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Friday 22 May 2015
Friday 22 May 2015
Friday 22 May 2015
Friday 22 May 2015
The Mortgage Market Review (MMR), introduced in 2014, set out strict affordability criteria to limit high-risk mortgages. While this raised questions about its impact, nearly a year later, mortgage approvals remain high, and house prices have held fairly steady.
If you’re thinking about buying a house, here are some important questions to consider.
Is Now the Right Time for Me to Buy?
Buying a home involves far more than just the property price. You need to account for several additional costs:
Stamp Duty: Payable on homes costing over £125,000.
Solicitor and Surveyor Fees: Essential but often overlooked.
Mortgage Arrangement Fees: Costs associated with setting up your loan.
Key Considerations:
Early Repayment Charges: Some mortgages impose fees if you repay early (e.g., if you sell the property).
Estate Agent Fees: If you sell your home, you’ll likely need to pay for an estate agent’s services.
Rent vs Buy Analysis
Before committing, ask yourself:
How long do I plan to stay in the property to make the upfront costs worthwhile?
Could I cope financially if house prices stayed steady or even fell?
If the answers leave you uncertain, renting might be the better short-term option.
I’m Ready to Buy – How Can I Reduce My Mortgage Payments?
Lower interest rates have made competitive mortgage deals more accessible. To secure the best rates, you need to make yourself as attractive as possible to lenders.
Steps to Improve Your Mortgage Eligibility:
Save a Larger Deposit: The bigger your deposit, the lower your loan-to-value (LTV) ratio, which reduces lender risk.
Clean Up Your Credit Record:
Check for errors and get them corrected.
Register on the electoral roll – this boosts your credit score.
Stay Within Affordability Limits: Lenders will carefully assess your finances to ensure you meet the affordability rules set by the Mortgage Market Review.
Doing this groundwork will help you view your financial situation from the lender’s perspective and maximise your chances of approval.
What Happens If Interest Rates Change?
Fixed-Rate Mortgages
If you’re on a fixed-rate deal, interest rate changes won’t affect you until the fixed term ends. However, once it does, your repayments could rise if rates go up.
Variable Rates
If you’re on a variable or tracker mortgage, your repayments will fluctuate in line with interest rate changes.
Preparing for Rate Fluctuations
While lower interest rates may reduce your monthly payments, it’s risky to base your financial strategy on this continuing. Instead:
Assess how you would cope financially if rates increased.
Consider the long-term picture. Over a period of 5 years or more, it’s likely you’ll experience both rising and falling interest rates.
Your financial plan needs to be robust enough to handle both scenarios.
Final Thoughts
Buying a house is a major financial decision. By understanding the costs, improving your mortgage eligibility, and planning for interest rate changes, you’ll be better equipped to navigate the market.
Take your time, do your research, and make sure your financial strategy is resilient enough to withstand the unexpected.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
The Mortgage Market Review (MMR), introduced in 2014, set out strict affordability criteria to limit high-risk mortgages. While this raised questions about its impact, nearly a year later, mortgage approvals remain high, and house prices have held fairly steady.
If you’re thinking about buying a house, here are some important questions to consider.
Is Now the Right Time for Me to Buy?
Buying a home involves far more than just the property price. You need to account for several additional costs:
Stamp Duty: Payable on homes costing over £125,000.
Solicitor and Surveyor Fees: Essential but often overlooked.
Mortgage Arrangement Fees: Costs associated with setting up your loan.
Key Considerations:
Early Repayment Charges: Some mortgages impose fees if you repay early (e.g., if you sell the property).
Estate Agent Fees: If you sell your home, you’ll likely need to pay for an estate agent’s services.
Rent vs Buy Analysis
Before committing, ask yourself:
How long do I plan to stay in the property to make the upfront costs worthwhile?
Could I cope financially if house prices stayed steady or even fell?
If the answers leave you uncertain, renting might be the better short-term option.
I’m Ready to Buy – How Can I Reduce My Mortgage Payments?
Lower interest rates have made competitive mortgage deals more accessible. To secure the best rates, you need to make yourself as attractive as possible to lenders.
Steps to Improve Your Mortgage Eligibility:
Save a Larger Deposit: The bigger your deposit, the lower your loan-to-value (LTV) ratio, which reduces lender risk.
Clean Up Your Credit Record:
Check for errors and get them corrected.
Register on the electoral roll – this boosts your credit score.
Stay Within Affordability Limits: Lenders will carefully assess your finances to ensure you meet the affordability rules set by the Mortgage Market Review.
Doing this groundwork will help you view your financial situation from the lender’s perspective and maximise your chances of approval.
What Happens If Interest Rates Change?
Fixed-Rate Mortgages
If you’re on a fixed-rate deal, interest rate changes won’t affect you until the fixed term ends. However, once it does, your repayments could rise if rates go up.
Variable Rates
If you’re on a variable or tracker mortgage, your repayments will fluctuate in line with interest rate changes.
Preparing for Rate Fluctuations
While lower interest rates may reduce your monthly payments, it’s risky to base your financial strategy on this continuing. Instead:
Assess how you would cope financially if rates increased.
Consider the long-term picture. Over a period of 5 years or more, it’s likely you’ll experience both rising and falling interest rates.
Your financial plan needs to be robust enough to handle both scenarios.
Final Thoughts
Buying a house is a major financial decision. By understanding the costs, improving your mortgage eligibility, and planning for interest rate changes, you’ll be better equipped to navigate the market.
Take your time, do your research, and make sure your financial strategy is resilient enough to withstand the unexpected.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
