Halifax has confirmed the re-introduction of its popular two-year remortgage product, while at the same time outlining a series of overhauls to several major remortgage deals.
Customers remortgaging with Halifax now have a total of three fee options to choose from at four LTV (loan-to-value) levels, with loans available for up to 85% of the total value of the property.
Remortgage options will now be available with fee options of £1,500, £999, or no fee at all. The Halifax confirmed that only remortgage loans of £250,000 or more will be available with the highest fee option.
Halifax confirmed that remortgage rates will vary from 1.2% up to a maximum of 60% loan to value with the £1,499 fee option through to 2.88% up to a maximum of 85% loan to value with no fee payable.
Additional interest rate increases have been applied to the lender’s five-year and three-year remortgage deals: up to 0.28% with some loans. There have also been reductions of up to 0.14% elsewhere.
Further advance rates and product transfer rates have been reduced by up to 0.52%; other products have been increased by up to 0.22%.
At the same time, BM Solutions, a Lloyds Banking Group company, has announced alterations to its own five-year and two-year further advance and product transfer rates.
However, the bank stopped short of confirming the extent of the interest rate increases in its statement.
Manchester has risen through the ranks to become the UK’s most appealing and profitable prospect for buy-to-let investments. That’s according to the latest figures from Aldermore’s Buy to Let City Tracker, which positions the city of Manchester above all other UK regions as the country’s new hotspot.
The second-best location for buy-to-let investments was Cambridge, followed by London in third place.
Aldermore’s tracker takes a number of factors into consideration, ranking towns and cities by way of short-term rent yields, average monthly rent prices, long-term returns through increasing house prices, the strength of the rental market in the region, and the total housing stock available.
Major residential and commercial development projects across Manchester since 2015 also contributed to its newfound status as a top buy-to-let location, according to Aldermore.
Key points of appeal
Manchester has one of the lowest overall vacancy rates and available property inventories of any comparable city, resulting in an average annual house price growth of 4.1%.
In addition, private landlords operating in Manchester benefit from consistently solid rental returns. Fuelled by a city with one of the largest private rental markets in the UK, 31% of those living in Manchester currently rent privately.
Speaking on behalf of Aldermore, head of mortgage distribution Jon Cooper highlighted Manchester’s growing potential as a safe haven for buy-to-let investments.
“There has been a high level of uncertainty for landlords since the COVID-19 outbreak, and they have had to continuously adapt to a raft of challenges, but with so many working from home right now, it reinforces the importance of a robust and diverse private rental sector,” he said.
“The changing needs of renters, whether to move to a new location or a different type of property to fit flexible working demands, have created investment opportunities for landlords.”
“The private rented sector is vital to the economy right now and its recovery from the pandemic, so landlords should seek portfolio advice from their lenders to see how they can look at new ways to support the sector.”
Over the past decade, the number of mortgage payers trapped in highly uncompetitive deals has skyrocketed. According to the latest figures published by the London School of Economics, as many as 250,000 mortgage ‘prisoners’ are paying exponentially more than the average rate of interest on their loans. Work out what mortgage would cost by using our UK mortgage calculator
Many of whom are being forced to pay double the interest that would be payable on a more competitive fixed rate deal.
This is proving particularly difficult during the coronavirus pandemic, as household budgets are stretched to and in some cases beyond breaking point. New data suggests that these mortgage prisoners are as much as 40% more likely to default on their loans than other borrowers, as a result of the pandemic.
Imprisoned in high-interest loans
The term ‘mortgage prisoner’ is used in relation to those who are prevented from switching to more competitive deals by their lenders. Having started out with an affordable loan charged at a competitive introductory rate of interest, their mortgages were subsequently switched to variable rate loans by their lenders.
Over time, the interest rate on the loan gradually increases to such a point that the borrower is paying significantly more than the Bank of England base rate, or typical industry norms. Many of those affected today are paying in the region of 5% on their variable rate mortgages when introductory fixed-rate deals available elsewhere are charged from as little as 2%.
However, the terms and conditions of their loans disallow them from switching to a more competitive deal elsewhere.
Elevated risk of mental illness
The financial struggles of those affected have been directly linked with an elevated risk of mental illness. Many mortgage prisoners have suffered from chronic anxiety, stress and depression over fears of falling behind on their repayments and subsequently losing their homes.
Martin Lewis of Money Saving Expert spoke of the government’s ‘moral responsibility’ to step in and do something about the issue.
