Latest news with #PeteMugleston
Scottish Sun
2 days ago
- Business
- Scottish Sun
Mortgage scheme to help first-time buyers with small deposits WILL launch this summer, Spending Review reveals
Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) RACHEL Reeves' Spending Review has confirmed the extension of a mortgage scheme aimed at helping first-time buyers with small deposits. The Mortgage Guarantee Scheme will re-launch permanently in July, according to government documents released today. Sign up for Scottish Sun newsletter Sign up 1 Since the scheme began, over 53,000 mortgages have been completed using it, with a total value of £10.7billion as of December last year Credit: Getty The scheme, first introduced in 2021 and initially set to end this month, allows buyers to purchase a home with just a 5% deposit. It can be used for any property costing up to £600,000. The government then provides a guarantee to lenders, covering some of their losses if the borrower cannot repay their mortgage and the home is repossessed. While the current application round ends on 30 June, a new permanent mortgage guarantee scheme will launch in July, aiming to help more young families and renters become homeowners, according to the Spending Review. The Spending Review also includes: A pledge to end the use of migrant hotels by the next election Confirmation that nine million pensioners will get the winter fuel allowance this year Free school meals for half a million more children An extra £39billion over the next decade for social housing A £15billion boost to transport to "properly connect" Britain's towns and cities £22billion investment in research and development and £2billion in Artificial Intelligence A £30billion injection in clean energy including £14billion for nuclear energy A rise in departmental budgets by 2.3% a year totalling £190billion more than the Tories The Defence budget hiked to 2.6% of GDP by 2027 Since the scheme began, over 53,000 mortgages have been completed using it, with a total value of £10.7billion as of December last year. This was especially helpful in the early 2020s, right after the pandemic. At that time, many banks were worried about the economy and were reluctant to offer mortgages to people with small deposits because they feared people might lose their jobs or house prices might fall. It was tough to get a mortgage if you only had a 5% deposit. The Mortgage Guarantee Scheme solved this by promising to cover some of the banks' losses if borrowers couldn't pay back their loans. This gave banks the confidence to offer 95% mortgages again. Best schemes for first-time buyers However, many banks are now offering similar mortgages without relying on government support. Experts believe the scheme's future is less significant, as banks are increasingly willing to lend to people with small deposits. Pete Mugleston, mortgage adviser and managing director at Online Mortgage Advisor, said: "On the one hand, the Mortgage Guarantee Scheme is a useful way of helping first-time buyers get on the property ladder if they don't have a large deposit "But, given that a lot of lenders are now offering mortgages with a 5% deposit and lower, the Scheme isn't as big an issue." For example, Skipton Building Society offers a 100% mortgage deal that allows you to buy a home without a deposit. A similar mortgage deal was recently launched by April Mortgages too. Accord offers a £5,000 deposit mortgage while other lenders have been slashing their affordability rules. A word of warning NO deposit mortgages can open doors for people who wouldn't be able to get on the housing ladder otherwise. Experts have generally seen the reintroduction of 100% mortgages as a positive thing and this deal from April Mortgages does have rigid lending criteria. But it's important to remember this deal won't be for everyone and they can be seen as quite controversial home loans. 100% mortgages mean you don't need a deposit - but it also puts buyers at higher risk of negative equity. This is when your mortgage is more than the total value of your home, which can happen if house prices fall. If you're in this position it can make it harder to remortgage, sell your home and get competitive rates from lenders. Typically they also have higher interest rates, making them more expensive. The general rule is that the smaller your deposit the higher your monthly mortgage repayments will be. Therefore because you won't have a deposit, your monthly repayments are likely to be more expensive compared with someone who did put down a deposit. You will need to be sure you can keep up with the payments and account for any potential financial shocks. 100% mortgages disappeared after the financial crisis in 2008, as they were seen a contributor to the sub-prime housing bubble and subsequent collapse. What other schemes are available? There are other government schemes available for first-time buyers alongside the Mortgage Guarantee Scheme. It's important to carefully explore each option, weighing the benefits and potential drawbacks, before making a decision. Here are some of the available options... First Homes First-time buyers can get a home for between 30 to 50% less than its market value through the First Homes scheme. You can buy a new build home from a developer or a property from someone who's used the scheme before and is now selling. The scheme is only available in England and you'll have to be 18 or older to qualify. Your total household income must be £80,000 or less, or £90,000 in London. You'll also need to be able to get a mortgage for at least half the price of the home. Shared ownership If you can't afford all of the deposit and mortgage payments for a home that meets your needs, you could consider shared ownership. This is when you buy a share of the property and pay rent to a landlord on the rest. You'll also likely need