Physical valuations are back, but with conditions.

‘Back in Business’, ‘Business as Usual’, ‘When we come out of this’ - all terms I’m sure you’ve heard a lot recently.  I think it is now very clear to say that any form of ‘normality’ will be a different experience from what we have been used to.  Every day includes new learnings and new ways to do things.  Working from home has meant I have seen more of the kids and wider family, watched more TV, and worked longer hours (how has that happened?!).  And we are seeing a lot of positivity in the market and a lot of people talking up the exit from this awful disease, rather than burying their head in the sand and hoping it will all go away. 

The really positive news over the last week is the return of ‘physical valuations’.   Many lenders had taken to using ‘automated’ and computer-generated valuations recently.  Which has been great but meant that the more complex property types (HMOs, Multi Units, Properties with Annexes), could not proceed as they needed someone to visit the property and report back to the lender.  With the lockdown restrictions eased, this has meant that some lenders who were ‘mothballed’ can now begin to lend again.

Customers can now view properties in person, speak to estate agents and, hopefully, now move home.  It is estimated that circa 40,000 property transactions were put on hold due to valuers not being able to visit properties and some 300,000 transactions stalled due to people being unable to move whilst following the government instructions.  The new allowances have very strict social distancing guidelines for all companies involved however, and these need to be followed. 

These are all very small steps on the road to some sort of recovery and the signs are that this will be a long road.   For now, the new norm is online conferencing, visiting friends and family from a distance, maybe a weekly online quiz and binge watching the odd programme here and there.

Everything we do is under review and from a work point of view, do we really need to return to an office when we can discuss mortgages and related finance all day (and evening) via laptops and video conferencing?  Only time will tell.  Processes have had to adapt and change so quickly.

What we cannot afford is for a second spike which would put yet more lives at risk. Health first and any slippage would be very damaging for the financial/property sector.  Stay safe..

This should be a time used wisely, not only to review life goals, but also financial situations.

Due to the current unfortunate circumstances, we are now becoming very used to the Coronavirus lockdown.  However, perhaps this should be a time used wisely, not only to review life goals, but also financial situations.

Do you have a Will?  Statistics show that only one in three people currently have a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed when they die. 

Do you have Life Insurance, Mortgage Payment Protection Insurance (MPPI), Accident Sickness and Unemployment cover, Critical Illness Cover, and more?  Any of these products might be beneficial to your personal circumstances or needs, especially if you have children, and with competition increasing, these types of products are not as expensive as you may think.

MPPI makes it possible for you to keep on paying off your mortgage, even if you stop receiving a stable income.  People tend to choose this option because it is explicitly designed to cover their mortgage payments.

We often associate protection needs with homeowners, but it was interesting to see recent data suggest that the majority of renters are putting themselves and their possessions at risk because they do not have vital forms of insurance in place. Research from one provider uncovered evidence that just one in five rental households had life insurance, compared to three out of five homeowners with a mortgage. The figures are particularly concerning because the number of renters in the UK is rising, a trend driven by higher house prices and other challenges which make it difficult for would-be first-time buyers to get on the housing ladder.

A further study from another provider appeared to back up this trend, finding that whilst 41% of homeowners had life insurance or critical illness cover, just 26% of those renting had such a policy in place.

People are very quick to insure their pet, Sky TV, their travel plans and their house contents, but forget their biggest asset and this frequently gets left to last, or until it’s too late.

All in all, to make sure your financial situation is better protected, you really should investigate all options to cover you, your family and your financial commitments.  Familiarise yourself with all the options available and do your research before committing.  As always, seek professional and open market advice.

You'd use a local shop over a supermarket. It should be the same with your mortgage broker.

Through this unprecedented time, I can’t stress enough that you should be using a mortgage broker to review your requirements and help arrange your re-mortgage to cut down your costs.  Yes, you can sometimes go direct to the lender, but is it right for you?  Is there a better rate elsewhere?  Have you read all the small print? How long are you tied in for?  Fixed or Tracker rate?  Can you apply whilst in the three-month mortgage payment holiday?  Will the lender take my ‘Furlough’ pay as income?  And so on.

At times like these, changing your rate can be a huge decision as we all look to cut costs in order to see the next few months through.  Without professional guidance, you might not only get the wrong deal, but you might also miss it.  A wide number of lenders have withdrawn products recently, yet only advised us the day after the products were withdrawn.  Some lenders, due to the volatility of the markets, have even reviewed full mortgage applications in with them, and withdrawn their initial approvals!  Worse, some have actually withdrawn fully issued mortgage offers! 

This is a sign of the times and now, more than ever, you should be using your local mortgage broker.  Just like the local shops competing against the supermarkets, everyone is struggling and that little mortgage product transfer you’re doing through the smart phone app to your high street lender, could be vital income to the broker who may have helped you out so many times in the past.  Don’t cut them out, let them help and advise you.  It is unlikely to make a difference to you in terms of rate or fees, but it can make a huge difference to income being generated for the mortgage broker in these challenging and difficult times.

Generally, the housing market is coming to a standstill as the Government requests everyone to stay at home.  This means that surveyors cannot visit the property and therefore a lender cannot lend on a property it has no idea of the value on.  There are remote systems that can provide Automated Valuations (AVM), but only a few lenders will currently take these as a base to which they can lend to and the risk curve will only allow an AVM up to 85% loan to value. In the main, most lenders will only allow 75% AVMs at the moment and only on re-mortgages.  As we all get used to working from home, this may change.

Yet, through adversity, there are rays of sunshine!  A number of lenders are looking at ways to increase volumes, reach out to help customers and keep the market going.  Some of these will be offerings only available through the broker market channel.  So, keep in touch, keep the relationship close and let’s work together to achieve the best outcome.  We are fully functional and working from home during normal business hours.  We continue to offer our free advice service, so speak to the team and we’ll help you as best we can.  Keep well.

