Mortgage, rent and protection options during the Coronavirus pandemic

Following the announcement from the Government on an effective ‘lock down’ for the UK, we wanted to reassure you that the team at Clever Mortgages are fully operational and working from home.

We want to make sure you’re kept up-to-date with what’s going on regarding mortgages, protection, support available for businesses and your finances in general. This page includes a hub of official guidance, which may be worth bookmarking so all information is easily available.

We’re here to talk to you about your mortgage and protection options – and discuss any concerns following the recent pandemic. There’s lot of information out there about mortgage holidays, rental payments and the support available for businesses and self-employed workers.

Regular updates are being made regarding the measures that are being put in place to reduce the impact Coronavirus will have on people and businesses. Below are links to official websites which provide the most up-to-date information regarding:

You may also be wondering about the protection options available surrounding Coronavirus, such as:

  • Why life insurance is important and how it should cover coronavirus
  • Why Income Protection (PHI) is important and how it should cover coronavirus
  • Why critical illness is important and how it’s unlikely it will cover coronavirus

Read our latest guidance on protection 

Whatever your query, just get in touch and we’ll discuss all available solutions based on your circumstances.

Most importantly though, ensure you and your household keep safe and well. Full NHS guidelines, including how to stop the spread and symptoms to look out for can be found here.

We’re here to support all our customers and their families during this challenging period.

Protection options available during the coronavirus pandemic

During these uncertain times, now more than ever, it’s worth knowing how your cover will protect you and your family should a tragic event occur.

Here we discuss the following types of cover:

  • Life insurance
  • Income protection
  • Critical illness

We’ll discuss why they’re important and whether existing policies could be affected by coronavirus:

Policies are taken out based on the details provided upon application. Insurers assess this information, along with other factors, such as:

  • Age
  • Whether you smoke
  • The type of cover you require
  • Existing medical issues
  • Employment status and type

You’re then offered your terms of cover – which won’t change once accepted, and you start paying for the cover.

Due to the current health scare, it’s natural you may be looking to take out life, income and critical illness insurance policies – and it is still possible to obtain cover.

Insurers have started asking about coronavirus though, such as whether you’ve tested positive for COVID-19, had symptoms or currently in/been in self-isolation.

Your existing life insurance should cover coronavirus

Whilst it’s never nice to think of, it’s good to be reminded about how important cover is and why you took it out in the first place. Ultimately though, cover is there to ensure your family has the funds to continue living in a property – or to use for other purposes – if the worst should happen.

Life insurance is usually taken out to cover a debt, such as a mortgage and/or to give the family a lump sum in the event of death. Some people also take out policies to cover funerals.

Your existing Income Protection (PHI) should cover coronavirus

Long-term income protection policies (PHI) are usually taken out for 5 to 40 years and normally up to retirement age. These policies are taken out to replace lost income in the event of long-term sickness or injury and usually start to pay out on a claim following any employer sick pay entitlement.

You’ll need to check your policy documents and check any ‘deferred period’ before a claim would be paid though, as these can be 1 to 24 months.

You can also click here to see what the Government is doing to support workers

Critical illness is very important but unlikely to cover coronavirus

It’s never nice to think of becoming critically or seriously ill and these policies – like life insurance – are also usually taken out to cover a debt. They can also provide you and your family with a lump sum to help with care or changes needed in your life or property if you’re seriously ill.

These policies are based on covering certain medical conditions and serious illnesses at the time of the application. Whilst the list is long, it’s unlikely to cover COVID-19 as it isn’t considered a critical illness. If you developed a serious or critical illness as a result of COVID-19 that might be considered for a claim.

No matter what type of cover you’d like to take out – or whether you have questions about an existing policy, we’re here to help. We’re happy to answer your queries and do our best to find a solution based on your circumstances.

Contact us now

Should I protect my income?

Should I protect my income?

When it comes to protecting your family and livelihood, you just can’t be too careful. It may come as a surprise to learn that only 35% of UK adults hold a life, critical illness or income protection product.

This equates to 15 million people, which may seem like a lot (https://www.fca.org.uk/publications/corporate-documents/sector-views-published-february-2020 – page 35) but comparing it to the 17.6 million who have gadget, phone or warranty products, it could be argued that UK adults are seemingly more likely to protect their gadgets than their income!

Even with only 35% of the UK adult population holding life, critical illness or income protection products, insurers still pay out £14.5million every day for claims, highlighting just how important income protection insurance can be. (https://www.abi.org.uk/data-and-resources/industry-data/uk-insurance-and-long-term-savings-key-facts/) Nobody likes to think that something bad might happen, and there’s certainly nothing wrong with that positivity day-to-day- but it’s important to be prepared in case something goes wrong. Just take the current climate as an example.

Income protection is one of the most important things in financial planning but often overlooked by many. There are various types of income protection which we’ll explore, but first it is useful to know what the statuary sick entitlement is to understand the importance of protecting your income.

Should you find yourself in a position where you can’t work, it’s likely you’d get some form of sick pay from your employer or through statutory sick pay (SSP), but in most cases SSP equates to around £94.25 a week for up to 28 weeks (https://www.gov.uk/statutory-sick-pay), which many find doesn’t match the income they’re used to, making it a struggle to make ends meet

Some employers will continue your pay during periods of sickness, this is at the employer’s discretion and isn’t guaranteed, it can vary from one week to 2 years. It may be useful to know that you can tailor some income protection policies around employer sick pay.

Income Protection

What are the different types of income protection insurance?

There are several different income protection products designed to protect your income or cover your outgoings.

Mortgage Payment Protection Insurance policies – MPPI

Please note, this is not the widely mis-sold PPI.

Mortgage payment protection insurance policy, or MPPI is a type of protection policy that covers your mortgage and associated bills. MPPI will cover your mortgage payment, any associated life assurance and buildings and contents insurance, usually up to a limit of 125% of your actual mortgage payment if you’re unable to work. This type of income insurance product allows you to choose what kind of situation you’d like to cover that may result in loss of income due to an inability to work. You can usually cover sickness, accident or unemployment as a package or individually if you choose not to cover a certain scenario. Often insurers allow a tolerance to allow for interest rate fluctuation and may allow you to cover an additional percentage of the mortgage payment.

Accident, Sickness and Unemployment – ASU

This type of income protection is very similar to MPPI but is based on your income, rather than your mortgage and outgoings. Known as Accident, Sickness and Unemployment (ASU), this insurance helps replace and cover income that could be lost if you’re unable to work due to sickness, injury or unemployment, depending on the cover you choose.

