Stamp duty holiday extended and 95% mortgages now available

As a result of the pandemic there have been very few low deposit mortgages available. If you, like many, would like to get onto the property ladder, or move home, but have been struggling to source the deposit funds needed, then help could now be on hand.

Today (3 March 2021) the Government announced during the Budget a new scheme that 95% mortgages are now available for first time buyers and current homeowners to buy properties up to £600,000 with just a 5% deposit.

The Stamp Duty holiday has also been extended until the end of June for properties up to the value of £500,000, which could save you thousands of pounds – and provide a much—needed financial relief.

The Government’s new mortgage guarantee scheme is set to launch in April and is there to help if you’ve been unable to secure and mortgage due to lenders asking for such large – and unreachable – deposits.

If you want to move home, but currently feel like it’s an unreasonable pipedream, then the Government’s new mortgage guarantee scheme could provide you with light at the end of tunnel:

How much could you borrow?

Ever wondered borrow?How much can you Find out nowHouse £0£100£1,100£10,000£50,000£100,000£125,000House £125,000£0£0£5,000£10,000£30,000IncomeMortgage £105,000Deposit£0£20,000£10,000£5,000You could borrow between£105,000 £135,000to

Wondering how much you could potentially borrow and how much a mortgage might cost you?*

Use our free interactive mortgage form to tell you.

Our mortgage advisors will then speak to you in more detail for a free, no obligation mortgage quote.

Who is the Government’s mortgage guarantee scheme for?

The Government mortgage guarantee scheme is for people and couples of any age who want to buy their first home or move but cannot afford to save up a large deposit to secure a mortgage.

What type of property can I buy under the new Government scheme?

You can buy any type of property, such as house, flat or bungalow, as long as it will be your main home – and not one to rent out or act as a second home for example. The scheme also isn’t restricted to new-builds, so you can choose and buy the property of your dreams, whether it’s old or new.

How do I apply for a mortgage under the new scheme?

These 95% mortgages will be available through a range of lenders, and you will apply in the same way as any other mortgage – but of course, you will only need a 5% deposit.

What is Stamp Duty?

Stamp Duty is the tax you pay when you by a residential property or piece of land in England and Northern Ireland.

What is the Stamp Duty Holiday?

The threshold for anyone buying a home and having to pay Stamp Duty was initially increased from £125,000 to £500,000 until the end of March. This has now been extended until the end of June. Following this, the threshold will decrease to £250,000 until the end of September and back to £125,000 from October onwards.

What is a 95% LTV mortgage?

A 95% mortgage (also known as a 95% LTV mortgage) is a mortgage to purchase a property with a small deposit (at least 5% of the purchase price). Your deposit is the amount of money that you need to put into the mortgage to make up 100% of the final purchase price.

For example, if you wanted to purchase a property at £200,000, you would put in £10,000 and a mortgage lender would lend you £190,000 to purchase the property.

How can Clever Mortgages help me?

Here at Clever Mortgages, we have access to hundreds of lenders and so can help you find the right mortgage based on your circumstances. There are so many different mortgages available so we will do all the hard work for you. We’ll find the right lender and product for you, guiding you every step of the way to help you buy your new home.

Speak to us now!

Why use a mortgage broker?

Mortgage brokers help you find the best deals on the market – not just from one lender. With a broker you can expect:

  • Valuable knowledge, through years of experience helping customers to find mortgages
  • An improved chance at finding a mortgage, some mortgages are only available through a broker
  • Help with the application process, as usually just one application can be used across various lenders
  • Advice on how to improve your chances, for instance getting a guarantor or applying for a joint mortgage

About Clever Mortgages

We specialise in assessing an individual’s situation, and finding the right mortgage solution for them. We can help:

  • With remortgages, buy-to-let, and first-time buyers mortgages. We have experts who cover these areas
  • Even if you’ve got bad credit – we help people every day with a variety of credit histories to find the right mortgage
  • With applications, as we’ll take the hassle away. We require your details once and we’ll know the best lenders for your circumstance
  • Our team know the lenders that are most likely to say ‘yes’, and give you the best rates

What should I do next?

