Mortgage Changes for 2020
Whether you’re a first-time buyer, a homeowner looking to remortgage or a buy-to-let landlord, 2020 is sure to be another rollercoaster ride in the world of mortgages.
There have been a few big changes in the mortgage world for different groups of buyers.
First-time buyers will definitely be happy with some of the recent changes. We have seen 95% LTV mortgages re-emerge on the market place. Barclay’s paved the way for more relaxed borrowing rules, allowing individuals to borrow five times their salary as first-time buyers (so long as their salary was above £30,000). This is very interesting for investors looking to flip properties, as first-time buyers often look to purchase properties that have recently been renovated that are ‘walk-in’ condition.
Rates look set to stay low for now, with many homeowners capitalising on fixing their mortgage for five years at a low rate. Two year fixed rate mortgages still have a little wiggle room to give in comparison to the five year fixed rate deals, so we will have to wait and see if the banks adjust the two year fixed rates.
Your age can play a part in how much you can borrow and for how long. Recent changes in the market have made borrowing easier in later years, with some lenders removing their maximum age for buy-to-let mortgages. We also saw the introduction of 40-year term mortgages, which is likely a reflection of the increase in the number of first-time buyers in the housing market.
For those of us who own our own homes, now could be a good time to remortgage. With rates so low and some lenders offering a very competitive ten year fixed rate mortgage, many homeowners will look to remortgage. As rates are low, and stamp duty costly on higher-end properties, it’s likely we will see an increase in borrowing for those remortgaging to renovate their homes or add extensions, as an alternative to moving home.
Landlords will undoubtedly need to have their wits about them in 2020. 2019 saw many lenders offering fantastic rates with cashback, but landlords have been caught out with upfront fees of up to £1,995. Two year fixed deals are becoming ever more popular with landlords who are uncertain about the long term profitability of owning properties affected by the mortgage relief tax cuts.
As you can see, 2020 will be an interesting year for lending across the mortgage spectrum. It’s good news if you are due to remortgage, and also great if you are a first-time buyer. It’s potentially less exciting for landlords, however, using a mortgage broker who has access to the whole market may help with profitability from your portfolio.
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