Remember that you will only receive Statuary Sick Pay from the state if you are unable to work due to an accident or sickness, so the ASU policy adds to this. ASU can protect a percentage of your gross salary, usually around 50-70%, providing the financial support you’ll need to continue your life with a monthly tax-free (https://www.gov.uk/income-tax) cash sum until you’re ready to return to work. However, the duration of payment is normally to a maximum of two years with 12 months being the most prevalent cover available.

Is income protection like PPI?

Income protection is not the same as PPI (payment protection insurance). PPI is a type of insurance sold alongside credit agreements like loans, car finance or credit cards to make sure repayments are made if the borrower becomes unable to afford them, perhaps due to unemployment, sickness or injury. The whole scandal around PPI was that it was just added to people’s loans whether they would have been eligible to make a claim or not.

ASU income insurance is designed to protect your income and ability to pay your credit commitments and your life costs, such as food, bills, utilities and childcare. A valid claim on ASU insurance gives you a monthly, tax-free percentage of your income(https://www.gov.uk/income-tax)- allowing you to distribute it accordingly.

What does it cover?

All types of income protection insurance allow you to protect your ability to meet financial commitments in the event you’re unable to work and earn your usual income due to illness, accidental injury or unemployment. Financial commitments income protection insurance can cover include:

  • Salary
  • Mortgage or rent payments
  • Loan payments
  • Credit card repayments
  • Daily living costs
  • Other financial commitments

Some insurers allow you to protect up to 70% of your gross salary. It’s important to remember that income protection doesn’t cover life-threatening illness or death, to be insured for this you’ll need to consider critical illness insurance or life insurance.

What doesn’t it cover?

ASU and MPPI doesn’t cover everything, things that an insurance policy doesn’t cover are often termed ‘exclusions’ and it’s important to check your insurance policy to be sure your concerns don’t fall under an exclusion before purchasing it. Exclusions could include but are not limited to:

  • Pre-existing conditions
  • Critical illness
  • Some policy covers mental health, some policy excludes it. If this is something that is relevant to you it’s worth double checking whether the insurance you’ve chosen covers this
  • Normal pregnancy
  • Specific policy exclusions
  • Voluntary redundancy
  • Voluntary resignation
  • It’s essential to thoroughly check the policy of income protection to be sure that it covers the types of illness, injury or unemployment situation you might be concerned about.
  • If it is known that you may be at threat of redundancy prior to taking out the cover

Also, there is often an initial Exclusion Period or Waiting Period see below.

How soon am I covered by income protection insurance after taking it out?

Your cover starts as soon as your application is accepted, and your policy begins. Don’t forget though that your policy will more than likely include a ‘waiting period’ meaning you won’t be able to make a claim before a specified time has passed. This is normally 3 to 6 months where no claim can be made. This is to protect the insurer against large scale claims if many applicants may know that that their company could be laying people off or an applicant feels that they may have a serious illness before taking the cover. Once you have paid premiums beyond the initial “exclusion period” then you will be covered.

To find out how to get cover as soon as possible, speak to one of our specialist advisors.

You may also choose a “deferred period”, this would mean if you made a valid claim, you’d wait a period before payments would begin. You may think that you want cover immediately, however the sooner the payments are made the higher the premium, so applicants may choose a deferred period to bring down the monthly premium. You can usually select deferred periods from 4 weeks to 12 months- the longer the deferred period the lower the premium. You can sometimes opt for “back to day one” cover. This would mean that if you chose a 30-day deferred period with back to day one cover, on the 31st day, a claim payment would be made covering the period going back to day one of your claim.

It is important to understand that most MPPI and ASU insurance products go through the full underwriting process to check eligibility at the point of claim and not at application.

Can I take out long-term income protection?

Simply put, yes- but this falls into a separate category and does not include unemployment or redundancy cover. Known as Permanent Health Insurance or PHI, this is underwritten at the point of application and covers you for long term sickness or accident. You can select an end date of the cover up to your retirement age and cover up to a maximum of 70% normal take home pay minus State Sickness Benefit.

For this type of cover you would go through a full underwriting process, but once cover is given by the insurer it won’t be withdrawn or changed (even due to new health conditions)- providing you keep up your premium payments. It is worth noting application may be declined if you have a serious medical condition or have a high-risk occupation, but this can be discussed with an adviser before you apply. You will need to think about some of the points listed below, all of which will have an influence on premium prices. See more about how much income insurance will cost?

  • Employment type– many insurers will put you into a risk category according to your type of employment. For example, a low risk profession, like an office administrator might have lower premiums than a high-risk profession, like a construction worker. This is because a person in a high-risk profession is more likely to make a claim on their income protection than someone in a low risk profession.
  • Age – you can apply from 18 years year old, most insurers let you apply up to 60 but this is increasing with some insurers as people are working for longer.
  • Family medical history – insurers will want to know what your family medical history is to get a better idea of what kind of insurance they can offer.
  • General health
  • Whether you’re a smoker
  • Amount you want to cover– this will affect your premiums so insurers will want to know how much you want to protect in the event of your inability to work.
  • Deferral period– the amount of time you must be off work before receiving payments. A longer waiting period is likely to have lower premiums as opposed to a shorter waiting period, but it’s worth checking to see how much cover you might want and how soon before choosing an income protection insurance plan.
  • Benefit payment period, with PHI policies you can set the benefit payment period per claim to be 1, 2 or 5 years, or full term- which means in the event of continuous claim the insurer would pay out until the policy end date.

Who might want a type of income protection?

Anyone who would struggle to live without their regular income earned from working should consider income protection. It’s not something that many people consider until the protection is needed, but being proactive and taking steps to prepare for the possibility of injury, illness and possible unemployment can help keep you and your family financially safe should need arise.

If you’re self-employed see here.

If you’re in part-time employment see here.

If you’re unsure, speak to one of our specialist advisors at Clever Mortgages to find out if income insurance is right for you.

I work part time. Can I still take out Income Protection Insurance?

You can take out the various forms of income protection described above with part-time work. Just like income protection with full-time employment, you can protect a percentage of your income when you’re in part-time employment with an income protection insurance policy, covering you in the event of sickness or injury.

If you’re in part-time employment and want to take out income protection insurance, get in touch with one of our specialist advisors at Clever Mortgages.

