With spring springing and a new financial year rolling in, now could be the perfect time for some financial spring cleaning. If you’re a homeowner, you may be thinking about whether or not to try to make overpayments on your mortgage. Here are some points you might want to consider? How’s your cash-flow? If you’re on a variable income, then you might want to wait a while before deciding if you’re in a position to make overpayments on your mortgage. This is particularly true if you’re self-employed. Employees may have to wait for payments such as commission and overtime. They should, however, know exactly when they can expect them. The self-employed can set payment terms. Realistically, however, clients may not always stick to them. This can be for a variety of reasons from problems with their cash flow to lack of time to process the invoice. On that note, if you are self-employed, now might be a very good time to review your invoicing and credit-control processes. You might also want to look at what payment methods you accept and consider whether they’re delivering the best value for money. Do you have savings? If you have income protection insurance, then you need to check the processing time for claims. Ask yourself how you would keep going during this period. If universal credit is your safety net, then the current waiting time is around five weeks. Again, you need to ask yourself how you would keep going during this period. It’s also worth noting that having just the minimum in emergency savings basically leaves you with little to no room to manoeuvre. This could pose serious issues if your claim was delayed for any reason. In addition to having an emergency fund, it might also be useful to have savings for predictable expenses. This can mean anything from a new pair of shoes to a new washing machine. On that note, it’s advisable to think realistically about how much useful life your big-ticket items have left in them. This can influence your saving goals. Do you have insurance? You may be prepared to risk the loss of some of your possessions. Are you, however, ready to risk the loss or your health and its consequences? How about legal bills if someone accuses you (or your children) of causing them some form of damage? Have you dealt with other debts? If you have other debts, then it may be sensible to tackle them ahead of your mortgage. In simple terms, the higher the interest rate on a debt, the more you should prioritize paying it off. The one, potential, exception to this rule of thumb is accounts with small balances. You might want to pay these off first so you can close them and move on. Could you get a better deal for your money? If you’re in the fortunate position of having good cash-flow, savings, insurance and no debt, then your next step is to think about where you would get the best return for your money. This question really has two aspects. These are the emotional aspect and the practical aspect. Emotionally, you may very much like the idea of being totally debt-free and owning your own home outright. If this is how you feel, then overpaying your mortgage may be the right course of action for you. Be aware, however, that interest rates are extremely low just now. This means that, at present, you might be able to get a much better return for your money through investment. That said, investment returns are not guaranteed, whereas a mortgage is a commitment you need to meet if you want to keep your home. For savings and investments, we act as introducers only 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.

The initial lockdown (in March 2020) brought the housing market to an abrupt stop. Since then, it’s been operating under various levels of COVID19 restrictions. Now, however, vaccines are being rolled out and a way out of lockdown has been planned. It, therefore, appears that the UK may be reaching a “new normal”. What could this mean for the housing market? An increase in transactions Moving home can be stressful at the best of times. Moving home at a time of COVID19 restrictions took the usual challenges to a new level. As those restrictions ease, people may be more inclined to get back into the market. It’s also possible that the impact of the pandemic will lead people to reassess their housing needs. For example, parents who’ve had to keep children indoors throughout the pandemic might want to make sure that they have convenient access to green spaces. Likewise, buyers might be more inclined to pay extra for properties with space for home offices and/or gyms. This would help to ensure that they had some level of protection in the event of another pandemic or other critical event. A new emphasis on photo and video presentations It might be some time before the majority of houses are bought and sold virtually. In fact, that time may never come. It is, however, very possible that the post-pandemic housing market will continue to make extensive use of virtual presentations. The simple fact of the matter is that real-world house viewings are a hassle for everyone. Sellers have to get their home ready. Buyers have to travel to the location. Agents have to manage the logistics. There is hence a clear argument in favour of pushing out more information in the form of photos, videos and possibly even virtual tours (e.g. live-streaming). These can be used to whittle down buyers to people who are seriously interested in