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  A wide number of lenders have withdrawn products recently, yet only advised us the day after the products were withdrawn.  Some lenders, due to the volatility of the markets, have even reviewed full mortgage applications in with them, and withdrawn their initial approvals!  Worse, some have actually withdrawn fully issued mortgage offers!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.

Moving forward to the challenges ahead.....and Happy Christmas!

This time last year, I was predicting that we’d have got over the shenanigans of Brexit and be moving forward in to the unknown, yet positive, challenges that lie ahead. 

How we can be no further forward still is beyond me.  But at the same time, I can’t believe the year has gone and I’m writing my last column for 2019!

The mortgage world has been pretty flat with figures estimated to be only a slight increase on 2018.  On the upside, choice of mortgage product is at it’s all time high and rates are incredibly low.  Great for the end consumer!

The festive period can be a time for reflection.  It can also be a time when many people start looking at new properties to move to. Or they may already be committed and are packing ready for the removal lorry, or they take time to review what mortgage they have and question if there is anything better out there. That is of course, if they are not simply taking a holiday, and why not?

Whatever your plans, it makes sense to review your current mortgage deal and see if there is a better option and perhaps look to secure a competitive rate for a few years. Whilst I always err on the optimistic side of a rates argument, we are entering a truly unknown era as we plan for Brexit (again) and there is no history to prompt what the immediate and longer-term implications will be.

Technology was due to take over the mortgage market in 2019 and despite millions being spent, this has only had a small impact.  Circa 72% of all mortgages generated are still via brokers/intermediaries.  You are entering into the biggest debt of your life and questions need answering.  You just can’t beat the human touch…. for now.   Many lenders have yet to evolve with the digital era and those who will win will be the ones offering quality technology, but also the human impact for those who prefer or need it.

Finally, I really appreciate you reading my column!  I’ve tried to provide an unbiased insight to what happens in the mortgage world, with a little bit of humour along the way!

A huge thank you to everyone who has instructed impact sf to source and arrange their mortgage during the past twelve months. It has been a fantastic year, including a brand name change and a new additional office in Barttelot Road!  We have a fantastic team and they are a truly hardworking and knowledgeable group of people.  Best in the business!

On behalf of all the staff and directors at impact specialist finance, we wish you and your families a very Happy Christmas and a Relaxing and Prosperous New Year!  Bring on 2020!

If the credit score computer says ‘no’, you will tend to find most high street lenders doors shut.

I haven't mentioned it for a while, but it certainly is causing a lot of customers an issue.  Credit scoring!  This is an assessment on all available financial information and calculates a 'score' for the lender.  It also includes a search on your overall credit history covering, in the main, all of your financial transactions over the last six years.

Most lenders credit score applications to try and assess your ability to repay any loans.  This will take in to account many factors including the amount of credit you have, whether you are on the electoral role, your recent payment profile on any existing credit and the number of recent credit searches you have on file.  Nearly all financial institutions will register a credit search against you.  So, if you have recently updated your car insurance, home insurance, taken out a mobile contract and just got a new credit/debit card, that’s probably four searches in a short amount of time! Be wary that some 'comparison sites' may have also searched you just whilst seeking a new insurance quote.

If the lenders computer says ‘no’, you will tend to find most high street lenders doors shut to you.  But fear not, if you have a reasonable deposit and can prove all income, there are lenders who do not credit score, but will manually review and underwrite affordable applications on an individual basis. 

I always suggest that you speak to an independent mortgage broker with access to whole of market mortgages.  Banks may only advise on their product range. Estate Agents ‘in-house’ mortgage advisers may only be able to offer mortgages from a select panel of lenders. Therefore, in order to get best advice, make sure you do your homework, speak to a whole of market mortgage broker who can advise on the most appropriate mortgage in the market to meet your requirements, whether this be with a credit score or just a credit search.

Too much information online can be confusing!

As rates continue to reduce, competition has moved at a pace on the high street.  Most of these lenders can offer attractive low rates with free valuations and free legal costs on remortgages.  This is great if you fit the lender's mould and meet their requirements.  However, if you don’t meet their requirements or if you fail the lenders credit score, where do you go next?

The easy response is a mortgage broker who not only has access to the high street lenders but the whole of the mortgage market.  

According to recent reports in the mortgage media, circa 72% of all mortgages are now arranged through a mortgage intermediary.  A good mortgage broker will not only have access to and understand the high street offerings, they will also have access to smaller building societies and other lending institutions who can think 'outside the box', manually assess applications and lend when the high street lenders might not.  This can include lending in to retirement/over age 70, lending to the complex self employed, ExPat mortgages, buy to lets, holiday homes, multiple properties on one title and so much more.

