If you are already the owner of a property, whether it’s a family home of your own or a buy to let in your name, you will no doubt see it as an investment. It goes beyond putting a roof over your head, it will be your largest asset and you’ll either want to sell it at some point or pass it on through the generations.
The property market is always going through changes and fluctuations, with there being times that you will see property prices in Coventry soar high.
During peaks times such as these, it may be a good idea for you to take a look at your options for a remortgage in Coventry, as doing so may see you be able to access a much more favourable loan to value, which in turn can mean better rates of interest.
Loan to value (LTV) is the ratio of your mortgage to the value on the property market, expressed as a percentage. As an example of this, if you were to purchase a property for £100,000 with a 10% (£10,000) deposit, you will require a 90% loan to value mortgage on it.
Mortgage loan to values will be broken down into tiers and brackets. Typically speaking, the lowest bracket will be 60%, then increasing to the highest ratio of 95%. The brackets and tiers offered will vary across the different mortgage lenders.
If you are able to get a lower loan to value, you will have access to a wide range of mortgage deals with much more competitive rates of interest.
Taking the above-mentioned example and fast forwarding many years ahead, you may find that your property in Coventry has now grown in value to £110,000, with your initial £90,000 mortgage balance reducing to £80,000. This means that you will have a new loan to value of 73%.
From here, if you were able to take out a remortgage in Coventry, you would likely have access to a 75% loan to value mortgage, which should be able to offer you a more competitive rate of interest.
Of course there are other factors to bear in mind, such as the condition of the market, that impact interest rates when you look at a remortgage in Coventry.
Lower loan to value mortgages in Coventry will typically have that lower rate of interest, because it shows that you are much less of a risk to the mortgage lender.
Of course, in order for you to be able to access the better rates or to set better terms, you also need to see if your property is worth more than you initially paid for it and if so, what is the value of it now. In order for you to be able to do this, you need to have a valuation taken out.
When you take out your remortgage in Coventry, you will be going through the process of moving onto a new mortgage, with a brand new mortgage lender. If you were to take out a product transfer in Coventry, you would be taking out a new mortgage with the same mortgage lender.
Again, referring back to the risk for a mortgage lender, because you are with a new mortgage lender, they will need to know exactly what your property is worth, before the lend to you. There are typically two types of property valuation that you will come across.
The first of these is an Automated Valuation Model (AVM), which may also be called a desktop valuation. In taking out one of those, you won’t have a physical visit to your property, with instead it being a database that will look at similar properties in the area, before it determines the value.
The alternative to having one of these taken out is a physical valuation, in which someone makes a physical visit to your property, inspecting both the inside and outside, in order for them to determine the true value of the property themselves.
This is something that will be especially useful if you have made any home improvements or extensions, that other properties in that location maybe haven’t had. This is something you are welcome to bring up with a mortgage advisor in Coventry, if you would prefer that to be taken into account.
Whilst you may be able to use the equity within your home to access better mortgage deals, there may be times in which you wish to remortgage in Coventry and release that equity. This is something many homeowners do, with the most popular choice being to remortgage for home improvements.
When you take out a remortgage to release equity, you will need to be careful about what you are doing. In virtually every circumstance, you will take out a new mortgage to replace the previous mortgage (as is the case with a remortgage in Coventry), but you will be going up to a higher loan to value.
Because you have yourself a higher loan to value, you will also see your monthly mortgage payments increasing as well.
Many homeowners will be hoping that making an investment in your home and having all the different home improvements you wish to have done, your home will have gone up in value, meaning that when you next remortgage in Coventry, you’ll find yourself on a lower loan to value again.
It’s all about making market predictions and having a well-thought out plan, especially when you are handling what is no doubt your largest financial investment, in your home. A trusted mortgage advisor in Coventry will be able to best advise on the approach to take in your particular situation.
From time to time, you may actually wish to remortgage in Coventry earlier than you otherwise would. Whilst remortgaging is normally done “early”, before your fixed-term is due to end, you may be able to do this even earlier, sometimes even a year earlier.
The downside to remortgaging in Coventry early, is that you will most likely have to pay an early repayment charge (ERC), as you will be exiting a contractually agreed term with your mortgage lender, breaking your agreement with them.
It can be difficult to predict how house prices are going to be, so you never quite know what the property market is going to look like at any given time. What could seem like a good idea for you at the time, could actually not be financially viable for you.
