I hope this blog finds you well. As part of my commitment to keeping you informed about the latest developments in the mortgage industry, I’m pleased to share some key updates and insights from the past month.

1. Mortgage Rate Changes: Several major lenders, including Halifax and Virgin Money, have announced changes to their mortgage rates. Halifax has reduced its residential fixed-rate offers by up to 0.31%, while Virgin Money has made further rate adjustments. These changes could impact your mortgage payments, so it’s worth reviewing your current rate and considering if a switch might be beneficial.

2. First-Time Buyer Support: Leeds Building Society has launched a new mortgage product aimed at first-time buyers. This initiative is designed to make it easier for new buyers to enter the property market, offering competitive rates and flexible terms. If you know someone looking to buy their first home, this could be a great opportunity for them.

3. Buy-to-Let Market: The buy-to-let market continues to face challenges, but there are positive developments as well. LendInvest and CHL Mortgages have cut landlord rates by up to 0.25%. If you’re considering expanding your property portfolio, now might be a good time to explore these options.

4. House Building Activity: There has been a noticeable decline in house building activity during February. This could affect the availability of new homes and potentially drive up property prices. Staying informed about these trends can help you make better decisions regarding your property investments.

5. Market Predictions: Looking ahead, mortgage rates are expected to remain relatively high, ranging between 4% and 5.5% throughout 2025. However, if the economy slows down and inflation cools, we might see a gradual decline in rates. The housing market is predicted to experience moderate growth in home sales as buyers adjust to higher prices and mortgage rates.

If you have any questions about how these updates might affect your mortgage or if you’re considering any changes, please don’t hesitate to reach out. I’m here to help you navigate these developments and ensure you make the best decisions for your financial future.

Best regards,

Ross Stisi

We are thrilled to announce that our business has been named “Mortgage Advisers of the Year 2023 – Scotland”! This prestigious award recognises our outstanding dedication to providing exceptional service and expertise in the mortgage industry.

At our business, we strive to help our clients achieve their dreams of homeownership by providing tailored advice and support throughout the mortgage process. Winning this award is a testament to the hard work and commitment of our team, who consistently go above and beyond to ensure our clients receive the best possible service.

We would like to express our gratitude to our clients, whose trust and loyalty have made this achievement possible. We are honored to have been recognised for our efforts and will continue to uphold the highest standards of excellence in our industry.

We look forward to continuing to serve our clients with the same level of dedication and professionalism that earned us this prestigious award.

We aim to ask clients to describe what’s happening at each of the. Key stages of their mortgage journey and how they feel at each stage.

First contact

• We like to ask questions such as –
  • Why did they choose Stisi Group?
  • How did they find us?
  • What concerns do they have if any at this stage?
  • Does having a dedicated case manager and adviser make them feel more valued?

J Smith – Elgin responded –

Having known Ross Stisi personally for a number of years, we knew first hand how passionate he is about his work, his commitment to delivering a first class client service and of his proven track record for getting clients favourable results, so it was an easy decision to instruct Ross to act for us. While we thought we were in a strong position to get a favourable DIP, we did have initial apprehension. Ross was available, approachable, frank, and his professional experience and technical knowledge shone through. He alleviated any concerns we had without us having to first explain what they were. Ross did provide ample opportunity to ask questions but we found he had already covered everything so were left with nothing to ask.

DIP

• Questions –
  • What did they have to do?
  • Was this stressful?
  • Was this more difficult or easier than expected?
  • How did we help them through the process?
  • How do they feel moving forward?

J Smith – Elgin responded –

In one phone call, Ross let us know exactly what we would need to provide by way of paperwork so we were prepared when the process started. The online Portal StisiGroup operate is very user friendly, clear and makes submitting all the necessary paperwork and personal details easy to do. We were anxious waiting for the decision, however thanks to Ross’ hard work in the background, we didn’t need to wait long. He contacted us to advise of the DIP by telephone. We had arranged to view a property and needed the DIP prior to viewing – we were aiming to enter into verbal negotiation after the viewing.

Mortgage application process

• Questions –
  • How are they feeling now?
  • Is the process more complicated or less complicated than expected?
  • Is it daunting or have we taken the worry away?
  • How quickly have they completed and submitted their application?
  • Was this longer or shorter than expected?

J Smith – Elgin responded –

Again Ross’ technical product knowledge and experience in the field made this part of the process very straightforward for us. He fully (and accurately) explained each stage of the process, what was involved, timescales etc so all we had to do was wait. The Stisi Group Team was available at hours that suited us (not normal working hours) and responded incredibly promptly to arsing questions. First class service in every aspect!