to pay a service charge to maintain common areas shared between you and your neighbours. Buyers can usually get a share of between 10 and 75% of the home's full value. You can buy more of the home later on in a process called staircasing. However, some people who have used shared ownership have struggled to buy bigger portions of their homes due to being forced to pay increasing rents and service charges. Lifetime ISA People struggling to save for a deposit can get extra help from the Government by saving into a Lifetime ISA (LISA). You can save up to £4,000 a year into it and the Government will give you a free bonus worth 25% of whatever you save. You have to be between 18 and 39 to open a LISA and you can pay in and get the bonus until you're 50. It's worth knowing that if you withdraw your money before you're 60, it must be spent on buying your first home. If you withdraw it for any other reason you'll lose your bonus and also effectively pay a 6.25% penalty - so you'll end up with less than you put in. You should also be aware that you can only use a LISA on homes worth up to £450,000. Right to Buy This scheme was brought in during the 1980s and allows most council tenants the right to buy their council house at a discount. There are different rules for Wales, Scotland and Northern Ireland. You can make a joint application with up to three family members who have lived with you for the past 12 months. If you rent from a Housing Association you may also have the right to buy it at a discount under the Government's Right to Acquire Scheme. Deposit Unlock This lets you buy a new build home from any developer registered with the scheme as long as you have a 5% deposit. The scheme is available to both first-time buyers and home movers. It's available on new-build homes up to the price of £833,250. Deposit Unlock is currently available with participating lenders including Nationwide and Accord Mortgages.
Telegraph
09-04-2025
- Business
- Telegraph
How to insure against redundancy in Britain's uncertain job market
Do you have any form of redundancy insurance? Would you consider taking out a policy, or do you think it's a waste of money? We'd like to hear from you – contact us at money@ Being made redundant is one of life's financial disasters many of us don't like to think about – but getting some form of 'redundancy insurance' in place could provide some peace of mind if you were to suddenly experience a loss of earnings. Redundancy is not uncommon – especially in certain industries – and as firms negotiate with employers' National Insurance hikes, as well as increases to the minimum wage and Labour's workers' rights bill, we could see a growing number of people getting laid off. Amid such uncertainty, it's vital to have a plan in place to enable you to continue paying your mortgage and other household expenses should you find yourself out of a job. Redundancy insurance is one option, but you need to tread carefully – while some policies can help tide you over should you lose your job, you need to ensure the products you plump for are right for your needs. Here, Telegraph Money explains what redundancy insurance is, what types there are and whether it's worth getting. What is redundancy insurance? While there is no 'redundancy cover' per se, there are a few different types of income protection insurance which can help out if you lose your job. Short-term unemployment insurance This type of policy can cover a proportion of your salary specifically if you're made redundant – rather than being unable to work for any other reason. It won't cover you if you take voluntary redundancy, or you're sacked, and you won't receive a payout if there was any suggestion that redundancies were on the cards when you took out the policy. You may also find it difficult to get covered if you work part-time – it's best to check individual policy details to find out. Mortgage payment protection insurance One way to protect yourself against potential redundancy, is by taking out mortgage protection insurance. Policies usually start paying out three months after your salary stops coming in and continue to pay for up to 12 or 24 months, so you have another plan to cover the initial drop in earnings. Pete Mugleston, mortgage expert at Online Mortgage Advisor, said: '[These policies] kick in if you lose your job through no fault of your own, covering your mortgage payments during this challenging period.' While some policies may pay out an additional sum to help with other bills, don't make the mistake of thinking this insurance will actually cover your income – paying for food and other essentials will need to come out of another source. Accident sickness and unemployment ASU, as it is known, covers you being unable to do your job due to accident or illness. It also covers the possibility of redundancy by paying you an income for the time you are not working. Generally speaking, policies are taken out on a short-term basis, providing payments for up to one or two years. Payment protection insurance These policies cover payments owed for specific debts, such as loans or credit cards, in case you're unable to keep up with them. We explain more about PPI below. What about PPI? You'll likely have heard of PPI, which got thrust into the headlines a few years ago when a large-scale PPI mis-selling scandal was uncovered. But, sold correctly, it can be helpful. In short, PPI typically covers repayments for credit card or loan debt if you find yourself in a position where you cannot keep up with them – including being made redundant. It can also cover things such as store cards, mortgages and catalogue accounts. While ASU policies are similar, exclusions may be a little less onerous, and policies do not need to be linked to a loan. ASU should include redundancy provisions, too. Do you pay National Insurance on redundancy pay? National