First Home Fund

Published on by David Category: Uncategorized

What is the First Home Fund?

The First Home Fund is a shared equity scheme run by the Scottish Government and aims to help first-time buyers purchase a property. Up to £25,000 is available to all first-time buyers towards the purchase of both new build and existing properties.

A first-time buyer is anyone that does not own, or has previously owned, a property in Scotland or anywhere else in the world. If you are applying for a joint mortgage, only one applicant needs to be a first-time buyer to qualify for the scheme, provided that none of the joint applicants still own another property by the time you are ready to complete the purchase of your new property. If you and your partner are both first-time buyers you will only be able to receive one contribution towards the property from the Scottish Government.

In order to take part in the scheme, you will be required to provide a minimum deposit of around 5% (subject to individual lender requirements) and your mortgage must be at least 25% of the purchase price. Although the Scottish Government will have an equity share in the property, you will own the property outright. There are no monthly payments to be made towards the Scottish Government and no interest will be charged.

You will normally repay the Scottish Government’s percentage equity share when you sell your home, however you can choose to pay this off earlier.

What is Shared Equity?

Buying through a shared equity scheme means you split the cost of purchasing the property with the Scottish Government. You will fund your share through a deposit and a mortgage, with the remaining share being provided by the Scottish Government.

There are no monthly payments or interest payments to the Scottish Government for their contribution. Instead, you will normally pay it back when you sell your property, or you can choose to increase your equity share over time.

As an example, if your deposit and mortgage pays for 85% of your home’s value when you buy, the Scottish Government will hold a 15% share. This means that when you sell, you will receive 85% of the final sale price and the Scottish Government will receive 15%.

This does not mean that the Scottish Government has an ownership right to the property. You will own the property outright and hold the full title.

Who is the First Home Fund for?

The scheme is open to all first-time buyers in Scotland who are taking out a mortgage. You will not be able to apply to the scheme if you are a cash buyer or if you have previously owned a property in the UK or abroad at any time (as either a sole or a joint owner).

While the scheme is open to all first-time buyers there are a few requirements that you will need to be aware of:

  • The maximum contribution from the Scottish Government is £25,000 or 49% of the property valuation figure or the purchase price (whichever is lower). If you purchase a property for less than the valuation figure then the maximum Scottish Government contribution is £25,000 or 49% of the purchase price.

Find out more

To find out more information on the First Home Fund and discuss how it may be able to help you own your first home get in touch with David Butler.

Email: david@portfs.co.uk

Telephone: 01224 050929 or 01224 784030

Your home may be repossessed if you do not keep repayments on your mortgage.

www.portlethenfinancial.co.uk

Bank of England – Base Rate

Published on by David Category: Interest Rates, Mortgage Tips

A look back at base rate over the last 20 years

The Bank of England Official Rate or base rate over the last 20 years. In the chart below the first nine years shows what was a pretty normal range for base rate which averaged 4.95% over the period to Oct 2008. Since March 2009 rates have remained very low with only four changes to it over this period. 

If you have taken out a mortgage or remortgaged over the last 10 years you would be forgiven to think rates were always this low!! 

What next for interest rates?

That depends on Brexit, the economy and inflation.

The Bank of Englands role is to control inflation and they have a target of 2% and the Bank of England official rate will be changed to keep inflation at or close to this target rate. However they also have to take other economic factors into account.

In the latest monetary policy committee inflation report the bank that it would restrict the pace of interest rate rises over the next two years to no more than 0.25% due to Brexit uncertainty and a slowing economy. However Mark Carney the Bank of England Governor also warned that a modest recovery to the economy over the next 3 years will warrant higher interest rates.

If your mortgage rate is ending soon then considering a fixed rate is worth considering. If you would like to review your options get in touch with David for a free mortgage review.

David can be contacted on 01224 784030 or by email on david@portfs.co.uk

Chart Data supplied by Bank of England

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Help to Buy ISA

Published on by David Category: First time Buyer, Help to Buy ISA

Are you a First Time Buyer and saving for your deposit?

Then let the government boost your savings by 25%!!!

If you save in a Help to Buy ISA you will get a £50 bonus for every £200 you save up to a maximum bonus of £3,000.

Entry to the Help to Buy ISA closes on 30th November 2019

How does it work?

Help to Buy ISA’s are available from a range of banks and buildings societies and the accounts are available to each first time buyer. So if you are purchasing jointly then you can each benefit from the 25% bonus provided you each save the minimum amount required. If you both save the maximum allowable that a combined bonus of £6,000.

You can open the account with any amount but in your first month you can deposit a lump sum of up to £1,200 and then save up to £200 per month.

Once you have saved a minimum of £1,600 you qualify for the 25% bonus. The maximum bonus is £3,000 and this would mean saving £12,000 to qualify for it.

Your solicitor will collect the government bonus amount and this will be used along with your savings towards the deposit for your first home.

To qualify for a Help to Buy: ISA you must:

  • be 16 or over
  • have a valid National Insurance number
  • be a UK resident
  • be a first time buyer, and not own a property anywhere in the world
  • not have another active cash ISA in the same tax year: If you have opened a cash ISA this tax year, you can open a Help to Buy: ISA but will have to take additional steps.


To qualify for the government bonus, the property you are buying must:

  • be in the UK
  • have a purchase price of up to £250,000 (or up to £450,000 in London)
  • be the only home you will own
  • be where you intend on living
  • be purchased with a mortgage

If you have any questions on mortgages or saving for your deposit for your new home than please get in touch.

