19 October 2017

Coming to the end of your mortgage life?

When coming to the end of the mortgage term with your lender, it’s rare to be offered any additional products to stay with them as you are ending the mortgage contract (normally 25 years or more).  They also fail to advise you to seek further advice about re-mortgaging to another provider.  Despite ages possibly having achieved ‘later life’ status, there are options available and although this might cease on the high street, as their maximum ages tend to be between 70 and 75, there are a huge number of lenders who will still lend.  Why should a customer not have a mortgage due to being in advance of normal retirement age?  We know people are working well in to their 70’s now and some are deferring pensions until needed.  So, for the right customer, with the right income and right loan to value of the property, a normal mortgage is still achievable.  These lenders will be building societies, or similar, dotted around the country but having been established for decades, even centuries!  They think outside the box, manually assess and will take a reasoned decision, rather than a computer based ‘tick box’ response.  They will also consider interest only options, assuming there is a suitable repayment strategy in place.

Re-mortgaging away from your current lender should not be looked upon negatively.  Many lenders will cover the cost of surveying your property, as well as covering the legal fees in transferring your mortgage from one lender to another.  But most of all, you should think of number one as this could save you money against your monthly budgets. This can only be a good thing.

Finally, should the above not fit the lenders criteria, Equity Release might be the way forward.   Equity Release provides a valuable option for people in, or close to, retirement who may be wishing to realise additional income, raise funds or to consolidate debt. But it must always be considered alongside other financial options in the light of individual circumstances.  Some providers also allow the interest to roll up, so there are no monthly payments.  However, this obviously reduces the equity available in your property.  Terms and conditions apply and specialist advice should be sought as this can be a very complex matter and can affect future equity.

12 October 2017

Rates rising....and great event for Landlords

You can’t have missed the increasing press column inches regarding a possible Bank Base Rate rise recently.  Sometimes I do think we talk the market in to a direction rather than letting it take its natural path!  History suggests that we tend to see the fixed rates rise first, before the bank base itself.  Over the last week we’ve seen a number of lenders increase their fixed rates, including Nationwide, Halifax and Barclays.  Some rates have increased by up to 0.9%!  I suspect others will also follow as SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have also increased over the last week.

That said, the Bank of England has to take in to account the huge debt levels the nation currently has and that even a small base rate hike could have a significant effect on current spending levels.  However, it appears to be an issue which is gathering pace and we should watch this development closely.

Do remember that even if your rate is not up for renewal for a few months, some lenders mortgage offers are valid up to six months, so you can arrange a new rate in advance of your current rate coming to an end.   This will also ensure that you don’t move to the lenders standard variable rate, which will inevitably will be higher than your current rate, whilst looking for your next mortgage product. 

And finally, it was great to see so many people at the Landlord Property Investor and Homebuyer Show at the London ExCel last week.  It also highlighted how many people are not yet aware of the new rules surrounding portfolio landlords.  This is a large education piece and one that needs to be taken in to account asap by anyone who owns more than four properties.  Although each lender’s requirements are different, in the main, the common requirements are now a Business Plan, a Cashflow and forecast, Assets and Liabilities statements and full details on the whole portfolio including current mortgage, value, rent achieved, etc.  These new rules will take a while to bed in and as there is an increase in underwriting, I suspect delays will occur for a while, so be aware if you are in a rush!  

05 October 2017

Rates to rise in 'near term'.

Hopefully you will have seen the headlines this week, but if you haven’t, the specific one I am referring to is where the Bank of England governor Mark Carney has said he expects the bank base rate to rise in the “near term” – thought to be within the next few months.

He did emphasise that this would be a limited and gradual process as the bank begins to ease its “foot off the accelerator” of the UK economy.  Mr Carney also warned about lenders becoming more reckless in their consumer credit lending, including credit cards and car finance.
Coming from the Bank of England, this is a bold statement and one we should all take note of.  So, is now the right time to long term fix? 

