Getting on the property ladder is a lot different to how it used to be. If we compare the home ownership status of young people today to the older generation – the results show a stark difference. Check out our Mortgage Application Guide for more information about the mortgage process.
It used to be that the retirement dream was to leave the city and head for the seaside – if not the year-round sun of the south of Spain, then perhaps the clean air of the British coast.
But could it be that the emergence of the ‘Smarties’ – Senior Market Town Retirees – is set to change that?
These tend to be couples and singles aged 65-plus, who have chosen to move to green and pleasant market towns for their retirement . Places with a thriving community of all ages, small enough to have a ‘villagey’ feel but large enough to have all the regular amenities and social needs that they would be used to.
“Old age and retirement used to be a more homogenous group,” explained Richard Jenkings from Experian.
“In the past people would go on holiday to the seaside and then a lucky few would then retire to those same resorts. Today we still see this happening, but a rising trend is for better-off retirees to move not to the traditional sea-side resorts, but instead to pleasant, often historic, cathedral cities and quality market towns. Continue reading
If your mortgage application is refused, it can be not only frustrating but inconvenient, as it can affect or even halt many plans you may have already made.
The Mortgage Advice Bureau now says that the average age of a first-time buyer is now 37, which would make a standard 25-year mortgage take them to 62. However, this figure is likely to creep up, as high house prices up and down the country take first-time buyer ages beyond 40.
The mortgage affordability rules introduced in April 2014 take into account not only how much you are earning, but how much you are spending, and whether you actually have the money to make your monthly mortgage repayment. It could even lead to longer-term mortgages, potentially taking people past 65.
The consequence for many people though is that credit refusal can often lead to more attempts to get credit – and making multiple applications in a short space of time could have a serious impact on your chances of getting credit in the future.
There are a number of reasons you might be turned down – and finding out what they are could get you back on track.
Some of the headlines are:
Tax Credits/Welfare – The planned £4.4bn cuts to working tax credits as part of plans to reduce the welfare bill by £12billion, has now been abandoned and tax credits will now remain unchanged.
The Chancellor said the £12bn of welfare savings will be “delivered in a way that helps families as we make the progression to a national living wage”
The Chancellor also says that “more than a million” more jobs will be created over the next five years.
Council Tax – It’s been confirmed that local councils have the freedom to increase council tax bills by more than 2 per cent, to help pay for social care funding.
Childcare – 30 hours free childcare for 3 and 4-year-olds from 2017, to parents working more than 16 hours and earning less than £100,000.
Pensions – The basic state pension will increase by £3.35 a week next year, taking the weekly ‘single tier’ total up to £155.65 for new pensioners.
Housing – £2bn has been set aside for more than 400,000 “affordable homes” to be built in England, to buy and to rent. Stamp duty for Buy To Let homes will be 3% higher than for regular stamp duty.
Right-to-buy is being extended to housing association tenants starting with a new pilot in five housing associations from midnight.
Help To Buy will be a shared ownership venture aimed at allowing people to get equity loans to help buy a home. London Help to Buy gives a 40% interest-free loan to first-time buyers.
Arts & sport: Arts Council funding will be increased so as to keep free museum entry. UK sport budget will increase by 29% “so we go for gold in Rio and in Tokyo”.
The home ownership dream can seem just that for many of us – a dream. New mortgage affordability rules – where mortgage lenders require more current financial information as well as examining your ability to pay in the future – have made the home-buying process more complicated. Add to this, booming house prices and it means that many hopeful homeowners have to find larger deposits than before.
According to the Nationwide House Price Index, the average UK property price in October 2015 was £196,807 – up from £173,678 in October 2013 (a rise of 13.3 per cent). On a mortgage that offers 90 per cent loan-to-value (LTV), this means finding a deposit of nearly £20,000, with estate agent and legal fees on top of that too.
On 1 December 2015, as trailed in the Chancellor’s March 2015 budget, the Help to Buy ISA will be launched, in which the government will make a contribution towards the deposit on a house purchase.
The scheme allows first-time or existing buyers to get onto, or move up, the housing ladder with as little as a 5 per cent deposit. Depending on your circumstances and the property you are trying to buy, such as a new build, the Help to Buy scheme can help you with an equity loan or mortgage guarantee.
Buying a home with your partner or friends can be a much needed boost to get on the property ladder – helping to raise a bigger deposit and making your dream that extra bit more affordable.
Checking your Experian Credit Report can also help you see if and how you are financially linked. It can also help you understand if you need a little work to tidy up your credit history before a joint mortgage application is made. Here are some key tips we’ve put together to help you, if that’s what you’re about to do.
Generally speaking, the higher your credit score, the better your chances are of getting your mortgage, lower interest rates, and better deals. When you make your application, the lender will use the data & information held on your credit report, as well as other information within your application, to give you a credit score. This will tell them whether to accept you as a customer or not.
Buying your first home with a partner, and getting a mortgage together, can mean there’s a lot you’ll need to agree on – from furnishings to finances and more.
Compromise will inevitably have to be reached regarding the area you choose, the layout, the size, how long you intend to be there and several other factors. Do you need to be near a good school? Is it important to be close to a train station? Buying together is likely to mean an element of give and take in many departments like this.
Making sure that you’re financially able is important too – would buying a property stretch your budget to breaking point? Not only is there a mortgage to think about, but also one-off costs like solicitor’s fees, as well as regular bills & maintenance costs.
Your credit rating can be an important factor here. In general, the higher your credit score, the better your chances are of getting your mortgage, lower interest rates, and better deals.
If you’re applying to have a joint mortgage, bear in mind that credit reports only become linked if two people have actually applied for credit together (eg: a joint bank account, a mortgage with two names on it) or they tell Experian or a lender that they are financially connected.
By checking your Experian Credit Report you can see if and how you are financially linked, it can also help you understand if you need a little work to tidy up your credit history before a joint mortgage application is made.
For more helpful information on mortgages, visit www.experian.co.uk/mortgages, with useful hints, tips and features.