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Fixed-Rate Mortgages | Mortgage Advice in Durham

Fixed-rate mortgage advice in Durham

When you enter the mortgage world, you will find that there is not just one mortgage for everyone. They vary depending on different circumstances with some being more complex than others. In this article, we will be looking at just one of the types of mortgage, fixed-rate mortgages. This one has increased in popularity over the years and is seen to be the most common one.

What is a fixed-rate mortgage?

As stated in the name, a fixed-rate mortgage is where you are taking out a fixed-rate mortgage where your interest will be consistent throughout your mortgage term.

The duration of the mortgage term can vary depending on the deal you are on. It also depends on how long you fix your deal.

For example, the lowest-terms usually have the lowest interest rates. Even though this is good, it does mean you will need to renew your mortgage product via a Remortgage in Durham more often.

This is one of the reasons why fixing your mortgage deal over a lengthy period on a fixed-rate mortgage can be more beneficial.

Medium & long term fixed mortgages

It’s all down to whether or you are willing to look for a new fixed-rate deal every two to three years or not. A medium to long-term product is perfect for those who don’t want to frequently search for new deals. Like with many financial commitments, you will need to look at your current and future financial circumstances when deciding the duration you’re going to fix your mortgage for.

One of the popular choices amongst fixed rates is five-year fixed rates with one of the reasons being the security of consistent monthly payments. On the other hand, there are some negatives to this. If the interest rates drop when you are locked in, this will result in paying more than you would’ve been had you taken out a product with a shorter term.

It can be possible for you to fix in your mortgage for an even longer period of time if you feel this is the best option for you. In many cases, the options are limited, but you can find seven to ten-year fixed products. You may find these types of products aren’t usually very popular because you’re committing to a product for a whole decade! Within this time, better rates are usually to come available. Keep in mind that these are usually the most expensive fixed-rate products available to customers.

Fees to consider

Booking and mortgage arrangement fees

Along with interest rates and payments, you will have to factor in mortgage arrangements and booking fees.

It is likely that a booking fee would be charged if you do attend an appointment with a Mortgage Advisor in Durham. Unlike some mortgage brokers, we do not charge a booking fee, we offer all our customers a free mortgage appointment.

You will be charged upon completion, therefore, for those you take out short, fixed-term products, it could result in you accumulating a large number of costs just for sorting your mortgage. Whereas, with a medium fixed-term mortgage, you won’t be required to constantly pay for arrangement fees.

Early repayment charges

Also known as ERC’s, you can receive an Early Repayment Charge when you overpay your mortgage or pay back your mortgage too early.

In some cases, people forget about ERC’s or overpay by accident, while some overpay on purpose. This is just one of the cases where the positives of overpaying can sometimes outweigh the negatives.

When your fixed-mortgage term is coming to an end, you may find that there are much better interest rates already available. This where overpaying and receiving an ERC can be beneficial as you are accessing them better rates. In circumstances where it’s a limited product offer that you have received or a deal that you have found and you want to lock into right away, this is where an ERC can be helpful in the long run.

Normally, ERC’s aren’t too costly. The amount you will be charge is calculated by the remaining amount left on your mortgage. For example, if you have a total of £80,000 left on your mortgage and the ERC is 2%, you’ll receive a £1,600 early repayment fine. Overall, this figure does not seem too bad.

Our advice

Before you fo jump into a deal, as an expert Mortgage Broker in Durham, we do recommend you carry out some research. One thing that is best to avoid doing is going for ‘headline’ deals as these are a way to mislead with their cheap rates but the high arrangement fees!

Seeking Remortgage Advice in Durham can help you secure great fixed-rate mortgage products. As well as this, it can also provide you with further information on ways to save costs on various fees that are a part of getting a mortgage. Contact us to speak to one of our hard-working Mortgage Advisors in Durham.

To learn more about the other mortgage types out there, check out our article on the ‘different types of mortgage in Durham’.

The Pros and Cons of Using a Mortgage Broker in Durham

There are many reasons why you should use a Mortgage Broker in Durham. It can be helpful if you are taking that first step into the mortgage world, or going through the process the second time as you come towards the end of your fixed term as the process can be daunting sometimes.

With many options available for homeowners and home buyers, you ideally want to get it right first time, even with a lot of money involved.

Obviously, we believe that our tailored service as a Mortgage Broker in Durham would be helpful during the mortgage journey, in particular, First Time Buyers in Durham.

Even though we are experts in assisting customers through the process, it’s also understandable that the service is not for everyone and some may still wonder how we can help.

With this in mind, we have created a helpful guide about why approaching a Mortgage Broker in Durham could benefit you in your situation and why some people decide to go direct to the mortgage lender instead.

What are the pros & cons of using a mortgage broker in Durham?

Cost-Effectiveness

Deciding to go direct with the mortgage lender and finding your own mortgage deal can save you more money than approaching a Mortgage Broker in Durham. However, mortgage brokers may charge a fee but can be based on circumstances.

Being experienced in going through the process, having an easy case and lengthy knowledge may mean that it’s best and cheaper to go through the process yourself. This can be an issue if you have a more complicated case and people who don’t understand the lender criteria.

Going through the mortgage process with little to no knowledge could either result in you being on the wrong deal or ending up unsuccessful when applying for a mortgage deal. Either circumstance could mean spending more money than you have to, or damage your credit score which could negatively effect your chances of applying for a mortgage further down the line.

