Same House, Double the Cost: What Happened to UK Mortgages?

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Same house double the cost.
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In 2020, the average UK home costs you about 800 quid a month.
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Today the same house is nearly 1,450 quid.
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I think back in the like the 70s, it was effectively three times income could buy the average house.
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Now it's pushing towards seven and eight times average income because house prices have gone up faster than average income has.
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Thing is now with these higher rates for a lot of people, certain areas of the UK, some houses which should be normal homes are like unaffordable.
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Welcome to the Serious Money Podcast, unfiltered money talk for people who have outgrown the basic stuff.
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I'm Chris.
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I'm Gareth.
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28 years experience between the two of us in financial.
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Don't know when that'll be like.
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So five years will be at 40.
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Oh wow.
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Same house double the cost.
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In 2020, the average UK home costs you about 800 quid a month.
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Today the same house is nearly 1,450 quid.
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Nothing about the house change.
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Maybe it got a little bit a little bit mouldier.
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Probably got a little bit drier with global warming, warming and whatnot.
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But the maths did change.
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So that's what we're talking about here.
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Where did all this, where did these extra costs come from?
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Primarily mortgage interest.
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Yeah, mortgage interest, you know, cost of houses have gone up.
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Because like if you look at the historical figures, you can do this, and you can do this on right more.
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You can do this by just looking at like families' houses, historically.
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Have you used that before?
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Use nation?
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No, not really.
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But like effect effectively every 10 years your house should double in value.
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Historically, yeah.
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And you can see that if you look back.
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Like I actually did it with my parents' house, what they bought theirs for, and theirs has theirs actually, I think, from when they bought it, I think they paid like six grand for it or whatever it was back then, which people could buy on a credit card these days on 0% interest if they wanted to.
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But that was obviously back in the 70s or wherever it was.
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But if you did I did the maths with theirs, and it was actually about 11 times what this has gone.
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Wow on average.
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I think it's just got a you know, they just got a standard semi-detached house and import.
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So the house the house is increasing in value, but I think the thing the thing is the wages haven't kept up in it, huh?
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Well, I don't know.
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No, because if you do that like it like I think like I've done this before, I think back in the like the 70s, it was effectively three times income could buy the average house.
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Now it's pushing towards seven and eight times average income.
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Yeah.
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Yeah.
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That makes sense.
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Because house prices have gone up faster than average income has.
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Average UK home went from 230k in 2020 to 280k in June 2026.
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They've been about they've been a bit stagnant for the last year or so.
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They have been.
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They they've kind of been a bit stagnant since the big C word, haven't they?
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What's that?
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2020.
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Yeah.
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The reason I say it like that is because the algorithm used to affect your um reach, didn't it?
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Do you remember that?
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So if you say if you actually used the word COVID in in a uh you say C word, I was just saying the obvious one.
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Oh right, okay.
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So what's he talking about?
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Not that one.
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Not the rude one.
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So social media used to be slightly suppressed if you use the word COVID in it in um in social media posts years ago.
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But anyway, that's a side note.
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Yeah, that's a side note.
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But yeah, no, but like houses are like interest rates have been pretty brutal, you know.
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They have been a killer.
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I've I've got some kinds coming off like 0.895 year fixed, which they had right at the end when it when it kind of went in 2021.
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Yeah, the one on the and the let's say 0.89% fixed for five years.
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I spoke to and they now go on four and a half percent.
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I spoke to I spoke to a guy on Friday.
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He's like, Yeah, I I've got a um so I've got five years, five years left.
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I'm a 1.75.
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You take a tenure.
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That's a core mind, isn't it?
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That was a core mind, wasn't it?
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Absolutely.
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Because but the thing is I never did, I don't talk about you, but I only ever took two years.
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No, I've got to.
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So I've got this thing about taking two-year products, and I always have to I even though I told clients take five years, right?
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Because I was like, look, this is the lowest you'll ever ever see money because um I was always taught this rule of thumb that if you can average five percent over the life of your mortgage, you'd kind of beaten the market in reality.
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Yeah, this that was the general rule when I started out back in the like kind of mid 2000s in doing this.
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So when people get in these, I was like, just take a five year, but I never considered a seven or ten year, which was not.
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See, it's like like like I I I distinctly remember because we're both we've both got experience being mortgage brokers.
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Yeah, yeah.
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Like I remember sort of uh I guess it would have been maybe 2017.
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I distinctly remember having a conversation with a couple around a five year versus a ten year, and at the time the five year was probably around you know 1.2%.
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Ten year was like 1.4.
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You're like a point two at 1.2%.
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Why would you why would you want to be like you know?
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But um yeah, look where we are now, like average average rate.
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Who who knew?
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Like, like I don't think we ever predicted they would go up as rapidly as they did either.
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Do you mean that's how it goes?
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That's how it goes, you know.
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You you can't predict it.
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Do you mean and and like for you know for me, for me, starting off in the industry around 2015, I was sort of introduced to a world where interest rates were borrowing was basically free.
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Oh, because when I took like I was looking back since the global financial crisis, yeah, like like I was looking back through my mortgages, like kind of pre-France 2008 crash and stuff, and like my mortgage, all my mortgages, because I had a few rental properties back evening looking through your previous, they were around about the five percent, five, six percent back then that I was getting.
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Do you know what I mean?
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You just you remortgaged just now.
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Did you say you just remorged?
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Yeah, I just remortgaged now.
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Took a tracker controversial?
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I don't think so.
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Because the difference between for me a two-year tracker with no tie-ins as well, so it means I could jump out and jump into a fix if I needed to.
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That's one of the caveats, or I could sell with no tie-ins, because a fixed rate generally will have a tie-in.
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Actually, most trackers will have some sort of tie-in where you'll have an earlier repayment charge of but but did did you have to pay to get onto that?
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Was there a fee to get onto that tracker?
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Uh yeah, it was a grand 995.
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A lot of them have fees and that's it.
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Yeah, so but it but it kind of worked out the fee version worked out cheaper than the one with no fee.
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But the difference between the fixed and the tracker was 0.75%.
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That's quite a big jump, isn't it?
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Now, that's three I say three base rate moves because generally they move in 0.25 increments when they move the base rate, the Bank of England.
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Do I realistically think over the next couple of years we're gonna have three point two five percent?
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I don't have a crystal ball, but I don't think we will.
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I just think the economy is in in a pretty rough place in the UK.
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I I um I think like clearly if anything, I think it might come down rather than go up.
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That was the the trajectory, sort of the general trajectory if you look at sort of you know the longer sort of term picture of you know five, ten years, has been rates were sort of starting to drop.
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Yeah.
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And sort of start of the year before the before the Middle East stuff all kicked off, yeah.
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Rates were creeping below.
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You know, I I I'd done a two-year fix for someone, I think it was 60% loan to value, you know, 60% 3.7 was it?
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It was sp I think it was 3.6.
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Yeah.
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3.6, but now they'd probably be looking at more like 4.6.
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Yeah, I I think right, because like I like we did a couple before that, which were like I think I remember some rates were like 3.79 sort of figure.
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Because it's quite funny actually.
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Um, I was going with uh potentially a product switch and staying with my current lender, but we needed to borrow some more money to do some uh refurbishments on the house uh that we needed to do.
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But you could I couldn't borrow more with the lender because of their criteria and stuff like that, because I'm self-employed and so on and so forth.
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But I had booked a 3.79% switch rate fixed at that point.
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Oh, so you lost that one?
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I lost that, yeah, through my own fault slightly with the lender Nat West, which I don't know whether you realise this, is that you have to borrow more money with NatWest on a switch.
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There's a certain process you have to go through an order of how you do it.
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You have to do the product switch, you have to do the product further advanced first.
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Yeah, which is basically taking the same.
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Taking them more money out.
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So you have to do the further advance.
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Further advance first, right?
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When that completes, then you can only do the product transfer.
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If you have done the product transfer first, you'd have to complete, wait six months and then do the further advance, right?
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Now, nowhere in their criteria does it say this, and bear in mind we have access to around a hundred lenders, don't we, right?
