First Time Buyer Archives | Mortgage Advisors

Stamp duty holiday extended and 95% mortgages now available

Posted on 3rd March 2021 | by Neil Alexander

Whats in this section

Who is the Government’s mortgage guarantee scheme for?

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

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

What is Stamp Duty?

What is the Stamp Duty holiday?

What is a 95% LTV mortgage?

How can Clever Mortgages help me?

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?

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

Alison Tetlow

Alison is a specialist mortgage broker who has been working for Clever Mortgages for 7 years helping customers with bad credit and has over 25 years experience within the mortgage and housing market.

Call us on: 0800 197 0504

See our FAQ page

A Beginner’s Guide to Help to Buy Mortgages (HTB)

Posted on 19th March 2020 | by Neil Alexander

A Beginner’s Guide to Help to Buy Mortgages (HTB)

Homeownership is becoming a distant dream for a growing section of the British population. According to government data, the average age of first-time homebuyers has increased across the country, with only 27% of Brits under-35 owning their home in comparison to 65% in the 1990s.

Are you a first-time homebuyer struggling to come up with the down payment? Don’t worry, the government can help you. The UK government launched the Help to Buy (HTB) mortgage scheme in April 2013 to help first-time homeowners, as well as existing homeowners, buy a property.

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

What is a Help to Buy (HTB) mortgage?

The Help to Buy scheme is a government-aided initiative to help first-time homebuyers and existing homeowners purchase a new property buy helping towards the deposit. There are two primary options under HTB program: equity loan and shared ownership.

We’ll focus on Help to Buy equity loan in this post.

Financial assistance under HTB mortgage

Here is how you receive financial aid under Help to Buy (HTB) equity loan.

The government provides an equity loan of up to 20% of the price of the house (40% in London), subject to a maximum purchase price of £600,000.
The borrower must contribute at least 5% of the price of the property, and the rest (75% or 55% in London) is borrowed from a mortgage lender. As per the rules, you must apply for a minimum mortgage of 25% to qualify under the program.

Repayment terms and interest rate of HTB mortgage

The maximum repayment term for a Help to Buy equity loan is 25 years. You have to repay the exact percentage amount (20%) to the government upon the sale of the property.
You can repay the loan anytime during these 25 years. However, you have to pay at least 10% of the market value of the house in an early repayment.
There are no interest payments during the first 5 years of the government loan, but past that, you’ll pay 1.75% plus 1% as interest. The interest rate will rise in proportion with the inflation or Retail Price Index (RPI).
There is a monthly management fee of £1 for the first 5 years.

How do you qualify for a Help to Buy mortgage?

The government has set some qualifications for Help to Buy mortgages.

The property should be newly built with a maximum price of £600,000.
As the borrower, you need to contribute at least 5% (of the property’s value) as a deposit.
You must take a traditional mortgage (from a qualifying lender) of at least 25% of the house price.
If you are purchasing a house in London, your contribution and mortgage must cover 60% (55% Mortgage/5% deposit) of the house price. If you’re buying a home outside London, the amount rises to 80% (75% mortgage/5% deposit) of the cost of the property.
The maximum primary mortgage amount cannot exceed 4.5 times of your household income.
The Help to Buy program is not available for buy-to-let purchases. It has to be your primary residence, and you cannot sublet it until the HTB loan is repaid.

How Help to Buy mortgages will change in 2021?

The Help to Buy mortgage scheme is set to undergo significant changes after March 2021.

Under the new rules (applicable between April 2021 and March 2023), only first-time homebuyers will be eligible for a HTB loan. Additionally, the government will introduce regional limits for the maximum house price instead of the current £600,000 country-wide limit.

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!

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Mortgage jargon buster

Posted on 12th July 2017 | by Neil Alexander

We know that getting a mortgage can be confusing. There are lots of things to consider and a lot of terminologies that you may not have heard before. Here we have tried to clear up the confusion by explaining in simple terms what these different terms mean.

Mortgage-related terms

Mortgage broker

A mortgage broker is an adviser who can arrange a mortgage between borrowers and lenders. Clever Mortgages are a mortgage broker who can help source the right mortgage for you.

