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How to Add Real Value to Your Home Before Selling

Before placing your home on the market, it makes sense to perform a little profit-oriented housekeeping. Ask any real estate expert and they will tell you how it is often the smaller details that add up to the biggest differences price-wise.

But of all the home improvements you can conduct before selling your home, which have the most positive effects on market values?

According to those who specialise in maximising properties’ market values, the following could make a significant contribution to your home’s value and curb appeal:

1. Painting and Decorating

Superficial it may be, but a fresh coat of paint really can hide a world of sins.  Always remember that those who view your home in mind of making an offer want to see it as something of a blank canvas. Hence, a pristine coat of fresh paint (in a neutral colour) can be just the thing to help them do just that.

2. Basic Repairs

The same can also be said for the equally superficial repairs that are technically not a big deal. Examples of which include stiff doors, squeaky floors, window rattles, cracked wood, chipped paintwork, broken lights, stained fabrics – anything that could technically take the shine off the room in question.

3. Front Door, Porch and Hallway Enhancements

First impressions are everything, and most prospective homebuyers make up their minds almost immediately after entering a property for sale. Anything you can do to make that all-important first impression the right first impression is something you should be doing. Ensure your entranceways send the right message about the rest of your home.

4. Declutter and Clear Out

Back with the blank canvas theme, getting as much excess clutter out of your home as possible is essential. If necessary, consider hiring a storage locker for the duration of your relocation, offloading everything that does not need to be there.

5. Kitchen and Bathroom Remodelling

Installing a new kitchen or bathroom (or simply updating your existing setup) could add anything from £5,000 to £25,000 to the total market value of your home. In both instances, the average return on a kitchen or bathroom upgrade when selling a home is around 65%.

6. Smart Lighting and Heating

With the living-cost crisis only set to get worse before it gets better, more prospective buyers than ever before are prioritising smart and efficient utilities.  Smart lighting and heating, in particular, can be highly attractive to prospective homebuyers, constituting an affordable upgrade and adding as much as £10,000 to a home’s market value.

7. Outdoor Living Spaces

More people are spending more time at home than ever before, as hybrid working continues as the new norm. Private outdoor living spaces are particularly attractive to prospective homebuyers, which in many cases can be a deal-breaker. Research suggests that by presenting your home’s exteriors in the right way, it can benefit the value of your home by more than £8,000.

8. Private Parking

Building a garage or driveway may seem like a major undertaking, but doing so can nonetheless lead to a healthy return. On average, adding a single-car garage to a home can increase its total market value by as much as £25,000 in some parts of the country.

9. Loft Conversions

The value added by a loft conversion will be determined by multiple factors, including the functionality of the new space and its size. In the case of a fully-functional living space large enough to use as a bedroom or home office, a loft conversion can easily add £40,000 or more to a home’s market value.

10. Conservatories

Last up, a modest conservatory can be installed for as little as £5,000, yet can make a significant contribution to a home’s asking price. Anything from £8,000 to more than £15,000, depending on the location of the property and the type of conservatory installed.

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Homes England Falls Short of Housing Delivery Targets Once Again

England’s escalating housing crisis shows no sign of abating anytime soon, as Homes England is once again short of meeting any of its housing delivery targets. The figures in the agency’s 2021/22 annual report and financial statements make for disappointing reading, with just 26,953 out of a planned 34,349 affordable homes having been successfully built.

In total, Homes England fell 15% short of its aim to build 44,275 new homes this year, having successfully constructed 37,632.

Pointing the finger of blame squarely at labour shortages and material procurement issues, Homes England said unexpected discrepancies had increased home delivery times by around 20 weeks on average.

“Capacity issues in the planning system, nutrient neutrality challenges, and material and labour shortages with increased associated costs have caused delays to housing provisions, impacting the agency’s delivery against its KPIs,” commented Peter Denton, CEO at Homes England.

The agency also failed to meet its unlocked housing capacity target, unlocking 58,993 homes through infrastructure and land – 38% fewer than its goal of 94,863.

Homes England also said that the shortfall was attributed in part to several key infrastructure programmes reaching the end of the funding deployment phase and moving to portfolio management.

“Our affordable homes programmes are a core contributor towards our completions and over the past year partners have reported challenges in delivering completions,” read an extract of the report from Homes England.

