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Mortgages

Mortgage Fraud on the Rise: How to Protect Yourself

With increased reports of mortgage fraud, it is becoming increasingly important to protect yourself from scams when considering buying a property.

We all think we would be too clever to fall for a scam, but with the recent case of a victim being conned out of a whopping £640,000, experts are warning home buyers to be ever vigilant.

Figures from the Office of National Statistics Crime Survey reveal that there were around 4 million cases of scams, reported in England and Wales, in 2020 alone. From email, text, and phone scams to online shopping and property scams, criminals are becoming increasingly sophisticated in their methods.

Recent information revealing a marked increase in conveyancing fraud has prompted the National Economic Crime Centre and the National Crime Agency to offer guidance on how home buyers can ensure that they are protected against such threats.

Conveyancing Fraud

Also referred to as “authorised push payment fraud” or “payment diversion fraud” is one of the most lucrative scams for criminals.

It involves the scammer posing as a lawyer and convincing the buyer to transfer outstanding balances and deposits into the criminal’s account. The victim becomes liable due to the fact that they authorised the payment.

In more detail, it involves the scammer intercepting correspondence, usually emails, between the buyer and their solicitor, where they are able to gain valuable information related to the purchase. The scammer then creates a “spoof” email which mimics the account of the solicitor and then sends a request for the exact amount owing, leading the victim to believe that the email has come from a reliable source.

Fraud threat lead at the NECC, John Shilland, told conveyancers: “Payment diversion fraud is increasing, and it is vital to be alive to the threat as criminals are targeting home buyers due to the scale of the transactions.”

“Whenever a client is making a payment for a house purchase, they should be highly suspicious of any change in account details or new instructions. Remind them to always check with a trusted known contact, and if they have any doubt not to transfer the money.”

 

How to Protect Yourself

The average loss victims see as a result of conveyancing fraud is around £100k prompting the government to set up a task force to tackle all scams in the UK.

The following advice can be used to safeguard yourself against unscrupulous scam artists:

Double check the bank details

Ensure to ask for bank details either in person or over the phone (you should initiate the call) right from the offset. You could also request a copy of the details by post as an added precaution.

Initially only send a small sum of money by transfer and then ask your solicitor to confirm that it has been received before you transfer the balance.

Should you receive an email stating any changes in bank details, call to confirm that the details have in fact been changed before commencing with any transfers.

With advances in technology, scammers can spoof any number on your caller ID so make sure you hang up and call back the number to make sure it is genuine. Also, double check the telephone number on their website or previous correspondence.

Check your online security

Ensure that you use a secure network when opening or replying to any correspondence received from your solicitors. Unsecure wi-fi can be easily hacked into by scammers.

Install anti-virus protection and update it regularly to ensure you are secure and make sure passwords are strong and that you have a different one for each account.

Stay off social media

Although you may want to announce your exciting house buying plans on social media, avoid doing this until all contracts have been signed and all monies have been exchanged. Fraudsters are constantly scouring platform such as Facebook, Instagram, and Twitter to find victims to target.

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Mortgages

The UK’s Buy-to-Let Market Turns 25

On September 24th the concept of buy-to-let as we know enjoyed its 25th birthday. Unveiled by the Association of Residential Lettings Agents at a major event in London, buy-to-let was launched with significant fanfare and equally significant skepticism.

There were those who predicted nothing but bad tidings and turbulence for the somewhat controversial new concept. Some had even predicted the buy-to-let scheme to be relatively short lived, particularly as it grew into a sector rife with misconceptions, misunderstandings and misleading myths.

Fast forward 25 years and the UK’s buy-to-let sector is one of the most robust and attractive in the world. But what is important to remember is that buy-to-let is not exclusively about generating massive profits for those who bought the right homes at the right times.

It has also had a major social impact on countless communities across the UK which have benefited significantly from the private rental sector (PRS).