A dedicated Mortgage Advisor in Durham strives in getting your recommendation right the first time by finding you the best and cheapest deal on offer. As much as this service comes with a fee, you could find that you save a lot of money in the end.

Local Bank Branch Relationships

One of the reasons why many older customers decide to approach a bank is due to how the mortgage process was previously run. Prior to the introduction of online banking apps and modern technology, as a loyal customer, you may approach your local branch a lot where you would speak to the same people.

If you were looking to get a mortgage, you would go through the bank manager and speak to them. They had extensive knowledge of your finances and would be the ones to approve a mortgage for you. Now, many things are done digital including credit scoring.

Because of advanced technology within these banks, it means that the bank manager would not personally go through your case. It would be carried out through an online system which will determine if you are eligible for a mortgage or not. Regardless of what bank you are with, everyone is treated fairly.

Exclusive Mortgage Products

Following on from the previous point, there is an assumption amongst people that going direct would mean they are open to the best and exclusive deals. This is true to an extent, however, they will offer the best deal from their own company.

Not every mortgage lender is a bank and there is a large variety of options to choose from. Therefore, the most suitable deal your bank can offer, might not be the best one for you outside that bank.

This is another reason why taking out tailored Mortgage Advice in Durham can be a huge benefit to you. With an expert advisor by your side, they will be able to go through your case and find you the deal amongst our large panel of lenders that is perfect for your circumstance.

On the topic of exclusivity, approaching a Mortgage Broker in Durham can give you access to deals that you can’t find anywhere else. If you are a first time buyer, looking to remortgage in Durham or have a specialist case, there are many options available to you through an expert mortgage broker.

Changes to Regulation & Consumer Protection

After the 2007-08 credit crunch, the mortgage market needed to change. The 2014 Mortgage Market Review, stated that lenders could not sell mortgages to their customers without regulated advice.

This policy meant you couldn’t just approach a bank to tell them you want a mortgage and be accepted without the important checks. Furthermore, it meant that you couldn’t be granted a mortgage by any member of the bank, which was a regular occurrence, regardless of if they were qualified to do so or not.

Along with these new policies, consumer protection was introduced which was initially not provided to you by the bank. This means that you, as the customer, as the right to complain to the Financial Ombudsman if you feel misadvised in any way. The Financial Services Compensation Scheme is also available to you to make a claim.

Having this in place can assure customers who approach both mortgage brokers and mortgage lenders that they are in safe hands and are receiving professional and regulated advice.

Booking an Appointment with a Mortgage Advisor in Durham

One factor which can be a disadvantage to mortgage lenders but is beneficial to mortgage broker is that it can sometimes take months to try and speak to an individual at a bank. Whereas, getting in touch with a Mortgage Broker in Durham, like ourselves, can provide you with a more quick and responsive service that keeps you updated constantly about your mortgage process.

We are proud to offer a tailored service where a member of our team will contact you at a time that is best for you and your lifestyle. From morning, until late, 7 days a week, our expert Mortgage Advisors are here to help. This can sometimes include bank holidays!

Depending on availability, you may be able to book yourself in and have the appointment on the same day! However, it’s up to you if you want to speak to someone today or in a few days time.

As a part of our tailored service, our advisors have flexible availability. This means you can book yourself in around your 9-5 or around any other commitments. Our quick and simple book online system is great if you are on the move and need to book an appointment.

Responsiveness is an important part of Durhammoneyman. Whatever mortgage process you are going through, our friendly team will keep you in the loop. Your advisor will let you know of any changes that could arise.

The public’s views on mortgage brokers has changed due to Mortgage Brokers in Durham, like ourselves, providing an open and honest service to all customers looking to start their mortgage journey.

Handling Complex Scenarios

Through our time providing Mortgage Advice in Durham, we sometimes speak to customers who have a more complex situation than your average case. Below are just a few common situations we have encountered over the years;

  • Mixed Deposit (Savings & Gift) – This means auditing two different sources.
  • Applicants, who are on zero hour contracts – Will there be a consistent income?
  • Making a Second Purchase – Can they afford to make that additional purchase?
  • Self-Employed with No Fixed Income – A common challenge for Self-Employed applicants.
  • Poor Credit History – A lender will not look favourably upon an applicant who has mismanaged payments in the past.
  • Affordability – Can they afford a mortgage full stop?

In previous years, mortgage lenders could easily offer you deal that was better than any other lenders. Now, it’s not all about which deal you go with, it’s if you match the criteria or not.

Even if you find a deal that is reasonable, it doesn’t mean you match the criteria for it. In order to determine this, the lender will perform either a hard search (resulting in a footprint on your credit file? or soft search (leaves less of a footprint on your credit file).

One thing that could damage your credit file is being declined for an agreement in principle when applying for a mortgage. On top of that, if you are declined, it’s very unlikely that you will be given a reason for this which can be frustrating.

If you do speak to a Mortgage Broker in Durham like Durhammoneyman, we will be able to go through your case before, so you are prepared and in a position where you have a better chance of being accepted.

Here at Durhammoneyman, we have a large panel of lenders who offer a range of mortgage products. We will be able to match you up with deals and look to get you an agreement in principle. If you get your agreement in principle through Durhammoneyman, it will usually take no more than 24 hours after your free mortgage appointment.

