Rates being pulled quickly, have your paperwork ready!

The current climates continue to affect the mortgage market in many ways.  We’ve seen lenders pull rates quickly, decreasing rates one day and increasing them the next.  We’ve seen some lenders remove the higher LTVs (Loan to values) 95%, some removing 90% and others removing 85%.  We have seen some lenders launch limited edition products and others have not re-entered the market at all!  All signs of the times and of the fast-moving pace of the money markets. 

The only certainty seems to be uncertainty and where lenders may have previously considered clients on furlough, or those who have taken bounce back loans within their businesses, this may have changed as lenders look to ensure clients can afford the mortgage for the next six months and onwards.  Some require a letter from the client to confirm this whereas others may require to view bank statements to prove they have the funding. 

Some lenders may have previously taken all of a client’s bonus or commission when working out affordability, but more recently have reduced this to 50% of received monies.  We’ve seen one lender limit the maximum term of the mortgage to 25 years for first time buyers and change their acceptance on where deposits come from, for example - gifted deposits.  

With changes happening quickly, it is vital you get all the documentation required to the lender as quickly as possible to secure your rate and that product availability.  Especially as some lenders are receiving pre-covid volumes of business, but only with 50-70% of normal staffing levels.  This means that some lenders can be weeks behind and if you only provide certain items, you may find that you go to the back of the queue when the outstanding items required are submitted, which extends the delays. 

Most lenders will no longer prioritise the valuation of the security property.  They will assess the whole mortgage application and confirm agreement to proceed before instructing the valuation.  Be aware of this as Estate Agents need the valuation instructed asap.  Depending on the lender you go with, this could take a few weeks.

Finally, expect this to continue for some time.  Not just because of the ongoing pandemic, but also with the stamp duty temporary changes taking effect, a lot of people are trying to move before the end of March deadline.  Good for the property market, but who knows what may happen with processing, criteria and resulting inevitable delays over the coming weeks and months.

Mortgage Payment Holidays, Rates, Home Working, Valuations and more.....seek advice

What a difference a week can make!  Testing times for us all.  I want to review a few key issues this week, hence the slightly bigger column than normal!

Let’s start with Mortgage Payment Holidays:

As mentioned by the Chancellor last week, everyone may be entitled to a mortgage payment holiday of three months.  The holiday allows a borrower to DEFER mortgage payments for an agreed period of time.  At the end of the holiday, the normal monthly payments resume.  HOWEVER, you will still need to repay the money owed and you WILL incur interest on your mortgage during the holiday. Please note that you will need to speak with your lender first and they will decide whether you are eligible for the payment holiday.

You should certainly not stop your direct debits but do continue with your normal mortgage payments until the lender agrees your payment holiday.

If you don’t need to, don’t take the payment holiday! This may sound strange, but behind the scenes, and despite saying it won’t affect your credit score, it will possibly affect your ongoing ability to borrow. No one knows exactly how these holidays will be accounted for when you go to re-mortgage or buy another property.  Lenders want to see that you have consistently paid your last twelve monthly mortgage payments.  If you take the payment holiday, you will have only paid nine.  With the onslaught of technology making decisions, a computer may not be able to decipher that you’ve had an approved payment holiday for three months. It will only see that the mortgage has not been paid.  In the interim, this is may seem small beer in the grand scheme of things. The reality is that, for onward future finances, it could be huge.  We know this as in more normal climates, you can take one mortgage payment holiday and it is usually registered as a ‘U’ on your credit reports and we can sometimes have trouble getting these through lenders current systems.

Rates - are fluctuating hourly, with some resemblance to the crash in 2007/8.  Some lenders have withdrawn rates at midnight and tell everyone the day after, so they won’t receive a spike of business. We all understand why bank base rate (BBR) changed but this has resulted in a huge number of Tracker rates (tracking the BBR) being withdrawn. Existing customers charging rates obviously reduce with the changes, but these great rates are not open to new clients.  Fixed rates haven’t changed too much, but some have increased.  It’s mainly criteria where we have seen changes.  Some lenders have withdrawn high loan to values, so 95% deals and for Buy to Lets, many lenders have mainly dropped to 75% loan to value.  In short, if you find a great deal, be quick!

