The issues facing first time buyers, homeowners and potential movers!

To say that the government is currently under a substantial amount of pressure is something of any understatement. Keeping political points of view or persuasion on the sidelines, the handling of the coronavirus pandemic and Brexit remain huge issues which are dominating time, resources and attention.

I fully appreciate the importance of tackling these concerns and the major toll they are having on the health – physically, mentally and financially – of the UK population. However, there are also a number of other areas which the government can ill-afford to ignore across the housing and mortgage market.

The problems facing mortgage prisoners are mounting and a recent report from the London School of Economics (LSE) has put the onus and ethical responsibility on the government to solve the mortgage prisoner crisis quickly and recommended a package of measures to do so.

Another situation which is cause for great concern revolves around cladding, and finding appropriate solutions for such deputes should also be high on the government’s agenda. Through no fault of their own, all too many people continue to find themselves in a position where it is neigh on impossible to sell certain property types or even remortgage them - which is an unacceptable outcome.

There are also question marks in the air around whether the government will extend the stamp duty deadline in light of some lending, survey and conveyancing backlogs which are having knock-on effects on a growing number on housing chains. A trend which will only intensify in the coming weeks.

These are just some of the issues facing first-time buyers, existing homeowners and potential homemovers. In the current economic climate, there are many extra layers of complexity for all those involved in the mortgage journey. And this really does outline the importance of impartial, independent financial advice when it comes to  overcoming a growing number of challenges and ensuring that people have access to the right kinds of financial options to match their current, and future requirements.

So, speak to a specialist, impartial, independent adviser about your property related needs in this increasingly uncertain marketplace.

A number of factors are driving activity throughout the Buy to Let sector

It’s fair to say that the money pages often tend to focus on the negative parts of the Buy-to-Let (BTL) market rather than the positive ones. I’m sure you will continue to see headlines around landlords selling property, but what you are less likely to read about is the continued resilience being shown by lenders, landlords, developers and investors - both domestic and overseas.

A number of factors are driving activity throughout the BTL sector. The obvious one being that a growing number of landlords are taking advantage of the current climates to expand their portfolios and tap into some changing tenant demands and priorities – in relation to property type, flexible home working capacity, location and outside space.

Houses appear to be more in demand than flats and it’s widely suggested that a greater number of people are looking to rent for longer. The return of the student population has also played a key role in both increased activity and demand. There was no guarantee of this happening during the early summer months and this represents a significant proportion of the BTL market, especially for professional landlords. The more specialist areas such as holiday lets and ex-pat BTL are also seeing additional options emerge and there is also growing demand among first-time buyers looking to enter the BTL market.  

This was highlighted in recent data from Legal and General which showed that criteria search combinations for first-time buyers, first-time landlords and non-owner occupiers have seen an 18% increase since the beginning of September. The data also showed that ‘holiday lets’ was the second most searched term among mortgage advisers in September, moving from the top spot in August. International travel restrictions have fuelled an increase in demand for ‘staycations’, with many choosing to holiday in the UK rather than travelling abroad.

The importance of the private rented sector continues to rise as the housing supply gap widens, the amount of affordable housing being built lessens and demand for rental property will only grow. These factors are generating more opportunities for landlords and lending appetites are escalating to provide some highly competitive funding options.

So, if Buy-to-Let is something you are considering, speak to the professionals and especially a specialist in this area, in order to make the right impact..

Demand across the rental market remains strong.

The purchase market is currently buzzing. In a throw-back to some of the heady days of old, we’re hearing stories of bidding wars and properties being snapped up before they even come onto the market. It’s clear that whilst the raising of the stamp duty threshold has certainly worked to accelerate activity across the housing market, changes in people’s working and financial circumstances are affecting their decision-making process. Meaning that the value attached to good, professional advice has never been higher.

Demand across the rental market also remains strong as many potential homebuyers from the pre-lockdown period are currently being forced into renting for longer due to lingering economic and workplace uncertainty. And some demands over the size, quality and location of these rental properties are also shifting.

Here at Impact Specialist Finance, we’re seeing a swell of activity within the buy-to-let (BTL) marketplace as a wide range of investors, developers and landlords are looking to take advantage of the stamp duty tax break. This was reflected in research from cherryplc.co.uk which outlined that more than half of brokers have seen an increase in buy-to-let purchase business in recent weeks. 57% of brokers said they had seen a rise in purchase business, compared to just under 12% who reported an increase in demand for capital raising on a remortgage.