With technology taking over the world, and so many transactions taking place over the internet, it might be easy to be attracted to products online.  There is so much information readily available and over 11,000 mortgage products to choose from, but these types of things can get lost in translation.  Therefore seek advice.  Yes, it may cost you a small fee to have someone research the market on your behalf and make recommendations, having assessed your short to long term needs and requirements.  More importantly, it could save you thousands in the long run, over choosing the wrong products yourself. In addition, any professional will probably build a long term relationship with you and contact you at the time your current rate is coming up for renewal to ensure you have the best rate available.  It's good to talk..!

Credit Scoring - most lenders do it!

I haven't mentioned it for a while, but it certainly is causing a lot of customers an issue.  Credit scoring!  This is an assessment on all available financial information and calculates a 'score' for the lender.  It also includes a search on your overall credit history covering, in the main, all of your financial transactions over the last six years.

Most lenders credit score applications to try and assess your ability to repay any loans.  This will take in to account many factors including the amount of credit you have, whether you are on the electoral role, your recent payment profile on any existing credit and the number of recent credit searches you have on file.  Nearly all financial institutions will register a credit search against you.  So, if you have recently updated your car insurance, home insurance, taken out a mobile contract and just got a new credit/debit card, that’s probably four searches in a short amount of time! Be wary that some 'comparison sites' may have also searched you just whilst seeking a new insurance quote.

If the lenders computer says ‘no’, you will tend to find most high street lenders doors shut to you.  But fear not, if you have a reasonable deposit and can prove all income, there are lenders who do not credit score, but will manually review and underwrite affordable applications on an individual basis. 

I always suggest that you speak to an independent mortgage broker with access to whole of market mortgages.  Banks may only advise on their product range. Estate Agents ‘in-house’ mortgage advisers may only be able to offer mortgages from a select panel of lenders. Therefore, in order to get best advice, make sure you do your homework, speak to a whole of market mortgage broker who can advise on the most appropriate mortgage in the market to meet your requirements, whether this be with a credit score or just a credit search.

Competition for those with low deposits

Lenders are at last starting to recognise the importance of high loan to value loans for both first time and subsequent mortgage applicants. One such lender has chosen a limited panel of broker companies to distribute their new 95% loan to value product to home movers, first time buyers and those seeking to re-mortgage. We are delighted that AToM has been chosen for this purpose. This product is not restricted to new build properties, like most other 5% deposit products recently launched by some lenders, and it is not subject to credit scoring or early redemption penalties. The only stipulation is that those moving or remortgaging have had a mortgage for at least twelve months and any first time buyers must have been renting for the last twelve months. If this product is of interest, be quick as I suspect the demand will be huge for this products and funds will utilised quickly.

 

The Second Charge Secured Loan market has seen huge growth recently. March saw a 17% increase on February, breaking the £35m barrier for the first time in nearly four years, according to the Secured Loan Index. Many who require a loan to carry out home improvements or for other luxury items, but are currently sitting on very low lenders variable rates are opting to add on a second charge to their current property (sits behind the first charge mortgage). Right for certain people but rates start from around 5.5%, so will need to ensure it’s beneficial in the short to medium term compared with a complete remortgage to another lender/rate.

Finally, recent figures from creditaction show that the actual state of the financial economy is still extremely fragile:

- The average amount owed per UK adult (including mortgages) was £28,981 in February. This was around 118% of average earnings.

- The estimated average outstanding mortgage for the 11.3m households that carry mortgage debt stood at £112,153 in February.

- 277 people are declared insolvent or bankrupt every day (based on Q4 2012 trends). This is equivalent to one person every 5 minutes 12 seconds.

- 84 properties are repossessed every day (Every 17 mins)

- 1,454 people a day reported they had become redundant between November 2012 and January 2013.

- Citizens Advice Bureau in England and Wales dealt with 8,192 debt problems every working day during the year ending December 2012.

Stark figures, but we all need reminding occasionally and always worth reviewing your own finances to ensure you’re paying the best rates and where possible, have plans in place to account for all eventualities.

 

Increased competition in the 95% LTV market for First Time Buyers

We’ve seen another week of market movement and increased competition as lenders lower rates and loosen criteria.  There is a lot more positive activity from the lenders, however we are also seeing an increase in service times and underwriting responses resulting from increased volumes.  A few are even reporting backlogs of over a week just to look at a case!  In addition, if they then need further information in respect of the application, once received, this can then join the back of the queue again to be looked at!  Be aware of these timescales if you are in a hurry to complete.