Disproportionate Focus on Profiteering Landlords

All manner of shadows have been cast on the buy-to-let sector over the years, giving it a somewhat undesirable image for many. Oftentimes, criticism focuses on profiteering landlords, who are accused of making easy money at the expense of their tenants.

When you consider just how many multimillionaires the buy-to-let sector has made over the years, you see the logic in such associations.

What is routinely overlooked is the way in which buy-to-let landlords are simply running a business, complete with the same risks and responsibilities as any other venture. Not to mention, increasingly strict and complicated government policy, designed to hit investors where it hurts.

Contrary to popular belief, making a success of a buy-to-let business venture in the UK is not easy. It involves a lot of hard work; it can be surprisingly stressful and comes with an endless list of associated costs and tax liabilities. Not to mention, the constant threat of further issues prompted by problematic tenants.

The majority of tenants are as amicable, responsible and well-meaning as it gets. But there will always be a small minority that appears intent on making things as unpleasant as they can for their landlords. Anti-social behaviour, damage to property, ongoing rent arrears and so on, all everyday issues private landlords must contend with.

Investment in Quality Housing

The UK’s private landlord community must also be credited with supporting the redevelopment of the private rental sector, which at one time was in a rather sorry state of collective repair.

In the 25 years since its debut, buy-to-let has seen billions of pounds pumped into homes of all shapes and sizes across the country. Today, it is illegal for a landlord to let out a property that does not guarantee a certain level of safety and good overall living standards.

For those who cannot afford to buy their own homes or simply do not wish to do so, the PRS continues to play a pivotal role in the UK’s housing landscapes. Though even today, it is a sector that still has unfair and unjust connotations with greedy investors looking to make easy money at the expense of their tenants.

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Protecting the Environment Through Conscientious Property Development

Never has humanity been more united in its concern for the state of the environment and the pace of climate change. Now more than ever, households and businesses are demonstrating a real awareness of the importance of sustainability.

By 2040, the government in the UK intends to prohibit the sale of all new combustion engine cars outright. Something campaigners are pushing to bring forward by at least 10 years.

Energy efficiency has been a major concern for homes and businesses across the UK for some time, with a raft of initiatives having been brought in to boost eco awareness. Single-use carrier bags have all-but vanished from supermarkets, incandescent light bulbs are no longer sold, and plastic straws are disappearing fast.

It may even soon be possible to claim something of an incentive for handing used plastic bottles in for recycling, as has been the case with aluminium cans for years.

Elsewhere, new and established property developers are also stepping up their efforts to care for the planet. New technologies are being introduced all the time to reduce energy consumption, while the use of reclaimed and recycled materials becomes more widespread.

The installation of super-thick loft insulation has become the norm for most new homes, often combined with triple-glazed windows and even the inclusion of solar panels to generate renewable energy.

As the UK’s house builders race to keep up with insurmountable demand for new homes, it is likely we will continue to see more energy-efficient homes make their way onto the market than ever before.

Net Zero Carbon by 2030

Having been acknowledged as too ambitious to be realistic, the UK government scrapped its “Zero carbon policy” in 2017. Nevertheless, house builders and property developers remain united in their commitment to bringing more energy efficient homes to the market.

London recently joined another 18 major cities worldwide with the pledge to ensure all new buildings will be rated net zero carbon by the end of the current decade.

Advancements in eco-friendly technology are making it easier for homeowners and tenants to live more sustainable lives. For example, homes are now being constructed with exterior features that collect, filter and recycle rainwater. Smart lighting and heating systems are also boosting energy efficiency, while helping people gain a better understanding of their own energy usage habits.

Some of the renewable energy systems such as solar generators built into homes are so efficient that their occupants are actually selling excess energy back to their main providers.

Increasingly, lenders are showing preference to property developers and investors committed to sustainability. Going forwards, it is entirely likely that those who commit themselves to environmentally-friendly property development will benefit from preferential interest rates on loans and mortgages, along with other government-backed incentives to ensure a sustainable future.

