London Mortgage Brokers | Just Us Mortgage Brokers

Here it is, the annual awards for the most preposterous mortgage moments of the previous year. Of course this is a very keenly contested award, with lenders and life providers going to great lengths to outdo each other.

Frankly, these guys are EXPERTS in their fields. These below are really just a pick of some truly outstanding, jaw dropping moments of 2011.

5th Place: Lender requires proof of maiden name (client been married for 3 years). Old passport (unacceptable as out of date) only remaining document they will accept – GUN LICENCE. Thanks.

4th Place: Us: Client has 100k basic salary 300k bonus. Lender: Crikey that’s a lot of overtime. Us: It’s a bonus – NOT overtime. Lender (in Geordie accent, clue!): What time does he clock in like? US: He does not earn 300k in OVERTIME!

3rd Place: Mortgage underwritten. Valuation done. Sits in a queue for 10 working days to be looked at. 2 minute check – yes, all approved. Just need to press print for the mortgage offer. How long does that take? ANOTHER 16 working days!!!

2nd Place: Exchange of contracts takes place on Friday, with Completion set for following Friday. On Tuesday the lender calls to WITHDRAW the mortgage offer. Pandemonium. Chaos. Easily the most stressful moment. No resolution from lender. Next morning, customer service questionaire arrives from them in the post. I PROMISE you this is true!!

1st Place: Call life provider. Us: Hello can you tell me how much life insurance this client has please? Life Provider: No problem – what is his date of death? Us: Er, he’s not dead – just want to know how much he’s insured for. LP: We’ll need a date. US: OK lets say it was yesterday. LP: So he is dead after all? Aaarrrrggghhhh!!!!

That’s it – frankly this sort of madness takes place every day. All of the above are anonymous but true examples of what we deal with. We don’t doubt for a moment that these situations will continue in the future.

Just Us Mortgages – London Mortgage Brokers here to provide YOU with customer service in 2012!

One of the side effects of an exciting recession is the plethora of government reports and inquiries into our misdeeds. Isn’t it amazing how much naughtiness everyone can get away with in the good times only for it all to catch up with up later?

MPs, Bankers, Journalists, Europeans, Americans, Banks, Gordon Brown and now Jeremy Clarkson. How on EARTH have estate agents not come in for a bashing yet??

And let’s be honest, we’re up that creek without a paddle, the proverbial has hit the fan and the tide has come back in and now we can see who’s lost their trousers.

And so on.

So it seems that the Vickers report, with good old Vince Cable ramming it down our throats, seems to be driving home some great messages about how UK mortgages should look in the future. It seems we’ve made a lot of terrible mistakes, lending became too lax.

So some good principles, enforced across all lenders will make lending more robust and help prevent any trouble in the future.

When I first looked at this I thought – good news really.

Then my brain kicked in. What is really going on here and who are the winners and losers? The answer is sadly predictable.

No doubt the last economic cycle saw lending get really relaxed, at the end. But only at the end. Property is either too expensive, sometimes too cheap and for a nanosecond every now and then…the right price.

What all these reports, ideas, regulations and laws fail to grasp is that in the war between politicians, bankers and Europe lies the (mostly) innocent bystander.

The lot who want a mortgage so they can own a home.

These new draconian laws represent several steps backwards. There are only losers as far as the general public are concerned.

STATEMENT:You MUST have a repayment mortgage or demonstrate a “suitable” repayment vehicle.
ANSWER: Whose definition? WHY? You are aware I will earn more in the future? (NO!)

STATEMENT: You MUST be able to afford your mortgage in 5 years time if interest rates go unto X%.
ANSWER: Think 5 years ago. If you knew what was going to happen in 5 years time, would you have had the courage to tie your shoe laces up, let alone buy a property? Who knows what the future holds?

It’s all rather dreary really. The politicians pick on some easy targets with some (at least hopefully) well intentioned ideas, which as usual are not well thought through.

The Banks just devolve their centres to India, South Africa and so forth to reduce costs and make more profits. They are not interested in listening to an individual case, just follow drop down logic as to whether they will lend or not.

