The chancellor is expected to unveil a mortgage guarantee scheme that aims to help first-time buyers get their foot on the property ladder in next week’s budget. Rishi Sunak is attempting to incentivise lenders to provide mortgages to first-time buyers, along with current homeowners, with deposits as low as 5% on properties worth up to £600,000. The government will offer lenders the guarantee they need to provide mortgages covering the remaining 95%, with details set to be unveiled on Wednesday. The scheme will be subject to standard affordability checks, and is expected to launch in April. Low-deposit mortgages have virtually disappeared due to the economic impact of the coronavirus pandemic, the Treasury said as Boris Johnson announced he wanted “generation rent to become generation buy”. “Young people shouldn’t feel excluded from the chance of owning their own home and now it will be easier than ever to get on to the property ladder,” the prime minister said. Sunak’s mortgage guarantee scheme is based on the help-to-buy mortgage programme introduced by David Cameron and George Osborne, which ran until June 2017. The scheme was an attempt to kickstart the housing market following the 2008 financial crisis, and was estimated to have helped sell more than 100,000 homes in the UK. Sunak said: “Owning a home is a dream for millions across the UK and we want to help as many people as possible. “Saving up for a big deposit can often be difficult, and the pandemic has meant there are fewer low deposit mortgages available.” However, in an interview with the Financial Times, the chancellor said there was a need to “level with people” over the state of the UK economy, which was under enormous strain. “There are some people who think you can ignore the problem. And worse, there are some people who think there isn’t a problem at all. I don’t think that,” he said. “We now have far more debt than we used to and because interest rates … at least a month or two ago were exceptionally low, that means we remain exposed to changes in those rates.” In an attempt to support the UK’s economic recovery from the pandemic, Sunak has also announced measures to tackle unemployment as the furlough scheme comes to an end, including new funding and cash incentives for apprenticeship schemes. The temporary £20-a-week rise in universal credit payments is expected to be
Read more →Portfolio mortgages can simplify finances for overseas and expat landlords holding property in the United Kingdom, as that’s what they’re primarily designed for. With recent news regarding tax and stamp duty laws, overseas landlords are forever looking at methods to increase their investment income. Further changes in 2020 will lower the amount of tax relief a landlord can claim. For instance, overseas landlords won’t be able to offset interest as an expense like previous years. For landlords with multiple properties, or landlords aiming to grow their portfolios, a portfolio mortgage could be something to consider. Placing an entire portfolio under one mortgage can be beneficial, especially with a large number of properties. What is a portfolio mortgage? A portfolio mortgage allows overseas and expat landlords to place all of their buy to let mortgages under one mortgage. Portfolio finance is treated as a single mortgage account. Rather than having separate buy to let mortgage lenders for each property, the entire portfolio is undertaken by one portfolio mortgage lender, hence one monthly payment. The property portfolio is registered as a limited company and finances and expenditures are treated exactly the same as any other business model. Property portfolio financing is a term used for when a landlord has at least four properties. Technically, a portfolio could consist of two properties, but from a lender’s perspective, they would usually class four properties to be the bare minimum for a portfolio. There is no limit to how many properties landlords can hold but some lenders do have their own internal restrictions. If a landlord had ten properties on separate mortgages, then there would be ten monthly outgoings to multiple lenders. A portfolio mortgage allows landlords to solely focus on a single mortgage payment each month to a single lender. One monthly mortgage payment is perhaps easier to manage in comparison to multiple mortgage payments across the month. Lenders introduced portfolio mortgages to allow landlords to hold and manage their multiple buy to let mortgages with greater clarity. Rather than having multiple mortgage statements, portfolio mortgages allow for one monthly statement and one payment, simple. Landlords with portfolios don’t have to have a portfolio mortgage and it is entirely optional. Advantages of having a portfolio mortgage for overseas landlords All mortgages types will usually have positives and negatives. It’s difficult to explain whether or not a certain mortgage type will be advantageous to you without
Read more →In 2018, the average UK tenant spent 52% of their disposable income on rent and with rental payments so high it makes saving for a deposit to purchase a flat or home very difficult. There is however a scheme that provides an option for those who wish to own a property but do not have a large disposable income or savings. The Shared Ownership mortgage scheme allows applicants who are not able to currently afford to buy a property with the option to ‘purchase’ a share of a property whilst paying rent on the remainder. To be eligible for this scheme your household income must be £60,000 or less (£90,000 or less in London). Also, you need to be approved by the Housing Association and often you can only buy in the borough that you currently live in. An Example You buy a 25% share in a £500,000 property for £125,000. Your deposit is linked to the value of your share of the property and would normally be 5%, so £6,250 in this example. You will then pay a mortgage on the amount of