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First Class Mortgage & Protection
Back in 2014, I was working full time in corporate, trading my most valuable commodity time for salary.Feeling like a small cog in a big wheel, corporate bureaucracy had taken its toll on me.I wasn’t fulfilled and I watched others retire with a £1,000,000 pension that pays them less than the average UK wage.The system is set up for us to work for 40 years to then end up with a life in retirement that ultimately pays us less than when we were working.I noticed that my life in retirement, or even when I decided to slow down, it wasn’t going to be enough.My trajectory was all wrong.One that I feel that all too many of us, are far too familiar with.What I ardently desired was to have full control over my time, so that I could do what I wanted to do, when I wanted to do it, with the people that I loved to be with.It wasn’t the “stuff” that was driving me, it was the freedom and choice to do something that excited me.Something that left me feeling more fulfilled, combined with a trajectory that created greater security and certainty for my family’s future.Something tangible that I was in control of, that no one else could take away from me, when done diligently.Something that allowed my trajectory to go up and not down.I needed to make a change, but at the time, starting out with primitive knowledge, I was unsure and lacking the confidence on how to do it.Since then, I have learned not what to do, and as a result, I have successfully grown my property business which has led me to run and own my mortgage advise business today.Now I know from personal experience and having made the transition from full time employee to successful Property Entrepreneur, that it’s not as easy it’s made out to be.It all starts with acquiring a particular mind-set that needs to be learned and then mastered.It starts with delayed gratification.Delayed gratification is something that a lot of us struggle with. We’d much rather have instant gratification, that’s the kind of world we are living in, and during this terrible pandemic I have been guilty of this too.We want things quicker, and as a result, the property market has gotten distorted from core fundamentals, believe it or not, delayed gratification plays a big part in investing today.No longer do people refer to the phrase ‘good things come to those who wait’.But that is exactly what is required to build a successful property business and no one is talking about it.The best Property Investors avoid deals that others don’t.That’s why we build long term sustainable relationships that offer continued one to one support, so you can build a property business that fits you and your individual circumstances, it’s bespoke to you.
Christian Michael, director and principal consultant of First Class Mortgage & Protection has seen a surge in people looking to move due to lockdown and a temporary cut to the stamp duty land tax.
But with the average house purchase taking up to 12 weeks, he is advising people to start now.
Buyers can currently save up to £15,000 on the purchase price of their property, but there could be a downturn in sales when the holiday and furlough support both come to an end in March.
Christian who has worked in financial services for over 9 years, says people thinking of moving should recognise the time constraints and take action while the market is strong.
The average house buying process can take at least 12 weeks and involves several parties, including lenders, solicitor and mortgage advisors.
“Now is the time to do your homework, make sure the relevant paperwork is in place and look to appoint the necessary people,” he advises.
COVID19 hits income
Christian recognises some people may be struggling to pay their current mortgage. “It helps to know your options so that you have a plan – rather than mounting fear and anxiety. Speak with your lender straight away and they can take steps to help you,” he says.
Some people have lost their jobs due to Covid or have been placed on furlough, posing a risk to mortgage lenders and limiting their options.
Christian explains: “Rates may be slightly higher but there are still attractive options. We have found that lenders want to retain and support customers and are being flexible in the current circumstances.”
Borrowers impacted by coronavirus can take a six-month mortgage payment holiday. People who have already started a mortgage holiday will be able to top up to six months without this being recorded on their credit file.
For every month that is taken off from making payments, the size of debt increases by that amount, along with interest for that time period.
Christian’s calculations show if a three-month holiday was taken for a loan of £222,000 with 23 years remaining, the balance would rise to around £225,000 after the holiday and a further £1,400 in interest.
He says: “There is a short-term gain, but there’s also some long-term pain, and you need to ask yourself if it’s worth it.”
“If you are struggling to pay your mortgage at this time, then such a holiday is likely to be the better option. The effect on your monthly repayments will be relatively small, but costs increase over the lifetime of your mortgage.”
Christian believes repossession is likely to be a last resort for a lender. “People may see lenders as a faceless body, and there’s a misconception that lenders are looking to repossess their house straight away. But in our experience, they generally want to help their customers.”
“Lenders want to lend money and make interest. It’s not good business to repossess homes, which leads to fees and hassle. If you speak to them early on, they can look at your options.”
Options may include taking a mortgage holiday, reduced capital or interest-only payments for an agreed time or an extension on payments.
It may also be possible for some people to downsize and pay for the next property with cash if they have enough equity. Taking out another mortgage, even for a smaller amount, would involve meeting certain criteria.
Christian, who has a quarter of his customers managing buy-to-let properties, says the current market may be best suited to those looking to make a long-term investment.
He adds: “The buy-to-let market is not for everyone. Those with portfolios and funds in reserve are looking to make money back in 10 to 20 years. Buy-to-let is not suited to the risk-averse or those looking to make money in one to two years.”
According to Christian, those with savings may be better off paying part of their mortgage, as opposed to putting money into savings products, which currently offer a lower return on interest rates.
He concludes: “Investing in property could be problematic if you think your income is at risk in future. Paying off more of your mortgage, if possible, could be a safer route to take.”
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR REPAYMENTS