That's it for 2015! Roll on 2016. Thanks for reading.....!

Amazingly, this is my last column of the year!  I enjoy writing each week and updating you on the mortgage world's good and bad, but I am looking forward to a couple of weeks without tight production deadlines to meet!

The door may be nearly shut on 2015 and, in many ways, I'm ready to kick it shut.  It's been a frustrating year as lenders have been neither here or there with their lending volumes and every one of them has had one eye looking over their shoulder for the regulator and the other looking forward in preparation for the new European Mortgage Credit Directives that are due to be implemented in March 2016.  Wouldn't it be nice if we could just have a couple of years without regulatory changes?

At the same time, it has been a year for building foundations for what I hope will be a fantastic 2016.  Once the new regulations have been implemented and with rates set to stay static for some while yet, mortgage lenders will be competing for business. A rate price war may happen and this can only be a good thing for the end consumer.  We will also be welcoming a number of new lenders to the market (and some returning) and this will help keep competition rife.  Good times ahead!

Finally, a heartfelt thank you for reading my columns.  I've tried to provide an unbiased weekly insight to what happens in the mortgage world (and tried to keep it upbeat!). 

Thank you to everyone who has instructed AToM to source and arrange their mortgage during the past twelve months. It has been a fantastic year and we have enjoyed substantial growth in volume, November bringing more than £30m in new applications. Also, an increase in  headcount with almost 30 in the AToM team located between our two Horsham offices! They are a truly fantastic team. 

On behalf of all the staff and directors at AToM, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year! 

Increased Stamp Duty for Second Properties and Buy to Lets.

So, quite an easy start to this weeks column as the Chancellors 'Autumn Statement' has written most of my column for me!  If you haven't seen the news, for Second Properties, or Buy to Let purchases, stamp duty rates will be 3% higher.  This means that we have the following:

• Value of property £40,000 to £125,000 – additional stamp duty surcharge of 3%
• Up to £250,000 – SDLT increased to 5%
• Up to £925,000 – SDLT increased to 8%
• Up to £1.5m – SDLT increased to 13%
• Over £1.5m – SDLT increased to 15%

Therefore, for a property valued at £175k, stamp duty is currently £1,000 and this will now increase to £6,250.  Quite a hike!  For a property valued at £300k, the additional increase amounts to an eye watering £9k!

The Chancellor says this is in order to help first time buyers.  Some would say that landlords will still buy properties whilst first time buyers struggle to get on to the ladder, but rentals charges may be increased to cover the additional cost.  And whilst this does not come in to force until April 16, some estate agents are predicting a short-term surge in property purchases.

With the recent stamp duty changes and increases in taxation on profits being introduced over the next few years, the Buy to Let sector has taken quite a beating over the last couple of budgets.  Yet with interest rates so low and demand for rented properties increasing, and no clearly defined solution to help first time buyers, I can't see these changes killing off the buy to let sector just yet!

What it does do is ‘stutter’ interest from those who might have been looking to invest in property compared to plunging savings rates and volatile stocks.  If the Chancellor's long term vision is to kill offer the buy to let sector entirely, then those who may have been looking at income from Properties as a viable alternative to a pension arrangement may well be slightly more wary given these latest developments.

Two million sitting on a Lenders Standard Variable Rate!

New lenders will be a key part of the mortgage market in 2016.  A number of lenders have applied for authorisation from the regulator and a number of others have contacted AToM with regards to re-launching in to the market place.  It's a buoyant market and lenders can see growth in 2016, especially whilst rates remain low. 

With this in mind, it still amazes me how many people do not change their mortgage.  HSBC have recently suggested that over two million borrowers in the UK market are sitting on a lenders standard variable rate (SVR) in excess of 3%.  In fact, the average lenders SVR is sitting around 4.82%, whilst the market continues to enjoy record low rates.  Short term fixeds are commonly around the 1.25% mark with five year deals circa 2%.  This makes it worthwhile to review your options and see if you can save money.

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

In other news, Halifax is changing its income multiple to a flat 4.75 times sole or joint incomes.  For loans over £500k, this remains at 4 times income.  I suspect we will see some other lenders follow suit in to the new year and the lender will still require a full affordability assessment to be carried out.  However, this is pretty generous and many customers still believe they can only get 3-4 times income, so 4.75 times income, especially joint incomes, might be an eye opener for some!

Finally, outside AToM we have a box offering free ‘Property Today’ papers.  This is a good gauge to the local market and how interested people are in properties each week.  Last week, we ran out in a couple of days.  Possible signs of a buoyant local market (despite low stock levels), or just a lot of people keeping an eye on things?  Who knows…

Don't miss Horsham's Landlord show on 28th November

If you are currently in the process of changing your mortgage, has your current provider, adviser, arranger advised you of the regulatory changes that are due to be implemented shortly?  This is especially important if you are looking at buying a new build property that may not be completed until after March 2016.   One of the key areas of the new Mortgage Credit Directive is that lenders must issue a 'binding offer'.  This means that unless a material change occurs, post mortgage offer, or the customer has provided inaccurate information, the lender cannot re-underwrite the case.  This sounds pretty straight forward.  However, if you are arranging your mortgage today and on current lender structures, come March 22nd, your offer will be null and void.  Thus between now and 21st March, the lender should send you another mortgage offer which will be compliant with the new regulations.   This new offer also introduces an obligation on lenders to give customers the right to seven days of reflection (a cooling off period).  These are just two examples of a number of new regulations that are coming into effect and that you should be aware of.  More news will follow on this. Of course, as with the last regulatory changes (Mortgage Market review – April 2014) you can be certain that the national press will publicise all you need to know, just a week before the regulations hit the market!

Finally, we're just over a week away from Horsham's FREE and dedicated LANDLORD event.  On Saturday 28th November, at the Drill Hall, Denne Road Horsham, a number of local businesses will be exhibiting and offering key information and regulatory updates that come in to effect in 2016.  Whether a first time Landlord or an experienced portfolio investor, the event will offer information and assistance for all.  Organised by AToM and Spofforths Accountants, exhibitors include the National Landlords Association, Courtney Green, Guy Leonard, Leaders, Rix & Kay Solicitors, David Everett Plumbing, Lady Decorators, Community Fire Services, Durrants Removals, Sharon Davis Inventories and much much more!  Hope to see you there!

They say no base rate move in 2016. Now, use a broker!

As mentioned in one of my earlier columns, I could not envisage a rate rise for some time and, at the earliest the end of 2016, start of 2017.  This has now also been stated by the Bank of England who suggest that there will be no movement in base rate for the whole of 2016.  If it's correct, then good news indeed!  What this means is that lenders effectively have cheap money to lend.  In the current climate, with minimal property stock for sale, reduced activity across the market and increased targets, we will see a lot of competition and possibly rate decreases as Lenders become more focussed on attracting new business. 

This will also apply to the non high street lenders.  They will have an uphill struggle to compete with the bigger lenders in rate reductions.  Where this breed will succeed is through helping those who are rejected by the high street, for whatever reason.  As the household names usually work on a computer automated credit scoring system, not everyone will fit the mould required.  The smaller lenders have an ability to manually review an application, assess it on its merits and carry out a credit search, rather than a credit score.  Rates are not far different from those on the high street and in most cases, the process will be the same.  But having a human underwrite your application can be a big plus when other avenues may have been closed to you.

