This week I want to take a brief look at the mortgage process when purchasing a property. First time buyer or home mover, your mortgage application process will be roughly identical. The selling agent will look to agree a number of deadlines including the arrangement of mortgage finance. You should speak to an independent mortgage brokerage (AToM?) who will assess your financial requirements with you. They are required to provide you with an Initial Disclosure Document detailing who they are, who they are regulated by and costs involved in arranging your mortgage, including any advice or consultation fees charged. This document also advises how to complain if you are unhappy with the advice given. A good advisor will complete a financial fact find form enabling them to ‘know their client’. This is a must before any advice or recommendation can be provided. Once you’ve decided on the best mortgage for your personal requirements, a decision in principle (DIP) will be completed with the chosen lender, normally on-line. This involves brief personal details, income disclosure and a credit search on you. Be wary though, the more credit searches carried out, the more likely your credit score will decrease. The moral here is to ensure that the product is right for you before a DIP is conducted.
Once the DIP is agreed, normally instantaneously, it is then upgraded to a full application. Payment for valuation is then needed (sometimes free) and the valuer will confirm to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost.
In the meantime, the lender will probably require information on income, identity, proof of residency as part of their due diligence requirements. Assuming no issues arise with any of these, a mortgage offer should be issued. Then, subject to the conveyancing process your solicitor has to work through, you are now on the road to completion and should soon pick up the keys to your new home!
15 August 2009
07 August 2009
Confidence appears to be on the increase!
Lenders have started to release their six monthly profit/loss figures this week. With HBSC and Barclays reporting £3bn in profits over the last six months, the future started to look great, especially for those anticipating large bonuses! But then came reports of losses from Northern Rock (£724m) and Lloyds Banking Group (£4bn) and with it signs that we really are not much further forward than we’d hoped.
Nationwide became the heroes of the week by lowering interest rates, some by as much as 0.5%. This was quickly followed by their specialist arm, The Mortgage Works, who major in Buy to Let mortgages, who also reduced some of their rates.
In our Carfax office, we have seen encouraging signs that people are now looking for property with more confidence than of late. Some are enquiring to find out how much they can afford whereas others are chasing interest rates whilst they remain low. Consumer confidence is definitely on the increase and this is supported by the increasing number of first time buyers exploring all avenues to try and get their foot on the property ladder. I am impressed by the increasing willingness of some lenders to accommodate first time buyers looking at shared ownership schemes. First time buyers, if eligible, can purchase a percentage of a property (between 25 and 75%) and a housing association purchases the remainder. The buyer then pays rent on the latter percentage with the option to purchase an increased share of the property later on. There are many schemes available and a good supply of properties in the area, so do review all the options available.
Finally, we were visited by one lender this week, who had ‘mothballed’ themselves about a year ago and who have now indicated that they will be rejoining the lending arena in the not to distant future and more surprisingly, they are currently looking to employ up to 10 new staff! Positive news and fingers crossed that this is the beginning of a new era.
Nationwide became the heroes of the week by lowering interest rates, some by as much as 0.5%. This was quickly followed by their specialist arm, The Mortgage Works, who major in Buy to Let mortgages, who also reduced some of their rates.
In our Carfax office, we have seen encouraging signs that people are now looking for property with more confidence than of late. Some are enquiring to find out how much they can afford whereas others are chasing interest rates whilst they remain low. Consumer confidence is definitely on the increase and this is supported by the increasing number of first time buyers exploring all avenues to try and get their foot on the property ladder. I am impressed by the increasing willingness of some lenders to accommodate first time buyers looking at shared ownership schemes. First time buyers, if eligible, can purchase a percentage of a property (between 25 and 75%) and a housing association purchases the remainder. The buyer then pays rent on the latter percentage with the option to purchase an increased share of the property later on. There are many schemes available and a good supply of properties in the area, so do review all the options available.
Finally, we were visited by one lender this week, who had ‘mothballed’ themselves about a year ago and who have now indicated that they will be rejoining the lending arena in the not to distant future and more surprisingly, they are currently looking to employ up to 10 new staff! Positive news and fingers crossed that this is the beginning of a new era.