  • You enquire online with us today or request a call back
    Our simple form takes a couple of minutes to fill in, this gets the ball rolling
  • One of our experts will give you a call to find out more about your situation
    We have experts in remortgaging, who focus solely on helping customers save money
  • We do all the hard work for you
    We search the market for the trusted lender that’s right for you
  • Our expert will get back in touch
    We can guide you every step of the way, and we’ll always keep you up-to-date with progress

Speak to a broker

Laura Connor

Laura is a specialist mortgage broker, whose been working for Clever Mortgages for 5 years and has over 11 years experience in Financial Services.

Call us on: 0800 197 0504

See our FAQ page

What happens when applying for a mortgage?

Have you ever wondered what happens when applying for a mortgage?

Below, we break this down into 6 simple steps. Although applying for a mortgage can seem daunting and confusing, there are simple steps you can follow to make sure you understand the basic application process.

Below, we look at the main steps for applying for a mortgage and what you might need to think about.

Clever Mortgages specialise in helping people find the best mortgage possible for their current situation, no matter what your past or current credit history is. Speak to one of our advisors if you have any questions.

Contact Clever Mortgages

Step 1

Complete our online enquiry form and supply your intitial details, we will contact you to discuss your requirements in more detail.  We can determine how much you can borrow before moving forward with your application.

Step 2

After we’ve taken a look over all of your details, we’ll scour the market for the best mortgage deals possible for your situation. We’ll then discuss any mortgage deals that match your criteria.

Step 3

If you’re happy with the mortgage we’ve recommended, the next step is getting a mortgage agreement, commonly known as an AIP or ‘Agreement in Principle.’ This essentially means that the mortgage provider agrees to lend you the money subject to final checks and approval of your chosen property.

Step 4

Once your AIP is accepted, the next step is to formally apply for the mortgage. If you’re applying through us, we’ll do this part for you. The mortgage provider will then conduct a formal valuation on the property to make sure it’s worth what you think it is or have offered to buy it for.

Shared ownership

Step 5

If the property value is sufficient and after checking over the documentation you’ve provided, the mortgage lender will make a formal mortgage offer to you. Once you’ve accepted the mortgage offer, the solicitor can finalise all the legal work and arrange a completion date

Why now is a great time to move home

Step 6

You move into your new home or if a remortgage you will have switched lender and may have funds in your account for home improvements. You then begin making your mortgage repayments. Congratulations

How much could you borrow?

Ever wondered borrow?How much can you Find out nowHouse £0£100£1,100£10,000£50,000£100,000£125,000House £125,000£0£0£5,000£10,000£30,000IncomeMortgage £105,000Deposit£0£20,000£10,000£5,000You could borrow between£105,000 £135,000to

Wondering how much you could potentially borrow and how much a mortgage might cost you?*

Use our free interactive mortgage form to tell you.

Our mortgage advisors will then speak to you in more detail for a free, no obligation mortgage quote.

What is a mortgage broker?

A broker is a Financial Conduct Authority (FCA)-regulated professional who specialises in finding mortgages for people. They do this by taking your circumstances into account and learning about your situation before recommending the best mortgage deals for you.

Why use a mortgage broker?

Mortgage brokers help you find the best deals on the market – not just from one lender. With a broker you can expect:

  • Valuable knowledge, through years of experience helping customers to find mortgages
  • An improved chance at finding a mortgage, some mortgages are only available through a broker
  • Help with the application process, as usually just one application can be used across various lenders
  • Advice on how to improve your chances, for instance getting a guarantor or applying for a joint mortgage

About Clever Mortgages

We specialise in assessing an individual’s situation, and finding the right mortgage solution for them. We can help:

  • With remortgages, buy-to-let, and first-time buyers mortgages. We have experts who cover these areas
  • Even if you’ve got bad credit – we help people every day with a variety of credit histories to find the right mortgage
  • With applications, as we’ll take the hassle away. We require your details once and we’ll know the best lenders for your circumstance
  • Our team know the lenders that are most likely to say ‘yes’, and give you the best rates

What should I do next?