Insurance (NI) is not deducted from a redundancy payment. More specifically, the first £30,000 of any such pay is usually free from both income tax and NI contributions. Anything over this, however, will be added to your income and may be subject to tax at your marginal rate. If you're getting laid off, it is important to understand how much you will actually get once tax has been paid. You also need to get your head around how to make this money last if you don't manage to get a new job as quickly as you'd like to. Does income protection cover redundancy? Income protection is a type of insurance designed to replace a percentage of your income if you are unable to work due to illness or injury. It pays a regular tax-free income, with payouts typically set at between 50cpc and 70pc of salary. It covers both employed and self-employed workers. As it can help cover essential living costs such as the mortgage, rent and bills until you are able to return to work – or ready to retire – it can offer a real safety net. But don't make the mistake of thinking this will pay out if you get made redundant. Gary Smith, of wealth management firm Evelyn Partners, said: 'Many employers include a form of income protection as a standard or optional employee benefit, but while this should cover illness and disability, it will very rarely protect against unemployment.' The same is true of stand-alone income protection policies that you take out privately. Moreover, it's true of 'short-term income protection', a type of insurance that can temporarily replace a portion of your monthly earnings. This is usually 12 or 24 months and may be referred to as 'budget income protection' as it costs less and only provides cover for a limited time. According to consumer organisation, Which?: 'Neither income protection – nor short-term income protection – pay out if you're made redundant. What they may provide is 'back to work' help if you are off sick.' Is redundancy insurance worth getting? When deciding whether to take out a policy such as mortgage payment protection insurance, there are several factors to consider. For starters, employment stability plays a big role. Mr Mugleston said: 'If you have a stable job with good benefits, you might not need mortgage protection insurance. However, if your job is less secure, it could be a valuable safety net.' Just remember that most policies will not pay out immediately – there will typically be a 'deferred period' of up to three months before payments kick in. This may not be particularly helpful as you may well have found another job by this time, and might have actually needed the money much sooner. Also be aware that if you are self-employed or on a temporary contract many payment protection policies won't cover you. Further, if you take voluntary redundancy, you will probably find your insurance won't be of any use. It's essential to scour the terms and conditions of any policy carefully before you buy. You don't want to find yourself spending hundreds of pounds annually on costly protection policies that are unlikely to pay out. Equally, if you have a decent pot of savings put aside, this money can act as a buffer in case you're unable to work, potentially reducing the need for this kind of policy. Mr Smith said: 'A fund of cash savings is an obvious and sensible safety net for both the employed and self-employed. I recommend having between six and 12 months of basic expenditure in your cash reserve for peace of mind.' Redundancy insurance FAQs Where do you find the best redundancy insurance? Stand-alone income protection or mortgage protection policies are available from insurance providers and brokers. It's vital to shop around and compare different providers to find the best deal. Never buy one of these policies automatically from your loan provider or mortgage lender before finding out what's on offer elsewhere. Also be sure to look into other types of insurance and products that might offer similar protection. Comparison sites can be a good place to start, or you can try sites such as Lifesearch or Drewberry Insurance, which specialise in these kinds of policies. When should you consider buying redundancy insurance? If you're thinking about purchasing redundancy insurance, you need to do this when things are going well. Crucially, if you hold off until redundancies have been announced – or until rumours about job losses are doing the rounds at your workplace – you won't be able to claim. Keep in mind that it's worth looking to purchase this type of cover if there's a decent likelihood of redundancy – but this is more than three to six months away – and if you think it's unlikely you'll secure another job within three months of being laid off. Before taking the plunge, you need to be sure you understand the policy terms. The level of cover and exclusions can vary a great deal, so you'll need to check the small print on your policy. How much does redundancy insurance cover? This varies depending on which type of policy you opt for. With income protection, payouts are typically between 50cpc and 70pc of salary, and deferral periods can range from a few weeks to a few months. (Just note that the shorter the deferred period, the higher the premium you're likely to have to pay). Payment protection policies may only cover payments for up to 12 months. Some may pay out for up to 24 months, but they will usually be more expensive. Also note that policies don't usually pay out immediately. There's typically a 'deferral period' of around three months. Mortgage payment protection policies pay out a set amount each month, this tends to be after three months. Seek advice If you're not sure of the best type of protection policy for you – and any financial dependents you may have – it's worth speaking to a financial adviser. They can help you find the right insurance for your needs.