“This has mainly been due to delays and access to labour supply and materials. Schemes approaching completion were more directly impacted by labour and materials shortages because it is at this stage where the need for resource is greatest,”

“Delays added c. 20 weeks to delivery times, reducing capacity to complete homes in the original timescales.”

A Brighter Outlook Ahead?

A brief summary of the targets set out by Homes England and the agency’s actual performance can be seen in the table below:

KPI2021/22 actual2021/22 targetDifference% away from hitting target
Completions directly supported by Homes England37,63244,2756,64315.00
Completions directly supported by Homes England (additional to the market)25,27930,9225,64318.25
Affordable completed homes supported by Homes England26,95334,3497,39621.53
Starts supported38,56248,81010,24821.00
Unlocked housing capacity58,99394,86335,87037.81

Source: Homes England annual report and financial statements

Despite the disappointing performance for 2021/22, Peter Denton reaffirmed the agency’s commitment to further expansion and enhanced regeneration going forwards.

“This means we will not only deliver the homes this country needs, but we will also work with partners to revitalise run-down and derelict sites in order to bring confidence, pleasure and pride back to our town centres,” he said.

“With a renewed focus on regeneration, a more place-based way of working will be central, bringing together all our tools and capabilities to support local leaders to deliver their vision for their towns, cities and rural communities,”

“While boosting housing supply across England remains an important focus for the agency, our role is increasingly about more than making homes happen — it is about creating sustainable, thriving places that foster a sense of community and pride and can better connect people to employment opportunities and provide the amenities they need.”

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Planning Permission Applications Down Once Again in Q1 2022

The lack of inventory on the UK’s prohibitively expensive housing market shows no signs of abating soon. According to the most recent figures published by the Department for Levelling Up, Housing & Communities (DLUHC), just 84,000 of the 109,900 applications for planning permission submitted in Q1 this year were granted.

This equates to an 87% success rate for planning permission applications submitted during this time – down 4% compared to Q1 2021. This may sound less than significant, but it comes at a time when the UK is in dire need of a major uptick in affordable home availability.

In addition, the total number of planning permission applications received for the quarter was down 12% compared to the previous quarter.

A total of 9,300 residential planning permission applications were granted in England in the first three months of the year – a 6% decrease compared to the same time last year. 1,900 commercial planning permission applications were granted – down 2% from Q1 2021.

Affordable Inventory Required Urgently

The dire need for rapid acceleration in the housebuilding sector was highlighted by Paul Neal of Missing Element Mortgage Services, who emphasised the importance of focusing on the availability of homes for people who actually plan to live in them.

“Not stock that is snapped up by landlords or builders to make a fortune on. Reliable, affordable housing for everyday people,” he said.

“Sadly, it’s not coming at anywhere near the pace it needs to, and planning is often the issue.”

Speaking on behalf of London-based property developer NewPlace, managing director Joe Garner said that the DLUHC data provides a clear indication that nowhere near enough homes are being built in the right places.

“The planning system is an absolute mess, and political infighting from central government all the way down to local councils is perpetuating the housing crisis,” he said.

Garner’s sentiments were echoed by Jamie Lennox, director at Norwich-based mortgage broker Dimora Mortgages, who likewise said that the government is not even coming close to meeting its own house building targets.

“Many developments get stuck in planning for years and until there is a quicker process to get sites approved, the ambitious plans for a certain number of new homes won’t ever materialise,” he said.

Help to Build Push Continues

Meanwhile, the government continues to push its Help to Build scheme as a potentially affordable alternative access point to the UK housing market.

Help to Build provides those looking to build their own homes with the opportunity to access a special mortgage of up to £600,000, which can be secured with a deposit of just 5% and offers the first five years interest-free. This 95% LTV mortgage will only be available through a selection of approved lenders, and the scheme is being managed by Homes England.

“Through the Help to Build scheme we will help thousands more people onto the property ladder by giving them the opportunity to build homes that are perfectly tailored to their needs and in the communities they want to live in,” said Housing minister Rt Hon Stuart Andrew.

“This innovative scheme will build on our work to break down the barriers to homeownership, as well as creating new jobs, supporting the construction industry and kickstarting a self and custom build revolution.”

Open to movers and first-time buyers alike, Help to Buy combines low initial deposit requirements with five interest-free years, followed by a 1.75% APR in the sixth year, and incremental annual increases thereafter.