  • You enquire online with us today or request a call back
    Our simple form takes a couple of minutes to fill in, this gets the ball rolling
  • One of our experts will give you a call to find out more about your situation
    We have experts in remortgaging, who focus solely on helping customers save money
  • We do all the hard work for you
    We search the market for the trusted lender that’s right for you
  • Our expert will get back in touch
    We can guide you every step of the way, and we’ll always keep you up-to-date with progress

Speak to a broker

Christie Buck

Christie is a specialist mortgage broker, whose been working for Clever for 4 years. She has been in the financial industry for nearly 9 years which included assisting clients in financial difficulty setting up IVAs.

Call us on: 0800 197 0504

See our FAQ page

95 percent ltv mortgage

Government to launch a new 95% mortgage scheme for first time buyers and home movers with a 5% deposit

Exciting news was received over the weekend, for prospective first-time buyers and those who would like to move home, but only have a deposit of 5%.  It appears the Government is going to announce a new 95% mortgage scheme in this week’s budget.

We still await full details of the scheme, but early news is telling us, that it will launch in April and will allow both first time buyers and home movers to buy a property up to £600,000, whilst putting down just 5% deposit, that being £5,000 per £100,000 borrowed.

For example, with a purchase price £200,000 – the deposit would be £10,000.

With people struggling to save and savings interest rates being low, a scheme is needed to get people on to the property ladder.  The Governments plan is to turn ‘generation rent’ into ‘generation buy’, although they also need to meet targets of building affordable homes to allow people to purchase.

It will be interesting to see which lenders take up this scheme with the Government and what the lending criteria will be.  Some lenders already offer 95% mortgages, when the help of a ‘guarantor’, typically a parent, adds security and backing.   Lending will still be subject to the normal assessment of affordability, sustainability, and credit checks.

Even if you have bad credit or a low credit score, Clever Mortgages can look at options for you and will find a lending solution if there is one available.

Along with this, we could also see the Stamp Duty Land Tax holiday extended by 3 months, again, we wait further details to see who may benefit from this extension.

How much could you borrow?

Ever wondered borrow?How much can you Find out nowHouse £0£100£1,100£10,000£50,000£100,000£125,000House £125,000£0£0£5,000£10,000£30,000IncomeMortgage £105,000Deposit£0£20,000£10,000£5,000You could borrow between£105,000 £135,000to

Wondering how much you could potentially borrow and how much a mortgage might cost you?*

Use our free interactive mortgage form to tell you.

Our mortgage advisors will then speak to you in more detail for a free, no obligation mortgage quote.

First Time Buyers with bad or low credit score

Finding a mortgage for a first-time buyer with poor credit can be difficult. Most first-time buyers want to borrow more than 85%, which can massively reduce their lending options.

Having a bad or low credit score will make getting a mortgage a little trickier, this has also been exacerbated over the last year due to tightening of lenders criteria, Clever Mortgages are specialist in this area.  As a mortgage broker, we have extensive experience in assisting first time buyers with previous credit issues including missed payments, CCJs, IVA’s and defaults. We provide impartial mortgage advice to first time buyers, including those who have been turned down elsewhere.

A lot of lesser-known lenders not found on the high street specialise in bad credit mortgages, many of which can only be accessed by an experience Mortgage Broker.  A Specialist lender doesn’t necessarily mean high interest rates therefore they can be an affordable option for many struggling to fit the mainstream lending criteria.

What do I need?

There are a few things that any lender will need to consider before offering you a mortgage and you will need to be up-front about these details with your specialist advisor, so they can find the right lender and the best deal for your circumstances. No matter what caused your bad credit, whether it was a missed payment, a default, or a CCJ, your lender will need to know:

  • When did the bad debt happen?
  • How long ago was it?
  • How much was it for?
  • What was it for?
  • Have there been attempts to settle the debt?
  • How much are you able to put down as a deposit?
  • What is your current income?

