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Dentists Who Invest

Dental Mortgage Outlook 2024 with Sarah Grace

James: 

any second live and in the house once again on the dentists who invest facebook group. Welcome everybody to this live q a between myself and the lovely sarah grace, where we’re here to talk about mortgages in 2024 and also the outlook, uh, generally on the market and also what this means for dentists. Sarah, how are you this evening?

Sarah: 

Yeah, great Thank you. That’s really good. Thank you for inviting me. I just need to say I haven’t got my crystal ball.

James: 

Okay, disclaimer alert. Didn’t waste any time getting that in, but, no, it’s fine, because this is the thing it’s just an opinion. Listen, you’re so right. It’s important to say that right because especially with interest rates and things like that.

James: 

Listen yeah interest rates, you’re gonna go. You’d be stinking rich when you’d be incredible, yeah, so it’s important to get that little disclaimer in there. By the way, sarah, by way of uh, uh, disclaimer ping pong right back at you. If you see me looking down like this, I’m not being rude, I’m just having a look at the questions that are gonna uh well, that usually appear whenever we do those lives or whenever we do these lives in denison invest facebook group. They usually appear in the comment section and, on that note, everybody, if you’re here watching this live with us this evening on tuesday, the oh, what day the month is it 26 26 spot on the money.

James: 

If you’re here watching this podcast and facebook live on the 26th of march 2024, feel free to go ahead and put live in the comment section on the chat on the facebook group right under this video, so we can see who’s here with us this evening.

James: 

If you’re watching catch up, feel free to prop, prop, prop, feel free to pop replay in the comment section, so we’ve got a really good idea of how many people are watching this on replay and we can, of course, tailor the content to those two demographics. So, on that very note, feel free to do that. Guys who are watching this Facebook live, either on catch up or live and coming back to this conversation this evening, feel free to do that. Guys who are watching this Facebook live, either on catch up or live and coming back to this conversation this evening, feel free to pop any questions that you might have for Sarah whenever it comes to mortgages, and specifically mortgages whenever it comes to dentists, because that is, of course, sarah’s area of expertise, and on that very note, sarah, and we must get this question absolutely loads. But let’s talk about what everybody talks about whenever it comes to mortgages, and those are interest rates. Where’s your prediction for interest rates in 2024?

Sarah: 

Yeah, so so the you might have sort of heard a bit on the news last week that inflation looks like it’s coming down and and that’s good news. And if inflation comes down the bank of england base rate will also come down. So the governor was predicting sort of june for the bank base rate to decrease. Now they’re saying it might be as early as may. Um, so the way fixed price uh, fixed rates are priced is based on predicted future bank of england base rate. So if they’re expecting the bank of england base rate to fall, that means fixed rates will fall. So so we’ve we’ve seen over the last month fixed rates increasing, so sort of towards the end of February they plateaued and then they’ve been increasing again. So hopefully that will stop.

Sarah: 

I’ve had a couple of emails from lenders today saying that they’re repricing and they are coming down. So so fingers crossed, we’re going to see fixed fixed rates, because that’s typically what people will when they take out a mortgage will go on a fixed rate initially not always, but that is typical, and especially when you’re looking at a fixed rate lower than the bank of england of England base rate. You know it’s. You know, yeah, it’s typical. It’s typical for a fixed rate.

Sarah: 

So, if I were taking a mortgage I don’t know what would I go for? A two or a five year, because that’s what every lender tends to offer is a two and a five. You might get some with a three year. I would probably go with a two year with a three-year. I would probably go with a two-year, and that’s because hopefully in two years’ time the bank-based rate will be much lower than what it is today. So I think the prediction is that that’s going to be starting with a three in two years’ time rather than it’s 5.25 today. So if that’s the case, we’ll hopefully see two and five-year fixed rates, starting with a three or thereabouts. So probably 1% 1.5% lower than where we are today, which is why I wouldn’t necessarily fix in for longer than two years if we’re in a falling rate market um, you know what?

James: 

can I just say thank you to you for giving your prediction with that level of specificity, because usually people dance around that, don’t they? And they’re like, ah well, we can’t say for sure, maybe it’ll go higher and then maybe give some general rules of thumb rather than saying where they think it’s going to go. Of course, disclaimer in there. No one knows for certain. You don’t have a cluster ball right.

