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Can I Have Two Mortgages in Cardiff?

Second Charge Mortgage Advice in Cardiff

Depending on the situation you happen to be in, a second mortgage may be a possible option for you to look at utilising. There are two different methods this can be achieved.

You may be able to obtain a Second Mortgage for buying an additional home or taking out a Buy to Let, allowing this to run alongside your existing mortgage. Alternatively, you may have the option of a Second Charge, where you take out an additional mortgage amount against the same property, with a different mortgage lender.

Below we’ve put together a guide on where this could be applicable, as well as a helpful video guide where Malcolm talks about the significance of taking out a second mortgage in Cardiff.

Can I Have a Second Mortgage? | MoneymanTV

Why would you take out a second mortgage in Cardiff?

There are various different situations where someone might find themselves needing to have more than one mortgage. Through our experience as mortgage advisors in Cardiff we’ve heard of some fairly common recurrences, with these including, but not limited to;

1) Wanting a second mortgage to raise money for your existing home.
2) Looking to rent out your existing home and purchase a new one.
3) In the market to buy a new property with your name on another mortgage already.
4) Looking to help your children out with a second mortgage.
5) In need of a second mortgage to purchase a buy to let property.

Looking at the latter one, we feel it’s important to let you know that we have a vast wealth of knowledge on Buy to Let mortgages in Cardiff, having worked with many lenders including very specialist ones, all with their own unique lending criteria.

We also have a long history of helping Buy to Let Landlords with their properties. For more information on being a Landlord, please check out our Buy to Let Mortgage Advice in Cardiff page.

Second Mortgage to Raise Money

If you have equity in your home, you could have the option to take out a Second Charge to release this equity and fund the deposit for a potential additional purchase. It can also be just generally used for any purchase, such as a new car, a holiday or something else.

The way a Second Charge works is that if you still have equity sitting in your property, you may be able to take out a mortgage with a second lender, in order to release some of the equity in the property.

Usually, if you are on a lenders Standard Variable Rate, we are able to shop around for you and find a more competitive deal whilst also releasing Capital. A further advance with your existing lender may also be an option available to you.

Second Mortgage to Rent out Existing Home to Purchase a New One

In some cases, homeowners may be looking to keep hold of their existing property, with the intention of renting it out a taking out a second residential mortgage on a new property. This process is known as a Let-to-Buy Mortgage and has become increasingly popular over the last decade.

Second Mortgage to Purchase a Home For Your Children

Sometimes your Children or even Grandchildren may be struggling to find their footing on the property ladder. As such we regularly see homeowners using either a Second Charge to release some equity to gift their loved one either a portion of, or the full amount of deposit.

Second mortgage for a Buy to Let in Cardiff

We find that there are many landlords looking to purchase additional Buy to Let properties to add to their portfolio, by taking out a second mortgage. Our team are able to use our expert knowledge to recommend the most suitable Buy to Let mortgage product based on your personal circumstances. You will be asked to produce a higher deposit for this mortgage than a typical residential mortgage.

Named On an Existing Mortgage and Want to Buy a New Home

If you are currently named on another mortgage and unable to get your name taken off of it, you may still want to try your luck and apply for a mortgage of your own. This is a situation we come across often and have experience helping many different customers with.

Specialist Mortgage Advisor in Cardiff

No matter your situation, if you are looking to get a second mortgage, we may be able to help. As a fast & friendly mortgage broker in Cardiff, our Advisors are able to search thousands of mortgage deals on your behalf, following up with a recommendation on the most suitable product for you based on your personal situation.

For more information get in touch to book your free initial mortgage consultation, and speak with a dedicated mortgage advisor in Cardiff.

Buying as a Sitting Tenant in Cardiff

Mortgage Advice for First-Time Buyers

During the many years we have spent as mortgage advice experts in Cardiff, we have, together with many of our advisors, witnessed a continuous increase in the number of enquiries made by private tenants in relation to becoming First Time Buyers in Cardiff by buying their current home from their Landlord.

