Build your 'Dream Home'!

We’re in the midst of a rate price war between lenders vying for new customers.  This is obviously great news for the end consumer, but it can’t be profitably sustainable for these lenders, so make hay whilst the sun shines, as they say!   Just be wary that lenders are ‘cherry picking’.  You may be drawn to a superb rate and approach the lender directly, but for whatever reason, they decline your application and offer you a higher alternative or nothing at all.  We’re hearing numerous differing stories from customers currently, and some are quite disturbing.  Especially if the lender has pulled the plug a number of weeks in to processing..

Don’t get me wrong, we are in a very positive era and enjoying a very busy start to the new year.  However, you need to be aware that these things happen and that they can happen at any time right up to the completion of your mortgage! 

There appears to be a lot of building work going on locally, mainly by large property developers.  In addition, we’re seeing a lot more enquiries for those looking to build their own dream home.  Many have been enquiring about mortgages to buy a property, knock it down and build a new one in the same location.  It can be done and these are normally called Self Build Mortgages.  Others are looking at substantially renovating their existing properties.  Again, this can be done.  Either way, have a chat with a local architect first to see if your plans are realistic possibilities.  They will have a good idea as to what the local Council Planning Officers will accept and of course, what they will reject!   Lenders then may look to lend funds on a stage payment basis.  Stage one might be the foundations, stage two might be ground level and so on.  Each stage would require sign off by the buildings inspector and then funds would be released.  The lender may not lend the full build amount, so be prepared to put in a deposit and possibly at each stage.  For extensions and renovations, it would depend on the size of the work and what funds may be required.   Seek professional advice.

Shop around before committing

There seems to be a lot of positive activity in the market currently with many lenders reducing rates.  Just in the last few days, we’ve seen Nationwide, Virgin Money, Accord, Santander, Yorkshire, Newbury and Hinckley & Rugby Building Society reduce rates or launch new products.  In the current climates, you should not be scared to deal with a lender who is not a readily known household name.  As many lenders fight for customers in a tight market, we are seeing some of the smaller lenders offering market leading rates to build up their portfolio and attract new business. 

Of course, this is the beauty of using a mortgage broker.  They will have access to many lenders that you have probably never heard of and products that are not usually visible to the public eye.  On average, a good mortgage broker will have access to over 3,000 mortgage products, from a huge number of lenders.   As with everything you purchase, it’s always worth shopping around as although you might think you have a great deal with your current provider, there may be better products out there that you are missing out on.

This also goes for the Solicitors where they are needed to act for both yourself and the lender in a mortgage transaction.   Remember that on some re-mortgage products the lender will cover the cost of standard legal work and valuations.  But for all other requirements there are a huge number of legal firms in both local and more regional areas.  Prices vary from company to company and you can decide exactly who to deal with (assuming they are acceptable to the mortgage lender).  Shop around before committing and as with everything, make sure you read the small print!

Positive news as First Time Buyer loans increased in 2012 by 11%, for those with deposits of less than 15%, according to Mortgage Monitor from esurv.  This amounted to just fewer than 64,000, compared to 58,000 in 2011 but still a way off the 179,000 in 2007! 

Finally, Castle Trust suggests that the average homebuyer now provides a deposit of £26,500 and this equates to an average of 20% of the property value across the country.  In comparison, those in London need nearer £73k as a deposit.

Review your paperwork and save money!

Happy New Year to you!  Fingers crossed it will be a peaceful, happy, healthy and wealthy one for us all!

I’ve not made any personal resolutions, but I did take time out to review all of the paperwork that’s been cluttering the kitchen for a while!  Life insurance, car and home insurance and even my mortgage was in the spotlight!  It was a worthwhile few hours and it usually saves money…  Start the New Year off with a review of your biggest outlay – the mortgage!  Even though we’re still early in the year, a number of lenders have already cut their rates and now could be a beneficial time to have a chat and review opportunities available to you.

