07 September 2017

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 30th 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. 

24 August 2017

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. 

17 August 2017

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.

10 August 2017

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.

03 August 2017

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.


27 July 2017

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.

20 July 2017

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.

13 July 2017

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!

06 July 2017

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!

22 June 2017

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.

08 June 2017

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.  

01 June 2017

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!

18 May 2017

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.

11 May 2017

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.

04 May 2017

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.

27 April 2017

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

20 April 2017

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!



13 April 2017

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.

06 April 2017

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.   

23 March 2017

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!

09 March 2017

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.


02 March 2017

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.

23 February 2017

Income multiples and affordability calculators.

Gone are the days when a lender used to simply calculate the mortgage loan available by multiplying your income by 4 or 5 times.  Today it's 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 once rates rise and specifically being affordable over a 5 year period. 

As loans become more and more competitive, this has seen some lenders lending well in excess of an equivalent 5 x income and some even up to 7 times!   For the right loan to value, right affordability and right customer, lenders are willing to offer a little bit more.  And with rates so low, now's a good time to be exploring these options.

What I do believe is that 2017 will be a very competitive year.  There's been a lot of talk about rates increasing, but so far this year, they've actually only decreased.  With a further twenty or more applications in with the regulator for lending licences, this can only mean greater competition and good news for the end consumer.  Don't panic just yet!

However, a lot of people put changing their mortgage to the bottom of the pile or the 'to do tomorrow' list.  Of course, this keeps getting delayed behind the 'save £20 a month on broadband' or 'update the pet insurance' chores.  Yet the mortgage is the biggest debt you'll ever have and probably one of the easiest to save on.  So don't put it to the bottom of the pile.  Rates may be low now, but there's no guarantee they will stay that way. 



16 February 2017

Rates are low and delays are across the market...

Following the recent regulatory changes across the mortgage market, specifically in the Buy to Let sector, and with rates currently so low on the Residential side, it was inevitable that delays were going to occur.  A few days can be the norm, but the reality is that some lenders are now advising of delays in excess of a month to process cases.  Yes, a month!  This really becomes an issue if the lender asks you to provide further information as when this is submitted, you will normally go back to the end of the queue!  So bear this in mind if you are in a contract race to buy your dream property and the Estate Agent is badgering you to get the survey instructed.

There have been some fantastic product launches over the last week or so, including some outstanding five year fixed rates.  One example from Santander offers a fixed rate for five years for those with a 40% deposit with a rate of just 1.89%  (APRC 2.49%), which includes a free valuation and free legal costs on remortgages.  Terms and conditions apply etc.  The market is hotting up!

We've even seen a sub 1% fixed rate for two years launched this week, again for those with a 40% deposit.  However, with all things, check behind the marketing headline.  The rate may catch your eye, but if the fees are expensive and it does not include free valuation or legals, it can prove less compelling than a slightly higher rate that includes all of those benefits. 

Some rates have been reduced for those who have had historic issues.  One example, with our friends at Kensington, allows for some historic issues over two years ago and will look at rates starting from 4.34% for those with just a 10% deposit.  

A number of lenders don't use credit scoring systems and prefer a manual approach, so don't think you cannot get a mortgage until you have tried!  Always shop around to find the best deal and always check the small print!  Naturally, I would recommend speaking to a professional who can search the whole market and advise which are the most appropriate deals available to you!


09 February 2017

A survey is for the lender, not you!

Some weeks there is just too much news to take in and it can be difficult to assimilate and decide which to report on.  Then there are quiet weeks where nothing much seems to happen.  This week has been the latter and the mortgage market has been quieter than normal.  So, what to discuss?  Surveys!

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.  Although, 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).  Of course, this can prompt a borrower, who has paid a fee, to question the reasonableness of this method.  In fairness to the lenders, it is a tried and tested system and rarely proves incorrect.  They have expenses regardless of the visit and this system does have the effect of keeping prices down. 

Remember that this, fairly basic valuation 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!  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 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 affect 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! 

26 January 2017

Computer says 'no'

So!  You have no credit problems: you have a good income: no debts and you are looking to buy a property or maybe remortgage.  But then, your bank, with whom you’ve been a loyal customer to for many years, reports back that you have a low credit score and the computer says “no”. They will not offer you a mortgage. This is a dramatically increasing scenario. The world of credit scoring (tick box mentality) is in our day to day finances and there’s no arguing with the lender once their technology has made the decisions.

Fear not!  There are a number of options still available to you which include lenders who will assess an application manually and seek to offer assistance to such customers. It does not just include those turned away by the high street for low credit scores. It could be a case scenario that needs a bit of lateral ‘out of the box’ thinking by an underwriter keen to say ‘yes’. This could include cross collateral security for clients who are asset rich: a sympathetic view for those who have trouble in proving ‘real’ income: customers who need guarantors: those in later life, or maybe just need someone to sit down, review the whole picture and advise on the best route to take.

As with everything you purchase, it’s always worth shopping around as although you might think you have a great deal with your current provider, there may be better products out there that you are missing out on.  And make sure you do move!  Why would you stay on the lenders variable rate, after the promotional rate had ended, if there was a more cost effective rate available with another lender saving you money?  Always think of number one.

Banks may only advise on their own product ranges. 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.


