A computer can't listen to your mortgage needs and requirements!

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 first assessed your short to long term needs and requirements.  More importantly, it could save you thousands in the long run, versus choosing the wrong products yourself. In addition, any professional will probably seek to 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 rates available.

It doesn't matter whether you are experienced, or if this is your first time.  Property ownership can be complicated, so explore all the options and do your homework.  There are a huge number of lenders available to you and all have competitive edges and good criteria options for the right customer.  Make sure you understand everything at the outset so that you don't regret it later!

A good independent mortgage adviser will be able to review the whole market for you and can identify the best lending options and then deal directly with the lenders central processing units, speeding up the process from application to offer. That said, even in this area we know of at least one lender that is sixteen days behind on post or electronic updates!  

An experienced adviser will listen to your specific needs and timescales and ensure that they line you up with a lender who will match both. So, if speed is crucial, then you may need to consider working with a lender where the rate may not be the keenest on the market, but they will get the deal to completion within your target timescales to ensure you get the property of your dreams.  Remember, make sure you adviser looks at the whole market, and not just a limited panel of lenders ensuring that you get the widest choice of lenders and products (including exclusive deals) available to you.

Technology in the mortgage process and changes for portfolio landlords.

The mortgage press is starting to increase their commentary on the ever growing importance of technology proving itself in the mortgage sector. This includes recent adverts suggesting that a computer algorithm will ‘fix’ the mortgage market and choose the right product for you!  In time, this might become a reality!  However, given that the mortgage is the biggest financial debt you are ever likely to have, over a long period of years, you should be absolutely 100% sure that is the right product for you moving forward.  I do believe there is a place for technology in everyone’s lives, and certainly in our marketplace, however I also believe there will always remain a place for the human touch and people like to buy from people and organisations they trust.  With such a plethora of information available and such an in-depth decision to make, I can’t see that position changing for some time yet.

Rates have been in the headlines again this week.  Some pundits are filling column inches suggesting that the bank base rate will rise by the end of the year and one large bank saying it could rise to 0.75% by the end of next year. 

In comparison, this week has also seen a sub 1% fixed rate launched by Accord Mortgages, part of Yorkshire Building Society.  The two year fixed deal requires a 20% deposit.  Other initiatives include the Lloyds Banking Group who are offering a £1,000 incentive for customers who remortgage from another lender before 12^th November whilst the Clydesdale have reduced a number of competitive 2 and 5 year fixed rate products.  The threat of rate rises hang over our heads as a real possibility, but a lot of lenders are seriously ‘under target’ for the year and I suspect there will be competitive rates around for a few months yet.  Do keep an eye out as there are some great offers around.

Finally, if you have more than four buy to let properties, the way a lender underwrites your application is changing.  As previously advised, from 30^th September the new Prudential Regulatory Authority rules come in to effect and lenders will ask for increasing amounts of information regarding your portfolio and finances.  Be prepared and always speak to a specialist!  

AToM = GE Top Volume Producer for 2013!

The mortgage market is a flurry of activity currently and competition in the sector is rife.  Lenders are looking at a variety of ways to sneak ahead of their competitors.  One such example relates to the Help to Buy New Build schemes.  When the scheme was launched, the customer would take a percentage of the property, normally up to 75 per cent.  Customers would put in a 5 per cent deposit and the government would cover the remaining 20 percent as an equity loan, repayable after ten years or on sale of property.  One lender has launched a product that will now allow a remortgage up to the full 95 per cent of the property value to remove their shared equity loan.  This is new to the market and shows an ambition to think outside the box and cater for customers who may otherwise have minimal options at the end of the equity loan period.

Some rates have started to creep up….. over the last week we’ve seen Metro Bank and Accord Mortgages increase selected rates by 0.2% and both Halifax and Santander increased some rates by 0.1%.  Not time to hit the panic buttons just yet, but good to note the movements in the market.   In fact some lenders have actually reduced a selection of rates, so always review the options available across the whole of the market.

