In January this year, Government fire safety guidance on external walls of apartment blocks, which used to only apply to blocks taller than 60ft, was extended to buildings of all heights with any cladding.The new safety advice was issued in response to the Grenfell Tower fire in 2017 but does not only apply to buildings with the type of cladding that caused the Grenfell fire.
Why is this a problem for homeowners?
The new requirement of an EWS1 form not only demonstrates that a building is safe but was brought in to give lenders more confidence in providing mortgages on multi-storey buildings following the Grenfell Tower fire.
However, there is a huge backlog in getting the forms due to the volume of properties which now fall under this requirement (an additional 2.7 million) and the very limited number of chartered fire engineers who can carry out the inspections.
This means that property sales are collapsing because to follow official guidance, many lenders are requesting an EWS1 form to show the building is safe. Without the form, buyers are unable to get a mortgage which means sellers are left trapped and unable to move.
We have been working with vendors who are unable to wait for the building inspections to be carried out due to a change in circumstances, such as a new job or growing family, and therefore need to sell quickly. We buy the property from them, with transactions completing in a matter of weeks or a timeframe to suit their requirements, and then we will pursue the building safety sign-off.
Whose responsibility is it?
To get these guarantees of safety, flat owners usually have to apply to the freeholders of the building. The freeholders then have to find a company to take samples of cladding from the external wall and have them sent away for testing.
However, freeholders are not obliged to get the building signed off if the building’s cladding is classified as low-risk. The problem for vendors is that some banks are so nervous that these flats could be declared unsafe in future, that they are requesting the EWS1 forms regardless.
WARNING: We have also read reports by Which? that leaseholders are being duped into paying thousands of pounds to fraudsters who are providing fake EWS1 inspection forms.
We have spoken to some flat owners who are unable to sell, even though the cladding material on their building is not combustible, as the freeholder will not pay for it to be tested. The issue can also affect those flat owners who are simply looking to re-mortgage. Even more worrying, is that some homeowners are being told it could take years for their building to be declared safe.
This is a situation that WeBuyProperty is monitoring very closely and will update our readers should we be informed of any updates. In the meantime, if you are in this situation and wish to discuss options for selling your property without the EWS1, call us on 0207 449 9797.
Due to the new eviction ban that has now been extended, millions of people have been affected. Currently, there are eight million renters in the UK, of whom 4.5 million have private landlords, while the remainder rent from social landlords such as councils and housing associations. Thousands of landlords have now become trapped, but there is a way out.
Webuyproperty will still buy your property with your current tenants and will save you the hassle that most Landlords are now facing. Learn more about how we can help.
What Challenges Do Landlords Now Face With The Eviction Ban Being Extended?
Due to the ministers extending the current ban on eviction until March 2021 it leaves a lot of landlords now in a very difficult position. Courts were due to resume cases on Monday after a long pause of 5 months due to the Covid 19 outbreak. Landlords will have to provide six months notice if they plan to evict their current tenants. These actions by the government have left Landlords angered and frustrated. Before the country faced a world wide pandemic the given notice from a Landlord to a tenant on eviction was two months. “according to independent research, 87% of tenants have continued to pay full rent since the start of the pandemic, with a further 8% agreeing reduced fees with their landlords.”
A survey which has been carried out by a homelessness charity shelter recently showed that thousands of private tenants had been threatened with eviction by their landlord or letting agents and thousands of them in England have fallen into arrears since the pandemic.
The extended ban comes as the government did not want the ban lifted until they could provide a plan to prevent people losing their homes due to Covid 19.
What Rights Do Landlords Now Have?
Landlords have been left with little to no power after the unacceptable plot twist from the government. They have no legal rights to deal difficult tenants that are not related or impacted by the results of Covid 19.
Landlords have now no way to evict tenants that are abusive, disruptive or cause problems to the remaining household tenants or neighbours. Landlords face months of unpaid rent and court cases in the coming future due to the extended eviction. This means landlords will be at a loss.
