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Life Insurance Advice in Halifax

Life Insurance Halifax 

Life insurance can act as a financial safety net to support your family in the event of your death. There are different types of Life Insurance to choose from and in this article, we will discuss what types are out there and explain why they are essential to take out. 

Speaking with a Mortgage and Protection Specialist in Halifax might be very beneficial. Here at Halifaxmoneyman, we offer a free insurance consultation that we highly recommend you take prior to commiting to any insurance policies because you want to find the best one that matches your circumstances. 

The reason we offer this is because life insurance can get complex, especially if you are not sure what you’re doing. As well as the different types of life insurance, you also need to choose what your policy covers and how long it will last. 

What is Life Insurance? 

Life insurance is a type of policy that financially supports your family in the event of death. This is through a lump sum of money that is passed down, usually to a family member or friend. 

In the event of a claim, you can decide if the cover is paid out all at once or through regular payments. 

As well as providing financial support for a family member, it also was introduced to replace lost income or payout outstanding debts owed in the person’s name e.g. a mortgage. 

The amount that is paid out alters depending on the type of cover that was taken out. The advantage of life insurance is that you decide what your payout goes towards. For example, you could specify that you want your payout to be used only on debts like a mortgage or car loans.  

Different Types of Life Insurance 

There are several different types of life insurance policies. Below are the policies that we commonly see people take out as a mortgage broker in Halifax: 

Level Term Life Insurance 

A Level Term Life policy provides you with a payout that will remain constant throughout your policy’s duration. This means whether a claim is made 5 years into the policy, or 20 years into the policy, the amount paid will be the same. The duration of the policy is usually between 5-25 years in 5 year increments. 

A policy that is usually used to cover a mortgage is Term Life Insurance. It’s common for people to take out this policy that’s in line with their mortgage term. If you do pass away and still have your mortgage to pay off, the policy will pay out. Due to this, the mortgage payments will not have to be relied on by a family member or any other name attached to the mortgage. 

Decreasing Term Life Insurance 

Through our experience as a mortgage broker in Halifax, this type of life insurance seems to be the type that is the most popular.
 

It might be a surprise to some as you may be thinking, why would you want to take out a policy that decreases in value? This policy is targeted at homeowners with repayment mortgages – which is most people. When you do pass away, the policy works by paying off the outstanding mortgage balance.   

The policy’s value mirrors the outstanding balance remaining on your mortgage. Therefore, as the amount owed on your mortgage decreases, so does the sum insured.  

Decreasing life insurance is usually taken out alongside other insurance products depending on your circumstances. It’s best that you speak to a Mortgage & Protection Specialist in Halifax to give you guidance on what they recommend to be the most suitable insurance for your needs. 

Increasing Term Life Insurance 

This type works in the opposite way to Decreasing Term Life Policy. Increasing Term Life Insurance will payout should you die within your fixed term.  

Furthermore, the amount that you have covered increases as your term goes on. Through the duration of your policy term, the fixed amount increases. As you can see, this is different from Decreasing Term Life Insurance.
 

The reason why this policy was introduced was to protect the policy’s total value against inflation and is usually in line with the retail price index. 

Whole of Life Insurance 

We find that Whole of Life Insurance is not the one at the top of the insurance market. Despite this, Whole of Life Insurance may still be helpful as well as being the perfect policy that suits your circumstances. 

As stated in the name, Whole of Life Insurance is the type of cover that lasts your whole life. In the event of your death, the policy you took will payout. You will find that Whole of Life Insurance will be a higher cost compared to a Level Term Life Insurance. This is because you are covered for your whole life instead of a fixed term. 

As long as you have kept up-to-date with your life insurance payments, your cover will apply for your whole life. This type of insurance is commonly used for family protection and is part of inheritance tax planning. 

Joint Life Insurance 

Joint Life Insurance is the type of policy that you may choose if you are in a relationship or married. This policy will payout in the event of one of you dying. Joint Life Insurance is often cheaper in comparison to both parties having two separate Life Insurance policies. It’s you and your partner’s decision if you want to take one out jointly or two separate ones. 

The policy pays out then ends in the event of one of you passing away. This may seem like a drawback to the policy, however, if you intended to take out the policy to pay off your mortgage then you would still be able to do so because the money will be released following the death of one of the policyholders. 

Death in Service 

In some cases, your place of employment may offer you Death in Service cover as part of their employee benefits package. This is something that not all workplaces offer as they are not obligated to do so.   

