Another year passes by!

For my final article of 2011, I have to start with the obligatory round up:

It’s been a year where we were supposedly out of recession but certainly not into full
recovery! Business volumes remained constant throughout the year, yet the smaller Building societies/mutuals were, apparently, the only ones actively crying out for more! Bank of England Base rate remained at 0.5% for the year with speculation constantly evaluating when it may rise (currently estimated to be late 2012/early 2013). The emergence of Short Term lenders (Bridging Finance) was highly noticeable and this area flourished. First Time Buyers were given a ‘boost’ with the launch of the Governments FirstBuy scheme yet there was no change to the decision to end the Stamp Duty holiday in March 2012. The State Bank of India launched in the UK, Abbey for Intermediaries (Santander) launched in to the Buy to Let market and Virgin Money bid for Northern Rock. AToM turned 20 years young! Social media and technology appears to have taken over day to day attention and let’s not forget the Royal Wedding! European issues continue to make the headlines. Finally, just a few days before Christmas, the FSA has issued a 400 page consultation paper on the Mortgage Market Review (MMR) – new rules and regulations for the industry due for implementation in 2013. I will cover this in detail in the New Year….

So what for 2012? Many have predicted a stable market with no sign of growth in lending volumes compared to 2011. Total mortgage lending is estimated to remain around the £136-£140bn mark. House prices are predicted to remain the same in the south and who can guess what will happen to BBR? We know it will rise, but no one knows when! MMR will cause a stir when implementation is announced later in the year. Lenders haven’t made it easy for borrowers in 2011, don’t expect that to change in 2012. All the more reason to use a whole of market independent mortgage brokerage (AToM!). Last plug of the year!

Thank you for reading my column. Trying to be positive in another year of negative markets has been an interesting challenge. However, I’d rather say it as it is. Please let me know if there are
any specific issues/areas you would like me to cover in coming months. You can email me at
dale.jannels@atomltd.co.uk, or call me on the above number.

The directors and staff at AToM wish you and your families a very Merry Christmas and a relaxing and prosperous New Year. We look forward to being of assistance to you during 2012.

A lot of Mortgage activity in the run up to Christmas

There has been substantial mortgage activity happening across the country as we roll
towards the Christmas break and festivities. This is slightly unusual for this time of year, but then nothing surprises us any more in the current climate! I certainly shall not complain at being very busy!

As mentioned last week, Abbey for Intermediaries (part of Santander) has launched
into the buy-to-let market with a range of products for non-professional
landlords. The products are available exclusively through mortgage brokers/intermediaries and require a minimum purchase price of £100,000. The launch products are by no means market leading, but appear to be more of a ‘dipping toes in the water’ exercise and getting systems set up. I suspect Abbey for Intermediaries will be a major player in the Buy to Let sector in the coming months and, from a market perspective, having another lending giant in this arena is great news.

Halifax have forecast that House Prices will remain stable next year. Despite many others suggesting a large property price decrease, the lender’s housing market outlook for 2012 predicts little change in property values over the next 12 months, with price movements of
between -2% and +2% expected.

The low interest rate environment has made monthly mortgage payments for first-time
buyers the most affordable for nearly eight years, according to figures
released from the Council of Mortgage Lenders (CML). Although first-time buyers’ deposit
requirements have remained stable in recent months at an average of 20%, their
monthly interest payments have continued to fall and now typically consume
12.3% of income, the lowest level since January 2004. Don’t forget that the stamp duty exemption for First Time Buyers up to £250,000 ends on 24 March 2012.

Finally, the CML have also estimated that there are some £8bn worth of mortgages due for
renewal in January 2012. Many reverting from long term fixed rates, or discounted products. If you’re one of those whose product period is ending, it’s definitely worth a review over the festive period and even a conversation to see what other options are available to you. It could be very beneficial!

Make sure you can pay back before you spend

Trying to remain positive in a reasonably bleak market is tough at the best of times. However, not only are the national press hinting that rates are to increase, but the Bank of England are also getting in on the act!! This week, in it's Financial Stability Report, the Bank has said wholesale funding (loans between lenders) will rise, resulting in higher mortgage rates. The report claims that the gap between funding costs and pricing has grown, making lending less profitable. It will be interesting to review that point once the end of year lender profit announcements have been released! That said, Matthew Wyles, Group Distribution Director of Nationwide has also suggested that mortgage rates would probably need to rise next year! These are very big names making these comments and we cannot afford to ignore them.

HSBC have been in the news this week as the FSA have fined them £10.5m for alleged inappropriate investment advice to elderly customers, via one of their subsidiary companies. The HSBC commercial division is also undergoing a restructure with the loss of around 330 jobs.

Good news for the Buy to Let market as Abbey for Intermediaries (part of Santander) are shortly to offer products in this arena. With few big players in this market, we welcome this giant who will shake up the competition, as in the main, the associated costs with a Buy to Let mortgage have become pretty expensive of late. We await to see their products and offerings, but anticipate these to be launched before the end of the year.

Finally, it’s just round the corner and will be on us all before we know it. Christmas is a time for
joy, cheer, laughter, happiness and credit… Not that I want to preach, but credit is your life history to a financial institution. I’m not saying don’t use credit, but make sure you can pay it back! If you miss a payment over the Christmas period on any debt, it could affect your ability to
obtain any type of credit next year. Credit reports may show the last six, yes SIX years of your financial history.

SWAP rates on the increase

Can you believe it’s December already? It’s been a busy few weeks at AToM towers. Consumers have been reviewing their finances and looking to secure a good deal in time for the Christmas break. Many are torn between a long term fixed rate and the temptation of a medium term tracker rate. The latter obviously being lower in rate, but more risky on monthly budgets if the bank base rate was to rise earlier than the experts have predicted. SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have also risen recently and lenders fixed rates have seen rate rises. Many expect this business increase to continue, with possibly a dip around the time for the ‘January Sales’.

For the employed consumer, mortgages are relatively easy to come by. For the self employed, where net profits, drawings and dividends have been generally low over the last 24 months, it’s becoming slightly more difficult, despite the number of mortgage products being on the increase. There are many alternatives than can assist in these types of scenarios. Some lenders will
look at adding additional properties as security for mortgage purposes. Others will look at investing two or three years up-front mortgage payments as additional comfort for the lender where income is not necessarily easily provable. Whatever the scenario, and no matter how complex, there may well be a lender willing to assist, if you know where to look!

On a slightly different tack, HMG are faced with a three pronged dilemma in that they need to provide additional cash for small businesses to stimulate growth whilst curtailing public sector borrowing and instilling confidence in the private employment sector. Unemployment
continues to rise and the Doom Sayers - where on earth do they come from – seem hell-bent on driving us into recession again. I guess that, like me, you will yearn for more positive vibes on the basis that positivity is infectious.

Enjoy the start of the Christmas festivities. It is never a bad time to start talking about your mortgage.

Inside the mortgage trade exhibition!

Over 70 exhibitors, including AToM, were in attendance at last week’s Mortgage trade event of the year - Mortgage Business EXPO 2011. More than 2,500 Mortgage Brokers, Independent Financial Advisers and Estate Agents visited over the two days to explore the products and offerings of the many Banks, Building Societies, Solicitors, Bridging and Commercial Funders and Specialist Mortgage Packagers. In addition, our trade association (Association of Mortgage Intermediaries) held numerous seminars covering various issues including ‘Mortgage Market updates: the impact of the impending European Mortgage directive’: ‘Consumer Protection’: ‘Current Issues’ and ‘Economic impact of the Economy’. How exciting it all sounds!

However, the reality is that we currently appear to be in a buoyant mortgage market and all of the Lenders at EXPO wanted to lend! This included some of the usual household names (not all could make it!), but more so the smaller lenders with no obvious funding issues, including Building Societies! Especially prominent were those in the Commercial and Short Term Lending (Bridging Finance) arenas.

All in all, we had a good two days exhibiting, made some fantastic new contacts and achieved a real insight as to how the market is currently holding up in various areas of the country. Believe me, the south is doing pretty well…

What I found valuable was the firm response to a question posed during a Lenders seminar with a panel consisting of Nationwide, Barclays, Northern Rock (Virgin Money), Platform (Co-Op) and GE Money Home Lending. The question raised to them all was, simply put, when do you hink the Bank of England will increase the base rate? The responses were pretty similar from all
parties – between late 2013 and early 2014.

Take what you want from this, but all of a sudden, short to medium term tracker rates look more attractive than they did just a few minutes ago!

Is your adviser qualified?

In October 2004, mortgages fell under the spell of the regulator, The Financial Services Authority. This was not a bad thing as it was becoming very clear at that time that certain areas of the mortgage market were not being patrolled properly and that some of the borrowing public may not, in turn, have been looked after satisfactorily.