Finally, AToM has been recognised as a major contributor to two specialist lenders.  GE Money Home Lending has awarded AToM as their top volume producer for the whole of 2013! Part of the GE Group, they specialise in lending to those who require large loans, over £250k, and to those who may have had a credit issue in the past.  Precise Mortgages, who also lend in the specialist sector, as well as Buy to Lets has confirmed AToM as their top volume producer across all products for the last six months!  Both lenders have a fantastic suite of products and we look forward to continuing to grow with them both.  Have a great weekend!

Product innovation is welcome

Product innovation is once again at the top of my news column this week.   A company has launched a very interesting proposition for those in the Buy to Let mortgage sector.  They will allow a 20% equity withdrawal opportunity.  This can be for any legal purpose and there are no monthly repayments.  Instead, this amount is repayable on the sale of the property and any increase in property value shared with the lender.  They will allow the total loan, including the amount with the first charge lender to a maximum of 85% of the property value.   Already this has created a lot of interest by those looking to buy further properties wanting to release funds for the deposit by raising monies on existing property.   Obviously T&Cs apply, but this is another example of lenders looking to be niche suppliers!

The Nationwide House Price index has reported that UK house prices increased by 1% on October and were 5.8% higher than October 2012.  They further report that house prices, at a national level, are only now around 7% lower than they were in the height of 2007.  Confidence boosting news!

And it is so across the market.  Rates are still decreasing!  Especially in the Near Prime sector for those who have had previous financial issues with their credit.   Many lenders are in this arena and they will cater for a missed mortgage payment in the last 12 months, historic defaults, County Court Judgements (CCJs).  A limited few will also consider those who are discharged bankrupts, had IVAs or who are in a debt management plan.

There’s no denying that this area of the market took a battering back in 2007 as many, many lenders who offered these types of mortgages were shut down or mothballed.  However, the regulatory lending restrictions are now more stringent than back then and the new breed (some never really left) have a whole new outlook on the term ‘responsible lending’. But where there is demand, there will always be supply.  Rates range from late 3%s, right up to double figures depending on individual circumstances.   

Finally, the Near Prime lender tends to be a ‘stepping stone’.  Most issues usually disappear from a credit search after a few years. Therefore, the aim would normally be to cater for current requirements on a short to medium term basis with the longer term outlook being structured to enable the customer to get back onto high street mortgage offerings, as quickly and cost effectively as possible.  Terms and conditions always apply and always best to seek professional advice.

It's all 'go' in the Mortgage market!

There are many changes in the mortgage market to report on this week!  I start with those who have cut rates or launched new products!  These include Halifax (some rates reduced by 0.5%), Barclays (some rates cut by 0.5% across residential and Buy to Let ranges), Aldermore Mortgages (some Buy to Let rates cut by 0.8%) and Precise Mortgages (some rates cut by up to 1%).  Others including HSBC, Tesco Bank and the Post Office have all launched very attractive low fixed rates.  However, always make sure you read the small print as although the rate may be attractive, the attached fees to the product may not be so and the deposit required is probably quite substantial.  Another important point to check is the rate you will revert back to when the product fixed rate ends.  You don’t want to have a ‘payment shock’ at the end of the term if the rate you revert to turns out to be substantially higher than your initial rate.

Saffron Building Society have launched a superb innovative product in to the specialist sector aimed at those who have had a slight blemish or two on their credit history.   Called the ‘Credit Repair Mortgage’, the product, which has no early repayment charges at all, is looking to assist those who have had financial issues in the past obtain a mortgage with a view to repairing their credit score and eventually getting them back on to high street rates.  The product caters for First Time Buyers as well as home movers and is initially for those who are employed.  The real win win on this product is that the longer the customer is with the lender, the lower their rate becomes.  For example, one product tier reduces annually by 0.4% for the first three years.  This is great innovation!  Terms and conditions apply…

Secured loans have also had a positive week as Shawbrook Bank launched a 95% LTV (loan to value) home owner product.  Loan sizes range from between £3,000 and £25,000 and are secured against the property as a second charge.  This is a really great move by the lender and will service a considerable gap currently in the market when mainstream high street lenders won’t allow a high LTV loan to a customer as a first charge.

Build your 'Dream Home'!