By speaking to a specialist early in your search they will be able to ascertain the above information and let your know the best options for you, this could include explaining the other types of purchase options you may have, including Shared Ownership and Help to Buy.

Quite often another issue facing first time buyers is whether or not they will be able to borrow enough to purchase the property they want. Clever Mortgages can be your first port of call when you start looking to purchase your first home, you can gain and insight on how much you can afford and the cost of the mortgage via our ‘Enquiry Form’.  We can also access your credit report for you which will speed up the process and give you an insight into your lending options.

Clever Mortgages have experience and expertise in complex and difficult cases and can find the best lenders for your circumstances. We can also provide useful information on managing your credit while you are planning to apply for a mortgage and buy your first home.

Contact us today on 0800 197 0504 or click below for more details.

How much could you borrow?

Ever wondered borrow?How much can you Find out nowHouse £0£100£1,100£10,000£50,000£100,000£125,000House £125,000£0£0£5,000£10,000£30,000IncomeMortgage £105,000Deposit£0£20,000£10,000£5,000You could borrow between£105,000 £135,000to

Wondering how much you could potentially borrow and how much a mortgage might cost you?*

Use our free interactive mortgage form to tell you.

Our mortgage advisors will then speak to you in more detail for a free, no obligation mortgage quote.

A Guide to Affordability

Mortgage lenders have traditionally used income multiples to decide how much you could potentially borrow, this calculation can sometimes produce an affordability ‘gap’ because house prices have risen beyond these calculations.

However, in more recent times, many have based their maximum borrowing based on ‘ability to pay’, which sometimes allows applicants to borrow a little more.  This will inevitably be subject to circumstances such as your credit file, whether you have had bad credit in the past and other elements such as If you have a family and other commitments.

The type of mortgage product could also affect this decision as well, such as a fixed rate mortgage, because the monthly repayments stay the same for a period of time, which is easier for borrowers to manage and budget for.

Affordability can also be down to the property you are looking to purchase as well, if you are looking to refurbish a property it would be never advisable to borrow to your maximum affordability limit as this would hamper any desire for making the improvements you wish to make.

The more money you borrow from your mortgage lender, the higher your credit score typically needs to be.   There are still plenty of options for First Time Buyers whose affordability wont quite stretch to their desired lending amount due to credit issues or a low credit score.

Here are some of the most commonly-used First Time Buyer methods.

Family Deposit Support

The bigger your deposit, the better the mortgage you can access. For this reason, a high percentage of first-time buyers are often gifted money by family members to put towards their deposit. This could not only get you onto the housing ladder quicker and there is varying options from straight forward gift to placing the deposit in a special savings account with the bank or securing it on the family home if this is mortgage free.

The Help To Buy mortgage deposit scheme.

Under this scheme, you can borrow up to 20% of your property’s value from the government to add to your 5% mortgage deposit. There are several terms determining your eligibility for this scheme, so it’s important to talk to us to understand these before applying.

Lifetime ISAs.

Help to Buy ISA’s were a way of saving to get the deposit to buy your first home. You could earn interest on the money you deposited into the account and if you used the ISA for the deposit on a house the government would boost your savings by 25% contributing up to a maximum of £3,000 towards it. The most comparable product now available is the Lifetime ISA, and further details can be found at https://www.gov.uk/lifetime-isa

Clever Mortgages have experience and expertise in complex and difficult cases and can find the best lenders for your circumstances. We can also advise you on your affordability while you are planning to apply for a mortgage and buy your first home.

Contact us today on 0800 197 0504 or click below for more details.

What Credit Score do you need to get on the housing ladder?

Having poor or bad credit doesn’t always mean you won’t get a mortgage, but it can affect the options available to you.

When a mortgage broker or lender assesses your application they gather information in relation to your credit, they may ask you to forward a credit report or request permission for them to run a report from one of the credit reference agencies to obtain your credit score.  This will look at your payment history and any issues you have had in the past.

