How To Actually Afford A House, With Dan Knott (Dan Does Mortgages)

This transcript is auto-generated and lightly edited for readability, it may contain errors.

[0:00] Sammie Ellard-King: My name is Sammie Ellard-King, and welcome to the Money Gains Podcast. We’re a show all about making, saving, and investing your money, interviewing the top minds in the industry to unpack their tips and tricks to success. And today, my guest is Dan Knott. Dan does mortgages. He is back for a part two, all on the latest, everything you need to know about buying houses, mortgages, the state of the market right now, interest rates, what to look out for. It’s an absolute masterclass in that. So if you’re looking to move soon, if you’re into your first home, or perhaps you’re buying a new home, then this is for you. But for now, let’s get started on the Money Gains podcast.

[0:57] Sammie Ellard-King: So, Dan, welcome back to the Money Gains Podcast. You’re back again, part two, man. Part two, yeah.

[1:03] Dan Knott: Thank you very much for having me back. It’s been a while. A lot’s changed since then. There has been, yeah. There’s been a lot of change in the mortgage market, uh, the property market. Um, and yeah, also as I say, a lot of change for yourself. I say you’re doing very well, which is great to see.

[1:20] Sammie Ellard-King: Thanks, man. Yeah, certainly a few more listeners on the podcast now, so hopefully that’s a good thing. But um lots happened in your personal life too. Congratulations on the on the little one.

[1:31] Dan Knott: Thank you very much. Yes, um, this year moved home myself into my second home. Um, a little bit of a renovation. So there was a lot going on. Coincided with that. So two weeks after getting the keys, our second baby came along. So it’s been it’s been a hectic one, but we’re okay. We’re doing all right.

[1:48] Sammie Ellard-King: Perfect, perfect timing as always, right?

[1:50] Dan Knott: As always.

[1:52] Sammie Ellard-King: And so how are you managing a business, a new baby, and a reno? Talk to me, man. I need to hear these strategies.

[2:01] Dan Knott: It’s it’s difficult, to be honest. Um, it’s difficult. You know, I’ve also got a toddler at home, so he’s home a couple of days a week. I do work from home primarily. Um, so some days, you know, there’s a lot going on in the house, but it doesn’t impact the work, you know. Um try and be as organised as possible. Um, make sure you know the clients, the home buyers have got exactly what they need. Sometimes, you know, I might have to turn the laptop on at nine o’clock in the evening, unfortunately. But we’ll make it work. Um, it’s been a busy year so far. Um, lots of home buyer success, so can’t complain.

[2:35] Sammie Ellard-King: Yeah, well, the markets are certainly moving again. Um, also equally moving soon as well. We’re uh we’ve had an offer accepted on a house and um we uh we uh it took ages to sell ours, but we did it. And uh so we’re now in like contracts and paperwork, which is basically the I say the fun part, but it’s definitely not, is it? It’s like dealing with solicitors is like honestly trying to pull like uh you know hair from a stone, or I think that’s the saying, but anyway, um we won’t get into that. I’m sure you deal with that on a daily basis, mate. So um I do, I do. I’d love to sort of start just obviously if someone hasn’t listened to the first episode, um, just a little quick update

[3:20] Sammie Ellard-King: on uh on you, like what and what you do.

[3:24] Dan Knott: Yeah, so my name is Dan Knott, known online as Dan Does Mortgages. So I’m a mortgage advisor who helps home buyers nationally to purchase their homes. I do work primarily in the first-time buyer market, helping first-time buyers nationally to take take those first steps onto the ladder. Um, I do a lot of social media stuff, I do a lot of podcasting um in terms of appearing as a guest, hopefully um helping to provide us, you know, accessible, digestible information for first-time buyers, and then obviously help my my first-time buyers who are clients. Nice, man.

[3:59] Sammie Ellard-King: Nice. Like, I think um you do a great job on socials, like explaining the kind of it is we’re we’re obsessed with property in this country, aren’t we? But we when it comes to it, there’s a lot of terminology, a lot of like processes, a lot of steps you have to take. And you do a fantastic job, mate, of uh, of simplifying it for the everyday person. So I I’ve certainly picked up a lot from your socials. I’ll I’ll just say that. But I’d love to kick start this with kind of how you would describe the current state of the UK housing and and mortgage market, and if there are any notable trends and shifts that you’re seeing right now that we should be aware of.