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So they don't even know their own policies.
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No, no, no.
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And this is the problem, right?
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So I'd been on a live chat and asked this, and they said, no, no, you can do it anyway.
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So their live chat had told me totally wrong.
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So the process and different lenders have different ways of doing it.
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Some don't care how you do it.
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Like Halifax used to have an order you had to do it in, but I think they've changed that now.
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So I got the order wrong.
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So then by that point, the rates had skyrocketed.
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So the next best rates was 4.7%.
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So it'd gone up nearly 1%.
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So I went to a different lender and I got a sub 4% tracker, basically.
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That's good.
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I think a 3.9% tracker.
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But a lot for but for a lot of people, the tracker is kind of you know, if you're on a tracker rate, you've got to have it's a bit of a gamble for a lot of people, isn't it?
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It is a bit of a gamble.
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I've always liked them personally, but but not people like the security of normal they're paying each month.
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They like the security of no one they're paying.
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I think the thing is now with these with these higher rates for a lot of people, in certain areas of the UK, some houses which should be normal homes are like unaffordable.
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Yeah, they they yeah, they are unaffordable.
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And I think that's why we're seeing such sticky like you know, you see these houses on the market, and you know, you s you you and I both speak to clients who are sat in their sort of you know, a family home, you know, valued somewhere between one and two million, something like that.
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They've been there for 10, 20 years, they want to downsize.
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Yeah.
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And these players just get stuck on the market.
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Yeah, they do because you know, if if you think like you look at someone who might want Frago's an 800,000 pound mortgage.
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Now, in reality, you probably need to be earning between probably 200 and 250 grand joint income on that, roughly.
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There are some lenders who will lend more, you know, like I know Halifax and one which will go five and a half, six times.
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I think that west, the thing you put in the notes here is they'll do up to six and a half times depending on your joint income above hundred and thousand, hundred and fifty thousand.
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So like just a few caveats.
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You know, there's generally I'd say generally I I I generally work between four and four and a half, four and four and a half, because that'll take into account any kind of child care debts or anything like that.
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But if you True, but I'd say, you know, for anyone, for anyone listening, if your income is over£100,000, yes, and you want to stretch it, you probably can go five.
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Which is really weird, right?
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Because they pay more tax.
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Pay more tax, so their net take-home is a lot less.
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Yeah.
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Comparatively.
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I cannot get my head around how that works.
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So I actually think people are actually technically stretching themselves.
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And I wouldn't really want to take a client with six and a half times income.
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But you know what?
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There's there's an FCA rule.
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There is a reason behind this.
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Cool.
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There's a there's an FCA rule, and I can't remember the exact percentages, but essentially the FCA says at least 80% of your lending must be at or below four and a half times the value.
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And so the banks then they have to choose what segment of the market they want to go after.
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They want to go after for the above 4.5 times LTV deal.
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So therefore it makes sense.
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So you see some lenders doing it with first-time like nationwide, for example.
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Yeah.
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You see some lenders doing it for first-time buyers.
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Yeah.
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But most lenders are gonna say, well, we'll take the high net worth earners, thank you very much, because we're gonna get we're gonna get more, we're gonna get more borrowing out of them.
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More borrowing, they probably perceive as less risk than maybe as well.
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They they will have run, they would have ri run a risk calculation.
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But again, an another area which is quite nuanced, and like this is why we advocate going to see a whole of market mortgage broker.
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I say whole of market because some are not whole of market.
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But by just going to High Street Bank, High Street Bank might have access to 20 products, right?
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And when I say 20 products, I mean there'll be fixed trackers or offset mortgages, maybe, but they'll have different ones of loan to value.
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So 60%, 70%, 75%, 80%, 85%, 90% loan to value, maybe 95%.
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The odd one does 100% deals, I think, now, potentially.
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Which has got like a parent, borrow, parent, put in money into savings, absolute nonsense.
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But I think I'm sure I saw with Miss Santan there, where they say they're doing like a four like what's a four grand deposit or something.
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Yeah, so well, I will come on to some of those ones now because I've done a couple of those ones.
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They might not have access to that, but if you go and see a broker, you could have access to 12,000 products and all 80 plus lenders in the market.
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Because not everyone these days, I don't think anyone is a straightforward customer anymore, like they used to be.
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Do you know what I mean?
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Because even you have some teachers who are on like kind of contracts, they're not on full-time.
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Oh, yeah.
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Do you know what I mean?
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And and that changes it.
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You you have people who are self-employed, which becomes a little bit more complicated again.
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But by just going to High Street Bank, you might get a straight, oh no, you don't fit for us, but actually you would fit with another lender quite easily.
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Yeah, and I think that's that's what I want to explore a little bit.
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And a lot of the high street banks are not that competitive.
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Like, I I have people who go and see Lloyd's Bank, albeit Lloyds, and then become in Halifax, so I think they'd become a bit more competitive.
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I'm sorry, Halifax becoming Lloyd's, yeah, sorry.
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And then a lot of them being swallowed up is like Virgin have gone to nationwide, is it now?
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Like those of these ones being swallowed up, aren't they, into kind of different but but but I think Virgin's brand is I don't think they'll say Virgin wanted, but it's gonna be under it's under the nationwide banner, which has got slightly different criteria.
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But then does that mean Clydesdale now are part of because Clydesdale and Virgin were part, does that mean they're all under the nationwide banner?
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Yeah, I don't know.
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But then they have different criteria, like Clydesdale are really good with self-employed, retain profits, and we're nationwide, don't do such a thing.
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So it's all a bit kind of nuanced, and this is why we'd always kind of advocate find an independent broker.
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These sort of, you know, this nuance it is the difference between you being able to afford a house and not afford a house.
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Yes.
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If you've got if you've got various sources of income, you've got self-employed income, which a lot of people do, maybe you've got a bonus structure.
00:13:37.440 --> 00:13:38.320
Is a lender going to be a good one.
00:13:38.480 --> 00:13:40.879
You've got a side hustle, you've got rental properties.
00:13:41.200 --> 00:13:42.159
Exactly, all this stuff.
00:13:42.240 --> 00:13:43.279
It's calculated differently.
00:13:43.519 --> 00:13:46.799
And and different lenders will offset rental properties differently as well.
00:13:46.960 --> 00:13:47.200
Yeah.
00:13:47.360 --> 00:13:47.919
Do you know what I mean?
00:13:48.000 --> 00:13:49.360
And require different criteria.
00:13:49.440 --> 00:13:55.279
You know, companies like, for example, Santander don't require proof of your rental property to be self-funded.
00:13:55.360 --> 00:13:59.600
You just need to give it nationwide wants to see one month's worth of bank statements, generally, don't they?
00:13:59.759 --> 00:14:01.360
To say you've got that rent coming in.
00:14:01.519 --> 00:14:01.679
Yeah.
00:14:01.919 --> 00:14:10.240
So but but but then by the same margin, Santander, I think, is one of those that will say, well, even if you're paying, if you've got a credit card, and you're gonna pay it off, they still calculate it with a full.
00:14:10.480 --> 00:14:11.200
They'll still calculate it.
00:14:11.600 --> 00:14:18.720
Which is a little bit of me that agrees with that, because there'll be a lot of people who take this further part and pay the credit card off but never pay it off.
00:14:18.879 --> 00:14:22.240
Yeah, but they can put that into the they can put that into the contract if they were that bothered about it.
00:14:22.399 --> 00:14:23.360
Which is what I think they should.
00:14:23.440 --> 00:14:25.919
I think some of them should do that if you consolidated their thing.
00:14:26.320 --> 00:14:36.159
Like, you know, when they should pay the when like for some people, if you're moving house, like when I moved house, part of that exercise was right, clean's late, I'm gonna pay off all my car and everything.
00:14:36.240 --> 00:14:39.279
Yeah, and I'm gonna move house, and that that was part of my calculation.
00:14:39.440 --> 00:14:39.759
Yes.
