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Dreams of Home Ownership Fading Fast for Younger Generations
The plight of young people with fading dreams of one day owning their own properties was recently laid bare in a BBC expose; the average UK property price has once again reached a new all-time high, and an entire generation is waking up to the fact that homeownership may be completely out of the question.
What is particularly striking is the way in which the issue is by no means confined to certain affluent areas of the country. The BBC makes it clear just how difficult and unaffordable things are becoming for would-be buyers all over the country.
Record property price growth in Wales
The BBC spoke to a 29-year-old classroom assistant and freelance writer from Gwynedd, who said that her region had been absolutely swamped by movers and buyers over the course of the pandemic.
“I’m just burying my head in the sand and praying the market might crash,” she said, in reference to Wales seeing the highest year-on-year average house price growth in the UK: an astonishing 11% since the same time last year.
“Even when Wales was closed [in lockdown] and we were staying home, it was still being flooded with tourists who didn’t respect the rules.”
“You can feel like where you live is just a playground. I’m hearing about houses being bought unseen and the prices in North Wales rising more than anywhere else in the UK.”
She went on to discuss the growing impossibility of purchasing even a modest home anywhere in the region due to the disparity between average wages and current property prices.
“I’ve got a friend who grew up in Abersoch, and there’s no way he could afford to live there now,” she told the BBC.
“It’s full of these incredible millionaires’ houses that are empty for most of the year. It’s really frustrating when people say, ‘You just need to work harder’. The average income in that area is not that high; you could work your arse off for years and never be able to afford a property.”
Where she lives, the average gross weekly income stands at around £479, which equates to an approximate annual salary of slightly less than £25,000. This isn’t nearly enough to pass even the initial stress tests of a major bank or lender.
Struggles in the Southwest
The BBC also spoke to 30-year-old Tamsyn Kelly from Cornwall:
“My plan was to make money in the city and go home and live in Cornwall eventually,” she explains.
“A few years ago, that seemed possible, but now there’s no way I could afford a property at home. If I went home, I’d have to register for a housing association property.”
“It doesn’t make any sense for my brother to try and get rental accommodation.”
“In Penzance, [homeowners] think, ‘Why rent it out when I could Airbnb?’ I think it’s becoming harder and harder for young people to stay in Cornwall; most of my friends there are still living with their parents, and we’re nearly 30. People aren’t able to get on with their lives and meet normal adult milestones.”
Somerset resident Sam Fawcett, 28, likewise stated that his chances of purchasing a property were practically non-existent even before the COVID-19 crisis began.
“Three new average-sized housing estates have gone up in the last five years, and another large one is just starting construction,” he told the BBC.
“But it doesn’t seem to have lowered house prices at all. In fact, my parents’ neighbours have just sold their house for £100,000 more than when they bought it four years ago.”
“The main thing I’ve noticed is how few properties are on the market at the moment.”
“There were periods over the last year when there were no properties at all to rent in the town or even a few miles into the surrounding area. Now there are six, but only three are within our price range. I know some of this must be because of COVID-19, but even in 2019, it was much harder than we thought it would be to find somewhere.”
How to Get a Good Deal on a Self-Employed Mortgage
Self-employed people are statistically more likely to be declined a mortgage than those who are traditionally employed. The vast majority of major banks and lenders impose additional restrictions on the self-employed that do not apply to those in conventional employment.
This does not mean it is impossible to qualify for a competitive mortgage while running your own business. Getting a good deal as a self-employed worker simply means approaching the right lenders and providing relevant evidence of your employment status and income.
Self-certification is no longer accepted
Previously, it was possible to self-certify your income as part of the mortgage application process. Where self-certification was an option, a lending decision could be reached based on the personal assurances of the applicant alone.
Today, lenders expect to see formal verification of income and financial status when considering applications from the self-employed.
This will typically mean providing:
- Certified accounts for at least two years
- Detailed evidence of earnings from HMRC
- Proof of your company’s track record
- Evidence of upcoming work or projects
This will need to be provided alongside all the usual documentation involved when applying for a mortgage, including but not limited to:
- Bank statements from at least the past six months
- Three months of utility bills
- Council tax bills
- Passports and/or driving licences
- Proof of current address and residency
- Maximum Loan Amounts for the Self-Employed
As a general rule of thumb, most mainstream banks will lend a maximum of 4.5 to 5 times the annual salary of the self-employed applicant. Though there is significant flexibility with maximum loan amounts depending on the lender in question and the financial circumstances of the applicant, In particular, offering a larger deposit can significantly increase the loan size available.
Getting a good deal as a self-employed worker
Mortgages for the self-employed can be extremely competitive, though they call for a strategic application process.
A few essential guidelines for self-employed mortgage applicants looking to get the best possible deal from a reputable lender are:
Apply via an established independent broker, who can conduct a whole market comparison on your behalf and find the perfect lender to suit your requirements. Taking your application directly to a lender is rarely the most cost-effective option.