04 August 2009
Lenders meeting could be good news?
31/7/09 - The Government Open Market Homebuy scheme funding for 2009/10 has now been allocated. Eligible beneficiaries were able to take out a mortgage to fund part of their property purchase and a low-interest equity loan to cover the rest. Claiming to have assisted 6,000 households in 2008, no one is quite sure how many households have had funds allocated to them for this scheme period. It is thought that the government will now concentrate on first time buyers and new build properties, through the schemes Homebuy Direct and New Build Homebuy.
The Land Registry has released figures suggesting that house prices rose in June by 0.1%, complimenting the earlier released Nationwide reports of a 0.9% increase. But let’s not forget the Halifax release commenting on a 0.5% decrease! As I’ve said before, until these three report a simultaneous increase in house prices for a consecutive 3 month period, we can’t start jumping around just yet!
Not much to report on rates this week. Perhaps the lenders felt they deserved a holiday and have taken their kids away, expecting us hardworking independent mortgage brokers to be away also? No such luck. But good news in that rates seem to have stabilised for now!
And whilst on the subject of lenders, I was pleasantly impressed with Alastair Darlings meeting with all the major banks to sternly express his wishes that they lend more to consumers and businesses. Sadly, this is the second or third time they’ve met and we’ve not seen lending at sufficient levels to drive recovery in the property market since either previous meeting, so I’m not holding much hope! However, this time the threat of bringing in a competitions inquiry, if lending does not increase, has been raised. Although this struck me as funny, as I thought it was the gentlemen in question that sped up and agreed the merging and acquisitions of such ‘super banks’ at the outset?
The Land Registry has released figures suggesting that house prices rose in June by 0.1%, complimenting the earlier released Nationwide reports of a 0.9% increase. But let’s not forget the Halifax release commenting on a 0.5% decrease! As I’ve said before, until these three report a simultaneous increase in house prices for a consecutive 3 month period, we can’t start jumping around just yet!
Not much to report on rates this week. Perhaps the lenders felt they deserved a holiday and have taken their kids away, expecting us hardworking independent mortgage brokers to be away also? No such luck. But good news in that rates seem to have stabilised for now!
And whilst on the subject of lenders, I was pleasantly impressed with Alastair Darlings meeting with all the major banks to sternly express his wishes that they lend more to consumers and businesses. Sadly, this is the second or third time they’ve met and we’ve not seen lending at sufficient levels to drive recovery in the property market since either previous meeting, so I’m not holding much hope! However, this time the threat of bringing in a competitions inquiry, if lending does not increase, has been raised. Although this struck me as funny, as I thought it was the gentlemen in question that sped up and agreed the merging and acquisitions of such ‘super banks’ at the outset?
24 July 2009
Things that gripe..
As we commence our fourth week in the Carfax hub of Horsham, my eyes have been opened to a number of interesting issues. Some which really require comment and others which perhaps I should just let pass me by! That said, and this might perhaps go against my better judgement normally, I want to take the rather risqué route and speak my mind on one particular issue which is of concern to me. One which, in the current climate, is unfortunate and can be detrimental to the house buying public.
I accept that it is a tough market out there and that everyone needs to firstly attract business and then convert what they can. If this is conducted professionally you can retain a customer for life. However, if it is done aggressively you can just as easily lose face and this can be very bad for business! We have lots of long term friends in the house sales sector and find that, in our view, the majority of these do work hard to provide a superb service. But, it appears that one or two may sometimes go a little bit over the top. It is both understandable, and sensible, that when a purchaser puts forward an offer for a property, the selling agent will require evidence that they can afford the transaction and obtain a mortgage. Quite right too! However, when the purchaser is then told that their offer will not be put forward to the vendor unless they place their mortgage through the selling agents own advisers, then this is surely not good or fair practice, in any sense!
Whinge over, and on to more positive matters. Properties appear to be selling and the general level of confidence is increasing in the market almost daily. The Conservatives will dismantle the Financial Services Authority (FSA) if they get into power next year. Not sure if that is a good or bad thing (just in case anyone from the FSA reads this column!). Have a good weekend!