00:14:40.000 --> 00:14:55.600
So so you've got Santander, for example, like some things they're good at, so and so you need to balance everything, and that's how you sort of get to the point where you can borrow more, and it's not all about borrowing more, but at the end of the day, this is about getting in the house which you need in the area which you want, so that you can live your life, basically.
00:14:55.840 --> 00:14:59.440
Yeah, it exactly, and but it is getting harder to buy, you know what I mean?
00:14:59.519 --> 00:15:04.720
I I think there's a lot of different kind of things out there, and you know, the cost of buying a house is expensive.
00:15:04.799 --> 00:15:06.559
How do you get the deposit to buy one?
00:15:06.720 --> 00:15:07.919
Yeah, gifted deposit if you're gonna have to.
00:15:08.159 --> 00:15:08.720
Gifts and deposit.
00:15:08.879 --> 00:15:14.000
You know, there are a few of these lenders like Yorksville and side or Cord Mortgages, which is the broker side, they do this.
00:15:14.399 --> 00:15:17.519
It works out as it can effectively be a one percent deposit, doesn't it?
00:15:17.679 --> 00:15:22.000
Because it can be up to half a million pounds, but the deposit is five thousand pounds.
00:15:22.240 --> 00:15:22.799
Yeah, okay.
00:15:23.840 --> 00:15:32.000
So it's uh it's a product which they call it a one percent deposit mortgage because they can go up to half a million, but basically the deposit is a minimum of five grand.
00:15:32.559 --> 00:15:36.480
So, you know, if you're buying a£250,000 property, then what that what's that?
00:15:36.639 --> 00:15:37.919
Five percent, is it ten percent?
00:15:38.159 --> 00:15:38.320
10%.
00:15:38.960 --> 00:15:44.240
Yeah, so it it helps for people on a on a higher buying a higher value property.
00:15:44.320 --> 00:15:44.879
So, you know what I mean?
00:15:44.960 --> 00:15:48.240
If they're buying a half a million pound property, it effectively is only one percent deposit.
00:15:48.480 --> 00:15:51.440
Right, but you're gonna pay, yeah, but you're gonna pay a egregiously high rate of interest.
00:15:52.080 --> 00:15:54.799
10% says 2% isn't it on 250,000, right?
00:15:55.039 --> 00:15:58.879
You are like I can't remember what it is, I think it's like mid-fives, I think.
00:15:59.039 --> 00:16:01.360
The but it means you can get on the property ladder.
00:16:01.679 --> 00:16:03.600
But you still need to be able to afford the balance, so you need that.
00:16:04.000 --> 00:16:05.759
Yeah, yeah, you you you need a higher income for that.
00:16:06.080 --> 00:16:08.720
Right, which is you also need a very good credit rating for that as well.
00:16:09.039 --> 00:16:11.919
But I have done quite a few of them to get people on the market, get on the ladder.
00:16:12.240 --> 00:16:15.600
To get the best possible rate, you've got need a couple of things, really, don't you?
00:16:15.679 --> 00:16:20.879
You need you need a strong income to give yourself the widest pool of lenders available, a strong secure income as well.
00:16:20.960 --> 00:16:25.200
So you know, ideally you need to have been in that job for a little bit of time, at least a year, I would say.
00:16:25.279 --> 00:16:29.600
You know, there's no wrong, there are some lenders who will do it based on just to keep all the options open.
00:16:29.919 --> 00:16:30.720
All the options open.
00:16:30.799 --> 00:16:31.360
Do you know what I mean?
00:16:31.440 --> 00:16:36.240
You you you you narrow the market if you've like just started your job or you're due to start a job.
00:16:36.399 --> 00:16:38.960
There are some lenders who will take a contract.
00:16:39.120 --> 00:16:44.000
But generally, yeah, you you you you probably want to have been in that employment six months plus you're out of your probation.
00:16:44.080 --> 00:16:44.399
Yeah.
00:16:44.559 --> 00:16:48.559
Um you've got to be you've got to be you've got to have time on your side as well to keep the costs low.
00:16:48.720 --> 00:16:54.480
Because if you want to if you want a 40-year mortgage term, which I'm an advocate for that, and I'll we'll come on to that in a second.
00:16:54.639 --> 00:16:54.720
Yeah.
00:16:55.600 --> 00:16:58.000
Yeah, because you can generally have up to 40 years, can't you?
00:16:58.080 --> 00:16:59.200
You know, on a mortgage term.
00:16:59.440 --> 00:17:02.159
But you typically can't go beyond age, typically seven.
00:17:02.720 --> 00:17:03.200
70.
00:17:03.279 --> 00:17:09.599
There's a few lenders on 75, but I generally will work on the 70 rule because that opens you up to more lenders.
00:17:09.759 --> 00:17:09.920
Yeah.
00:17:10.079 --> 00:17:10.640
Do you know what I mean?
00:17:10.720 --> 00:17:12.400
Um, right?
00:17:12.640 --> 00:17:13.920
Which means you've got to be 30.
00:17:14.000 --> 00:17:14.240
Yeah.
00:17:14.319 --> 00:17:14.640
For that.
00:17:15.119 --> 00:17:19.279
Otherwise you're going to be squeezed and the costs are going to increase because you've got less time to pay the bloody thing off.
00:17:19.599 --> 00:17:20.000
Exactly.
00:17:20.240 --> 00:17:23.519
More deposit you put down, the better rate you'll get, generally.
00:17:23.680 --> 00:17:23.920
Yeah.
00:17:24.160 --> 00:17:28.319
Doesn't really change much at 25 to 30% deposit.
00:17:28.480 --> 00:17:32.640
You know, once you break that, that's the sweet spot for the best rates.
00:17:32.799 --> 00:17:36.640
But I I don't think there's not a huge amount between 15 and I was looking yesterday.
00:17:37.920 --> 00:17:39.279
There's not much difference between right now.
00:17:39.599 --> 00:17:40.400
Right now, there was.
00:17:40.559 --> 00:17:41.759
Do you remember what it used to be like?
00:17:41.839 --> 00:17:43.359
Like you there'd be huge disparity.
00:17:43.440 --> 00:17:43.839
Do you know what I mean?
00:17:44.000 --> 00:17:46.000
Normally, but now it's quite small.
00:17:46.240 --> 00:17:51.519
The way it works is 5%, you'll you get you get you get higher 50% rates.
00:17:51.680 --> 00:17:56.640
If you put down six, seven, eight, or nine percent, you still get 95% rates.
00:17:57.039 --> 00:17:59.920
Put down 10%, then you get slightly better rates.
00:18:00.960 --> 00:18:09.440
But but between I would say that 10 per 10 and 15% deposit and 30% deposit now, there isn't a huge amount, is there, in the rates?
00:18:09.680 --> 00:18:14.240
I was looking at the rates um 4.4 to 5.5.
00:18:14.640 --> 00:18:16.480
That's where the rates are at the moment.
00:18:16.799 --> 00:18:17.039
Really?
00:18:17.279 --> 00:18:18.319
I don't look at them as much.
00:18:18.480 --> 00:18:23.920
I don't I I started out in mortgages as a mortgage broker, and now we still do mortgages in-house.
00:18:24.079 --> 00:18:25.759
Um, I don't do that many of them anymore.
00:18:25.839 --> 00:18:32.079
So I kind of like I'm a bit behind a little bit on some of the criteria with lenders, but I still understand it because I still keep my hand in.
00:18:32.160 --> 00:18:33.680
But yeah, I'm not 100% like, yeah, right.
00:18:33.920 --> 00:18:35.839
But a lot last time I looked, you were looking for you.
00:18:36.400 --> 00:18:48.000
I I know you're in the mid I know you're in the mid-fours, like when I was kind of looking because it's weird, it's kind of it sat around there for quite a while now, it's fluctuated up and down, up and down, as and then we have that little bit of a spike where it pushed everything up massively.
00:18:48.079 --> 00:19:00.079
And I'm probably it's probably worth just explaining why that like people fixate on the bank of England base rate being the real driver behind interest rates, but it's not so much, it's the inter-bank swap rates, isn't it?