At this stage, we had now entered into a verbal agreement, instructed a Solicitor and needed to get through the process as quickly as possible, given the very tight completion timescale unique to our circumstances. Ross and his Team assured us that our case was being given the priority it needed and they delivered!!

Between application and offer

• Questions –
  • How are they feeling?
  • Were they kept up to date by their case manager?

J Smith – Elgin responded –

The Stisi Group Team was in frequent contact with us. Answering arising questions and sharing their knowledge and experience of the whole process. Although feeling nervous (as first time buyers) the shared knowledge and experience from the Sitsi Group Team alleviated our nerves and made us confident in a positive, timeous outcome.

Mortgage offer agreed.

• Questions –
  • How have we liaised with them and the lender?
  • What’s happening now in their journey to their first / new home?
  • Have we been in touch, even though the lender has now offered them a mortgage?

J Smith – Elgin responded –

We were absolutely ecstatic when we received the offer. The Stisi Group Team telephoned us personally to deliver to the news! The first class service didn’t end there. We received further information on the next steps of the journey and Stisi Group liaised directly with our Solicitor regarding the standard security. This took an administrative burden away from us at what was an incredibly hectic time.

Moving into first/ New Home

• Questions –
  • What does this first / new home mean to them?
  • How will their lives change? (ie, can start a family / grow their family / freedom moving out from parents’ home / no more shelling out on rent)
  • Could they have got here without Stisi Group?

J Smith – Elgin responded –

Turning the key in the door to our first home was a moment that we will never forget. We are grateful to Ross and his Team at Stisi Group for their professionalism, fast work and walking with us through every stage of the process. We were also touched at the thoughtful and personal “New Home Card” from Stisi Group.

We are incredibly grateful to everyone who has taken the time to leave us reviews – thank you! We are a small family business, but you’re helping us to get noticed in our competitive industry. It’s a real achievement for us. You – our clients, colleagues and friends – are at the heart of all we do, thanks to our unique Client Obsession programme. This means that we always put you first. We are genuinely passionate about what we do, and getting the best result for each and every client.

The Mortgage Introducer Awards

Mortgage Introducer provides the latest industry news and insight. Launched in 1999, the UK mortgage industry now recognises Mortgage Introducer as the champion of the mortgage professional.

Senior operators in the sector have described as the Mortgage Introducer Awards as the “jewel in the crown of the UK mortgage industry”. The awards aim to promote and celebrate the outstanding achievements of businesses and individuals within the intermediary market. So, we’re very excited to be part of this, and grateful to everyone for your wonderful feedback and reviews.

“Coming out of what has been the market’s most testing time to date dealing with the fallout from COVID-19, the 2021 awards will promote and celebrate the outstanding achievements of both businesses, individuals and unsung heroes within the intermediary mortgage market.

“Winners will be selected from the people, products and services that demonstrate excellence and originality within the intermediary mortgage, equity release, protection and short-term finance fields.”

Robyn Hall, Publishing Director, Mortgage Introducer

What happens next?

Now that industry professionals have submitted nominations for the awards, public voting on the longlist is open until 15th October. The five businesses in each category will go through to the shortlist, announced on 20th October. These businesses will then submit further demonstration of their excellence and originality to a judging panel. Finally, Mortgage introducer will announce the winners on 22nd November.

We’re all delighted to make the 2021 Mortgage Introducer Awards longlist! It feels brilliant to see our small family business up there in such prestigious company.

I’m very proud of our team. The last 18 months have been a rollercoaster for everyone, not least in our industry. Homebuyers’ pent-up demand during lockdowns was compounded by lenders severely restricting available mortgage products. Now, the flood gates have opened and the property market is absolutely thriving! Properties are moving very quickly, and lenders are continually releasing new mortgage products.

During the fast-changing landscape our team have remained dedicated to getting the right deal for our clients. Emma and I are incredibly proud that our nomination recognises this.

Ross Stisi – Managing Director, Stisi Group

Thank you!

– from Ross, Emma and the Stisi Group team.

There’s no crystal ball – we don’t know what’s going to happen to the UK economy and the property market. But there are some things we do know. In my opinion, this could be the perfect time to buy your first home – here’s why:

Competitive mortgage products mean better deals

We’ve seen more and more lenders coming back to the market with mortgages available with just a 5% deposit. The UK government is also now backing the 95% mortgage guarantee scheme. This increased competition, combined with the current low interest rates, means that buying your first home might be more affordable for you than ever before.

