Mortgages for teachers
When newly qualified, part time or supply teachers, apply for a mortgage through their local banks or building societies, they are often overlooked, due to the lenders’ strict lending criteria and lack of consideration for the individual’s personal circumstances. Proving a regular income on a fixed or part-time contract can be difficult, which can automatically make you unattractive to many high street lenders. But, your chances of getting a mortgage are just as good as anyone’s and here’s how.
Use all your income
As a teacher you may undertake additional paid work such as tutoring in the evening or test marking in the school holidays, which can all be used to support your application.
Let your partner take the lead
If you plan to apply for a joint mortgage and your partner works full time, consider adding them as the first name on your mortgage application. It could improve the chances of getting your application approved, as lenders will favour them for their regular income.
Consider government initiatives
If you are struggling to raise a large deposit, there are a number of government initiatives available which could help to get you on the property ladder:
Shared Ownership: Part of the Help to Buy scheme and enables you to buy a share (between 25% and 75%) of a new or existing property.
Equity Loan: The government lends up to 20% towards the purchase cost, meaning you only need a 5% cash deposit and a 75% mortgage to buy your home. If you are looking to buy a property in London, the percentage the government will lend you increases to 40%. However, the property must cost no more than £600,000.
History of bad credit?
If you have had credit issues including; arrears, defaults, County Court Judgements (CCJs), debt management plans or been made bankrupt in the past 6 years, there are still lenders who will consider your application. Our advisors regularly work with adverse mortgage lenders and are well placed to advise you on all your available options.
Get expert advice
Our mortgage advisors are experts in teacher mortgages and can help advise you on how much you can afford to borrow and source the best teacher mortgage deals to suit your individual needs, in order to maximise your chances of being approved first time. They will also complete all the relevant paperwork, and liaise with your lender, estate agent and solicitors to ensure that your application is a success!
What to do before becoming a landlord
You’ve bought your first buy to let property and are now preparing for your first tenants, but what needs to be done? You’ll need to make a few big decisions about how you are going to manage your property, and ensure that a number of items are in place before you tenants move in. Luckily, we have compiled a handy list to help ensure that your buy-to-let investment is a complete success!
As a Landlord, you have a duty of care to your tenants, so make sure your property is protected by arranging the following checks and installations:
- Smoke alarm fitted on every floor of the property, where there is a room that will be used as living space
- Carbon monoxide detector installed in every room with a solid fuel-burning appliance
- A valid Gas Safety and Energy Performance Certificate (EPC)
When renting property accidents will happen, which can prove costly if you do not have the right level of cover in place! Landlord Insurance provides the specialist level of cover you need to protect both the structure and rental income of your investment.
As expert mortgage and protection advisors, we can ensure that you get the right level of cover for your personal requirements, so you can be rest assured that your investment is safe.
Do your homework!
Finding the right tenants is often the most complex part of the letting process. It’s important to know who you are letting your property to, and a letting agency can help you with this.
Letting agencies can help mitigate any potential risks by conducting in-depth tenant references, which typically include employment details, addresses, bank statements and references from their current landlord (if applicable). They will also carry out the necessary checks to ensure that that your tenants are legally able to rent in the UK, so you can be rest assured that everything is above board.
Arrange a tenancy agreement
Once you have found the right tenants, you will need to provide them with a tenancy agreement. An Assured Shorthold Tenancy (AST) contract is generally used for this purpose, and contains the proposed dates and duration of the tenancy, a breakdown of the rent payments and the required notice period, if the tenancy is terminated by either party.
Protect your tenants’ deposits
As a landlord, you must ensure that your tenants’ deposits are kept in a government approved tenancy deposit scheme, such as the Deposit Protection Service, who will intervene should a dispute about your tenants’ deposit arise at the end of the tenancy.
Set the bar
Before your tenants move in, it’s important to set out how you expect your property to be maintained, particularly if you decide to let is as a part or fully furnished let. Conducting an inventory before and after a tenancy, will help you to keep check of your assets and their condition, and reduce the chances of a potential dispute – Using a letting agent or independent inventory clerk to make sure this is done correctly, is certainly worthwhile!
