02 August 2018

We are entering a truly unknown era as we plan for Brexit, is it time to fix?

As we move in to August (where has the year gone?), 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 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 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 as we plan for Brexit and 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 our exit.

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 their current lenders standard variable rates with little contact from their mortgage lender. Why? Simply because lenders are comfortable with you paying over the odds and expanding their margins!  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 the coming months and years.

26 July 2018

An Independent Mortgage Adviser will review the whole market for you, not just a limited few lenders.

With technology taking over the world, and so many transactions taking place over the internet, it might be easy to be attracted to products online.  There is so much information readily available and over 11,000 mortgage products to choose from, but these types of things 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 first assessed your short to long term needs and requirements.  More importantly, it could save you thousands in the long run, versus choosing the wrong products yourself. In addition, any professional will probably 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 the best rates available. 

It doesn't matter whether you are experienced, or if this is your first time.  Property ownership can be complicated, so explore all the options and do your homework.  There are a huge number of lenders available to you and all have competitive edges and good criteria options for the right customer.  Make sure you understand everything at the outset so that you don't regret it later!

A good independent mortgage adviser will be able to 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 thirteen days behind on post or electronic updates!   An experienced adviser will listen to your specific needs and timescales and ensure that they line you up with a lender who will match both. So, if speed is crucial, then you may need to consider working with a lender where the rate may not be the keenest on the market, but they will get the deal to completion within your target timescales to ensure you get the property of your dreams.  Remember, make sure you adviser looks at the whole market, and not just a limited panel of lenders ensuring that you get the widest choice of lenders and products available to you.

19 July 2018

Looking at purchasing your first property?

Looking at purchasing your first property?  Then this week’s column should be of interest as there’s a number of ways to help you get on to the property ladder that may not be widely known.

First Time Buyers will usually require a minimum 5% deposit, but product availability increases with a 10%+ deposit.  Some lenders will allow a 5% builders deposit, but this must be confirmed as a gift and non-repayable. Some lenders will allow the deposit to come as a gift from the Bank of Mum and Dad, or an immediate family member.  This can include step family, aunts and uncles and is acceptable for first time and subsequent buyers.  The money must be a transparent gift that has originated in the EU and can be easily traced back to the originating source.   A letter from the family member will usually be required and needs to advise the gift amount, relationship the person gifting the monies is to the applicant, confirmation that it is a gift and not a loan and therefore is not repayable, confirmation that they do not currently own the property being sold and that they will not live in the property or have any interest in the property post completion. 

Some lenders may allow a loan of up to 100% of the property value if parents or another immediate family member will act as guarantor or provide additional security. Those guaranteeing, in the main, will need to show evidence of affordability for both their current residential mortgage and the one they are intending to guarantor and possibly allow a charge to be taken on their own home.

All positive indeed and that’s not even touching on the number of Help to Buy, Right to Buy and Shared Ownership schemes available.

Rates have reduced lately in a bid to assist this underserved market segment and criteria is definitely more accommodating.  Income multiples tend to be between 3.75 to 4.5 x joint income and terms and conditions always apply!  However, Lenders are showing a willingness to assist First Time Buyers and in the current market, that can only be a good thing.

12 July 2018

AToM’s chairman Vic Jannels picks up ‘Service to the Industry’ award!

I start this week with some fantastic news in the AToM’s chairman Vic Jannels was awarded his second accolade of the year as he picked up ‘Service to the Industry’ at last week’s Specialist Finance Introducer Awards 2018.   The event, held at Madison in St Pauls, London, was attended by over two hundred of the industry’s finest and hosted by Homes Under the Hammer and I’m a Celebrity’s Martin Roberts.  AToM’s system, OMS (One Mortgage System), also picked up ‘Best use of Technology’ and ‘Product Innovation’.  Awesome news and well done team!

The market is pretty quiet currently, apart from the odd ‘cabinet reshuffle’ here and there and at the time of writing, we’re about to get our 17th housing minister in 20 years!  Mind blowing.