Remember, having an agreement in principle doesn’t always mean you’re guaranteed to be agreed, nor does it guarantee a mortgage in the end, but it does provide safety for your credit file to have an expert go through your file beforehand. As a Mortgage Advisor in Durham, we always aim to get your recommendation right the first time.

In Conclusion; Should I use a Mortgage Broker in Durham?

At the end of the day, it’s your decision. As mentioned, there many advantages and disadvantages of going with a Mortgage Broker in Durham. On the other hand, there is many pros and cons to going direct as well. It all depends on how quick you want your service to be, and how secure you want to be.

Through our time as a Mortgage Broker in Durham, we have built up a positive reputation and strong relationship with many customers looking to begin their mortgage journey. If you are a first time buyer in Durham, coming to the end of your fixed term, looking to remortgage in Durham, we have done it all!

Here at Durhammoneyman, we offer fast & friendly advice that is FCA regulated. Simply book online or get in touch to book yourself for a free mortgage appointment or remortgage review with one of our brilliant advisors. Our goal is to fulfil your mortgage needs, by providing you with advice, at a time that best suits you, subject to availability.

For more information about our service, check out our fantastic customer reviews. You can have a customer insight on how our service has helped many individuals on their mortgage journey. We also offer free financial education through our YouTube Channel, MoneymanTV.

Help to Buy Mortgage Schemes

Help to Buy Mortgage Advice in Durham

After the unfortunate event that was the 2008 credit crunch, our government opted to create a backup plan, in a bid to try and restart the pulse of the mortgage market. Their focuses were on first time buyers, introducing ways to help them get onto the property ladder, referring to these as government ‘Help to Buy Schemes’.

There are various different Help to Buy Schemes available, some that you might find you are better suited for and others you won’t qualify for. Here is a list of the Help to Buy Schemes available to home buyers and a bonus scheme that might be useful.

Help to Buy Equity Loan

The Help to Buy Equity Loan is the most popular of the schemes available to customers. If you are a first time buyer in Durham and are looking to get started on your mortgage journey, this could very well be the scheme for you.

Help to Buy Equity Loan Mortgage Advice UK | MoneymanTV

First of all, you must be first time buyer to be able to qualify for this scheme. You must also be purchasing a new-build property too, as this scheme does not apply to regular properties. You will be required to have a minimum of a 5% deposit.

The way this scheme works, is that you will put down a 5% deposit (or more if you can, that usually works out better for home buyers) and then the government will provide you with a loan to make up a total of a 25% deposit. This changes depending on how much you put down, i.e., if you then put down a 10% deposit, they’ll loan you 15%.

Overall, this will leave you with a 75% mortgage and the loan provided by the government to pay off. You get 5 years interest-free to pay back your loan. If you are unable to pay this back within the 5 years, you will start gaining interest on the amount of the loan that is left to pay off, starting at a rate of 1.75%.

As a trusted mortgage broker in Durham, we know that balancing your mortgage payments and the equity loan repayment at the same time can be quite a difficult task. There are many different ways around this, for example, some customers look to remortgage to raise capital for this loan, however, this route will increase your monthly mortgage payments.

Help to Buy Shared Ownership Scheme

The Help to Buy Shared Ownership scheme was introduced as a means of allowing applicants to purchase a percentage of a property and then pay back the remaining amount as rent.

Help to Buy Shared Ownership Mortgage Advice UK | MoneymanTV

You will usually have to own between 25-75% of the property in question. The remaining percentage will be owned by an outside party, namely the local housing association or council. This share can possibly be increased further down the line, if you happen to find yourself in possession of some more money.

The way that your payments work is that you will be paying back your monthly mortgage payments, but also a monthly rental cost. This basically means you are paying 100% of the ground rent and service charge on your new home. This will still apply, even if your share is the minimum amount.

Help to Buy Armed Forces Scheme

The Armed Forces Help to Buy scheme was introduced in 2014 after the roaring the success of the Help to Buy Equity Loan scheme. This scheme aimed to utilise the same basic concept as the one that came before it, however, this one was focused in on members of the armed forces.

Help to Buy Armed Forces Mortgage Advice | MoneymanTV

If you do fit into the criteria of the scheme, this is something that could provide a real advantage to you when trying to get onto the property ladder. The government has now extended the deadline/review date of the scheme to December 2022 and we have high hopes that it stays around, as the scheme is incredibly helpful to existing armed forces members who are in need of the extra help.

Bonus: Lifetime ISA

The Lifetime ISA is often a scheme that people forget. It’s not everyone’s immediate go-to scheme, however, it’s still useful to have some knowledge of it, as it could be the scheme that helps you secure a property as a first time buyer in Durham.

Lifetime ISA Mortgage Advice UK | MoneymanTV

A Lifetime ISA is more or less a savings account where your money grows, completely free of tax. The government will also provide you with a top-up to your savings with an extra 25%. This means that if you meet the £4,000 maximum amount, you will receive a rather welcomed £1,000 bonus to your savings.

You have to pass specific mortgage criteria in order to gain access to this mortgage scheme. All of these details are readily available on the Lifetime ISA website.

Top 5 Mortgage Hurdles People Experience in Durham

Experienced Mortgage Advisor in Durham

Through our experience as a mortgage advisor in Durham, we have heard of our many clients’ different mortgage hurdles. Although these challenges are not entirely impossible to resolve, it’s vital to know that they can become a major factor in stalling the speed and flow of the process.