“Mortgage prisoners are the forgotten victims of the 2008 financial crash,” he said.
“The government at the time chose to bail out the banks, but unfairly., immorally, hundreds of thousands of their victims were left without adequate help, trapped in their mortgages and the financial misery caused by it. And they have been forgotten ever since,”
“There is a moral responsibility to release money to free mortgage prisoners from their penury,”
“Intervention can and will save lives.”
Commenting on behalf of the Treasury, a spokesperson offered non-binding reassurance that the government is aware of the issue and will continue to make efforts to support struggling mortgage payers.
“We know that being unable to switch your mortgage can be incredibly difficult,” read the response from the Treasury.
“Thousands of borrowers will now find it easier to switch to an active lender or continue interest-only payments thanks to recent rule changes by the Financial Conduct Authority – and we have been working closely with the industry to ensure more is done to help those who are eligible to switch,”
“We remain committed to looking for practical new solutions for borrowers who are struggling.”
Technically speaking, right to buy is not a separate mortgage category. Eligibility for a mortgage to fund a Right to Buy home purchase is established in the same way as a conventional mortgage; however, there is a separate mortgage category for bad-credit mortgage applicants, who would be unlikely to qualify with any mainstream lender. If you intend to purchase a property under the Right to Buy scheme and have issues with your credit history, it is essential to target specialist bad credit mortgage specialists with the help of an independent broker. You can even use our mortgage calculator in the UK to work out how much a mortgage would cost you.
Are bad-credit mortgages for the right to buy available?
The short answer is yes, although you are unlikely to find the support you need on the High Street. The specialist bad credit mortgage sector, aka subprime lending, is growing and diversifying and remains a facility most major banks and lenders are reluctant to offer or even fairly consider.
Subsequently, the key to finding and qualifying for a competitive bad credit mortgage lies in working with a specialist broker, who can compare the market on your behalf and find your perfect lender.
How can I tell if I have bad credit?
The three main credit reference agencies are Experian, Equifax, and Call Credit. Establishing if you have bad credit is therefore simply a case of checking your credit score with all or one of these three agencies.
If you have any questions, concerns, or doubts, they can be raised and discussed with your broker. If your credit score is low, specialist bad credit mortgages may be the only viable option. If your credit score is imperfect but far from catastrophic, you may be advised to work on improving it before applying for a mortgage.
Will I qualify for the right to buy a mortgage with bad credit?
The extent of the damage to your credit score will play a role in determining your eligibility or otherwise for a Right to Buy mortgage; however, specialist subprime lenders consider multiple additional factors alongside credit scores.
For example, your employment status, income level, current financial position and performance, assets, and other contributory factors will be considered. Ultimately, your lender simply needs to establish whether you are in a comfortable position to keep up with the repayments on your home loan.
How does bad credit affect the right to buy a mortgage?
Poor credit can affect a right-to-buy mortgage in the same way it affects any conventional mortgage. Interest rates and borrowing costs may be higher, and it may be more challenging to qualify in the first place; however, it is still perfectly possible to access an extremely competitive deal with expert broker support. Rather than approaching any lender directly with your application, you will find the process quicker, easier, and more cost-effective with a reputable broker in your corner.
For more information on any of the above or to discuss bad credit Right to Buy mortgage applications in more detail, contact a member of the team at UK Property Finance today.
After flatlining throughout much of the coronavirus crisis, the UK’s buy-to-let market is showing reassuring signs of a strong recovery. Property purchases and portfolio expansion plans put on hold during lockdown are now being unleashed on the sector, spurred in part by the current stamp duty holiday recently introduced by the Chancellor.
According to the results of an industry survey conducted by Cherry, upwards of 30% of brokers have reported a spike in individual buy-to-let purchase activity and interest. Likewise, almost the same amount (27%) reported growing interest in buy-to-let property acquisitions from limited companies.
In total, buy-to-let market activity in terms of planned purchases or purchase enquiries is on the up at around 57% of brokers across the UK. At the same time, brokers are also seeing an upturn in the number of clients applying for short-term financial products like bridging loans. Most of which are being used by landlords and investors for property refurbishments and improvements.
“It’s clear there has been a spike in buy-to-let activity in recent weeks. Whereas the BTL market has been dominated by remortgage business in recent years, it is purchase inquiries that are currently keeping brokers busy,” said Donna Hopton, director at Cherry.