[4:39] Dan Knott: Yeah, so the market, it’s moving, you know, it’s been a turbulent last few years, you know, as we were sort of coming out of that of that COVID period, it was especially hectic. House prices were going through the roof. Um, and then it, you know, it did come to a little bit of a slowdown, almost a standstill, but not quite. But as of this year, I would definitely say that you know the market is certainly moving. I believe last year um there was a statistic where I believe there was less first-time buyers last year than there had been in any of the previous 10 years. But this year, things are moving. I do believe there’s been reports that there’s been a slight increase in house prices this year um compared to the same time period last year. Okay. I

[5:24] Dan Knott: don’t think there’s there’s a there’s been a significant uplift yet because mortgage interest rates are still maybe a little bit higher than where, you know, what people would be comfortable with. Especially, you know, let’s say a year ago, there was a lot of bad news on the news regarding the mortgage market. It was, you know, portrayed as quite a scary time for buyers. But as a mortgage advisor, you know, I’m part of a community of hundreds, if not thousands, of mortgage advisors. What I can see is that mortgage advisors are busy, you know, the market is moving. No, it’s not where it was two years ago, but it’s certainly moving. People are looking to buy homes, so that’s a good thing. You know, I was having a lot of conversations around about a year ago with home buyers who were waiting to see where the market would go. They were waiting to see, you know, when

[6:09] Dan Knott: rates would come down or how far they would they would they would reduce by. I’m not having those conversations anymore. Um, a lot more people are contacting me. It’s the right time for them to buy, and they’re looking to looking to get things moving.

[6:22] Sammie Ellard-King: Do you feel like it’s always better then to just to get onto the market than wait in a lot of cases, then?

[6:29] Dan Knott: In a lot of cases, yes, definitely. The reason being, if we’re talking about buying a residential property, that’s not just an investment. It’s the home that you’re going to be living in, it’s a safe space, it’s the it’s the place where your family are going to have a roof over their heads. We can’t predict what’s going to happen with the market moving forward. There’s been so many changes over the last few years, um, it’s been impossible to predict. And, you know, that will continue going moving forward. There’s so many things that impact the economy. We can’t exactly predict where the market will be in one, two, or five years. What I tend to see at home buyers is that if you can achieve your goal in the current market, so if you can buy the property that you want to buy on an affordable basis, um, then it’s a good time to buy because you don’t know where the market’s going to be in another 12

[7:14] Dan Knott: months.

[7:16] Sammie Ellard-King: Yeah. Yeah. That’s what a lot of people struggle with, isn’t it? Is that timing thing? But often it’s like actually, if you wait and the house price, the house that you like, could go up five, ten, sometimes even twenty, thirty grand. By the time you come back around to look at the same house, you’re now having to downgrade your expectations.

[7:40] Dan Knott: Exactly. You know, a good example of that was over the COVID period where the market got so busy and um house prices increased so significantly, meaning that in a lot of cases, you know, people weren’t necessarily able to access a higher mortgage loan. So they needed to find that extra money in the form of a deposit. And that was something that a lot of people struggled with. Um, so that short time period meant that some people were in a position to buy, and then a matter of months later, they were finding it quite difficult. So, yes, if you can achieve your goal, speak to a mortgage advisor, find that out, find out what you can achieve so you’ve got some real clarity, and then make that decision from there on an informed basis. Rather than sometimes people will just look at the news, see the headline, mortgage interest rates are high, and they think, right, not a

[8:25] Dan Knott: good time of buy. Um, in my opinion, that’s not necessarily the best way to move forward.

[8:31] Sammie Ellard-King: Oh mate, no, no one should be listening to the news. Come on, we this is what we say on this podcast. Like, please stop listening to the news. Like, turn it off. The viewership’s going down. Listen to people, I’m not blowing my own trumpet. Listen to people like me, listen to people like other people that are on social media actually talking sense because they’re the ones that are actually giving you what you need to know at that period of time. They’ve done the research, they’ve looked at the stats. Whereas on the news, you’re gonna get like, oh, highest price of house ever, you know, mortgage rates are so high, first-time buyers can’t afford anything. And yes, I uh you know, it there are there is evidence of it

[9:16] Sammie Ellard-King: being more difficult for first-time buyers than ever, and we’ll probably get on to that a little bit, I’m sure. But um, you can’t be listening to this, man. It’s just so other than the the fact that the market is moving, which is great, uh, it’s good to see. You know, we want to see markets moving, especially in in your line of work, I’m sure. But equally as well, you know, when I’m selling my house, I want someone to buy it. And uh what kind of key factors do you think are driving the market then? What what’s what’s making it move?