00:19:00.160 --> 00:19:08.160
Which are driven by money markets and then and driven by things like what's going on in Iran and Ukraine and and generally in the economy.
00:19:08.799 --> 00:19:14.880
That's that's normally the the the closest the closest sort of sign that rates are changing.
00:19:15.039 --> 00:19:20.079
What is the cost of borrowing overnight between banks, yes, essentially over the short term?
00:19:20.400 --> 00:19:22.480
They they call it the inter-bank swap rates, don't they?
00:19:23.839 --> 00:19:26.720
Yeah, uh and then it's also long-term guilt, isn't it, as well?
00:19:26.880 --> 00:19:28.799
The yield on long-term guilt has an effect on it as well.
00:19:29.200 --> 00:19:35.359
This is basically say how much so the Bank of England base rate, and everyone kind of hinges on that, is a little bit irrelevant.
00:19:35.599 --> 00:19:38.799
That's kind of a that's almost that's more so for my tracker.
00:19:39.279 --> 00:19:43.359
Yeah, but also the base rate that they are kind of linked to the same thing.
00:19:43.519 --> 00:19:43.759
Yeah.
00:19:44.000 --> 00:19:47.920
But the but but the canary in the coal mine is the is the swap rates, as you say.
00:19:48.160 --> 00:19:48.720
Swap rates, yeah.
00:19:48.799 --> 00:20:02.079
That's one of the by the time the Bank of England base rate comes along, the canary's already sort of uh Yeah, and and and and this is the interesting thing, like I was trying to educate clients on this is that you know they they see the Bank of England base rate move and they're like, Does that gonna affect my mortgage rate?
00:20:02.240 --> 00:20:07.279
No, because everything's been priced in anyway, rates will have already moved so on anticipation of it.
00:20:07.519 --> 00:20:08.559
Yeah, agreed.
00:20:08.720 --> 00:20:11.839
So um keep keeping the cut like you can't make the house cheaper.
00:20:12.000 --> 00:20:22.079
I mean, you can you obviously you've got to not overpay for a house, but what I normally you know say to people as well, pay what you th you know, offer what you think the thing is worth, the mortgage lender's gonna send a value anyway, and if it down.
00:20:22.319 --> 00:20:22.640
Yeah, exactly.
00:20:22.720 --> 00:20:30.559
Because you do see some weird and wonderful valuations, and you know, you can do a bit of research yourself by looking at right move sold prices in the local area, looking for comparable properties.
00:20:30.640 --> 00:20:39.279
Because generally, like like uh a a value of a chart surveyor will go out and they will ring some local agents and kind of say to them what's what are these properties selling for the area?
00:20:39.440 --> 00:20:57.920
They use their local knowledge, they'll they'll look at what we call in the back end of right move called right move plus, gives them far more parameters around which you will never see on right move around what houses are moving, like what they're selling for, what offers have been accepted on them, how properties are moving up and down, and then they apply a bit of kind of science to it of their experience and stuff.
00:20:58.000 --> 00:21:04.319
But the surveyors, the the surveyors looking at what the property should sell for in an open market.
00:21:04.480 --> 00:21:04.799
Yeah.
00:21:05.039 --> 00:21:18.720
Whereas the agent is looking for what's the what's the most that we can possibly get from also the agent there are some more sense, like some of the some of the more sensible agents have usually got a surveying department, so they're coming here from an actual proper science.
00:21:18.799 --> 00:21:28.400
Other other companies are doing doing it just to get your deal over the line, just to try and get the amount you see on the market, they'll say, Oh, we'll put it on at this because they're trying to beat every other they just want property on the books.
00:21:29.440 --> 00:21:31.200
But then they end up bringing the bloody price down.
00:21:31.440 --> 00:21:33.359
It doesn't now let me caveat this.
00:21:33.519 --> 00:21:40.480
This isn't all agents, some of the big nationals, or some of these kind of you like some of these purple bricks and all that, are they still around?
00:21:41.680 --> 00:21:42.400
So probably so long.
00:21:44.079 --> 00:21:45.279
But so they were terrible for it.
00:21:45.359 --> 00:21:45.920
Do you know what I mean?
00:21:46.000 --> 00:21:49.359
Where they'd like tie you into these contracts, they'd put the price through the roof.
00:21:49.599 --> 00:21:59.599
They want the property on the books, so the incentive to like I think people have got to be realistic, especially in the current market, about how much their property is worth, and be very cautious about um prices.
00:22:00.160 --> 00:22:01.200
The properties are marketed at.
00:22:01.279 --> 00:22:06.400
If it's been on the market for a year, it's obviously not worth there's a couple of things wrong with it.
00:22:06.480 --> 00:22:13.359
It's overpriced potentially, the makeup of it just isn't appealing to the market because maybe you've done some things cosmetically to it.
00:22:13.519 --> 00:22:19.200
For example, turning a uh like a four-bed into a two-bed because you wanted massive might be.
00:22:19.279 --> 00:22:20.079
You do a few of those, don't you?
00:22:20.240 --> 00:22:20.880
You do a few of those.
00:22:20.960 --> 00:22:24.160
Yeah, or you made some cosmetic changes to it, which just doesn't appeal to the market.
00:22:24.400 --> 00:22:26.559
Yeah, but then but then that means it's not worth what is on the market.
00:22:26.640 --> 00:22:27.440
It's not worth what it's for.
00:22:27.759 --> 00:22:28.240
That's the bottom line.
00:22:28.400 --> 00:22:29.200
And yeah, exactly that.
00:22:29.440 --> 00:22:36.000
But a the the incentive from the agent's perspective is I want this property on my books on a three on a three-year contract.
00:22:36.079 --> 00:22:40.880
So I'm gonna make you believe that your house is awesome and it's worth 100 grand more than it actually is.
00:22:41.039 --> 00:22:49.119
Yeah, and and and also remember that when you're a buyer, that the agent, however you cut this, the agent is working for the seller, not you.
00:22:49.279 --> 00:22:52.400
Yeah, they're trying to get the best deal across the line.
00:22:52.480 --> 00:22:59.599
So be careful what you tell them about your situation because the you know you need to be you need to be a little bit cold when you're buying a property.
00:22:59.759 --> 00:23:08.480
Don't like I kind of always say, don't show all your cards at once, don't walk in there, and when you're with the agent, suddenly start saying, Oh, this is the house I want, this is the dream house, this is amazing.
00:23:08.640 --> 00:23:17.039
Because if you want to offer a deal on it, then you want to try and get 10-15% off the asking price, you're not because they know you just literally you sold yourself in that appointment.
00:23:17.200 --> 00:23:19.839
I mean, be very kind of calculated with the way you kind of do it.
00:23:20.480 --> 00:23:21.359
I'd communicate by email.
00:23:21.680 --> 00:23:22.799
Yeah, communicate by email, yeah.
00:23:23.039 --> 00:23:24.400
These people are meant to be professional.
00:23:24.480 --> 00:23:32.400
Uh and and remember, there's no such thing as a stupid offer, and they legally have to provide that offer to this to the to the seller.
00:23:32.640 --> 00:23:33.839
Okay, put that in the email as well.
00:23:34.160 --> 00:23:35.599
Put that in the email because some won't.
00:23:35.680 --> 00:23:38.400
They'll because they will say to you things like, Oh, that's far too low.
00:23:38.480 --> 00:23:40.480
And you say, I don't care, I want you to put that offer to them.
00:23:40.559 --> 00:23:43.039
Because you you've got to put it in, then you can work your way up an increment.
00:23:43.200 --> 00:23:44.400
There's no hard or fast rule.
00:23:44.559 --> 00:23:50.160
I generally, when I used to buy and set and like buy properties, I would start at 15% below, which is a bit punchy.
00:23:50.319 --> 00:23:59.200
I think it like so if uh if a property's on the market for 100,000, I would offer 85, depending on the mark on it's a little bit difficult now because there's a lot less stock on the market.
00:23:59.359 --> 00:24:03.279
So when you are going to see a prop property, you're potentially bidding against other people anyway.
00:24:03.359 --> 00:24:04.960
So you've got to be a little bit savvy with it.
