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The no-deposit mortgage that lets tenants buy the home they live in … with a gift from the landlord

July 1, 2024July 1, 2024 interestratesinfo

Interest-Rates.Info - UK Mortgage & Property News - Birmingham Money - West Bromwich Money - Mortgage Brokers

A growing number of people are taking out a little-known type of mortgage that allows them to buy a property without having to put down a deposit.

Several lenders offer “concessionary purchase” mortgages, meaning that a tenant can buy the property they are living in from their landlord at a marked-down price.

There has been a rise in take-up as tax changes on buy-to-lets and much higher mortgage costs prompt more landlords to sell. Now TSB, one of the lenders that offers these deals, reports significant demand.

“It’s gone from a product we never really spoke about to something that regularly comes up. We’re doing a steady number … there’s a demand for it,” says Roland McCormack, TSB’s mortgage distribution director.

Landlord Guide to the UK General Election 2024

June 25, 2024June 25, 2024 interestratesinfo

Understand the commitments from each party’s manifesto and their potential effects on landlords in the general election 2024.

As we approach the general election, we know you’re keen to understand each party’s plans – especially after the Renters (Reform) Bill and the abolition of Section 21 were scrapped at the last minute.

To make things easier, we’ve put together a summary of what the leading national parties are promising in their manifestos.

We’ve kept it straight to the point without any extra commentary – just the facts on what each party plans for the private rented sector, energy efficiency and how taxation changes might impact landlords across the UK.

Mortgage Rates 25 June 2024

June 25, 2024June 25, 2024 interestratesinfo

The Bank of England held its Bank Rate at 5.25% in June, as was widely expected. It was the seventh time in a row the Rate has been frozen since it rose to its current level in August 2023. It had previously undergone 14 consecutive rises (between December 2021, when it stood at just 0.1%, and last August).

The next interest rate announcement by the Bank’s Monetary Policy Committee (MPC) will be on 1 August at noon. The market is predicting that the Bank Rate will fall to 5% at that point.

Mortgage of first-time buyer tops £1,000 a month as house prices and rates rise

June 25, 2024June 25, 2024 interestratesinfo

The monthly mortgage of a first-time buyer has soared by more than 60% to exceed £1,000 a month since the last general election, according to figures that underline the financial challenge facing Britons trying to gain a foothold on the housing ladder.

Over the last five years, the average mortgage payment for a typical first-time buyer in Great Britain has risen by 61% to £1,075 a month, up from £667 in 2019, according to the property website Rightmove.

The increase of about £400 a month is linked to the march of house prices and interest rates, which have heaped financial pressure on borrowers, whose average wages have grown by just 27% over the same period. The financial squeeze has forced many younger borrowers to either look for smaller properties or to take out an ultra-long mortgage.

“As rates have increased over the last five years, the amount that a typical first-time buyer is paying each month on a mortgage has outstripped the pace of earning growth,” said Tim Bannister, a Rightmove property expert. “Some first-time buyers are looking at extending their mortgage terms to 30 or 35 years to lower monthly payments, or looking at cheaper homes for sale so that they need to borrow less.”

HMO landlords heavily reliant on property for sole income

June 25, 2024June 25, 2024 interestratesinfo

Half of HMO landlords say their property or portfolio is their sole source of income.

Just under 30% of landlords who took part in a mortgage lender’s survey owned an HMO property or portfolio. Some 72% of these landlords own HMO properties through a limited company.

Half said they did not have another job and used their property or portfolio as their sole source of income.

Despite some of the complexities of managing HMOs, the survey – by Landbay – found that nearly half of the properties were self-managed by landlords, a third of whom owned portfolios with over 20 properties.

The reason for this more DIY approach could be that the most popular size of HMO portfolio was the smallest, between four and 10 properties, with 34% falling into that category.

The survey found that the highest proportion of HMOs were in London and the South East (47%), followed by the East Midlands.

Typical first-time buyer mortgage payment ‘has jumped by 61% since 2019’

June 25, 2024June 25, 2024 interestratesinfo

Someone newly getting onto the property ladder can expect to pay around £400 more per month for their mortgage than five years ago, analysis suggests.

Calculations by property website Rightmove suggest the average first-time buyer mortgage payment has risen by 61% since the last General Election year of 2019, from £667 to £1,075 per month.

The calculations made various assumptions, including that first-time buyers would have a 20% deposit to put down, that their mortgage term would last 25 years and that they were taking out a five-year fixed-rate mortgage on an average rate.

Rightmove also used average asking prices of a typical first-time buyer homes, with two bedrooms or fewer, for the research.

Across Britain, first-time buyers now face paying £227,757 for a home, an amount which has jumped by nearly a fifth (19%) since 2019, Rightmove said.

‘My anxiety levels are rocketing’: The mortgage chokehold facing old-age Britons

June 25, 2024June 25, 2024 interestratesinfo

Many of us envisage retirement as a peaceful winding down after several decades of hard work.

But an increasing number of mortgage holders face having to put their relaxation on ice as they’re left with no choice but to work past their pension age to pay off long-term mortgages.

Homeowners are still reeling from painful interest rate increases by the Bank of England that pushed high street mortgage rates as high as 6.8%. Those who have taken out or renewed their mortgage in the past year have likely had their monthly payments rocket.

A recent BoE report revealed nearly half of all mortgages issued in the last three months of 2023 were for 30 years or longer, while two in five were issued to borrowers who would be past state pension age at the end of their mortgage term.

Different figures from UK Finance show 41,580 first-time buyers took out mortgages with terms of 30 years or more in the last quarter of 2023, of which around 15,700 (38%) were longer than 35 years.

Mortgage expert explains how to use £100 to save at least £25,000

June 25, 2024June 25, 2024 interestratesinfo

This tip works because you end up reducing the amount of money you have to pay in interest, which can build up over the years. But by making overpayments, you can cut down the extra cash you need to pay and reduce the length of your mortgage term.

How will the general election impact renters and buy-to-let landlords?

June 25, 2024June 25, 2024 interestratesinfo

Private renters and landlords make up a significant portion of the UK electorate. With this in mind, it should come as no surprise that politicians have been appealing for their votes as we race towards a general election on 4 July.

Around 35% of people in England live in rented accommodation, according to the latest English Housing Survey. Sixteen percent are in social housing, while 19% are in private rented accommodation.

Meanwhile, around 13% of people in Scotland and Wales are private renters, versus 16% in Northern Ireland. It should be noted that a lack of regular data in Wales and Northern Ireland means we have to rely on information from the 2021 Census, so these figures could have shifted slightly since then.

Meanwhile, there are currently around 2.82 million private landlords in the UK, based on income tax data from HMRC. That amounts to around 4% of the population.

Against this backdrop, we look at the key policies each major party has promised when it comes to buy-to-let landlords and renters. How will a Labour or Conservative win affect you?

Home owners spend more time researching air fryers than a mortgage – here’s how to get a good deal

June 19, 2024June 19, 2024 interestratesinfo

Homebuyers and remortgagers spend more time choosing home appliances than digesting mortgage deals, a study claims, as homeowners report the fast-paced mortgage market is making them stressed.

A sixth of homeowners said they felt pressured into making a quick mortgage decision due to the rapidly changing market, according to research by Smart Money People, with 57 per cent reporting that they felt stressed as a result.

A quarter of buyers and remortgagers said the mortgage process had left them confused.

On average, homeowners spent less than half a day looking at mortgage options before diving into a deal, Smart Money People said – this is less time than they spend considering which coffee machine or air fryer to buy.