And yes, there may be a small fee for this research and advice.  Prices vary from company to company and you can decide exactly who to deal with.  As with everything, before committing, make sure you read the terms, conditions and small print!

19 January 2017

AToM awarded 'Best Residential Mortgage Packager' 2016!

I am delighted to commence this week’s column with the fantastic news that AToM has received a national mortgage lender award!  We have been awarded ‘Best Residential Mortgage Packager’ by the lender Precise Mortgages, for the fifth year in a row!  It’s rare for lenders to issue awards, so this is really special and great recognition. We have a super team at AToM and this award is real credit to the hard work the staff have put in during the recent tough market conditions.

As a Mortgage Packager, not only do we work with the general public, but nationally too with many Accountants, Mortgage Brokers, Independent Financial Advisers and Estate Agents. With over 8,000 registered introducers on our databases, lenders use AToM to offer their mortgage products seeking quick distribution and marketing to all of the above. This often means that we see exclusive deals, new lenders and product innovations, ahead of the general marketplace.  AToM also collates information for the lenders, obtains employer or accountant references, instructs valuations, obtains mortgage offers and in some cases has the lenders own underwriters in our offices, enabling a quicker turnaround.

With this in mind, actually placing a mortgage with a lender is not normally difficult. The hardest part, in the recent climates, is getting the mortgage through to completion! To assist this, try not to give lenders an excuse to decline your application or refuse to lend to you. Try to pay bills on time, don’t miss payments, 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, or not!  Ensure you disclose everything upfront as lenders hate surprises!  Remember that lenders can re-credit search/credit score you right throughout the whole mortgage process.


So in short, we are a little bit like Doctor Who’s Tardis. The AToM shop front opens onto a business which has much, much more going on behind the scenes!

12 January 2017

Even the pundits say to 'act fast' to secure a good rate!

There seems to be a lot of talk from various industry pundits regarding the end of the 'good rates' in the mortgage market.  Even Martin Lewis' money saving programme this week suggested that consumers should be quick and secure a competitive rate.

Remember, that fixed rate monies are derived by the money markets, whereas tracker rates follow the Bank of England base rate and lenders decide on their own standard variable rates.

With this in mind, personally, I can't see rates having a significant increase for some time yet.  You might see the odd shift here and there, but with over 11,000 mortgage products now in the market place, this is expected.  To back this up, many lenders fell short of targets last year and with a market that is expected to be similar in overall volume in 2017, compared to 2016,  I can only see competition becoming stronger to fight for the business.

Just in the last few days, we've seen Buckinghamshire Building Society launch a first time buyer mortgage at 95% loan to value (LTV), so just a 5% deposit required.  In addition, the rate is an attractive 3.24% and the product has no product fee and £250 cash back.  This lender also reviews cases manually, rather than a credit score.

Accord Mortgages is giving offset mortgage customers £1,000 when their home loan completes, for a limited time.

Virgin Money has launched new residential and buy-to-let fixed rate loans. The range includes a two year residential fixed rate up to 90% LTV at 2.84% for first time buyers. The loan has no product fee and £1,000 cash back.  Virgin has also introduced a five-year residential fixed rate up to 65% LTV now at 1.89%.  The loan has a £995 fee, £300 cash back for purchases, a free valuation and legal fees for remortgages.

And finally, Bank of Ireland for Intermediaries has increased its maximum loan size to £1.5m for Buy to Lets and increased its upper age limit for Residential customers to 75.


So in short, despite the negative press, no one knows what's going to happen this year and with economists pulling their hair out, you just have to think of number one.  You have no loyalty to stay with your current lender when others will offer better rates.  And only you can decide if you want the certainty of a long term fixed rate, or if you are happy to see what happens with a shorter term tracker rate.  As always, terms and conditions apply and, as Martin Lewis said, speak to a whole of market mortgage broker!

05 January 2017

So, what's in store for 2017?

A Happy New Year to you all! 

In the last 12 months, we've seen many new lenders launch in to the mortgage market in addition to the current batch fighting for business by offering low and attractive rates with freebies including valuations, free legals and even cash backs.

I see 2017 offering a lot more to First Time Buyers including more products aimed at those with smaller deposits.  Shared Ownership opportunities and Right to Buy mortgages will also increase as local authorities push schemes to help get people on the property ladder.

The easy business for the high street lenders is for Home movers and those looking to Remortgage. Simple and straight forward, with some of the best rates available and subject to clients credit scores, these should be all computer decision based.
                                 
Without doubt, the most in-demand side will be the more specialist Buy to Lets, Houses of Multiple Occupation, Holiday Lets, Student Lets, basically whatever will bring in the best return for investment.  Despite the Prudential Regulation Authority introducing new rules, and considerable tax changes being implemented over the next three years, this will still be a huge part of the market as returns on savings remain low and people look for other ways to invest and make money. 

But of course as volumes increase, those with credit issues, or adverse may be turned away by the high street.  More and more lenders are launching ways to help this sector.  Nearly anything is acceptable from missed mortgage payments, to bankruptcy, to debt management plans, to payday loans.  Strict terms and conditions apply, but seek specialist advice as these can now go right up to 90% of the property value.


And let's not forget the over 65s.  Lending in to later life is a huge part of the market and more and more lenders are offering products to this age bracket.  Some with unlimited age restrictions.  As long as the loan to value is good and affordability fits, why can't anyone have a mortgage?!