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HOW LONG DOES A MORTGAGE OFFER LAST?

I have recently had a mortgage offer but I am not quite in a position to accept it just yet. How long does a mortgage offer last for?

Laura Capon

FTB says: Every mortgage offer is slightly different, so the period of time your mortgage offer is valid for will vary from lender to lender. One thing they do all have in common, however, is that they are valid for a fixed period. In the vast majority of cases this will be three months but for new builds it is often six months when bought off-plan, as the mortgage criteria can be more complex. You may also be able to extend the offer for a new build property if you haven’t accepted within the time frame. It’s always advisable to talk to a mortgage adviser who will point you in the right direction once they know what kind of property you are looking for and the time frames you are looking to work within.

DO ALL MORTGAGES HAVE ARRANGEMENT FEES?

Having recently visited the bank to talk about mortgages I was offered a mortgage that comes with a mortgage arrangement fee. What does a mortgage arrangement fee cover and do all mortgage applications come with one?

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Isabelle O’Sullivan

FTB says: All fees associated with your mortgage should be outlined in your mortgage illustration document, which breaks down each fee, explaining what it is and how much it will cost you. A mortgage arrangement fee is what you pay the lender to set up your mortgage and most mortgages will have one. The cost can vary significantly, although on average it will cost around £1,000. You can usually choose between paying the arrangement fee upfront or adding it to the mortgage but it will ultimately cost more to do the latter as you will pay interest on it over a period of time.

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Please send us your questions, comments and suggestions concerning property, or the articles in First Time Buyer magazine.

lynda@firsttimebuyermag.co.uk

House Viewing Tips

In the next few months, I am going to start looking at potential properties for my first home. Is there anything I should be particularly looking out for when I’m being shown around? Ismail Farley

FTB says: A good tip is to write down what is important for you in your home before you make any visits. Be prepared though, a home might not be able to tick every single box but it should give you some indication on whether or not the property will suit your needs. Whether it be lots of storage space, a big kitchen or stylish bathroom, everyone has their own preferences. A show home is a great place to start as you can get a real flavour for the potential of a property rather than an empty shell of a newly built house without anything in it. Be sure to ask questions if you are being shown around as well, and again, perhaps have some of these prepared before your visit. Finally, don’t jump at the first property you view no matter how nice it may seem. It is good to see a range of properties so you can make a better judgement on one of the biggest decisions of your life.

Meaning Of Credit Score And Credit Report

While looking for a mortgage I have come across the terms “credit score” and “credit report”. Is there are difference between the two and, if so, what are the differences?

Jacob Frost

FTB: Your credit report is the detailed record of all your financial behaviour. A credit score is a number, calculated by credit reference agencies and lenders, which sums up the information in that report. Your credit report tells the story of how you’ve handled credit in the past. Looking at your report allows credit providers to answer important questions about your financial habits that will affect your ability to gain a mortgage and under what terms. It takes into account your current debts, whether or not you pay your debts on time and whether or not you tend to take on more debt than you can afford to repay. Your credit report isn’t the only data a credit provider will use to make a decision though. The information you provide in your application and other factors like your income are all important too.

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For everything you need to know about buying for the first time, go to firsttimebuyermag.com

TV presenter and property expert Jonnie Irwin gives his thoughts and views on first time buyers and the housing market

Most of us like a good moan, don’t we? I find myself often at it, needlessly having a thought or making a comment that helps nobody, especially myself. Maybe it’s the inclement weather that moulds our subconscious, but as soon as the thermometer goes too low or too high, someone’s bellyaching! In a life where many of us live in comparative comfort compared to those in other countries around the world, we often find something to whinge about – and the more we do it, the gloomier our outlook becomes.

Conversely, I recently filmed with a crew on Escape to the Country and to a person, every member of the small team was unfathomably positive. Perhaps that’s something to do with their youth, but it was infectious, and I’ve thought about it quite a bit since. Don’t get me wrong, there’s still room for a bit of cynicism in short doses, but I’ve become more aware of negative vibes everywhere, and surprise, surprise, culprit number one is …our press!

Of course, there’s plenty of truth to the bounty of bad news out there to report on, but when it comes to financial outlook, focusing on just the negative can be dangerous. Those predicting the future of the financial or property markets find it easier to predict a downturn. After all, most markets are cyclical so the commentators will eventually be proved right.

It’s a brave prediction forecasting anything positive out there at the moment, but there are signs of movement in the market and help out there which should be good news to buyers.

Firstly, in order to save for the deposit, you can still use a Lifetime ISA (Individual Savings Account) to buy your first home or save for later life. You must be 18 or over, but under 40, to open a Lifetime ISA. If you can tighten your belt elsewhere you’ll be able to save up to £4,000 each year, until you’re 50. You must make your first payment into your ISA before you’re 40. Way too late for me!

The Government will then add a 25% bonus to your savings, up to a maximum of £1,000 per year. The Lifetime ISA limit of £4,000 counts towards your annual ISA limit. This is £20,000 for the 2022 to 2023 tax year. You can hold cash or stocks and shares in your Lifetime ISA, or have a combination of both. When you turn 50, you will not be able to pay into your Lifetime ISA or earn the 25% bonus.

As for the current UK mortgage market, the headlines reporting on mortgage products being suddenly taken off the shelves is still fresh in the mind, so its perhaps arguably harder and less headlinegrabbing to paint a truthful and more positive image.

It’s true that interest rates are higher, but it doesn’t mean that mortgage lending is restricted or problematic. The mortgage is the product, the interest rate is a result of outside forces.

The cost of supplying mortgages has increased. It’s also why you can see action being taken by lenders and mortgage fixed rates being lowered. Reflecting this fact, several lenders are cutting margins, alongside small reductions in costs of funds. In other words, when a lender cuts margins, it means they are hungry to lend. Just like the car seller must sell cars, the lender “must” sell mortgages. Hold on, that’s good news isn’t it?

Right now, mortgage lending is healthy. The number of low deposit mortgages currently available demonstrates this. For shared ownership alone there are 99 mortgage products with just a 5% deposit! I didn’t see this on the news, I learnt it from Jon Lord at Metro Finance. This type of lending would disappear in a low liquidity market, just like it did in the financial crash back in 2008/09 when there were virtually zero low deposit mortgages.

Current times are nothing like a financial crash. Of course, affordability is a challenge –we all have “shorter arms and deeper pockets”, hence why shared ownership demand has increased, because it helps make the unaffordable, affordable. And why we’ve seen new lenders enter this sector in the last month. As an aside, lenders would not enter new sectors in a climate of restricted lending.

And, of course, interest rates are higher, but are they actually “high”? I don’t want to sound like an old grandpa, but even I remember paying 7%. When based against long term averages, 5% seems about right.

Obviously, the increases have been more sudden than desired, yet mortgage lenders are in their usual highly competitive battle to keep them as low as possible, especially on longer five-year fixed rates.

As we shiver through the winter you might not feel this is the time for you to buy a home, but when you are ready, I assure you that mortgage lenders not only want to lend, they need to, and face similar challenges of higher interest costs and higher overall costs.

Remember love isn’t just for Valentine’s Day, it should be for the other 364 days too! But just in case you need to remember to sprinkle a little romance, you could treat that someone special, whatever your relationship status, on 14 February with our FTB 14 top picks to set the romantic mood…

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