[9:47] Dan Knott: One thing that’s making it move initially is that there are a lot of people who did delay buying for let’s say 12 to 18 months. People in the life can only wait so long, whether you know, if you’re ready to buy because it’s time to move out of your parents’ house, you know, you’re sick of living with your parents, you’re sick of moving between rentals and dealing with the landlords, or you maybe you’re just in a relationship and it’s time to buy your home. People can only wait so long. So now people who maybe weren’t looking to buy are now coming back to the market. Um, however, in addition to that, mortgage interest rates, especially over the last few weeks and months, mortgage interest rates are moving in the right direction. There’s a lot of talk at the moment of what the new normal is going to be, and you know, a lot of bank banking leaders have been talking about this. Um, interest rates

[10:32] Dan Knott: aren’t going to go back to where they were in 2019 or 2020. It’s looking like they may bottom out, a lot of people are suggesting at around about 3.5%, making the new normal 3.5 to 4.5%. That’s the prediction of some banking leaders. Now, you know, there’s never any guarantee, um, but that sounds about you know, that sounds realistic to me. Interest rates are moving in the right direction. Um, you know, recently last month, we had an interest rate of sub 4% for the first time. Okay, first time in a while, sorry. So that’s another indicator that things are moving. Since then, many other lenders have followed suit. Now that those rates aren’t available to everybody. So that first product that was sub 4% was for home movers with a deposit of 40%

[11:18] Dan Knott: with a five-year fix, and it had a hefty fee attached, but things were moving in the right direction, and many other lenders. We saw the three. We saw a three. We saw a three, and that’s what it’s all about. So things are definitely moving in the right direction in terms of interest rates. Now, I’ve got you know some examples for you here. So for a first-time buyer, as of today at the time of this recording, and the market ever, you know, the market’s ever changing. For a first-time buyer with a five percent deposit at the time of this recording, the lowest rate on the market is around about 5.05%. With a 10% deposit on a five-year fix, that’ll be 4.68%. With a 15% deposit on a five-year fix, that’s 4.36%. If we go back a year, a lot of my home buyers were paying over 5%. Um, you

[12:03] Dan Knott: know, it was it was very, very common. The market, you know, rates are coming down, so that’s a good sign. And yeah, a lot a lot of people are now looking to buy.

[12:12] Sammie Ellard-King: Yeah, yeah. Oh, that’s a good to hear. That’s good to hear. And I suppose when you’re you’ve waited 12, 18 months, you’ve if you’ve been saving and you’ve been contributing perhaps to a Lifetime ISA or something along those lines, you’ve got a bigger nested and a bigger deposit, which hopefully you could put towards either a 10 or a 15% deposit, which brings down your interest rates when you go, as you’ve just said, which is really, really interesting. But uh it’s it’s uh it is crazy because I went from a uh 1.7 to a 5.2 um when we remortgaged in January, which was like you know, pretty uh crazy difference, right? And I think that’s what a lot of you know highly educated people in the UK

[12:57] Sammie Ellard-King: didn’t look at the history books and they just went, well, I can get this, let’s go for it, and didn’t really realise that any kind of increases there um have a significant impact on your finances and your ability to run your life. So I think with interest rates fluctuating, what advice would you give to homeowners considering remortgaging or having to remortgage in the near future?

[13:26] Dan Knott: Yeah, so uh so this is sort of a you know it’s a common topic at the moment in what is now a more expensive market. I’ve just moved home and my interest rate went from 2.27% up to over 5% too. So I’ve I’ve been in a very similar boat. Now, when you come to remortgage, okay, if your if your new deal is due to expire, you can secure, sorry, if your current deal is due to expire, you can secure your new deal within six months of your current deal ending. Okay, now what I would generally recommend is that you are exploring the whole of the market, your current lender may not be the one offering the best deal for you. You may be able to switch somewhere else with another lender and save some money. Okay, so a whole of market mortgage advisor like myself um can walk you through

[14:11] Dan Knott: that process. Okay, now it is common, as mentioned. You know, if if you took your last mortgage, let’s say two to five years ago, for most people, this next mortgage is going to have a higher interest rate, okay, unless you’re incredibly lucky. So that’s something in which we are all facing. Okay, we’ve got two options here. Okay, you can either complete a rate switch with your current lender, or you can remortgage elsewhere, of which I’ve previously mentioned. So, to use myself and my homeowners as an example, what I would do is explore all options. Okay. Um, is it cheaper to stick with your current lender or is it cheaper to remortgage elsewhere? Within that, we’d be

