If you’re thinking of buying a home, navigating the mortgage market can be even more daunting than finding a new place to live. And if you’re in a same sex relationship, there’s often another layer of aggravation added to the process with many advisers, brokers and lenders automatically assuming that you’re straight, meaning that every time you take a step along the road to finally buying the home of your dreams, you constantly find yourself “coming out” and having to explain yourself and your domestic set-up.
That’s why we’re thrilled to welcome Michelle Costello of CS Financial to the OutNewsGlobal team. Michelle’s knowledge of the market is second to none and, because she’s a mum in a same-sex relationship, she has a natural understanding of the hopes and aspirations of LGBTQ+ people.
Find out more about Michelle in this Q&A:
Welcome to the OutNewsGlobal family! What are you hoping to bring to the table?
Thank you very much for having me & for the warm welcome!
Not to send everyone to sleep on my first piece for the magazine but I’m a fully qualified mortgage and protection advisor so I bring oodles of experience in my field which I’m really looking forward to being able to share with our readers. I really want to be OutNewsGlobal readers ‘go to’ person for anything mortgage or protection related. Hopefully as you read over this piece you will feel confident to put the most important financial process in my hands. I aim to take the pain out of the mortgage process by supporting people through the whole journey.
Can you tell us a little bit about CS Financial and how you became involved?
CS Financial Group was founded by the director Craig Skelton with a team of Mortgage and Protection Advisors as well as Financial Advisors who can help with Retirement or Investment advice. Craig’s vision is to help people like myself, who are passionate about offering a great service, transition into a successful Mortgage Broker. By sharing the businesses core values of integrity, honesty and trust, I am able to find the right mortgage and protection solution for my clients built on a Five Star service.
I joined the CS Financial Groups mortgage and protection arm back in May of this year. I’d worked for a large high street bank for many years. Through the pandemic the vision of how the bank wants to interact with its customers changed massively, due to these changes at the end of 2020 I was informed I was to be made redundant.
I know the impact of COVID has been huge for everyone but for me the biggest impact was how much time I was able to spend with my children. Don’t get me wrong: lockdown, working from home and home-schooling has been one of the biggest challenges of my life and some days I was broken, as a I know many working parents were. I think everyone found the numerous and often never-ending lockdowns a time to stop, reflect and consider what’s important.
For me it’s a better work life balance being able to give 100% to my clients whilst also being a Mum to my children. I truly love what I do as a job, being able to help people onto the property ladder, helping people save money or seek extra finance to make their house into a home. To be able to do this as Michelle Costello Mortgage and Protection Advisor @ CS Financial Services as well as being present for my children is amazing. I might change my mind over the winter though when I’ve got to take the children to football training!
It’s so difficult to make that first property purchase these days: what advice can you give to someone taking their first tentative steps on to the property ladder?
Firstly, I would say reach out to a mortgage broker, hopefully me! Everyone’s journey is different, and no two people are the same so to simply go to ‘your bank’ may not be the most suitable solution, as a broker I’m able to look at a panel of lenders and therefore find the right fit for a customer and guide them through the whole process.
Complete a Decision in Principle. This is a tentative check that allows a broker to check with a lender whether a mortgage placed with them could be approved. It also gives an indication of the lending power of the borrower, an important piece of information to know when looking for a property.
Have a look at the schemes that are available.
-Shared Ownership schemes allow a borrower to buy a percentage of a property, usually between 10% and 75%. The borrower then pays rent for the remaining shares in the property.
-Appreciate money does not grow on trees but the higher the deposit the more competitive the interest rate. It’s fabulous news that 95% mortgages are back on the market but they may not be right for everyone.
-There is also the New Build Help to Buy scheme is available for New Builds. The scheme works via a Help to Buy Equity Loan scheme. It’s a government backed scheme. As a borrower you place down a 5% deposit and the government back this with a 20% 5 year interest free loan, year 6 onwards you begin to pay interest. When the property is re-sold the borrower pays back 20% of the property value to the government.
-If you are struggling to gain approval for a mortgage based on affordability and none of the above schemes are right for you a further option is to look at a guarantor mortgage. More and more lenders are now willing to assess a mortgage and use parental or relatives’ income as part of the affordability assessment.
-Or buy with a friend or friends, utilise the power of numbers. Some lenders allow up to four people to get a mortgage
It’s also important to understand the fees involved so you can budget future costs.
-Mortgage product fees.
-Property valuation fees
The fees are not a set amount and can vary massively therefore I’d recommend a borrower seeks advice to ensure they are getting the most competitive deal to suit their needs.
I appreciate the mortgage world can be a very scary as well as a daunting place to step into especially with the current climate I do hope I’ve managed to let any first time buyer readers see that there is a light at the end of the tunnel. I’m always happy to chat to any potential first-time buyers to answer any questions.
