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 Manchester 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 Manchester & those who are Moving Home in Manchester. 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. For a more detailed analysis at what you can do and why, please see our How to Improve Your Credit Score article.
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.
You can read more about these in our Different Types of Mortgages article, with informative videos covering each topic.
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.
Many customers see the process of obtaining a mortgage as a stressful and difficult one. All lenders have their own specific lending criteria and applicants can often feel like they’re stuck in an endless cycle trying to obtain a mortgage directly with the lender of their choice.
When you reach this point, it’s important not to get yourself down and instead seek the help of a professional in the field, like a Mortgage Broker in Manchester. No matter the situation you are currently faced with, our trusted team of experienced Mortgage Advisors may be able to help. We help First-Time Buyers in Manchester, those looking to Remortgage in Manchester & even the Self-Employed in Manchester.
Depending on the lender you end up taking out a mortgage with, some credit scores are a little trickier to pass than others. This is because whilst a lot of lenders will cover general grounds, though some will be targeting specific niche markets.
It would seem to be the case that generally, lenders with the lowest rates will have stricter lending criteria than lenders that may have higher interest-rates. Due to this, most customers will find they don’t match the criteria of every lender that they come across.
When lenders offer very competitive deals, the criteria margins tend to be a lot tighter. This is to ensure customers don’t fall into any kind of debt, which should be a top priority so that the lenders may remain in profit. Due to this, qualifying for them can unfortunately present itself as quite the challenge.
These lenders of the High Street who are offering the cheapest of deals will try to use other means of maximising their earnings from borrowers. Once a lender has agreed to give you a mortgage, it is not uncommon for them to try and sell you other products that they offer, in a bid to try and make them more commission than they’re already getting from the mortgage. The products they may try to sell you include Bank Accounts, Unsecured Loans, Credit Cards & Insurance.
Every so often, mortgages with the lowest rates of interest are bundled with higher setup fees. The recommended best practice usually is to ignore products like these and leave the product recommendation in the hands of an open & honest professional with experience in mortgage advice. This is somewhere we can help.
Our trusted and dedicated Mortgage Advisors in Manchester will be able to recommend the product that best suits your individual circumstances, saving both your time and your money.
Lenders may also try and take advantage of customers when their original mortgage deals are starting to reach the end of their term. Some lenders still let borrowers move onto a Standard Variable Rate (SVR), in hopes the customer may stick around and continue to take out mortgages and other services under themselves.
Mostly these days, lenders will offer follow-on deals, often called “Product Transfers”. Whilst it may be an easier option in arranging one of these with your lender, in some cases these deals may not compare well when looking at deals made available to new customers. As such, it’s always worth exploring your options elsewhere before deciding on something.
In truth though, not all customers are actually able to take out a Remortgage somewhere else. If for some reason your credit history has changed during your mortgage term, there’s a chance your only option will be to keep on using your lenders Standard Variable Rate. This may also be the case with changes in personal circumstances, such as relationship status.
The status of the economy at the time can also affect the level of difficulty in obtaining a mortgage. If things are looking pretty rough for the economy, lenders may restrict how much they’re willing to lend out to their customers. On the flip side, if things are going well, they may be willing to lend out a little more than they otherwise would’ve.
It’s a scenario where there are both positives and negatives to the same situation. Some would say qualifying for a mortgage in the modern era is considerably easier, whilst some would argue it’s become more difficult than it ever was in the past.
Back before regulations were put in place, we would regularly see “Subprime” and “Self-Cert” mortgages, readily available to those looking to take out a mortgage. Around the early 2000s, new lenders were popping up everywhere, relaxing their criteria and attempting to seize the opportunity to make money wherever they could.
Overseas in North America, something known as “Ninja Mortgages” became popular, which stood for “No Income, No Jobs Or Assets”. Thankfully, mortgage types such as “Ninja” & “Self-Cert”, of which were incredibly reckless, are no longer allowed, with only “Subprime” continuing through specific lenders.