the property. A return to internet cabling If remote/hybrid working remains mainstream then internet access could become a key differentiator between properties. There may be little individual consumers can do to influence the development of the UK’s broadband infrastructure. By contrast, there could be a lot they could do to influence the quality of the internet within their home. For example, homeowners might choose to have internet cabling installed so that they would have the choice between wired and wireless internet access. An escape to the country On a similar note, if remote/hybrid, working becomes a major part of the new normal, then inner-city housing markets could suffer. By contrast, areas with poorer transport links could benefit, albeit probably only if they had decent internet. After all, if people are spending fewer days in the office, they might be more willing to put up with longer commutes in return for lower prices. University cities might be an exception to this, at least to some extent. If universities continue to deliver face-to-face teaching and if students want this, then they may continue to generate demand inside cities. Again, however, it’s unclear whether this demand will stay at historic levels. Courses with a practical element may require, or at least benefit, from real-world teaching facilities. That said, there may be ways to fulfil this need other than having students on site all the time. Courses that are, however, based more on reading may be adapted fairly easily to a remote-learning model. It would then be a question of which students preferred. On the one hand, students might very much like the idea of being in a city with their peers. On the other hand, this comes at a price. Students will have to decide for themselves whether or not they think this is a price worth paying. 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

The chancellor’s decision to extend the Stamp Duty holiday means that there is a bit of extra breathing space to complete transactions. That said, the full relief is only available until the end of June. This means that nobody can afford to delay. With that in mind, here are some pointers for people looking to beat the clock on the Stamp Duty holiday. If you’re selling If you already have a buyer, then from here on it’s all about organisation. Hopefully, you’ll already have prepared everything a conveyancer might need. If you haven’t then you need to get moving on that quickly. Even if you have, or think you have, be prepared to be contacted with further questions or requests for information. It’s a good idea to ask your buyers for the details of their conveyancer. Then add the conveyancer’s domain (the bit after the @) to your list of safe senders. That should prevent any messages from dropping into your spam folder. The conveyancer will probably chase up on them, but you want to avoid wasting time at all. If you don’t already have a buyer, then you need to decide whether or not you’re committed to making a push to beat the Stamp Duty Holiday deadline. If you are, then you need to think quickly but seriously about why you don’t have a buyer. For example, has your home not been marketed effectively or is your asking price unrealistic (or a combination of both)? You might also want to think about the practicalities of moving yourself now. Firstly, if you buy during the Stamp Duty holiday, you’ll get the benefit of it. Secondly, if you’ve moved, or at least are in the process of moving, buyers now that you’re not going to change your mind (or have a chain collapse) and pull out. If you’re buying If you’re buying then ideally you should have had an offer accepted by now. If you haven’t then, again, you need to think quickly but seriously about whether or not you’re going to chase the deadline. Remember, if you’re a first-time buyer, you can expect to get a discount on Stamp Duty even when the official Stamp Duty holiday comes to an end. If you are going to chase the Stamp Duty holiday deadline, then you absolutely need to be super-organised. Hopefully, you will have mortgage preapproval. If not, then get this arranged as quickly as possible Remember that you will need ID, proof of address and proof of your source of funds. Get the necessary documentation together and keep it where you can find it. If you’re still to line up a conveyancer, then you need to move as quickly as you possibly can. Remember, the Stamp Duty holiday will remain open to all buyers, not just ones with transactions in progress at the time the holiday was supposed to end. This could mean new buyers entering the market and needing conveyancers. If you’re only putting in an offer now, then you might want to assess a potential seller as thoroughly as you assess a potential new home. Basically, you want reassurance that they are also committed to completing the sale by the deadline. Let buyers and sellers beware As a final point, buyers and sellers should both keep safety in mind at all times. Remember that property transactions are targets for fraudsters and you want to avoid falling victim to them. No matter how much of a hurry you’re in, always make sure you do appropriate security checks whenever necessary. It’s better to miss out on the Stamp Duty holiday than to fall victim to a scam that could literally ruin your life. Your property may be repossessed if you do not keep up repayments on your mortgage.

