New Build Home Buy

There are three different home buy schemes, designed by the Government to help first time buyers or key workers considered to be in housing need:

New Build Home Buy UK

You buy a share of a property from a Housing Association – perhaps 50%, and pay rent on the rest. This was previously known as shared ownership.

Open Market Home Buy UK

You buy 75% of a property yourself, and the remainder is purchased with the help of an equity loan. This is known as “shared equity.”

Social Home Buy UK

The Housing Association and Local Authority tenants are given the opportunity to buy a share in their home, at a discount.

www.housingcorp.gov.uk/yourhome/shared.htm

Shared Ownership

This is a Government sponsored scheme to help you get on the first rung of the property ladder. It enables you to buy a property, which would normally be outside your price range, because you are able to buy a “share” jointly, normally with a Housing Association.

e.g. If you buy a 50% share, then you have a much smaller monthly mortgage payment, and you merely pay a rent on the other 50% to the Housing Association. The combined monthly cost of the mortgage and rent is normally much less than you would have to pay if you borrowed enough money to buy 100% of the house outright. Specialist lenders offer shared ownership mortgages and they generally assess your ability to pay on the share that you are buying and make an affordability calculation when considering the rent to the Housing Association.

You can increase your share of the ownership right up to 100% – this is called “staircasing.”

www.housingcorp.gov.uk/yourhome/shared.htm

Shared Equity

Currently known as the Government’s “Open Market Home Buyers Scheme”, it enables you to buy 75% of the property using a mortgage from a select number of lenders, and the remaining 25% is a “top-up” home loan from the mortgage lender and the Government.

After 5 years a small amount of interest is payable on the top-up shared equity loan, which is fully repayable when you sell the property.

www.housingcorp.gov.uk/yourhome/shared.htm

Buy to Let

Investing in a Buy-to-Let Property

When you buy a property to rent out, the loan is normally referred to as a “buy-to-let” mortgage.

Lenders apply different criteria to the terms they offer when you buy a home in which to live. In particular, they regard your loan as a commercial mortgage.

A deposit of between 20-25% of the purchase price is normally required, and if you can find 25% of the purchase price, this opens up a wide range of lenders and a spread of competitive terms and mortgage products.

What is Involved in Owning a Buy-to-Let Property?

You will be responsible for the normal purchase and maintenance costs, mortgage payments, plus all the other duties and obligations placed upon a “landlord.”

Using a Letting Agent

Agents usually charge around 10/15% of the rent but can offer a useful service and spare you some of the onerous responsibilities of a landlord. For example, they will find a tenant, collect the rents and generally manage the property.

If they screen applicants in an approved manner, their insurance company may guarantee the rents if the tenants fail to pay.

What Could Go Wrong?

Tenants could fail to pay their rent or move out, and there may be a gap before new tenants move in.

Even if you are not receiving a rental income, you will still have to make the mortgage payments.

You might need to dip into your savings if any of these events occurred.

Other expenses you need to consider are:

Ongoing maintenance and repairs, i.e. leaking roof, etc.
Fire and Local Authority Regulations – if you are served with a schedule of alterations or repairs, it could be expensive.
Realising Your Assets

With many investments, if you need cash, you may make total or partial withdrawals quite quickly with little or no cost or penalty, e.g. various Bank/Building Society deposit accounts, National Savings, unit trusts, etc.

However, if you need to “cash in” a buy-to-let property investment, you will need to sell individual properties and this will involve agents and solicitors’ fees, and of course you will have to wait for a purchaser to be found. You will also be subject to prevailing market conditions – if there is a lull in the property market you might have to accept a lower sale price than you would have liked, or wait some time to find a purchaser.

Income Tax

You are liable to pay income tax on the rental income you receive, charged at your highest marginal rate. There are a number of expenses you can offset against income tax:

Maintenance Costs (such as painting and decorating), Depreciation of Furniture Value, Cleaning, Ground Rent, Service Charges and Buildings Insurance, where applicable, Advertising the Property, Letting Agents Fees, Accountants Fees, Insurance Policies on White Goods, Gas Boilers and Plumbing Cover.

Capital Gains Tax

When you sell the property, you will be liable for Capital Gains Tax (CGT), but only on the profit you have made. You have a personal CGT allowance each year. If your property is held in joint names with a spouse or partner, you can add your allowances together. Any net gain is added to your total gains from other sources in the year, to determine the tax payable. If the property was formerly your main residence, (i.e. your home), you may be exempt from CGT if you sell within 3 years of it becoming a rental property. If the property was never your main residence, there is not likely to be an exempt period – Your potential CGT liability for any profit on the sale of the property is normally effective from the day you complete on the purchase.