Home working – Most brokers, lenders, surveyors are now fully functional from home.  This is causing problems for some lenders.  One major high street lender has already confirmed that it can only handle so many bits of business each day in the new format and as such, once it reaches its quota, it will stop taking further business for that day!  Business continuity plans at their best!  

Valuations – Although it’s a slightly different business as usual, the one part of the market we all rely on is the valuation of the subject property.  The surveyor is the eyes of the mortgage lender and relies on their feedback to confirm suitable security.  If the valuer cannot assess the property, the mortgage market will grind to a halt. This is the one bit I’m really concerned about and keeping a close eye on developments.  Many lenders have already stopped physical valuations of properties to protect their employees.  Watch this space.

Finally, we, at Impact SF are fully functional and working from home during normal business hours.  We continue to offer our free advice service, so speak to the team, pick our experienced brains and we’ll help you wherever we can.  Stay safe.

AVM, Homebuyers, Building Survey - Which valuation is right for you?

With every mortgage, the lender will require to know that they are lending money on a suitable property.  This will entail a valuation and normally a surveyor will visit the subject property.  This is a fairly basic valuation and is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes.  They have no obligation to tell you what is in the report or give you a copy!

In some cases, they will not actually visit.  This is because they can often access detailed information electronically, normally called an Automated Valuation Model (AVM), where a mathematical system calculates the property’s value based on a number of comparable properties and other in-depth calculations. 

Therefore, you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the standard lender mortgage valuation.

Homebuyer Report - a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse effect on the value of the property, or if further investigations are required.

A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required and provide extensive information on major or minor defects.

Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life!

Finally, if you have any burning questions or items you would like me to discuss, I’m always looking for content ideas, so please don’t be shy to ask!  You can email me at dale@impactsf.co.uk or call me on the number above.

Which type of property valuation is right for you?

On every property, the lender will require to know that they are lending money on a suitable property.  This will entail a valuation and normally a surveyor will vist the subject property.  This is a fairly basic valuation and is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes.  They have no obligation to tell you what is in the report or give you a copy! 

In some cases, they will not actually visit.  This is because they can often access detailed information electronically, normally called an Automated Valuation Model (AVM), where a mathematical system calculates the property’s value based on a number of comparable properties and other in-depth calculations.  

Therefore, you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the standard lender mortgage valuation.

Homebuyer Report - a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse effect on the value of the property, or if further investigations are required.

A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life!

Finally, I’m always looking for content ideas.  So, if you have any burning questions or items you would like to see, please don’t be shy to ask!  You can email me at dale@impactsf.co.uk or call me on the number above.

HMO Licences taking up to 9 months...

If you have a House of Multiple Occupation (HMO), you should now be aware of the rules that came in to effect on 1^st October.   You also be aware that some councils are behind already on the licence applications with one rumoured to be nine months behind!

To recap - any property with five or more occupants (not all related) will now need an HMO licence, as the Licensing of Houses in Multiple Occupation Order 2018 takes impact.  

Previously, the licence applied to properties with three or more stories and five or more occupants (not related to each other).  However, it was decided to change these requirements and ultimately increase the number of properties that require a licence.

These changes impact both existing and prospective HMO landlords and full details on how to obtain licences will be available on the relevant councils’ websites, alongside other requirements the individual council may have put in place.

A minimum size for bedrooms has also been implemented and the guidance will recommend that floor space be no less than 6.51sqm for a single adult and 10.22sqm for two adults sharing.  Any room with less than 4.64sqm is not to be used as sleeping accommodation.