What we are seeing, despite heavy rumours of a bank of England base rate increase possibly as soon as August, is lenders reducing their current rates.  The holiday period is inevitably quieter, although add this to an already quiet market, and lenders need to attract customers to keep on track to hit their annual targets.

Just in the last week, we’ve seen Halifax, NatWest, Platform and TSB all reduce selected rates and our friends at Secure Trust launch a 90% LTV product that caters for those who have had a credit blip in the past.  There are some great rates and options around currently.

Finally, valuations on properties to be mortgaged come in various guises. Every mortgage lender will require a valuation on the property although, in some cases, they will not actually visit. This is because they can often access detailed information electronically.  Remember that this fairly basic valuation is for the lender, at your cost, and should not be relied upon as a guarantee that the property is sound and fit for purpose.  Seek a more detailed survey if you have any doubts.  Recently, and with a lack of stock readily available, we are seeing valuers ‘down value’ a property.  Just because it’s been sold at £330k, does it mean it’s worth that price or has it been sold to the highest bidder.  Always do your home work before the valuer goes out, as if he says its only worth £300k, then you’ll have to find the difference from your own pocket as the lender will only lend against the lower of the purchase price or valuation. 

07 June 2018

You have some adverse credit and the high street lenders have said no. What next?

So, you have a default? A CCJ?  Missed a payment or two here and there?  Yes, then the high street lenders will probably say they can’t help, but there’s plenty of others who will. 

These days, competition is very strong across the market and this includes helping those who have had a credit blip or two in the past.  Some lenders may even go right up to 90% of the property value for the right customer.  And, this might be surprising, but rates start in the early to mid 2%s range on some products.

Don’t despair, there are lenders out there who, subject to terms and conditions, will probably look at your scenario and have seen it all before. 

To make the process as smooth as possible, make sure you have all details to hand at the outset.  When was the default / CCJ, is it satisfied, why did it occur, etc?  Disclose absolutely everything upfront. 

With all new mortgages, a budget planner will be required.  Make sure you know and can advise exactly how much you are spending on your lifestyle.  Especially make sure you know your monthly costs on food, household expenses, travel, pension and saving contributions and other likely costs such as hobbies, going to the gym, lottery direct debits and more.  Every lender will review your ability to afford your new mortgage both now, and over coming years, so all direct debits and most entries on your bank statements or credit report will need to be advised.  This is so the lender can make a viable stress test on future rate rises and ensure that you will still be able to afford your mortgage at that time. 

Finally, despite some of these amazing products being available and lenders looking to attract new business, we are seeing general processing delays across the market.  Some lenders are not taking appointments for two to three weeks, some are up to ten working days behind on processing, and we have experienced recent telephone calls taking over an hour to receive any kind of response!  These are just on the broker side so heaven knows how customers are faring!  With some complex deals, these are not available directly, so speak to your local (and long established) independent brokerage and let them take the stress away from you.

31 May 2018

With Open Banking now available, don't give the lenders a reason not to lend.

There’s been a lot of talk recently about new technology, especially regarding the new ‘open banking’ opportunities and how your private transactions will come under scrutiny by lenders decision making computers, after you’ve given permission of course!

The idea is that the lender can review your incomes, outgoings and all other financial items just from delving in to your account, via open banking.  Big brother indeed.  The aim is to speed up the financial transaction and allow institutions to access your data at the touch of a button, as well as providing more competition and innovation to financial services.

The downside is that whatever is in your bank statements, lenders must take it into account when deciding whether to lend to you, or not.  There’s no hiding and now no apparent limit on time to be reviewed.  Currently lenders tend to look at just the last 3 months bank statements, but with open banking data at their fingertips, this could be unlimited moving forward.

With this in mind and so many recent rate and criteria changes, lenders will look closely at an individual’s recent payment profile, how many recent credit searches have been incurred by financial institutions and more.  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.  Try and ensure there’s no missed or late payments as these will also decrease your credit score.  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.  