 These challenges could include:

  • The effects that divorce and separation could have on a mortgage
  • Unemployment and getting a new job
  • Costs relating to childcare  
  • Evidencing a deposit source
  • Understanding benefit income

Effect of Divorce and Separation  

Divorce and separation can be hard to deal with and is very unfortunate. When this occurs, many divorced partners are then faced with more than just marriage challenges, with one of these being the joint financial endeavours that were taken out together. 

An option that initially sounded endearing to many married couples, due to the fact it can allow them to achieve their goal quicker, can quickly turn sour in the event of a separation. 

We tend to hear a handful of commonly asked questions from one half of the former happy couple when they get in touch. These include;

  • What is the possibility of being excluded from their ex-partner’s mortgage?
  • Could they possibly obtain a second mortgage?
  • Is there a way to exclude their ex-partner from the mortgage, in order to keep it for themselves?

Considering the affordability of your mortgage payments is paramount. As well as having an expert Durham mortgage advisor, you need to ensure that you are fulfilling necessary income requirements that make the obstacle of divorce and separation easier to overcome.

Effect of Employment Gap and New Job on Mortgage Payments 

In some cases, getting a new job comes with a greater income level than your previous job. However, a gap between going from your previous job to your new job can become a complication with your mortgage, and it’s especially the case for mortgage lenders.

If you are starting a new job, some lenders are always willing to factor in the new job either in the first month or as soon as you are about to start it. Furthermore, you will find periods of probation are acceptable.

Childcare-related Expenses 

When dealing with mortgage-related issues, we have found that the mortgage amount can change depending on if you are a family with children or not. A family with children, for example, will be offered much less compared to a family without children.

This is especially true in cases where the parents have just started back at work and are in the process of managing childcare, which are known for having notoriously high monthly costs. Many mortgage lenders will view these the same way they view other large monthly outgoings such as car payments.

It is best to mention, however, that a number of mortgage lenders operate in a different way. In some cases, lenders dismiss childcare-related expenses as part of the outgoing costs. This is due to the fact they strictly operate based on the data presented by the Office of National Statistics for outgoing costs. This can potentially increase the mortgage amount.

Evidence of Deposit Source 

Anti-Money Laundering laws, put in place in the UK, tend to be quite strict. Because of this, it needs to be known where all funds deposited by the mortgage borrower are coming from. Evidence of the deposit source will be required by your mortgage broker and lender. Sometimes, it may even be required by estate agents and solicitors.

Due to this, the entire mortgage application becomes a lot more complicated. Regardless of the source of deposit (either gift, personal savings, property sale, premium bonds, or personal loans), there must be documents detailing how the funds were obtained.

What to Know About Benefit Income? 

Benefit income can have its challenges too! With the help of an expert mortgage broker, this can be easily tackled. In fact, all forms of benefit incomes can be taken into account from disability benefits to child tax credits, however, this depends on the views of the mortgage lender.

Get in Touch with a Mortgage Advisor in Durham

It doesn’t matter if you are a first time buyer in Durham, looking to move home in Durham, or looking to remortgage in Durham, challenges can come about and cause unnecessary stress. Get in touch with a mortgage broker like ourselves and we will try and help take the stress away. 

Why isn’t it easier to get a Mortgage in Durham? | Mortgage Advice in Durham

Getting a Mortgage in Durham

Durhammoneyman has had more than 20 years of experience in the mortgage business. In this time, our heaps of experience and knowledge through the years have allowed us to help many different and unique customers get through difficult mortgage obstacles.

Therefore, no matter what personal situation you are in, we have probably encountered a similar one before. A few of our services include first-time buyers, remortgage, and self-employed mortgage advice in Durham.

Getting a mortgage can become complex if you are unsure of what you are doing. The reason for this is that there are thousands of different lenders with their own individual lending criteria, and it can be difficult to find the right one.

You’ll find that by instead opting to speak with a mortgage broker in Derby, you’ll be opened up to a wider variety of mortgage options, with criteria that your dedicated advisor will be able to match you up to.

Going to a lender for a Mortgage in Durham

Sometimes, you will find you can pass a lenders credit scoring system easier than you would from another, it all just depends on the lender. There are parts of the market that different lenders love to focus on, specific niche markets.

It’s common to find that the stricter the lending criteria are, the lower the supply rates are. The criteria can be stricter to match than others. Therefore, don’t feel disheartened if you are struggling to find a lender that will accept you.

It can be hard to qualify with lenders who have strict criteria. When a competitive deal has been offered to you, it will always have a tight margin. This is due to the fact that the lender needs to know the customer will be able to afford the mortgage and lenders want to make a profit off this and not lose money.

Lenders with Low Rates

When it comes to high street lenders offering the cheapest rates, you will find they will always increase their earnings from their borrowers. As soon as a mortgage has been accepted, they will gain more profit by selling you more of their products. Some of the products include bank accounts, unsecured loans, credit cards, and Insurance.

A common occurrence that you may find with mortgages, is the lowest rate of interest often comes with expensive set-up costs. This is why people often stay away from these products. When a lender grants you a mortgage, the main thought they have will be about their profit.

On the contrary, a Mortgage Broker in Durham will always have your best interest. Our knowledgeable and caring team knows all the secrets to save both your time and your money. We will work hard to find the best deal available that fits your circumstances.