00:24:05.039 --> 00:24:10.240
I I think yeah, there's also a factor of the main residence being not necessarily an investment.
00:24:10.400 --> 00:24:19.599
I just think like for me, I'm just gonna be offering best and final via via email, the what I feel is reasonable market value for that property.
00:24:19.839 --> 00:24:22.559
You've got to be willing to walk away as well, which is likely gonna be lower.
00:24:22.880 --> 00:24:26.240
I don't want to mess around, I don't want to go into a bidding war, it's not an investment.
00:24:26.319 --> 00:24:29.839
I won the house, but I only want to pay market value for it, I don't want to pay more.
00:24:30.000 --> 00:24:31.519
Yeah, and we went through a phase of that.
00:24:31.839 --> 00:24:36.480
We were probably gonna grow over market value, value was a down boundary because there just wasn't much housing stock out there.
00:24:36.559 --> 00:24:36.799
Right.
00:24:36.880 --> 00:24:37.440
Do you know what I mean?
00:24:37.599 --> 00:24:43.680
Like in the current with rates as they are, with the tax situation as it is, you don't stamp duty we haven't talked about.
00:24:43.920 --> 00:24:44.400
Oh yeah.
00:24:44.480 --> 00:24:45.759
Like let's talk about that.
00:24:45.920 --> 00:24:48.880
Well, let's not talk about it changing, but yeah, we've um yeah.
00:24:49.359 --> 00:24:52.480
Well, stamp d stamp duty is uh is an interesting one.
00:24:52.559 --> 00:25:03.279
Like I I I personally I I'm I'm about to do a video on this on Instagram where I actually think we should abolish um stamp duty for main residents.
00:25:03.359 --> 00:25:05.039
I think we should only charge on investment.
00:25:05.440 --> 00:25:08.160
Well, there was a I did a post about this the other day.
00:25:08.240 --> 00:25:08.960
I don't know if you saw it.
00:25:09.200 --> 00:25:11.440
I probably did, I probably liked it but didn't watch it, you know.
00:25:12.640 --> 00:25:14.400
You probably reported it, didn't you?
00:25:14.559 --> 00:25:28.000
Uh no, that the that there was a essentially there's a copy of it, maybe there's there's a there's a bit of noise in the newspapers as as always, um, you know, around a new property tax, oh yeah, uh which would replace council tax and duty.
00:25:28.480 --> 00:25:32.720
So basically it would be sort of a fraction of a percentage.
00:25:33.119 --> 00:25:36.000
The bigger the house you got, the the more expensive it is, the more you're gonna pay.
00:25:36.079 --> 00:25:37.279
But how are they gonna value that?
00:25:37.519 --> 00:25:42.400
Well, they the the idea would be that they value it on a three-month rolling base a three-year rolling basis.
00:25:42.720 --> 00:25:44.000
She'd have to have a valuation done.
00:25:44.160 --> 00:25:47.680
Well, they'd be well, this is the thing, they've got the tech now to be able to do these valuations.
00:25:47.759 --> 00:25:53.920
It's not like because council tax is based on But that's interesting, though we talk about tech, because that'll work on your local area.
00:25:54.079 --> 00:25:56.400
The average house is a little bit like when they do desktops, right?
00:25:56.559 --> 00:25:59.039
Yes, it's well I had this once, this is quite funny, right?
00:25:59.200 --> 00:26:07.680
So one of my clients had a three-bed like semi-detached, just on the outside of this estate, which were multi-million pound gated properties.
00:26:07.839 --> 00:26:11.359
So his probably it was probably only worth about half a million, right?
00:26:11.440 --> 00:26:13.519
But he got valued at two million, right?
00:26:13.759 --> 00:26:15.680
Because he fell into this postcode area.
00:26:16.000 --> 00:26:19.119
Like it was it was uh on a desktop valuation that was.
00:26:19.200 --> 00:26:22.000
But if a value went out, you would have been like, well, actually you're not part of that estate.
00:26:22.079 --> 00:26:25.359
And yeah, so it's it's funny you say that because you could end up then paying more money on it.
00:26:25.839 --> 00:26:32.640
And and you know, there's there's parts of Cardiff, like you know, like Poncana, say oh yeah, you you and then you cross you cross the main road and you're in Canton.
00:26:32.880 --> 00:26:34.559
Yeah, and and it's half the price.
00:26:34.720 --> 00:26:34.960
Yeah.
00:26:35.200 --> 00:26:36.319
Doesn't really make sense, does it?
00:26:36.559 --> 00:26:37.279
I don't know, that's the problem.
00:26:37.359 --> 00:26:39.759
So how and that's my thing then they're a different style of house.
00:26:40.000 --> 00:26:48.319
If they're if they're gonna do this kind of property tax thing based on a percentage of the value of the house and so on and so forth, that it's gonna be an absolute car crash.
00:26:48.400 --> 00:26:51.119
Because you could then stamp duty is a is a bitch though.
00:26:51.279 --> 00:26:52.319
Oh, some duty surrender.
00:26:52.480 --> 00:26:53.039
We don't get anything for it.
00:26:53.119 --> 00:27:01.200
I always kind of say this, clients remember you gotta pay stamp duty and remember you don't even get a bottle of proseca when you um when you buy the house for for the tax you're paying.
00:27:01.519 --> 00:27:01.920
Nothing for it.
00:27:02.079 --> 00:27:03.279
It's just an easy tax, isn't it for them?
00:27:03.359 --> 00:27:04.000
It's just an easy tax.
00:27:04.319 --> 00:27:11.359
Yeah, but the I I mean it's it's stifling though because it it actually stops people from downsizing as well, which just completely stagnates the market.
00:27:11.519 --> 00:27:20.880
Yeah, I I I think I uh genuinely, I and this is another episode, but the whole tax system is so archaic, it needs a whole we need to understand where some of this money is.
00:27:20.960 --> 00:27:34.319
I think we need in the country we need to really understand where we're spending money because we're we waste a lot of money in the UK, and the way we think we can sort that out is by just adding more taxes to tax our way out of debt.
00:27:34.480 --> 00:27:47.359
But I think I think I I kind of liken us to a really bad spender who can't in the UK, I we just can't control our which terrible with our budget in the UK and it's driving all these tax changes.
00:27:47.599 --> 00:27:56.559
I think the government j generally underestimate, and this is probably true of many countries, they underestimate the the impact behaviourally, and that's something like stamp duty has.
00:27:56.960 --> 00:28:01.519
Like use the example, you know, you'll you'll recognise this, seven bridge.
00:28:01.599 --> 00:28:02.799
Or was it five pounds seventy?
00:28:03.039 --> 00:28:05.279
Oh yeah, so five pounds seven is highest.
00:28:05.440 --> 00:28:06.880
They removed like five pounds seven.
00:28:07.200 --> 00:28:09.440
And that was funding keep the upkeep of the bridge, wasn't it?
00:28:09.519 --> 00:28:10.480
And painting it and all that.
00:28:10.640 --> 00:28:10.960
Yeah, yeah.
00:28:11.039 --> 00:28:12.799
But so so so they they scrap that.
00:28:12.960 --> 00:28:18.640
Yes, right, all of a sudden, every Tom Dick and Harry from Bristol moves the other side to Chapstone.
00:28:18.880 --> 00:28:20.400
Yes, because it's cheaper to live there.
00:28:20.559 --> 00:28:24.720
Yeah, but£5.70 wouldn't have made a huge amount of difference.
00:28:24.799 --> 00:28:36.079
It I know it adds up, but it's just like that it's that mental barrier, it's queuing to pay to throw the money in the basket, like it's just that sort of that barrier to entry, yeah, which it could have been a quid.
00:28:36.160 --> 00:28:37.440
Probably the same thing would have happened.
00:28:37.599 --> 00:28:45.759
Yeah, it's the same with stamp duty, it's not so so much the amount, but it's so it's that sort of you know, elderly couple who's in a sort of 1.5 million quid house.
00:28:45.920 --> 00:28:51.599
They literally won't sell because they don't want to pay 20 rand on stamp duty to buy a 600,000 pound house.