the property you own yourself along with rent on the remaining share, allowing you to build up some equity as the mortgage decreases and value (hopefully) increases. You also have the option to staircase and purchase a greater share of the property overtime, allowing you to make larger contributions towards the mortgage as opposed to the rent and to own more of the property. The rental and mortgage payments combined will generally be less than what you would pay for the full rent on the open market, and you will also have access to the equity that you have built up when you come to sell or remortgage. The disadvantages of using this scheme is that you will generally be paying a maintenance or service charge on the full 100% of the property as opposed to just the share you own and these costs can be quite high. Also, since you are a tenant in law, you could lose the property if you are unable to keep up with rental payments. Not all lenders offer shared ownership mortgages, so it is a restricted market but you have to factor in the service charge and rent into your affordability – so if you have debt or childcare costs you might struggle to find a mortgage. The Shared Ownership scheme is a great
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A UK new-build property Should you buy a UK new build property or an existing property already built? You often see news in the press moaning that not enough new homes are being built in the UK and that there’s a vast shortage of housing. In fact, government figures show 162,180 were built last year (2018). That isn’t enough to fix the housing shortage but it does mean most of us will come across a brand-new property when we are out house hunting. Here are some pros and cons of buying a brand sparkly UK investment property new home straight from the developer against an existing home already built and for sale on the market. Pro’s of buying a new build property in the UK Unpack and go – A new home is a blank canvas with fresh tiling, paintwork, kitchens and bathrooms. This means there should be very little, if anything, you need to do to it. You can simply unpack your belongings and start enjoying your new home. A boost to buying – For many first-time buyers a new build home is the only way they can get onto the property ladder. That’s because schemes such as Help-to-Buy and Shared Ownership are only available on the purchase of a new home. Incentives – Some developers will throw in extras in order to get a sale. This could mean paying your stamp duty or covering the cost of carpets. Modern living – Top-spec new builds have all the latest technology. Many offer ‘smart home’ features and open-plan layouts. Some also have shared services such as a gym or concierge. Design a home – Buy off-plan and you may be able have a say in the design. The builder may let you choose fittings and perhaps even the layout. Low bills – New build homes have to comply with the latest building regulations. This means they are far more energy efficient than older properties. Data from Energy Performance Certificates shows over 80% of new homes have the highest A or B ratings. That compares to just 2.2% of existing properties. Chain-free – As you’ll be the first owner you won’t have a chain of buyers above you. This can take away one of the main stresses of buying a home. Warranties – Most new builds come with a warranty, which you don’t get with an existing home. But, a warranty
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Getting A UK Mortgage With Foreign Income If you are a British expat living and working overseas and you are paid in a non sterling currency, you may experience difficulty securing a mortgage on a UK investment property property or remortgaging with an existing lender. The positive news is that there are lender options for UK expats and foreign nationals when it comes to remortgaging or purchasing property in the UK. It is possible to get a UK mortgage from abroad using foreign currency or a combination of Sterling and a foreign currency, typically US Dollar or Euro. Foreign currency mortgages are available Despite the seemingly overly restrictive regulations and the influence they have over traditional lenders’ appetite for lending to those with foreign currency income, it is still possible to access the funds you need to purchase a property in the UK. The lenders who are willing to provide mortgage of this type often work through specialist brokers (intermediaries). Therefore, if you require a UK expat mortgage or UK refinance, then it is advisable to contact a specialist expat and foreign national mortgage broker like Premier Expat Mortgages. Proof of income There are still lenders that are prepared to provide UK mortgages to those paid in foreign currency. One of the biggest hurdles that you will face in the application process for a foreign currency UK mortgage is providing proof of your income. Documents Required The documents that you have to provide will vary from lender to lender, however as a rule of thumb you should expect to require: Your employer’s details A number of months’ payslips Information regarding the property you want to buy Personal details including proof of address A letter from an accountant and tax returns (if you are self employed) Documents in foreign languages The majority of lenders we work with will require the documents that you have to be written in English. However, there are some lenders that are willing to accept documents that are in a foreign language. Examples of this is if we use a Chinese bank to secure your mortgage and the client lives and works in China. The lender will have staff on hand that can read Chinese and so there will not be a need for the documents to be translated. In the event that your documents are in a foreign language, you will have to have them translated