What is for sure is that obtaining professional advice from a company who is willing to stand behind their recommendations and build a relationship with you, rather than just treating you as a number, should be a key priority.  Yes it may cost a small fee, but finding the right mortgage for your needs has to be more important in the longer term.  As more and more regulations hit the mortgage industry, dealing with someone who is experienced and who has access to the whole market, rather than just a small panel of lenders, should mean that you get the appropriate advice and less stress to concern you later on.  Remember, this is the biggest debt you're ever likely to have.  It should therefore be treated with the up-most respect.

Buy to Let now with free valuation and free legals (including purchases*)

With the year end closing in fast, and new regulations only just around the corner, we are starting to see some lenders advising their plans for next year.  Many lenders have increased targets and AToM has been in contact with a number who are looking to launch or re-launch (having been dormant) during the coming months.  The majority of industry pundits, including myself, don't believe rates will now change until late 2016, or early 2017.  So with a slightly quieter market, competition, especially rates, should be fierce for the remainder of this year and moving into next year.  This can only be good news for the end consumer.

For those with Buy to Let / Investment property interests, we have seen new lender, Foundation Home Loans, stir up the market as they have launched products with free valuations, free legal costs and will accept customers who have no minimum trading period on employed or a self employed basis and no minimum income requirements.  This is in addition to looking at customers who may have had a blip or two on their credit history.  Although a recent new entrant to the market, Foundation have an appetite to lend and are innovative.  I think we will see a lot more from them in 2016.

Another lender has launched a five year fixed rate for Buy to Lets with a rate sub 4%.  This whole sector will remain buoyant while the rental market continues to grow at a substantial pace.

Nationwide House Price Index confirm UK house prices increased by 0.6% in October, with the annual price growth edging up to 3.9% from 3.8% in September.  The average house price now stands at £196,807!

And finally...due to an 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! 

Positive movements from lenders..

Lenders have been actively looking at their offerings this week and loosening their criteria, positively.  As I have said before, I think in the run up to the end of the year, we will see a number of attractive deals launched by lenders who want to build up their pipelines ahead of, what will be, a very demanding 2016.

First Time Buyers have been in the spotlight as both Nationwide and Santander focus on the higher 'loan to value' market. These products cater for those looking to purchase their first property who have a deposit as small as just 5%.  Santander's products will be launched later in the month, but Nationwide's are an attractive proposition with starting rates sub 4% and £500 cash back to help towards the costs involved in arranging a mortgage.  

Interest only mortgages have also come back on to the lenders radar.  NatWest has confirmed it will offer interest only mortgages to customers who earn over £100k per annum and who have an 'acceptable' repayment strategy.  So, this may not be open to everyone, but it is positive that lenders are looking for gaps in the market in which to attract more business.  

This also shows in recent figures released from the Bank of England confirming that lenders approved more mortgages in July, than in any month since January 2014.  This amounted to 11,766 approvals, up 8% compared to July 2014.

And finally, do you look at your financial budgets frequently?  A report from well known credit referencing agency Equifax has suggested that over 78% of mortgage people surveyed are not currently budgeting for a rate rise.  We all know rates will rise, even though the Bank of England base rate was held for the seventy eighth consecutive month this week, but nobody knows when this will happen.  Many people asked did not know how much a rate rise would cost them on a monthly basis, despite many respondents believing rates would rise over the next twelve months! 

What is a normal retirement age for mortgages?

You may have seen the Citizens Advice Bureau release research estimating that nearly 1 million people have an Interest Only mortgage with no obvious way of repaying it.  This means that come normal retirement age, the lender has the right to request repayment of their loan.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty five years, they face having their home repossessed or being forced to move out.  On the high street, the end of the loan term will normally hit those aged between 65 to 70.  This is not new news, but does highlight that people are still burying their head in the sand and hoping this will go away or the lender may be lenient.  No chance on either.  You may get a years extension, but the lender will want their money back and that you cannot avoid.

However, there are a number of lenders that recognise that 'normal retirement' age is no longer set in stone and people continue to work long in to later life.  Many will consider loans ending at the customers age of 80 (maybe to 85) and on a repayment basis, so no loan outstanding at the end of the term.  This is all subject to affordability and will depend on the loan size compared to the value of the property.  These are also not high street names and as such, rates may be slightly higher than the big super tanker, large volume producing household names that we are used to.  But at least they will consider helping out and could keep you in your home!

This also runs in line with recent reports that the top six lenders in the UK are losing market share to the smaller lenders.  Virgin Money, Skipton and Coventry have all posted figures with a year on year increase in excess of 25%.  But where the smaller lenders are really winning is the ability to think outside the box and in some cases, manually assess your application with no credit scoring.  The smaller lenders can be more innovative and change things quickly to suit market conditions and to attract new business.  Don't be shy of a non household name, they could very well be the best lender for your next mortgage move..

Are you ready for your 'payment shock'?

In recent columns I have used the word 'panic' to describe the possible rush to secure a good mortgage deal before they vanish when rates rise, and also made comment on how lenders may be feeling in terms of possibly missing their annual lending targets. The latter should lead to some good deals which I feel sure will hit the market in the last few months of this year.

However, there is another important term I think worthy of mentioning now and this is ‘Payment Shock’. A well worn term during the mid to late 90's and one which I think Mr Jannels 'senior' may have played a part in coining! It describes the potential increase in monthly mortgage payments when an incentive period, for example a fixed rate, comes to an end and the mortgage moves to the lenders standard variable rate. It is worth reflecting that a one percent uplift on a mortgage of £200,000 may mean a monthly increase of up to £166.66 and, in many cases the rate may well increase substantially more than this.  Imagine the impact of a two or three percent rise! Not unusual if the lenders standard variable rate is in the late four percent range. 

We try to keep a listening ear open to those in our sector who are considered 'gurus' and their predictions on interest rate rises and when they will happen. In truth, no one can be certain, other than that they will rise. It is important therefore for mortgage borrowers to consider the potential of any rate increase (payment shock) and how it will affect them. A good time perhaps to consider a new fixed rate?

Finally, a commentator once wrote about consumers carefully researching prices for a new dishwasher or fridge and then shouting from the rooftops when they have saved £20 from shopping around. And, why not? Yet the financial press and advisers alike will regularly lament on the fact that borrowers will allow their monthly mortgage payments to continue regardless when they could be saving multiples of £20 every month! 

69% of all mortgages written by advisers!

The importance of mortgage advice has never been greater and it is an interesting fact that, according to the Council of Mortgage Lenders, 69% of all mortgages were written through professional advisers during the second quarter of the year. This is a substantial uplift on previous quarters and there are probably a number of reasons for this including long delays we are advised are happening with some lenders both in interview availability and processing times. 

The professional mortgage adviser reviews the whole market for you and can identify the best lending options and then deal directly with the lenders central processing units, speeding up the process from application to offer. That said, even in this area we know of at least one lender that is eleven days behind on post or electronic updates. A good adviser will listen to your specific needs and timescales and ensure that they line you up with a lender who will match both. So, if speed is crucial then you may need to consider working with a lender where the rate may not be the keenest on the market but where you get what you want. Your adviser will discuss this in detail with you before you make any decision.

On a different subject, a number of mortgage lenders are looking ruefully at their performance against target for the current calendar year and casting sideways glances at their competitors. At the start of the year, no one was really sure what the effect of the 2014 Mortgage Market Review would have. A number of lenders are, allegedly, well below target and we will probably see a price war in the next few months as they look to gain ground before the year end

Rates are creeping up...