Difficulties When Looking to Remortgage in Durham

In some cases, not everyone can just remortgage somewhere else and this is due to many reasons:

  • Breakup with a partner
  • Your household income may be less than it was at the start of the application
  • Since taking out a mortgage, the applicant has had a default or CCJ
  • There has been an decrease in value of the home since it was bought

Lending Criteria and the Economy

Matching lenders’ criteria, depending on the current performance of the economy, can affect how easy or hard it is to get accepted a mortgage. If the economy is suffering, lenders will tighten the margins and vice versa when the economy is doing well. Depending on when you are applying, it can sometimes be hard to obtain a mortgage, yet previously, mid-2000’s, it was too easy. This was prior to the credit crunch where lenders were granting ridiculous mortgages to people who couldn’t afford one at all.

As well as matching the lender’s criteria, the current state of the economy is another factor that can affect your chances of being accepted for a mortgage. If the state of the economy isn’t doing well, lenders will tighten the margin and vice versa when the economy is performing well.

There are times when obtaining a mortgage can be difficult. It just depends on when you have applied for it, whereas, in the mid-2000s, it was too easy. Before the credit crunch, lenders were granting ridiculous mortgages to people who couldn’t afford one at all.

Lenders took a completely different view and tightened their criteria after the credit crunch. The requirements included a 25% deposit which meant getting on the property ladder was unattainable. This tempted customers into renting due to the brisk increase in interest rates.

Mortgage Broker in Durham

We have become knowledgeable about what lenders are looking for in mortgage applicants through our valuable experience. Credit scoring is something many high street lenders now do to try and save time and money. Furthermore, this method gives the lender confidence in their ability to lend. 

Speaking to a Mortgage Broker might be the best option if you are struggling to match the lender’s criteria. As a Mortgage Broker in Durham, we can provide you with options that we know will increase your chances of your mortgage application being successful.

With a range of simple ways to achieve this, giving us a call could bring up a step closer to securing a mortgage deal. Get in touch and speak to an experienced Mortgage Advisor in Durham and potentially start your journey on the property ladder. 

Lending Criteria Mortgage Advice in Durham

The Credit Crunch Explained

Mortgage Advice in Durham

In order to understand what happened with the 2007/08 “Credit Crunch”, we need to take a look back on the years that lead up to it. If a First-Time Buyer in Durham took out a mortgage to buy a home back in the 1970s and ’80s, it’s very likely that this process was undertaken through a building society. It may be hard to believe, but your high street bank did not always offer their customers mortgages!

To find out whether you qualified for a mortgage or not, you’d have made an appointment with the building society manager and spoke with them. Customers would be encouraged to take out savings accounts with the building society and then the building society would use those people’s savings to lend to their other customers. Interest-rates would also be higher to borrowers than the rate they were paying to savers, in order for them to turn a profit.

Once the banks started to get involved with mortgage lending, they moved away from that older model. Instead, they opted to “buy” the money from markets, in order to accelerate the rate in which they could lend money to their customers.

Mortgages in The Noughties

If we move ahead of time and into the mid-2000s, there were plenty of new specialist lenders working within the mortgage market. Most of these originated from North America. Their way of handling business was to sell their book of mortgage customers, allowing them to raise new funds and continue the cycle of lending.

This method of practice was labelled Securitisation. The investors that bought these books were larger financial institutions such as pension funds and other High Street Banks.

The market was booming and these mortgage lenders were making a great deal of money. The newer lenders seized an opportunity by introducing more relaxed lending criteria. Poor credit history? Don’t worry about it. Wanting to self-certify? Go for it! These sorts of things were no issue for their businesses, or so they thought at the time…

Apparent Problems in the Market

As anyone with an inkling of common sense might have anticipated, these mortgages began to default. Major banks lost their confidence in each other, due to the uncertainty of how exposed they were in the very quickly falling apart subprime mortgage market.

In very quick fashion, the once sustainable banks’ share prices had completely dropped. A select few were bailed out by the UK Government (or more accurately, the taxpayer) in order to stop them going under altogether, whilst many failed to stay afloat.

Over the course of “The Great Recession”, a total of almost 80 different banks, building societies and lenders around the world, across 20 different countries, filed for bankruptcy or were acquired.

Because of this utter economic disaster, lending quickly dried up. Property prices dropped by a large amount and everyone lost confidence in the UK economy. It took almost a decade for the market to safely get back to a point where it could function sustainably once again.

Economic Recovery

Nobody wanted this to happen again, especially the UK Government, so investigations took place that aimed to look into what exactly happened and where it all went wrong. These studies led to the carefully thought out “Mortgage Market Review of 2014” that led the charge forward.

Self-cert mortgages had already been completely banned by then, but the biggest change to come out of this was that lenders themselves were now solely responsible for ensuring that the customer could in fact afford their mortgage payments.

The lenders were now responsible for digging deeper into customers incomes and outgoings with more precise lending criteria. They were paying more attention to credit commitments, childcare and other outgoings, so they could ensure customers were definitely able to afford their mortgage repayments on a consistent basis.

We have no doubts that it has now become a lot harder to get a mortgage than it was back in the day, though this is absolutely for the betterment of the industry, the economy and homeowners nationwide. Customers need to be a lot more organised with paperwork in order to prove their finances and be taken seriously by lenders and home sellers alike.

So many mistakes were made in the period running up to the Credit Crunch, but we hope that the industry learned a lesson this time and has lowered its chances of ever falling into a rut like this again.