As a private tenant in Cardiff, this is possible as long as you have been presented the offer of “first refusal” by your Landlord. First Refusal basically refers to the fact that the Landlord has given the tenant the option of buying the home directly from them, as opposed to going to the open market. In cases where the tenant has not been offered first refusal or is unsure whether or not such an offer has been made, we always recommend reaching out to your Landlord to confirm.

Why are more landlords offering to sell directly to their tenants?

One of the main reasons for this trend is a change in certain government policies. Buy to Let purchases were previously given a certain tax relief by the Government. This tax relief has now been completely removed and as such, many Landlords are faced with paying higher tax bills than they usually do.

As many Landlords will agree, the act of buying and renting out a home serves as a great long-term investment plan. This has been the case for a long time, and many still find it so in spite of the policy change of recent years and have decided to continue (even with the issue of higher tax bills), keeping the brighter future of the property market in mind.

However, for other Landlords, they have decided to sell their previously rented out homes and move on to other ventures, whether as a result of the aforementioned issue, general financial constraints, or other personal reasons.

Whatever their reasons may be, if you find yourself as a tenant of such a landlord, note that you would not exactly be doing them any special favours as there are a number of merits they will enjoy by selling the home directly to you.

They include the following:

Avoidance of Estate Agent Fees

By selling the home to their tenant, the landlord can save some money that would otherwise be spent paying estate agents.

An Easier Process

If the landlord puts the home up for sale on the open market, would-be buyers will have to schedule times for viewing the property, an activity that would prove difficult with a tenant still occupying the property.

 Refurbishment Cost Reduction

Since the landlord will be selling directly to their tenant while they still occupy the property, there will be no need to set some money aside for paying cleaners, making certain repairs (whether major or minor), and repainting if need be. Such activities would be necessary to make the property attractive to the would-be buyer, a stranger, and not for someone who already occupies the property and sees it as it is.

Absence of Rental Void

Putting the home on the open market and asking the tenant to leave (or in cases where the tenant leaves willingly) places the landlord in a position where they are unable to maintain the steady income they usually obtain from payment of rent – rental void. This is because it could take a while to find a willing buyer and complete the sale. Selling to the tenant however means that the tenant will continue paying rent until they are able to finalise the purchase.

On your part as a tenant in such a situation, here are some of the advantages:

Familiarity with The Home

You know the property in and out and understand the necessary improvements, if any, that need to be made.

Freedom To Make Changes

Buying a home you are already used to and love gives you the liberty to make any changes you want – whether as regards interior decorations or the surroundings – without the usual permission and deliberation involved as a tenant.

Possible Discount

Since you would be saving your landlord some money as the property buyer, he or she could offer you a discount from the open market price.

Absence of Property Chain

For other buyers or movers who own property already, the issue of property chain can bring about some discomfort as a buyer could be waiting for the occupant of the property to move out so they could move in, while that occupant is also waiting for someone else to move out of another property. This has hindered the sale of many properties. As a sitting tenant however, you are not burdened by this as you already occupy the property you plan on buying; you only need to meet lender criteria.

Getting Prepared for Your Mortgage in Cardiff

Mortgage Advice in Cardiff

Once you have saved for your deposit and you have enough money for a mortgage, it’s time to get prepared for your mortgage application. There are lots of different things that you will need to provide alongside your mortgage application, so we thought that we would give you a handy list so that you know what you need:

Document Checklist in Cardiff

Up to date credit report

This item should be at the very top of your list; ideally, it would be handy if you can obtain this before you approach your Mortgage Broker in Cardiff. Your credit report will show you how your credit score is looking, which is what lenders will use to determine whether you’ll be accepted for a mortgage.

They are going to look at everything on your credit file, this will allow them to match you up with a lender that will be best suited to you. If your credit score is low you may need to look at a way to improve your credit score, for example, getting yourself on the voter’s roll seems to really help in terms of your credits score.

Proof of ID

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In terms of proving that you are, who you say you are, you will need to provide some in date photographic ID. Most of our customers use a driving license or passport for this part of the process.

