Flat market predicted for 2018. although Technology will play a big part. Have a great Christmas!

So, as I pen my last column of the year, I reflect on a year that has had many ups and also many downs.  We can’t ignore the current housing shortage or the severe lack of help to first time buyers, even allowing for the recent stamp duty changes.  On the upside, and despite the bank base rate increasing, there are still plenty of good rates to be had and we’ve seen a good number of new lenders launch.  All great news.

2018 is set to be another flat market, with overall mortgage volumes estimated to remain circa £250bn.  However, with the onset of technology and more specialist requirements, the mix of the market is set to change, and many lenders will fall short of their targets, unless they evolve with the digital era.  It really is a case of watch this space as some lenders may just get left behind.

Those who will win will be the ones offering quality technology, but also the human touch for those who prefer or need it.  Sometimes, people just want to talk to people.

On a personal note, thank you for reading my column, it is appreciated. Mortgages can be a dull subject and I’ve tried to provide an unbiased insight to what happens in the mortgage world (and tried to keep it upbeat!).  However, I’m looking forward to a couple of weeks without a production deadline to meet!

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, completions and headcount in the AToM team located between our two Horsham offices.  They are a truly awesome and knowledgeable group of people.

We were honoured to be nominated in a number of awards this year and win three major accolades including Best Bridging & Commercial Broker at the Mortgage Strategy awards, Best Use of Technology in the National Mortgage Adviser awards and most recent, Best HMO Distributor from Precise Mortgages.  Thank you to everyone who voted for us!

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!  Bring on 2018!

AToM - Best Buy to Let Distributor for HMOs 2017!

There are many awards issued throughout the year in various industries.  Some you are nominated for.  Some you can voted for yourself.  Others are awarded to celebrate the volume and quality of the business you produce.  Thankfully, the latter applies to the latest award that AToM has just received.   At a lavish awards ceremony held at the fantastic Weston Park Stately Home in the Midlands, AToM was confirmed as the Best Buy to Let Distributor for HMOs (Houses of Multiple Occupation) in 2017 from specialist lender Precise Mortgages.  This was superb recognition for the amazing and highly knowledgeable staff we have at AToM and specifically those who specialise in the Buy to Let sector.  Well done team!

I mention credit scoring/searching quite a bit, but it really is so important in the current financial world when lenders are deciding to lend to you, or not.  Most lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile on any existing credit.   The number of recent credit searches you have on file will also have an impact.  So, over the festive period, just be wary when getting quotes for car or home insurance, mobiles, etc that each of these will register a search against you, especially if you’re planning to review your mortgage in the near future.

We have seen a number of good product innovations during the last few weeks.  One that sticks out is that Precise Mortgages have recently launched a new buy to let that allows the customers personal income to top up any rental shortfall.  Usually the mortgage on a buy to let is calculated on the rental it achieves. Occasionally this may not achieve the loan required.  So, to allow surplus income to be used to ‘top this up’ is a great addition from Precise. 

The Buy to Let sector generally is becoming very competitive and despite an increasing number of options and new lenders launching in to the market, demand is still increasing.   Whilst first time buyers struggle to get on the property ladder (hopefully the recent stamp duty changes may help?) and savings interest rates remain low, many continue to invest long term in to property and there's no immediate reason why this should change.  However, with all of the recent tax changes on Buy to Lets, you should not only seek professional mortgage advice, but also tax advice from an accountant who understands property.  Get it right first time.  

How much can I borrow?

One of the most frequent questions to start a mortgage interview tends to be around ‘How much can I borrow?’.   Only a few years ago, that could easily have been up to 8 x income with the minimal of fuss.  Oh, how things have changed, and rightly so!  Those were times with little control and the lengthy recession bore testament!

Today it is so much more intense!  For example, a lender will require to know your monthly budget spend figures, right down to every direct debit on your bank statements, including council tax, insurances, mobile phones, lottery payments and gym membership!  From these monthly outgoings, the lender will look at affordability and decide from there what mortgage amount might be available to you.  However, on the other side, not only can it be restrictive depending on your monthly outgoings, but it can also be very generous depending on what little outgoings you have!   The lender has a duty to make sure you can afford your mortgage today, as well as when rates rise and specifically to it being considered affordable over a 5 year period.

But this also means that what was once an affordable mortgage may suddenly become unaffordable due to the perception the lender has on consumer spending habits, both historically and projected for the future.  

We have seen the phasing out of income multiples and the introduction of affordability models.   So, no more straight forward 4 or 5 x income discussions.  The amount you can borrow will depend on your monthly net income against expenditure and living costs.  

However, this also works positively for the right loan to value, right affordability and right customer, as lenders are willing to offer a little bit more. 

With the increase in requirements, the time taken in research prior to recommendation for a suitable mortgage product has also increased, as have the lenders own underwriting procedures.  So, beware if you are in a rush!    

Finally, whilst the holiday period is up on us, do take time to dig out that paperwork and come and have a chat.  With rates so low, now might be a good time to be exploring these options and it could be a very beneficial exercise!

HMOs, Ltd Company Buy to Lets and Credit scoring!

There have been a number of competitive launches this week in the Buy to Let sector.  Especially for those buying a House of Multiple Occupation, or in a limited company name.

The more noticeable includes the launch of new products from our friends at Precise Mortgages, designed to assist those looking to purchase investment properties in a Limited Company name.  With Buy to Lets, the loan tends to be calculated based on the rental income achievable. If the product is not a 5-year fixed rate, then this is required to be at a nominal rate of, circa, 5.5% and with rental required at up to 145% of that figure.  With the Precise product, the lender will use the pay rate of 3.09% to calculate the loan, as it is a fixed rate for five years, and with a 125% rental requirement, depending on individual circumstances.  This makes a huge difference to the loan available, and a fixed rate that low is an attractive deal also.

With the recent reduction in mortgage interest relief, since April 2017, landlords are only able to offset finance costs at the basic rate of tax at 20%.  This affects higher rate tax payers, but also basic rate tax payers if they are pushed in to the higher rate bracket, perhaps as a result of their rental income.  As such, we are seeing more and more customers look at a Ltd Company Special Purpose Vehicle to hold their investment properties and provide more efficient tax benefits under current legislation.  Obviously, tax advice should be sought as individual circumstances vary!