It was almost inevitable that the March 2021 budget was going to be focussed on dealing with the financial impact of COVID19. The chancellor also has to have an eye to Brexit, even if that wasn’t at the forefront of his speech. There was plenty to interest those involved in the property market. Here is a quick round-up of the key points. The Stamp Duty holiday is extended From the perspective of the property market, the headline news is, of course, that the Stamp Duty holiday has been extended. The Stamp Duty threshold will remain at £500K until the end of June. Then it will drop to £250K until the end of September. It will remain open to all buyers, including investment ones, although investment buyers will still have to pay the surcharge. On the one hand, the news of an extension may not exactly come as a surprise. Firstly, there was widespread lobbying by the property industry (and buyers). Secondly, there was growing media speculation that the chancellor would offer some kind of extension. Thirdly, there have been significant delays to property purchases due to the effects of COVID19. On the other hand, it is arguably surprising that the chancellor chose to extend the Stamp Duty holiday in the way he did. There’s a difference between allowing people time to complete transactions they have started and extending the tax break to everyone. You could argue that there is limited opportunity for people to take advantage of the full tax break unless they already have a sale in process. Given the timelines of property transactions, this may be true. That may not, however, stop them from trying, especially if they know they have a good chance of qualifying for some kind of tax break. New 95% mortgages The government announced a new scheme in which it would underwrite 95% mortgages. Full details of the scheme have yet to be released. In essence, however, it looks very much like a reworking of the old Mortgage Guarantee Scheme which ran from 2013 to 2016. Based on current information, the scheme will be open to all residential buyers (as opposed to just first-time buyers). It will also be available to people buying existing properties as well as new-build ones. The government has indicated that the scheme will have an upper limit of £600K. IHT and CGT thresholds frozen The thresholds for Inheritance Tax and Capital Gains Tax are to be frozen at their current levels until 2025/2026. It will be interesting to see what effect, if any, this has on the housing market. Freezing the tax-free thresholds means that any inflation could push people into higher tax brackets. In short, it increases tax take without increasing headline taxes. The IHT freeze could encourage older people to downsize and release the equity in their family homes long before their deaths. Similarly, it could encourage investors to take a decision on whether or not they are likely to want to hold onto a property until 2025 and beyond. If they don’t, it could be in their best interests to sell it sooner rather than later. General economic stimulus The chancellor reserved his largesse for areas that had been (particularly) hard-hit by COVID19. In particular, he extended both the furlough scheme and the self-employed grant scheme to September. The Universal Credit increase also stays until then and the minimum wage goes up to £8.91 an hour from April. There are grants for businesses reopening after lockdown as well as rate breaks for all businesses and VAT breaks for the hospitality sector. There are special measures for the arts and sports and financial incentives to take on apprentices. Hopefully, these measures will help to get the economy moving again. This should then feed through into the property market in general and the mortgage market in particular.

Recent data from confused.com has given an interesting overview of what the UK wants to know about mortgages. We advise anyone considering taking out a mortgage to get professional help, internet searches may not always offer the best solution to your situation. With that in mind, here is a list of questions plus some ideas on the answers. The searches ranked Here are the top mortgage-related questions and their number of annual searches. How long does a mortgage application take? 20,000+ How long does a mortgage offer last? 17,480 How to get a mortgage with bad credit? 14,800 What is an interest only mortgage? 14,360 What is a lifetime mortgage? 14,250 How long does a mortgage application take? When looking at search questions, it’s important to understand the intent behind the query. At first glance, this question could be asking how long it takes to fill in a mortgage application form. This could be the case and there would certainly be no harm in providing this information if it was available. There might not be a hard-and-fast answer but we can offer some guidance. Again there is no exact answer to this, it will depend on the type of mortgage, how thorough you have been in completing your paperwork, what backlog the lenders have and what further information they may require. Every application is treated differently so there is no one answer fits all. There is an average number quoted of 18-40 days but this should only be used as a guideline. How long does a mortgage offer last? This is a straightforward question and ideally, you should give a straightforward answer. Each lender will have their only rules, you will be given a answer such as “typically between three and six months but check your agreement”. How to get a mortgage with bad credit? There are a few potential ways to answer this. Firstly, we can choose to direct you to mortgages which could be available to people with bad credit. Or if we have dealings with specific lenders and have experience with this type of mortgage we can offer you direct advice. Here is an article from Which? That explains in more detail the information you may need. What is an interest only mortgage? In the current situation, it’s worth considering the possibility that many people will consider this as a solution to payment difficulties. Here is an article from Which? That tells you what to expect from an interest only mortgage and some of the things to consider before taking out this type of mortgage. What is a lifetime mortgage? At Equity Release Alliance we offer a full range of information regarding this type of mortgage. A lifetime mortgage is completely different and every application is dealt with very much in a specialist manner. Please review our information here 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.