“This window of opportunity for reduced stamp duty land tax will certainly be helping to drive this demand, but we are seeing that the market is generally buoyant, which is a positive sign for advisers and the economy.”
A golden opportunity for landlords and investors?
Traditionally, Buy to Let has been seen as something of a safe haven for investors in the UK. To some extent, an investment opportunity that more or less guaranteed generous and ongoing returns with little to no risk involved
More recently, the government announced a temporary stamp duty adjustment. By significantly increasing the threshold at which stamp duty is payable on property purchases, from £125,000 to £500,000, the Chancellor effectively shaved thousands of pounds off the purchase prices of properties for buy-to-let investors.
Coupled with rock-bottom mortgage calculator UK rates over the past few months, it was seen by many as a potential golden opportunity for landlords and investors.
A leading source stated, “In the right hands, buy-to-let can still be a useful and profitable investment vehicle.
Landlords will rush to buy homes before the stamp duty holiday ends in March next year, after which I think there may be a natural drop in activity.”
Mortgage applicants naturally seek the best possible deals, which for most means choosing lenders that offer the best introductory rates. Unfortunately, research suggests that a surprising proportion of home buyers do not realise that when their initial deal comes to an end, the mortgage is automatically switched to a standard variable rate (SVR) mortgage.
Banks and lenders are legally obliged to explain this caveat when organising and issuing mortgage contracts, though thousands are apparently unaware of the terms of their home loans.
A new study conducted by MoneySuperMarket suggests that a full 12% of mortgage payers have lapsed onto SVR rates by accident. This results in an average additional monthly repayment of approximately £133, with a typical SVR mortgage costing around 15% more than an introductory mortgage deal.
Worse still, among those who accidentally wound up on an SVR and found themselves essentially out of pocket, many claimed they were not made aware of the automatic switch at the end of their initial deal. The same study from MoneySuperMarket found that around 15% of all mortgage borrowers do not know that the transfer to an SVR at the end of the introductory period is automatic.
Switching deals at the right time
In total, MoneySuperMarket estimates that around 1.3 million Brits could have lapsed onto an SVR mortgage, amounting to total collective added costs of more than £175 million per month. By contrast, those who switch to a better deal at the right time, i.e., prior to their introductory rate coming to an end, stand to save an average of £340 per year.
For those already tied into an SVR, the potential monthly savings increase to approximately £1,602 per year.
According to MoneySuperMarket, the importance of switching to a competitive deal at the right time simply cannot be overemphasised.
“Standard variable rates on mortgages are notoriously expensive, and with 15% of those remortgaging being unaware of how they work, automatically lapsing onto them is a common and costly financial pitfall,” commented Money Supermarket’s Emma Harvey.
“Regardless of whether you’re on an SVR mortgage or another type, there could still be significant savings to be made when your initial mortgage deal comes to an end. In fact, we found that the average saving for mortgage holders still within their initial product period is £28.36 per month, which really adds up.”
“In order to stay on top of how much you’re spending on your mortgage, be aware of when your current mortgage deal is due to come to an end and start researching rates several months in advance.”
“You can arrange your new deal three months before the end date so that you switch over at the end of your initial term, ensuring you are always on the best deal.”
Independent broker support
If you are reaching the end of your introductory deal or believe you are paying too much on your current mortgage, we can help. You can contact a member of the team at UK Property Finance, and we will conduct a whole-market search on your behalf, enabling you to find a more competitive deal and make ongoing savings on the life of your loan. Along with this, you can even use our UK mortgage calculator to work out the costs more accurately yourself.
Prior to the government’s decision to more or less declare war on private landlords, buy-to-let was a safe haven for investors. If not, a veritable goldmine for those who made the savviest moves. But it wasn’t to last, as sweeping tax reforms hit current and prospective landlords hard, removing much of the appeal from the sector as a whole.
More recently, Chancellor Rishi Sunak announced a temporary stamp duty adjustment. Detailed in early July, the new policy would see the threshold at which homebuyers are required to pay stamp duty increase from £125,000 to £500,000. Coupled with comprehensively affordable mortgage deals and the easing of eligibility requirements among many major lenders, things could once again be working in favour of landlords.
But does this mean that now is the right time to consider a buy-to-let investment? Or do these potential incentives for landlords simply not go far enough? Use our UK mortgage calculator to find out what kind of mortgage suits you best and the exact costs.