Low interest rates

Interest rates are low. Really low. The Bank of England base rate is currently just 0.1% – the lowest interest rate the UK has ever seen.

The bank cut the rate in March last year to help manage the economic shock of the pandemic, however their Monetary Policy Committee reviews the base rate every six weeks. While they voted unanimously to hold the rate 0.1% at the start of August, we now await the next review on 23^rd September.

Time-saving virtual tours

House hunting can be very time-consuming, especially if you’re not sure which area you want to be in, or if lots of different properties catch your eye. There can be lots of phone calls and emails backward and forward to book viewings, and then there’s all the travelling round to finally view each property too.

Well, thanks to the pandemic, many properties now have wonderful 3D plans and virtual tours that you can view from the comfort of your own sofa – allowing you to understand the inside of a property much better than before, without all the faff of bookings and travel. This, coupled with a quick search on Google Maps (who doesn’t like a ‘street view’?), will quickly tell you if a property is even worth a visit.

Mortgage advice is more accessible than ever

Access to advice has become easier and (in some instances) quicker. Just as estate agents have created online viewing services, many mortgage advice firms and even banks have introduced an online video chat model.

This offers a huge time saving, as there’s no need to travel to have a face-to-face meeting. It’s now far easier to fit in appointments alongside work and your other commitments.

The pandemic has encouraged so many businesses online that competition has increased, encouraging an increase in product standards – think of all the online services, virtual tours, 3-D floor plans, property finders, and so on. All this competition promotes new and better ways of doing business, offering a vastly improved experience for the consumer, and all at a better price.

Get in touch for a chat

Want to buy your first home, but not sure where to start? Please get in touch with us – our friendly expert team are always happy to help.

Ross Stisi – the Bearded Broker

You may have to pay an early repayment charge to your existing lender if you remortgage.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

The announcement yesterday now sees clients, customers and the wider industry invited to vote for nominees. Those with the most votes in each category will make the shortlist, judged by a panel of industry experts.

Vote for us!

We’re delighted to make the longlist again – it is a real mark of achievement for our family business and small team. It would be fantastic to make the shortlist too, so we’d really love to have your vote!

The 2021 Scottish Mortgage Awards

Mortgage Introducer will be hosting the 2021 Scottish Mortgage Awards, which are an annual highlight in the sector. They aim to recognise the brightest and best of the Scottish property finance market. We are nominated alongside some of the sector’s most senior operators, so this makes it an amazing achievement for us. We’re therefore very excited to be part of this, and very grateful to you – our clients, colleagues and business partners – for all your wonderful feedback and reviews.

Industry professionals submitted nominations for the awards, and voting for nominees is open until 8th September. Mortgage Introducer will then announce the shortlist on 13th September, when judging by respected independent experts will begin. Finally, the awards will be announced on 8th October!

The 2021 Scottish Mortgage Awards judges will select winners from the people, products and services that demonstrate excellence and originality within the Scottish intermediary mortgage market.

Thank you

We’re incredibly grateful to everyone who has taken the time to leave us reviews – thank you! Our unique Client Obsession programme is at the heart of all that we do, meaning that we always put our client first. We are passionate about what we do, getting the best result for each and every client. The awards recognise this, and we couldn’t be more delighted!

Have we earned your vote? If so, we would really appreciate a minute of your time, for your vote for us. It’s quick and easy to do – just visit the Scottish Mortgage Awards page. 

Need a hand?

• Scroll down the page to choose Regional Best Broker – Edinburgh from the list of categories on the left of the page,
• Scroll down again to click on Stisi Group
• The page will now automatically move you to the next category, Regional Best Broker – Glasgow
• Scroll down the page to click on Stisi Group
• Now, scroll to the bottom of the page to hit ‘Submit Votes’
• Enter your name and email address
• You’re all done!

Thank you – from Ross, Emma and the Stisi Group team

If you want to skip ahead to a particular section, these are the different types of mortgages we’ll talk about:

• How will you repay your mortgage?
  • Repayment mortgages
  • Interest-only mortgages
  • Part-and-part mortgages
• Different types of mortgages – fixed and variable
  • Fixed rate
  • Variable rate
  • Tracker rate
  • Discounted variable rate
  • Standard variable rate
• We’re here to help (so don’t panic!)

How will you repay your mortgage?

The first thing you need to consider is how you’ll repay your mortgage. There are three different types here, although, for most of us, a repayment mortgage is usually the only practical choice.