With the possible delays in granting the license some lenders may not be willing to assist until the approval has been actually issued.  However, speak to a specialist who has access to All Types of Mortgages as some lenders are happy to proceed once the application has been made.

Finally, also remember that the surveyor is the lenders ‘eyes’ in all financial transactions.  They will value the property for both rental possibility as well as its actual value.  As this report is for the lender, they have no obligation to tell you what is in the report or give you a copy!  If you are looking to buy a property and convert it in to an HMO, you will need to let the valuer know when they visit the property as this may change the value of the property and more importantly, the rental achievable.  This could also affect the possible loan amount that the lender will allow.

AToM’s chairman Vic Jannels picks up ‘Service to the Industry’ award!

I start this week with some fantastic news in the AToM’s chairman Vic Jannels was awarded his second accolade of the year as he picked up ‘Service to the Industry’ at last week’s Specialist Finance Introducer Awards 2018.   The event, held at Madison in St Pauls, London, was attended by over two hundred of the industry’s finest and hosted by Homes Under the Hammer and I’m a Celebrity’s Martin Roberts.  AToM’s system, OMS (One Mortgage System), also picked up ‘Best use of Technology’ and ‘Product Innovation’.  Awesome news and well done team!

The market is pretty quiet currently, apart from the odd ‘cabinet reshuffle’ here and there and at the time of writing, we’re about to get our 17^th housing minister in 20 years!  Mind blowing.

What we are seeing, despite heavy rumours of a bank of England base rate increase possibly as soon as August, is lenders reducing their current rates.  The holiday period is inevitably quieter, although add this to an already quiet market, and lenders need to attract customers to keep on track to hit their annual targets.

Just in the last week, we’ve seen Halifax, NatWest, Platform and TSB all reduce selected rates and our friends at Secure Trust launch a 90% LTV product that caters for those who have had a credit blip in the past.  There are some great rates and options around currently.

Finally, valuations on properties to be mortgaged come in various guises. Every mortgage lender will require a valuation on the property although, in some cases, they will not actually visit. This is because they can often access detailed information electronically.  Remember that this fairly basic valuation is for the lender, at your cost, and should not be relied upon as a guarantee that the property is sound and fit for purpose.  Seek a more detailed survey if you have any doubts.  Recently, and with a lack of stock readily available, we are seeing valuers ‘down value’ a property.  Just because it’s been sold at £330k, does it mean it’s worth that price or has it been sold to the highest bidder.  Always do your home work before the valuer goes out, as if he says its only worth £300k, then you’ll have to find the difference from your own pocket as the lender will only lend against the lower of the purchase price or valuation. 

Only 20% of homeowners take a homebuyer survey when purchasing a property.

Research from Legal & General has shown that only 20% of homeowners take out a home buying survey when purchasing a property.  This is despite home buyers on average spending £5,750 on unforeseen repairs when they move into their new home!

So, to recap on the options:

Valuations on properties to be mortgaged come in various guises.  Every mortgage lender will require a valuation on the property to ensure the property is suitable security for their purposes. This is a fairly basic valuation and is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes.  They have no obligation to tell you what is in the report, or give you a copy! 

In some cases, they will not actually visit.  This is because they can often access detailed information electronically, normally called an Automated Valuation Model (AVM), where a mathematical system calculates the property’s value based on a number of comparable properties and other in-depth calculations.  

Therefore, you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the standard lender mortgage valuation.

Homebuyer Report - a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse effect on the value of the property, or if further investigations are required.

A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life!

Finally, I’m always looking for content ideas.  So, if you have any burning questions or items you would like to see, please don’t be shy to ask!  You can email me at dale@atomltd.co.uk or call me on the number above.  Have a great week!

A survey is for the lender, not you!

Some weeks there is just too much news to take in and it can be difficult to assimilate and decide which to report on.  Then there are quiet weeks where nothing much seems to happen.  This week has been the latter and the mortgage market has been quieter than normal.  So, what to discuss?  Surveys!

