LIFT – Open Market Shared Equity

Published on by David Category: First time Buyer, Mortgage Tips, Shared Equity

The Low-cost Initiative for First Time Buyers – LIFT Open Market Shared Equity Scheme might be for you.

Unlike the Help to Buy scheme which is only for new build homes from house builders the Open Market Shared Equity (OMSE) scheme is for homes that are for sale on the Open Market. So if you want to buy your first home but can’t afford the total cost this might be the right scheme for you.

How it Works

The Scottish Government will give assistance to qualifying first time buyer by taking an equity share in your new home.

You will own the largest share usually between 60% and 90% of the purchase price with the Scottish Government holding the remaining share under a shared equity agreement. The mortgage lenders will typically require you to have a minimum of a 5% deposit based on the full purchase price/market value.

If you were to purchase a 75% share of your new home, the Scottish Government will provide assistance for 25% of the purchase price.

You will own 100% of your home and have the title deeds in your name but the Scottish Government will have a “standard security” on the home to protect their share. It also means that when you sell they get a their share of the sale proceeds back.

How to qualify

You need to be able to show that you can’t afford to buy a home that meets your needs without help from the OMSE scheme. If it looks like you’d be able to buy a home without any help, your application won’t be eligible.

Maximum price thresholds

There are maximum price thresholds and criteria on what you can purchase. The price threshold varies depending on where you are purchasing and the size of property you are eligible for. You can typically purchase a property that is one apartment larger than you require an apartment is classed a room. So, a 3 apartment property is a 2 bed property.

In Aberdeen City a one bed property (2 apartment) has a maximum price of £110,000 and a 2 bed (3 apartment) £130,000. In South Aberdeenshire these figures increase to £125,000 for a 1 bed (2 apartment) and £170,000 for a 2 bed (3 apartment) property.

Example

If you can get for example a mortgage of £85,000 you could if you qualify for the scheme purchase a 1 bed property in Aberdeen city for £110,000 and 82% share, £90,500, made up of your £85,000 mortgage and a deposit of £5,500.

What to do next

Get in touch and we can discuss the scheme in detail and your eligibility. The next step is to apply to the scheme administrators and if approved you will be issued with a “passport letter” then once you have found your home a copy of the valuation has to be provided so that the property can be approved.

If it seems complicated, don’t worry, we are here to assist at every stage of the process and make it as easy as possible.

To get more information or arrange an appointment give David a call on 01224 784030 or email david@portfs.co.uk

Portlethen Financial Services

Mortgage Advice Aberdeen

David Butler, Portlethen Financial Services, Unit 14 The Green, Portlethen, AB12 4UN

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

 

Equity Release

Published on by David Category: Equity Release

What is Equity Release?

This Blog post on Equity release will hopefully explain some of the details of equity release and what you should consider.

Equity Release lets you unlock the tax-free cash from your home, without having to move out.

You might be looking for some extra money for home improvement, help out your family, repay a mortgage or a bit of extra income in retirement.

Equity Release is only available if you are over a certain age usually 55.

Releasing equity from your home is a big decision and you need to get the correct financial advice.

How does it work?

Based on your age you will have access to a percentage of the property valuation to take as a tax free cash sum.

Types of equity release schemes

There are two main types of equity release scheme-

  • Lifetime Mortgage
  • Home Reversion scheme

 

Lifetime Mortgage

Home Reversion

How it works

You have a loan on your home with the interest charged usually added (roll-up) to the balance outstanding

You sell all or part of your home

Do you still own your home?

Yes, but you have to pay back the mortgage.

No, you will be a tenant

Can you stay living in your home?

Yes

Yes

Do I have to pay anything?

Usually nothing but with some providers and products you can choose to pay the interest

Some home reversion plans charge a peppercorn rent.

How does the provider get their money back?

The mortgage balance outstanding (capital and interest added) is repaid from the sale of the property when you die, or if you move out permanently

When your home is sold after you die or move out permanently

Is it right for you?

We can review your current circumstances and objectives and explain how Equity Release works so that you have all the information so that you can make an informed decision. If we do not think it is the right option for you we will tell you.

Before deciding on an equity release plan, you should consider the alternative options and the impact on any state benefits a release of equity may have.

Equity release is not right for everyone and receiving the correct advice is essential.

Why Portlethen Financial Services

Portlethen Financial Services has been providing mortgage and financial advice since 1996 and were Independent Financial Advisers for the majority of this time but are now Specialist Mortgage Brokers & Financial Advisers utilising their wealth of knowledge and experience to provide new and existing clients with bespoke Mortgage, Equity Release and Insurance advice.

David Butler our Equity Release specialist has been providing holistic financial planning advice for the last 25 years and is a member of the Chartered Insurance Institute, Society of Mortgage Professionals, for Equity Release and Mortgage advice. In addition, David is a Member of the Personal Finance Society, Dip PFS, and holds the Advanced Financial Planning Certificate.

David will have a free initial consultation with you to discuss all the options and ensure equity release is the best financial decision for you.

The Equity Release Process

  • Initial Consultation to introduce our services and discuss Equity release and the alternatives to consider
  • Discovery Meeting – where we will complete a fact find to obtain as much information as possible relating to your current financial circumstances and objectives. In addition to discussing the risks associated with equity release and your feelings towards them.
  • Research – The providers and plans available will then be thoroughly researched to ensure any recommendation will suit your individual objectives and attitude to risk.
  • Presentation of recommendation – a meeting will be arranged to present the recommendations of the most suitable equity release plan and provider. The report produced outline your current position and our recommendations to achieving your goals. Supporting information will also be included, personalised illustration and Product Brochures.
  • Implementation – If you accept our recommendation we will then compete an application form which will be underwritten, a valuation instructed and an offer issued.
  • Independent Legal Advice – A solicitor used to dealing with Equity Release should be engaged who will make sure you fully understand the workings of the plan and the legal implications before you go ahead.
  • Completion – Once the offer has been issued and the legal work completed you will receive the money approximately 8 to 12 weeks from date of the original application.