“Self-build isn’t the preserve of the wealthy, and Help to Build makes it more practical and accessible than ever before for people to build their dream home,” said Andrew Craddock, Darlington Building Society chief executive.

“This scheme also opens up the opportunities to first-time buyers. It is a fantastic example of the market moving with the times, and people’s changing wants and needs.”

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What is Invoice Finance? Advantages and Disadvantages

Invoice finance provides businesses with the opportunity of accessing money they are owed by their own customers in advance. In doing so, delays between issuing invoices and collecting payments can be shortened, or eliminated entirely.

Where the business issues an invoice, the recipient may have anything from seven to 90 days to pay – sometimes even longer. During which, the business must continue to make ends meet with its own on-hand capital reserves.

Effectively a financial ‘gap-filler’ for such scenarios, invoice finance allows the business to access its owed capital immediately.

How Does Invoice Financing Work?

Invoice finance can be beneficial for any business (or sole trader) for which significant gaps between raising invoices and receiving payments are the norm.

The facility is arranged by a specialist lender, who takes into account the company’s financial status, and the professional background of the applicant.  Pending invoices are then used to determine how much the business is owed, and the lender issues a loan to cover this outstanding amount.

Over the subsequent weeks or months, the business repays the loan as they collect payments from their customers.

“As the culture of late payment continues to rise here in the UK, the threat that this poses to businesses also grows. Our recent survey results highlight just how vital invoice finance is to businesses,” explained Phil Chesham, head of invoice finance at Time Finance.

“Of the business owners surveyed, 67% reported that an invoice finance facility helps them to pay suppliers, HMRC, employees and other financial commitments on time. 50% told Time Finance that it helps to manage late payments from customers and over one third said it helps them to better combat the current economic challenges such as rising costs and inflation,”

“With late payment debt as high as £200,000 for one in five UK SMEs, invoice finance solutions are as vital as ever and with the addition of our credit control service here at Time Finance, we can really take the strain away from chasing payments and protect our clients’ customer relationships.”

What Are the Advantages of Invoice Finance?

The potential benefits and cost-effectiveness of invoice finance will always vary significantly from one business to the next.

For those who stand to benefit from an invoice finance agreement, the main advantages of the facility are as follows:

  • Access to Quick Cash – Businesses with plenty of liquid capital always enjoy a competitive advantage over those with limited cash reserves.  With invoice finance, the business gains access to the money it is owed, right after its invoices are issued. 
  • No Assets at Risk – Invoice finance is issued in the form of a specialist unsecured loan, for which the invoices themselves serve as a form of collateral for the facility. This means no physical assets need to be put on the line and subsequently put at risk.
  • Missed or Late Payments – It can also be a useful facility for avoiding (or minimising) the consequences associated with missed or late invoice payments. Where customers pay late, the business can still access the money it is owed in a timely manner.
  • Reputation Protection – Most businesses rely on their customers’ payments to meet their own payment obligations. Invoice financing can make it much easier for businesses to keep to their own commitments, protecting both their reputation and their credit status.

What Are the Disadvantages of Invoice Finance?

Invoice finance is not suitable for all businesses and there are downsides to such agreements that must be considered. The most important examples of which are as follows:

  • Restricted to Business Customers – The only invoices that can be paid early as part of an invoice finance deal are those issued to other businesses.  Invoices issued to the general public cannot be claimed early on invoice finance.
  • Potential Relationship Strains – With some types of invoice financing (invoice factoring), the lender subsequently takes charge of chasing up the borrower’s customers for payment. Depending on how this is handled, it could result in frayed relationships between the business and its customers.
  • Long-Term Costs – Invoice finance can prove a highly cost-effective and beneficial solution, but is never offered free of charge. Irrespective of the terms, conditions and duration of the agreement, it will always result in additional costs for the business.

All of the above pros and cons will be discussed in full during your initial consultation, during which your broker will help you determine your suitability and eligibility for invoice finance.

Invoice Finance in Practice

To illustrate how invoice finance works in practice, consider the following example scenario:

  • A small business issues an invoice for £5,000 to a customer, with a 30-day payment deadline
  • The business would like to get this money back as quickly as possible, in order to invest it in a new project
  • An invoice finance agreement is reached for 85% of the value of the invoice, and with total borrowing costs of 3%
  • The business receives a payment of £4,250 from the lender i.e. 85% of the value of the invoice raised.
  • When the £5,000 invoice is paid, the full £5,000 is transferred directly into the account of the lender
  • The borrowing costs (£150) are subtracted from the remaining value of the invoice (£750), and the remaining £600 is transferred back to the business.