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What is life insurance? Life insurance can pay your dependents money as a lump sum or as regular payments if you die early whilst you are working and in employment. It’s designed to provide you with the reassurance that your dependents will be looked after if you’re no longer there to provide for them. The amount of money paid out depends on the level of cover you buy. You decide how it is paid out and whether it will cover specific payments, such as mortgage or rent. You may need to think about whether receiving a payout will affect any means tested benefits your dependents might otherwise be eligible for. There are two main types of life insurance: Term life insurance policies: run for a fixed period of time (known as the ‘term’ of your policy) – such as 5, 10 or 25 years. Some policies can run longer upon request from your life insurance company. These kinds of policies only pay out if you die during the policy. There’s no lump sum payable at the end of the policy term. A whole-of-life insurance policy: will pay out no matter when you die, as long as you keep up with your premium payments. What isn’t covered with life insurance? Life insurance usually only covers death – if you can’t provide for your family because of illness or disability, you won’t be covered. Some life insurance policies provide a terminal benefit, although these are not automatically granted. A terminal benefit will pay out on diagnosis of a terminal illness. Check the terms and conditions of your policy to see if you’re covered. Most policies have some exclusions (things they don’t cover). For example, they might not pay out if you die due to drug or alcohol abuse, and you normally have to pay extra to be covered when you take part in risky sports. If you have a serious health problem when you take out the policy, your insurance might exclude any cause of death related to that illness. You can buy other insurance products for these issues, which cover: long-term illness critical illness cover, or total and permanent disability. Do you need life insurance? If you have: dependants, e.g. school age children a partner who relies on your income, or a family living in a house with a mortgage that you pay – a life insurance policy can provide for
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Why Invest in Property in the UK? Why Should Overseas Investors Invest In UK Property? Bricks and mortar have long been seen as a prudent way to invest with the phrase ‘an Englishman’s home is his castle’ revealing just how deeply entrenched in the British psyche investment property is. The UK investment property business is a financially rewarding and exciting business which can produce great rewards. It can produce a consistent income, even once you have retired. Historically, property prices have been on a strong upward trend since the 1970’s despite some volatility during the recession and credit crunch . New research has revealed that houses prices have grown faster in the UK than any other Europeans country. In fact, since 1988 house prices have gone up by a staggering 333%. This represents an average rise of 12.3% per year. Many home owners have benefited from the rising housing market and have seen their property increasing in value over the years. No wonder property investment is now seen by many as the best way to provide long term financial security. Why should you invest in property NOW? 1. House prices will carry on increasing The UK still has a serious shortage of housing caused by a number of social and demographic factors. Unlike other European countries, our population is expanding significantly and it is predicted to reach 70 millions by 2020 compared to 63.7 millions today. More people living in the UK means that the demand for housing will carry on increasing therefore driving up the price of property for the foreseeable future. According to the Office of National Statistics there will be an annual shortfall of housing in the UK of over 100,000 properties each year for the next decade. This could mean a 1 million housing shortfall by 2025 if current trends continue. 2. High rental demand, high rental returns. A number of factors have combined to push up rental demand including an increase in immigration, more people living alone and rising house prices stopping first time buyer onto the ladder. This is excellent news for landlords who are finding that their Buy to Let properties are being let extremely quickly while their rental income keeps increasing. 3. Low interest rates Interest rates have been at an all time low for 6 years making borrowing increasingly cheaper. With mortgage payments currently at their lowest, and ever increasing monthly
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What is a secured loan? A secured loan requires you to pledge an asset, such as your home, as collateral for the secured loan. In the event of missing a payment or defaulting on the loan, your bank or lender can then collect the collateral and repossess the property as a matter of last resort . This type of loan generally has a lower interest rate because the bank has less risk since it can easily collect the collateral if you default on payments. On the positive side, a secured loan can be a good way to build credit if you go through a reputable lender like a mainstream high street bank. Types of Secured Loans Mortgages are secured because your home acts as collateral for the loan. If you miss payments, you can go into forfeiture and lose your home. Car loans are also secured loans. Similar to a mortgage, the car itself is asset for the loan. If you default on payments, the car can then be repossessed. Secured credit cards are another type of secured loan. The bank will usually require you to make a deposit against the card’s limit, which guarantees the loan. Banks will do this for customers who are trying to build their credit history, or for those trying to improve bad credit. The Good: Benefits of Secured Loans Generally, secured