Finally, so you’ve done all the hard work and gone through the whole mortgage process with the lender providing you with a mortgage offer and you can now sit back and relax.  Wrong!  Although the ‘binding’ mortgage offer has been issued, until you have completed on your new mortgage, the lender can still decline to proceed with their offering.  If you take out any finance, have lots of credit searches done or miss any payments after the mortgage offer has been issued and before completion, it could be that the lender will re-credit score you before completion, especially with the now easily available open banking access, and uncover something that might not be to their liking or mortgage conditions.  Always seek professional advice.

24 May 2018

AToM Chairman awarded 'Outstanding Contribution' at Specialist Lending Awards 2018

I start this week with some fantastic news!  AToM’s Chairman and Founder (and my father!) Victor Jannels, received an award for his ‘Outstanding Contribution’ to the mortgage industry last week. The British Specialist Lending Awards ceremony was held at the spectacular London Waldorf Hotel and Vic was truly surprised and delighted, thanking everyone for their kind support and nominations.  Well done VJ!

In other news, the market is reported to be pretty flat currently, some estimating the impact on April was as much as 25% lower in property transactions than during March 2018.  

With this in mind, it’s good to see a number of lenders making changes to criteria or launching new products to try and offset the downturn.

One such lender, Kensington Mortgages has increased its loan to value (LTV) to 90% of the property value up to £1m loans, including options for those who might have had a credit blip previously.  This also includes new build flats and right to buy flats.  For those with a 20% deposit, the loan can go as high as £2m.

Staying with Kensington Mortgages, they’ve also added Limited Company mortgages to their Buy to Let options, up to 80% LTV, and offer a simpler process with limited company investors only being assessed on the property portfolio of the company.  Terms and conditions apply!

Rates have increased slightly though with Moneyfacts, the data provider, suggesting that the average cost of a two year fixed rate has risen to a twelve month high of 2.52%.  Whilst five year fixes remain the most popular in recent months, demand for shorter deals has been rising.  Changing SWAP rates (the mechanism through which lenders can acquire a fixed price for funding over a specific period of time) has seen a number of lenders reprice upwards over the last week or so, and although not directly linked, this is despite the Bank of England base rate remaining at 0.5%. 

This should encourage anyone considering reviewing their mortgage options in the not too distant future, to possibly consider it sooner as the ‘rate hike’ hints keep coming!  Always seek advice! 

17 May 2018

Aldermore have launched a fantastic lending in to later life proposition.

I’ve mentioned lending in to later life a number of times over the last few weeks.  It’s a market that is heavily underserved and one that a number of lenders are looking to assist over the coming months.  At the moment, it’s a product range only really offered by the smaller lenders who can think on a case by case basis and take all things in to consideration. However, just recently, some of the larger lenders are realising what a huge market this is and are taking action.

On the high street, some lenders will now consider applications from those over 55 and allow a term up to their 80th or 85th birthdays.  At this point, the mortgage must be repaid.

So credit to Aldermore, a ‘challenger bank’, who have looked at what is on offer, taken many considerations in to account and launched a true alternative to Equity Release in the form of a ‘Lending in to Later Life’ product. 

The key highlights are that you can apply up to a maximum age of 85!  They will allow a mortgage term up to your 99th birthday and they will consider Interest Only.  They will also consider allowing retired borrowers to remortgage their interest only loan when it comes to an end, using the sale of their property as a means of repaying the debt.

In order to qualify for the interest only option, borrowers must have a minimum of 40% equity in their property and can choose from a range of two, three, five and ten year fixed rate deals.  There is also a variable rate option and if on a repayment basis, the loan can be offered up to 75% of the property value, subject to terms and affordability.

This product will also allow home owners to release capital to help family members with deposits for new properties, release equity to help with future income requirements, pay existing debts, or help with inheritance tax planning, and so on.

Revised rules from the regulators will now allow retired individuals to use their home as repayment of interest only debt, which was restricted only a few years ago.  Therefore, this great Aldermore launch could be the first of many to come... and with only four companies in the UK having access to its limited launch, AToM is delighted to be able to offer this product.       

10 May 2018

Two million people have their mortgage on a lenders Standard Variable Rate!