However, you can’t use driving licence for ID though if you are also using it for proof of address. If you are a non-UK national working over here on a Visa, you’ll need to produce that too.

Proof of address

Home Icon

In addition to your ID, you’ll have to prove where you live. As mentioned above, you can’t use your driving licence or passport if you are already using them for your proof of ID.

We usually advise people to use a utility bill or an original bank statement dated within the last 3 months.

Last 3 months’ bank statements

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Your bank statements are needed to evidence your income and regular expenditures. When your lender analyses your bank statements, they are going to look for a variety of different things. For example, if a lender notices gambling transactions on your statements, they may not be so happy, it depends how often you gamble. They will also look at whether you stick to your agreed overdraft limit and if your direct debits bounce regularly. They need to be confident that you are going to be able to meet your monthly mortgage payments.

The Bank Statements you need to produce tend to be the ones where your salary goes in and your bills go out.

Evidence of your deposit

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You will need to prove where your deposit has come from and show that you have the correct amount needed. This is all for anti-money laundering purposes; your lender will need to be certain on everything. I always think it’s best not to move monies around your various accounts too much. If you do, it will make evidencing the audit trail more difficult. Lenders also like to see that you’ve saved up for the deposit, so be careful on transferring large sums of money close to your application.

It’s not unusual for a portion of or the whole of the deposit to be covered by a gifted deposit from a family member or friend. These funds will also need to be evidenced and the person who has gifted you the deposit will need to sign a letter to confirm that it was a gift and not a loan.

Proof of income

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In terms of affordability, the most important thing that you will need to evidence is your income. If you are employed this tends to be through your last 3 months’ payslips and some may even want your most recent P60. Lenders can consider regular overtime, commission, shift allowance and bonus. If you are lucky, your lender may accept earnings from more than one employer. This situation comes around when the applicant has a part-time job or is Self Employed.

Many of our customers in Cardiff are Self Employed. If this is you, then you’ll need your Accountants’ help to request your last 2 or 3 years’ proof of earnings from the Revenue. If you submit your own Accounts’ please contact us and we will advise you what to download from the Government Gateway.

Budget planner

As an experienced Mortgage Broker in Cardiff, we always advise that you do your homework and write down an estimate of your anticipated outgoings after you move to a new house. You can then work out a rough idea of how much your council tax and utility bills will be plus your regular expenditures such as food and drink. You will then be able to demonstrate how much disposable income you have available to pay your mortgage from.

Before we carry out an appointment with you we can send you our version of a Budget Planner to help you with this.

As you can see from the above, preparing for a mortgage isn’t easy. Think of it like the “Tortoise and the Hare” – if you want your application to run like clockwork, you’ll need to put the time aside to get everything together. You’ll get there much quicker if you put in the work at the outset!

Agreement in Principle and Soft Credit Searches

Mortgage Advice in Cardiff

What is an Agreement in Principle? | MoneymanTV

Once you pass your lenders credit score and have qualified for a mortgage, you will receive an agreement in principle or more commonly known as an AIP. With an AIP in place, you are able to make an offer on a property. They will also come in handy for asking price negotiations, as the seller now knows that you are serious and ready to start the home buying process.

How does your AIP affect your credit score?

There are two main ways that a lender will access your credit score, the type they choose is entirely up to them. They will factor in lots of different things, this includes reliability, your deposit size, etc.

The two ways a lender can assess credit score are through a soft credit search and a hard credit search.

Soft credit search

Soft credit searches are a lot more common these days, they are much easier for lenders to carry out. They are easier to carry out because they need less information out of it. If lenders perform a soft credit search on your file, it also won’t damage your score, it will leave it unaffected.

Whilst your financial institution will gain less information about you by choosing a soft credit search over a hard credit search, an agreement in principle from one of these lenders is usually still an extremely strong signal that your full application will be accepted.

Hard credit search

Hard credit searches go much more in-depth than soft credit searches. The main difference between the two is that hard credit searches can affect your credit score. Anyone who looks at your file in the future will be able to see that you had a hard credit search performed on you.