We’re in the midst of a rate price war between lenders vying for new customers.  This is obviously great news for the end consumer, but it can’t be profitably sustainable for these lenders, so make hay whilst the sun shines, as they say!   Just be wary that lenders are ‘cherry picking’.  You may be drawn to a superb rate and approach the lender directly, but for whatever reason, they decline your application and offer you a higher alternative or nothing at all.  We’re hearing numerous differing stories from customers currently, and some are quite disturbing.  Especially if the lender has pulled the plug a number of weeks in to processing..

Don’t get me wrong, we are in a very positive era and enjoying a very busy start to the new year.  However, you need to be aware that these things happen and that they can happen at any time right up to the completion of your mortgage! 

There appears to be a lot of building work going on locally, mainly by large property developers.  In addition, we’re seeing a lot more enquiries for those looking to build their own dream home.  Many have been enquiring about mortgages to buy a property, knock it down and build a new one in the same location.  It can be done and these are normally called Self Build Mortgages.  Others are looking at substantially renovating their existing properties.  Again, this can be done.  Either way, have a chat with a local architect first to see if your plans are realistic possibilities.  They will have a good idea as to what the local Council Planning Officers will accept and of course, what they will reject!   Lenders then may look to lend funds on a stage payment basis.  Stage one might be the foundations, stage two might be ground level and so on.  Each stage would require sign off by the buildings inspector and then funds would be released.  The lender may not lend the full build amount, so be prepared to put in a deposit and possibly at each stage.  For extensions and renovations, it would depend on the size of the work and what funds may be required.   Seek professional advice.

Anyone selling mortgages must be qualified!

After several years of consultations, panic by various areas of the market and the odd debate here and there, the Financial Services Authority (FSA) have issued their final policy rules following their Mortgage Market Review (MMR).

Some might argue this is badly timed with the market still in dire retraction from the crashes of 07/08 and no real recovery since then.  But at the same time these rulings are needed to ensure that the same issues cannot happen again, once we get back to some normality in the lending arena.

With many consultation papers previously issued to the market for responses, the final policy rulings are not of much surprise and we must not forget, are to ensure the best interest of the end consumer.

I thought I would try and highlight a few of the rulings that caught my eye and which must be adhered to (mostly from April 2014):

-          Anyone selling mortgages must hold the relevant mortgage qualifications
-          Firms must act ‘in the customers best interests’
-          Lenders are to be responsible for customer’s affordability and for verifying customer’s income.
-          All ‘interactive sales’, those completed face to face or over the phone, are to be treated as ‘advised sales’.  So, whoever sells the product is deemed responsible, whether it be your bank, broker or other suitably qualified individual. 
-          Stress testing must be carried out for future rate increases.  If you cannot afford an increase in rate, you are unlikely to be given that current product.
-          Interest only survives, but only for customers who present a credible repayment vehicle.
-          Concessionary rates offered by lenders cannot be removed because of payment problems.

These are just a few cherry picked from the 300+ pages of the MMR and I’m glad we have near 18 months to review, digest and act upon the rest!   

With an estimated cost in the region of £70m to implement the changes, this is not a cheap exercise, but the cost of market failures has obviously been substantially more, so anything that will prevent such issues happening again must be welcomed.

Many lenders have already restricted lending policies and reduced exposures to higher risk products, so the real issues will revolve around how Banks and other lenders handle the ‘advised sale’ requirements.  We shall have to wait and see.  In the meantime, this is already in action at your local independent and whole of market mortgage brokerages….! 

Consolidating debts / debt management plans ....

With most lenders increasing rates over the last couple of weeks, it was a pleasant and welcome surprise to see the Coventry Building Society reduce theirs by up to 0.3%.  The lender already had good rates and the new highlights include a low 5 year fixed rate with minimal or no fees on re-mortgages.  These are rates certainly worth exploring! 

Many prospective clients coming through the doors at AToM towers over the last few weeks have been reviewing fixed rate options.  Uncertainty is a big fear factor within the market especially with regards to the Bank of England base rate and the national press installing more confusion rather than a level of calm when it comes to interest rate predictions!

We have also seen a vast increase in customers looking to consolidate debt or even look at debt management plans. Both can sometimes cause issues. If you consolidate unsecured credit in to your mortgage, although your monthly payments may be lower, you may be paying more for your debt over a longer term.