00:28:51.759 --> 00:28:54.000
That's the Yeah, it's a psychological thing, isn't it?
00:28:54.079 --> 00:28:56.720
And and and I don't think you should pay on downsizing.
00:28:57.039 --> 00:28:57.279
No.
00:28:57.519 --> 00:28:59.440
But I I just think it all needs to be overhauled.
00:28:59.519 --> 00:29:06.240
Do you mean I like it which then there's gonna be there's gonna be some um there's gonna be some teething issues to say the least if it does get done.
00:29:06.480 --> 00:29:11.039
I just think the whole tax system that you kid needs to be overhauled because it it just doesn't it's just not fit for purpose.
00:29:11.200 --> 00:29:12.480
Do you mean it's very archaic?
00:29:12.799 --> 00:29:18.000
To get the best rate, you've got to reduce the loan to value, you're gonna get the best rates at 60% loan to value.
00:29:18.240 --> 00:29:25.279
Income, you need your you need your income to be at least probably you know no more than the borrowing you need divided by four.
00:29:25.359 --> 00:29:25.440
Yeah.
00:29:25.599 --> 00:29:27.599
No less than the borrowing you need divided by four.
00:29:27.680 --> 00:29:32.880
So if you need a million quid, you know, to get the best possible rates, you probably need income of two, two hundred and fifty grand of gross.
00:29:33.119 --> 00:29:36.480
Yeah, yeah, I would say yeah, easily because th some things come with that.
00:29:36.559 --> 00:29:42.960
When you're on that sort of income, you've usually got quite an expensive car, which is factored in with a most lenders will factor it in for affordability.
00:29:43.119 --> 00:29:47.119
You've probably got childcare costs, you might have private school costs, all those things will exist.
00:29:47.759 --> 00:29:51.839
That's generally why I work, even though these lenders will offer five to five and a half times.
00:29:52.160 --> 00:29:55.200
That is not taking into account deducting your expenditure.
00:29:55.279 --> 00:29:59.599
So that's why generally I will work on four to four and a half times as a rule of thumb for kind of lending.
00:29:59.839 --> 00:30:02.079
Do you think there's ever a bad time to move to move home?
00:30:02.319 --> 00:30:04.880
No, I because I think it's I think it's relevant to you.
00:30:04.960 --> 00:30:06.400
If you need to move, you just move, don't you?
00:30:06.720 --> 00:30:07.920
I mean it's short, isn't it?
00:30:08.240 --> 00:30:12.160
And and like you said, you're not buying investment property, you're buying a family home.
00:30:12.240 --> 00:30:12.400
Right.
00:30:12.559 --> 00:30:14.240
You're not buying this for investment purposes.
00:30:14.319 --> 00:30:18.240
And this is where I come back to like people say, Oh, the market's crashed and my house has gone down in value.
00:30:18.319 --> 00:30:19.839
And I'll say to them, Are you planning on selling?
00:30:19.920 --> 00:30:21.119
Oh no, it's our forever home.
00:30:21.279 --> 00:30:22.480
Don't worry about it, it's paper exercise.
00:30:22.559 --> 00:30:22.720
Right.
00:30:22.880 --> 00:30:27.680
If you've if your house technically on paper has gone from half a million to 450, it's a paper exercise.
00:30:27.839 --> 00:30:30.400
And let it only becomes an issue if you need to sell.
00:30:30.559 --> 00:30:30.720
Yes.
00:30:30.880 --> 00:30:33.119
But then you kind of hope the property your buying has come down in value as well.
00:30:33.279 --> 00:30:44.559
I guess there's also like the there's also in the back of your mind, if you're on a short-term fixed rate like you are, if your property decreases in value, then when you come to remortgage, you could actually bump up a loan-to-value bracket.
00:30:44.720 --> 00:30:46.160
Yeah, it's even put you on 100%.
00:30:46.559 --> 00:30:50.960
It's not kind of a yeah, I guess for me that's not overly relevant, I guess, when loan to value is it's quite low.
00:30:51.359 --> 00:30:53.039
28% or something, stupid like that.
00:30:53.119 --> 00:30:55.680
But yeah, if you're on a higher, yeah, it can certainly do.
00:30:55.839 --> 00:31:05.119
I I think uh one I'd like to talk about, like, is and I and I see a lot of creators talking about credit rating, and you've got to have a brilliant credit to get a mortgage and stuff like that.
00:31:05.279 --> 00:31:10.880
Sadly, a lot of these creators have never actually worked in the mortgage industry, so there's a little bit of a nuance to credit.
00:31:11.039 --> 00:31:14.880
Bad credit will affect you getting a mortgage, generally full stop.
00:31:14.960 --> 00:31:15.440
Do you know what I mean?
00:31:16.079 --> 00:31:19.759
If you've missed a load of payments, you know, you defaulted on things.
00:31:20.079 --> 00:31:20.559
CCJ.
00:31:20.880 --> 00:31:22.079
CCJ before judgment.
00:31:22.319 --> 00:31:26.240
Yes, you can get mortgages, you'll end up with a horrendous rate, but really, I think you're out of the market.
00:31:26.400 --> 00:31:34.240
You know, you just need to have some credit, you pay it regularly, you haven't missed any payments, you're not overly debted.
00:31:34.559 --> 00:31:36.160
That's all you kind of need to have a good credit rated.
00:31:36.400 --> 00:31:36.880
Do you know what I mean?
00:31:36.960 --> 00:31:37.200
Yeah.
00:31:37.440 --> 00:31:42.720
I think Because they look at it very differently for a mortgage, because it's it's secured on a property, right?
00:31:42.880 --> 00:31:45.920
Because you might find you've gone to get a new credit card, right?
00:31:46.000 --> 00:31:47.519
And you've been declined, okay?
00:31:47.680 --> 00:31:49.839
And you think, oh, now I'm not gonna be able to get a mortgage.
00:31:49.920 --> 00:31:51.440
That's not gonna happen, right?
00:31:51.759 --> 00:31:56.480
Because your money is secured against a debt, because the bank know if anything really happened, they just take the house off.
00:31:56.799 --> 00:32:01.839
I think well, like what I would suggest to anyone to do is to get a check my file credit report.
00:32:02.000 --> 00:32:04.720
Yeah, but we can put a link to that in the in the show notes.
00:32:04.799 --> 00:32:05.039
Yeah.
00:32:05.359 --> 00:32:08.240
Like how you can get your I think you get a free 30 days as well, don't you?
00:32:08.319 --> 00:32:08.559
I don't know.
00:32:08.640 --> 00:32:11.039
On those it's just a nice little rapport.
00:32:11.119 --> 00:32:12.160
You can go through it.
00:32:12.319 --> 00:32:19.680
Some people And you see, and Check My File covers all the is it um Equifax, Experian, and TransUnion, which are all the main ones that lenders use.
00:32:20.079 --> 00:32:20.559
You can also use it.
00:32:20.640 --> 00:32:22.319
We're not we're not sponsored by Check My File.
00:32:22.480 --> 00:32:26.960
No, but what you're looking for is you're looking for any missed payments and late payments.
00:32:27.279 --> 00:32:33.279
Any late payments, uh any defaults which will show as a D on there, and it'll show you'll be amazed how much information it actually shows you.
00:32:33.519 --> 00:32:33.920
Yeah, yeah.
00:32:34.400 --> 00:32:35.920
Like how much these banks know about you.
00:32:36.000 --> 00:32:40.720
Basically, it gives you everything the bank can see before you actually apply everything in Lenders.
00:32:40.880 --> 00:32:41.680
And there's something key.
00:32:41.759 --> 00:32:51.839
And one of the big ones is which can affect you getting a mortgage, is an old mobile phone credit agreement, which you might have had some dispute.
00:32:52.000 --> 00:32:52.720
I've had this a lot.
00:32:52.799 --> 00:32:53.839
I don't know whether you've come across it.
00:32:54.160 --> 00:32:55.680
Maybe you bought your ex a phone or something.