This won’t really affect you if your credit score is high. If your score is lower and you have more than one hard search on your file, it could look like you are trying to apply for lots of credit at the same time.

Does an AIP guarantee a mortgage a Cardiff

You will never be guaranteed a mortgage, however, securing an AIP will definitely help. Once you have provided your lender with all of your documents, an underwriter will make a final decision. An AIP usually includes a small print that can easily be missed. When customers reach out for help about their agreement in principle, in some cases we find they’ve been turned away at full mortgage application stage.

The documents required include ID, payslips, bank statements, etc. As your expert Mortgage Broker in Cardiff, we take pride in helping you get all of this ready.

Is my AIP a necessity when making an offer?

If you are lucky you can just about get away with it, however, most estate agents will want you to provide evidence that you are able to proceed with the purchase.

How long will my AIP last for?

Normally, your AIP will need renewing after around 30-90 days. As a Mortgage Broker in Cardiff, we strongly recommend that you get one in place as soon as possible. You don’t want a situation where you have found your dream home but can’t actually apply for it because you don’t have an agreement in principle in place.

If it’s starting to expire, don’t rush a purchase as you can renew your AIP very easily. So don’t buy a house for the sake of it, make sure it right first.

Did you know that we can usually turn around an agreement in principle for you within 24 hours of your mortgage application! This is incredibly useful if you are a First Time Buyer who has found their dream first home and want to put down your deposit straight away. Even if you are Moving Home in Cardiff, having an AIP within 24 hours could prove extremely beneficial.

On top of this, we also offer a free mortgage consultation, so don’t hesitate to get in touch today to claim this offer. We can’t wait for you to get in touch with your expert Mortgage Advisor in Cardiff.

How Much Deposit Do I Need To Buy A House in Cardiff?

Mortgage Advice in Cardiff

How much deposit you need to buy a property depends on your personal situation and what it is exactly what you are looking to do. Here we take a look at how much you might need based on your own circumstances.

Why do I need a deposit anyway?

In previous years, 100% mortgages were readily available and before they were taken away, Northern Rock was offering 125% loan to value mortgages. What this meant is that if you were buying a property valued at £100,000 they would lend you up to £125,000.

Lenders require you to put down a deposit simply to reduce their risk of lending. If they lend you 100% of the purchase price then you happen to accrue any debts leading to property repossession, then they could be at a financial loss, especially if the house prices dip and they can’t make their money back.

You will also find that some say if you haven’t invested some of yours or your family’s money into your home, then you might find it a bit too easy to “walk away” should the going get tough and you were finding it difficult to meet your monthly payments. If you are not in a position to save up at least 5% of the purchase price yourself, then it could be argued that you’re not quite ready to take that first step onto the property ladder.

Won’t the government pay the deposit for me?

Unfortunately no, but if you are able to find 5% of your own resources then you could qualify for the government’s Help to Buy equity loan scheme. This applies to new properties only. You put in 5% and the Government loans you up to 20% to make up a 25% deposit. After 5 years you need to start looking at paying the equity loan back possibly by way of a remortgage or from any kind of savings you have been able to make in the meantime.

Is a 5% deposit enough?

At the moment, yes 5% is enough in many circumstances. Not all Lenders will accept only a 5% deposit though so your options are more limited and normally you will need a reasonable credit score to qualify. There are lenders out there that would consider you for a 95% mortgage with an average credit score but the interest rates are usually higher in those cases.

My credit history is poor – how much do I need to put down?

A majority of the specialist lenders want you to put down at least 15% deposit if you have a history of poor credit once again as above this is simply to reduce their risk in case a repossession becomes necessary. It is much more difficult to obtain this type of mortgage than it was in the mid-2000s but it’s not completely impossible to find one.

What about Buy to Let?

You’ve always needed to put down a much larger deposit for Buy to Let Mortgages and most lenders at the moment are looking for at least 25%.

Can I take out a loan for the deposit?

This could be possible but the vast majority of lenders won’t allow this as it would more or less still be 100% lending.

Can someone gift me a deposit?

