THIS MORTGAGE GIVES THE ABILITY MOVE HOME WITH JUST A 5% DEPOSIT.

The Saffron Building Society has launched today a 95% mortgage designed for home movers who have little equity in their existing home.

The basic lending criteria is :

1)      Interest rate of 5.99% (apr 6.1%)

2)      Fixed until 31/08/2016

3)      Only a 5% deposit is required

4)      Open to home movers

5)      £495 arrangement fee

6)      House purchase up to £500,000

7)      Penalty free

The great feature of this mortgage is that it is penalty free. This means that you can remortgage to a better rate as soon as you have 10% equity in the new property.

EDIT 16/04/2013 Principality Building Society have now moved into the 95% mortgage market.

Contact us today for a free no obligation initial discussion or meeting to see it this is the right mortgage for your circumstances.

Why use Neil Soundy Financial Services for your mortgage advice in Cardiff.

We offer at least twice the choice of mortgages compared to a standard mortgage broker. View the video on our homepage that explains how we are different.

For client reviews go to our testimonial page

We will give you expert impartial advice on the mortgage market.

Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.

We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage

Request Call Back

We can discuss your current situation and the options available to you before arranging a free no-obligation meeting.

In this article I will cover Let to Buy Mortgages and Permission / Consent to Let Mortgages.

Let to Buy Mortgages are recommended when you are retaining your existing property, renting it out and buying a property which will be your new main residence. You are remortgaging to a buy to let mortgage. This is advised where you see this as a longer term arrangement.

The amount the new lender will advance on your retained property is not based on your income but the projected rental income and the equity in the property. The basic rule of thumb is that they require a minimum of 25% equity (some lenders will advance up to 85% loan to value) in the property and the rental income be 25% higher than the interest only payment. The more equity in the property means less risk to the lender and a better rate.

The benefits of a let to buy mortgage are:

1) It is a permanent solution.

2) You can raise additional money to help fund deposit on the next property.

3) The mortgage can be arranged on an interest only basis to reduce monthly mortgage payments.

Permission to Let / Consent to Let Mortgages is where you approach your existing lender informing them that you intend to rent out your existing home. You might want to take this route because of a temporary job move or you want to buy another property quickly without selling yours. In the past most lenders have been very helpful, letting you retain your existing mortgage product /rate and only charging a small administration fee.

The majority of lenders now are far stricter on permission to let mortgages. They will grant permission for 12 months and review annually, increase the rate and may charge a substantial fee. An example of this new criteria is with the C&G. Their current standard variable rate is 3.99% (for mortgages completed after 1/6/2010). The rate will increase to 5.99% if you request for permission to let for a property with equity of 25%.

Another recent example is a client with First Direct mortgage on a permission to let basis that had expired after 12 months. The lender would not renew the permission to let and were insisting that the property be sold or converted to a buy to let mortgage. As the client had only 15% equity and did not meet the buy to let rental criteria he was forced to sell at below market value. First Direct can insist on him selling the property as he no longer meets the terms and conditions of his original mortgage offer.

Lenders

Not all Buy to Let lenders offer Let to Buy mortgages. The major quirk in the criteria is the 6 month rule.

An example of this is with the Skipton Building Society. They will let you remortgage your property to buy to let basis and raise additional funds to help purchase your new home. However if we approach them to remortgage to a buy to let basis after you have moved out they will require a 6 month track record of the property being rented. BM Solutions and Woolwich do not impose this rule.

The majority of lenders will not include your let to buy mortgage borrowing as a financial commitment as long as it is can be evidenced as a self financing proposition. Accord, Yorkshire Building Society and Nationwide are among a group of lenders who will treat your let to buy mortgage as a commitment and expect that your personal income to support your permission to let and new borrowing until evidence of a track record of rental income.

Lending criteria is very fluid; please contact me for lenders current position.

Tax

When you property is being rented out you become a landlord. This means that you will have to make an annual tax return. You can only offset the interest only element of your mortgage payment as a business expense, not the capital part. As the property is no longer your main residence you might have to pay capital gains tax when it is sold.

Insurance

As the property is no longer your main residence you will have to amend your home insurance to reflect that the property is now being rented.

Risk

Converting you mortgage to a buy to let basis does give you the ability to buy a new home and suits some people but at increased risk. The buy to let mortgage still needs to be paid every month even if not tenanted.