We here at Webuyproperty want to bring it to the attention of Landlords that we will buy your property with or without tenants. We are a company that are here to help.
Please visit our website https://webuyproperty.com to send us a no obligation cash offer within 24hours.
If you found this article helpful, please forward this email to someone who would find it useful.
Selling your home can be something tempting to try alone. Maybe you don’t want to hire a real estate agent as you need to save money and keep costs down. However you do need to be careful and use a reputable agent or service even if they are online.
Some internet agents simply list your property online — leaving you to do all the work, from taking photographs, to conducting the viewings and handling negotiations. If you’re in a hurry to sell your property or need to liquidate fast then obviously this doesn’t help much.
The truth is that there are several factors involved when it comes to selling your residential properties. And if selling them by yourself, you might unknowingly ignore important issues. Depending on your level of experience in the real estate industry, you might lack the right knowledge of how things actually work and the best way to approach them.
Have you ever thought of selling your properties directly to an online buying service? You could end up saving a lot of time and avoid a many of the headaches involved with an online listing agent or traditional agency.
At We Buy Property, we’ll reveal the most important things to consider when deciding to sell your property online and why you should sell your home to a buying service like us. Let’s get started:
Location
Regardless of your current location, an online buying service can help you. You don’t have to rely on a local market purchaser or agent to be in your area, in order to make the sale.
Using a reputable and reliable online buying service that purchases property nationally can be a huge advantage, as they can buy your home directly from you no matter where your based.
With online listings platforms and agents, you still have to wait for someone to show interest in your property listing for that area before they contact you. With an online buying service you can get a valuation and quote to purchase your property within 24 hours.
You’re Already Busy
Selling a residential property is sometimes a full-time job. It isn’t as simple as you may think. Things to consider are the time spent in fielding calls from prospective buyers. Or the time spent to source the platforms where you’ll have to advertise the property. There are also dozens of other essential tasks before you will be able to finalise the sale with a prospective buyer.
You are already busy with your life and your job, so why not eliminate all these extra tasks and just use and online buying service.
At We Buy Property, we can help ease the process and take care of all the details. We aren’t too busy to handle the solicitor fees, valuations and legal checks to help get you a final offer. We Buy Property offers the best possible price for your home without the worry of viewings, chains and long timelines. No need to worry about your position or the condition of the property as we purchase it for cash.
Incredibly, we always work around the clock to ensure that a large percentage of our clients actually turn into qualified sellers and help them complete a successful transaction with us. If you are already finding yourself busy with activities revolving around your job and personal life, you definitely need an online buying service like We Buy Property to purchase your home.
Understanding Contracts
Contracts can be complex and cost you time and money – when dealing with an online agent make sure you know what you’re signing and remember that they want your business, so challenge anything you don’t like and never pay more than you need to.
No sale, no fee
Some online estate agents will ask you to pay upfront, but some do offer a ‘no sale, no fee’ guarantee – which means you won’t have to pay if the sale falls through. But check the small print first.
Tie-in periods
Lots of estate agents, even the big high street brands, include a tie in period. But if you end up not getting on with them or become unhappy with their service you will want to terminate the contract. Make sure your contract gives you the flexibility to terminate without incurring a penalty, and go elsewhere if you’re unhappy with your agent.
At We Buy Property, we know everything that comes with contracts and closing and can simplify the whole process, and remove the stress. We are professionals. We know what is meant to be disclosed and are completely transparent and ethical in our whole process with you.
Selling a property involves signing paperwork. We know the nitty-gritty of contracts and closing and can help keep things smooth and straightforward. Having us to help you navigate through the closing contract signing situation is a significant step towards the successful sale of your home.
Deal With Us Now!
We are We Buy Property! We Offer Quick Property Sales. No Fees. No-Fuss!
Based in London, our team has worked in the property industry for over 50 years. We are proud to offer clients a bespoke service. Whatever the circumstances, our experienced staff will guide you from start to finish, supporting you all the way. Sell your house in days, not months.