Redundancy and income protection insurance

Some income protection insurance policies protect against involuntary redundancy, ASU and MPPI being the most common as described above. You can’t insure against voluntary redundancy or leaving work by resignation, but you can put protection in place so that if you experience involuntary redundancy, you’ll be able to meet your financial commitments. You’ll still most likely have a waiting period, and the payments usually only last a set period, intended to keep your financial and living costs covered while you find a new source of income. Some policy also requires you to have held it for a certain length of time, the initial exclusion period, explained above before you can claim for involuntary redundancy, often around 3-6 months.

Please note that you can’t take out unemployment protection cover if you’re aware of a situation that could lead to you being made unemployed.

How much income protection cover can I get?

To find out how much cover you might want, you can calculate your essential monthly outgoings. This could be things like:

  • Mortgage or rent payments
  • Household bills. Think about your food shops, internet bills, telephone packages etc
  • Utilities. Your gas, electric and water bills will still need to be paid if you’re unable to work.
  • Childcare costs
  • Loan repayments
  • Credit card payments
  • Essential running costs

When you add up your living costs to figure out what income protection you could use, bear in mind some travel costs, work clothes and equipment, work lunches and other associated costs might be decreased or stop if you’re unable to work.

Once you have your total, check and see how much statutory sick pay you’re entitled to or how much your employer will pay while you’re off work, then subtract this from your overall sum. This should give you an indication of how much cover you could use to keep paying your living costs in the event of being unable to work.

It’s important to remember that statutory sick pay only last 28 weeks, whereas some employer sick pay schemes can last up to 12 months so bear this in mind when choosing your cover. Your adviser will take this into account and discuss the best option.

Its also important to remember that the maximum cover you can obtain is 70% of your normal gross salary, and many insurers cap the total level of cover, which could be less than 70% depending on your salary.

How long does income protection pay out for?

This depends on the type of product you have and, with some policies, how long you choose when getting your quotation. If you make a valid claim on your income protection insurance, you could get payments until you’re well enough to return to work, unless you retire before that.

You can get long-term protection (see PHI see above) and short-term income protection insurance. Some plans will pay out until you retire, some will only last a few years, so it’s important to decide how much cover you might need and how long you might need it for.

You can also bring two options together, an ASU policy with a 12-month claim pay out period, dovetailed with a PHI policy with a 12-month deferred period and a full term pay out.

How many times can I claim?

With a traditional long-term income protection insurance policy, you can claim as many times as you need to while the policy is active.

How much does income protection cost?

The cost of your income protection will depend on the product you choose and a variety of factors -insurers will use many elements of your personal circumstances to calculate the premiums in your quotation.

  • Employment type– many insurers will put you into a risk category according to your type of employment. For example, a low risk profession, like an office administrator might have lower premiums than a high-risk profession, like a construction worker. This is because a person in a high-risk profession is more likely to make a claim on their income protection than someone in a low risk profession.
  • Age – you can apply from 18 years year old, most insurers let you apply up to 60 but this is increasing with some insurers as people are working for longer.
  • Family medical history – insurers will want to know what your family medical history is to get a better idea of what kind of insurance they can offer.
  • General health
  • Whether you’re a smoker
  • Amount you want to cover– this will affect your premiums so insurers will want to know how much you want to protect in the event of your inability to work.
  • Deferral period– the amount of time you must be off work before receiving payments. A longer waiting period is likely to have lower premiums as opposed to a shorter waiting period, but it’s worth checking to see how much cover you’ll need and how soon before choosing an income protection insurance plan.
  • Benefit payment period, with PHI policies you can set the benefit payment period per claim to be 1, 2 or 5 years or full term, which means in the event of continuous claim the insurer would pay out until the policy end date.

Get in touch with one of our specialist advisors at Clever Mortgages to get a (free?) quote on your income protection insurance.

Self-employed income protection

If you’re self-employed, you don’t have access to statutory sick pay as you don’t have an employer and, without income protection insurance, would have to apply for ESA. https://www.gov.uk/employment-support-allowance) Because of how the new Universal Credit

system works, it’s likely you’d have to apply for that and claim ESA within Universal Credit. After completing an assessment, you’d be eligible for up to £73.10 a week if you’re in the work-related activity group or up to £111.65 a week if you’re in the support group (https://www.gov.uk/employment-support-allowance/what-youll-get).

If you’re self-employed, it’s advised that you consider income protection insurance to protect some of your income in the event of sickness or injury. Income insurance for self-employed workers usually offers cover for around 50%-70% of your income, just like regular income protection insurance.

Are you self-employed and want to protect your income? Get in touch with one of our specialist advisors at Clever Mortgages to take the first step towards protecting your livelihood.

Critical Illness Insurance

What is critical illness insurance?

Critical illness insurance is a type of protection insurance that provides you with a tax-free lump sum if you’re diagnosed with any of the injuries, illnesses or medical conditions covered in your policy. It’s designed to give you and your family peace of mind financially should you fall seriously ill or become injured and unable to work.

This insurance is not intended as a form of income- this is why it’s paid in a lump sum and not monthly or in instalments. However, the money can be used in any way you see fit, such as investing to provide a monthly income.

How does critical illness insurance work?

You’ll need to figure out how much cover you’ll need and how long you want the policy term to last. So, you could decide to cover the cost of paying off your mortgage and a year or more of your salary while you recover or find alternate income. If you fall critically ill, injured or get diagnosed with a condition listed in your policy, you’ll get a one-time, tax-free lump sum of cash and then your policy will end.

Critical illness insurance is often sold alongside life insurance and they work in a similar way. See life insurance.

What illnesses are covered?

Different insurance providers have different policies that include or exclude certain medical conditions. Generally, most critical illness policy covers:

  • Some cancers
  • Heart attack
  • Stroke
  • Some organ failure
  • Multiple sclerosis
  • Major transplant surgery
  • Alzheimer’s
  • Parkinsons

You’ll do assessments to make sure your policy covers the illnesses or medical conditions you may be concerned about.

What isn’t covered?

Critical illness insurance doesn’t cover minor illness, injury, accidents or death. These scenarios are covered by income protection and life insurance.

There are also often exclusions to policy, which you’ll need to check before you take out your insurance. Sometimes you can add cover for certain medical conditions, sometimes they’ll be specifically excluded- it entirely depends on the insurance the provider offers.

It’s also worth noting most critical illness insurance only allows you to make a claim once your illness or medical condition reaches a certain point of disability or inability to work. There may also be a short processing period so it’s important to get in touch with your insurer as soon as you receive a diagnosis.

How much cover?