Need a letting agent?
Working full-time and being a landlord can be demanding! But, using a letting agent can help to reduce the burden. They can manage all the necessary advertising, viewings, screenings, inspections, repairs and rental income for you. If you favour a more hands on approach, most agencies will also offer a tailored service, so they can help out where needed.
Teaching children to save
With an increasing number of first-time buyers relying on the ‘Bank of Mum and Dad’ to help them get on the property ladder, teaching children to save and understand the value of money from an early age has never been more important. No matter how young or old your children may be, we have put together a number of handy tips that will help make them savvy savers in no time!
Letting young children see and handle coins and notes regularly is the best way to get them used to money being a part of their everyday lives. To help them learn to understand the value of money, raid your money box and stack piles of coins next to each other, using the various coin denominations, until each one equals £1. Once you have completed this, take the piles down and ask your child to rebuild them.
If you want something, you’ve got to pay for it!
Plan a family day out and list all the things you’ll be doing including food and transport. Work out a realistic budget for this and withdraw the cash. Let your child count and hand over the money whenever you do an activity that requires money – If they want to do something that you haven’t planned for, explain to them that there may not be enough money to do this, as well as the other things you have planned.
The £1 challenge
Give your child a £1 to spend on whatever they choose in a local shop. Ask them what they want to buy and if they can afford it. If they are struggling, take them to an area in the shop where you know they will be able to buy something for this amount, and ask them what they think.
Save, spend, save again
The best way to get children to understand the true value of money, is to let them save and spend their own cash. Work out a reasonable amount to give them each week, maybe get them to help you out around the home to earn this, and let them decide how they spend it.
Buying them a moneybox or opening a bank account will also give them somewhere to store their savings and teach them that money needs to be looked after and kept safe – For teenagers, gradually increase their allowance so that they can learn to budget for their toiletries, clothes and social activities.
Planning for success!
Talk to your child about saving for something they really want and help them work out how long it would take to buy it. If it’s a fairly expensive item, why not agree to pay a certain amount towards it, if they save the rest?
Planning and budgeting is particularly effective for older children. Getting them to plan an event from start to finish, detailing everything involved including; activities, food, drink and transportation, and working out how much it’s going to cost, can help them realise if it’s affordable and if anything can be done cheaper.
‘Just put it on your card’
If paying on a debit and/or credit card is your family’s preferred method of payment, it’s important to familiarise your children with how this works also, so that they learn that money isn’t free! The best way to do this is to let them see you paying for something on your card and then showing them your bank statement after, so that they can see the money leaving your account and your remaining balance after.
5 steps to become a successful landlord
Becoming a landlord can be an exciting and rewarding prospect; from selecting a property with a potential profitable return, to taking care of your tenants. If you are planning on investing or are simply interested in learning more, here’s our top 5 steps to consider for a successful buy-to-let investment.
Do your research!
When deciding on an area to buy your buy to let property, choose an area that prospective tenants would like to live in with attractive selling points such as; good transport links, schools and / or entertainment facilities – Use property websites such as Rightmove and Zoopla to help you with this!
When you have decided on an area, be sure to also speak to a local letting agent who can help you understand which properties are in demand and how much they rent for.
Hands-on or stress free?
Being a landlord comes with a lot of responsibility! If you choose to buy near to home, you will be close by should anything go wrong. But, if you choose to look further afield, using a lettings agency could be a wise decision!
Letting agents can help reduce the burden, by managing all the necessary advertising, viewings, screenings, inspections, repairs and rental income for you, and the cost for their services varies from a months’ rent for letting only, to an ongoing yearly fee of around 10% of your rental income for full-time management.
When you buy a second property for rental purposes, you need to take out a Buy to Let mortgage. Buy to Let mortgages are very similar to standard residential mortgages, but there are some important differences to note:
- You will need a minimum deposit of 25%, but the more you can put down, the better your interest rate will be!
