There are other options rather than a full remortgage.

If you are looking to raise additional funds but are already on an attractive rate with your lender, there are other options rather than a full remortgage. Depending on the amount already lent as a mortgage, compared to the value of the property, some lenders will allow a ‘secured loan’ to be added as additional borrowing, right up to 95% of the property value. 

A secured loan is a 2nd, or subsequent charge which allows the equity in a property to be used as security.  The secured loan is usually repaid over a shorter term than a mortgage, circa 1-10 years, but the term can be longer, although this will increase the amount of interest repaid.   Second charge lenders are also in the midst of a price war.  Many have reduced rates, one or two new lenders have entered the market and rates can now be below 4%.  Rates vary depending on the customer’s circumstances and current level of borrowings.  Make sure you review all options available to you and always seek advice.

Alternatively, your existing lender may allow a further advance.  This would be a separate entity to your existing mortgage and again, will be subject to affordability and so on.  Normally, you will need to have had your existing mortgage for at least six months, before applying for a further advance.

Either of these might be a better and cheaper alternative over a shorter term, than a full remortgage of your first charge.

As I’ve mentioned many times, lenders are looking more carefully at affordability, not just for now but also any potential changes that may affect your income in the next five years. Be ready for some fairly detailed questions when submitting an application!

Finally, you buy a car from a car specialist, flowers from a florist, so for all your mortgage requirements, why buy anywhere other than from your local and independent mortgage specialist?

Be ready for some fairly detailed questions when submitting an application!

The remortgage market is awash with lenders actively looking to attract new customers. 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. So pull out that paperwork and have a no obligation conversation with your local, independent and whole of market mortgage advisers!

Alternatively, if you are looking for additional funds, but are already on an attractive rate with your lender, there are other options rather than a full remortgage. 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.   A secured loan is a 2nd, or subsequent charge which allows the equity in a property to be used as security.  The secured loan is usually repaid over a shorter term than a mortgage, circa 3-7 years, but the term can be longer, although this will increase the amount of interest repaid.   Second charge lenders are also in the midst of a price war.  Many have reduced rates, one or two new lenders have entered the market and rates can now be below 4%.  Rates vary depending on the customer’s circumstances and current level of borrowings.  Make sure you review all options available to you and always seek advice.

In either of the above the lenders are looking more carefully at affordability, not just for now but also any potential changes that may affect your income in the next five years. Be ready for some fairly detailed questions when submitting an application!

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!

Secured Loans market is in a period of change

The second charge secured loans market is under a period of change and has been since April 2014 when responsibility for the regulation of consumer credit transferred to the FCA.  But there's also an EU Directive due to be implemented in 2016.  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.  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.

In fairness, and depending on the reasons for the capital raising, there are numerous examples of borrowers being better off with a secured loan rather than moving their existing mortgage, especially if it's an interest only mortgage.  In addition, those who are self employed with minimal accounts, have historic adverse credit or need a greater flexibility than that offered by first charge mortgage lenders, may have no other option than to look at a second charge on their property. 

So be prepared moving forward, if you want to raise some additional funds on your property, you will be presented with a standard remortgage first charge illustration as well as a secured second charge alternative. With rates now starting from below 5% on a second charge loan, this may not be a bad thing.

At the beginning of October, as mentioned in some previous articles, the Bank of England has enforced capping restrictions to lenders.  Funders will now only be allowed to lend up to 15% of their loan book at more than 4.5 times income.  No one knows the true effect this will have to funds available in the market generally, only time will tell. 

Finally, it is really good to see a new lender coming to market.  Fleet Mortgages, a new Buy to Let lender is set to launch in November.  The management team are no strangers to the market as many have been involved in various lending guises previously and we certainly welcome a fresh outlook and further funding in the market.  I wish them every success.

Is now the right time to Fix?