Panic Panic Panic.........ok, so that's a little dramatic!  However, we have seen a number of lenders increase rates over the last few days.  TSB, Halifax, Nationwide, Virgin Money, NatWest and Coventry Building Society are just a few who increased their rates on various product offerings.  We have seen SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) start to creep upwards and as such lenders are re-pricing accordingly.  Despite my headline, I don't believe it is really time to panic just yet.  Many pundits are suggesting middle of 2016 before we see a true rate rise.  Just keep an eye on things if you are looking for a long term bargain.

What we have seen recently are lot of enquiries to remortgage for home improvements.   Increasing the value in your property can involve large renovation, adding a room or two and a general investment in time and builders.  That said, with house prices booming in the local areas, many have decided to look at cosmetic changes.  So up-grading kitchens, bathrooms, redecorations and so on.  Whether small or large, the investment in property can bring rewards to the value and if you are staying put, reward in the satisfaction of home comfort.  Plus a potential large saving in stamp duty too versus moving home!

We have also seen an increase in customers looking to consolidate debt or even look at debt management plans.  Both can sometimes cause issues. If you consolidate unsecured credit in to your mortgage, although your monthly payments may be lower, you may be paying more interest for your debt over a longer term.  With debt management plans, or Individual Voluntary Arrangements (IVA), etc, 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 consider anyone who has been in an IVA unless it has been discharged for more than three to four years. Advice should always be sought before entering in to these types of arrangements or agreements.

Sometimes a conversation with a human being is just what is needed!

Over the last few weeks, we have seen a number of lenders who have post positive half year results.  Many stating that they have increased lending against their previous financial year.  But this is hardly surprising as many didn't want to lend (or maybe were not allowed to!) post the new regulation implementations in early 2014.  However, it is important to run with the positive news and such announcements on half yearly figures show that lenders are now keen to lend and are looking at ways to compete in an active market.  What this means is that end consumers should be able to bag a bargain for some time yet whilst rates remain low and competitive.  Some industry pundits are even stating that it will be the middle of 2016 before they expect any rate rises...

This has also resulted in a swing between the high street and niche lenders.  The smaller lenders are stealing market share from the 'super tankers' on the high street as an increasing number of consumers are requiring a manual and human assessment rather than a computer decision making system.  Despite all of the available technologies in the current climate, sometimes a conversation with a human being is just what is needed!

From where we see it, on the front line, I would dare to suggest that consumer confidence appears to be the highest it has been for some considerable time.  People are selling, people are buying and many are remortgaging!  August is never normally this busy!  It is not just one geographical area either, although does appears to have a leaning to the south. What does seem to be apparent is that the demand is for ‘all types of mortgages' for all types of people!   From the straight forward, to the complex, to the commercial shop front, to the credit issues, to the first time landlord investing in their first Buy to Let property and so much more, we are seeing many different scenarios.

Finally, Nationwide House Price index has indicated that House Prices increased in July by 0.4% compared to June and 3.5% over the last twelve months.  The average house price now sits at £195,621.

New entrants to the Buy to Let market!

With the rental market continuing to be buoyant, and with no signs of declining, the mortgage market is active as lenders recognise the huge demand for Buy to Let (investment property) mortgages.   These can be from a first time landlord, right through to the experienced House of Multiple Occupation (HMO) / Student Let portfolio investor.   Deposit requirements can be as low as just 15% and as this sector has also recently been through a price war, rates are competitive (some now sub 2%) and may also come with packaged deals, such as free valuation and free legal costs.

But with so many lenders now in this sector, rates may not remain the main area of competition for much longer! Some lenders are also reviewing criteria in order to attract new business.  Many lenders historically would not allow first time landlords, anyone earning an income less than £25k per annum, those who have more than ten properties, or those who may have had previous blips on credit history, to give you a few examples.

However, we have seen recently that criteria and attitudes are being relaxed and lenders are having to compete to attract more business.  There are also a large number of new entrants to this market including Foundation Home Loans, AXIS Bank, Fleet Mortgages and Pepper Home Loans to name just a few.  Each have launched their own niche propositions and are looking to attract a certain type of Buy to Let customer.

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%, normally at a marginal rate of circa 5% and, after costs such as managing agents, this should leave some spare cash to cover repairs, maintenance and landlords insurance. It should also enable a fund to be established to cover the mortgage payment in the event that there is no tenant in situ for a while. Remember that, whatever the deal, lender terms and conditions will always apply.

Delays across the market....and Elephants in Horsham?

Wow, what a week!  It's good and bad news though. The good news is that the mortgage market is really buoyant with good business volumes, product choice at it's highest for some years and properties selling quickly (sometimes before they make the papers and above the asking price). The bad news is that this is causing a number of lenders major servicing problems as they do not have the staff to handle application numbers.  One we know of is working on applications submitted three weeks ago!  We also have had delays on valuations with some surveyors taking up to two weeks to book an appointment.  Unfortunately lenders have agreements with certain surveyor companies and they have to undertake the valuation, no matter what the delay in actually carrying out the appointment.  There is no shame in being open about these delays as they should be taken in to account whether buying, or selling a property and this helps everyone manage expectations. 

That said and even with the delays, now is a good 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.  Terms and conditions will always apply.

Finally, I have to say what a fantastic job Horsham Rotary are doing with the Elephantastic trail!  Over 150 Elephants of all sizes have been bought and decorated by local organisations.  These are now on display and children should follow the safari trails to locate the Elephants nickname with the major prize being a trip to Kenya!  There have been some amazing works of art and I'm sure they will make a lot of money for some worthwhile charities. Search "Elephantastic Horsham" to find out more. The big question is, after the Giraffes last year and Elephants this year, what will be next - Alpacas!?  

Rates to rise towards the end of the year?

The Governor of the Bank of England announced last week that interest rates are to raise, probably at the end of this year or early next.  Although though this is no surprise and it is quite likely that we have all been tentatively expecting this announcement for some considerable time now, very few industry pundits have publicly agreed with this statement, at the time of writing!  

So, if it does happen, what will it mean?  Well, the cost of borrowing will be the first noticeable impact with any mortgage on a bank base rate tracker following the upward trend almost immediately, with variable/discounted rates likely to be closely behind.

For those on vary low tracker rates this may not initially be considered too painful if you consider that bank base rate was in the mid 5% range prior to the dramatic and sustained low rate period which is now longest in modern history.  However, to put it in perspective, given that we live in an area of high value properties and accompanying high level mortgages any rate rise may be more meaningful.  For example, a 1% increase on an interest only £200k mortgage will mean an increase of circa £2,000 per year (£167pm).  This needs to be factored into any family budget. To make matters worse, it is anticipated (by the Governor) that base rate will level out around 2.25% so this makes the maths even more important.

If you are currently on a fixed rate, no change for the term of your deal.  But, you may see your reversion rate (the rate you will move on to at the end of the fixed rate period) increase. 

However, with a reported one million people paying their mortgage by credit card and a further three million people who have never had a rate rise, any movement in bank base rate will be closely monitored to see impacts on the economy and activity as 'normalisation' begins. 

Lenders are actively looking for your business.

There are now nearly 10,000 mortgage products on offer throughout the mortgage finance market. This is a substantial increase from the same time last year and gives a good indication that lenders are actively looking to assist clients with product choice.  A number of new lenders have launched and a number are also in the pipeline awaiting authorisation.