In addition, more than 30% have seen an increase in individual purchases and nearly 27% have seen an increase in limited company purchases. There has also been an increase in the number of clients with more specialist BTL requirements, with nearly 8% of brokers seeing a rise in demand for houses of multiple occupancy (HMOs) and almost 4% seeing more enquiries for lending on both multi-unit blocks of flats and holiday lets. This uplift within the intermediary market is reflective of increased momentum across the board as the more professional end of the landlord spectrum are actively looking to add to their portfolios and acting swiftly on the opportunities that are currently presenting themselves.

Confidence around the BTL proposition is growing as more and more lenders are re-entering the market after a temporary break due to lockdown restrictions and competition is swiftly rising, especially amongst specialist lenders and with the option of 85% loan to value now being back on the table.

Many challenges remain but the importance attached to private rented sector is all too evident. And the sector - alongside a robust advice process – will continue to evolve to meet this growing demand, not to mention ever-changing landlord and tenant needs.

Rates being pulled quickly, have your paperwork ready!

The current climates continue to affect the mortgage market in many ways.  We’ve seen lenders pull rates quickly, decreasing rates one day and increasing them the next.  We’ve seen some lenders remove the higher LTVs (Loan to values) 95%, some removing 90% and others removing 85%.  We have seen some lenders launch limited edition products and others have not re-entered the market at all!  All signs of the times and of the fast-moving pace of the money markets. 

The only certainty seems to be uncertainty and where lenders may have previously considered clients on furlough, or those who have taken bounce back loans within their businesses, this may have changed as lenders look to ensure clients can afford the mortgage for the next six months and onwards.  Some require a letter from the client to confirm this whereas others may require to view bank statements to prove they have the funding. 

Some lenders may have previously taken all of a client’s bonus or commission when working out affordability, but more recently have reduced this to 50% of received monies.  We’ve seen one lender limit the maximum term of the mortgage to 25 years for first time buyers and change their acceptance on where deposits come from, for example - gifted deposits.  

With changes happening quickly, it is vital you get all the documentation required to the lender as quickly as possible to secure your rate and that product availability.  Especially as some lenders are receiving pre-covid volumes of business, but only with 50-70% of normal staffing levels.  This means that some lenders can be weeks behind and if you only provide certain items, you may find that you go to the back of the queue when the outstanding items required are submitted, which extends the delays. 

Most lenders will no longer prioritise the valuation of the security property.  They will assess the whole mortgage application and confirm agreement to proceed before instructing the valuation.  Be aware of this as Estate Agents need the valuation instructed asap.  Depending on the lender you go with, this could take a few weeks.

Finally, expect this to continue for some time.  Not just because of the ongoing pandemic, but also with the stamp duty temporary changes taking effect, a lot of people are trying to move before the end of March deadline.  Good for the property market, but who knows what may happen with processing, criteria and resulting inevitable delays over the coming weeks and months.

A good time for first time buyers?

Recent changes to the stamp duty threshold have attracted a growing number of enquiries from First Time Buyers (FTB) looking to take advantage of this short-term tax break in order to get their foot onto the property ladder.

This is a great time for FTBs to take the leap but as we continue to operate in a transitional lending marketplace, there are still many things to consider.

So, here are some tips for FTBs.

• Let’s start with a simple piece of advice. If you are an FTB considering purchasing a new car and a new house – purchase the house first. Financial commitments such as car finance repayments can quickly limit affordability on FTB applications.

• FTBs should also be aware that they need to declare ALL credit commitments. Income and credit-related scrutiny has, quite rightly, been ramped up from a lending perspective in recent times and clients must share all relevant financial commitments.
  

• An area highlighted by one of our top advisers is that FTBs can often overlook student loans as being a credit commitment, as these are automatically deducted from pay packets. However, most lenders will include this in their affordability calculations.

• It is often not necessary to instruct an independent surveyor for a Home Buyers Report and savings can be made by using the lender’s valuer to complete the report.  There are pros and cons to this, which any good adviser can walk you through.

• When purchasing the biggest asset of your life, invest in the right professionals and undertake some due diligence. Online conveyancers can appear to be a good low-cost option but may not necessary be the best option as this is purely a process driven approach. As opposed to a solicitor which acts in your best interests and provides professional advice. 

• An estate agent’s in-house broker can offer a simple solution to keep the mortgage and purchase with the same company. However, these are rarely independent “whole of market” brokers and tend to work from a restricted panels of lenders. This may limit your mortgage options and you may not get the best deal or most suitable mortgage.