The cover works by paying out a lump sum of cash to the employee’s family or a person of their choice if they die. Usually, this sum is up to 5 times their annual salary. Unlike the other types of policies, there is a specific limitation on what can be done with the employee’s money. 

The payout is not associated with if an employee dies in the workplace. 

Taking out Life Insurance as a Single Homeowner 

Life Insurance options is something you shouldn’t disregard just because you’re a single home owner. 

It’s not unusual for people to forget life insurance when they have settled into a new place and are currently living on their own without children or a partner. Unfortunately, Life Insurance doesn’t always apply to single homeowners which is why people choose to ignore it.   

Even if it might not apply to you now, your circumstances could change in the future, which is why you should think about it because Life Insurance could become a crucial thing to have. 

To find out if it’s worth taking out Life Insurance as a single homeowner, get in touch with one of our Mortgage Protection and Insurance Specialist in Halifax.   

What is a 95% Mortgage?

A 95% mortgage is as simple as the name would suggest; you are borrowing against 95% of the price of a property, and then you are covering the remaining 5% with your deposit. An example of this is if you looked at buying a property that was worth £150,000 with a 95% mortgage, you would be putting down £7,500 as your deposit and borrow the remaining £142,500 from the lender. 

95% Mortgage Advice in Halifax

Off the back of the March 2021 Budget, Boris Johnson announced a Mortgage Guarantee Scheme for mortgage lenders, making 95% mortgages more readily available from the bigger high street banks.   

This is fantastic news for First-Time Buyers and Home Movers alike, as this scheme will continue running until December 2022. Certain terms and conditions will apply though, which is something your Mortgage Advisor in Halifax will be able to look at, to see if you qualify.    

All our customers who opt to Get in Touch will receive a free, no-obligation mortgage consultation where one of our dedicated mortgage advisors will be able to make a recommendation on the best possible route for you to take.

Can I get a 95% mortgage?

95% mortgages are usually accessible by both First Time Buyers in Halifax & those who are Moving Home in Halifax. Whilst saving for a 5% deposit sounds like a pretty straightforward concept, you’ll still need to have an acceptable credit score and prove that you are able to afford your monthly mortgage repayments, in order to access a 95% mortgage.

Improving your credit score

A good credit score is essential in the process of obtaining any mortgage, especially a 95% mortgage. Things like paying any current credit commitments on time, ensuring your addresses are updated and checking that you’re on the voters roll, can all help with your credit score.

Affordability 

Affordability is another one that is important to take note of. By giving the lender details of your income and monthly outgoings (things like your bank statements will be necessary for this) and any pre-existing credit commitments, your lender will be able to get a general overview of whether or not you are able to afford this type of mortgage.

Can my family help me get a 95% mortgage?

Nowadays we see lots of family members helping each other get onto the property ladder, especially parents looking to further their children’s lives. The way this usually happens is by gifting the person looking to find their home, the deposit required. Known through the industry as the “Bank of Mum & Dad, Gifted Deposits are only intended to be a gift, and not as a loan. The lender will need proof that this has been agreed, before it can be used towards your mortgage. 

How do I choose the right 95% mortgage?

When looking for a 95% mortgage, you want to make sure you have the right type of mortgage. Each mortgage type works differently, with that choice allowing you to find one that is most appropriate for your personal and financial situation. 

Some homeowners and home buyers prefer Fixed Rate or Tracker Mortgages, mortgage types which mean you either keep interest rates at a set amount for the term given or have your interest rates tracking the Bank of England base rates.

Alternatively, you might find that Interest-Only or a Repayment Mortgages are more your style. Interest-Only allows cheaper payments until you need to pay a lump sum at the end (mostly now used for Buy-to-Lets), whereas a Repayment mortgage (a normal mortgage if you’d like) means you’ll be paying interest and capital combined per month.

How can a bigger deposit help with my mortgage? 

Seeing as a mortgage is such a large financial outgoing, you need to be prepared and need to be aware. You might find things like higher interest rates, remortgaging difficulties due to less equity and then negative equity all cropping up if you’re not. 

There is no need to worry though, as all these can be avoided if you’re savvy enough with your process to begin with. The more deposit you put down for a property, the less risk the lender will see you as. 

A larger deposit, of say 10-15%, would not only reduce the rates of interest by a noticeable amount, but would also give the property more equity and reduce the risk of negative equity, thanks in part to you borrowing less against the property. 