With debt management plans (DMP), or Individual Voluntary Arrangements(IVA), again, the lower monthly payments may help in the short term, but you may well find it hard to gain an approval from a lender to refinance at a later date. Lenders tend to shy away from DMPs and may not assist anyone who has been in an IVA unless it has been discharged, normally, for more than four years.  Advice should always be sort before entering in to these types of arrangements.

At AToM, we are independent and we will happily go through the pros and cons of changing any of your financial details before proceeding to conduct any credit searches or decision in principles. You need to be clear that it’s the right deal for you. If your current deal is still the best option for you, we will suggest you stay where you are.

Goodbye 2010.....and 2011 - 'bring it on' !

For my last column of the year, I thought I’d start with the obligatory round up of 2010!

It’s been another year of highs and lows, with many businesses struggling to survive and some major players leaving the market. The beginning of 2010 saw mortgage rates rise, despite a low Bank of England Base Rate (BBR). Yet, a reversal in the second half of the year saw lender rates drop as they chased volume business. Abbey, Bradford & Bingley, Alliance & Leicester, etc re-branded and become Santander. Metro Bank was the first new high street Bank launch in 100 years! A coalition government now steers us on the road to recovery (!) and the Financial Services Authority is to be disbanded. In reality, it is a name change (Consumer Protection and Markets Authority) with a new owner and location (BofE)! I won’t mention the world cup! And, despite consistent ‘mortgage approvals in decline’ stories, there has been increased mortgage activity and lender appetite in recent months.

So what for 2011? There are predicted signs of growth with total mortgage lending estimated to be approaching £140bn, compared to the £136bn estimated for 2010. Tesco Bank are due to launch. House prices are predicted to dip slightly. Who can guess what will happen to BBR although, at a recent conference, a well respected commentator suggested that BBR would not move until 2012 at the earliest. Another major question revolves around interest only mortgages, with many lenders removing this option at certain levels, are its days numbered? Don’t forget the VAT increase due in January. The repayment by Banks of the Specialist Liquidity Scheme, a mere £200bn+, is due towards the end of 2011 and early 2012. We expect to see this as a lender priority late into the year.

So, the reality is another year of highs, lows and a small mix of uncertainty for us all. Let’s also hope someone rushes to help first time buyers…

Thank you for reading my column throughout 2010. It has been a hard task trying to deliver a positive spin in a negative market. There are no plus points for ignoring the truth! Please let me know if there are any specific issues/areas you would like me to cover in coming months. You can email me at dale.jannels@atomltd.co.uk, or call me on the above number.

The directors and staff at AToM wish you, your family and friends a very Merry Christmas and a relaxing New Year. We look forward to being of assistance to you during 2011.

Bank of China choose AToM

The debate on where mortgage interest rates are going took another stumble this week. For many months, various economists had predicted that the Bank of England base rate would rise towards the end of 2010 with further rises throughout 2011. However, Ernst & Young have suggested that if the impending spending cuts come through, the BBR will remain at 0.5% until 2013! Another sign that although we all believe rates have to rise, no one really knows when this will occur.

With this in mind, AToM towers has seen a vast amount of people requesting long term fixed rates over the last 3 to 4 weeks. Uncertainty seems to be the only certainty in the market and, quite rightly in my opinion, people want the guarantee of a long fixed rate term on their mortgage so they can plan for the next few years in confidence. There are some great rates to be negotiated currently and some include free valuation and solicitor’s costs, so that re-mortgaging fees are kept to a minimum.

We’ve also seen lenders expanding their distribution. AToM was delighted to be appointed to the Bank of China distribution panel last week. We can now offer lifetime tracker rates for Residential, Buy to Let and Commercial properties. Bank of China have only been in this area of the market for a year and AToM is now one of only five distributors in the UK to offer their products, outside of their branches. Please contact us to find out more.

And finally, I’ve mentioned this before, but its back on the radar. Many dormant lenders are offering customers a discount of up to 30% off their mortgage to move lenders. If your current lender is one of these, then it’s worth a call to see if you qualify for a discount. Normally, they will give you a deadline in which to complete the transfer of your mortgage but I’m sure it’s a timescale that AToM could meet. Just think, up to a 30% reduction on your mortgage - it could be a financially beneficial telephone call!

