Jade Buswell

Jade Buswell

Jade manages all the internal processes and human resources within UK Property Finance Limited. After many years working within the financial sector and working with qualified CeMAP advisors, Jade has gained a wealth of knowledge and ensures UK Property Finance fully complies with the FCA regulations whilst managing the larger customer accounts and partner relations. Jade has been shortlisted for the senior female executive award with The Women's Awards for the East Midlands and is a valuable asset to have onside when sourcing the best financial deals.

5% Deposit Mortgages Now Back on the High Street

For the first time in years, several major lenders have reintroduced 95% LTV mortgages with a deposit requirement of just 5%.

An initiative aimed at encouraging more first-time buyers to get on the property ladder in England, these government-backed loans are now available from Lloyds, Santander, Barclays, HSBC, and NatWest.

Experts, however, have advised movers and first-time buyers alike to consider stretching to deposits of 10% or more where possible in order to avoid higher interest rates and elevated overall borrowing costs.

A welcome return of the 95% LTV mortgage

Details of the scheme were unveiled by the Prime Minister in this year’s budget, during which the chancellor confirmed that 5% deposit mortgages would be available to anyone looking to purchase a property up to the value of £600,000.

The property being purchased, however, must be the buyer’s only home and their intended place of residence, not a second home or a buy-to-let property. It has also been confirmed that new-build properties will be exempt from the 95% mortgage offer.

Encouraging as many lenders as possible to take part in the initiative, the government has offered a partial guarantee (of up to 15%) in compensation to lenders in the event of non-repayment on the part of the borrower.

Major banks, including Lloyds, Santander, Barclays, HSBC, and NatWest, have already begun offering mortgages with an LTV of 95%, while Virgin Money has confirmed plans to do so in May.

Higher risk, higher interest rates

Upon announcing the scheme, the chancellor acknowledged the difficulties first-time buyers have traditionally faced putting together excessive deposits for home purchases.

“Every new homeowner and mover supports jobs right across the housing sector, but saving for a big enough deposit can be hard, especially for first-time buyers,” the Prime Minister said.

“By giving lenders the option of a government guarantee on 95% mortgages, many more products will become available, boosting the sector, creating new jobs, and helping people achieve their dream of owning their own home.”

Even where the 95% LTV mortgage is now available, lenders will continue to carry out stringent affordability and eligibility checks on applicants. Discrepancies in job status, income, or credit history, even as a result of the effects of the COVID-19 pandemic, could make it difficult or impossible for applicants to qualify.

In addition, 5% deposit mortgage customers have been told to expect slightly higher rates of interest than those attached to mortgages with a lower LTV. Some banks involved in the scheme have confirmed two-year fixed-rate deals at 4%, up to 75% higher than a comparable mortgage with a 10% deposit.

“It reflects the extra risk the bank is taking on. I think over the long term, that is a pretty competitive rate for customers,” said Lloyd Cochran, head of mortgages at NatWest.

“One of the things we do is ensure that the customer can afford that rate. We also ensure that the customer can afford that loan if interest rates rise.”

Housing Market Performs Beyond Expectations in March, Halifax Data Suggests

The run-up to the Easter home buying season has apparently put an early “spring in the step” of many movers and first-time buyers, according to the latest figures released by Halifax.

Part of the biggest high street mortgage provider in the UK, Lloyds Banking Group, Halifax, spoke of a resurgence in activity in the country’s real estate market throughout the course of March. The improved performance had been predicted by many because of the confirmed stamp duty holiday extension covering most property purchases in England, Wales, and Northern Ireland.

Growing demand for desirable properties in key areas across the UK resulted in an average house price growth of 6.5% in March, compared to the same time in 2020. This took the average UK house price to just over £264,600.

Affordability issues for first-time buyers

This reassuring increase in average property prices will undoubtedly come as welcome news to current homeowners and those planning imminent moves; however, it is likely to cause further concerns for many first-time buyers, for whom affordability may have been an issue even before the recent house price growth, particularly those who have had their income and job status affected by the COVID-19 crisis.

Likely to serve as a lifeline for many, several major high-street banks have confirmed their intent to take part in a government-backed loan scheme, which will enable them to reintroduce 95% LTV mortgages for the first time in years. This will open the door to mortgages that require only a 5% deposit, giving more first-time buyers the opportunity to get on the housing ladder.

