Ideal Home |
- Renovation mortgages: how do they work?
- What is a mortgage broker and should you use one?
- Early repayment charges: what are they and how can you avoid them?
- Prefabricated homes – what are the advantages and where do I start?
- Best mortgage rates – how to find the cheapest deals
- Experts reveal 5 most important things to get right when flipping a property
- Experts warn that you shouldn’t be making your bed every morning - here's why
| Renovation mortgages: how do they work? Posted: 07 Jun 2022 07:00 AM PDT Do you dream of turning a rundown or derelict property into a home? You may need to take out a specialist renovation mortgage to fund such a project, unless you have a large lump sum to pay for the work. You may have found an empty property in an amazing location with panoramic views that you want to restore. Or you might come across an uninhabitable property that you want to breathe life into. Whatever your property renovation project, you may need a specialist mortgage to meet the cost. What is a renovation mortgage? Image credit: Future PLC/Bridget Peirson Most high street lenders only offer mortgages on properties that are considered habitable. So, if you're buying a property not currently fit to live in, you'll need to find a renovation mortgage from a specialist lender. The loan will finance the purchase of a property that's derelict, in need of conversion, or uninhabitable because it's without a working kitchen or bathroom. Standard repayment or interest-only mortgages aren't suitable for extensive renovations. Chris Sykes, of the mortgage broker Private Finance, says: 'If it is a large renovation then normal mortgages are not suitable as lenders are taking on risk they are not pricing for in this case, and you could run out of money and leave a property in a worst state than it was when bought, affecting the lender's security and the property's saleability.' The important feature of a renovation mortgage is that it enables you to borrow the money you need for the work. You'll receive the money in tranches rather than all upfront. How does a renovation mortgage work? Image credit: Future PLC/Simon Whitmore With a renovation mortgage, you may be able to borrow up to 90% of the property's value as it stands, depending on your income and circumstances. You should fund the remainder of the purchase from savings, other assets, or borrowing. The lender usually withholds a chunk of the money, and releases it in stages as the property is renovated. This is similar to a self build mortgage. On completion of specific stages, and inspection by the lender's surveyor, you could receive more money. Adrian Anderson, director of property finance specialists Anderson Harris, says: 'The bank will want an element of control over when and how the money is released to pay for the works to ensure the money is used correctly. The money is usually released against the architect's certificates/confirmation that different stages of the development have been completed or when the next stages are about to start.' Bear in mind that the cost of restoring a building will rapidly add up. You need some savings, or other forms of finance such as personal loans, to pay for work between 'stage payments'. When taking on a project of this nature, you should also take out a specialist renovation insurance policy to protect your investment. Will it cost more than a standard repayment mortgage?Yes. A renovation mortgage rate will typically be one or two percentage points higher than a standard mortgage. This is because the risk to lenders is greater. There's no guarantee that the work will be finished. The lender could be forced to repossess the property to recoup their debt. It also depends on how much you borrow. Anderson says: 'Due to the works going on at the property there will be development risks associated and therefore the banks factor this in with their upfront fees and the rate charged during the development period. These types of mortgages usually take the bank more time to administer at time of application as it has to carry out due diligence on the works taking place. These include checking planning permission is in place, checking the costings/timescales look realistic and carrying out due diligence on the contractor.' What kind of properties qualify for a renovation mortgage? Image credit: Future PLC/Tom Meadows You can get a renovation mortgage on a vast range of "fixer-upper" properties. This covers properties from a listed building that's fallen into disrepair to a timber shell without a roof. However, the range of mortgages you have to choose from will be far greater if the property to be renovated is habitable. That means it comes with a working kitchen and bathroom. Where can I get this type of mortgage?There is a limited number of lenders offering finance for complete renovations. Try lenders offering self build mortgages as a starting point. For example Ecology Building Society specialises in lending on energy efficient properties. Smaller building societies are often a good place to try. Speak to a mortgage broker to find out about your options. This is a specialist area of the mortgage market and the solution may need to be imaginative. Working with someone independent who knows the market well is a good move. Can a first-time buyer get a renovation mortgage?Yes, in theory first-time buyers can get a renovation mortgage, and doing up a rundown property may appeal as a way to get onto the property ladder. However, they'll need a deposit of around 20-25% of the purchase price, which could be a struggle to stump up unless they have enough saved. What happens when the renovation is complete?Once the renovation is complete, you ideally take out a mainstream mortgage on the property. 