All invoice finance contracts are bespoke agreements, tailored to meet the exact requirements of the business in question. Though in most instances, the logistics of invoice finance are fairly similar and surprisingly straightforward.

For more information on any of the above or to discuss the potential benefits of invoice finance in more detail, call anytime for an obligation-free consultation.

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Government Introduces Help to Build in England

A new scheme has been unveiled by the UK government, which will supposedly assist “thousands” of first-time buyers looking to get on the property ladder. Though unlike traditional Help to Buy schemes, this new initiative offers support to those who plan on building their own homes from scratch.

Named Help to Build, the programme will reduce the immediate costs of building a home by offering those who take advantage access to lower-deposit mortgages with fixed introductory interest rates.

The scheme was officially announced last week by the Department for Levelling Up, Housing and Communities, and £150 million has been set aside to help those who qualify.

First-time buyers are finding it increasingly difficult to get on the property ladder, with average house prices having once again surged to all-time record-highs in April – £281,000. Over the course of just 12 months, the average price of the UK home has increased by more than £31,000, pricing more prospective buyers than ever before entirely out of the market.

What is Help to Build?

Help to Build provides those looking to build their own homes with the opportunity to access a special mortgage of up to £600,000, which can be secured with a deposit of just 5% and offers the first five years interest-free. This 95% LTV mortgage will only be available through a selection of approved lenders, and the scheme is being managed by Homes England.

In a similar way to property development finance, Help to Build mortgages will be issued in a series of stages, coinciding with the completion of key phases of the construction project. The maximum loan available will be £600,000 to cover the costs of the land and the home’s construction, or £400,000 on build costs alone where the land is already owned.

“Through the Help to Build scheme we will help thousands more people onto the property ladder by giving them the opportunity to build homes that are perfectly tailored to their needs and in the communities they want to live in,” said Housing minister Rt Hon Stuart Andrew.

“This innovative scheme will build on our work to break down the barriers to homeownership, as well as creating new jobs, supporting the construction industry and kickstarting a self and custom build revolution.”

Who Can Apply?

While the scheme is designed to appeal primarily to first-time buyers, it will also be open to anyone interested in building their own home in England. In order to qualify, applicants will need an excellent credit score, a detailed breakdown of the project’s estimated costs and evidence of full planning permission from the relevant authorities.

In addition, the newly constructed home must be the sole residence of the mortgage holder – the scheme is not available to those looking to build a second home, or a BTL home.

After the first five interest-free years, interest will apply starting at 1.75% in the sixth year, and rising annually thereafter.

“Self-build isn’t the preserve of the wealthy, and Help to Build makes it more practical and accessible than ever before for people to build their dream home,” said Andrew Craddock, Darlington Building Society chief executive.

“This scheme also opens up the opportunities to first-time buyers. It is a fantastic example of the market moving with the times, and people’s changing wants and needs.”

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Why it Pays to Make Your Rental Properties More Energy Efficient

Most current indications point to a gradual-but-accelerating return to town and city living. The latest data from Rightmove confirms a major spike in demand for rental properties in and around London, as workers once again find themselves beckoned back to the office.

All of which is playing directly into the pockets of buy-to-let landlords, who across the UK are reaping the benefits of record-high monthly rents.  Unfortunately, many (if not most) of these BTL investors are also finding their futures blighted by the prospect of new minimum EPC rating requirements on the horizon.

Recent estimates suggest that at least 60% of all current housing stock in the UK has an EPC rating of D or lower. This would suggest that the vast majority of properties will need to be upgraded significantly, in order for them to meet the new minimum C rating within the next few years.

The extent of the repairs required will vary significantly from one property to the next. Even so, it is estimated that the average landlord will face costs of between £6,000 and £10,000 – some significantly more.

Understandably, the tendency among many cash-strapped landlords is, for the time being at least, to bury their heads in the sand. But while forking out significant sums of money for energy-efficient upgrades is far from fun, it’s something that really needs to be done sooner rather than later.

Here’s why:

Tenants Prefer Energy Efficient Properties

With household energy prices at record highs, tenants are increasingly setting their sights on energy-efficient properties. Further hikes are on the cards for the coming months, which will make it increasingly difficult to let out inefficient homes for decent prices.