It is estimated that over two million people have their mortgage currently sitting on the lenders Standard Variable Rate.  These are the findings of the Financial Conduct Authority’s interim review of the mortgage market competition.  The regulator found that consumers are more likely to stay with their existing lender, rather than move to a new lender where the rates could be cheaper.   

Although, close to half of those currently on an SVR would not benefit from switching, as they are already on a good rate, or close to the end of their mortgage term.

Interestingly, and worryingly, the report also estimates that over 260,000 borrowers are with lenders who are not authorised to offer them new mortgage products! This is because the lenders ‘sold on’ the customers mortgages to another institution. This is obviously concerning as customers are paying over what they need to and may not be able to move to a better lender.

However, it is surprising how many people don't review their mortgage rate frequently.  Many still believe that rates can drop further and some just really can't be bothered with the hassle to change.  The reality is that we are on a knife edge and rates are predicted to increase further, but the mortgage pundits are now suggesting later in 2018 is more of a realistic expectation for the next rate rise.  As such, many are now taking advantage of the opportunity to remortgage with a free valuation and free legal costs but are chancing their arm with a short-term tracker rate (lower rates than fixed, but can fluctuate).  Whatever your risk appetite, the options available now are likely to be better and cheaper than sitting on a lenders standard variable rate.

Another reason people don't switch is because they think they are too complex to be helped.  In a rapidly expanding market with highly competitive rates, many lenders have looked at other ways to assist customers rather than just pay rates.  This can include criteria such as types of property, types of customer, income make up, guarantors, charges on more than one property and so on.  The likelihood is that you are not alone in your requirements and there will be a lender out there willing to assist and who probably needs you just as much as you need them… 

03 May 2018

Market is flat, but competition is high. What about a bridging loan?

With well over 11,000 mortgage products on offer throughout the mortgage finance market, competition is fierce.  However, the actual market itself is pretty flat and seems to be taking some time to recover from the two week Easter break!

Lenders are actively looking to assist clients with great product options and despite some longer deals increasing in rates, quite a few have been reduced to try and attract new business.
What we have seen recently are a lot of enquiries to remortgage for home improvements.  Increasing the value in your property can involve large renovation, adding a room or two and a general investment in time and builders.  Or smaller cosmetic changes such as up-grading kitchens, bathrooms, redecorations and so on.  Whether large or small, the investment in property can bring rewards to the value and if you are staying put, reward in the satisfaction of home comfort.  Plus, a potential large saving in stamp duty too, versus moving home!

Whilst rates remain relatively low, and this has become apparent across all sectors of the market including both Bridging and Commercial, the consumer has choice.

Bridging Finance (now also known as short term lending) is money to be used in the short term to facilitate a financial transaction which has either an urgent or short lifespan and which is primarily geared to a property transaction. The most regular type of transactions include: a property being purchased at auction: the purchase of a new property whilst the current one is still being sold - usually when downsizing: acquisition of a property which needs substantial renovation before it is suitable for a traditional mortgage or payment of an unexpected expense whilst more regular finance is being arranged.

There are a myriad of other reasons for which short term lending can be applied and each application is looked at on its own merits before a lender will agree to assist. The best way to look at this is as a means to an end. These lenders will need certainty on the exit route (how will they get their money back?) and they will always insist on an agreement being in place from a traditional mortgage lender to provide a mortgage, at a given time and once any requirements have been fulfilled. So, short term lending is designed to fulfil the need or desire to act quickly. We have seen funds drawn in 48 hours from application! Beware though, this type of lending is not the cheapest and always seek professional advice.

26 April 2018

Lending in to later life - age 65+, no problem!

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.

According to some lenders reports, there are an estimated 600,000 people due to come to maturity on their interest only mortgage by 2020, aged over 60.  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 is likely to advise them - they just want their money back!).

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..

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 family home!

19 April 2018

The mortgage process is pretty straight forward, whatever your scenario.

Arranging a mortgage can take time.  But actually, the process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same.  On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance. At this point you can shop around and should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you.  Advisers are required to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any charged for advice or consultation.