Why use Neil Soundy Financial Services for your mortgage advice.

We will give you expert impartial advice on the mortgage market.

Your initial consultation is free with no obligation.

For client reviews go to our testimonial page.

Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.

The Financial Conduct Authority does not regulate some forms of buy-to-lets.

We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.

Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.

By Neil Soundy

Request Call Back

We can discuss your current situation and the options available to you before arranging a free no-obligation meeting.

On the 20/03/2013 the Chancellor announced a new scheme to boost the housing market.  The government have allocated £12bn of guarantees to enable £130bn of mortgage lending over three years.

The Help to Buy Scheme is designed to promote lending at high to value, including 95% mortgages with a maximum purchase price of £600,000. It will include first time buyers, home movers and remortgages though this criteria could change.

At present on a 95% mortgage some lenders protect themselves from the increased risk of loss on repossession by insisting the purchaser paying a Higher Lending Charge.  This insurance policy will pay the lender the difference between the amount borrowed and the sold price in case of repossession.

The Help to Buy Scheme lessens the risk to the lender as the scheme underwrites 14.25% of the value of the property. On a purchase price of £120,000 the purchaser would still fund a £6000 deposit while government would underwrite £17,100 against default.

The three hoped for benefits of this scheme are:

1)       More lenders will be encouraged to lend at 95%.

2)      The lenders will offer more competitive rates.

3)      Higher lending charge will not be required.

This scheme is aimed to be introduced in January 2014 but as there are ongoing negotiations with the FSA and lenders so this could easily get deferred.

We will update on the progress of the Help to Buy Scheme in future blogs.

Why use Neil Soundy Financial Services for your mortgage advice.

We will give you expert impartial advice on the mortgage market.

Your initial consultation is free with no obligation.

View the video on our homepage that explains how we can offer at least twice the choice of mortgages compared to a standard mortgage broker.

For client reviews go to our testimonial page

Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.

We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.

Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.

By Neil Soundy

Request Call Back

We can discuss your current situation and the options available to you before arranging a free no-obligation meeting.

We have listed below Santander’s basic buy to let lending criteria.

If you answer yes to any of the following questions,

unfortunately Santander will decline the application.

1. Are any of the applicants aged under 21?

2. Are any of the applicants aged over 70?

3. Does any applicant reside outside of the UK/

Does any non-UK applicant not have permanent rights to

reside in the UK?

4. Do either of the applicants not have a current UK

residential or Buy to let mortgage?

5. Has your applicant(s) more than three Secured

Credit commitments or more than two existing Buy to Let Mortgages?

Will your applicant have more than two properties

mortgaged with Santander that are or will be let?

6. Is this a regulated Buy to Let mortgage?

7. Is the property value below £75,000?

8. Will the LTV be greater than 75%?

9. Will the application include any borrowing for

debt consolidation?

10. Will the property be subject to mandatory licensing

as a HMO (House in Multiple Occupancy)?

11. Is the application for a property subject to

planning restrictions preventing occupation for

52 weeks a year?

12. Will the property have four or more tenants or

require more than one tenancy agreement?

13. Did the (proposed) tenant(s) previously own the property?

14. Is the property leasehold, where the leaseholder

retains a controlling interest in the freehold?

15. Is the property a freehold flat?

If you cannot say yes to all the questions, contact us so we can source a but to let mortgage for you.

Why use Neil Soundy Financial Services for your mortgage advice.

We offer at least twice the choice of mortgages compared to a standard mortgage broker.

View the video on our homepage that explains how mortgage advice has changed.

We will give you expert impartial advice on the mortgage market.

Contact us today for a free no obligation initial discussion or meeting

Neil Soundy Financial Services Ltd is an appointed representative of HL Partnership Ltd which is authorised and regulated by the Financial Services Authority.

The Financial Conduct Authority does not regulate some forms of buy-to-lets.

We do not give or imply legal or taxation advice. We recommend you contact a solicitor or accountant for advice in these areas.

Think carefully before securing other debts against your home/property. Your home/property may be repossessed if you do not keep up repayments on your mortgage.

By Neil Soundy

Request Call Back

We can discuss your current situation and the options available to you before arranging a free no-obligation meeting.