[14:56] Dan Knott: considering the cost of the next mortgage product, okay, but also the cost if you are remortgaging, if you’re using a solicitor, mortgage advice fees, um, that will all be included in the advice. That will then allow you to make an informed decision. Okay. Now, a common question that I’m asked when somebody’s approaching the time to remortgage is Dan, rates are coming down a little bit. Do I really want to secure my next deal now? Or should I wait a few months to see if rates come down? My advice would always be secure the deal. Reason being we can’t predict once again where the market’s going to where the market’s going to go over the next few months. But what we can do is, let’s say if you secure your your deal is due to end in the next six months and you secure your next deal

[15:41] Dan Knott: right now. Okay. If that lender releases cheaper mortgage products before the switch happens, it’s quite a simple process typically to switch you onto the cheaper deal with that lender. Okay. So we are looking to tie in a deal now. Um, and then if necessary, if the if the opportunity arises, we can switch to a cheaper deal with that lender.

[16:48] Sammie Ellard-King: That’s what my lender did. So I think we got offered 5.4 or maybe even 5.5. It was a lot higher. And then we waited right to the last second, and then we said, Hey, uh Mr. Lender, what’s your current rates? And they went 5.2, and we went, Well, we’ll have that then, please. Thank you. And they just moved us onto it. And it was a really simple process. And so, can you in this case, could let’s say I secured a deal with a lender six months out, and then two months before, I can I then come back to the table and look at the market again? And if, you know, I don’t know, Halifax or Lloyd’s or whatever. And if I secured with Halifax and Lloyd’s are offering 0.2%

[17:34] Sammie Ellard-King: lower, if I’ve secured, can I then change? How does that work?

[17:37] Dan Knott: You absolutely can do, yes. So before your new deal starts, yes, you could cancel um that application, that mortgage offer, and look to move to another lender on the market. Um, so yeah, you absolutely can do that. It would just be another full mortgage application. If you’re working with an advisor, you know, there may be another fee. So those are the considerations. But yes, you absolutely can do. A further thought would be, you know, and it’s a common question again that I’m asked is that if your your current deal is cheaper and the the new deal that you’ve you’ve secured is going to have a higher interest rate. Um, some people will ask, well, should I wait? So I’m not moving on to the higher interest rate straight away. In reality, what I would do is if we were looking to remortgage, we would secure your new deal. However, that

[18:22] Dan Knott: would not come into place until your current deal ends. Okay. That means that you are getting maximum benefit out of your current cheaper deal.

[18:31] Sammie Ellard-King: Okay, okay, okay, I got you. And what do you think is like one of the most common mistakes people do then when they get to remortgaging today? Like, yeah, what what are you seeing as a common mistake that people make when they remortgage?

[18:45] Dan Knott: Quite often it it’s leaving it too late. Um, it’s not being proactive. So sometimes, you know, if you if if we are remortgaging to another lender, that means submitting a full full mortgage application. There will be a solicitor involved to arrange that trans that transfer of funds. And that can mean that sometimes the deals may run over the time when your current deal expires, meaning that you might have to spend a month or two months on the standard variable rate, which is going to be expensive and it’s not where we want to be. So, yeah, first tip would be make sure you are looking into your e-mortgage six months in advance. Second tip would be explore the whole of the market. That doesn’t mean that you have to switch lenders, but you’re exploring all options, making sure that the deal is the right financial option for you.

[19:30] Sammie Ellard-King: Okay. And do you feel like when people buy a house, then they should probably look at what the scenarios could be if it does go up two, three percent from this point on? Because we haven’t got a crystal ball. And if you know Putin decides to jump on his high horse again and go charging in, and you know, inflation kicks off and the world goes mad again, or we get another pandemic, or something along those lines, right? And we’re in the same position again, and interest rates go flying up even higher because you know, in the 80s they were sub you know, post 10%. Uh hopefully we’ll never see that, but it you never know, right? So what’s that would you suggest that that’s a good thing to do? And do you do that with your clients?

[20:17] Sammie Ellard-King: As in, sorry, go back to the what was the question? Sorry. So, like let’s say you’re offered 4%, do you feel like they should look at whether six percent is actually affordable for them before they go in?

[20:27] Sammie Ellard-King: Right.

