28 June 2010

The Mortgage Process...

The mortgage process when purchasing a property, first time buyer or home mover, will be roughly the same. The selling agent will seek to agree a number of deadlines including the arrangement of mortgage finance. At this point you should speak to an independent mortgage brokerage who will assess your overall financial position and mortgage requirements with you. They are required by law to give you an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any for advice or consultation. This document also advises how to complain if you are unhappy (now or in the future) with the advice provided.

A good advisor will complete a financial fact find ensuring that they ‘know their client’. This is necessary before any ‘advice or recommendation’ can be provided. Be patient as this process can be lengthy. It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements.

Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually on-line with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score. Ensure that the product and lender are right for you before a DIP is conducted. Possibly choose one adviser to work with you right through the process!

DIP decisions are normally instantaneous. Assuming success, it is then upgraded to full application. Payment for valuation is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitors conveyancing process, you are now on the road to completion and should soon pick up the keys to your new home!

18 June 2010

The task ahead is not to be envied...

With less than a week to go before the new coalition emergency budget is announced pundits, all and sundry, are in full flow trying to predict what the Chancellor will implement to try and correct the country’s financial nightmare. The task ahead is not to be envied!

On the mortgage side, there are many potential issues on the horizon. Not least the fact that a certain small sum of around £300bn was advanced to a number of banks over the last 2 years and which is due to be repaid in the next two years or so. To put this in to perspective, circa £300bn was the total amount lent in the UK by financial institutions in 2007! With quantitative easing a distant memory, banks and financial institutions are working out ways to ensure their loans via the Special Liquidity Scheme are repaid within the deadlines. Could this mean we see further restrictive lending, on an already tight market, in order to meet these demands? In comparison to the 2007 figures, it is predicted that 2010 will show gross lending figures in the region of just £140bn…

With this in mind, mortgage lending in May saw a reduction in the number of First Time Buyers. Figures from the Council of Mortgage Lenders advised that First Timers accounted for 35% of house purchasers in May, down from 39% in March and 38% in April. Although many lenders are targeting First Times Buyers, the actual reality of them obtaining a mortgage is still problematic and depends heavily upon the amount of deposit, the interest rate and affordability, all of which can be potential issues.

In addition, according to Marketguard, if and when the Bank of England base rate starts to increase, some 7% of mortgage holders are already saying that won’t be able to meet their required mortgage repayments. If correct, this is a frightening statistic!

The Chancellor has a huge task ahead of him trying to reverse the UK’s ever increasing financial deficit whilst at the same time keeping consumer confidence high and ensuring the Banks and Financial Institutions continue to increase their lending. With such an inherited nightmare, personally, I think he has more chance of winning the lottery!

11 June 2010

Volumes have been increasing but the World Cup may slow it down..

Signs that the market is still not fully on the road to recovery have been reaffirmed this week as both Northern Rock and NatWest Intermediary Solutions reported that circa 600 jobs are to go. The cut backs are further proof that although positive signs have been outweighing the negatives recently, we cannot overlook the underlying financial instability issues endemic within the financial industry. And, of course, we all wait with baited breath to see what impact the forthcoming emergency budget will bring. The coalition government have been left with a huge debt/financial crisis to pick the bones out of and it appears to be much worse than we all imagined. No doubt we will get to know the full picture on the 22nd June.

In the meantime, we have been receiving a higher volume of mortgage applications for purchase transactions from across the country. The removal of HIPS does appear to have had some impact. Those looking to sell seem to be more active and yet there are some great deals to be had for purchasers whilst house prices remain relatively low in some areas.

However, with this in mind, market activity is predicted to lull during the World Cup and just as the market is showing signs of momentum. This is something we could do with out in the current climate. Obviously, I hope England win the tournament, but it would be nice if the housing market rides on the wave of success too! That said, pundits are predicting an increase in activity of up to 8% after the World Cup has finished.

Finally, as market activity has been buoyant over the last few weeks, so has the underhand tactics of some of the corporate Estate Agency chains in the area. We hear first hand from customers who have been ‘told’ to use to the internal Mortgage Adviser (who may not offer whole of market products) or their mortgage offer will not be put forward to the vendors. This is a clear breach of the Code of Practice for Residential Estate Agents. To review all the Rules and Code of Practice, visit www.naea.co.uk . They are an interesting read and certainly something you should review before entering the house buying process so you know your rights.

04 June 2010

Are you eligible for a discount on your mortgage?

During the last few weeks, we’ve noticed a marked increase in customers approaching us having been offered a discount on their mortgage by their current lender to move to an alternative lender. The customers current lender may be one that has closed their doors to new business and which is looking to re-capitalise to bring funds back in-house. We have seen some mortgage customers who have been offered discounts of up to 30%! This is great for the customer, especially if they have had clean credit and have maintained repayments on all of their financial liabilities for more than twelve months. It is definitely worth exploring this route if the lender you currently hold your mortgage with is no longer actively trading. Up to 30% off your current mortgage amount could be very beneficial in the current financially strained climate.

Even if you have had financial issues, there are lenders who will look at your purchase or remortgage requests. One in particular, only directly accessible through a few mortgage distributors such as AToM, is ‘igroup’. A company owned and funded by the American giant GE. igroup recently re-launched their product proposition to the mortgage market for those who are employed. They are offering mortgages up to 75% of the property value for both first time buyers and home owners. Some of their products will allow for credit issues which happened more than 24 months ago, including CCJs and Defaults. Some of their products will allow for more recent issues and as a result, they reduce their offerings to 70% of the property value. However, with only a few lenders currently in this are of the market, they are one of the most proactive with rates starting from as little as 3.49% (APR of 5.1%) variable. They also have two and three year fixed rates available. Conditions apply.

There are other lenders who are active in this arena so, whatever your circumstances, do come in and see us, or call the number above for a free confidential conversation and see what options are available to you.