The final curtain for Self Cert..and so long Mercury FM!

The final curtain appears to have been drawn on Self Certification and Fast-Track mortgages. With preparations in place to amalgamate the Financial Services Authority (FSA) into the Bank of England in 2012, the regulator is clearing up what it considers to be a few outstanding projects. The Mortgage Market Review papers were distributed late last year and the FSA has now launched its consultation papers, following feedback from various parties.

One major proposal is that all lenders will have to prove affordability on all loans. Therefore, every mortgage applicant will be required to provide accounts or payslips and possibly bank statements so that the lender can deem the loan affordable to the consumer. With the old Self Certification mortgages and on some current ‘Fast Track’ mortgages, proof of income was not necessarily required by the lender.

Other changes also include providing proof of affordability into retirement and on interest only loans (which will be assessed as though they were on a Repayment basis). House price inflation or downsizing to a smaller property will no longer be acceptable as a suitable repayment option.

These, and a myriad of others points, are now at the consultation process and are planned to be implemented later in the year.

The Council of Mortgage Lenders has reported a great month for new lending in June, some 15% up on May and a 7% increase on June 09. However, whilst the market remains delicate, the power appears to be turning from the sellers to those who can actually raise mortgage finance. Whilst market products remains constrained, this could be very much to the benefit of the buyer. Remember, take independent advice before agreeing to proceed on a mortgage.

And finally…it’s the end of an era as Mercury FM changes to Heart FM. I’d like to personally thank all of the staff at Mercury FM for delivering a great local radio station in recent years. They certainly assisted in growing AToM’s exposure in the local area. I wish them all the very best for the future.

Time being called on Interest Only?

There has been much hype recently regarding Interest Only and Repayment mortgages. With an Interest Only mortgage, you only pay interest and no capital and so, at the end of your chosen term, you still owe the lender the same amount as when you began. Normally with this method, it is recommended that you contribute to a saving or investment vehicle to generate funds to repay the mortgage at the end of the term. However, this is usually optional.

With a Repayment Mortgage, you pay both interest and capital each month. Initially, this appears more expensive, but does mean that you pay back the loan with no debt outstanding at the end of the term assuming you meet the required payments on time.

Many lenders have recently tightened their requirements on Interest Only mortgages. Some will not allow this method above certain loan to value levels. Others charge higher interest rates and many are trying to persuade customers to switch from interest only to repayment.

Why the recent attention to these repayment options? Simply, because many borrowers have stepped onto the property ladder choose the cheaper option promising to review their payment plans at a later date. The problem is that the ‘later date’ never seems to arrive! As we all know, people generally live to their means. Many borrowers on this scheme have no savings or viable plans to pay back the debt and this is worrying!

That said, Interest Only mortgages can be right for certain professions - people entitled to annual bonuses: the fluctuating income of self employed: or employments where lump sums are received after a number of years in service.

This debate is gathering pace so expect to read more in coming months.

Finally, do you know the full details of your own mortgage? A recent Consumer Financial Education Body report suggests that 15% of mortgage holders are unaware of their current repayment style or interest rate! As this is the largest debt you are likely to take, it seems crazy not to understand it! We are quick to change mobile, broadband or utility provider the minute rates start to increase. This mentality should also be applied to mortgages. Always be on top of your mortgage. Otherwise it could cost you a small fortune.

June was a great month, but was it a fluke?

AToM can report a bumper month for new business in June. Our best month for mortgage applications and completions for over a year! Fantastic news which shows that, even in a dire market, consumers are turning to independent mortgage advisers for assistance for advice and support. Now, more than ever, independent advice is key. There are many mortgage options available, but finding the right one to suit your requirements can be difficult, especially as some lenders only offer their special mortgage products through a select panel of distributors, like AToM.