Valuations on properties to be mortgaged come in various guises.  Every mortgage lender will require a valuation on the property to ensure the property is suitable security for their purposes.  Although, in some cases, they will not actually visit.  This is because they can often access detailed information electronically, normally called an  Automated Valuation Model (AVM).  Of course, this can prompt a borrower, who has paid a fee, to question the reasonableness of this method.  In fairness to the lenders, it is a tried and tested system and rarely proves incorrect.  They have expenses regardless of the visit and this system does have the effect of keeping prices down. 

Remember that this, fairly basic valuation is for the lender, paid for by the borrower, and it should not be relied upon as a guarantee that the property is sound and fit for purpose.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes.  They have no obligation to tell you what is in the report, or give you a copy!  Therefore you should always consider the benefit of an independent survey on the property you are purchasing to ensure that any and all defects are noted before signing contracts. There are two main types of survey available, aside from the mortgage valuation.

Homebuyer Report - a standard format set out by the Royal Institution of Chartered Surveyors (RICS). This will not focus on every aspect of the property as a building survey will (below), but will advise on urgent matters needing attention. It may advise if items (a leaky roof for example) might have an adverse affect on the value of the property, or if further investigations are required.

A Building Survey – an in-depth survey for all properties: listed buildings: buildings that have had extensive alterations, or of an unusual construction. The surveyor will examine all accessible parts of the property and advise on technical information: the condition relative to age: further special investigations required, and provide extensive information on major or minor defects.

Both will comment on whether the agreed asking price is reasonable, whether it reflects the condition of the property and should give you peace of mind whilst making the biggest purchase of your life! 

Delays across the market....and Elephants in Horsham?

Wow, what a week!  It's good and bad news though. The good news is that the mortgage market is really buoyant with good business volumes, product choice at it's highest for some years and properties selling quickly (sometimes before they make the papers and above the asking price). The bad news is that this is causing a number of lenders major servicing problems as they do not have the staff to handle application numbers.  One we know of is working on applications submitted three weeks ago!  We also have had delays on valuations with some surveyors taking up to two weeks to book an appointment.  Unfortunately lenders have agreements with certain surveyor companies and they have to undertake the valuation, no matter what the delay in actually carrying out the appointment.  There is no shame in being open about these delays as they should be taken in to account whether buying, or selling a property and this helps everyone manage expectations. 

That said and even with the delays, now is a good time to review your current mortgage and possibly obtain a great rate with minimal (if any) costs to change your mortgage. 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.  Terms and conditions will always apply.

Finally, I have to say what a fantastic job Horsham Rotary are doing with the Elephantastic trail!  Over 150 Elephants of all sizes have been bought and decorated by local organisations.  These are now on display and children should follow the safari trails to locate the Elephants nickname with the major prize being a trip to Kenya!  There have been some amazing works of art and I'm sure they will make a lot of money for some worthwhile charities. Search "Elephantastic Horsham" to find out more. The big question is, after the Giraffes last year and Elephants this year, what will be next - Alpacas!?  

Rumours are rife on a Bank Base Rate increase soon.

Following on from the Bank of England Governor's recent comments on a Sunday TV programme, and in fact some time beforehand, the rumour mills are rife trying to guess when we will see a Bank of England base rate rise.  The economy is so buoyant that it needs a little slowing down, apparently!  I was recently in attendance at a seminar in which five notables gave their views on when the increase may occur and the general consensus was that it could be later this year and, if not, then most definitely in the first quarter 2015. 

With this in mind, have you checked your rate and product recently?  Now might be the time for a review.  However, be wary that your local bank of building society, in some cases, are taking up to four weeks to see customers!   Some are a number of days behind on underwriting.   And the most bizarre scenario we had this week was from a surveyor.  They were happy to visit the property to carry out the normal mortgage lender valuation.  However, they were also required to carry out a homebuyers report, a more in-depth survey for the customers benefit and, to great concern, they could not conduct this at the same time and would have to return, possibly four weeks later.  Frustrating for the customer who wanted to buy quickly.  Generally the whole market is incredibly busy yet the current staffing levels just can't cope. 