People will only generally leave their mortgage in Coventry early, if they absolutely must, if their reason is good enough. It would always be recommended that you get the opinion of an expert mortgage broker in Coventry, before looking to do something like this.
An example of this could be the COVID-19 pandemic, where the Bank of England base rate plummeted to record lows. Because this happened, people who were set to remortgage in Coventry once their fixed-rate period ended were able to benefit from this and inherit lower interest rates.
Homeowners who perhaps had a year or so to go still likely would not have benefitted from these drops, unless they chose to remortgage in Coventry early, then fixing in for a longer period to keep it low. Mortgage lenders did pull a lot of products during this time, so it is a niche example.
Even with that in mind, it demonstrates an example of where taking out a remortgage in Coventry early, could be financially beneficial. If you have seen your home go up in value, you may also see the benefit in remortgaging in Coventry early, as doing so can see you access a lower loan to value.
This may outweigh the possible costs of an early repayment charge, though remember that this will still be a factor, unless you are doing a product transfer, in which case a mortgage lender may waive that fee. In addition to this, you may also have arrangement, valuation and solicitors fees to pay.
If you are able to showcase that what you are saving are able to outweigh the possible costs, it could be worth looking at. That said, it should only be looked at if absolutely necessary, so speak to a mortgage broker in Coventry before looking at this.
The Financial Conduct Authority does not regulate some types of commercial or buy to let mortgages in Coventry.
In the mortgage world, there are a wide variety of routes that someone buying a property in Coventry can go down. From first time buyer mortgages in Coventry, to remortgages in Coventry, holiday lets and even HMO properties, there’s a lot you could do!
One of the options that we come across most, that is incredibly popular for property buyers, is a buy to let mortgage in Coventry.
A buy to let in Coventry is a property purchased as an investment, it’s not a property you can live in, the sole purpose is to generate income. If you have been a private renter at some point in the past, it is incredibly likely that you have a buy to let mortgage in Coventry.
For a property to have the classification of a buy to let in Coventry, it has to be mortgaged as that type of property, with the landlord expressing their intent to rent. The tenant will be paying a monthly rental fee, that in theory should cover the monthly mortgage costs that the landlord has, plus extra.
There are many different factors to take a look into, before you are able to determine your eligibility for taking out a buy to let mortgage in Coventry.
Some of these factors will include the type of property you’re looking to purchase, how old you are (you need to be at least aged 21 and not all mortgage lenders will let you borrow past aged 75), as well as any prior experience you have of being a buy to let landlord.
The biggest factors to look at are affordability, the minimum required deposit for a buy to let mortgage in Coventry and lastly, your credit score.
For you to be able to prove that you are eligible for a buy to let mortgage in Coventry, you will need to prove to your mortgage lender that you can afford it. Most mortgage lenders base their criteria on what the projected rental income will be.
Projected rental income is the figure that your mortgage lender believes you should charge as rent, in order to cover the costs of your monthly mortgage payments, plus some more. There will be a set requirement for this, which is calculated based on the property value.
Further to this, there are some mortgage lenders that work with buy to let mortgages in Coventry, that will also have a minimum income requirement. This typically sits around £25,000, though this will entirely depend on your mortgage lender.
An expert mortgage broker in Coventry with experience in working with buy to let mortgages in Coventry, such as Coventrymoneyman, will look to find the most suitable mortgage lender for your plans, as well as with the best deal for your buy to let investment purchase.
As tends to be the case with most purchases, there will be a need for you to put down a deposit. For a buy to let mortgage in Coventry, you are typically looking at a 20-25% deposit on the property, though can be more or less, depending on your mortgage lender.
The reason that they require this deposit, is to reduce your risk to the mortgage lender, as a higher deposit means you borrow less against the property. You’d be giving yourself a 75-80% loan to value as well, which gives you much better interest rates.
If say you had bad credit when applying for a buy to let mortgage in Coventry, you would be seen as a higher risk to the mortgage lender than the standard applicant, perhaps warranting the need for an even bigger deposit.
It may be entirely possible to get a buy to let mortgage in Coventry even with a poor credit score or with a history of having bad credit, though your mortgage lender options may be much more limited. There may even be some who won’t lend to someone with bad credit at all, depending on severity.