Sarah: 

Yeah, yeah, but the thing is is my prediction is based on several other people that are far more qualified than me. You know economists and that sort of thing, and that’s what they’re all predicting. So you know, yes, there is no guarantee, and obviously there could be a worldwide event that that ticks something off. And then interest rates you know that will have an impact on the interest rates. Then you, you, you don’t know, but you know, let’s hope things remain stable, um and inflation. Inflation is a key driver, um to interest rates and hopefully that that will continue to fall as it has been yeah, well, it was ridiculously bad quite recently, wasn’t it?

James: 

so, yeah, realistic, well, listen famous last words, but realistically it couldn’t have got much worse.

Sarah: 

No, no, no, no. And so, yeah, that’s all looking. All of the indicators are looking good. But also I think that those people that are in the glory of their fixed rate, starting with a one, whether we’ll ever go back to those days, I think that that might be a once in a lifetime generation or whatever occurrence. So enjoy it whilst you’ve got it.

James: 

Yeah, something to brag about if you’re in that zone, right 1.22. Sarah’s not above bragging, sarah’s not above bragging. No, I’m kidding, I’m kidding, I’m kidding. Awesome, okay, cool. So that’s generally market outlook for 2024 and you know what? Let’s make it specific to dentists anything us dentists should know whenever it comes to purchasing property. 2024 for glass and mortgages right.

Sarah: 

So so I’ve got some good news in that I’ve just had a new lender come on board, which is great. This is for those clients that don’t have a full two-year track record, as long as they’ve got three pay schedules, and it doesn’t matter whether it’s NHS private and it doesn’t matter whether it’s NHS private, because that could have caused a few issues with some lenders that they’re happy to take NHS income but not private. All I need is your last three months pay schedules and we just add up all of the income, obviously the dentist’s share of that income on those pay schedules, times it by four to give an annualized figure, and I can work off that for lending capacity, which is great.

James: 

No way.

Sarah: 

Is that?

James: 

something? Has that ever been the case, ever before, to your knowledge, that someone would accept that?

Sarah: 

No, no, no, no, no no no, no uh well, we, we used to have scottish widows which you could actually, before you started, there at you at your you know place of work. So let’s say it’s august, you’re starting your, your associate position in september and you’ve got a letter from a principal saying what your udas are going to be. Scottish widows would lend based on that and you didn’t need to have had any income come in whatsoever. Um, but obviously scottish widows have gone. We’ve’ve got a similar lender where they will do that, but they’re more interested in UDAs, which you know. Nhs dentistry is not as popular as what it used to be.

James: 

There we are Fascinating Top stuff, okay, cool. So at the minute, where you’re at, sarah, is you’re just to pull back to what you were saying earlier, based on the logic that you were speaking of just a second ago, with regards to interest rates and what we think emphasis on the word think might happen. Well, there’s a lot of advantages. So we say, in a fixed two year, based off what you said, should that prove true. Disclaimer, as we’re just making this to point out Is there ever a case for a variable mortgage in this day and age?

Sarah: 

Yeah. So I’m just doing a couple of variables at the moment, and that’s people coming off a fixed rate and they’re looking to perhaps move sometime later on this year, and the problem is is we could get them a follow on rate with their existing lender or put them on a new fixed rate with a new lender, but they don’t know what they’re going to be buying, and so they want to have that flexibility.

Sarah: 

So that you know, should they find their dream home and they’re going to have to go like six times income? Yeah, because the dentists do like to push the boundaries. You know we need to have that flexibility, so I will then put people on trackers and that where there’s no exit penalties, so that you’ve got that full flexibility of being able to go to the whole of market when you find a dream home.

James: 

There you go. I’m interested to know and actually this is another question that I had with relevance to 2024. And I’m speaking in very broad terms here because obviously you’re going to see a real variance in terms of demographics that come to your office. How have the demographics of those who are looking for a mortgage shifted with time? So what I mean by that, are people generally older? Are they younger? Are they yeah, yeah?

Sarah: 

yeah, like I think, nationally, the average first time buyer now is certainly into their 30s. Um, we, we still you, we’re doing, I’m doing some mortgages at the moment for people that are like 24 and that. So you know, but that’s possibly because dentists do tend to earn, you know, a decent, decent money. And also you know they’ve perhaps got their family, which bank of mum and dad are giving them their deposits or lending them their deposits. You know one or the other. So so I think that you know that the dental sort of clients, they’re probably still much younger than the national average, but that’s probably just because of their income and and that there we go.