Repayment mortgages

With a repayment mortgage, each month you pay back part of the money you’ve borrowed as well as paying the interest. This means that over the length, or term, of the mortgage, you’ll have repaid everything you borrowed, and all the interest owed. You’ll then own your home outright. Repayment mortgages are also referred to as capital and interest mortgages. The capital is the amount of money you owe in your mortgage.

Interest-only mortgages

As you might guess from the name, an interest-only mortgage means you only repay the interest that you owe each month. Yes, this means that your monthly payments are lower than with a repayment mortgage. However, your payments don’t include paying off any of the money you’ve borrowed. By the end of the mortgage term, you’ll have paid off all the interest owed, but you’ll still owe the original amount of your mortgage.

At this point, you will be required to pay back the full mortgage amount, in one payment. A lender will typically only offer an interest-only mortgage deal if you can prove that you have an acceptable savings plan in place, so that you will be able to make this lump sum payment.

‘Part and part’ mortgages

A ‘part and part’ mortgage is just as it sounds. The total mortgage sum is split into one part repayment and one part interest-only.

Let’s imagine you borrow £150,000, with £100,000 on a repayment basis and £50,000 on an interest-only basis. Your monthly payments would pay off the interest accruing on the whole £150,000 borrowed, but only pay off the £100,000 repayment element. At the end of the mortgage term, you would need to pay the remaining £50,000 back in one lump sum.

As with interest-only mortgages, lenders typically only offer this option if you can prove you have a plan in place to be able to make this final payment.

Different types of mortgages – fixed and variable products

Now that you have an idea of repayment options, let’s look at the different types of mortgage products available. These fall into two categories – fixed rate and variable rate. The ‘rate’ here is the interest rate on your mortgage.

Fixed rate

You won’t be surprised to know that a fixed rate mortgage is when the interest rate is fixed, or held, at the same rate for an agreed period of time, from the start of your mortgage. This is often for two or for five years but can be anything from one to ten or even 15 years. So, a ‘two year fixed rate’ mortgage would mean the interest rate won’t change until after the initial two years are up.

When the fixed rate period ends, your mortgage will move on to your lender’s standard variable rate (SVR). At this point you can consider arranging a new fixed rate period with your current lender or see if you can find a better deal with another lender.

Fixed rate mortgage pros

• Peace of mind – you know that your monthly payments won’t change for the duration of your fixed period.
• You can budget more easily, knowing exactly what your monthly payments will be.
• Even if interest rates rise during this time, the interest rate on your mortgage won’t.

Fixed rate mortgage cons

• If interest rates fall, you won’t benefit as your rate will remain the same.
• Interest rates on fixed rate mortgages can be higher than for tracker products.
• If you want to change your mortgage before the end of the fixed period, then it’s likely that you’ll have to pay an early repayment charge.

Variable rate

There are several types of variable rate mortgages, but the one thing they all have in common? You guessed it – the interest rate can vary during the term, or length, of the mortgage.

We’ll take a look at each in turn.

Tracker rate

With tracker mortgages, it’s all in the name! A tracker mortgage rate tracks, or follows, a particular interest rate – most often the Bank of England base rate. The lender will then add a fixed percentage to the base rate. So, for example, if the base rate is 1% and your lender adds 2%, your interest rate will be 3%. If the base rate then increases to 1.2%, your rate would increase to 3.2%.

Some lenders will set a ‘collar rate’ on a tracker rate mortgage, which is a minimum rate that your interest rate cannot go under. We haven’t come across many lenders who set a limit on how high the rate can go though but this is called a ‘cap rate’.

Tracker rate mortgages are usually for two to five years. At the end of the tracker rate period, your mortgage will move on to your lender’s Standard Variable Rate (SVR) unless you arrange a new mortgage with your current lender or a new lender.

Tracker rate mortgage pros

• If the base rate decreases, then your interest rate will also decrease. You would then usually see a decrease in your monthly repayments.

Tracker rate mortgage cons

• You won’t have the certainty of knowing how much your monthly repayments will be.
• You may not benefit from any decrease in the base rate if this would take you below a set collar rate.

Discounted Variable rate

A discounted variable rate means that you have a discount on a lender’s standard variable rate (SVR) for an agreed period, from the start of your mortgage.

Your discount will be a set percentage of the SVR. This percentage will remain the same for the agreed period – often for between two and five years. Your monthly payments won’t necessarily remain constant for this period though, as your lender is able to change their SVR as they choose, at any time.

Here’s an example – a lender might offer a 1.5% discount off their SVR, and this will be set a two-year period. The SVR is currently at 4%, meaning you pay interest at 2.5%. If the lender then increases their SVR to 5%, your 1.5% discount would mean you now pay interest at 3.5%.