Fortunately, there are mortgage lenders who are willing to consider buy to let bad credit mortgages in Coventry. Of those mortgage lenders, they will want to again look at how bad it is, possibly requiring a higher deposit than you otherwise might have saved up for.
In order to make an application for a buy to let mortgage in Coventry, you’ll first need to find a property that you would like to buy.
From that point, the next step is to get in touch with an open & honest buy to let mortgage advisor in Coventry, in order to confirm your eligibility. They will also check the market for the absolute best deals for you and arrange your mortgage agreement in principle.
Once you have this document, you will be able to make an offer on the property you wish to buy, which will lead on to your full mortgage application process, providing that offer is accepted.
Typically speaking, the majority of buy to let mortgage investors will take out an interest only mortgage on their property, as this means only paying interest per month, lowering your monthly outgoings.
Once the term comes to an end, you will owe the remaining capital balance. This is either covered by remortgaging it onto a repayment mortgage or by selling the property. You may be required to set up a repayment vehicle, to cover the costs.
Whilst this is mortgage type we come across the most with buy to let in Coventry (and is perhaps more tax-efficient for some), repayment mortgages are still valid options for buy to let landlords. This means your mortgage, much like a standard residential, would be interest and capital combined per month.
Even though this will likely increase your monthly mortgage payments, equity can grow quicker in your property. Furthermore, when your term ends, you will own your property outright, negating the need to pay back any large capital owed.
As discussed, a mortgage lender will want to stress-test your projected rental income, as a means to see how much you would have to earn in order for your monthly mortgage payments to be safely covered.
In terms of the amount that you are able to borrow, providing that your projected income can cover the amount you wish to borrow, you typically won’t have many limits. A mortgage lender may still want to see though that your projected rental income exceeds how much you owe per month, by a set amount.
You will need to provide your mortgage lender with a series of documents, before you are able to proceed with your buy to let mortgage process. This can include things like proof of income, deposit, your ID, address, any bonus or commission you earn and your current/most recent P60.
If you are a self employed mortgage applicant, you also typically need to provide your SA302 tax returns. Existing landlords may also be required to provide proof of rental income, which usually is found in the form of an ARLA-regulated report, as well as a mortgage statement for your other properties.
Having as much of this with you as you can, prior to starting your buy to let mortgage process, will allow you to move through your mortgage application much quicker, so we would absolutely recommend being as prepared as you can be.
Of course any mortgage will have a series of costs involved and a buy to let in Coventry is no different. There will be your deposit, you could have mortgage arrangement fees, application fees and even broker fees, plus your monthly payments, all things you may be expecting.
Further to this though, there may be additional fees such as solicitors fees, disbursement fees, stamp duty land tax, valuation fees, product fees and mortgage exit fees.
Your mortgage advisor in Coventry will be able to give you a more accurate look at the potential stamp duty rates. If you ever decide you wish to leave your buy to let mortgage in Coventry early, there may also be an early repayment charge (ERC), which are often very expensive.
Lastly, you’ll have to consider the different costs that exist beyond just a mortgage and mortgage process, such as landlords insurance, letting agent fees, income tax and then of course the standard property maintenance costs.
Over time you are likely going to have tenants that need something to be looked at or fixed. Depending on the works that will need to be carried out, as well as the contractors you are working with, this can vary from cheap to quite costly.
All of the various costs that are involved with a buy to let mortgage in Coventry will depend on both your mortgage lender and personal/financial situation. Not every cost will apply, though your mortgage advisor in Coventry will make sure you are aware of all these costs.
As a general rule, yes you will be able to remortgage a buy to let in Coventry. Common reasons we hear for landlords looking to remortgage a buy to let in Coventry, include releasing equity as a means of funding the deposit for a further property purchase.
The equity that is sitting within your buy to let in Coventry works a little differently than a standard residential property, if you happen to be on an interest only mortgage. Typically, your balance and interest would come down together, creating a much bigger gap between the balance and value.
With an interest only buy to let in Coventry, you would only see the interest come down. That means your equity depends on your deposit and if your property is now worth more than it was. Those who have an interest only mortgage may also decide they wish to pay their capital after all.
This is something that could be achieved, by remortgaging your buy to let in Coventry from an interest only mortgage onto a repayment mortgage. Whilst your mortgage payments would be higher, you would be able to pay both interest and capital together.
