Property & Mortgage

I S S U E 4 - AU T U M N 2 0 2 1




I S S U E 4 - AU T U M N 2 0 2 1

THE MORTGAGE & PROPERTY M AG A Z I N E LOCATION, LOCATION, LOCATION Deciding where to live: 10 factors to help you choose D O N ’ T W O R R Y, BE HAPPY MORTG AGE OR MARRIAGE ‘GENERATION RENT’ How to reduce stress and anxiety when applying for a mortgage Which is more important – the dream wedding or the dream home? Are you giving serious thought to becoming a buy-to-let landlord? AGENTIS FINANCIAL & MORTGAGE SOLUTIONS LTD T: 01733 367800 36 Thorpe Wood, Peterborough, PE3 6SR W: www.agentisfinancial.co.uk E: info@agentisfinancial.co.uk Your home may be repossessed if you do not keep up the repayments on your home Approval: SOL10016

I S S U E 4 - AU T U M N 2 0 2 1

CONTENTS

Autumn 2021 Mortgage finance 10 Mortgage or marriage Which is more important – the dream wedding or the dream home? 12 Navigating the home-buying process Ways to avoid common firsttime buyer mistakes LOOKING FOR EXPERT MORTGAGE ADVICE? Let us arrange the perfect mortgage for you Whether you’re investing in a buy-to-let property or looking to buy your first home, we can help. Our expert professional mortgage advice will find you the best mortgage deal whether you’re buying a property investment or home. Your dedicated mortgage adviser will learn about your situation and needs before narrowing down your mortgage options. 15 Don’t worry, be happy How to reduce stress and anxiety when applying for a mortgage 16 Positive solutions to negative equity How to get out of it and what options to consider 18 Funding home improvements with equity release Lending options for over-55s could provide the cash you need to invest in your home To find out what you could borrow and what your payments may be, contact us today. O N T H E C OV E R Contact Agentis Financial & Mortgage Solutions Ltd – telephone: 01733 367800 – email: info@agentisfinancial.co.uk Deciding where to live – 10 factors to help you choose YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR HOME The Mortgage & Property Magazine Selling property 20 On the move Planning to move into something bigger, or downsizing 22 Is it best to sell your home before buying? Advantages of completing your sale before you buy 24 Estate agent fees – getting value for money Tips to help you cut the cost of selling your home 03 26 Get moving faster with a guaranteed buyer Avoid the stress of trying to sell your home by part-exchanging it 29 Struggling to sell your property? How to move out and move on

CONTENTS

CONTENTS

CONTENTS Property matters Property investment 56 Younger buyers plan escaping to the country Why urban living lost its appeal during the pandemic 58 Location, location, location Deciding where to live – 10 factors to help you choose 60 Our homes electric All new homes with a dedicated car parking space to be built with an electric chargepoint 62 The art of negotiation Statistics you need to know before haggling down the price of a property 32 Top tips for buying a new-build property Questions you need to ask before buying a new-build house or flat 36 Reassessing your living space 5 home improvement works that could bring the biggest profits 40 Buying your first home Your checklist for all the key stages to get you on the property ladder 44 Older homeowners decide to stay put More over-55s have no plans to downsize 46 Current property market driven by multiple factors Nearly seven in ten homes across Great Britain have found a buyer in the current market 66 How to avoid conveyancing fraud Understand the risks to avoid losing your mortgage deposit 48 Property viewing checklist Everything you must check before making an offer 68 Gazumping: What is it and how can you avoid it? Improve your chances of closing the deal on your dream home 70 Average UK house price £256,000 Impact of rising prices and phasing out of stamp duty holiday 72 Passing on property to your next generation How to avoid overspending on Inheritance Tax and Capital Gains Tax 74 Moving in to your dream home Ready to take that step? 10 things to think about to get you on the property ladder 78 ‘Generation Rent’ Are you giving serious thought to becoming a buy-to-let landlord? 82 HMO investment opportunities The ideal solution for affordable and flexible housing growing demand 86 Investing in property What should I consider before becoming a buy-to-let landlord? 89 Property tax matters Understanding when and how much Capital Gains Tax you’ll be charged 92 Move on up Landlords achieving higher rental yields in 2021 95 Landlords’ seasonal property maintenance check-list Maintaining happy relations with tenants and sound financial sense 52 Stamp Duty Land Tax How much do I have to pay now the holiday has finished? 96 Rental demand returns to cities UK cities seeing increased demand during the second quarter of this year 54 Nurturing your home Feng shui tips to create a peaceful living space 04 The Mortgage & Property Magazine 98 Managing a letting Time to consider using a property management service company? 100 Legal matters Latest regulations for buy-to-let landlords 102 Selling a tenanted property Landlord tips to help guide you through the process 105 Are you ready to become a buy-to-let landlord? 5 reasons to consider the current opportunity for property investment 108 Landlord rights Dealing with troublesome and difficult tenants 110 Looking to rent out your home? Basic requirements you might not have thought about Financial protection 114 112 Growing demand for holiday-let mortgages Restrictions or concerns about travel remain and people feel safer holidaying in the UK How secure is the future of your family home? Cover to continue paying your mortgage and other bills if your income stopped Property glossary 116 Property jargon buster Getting confused by waffly terms and property speak? 05