- The amount you can borrow is calculated on the potential rental income of the property you are looking to purchase, rather than your own income
- Your annual rental income be at least 125% of the annual mortgage interest payments, to help you during tenant vacancy periods.
As expert buy to let mortgage brokers, we can tell you how much you can afford to borrow, and find you the best buy to let mortgage deal to suit your individual circumstances. When you’re ready to move ahead with your mortgage application, our dedicated support team will even handle this for you through to completion, to ensure that your application is a complete success!
What tax will I pay?
As with every property purchase, there are various taxes you will need to pay at some point in the buy to let property sales and purchase process:
Rental income tax: Any rent you receive is taxable and the rate of tax you will pay is charged in accordance to your income – 20% for basic rate taxpayers, 40% for higher rate and 45% for additional rate.
Allowances: You can minimise the amount of tax you’ll have to pay by deducting certain expenses (detailed below) from your taxable rental income up to 20%.
- Letting agency fees
- Buildings and contents insurance
- Council tax
- Utility bills (if you pay them on behalf of the tenant)
- Essential maintenance such as a roof repair or new boiler
Capital Gains Tax: If you choose to sell your buy to let property you will have to pay Capital Gains Tax on any profit you make from the sale, which varies between 18% and 28%, depending on your tax bracket.
Allowances: For the 2017/18 tax year, the first £11,300 profit you make is Capital Gains Tax free.
Stamp Duty Land Tax (SDLT): When you buy an additional property that is not your main residence, you have to pay Stamp Duty Land Tax on it, dependent on the purchase price of the property shown below:
- Less than £125,000: 3%
- £125,001 – £250,000: 5%
- £250,001 – £925,000: 8%
- £925,001 – £1.5 million: 13%
- £1.5 million+: 15%
As a landlord, you will probably have invested a lot of your money into your property, so it makes senses to protect it! Landlord Insurance provides you with the specialist level of cover you need to protect both the structure and rental income of your investment. But, not having the right level of cover can be disastrous – that’s where we can help!
Our mortgage and protection advisors will assess your personal requirements and tailor your cover accordingly, so you can be rest assured that both your investment and income are protected.
Getting a single parent mortgage
Managing day to day life as a single parent often involves balancing work and home, getting the kids to school, making their meals and staying on top of the chores, which can be difficult. Getting a mortgage by yourself may also not be easy, but it’s certainly not impossible when you take our advice!
Use your benefits to your advantage
Being a lone parent often means your income is low, which can have a significant impact on the amount mortgage lenders are prepared to let you borrow. You need to demonstrate that you are able to keep up your mortgage repayments and your benefits can help you with this.
Child Benefit, Tax Credits and Maintenance Fees, will all be taken into account by the lender when they calculate the amount they will allow you to borrow – Make sure you keep proof of these payments in a safe place, as the lender will need to see these!
Consider Government initiatives
There are a number of Government initiatives available to help people who are struggling to buy a home get on the property ladder:
Shared Ownership: Part of the Help to Buy scheme and enables you to buy a share (between 25% and 75%) of a new or existing property.
Right to Buy: If you have been living in social housing for more than 3 years, then you could be eligible to buy your home at a discounted price from your local council.
Bank of Mum and Dad
If you are struggling to raise a large enough deposit, a close family member may be able to help you:
Guarantor mortgages: A parent or close family member guarantees either a proportion or the entire mortgage debt and are ultimately liable for any repayments that are missed. Your Guarantor will however need to be able to either cover their mortgage and their agreed share of yours or have the majority of their mortgage paid off, and have a good few years left in employment ahead of them.
Family Springboard mortgages: A more popular option that enables a member of your family to provide 10% of the purchase price as security. If you keep up your repayments, they will receive their money back with interest.
Get specialist advice
As award winning mortgage advisors, we can talk you through all your available options and tell you how much you can afford to borrow at no cost or obligation to you, so get in touch!
If you are looking to get on the property ladder or want to start putting a bit of extra cash away to support you in your retirement, you could get a free 25% cash injection to help you on your way with a Lifetime ISA!
