Guides and Blogs

1. First Time Buyer Mortgage Guides:

2. Market Update: March 2025.

3. Buy to Let, Ltd Co vs personal name.

4. Additional borrowing options:

5. Adverse Credit Mortgages:

6. The Home Buying Journey and Associated Costs:

  1. First-Time Buyer Mortgage Guide – UK

Buying your first home is an exciting milestone, but it can also feel overwhelming. This guide will walk you through the mortgage process, from understanding your options to getting the keys to your new home.

1. What is a Mortgage?

A mortgage is a loan provided by a bank or lender to help you buy a property. You repay the loan in monthly installments, typically over 25 to 40 years, with interest.

2. How Much Deposit Do You Need?

Most lenders require a deposit of at least 5% of the property’s value. The larger your deposit, the better the mortgage rates you can access. Typical deposit options include:

  • 5% deposit – Limited mortgage options, higher interest rates.
  • 10%-20% deposit – More choices, lower interest rates.
  • 25%+ deposit – Access to the best deals and lowest rates.

Some lenders offer zero-deposit mortgages if you meet specific criteria.

3. Types of Mortgages for First-Time Buyers

There are several types of mortgages available:

  • Fixed-Rate Mortgage – Your interest rate stays the same for a set period (e.g., 2, 3, or 5 years), providing stability in repayments.
  • Tracker Mortgage – The interest rate moves in line with the Bank of England base rate, meaning your monthly payments can go up or down.
  • Variable-Rate Mortgage – The lender sets the interest rate, which can change at any time.
  • Discounted Rate Mortgage – Offers a discount on the lender’s standard variable rate (SVR) for a set period.

4. How Much Can You Borrow?

Lenders assess your income, outgoings, and credit history to determine how much you can borrow. Typically, you can borrow 4 to 4.5 times your annual salary. Using a mortgage calculator can give you an estimate.

5. Government Schemes for First-Time Buyers

To help first-time buyers, the UK government offers various schemes:

  • First Homes Scheme – Discounted new-build homes for first-time buyers and key workers.
  • Shared Ownership – Buy a percentage of a property (e.g., 25-75%) and pay rent on the remaining portion.
  • Right to Buy – Allows council tenants to purchase their homes at a discount.
  • Lifetime ISA (LISA) – A savings account that provides a 25% government bonus towards your first home deposit.

6. The Mortgage Application Process

  1. Get a Mortgage Agreement in Principle (AIP) – This gives an estimate of how much a lender might lend you.
  2. Find a Property – Work with an estate agent to find the right home.
  3. Make an Offer – Once accepted, you’ll need to formally apply for a mortgage.
  4. Mortgage Application & Valuation – The lender assesses your financial situation and the property’s value.
  5. Receive a Mortgage Offer – If approved, you’ll receive a mortgage offer confirming the loan details.
  6. Conveyancing & Legal Work – A solicitor or conveyancer handles legal checks and contracts.
  7. Exchange Contracts – At this stage, the purchase becomes legally binding.
  8. Completion & Move In – The lender releases the funds, and you get the keys to your new home.

7. Costs to Consider When Buying a Home

Besides your deposit, there are additional costs to factor in:

  • Stamp Duty – First-time buyers in England and Northern Ireland don’t pay stamp duty on properties up to £425,000.
  • Mortgage Fees – Application, arrangement, and valuation fees may apply.
  • Solicitor Fees – Legal costs for conveyancing.
  • Surveys – Additional property inspections for potential issues.
  • Moving Costs – Removal services and initial home setup expenses.

8. Why Use a Mortgage Broker?

A mortgage broker can help you find the best mortgage deals, access exclusive offers, and guide you through the process, saving you time and money.

9. Get Started Today!

Buying your first home is a big step, but with the right preparation and expert advice, it can be a smooth and rewarding experience. If you’re ready to take the next step, speak to a mortgage advisor today to explore your options and start your homeownership journey!

 

2. Market Update: March 2025

1. Housing Market Trends

• Property Prices: House prices have shown moderate growth, with an annual increase of around 2-3% due to stabilizing interest rates and improving buyer confidence.

• Regional Variations: London and the South East continue to see steady demand, while northern cities such as Manchester, Liverpool, and Leeds are experiencing stronger price growth driven by increased investment and infrastructure projects.

• New Build Demand: The demand for new-build properties remains strong, especially among first-time buyers benefiting from government incentives.

2. Mortgage Market Trends

• Interest Rates: The Bank of England has held the base rate steady at 4.5%, with speculation of gradual cuts later in 2025. Fixed mortgage rates have stabilized, offering more affordability for buyers.

• First-Time Buyers: Government schemes such as First Homes and Shared Ownership continue to support first-time buyers, though affordability remains a challenge.

