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If you have an interest only mortgage now could be the time to consider switching product before the window closes.

In the last two weeks both Natwest and Coventry Building Society ceased offering interest only mortgages for residential property following on from Nationwide’s decision to do the same some time ago.

Add to this the vast number of lenders who have restricted interest only borrowing to less than 75%, 66% or even 50% of the property value and the market for these mortgages is now stricter than ever.

Borrowers on interest only mortgages currently sitting on their lenders variable rate should consider changing their mortgage to a new product now before the market contracts further.

With the FSA’s announcement that interest only lending would become part of their mortgage market review following the credit crunch many lenders have reacted in a kneejerk fashion eliminating the option for customers with a suitable repayment strategy to refinance their loan regardless of the plausibility of their circumstances.

This is already creating a large number of mortgage “refugees” unable simply due to lenders criteria to arrange a new mortgage and who then become trapped on a variable rate without the option to move.

Whilst this may not be the end of the world whilst the Bank of England Base Rate is low it could result in thousands more repossessions in the event of the collapse of the Euro.

This scenario would almost certainly see wholesale increases in lenders standard variable rates which many borrowers might find too large to handle.

For those in the last years of an interest only mortgage or perhaps even half way through with a borrowing of more than 50% of their properties value waiting too long to consider a move to a new product could see them shut out of the market in the long term.

Of course for those borrowers without a suitable strategy for repaying an interest only loan then this should be the right time to think about switching either to a full repayment mortgage or if investment’s such as endowments are not performing and predicted to fall short of requirements whether a part repayment and part interest only loan could be suitable.

For more information contact one of our whole of market advisors on 0845 4594490

85% loan to value Buy to Let mortgage products released by Kensington

It’s been a long time since I have had anything significant to write about in terms of new products, but this morning Kensington Mortgages have announced what must be one of the most significant signs to date that mortgage lending is returning to some sense of normality.

Their new buy to let product range is available up to 85% loan to value even for first time landlords, and although arrangement fee’s on the 85% product are 2.5% it is still a major step forward for buy to let landlords particularly as it is available on up to 3 properties with an interest rate of 5.99% fixed for two years and with a portfolio maximum of £1 Million or 3 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 required and this should help to ensure that the products are viable . The range also now allows first time landlords into the market at 80% and at this loan to value there is a flat fee product option as well as a 2.5% fee which will work well for those borrowers with higher property values.

The products are also available for both purchase and remortgage however they are only available for properties in England and Wales, have a minimum income requirement of £25,000 or £30,000 above 75% loan to value.

For more information on any of these products please call one of our mortgage advisors on 0845 4594490.

Hope for the Housing Market

A recent report by the Council of Mortgage lenders has revealed that the number of homes repossessed in the UK fell by 7.5% in the first three months of 2010. Home repossession is one of the ultimate fears for any homeowner, and the fact that the figure is falling is perhaps proof that the finances of the nation have recovered a little.

In terms of the actual number of repossessions that figure fell from 10,600 homes in the final three months of 2009 to 9,800 in the first three months of 2010. Most encouragingly that number was 26% lower than the same period in 2009 when an enormous 13,200 people lost their homes.

The CML said that the biggest factor in the drop of repossessions was the drop in the interest rate. In March 2009, partially in response to the rising number of people losing their homes, the Bank of England dropped its base interest rate to 0.5% and has kept it there ever since. This meant that many people who were looking at the precipice, even those who found themselves unemployed, were able to claw back some of the arrears on their mortgages.

On the back of these positive figures that CML has said that it may revise it’s original forecast of 53,000 repossessions for the year should there be no further problems with the economy.

The news did, however, come with a warning from the CML. If interest rates were to increase, it warned, many hundreds of thousands of people could find themselves struggling to meet higher repayment costs and therefore find themselves facing the prospect of repossession. It warned that it was imperative for the BoE to keep the rates low for as long as possible, even in the face of rising inflation.

Mortgage Interest rates have however fallen to record lows for those customers with a sizeable deposit and good credit history. The personal loans market is also improving steadily with Santander’s flagship product for existing customers having a typical of 8.9%, and secured loan rates also falling to levels more in line with previous years.