Difficult to answer, as it’s down to personal preference.  The points to note in the statement are that this will be a gradual process.  We all know rates will rise, but it’s when and by how much that no one can predict.  Therefore, if you know your circumstances are not going to change for the foreseeable future and you like the security of knowing your outgoings remain the same each month, then a long term fix is probably for you and there are some great deals to be had currently.   But if you like a bit of comfort in your monthly budgets and are a bit more of risk taker, maybe something shorter term is more applicable to your needs.  The rates will be slightly lower, but of course at the end of the term, you could be meeting the full on barrage effect of a rate rise.  Obviously, terms and conditions apply and each person is different, so personal preferences is key and advice should be sought.

And finally this week, some great news from our good friends at Precise Mortgages.  Charter Court Financial Services, the parent company of Charter Savings Bank, Precise Mortgages and Exact Mortgage Experts, has been valued at approximately £550m as part of its stock market flotation.  The specialist mortgage finance company will make more than 95 million shares available.  This shows the continual need for specialist mortgages and how well the lender has done since launch in 2011.  Congratulations to all of the teams there. 

28 September 2017

Technology in the mortgage process and changes for portfolio landlords.

The mortgage press is starting to increase their commentary on the ever growing importance of technology proving itself in the mortgage sector. This includes recent adverts suggesting that a computer algorithm will ‘fix’ the mortgage market and choose the right product for you!  In time, this might become a reality!  However, given that the mortgage is the biggest financial debt you are ever likely to have, over a long period of years, you should be absolutely 100% sure that is the right product for you moving forward.  I do believe there is a place for technology in everyone’s lives, and certainly in our marketplace, however I also believe there will always remain a place for the human touch and people like to buy from people and organisations they trust.  With such a plethora of information available and such an in-depth decision to make, I can’t see that position changing for some time yet.

Rates have been in the headlines again this week.  Some pundits are filling column inches suggesting that the bank base rate will rise by the end of the year and one large bank saying it could rise to 0.75% by the end of next year. 

In comparison, this week has also seen a sub 1% fixed rate launched by Accord Mortgages, part of Yorkshire Building Society.  The two year fixed deal requires a 20% deposit.  Other initiatives include the Lloyds Banking Group who are offering a £1,000 incentive for customers who remortgage from another lender before 12th November whilst the Clydesdale have reduced a number of competitive 2 and 5 year fixed rate products.  The threat of rate rises hang over our heads as a real possibility, but a lot of lenders are seriously ‘under target’ for the year and I suspect there will be competitive rates around for a few months yet.  Do keep an eye out as there are some great offers around.

Finally, if you have more than four buy to let properties, the way a lender underwrites your application is changing.  As previously advised, from 30th September the new Prudential Regulatory Authority rules come in to effect and lenders will ask for increasing amounts of information regarding your portfolio and finances.  Be prepared and always speak to a specialist!  

14 September 2017

Getting a mortgage through the lenders in the current climates is still challenging.

If you don’t appear on the electoral roll or don’t have any credit, when applying for finance, some lenders may consider that you don’t exist financially!  This has been a hurdle in the finance world for some time.  In current climates, it seems that lenders only need to find the smallest of excuses to not agree a mortgage request. Historically, lenders were often more amenable if an applicant could not be located on a credit search. Today, if you have no regular credit commitments or do not appear on the electoral roll at your current address, be prepared for a possible knock-back. 

The market has been pretty quiet this week, with only a few lenders making headlines and reducing rates. I suspect the market is still coming to terms with an unexpectedly buoyant August.  And, be prepared for a good run in to the end of the year, as we know of at least three lenders who are shortly to launch and create a ‘stir’ with their product offerings.

AToM is experiencing large numbers of ‘complex prime’ enquiries lately. One example is for a property which is currently converted in to two properties, but where there is only one registered title.  Another example - for tax purposes - customers seeking to purchase a number of investment properties in a Limited Company name with their company structure designed purely to hold properties.  These are live examples which certainly can be placed. They just need a bit of extra thought and the location of lenders who don’t fit the normal credit scoring mentality.

