Brexit, uncertainty, opportunity!

Wow, February already!  Time flies.  It also brings us another month closer to Brexit.  Uncertainty remains and nobody knows what lies around the corner.  However, we’ve been through this before.  Remember the millennium bug that was going to be the ultimate in chaos, computers wouldn’t work and the world would be a worse place, etc etc?  But it didn’t and it wasn’t!  Life will continue the following day after Brexit and we can move forward, whatever the outcome.  The future might just be slightly different from beforehand, but we adjust.  That includes our financial sectors.  It had a huge downturn and readjustment back in 2007 and we lost a large number of lenders.  But, over the last 24 months a number of those same funders have reinvested in new lending platforms and opportunities have arisen again.

With uncertainty brings change!  Several lenders have recently changed rates or criteria in the market to assist customers.  

VIDA Homeloans has increased its Buy to Let loan to values from 80% to 85% for loans up to £250k for properties outside of the M25.  This now means there are three lenders in the market that only need a 15% deposit for a buy to let.

They have also increased their Residential loan to value offerings from 85% to 90% with a max loan of £400k.  A number of their rates have also dropped by up to 0.5%.  Great move from this specialist lender.

In the mainstream sector, we’ve seen changes from Virgin, Platform, TSB, Barclays, Coventry and Saffron Building Society.  Some rates up, some rates down.

Complex scenarios are on the increase.  We had one recently where the clients had built a number of properties but could not sell them for the desired price, siting Brexit as a major factor in this.  Having financed the build with development funding, this can be quite expensive if you run over the agreed timescales.  In addition, this company was running at a loss for this project, as all the building costs had been put through the accounts without the counterbalance of the properties selling to recoup funds.   Not a case many lenders would look at!  However, a lender was found who was willing to assist due to the fact that the clients had previously completed many projects like this, had a number of shareholders, and, as they were converting the properties in to Buy to Lets, this would be a long-term venture.

This is the benefit of using an independent adviser rather than anyone limited to a small selection of mortgage lenders and a restricted panel.

Mortgage prisoner? There's light at the end of the tunnel...for some.

Around 140,000 people with mortgages are currently classed as ‘mortgage prisoners’.  This means that they could be with a lender who is no longer active, or a lender who has ‘bought’ a number of clients from other lenders but who does not offer additional mortgage products once the customers current incentive rate period comes to an end.   So, effectively, the client will sit with the lender on their standard variable rate, normally a lot higher than incentive rates, and because of various reasons, they may not be able to move to another lender.  This could be due to their loan to value (amount borrowed against the value of the property), or maybe that particular lender at the time had attractive, exclusive income multiple calculations, which are no longer offered or new and stricter criteria no longer enables them to change lender. 

Many of the mortgage industry have campaigned for some time to try and assist these customers.  It seems the regulator has taken note and issued a consultation paper.  I stress, this is only at consultation stage, but it shows that this is now a concern and the regulator is seeking a way forward.  One part of the consultation entails a ‘relative’ test, rather than ‘absolute’ test.  This would check to see if the new mortgage costs would be cheaper than the current costs.  As such, the client may be able to transfer to another lender with minimal checks, underwriting and fees (normally this would be classed as a product transfer if the client was staying with the same lender and changing to a better deal).  This also assumes the new lender has made a commercial decision to see if this works for them in taking on these customers.

I can only see this truly working if all lenders in the market are ‘encouraged’ by the regulator to make this work.  Not all customers will be able to be assisted but it is a step in the right direction and that can only be good news for those who are currently paying way over what they should be.

Finally, we’re looking for staff to join our fantastic team in Horsham.  Ideally, we’re looking for mortgage brokers who have been in the market for at least a year and have a proven track record in customer service and recommending mortgage and protection products.  If this is of interest, or you know someone who is looking, please get in touch.

Don't stay on the lenders standard variable rate for the sake of it!

2019 has started as expected, with the main stay being uncertainty. Already we’ve seen three lenders stop lending or pull all of their products due to ‘costs of funding’ and ‘uncertain times ahead’.  This is all a bit ‘de ja vu’ compared to back in 2007/8 before the big ‘crash’.  However, this time we’re not on the verge of a global recession (hopefully) and once we know what lies ahead for Brexit, things should return to some normality, whatever that may be. 

Lenders want to start the year with a flurry and a number of lenders have launched limited edition products.  These are short term offers and therefore if you are looking to secure your ‘uncertainty’ for the next three to five years, there are some great deals to be had currently.

It always surprises me how few people actually 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, whilst letting ‘sleeping dogs lay’ when it comes to the mortgage!

It’s very easy when the promotional rate period comes to an end to keep your mortgage with the same lender, ‘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 start for 2019, especially if you’re currently on a Standard Variable Rate, or equivalent.   These tend to be a lot higher than what’s available in the market place.

Many Lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations and some with legal costs.  Rates are competitively low and mortgage product choice is at its highest for some time.

If there’s ever a time to review all options, now might be a good time, as after Brexit, who knows where we will be..