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Sales Group 2

4 things you need to know about mortgages & interest rates

House prices have long held the property headlines but making a late charge for column inches of late are interest rates and their effect on mortgages. December 2021 was a busy month for the Bank of England, whose actions and intentions will shape the year ahead for property buyers.

Here are four key take-aways from the most recent announcements:-

1. The interest rate has risen: it has taken the Bank of England three years to start raising the interest rate from its historic low of 0.10%. As of December 2021, the interest rate is 0.25% – still a very low rate and a return to the figure we last saw in March 2020. The mortgage market, however, remains fiercely competitive and lenders continue to offer attractive rates on home loans in a bid to win borrowers’ business.

2. Most borrowers are unaffected: mortgage rate volatility in the past has encouraged more borrowers to take out fixed rate home loans. As a result, UK Finance estimates that 74% of all current mortgages are fixed and enjoy a rate that doesn’t budge, despite what the Bank of England does. Borrowers should, however, pay attention to when their fixed-rate period ends. Many lenders have already increased their standard variable rate – the rate you’re automatically switched to if you take no action at the end of a fixed-rate period – in light of the Bank of England’s decision.

3. Long-term mortgages are on the rise: coming at a time when more property buyers will be looking for long-term repayment security, another 40-year fixed-rate mortgage has launched in the home loan market. While borrowers need to check details – such as any early repayment charges, the set interest rate and the ability to ‘port’ the mortgage to a different property – fixing for four decades allows people to borrow greater sums of money, with a repayment figure that stays the same, even if interest rates rise.

4. Affordability checks may be eased: before the Bank of England decided to raise the interest rate, it had floated the idea of easing mortgage affordability checks. This tests the borrower’s ability to keep paying the mortgage after any fixed-rate period ends and interest rates rise by 3%. It is thought the 3% benchmark may be revised downwards, making it easier for more people to borrow money. It’s a case of ‘watch this space’, with further details expected.

Whether you are taking out your first ever mortgage, need to borrow more to fund your next move, want to purchase a buy-to-let or are thinking of freeing equity by remortgaging, we urge you to take independent financial advice.

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Sales Group 1

Interest rate & mortgages update

After staying the same for the last three years, the Bank of England decided to use its December 2021 meeting to start raising the interest rate from its record low of 0.10%. The widely predicted move comes as inflation continues to rise – something monetary policy makers hope to stop.

So what does the new interest rate of 0.25% mean for those with a mortgage? The good news is most will not see any change to repayments, as figures from financial trade body, UK Finance, indicate that 74% of all current mortgages are fixed and as a result, the monthly repayment is protected.

For the other 26% on tracker or variable-rate mortgages – who will typically pay an extra £10 to £15 more every month as a result of the rate hike – thoughts may turn to moving to a fixed-rate product, especially as experts widely believe further rate rises could be on the cards as we move through 2022. 

Talk of fixed rates brings us neatly to other news from the world of mortgages – another 40-year, fixed-rate home loan being launched to the UK market. This unusually long term, with a rate that remains unchanged for up to four decades, may spark interest among nervous borrowers who would like a buffer from further interest rate rises. 

Committing to the same mortgage product for 40 years does, however, need careful consideration. Although there is financial security in the fact that the mortgage’s rate, and therefore the monthly repayments, will remain unchanged – even if interest rates rise – the home loan’s small print needs reading.

Before borrowers get excited, they’ll need to check they’re happy with the product’s rate of interest, given that they’ll be living with it for a number of years. They should also confirm they have the necessary deposit or equity needed to meet the lender’s loan-to-value criteria. 

Those interested in long-term, fixed-rate mortgages will also need clarification about ‘porting’ the mortgage, which is the ability to take the mortgage with them if and when they move home. It’s also worth checking the cost of paying the mortgage off early, which can incur early redemption penalties.

There is another piece of finance news that may affect borrowers for the better in 2022. Although it remains a consideration at this point – and the news was announced before December 2021’s interest rate decision – the Bank of England is mulling over easing mortgage affordability checks. 

Any change would affect how borrowers’ financial capabilities are assessed at the application stage. Currently, lenders want proof that a borrower could afford repayments if interest was charged at its standard variable rate, plus three percent. 

The Bank of England may downgrade the three percent figure, making it easier for more people to pass the affordability checks and potentially borrow greater sums of money. We will provide updates when further details are released.

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Sales Group 1

First-time buyer? 6 top tips when saving for a deposit

If you’re a first-time buyer, putting down a deposit is part and parcel of purchasing your first home. We all know the bigger the deposit the better but how can buying novices save effectively in 2022?

A little background about deposits
A cash deposit is provided by buyers to show serious commitment to a property purchase. The deposit is paid to the seller’s solicitor at exchange and if the buyer withdraws from the purchase, they will forfeit their deposit. When you consider Halifax’s UK average house price in November was £272,992, 10% of that – £27,299 – is a sum most of us can’t afford to lose.

Deposits and mortgages
The cash deposit provided at exchange is the same deposit that is considered when applying for a mortgage – there’s no need to save twice! The bigger the deposit the better as this will improve the LTV (loan-to-value) – the ratio of mortgage to property value. For example, if you’re buying a £200,000 flat with a £20,000 (10%) deposit, you’ll need a 90% LTV mortgage.

Lower LTVs – where the lender loans less and the buyer provides a larger deposit – result in cheaper monthly repayments, the ability to reduce the mortgage term and access to the lowest interest rates, and this is why saving for the biggest deposit possible is advisable.

Existing homeowners don’t need a deposit
If you’re already a homeowner, you won’t need to save up for a deposit when making an onward purchase as the conveyancers involved will use what’s referred to as the exchange deposit. This is where the deposit paid by the buyer at the bottom of the chain moves up and provides the security for the others involved.

How much is enough when buying your first home?
Mortgage lenders offer a number of home loans where buyers need to supply a 5% deposit, although lower rates of interest are generally attached to products where the purchaser can supply a 10%, 15% or even 20% deposit. If you’re at the start of your savings journey, these 6 tips will help get you started:-

  1. Open a specific account
    Use a comparison site to find the account that pays the best interest rate and open an account for the sole purpose of saving for a deposit. Look for accounts that limit how many times you can withdraw money to stop you accessing the account in an emergency.
  2. Save in a deposit-specific ISA
    An alternative to a savings account is the lifetime ISA (LISA) – a tax-free savings or investment account designed specifically for those saving for their first home or for retirement. You must be between 18 and 39 to open a LISA, and for every £4 saved, the Government will add £1, up to a maximum of £1,000 every tax year. Savings can be withdrawn after the first 12 months and used as a deposit on a property worth up to £450,000.
  3. Make saving automatic
    Manually moving money between accounts is a habit you can easily fall out of, so set up a standing order that automatically transfers money on a monthly basis into your dedicated deposit account. You could also ask for all birthday and Christmas presents to be in cash, to be paid directly into your deposit account.
  4. Re-evaluate your renting situation
    It can be hard to save for a deposit while paying rent. You can reduce your outgoings by moving to a smaller property or by taking in a lodger (check with the landlord first). You could even remove the need to pay rent altogether by moving in with family or friends.
  5. Change your eating habits
    A milkshake here, a pizza there – it all adds up, with a twice weekly trip to Starbucks for a caramel frappuccino and a muffin setting you back at least £5 every visit. Home cooked food will always save you money, as will swapping your food shopping habits. Replace Waitrose with a continental budget supermarket and your deposit fund will look a lot healthier.
  6. Shop around & switch
    Save more money by reducing your monthly bills. Use comparison sites, switching incentives and introductory offers to cut what you spend on gas, electricity, broadband and mobile phones. Easy wins include changing your SIM card plan and asking rival broadband suppliers to beat your current deal.

If you need help with working out how much deposit you may need and what loan-to-value you should aim for, we’d be happy to help crunch the numbers with you. Contact us for advice and guidance.

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Sales Group 2

The super habits of deposit savers

Many of us may feel the squeeze in 2022, especially with rising fuel and food costs leaving first-time buyers wondering how they can save for a deposit. With the average deposit hovering around 18% of a property’ purchase price – that’s almost £50,000 – it can feel like there’s a mountain to climb.

Saving is not impossible, however. The secret is getting into good habits and despite what the coming months may throw at us, you can squirrel away a tidy sum of money to use as a deposit. If 2022 is the year you’d like to take your first step on the property ladder, here’s what super savers are doing:-

They give themselves a deposit deadline

Savvy savers will be motivated by a deadline. Don’t, however, set a D-day and promptly forget about it. Diarise monthly ‘check ins’ to see how your fund is building and re-evaluate how much you need to save at the halfway point to avoid any shortfall. 

They choose the right savings account

Shopping around for the best savings account is essential. ISAs are a tax-free way of saving money and they usually have higher interest rates than bank accounts. There’s even a product – the lifetime ISA (LISA) – specifically for first-time buyers saving a deposit. With a LISA, the Government will top up your fund, adding £1 for every £4 saved. In addition, money can’t be withdrawn for any reason other than for a property deposit or for retirement, removing the facility to raid the account. 

They set up a standing order

Even the most disciplined of savers can forget to manually transfer money to a savings account. A good action plan is to set up a standing order that automatically transfers a set amount every month, without any action required.

They don’t deal in cash

The phrase ‘money burning a hole in your pocket’ is the enemy of the saver. If you’re ever in receipt of money – whether that’s a gift or when selling something – ensure the payment is made directly to or transferred quickly into your savings account to remove the temptation of spending it.

They live frugally, not lavishly

Saving for a deposit isn’t the time to live the high life. Short-term but impactful compromises may involve swapping the Amalfi coast for camping in Cornwall, luxury spa days for DIY facials and Michelin-star restaurants for stay-at-home suppers. Even switching a Costa cappuccino a day for instant coffee granules will help.

They sell, sell, sell

As the saying goes, every little helps so selling unwanted goods and gifts is a great way to swell the deposit savings. Facebook Marketplace, eBay, Vinted and Shpock are online platforms where it’s easy to sell clothes, homewares and collectables.

They start a side hustle

Smart savers are willing to go the extra mile in terms of income. If you’ve dreamt of starting a kitchen table craft business, have thought about taking part in market research or want to turn a hobby into a money-making side hustle, now’s the time to make it happen. 

They bank what they save

There’s no ground breaking advice when it comes to saving money but the best savers bank what they’ve saved before it’s frittered away. You’ll reach your deposit goal quicker if you identify how much you are gaining by switching broadband suppliers, for instance, and amending your standing order by the same amount. 

We’re here to help all first-time buyers, so get in touch if you’d like advice regarding deposits and starter homes.

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Lettings Group 1

Regulation change regarding carbon monoxide alarms

Tenant wellbeing should be at the top of every landlord’s compliance list and there’s a new gas safety regulation to understand and implement this winter. The change has prompted a number of questions from landlords, which our lettings team have answered:-

Q. How have carbon monoxide alarm rules changed?
A. The Government’s change to gas safety regulations in late 2021 states that all properties in the private rental sector with a fixed gas appliance, such as a gas boiler or fire, now need a carbon monoxide alarm fitted.

Q. Wasn’t that always the case?
A. Previously, the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 made it mandatory for rentals to have a carbon monoxide alarm only where there was a solid fuel appliance, such as a coal fire or wood burning stove.

Q. My buy-to-let doesn’t have a gas appliance – am I affected?
A. If your rental property is all-electric but you’re planning to install a gas appliance, the new regulations have made it compulsory to supply a carbon monoxide alarm at the same time as you fit a new gas appliance. If you rely on solid fuel to heat or power the property, you will still need a carbon monoxide alarm.

Q. If I supply a carbon monoxide alarm, have I fulfilled all of my alarm obligations?
A. Landlords, or their property manager, need to go a little further than merely providing a carbon monoxide alarm. They need to ensure it works at the start of every new tenancy by testing the alarm, and they need to replace a faulty carbon monoxide alarm as soon as a fault is flagged up.

Q. Have the rules changed in regards to smoke alarms?
A. Smoke alarm rules – as set out in the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 and the statutory guidance (Approved Document J) supporting Part J of the Building Regulations – stay the same. Landlords are required to install at least one smoke alarm on every storey of their rental property that is used as living accommodation. Like carbon monoxide alarms, a landlord, or their property manager, needs to test the smoke alarm at the start of every new tenancy and replace a defective alarm as soon as they are alerted to a problem.

Q. Whose job is it to test any alarms?
A. The Government makes it quite clear that a tenant is responsible for testing any carbon monoxide and smoke alarms during the tenancy period, as outlined in the Government’s Smoke & Carbon Monoxide Alarm Q&A Booklet. Tenants are responsible for changing an alarm’s batteries but it should be the landlord that replaces an alarm unit that’s broken.

Q. Where’s the best place to install smoke and carbon monoxide alarms?
A. The best locations for smoke alarms are where air circulates more freely, such as landings, hallways and stairwells. Installing carbon monoxide alarms at head height is best, as long as the alarm is between 1 and 3 metres away from any gas or solid fuel appliance.

Please check with us if you think your buy-to-let property is exempt from any gas safety regulations. We would be happy to advise on the best course of action to keep your let compliant and your tenants safe.

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Lettings Group 2

New carbon monoxide alarm regulation

Landlords of private rental properties need to be aware of a change in regulation relating to gas safety. All buy-to-lets with fixed gas appliances, such as a gas boiler or a gas fire, now need to have a working carbon monoxide alarm after changes were brought forward through the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 and the statutory guidance (Approved Document J) supporting Part J of the Building Regulations.

Additionally, the regulations state that a carbon monoxide alarm needs to be supplied when the first gas appliance is fitted in a rental property. This could be when electric storage heaters are replaced with gas central heating, for instance.

This is different to the old regulation, which previously stated that carbon monoxide alarms were only a mandatory requirement in any room containing a solid fuel burning appliance, such as a coal fire or a wood burning stove.

It has been reiterated that it is the landlord’s responsibility – or that of a managing agent working on their behalf – to ensure a defective carbon monoxide alarm is replaced once they are told it is faulty. They should also ensure the carbon monoxide alarm is tested for working efficiency at the start of every new tenancy. 

A refresher on smoke alarm regulations

There is no change to the regulations regarding smoke alarms in rental properties but a refresher on the compliance aspect is always useful. Private sector landlords should have at least one smoke alarm installed on every storey of their rental property which is used as living accommodation. As with carbon monoxide alarms, they must make sure the alarms are in working order at the start of each new tenancy.

Failure to comply with any of the carbon monoxide or smoke alarm regulations can result in a fine of up to £5,000, with the requirements enforced by the local authority in charge. 

Testing…testing

One of the biggest grey areas with regards to both smoke and carbon monoxide alarms is testing the alarm during the tenancy period. This excerpt is taken from the Government’s Smoke & Carbon Monoxide Alarm Q&A Booklet, and should be widely distributed to new and existing tenants: 

“After the landlord’s test on the first day of the tenancy, tenants should take responsibility for their own safety and test all alarms regularly to make sure they are in working order. Testing monthly is generally considered an appropriate frequency for smoke alarms. If tenants find that their alarm(s) are not in working order during the tenancy, they are advised to arrange the replacement of the batteries or the alarm itself with the relevant landlord.

 A note on alarm placement

As well as ensuring that smoke and carbon monoxide alarms are in good working order, landlords can ensure their location increases their chance of effectiveness. Smoke alarms should be fitted to the ceiling in circulation spaces, such as hallways, stairwells and landings. Carbon monoxide alarms should be placed at head height between 1 and 3 metres away from a gas or solid fuel appliance.

Please contact us if you have any questions about gas safety and compliance in rental properties.

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Sales Group 2

2022: the year of the power buyer

We’ve had power dressing, the power lunch and even power walking but have you heard about the power buyer? It’s a phrase recently used by property portal Rightmove to describe purchasers who are in the strongest position possible.

As we move into 2022, becoming a power buyer will increase in importance. Expert forecasts for the months ahead are in agreement – moving activity will continue, buyers will face competition from rival purchasers and sellers will prefer offers from those who can proceed without drama and delay. Have you got what it takes to be a power buyer?

The value of the offer is important….

As well as reflecting a home’s value, finish and desirability, the asking price will play an instrumental role in the owner’s next move. In almost every case, the seller’s onward purchase and potentially how much money they need to borrow will hinge on the offer they accept. A power buyer will offer as close to the asking price as fairly possible.

….but it’s not everything

As an estate agent, it’s highly unlikely that we’ll encourage sellers to accept the highest offer without investigating the potential buyer’s wider circumstances. One of the first questions we ask anyone hoping to view a property is ‘do you have a property to sell?’. If the answer is yes, we’ll ask if the property is under offer.

These questions relate to time and proceed-ability. A power buyer will already have their home under offer so they’re ready to hit the ground running and won’t risk delaying the transaction. Remember, even if a buyer offers way over the asking price, they may be overlooked if their own property isn’t on the market and this can draw out a transaction for weeks or even months. 

It’s behind you

A chain, that is. Power buyers realise that getting caught up in a long chain isn’t what any seller wants, so they make themselves as chain-free as possible. Of course, first-time buyers are naturally chain-free but some power buyers will sell their own property and move into rented accommodation as a temporary measure. This makes them chain-free when they decide to make their next purchase.

Money matters

Some of the most powerful buyers are those who can purchase with cash. By having money in the bank, they sidestep the mortgage application process and remove the risk that they may be turned down for finance. For a seller, a cash buyer represents a quicker, simpler transaction. 

The majority of buyers, however, will need a mortgage to purchase a property but there are two simple steps people can take to move them into the power buyer category. The first is to have valid evidence of your deposit and the second is to have a mortgage agreement in principle. Both of these should be in place before a buyer starts looking for a property.

Be authentic

Sellers will sit up and take notice of purchasers who are sincere, open and reliable. That means turning up to pre-booked viewings (preferably on time), putting forward sensible offers and not making outlandish demands. Building the best ‘power buyer’ picture also includes having a solicitor instructed when an offer is made, showing flexibility when it comes to a completion date and taking a genuine interest in the property for sale. 

If you would like more advice about how to become a power buyer, contact our team today.

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Sales Group 1

9 tips for becoming a power buyer

As far as property trends go, 2021 was the year of the ‘great reset’, with more people wanting to buy property than homes available for sale. The demand and supply issue has already created a trend for 2022: ‘the hangover’. With thousands of would-be purchasers thwarted last year due to red-hot competition, many buyers will roll over to 2022, hoping a new year will bring them new buying opportunities.

With sellers set to enjoy multiple viewings and offers on their properties, being a ‘power buyer’ in 2022 will be crucial. This means presenting yourself as the stand-out, most bank-able purchaser when compared to the buying competition – someone who will offer the seller the simplest, most straightforward transaction.

So what can you do to become a power buyer in 2022? Here are our top 9 tips:

  1. Don’t make silly offers: you can risk coming across as a time waster if you offer well below the asking price. Aim for as close to the advertised value as you can justify and don’t nitpick over a couple of pounds here and there.
  2. Sell first, buy second: all estate agents will advise sellers to choose a buyer who already has their property under offer. In a competitive market, merely having your home ‘for sale’ may not be good enough, especially if a rival has already sold their property.
  3. Present as a chain-free purchaser: if you’re a first-time buyer, you’ll already be a power buyer but selling-up and taking an interim rental property or moving in with family before you buy again are two other ways of making yourself chain free.
  4. Come to the table as a cash buyer: cash buyers are power buyers as they’re not relying on a mortgage to buy a property. This simplifies the transaction, reduces the seller’s risk and can trim weeks off the moving process.
  5. No cash? Have a mortgage lined up: many transactions fall apart at the finance stage, therefore sellers prefer buyers who can prove they’ll be loaned enough money to buy the property. This is called a mortgage agreement in principle – something the seller’s estate agent will request. 
  6. Have a solicitor lined up: showing you are serious about the sale will stand you in good stead. A power buyer will have researched solicitors before they start looking at properties and will instruct one as soon as their offer is accepted. 
  7. Have your deposit ready: potential buyers will be prequalified by the seller’s estate agent so they know who’s in a financial position to proceed. By having your deposit in one bank account, together with valid evidence from your bank or building society, you’ll edge ahead of disorganised rivals.
  8. Be accommodating: if you really love the property and want to impress the sellers, be as accommodating as you can. This may mean flexibility when it comes to viewing times or leeway when it comes to the completion date.
  9. Tell the seller your intentions: sellers won’t warm to dithering, stuttering buyers who don’t seem 100% committed. Use a viewing to tell the seller you want to buy the property, and avoid saying  you’re ‘interested’ or may ‘possibly’ make an offer.

If you have seen one of our properties for sale that you’re interested in purchasing, talk to us about your status and how we can help you make a successful offer.