Even at that time, many mortgage intermediaries were already professionally qualified, although, not necessarily in the mortgage sector, most being authorised in wider ranging financial services arena. Since 2004, mortgage intermediaries seeking to provide advice and recommendation to their clients have had to be specifically professionally qualified, by examination, and the subsequent denotations that are shown vary in format but mainly incorporate CeMAP (Certificate in Mortgage Advice and Practice).

Therefore, for any mortgage which falls under the regulatory banner you should ensure that the advisor who deals with your mortgage is qualified under this title at the very least and that they are not simply information gatherers for others who will remotely research and advise at arms length. At the moment, Buy to Let mortgages are not regulated although the authorities are looking very closely at this and we fully expect them to fall under the regulatory banner before too long.

So why the need for professional qualification? Simply put, it is in your best interests to be advised by someone who adheres to and works with a high level of principles and who regularly undertakes continuous training to ensure he or she is always abreast of the best market products and practices designed to suit your personal circumstances.

Finally, on this subject, the regulator is now proposing that all advisers take further examinations to ensure that their skill and professionalism is continually upgraded in line with market needs. AToM supports this as we believe in full and dedicated commitment to the profession and we are keen to see the restoration of advice as a welcome requirement of our customers rather than the
less regarded necessity which appears to have become the case in recent years.

Small positives and Mortgage Expo!

Each month I shudder as various statistics arrive on my desk - £130m daily increase
in Government national debt (PSND); 1,600 people made redundant daily; 99 daily
property repossessions and the suggestion that every UK adult owes £29k (122%
of average earnings). This, in addition to the global issues currently taking up the daily headlines and adding immense pressures to the various financial markets, does not paint a pretty picture of
what might lie ahead.

However, we can take some small positives as current lending markets see a little Retail
Mortgage-Backed Securities (RMBS) action occur. What does this mean? In short, it's a volume of mortgages, bundled together and sold off to investors as a package. On this basis, it dilutes the
downside of any one borrower defaulting. For the industry, it means that the Lender,
once this book is sold, should be able to lend a further amount in new lending. Competition with product pricing is also more active than of recent months and appetite for volume lending is apparent with a few exciting exclusive product launches.

One thing to think about when taking out a new mortgage is the reversion rate of that product (the rate at which the mortgage reverts to, once the incentive fixed, discounted, tracker rate period expires). Some lenders tend to revert to a tracker rate at an amount above Bank Base Rate (BBR). Others revert to their own Standard Variable Rate (SVR), and even in the current climate, they can be high (5.99% +). Always do your homework and make sure you understand all the elements of your mortgage before signing on the dotted line. Ensure that you have no cause for regret later.

Finally, next week sees the great and the mighty of the mortgage industry meeting together at Olympia 2, London for Mortgage Business Expo 2011. This exciting two day event consists of lenders and ancillary businesses showing their wares and seeking to establish increased business relationships and volumes. Many presentations occur over the two days, but the most anticipated
will be the ‘update on the mortgage market by The Financial Services Authority’. I suspect that this one will be standing room only and I’ll update you on their thoughts and views in the coming weeks.

It's still tough out there..

Getting a mortgage application through a lender in the current climates can still be challenging. One day it appears relatively easy, yet 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. Remember that most Insurance companies and mobile phone providers carry out credit searches on people before issuing their products. Try not to incur too many searches in a short space of time. This can also be detrimental to your credit score.

When choosing who to speak to about your mortgage, ensure that the company you are talking to, whether it be a mortgage broker, or an Estate Agents in-house mortgage adviser, has access to the ‘whole of market’ and not just a fixed panel of lenders. If they do not have access to the whole of market, they may not be offering you the best deal available to meet your requirements.

Finally, for some months, a few of the smaller specialist lenders have been offering existing borrowers ‘golden goodbyes’ to assist them in remortgaging away to another Lender. This tends to be a cost effective way for the lender to lower their exposure and re-capitalise over exposed mortgage books, or so we are led to believe! In some instances, the incentive to the borrower to move away has been thousands of pounds. We are aware of some discounting by tens of thousands or up to 25% of the current loan amount! Quite simply, some lenders are happy to pay
substantial amounts to say goodbye! Other lenders have waived early redemption charges on some loans to encourage borrowers to move their mortgage elsewhere. This fad seems to be on the increase again. If your mortgage is a with a small specialist lender, who you know are no longer actively trading, a call to them could be very worthwhile and could decrease your mortgage amount, term and payments!

Exclusively through AToM - Packaging!

It’s been a really busy few
weeks at AToM HQ. For those regular
readers, you will know that AToM does not only arrange mortgages for the
general public who visit the shop front, but we are also a specialist packager/distributor
dealing with mortgage brokers, estate agents and independent financial advisers
nationally. For some lenders, AToM acts
as the administration arm, collating information, instructing valuation and
processing applications right up to mortgage offer status. For other lenders, AToM will be allocated a
tranche of funds to lend on their behalf and AToM advertises them and controls
the administration process. Any mortgage
broker, independent financial adviser or similar, who require these certain products,
will often have to come via AToM to gain access to such products.

One recent example is from a
company called Precise Mortgages. They
have launched a product aimed at the ‘Near Prime’ sector, and this means those
who have had some financial issues in the past.
Their normal core range is available up to 80% of the property value,
but via AToM, customers can achieve 85%.
This is totally exclusive.
The benefit to the lender is that AToM carry out all the work, including taking
telephone calls, requesting information from employers/accountants, collating
documentation, and more. So it’s cost
effective for the lender. In return,
AToM gets ‘almost’ guaranteed business.
A great two way relationship! As
the saying goes, it’s amazing what happens behind closed doors!

Finally, according to
unbiased.co.uk, and since the inception of the credit crunch, there are
approximately 46% of all mortgage borrowers who have failed to review their
mortgage to see if they can get a better deal!
This seems crazy on the face of it unless you are one of the lucky ones
with a rate including just a small margin over the base rate. If you are on a
lenders standard variable rate and this is more than 4% you might be missing a
valuable trick, and the opportunity to fix to avoid the potential pain when,
eventually, rates do start to rise. Seek
independent advice – you are unlikely to regret it. Even if the advice is to stay put!

The Process!

The mortgage process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same. On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance.

At this point you should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you. They are required to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they use a restricted lender panel or ‘whole of market’; any fees and costs involved including any charged 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 fully ‘know their client' and fully understand their client’s financial position and requirements.’ 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, matching your financial needs and aspirations, 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.

DIP decisions are often 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. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

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 now be issued. Then, subject to the solicitor’s conveyancing process, you are on the road to completion and, if it is a purchase, you should soon pick up the keys to your new home!

New 95% Loan to Value aimed at First Timers

First Time Buyers have received more attention this week with The Hanley Economic Building Society being the latest to offer an attractive product to this sector.  At 95% of the property value and with a 3 year discounted rate of 4.75% (5.3% APR) and a fee of just £99 upfront and £400 on completion, this is a bold attempt from the lender to attract first timers.  Only six distributors in the UK have access to this product (AToM are one!) and I suspect funds will be utilised on this product pretty quickly for those with just a 5% deposit!  Well done The Hanley!

Leeds Building Society have also been busy in the products department and launched a 1.99% (4.5% APR) fixed rate for two years for purchase or remortgage.  They will lend up to 70% of the property value and will charge a £199 booking fee upfront and £1,800 completion fee. 

On both these products, redemption penalties will apply during the product period and terms and conditions apply!

In other news, according to creditaction, Rightmove has said new sellers raised average asking prices by 0.7% (£1,596) to an average of £233,139 in September. Prices rose 1.5% compared to September 2010.

House purchase approvals (35,226) were higher in August than in July according to the British Bankers Association, and 14% higher than in August 2010. The average loan approved for house purchase in August was £145,500 which is 1% higher than a year ago.

A moneysupermarket.com survey has found that 27% of Brits currently spend over 40% of their wages on paying off non-mortgage debt. The figures show that the average person pays off £322 every month, which is equivalent to a quarter of the average monthly income for a UK adult (currently £1,288). Even more strikingly, 8% of people say that they spend over 80% of their wages on repaying debt.

And finally, a study by Endsleigh suggests that twice as many people living in the UK are renting (45%) compared to those owning their own home (23%). Middlesex is the most popular area, with over three times as many renters (51%) as buyers (16%). It is closely followed by East Sussex (48%), Surrey (46%) and Berkshire (46%) – all of the top 10 regions for renting are in the South.  According to Endsleigh, 62% of renters intend to buy a property in the next five years.

Low rates and new lenders!

As we enter the final months of the year, we are starting to see more positives from some lenders as they relax their previously strict underwriting criteria. New lenders are also knocking on our doors to see if we can distribute their products. Hoorah! An appetite to lend! I suspect others will make a last ditch attempt to end the year on a high by offering lower rates to attract decent volumes of business in order to hit targets. Rumours are that we shall see some low and attractive tracker rates, but only available for a limited amount of time (i.e. one week, etc). Watch this space! But be wary that if you are after a fixed rate, these are currently more volatile and rates are moving rapidly, some up and some down, depending on the term of the deal.