If you are against the idea of moving, but would like to increase the space available to you by way of an extension, or loft conversion, lenders may look to assist in the form of a second charge loan.   Many lenders realise that consumers needs large sums to complete certain types of work on their home and will secure the loan against the value of the property.  This is up to a certain loan to value, normally 85% maximum.  Term and rates depend on the loan required but can be short to medium term, or longer if required and loan sizes can go up to £200k. The second charge also allows you to keep your current mortgage and rate untouched, good in the current climate if you have a low tracker rate.  

Finally, if you are on an interest only loan, be prepared to hear from your lender shortly (if you haven’t already).  With many lenders withdrawing from interest only towards the end of 2012, those who have customers on interest only options will be looking to review how that customer will repay the loan back and may require proof.  I suspect this will be of high priority for 2013 for many lenders.  If you don’t have a repayment plan in place (usually these were endowments, ISA’s or future bonus/lump sum pay out), you will need to review how the lender will get their money back.  Selling your home is no longer a generally approved repayment option, so be aware and seek professional advice if this affects you.

Goodbye 2012 - Optimistic for 2013!

I can’t believe this is my last column of 2012!  On the one hand, we could not have had a better year for sport and it makes you proud to be British with the fantastic achievements from our truly inspirational sports men and women.   On the other hand, the retail and financial sectors have had another tough ride…

We have seen the demise of retail giants and household names such as Comet and JJB.  Many others are under extreme pressure to make ends meet.  The Northern Rock brand, the first major public crash of a lender in 07, will also soon just be a name in history, replaced now by Virgin Money .

We were all optimistic and hoping for a hugely more positive year, but the reality is that lending remained pretty static, despite the requests from ‘the powers that be’, and volumes will finish not much different from those in 2011.

Interest only mortgages seem to be on their last legs as more lenders are withdrawing this option.  The ‘Funding for Lending Scheme’ has received good press and appears to have had a positive impact.  It has huge potential for 2013 and I hope this is expanded to help the smaller lenders, not just the high street big six.

Finally, who can forget that we have had MMR (Mortgage Market Review) installed upon us.  Yet more regulation for the mortgage market, due to impact us all in April 2014. Good for mortgage brokers and mortgage advice!  This is a parting gift from the FSA, as they change name to the FCA (Financial Conduct Authority), same people, possibly different location….!  Roll on next year.

Thank you for reading my column.  I really appreciate it and thrive on it being mentioned on a visit to our offices (or whilst in the Pub!) and I’m always happy to discuss a mortgage or the state of the market!   It’s been an interesting challenge this year remaining positive when markets have been so tough.  I’ve always tried to say it as it is and hope that has been beneficial in your decision making, when it comes to finding the right mortgage/company/brokerage!

Please let me know if there are any specific issues or areas you would like me to cover in coming months.  You can email me at dale@atomltd.co.uk, or call me on the above number.  I’d be delighted to discuss with you.

On behalf of everyone at AToM, we wish you and your families a very Happy Christmas and a relaxing and prosperous New Year.  We look forward to being of assistance to you in 2013…

A debt is not just for Christmas...

Following on from last week’s news on rates, Nationwide have cut some of their mortgage rates by up to 0.7% as they join the apparent ‘product price rate war’.  That is a substantial cut!  Santander for Intermediaries has launched another set of attractive rates which are only available for seven days. The message from this lender is to be quick as the funds are usually snapped up within their seven day window. That said, you don't have to complete the mortgage transaction inside that timescale.  Simply secure the funds and protect the rate.  How the market has changed!  

Another lender has withdrawn from the Interest Only mortgage sector.  I might write a separate article on this shortly as I feel that there is still a place for this type of lending for the right client profile and it seems that many lenders are choosing to ignore these quality cases.  Pretty soon it might be easier to confirm who is still offering this option!!

There are rumours that mortgage lending may become easier to obtain next year and some financial gurus are predicting an increase of up to ten billion in net lending.  That is a substantial increase although we all suspect that the lenders will not necessarily relax their underwriting criteria!  So more mortgages but strict criteria and that is why my final point this week is, again, so important. 