• Buy-to-Let: Landlords are adjusting to regulatory changes, but rental demand remains high, especially in urban areas with strong employment growth.

3. Rental Market Update

• Rising Rents: Rental prices have increased by 5-6% year-on-year, driven by high demand and a shortage of rental properties.

• Landlord Trends: Many landlords are focusing on energy efficiency improvements to comply with new regulations and attract tenants.

4. Market Outlook for 2025

• Stable Growth: House price growth is expected to remain steady, with affordability and economic conditions playing a key role in demand.

• Mortgage Affordability: If inflation continues to ease, we could see lower interest rates, making mortgages more accessible.

• Regulatory Changes: Stricter rental market regulations may impact landlord strategies, but demand for rental properties remains high.

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3. Buy-to-Let Guide: Limited Company vs Personal Ownership

Investing in buy-to-let (BTL) properties can be a great way to generate income and build long-term wealth. However, one key decision is whether to purchase properties as an individual (personal ownership) or through a limited company (Ltd). This guide explores the benefits and drawbacks of both options to help you choose the best structure for your investment.

1. Key Differences Between Limited Company and Personal Ownership

Feature Personal Ownership Limited Company
Tax on Rental Income Income is taxed at personal tax rates (up to 45%) Corporation tax applies (currently 25%)
Mortgage Interest Relief No full relief – only a 20% tax credit available Full mortgage interest relief allowed
Stamp Duty (SDLT) Standard buy-to-let rates apply Higher rates may apply for company purchases
Profits Withdrawal Taxed as personal income (if withdrawn) Can be taken as salary, dividends, or retained for reinvestment
Mortgage Availability More lenders, competitive rates Fewer lenders, often higher interest rates
Inheritance Tax Planning Properties are in personal estate More flexible inheritance tax planning

2. Advantages & Disadvantages

Personal Ownership

✅ Simpler to set up & manage – No need to register a company or file company accounts.
✅ More mortgage options – Wider choice of lenders and lower interest rates.
✅ Lower administrative costs – No need for company tax returns or additional accounting.
❌ Higher personal tax rates – Rental income taxed at personal rates up to 45%.
❌ Limited mortgage interest relief – Can only claim a 20% tax credit.
❌ Less efficient for portfolio growth – Higher tax makes reinvestment harder.

Limited Company Ownership

✅ Full mortgage interest tax relief – All interest costs can be deducted before tax.
✅ Lower corporation tax rates – Profits taxed at 25% instead of up to 45% personal tax.
✅ Better for reinvesting profits – Can grow your portfolio more tax-efficiently.
✅ Improved inheritance tax planning – Shares in a company can be transferred strategically.
❌ Higher mortgage rates & fewer lenders – Limited company mortgages often cost more.
❌ Additional administrative burden – Company accounts, tax returns, and legal requirements.
❌ Stamp Duty may apply when transferring – Moving properties from personal to Ltd ownership incurs costs.

3. Tax Considerations

Personal Taxation

  • Rental income is taxed at income tax rates (20%, 40%, or 45%).

  • No full mortgage interest relief – only a 20% tax credit.

  • Capital Gains Tax (CGT) when selling:

    • 18% (basic rate taxpayers)

    • 28% (higher rate taxpayers)

Limited Company Taxation

  • Corporation tax on profits at 25%.

  • No personal tax on profits unless withdrawn (dividends or salary).

  • Capital Gains Tax – Gains taxed at corporation tax rates, but no annual CGT allowance.

  • If taking dividends, dividend tax applies at 8.75%, 33.75%, or 39.35% depending on income level.

4. Mortgage Considerations

  • Personal BTL mortgages have more choice & better rates.

  • Ltd company mortgages have higher rates & fees, but more tax efficiency.

  • Many investors use Ltd structures for long-term tax benefits despite higher costs.

5. Who Should Consider Ltd vs Personal Ownership?

Personal Ownership is Best If:

✔️ You are buying 1-2 properties as a small-scale investor. ✔️ You need access to rental income immediately. ✔️ You want lower mortgage rates and a simpler process.

Limited Company is Best If:

✔️ You plan to build a property portfolio and reinvest profits. ✔️ You are a higher-rate taxpayer looking to reduce your tax liability. ✔️ You want to pass on your portfolio more efficiently.

6. Conclusion: Which Is Right for You?

Choosing between personal ownership and limited company ownership depends on your long-term goals, tax situation, and investment strategy. While limited companies offer better tax efficiency and mortgage interest relief, they come with higher costs and administrative work.

For tailored advice, speak to a mortgage broker or tax advisor to determine the best structure for your investments.

4. Guide to Additional Borrowing Options

If you’re looking to access extra funds while already having a mortgage, there are several borrowing options available. Whether you need money for home improvements, debt consolidation, or an investment, understanding the best method can help you make an informed decision.

