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Getting a mortgage on an unusual property


Many borrowers have fairly straightforward mortgage requirements – they are employed and can easily prove income, while the property is of a standard type and construction. Lenders are usually happy to lend to these borrowers so obtaining a mortgage is not too difficult.

However, not everyone is in this position, which is where mortgage brokers such as Anderson Harris come in. If you have a mortgage application that is even slightly out of the ordinary – you are buying a studio flat, for example, or a flat above a shop, then we can identify the lender most likely to lend.

As far as lenders are concerned, the main issue is resale value. You may be prepared to buy a studio flat or one above commercial premises, but would someone else feel the same if the lender had to repossess your property and sell it on? Anything with a limited resale market, such as properties with short leases or those with shared access, ring alarm bells for lenders.

If you are buying a property of unusual construction, such as a thatched cottage or converted barn, smaller building societies, who consider applications on a case-by-case basis, will be a better bet than high-street lenders. It often comes down to the individual case. A flat above a pub in Chelsea or another prime location may be acceptable to a lender due to high demand for the area and potential ease of reselling the property. The same cannot be said of ex-local authority properties and those with unusual characteristics.

Lenders often make clear stipulations regarding what they will and won’t lend on but increasingly they will rely on the mortgage valuer’s comments regarding value, desirability and resale. Borrowers will require a specialist lender in many of these instances and should use a broker to identify the one most likely to be sympathetic to their particular situation.

Adrian Anderson
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Adrian Anderson

A mortgage for life – Daily Telegraph podcast


Anderson Harris director Adrian Anderson was asked to talk to the Daily Telegraph about the various options for older borrowers and whether plans to introduce a mortgage for life, rather than insisting that all lending is paid off by retirement, is a good idea.

Click here to listen to Adrian (from 19.45 minutes in)


Adrian Anderson
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Adrian Anderson

Equity release for landlords


A lender has launched an equity release product which can be taken out on a buy-to-let property or second home, rather than your main residence.

Landlords will receive a lump sum upfront with interest rolling up for the duration of the loan, enabling them to release money from a buy-to-let and not pay the mortgage interest each month. There are no affordability checks so it may appeal to the owner of a buy-to-let property who does not qualify for a standard buy-to-let mortgage. However, borrowers should be warned that the rate of interest is higher – from circa 6.24 per cent AER – than on a regular buy-to-let.

The minimum age for applicants is 55-years-old, which is low, but the lender will only lend circa 9 per cent loan-to-value to someone that age; otherwise, interest would potentially compound over a very long period. Older borrowers can borrow higher LTVs so a 70-year-old can borrow circa 24 per cent, while an 80-year-old can borrow circa 34 per cent. We believe this product will be targeted at those in their seventies and beyond as this is where conventional buy-to-let lenders do not tend to accept new applicants. The maximum age of a borrower is 90 – again, most buy-to-let lenders would not contemplate lending to someone this old.

The maximum property value against which the product can be taken out is £6m, which is encouraging, as many equity release providers will not lend against such an expensive property.

Borrowers should be aware that there are early repayment charges for the first eight years of the loan so it is not a short-term solution and the mortgage can’t be ported to another property. Independent advice from a broker who specialises in equity release such as Anderson Harris, is vital before taking out such a product to ensure it really is the most suitable solution.

While the product is expensive, it is innovative and could lead to other lenders following suit, which would bring the pricing down. There is an option to service the interest will also appeal to some borrowers.

Adrian Anderson
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Adrian Anderson

Bank of Mum and Dad becomes ninth biggest ‘lender’


It is difficult to remember the last time Anderson Harris arranged a mortgage for a first-time buyer who didn’t have some form of assistance from parents or had inherited a large sum for a deposit. House prices have increased significantly over the past few years while salaries have risen at a much slower rate, making it extremely difficult for first-time buyers to purchase a home.

Research out this week from Legal & General reveals what we already suspected – that parents are significantly helping their offspring onto the housing ladder, to the tune of £6.5bn this year. This is similar to the amount lent by the Yorkshire Building Society, the country’s ninth biggest mortgage lender.

Hopefully, these parents will be gifting the deposit rather than lending it, as lenders will take a loan into account when calculating affordability. Because of this, parents may be interested in other options, such as becoming party to the mortgage to help their child to borrow more, assuming the parent has a strong income. Metro and Barclays offer ‘joint borrower/sole proprietor’ mortgages which have proved popular with first-time buyers as the parent is on the mortgage and liable for it, along with the child, but does not have to be party to the property deeds. This means the parent can avoid potential capital gains tax on disposal of the property and the extra 3 per cent stamp duty will not be applied when the property is purchased. The other advantage is that as long as the child can prove to Barclays that they can afford the mortgage in their own right at a later date, then the parents can be released from their obligations.

