Tag Archives: mortgages

The mortgage process – what’s involved

Mortgage process

Sarah Logeswaran, a first-time buyer from London, recently sent Springtide Capital some positive feedback as follows:

“Springtide Capital’s extensive knowledge and experience, coupled with their approachable and friendly nature, really eased me through the process of purchasing my first home.”

We thrive on feedback at Springtide Capital, as it helps us to continually improve the service we offer.  We’re thrilled that Sarah was happy with the high level of service she received and it’s something we strive for with all our clients, as we know that getting a mortgage is one of the most stressful things you can go through. We’re proud of the service we give and that’s why we’d like to help new clients to understand what they can expect from us when purchasing their first property.

Henry Knight, Director of Springtide Capital has also provided his tips on key broker qualities.

  1. The initial meeting

A client’s perspective: The client initially approaches Springtide Capital to obtain a mortgage for a property they have set their sights on. Although the majority of clients are savvy with their finances, the mortgage market is baffling and clients often require guidance on what they can afford and the types of mortgages available. Non-advised sales of mortgages are now not available so a client must seek financial advice.

Moreover, clients usually prefer face-to-face meetings with a broker, rather than a call centre adviser, due to the private nature of the questions, which must be answered. It also provides the client with more options, as the broker isn’t tied to a specific lender, and gives them a point of contact to guide them through the mortgage process.

A face-to-face meeting is then arranged and our Mortgage Consultant will go through their client’s requirements, financial situation and explains the application process and the types of mortgages available.

Springtide Capital’s perspective: The mortgage industry is heavily regulated, and it’s vital that the Mortgage Consultant can demonstrate (document) that any recommended mortgage fits his/her client’s personal circumstances and is affordable in the event of rate rises – protecting the client.

Henry’s tip: “A mortgage consultant should take the time to understand a client’s circumstances on the first meeting. They must then clearly explain the process and then make sure the client understands the financial commitment they’re undertaking.”

  1. The key facts documents

A client’s perspective: The client will then receive a Key Facts Illustration (KFI) document, explaining, in detail, the type of mortgage recommended (including interest rate, the overall Annual Percentage Rate of Charge (APRC), the monthly payment and any fees), the total amount payable over the term of the mortgage and next steps they’ll go through if they wish to proceed.

Springtide Capital’s perspective: This is where our Mortgage Consultant’s experience really comes into play. Using all of their knowledge of the market, regulation and lender relationships they will have researched the deals available that best fits the client’s needs before issuing a KFI. They will also take into account any additional challenges that the client may face when applying for the mortgage e.g. any restrictions they might have that could make getting a mortgage difficult and place the business with lenders who specialise in such cases.

Henry’s tip:“A mortgage consultant should have an in-depth understanding of the mortgage market in order to find a mortgage which best fits the client’s circumstances. They also need to know how to structure a proposal to a mortgage lender especially where the client’s circumstances are outside of the standard criteria.“

  1. The Agreement In Principle (AIP)

A client’s perspective: The client is given an AIP by the lender and details are sent out to read and discuss with the Mortgage Consultant. The client can then place an offer on the property. Once the offer on the property is agreed, our Mortgage Consultant will then submit a formal application with full information to the lender.

Springtide Capital’s perspective: This is a crucial part of the process as an AIP is only based on information provided by the client. To obtain a mortgage the Mortgage Consultant must then evidence the facts provided by his/her client e.g. proof of income, bank statements etc. It’s then vital that everyone in the process is kept up to date with progress until exchange of contracts and money is transferred from the lender. This is often the most stressful part of the mortgage process and that’s where our Mortgage Consultants really come into their own. They will liaise with their client, the lender, solicitor and estate agent to ensure that all the documentation is received and will often be the first point of contact if things don’t go as smoothly as planned. They will work hard with all parties to make sure their client gets the resolution they need, with as little hassle as possible.

Henry’s tip:“A mortgage consultant should keep all parties updated with progress, whether they are the client, lender, estate agent or solicitor. They should be available throughout the process and proactively resolve any problems that crop up.”

 

If you would like to speak to a Springtide Capital mortgage broker please call

020 3040 4400.