The majority of clients visiting AToM are looking for a longer term fixed rate, although some are still happy to take a short term tracker rate and are confident that rates will not fluctuate too much in the coming months.  There are some good products available with minimal set up costs that have no early redemption penalties at all.  So if you wanted to switch products later on, to a fixed rate for example, this could be done (be aware that most lenders charge product fees on fixed rates).  Some lenders even offer the ability to do both in the same mortgage offering.  Lenders are innovative when it comes to attracting a certain type of business and clientele!  But do remember that tracker rates can go up, as well as down and more recently, fixed rates have been creeping up.

With all new mortgages, a budget planner will be required.  So make sure you know and can advise exactly how much you are spending on almost every aspect of your lifestyle.  Especially make sure you know your monthly costs on food, household expenses, travel, pension and saving contributions and other likely costs such as hobbies, going to the gym, lottery direct debits and more.  Every lender will review your ability to afford your new mortgage, and they make assumptions for coming years, so all direct debits and most entries on your bank statements or credit report will need to be advised.  This is so the lender can make a viable stress test on future rate rises and ensure that you will still be able to afford your mortgage at that time.  Yes, maybe there is a little guess work, but do make sure you disclose all monthly expenditure as the lender will normally want to review your bank statements and will see it all anyway! 

Provide as much info as possible at the outset to avoid problems later on.

Mixed updates from lenders this week as some have increased rates and others have reduced them.  Fluctuations do not always correlate to the cost of the funds to the lender.  Sometimes a lender will increase rates to stem the flow of business and, where needed, allow them to catch up and bring their service levels back to within manageable levels.  A few lenders are over a week behind in processing, but the average seems to be two to three days to turn things around.   Speed is a high priority in the current climates. 

The most important thing is to provide as much information and paperwork at the outset as possible.  If a lender wants three months bank statements showing salary credits and rent or mortgage payment debits, that's what they want.  Two months will not suffice and will cause your application to be delayed!  Our world will not ever be paperless, so be prepared to present all items as required and ready to read a lot of small print!

That said, specialist lenders are becoming more accommodating to difficult and complex scenarios.  This can be on the residential side, where family may act as guarantors and allow a charge on their property in addition to the security property.  Or, it could be a non standard construction type property (as seen on TV), that may not be suited to a high street lender.  Or it could be where a landlord rents out a property to a member of their own family.  This is classed as a 'regulated buy to let' and as such, following regulation changes last year, only a few lenders will consider these mortgage applications types at present. 

Others include mortgages for the over 65s / lending in to retirement (life doesn't end at 65!).  Or development projects from first timers to experienced builders.  Many of these are happening in the local area where empty office blocks are being converted in to flats, etc. 

Whatever your requirements, there's probably a lender out there willing to consider your scenario.

Those in Debt Management Plans and 'Mortgage Prisoner's have help!

Debt Management Plans have had a place in the market during the tough times and have assisted many customers in reducing their monthly outgoings.  In brief terms,  the DMP company arranges a reduced monthly payment amount to the customers creditors.  However, some credit companies will see this as a breach of their original terms and may register defaults or an 'arrangement to pay' status position against the customers credit file.  This has been quite a barrier and has often prevented mortgage lenders assisting the customer with finance. 

As lenders compete for business, we are starting to see reviews of criteria options and some will now look to help those in a DMP up to 75% of the property value.  The DMP must be paid off as part of the deal.  If the DMP was paid off more than 36 months ago, then the lender will look at mortgage options up to 85% loan to value.  There are a myriad of terms and conditions, as you would expect, but this is a great step forward and now opens doors to customers that may not have been helped before.

With this in mind, we have also seen at least one lender looking to help those who could be classed as 'mortgage prisoners'.  This could be where a customer is coming to the end of the product term and due to revert to the lenders variable rate.  But since their last mortgage arrangement, new regulations have been implemented and the customer may no longer qualify for the same type of deal. Affordability calculations may have changed or another reason may affect their new mortgage options.  Therefore the customer may be stuck with the current lender and unable to move.  Some lenders have looked at these types of customers and launched 'transitional' mortgage options.  These lenders look at moving customers away from their current lender, on a pound for pound remortgage, with the minimal of paperwork and no requirement to undertake additional affordability assessments where no further funds are being raised (and assuming no income changes since the previous arrangement).  This assumes that the customer has conducted their current arrangement in an exemplary manner of course! This allowance to the lenders from the regulator is only available until 2016, when the EU Mortgage Credit Directive is implemented, so be quick!

Helping First Time Buyers..

First time buyers have been given a huge helping hand this week with the launch of a new 100% mortgage scheme. This works using the process of a legal charge being registered against immediate parental property, effectively using the equity as a guarantee. However, the key point here is that the applicant’s income must be sufficient to cover the whole of the mortgage on their own. Up to 80% of the value of the mortgage is charged to the applicants property and the remaining amount is charged against the parents property. The charge on the parental property, plus any existing mortgage, should not exceed 75% of the total borrowing on that property. What this means is that, for those with good income, supportive and accommodating parents yet little or no deposit, a property purchase is eminently possible enabling clients to get a foot on the property ladder. Good to see such product innovation!

The Government recently announced an increased availability to council tenants enabling more of them to purchase their own properties and this has resulted in a large number of enquiries for Right to Buy mortgages. Right to Buys often result from a local council selling the subject property to an existing tenant and at a discounted price. This discount can be up to £75k (£100k in London) and tenants must have been with the council for five years or more to obtain the maximum discount level. Some lenders will allow borrowing of up to 100% of the discounted sale price, and possibly slightly more if the extra funds are to be used purely for home improvements. If you re-sell your home within five years you will usually have to repay some, or all, of the discount you received. However, re-mortgaging is usually allowed during this time period. This is covered under the term 'Pre-emption Clause'

The other big hitter for first time buyers is through Shared Ownership Schemes, normally provided through designated 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.

These 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 differing customer types, so always seek advice.  Especially as some of these lenders may not be household names.  But that shouldn't deter you as their volumes are hugely on the increase and they are great lenders to deal with.

Non verbal communication in mortgages

I guess that one thing we all agree on, like it or not, is the ever increasing reliance upon non verbal communication.  It is surprising just how much we rely on email, Twitter, Facebook and  a growing myriad of similar links to deal with almost everything we do these days. Even to the point of trusting people we never meet, including banks, solicitors, shops, trading platforms and, dare I say it, future life partners too!

More often than not, this leap of faith will prove to be successful and I am an aficionado. Yet papers remain full of stories about customers who have received something they did not order, or maybe where they are left to wonder how they got it so wrong ending up with items of the wrong shape or size, possibly including the life partners too!

So how is this relevant to the mortgage sector?  Simply that the mortgage still remains the largest financial transaction that a person will normally make during their lifetime.  Some will enter the mortgage market several times during their working life, often in increasing amounts, and it is this that I find intriguing when electronic information transfer is used to manage such life changing business.

My message is not that there is any particular reason not to transact electronically.  More that when the matter is complex in nature and crucial to financial comfort and sanity, then surely it makes sense to talk to someone who knows the innermost workings and product criteria and who can provide you with the degree of comfort you need before you start parting with money. In the case of a mortgage, this may include a mix of application, valuation and legal fees and this is just to get you started!