[20:28] Dan Knott: Yes, absolutely. And that should always be considered because rates can increase in the market. So when it comes to remortgaging or moving home in the future, um you could be in a more expensive market. As well as that, if there’s any issues with remortgaging or um in the future, you may have to spend a period of time on a variable rate. So, yes, you should consider that. However, the thought process will be different for everybody, as an example. Let’s say you are looking at what would happen if rates would increase to this amount. You can run those figures on a basic online calculator to let you know if your interest rate in two years’ time was to increase, how much would that be? Would that be affordable? Then you can consider things such as, um, you know, let’s say if somebody’s just started in the police force

[21:13] Dan Knott: and there’s a predictable increase in pay ahead of you, you can then factor that factor that into your thought process and your decision making. However, if you’re in in you know in a job in which you aren’t anticipating or aiming for any form of pay increase, you may choose to be a little bit more conservative. So, yes, absolutely, market changes are common. Um, you need to consider that. Um, it’s not, you know, it’s not all it’s not about being doom and gloom, but you need to be realistic and make sure you’re looking after yourself financially, your current self and also your future self.

[21:46] Sammie Ellard-King: Okay, okay, cool. Now, one of the big things that people don’t necessarily understand when they come to move is there is this big fat thing called stamp duty involved, um, whether that’s moving. And equally as well, there’s a limit for first-time buyers. So, I mean, it’s changed so much, I don’t even know what it is right now. And like it honestly just blows my mind because they just keep moving things, government come in, we’re gonna move this around and do this and that. Can you explain stamp duty and how it actually impacts both first-time buyers and existing homeowners?

[22:26] Dan Knott: Yes. So, stamp duty is essentially um a tax that you pay on the land that you are purchasing. Okay, now this may be payable dependent on the circumstances of the purchase and the purchase price. Now, there’s a change upcoming in from the 31st of March 2025. I actually ran a poll on this on my Instagram recently to find out who knew about this, who didn’t. And 90% of people didn’t know that this change was coming. Okay. So in September 2022, I believe it was, there was a change to the stamp duty thresholds with the hope of encouraging people to buy property and to make sure that the market kept moving in the right direction. Okay. So current the the

[23:11] Dan Knott: the current thresholds are, okay, so for a first-time buyer, you do not have to pay stamp duty up until a purchase price of £425,000. Okay. As of the 31st of March 2025, that drops back down to where it was previously, and that is £300,000. Now, as an example, if you were to buy a property for £425,000, you would then pay a stamp duty of 600 and sorry, £6,250 after that March date. Currently, you would pay nothing. Therefore, that’s quite a significant outgoing that you could have dependent on what when your purchase completes. So, you know, purchases may take up until

[23:56] Dan Knott: you know, they could take up to six months if you found the right property. So we’re report we are approaching a time period now where you need to start considering that and speaking to solicitors about when do you think I’m going to complete? Dependent on that answer, how much stamp duty am I going to have to pay? Will that impact how much of a deposit you can pay? Will that impact your emergency fund? Um, but it’s something people need to start thinking about. Yeah, yeah.

[24:23] Sammie Ellard-King: And what about existing homeowners then?

[24:26] Dan Knott: Yeah, so the nil rate threshold of which is currently £250,000 for home movers and will return to the previous level of £125,000. So the same thing with home movers, although the thresholds are different, you’ll start paying essentially more stamp duty as of the 31st of March 2025. Oh man, that hurts, doesn’t it? It does, and it can do. Yes, it certainly will. There’ll be some people who it’s it’s definitely going to hurt. Um, you know, will the government make any, you know, make a decision about this and decide to, you know, that they’re not going to make this change? I’m not too sure. Um, they haven’t made that decision yet, anyway, and the clock’s ticking. So it does look like that the change

[25:11] Dan Knott: is going to occur.

[25:12] Sammie Ellard-King: I think you’re probably right, mate. This country is extremely in debt and they’ve got a lot to pay for and sort out. And stamp duty is probably one of the easy wins for putting money back in the coffers because people are still going to buy homes. Uh, it is unfortunately going to price some people out and mean that they have to wait. But yeah, it’s a tough one. So, what strategies you mentioned, you mentioned speaking to the solicitors and buyers about completion dates. Are there any other strategies and tips that you can suggest for buyers to kind of maximize this current rate of stamp duty?

[25:51] Dan Knott: So, if you are looking to buy a property in the immediate or sort of near future, it it’s it comes down to preparation. And that will always be a common theme of my advice because it is correct, it is all about preparation. Now, when you pay stamp duty will depend on your completion date. However, um, what you can do to maybe help impact that or manipulate that is to make sure that you are fully prepared with your mortgage, you are ensuring that your mortgage offer is going to be issued as soon as possible. You are communicating well with your solicitors, making sure that they have the information that they need from you in order to send offer things such as property searches, and you are answering their queries to make sure that everything at your end um is responded to

[26:36] Dan Knott: and is resolved as soon as possible, therefore giving you the best chance of completing before that date of the 31st of March 2025.