Gross mortgage lending down 5% year-on-year

Henry Knight, Director, Springtide Capital

Henry Knight, Director, Springtide Capital

According to the latest Council of Mortgage Lender’s (CML) market commentary, gross mortgage lending reached £20.6 billion in October, which is a decrease of 5% year-on-year.

Report highlights also included:

  • Economy holding up better than expected
  • Monetary Policy Committee (MPC) left interest rates unchanged

THE ECONOMY

Economic data has now revealed that the UK’s post-referendum economic landscape is stronger than expected.

The Office for National Statistics (ONS) reported that the economy has grown by 0.5% compared to the three months to June. In addition, the ONS also reported that unemployment rate fell to 4.8% and that inflation has dipped to 0.9%. In response to this, the Bank’s November Inflation Report, expects inflation to reach 2.7% by the end of 2017.

The Monetary Policy Committee (MPC) voted to keep the interest rate at 0.25%.

HOUSING MARKETS

Gross mortgage lending in October totalled £20.6 billion and is 5% lower than October last year (£21.8 billion).Gross lending for the whole of 2016 will be between £240-245 billion, which would represent a 10-12% rise compared to 2015.

Better than expected, house purchase approvals reached nearly 63,000, prompting the Bank of England to revise up its forecast for approvals from 56,000 to 65,000.

Finally, tightened affordability criteria and recent stamp duty changes have meant softer buy-to-let activity overall. The mix of lending has slowly moved towards remortgage activity, accounting for 40% of lending against a third in recent years.

Henry Knight, Managing Director, Springtide Capital added: “It’s great to finally see data detailing that the UK’s economy is stronger than expected as this will perhaps allay fears of economic uncertainty in the market. However, the lack of available properties now seems to be compounded by subdued home-mover activity meaning demand continues to outstrip supply.”

Commenting on market conditions in this month’s market commentary, CML senior economist Mohammad Jamei said:

“The housing market has continued to fare better than many expected, with survey indicators still painting a relatively positive picture. The Royal Institution of Chartered Surveyors survey showed demand holding up well.

“The problem is that this demand is still not being met with a supply response. New instructions to sell have fallen, or been relatively flat for more than three years now. This has led to the average number of properties per surveyor falling to its lowest level for nearly 40 years.The impact of this is that it limits the number of potential transactions, as well as pushing up prices, as the relatively few properties up for sale are bid up by a growing number of buyers.”

If you would like to speak to a Springtide Capital mortgage broker please call 020 3040 4400.

 

Source: https://www.cml.org.uk/news/news-and-views/market-commentary-november-2016/

Mortgage lending remains healthy

According to the Council of Mortgage Lenders’ (CML) latest report, gross mortgage lending for August is £22.5 billion, up 15% compared to a year ago.

Other CML report highlights included:

  • Possible economic recovery in August
  • House purchase activity subdued but remortgage activity set for growth
  • Bank of England may still cut rates again following significant monetary stimulus last month

The economy

It still appears to be difficult to obtain economic data after the referendum, but it’s looking more positive, with a continued fall in unemployment and the Monetary Policy Committee (MPC) conceding that the bounce back was stronger than predicted.

Although the Bank of England’s governor, Mark Carney, has said that rates would not fall below zero, it does look likely that they could reach 0.1%. And as far as inflation goes, it has slowly edged up to 0.6% recently and is expected to reach 2% in the first half of next year.

Mortgages

Housing and mortgage markets

According to the CML report, “the Royal Institution of Chartered Surveyors’ survey bounced back, predicting price and sales volumes to rise over the three and twelve month horizon.” However, we must remember that we still have a property supply shortage, which we would assume would hold back sales volumes.

It seems that buyer confidence has been knocked a little, as house purchase approvals dropped to around 61,000 according to CML, however it is felt that this will improve as confidence increases.

Remortgage activity is the largest contributor to August’s lending figures, which totalled £22.5 billion. Both buy-to-let and first-time buyer activity remained subdued, most likely due to a combination of confidence, tightened affordability and tax changes.

