The Island’s property sector remains steady, but some experts are seeing signs of an upturn in the residential market next year. So, 2015 could be the ideal time to move into your dream home – but it’s a very competitive market and putting financial plans in place well in advance will give you a significant advantage.
Tim Groves, Commercial Director at Black Grace Cowley, is cautiously optimistic about the Island’s residential market.
“Notwithstanding better sales figures in the second half of 2014, there are still many challenges ahead,” he says. “The market is tough across all price ranges. However, it is moving, particularly at lower levels with an increase in sales of good quality, sensibly priced, houses and apartments. We expect that trend to continue into 2015. However, vendors with property to sell upwards of ?450,000 will find themselves in an ultra-competitive position when they choose to bring their property to the market. I cannot stress enough how important it is to listen to market driven advice and experience, particularly when setting a price. Think ‘value’ not ‘asking price’.”
Just a short walk from the Black Grace Cowley’s main office in Victoria Street, Douglas, is MBL Financial, one of the Island’s leading IFAs. John Shields, a Financial Consultant at MBL Financial who for the last 15 years has specialised in all aspects of mortgage advice and arrangement, says that in today’s housing market it’s vital to be able to move quickly to secure a purchase.
“Planning ahead has never been more important. In most cases – and even in the early stages of consideration of buying – we would advise applying to one of our high street lenders for an ‘agreement in principle’. This means that when the ideal property does become available we are prepared and can act immediately as our client’s mortgage would have already been approved.”
Demonstration of affordability has always been the most important part of any mortgage application. But it’s now even more so following the Mortgage Market Review (MMR) rules which were introduced in the UK by the Financial Conduct Authority (FCA) in April. These rules also have an impact on Isle of Man mortgage providers and borrowers concerned with the purchase of residential properties. In summary, the new rules mean that customers need to meet additional criteria in order to satisfy lenders that they can afford the mortgage – not just now, but in the future too. It is now up to the borrower to prove to the lender that they can afford not only the mortgage payment, but also all other expenses related to the home – such as regular utility bills – along with all other normal monthly expenditure.
Demonstration of affordability now means even more detailed budget planning and allowing for any future rises in interest rates which could have an impact on surplus income. Mr Shields says that this is especially so for first time buyers who also have to consider other factors if they wish to take advantage of Government initiatives to help them get on the property ladder. In August, the Government’s House Purchase Assistance Scheme for first time buyers was replaced by two new schemes – Shared Equity Purchase Assistance (First Home Choice) Scheme and Shared Equity Purchase Assistance (First Home Fixed).
All of these recent changes, combined with an already competitive property market, may seem to add even more complexity to the process of securing a mortgage – but in practice these developments are more evolutionary than revolutionary steps in regard to the impact on financial planning for property purchases. But it does emphasise the importance of getting sound advice from the outset from an experienced estate agent and mortgage adviser – and the earlier, the better.
MBL Financial is one of the Island’s longest established independent financial advisers and recently opened a new office in 33-35 Victoria Street, Douglas. For information go to www.mbl.co.im or call 01624 640580.
Photo - John Shields, Financial Consultant at MBL Financial.