At the end of the day the news from the CML is positive, though there is the warning that things could deteriorate at any moment and we should not forget that even though the numbers are dropping, nearly 10,000 people lost their homes in the first three months of this year, the economic crisis, whatever the figures may say, is very much still with us.

New Mortgage lenders start to fill the adverse & sub-prime mortgage market again.

Over the past few weeks new mortgage lenders have been popping up at quite a pace, with Platform Igroup and Kensington all returning to the market after considerable time away there is at last some possibility for clients with less than perfect credit history to obtain new mortgages although loan to value limits are still strict.

These lenders maintain adamantly in the press that they are lending to prime borrowers only however the truth is that they are lending to customers who would have been considered near prime or very light adverse in the days preceding the credit crunch.

To boot this week also saw the announcement that Aldermore mortgages had opened its doors to the main intermediary marketplace for both residential and buy to let loans, as well as Precise Mortgages adding further new options in the Buy to Let mortgage marketplace.

Kensington and Igroup in particular have filled the much needed whole between highly competitive high street residential mortgage rates and ultra high adverse rates offered by the likes of Platform and Cheshire Mortgage Corp. They have rates ranging between the 4-6% mark which are much more palatable than 8% plus offerings from the other two.

For further information on any of the products from these new lenders speak to one of our independent mortgage brokers on 0845 4594490

80% Loan to value buy to let mortgages return from the mortgage works.

Mortgage Interest rates continue to creep slowly downwards towards the current bank base rate of 0.5% and it’s clear to mortgage brokers that while the range of products on offer in the market currently is still a major factor preventing true growth in the property sector particularly in buy to let, It is still very encouraging to see the mortgage works increase their maximum loan to value for buy to let mortgages to 80%.

The new products are quite competitively priced and so this reduction of minimum deposit size is one of the few examples of lenders returning to a competitive spirit since HSBC announced their 2% tracker rates more than a year ago.

Fixed rates are available from 4.69% with a 2.5% arrangement fee, 5.69% with a 1.5% fee and 5.79% with a £1795 arrangement fee and a 5% early repayment charge during the initial term of the product. Standard legal and valuation charges would apply.

A lending limit of £350,000 at this LTV will reduce the popularity of the product in the south east but should help to ensure that TMW are not saturated with new business, and it is likely that this too will be increased in the not too distant future.

For further information about these products please speak to one of our mortgage advisors on 0845454490.

Mortgage Broker Q&A – Is it safe to use small regional lenders or would I be better protected borrowing from a larger bank?

This is a really interesting question for me as it crops up quite a lot however it’s important to remember that borrowing from a bank is not the same as depositing money into it.

Firstly on the reasons you should use small regional lenders, they are currently leading the market in terms of mortgage and savings rates and you may well find their customer service slightly less like dealing with a brick wall! There really are some cracking products being delivered by small regional lenders at the moment and there is really very little reason to shy away from them.

If you were a mortgage borrower with an institution that failed then there would be very little likely-hood of the administrators coming round with repossession orders even if the law permitted them to do so (which I am pretty sure it doesn’t but I am not a solicitor), because selling an entire loan book would be ludicrously complex and probably produce a much lower return than simply selling the book of loans to another institution, something which is in fact very common trading by Banks anyway.

Even in the event that there was no one forthcoming to purchase the loan book, the administrators would simply let the book run and pass administration to an outsourcing firm – again quite common.

The government currently in power has made it clear that it will not allow any financial institution in the UK to fail regardless of its size. The FSCS or Financial Services Compensation Scheme currently does not discriminate between the size of institutions either so as long the provider is a part of this scheme and falls under UK regulation this is not affected.

Woolwich announce new low fee fixed rate products up to 75% loan to value

The Woolwich announced several new fixed rate products yesterday which herald the return of low fee sensible rate mortgage products to the market at what will surely prove to a pivotal moment in the UK’s turn from recession to recovery.

The rates which include a 2 Year fixed at 3.89% available up to 70% loan to value and at 4.09% up to 75% loan to value have an application fee of just £199 with free valuation and legal work on remortgages or £200 cash back towards legal costs if using your own solicitors. Early repayment charges apply of 3% of loan to be paid until 31/01/2012, and APR for the products is 2.8% On both.