Though you may have limited options, you may actually be able to get a buy to let mortgage in Coventry, as a first time buyer in Coventry. With buy to let mortgages in Coventry as a first time buyer, you will most likely need to put down a bigger deposit, so you can access the amount you would like to borrow.
In addition to this, it is important to remember that you would be losing benefits that first time buyers get, such as stamp duty. This is because you will not be living there and buy to let landlords will have at least some level of stamp duty that they owe on their properties.
For some first time buyers in Coventry, you might find that being a landlord is actually a good way to create a boost to your income, prior to going on to find a property of your own with a mortgage.
Please bear in mind that when this happens, a mortgage lender will be assessing you on that second purchase with the knowledge that you already have taken out a mortgage in your name before. This could affect your affordability or lower the amount that you are able to borrow.
Originally brought forward in 2014, following the successful launch of the Help to Buy Equity Loan Scheme, the government introduced a scheme that by design had the purpose of reducing the low rate of forces home ownership across the country.
The Forces Help to Buy Scheme in Coventry is available to Tri-Service members, the Royal Navy, Royal Marines, Army and Royal Air Force, so long as they can meet the criteria.
Further to this, the Ministry of Defence’s Defence Accommodation Strategy also comes into play with this, aiming to make sure everyone has equal access to a good standard of accommodation.
Outlined in the MoD’s strategy, is the positive impact that homeownership can potentially have on people with inherently mobile careers, with these including partner employability, stable education for their kids and also continuity, as members of the services move out of being in active service.
Though it was supposed to end back in 2019, we have seen a few extensions for the Forces Help to Buy Scheme in Coventry, with the government eventually turning this into an enduring policy, which will allow it to remain available to all service members, both now and in the years to come.
The way that the FHTB Scheme will work, is that service personnel have the ability to borrow up to 50% of their annual salary, which will have a cap at £25,000, free from interest. They are able to use this, either as a means to buy their first home or if they are an existing homeowner, move home.
It is currently available to all regular personnel who have completed the required length of service, are not listed as a reservist or member of the Military Provost Guard Service, have more than 6 months of time left to serve at the time of application and that meet all of the correct medical categories.
That being said, there may still be exceptions to the criteria, especially when you are factoring in special medical and personal circumstances. To learn more about this and other information regarding a Forces Help to Buy in Coventry, please take a look at the government guidance website.
Possibly one of the best aspects of FHTB, is that you are not required to have any current savings of your own before you can use it to get onto the property ladder. You have the freedom to use this towards costs such as a deposit, solicitors fees, estate agents fees and even stamp duty land tax.
The handy news regarding deposit too, is that the vast majority of mortgage lenders will accept the funds from FHTB for doing so. It tends to be a much more relaxed scheme than other home buying schemes, with the loan from Forces Help to Buy in Coventry only requiring you to pay back over a period of 10 years.
As an open & honest mortgage broker in Coventry, that has a deep love and respect for our service members across the United Kingdom and in Coventry, we’re here to support and help you on your home buying journey in any way that we are able to do so.
From your initial point of contact, all the way through until you achieve mortgage completion and even beyond, your dedicated mortgage advisor in Coventry will work hard to make sure that you are taken care of and end up with the best result for what it is you wish to achieve.
To learn more, you are welcome to book yourself in for a free mortgage appointment and we will see how we are able to help you throughout your home buying experience.
Note; The Forces Help to Buy in Coventry is not the same as a standard UK help to buy in Coventry or shared ownership in Coventry.
If you are both a current service member and homeowner that is looking to use Forces Help to Buy in Coventry for moving home, and are aged 55+, it may be worth looking at your options for equity release or retirement interest-only mortgages (RIO Mortgages), as forces pensions may prove to be beneficial in this regard.
To understand the features and risks of equity release in Coventry and lifetime mortgages in Coventry, ask for a personalised illustration.
A lifetime mortgage in Coventry may impact the value of your estate and it could affect your entitlement to current and future means-tested benefits. The loan plus accrued interest will be repayable upon death or moving into long-term care.
The first place we should visit is the question of what is exactly is gazumping? The term gazumping is used as a way to describe an instance where a property seller accepts accepts an offer from another buyer, even if you’ve already started applying for your mortgage.
A lot of people may understandably ask the question; “Surely this isn’t legal? Especially if the seller has already accepted your offer to buy the property?”
Whilst yes, it is highly immoral and we do not condone the act ourselves, the unfortunate case is that it is not illegal and thus nothing can be done if that happens.