[26:45] Sammie Ellard-King: Oh man, dealing with solicitors. Trust me, I know. It’s just so annoying. You know, I find I just don’t understand why it takes so long. Why why do you think it does? I just don’t get it. It’s a bit of paper.

[27:02] Dan Knott: In so why does it take so long? I do think that that part of the process is extremely outdated. Um not just in in terms of the actual the actual sort of work that they do in terms of sending off a searches, but also communicating with clients. I always feel like it’s it’s very common when I work with solicitors that they’re standard, they will they will send out that email of we will respond within 48 hours, which I think is a lot less common these days. Solicitors don’t communicate with the clients via WhatsApp, it’s all very it’s all very rigid as as a service. Um it’s something I always think, you know, there could be some very quick and easy changes made to certain businesses, um, which would make

[27:47] Dan Knott: you a lot more appealing to home buyers in terms of basically how you communicate with home buyers, because I do feel like that’s that element of the process with with the with the solicitors is extremely outdated in a lot of cases.

[27:59] Sammie Ellard-King: Yeah, yeah. Like, guys, from Dan’s experiences in the hundreds, probably now, my experience is second time round, like just be prepared. Like, it doesn’t move as fast as you want. And when you want a bit of info

[29:22] Sammie Ellard-King: and you try and get through to a solicitor, you’re gonna speak to a PA and they’re gonna tell you they’re gonna get back to you, and it’s gonna take them six or seven days even to respond to that one thing. And then if one thing’s wrong on your application or you’ve put this or they need this, and then suddenly it’s another week, and it can be extremely frustrating. So I think preparing yourself for that up in advance is probably one thing, and that kind of leads me on to my next question, Dan, really, which is like if you are a first-time buyer, we’ve mentioned stamp duty, we’ve mentioned solicitors now, we’ve mentioned mortgage rates and interest rates for first-time buyers. What are the biggest challenges right now that you can see coming up and and how best can they prepare for their first move?

[30:07] Dan Knott: Okay, so a challenge will always be okay, accessing uh the deposit amount that they need, or building that deposit amount that they need. It’s important to have an awareness of the lifetime ISA. If you can open that lifetime ISA as soon as possible, it’s you know it can really help buyers. It is flawed in some ways, of which I’ll move on to. However, it is a great opportunity for the for the right buyer. Okay, so you can contribute £4,000 per year annually with a 25% bonus from the government on top of that. Okay, now that does contribute to your annual ISA limit. Now, with that, to benefit from the Lifetime ISA and to benefit from the bonus, um, that purchase of the property must be made at least 12 months after your first payment is paid

[30:52] Dan Knott: into a lifetime ISA, as well as that, the property purchase price must be £450,000 or less, of which is a hurdle that many people uh you know encounter encounter encountering as well. Um, would you like me to talk more about this before I move on? Please do, yeah. Yeah, so this, you know, since the lifetime ISA came about, that maximum limit for a purchase price has been set at £450,000. Now that hasn’t budged yet. You would think because house prices have increased so significantly over the last six years or so, that that would need to increase. Um, because a lot of people maybe start contributing to a lifetime ISA with the aim of purchasing a £400,000 property, and that property is now worth £480,000

[31:37] Dan Knott: and therefore they can’t access it. So it’s definitely flawed. Again, will the government change this? I’m not sure when they will change this. Reason being I would have expected it to happen after COVID when the market slowed down, and it seemed like an obvious change to make. However, they’re gonna have to increase it at some point because historically house prices continue to increase. So at some point, it is going to have to change. But you know, I don’t think we can bank on that happening over the next six, twelve, eighteen months.

[32:09] Sammie Ellard-King: No, I know. You can’t bank on any of these things, and it should be put up because yes, okay, fair enough. If you’re buying, you know, up your neck of the words, Newcastle Way, Sunderland Way, or even just you know, in a in an uh in a northern county, yes, you’re quite likely to be under the £450,000 unless you’re buying a big home, right? And uh in London, get in your shoebox, man. Like if you’re lucky. Uh and and around here where I’m living now, you know, a two-bedroom house in a lot of uh the new estate that they’ve just built up the road, a two, two up, two down, no different to mine, is £450,000, which is just goes to show, and that’s like in a home county or in Hampshire, right? So

