Tag Archives: mortgage adviser

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!”

 

Six secret steps to mortgage success for the self-employed

 

For some, obtaining a mortgage when you’re self-employed, may seem like walking up the down escalator – fruitless. We’re sharing our experience with you, to give you a smoother ride to success – your mortgage isn’t a dream, it’s a spreadsheet and SA302 form away from reality.

Why is it so tough?

It boils down to two things: the mortgage market review (MMR) which made all borrowing rules tougher (to protect you) and proving your income.

When you’re salaried, it’s easier for banks, as you represent less of a risk, with a steady income each month – if you’re self-employed, this is often not the case, with busier and quieter income periods. The banks will also be looking at how quickly people pay you, forecasted income and how much profit you make.

It’s responsible to ensure you can afford a mortgage

On a positive note, it’s good that a lender or bank ensures that you can afford the mortgage in the first place, it’s no different to an employed person in that respect – the rules are there to protect you.

We submit many successful mortgages for self-employed people, it’s all in the preparation and choosing the right lender for your circumstances, which may or may not be a mainstream bank.

In order to allay the worst fears of self-starters everywhere, we’ve put together the following checklist for self-employed mortgage applicants.

  1. Get your SA302 form

self-employed-mortgage-application-documents

We’ve written about the SA302 form before. This is the one page tax calculation document you get from HMRC after you’ve submitted your tax return each year. You can also find out how to access it by visiting the HMRC’s website.

It’s common for lenders to request SA302 forms dating back three years in some cases. The good news is, if you submit your return online, you can usually print off what you need quickly. If you still submit via post, you may need to wait a few weeks for it to arrive after requesting it.

  1. Get your income figures ready

You’ll no doubt be asked to go through a mortgage interview: a process of discussing your income and personal outgoings and talking through the details of the mortgage. Our biggest tip is to get your figures ready before the call, it will save both you and the interviewer a great deal of time, do the work before hand to make it painless.

Ensure you have your accounts to hand, with profit and tax for the last three years. You’ll also need details of any other income such as a partner freely available. The majority of lenders will require accounts and personal tax returns to be within the last 18 months, so do not delay if you are thinking of arranging a mortgage.

  1. Stress test yourself

Don’t just base all your calculations on the here and now. The drum beat for interest rate rises at the Bank of England grows louder by the day and most of the indicators point to a gradual increase in rates which takes place over a number of years.

Which means you could be facing higher base rates when you come to the end of any fixed rate period.

Use a mortgage repayment calculator to model such a scenario based on your projected income and check that you’ll be able to handle the extra interest burden.

  1. Gather your documents

Lenders will want to see proof not only of your recent income but might also want to see evidence of your future income, so be prepared to present formal offers or signed contracts for future work. And remember your SA302!

  1. Survey your outgoings

The new guidelines require that mortgage advisers assess the affordability of a particular product based not only on your income but on your outgoings too.

While this is a much more thorough method for checking affordability than the old income multiple calculation, this financial probing can get down to quite a granular level.

The questions can vary depending on lender, you’ll definitely need details of household bills, savings, personal expenditure, existing loans, pensions – basically any money that goes in or out of your bank account/s.

This is no time for back of the envelope scribbling – this kind of financial planning calls for a spreadsheet. Our advice then is to note down all your expenditure in great detail in advance, the better prepared you are, the quicker it’ll be over.

    6. Talk to a mortgage broker

With the introduction of the new rules, banks are scrambling around to recruit sufficient mortgage advisers to handle the demand. This has lead to long waiting times for appointments with banks and the length of the application process itself.

Fortunately, mortgage advisers at banks aren’t the only ones who can perform these new checks: FCA authorised mortgage brokers can do it too. So, by making use of a broker you’ll not only receive help on gathering the figures together, you’re also maximising your chances of a successful application and cutting down the amount of time it takes to apply.

To speak to a specialist mortgage broker at Springtide Capital, get in touch today.

 

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.