1. What Is Additional Borrowing?

Additional borrowing refers to increasing the amount you owe on your mortgage to release equity or access funds for other financial needs. This can be done through various options, depending on your circumstances and lender requirements.

2. Additional Borrowing Options

1. Further Advance

A further advance allows you to borrow extra money from your current mortgage lender. This is a good option if your lender offers competitive rates and you want to keep everything under one mortgage.

✅ Pros:

  • Typically lower interest rates than personal loans or credit cards.

  • Keeps borrowing with the same lender, simplifying management.

  • Can be used for home improvements, investments, or other needs.

❌ Cons:

  • Requires affordability checks and a new assessment.

  • Additional borrowing may be at a different rate than your main mortgage.

  • Your repayments will increase.

2. Remortgaging to Release Equity

Remortgaging involves switching to a new mortgage deal, either with your current lender or a new provider, while borrowing additional funds against your property’s value.

✅ Pros:

  • Can help secure a better interest rate if rates have dropped.

  • Potentially lower repayments if the new mortgage deal is more favorable.

  • Good for large borrowing amounts.

❌ Cons:

  • Early repayment charges may apply if you’re leaving your current mortgage deal early.

  • Requires affordability checks and a full application process.

  • If rates have risen, your new deal may be less favorable.

3. Secured Loan (Second Charge Mortgage)

A secured loan, also known as a second charge mortgage, allows you to borrow money against the equity in your home while keeping your existing mortgage in place.

✅ Pros:

  • Can be useful if you have a favorable mortgage rate and don’t want to remortgage.

  • Available even if your current mortgage has early repayment charges.

  • Can provide flexibility in repayment terms.

❌ Cons:

  • Interest rates may be higher than standard mortgage rates.

  • Adds a second monthly repayment on top of your existing mortgage.

  • Your home is at risk if you fail to keep up with repayments.

4. Equity Release (For Over 55s)

Equity release allows homeowners aged 55+ to access tax-free cash from their home’s value without having to sell or move.

✅ Pros:

  • No monthly repayments required (in lifetime mortgages).

  • You can receive a lump sum or smaller amounts over time.

  • Allows you to access cash while staying in your home.

❌ Cons:

  • Can reduce the inheritance you leave to family.

  • Interest is compounded, meaning the amount owed can grow over time.

  • Can affect eligibility for means-tested benefits.

3. How to Choose the Right Option

When considering additional borrowing, think about:

  • Your current mortgage rate – Will remortgaging be more beneficial?

  • Your affordability – Can you manage higher repayments?

  • Future financial goals – Do you need a long-term or short-term solution?

  • Fees and costs – Are there early repayment charges or arrangement fees?

4. Get Expert Advice

At Bowen Mortgages, we help you explore the best additional borrowing options to suit your financial situation. Contact us today for expert mortgage advice tailored to your needs!

5. Guide to Adverse Credit Mortgages

If you have a history of poor credit, getting a mortgage may seem challenging, but it’s not impossible. Many lenders offer adverse credit mortgages designed for individuals with bad credit, giving you the opportunity to secure a home loan despite past financial difficulties.

1. What Is an Adverse Credit Mortgage?

An adverse credit mortgage, also known as a bad credit mortgage or subprime mortgage, is a home loan for borrowers who may struggle to qualify for a standard mortgage due to their credit history. Lenders assess these applications differently, often considering additional factors beyond credit score, such as income, affordability, and deposit size.

2. Common Reasons for Adverse Credit

Lenders may classify you as having adverse credit if you have experienced:

  • Missed or late payments on loans, credit cards, or mortgages.

  • County Court Judgements (CCJs) against you.

  • Defaults on credit agreements.

  • Bankruptcy or IVAs (Individual Voluntary Arrangements).

  • Debt management plans.

  • Repossessions.

While these issues can make securing a mortgage harder, specialist lenders consider cases individually, and there are options available.

3. How to Improve Your Chances of Getting an Adverse Credit Mortgage

If you have a poor credit history, there are ways to improve your chances of approval:

✅ Check Your Credit Report

  • Obtain your report from Experian, Equifax, or TransUnion to check for errors and understand your credit status.

  • Ensure all information is accurate and up to date.

✅ Save for a Larger Deposit

  • Most adverse credit lenders require a higher deposit (typically 15-30%).

  • The larger your deposit, the lower the risk for lenders, increasing your chances of approval.

✅ Demonstrate Affordability

  • Lenders assess whether you can afford repayments based on income and expenses.

  • Reduce unnecessary spending and avoid taking on new debts before applying.

✅ Improve Your Credit Score

  • Make all payments on time to show financial responsibility.

  • Register on the electoral roll at your current address.

  • Keep credit utilization (how much credit you use vs. your limit) low.

✅ Consider a Specialist Lender

  • Mainstream lenders may decline applications from those with bad credit, but specialist lenders are more flexible.