The amount of cover you might want will depend on what you want to cover should you fall critically ill. You should consider things like:

  • Paying off mortgage
  • Rent while arranging new income
  • Home improvements or adaptations, depending on how your needs may change
  • Paying household bills while arranging new income
  • Paying off debt
  • Covering medical bills or equipment

The cost of your insurance will vary with different providers, but insurers often look at:

  • Lump sum you wish to receive should you claim on your critical illness insurance
  • Term of insurance
  • Age
  • Personal medical history
  • Family medical history
  • Type of work
  • Whether you’re a smoker

This information helps the insurer decide how much your monthly premium should be.

Who might want it?

It’s a personal decision whether to take out critical illness insurance, many people don’t like to think they’d fall ill or become disabled, but if you have financial commitments that working enables you to meet, it’s important to consider what protection you have in place should you lose the ability to earn that income.

Unemployment benefits vary, but they rarely match a working salary. If you’re in a couple, and one of you is over 25, you’d be entitled to £498.89 for you both per month. A single person over 25 would be entitled to £317.82 per month according to the current universal credit figures. (https://www.gov.uk/universal-credit/what-youll-get)

Of course, these figures increase if you’re off work and claiming due to illness- but you have a waiting period with assessments, and you’re not guaranteed a higher rate of benefit. If you fall ill and have mortgage payments, a new need for medical equipment and home adjustments a lump-sum of cash could help tide you over until new arrangements can be made.

Life Insurance

What is life insurance?

Life insurance is a type of protection insurance that provides a lump-sum of cash to your family or loved ones in the event of your death. It can provide a peace of mind knowing your loved ones will be provided for, can help pay for funeral costs or could go towards pay off your mortgage. Whatever the use, it’s there to cover the ones you leave behind should you pass.

Types of life insurance

There are several different types of life insurance, covering different periods of time and situations.

Term assurance
With term life insurance, you have life insurance for a set period. This means your insurance will only pay out in the event of your death during the term of your policy. If you out-live the term of your policy, you won’t receive any money or the return of your premium. This could be useful if you’ve got a set term on a mortgage, for example, and wanted to make sure it could still be paid off by your family in the event of your death.

There are three main types of term assurance insurance;

Level term: pays out a lump sum if you pass away within the term of your policy. The amount of money you insured for stays level- the same- throughout the term of your insurance. Even with a repayment (decreasing mortgage) often people take fixed lump sum of cover to build up a ‘surplus’ in cover.

Decreasing term: the lump sum paid in the event of your death decreases over time, this type of policy is often intended for debt that decreased over time- such as a repayment mortgage.

Increasing term: this type of term assurance means the amount of money you’re insured for increases over time, often to match inflation, so your beneficiaries can get the maximum payment possible within your policy should you pass away.

Family income benefit policy
Family income benefit works differently, this type of life insurance is essentially a replacement income for your family over a set period. So, if you took out family income benefit policy, with a pay-out of £3000 per month on a valid claim, with a term of 40 years and you passed away 20 years into your term, your family would receive a monthly payment of £3000 for 20 years (£720,000).

This policy is usually intended for families, if the primary earner takes out family income benefit policy and passes away within the term, it means the family can live as usual until another income is arranged or the term of the policy ends. If you pass away after the term of your policy ends, your family won’t receive any payment.

Whole of life policy
This type of life insurance means that your beneficiaries get a lump sum payment in the event of your death, regardless of when that might be. Unlike term assurance or family income benefit policy, whole of life insurance doesn’t have a set period that it covers, you’re covered for your whole life until you die, your insurance providers pay your beneficiaries the lump sum agreed and the policy ends.

How does life insurance work?

Similar to critical illness cover, you work out how much you would like to leave to your beneficiaries, decide the term of your policy and what type of life insurance would suit your situation best, and

take out a life insurance policy which you pay monthly premiums for. In the event of your death, your policy would pay out the agreed amount to your chosen recipients.

Life insurance if often sold alongside critical illness insurance. See critical illness insurance.

What does life insurance cover?

Life insurance protects your family financially after you pass away. It’s intended to provide financial security to your loved ones when they can’t depend on your income or salary anymore.

How much cover?

The amount of cover you might want will depend on what you want to leave your beneficiaries, it also depends on the period you want to be covered. You might want to consider thing such as:

  • Paying off mortgage
  • Replacing your salary for a period of years
  • Leaving a cash gift to loved ones
  • Covering your funeral costs

Deciding what you want to protect could give you an idea of what insurance you might want, whether you want term assurance to cover your salary for your family in the event of your death before retirement, or whether you might want to leave a legacy to your family regardless of when you pass – figuring out what you want from your policy can help you find the right cover. If you’re struggling, you can always speak to one of our expert advisors to find out more.

The cost of your insurance will vary with different providers, but insurers often look at:

  • Lump sum you wish to leave
  • Term of insurance, if applicable
  • Term type- level, decreasing, increasing
  • Age
  • Personal medical history
  • Family medical history
  • Type of work
  • Whether you’re a smoker
  • Some policy requires you to disclose whether you take part in risky sport, if so, you might be charged more

This information helps the insurer decide how much your monthly premium should be. It’s also worth considering having your life insurance written in trust, if you have specific beneficiaries you wish to name. All life insurance policy can be written in trust, this lets you name your trustees and can offer protection from inheritance tax your life insurance pay-out wouldn’t be considered part of your estate.

Who might want life insurance?

If you have family, or dependants that rely on your income it’s worth considering protection insurance. You might also want to leave their loved ones a gift, help pay for funeral costs or make sure your family is financially secure in the event of your death.

Changes to Capital Gains Tax on buy-to-let properties, second homes or holiday lets

 

Capital Gains Tax on property is set to change soon (6 April 2020). If you’re a professional landlord – or own any other property on top of your main residence, you will need to be aware of how these changes will impact you at the point of selling a buy-to-let property, second home or holiday home.

There are three main proposed changes to legislation around Capital Gains Tax:

Capital Gains Tax liability

Currently, when you sell a property that’s not your main residence, the gain, minus costs associated with the sale are reported on your annual tax return. If you’re then liable to pay Capital Gains Tax, these need to be paid by 31 January; following the end of the tax year when the property was sold.

From 6 April 2020, you’ll need to submit a residential property return and make the payment within 30-days from completion of the sale. This 30-day rule will only apply to UK residential properties sold on or after this date – and only where Capital Gains Tax is chargeable.

Private residence relief

Currently, when your property has been your main residence for the last 18 months of ownership, this is treated as the principal private residence period and exempted from tax.

