In the period since the tragic Grenfell Tower fire of 2017, understanding unsafe cladding has been a key issue when it comes to mortgages. Many of those living in similar buildings have been unable to remortgage or to sell their properties. Steps taken in response to the Grenfell Tower tragedy understandably resulted in revised regulation surrounding cladding and fire safety.

Measures included needing an ‘EWS1’ form, when applying for a mortgage. This is a type of safety certificate introduced after the Grenfell disaster. This form requires a professional survey of the property to determine the safety and suitability of the cladding, insulation and other materials used in its construction. Being unable to get this certificate has meant that some leaseholders and freeholders of high-rise buildings have become trapped in their existing mortgages.

The introduction of new industry guidance in January 2023 issued by the Royal Institution of Chartered Surveyors (RICS), helps valuers assess properties with cladding. As a result of this guidance, owners may now be able to sell and remortgage more easily, due to six major lenders agreeing to lend on affected properties. The six lenders who have updated their criteria are: NatWest, Santander, Barclays, HSBC, Lloyds and Nationwide.

It is a positive step forward in an area of lending that has been challenging. You will however, need to provide evidence that at least one of the following applies for you to get a mortgage from one of the six lenders:

• You are covered by one of the recognised Government schemes – the Developer Remediation Contracts, (buildings 11 meters or taller) the Medium Rise Scheme (buildings between 11 and 18 meters) or the Building Safety Fund (buildings taller than 18 meters) or you are covered by the leaseholder protections in the Building Safety Act.
• If required your building will be fixed by the developer. as developers must agree to remedy serious fire safety defects in their blocks or be banned from starting new developments under the latest government cladding update.

Unfortunately, this means that if there is no remediation plan in place and you aren’t covered by one of the existing Government schemes, it will remain challenging to get a mortgage.

As the evidence required varies by lender, it is best to understand exactly what evidence is required before you apply. So, whilst it is positive that Banks will now lend on properties if the mortgage application meets individual lenders’ policy and regulatory requirements, there is still some way to go. Some lenders remain cautious about the government guidance surrounding higher-risk buildings

Henry Knight from Springtide Capital comments: ‘Existing homeowners who have found finding a mortgage deal on their property almost impossible are in a stronger position now in 2023. It is crucial that more lenders join the six existing banks to give customers as much choice as possible through increased competition’

Our expert advisors are here to find the right financing option for you. We understand the criteria required and can help improve your chances of a positive mortgage offer. Contact us today on 020 8154 7280

 Sources:

https://en.wikipedia.org/wiki/Grenfell_Tower_fire#:~:text=On%2014%20June%202017%2C%20a%20high-rise%20fire%20broke,with%20more%20than%2070%20injured%20and%20223%20escaping

Cladding External Wall System (EWS) FAQs (rics.org)

Valuation approach for properties in residential buildings with cladding (rics.org)

Developer remediation contract – GOV.UK (www.gov.uk)

Medium-Rise Scheme (MRS) pilot opening: leaseholder factsheet – GOV.UK (www.gov.uk)

Remediation of non-ACM buildings – GOV.UK (www.gov.uk)

https://hoa.org.uk/2023/02/government-cladding-update/#:~:text=February%201%2C%202023%207%20minute%20read%20In%20the,their%20towers%20or%20face%20a%20ban%20on%20developing.

https://www.gov.uk/government/publications/developer-remediation-contract?_ga=2.120442056.130233984.1678110522-1149413627.1678110522

With hundreds of mortgages available, it can be daunting getting started on the journey to securing a mortgage. There are many things you can do to make the process as easy as possible. Here we will highlight some of them.

Preparation

Get your paperwork in good order. Having the information to hand from the outset will stand you in good stead and will make the process less stressful for all involved.

A good example of the kind of information you will need to organise is the information required to apply for your ‘decision in principle’. This is often seen as the first step to buying or remortgaging a home. It helps you understand how much you could borrow before you apply for a mortgage.

To get your decision in principle you will need to provide confirmation of your personal details, know your regular outgoings, debt repayments and regular living expenses. Plus your salary and any other income that you receive on a regular basis. You will require at least a months’ worth of bank statements. You’ll need at least your last 3 months of payslips, your last P60 and evidence of any other income. If you’re self-employed you may have to provide several years’ business accounts.

An decision in principle is obligation-free and having one shows that you can, in theory, afford to buy a property. To get one, you’ll either need to approach a mortgage lender directly or via a mortgage broker.

Seek advice – Mortgage brokers

For something as important as a mortgage it makes sense to get expert help from someone who deals with them day in, day out. A mortgage broker has a key role to make sure you never pay more than you need to. They are able to review the mortgage market and apply for a mortgage for you based specifically on your financial circumstances. Due to their knowledge of each lenders underwriting criteria, they can advise you on which lenders are likely to accept you and which ones aren’t. This helps avoid delays and is important as it may have an impact on future applications. Brokers have access to software that allows them to search mortgage deals much faster and more thoroughly than you could yourself. A good broker can save you a lot of time and stress.

For more benefits of using a mortgage broker please read our article.

Get ahead

 If you arrange your mortgage as early as possible, you’ll be in a stronger position with sellers and estate agents. On average, offers typically take 3 weeks to come through, from when you apply for your mortgage to receiving your mortgage offer. Each offer lasts for a fixed amount of time, usually between 3-6 months. If there are likely to be any problems with your application it is best to know at the start and have time to remedy. The best advice is to start the process before you start seriously looking for somewhere to buy.  If you have an existing mortgage, it’s always best to lock in a new mortgage to start as soon as your previous deal ends.

Henry Knight from Springtide Capital advises: “We urge anyone coming to the end of their current deal to start talking to a broker at least seven months prior to that deal finishing. Acting early and decisively will be hugely beneficial.”

To help you navigate it all and to discuss your mortgage requirements today contact Springtide Capital on 020 8154 7280

Sources:

 How to buy a home – GOV.UK (www.gov.uk)

Why use a mortgage broker? | Springtide Capital