Consult your credit score and note any discrepancies, as a history of credit issues could affect which lenders are willing to consider your application. If possible, take the time to address any issues with your credit that can be corrected before applying.
Hire an accountant to get your papers in order and to help you present a convincing case to prospective lenders. Accounts, statements, and paperwork prepared by a reputable accountant are always more authoritative when presented as part of an application.
Consider the alternative options to a conventional mortgage, which your broker will advise you on. For example, if you already have equity tied up in your current home or business property, a bridging loan could be a cost-effective option.
For more information on any of the above or to discuss any aspect of self-employed mortgages in more detail, book your obligation-free consultation with UK Property Finance today.
Are Lenders Unfairly Discriminating Against 5% Deposit Mortgage Applicants?
The return of the 95% LTV mortgage to the UK High Street came as welcome news for many thousands of first-time buyers. Ever since the financial crash almost 15 years ago, lenders have placed greater scrutiny than ever before on those they do business with.
Where an applicant is not clearly in a position to comfortably afford to repay a loan, rejection is guaranteed.
More recently, lenders have been urged to demonstrate greater flexibility where possible, both for the benefit of their applicants and for the wider economy, as the UK gradually climbs back to strength in the wake of the COVID-19 crisis.
With the 95% LTV mortgage back in business at a string of major lenders, it should be plain sailing for those unable to come up with a larger deposit.
What seems to be happening is actually quite the opposite; the idea of the 5% deposit mortgage is to enable more deserving and financially stable borrowers to get onto the property ladder. Instead, reports continue to emerge of mortgage applications being unfairly and immediately declined, despite the fact that the applicants in question can clearly afford a mortgage.
Excessive restrictions are enforced
Some brokers have said that despite the fact that 95% of LTV mortgages are government-approved, lenders are placing excessive and unfair restrictions on these loans. Unless the applicant in question has a 100% flawless credit score and is clearly sitting on a small fortune in personal wealth, they’re falling at the first hurdle.
And in doing so, I completely missed the idea of the government-backed 5% deposit mortgage initiative.
New-build properties are apparently completely out of contention for 95% LTV mortgages with the five biggest lenders in the UK. Even when people have held on to their jobs throughout the pandemic and built an outstanding track record financially, they are still being turned down routinely.
Experts believe it is simply a case of lenders attempting to cover themselves against what happened previously. Rather than assessing eligibility based on an applicant’s financial status today, they’re taking into account every possible scenario going forward.
A certain amount of due diligence in such regard is important, but the extent to which lenders are scrutinising applicants on the prospect that they might lose their jobs in the future is making the 95% LTV mortgage scheme considerably less accessible.
The importance of independent broker support
While such complications perpetuate, the importance of independent broker support will continue to grow. Brokers are gradually getting a feel for the 5% deposit mortgage landscape, along with the fact that lenders are actually taking 95% LTV loans seriously.
Taking an application directly to a major lender in the hopes of getting a mortgage with a 5% deposit is inadvisable.
To learn more about the government-backed mortgage scheme or to discuss your eligibility for a home loan in more detail, contact a member of the team at UK Property Finance today for an obligation-free consultation.
Crypto Withdraw Feature Coming to PayPal, Company Confirms
PayPal has confirmed that its customers will soon be able to transfer cryptocurrency from their accounts to external wallets for the first time. Currently, it is only possible for customers with crypto coins in their accounts to either hold onto them or spend them.
CoinDesk, Head of Blockchain Services for PayPal, Jose Fernandez da Ponte, confirmed that the service will be introduced at Consensus 2021, a conference organised and hosted by CoinDesk.
“We want to make it as open as possible, and we want to give choice to our consumers,” Jose confirmed for those in attendance.
“Same as we let them pay any way they want to pay, we want them to bring their crypto to us, so they use it in commerce, and we want them to take the crypto they acquire with us and take it to the destination of their choice.”
When quizzed as to the likelihood of PayPal introducing its stable coin sometime in the near future, Mr. da Ponte stated that it is “way too early” for this kind of move to be made. He also commented on expectations with regard to the rollout of central bank digital currencies, stating that “it absolutely makes sense that central banks will issue their own tokens.”
A long-awaited service expansion
PayPal officially entered the cryptocurrency game as recently as March this year, when it was confirmed that the company would begin letting customers in the US use crypto coins for payments.
Shortly after, PayPal announced that it would allow its customers to connect their accounts with their Coinbase-operated digital wallets, facilitated by the Venmo payment app.
“Crypto on Venmo is a new way for the Venmo community to start exploring the world of crypto within the Venmo environment they trust and rely on as a key component of their everyday financial lives,” commented Senior Vice President of PayPal and General Manager of Venmo, Darrell Esch.
“No matter where you are in your cryptocurrency journey, crypto on Venmo will help our community learn and explore cryptocurrencies on a trusted platform and directly in the app they know and love.”
“Our goal is to provide our customers with an easy-to-use platform that simplifies the process of buying and selling cryptocurrencies and demystifies some common questions and misconceptions that consumers may have.”