Activity remains high in the financial sector.   Halifax has reduced some two year deals by up to 0.2%.  Santander have launched two year tracker rates in the region of 1.79% (40% deposit) and Woolwich (Barclays) has launched products on the Governments Help to Buy Mortgage Guarantee scheme, available up to 95% loan to value.  We’ve also heard Richard Sharp, an external member of the Bank of England’s Financial Policy Committee, suggest that now is a good time to fix in to a long term deal.  Is he right?  Who knows!   There’s no denying that five year fixed rates are incredibly attractive and we have seen some rates start to creep up on these longer term deals.  However, it is personal preference.  If you wanted the certainty of knowing your mortgage payments won’t change for the next sixty months, then they are certainly worth a review!

The New Year has seen a large increase in requests for secured loans. 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 are usually between £3.5k and now up to £2.5m!  There are also no 'up-front' fees to find although costs 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, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.  Always seek advice.

Read the small print and don't get searched

Some comparison websites are causing a stir.  We’ve had a few customers contact us for a mortgage recently who have been totally unaware that they have had a number of credit searches carried out having recently searched for competitive renewal quotes on their home or car insurance.   I’m sure it will be stated somewhere in the small print, but the customers have researched a number of comparison sites and ended up with a number of credit searches on their profile.  This, in a small amount of time can have a marked affect on your credit score, and as such, affect your ability to obtain finance, so read the small print and be aware!  

The Council of Mortgage Lenders (CML) has reported that July’s figures for mortgage lending were up 12% compared to June.  This amounted to £16.7bn and compared to July last year, was an impressive 29% increase.  Positive figures indeed and it will be interesting to see August’s figures as this was also an incredibly busy month.  Interestingly, the First Time Buyer sector has proved one of the larger increases in volume, circa 5%, with an average deposit of 18% and an average loan amounting to 3.31 x income.

We’ve also seen a large increase in requests for secured loans.  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 are usually between £3.5k and £100k. There are also no 'up-front' fees to find although costs 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.  

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

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.

 

Positive activity in the mortgage market

Only a few days into the final quarter of the year and we’re already seeing lenders lowing rates to attract new business.  Woolwich have cut some rates by up to 0.2% and Abbey for Intermediaries have reduced various fixed rates across the range, both following numerous lender changes last week.  Accord Mortgages have also launched eight products aimed at First Time Buyers with a 10% deposit.  Rates are reasonable and some offer free valuations and £250 cash back.  All in all, it seems there is an appetite to lend in the last quarter (to hit bonus targets?!) and this is great news for the end consumer.

Second charge lenders are also in the midst of a price war.  Many have reduced rates, one or two new lenders have entered the market and another has increased their maximum loan size up to £200,000.   Many customers are making use of a second charge, rather than a full remortgage, as their existing first charge mortgage is on a very good rate and it may not prove cost effective to remortgage the whole amount.  Make sure you review all options available to you.

House prices have fallen 0.4% in September, according to the Nationwide House Price index.  The average house price now stands at £164k.  Nationwide go on to suggest that overall house prices should remain “relatively flat” or decline only modestly over the next 12 months.

With a recent Panorama programme highlighting the use of Payday loans around the country, I need to reiterate that these are classed as an ‘adverse entity’ with most lenders (not that some would admit it!).   In short, these lenders will charge a premium interest rate for a mortgage, compared to a high street lender.   However, even these lenders (those who accept customers with historic CCJs, defaults, or missed mortgage payments registered against them) MAY NOT accept someone who has taken out a payday loan.   So, although these may be right for a customer in certain circumstances, they will most definitely limit the number of lenders available to you when you come to apply for or change mortgages.  Seek advice.

Much has changed since 2007...

Someone said to me this week its five years since Northern Rock crashed the ‘mortgage boom’ party and to be honest, I did ponder on where those years have gone!  Much has changed since 07 and lenders now appear to be run by their credit risk personnel, who in turn report to the Financial Services Authority, our regulators.   Let’s be honest, most feel that the FSA now run the lenders too!  As a directly authorised mortgage intermediary, we have had our fair share of ‘guidance’ by the regulator and with the fees involved just to trade in the mortgage market, it’s no surprise that so many have jumped ship and started new careers.  However, what this has left is huge gaps and I often wonder where the market will be in two or three years time as many more retire and fresh blood seems to be so scarce on the horizon.  What will be will be!  But in the meantime, there’s no substitute for honest, transparent professional advice and recommendation, based on your exact needs and requirements.   Online computer systems just can’t compete with that!

