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If you are a First Time Buyer in Birmingham buying a house without support is not always easy. It is undoubtedly one of the most exciting things to do in your life but perhaps the most expensive investment of one’s life that needs to get done with dire vigilance. Unless you have a respectable amount, you will need to take out a mortgage to finance a house.
Applying for a mortgage can be nerve-wracking, and perhaps a very daunting task. No lender lends money easily. Every Lender goes through a strict process of verifying a borrower’s credentials before lending you the loan. It’s important you have all documentation organised that will support you through the process of getting a mortgage. For further information how to be prepared, check out our article ‘Getting preparing for a mortgage in Birmingham‘.
Once you decide to seek mortgage advice in Birmingham, you need to notice that the law demands lenders to lend money responsibly. It will require careful observation of bank statements or the creditworthiness of a borrower. However, lenders cannot grant you credit if they think that you cannot service the debt or found that you are financially weak.
Mortgage lenders require you to provide them with recent bank statements from any account with readily available funds, be it a salary or savings account. The purpose of carrying out such activity is to confirm that you will afford the down payment and make your monthly mortgage payments successfully without any delays.
You might be pondering how bank statements can act as proof of the creditworthiness of a borrower. One trend that has come to the forefront is the question of gambling transactions on bank statements. Let us discuss each question in detail for better clarification.
Typically, gambling and the mortgage does not go together. Taking out a mortgage means that a bank acknowledges a borrower’s creditworthiness and that a borrower can make timely payments. But if a bank finds out that you are a professional gambler, using your winnings as evidence that you can afford to take out a mortgage, it might lead to the mortgage getting declined. However, there is nothing illegal about licensed gambling. Many people practice gambling occasionally or simply as a pastime or a hobby.
You might have noticed that even the bookmakers and gambling advertisers urge customers to gamble responsibly. Therefore, we advised keeping this in mind when applying for a mortgage loan. While it is not the Lender’s job to tell you how to live your life, how to spend your money, or indeed to moralize on moral rights and wrongs of gambling but they do have a duty to lend you prudently.
Suppose lenders need to prove to the regulators that they are making prudent lending decisions. In that case, it isn’t entirely unreasonable of them because you would adopt a similar approach when it comes to lending your finances to anyone needy.
Gambling indeed presents a higher risk to the Lender. However, as we mentioned above, it is not illegal to gamble, so just because you have the odd gambling transaction on your bank statements does not mean you will get automatically declined for a mortgage. That depends on the type of gambling, the amount of money you bet, and the frequency of such transactions, all play a significant part when lenders make their decision.
If your bank statements show a pattern of unaffordable, high-risk betting, you may find that lenders’ choice gets drastically reduced. Lenders will compare the level of gambling concerning your income so small flutters that do not often or affect your finances may get accepted.
On the contrary, if you bet more often and get overdrawn continuously, the Lender will likely count you as irresponsible and potentially decline your application.
As we’ve seen, lenders look at your bank statements to identify how well you manage your money and to help them establish a viewpoint against you that either gives them the confidence that you are financially prudent or not.
Please note that the lenders are financial institutions that, either directly or as part of a wider group, often sell current accounts, overdraft facilities, credit cards, and personal loans. Therefore understand that these things can all play an essential part in prudent financial planning.
The key for a mortgage applicant is to what extent these facilities get managed. For example, having an overdraft facility and occasionally using it, is not inherently wrong, but regularly exceeding the overdraft limit is not considered satisfactory. Thus, lenders will look for excess overdraft fees or returned direct debits because these would generally show that the account is not getting well managed.
Other things to notice consist of the credit transactions from pay-day loan companies. A credit score is highly influential in almost all financial transactions. If you mismanage your credit and earn a low credit score, you’ll be less likely to qualify for loans or credit or end up with a high-interest rate on a loan and low terms and conditions. Therefore being a responsible credit score holder shows that you are trustworthy.
The simple answer is to be sensible and, if possible plan ahead and plan carefully. Typically, a bank would ask for up to three months of your most recent bank statements. These will show your salary credits and all your regular bill payments. Thus, if you know that you’re likely to apply for a mortgage loan soon, try to ensure that you avoid any of the above pitfalls.
Take a break from gambling for a short while and work on presenting a strong bank statement. Often when you seek Mortgage Advice in Birmingham, you’ll observe that some lenders may ask or may not ask for your bank statements. So to be on the safe side, if you do gamble, please gamble responsibly.
If you are a First Time Buyer in Birmingham who needs more information about the world of mortgages, it’s key to get some Specialist Mortgage Advice in Birmingham from an expert Mortgage Advisor. Throughout the process, they can provide you with the best help and support you need to get you on track with your finances.