00:32:55.920 --> 00:33:04.240
Yeah, or like like the amount of times you see O2 voter phone where it might only be a default of£10 or£15, but they really hammer your credit report with it.
00:33:04.400 --> 00:33:05.759
Same with um water as well.
00:33:05.920 --> 00:33:07.119
Do Welsh Water do it?
00:33:07.279 --> 00:33:10.079
Welsh Water if you rent if you rented or something.
00:33:10.240 --> 00:33:18.240
If you or if you've got rental properties and you've put yourself up as the original, as the owner of that property, they'll ping your credit report and that will really stop you getting them.
00:33:18.319 --> 00:33:19.359
But we had a real problem with a client.
00:33:19.599 --> 00:33:31.359
One of my clients said he's got 100 blinking rental properties, and plus he had one default on a water bill which one of his tenants defaulted on, he knew nothing about, pinged his credit report, 200 quid, right?
00:33:31.519 --> 00:33:33.519
We generally it was really hard to get in mortgages.
00:33:33.599 --> 00:33:35.920
We we had to go we had to go to specific lenders to get him mortgages.
00:33:36.079 --> 00:33:37.039
It can normally be done though.
00:33:37.119 --> 00:33:39.759
It can normally be yeah, you can normally get the mortgage through, can't you?
00:33:39.920 --> 00:33:45.599
You can get it through, yeah, you can't this unless this was yeah, the big ones are more if you've if you've obviously defaulted on a mortgage in the past.
00:33:45.839 --> 00:33:50.960
But like but it but this thing I see a lot of people, you know, like take out a credit card so you it's gonna get your mortgage.
00:33:51.039 --> 00:33:52.400
That doesn't really work.
00:33:52.799 --> 00:34:00.000
The only time that will well, what I will say is I was speaking to a young guy a couple weeks ago, and we did a mortgage application for him.
00:34:00.240 --> 00:34:03.519
Got like three or four declines, and there's nothing bad on his credit report.
00:34:03.599 --> 00:34:05.759
I put it through, I put it, you know, I I escalated.
00:34:06.079 --> 00:34:06.880
Didn't have any credit, I guess.
00:34:07.119 --> 00:34:08.239
Just didn't have any credit.
00:34:08.480 --> 00:34:13.760
But saying that, you know, we went down to sort of page two of the sourcing, he took a hit of 0.1%.
00:34:14.480 --> 00:34:15.679
Yeah, like we we got a deal.
00:34:16.000 --> 00:34:21.760
Because the thing is, some lenders, and this comes back to what you said uh around the FC rules, some lenders don't want that type of client.
00:34:21.920 --> 00:34:22.159
Right.
00:34:22.320 --> 00:34:28.320
And it's a little bit like like I will I always used to, when it was the first time buyer, no real credit history.
00:34:28.480 --> 00:34:32.480
My default would be someone like Santander or Halifax, yeah, or maybe nationwide.
00:34:32.559 --> 00:34:34.320
You wouldn't go to some of these other lenders.
00:34:34.559 --> 00:34:42.559
That's not advice like that's not advice, like and that changes all the time because different because lenders will decide they want to buy business in different areas, so they'll kind of flip.
00:34:42.719 --> 00:34:54.239
But back in the day, and I'm talking probably 10 years ago, yeah, if you had a first-time buyer account, you would no credit, you would just default to a handful of lenders because you just knew it would decline with other ones, because you just knew that they just weren't interested in them.
00:34:54.400 --> 00:34:57.840
Yeah, but to say I I I I would tend to agree.
00:34:57.920 --> 00:35:01.840
I think you know, being on the electoral role, that's a big one, which people Yeah, that is a big one, yeah.
00:35:02.000 --> 00:35:05.920
Be on the electoral register, so just register to vote, basically, is all that means.
00:35:06.079 --> 00:35:09.519
Uh, don't do don't necessarily have to vote if you don't think it makes a difference.
00:35:09.760 --> 00:35:17.280
Um and you know, having a f having a few open lines of credit probably isn't isn't a bad thing, but that happens naturally anyway.
00:35:17.519 --> 00:35:22.639
Like, I I think opening a credit card for the sake of it is probably not necessary.
00:35:22.800 --> 00:35:26.320
Like, you know, how about you just try and get a decision in principle first?
00:35:26.559 --> 00:35:31.199
Or just take advice from a mortgage lender rather than someone who's never actually bought a house, let alone.
00:35:31.679 --> 00:35:32.960
Yeah, speak to a mortgage brokerage.
00:35:33.199 --> 00:35:34.079
I mean, you know, I I see.
00:35:34.159 --> 00:35:38.000
And I think this is sometimes a dangerous don't be wrong, don't get me wrong, there's there's a lot of creators out there.
00:35:38.159 --> 00:35:47.760
We know a lot of creators as well who are who are not like haven't worked in the financial services industry who do some great stuff, but there's some I see now putting stuff out there which is generally false.
00:35:48.079 --> 00:35:55.519
And when you kind of look at it, you're like, well, actually, like I I've seen a few creators, but I've I've looked back through and I'm like, they've done a bit of a story about themselves.
00:35:55.679 --> 00:36:05.360
Um, they they don't own a home themselves, they've never owned a home themselves because they rent and they're telling you about how to buy a house, so therefore they're just reading it.
00:36:05.519 --> 00:36:08.239
Like, just just be careful what you listen to out there.
00:36:08.320 --> 00:36:08.719
Do you know what I mean?
00:36:08.960 --> 00:36:11.760
Don't take don't take out a credit card just for this for this reason.
00:36:12.000 --> 00:36:14.800
Just because something's because it could actually make it could actually make things worse.
00:36:14.960 --> 00:36:15.599
It could make things worse.
00:36:16.480 --> 00:36:20.960
So if you end up getting declined on a load of credit cards you've taken out, that's gonna be on your blinking credit report.
00:36:21.199 --> 00:36:21.760
Do you know what I mean?
00:36:22.079 --> 00:36:25.519
So one of the I don't know if you I don't know if you agree with this one.
00:36:25.840 --> 00:36:33.280
In the in the current climate, probably one of the best ways to reduce the mortgage costs if you can, is interest only.
00:36:33.440 --> 00:36:33.840
Yeah.
00:36:34.079 --> 00:36:42.800
And I think like I think it's a great you know, if you are someone who is who's got a bit of a financial plan behind them, yeah, I think it can be really effective.
00:36:43.360 --> 00:36:56.960
And because I toyed with this actually myself, of of going to interest only, because I my personal opinion is by investing in the great companies of the world, I'm probably gonna I'm gonna beat the interest rate on what my overpayment would have been.
00:36:57.039 --> 00:37:01.519
So and obviously I invest and save that but I I I stayed with repayment in the end.
00:37:01.760 --> 00:37:04.559
But yeah, if you've got quite a small mortgage, it's gonna be much of a much lesser.
00:37:04.960 --> 00:37:13.599
Yeah, it is, but but but if you're like if you're having to buy a sort of you know seven-figure house and it's a bit of a stretch, you've got kids who are young in school.
00:37:13.760 --> 00:37:20.559
Now, obviously, the thing is with a repayment mortgage, with an interest-only mortgage, it means the balance is not gonna be decreasing.
00:37:20.800 --> 00:37:21.760
No, it stays the same.
00:37:22.000 --> 00:37:25.760
But actually, in real terms, it does decrease automatically.
00:37:26.000 --> 00:37:26.320
Yes.
00:37:26.559 --> 00:37:39.840
Because if I take out an interest only mortgage today, in 20 years' time, my income is increasing every year due to inflation, my bills are increasing every year due to inflation, but the mortgage And the value of property's going up.
00:37:40.000 --> 00:37:44.559
The value of the property is going up, so that loan to value gets stretched, even though I'm not paying the mortgage down.
00:37:44.639 --> 00:37:51.679
But that interest only mortgage, you know, assuming the rate doesn't change, which obviously it will fluctuate up and down, but the balance stays the same.
00:37:51.760 --> 00:37:51.920
Yeah.
