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Mortgages Other Finance News

What £250,000 Will Stretch to in Several Areas of England

Average property prices in the UK exceeded £250,000 some time ago but what exactly can you get for this kind of money in different corners of the country?

Unsurprisingly, the size and specification of property you can expect for your £250,000 differs greatly from one region to the next. With the stamp duty holiday having been extended until at least September 30, the next few months are expected to be particularly busy for the real estate market.

For those setting their sights on a property for around the £250,000 national average, this is what you are likely to find available in key areas of England:

North East

The average price for a three-bedroom house in the North East of England is just over £152,000, which means that £250,000 would stretch to quite an impressive property. An attractive four-bedroom townhouse recently renovated and with pristine private gardens should be well within your price bracket in select areas of the North East.

North West

North West Property

Similarly, the average market value of a three-bedroom home in the North West of England is just under £200,000. If looking to spend £250,000, you could invest in a large and relatively newly built four-bedroom home with landscape gardens, a separate dining room and excellent transport connections. House prices are also up more than 7% in this region year on year, making it a great location to consider buying into.

Yorkshire and the Humber

With average prices hovering around £190,000, an investment of £250,000 in Yorkshire and the Humber could stretch to a beautiful rural property in a quiet and secluded corner of the county. Ideal for those looking to escape the chaos and congestion of busy urban centres for a more tranquil countryside lifestyle.

West Midlands

Homes rarely take much time to sell in the West Midlands – an average of 65 days, fuelled by consistent demand. £250,000 in an area where the average property values hover around £220,000 could easily stretch to a spacious three-bedroom semi in a desirable corner of the county with lush gardens and an expansive driveway for multiple cars.

East of England

East England Property

Property prices in this region are currently averaging around £327,000, though there is plenty available for a £250,000 investment. Three-bedroom detached and semi-detached properties in and around Norwich in particular are proving popular among movers and investors alike.

South East

South East property

With the same average asking price of around £372,000, the second most expensive region in England still has options available for a £250,000 investment. Terraced properties in particular with private gardens and two to three bedrooms were available in plentiful supply as of early 2021.

London

Lastly, £250,000 is still more than enough to invest in an attractive contemporary flat with two bedrooms and spacious living areas in several South London postcodes. Considering the average price of around £645,000 for a home in London, the fact that anything attractive is available for this kind of money is actually quite surprising.

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Mortgages Other Finance News

A Central Knightsbridge Flat for Just £150,000?

We recently published a post examining what the £250,000 average UK house price could be used to purchase in different parts of the country. With average property prices now exceeding £645,000, key London locations are largely out of reach for most movers and investors.

But there will always be the occasional exception to the role, as illustrated in a recent (and somewhat controversial) listing by Knight Frank estate agents.

Typically, you may find it impossible to believe that an apartment in London overlooking Harrods and Hyde Park would be available for just £150,000. You would understandably expect there to be plenty of strings attached, and you would be right.

What £150,000 is Worth in Knightsbridge

Home of the wealthy and super wealthy alike, Knightsbridge is not the kind of place you can usually buy into for just £150,000. This unusual exception listed by Knight Frank boasts one of the most prestigious postcodes in the entire country, with one major caveat:

It is listed as a “zero bedroom” flat.

Roughly translated, the flat in question measures just eight square metres in total and therefore does not qualify as having a bedroom. Interestingly, developers are prevented under strict regulations from building any properties less than 37 square metres in size.

The Knightsbridge flat is therefore more than four times smaller what is considered permissible by regulators as a dwelling to occupy for residential purposes.

Nevertheless, the flat is described by Knight Frank as a “blank canvas” for the lucky investor to do whatever they want with.

Cause for Concern?

Approached to comment, a representative speaking on behalf of Knight Frank remained adamant that the tiny flat would make a good investment and has a great deal of potential.

“The minimum space standards are only relevant to planning permissions in London for newbuild residential developments and converted properties constructed after 2011,” said the representative.

“The property at Princes Court on Brompton Road was originally leased in 1976 and has been used as residential accommodation prior to the minimum space standards coming into effect. Knight Frank can confirm that the property complies with all relevant regulations.”

However, others from within the industry and elsewhere expressed concern regarding the extent to which elevated prices are being charged for dwellings with no immediate practical value.

Labour’s Shadow Housing Secretary, Thangam Debbonaire, said that the Knight Frank listing does nothing but illustrate the wider issues with the local and National Housing market.

This outrageous advert is evidence of a broken housing market and shows why we need more truly affordable homes,” Debbonaire said.

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Other Finance News

Yorkshire and the North-West Tipped for Massive House Price Growth

Increasingly, investors are setting their sights on residential properties away from the usual safe haven of London and the surrounding region. Driven by the prospect of radical house price increases within the next five years, more investors than ever before are picking up properties in select areas of Yorkshire and the north-west.

