Blog Archives

How to protect yourself when buying a home with a partner

21.02.2017

With such a gap between property prices and income it is highly likely that most people will end up buying their first home with someone else – whether it is a partner, friend, parent or sibling. Two incomes and two deposits will mean your money goes a lot further.

However, there are issues to bear in mind when buying property with somebody else. In terms of the mortgage itself, all the typical issues around affordability and meeting the lender’s stress testing still apply. Lenders will look in great detail at each applicant’s income and expenditure, especially fixed outgoings such as personal loans and credit cards. It makes sense for those buying to ensure their finances are in good order before making a mortgage application.

The other issue is that with a joint mortgage the liability for each borrower is joint and several. This means that the lender can pursue each applicant individually and jointly if the mortgage falls into default so if your buying partner doesn’t pay their bit, you are also responsible for it. This element, combined with the affordability issues, means that if a couple split up or a friend wants to go their own way, the lender will need convincing that the remaining borrower can afford the mortgage before the other party is relieved of their obligation. There will also be considerations of buying the other party out and the potential need to release equity to do this. There are plenty of potential pitfalls so applicants need to consider these before committing and seek independent mortgage advice.

Jonathan Harris
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Jonathan Harris

Mortgage lending at its highest since 2008

20.11.2015

The mortgage market goes from strength to strength with the highest monthly lending figure since July 2008, according to the Council of Mortgage Lenders. Mortgage brokers are certainly busy as borrowers increasingly turn to an intermediary to help navigate the post-Mortgage Market Review world with its many challenges. Those who can jump through all the necessary hoops will be rewarded with some very competitive rates indeed – a trend which shows no signs of abating as lenders vie for business and interest rates look set to remain low.

The biggest challenge for borrowers is meeting lenders’ affordability criteria, as property prices continue to rise in many areas while wages fail to keep pace. First-time buyers will find it difficult to get themselves in a position to buy unless they have assistance from the Bank of Mum and Dad. This should keep a lid on the market and ensure we don’t return to runaway growth.

Jonathan Harris
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Jonathan Harris

The growth of the £1 million mortgage

05.10.2015

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

Easter house hunting: how to make it easier to get a mortgage

21.04.2014

Easter is traditionally one of the busiest times of the year for the housing market so if you are house hunting this weekend, it’s worth doing some groundwork beforehand. Property prices are steadily rising, especially in and around London, as there is little stock on the market. This means it is very competitive out there.

There is also growing concern among buyers that the Mortgage Market Review will may make it harder to get your mortgage approved. However, there are some things you can do to help yourself:

1) Get your finances in order:

  • Lenders are now thoroughly checking your expenditure versus your income.
  • Preferably at least three months before starting an application you should rein in your spending.
  • Lenders will be looking to see whether you can still afford your mortgage when interest rates rise.

 

2) Credit check yourself:

  • Check your credit rating with Equifax and Experian, as a poor credit rating can severely dampen your mortgage plans.
  • If there are any mistakes, you can get them corrected.
  • Knowing the full extent of any problems in advance can help brokers tailor their advice accordingly.

 

3) Pay off outstanding debts:

  • Pay off any outstanding debts if you can, as this will maximise the amount you can borrow.

 

4)  Act as though you already have the mortgage:

  • Banks are more concerned with your spending history as opposed to what you say you’ll do in the future.
  • Most lenders will require your past three months pay slips and bank statements to check up on the information you provide.

 

An independent mortgage broker can help with all of these. In our experience, the sooner we speak to a client, the sooner we can give them advice that is tailored to their particular circumstances. While banks offer in-house ‘advisers’, they can only offer you the bank’s products, whereas Anderson Harris can go through all the options.

Adrian Anderson
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Adrian Anderson

Why opt for a middleman when arranging property finance?

07.11.2013

With property prices continuing to rise and activity in the housing market flourishing, Anderson Harris is busy working through some very complicated mortgage applications. Many of these deals would not have stood a chance of being considered without the level of knowledge and perseverance that is being applied to them.

Why are we telling you this?

Many of our clients are wealthy but typically short of the time needed to demonstrate that wealth to the point where banks are persuaded to lend to them. So while on the face of it a client’s wealth should convince a lender that they are a good risk, some element of proof is required.

Private bankers are busy and do not always have time to assess new enquiries properly if they are approached directly.  Fortunately the bankers know us well and know that if we introduce a client to them, we have already done our due diligence. If we propose a client to them, it’s because we believe they are the best fit for that client.

We spend a lot of time with clients, really getting to understand their financial position. Clients do not always want to provide documentary evidence of their assets, while for banks this is pretty much a prerequisite. We are able to draw the relevant insight from our client discussions and present this in a manner which is acceptable to the bank. We cut down on time wastage both for the client and the bank. We tease out the salient financial points, so that the banks feel more comfortable.

The value of our broking skills and connections with the private banks are making some tricky-looking applications a possibility and at the same time increasing the success ratio of obtaining a mortgage for our clients, with less hassle.

It is not only the private banks who are worth considering. A number of high-street lenders are producing large loan offerings which may suit the client better. We can advise whether this is the case and direct your application accordingly. Contact us for more information.

Adrian Anderson
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Adrian Anderson