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.