Long-term market projections

It remains to be seen how the UK’s slow return to some form of normality affects the real estate market; nevertheless, some experts believe that a prolonged slowdown over the course of the year is largely inevitable due to the lingering effects of the COVID-19 pandemic.

“With the economy yet to feel the full effect of its biggest recession in more than 300 years, we remain cautious about the longer-term outlook,” commented Russell Galley, managing director at Halifax.

“Given current levels of uncertainty and the potential for higher unemployment, we still expect house price growth to slow somewhat by the end of this year.”

Monthly house price growth for March was recorded by the Halifax at 1.1%, suggesting that the average UK property had increased in value by just over £15,400 over the past 12 months. Performance that exceeded most expectations, given the catastrophic economic impact of three consecutive lockdowns.

“Casting our minds back 12 months, few could have predicted quite how well the housing market would ride out the impact of the pandemic so far, let alone post growth of more than £1,000 per month on average,” Mr. Galley added.

How Coronavirus Has Radically Changed the Priorities of Homebuyers

COVID-19 (and three consecutive national lockdowns) have had a major impact on the lives of every person in the United Kingdom. In particular, real estate market activity has illustrated how thousands of movers and first-time buyers have completely changed their priorities with regard to preferred property types and locations.

According to the latest figures from Rightmove, London has been overtaken by Cornwall for the first time as the UK’s most desirable location for residential properties. Devon has also been propelled in the rankings to third, while Dorset now sits in 10th position after previously ranking 20th.

The findings come as no surprise to the vast majority of UK estate agents, who throughout the pandemic noted a major spike in interest in rural homes, countryside properties, and larger residential dwellings with gardens.

Interest in city centre flats and urban homes with convenient transport connections has been diminishing throughout the COVID-19 crisis as the UK gets used to a new era of working from home and spending more time than ever indoors.

A larger home is a priority for buyers

The figures released by Rightmove suggest that sales of larger homes are accelerating significantly across the country, resulting in a major shortage in inventory in some locations.

For example, five-bedroom detached home sales have increased by as much as 38% over the past year, compared to the 15% increase in sales volumes for four-bedroom flats. Five-bedroom and four-bedroom bungalows have also skyrocketed in popularity, achieving 22% and 20% growth, respectively.

Meanwhile, private renters are likewise setting their sights on entirely different rental properties, predominantly away from busy urban centres. Two-bedroom and one-bedroom flats were the most sought-after rental property types in February last year; this year, it is two-bedroom semi-detached and detached houses that have topped the rankings.

“More space has always been the most common reason for people moving home, but the evolution for many, from balancing their laptop on the end of a bed last March to making an office a permanent addition to a home, has led to a need for even bigger homes than before,” commented Rightmove’s director of property data, Tim Bannister.

Estate agents expect a gradual return to normalcy

The lingering effects of the COVID-19 pandemic could result in a permanent or semi-permanent alteration to the priorities of buyers and movers across the United Kingdom; however, many estate agents believe that the current shift in interest will gradually wane, ultimately paving the way for a slow return to normality.

This is attributed to the fact that record demand for certain property types in desirable areas of the country is already resulting in major property price increases. Average house prices in regions once considered less desirable than their central urban counterparts are predicted to skyrocket, effectively pricing many movers out. At this point, it is inevitable that many will once again have no choice but to set their sights on more affordable urban dwellings, at least partially reversing the mass exodus away from central city living.

Sunak Discusses Plan to Create ‘Generation Buy’, Bucking Prior Trends

For years, the UK has been blighted with the prospect of an entire generation being priced completely out of the property market. An issue in almost all areas of the country, prospective first-time buyers have found it increasingly difficult to qualify for mortgages with excessive initial deposit requirements.

This demographic has long been dubbed ‘generation rent’, an unfortunate reference to the likelihood of most within this group being forced to rent homes for a lifetime.

But this is something that could be set to change due to a series of new measures and reforms being introduced by the government. At least, according to Chancellor Rishi Sunak, who has boldly claimed that ‘generation rent’ will be transformed into ‘generation buy’.