Christmas will be here before we know it.  Now, I don’t want to preach but please remember that credit is like your life history to a financial institution. I’m not saying don’t use credit but, if you do, then make sure you can pay it back!  If you miss a payment over the Christmas period, on any debt, it could affect your ability to obtain any type of credit next year.  Credit reports show up to the last six years of your financial history and details any missed payments to everyone from mobile phone providers, to car insurance and, of course mortgages.  To be safe make sure all payments are made on or before the due date and keep your credit file crystal clear.

Lot's of activity in the mortgage market!

There is a lot happening in the mortgage market as we move into the last month of the year! Where have the last eleven months gone?

Good news in that lenders are looking to expand their distribution offerings to a wider market as both Kensington Mortgages and Saffron Building Society launch new products into the intermediary market. Both have various niches and are looking at a number of new products. Saffron, for example, have no redemption penalties on their products, so a customer can leave or overpay at will. These include Residential, Rent to Buy for First Time Buyers, Buy to Lets and Self Build Projects. Seek advice though!

On the other side, there was another nail in the coffin for Interest Only this week as both NatWest and Royal Bank of Scotland cease to offer new interest-only mortgages from Monday 3rd December. This does not affect existing customers or their Buy to Let mortgages.

Many lenders still offer Interest Only as an option, however we are slowly seeing it eradicated from the high street lenders. For the right situation and right scenario, Interest Only works, but it really does look like it is going to be an option only available through the smaller lenders and at a low loan to value soon.

The price war continues as we see lenders offering competitive rates, but this time on a ‘fire sale’ type basis. Santander issued some sub 2% fixed rates via brokers, for just 7 days! This has now been followed by Accord Mortgages who have launched some attractive options, but for a period of just 10 days. Do keep an eye on our shop front in the Carfax, if you are local, as we promote these opportunities in our window. If they are right for you, you will need to act fast as when they are gone, they are gone!

Finally, news just reaching me as I write this column is that the Bank of England has decided on Sir Mervyn Kings successor. Bank of Canada Governor Mark Carney will take over the post in June 2013. Personally I welcome someone external to take over the role as it does need a good shake up and a little modernisation!  However, there’s no denying that the job in hand is huge and the new Governor will need to settle in quickly to the tasks at hand, including financial stability, regulation and monetary policy.

The Mortgage event of the Year...

The great and the good of the industry descended upon London’s ExCel last week for the annual Mortgage Business Expo.   Around 70 exhibitors offered their wares to mortgage brokers, intermediaries, financial advisers, solicitors and others who attended the largest trade mortgage event in the calendar. 

The two day extravaganza was well received in its new venue (previously Olympia) and despite the slightly longer journey, attendees enjoyed the fantastic facilities available at the gigantic centre.

Big players such as Nationwide, Virgin Money and Halifax had their latest products and rates on offer which were well received especially as most have recently been reduced.  However, noticeable absentees included Barclays, Natwest and Santander, leaving a rather large gap from the high street contingent.

This left room for the smaller, lesser known lenders to promote their offerings.  They may not be processing the volume of cases like the high street lenders, but they have a huge appetite to lend and offer niche products to cater for a variety of customer profiles.

Thriving areas also included short term funders/lenders specialising in Bridging Finance and a number of Commercial lenders were also in attendance as funding becomes somewhat more available to businesses.

Our trade association AMI (Association of Mortgage Intermediaries) held numerous seminars covering various issues including Mortgage Market updates and it’s estimated that over 1,750 people attended the two days.  Well done to the organisers!

AToM were the only Specialist Mortgage Packager/Distributor onsite who offered all areas of the mortgage finance sector.   If you follow us on twitter, you will see our stand (@atommortgages).

For those who don’t know AToM, we have a shop front in the Carfax, Horsham.  But we also process cases for lenders via exclusive products and to a database of over 8,000 mortgage brokers, intermediaries and IFAs.   In short, we are a one stop shop catering for all types of people whether it be a straight forward and clean credit history application, right through to complex deals needing a manual assessment on a product exclusive only available via AToM.  As the name suggests, All Types of Mortgages!  So why not give us a try!