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Mortgages

Equity Release Proves Popular and Pension Pots Prove Insufficient

Equity release has become an increasingly popular option for retirees, as many homeowners face the daunting prospect of insufficient retirement income.

Official guidance from the Pension & Lifetime Saving Association’s ‘Retirement Living Standards’ states that to meet their basic living requirements, retirees need a minimum of £10,200 in their pension pots. In 2020, figures suggest that more than 85% of newly-accessed pension pots contained less than £10,000.

This would suggest that even with full state pension contributions, those concerned would find their finances stretched uncomfortably.

Meanwhile, average property prices in the UK have spiked by more than 13% over the past year alone. In the 10 years from July 2011 to July 2021, average property prices in the UK grew from £169,866 to £255,535.

In total, combined equity wealth among adults over 50 in the UK is somewhere around £3.8 trillion. Retirees who own their own homes could therefore be sitting on all the capital they need to get the most out of their retirement.

With a lifetime mortgage, aka equity release, those who are asset-rich but cash-poor could leverage some or all of their equity they have tied up in their home; precisely what millions are doing, in order to raise cash for a variety of reasons.

Applications for Equity Release

The latest figures from Legal & General indicate a number of patterns among intended applications for lifetime mortgages. One of the most common reasons for releasing equity is funding home improvements, 41% of applicants indicating their intent to renovate their homes.

Around 17% said they intended to give some or all of the funds raised to their loved ones. Helping family members with mortgage deposit requirements to purchase their own homes is another popular application.

In the wake of the Covid-19 pandemic, there has been a major spike in the number of equity release customers simply releasing funds to sustain their lifestyles.

Further Growth Projected for the Equity Release Sector

Speaking on behalf of Legal & General Home Finance, Chief Executive Officer Claire Singleton predicted further growth for the sector going forwards.

“In recent years, people have become more accepting of the concept of equity release, which has helped the market grow. However, many potential customers are still unaware of the product’s flexibility and the broader benefits this can have both for individuals and wider society,” she said.

“We anticipate that as more people see the value in their property wealth increase, lifetime mortgages will cease to be seen as a ‘specialist’ option and instead become a more standard consideration amongst other at-retirement products,”

“Looking ahead, we anticipate that products on the market will evolve to better serve the diversity of consumer needs, whether it’s innovation that helps people improve their quality of life, support their loved ones or ‘green’ improvements to help better manage their impact on the world around them. The home is a vital part of an estate and is often an individual’s largest asset,”

“As people are living longer, accessing property wealth will become an increasingly important consideration to help meet financial goals and fund the retirement they dream of.”

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Mortgages

Brokers are Warning Homeowners to Check Mortgage Terms Amid Fears of a Drastic Rise of 3.5% Base Rate by 2023

UK mortgage brokers are advising property owners to carefully check the terms and conditions of their mortgages following news that there could be a huge increase in rates by 2023. This in real terms means that monthly mortgage repayments will potentially rise by hundreds of pounds if the BOE’s base line was to rise, as has been forecast by the Office for Budget Responsibility.

Currently sitting at an all time low of 0.1%, the base rate is expected to rise in the coming months in order to tackle rising inflation. It is not yet known what the rise will be, but the OBR has warned of a “worse-case scenario” where decreased wages and increased energy costs may cause the base line rate to rise to as much 3.5% by 2023. This is turn could see mortgage repayments rise by as much as 33%.

Director at mortgage broker Your Mortgage Decisions, Dominic Lipnicki, said: ‘For many borrowers, the idea that the Bank of England base rate could increase to 3.5 per cent by 2023 is very scary indeed.

‘Those used to record low fixed rates would be shocked to see their payments balloon if such an increase became a reality.

‘The market has not seen rates as high as this since 2008 and many borrowers would find such an increase devastating.

‘Many borrowers who are either on the lender’s standard variable rate or a few months away from their fixed rate scheme expiring will be keen to secure a new deal now to avoid that risk.’