This is a great time for FTBs in the right financial position to take the plunge but the importance of good, professional mortgage advice should not be underestimated in what remains a challenging time for many. If your interested in finding out more, why not speak to one of our advisers about how we can help you on this journey.

Slightly more complicated for the self-employed to get a mortgage

There are many concerns in the current climates relating to job security and especially how lenders look at the self-employed following lockdown with regards to consistency of ongoing income and customer base.

The growth of self-employment, contracting and the gig economy has continued to challenge and change the make-up of the UK workforce over the past few years. Government statistics for 2019 saw the number of self-employed people rise to 4.93 million, some 125,000 more than a year earlier and this is a number which is only expected to grow.

As a specialist mortgage broker, we’re seeing a greater number of clients who are not only self-employed but who have a variety of income streams and different ways in which they generate their income. As the raising of the Stamp Duty threshold is set to encourage more first-time buyers into the housing market, and homemovers to take the next step up the property ladder, it’s vital that mortgage brokers are adept at meeting the ever-changing demands of such borrowers.

Moving forward, an even greater proportion of homebuyers will have a non-traditional income history and many differing forms of current income for lenders to contend with. Despite this sustained shift, it largely remains the case that those with a salaried or traditional source of income are far more likely to be eligible for mainstream mortgage deals than those with complex income scenarios. Having said that, there also remains a misconception that those missing out on the perceived favourable terms of high street lenders are unable to get a mortgage. Thankfully, there are a healthy number of lenders - some on the high street, many more not on the high street - who have competitive product ranges and flexible criteria in place which can service the needs of the self-employed workforce or those with multiple income streams. A large proportion of these products are available through specialist lenders and some can only be accessed via a mortgage broker.

It’s always been slightly more complicated for self-employed people to obtain a mortgage and – especially over the short-term - this may get even tougher when you consider additional Covid-19 complications. The rise of self-employment and the gig economy will undoubtedly continue. And with many underlying lending restrictions still in place, especially at higher loan-to-value levels, this really does magnify the importance of good, professional advice in helping self-employed clients and those with more complex incomes to achieve their homeownership goals. 

Lenders attitudes to risk and operational capacity affect higher LTVs

Loan-to-value (LTV) has always played a huge role in the mortgage market, although borrowers can often be unaware of the activity swings going on behind the lending scenes and the reasons for these.

Getting back to basics for a moment, LTV is essentially the size of mortgage that a lender is prepared to offer borrowers in relation to the value of the property they are looking to purchase or remortgage. It is expressed as a percentage. For example, if a lender offers a mortgage deal which has a maximum 80% LTV, it means they will lend up to 80% of the property value. And the borrower will need a minimum 20% equity if they are remortgaging or a 20% deposit for a purchase.

The well-publicised reintroduction of physical valuations offered a huge lift to the mortgage market generally. This was swiftly followed by a flood of lenders welcoming new business. After a cautious initial approach, LTV levels initially crept up, but the question is – did some lenders open the higher LTV door a little too soon? Were they surprised by the amount of pent-up demand or were they not quite in the right position to make such moves from a logistical and operational sense?

Only individual lenders can answer this question, although many 90% and some 95% LTV products have been launched and pulled in quick fashion as lenders appear to be struggling to service the influx of enquiries. Or lenders are simply offering them for a limited time through limited distribution channels to help control the supply and demand element.

Highlighting products being pulled from the market is certainly no criticism of these lenders. If service levels can’t be maintained, then this is clearly a sensible move to make. Managing risk and operational capacity has always been a challenge for lenders, and this is proving increasingly difficult in the midst of some uncertain economic conditions. This is reflected in product numbers. Recent data from Moneyfacts revealed that the number of products at 90% loan to value has shrunk to less than a tenth of the figure available pre-lockdown. The data outlined that there were 779 residential deals for borrowers with a 10 per cent deposit in March before social distancing rules came into force, shutting down the market. However, at the end of June, there were said to be just 72 products on offer at 90 per cent LTV, a drop of 91 per cent.

The higher LTV lending battle will be an ongoing theme throughout the rest of 2020, and this will be dictated by a number of issues from an internal and external perspective. There’s no getting away from the fact that borrowers are crying out for higher LTVs. However, there remain question marks over house prices, unemployment figures, not to mention if and when a recession may hit – and how long this may last. From a lending perspective, issues remain over attitudes to risk, operational capacity and servicing the valuation backlog and pipeline cases.

