Welcome to the brokers blog; where we discuss the latest developments, common queries, spurious sources and the sublime, ridiculous and esoteric aspects of the mortgage industry.
Can someone over the age of 75 go on a mortgage?
Occasionally we are asked if we can arrange mortgages for elderly, or retired people of age 70, 75, 80 or even 90.
That will depend on the circumstances: whether the mortgage is for a buy-to-let or Residential property, if it is a joint application and if the income of the older applicant is necessary for affordability.
Most lenders for buy-to-let mortgages will have a maximum age of up to 80, but some have no maximum.
For Residential mortgages, where the income of the older applicant is required in the application, most lenders will not go beyond the age of 75-80. Many may be even more restrictive.
If it is a joint application with a younger applicant who can afford the mortgage in their own right, then some lenders will ignore the age of the other applicant entirely.
Other products available to seniors, such as ‘Lifetime Mortgages’ and ‘Home Reversion Plans’, may be more suitable, which work in very different ways to traditional mortgages and require specialist advice.
It is important to remember that all applicants on a mortgage would be responsible for the payments regardless of whether their income is used in assessing the case.
Therefore, as part of the advice process, we would consider arranging protection in case of death, illness or injury to either party.
To get expert advice, call 0345 4594490 or fill in our short enquiry form.
Whilst it remains unclear how close we are to a collapse of the Euro, one thing is clear; predicting how the fallout would affect financial markets is no easy task, even for seasoned financial experts.
In pure mortgage terms, one set of products appears to be particularly risky in the current market; is any which tracks a variable rate as opposed to the Bank of England base rate. These include discounted rates, variable rates and Libor-linked or Libor-rate deals.
All of these products could be subject to increases if the Euro collapsed, even if the monetary policy committee of the Bank of England decides to keep interest rates low.
When the BOE base rate was reduced heavily in 2008, many lenders did not pass these cuts into their variable rates for some time; as doing so would have seriously jeopardised their ability to remain afloat.
Similarly, in the scenario of the collapse of the Euro and or the default of a nation such as Greece, Spain or Italy, this would undoubtedly cause a similar crisis in the banks leading to a drying up of money markets and upward pressure on banks’ variable rates.
Most discount-rate mortgages are offered by smaller building societies, which typically have a much lower risk exposure and would be better insulated against having to raise their variable rates significantly in a similar scenario. However, they are not immune to this risk.
More concerning, though, are Libor-linked deals; these are linked to the going rate of lending between UK banks and could rise a lot if we saw more market turmoil.
Even so, tracker deals could still be a risk; who knows how the different repercussions of this kind of event could ultimately play out?
So when looking at current products, comparing the difference between fixed and variable rates, in general, is well worth doing. I would take a pragmatic approach where the difference is minimal, as it seems likely that the last string of bailouts may yet prove to be the tip of the iceberg.
If you have been considering fixing your mortgage by remortgaging to a new deal, then now might be the prime time to do it.
Fixed-rate mortgages have been dropping steadily for several months with the expectation that interest rates in the UK will remain low in the long term.
However, the downgrading of several major banking groups in the UK by the rating agency Moody’s last week is likely to put pressure on the big UK mortgage lenders to increase the cost of these deals.
It could be a flash in the pan, rates were beginning to rise early this year when the economic outlook was less gloomy, but the effects of the Tsunami in Japan and the subsequent concerns over the Eurozone were enough to revert the trend.
What is certain, though, is that there are fixed-rate mortgages available which are several per cent lower than the average mortgage interest rate paid by borrowers over the last 25 years; so if you are concerned by the possibility of higher rates and don’t have too much to lose by switching to a fixed-rate deal; there have certainly been far worse times to take a fixed rate.
We have recently launched the first of several new mortgage calculators, which aim to provide much more sophisticated systems for borrowers to assess their lending ability online.
The most important of these new calculators is the maximum loan calculator, which models some of the more complex systems for affordability lenders are using to assess customers borrowing potential.
Lenders are increasingly stepping away from using pure income multiples, and the large high street banks and building societies now consider many factors: including credit scoring, the number of financial dependents and overall debt-to-income ratio, to decide on an appropriate borrowing figure.
The calculator is (as far as we are aware) the only one currently available which illustrates how different types of lenders’ calculations vary, taking into account dependents, existing credit commitments and credit scoring.
We have several more new tools in development, soon to be added, so keep an eye out for more coming soon.
It has been a long time since we’ve had significant news about new products; this morning, Kensington Mortgages announced one of the most significant indicators to date; that mortgage lending is returning to normality.
Their new buy-to-let product range is available up to 85% loan-to-value even for first-time landlords; although the arrangement fees on the 85% product are 2.5%, it is still a step forward for buy-to-let landlords.
It is available on up to 3 properties, with an interest rate of 5.99% fixed for two years, and a portfolio maximum of £1 Million or three properties on the product.
Rental coverage requirements are also lower than the competition, with a rental yield requirement of 120% coverage at the pay rate; this should help to ensure that the products are viable.
The range also allows first-time landlords into the market at 80%, and at this loan-to-value, there is a flat fee product option in addition to the 2.5% fee option, which will work well for those borrowers with higher property values.
The products are available for purchase and remortgage; however, they are only available for properties in England and Wales and have a minimum income requirement of £25,000 or £30,000 above 75% loan-to-value.
For more information on these products, please call one of our mortgage advisors on 0345 4594490.