Sticking within this area, Landbay have launched some attractive Buy to Let tracker rates with no redemption penalties at all.  These products are great for those looking at a short term project, or perhaps where they want to re-mortgage after a short period, possibly following some works to the property, and taking money out of the increased value to reinvest in further properties, and so on.

Conversely, with lenders reducing rates and chasing completion volumes for year end, we are seeing more people being declined.  Not necessarily due to adverse credit, but because their credit score is not as high as they thought, and they don't meet the lenders requirements as a result.

Credit scoring is one of the most widely used means to assess a customer’s ability to obtain a mortgage.  All credit scores include a credit search – this reviews your financial history, payments to utility suppliers, mobile phones, etc.  The high street lenders, in the main, use credit scoring.  However, do your homework as many smaller lenders will offer just as attractive rates, but they will manually assess your ability to obtain a mortgage and use a human to assess your credit profile, rather than a computer aided credit score decision making system.  

Coming to the end of your interest only mortgage?

According to our good friends at Shawbrook Bank, there are an estimated 600,000 people due to come to maturity on their interest only mortgage by 2020.   Many will probably have no way of repaying their interest only mortgage.  Some will have endowments that didn’t meet expectations, or maybe the house has not increased in price as much as hoped.  Stricter mortgage rules and lending criteria has made it harder for those over 55 wanting to re-mortgage. However, despite the high street being almost a closed entity, there are plenty of other options (not that your current lender are likely to advise them - they just want their money back!).

Come normal retirement age, the lender has the right to request repayment of their loan at end of the mortgage term.  If the customer has no way of repaying this and has just continued to pay the interest over the last twenty five years or so, they face the possibility of 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 many 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 one or two year extension, but the lender will want their money back and that you cannot avoid.

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 necessarily 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 adviser to review all possibilities.

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. These are 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!

Bank Base has risen...... don't get stuck on the lenders SVR

Last week saw the Bank Base rate rise for the first time in ten years.  It now stands at 0.5%.  The monetary policy, which meets each month to set the base rate, voted by 7 to 2 to increase the rate, in a bid to slow down the rate of inflation which currently stands close to 3%, 1% over its target.

For those with mortgages on a tracker rate, the lenders will probably pass on the full 0.25% increase, with effect from the following month.  So, expect a rate increase letter and a higher payment in December!

For those on fixed rates, nothing will change, until your product fixed rate period ends.  Then it will be down to what’s available at the time.  Unless you are on quite a high fixed rate, in which case sometimes it’s worth looking to see if it’s beneficial to pay any redemption penalties you may have to fix on to a lower rate, that might be available now.  This needs professional advice.

For those on the lenders standard variable rates – WHY?!  The lenders SVR tends to be more expensive than other products available and you should act now as you’re probably paying too much as it is!  Some lenders SVRs are circa 5%!  Lenders will alter their SVRs when they choose. 

The increase in 0.25% will probably take an extra £21 out of your pocket each month, per £100,000 on your mortgage.  Not vast amounts.  However, this could signal the possible end of the cheap rates…

Lenders tend to buy tranches of fixed rate funds from the money markets.  This is then lent to the consumer until the tranche ends.  At that point, they acquire more funds and so on.  However, the latter will inevitably be more expensive and so rates will rise, etc.   As I write, some lenders have increased rates, marginally, but there’s still some amazing products available and I suspect these will be around for some time yet as lenders are desperate for business.  Many products also include free legal costs and free valuations on remortgages, so minimal costs to change lender.  But do remember, although I don’t think they will for some while yet, these products can be withdrawn at any time.  So, if you’re thinking of changing or reviewing your mortgage, now might be the right time to get the paperwork out!

New Buy to Let with just 15% deposit requirement is launched!

A second Buy to Let with only a 15% deposit requirement has been launched into the Market.  Exclusively through just three distributors in the UK (inc AToM!), BlueZest is a new lender to market and has some superb products. These products are part of a broader range that allow landlords and developers to do refurbishments, conversions and new builds with funds advanced upfront, secured on non-development property that they already own. These mortgage products are available for periods up to 18 months with competitive rates, without the need for bridging finance.  This is a fantastic offering and we look forward to working with them.

Despite the continued talk of rates rising, there is a lot of activity in the market place and some rates have even decreased (Nationwide with some residential rates by up to 0.5%).  Foundation Home Loans has launched a new Buy to Let range with just a fixed fee of £1,999 (most lenders charge up to 2% of the loan amount), for loans up to £1m.  And Accord Mortgages has added a £500 cashback to all of their Buy to Let fixed rate house purchase products.  Obviously, terms and conditions apply.

The Buy to Let sector generally is becoming very competitive and despite an increasing number of options and recent regulation changes to the market, demand is still increasing.   Whilst first time buyers struggle to get on the property ladder and savings interest rates remain low, many continue to invest long term in to property and there's no immediate reason why this should change. 

The really positive news is the number of new lenders who have launched this year.  A sign of the times and that funding is a lot easier to achieve compared to recent years.  This has also bought in rate price wars and this can only be a good thing for the end consumer and keeps competition rife.

However, with all of the recent tax changes on Buy to Lets, you should not only seek professional mortgage advice, but tax advice from an accountant who understands property and all the new rules surrounding landlords and, where applicable, portfolio landlords.

Remortgage to renovate rather than move? Or Buy to Let?

There have been a number of remortgage applications recently for those looking to raise funds to purchase other properties or to make improvements to their current homes.  Just around the local area, I have seen an amazing amount of building work and renovations / extensions being carried out.  Many home owners appear to be improving their current residence rather than taking the big leap of selling and moving up (or down) the ladder.  This appears consistent with the general view that there is a shortage of properties up for sale.

Other consumers might be making the next step, but are then renting out their current property on a Buy to Let basis rather than selling it.  Nice if you are in that lucky position!  The rental market is certainly buoyant and showing no signs of slowing down over the coming months. So a Buy to Let might provide you with a modest return for your investment and may be the start of building a little portfolio nest egg for later on life. We have noticed that this is a growing desire for many who fear that their pension arrangements may not be sufficient and that rental income may be a suitable supplement.  Many new lenders have also launched in to this sector over recent months.

Over the last week we’ve seen rate increases in the fixed rates arena as column inches increase in speculation over a bank base rate rise in November.  However, lenders are still competing for business even as we move in to the final stages of the year.  We’ve seen reductions in the Buy to Let sector and the specialist bridging/short term lending market has seen movements in both criteria and rate decreases.  There are many opportunities whatever your circumstances and lenders are willing to have a conversation in order to do the right deal.