We also have to consider how this period is affecting new and existing borrowers. At Impact Specialist Finance, we’re seeing greater numbers of clients coming through our doors with some form of adverse credit, and this number is only likely to grow. When it comes to servicing these needs, fewer options are currently available. Many specialist lenders are tightening criteria and it’s difficult to know if, and when, the near prime product market will experience any significant improvement. Especially in the midst of lingering uncertainty around exactly how payment holidays will affect credit assessments.

These trends will prove interesting stories to follow as lenders continue to get to grips with demand and how best to service ever-changing borrowing circumstances amidst a variety of Covid-19 and wider economic repercussions. What we do know is that mortgage advisers will prove invaluable in quickly determining whether a case is viable or not and advice has never been more vital than it is today.

Even on Furlough, lenders may consider you for a mortgage.

Just because you’re on the Furlough Scheme(or have been on it), does not necessarily mean you cannot get a mortgage.  Several lenders have issued guidelines to accommodate those on Furlough and will offer mortgage products to them.  Especially clients looking to stay with the same lender and do what is called a ‘product transfer’.  As with all instances, you should speak to a professional broker who can review the whole market.  Staying with your current lender might be the easiest option, and a broker can arrange this for you, but it does not necessarily mean it will be the best rate and option available to you.  Always shop around, loyalty to lenders should be the least of your priorities as they may not be loyal to you!

This also relates to mortgage payment holidays.  A number of lenders have advised they will consider clients who have taken a mortgage payment holiday, depending on their circumstances.  However, many have said they will not assist if the client is still in the mortgage payment holiday so check the lenders requirements.  And we’ve been made aware of instances where a client has applied to a lender for a mortgage payment holiday, whilst also applying to purchase a new property for investment!  This was not taken lightly by the lender and the mortgage payment holiday had to be repaid, before the new mortgage could proceed.  Mortgage payment holidays really are for those who are having difficulties in the current climate.

We’ve also had recent updates from lenders who will look in detail at self-employed clients who have taken out Bounce Back Loans and CBILS funding.  Both cannot, in the main, be used as a deposit for purchasing premises and the lender will want to look at the self-employed clients cashflow forecasts, management accounts and really understand the impact of COVID-19 on their businesses, specifically with regards to how income will recover in the short to medium term.

Finally, the higher loan to value market is like the ‘hokey cokey’.  Some lenders are in, some are out, some are back in and so on.  One lender even launched a 90% lending product for just 48 hours.  Another has launched a ‘tranche’ of funds for the month.  Once it has been used up, that is it.   This is the benefit of using a broker as we will know what lender will offer such products and monitor the very strict deadlines to ensure you get the right deal for your circumstances. 

Physical valuations are back, but with conditions.

‘Back in Business’, ‘Business as Usual’, ‘When we come out of this’ - all terms I’m sure you’ve heard a lot recently.  I think it is now very clear to say that any form of ‘normality’ will be a different experience from what we have been used to.  Every day includes new learnings and new ways to do things.  Working from home has meant I have seen more of the kids and wider family, watched more TV, and worked longer hours (how has that happened?!).  And we are seeing a lot of positivity in the market and a lot of people talking up the exit from this awful disease, rather than burying their head in the sand and hoping it will all go away. 

The really positive news over the last week is the return of ‘physical valuations’.   Many lenders had taken to using ‘automated’ and computer-generated valuations recently.  Which has been great but meant that the more complex property types (HMOs, Multi Units, Properties with Annexes), could not proceed as they needed someone to visit the property and report back to the lender.  With the lockdown restrictions eased, this has meant that some lenders who were ‘mothballed’ can now begin to lend again.

Customers can now view properties in person, speak to estate agents and, hopefully, now move home.  It is estimated that circa 40,000 property transactions were put on hold due to valuers not being able to visit properties and some 300,000 transactions stalled due to people being unable to move whilst following the government instructions.  The new allowances have very strict social distancing guidelines for all companies involved however, and these need to be followed. 

These are all very small steps on the road to some sort of recovery and the signs are that this will be a long road.   For now, the new norm is online conferencing, visiting friends and family from a distance, maybe a weekly online quiz and binge watching the odd programme here and there.

Everything we do is under review and from a work point of view, do we really need to return to an office when we can discuss mortgages and related finance all day (and evening) via laptops and video conferencing?  Only time will tell.  Processes have had to adapt and change so quickly.

What we cannot afford is for a second spike which would put yet more lives at risk. Health first and any slippage would be very damaging for the financial/property sector.  Stay safe..

