ones can be applied to your space. Remember that even well-known tricks can still be very effective. For example, it’s probably fairly common knowledge that mirrors amplify light and space, but the trick still works. Practicality Cover off anything which contributes to keeping your property windproof, waterproof and warm. That would include, for example, insulation, central heating and double-glazing. Again, be as specific as you can. For example, if your boiler is relatively new make sure to mention the fact. Also, cover off any features which enhance physical security. For example, what is the state of your windows and doors? Do you have any smart security devices you’re leaving behind? Is the approach to your home well-lit? If so, do you control the lighting or is it street lighting? Last but definitely not least, think about connectivity. Does your house have plenty of electrical sockets or even USB sockets? Do you have wired internet as well as wireless internet? What’s the speed like? If it’s not great, is it due to be improved? How’s your mobile signal? The issue of upgrades Keep in mind that there is a difference between making an upgrade to your home for you to enjoy and making an upgrade to your home to increase its sales value. Remember that advice on what buyers look for in a home can only ever be based on statistical trends. The statistics may indicate that buyers, in general, value a particular feature but that doesn’t mean that any particular buyer will. Even if they like the idea in principle, they may not like how you have implemented it. Even if they do, they might not like it enough to pay more for the property. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

The Stamp Duty holiday has arguably been the housing-market equivalent of the January sales. It got people out and spending at a time when they might otherwise have stayed at home and saved. Like the January sales, however, it must come to an end (barring any major surprises). So what will happen to the housing market then? The case for more growth The Stamp Duty holiday benefitted onward-movers (and investors). It didn’t really benefit first-time buyers. In fact, it arguably disadvantaged them. First-time buyers already benefited from a Stamp Duty discount, albeit a capped one. The Stamp Duty holiday put them (back) on an even playing field with people who were likely to be on a stronger financial footing than them. For example, onward-movers would have had the opportunity to build up equity in their home. Investors, meanwhile, by definition, are people who have money they can set aside for the purpose of making more money. It is, therefore, possible that a lot of the house-price growth seen over the last year or so has actually been an indirect result of the Stamp Duty holiday. In other words, the Stamp Duty holiday may have encouraged people to move on sooner rather than later. It might also have encouraged them to look at larger properties. For example, some people might have wanted more space for children (indoors and outdoors). Some may have wanted working-from-home space. Some may even have wanted both. Further growth may, therefore, come from first-time buyers returning to the market once their Stamp Duty advantage returns. If it does, it will be interesting to see what type of properties they buy and where. The case for flatlining There are two good reasons for thinking that house prices might flatline. The first is that there has been so much activity in the housing market since last July. It’s therefore entirely reasonable to wonder how much energy there can be left in the housing market. Quite simply, it may have run out of steam naturally and hence may need some time to cool off. The second is that the housing market can only grow if people can afford to pay higher prices for homes. This depends on their income and, one way or another, this generally depends on the state of the economy. Even people on guaranteed fixed incomes (e.g. pensioners) are impacted by the state of the economy as it influences prices and hence their disposable income. Technically, the UK economy is growing. Realistically, however, the growth could be more accurately described as a reboot. In other words, the UK economy has spent over a year in various stages of lockdown. It’s now getting back to where it was rather than forging ahead. This begs the question of how much further growth, if any, the housing market can sustain before it becomes unaffordable. Help-to-Buy schemes may be a consideration here. That said, these ultimately depend on the government’s ability to finance them. This ultimately depends on the state of the economy (and hence tax revenues). The case for house-price falls What goes up doesn’t necessarily have to come down. If it’s to stay up, however, it needs something to support it. In the case of the housing market that is often mortgage payments. If homeowners cannot afford their mortgage payments, then, one way or another, their home will be sold. If buyers cannot afford mortgage payments then they cannot buy. This means that either homes go unsold or sellers lower their prices until buyers can afford them. In the real world, it may mean a combination of both. There is a difference between house-price falls and a market crash.  