Finally, AToM was thrilled to receive a National Mortgage Adviser Award for the Best Use of Technology last month.  Many thanks to everyone who voted for us, it really is appreciated! 

Coming to the end of your mortgage life?

When coming to the end of the mortgage term with your lender, it’s rare to be offered any additional products to stay with them as you are ending the mortgage contract (normally 25 years or more).  They also fail to advise you to seek further advice about re-mortgaging to another provider.  Despite ages possibly having achieved ‘later life’ status, there are options available and although this might cease on the high street, as their maximum ages tend to be between 70 and 75, there are a huge number of lenders who will still lend.  Why should a customer not have a mortgage due to being in advance of normal retirement age?  We know people are working well in to their 70’s now and some are deferring pensions until needed.  So, for the right customer, with the right income and right loan to value of the property, a normal mortgage is still achievable.  These lenders will be building societies, or similar, dotted around the country but having been established for decades, even centuries!  They think outside the box, manually assess and will take a reasoned decision, rather than a computer based ‘tick box’ response.  They will also consider interest only options, assuming there is a suitable repayment strategy in place.

Re-mortgaging 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 against your monthly budgets. This can only be a good thing.

Finally, should the above not fit the lenders criteria, Equity Release might be the way forward.   Equity Release provides a valuable option for people in, or close to, retirement who may be wishing to realise additional income, raise funds or to consolidate debt. But it must always be considered alongside other financial options in the light of individual circumstances.  Some providers also allow the interest to roll up, so there are no monthly payments.  However, this obviously reduces the equity available in your property.  Terms and conditions apply and specialist advice should be sought as this can be a very complex matter and can affect future equity.

Rates rising....and great event for Landlords

You can’t have missed the increasing press column inches regarding a possible Bank Base Rate rise recently.  Sometimes I do think we talk the market in to a direction rather than letting it take its natural path!  History suggests that we tend to see the fixed rates rise first, before the bank base itself.  Over the last week we’ve seen a number of lenders increase their fixed rates, including Nationwide, Halifax and Barclays.  Some rates have increased by up to 0.9%!  I suspect others will also follow as SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) have also increased over the last week.

That said, the Bank of England has to take in to account the huge debt levels the nation currently has and that even a small base rate hike could have a significant effect on current spending levels.  However, it appears to be an issue which is gathering pace and we should watch this development closely.

Do remember that even if your rate is not up for renewal for a few months, some lenders mortgage offers are valid up to six months, so you can arrange a new rate in advance of your current rate coming to an end.   This will also ensure that you don’t move to the lenders standard variable rate, which will inevitably will be higher than your current rate, whilst looking for your next mortgage product. 

And finally, it was great to see so many people at the Landlord Property Investor and Homebuyer Show at the London ExCel last week.  It also highlighted how many people are not yet aware of the new rules surrounding portfolio landlords.  This is a large education piece and one that needs to be taken in to account asap by anyone who owns more than four properties.  Although each lender’s requirements are different, in the main, the common requirements are now a Business Plan, a Cashflow and forecast, Assets and Liabilities statements and full details on the whole portfolio including current mortgage, value, rent achieved, etc.  These new rules will take a while to bed in and as there is an increase in underwriting, I suspect delays will occur for a while, so be aware if you are in a rush!  

Rates to rise in 'near term'.

Hopefully you will have seen the headlines this week, but if you haven’t, the specific one I am referring to is where the Bank of England governor Mark Carney has said he expects the bank base rate to rise in the “near term” – thought to be within the next few months.

He did emphasise that this would be a limited and gradual process as the bank begins to ease its “foot off the accelerator” of the UK economy.  Mr Carney also warned about lenders becoming more reckless in their consumer credit lending, including credit cards and car finance.

Coming from the Bank of England, this is a bold statement and one we should all take note of.  So, is now the right time to long term fix? 

Difficult to answer, as it’s down to personal preference.  The points to note in the statement are that this will be a gradual process.  We all know rates will rise, but it’s when and by how much that no one can predict.  Therefore, if you know your circumstances are not going to change for the foreseeable future and you like the security of knowing your outgoings remain the same each month, then a long term fix is probably for you and there are some great deals to be had currently.   But if you like a bit of comfort in your monthly budgets and are a bit more of risk taker, maybe something shorter term is more applicable to your needs.  The rates will be slightly lower, but of course at the end of the term, you could be meeting the full on barrage effect of a rate rise.  Obviously, terms and conditions apply and each person is different, so personal preferences is key and advice should be sought.

And finally this week, some great news from our good friends at Precise Mortgages.  Charter Court Financial Services, the parent company of Charter Savings Bank, Precise Mortgages and Exact Mortgage Experts, has been valued at approximately £550m as part of its stock market flotation.  The specialist mortgage finance company will make more than 95 million shares available.  This shows the continual need for specialist mortgages and how well the lender has done since launch in 2011.  Congratulations to all of the teams there. 

Technology in the mortgage process and changes for portfolio landlords.

The mortgage press is starting to increase their commentary on the ever growing importance of technology proving itself in the mortgage sector. This includes recent adverts suggesting that a computer algorithm will ‘fix’ the mortgage market and choose the right product for you!  In time, this might become a reality!  However, given that the mortgage is the biggest financial debt you are ever likely to have, over a long period of years, you should be absolutely 100% sure that is the right product for you moving forward.  I do believe there is a place for technology in everyone’s lives, and certainly in our marketplace, however I also believe there will always remain a place for the human touch and people like to buy from people and organisations they trust.  With such a plethora of information available and such an in-depth decision to make, I can’t see that position changing for some time yet.

Rates have been in the headlines again this week.  Some pundits are filling column inches suggesting that the bank base rate will rise by the end of the year and one large bank saying it could rise to 0.75% by the end of next year. 

In comparison, this week has also seen a sub 1% fixed rate launched by Accord Mortgages, part of Yorkshire Building Society.  The two year fixed deal requires a 20% deposit.  Other initiatives include the Lloyds Banking Group who are offering a £1,000 incentive for customers who remortgage from another lender before 12^th November whilst the Clydesdale have reduced a number of competitive 2 and 5 year fixed rate products.  The threat of rate rises hang over our heads as a real possibility, but a lot of lenders are seriously ‘under target’ for the year and I suspect there will be competitive rates around for a few months yet.  Do keep an eye out as there are some great offers around.