'Usually at this stage of the process you can refinance based on the open market value of a property and take a more normal mortgage, and hopefully at a low LTV as this is when the gains you have made are realised,' says Sykes. 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| What is a mortgage broker and should you use one? Posted: 07 Jun 2022 04:00 AM PDT If you're looking to apply for a mortgage, you might consider using a mortgage broker. But what is a mortgage broker and do you really need one? In a nutshell, a mortgage broker is an adviser that helps you get a mortgage. They will search the mortgage market to help you find the right product from thousands of deals. Using a broker gives you a mortgage expert on your side. Brokers need to pass professional qualifications to give advice and they're regulated by the Financial Conduct Authority. They'll also give you a realistic idea of how much you can borrow and therefore your purchasing power. And they'll help get your finances 'mortgage ready' to give you the best chance of getting your application approved before finding you the best mortgage rates. Will using a mortgage broker get me a better deal?A broker will find you the best and cheapest mortgage that meets your needs. It's important to remember there isn't one best mortgage. The lowest rate might not be accessible to you or come with high fees you don't want to pay. 'Using a broker who knows the market and is used to helping hundreds of people with their mortgages every day significantly increases the chances of you securing a mortgage at a good rate because of their expertise, experience and in-depth knowledge of the market,' explains David Beard, founder of Lendingexpert.co.uk. 'Brokers can also speed up the process for you, and they'll know which lenders are more likely to accept your application, taking a lot of the stress out of applying.'  Image credit: Future PLC/ Alun Callender What's the difference between a mortgage broker and direct lender?A direct lender, such as a bank or building society, offers their own mortgages. They can give you advice on their products, but they won't tell you if a competitor's mortgage could suit you better. A broker works for you. They'll do a detailed 'fact find' to get all the information they need. Then they'll shop around, searching the mortgage market on your behalf. Most importantly, they have inside knowledge of how lenders work. They know which are super smooth on service or running slow, and they stay up to date with constantly changing lending criteria. They'll find the best mortgage that you're actually eligible for, so you don't waste time on applications that get rejected and send you back to square one. Find out how much you could borrow with our mortgage calculator. Are mortgage brokers independent or will they only offer mortgages from certain lenders?Some are independent and can arrange a mortgage from any UK mortgage lender. This type of broker is called 'whole-of-market'. Others have access to a panel of lenders that represents the mortgage market, without including every single lender. They are all bound by regulations so you can trust their advice and go to the Financial Ombudsman Service if you're not happy. Be sure to check whether your broker is whole-of-market or how many lenders they have access to before proceeding. How much does a mortgage broker cost?Advice from a broker ranges from completely free to thousands of pounds. How you're charged will depend on the broker. All mortgage brokers make money by earning a commission from the lender for introducing business to them. However, some brokers won't charge the customer any extra, so you'll get the advice for free, while others will charge you a fee. This will be either a fixed fee or a percentage of the amount you borrow – for example, 0.5% on a £200,000 mortgage would be £1,000. 'When arranging an appointment with a broker, you can ask what the broker fee is and at what stage it is payable,' says Karen Noye, mortgage expert at Quilter. 'A typical charge would be in the region of £495 but this could be different depending upon the advice required or complexity of a case. You wouldn't normally expect to pay anything for the initial consultation.'  Image credit: Future PLC/ Colin Poole How do I find a good mortgage broker? What should I look out for?Word of mouth recommendations are a great start, so speak to friends and family first. Then check out online reviews. Your estate agent might work closely with a broker and recommend them, but you're not obliged to use their preferred partner. When comparing brokers, as well as finding out whether they are whole-of-market and what their fee will be, it's worth asking the following key questions:
'If you find a broker who only communicates via email, but you'd prefer to meet in person, you might want to consider a different one,' says Beard. 'Understanding how your broker will communicate with you will help keep the process efficient and stress-free depending on your communication style.' Some brokers have specialisms, such as helping the self-employed or those with credit blips, which could be invaluable if you have specific needs. Pros and cons of using a mortgage brokerPros
Cons