Homes are expensive purchases on their own. Once you fill them up with your possessions, they can become even more expensive. It’s therefore worth taking the time to understand home insurance properly. The basics of home insurance Home insurance is generally divided into two broad categories. The first is buildings insurance and the second is contents insurance. There are, however, a number of add ons and complementary policies you may need or just want. Here is a quick look at the main types of cover and what they mean in practice. Buildings insurance The key point to remember about buildings insurance is that it’s to replace the building rather than the land. This means that the insurance value of your property may be substantially less than what you paid for it. There is nothing to be gained by overinsuring, so make sure you avoid overpaying. Contents insurance Broadly speaking, contents insurance covers the contents of your property. There is, however, a lot of nuance in this. For example, standard home contents policies may exclude, or at least limit, certain types of property. They may only cover items in the main home, rather than outbuildings. They may also exclude accidental damage. Some policies may extend their cover for a higher premium. Others may require you to buy separate policies. You may find that you end up doing a combination of both. Cover for valuable property It’s really important to read the fine print of your contents policy very carefully. There may well be restrictions on cover for certain types of property such as cash, jewellery and electronics. Other exclusions may also apply. Even if the insurer does offer cover for them, they may require you to declare the items specifically and potentially increase your premium for them. If this is the case, then it may be worth investigating the pros and cons of including such items on your general insurance versus insuring them individually. In particular look at the breadth of cover involved as well as the price. For example, a standard home contents insurer might be prepared to insure your bicycle against theft from your home. A specialist cycle insurer, by contrast, might cover you for theft in other locations. They might also offer valuable extras such as protection in the event that a third-party makes a claim against you. Cover for outbuildings You may see your outbuildings as part of your home, but your insurer may see the matter differently. This means that it’s strongly recommended to read the terms of your policy carefully and, if necessary, clarify them in writing with your insurer. You may find that covering outbuildings requires you to pay for add-on cover and/or comply with security requirements. In fact, even if your insurer does not explicitly require you to have any security features on your outbuildings, it may be to your advantage to invest in them. This will help to reduce the chances of having a claim denied due to you having failed to take sufficient care of your property. They should also help to reduce the chances of you falling a victim to theft in the first place. Cover for accidental damage Insurance can protect you either against what happens to you or against the consequences of your own actions. In the context of home insurance, the latter is generally known as “accidental damage cover”. It may or may not be included as standard with your regular buildings and/or contents cover. If it doesn’t, then it can be well worth purchasing as an add-on or complementary policy.  That way you’ll be covered for any damage you do to your home and/or its contents.  Accidental damage cover isn’t just for DIYers (and people with young children).  It can be extremely useful for just about anyone. For home insurance we act as introducers only.