Finally, if you have more than four buy to let properties, the way a lender underwrites your application is changing.  As previously advised, from 30^th September the new Prudential Regulatory Authority rules come in to effect and lenders will ask for increasing amounts of information regarding your portfolio and finances.  Be prepared and always speak to a specialist!  

Getting a mortgage through the lenders in the current climates is still challenging.

If you don’t appear on the electoral roll or don’t have any credit, when applying for finance, some lenders may consider that you don’t exist financially!  This has been a hurdle in the finance world for some time.  In current climates, it seems that lenders only need to find the smallest of excuses to not agree a mortgage request. Historically, lenders were often more amenable if an applicant could not be located on a credit search. Today, if you have no regular credit commitments or do not appear on the electoral roll at your current address, be prepared for a possible knock-back. 

The market has been pretty quiet this week, with only a few lenders making headlines and reducing rates. I suspect the market is still coming to terms with an unexpectedly buoyant August.  And, be prepared for a good run in to the end of the year, as we know of at least three lenders who are shortly to launch and create a ‘stir’ with their product offerings.

AToM is experiencing large numbers of ‘complex prime’ enquiries lately. One example is for a property which is currently converted in to two properties, but where there is only one registered title.  Another example - for tax purposes - customers seeking to purchase a number of investment properties in a Limited Company name with their company structure designed purely to hold properties.  These are live examples which certainly can be placed. They just need a bit of extra thought and the location of lenders who don’t fit the normal credit scoring mentality.

Getting a mortgage through the lenders in the current climates is still challenging. One day it’s easy to get a case through, the next, it’s a nightmare!  So whatever you do, try to not give lenders any excuses to decline your application or refuse to lend to you. Try to pay bills on time, don’t miss payments where possible and especially not mortgage payments!  Any missed (or sometimes late) payments will be registered on your credit file and this is normally used as the basis of a decision to lend to you. 

Buy to Lets - PRA Rules, Over 55s, The Leek BS and Tiptons lower rates!

Hope you had a great summer.  I don’t think there was a lull in anyway shape or form in our sector as it remained incredibly busy throughout!  However, it still feels like it’s back to work with a bang in the mortgage world.  

We’ve seen many lenders release details regarding the Prudential Regulation Authority (PRA) changes, which come into effect on 30^th September.  In short, anyone who owns more than four Buy to Let properties will be classed as a professional landlord.  The new rules require lenders to assess applications using a specialist underwriting process, review and stress test the landlord’s whole portfolio, as well as the individual’s financial capability. This includes those held in a Limited Company name.  Lenders will be required to make sure you are not over exposed and any decision to lend will be made once the whole portfolio has been taken in to account.  Each lender will interpret the rules differently and many lenders have not yet confirmed how they will be looking to change things.   But you need to be aware that these rules are imminent and we expect some delays whilst the changes imbed themselves.

For the OVER 55s, there has been much focus recently on offering rates to those lending in to later life.  One such example is with Shawbrook Bank, who have lowered the fixed and variable rates on its 55 Plus interest-only product offerings.  Rates will now be available from 4.75% variable depending on circumstances and terms, available to age 85.

Our good friends at the Tipton Building Society have launched some exclusive products with rates starting from just 1.04%.  This includes free valuation and free legals on remortgages.  The lender also manually assesses everything, so even though the high street might have said no, there may be an option with a lender such as Tipton, assuming no adverse, and good income etc.

Finally, the Leek United Building Society have launched a First Time Buyer 95% mortgage, with a free valuation, free standard legal work in relation to the property purchase and no application fees.   Great for those with a small deposit looking for their first property and we must applaud the lender for trying to help a sector that is in dire need of innovation to help get people on the first rung of the property ladder. 

60% of people don’t believe that they would be able to get a mortgage.

A recent survey from Masthaven Bank has revealed that over 60% of people don’t believe that they would be able to get a mortgage. On top of that, some 50% of current homeowners surveyed feel that they would also struggle to get a mortgage. This leads Masthaven to believe that large numbers feel like mortgage prisoners. Masthaven’s ‘Game of Loans’ report comprised of two surveys of over 2,000 UK adults, in January and July 2017. It found that almost two thirds of people polled believe that getting a mortgage is about ‘box ticking’ and does not take into account the reality of someone’s situation. Age is also a contentious issue with nearly three in four (74%) people surveyed saying they feel that meeting repayment criteria should determine mortgage eligibility, not age. Moreover, three in five (60%) of those surveyed believes that everyone who can afford the repayments when they retire should be eligible for a mortgage. 

This is a consistency across the market. With so much negativity in the media, it is not surprising that many people think they have no options. But this couldn’t be further from the truth. There are more lenders and products available now than there has been for some time. Therefore, more options and choice for customers that may not have been eligible for a mortgage in previous times. This often does not include high street lenders though. These lenders could include a small building society located in a small village anywhere in the UK. Having access to a whole of market mortgage broker is the only way you’ll gain access to such a possibility. 

In addition, and specifically aimed at those over age 55, Shawbrook Bank have recently launched a mortgage lending in to later life. Allowing interest only, this product assists clients in keeping their savings in place for longer, enables them to stay in their cherished home for up to an additional fifteen years and could allow them to raise additional funds, where affordability allows. Customers can also overpay the mortgage and there are no early repayment charges. 

When did you last review your current deal?

As we move deeper into the holiday period, I feel the need to be a pain and reiterate that whatever is spent on credit cards has to repaid! If, you are looking to review your mortgage in the next few months and load the credit card balance built up during the holiday period, remember that lenders will use the balance and offset against your income, before working out what you can borrow. That includes interest free credit cards, loans and also HP agreement and student loans. They are all taken in to account.

The holiday period can also be a time when many people do one of three things in the mortgage sector. Firstly, they start looking at new properties to move to. Or they may already be committed and are packing ready for the removal lorry, or they take time to review what mortgage they have and question if there is anything better out there. That is of course, if they are not simply taking a holiday, and why not?

Certainly, once the holiday is over, then it makes sense to review the current mortgage deal and see if there is a better option and perhaps look to secure a competitive rate for a few years. Whilst I always err on the optimistic side of a rates argument, we are entering a truly unknown era. We have never left the EEC before and so there is no history to prompt what the immediate and longer term implications will be. It may well be that we need to be prudent and a medium to long term fixed rate will allow the head to drop comfortably onto the pillow each night if rates do rise as a result of Brexit.

