Latest: Press Release

Springtide Capital offers three top tips in final countdown to MMR

With just a few days until the Mortgage Market Review is put in place, Henry Knight, Managing Director of broker Springtide Capital explains the three top things consumers need to know about the new regulation:

1.    Affordability is the key

After Saturday, lenders will no longer be using income multiples to determine how much you will be able to borrow. Instead, the new rules stipulate that they must look more closely at your level of ‘affordability’ instead. Put simply, lenders will be doing a much more thorough investigation of your earnings and outgoings, looking into how you spend your money on a monthly basis in much more detail. Therefore, take into account that this will not only drastically increase the length of time it takes to get a mortgage, but also that each and every one of your monthly expenditures may affect your application- even one off luxury purchases such as holidays or eating out at the weekend.

2.    Interest only borrowers may be hit hardest

Lender criteria varies considerably from one lender to the next and this also applies to interest only mortgages. However, under the new rules, all interest only borrowers will need to demonstrate alternative methods of repayment of their loan at the end of the term in order to be approved. This may involve demonstrating additional income from a buy to let property, investment or pension plan.

3.    Get advice early on to avoid missing out

Getting the keys to your dream property will require planning. Timescales have been lengthened as a result of MMR and you need to be speaking with a qualified adviser early on in the process. Our team are already fully qualified to advise clients and do not need any further training, therefore the impact on those borrowers securing a mortgage with professional help will be minimal. However, the same cannot be said for those choosing to apply direct with a lender, as these borrowers are likely to find themselves the victims of delays after the new regulation is introduced over the weekend.

Budget Wishlist 2014

Henry Knight spills the beans on the three things we are keeping our fingers crossed for in this year’s Budget….

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1- Stamp Duty

Whilst last years’ Funding for Lending and Help to Buy schemes went a long way to addressing the issue of helping struggling first time buyers onto the property ladder, we still believe that stamp duty is a significant obstacle to getting more homebuyers into their first homes. Therefore, we are hoping for an increase in the stamp duty threshold for all first time buyers up to the value of £600,000, in line with the terms of the Help to Buy scheme.

2- Help to Buy by Postcode

We are not only hoping to see an extension of the second phase of the Help to Buy, but we are also hoping for a much more targeted approach to how the scheme is operated. In order to reduce the growing disparity between London and the rest of the country, we would like to see Help to Buy 2 operated according to the different requirements of individual postcodes. Some regions are more in need of a housing market boost than others, which is why we are hoping that Help to Buy by Postcode is something the Chancellor looks to include a week from today.

3- Off setting interest payments on buy to lets

There has been some talk in the past that the Government may potentially remove the ability to offset interest payments for tax purposes on buy to let properties. We would strongly disagree with any decision to allow this as it would have a detrimental effect on the investment market across the whole of the UK.

 

Clients are ‘shocked’ by changes to mortgage application process since 2007

Increasing numbers of Springtide Capital’s clients have been shocked by the extent of changes to the mortgage application process in the last six years. Many have reported that they are finding the process much more ‘challenging and time consuming’ than in previous years.

Before 2007 mortgage applications would regularly go through in under 10 working days, however clients now find they will have to wait at least 15 working days and often much longer. This has the result of delaying exchange dates and often jeopardises the entire sale.

This trend is largely attributed to regulatory change and the fact that lenders are now being far more diligent. Compared with fast track applications from 2007 which relied on a credit score alone, lenders will now ‘forensically’ examine all income and expenditure before agreeing to make an offer.

Henry Knight, Managing Director of Springtide Capital has told clients that the process can still be managed quickly and efficiently, as long as they are prepared and informed in advance of what is required.

Knight offers his top five tips for those wishing to be as organised as possible:

1. For purposes of identification make sure you have an up to date passport.  If using your driving licence, ensure it is showing your current home address.

2. You will need to have a proof of address. Lenders will only accept a hard copy that has been posted to your address, rather than an online version. It must be addressed within the last three months and show the current address in its correct format.  Many lenders also expect to see the first initial of the clients name showing.

3. If you are employed, you must obtain the last three months payslips and last two years P60s. These are the documents that people often have issues locating, however, you can normally obtain duplicates from your HR department if you cannot locate them.