Yes, this happens all the time. Usually, it’s “bank of Mum and Dad” gifting or other family members but lenders have been known to accept family friends for gifting the money, so long as they can evidence the funds, prove who they are and confirm they are not expecting repayment of the gift as some kind of loan.

Are there any circumstances where I don’t need a deposit?

If you are buying as a sitting tenant at a discount from the open market value, from a family member or if you qualify for a discount under the Right to Buy scheme then generally speaking you wouldn’t need to put any of your own money in as the equity is already “built-in” to the deal.

Please remember that the above information is for reference purposes only and is not to be viewed as personal financial or mortgage advice.

How to Improve Your Credit Score in Cardiff

The importance of credit score

Ways to improve your credit score | moneymanTV

First Time Buyers or any applicants with high credit scores are more likely to get accepted for a mortgage over applicants with a lower credit score. Lenders study your application carefully in order to ensure that you are able to afford a mortgage with them. You will never be guaranteed a mortgage and this is because every lender has different lending criteria and the chances of you matching every single one of these is unlikely.

Each lender has developed their own way of identifying whether you match their criteria or not. It is your Mortgage Advisors’ job to try and find you a lender who has the most criteria you match up to. They will also try to find the best deal for your personal circumstances. Whether your advisor is from your bank, the mortgage lender or a Mortgage Broker in Cardiff, your advisor will try their best to match your personal circumstances.

By going with a Mortgage Advisor in Cardiff, you will always know what is going on and will always be updated if anything changes or something comes up. We are a dedicated mortgage broker, here to help improve your credit score and help secure that perfect mortgage deal. Whether you are a First Time BuyerMoving Home or Self Employed, we think that you would benefit from fantastic Mortgage Advice in Cardiff.

Credit Score Mortgage Advisor in Cardiff

There are many different credit reference agencies in Cardiff that you can go to, with the most popular are Experian and Equifax. Before you make a decision, research each agency as it is a possibility that some of them could be holding incorrect data and discovering any discrepancies will be very beneficial to you.

Improving your credit score can be difficult but there are ways you can do this effectively in a manner that allows you to reap the rewards down the line.

Avoid unnecessary credit searches:

Making multiple credit searches could actually have a adverse impact on your credit score. Price comparison websites are risky as they can also damage your score, so be extra careful. We also advise you to not apply for credit during the mortgage process as this may signify to the lender that you are struggling financially, even if you are not. It is a good thing in the long term though as it shows that you are reliable in making recurring payments.

Check that you are on the voters roll:

Another simple but useful tip for improving your credit score is by registering for the Electoral Roll. In the eyes of the lender, it shows stability which they will favour. When registering, you must spell your name correctly and set your address to your current one and not a previous one. If you are not registered then you definitely should do this asap, as it’s quick and easy to set up and it could have a really positive impact on your credit score. Make sure everything is correct though to maximise the benefits!

Don’t run close to your maximum limit:

Maxing out your card each month is not recommended and is bound to reduce your credit score. The lender looks at your credit card statements to check whether or not you have paid off balances by the due date. If you are meeting due dates and have never exceeded overdraft limits then a lender will see that you are more than capable of handling your finances well and it could prove beneficial towards your mortgage application.

On the flip side, if you don’t manage your finances carefully then the lender will believe that you don’t take payments seriously, thus reducing your chances of being accepted by them for any amount.

Check your address history is keyed correctly:

We often find that people who have moved house have not told their previous credit provider, which means that on their records you still are shown as living in the other property. Make sure you are on top of this as lenders don’t like to see your address history all mixed up and shown as living in two different places when you are not.

Remove financial links to others:

Some people, without even realising, have a family member or ex-partner connected to their financial commitments. It’s worth checking just to be sure, as you can’t get the financial association removed if the account is still live. If you are trying to remove any of these links then you should contact the credit reference agencies and make a request with them directly.

Applicants see credit scoring as being an unfair approach to accessing whether or not they can obtain a mortgage. Lenders disagree as this method provides a faster, fresher approach to their system of credit scoring. It’s also a lot cheaper for the mortgage lender and it provides always provides a result that they deem trustworthy.