That said, long term rates have been considerably higher than where they are now. If you are on a long term fixed rate, in excess of 5%, then it may just be worth having a review to see if re-mortgaging now could save you money. With many lenders offering low rates and some offering fee free re-mortgage deals, there’s no harm in reviewing your current mortgage product to see if money can be saved. Even if you are to incur redemption penalties to change lenders, a new mortgage could still work out financially beneficial although this is an important calculation in the overall process. Speak to your local independent mortgage advisers to find out more. It could be a very worthwhile conversation in the run up to Christmas and looking to the future!

Finally, the Buy to Let market has had a busy week. The Post Office withdrew its entire range of Buy to Let products. The lender says it plans to concentrate on helping First Time Buyers and Residential mortgages. And Kensington, the only lender in the Buy to Let market to offer an 85% mortgage, has withdrawn their product. After a bumper few weeks, the lender has allocated their tranche of funding on this great product offering. They will continue to offer mortgages up to 80% of the property value.

Don't allow un-necessary credit searches

A mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what certain marketing / PR headlines suggest about how the “100% mortgage is back” or how Bank Base rate will not rise for many years, or how much profit the banks are reportedly making!

Advice is crucial and should, ideally, be sought from a company offering ‘whole of market’ mortgages. Remember that some Estate Agency chains and Banks, in particular, can normally only offer advice on their own products or from a limited number of lenders.

Be wary that the more of these you talk with, the more likely you are to be credit searched. Make sure you stipulate at the outset that you do not authorise any credit searches, until you are happy to proceed with a specific product or lender.
Also, if not presently, but you have plans to apply for a mortgage in the not too distant future, keep your eye on your credit. Don’t miss or make late payments to any provider. All financial institutions will base their decision initially on your credit history. If you have missed or late payments, or even a lot of recent searches (from multiple finance/mobile/car/home insurance applications), this could be detrimental to your ability to obtain finance, at a competitive rate. If you have not reviewed your credit search before, get it for free (30day trial period) from Credit Expert (see www.atomltd.co.uk for a link). It’s well worth a review and a good insight on how attractive you may, or may not, look to a lender.

Finally, as lenders endeavour to control volumes and distribution, many limit which companies can access their products. Therefore, it is with delight that Platform (The intermediary lender of the Co-Operative Bank PLC) has retained AToM as a specialist mortgage distributor for a number of their products. The lender has a good appetite to lend in a specific arena in the mortgage market and we are privileged to be one of only 3 selected companies in the UK to promote their services and exclusive products.

Discount to leave your current lender?

The FSA (Financial Services Authority) has published its latest Mortgage Lending Data for the UK covering the second quarter of 2011. The key areas of interest are -
- The proportion of lending for house purchase, which includes buy-to-lets, increased from 54% in Q1 to 59% in Q2,
- Lending to first-time buyers rose from 14% in Q1 to 16% in Q2.
- New lending at fixed rates increased in Q2 to 56%.
- The average rate on new advances rose from 3.65% in Q1 to 3.81% in Q2, which the FSA puts down to the increase in fixed rate lending and a rise in the average fixed rate from 4.24% in Q1 to 4.43% in Q2

Despite the latter, fixed rates are really very competitive in the current climate and well worth a review.

Other figures released this week show that mortgage lending may top £40b which would be £3b more than the last quarterly predicted figures. This is very positive.
However, be aware that we have just seen an increase in the three monthly LIBOR rate (London Interbank Offered Rate) which has increased to 0.90%. This is the rate of interest at which banks offer to lend money to one another in the wholesale money markets in London (effectively a measure of confidence between banks). Reports suggest that the European debt crisis is pushing up LIBOR rates as banks start to eye each other with suspicion again. Watch this space!

Finally, I’ve mentioned this before, but its back on the mortgage lending radar. A few dormant lenders are offering customers a discount (some up to 30%) off their mortgage as an encouragement for them to move away. If your current lender is one of these (and is not actively lending) then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet assuming you meet all of the new lenders criteria requirements!

Another Summer gone....now time for a Financial review!

The summer holidays are over, the kids are back to school, and you may (or may not) be looking forward to peace and quiet and having some time on your hands. However, as the final few months of the year race towards us, maybe it’s time to start thinking about 2012 and what trials and tribulations this may bring.

Without doubt, the only certainty in the current financial markets is uncertainty. When will bank base rate rise? Who really understands what is happening with house prices? Will 2012 mortgage lending be more or less restrictive than what we have seen throughout 2011, especially as the banks scrape and save(!)to pay back the circa £300bn to the Bank of England in early 2012, advanced to them via the Special Liquidity Scheme? Will the world really end on 21/12/2012? Ok, the latter is a Mayan ancient prophecy and has nothing to do with mortgages....!

All of the others point towards ensuring you review your current financial arrangements and determine that you are on the best deal to see you through the medium to long term. Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, or a discounted option, right now, all are available at attractive rates in the mortgage market.

Other things to consider - Do you have a Will? Statistics show that only one in three people has a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.
Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more? Any of these products might be beneficial to your personal circumstances or needs.

A quick review with an independent mortgage advisor with permissions for access to whole of market mortgage rates and other associated financial products, could be time very well spent.

Remortgages are creating a stir...

Despite coming towards the end of the holiday season, there is certainly a lot of mortgage activity happening! AToM have seen a huge increase in enquiries for re-mortgages as customers look to refinance existing deals on to better rates or raise capital to purchase other properties or for home improvements. There’s no better time to review the market as there are some competitive rates currently available.

With rates so low we have also seen a vast increase in customers looking to consolidate debt and add these to their current mortgage. This can sometimes cause issues. If you consolidate unsecured finance in to your mortgage, although your monthly payments may be lower, you may be paying more for your debt over a longer term.

Those whose finances have got out of control tend to look at debt management plans, or Individual Voluntary Arrangements (IVA). Again, the lower monthly payments may help in the short term, but you may well find it hard to gain an approval from a lender to refinance at a later date. Lenders tend to shy away from debt management plans and may not touch anyone who has been in an IVA unless it has been discharged for more than four years. Advice should always be sort before entering in to these types of arrangements.

At AToM, we are independent and we will happily go through the pros and cons of changing any of your financial details before proceeding to conduct any credit searches or decision in principles. You need to be clear that it’s the right deal for you. If your current deal is still the best option for you, we will suggest you stay where you are.

Whatever you do remember to check what terms and conditions apply and also remember that your home may be repossessed if you do not keep up repayments on your mortgage.

What is Credit Scoring?

Credit scoring is creating havoc for mortgage applications to high street lenders. Most lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile. If the computer says ‘no’, you will tend to find all high street lenders doors shut to you. Even your bank, with whom you’ve been a loyal customer to for many years, reports back that you have a low credit score, the computer says “no” and they will not offer you a mortgage.

But you have no credit problems: you have a good income: no debts and you are looking to buy a property or maybe remortgage. This is a dramatically increasing scenario. The world of credit scoring (tick box mentality) has taken over and there’s no arguing with the lender once their technology has made the decisions.
All credit scores include a credit search – this reviews your financial history, payments to utility suppliers, mobile phones, etc . Every financial institution from mobile phone companies to insurance companies will carry out a credit search before offering you their services. This can also be a negative though, as the more credit searches you have, the lower your credit score maybe.

Fear not! There is light at the end of the tunnel. AToM recognised that good clients were being rejected by lenders for no apparent reason and has built up exclusive relationships with a number of lenders who will assess an application manually and seek to offer assistance to such customers. This is our alternative to ‘the computer says no’ and have found an avenue for the right deals working with lenders that not only manually underwrite cases, but who have an appetite to lend. We call this Complex Prime and it does not just include those turned away by their bank for low credit scores. It could be a case scenario that needs a bit of lateral ‘out of the box’ thinking by an underwriter keen to say ‘yes’. This could include cross collateral security for clients who are asset rich: a sympathetic view for those who have trouble in proving ‘real’ income: customers who need guarantors or maybe just need someone to sit down, review the whole picture and advise on the best route to take.

I have always suggested that you speak to an independent mortgage broker with access to whole of market mortgages. Banks may only advise on their product range. Estate Agents ‘in-house’ mortgage advisers may only be able to offer mortgages from a select panel of lenders. Therefore, in order to get best advice, make sure you do your homework, speak to a whole of market mortgage broker who can advise on the most appropriate mortgage in the market to meet your requirements, whether this be with a credit score or just a credit search.

Really exciting mortgage products!

Some really exciting new mortgage products have been launched over the last week. You could even go as far to say the lenders are pretty confident that rates are not going to be fluctuating any time soon. One article I saw had a spokesperson from moneysupermarket.com suggesting the likelihood of Bank Base Rate being cut by 0.25% is greater now than it has ever been! Great for the consumer! Not so great for getting money moving around the mortgage markets!

SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have reduced over the last few weeks. The cost of 5 year fixed monies currently resides around the 1.80% mark. The Lender then provides the product to you, the customer, at rates currently in excess of 3%. In comparison, 2 year fixed rates monies stand around 1.20%.

As a result, we’ve seen a number of long term fixed rates launched over the last few weeks and the one causing great excitement (as I write) is from Coventry for Intermediaries who are offering a 2.99% fixed rate available for 2,3 or 4 years. The lenders fees range from £200 to £1800 and can be added to the loan. The lender also offers one free property valuation and free legal costs on remortgages, so keeping the cost of changing to them at a minimum. Five year fixed rates have also reduced with some lenders offering rates as low as 3.39%.

House price commentary continues to make headlines as rightmove.co.uk report a decrease of 0.1%, despite property transactions increasing by 5% in July. This is in line with Zoopla.co.uk who suggests that two in five, 39% of all properties currently for sale, have had their asking prices reduced at least once since coming on to the market. And Investec Specialist Private Bank reported a 10% increase in high valued properties during the second quarter of 2011, with over 21 thousand properties up for sale valued at £1m and over.

Statistics tell the story

Of late, the mortgage market has been a very positive place with product choice rapidly on the increase. Lenders have been appearing keen to lend and some even wanting to help over and above the normal call of duty! But (and you knew it was coming!), the statistics are still showing the fragile state of our economy.
August’s creditaction figures state that:
- 331 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 60 seconds during a working day.
- 1,577 Consumer County Court Judgements (CCJs) were issued every day during Q1 2011 and the average judgement amount was £3,118.
- 220 mortgage possession claims will be issued and 160 mortgage possession orders will be made today (100 properties were repossessed every day during Q1 2011)
- 1,578 people reportedly were made redundant every day during the 3 months to end May 2011
- The UK population is projected to grow by 1,205 people a day over the next decade

However, despite all of these eye opening and, frankly, quite depressing figures, the one that really is quite unbelievable in the current climate is that, in Q1 2011, UK banks and building societies wrote off £1.89bn (£866m of that being credit card debt). This amounts to a write-off of £20.71m a day! Who said lenders have funding issues??
The average house price in the UK in May 2011 for first time buyers stood at £150,685 which is an annual decrease of 2.1%. The typical first-time buyer deposit in May was 20% (£29,874). The average first-time buyer borrowed 3.14 times their income and the average first-time buyer loan was £119,497.
As at the end of March, there were 1.3m buy-to-let mortgages outstanding, worth a total of £152 bn. By value, buy-to-let mortgages accounted for 12.3% of all mortgages.
And finally, as the summer is well underway - Barclays estimate that, over the course of the six week summer holiday period, British holidaymakers will spend a total of £1.47 billion whilst they are abroad (via debit cards and cash withdrawals). However, Barclays say that this figure is broadly the same as that for summer 2010, and suggest that this shows that consumer confidence has not totally bounced back since the end of the recession.
Next week will be more positive, honest! Sometimes, we just need a reality check!

'Near Prime' mortgage options on the increase

My articles over the recent weeks have concentrated on the apparent ‘rate war’ raging between lenders in the Buy to Let, First Time Buyer and Residential sectors. We should not ignore that the same is also happening in the ‘Near Prime’ arena. I’m calling it ‘Near Prime’, but it has many other names including, Sub Prime, Credit Repair, Almost Prime, Adverse and so on. In short, it’s the area of mortgages that cater for those who have had some sort of financial issue in the past.

There are many lenders re-lending in this arena and they will cater for a missed mortgage payment in the last 12 months, historic defaults, County Court Judgements (CCJs), discharged bankrupts/IVAs and those who are in a debt management plan.
There’s no denying that this area of the market took a battering back in 2007 as many, many lenders who offered these types of mortgages were shut down or mothballed. However, the regulatory lending restrictions are now more stringent than back then and the new breed (some never really left) have a whole new outlook on the term ‘responsible lending’. But where there is demand, there will always be supply.

Rates start from the early 3%s and go right up to the early 9%s, depending on individual circumstances. Lenders will lend up to 80% of the property value in the main and will cater for both employed and self employed. Some rates are also offered without any redemption penalties.

Financial issues do adversely affect credit scores (the normal assessment process used by a lender to decide whether to lend or not), and as such, some Near Prime lenders will manually review on a credit search, rather than resort to a credit score.

Finally, the Near Prime lender is a ‘stepping stone’. Most issues tend to disappear from a credit search after a few years. Therefore, the aim would normally be to cater for current requirements on a short to medium term basis with the longer term outlook being structured to enable the customer to get back onto high street mortgage offerings, as quickly and cost effectively as possible.

Product Choice still on the increase!

Product choice has been on the increase over the past few months. Independent research company, Defaqto, suggest that 8,968 mortgage products were brought to market, or updated between April and June this year.

186 brand new fixed rate mortgages were introduced and there were 4,815 changes to existing fixed rate deals. 80 Tracker rate mortgages were launched and 99 buy to let products were brought to market.

Defaqto also go on to say that, given the speed of change in the mortgage market, lenders are faced with three key challenges:
• Keeping on top of what competitors are doing, and being aware of new launches or product changes as soon as they happen
• Being able to respond quickly to take advantage of opportunities or to counter threats
• Identifying how to make their mortgage product stand out from the competition and how they can cut through the noise of competing products to reach target consumers

Although obvious, I think this hits the nail on the head. In the current climate, lenders are changing rates daily to keep abreast of each other. Some are launching marketing leading products, available for just a week, in order to bolster business volumes. This is good news for you, the consumer! Do keep any eye on AToM’s shop front window in the Carfax (near the bandstand), as we are now highlighting some of the most competitive rates available. Just be wary that rates can be withdrawn at any time!

Moneysupermarket.com have also highlighted that there are good opportunities around for those with a 10% deposit. 312 products are now on offer and this is up 17% compared to June.

Someone asked me this week if it is true that FSA spent more than £500k on internal caterers for staff and visitors last year. They also asked if it was true that this represented an increase of more than 30% on 2009 and, finally, they asked if it was true that the top job in the FSA now pays more than £800k per annum (against the £308k paid to the Governor of The Bank of England). I immediately responded that I could not possibly comment!

Switch and Fix on Buy to Let!

More movement in the mortgage market this week as yet more lenders have decreased rates and a pricing war seems to be unfolding in the longer term fixed rate offerings. One lender, Accord Mortgages, have reduced their 5 year fixed rate to just 3.84%, available to 75% of the property value and with a lender fee of just £995. They have also reduced their 2 year fixed to 2.79%, also with a £995 fee.

Loans of 90% of the property value and over also seem to have been targeted this week as lenders seek to assist those with small deposits. The rates are reasonably priced, but as more and more lenders re-enter this arena, with sensible lending, the rates will decrease. One example is Kensington Mortgages, funded by Investec, who offer First Time Buyers a 2 year fixed rate at 5.99% with a £699 fee and a free valuation, with a 10% deposit required. For home movers, the rate is 5.79% with a £999 fee. The benefit with Kensington is they do not credit score, compared to many others. Certainly an area to keep an eye on over the coming weeks.

The Buy to Let (BTL) market has also seen huge changes as Natwest cut some rates by 1.4%, Mortgage Trust (part of Paragon group) launch 18 new BTL products, some starting from sub 4% and The Mortgage Works (part of Nationwide) launch a 2.99% tracker and allow ‘switch to fix’ on all of their Buy to Let trackers.

The Switch to Fix option is now available on both Residential and Buy to Let mortgages via certain providers. It is a great product offering allowing you to have the best of both worlds. Take a low base rate tracker and enjoy the Bank of England base rate whilst low, and when you feel you want to fix your monthly payments for a medium to longer term, transfer to a fixed rate with the same lender. Sounds great, but just beware that the lender may charge a product fee for the fixed rate and of course, you will only have access to those fixed rates available at the time of the switch. Terms and conditions apply!

A 5 year fixed at 3.89%! Very nice!

Shortly after writing and submitting last weeks article, nearly every lender reduced their rates! It must have been something in the water, but this really does now signify a superb time to review the amazing mortgage products on offer and see if you could make savings on your current arrangements. The most noticeable headline product was from Nationwide, who launched a 5 year fixed rate at 3.89% with a product fee of £900 and a £99 booking fee. Available for loans up to 70% of the property value, this product provides exceptional value for those looking to fix their monthly payments for a reasonable amount of time. Nationwide becomes hero of the week! Perhaps, in future articles I should nominate hero and villain of the week. Perhaps not, as that would set me up to be shot at as well I guess!

Late last week, Hinckley and Rugby Building Society launched an exclusive Buy to Let product, only available through AToM. The rate is fixed at 3.99% for 2 years up to a maximum loan to value of 65%. The lender fee of £1,250 (cheap compared to many) is added to the loan within the 65%) and this is a very attractive rate for those landlords looking to fix rates for the next couple of years and maximise their income.