Do I need a mortgage broker?You don't need a mortgage broker, but they're a great idea unless you're confident about choosing the right product from the thousands on offer. With a mortgage broker, you get a mortgage market expert on your side, helping you find the best deal, filling in the forms, chasing the lender and solicitor on your behalf, and holding your hand through the whole homebuying process. This can be particularly useful for first-time buyers, self employed mortgage applicants and those with credit issues. With thanks to Rachel Wait for her contributions to this article. The post What is a mortgage broker and should you use one? appeared first on Ideal Home. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Early repayment charges: what are they and how can you avoid them? Posted: 07 Jun 2022 02:00 AM PDT You could dramatically reduce your biggest monthly outgoing by moving to a cheaper mortgage deal, but it's vital to factor in the impact of early repayment charges on the savings you make. Switching to a different lender to benefit from the best mortgage rate or repaying your mortgage before your current deal ends may trigger an early repayment charge, or ERC, which can amount to thousands of pounds. What are early repayment charges?An early repayment charge is a penalty for ending your mortgage deal before its tie-in period expires. For example, if you've signed up to a five-year fixed rate, and you want to move to a cheaper deal a few years later, chances are, you'll have to pay an ERC. You might also have to pay an ERC if you're paying off a chunk of your mortgage early, or if you're fortunate enough, your entire balance. The reason that lenders charge an ERC is because when they lend you money, they're expecting to make a certain amount of interest from the deal. By repaying your mortgage early, they end up out of pocket. Jane King, mortgage adviser at Ash-Ridge Private Finance, says: 'When a lender provides a mortgage they factor in a profit margin. If the mortgage is redeemed early then some of that profit is lost. Therefore, the early repayment charge allows the lender to recoup some or all of this margin.' The charge can be significant. For example, if there's £150,000 left on your mortgage balance you'd pay an eye-watering £4,500 to leave a deal early with a 3% ERC. Do all mortgages have early repayment charges? Image credit: Future PLC/Lizzie Orme No. An ERC doesn't always apply. Whether you might face this fee depends on the type of mortgage you have. You won't have to pay an ERC if you're on your lender's standard variable rate (SVR), and you want to move away from this. You’ll usually only be charged a small admin fee of, say, a few hundred pounds. Some tracker and fixed rates mortgages also don't carry an ERC. ‘But the rates are usually a little higher, particularly in the case of a fixed rate without an ERC,’ says David Hollingworth, associate director of broker L&C. A mortgage broker can help you to find mortgage deals that have no, or low, ERCs, if they're a concern for you. ‘Finding a deal without an ERC gives borrowers more flexibility. It’s suitable for those in receipt of a bonus, for example, or expecting an inheritance who might repay their mortgage early,’ says Harris. What is a typical repayment charge?ERCs vary dramatically, and usually range from 1% to 5% of your remaining mortgage balance. While a 1% ERC might not sound a lot, it can still amount to a fair sum – £2,000 on a mortgage balance of £200,000, for example. The percentage charge for an ERC may gradually reduce on some deals from, for example, 5% in year one of a five-year fix to 1% the final year. In this scenario, if you had £150,000 outstanding on your mortgage, you'd pay an ERC of £7,500 in year one, which would gradually reduce to £1,500 in the final year of the deal. How can I avoid an ERC?Most lenders offer some leeway for borrowers to make overpayments of up to 10% of their mortgage balance without paying an ERC.  Image credit: Future Plc/Colin Poole Chris Sykes, from mortgage broker Private Finance, says: "Different lenders allow different amounts from 0% to 50% of the balance to be repaid early, but 10% per year is the norm. Most lenders want to give borrowers an element of flexibility while not overextending this privilege to make a loan unprofitable to them. "At the end of the day the lender wants to get paid back their funds and offering an overpayment allowance allows their risk to reduce faster on a loan over time as it increases the equity in a property." You may also avoid an ERC by choosing a shorter deal. This way, if your circumstances change such as selling up after a divorce or to move for work, you'll hopefully be out of the tie-in period. Bear in mind, though, that it's always a good idea to do the sums to see if it's worth paying an ERC. It may be worth paying a penalty to ultimately save more money on your mortgage repayments over the long term if you're on an expensive standard variable rate (SVR). You'll usually slip onto your lender's SVR when your current mortgage deal ends, and the rate can hugely increase your monthly repayments. In this case, the interest you're paying may outweigh the ERC, making it more sensible to pay the fee to switch rates. What about when I remortgage or move house, do I have to pay an ERC?Possibly, yes, if you're not careful. If you're remortgaging, check that your new deal doesn't kick in until the end of your current deal to avoid paying an ERC. If you're on your lender's SVR, though, you won't pay an ERC to remortgage. As part of your moving house checklist, you might pay an ERC if you're moving to a cheaper property. You'll probably want to use the money released from the sale of your old home to reduce the size of your mortgage. But this may trigger an early repayment charge. However, you might have a flexible mortgage that you can take with you when you move house. This is known as porting your mortgage, and most lenders allow you to avoid an ERC this way, provided you're not repaying a large chunk of your mortgage in the process. But if you're borrowing more to move house, you'll need to go through the mortgage affordability assessment process, and you may not be able to port your mortgage. If you cannot borrow enough, you may face an ERC if you have to take a mortgage from another lender. 