So, whilst the risks may seem intimidating, planning ahead and saving for a bigger deposit to access something like a 90% or even an 85% mortgage will be a massive help in your mortgage journey and something you’ll be able to reap the rewards from in the future. 

Buying a Property with a Friend or Partner in Halifax

Mortgage Advice in Halifax

Buying a house with a Friend | MoneymanTV

Over time, the inflation of property prices has far outweighed the increase in wages. People nowadays are looking to build their own house rather than stay at rent somewhere and spend much money on paying rentals. The move from renter to homeowner needs proper planning and takes time. Therefore, many people, especially first time buyers in Halifax due to their low affordability levels, plan to buy a property with a friend or a partner. This is because the dual-income sources lead to a sufficient pool of income that convinces a lender to offer a higher mortgage amount.

When you jointly pool in your income, you decide mutually to divide the cost between the two, thereby making it more affordable. However, this is a Specialist Mortgage and comes with some risk. This article will answer some questions we often receive and shed some clarity on buying a property with a friend or partner in Halifax.

How many people can jointly co-own a property?

Owning a property involves a lot of regulations and technicalities. This is even more apparent in joint properties as one owner might want to sell the property, whereas the others do not. However, in Halifax, lenders allow up to four people to co-own a property at one time. If anyone owner stops contributing to the monthly mortgage payments, the other owners still have a right by law to stay in the property unless the court states otherwise. With this in mind, you need to be cautious with whom you choose to buy a property.

Any plans to increase the Mortgage down the line, require consent from all involved. With this in mind, it is also essential to discuss long term plans for owning your property if someone opts for a different route or situation change.

Joint Tenancy or Tenancy in Common?

This concept is associated with couples who are married or are in a civil partnership. Such people are usually involved in joint tenancy. In case any one of the applicants pass away, the ownership will already be transferred to the other owner. This is where mortgage life insurance comes in handy, as at that point, the Mortgage would be repaid. However, you’ll require consent from other applicants if you want to sell or remortgage the property in the future.

Tenants in Common is usually chosen by the likes of relatives or friends buying a property together. This option allows you to own the property jointly, but it does not need equal shares. If one party is making more money than the other is, this works out well.

You can also act individually if you are a Tenant in Common, so you could realistically sell or give away your share, without the other person losing their stake in the property.

What happens if one party stops making mortgage payments?

All parties involved in joint ownership or have relevant shares in the property are liable for the mortgage repayments. Generally, if one member fails to make the payments, the other covers the cost to prevent any debt from building up.

Any arrears made on a mortgage may stop you from getting one in the future. An ideal way to think of joint mortgages is that you don’t own 50% of a property, you own 100% of it conjointly.

How do I remove an ex-partner or myself from a mortgage?

Removing someone from Mortgage can be challenging as lenders need to do a vigilant check on your affordability level to confirm that you can pay the Mortgage all by yourself.

None who has applied for a mortgage together ever thought of separation in the longer run, but unfortunately, time does not always stay the same. Therefore, it is vital to remember how big a financial commitment to getting a mortgage is and how challenging it gets when all of a sudden, you decide to make changes. So it’s always recommended to assess your personal life thoroughly before agreeing to something big.

Handling over the evidence to a lender that you have been managing mortgage payments since your ex moved out, does not qualify the fact that you alone can make it a sole name mortgage.

Lenders would much rather there be a second income if one person is unable to afford their half. The process of removing someone involves a brand new affordability assessment, much like they would when you first applied for a mortgage.

If your lender declines your request to do so, you should get in touch with your mortgage advisor in Halifax to see if any other lenders would agree to let you transfer into your name.

It may also be worth your time to see if any family members can help you out with this. They can often gift a lump sum amount to reduce the amount owed or even replacing your ex-partner on your Mortgage.  

Things to remember when removing yourself from a mortgage

Even if you and your partner are set apart, and you end up moving home in Halifax, you are still responsible for repayments. Even if you agree with your ex that they will pay the payments responsibly, there might be a time when your ex cannot pay thereby making you liable for costs.

If you promise to send them money every month, you need to be watchful of your credit report because if he defaults, it will negatively affect your credit score.

Being tied up to an older mortgage also limits your ability to borrow for any new homes you might be looking to buy, as the lender will take your current repayments into account, seeing them as existing credit commitments.