This should be a time used wisely, not only to review life goals, but also financial situations.

Due to the current unfortunate circumstances, we are now becoming very used to the Coronavirus lockdown.  However, perhaps this should be a time used wisely, not only to review life goals, but also financial situations.

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 when they die. 

Do you have Life Insurance, Mortgage Payment Protection Insurance (MPPI), 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.

MPPI makes it possible for you to keep on paying off your mortgage, even if you stop receiving a stable income.  People tend to choose this option because it is explicitly designed to cover their mortgage payments.

We often associate protection needs with homeowners, but it was interesting to see recent data suggest that the majority of renters are putting themselves and their possessions at risk because they do not have vital forms of insurance in place. Research from one provider uncovered evidence that just one in five rental households had life insurance, compared to three out of five homeowners with a mortgage. The figures are particularly concerning because the number of renters in the UK is rising, a trend driven by higher house prices and other challenges which make it difficult for would-be first-time buyers to get on the housing ladder.

A further study from another provider appeared to back up this trend, finding that whilst 41% of homeowners had life insurance or critical illness cover, just 26% of those renting had such a policy in place.

People are very quick to insure their pet, Sky TV, their travel plans and their house contents, but forget their biggest asset and this frequently gets left to last, or until it’s too late.

All in all, to make sure your financial situation is better protected, you really should investigate all options to cover you, your family and your financial commitments.  Familiarise yourself with all the options available and do your research before committing.  As always, seek professional and open market advice.

You'd use a local shop over a supermarket. It should be the same with your mortgage broker.

Through this unprecedented time, I can’t stress enough that you should be using a mortgage broker to review your requirements and help arrange your re-mortgage to cut down your costs.  Yes, you can sometimes go direct to the lender, but is it right for you?  Is there a better rate elsewhere?  Have you read all the small print? How long are you tied in for?  Fixed or Tracker rate?  Can you apply whilst in the three-month mortgage payment holiday?  Will the lender take my ‘Furlough’ pay as income?  And so on.

At times like these, changing your rate can be a huge decision as we all look to cut costs in order to see the next few months through.  Without professional guidance, you might not only get the wrong deal, but you might also miss it.  A wide number of lenders have withdrawn products recently, yet only advised us the day after the products were withdrawn.  Some lenders, due to the volatility of the markets, have even reviewed full mortgage applications in with them, and withdrawn their initial approvals!  Worse, some have actually withdrawn fully issued mortgage offers! 

This is a sign of the times and now, more than ever, you should be using your local mortgage broker.  Just like the local shops competing against the supermarkets, everyone is struggling and that little mortgage product transfer you’re doing through the smart phone app to your high street lender, could be vital income to the broker who may have helped you out so many times in the past.  Don’t cut them out, let them help and advise you.  It is unlikely to make a difference to you in terms of rate or fees, but it can make a huge difference to income being generated for the mortgage broker in these challenging and difficult times.

Generally, the housing market is coming to a standstill as the Government requests everyone to stay at home.  This means that surveyors cannot visit the property and therefore a lender cannot lend on a property it has no idea of the value on.  There are remote systems that can provide Automated Valuations (AVM), but only a few lenders will currently take these as a base to which they can lend to and the risk curve will only allow an AVM up to 85% loan to value. In the main, most lenders will only allow 75% AVMs at the moment and only on re-mortgages.  As we all get used to working from home, this may change.

Yet, through adversity, there are rays of sunshine!  A number of lenders are looking at ways to increase volumes, reach out to help customers and keep the market going.  Some of these will be offerings only available through the broker market channel.  So, keep in touch, keep the relationship close and let’s work together to achieve the best outcome.  We are fully functional and working from home during normal business hours.  We continue to offer our free advice service, so speak to the team and we’ll help you as best we can.  Keep well.

Mortgage Payment Holidays, Rates, Home Working, Valuations and more.....seek advice

What a difference a week can make!  Testing times for us all.  I want to review a few key issues this week, hence the slightly bigger column than normal!

Let’s start with Mortgage Payment Holidays:

As mentioned by the Chancellor last week, everyone may be entitled to a mortgage payment holiday of three months.  The holiday allows a borrower to DEFER mortgage payments for an agreed period of time.  At the end of the holiday, the normal monthly payments resume.  HOWEVER, you will still need to repay the money owed and you WILL incur interest on your mortgage during the holiday. Please note that you will need to speak with your lender first and they will decide whether you are eligible for the payment holiday.