Specifically, he believes that the extension of the stamp duty holiday and a new government incentive scheme that will guarantee 95% mortgages will make a real difference to first-time buyers.

He stated with confidence that the initial stamp duty holiday had “helped hundreds of thousands of people buy a home and supported the economy at a critical time”, suggesting that even greater numbers of buyers could benefit from the second instalment of the suspension.

Meanwhile, banks are to be offered government guarantees in return for reintroducing 95% LTV mortgages with a deposit requirement of just 5%. As the vast majority of struggling first-time buyers cite elevated deposit requirements as their main barriers to homeownership, this new initiative could make a real difference.

Speaking on behalf of NatWest Group, head of mortgages Lloyd Cochrane welcomed the government’s decision to encourage lenders to bring back 5% deposit mortgages.

“For those customers with smaller deposits looking for a mortgage, particularly younger or first-time buyers, saving up for a big deposit can often be difficult, and we know people in these groups are some of the hardest hit by the effects of the pandemic,” he said.

“A government-backed mortgage guarantee scheme will help segments of the market for whom homeownership has felt far out of reach in recent months.”

Likewise, Wilson’s tax consultant, Imogen Lea, said that the extension of the stamp duty holiday would help ensure those who may have missed out the first time around will have ample opportunity to make significant savings.

“The welcome three-month extension to the SDLT holiday gives potential property investors a second chance to purchase with no SDLT up to £500,000,” she said.

“The extension to properties valued at £250,000 or less, which will be introduced in July and run until September 30, could see more sustained growth in buy-to-let investments in parts of the country where property prices are lower or in smaller dwellings,” Imogen added, highlighting the potential benefit of the extension for BTL Property Investors.

However, critics have argued that the government’s efforts to improve access to the property market for first-time buyers do nothing to help renters and mortgage payers who have fallen into arrears due to the COVID-19 crisis.

When is a Secured Loan a Good Option?

An unsecured loan can be a versatile and conveniently accessible financial tool for short-term borrowing requirements; however, unsecured loans are typically only available for relatively small sums and are repaid using regular monthly payments over an agreed-upon timescale.

With secured lending, significantly greater sums are often available for repayment over a much longer period of time. The most common example of a secured loan is a mortgage, wherein the applicant borrows to buy a home and repays the balance over 10 to 35 years.

Secured lending is the provision of security (aka collateral) by the applicant, which is used as an insurance policy to repay the loan. In the event that the loan is not repaid in full, the lender has the legal right to take ownership of the security, sell it, and use the proceeds to recoup their losses.

A secured loan therefore carries the risk of forfeiting assets but can nonetheless be beneficial in a variety of ways.

What are the benefits of secured lending?

The main benefits of secured lending are the option of borrowing a relatively large sum of money, and they are available for most legal purposes. If sufficient equity is available in your property to cover the loan amount should the loan default, you have a high chance of success.

Even poor credit and a lack of income (bridging loans only) may still be considered.

In addition, the reported average completion time for a secured loan at the end of 2020 was just 13 days. Repayment options are also flexible, allowing borrowers to repay the loan over their preferred period, dependent on affordability, anything from a few months (for bridging loans) to 40 years.

With competition among UK lenders at an all-time high, typical interest rates for secured loans are at the most competitive that they have ever been.

When is a secured loan the right option?

As for when a secured loan represents the ideal option, there are technically no legal limitations to where and how the funds can be used. Therefore, a secured loan could be the perfect option in any instance where the following is required:

Significant loan amounts: Secured lenders offer loans starting from £10,000 upwards, making secured loans ideal when you need to borrow a significant sum of money for a major purchase, project, or investment.

Long-term repayment: Being able to spread out the repayments on a secured loan over several years or decades provides the borrower with access to affordable monthly repayments.

Poor credit borrowing: As secured loans are typically issued primarily on the basis of security, it is possible to qualify for a competitive deal with a poor credit history or no credit history.

Business loans: As the vast majority of businesses have a variety of valuable assets at their disposal, secured loans can be used as competitive and versatile business loans for a long list of purposes.

If you can prove that you can comfortably afford the repayments on your loan, secured lending could enable you to access the funds you need at a competitive rate of interest.