I accept that it is a tough market out there and that everyone needs to firstly attract business and then convert what they can. If this is conducted professionally you can retain a customer for life. However, if it is done aggressively you can just as easily lose face and this can be very bad for business! We have lots of long term friends in the house sales sector and find that, in our view, the majority of these do work hard to provide a superb service. But, it appears that one or two may sometimes go a little bit over the top. It is both understandable, and sensible, that when a purchaser puts forward an offer for a property, the selling agent will require evidence that they can afford the transaction and obtain a mortgage. Quite right too! However, when the purchaser is then told that their offer will not be put forward to the vendor unless they place their mortgage through the selling agents own advisers, then this is surely not good or fair practice, in any sense!
Whinge over, and on to more positive matters. Properties appear to be selling and the general level of confidence is increasing in the market almost daily. The Conservatives will dismantle the Financial Services Authority (FSA) if they get into power next year. Not sure if that is a good or bad thing (just in case anyone from the FSA reads this column!). Have a good weekend!
17 July 2009
Going up or coming down? Anyone know about House Prices?
Nationwide launched a 125% mortgage this week! Sadly, most reports failed to spot that this scheme is for existing borrowers, in negative equity, looking to move house! Positive news, but the hype will have teased first time buyers who will have to wait a while longer yet! In the middle of 2007, there were some 28,000 first time buyer products. Today, there are roughly 1,200.
Are you confused about house prices? I am. Nationwide recently reported that house prices increased in June by 0.9%. Halifax refuted this stating a decrease of 0.5% in the same period! If they cannot agree what chance do we have? Your guess is as good as mine. Let’s wait for the Land Registry report, although they are usually three months behind the pace due to reporting timings!
The Bank of England retained base rate at 0.5% last week. Good news for those on tracker rates. Not such good news for the market generally. Customers who have recently finished a fixed rate period with a lender will revert to the lenders currently low standard variable rate (SVR) and remain there quite happily. Lenders SVR’s tend not to change unless bank base rate does. However, it is borrowers moving from lender to lender which helps to stimulate money movement in the financial markets. Borrowers leaving a lender release funds for someone else, and so on. With minimal movements, the lenders enjoy continued excuses to restrict lending! Or, is it me…!
Finally, re-mortgage applications have increased recently. Borrowers looking to secure long term fixed rates are applying at the right time. Some, who are in increasing financial difficulties, are looking for sensible ways to remortgage (not always our recommendation). Others are releasing equity to acquire Buy to Let properties in the current cheaper climate. Whatever your requirements, speak soon to an independent mortgage advisor. You know who to call…
Are you confused about house prices? I am. Nationwide recently reported that house prices increased in June by 0.9%. Halifax refuted this stating a decrease of 0.5% in the same period! If they cannot agree what chance do we have? Your guess is as good as mine. Let’s wait for the Land Registry report, although they are usually three months behind the pace due to reporting timings!
The Bank of England retained base rate at 0.5% last week. Good news for those on tracker rates. Not such good news for the market generally. Customers who have recently finished a fixed rate period with a lender will revert to the lenders currently low standard variable rate (SVR) and remain there quite happily. Lenders SVR’s tend not to change unless bank base rate does. However, it is borrowers moving from lender to lender which helps to stimulate money movement in the financial markets. Borrowers leaving a lender release funds for someone else, and so on. With minimal movements, the lenders enjoy continued excuses to restrict lending! Or, is it me…!
Finally, re-mortgage applications have increased recently. Borrowers looking to secure long term fixed rates are applying at the right time. Some, who are in increasing financial difficulties, are looking for sensible ways to remortgage (not always our recommendation). Others are releasing equity to acquire Buy to Let properties in the current cheaper climate. Whatever your requirements, speak soon to an independent mortgage advisor. You know who to call…
13 July 2009
First Time Buyers are active.
10/7/09 - The French Market brought some colour and a different shape to the Carfax during last weekend. It reminded me just how much we are inexorably linked with our European cousins and, in the mortgage market, this is very noticeable. Members of European states are entitled to borrow money from mortgage companies in UK in the same way and on the same terms as we can. Like us they must prove ability and intent to repay and then, subject to underwriting and due diligence, can take a mortgage on a property here. We have the same rights in European countries too, although it is fair to say that some do not really promote home ownership in the same way as us, preferring rental or long standing family home use. Anyway, it was good to see the colours and hear the Galic language whilst also enjoying sweltering Mediterranean temperatures!