4. If you receive a bonus, you must also demonstrate the latest pay slips for this. Again, it can be tricky to find so ask for assistance in your accounts or HR department if you cannot find the hard copy.

5. If you are self employed, you will need an SA302 form from the last three years as well as the last three years accounts.  Few people have heard of an SA302 form and they are not sent out automatically.  You will need to phone HMRC to request the documents and they will insist on posting them out.  HMRC also only send these by second class post meaning they can take 10-15 days to come through.

Mortgage finance at £1m and above set to be most competitive since 2007

Today, Springtide Capital has predicted that the pricing and availability of mortgage finance at £1m and above will be at its most competitive since before the financial crisis. The broker has witnessed a particular increase over the last four months in the number of high street lenders re-entering this market.  For the previous five years, this market had been the preserve of the Private Banks, however there is now a significant shift towards the retail banks offering purely transactional deals and becoming increasingly keen for the business.

Experts at Springtide Capital predict the impact of this trend will be heightened competition among the retail and private banks for high net worth clients. This, in turn, is likely to reduce the cost of borrowing on mortgages over £1m over the next twelve months.

Henry Knight, Managing Director of Springtide Capital says:

‘Following the financial crisis we witnessed the percentage of high street lenders withdraw from the large loan market, leaving the opportunities with the private banks.   Now that the likes of Nat West, Santander, Virgin, Halifax and Woolwich have all come back to the market with new propositions, we can expect to see more competition and innovation amongst all banks”.

Knight added:

‘The significant difference is that private banks will invariably be looking for a wider relationship, often insisting on funds under management whereas the high street lenders are able to offer this level of finance without asking for any such commitment from their customers.  We therefore expect as a result of this we will see increased pressure on private banks, resulting in rates falling in the months ahead for both those purchasing and refinancing.’

Mortgage market forecast: best rates in 2014 will last for 6 months only

BEST RATES IN 2014 WILL LAST FOR SIX MONTHS ONLY

Today, Springtide Capital has predicted that the best mortgage rates of 2014 will only be available for six months at most. The broker has also predicted the start of a ‘rate war’ among lenders in the first three months of the year as a result of the Help to Buy scheme. Help to Buy is predicted to intensify competition among lenders at the start of the year as more first time buyers enter the market.

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London’s buy to let investors ‘struggling’ to get high loan to value mortgage finance, according to broker Springtide Capital

The broker; Springtide Capital, has recently noted a growing demand from investors for mortgage finance with a high loan to value. However, the majority of lenders require a rental income of 125% of the interest payment on mortgages at 75pc loan to value and above; which is unattainable for the majority of investors.

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Self employed are at risk of ‘significant delays’ in home buying process due to SA302 form, according to Springtide Capital

Mortgage broker Springtide Capital has today reported a growing trend of self employed borrowers who are potentially at risk of significant delays in the home buying process. Most lenders now require self employed individuals to obtain a document from HMRC known as an SA302 form. This is a one page document designed to demonstrate taxable income in the same way they ask for pay slips from employees of organisations.

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‘Help to Buy II is not necessary for housing market growth’, according to broker, Springtide Capital

With the Council of Mortgage Lenders (CML) reporting yet another increase in gross mortgage lending across the UK, homebuyers are becoming increasingly confident in government schemes such as Help to Buy, with one in five first time buyers claiming to be optimistic about their prospects since the initiative was launched during the Budget earlier this year, according to the BSA (Building Societies Association.)

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Homebuyer surveys ‘slower than ever’ and may delay transactions according to broker, Springtide Capital

London based mortgage broker, Springtide Capital has recently noted a significant delay in the length of time required to book homebuyer surveys. Just 6-12 months ago, the average time taken to book a survey was 3 days, which has now increased to an average time of 7 days and can take even up to 2 to 3 weeks, according to the broker.

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Interest-only ‘refugees’ can save money switching to repayment options according to broker, Springtide Capital

A widespread number of low rates available on the market have encouraged many homeowners to remortgage recently, according to the latest data from broker, Springtide Capital. However, in light of recent changes to interest only lending, Springtide consultants have noticed that many are reluctant to switch to alternative repayment options owing to concerns around the high fees attached to these lower rates.

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