House-price falls can be a case of a slow slide to a gentle landing and then a climb back up again.  They do not have to be sudden drops.  Either way, however, house prices can and do fall if they rise to unsustainable levels. Contact us today for more information or to get mortgage advice. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

According to the Bank of England, in March 2021, gross mortgage borrowing hit £35.6bn. Repayments, however, totalled just £23.8. This is the highest net difference since records began in 1993. What’s more, it's happening with a global pandemic still in progress. This raises the question of what is behind these figures and what they mean for the long-term health of the housing market. The Stamp Duty holiday Right now, it’s almost impossible to talk about the UK housing market without talking about the impact of the Stamp Duty holiday. Rather like “Eat Out To Help Out”, it’s proving to be an idea that sounded good at the time but, with hindsight, is becoming increasingly controversial. The manner in which it was extended was, arguably, even more questionable. On the one hand, you could argue that stimulating the housing market stimulates the economy in all sorts of ways. The obvious way is that it creates employment for people directly involved in the real-estate sector. The less obvious way is that people who move homes tend to spend money on their new properties, for example by furnishing and decorating them. On the other hand, you could argue that this is short-term gain for long-term pain. Coincidence does not equal causality. It is, however, very hard to see the recent surge in UK house prices as being totally unconnected to the Stamp Duty holiday. It may not be the only factor but it certainly appears to be a significant one. How significant it is will probably become clear once it finally ends. The Help-to-Buy Mortgage-Guarantee scheme v2 Having closed the Help-to-Buy Equity Loan scheme to onward movers, the government proceeded to relaunch the Help-to-Buy Mortgage-Guarantee scheme. This is available both to onward movers and first-time buyers. As with many of the government’s stimulus measures, this move generated controversy. On the one hand, it is a means to address the affordability issues which can make it so difficult for people to get on or up the housing ladder. On the other hand, it’s addressing the symptom rather than the cause. In other words, it’s not addressing the chronic supply-side issues which have plagued the UK housing market for so many years. What’s more, introducing government-backed loans at this time is particularly risky both to buyers and to the taxpayer. It’s looking increasingly likely that remote- or at least hybrid-working is going to be very much a part of the post-pandemic “new normal”. Over the long-term, that could be a huge benefit to everyone. In particular, it could spread out the benefits of the UK’s economic strengths. Over the short term, however, it could lead to house prices stagnating or even dropping in what were once popular housing markets. This could leave new buyers dangerously exposed - and the tax-payer with them. The race for space Small-space living may have its charms but it also has its limitations. In particular, it can leave you very dependent on having regular access to external facilities. The lockdowns showed just how vulnerable that could make you if anything went wrong. This in itself might not have been enough to get people to make a long-term investment in more space. After all, everyone knew that the pandemic would have to end eventually. Signs that employers are becoming more open to remote-/hybrid-working, however, are changing the game in the housing market. Before the pandemic, most workers had to think about the practicalities of getting to an on-site work-space every day. Now, increasing numbers of people have the option to work from home regularly. This means that they can invest in a larger property and live with a longer commute when they do need to head into their official workspace. Unlike the other two factors, this influence looks like it’s here to stay. It is, however, likely to have the most impact over the immediate future as people adjust. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage Please contact us for any more information.

