A buyers Market, not a sellers…

It’s no secret that Covid-19 has had a devastating impact on the entire world.

Millions have lost their jobs. Off of the back of this, many will have to take payment holidays on their mortgages, some may eventually fall behind on mortgage payments and some may even lose their homes due to repossession. 

What does this mean for the market?

I’m going to focus on 2 things today.

  1. It will be a buyers market, not a sellers 
  2. Lenders will have to recover a lot of unpaid debt and be a lot more frugal with who they lend to

What does this mean for you? 

The person with a home to sell…

  • Now is the time! Sell as soon as possible and sit on the funds. Move in with family, think about short term renting and sit on the proceeds of the sale as in a few months, you will be able to buy a bigger house for a lot less.
  • Fast forward a few months… If you take too long to take the leap to put your property up for sale, you may need to take an Offer much less than what you wished for.

Are you in a chain? There’ll be more about what can do next week… 

 The person with a home to buy…

  • Hold your horses. There are going to be many houses to choose from and many people desperate to sell them so this may work in your favour when it comes to negotiating on price. 
  • You may need to front more deposit than you may have initially planned due to Mortgage products being quite unstable. 90% Mortgages which require a 10% deposit have been pulled and reintroduced week by week. Lenders may also be a lot more picky with who they lend to, request much more information and be much quicker to decline applicants who don’t fit within their risk appetite 

Key take aways

Home Sellers

  • The time is now!

Home Buyers

  • Be patient. Fix your credit & save save save!

All information on my blog is opinion driven based on market trends, statistics and forecasts regarding the current situation. 

*Photo Source https://www.standard.co.uk/news/estate-agents-face-ban-on-for-sale-signs-6781275.html

Help to Buy: Equity Loan

Help to Buy

Reading time: 3 mins

In this month of October, we have been solely talking about the various Help to Buy schemes available.

The Help to Buy initiative was a way of assisting young first-time buyers acquire their first home. At a time where it almost seemed impossible for the millennial to own a property in the ever changing and increasing property market, the government stepped in to lend a hand.

However, there is a catch. Nothing in life is free and that’s why it is important to know the pros and cons of any scheme you commit to.

These scheme consist of the following:

Help to Buy ISA

Lifetime ISA Post due 29th October

Equity Loan

Shared Ownership

Mortgage Guarantee Scheme Withdrawn November 2016

 

What is a Help to Buy Equity Loan?

 

The Government lends you up to 20% of the cost of your newly built home, so you’ll only need a 5% cash deposit and a 75% mortgage to make up the rest.

This scheme is available to First-time buyers and Home movers.

For example:

Purchase price: £200,000

Your contribution to the deposit: £10,000

The Governments contribution to the deposit: £40,000

Mortgage Amount: £150,000 75% LTV

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You won’t be charged loan fees or interest on the 20% loan for the first five years of owning your home, however you will have to pay £12 management fees each year.

After 5 years, you will have to start paying back the 20% you initially borrowed, plus interest and your monthly Mortgage payments

ALERT

Things to bare in mind:

  1. Interest kicks in after five years, and could amount to a chunky sum over time.
  2. The Government will take the same percentage of the sale price as you opted for when you took out your equity loan (regardless of how much the loan was originally for) when the property is sold.
  3. You can repay part or all of the loan early, but the Government will only accept this if it’s a minimum of 10% of the property’s current value.

Selling your property

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Home Mover

Reading Time: 2 mins

Selling your property can be basic, however with so many different schemes and second charges, there are multiple factors to consider.

Today we are going to focus on a basic sale.

You are either:

  1. A home Mover
  2. Deciding to sell and rent going forward/move in with family.

“I’m not too sure about when, but I know that I want to sell my property this year”.

“I’ve got my eyes on a property, I’m ready to make an Offer, but I haven’t even put my property on the market yet”.

“I want to move, but I haven’t got my eyes on a property just yet, they’re just not ticking all of the boxes”.

My answer to all of the above is to get in touch with the local Estate Agency’s in your area and put your property up for sale.

Once it’s up, you can always take it down if you change your mind. The longer you procrastinate doing nothing, no one is viewing your property, no one knows you’re considering selling up and once you see a property you are interested in and tight deadlines follow, you’ll be anxious and overwhelmed with the process.

STEP 1: Contact local agents and explain your situation

STEP 2: Get them round to view your property and give you a rough idea of what your property is worth, what properties in your area have been sold for of late

STEP 3: Understand the agents charge policy. Some charge 1% of the sale price, other 0.5%, 0.25% etc and there are a variety of packages including pictures, Zoopla listings etc that you need to be aware of

STEP 4: Solicitor – find one. Just like with a purchase, you’ll need a solicitor to act on your behalf. They will liaise with the buyers solicitors to arrange particulars of the contracts, exchange and completion dates.

STEP 5: Funds – Once the sale is done and monies are received, your solicitor will pay off your existing Mortgage and the excess will be yours.

STEP 6: Buying a new home – The excess funds will be used as a deposit towards your new home. That’s why it’s important to sell and buy simultaneously.

OR

STEP 6: Renting/Moving in with family – The excess funds will be wired to the account of your chance savings, current, bond etc.

FAQ’s

What about Tax?

Private Residence Relief. You don’t pay Capital Gains Tax when you sell (or ‘dispose of’) your home if all of the following apply: you have one home and you’ve lived in it as your main home for all the time you’ve owned it. you haven’t let part of it out – this doesn’t include having a single lodger.

What if I bought my house under a government scheme or have a second charge in place?

Consult a solicitor. One that specialities in properties sold under your scheme/second charges before you put it up for sale. You need to understand the process, legalities and personal cost to you.