Business owners have to be prepared to deal with all kinds of challenges. One of them is the ability to get approved for a mortgage. Unfortunately, this challenge appears to be getting even more difficult thanks to the combined impact of COVID19 and Brexit. The self-employed and the mortgage market Since 2014, lenders have been legally obliged to scrutinize a potential borrower’s ability to repay a mortgage. If they are shown to have failed in this obligation, then they can lend up in all kinds of trouble with the regulators. On the one hand, this approach may be what is needed to prevent a repeat of 2008. On the other hand, it severely limits lenders’ ability to exercise human judgement. It also, arguably, encourages them to err on the side of caution. Quite bluntly, mortgage lenders may see the inconvenience of turning down a customer as being preferable to risking sanctions from the regulator. This is bad news for anyone in non-standard work situations, including the self-employed (both sole traders and business owners). Employees on zero-hours contracts and other forms of (potentially) variable income may also find themselves struggling to get approved by a mortgage. What’s more, recent events have made that challenge even greater. COVID19 and the mortgage market Lockdown 1.0 forced the housing market to a skidding halt. Ever since then, the UK has been in various states of COVID19 response. These have ranged from mild restrictions to complete lockdowns. What’s more, over time, the restrictions have become even more granularized. This has meant that the economic impact of COVID19 has varied from place to place depending on the severity of the restrictions. To make matters worse, the restrictions have changed frequently, often at fairly to very short notice. This has forced mortgage lenders to keep trying to figure out a response to an ever-changing situation. As if this wasn’t hard enough, mortgage lenders have also had to work out what they need to do to keep their own operations running. This not only meant keeping their staff safe but also dealing with borrowers experiencing financial difficulties due to COVID19. They then had to deal with the impact of the government’s Stamp Duty holiday. This turbocharged the housing market and hence led to a deluge of mortgage applications. Sadly, however, data from mortgage broker platform Haysto indicates that business owners, directors of limited companies and sole traders were at high risk of rejection because of their jobs. Brexit and the mortgage market The UK’s final exit from the EU has been a work in progress for some time now. In fact, even though the UK has now officially left the block, there’s a strong case for arguing that it still is. There has been widespread media coverage of the challenges involved in transporting goods between the UK and the EU and the UK and NI. To be fair, unscrambling the UK’s long relationship was a massively complex task. Arguably, it was almost inevitable that the post-withdrawal period would highlight the shortcomings of any agreement. It’s also reasonable to point out that at least some of these issues might have been dealt with earlier if the UK government hadn’t been dealing with the impact of COVID19. None of this, however, is likely to be of any immediate comfort to business owners trying to find a post-Brexit “new normal”. What’s more, it’s unlikely to help their chances of getting financing of any sort. Quite simply, lenders may be sympathetic to the plight of business owners but they also need to be pragmatic about the chances of getting their money back. The way forward Hopefully, vaccines will soon deal with COVID19 and, also hopefully, the issues with Brexit will be resolved sooner rather than later. Once business owners can get time to breathe and look at the future, they can start to focus on making themselves attractive prospects as borrowers. Your property may be repossessed if you do not keep up repayments on your mortgage.

Like many other industries, the real estate sector has been working to leverage the internet as much as possible. COVID19 has helped to give this trend a major boost. It is not, yet, always practical to complete a home sale entirely from the comfort of your current home. It is, however, very possible to complete a significant percentage of it online. Here are some tips. Online mortgage applications Assuming you need a mortgage, there are two major advantages to getting preapproved for one. Firstly, it keeps your expectations realistic. Secondly, it’s a way to reassure home-sellers that you can make good on an offer. A potential lender is going to need you to provide documents to them. There are two ways these can be transmitted. One is to send scanned copies and the other is to hold the originals up to a camera while a human checks them. You may have to do a combination of both. In either case, think about what you need to do to make sure that your documents can be read easily. If you’re using a proper scanner to scan documents, check the settings and check the output. If you’re using a mobile, do the same and also make sure that the document is flat and well lit. Be careful of reflections on plastic coatings (e.g. on passports). Likewise, if you’re holding a document up to a camera so a human can see it, make sure you have plenty of lighting at your end. Also, be prepared to move the document around the screen according to their instructions. Househunting Regardless of whether you’re using one of the major property portals or a local estate agent’s website, take some time to learn how it works. In particular, look for filters. These can make it much easier for you to hone in on the sort of property you really want. You might find it helpful to read the text description of a property before you start looking at the pictures. The text box is often the place to find the key details of a property. It will typically set out everything from the number of rooms and their sizes to the installed utilities to sustainability information like the EPC. Checking this first will save you falling in love with the photos of an unsuitable property. That said, the photos should generally be what you look at next. They can give you a feel for what it’s like to live in a property. Video can be even more informative. Even if property portals do not host it, you may still find links to home tours hosted on YouTube. Viewing a house Only you can decide if you’re willing to buy a property on the basis of a virtual tour or if you need to see it in person to be sure. It is, however, worth thinking about this before you start your house-hunt as virtual viewings (private and group) are increasingly likely to be an option. These offer some of the interactivity of a regular home tour (e.g. the ability to ask questions) but can be undertaken at a (safe) distance. It will be interesting to see if virtual home tours form part of the new normal after COVID19. They might not be suitable for all properties (e.g. very individual and/or premium ones). They do, however, offer a lot of convenience to buyers, sellers and real-estate professionals. In particular, they can save a lot of travelling time (and the associated environmental footprint). Conveyancing Once you’ve had an offer accepted, you’ll need to start the process of conveyancing. These days, you can look for a conveyancer online. You may even be able to go through the entire conveyancing process without ever meeting them in person. Do, however, stay alert to the possibility of scammers posing as your conveyancer. Make sure you are absolutely clear about the right way to contact your conveyancer and the right bank account to use for all money transfers. Your property may be repossessed if you do not keep up repayments on your mortgage.