The UK housing market has long been known for its vigour. Since July 2020, however, its performance has been astounding. According to figures from the Office for National Statistics, over the year to March 2021, there was a 10.2% increase in property prices. Is this, however, a good sign or a major red flag? House prices in context The ONS figures are for property as a whole rather than just residential property. Realistically, however, the bulk of transactions completed in that period will almost certainly have been for residential property. What’s more, if any commercial property was sold, it was highly unlikely to have been for any significant price. The only potential exception here is “staycation” property. Additionally, March through June 2020 was essentially closed season for the housing market. This essentially means that the “year-on-year” increase was achieved in three-quarters of a year. It was also achieved during a pandemic and with Brexit ongoing. That’s little short of phenomenal. In fact, the last time the UK housing market saw higher growth was in August 2007. The spectre of 2008 Of course, after 2007 came 2008. That was definitely another year most people would probably like to forget. In fact, the repercussions from that year continue to be felt today as the UK government still owns shares in RBS. This in itself leaves the UK government exposed to the housing market. Its exposure is increased through its various buyer-support schemes. The Help to Buy Equity Loan scheme arguably carries the most risk. This is because the value of the government’s stake in a property is directly tied to its market value at the time the buyer pays back the loan. This means that the government is at risk on two fronts. Firstly, it’s at risk of the buyer being unable to pay the mortgage. They would then either need to sell the property at the going market rate or have it repossessed. Secondly, a buyer could leverage the situation by buying themselves out of the loan at a discounted price. This would make perfect sense for them individually but not for taxpayers as a whole. The new Help to Buy Mortgage Guarantee scheme also leaves taxpayers exposed to a downturn in the housing market. Technically, the guarantee is to the banks rather than to the buyers. Essentially, however, the end-effect is the same. Will history repeat itself? There is one factor about these price increases which has not applied before. That factor is, of course, the Stamp Duty holiday. This means that even though headline property prices have increased, the financial impact to the purchaser is less than it would have been in normal circumstances. At least, it is if you’re an onward-mover or an investment buyer. First-time buyers already qualified for a discount on Stamp Duty. As has often been pointed out, they lost this advantage during the general Stamp Duty holiday. That said, they still qualified for other, unique tax breaks such as the Lifetime ISA and the Help-to-Buy Equity Loan scheme. This means that the people who have bought property since March 2020 are not necessarily as financially-stretched as the headline figures might suggest. If they have bought their homes as long-term purchases and can afford their mortgage over the long term, then, statistically, there is unlikely to be a problem. Over the long term, general inflation will almost certainly do its work and deliver them equity. On the other hand, if they need (or want) to move or have issues paying their mortgage, then they could find themselves in very serious trouble. If future buyers are unable or unwilling to pay these kinds of prices and Stamp Duty then recent buyers could very easily find themselves in negative equity. In short, the Stamp Duty holiday may be creating a new generation of mortgage prisoners. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage Please contact us for any more information

If you thought the self-employed had a hard time in the mortgage market, you’d be right. According to the latest data from the MBT Affordability Index, only 70% of self-employed mortgage applicants found at least one lender able to meet the loan. For customers aged 55 and over, however, the figure was 64%. So why is this and what, if anything, can be done about it? The over-55s can be self-employed too It’s important to highlight the fact that there could well be a lot of crossover between the self-employed and the over-55s. In fact, it’s highly likely. By the time you reach 55, you probably have a lot of professional experience and contacts. You may be less and less willing to do the “9-5” run or, bluntly, to deal with workplace politics. Alternatively, you may have become “accidentally” self-employed as a result of job loss. That said, there are still a lot of over-55s in regular employment. What’s more, they are probably in either upper-management or senior technical roles. There is hence clearly more to the figures. It’s unclear what sort of property over-55s are buying The MBT Affordability Index relates to residential property but that covers a very broad spectrum. It also includes people who are buying their next home before selling their current one. This could feasible include a lot of people over-55s. A lot of people in this age group are likely to be “empty-nesters” downsizing into a smaller property. It’s very likely that they’d want to minimize the upheaval of the move by having their new home ready before they give up their old one. How easy it would be for people in this situation to get a mortgage would probably depend on the amount of the mortgage versus the equity in their old home plus their income. It is, however, worth noting that smaller homes are not necessarily significantly more affordable than larger ones. They may be less expensive to run and easier to maintain but that might not be enough to tip the balance for a mortgage. The