Happy New Year! Are you financially prepared for the year ahead?

And so another year begins, have you made any resolutions?  If not, make one to review your mortgage!  Now that the election is out of the way and we have a ‘clearer’ route to Brexit, lenders will look at their strategies for the next few years and I’m sure somewhere in those plans will be reviewing their rates and offerings to maximise profitability. 

In the meantime, one lender has already reduced a 5 year fixed rate to under 1.5% with free valuation, free legals on remortgages (£300 cashback for purchases).  There will be other similar deals available, and terms obviously apply, but the fact that these rates are so low so early in the year is impressive!

Technology will play a huge part in the mortgage market over the coming few years.  I’m sure mortgages will be available through a full ‘comparison type’ model shortly.  But it does not necessarily mean it’s the right option for you.  As with some current comparison sites, some of the options provided are those that pay a referral fee to the site and may not be the most suitable for the end user (although they might pay the highest referral fee to the providing site!).

We understand that a straightforward customer who fits the high street with 2.4 children, lived at their current address for ten years, has consistent employment, no debts and wants to remortgage pound for pound, will be an ideal customer for the technology model.  However, not everyone will fit this model and thus the human touch will be required for some years yet.

And of course, this is all relying on you having a decent credit score.  You can’t turn on the TV without seeing an advert for your free credit score!  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 few years.

Most lenders credit score applications to try and assess your ability to repay any loans.  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!  So even before starting the full mortgage process, have a chat with a professional adviser and seek their advice what to do and when, to enable the best chance of getting a mortgage first time.

Your mortgage broker should 'get to know you'...

Arranging a mortgage can take time.  But actually, the process, regardless of whether you are a first time buyer, home mover or simply re-mortgaging, will be roughly the same.  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 advisor 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.

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.

Equity Release is not right for everyone. What are the other options?

It seems to be that you can’t turn on the TV without seeing an advert for Equity Release.  

This is one area of the market that continues to gain momentum.  It gets a huge amount of airtime and column inches, yet its estimated to be just a £4bn part of a £260bn+ mortgage market and not necessarily right for everyone. 

Equity Release, put simply, is a scheme through which the asset rich can release funds from the equity in their property. This scheme normally applies to applicants approaching the twilight of their life although it is not uncommon for the newly retired to participate. Equity Release is highly regulated to ensure no high pressure selling and we always encourage offspring involvement.  After all, the equity is likely to form a major part of their inheritance and they should always have the opportunity of finding alternative methods of funding their parent’s lifestyle first.  Some providers also allow the interest to roll up, so there are no monthly payments, and some allow the capital raised to be used as future income.

What you don’t see in the adverts and on TV for Equity Release, are the alternatives.  When coming to the end of the mortgage term with your lender, it’s rare to be offered any additional products to stay with them as you are ending the mortgage contract (normally 25 years or more).  They also fail to advise you to seek further advice about re-mortgaging to another provider.  Despite ages possibly having achieved ‘later life’ status, there are options available and although this might cease on the high street, as their maximum ages tend to be between 70 and 75, there are a huge number of lenders who will still lend. 

Why should a customer not have a mortgage due to being in advance of normal retirement age?  We know people are working well in to their 70’s now and some are deferring pensions until needed.  So, for the right customer, with the right income and right loan to value of the property, a normal mortgage is still achievable.  These lenders will be building societies, or similar, dotted around the country but having been established for decades, even centuries!  They think outside the box, manually assess and will take a reasoned decision, rather than a computer based ‘tick box’ response.  They will also consider interest only options, assuming there is a suitable repayment strategy in place.

Terms and conditions always apply, and specialist advice should be sought as this can be a very complex matter and can affect future equity and income.