Thinking further, you will have agent’s fees if selling and removal expenses, and if buying, stamp duty, disbursement charges, utility connection charges and more..

These can most, if not all, be conducted online but all are good reasons to talk to someone along the way to help pull the strings together.  And yes, there may sometimes be a fee to pay for this but you may find it all worthwhile!

Keep your current mortgage and look at a secured second charge?

So you are looking to raise some funds for a home improvement exercise or maybe to purchase another property, yet your current mortgage is a on a superb, competitive rate and you really don't want to change it.  Your current lender has offered a further advance, but you want to explore other options.

That leads us to the secured second charge market, also known as 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 usually start from £3.5k and now range right up to £2.5m!  There are also no 'up-front' fees to find although costs for valuations and legals (for example) are added to the advance.

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, sometimes up to 95% of the property value.

The secured loan is normally repaid over a shorter term than a standard mortgage, usually 3-7 years, but the term can be longer and up to 25 years, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings, but can start as low as 4.95%.  

This market is predicted to grow dramatically in 2016 when a new EU Directive is implemented.  In short, when a customer wants to remortgage to raise additional funds, the intermediary / mortgage broker will need to demonstrate the best outcome for the customer. This means not only looking at a full remortgage on a first charge basis, but a comparison with an appropriate secured second charge loan allowing the customer to keep the existing mortgage or a further advance with the existing funder.  Although the Directive is still a way off, the FCA principles already apply to firms and individuals so best outcomes and best practice for borrowers are at the forefront of any advice and recommendation. This demonstrates more than ever the need to seek professional advice to achieve and meet your needs and requirements!

Stress tests can make quite a difference on your affordability

The election is now fading into the distance and we can concentrate on the future!  I am pleased there is to remain a level of continuity for our sector as it has been a very positive few months in our market and we need that to continue.  Funding is on the increase, competition is rife and rates are at their lowest for some time, with no immediate sign of any increase.  The remortgage market is buoyant and many are taking advantage of the lenders need to attract new business with many lenders offering free valuations and free legal costs. 

However, the main issue is still that demand for new houses outweighs the numbers being built and this will be the Governments biggest and immediate headache, along with possible lack of materials and manpower.  Time will tell.

The other issues tend to be around lender affordability.  Difficult to detail when I have minimal words, but in the main, lenders will stress test all mortgages against a possible rate rise and underwrite the customers based on their ability to pay at the higher rates.  The regulators want lenders to ensure the customer can afford their mortgage for at least the next five years.  So, for example, a shorter term deal may be stress tested at a pay rate of 3% plus 3 percentage points higher than the prevailing rate at origination, so in this case 6%.  Whereas a five year (or longer) deal may be stress tested against the pay rate, which might only be 3 or 4% in current climates.  This can make quite a difference when it comes to calculating the affordable loan amount over the first five years of the loan, subject to the lenders terms and conditions. 

Longer term fixed rates can be good for the end consumer as they should get the loan they want, but also the monthly payments remain fixed for the next five or more years.

There are a number of attractive five year deals, some six and also ten year deals currently available.  Potentially great value if you know your plans for the longer term and prefer to fix your monthly payments.

'Remortgage ASAP or lose your chance?'

With everyone talking about the arrival of Princess Charlotte or the General Election, I feel compelled to mention both this week.

There's no denying that the public enjoy a Royal baby!  Not that William or Kate will need to, but for most, an expanding family normally leads to an increase in requirement for space.  Many may have upsized beforehand and bought a bigger property.  Or they will be looking to increase space, either via extending the existing property or maybe a loft conversion.  Either way, there are a variety of ways this might happen and, if it is you, then your first port of call should be to your current lender to see if they will increase your current borrowing.  Or shop around and see if other lenders might offer you a better alternative.  Depending on the size of the funding required, a secured second charge may be more suitable.  This might be a shorter term deal and means that you can keep your current mortgage untouched, especially if you already have a superb interest rate.  As always, do your homework and speak to an independent adviser!

By the time you read this, the Election will be over and results well on the way.  Many people have asked me if things will change depending on the results.  Quite simply, whatever happens and whoever is in power, they will be under extreme pressure from the housing market.  The target number of new houses are not being built, a generation of mortgage holders have never had an interest rate rise and some are saying that over 1m people are paying their current mortgage by credit card!  That is all on top of a buoyant housing market; rates still at their lowest for some time; the need to be able to maintain a healthy flow of first time buyers and with the European Mortgage Credit Directive (tougher affordability checks) less than a year away! These all combine to suggest a difficult task for whoever holds the balance of power!

However, for those able to review their mortgage requirements today, there is huge competition for customers in the fixed rate arena.  With both three and five year fixed rates now sub 2% and even Martin Lewis (Money Saving Expert) saying last week 'Remortgage ASAP or lose your chance?', the onus is on you to make sure you know your current rate, when is it up for renewal and making sure you change.  A huge number of people simply don't and might be paying more than they need to!

300 articles later...

As I pen my 300th column for the paper, I do wonder where the years have gone and what a totally different market we are now in compared to my first column in 2008!   In fact, that actual column highlighted the 'stormy waters ahead' and that 'this would be a journey we wouldn't forget in a hurry'.  What I, like most, didn't realise is that seven years on, we would still be in such a financial retraction!

However, the positives are that we are in the midst of a very competitive high street price war which has just seen a high street lender launch a sub 2% five year fixed rate deal.  This will spur on further reaction over the coming days. 

We've also seen lenders looking at assisting those with just a 5% deposit and having minimal or very small fees, to help First Time Buyers and Next Movers.   

We're also seeing lenders look at criteria to attract business, rather than just a low rate.  This could be a key part of the mortgage market moving forward.  A huge number of people will be ignored by computer technology and credit scoring decision making systems. But this does not mean they should not obtain mortgage finance, it just means they don't meet all of the rules entered to make that particular decision!

I often wonder if we are on the way back to as it was in 2007/8.   Rates couldn't go much lower then either and criteria played a huge part.  Fast forward to today and again rates can't get much lower and lenders are looking at gaps in the market where a criteria change or tweak might give them the competitive edge.

However this time, we also have a housing shortage problem.  The demand for houses is outstripping supply and this could lead to an increase in house prices.  First Time Buyers are already finding it tough enough without the additional stress of a lack of properties.  Let's hope someone is looking at addressing this issue and has a balanced approach to the market. 

Which leaves one last thought - I wonder what the market will look like in another 300 articles time?

Uninhabitable property, self build or full refurbishment required?

Just because a property is run down or even classed as 'uninhabitable', does not mean you cannot get a mortgage on it.   Or if you are intending to purchase a property to let out, but it's currently in an 'unlettable' condition.  Lenders will cater for these scenarios (dependant on the exact type of works required!).  In the main, the work required needs to be cosmetic - a redecoration, maybe a new kitchen or bathroom.  Many now offer 'refurbishment' loans where the work must be carried out within a period of time after purchasing the property, normally three months.  Others will allow the works to be completed, revalue the property and lend based on the newer property value.  Each lender will work on the valuers comments once they have visited the property and adjust their offerings accordingly.  Just because the high street or your current lender says no, does not mean that it can't be done!

As the local area continues to become a 'new homes exhibition', there are a number of lenders also assisting customers with more private projects such as development and self builds.  Normally the customer will purchase a property in need of work, knock it down and rebuild, or extensively renovate their existing.  Either way, the lender who funded the original purchase will need to be advised and aware of all works as you will be altering their security!