From 6 April 2020, this period will be reduced to 9 months.

There will be no changes for people who move into a care home or have a disability. The relief period will remain the same and be the last 36 months of ownership.

Lettings relief

Currently, if a property was your main residence at any point of ownership, even with periods of being let; you would be entitled to claim a Capital Gains Tax relief of up to £40,000 of any gains. If the property is jointly owned and not with your spouse, you would be entitled to tax relief on gains of up to £40,000 each.

From 6 April 2020, this relief will only apply if the property was let out whilst you were living in it.

What is Capital Gains Tax?

Capital Gains Tax is a tax paid on the profit made from an asset sold or disposed of, which has increased in value. It is the increase in amount of value that is taxed – not the whole sale or disposal cost.

For example, you bought a house for £100,000 and then sold it for £150,000. This means you made a gain of £50,000 – the amount which would be subject to tax.

What you pay Capital Gains Tax on

You pay Capital Gains Tax on the gain you make on, what are known as chargeable assets, which include:

  • Business assets
  • Property that you don’t live in as your main home
  • Your main home if you’ve rented it out, used it for business purposes or it’s a very large property
  • Most personal possessions, apart from your car, which are worth £6,000 or more
  • Shares that are not in an ISA or PEP

It is possible to reduce any Capital Gains Tax you pay by claiming a relief if you’re able to. If you have made a gain on an asset you jointly owned with someone else, you would only have to pay Capital Gains tax on the actual amount you gain.

When you don’t have to pay Capital Gains Tax

Capital Gains Tax is only paid when the total amount you earn every year is more than an annual tax-free allowance.

You also don’t have to pay Capital Gains Tax on:

  • Gifts to your spouse (wife, husband, civil partner)
  • Gifts to charity
  • Lottery, pools or betting winnings
  • ISAs or PEPs
  • UK Government gilts and Premium Bonds

Capital Gains Tax allowances

You only have to pay Capital Gains Tax if your gains add up to more than your tax-free allowance – or Annual Exempt Amount.

  • £12,000
  • £6,000 for trusts

No issue is too taxing for us!

It’s that time of year again…tax returns must be submitted, and HMRC bills need to be paid.

If you have a business or are self-employed and have been faced with unexpectedly high bills – then we could help by securing additional funding to cover them.

Let’s discuss your lending requirements now!

Our Guide to Mortgage Jargon

Our Guide to Mortgage Jargon

Taking out a mortgage is a huge financial commitment, and so you’ll want to feel you’re clear on what you have to do and when – and exactly what you’re getting.

When you start looking at and applying for mortgages, there seems to be a whole world of jargon to get your head around, some of the words and phrases you won’t have heard in any other situation – from arrears to valuations – here we take a look at the vocabulary you’ll need to understand.

If you would prefer to talk with an Expert Mortgage Advisor and have a straight-forward conversation about your Mortgage needs with simple explanations – Please give us a call on: 0800 197 0504.

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Mortgage terms explained

Arrangement fee

This is a set-up fee for your mortgage. Most mortgage lenders will let you add this fee to the loan, but this means you’ll be paying interest on it for the whole mortgage term.

Arrears

An account is said to be in arrears if monthly payments aren’t kept up to date with. When this happens, the mortgage company is likely to apply extra charges on top of their monthly payments – and the fact that your account has gone into arrears could be noted on your credit file.

Base rate

The base rate is the rate the Bank of England charges other banks and lenders when they borrow money. This influences the interest rates that many lenders charge for mortgages, loans and other credit they offer customers

Booking fee

A booking fee is charged up front and pays for ‘booking’ in the loan while your application goes through. It’s sometimes also known as an ‘application’ or ‘reservation’ fee. This fee can’t be refunded if you end up not taking the mortgage out.

Broker

A mortgage broker is a financial adviser who specialises in offering advice on mortgages. They can help by saving you time and stress when applying for a mortgage, because as they’re doing this day in day out, they know which mortgage lender might give you the best deal, based on your individual situation. They can also help you a great deal with the application process itself.

Buildings insurance

This is a (usually compulsory) policy that covers damage to the structure of your home such as the walls, roof and floors, and it usually covers damage to fixtures and fittings too. So if you’ve got a fitted kitchen for instance, your insurance is likely to pay for any repairs needed.

Buy-to-let mortgages

These mortgages are especially for landlords who want to buy a property to rent it out. The rules around buy-to-let mortgages are similar to those around regular mortgages, but there are some key differences which a good broker would be able to help you to understand.

Completion

The final stage of the conveyancing process after exchange of contracts – when keys change hands and the mortgage is officially started.

Early repayment charge

Although you may be able to move house and/or remortgage at any time with some lenders, an early repayment charge will be incurred if you repay the capital within the early repayment period – the repayment period will be stated on your contract.

Exchange of contracts

The point at which signed contracts are exchanged by the legal representatives (usually the solicitors) of the buyers and sellers in the process. At this point, the contracts are legally binding, the deposit is paid and in general everyone can rest assured the move is going to happen.

Fixed rate mortgage

With a fixed rate mortgage, your mortgage repayments stay the same for the time period (the term) of the mortgage deal. This has the advantage that you know exactly what you’ll be paying each month, however the disadvantage that if the Bank of England Base Rate changes, you won’t reap any potential rewards either.

Guarantor mortgages

Getting a guarantor to help support your mortgage application could help you buy a property when you have a small deposit, or low income. You’ll need a relative or friend who is willing to be named on the mortgage with you and make any payments you miss.

Interest

Like with most loans, as well as paying back the capital you borrow, you will also have to pay interest on your mortgage – i.e. extra money on top of the capital divided into monthly repayments. This may be calculated on a daily or annual basis, depending on the specific terms and conditions of the mortgage – all of which should be explained in your mortgage agreement.

Interest only mortgages

As the name suggests, with an interest only mortgage, you’ll only pay back the value of the interest each month, rather than paying off the actual property value itself. So, with this mortgage your monthly payments should be lower than with a regular mortgage, but at the end of the term you’ll still owe the original loan amount.

Joint mortgage

A mortgage that’s taken out with two or more people named on the contract. All people named have responsibility for meeting the repayments.

Loan-to-value (LTV)

The loan-to-value ratio is how much you’ve borrowed with a mortgage compared to the value of your property – so this depends on how much of a deposit you can afford to put down. It’s calculated as a percentage, and typically, the lower your LTV, the better chance you have of getting a lower interest rate.