'It may be sensible to think about how long you are likely to be in a property or if you're likely to move when considering the ERC period. Also think about whether you're likely to need additional borrowing during the mortgage period,' says Sykes. The post Early repayment charges: what are they and how can you avoid them? appeared first on Ideal Home. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Prefabricated homes – what are the advantages and where do I start? Posted: 07 Jun 2022 12:00 AM PDT The prefab home has been on a journey of redemption over the last few decades. Often seen as a damp, low cost, low quality, post-war housing solution, these Cinderellas of the property industry are now seen as the future. As always the truth is more complicated. Post-war prefabs were actually very successful; warm, well designed and well-loved by their residents, especially in comparison to the standard of housing at the time. They provided an intelligent, rapid response to the acute housing crisis created by WW2. Their reputations were coloured because they were generally designed for a 20-30 year life span. This was often extended by decades with many becoming tired and damp before they were replaced, tarnishing their image for a generation. The idea that we can utilise this approach again to help us in our current housing and environmental crisis is certainly appealing.  Image credit: Huf Haus Prefabrication in housing is a broad term covering everything from bespoke self build homes with a kit of pre-cut timbers and instructions that require complete erection on site, to fully built homes craned into place with bathrooms and kitchens installed. The phrase 'Modern Methods of Construction' or MMC is often used to cover the advantages and efficiencies of processing elements of the structure or the whole house in a factory. The efficiencies and economies from a production line are huge; whole buildings built by a team over a few days in a vast shed to be broken into large elements and loaded onto a series of lorries and whisked to site is a thing to behold. It means that the structure and insulation remains totally dry during construction avoiding issues with damp insulation and moisture in newly built houses. It also massively reduces waste. There has been a rule of thumb that about 8-10% of materials on a typical building site end up in a skip! Working in a factory allows for 'nesting' computer programmes to work out the most efficient way to cut and use materials from standard sizes to minimise waste. Combined with the benefit that materials are rarely left over on a production line, they simply go into the next building along the construction line rather than into the bin.  Image credit: Facit Homes There are significant issues with build quality on many traditional construction sites. Building in a warm dry factory allows for better workmanship and supervision and reduces time lost to inclement weather. It also opens opportunities for new people to join the construction industry. Unsurprisingly, months spent outside in freezing weather is not the best advert for a career in construction! Working in a more controlled environment could, for example, bring many more women into the sector which would be very welcome. It also has benefits for transport as getting workers to and from site is often one of the larger components of carbon emissions associated with a project. Construction is responsible for hundreds of million van miles each year in this country alone. If a workforce can live near a house building factory then travel miles can be reduced to short daily commutes and the delivery lorries taking the buildings to site.  Image credit: BAUHU One of the criticisms of pre-fab has been that the designs are standardised to allow for the economies of scale and the benefits from factory construction to be achieved. Given that no site is ever identical and that the variety of shapes, styles and materials of British homes has always been a joy, these are reasonable concerns. However the MMC sector is getting heavy investment, evolving fast with many different ideas and solutions to allow for greater customisation and choice whilst keeping its inherent benefits – so watch this space. Homes built with less waste should be cheaper. Homes with better build standards should be more efficient and constructed with less impact on the planet. So cast off any prejudices and embrace the coming revolution. The post Prefabricated homes – what are the advantages and where do I start? appeared first on Ideal Home. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Best mortgage rates – how to find the cheapest deals Posted: 06 Jun 2022 02:00 AM PDT  Are you looking for the best mortgage rates? The Bank of England has just increased interest rates for the fourth time in a row to reach 1% as it tries to curb inflation. Anticipating the rise, mortgage lenders had already begun to hike the cost of new deals. Meanwhile, homeowners on variable rate mortgages will be watching their monthly payments climb up and up. So, now is the time to look out for mortgage best buys: switching to a cheap mortgage could save you thousands of pounds a year, particularly if your current deal is coming to an end. Otherwise, you'll soon be paying your lender's standard – and probably higher – variable rate. David Hollingworth, associate director of broker L&C Mortgages, says: 'Although mortgage rates have been rising since the final quarter of last year it's important to remember that in historical terms current mortgage rates are still extraordinarily low, even if they don't look quite as sharp as the rock bottom rates we saw last year. 'It's certainly the case that the best mortgage rates on the market will beat a standard variable rate so it's as important as ever to shop around to get the best overall value. Switching to one of the keen fixed rate deals on offer now will also protect against further rate rises.' After the recent flurry of rate increases, the cheapest fixed rate you can get your hands on is 1.70%, according to Moneyfacts. However, you can still get a variable rate of 0.99% if you have a 40% deposit. Since December, the average standard variable rate has risen from 4.41% to 4.78%. A borrower with a £250,000 mortgage over 25 years switching from the average standard variable rate of 4.78% to a two-year fixed rate of 1.70% could save £406 a month and £9,744 over two years. Mortgage lenders are using interest rates to manage their demand. What that means is that if they come out with a deal with a great mortgage rate, it probably won't hang around for long. Before they get too swamped with business, they withdraw the rate again. And some banks and building societies are quite picky about who gets their best rates. But, whatever your situation, there are steps you can take to improve your chances of getting a great deal.
Best mortgage rates December 2021Best two-year fixed rate mortgages
Best five-year fixed rate mortgages
Best 10-year fixed rate mortgages
Best first-time-buyer mortgages
Best buy-to-let mortgage
Rates valid as of 16 May 2022. Source Moneyfacts  Image credit: Katie Lee How do I find the best mortgage rate?If you're thinking of buying a house or remortgaging, a good starting point is to get a feel for the mortgage rates on offer. That means looking at some mortgage brokers' websites and at price comparison sites, such as our sister brand GoCompare, Moneysupermarket and Comparethemarket. Check out what your own mortgage lender or bank is offering as well, as some have better deals for existing borrowers or customers who bank with them. High-street lenders can be competitive, but they're not the only option if you're looking for a mortgage. Small building societies can sometimes be more understanding and flexible if your situation isn't straightforward, such as if you've recently swapped jobs or are self-employed. And there are some digital and mobile-only banks that also offer mortgages. To get the very best rates, these are your main options: 1. Use a traditional mortgage brokerA mortgage broker is qualified to give you advice on the best mortgage rates. They'll get to know your circumstances and find out what your plans are for the future before recommending the best deal. They operate independently from banks and building societies. But not all brokers search the entire mortgage market. Some only recommend mortgage deals from a limited selection of lenders. If you're using a broker, ask them how they operate before going ahead. Mortgage brokers will have access to exclusive mortgage deals that you wouldn't be able to ask your bank for. There are also some lenders that only deal with mortgage brokers because they don't have any branches. That said, from time-to-time mortgage lenders keep back their best mortgage deals and offer them to borrowers directly, so it is worth doing some shopping around via a price comparison site. Using a broker could add an extra cost to your mortgage bill. All mortgage brokers receive a payment from the mortgage lender they recommend, but some also charge a fee for their services on top. This can be up to 1% of your mortgage balance but often it is a flat fee. 2. Find an online mortgage brokersIf you prefer to sort out your finances over the internet, you can use an online mortgage broker such as Trussle, Habito or Mojo Mortgages instead. The face-to-face meeting is replaced with an online application form and once you've submitted your personal details you'll receive a mortgage recommendation. Both Trussle and Habito use computer algorithms to search through thousands of deals for you, while also providing a human adviser to talk through recommendations. Mojo uses a human adviser to search more than 10,000 rates. Online brokers are quick and convenient. You apply for a mortgage at a time that suits you and you still get to speak to a real-life adviser once you've received your recommendation. You don't have to wait for paperwork to be posted and you can track your mortgage application online. But without an adviser to help you fill out the application, you could make a mistake which may go undetected for weeks and eventually lead to a rejection or delays. 