House prices rose in March by 0.2% compared to February according to the Halifax House Price Index with the average price now sitting just below £164k. 

Our good friends at the Saffron Building Society have launched a superb product aimed at First Time Buyers.  The lender is offering a 95% mortgage with no credit scoring, to those who have never owned a property.  Customers will still be credit searched but cases are reviewed on a manual assessment, rather than a computer making the decision.  There are no early redemption penalties and the arrangement fee is just £495.  This is not just aimed at New Build properties either!  Obviously terms/conditions and other fees may apply, but this kind of innovation is exactly what the mortgage market needs!

Although not household names, specialist lenders like Saffron have money to lend and a desire to create products to assist gaps in the mortgage market.  For instance, the usual requirement on the self employed is 2 or 3 years accounts and possibly the SA302 returns from the Inland Revenue. Some specialist lenders, for the right deposit, will allow just 1 years accounts to prove income, normally with an accountant projection for the second full year and probably up to six months personal and business bank statements.

This is the beauty of using a mortgage broker.  They will have access to many lenders that you have probably never heard of and products that are not usually visible to the public eye. On average, a good mortgage broker will have access to over 6,000 mortgage products, from a huge number of lenders.  As with everything you purchase, it’s always worth shopping around as although you might think you have a great deal with your current provider, there may be better products out there that you are missing out on.

Product rates are on the up...

Over the last seven days, we’ve seen nearly every lender pull their products and, in the main, increase rates across the board. Is this a time to panic? I’m really not sure. Who can predict the future and what is around the corner?

Fixed rates on offer at the moment are very attractive and some pundits have suggested that if they increase, they may not come back down. The only way to be sure and secure a good rate is apply as soon as possible!

Another lender has reduced its maximum loan for interest-only mortgages from 75% to 50%
for certain repayment strategies. Clydesdale Bank say that where the repayment vehicle is either cash savings or downsizing, the maximum loan to value will now be a maximum of 50%
on interest only loans.

In a week of many changes, the most ‘interesting’ came from Santander who will now require customers to account for one-off costs such as Christmas and birthdays in their income and affordability assessments. Regular costs are already accounted for in assessments, but the lender now requires non-regular costs to also be disclosed. The old joking phrase of a lender requiring your shoe size and inside leg measurement, all of a sudden does not sound quite so far off…and, on the birthday thing....what if you are at the older end of the scale and have four or five grandchildren as well?

What this all demonstrates is that it is still a very tough market out there and in some cases, getting tougher. Many turn to the internet as it’s such a superb tool. However it can also be a disadvantage as so much information, news, products and detail can make it more confusing than planned. A good ‘old fashioned’ face to face conversation with your local specialist independent mortgage brokerage might be the answer. They will, in most cases, have a relationship with the lenders, understand their requirements and ensure all the correct information is submitted from day one. There really is no better time to utilise the expertise and staffing levels they can provide for you in what’s becoming an over informed and more recently, negative market place.

Why use a Mortgage Broker?

There are many mortgage lenders actively looking to increase their volume business by offering superb products and rates, but there’s also some who have good PR companies who portray a positive lending attitude.

You would think in the current climates, with mortgage volumes reasonably low, that new applications submitted to lenders would fly through and come to a quick and easy completion. Unfortunately, in some cases, it’s not so.

These are the daily trials and tribulations of dealing with some major mortgage lenders who simply do not appear to want to lend.

We’ve heard many stories recently from customers who have initially gone direct to a high street lender, but then wished they had not! Should your application meet all the requirements and the lender has no further questions or requirements, then a mortgage offer should be quickly produced.

However, if, for whatever reason, a lenders underwriter decides to request one further bit of information, or needs additional clarification, then the fun begins.

You may receive a call or an automated email detailing additional requirements and once you’ve provided the information, you enter a service standard queue (usually 48 hours) and assuming of course that the information returned does not get lost and is directed to the right department! Should the lenders underwriter decide they are happy with the additional information, your application may proceed. But, the new information provided could provoke further questions or requirements, and so the cycle begins again!

They say buying a house is the second most stressful event in your life after having children. I’d say that it’s nearly on level par in the current market conditions.

What this all demonstrates is the value of dealing with a specialist independent mortgage brokerage as we will take this painful flack on your behalf. In most cases, we will have a relationship with the lender, understand their requirements and ensure all the correct information is submitted from day one. There really is no better time to utilise the expertise and staffing levels we can provide for you. Let us take the strain on your behalf to push the mortgage through to an early completion. And, if a lender does decline to proceed, we can quickly try to find an alternative lender to suit your requirements, with the minimal of fuss.