If you want to get ahead of the game, you should send an up-to-date copy of your credit report in advance to your Mortgage Advisor in Cardiff. Starting early will increase your chances of being accepted for a mortgage the first time. The more that your advisor knows about your financial situation the better your chances will be.

Also, there are still some lenders that will want to do the process the old-fashioned way and will prefer a manual approach. They will have certain rules that they stick by about the number of defaults and CCJs that they will allow.

How Much Can I Borrow For a Mortgage in Cardiff?

One of the most popular questions we get asked here at Cardiffmoneyman is “How much can I borrow for a mortgage?”. In this post, we will go into the details of affordability assessments and how they apply post-2014. 

Whether you’re a first time buyer, moving home in Cardiff or looking to delve into buy to let mortgages, we hope that this article can help!

Historic Rules

Back in the day, before the era of credit scoring, mortgages were assessed manually by your local Building Society Manager. Lenders moved towards more uniform income assessments to bring forward a more consistent approach in the 1990s. 

Maximum lending “caps” were introduced to prevent budding homeowners from borrowing more than 3-4 times their income.

Around the time of the early noughties Credit Crunch, these income multipliers started to become more “generous”. Shockingly, lenders would allow some customers to self-certify, without the need for background checks!

As you can imagine, that went very wrong. Post-financial crisis, everything became stricter, with far more rules being put in place to try and protect the market from future disrepair. This made getting a mortgage significantly more difficult for some.

Mortgage Market Review 2014

In 2014, the mortgage market had managed to recover, and we were introduced to the Mortgage Market Review 2014. This was a new set of guidelines for Lenders to follow in order for things to go smoothly. The old income multiplier method was no more, and we saw the emergence of more sophisticated affordability calculators. 

With these new calculators, it became possible to delve deeper into how the applicant was spending their money and what their net disposable income would be. Advisors were looking at bank statements more closely to make sure the customer could only get a mortgage they were able to afford. One of the many factors included regular large expenses such as childcare.

Variances in Lenders

Lenders can get quite competitive with one another, on the likes of price and lending criteria. Because of this you will find that things like the maximum borrowing capacity can completely differ between lenders. You may fit into a different niche depending on the lender, so if you are unsuccessful with one it does not mean your journey is over.

Some Lenders will take into account state benefits such as tax credits for a mortgage. Others are more generous if you are self-employed and looking for a mortgage. Taking out the longest mortgage available also opens you up to a larger amount you can borrow.

As time went by throughout the noughties, Lenders were a lot more lenient with how much they would lend. Some would offer self-certified mortgages without bothering to do a background check to see if they were being honest! Yet they wondered why it went wrong… Predictably so, the market crashed and the time between 2008 and 2010 were very difficult indeed, making it harder to get on the property ladder.

Modern Day Mortgage Approach 

When the market eventually recovered in 2014, we saw the regulator launch the Mortgage Market Review (MMR). There is still a “cap” on how much can be borrowed (the majority of lenders prefer to stay below 4.75 times your annual income) but spending habits now become a factor in the process. Examples of these include high childcare costs, credit commitments and student loans. If you have any of these, you could be offered a lot less than someone earning the same amount who does not need to worry about those things.

We are still regularly surprised by what some lenders will and will not accept. In some cases, lenders may penalise low-earners (it could be that they’re not the type of applicant they want), some take pension contributions as a fixed outgoing so if you were, for example, a public sector worker with a big pension deduction that is less than a private sector and so on. 
 
Different people are often better suited for different things. If you need to maximise your borrowing capacity to secure your dream home, then you will definitely need the support of a Mortgage Broker in Cardiff. We will be able to work alongside you, seeing which lenders will be able to lend you the amount you were hoping to borrow.
 
It is important to sit down with an advisor prior to making any kind of offer, so you can figure out what is within the realms of affordability.

Cardiffmoneyman.com & Cardiffmoneyman are trading styles of UK Moneyman Limited, which is authorised and regulated by the Financial Conduct Authority.
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