For first time buyers in Cardiff statistics show that in recent years property prices have increased at a faster rate than wages. We have found that many people look to purchase in joint names with a partner or friend in order to be able to afford a suitable home at a more reasonable price.
Purchasing in joint names usually will increase your maximum borrowing capacity, as the lender will look at all party’s income and take this into account when running the affordability calculations.
Surprisingly, we work with some lenders who will accept up to 4 people co-owning a property. If for any reason, one of the co-owners of the property decides to no longer contribute to the mortgage repayments, any joint owners will still have the legal right to reside in the property unless this is ruled otherwise by a court.
If you would like to increase the mortgage at a later date, you must gain consent from all co-owners involved. It’s therefore essential that you make long term plans about what will happen in the future should you end up wanting different things.
We find the most popular Tenancy for married couples or those in civil partnerships is ‘Joint Tenancy’. With this type of tenure, if either party were to pass away, the property would be handed over to the co-owner. If you have taken out relevant life insurance, at this point, your mortgage would be repaid.
With ‘Joint Tenancy’, when looking to remortgage or sell the property in the future. It would be required that all names on the tenancy agree to this.
When purchasing with relatives or friends, we find that ‘Tenants In common’ is the most popular tenure. You will still jointly co-own the property but are have the flexibility to do so not with equal shares. This works well if one party is making a more significant financial contribution than the other.
With ‘Tenants in Common’, another positive aspect, is that you can act independently. For example, you can choose to sell or give away your share of the property to someone else without the need to consult other parties.
All mortgage borrowers are jointly and severally liable for mortgage payments. If you find yourself paying all future payments without a co-owner, you will still be liable. You are preventing the mortgage from falling into any debt. As mortgage arrears showing on your credit file could have the potential to stop you from obtaining a mortgage in the future.
It is best to think of it like this: You don’t own 50% of a property, you own 100% jointly.
Lenders will need to be confident that you can keep up with monthly payments on your own before they can approve of this happening.
When purchasing a home with a partner, it’s a whole new chapter starting in your life and can be a great way to start fresh with another individual. In all the excitement of moving home, it can make you wonder about the justifications if things go sideways.
As seen from above, a mortgage is a big financial commitment and making changes is going to be a challenge.
With physical proof that you can maintain mortgage payments since your old partner moved, the lender may agree to your request to put the mortgage into your single name. However, Lenders like the idea that there are two people to pursue in the event of arrears occurring. To remove someone, they will carry out a brand-new affordability assessment, precisely in the same way as they would at the point of purchase.
Whilst a lender may not accept a request, it’s always beneficial to speak with a mortgage advisor in Cardiff beforehand, as there may be other lenders who could agree to your transfer request.
It can also be worth talking to family members to see if they can help you out to make life a little bit easier. They can do so by replacing your ex on your mortgage or by gifting you a lump sum to reduce the amount owed, meaning your savings can contribute to easing your future mortgage payments.
If you and your partner split up and you leave the family home, then your responsibility is still shared for mortgage payments even if an agreement was settled with your ex that they will make all the payments.
If you are sending your partner money each month, you should keep an eye on your credit report to ensure they are paying the mortgage. If they default, then it will impact your own score.
Is your name still linked with an existing mortgage? Then the payments for that will be considered if you buy a new home of your own. That will mean Lenders might not lend you as much as you would like.
Buying a home with someone is different from renting with them. It’s always better to agree on what would happen to the house should things not plan out as expected.
Mortgage protection insurance is a term used to encompass various types of cover designed to protect borrowers like first time buyers in Cardiff from events that could severely impact their ability to maintain mortgage payments.
There are different variations, but when connected to a mortgage, they are all there to provide peace of mind and usually fall into the following categories:
As a rule, if the policyholder dies within the term, then the sum assured should be enough to pay off the outstanding mortgage balance and ensure the borrower’s dependents aren’t left with a debt they might not otherwise be able to manage.
Our protection specialists in Cardiff can run through all the different types of life cover and recommend the most suitable plan for you.
Critical Illness Insurance works similarly to life insurance in that it is usually taken for a specific term of years and can have different options such as level/increasing.
It pays out a lump sum, and, like life cover, it is taken on a decreasing term basis in line with the reduction of your mortgage balance for borrowers.
The key is that the benefit is paid if you fall victim to one of several specified critical illnesses and pays out whatever the long-term prognosis of that illness. The type of illnesses covered vary from company to company.
That’s why this type of insurance cannot be solely price-driven and always recommended advice.
In practice, many companies will offer life and critical illness cover as a combined policy and would usually payout on the “first event”, i.e. whatever happens first – either death or a severe illness – the payout is made. They can also be written on a single or joint life basis.