Henry Knight, Managing Director, Springtide Capital commented: “It’s positive that lending figures continue to look healthy, which is supported by remortgage activity – a low-risk area that lenders are happy to fund. In terms of a base rate drop, now really is the time to get on the property ladder or consider remortgaging, with a selection of low mortgage rates available. All we need now is more properties on the market!”

 

Marginal drop in post-referendum house purchase activity

According to the Council of Mortgage Lenders’ (CML) latest market summary, there has been a marginal decrease in house purchase activity following the EU referendum in June this year.

CML has estimated that gross mortgage lending was £21.4 billion in July, only a small decrease on June’s figures, but the first year-on-year drop for more than a year.

A year-on-year drop hasn’t gone unnoticed, as the Bank of England (BOE) has announced a “significant monetary stimulus, aimed at supporting the domestic economy during a protracted period of uncertainty and structural change.”

Economic snapshot

CML’s market summary reported that “the post-referendum economic landscape is not much clearer than a month ago. Some indicators are more backwards-looking or inherently volatile than others, and this makes it harder to gauge where things currently stand.”

On the other hand, the UK has a record proportion of working age people in work, the unemployment rate is down to 4.9% and retail sales rebounded strongly in July.

Henry Knight, Managing Director, Springtide Capital commented: “Although a decrease may sound negative, the UK economy actually seems to be fairing well following the referendum. We still have a long and unknown road ahead, however, we can take some reassurance in the fact that the Monetary Policy Committee (MPC) has a package to support financial pressures.”

The MPC package

According to CML, “the MPC unveiled a significant package of monetary measures in early August. Reflecting the transmission delays before the monetary policy takes effect, the Bank’s timing is designed to provide meaningful stimulus to our domestic economy as growth sags going into next year.

“As well as the widely anticipated 25 basis point reduction in Bank Rate to 0.25%, the Bank of England also announced a fresh round of quantitative easing – with £60 billion of gilt purchases and up to £10 billion of UK corporate bond purchases – and a new £100 billion Term Funding Scheme (TFS).”

How will this help?

Firstly, the base rate will no doubt help borrowing rates to remain low, which helps affordability for households and firms.

Secondly, lenders will have access to £100 billion over the next year at beneficial rates for four years – supporting the financial pressures that they will face. As a bonus, new lending may also be eligible for a matched amount of additional funding under the new package, encouraging new business.

Gross lending hits £20.7 billion in June

 

Following the EU referendum, the Council of Mortgage Lenders (CML) issued their market commentary, estimating that gross mortgage lending reached £20.7 billion in June. This is 16% higher than May’s lending total of £17.8 billion, and 3% higher than the £20.1 billion lent in June last year. This is the highest June figure in eight years when gross lending reached £22.6 billion in 2008.

It is expected that the result of the EU referendum will have an impact on the housing market, however, the extent is yet unknown. The general view is that uncertainty will create a wait-and-see attitude and dampen housing price growth. You can read Henry Knight’s view here.

Not surprisingly, it is expected that lending over the coming months will be dominated by remortgage activity as opposed to house purchases.

The economy

The new Prime Minister, Theresa May, will be tasked with triggering Article 50 of the Lisbon Treaty, although she has stated that it will not be this year. The Prime Minister has already appointed new members of her cabinet, built to deliver her vision of leadership for the UK.

Despite speculation, the Bank of England has held interest rates at 0.5%.

The Bank of England has said: “Most members of the committee expect monetary policy to be loosened in August. The precise size and nature of any stimulatory measures will be determined during the August forecast and Inflation Report round.”

According to CML, “Economic growth in the first quarter of 2016 was unrevised at 0.4%, according to the Office for National Statistics’ second estimate. Survey data indicates that this subdued rate of growth is set to continue into the second quarter of 2016, partly as businesses postponed investment decisions until after the vote.

“Forecasters had already revised down growth expectations for the UK economy to around 2% for 2016, but even this figure is likely to be revised down further as the period of economic uncertainty extends.”

The inflation rate remained at 0.3% for the second month in a row in May, driven by a fall in the price of clothing and food, but is expected to rise in the second half of the year.