3. Renegotiate with your current lenderIf you're looking for a new mortgage deal without any extra borrowing, speaking to your current mortgage lender is a quick way to switch rates. Your earnings and credit report will not be rechecked if don't increase your mortgage balance or change the term. You'll receive a letter from your lender three to six months before your current rate expires telling you the new deals the bank can offer you. When your existing mortgage deal ends, you'll then be automatically transferred to the one you've chosen. Some lenders will even let you switch before your deal has expired if the new deal is cheaper. But be warned: just because your bank is being helpful, it doesn't mean it is offering you the best mortgage deal on the market. You're also not receiving personalised mortgage advice. 4. Use price comparison websitesPrice comparison websites are a good place to start your search by giving you an overview of the best rates on the market Popular comparison websites include; GoCompare, Compare The Market and Moneysupermarket.com. David Hollingworth says: 'Mortgage rates have been moving extremely quickly. Best buy tables on price comparison websites are an easy way to keep tabs on changes to the best mortgage deals available and will give you a quick overview of the lowest rates on the market.' The lowest interest rate does not make it the cheapest mortgage deal, however. Look at the mortgage fees that accompany the deal and check to see if it comes with a free valuation or legal work. 'There are thousands of mortgage deals and lots of them look similar but can have different criteria requirements,' adds David. 'So it's important to check that you meet the lender's eligibility criteria as well as focusing on the cheapest mortgage rates.'  Image credit: Colin Poole How to prepare your finances for a new mortgageOnce you've got an idea of what's on offer, start your preparation so your finances are in the best shape when you actually apply for your mortgage. Don't leave this until the last minute. Check your credit rating a few months before by applying for a copy of your credit report so you can take steps to improve your credit score for a mortgage. You should do this at the three main credit reference agencies; Equifax, Experian and TransUnion (its consumer brand, Noddle, provides credit reports for free). You can apply for a copy of your report online. It will cost £2 with the other two agencies every time you apply, but you may be able to get your report for free through the regular promotions they run. The reason why it makes sense to apply for your credit report in advance is that if there's a mistake, you have time to get it corrected. And if your credit report shows late or missed payments, you can add what's called a 'notice of correction'. This a short explanation of why you missed the payment. A mortgage lender would have to look at this explanation before it makes a decision about whether or not to lend to you. If you're not on the electoral register, sign up for it. Mortgage lenders use it to verify that you are who you say you are, and it will affect your credit rating if you're not registered. You can do this at Register to Vote. If you're normally overdrawn, reduce or pay off your overdraft. Mortgage lenders will be nervous if your overdraft is increasing month by month or is sizeable. You don't have to be debt free, but banks will take any debt you already have (such as loans and credit cards) into account when working out how much to lend. Working out how much to borrow Image credit: TI-Media Although mortgage rates for particular deals vary from lender to lender, they all tend to charge a higher rate the more you want to borrow in relation to the value of the property (called the Loan To Value, or LTV). Mortgage lenders tend to work to similar thresholds, with mortgage rates typically rising for every extra five per cent you want to borrow. So, if you can keep your borrowing at, say, 80 per cent rather than 82 per cent, your mortgage rate should be a bit cheaper. What type of mortgage rate should I go for?There are lots of different types of mortgage rates, and it's not always clear exactly how they work.
When your mortgage rate runs out, you'll go onto your lender's standard variable rate unless you switch to another deal. Always check what the Standard Variable Rate is before you choose a mortgage deal. They vary by over two per cent between lenders and, if your circumstances were to change and you couldn't qualify for a great rate, you want to know you're not being hammered by the SVR. If you're confident in finding the best deal, you can sort it out yourself. Bear in mind that finding the cheapest rate is easy, but finding the best mortgage is less straightforward. What is an overall cost for comparison?When you're looking at mortgage deals, you'll see the phrase 'overall cost for comparison' or APRC (annual percentage rate of change) next to an interest rate. This is a standardised figure, provided by the lender, to show overall interest rate for the duration of the deal. It includes the cost of the mortgage, plus any fees and charges that you have to pay. It's a useful figure because it helps you compare deals that may look similar on the surface (e.g. same headline rate) but work out rather differently when all the costs are taken into account. What is a good interest rate for a mortgage?Two and a half per cent is a decent benchmark to be aiming for, according to Peter Gettins of broker L&C Mortgages. He says that there are deals that can offer rates below this on a range of products, from five-year fixed rates (if you want to borrow up to 75 per cent of the property's value) to two-year fixes at 90 per cent loan-to-value. You can even get some ten-year fixed rates at just under two and a half per cent. Can you negotiate a better rate for a mortgage?You can't haggle the rate down like you can with home insurance. But if you haven't reviewed your mortgage deal in a while, and especially if you're on the standard variable rate, there's a very good chance you can get something better, says London and Country's Peter Gettins. 