Getting a mortgage through the lenders in the current climates is still challenging. One day it’s easy to get a case through, the next, it’s a nightmare!  So whatever you do, try to not give lenders any excuses to decline your application or refuse to lend to you. Try to pay bills on time, don’t miss payments where possible and especially not mortgage payments!  Any missed (or sometimes late) payments will be registered on your credit file and this is normally used as the basis of a decision to lend to you. 

07 September 2017

Buy to Lets - PRA Rules, Over 55s, The Leek BS and Tiptons lower rates!

Hope you had a great summer.  I don’t think there was a lull in anyway shape or form in our sector as it remained incredibly busy throughout!  However, it still feels like it’s back to work with a bang in the mortgage world.  

We’ve seen many lenders release details regarding the Prudential Regulation Authority (PRA) changes, which come into effect on 30th September.  In short, anyone who owns more than four Buy to Let properties will be classed as a professional landlord.  The new rules require lenders to assess applications using a specialist underwriting process, review and stress test the landlord’s whole portfolio, as well as the individual’s financial capability. This includes those held in a Limited Company name.  Lenders will be required to make sure you are not over exposed and any decision to lend will be made once the whole portfolio has been taken in to account.  Each lender will interpret the rules differently and many lenders have not yet confirmed how they will be looking to change things.   But you need to be aware that these rules are imminent and we expect some delays whilst the changes imbed themselves.

For the OVER 55s, there has been much focus recently on offering rates to those lending in to later life.  One such example is with Shawbrook Bank, who have lowered the fixed and variable rates on its 55 Plus interest-only product offerings.  Rates will now be available from 4.75% variable depending on circumstances and terms, available to age 85.

Our good friends at the Tipton Building Society have launched some exclusive products with rates starting from just 1.04%.  This includes free valuation and free legals on remortgages.  The lender also manually assesses everything, so even though the high street might have said no, there may be an option with a lender such as Tipton, assuming no adverse, and good income etc.

Finally, the Leek United Building Society have launched a First Time Buyer 95% mortgage, with a free valuation, free standard legal work in relation to the property purchase and no application fees.   Great for those with a small deposit looking for their first property and we must applaud the lender for trying to help a sector that is in dire need of innovation to help get people on the first rung of the property ladder. 

24 August 2017

60% of people don’t believe that they would be able to get a mortgage.

A recent survey from Masthaven Bank has revealed that over 60% of people don’t believe that they would be able to get a mortgage. On top of that, some 50% of current homeowners surveyed feel that they would also struggle to get a mortgage. This leads Masthaven to believe that large numbers feel like mortgage prisoners. Masthaven’s ‘Game of Loans’ report comprised of two surveys of over 2,000 UK adults, in January and July 2017. It found that almost two thirds of people polled believe that getting a mortgage is about ‘box ticking’ and does not take into account the reality of someone’s situation. Age is also a contentious issue with nearly three in four (74%) people surveyed saying they feel that meeting repayment criteria should determine mortgage eligibility, not age. Moreover, three in five (60%) of those surveyed believes that everyone who can afford the repayments when they retire should be eligible for a mortgage. 

This is a consistency across the market. With so much negativity in the media, it is not surprising that many people think they have no options. But this couldn’t be further from the truth. There are more lenders and products available now than there has been for some time. Therefore, more options and choice for customers that may not have been eligible for a mortgage in previous times. This often does not include high street lenders though. These lenders could include a small building society located in a small village anywhere in the UK. Having access to a whole of market mortgage broker is the only way you’ll gain access to such a possibility. 

In addition, and specifically aimed at those over age 55, Shawbrook Bank have recently launched a mortgage lending in to later life. Allowing interest only, this product assists clients in keeping their savings in place for longer, enables them to stay in their cherished home for up to an additional fifteen years and could allow them to raise additional funds, where affordability allows. Customers can also overpay the mortgage and there are no early repayment charges.