Life insurance

This kind of insurance usually pays a tax-free lump sum of money in the event of your death within the policy term, which can be used to pay off your mortgage. This is a tax-free sum, that’s usually decided on at the time of applying for the policy.

Mortgage term

This is the length of time you have to repay your mortgage. The typical mortgage term is 25 years when you take it on, but they can be much shorter or longer depending on factors such as your age, and how many years you’ve had a mortgage for before.

Negative equity

When a property is in negative equity it is worth less than the mortgage secured on it, this is usually caused by falling property prices.

Remortgage

This is when the homeowner pays off one mortgage with a new mortgage using the same property as security. People choose to remortgage for various reasons, but usually it’s to bring down the overall monthly mortgage payment amounts.

Stamp duty

Stamp duty – a tax that’s paid when buying a property – it’s paid by the buyers. It is paid at the point of completion, and the amount is related to the price being paid for the property.

Tracker mortgages

Tracker mortgages are a type of variable rate mortgage. What makes them different from other variable rate mortgages is that they follow movements of another rate. Usually, the rate they track (follow) is the Bank of England Base Rate.

Variable rate mortgage

Here your mortgage rate will move up and down over the time you have it, meaning that your mortgage repayments won’t always stay the same. The main cause for this is the UK economy. If you’re using a mortgage broker, they might be able to offer their opinion on whether it’s a good time for a variable rate mortgage

Valuation

Before agreeing to provide a mortgage, the lender will arrange for a valuer to look over the property to check how much it’s worth and assess its suitability for the mortgage amount that’s being taken out.

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What is the difference between fixed and variable mortgage rates?

What is the difference between fixed and variable mortgage rates?

Deciding on a mortgage may well be one of the hardest decisions you ever have to make, so it’s important to assess and understand all the options available to you.

Fixed-rate mortgages

A fixed-rate mortgage is where your interest rate – and thus your monthly payment – remains the same throughout the agreed period, typically between 2 and 5 years. By contrast, the repayments on a variable mortgage are ever-prone to change, depending on interest rates.

Perhaps the main advantage of a fixed mortgage rate is that your monthly repayment remains the same throughout the agreed term. This can offer you peace of mind, with the predictability of the arrears allowing you to budget each month around your mortgage repayments.

Because of their security, fixed-rate mortgages are often the more expensive and sought after of the two options. Their popularity means there are many providers constantly in competition with each other though, so it it’s always worth speaking to a mortgage advisor to find the best deal.

Variable-rate mortgages

The option of a variable mortgage rate is undoubtedly the riskier of the two. If interest rates rise drastically – which they may well do – It could turn out to be significantly more expensive. On the other hand, there is always the chance that you’ll end up with a lower monthly repayment, making the variable rate cheaper. The catch is the uncertainty.

If you’re unhappy with your variable mortgage rate, or you’re coming to the end of your fixed term, you may be thinking about changing your mortgage lender. The Money Advice Service also recommends reviewing your mortgage regularly. With the competitive mortgage market constantly churning out great new deals, shopping around for a new mortgage lender can potentially save you thousands of pounds.

The mortgage market is as complex as it competitive. As such, it’s always a good idea to speak to a mortgage adviser, who will explain all the options available to you.

At Clever Mortgages we focus on providing lending advice and solutions specifically tailored to your needs – whilst providing a service you can rely on throughout the process.

If you’re looking to switch your mortgage provider, get in touch using our simple enquiry form or give us a call on 0800 197 0504.

Top 10 Mortgage Questions Answered

Top 10 Mortgage Questions Answered

Moving house is stressful enough, and getting a mortgage in place can feel really daunting. With so many different products and rates available, it’s hard to know where to start.

Taking a mortgage out is a big step and has long-lasting financial implications. The last thing you want to do is enter into one without being fully informed and knowing all the facts. To help clear things up, we’ve picked 10 of the most frequently asked questions we receive about mortgages, and we’ve answered each one of them for you. – Updated for 2019.

  1. What is a fixed-rate mortgage?
  2. What is a variable-rate mortgage?
  3. What type of debt is a mortgage?
  4. How much deposit will I need for my mortgage?
  5. What should I do if I can’t afford my mortgage payments?
  6. When will the interest rates on my mortgage go up?
  7. Can I get a mortgage with a poor credit rating?
  8. How long will it take me to get a mortgage?
  9. If my income goes up, can I pay my mortgage off more quickly?
  10. What happens when I’ve finished paying my mortgage off?

1. What is a fixed-rate mortgage?

Fixed-rate mortgages are one of the most popular mortgage types on the market. With a fixed-rate mortgage the payment stays the same for the term of the rate, which will usually be between 2-5 years. At the end of the fixed term the rate usually reverts to a standard variable rate for the remainder of the mortgage – unless you switch product.

The main appeal of fixed-rate mortgages is that you’ll have the peace of mind you won’t pay anymore than what you agreed throughout your whole fixed term period – so you’ll know exactly what you’ll be paying each month. The downside is that fixed-rate mortgages tend to involve slightly higher monthly payments than variable ones, plus you won’t benefit if interest rates fall.

2. What is a variable-rate mortgage?

If you decide to opt for a variable-rate mortgage, you need to be aware that the interest rate on it can change at any time, affecting your repayment amount. If the interest rate lowers you’ll be paying less on your mortgage, but if it increases you’ll end up paying more. It’s a good idea to have funds available to accommodate a potential rise in interest rates, if you decide variable-rate is the way you want to go.

3. What type of debt is a mortgage?

A mortgage is classed as a secured debt, because the money you’ve borrowed is secured against the home you’re buying. If you fail to keep up with your repayments, your home could be repossessed.

4. How much deposit will I need for my mortgage?

This can vary depending on factors like your credit score, the lender you opt to borrow from and how much you’re looking to borrow. Generally speaking, however, you’ll need to put down at least 5% of the property’s value to secure the mortgage.

5. What should I do if I can’t afford my mortgage payments?

If you can’t afford to make your mortgage payments you need to contact your mortgage provider immediately. Burying your head in the sand and missing payments is the worst thing you can do – repeatedly missing payments can not only have a negative impact on your credit rating, but also potentially result in your home being repossessed.

6. When will the interest rates on my mortgage go up?

This is dependent on the type of mortgage. With a fixed-rate mortgage, your payments won’t change until the end of the term, at which point they could go up or down, dependant on the rate at that time.

With a variable-rate mortgage, the payments could go up or down at any time.

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7. Can I get a mortgage with a poor credit rating?

