Question one – Given the recent lockdown circumstances have people stopped applying for mortgages?
During the lockdown the mortgage market stayed open however the biggest challenge for lenders was physical valuations and they had to adapt very quickly. They did and most lenders were able to use desktop or index valuations and that kept the mortgage market moving.
Some applications needed to have a physical valuation carried out and this had to be put on hold until the lockdown was eased. Lenders were understandably anxious during the lockdown and many lenders pulled the higher Loan to Value (LTV) products. Prior to lockdown most high street lenders were offering up to 95% LTV mortgages.
This LTV range has been removed by all lenders now, however there are plans to go back to complete normal as the restrictions are eased. The challenge now is lenders are all still working from home and when the housing market re-opened their capacity was seriously under pressure and as a result some lenders have started pulling their 90% LTV range.
As a ‘Whole of Market’ mortgage advisor I have access to every lender and products available and lenders are very good at communicating what changes they are making and when. They will typically advise us that a product will be pulled in 24/48 hours which allows us to still apply for that product if that’s what has been recommended to the client. I would say there was a decline in mortgage applications during lockdown and now the market is back with a bang.
I am seeing lots of first-time buyers and people looking to move or just re-mortgage. Most lenders have returned to physical valuations and the backlog caused by the lockdown has been caught up, therefore we are almost back to normal. If you are looking for just general advice then please speak to a broker who will be able to advise as to the current situation. I was very proactive with my client base and sent out regular emails which updated them about Mortgage payment holidays, products being removed and much more.
Question two – When a fixed fee mortgage comes to an end what advice can you offer customers to get the best deal?
Speak to a Mortgage advisor at least 6 months before your deal is coming to an end. Most high street lenders when they issue a mortgage offer it is valid for 6 months. Therefore, if your current deal is due to end you can get a new deal set up and in place to start the day your current deal ends and the advisor will take care of all of it.
It also means that you can take advantage of the interest rates 6 months in advance. Interest rates are at their lowest due to the Bank of England base rate being 0.10% and therefore the only direction they will go is upwards. If we take the current situation, we are in with Covid 19 and the ongoing Brexit talks then there is no way to see if interest rates will change in the next 6 months. However, imagine you secure your new deal 6 months in advance and in 6 months’ time interest rates have risen, I am sure you will be pleased you did something 6 months prior.
Seeking advice from a mortgage broker means they will offer you the best advice and it could be that a product transfer with your existing lender is the best way forward – these are usually available to apply 3 months before the current deal ends however a product transfer requires (with most lenders) no new underwriting (assuming you have paid on time and have no arrears) this is great if you have been furloughed or your income has changed since the original application– The current mortgage holiday is not classed as arrears so don’t worry about that – again speak with your mortgage advisor for the best advice.
At Fortress whenever we get a mortgage for a client, we diarize a date 6 months before the mortgage fixed rate period will end and then contact the client well in advance to get the new deal. At Fortress we want to take the pain of mortgages away and deal with everything for the client so there is always a seamless transition from the current mortgage to the new with no extra payments having to be made on a Standard Variable rate as the fixed rate period has ended.
Question three – The mortgage industry has a bad reputation for charging fees what is your company take on this?
Our Strapline is ‘Mortgage advice without the price’
Fortress doesn’t charge a fee as we recognise that buying/selling a house and getting a mortgage is a costly process and we don’t want to add to those costs. We get paid a ‘Procurement fee’ by the lender we get the mortgage with and this is more than sufficient to cover our costs.
We also hope to do the clients re-mortgage at the end of the fixed period and continue to service their needs for the foreseeable future. Fortress’s aim is to the Broker of choice due to service and we believe that not charging a fee from the outset gives our clients help when they need it. We then hope that that the level of service they have experienced means they will come back again and again. Even better is they recommend us to friends and family.
Question four – If I was purchasing a new build property what advice would you give me?
