18 January 2018

Are you ready for Open Banking?

Open banking seems to be the buzz phrase of the moment as the world of technology impacts the way our spending habits are analysed.  In short, you will soon be able to give permission to your Bank or Building Society, to release all details of your bank account transactions to any regulated business.  This can speed up the process of decision making when applying for loans, mortgages, etc, in comparison to just supplying your last three months paper bank statements, which is the current normal way of disclosing.  So no longer will your bank be the only one to know how much you spend on your weekly shop, utility bills and broadband!  Or of course, when you move into, and how often you use, your overdraft!  Permission can be withdrawn at any time.  Nine institutions were given a deadline of 13th January to be ready for launch, and five have been granted an additional six weeks to be ready.  Watch this space!

There have been a number of new products launches for the new year as lenders seek to gain a good start to 2018.   Many lenders have lowered rates and some have reviewed their criteria in order to bring in more business, possibly allowing customers that wouldn’t have been approved towards to the end of 2017.    Always review all possible options before giving up. 

Finally, the importance of mortgage advice has never been greater. It is an interesting fact that, according to a number of industry sources, over 70% of all mortgages are written through professional advisers. There are probably many reasons for this including long delays we are advised are happening with some lenders both in interview capacity and processing times.


The majority of professional mortgage advisers review 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 over ten days behind on post or electronic updates currently!  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.  They should also contact you again when your product is up for renewal and guide you through that process, building a long-term relationship with you. 

11 January 2018

Only 20% of homeowners take a homebuyer survey when purchasing a property.

Research from Legal & General has shown that only 20% of homeowners take out a home buying survey when purchasing a property.  This is despite home buyers on average spending £5,750 on unforeseen repairs when they move into their new home!

So, to recap on the options:
Valuations on properties to be mortgaged come in various guises.  Every mortgage lender will require a valuation on the property to ensure the property is suitable security for their purposes. This is a fairly basic valuation and is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes.  They have no obligation to tell you what is in the report, or give you a copy! 

In some cases, they will not actually visit.  This is because they can often access detailed information electronically, normally called an Automated Valuation Model (AVM), where a mathematical system calculates the property’s value based on a number of comparable properties and other in-depth calculations.  

Therefore, you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the standard lender mortgage valuation.

Homebuyer Report - a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse effect on the value of the property, or if further investigations are required.

A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life!


Finally, I’m always looking for content ideas.  So, if you have any burning questions or items you would like to see, please don’t be shy to ask!  You can email me at dale@atomltd.co.uk or call me on the number above.  Have a great week!

14 December 2017

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!

07 December 2017

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.  

30 November 2017

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!


23 November 2017

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.  

16 November 2017

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!