Considering we are currently experiencing some of the lowest rates on record, the expected rate increase has come as somewhat of a shock. Lenders are suggesting that sooner or later the rates had to increase substantially.

‘There are early signs of upward pressure on mortgage rates, with markets anticipating a base rate rise.

‘Competition cannot hold prices back indefinitely.

‘At some point we will start to see movement, and the historically low rates that we have today may have a very short shelf life. We could see upward momentum as early as the first quarter next year’, commented John Eastgate, managing director of property finance at lender Shawbrook Bank.

Brokers are urging people to carefully check their mortgage, particularly those with standard variable rates and are encouraging them to consider switching to fixed rate mortgages. Fixed mortgage deals on lower rates will allow households to budget more effectively for the coming years, which is vital with other household costs rocketing.

 

Chief executive at The Mortgage Lender, Peter Beaumont, said:’ For some, depending on the deal they are on, the financial benefits of remortgaging could outweigh any charges, especially during this period of record-low rates.

‘For anyone tied to a standard variable rate, then the best bet is to refinance as soon as possible.’

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Bridging Loans Mortgages

Thinking of Buying a Holiday Home? Six important Factors to Consider

Investing in a holiday property is a huge decision and mustn’t be entered into without first considering the pros and cons. While your main reason for buying may be for personal use, it would be wise to look at the potential earnings that could also be generated from renting your vacation property to other holiday makers when you are not using it.

There are six main considerations that all potential holiday property owners should take into account before making a final decision.

Your Eligibility

You may have access to funds, or a mortgage agreed in principle, which is a great start but doesn’t necessarily mean that you are eligible to buy. Particularly, where international real estate is concerned, there may be laws which regulate if and how foreigners buy property in that country. The type of property may also be an issue, with foreigners only being allowed to buy certain property types.

Some countries, like Singapore for example, only allow foreign property purchases if a Singaporean is partnered in the purchase. Countries such as Thailand have even tougher restrictions where at least 51% of Condos must be Tai owned and houses and villas can only be bought by local people.

How Safe is the Area

With overseas holiday property purchases it is important to have an in-depth knowledge of the area that you intent to buy in, particularly when it comes to security issues. While you may love the area and feel completely safe and relaxed on your holiday, it is important to think about how secure the property is when it is not holiday season, and it is empty.

This problem can be averted by buying property in a gated communities or investing in security such as CCTV or guards. The cost of security should be taken into account when looking at your budget.

Does it Match your Holiday Dreams?

Identifying which activities you love to do the most on holiday is imperative to finding the right property in the right location. So, if you love the beach then an apartment overlooking the sea in a busy tourist town, with lots of restaurants and clubs may be perfect. But if you are looking for peace and quiet then buying a bit further afield, perhaps in a small seaside village, may help you find the perfect spot for repeat holidays.

Finding a holiday property that suits all your vacation needs is the ideal situation so the importance of researching the areas you like cannot be understated.

Sticking to your Budget

It may seem obvious, but it is important to stick to your budget and factor in all additional and potential unforeseen costs into you budget.

Take into consideration the cost of living in the area you are buying as this may restrict the things you can do while on holiday. If all the local amenities are excessively expensive then this will impact negatively on the enjoyment of your holiday as you will find yourself watching the purse strings instead of having a relaxing break.

Can I Rent out My Holiday Property?

If you are considering renting your holiday home to holiday makers to generate some additional income then it is important to consider the area you are buying in.

Limited entertainment options will also limit the amount of people who will want to rent your property. The type of property should also match the target market you are aiming at, so if the area is family orientated then a property that can accommodate larger groups of people with facilities for children would be advisable.

Excellent transport links and accessibility will be a great asset when it comes to trying to let out your property, whereas a holiday let that is off the beaten track may only appeal to a smaller, more niche market.

It is also vital to check before purchasing whether the building/apartment block actually allows for properties to sub-let as holiday rentals and if so, what are the restrictions on duration and times of year.

Cost of Ownership

Ownership costs are an absolute and must be considered in your budget.

