Question; I have a joint mortgage currently; we want to change it to being solely in my name or my partners; what do we need to do?
Firstly you need to establish whether your existing mortgage is still within any tie-in period and what penalty for early repayment may apply.
Then you need to check with the lender whether they are happy for the mortgage to transfer to a sole basis, which will mainly come down to their assessment of whether it is affordable to you as a single applicant.
They will re-assess the affordability of the case as if it was a new mortgage. If they are happy you can afford it alone, then the land registry and title will need amendment and a new mortgage contract issued.
That process will require a solicitor or conveyancer to act; you will have to pay for a transfer of equity, usually costing a few hundred pounds.
Depending on the size of the mortgage and the property valuation, it is possible stamp duty may also be chargeable. You should consult your conveyancer on this aspect, as it is a complex field.
However, if the lender is not satisfied the loan is affordable to you alone, they can refuse to remove a party from the loan. That would mean finding a different lender and paying any early repayment penalties to change if a suitable option is available.
If an early repayment penalty is due to end within a few months, you may be able to arrange this as part of a normal remortgage and defer completion until the penalty ends. If it ends more than six months from now, or if you require the release of the other party sooner, you have to pay any applicable penalty.
As well as affordability, the lender will usually re-assess you as a credit risk and possibly the property value.
If you are considering transferring a party from a loan due to bankruptcy proceedings, the solicitors will be made aware of this, and the transfer will not be possible.
As usual, if you need further information about this call 0345 4594490 to speak to a mortgage advisor about your circumstances.
Question; I intend to move out and let my property with a residential mortgage on it; what should I do, and is this ok?
Firstly, it’s a typical condition of almost all residential mortgage contracts that the property is not to be let without the lender’s consent. So you should always speak to your lender first and see what they say.
Most lenders will be relatively helpful with this; there are numerous reasons people choose to let what was once their home, and it’s a common occurrence.
Some lenders may want to change the mortgage contract to a buy-to-let type; others may change nothing until the current mortgage is out of its initial term.
A lender is unlikely to give you a positive response if you only entered into your mortgage contract very recently. If they did, few people would bother paying the higher interest on a buy-to-let mortgage and would take a residential mortgage and switch it a week later.
You will also need to look at your buildings and contents insurance; it will likely invalidate your policy if you are not the primary occupant.
Tenants are more likely to ruin a property than the owner, so your home insurance may be a little more expensive.
You also need to make sure you comply with all the regulations around being a landlord as regards gas inspections and using a secure tenants deposit scheme to avoid any litigation in the future. You should also investigate if any licensing schemes are applicable with your council.
As usual, if you need further information about this call 0345 4594490 to speak to a mortgage advisor about your circumstances.
When a mortgage broker arranges a mortgage for a borrower the commission they receive (if they take the commission as opposed to a fee) is not standardised but there is however only a limited difference from lender to lender. Typically the percentage is about 0.3 to 0.35% for a residential mortgage with good credit, 0.40 to 0.45% for buy to let mortgages, and slightly higher for adverse credit applications.
Why then are several banks, one of which I won’t name but is almost entirely government owned (guess who?) is loading rates available via intermediaries by anything up to 1% against an equivalent product available through them direct? If these lenders are proposing that it costs them more to accept intermediary applications this is farcical.
They may argue that the intermediary market would simply direct too much business to them which they don’t have funds to supply. This is plausible but I think it is actually pricing intermediary products out of the market to attract business from consumers direct who can then be goat herded into higher rate products with down valuations and clandestine credit scoring, or even lower rate products with ridiculous fee’s which are more expensive in reality. Without a broker to argue the case and guide on fee’s most people will simply accept being cascaded to a higher rate without asking difficult questions, or being declined an application having paid for valuations and the like.
I want someone to actually put the question to these banks, how is this rate loading fair practice and why is it in place? Because to the educated it seems to be the intention to get mortgage advisors out of the market so that dodgy products can once again be sold in bulk. Just look at the return of long early repayment charges on market leading rates as a sign that lenders are looking for ways to lock customers into potentially crippling mortgage rates.
I wrote an article some time ago about the FSA’s proposed changes to end self-certification and fast-track mortgages; I made a big point about how this could leave many people struggling to refinance and cause trouble for the recovery of the housing market.
The FSA confirmed last week that they would take action; the press has been making similar observations to my own today about the impact any regulation could have on our recovery and those borrowers with an existing loan of this type.
But over the weekend, I had a realisation; and made a U-turn on the subject. In reality, there are few legitimate borrowers who cannot “prove” their income.
The point is that the word “proof” and its interpretation is the key detail. Almost all people can show evidence that the income they declare is broadly accurate; they may not be able to prove income in the manner that a traditional full-status mortgage would require.
For example, if you have a business from which you could take far more income than you currently do without running it into decline, that is your prerogative.
You should still be able to evidence in a suitable way that your business has the potential for you to take further income and that the loan would then be affordable.
It may not be satisfactory at your local building society now, but lenders with good product development teams will soon see how to create a new type of product to cater for this market once their appetite comes back.
So if the FSA gets this legislation right and does not dictate or define what proof consists of, then there will still be the opportunity for lenders to market products for those with non-standard income, priced above full-status products as before but simply requiring some evidence to back up that the income declared is not a total fabrication.
The FSA just need to be careful not to try and make this legislation so watertight that it chokes the housing market to death.
There have been so many new rates announced over the last two weeks it hasn’t been possible for me to talk about them all.
Suffice it to say, if you are remortgaging or buying your first or second property, rates across the board have dropped by as much as 0.3%.
Arrangement fees also seem to have reduced, with several of our broker best buy products now having arrangement fees below £600, against an average of £999 for most headline rates a few weeks ago.
Swap rates have dropped significantly since the massive drop in BBA LIBOR over the past two months; this has helped fuel cuts in fixed rates; there still seems to be a general lack of movement on rates at higher loan-to-values for borrowers looking to remortgage.
Fixed rates at 85% loan-to-value; for example, continue to sit around the 5.99% mark with little movement.
It will be interesting to see who makes the first move on this market of higher loan-to-value remortgage borrowers (if indeed there is any drop at all); it seems almost as if the pot is so big that banks are scared to dip their toe in the water in case they get swamped.
It certainly can’t be claimed that a remortgage at 85% is a greater lending risk than a purchase at the same loan-to-value, yet you could get a much better rate if you were buying at this LTV.
Mortgage Advisors will be keeping their eyes peeled for changes on these higher LTV products; hopefully, the news that interest rates are likely to remain low in the long term will help to drive swap rates down further and one of the big banks into releasing some decent remortgage rates for those with little equity.
And if you’re listening, a 95% purchase product wouldn’t go amiss either!