So take the chance to look and see if a re-mortgage to a fixed rate might benefit you. Actually, it is wise to consider this anyway as there are millions of people on lenders standard variable rates enjoying complete and deafening silence from their current mortgage lender. Why the silence? Simply because lenders are comfortable with you paying over the odds and expanding their margins! They are under no obligation to offer you a better deal when you come to the end of an incentive term and you automatically flip onto their variable rate. It is worth looking for a better deal and many lenders will welcome you with free valuation and legal initiatives and a difference of 1% can save you a substantial sum over few years.

The Mortgage market is vibrant!

Having written this column every week since early 2009, a lot of people ask me “how do you know what to write each week, it must be difficult?” But actually, there’s so much going on, I could easily fill more than my 350 word column consistently.  The mortgage market is vibrant with both activity and positivity.  Mortgage product offerings are at their highest for some time and lenders appear to want to lend!

The bottom line is that a mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what the national press decide to publish about the Bank of England base rate being held at 0.25% again, or how much profit the banks are currently making! Or what a mate says in the pub!

Advice is crucial and ideally from a company who can offer ‘whole of market’ mortgages, not just products from a limited panel of lenders, like some Estate Agency chains or a Bank/Building Society who only offer their own or a limited set of products. 

Most lenders have a set of rules and criteria that need to be met even before requesting a decision in principle (stage at which you are credit searched for pre-approval). For example, one lender has a debt utilisation rule at 70%. So, if you had a credit card with a £1k limit and you had a balance of £701, you will be in excess of their 70% rule which means you would be ineligible for this lender. Another stipulates you can have no more than 8 unsecured credit cards or loans at the point of application. We tend to see customers have a number of debts within this ruling, but who keep open old debts with zero balances. This can push them over the lenders stipulations. Others won’t look at gifted equity, or assist where the customer has had a break in employment in the last twelve months, or lend on properties with a flat roof, and so on.

All of these are little idiosyncrasies that should be known by anyone advising on a mortgage. Thus saving time and probably unnecessary credit searches being carried out. Remember, the more credit searches you have against your name, the more likely your credit score will decrease, which may affect your ability to obtain finance. Whoever you talk to about your financial requirements, make sure you say at the outset that you do not want to be credit searched, unless you give them the authority to do so or a product has been thoroughly researched.

A swing between the high street lenders and the more niche market

During the last few weeks, we have seen several lenders who have posted positive half year results.  Many of them stating that they have increased lending against their previous financial year results.  But this is hardly surprising as many didn't really want to lend heavily last year.  However, it is important to run with the positive news and such announcements for half yearly figures show that lenders are 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 late 2018 or early 2019 before they expect any rate rises...

These results have also resulted in something of 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!  And you’ll be surprised at what some of the smaller lenders can do, including lending into retirement, up to six times income, cross collateral charges on numerous properties and more.

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!  July and August are 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.

New rules for Buy to Let portfolio landlords from September

If you are a Buy to Let landlord and own more than four properties, then this could be of interest to you..

In September, the Prudential Regulation Authority (PRA’s) second round of regulation rules will impact the Buy to Let sector.  These requirements revolve around the ‘professional landlord’ and specifically anyone who owns more than four properties.  These follow the recently implemented phase one, which took place in January 2017, implementing more stringent rental calculations and affordability assessments.  The overall aim of the rules is to bring all lenders up to prevailing market standards and guard against any slipping of underwriting standards during a period in which firms’ growth plans could be challenged by the changing economic landscape and the impact of forthcoming tax changes.

So, what does this mean?  The new rules require lenders to assess applications using a specialist underwriting process, review and stress test the landlord’s whole portfolio, as well as the individual’s financial capability. This includes those held in a Limited Company name.  

Lenders will be required to make sure you are not over exposed and any decision to lend will be made once the whole portfolio has been taken in to account.  Each lender will interpret the rules differently and, although still in July with launch just a couple of months away, many lenders have not yet confirmed how they will be looking to change things.

However, the murmurs across the market suggest that some lenders will look at all assets and liabilities, possibly even a business plan for the portfolio, any previous experience in property rental and both property rental and personal incomes.  This could also include budget forecasts.  As a standard, we expect to see the usual tax returns, three months bank statements and copies of all Assured Shorthold Tenancy agreements being requested. 

Therefore, if you are looking to change properties, buy further or reassess current portfolios, you might be wise to do it sooner, rather than after September.  Without a doubt, and as with any previous regulatory implementation, lenders turnaround times will be affected as new rules bed in and processes will become slower than usual, for a while at least.

Don't talk the market down, it's ticking over nicely!

There have been a number of comments made in the national press recently regarding the market being in a lull and how mortgages are becoming harder to obtain.  I do think sometimes that people talk the market down, rather than reporting the actual situation.

As both a specialist mortgage provider, as well as whole of market (including the high street lenders), AToM has actually seen an increase in business recently rather than a drop in activity.  From talking to our peers we are aware that they are experiencing this growth too! 

We have also seen a number of  new lenders enter the market and there are others due to launch soon.  This would not be happening if any lender thought the market was in decline!

One lender, Masthaven Bank, launched recently in to the residential sector looking specifically to fill gaps in the specialist market.  These include allowing gifted deposits and equity, contractors, self employed - straight forward or complex, customers borrowing in to retirement and those who fail credit scores, to name just a few.  With rates starting from under 3%, this is a lender who is looking to lend and they should be applauded for such innovation and great launch products.

Other recent 'game changers' include Kensington Mortgages who cater for those with historic blips and with only a 10% deposit.  Precise Mortgages and Kent Reliance, who are both positively active in the Buy to Let sector, especially with regards to Houses of Multiple Occupation, Ltd Company BTLs and with new underwriting regimes on the horizon for Portfolio Landlords (those with more than 4 properties) and these are definitely ones to watch.  Tipton Building Society and Dudley Building Society for allowing lending in to retirement and above average income multiples. And there are so many others who I don't have space to mention!

So the bottom line is simple.  Just because the high street says no, or your mate down the pub says 'you'll never get a mortgage' because of your situation, find an experienced mortgages specialist who may be able to open up a door to a wide range of opportunities available to you.

Arranging a repayment vehicle for an Interest Only loan is not a job for ‘tomorrow’.