Savers aged between 18 and 40, who open the new Lifetime ISA when it launches on 06 April, can put away up to £4,000 a year and receive an additional 25% tax free, government bonus until they reach the age of 50. By this time, you could have received as much as £32,000 in free cash! – Who doesn’t want free money?
- Contributions to a Lifetime ISA will count towards your annual tax free savings limit of £15,240 – Fortunately, this will rise to £20,000 for the 2017/18 tax year
- If you withdraw cash for anything other than buying your first home or before you turn 60, you will incur a 25% penalty! – Be wise and only use it for home buying or retirement
Is it better than a pension?
The Lifetime ISA can be used to save for your retirement in addition to your pension. But, the rewards of only saving in a LISA are not as attractive and here’s why:
- You can only withdraw cash from a LISA once you turn 60 – Not great if you plan on soaking up the sun and retiring early
- For most, having a pension is just as beneficial, as you save from gross (pre-tax) income – Certainly wouldn’t be attractive to high earners
- If you’re employed, the workplace pension scheme requires that your employer has to pay in as well – You won’t get this from a LISA
What wins, Help to Buy ISA or Lifetime ISA?
You can save in both schemes, but will only be able to use the government bonus from one of them to buy your home. If you are looking to buy a property within the year, the Help to Buy ISA will enable you to get the government bonus faster, with a minimum deposit of £1,600.
But, for those looking or thinking to buy over the next year or so, the Lifetime ISA is far more attractive! Plus, if you already have a Help to Buy ISA and transfer your savings to a LISA before 06 April, the 25% bonus will be applied to the entire amount saved! – Now that’s certainly worth considering!
We have compiled a handy breakdown below to help you quickly see how each compare:
|Question||Help to Buy ISA||Lifetime ISA|
|How much can I pay in?||£1,200 in the first month, followed by £200 a month thereafter||£4,000 a year|
|How does the Government bonus work?||Maximum bonus of £3,000, which you receive upon completion of buying your home||25% applied to your savings at the end of the first year, monthly after that|
|What’s the maximum property purchase price?||Can be used by First Time Buyers to purchase a home up to the value of £250,000 (£450,000 in London)||Can be used by First Time Buyers to buy a residential property up to the value of £450,000|
|How long will I need to have it before I can use it?||No time limit||12 months+|
|How can I use it?||For a mortgage deposit only||Can be used for your mortgage deposit and home deposit|
|Where can I get one?||From most banks and building societies||Stocks and shares providers at present. But, Skipton will have one for launch, and it is expected that other high street banks will follow|
Ready to get moving?
Do you think the new Lifetime ISA will help you reach your savings target much sooner than expected? Are you thinking of buying a property in the near future and would like some advice? Our professional mortgage advisors are at hand to help you with all your mortgage related questions!
They will assess your personal circumstances and explain all your available options, so you can get a good idea of how much you can borrow and/or start searching for your dream home. Their advice is completely free, so get in touch!
Getting a self-employed mortgage
If you own your own business, you are probably used to hearing how difficult it is nowadays to get a self-employed mortgage – but this simply isn’t true. The process has certainly changed, as Self-Certification mortgages which enabled self-employed individuals to borrow money without proving their income, are no longer in use. But, your chances of getting a mortgage are just as good as anyone’s and here’s how.
Most mortgage lenders deem self-employed individuals to be a higher risk than a salaried employee, and therefore require at least 2 years accounts in the form of an SA302 form (proof from the HMRC that you have reported your income) and a tax year overview – be wise and use a chartered or certified accountant to help you with this. They will ensure that your accounts are up to scratch and help you understand any details that you are not too sure about.
If you have less than 2 years’ accounts, it’s not the end of the world! There are lenders who will consider you. But, you will need to prove that you have either; have regular work, recently left full time employment and started contracting or can guarantee that you will have regular work in the near future.
Everyone loves stability
The self-employed mortgage process differs according to the set-up of your business:
- Sole trader: A mortgage lender will look at your profits when assessing your income and usually request an SA302, to see the total income received and tax due.
