26 October 2017

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

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

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

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

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

19 October 2017

Coming to the end of your mortgage life?

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

Re-mortgaging away from your current lender should not be looked upon negatively.  Many lenders will cover the cost of surveying your property, as well as covering the legal fees in transferring your mortgage from one lender to another.  But most of all, you should think of number one as this could save you money against your monthly budgets. This can only be a good thing.

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

12 October 2017

Rates rising....and great event for Landlords

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

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

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

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

05 October 2017

Rates to rise in 'near term'.

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

He did emphasise that this would be a limited and gradual process as the bank begins to ease its “foot off the accelerator” of the UK economy.  Mr Carney also warned about lenders becoming more reckless in their consumer credit lending, including credit cards and car finance.
Coming from the Bank of England, this is a bold statement and one we should all take note of.  So, is now the right time to long term fix? 

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

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