Godiva, the intermediary of Coventry Building Society have launched a superb 2.99% flexible rate for the life of the mortgage to 75% on either purchase or re-mortgage cases. Their booking fee is just £199 and the arrangement fee is £800 and this can be added to the advance. What makes this product even more exciting is that there are no early redemption interest charges at any time. If you are re-mortgaging the lender will cover the cost of a standard valuation (up to fee value £670) and standard legal fees too. The product is also fully flexible and should therefore appeal to many borrowers looking for both a cheap rate and flexible mortgage options.

The only thing to note with these products is that they tend to have a short shelf life, so don't delay! Talk with your independent financial advisor.

The 'mortgage product sale' continues!

The great ‘mortgage product sale’ has continued over the last week with some lenders reducing rates and one lender offering market leading products for just 7 days! This is the third ‘1 week’ sale we’ve seen in the last month and, in this instance, the products were very competitive short and long term fixed rates. Lenders who have recently reduced rates include Woolwich, Santander, Halifax and Leeds. Most lenders also offer a free valuation (and free legal costs on remortgages) to attract new business.

The government has issued details of the FirstBuy scheme this week. Announced in the budget, the scheme is aimed at assisting First Time Buyers purchase their first home. A 5% deposit is required, a 20% equity loan is funded by the government and house builder and the remaining 75% is funded by a mortgage, from the lenders taking part in the scheme. The loan is then repaid on resale of the property. The suggestion is that this will help over 10,000 first time buyers over the next two years, but let’s see the scheme in action first before commenting on the possible results! First timers are encouraged to register their interest as the first ‘new build’ properties are due to be available from September. More information is available on the Directgov website but, as yet, no questions and answers page!
The Financial Services Authority (FSA) have released Mortgage Lending Data figures revealing that repossessions increased by 17% in the first quarter of 2011. There were 9,613 possessions during the first three months of the year. These figures are collated from around 300 lenders submitting their quarterly mortgage lending activity returns to the FSA. New arrears cases in Q1 were 8% lower than the previous quarter, while the total number of accounts in arrears at the end of Q1 were 2% down on the previous quarter.

Finally, if you are already working in the mortgage industry and fancy a new challenge, AToM is looking to recruit experienced and qualified mortgage professionals. Come in and see us or visit our website to find out more!

Great products on offer - time to Remortgage?

There has been a lot of movement in the mortgage market recently. Lenders half-year figures are due shortly and it appears that some of them will be slightly short on new business volume targets and as such have had to try and remedy the situation. Two lenders in the last two weeks have issued market leading products but only allowed a 7 day period for applications, before withdrawing the products entirely. These ‘quick sale’ products provide superb deals for the end consumer, mostly at minimal cost, if you know how to access them and can act quickly!

In the main, these products have only been available via Mortgage Brokers and financial intermediaries. Lenders have been re-installing their faith in this distribution medium over the last few months. This is also backed up by recent figures from the Council of Mortgage Lenders showing that brokers accounted for 63% of first-time buyer mortgages, 60% of remortgage loans and 53% of home mover loans in Q1 2011. Whilst some attractive rates are being offered by the high street lenders, there may also be a better option from a lesser known provider. Simply put, the best way to find these is to speak to an independent mortgage brokerage which has access to the ‘whole of market’.

Finally, following on from the above, the sun is shining and the remortgage market is well and truly open – some lenders are actively looking for business. Now is a superb time to review your current mortgage and possibly obtain a great rate with minimal (if any) costs to change your mortgage. Whether you want to fix your monthly payments for a period of time, or you fancy a low rate tracker mortgage, or maybe both - a tracker rate with the option to fix later on, there are plenty of great products currently available. If you are in any doubt, speak to a mortgage adviser, get a free mortgage review and you may not miss out on some great offers before they are gone. It’s good to talk..

Know what's right..

You may have noticed that I have not had a rant for a while, but as it appears that some underhand activity appears to be starting up again I feel obliged to highlight these to both sellers and purchasers alike.

We have had customers approach us recently advising that, when they are ready to make an offer on a property, the Estate Agent has refused to forward the offer to the vendor unless the proposed purchaser obtain their mortgage facilities via the Agents own internal mortgage consultant!

This is not good for so many reasons including the main, it’s wrong! In addition, the vendor wants to sell the property and is not really concerned about which provider arranges the mortgage for their purchaser!

No one is disputing that the proposed purchaser must prove their ability to obtain finance, where applicable. Nor do I argue with the selling Agent’s right to offer their services, as competition is a healthy thing. However, the purchaser must retain the right to decide for themselves who provides their mortgage finance.

The National Association of Estate Agents (NAEA) is the UK's leading professional body for Estate Agents. Most of the independent Agents in Horsham are registered with the body and adhere to the code of conduct - The Property Ombudsman Code of Practice for Residential Sales. Section 6 states:

By law you must not discriminate, or threaten to discriminate, against a prospective buyer of the seller’s property because that person declines to accept that you will (directly or indirectly) provide services to them. Discrimination includes – but is not limited to – the following: - making it a condition that the person wanting to buy the property must use any other service provided by you or anyone else - failing to tell the seller of an offer to buy the property.

Purchasing a home is probably the largest monetary event you will ever incur and you need to be 100% happy in all aspects of the whole transaction. For more information, go to www.naea.co.uk and see if the Agent you are looking to use is subscribing to adhere to these rules and regulations.

Finally, beware, as not all Estate Agents internal mortgage consultants can offer ‘whole of market’ mortgages. Make sure you ask the question! If you’re not being offered ‘whole of market’ and instead are being offered mortgage products from a ‘limited panel of lenders’, you may be missing out on the best product available to you.

Mortgage Business Expo - Positive!

Last week, I visited the Mortgage Business Expo (MBE) in Manchester. MBE is the mortgage industry’s leading exhibition where lenders, mortgage distributors, solicitors, and the like, advertise their wares to visiting mortgage brokers and intermediaries. The exhibition, which is usually held in London, has recently expanded to Manchester.

As well as exhibition stands, there are also seminars from industry leaders, trade bodies and regulators. What was apparent was the huge number of visitors in attendance and the very buoyant mood fulfilling the event. Although all seem to agree that lending volumes in the mortgage market will still be relatively small for this year, there was some anticipation from a lenders debate/seminar that volumes will increase next year. Especially after the government has recovered the funding (due early 2012) that was lent out to some Banks via the Special Liquidity Scheme.
This could be good news and would be great for first time buyers.

Despite a lot of positive news in this sector of late, a recent survey by the Yorkshire Bank has revealed that 84% of first-time buyers rely on financial support from their parents in order to purchase their first home. The figure has more than doubled since 2005, when just 38% of first-time buyers relied on the ‘bank of mum and dad’. As reported previously, some lenders are now offering mortgages to those with just a 5% deposit. A huge step forward since just 12 months ago and nearly all lenders are now actively looking to help first time buyers get on the property ladder.

Finally, it can be tempting to take up the offer of a ‘payment holiday’ from your lender. This usually allows a period of time (1 – 6 months) in which no mortgage payment is made. Although this can be an attractive offer, usually this will show as ‘no payment made’ on your credit report and more importantly, may extend the term of your mortgage repayment and increase the interest payable. Always make sure you read and understand the small print before taking any action. If in doubt, seek professional advice.

Short Term Lending is on the increase!

The ‘Short Term Lending’ market has been flourishing recently. Specifically geared at speedily arranged loans, normally with a monthly rate of interest and pre-agreed with an ‘exit’ route, the term ‘Bridging Finance’ is quickly becoming a household name.

With many lenders in the market, offering loans up to 75% of the property value (sometimes higher with additional security offered) these types of loan are calculated and charged on a daily/monthly basis, with some even offering to roll up the interest (no monthly payment). Interest rates start from 0.75% per month and normally are arranged over a period of between 1 to 18 months. Most will carry a lender fee, an assessment fee, some will include early repayment charges and possibly an exit fee. However, for the right scenario, these loans provide a superb funding line.

Ideal scenarios for Bridging Finance include –

1) Refurbishment – allows you to buy and refurbish property quickly
A loan to support with the purchase of a property and then undertake the refurbishment before it is eventually presented to a mortgage company or bank for long term re-mortgage finance, or sold.

2) Purchasing properties at auction
Short Term Loans can be arranged very quickly and can be ideal where there are tight deadlines to meet. A typical 28 day completion from purchasing an auction property is usually easily achievable. A pre-auction valuation is considered a must.

3) Funding under value purchases
A loan based on the actual value of a property and not the purchase price. Thus, when purchasing a property, under value, you may have the ability to borrow up to 90%of the cost of a property (subject to valuation) and then re-finance the transaction using a traditional lender later on.

4) Chain breaking or not sold your property yet
When the chain breaks or you have not sold your property but found one you have fallen in love with, bridging finance may enable you to complete on the purchase before you have sold your existing home.

These are just some examples, there are many others.

