Be aware of the technology around your mortgage application

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.

Not all lenders have signed up to this as yet, but it’s only a matter of time.  Therefore, be mortgage ready.  If you accounts are all over the place, tidy them up!

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, many customers forget to disclose an old student loan, or a 0% interest car HP agreement, or even the monthly payment out to a pension.   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 everything 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.

Tesco Bank and Which? Mortgage Advisers gone. Yet others launch new products.

Market conditions continue to cause huge uncertainty and as such, we’ve seen some lenders pull out of the market until more stable conditions return and others completely stop lending.  The most recent being Tesco Bank.  They announced that hey have ceased all new mortgage lending and are actively looking to sell their existing mortgage portfolio, to concentrate on serving a broader range of customers in more specific areas outside of mortgages. 

Whilst this is a slight negative for the mortgage market, as their lending book amounted to over £3.7bn, others continue looking for ways in which to help attract new business.

We’ve seen some great new product additions and just in the last few days, our friends at Masthaven Bank have launched some fantastic products aimed at the Buy to Let sector.

This includes the launch of a new ‘Specialist Property’ product to cater for a wider variety of property types including:

- Multiple unit freehold

- Larger Houses of Multiple Occupation (7-10 rooms) on single or multiple Assured Shorthold Tenancy (AST) agreement

- Flats on floors 10-20

- Retirement accommodation

- Modular Housing

They’ve also launched a new ‘Specialist Landlord/Tenant’ product to cater for a wider variety of landlord and tenant types including Holiday lets, Airbnb lets, DWP/Asylum tenants and Houses of Multiple Occupation/Student accommodation (6 or fewer rooms on a single or multiple AST).  Great news. 

Further assistance for the Buy to Let sector was also launched recently by another lender who now allows for ‘Top Slicing’.  Basically, rental income is used to calculate the loan amount. If there is an excess, this may be used to assist other properties where the rental income falls short. Or if the rental income is not quite enough to reach the loan required, the customers income may be taken into account to ‘top up’.

Finally, Help to Buy (HTB) schemes have also been given a boost.  We have a lender who offers free standard valuations on all HTB products available in England and Wales.  They will also consider schemes with 5% Builders incentives and allow the mortgage offer to be valid for 6 months with extensions possible.

Obviously with all the above, terms and conditions apply and it’s down to the lenders standard underwriting and affordability checks.  But these are signs that despite the uncertainty, there are active and proactive lenders looking to help all types of customers.

Buy, Sell, Renovate, Rent? So many opportunities.

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 into this sector over recent months and 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 current provider. This can only be a good thing.

Finally, once you have more than four properties, the regulators/lenders class you as a ‘portfolio landlord’. Although each lender’s requirements are different, in the main, this entails a more in-depth investigation and underwrite of your situation.  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.  Be aware if you are in a rush as this underwrite can take a little longer than a standard mortgage process.  

Cryptocurrency still not widely accepted in the mortgage world.

There’s been a lot of hype around the rise of ‘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.  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 billions 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.

In the meantime, and especially in the current climates, you should do your homework and speak to a ‘whole of market’ mortgage adviser.  They might have an avenue for such a transaction.

However, 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! If you don’t like their stance, or they’re ‘forcing’ you to use a specific adviser, walk away….

Finally, we are delighted that Impact Specialist Finance has been nominated for Best Product Innovation; Best Use of Technology; Bridging Distributor of the Year, Best Buy to Let Broker and Specialist Finance Business of the Year at the 2019 Specialist Finance Introducer Awards.  Brought to you by Mortgage Introducer, the SFI Awards celebrate all that is great in the specialist mortgage sector.

To help us, we need YOUR vote please!  You can nominate at https://sfiawards.co.uk/voting/.  Thank you in advance!

United Trust Bank launch a market friendly mortgage offering. But be quick!

Let’s not beat around the bush, it’s tough out there!  We have seen numerous local and national retail outlets and banks recently confirm they are to reduce their store or branch numbers as the ‘online versus shop front’ takes further casualties.  

In addition, the finance sector is also finding it tough.  Despite already losing some lenders with funding issues, other lenders are delayed with processing mortgage cases.  One we know is at least two full weeks behind and then a further week to produce the mortgage offer!  Certainly something to check before you proceed with a lender, especially if you’re in a rush to buy that ‘dream home’.

On the plus side, it is encouraging lenders to become more innovative and think about more differentiating ways to attract new business. 

Our friends at United Trust Bank have launched a very limited distribution remortgage range that allows each application to be assessed on its merits and does not aspire to the ‘one-size-fits’ all mentality.  This includes:

-        No requirement for a minimum credit score.

-        No restriction on property construction types

-        No loan to value restrictions on any flats

-        No borrower legal representation required

-        No penalties on five-year fixed rate products.

-        Free valuation up to a property value of £250k.

Obviously, terms and conditions apply, but this shows that lenders are thinking about unique angles to assist clients, especially with regards to remortgages and speeding up the process.

With this in mind, I feel the need to 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 have loaded the credit card balance up during the Easter 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, Car HP/PCP agreements and student loans. They are all taken in to account.

Finally, we have also seen a vast increase in customers looking to consolidate debt and add these amounts to their current mortgage. This can sometimes cause issues. If you consolidate unsecured finance into your mortgage, whilst your monthly payments may be lower, you may be paying more for your debt over a longer term.  Always seek professional advice, read the small print and don’t rush in to things.