We are a cash-rich principle buyer who actively seeks motivated sellers that can transact and complete in a matter of days. Our house buying service caters for all types of clientele and is designed to remove the hassle and stress associated with managing a property.
We can guarantee a quick sale that can be completed in a matter of days instead of weeks. If you think this might be of interest to you, visit our website and enter your postcode for a free no-obligation cash offer.
Selling a property can seem like a daunting task, considering it can be one of the most expensive decisions you might have to make.
There a many things you will need to take into to consideration, such as agent fees, auction fees, mortgage fees and many more things that can quickly add up. Selling your home isn’t as simple as just agreeing on a price and pocketing the final amount offered.
However, if you do your research, have the right information and understand the costs involved it doesn’t have to be so stressful. Planning ahead will help you to prepare and budget for your sale accordingly.
In this article, we’ll take you through the significant financial outlays you can expect to incur when it comes to selling your property. Besides this we’ll also provide a few tips and ideas on how you can reduce your costs.
Estate Agency Fees
When it comes to selling a residential property, the estate agency fee tends to be the biggest cost incurred by a home seller. Typically, estate agents in high street areas charge between 1% and 3% commission, including the VAT on the home sale price.
Here in the UK, reports reveal that the average sales price of a house is around £219,000. Estate agents typically charge around 2% on a home price which is around £4,380 and above in costs. If your home is worth more or your home sale price is higher you might find an increase in the commission fee charged by your agent.
When it comes to selling a home you would usually use a traditional high street estate agent. Although many online estate agents now offer dedicated local agents, the ability to just walk into a high street office is reassuring to many.
High street estate agents will often have greater overheads than their online counterparts. This includes rent for their storefront, business rates, staff, etc. These extra costs mean that you end up paying more for their services, in some cases a lot more. The usual commission for a high street estate agent can vary between 0.75% – 3% of the final selling price (often + VAT).
They’ll also be in charge of getting your property listed on their home sales portal and help arrange and host the inspections on your behalf.
Online estate agents offer their services similar to you doing it yourself, with you listing your home for sale on their website. This typically requires that you make an upfront payment for a specific package which includes a listing of the property on the site. However you’ll be organising the viewings and inspection of the property. Apart from that, some do offer advanced services similar to that of traditional estate agents to help with the management and other tasks involved in arranging viewings.
When using an online service make sure you do your research, take your time to find the best service that matches your needs. As a good alternative, when using WeBuyProperty.com you have no agents to deal with, no boards, no viewings, simply a quick cash offer within 24 hours, typically at 90% of the market value.
Removal Costs
So now your aware of the agent’s fees, you still have to take into account the removal costs. Your removal cost depends on the amount of furniture and other items inside the property that you’ll have to remove. You should factor this into your budget before listing your home for sale. Of course, moving fewer possessions will significantly help reduce your removal costs. If your able to plan well ahead you can start clearing the property in small stages. Get family and friends to help or rent a van which can be done by yourself.
Above all, if using a removal firm you should ensure that you get your quote in advance and don’t leave things till the last minute.
Legal Fees
The buyer covers the costs relating to search, survey, and stamp duty. However, the services of a solicitor or licensed conveyancer cannot be left out when it comes to selling your house. Their primary role is to act on your behalf, and they handle all the legal documents related to selling a property. Apart from that, they help clarify what’s included and what’s not included in the home sale agreement.
Depending on the complexity of the sales, local, and size of the property, the pricing of hiring a solicitor ranges between £500 and £1,500. However, there are parts of the transaction you can go without, but that always comes with a risk. If you want to get the specific price of hiring a solicitor, you should consider comparing quotes or probably use a comparison website to get the best deal.
Energy Performance Certificate (EPC) Costs
Usually, an EPC is a legal requirement when selling a property, and it lasts for about 10 years. So, make sure you check the validity of your current one. If necessary, you can arrange for a new certificate. The cost of an energy performance certificate usually varies between £60 and £120.