Whereas life and Critical Illness cover pay out a lump sum, income protection pays out a monthly sum designed to replace your wages if you are unfit to work.
Unlike critical Illness cover, there are no restrictions on the illnesses or injuries covered, the only factor being whether they make you unfit to work.
However, there are restrictions on how much you can cover and how quickly benefits would start to be paid.
Like life and critical Illness cover, these policies are underwritten based on your health and lifestyle when you apply. All income protection policies are written on a single life basis.
Unlike the traditional forms of policy, the cover would pay an annual or monthly income for the remainder of the plan’s term rather than pay out a lump sum.
Thus, it can replace the primary breadwinner’s income for several years, dependent upon a particular client’s circumstances and, because of this, would usually be written on a level or basis or an index-linked basis designed to keep up with inflation.
There’s an adage that says you can never have too much insurance. Indeed, many people have one or more of the different types of policy, and it would be wrong to think of Mortgage Protection Insurance as just an “either/or” choice.
However, affordability plays a massive part in the real world, so whilst it would be fantastic to cover yourself for every potential opportunity, a good advisor will sit down with you and tailor the type of cover to be the most suitable combination to your family’s priority and budget.
If you are only planning on living for a short period, renting makes more sense. However, if you are going to stay in a particular area for a long time, saving for a deposit and buying would be more suitable.
If you had parent(s) who took out a mortgage, this might encourage you to be a first time buyer in Cardiff once you saved enough for a deposit. This article will take a look at the benefits and drawbacks of buying a home.
The property market fluctuates, leaving people unsure whether when is the best time to start putting your foot onto the property ladder. Before committing to a purchase, you should speak with a mortgage advisor in Cardiff to discuss all your options.
With that said, this is more than just an investment. It’s a home. The most important factor is finding the most suitable one for your circumstances.
More often than not, your repayments on the mortgage can sometimes be cheaper than rent. Interest rates tend to fluctuate, too, meaning your mortgage payments can do the same. Alternately, you could look a taking out a fixed-rate mortgage.
A fixed-rate mortgage will ensure your payments remain the same for a set period. On the flip side, rental properties typically see prices stay the same or increase.
Owning a home creates a sense of stability for them and their families. Providing you can keep up your payments, nobody can force you to leave your home if you don’t want to.
As a tenant, you get some protection with things like how much notice you need to be given, and if they want the house back, your hands are firmly tied. However, when you factor in family, work or schools nearby, this isn’t ideal for you.
At times, Landlords give their tenants the first refusal to buy the property if they are selling, as this saves them on Estate Agent fees.
Renting can be a more flexible option than owning a property. There’s nothing to stop you from giving your landlord notice if you want to leave for a job in a different area.
As a homeowner, this becomes awkward as you have to decide whether or not they want to rent out your home or sell it. The process of selling a home and buying a new one is both expensive and time-consuming.
If you’re unsure of your commitment to a set area and feel you may move again, you should consider whether or not it’s worth buying a property. It should be viewed as a long term investment.
Landlords should be responsible for all major repairs that a tenant needs. Some are better than others when it comes to this, and you still might end up doing some repairs yourself.
If you are a homeowner, then all of this is down to you, ensuring the property (a condition of any mortgage you take out).
Contrary to popular belief, owning your own home is not for everyone. If you are young and moving in with a partner for the first time, renting may very well be the perfect option for you.
There’s nothing wrong with renting for a while. However, life is unpredictable, and for one reason or another, you may need to remove someone’s name from a property, which can be difficult on a mortgage.
There are not many more extensive financial commitments than buying a home, so everyone should consider the options before diving in. If you decide to rent through, it may take you much longer to save up for a deposit.
Overall, most folks tend to decide on buying over renting. However, no matter whether you’re paying rent to a landlord or paying for a mortgage, you’re still making monthly payments to live somewhere.
The consensus is that people would much rather their payments go towards their benefit than someone else. It’s often just a matter of timing and being in a better financial position.
Home movers in Cardiff are often in two minds whether to move or not (e.g. “I like my neighbours, but I’d like an extra bedroom). However, most potential first time buyers in Cardiff, if asked, would likely say they want to be on the property ladder.
They are often unphased by and disinterested in external factors such as ongoing political events. So whilst the housing market does go through fluctuations, this hardly ever puts people off wanting to get onto the property ladder.
It should always be classed as a long-term investment, and whilst it might not be ideal if your home drops in value, history suggests that when that does occur, the prices go back up in the long run.
95% mortgages are an option if you fit the criteria, if you are more than halfway to having the 5% deposit available, it’s worth trying to get an Agreement in Principle in place. To make sure you are eligible for a mortgage when the time comes.