Lenders might not always agree to your demand, because rendering such a vast amount comes with a risk.  So always plan carefully whom you need to get into agreement with. It is better to agree on a plan in advance, to avoid difficulty if things ever go wrong in the future.

Mortgage Advisor in Halifax

Don’t Pretend You Live Somewhere You Don’t in Halifax

Mortgage Advice in Halifax

When it comes to applying for a mortgage and your credit score, the fewer addresses you have on your record the better, however it seems that people are becoming savvier and aware of this.

We are now seeing more and more applicants who have moved out of their parents address into rented accommodation but think that it is a good idea to leave their bank statements, credit card and Electoral Roll information registered at their previous address.

There are good reasons why people do this, however, I’m afraid this is now a flawed strategy. Almost without fail, if you have moved to a new address, there will be some record of this on your credit report. This could be from a delivery address when you have ordered something online or a car/home insurance search and many more.

By far a better strategy for you if you are thinking about taking out a mortgage is to get all of your accounts (credit cards / current accounts) and electoral roll changed over to your new address. When updating your address on your credit file and electoral roll ensure you double check the date in and date out. If you do make a mistake with these dates it can appear that you are living in two places at the same time. This is a more open and honest way of trying to apply for a mortgage.

Speak to a Mortgage Broker in Halifax

Speaking to a Specialist Mortgage Advisor in Halifax would benefit you in many ways. Firstly, a Mortgage Broker like Halifaxmoneyman will tell you exactly how to improve your chances in getting accepted for a mortgage and help you complete these simple steps if you need guidance. They will go above and beyond for you, trying to find you that perfect mortgage deal that best suits you and your personal and financial situation.

Here at Halifaxmoneyman, we also offer a free mortgage consultation and you can get in touch with us 7 days a week from 8am – 10pm! We work for you, trying to provide the best mortgage experience we can; we hope that we hear from you soon!

Getting Prepared For Your Mortgage in Halifax

Mortgage Advice in Halifax

So, you’ve saved up for your deposit (or got the green light from “Bank of Mum and Dad”) and made the decision to move home. What’s the next step? Put simply, and in the best boy scout traditions, it’s time to get prepared.

Know where you stand

We’d recommend speaking to an experienced Mortgage Broker in Halifax as early on in the process as possible, so you know how much you can borrow for a mortgage and how much it will all cost. Obtaining an up to date credit report should also be at the top of your list, you don’t want a meaningless squabble with your mobile phone provider holding you back from buying a home. Taking the above two steps will give you a meaningful expectation of how possible this is going to be and what your budget is.

Getting organised

Your Mortgage Broker in Halifax will obtain a fully credit-checked Agreement in Principle on your behalf but you’ll have to prove who you are, where you live and how much you earn. There really is loads of paperwork for you to get together so it’s a good idea to open a file for yourself and start collecting everything in advance.

Proof of ID

In terms of proving who you are you’ll need to produce some photo ID such as a Driving license or passport, if you’re a non-UK national working over here on a Visa you’ll need that too.

Proof of address

In addition to the above, you’ll need to prove where you live. You’ll need to produce a utility bill or original bank statement dated within the last 3 months.

Last 3 months’ bank statements

The analysis of your spending habits has become one of the most important determining factors in whether you’ll qualify for a mortgage or not. Your bank statements should evidence your income and regular expenditures. Lenders will not be happy to see gambling transactions on your account. Nor will they like it if you go over an agreed overdraft limit or if your direct debits bounce regularly.

Proof of deposit

You will have to prove you have the funds in place for the deposit and also evidence this for anti-money laundering purposes. Try not to move monies around your various accounts too much as it will make evidencing the audit trail more difficult. Lenders like to see your savings building up so you’ll need to account for any large credits into your accounts.

Quite often money for deposits has been gifted by family members. These funds need to be evidenced also and the “donor” will need to sign a letter. This is to confirm it’s a non-refundable gift, not a loan.

Proof of income

In terms of affordability, the most important thing is to be able to prove your income. If you are employed this tends to be by way of your last 3 months’ payslips and most recent P60. Lenders can take into account regular overtime, commission, shift allowance and bonus.

If you are Self Employed then you’ll need your Accountant’s help. This will be to request your tax year overview.

A list of your expected outgoings

It’s a good idea to do your homework. Write down an estimate of your anticipated 1outgoings after you move house. You can work out an idea of how much the council tax and utility bills will be. In addition to that, you can work out your regular expenditures, such as food and drink. This will demonstrate how much disposable income you have available to pay your mortgage from.