There has been increasing commentary recently regarding Interest Only and Repayment mortgages. With an Interest Only mortgage, you only pay interest and no capital and so, at the end of your chosen term, you still owe the lender the same amount as when you began. Normally with this method, it is recommended that you contribute to a savings or investment vehicle to generate funds to repay the mortgage at the end of the term. However, this is usually optional but the lender will maintain contact with you during the term to investigate how you will eventually repay them.

With a Repayment Mortgage, you pay both interest and capital each month. Initially, this appears more expensive, but does mean that you pay back the loan with no debt outstanding at the end of the term on the reasonable assumption that you meet the required payments on time. 

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

For a customer to get to the end of their mortgage term still owing exactly the same as when they took it out, with no form of repaying the loan apart from selling their property, creates a major headache for the lender, especially when they want their money back!  This is also part of the reason why so many lenders have historically moved away from offering interest only all together.

In addition, most high street lenders will only lend until normal retirement age, so those looking to extend their loan beyond normal retirement age, may only find a small number of mortgage lender options.

That said, Interest Only mortgages can be right for certain professions - people entitled to annual bonuses: the fluctuating income of self employed: or employments where lump sums are received after a number of years in service. It is not an exact science however and every case is different.

Arranging a repayment vehicle for an Interest Only loan is not a job for ‘tomorrow’.  As we all know, tomorrow never comes.  So, do it now!  Sort out a plan of action and put it into motion. Speak to your current lender or mortgage broker and review the options available to help you achieve repaying the loan over a specific time period.  But don’t delay…the clock is ticking!

Stick with your current lender?

So, your mortgage product is coming to the end of it's term.  You may have fixed for an amount of time, maybe two, three or five years.  And now your rate is due to change to the lenders variable rate, which in the main, is higher than the rate you are currently on, and your monthly payments are about to increase.  But hold on, your current lender has seen the light and decided to offer you some 'fantastic' products to keep you.  Even though you are four months out of your product change, they've given you just fourteen days to decide whether to choose a new product to stay with them.  What do you do?

One recent example a customer showed us, had some very attractive rates.  However, when we looked, the same lender was offering better rates through the intermediary sector, with the same fees, etc.  I always say do your homework, and lucky this customer did as it saved them 0.1% on the rate over a three year period.

Even though some lenders put a deadline on any new offerings, remember most are contacting you three or four months before your product changes, so there is plenty of time to review your options and choose the best one for you. 

This is the biggest debt you will ever take on, take your time and ensure you will not regret it further down the line.  Always seek advice! 

With this in mind, we've seen a lot of rate changes and reductions over the last few days.  TSB, Santander, Halifax, Harpenden Building Society, Accord, Platform, Saffron, Kensington, Virgin Money and Precise Mortgages have all made changes, to name but a few.  Key highlights include 5 year fixed rates from 1.75% up to 65% LTV, Buy to Let fixed rates from 2.99%, ExPats in Australia can now be First Time Buyers in the UK, more options for lending in to retirement and many many more positive enhancements.    Lenders want to lend!

If the credit score computer says ‘no’, you will tend to find most high street lenders doors shut.

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.

Coming to the end of the mortgage product term. What next?

We're seeing some issues for those coming up to the end of their product promotional rate period, especially where the lender is not offering them anything attractive to stay.  Lenders want to lend, but in some cases are not able to, or may choose not to, even to existing customers.   The simple reason being that the customers 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 over the last few years 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!

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.

Products 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 abroad 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 and preferably multi-national business abroad and in a region upwards of £40000 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.  

Choosing the right mortgage is difficult - use a broker!

Choosing the right mortgage can be a difficult task.  Many people are swayed by the marketing leading and highly promoted incentive interest rates.  But actually, when you add on any lender fees, along with any valuation costs and look at the true cost over a period of time, these can sometimes prove to be more expensive.

Of course, this is the beauty of using a mortgage broker.  They will have access to many lenders that you have probably never heard of and products that are not usually visible to the public eye.  There is so much information readily available and over 11,000 mortgage products to choose from, but key information can get lost in translation.  Therefore seek advice.  Yes, it may cost you a small fee to have someone research the market on your behalf and make recommendations, having assessed your short to long term needs and requirements.  However, the broker will stand by their recommendation and, more importantly, it could save you thousands in the long run, versus choosing the wrong products yourself, usually from a single provider.

In addition, any professional will seek to build a long term relationship with you and contact you at the time your current rate is coming up for renewal to ensure you have access to the best rates available at all times.

This also goes for the Solicitors where they are needed to act for both yourself and the lender in a mortgage transaction.  Remember that on some re-mortgage products the lender will cover the cost of standard legal work and valuations.  HOWEVER, this is not always the best or cheapest option.  These can be slow, depending on the volumes received by the lender and sometimes it's better to pay the extra amount to get the job done quicker.

There are a huge number of legal firms in both local and more regional areas.  Prices vary from company to company and you can decide exactly who to deal with (assuming they are acceptable to the mortgage lender).  Shop around before committing and as with everything, make sure you read the small print!

Payday loans won't help your mortgage application.

I have mentioned previously the impact that Payday loans can have on a mortgage application and lenders decisions. It is fair to comment that the incident rate on these went quiet for a while, but over the last few days there has been a marked increase in enquiries from those who might have used a Payday loan in the last twenty four months.  I need to reiterate that these are classed as an ‘adverse entity’ with most lenders (not that some would admit it!).  However, even the lenders who accept customers with historic CCJs, defaults, or missed mortgage payments registered against them, may choose not to accept someone who has taken out a recent payday loan.  So, although these may be right for a customer in certain circumstances, they will almost definitely limit the number of lenders available to you when you come to apply for or change mortgages.   With this in mind, lenders will also look closely at an individual’s payment profile, how many recent credit searches have been incurred by financial institutions and more. The more credit searches you have on your profile, over a recent period of time, the more likely your credit score will be lower as a result.  Every financial institution, including Payday loan lenders, will credit search you, so beware!

The other issue tends 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.

There are however many opportunities, whatever your circumstances and lenders are willing to have a conversation in order to do the right deal.  Of course, rates and terms will vary depending upon the type of mortgage written. Lenders have varying degrees of risk assessment calculations and this will determine the loan to value and charging rate levels.  Finally, remember to always read the small print and understand all fees involved.  The lowest rates on offer may not always be the most cost effective over a period of time for you.

The Bank of Mum and Dad is huge!