Data from the Halifax House Price Index shows that average house prices have increased by 7.6% in the year to November and by 1.2% between October and November. That’s in spite of COVID19 and Brexit drawing ever closer. Can house-price increases continue into 2021 and beyond? Here are some points to consider. The impact of the Stamp Duty holiday The Stamp Duty holiday was, effectively, a time-limited special offer, albeit on tax. It’s due to end on 1st April 2021. This could lead to a mad scramble over January 2021 as buyers rush to put in offers while they still have at least a chance of completing before the deadline. After this, however, the realities of conveyancing are going to reduce the relevance of the tax break. It’s also worth noting that the Stamp Duty holiday didn’t benefit first-time buyers as much as it did onward movers and investors. This is because first-time buyers already benefited from a reduction on Stamp Duty. In fact, there’s a case for arguing that they may actually be better off when the Stamp Duty holiday ends and they are the only ones with the Stamp Duty break. Potentially, the end of the stamp duty holiday could see a greater percentage of first-time buyers enter the market. This would, however, depend on a number of other factors most of which relate to their ability to finance a property purchase. In other words, it would depend on whether first-time buyers can put together deposits and get mortgages. The state of the mortgage market The key question here is arguably whether or not the government is likely to involve itself in the mortgage market. If it does, there are several moves it could make. One is to work with regulators to ease off the rules on affordability. This move would, however, carry two obvious risks. Firstly, there’s the risk that lenders simply wouldn’t take up the opportunity to use more relaxed lending criteria. Secondly, there’s the risk that the government could find itself in another bail-out situation if they did. After all, if they encouraged lenders to relax their lending criteria, then it might be difficult for them to refuse to accept any blame for the consequences. The government has extended the Help-to-Buy scheme while restricting it to first-time buyers. It has also mentioned plans to make it possible to buy houses with just a 5% deposit. It’s unclear whether or not this was a reference to the confirmed Help-to-Buy scheme or something else. The issue of remote working If remote working becomes an established part of the “new normal”, it could have massive repercussions for the property market. What’s more, it might only take a very low-level of adoption for the impact to be felt. Assuming a five-day work-week, staff working remotely for just two of those days could be enough to change the dynamics of the property market. On the employer’s side, encouraging remote work could allow them to reduce their need to rent commercial property. It would also allow them to continue to benefit from the investment in remote infrastructure they would have had to have made to keep going during COVID19. On the employee’s side, the less often you have to go to the office, the less you have to worry about minimizing your commuting time and the more you have to think about your home-office space. This could encourage buyers to move out of traditional commuter-belt areas and into areas where they can afford larger homes with space for decent home offices. If so, the end result could be an overall adjustment of property prices. City-centre locations and traditional prime commuter-belt towns could see less demand and therefore potentially lower prices. That said, current homeowners might simply choose to stay put unless they were forced to move. This might create an environment with fairly stable prices but few transactions. Your property may be repossessed if you do not keep up repayments on your mortgage.