An EPC basically provides information about the energy efficiency of the home. It’s a certificate that provides home buyers with insights regarding the possible energy bills and the areas that need improvements.
The cost doesn’t end here. Other things you may need to consider can include, mortgage costs, capital gains tax, property tax, and more.
Need to Sell a Home in the United Kingdom? Partner With Us Now at We Buy Property!
It’s a big decision to sell your home and putting your trust in a company to handle your biggest asset can seem like the hardest choice you will have to make.
At We Buy Property, we have over 50 years of experience in the industry. We are a reputable and reliable home purchase company that provides homeowners with excellent insight and guidance throughout the home sale process.
We Buy Property provides a fast, cash guaranteed sale. Ultimately, giving our customers and clients a quick and easy alternative to selling their houses on the open market. Partner With Us Now: WeBuyProperty.com
It’s one thing to have your home clean and tidy when people come to view it, but can you really affect how much potential buyers will offer? The very simple answer is yes, absolutely.
Following the latest advice from the Government, estate agents are back up and running as of today (Wednesday) so there is no better time to start preparing your home for sale.
We Buy Property’s simple guide with expert property developer Tommy Hughes will give you the lowdown on how common seller mistakes could knock thousands off your property’s value and how to turn viewings into offers at asking price or more…
Kerb appeal
Think of your home’s exterior as the face of your sale. What might a viewer’s first impression be? You can help your house sale along no matter the season by taking these simple steps:
*Jet-wash your patios and driveways. If you don’t have one of your own, borrow from a friend or rent one for as little as £22 a day
*Ditch rubbish or broken garden furniture and invest in a cheap and cheerful new set. You want your buyer to picture themselves sitting there on a summer evening with a cold drink in hand
*Tidy the garden borders and plant a few new shrubs. A bit of colour in the garden goes a long way
*Clean your doors and windows
If you have a budget for landscaping, go for it. Whatever you spend on a professional garden makeover will add double the value. If you spend £10,000, the value of your property is likely to go up by £20,000.
Rip out old bathrooms
You want a potential buyer to come in, take a look and think: ‘Great, nothing to do here.’ If your bathrooms (or kitchen for that matter) are dated, they will devalue your property by thousands. But don’t fret! You can pick up a simple updated bathroom suite for as little as a few hundred pounds from online suppliers. Fitting costs will be extra, and kitchens will cost more, but expect your return on investment to triple. It’s well worth the spend.
Get energy-efficient
At a time when energy prices do nothing but soar year on year, it’s important for any buyer to know how good their new home will be at keeping the heat in. It’s a legal requirement for all UK property listings to come with an up-to-date EPC energy rating to let buyers know how energy efficient your home is.
Solar panels are great for this, but they’re pricey to install and upgrade, and surveys have buyers can be put off by their aesthetics. However, there are many other things you can do to improve your property’s rating.
Old boilers, single glazed windows and poor insulation in the walls and roof will make buyers start knocking numbers off their offer – 5k to add double glazing, 5k to insulate roof and 3k to update the boiler – not to mention how undesirable the disruption will be.
If the buyer is debating between your house and the one up the road with a similar spec, the energy rating could make or break your sale, especially in a delicate market as finicky as ours. Buyers have had a lot to contend with – Brexit, the Boris Bounce and now Covid-19. Don’t give them any more reason to worry. Spent the money to upgrade, knowing it won’t be wasted – a good energy rating can boost your property’s value by 14 per cent.
Keep it neutral
We all love to put our own stamp on things, and nothing is more personal than how we decorate our home. But take a look around. Do you have loud wallpaper patterns, bright or dark colours on the walls? No doubt they’d redecorate over time. But OVER TIME. Whilst some buyers hanker after a doer-upper, many will want to simple move in without doing any work. Get rid of feature walls, opting instead for neutral tones and colours throughout the house. It’ll only cost you a few hundred at most to give the walls a new lick of paint, but it will be exponentially beneficial in securing offers.