After the unfortunate case of Credit Crunch, lenders took a whole new view on the world of mortgages, tightening their mortgage lending criteria. The required deposit was often 25%, with many struggling to get onto the property ladder at all because of this. On top of higher deposits, interest rates also went up, leading to many deciding they would much rather stick with renting.
You’ve done great so far. Most of the money for your mortgage has been saved, now it’s time to get prepared for a mortgage! We’ve compiled a list of some helpful advice for First Time Buyers in Manchester, in order to ensure you’re as mortgage ready as possible.
The first thing you should always aim to do is get an up-to-date credit report, even before you come to a mortgage broker in Manchester for mortgage advice. It’s a good idea to pay off any outstanding payments you have, even if you’re holding off based on matters of principle. This way you’ll have less going against you, increasing your chances of getting a mortgage!
A really good tip is to make sure you’re on the voter’s roll, as that apparently has a positive effect on your credit score. Closing down old credit cards also seems to really help. Your Mortgage Advisor in Manchester will run through your credit report in the early stages, giving advice on what you could do to make sure your credit score looks great!
At the start of your home buying process, you’ll be asked to provide some photo ID. Our customers usually bring a driving license or passport to help out with this.
Your driving license can be quite handy for your address too, although you can only use it for one of the options, so if you’re using it for photo ID, you’ll need something else to assist with proof of address. Any non-UK nationals now residing in the UK will need to show us a copy of their Visa also.
You’ll also need some documents that evidence where you live. The normal go-to for these is a utility bill or original bank statement that has a date of the last 3 months. Alternatively, as mentioned above, if you’re using a passport for photo ID, you can use your driving license as proof of address too.
Your bank statements should evidence your income and regular expenditures. It’s preferable if you don’t gamble leading up to this, as the lender may hold this against you. The same goes for going past overdraft limits and letting direct debits bounce – This is all about getting prepared.
Most lenders will ask to see your bank statements, as they like to be confident that you take your finances seriously. The bank statements usually needed are the ones that show your salary going in and your bills going out.
As a First Time Buyer in Manchester, you will have to prove you have the funds in place for the deposit and evidence this for anti-money laundering purposes. It’s always best practice to limit moving money around your various accounts, as it makes evidencing the audit trail more difficult. Lenders prefer to see your savings building up, so you’ll need to account for any large amounts that have been transferred into your accounts recently.
Nowadays, deposits are often gifted by family members and is the most popular way forward for First Time Buyers in Manchester. These need to be evidenced also, with the “donor” needing to sign a letter confirming it’s non-refundable.
The most important thing when it comes to affordability is proving your income. This is often your last 3 months of payslips if you’re employed, with some lenders needing to see your most recent P60. Lenders may also consider regular overtime, shift allowance, bonuses and commission. If you have more than one employer (maybe you have a part-time job or are self-employed), lenders will also accept earnings from those.
These days, many applicants are self-employed and seeking fast and friendly Mortgage Advice in Manchester. Self Employed applicants will need help from their accountants to request their last 2-3 years’ proof of earnings from the Revenue. Our Mortgage Advisors in Manchester are able to talk you through what to download from the Government Gateway if you’re in control of your own accounts.
It’s always a good idea to do your homework and write down an estimate of what your outgoings might be after you move to your new home. This helps you work out how much your council tax and utility bills will be, plus regular expenditures like food and drink. It’s also able to show how much disposable income you’ll have available to pay your mortgage from. We’ll send you our version of a budget planner before we go forward with our appointment, which hopefully can help you with this.
As you can see from all of the above, it’s not easy to get prepared for a mortgage, although it’s still achievable! If you put in the hard work from the start, staying patient and being careful, things are a lot more likely to go your way!
When it comes to applying for a mortgage, you need to be careful and watch out for your credit score. The higher your credit score, the more likely that it is that you will be accepted by a lender for a mortgage. There are many different things that can have an effect on your credit score.
One of these, is the fewer addresses you have on your record the better. People are starting to go about this the wrong way though.
More and more, we see applicants who have moved out of their parents address into rented accommodation, but are still leaving their bank statements, credit card and electoral roll information registered to their parents address.