If you are fortunate enough to have savings, then it’s important to use it to best effect.  Paying down your mortgage is one option, but there are others you should consider first. Building up an emergency fund Emergency funds (or “cash cushions”) are handy at the best of times. Right now, they may literally end up being a lifeline. If you only have limited savings then your best option by far may be to leave them as a cash deposit you can access if you need it. In fact, you may want to build up that pile of cash rather than pay off your mortgage. Even if you’re earning less in interest on your cash balance than you’re paying in interest on your mortgage, there is still a meaningful value in having cash savings. The value is basically a certain level of “self-insurance”. In other words, it’s the knowledge that you can deal with life’s slings and arrows without having to rely on getting financing. Increasing your insurance coverage This is essentially the same idea but from a slightly different perspective. With COVID19 yet to be brought under control and Brexit on the way, now could be an excellent time to review your insurance cover. In addition to thinking about cover for your belongings, you might want to think about cover for your income, your health and your pets’ health. You might also want to consider whether or not any of your possessions or activities could open you up to legal risk. Pets and bicycles are definitely worth a thought here. If so, it could be worth getting insurance to protect against this. Even if the possibility of it happening is low, legal bills, like medical bills, can be high. This can justify the cost of insurance. Paying off higher-interest debt Your mortgage may be your biggest, single debt but it may not be the one with the highest interest rate. If you have savings and are fully insured, then it may be best to prioritize paying off credit and store cards and personal loans. Investing in the stock market If you’re really confident that you can live without the money, then you may want to consider putting it into the stock market. There is no “right or wrong” about this, just what works for you. Essentially, you need to think about your skill and confidence as an investor and decide whether or not your investment returns would beat the savings made by reducing your mortgage. Investing in your home This may seem like an odd suggestion, but if you’ve been thinking of making updates to your house, then now may be the time to do it. Not to put too fine a point on the matter, if lockdowns continue into 2021, you may be spending a lot more time at home than you’d have liked. If so then you might want to prioritize anything which improves the time you spend in it. That said, you may want to think carefully about making any significant upgrades if you’re thinking about moving. Even if they add value to your home, they may not add enough value to justify the initial outlay. Investing in yourself This may seem like an even odder suggestion, but it is worth considering. In blunt terms, take a look at your current income stream and the skill-set that generates it. Think about how robust or vulnerable that income stream is. Then think about what that means in terms of making sure that you can maintain or even improve your income in 2021 and beyond. Depending on your situation, this could mean anything from developing existing skills to learning new ones to starting a new business or side-hustle. The key point is to think ahead about what life might throw at you and do your best to prepare for it. Your property may be repossessed if you do not keep up repayments on your mortgage.

The Mortgage Market Review took effect in 2014. Over the long term, it may reduce the risk of another 2008. For the present, however, it has led to some people being trapped on expensive mortgages because they are being told that they cannot afford better deals. The plight of these “mortgage prisoners” is well known. What is less well known is what to do about it. The basics of “affordability criteria” Before the MMR mortgage lenders were able to use fairly blunt lending criteria, such as multiples of income. Post the MMR, lenders became obliged to take a much more detailed look at a potential borrower’s finances and to think much more rigorously about what they could and couldn’t afford. In particular, lenders had to think about what would happen if interest rates were to rise over the course of the mortgage. The official aim of the MMR was to ensure that borrowers only took on loans they could genuinely afford, hence the name “affordability criteria”. This reduced the risk of them ending up having their home repossessed with all that implies. It may not have been entirely a coincidence that reducing the risk of defaults also reduced the likelihood of a mortgage lender getting into financial trouble. This in turn reduced the likelihood of them asking the government for assistance and hence potentially opening up a massive can of worms. The problem with “affordability criteria” Regulator-mandated affordability criteria effectively take away a lender’s ability to use their own discretion. This removes their ability to make special arrangements for people in non-standard situations including mortgage prisoners. Quite simply borrowers have to be able to meet the affordability criteria as set out by the FCA or lenders have to decline them. The FCA has tried to address this by offering lenders some leeway for dealing with mortgage prisoners. This has