How can my family help me buy a house?

In the summer of 2020, when the UK started to emerge from lockdown, the release of pent-up demand and a revived housing market prompted a surge in transactions and an increase in house prices. The average house price reached a record £224,123, reported the Guardian newspaper – a rise of 3.7% in the previous 12 months.

The surge in house prices almost certainly came as bad news to first time buyers already struggling to put together a deposit, so predictions that prices are set to fall again over the coming 12 months might have seemed a welcome break.

But according to a story in the Financial Times recently, even if house prices fell by as much as 20%, first-time buyers would still have a more challenging time getting that first step on the housing ladder than they would have done just a year ago.

Family mortgages

Against such a depressing background, first-time buyers may be looking increasingly to their family to help with the purchase of t…

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What are let to buy mortgages?

If you have owned your existing home for a while, naturally, you are likely to have grown fond of it. More often than not, its value has increased in line with the overall increase in house prices. As you have been paying off your mortgage, so your equity in your current property is also likely to have increased.

So, a home that you have grown to love and one that has increased in value may be one that you want to hold on to as a long term investment if you decide to move home. Not only that, but it might also give you the chance to release some of the equity in your current home to buy the new, second property.

How does a let to buy mortgage work?

Let to buy mortgages offer you the opportunity of doing precisely that. As the term suggests, this type of mortgage is based on your letting your current home.  So, its value continues to work hard for you through the income stream from rents, and you also release some of the equity you own in that hom…

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What is a spring board mortgage?

First-time buyers have always found it challenging to get that critical initial step on the housing ladder. In a report on the 13th of August 2020, the BBC advanced four reasons why these hopeful buyers in the United Kingdom might find it more difficult than ever:

with lenders looking for larger deposits, first-time buyers who save 5% of their income for a deposit may need as long as 30 years’ to save enough; an estimated half of all 25 to 34-year-olds who are currently renting simply do not have any savings; given the lower-valued homes in which first-time buyers will be interested, the stamp duty holiday available until the end of March 2021 is of no relevance; and employment prospects may be patchy and require candidates to move to a different part of the country – a steep expense in itself.

In a story dated the 1st of July 2020, therefore, the Financial Times predicted that the “bank of Mum and Dad” would continue to help support the attempts of a …

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What should I do if I have an endowment mortgage shortfall?

If you have an endowment mortgage, it was likely arranged so that you could enjoy the benefits of an interest-only mortgage (lower monthly repayments). Plus, protected by the security of an endowment insurance policy designed to cover the capital repayment costs at the end of your mortgage term.

As some people have found to their cost, the risk in any such endowment mortgage is the performance of the endowment policy and whether the eventual payout covers the capital repayment on the mortgage. If it does not, you have a potential endowment shortfall.

From time to time, the endowment shortfall arises not simply because of underperformance but mismanagement by the insurance company – as a story in the Daily Record on the 12th of January 2020 went to show.

How do endowment mortgages work?

Endowment mortgages were widely popular throughout the 1980s and ‘90s. They promised the benefits of a relatively cheap interest-only mortgage backed-up by an…

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What is an Islamic mortgage, and how does it work?

Unless you are from a Muslim background or faith, you might easily dismiss an Islamic mortgage as being too specialist for you. You probably regard such a mortgage as one reserved for those who profess a particular faith – with the religious connotations somehow tied up in terms of the mortgage.

In fact, Islamic finance products in the UK are treated in the same way as all others – they are subject to the same regulations and legislation as any other mortgage product and mortgage lender pointed out a paper in Lexology on the 1st of October 2019.

Indeed, the UK government has positively encouraged the growth of Islamic finance for at least the past 30 years’, according to an official paper entitled UK Excellence in Islamic Finance. In the past ten years’ or so it has consciously developed a fiscal and regulatory framework to reflect that fact.

What is a Sharia-compliant mortgage?

An Islamic mortgage is one that's compliant with Sharia law. Th…

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Mortgages for people aged 60 and over

As you get older, it becomes increasingly more challenging to get a mortgage.