It’s important to consider the SVR as well as the discount offered in a deal – a smaller discount off a lower SVR could work out cheaper than a larger discount off a higher SVR.

As with tracker mortgages, lenders may set a ‘collar rate’ on a discounted variable rate mortgage, which is a minimum rate that your interest rate cannot go under.

Discounted variable rate mortgage pros

• These deals can offer great rates, particularly if SVRs are generally low and the Bank of England base rate is low.
• If your lender’s SVR decreases, then your interest rate will also decrease. You would then usually see a decrease in your monthly repayments.

Discounted variable rate mortgage cons

• Lenders can change their SVR as and when they choose, making it hard to budget for your monthly repayments.
• Your lender doesn’t have to follow the Bank of England base rate, so may choose not to decrease their SVR even if the base rate decreases.
• You may not benefit from any decrease in your lender’s SVR if this would take you below a set collar rate.

Standard variable rate

Standard variable rate (SVR) mortgages aren’t offered as initial mortgage deals – instead, a lender will offer you their current SVR.

Every lender has their own standard variable rate. They can set this at any rate they choose and change it at any time. Usually, SVRs roughly track a few percentage points above the Bank of England’s base rate movement. If you find yourself on an SVR then it’s always worth comparing it with available deals.

Standard variable rate mortgage pros

• If the Bank of England base rate decreases, then your lender may reduce their SVR, meaning your interest rate would decrease. You would then usually see a decrease in your monthly repayments.
• There are usually no early repayment charges if you choose to make early repayment on your mortgage and pay it back in full.

Standard variable rate mortgage cons

• They can be expensive – rates are generally higher than the rates offered on deals on the market.
• The interest rate can be increased at any time, by any amount, making it difficult to budget for monthly payments.
• If the Bank of England base rate increases, then it’s almost certain that your lender will increase their SVR.

Are there even more different types of mortgages?

In short – yes! However, these are specialist mortgage products, available to those with unusual circumstances. This could be Expat mortgages for people working overseas, mortgages for members of the Armed Forces or perhaps mortgages for a second home.

If you find yourself in an unusual situation then please speak to us to find out about the options that may be available to you.

What else do I need to know?

Many lenders charge a product fee for a mortgage, and this cost can vary greatly from lender to lender. It’s important to factor any additional costs into the affordability of a mortgage, and when comparing the overall costs of different types of mortgages.

To balance out the additional costs, lenders may also offer incentives with a mortgage product. This could be in the form of a free property valuation, help with legal costs regarding your property purchase, or simply cashback. Again, it’s important to consider these alongside all the other factors.

Stisi Group is here to help!

We offer free, no obligation advice and consultations with our Trusted Mortgage Experts.. Handy if the world of mortgages feels a bit like a minefield!

The mortgage market is constantly changing. So, whether you’re buying your first home, looking to move home, or simply looking to make sure that you’re still on the right deal for you, we’re here to help.

We know our business inside and out and our unique Client Obsession programme means that you are our priority. We take the time to listen to you to make sure that we give you the advice you need. Don’t just take our word for it though – take a look at our reviews on Google to see how we’ve been able to help other clients.

Want to get started? Just get in touch using the form below or give us a call – our advisers will be happy to answer any questions you may have, and to go through the whole mortgage process with you.

Call us on 0131 510 1240 or email us at info@stisi.co.uk.

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

Are you wondering how you can buy a house with a low deposit? Well, it’s good news, Scotland – the First Home Fund is reopening!

Before we jump into all 15 things you need to know about the First Home Fund, here’s a super-fast overview:

• First time buyers in Scotland could get up to £25,000 towards the deposit on their first home.
• There are no monthly repayments or interest to pay – instead the Scottish Government receives a share of the sale price, whenever you decide to move on.
• The current scheme will only run until 31^st March 2022 or until the funds run out.
• The funding pot for the current scheme is £60 million – this is a huge cut from the £200 million in the original fund.
• Due to the limited funding and duration, we expect to see high demand for the fund.

Now you’ve got the general idea, our Bearded Broker Ross Stisi explains how this help to buy scheme will help YOU.

What type of scheme is the First Home Fund?

The fund is a First-Time Buyer Help to Buy scheme, offered exclusively in Scotland. The scheme is funded by the Scottish Government, as they seek to offer additional financial help to first-time buyers.

The First Home Fund is classed as a Help to Buy shared equity scheme.

What does ‘shared equity’ mean?

‘Shared equity’ means you share the cost with another party. So, you will have full ownership over your home and the Scottish Government will hold a share of the property.