- Partnership: If you go into business with someone else, lenders will look at each partner’s share of the profit to determine you annual salary.
- Limited company: The lender will need to see your business and personal accounts separately, in order to assess your mortgage affordability.
As lenders love to see consistency, you should delay making any changes to the structure of your company if you are considering this. If you can’t, it’s probably worthwhile postponing your mortgage application, in order for lenders to clearly see how the changes have affected your business.
It’s usually always a good idea to retain more profit within the business. But, if you are too stringent with your income, it could affect your chances of getting a mortgage, so treat yourself! Paying yourself a higher wage for a period of time can help boost both your mortgage application and your savings – make sure you can still afford your mortgage repayments and other outgoings, if you choose to reduce your salary again though.
Save, save, save!
As with all mortgage applications, the larger your deposit, the lower your repayments will be – but, it can improve your chances of getting a mortgage even more so when you’re self-employed.
Let your partner take the lead
If your partner is a salaried employee, then adding them as the first name on your mortgage application, could also help your chances of getting it approved. They may not earn as much as you, but lenders will favour them, as their income is looked at as being more regular and predictable.
Seek expert advice
Our mortgage advisors are experts in self-employed mortgages and can help advise you on how much you can afford to borrow, and source the best lenders to suit your individual needs, in order to maximise your chances of being approved first time. If you decide that a mortgage is the right choice for you, they will also complete all the relevant paperwork, and liaise with your lender, estate agent and solicitors to ensure that your application is a success!
Saving for a mortgage deposit
A mortgage deposit is the largest amount of money most people will ever save. It’s a big milestone to reach. But, if you think smart and make a few small adjustments to your current spending habits, the pounds will soon pile up and you’ll be in your new home in no time!
How much deposit will I need?
The minimum amount needed for a mortgage deposit is 5%. However, the more you can save, the more favourable your mortgage rate will be. A 10% deposit would put you in a far stronger position and should be achievable if you are saving to buy a home with someone else – don’t forget to also budget for your moving costs; Stamp Duty Land Tax, valuation and legal fees!
Review your finances
Once you know how much you need to save, a thorough review of your finances could make all the difference. Make a simple list of all your outgoings including your; rent, insurance policies, energy bills, television, broadband, landline and mobile phone contract/s, and how much you are paying for them each month, and compare it with your monthly income, including your current earnings and any regular overtime payments and bonuses – this will give you a solid foundation to work from.
Clean up your act!
If you’re serious about saving for a mortgage deposit, then cutting back on some little luxuries, such as your daily coffee or weekly takeaway, will free up some additional finances for your home fund. Lenders will also look at your credit history and spending habits when you apply for a mortgage, so an orderly bank statement could benefit your application!
Boost your savings!
Cash ISAs and savings accounts are two great ways to make your money grow faster. To make sure you stick to your plan, consider setting up a standing order or direct debit, so that your savings are automatically paid into your account every month.
- ISAs Allow you to save money tax free, up to the annual allowance of £15,240.
- Fixed bonds By depositing a sum of cash for a set period of time, you can secure a fixed interest rate. However, you won’t be able to access your cash until after the agreed time.
- Savings accounts Tend to offer slightly higher interest rates than current accounts. But, you usually need to pay in a certain amount each month to benefit from the interest.
Free, specialist advice & support
When you are nearing your savings target, it’s a good idea to obtain an Agreement in Principle, which we can obtain for you at no charge!
Alternatively, if you would just like some free advice about your affordability options, our expert mortgage advisors are available 7 days a week to meet or chat with you to help you get your dream home.
Why you should NEVER take out a payday loan
Are you considering taking out a payday loan? Take our advice and consider all the available options first. Payday loans may seem like a quick fix to a short term problem. But, they can seriously jeopardise your credit score, and risk your chances of being approved for future credit, especially a mortgage!
6 years bad luck?
Payday loans can significantly reduce your ability to get a mortgage, even if paid on time. Lenders use your credit report to check your repayment history, which contains records on bank accounts, credit cards, loans, overdrafts, mortgages, mobile phone/s and some utilities payments, from the past 6 years!
