There’s a new sound certain to gather volume in coming weeks and rapidly overtaking the wailings of politicians on the hustings! It’s the plaintiff sound of heads banging against a wall in frustration! These are the daily trials and tribulations of mortgage intermediaries dealing with some major mortgage lenders in the current climate.
As staff reductions and consolidations continue, mostly below the radar of national press, teams of underwriters, who brokers have established solid relationships, are being replaced by telephone ‘no can do’ teams and who, in most cases, to put it bluntly, are not helpful in the slightest. In fact, one of my colleagues has chased a lender for a response on an application for the last four days being constantly told “we are within our 48 hour service standards.” Perhaps they mean 48 working hours, so nearly seven business days? Some lenders have recently confirmed backlogs are in excess of ten days!
If, for whatever reason, a lenders underwriter decides to request one further bit of information, or needs additional clarification, then the fun begins. It is really frustrating to learn that some underwriters are not allowed to call and establish an answer which might take 30 seconds to resolve. Instead, we receive an automated email detailing requirements and once we’ve provided the information, we re-enter the ‘48 hour’ service standard queue and the cycle begins all over again. Assuming of course that the information returned does not get lost and is directed to the right department!
Whinge over! It could have been much worse (really!) but here I am, hanging on to the phone (20 mins so far) waiting for someone to talk to me. But, they keep saying that I am really important to them, so I will hang on for just a little while longer…!
What this all demonstrates is the value of dealing with a specialist mortgage intermediary as we will take this painful flack on your behalf. Imagine you are dealing with the lender direct and this happens to you! There really is no better time to utilise the expertise and staffing levels we can provide for you. Let us take the strain on your behalf to push the mortgage through to an early completion.
16 April 2010
12 April 2010
Few consumers really know what it would cost to replace all of their household goods
So now it’s confirmed. The election will be on 6th May. I will step back from commenting on political issues. There will be enough elsewhere! So, this week I thought I would review home building and contents insurance.
Buildings insurance is compulsory wherever a mortgage is in place. Whilst contents insurance is optional, it is often packaged together with buildings insurance, generally representing better value for the homeowner and value is more important than ever. According to the AA’s benchmark BIP index, quoted premiums in this area have risen for eight successive quarters.
So, why the rise in buildings insurance when house prices have been depressed? Claims experience affects pricing. The harsh winter and last year’s floods has led to an upsurge in claims for buildings damaged by snow, ice and water. The cost of rebuilding and repairing homes to the higher standards required by building regulations has been steadily rising – and it’s the cost of rebuild, not market value, that dictates the sum insured - and the most that an insurer is likely to pay out.
The homeowner has responsibility of ensuring that the sum insured is right. There is a real danger of both over and under-insurance as most homeowners don’t know the full rebuilding cost of their property. A lenders mortgage valuation will provide an estimated rebuild cost, but you should always consider a second opinion.
When it comes to contents insurance there is a persistent issue with under-insurance. Few consumers really know what it would cost to replace all of their household goods, and very few have a full inventory of their possessions. It is worthwhile systematically visiting every room – remember the garage and loft - and listing everything. People naturally think of the bigger ticket items, like furniture, TV and jewelry, but it’s amazing how many forget to include other pricey items like clothes and tools.
When assessing, it is important to identify the valuable items. Most insurers include a reasonable limit for unspecified high risk and valuable items, but do check that it will be adequate and that the single item limits are appropriate. If in doubt, speak to your local independent and whole of market mortgage and insurance provider.
Buildings insurance is compulsory wherever a mortgage is in place. Whilst contents insurance is optional, it is often packaged together with buildings insurance, generally representing better value for the homeowner and value is more important than ever. According to the AA’s benchmark BIP index, quoted premiums in this area have risen for eight successive quarters.
So, why the rise in buildings insurance when house prices have been depressed? Claims experience affects pricing. The harsh winter and last year’s floods has led to an upsurge in claims for buildings damaged by snow, ice and water. The cost of rebuilding and repairing homes to the higher standards required by building regulations has been steadily rising – and it’s the cost of rebuild, not market value, that dictates the sum insured - and the most that an insurer is likely to pay out.
The homeowner has responsibility of ensuring that the sum insured is right. There is a real danger of both over and under-insurance as most homeowners don’t know the full rebuilding cost of their property. A lenders mortgage valuation will provide an estimated rebuild cost, but you should always consider a second opinion.
When it comes to contents insurance there is a persistent issue with under-insurance. Few consumers really know what it would cost to replace all of their household goods, and very few have a full inventory of their possessions. It is worthwhile systematically visiting every room – remember the garage and loft - and listing everything. People naturally think of the bigger ticket items, like furniture, TV and jewelry, but it’s amazing how many forget to include other pricey items like clothes and tools.
When assessing, it is important to identify the valuable items. Most insurers include a reasonable limit for unspecified high risk and valuable items, but do check that it will be adequate and that the single item limits are appropriate. If in doubt, speak to your local independent and whole of market mortgage and insurance provider.
02 April 2010
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!
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!
26 March 2010
He giveth....he taketh!
The Chancellor had every opportunity to win votes and give the housing market the important boost it needed in this weeks pre-election budget. Did he? That’s for you to decide.
