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.