over-55s are nearing or at official retirement age Age may be but a number, but mortgage lenders work on numbers. Once you hit 55, you’re, technically, closer to the end of your working years than to the start of them. In fact, it’s entirely likely that you’ll hit retirement age before the end of your mortgage term. Alternatively, you may already be at retirement age. In the old days, that might have meant that you had a guaranteed pension. These days, however, it’s also possible that you’re using income drawdown. This might give you better returns over the long term, but the returns aren’t guaranteed. Depending on your exact age, you might be able to get around this by having a mortgage with a shorter term. Of course, this would have implications for affordability. It could also raise questions about what would happen if you were to lose the income from your employment/self-employment. Lenders have to err on the side of caution There is a frustrating lack of data on what, exactly, is making it so difficult for the over-55s to get mortgages. Indicators, however, suggest that lenders are simply playing it safe, possibly to the point of excessive caution On the one hand, this is entirely understandable. In fact, given the current regulatory situation, it may be unavoidable. On the other hand, this situation has the potential to create major long-term issues not just for the housing market but for society as a whole. If first-time buyers are the life-blood of the housing market then downsizers are the life-blood of the family homes market. The UK simply does not have the space to keep building limitless family homes to accommodate both families and people who can’t move on because they can’t get a mortgage. Urgent action, therefore, needs to be taken to address this situation. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage Please contact us for any more information

At a basic level, interest rates are easy to understand. The higher they are, the more the borrower pays the lender and vice versa. In the real world, however, there can be a lot of nuance. With that in mind, here’s a quick look at the main types of mortgages and how interest rates apply to them. Interest-only mortgages With interest-only mortgages, you pay back the interest each month and the capital at the end of the term. This means that your monthly repayments will be lower than they would be for an equivalent repayment mortgage. On the other hand, you never reduce the amount borrowed over the term of the loan. In other words, you’re always paying interest on the amount you originally borrowed. This means that what you end up paying overall will be more than with an equivalent repayment mortgage. Offset mortgages With an offset mortgage, the borrower keeps their savings with their mortgage lender. The savings balance is used to offset the mortgage balance. In other words, borrowers forgo interest on their savings in exchange for paying less interest on their mortgage. Some offset mortgages also permit borrowers to link their current accounts to their mortgage balance. For practical purposes, offset mortgages are simply a method of calculating how much interest is due on a loan. In principle, they can be offered as interest-only or repayment, fixed-rate or variable rate. It all depends on the lender’s view of the market (and the individual borrower). Similarly, the benefits of an offset mortgage have to be considered in context. For example, the ability to reduce the amount of interest payable is a benefit. If, however, the interest rate charged is significantly higher than with other products, this benefit may be negated. Repayment mortgages With repayment mortgages, monthly repayments cover the interest and a portion of the capital. This means that they are higher than the monthly repayments for interest-only mortgages. On the other hand, it also means that the amount borrowed reduces over the course of the mortgage. This means that, overall, you will pay back less than with an equivalent interest-only mortgage. It also means that you build up equity in your home more quickly. With interest-only mortgages, your equity is basically the amount of your deposit plus any increase in the value of your home. With repayment mortgages, you get this, plus the equity you build up through making capital repayments each month. The more equity you build up, the lower your loan-to-vehicle ratio becomes. This can make it possible for borrowers to remortgage at better rates. Fixed-rate and variable-rate Fixed-rate mortgages, as their name suggests, have a set rate for a set period. This means that they won’t go up during that period. It does, however, also mean that they won’t go down either. Right now, that might seem like a moot point given how low-interest rates are. It is, however, worth remembering in general terms. Variable-rate mortgages, also as their name suggests, charge a level of interest that rises and falls in line with the base rate charged by the Bank of England. Depending on circumstances, this could make them (much) more expensive than fixed-rate mortgages. On the other hand, it could also make them (much) cheaper. In general terms, neither type of interest rate is better or worse than the other. In specific terms, however, some borrowers might very much prefer the consistency of fixed-rate mortgages. Others might prefer the flexibility of variable-rate mortgages. The key point is to get the best possible deal for your situation. As a minimum, this usually means that you have to stay off your lender’s standard variable rate. This can be much higher than the best deals on their books, let alone the best deals on the market. Your property may be repossessed if you do not keep up repayments on your mortgage. The FCA does not regulate some forms of buy to let mortgages. Please contact us for any more information.