If you’ve been in debt before or entered into a debt solution, you might’ve heard you won’t be able to get a mortgage until you’ve improved your credit rating, but this might not be the case. Bad credit mortgages (also known as sub-prime mortgages or adverse credit mortgages) are available for people who’ve had some financial problems and have blemishes on their credit report.

We specialise in mortgage advice for people with less than ideal credit ratings so you could get the mortgage you need now, rather than having to wait for years. What’s more, after you’ve repaid your bad credit mortgage for a few years, your credit score should have improved, meaning you could remortgage to a standard lender with different interest rates if you wish.

8. How long will it take me to get a mortgage?

This varies depending on your situation, but generally speaking it’ll take between one and two months for a typical mortgage to be processed. This is after you’ve spent time browsing the mortgage market and weighing up the options to decide what mortgage you want to go for. Remember, entering into a mortgage is a huge decision, and you shouldn’t rush into it – make sure you’ve given yourself ample time to compare mortgages from a range of suppliers before you pick one.

9. If my income goes up, can I pay my mortgage off more quickly?

You can – but you should be sure that you can afford to do so before you consider it. As long as you’ve got enough excess cash in reserve for things like emergencies or unseen costs, paying your mortgage off early can be very beneficial. Not only does it mean you’ll have paid your mortgage off early, it also means that you could also pay less in interest due to making a lump sum payment. Just bear in mind there could be an early repayment charge though, so make sure you check with your lender first.

10. What happens when I’ve finished paying my mortgage off?

You’ll have paid off all the debt secured against your home, and your mortgage lender will remove any charges against your property they have on their system.

Want to get started?

Contact us now about finding a mortgage for you. Speak to one of our brokers, or fill in our simple enquiry form and we’ll go through all your mortgage options.

Can I get a Mortgage after an IVA?

Can I get a mortgage after an IVA?

You can get a mortgage after an IVA (Individual Voluntary Arrangement) but your choices may be more limited depending on the amount of time you have been out of the voluntary arrangement. Clever Mortgages are specialist mortgage brokers with a wealth of experience in helping to source an adverse credit mortgage after an IVA has completed.

8 mortgage lenders after an IVA

If you would prefer to speak to an Expert IVA Mortgage Adviser now, then please call us on 0800 197 0620 for mortgage advice.

How to get a mortgage after an IVA?

6 years after an IVA is registered the mark on your credit file should have come off and you should have received your completion certificate from your insolvency practitioner. This is worth checking on your credit file and also on the Insolvency Register.

Even with your credit file no longer showing an IVA it will have affected your credit rating and it can be difficult to get mainstream lenders to view your remortgage or mortgage application favorable. Luckily, there are often lenders who may provide a mortgage after an IVA. These specialist lenders are often referred to as “adverse mortgage lenders”.

Adverse mortgage lenders are found and assisted by master brokers like Clever Mortgages, who help gather information and give the required advice so you can make an informed decision.

The process of finding and applying for a mortgage after an IVA is the same as most other applications, requiring documentation and an affordability assessment. All of which Clever Mortgages can assist you with.

How long after an IVA can I get a mortgage?

You are likely to have mortgage options straight after finishing your IVA. Your credit rating may cause your options to be somewhat limited and have a few restrictions, but it is worth investigating.

The number of specialist mortgage lenders willing to consider mortgages after an IVA will likely increase the longer you have been out of an arrangement.

There are also other lending products that could be possibilities such as Secured Loans or Product switches.

In some cases, there may be lenders who would consider a remortgage with you during the IVA, but with certain requirements, such as using funds to settle the IVA.

Some lenders may decline any application for a mortgage if you have ever had an IVA, but specialist lenders could consider applications regardless of your IVA history. Generally the longer the IVA has been completed, the more lenders may become options. High street lenders may have a harder time placing your situation within their criteria, which is where a specialist master broker like Clever Mortgages comes in.

Regardless of how long ago your IVA has completed, or even if you are looking for options and you are still in your IVA we can provide advice on getting a mortgage after an IVA.

What rates can I get on a mortgage after an IVA?

Clever Mortgages have a team of mortgage advisors who have helped many other people coming out of an IVA to make successful mortgage applications and remortgages.

The range of mortgage interest rates as of 26th March 2019 are between 1.52% to 3.63%**

Clever Mortgages were able to find a mortgage for one of our customers recently which saw him save money on mortgage fees, get a competitive 1.90% rate and get this rate fixed for 5 years *APRC representative of 3.6%

Can I remortgage during an IVA?

Remortgaging whilst you are in an active IVA is possible, but there are only a few specialist lenders who would consider your case. The reason for your remortgage would also determine whether or not you were able to pursue this option.

When remortgaging within an IVA there could be requirements from the lender, such as having to use released funds to settle the IVA early.

You could remortgage during the IVA to find a better rate or to fix the interest amounts but if your intention is to release equity, you would likely be expected to pay some of this into the voluntary arrangement.

These cases are certainly worth talking with Clever Mortgages about, as they are experts in remortgaging within IVA arrangements and after their completion.

What rates can I get on a remortgage after an IVA?

Remortgaging after an IVA could be one of the first actions you take following the completion of your debt solution arrangement. The remortgage could be used to lower your payments, interest rate or to release funds for home improvements.

Overall the rates you can get will be determined by whichever lenders are available to you.

Clever Mortgages were able to consolidate the clients’ secured loan and his current mortgage into a new mortgage package. This took the clients monthly payments from £1,162 per month down to £650 saving £512 per month. *APRC representative of 3.6%

What size of deposit will I need?

The deposit size will vary by the lenders available to you, but you may be less impacted by your completed IVA history or debt solution than you think.

Some lenders may expect larger than average deposits due to your credit rating, whereas some may only expect the standard deposit size from 5% to 10% of the property value.

How to save for your deposit

Saving for the deposit can be an ordeal but you could reassign your monthly IVA payment amount into a separate account, creating a mortgage deposit savings pot.

Just because you have completed an IVA does not necessarily stop you from taking advantage of other deals such as; First Time Buyer initiatives like a 5% deposit scheme or Right to Buy schemes.

Another option is the Help-To-Buy scheme which could be an option depending on your circumstances and eligibility.

What is my credit file like after an IVA?

Your credit report will show your IVA for 6 years from the date of issue (From the start of the IVA). An IVA is an individual voluntary arrangement, meaning the term is adjusted based on your specific circumstances but usually last between 5 to 6 years, after which time you will receive a completion certificate from your insolvency practitioner.

