The General Election Effect

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Whoever you voted for in the December 12th Election, the overall winners were the Conservatives which saw their 9-year run in office continue for another 5-years. However, what does all this mean for mortgages?

Well in a much more light and financial turn of events, the Pound has strengthened giving hope that the country can once again show a dominative force. But it has fuelled the predictions of house pricing, which may rise in 2020.

How will the Conservative victory impact the mortgages, homeownership ambitions for Doncaster based First-Time Buyers and those looking for a new start in the new year and wanting to move home? And will happen to our already broken housing market? Although, the real understanding is, we must wait until the next budget in February or March of the new year – experts have already been offering their views on the pledges and promises made by our Prime Minister, Boris Johnson. Here at MortgagesRM – Doncaster Fee Free Mortgage Advisor, we have put together an early indication of how the Tory Government might impact your mortgage and home.

Long-Term for the First-Time Buyers

Already, there has been a positive response from property experts over the Tory’s victory, but there were also concerns about whether the promises made in the manifesto and during the campaign would be true. One major pledge made by the Conservatives was to introduce a long-term fixed-rate mortgage for any First-Time Buyers who were looking at buying with a smaller deposit. The aim is to help more renters buy their home and offer a route into homeownership to those who could only afford a small deposit of 5%.

The Promise, which came with mixed views from mortgage experts, like myself, were saying the idea of a ‘lifetime’ mortgage meant borrowers would only be protected from future interest rate rises. However, others thought the pledge was too vague and called for a flexibility in the design of the updated mortgages to allow for borrowers’ changing circumstances such as, if they needed to move house.

Stephen Kerrigan, of MortgagesRM – Doncaster Fee Free Mortgage Advisor explained that this was only the biggest change in the Tories plan when they talked about bringing in for those who were struggling to get onto the property ladder. It’s not clear how these would be offered, with the Tory Government just saying that they would encourage the mortgage industry to increase the availability of these products.

How is Help-to-Buy effected?

The Tories mentioned that they were looking to extend the Help-to-Buy scheme to 2023. This is an initiative which allows buyers to take out a loan from the government of 20% of the Property’s value on new build houses. With the scheme seeing to be increasingly popular with First-Time Buyers, I’m glad that they promised to bring it back – let’s just hope they stick with it!

The Housing Crisis

There have been 18 housing ministers in 20 years, which prompted Jackie Bennett, director of mortgages at UK Finance, to call for a minister in this department with a long-term vision, who could allow proper decisions to be taken on some of the big issues. It was something which was echoed by many experts pointing out, whoever takes on the role will have ‘fundamental challenges’ to grapple with. These included a lack of affordability, the effects of a stagnating market and a lack of innovation in both mortgage products and the house-buying process.

What’s more, he said finding time amid the busy Brexit schedule to tackle the problem of affordable housing could also prove challenging. This doesn’t just mean building thousands more of the new homes the country needs.

Interest-Only Mortgages in Mis-Selling Scandal

Hundreds and Thousands of Interest-Only borrowers are being owned compensation after being mis-sold mortgages by their Mortgage Advisor. This has breached regulatory rules on affordability and suitability when selling a property and gaining on a Remortgage before the financial crisis, according to Stephen Kerrigan of MortgagesRM – Doncaster Fee Free Mortgage Advisor.

Some Mortgage Advisors failed to check the repayment vehicles were in place or wrongly accepted downsizing as a repayment strategy in a market where house price rises could not be relied upon. The borrowers who could be entitled to claim were often vulnerable with high debts and, to their detriment, were moved from repayment to interest-only deals. However, the clients should have been sent to an insolvency practitioner, rather than advised to take out interest-only mortgages, which has now left them at risk of losing their home altogether.

Over the last few years, mortgages have broadly upheld around one in five interest-only mortgage case complaints and the amount coming through has remained stable at around 300-400 a year. In a handful of recent cases MortgagesRM ruled out that borrowers were due compensation after incorrectly being advised to take out interest-only deals by their Mortgage Advisor. In these rulings, homebuyers were typically relying on overseas property investments to pay off the mortgage.

The flow of claims is set to significantly increase from the few hundred a year is currently seeing because, as more mortgages mature and more borrowers are set to realise, they could. Stephen Kerrigan has said: “You’ve got a large number of consumers now at the end of term and asking whether they were wrongly advised at the time – and many will be answering that yes they were.”

A review of interest-only mortgages by the Financial Conduct Authority in 2018 found that around 2.6m of the loans will be due for repayment over the next 30 years.

At the time, the regulator also found that a vast majority of borrowers understood the terms of the loan at the point of sale. The 2018 investigation of the mortgage market concluded that there was no evidence of mis-selling, but the growing number of people applying for our help suggests otherwise.

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