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Mortgages have been in the press recently. The main focus has been the increase in interest rates, causing a headache for many, particularly considering the turbulence following last September’s budget, the continuing war in Ukraine and the cost-of-living crisis.
We expect that rates will rise further, and this means that some ‘deals’ may be withdrawn because of market conditions.
However, despite this economic uncertainty, some lenders are becoming more innovative and there is good news for many demographics.
So, what’s new?
The Help to Buy initiative has helped first time buyers to get on the property ladder with only a 5% deposit since 2013 – but this has now come to an end. With no government proposals to replace this, many first time buyers have been priced out of the market altogether.
Skipton Building Society have launched a 100% LTV product called the ‘Track Record Mortgage’ aimed at those ‘stuck’ in the ‘rent trap’. Only first-time buyers aged 21 or over are eligible and they must be able to evidence 12 months of paid rent and household bills. The monthly mortgage payment must be equal to, or lower than, the rental cost and the maximum loan is £600k.
In addition, Leeds Building Society has partnered with Experian Boost to help applicants demonstrate creditworthiness when applying for a mortgage. This means that applicants can use Netflix and Amazon accounts for credit scoring – useful for those with little or no unsecured liabilities and reflecting ‘modern life’.
It’s great to see new products for first time buyers, though it is worth stressing that these are available for new and existing homes, but not new flats.
The housing stock in the UK is the oldest in Europe, meaning that achieving net zero by 2050 will be a challenge.
Aviva have secured funding from the government to create a specialist lifetime mortgage that will help homeowners fund works to improve the energy efficiency of their home. Whilst the motivation behind this is to see a reduction in the carbon footprint of the UK’s housing stock, this should also make homes more comfortable and reduce energy costs for those in later life.
Following on from the above, there are currently 26 innovative green finance projects (some of these being mortgages) awarded funding to make UK homes more efficient by unlocking cash.
These mortgages reward energy efficient upgrades – not only on bills, but with some mortgage rate cuts for those who make their home ‘greener’. Clydesdale Bank PLC (trading as Virgin Money) are looking to create a product which delivers in the pocket but also makes a positive impact on the environment. It’s clear that ‘green mortgages’ will be on the increase from here.
Watch this space!
Whilst the residential real estate team at Bolt Burdon cannot advise on financial products, they are well placed to assist with the legal procedure of mortgages, re-mortgages and equity release mortgages. With regards to the latter, we are members of the Equity Release Council, which demonstrates our commitment to providing excellence in this work.
In the current economic climate, it’s vital to move fast, if you are looking for a fixed rate – so, it’s also key that you instruct your solicitor early too.
We understand that many borrowers are concerned about the rising rates but be assured that mortgage lenders reaffirmed their support in December 2022 to those struggling to keep up with mortgage payments. In this scenario, contact your lender as soon as possible to make them aware of your situation. If you can, give some thought to how much you can afford to pay, and whether your financial situation is likely to change. It may be possible to take a payment holiday, switch to ‘interest only’ payments temporarily or extend your mortgage term. The sooner that you contact your lender, the sooner you will be able to agree upon a solution which works for you both.
Please get in touch if you need assistance.
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