Nearer home, fixed rates on mortgages are rising. Lenders are withdrawing some product ranges and, in some cases, dropping out of the investment (buy to let) market altogether. Is this a sign that there is a gathering nervousness at the welter of rental properties and concern at how they will fare if there are so many that they may soon outweigh the number of possible tenants? If this were to be the case then rental values will decrease and we will enter another cycle of downturn in the sector. Lets hope not!
First time buyers seem to be very active and we have seen a definite upturn in recent weeks. Mostly, 90% is the maximum available to them and rates swing wildly from the mid 3%'s (if you can get the lender to say yes) to the early 7%'s, the latter for five year fixed rates. This may not be such a bad deal as it sounds if interest rates do start to rise anytime soon.
Nearer home, fixed rates on mortgages are rising. Lenders are withdrawing some product ranges and, in some cases, dropping out of the investment (buy to let) market altogether. Is this a sign that there is a gathering nervousness at the welter of rental properties and concern at how they will fare if there are so many that they may soon outweigh the number of possible tenants? If this were to be the case then rental values will decrease and we will enter another cycle of downturn in the sector. Lets hope not!
First time buyers seem to be very active and we have seen a definite upturn in recent weeks. Mostly, 90% is the maximum available to them and rates swing wildly from the mid 3%'s (if you can get the lender to say yes) to the early 7%'s, the latter for five year fixed rates. This may not be such a bad deal as it sounds if interest rates do start to rise anytime soon.
Gone in 60 minutes....product withdrawals!
3/7/09 - It is really pleasing to note that there is an upward surge in consumer confidence in the housing market and this is showing in the mortgage market as well. There is a noticeable intent also on the part of some lenders who are re-visiting criteria and rates to see if they can start to attract more business which will progress from application to completion. For some time now initial applications have been approved in principle but then many cases have run into brick walls somewhere along the line.
More positive news with the Nationwide releasing figures stating that house prices rose 0.9% in June, the third rise in the last four months. It has also pushed up the average house price to £156,442 from £154,016 in May.
Conversely, this somewhat better news has the ‘occasional’ sting in the tale as interest rates are starting to rise and particularly in the fixed rate sector. So, as I keep repeating, make certain that you catch the rate before they rise even further and it is a generally accepted view that they will in the coming weeks and months.
To put this in to perspective, one lender last week sent out notice of their intent to withdraw products. This was sent to all mortgage intermediaries at 2pm. The laughable side was that they gave a deadline of 3pm (same day) to secure the product and rate by completion of a decision in principle (effectively an online application)! Just one hours notice to save rates that we might have been discussing with customers for some days previous! And of course, the replacement rates were all somewhat higher.
Finally, over last weekend, AToM moved to new premises in the Carfax, Horsham. We are right next to the bandstand in the town centre. Please feel free to drop in, appointments are not necessarily required and we’d be delighted to meet with you.
More positive news with the Nationwide releasing figures stating that house prices rose 0.9% in June, the third rise in the last four months. It has also pushed up the average house price to £156,442 from £154,016 in May.
Conversely, this somewhat better news has the ‘occasional’ sting in the tale as interest rates are starting to rise and particularly in the fixed rate sector. So, as I keep repeating, make certain that you catch the rate before they rise even further and it is a generally accepted view that they will in the coming weeks and months.
To put this in to perspective, one lender last week sent out notice of their intent to withdraw products. This was sent to all mortgage intermediaries at 2pm. The laughable side was that they gave a deadline of 3pm (same day) to secure the product and rate by completion of a decision in principle (effectively an online application)! Just one hours notice to save rates that we might have been discussing with customers for some days previous! And of course, the replacement rates were all somewhat higher.
Finally, over last weekend, AToM moved to new premises in the Carfax, Horsham. We are right next to the bandstand in the town centre. Please feel free to drop in, appointments are not necessarily required and we’d be delighted to meet with you.
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