Who does the First Home Fund aim to help?

The scheme is designed for first time homeowners – the clue is in the name!

Why is the scheme so important?

Between trying to save for a large deposit, and strict lending criteria making mortgages with low deposits harder to obtain, it’s not always easy to get your foot on to the property ladder. So, the Scottish Government identified the need to do something more to help people like you – first-time buyers.

The existing Help to Buy scheme in Scotland is closed for 2021 – 2022, due to current additional budget pressures. However, even when it is open, it is limited to new build houses only.

The current shared equity LIFT scheme is also far too restrictive. This is in part due to the criteria for eligibility and property price thresholds.  

How will the First Home Fund help me as a first-time buyer?

In short – you get funding of up to £25,000 to boost your deposit towards your new home. It’s also an affordable scheme, as there are no monthly repayments to make and no interest to pay. We’ll talk about repayment later on.

The funding comes from the Scottish Government, through the First Home Fund help to buy scheme, and must be used as part of your deposit for the first purchase of your new home. You will still be required to put down 5% of your own money into the deposit. This percentage is based on the purchase price of your new home.

For example: If you’re buying a property for £100,000, you will be required to put down £5,000. The Scottish Government can then put in up to £25,000.

Do I have to borrow the full £25,000?

No. You can borrow any amount, up to £25,000, that you need. The less you borrow, the less of a share the Government will own – which will benefit you when you come to sell.

Are there any restrictions on the type property I can buy?

Unlike other schemes of a similar nature, you can use the fund against any new build or existing built properties. There are no limits on things like the number of bedrooms, which are restricted in other types of schemes. Just to be clear, the First Home Fund is for residential properties and not for any type of commercial properties.

The other key point is that the property needs to be of a ‘tolerable standard’. You can find out more on the MyGov.Scot website if you’re unsure what this means.

Sounds too good to be true! Are there any other restrictions?

Believe it or not, there are not many.

The key restrictions for you:

Properties

• You must not own any other property, nor have ever owned or held title to any other property at any point, either in Scotland or anywhere else in the world
• If you are buying as a first-time buyer and you wish to buy with someone else who already owns a property, then this property must be sold by the time your new purchase completes (i.e. you get the keys). This includes needing to sell any background buy to let investment properties

Finances

• The maximum funding from the Scottish Government is £25,000. How much of this you apply for will depend on your needs.
• You must be taking out a mortgage of at least 25% of the purchase price and your mortgage must be on a capital and interest basis
• You cannot use this in conjunction with any other government schemes however you can still use a help to buy ISA or a lifetime ISA to fund your 5% deposit
• Your monthly costs cannot be more than 45% of your net income (the amount you have available to spend each month)
• The Scottish Government will not be able to have more than a 49% share in the property. For example, if you are buying a property for £45,000, you could only apply for up to 49% of this, which would be £22,050

Buying your property

• You must already have an offer accepted on a new property before applying for the scheme
• Your solicitor cannot have already concluded missives (this is the legal contract) between you and the person selling the house, prior to your application for the First Home Fund

What’s in it for the Government? Surely, they are not doing this for nothing?

This is a very good question.

In our opinion, this is a win-win situation for both the first-time buyer and the Scottish Government. You get to a buy the house you never thought you could afford, and they get to invest some cash into property, just like any other investor would. Think of it as an interest-free loan and a calculated gamble by the government.

So how does the Government get its money back, I hear you ask?

The Scottish Government only benefits from this if you benefit from it. What does this mean?

Let’s take a simple example: 

• You’re buying a house for £100,000
• You borrow £70,000 by way of a mortgage
• You put down a £5,000 of your own cash on top
• The Government puts in £25,000

So, here, the Scottish Government owns a 25% share in your property.

20 years later, you decide to sell the property. For the ease of this example, we shall say the house has doubled in value over this time:

• You sell the house for £200,000
• The Government gets back 25% of the new sale price, so receives £50,000
• You keep the 75% which is left, £150,000
• Everyone is a winner!

Over the 20 years, you have paid no monthly payments on the original £25,000 and zero interest on the £25,000. I would say it’s an absolute stroke of genius.

But what if the house sells for less than I bought it for?

If you lose then the Scottish Government will lose, and this is a risk they are willing to take. You just need to look at historical house values to know that over time and through the scheme as a whole, they won’t lose, and neither will you.

The Scottish Government portion is always based on a percentage figure. If the value of your home drops by 10% by the time you come to sell it, then their share also drops by the same percentage.