James: 

Fascinating stuff. What about single versus in in an item with another individual?

Sarah: 

I did actually do some. A lender asked me for those stats and, oh gosh, I can’t remember. We did do quite a lot of single mortgages. I’m just trying to think what those were. We did do quite a lot of single mortgages and we had slightly higher stats that were men over women, uh, that were single applicants, um, but but still still very good. But the women on their own, buying on their own, were higher than the national average good to know, good to know, good to know, okay, cool.

James: 

Well, listen, sarah. What we like to do on these tuesday lives on the dennison facebook group, what we like to do is keep them fresh, impactful and concise, and, yes, usually what that means is we aim for around the 15 20 minute mark whenever it comes to these live q and a’s and, on that note, we’re coming up to the 15-20 minute mark whenever it comes to these live Q&As and, on that note, we’re coming up to the 15 minute mark very, very, very soon. And I was just wondering before we part ways and we shake hands. We thank you for your time tonight on the Dentistry Invest Facebook group. Have you got any general words of wisdom or us dentists need to know whenever it comes to taking out a mortgage in 2024? Anything we should know whenever it comes to taking out a mortgage in 2024?

Sarah: 

Anything we should know. A couple of things that have caught clients out recently is pension contributions. They’ve, you know, because obviously this tax year and also next until potentially we’ve got a new government, you can do 60K into a pension. And that’s caught somebody out because you know, and their accountant was like saying, yeah, but you can add it back in. And yes, we do have some lenders that you can add the pension contribution back in, but if you want to have the choice of the market that you, you can’t. You know that the your high street lenders will not add back your pension contribution.

Sarah: 

So so I would say, because also with pension contributions, you can do the sort of carry back so you can go back to years that you haven’t maximized. Your pension is is, um, you know, it’s not a case that we get to the end of the tax year and if you don’t use that, you lose it. Um, always, you know, speak to a mortgage advisor, um, we’re also getting towards end of tax year and so if you’re doing tax returns and that sort of thing, you know you might want to perhaps not put some expenses through if you’ve gone on a course. I spoke to an accountant just this last week and somebody had paid quite a chunky amount for a course and they said that they could put the majority of that through in next tax year because the course is still running in next tax year, which then that made their income higher for the current tax year so that when we get to the 6th of April they can do the tax return and we’re using a higher figure on the tax return.

James: 

Oh, interesting. So basically, if you throw anything in there that’s tax deductible, that may not be considered as part of your income by some lenders?

Sarah: 

Yeah, so if you’ve got 15k on a course and you put it all through because you want to reduce your tax bill, well then, then that’s going to have an impact on your borrowing, because it will reduce your borrowing by 15k straight away there we are interesting.

James: 

Okay, didn’t know that. And this, this, this sort of stuff is flipping gold dust to dentists, because not even all of the financiers know this stuff sometimes, do you? Know what I mean no, no, no, awesome. Anything else Dennis need to know.

Sarah: 

Well, always speak to a mortgage advisor ASAP, even if it’s just for a chat, and how does it all work? Because you know, hopefully we’ll all be able to give you, because you know, hopefully we’ll all be able to give you, give them tips and that of things to sort of be mindful of, but keep your credit clean. Not that I have a problem normally with dentists with poor credit, but, yeah, electoral roll that’s the one thing is make sure you’re on the electoral roll where your bank statements are at. You know, quite a few people still leave themselves on the mum and dad’s home and they might live somewhere else. Now, try and have everything all aligned so that it’s all got the same address.

James: 

Boom aligned so that it’s all got the same address boom, sarah. Thank you so much for your hot and fast wisdom tonight on the facebook group and the dennis to invest podcast. If anybody listening to this wants to get in touch with you, how are the best off doing that?

Sarah: 

uh, we we um online. You can go through our website, which is wwwsarah-bracecouk. Phone office number 0203 633 3888.

James: 

Top stuff. Sarah, thanks so much for your time once again. I’m sure we’ll see each other super soon.

Sarah: 

Yeah, lovely, great Thanks, james. See you soon.

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