  • A mortgage broker can help find the right lender for your situation.

4. Features of Adverse Credit Mortgages

Adverse credit mortgages differ from standard mortgages in several ways:

Feature Standard Mortgage Adverse Credit Mortgage
Deposit Required 5-10% 15-30%
Interest Rates Lower Higher due to risk
Lender Flexibility Stricter More accommodating
Credit Check Must have good credit Past issues considered
Availability High street banks & specialist lenders Mostly specialist lenders

5. Alternative Options If You Can’t Get a Mortgage Now

If your credit history is preventing you from securing a mortgage, consider:

  • Guarantor Mortgage – A family member guarantees the loan, reducing lender risk.

  • Help to Buy / Shared Ownership – Government-backed schemes for first-time buyers.

  • Wait & Improve Credit – Spend time improving your credit before reapplying.

6. How a Mortgage Broker Can Help

Applying for an adverse credit mortgage can be complex, but working with a specialist mortgage broker can improve your chances of success. At Bowen Mortgages, we:

  • Work with specialist lenders who accept bad credit applications.

  • Help you find the most competitive rates available.

  • Guide you through the entire process to make securing a mortgage easier.

7. Conclusion

Having adverse credit doesn’t mean you can’t get a mortgage. While your options may be more limited, there are lenders willing to work with you. By improving your credit, saving for a higher deposit, and working with a specialist broker, you can find a mortgage that suits your needs.

For expert advice and tailored mortgage solutions, contact Bowen Mortgages today!

6. The Home Buying Journey & Associated Costs

Buying a home is an exciting milestone, but it can also be a complex process with several steps and costs involved. This guide breaks down the home purchasing journey and the fees you should be aware of when buying a property in the UK.

1. The Home Buying Journey

Step 1: Determine Your Budget & Get a Mortgage Agreement in Principle (AIP)

  • Assess your financial situation, including savings for a deposit and monthly affordability.

  • Approach a mortgage broker or lender to obtain an Agreement in Principle (AIP), which shows how much you could borrow.

Step 2: Find a Property & Make an Offer

  • Search for properties that match your needs and budget.

  • Once you find the right home, submit an offer through the estate agent.

Step 3: Apply for a Mortgage

  • Submit a full mortgage application to your chosen lender.

  • The lender will conduct affordability checks and a property valuation.

Step 4: Conduct Property Surveys & Searches

  • A property survey assesses the condition of the home and highlights potential issues.

  • Local authority searches check for planning permissions, environmental risks, and legal restrictions.

Step 5: Exchange Contracts

  • Once both parties agree, contracts are exchanged, and you pay the deposit.

  • At this stage, the purchase becomes legally binding.

Step 6: Completion & Moving In

  • The mortgage funds are transferred, and you receive the keys to your new home.

  • You can now move in and start making the property your own!

2. Fees & Costs Involved in Buying a Home

1. Mortgage Fees

  • Arrangement Fee (£0 – £2,000) – Charged by lenders for setting up the mortgage.

  • Valuation Fee (£150 – £1,500) – Covers the lender’s property valuation to ensure it is worth the loan amount.

  • Booking Fee (£99 – £250) – Some lenders charge a fee to secure a mortgage deal.

2. Deposit

  • Typically 5-20% of the property price.

  • The larger the deposit, the better the mortgage deals available.

3. Legal Fees (Conveyancing)

  • Solicitor Fees (£800 – £2,000) – Covers legal work such as contracts, searches, and handling payments.

  • Local Searches (£250 – £500) – Checks for planning, environmental, and legal issues.

4. Stamp Duty Land Tax (SDLT)

  • Stamp Duty applies to homes over £250,000 for standard buyers (rates vary).

  • First-time buyers may qualify for relief on properties up to £425,000.

5. Survey Fees

  • Homebuyer’s Report (£300 – £600) – Basic survey for modern properties.

  • Full Structural Survey (£600 – £1,500) – Recommended for older or high-value homes.

6. Moving Costs

  • Removal Services (£300 – £1,500) – Costs vary depending on distance and volume of belongings.

  • Storage Costs (if needed) – Prices depend on unit size and rental duration.

7. Insurance Costs

  • Buildings Insurance (Required) – Protects the structure of the home.

  • Contents Insurance (Optional) – Covers personal belongings inside the home.

8. Additional Costs to Consider

  • Home Repairs & Decorating – Budget for any necessary improvements.

  • Council Tax & Utility Setup – Monthly expenses once you move in.

3. Final Thoughts

Buying a home involves more than just the property price. Factoring in all associated costs ensures you are financially prepared for the process. Working with a mortgage broker can help you navigate the journey and find the best mortgage deal for your circumstances.

For expert guidance, contact Bowen Mortgages today!

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