Watch out for Japanese Knotweed
This invasive plant is fast-growing and shockingly strong. It can push through concrete, meaning it can cause structural damage to your property that can devalue your property by 100 per cent. Some mortgage lenders will refuse finance on a property with Japanese Knotweed in the garden, or even in neighbouring gardens.
Call in a specialist to remove it as soon as possible. It can be pricey (around £2000-5000) and slow to get rid of – taking anywhere from 8-12 months of monitoring to ensure it doesn’t come back.
Neighbours are not legally obliged to remove it from theirs, but they can be prosecuted for allowing it to spread.
Planning permission and building regulations
Have the correct planning permission for any building work you’ve carried out for extensions and loft conversions. If problems are uncovered in the legal work, you may be able to purchase an indemnity policy for your buyer, but at worst you may be forced to pull down the building work.
Seller beware!
Local crime
High rates of crime locally can impact property prices, but you can invest in good security measures like window and door locks, alarm systems and security lights front and back to help mitigate this risk for buyers.
Good school premiums
According to a recent survey by Rightmove, parents in England are prepared to pay an 18 per cent premium to buy a home in the catchment area of an Ofsted-rated outstanding school. You can’t do anything about the location of your house or the schools around it, but it’s good to be aware of it, so do your homework.
Nuisance neighbours
If you’ve been unlucky enough to have one, you’ll know how hard it is living next door to a nasty neighbour. There are measures in place so you can report noise or air pollution to the council, but your solicitor will be obliged to disclose official disputes with neighbours during the sale process. If you can, always try to reach an informal and amicable solution before reporting your neighbour.
For months, Brexit and the wobbly state of British politics hit the property market hard. Should we sell? Should we wait? Those were the questions on every seller’s lips.
The market was slow for most of 2019 as the uncertainty took its toll, with house prices increasing just 0.3 per cent in the last month of the year.
But following the General Election in December, and then Brexit finally happening – whether we liked it or not – things were on the up with stability in the economy at long last.
The number of house sales rose by more than 12% in January 2020, there was a spike in mortgage approvals, as well as an increase of buyer demand in the property market.
Unprecedented times
Then, as news of a novel and deadly coronavirus began to spread, the World Health Organisation declared a global pandemic.
Boris Johnson announced the UK lockdown on 23rd March, grinding the UK economy to a halt.
With strict social isolation measures and a nationwide lockdown in place, entire buying chains froze, throwing the property market into a position never before seen. Mortgage offers expired, wreaking havoc on chains all over the country.
Landlords were issued with warnings they were not allowed to evict tenants even if they failed to pay their rent.
Mortgage holders were able to access payment holidays to ease the financial strain, but many lenders put new lending temporarily on hold.
Of course, staff were furloughed, many made redundant and the millions of self-employed saw their income disappear overnight, creating financial crisis for hundreds of thousands.
People were also advised not to move home, with removal firms ceasing most activity, too.
Moving past the peak
Deaths from Covid-19 increased almost daily, hitting a peak of 1172 in late April.
But now, as the daily Covid-19 infection and death rates begin to slowly – and thankfully – trend down, the Prime Ministers and his team are devising a plan of action to ease the UK out of lockdown.
So, what does this all mean for the property market moving forward?
Data released for the first financial quarter is based on sales finalised before the lockdown began, therefore not giving us an accurate picture of the current state of the property market.
New figures that will be released later this month, or in early June, will give us a better snapshot of the property market during Covid-19 but until we know when the lockdown will end, uncertainty will hang over the property market like a black cloud.
Whatever the statistics, getting your home on the market is going to be more challenging than usual.
Practical problems
Due to continuing social distancing rules, estate agents won’t be able to come to your home for a valuation or to take marketing pictures of your property for the foreseeable future.
If your property was listed before this nightmare began, you won’t have had any viewers for many weeks for the same reason. Most people won’t risk buying a property without seeing photos or being able to visit.
Knight Frank forecasts that UK prices will fall by 3% this year, then bounce back by 5% in 2021, in line with its predictions the country’s economy will shrink as a whole due to the impact of the pandemic.