Housing

Lending figures are still distorted by the stamp duty change on second properties, this together with the uncertainty caused by the EU referendum, may show a lengthened downside to transactions as opposed to a dramatic one.

CML added: “And while this uncertainty will linger for some time, house prices remain underpinned by sound fundamentals.

“…the characteristics of the UK housing market are unlikely to change dramatically in the near term, as there will continue to be a mismatch of supply and demand, stretched affordability and a relatively low number of home movers.”

Henry Knight, Director, Springtide Capital commented: “We won’t be able to see the full extent of the impact of the EU referendum result for some months. Those who were in the middle of buying or selling a property would have no doubt continued progressing their sale or purchase following the referendum. Properties continue to go on the market and there is a strong demand for them – who knows, it may even result in people wishing to sell their property prior to any exit from the EU.

“Dampening housing price growth against what was an unsustainable rate of increase will help first-time buyers to afford properties. I’m sure that the housing market has challenging times ahead, but this may not be felt as soon as people may have thought. For Springtide Capital, it is very much business as usual.”

Please call one of our advisers on 020 3040 4400 if you would like any further information.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Managing Director of Springtide Capital, Henry Knight, reflects on recent events

 

As the UK digests the ‘Leave’ vote following the EU referendum, it’s fair to say that behind the scenes  the financial world has been busy understanding the consequences. Henry Knight, director, Springtide Capital addresses some of the main concerns within the mortgage market.

House prices

Henry Knight, Managing Director at Springtide Capital sends a message of reassurance,

“We are clearly in for a period of uncertainty whilst the markets rebase themselves.  However, I’d like to express my personal opinion that although there may be a small correction in house prices, this is set against the fact that we have been in a market with continual price increases. Therefore, the rational outcome would be for an overall flattening of the annual rate as opposed to great reductions. Buying a home or even an investment property in most cases is a long-term decision, not one based on growth over a short period.”

Mortgage rates

Henry has also highlighted that it is unlikely that the base rate will increase, with Bank of England’s Mark Carney recently stating that quantitative easing would be back on the agenda to sure up the economy if required – potentially lowering rates even further to stimulate or stabilise.

We can, however, expect some tightening in lending, which may mean that 95% loan-to-value (LTV) deals aren’t as competitive. It’s also likely that banks will continue to seek out clients at 60-70% LTV, where pricing can be expected to remain strong.

Bank liquidity

Henry continued by saying that, “Liquidity within the banks was significantly bolstered following the last financial crash, ensuring that banks are in a far more secure position to withstand this type of event. Therefore, it would seem reasonable to assume that it shouldn’t be a major issue unless there was a very significant market drop over a sustained period (25%+).

Summary

We appreciate that uncertainty is always unsettling, especially if a person is in the process of selling or buying a property, but we’d encourage everyone to take a longer term view.

If you read ten different press articles, you’re likely to receive as many different views on the topic – many experts are making educated guesses at best, therefore kneejerk reactions are not recommended. In fact, many mortgage holders are likely to be able to take advantage of cheaper mortgage rates in the coming weeks as banks will continue to have an appetite to lend.

Moreover, it will take time for the full consequences of a ‘leave’ vote to be revealed and for the government to begin to pave the way for the future – we have to be patient.

Please feel free to speak to one of Springtide Capital’s qualified Mortgage Consultants for further information and guidance on 0203 0404400.

Half of mortgage holders have no life cover

 

Springtide Capital have been helping mortgage holders to protect themselves and their families with life assurance and critical illness cover for many years. However, no matter how great the benefit and peace of mind, our experience tells us that any additional expense reduces willingness to take out insurance policies.

 This has recently been reflected in research from Scottish Widows, stating that “50% of the UK’s mortgage holders have no life cover in place, meaning that 8.2 million people are leaving themselves and their families financially exposed if the unforeseen were to happen.”

It’s critical

The research also revealed that “only a fifth (20%) of the UK’s mortgage holders have a critical illness policy, leaving many more millions at risk of financial hardship or losing their home if they were to become seriously ill.”