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W E L C O M E T O T H E M O R T G AG E & P R O P E R T Y M AG A Z I N E

HOW CAN I BUILD MY BUY-TO-LET EMPIRE? Let us find the right property finance to fund your investment portfolio We can help you whether you’re starting or expanding your investment property portfolio. We know a buy-to-let investment can be a big commitment, that’s why our dedicated mortgage advisers will help you consider the costs, responsibilities and risks of becoming a landlord. To find out what you could borrow and what your payments may be, contact us today. Contact Agentis Financial & Mortgage Solutions Ltd – telephone: 01733 367800 – email: info@agentisfinancial.co.uk THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. Welcome WELCOME TO the Autumn 2021 quarterly issue of The Mortgage & Property Magazine from Agentis Financial & Mortgage Solutions Ltd. You want to buy a property but are not sure where? It could be the most important decision you’ll ever have to make. If you get it wrong, you may be unhappy with where you live, and then have to face the costs of moving again. Whether you’re looking for your first home, a fresh new start or planning to find the perfect home where you can spend your retirement years, there’s much more to buying a home than finding a property you like and signing on the dotted line. On page 58 we weigh the factors you need to consider before you commit. Buying a new home, and taking out a mortgage to do that, is a major, long-term financial commitment. If the idea of applying for a mortgage makes you feel anxious, you’re not alone. Financial decisions can cause anxiety for some people, and it’s natural to worry about making a long-term commitment that could affect your future wealth. To put your mind at rest, on page 15 we’ve broken down some of the concerns people commonly have when applying for mortgages and explain how working with a professional mortgage adviser could help. The Netflix reality show Marriage or Mortgage reveals a lot about the emotional aspects of home buying, as couples decide whether to spend their savings on a wedding or a home. Over the years, both the average cost of a wedding and the average deposit required to buy a property have increased. As a result, this has forced some younger couples in the UK to decide which is more important to them — the dream wedding or the dream home? Turn to page 10. So with ‘Generation Rent’ on the rise, is it time you gave serious thought to becoming a buy-to-let landlord? Fundamentally, buying a buy-to-let property works in a very similar way to any residential property. Buying property as an investment has proved to be a successful and lucrative investment decision for some. So if you’re keen to become a buy-to-let landlord and want the best chance of success, on page 78 we provide our top tips on getting started. A complete list of the articles featured inside this issue appears on pages 03, 04 and 05. We hope you enjoy reading this issue and always welcome your feedback. u David Mortell Ce(MAP) Ce(RER), Director YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON MORTGAGE. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR YOUR HOME The Mortgage & Property Magazine 07

