Estate agents are open, lenders are open, and we are open!

On Monday 11 May, the government surprised many by announcing the reopening of England’s housing market from the following Wednesday. Rightmove reported nearly 5.2 million visits were made to its website on the first day of the lockdown easing, which was a 4% increase on the same day a year earlier.

Under the announced changes, both estate agents and members of the public were given the green light to travel to properties for viewings and to undertake house moves – albeit with certain rules in place to enforce continued compliance with social distancing.

These included, sellers being outside the property while viewings are completed, the number of viewings per day being restricted and potential buyers being encouraged to view the property virtually in the first instance. Some estate agents are asking prospective buyers to complete a health declaration before allowing them to view a property.

Mortgage rates fall to record lows

The Bank of England’s base rate cuts to 0.1% have resulted in mortgage rates now sitting at all-time lows. The average overall two-year fixed rate is now 2.09%, a drop of 0.34% between March and May.

While those on variable rate and tracker mortgages stand to benefit, it has proved to be more difficult for those in the higher loan-to-value (LTV) ranges to secure a mortgage, with many lenders pulling mortgage products from the market and increasing rates, particularly for 95% LTV mortgages. Encouragingly, lenders are now beginning to reintroduce products and starting to relax their LTV restrictions.

Borrowers with a 10% deposit or equity will be pleased to see an average drop of 0.17% and 0.26% in rates for two and five-year fixed deals.

Speak to us early in the process

Whether you are moving up the ladder, looking to downsize, purchasing another property or remortgaging, getting a mortgage is one of the biggest financial decisions you will make. So, it’s important to get it right.

With the property market starting to thaw again and mortgage rates now sitting at all-time lows, it’s worth speaking to us. If you’re looking to move or remortgage, we can help you work out how much you’re likely to be able to borrow, prepare your mortgage application, and find the right mortgage for your circumstances.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Income protection explained
Income protection policies provide a monthly payment (payable after a waiting period) to help replace your income if you are unable to work because of an accident, illness or involuntary redundancy. Short-term income protection policies will pay out for a fixed amount of time (typically six months or a year), whereas long-term income protection policies are designed to replace your income (up to a maximum of around 60% before tax) until retirement age, death or for a specified period of time.

Am I covered for COVID-19 under my existing policy?
Policyholders who took their policies out before the outbreak should be covered under the existing terms and conditions, for both short-term and long-term income protection.

Fortunately, most people who get the virus have mild symptoms or recover quickly, usually within a few weeks. Because most income protection policies have a waiting period before money is paid out and also a minimum claim period of 30 days, you are unlikely to be able to claim under the sickness element of your policy.

However, if you are an existing policyholder who had unemployment cover included in the policy and you are made redundant, you should be able to make a claim for enforced redundancy.

Can I take out a new income protection policy now?
It is still possible for new customers to purchase accident and sickness cover, although you should be aware that pre-existing medical conditions will be excluded and insurers may have changed their terms for new customers.

However, the situation is not the same for unemployment cover, with brokers reporting that cover is unavailable for new customers, both as a standalone policy and under ASU (Accident Sickness and Unemployment) policies.

Managing existing policies
The good news is that you can renew your short-term and long-term income protection policies, although the terms may change at renewal.

Furthermore, some insurers are offering three-month payment breaks for those who are unable to pay their premiums at the moment.

Here to help
It’s important to remember that all protection cover should be bought for the short, medium and long term and should be tailor made to suit your own circumstances, rather than just opting for the cheapest premium.

As with all insurance policies, conditions and exclusions will apply.

As people’s anxiety about their financial future intensifies, it’s likely that many people will be considering how they can reduce their outgoings. Income protection or critical insurance may be top of the list to cancel if they can be perceived to be unnecessary expenses.

In reality, critical illness and income protection policies can protect your income or support your family, if you lose your jobs or become ill for an extended period of time, so should certainly not be on the list of expenditure to cut.

A financial lifeline
Never have we been so starkly reminded of the need for the safety net of protection cover. A recent YouGov survey about the pandemic revealed that nearly a third (32%) of Brits currently fear for their future. Cover such as life insurance, critical illness cover and income protection can help lessen the blow of unexpected events.

Don’t act in haste
Covid-19 is resulting in financial difficulty for many and may lead to people to consider cancelling their protection insurance direct debits. Please don’t act in haste, talk to us, we can offer support and guidance if for any reason, you are, or you think you will be, in financial difficulty.

It’s good to talk it through
Rest assured, what is certain is that we are here to help. If you have any questions about your protection policies or requirements, whether this be existing policies, or you are considering new ones – please get in touch, we have our finger on the pulse in this fast-changing environment and can assist you to navigate the challenges ahead.

As with all insurance policies, conditions and exclusions will apply

This contrasts with the 1980’s, when a fast-rising property market encouraged a move every eight years on average.

However, high prices in some regions, Stamp Duty and the other costs of moving, are now encouraging us to stay put and spend money improving our properties.

With so many more people staying put and embarking on some home improvements, it’s a good idea to select improvements and renovations that will add value to your property in case you do decide to move on one day.

Some of the best improvements to add value to your property include (plus potential value added):

Converting your cellar — 30%

Converting your garage to living space — 15%

Extending the kitchen — 15%

Loft conversion to add a bedroom — 15%

Increase living space with a conservatory or similar — 10%

Kerb and garden appeal — up to 10%

Fitting a new bathroom — 5%

Making the living area open plan — 3-5%

Here are some useful tips to bear in mind before embarking on your chosen project:

Check your deeds
There could be restrictions on what you can do, you may require planning permission, especially if it affects a boundary or external modifications are involved.