Another popular product is the Barclays Family Springboard mortgage where the first-time buyer doesnt need a deposit as long as a family member or helper can provide 10 per cent of the property price as security in a savings account. This is returned after three years. 

Jonathan Harris
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Jonathan Harris

Will your mortgage be paid if you die?


Death may not be a particularly uplifting subject but the devastation it can cause from a financial point of view means it must be addressed. Many joint mortgages are built on the income of one applicant so ensuring that debt is repaid in the event of that person passing and the home can be kept rather than sold to pay back the mortgage, is vital.

It is also worth purchasing life cover for a spouse who doesn’t work because if they were to die, and leave young children who need looking after, the ability of the surviving spouse to work the same hours and generate the same level of income may be compromised.

When deciding what protection you need, life cover really should be at the top of the list. It is relatively inexpensive but provides an incredible amount of peace of mind. As you might imagine, life cover goes well alongside a mortgage and particularly if you are taking out a high-value home loan, it is essential.

At Anderson Harris we are well versed in putting life policies in place, accessing the best insurers in the market. Even clients who already have life cover can benefit from a health check as premium costs have fallen significantly in recent years as average life expectancy has increased.

For example, one client took out £1.2m of life cover five years ago at the age of 42. It was a 33-year level term policy with a monthly premium of £164. He asked us to find something better – we were able to negotiate a new policy with the same level of cover but a reduced monthly premium of £121. That equates to a saving of £43 a month or £14,448 over the course of the 28-year policy. There was no cost to the client and minimal paperwork, with the new policy in place within two weeks of the case being presented to the insurer.

Many of our clients may think they don’t need life cover because they have death-in-service benefit, usually to the tune of four times their basic salary, which pays out a lump sum if they die while employed by the firm. But with many of our clients receiving bonus income as well as borrowing high multiples, these policies are often inadequate and were never designed to cover mortgage debt in the first place so a specific life cover policy is strongly advised.

Please get in touch for more information.

Adrian Anderson
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Adrian Anderson

Three things every first-time buyer should know


Buying your first home is an exciting time but it can also be daunting. Below we offer three top tips to get you started:

  1. Start monitoring and cutting back on your spending 3-6 months in advance of applying for a mortgage. Keep your bank account operating in credit or within its limit and stop high levels of discretionary spending. Also, let go of any regular committed expenditure, such as the gym membership that you don’t use. Lenders will scrutinise your bank statements to assess conduct and spending patterns to establish affordability so present yourself in the best possible way.
  2. Start thinking about the sort of property you want to buy and set yourself a realistic budget and stick to it. Consider the re-sale of the property‎. It’s your first property and your circumstances are likely to change over time, so being able to sell this property without too much difficulty will help move you on to your next move/purchase.
  3. Be prepared to take the advice of the professionals you engage with in the buying process, such as an independent mortgage broker like Anderson Harris, and don’t always go for the cheapest option. In life, you often end up getting what you pay for and if you go for a cheap solicitor, for example, you may find they are inundated with work and can’t deal with your purchase in a timely fashion.
Jonathan Harris
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Jonathan Harris

Record low mortgage rates


If you are in the market for a fixed-rate mortgage, you are in luck. Falling Swap rates – the rate lenders pay to borrow from each other – have plummeted following the Referendum and lenders have been cutting their fixed-rate mortgages accordingly.

This week, HSBC has launched a ten-year fixed-rate mortgage at just 2.79 per cent. Coventry Building Society then jumped in with a ten-year deal pegged at 2.39 per cent, although there is a maximum loan-to-value of 50 per cent. Meanwhile, Metro Bank released a five-year fix at 2.09 per cent with no product fee (up to 60 per cent LTV). Two-year fixes are cheaper still with rates starting from 1.34 per cent with a £999 fee.

While fixes are at rock-bottom, it is important not to fix for longer than you are absolutely sure about. Taking out a ten-year fix when you are buying your first flat with a friend, for example, might not be sensible as your circumstances could change significantly over the decade and you may face a hefty early repayment charge (ERC) to get out of the deal early. But if you are married with a couple of young children, a ten-year commitment during which you  have the security of knowing your mortgage payments won’t rise, may be welcome.