For some reason, people think that it is a good idea and it could help their credit score, however, it can actually damage your credit score. Almost without fail, if you have moved to a new address, there will be some record of this on your credit report, whether you change your details or not.
Things as simple as a delivery address when you have ordered something online or a car/home insurance search can appear on your credit report.
Before you perform a credit search and apply for a mortgage, you have to make sure that, to your knowledge, nothing will affect your credit score. You will need to get all of your accounts (credit cards / current accounts) and electoral roll are all changed over to your current residential address.
This only really applies to you if you have already moved out of your parents home, as when you are moving out to get a mortgage in a new home, you are able to change your details to the new property once you’ve moved in.
Regardless, all these things needs to be double and triple-checked when applying for a mortgage. We always find that people forget to update their address on their credit file and electoral roll. It can make a massive difference to you in your quest for a mortgage!
It’s important that you get the dates right too, knowing the exact date you moved into your rented property and the day that you left it. If you do happen to make a mistake with these dates, lenders may be under the impression you are living in two places at once.
By making sure that every bit of information on your file is up-to-date, you are proving to the lender that you know what you are doing and you are taking the process seriously. It’s a more open and honest way of trying to apply for a mortgage. You want to impress them in any way you possibly can and this is a good way to start doing so.
If you still need a bit more help or just want some insight from a professional Mortgage Advisor in Manchester, feel free to get in touch for a free mortgage consultation.
We know that being a First Time Buyer in Manchester with no mortgage experience can be hard, which is where we are able to help. Get in touch with your friendly Mortgage Broker in Manchester today.
A gifted deposit could be either the full amount or a portion of the deposit that gets gifted to you, with an agreement that you don’t have to repay the money.
Gifted Deposits come in useful when you have sufficient money for your monthly repayments but can’t afford the initial deposit. Getting a gifted deposit offered may also open you up to better rates from a lender.
It can also help if you’re on a smaller salary and can afford the monthly mortgage repayments but then are unable to save your initial deposit.
Mainly it is your parents who can gift you the deposit. Ether natural-born and adopted parents it doesn’t matter. You may see this online as the “bank of Mum & Dad”.
There are possible alternative family members who could also get considered when looking at utilising a gifted deposit. This is dependent on individual lenders so would require care while trying to find the right mortgage lender.
In some cases, if the person helping you is over the age of 55, they may look to gift you a deposit by utilising Equity Release in Manchester.
We often find that clients aren’t aware that their parents can help with their mortgage, or don’t feel like they can ask them for help.
The truth is that most parents are more than happy to help their children, wanting them to get there foot onto the property ladder.
Taking out a mortgage is preferable than renting, due to you being able to pay less per month potentially.
The deposit can often come from inheritance, although the parents have known to gift it earlier on in life if they already have enough saved or have released a certain amount of equity from their property.
Most lenders won’t accept a loan as a means of paying your deposit. It is down to the insecurity that you’d have enough disposable income to pay back both the loan and the mortgage simultaneously.
There is no limit on the amount of gift you can receive although I know of at least one lender that insists you put in at least 5% deposit from your funds.
The people who benefit the most from this tend to be First Time Buyers and Home Movers in Manchester.
It can also be useful when in conjunction with the Help to Buy Scheme, as the required 5% deposit. Depending on the lender, it can be paid via gifted deposit.
Generally speaking, all lenders will require a gifted deposit form. Depending on the lender. You may get asked to provide further proof and ID (things like donor ID or bank statements).
On Saturday 31st October, the UK Prime Minister Boris Johnson announced that England would enter a second lockdown from Thursday 5th November, through until Wednesday 2nd December. This was done with the intention to decrease the spread of the coronavirus across the country, with additional restrictions in place.
Luckily for some, this lockdown is a little more relaxed than the first lockdown we experienced, allowing more industries and educational settings to remain open. The thing that initially concerned us the most, was what would happen to the property market. Thankfully, now that Lockdown 2.0 is underway, we can say that everything looks promising and the property market will remains open as normal.