You should certainly not stop your direct debits but do continue with your normal mortgage payments until the lender agrees your payment holiday.

If you don’t need to, don’t take the payment holiday! This may sound strange, but behind the scenes, and despite saying it won’t affect your credit score, it will possibly affect your ongoing ability to borrow. No one knows exactly how these holidays will be accounted for when you go to re-mortgage or buy another property.  Lenders want to see that you have consistently paid your last twelve monthly mortgage payments.  If you take the payment holiday, you will have only paid nine.  With the onslaught of technology making decisions, a computer may not be able to decipher that you’ve had an approved payment holiday for three months. It will only see that the mortgage has not been paid.  In the interim, this is may seem small beer in the grand scheme of things. The reality is that, for onward future finances, it could be huge.  We know this as in more normal climates, you can take one mortgage payment holiday and it is usually registered as a ‘U’ on your credit reports and we can sometimes have trouble getting these through lenders current systems.

Rates - are fluctuating hourly, with some resemblance to the crash in 2007/8.  Some lenders have withdrawn rates at midnight and tell everyone the day after, so they won’t receive a spike of business. We all understand why bank base rate (BBR) changed but this has resulted in a huge number of Tracker rates (tracking the BBR) being withdrawn. Existing customers charging rates obviously reduce with the changes, but these great rates are not open to new clients.  Fixed rates haven’t changed too much, but some have increased.  It’s mainly criteria where we have seen changes.  Some lenders have withdrawn high loan to values, so 95% deals and for Buy to Lets, many lenders have mainly dropped to 75% loan to value.  In short, if you find a great deal, be quick!

Home working – Most brokers, lenders, surveyors are now fully functional from home.  This is causing problems for some lenders.  One major high street lender has already confirmed that it can only handle so many bits of business each day in the new format and as such, once it reaches its quota, it will stop taking further business for that day!  Business continuity plans at their best!  

Valuations – Although it’s a slightly different business as usual, the one part of the market we all rely on is the valuation of the subject property.  The surveyor is the eyes of the mortgage lender and relies on their feedback to confirm suitable security.  If the valuer cannot assess the property, the mortgage market will grind to a halt. This is the one bit I’m really concerned about and keeping a close eye on developments.  Many lenders have already stopped physical valuations of properties to protect their employees.  Watch this space.

Finally, we, at Impact SF are fully functional and working from home during normal business hours.  We continue to offer our free advice service, so speak to the team, pick our experienced brains and we’ll help you wherever we can.  Stay safe.

"Tested in a way we've never been tested before"......and Bank Base cut by 0.5%

We’re being tested in a way that our generation has never been tested before.  These are uncertain times and no one can predict what the future days, weeks, months will bring.  The Bank of England has cut interest rates by a significant 0.5% to just 0.25% and at the time of writing, this is predicted to be cut even further.  Especially seeing that the Federal Reserve (FED) in America have just cut their rates by a full 1%.  All countries are trying to prevent a global recession, avoiding 2007/8 all over again.

All I can say at this time is keep safe and look after number one.  Get your house in order quickly.  Impact will inevitably be shutting both of our offices in Horsham to protect our staff and families, but we will continue to work from home and be available on phones, online and by webinar facilities (Microsoft Teams, etc).  Not everyone will get this horrible virus and lenders still want to lend.

Yes, it might take a little bit longer to arrange things, as home working takes effect and some, especially the banks and building society security systems and such, will experience new challenges with all of their staff working from home.  But lending will go on and right now is an ideal time to take advantage of the amazing rates and deals on offer.

Remortgaging should be a very simple process and we can guide you through the requirements and deals on offer. 

Even staying with your current lender once your current fixed rate has expired and transferring to a new rate is pretty straight forward.  We can assist with all of these, remotely and quickly.

Finally, I’ll say it again, look after number one. You will probably have some time on your hands, you have the paperwork at home and you have the superb team at Impact online and available to help you throughout the whole process.  Or just even to give you some free advice.  No one knows how long this unprecedented experience will last, so just make sure you’re in a good position to see it through.  Stay safe.

Completing a fact find and be mortgage ready!

First time buyer or home mover?  Either way know the process and be mortgage ready!

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 adviser 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.  We’ve had a few customers contact us for a mortgage recently who have been totally unaware that they have had a number of credit searches carried out having recently searched for competitive renewal quotes on their home or car insurance via comparison sites.  This, in a small amount of time can have a marked affect on your credit score, and as such, affect your ability to obtain finance, so read the small print and be aware! 