When you purchase a life and critical illness policy, you’re actually buying peace of mind so that mortgage payments will be met, which is often the last thing you or your family would like to manage when illness strikes or worse.

Springtide Capital have two dedicated and experienced Protection Consultants, Andrew and Jackie.

They will take the time to understand your circumstances, ask any relevant health questions and provide a quotation, which is tailored to your needs – ensuring that you and your family are protected.

Jackie, Protection Consultant at Springtide Capital, commented: “I consider life and critical illness extremely important when you take out a mortgage or other loans. Although it isn’t a condition of a mortgage application, lenders do like to understand that you have considered the consequences of not taking one out. It really is better to be safe than sorry.”

Living on a single income

33% of respondents admitted “that if they or their partner were unable to work for six months or longer due to ill health or personal injury, they’d be unable to live on a single income.

“And more than two-fifths (43%) of those who couldn’t cope with a single wage say they would resort to dipping into their savings in order to survive. Yet 43% say their savings would last for no more than a couple of months and 15% don’t even know how much they have, meaning they could be relying on backup which doesn’t actually exist.”

Three months and counting

In addition, “just under a quarter (23%) could only afford to pay household bills for a maximum of three months if they or their partner were unable to work, and 23% could make a maximum of just three monthly mortgage payments. Another 15% admit they’re not actually sure how long they’d be able to cope with their mortgage payments.

“Welfare reforms make the case for financial protection all the more pressing. A quarter (25%) of mortgage holders who say they’d be unable to live on a single income if their partner were unable to work also admit that they’d rely on state benefits to ensure they could manage financially.”

Henry Knight, director at Springtide Capital, added: “I’d urge mortgage holders to seek advice on protecting themselves should the worst happen. A quote can be produced very quickly and tailored to the budget level of the client. Cover becomes priceless when it’s required.”

To find out how we can help you with your mortgage protection needs simply call 020 3040 4400.

SOURCE: Scottish Widows Research June 2016

 

Mortgages for barristers are no cut and dried affair…

 

Mortgages for highly skilled professionals, like barristers, form a vital part of the work that mortgage brokers carry out.

There is one reason – barristers simply don’t have time.

This is due to the highly specialised nature of the work they do and the unique circumstances under which chambers operate. The assistance of broker advice on mortgage product selection, and how to present earnings as part of a mortgage application, is invaluable to them.

Barrister mortgage applications are not always simple.

Not simple, but achievable, if you’re a broker who understands what mortgage providers are looking for. One of the main hurdles for a barrister mortgage application is presenting earnings accurately.

Sounds easy? Not really, lenders must be satisfied that an applicant can afford their mortgage – the remuneration of barristers in private practice is rarely a cut and dried affair. A barrister’s cash flow is often restricted by lengthy cases, debt owed by solicitors, the costs of chambers themselves as well as travel expenses and legal subscriptions.

All these act to cause significant underestimation of the net worth and earnings potential of a barrister, and can cause mortgage applications to be rejected.

Of course, if barristers had the time to thoroughly look into lenders’ requirements and preferences, to craft their mortgage applications accordingly, and then to follow up their applications with further responses to lenders’ concerns, then none of this would be a problem.

But long working hours, and heavy caseloads, often means that seeking expert advice and help from a qualified mortgage broker is a much more convenient option.

How can a mortgage broker help a barrister?

A qualified mortgage broker can help a barrister with their mortgage application in three main ways:

  • By recommending suitable mortgage products and advising on the likelihood that the barrister’s application for a particular product will be approved;
  • Presenting the barrister’s mortgage application to the lender in a way that emphasises the barrister’s true earnings;
  • Advocating on the barrister’s behalf in cases where the lender requires further evidence.

Because of their unique method of remuneration, barristers’ making mortgage applications by themselves are not adequately catered for by large financial institutions. A call centre operative at a bank for instance may not be familiar with the extra measures a barrister needs to take when presenting their application.

Mortgage brokers who have experience in mortgages for barristers on the other hand will have existing relationships with such organisations, will know how each lender likes to be presented with evidence of earnings, where each draws the line between an accepted and rejected application and how much room for negotiation there is.