As you can see from the above, it’s a real paper trail when you are applying for a mortgage but if you want your application to run like clockwork you’ll need to put the time aside to get everything together.

My own view is that it’s better to get all this at the outset and collate everything that the lender could possibly ask for. As this saves time and frustration later down the line if you’re subsequently asked for paperwork you could have had ready at the outset.

Confused About the Help to Buy Schemes?

Mortgage Advice in Halifax

Whilst it is widely accepted that there is a national housing shortage, the Government has launched several schemes over the years. These have been under the “Help to Buy” banner, designed to get people onto the property ladder.

Unfortunately calling all the schemes Help to Buy has caused confusion amongst consumers! Here’s my take on what’s out there right now.

Schemes Currently Available

Help to Buy ISA

This is a savings scheme available from most high street banks aimed to help First Time Buyers in Halifax with their deposit. If you meet the criteria, your savings will be boosted by 25% by the government. Your Solicitor will apply for this bonus at the end of the house buying process so somewhat bizarrely you can’t use the bonus towards your deposit as it’s paid shortly after completion.

Help to Buy Equity Loan

This is the most popular scheme and is available on new build properties only. The government will lend you up to 20% of the purchase price. Usually, my customers put down a 5% deposit and take out a 75% mortgage for the rest. Remember, it’s a loan not a gift and the government have a stake in your new home until you pay them back.

Forces Help to Buy

If you’re in the armed forces, you can borrow up to 50% of your salary, up to a maximum of £25,000 interest-free towards a new home.

Some FAQs about the Help to Buy Schemes

What if I’m Self Employed?

There are lots of options available to you. It’s a good idea to speak to your Accountant and also speak to a mortgage broker for advice.

Do I have to buy a new build house?

Yes and no, the Help to Buy Equity Loan is for new build properties only. The Help to Buy ISA and Forces Help to Buy can be on new or old.

Do you need a good credit rating?

There may be options available to you even if you have a poor credit score. Mortgage lenders are becoming increasingly competitive on criteria and many challenger banks are entering the market. Again, please seek mortgage advice from a local expert!

How much deposit do I need?

A minimum of 5% as a rule.

Can my deposit be gifted by my parents?

Yes, family members and sometimes friends can gift (not a loan). This is a popular way for First Time Buyers to get on the property ladder. In a recent government survey, 27% of such buyers relied on family and friends to help with a deposit.

Do I need to pay the government back?

Yes, with the Help to Buy Equity Scheme the Government loan is interest-free for 5 years. After this, you’ll pay fees. Hopefully, the property will have increased in value and you can potentially remortgage the property at any time. This likely would be to raise funds to increase your share. Remember, the government will also receive their share of any profit made.

Is Help to Buy just for first-time buyers?

The Help to Buy Equity Loan is only available for First Time Buyers, however, the Forces Help to Buy can be accessed by both First Time Buyers and Home Movers.

How do I use the Help to Buy Scheme?

The first stage would be to have a free mortgage consultation. This is to work out your maximum borrowing and also to get a mortgage agreement in principle certificate. This puts you in a strong position to make an offer. Once you have this in place you’ll be a “qualified buyer”, the next step is to go and view houses!

For more information and further terms and conditions about any of the above schemes please refer to the ownyourhome.gov.uk website.

Self Employed Mortgages in Halifax

According to the Office of National Statistics, the UK is going through a bit of a Self Employed “boom”. The number of Self Employed individuals rose from 3.8m in 2008 to 4.6m in 2015. This could be down in part to people being inspired to become the new Peter Jones on Dragon’s Den or Richard Branson. More realistically it’s just that work patterns have been changing for several years now.

No longer would someone be expected to leave school at 18 and work for one employer all the way through to retirement. The rise in new engineering and digital occupations, in particular, give rise to Self Employed roles and short-term contracts. However, the uncertain nature of this type of work can make Banks nervous about issuing mortgages.

It’s not impossible to get a mortgage if you are Self Employed by any means but it certainly is a specialist area so here I take the opportunity to help you get prepared if you are in this position and thinking of buying a house.

How many years’ accounts do I need?

At the moment it’s a minimum of one year’s trading with some Lenders wanting a minimum of two. The reason for this is that so many businesses fail in the first year Banks aren’t willing to take on that level of risk.