Gazumping happens all too often and for better or worse is a regular occurrence across the English & Welsh property markets.
The reason for this, is because until there have been written contracts exchanged by the lawyers, the agreement is not legally binding. Verbal agreements will not hold up in the court of law.
For first time buyers in Coventry, being gazumped can be especially difficult and demoralising. You’re on your way to finally achieving your home owning dreams, when it all suddenly comes crashing down.
You may also find yourself caught up in a property chain that breaks, resulting in you having to push back your moving day. If you end up losing money because of this (perhaps you’ve already paid for non-refundable survey costs, conveyancing fees etc.), it can be even more frustrating.
As mentioned further up, until there has been a legal exchanging of contracts with your lawyers, any agreements made verbally won’t be legally binding. The seller is under no obligation to take the moral high ground and does not need to keep their word.
Between the point of having your offer accepted and exchanging deals, there can unfortunately be a good number of weeks. Whilst dedicated mortgage advisors in Coventry will aim to work as quick as they can, it’s not an instantaneous process and does take time.
The reason that the mortgage process can take as long as it does, is down to varying factors, such as having someone come out to do a property survey, arranging for a conveyancer to carry out the required searches and then also waiting to receive your mortgage offer.
Whilst you’re waiting for all this to go through, other first time buyers in Coventry may come in and make the seller a better offer than what you had both previously agreed on, leading them to accept and leave you without a property to buy.
It’s difficult to pinpoint a specific cause of gazumping, as it varies per situation. Sometimes it’s financial preference, but it can also be anything from a buyer who’s process may be quicker, to someone who isn’t reliant on a property chain.
The term ‘gazumping’ is used as an umbrella term for any of these situations, wherein the seller takes up another offer after already verbally agreeing to yours.
There’s not a lot that can be done initially. A lot of the steps that might occur may not even become factors until you have decided to make an offer on the property.
Those steps, for reaffirmation of the points mentioned earlier, are having someone take out a property survey, finding a conveyancer to do searches, and the point where your mortgage is offered.
Even though you have limits as to what you can do to start with, you may still be able to quicken the pace between making an offer and exchanging your contracts. These are a few ways in which you can do this:
Additionally, there are a few other tips and tricks that may be quite useful to you and give you some additional security prior to the point of making contract exchanges with the seller.
First of all, make sure you ask the seller if they can possibly take the property down from the open market whilst you’re sorting out your mortgage, as this will lower the chance of someone else jumping in with an offer the seller can’t refuse.
The property owner is not obligated to agree to this request, though we generally find that many homeowners will agree to this request out of respect, especially if they’ve struggled in getting offers on the property in the first place.
Second of all, you should definitely look up your options for setting up a Lock-in-Agreement, as this means the seller has something to lose too as they will have to put down a deposit down as well.
If one of the party decides to pull out of the deal with one of these agreements in place, the other side will take their deposit. Sorting this out on the legal front can cost a pretty penny, but for that added security you may find it to be very beneficial.
Last of all, you may have the option of taking out insurance in order to protect yourself against being gazumped. These policies will be an agreement that in the event you are gazumped, you will receive a lump sum payout.
If you are a first time buyer in Coventry, you may not aware of what a mortgage agreement in principle is. A mortgage agreement in principle (sometimes shortened to AIP or DIP – decision in principle) is a document that demonstrates the lender believes, so far, you are a good candidate for a mortgage and are ready to go.
This shows both the estate agent and the person selling their home, that you are creditworthy as you have passed the lenders initial credit score. It’s important to remember though that this is not a guaranteed mortgage, as going for a full application will require even more in-depth background checks.
However, it is a good idea to get one done at the earliest opportunity for the following reasons:
When you are at the point where you would like to make an offer on a new home, you’ll find that the majority of estate agents will undertake due diligence and ask you to provide them with proof that you do in fact have the means to proceed with the property purchase.
Your proof will usually come in the form of bank statements, but can also be done using an agreement in principle. This is something that we can provide for you, usually within 24 hours of your initial appointment.
Once you have provided them with all this documentation, the estate agent will generally cease marketing the property and put a “sold” or “sale agreed” board up outside of it.
If you already have a mortgage agreed prior to making an offer on a property, this will definitely appeal to the seller, as this proves you are not making an offer on the fly and have actually put a lot of thought into how you’re going to fund the purchase.