Tesla’s $1.5 Billion Bitcoin Purchase Continues to Divide Opinion

Tesla has once again been dominating the headlines over the past week, after the company made a historic $1.5 billion Bitcoin purchase. The huge cryptocurrency investment was not entirely surprising, given CEO Elon Musk’s public praise for Bitcoin for some time now.

Many analysts had always seen it as purely a matter of time before Musk entered the cryptocurrency marketplace, though few had predicted such a monumental investment.

Tesla’s $1.5 billion Bitcoin investment spurred another meteoric rise in the value of the world’s number-one digital asset. Having recently skyrocketed beyond $40,000 for the first time, the value of a single Bitcoin briefly broke the $50,000 barrier before settling back at $47,000 by Monday, February 15.

Confidence in cryptocurrency in general spiked alongside the value of Bitcoin, which, on the basis of this single purchase, increased by around 9%.

But at the same time, economists and market watchers are questioning whether a major investment in Bitcoin represents a savvy use of the firm’s funds. Whether Tesla is wise to begin accepting Bitcoins for purchases of its products has also been called into question.

Differences of opinion

Unsurprisingly, Tesla’s cryptocurrency investment has divided experts right down the middle. In an interview with MarketWatch, Christopher Schwarz from the Centre for Investment and Wealth Management at the University of California insisted Musk had made a mistake.

“I think this is an awful strategy on many, many levels,” he said.

“In essence, this is like creating [currency] risk since none of Tesla’s suppliers are paid in Bitcoin.”

Tesla has done little other than delight its stakeholders and shareholders as of late. Within the past 12 months alone, Tesla share prices have increased by an astonishing 472%. This is more than what Bitcoin itself has gained over the same period of time, achieving growth of 337%.

Jerry Klein, managing director and partner at Treasury Partners, likewise told MarketWatch that the decision to invest in Bitcoin was unusual and unexpected.

“Tesla’s purchase of Bitcoin is an unusual use of corporate cash, which is typically held in safer and less volatile assets, such as short-term fixed-income securities, to ensure liquidity and limit volatility,” he said.

“While Tesla shareholders are reacting positively to the news, it remains to be seen how shareholders would react if a decline in Bitcoin’s price negatively affects Tesla’s future earnings.”

“CFOs are willing to accept risk in their overall business, but not with the cash on their balance sheet. While Bitcoin has been surging in recent months, it’s been very volatile over the past few years.”

Meanwhile, there are those who believe simply allowing capital to effectively ‘go to waste’ with traditional holding options is actually the biggest mistake companies like Tesla can make.

“Corporations with ever-increasing dry powder have a most obvious cash management option: partial BTC allocation,” commented co-founder of Nexon, Antoni Trenched.

“Sitting on piles of cash offers little to no return and gets constantly devalued by central banks’ excessive QE measures. Having a Treasury policy that diversifies risk and return, as well as looking into ‘the fastest horse’, is not only a sound policy but is also the one that most adheres to the key principle of maximising shareholder value.”

Is Consolidating Debts with a Secured Loan a Good Idea?

On one hand, it is true to say that taking on any form of debt while already struggling with your monthly outgoings is not a good idea. Attempting to solve debt by taking on more debt is usually counterproductive, though there is one exception to the rule.

Debt consolidation involves using one larger loan to pay off multiple debts, leaving the individual in question with just one monthly repayment that they can afford. Replacing numerous debts with a single loan at a competitive rate of interest can also significantly reduce the individual’s overall debt level and outgoings; however, consolidating debts with a secured loan is not without its risks, all of which should be discussed in full with an established broker before applying.

Taking out a secured loan to consolidate debts effectively means converting a series of unsecured debts into one larger secured debt. This immediately brings the benefits and risks associated with secured borrowing into the equation, such as the following:

Benefits

  • A secured loan can often be provided at a significantly lower rate of interest, as they are considered lower-risk products on the part of the lender.
  • Taking out a secured loan provides the opportunity to repay the balance over 5, 10, 15, or even longer, allowing for comprehensively affordable monthly repayments.
  • Specialist-secured loans for debt consolidation do not adversely impact the credit history of the applicant.
  • Provided you have sufficient security (assets) available to cover the total sum of the loan, you have a strong possibility of success with your application.