Halifax has launched a 5.89% (APR 6.1%) seven year fixed rate mortgage up to 90 per cent of the property value, exclusively for first time buyers.  There is no product fee and customers are eligible to receive £500 towards their moving costs.  Might be right for some very cautious people who like to fix payments long term.  However, rates are lower on shorter term fixes and with rates predicted to be static for some time, alternative products at the end of the short term are likely to still be more competitive.  But, the principle of trying to help First Time Buyers is to be applauded.

Finally, the 2^nd Charge Secured Loan market showed huge growth in July.  Second charge mortgage lending shot up by 11% according to the latest figures from the Finance & Leasing Association.   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).  Again, right for certain people but rates start from 6.9%, so will need to ensure its beneficial in the short to medium term compared with a complete remortgage to another lender/rate.

On a good rate? Maybe a Loan is an option..

Many of us will review car insurance, home insurance, gas and electricity suppliers to find the best rate on the market.  But it’s astounding how many people just leave their mortgage with their existing supplier.  Most lenders look to attract new customers, but are less likely to offer attractive options to stay with them.  This, in the main, is due to the different fees and charges that can be added to the new mortgage at the outset.  In the current climate, the lenders bottom line tends to be more profitable with new clients, rather than old.  So don’t feel loyal, if a better option is with another lender; think of number one!

That said, we are still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may find that you have to stay with your current lender anyway!

The other option, if you’re looking to raise cash for home improvements, to consolidate debt (although not always encouraged) or for another legal purpose, is a secured loan.

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 are usually between £3k and £100k. There are also no 'up-front' fees to find.

We tend to find that many customers looking to re-mortgage 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.

The secured loan is usually repaid over a shorter term than a mortgage, circa 3-10 years, but the term can be longer, although this will increase the amount of interest repaid.  Rates vary depending on the customer’s circumstances and current level of borrowings.

As with all finance, seek advice and think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it!

Review your options!

Many of us will review car insurance, home insurance, gas and electricity suppliers to
find the best rate on the market. But it’s astounding how many people just leave their mortgage with their existing supplier. Most lenders look to attract new customers, but are less likely to offer attractive options to stay with them. This, in the main, is due to the different fees and charges that can be added to the new mortgage at the outset. In the current climate, the
lenders bottom line tends to be more profitable with new clients, rather than old. So don’t feel loyal, if a better option is with another lender; think of number one!

That said, we are still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may find that you have to stay with your current lender anyway!

The other option, if you’re looking to raise cash for home improvements, to consolidate debt (although not always encouraged) or for another legal purpose, is a secured loan. 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 are usually between £3.5k and £100k. There are also no 'up-front' fees to find.

We tend to find that many customers looking to re-mortgage 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.
The secured loan is usually repaid over a shorter term than a mortgage, circa 3-10 years, but the term can be longer, although this will increase the amount of interest repaid. Rates vary depending on the customer’s circumstances and current level of borrowings.

As with all finance, seek advice and think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it!

What about a secured loan?

With all the recent headlines appearing in the national press on mortgage rates, are you looking to remortgage? Most lenders look to attract new customers, but are less likely to offer attractive options to stay with them. This, in the main, is due to the different fees and charges that can be added to the new mortgage at the outset. In the current climate, the lenders bottom line tends to be more profitable with new clients, rather than old. So don’t feel loyal, if a better option is with another lender; think of number one!

However, we’re still stuck with the fact that many lenders do not want to lend in huge volumes. Therefore, you may find that actually getting a mortgage becomes the main obstacle and you may have to stay with your current lender anyway!

The other option, if you’re looking to raise cash for home improvements, to consolidate debt (although not encouraged) or for another legal purpose, is a secured loan.

A secured loan is a 2nd, or subsequent charge, designed for homeowners which allows the equity in their property to be used as security. Loans are usually between £3.5k and £100k. There are also no 'up-front' fees to find.

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.

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

As with all finance, seek advice and think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other loan secured on it!