Fast & Friendly Mortgage Broker in Durham

What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Durham

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Durham will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First-Time Buyers in Durham & those who are Moving Home in Durham. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

Mortgage Payment Holidays | Mortgage Advice in Durham

Mortgage Payment Holiday

At the start of the Covid pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday if they needed it. Most lenders followed the Government’s guidelines and did their best to help their borrowers during these hard few months.

We feel that it is best to create a summary of what mortgage payment holidays are, what lenders are doing and who can provide you with help and guidance through the coming months.

On that note, we feel like this is a good time to talk about what mortgage holiday payments are and how they can help you with your mortgage payments.

What is a Mortgage Payment Holiday?

They are quite simple. A mortgage payment holiday is a set-period, agreed upon between you and your lender, bank or building society, where your mortgage payments are deferred. In this situation, the set period should be around three months.

You will still have to pay back these payments. Over the period, you will receive interest which will be added onto your loan at the end of the payment holiday whilst your capital balance will not decrease. So, your overall mortgage loan will slightly increase. So you save money in the short term but in the long term, it may prove expensive.

Once you feel like you are ready to start paying back your monthly mortgage payments, either your monthly mortgage payments will be recalculated at a higher level or your mortgage term could be increased. Lenders prefer to not increase your mortgage term as it could put you past their standard retirement ages.

You may even be allowed to pay off a lump sum later on in the year to get your monthly mortgage payments back on track to how they were prior to your payment holiday.

Mortgage payment holidays are available for borrowers with both residential or Buy to Let Mortgages in Durham. This really helps out landlords as they now have help if rental payments are affected.

The Government’s Proposal

Here is the Government’s proposal following the COVID-19 outbreak:

  • Mortgage lenders will offer an automatic three-month mortgage payments holiday for borrowers who have been impacted directly or indirectly by COVID-19
  • The mortgage payment holiday will apply to customers who are up to date on their payments, not in arrears, and wanting to self-certify that they are impacted by COVID-19
  • This means that lenders will not complete an income and expenditure assessment, or an assessment of alternate payment options as ordinarily required under MCOB
  • This proposal will allow lenders to be more responsive to customer needs and offer forbearance in a simple way to customers in an environment where the operation of collections teams made be also impacted by COVID-19
  • Customers will be made aware that interest will accrue in the holiday period and they will need to make up deferred payments in the future
  • Customers who wish to undertake a full assessment of their ability to pay or financial difficulty may still do so.

How do I apply for a Mortgage Payment Holiday

Even if you had a mortgage payment holiday before, we always recommend speaking to your Mortgage Advisor in Durham. They will sort out everything out for you and work out whether you actually need to take a mortgage payment holiday. You can also go directly to your mortgage lender and enquire about taking one but this may not benefit you as you may not even need one. The main thing is not to panic and explore all of your options before rushing into anything.

Here are the steps you need to take if you won’t meet/aren’t meeting your monthly mortgage payments and have been directly affected by the COVID-19 outbreak:

  • The customer would contact the lender and inform them that they are being impacted
    by COVID-19
  • The lender would accept these details from the customer and offer an automatic
    three-month mortgage payment holiday
  • No evidence is needed for the lender
  • The lender makes the customer aware that interest will accrue and will be contacted at the end of the three months to complete an assessment of the customer’s circumstances
  • At the end of three months, an arrangement to pay will be agreed with the customer according to their circumstances to recover any shortfall, also ensuring that the mortgage remains affordable and sustainable
  • The lender notifies the customer that if they wished to complete a full assessment now, there may be other forbearance options more suitable to the customer.

For more useful information on how the coronavirus could affect your mortgage click here.

Will a Mortgage Payment Holiday impact my Credit Score?

In most cases yes, they can give a negative effect to your credit score. However, you are taking one because of a virus so lenders shouldn’t let it damage your score.

To ensure that this is the case, before taking out a mortgage payment holiday, you must contact them. You need to record their answer as well as the date, time and the name of the person that you spoke with. This will avoid any confusion down the line if anything changes. It all depends on your lender, there is no guarantee that every lender will say the same thing.

Will I still be able to Remortgage or take a Product Transfer with my lender?

You would’ve thought that everything would continue as normal, however, all lenders are now avoiding all remortgages and product transfers during a mortgage payment holiday.

This will affect borrowers approaching the end of their existing product as they may be forced to move on to a higher lenders variable rate. This could mean that borrowers who act too early and jump into a mortgage payment holiday deal straight away could end up accruing interest on a costly variable rate.

This is another reason why we say don’t rush into anything! Take it slow and evaluate your options with an expert Mortgage Advisor in Durham first, they will make sure that you actually need to take out a payment holiday first before diving in headfirst. There are lots of mortgage options out there so have a look first with your mortgage Broker in Durham.

What are my other options?

Some lenders could offer you a temporary switch over to interest-only in order to reduce your monthly payments but not to add any more to the loan amount by still servicing the interest payments each month.

You don’t need to put all of your mortgages onto interest-only, but doing so could help you out financially.

If you have savings, remortgaging onto an offset basis could really help you out, you will be cutting down on monthly payments massively. For example, if you have a £250,000 loan and £50,000 in your savings, you would only pay interest on £200,000.

This may all may seem a bit stressful and it this may have come around faster than expected, however, you should try to take it slow and calm down. As your Mortgage Broker in Durham, we are still here to help and relieve you of all of that stress. Remember, we are still open as usual operating 7 days a week. Receive a free mortgage consultation with a Mortgage Advisor in Durham today, we hope that we can help you out!