According to Savills, average house prices in this part of the country could increase by as much as 30% within the next few years.  If so, this would outpace London’s house price growth rate by as much as 200%, playing right into the pockets of those who purchase properties at the right time.

2021 was expected by most to bring little other than turbulence and uncertainty to the real estate sector, which has faced one of its most difficult years on record since the beginning of the COVID-19 crisis.

Head of residential research at Savills estate agents, Lucian Cook, admitted that the initial outlook for 2021 looked to be “complex and uneven” at best.  Nevertheless, the agency has been forced to revisit its projections, due to the sector’s reassuring performance during the first months of the year.

“But the outlook has improved since the beginning of the year given the speed of the vaccination programme, the expected relaxation of social distancing measures and government support for both jobs and the housing market,” he said.

Five-Year Predictions

In stark contrast to initial projections of a steady slowdown, Savills now expects property prices in the UK to increase on average by 4% by the end of the year.  Forecasting further ahead, average growth of approximately 21% is expected within the next five years.

If this proves accurate, the average asking price for a UK home would be just slightly under £280,000.

But what could prove particularly interesting is the disparity in property price increases between certain regions of the country. According to Savills, some regions in the north-west of England could see average property price increases of 28.8% within the same time. In Yorkshire and Humberside, homes could increase in value on average by as much as 28.2%.

Meanwhile, the five-year growth forecast for London indicates potential property price increases of just 12.6%. This would therefore mean that properties in Yorkshire and the north-west could see property price growth of more than twice the speed of comparable homes in London.

More movers and buyers than ever before are setting their sights on more spacious homes in quieter regions away from major cities, having reconsidered their priorities during three consecutive lockdowns.

In addition, Savills has credited much if the shift in buyer interest to rock-bottom mortgage rates, which could be around for some time to come.

“The expectation that interest rates will stay lower for much longer than was predicted pre-pandemic means there remains capacity for medium-term house price growth despite the unexpectedly strong performance of last year. Across the country as a whole, five-year price growth of around 20% looks sustainable without unduly depleting mortgage affordability,” Cook added.

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Other Finance News

Financial Sector Contributes Record-High £76bn in Tax in 2020

The overwhelming majority of sectors experienced catastrophic losses last year, due to the COVID-19 crisis and the effects of lockdown. The UK’s financial sector was by no means immune to the harms of Coronavirus, which was also predicted to face a monumental downturn in the wake of a turbulent Brexit.

The latest figures suggest that financial firms paid a cumulative all-time record of £75.6 billion in tax contributions last year. This enormous figure comprised £41.5 billion from and customers and staff, along with £34.1 billion from the finance firms directly.

The sector’s surprisingly high contribution during such a difficult year again highlights its criticality to the UK economy, along with the importance of safeguarding its future for the benefit of the country.

Lack of Prioritisation in Brexit Talks

Data has once again shown that while the finance sector remains a comparatively modest sector in terms of job creation, its economic contribution is disproportionately high.

Pension funds, banks, insurers and other specialist finance companies account for around a million jobs, just 3% of the total workforce. However, the sector continuously pays approximately 10% of all employment taxes the treasury collects each year.

It is therefore surprising that while UK-EU post-Brexit trade deal talks were underway over the past few years, the financial services sector was largely swept to one side. Even Boris Johnson stated that the resulting agreement “perhaps does not go as far as we would like” for the sector, despite its essential economic contribution.

Speaking on behalf of the City of London Corporation, policy chair Catherine McGuinness expressed disappointment “not to see the sector’s role recognised during the trade negotiations with the EU.”

“We must now move forwards and focus on an ambitious dialogue which reflects the deep integration of our two markets,” she continued.

Meanwhile, Lord Mayor of the City of London, William Russell, reemphasised the importance of ensuring the UK upholds its global reputation for elevated regulatory standards.

“Now is the time to be entrepreneurial, to look again at how we do things, to consider how to take full advantage of our position,” he said.

“This emphatically does not mean pushing for sweeping deregulation and tax cuts, in what has often been called the ‘Singapore on Thames’ model, which rather misrepresents Singapore and the reasons for its success.”

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Mortgages Other Finance News

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 the 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 home ownership, 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, particular 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 home ownership has felt far out of reach in recent months.”

Likewise, Wilsons’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 to 30 September, 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.

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Bridging Loans

Searches for Development Bridging Back in the Top Five

Specialist brokers operating within the bridging sector have noted a major spike in activity and interest among property developers. As a result, and for the first time since February 2019, development finance is back within the top five search terms within the bridging category.

According to Knowledge Bank, which recently revealed the top-performing search terms for January 2021, there has been a significant increase in the number of searches targeting ‘development bridging and in particular maximum loan to GDV i.e., the LTV against end value’. This suggests that bridging finance is being sought by construction companies and developers for major property development and redevelopment projects.