The more energy-efficient a rental property, the easier it is to let out and get the best possible return on your investment.

You Have No Choice But to Make the Necessary Improvements

The costs of making the renovations required to meet the government’s new standards are only likely to increase over time. Those who wait until the last minute will only face the prospect of elevated costs and a mad dash to get over the finish line in time.

Acting early could therefore save landlords time, money and stress – all in significant quantities.

You Could Face Heavy Penalties if You Don’t

For those who fail to meet the deadline, significant penalties will almost certainly apply. 

“The proposed Minimum Energy Standards for rented properties will shift from an E rating to a C rating under the new rules, and making changes isn’t optional. The new regulations will be introduced for new tenancies first from 2025, followed by all tenancies from 2028,” commented Sundeep Patel, Director of Sales at Together.

“If your property is found to fall short of the required rating, you could face a fine of up to £30,000. Plus, you’ll have an unlettable property on your hands, which is not only a waste of essential residential resource, but also means you’ll incur a loss of rental income.”

If you would like to learn more about the potential benefits of bridging finance for energy-efficient home improvements, contact a member of the team at UK Property Finance today.

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People Are Choosing Longer Term Rentals, Even as 86% of Rental Households Face Financial Strain

Getting a foot on the UK’s property ladder has become borderline impossible for an entire generation of renters. Skyrocketing house prices combined with an unprecedented cost-of-living crisis have forced many to abandon their dreams of homeownership entirely.

Consequently, a study conducted by Ocasa indicates that more UK residents than ever before are viewing long-term private rentals as a viable alternative to home ownership. Affordability and flexibility were found to be the two main points of appeal, among those seeking long-term rents over property purchases.

But even with the number of rental properties in the UK having increased by 1.1 million over the past 10 years, average rent costs are hovering at record highs.  In fact, a full 86% of UK tenants said that rent cost increases have placed greater strain on their household expenses over the past few years.

This could be one of many reasons why tenants are actively seeking longer-term agreements with their landlords. Where possible, locking in an agreed maximum rent in return for a longer-term tenancy agreement is becoming the preferable choice for many.

The alternative option is to risk regular and rapid monthly rent increases, each time a shorter tenancy agreement expires and needs to be renewed.

An Escalating Cost-of-Living Crisis

Where households are already struggling to make ends meet, utility price increases are the single biggest cause for concern. Monthly rent cost increases and fuel prices are also contributing to widespread financial instability, along with council tax bills and food prices.

Polled by Rentd, 46% of households said they were worried about further living-cost increases forecast for the remainder of the year, while almost 60% said they would likely have to make additional cutbacks over the coming months.

Speaking on behalf of Rentd, CEO and founder Ahmed Gamal highlighted how private tenants are being hit disproportionately hard by living-cost increases.

“The cost-of-living crisis is particularly concerning for the nation’s tenants, many of whom would have already been struggling with the cost of renting and will now find they are being financially stretched to their limits,” said Gamal.

“During the pandemic, we saw rental values drop across a great deal of the market, but with normality returning this year, they are once again starting to climb. This means that many tenants may now be finding that the cost of renting in their given area is quickly becoming unaffordable,”

“When committing to a rental property, it’s important to consider that much like a variable rate mortgage payment, the cost of your rent is subject to change. So it’s vital to leave yourself some room within your monthly budget to account for this increase, otherwise, you may find yourself looking for a more affordable property or location.”

Discouraged by High Upfront Costs

Among those who would like to own their own homes but cannot afford to do so, high upfront costs of purchasing a property are the biggest discouraging factor. Average UK house prices are now heading towards £300,000, meaning that the average deposit (at 15%) a buyer would need to come up with would be around £45,000.

Coupled with the rest of the initial costs associated with buying a home, total on-hand savings needed to get the transaction underway would exceed £50,000.

The overwhelming majority of average earners in the UK simply do not have the capacity to come up with anything near this amount. All of which can be particularly disappointing for those whose monthly rent bills are significantly higher than the average monthly mortgage payment on a comparable property.

Despite being able to comfortably afford a mortgage in terms of repayments, millions are nonetheless unable to meet the basic requirements to qualify.

Even so, Jack Godby, Head of Sales and Marketing at Ocasa, was keen to point out how renting long-term need not always be seen as a last resort, worst-case scenario option.