However, where there are positives, there can be negatives! Many lenders have set a minimum term for a property to be owned before they will allow a remortgage to occur. This is usually six months. So please ensure this is factored in to any purchase, budget calculations, etc before committing to any Short Term Funding/Bridging Finance. For more information, or to discuss a specific scenario, please contact AToM.

An increasing appetite to lend..

The ‘Property Today’ box outside AToM ran out of property papers by Monday lunchtime this week! A new record! And with my neighbours selling their property within three weeks of going on sale, I could be accused of being overly positive about public interest in the current property market, despite what the national press are reporting!

One of the mortgage trade magazines (Mortgage Strategy) this week has revealed that they are aware that 11 new lending institutions have applied to the FSA for authorisation to lend, over the past 12 months. Great news and this shows an increasing appetite to lend. However, with the regulators indicating that they will make a decision within 12 months of receiving an application, some of these new lender opportunities could be a way off just yet!

Inflation has risen to 4.5% for April, from 4% in March, state the Office of National Statistics. Easter and the numerous Bank Holidays had a significant impact. Although, this probably won’t have an impact on the Bank of England Base rate with any rise unlikely to occur until November at the earliest, reports an economist for Cebr. Who knows!?

I’ve mentioned this before, but its back on the radar. Many dormant lenders are offering customers a discount of up to 30% off their mortgage to move away. If your current lender is one of these (not actively lending), then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet!

And finally, remember that financial institutions evaluate your mortgage application based on your credit history. In fact, every financial outlay you have, or have had, may be reported upon. Most institutions will use either Experian or Equifax to review your financial status. If you have too much credit, not enough credit, or missed payments on any credit or utilities (including Gas bills or Mobile phones), you may find that mortgage availability to you could be limited.

A positive for First Time Buyers!

I start this week’s column with superb news for First Time Buyers who have a 5% deposit! Two lenders have launched 95% mortgages over the last few days. It’s been some time since we’ve seen a true 5% deposit product with an affordable rate of interest (sub 6%) and low arrangement fees. Although the lenders are not actively promoting these products, they are available through certain mortgage intermediaries and will undoubtedly have limited funding availability. So be quick!

This does show a positive attitude from the lenders and an apparent appetite to lend. Although these products may only be ‘testing the water’ and will be extremely difficult to get through, I hope this is the start of the return of some normality to an under funded first time buyer market.

The Halifax House Price index has suggested that house prices dropped by 1.4% in April, compared to March. This is following Nationwide’s suggestion earlier in the month that prices for April had decreased by 0.2%. Despite the two indexes differing in amounts, they do come to the same conclusion that prices had dropped. This puts pressure on the Bank of England to keep the base rate on hold, which, in turn, is good news for those on tracker rate mortgages.

The number of mortgage products available in the market rose by 13% in April up to 11,748 according to an analysis by Mortgage Brain. This is nearly 7,000 more products than at the same time last year. Fixed rate product offerings rose by 16%, cementing their position as the most popular product type.

Whatever your particular need, do talk to an independent mortgage advisor who has access to all lenders in the marketplace rather than a limited panel or single provider.

Finally, AToM has been heavily involved in a local initiative called Set4Success which is due to launch shortly. Working in partnership with Horsham District Council, Horsham Rotary Club, Horsham Schools and local businesses, Set4Success will assist Horsham District’s young sportspeople with funding for training and competing. To find out more or to see how you can get involved, visit www.set4success.org

Lenders products available via Intermediaries

There has been an influx of lenders joining the intermediary mortgage market recently. Having previously been solely ‘business to consumer’, these lenders are now establishing that there is value in offering their products via a wider audience and gaining a better exposure in a large, but somewhat strained, intermediary marketplace.

Although these lenders are not household names, they do have some superb product offerings and by distributing these products via intermediaries, the consumer has access to products they may not have been aware of otherwise.

Some lenders have chosen limited, or exclusive, distribution. For example, the Chorley Building Society, based in the north, has chosen AToM to exclusively distribute a product that caters for borrowing up to 85% of the property value right up to a maximum loan size of £1m. This is a rare opportunity as not many lenders will lend that high in the current climate. Others, including Precise Mortgages are choosing to solely distribute their products (aimed at those who have minor credit issues) through the intermediary sector, and AToM is one of their limited approved distributors! Mortgage Trust recently re-launched into the Buy to Let market, solely through intermediaries.

Metro Bank, Post Office and the oncoming launch of Tesco mortgages later in the year are likely to remain customer facing only. Which is fine for the right type of consumer. However, like most banks and building societies, you will only receive advice on their own products and not any others available in the market place. So although you may get a great deal on ‘club card’ points, there’s really no substitute for advice and recommendation from someone who can review the whole of market and cater to your exact requirements. Don’t you just wish they would stick to what they are good at rather than trying to take over the whole world?!

Finally, I am delighted to announce that AToM has been voted ‘Best Mortgage Packager’ for a second year running in the national MyIntroducer.com awards 2011. This is a great achievement and is in recognition of the hard working team we have at AToM.

Know the mortgage process

The Easter break always tends to stifle the supply of any deeply interesting mortgage news, so this week I thought I would recap on the mortgage process.

The mortgage process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same. On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance. At this point you should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you. They are required by law to provide you with 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 charged 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 fully ‘know and understand their client’s financial position and requirements.’ 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.

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. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

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 solicitor’s conveyancing process, you are now on the road to completion and, if it is a purchase, you should soon pick up the keys to your new home!

Enjoy the long weekend!

It's good to talk!

We’ve been bombarded with visitors over the last few days as hoards of children embark on the Great Easter Bunny hunt, organised by the Rotary Club of Horsham. It’s wonderful to see so many people taking part and obviously its superb fun for the children as they are spoilt with chocolate, if they find the bunny and carrot! We’ve also had some great enquiries from those who have been dragged, I mean accompany, the children on their tour of the participating shops! This event has certainly been worthwhile for all involved and created a great community spirit.

The Buy to Let market has welcomed back an old name - Mortgage Trust has relaunched this week with some great mortgage rates and their products are only available via mortgage brokers/intermediaries. Mortgage Trust were a major player in the Buy to Let market some years ago and their new product range, some with free valuation and free legal costs, give the impression they want to achieve that status once again.

The “fix or track” debate goes on! With inflation down to 4%, many pundits are now predicting that the Bank of England base rate will not change for the remainder of the year. Therefore, a good low base rate tracker mortgage over a short term could be beneficial. However, there are also some great fixed rates on offer too. Who knows what is right and what is wrong!? Most agree that rates will increase. It’s a case of when and whether or not you are prepared to gamble your biggest monthly expenditure on a ‘could be this month’, ‘could be next month’ scenario. You will almost definitely find that by the time the Bank Base rate does start to rise, the cost of fixed rate monies will have already risen.

It’s good to talk, and we don’t charge for conversations! If you are worried out the cost of your mortgage or especially what would happen to your individual monthly payments should rates increase, please do come in and see us. On an average £100,000mortgage, a 1% interest rate rise could cost an extra £83 per month. AToM is totally independent and offers advice on mortgages for the whole market.

Wishing you and your families a very Happy Easter!

17% of UK adults failed to pay one bill in last 12 months.

The sun is shining, kids have broken up for Easter, inflation is down to 4%, The Bank of England base rate remains at 0.5% for the 25th consecutive month and the Council of Mortgage Lenders confirm that lending for house purchases climbed by 8% in February. Perhaps I should end my column now, on a positive!

The worrying trend seems to be the public perception of what will happen when, not if, bank base rate rises. Moneysupermarket.com has established that an alarming 17% of people surveyed feel they will be unable to afford their mortgage payments when interest rates do rise, while 6% have already put their home on the market.

According to the UK Payments Council, at the end of 2010 there were an estimated 63m credit and charge cards in the UK compared with around 62m people in the country. Total credit card debt in February 2011 was £58.5bn and the average interest rate on credit card lending is currently 18.84%, which is 18.34% above bank base rate (0.5%)!

Creditaction suggest 1 in 10 UK adults are permanently overdrawn. One third of people have moved into the red during the last 12 months and 17% of UK adults (almost 8 million people nationwide) failed to pay at least one bill over the last year, potentially putting their credit profiles at risk.

We enjoyed the company of a work experience student from a local school last week. A well educated young man. Although he knew about credit and debit cards, he had little knowledge (as is the case with many of his generation) what would happen if he missed a payment later on in life to any credit agency or even a mobile phone provider. It was a real eye opener for him!

Finally, if you have not yet nominated a local business/individual in the WSCT Business Awards 2011, please make sure you do! All businesses, large or small, need a ‘pat on the back’ and recognition for their hard work and efforts. The closing date for nominations is Friday (15th April), so be quick and vote wisely! As an aside, did you know, I have been writing this column, every week, since November 2008...?!

Lenders are restricting the Interest Only option.

