With the threat of another interest rate rise tomorrow. Borrowers are rushing to lock into fixed-rate mortgages before they the best deals disappear. New research from data firm Twenty7Tec shows that longer-term fixes in particular are proving attractive to borrowers worried about the uncertain economic outlook, with 7,000 people searching for a fixed rate of more than ten years in April. This is a 72 per cent increase on the same month last year.
There was also a 26 per cent jump in people searching for a ten-year fixed-rate mortgage. While there was a 25 per cent jump in borrowers after five-year fixes. Meanwhile, the number of people searching for two-year fixes, traditionally the most popular of mortgages, fell by 35 per cent.
While the demand for increased security is understandable given rising interest rates and the cost of living. It’s important borrowers don’t lock in for longer than they are absolutely sure about. Many of the longer fixes have hefty early repayment charges for the length of the fixed period. So if borrowers need to get out of the mortgage early, they will be penalized for doing so.
Mortgages for contractors
As house prices continue to rise in many parts of the country, affordability could be another issue facing borrowers. Contractors working across the IT, finance or construction industries. May not realize that they may be able to achieve a bigger mortgage if they seek the right advice. The added complication of IR35 regulation, with the liability for contractor status shifting from the individual to the employer. Means lenders have struggled with umbrella set-ups and what income to use. With contractors paid differently from employees, earning a day rate via a limited or umbrella company.
Subsequently, any contractor looking for a mortgage must use the right broker. Who is well versed with the rules and knows which lender to approach to get the best possible terms. Seeking advice from a whole-of-market broker such as AWS Private Finance can help. Even if it is classed as commission and holiday, and will also take this into account before pension deductions. This can make a significant difference to the amount you can borrow.
Mortgages for professionals
Likewise, professionals may not realize that some lenders will offer preferential terms and rates. Some professions can access higher income multiples of up to six times income. As opposed to the standard four or 4.5 times for non-professionals. While some lenders will take 100 per cent of variable income into account. When working out how much you can borrow.
How AWS Private Finance can help
The introduction of IR35, rising living costs and squeezed affordability. All mean it is more important than ever that borrowers seek mortgage advice from a whole-of-market broker. We have plenty of experience in arranging contractor mortgages, as well as helping professionals get the finance they need, and can guide you through the process, ensuring you are prepared properly. So that there are no nasty surprises when it comes to applying for your mortgage. Please get in touch for more information.