Of course, there has been some minor changes to areas of the home buying process, most of them relating to social distancing. The property market is still standing strong though! Here is a look at some of the things you can still do:
Unlike the start of the last lockdown when the rules were stricter, in this lockdown you are still able to move home if you need to. Home removal services, van hire, everything needed to move home will still be available for people to use.
As mentioned at the start, the process of moving home will have to be completed under the social distancing guidelines. This will be vital to follow if you are either viewing other people’s properties or taking house viewings on a regular basis.
Yes, the government are allowing you to visit your estate agent’s office. However, this is dependent on individual branches, as some estate agents have chosen to work form home and have closed their public office. You may have to check online to see whether they are open or not.
Nowadays a lot of people prefer to transact over the phone, so even if you can’t visit in person, you can rest assured that the staff are fully equipped to get the process started over the phone and even online.
We advise that you take your time if you are going through the process online, and make sure that you fully understand everything that is being communicated.
You can still continue with your house viewings, however, if your estate agent is offering a virtual house viewing, it is probably more recommended to try that. Most home buyers are shifting towards this new way of doing house viewings; as a Mortgage Broker in Manchester, we also expect that the number of virtual viewings will increase over the course of national lockdown.
Even though virtual viewings may be your safest option, we also understand that choosing your dream home is a really big decision for your life going, so if you want to view the property in person, this is understandable. Just remember to be careful!
Your estate agents will also check with the property owners that a property viewing is okay, so long as it is socially distanced property viewing. If they agree, then you can arrange a date and time. Depending on the time of day and the homeowner’s personal situation, they may go out somewhere so that there as few people in the household at one time as possible.
The property market hasn’t been put on pause like it was earlier in 2020, so you are still able to go through the home selling process as normal. You will need to consider everything that comes with selling a property, including choosing an estate agent and a property valuation, getting pictures of the property taken and making it presentable for any viewers.
With the guidelines and restrictions in place, there may be some delay in certain areas of the process, though that should not put you off. Estate agents are very busy right now with enquiries and with all of the different measures in place, things that are normally easy to complete are taking a little longer than they would like.
Yes, conveyancing solicitors will remain open as normal. They will still be available to support the sale of your property. Much like estate agents, most solicitors are working from home and we advise that you be patient as due to the demand in the property market, things may not go as quickly as you’d normally hope for.
As a dedicated Mortgage Broker in Manchester, this is a question that we have been asked quite a lot during the course of the pandemic. It was particularly asked by lots of homeowners during the first UK lockdown.
In this lockdown, even though it’s much shorter, you can take a mortgage payment holiday if it is really deemed necessary. We understand that there are many homeowners out there that need help meeting their mortgage payments. If this is your situation then taking one out could be a real lifeline for you and your home.
To find out more helpful information about mortgage payment holidays and whether you should take one out, check out our article on mortgage payment holidays.
If you took out a mortgage payment holiday during the first lockdown and are currently still on the scheme, you can extend your holiday further so that it comes to a total of six months holiday. However, if you have already had a six month payment holiday and you have already reached the six month limit and therefore unlikely that you will be able to utilise the scheme again going forward.
The property market is slowly catching up to speed and thankfully can continue marching on through this second lockdown. If you are wanting to start the mortgage/home buying process and would like help from someone with experience, it may be within your best interests to get professional Mortgage Advice in Manchester.
With all of the social distancing measures in place and the demand in the market, this could also make things a lot quicker for you. As an experienced Mortgage Broker in Manchester, we have a wealth of knowledge in helping customers achieve their mortgage dreams. We want the whole process to run as smoothly as your do; don’t hesitate to get in touch today and we will get you booked in with a mortgage advisor!
The general rule of thumb, whether a first-time buyer, home mover, or budding Buy to Let landlord in Manchester, is the higher your score, the more likely you are to get accepted for a mortgage.
It is worth noting that lenders have an internal credit score that gets built on the information held on your credit report as well as information within your application. Every mortgage provider follows their credit scoring policy, so just because one high street bank declines you, it doesn’t necessarily follow that they will all say no.