Further impositions were seen this week as the Lloyds Banking Group slapped on a maximum income multiple for all loans over £500k. With immediate effect, the lender will only allow a maximum of four times income on all loans in this segment.  Described as a “targeted policy change” to address inflationary pressures in the housing market, especially London, the change applies to mortgage lending through Halifax, Lloyds, Bank of Scotland and Scottish Widows Bank.   Thankfully, there remain other opportunities in the marketplace and we are hopeful that other lenders don't feel that they have to follow the Lloyds lead. Only time will tell. 

Halifax help First Time Buyers

A helping hand for First Time Buyers this week as Halifax for Intermediaries launched a promotion where they will pay the Stamp Duty for all properties with a value between £125k and £250k.  With products available to customers with a minimum 10% deposit, this is a nice move by the lender, especially as this is not restricted to just ‘new build’ properties.

Nationwide’s House Price Index suggested that the typical value of a house declined by 0.1% between March and April, with the typical UK home now being worth £165,586.  This is still 0.9% higher than April 2012.

With this in mind, lenders require a valuation to be carried out, by their approved valuers, on every mortgage.  This report is for the lender only and should not be relied upon when purchasing a property, as it does not go far enough.  It only responds to the questions lenders ask relating to the property being suitable security for mortgage purposes and an increasing number of these are now done by a ‘drive by’, so the valuer may not even enter the property!  They have no obligation to tell you what is in the report, or give you a copy!  Therefore you should always consider the benefit of an independent and more in depth survey on the property you are purchasing to ensure all defects are noted before signing contracts.  The extra few hundred pounds cost upfront could save you thousands later on.

Mortgage approvals were up 5 per cent in March, compared to February report the Bank of England.  House purchases rose 3 per cent to £8bn and remortgaging up 9 per cent to £4.1bn.  Positive signs and shows how attractive the current rates are in the market.  We are seeing a huge amount of long term fixed rates being snapped up.  Criteria is also being relaxed slightly as lenders target volume business.  If you don’t think you can get a mortgage, have a chat with a local independent mortgage brokerage as you may just be surprised with how they respond!

The valuation is for the lender, not you!

Some weeks there is just too much news to take in and it can be difficult to assimilate and report on. Then there are quiet weeks where nothing much seems to happen.  This week has been the latter and the mortgage market has been quieter than normal.  So, what to discuss?

Well, it all went Wonga at Newcastle FC this week as the lender has agreed terms to take over the clubs shirt sponsorship.  Current sponsor, Virgin, indicated that they were sad to be losing the sponsorship deal previously negotiated by Northern Rock, the bank they recently acquired and whose name they are now phasing out totally.  

The Bank of England Base rate was retained at 0.50% for another month, but watch this space. There are a number of highly rated financial gurus predicting a cut in November.  Will it happen?  No one really knows but the momentum is gathering and we will see before too long.  If there is a reduction then it may not be for long and any resulting decreases in lenders tracker, discounted or fixed rates should be snapped up quickly.  Don’t miss any opportunities to save yourself money!  

On a separate subject, valuations on properties to be mortgaged come in various guises. Every mortgage lender will require a valuation on the property although, in some cases, they will not actually visit. This is because they can often access detailed information electronically.  Of course, this can prompt a borrower, who has paid a fee, to question the reasonableness of this method. In fairness to the lenders, it is a tried and tested system and rarely proves incorrect.  They have expenses regardless of the visit and this system does have the effect of keeping prices down.  Remember that this, fairly basic valuation is for the lender, at your cost, and should not be relied upon as a guarantee that the property is sound and fit for purpose.  Seek a more detailed survey if you have any doubts.