W E L C O M E T O T H E M O R T G AG E & P R O P E R T Y M AG A Z I N E

EDITOR-IN-CHIEF

Rachel Garrahan DEPUTY EDITOR Barnaby Thomson ASSOCIATE EDITOR Reuben Archer EDITORIAL LIFESTYLE EDITOR Mollie Hammond EDITORIAL CONTRIBUTORS Edwin Clement, Theodore Jasper, Ella Crosbie, Jack Reid, Vicki Reeve, Trixie D’Arcy, Lucy Bowen, Emily Hall, Charlotte Roberts, Claudia Lysander, Matt Willis, Matt Woolf, Jan Conrad, Tobias Spencer, Charles Magnus, Felix Wong ART CREATIVE OPERATIONS DIRECTOR Josh Sims SENIOR ART EDITOR Camilla Cecily ASSISTANT ART EDITOR Leo Barrett PICTURE EDITOR Matilda Finn STRATEGY AND PLANNING CONTENT PLANNING EDITOR Poppy Willis CONTENT EDITOR Arabella Berkeley PRODUCTION PRODUCTION DIRECTOR Janet Noone PRODUCTION CONTROLLER Kathryn Chen DIGITAL PROJECT MANAGER Neil Joshi PUBLISHING SENIOR ACCOUNT DIRECTOR Francis Clarence ACCOUNT MANAGER Jill Stone GOLDMINE MEDIA LIMITED Floor 2, The Pinnacle, 170 Midsummer Boulevard, Milton Keynes, Buckinghamshire, MK9 1BP ©2021 Goldmine Media Limited T: 0845 686 0055 E: info@goldminemedia.co.uk The Mortgage & Property Magazine is published quarterly for Agentis Financial & Mortgage Solutions Ltd by Goldmine Media Limited. All enquiries should be addressed to The Editor, The Mortgage & Property Magazine, c/o Goldmine Media Limited, Floor 2, The Pinnacle, 170 Midsummer Boulevard, Milton Keynes, Buckinghamshire, MK9 1BP. Please note that The Mortgage & Property Magazine does not accept unsolicited contributions. Editorial opinions expressed in this magazine are not necessarily those of Goldmine Media and Agentis Financial & Mortgage Solutions Ltd does not accept responsibility for the advertising content. Offers and promotions may have limited availability. TO DISCOVER MORE, VISIT THE Agentis Financial & Mortgage Solutions Ltd website: WWW.AGENTISFINANCIAL.CO.UK All Rights Reserved. The content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. Articles should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, TIME TO SWITCH TO A NEW, CHEAPER MORTGAGE DEAL? Whatever your mortgage needs, we’ll explore the right options for you You could save money by moving your mortgage. Let our dedicated mortgage advisers know what’s important to you and we’ll take all the confusion out of finding a new mortgage. You’ll also get access to exclusive rates from some of the UK's biggest lenders. To find out what you could borrow and what your payments may be, contact us today. there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. AS WITH Contact Agentis Financial & Mortgage Solutions Ltd – telephone: 01733 367800 – email: info@agentisfinancial.co.uk ALL INSURANCE POLICIES CONDITIONS AND EXCLUSIONS MAY APPLY. YOUR BUY-TO-LET PROPERTY MAY BE REPOSSESSED OR A RECEIVER OF RENT APPOINTED IF YOU DO NOT KEEP UP PAYMENTS ON YOUR MORTGAGE. MOST BUY-TO-LET MORTGAGES ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FCA). EQUITY RELEASE MAY INVOLVE A HOME REVERSION PLAN OR LIFETIME MORTGAGE WHICH IS SECURED AGAINST YOUR PROPERTY. TO UNDERSTAND THE FEATURES AND RISKS ASK FOR A PERSONALISED ILLUSTRATION. EQUITY RELEASE REQUIRES PAYING OFF ANY EXISTING MORTGAGE. ANY MONEY RELEASED, PLUS ACCRUED INTEREST, TO BE REPAID UPON DEATH OR MOVING INTO LONG-TERM CARE. EQUITY RELEASE WILL AFFECT POTENTIAL INHERITANCE AND YOUR ENTITLEMENT TO MEANS-TESTED BENEFITS BOTH NOW AND IN THE FUTURE. 08 THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON MORTGAGE. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR YOUR HOME