When it comes to which credit reference agency to use, or which one will the lender use, unfortunately, they do not always divulge this information.
In any case, sometimes lenders chop and change between Experian, Equifax, and Call Credit. It is good practice when looking to obtain a mortgage to check multiple credit reference agencies. The reason for this is that information on one agency’s file may differ from that on another.
Until you have registered with one of the credit reference agencies to check your score, the first thing you need to do is stop applying for new items of credit. Be careful, something as simple as comparing car insurance on a price comparison website can register unwanted credit searches.
Lenders will use the electoral roll to carry out identity checks, so this is a crucial step. Ensure that your names spelled correctly and you get registered at your current address, your credit file will show if you are registered or not, you can also check with your council.
Mortgage Lenders like to see some “active credit” so having a credit card that you use regularly and pay it off in full each month can help over time. However, bear in mind that taking out new credit could have a short-term negative impact. Don’t miss payments!
Regularly running close to your limit on your credit card or going over the limit will harm your score. Using too much of your available credit will hurt your credit score.
It is essential that you do not appear to be living in two places at once. In any case, this can happen when you incorrectly enter your dates in and dates out of previous addresses.
It’s worth spending some time double-checking the dates and making sure the formats of the addresses are consistent. However, this is tricky when you have lived in a flat/apartment.
If you have any credit or store cards that you are not using you should cancel these. Please note again that this could have a short-term negative impact on your score.
The systems can’t tell whether it is you or the lender taking this action, but it helps in the long run. Also reduces the chances you’ll fall victim to fraud if they were ever to get stolen.
Ensure that all of your open accounts get registered at your current address and not a previous one.
Your ex-partners could affect yours if you hold joint accounts, a mortgage, or a loan. It is vital to inform the credit reference agencies that you are no longer associated and remove any links.
Love it or hate it credit scoring is here to stay. Also, it will have a significant bearing on whether you will qualify for the mortgage you need. It’s quicker and more consistent for lenders to rely on their systems than their human resources.
Having an up to date copy of your credit report to provide to your mortgage broker will help build up a full picture of your financial situation and help them recommend the most suitable mortgage for your circumstances.
Passing a credit score can be quite a challenge for some, especially when applying for a mortgage. Depending on the mortgage lender, some credit scores can be harder to pass. If you would like to find out why you got declined, unfortunately, you may be out of luck. Lenders rarely give out the reasons as to why you did not pass, due to them not wishing to disclose the contents of their scoring system.
Additionally, this is where an expert Mortgage Broker in Manchester may be able to help. Once you obtain a copy of your credit file, your dedicated Mortgage Advisor will be able to go through it with you, working out which lenders you are better off looking at for your mortgage. Putting down more deposit also makes passing your credit score easier.
There are a variety of things that you can do to improve your credit rating. If you own a credit card, you should use it regularly and ideally pay off the full balance each month. Being on the voters roll to show where you live also helps. We recommend closing old bank accounts, credit cards and store cards that you no longer use.
Failing a credit score for one lender is not the end of the road, so don’t give up! There is a chance that another lender may be willing to accept you. Be warned though that having too many hard credit footprints registered against you may have a negative effect. Having too many credit searches can affect your credit score.
All lenders have unique ways of calculating the amount you can borrow. Theoretically, you could approach ten different lenders and get ten different answers, though this is purely dependant on whom you are speaking. Some lenders are more generous than others, for example, when an applicant classes themselves as self-employed.
Your mortgage lender may consider assessing 100% of an employee’s bonuses and overtime, however, this isn’t the case for all lenders.
When starting with an enquiry, many lenders will only require an affordability assessment to determine your potential course of action. These get referred to as “Soft Searches”, and it gives them a rough idea of how to proceed without leaving a hard credit footprint.
On the flip side, some lenders will only perform a “Hard Search”, which includes a mandatory credit check on top of their affordability assessment. Click the following link to find more information on Hard & Soft Credit Searches.
If you are looking to buy a home potentially, we recommend having an affordability assessment carried out before home viewings, as this lets you avoid potential disappointment. Proving you have been able to maintain mortgage or rent payments in the past doesn’t always guarantee you’ll pass the lenders own affordability assessment.