On a self build, the lender will issue the funds on a stage basis. Normally once the foundations have been laid, property built to eaves level, made watertight and so on.  At each stage a valuer will review and advise the lender of progress and to release payments.  If the property has increased in value as a result, you will tend to find the lender may lend on the Gross Development Value (the end value).

On a full refurbishment, again, the lender will want to know the plans and may lend in stage payments against the end value of the property, depending on the extent of the works involved.

The lender will require sight of all planning permissions and estimates of costs involved before lending any funds.   Seek out a local architect to assist you with plans and costs and always make sure you set out your budgets from the outset.

Lenders are targeting the Self Employed..

Mortgages for the Self Employed have been sparse over the last few years.  Despite providing a huge part of the economy, lenders have been reluctant to lend to this area.  However,  lenders have now recognised this and are looking more positively to assist the 4.5m self employed (figures as at end of 2014).  A few lenders will now even offer mortgages to those with just one years accounts (up to 85% of the property value), although, in the main, the normal requirement is to have two years audited accounts.  In all instances the lender will need to prove suitable affordability and a deposit will be required, but this is a huge step forward from just a few months ago. 

There are also lenders lending in this arena that will cater for customers who may have a missed mortgage payment in the last 12 months or may have Defaults and/or County Court Judgements (CCJs).   Terms and conditions apply, and lenders must prove ‘responsible lending’, but where there is demand, there will always be supply.

The other area that continues to be on the increase and something of a headache for lenders is ‘lending in to retirement’. As we all know, life doesn't end at age 65-70 and neither should it on the high street!  Often, retired people have managed their finances successfully over the years and enter retirement mortgage free.  At the same time, many, whilst having no mortgage, also suffer from reduced income and there is a saying in our profession that it is not always wise to have everything tied up in bricks and mortar and yet have nothing to spend.  Others may wish to continue their mortgage past normal lender retirement age, whilst they may still be working.  There are schemes where equity can be turned into a mortgage (not equity release) and where off-spring may be able to assist with the repayments in order to secure and protect their inheritance whilst also ensuring a comfortable retirement for their parents.  This is not right for everyone but it is certainly worth talking to a qualified advisor to review all possibilities.

You will be asked to prove you have finance in place.

When buying a property, one of the most important things an estate agent will require is proof that you can actually afford to purchase the property. Usually this evidence is required early in the process and it can be via any legitimate source (ie it DOES NOT have to come from the agents internal mortgage advisers). In most cases the initial confirmation will be in the form of a decision in principle (DIP) from a mortgage lender which is where all your details have been input on to the lenders systems, a credit search completed and, subject to normal underwriting, the lender (based on the information provided thus far) has agreed to lend you the money to assist with the purchase.

The next step, once you have had your offer accepted, is to fully apply for the mortgage. This will include the lender underwriting your mortgage application, reviewing payslips/accounts, bank statements, ID and other documentation as required. The lender will also move to instruct the valuation. This is where a surveyor will go out to the subject property and confirm it is suitable security for mortgage purposes , fundamentally acting as the lenders eyes.

Once the lender is happy with the underwrite and the valuation, a mortgage offer is issued and a solicitor appointed to deal with the legal process through to completion.

In the main the process is pretty straight forward, but it can be daunting . You should be prepared for any lender to request as much information on you as possible . This enables them to make an informed decision whether or not to lend you such a large amount of money. The lender may also calculate that you can afford the mortgage over the next five years, as they anticipate rates may rise!

Finally, make sure you ask questions and are comfortable you understand everything you are signing. As you would expect there is quite a lot of paperwork involved in the mortgage process and it can be quite a read! However, this is the biggest debt you are likely to take on. Some rates will have early redemption penalties to change or switch products, so you need to get it right first time. Don't be shy to ask and if in doubt, seek independent advice.

The Budget introduced - Help to Buy ISA

Being so close to an election, last week's budget was always going to be aimed at voters and this has not disappointed.  What we have also seen is an interesting new innovation and the Help to Buy ISA is warmly welcomed. 

The day to day reality is that First Time Buyers are struggling to get on the property ladder.  The biggest stumbling block is normally around lender affordability, closely followed by the deposit required.  Of the limited details available at the time of writing, for every £200 saved in to the Help to Buy ISA, the Government will add an additional £50 in an attempt to 'work hand in hand' to help consumers purchase their first property (to a max of £3k).  Accounts will be available through banks and building societies from Autumn 2015 and the bonus payment is paid when you actually buy your first home. Having seen some budget figures, it is suggested that this will create a rather large £835m spend in the Governments figures by 2019/20, so it will be interesting to see what deadline they put on purchasing a property after the scheme ends in four years time.  The bigger question is where are these houses?  Already there is a large shortfall of houses across the country, especially with new builds, and an increase in demand is probably not going to help.

The Chancellor stated at the outset of his speech that this would be a "budget for the homebuyer, the self employed and business owner", all of whom have struggled over the years to easily obtain mortgage finance.  More recently, with increased competition across the market, we have seen some lenders beginning to relax criteria to assist these particular types of customer.  Flexibility was also given to 5m pensioners who may access their annuity pots from April 2016.  This, in addition to the new pension rules coming in next month, will create an increase in demand for property sales.  But before you go withdrawing your life savings, seek independent professional financial advice.  If funds are to be withdrawn to put towards property purchase, be aware that not all lenders will look to lend to those already enjoying retirement.

Credit Scoring - most lenders do it!

I haven't mentioned it for a while, but it certainly is causing a lot of customers an issue.  Credit scoring!  This is an assessment on all available financial information and calculates a 'score' for the lender.  It also includes a search on your overall credit history covering, in the main, all of your financial transactions over the last six years.

Most lenders credit score applications to try and assess your ability to repay any loans.  This will take in to account many factors including the amount of credit you have, whether you are on the electoral role, your recent payment profile on any existing credit and the number of recent credit searches you have on file.  Nearly all financial institutions will register a credit search against you.  So, if you have recently updated your car insurance, home insurance, taken out a mobile contract and just got a new credit/debit card, that’s probably four searches in a short amount of time! Be wary that some 'comparison sites' may have also searched you just whilst seeking a new insurance quote.

If the lenders computer says ‘no’, you will tend to find most high street lenders doors shut to you.  But fear not, if you have a reasonable deposit and can prove all income, there are lenders who do not credit score, but will manually review and underwrite affordable applications on an individual basis. 

I always suggest 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.

First Time Buyers, Contractors and New Lenders!

A fantastic product has been launched aimed at First Time Buyers.  The 95% loan to value product has a discounted rate for two years from the lenders variable rate and no lender arrangement fees on completion.  Comparing this to an average range  mortgage, this is a saving of around £1k.  The lender has no early redemption penalties so the customer can move away at any time and it has a £500 cash back.  This is a good entry product for those looking to get on the ladder with just a 5% deposit and great to see lenders are seriously looking to assist first time buyers positively.

Contractors have also been targeted.  For those working on fixed term contracts, who have a minimum of 6 months left on the current contract and a good history, it is possible to get up to 90% of the property value.  In the main, the lenders will work on daily rate, multiplied by five days and forty eight weeks to work out income.  This is then used in the lenders affordability calculations.  Some lenders have no early redemption penalties so the customer can move away at any time.