This might persuade a seller to accept an offers you make that could possibly be under their asking price.
When it comes to purchasing a new or additional home, some customers like to try and run before they can even walk. They charge ahead all guns blazing, making an offer on a property without actually making sure they can proceed in the first place.
If the application then goes ahead and fails, this can result in disappointment that could’ve been avoided. The last thing you want to be doing is having your heart set on a new family home and then feeling down when it doesn’t work out the way you had hoped.
This can all be prevented by getting in touch with us at an earlier stage. Sometimes there are factors that may cause an application to fail, that given time and care with the help of a mortgage broker in Coventry, can be solved over time.
An example of this is, let’s say you have a disputed mobile phone bill that keeps cropping up. This is something that can be sorted with the appropriate action. Some think they’re on the voters roll when they are not. Give it a few weeks and that can be sorted too.
In some cases you might not be able to get a mortgage at all. If that does happen to be the case, it’s better that you are made aware of that now rather than mess people about. One of our dedicated mortgage advisors will be able to tell you what you need to do to improve your credit-worthiness for the future.
Let’s say in theory, you know that you have got a good credit rating and have never been turned down for credit, you’re registered on the voters’ roll and you’ve always keep up your monthly credit payments. What could possibly go wrong?
Well the truth is, you could approach 10 different lenders these days and get 10 different results from each of them! They all have their own lending criteria and calculate affordability in their own unique ways.
If you are Self Employed in Coventry it can be complicated further, as some lenders may take your net profit, whilst others are known to use your salary and divided. In some cases, you’ll find that lenders may even use your latest year, whilst others prefer an average over 3 years.
Being mindful of your borrowing limits is important as this will help you determine what your ideal price range will be. Ou dedicated mortgage advice team will be able to advise you of the maximum mortgage available to you. Also, more importantly, together we’ll work out how much you can afford to pay back on a monthly basis.
Even if you are not married and aren’t looking to settle down and have kids at any point in the near future, it is likely that you will still benefit from taking out life insurance in Coventry. No matter your personal circumstances and life choices, if you are a single homeowner, there are still plenty of justifiable reasons to take out life insurance.
Having a life policy in place can be a big support to your family in dealing with any apparent debts after your passing, such as any remaining mortgage payments that need to be made.
Typically, the purpose of taking out life cover is to cover the costs of any mortgage payment debts. The policy will usually be set up to automatically pay out a lump sum, equivalent to the mortgage cost, in the event that the policy holder (the person with the life cover) passes away whilst still having outstanding monthly mortgage payments.
If you are living with a partner or you have children, the insurance might even be extended into an income boost provided to your dependants, in order to cover any living costs.
The reasoning for that particular extra protection may not be necessary for single cover applicants, but taking out some insurance to cover your mortgage is still worth doing to ensure your payments are securely paid off when you’re gone.
If a single homeowner passed away before their mortgage balance has been paid off, their bank or building society can look to pay off that balance from their late customer’s estate, i.e., their collective belongings (accumulated assets is a term people use for this). This will be something of worth they can sell, like a car.
Quite often when these cases arise, we find that the property will get sold at auction in order to pay off the remaining balance. If the home happens to fall into negative equity, the lender has every right to demand that the difference must be made up by the estate.
As an alternative to this, the lender can demand that the property be sold with any surviving family members not being able to make up any shortfall on the balance. As if this wasn’t bad enough, if the probate process is drawn out (the probate is the period of time where the individual’s estate is handled), the lender can actually continue to add interest charges, increasing the total amount of the balance that needs to be paid. Morally questionable, but unfortunately not illegal.
Taking out life insurance will help protect your family and/or estate from these problems from occurring.
If you are looking at the options you have for taking out life cover in the future, please get in touch and book yourself in for a free consultation with one of our dedicated protection advisors in Coventry.
No matter if you have plans of becoming a first time buyer in Coventry or are already a homeowner, we feel this is something better sorted now than left too late.
A life insurance policy can also mean that if you have any children or grandchildren, they can be left some form of inheritance, regardless of if there is equity in the home.
If you have been looking at getting a mortgage or more specifically have been looking at your options for a Remortgage in Coventry, it’s likely you will have seen the term Capital Raising before.
You may see such a term and be wondering what that means, what exactly is Capital Raising? The answer is simple; Capital Raising is the act of raising money, in this case referred to as Capital. This is done through a few different methods and can be used for various reasons.
