That's it for 2015! Roll on 2016. Thanks for reading.....!

Amazingly, this is my last column of the year!  I enjoy writing each week and updating you on the mortgage world's good and bad, but I am looking forward to a couple of weeks without tight production deadlines to meet!

The door may be nearly shut on 2015 and, in many ways, I'm ready to kick it shut.  It's been a frustrating year as lenders have been neither here or there with their lending volumes and every one of them has had one eye looking over their shoulder for the regulator and the other looking forward in preparation for the new European Mortgage Credit Directives that are due to be implemented in March 2016.  Wouldn't it be nice if we could just have a couple of years without regulatory changes?

At the same time, it has been a year for building foundations for what I hope will be a fantastic 2016.  Once the new regulations have been implemented and with rates set to stay static for some while yet, mortgage lenders will be competing for business. A rate price war may happen and this can only be a good thing for the end consumer.  We will also be welcoming a number of new lenders to the market (and some returning) and this will help keep competition rife.  Good times ahead!

Finally, a heartfelt thank you for reading my columns.  I've tried to provide an unbiased weekly insight to what happens in the mortgage world (and tried to keep it upbeat!). 

Thank you to everyone who has instructed AToM to source and arrange their mortgage during the past twelve months. It has been a fantastic year and we have enjoyed substantial growth in volume, November bringing more than £30m in new applications. Also, an increase in  headcount with almost 30 in the AToM team located between our two Horsham offices! They are a truly fantastic team. 

On behalf of all the staff and directors at AToM, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year! 

Those in Debt Management Plans and 'Mortgage Prisoner's have help!

Debt Management Plans have had a place in the market during the tough times and have assisted many customers in reducing their monthly outgoings.  In brief terms,  the DMP company arranges a reduced monthly payment amount to the customers creditors.  However, some credit companies will see this as a breach of their original terms and may register defaults or an 'arrangement to pay' status position against the customers credit file.  This has been quite a barrier and has often prevented mortgage lenders assisting the customer with finance. 

As lenders compete for business, we are starting to see reviews of criteria options and some will now look to help those in a DMP up to 75% of the property value.  The DMP must be paid off as part of the deal.  If the DMP was paid off more than 36 months ago, then the lender will look at mortgage options up to 85% loan to value.  There are a myriad of terms and conditions, as you would expect, but this is a great step forward and now opens doors to customers that may not have been helped before.

With this in mind, we have also seen at least one lender looking to help those who could be classed as 'mortgage prisoners'.  This could be where a customer is coming to the end of the product term and due to revert to the lenders variable rate.  But since their last mortgage arrangement, new regulations have been implemented and the customer may no longer qualify for the same type of deal. Affordability calculations may have changed or another reason may affect their new mortgage options.  Therefore the customer may be stuck with the current lender and unable to move.  Some lenders have looked at these types of customers and launched 'transitional' mortgage options.  These lenders look at moving customers away from their current lender, on a pound for pound remortgage, with the minimal of paperwork and no requirement to undertake additional affordability assessments where no further funds are being raised (and assuming no income changes since the previous arrangement).  This assumes that the customer has conducted their current arrangement in an exemplary manner of course! This allowance to the lenders from the regulator is only available until 2016, when the EU Mortgage Credit Directive is implemented, so be quick!

Secured loans are not as expensive as you think..

I'm finding it a really good time to be in mortgages!  Rates are low, customers need professional assistance more than they ever have done and competition in the market is at it's highest for some years. This is across all areas of the market place from Residential Mortgages to Buy to Let, and Bridging Loans to Secured Loans.

In fact, the latter has seen a large increase in demand. A secured loan is a 2nd, or subsequent charge, designed for homeowners and which allows the equity in their property to be used as security.  Loans usually start from £3.5k and now range right up to £2.5m!  There are also no 'up-front' fees to find although costs for valuations and legals (for example) are added to the advance.

We tend to find that many customers looking to remortgage to raise additional funds are already on an attractive rate with their lender. To move away could be costly and they could end up on a much higher interest rate.  Depending on the amount already lent as a mortgage, compared to the value of the property, most lenders will allow a secured loan to be added as additional borrowing, right up to 95% of the property value.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer and up to 25 years, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.  

This market is also predicted to grow in 2016 when a new EU Directive is implemented.  In short, when a customer wants to remortgage to raise additional funds, the intermediary/broker will need to demonstrate the best outcome for the customer and not only look at a full remortgage on a first charge basis, but compare with an appropriate secured second charge loan allowing the customer to keep the existing mortgage or a further advance with the existing funder.  Although the Directive is still a way off, the FCA principles already apply to firms and individuals so best outcomes and best practice for borrowers are at the forefront of any advice and recommendation. This demonstrates more than ever the need to seek professional advice!