[32:54] Sammie Ellard-King: it’s like it’s pretty crazy when you think about it that they haven’t put that up. Okay, so Lifetime ISA, get that open. I mean, Martin Lewis and now every financial influencer on the planet just says if you’re within the age range of 18 to 39, open it, put a pound in, you’ve started the clock. You don’t have to contribute to it, and it’s just rocking and rolling. I know your LinkedIn post the other day was talking about it as well, and like I I enjoyed that. It got a few people going, man. So but it’s good, it’s a good conversation. We need to have it. The 450,000 pounds needs to be raised. Personally, I think 550 is the sensible amount that it should go up to. But okay, so we’ve got deposit, we’ve got a lifetime ISA, we’ve got stamp duty. What else? I’m a first-time buyer. What

[33:39] Sammie Ellard-King: am I? I don’t know what I’m doing. Help me down.

[33:41] Dan Knott: Yeah, so next of all, you need to consider, you know, we need to access the loan amount that you need to buy the property that you want to buy. So, how can you give yourself the best possible chance of doing that? That is speaking to a mortgage advisor as soon as possible, really. There’s not really, it’s it can never be too early to speak to an advisor, to have that initial chat to understand what your circumstances are, what your goal is, lay some initial foundations in terms of your understanding of your position, of what boxes you need to tick um on that road to buying a home and making sure you’ve got a plan. You know, I’ll I’ll work with home buyers often for you know for two years from initial conversation until they actually buy a property. But that initial conversation, as I say, allows you to understand,

[34:26] Dan Knott: right, is your income enough to achieve your goal? Do you need to decrease your debts to achieve your goal? Um, what does your credit history look like? Um, do we need to make any changes in relation to your credit history? Do we need to build that? Do we need to make sure you’re not making any more mistakes? Um, having that clarity early at least will then allow you to go, right? If I buy a home in 12 months, Dan or another advisor has told me, right, my income is good, my credit history is good. However, I maybe need I maybe need to get rid of that credit card debt as an example. That will then allow me to achieve the goal. Um, so then you can move forward with full clarity because you don’t want to get the day of you know, seeing your dream property, you’ve never spoken to a mortgage advisor, and then you have that conversation

[35:12] Dan Knott: and find out that for whatever reason, it’s not going to happen. So, yeah, have a chat early, lay some foundations and make sure when the time comes, you know exactly where you stand and what you can achieve.

[35:23] Sammie Ellard-King: Okay, interesting. So, like the income I need is gonna massively affect it, the credit score I need is gonna massively affect it, my debt’s gonna massively affect it. So, what are these ratios then?

[35:38] Dan Knott: So, yeah, so most mortgage lenders, most mortgage lenders on the market will lend a four uh first-time buyer up to a maximum of 4.5 times their income. Okay, that will come down from 4.5 times, depending on the debts that you have, any bad credit history, if you have children, um, that will all impact how much you can borrow. So most mortgage lenders will go up to a maximum of 4.5 times. Now, if you have a basic salary on a permanent employed contract and you have no children, no debt, no bad credit history, most lenders will lend you up to 4.5 times that amount. That’s a pretty accurate prediction. However, most people do have some form of debt or have children or maybe have a mispayment, which can cause a variation

[36:24] Dan Knott: there. Now, in terms of how much debt you can have, it’s important that your debt is proportionate to your income. Okay. Now, how much debt would stop you achieving your goal, it’s impossible to say. But at worst, we need your debt to be proportionate to your income so you’re not failing on debt-to-income ratio. But that level of debt will impact how much you can borrow. Now, there are some lenders who will lend over five over 4.5 times your income. Okay. There are certain lenders who will go up to 5.5 times for the right applicant. Now, that does often, you know, that may be higher, a higher earner. Um, but those options are there, where suitable. And I have had home buyers take that option um this year. You know, things

[37:09] Dan Knott: that we would consider, you know, 5.5 times is quite a high amount. So we do have to be cautious around that. However, if we can make the figures work, um, in terms of we may have to, you know, your fixed term period will impact how much your monthly mortgage payment is, your mortgage term will impact that, as well as that. Things such as are you expecting your pay to increase over the next few years? Is that predictable? That will all impact advice. But yeah, working with an advisor who really understands the market and can make sure that you are accessing the best possible financial solution for you, in my opinion, it’s a no-brainer. Um it’s going to make sure that you’re achieving your goal on time, first time, minimal stress, um, as long as you’re working with a good advisor.

[37:52] Sammie Ellard-King: And you are one of those people, Dan. You’re one of those people, mate. So I lastly, uh, you run into some conversations where there’s like fees to have these kind of conversations. And why uh why is there a fee? And is there a fee when I need to have this kind of conversation?