For the purposes of clarity, house prices can go up and down over time and the above statement is not in any way to be taken as advice regarding house valuations.

Who is the First Home Fund Help to Buy scheme not for?

• Buy to let investors
• Existing homeowners
• Purchases anywhere else in the world other than Scotland
• Scheme abusers (if you are not sure what I mean then you are not a scheme abuser; if you know exactly what I mean then I will make sure you get caught. Shame on you!)

How much does it cost to apply to the First Home Fund?

You will be charged a fee of £550 for administration purposes, payable on application to the Scottish Government. The fee will be refunded if your application is unsuccessful.

This administration fee is required to be paid three weeks prior to your new house purchase completing and you picking up the keys. Failure to pay the fee will result in your application being cancelled.

Can I buy out the Government?

Yes – you can buy out their share at a minimum of 5% each time, and at any time that suits your circumstances. The only real limiting factor is that they cannot own less than 10%.

For example, if you owned 90% and they still currently owned 10%, then your next purchase of their shares would have to be the full 10% that’s left, giving you complete ownership.

How can I find out more?

Stisi Group are industry experts, specialising in shared equity mortgages and shared equity government schemes.

We honestly love helping first-time buyers get their foot on to the property ladder. We also understand that sometimes the process can be daunting, so we’re here to answer your questions and guide you right through the process.

Please get in touch with us if you’d like to chat with one of our team. You can call us on 0131 510 1240 or email us at info@stisi.co.uk to find out more!

Your home may be repossessed if you do not keep up repayments on your mortgage.

There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1% but a typical fee is 0.3% of the amount borrowed.

You can stiil apply for a mortgage payment holiday, should you need to, until 31st March 2021. Here’s what you need to know:

• You will still accrue interest on your mortgage during a payment holiday. This means that overall, it is likely that you will end up paying more – so only take a payment holiday if you really need to.
• The deadline for mortgage payment holiday requests is 31st March 2021.
• All payment holidays must have ended by 31st July 2021.
• If you haven’t yet had a mortgage payment holiday, you can request up to a three-month break from payments – but you must apply before 31st March.
• If you’ve already had a three-month payment holiday, you can still apply for a further three months – but you must apply by 31st March.
• If you are currently taking your first mortgage payment holiday finishes after 31st March, you may still request to extend it. You cannot extend the payment holiday beyond 31st July.
• If you have already had six months’ of mortgage payment holidays, but find that you still need support, your lender should arrange ‘tailored support’ for you.
• While your first six months of payment holiday are not shown as missed payments on your credit file, lenders are still able to find out about them (i.e., by looking at your bank records or outstanding mortgage value) – so it may still affect future credit applications.

Here to help

We’re passionate about what we do, we’re trusted experts, and we’re here to help if you’ve any questions. After all, we’re all in this together. Email us at info@stisi.co.uk or call us on 0131 510 1240.

Update: November 2020

Mortgage payment holiday schemes have recently been extended by the UK Government. Here’s what you need to know:

• The deadline for mortgage payment holiday requests has been extended until 31st January 2021
• You can request a three-month break from payments, with the option to extend this for a further three months, if needed.
• If you’ve already had, or are currently taking, a three-month payment holiday you can still apply for a further three months.
• If you have already had six months’ of mortgage payment holidays, but find that you still need support, your lender should arrange ‘tailored support’ for you.
• While your first six months of payment holiday are not shown as missed payments on your credit file, lenders are still able to find out about them (i.e., by looking at your bank records or outstanding mortgage value) – so it may still affect future credit applications.

May 2020

Is a mortgage payment holiday a good idea? The UK Government is supporting UK mortgage holders with mortgage payment holidays – but is it the right option for you?

Watch as our Bearded Broker Ross Stisi considers the good, the bad and the ugly in this two-minute taster video, so you can make an informed decision. If you’d rather read, just scroll down!

Is a mortgage payment holiday right for you?

The good

Yes, the good is pretty obvious – you won’t have to pay any mortgage payments. The payment holiday window is three months, during this intense period of COVID-19 lockdown. Many people have had their income reduced, perhaps through being furloughed or having reduced working hours – or worse. A three-month mortgage payment holiday could really help to lift some of the pressure.

The UK Government is backing the availability of payment holidays. This means that there is no penalty or credit rating impact should you choose to apply.

The bad

Unfortunately, you can’t have the good without the bad. If you take a mortgage payment holiday you have a three month window in which you don’t have to pay any mortgage payments. Your lender will take those three payments and add them on to the debt of your mortgage. This means that your on-going monthly payments will increase slightly. 

