We are probably looking at a tough few months ahead, across all markets and sectors.

Despite Sainsburys Bank, Bluestone, Hinckley and Rugby Building Society, Kensington Mortgages and Secure Trust Bank all reducing rates on their mortgage products last week, things are still ‘interesting’ out there.

We have seen numerous retail outlets and banks recently confirm they will reduce their store or branch numbers as the ‘online v shop front’ takes another hit.   Wonga collapsed, and we’ve seen Countrywide, the UKs biggest estate agent, raising £140m in emergency cash.

As we move in to the final third of the year, I’d say we are probably looking at a tough few months ahead, across all markets and sectors. 

On the plus side, it is encouraging lenders to become more innovative and think about more innovative ways to attract new business. 

Magellan Homeloans has entered the Buy to Let sector with offerings for portfolio landlords, as well as limited company and refurbishment options.  However, the really interesting piece is that they will allow first time landlords to purchase a buy to let, with a professional landlord acting as a guarantor.  This includes Houses of Multiple Occupations and Multi-Units.  We all need advice when it comes to property, so this is a positive move.

Kensington have also launched a 5% deposit product that caters for individuals who may have had a credit blip in the past.  Their rates start from 4.64% for a two year deal and allows defaults over 36 months old and two missed payments to unsecured credit in the last 12 months.  Terms and conditions obviously apply, so seek advice!

With rates so low we have also seen a vast increase in customers looking to consolidate debt and add these to their current mortgage. This can sometimes cause issues. If you consolidate unsecured finance in to your mortgage, whilst your monthly payments may be lower, you may be paying more for your debt over a longer term. 

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.

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?

We are entering a truly unknown era as we plan for Brexit, is it time to fix?

As we move in to August (where has the year gone?), I feel the need to be a pain and reiterate that whatever is spent on credit cards has to repaid!  If you are looking to review your mortgage in the next few months and load the credit card balance up during the holiday period, remember that lenders will use the balance and offset against your income, before working out what you can borrow. That includes interest free credit cards, loans and also HP agreement and student loans. They are all taken in to account.

The holiday period can also be a time when many people start looking at new properties to move to. Or they may already be committed and are packing ready for the removal lorry, or they take time to review what mortgage they have and question if there is anything better out there. That is of course, if they are not simply taking a holiday, and why not?

Certainly, once the holiday is over, then it makes sense to review the current mortgage deal and see if there is a better option and perhaps look to secure a competitive rate for a few years. Whilst I always err on the optimistic side of a rates argument, we are entering a truly unknown era as we plan for Brexit and there is no history to prompt what the immediate and longer-term implications will be. It may well be that we need to be prudent and a medium to long term fixed rate will allow the head to drop comfortably onto the pillow each night if rates do rise as a result of our exit.

So take the chance to look and see if a re-mortgage to a fixed rate might benefit you. Actually, it is wise to consider this anyway as there are millions of people on their current lenders standard variable rates with little contact from their mortgage lender. Why? Simply because lenders are comfortable with you paying over the odds and expanding their margins!  It is worth looking for a better deal and many lenders will welcome you with free valuation and legal initiatives and a difference of 1% can save you a substantial sum over the coming months and years.

An Independent Mortgage Adviser will review the whole market for you, not just a limited few lenders.

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 thirteen 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 available to you.

Looking at purchasing your first property?

Looking at purchasing your first property?  Then this week’s column should be of interest as there’s a number of ways to help you get on to the property ladder that may not be widely known.

First Time Buyers will usually require a minimum 5% deposit, but product availability increases with a 10%+ deposit.  Some lenders will allow a 5% builders deposit, but this must be confirmed as a gift and non-repayable. Some lenders will allow the deposit to come as a gift from the Bank of Mum and Dad, or an immediate family member.  This can include step family, aunts and uncles and is acceptable for first time and subsequent buyers.  The money must be a transparent gift that has originated in the EU and can be easily traced back to the originating source.   A letter from the family member will usually be required and needs to advise the gift amount, relationship the person gifting the monies is to the applicant, confirmation that it is a gift and not a loan and therefore is not repayable, confirmation that they do not currently own the property being sold and that they will not live in the property or have any interest in the property post completion. 

Some lenders may allow a loan of up to 100% of the property value if parents or another immediate family member will act as guarantor or provide additional security. Those guaranteeing, in the main, will need to show evidence of affordability for both their current residential mortgage and the one they are intending to guarantor and possibly allow a charge to be taken on their own home.

All positive indeed and that’s not even touching on the number of Help to Buy, Right to Buy and Shared Ownership schemes available.

Rates have reduced lately in a bid to assist this underserved market segment and criteria is definitely more accommodating.  Income multiples tend to be between 3.75 to 4.5 x joint income and terms and conditions always apply!  However, Lenders are showing a willingness to assist First Time Buyers and in the current market, that can only be a good thing.

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. 

You have some adverse credit and the high street lenders have said no. What next?

So, you have a default? A CCJ?  Missed a payment or two here and there?  Yes, then the high street lenders will probably say they can’t help, but there’s plenty of others who will. 

These days, competition is very strong across the market and this includes helping those who have had a credit blip or two in the past.  Some lenders may even go right up to 90% of the property value for the right customer.  And, this might be surprising, but rates start in the early to mid 2%s range on some products.

Don’t despair, there are lenders out there who, subject to terms and conditions, will probably look at your scenario and have seen it all before. 

To make the process as smooth as possible, make sure you have all details to hand at the outset.  When was the default / CCJ, is it satisfied, why did it occur, etc?  Disclose absolutely everything upfront. 

With all new mortgages, a budget planner will be required.  Make sure you know and can advise exactly how much you are spending on your lifestyle.  Especially make sure you know your monthly costs on food, household expenses, travel, pension and saving contributions and other likely costs such as hobbies, going to the gym, lottery direct debits and more.  Every lender will review your ability to afford your new mortgage both now, and over coming years, so all direct debits and most entries on your bank statements or credit report will need to be advised.  This is so the lender can make a viable stress test on future rate rises and ensure that you will still be able to afford your mortgage at that time. 

Finally, despite some of these amazing products being available and lenders looking to attract new business, we are seeing general processing delays across the market.  Some lenders are not taking appointments for two to three weeks, some are up to ten working days behind on processing, and we have experienced recent telephone calls taking over an hour to receive any kind of response!  These are just on the broker side so heaven knows how customers are faring!  With some complex deals, these are not available directly, so speak to your local (and long established) independent brokerage and let them take the stress away from you.