Mortgage Advice in Durham

How to Improve your Credit Score in Durham

Mortgage Advice in Durham

Ways to improve your credit score | moneymanTV

What is a credit score?

A credit score is a tool that lenders use to measure an applicants ability to afford a mortgage. The higher your score, the more likely it is that you’ll be accepted for a mortgage. Which means that if you have a lower score, your chances of being accepted decrease.

Even though having a good credit score may look good on the outside, you must know that each lender has their own individual lending criteria and it’s more than likely that you won’t meet all of them. So sometimes it’s also down to your circumstances and not just your score.

Matching lender’s criteria

Most lenders’ criteria are completely different from one another, lenders have almost developed their own niche market. You could end up matching to a handful of them or maybe only a couple. As long as you end up securing a great mortgage deal that is all that matter though and it’s your advisor’s job to help you do that.

Whether you go with your bank’s in-house advisor or a Mortgage Broker in Durham, your personal and financial situation will be evaluated and then compared with lenders’ and their mortgage products.

We would always recommend approaching a Mortgage Broker in Durham before going straight to your bank’s in-house advisor and this is because your bank can only offer you their own products. If you choose a broker like us, we are able to access thousands of different mortgage deals through our large panel of lender’s. Once we have your details, we will try our hardest to match you to a lenders’ criteria.

If you are struggling to match a lenders’ criteria, it could be down to numerous different things. The most common reason why people don’t meet lenders’ criteria and get declined for a mortgage is because of their low credit score. If this is the case, then you need to try and improve it.

Improving your credit score

Avoid unnecessary credit searches

Having unnecessary credit searches on your file could have a negative effect on your credit score. Lenders’ don’t like seeing that you are repeatedly checking your score, they may think that there is a reason for it and they could even start asking you questions about it during your application process. Even using price comparison websites could damage your score.

On a side note, if you are applying for a mortgage, we strongly recommend that you avoid applying for any form of extra credit in the meantime. Paying back owed credit before your application will look good on your application, however, borrowing/paying back credit during your application will have a reverse effect. If you borrow credit, some lenders’ could think that you cannot afford the deposit and are relying on the credit to help you.

Credit Check Durham

Are you registered on the Voter’s Roll?

A great way to improve your credit score is to register onto the Electoral Roll, it indicates stability and lenders really like that. It’s really easy to get yourself registered and the fact that it can increase your credit score, you’re missing out if you don’t take the opportunity.

If you are already registered, you should check that all of your information is correct as lenders will easily spot misspellings and an incorrect address.

Don’t run too close to your maximum limit

Maxing out your card each month will negatively impact your credit score. If you are using a credit card, a lender would much rather that you pay off the balance in full each month as it shows that you are good at managing your money. If you are exceeding your credit limits or overdrafts, your lender won’t think that you take your finances seriously. This could massively impact your credit score, especially if you get declined by a lender due to this reason.

Check that your address is up to date

When people move home, especially from their parent’s house, people often forget to update all of their address’. When you forget to update your address with a previous credit provider, it can appear that you live in two different properties at the same time. This can hurt your credit score once lenders see this so make sure that you are keeping on top of what address’ are linked with each of your accounts.

Close down your unused credit accounts

Do you have any store/credit cards that are no longer in use? If you do, then you should contact the provider and get them to fully close your account(s). Having these accounts open could be doing your credit score more harm than good. However, this could also still have a negative effect on your credit score as the credit reference can’t really tell if it’s you closing the account or the provider. Don’t worry though, it’s a good thing to check up on as if you have lost a card and didn’t realise then fall victim for fraud, you could end up having a worse effect on your score.

Remove your financial link to others

If you are financially linked to a family member or ex-partner your credit score could be affected without you even knowing. However, if the account is still live, you cannot remove your link just yet. If you want to remove any of these links, then you should get in touch with the credit reference agencies and make a request.

Summary

More often than not, applicants see credit scoring as an unfair way of determining the success of a mortgage application. For example, you may have a low score due to personal circumstances, which applicants think is unfair. As a Mortgage Broker in Durham, we mostly see that it’s people that are Moving Home or Self Employed struggle with their credit score. However, if this isn’t your mortgage situation and you still need help with improving your credit score, you know to get in touch with.

Sending an up-to-date credit report to your expert Mortgage Broker in Durham could prove extremely beneficial to your mortgage journey. A great tool that we always recommend to our customers is checkymyfile.com.

Check my file | Mortgage Advice in Durham

The more your advisor knows about your finances the better. Also, there are still some lenders that prefer to operate the old-fashioned way and will manually assess your application. They will still have rules that they stick by about the number of defaults and CCJ’s that they will allow.

A Mortgage Broker in Durham, like us, likes to do things the new way and will always aim to deliver you the same Fast and Friendly Mortgage Advice service that you are all used to. We hope to hear from you soon.

Should I Rent or Buy in Durham?

Mortgage Advice in Durham

As a Mortgage Broker in Durham, we often have First Time Buyers considering their first move onto the property ladder as they ponder whether to buy a home or continue renting.

When deciding whether to rent or buy, the most common thing that you will hear is that renting is a waste of money. You have to ask yourself, is it a waste of money? The answer completely relies on your personal circumstances.

In fact, times have changed and it’s now a lot more common to find people who are renting. As an expert Mortgage Broker in Durham, we thought that with all of our mortgage experience we should talk about whether you should buy or rent a property.

