Mortgage Round Up 16
Mortgage Round Up 16
Welcome to our regular update on Mortgages.
Mortgages and Schemes are constantly changing and so should you be interested in a obtaining a mortgage or Home Purchase Plan (be it for a First Time Buyer, Mover or re-mortgage), getting the right deal is vital.
Here at Box Financial Planning, we are here to help ensure you get the right Mortgage, Home Purchase Plan or Equity Release for you.
This month, we are looking at several different mortgages and Home Purchase Arrangements.
There are also important changes this month, with the Financial Conduct Authority (FCA) introducing regulated ‘Consumer Buy to Let’ Mortgages – which we are authorised to provide advice on and arrange – but not every Mortgage Broker is.
The following information should not be taken as a recommendation and all Mortgages/Home Purchase Plans are subject to status.
All schemes are based on a Property Value of £350,000 and a loan to value as indicated and highlight some of the better deals currently available.
|Type||Initial Interest/Rent Rate||Fixed/Discount Period||Loan to Value||Arrangement/Booking Fee||Final Interest/Rent Rate|
|Buy to Let - Tracker*||2.49%||2 Yrs||75%||£999||5.50%|
|Buy to Let - Fixed*||2.64%||2 Yrs||75%||£800||5.79%|
|Buy to Let - Fixed*||3.99%||2 Yrs||80%||£0||5.35%|
|Home Purchase Plan (Sharia Compliant) - Fixed*||3.79%||1 3/4 Yrs||70%||£399||4.49%|
|Home Purchase Plan (Sharia Compliant) - Discount*||3.59%||1 3/4 Yrs||70%||£399||4.49%|
|Retirement Mortgage - Fixed * & **||4.39%||Open Ended||Age Dependent||£1,437||4.39%|
|Lifetime Mortgage - Fixed **||5.19%||Open Ended||Age Dependent||£754||5.19%|
Details correct as at 13/03/16
The difference between paying a higher ‘arrangement fee’ and receiving a lower interest rate can be significant and is very much dependent on the loan amount – as below around £200,000 the lower interest rate saving being less effective.
In addition, some of the above schemes include additional features such as ‘Cash Back’ on completion or free valuations.
For Buy to Let investors, costs and rates significantly rise above 80% Loan to Value, so budding ‘Buy to Let’ investor should aim for at least a 20% deposit and ideally 25%.
Home Purchase Plans are often the basis for Sharia Complaint arrangements and therefore are suitable for Islamic based arrangements – although the schemes are generally available to individuals of any faith.
Retirement and Lifetime Mortgages (along with Reversionary Schemes are only available for those generally over the age of 55 and are generally suitable for those retired individuals seeking to release capital from their home. In addition, Loan to Values are more dependent on the individuals age rather than income or property values. Where Interest is paid (rather than rolled up), interest are often lower and this can significantly reduce the overall build up of the mortgage amount over time.
In addition to the Arrangement/Booking Fees, there will be other costs such a Legal and Valuation costs as well as any agreed advice fees (our normal fee is 0.35% of the transaction Value although we do have some special deals on at the moment which may reduce this and some lenders may pay a procuration fee, which will cover some or all of this fee) which will therefore also need to be paid.
As a reminder, the initial rate is not necessarily the most important rate and therefore all three aspects (Setting up Costs, Interest Rate and Final Rate) and your personal situation needs to be taken into account, to ensure you end up with the most appropriate debt related product.
Our initial meeting/discussions are without charge or obligation, so please contact us should you wish to avail yourself of our whole of market, Mortgage, Home Purchase Plan and Equity Release review service.
Next time, we will be looking at borrowers wishing to move home.
Interest rates can rise as well as fall and the post Discount/Fixed Periods may be higher or lower than stated.
*The property may be repossessed if you do not keep up repayments on your mortgage or Home Purchase plan secured on it.
**This is a Lifetime Mortgage. To understand the features and risks, ask for a personalised illustration.