There has been much hype recently regarding Interest Only versus Capital and Interest (Repayment) mortgages. With an Interest Only mortgage, you only pay interest, so, at the end of your chosen term, you still owe the lender the same amount as when you began. Normally with this method, it is recommended that you contribute to a saving or investment vehicle to generate funds to repay the mortgage. This is generally optional but the Financial Services Authority (FSA) are paying great attention to this as they do not want to see customers with large debts remaining later in life.

With a Repayment mortgage, you pay both capital and interest each month. Initially, this is more expensive, but it does mean that you pay back the full loan by the end of the term, assuming you meet the lenders required payments on time.

We are seeing more and more lenders tighten their requirements on Interest Only mortgages. Nationwide and Lloyds Banking Group (including Halifax) have recently limited the maximum loan available on an Interest Only option to 75% of the property value. Above this level, Repayment is mandatory.

Some lenders charge higher interest rates if you take an Interest Only mortgage and many are trying to persuade customers to switch from this method to Repayment. Some no longer offer Interest Only at all!

Why the recent attention to these repayment options? Simply, because many borrowers who have stepped onto the property ladder chose the cheaper option promising to review their payment plans at a later date. The problem is, the ‘later date’ never seems to arrive! As we all know, people generally live to their means. Many borrowers on this scheme have no savings or viable plans to pay back the debt and this is worrying!

However, Interest Only mortgages remain practical for certain professions - people entitled to annual bonuses - the fluctuating income of self employed - employments where lump sums are received after a number of years in service are some examples.

Some lenders offer a part and part option, enabling the customer to pay some of their loan on Repayment and some on Interest Only. This serves to help many borrowers and keeps monthly payments at a lower level yet the underlying issue still remains. At the end of the mortgage term, the Interest Only element still needs to be repaid! Seek professional advice.

If you can, overpay!

For those lucky enough to be on a very low bank base rate tracker mortgage, you may have enjoyed a couple of ‘comfortable’ years with the bank base rate being at an all time low. However, are you one of the few on tracker rate mortgages who have taken advantage and overpaid on their monthly payments? Barclays recently carried out a survey of over 1,000 borrowers and found that only 10% were currently overpaying and 6% are planning to start overpaying this year. For those who have not yet started, this could be a missed opportunity on shaving a number of years from the term of the loan, or reducing the interest paid each month, even by just overpaying small amounts.

The Buy to Let market (investment properties) looks set to be the most competitive sector of the mortgage market as further lenders signal their intent to offer products to this area. Metro Bank, Santander and Yorkshire Building Society are just a few that have signalled their interest for later in the year. Skipton Building Society has also this week re-launched in to the Buy to Let marketplace. As First Time Buyers continue to struggle to get on the property ladder (the government First Buy Scheme may assist a few), the rental market is expected to continue its rapid growth. Interest rates for investment properties have tended to be slightly higher with larger lender fees charged for arranging these types of mortgages. However, with more lenders already competing, both rates and fees are already starting to reduce and will fall further as the market becomes crowded.

Finally, larger loan availability is also on the return. Having been somewhat restricted over the last few years, obtaining loans of £1m + have been slightly more difficult to achieve. This is set to change as Nationwide have recently increased their maximum loan to £2m at 75% of the property value and 70% above £2m on an individual case by case basis. Bank of China will also consider loans of up to £10m for the right applicants. All steps in the right direction and one might even start to get slightly excited at the increasingly positive nature of the mortgage news circulating the market of late!

Complex Mortgages are not frowned upon these days!

Some while ago, I mentioned that AToM had re-launched its ‘Complex Prime’ proposition. Complex Prime looks at mortgage applications which, for whatever reason, do not fit the normal high street credit scoring/tick box mentality or need something of a more complex underwriting nature.

A recent example we came across was a young chap at the age of 76. Obviously well into retirement and enjoying a pension of around £75k per annum. Very nice! He wanted to move properties and needed a loan of around £150k to purchase a property valued at £700k. Because of his age many lenders had turned him away. And because he, according to many lenders, had no ‘earned’ income, found most doors shut. However, we were able to offer a mortgage over a 10 year term on a Capital Repayment basis, on the understanding that his wife would receive 60% of his pension income, should the unfortunate happen to the husband. The rates were competitive and fees attractive.

Another example was a gentleman looking to re-mortgage a holiday home that was only allowed to be let out for 11 months of the year. Many lenders prefer second properties to be let out on an Assured Shorthold Tenancy agreement, usually contracted for 6 months at a time and renewable. However, with holiday lets, the agreements tend to be weekly. So, again, the lenders available were restricted, but we managed to place with a small building society offering attractive rates and fees.

Other examples include applicants with no credit: too much credit: a desire to pay up front or add additional security in the form of another property increasing their ability to borrow more.

These are just some of the benefits of using an independent mortgage brokerage and especially if they are ‘whole of market’, and who can deal with any lender and are not restricted to a panel of lenders.

AToM now has seven lenders on its Complex Prime panel already looking exclusively at these scenarios, with other lenders shortly to join. These lenders may not be household names, but you’ll probably find they are extremely helpful and will look at most scenarios, manually, with no credit scoring and have an appetite to lend!

....then we had a budget!

Outside AToM HQ, in the Carfax, we have a distribution box for the WSCT ‘Property Today’ pages. These have been taken in huge numbers over the last few weeks, which give us the impression that people are looking for properties or are monitoring house prices. It’s also been a very busy few weeks in the mortgage market, with rates fluctuating and lenders appearing to be actively lending. Many financial institutions recorded a great month for new business in February, for both purchase and remortgage applications.

Any perceived mini-recovery could possibly stall though, as we approach the forthcoming budget from Chancellor George Osborne.

The pundits have been hard at work trying to predict what the outcome will be and it is a fact that, like it or not, the Government is still faced with a huge task in getting the country back on track financially.

Figures from creditaction for March report:

- £120,660,000 is the interest the Government has to pay each day on the UK’s net debt of £2,244.2bn (which includes financial interventions).
- 212 mortgage possession claims will be issued and 163 mortgage possession orders will be made today
- 337 people every day of the year will be declared insolvent or bankrupt. This is equivalent to 1 person every 59 seconds during a working day.
- 1,603 Consumer County Court Judgements (CCJ's) were issued every day during Q4 2010 and the average judgement amount was £3,245.

Mortgage lenders took 7,900 properties into possession in Q4 2010 according to the Council of Mortgage Lenders. This equates to 87 properties being repossessed every day. In terms of payment difficulties, 169,600 mortgages ended Q4 2010 with arrears equivalent to at least 2.5% of the outstanding mortgage balance.

There are more credit cards in the UK than people according to the UK Payments Council.

The typical first-time buyer deposit in December was 23% (£35,020).

Yes, some of these figures make for grim reading, but they give an idea of the pressures the Government has to deal with in the upcoming budget and balancing the already fragile economy with the impact they will present.

Why use a Mortgage Broker?

There are many mortgage lenders actively looking to increase their volume business by offering superb products and rates, but there’s also some who have good PR companies who portray a positive lending attitude.

You would think in the current climates, with mortgage volumes reasonably low, that new applications submitted to lenders would fly through and come to a quick and easy completion. Unfortunately, in some cases, it’s not so.

These are the daily trials and tribulations of dealing with some major mortgage lenders who simply do not appear to want to lend.

We’ve heard many stories recently from customers who have initially gone direct to a high street lender, but then wished they had not! Should your application meet all the requirements and the lender has no further questions or requirements, then a mortgage offer should be quickly produced.

However, if, for whatever reason, a lenders underwriter decides to request one further bit of information, or needs additional clarification, then the fun begins.

You may receive a call or an automated email detailing additional requirements and once you’ve provided the information, you enter a service standard queue (usually 48 hours) and assuming of course that the information returned does not get lost and is directed to the right department! Should the lenders underwriter decide they are happy with the additional information, your application may proceed. But, the new information provided could provoke further questions or requirements, and so the cycle begins again!

They say buying a house is the second most stressful event in your life after having children. I’d say that it’s nearly on level par in the current market conditions.

What this all demonstrates is the value of dealing with a specialist independent mortgage brokerage as we will take this painful flack on your behalf. In most cases, we will have a relationship with the lender, understand their requirements and ensure all the correct information is submitted from day one. There really is no better time to utilise the expertise and staffing levels we can provide for you. Let us take the strain on your behalf to push the mortgage through to an early completion. And, if a lender does decline to proceed, we can quickly try to find an alternative lender to suit your requirements, with the minimal of fuss.

Fantastic February!

The Bank of England’s January lending figures report that the number of remortgages rose to 33,498. This is nearly 10% above the six month average. These statistics suggest an increasing wariness of future mortgage rates and in addition, the fact that fixed rate mortgage interest rates were relatively low in January.
Mortgages for property purchases also increased, to 45,723, slightly below the six month average of 46,686. Total lending to individuals increased by £1.5bn.

I suspect these figures to be vastly different for February as some lenders increased fixed rates due to the fluctuation in the money markets and many customers will have raced to secure low rates before they were withdrawn.