Offset mortgages are not the ‘go to’ mortgage for most, but they can turn out to be a great option to go on. It provides an opportunity to the customers to reduce the interest to be paid.
Offset mortgages can help pay off your mortgage quicker, as well as coming with tax benifits.
This is a form of mortgage that connects the outstanding balance with a savings account (normally through the same financial provider).
The balance you have on your bank account reduces your mortgage interest. You should only pay interest on £200,000 on your mortgage, for instance, if your mortgage was £300 000 and you had £100,000 in your associated savings account.
An offset mortgage offers flexibility, as you are able to add or remove funds from your offset savings account as and when required, meaning the cash is still available should you need it.
Also, you are able to reduce your interest and monthly payments by adding funds to your offset savings account. I.e. if you know you are going to be paid large bonuses these could then go into your offset account to reduce your payments. An offset could turn out to be the best way for a first time buyer in Cardiff who is looking to overpay on his mortgage.
Offset mortgages appear to be of special benefit to higher taxpayers or additional taxpayers and to persons who do not rely on the increased interest to fund their daily lives.
An offsett mortgage is a specialist subject and is not the right option for most. However, our mortgage advisors in Cardiff have vast knowledge when it comes to offset mortgages and will be able to advise if it is the right option for you.
Take some time to consider all the possible options and outcomes while speaking to Mortgage Advisor in Cardiff. It is necessary to consult an advisor to know more about the impact of Offset and how would you be getting the benefit from it in the long run.
If you need any sort of help or just want the questions to be answered or you have made the decision to remortgage in Cardiff. Then get in touch with our Mortgage Advisors in Cardiff. We will be more than happy to recommend you the most suitable mortgage for your individual financial circumstances.
Each lender has a different playing field when it comes to credit scoring. You may find it easy to pass with some lenders and hard with others. If you fail to approve a credit score, lenders can sometimes be unhelpful and not tell you the exact reason why you failed.
It might be down to a mixture of things, and they can’t find exactly why your application was unsuccessful.
It is the place where your specialist Mortgage Broker in Cardiff offers you a helping hand. If you can obtain a copy of your credit file, come and speak to one of our Mortgage Advisors in Cardiff and they will try their best to match you with a lender that you have a high chance of passing through.
Also, offering a deposit of more than the minimum of 5% will increase the chances of you succeeding a “good” credit score for a mortgage.
If you have a credit card, using it regularly and paying it off every month is a great way to prove that you can keep on top of payments. Registering on the voter’s roll can also really help and is easy to set up.
If you also have any old bank accounts or store cards that are no longer in use, you should get them closed down as this looks better from the lenders’ viewpoint.
If you have failed a lenders’ credit score, don’t worry! There are lots of different lenders out there, all with additional criteria. You should eventually find one that you will fit perfectly.
On the other hand, please don’t apply for too many hard credit checks as the more you do, the worse effect it can have on your file. Lenders can see you are failing over and over, possibly removing all of your chances of passing altogether.
As well as having their unique lending criteria, each lender will also have their way of how working how much you can borrow. It is more than usual to approach ten different lenders and receive ten completely different answers. Some will be lenient, and some will be strict.
For example, if you are Self Employed in Cardiff, the lender may be more generous. You will find that some lenders will assess 100% of an employee’s overtime and bonuses and others may not, it depends on the lender. Others may allow you to pass with “unearned” income such as tax credits, child benefits, and maintenance.
As a trusted Mortgage Broker in Cardiff, we have a large panel of lenders. We can approach any of these for you, without the need for a credit check, to perform an affordability assessment for you.
If so, to get ahead of the game, you could have an affordability assessment carried out before you start searching for properties. Here’s what would show you what sort of financial situation you are in before you begin getting credit checks.
Providing evidence that you have kept on top of your mortgage and rent payments does not guarantee that you will pass a lender’s own affordability test.
Each lender has their own strict lending criteria. Some are better than others, depending on your personal and financial situation. Lenders want to attract good quality borrowers who may not fit their competitor’s criteria. They engage them by carving out niches for themselves.
Here are some reasons why your mortgage application could be denied or has been getting denied for being outside of policy:
If you come to us, your local Mortgage Broker in Cardiff, we can find the best lender for you based on your situation. Even if you think your problem is a little complicated, don’t hesitate to get in touch.
We have dealt with thousands of complex cases, and we can’t wait to help you through yours. With our help at Cardiffmoneyman combined with a perfectly matched lender, you will be able to put down a deposit for a mortgage in no time!
Get in touch with a Mortgage Advisor in Cardiff and receive a free mortgage consultation today.