Risks

  • Secured debt consolidation loans are typically issued against the home of the applicant, which may subsequently be repossessed if the loan is not repaid as agreed.
  • Variable interest rates are occasionally used on longer-term secured loans, which means monthly outgoings could increase (or decrease) in the future.
  • You cannot qualify for a secured debt consolidation loan of any kind if you have no qualifying assets to secure the loan against.

How can I ensure I get the best possible deal?

Before applying for a secured debt consolidation loan, it is essential to ask yourself three important questions:

  1. Will the loan clear all of my debts and, therefore, put me in a much better financial position?
  2. Can I comfortably afford the repayments on the loan without any issues?
  3. Am I sure I will be able to cope if the interest rate on my loan increases in the future?

If, after considering the pros and cons, you decide to go ahead with a debt consolidation loan application, ensuring you get the best possible deal means working with an established independent broker.

Your broker will conduct a whole-of-market comparison on your behalf, incorporating countless specialist lenders that do not work directly with the public. This comparison will be provided free of charge, with no fees or commissions payable for the services offered.

For more information on any of the above or to discuss your requirements in more detail, contact a member of the team at UK Property Finance today.

Bankruptcy Mortgages Explained

Contrary to popular belief, bankruptcy will not necessarily count you out of the running for a mortgage. A history of bankruptcy on your file can create additional challenges, but it does not make qualifying for a mortgage impossible.

It is simply a matter of carefully considering the options in order to pair your requirements with an appropriate lender you can count on.

How soon after bankruptcy can you get a Mortgage?

In the immediate aftermath of declaring bankruptcy, qualifying for any kind of credit can be extremely difficult. Particularly when major banks and lenders are concerned, those who have recently been declared bankrupt are excluded from almost all lines of credit across the board.

Any history of bankruptcy in your financial history will appear on your credit file for a period of six years. During this period, you can expect to be scrutinised by the vast majority of mainstream lenders when applying for lines of credit. The more recent the bankruptcy, the lower the likelihood of qualifying for a loan.

If you are considering applying for a mortgage during this period, you will need to take your business to a specialised lender. Away from the UK High Street, there is an extensive network of flexible and accommodating specialists who welcome applicants with flawed credit histories. Even those with recent bankruptcies are not necessarily ruled out of contention. You can even use our UK mortgage calculator to work out the cost.

You may have recently been declared bankrupt, but you may also be in an extremely strong financial position with a provable source of income. Likewise, you may already own one or more properties, against which you may be able to secure a loan to access the funds you need.

Bankruptcy need not prevent you from qualifying for a mortgage, but it is essential to seek independent advice before applying. Consult with an independent broker to discuss the available options and choose an appropriate course of action.

What size deposit do you need?

With all types of ‘substandard’ finance, bigger deposits make it easier to qualify for a competitive loan. During the first couple of years following bankruptcy, you may be required to provide as much as 40% as a minimum down payment. Over the subsequent two to three years, this could fall to as little as 25% or even 15%.

If you declared bankruptcy six or more years ago, there is a good chance you will qualify for a mortgage with a deposit as low as 10% or even 5%. Though it is worth bearing in mind that the larger the deposit you provide, the more likely you are to be offered a competitive rate of interest and reduced overall borrowing costs,

Larger deposits often hold the key to not only qualifying for a poor-credit mortgage but also ensuring you access a competitive deal. If possible, it is therefore worth considering offering a down payment that exceeds the lender’s minimum requirement.

Which lenders offer bankruptcy mortgages?

On the UK High Street, the list of lenders that specialise in bankruptcy mortgages is relatively short. In fact, any evidence of bankruptcy whatsoever is likely to count you out of the running with the vast majority of mainstream lenders.

This is why it is important to set your sights beyond the usual high-street names if you are looking to get a good deal with a history of bankruptcy. With the help of an established independent broker, your requirements and financial position can be paired with an innovative and accommodating lender who specialises in post-bankruptcy mortgages.

By working with an independent specialist, you are far more likely to both qualify and be offered a competitive deal you can afford. Particularly if you are otherwise in a strong and consistent financial position, your history of bankruptcy may not be held against you.

Speak to an independent broker to arrange a whole-market mortgage comparison, including the specialist lenders you won’t find on any UK high street.