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.

"Tested in a way we've never been tested before"......and Bank Base cut by 0.5%

We’re being tested in a way that our generation has never been tested before.  These are uncertain times and no one can predict what the future days, weeks, months will bring.  The Bank of England has cut interest rates by a significant 0.5% to just 0.25% and at the time of writing, this is predicted to be cut even further.  Especially seeing that the Federal Reserve (FED) in America have just cut their rates by a full 1%.  All countries are trying to prevent a global recession, avoiding 2007/8 all over again.

All I can say at this time is keep safe and look after number one.  Get your house in order quickly.  Impact will inevitably be shutting both of our offices in Horsham to protect our staff and families, but we will continue to work from home and be available on phones, online and by webinar facilities (Microsoft Teams, etc).  Not everyone will get this horrible virus and lenders still want to lend.

Yes, it might take a little bit longer to arrange things, as home working takes effect and some, especially the banks and building society security systems and such, will experience new challenges with all of their staff working from home.  But lending will go on and right now is an ideal time to take advantage of the amazing rates and deals on offer.

Remortgaging should be a very simple process and we can guide you through the requirements and deals on offer. 

Even staying with your current lender once your current fixed rate has expired and transferring to a new rate is pretty straight forward.  We can assist with all of these, remotely and quickly.

Finally, I’ll say it again, look after number one. You will probably have some time on your hands, you have the paperwork at home and you have the superb team at Impact online and available to help you throughout the whole process.  Or just even to give you some free advice.  No one knows how long this unprecedented experience will last, so just make sure you’re in a good position to see it through.  Stay safe.

Completing a fact find and be mortgage ready!

First time buyer or home mover?  Either way know the process and be mortgage ready!

On any new purchase, the selling agent will seek to agree a number of deadlines with you, including the arrangement of mortgage finance. At this point you can shop around and should make sure that you speak to an independent mortgage brokerage who will assess your overall financial position and discuss your mortgage requirements with you.  Advisers are required to provide you with an Initial Disclosure Document detailing who they are; who regulates them; their scope of permissions; whether they are restricted to a small lender panel or ‘whole of market’; any fees and costs involved including any charged for advice or consultation.

A good adviser will complete a financial fact find ensuring that they fully ‘know and understand their client’s financial position and requirements.’  This is necessary before any ‘advice or recommendation’ can be provided.  Be patient as this process can be lengthy.  It is in your best interests however, ensuring that you receive the best possible advice designed to meet your personal mortgage needs and requirements. Once you’ve agreed the best mortgage for you, a decision in principle (DIP) will be completed, usually online with the chosen lender. This involves brief personal details, income disclosure and a credit search. Be wary here as too many credit searches will have a negative effect on your credit score.  We’ve had a few customers contact us for a mortgage recently who have been totally unaware that they have had a number of credit searches carried out having recently searched for competitive renewal quotes on their home or car insurance via comparison sites.  This, in a small amount of time can have a marked affect on your credit score, and as such, affect your ability to obtain finance, so read the small print and be aware! 

DIP decisions are normally instantaneous.  Assuming success, it is then up-graded to a full application. Payment for survey is made (sometimes free) and the valuer confirms to the lender if, in their opinion, the property is suitable security for mortgage purposes. A more detailed in-depth survey (homebuyers report) can be arranged at the same time, but for a slightly higher cost. That said, for older properties it should be considered a worthwhile investment as it could save you thousands in the long run.

The chosen lender will require information on income, identity, proof of residency as part of their due diligence requirements.  Assuming no issues arise, a mortgage offer should be issued. Then, subject to the solicitor’s conveyancing process, you are now on the road to completing your mortgage process!

Bridging finance can be much quicker to arrange than a normal mortgage

Bridging finance (also known as Short Term Lending) is a solution that can be used to provide fast access to funding for a number of different circumstances.

Often, bridging finance can be much quicker to arrange than a normal mortgage. However, bridging finance should not be considered a replacement for more traditional mortgage lending which is normally more cost-efficient.  It can be a complicated process and each case is written on a bespoke basis according to the requirements of each individual transaction.

Initially, this type of finance was used as a way to mend a broken link in a housing chain and typically used to ‘bridge’ the gap between a house sale and completion.

However, bridging is often also used for people buying at auction, to meet strict deadlines (usually of 28 days), for people wanting to carry out refurbishments to boost the value of their homes or where the property would not met the requirements of a traditional mortgage lender as well as for numerous business purposes. Some lenders will also help with short term VAT requirements subject to strict controls.

In more recent years, the market has seen a broader number of uses for short-term loans as their popularity has increased. For example, many commercial premises are now being converted into residential houses or flats, because of the expansion of permitted development rights, and bridging loans can be used in the initial stages of the conversion with longer term funding provided once the building project has started.  Short-term finance can be used to buy new equipment, to build up stocks ahead of an expected rush on seasonal orders, or for buying shares in another business.  It’s becoming increasingly popular, mainly because of its speed and flexibility.

The best way to look at this is as a means to an end.  Lenders will need certainty on the exit route (how will they get their money back?) and they will always insist on an agreement being in place from a traditional mortgage lender to provide a mortgage, at a given time and once any requirements have been fulfilled.  Alternatively, the exit route might be from the sale of the same or another property. So, short term lending is designed to fulfil the need or desire to act quickly.

Finally, this type of funding has become more competitive over the years with some now offering rates as low as 0.43% per month for the right customer.  Obviously, individual terms and conditions apply and with these types of offerings always seek professional advice!