The budget has helped first time buyers with the abolishment of Stamp Duty on all properties under £250k to the end of 2011. Great news for those looking to join the property ladder, but raises confusion within the mortgage market. What is a first time buyer? Most lenders class a first time buyer as someone who has not had a mortgage for, say, one to three years. Under the new offering will these purchasers be counted out? There is a need to define who will and who won’t still fall foul of stamp duty (unclear at the time of writing this article). Watch this space!
Whatever the ruling, it is a welcome boost to the market. That said, he giveth, and he taketh away! Those purchasing above £1m will now ‘enjoy’ a 1% increase in stamp duty which will be 5% from April 2011.
There is still a lack of property for sale in the market and where are the incentives for those who want to sell and trade up? Let’s be realistic……in the West Sussex area, the gap from a two bed to a three bed property is quite substantial and sits right around this threshold. So if the latter are to sell (at say £225k) and have to pay 3% stamp duty on their new purchase (say £260k) in addition to estate agency fees and the cost of a HIP, whilst their purchasers pay minimal fees, could this deter home movers? Is this a ploy?
A fundamental budget flaw seems to be the continued reliance on the housing sector to drive the economy forward. Whilst banks continue to lend at the bare minimum (their clever advertising paints a different picture) and with few really attractive first time buyer mortgage packages, there were other areas Mr Darling might have looked at to stimulate the market. The stamp duty ‘nudge’ is a sop to catch votes and needs to recognised as such.
The budget has helped first time buyers with the abolishment of Stamp Duty on all properties under £250k to the end of 2011. Great news for those looking to join the property ladder, but raises confusion within the mortgage market. What is a first time buyer? Most lenders class a first time buyer as someone who has not had a mortgage for, say, one to three years. Under the new offering will these purchasers be counted out? There is a need to define who will and who won’t still fall foul of stamp duty (unclear at the time of writing this article). Watch this space!
Whatever the ruling, it is a welcome boost to the market. That said, he giveth, and he taketh away! Those purchasing above £1m will now ‘enjoy’ a 1% increase in stamp duty which will be 5% from April 2011.
There is still a lack of property for sale in the market and where are the incentives for those who want to sell and trade up? Let’s be realistic……in the West Sussex area, the gap from a two bed to a three bed property is quite substantial and sits right around this threshold. So if the latter are to sell (at say £225k) and have to pay 3% stamp duty on their new purchase (say £260k) in addition to estate agency fees and the cost of a HIP, whilst their purchasers pay minimal fees, could this deter home movers? Is this a ploy?
A fundamental budget flaw seems to be the continued reliance on the housing sector to drive the economy forward. Whilst banks continue to lend at the bare minimum (their clever advertising paints a different picture) and with few really attractive first time buyer mortgage packages, there were other areas Mr Darling might have looked at to stimulate the market. The stamp duty ‘nudge’ is a sop to catch votes and needs to recognised as such.
19 March 2010
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.
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.
12 March 2010
A lenders mortgage valuation may not go far enough.
Mystique surrounds mortgage and property valuations, so, firstly, here is a brief overview on the options…….
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. 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 all defects are noted before signing contracts. There are two main types of survey available, aside from the mortgage valuation.
A Building Survey – an in-depth survey for all properties built pre-1900: 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.
Homebuyer Report - a standard format set out by RICS (Royal Institution of Chartered Surveyors). This will not focus on every aspect of the property as will a building survey, but will advise on urgent matters needing attention. It may advise if items might have an adverse affect on the value of the property.
Both will comment on whether the agreed asking price is reasonable and whether it reflects the condition of the property. AToM can recommend local providers for either service.
Lender news includes: Northern Rock’s posting losses of £257m for 2009, a vast improvement from the £1.4bn losses for 2008.
‘Abbey for Intermediaries’ have reduced rates by up to 0.4% on four year fixed products and now have some very attractive offerings. These are only available through intermediaries, so talk to your local independent mortgage advisers!
Finally, Microbiz takes place at the Drill Hall, Denne Road tomorrow (13th) and is a must for any small business or start up. A treasure-trove of information and it’s free! AToM will be there. Come and see us.
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. 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 all defects are noted before signing contracts. There are two main types of survey available, aside from the mortgage valuation.
A Building Survey – an in-depth survey for all properties built pre-1900: 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.
Homebuyer Report - a standard format set out by RICS (Royal Institution of Chartered Surveyors). This will not focus on every aspect of the property as will a building survey, but will advise on urgent matters needing attention. It may advise if items might have an adverse affect on the value of the property.
Both will comment on whether the agreed asking price is reasonable and whether it reflects the condition of the property. AToM can recommend local providers for either service.
Lender news includes: Northern Rock’s posting losses of £257m for 2009, a vast improvement from the £1.4bn losses for 2008.
‘Abbey for Intermediaries’ have reduced rates by up to 0.4% on four year fixed products and now have some very attractive offerings. These are only available through intermediaries, so talk to your local independent mortgage advisers!
Finally, Microbiz takes place at the Drill Hall, Denne Road tomorrow (13th) and is a must for any small business or start up. A treasure-trove of information and it’s free! AToM will be there. Come and see us.
05 March 2010
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.
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.
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