A very good or excellent score from a credit reference agency suggests an increased likelihood that a high street lender will accept your mortgage application, which means you’ll have more and better deals available to you. If you credit score is low or shows you have a poor score it will be harder to find a lender and you may have to look at more specialist lenders.

Can You Get a Mortgage or Remortgage with Bad Credit?

It is possible to purchase a house or remortgage with bad credit or a low credit score, but your choice of lenders will be reduced and the options available to you will depend on the nature of the bad credit and how recent it was.

For example, we still may be able to find you a suitable lender if you were previously declared bankrupt but it was discharged a few years ago, or you only had CCJs or default due to a few missed credit card or mobile phone provider payments.

If you suspect you could have bad credit or a low score, it is important to talk to a Mortgage Specialist who will be able to obtain a copy of your credit file and look at the options. It may be that you will have to wait and improve your score to allow you to purchase a property or remortgage.

How Credit Scores work

Your credit score is a 3-digit number based on your borrowing and financial behaviour. There are a number credit reference agencies where you can obtain your report, and the reports are normally categorised as very poor, poor, fair, good, very good or excellent.

Things that affect your credit score can include:

  • Missing mortgage payments
  • Regularly maxing out credit cards
  • Receiving CCJs (county court judgement) or defaults
  • Paying bills late or not at all
  • Relatively high levels of debt
  • Not registering on the voters roll
  • Entering into an IVA (Individual Voluntary Agreement) or Debt Management Scheme
  • Not having much of a payment or credit history – i.e. not building up a record of regular, punctual payments

How Can you Improve your Score?

No matter how close you are to applying for a mortgage, it’s worth taking steps to improve your credit score. This will improve your chances of being approved for a better mortgage, as well as other financial products in the future.

Ways to improve your credit score include

  • Avoid any late payments on any outstanding debt and continue to pay your bills on time.
  • Keep your credit card balances below 30% of your total credit limit. For an even better effect on your credit, keep them below 10%.
  • Close any unused cards.
  • Register on the voters roll.
  • If your credit is low obtain a major credit card and start using it regularly. Ensure you keep up regular payments or repay in full any balance.

Clever Mortgages have experience and expertise in complex and difficult cases and can find the best lenders for your circumstances. We can also provide useful information about managing your credit while you are planning to apply for a mortgage and buy your first home.

Contact us today on 0800 197 0504 or visit www.clever-mortgages.co.uk for more details.

90% Loan-to-Value mortgages starting to return to pre-pandemic levels as Lender confidence grows

Lending in 2020 was massively impacted by the COVID-19 pandemic.  In April 2020, due to the lockdown, we saw the property market come to a sudden halt and lenders started to withdraw products from their lending portfolios, mainly those that required the smallest deposits.  It was reported, at the time, that before the lockdown there were over 700 mortgage products available that required a 10% deposit or less, this dropped to around 60 products post lockdown*.  The impact on the first-time buying market was massive and as a result many were unable to get a foot on the ladder due to the new level of savings required.

90% LTV mortgage

2021 has brought some good news with many of the high street lenders moving back to offering 90% products and also some of the specialist lenders dipping their toes back in the water.

As a few lenders start to offer 90% mortgage products, which means the customer needs a 10% deposit, other lenders will start to follow the trend and offer them to, thus giving more choice to customers.  This return to a wider choice, means you are likely to be better to speak to a mortgage adviser such as Clever Mortgages who can look across the mortgage market to find you the most suitable product and lender.

We may also find as the lenders confidence grows, we start to see more lenders offering 95% mortgages, with the customers putting down 5% of their own funds.

Furthermore, the more lenders offering these products it creates competition to obtain business and this has seen interest rates charge for a mortgage reduce.  Nationwide have already announced a cut across their 90% product range. 

Most of the high street lenders are stipulating the higher loan to value, 90% lending products are for First Time Buyers only, such as Halifax, Barclays and Virgin Money but there are some lenders that will look at Next Time Borrowers such as:-

Accord
Aldermore
Coventry
Metro Bank

Nationwide
NatWest
Platform
TSB

There are also a hand-full of lenders who will offer a higher loan to value products to borrowers who have had credit issues in the past, such as low credit scores or bad credit.  However, each lender will have different criteria and restrictions regarding lending therefore it is always best to speak to a specialist, such as Clever Mortgages who are on hand to help you with your borrowing needs.