At the start of the Coronavirus pandemic, the Government promised that all borrowers would be allowed a three-month mortgage payment holiday if they needed it. Most lenders followed the Government’s guidelines and did their best to help their borrowers during these hard few months.
We have thought carefully about the possibilities of what could happen to your Mortgage over the next few months. We are working very closely with all of our lenders to ensure that if anything changes, we can inform you right away and recommend the best option for you to take so that you still feel secure and happy with your Mortgage.
We feel that it is best to summarise what mortgage payment holidays are, what lenders are doing, and who can provide you with help and guidance through these next few months.
Mortgage payment holidays are an agreement entered into with your bank, building society, or mortgage lender to defer your monthly mortgage payments for a set period. In this case, 3-months.
It does not mean you never have to pay the amount back, but the interest you defer gets added to the loan amount, while your capital balance will not decrease. In other words, your mortgage amount will increase slightly, and you will continue to attract interest on the whole amount.
When you are ready to continue the payments, this could mean that your monthly payments get recalculated at a slightly higher level, or your mortgage term gets increased somewhat. Most lenders will probably prefer not to extend your mortgage term as this could take you past their standard retirement ages, but the detail on this will follow in due course.
Dependent on your mortgage deal, you may be able to pay off a lump sum later in the year to bring your Mortgage back to where it would have been.
Mortgage Payment Holidays are available both for those with residential or buy to let mortgages, which means landlords also have assistance if rental payments are affected.
The full proposal is in detail below:
We would recommend speaking to your Mortgage Advisor in Birmingham. They will assess your financial situation first before looking to defer your payments as your situation may not yet be pressing.
If you are wondering why use a mortgage broker in Birmingham like us, will allow you to explore all of your current mortgage options and could make things feel a lot less stressful.
In some cases, a mortgage payment holiday can harm your credit score, but most lenders have now said that for issues linked to the virus, they will ensure that this is not the case.
You must ask this question to your lender directly and record the response, including the date and the name of the person you are speaking to avoid confusion later. Different lenders are doing other things.
At first, everything seemed like it would remain the same, and you would still be able to make changes to your mortgages as usual. However, this has changed in the last couple of days, and lenders have been asking borrowers to avoid making changes whilst you are within a mortgage holiday period. So, at the moment, they are not allowing mortgages and product transfers.
Borrowers nearing the end of their existing product may get forced to move on to the higher lenders variable rate. It might mean that borrowers who act too early could find themselves on a mortgage payment holiday that accrues interest on a costly variable rate.
We would highly recommend speaking to your remortgage mortgage advisor in Birmingham, and they will determine the best course of action based on your personal and financial situation. If possible, arranging your mortgage transfer first then asking for the holiday would seem to be the most sensible way forward.
At the moment, no Lenders have withdrawn mortgage offers; in fact, some are extending offers past the standard six-month expiration date.
It would help if you did not pull out of your purchase unless, for example, you are worried about losing your job as a result of Coronavirus. We are advising everyone to proceed as usual for now and “wait and see” – you are not committed to completing your purchase until contracts get exchanged.
In some cases, lenders can offer you a temporary switch to interest-only to reduce your monthly payments but not to add any further to the loan amount by still servicing the interest payments each month.
It may not be necessary to convert all your Mortgage to interest only, and it may be that putting part of the Mortgage on this basis could give you the breathing space you need.
People with savings may find that remortgaging onto an offset basis could give them a helping boost they were looking for, and they will be cutting down on their monthly payments whilst keeping hold of their savings.
For example, someone with a £400,000 loan and £100,000 in savings would only pay interest on £300,000. Either way, this will massively reduce their monthly mortgage payments.
For others, a straight remortgage to another lender, calculating the cost of any early repayment charges, may well be enough to ease the burden or simply extending the term of your Mortgage.
If you still have any other questions on mortgage payment holidays or want general Mortgage Advice in Birmingham, give us a call today. We want to help you and your mortgage journey through these tough few months ahead. Speak to a specialist mortgage advisor in Birmingham today.
Buy to let landlords in Birmingham, who have a current property portfolio, get in touch to speak with one of our mortgage advisors in Birmingham asking if there’s any way to exchange ownership from your name(s), into the name of your own limited company?
Firstly, you will need to understand the significance of how mortgage lenders approach Limited Company purchases, and there are only a handful of mortgage lenders that accept Limited Company applications through anything other than a Special Purpose Vehicle or (SPV) Company.
For example, a company set up expressly to invest in a particular type of property. What happens is when you register a company, the registration includes a Standard Industrial Classification (SIC) a code that sets out the business type(s) in which the company participate.
Additionally, mortgage lenders wouldn’t accept applications from trading companies that can make trades in other areas, like a plumbing or heating company. In any case, you would then need to set up a separate company to own your BTL properties, instead than purchasing them through your plumbing company.