This was the first time this particular term had appeared within the top five in two years.

No Change at the Top

The top three search terms remained the same for January 2021, which according to Knowledge Bank were ‘Maximum LTV’, ‘regulated bridging’ and ‘minimum loan amount’, however, the order of the three top searches changed from the month before, suggesting a shift in priorities among applicants.

In the commercial lending segment of the market, the three most popular search terms according to Knowledge Bank were ‘semi-commercial’, ‘maximum LTV for commercial investment’ and ‘minimum loan amount’. A new entry to the top five for January was ‘commercial owner occupier’.

‘First-time buyers’ also made an entry to the top five searches conducted in the buy-to-let segment, for the first time since February last year. The most popular search term in the BTL bracket was ‘lending to limited companies’, which according to Knowledge Bank reflects the growing number of landlords looking to set off companies prior to the planned punitive tax changes.

The Importance of Specialist Broker Support

Commenting on the data, Knowledge Bank highlighted the growing importance of seeking independent specialist support to access a competitive deal from a reputable lender.

“With the end of both the stamp duty holiday and furlough scheme [in sight], lenders are certain to continue adapting criteria to keep up with the evolving market,” commented Knowledge Bank’s operations director, Matthew Corker.

“It is now physically impossible for any mortgage broker to keep all the different criteria in their heads,”

“So, it is now more important than ever for brokers to use a comprehensive criteria search system to ensure they can provide their clients with best advice — and evidence that they have done so.”

As many bridging loan specialists in the UK operate exclusively via established brokers, their products are only available with broker representation.  Comparing the market with the support of a broker can be beneficial in a variety of ways, including access to objective and impartial advice on the funding solutions available.

For more information on any of the above or to discuss the potential benefits of bridging finance in more detail, contact a member of the team at ukpropertyfinance.co.uk today.

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Bridging Loans

How to Get a Bridging Loan for a London Property

With monthly interest rates hovering at an all-time low, there has never been a more cost-effective time to consider bridging finance.

Particularly where the funds are required quickly and for a major purchase or investment, bridging loans offer an invaluable lifeline for both private borrowers and commercial customers.

Getting a Bridging Loan as a Homeowner

Accessing bridging finance as a homeowner is relatively straightforward and can be used for a wide variety of projects or purposes.

For example, one of the most common applications for bridging finance as a homeowner is to renovate a property before listing it for sale, to achieve the maximum market value. Another use for bridging finance would be to prevent a chain break, enabling dream houses to be purchased before the sale of a current property has been finalised.

Bridging loans are also commonly used in the same way for downsizing. Buy a property at a competitive price with a bridging loan, repay the funds with the sales proceeds of your former home and retain the remaining proceeds from the sale.

It is even possible to use bridging finance to upgrade or extend your current home, before subsequently paying off the loan with a longer-term financial product (like a secured loan or mortgage) to repay the balance over several years or repayment by sale once the work is complete.

Provided you have sufficient equity in the security being offerred, you should be accepted for bridging finance. Even if your credit report is imperfect, this will not necessarily prevent you from accessing a competitive bridging loan.

Getting a Bridging Loan as an Investor

Bridging finance is increasing in popularity as a popular purchase tool for investors. As conventional mortgage products and High Street loans become increasingly difficult to access, the flexibility of bridging finance gains further appeal.

Investors looking to purchase properties in London often have limited time to make decisions and access the funds needed. Particularly when it comes to last-minute property purchases like those at auction, waiting weeks or months for a mortgage to be formalised simply is not an option.

In this scenario, bridging finance can help, as it can be secured against any viable property the investor owns and the finance can be arranged within a matter of days.  Whether looking to ‘flip’ a property purchased in poor condition for a profit once renovated or to purchase and resell an auction property of any kind, bridging finance holds the key to fast and affordable investments in London.

Key Criteria…

In both instances, the main requirement that must be fulfilled is ownership of acceptable property. A bridging loan can be secured against almost any type of residential or commercial property, often irrespective of type, purpose and even condition.

Ensuring you get the best possible deal means shopping around with the help of an experienced broker, who compares the market in its entirety on your behalf.  Always remember that many specialist lenders work exclusively via established brokers, meaning their products and services are not available directly to the public.

For more information on any of the above or to discuss your requirements in more detail, book your obligation-free consultation with UK Property Finance today.

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Secured Loans

Secured and Unsecured Debt Consolidation Loans: Which is better?

A competitive debt consolidation loan has the potential to save an individual with multiple debts, time, money and hassle. Particularly if their existing debts attach elevated rates of interest and excessive borrowing costs, consolidation can represent a real lifeline.