First Time Buyers trying to get on the property ladder will turn to the Bank of Mum and Dad to borrow more than £6.5bn this year, according to a report from Legal & General.  This equates to nearly 25% of UK property transactions and similar to being the country's ninth biggest mortgage lender!

The report suggests that the 'millennials' are the biggest recipients with 70% of the funding going to people under the age of 30.   

Although, a report from Prudential has also suggested that Mum and Dad worry about how their money is being spent and would like control over the gifted funds.  One in four worry it could be given to their children's spouses in the case of divorce and one third are mindful their children could squander the gift altogether!

First Time Buyers currently have a good number of options available to them, including mortgages up to 95% of the property value and where possible, parental guarantor mortgages. 

We've also seen a marked increase recently in enquiries for Right to Buy properties and those looking to purchase on a Shared Ownership basis:

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 £78,600 (£104,900 in London)  and applicants must have been a public sector tenant for at least three years.  Some lenders will allow borrowing of up to 100% of the purchase price.  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.  There are other schemes available to housing associations and the Government has plans to extend Right to Buy to more housing association tenants.

Shared Ownership Schemes are normally 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 (normally called ‘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, even those who may have had financial credit blips in the past.  So always seek advice.

Mortgages for the over 65's. Yes!

AToM were exhibiting at the excellent Landlord and Property Investor Show at the ExCel over the weekend and in addition to the many Buy to Let enquiries received, there were a huge number from people who thought they could not obtain a Residential mortgage over the age of 70!  

On the high street, this may still remain true in some cases as these lenders generally allow a mortgage term to last until the applicants normal retirement age.  This used to be 65, it tends to now be 67, but the reality is it can be much later.  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 than it used to be.  Many non-household named lenders will look at lending to customers to 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 and regular amount of income, a high level of equity in the property and can satisfy the lenders affordability requirements, then some lenders will be happy to lend.

This is the same with Buy to Let, where at least one lender we have access to allows the applicant to apply right up to age 80, with a 30 year mortgage term!  Many others have no restriction on age either.  Responsible lending and affordability are key in any lenders decision making. 

Age really is no longer an issue and simply needs specialist advice from someone who offers a range of lenders from the 'whole of market', not just a restricted panel of lenders or the high street.

Delays, low rates and AToM at the Property Investor & Homebuyer Show

Delays, delays, delays!  With so many lenders dropping rates to all time lows, it was inevitable that their back end would not be able to cope with front ends sales!  We are finding a number of lenders are often taking one to two weeks to turn things around.  A few are much longer and we know of one that is currently taking over nine weeks to review applications.  Yes, nine weeks!  When applying for the house of your dreams and with the Estate Agent demanding a quick survey, always check with the lender to find out their service levels before putting your mortgage with them.  You might find the agents won't be happy with a substantial wait. 

The other impact, just around the corner, is the impending Election.  Based on previous experiences, many people put their home plans on hold whilst elections occur and this can also have an effect on lenders, who then reduce rates to attract more business, and so we have a spiral effect as per my earlier comment above.

On the up side, we've seen some incredible offerings from lenders.  Last week we saw the lowest five year fixed rate deal at 1.29%, which was withdrawn pretty quickly and although the rate has increased, is still a very respectable 1.59% (up to 60% of the property value and £900 fee).  We also saw one Building Society launch a 0.89% two year fixed rate deal with a £1,495 fee.  How low can they go?  The choices are currently attractive and seemingly very good for the end consumer.  As always, terms and conditions apply and are subject to individual circumstances, so seek advice!

Finally, this weekend is The Property Investor & Homebuyer Show at ExCel in London (28/29th).  If you are looking at property to rent out, this is the ideal place for obtaining up to date property market information, networking and, of course, property to buy.  It is designed to cater for all levels of property experience, so whether you are a property novice or a seasoned investor you will find the answer to your questions.  Better still, both the show and seminar programme sessions are free to enter.  AToM will be exhibiting, so if you are attending, come and say Hi

Five year fixed at 1.29% available only via an app!

I can't ignore the headline of the week, from Atom Bank (not related!), who have launched a market leading five year fixed rate at just 1.29%.  This is available to those with a 40% deposit and has just a £900 fee.  They have also launched an 80% loan to value (LTV) fix at 1.49% and a 90% LTV at 1.99%, both with a £900 fee and for five years.  APRCs will relate to individual circumstances and obviously terms and conditions apply!  What is for sure is that these are so good, they are in huge demand, have been covered by all the major consumer websites including Martin Lewis, etc and won't be around for long, so be quick!   Only a few brokers in West Sussex have access to this product...

Long term fixed rates won't be for everyone as you are tied in for the full five years and will have a redemption penalty to pay should you repay the mortgage early.  However, they tend to be portable and thus can be taken with you, subject to the lenders criteria, should you move house.

Atom Bank do a lot of their functionality via an app, including voice and face recognition.  Impressive hi-tech stuff indeed. 

Already, most people will start their home buying process via the Rightmoves and Zooplas of the world, but some commentators are also predicting that the whole home buying process will soon become a digital revolution.  With more effective use of technology cutting down the mortgage process, and many lenders now processing everything online, I can see how that can happen.

However, at the same time, I can also see many customers just wanting to speak to someone face to face.  Especially those who have not grown up with technology! Plus, as mortgage volumes are increasing, we will see more and more customers fall out of the 'technology only' bracket.  So explore all options and if the technology becomes to confusing, pick up the phone!

See if a remortgage to a fixed rate might benefit you..

We are in the middle of the Easter school break and this is traditionally a time when many people do one of three things in the mortgage sector. They start looking at new properties to move to: they are already committed and are packing ready for the removal lorry or, they take time to review what mortgage they have and question if there is anything better out there. It might be argued that huge numbers of people simply take a holiday, and why not?

Certainly, once the holiday is over, then it makes sense to review the current mortgage deal and see if there is a better option and perhaps look to secure a competitive rate for a few years. Whilst I always err on the optimistic side of a rates argument we are entering a truly unknown era. We have never left the EEC before and so there is no history to prompt what the immediate and longer term implications will be.

It may well be that we need to be prudent and a medium to long term fixed rate will allow the head to drop comfortably onto the pillow each night if rates do rise as a result of Brexit (whoever thought of that word to describe it?)