A good advisor will complete a financial fact find ensuring that they fully ‘know and understand their client’s financial position and requirements.’  This is necessary before any ‘advice or recommendation’ can be provided.  Be patient as this process can be lengthy.  It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements. Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually online with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score.

DIP decisions are normally instantaneous.  Assuming success, it is then up-graded to a full application. Payment for survey is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements.  Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitor’s conveyancing process, you are now on the road to completing your mortgage process.And finally this week, if you want to find out more about Buy to Let mortgages, the Property Investor and Homebuyer show is taking place at the ExCel exhibition centre in London on 20th/21st April.  Well worth a visit and AToM will also be exhibiting.

12 April 2018

In January, the average mortgage interest rate was 2.53%. How does that compare to yours?

Some eye watering statistics from The Money Charity this week.  The Charity has reported that total mortgage lending stood at £1.37 trillion at the end of January.  This is up from £1.32 trillion in 2017.  Averaged over the 11.1m households with a mortgage, this equates to £123k per home in January.
The average interest rate was 2.53% at the end of January.  Product offerings now exceed 11,000 across the market and rates start from circa 1%.

There were 24,840 loans approved for house purchase in January, according to UK Finance, 5% lower than a year earlier.  The average loan approved was circa £189k.

This decrease is interesting as it is a common knowledge that owning a home can be cheaper than renting.  The report goes on to suggest that inclusive of all benefits, private renters spent an average of 34% of their income on rental payments.  In comparison, people who owned their home only spent on average 18% of income.

The Ministry of Justice reported that 47 mortgage possession claims were issued every day, throughout quarter four 2017.  31 mortgage possession orders were made every day.  18 properties were repossessed every day.

And just because this caught my eye - Child Poverty Action Groups ‘The Cost of a Child in 2017’ report estimates that couple families now spend £155,142 on raising a child to their 18th birthday - £23.61 a day!  This is up 2.4% compared to last year.

This will go some way towards why the report suggests that around 9.45m (35%) households have no savings, while a further 2.97m (11%) have under £1,500. 

I know, stark figures indeed.  But sometimes we do just need to review what we have, where we are at and how can we change things.   It always surprises me how few people know what rate they are on, the type of mortgage, i.e., fixed rate, tracker rate, etc, and whether they are paying interest only, or capital repayment.  Unsurprisingly, almost everyone knows what it costs per month to the nearest penny! They will haggle for a £10 discount on a new washing machine, or sky TV,  but will stay with the current lender when their ‘promotional rate’ period comes to an end, ‘brush it under the carpet’, and deal with it ‘tomorrow’. But, we all know tomorrow never comes.  A review of what’s on offer from other Lenders could give you a nice surprise and probably a few extra pounds in your pocket!  

05 April 2018

Piazza Italia was superb! Lenders launch in to Near Prime for those with small deposits

This column is always a difficult one to write in the middle of the Easter holidays and whilst a lot of people are away, including myself!  So, whilst writing this from our ski chalet, I do look around the surroundings and weigh up the local house prices and compare to those back home.  We are most definitely an expensive comparison.  With this in mind, I wonder how first time buyers manage to save alone, without the help from the bank of mum and dad or grandparents, in the current climates, most probably still whilst paying to rent a property?  Which incidentally, will be a significant amount more expensive on the monthly payments than a mortgage probably would be!  This is of course on the basis that the clients have no issues, which, as more and more people apply for a mortgage, more and more fall out of the ‘high street’ model.  Some give up, whilst others look for the alternative mediums out there, such as ‘whole of market’ mortgage brokers, who have access to lenders who want to help. 

Lenders recognise that they should be helping those who may have had a blip in the past.  Just last week, our good friends at Kent Reliance (part of the One Savings Bank group), launched a mortgage for those with a 10% deposit, that may have had a default or CCJ over two years ago, or a missed mortgage payment over one year ago, with rates starting from just 3.19%.   Terms and conditions obviously apply, and these deals are only available through a limited few. 
They join another lender, Kensington Mortgages, who also offer a similar offering for those with just a 10% deposit.   However, that means that only two lenders in the whole market will consider someone with a historic blip and just a 10% deposit.   These two lenders must be applauded for leading the way.  But overall, this needs to change and more lenders need to follow suit and offer assistance. 