“In the UK, popular opinion has long said that owning a home is better than renting; renting is something you do while you wait until you can afford to buy. But this isn’t the case in other countries, and it’s become less and less so here,” he said.

“People are now choosing to rent for the long-term, rejecting buying altogether because of the many downsides that come with ownership, from the growing expense to the risk and inflexibility,”

“In reaction to this growing demand, rental providers are upping their game, providing high-quality homes with tenancy agreements that offer greater security and more freedom to make the property their own,”

“This is particularly true of the build to rent sector which has grown phenomenally in just a few short years and looks to be one of the driving forces of change when it comes to how we choose to live.”

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Wedding Loans: An Introductory Guide

Planning a memorable wedding is not for the faint-hearted. Both in terms of the logistics involved and the costs, it can be a surprisingly time-consuming and complex endeavour.

According to the latest National Wedding Survey (conducted by Hitched.co.uk), the average cost of a wedding in 2021 was £17,300. This marks a dramatic increase from the £9,100 average in 2020, and is set to continue escalating as inflation continues to skyrocket.

In general, experts recommend setting aside around £20,000 as a base figure, once all expenses have been factored in.

Unfortunately, this simply isn’t the kind of money most people have lying around. Some couples save for several years to pay for their dream weddings, while others turn to family members for support. But there is a practical and flexible alternative for those who can neither save nor borrow the money they need from their loved ones.

Designed specifically for making special days as special as they can be, a wedding loan could be just the thing to make the whole thing more affordable.

What Are Wedding Loans?

Wedding loans are typically issued in the form of unsecured personal loans, but there are also secured borrowing options available. Terms, conditions and borrowing costs vary in accordance with how much you borrow, the length of the repayment period and your credit status.

Depending on the lender you choose, you could be looking at total interest payable of anything from 5% to more than 35%. The balance of the loan can be repaid over monthly instalments spanning one to 10 years, and there is no upfront payment (deposit) required.

Some banks issue standard personal loans which can be used to fund weddings, while others provide specialist wedding loans issued exclusively for this purpose. Either way, the money can be used to cover the costs of venue hire, catering, transport, attire, décor and even the honeymoon of a lifetime.

How Much Money Can I Borrow with a Wedding Loan?

The amount you can borrow will be determined by your financial status and creditworthiness at the time of your application. In the case of an unsecured personal loan, the following factors will be taken into account by your lender:

  • Your credit score
  • Whether you apply individually or as a couple
  • Your chosen lender
  • Your income and debt
  • Your general financial status

With personal loans for weddings, it is possible to borrow anything from £1,000 to around £15,000 – depending on your financial circumstances at the time. For figures in excess of this, a secured loan could be a better option.

With a secured loan, there are technically no limitations to how much you can borrow. The loan is secured against assets of value (usually the home of the borrower) in the same way as a mortgage.

Secured loans are typically issued in sums of £10,000 or more, and can attach lower rates of interest than comparable unsecured loans. However, it is important to acknowledge the fact that your home may be at risk of repossession if you do not keep up with your monthly repayments.

When Should You Get a Wedding Loan?

Applying for a wedding loan could be the best course of action if the following apply:

  • You need the money as quickly as possible, either having decided to get married in the near future, or with the date of your wedding approaching and various costs still outstanding.
  • Your credit score is up to scratch, as this is the main factor that will determine your eligibility for an unsecured personal loan.
  • You can comfortably afford the monthly repayments, having considered both your immediate and your long-term financial situation.

Before applying, consult with an independent broker to discuss your eligibility for wedding finance and the various unsecured and secured funding options available.

How to Get a Loan for a Wedding

If you need to borrow money to pay for a wedding, there are a few steps to take before the money hits your account.

Pros and Cons of Wedding Loans

Broker support is essential to ensure you get a good deal on a wedding loan.  Your broker will scour the market in its entirety to find you an appropriate product and will negotiate on your behalf to ensure you get the best possible deal.

In addition, your broker will ensure you are familiar with the basic pros and cons of wedding loans, which are as follows:

Pros

  • Wedding loans can be secured or unsecured. This opens the door to a variety of different types of loans for all applicants, including those with poor credit or no formal proof of income.
  • Interest rates are lower than credit cards.  Interest rates on credit cards can be anything from 0% to more than 25%. With a typical short-term wedding loan, you could be looking at an interest rate of around 5%.
  • Fast access funding available. With specialist products like bridging loans, the money you need could be in your account and ready to use within a few working days.