Your property may be repossessed if you do not keep up repayments on your mortgage.

Portlethen Financial Services

Mortgage Advice Aberdeen

 

David Butler specialises in providing mortgage advice tailored to your specific circumstances and mortgage needs. To arrange a free mortgage and insurance review get in touch.

Retirement Interest Only Mortgage

Published on by David Category: Uncategorized

What are they?

A retirement interest-only mortgage is very similar to a standard interest-only mortgage, with two key differences.

  1. The loan is usually only paid off when you die, move into long term care or sell the house.
  2. You only have to prove you can afford the monthly interest repayments.

Retirement interest-only mortgages are generally aimed at older borrowers, such as the over 55s, over 60s and pensioners who might find them easier to qualify for than a typical interest-only mortgage.

In this way, they’re similar to types of equity release schemes like a lifetime mortgage, where you pay-off the original capital and possibly any interest when you die or move into long-term care.

However, with a lifetime mortgage you will either:

  • have a larger amount to repay at the end because there are no monthly repayments and the interest is rolled-up and added to the total loan value, or
  • make monthly interest payments and ad-hoc capital repayments during the term of the mortgage. This reduces or stops the effect of interest roll-up, but involves higher monthly repayments.

But, with a retirement interest-only mortgage, you only pay off the interest each month, so your monthly repayments will be lower.

This means you should be more likely to have something to pass on as an inheritance, or pay for long-term care.

How is it repaid?

You will be making monthly payments of the interest on the capital balance throughout the mortgage term with the capital being repaid when the house is sold, on death, or entry to long term care.

 

Advantages of a retirement interest-only mortgage

  • No need to demonstrate a suitable plan for repaying the mortgage.
  • More likely to have something to pass on as inheritance.
  • No problem of interest roll-up – which is when interest builds and builds – like with equity release.
  • Avoid having to downsize to a smaller property.
  • The loan term is not fixed.
  • Generally cheaper when compared to most Lifetime Mortgages.
  • You can unlock some of the equity in your home to pay off outstanding debt.

Disadvantages

  • You will need to pass the mortgage affordability checks to prove you can afford the interest only repayments.
  • Your home will be sold off to repay the loan when you die, enter long-term care or sell your home.
  • Your home is at risk if you do not keep up the repayments.
  • The amount you can borrow is based on your retirement income and your loan to value ratio.

Is a Retirement interest only mortgage right for you?

There is now alternative available to Lifetime Mortgages and Equity Release plans and depending your individual circumstances and requirements a Retirement interest only mortgage may be the best option.

However, it is a big decision to take out a mortgage on your home or increase the existing borrowing and all options should be fully reviewed before a decision is made.

As a specialist financial adviser David Butler is qualified to provide advice on both Equity release and Retirement Interest only mortgages and will take a holistic approach in reviewing your current circumstances and making the appropriate recommendations to achieve your goals.

David is a member of the Society of Mortgage Professionals, Dip PFS & Certs CII (MP & ER)

To arrange a free review appointment, call 01224 784030 or email david@portfs.co.uk

Portlethen Financial Services

www.equityreleaseaberdeen.co.uk

Your home may be repossessed if you do not keep up repayments on your mortgage

Equity release refers to home reversion plans and lifetime mortgages. To understand the features and risks ask for a personalised illustration

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Help to Buy

Published on by David Category: Help to Buy

Help to Buy

The Scottish Government Help to Buy Affordable New build scheme is a shared equity scheme aimed at helping both first time buyers and home movers buy a new build home.

If you want to buy that new build home but can’t afford the total cost then you might be able to get help through the Help to Buy scheme.

How it Works

You will be expected to purchase a minimum share of 85% of the total purchase price and the Scottish Government will hold the remaining equity share under the shared equity agreement. The title deeds for your new home will be 100% in your name(s) but the Scottish Government will have a standard security on your home to protect their equity share.

The maximum purchase price under the Help to Buy scheme is £200,000 for the financial years 2018-19. 2019-20 and 2020-21.

If you can from your own funds and the mortgage available afford to purchase without the Scottish Government equity share you would not be eligible for the scheme.

Once you have purchased your new home you can in the future increase the share you own by repaying the Scottish Government for their share. This can be done in stages of at least 5% and you can increase your share to 100%. If you do want to increase your share it will be based on the valuation of the property at that time and you will be responsible for the cost of a valuation, legal costs and the administration costs.

How to apply

Once you have found a new home you like from one of the participating builders you will need to speak with a financial adviser (Mortgage Broker) to review your current financial situation and carry out the mortgage affordability with lenders and review whether you would be eligible for the Help to Buy Scheme.

If so then a mortgage can be approved in principle and you can then reserve your new home and at this stage you will apply to the administering agent of the Help to buy scheme. Your financial adviser (Mortgage Broker) will assist you with this process.

If the administering agent approves your eligibility for the scheme you will be issued with an Authority to Proceed letter confirming the mortgage loan amount, deposit and Scottish Government equity share grant approved. You can then proceed with the purchase of your new home

Want to know more

If you are interested to learn more about the Help to Buy scheme and whether you might be eligible get in touch to arrange an appointment where we can explain in detail how it works and provide information on the mortgage options available.

david@portfs.co.uk
call David on 01224 784030
Portlethen Financial Services
Unit 14 The Green
Portlethen
Aberdeen, Aberdeenshire AB12 4UN

Your home may be repossessed if you do not keep up repayments on your mortgage.