To find out more about your options give us a call on 0800 197 0504 or chat to us on our website www.clever-mortgages.co.uk.

*BBC news article 3rd September 2020 – https://www.bbc.co.uk/news/business-54000714

Will the stamp duty holiday continue past March 2021

This year has been a roller coaster when it comes to the mortgage market, during lockdown 1 in March Mortgage Products fell dramatically with lenders very nervous what the affects of the pandemic would bring, removal of higher LTV schemes saw less first time buys able to get a foot on the ladder. 

The transition to have Mortgages underwriters working from home, desktop valuation instead of physical visits also affected the lenders capacity to accept business.

However, since then mortgage approvals have reached a 13 year high with lenders gaining more confidence and assessing their products to meet the growing demand.

This strong improvement has all been helped with temporary stamp duty holiday

So, will the stamp duty holiday continue in 2021?

There was a strong push from the industry to extend the stamp duty holiday past the 31st March, however the government have now confirmed that this will not be the case.

More than 22,000 people signed a petition calling for the stamp duty holiday to be extended for a further six months.

The petition stated: “Extending the stamp duty holiday for an additional six-months will assist many buyers who are looking to move to a property that they will not be able to afford otherwise. This will help to stabilise the housing market.

As it received over 10,000 signatures, the government was required to respond.

The Treasury said the stamp duty holiday was designed to be a “temporary relief” to stimulate market activity and support jobs that rely on the property market.

“The government does not plan to extend this temporary relief”, it stated.

It added that the pandemic caused uncertainty for buyers and sellers with property transactions down by as much as 50% during the first lockdown

“To stimulate immediate momentum in the property market and to support the jobs of people whose employment relied on custom from the property industry, the government decided to introduce a temporary Stamp Duty Land Tax (SDLT) relief. This relief increased the starting threshold of residential SDLT from £125,000 to £500,000 from the 8 July 2020 until 31 March 2021. Since the relief was introduced, transactions have increased and seasonally adjusted data shows that in October 2020, transactions were 8% higher than October 2019.

“As the relief was to provide an immediate stimulus to the property market, the government does not plan to extend this relief. SDLT is an important source of government revenue, raising several billion pounds each year to help pay for the essential services the government provides,” it said.

The Treasury confirmed it will maintain the stamp duty relief for first-time buyers which increases the starting threshold of residential SDLT to £300,000 for property purchases below £500,000.

What impact will this have?

This news will see a rush of potential buyers looking to get their application in to the lenders by January. 

The fear then will be will the lenders cope with this influx, timescales this year have been dramatically increased with more underwriting required, searches taking a lot longer and some lenders taking up to 28 days to even look at a mortgage case.

This extension could see borrowers who did not budget for the stamp duty finding they are unable to complete prior to 31st March due to tight timescales and finding they now have the bill to pay.

Clever Mortgages know the importance of choosing the most suitable lender for your circumstance whether that is because of bad credit, low credit or you just don’t know where to start.

Lenders criteria and timescales will be very prevalent in 2021 especially if you are looking to take advantage of the stamp duty holiday, so talk to the experts who can help. 

Clever Mortgages will look to assist you from start to finish, liaising with the lender, solicitors and estate agents to ensure you are fully supported through your property purchase.

Furlough Mortgages

The current situation with furlough mortgages

You may have been on furlough or finding yourself on an extend period with the current scheme running until 30th April 2021.  If you are looking to purchase a property or remortgage your current home, you may find it difficult to find a lender to accept your furloughed income, especially if you also have bad credit and a poor credit score.

Around 9 million people have been furlough since the pandemic began and whilst some returned to work after the initial scheme came to an end, with the Government resurrecting the original 80% version it meant people went back on furlough or had the period extended.