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!

Bridging finance can be much quicker to arrange than a normal mortgage

Bridging finance (also known as Short Term Lending) is a solution that can be used to provide fast access to funding for a number of different circumstances.

Often, bridging finance can be much quicker to arrange than a normal mortgage. However, bridging finance should not be considered a replacement for more traditional mortgage lending which is normally more cost-efficient.  It can be a complicated process and each case is written on a bespoke basis according to the requirements of each individual transaction.

Initially, this type of finance was used as a way to mend a broken link in a housing chain and typically used to ‘bridge’ the gap between a house sale and completion.

However, bridging is often also used for people buying at auction, to meet strict deadlines (usually of 28 days), for people wanting to carry out refurbishments to boost the value of their homes or where the property would not met the requirements of a traditional mortgage lender as well as for numerous business purposes. Some lenders will also help with short term VAT requirements subject to strict controls.

In more recent years, the market has seen a broader number of uses for short-term loans as their popularity has increased. For example, many commercial premises are now being converted into residential houses or flats, because of the expansion of permitted development rights, and bridging loans can be used in the initial stages of the conversion with longer term funding provided once the building project has started.  Short-term finance can be used to buy new equipment, to build up stocks ahead of an expected rush on seasonal orders, or for buying shares in another business.  It’s becoming increasingly popular, mainly because of its speed and flexibility.

The best way to look at this is as a means to an end.  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.  Alternatively, the exit route might be from the sale of the same or another property. So, short term lending is designed to fulfil the need or desire to act quickly.

Finally, this type of funding has become more competitive over the years with some now offering rates as low as 0.43% per month for the right customer.  Obviously, individual terms and conditions apply and with these types of offerings always seek professional advice!

The 'Boris Bounce' is having an effect!

The ‘Boris Bounce’ really seems to be hitting positively as activity in the mortgage market is booming.  We’ve seen an amazing first two months of the year, with February exceeding expectations (thank you to all who are dealing with us and well done team!).

But also for you, the consumer, this is a fantastic time to be looking at your finances.  Rates are low and lenders are looking at many different ways to attract new customers and keep existing (which I would not have said only a year ago).

Whether you want to fix your monthly payments for a period of time, or you fancy a low rate tracker mortgage, or maybe both - a tracker rate with the option to fix later on, there are plenty of great products currently available.  Many lenders are offering superb remortgage opportunities with minimal costs to change, including free standard valuations (lender survey on your property) and legal costs (solicitors or conveyancer to register the charge in the new lenders name).  Rates are competitively low and mortgage product choice is at its highest for some time.

It also surprises me how many people don’t think they can get a mortgage.  Pepper Money recently carried out some research that suggested 93% of people surveyed did not know they may get a mortgage with a CCJ registered as recently as 6 months ago. 

Another example, with our friends at Kensington, allows for some historic issues over three years ago and will look at rates starting from 4.69% for those with just a 10% deposit and no lender completion fee.  Terms and conditions obviously apply, but good to have options.   

Finally, a number of lenders don't use credit scoring systems (computer says no!) and prefer a manual approach, so don't think you cannot get a mortgage until you have tried!  Always shop around to find the best deal and always check the small print!  Naturally, I would recommend speaking to a professional who can search the ‘whole market’ and advise which are the most appropriate deals available to you.

Age should not be an issue when getting a mortgage.

Just because you’re over 65, it doesn’t mean you can’t have a mortgage!  But sometimes it can be harder to get a mortgage that is right and affordable, due to age restrictive terms, once you reach a certain milestone with the high street lenders.

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.  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 industry reports, there are an estimated 100,000 people due to come to maturity on their interest only mortgage in 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 65 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 75.  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 into later life. These are not high street names and as such, are not known to everyone.  But with some having no maximum age at all, at least they will consider helping out and could keep you in your family home for years to come.

Visits to property website up 7% on January 2019.

I’ve just read that visits to Rightmove surpassed 150 million for the first time in January, making it the busiest month ever recorded. There were said to be over 152 million visits to the property portal in January, a 7% increase on January 2019. The top five busiest days ever on Rightmove were all said to be between 21st and 29^th  January, with Wednesday 29^th topping the list. There were reported to be over 5.7 million visits on that day, up 9% on the previous record set back on 24^th April 2019. Time spent by home hunters on the site was up 4%, with people spending a total of 1.17 billion minutes on there.