EDITOR-IN-CHIEF

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E OVER THE YEARS, both the average cost of a wedding and the average deposit required to buy a property have increased. As a result, this has forced some younger couples in the UK to decide which is more important to them — the dream wedding or the dream home? IS REALITY TV NOW REFLECTING ACTUAL REALITY? The Netflix reality show Marriage or Mortgage reveals a lot about the emotional aspects of home buying, as couples decide whether to spend their savings on a wedding or a home. In the popular show each episode focuses on one couple that are shown properties to fit their budgets while a wedding planner takes them on a tour of venues, trying on wedding dresses and tasting food for hypothetical receptions. Low interest rates, stagnant wages and high rents have made saving hard work for many, and some younger people are now finding that they cannot afford to get married and jump on the property ladder at the same time. The average wedding in the UK in 2021 and 2022 will cost a little over £20,000[1] and that only includes the costs of the day itself and not the cost of the honeymoon or other associated events like a bridal shower. COST-CONSCIOUS ATTITUDE Since the average price of a property in England is £256,000[2], a 10% deposit (which is typically the minimum you would need to save) would be £25,600, but first-time buyer deposits are often much higher. Plus, there are various other costs involved, including mortgage arrangement fees and survey fees. Even if you approach both with a costconscious attitude, it would be difficult to save for a deposit and get married at a combined cost of less than £50,000. MORTGAGE OR MARRIAGE Which is more important — the dream wedding or the dream home? 10 IMPORTANT LIFE GOAL For couples who each earn around the average UK salary, saving that amount could take between 10 to 20 years. So, many people in their 20s and 30s are forced to choose whether to The Mortgage & Property Magazine 11 postpone the big day or wait until afterwards to save for a home. Recent research[3] highlighted that 12% of UK respondents believe that taking out a mortgage was more important than getting married. And, while 76% of people think that buying a home is an important life goal, slightly fewer (64%) think that getting married is an important life goal. MEANINGFUL RITE OF PASSAGE Although no one can predict how the housing market will go in the future, the difference between spending on a wedding and spending on a home is tangible. In one case you get a beautiful day and a meaningful rite of passage, but in the other you get real property you can live in for years. A home of your own is also an investment that can pay off down the road and one that should see its value grow. Saving towards a common goal or goals, creating a monthly budget, making joint decisions and dreaming about the future are critical building blocks for a lifetime of partnership. These skills will serve you well in almost any scenario, whether staged for TV or happily ever after. u >> TIME TO GET MOVING WITH A MORTGAGE THAT WORKS FOR YOU? << We can help get you moving with a mortgage that works for you, so you can expect a reliable, friendly and professional service. Contact Agentis Financial & Mortgage Solutions Ltd – telephone 01733 367800 – email info@agentisfinancial.co.uk. Source data: [1] https://www.compareweddinginsurance.org.uk/ blog/average-cost-uk-wedding.php [2] https://www.ons.gov.uk/economy/ inflationandpriceindices/bulletins/housepriceindex/ july2021 [3] https://www.whatmortgage.co.uk/news/whybrits-are-prioritising-a-mortgage-over-marriage/

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E BUYING A NEW home is an exciting time, but it can also be a little intimidating if you don’t have the right knowledge and support to help you through the process. When you’re navigating the homebuying process for the first time, there are bound to be some obstacles to overcome. But many of the most common first-time buyer mistakes can be avoided if you are aware of them. Here are four major pitfalls and how to evade them. Navigating the home-buying process AVOID MORTGAGE REJECTION A common mistake is applying for a mortgage without first checking your credit report. This could lead to your application being rejected for issues that are easy to fix. You can obtain your credit report from a service such as Experian or Equifax. If there are incorrect items on your credit report, you can ask for them to be removed. If there are items that are correct, but not representative of your current financial situation (for example, an unpaid bill during a previous period of unemployment), you can also ask to add a notice of correction. You are permitted to submit a short explanation of up to 200 words. Ways to avoid common first-time buyer mistakes AVOID GOING OVER BUDGET Often, first-time buyers have saved enough for their deposit, but haven’t considered all the extra costs which put a strain on their budget. These can include: • Stamp Duty Land Tax (SDLT), if you’re buying a property worth more than £300,000 in England or Northern Ireland 12 The Mortgage & Property Magazine 13