certainly helped in some cases. There are however a lot of circumstances in which mortgage prisoners cannot take advantage of these special accommodations. In particular, they do not apply to people with current or recent arrears. This is arguably rather ironic since the expense of being trapped in a high-rate mortgage may have played a role in the borrower being driven into arrears. Similarly, getting a better deal might go a long way to stopping the borrower running up more arrears. It’s also worth noting that the FCA simply offers lenders the option to apply extra flexibility when dealing with mortgage prisoners. It does not mandate that they do so. What’s more, it’s hard to see how it reasonably could unless they were also offering some kind of government-backed guarantee in the event of a default. Will the government intervene? Not to put too fine a point on the matter, the plight of mortgage prisoners was created by the government. You could therefore argue that the government has a moral duty to put the matter right. After all, the banks were bailed out in their time of need and frankly, their situation was of their own making. Mortgage prisoners by contrast are victims of government action. This raises the question of what the government could do. There are plenty of possible suggestions here. Possibly the most obvious one is to extend the existing Help-to-Buy scheme to mortgage prisoners. In other words, provided that the mortgage prisoners had at least 5% equity in their property, the government would guarantee up to 20% of their mortgage. This would hopefully be enough to open up the regular mortgage market to them. As a minimum, they would get five years on a better deal to clear their feet. After this, they would potentially have to pay 1% interest on the government loan. Even this, however, could be more affordable than what they are paying now. Your property may be repossessed if you do not keep up repayments on your mortgage.

The Stamp Duty holiday applies to all properties purchased between 8th July 2020 and 31st March 2021 (inclusive). Assuming it closes on schedule, there are basically three months left to complete transactions. This raises the question of whether the Stamp Duty holiday is still meaningful for new buyers (and sellers). New buyers If any buyer is considering entering the market now, then they really need to get their mortgage arrangements in hand as soon as possible. This could mean going down the mortgage preapproval route while they are house-hunting. If they find a property before the mortgage preapproval is finalised, they might be able to put in an offer. Then they could get their lender to push through the approval or change to asking for a mortgage on that specific property rather than a generic preapproval. What’s more, the safest route, insofar as there is one, is to look for properties which are both chain-free and fairly standard. The first point is obvious. Not only is a chain only as good as its weakest link, but longer chains also take longer to move and right now time really is of the essence. The second point basically means to look for properties which are likely to provide straightforward work for conveyancers. Do some research on the area and see if anything throws up a red flag, for example, mining works or nearby water. Also, ask sellers directly if they have all their paperwork ready. New sellers You may want to think about whether or not you’re prepared to accept an offer from a buyer without mortgage preapproval. In principle, the risk of losing out on the Stamp Duty holiday is on the buyer, not the seller. In practice, however, you need to think about what may happen if the buyer cannot complete in time. The two big risks are that the buyer pulls out completely and that they reduce their offer. In fact, the buyer could find themselves forced to do one or the other. They may not be able to get a mortgage at all. If they do, they may not get a mortgage to cover what they initially agreed to pay. Similarly, you might want to think carefully about whether or not you want to take your chances with an onward chain. Even if you think it’s secure, you may find that buyers for your property will be wary about getting involved with it. They’re already getting close to “the point of no return” for getting conveyancing finished before the deadline. On that note, it’s in everyone’s interest for sellers to get their paperwork in order as early as possible. Ideally, the buyer’s conveyancer should be handed everything on the proverbial plate. Sellers should also make sure that they are easily contactable in case the conveyancer does have any further questions. Is it worth the rush? Buyers need to be careful that they don’t end up rushing into making decisions they later regret. This is particularly true for first-time buyers who already get Stamp Duty benefits. In fact, unless first-time buyers are under pressure to move, now may be the time for them to sit on the sidelines and wait out the rest of the Stamp Duty holiday. They will then regain their tax advantage over onward movers. Even if the Stamp Duty holiday is extended, its effect may not be as impressive the second (or subsequent time around). The whole point of time-limited offers is that they force people to take action within the given time frame. If people get the idea that the time frame can be extended, then they may feel under (a lot) less pressure to act. Your property may be repossessed if you do not keep up repayments on your mortgage.