[38:13] Dan Knott: So every mortgage advisor should charges their fees in a different way. Okay. So for a residential mortgage, fees typically vary anywhere from zero to a thousand pounds. Okay. Now when that’s how the conversation or no so so when those fees, so the the total fee ranges anywhere from zero to a thousand pounds in my experience. When those fees are payable, will differ from advisor to advisor. Some advisors may charge a fee up front at initial conversation, some at decision in principle, some at offer, some at completion. Many will break down their fee throughout that process. Okay. Um for myself, I charge my fee at mortgage offer. Now I’ll be up front about it. So my fee is £500

[38:58] Dan Knott: only payable when you achieve your mortgage offer. Now, that is the the fee in most cases. You know, sometimes that fee may change if there is, you know, horrendous adverse credit history. Okay. The amount, the the the total amount won’t change, but we may charge a portion of that at an earlier stage. Okay, so why is there a fee? Um, you know, every advisor is different, some charge more, some charge less. Um, mortgage advisors receive something cut from the bank called a procuration fee, which is essentially a commission from the bank. To be quite upfront about that, it’s not a lot. Okay. If if you were to if a mortgage advisor was to live on just procuration fees, um, they would have to do a lot of mortgages to earn

[39:43] Dan Knott: a living that’s going to support the family. And if a mortgage advisor is doing a lot of mortgages, what then drops are standards, service levels, speed, communication. Um, so that is essentially why mortgage advisors charge fees.

[39:58] Sammie Ellard-King: Okay, that makes sense.

[40:00] Dan Knott: And because mortgage advisors are experts, they were going to make sure that the process is streamlined, um, stress-free. And I’d say you are achieving your goal on time and first time.

[40:10] Sammie Ellard-King: Yeah, I yeah, I you know, I I paid my mortgage advisor uh because I’m a business owner and it was a complicated deal. Like it, you know, my other half wasn’t, and meant that the amount of market that would lend to us was extremely small based on how early I was in terms of my business. It was a complicated deal. But so I’d have never been able to have done that. And you know, he knew immediately who to call, made the phone calls, we did the right thing, and and you know, we paid the fee because we wouldn’t got the mortgage, right? And that’s sometimes what you need to take into consideration.

[40:50] Dan Knott: It’s saving it’s saving you as well time, hassle, and stress. You know, there’s over a hundred lenders on the market. You know, if if me and you had a conversation, I would, you know, certain lenders would start pinging my head, right, from what Sammie’s just said as a business owner who’s early on in you know in that business. Um, these are the lenders we may choose to access. Now, if you’re not in this industry, there are a hundred lenders. If you’re going to call them all, that’s a lot of time taken up. Um, especially if you’ve got a job, kids, hobbies, or a life. So, yeah, a mortgage advisor is going to do that leg work for you.

[41:25] Sammie Ellard-King: Yeah, it’s so important, man. It’s so, so important. Do you think then that like just to kind of bring this to a close, um, is there anything like that we’ve not discussed today, like other than the climate and mortgage products that people should be aware of right now?

[41:42] Dan Knott: I’m not too sure there’s anything else that we’ve missed. Um, but I would say, you know, there’s a lot of pressure that comes from the news. There’s a lot of pressure that comes from family or friends as a result of the news. Um, your mortgage deal is not going to match your friend’s mortgage deal. It will be different. You’ve got different circumstances, different goals. The market may be different. Um, so yeah, don’t be pressured. If it’s the right time for you to buy in your life, you know, uh then have a chat with an expert, find out what’s possible, and then go from there.

[42:16] Sammie Ellard-King: That’s great advice, Dan. Love this chat. It’s been really good having an update. I think we’re gonna have to do this like once a year, mate, and just like get the get the Dan Knott like update on the market. I’d absolutely love it. I’d love to. I’ll be honored. I’ll be back next year. Yeah, part three is incoming people. If you’ve enjoyed this one, Dan, where can people find you?

[42:37] Dan Knott: Yeah, so my main social media page is on Instagram, and that is at Dan DoesMortgages underscore. They can find me on LinkedIn. My name is Dan Knott. Um I’m also on Facebook is Dan DoesMortgages, and yeah, all contact details are available on those websites. And you know, you can also just send a direct message if you’d like to have a chat.

[42:58] Sammie Ellard-King: Wicked, we’ll leave those links in the show notes for anyone that is needing a mortgage, get in touch with Dan. He is your man for this, and it’s been a real pleasure, mate. We’ll chat soon. Chat soon. Thank you.