00:37:52.079 --> 00:37:55.360
So that balance will be a smaller portion of my income in 20 years.
00:37:55.599 --> 00:37:57.679
But you have to ensure you have some sort of vehicle to repair.
00:37:58.000 --> 00:37:58.239
Yeah.
00:37:58.400 --> 00:37:59.440
Yeah, in reality.
00:37:59.519 --> 00:38:01.519
And and and n none of this is mortgage advice.
00:38:01.679 --> 00:38:05.119
We always suggest that you get a kind of mortgage advice if you're gonna be looking to do that.
00:38:05.440 --> 00:38:06.079
This is individual.
00:38:06.239 --> 00:38:07.519
No, it's not, and it's just an example.
00:38:07.599 --> 00:38:16.880
And no, and there are some benefits, and I've got a lot of clients who kind of do that, but a lot of clients are in that bracket where you're talking about, where their properties are much more punchier values and stuff of that as well.
00:38:17.039 --> 00:38:30.239
They run, I've got a lot of clients who do this, who run businesses which we know they're gonna have an exit in X amount of years as well, where they're probably just gonna pay the whole mortgage off because I've got a couple of clients exiting in the next like three to five years where they're gonna have this lump summary is gonna pay the mortgage off.
00:38:30.400 --> 00:38:31.119
Not everyone can do it.
00:38:31.199 --> 00:38:47.039
Typically, lenders will say you need and lender like the lender criteria is so quirky now with that, and it can be things like minimum property value inside London, a minimum equity inside London of half a million, outside London of 300,000, income has got to be in excess of a hundred thousand.
00:38:47.280 --> 00:38:51.679
There are some who will do it like load of value's gotta be 50% load of value or 75 or below.
00:38:51.840 --> 00:38:53.119
And there's some real quirky ones.
00:38:53.199 --> 00:38:55.119
Some lenders are purely we don't do interest only.
00:38:55.280 --> 00:38:55.679
Do you know what I mean?
00:38:55.840 --> 00:39:01.440
And then and then some will say, Well, if you could afford it, if you could afford a repayment, then you can do an interest only.
00:39:01.840 --> 00:39:06.400
Yeah, and yeah, so a lot of them will underwrite you based on repayment figures.
00:39:06.639 --> 00:39:07.760
You still got to be able to afford it.
00:39:08.079 --> 00:39:10.079
Be able to afford it, but they will allow you to interest only.
00:39:10.159 --> 00:39:10.559
Do you know what I mean?
00:39:10.639 --> 00:39:14.320
And then others will be very demand you to have some sort of repayment vehicle.
00:39:14.559 --> 00:39:17.760
But again, it can be sale of current property, which means you've got to downsize.
00:39:17.920 --> 00:39:23.920
Especially if you're getting on a bit sort of, you know, age-wise and you haven't got that long to repay it, and you think, well, my kids are young.
00:39:24.000 --> 00:39:26.400
I we need a house close to the schools we want.
00:39:26.800 --> 00:39:28.559
We don't want to rent, we want to own.
00:39:28.719 --> 00:39:34.239
We want to build up, we want to build up gains, capital gains tax-free in the property which we own if it increases in value.
00:39:34.320 --> 00:39:34.480
Yeah.
00:39:34.639 --> 00:39:39.519
But we want the cost to be a bit lower, and we know we're going to move out of the house sort of later on in life.
00:39:39.679 --> 00:39:41.039
Interest only could be an option.
00:39:41.119 --> 00:39:42.639
And yeah, but it needs to come with a plan.
00:39:42.880 --> 00:39:44.079
It needs to come with a plan.
00:39:44.239 --> 00:39:47.679
And you can and you know, oftentimes you can you can still damn pay it, right?
00:39:47.760 --> 00:39:49.280
You can still make the overpay.
00:39:49.519 --> 00:39:50.400
Or you can invest the money for it.
00:39:50.480 --> 00:39:51.119
Like, do you know what I mean?
00:39:51.199 --> 00:39:54.719
Like, like a lot of my clients who are doing that are actually investing money towards paying that.
00:39:54.960 --> 00:40:01.039
I've got a client now who's doing that, he's he's on interest only, pays off lump sums on it regularly and he's paid off quite a few lump sums over the years.
00:40:01.119 --> 00:40:09.679
But we've got a ICE which he's been doing for X amount of years, which we've calculated by I think the middle of next year when his ERC is up on his current mortgage.
00:40:10.000 --> 00:40:10.880
The repayment charge.
00:40:11.039 --> 00:40:14.320
Yeah, the repayment charge, there'll be enough to get rid of the full interest only.
00:40:14.400 --> 00:40:16.320
Because he he just wants rid of it, and I get that.
00:40:16.400 --> 00:40:16.800
Do you know what I mean?
00:40:16.880 --> 00:40:18.719
But his loan to value is about 10%, I think, right?
00:40:18.960 --> 00:40:22.480
Especially for business owners, it can give him a little bit more flexibility in terms of.
00:40:22.880 --> 00:40:24.000
Which he is, which he is a business.
00:40:24.400 --> 00:40:25.840
This year I'm gonna pay a chunk off.
00:40:25.920 --> 00:40:28.000
Oh, this year I've sold my business, I'm gonna pay a chunk off.
00:40:28.079 --> 00:40:37.360
Yeah, and like it worked very well for him because he was aggressively putting money into his business to grow it, and he's getting to that point where he will exit for a very large sum of money.
00:40:37.519 --> 00:40:48.719
But that flexibility of interest only worked really well for him because he was he had that spare money to do the things he wanted to do to be a bit more aggressive with his business growth, um, but then add the forever home.
00:40:48.880 --> 00:40:58.480
It can be a bit of it can be a bit of a poison poison chalice though, because you could end up with a 800 grand property, yeah, still with a 400,000 pound mortgage on it.
00:40:58.559 --> 00:40:58.880
Yeah.
00:40:59.039 --> 00:41:08.159
Um, and if if you if you run that too close to the line and the property values do dip, there's a bit of volatility in house prices, then you could end up on it on a sticky wicket.
00:41:08.400 --> 00:41:11.039
You could, and you could get to an age actually where you're too old to remortgage then.
00:41:11.119 --> 00:41:11.599
And what do you do?
00:41:11.679 --> 00:41:17.360
You look at extra release, but extra release is a bit kind of the loan of value is a bit more restrictive on that, and you might not be able to repay it.
00:41:17.440 --> 00:41:18.559
You could get yourself a sticky wicket.
00:41:18.719 --> 00:41:25.920
So I I like I think caveating doing interest only with having a financial plan around it is the key, really, and not just winging it.
00:41:26.159 --> 00:41:27.119
Oh yeah, yeah, yeah.
00:41:27.199 --> 00:41:30.239
Don't just don't just wing it, you've got to make sure this thing is affordable.
00:41:30.400 --> 00:41:31.920
Uh, but it's all gone up, mate.
00:41:32.079 --> 00:41:35.039
Energy bills gone up, house prices gone up.
00:41:35.280 --> 00:41:36.639
It's just bloody tough out there though, isn't it?
00:41:36.960 --> 00:41:40.079
Trust rates gone up, so you just gotta sort sort of try and eke out the winds where you can.
00:41:40.320 --> 00:41:40.800
I think you have.
00:41:40.880 --> 00:41:50.639
I think you've just got to be a little bit more savvy these days, and I mean, and you know, it and work with what you got and and and just remember that everyone's in a bit of a like it it is just bloody hard out there.
00:41:50.800 --> 00:41:51.599
Yeah, agreed.
00:41:51.760 --> 00:41:52.880
Anything else you want to add to this one?
00:41:52.960 --> 00:41:53.599
Have we covered everything off?
00:41:54.639 --> 00:42:01.360
We'll probably do some other episodes on mortgages and property and vital air and all that stuff in the future as things kind of come out from questions that people have.
00:42:01.440 --> 00:42:02.960
But yeah, I know I think we've covered what we need to.
00:42:03.599 --> 00:42:04.480
All right, nice one.
00:42:04.639 --> 00:42:05.519
See you in the next one.