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  Permission can be withdrawn at any time.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 13^th 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. 

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!