Despite such positive news, market conditions, and national debt statistics for June, from creditaction, do not paint a pretty picture. In brief:

- 107 properties were repossessed daily during Q1, 2010
- 203 mortgage possession claims will be issued and 158 mortgage possession orders will be made today
- 391 people are declared insolvent or bankrupt every day. Equivalent to 1 person every 51 seconds during the working day.
- 1,000 people seek some form of formal debt rescheduling every working day.
- 1,896 people were made redundant every day during the 3 months to end April 2010.
- £131.5m is the interest the Government pays each day on the UK’s net debt of £903bn. Estimated to rise to £182m a day in 2015-16!
- Shelter estimate that more than one million householders have used credit cards to pay their mortgage or rent in the last 12 months and moneysupermarket.com advises that almost 5m UK adults regularly use their credit card to pay household bills. Another 2.5m withdraw money using their cards!

Scary figures! The recent emergency budget is trying to tackle the scale of some of these and only time will tell if it succeeds.

In the meantime, remember that financial institutions evaluate your mortgage application based on your credit history. In fact, insurance companies will also credit search you before agreeing to cover you. Most will use either Experian or Equifax to review your financial status. In short, every financial outlay you have, or have had, will be reported. If you have too much credit, not enough credit, or missed payments on any credit or utilities (including Gas bills or Mobile phones), you may find that mortgage availability to you will be limited.

Guarantor Mortgages, great for First Time Buyers

First time buyers are still struggling to get on to the property ladder. So, this week, I thought I would evaluate an option available to first time buyers in the form of guarantor mortgages.

Some lenders will allow a family member to act as a guarantor. Usually, the guarantor will need to prove they can afford their own residential mortgage and also the proposed mortgage they wish to guarantee. For example, if their mortgage was £100k and the proposed mortgage was £100k, the lender would look to ensure the guarantor could afford the total £200k loan. So, based on standard income multiples of, say, 4 x income, the guarantor would need to prove income of £50k. There are many ways of calculating affordability and every mortgage case is different. Lenders income multiples vary. Some assume the guarantor has no other loans. Some lenders offer a limited liability guarantee, so guaranteeing a smaller proportion of the loan. Although a guarantor mortgage is traditionally associated with first time buyers, there are products in the market that cater for those looking to move home or re-mortgage. You will probably need a minimum deposit of 15%.

The Post Office has confirmed that they will shortly be lending 90% mortgages aimed at first time buyers. At the moment it has not given any more details about the product, but says it wants to target those on low incomes. Let’s evaluate. I’ll make assumptions that they mean £20k (and below) and four times income, so £80k. Add in a 10% deposit (plus solicitors and valuation fees) and you are looking at a purchase price in the region of just £90k! This move was announced by a Government spokesman so the cynic in me asks if the headline was designed to win votes? Rates are likely to be quite high and, interestingly, the funding line is from Bank of Ireland.

Nationwide have confirmed that house prices rose by 0.7% in March, compared to a 0.8% drop in February. Prices sit 9% higher than a year ago, say the lender.

Finally, the WSCT Business Awards 2010 voting deadline is drawing close (9/4/10). If you have not voted yet, please take 2 minutes to do so. Local companies have had a rough ride over the last few months and need your support and your votes!
Have a great Easter!

The return of Exclusive mortgage products!

Lenders are returning to the market! Hooray! Importantly, they are also providing exclusive products again. AToM has an exclusive 2 year fixed product at 3.35% (5.2%APR) up to 75% of the value of the property for both purchase and remortgage. We have £5m to allocate, so if this is of interest, please contact us for terms and conditions. Move quickly as £5m will not last long!

A new lender entered the market last week. Drawbridge Financial have a real appetite to lend and will look at applications on a case by case basis. They specialise in HMO’s (houses of multiple occupation such as student lets), refurbishment loans, short term bridging finance, commercial finance and more. With loans from £50k up to £15m available, this is an attractive portfolio.

The Building Societies Association has reported that only 49% of consumers think now is a good time to buy a property. The barrier seems to be the lack of mortgage finance. With funds easing, I would argue that it is a good time to get onto the housing ladder. What we can be sure of is that house prices are currently low in most areas. Mortgage interest rates are low currently but are likely to rise towards the end of this year and, probably, throughout next year too. So, to purchase a property when prices and rates are on the low side looks like a good prospect.