Due to the risks associated with borrowing large sums of money and the lenders requirements to satisfy Financial Conduct Authority (FCA) affordability rules its important lenders understand your income both now and for the future.

Originally when furlough began, lenders would look at affordability based on the 80% provided by the Government.  However, changes to the scheme, along with the recent extension has made lenders more cautious.

Can I get a mortgage on furlough

Currently, lenders are looking for customer to have returned to work and have a clear payslip with no furloughed income showing, they may even request two payslips and confirmation from the employer that you will not be going back on furlough.

The lending market is therefore even more difficult to navigate, and we would urge you to speak to a mortgage broker such as Clever Mortgages, who deal with all types of mortgages and are also specialist in bad credit mortgage advice.

Clever Mortgages can assess your situation now, to see if a mortgage is possible and if not work with you on a plan for when to apply to a lender.  If you use a mortgage broker such as Clever Mortgages, with access to 100 of lenders, it means you aren’t going lender by lender yourself, running up marks on your credit file and potentially reducing your credit score.

If there is a second person to add to the mortgage and they have not been on furlough, it might be that will be enough to support your application.  We can also look at product transfer options to save you money with your existing lender.

You may also find that there is less availability for those with a smaller deposit, say 5 or 10%.  We have seen lenders start to offers these products again, but you have to match the criteria to achieve it, again this is were speaking to a mortgage broker is key.

Whatever your situation, please feel free to contact Clever Mortgages on 0800 197 0504 or using the live chat on our website to talk to the team.

Why use a broker?

Buying a new house doesn’t have to be a stressful process. Sure, moving all of your belongings and updating your details everywhere can be tiresome, but it’s an essential part of moving home that has to be done. Where the real stress of moving home comes in, usually, is trying to find the right mortgage provider.

People who go direct to their provider spend hours upon hours trawling through comparison websites trying to find the most suitable deal, comparing rates, calling different providers and so on. It can be an incredibly wearing process – unless you go to a mortgage broker.

What is a broker?

A broker is a Financial Conduct Authority (FCA)-regulated professional who specialises in finding mortgages for people. They do this by taking your circumstances into account and learning about your situation before recommending the most suitable mortgage deals for you.

Why use one?

There are many reasons why it’s beneficial to use a mortgage broker – here’s a few of the main ones.

Greater choice

One of the main benefits of using a mortgage broker is the fact that you can often get access to exclusive mortgage rates that aren’t available to people who go direct to their provider. The reason for this is that there are some lenders who only lend through brokers, and as a result you can get offers that might not be listed on comparison websites and potentially save a great deal on your mortgage payments.

Less hassle

Hate paperwork? Mortgage brokers remove a lot of the hassle from getting a mortgage deal over the line, and will often complete the majority of paperwork for you.

Using a broker also protects you against filling in paperwork incorrectly, which is actually something that happens often due to the fact that the paperwork involved with moving house can be quite confusing at times, and they’ll also deal with the lender on your behalf.

The most suitable deal for you (even with bad credit)

Mortgage brokers are experts in getting the most suitable deals for their clients. A good broker will take the time to learn every detail about your situation and how your circumstances might affect what rates you’re eligible for.

Once they’ve done this, brokers will comb the market in order to find the most suitable mortgage deal on the market for you. Even if you’ve got extenuating circumstances such as a bad credit score, for example, and have been rejected for a mortgage deal by some of the bigger high-street banks, a broker will be able to find you a deal.

Again, they’ll be able to do this due to the fact that they’ve got access to rates that simply aren’t available to people choosing to go direct their mortgage providers. This means that whatever your credit score, the chances of you getting the most suitable deal to suit your circumstances is greater if you choose to go to a mortgage broker.

Help to buy scheme – April 2021 – March 2023

The new Homes England Help to Buy Equity loan scheme commenced on the 16th December 2020.  This scheme is only open to first time buyers purchasing a new build property.

The scheme is design to help people struggling to save their own deposit to meet lenders requirements and get on the housing ladder.