But which of the two main options available, secured and unsecured consolidation loans, is the better choice? More importantly, in what circumstances would it be advisable to consider using a consolidation loan to repay debt?

What Kinds of Debt Can Be Consolidated?

Consolidation loans can be used to pay off almost all types of loans and outgoings:

  • Overdrafts from banks
  • Outstanding credit card debts
  • Arrears on personal loans
  • Payday loan balances
  • Store cards and credit facilities

Where multiple debts are making it difficult to keep up with your monthly repayments, a consolidation loan can simplify your financial life and reduce your overall outgoings.

Do Debt Consolidation Loans Result in Negative Credit?

The answer depends entirely on the nature of the credit facility you take out. There are some specialist consolidation loans that can adversely impact the credit score of the applicant. Simply by applying for a debt consolidation loan, your credit history may be impacted.

However, there are also various specialist secured consolidation loans that have no impact whatsoever on the applicant’s credit history. It is therefore important to carefully discuss the various options available with your broker, before submitting your application.

How Do Secured Debt Consolidation Loans Work?

A secured debt consolidation loan works in a similar way to a mortgage, in that it is secured against your home, or other qualifying assets. As the loan is secured, it is considered a lower-risk facility on the part of the lender, ultimately resulting in more competitive rates of interest and flexible repayment terms.

In addition, secured debt consolidation loans are typically available in much higher sums than unsecured consolidation loans.

The major risk attached to a secured loan is that of forfeiting your property if you fail to keep up with your agreed repayments.

How Do Unsecured Debt Consolidation Loans Work?

An unsecured debt consolidation loan is issued purely on the basis of merit, with no security required. This means credit checks are done that include your earnings, employment status and general financial position.

The benefit of an unsecured loan is that you do not need security, nor are you at risk of losing your home if you fall behind your repayments.

However, unsecured debt consolidation loans are considered higher risk for the lender, therefore are not typically issued in sums of more than £15,000 and may attach less competitive rates of interest.

Which Debt Consolidation Loan is best?

Choosing the most appropriate debt consolidation product means first discussing all available options with your broker. Suitability will be determined by how much you need to borrow, your preferred repayment period, your financial status, your credit history and whether you have qualifying assets available.

After which, a complete market comparison can be performed on your behalf, in order to ensure you get the best possible deal.

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.

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Mortgages

New 5% Deposit Scheme Could Help Millions of First Time Buyers

As part of the 2021 Budget outlined by Chancellor Rishi Sunak this week, major banks and lenders are to be offered incentives to help more first-time buyers get on to the property ladder.

Ahead of the official announcement, the Treasury affirmed the government’s intent to support lenders offering 95% mortgages (with just a 5% deposit requirement), which for the most part disappeared entirely from the market over the past 12 months.

The Chancellor spoke of the major economic challenges posed by the pandemic, spurring an increase in national debt to £2.13 trillion.

“We went big, we went early, but there is more to come and there will be more to come in the Budget. But there is a challenge [in the public finances] and I want to level with people about the challenge,” he explained in an interview with the Financial Times.

“I will do whatever it takes to protect the British people through this crisis and I remain committed to that.”

At the same time, others raised the issue of seemingly inevitable tax rises, insisting that the Chancellor clarifies his position on when and to what extent the country can expect them to occur.

“If we don’t get it under control before inflation comes back then we will face a financial crisis,” warned former Conservative chancellor Lord Clarke, who insisted that an increase in taxation was an urgent priority.

A Helping Hand for First-Time Buyers

The incentives for banks willing to offer 95% mortgages could potentially help millions get on to the property ladder for the first time. It has become apparent that the employment prospects and financial situations of young adults across the country have been devastated by the pandemic.

While the government will be actively encouraging first-time buyers to set their sights on property purchases in the near future, major lenders have affirmed their commitment to lending exclusively to those who are clearly in a comfortable financial position with a guaranteed long-term source of income.

This is therefore likely to mean that even where the 5% minimum deposit requirement applies, it may still be difficult to qualify for a mortgage under the current conditions.

However, the scheme is by no means exclusive to first-time buyers, or for the purchase of new homes. It has been capped at a maximum of £600,000 but it will be accessible to existing homeowners as well as newcomers to the housing market.

Commenting on the introduction of the new incentive scheme, the Treasury highlighted the scarceness of low-deposit mortgages available at the beginning of 2021, just eight in total were being offered in England during January.

The scheme is officially set to be rolled out across the UK in April, at which point the government will begin shouldering some of the risk of these high LTV loans. Its introduction could take place immediately after the withdrawal of the stamp duty holiday, which is expected to be terminated on March 31.

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Secured Loans

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 timescale.

With secured lending, significantly greater sums are often available and for repayment over a much longer period. 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 brings 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 high sum of money and they are available for most legal purposes. Provided 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 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 a 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.

Provided 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.

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.

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