Cost such as insurance, management fees and home association fees can quickly add up so you need to make sure you can comfortably afford these. There will be ongoing maintenance costs for fixing and replacing appliances such as air conditioning, lighting, ovens, etc as well as general upkeep to keep the property looking in tip top shape, such as painting and gardening.

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Mortgages

More Than Half of All New Mortgages Extend Beyond Borrowers’ 65th Birthdays

It has typically been the policy of most major lenders to issue mortgages only to those able to repay the balance in full prior to their retirement. As of late, lenders have been acknowledging the UK’s skyrocketing average life expectancy, along with the desire of more people than ever before to work well into their 60s or 70s.

Consequently, more than half of all new mortgages issued are being allocated to borrowers who will still be repaying their debts after their 65th birthdays. That’s according to new figures from UK Finance, which indicate that 52% of new homeowner mortgage lending activity involves borrowers planning to continue repaying long after turning 65.

The UK’s ageing population is spurring an inevitable shift in attitudes towards mortgage lending, reports UK Finance.

Growing Demand from Older Applicants

The report from UK Finance indicates that this is the first time more than half of all new mortgages issued are going to those who will still be repaying their home loans after their 65th birthday. Demand for mortgages among applicants aged 55 and over has been growing significantly for several years.

In 2014 less than one third of all mortgages issued went to applicants who would complete their repayment obligations beyond the age of 65.

Speaking on behalf of UK Finance, director of mortgages Charles Roe said that the trend was only likely to continue gaining momentum indefinitely.

“There’s been growing demand for mortgages from those aged over 55 and this is set to continue as more people live and work for longer,” he said.

“For the first time since records began more than half of all new mortgages are due to end after the homeowner’s 65th birthday, and lending to over-55s has grown even where mortgage lending in the wider market has remained subdued,”

“Later life lending both now and in the future will be imperative as existing homeowners look to later life products for accessing equity as they get older.”

Equity release products have also seen unprecedented demand from homeowners across the UK. However, decisions regarding equity release should only be reached after enlisting the support of an experienced broker or financial adviser.

While attitudes towards finance in later life are changing, the potential consequences associated with secured borrowing must always be carefully considered.

“UK Finance’s findings underscore the integral role that later life lending plays in consumers’ long-term security,” commented chief executive of the Equity Release Council, Jim Boyd.

“Attitudes towards home finance in later life have changed, and homeowners are increasingly comfortable with mortgage borrowing into retirement and open to the benefits of realising some of their property wealth as they age,”

“Property wealth can play an important part in a holistic approach to funding retirement and, as an industry, we must work together to ensure consumers get the information they need to weigh up increasingly complex financial decisions to do this.”

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Mortgages

What is a Buy To Let Investment? The Basics You Need to Know

Purchasing any residential property with the intention of letting it out can be an appealing prospect. In the UK, estimates suggest there are now approximately 2.65 million landlords operating within the private rentals sector.

Does this mean that buy-to-let is the right choice for you?

Before making any major decisions regarding BTL investments, it is important to ensure you understand the benefits and drawbacks of becoming a private landlord.

What is Buy-to-Let?

The term ‘buy-to-let’ is used when an individual or business invests in a residential property to be ‘let’ out to tenants.

Rental properties are purchased using a specialist mortgage, which differs from a conventional home loan by way of both qualification criteria and overall borrowing costs.

Buy-to-let investments generate profits through monthly rent payments from tenants, which cover the costs of the mortgage and leave at least a small amount left over. Depending on the type of property and its location, rent yields and profits can vary from modest to exceptional.

What Are the Advantages of Buy-to-Let Property Investments?

The biggest benefit of BTL is its potential to generate a regular source of income for the owner of the property. Typically, rent is charged at a rate that not only covers the monthly mortgage payment, but also all potential maintenance requirements for the property.

Buy-to-let property owners may benefit significantly from capital growth over time.  Average UK house prices have been skyrocketing for some time and are predicted to continue doing so indefinitely. Though again, gains by way of property value increases vary significantly from one property type and location to the next.