Each lender will have their strict lending criteria. Depending on your circumstances, some lenders may be better options than others. These lenders look to carve out niches for themselves, to attract high-quality mortgage borrowers who might not have been a fit for their competitors.
Here are some examples at to why mortgage application get declined:
As a Mortgage Broker in Manchester, we will use our experience and knowledge of lenders and their criteria to recommend a mortgage for you, personalised to your circumstances. We have been able to help many first time buyers in Manchester, as well as people looking to remortgage and interested in the buy to let scheme.
Suppose you have a unique or complicated situation. We recommend looking to speak with an experienced Mortgage Advisor in Manchester. Being declined with various lenders directly could negatively affect your chances of being accepted for a mortgage.
When Buy to Let customers with an existing property portfolio in Manchester get in touch, we often hear the following question: Am I able to exchange ownership of my property from my own name, into the name of my limited company?
A good starting point is to know how a mortgage lender will approach purchases from Limited Companies. You will be hard pressed to find any lenders that will accept applications from a Limited Company through anything other than an SPV (Special Purpose Vehicle) Company.
An example of this is a company set up with the sole intention of investing in properties like this. When registering your company, your registration will include a SIC (Standard Industrial Classification) Code that shows the types of business in which the company will be involved with. Mortgage lenders normally would not accept applications from general trading companies that can trade in multiple areas.
If, for example, you have a plumbing and heating company (covering both trades), you will need to set up an entirely new company to own the properties in your Buy-to-Let portfolio, rather than buy them through your plumbing company. The SIC codes typically accepted are 68100, 68201, 68209, 68320, though this is varied depending on the lender you go with.
To find out more information about SIC Codes, consult the Government website: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/527619/SIC07_CH_condensed_list_en.csv/preview
You will find yourself with both advantages and disadvantages to purchasing a Buy-to-Let in Manchester under a Limited Company. For example, applications from SPV’s may not be considered by all lenders. Instead, they would rather limit their lending to lone applicants or couples who are applying in their own personal name(s) as opposed to a company name. Because of this, applicants using their own personal name will find themselves with a wider range of products than those using SPV’s.
When it comes to the lenders who would lend to an SPV, the mortgage rates are also generally much higher than the rates offered to individual applicants. An upside however, is that the way rental income is taxed has been changed over the past few years, meaning that many people prefer to make use of the advantages generated by SPV ownership (relating to how income is taken and how that income is taxed), as they more than make up for any extra interest charges or lack of choice when it comes to products.
One of the primary things we always suggest our customers look at when evaluating their options of buying your portfolio under an SPV, is that you speak with a specialist tax advisor for professional advice. A tax advisor will be able to assess factors such as external income sources and the rate of personal income tax you pay, seeing how they will affect the overall status of your tax. This will help decide whether or not individual or SPV ownership is an option you should go with.
As mentioned previously, a main deciding factor in your decision will be the position of your tax. This becomes a little more complicated when you start to weigh in whether or not you want to transfer properties you already own from individual ownership, to company ownership.
The issue is that it isn’t just a simple, straight-forward transfer. This type of transaction is a change of legal ownership. Your Limited Company is in it’s own right, a completely separate corporate identity. As such, the transaction will be counted as a purchase from you as the individual, to the SPV. With this in mind, stamp duty charges, legal costs and new mortgage and valuation charges will all be in play once again.
You must remember that Limited Companies come with running expenses and legal obligation, however, these may be offset by the possibility of tax-deductible costs or long-term tax benefits.
If a buy-to-let landlord is looking to increase their property portfolio, it would probably benefit them more to keep the current property under their individual name and only use the SPV to buy any additional properties. By doing this, you avoid any switching costs and unwanted legal fees for something that is already yours. That being said, each case is different, and you may find that the upside of a switch is far more beneficial than any of the downsides that come with it. It’s all depending on individual circumstance.
As covered, this is very specific territory. If you are thinking of following this path, please get in touch with an experienced and knowledgeable Buy-to-Let Mortgage Broker in Manchester.