A common way for this to occur is for customers to take out a Remortgage as a means of releasing the equity in their property. Equity is the difference between what you have left to pay on your mortgage and the true value of the property.
If your property happens to increase in value over the duration of your mortgage, rather than Remortgaging to Release Equity, you may find yourself looking to do this with a Further Advance. This is where you take out an additional mortgage on your property to borrow even more, as a means of once again releasing equity.
This mortgage will typically be over a longer term and have interest rates that are lower than a standard personal loan, although it will be paid back alongside your existing mortgage.
This can be a great option for those who do not wish to Remortgage, or maybe tied into their existing deal. However, there are risks, such as a higher risk of repossession if you cannot keep up the significantly larger number of monthly repayments.
A Second Charge Mortgage works similar to that of a Further Advance, wherein you will be taking out an additional mortgage alongside your existing one, as a means of releasing the equity in your home for future home improvements or anything else you wish to spend your newly acquired funds on.
The difference between a Second Charge and a Further Advance is that a Second Charge will often be with another lender and on a different rate. In the unfortunate event of a repossession, your initial mortgage lender will be paid back from the property’s sale, with any remaining funds used to pay off the Second Charge.
You may find yourself needing to Capital Raise and release equity via a Remortgage, for all kinds of reasons. Popular choices for this include to fund any Home Improvements, Modifications or Alterations, such as a new home office, a possible home extension or even a loft/garage conversion, as well as to consolidate any debts that have been accrued over time.
Other options may include to gift a deposit to your children, to purchase a second home (usually an option with Buy to Let Landlords in Coventry), to fund large purchases such as a car, wedding or holiday.
If you have equity in your property and are looking to take out a capital raising mortgage, then a remortgage in Coventry could be useful to you. Generally speaking, mortgage lenders will let you borrow up to 90% of the value of your property.
Please do get in touch and we will advise you of the most appropriate option for your circumstances. If remortgaging isn’t quite for you, taking out unsecured credit might be a more suitable option for you. A standard Remortgage can take roughly around 4 to 6 weeks to go through.
With Debt Consolidation there are some risks to take into account. That is why we always recommend you speak with a qualified Mortgage Advisor in Coventry, before consolidating any unsecured debts against your home.
Coventrymoneyman is an experienced Mortgage Broker in Coventry, here to help you find the best capital raising mortgage deal for both your financial and personal situation. All of our customers will benefit from a free remortgage in Coventry consultation. During this consultation we will make a full recommendation.
If you are over the age of 55, you may find yourself better suited for taking up equity release in Coventry.
No matter if you are a first time buyer in Coventry, looking to take that initial step onto the property ladder, thinking of moving home in Coventry, or looking to Remortgage for any potential Home Improvements, the concept of overpaying, even by a minor amount, can make a huge difference in the amount on the interest you pay back over the course of your mortgage term. The earlier you look at overpaying, the better the effects of your extra mortgage payments.
Whether or not this is done, depends on the homeowner. Some may choose not to down this route, whilst some struggle to afford these additional payments. A lot of the time though, it comes down to life getting in the way.Even still, if you can, overpaying is the ideal thing to do when you take out a mortgage. Let’s be honest though, there’s always something new and flashy we’d rather buy, as opposed to making an extra payment on the mortgage.
Part of the problem here is remembering to overpay. It’s not something that’s particularly likely to cross your mind too often. Possibly when your mortgage only has a few years left, but the impact at that point isn’t as great as it could have been if you’d done it earlier.
An easy way to make overpaying part of your routine is to set up a standing order paying your lender each month. Even better, organise it so that it goes out the same day as your mortgage payments. This way, it just feels like one amount and you will become used to this.
By using a standing order, you’re in control. Unlike a direct debit which the receiver controls, you can easily cancel a standing order if your financial situation changes. Whilst it would be a shame to stop overpaying, at least you would benefit from the overpayments made up until that point.
Overpaying your mortgage is a great habit to get into. You don’t need to pay huge amounts unless you feel you can. But you’ll be grateful toward the end when you realise you’ve been able to shave a year or two off your repayments.
If you overpay, some mortgage providers will even let you make reduced payments or take a payment holiday if you have been overpaying for a while. Before taking a payment break though, it’s important to check with your lender that you are eligible to do so as you could face a negative mark on your credit report if you’re not.