This increase will be determined by two factors – the balance of your mortgage, and the remaining term on your mortgage. The greater the balance and the shorter the term, the greater the monthly payment increase. Make sure to discuss this with your lender, so you have a clear understanding of your monthly payments after a payment holiday.

The ugly

While a three-month mortgage payment holiday can really help your short-term financial situation, having to restart payments – and at an increased amount – might feel pretty ugly. But, if you need to take off the financial pressure right now and you can afford the subsequent increased monthly payments then a mortgage payment holiday can be of real financial benefit.

The verdict?

We wouldn’t recommend taking a mortgage payment holiday if you don’t absolutely need it. If you can manage right now then it could be an option that you keep in reserve, for whatever’s round the corner. However, if a payment holiday is going to make the difference for you right now, and you use it appropriately, then it’s definitely an option for serious consideration.

How do you arrange a mortgage payment holiday?

If you decide that this is the right move for you, or if you just want to find out more, all you need to do is contact your lender. Most lenders now have specific COVID-19 support pages on their websites, and many have set up online applications. Not sure how to contact your lender? An internet search of your lender’s name, ‘payment holiday’ and ‘COVID-19’ should help.

Here to help

We’re passionate about what we do, we’re trusted experts, and we’re here to help if you’ve any questions. After all, we’re all in this together. Email us at info@stisi.co.uk or call us on 0131 510 1240.

A recent report from Online Mortgage Advisor found that 11 out of 31 local authorities have become less affordable in Scotland over the last ten years – and revealed that East Lothian has seen the largest affordability ratio increase of any local authority over this time. The higher the ratio, the wider the gap between local earnings and property prices.

The latest figures from ESPC (Edinburgh Solicitors Property Centre) found that properties in East Lothian experienced a 9.4 percent increase in average selling price year on year, from November to January, up from £247,950 to £271,211.

This continues a rising trend for house prices in the region – ESPC reported an 18 percent increase in average selling prices from 2010 to 2019. This trend has continued through 2020; despite the unprecedented closure of the property market with the first Coronavirus lockdown, average selling prices still rose, to £264,035 – an increase of 5.9 percent on 2019.

While the thriving East Lothian property market is good news for the region, it also means that first time buyers often cannot afford to purchase a home in their local area. To compound this, the Scottish Government has announced cuts to help to buy schemes, due to the current additional financial pressures on the budget. The main Help to Buy (Scotland) scheme has been closed for 2021 – 2022, and the Open Market Shared Equity (LIFT) scheme has been reduced to £44 million for the year.

There is however some hope for first time buyers, with the First Home Fund – currently closed due to these extraordinary circumstances – now due to reopen on 1^st April 2021. This scheme hasn’t escaped the budget cuts though, and has been reduced from £200 million last year, to just £60 million for 2021 – 2022.

Local family businesses Stisi Group mortgage experts and Clancys Solicitors and Estate Agents have teamed up to offer a free First Home Fund information session, in a bid to ensure that local first time buyers don’t miss out. The shared equity scheme offers a free loan of up to £25,000 towards a first property deposit; the buyer needs only to provide a five percent deposit.

Funding is offered on a first come, first served basis, across Scotland. With the additional financial pressures of the Coronavirus pandemic making it more difficult than ever to save a deposit, the main Help to Buy scheme closed, and the severe cuts to the LIFT and First Home Fund, it’s expected that demand will be high and the available funding will run out quickly – long before the March 2022 end date.

Ross Stisi, Stisi Group Managing Director, said: “Strict lending criteria is making mortgages with low deposits harder to obtain and we know it’s not easy for everyone to save up for a large deposit. As the First Home Fund is a shared equity scheme, it works like an interest-free loan with no monthly payments. Anyone interested will need to act quickly though, as industry experts expect demand to soar. I wouldn’t be surprised if funding ran out within months, or even weeks, due to uptake.”

Paul Clancy, Property Director at Clancys Solicitors and Estate Agents, added: “We’re keen to make sure local first time buyers hear about this opportunity, as it could be the difference in making a home in East Lothian affordable to them.

“A great advantage of the First Home Fund is that it’s not means-tested like other shared equity schemes, so I feel this will be able to help a lot more first-time buyers in the EH postcode area.” 

The free information event First Time Buyers – How to get £25,000 towards your new home – will be held on Saturday 6^th March, at 10am, via Zoom. Bookings is via Eventbrite.

Anyone wishing further information can call Stisi Group on 0131 510 1240, email info@stisi.co.uk or follow @StisiGroup on social media.