This information is, however, subject to variation at any time and is only our own impression of how the current tax rules are applied.

It is essential that you consult your Accountant or tax professional to obtain clarity about your own tax position. HM Revenue & Customs (HMRC) publish their own “Property Income Manual” which is available at:

www.hmrc.gov.uk/manuals/pimmanual/index/htm

Our Qualifications and Experience

Regents Court Financial have two advisers who hold mortgage qualifications, and they both have skills, knowledge and experience of Buy to Let.

Our Principal has received National Industry awards for mortgage advice and in a previous career was an Estate and Letting Agent.

Equity Release

What is Equity Release?

In simple terms, it is a way for you to benefit from the value of your home without having to move out of it. It is particularly suitable for the over-55’s who own their own home and who need extra cash or income, but do not want to make regular mortgage payments.

It can provide you with cash, income or a combination of both.

The two common schemes are Lifetime Mortgages and Home Reversions, and the common factor is that you don’t have to make mortgage payments.

You must, however, take specialist advice and Regents Court Financial has an extension to their FCA licence, to enable them to give Equity Release advice. Their principal, Andrew Clothier, has incremental qualifications CF7, HR1 & Level 3 Certificate in Equity Release.

Equity Release Council

We only recommend Equity Release schemes that are operated by members of this organisation, which has been set up by specialist lenders to protect clients by operating within a code of practice.

www.ship-ltd.org/uploads/FINALBROCHURE2.pdf
www.moneymadeclear.fsa.gov.uk/pdfs/equity_release_ink.pdf
To understand the features of Equity Release, ask for a personalised illustration.

We do not make a charge for an initial consultation.

There may be a fee for equity release advice. The precise amount will depend upon your circumstances, but we estimate it will be £600.

Mortgage Arrears

If you cannot meet your mortgage repayments or you are worried you might fall behind, it is important to take action now – don’t put it off. We are experienced at advising on how to deal with financial pressure.

Some borrowers are coming to the end of low fixed rate deals and are having to replace them at higher rates.

Ultimately, this could lead to more repossessions – figures from the Council of Mortgage Lenders show that 6,230 homes were repossessed in England and Wales in the period January-December 2004.

Regents Court Financial has recently helped two families save their homes from repossession.

“One couple arrived at the office on Thursday, with an eviction order for the following Tuesday! It was panic stations to get a hearing at the local Court Office, and we eventually sat before the Judge on Monday – just one day before the family was due to be evicted.”

“Our Principal, Andrew Clothier, repossessed homes for mortgage lenders in the 1980’s, so he is very familiar with the Court system. If it’s not too late, the lender can be persuaded to suspend eviction while the arrears are paid off; otherwise we arrange a remortgage with a new lender and ask for time to complete the arrangements.”

“If the lender insists on eviction, we credit check the borrowers and the same day arrange an agreement in principle for a remortgage from a new lender. This enables us to identify the lender who offers the best terms, even if the borrower has a poor credit record, i.e. County Court Judgements, arrears, etc”.

“An application is then made to the Court for a hearing. We go to Court with the borrowers and talk about their financial situation, in an effort to get the eviction deferred. We have a pretty good idea of what the Judge will need to know and we are ready to answer detailed questions about the family’s finances plus a vital progress report on the remortgage.”

Under financial pressure, borrowers often talk to commercial debt agencies who advertise nationally. These schemes can be expensive and often involve their credit rating being unnecessarily compromised. The agency can’t usually deal with all the issues, which forces the borrowers to seek advice from a range of other organisations, some of whom may have their own agendas and priorities.

Andrew says, “It’s essential for homeowners who get behind with their mortgage, to keep their lender updated on their financial position, and if they can’t keep to an arrangement, let them know before they miss a payment.”

“We can help borrowers and urge them to contact us as early as possible – preferably before they miss a mortgage payment.”

What Is Remortgaging?

Remortgaging is switching your existing mortgage to a new lender, sometimes simply to cut costs, but there are other reasons to think about remortgaging:

Debt consolidation
Home Improvements
Capital Raising
Other Investments or purchases
Purchasing a Buy-to-Let Property
A Divorce Settlement
Fixing the interest rate
Offsetting current/savings accounts
How Much Will It Cost?

Paying Off Your Existing Lender

Your current lender will probably charge an administration fee, usually from £100-£300 for the administrative costs of paying off your mortgage.

In addition, they may make an Early Repayment Charge. This is a financial penalty that you may incur for moving your mortgage away from them while you are still in a concessionary rate period, i.e. fixed, capped, discount, tracker etc.

These penalties can run into hundreds or thousands of pounds, and if you are still within such a penalty period, it may be uneconomic to move your mortgage until the penalty period has expired.