Nationwide has reported that house prices increased by 0.3% in February with the average UK house price now standing at £161k. This is 0.1% lower than this time last year. The lack of first time buyers and easily accessible mortgages are still major factors with regards to prices and activity in the housing market.

AToM had a fantastic February for new business received. Applications were up 68% compared to February 2010 and resulted in our best month since June 2009 for new business. This was mainly due to our top four lenders – GE Money, who offer mortgages to the employed with some allowance for previous credit problems. Bank of China, who had a market leading lifetime tracker rate residential mortgage (they also cater for Buy to Lets). Platform (part of the Co-operative Bank Plc) who are actively lending in the Buy to Let market, with small arrangement fees. And AToM’s “Complex Prime”, a number of funders who look to assist those who have been declined by the high street lenders credit scoring systems for no apparent reason. This could include not being on the voters role, having to little (or too much) credit, securing a charge on more than one property, lending into retirement and many other reasons. Whatever your mortgage requirements, speak to an independent mortgage adviser!

Fixed rates are on the up!

The mortgage market has been very volatile over the last few days and the cost of fixed rate monies (SWAP Rates) have increased rapidly. This has meant many lenders have withdrawn products with little notice and subsequently increased their rates. The most notable being Nationwide who increased fixed rates by 0.30%. Others are expected to follow suit.

So it begs the question, if fixed rates are on the increase and inflation is on its way to an estimated 5% (was 4% in January), when will the Bank of England increase its base rate? The pressure is certainly on to contain inflation and avoid larger and more damaging rate rises in the future. The pundits had previously predicted a rise in May; however, this could now be bought forward. One member of the MPC (monetary policy committee) has even suggested this week that there should be an immediate small rise. Keep an eye on the press, but if you’re looking to change your mortgage onto a fixed rate, don’t delay!

The Financial Services Authority (FSA) has been flexing their muscles with lenders recently. DB Mortgages, part of the Deutsche Bank Group have been fined £840k for irresponsible lending practices and unfair treatment of those who fell in to arrears. DB Mortgages specialised in the sub prime arena offering mortgages to customers who had CCJ's, Defaults, etc. It is understood that £1.5m has been put aside for customers redress. Despite the sub prime lender crash of 2006/7 (lenders effectively withdrew entirely from assisting those with financial issues), there are lenders today actively lending in this arena assisting those with credit impairments (albeit with stricter lending regulations than in 2007!).

Finally, if you are a Halifax mortgage holder, and took a mortgage between September 2004 and September 2007 via their Bank of Scotland brand, you might be interested to note that Lloyds Banking Group, their parent company, is making a provision of £500m for goodwill payments in relation to an agreement with the FSA over wording that could have caused confusion in mortgage offers sent out during this period. I won’t go in to the specific details but suffice to say you don’t need to do anything as, from April, they will be contacting over 600,000 customers who may have been affected.

Still tough for First Time Buyers...or is it?

First Time Buyers are hitting the press again, with reports from rightmove.co.uk suggesting that first timers now account for less than a quarter of all potential house purchases in the UK.

However, lenders are beginning to take on this problem. Many are launching products specifically aimed at First Time Buyers and some of the major builders are also looking at ways to get people on to the property ladder. Even the government has recognised that there is an issue and is holding talks with Lenders, Builders and other industry leaders this week to try and find a solution. Although, with the recent major financial cuts across the country, one wonders how this area might be financially supported.

First Time Buyers will usually require a minimum 10% deposit. Some lenders will allow a 5% builders deposit, but this must be confirmed as a gift and non repayable. Some lenders will allow the deposit to come as a gift from the Bank of Mum and Dad, again as long as it is confirmed this is non repayable.

Rates have reduced lately, with the likes of Santander, NatWest, and a few others lowering interest rates on their 90% products in a bid to assist. However, you are still looking circa 6% interest rates for a fixed rate and most lenders now require the mortgage repayment method to be capital and interest, rather than just interest only for those borrowing more than 75% of the property value.

Some lenders will allow a loan of up to 95% of the property value, if parents or another immediate family member will act as guarantor. Those guaranteeing, in the main, will need to show evidence of affordability for both their current residential mortgage and the one they are intending to guarantor.

Even some Building Societies are offering 90% loans, with possibly higher levels to existing long term account holders. Customers, in the main, need to be located near to the branch of the lender. Variable and tracker rates are also being offered (circa 4.5%) depending on the lender. Income multiples tend to be slightly restrictive though with some offering 2.50 to 3 x joint income, or up to 3.75 x single income. However, they are showing a willingness to assist First Time Buyers and in the current market, that can only be a good thing.

Buy to Let increased to 85% LTV

Kensington mortgages have launched an 85% loan to value product for Buy to Lets (investment properties for letting out). They will consider First Time Buyers looking to become first time landlords and now also allow applications on new build flats. Good niches and a bold statement of intent to lend! They are currently the only lender requiring a 15% deposit for Buy to Lets, but I expect others will follow suit shortly.

I was astounded to see recent figures from creditaction reporting that Banks and Building Societies had written off £9.9bn of loans to individuals over the last 12 months (end of Q3 2010). That’s nearly £20m a day! In addition, the Government is paying a jaw dropping £120m a day in interest alone on the UK’s net debt (£889bn excluding financial interventions). These are scary figures indeed. But to add to the reality, individuals currently owe more than the entire country has produced during the last four quarters. It’s therefore no wonder that the lending market is in the state it’s in and provides some understanding in to the pressures facing the Government and Bank of England when considering rate changes.

As I write this article a few days before the paper is printed, I am unable to comment on this week’s Monetary Policy Committee (MPC) decision on whether or not to increase the Bank Base Rate. However, out of the nine MPC members for January, two voted for an increase. This is an increase on previous months and we may not be too far away from seeing a rate increase. Some estimates suggest May.

Finally, there has been speculation in the financial press lately regarding the Mortgage Market Review (MMR) which is an FSA initiative to make, in their words, the mortgage market more professional and transparent. Much of this, together with another of their initiatives is the Regulatory Distribution Review (RDR) part of which is designed to encourage our sector towards a fee charging route in all financial advice areas whereas, today, most income for advisors is from introductory fees incorporated in the product sold, paid by the providing financial institution. Watch this space in months to come but it seems fair in many ways that, given the professional qualifications mortgage advisors now need to obtain to give advice, a fee reward is not unreasonable for the amount of work and research undertaken in advising and recommending a mortgage product.

New mortgage business up 83%

The Bank of England has reported that mortgage lending in December dropped to the lowest level in two years and Nationwide has reported house prices dropped by 0.1% in January, the first fall recorded by the lender since Aug 2009. Neither of these articles is worth further comment though as there are many positives to concentrate on!

The Buy to Let market was given another boost this week with Platform (the intermediary lending arm of the Co-operative Bank) revamping rates and launching new products. If you’re looking to purchase a property for investment purposes, this lender is well worth a look. Tracker rates start from 3.89% (APR 5%) and only have a £995 arrangement fee (some lenders charge up to 3.5% of the loan amount). These products also have free legal costs for those looking at re-mortgaging existing Buy to Let properties. AToM is one of a small number of distribution partners in the UK chosen by this lender to offer these products.

On the Residential side, one of our local Business Development Managers, from a major high street lender informed us that their remortgage business had increased 7% over the last week and now accounted for 46% of their business. At the same time, those who applied for mortgages requesting a fixed rate product were up 9% on previous weeks.

And finally, January’s new mortgage business received at AToM amassed to an 83% increase, compared to the same period in 2010. Many customers are fixing their rates in anticipation of a possible bank base rate rise, but some are also taking advantage of the attractive bank base rate trackers currently available. Others have more complex scenarios that they needed assistance with, which the high street lenders would not normally entertain. Despite what you read in the national press, we are seeing an appetite from lenders to lend, an increasing willingness to be helpful and, most importantly, approval of applications. Long may that continue!

What about a secured loan?

With all the recent headlines appearing in the national press on mortgage rates, are you looking to remortgage? Most lenders look to attract new customers, but are less likely to offer attractive options to stay with them. This, in the main, is due to the different fees and charges that can be added to the new mortgage at the outset. In the current climate, the lenders bottom line tends to be more profitable with new clients, rather than old. So don’t feel loyal, if a better option is with another lender; think of number one!

However, we’re still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may have to stay with your current lender anyway!

The other option, if you’re looking to raise cash for home improvements, to consolidate debt (although not encouraged) or for another legal purpose, is a secured loan.

A secured loan is a 2nd, or subsequent charge, designed for homeowners which allows the equity in their property to be used as security. Loans are usually between £3.5k and £100k. There are also no 'up-front' fees to find.

We tend to find that many customers looking to remortgage to raise additional funds are already on an attractive rate with their lender. To move away could be costly and they could end up on a much higher interest rate. Depending on the amount already lent as a mortgage, compared to the value of the property, most lenders will allow a secured loan to be added as additional borrowing.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.

As with all finance, seek advice and think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it!