From the mortgage lender’s point of view, the reasoning may be understandable. Mortgages are designed to be repayable over many years’ – 20, 25 or even 30 years, let’s say. For anyone taking on a mortgage when they are aged 60 or over, therefore, they are likely to be well over 80 years old before the mortgage reaches full term.

Along with all the usual calculations based on your current income, expenditure, credit record, and loan to value (LTV) ratios, therefore, any lender may also need to start looking at your income during retirement when determining the affordability of any loan – in other words, what your pension is likely to be worth and the affordability of the mortgage repayments.

Against those difficulties and the natural wariness of mortgage lenders, however, it must also be recognised that the population is ageing and that we are all living longer lives. …

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Retirement interest-only mortgages explained

Interest-only mortgages have the attraction of relatively lower monthly repayment costs – you are only repaying the interest in those instalments and delay repayment of the capital amount until the end of the mortgage term.

Apart from that broad appeal, however, interest-only mortgages may have a particular appeal to the older homeowner – and these are called retirement interest-only mortgages, or RIO mortgages.

When they first appeared on the market, take-up of these retirement mortgages was relatively muted, argued an article in the FT Adviser on the 25th of June 2020. At that time, around 12 different lenders were offering 38 RIO mortgages of one type or another. That number has now grown to 20 lenders with 87 products on offer.

What are retirement interest-only mortgages (RIOs)?

Retirement interest-only mortgages are only available for those over the age of 55. They are likely to be a particular interest to older borrowers who are in or …

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What are Right to Buy mortgages?

The Right to Buy was introduced by the Housing Act 1980 and gives local authority tenants in England the Right to Buy their homes at significantly discounted prices. There are different rules for Wales, Scotland and Northern Ireland.

You are eligible to participate in the Right to Buy scheme if the home you are renting is your main residence, it forms a self-contained dwelling unit, and you have been a public sector tenant (of the council, a housing association, or an NHS trust) for three years.

In a posting dated the 6th of May 2020, the Money Saving Expert also explained the government’s decision to trial rolling out the scheme to housing association tenants, too. It pointed out that there are approximately 2.5million housing association tenants in England, 1.3million of who have lived in those homes for at least three years and who may now qualify for the Right to Buy.

What is a Right to Buy mortgage, and how does it work? …
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How do Halal mortgages work?

It’s a word you are likely to have seen or heard but what exactly does “halal” mean? The Halal Food Authority offers one of the simplest definitions by explaining that halal means permitted or lawful – and contrasts it with its opposite “haram” which means prohibited or unlawful.

Halal is defined, therefore, with reference to the Muslim Sharia law. Within this context, its meaning broadens into concepts of what is permissible, lawful, clean, and ethical.

It is against that background it becomes clearer to think about Islamic mortgages as ethical mortgages – halal mortgages.

What is a Halal mortgage and how does it work?

What makes a halal mortgage an ethical mortgage? It is ethical because it complies with Sharia law. Sharia law holds that interest-driven money lending and investment are harmful and, so, prohibited.

A Sharia-compliant or halal mortgage, therefore, is one that does not rely on interest-based borrowing but on somethi…

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Financing the build of your dream home

Who doesn’t have a vivid picture of their dream home in mind? It’s your dream and yours alone. So, you’ll want to maintain complete control over the building work and make it all a self-build project.

Although it’s a self-build project, that doesn’t mean it’s likely to come any the cheaper. Love Property magazine, for instance, revealed that the average cost of a self-built property – including the land, fees and building costs – is close to half a million pounds.

Your £500,000 or so investment is likely to be a sound decision, of course. But that doesn’t much help to find the half-million pounds in the first place – even if you have sold your existing home to build your dream home.

The solution may lie in a specialist self-build mortgage.

What is a self-build mortgage?

Just as the name suggests, a self-build mortgage is specifically designed to provide the finance you need for the building work on the dream home you have set your …

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