Dudley launch - AToM one of the chosen few!

The summer is over, the kids are back to school and the post holiday credit card statements are on their way!  Ok, so a bit negative, but don’t panic when they arrive.  Debt Management Plans and Payday loans look like an attractive solution and they will be right for some people. However, most mortgage lenders are not favourable to these arrangements.  If you are looking to change your mortgage, think twice before committing to such a plan. Consolidating debts into one monthly payment via a secured loan or even a total remortgage may be a better option. Obviously securing short term debt in to a longer term loan will inevitably increase the amount of interest paid and professional advice should be sought before going this route.  But do review your options as rates are low.

The Dudley Building Society has launched their new mortgage lending proposition through seven key mortgage packager/distributors around the country.  We’re delighted that AToM is one of the chosen few!  The Dudley BS specialise in assisting First Time Buyers, Shared Ownership (90% of share on New Build properties), Right to Buys, Buy to Lets and more.   It’s great to see lenders expanding their propositions in to new areas and we look forward to working with them.

Buy to Let mortgages seem to be the flavour of the month.  With the rental market remaining buoyant and showing no signs of declining, lenders are reacting to the huge demand for investment/buy to let properties.  This sector has also experienced the recent mortgage price war and some big criteria changes as lenders seek to attract more of this business type.  Buy to Let properties will often provide a modest monthly return over and above the mortgage payment.  The additional amount can be used to supplement income, or, with flexible mortgages, can be used to “overpay” the mortgage and reduce the term.   Most lenders in this sector will require the rental income to exceed the mortgage payment by up to 125%.  Remember that, whatever the deal, lender terms and conditions will always apply and there are no guarantees of continued rental or capital growth.

August was a superb month for AToM.  Completion numbers, those taking out mortgage loans, were the best for five years!  Thank you to all those who have been using AToM’s services, we really do appreciate it.

Read the small print and don't get searched

Some comparison websites are causing a stir.  We’ve had a few customers contact us for a mortgage recently who have been totally unaware that they have had a number of credit searches carried out having recently searched for competitive renewal quotes on their home or car insurance.   I’m sure it will be stated somewhere in the small print, but the customers have researched a number of comparison sites and ended up with a number of credit searches on their profile.  This, in a small amount of time can have a marked affect on your credit score, and as such, affect your ability to obtain finance, so read the small print and be aware!  

The Council of Mortgage Lenders (CML) has reported that July’s figures for mortgage lending were up 12% compared to June.  This amounted to £16.7bn and compared to July last year, was an impressive 29% increase.  Positive figures indeed and it will be interesting to see August’s figures as this was also an incredibly busy month.  Interestingly, the First Time Buyer sector has proved one of the larger increases in volume, circa 5%, with an average deposit of 18% and an average loan amounting to 3.31 x income.

We’ve also seen a large increase in requests for secured loans.  A secured loan is a 2nd, or subsequent charge, designed for homeowners and 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 although costs are added to the advance.

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.

Right to Buy or Shared Ownership?

It’s been a very busy week in the mortgage market.  Lots of rate volatility as lenders long term fixed rates begin to creep up, along with many delays across the market as lenders struggle to cope with rising volumes as people snap up great rates before they increase!  Unfortunately, it also means that some funding levels are being fully utilised and one such example is with our good friends at the Saffron Building Society who have shut their doors temporarily for this exact reason.  They follow a number of lenders who temporarily suspended lending in early August.  But we hope to see them return in the autumn with a great new range of products for 2014.

Many lenders are looking for niches in the market and two such examples are Right to Buys and Shared Ownership schemes.

Right to Buys are usually via the local council selling their properties to the existing tenant at a discounted price. This discount can be up to £75k and tenants must have been with the council for five years or more. Some lenders will allow borrowing of up to 100% and possibly slightly more if the extra funds are to be used purely for home improvements. If you resell your home within five years you will usually have to repay some, or all, of the discount you received, however remortgaging is usually allowed in this time period. This is covered under the term Pre-emption Clause.

Shared Ownership Schemes are provided through housing associations. You buy a share of your home, between 25% and 75% of the property value, and pay rent on the remaining share to the housing association. You usually have the opportunity to purchase a bigger share of the property later on (known as ‘staircasing’). Local housing associations must confirm your eligibility in order to join these types of schemes.

Both schemes are proving popular in the local area and a wide number of lenders are looking to lend in both scenarios and to a number of different customer types, so always seek advice.  Especially as some of these lenders are not household names.  This should not deter you though as these lenders have a good funding arm and an appetite to lend!

Confused by the internet "information"? .....we can help!

Considering it was a ‘holiday month’ August was a flurry of activity and caught many of us out and this was a very pleasant and great surprise!  Of those approaching AToM, many were seeking straight forward simple human assistance having become confused by the huge amount of information currently available on the internet.  The majority were after the superb low rates currently available.  However, and with this in mind, we have seen a few fixed rates increase over the last week as some volatility returned to the financial markets (as I write Nationwide Building Society, Accord Mortgages and a couple of other specialist lenders have all raised medium to long term fixed rates, some by up to 0.4%).  As mentioned in previous columns, lenders are incurring huge delays with processing and underwriting and August’s great business volumes won’t have helped clear the back logs!

Second steppers are being given a helping hand.  Some lenders are offering loans of up to 95% of the property value to get people moving up the ladder and thus freeing up properties affordable to the first time buyer sector.   Lloyds TSB’s recent research also compliments this as they report that equity levels for home movers have helped people living in their first home jump up to the next level.  Improving house prices over the last twelve months have helped.  Despite a reported 2% decrease in homemover mortgages in the first half of 2013, the same time frame that saw a nineteen per cent increase in first time buyer approvals, the average equity share position of a home mover rose from one per cent in the second half of 2012 to thirteen per cent in June 2013!

Finally, due to the increase in business volumes, we’re looking for staff to join our expanding AToM team.  If you know someone in the mortgage sales sector, with the relevant qualifications (or studying towards them) and who likes to be kept very busy, then please ask them to get in touch!