The SIC codes typically accepted are 68100, 68201, 68209, 68320 but it can vary from lender to lender. To find out more information about SIC Codes, consult the Government website click here.
Firstly, not every mortgage lender will consider applications from an SPV, preferring to limit their lending to individuals/couples in their name(s), which means that individuals tend to have a wider choice of lender and product than SPVs.
Secondary, lenders that will lend to an SPV, the mortgage rates offered would typically be higher than those provided to individuals. In recent years, changes got made to the way rental income is taxed. For many people, the tax advantages generated by SPV ownership (relating to how payment gets taken and how that income is taxed) more than make up for any extra interest charges or lack of choice.
We would highly recommend when considering whether to buy your property portfolio under the auspices of an SPV, is that you take specific advice from a specialist Tax Advisor in Birmingham.
They will assess how factors such as your other income sources, and the rate of personal income tax you pay will affect your overall tax status and establish whether individual or SPV ownership is the best choice for you.
By now, you have taken into consideration the main factors in deciding where they buy under an SPV is your tax position. Which complicates things when choosing to whether to transfer properties you already own as an individual into company ownership.
Firstly, the issue is that these sorts of transactions are not a simple transfer; it is a change of legal ownership. The Limited Company is a separate corporate identity, so the transaction is effectively a purchase by the SPV from you selling as an individual, so stamp duty charges, legal costs and new mortgage and valuation charges will apply.
Secondly, it’s important to remember that limited companies have running expenses and legal obligations. However, these may get offset mortgages in Birmingham by the potential upside of some tax-deductible costs or long-term tax benefits.
Landlords are looking to increase their property portfolio, and it often works out that they continue to hold existing properties in their sole name(s) but purchase any new additions under the company name, therefore avoiding all the on-costs of switching. Bear in mind, every case is different, and there may be some circumstances where a switch would be beneficial in the long run, even considering the costs of switching.
As you can see, this is a particular territory. If you are thinking about taking this route, our team of experienced buy to let mortgages in Birmingham are ready to help you with all the arrangements, providing top quality mortgage advice in Birmingham, backed up by introductions to appropriately experienced accountants and solicitors as required.
This article was originally published on 30th March 2020 and as of the 20th May 2020 the property market has now resumed and this information has become outdated. Everything was 100% accurate at the date that this article was published.
During last week, the mortgage market has suffered thanks to the coronavirus. Everything has come on a bit fast, and we recommend it’s best to catch you up to speed.
We aren’t trying to scare you, and we want to explain what is happening to the mortgage market and do our best to help you through the problems you may face during these rough times.
The central dilemma for the mortgage market is that surveyors and mortgage valuers can’t go out and visit properties because the whole property market is on hold. Lenders need to know what they are lending against, so require some sort of valuation before accepting your application.
Some lenders rely on AVM’s (Automated Valuation Model) for valuations on a property. The reason being it’s a way for lenders to receive a valuation without actually going out to the property.
However, when they don’t need to send someone out to look at the property physically, these types of mortgages get restricted and to lower loan-to-values only.
During the last couple of days, as of March 28th, some lenders have been restricting their maximum loan-to-value down to 60%. So, they are continuing to process these types of applications but not necessarily ones at higher loan-to-values.
Each lender is taking a different approach. So far, no mortgage offers got withdrawn, and we think that it is just a waiting game at the moment, lenders are just putting everything on hold before rushing into accepting more mortgages.
We have whiteness that some lenders have decided to extend the periods of their mortgage offers from six months up to nine to allow the economy and the mortgage market to get back up and running again.
Following our recent article about mortgage payment holidays, we want to remind you that you should only take one if you need to. Do your research, talk to a remortgage advisor in Birmingham, evaluate your options, and see whether it is the right thing for you.
It is more than likely that they will extend the period of your mortgage anyway, so it could be better just to hold off. You should contact your lender if you are questioning your ability to meet your monthly mortgage payments.
If you decide that this is your best option, lenders are asking for you to get in touch online due to the sheer volume of calls they are receiving.
If you are going to request a payment holiday, check that it won’t affect your credit rating or mark any arrears against your account. Also, don’t just cancel your direct debit and remember that you will need to seek permission from your lender to take a payment holiday.
The main thing is not to panic. We are here to help you with all of your mortgage problems and get you and your mortgage through these next couple of months. At some point in the coming weeks or months, someone is going to press play again.
We will all be back to normal in the given time. You can still get in touch with a Mortgage Advisor in Birmingham 7 days a week. Business is as usual. We can’t wait for you to get in touch and help you with all of your mortgage needs.
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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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Birminghammoneyman.com & Birminghammoneyman 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
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