Legal Fees

A new lender will require you to spend a few hundred pounds on legal fees in arranging your remortgage. However, some will pay these costs for you as an incentive for you to move your mortgage to them.

Valuation Fees

The new mortgage lender will want to satisfy themselves as to the condition and value of your house. This involves a valuation or survey fee, which again, some lenders will pay for you.

Application or Product Reservation Fee

This is a fee charged by a lender for a special mortgage scheme, i.e a fixed, capped, discounted or tracker rate.

Fees can vary dramatically and may be hundreds or thousands of pounds, although the average lender will add them on to the mortgage. Application fees can nevertheless completely compromise the economics of moving the mortgage.

Adverse credit

The overall cost for comparison is 8.90%. The actual rate will depend on your circumstances. Ask for a personalised Illustration.

Think carefully before securing other debts against your home. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

A Buy to Let Mortgage is not regulated by the Financial Conduct Authority unless the tenant is a member of the borrower’s immediate family, or the borrower intends to occupy the property at some stage.

Poor Credit Remortgages

Generally speaking, no matter what your financial history, you can find a remortgage deal to suit you.

If you have CCJ’s, bankruptcy, arrears or defaults in your financial history then some lenders may not be prepared to lend money to you. However, there are many companies who offer remortgages even if you have a poor credit history. Regents Court Financial use whole of market to search the best deals available and lenders who do not charge excessive fees.

We do not make a charge for an initial consultation.

Student Remortgages

Remortgaging can be one of the most effective ways to save money and cut monthly outgoings.

Student remortgages are offered if a guarantor is available – usually parents or legal guardians.

We do not make a charge for an initial consultation.

Divorce Remortgages

During a divorce it is important to establish how the mortgage payments will be kept up, but also how to remortgage to suit both parties. As circumstances change, one partner may want to leave a shared house while the other wants to stay on. Expert independent advice is essential at this stage in your life and Regents Court Financial have divorcing clients referred to them by professional advisers, i.e. Solicitors, Accountants, etc.

We do not make a charge for an initial consultation.

Debt Consolidation Remortgage

Remortgaging can be one of the best ways to save money and cut your monthly outgoings. If you have lots of money outstanding on unsecured loans, credit cards and store cards, you could dramatically improve your monthly budget.

E.g. If your total monthly outgoings exceed your income, it is often possible to reverse this situation immediately, although you need to be aware that the payment term is usually longer than on a standard unsecured loan, so in the long run you may end up paying more.

Capital Raising Remortgages

If you need to raise funds for any reasonable purpose, a capital raising remortgage could be suitable. By remortgaging your home, you can often release capital and pay it off at a lower interest rate than you would if you arranged a unsecured loan. The cash can be used for home improvements, a holiday, a new car, to buy a buy-to-let property, etc.

Mortgages for Right to Buy

There are a number of lenders offering mortgages to help tenants buy their own Council or Housing Association Home.

Regents Court Financial are Whole of Market Independent Mortgage Advisers so we can look at all the lenders who consider Right to Buy:

Whether it’s a house or a flat + some non standard construction Homes
For those who may have experienced difficulty with credit in the past
A Mortgage for the whole discounted purchase price so you don’t need to find a deposit
Sometimes we can find a lender who will allow you to borrow more than the discounted price to allow for the cost of home improvements.
If you need help with your Right to Buy application, we’ll help you complete the forms.

For information and to check your eligibility visit https://www.gov.uk/right-to-buy-buying-your-council-home/overview

Mortgages & Remortgages

Mortgages and House Purchase

Did You Know?

There are over 2000 different mortgage schemes to choose from.

  1. Which is the right one for you?
  2. Are you paying too much?
  3. Could you get a more suitable deal?
  4. Is it safe for you to lock in and risk paying an early repayment charge?

It Is So Important To Take Advice…

Buying a house is probably the single largest purchase most of us make in our lifetime, so you must get the most suitable advice.

Even if you already have a mortgage you may be able to change it for a new, more flexible and more effective one.

We use the latest technology and our systems are updated at least once a day to ensure that we have the most up-to-date information all the time.

Get Professional Advice…

Talk to us, qualified independent financial advisers. We will determine which factors are most important to you and use them to analyse and search for the mortgage scheme which best matches your needs and circumstances.

We do not make a charge for an initial consultation.

There may be a fee for mortgage advice. The precise amount will depend upon your circumstances, but we estimate it will be £500.

 

9 Mortgage Awards since 1998

Andrew Clothier has received 9 national financial service industry awards since 1998

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

You may have to pay an early repayment charge to your existing lender if you re-mortgage.