Mortgage lender

The financial institution who lends the mortgage funds to a borrower in order to buy their home. We have a comprehensive range of lenders to help get you a mortgage whatever your situation.

LTV (Loan to Value)

A ratio made up of the size of your mortgage in relation to how much your property’s worth. People who are borrowing 60% or less are likely to get the best deals.

APR (Annual Percentage Rate)

The overall cost of your mortgage per year, including interest and associated fees. This amount will vary from lender to lender.

AIP (Agreement in Principle)

This is a document that you will receive from a mortgage lender to confirm that you can borrow a certain amount from them. This does not mean your mortgage has been officially approved but you can use this to show sellers that you can afford the property.

Mortgage valuations

A mortgage valuation report can give you a rough indication of how much a property is worth. They take place before your mortgage is approved to give the lender enough information on whether the property is safe to lend on. This is not the same as a homeowner or structural survey.

Surveys

A survey is a more in-depth version of a valuation, carried out by a qualified surveyor before purchasing a property. They will inspect the property to make you aware of any structural problems, major repairs or potential issues. These can help you to avoid any expensive surprises after you’ve bought the property.

Equity

The total amount of the property you own outright without considering the remaining mortgage. This includes the deposit amount, the amount of the mortgage you have paid off and any value gained on the property during ownership.

Negative equity

A property is in negative equity when the mortgage is worth more than the house is worth. This is usually caused by falling property prices.

Stamp duty

Stamp duty land tax (SDLT) is a lump-sum tax that must be paid by anyone purchasing a property in the UK above £125,000. For more information on stamp duty, please see the Gov.uk website.

Base rate

This is the interest rate set by the Bank of England for lending to other banks. This rate is used as a benchmark for interest rates in general.

SVR (Standard Variable Rate)

This is the go to rate that lenders will put you on once you’re at the end of an introductory fixed, tracker or discounted deal. Each lender will have their own SVR rate and this usually fluctuates in line with the Bank of England’s base rate but may be higher.

Mortgage arrears

This is a legal term for overdue or missed payments on your mortgage. This can lead to your home being repossessed if you don’t agree to a term with your lender to pay off the arrears as soon as possible.

Conveyancing

The legal work that takes place when you buy or sell a property. Your conveyancer will take care of transferring the cash to buy your house as well as dealing with the Land Registry.

ERC (Early Repayment Charge)

If you pay off your mortgage early or make overpayments that are more than your set limit, then you might incur an ERC as set out in your contract terms.

Arrangement fee

This is an administration charge that you pay to your lender in order to set up your mortgage. You can usually choose to pay this amount in full or add it onto your mortgage.

Booking fee

Also known as an application or reservation fee; a booking fee is required to reserve a mortgage deal. This amount is non-refundable and you’ll be expected to pay upfront when you’ve submitted your application.

Mortgage Types

Fixed rate

A fixed rate is where your mortgage stays at the same rate for a period of time. This means that you can be exactly sure what you will pay from each month to the next.

Variable rate mortgage

This is where your charges are in line with the mortgage lenders SVR. This means that some months you could be paying more whilst other months you could be paying much less.

Tracker mortgage

A tracker mortgage is a type of variable rate mortgage but most commonly tracks the movement of the Bank of England’s base rate. The amount you will be charged each month will be in line with this amount.

Capped mortgage

If you choose a mortgage with a capped rate then the interest rate will never exceed the cap set, regardless of any changes to the Bank of England base rate.

Offset mortgage

These mortgage types link to your savings account as well as your current account. This allows you to make overpayments each month, allowing you to pay your mortgage off more quickly. These types of mortgages are most suitable for high-earners who are able to save each month.

Interest-only mortgage

Interest-only mortgages allow you to only pay off the interest on the amount you borrow. At the end of your mortgage term, you use your savings or investments to pay off the rest of the amount.

Subprime mortgages

Subprime mortgages are for people who have a poor credit history. Higher interest rates are usually associated with these types of mortgages as conventional mortgages are seen as high risk as the customer is more likely to default on the loan.

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