'With rates moving quickly it's even more important to start shopping around sooner rather than later,' adds Peter. 'Waiting until the end of a deal could result in a spell on an expensive standard variable rate. It's always sensible to start looking at least three months before your current deal ends. Many lenders will allow you to lock into a new deal as much as six months before.' Some lenders offer better rates to their existing customers and may let you switch to your new rate early, penalty free, if it's cheaper. Reserving the best ratesMortgage rates change rapidly depending on the economy. When you apply for a new deal, you are reserving that rate. So even if the lender withdraws it before you have completed the switch the rate is still yours. Once you've been approved for the mortgage you'll receive a formal mortgage offer which is valid for between three to six months so you can hang on to your rate long after it has been withdrawn. What's the best time period for a fixed-rate mortgage?How long your fixed rate mortgage lasts for depends entirely on your own circumstances and budget. If you're planning to stay in your home for a long time to raise a family and be near good schools, borrowers may prefer to lock in to a five or ten-year fixed rate. A young person who hasn't decided where they want to put down roots may prefer the flexibility of a two-year fixed rate. If you compare a two-year fixed rate and a five-year one, with the same fees and charges, the fees on the two-year mortgage will work out more expensive on a 'per year' basis. It sounds obvious, but it's easy to focus on the headline interest rate, which will be lower on a two-year fixed rate deal. While there are lots of two and five-year fixed rate mortgages, there aren't so many mortgage lenders offering them for ten years or more. Check the early repayment charge, especially if you're choosing a longer fixed rate. It's typically a percentage that reduces over time and it varies widely between lenders – and fixed rate mortgage deals.  Image credit: Lizzie Orme Will mortgage rates go up or down?It's always hard to predict whether mortgage rates will rise or fall and with the current political situation, it's even harder. But Jane King, a mortgage adviser with Ash-Ridge Private Finance thinks rates are unlikely to fall. 'Rates have been marching upwards during the last three months of 2021 and are still rising,' says Jane. 'This is for all sorts of reasons. The first is because there has been an increase in swap rates. Swap rates are the interest rates the bank must pay when it borrows money to lend out on fixed rate mortgages.' The other reason, says Jane, is to preserve their service standards by being uncompetitive for short periods. She adds: 'Tracker rates, which track the Bank of England base rate, have already risen four times this year due to increases and with further rises forecast these too are destined to become more expensive.' Fees and mortgage ratesIt's not just the mortgage rate itself you need to take into account, but the fees charged by the lender. Most lenders charge an arrangement fee (which is often around £1,000 – or even more). There may be a booking fee, although these are less common. Some lenders offer two versions of their mortgage deals; one with a fee and one that's fee free. If you have a smaller mortgage, it's worth comparing the fee-free option. You'll normally have to pay a valuation fee and legal fees as well, although the lender may make a contribution towards these. What are exit fees?In most cases, you're tied into your current mortgage deal for a set period usually matching the term of your interest rate. For example, you would be tied into your two-year fixed rate for two years. If you want to leave before the end of the two years you must pay an exit fee also known as an early repayment charge. The charge is calculated as a percentage of your mortgage balance ranging from 5% to 1% depending on the deal. If you can get a big enough saving by switching mortgage, it may be worth paying these fees, but do your sums carefully – and consider waiting until your current deal ends. With a little preparation and either the help of a professional mortgage broker, or some research, you should be able to find a great mortgage deal. The post Best mortgage rates – how to find the cheapest deals appeared first on Ideal Home. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Experts reveal 5 most important things to get right when flipping a property Posted: 06 Jun 2022 12:00 AM PDT George Clarke returned to screens last week, with a brand new Channel 4 property show – George Clarke’s Flipping Fast. The show is all about flipping houses – buying a house cheap, and doing them up to make a profit within a short period of time. In the show the architect is joined by sibling duo Scarlette and Stuart Douglas, property developers and expert house flippers, who have a number of property shows under there belt, including a special episode of Love It Or List It, and Worst House On The Street. Ideal Home spoke to the pair to find out their top tips on how to flip a house and sell a house for the best profit, including why a tradesmen is one of the most important factors to get right.  