When children fly the nest, family homes can begin to feel very empty. They are, however, often full of equity. This can easily end up in the hands of HMRC unless parents are very careful. For these reasons, and many more, downsizing can be a very attractive option. With that in mind, here is a quick guide on how to downsize without stress. Make sure downsizing is the right option for you Downsizing should be something you do because you want to, not because you think you ought to. It’s the right option for a lot of people. It is not, however, the only option. For example, equity release might let you stay in your own home while lowering your Inheritance Tax bill. Give yourself time to find the right property If you’re thinking of moving to a new area, give yourself plenty of time to get to know it before you commit. Remember that living in a place is very different from being there as a tourist. Make sure you try it out in different seasons. If you can only manage short breaks, try to go both at weekends and mid-week. Then think about what sort of property will suit you both now and going into the future. Essentially, you need to find somewhere which is both small enough for you to maintain easily and large enough for you to have the lifestyle you want. This is probably going to involve having space for people to stay over. You may also want an office/craft-room. If you’re fully retiring, then it may be perfectly feasible to pack a lot of functionality into each room. For example, putting a sofa bed and some extra storage into your office lets you turn it into a guest bedroom. If, however, you’re planning on continuing to work, at least to some extent, then you may want, or need, to keep your office purely as an office. Get the property ready before you move into it As a minimum, try to have all your utilities connected before you move. In other words, make sure you have internet as well as gas/electricity and water. Ideally, have all your major pieces of furniture and appliances in place and connected before you move yourself and your personal possessions. If you can’t do this, then make absolutely sure you have an accurate floor plan for your new home. This is essential for accurately working out what can physically go where. It’s even better if you can get clear photos and/or video of your new home. This can help you to get an idea of whether or not your current furniture will look appropriate in it. Use full-service home-movers Even if you’ve done every other home yourself, or at least done your own packing, consider using full-service home-movers for this move. Use the extra cost as additional motivation to curate your possessions effectively. Put your possessions in order This can be the hardest part of a downsize but it doesn’t have to be. Remember, you don’t need to put yourself up against a strict deadline. You can give yourself a bit of breathing space. For example, you could move your belongings into storage and then go through them at your own pace. Of course, there would be a cost to this, but, again, this could act as motivation. There are various ways to approach downsizing your possessions. In your later years, one very effective strategy is to move from your least sentimental items to your most sentimental items. This often means that you start by making some easy wins. These clear out space (mentally and physically) so you can focus on more important items. Please contact us if you would like any more information Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage Equity release refers to home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration. The FCA does not regulate some forms of inheritance tax planning and we act as introducers for it

Since the beginning of the Stamp Duty holiday, there has been an overall increase in the price of property in the UK. There has also been an increase in the number of people searching for 95% mortgages. Should this be ringing alarm bells? Here are some points to consider. The MMR should stop a repeat of 2008 Post-2008, lenders now have to consider a borrower’s real-world ability to repay their loan. This means that they have had to stop relying on “macro” criteria such as multiples of income. Instead, they have to look, in more granular detail, at a potential borrower’s particular circumstances. This system may not be perfect. It created “mortgage prisoners”. It should, however, at least stop a repeat of 2008. That said, it still doesn’t leave the taxpayer entirely in the clear. For example, the Help-to-Buy Equity Loan scheme ties the taxpayer’s return to the value of the house. In other words, if the price of the house goes down, so does the taxpayer’s return. With the “new” Help-to-Buy Mortgage Guarantee scheme, the taxpayer will guarantee up to 15% of a 95% mortgage. In other words, if the borrower defaults, the taxpayer may find themselves hit. The Stamp Duty holiday should end later this year If the Stamp Duty holiday was intended to stimulate the housing market, then it has arguably done its job. In fact, it may have done its job rather too well. Buyers with sales in progress may be relieved that they have extra time to complete them. It is, however, worth asking whether the Chancellor implemented the SDLT-holiday extension in the right way. The SDLT discount remains available to all buyers, not just ones with sales in progress. Admittedly, new buyers would need to move pretty quickly to get the full benefit of it. Even if they don’t, however, they may still get the tapered discount which will apply over the summer. This raises the question of how demand (and prices) will be impacted both now and after the SDLT holiday comes to a complete end. If they stabilize or even reduce, then, everything being