15 August 2009

The Mortgage Process...be clear!

This week I want to take a brief look at the mortgage process when purchasing a property. First time buyer or home mover, your mortgage application process will be roughly identical. The selling agent will look to agree a number of deadlines including the arrangement of mortgage finance. You should speak to an independent mortgage brokerage (AToM?) who will assess your financial requirements with you. They are required to provide you with an Initial Disclosure Document detailing who they are, who they are regulated by and costs involved in arranging your mortgage, including any advice or consultation fees charged. This document also advises how to complain if you are unhappy with the advice given. A good advisor will complete a financial fact find form enabling them to ‘know their client’. This is a must before any advice or recommendation can be provided. Once you’ve decided on the best mortgage for your personal requirements, a decision in principle (DIP) will be completed with the chosen lender, normally on-line. This involves brief personal details, income disclosure and a credit search on you. Be wary though, the more credit searches carried out, the more likely your credit score will decrease. The moral here is to ensure that the product is right for you before a DIP is conducted.
Once the DIP is agreed, normally instantaneously, it is then upgraded to a full application. Payment for valuation is then needed (sometimes free) and the valuer will confirm to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost.
In the meantime, the lender will probably require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise with any of these, a mortgage offer should be issued. Then, subject to the conveyancing process your solicitor has to work through, you are now on the road to completion and should soon pick up the keys to your new home!

07 August 2009

Confidence appears to be on the increase!

Lenders have started to release their six monthly profit/loss figures this week. With HBSC and Barclays reporting £3bn in profits over the last six months, the future started to look great, especially for those anticipating large bonuses! But then came reports of losses from Northern Rock (£724m) and Lloyds Banking Group (£4bn) and with it signs that we really are not much further forward than we’d hoped.
Nationwide became the heroes of the week by lowering interest rates, some by as much as 0.5%. This was quickly followed by their specialist arm, The Mortgage Works, who major in Buy to Let mortgages, who also reduced some of their rates.
In our Carfax office, we have seen encouraging signs that people are now looking for property with more confidence than of late. Some are enquiring to find out how much they can afford whereas others are chasing interest rates whilst they remain low. Consumer confidence is definitely on the increase and this is supported by the increasing number of first time buyers exploring all avenues to try and get their foot on the property ladder. I am impressed by the increasing willingness of some lenders to accommodate first time buyers looking at shared ownership schemes. First time buyers, if eligible, can purchase a percentage of a property (between 25 and 75%) and a housing association purchases the remainder. The buyer then pays rent on the latter percentage with the option to purchase an increased share of the property later on. There are many schemes available and a good supply of properties in the area, so do review all the options available.
Finally, we were visited by one lender this week, who had ‘mothballed’ themselves about a year ago and who have now indicated that they will be rejoining the lending arena in the not to distant future and more surprisingly, they are currently looking to employ up to 10 new staff! Positive news and fingers crossed that this is the beginning of a new era.

04 August 2009

Lenders meeting could be good news?

31/7/09 - The Government Open Market Homebuy scheme funding for 2009/10 has now been allocated. Eligible beneficiaries were able to take out a mortgage to fund part of their property purchase and a low-interest equity loan to cover the rest. Claiming to have assisted 6,000 households in 2008, no one is quite sure how many households have had funds allocated to them for this scheme period. It is thought that the government will now concentrate on first time buyers and new build properties, through the schemes Homebuy Direct and New Build Homebuy.
The Land Registry has released figures suggesting that house prices rose in June by 0.1%, complimenting the earlier released Nationwide reports of a 0.9% increase. But let’s not forget the Halifax release commenting on a 0.5% decrease! As I’ve said before, until these three report a simultaneous increase in house prices for a consecutive 3 month period, we can’t start jumping around just yet!
Not much to report on rates this week. Perhaps the lenders felt they deserved a holiday and have taken their kids away, expecting us hardworking independent mortgage brokers to be away also? No such luck. But good news in that rates seem to have stabilised for now!
And whilst on the subject of lenders, I was pleasantly impressed with Alastair Darlings meeting with all the major banks to sternly express his wishes that they lend more to consumers and businesses. Sadly, this is the second or third time they’ve met and we’ve not seen lending at sufficient levels to drive recovery in the property market since either previous meeting, so I’m not holding much hope! However, this time the threat of bringing in a competitions inquiry, if lending does not increase, has been raised. Although this struck me as funny, as I thought it was the gentlemen in question that sped up and agreed the merging and acquisitions of such ‘super banks’ at the outset?