With all this attention on fixed rates, it’s easy to forget base-rate trackers but if you don’t need the certainty of a fix, they are worth a look. With Bank of England Governor Mark Carney suggesting that the next move in interest rates may be downwards, a base-rate tracker will not only be cheap now but could get even cheaper. Base-rate trackers start from 1.34 per cent over two years, with a £999 fee and no ERCs, so you can switch to a fixed rate at any time.

There are plenty of good deals on offer – talk to an independent professional adviser such as Anderson Harris, for more details.

Jonathan Harris
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Jonathan Harris

Anderson Harris on the FT Money Show


With a number of lenders including Halifax and Nationwide increasing the maximum age at which they will lend, is there still a place for equity release?

Adrian Anderson, director of mortgage broker Anderson Harris, is one of the few brokers who advises on both conventional mortgages and equity release. He was invited on the FT Money Show to discuss the pros and cons of each.


Jonathan Harris
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Jonathan Harris

Anderson Harris offers equity release


A rise in property values, coinciding with the low interest rate environment, has made equity release a more viable and popular solution for an ageing population, which is ‘asset rich, cash poor’.

Increasingly, we found ourselves being approached by older people who found themselves in a predicament – lenders unwilling to lend because they didn’t have much in the way of income while they didn’t want to downsize and leave the home they had lived in for many years to free up cash. We decided to enter the equity release market to specialise in arranging mortgages for high-net-worth clients as we were coming across many elderly people in London with high-value equity release requirements.

To enable us to offer equity release, I took the Certificate in Equity Release (ER1) examination with the Chartered Insurance Institute. The certificate is a practical solution that develops the understanding of the equity release regulation, products and advice process.

Specialist training is required because advising a lifetime mortgage solution is usually a far more time-consuming process than advising on a regular mortgage. The client would usually be classed as ‘vulnerable’ due to their age so in order to recommend a lifetime mortgage a great deal of fact finding is required. The decision to apply for a lifetime mortgage is often a ‘family decision’ and the borrower’s children or family members may often be involved in the advice process so that all potential solutions can be considered. The borrower should also take independent legal advice before proceeding with an equity release mortgage.

The equity release requests that have crossed my desk include a couple in their seventies who required the funds to extend the lease on their Mayfair apartment. Another elderly couple needed to remortgage as they no longer ticked the Mortgage Market Review boxes when their mortgage with a private bank came up for renewal. Another couple in their eighties wanted to explore releasing money to gift to children for their grandchildren’s school fees.

Demand for equity release is increasing and providers are becoming more competitive. An equity release mortgage is a big decision for any potential borrower and even though it isn’t a cheap solution it can still be the right one for certain borrowers.

Adrian Anderson
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Adrian Anderson

Why now is a good time to remortgage


With interest rates at record lows and some extremely competitive mortgage deals around, it is a good time to consider remortgaging onto a new deal.

Below, we run through a few factors to bear in mind:

  • Take into account the full cost of the deal, including rate plus fees. Many remortgage deals come with free legal fees and valuations, which can help keep the cost down.
  • Check your existing deal doesn’t have any early repayment charges. Many borrowers may be able to find a cheaper rate than their current one but the cost of redeeming a mortgage early can outweigh any savings by quite a distance.
  • Make sure you choose the right product. A number of clients have been asking for five-year fixes where they might be better off with two consecutive short-term fixed rates. Take advice.
  • Don’t forget base-rate trackers. Most of the discussion around mortgage rates is how cheap fixed-rate deals are. But with base rate at 0.5 per cent and no sign of it rising anytime soon, a cheap tracker can offer excellent value. Often these deals have no penalties so you are free to pay down as you like or you could switch to a fixed rate if interest rates start to rise. However, if you can’t afford to be wrong – that is, if rates rise you would struggle to pay your mortgage – then a fixed rate makes sense.
  • School fees can create a huge problem for borrowers as banks no longer regard them as discretionary spending but as a full credit commitment like a car loan or credit card payment. The pressure this puts on the affordability calculation can be massive and throw off some borrowers by hundreds of thousands of pounds that they would have been expecting to be able to borrow. The best advice is to speak to an independent broker before applying for a mortgage as lenders view school fees differently, with one lender taking a very dim view on affordability and others looking more closely at how long these fees have left to run. In some circumstances, if the borrower can show significant enough assets to cover the fee commitment for a period of time then the lender will take this away from the calculation altogether. Alternatively, if there are large bonuses these can be used to cover the commitment.

It is worth speaking to an independent mortgage broker such as Anderson Harris, as criteria are tighter since the Mortgage Market Review was introduced and if you haven’t taken out a mortgage for a few years, you will find that you will be asked many more searching questions regarding affordability.


Adrian Anderson
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Adrian Anderson