These are pretty remarkable numbers and ones that will hopefully relate into the prospect of rising activity levels, especially in the lead up to a usually active late Winter/early Spring period.

Unless you are incredibly lucky, you’re probably going to need a mortgage to buy your dream home.  A mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what the national press decide to publish about the Bank of England base rate being held at 0.75% again, or how much profit the banks are currently making! Or what a mate says in the pub!

Advice is crucial and ideally from a company who can offer ‘whole of market’ mortgages, not just products from a limited panel of lenders, like some Estate Agency chains or a Bank/Building Society who only offer their own or a limited set of products.

I guess what I am saying is think before you agree to use any in-house service of this type as overall, it may not always be in your best interests, and as this is the largest financial transaction you will be involved in at the time, it is important to feel comfortable about it.  Also, to have some independence in the event of any concerns or disputes makes great sense.

Finally, make sure you ask questions!  For example, if you’re not being offered ‘whole of market’ products and instead are being offered mortgage products from a ‘limited panel of lenders’, you may be missing out on the best product available to you. You are, after all, in the driving seat.

Fixed or Tracker rate? What's your preference?

So, do you go Fixed, or do you go Tracker?  A question we are asked many times every day!

With a fixed rate, you know that every month your mortgage payment will be exactly the same until the product period ends. Normally this can be two, three, five or ten years.  However, you will have a penalty to pay, if you decide to leave during the fixed rate product period.  Note that the mortgage product period and the term of the mortgage are two different entities.  The fixed rate product period might be for five years, but the mortgage itself might be for twenty-five years.  Make sure you understand the difference as after five years you could be moving on to the lenders Standard Variable Rate (SVR), which could be a lot higher (possibly in excess of 5%).

With a tracker rate, this will normally be an interest rate charged in addition to the Bank of England base rate, currently 0.75%, and will move immediately any changes occur.  However, most tracker rates have no penalties to leave.  So, great if you are planning to move imminently or have bonuses due and want to repay a large lump sum off your mortgage.  They can also be cheaper than a fixed rate, but obviously have more risk of increasing rates too.  

For those sitting on the lenders SVR – WHY?!  The lenders SVR tends to be more expensive than other products available and you should act now as you’re probably paying too much as it is!  And lenders can alter their SVR when they choose.

So, in short, the fixed or tracker conundrum is down to personal choice.  A number of clients visiting impact are looking for a longer-term fixed rate for certainty and to help manage their monthly budgets.  But a number are still happy to take a short-term tracker rate and are confident that rates will not fluctuate too much in the coming months.  Either way, there are some good products available with minimal set up costs and it does seem to be a ‘race to the bottom’ with regards to pricing currently.

One thing to think about though – if you are contemplating a tracker rate for now, with the intention of changing to a fixed rate later on, be aware that if rates start to rise you might find that the fixed rates have already increased before the tracker rate even starts to.

Being Self Employed shouldn't affect you getting a mortgage.

A large myth suggests that because you are self-employed, you will find it harder to get a mortgage. Maybe that was so a few years ago, but not today.

Yes, the financial crash took its toll on the self-employed and quite rightly killed off the ‘self certification’ type deals (no proof of income).  But today lenders are quite happy to lend to those who are self-employed and have a good track record.  The majority of lenders require two years accounts and will tend to average your last two years figures.  However, there are also some lenders who will look to assist you even if you are in your first year.  Some will also consider just last year’s figures, even if you have been self-employed for longer.

Generally, the longer you’ve been self-employed and the more years accounts you have, the larger number of lenders you will have who are willing to assist.

Some lenders do not require to see your full accounts but will require an accountant’s certificate to be completed.  This differs lender to lender. Some will require a full set of accounts and/or an accountant’s certificate!  Some will require this and/or tax year overviews and more.  All can be requested via HMRC.

They may also require to review business bank statements to review day to day cashflows and possible projections for future income, including potential contracts, etc.

This can also change depending on the make up of your self-employment, whether a sole trader, partnership, Ltd company director and so on.

Deposit requirements can range lender to lender, but the bigger deposit you have, the greater the number of deals will be available to you.

Finally, plan ahead.  Six months ahead of your mortgage requirements, make sure you have your house in order.  Check your bank statements are in good order, check you have the right accounts and relevant paperwork from your accountant.  Don’t have too many credit searches in a short amount of time as this could affect your credit score.  Ensure you are on the electoral role and have decent breathing space on card limits and loans.  All of this should put you in a good position before the lender even looks at their ability to lend to you!