Speak to a ‘Whole of Market’ mortgage advisor first. The advisor will be able to advise how much you can borrow and what schemes you should look at such as The Help to Buy equity scheme. This is where you get a 75% LTV mortgage, the government gives you 20% LTV and you need to put in a 5% deposit. This is only available on new builds and the developer has to be part of the scheme. The advisor can help with every aspect and guide you to get you a competitive deal. New build developers will usually have a show home and professionals to speak with you about finance.
However always ask if they are able to offer you ‘Whole of Market’ advice as it could be that they use a panel of lenders and therefore wont be able to offer you the best deal. A Mortgage advisor has to adhere to the FCA guidelines and one of these is ‘Treat the customer fairly’ therefore you may get a deal through the advisor that the developer cannot offer you. Another factor is the maximum LTV you can get on a new build, due to the lockdown many lenders dropped their maximum LTV allowed on a new build and again speak with a mortgage advisor to find out what deals are available. New build mortgages are not as straight forward as a typical residential mortgage and each lender treats these differently.
It’s the mortgage advisor’s responsibility to research thoroughly in order to ensure you get the best solution. Here at Fortress we have a Business Development Manager (BDM) at every lender and we run through every client situation with our BDM prior to submitting the mortgage application. We do this as we don’t want to get a negative result by not doing full due diligence as this waste’s everyone’s time. When we put on a mortgage, we will be 99% certain it will go through due to the extra research to ensure it all fits. Every person we see has different financial circumstances and our job is to make those circumstances fit with the generic criteria of the lender. If we get that right than we get a positive result and our client is able to buy the property they want. If we aren’t that thorough then the mortgage could be declined and the client is disappointed.
Also make sure you keep New Build Rights Alliance (NBRA) Ltd details to hand as they can help you with any issues that purchasing a New build property can present. Fortress have teamed up with NBRA Ltd in order to offer our clients aftercare so any issues with a new build that crops up can be dealt with fairly and efficiently. Fortress wants to help you buy the property and to ensure you stay in the property.
Question five – Are their other ways that I could raise finance if I don’t have a full deposit amount and how do I best protect my mortgage once agreed?
The simple answer to this is yes there are many ways to raise finance other than the traditional high street lender. There is pretty much a lender out there for every situation and again this is why it’s good to speak with a mortgage advisor. As stated earlier everyone’s financial circumstances are different and sometimes, they don’t fit into the high street lender criteria. As long as clients are upfront with their situation there is usually a way that they can still get a mortgage. Fortress has access to specialist lenders and whether there is adverse credit or low income or the need of a guarantor then Fortress can help. The best advice is tell the mortgage advisor the situation and they will scan the market for a lender.
Admittedly the specialist lender route doesn’t afford the lower interest rates available with high street lenders however it could help you buy that dream house when your bank has turned you down. The products available currently do mean that perhaps a larger deposit is needed, perhaps the bank of Mum and Dad can help with a gift or even be a guarantor or the Help to Buy Equity scheme could be the way forward. Again, speak to your mortgage advisor and as long as they have all the information then they should be able to present you with options you possibly hadn’t considered. Fortress has seen clients who wanted to sell but the property isn’t selling and they have found their dream home which they cannot offer on due to not selling their current home and have come up with a solution to turn their current property into a Let to Buy (LTB).
Therefore, they are able to raise enough for the deposit to purchase the dream house along with a mortgage. The rental income they receive on the LTB means they can offset this income against the new property mortgage and have 2 assets increasing in value and potentially paying the same as they were before. Not only do we offer solutions like that example we also are able to offer many other aspects of needing a mortgage. We are fully qualified in all aspects of Protection such as Life Insurance, Critical Illness Cover, Over 50’s policies, Home and contents insurance, Equity release and very recently we have teamed up with a company called Kwil who can sort out your Will. If you require further details on any of our services please visit our website www.fortress-mortgages.co.uk where you can fill out a contact form or even better give us a call on 01202 386053 and lets have a chat about what you need. In normal time we prefer to visit you and sit-down face to face and show our systems so there is complete transparency in what we do however with the current situation we do have the technology so a home visit isn’t needed.
If you have any questions or just need some free advice please get in contact as we are always happy to help.