The mini-budget and what you need to know about mortgage rates and shared ownership

The cost of living and mortgage rates are all over the news at the moment. With lenders pulling old mortgage deals from the market, what does this mean for you and how will it affect applying for a mortgage?

Here at Bromford we have done the hard work for you and collated information to help you make sense of what’s going on to help you make an informed decision on buying your dream home, or even buying more shares in your current home.

What’s happening with mortgages at the moment and what mortgages are available?

According to Mortgage Advice Bureau on Tuesday 27^th September there were around 3,596 residential mortgage deals available, this dropped by around 284 overnight, and has dropped even more since. This drop was mainly due to the mini-budget announcement by Kwasi Kwarteng, which means lenders struggle to price products accurately. This twinned with the current interest rate rises can make for a very difficult market.

Mortgage Advice Bureau have more information on what products are available by which lender.

Will these changes affect shared ownership?

The current changes affect the whole market, not just shared ownership. One of the best things about shared ownership is if you can’t afford the mortgage on a home, you can buy a share in a property which you can mortgage against, and then pay rent on the rest. This means that a new home could be more affordable than you think. The Share to buy website has a great tool that will allow you to compare current shared ownership mortgages available – please note these will change regularly.

If you’re a Bromford customer and are looking to buy more shares in your property, also known as staircasing, then read our guide. If you’re not a Bromford customer then please contact your provider. Although mortgage rates are higher at the moment, buying additional shares in your home means you won’t be paying rent on those shares, meaning you could end up paying less and have the satisfaction that you own more of the home you enjoy.

The government have also recently made changes to stamp duty. Meaning now you only have to pay stamp duty on a property that’s worth more than £250,000 if you already have a mortgage, or £450,000 if you’re a first-time buyer.

5 facts about mortgages and advice on how to make your income go further

There are things you can do to make your money go that little bit further every month by making changes. We have included our 5 tips below:

1. Anyone who has already applied for a mortgage will have secured their mortgage rate and this won’t change – so there’s no need to panic. If you’re in the process of securing a mortgage deal make sure you dig out all the documents that your lender needs as soon as possible as this will help speed up the process and secure your deal.
2. Write down your income and outgoings and be prepared to sacrifice some of those treats and extras to boost your mortgage budget – Swap that morning Starbucks with a coffee from home, cancel that gym membership for a run, and see if you really need to be subscribed to 6 streaming services all at once? Maybe swap and choose each month depending on what you want to watch.
3. If you currently have a mortgage and are struggling to make your payments, speak to the lender. They may allow part of your mortgage to be paid on an interest-only basis for a short period, reducing your monthly payments.
4. If you’re a first-time buyer you won’t have to pay stamp duty on any property worth less than £450,000, or £250,000 if you’re currently a home owner, saving you a substantial sum. This money saved can be put towards a bigger deposit, or even help with other costs.
5. Monthly mortgage repayments can be reduced by opting for longer-term mortgages of up to 40 years which are now more generally available than they have ever been. This can be reduced at a later date.

We caught up with, Helen Pierson, at Mortgage Advice Bureau and they urge people to get advise;

 You can contact Mortgage Advice Bureau or call on 0330 002 1230. 

Note: Bromford is not a mortgage lender and cannot offer advice on mortgages. Please seek advice from a qualified mortgage adviser regarding mortgages.