This means that at the end or a year thereafter, the IVA will no longer be recorded as an active debt solution arrangement on your credit report. This does not mean that your credit reference will not show any debts or adverse credit like defaults or missing payments that were not included in your IVA.

Clever Mortgages are a specialist broker and can help you find a mortgage after an IVA and provide you with more information on the after effects of an IVA on a mortgage or remortgage application, including your chances of being accepted.

You can check your credit report from sites such as Experian, Noddle or Check My File which are able to give you an idea of what mortgage lenders base some of their decisions upon.

How will Clever Mortgages Help?

Clever Mortgages would use the Noddle report of your circumstances as it includes information on both Experian and Equifax. Credit reports directly from either Experian or Equifax could miss information shown on its counterpart.

Once you have a copy of your current credit profile, please complete the enquiry form below and the Clever Mortgages team can provide you with specialist advice and help find the options available to you.

A lender may consult one or more of the credit referencing agencies to help them make a decision on whether to lend to you. This can result in them potentially seeing more information on your credit profile than you would have access to (using just one credit referencing source).

A credit reference is done by a lender or mortgage broker as a part of any mortgage or remortgage application. This search is standard and highlights any current or past outstanding debts such as unsecured debt, hire purchase and secured debts.

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* APRC Representative Example Mortgage amount £170,995 (including £995 mortgage lender fee), 64 payments of £748.30 at a fixed interest rate of 2.28%, followed by 236 mortgage repayments of £889.60 at a variable rate of 4.24%. Over a term of 25 years, giving a total amount payable of £258,861 at an APRC representative of 3.6%. The contract will be secured against your property.

**Based on rates available from 3 major lenders, lending on 85% LTV for a residential purchase, gift as deposit, 25-year term, and if IVA is no longer on credit file.

Check your credit score

Many people avoid checking their credit report because they have been lead to believe it will have an impact on their overall score. In fact, you can check your own credit report as often as you like without it having an impact on your score. Although every check of your report will create a footprint on your file, only searches made by financial lenders will leave a mark on your file that other lenders will see.

Check your credit score

You can check your credit file for free here with Noddle.

Checking your credit file will NOT affect your score

Many people avoid checking their credit report because they have been lead to believe it will have an impact on their overall score. In fact, you can check your own credit report as often as you like without it having an impact on your score. Although every check of your report will create a footprint on your file, only searches made by financial lenders will leave a mark on your file that other lenders will see.

Why do we check your credit score?

As responsible mortgage brokers, it’s our job at Clever Mortgages to recommend the right products to you. Having access to your credit file means we can carefully consider your lending options and discuss other options with you if they are more appropriate.

We want to make sure that we place you with the right mortgage product and with the right lender for your situation. We also have options available for people with a poor credit history.

What does your credit score mean?

Your credit score shows lenders how trustworthy you have previously been at repaying your debts. This helps lenders make an informed decision about whether or not they should lend to you now. Be aware though of the differences between no credit and bad credit.

Checking your credit score can be daunting, especially if you’ve never checked it before. The advisers at Clever Mortgages will be more than happy to help you better understand your credit score and what type of loans you might be eligible for.

Refused a mortgage with a good credit score?

Every lender has their own lending criteria which will usually take into consideration more than just your credit score. Other factors such as borrowing against the property value, length of time in your current job or at your current address.

If you know your credit score is low, then there are things you can do to improve your credit score before applying for a mortgage.

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Things to avoid doing when applying for a mortgage

When applying for a mortgage you will want to avoid doing anything that could hold back your chances of being accepted. You might have already been working hard to improve your credit score and shouldn’t want to do anything that could further implicate your application.

Things to avoid doing when applying for a mortgage

When applying for a mortgage you will want to avoid doing anything that could hold back your chances of being accepted. You might have already been working hard to improve your credit score and shouldn’t want to do anything that could further implicate your application.

Lenders will want to see that you can afford to make monthly mortgage payments. They will typically use your credit report, your most recent payslips and your P60 to determine this.

We have put a list together of the things that mortgage lenders can view negatively during your application process. You should avoid doing any of these at all costs.

1.     Applying to multiple mortgage providers

Many people presume that by applying to lots of different places for a mortgage, they will eventually find a lender who will accept them. In fact, by doing this you can actually make it more difficult for you to get a mortgage. When you apply for any type of finance, the lender will typically carry out a search on your credit file. This will leave a footprint that other lenders will be able to see.  Too many applications within the same time period can be viewed negatively by lenders as it can look as though you have a desperate need for finance. By using a mortgage broker you can be confident that we will find you the most affordable and appropriate mortgage for your circumstances.

2.     Taking out another loan

You also shouldn’t consider taking out any other forms of credit whilst applying for a mortgage. This includes anything from a car loan to a phone contract. New loans can be a red flag for mortgage providers when you’re in the middle of your application. The reason for this is that lenders base your application on your DTI (Debt to Income ratio) at that time. Any changes such as a new loan will increase your DTI and can create a delay or even cause lenders to reject you. A huge concern for lenders will be whether you can still afford the mortgage payments on top of the new loan you have taken out. They will need to re-evaluate your situation in order to make a decision.

3.     Overusing your credit cards

Credit cards are also taken into consideration in your debt to income ratio (DTI). Making large payments on your credit card can affect your ratio so you should avoid doing this before and during your mortgage application. Additional debt on your credit card is a common reason for mortgage rejection, so you should refrain from doing anything out of the ordinary.  Any large purchases should ideally be held off until after your mortgage approval.

4.     Making a major purchase

Even if you’re not using a credit card to make payments, you should still avoid making any other large purchases when applying for a mortgage. Lenders will want to see that you have plenty of cash available throughout the process to take care of the various mortgage fees. If they see you’ve made a large purchase they might question your ability or intentions to repay your mortgage.

5.     Late payments on any current loans

Managing your current loans should be a key priority when applying for a mortgage. Falling behind on any money you owe can be extremely damaging to your mortgage application. If you do, mortgage lenders will likely assume that they can’t trust you to make any future payments on time. This can lead to your application being rejected altogether. It can be especially damaging if you have a history of bad credit and need to prove that you are able to make payments on time and in full.

6.     Switching your job

If possible, you should avoid changing your job during your mortgage application process. Lenders prefer you to be past the probation stage of your job role. Many lenders also won’t accept your application if you’ve been in your current employment for less than twelve months. This is because your job can be considered less secure and lenders don’t want to run the risk of you losing your job and not being able to afford to make the payments.

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