equal, affordability will also stabilize or improve. What’s more, again, assuming that the Chancellor “resets” Stamp Duty to how it was before the pandemic, first-time buyers will still get a Stamp Duty discount. This should make buying a property more affordable for them than for people who are moving on. Remote/hybrid working may become mainstream Right now, there is a large question mark hanging over the future of remote/hybrid working. If it does become a mainstream part of the “new normal”, then it could have a huge impact on the dynamics of the property market. In simple terms, it could allow people to move to locations that are off the commuter belt and priced accordingly. If so, then, over the longer term at least, there could be stagnation or even deflation in city property markets, especially in the central areas. Traditional commuter-belt areas might also fall out of favour as their transport links would be less relevant to people who would be spending less time in a physical office. By contrast, outlying areas might see higher demand. This could lead to localized house-price inflation, but this is not guaranteed. Even if it does happen, these areas might still remain comfortably affordable. Economic growth may “float all boats” In a best-case scenario, post-COVID19 the economy will recover and this will lead to a growth in earnings. If earnings growth outstrips house-price inflation, then buyers’ purchasing power will increase and house-price affordability will improve. Of course, at present, this is all arguably wishful thinking. It is, however, not unreasonable. COVID19 is being vaccinated away. Brexit has happened and the UK will need to learn to deal with it. Hopefully, therefore, economically, the only way is up. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage Please contact us for more information

It was always fairly obvious that COVID19 was going to have a significant financial impact on the UK (and, indeed, the world). What may not have been obvious, however, was just how that impact was going to manifest itself. For example, the after-effects of COVID19 are acting as a barrier to re-mortgaging. Here’s what you need to know. Financial help carries a price tag The government introduced a raft of support measures to help people cope with the impact of COVID19. These included emergency loans (not grants) to businesses, the furlough scheme and grants for the self-employed. The government also worked with various parts of industry to create breathing space for those impacted by COVID19. For example, it worked with lenders to implement what were effectively self-certified payment holidays. In other words, borrowers were simply allowed to tell their lenders that they had been impacted by COVID19 and hence needed special arrangements. They did not have to go through the usual process of lender scrutiny and approval. These measures were not, however, entirely “no strings attached”. To begin with, payment holidays simply meant that the borrower did not have to make their usual repayment. Lenders, however, were permitted to keep on adding interest to the debts. This meant that payment holidays could actually leave people owing more, in the case of high-interest debts, a lot more. In addition to the direct, financial impact, payment holidays had the potential to damage credit records. Even if, technically, they weren’t reported, there was still the possibility that lenders would figure it out all the same. For example, if the balance of a loan was going up instead of down, then it was fairly likely that the borrower was on a payment holiday. COVID19 and the mortgage market On the one hand, the mortgage market has arguably adapted to COVID19 impressively well. Banking itself went online years ago. Mortgage products, however, were still largely dependent on analogue processes like surveying and conveyancing. The industry has, however, pulled together to keep the mortgage market running. On the other hand, the damage COVID19 has caused to people’s finances can make it very difficult for them to get new mortgages, even if they’re already homeowners. Since the Mortgage Market Review, lenders have been obligated to scrutinize a potential borrower’s financial situation. They can only lend if they are confident that a borrower can afford the loan. People impacted by COVID19 may have seen their credit ratings going down, their debt levels going up and/or their employment situation becoming more precarious. Finalizing Brexit at the same time may have made life even more challenging for some people. In short, COVID19 may have created a new group of “mortgage prisoners”. It is unclear just how big this group might be because some people might not bother even trying to remortgage. If they believe they’re almost certainly going to be turned down, they might just bide their time and wait for better days. Finding a solution The state of the mortgage market could end up being a tricky dilemma for the government. On the one hand, they are likely to be well aware of the dangers of encouraging lenders to relax their standards. On the other hand, they will presumably want to avoid voter backlash at the next election. One possible way to square this circle in the mortgage market would be for the government to include remortgagers in the new Help-to-Buy mortgage guarantee scheme. This might also help people who were mortgage prisoners before COVID19. On a broader note, the government may need to work with industry to provide longer-term help to people whose finances have been disrupted by COVID19. This could ultimately benefit the economy as a whole and the mortgage market in particular. Please contact us for any more information Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage