Rishi Sunak’s second Budget as Chancellor brought two pieces of welcome news for the property sector as the Government attempts to transform “Generation Rent” into “Generation Buy” to help stimulate the UK economy, namely the new 95% Mortgage Guarantee and an extension of the Stamp Duty Holiday.
The name of this scheme is misleading as not everyone that applies is guaranteed to be offered a mortgage, it is still subject to affordability and credit score. The “guarantee” itself is that the Government will ensure Lenders don’t stand a loss if they grant a 95% mortgage to a customer who then subsequently falls into arrears and is repossessed leaving behind negative equity.
This scheme should in theory give Lenders more confidence to lend even though the applicant only has a smaller deposit to put down. Of course, Lenders never want to repossess someone’s home unless it is the last resort, but if that happens then the new scheme would cover any shortfall.
Lenders have been worried about the prospect of home values decreasing so this measure should alleviate that concern although of course, the chances of negative equity occurring will naturally reduce should property prices increase as a result of these announcements!
The scheme is available to both 1st Time Buyers and Home Movers, it’s available on any property (not just new build) and will run until December 2022. Some major High Street Banks have already signed up to the scheme and it’s likely more will follow later on. It’s still a big challenge for Lenders to cope with the demand they are getting for mortgages due to the difficulties training and supervising staff working from home but they will want to offer as many of these mortgages as they can.
When the Stamp Duty Holiday was launched last year we all hoped life would be very much back to normal by the cut-off date of 31st March 2021 but things didn’t pan out that way as we know. Solicitors are struggling to keep up with the workload and if lots of chains had collapsed then it would have partly defeated the object of the exercise.
Therefore it was good to hear the scheme has been extended to 30th June for purchases up to £500,000 and 30th September for purchases up to £250,000.
The Government certainly sees the property sector as an area that can play a big part in our economic recovery and if you are looking to buy a home or remortgage this year please reach out and we will be happy to advise you.
Needs for offset mortgages have dropped since the 1990s. Although they’re still a great option for customers who are able to put something aside each month. They’re also good if you think you may receive a lump sum soon.
When you take out an offset mortgage, the lender will give you a savings account to go along with it, solely for the purpose of the mortgage. Rather than attracting interest, the money offsets against your mortgage balance. For example, if your mortgage is worth £100,000 and you have £18,000 in savings, then you pay interest on the remaining £82,000.
It’s a smart move if you are due a lump sum for any reason, such as future inheritance. As you can store your money until you are ready to decide what to do with it due to it being interest-free. This can apply to any annual or quarterly bonuses from your job that you don’t rely on.
An offset is an excellent opportunity for a First Time Buyer in Sunderland who want to overpay on their mortgage. Overpaying can reduce your mortgage payments for your next term. Leading to a reduction on your interest rates too, with other mortgage types. The money you put in cannot be taken out again until the end of your term. Which can be less than ideal if you change your mind or need to take some of it out early.
This is where Offsets are handy, you have a savings account, you can take out the funds at any time. Then put them back in when you’re ready. If you’re looking to make additional payments on your mortgage over time. We’d highly recommend taking advantage of the Offset savings account as you go.
Make sure to consider all your options when speaking to a Mortgage Advisor in Sunderland. Some consumers who like Offset Mortgages tend to keep these types of mortgages going and therefore, don’t tend to remortgage. Your advisor should be able to show you the impact of how an Offset can save you money over the course of the full term.
If you have any questions or require any help regarding Offset Mortgages or wanting to Remortgage in Sunderland. Then get in touch with one of our friendly Mortgage Advisors in Sunderland. We will be happy to help discuss the topic further.