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NG24 1JS

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Q. With interest rates coming down, what are my mortgage options?

A. Interest rates and mortgages have been in the news a lot recently. The Bank of England has reduced interest rates to a record low of 0.25%, and even hinted at the possibility of a further cut. So, is this a good time to fix for longer than the usual two years?

Historically, two year fixed rates were the norm, but five years is now more common and some lenders are launching seven and even 10year fixed deals, with attractive rates.

If you are in a stable situation relationship, job, house then a longer term fixed rate does make sense. But you wouldn’t want to break a 10year fixed rate and incur an early repayment charge, as this would be costly (although you can transfer the mortgage to a new house if you sell).

Over the past six months, 91% of our clients have opted for a fixed rate mortgage, most on two year terms. It’s worth bearing in mind that when you come to review your two year fixed rate, may be around the time that the UK is actually leaving the EU.

Nobody knows what impact that will have on the economy and interest rates, and that’s why some people may prefer to choose a longer term fixed rate, and enjoy the peace of mind that comes with it.

If you’re buying a home with a smaller deposit, it may be worth considering a short term fixed rate. As your equity grows (known as the loan to value or LTV) the lender’s risk profile reduces, and they will generally offer you cheaper rates. So, even if interest rates increase, you can offset this by securing a lower rate, reflecting that reduced risk.

If you feel five years is too short, but 10 years is too long, there is now another option. So far, 32 seven year fixed rate products have been launched (compared to only a handful five years ago) and these are a good middle ground.

The other solution, of course, is a tracker or variable mortgage, which may follow the Bank of England base rate. But, although interest rates could fall again, they could also increase as we approach the EU departure date. Be mindful that rates could go up or down. Much depends on your circumstances and attitude to risk. The best course of action is to seek independent advice.

James

BB Mortgages helps scores of self-employed people find a mortgage each year. For advice, call us on Newark 01636 674455

Q. I am self-employed, can I still get a mortgage?

A. The answer to this question is most definitely yes. But (and you knew there was a but coming, didn’t you?) lenders are a little stricter with self-employed applications. It frustrates me when I hear that lenders haven’t been helpful to a self-employed applicant; something which is often mentioned in the media. Like anything in life, it helps to be armed with some knowledge.

Some key points to note for self-employed mortgage applicants are:

  • You must have your documents in order. The majority of lenders will require your tax calculation (also known as an ‘SA302’) for the last three years. This can be ordered from your accountant, HM Revenue and Customs or from the HMRC website. In short, this is a summary of your self-employed income, net profit or dividends and salary, if you are a limited company
  • Most lenders will then take an average of the last two years’ income. However, some lenders will take the most recent year’s income and others have individual ways of looking at your income
  • There are some lenders in the market that will accept you if you have only been self-employed for one year, instead of the usual two or three years

    • If you are self-employed, the most important thing to do is talk to a mortgage broker before you find a property. They will help you fully understand what paperwork is required and how different lenders will assess your income. That will give you an idea of what’s achievable.

    So, the good news is that there are lots of mortgage options out there for home-movers, people looking to remortgage, first-time buyers and investors. It just requires good knowledge of each lender’s self-employed criteria and a little patience to negotiate the lender’s underwriting procedures.

    I hope this helpful to anyone who is self-employed and looking for a mortgage.

    James

    BB Mortgages helps scores of self-employed people find a mortgage each year. For advice, call us on Newark 01636 674455

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We would like to take this opportunity to thank you for your efforts in making it possible for us to purchase our first property.  You have been brilliant and your services have been friendly, helpful, swift and professional.  We cannot thank you enough and it has been an absolute pleasure working with you.  What is known to be a stressful time has been very smooth and I have yourselves to thank for this.

Miss Knight

2016-03-22T17:24:36+00:00

Miss Knight

We would like to take this opportunity to thank you for your efforts in making it possible for us to purchase our first property.  You ...

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2016-09-13T12:38:09+00:00
Mr L hadn’t sold his house but had found the house of his dreams, we arranged a mortgage that allowed him to buy his new ...

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2016-09-13T12:43:22+00:00
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2016-09-13T12:48:10+00:00
Mr W works abroad but wanted to buy a buy to let property, most lenders will require him to own and live in in a ...

Mr C wanted to buy a student house in Lincoln via a limited company to take advantage of the income tax benefits of this. He spoke with other brokers and high street lenders all of which said it wasn’t possible. We found a building society who specialise in this with sensible fees and interest rates.

2016-09-13T12:49:06+00:00
Mr C wanted to buy a student house in Lincoln via a limited company to take advantage of the income tax benefits of this. He ...

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