Even if you currently have or have had previous bad credit, a poor or low credit score, the Help to Buy scheme is still available to you.

How does it work?

All parties to the scheme need to be first-time buyers and purchasing a newly built property in England to apply.  The builder also needs to be registered with the Help to Buy scheme.

You can borrow a minimum of 5% and up to a maximum 20% (40% in London) of the purchase price.  The equity loan is from the Government, which is used as a deposit on the property and the Government have a percentage stake in the property.

There is a maximum purchase price cap by English region

Region (England)

Maximum property price

East Midlands

£261,900

West Midlands

£255,600

East of England

£407,400

Yorkshire and the Humber

£228,100

North East

£186,100

North West

£224,400

London

£600,000

South East

£437,600

South West

£349,000

Do I need to have my own deposit?

Yes, the scheme and a mortgage lender will expect you to have your own deposit, a minimum of 5% of the purchase price.  This is added to the Government equity loan and along with a new mortgage you will have the funds to purchase the property.

How does the Government Equity loan work?

The equity loan is interest free for the first 5 years, after that you will pay interest on the loan amount.  This allows you to get familiar with budgeting to live in your first property, so please ensure you factor in this additional cost at the 6-year point, unless you plan to pay the loan off.

The payments you make at the 6 year point are to pay the interest only, you will not reduce the amount owed, that balance stays the same.  However, you can repay all or part of the equity loan at any time and reduce the balance.  The minimum repayment is 10% of the value of the property at the time of the repayment and you have to pay in 10% multiples.

You only pay interest on the original amount borrowed from the Government, this amount doesn’t change.

What repayments will I make?

You will of course pay monthly for your new mortgage and these payments will be confirmed by a mortgage adviser.

The Government equity loan is interest free for the first 5 years.  You must pay a £1 monthly management fee.

After the 5 years, you continue to pay the £1 monthly management fee, plus interest on the equity loan.  The current interest rate is 1.75% and this will increase each April by the Consumer Price Index (CPI), plus 2%, and that’s of the interest rate and not added to it.  For example it won’t be 2.75% (1.75% + 2% (assuming no increase to CPI) it will be 1.75% x 2% = 0.035% + 1.75% = 1.785%  You must continue to make these two payments until the equity loan is repaid.

Your mortgage adviser can help you work out these payments and review your budget with you.

When do I repay the equity loan?

When you sell your home, you will be expected to repay the loan.  Also, if you reach the end of the equity loan term (maximum 25 years) or you pay off your mortgage.

If you failed to meet the terms of the equity loan contract you could be asked to repay the balance in full.

The amount you pay back is based on a percentage of the market value at the time you want to repay some or all of it.  Therefore, if the value of your home increases so does the amount you owe on the equity loan, if the value falls, so does the equity loan.  For example, if your equity loan was 10% you will have to pay 10% of the properties value at the time you repay the balance.

How do I apply for an equity loan?

You’ll need to find a new build property provided by a builder registered with the Help to Buy scheme.  You can contact your local Help to Buy agent by clicking here, they can also help you with the Help to Buy application.

The next step is to apply for a mortgage, or if you want to get an idea of your lending options, especially if you have or had bad credit then contact Clever Mortgages.

For properties in Wales and Scotland

Similar schemes exist in both Wales and Scotland.

In Wales the maximum property price is £300,000, with a 5 year interest free loan and is also called Help to Buy.

In Scotland, the scheme is called Affordable New Build Scheme and for properties up to £200,000 in value.  The Scottish Government loan is a maximum 15% but is interest free for the whole duration of the term.

You can search each Governments site to find more information. Wales or Scotland 

Bottom Line

If you’re a first-time homebuyer, all these details and technicalities could be overwhelming. Clever Mortgages are a team of experts that help first-time homebuyers go through the entire financing and home buying process. We have helped lots of clients through the HTB buying process with step-by-step assistance.

Remember, even if you currently have or have had previous bad credit, the Help to Buy scheme is still available to you.

If you’re ready to become a homeowner, give us a call today!

Why use a broker?