Cons

  • Additional debt.  By taking out a wedding loan, you will have one more formal debt to contend with when the dust settles.
  • Temptation to overspend. There is also the undeniable temptation to borrow more than you need and more than you can afford to make your wedding as lavish as possible.
  • Restricted lending. Unsecured wedding loans are issued exclusively to borrowers with an excellent credit score and extensive proof of their financial position.

Alternatives to Wedding Loans

Where specialist wedding loans are unavailable or simply not your preferred choice, the following can also be used to cover the costs of a wedding:

Credit Cards

Some credit cards provide new customers with an introductory 0% interest period, which can be great for spreading the costs of larger purchases or investments over a year or so.

Bridging finance

Fast-access bridging loans are ideal where short-term repayment is possible, charged at around 0.5% more a month and with minimal associated borrowing costs.

Home Equity Loan

There is also the option of borrowing against the equity you have tied up in your home in the form of a remortgage, a mortgage extension or a specialist home equity loan.

Before deciding which of the options is best for you, consult with an independent broker for their input and advice. Your broker will also provide the representation you need to ensure you get the best possible deal, whichever product you decide to apply for.

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Increased Mortgage Interest Rates Combined with the Cost of Living Crisis Forces Buyers and Homeowners to Dip into Savings

It’s no secret that times are hard for millions of UK residents, with the cost of living escalating at a speed not seen since the big recession back in 2008 and with the cost of mortgages constantly on the rise, affordability for new buyers is becoming increasingly out of reach with many not having enough savings for a deposit and others struggling to meet their current monthly mortgage obligations.

Cost of Living Crisis

Adding to the misery is the fact that inflation rates are at the highest seen for thirty years pushing monthly outgoings through the roof for the vast majority of the population. Wages are certainly not keeping up with the rapid price increases resulting in many accessing savings just to meet their monthly commitments. With inflation at a thirty year high of 9% and expected to reach 10% by next year, households will need to tighten their belts even further.

And it’s not just inflation that is causing chaos for many, the enormous gas and electricity price hike is a worry for almost every household in the country. This is due to the impending increase in the energy price cap coming in October and the embargo on oil and gas from Russia. Diesel and petrol prices are at the highest ever seen which is having a detrimental effect on drivers and in turn causing further increases in prices, due to the added costs of manufacturing and logistics.

Bank of England Increases the Base Rate for Fourth Time in a Row

Despite increased mortgage interest rates, the property market remains surprisingly buoyant, but experts are predicting a marked slow down over the next year, when house prices are expected to stabilise and with any luck the economy will start to recover, although there is still a lot of uncertainty surrounding this expectation as inflation continues on an upward trajectory.

The main reason for the interest rate hike is that the Bank of England has raised the base rate four consecutive times since December 2021, increasing base rates from 0.1% to 1%. Their reasoning for doing this is to try and tackle the huge increase in inflation. The concept behind this is to discourage people from spending and encourage saving instead.

A Third of Income Needed for Mortgage Repayments

Average monthly mortgage repayments are now approximately a third of monthly income. Annual income, on average, in the UK is currently £31,447. So for example, a home bought for the average price of £276,019, on a 25 year loan period, with a 75% LTV (£69,000 deposit) and a fixed rate at the current average mortgage rate of 1.84%, will equate to monthly repayments of £859.41.

Current figures show homeowners using 32.8% of their monthly wage to meet their repayment obligation which is up 5% since before the Covid pandemic and close to levels seen during the credit crunch of 2008 when the UK was plunged into a crippling recession.

CEO of Octane Capital, Jonathan Samuels, commented: “The cost of living crisis is a current cause of great concern and many homeowners are not only combating the inflated cost of day to day living, but also the monthly cost of their mortgage following a string of interest rate increases.

“At the same time, wage growth has simply failed to keep pace with these rising costs and so the proportion of our income required to cover our monthly mortgage commitments is now substantially higher than it has been for many years.

“Unfortunately, this cost only looks set to increase as we expect to see interest rates increase further throughout the year. The best advice for those currently struggling is to consult a mortgage professional and see if they can swap to a product offering a better rate. For those currently looking to buy, it’s vital to factor in any potential increase and not to borrow beyond your means based on current rates.