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E Don’t worry, be happy How to reduce stress and anxiety when applying for a mortgage “Many first-time buyers try to manage the whole process themselves, even though expert advice is easily available.” • • • • If you’re buying a property in Scotland, you will pay Land and Buildings Transaction Tax (LBTT) and in Wales Land Transaction Tax (LTT) instead of Stamp Duty Mortgage arrangement fees, which can run into thousands of pounds Solicitor or conveyancing fees, to pay to manage the transaction for you Insurance, including buildings insurance (which is essential to secure a mortgage) and other types of insurance to ensure you don’t lose your home if your financial situation changes These extra costs could potentially add up to around £15,000, so you might need to save up a little longer before you’re ready to buy. AVOID COSTLY PROPERTY PROBLEMS As a first-time buyer, you might not be aware of all the things that can go wrong with a home, and they’re not always visible. For example: • An old boiler may need to be replaced soon after you buy the property, costing thousands • • Poor insulation in the roof and walls can add to your energy bills in winter Missing roof tiles can lead to leaks and potentially expensive water damage It can help to take someone with more experience along to viewings, but they might also easily miss some issues. A professional survey, though it will cost several hundred pounds to arrange, will identify any potential issues and could save you a lot of money over the long term. AVOID GOING THROUGH IT ALONE Many first-time buyers try to manage the whole process themselves, even though expert advice is easily available. Obtaining expert financial advice can help you to understand how much you can realistically afford to borrow and repay, so you don’t overstretch yourself. A professional mortgage broker can help you create a plan to save a bigger deposit, or a budget so that you can afford all of your monthly mortgage repayments while continuing to save for the future. They will help you find an appropriate mortgage deal to minimise your monthly repayments and can give you access to a 14 wider range of products than if you were to research the market yourself and look at a lender’s offerings. It’s also likely they will be connected to a professional network within the sector, and they may even be able to offer products that aren’t available to the general public. You will also be guided through the process of applying for a mortgage to avoid time-wasting rejections, get help with paperwork and you won’t have to handle the application. In many cases, first-time buyers will easily recoup the cost of this expert mortgage advice in the savings it brings them. u >> FIND THE RIGHT MORTGAGE FOR YOU << We've got everything you need to make finding a mortgage straightforward. For further information about how we can help, contact Agentis Financial & Mortgage Solutions Ltd – telephone 01733 367800 – email info@ agentisfinancial.co.uk. BUYING A NEW home, and taking out a mortgage to do that, is a major, long-term financial commitment. If the idea of applying for a mortgage makes you feel anxious, you’re not alone. Financial decisions can cause anxiety for some people, and it’s natural to worry about making a long-term commitment that could affect your future wealth. To put your mind at rest, we’ve broken down some of the concerns people commonly have when applying for mortgages and explain how working with a professional mortgage adviser could help. GETTING A MORTGAGE IF YOU’RE SELF-EMPLOYED Many people may mistakenly believe that they’re unable to get a mortgage because they are self-employed. This factor alone is not typically a reason that your mortgage application will be refused. However, you might find it a little more difficult to meet a mortgage provider’s affordability requirements. You’ll need to demonstrate your self-employed income for two or more years, and you may have to provide additional paperwork compared The Mortgage & Property Magazine with salaried employees. A professional mortgage adviser can advise you on how much you can afford to borrow and simplify the application process. GETTING A MORTGAGE WITH A POOR CREDIT HISTORY Some people may worry that their credit history will make it impossible to get a mortgage. Your credit history indeed plays a role in the approval process, along with your income and other details of your financial circumstances, but your chances of success might be better than you think. In many cases, negative items are removed from your credit report after seven years, so if your financial problems are long ago, you may not need to worry. If you have recent issues, you might not have access to every mortgage on the market, but a professional mortgage adviser can advise on which lenders will work with you. UNDERSTANDING MORTGAGE RATES A common cause of concern when applying for mortgages is that it’s difficult to understand and compare how much you’ll pay with different products. Mortgages advertised at low fees can have hidden costs, or the rate can rise significantly after only a short period. Sometimes it’s worth opting for a higher rate if it’s guaranteed not to rise. To avoid unexpected expenses and get the right deal, you should read through all of the small print and do some calculations to compare the total costs of different mortgages. Your professional mortgage adviser can go through this with you. UNDERSTANDING MORTGAGE JARGON Confusing language can add significantly to the stress involved in applying for a mortgage. If you’re not familiar with terms like equity, gross, capital or offset, then the product guides and terms and conditions can be almost impossible to read. A professional mortgage adviser can explain things to you in simple terms. WORKING WITH A PROFESSIONAL MORTGAGE ADVISER Many mortgage anxieties can be mitigated by working with an experienced professional mortgage adviser. They can take 15 the stress out of choosing the best rate and offer advice on which mortgage is right for your circumstances. They may also have access to a wide range of mortgages, some of which might not otherwise be available to you. With greater access to a wider market, your professional mortgage adviser may be more likely to find a mortgage that’s right for your circumstances, even if you have a poor credit history or you’re self-employed. u >> LOOKING TO GET MORTGAGE ADVICE? << Using an experienced professional mortgage adviser not only makes sound financial sense, but can provide you with all sorts of vital help. To discuss how we could help you through the mortgage process, speak to Agentis Financial & Mortgage Solutions Ltd – telephone 01733 367800 – email info@ agentisfinancial.co.uk.