So do take the chance to look and see if a re-mortgage to a fixed rate might benefit you. Actually, it is wise to consider this anyway, regardless of Brexit as there are millions of people on lenders standard variable rates enjoying complete and deafening silence from their current mortgage lender. Why the silence? Simply because lenders are comfortable with you paying over the odds and increasing their margins! They are under no obligation to offer you a better deal when you come to the end of an incentive term and you automatically flip onto their variable rate. It is worth looking for a better deal and many lenders will welcome you with free valuation and legal initiatives and a difference of 1% can save you a substantial sum over few years.

Talk to an independent mortgage adviser and see what they can offer.

Lenders have to report statistics. Are you one of them?

According to the CML (Council of Mortgage Lenders), gross mortgage lending in January totalled an estimated £18.9bn.  This is an increase of 2% on January 2016, and down 6% from December.  There were 29,743 loans approved for house purchase in January, according to the British Bankers Association (BBA), with the average loan approved for house purchase rising to £182,500.

The Financial Conduct Authority reports that 69.75% of mortgage lending in Q3 2016 was for 75% or less of a property’s value.  Just 5.3% of lending was for mortgages over 90% of a property’s value!

Lenders are restricted on the amount they can lend in many different mortgage categories.  So for example, if a lender offers more than 4.5 x income, the maximum allowed across their business for the year will be a set percentage of business.  If this is, say 15% of business, once this target is hit, the lender will need to withdraw this offering (or dramatically increase other areas to bring the split of business back in line).  This is also the same with lending in loan to value bandings, so a percentage limit will be enforced on lenders offering over 90% loans to the value of the property and so on. 

The Office of National Statistics say that the average house price for first-time buyers was £184,973 in December 2016, which is an annual increase of 7%.

Whereas The Money Charity Statistics confirm that outstanding mortgage lending stood at £1.326 trillion at the end of January.  That means that the estimated average outstanding mortgage for the 11.1m households with mortgage debt was £119,752 in January.

As you can see, everything is a statistic.  With this in mind and with so many rate changes and reductions, lenders will look closely at an individual’s recent payment profile, how many recent credit searches have been incurred by financial institutions, and more.  So don’t give them any excuses not to lend to you!  The more credit searches you have on your profile, over a recent amount of time, the more likely your credit score will be lower as a result.  In short, your credit search / score are the basis on which most lenders will initially decide whether to lend to you or not.  The best rates will almost definitely go to those with the best credit scores.  If you’ve not checked your credit file before, it is well worth a review and most are now free.   

Be ready for some fairly detailed questions when submitting an application!

The remortgage market is awash with lenders actively looking to attract new customers. 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.  Many lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations (lender survey on your property) and legal costs (solicitors or conveyancer to register the charge in the new lenders name).  Rates are competitively low and mortgage product choice is at its highest for some time. So pull out that paperwork and have a no obligation conversation with your local, independent and whole of market mortgage advisers!

Alternatively, if you are looking for additional funds, but are already on an attractive rate with your lender, there are other options rather than a full remortgage. 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.   A secured loan is a 2nd, or subsequent charge which allows the equity in a property to be used as security.  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.   Second charge lenders are also in the midst of a price war.  Many have reduced rates, one or two new lenders have entered the market and rates can now be below 4%.  Rates vary depending on the customer’s circumstances and current level of borrowings.  Make sure you review all options available to you and always seek advice.

In either of the above the lenders are looking more carefully at affordability, not just for now but also any potential changes that may affect your income in the next five years. Be ready for some fairly detailed questions when submitting an application!

A Place for Landlords - Horsham!

My column has to be submitted by Tuesday so, by the time you read this, the budget will have taken place and we will all be digesting the Chancellors latest updates.   However, we already know that people with Buy to Let properties will see their tax bill increase as the mortgage interest and other financial costs relief begins it's phase out from April onwards.   Expect this to be under the spotlight, although I don't think there will be a back track.  I'll cover any other property finance surprises in future columns.

Whilst on this subject, we're bringing back our popular ‘A PLACE FOR LANDLORDS  INVESTOR PROPERTY’ show in April!  This year it will take place at the Drill Hall, Denne Road, Horsham where you can learn about the new tax relief changes, the new PRA rules surrounding Buy to Lets and legal entities as well as meeting many local specialist companies.  These include AToM, Kreston Reeves Accountants, Coffin Mew Solicitors, Courtney Green Lettings, Leaders Lettings, Lady Decorators, The National Landlords Association, Durrants Removals and more!   It is likely to be a packed event and we expect the free Seminars to be oversubscribed, so BOOK EARLY!  To find out more, email landlordshow@atomltd.co.uk or call 01403 27 26 25.  A Place For Landlords - 1st April - 9am to 2pm- Drill Hall, Denne Road, Horsham RH12 1JF.

And finally, staying with Buy to Lets, the minimum deposit can be as little as just 15% although, at this level there are fewer product options.  With a 20% deposit, the number of products increases substantially, as do those with a 25% deposit, and so on.  Rates in this sector are now so low that there's actually not a huge gap between Buy to Let rates and normal Residential rates, as there used to be. 

As the new taxation changes are implemented, we are seeing a lot more people purchase properties in a Limited Company name.  This sounds complicated, but any good property accountant will be able to advise you at the early stages if this is more beneficial to you, rather than buying in a personal name (see the free seminar at A Place for Landlords!).  The most important thing is to ensure any property investment outlay gives you the best return possible and professional advice should always be sought.

Right to Buy or Shared ownership?

Over the last few weeks, we’ve seen a marked increase in enquiries for Right to Buy properties and those looking to purchase on a Shared Ownership basis.

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 £77,900 (£103,900 in London) and applicants must have been a public sector tenant for at least three years.  Some lenders will allow borrowing of up to 100% of the purchase price.  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.  There are other schemes available to housing associations and the Government has plans to extend Right to Buy to more housing association tenants.  So if you think you are eligible, register on the Government's website.

Shared Ownership Schemes are normally 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 (normally called ‘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, even those who may have had financial credit blips in the past.  So always seek advice.

Finally, first time buyers generally are in the spotlight again with many great rates and low fee products available.  One in particular, launched over the last few weeks, will allow customers to achieve, subject to an affordability assessment and minimum income levels, a loan equivalent to six times their income.  Yes SIX!  With a 15% deposit required and a competitive rate of interest, this product is an exclusive from the Tipton & Coseley Building Society.  Obviously terms and conditions apply.  There still needs to be a lot more innovation in helping the First Time Buyer sector overall, but huge credit to those trying to assist in the current climates.