Blog Archives

Huge surge in remortgaging


Remortgaging was up 40 per cent in September compared with a year ago, according to the British Bankers’ Association.

The strength of these remortgaging numbers reflects the number of cheap mortgage deals available, as well as borrowers’ concerns that interest rates are likely to rise sooner rather than later. However, with Mark Carney, governor of the Bank of England, suggesting over the weekend that rates rises are a ‘possibility not a certainty’, it remains to be seen whether borrowers will lose the urge to remortgage.

Mr Carney did urge households to prepare for tighter monetary policy regardless and with fixed rates likely to remain competitive over coming months, there will be plenty of deals to tempt borrowers. Lenders are keen to lend and have plenty of funds to do so – as we move towards the end of the year it is possible that we could see some exceptional deals as banks look to meet their targets for the year. Borrowers who are coming up to remortgage should therefore consider taking the plunge as some of these fixed-rate deals will be almost too good to miss.

Jonathan Harris
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Jonathan Harris

Non-conforming borrowers – is it easier to get a mortgage?


New lender Bluestone Mortgages, which launched earlier this week, has said it will consider lending to non-conforming borrowers.

This is excellent news, with many strong mortgage applicants considered to be non-conforming because they are self-employed, are older or have had credit issues in the past. They don’t necessarily have to be big problems but they can make it very difficult to get a mortgage.

Lenders need to take time to consider these applicants. High-street lenders tend to be far too vanilla with their criteria and reject people without delving into the detail first. Some lenders claim to be ‘non-conforming’ but turn out not to be very different from mainstream banks.They seem to be so bound by Mortgage Market Review rules still that there can be no sense used in the mid market; it is all about ticking boxes.

Banks are getting better at understanding complex income for contractors and the self-employed, but it would be good to have a lender with a more sensible view on age, interest only or income and affordability. For example, allowing more than five times if someone is wealthy, guarantors or discounting school fees from affordability calculations as long as there was a way to pay them in place.

Do get in touch if you have any questions about non-conforming lending.

Jonathan Harris
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Jonathan Harris

The growth of the £1 million mortgage


The number of £1m-plus mortgages granted by lenders is growing, as property prices continue to rise. High-street lenders are more interested at lending at this level than they have been in recent years, although the bulk of loans comes from the private banks.

Most of the high value properties tend to be in London. However, we have seen a shift in clients seeking to cash out of London and purchase much larger properties in the country. Values in London have grown a lot more than values outside of London over the past five years. A large country house can sometimes cost less than £500 per sq ft, whereas a house in Chelsea can cost £2,000 per sq ft, hence large houses outside of London may look good value comparatively. Some clients have explored selling their London family home and purchasing a large country property and a small flat in town.

The process for taking out a large mortgage is similar to that for a smaller loan with the lender having to assess overall affordability. However, for £1m-plus mortgages this process can sometimes take longer.

This is because some very high earners often also have very high outgoings. For example, higher earners with families may have hefty private school fees, nannies and house keepers, as well as extravagant annual family holidays to St Tropez in the summer and Verbier in the winter. These all have to be factored into affordability.

However, in some scenarios the affordability for a £1m mortgage can be more straightforward. One of my City clients borrowed in excess of £1m, his income multiple was circa two times the mortgage and he worked 12 hours a day, so had no time to spend any of his vast income.

Some high-street banks have a maximum loan size of £1m or £2m. Above this level the private banks start to get interested.

Many people applying for £1m-plus mortgages have the ability to purchase the property outright but are choosing to borrow to take advantage of low interest rates. Why use your own money when you can use someone else’s – and at such cheap rates?

Adrian Anderson
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Adrian Anderson