Check your policy
If you’re going to make any major changes to your home, you should contact your buildings and contents insurance provider first to avoid unintentionally invalidating your policy and check your policy covers you for accidental damage.

Get your paperwork in order
If you are looking at a large undertaking such as converting your loft, ensure you have the correct paperwork and certification, otherwise the money you spend may not be realised in the sale price.

Preserve bedroom space
Try not to reduce your bedroom count, you may want to convert a third bedroom into an en-suite, but by losing a bedroom you will reduce the value of your property.

Be commercially-minded
Consider the neighbourhood you live in and the types of buyers likely to want to live there, for example spending money landscaping your garden may not appeal to a younger professional couple who want low-maintenance outside space.

Avoid personalisation
Unless you are prepared to redecorate when you come to sell, use a neutral colour scheme, introduce colours in soft furnishings and accessorises and personalisation with pictures or photos.

Hire a professional
Avoid a DIY disaster by only taking on projects you are confident you can complete.

We can help
Please get in touch if you are looking to fund your home renovations with a remortgage or second charge loan.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

Keep it simple
Many products are available but a simple level-term policy, where a pre-decided lump sum is paid out should you die within a stated period, is among the simplest to arrange and is typically not very expensive. As a rule of thumb, life cover should provide ten times the main breadwinner’s income. The amount should cover any outstanding debts, including mortgage, regular outgoings, potential university fees and so on. The term should reflect the needs of your dependants; Children will probably need support until they leave education and a partner may need it until pensionable age.

Joint or single cover?
A joint policy will cover you and your partner, paying out on the first death within the term. Alternatively, you can have separate single-life policies; a little more expensive but potentially two payments. A young, fit individual should find life cover affordable. Be open about your lifestyle, especially if you have existing medical issues. Premiums rise with age, lifestyle factors, such as smoking and other factors that affect your life expectancy.

Keep under regular review
Reviewing your protection needs helps make sure you have the right cover in place for your financial circumstances, giving you the peace of mind that you’ve got things covered.

As with all insurance policies, conditions and exclusions will apply.

Between March and May:

2,656 mortgage products were withdrawn, many of which were high loan-to-value (LTV) deals (i.e. those requiring a smaller deposit).

396 two-year fixed and 374 five-year fixed deals at 90% and 95% LTVs were pulled from the market.

Lenders make a cautious return
As certain social distancing restrictions began to be lifted in May and the property market reopened for business, lenders began relaunching higher LTV deals and products aimed specifically at first-time buyers, such as Help to Buy loans.

With the property market still in the early stages of recovery, it’s worth being pro-active and following some of these tips to maximise your chances of mortgage approval:

Save as much as you can – while many people are experiencing financial difficulties during the pandemic, many of us are also spending a great deal less than usual. Getting your deposit as high as possible will increase your chances of mortgage success.

Clear your debt – when considering your application, lenders will look at any outstanding debt. Clearing as much debt as possible, as well as closing any unused accounts, will increase lenders’ confidence in your ability to repay your mortgage.

Understand your credit score – the better your credit rating, the higher the likelihood you’ll be accepted for the best mortgage deals. Understanding your credit rating and how to improve it is key to moving forward with a successful mortgage application.

Keep excellent records of self-employed earnings – providers can be more nervous about lending to self-employed people, so having excellent records of your earnings over the past two or three years (depending on the lender) can really improve your chances.

Consult the experts
We are on hand to make sure you get a great deal for your circumstances, and one that gives you the highest chance of success. Whether you’re a first-time buyer or a second stepper, we’re here to guide you through this difficult period.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Mortgages
If you’re on a fixed-rate mortgage, you’ll be protected from the latest rise until your current deal runs out. If that happens any time soon, you may well find the cost of a new fixed-rate mortgage has shot up - with even the most competitive two-year deals currently priced at between 4 and 4.5% compared to less than 1% a year ago.

For those on tracker mortgages, you’ll almost certainly see your payments go up in the next few weeks to reflect the full increase in the base rate. In general, you can expect to pay an extra £23 a month on a £100,000 mortgage.

Homeowners on their lender’s standard variable rate (SVR) will also probably see their monthly payments go up. They may not be hit with the full increase though, as these rates go up at a lender’s discretion. Banks and building societies may take longer to decide on SVR changes, as they come under pressure to shield customers from the full impact of the latest base-rate hike.

Other debt
The base-rate increase will also more than likely see the cost of borrowing rise in other areas. Although often not explicitly linked to the base rate, credit card rates are generally expected to go up in response to the latest rise. This means they’ll almost certainly reach the dizzying heights of 30%.

It’s also widely anticipated that many lenders will pass on the increase to people taking out new personal loans and car finance.

Savings
The base-rate rise should be good news for savers, although it can take time for increases to be passed on to customers. Getting professional advice can help you make the most of your money.

Investments
Changes to interest rates can affect different types of investment in different ways. Your financial adviser can build a diverse portfolio which may minimise the effects of any rate fluctuations.

Budgeting
In light of the latest base-rate increase and changes announced by Kwasi Kwarteng in the government’s mini-budget, it makes sense to review your own budget. A financial adviser can help you weather these uncertain times and ensure you’re making more of your money.

Key takeaways:

• Homeowners with tracker mortgages are likely to see their monthly payments go up in the next few weeks. People on their lender’s SVR will probably see an increase to the amount they have to pay too, although they may be shielded from the full impact. The cost of new fixed-rate deals is also set to rise.
• The cost of credit card debt, along with new car finance and personal loans, will almost certainly increase in response to the change in the base rate.
• The rise should be good news for savers, although it may be worth waiting before switching to see if rates increase further.
• Making sure you have a diverse portfolio can protect investments from rate fluctuations.
• A financial adviser can help ensure you’re making the most of your money in these uncertain times.