BTL investments are considered among the simplest and quickest to exit, should it become necessary to do so at some point in the future. With demand for desirable homes at an all-time high, investors rarely encounter any difficulties selling their BTL properties for their full market value.

What Are the Disadvantages of Buy-to-Let Property Investments?

On the downside, qualifying for a buy-to-let mortgage is not quite as simple as qualifying for a traditional mortgage. There are higher deposit requirements and more extensive restrictions to take into account, with regard to who is and is not eligible.

Interest rates and borrowing costs on a BTL mortgage are usually higher than those of a traditional mortgage. Prospective landlords must also take into account additional costs attributed to repairs, maintenance and the general upkeep of their rental properties.

While demand for quality rental properties is insatiable across much of the UK, potential gaps between tenancies cannot be ruled out. During which, the landlord is still required to make their monthly mortgage payments in the normal way, though without the benefit of rental income.

Independent Expert Advice

Before deciding on any BTL investment opportunity, it is essential to consult with an independent broker to discuss the options available. During your consultation, you will have the opportunity to determine your eligibility for BTL mortgage products and whether your financial situation qualifies you for life as a private landlord.

Call or e-mail anytime for more information on buy-to-let investments, or to book your obligation-free consultation with a member of our team.

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The National Landlord Investment Show is Officially Back in Business

After being put on indefinite hold for the past two years, the organisers of the National Landlord Investment Show have officially confirmed the return of live events across the UK.

The first in-person National Landlord Investment Show will take place at Manchester United FC’s iconic Old Trafford ground on October 12, before heading south to the main national event in London on October 26 at Old Billingsgate.

“We are absolutely thrilled to be returning to Old Trafford, Manchester for our first live event in nearly two years. Not only is this our seventh return to Manchester United Football Club, but also marks our 70th live show since our inception in 2013,” said Tracey Hanbury, the show’s founder.

The biggest and most prestigious annual event of its kind for landlords and property investors, the National Landlord Investment Show provides newcomers and established investors with the opportunity to connect with other property professionals from around the country.

Anyone involved in the BTL sector or considering investing in a private rental property is invited to head over and check out the action.

“We offer the opportunity to meet exhibitors and discuss your needs, browse the superb products and services on offer, network and watch excellent seminars by leading industry experts,” added Hanbury.

“Attendees will find an extensive spread of exhibitors at the show and, with the property market remaining buoyant, there’s no time like now to get involved.”

A wide variety of exhibitors from around the greater Manchester area are set to make an appearance at this year’s events, spanning such sectors as legal advice, finance suppliers, investment opportunities, insurance, tax experts, property management, education & mentoring, the latest proptech, furnishings/decor and many more.

Dozens of seminars and debates will take place throughout the day, discussing all aspects of the BTL sector and its future.

The main National Landlord Investment Show will follow the Manchester event on October 26, taking place at an equally iconic venue just a stone’s throw from London Bridge.

The venue is extremely impressive and will bring much to the event including fantastic train and tube lines directly into London Bridge and city tube stations which are all within walking distance,” advised Hanbury.

“Over 70+ exhibitors will be on hand for you to meet, network and do business with. In addition, the show boasts over 50 expert speakers and has added three unique and unmissable features.”

The event’s organisers spoke of their delight in the return of live shows, having been forced to host virtually events over the past two years.

Sponsors over the event have also spoken with optimism about the long-awaited return of the UK’s premier event for new and experienced buy-to-let investors.

“We have exhibited at all the live shows since 2013 and also sponsored the online events during the pandemic and I am delighted to say the shows have gone from strength to strength,” said Nova Financial chief executive and primary sponsor of the event, Paul Mahoney.

“We have increased our presence at all events and are delighted to be Main Sponsor for the upcoming Manchester & London shows. These events are unmissable for any UK landlord, me and my team cannot wait to be part of the events again and to meet you once again face-to-face.”

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