Payday loans are associated with financial instability, so if you are looking to buy a property and have had a payday loan within the past 12 months, you will not be able to get a mortgage. Similarly, if you had a payday loan a few years ago and only have a small deposit, your chances of getting a mortgage are restricted and will likely be at a far less favourable rate!
Alternatives to payday loans
If you need some extra cash, there are other options which can be far cheaper – so long as you can afford the repayments!
Most banks offer a 0% interest overdraft with their current accounts, allowing you to gain access to a reserve amount of cash. You can spend on your card and make withdrawals from a cashpoint, up to the limit the bank agrees with you.
Interest rates are at an all-time low, so it’s a good time to get a loan. However, you should only ever borrow what you need and repay it as quickly as possible – you won’t want to pay any more interest than is needed!
A credit card will enable you to spend on your card up to the agreed limit. This is fine, so long as you can afford to repay what you have borrowed at the end of each month, to avoid having to pay any interest.
Many credit cards now also offer 0% interest for 12 months+ on balance transfers, giving you plenty of time to repay the money you borrow! This could be a great option if you have a good credit score and are able to make the repayments. Bad credit? There are still options available, but the time you have to make the repayments may be shorter. However, you will likely have much longer than you would with a payday loan!
Watch out! Make sure you know how long the interest-free period is for and don’t go over the agreed limit – you won’t want to be hit with any additional charges. Remember to also never withdraw any sum of cash on your card, as you will pay a fee for this which could be hefty!
Credit unions and CDFIs
Credit unions and Community Development Finance Institutions (CDFI) aim to assist people who may not be able to get standard financial products and services available on the market. They offer loans that are similar to payday lenders with generally cheaper interest rates.
If you are interested in obtaining a copy of your credit report, you can do so by signing up with either Experian, Noddle or Equifax.
Moving in together is one of the most exciting things you’ll do, but it can be stressful if you do not plan ahead. However, we have compiled our top tips to ensure that you make the most of your experience. You only get to move into your first home once, so make sure you get organised and enjoy it – you’ve earned it!
Put together an essentials box filled with everything you’ll need for moving in day including; cleaning products, toilet roll, coffee, teabags, sugar and snacks for your helpers – don’t forget the kettle!
The essentials – It won’t be much fun without them!
One of the first things you’ll need to do is set up is your gas, electric and water. Make sure you arrange this as early as possible, as you will want to have everything up and running from day one.
You should also take a meter reading as soon as you move in to make sure your bills are correct, otherwise you could end up paying for the energy used by the previous occupants!
If either of you have owned a property before, you’ll also need to settle any outstanding balances. Just take a final meter reading before you move out and call your providers.
Tell your bank
The last thing you’ll want to deal with is a new card or PIN number being sent to the wrong address! If it was used for fraudulent purposes you would also not be covered by your bank, so advise them of your new address as soon as possible.
The easiest thing to do is to compose a standard letter, which we have put together for you here. Your bank statements are also a great place for noting any other companies you’ll need to inform.
Redirect your mail – it’s hard to remember everyone who has your address!
You can easily redirect your mail online via the Post Office. There may be a small cost for doing this, but it’s a small price to pay to avoid becoming a victim of fraud!
Update your online accounts
Ensure you add your new address to your online shopping accounts as soon as possible, otherwise someone else might benefit from your recent purchases!
Set up your television subscription (don’t forget your TV license!), broadband, landline and mobile phone contract in advance. You will often need to wait a few weeks to have these installed, so we recommend booking this work in as soon as you receive your moving in date.
Electoral roll – make sure you’re registered
Credit providers use the electoral roll to measure your eligibility for credit, so make sure you are firstly registered, and that your details are up to date!
Don’t forget your car
Your car insurance, V5C vehicle registration certificate and driving license all have to be updated – preferably before your move.
Be sure to also tell your insurer how your vehicle will be parked at night, as you may be able to save yourself some money! It could work the other way, but not notifying them in time could result in your claim being turned down, if you need to make one.