Practical solutions
There is good news, though.
Our team at webuyproperty.com does not require a visit your property to complete our valuation. We have cash in the bank to buy your property outright, right now, meaning uncertainty in the economy doesn’t impact our ability to buy properties.
We’ll complete in a time frame to suit you too, meaning completion is possible in as little as two weeks, or as long as you need to get your next property lined up. We can even buy your property and rent it back to you until you’re able and ready to move out, giving you the upper hand as a cash buyer when the market gets moving again.
It sounds too good to be true but trust us – it’s not. You can read the details of our ethical and straightforward work here.
For more information, please get in touch with our experienced team who are on hand to talk you through your options. Like many companies, we’re working remotely to protect our staff, so drop us a line on info@webuyproperty.com and we’ll get back to you ASAP.
The death of a loved one is ranked the most stressful life event. Dealing with grief takes a huge toll emotionally and physically. But what happens when you combine that grief with the stresses of inheriting a property?
And what does it actually involve? The formal process won’t happen overnight, which in a state of bereavement, might feel like a blessing or a curse. But the drawn-out proceedings are in place for good reason…
The legal bit
If the property has a mortgage, you’ll need to contact the lender to inform them the mortgage holder has passed away as soon as you can.
If you’re the executor of your loved one’s will, this will be straight forward. If no will was left, the court must appoint one. You can apply for a grant of representation, which confirms your legal status and ability to deal with your loved one’s estate (a person’s property, savings, investments and belongings).
Probate – a legal process in the courts to deal with a loved one’s estate – can take up to a year whilst the will is verified, assets are sorted, debts cleared, taxes paid and beneficiaries (a person named to inherit in a will) are given their share of the rest, which might include a property.
The Government has warned that the Covid-19 pandemic may cause further delays in court proceedings, including probate. But you can start the process yourself now, or pay a solicitor or specialist to do it on your behalf.
Mortgages
Lenders usually allow a grace period and monthly payments on your loved one’s mortgage are typically frozen (usually the duration of probate). Be mindful that interest may still accrue in that time, so it’s worth checking what the exact details are, and what the lender expects from you now, and when probate is finalised.
Once the executor has settled any debts, taxes and legal fees are paid, probate will be complete, and the property will become yours with a notification to the Land Registry.
If there is still a mortgage on the house you’ve inherited, there are a few ways you can settle it.
· Use the life insurance policy of the deceased
· Sell their valuable items (e.g. jewellery, artwork, furnishings)
· Use your own savings
· Re-finance the property
· Rent it to a tenant
· Sell it on the open market
· Or, sell it quickly to a specialist company like ours
We buy properties in cash and can complete a sale in as little as two weeks – our average offer is 80 per cent of the current market value of the house. We’ll even cover your legal costs if you use our solicitors.
You can learn exactly how easily you can complete a property sale with us with confidence and ease here.
Taxes
The amount of inheritance tax that will need to be paid during probate depends on the value of the estate. Anything under £325,000 and nothing will be due. Anything above is liable to 40 per cent tax.
e.g. if the value of the estate is £400,000, tax at a rate of 40 per cent will be due on £75,000.
That threshold increases to £500,000 if a home was gifted to the deceased’s children or grandchildren. This can include step, adopted or foster children.
Capital gains tax
If you sell the property you inherit as a beneficiary of a will, and that house increases in value between the time you inherit and sell, capital gains tax will be due on the profit.
Everyone has an annual tax-free capital gains threshold of £12,000.
If the profit (capital gains) is above £12,000, and you pay the basic rate of tax on your usual income, your capital gains tax will be 18 per cent.
If you are a higher or additional rate taxpayer, the rate of tax rises to 28%.
But, if you decide to move into the property and it becomes your main residence, no capital gains tax will be due when you sell it.
Income tax
This is only due if you start earning money on an inherited property, for instance, if you rent it to tenants. For more information, visit gov.uk and search ‘death and bereavement.’