Why is it important for LGBTQ+ people to come to a LGBTQ+ adviser like you?
Money and Financial well-being are a huge part of our day to day lives and we all need someone we can rely on to chat over and help guide us through key financial decisions. I want to be that person for our OutNewsGlobal readers. I know the mortgage world can be a daunting place without the added barrier or worry about the personal questions that are going to be asked, with the worry of reactions or responses, I can remove that barrier and remove any judgement about lifestyle. I know from my own personal experience that often unconsciously, I hope, people make assumptions of my partner’s gender. If I had a pound for every time I’ve been asked ‘so your partner, what’s his name?’ I think I could have retired. I don’t want to sound flippant as I am aware of the importance of the LGBT+ community being adequately represented I do however want readers to know that I’m not just here for pride month; I am here to support and represent my LGBT+ community all year around.
You offer something called “protection”. What’s that all about?
Well it’s not for any fun stuff I’m sorry to say!
We all know that life can be a challenge, this past 18 months has let us all know that! Sometimes the ‘rug’ can be pulled from under our feet without any warning. Taking on a mortgage is such a huge financial commitment and it’s incredibly important that a borrower fully understands the risks involved. We no longer live in a time when we can rely on the state for help so we all need to take personal responsibility for ensuring we can manage our finances and protect ourselves against a rainy day.
The two main ‘protections’ I would look at to financially protect someone taking a mortgage would be life cover and critical illness cover. Life cover for a mortgage is set at the onset with a level of cover that matches the mortgage balance. The cover is set on a decreasing basis which means as the mortgage balances reduces so does the level of cover. This is the cheapest and most cost-effective way to ensure the mortgage can be fully repaid if the borrower passes away. The other insurance is a critical illness cover, this is the same principle as life insurance but covers the borrower financially if they are diagnosed over the term of the mortgage with a critical illness for example but not limited to, heart attack, cancer, stroke. Life and Critical illness cover can be taken as a combined policy, so pays out for on first event or as two separate policies.
Income Protection is a more of a personal protection and you don’t need a mortgage to have this type of cover. I would encourage anyone who has an earned to keep reading. Simply put, if you had a jackpot machine that paid your monthly wage would you protect it for damage and repairs? I’m guessing most people’s answer would be yes, it would be foolish not to. If your employed, self-employed or a home maker you are that jackpot machine. Income protection plans aren’t a one fits all type of product and I would recommend you seek advice, but the basics are that the insured would receive a percentage of their income if unable to work due to accident or illness.
If you have a mortgage on a leasehold property then you are also legally required to have buildings insurance. Buildings insurances cover the house, it’s often explained that if you were able to tip your house upside down what does not fall out is the buildings. Contents cover is optional; I often ask people to tell me how they would feel of they returned home to find it had burned to the ground and all they had left was the clothes on there backs, how would they be able to cover the financial cost of replacement without any contents cover? Just something to think about.
The list of protection that can be offered is not exhaustive but one final protection to briefly cover is often known as lifestyle insurance. This is life cover and/or critical illness cover that can be taken to offer a sum of money above and beyond the mortgage balance. This type of cover would be set a defined monetary amount, again it’s not a one size fits all approach and a full review with a qualified professional is recommended to ensure if this type of cover is taken its appropriate. People may like to look at this to give a cash amount for children or surviving spouse, to make home improvements if they suffer a critical illness and need to adapt the home or to cover medical costs.
What’s the difference between a repayment and an interest-only mortgage, and what are the pros and cons of each?
I usually get to drawing to explain this but I’ll try and cover with words. A repayment mortgage ensures that each month the borrower is repaying both the capital, the original amount of lending, and the interest. This ensure that at the end of the defined mortgage term the mortgage is fully repaid and nothing is owing to the lender. This is more expensive monthly payment, but it allows for that peace of mind as you know the mortgage is being repaid.
Interest only is when the borrower simply plays the interest on the mortgage, at the end of term they are then required to pay the original mortgage balance in full. The lender will assess the borrower’s ability to have an interest only mortgage based on the proposed repayment vehicle. Again not exhaustive but this is often an investment, for example an ISA, pensions or sale of additional properties. As the borrower is only paying the interest the monthly payment to the lender is cheaper, however it places all the responsibility to repay the capital on the borrower. Lenders may also restrict the amount they would be looking to lend against the value of the property based on the increased risk of an interest only mortgage.
Interest only mortgages are becoming less and less favourable for lenders with some not offering them at all.
If there were one thing you could change about the mortgage market, what would it be?
I would love to take away the anxiety and stress that the mortgage process causes people. Moving house is one of the most stressful life events a person can ever experience and I would dearly love this not to be the case as life can be hard enough.
For more information about Michelle or to make an enquiry, click here.