Positive news for the Self Employed and also Ex-Pats!

The self employed have had a good week on the mortgage side.  Specialist lender, Precise Mortgages has changed criteria and will now allow customers to use just last years accounting figures as income for a mortgage.  Previously the lender, and most lenders, would look at two or three years figures and average over the period.  However, whether the customer has been trading one year, or twenty, the lender will now work on just the last years figures.  This is available right up to 85% of the property value and only via a small and select number of companies, including AToM. 

A number of lenders have joined the current price rate war over the last few days.   Metro Bank, Virgin Money and Leeds Building Society joined a number of other lenders who have cut rates substantially.  We even saw a six year fixed rate launched, under 3% interest rate, but sadly this was only available for three days before being withdrawn  - probably due to huge demand 

Others have also launched short term availability schemes. Accord Mortgages have launched a '10 day sale' on some of their products covering both their Residential and Buy to Let schemes.  These include lower lender fees, enhanced cash backs and low fixed rates options.  But be advised that these products will require your mortgage adviser to submit a full application before midnight on 1st October!  Terms and conditions apply, etc.

Finally, we are delighted to be one of only seven companies in the UK who can offer a new product range aimed at Ex-Patriots from Skipton International.  For UK Nationals  living abroad, looking to buy or remortgage an investment property in England and Wales, up to 75% of the property value, Skipton International will consider lending up to £1.5m with rates starting below 4% and no lender arrangement fee (for a limited time).  This really is a superb offering and if you know someone who may fit this criteria, please get them to contact us to find out more!         

Rates drop and Over 65s enquiries on the up!

Although the majority of mortgage pundits and industry experts are expecting a rate rise towards the end of 2014, or possibly early 2015, at the moment rates are decreasing! There is an apparent rate price war currently in full flow and most lenders are taking part!

Just in the last few days, we've seen Virgin Money reduce some fixed rates by up to 0.26%,  Accord reduce some products by up to 0.40%, Woolwich reduce some products by 0.24%, Halifax reduced some by 0.20%, NatWest decreased some rates by a respectable 0.64%, and hats off to Nationwide who reduced selected rates by a huge 0.70%!

All of these have created a stir in the market place.  It's great for the end consumer and activity is currently high. 

With this in mind, August was a superb month for New Business for AToM and I'd like to thank everyone who has used us to assist with their mortgage requirements.  We've had some fantastic challenges and some great accomplishments in helping arrange mortgage finance for a variety of property types and people!  Do explore all options available to you before signing on the dotted line.

Finally, we have recently noticed an increase in mortgage enquiries for those over the age of 65.   Normally, a high street lender will allow a mortgage term to last until the applicants usual retirement age.  This used to be 65, officially it's now 67, but the reality is it can be much later.  As such, most lenders increased their maximum age at the end of mortgage maturity to age 70.  However, we all know that people are working a lot longer now and repayment of such a large amount of money may not be possible in these restrictive conditions.  So the option is to raise further finance to repay the original loan or sell the property.  Thankfully, the first option is less onerous as it used to be.  Many non household name lenders will look at lending to customers a lot later in life, assuming the customers can prove their continued ability to pay.   This can take the maturity age up to age 80, 85 or even 90 and above.  If the customer has a good amount of income, a good amount of equity in the property and can satisfy the lenders affordability requirements, then a lender should be happy to lend.  Seek specialist advice. 

Buy to Let mortgages in high demand

Buy to Let mortgages seem to be the flavour of the month again.  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 a recent mortgage price war and some major criteria changes as lenders seek to attract more of this business type.  Mortgages can be achieved up to 85% of the property value.  But, as with all mortgages, the smaller the deposit, the higher the 'risk' and therefore the higher the rate.

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% and may use a higher stress test rate to calculate this.  Remember that, whatever the deal, lender terms and conditions will always apply and there are no guarantees of continued rental or capital growth.

More generically, many of us will review car insurance, home insurance, gas and electricity suppliers to find the best rate on the market and tell everyone when they have made even a small saving. Given this, it is astounding just how many people  leave their mortgage with their existing supplier and some don't know what rate they are paying!  Most lenders look to attract new customers, but are less likely to offer attractive options to retain 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.  There are many good rate options available currently and most with minimal costs to move. So don’t feel loyal, if a better option is with another lender - think of number one!

Fitting criteria is the key to unlocking lenders appetite

Lenders want to lend, but in some cases are not able to, even to existing customers!  Those who already have a mortgage, but took out their original loan before April 2014 (Mortgage market Review!) may not pass the same lenders new criteria.  Reasons can include, original borrowing on a multiple of income, age, small equity levels in property. Lending rules have changed dramatically and more stringent measures are in place, as well as tougher reporting to the regulator. Lenders have to be sure the customer can afford their mortgage for a number of years ahead and stress test against possible rate rises. Seek professional advice if you are concerned or are looking for an alternative lender as some might be considered to be hiding behind the rules!

I was surprised to see that an increase in housing supply has led to two-thirds of homes selling for less than their asking price in July according to the National Association of Estate Agents. They report an 11% increase in the average number of properties for sale per branch last month from 46 to 51, the biggest increase seen in three years. However, increasing supply and declining buyer registrations (possibly as a result of the above restrictive mortgage options) resulted in around 66% of homes sold last month failing to meet their asking price. 

Products though continue to increase and one of the fastest growth markets seems to be in the Ex-Pat sector. A British Ex-Pat in good employment is favoured by a growing number of lenders who are willing to provide a mortgage to help them obtain a Buy to Let property in UK. The rules are tight but there are lenders who will advance up to 75% of the property value. Incomes usually need to be from a recognised multi-national business abroad and in a region upwards of £50000 sterling equivalent. A couple of lenders will also allow Ex-Pats to own a residential property in UK and where their family, usually off-spring, will reside pending their return to UK.   

We are finding that criteria is the key to unlocking lenders appetite and you will not find this on most, if any, of the popular web-site offerings. Talk to your local professional mortgage adviser who will know how to access this important information quickly for you.