M O R T G AG E F I N AN C E

M O R T G AG E F I N AN C E

POSITIVE SOLUTIONS TO NEGATIVE EQUITY How to get out of it and what options to consider M O R T G AG E F I N AN C E MANY HOMEOWNERS fear falling into negative equity and the financial difficulties this can create. However, it is not always the disaster it appears to be, and the solution is often straightforward. We’ve provided answers to some common questions to help you understand and manage the situation. WHAT IS NEGATIVE EQUITY? If you’re in negative equity, it means that the current value of your home is less than the amount you owe to your mortgage provider. For example, if you bought a home worth £200,000, borrowing 90% of the value (£180,000) from a mortgage provider, if the value of your home fell quickly to £175,000, you would be in £5,000 negative equity. HOW DOES NEGATIVE EQUITY HAPPEN? Negative equity is usually the result of a sharp fall in the value of a property very soon after it was purchased. This can be because of a slump in the housing market. Falling house prices are typically the most common cause of negative equity. Other reasons could be if someone has taken a secured loan against their home in addition to the mortgage, for example, perhaps they borrowed an additional sum to consolidate other borrowing. If someone has an interestonly mortgage, the outstanding balance doesn’t reduce as they make payments. This puts them at a greater risk of negative equity if their property value falls. If mortgage payment has been missed, then the outstanding balance could increase to a level higher than the property value. Ultimately, negative equity can often be caused by a combination of these issues. HOW DO YOU KNOW IF YOU’RE IN NEGATIVE EQUITY? so this may not always be an appropriate option. If any of the above applies to you, you can find out if you’re in negative equity by asking for: • The outstanding balance you owe your mortgage provider • A property valuation from a local estate agent INVEST IN HOME IMPROVEMENTS In some cases, investing in an extension, new kitchen or garage conversion may increase the value of your home to above the outstanding balance on your mortgage. However, the cost of the home improvements could end up being more than the added value to your home. If the outstanding balance is higher than the valuation, you’re in negative equity. WHAT CAN YOU DO ABOUT NEGATIVE EQUITY? You have several options to help you get out of negative equity. You can: MAKE AN EARLY REPAYMENT ON YOUR MORTGAGE This can reduce your outstanding balance to below the property value. Mortgage rates are often higher than savings rates and so you could use any disposable funds you may have to repay part of your home loan. However, this could be subject to a charge if you make an early repayment, WAIT FOR THE HOUSING MARKET TO IMPROVE Negative equity is only really a problem if you want to sell your property, as there will be a shortfall in how much you need to repay your mortgage provider. Property market downturns are usually temporary so, if you can, simply wait to sell until house prices have risen and you’re no longer in negative equity. If you cannot wait to sell your home, you can discuss this with your professional mortgage adviser who can approach your mortgage provider to see if they will permit you to port the mortgage to your new home instead of repaying “If you’re in negative equity, it means that the current value of your home is less than the amount you owe to your mortgage provider.” 16 The Mortgage & Property Magazine 17 it. Alternatively, you could consider letting out your current home instead of selling it, to allow time for the market to improve. REDUCING THE RISK OF NEGATIVE EQUITY If you are in negative equity and you want to sell your home, then your options will depend on how flexible your mortgage lender is about transferring your mortgage to a new property. Some mortgage lenders offer specialist products for people with negative equity to move home. The best way to reduce the risk of negative equity is to put down a significant deposit. This should perhaps be above 10% or 15% of the property’s purchase price. This means you will be borrowing less through a mortgage. If property prices fall, the chance of your property’s valuation falling below the balance on your mortgage is reduced. u >> GUIDING YOU THROUGH THE MORTGAGE MAZE << We understand that everyone’s situation is different. If you’re looking to apply for a mortgage our experts can guide you through the mortgage maze. To talk to us about your requirements, please contact Agentis Financial & Mortgage Solutions Ltd – telephone 01733 367800 – email info@agentisfinancial. co.uk.

M O R T G AG E F I N AN C E



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