Dealing with probate issues can be a stressful process, but we’re here to answer any questions you have about selling a property to us for cash. Contact us on 0207 4499797 or info@webuyproperty.com
To buy a home, you either need cash to buy it outright, or a mortgage from your bank or lender to help cover the cost.
In order to assess if you’re eligible for a mortgage, the lender will consider a number of factors including how much you want to borrow, your income, how much deposit you have, and over how long a term (years) you want to take the mortgage.
The loan will be secured on the property you buy so if you fail to pay it, the bank might eventually repossess it – take ownership – to recover your debt.
One of the best ways to prepare for a mortgage application is to understand the reasons you might be refused a mortgage in the UK in the first place.
Your credit rating
Every time you apply for credit (items like a loan, credit card, store card or finance for a car or furniture) a ‘footprint’ is left on your credit report. Your credit rating also takes into account your history of monthly repayments including if you were late or missed any.
You can use a credit checker like Experian to look at at your simple credit report for free, or pay monthly for a more in-depth analyses of your credit rating.
Mortgage lenders will look at your credit history to help them figure out how much of a risk you pose financially – e.g. do you have a low credit score? Have you missed any payments? Defaulted on debt? Taken out multiple lines of credit? Declared bankruptcy or been subject to a CCJ (County Court Order).
Some or all of these may be taken as a sign you’re failing to manage your finances well. Each lender has their own special algorithm, so a good credit rating – whilst helpful – is not a guarantee of getting a mortgage approved.
TIPS:
Comb through your credit file and if there are any errors, report and request to fix them. Sometimes, companies make mistakes so it’s important to make sure everything in your file is correct. This will also help you identify any incidences of identity theft – when a fraudster has used your identity to obtain credit
Make sure you are registered to vote at your current address (on the electoral role) to help mitigate identify theft
The lower your revolving credit (how much unsecured debt you have) the better. Work towards paying off as much as you can, starting with the highest interest first. You could alternatively start with the lowest sums that you can pay off in one go to reduce the number of lines of credit you have and boost your credit rating a few points
If your credit card or cards are all maxed out or you’re very near your credit limit, this will adversely affect your credit rating, even if you’ve never miss a monthly payment. Repaying only the minimum amount may also negatively impact your credit file
Your deposit
If your deposit is too little, you may be refused a mortgage. Whilst five per cent deposit schemes are available, usually, lenders give better mortgage rates for 10 per cent deposits or more.
What they’re looking for is the lowest Loan To Value (LTV possible). This is a simple ratio of how much you want to borrow, versus the price of the property. Having a bigger deposit means a lower LTV ratio and poses less risk for a lender if property prices start to decrease.
E.g. you have a deposit of £20,000 and want to get a mortgage of £180,000 to buy a property worth £200,000. That’s a 90 per cent LTV, as you have a 10 per cent deposit. If you increase that deposit to £30,000, your LTV reduces to 85 per cent and it will likely make a positive difference to your chances.
TIP: you can either take more time to increase your deposit, or you can apply to borrow less and reduce your house property budget. E.g. you still have a £20,000 deposit but you apply to borrow £160,000, giving you a total budget of £180,000 and a LTV of 88.9 per cent. You could also do a little of both – increase your despite whilst lowering your property budget and therefore the LTV.
Your income
How much you earn and whether you’re planning a mortgage application on your own or with somebody else matters.
Usually banks look to lend a sole applicant a maximum of five times their salary, or three times for joint applicants.
Your mortgage application might be rejected if you apply for too much. You might also be turned down if:
You have recently become self-employed as lenders typically need at least two years of self assessment tax returns to get an idea of your income
You are on a temporary or zero-hour contract, or you have recently moved job and are in your probation period
If worst comes to worst and your mortgage application is rejected, don’t rush to apply elsewhere. This can adversely affect your credit rating and chances next time.
Instead, talk to a financial advisor who may be able to help figure out where things went wrong.