Here at Manchestermoneyman, we have many Buy-to-Let experts on hand to provide a high standard of mortgage advice in Manchester, backed up by introductions to appropriately experienced accountants and solicitors as and when necessary.
To speak with a Mortgage Advisor in Manchester, please Get in Touch and we will see what we can do for you.
It is a no brainer why we think when going with a Mortgage Broker is beneficial and speaking to one of our Mortgage Advisors in Manchester, then going straight to a Mortgage Lender—saying that it’s still worth exploring your options. We find that most people use a Mortgage Broker in Manchester; however, in this article, we will explain the pros and cons of both paths.
A Mortgage Broker like us will likely charge a broker fee on top of the other costs, whereas the Mortgage Lenders do not require this payment, thus saving you money on that front.
The Lender offers exclusive direct deals. They do this to attract business from both consumers and brokers alike. In any case, these deals are sometimes available only via the Mortgage Broker and not the branch. Before 2014, your Mortgage Lender would be allowed to let any member of staff sway you towards a potential mortgage without any proper mortgage advice or consumer protection.
By 2014 this was thankfully banned, with only experienced Mortgage Advisors in Manchester allowed to provide Mortgage Advice and make recommendations for their products. However, this, of course, took some adjusting and customers could be left waiting for a month or maybe more, just for an initial appointment.
We still see today that sometimes this can always happen, which isn’t great when you’ve just had an offer accepted for a property. Because of issues like this, applications via Mortgage Brokers started to rise. We offer a same day service, aiming to put you through to a qualified Mortgage Advisor in Manchester either immediately or at the most within the same day.
Before the 2010s, it was much more challenging to compare possible mortgage deals. Fast forward to the present day and looking for such deals is significantly more comfortable, with everything just a Google search away. The difficulty now lies in finding a lender whose criteria and features can be personalised, based on your circumstances. It would help if you were wary though, that the deals with the lowest rates tend to carry high arrangement fees.
Another point to take note of its affordability. No matter how good a Lenders deal is, you must be able to afford it. Because this is such a big deal, many people choose to go with a Mortgage Broker in Manchester as we’ll compare the criteria and find something that matches you and your circumstances.
These days, thanks to tightened regulations post Credit Crunch, mortgage applications are no longer straightforward. There are a variety of things that could potentially be a hindrance when you are making your application. These can include:
Over the years, Mortgage Lenders would show their competitive side, often trying to offer better deals than the next Lender. Nowadays, because of tightened margins, their differences come from their lending criteria.
Examples of these include the amount some would lend to the self-employed compared to others, as well as being slightly more lenient to previous adverse recordings on your credit report.
Whatever the situation, it is unique to you. When you explain this to an experienced Mortgage Broker in Manchester, they will likely have encountered something similar before. Hopefully, they’ll use this experience to recommend the most appropriate mortgage for you, at the lowest rate available to you.
Our service goes beyond just the mortgage too. Customers will rely on Mortgage Advisors in Manchester for more, even if the application is straightforward. They can discuss how much they’re planning to offer on a property, recommend services such as solicitors and property surveys, and go through any available protection.
Another significant aspect of the service a Mortgage Broker in Manchester provides is the ability to be more responsive than the lenders’ direct propositions. Out of hours and weekend, appointments are common-place, as are our Mortgage Advisors in Manchester working late on an evening to respond to customers’ emails.
An often-overlooked factor of why most applicants prefer a mortgage broker is that everyone seems to be busy, and you might need someone to handle the full transaction and take away your stress. Professional applicants will see the benefits of this as they have clients of their own that they’re able to charge their services.
Maybe in the future, lenders will want to take back more clients from brokers. If this happens, it’s relatively unlikely they’ll staff-up their branch networks. They will likely make investments in technology to transact with customers online.
For clients who want to do business that way, with say a straightforward product switch, it’s great. Generally, whether they are First Time Buyers in Manchester, Self Employed in Manchester, or looking to Remortgage in Manchester, people enjoy having the “human touch” when it comes to the mortgage process.