Meanwhile, credit scoring is creating havoc for mortgage applications to high street lenders. Most lenders credit score applications based upon the amount of credit you have, whether you are on the electoral role and your recent payment profile. If the computer says ‘no’, you will tend to find all high street lenders doors shut to you. Fear not, if your credit history is clean, if you want a loan to value of 75% or less and you can prove income, there are lenders who do not credit score, but will manually review and underwrite clean and affordable applications on an individual basis. AToM has access to six of these lenders so don’t despair if the high street lenders say ‘no’, if you fit the above profile, give us a call to see if we can assist.

AToM win mortgage industry 'Oscar'

AToM attended the Mortgage Strategy annual awards ceremony at the Grosvenor House Hotel in Park Lane last week. These awards are the ‘Oscars’ of the mortgage world and an opportunity for those who have managed to survive the incredibly tough climate in the mortgage market, to meet and be recognised. I was aware that AToM had been short-listed but was pleasantly shocked to hear the host, Alun Cochrane (8 out of 10 Cats) announce to the 650 attendees, that the award for “Best Specialist Distributor 2010” goes to…….. AToM! Wow! Two major industry awards in the same week with the latter being the big one! Superb news and really well deserved by all the team at AToM.

Coming back down to earth with a bump, other news this week reveals lenders look like they are starting to enter into price wars. BMSolutions (part of Lloyds Banking Group) recently reduced their Buy to Let rates and, only a few days later, The Mortgage Works (Nationwide) also reduced theirs. These two lenders probably write the majority of Buy to Let mortgages currently and, with both owned by larger organisations, this shows that their appetite in the investment property arena is warming up. Without doubt, there is a huge rental market out there and this is enhanced as more first time buyers struggle to raise deposits to purchase their first properties. With no other options, renting becomes their priority whilst trying to save deposits.

With this in mind, the Council of Mortgage Lenders this week released a report indicating that 80% of all under 30 year olds now need financial help from parents or relatives to make that first step on to the property ladder. With today’s first time buyer needing around £34k deposit, which also tends to be the average annual household income, there seems to be no end in sight for the first time buyer and their ambition to get onto the property market. Whilst there remains no remedy or demonstrable assistance from lenders, the Buy to Let market will continue to flourish.

Why am I being declined a mortgage?

So! You have no credit problems: you have a good income: no debts and you are looking to buy a property or maybe remortgage. But then, your bank, with whom you’ve been a loyal customer to for many years, reports back that you have a low credit score and the computer says “no”. They will not offer you a mortgage. This is a dramatically increasing scenario. The world of credit scoring (tick box mentality) has taken over and there’s no arguing with the lender once their technology has made the decisions.

Fear not! There is light at the end of the tunnel. AToM recognised that good clients were being rejected by lenders for no apparent reason and has built up exclusive relationships with five lenders who will assess an application manually and seek to offer assistance to such customers. This is our alternative to ‘the computer says no’ and have found an avenue for the right deals working with lenders that not only manually underwrite cases, but who have an appetite to lend. We call this Complex Prime and it does not just include those turned away by their bank for low credit scores. It could be a case scenario that needs a bit of lateral ‘out of the box’ thinking by an underwriter keen to say ‘yes’. This could include cross collateral security for clients who are asset rich: a sympathetic view for those who have trouble in proving ‘real’ income: customers who need guarantors or maybe just need someone to sit down, review the whole picture and advise on the best route to take.

I have always suggested 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.

Properties appear to be selling quickly..

A customer visited AToM last week to arrange a mortgage for their new property purchase. We obtained an agreement in principle, subject to the lenders normal underwriting, and the clients left ‘very happy’ with the speed at which this agreement was obtained. However, they still had to sell their own property. Most lenders “agreements in principle” are valid for anything between 30 and 90 days. The client left the office content in the knowledge that they had a new mortgage in principle and could confirm this to the vendor’s agents. Their own property was placed on the market the same day. This is usual practice and we then awaited the clients further instruction with regards to proceeding, once sold. The following afternoon, we had a call from the customer confirming that they had received four viewings that day and had accepted an offer nearly ten thousand pounds more than the asking price! One day on sale, two offers and one accepted! Proof, locally, that the market is returning especially if the property and, more importantly, the price is right. Consumer confidence is rapidly on the increase, a lot more properties are on the market and as mentioned above, they appear to be selling!