If you need any extra specialist mortgage advice in Coventry, make sure to get in touch and we will see what we can do to help!
A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender.
Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.
This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Coventry will be able to look at, to see if you qualify.
All our customers who opt to get in touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.
95% mortgages are usually accessible by both first time buyers in Coventry & those who are moving home in Coventry. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.
A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.
Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.
Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage.
When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation.
Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.
Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.
Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not.
There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as.
A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property.
So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future.
Times are changing, more and more people are renting, instead of buying a home. However, many people still see renting as a waste of money. If you have parents that are homeowners and you are still young, they might encourage you to buy a house rather than renting it.
But which option is better? Why do some people choose to rent but some people choose to buy? In this article, we will dive into the pros and cons of buying a home vs renting…
Buying a home is always a stressful process, not only financially but also because of other problems that might occur in the future. There are a lot of decisions to make when buying a house.
There are lots of pros and cons to buying a house, however, it’s really down to your personal and financial situation to whether or not you are suited for buying.
You have to keep in mind that this is an investment, this is a home that you will be living in for years. So, the most important thing is to find the most suitable one for you and that should be your motivation. That is why buying can be a tough call; is a property purchase a part of your long terms plans?
It is no secret that owning a home takes out the surprise of your landlord wanting the property back (which they can do at any time whilst renting). If you own a house and can manage to keep up with your mortgage payments, no one can force you to leave the house. However, if you are a tenant, even though the landlord has to give you some kind of notice, if your landlord wants the house back from you, there is not much you can do.
As a tenant, if your landlord wants the home back, you have to leave. It can be very unfortunate if you have children in a local school or your work is nearby. It can also be bad for your family as a whole. That is why it’s always great to have the security of your own house.
Throughout time, the value of a house will always rise but you never know if a house market crash is around the corner, and it might be annoying to buy a house only to watch its value drop.
The worse thing that could happen is that you break up with your partner, or you have to stop working due to an illness or something else and have to sell the house and lose the money that you have put into it. That is why you always have to think about the future before rushing into something and investing.
Generally, mortgages are cheaper than renting. Plus rent payments may change over time with interest rates going up and down, and it’s unlikely for them to decrease. On the other hand, if you haven’t got a fixed-rate mortgage, it may be just like renting, your mortgage payments could change. Before you know it, you are in the same boat.
Usually, rent goes up every year, and it is highly unlikely for your landlord to lower it. Even in the middle of the pandemic, most of the landlords refused to lower it.
One of the main pros of renting is flexibility. For example, if you get a job offer that requires you to move or you want to move home in Coventry, you have to think twice as a homeowner. However, as a tenant, giving notice to your landlord is more than enough. Of course, as a homeowner, you can sell your home and buy a new one, but this is time-consuming and very expensive. And you have to make the decision whether it would be best to keep the house and rent it out or sell it. This is another dilemma that won’t cross your mind if you were renting.
All in all, if you believe that there are other places that you might want to live in the future, buying a house might not be the best option for you. Always think of buying a house as a long-term commitment.
Repairs are another positive if you are renting because if you are a tenant, your landlord is responsible for every major and sometimes minor repair. However, some landlords may take a lot of time to get around to these repairs, it’s annoying but they’ll sometimes do it on purpose. All you can do is keep trying to get a hold of them. Some may be good and responsive, it’s just down to luck. Some minor repairs may be up to you, but generally speaking, your landlord has to handle it.
When you are a homeowner, everything is up to you. Including the insurance of the property which will be a condition of any mortgage you take out.
Even though many people say owning a home is easy, it is not for everyone. There are many things you have to consider before actually making an investment like this. There is no harm in renting for a while if you made the decision to move in with your partner or have an unstable job that might require you to move somewhere else in the future.
Even though it’s more common for people to buy a house rather than renting, no matter what decision you make, you will have to pay your monthly payments. You just have to be aware of your current financial position at the point of application.
For further expert first time buyer mortgage advice in Coventry, make sure to get in touch and we can recommend you whether it may be better to rent or buy based on your financial circumstances.
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UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
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Coventrymoneyman.com & Coventrymoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is Registered in England, No. 6789312 | Registered Address: 10 Consort Court, Hull, HU9 1PU.
Authorised and Regulated by the Financial Conduct Authority.
We are entered on the Financial Services Register No. 627742 at www.register.fca.org.uk