The newly launched Foundation Home Loans have already made some changes following their launch criteria on their Buy to Let offerings.  The specialist lender will now allow applications from customers who are in rented accommodation (but own other properties), have income from various sources (i.e. pensions, investments, etc) and deposits are now allowed to be gifted from immediate family members. All positive enhancements.

And, finally...having spent a fantastic day at the inaugural British Specialist Lending Senate at Brooklands Hotel last week, attended by over forty lenders, brokers and specialist mortgage packagers/distributors, I can safely say that this area of the market is set for huge growth over the coming months.  As volumes increase on the high street, more customers will be turned away and thus need the assistance of a specialist party to achieve their financial needs.  The computer says 'no' scenario is not a normal phrase within this sector as many lenders credit search rather than credit score.  Therefore human acceptance is the key to decision making on each case's merits rather than ticking a box on a computer screen.  This can only be a good thing for the end consumer and reiterates that there is life after the high street.

MMR - transitional provisions!

It's been nearly a year since the Mortgage Market Review (MMR) was implemented across the industry, to enhance consumer protection.  Many of these rulings have been embedded nicely and, quite rightly, everyone who speaks with a customer must hold the relevant mortgage qualification.  However, the one ruling that seems to be taking a little longer to implement affects the subject of Transitional Provisions.  So what does this mean?  In short, there are provisions in the MMR that allow lenders to provide a new mortgage or deal to customers with existing loans who may not meet the new MMR requirements for the loan.  The borrowing is not normally able to exceed the amount of their current loan (this decision remains with the lender).  Transitional Provision was designed to help customers who think they have become 'mortgage prisoners' due to a change in lending criteria since MMR. This includes items including strict income multiples, or interest only customers for example.  Each lender should now be offering the ability to assist existing customers, or attract new customers without the requirement to meet all of the new and slightly tighter MMR rules, including waiving affordability checks for customers who have a good payment history and no material changes.  What you are not seeing just yet is lenders advertising this ability.  Always ask!

Nationwide House Price index suggest that UK house prices fell by 0.1% in February, compared to a 0.3% increase in January.  The average house price now sits at £187,964 (up from £177k in 2014).

And finally.....a huge thank you!  In the recent Mortgage Strategy Awards 2015, the mortgage Oscars of our industry, AToM was voted a fantastic 3rd in the Best Specialist Mortgage Broker/Distributor.  For such a small company in a huge national industry, this was a great achievement and credit to the superb team we have at AToM!

Competition in the market is fierce..

I've mentioned a number of new lenders launching in to the Residential and Buy to Let sectors recently, and a number of new lenders are lining up for launch over the coming months.  It is an exciting time, not just because rates are so low and activity is increasing, but because lenders are now looking at new market areas and criteria enhancements.  One such lender recently launched in to the Buy to Let sector, and whereas the normal requirement is for customers to have two or three years self employed history, this lender has no minimum term requirement at all.

Whilst rates remain low, competition in the market will remain fierce and this changed approach has become apparent across all sectors of the market, including both Bridging and Commercial.

Bridging Finance (now also known as short term lending) is money to be used in the short term to facilitate a financial transaction which has either an urgent or short lifespan and which is primarily geared to a property transaction. The most regular type of transactions include: a property being purchased at auction: the purchase of a new property whilst the current one is still being sold - usually when downsizing: acquisition of a property which needs substantial renovation before it is suitable for a traditional mortgage or payment of an unexpected expense whilst more regular finance is being arranged.

There are a myriad of other reasons for which short term lending can be applied and each application is looked at on its own merits before a lender will agree to assist. The best way to look at this is as a means to an end. These lenders will need certainty on the exit route (how will they get their money back?) and they will always insist on an agreement being in place from a traditional mortgage lender to provide a mortgage, at a given time and once any requirements have been fulfilled. So, short term lending is designed to fulfil the need or desire to act quickly. We have seen funds drawn in 48 hours from application! Beware though, this type of lending and associated fees does not come cheaply and it makes sense to exhaust all other channels first!

Commercial loans tend to be looked at by specialist lenders, geared more towards high street premises/shop fronts, development opportunities, pubs, conversions from residential to multi use properties right up to multi-million pound office blocks and  hotel complexes.

"Best time ever to take out a mortgage" say the Nationals

The national press were spouting some fantastic headlines last week.  Especially one who ran with a front page stating 'Best time ever to take out a mortgage'!  This of course was fantastic news for the lenders and also mortgage brokers, who were referenced in the article.  

But is it really the 'Best time'?  Ten year and five year fixed rate offerings are in abundance and the lowest I can remember.  What we are also seeing, and have done for some weeks now, is a fantastic rate price war on the high street.  For the right deal, right income, right borrowing percentage of the property value, we're looking at short term deals only just over the one percent mark.  If we'd have been told this would happen a year ago, we might have laughed in disbelief!  In addition, the Bank of England governor in a recent speech even alluded to a possible rate cut after suggesting inflation will become deflation, causing yet more stir across the market and pundits to push back rate rise estimations even further, well in to 2016.

So, there seems to be no right or wrong answer to the question ‘is it the Best ever time to take out a mortgage?'  There is only what is right for your individual circumstances and budgets.  One thing is for sure, rates will change and they are so daily currently!

Finally, AToM are delighted to announce the launch of a new specialist lender, Foundation Home Loans. With just a small number of launch partners, FHL will be offering Buy to Let products across the market with a number of niches including no minimum income requirements, some credit history issues considered, max age 85 at the end of the term, no credit scoring and no early redemption penalties on some products.  This is an exciting time and we welcome FHL to the market and look forward to working with them.

Falling in love.....with long term fixeds?

With ten year fixed rates now below 3% and five year fixed rates falling below 2.25%, the market is awash with activity.  But is the nation really falling in love with long term fixed rates?  Right now, I'd say no.  Despite valentines day being around the corner and Fifty Shades of Grey ready to smash all box office records this weekend (don't get why!?), people are ignoring the romance of their finances and are happy to let their biggest monthly expense carry on at a gamble and remain loyal to their current (lending) partner.!

It's surprising how many people don't review their mortgage rates frequently.  Many still believe that rates can drop further and some just really can't be bothered with the hassle to change.  The reality is that we are on a knife edge and rates are predicted to increase, but the mortgage pundits are now suggesting 2016 is more of a realistic expectation for a rate rise.  As such, many are now taking advantage of the opportunity to remortgage with a free valuation and free legal costs but are chancing their arm with a short term tracker rate (lower rates than fixed, but can fluctuate).  Whatever your risk appetite, the options available now are likely to be better and cheaper than sitting on a lenders standard variable rate or reversion rate.  Don't wait until tomorrow, seek advice and save!

Another reason people don't switch is because they think they are too complex to be helped.  In a rapidly expanding market with highly competitive rates, many lenders have looked at other ways to assist customers rather than just pay rates.  This can include criteria such as types of property, types of customer, income make up, guarantors, charges on more than one property and so on.  The likelihood is that you are not alone in your requirements and there will be a lender out there willing to assist and who probably needs you just as much as you need them!   