Rent vs Buy | moneymanTV

Why should I buy?

The property market has been dipping up and down for quite some time now, you can never tell when it’s going to drop again. So if you decide to buy a property and the market plummets, your property value could too.

This has happened to many unfortunate homeowners over the years, although, history suggests that even if you buy at the very peak of the market as long as you can afford to keep the property eventually prices tend to go back up.

For example, during the period of the credit crunch sold values dipped. Before the coronavirus outbreak in 2020, the credit crunch was one of the lowest economic periods of recent times. Surprisingly, less than a decade later these sell values shot up to a new all-time high, meaning that if you bought a property between 2005-2010, it was more than likely that your property value had increased.

What we are trying to say is that if you invest in a property, in the future your sell price could increase which shows that it was worth buying over renting.

Risks of buying

On the other hand, you could lose money if you are forced to sell your home at the wrong time, for example, this could be down to a relationship breakdown or a reduction in your income.

If you are concerned about the risks that come with buying a home, talking to a professional Mortgage Advisor in Durham could put you at ease. Before rushing into anything, it could benefit you to know where the market is currently sitting. We have been working within the mortgage industry for over 20 years now, we know exactly how the market is performing and what deals will be available based on what it’s like.

Buying a home is a huge financial commitment and you want to make sure that you get it right the first time. It also needs to be 100% right for you, the most important factor is that it matches your circumstances.

Will a mortgage be cheaper than renting?

Applicants tend to think that mortgage payments are more expensive than renting, however, this is usually not the case. Also, depending on the mortgage that you take out, your payments may fluctuate; this is due to the interest rates changing. If you don’t want an inconsistent interest rate (can sometimes go down if you are lucky), you may want to look into fixed-rate mortgages. A fixed-rate mortgage could be the best option for you as your mortgage payments stay at the same rate through your whole mortgage term.

When renting, you’ll usually find that your monthly payments stay the same. Sometimes your lender may increase your rent for one reason or another but it’s unlikely that they’ll ever reduce it.

Security

People like buying a home for a sense of security. No one can force you out of the property unless you fail to keep up with your mortgage payments. Whereas if you rent, if something goes wrong on the landlord’s end, they could ask you to move out.

Of course, you have some protection when you are renting and get asked to move out; you will always get a notice period. This is a disadvantage to renting, you are living in someone else’s property so if they want you to move out, there isn’t much that you can do. This is certainly not ideal, especially if you have family or work nearby or you have children in a local school.

Sometimes landlords give their tenants the first refusal to buy the property if they are selling it so they can save on estate agents fees.

Flexibility

Renting can be more flexible than owning. If at any time you want to move out of the property, you have the complete right to; you can give your landlord notice whenever you want. This may be because of a job offer in another area or that you simply want to move somewhere new, etc.

This is made more difficult as a homeowner as you have to decide whether you want to keep your home and rent it out as a Buy to Let or sell it. The process of selling a home and buying a new one is time-consuming and expensive, so if you are considering going down this route, it may be best to get Mortgage Advice in Durham. Speaking to a Mortgage Advisor in Durham could take all of the stress off your back and it could allow you to access competitive mortgage rates.

If you think that you may not be around in a particular area for very long you should consider whether the property is worth buying. Buying a property should definitely be seen as a long-term investment.

Repairs

If you are renting, your landlord should be responsible for any major repairs. There will always be some letting agents and landlords better than others, however, as a tenant you should expect to do some minor maintenance of the property yourself.

If you are a homeowner then all of this is on your own shoulders, and so is insuring the property which will be a condition of any mortgage you take out.

Despite what some people might say, we know that owning a home is not for everyone. If you are a First Time Buyer applicant maybe you should consider renting first, especially if you are young or are moving in with a partner for the first time. If you move in with a partner, it could end up favouring you to rent just in case the worst happens and things don’t work out. Getting a name removed from a mortgage can be tricky and complicated whereas if you are renting, it can be a much easier process as you can move out whenever you want.

Buying Out An Ex For A Mortgage UK | moneymanTV

Speak to a Mortgage Advisor in Durham

Before diving headfirst into buying a home, it could benefit you most to look at all of your options and see which route benefits you most. Buying a home is a huge financial commitment, you need to be certain that this is right for you and your circumstances. If you decide to rent though it may take you much longer to save up for a deposit.

As a Mortgage Broker in Durham, we see that most applicants end up deciding to buy over renting. People see getting a mortgage as an investment and they would much rather see their monthly payments going towards their own benefit rather than someone else’s. It’s sometimes just a case of getting your timing right and also being in the right financial position to be able to proceed.

To see what route could be best for you based on your personal circumstances, get in touch with your experienced Mortgage Advisor in Durham. Durhammoneyman will hold your hand through the whole renting/home buying process and we will provide our full help and support at all times. We have been doing this for 20 years now, we know exactly how to help you!

Durhammoneyman.com & Durhammoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.

Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk

The information contained within the website is subject to the UK regulatory regime and is therefore primarily targeted at customers in the UK.
Should you have cause to complain and you are not satisfied with our response to your complaint, you may be able to refer it
to the Financial Ombudsman Service, which can be contacted as follows

The Financial Ombudsman Service, Exchange Tower, London, E14 9SR
www.financial-ombudsman.org.uk

© 2022 Durhammoneyman

Durhammoneyman – Portland House, Belmont Business Park, Durham, DH1 1TW

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