They have also included a 3 year fixed product at a similarly competitive rate.

This is a big departure from the glut of products currently offering headline rates with either £995 or even 2% arrangement fee’s and will surely serve to kickstart the lending industry back into competitive pricing with more than just on paper rate cuts.

The products are also available on new purchases and equally competitive there although the lenders standard valuation and legal fee’s will apply on purchases.

Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice although you do have the option to pay up to 1.5% of the loan amount. Some buy to let and commercial loans are not regulated by the Financial Services Authority.

Woolwich respond to criticism with revised rates

The Woolwich have responded to criticism around their stepped tracker rate which with a current headline rate of 1.98% is one of the lowest rates available in the market. I commented on the fact that the product was restricted to mortgages between 200K and 500K severely limiting its market when I announced the new rate here a couple of weeks ago, theses restrictions have now been removed and the rate is available for loans between 5K and 1 Million now from today.

They have not chosen to address however the lengthy tie in for five years with a 2% early repayment charge which could make the product very costly in the long term.

Instead they have released a new lifetime tracker at bank base rate +2.29% with a £999 application fee available up to 70% loan to value or at +2.69% with no fee again to 70% loan to value. The new products have early repayment charges of 1% for 2 Years making them much more favourable but crucially both allow you to switch to a later fix without penalty too.

Both products would have a valuation fee of £295 for a purchase at 70% loan to value with a mortgage of 100K and lender Conveyancing fee of £126 giving an APR of 2.9% and 3.3% respectively.

As usual always read the separate Key Facts Illustration prior to making a decision on a mortgage product and to speak to a mortgage advisor call 0845 4594490.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice although you do have the option to pay up to 1.5% of the loan amount. Some buy to let and commercial loans are not regulated by the Financial Services Authority.

Alliance & Leicester reduce 2 Year Fixed rates

A&L have announced further rate reductions yesterday on their 75% loan to value 2 year fixed rates for new purchases. The new product with a £995 fee and fixed rate of 4.53% sits alongside their 4.48% product with a 1% arrangement fee.

The new rate brings them once again into line with rates from the Abbey however the product will be of potential benefit to those who have recently gone self employed or started a business as A&L require only 1 Years accounts minimum against 2 from the Abbey. It also has a free valuation much like Abbeys three year fix at the same rate.

The move continues the trend of lenders moving their products down to a similar baseline but with no one currently undercutting the market significantly unlike what we have seen with variable rates from HSBC and the Woolwich although swap rates have not dropped in the same fashion as 3 month LIBOR which fuelled the reduction in variable rates.

The new rates have an APR of 5.1% and reversion rate currently stands at 4.99%. Early repayment charges are 3% of loan to be paid until 31/12/2011 and lenders Conveyancing fee is typically £189.

Always consult the Key Facts Illustration prior to making a decision on a mortgage product and seek independent advice. To speak to a mortgage advisor call 0845 4594490.

Alliance & Leicester reduce 3 year fixed remortgage rates

Alliance & Leicester have announced a reduction to 4.88% for their 3 year fixed rates up to 70% loan to value with either a 1% or £995 arrangement fee. The rate then reverts to 4.99% currently giving an APR of 5.2%.

Valuation fee’s are refunded on completion up to a property value of £1 Million and would be £280 based on borrowing of £100k at 70% LTV. Applicable fee’s are lenders Conveyancing fee of £189, Telegraphic transfer fee of £30 and early repayment charges of 3% of loan to be paid until 30/11/2012.

Whilst this brings them into line with offerings from Abbey it is still some .4% off the current products on offer from the Woolwich.

As usual always consult a Key Facts Illustration before making a decision about a mortgage. For further information on this product or any others please contact us on 0845 4594490 to speak to a mortgage broker.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice although you do have the option to pay up to 1.5% of the loan amount. Some buy to let and commercial loans are not regulated by the Financial Services Authority.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT. YOU DO NOT HAVE TO PAY A FEE FOR OUR SERVICES AS WE RECEIVE COMMISSION FROM LENDERS. SOME BUY TO LET AND COMMERCIAL LOANS ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY
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