Finally, hats off to the organisers of the Easter weekends Piazza Italia.  Despite the weather, the crowd turnout was fantastic, as was the entertainment, and it looked like everyone enjoyed themselves.  AToM was delighted to be a sponsor and well done to all involved.

29 March 2018

Lenders will look at your bank statements.

When applying for a mortgage, there’s no shying away from the fact that lenders look at bank statements!  Whether it be paper based or via the new ‘open banking’ technology, your private transactions will come under scrutiny.

I’ve mentioned it many times over the years in my columns and highlighted that whatever is in your last three months bank statements, lenders have to take it into account when deciding whether to lend to you, or not.

Sadly, in the last two weeks alone, we have had to turn away 18 cases, yes 18 cases, due to the customers bank statements (even though we can do All Types of Mortgages!).
So, why would this happen?  It could be that the client forgot to disclose they had a payday loan (short term funding until payday arrives).  These types of loans work for some people, but most of the lenders treat them as an adverse entry.  Despite what the ‘bar room adviser’ says, they don’t help towards your credit score!

Or it could be that the client forgot they exceeded their overdraft limit last month.  Just a little bit, only for one day, but it’s registered.  And that can mean disaster for the mortgage enquiry as it’s perceived you can’t manage your monthly finances.

What about transferring money from accounts resulting in a direct debit bouncing and being paid late?   Unfortunately, this is also looked upon negatively.

And there are numerous others, which include forgetting to disclose the student loan, or a 0% interest car loan, or even the monthly payment out to your pension.   Whether via bank statements, or via a credit search, the lender sees all debts and any monthly payments must be taken into account when it comes to affordability.

So, plan ahead.  Work out your budgets, what your monthly payments are and anything else that you need to disclose, before you go and see your local and independent mortgage adviser.  It’s time well spent and will stop any unnecessary delays, or possible declines, later on.

22 March 2018

Self Build, refurbishment or development? There are plenty of options..

As the local area continues to become a virtual ‘new homes exhibition’, there are a number of lenders also assisting customers with more private projects such as development, self-build, or if you just want to upgrade your existing property by way of refurbishment. 

On a self-build, the customer normally buys the land and the lender will issue the funds to build, on a stage basis. Normally once the foundations have been laid, property built to eaves level, made watertight and so on.  At each stage a valuer will review and advise the lender of progress and to enable the release of payments.  You will tend to find the lender will lend on the Gross Development Value (the end value).

On a full refurbishment, again, the lender will want to know the plans and may lend in stage payments against the end value of the property, depending on the extent of the works involved. They will almost always require a schedule of works – extension plans, kitchen, bathroom, etc. 

The lender will require sight of all planning permissions and estimates of costs involved before lending any funds.  Seek out a local architect to assist you with plans and costs and always make sure you set out accurate budgets from the outset.

Lenders will cater for all types of scenarios (dependant on the exact type of works required!).  Each lender will work on the valuers comments once they have visited the property and adjust their offerings accordingly.  Just because the high street or your current lender says no, does not mean that it can't be done! 

Have you heard of the Tipton Building Society?  What about the Saffron, Harpenden, Principality, Dudley, Furness, Shepshed, or the Stafford Railway Building Societies?  Not necessarily household names, but we are seeing these names and a lot more like them launching innovative products.  Not always looking for huge volumes but looking to fill gaps in the market and this should be applauded.  
A good broker will, in most cases, have a relationship with these types of lenders, understand their requirements and ensure all the correct information is submitted from day one.  There really is no better time to utilise the expertise and staffing levels they can provide for you in what’s becoming an over informed and more recently, highly competitive market place.

08 March 2018

Have you been offered a 'Product Transfer'?

I am looking at two main categories for this week’s column. 