Image credit: Channel 4 The new show is a combination of The Apprentice meets Love it or List it. It sees six people given £100,000 in order to start their 'house flipping' journey. The six-part series, which started on Wednesday 25th May, will discover who can make the most profit from developing homes over the course of 12 months. Scarlett and Stuart's house flipping tips1. Find the best tradesmen you canThis is essential, says Scarlette, and will make the whole process much easier. She tells us, ‘They don't always have to be the most expensive, but those that are consistent, reliable, and trustworthy are going to make what can sometimes be a stressful profession a lot easier!’ 2. Work backwards for your purchase priceJust like when you're buying a property for yourself, you first need to assess the potential profit margin when you plan to flip a house. Scarlette explains, ‘Find out the ceiling price for properties on that road, what the costs of the refurb would be, and then knowing the sort of profit you can make will help determine how much you offer on the property at the beginning stage.’  Image credit: Future Plc / Douglas Gibb Stuart agrees, suggesting that assessing the area overall can give a good indication of your potential returns. ‘Research the area that you plan to buy in. Is it best suited to commuters or families? Will flats or houses provide the best financial return? These are standard questions that you should know the answers to before you commit to buy. From here, you can calculate a renovation budget that allows you to make a profit, if your figures are correct.’ 3. Always have a contingency fundLike any property project, having money set aside for unforeseen issues can prove vital in the house flipping business. ‘Once you decide on a budget amount, always factor at least 10% as a contingency. No renovation goes exactly to plan!’ Stuart says.  Image credit: Future Plc 4. Work with an experienced mentor, or a partner, if you canScarlette explains, ‘It's a tricky business, so better you learn from the mistakes of others than making your own. We all must start somewhere, and we will all make mistakes – even seasoned developers do. But if you can minimise those when starting out, that's priceless.’ 5. Start smallStuart advised beginners, ‘Start small and simple – this way you can reduce the renovation cost and minimise risk. ‘Try something like a one-bedroom flat that doesn’t need extensive structural alterations first. Knocking down a stud wall here or there is fine, but weight bearing walls that need structural surveyor calculations can be quite complex and costly, especially on a first renovation!’ George Clarke’s Flipping Fast is on Channel 4, Wednesday at 9pm The post Experts reveal 5 most important things to get right when flipping a property appeared first on Ideal Home. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Experts warn that you shouldn’t be making your bed every morning - here's why Posted: 05 Jun 2022 01:00 AM PDT We've always been told that one of the best habits to maintain is to make your bed every morning, in order to start the day off on the right foot. However, mattress experts are now suggesting that this supposedly productive task might not actually be the best thing to do when you first wake up if you want to keep your best mattress in top condition. Why? The reason lies in the fact that as we sleep, we lose lots of fluid (e.g sweat) – around 285ml per night, according to The Sleep Council. This means that when we pull our duvets up to our pillows, we're essentially locking in all of that moisture. And there are a few reasons that may not be the right move. Making bed every morning warningMartin Gill, mattress expert and MD of retailer And So To Bed, explains that, ‘By making our beds in the morning we are trapping in that moisture and not allowing it to evaporate, which could lead to issues within the mattress fibres, especially in the warmer months when we sweat more.  Image credit: Future Plc ‘If the moisture isn't given the opportunity to evaporate – and the mattress isn't being cleaned – it can breed bacteria and fungi. This means that not only will your mattress not last as long, but it also puts the mattress owner at risk of being exposed to staphylococcus, enterococcus and norovirus, all of which have been discovered to be in dirty mattresses.’ Yuck! As such, leaving your duvet and any bed linen pulled right back to the bottom of the bed is a much better option, to allow your sheets and mattress to breathe after a long night of sleep. If you can't bear the thought of leaving your bed unmade for too long though, the experts advise that after a little while, you can safely make it again.  Image credit: Future Plc / Dominic Blackmore Gill explains, ‘After a few hours of being aired out it should be okay to make your bed. In the summer months we will lose more fluid, so airing out may require a little longer than in cooler months. Make sure you open the window too, to allow for air circulation, as this will speed along the process.’ In order to keep your mattress in good condition for as long as possible, mattress experts also advise regularly cleaning your mattress, and other simple tricks such as using a mattress protector, washing your bed linen every two weeks, and blotting at any stains that appear, rather than scrubbing. We’ll be thinking twice before making our beds first thing in the morning next time. The post Experts warn that you shouldn't be making your bed every morning - here's why appeared first on Ideal Home. |
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