How is my income assessed?

Most Lenders take the average of your last 2 years’ earnings. Some go off the latest year. This could be good news for you if your profits are increasing.

I’m a Director of my own Limited company – does this mean I’m employed?

Yes and no. Yes, you are employed but no, the lenders do not assess you as an employee unless you own less than 25% of the shares. Most lenders add your salary to your declared dividend to calculate your annual earnings with the odd one using net profit (this can be good if your business retains some profit).

My net profits don’t reflect the true picture of my business – what can I do?

This is a familiar question but there’s not much that can be done. Your mortgage application is assessed on the income declared (net profit or salary/dividend) to the Revenue. If you want to get a mortgage then you need to have paid some tax.

How much deposit do I need?

This is the same as an employed applicant. A minimum of 5%, although it may be more if you only have one year’s accounts.

Will a bigger deposit help me?

The more deposit you are able to put down the better deal the lender is likely to offer you. This means you will have a wider choice of lenders, in terms of the maximum mortgage that will be made available to you. Although this doesn’t make a massive difference.

I’m a contractor – am I treated differently?

Yes, it can be. lenders do seem to like Contractors at the moment. If you’ve built up a good track record then the lenders can consider taking your “daily rate” and applying a multiplier to this, rather than your net profit. I have seen lenders offer bigger mortgages to contractor applicants using this method, especially for IT contractors.

Can I self-certify my income?

Unfortunately, “self-certs” were widely abused in the pre-credit crunch days and there is no sign of this type of mortgage returning.

Taking out a mortgage as a sole trader, partner or Company Director can certainly be more complicated. More so than it would be for an employee. Some lenders are more flexible than others. In my opinion, it’s a good idea to get a Mortgage Broker in Halifax on your side early on in the process.

This is so you have realistic aspirations from the start. Long gone are the days when your Bank Manager could “take a view” on your circumstances just because you are a loyal customer. The lenders lean increasingly upon their computerised credit scoring systems. Like lots of things, it’s just knowing where to look.

The Different Types of Mortgages Explained

The Different Types of Mortgage

When you start out looking for a mortgage you will soon realise that there are lots of different options available. If you are a First Time Buyer in Halifax, you will probably be shocked to how many there are.

Below you will see a list of the most popular types of mortgages available on the market and hopefully.  If you have any questions regarding any of the below mortgage options, then please do not hesitate to contact us.

What is a Fixed Rate Mortgage?

A fixed rate mortgage means that your mortgage payments are going to stay the same for a set period of time. You can set the length of which you want to fix your payments for, typically this being 2, 3 or 5 years or longer. No matter what happens to inflation, interest rates or the economy you know that your mortgage payment, usually your biggest outgoing, will not change.

What is a Tracker Mortgage?

A tracker mortgage means that your interest rate will track the Bank of England’s base rate. So in other words, the lender that you are with does not actually set the rate themselves. You will be paying a percentage above the Bank of England base rate. In an example, if the base rate is 1% and you are tracking at 1% above base rate, that means you will be paying a rate of 2%.

What is a Repayment Mortgage?

When you take out a repayment mortgage this means that each month you are paying capital and interest combined. So as long as you keep your payments going for the full length of the mortgage term, the mortgage balance is guaranteed to be paid off at the end and the property becomes yours.

This is the most risk-free way to pay your capital back to the lender, in the early years it is mainly the interest that you are paying and your balance will reduce very slowly especially if you have taken out a 25, 30 or 35-year term. This situation switches in the last ten years or so of your mortgage, where your payments are paying off more capital than interest and the balance will come down much faster.

What is an Interest Only Mortgage?

Whilst many buy to let mortgages are set up on an interest-only basis, it is much more difficult to get a residential property on an interest-only basis.

It is much less likely for lenders to offer an interest only product now.  However, there are certain circumstances where this can be an option. These include downsizing when you are older or have other investments what you will use to pay the capital back. Lenders are very strict when it comes to offering these products now and the loan to values are a lot lower than back in the day.

What is an Offset Mortgage?

With an offset mortgage, the lender will set you up a savings account to go alongside your mortgage account. How this works is that let’s say you have a mortgage balance of £100,000 and £20,000 is deposited into your savings account, you only pay interest on the difference, so in this case £80,000. This can be a very efficient way of managing your money, especially if you are a higher rate taxpayer.