Small deposits, LTVs and credit scoring

You may have heard the term LTV a number of times when it comes to mortgages.  This stands for Loan to Value and effectively the definition is the amount you are borrowing compared to the value of the property.   This is especially key when a lender is a assessing your mortgage, as a higher LTV will create more of a perceived risk to the lender.  Mainly due to the fact that if house prices dropped sharply, the lender may not get their full loan amount returned, should they need to repossess the property for whatever reason.  Some lenders will charge a separate insurance for such high borrowing, normally called a Mortgage Indemnity Guarantee or Higher Lending Charge.  As such, you might find that a person who is borrowing 95% LTV and just investing a 5% deposit will attract the higher mortgage rates versus someone investing  a 25% or larger deposit.  Usually these are stepped, so up to 60% LTV, rates will be around 1% cheaper than those borrowing up to 70% LTV.  Then in turn these tend to be 1% cheaper than those borrowing up to 80% LTV,  and this will be cheaper than the next 5% LTV increase, and so on right up to 95% LTV.  So, in short, the more you can save for a deposit, the lower the interest rate you will probably receive from the outset.

This also is the same with credit scoring.  Credit scoring is one of the most widely used means to assess a customers ability to obtain a mortgage.  If you have had a number of recent credit searches for home insurance, car insurance, mobile phones, etc, this may affect your ability to achieve the best rates available to you.  In some cases it might also affect the amount of loan offered to you.  So make sure you have seen you credit report (experian, equifax, noddle), and know what appears on there.  This is your financial history to any lender and should be treated as your CV to a prospective party!  Try and keep payments up to date as anything within the last six years will probably be visible and may affect your ability to borrow.  However, if you do fail a lenders credit score, don't give up.  There are an increasing number of lenders willing to assist (depending on the nature of the decline) and they will also manually assess. A human making the decision, rather than a computer. 

Secured loans are not as expensive as you think..

I'm finding it a really good time to be in mortgages!  Rates are low, customers need professional assistance more than they ever have done and competition in the market is at it's highest for some years. This is across all areas of the market place from Residential Mortgages to Buy to Let, and Bridging Loans to Secured Loans.

In fact, the latter has seen a large increase in demand. 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 usually start from £3.5k and now range right up to £2.5m!  There are also no 'up-front' fees to find although costs for valuations and legals (for example) 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, right up to 95% of the property value.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer and up to 25 years, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.  

This market is also predicted to grow in 2016 when a new EU Directive is implemented.  In short, when a customer wants to remortgage to raise additional funds, the intermediary/broker will need to demonstrate the best outcome for the customer and not only look at a full remortgage on a first charge basis, but compare with an appropriate secured second charge loan allowing the customer to keep the existing mortgage or a further advance with the existing funder.  Although the Directive is still a way off, the FCA principles already apply to firms and individuals so best outcomes and best practice for borrowers are at the forefront of any advice and recommendation. This demonstrates more than ever the need to seek professional advice!

More rate fluctuations and lenders dislike payday loans!

Rate fluctuations seem to have been rife over the last few days as lenders continue to compete for business.  Barclays have cut some Help to Buy rates by up to 0.7%, Accord Mortgages cut their five year fixed rates by up to 0.2%, both Skipton Building Society and Santander launched their lowest ever two year fixed rate deals whilst The Mortgage Works (the Buy to Let arm of Nationwide) has launched the first ten year fixed rate mortgage for Buy to Let customers.  This is all good news for the end consumer but also shows how comfortable lenders are in promoting fixed rate monies over variable rates.  To me, this is in line with the general market consensus that the Bank of England base rate is probably not going to change for some time yet.  

Affordability plays a huge part in a lenders decision to assist customers with mortgage finance.  All lenders will look at the customers ability to repay any loan both now and stress tested to higher rates in the future.  As a result, some lenders have restricted the maximum they will lend to customers depending on their deposit.

This week, we have see Woolwich cap their income multiples for all loans over 80% of the property value.  For anyone with less than a 20% deposit, income calculations will now be a maximum of 4.5 x income (previously this was up to 5.5).  This is possibly as a result of recent Bank of England stipulations that only 15% of a lenders mortgage book may be loans with more than 4.5 x income calculations.

And finally, the news streams are saying this week is one of the busiest for customers looking to take out payday loans to pay off post Christmas debts.  I can't advise you either way, but I will say that if you are looking to take out a mortgage in the next twelve months, and you have had payday loans, be aware that lenders are likely not to assist you.  Payday loans are treated much like adverse credit but lenders are more likely to accept someone with historic adverse than someone who has taken out payday loans.  Homework is therefore crucial! 

Activity is high and criteria is changing!

A number of lenders have launched ten year fixed rates!  One even below 3% (up to 60% of the property value).  This is a bold move by the lenders but attractive if you know your movements are going to be minimal over the next ten years.   However, the expectation that the Bank of England base rate may stay at its historic low for some while longer yet might encourage more people to consider a variable or tracker type mortgage rate over a long term fixed rate.  It's a difficult decision to make.

According to the Halifax, more borrowers purchased their first home last year than in any year since 2007.  Some 326,500 first timers purchased a home in 2014, up 22% from 2013.  The lender also reported that first time buyers accounted for 46% of all mortgaged house purchases last year.

Halifax House Price Index suggested that house prices rose at their slowest pace for 11 months in the three months to December.  The average house price hit £188,858 last month, representing 7.8% growth from £175,193 in December 2013.  On a monthly basis, prices grew 0.9 per cent from £187,197 in November and the lender says it expects house prices to grow between 3% and 5% in the next year.

Metro Bank have launched in to the Buy to Let portfolio arena.  As well as looking at individual properties to let out, the lender will now consider funding up to 25 properties with a maximum loan of £5m.  Terms apply but for this type of investor, competitive, long term and flexible funding can be a scarce resource and therefore this is a welcome addition to funding options.

And finally, good news!  Charter Court Financial Services, who currently own mortgage specialist lender Precise Mortgages, has been granted a banking license.  The new bank, which will be called Charter Savings Bank will launch in the first half of 2015 and will be a welcome new addition in the sector.

My wishes for the year ahead..

I didn't make any New Years resolutions, purely on the basis I very rarely manage to keep them!  But if I were to make a wish list for the mortgage market, it would include Lenders becoming more lenient to the self employed, more lending for First Time Buyers and the over 65's and that we could find more builders! The latter point may not enthuse everyone, especially on a personal front living locally, but the economy undoubtedly needs more house building.

That said, there does appear to be much building work going on locally, mainly by large property developers. In addition, we are seeing many enquiries for those looking to build their own dream home. Many have been enquiring about mortgages to buy a property, knock it down and build a new one in the same location.  These are normally called Self Build Mortgages or Development Projects.  Others are looking at substantially renovating their existing properties.  If you are considering either of these, have a chat with a local architect first to see if your plans are realistic possibilities. They will have a good idea as to what the local Council Planning Officers will accept and of course, what they will reject!   Lenders then may look to lend funds on a stage payment basis. Stage one might be the foundations, stage two might be ground level and so on.  Each stage would require sign off by the buildings inspector, and often the lenders own valuer, then funds would be released.  The lender may not lend the full build amount, so be prepared to put in a reasonable deposit, especially at outset to demonstrate your own commitment.  For extensions and renovations, it may well depend on the size of the work and what funds are required. 

Some of the lenders in this sector may not be household names.  As many lenders fight for customers business in a tight market, we are seeing some of the smaller lenders offering market leading rates as well as niche products to build up their portfolio and attract new business.  Nevertheless, they are still there to lend and it is always worth shopping around before committing.  Competition can only be good for the end consumer.