loans are meant for those who have been denied unsecured loans. When used correctly, they can help build your credit score and credit history so that you can approach high street lenders again. Banks also like them because there is less risk involved. Lower interest rates are another advantage of choosing a secured loan. When choosing a secured loan, you should carefully consider what you will use as collateral. In addition, you should ensure that you are able to make payments in full and in a timely fashion, as not to be faced with losing your asset. As mentioned, a secured loan is a great way to build your credit. However, it is important to make sure you pay everything on time so that you can see a difference in your score. The Bad: Beware of Losing Your Collateral The danger of a secured loan is that you may lose whatever you set up as collateral if you fail to make your payments on time. Also, taking on too much debt may make it difficultRead more →
Weak Pound Fuels Property Investment The continued weakening of the Sterling Pound is creating massive buying opportunities but most of these are from overseas property investors mainly based in Asia. Right after the Brexit vote, the value of the pound significantly plummeted and most overseas investors snatched this opportunity to secure properties in Britain to make significant investment savings. Since 2018, as much as 57 percent of homes located in the prime central London area were bought by foreign investors according to the data provided by Hamptons International. Similarly, EU investors were among the largest group of foreign buyers investing in the said area. EU investors bought as much as 19 percent of properties in the second half of 2018, up from 10 percent during the same period in 2017. Overseas investors now own as much as 36 percent of properties in the Greater London area. In the past year alone, foreign investors from India rose by 3 percent while international buyers from Hong Kong and Russia increased by one percent. This increase in the number of overseas investors was also due to a significant drop in buy-to-let investors. The weak value of the pound has made it much more affordable for overseas investors to purchase UK properties as a form of investment. A property which used to cost an EU investor approximately £1 million would be cheaper by at least £124,000 or more in the years to come as pound value continue to depreciate. Prior to the 2016 referendum, a Sterling pound was worth US$1.50. It has depreciated to as low as US$1.24. After the no-deal Brexit announcement, it dipped 14% more to as low as US$1.10. Hong Kong investors believe Brexit and the weak pound is a buying opportunity. This is following a drop in London property prices in the first quarter of 2019. Foreign investors will continue buying properties in UK major cities such as Oxford, Cambridge, Edinburgh, London, and Birmingham since it will be easy and pretty convenient for most investors. Investors Buying More Student Flats The UK may have fewer students but this does not stop foreign investors in buying students flats. In Plymouth, one block of student flats is now owned by Middle Eastern companies following a multi-million-pound deal. A group of Qatari investors bought a Coombestone House block and are looking for more property investments in the city. Similarly, a Singaporean company also paid £180million toRead more →
Weak Pound Fuels Rich Foreign Investors’ Rush To Buy Student Flats Student numbers may be declining but foreign investors are lining up to buy Plymouth’s student flats with one block already being snapped up by a Middle Eastern consortium in a multi-million pound deal. The Coombestone House block, in Hastings Street, was bought by Qatari investors, according to industry insiders, earlier this year and other investors from the oil-rich nation are investigating opportunities in the city. Meanwhile a company from Singapore paid £180million for five huge Plymouth student apartment blocks which were offloaded by Unite. And two other blocks are said to have been gobbled up for “more than £1million” according to industry sources. Other properties are owned by businesses from Malaysia and South Africa, among others, and delegations from Kuwait, Israel, Spain and China are sniffing around the city. Nationally wealth funds and investors are snaffling property left, right and centre, despite Brexit uncertainty and global trade wars. But the reason for this activity is likely to be Brexit related – a huge decline in asset prices since the referendum vote. Sterling devaluation has made properties throughout the UK, including Plymouth, an attractive proposition. Henry Hutchins, chief executive of Clever Student Lets, the South West’s biggest student lettings firm, said properties are now changing hands at a 20% discount on a few years ago. Qatar is leading the way, having invested £3billion in the UK, and plans to splash another £2billion. Mr Hutchins said the Qataris nabbed Coombestone, a four-storey, 60-bedroom block, for “a few million”. Plymouth-based Clever Student Lets, the largest single office student accommodation firm in the UK, advises investors looking to put cash into bricks and mortar, whether new builds or older converted properties, and is involved in brokering deals. “We are seeing hardly any investment from UK companies,” Mr Hutchins said. “But we are seeing serious interest from Kuwait and Qatar, and others in the mid east. Every deal we have at the moment is foreign.” Mr Hutchins said his firm had been in talks with companies from Spain, Hong Kong and Israel in 2019, and clients from Malaysia had been scouring the city for opportunities. He added: “We advise and broker deals, they come to see what is available. The Qataris are still looking.” He said potential investors include high-wealth individuals, companies, pension funds and bankers and said: “It’s surprising. We get inquiries fromRead more →