Agreement in Principle and Soft Credit Searches

More and more people these days pay much closer attention to their credit rating. Consumer awareness of credit scoring is higher now than ever before. I’d say at least half of the people who contact us for the first time, have already looked at their credit report online.

There are many different credit reference agencies out there. Most people will have heard of Experian or Equifax, but the free trial we recommend potential new clients take is with Check My File. This is because of this report “sweeps” several of those reference agencies and collates the information into an easily understandable colour-coded report.

Often, clients ask if we will be doing a credit search on them, because they are aware that too many searches can have an adverse effect on their credit score. Lenders always run credit checks but we always seek a client’s permission before doing so. There are 2 different types of credit searches that Banks can run on a customer: hard searches or soft ones.

What is a hard credit search?

A hard credit search is an in-depth look at your credit report. Any financial institution carrying out one of these should seek your permission to do so. The advantage of a “hard” search is the lender is looking into your situation quite closely. If you pass the credit score then it’s fairly likely that your application will ultimately be successful. The only thing that can really go wrong from then on, is if for some reason you cannot provide satisfactory documentation to back up the information you have disclosed. Either that, or it turns out you have provided false details.

The bad news about a hard search though is that it leaves a “footprint” on your credit file. This means anyone who looks at your report in the future can see you have had a search carried out. This isn’t necessarily a bad thing, but if you have several footprints registered in a short period of time then it could look like you applying for lots of credit at the same time.

The footprint does not state whether your application was successful or not. However, if you have several searches over a few weeks, then lenders’ systems could wrongly assume you are being declined on the basis of; “Why else would you go to lender number 2 unless lender number 1 had said no?”.

The odd hard footprint on your record from time to time is no big deal. There’s no need to worry too much about this, just be careful not to have too many.

What is a soft credit search?

A soft credit search is a “lighter touch” look at your financial situation. This is the kind of search that would routinely be carried out on price comparison websites. This would give you an indication of what products might be available to you. It can also be useful if someone wants to verify your identity.

Some mortgage lenders do soft searches in the first instance. More and more lenders seem to be changing to doing this type of search. Whilst the financial institution doing a soft search obtains less information about you than if they had done a hard search, an Agreement in Principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.

You will be able to see that someone has carried out a soft search on you if you check your credit file. The good news though, is that these searches are not visible to other Financial institutions like Banks. This means that you can apply for an Agreement in Principle for a mortgage, without it damaging your credit score. This is irrespective of whether it is successful or not.

For further Specialist Mortgage Advice in Halifax, get in touch with our team today.

Product Transfer V Remortgage Advice in Halifax

What is a product transfer?

When your introductory mortgage deal comes to an end your mortgage lender may offer you a new deal to stay with them, this is known as a product transfer.

Are you rewarded for being loyal?

Unfortunately, lenders do not always reward your loyalty and the offer they make you may not be competitive with deals you could get elsewhere. Even more annoyingly, these product transfer rates are not as good as the deal they offer new customers either!

Tempted by an online switch?

Whilst swapping to a new deal with your current lender may well be fairly easy online, it is always in your interest to see what other deals you may be eligible for. Lenders will also tempt you to effect a new deal online without taking advice.

This can be really dangerous because if you do this without advice you are waving goodbye to all the valuable consumer protection you would otherwise have benefitted from.

You’ll be opting out of advice

We have seen numerous examples of customers affecting these “follow-on” deals and locking themselves into an inappropriate deal. Because they opted out of advice then they have waived a lot of their rights in terms of making a complaint.

We did have a recent case where a customer who was pregnant did this and was declined for a small further advance to fund some necessary home improvements a few months later. She then had to pay a hefty early repayment charge to swap to a new lender who would grant her the additional funds.

Always, always, always get mortgage advice

If we think a product transfer is the most suitable deal for you we will recommend that as a course of action for you and if we arrange the mortgage for you as a mortgage broker then all the regulation and consumer protection will apply.

In short, even if your requirement seems straightforward we recommend you always take advice – a second opinion costs nothing and making a mistake when taking a new product can be costly.

The remortgage market is highly competitive and savings can generally be made by searching the market for a new deal. This is why it might be within your best interests to speak to a Remortgage Advisor in Halifax. they will support you through the whole remortgage process and help you find that 1/1000 amazing mortgage deal!

Halifaxmoneyman.com & Halifaxmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
UK Moneyman Limited is authorised and regulated by the Financial Conduct Authority.
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