Sizeable stamp duty savings
In the wake of Chancellor Rishi Sunak’s stamp duty break announcement, some of the UK’s leading buy-to-let brokers experienced enormous spikes in both website visits and client inquiries. Likewise, both Strike and Zoopla reported increases of up to 15% in the number of people looking to buy homes or considering buy-to-let investments.
The prospect of saving thousands of pounds on stamp duty apparently piqued the interests of once-reluctant investors.
It’s important to note that landlords will still be required to pay a flat 3% surcharge on buy-to-let properties. This means that on a £300,000 investment property, the usual stamp duty of £14,000 would be reduced to a much more manageable £9,000.
Meanwhile, many lenders have begun both reinstating their buy-to-let mortgage products and improving the competitiveness of their deals. Qualifying is becoming easier, and buy-to-let products are currently available with rock-bottom interest rates, making them an appealing prospect for those who act fast.
Particularly in key locations outside the capital, the North West, for example, has seen year-on-year rent price gains for June of more than 5%.
Unfortunately, landlords and private renters alike are being forced to contend with a period of ongoing and indefinite uncertainty. Potential job losses and income reductions in particular are prompting movers and investors alike to think twice about making any major decisions for the time being.
Hence, basing buy-to-let investment decisions purely on stamp duty reductions isn’t considered advisable by most real estate experts.
A number of mortgage business owners feel that many will jump at the chance to pick up investment properties before the offer expires, while stating that buy-to-let can still be a valuable vehicle for those who get it right.
“Landlords will rush to buy homes before the stamp duty holiday ends in March next year, after which I think there will be a natural drop in activity,” he said.
“The UK is bracing itself for a slowdown in the economy, so I think it will be 2022 before the market rebounds again, assuming the taxman has no more nasty surprises.”
“It may never be the golden goose it once was, when amateur investors made easy money, but for the professional landlord, buy-to-let is still a profitable venture.”
Staycation spots are on the rise in the United Kingdom, and mortgage lenders are making their best attempts to meet the rising demand for them.
Do you think short-term lets are the new direction property lenders and investors should be eyeing for the next couple of years?
Before the onset of Covid-19, the UK holiday market was thriving in the face of world competition. British locals, along with foreigners, were taking advantage of the depreciating pound rate and booking more staycations than in previous years.
From a consumer’s perspective, environmental issues have become an important aspect when choosing a holiday destination. Research shows that a significant percentage of people are on a lookout for ‘more sustainable’ or ‘greener’ holidays in the future.
From the angle of a property investor, many factors such as long-term rentals and short-term lets, can motivate landlords to diversify their ownerships. The latter carry tax and financial benefits, including increasing demand from consumers and a more attractive business model for higher profit margins.
The outbreak of Covid-19 has restricted international travel, resulting in a rise in demand for staycations. While people are reluctant to go abroad for travel, they are on the lookout for closer and cheaper alternatives: A trend that is likely to survive until the virus subsides completely.
A number of Adapting to the times and new trends, mortgage lenders are giving more opportunities to borrowers. A number of companies such as YBS Commercial Mortgages and Teachers Building Society have attempted to profit off and open the market for staycations. YBS, for example, is now offering a buy-to-let product that targets holiday lets in the UK’s top tourist sites. The offer comprises a loan amount of £1m and the opportunity for a five-year fixed rate at 3.85% with a loan-to-value (LTV) ratio of 75%. Work out what a mortgage would cost you using our Mortgage Calculator UK.
On the other hand, Teachers Building Society has launched some products in which the lender offers a 3.49% three-year fixed rate and a 3.74% five-year fixed rate with a 75% LTV for borrowers. These products aim to meet the demands of new and pre-existing property investors.
Diversifying short-term lets is also imperative to its specific location along with the property on the market. Many believe that coastal resorts are a great option as these tend to be the most popular summer holiday destinations. However, seasonal-prone areas may not be the best choice when it comes to staycation lets.
One of the primary locations in the UK with the highest short-term let yields is Liverpool. Research shows that such city locations remain busy all year round, attracting business ventures and tourists. Most cities are geared up for hosting and attracting major sporting events, which automatically pulls people closer to the location. As mainland cities such as these have ideal transport links, restaurants and cafes, tourist sites, and employment hubs, they will continue to attract more people.
As the market trends continue to shift, the opportunities for lenders and borrowers alter as well. It is interesting to note how short-term lets thrive in the market, and if they will break traditional long-term rentals.