Ready to talk?

Get in touch if you would like to know more about equity release or book you free initial consultation. 

I hope you found the Equity Release Blog useful and imformative.

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

For Equity Release advice there will be a fee of £495 and we will also be paid commission from the provider.

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

www.equityreleaseaberdeen.co.uk

Mortgage Advice

Looking for a mortgage?

Published on by David Category: Mortgage Tips

Things you should know…..

Whether you’re a First Time Buyer, looking to move home, Re-Mortgage to a better rate or purchase a Buy to Let investment property getting the correct advice is essential.

A Financial Adviser / Mortgage Broker can provide you with much more than your own bank or building society. Not only will they have access to a comprehensive range of lenders and rates they will also have the knowledge of the different criteria and lending policy of these lenders and when you are looking for the right mortgage for your individual requirements this knowledge and expertise is invaluable.

Mortgage Affordability

All lenders will carry out a mortgage affordability calculation to confirm the size of mortgage available taking into account your income, liabilities, living expenses and mortgage term etc. However, there is not one calculator that is used by all lenders they each have their own formulas and take slightly different things into account. A Mortgage Brokers knowledge could make the difference in sourcing the lender that will allow you to buy your dream home!

Credit Scores and Scoring

The majority but not all lenders will use credit scoring in reaching the decision to lend as well as reviewing the contents of your credit history/file. The three main credit reference agencies each offer online access to your credit history and a credit score but the credit score from these companies will not necessarily be the same score that you will get from a lender but is a guide. The lenders will each use their own score card and will have different pass marks for lending depending on the loan to value (ltv) you are requesting. The contents of the credit history/file can also override the credit score so even if you have a good score with the credit agencies the lenders criteria my override the score if you have had defaults / Court Judgements or decrees etc. 

It is a good idea to have a look at your credit file so that we can review it contents and make sure there is nothing that can prevent you getting a mortgage. A copy can be obtained by registering with www.noddle.co.uk which is a free service provided by Call Credit or from www.experian.co.uk or www.equifax.co.uk who offer a free month’s trial and then an ongoing monthly fee. 

If you are not registered on the electoral roll – register know as this may help improve your credit score.

While in an ideal world no credit (loans or cards) is what you want this is not the case when you want a mortgage. If you have never had any loans or credit/store card there is nothing to score so you will not have a good credit score so if you are looking to purchase and need to improve your credit score taking out a credit card can help. Use it to fuel up the car and then clear the balance in full every month so you build up a good record or regular payment, don’t miss any or be late!!, and don’t be tempted to run up a card balance that you cannot clear as this will impact on the mortgage affordability.

Documents

If you do not usually keep your payslips and bank statement and shred them then STOP!!! 

A lender will require documents to verify your income and will typically require your last 3 months payslips, P60 and between one and three months bank statements if you are employed. The self-employed will usually need to provide 3 years’ accounts and/or HMRC SA302 tax calculations and Tax Year Overview statements but again the lenders each have their own document requirements. As mortgage brokers we will again be able to discuss the lenders document requirements and recommend lenders appropriate to your individual situation. So if you have only been self-employed for a year or are a contractor working via your own Ltd company do not despair!

The lenders will use your bank statements to cross check against payslips in verifying your income but will also review the contents and there are some things that they do not like to see. While there is nothing wrong with the odd bet on a sporting event or a game of Bingo the proliferation of online betting and Bingo sites has made it far easier to do at the push of a button on your smartphone or tablet. If the activity on these sites is seen as high, whether you are winning or not, in relation to overall income then a lender is unlikely to lend.

Overdrafts – Lenders usually do not have an issue if you use an overdraft provided you are not permanently in overdraft and that when you are it is within the agreed overdraft limit. If you do go slightly over the limit provided this can be explained, then they may be okay lending.

Deposits

The bigger the deposit the better the rate of interest available and a lower credit score required to lend. It makes sense to try have the smallest mortgage you can but trying to build up a deposit for First Time Buyers can take time unless the bank of Mum & Dad can assist with the deposit. Lenders do offer loans with only 5% deposit but the rates of interest are higher than if you have 10% deposit and this is where all lenders start to offer rates although if the property is New Build house or flat the deposit required by most lenders is higher Typically 15% or 20%.

The deposit require will be based on the purchase price or valuation whichever is the lower so if you pay over valuation for a property you will require the deposit (5% or 10% etc) plus the amount over valuation paid.

There are a number of Government Schemes available to assist First Time Buyers and Home Movers and for New Build Property the Help to Buy scheme is a Shared Equity scheme where only a 5% deposit. I will be covering how these schemes work in a separate post.

Mortgage Advice

The purchase or refinance of your home is one of the biggest financial commitments you will ever make and getting the correct advice and reviewing all the options is essential. We have been providing advice and arranging mortgage for clients in Aberdeen and throughout the UK for 25 years and as Financial Advisers can provide the advice you require and arrange the mortgage and insurance to protect your home.

To discuss your plans, get in touch to arrange a Free Initial Mortgage Consultation and starting planning for your future.