“While the current cost of borrowing may still remain fairly favourable, it’s vital you consider what any further increases may mean for your financial stability, as those borrowing right up to their limits initially are sure to struggle further down the line.”

Savers Forced to Access Funds to Survive

It’s not surprising that a huge number of UK residents have been forced to use savings to get through the month particularly in the last year. That is true for those lucky enough to have savings to fall back on, but the financial strain on those who have little to no savings is on the up, with many getting deeper into debt and the forecast for the next twelve months does not look bright.

According to a to report from Yorkshire Building Society, aptly named “Inflation Nation”, 17% of UK households had no savings at all. The report, which surveyed 4000 households, revealed that 39% had withdrawn funds from their savings account with a further 17% taking out over £1,000 to meet their financial obligations.

The report went on to reveal that the vast majority of people were either unable to save anything at all or were saving significantly less than they would typically be able to save.

The report went on to show that, of those surveyed, around 40% predicted increases of between £100 and £500 in monthly bills over the next year, making it even harder if not totally impossible to increase savings.

Government Help for Millions

On the 26of May, Rishi Sunak announced a £15 billion package to help UK households with the escalating energy prices. Poorer households will be eligible for a one off £650 payment to help towards gas and electricity bills with the rest of UK households to receive a £400 discount.

He stated: “We know that other countries in Europe have taken measures to help households with their energy bills, so this is obviously very helpful from an economic perspective, unlike the previous plan that was made available in March.”

“The government’s measures are really quite important because we know that there are a lot of people in this country who don’t have any form of savings.

“If a large proportion of the population starts to reduce their expenditure in other parts of the economy, then I think we could be in a very, very difficult economic situation.”

Although this help is welcome, for many households it will not be nearly enough to keep them out of an impending financial hole over the next twelve months with the cost of living crisis not expected to end any time soon.

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Other Finance News

Energy Efficiency Upgrade Costs a Major Concern for British Households

Research suggests that most UK households are concerned about climate change, and believe that steps need to be taken to safeguard the environment for future generations. A recent study conducted by the Office for National Statistics found that three in four (76%) Brits believe that climate change is a pressing issue that should be prioritised.

However, a separate study conducted by Cornerstone Tax found that a sizeable proportion of homeowners are being discouraged from boosting the energy efficiency of their properties due to the high costs involved. Around 45% of homeowners have investigated the prospect of making their homes more energy efficient but deemed any changes too expensive to go ahead with, without discounts or contributions from the government.

In addition, 22% said that they had taken steps to make their homes more energy-efficient, but were unable to go ahead with their planned upgrades due to planning restrictions.

A Major Source of CO2

With around one-fifth of all CO2 emissions in the UK coming from residential properties, the importance of making collective improvements to household energy efficiency is clear. Consequently, the government recently outlined new legislation that would make it a legal requirement for all homes in the UK to have an EPC rating of C or above by 2035.

Energy efficiency is a priority shared by around 36% of households across the country, according to the report from Cornerstone Tax. But given the potentially high costs of conducting the necessary upgrades and improvements, around a quarter (23%) of those who would like to improve energy efficiency at home have taken no steps to do so.

“It’s clear to me that the government will need to go further in incentivising these types of developments if they wish to see more people carrying them out,” said James Morley, business development director at Cornerstone Tax.

Even so, Mr Morley was keen to point out the potential savings that can be made by conducting energy-efficient improvements to their homes. Examples of which include loft insulation, solid wall insulation, ground source heat pumps and double-glazing, which according to Morley can translate to savings of up to £890 per year in reduced energy costs.

Affordable Funding

Commenting on the findings, group chairman of Cornerstone Tax, David Hannah, told Mortgage Introducer that affirmative action from the government was necessary to steer things in the right direction.

Specifically, he suggested that the government should “offer soft loans to householders in the same way they did to businesses during the pandemic”, enabling homeowners to spread the costs of their energy-efficient upgrades over several years at a lower rate of interest.

“Whilst the current reduced VAT charges on energy efficiency expenditure are welcome, they do not cover a wide enough range of products and are ultimately only a small help to hard pressed families,” he said.

“The net gain of reduced carbon emissions by insulating, allowing double glazing, and other energy efficiency and heat/power self-generation measures vastly outweighs the costs in terms of the environment. Again, the government could assist with medium term, in the region of 10-year soft loans to enable these properties to be brought up to modern energy efficiency standards.”

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