First off, it’s product transfers.  These are the options the lender will give you to stay with them.  So, you’ve been with your current lender through the term of your deal - normally a two year tracker ends after twenty four months, or your five year fixed rate might end on a specific end date.  Either way, the lender will normally write out to you three months in advance to offer you the next ‘big deal’.  Or is it?  I’ve had one high street lender offer a client of ours a deal 0.3% higher. To put the boot in, they are also actively offering rates 0.5% lower to new clients.  So, a client on 1.6% and wants to remain with their lender, who are offering them 1.9% to stay.  The same lender is offering new customers 1.4%!  So much for loyalty.  We had another recently where the lender wrote out and offered the clients a great deal to stay.  The client spoke to one of our mortgage advisers, who could offer a rate 0.1% lower, to stay with the SAME LENDER!  It really pays to look around and double check that you are being offered the best deal.  Plus, although the lender may not mention mortgage brokers in their renewal letter to you, nearly all lenders now offer product transfers through brokers. 

Which brings me on to my second point, choice.  It is still tough to get a mortgage in the current climate and now, more than ever, you should do your homework and speak to a ‘whole of market’ mortgage adviser and compare all mortgages available. If the person you are speaking to is not offering whole of market advice, i.e. they just review a panel of selected lenders, you may not be getting the best product for your needs and/or requirements.  For some of the larger brokers, lenders may even put one of their own underwriters in-house, so that your application can be processed within their offices.  This helps with speed, instructing valuations and dealing with queries quickly.

And remember, you can place your mortgage with whoever you like. You are under no obligation to anyone, despite what some may say! Everyone covets your business and there appears that there may be some unusual and possibly non-compliant tactics being used to gain your signature. Bedside manner counts! If you don’t like their stance, or they’re ‘forcing’ you to use them, walk away….

01 March 2018

Can you pay today and also over the next five years?

In our heavily regulated mortgage marketplace, the lenders main area in deciding whether to lend, or not, is on your ability to pay the mortgage both today and also in the future.  It's difficult to detail when I have a limited word count, but in the main, lenders will stress test all mortgages against a possible rate rise and underwrite the applicants 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% (even though bank base rate is 0.5%).  However, a five year (or longer) deal may be stress tested against the pay rate, which might only be 3% 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.  Longer term fixed rates can also be good for the end consumer as they should get the loan they want, but also the monthly payments remain fixed for the next five or more years.

Whilst in the 'planning' frame of mind, and with so much talk about rates increasing, have you reviewed your current financial arrangements to ensure sure you are on the best deal available?  

Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, right now, there are a number of attractive five year deals, and also some ten year deals currently available.  Potentially great value if you know your plans for the longer term and prefer to fix your monthly payments.

Other things to consider - Do you have a Will?  Statistics show that only one in three people currently have a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.  Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more?  Any of these products might be beneficial to your personal circumstances or needs, especially if you have children, and with competition increasing, these types of products are not as expensive as you may think. As always, seek professional and open market advice.

01 February 2018

Can a 'Cryptocurrency' help you buy a house?

You’ve probably seen some of the hype around the rise of what’s called ‘Cryptocurrency’.  Specifically, relating to Bitcoin and other similar electronic currencies.  Currently they are not regulated and their price can fluctuate immensely day by day.  However, there have been a number of success stories and thus providing funds which could possibly be used as a deposit for a property.  Normally, lenders will want to see a build up of savings, or proof of where the funds have come from, inheritance etc.  With no formal category for this type of return, and no formal guidance from the regulators, some lenders may class it as gambling and not allow it as a form of deposit.  Despite some lenders confirming they will assist, some of the major high street names have already confirmed they will not accept deposits derived from cryptocurrency. With technology thriving as it is and some cryptocurrencies now worth hundreds of billions dollars worldwide, this could be deemed quite an ignorant view.  I suspect, as they become more widely known and used, only time will move this forward.

With this in mind, Technology plays a major part in our financial world.  Some lenders already do a lot of their functionality via a mobile app, including voice and face recognition.  Impressive hi-tech stuff indeed.

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, some entities launching ‘robo advice’, 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 too confusing, pick up the phone!

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!