Yahoo
03-04-2025
- Business
- Yahoo
How Trump's tariffs may accidentally 'help UK buyers by lowering mortgage rates'
In an unexpected twist, President Trump's tariffs may actually be the thing that helps UK buyers by lowering mortgage rates, say experts. It's all down to SONIA swap rates (very broadly speaking, this is how much banks pay for sterling overnight), which have fallen this morning following Liberation Day in the US. According to Bloomberg, traders are now pricing in nearly 63 basis points of cuts from the Bank of England with the expectation of three rate cuts this year. The result? Potentially cheaper mortgages for UK homeowners - albeit with worse rates for savers if rates fall. 🚨 #TrumpTariffs: Economic genius or global disaster? 10% import tax + 34% on China = higher prices for YOU. Markets tank, jobs at risk—yet Trump calls it 'Liberation.' Thoughts? @zerohedge @MartiniGuyYT @Reuters @BBCBreaking — Daily Viral Clips. (@dailyviralclip) April 3, 2025 Pete Mugleston, Mortgage Advisor & Managing Director at Online Mortgage Advisor, explains: "Falling SONIA swap rates and expectations of multiple Bank of England rate cuts could be great news for the UK property market. "If Trump's tariffs slow global growth, prompting rate cuts, it may indirectly help UK buyers by lowering mortgage rates. First-time buyers and homeowners could benefit from improved affordability, potentially sparking a flurry of market activity, especially among those waiting for rates to fall. "While his intentions may not have been to boost the UK housing market, Trump's actions could result in a ripple effect that could create opportunities for buyers and encourage lenders to reprice products more competitively in the months ahead." Martin Lewis: Biggest factor to change mortgage rates Nationwide scam warning issued by bank's head of fraud DWP State Pension age will have to rise to 71 says report Riz Malik, Independent Financial Adviser at R3 Wealth agrees: "Trump's trade rhetoric may have rattled global markets, but it could end up offering a silver lining for UK mortgage holders. "Falling swap rates suggest lenders may soon reduce fixed-rate mortgage pricing, easing pressure on homeowners already hit by rising household bills and Reeves' budget. "While the full economic impact of US tariffs is still unclear, a more competitive mortgage market would be a timely boost for the UK housing sector. President Trump may have earned his state visit after all." But, it's not entirely good news, as Stephen Perkins, Managing Director at Yellow Brick Mortgages explains: "There has been an equilibrium between the desire to help an ailing economy with rate cuts and the need to keep inflation down with rate holds at the Bank of England of late, with predictions of only a couple of reductions in 2025. The delivery was pure Trump. Flanked by steelworkers and farmers, he railed against 'globalist sellouts' and past administrations. 'This is liberation from bad deals.' 'Biden wouldn't have the guts.' He's promising a manufacturing renaissance. — Riccardo (@Ric_RTP) April 3, 2025 "President Trump's tariffs have taken a sledgehammer to the scales of that equilibrium and damaged the world economy, so now there is growing pressure on more rate reductions this year to provide life support to the UK economy to compensate for the impact of the tariffs." Jason Hollands, managing director of investment platform Bestinvest by Evelyn Partners, says the Bank of England 'faces a dilemma – on the one hand, tariffs are going to lift the prices of some goods and it has a job to keep the lid on inflation so may keep rates higher for longer, but on the other hand it will want to support the economy from sinking into recession. 'My hunch is that they will regard price spikes related to the implementation of tariffs as a one-off shock and focus more on the risk of economic stagnation. We could therefore see interest rates come down more rapidly than expected. 'The hit to the economy from a global trade war could leave (Chancellor) Rachel Reeves' plans in tatters'. Mr Hollands suggested one option might be to freeze tax allowances and thresholds beyond 2028, 'leading to more and more people slipping deeper into income tax by stealth'.