I attended a product launch in London last week and one of the points of particular interest was the predictions on where the Bank of England Base rate will be in the next 12 to 18 months. Some large banks and building societies contributed to the predictions, including luminaries such as Goldman Sachs, HSBC and Nationwide. The general consensus was that, as we expect, BBR will rise in this time period. The lenders in-house specialists, economists and analysts have predicted that by the end of this year, the BBR will be 1-1.5% rising to around 3.5% by the middle of 2011. Interestingly, despite the same people being unable to predict (in advance) the recession or duration of the ensuing market turmoil, these predictions may just be worth taking note of and maybe a short term tracker rate is worth a look after all….

Out of recession and SVRs on the increase!

Mortgages - an interesting world! Gross mortgage lending is quoted to be up 12.5% year on year. Product offerings are increasing. Moneysupermarket.com indicates 384 products are available to those looking for an 85% loan and 165 for those looking for 90%. The UK is officially ‘out’ of recession! Superb news, so perhaps confidence will start to return in the mortgage sector now?
One point of concern surrounds the activities of some mortgage lenders and their reversion interest rates (rates which apply at the end of an incentive rate period). It appears that, despite mortgages being sold with a quoted interest rate ‘ceiling’ at the end of the incentive term, there may be options in the lenders small print allowing increases above this, and at no notice!
One lender which appears to have made such an increase is Skipton Building Society. Their offers ‘allegedly’ quoted a ceiling of 3% above the Bank of England Base Rate. Their new SVR (from March) will be 4.95%, an increase of 1.45%. This is blamed on “exceptional market conditions”! Ouch! Skipton’s actions have suffered the wrath of the national press and now the floodgates are open for others to follow if they have similar ‘get out’ clauses in their mortgage offers. Nationwide have increased some SVRS through their specialist arms UCB Homeloans (0.30%) and The Mortgage Works (0.50%) respectively. Two smaller lenders have announced a 0.35% increase from February.
What does this mean for you? Check carefully the details of your original mortgage offer. If the reversion rate is the lenders SVR, then it’s likely this will be increasing shortly. If it is a Bank Base Rate Tracker then you are likely to move onto an attractive reduced rate, at least for a while! Whichever, it is a good time to review your contract paying specific attention to the sections relating to reversion rates.
The re-mortgage market is reviving and it is a good time to review the market to see what’s available to you. Lenders seem to display little or no loyalty to you, so you have no moral obligation to them. There are plenty of lenders willing to compete for your business. Call AToM for a no obligation review.

Credit Card + Mortgage = not good.

A recent report from housing charity Shelter has suggested that as many as one million households are using their credit cards to meet their monthly mortgage or rental payments. This figure represents 6% of homes in the UK, with the charity adding that the problem is growing amongst the middle classes. Without doubt, this is a worrying trend as not only will you be increasing your current debt, you’ll probably be paying interest payments on both your mortgage and your credit card! Shelter have called these figures a “shocking discovery” and warned that in some cases if people were to default on their credit card payments, their homes could be repossessed.
In addition to these striking revelations, Creditaction has reported that 9,300 new debt problems are reported to the Citizens Advice Bureaux and 1,000 people are seeking some formal debt rescheduling plan every day. Therefore, it is unsurprising that in the same report, it is highlighted that a property is being repossessed every 11.2 minutes throughout the UK.
My advice would be not to let the situation get so bad that there is no way back. In the current climate, mortgage arrears are frowned upon as the worst possible misdemeanour. Worse than CCJs, Defaults and other missed payments on credit. Make sure you review your circumstances and take action before it happens. Once mortgage arrears, CCJs or Defaults are registered, every financial institution (including insurance & mobile phone companies) will see these when making decisions on whether or not to lend to you. At the same time, it is likely that any online internet application will fail should you have one of these issues registered against you within the last 12 to 24 months, as nearly all lenders use credit scoring and these inevitably will have a detrimental affect to you score.
To continue the scare mongering, there are only three or so lenders left in the market who will assist clients with adverse credit. The best case scenario is rates around the mid 5%s for historic adverse. The worst case is rates starting from 9.90% with eight, yes eight years redemption penalties to pay if you want to leave them. Therefore, the moral of the story is a simple one. If the going is beginning to look tough, speak to AToM for assistance. Sooner, rather than later!