OK so lets admit it, the following wasn’t great: Lend 125% of the value of a property, borrow the money FROM “the markets” via securitisation @ 7% and LEND it @ 5.39%. A business bound to go bust. Good old Northern Rock.

Idiotic lending from banks, lending money they didn’t have, has already been addressed by market forces. They couldn’t do it today, even if they wanted to.

These new laws don’t and won’t hurt the billion pounds profits of banks, they will hurt the consumer, the (mostly) innocent bystander / homeowner / first time buyer / home mover /mortgage prisoner.

To be continued…

Santander this week launched into the UK buy to let market. This is great and exciting news.

Firstly it re-inforces the message that the UK property market is a safe place to invest and to lend into. Santander obviously are eyeing up some profits and good for them.

It will come as a surprise bearing in mind our overall feelings towards the banks, but we actually really like Santander. Whilst they have over the last few years centralised their centres (and there have been some moments along the way!) on the whole this has worked well.

You can talk to people at Santander. Real people. With brains. This makes a real difference when you are looking to get the lending decision you want.

Furthermore, whilst there have been some delays on this launch (ahem!), Santander are using their online system for Buy To Let. Usually on a new product launch from a lender we revert to some archaic paper based system, documents in the post and all that nonsense. This shows from them, commitment to the market and a grown up approach.

So seriously – thumbs up this week for Santander. This may be a gentle launch in terms of loan to value and rates, but we are excited by what it represents. We’ll see some buy to let action in London from Santander in 2012.

Footnote: There is of course an old industry joke that Santander have been doing buy to let for years – they just didn’t know it

With impending European gloom and bank stocks bumping along the bottom – things don’t look great right now.

The 2008 crisis saw UK lenders hammered and it’s quite possible Credit Crunch mark II is arriving swiftly.

At that time, those who acted before the disasters unfolded reaped the rewards.

You must know the stories? The friend who tells you that their cleaner now costs than their mortgage? Or the Buy to Let investor who has a rate of 0.51% BELOW base rate? (I know one of these who had 5 properties on this rate, and he got irate when the bank charged him a fee to collect the direct debit!)

Sadly these sort of rates are consigned, for the foreseeable future, to history.

However there are still some great deals out there.

But don’t be fooled. Just because the Bank of England base rate isn’t moving anytime soon, doesn’t mean that lenders won’t hike their rates. In fact there are already signs that they are doing just this.

So is this the moment to get a rate secured? We say yes.

That doesn’t mean you have to complete on the remortgage right now. A mortgage offer will be valid for between 3 and six months. In the latter category include Woolwich, ING Direct, Accord mortgages and Coventry Building Society.

Here’s a final example for you. In January, we found a client a deal, with Santander, of 3.79% fixed for two years. The client wanted to raise some funds for some work to the property, which then didn’t go ahead. Last week they contacted us again – the work is back on. But the rate we found them (their circumstances have NOT changed) is 3.09% fixed for two years again with Santander.

This is typical of how much rates have improved over the course of this year.

We think they could easily get that much worse over the coming months.

So, London, if you’ve got a remortgage coming up over the next six months, now is the time to act.

Phil Anderson's 18 Year Cycle

Have you had a look at London property prices and the rental yields recently? I did last week and was surprised by the results (although I shouldn’t have been). The reason I did look was due to the surge in buy to let applications that we have been working on recently.

Since the credit crunch has bitten, property transactions have fallen. However, London is still a busy place, with a lot of people and a static number or properties. So the demand has moved from buying property to renting property. (Due to lending constrictions and so forth).

Lots of demand on rental property leads to competition and increasing rental prices. Ask anyone who has tried to rent a property recently. It is frenetic!

So whilst London property prices are probably around or below their 2007 peak, rental prices have surged, which in itself leads to an increase in rental yields.

The final part of the equation is lending. With Bank of England Base rate at 0.50%, and predicted to remain low for quite a while, buy to let mortgages have followed downwards.

The Buy To Let sector has long been seen as the market of choice for most lenders. Some reasons behing this:

1. It’s a high margin business (rates & fees).
2. A high deposit is required, giving additional security to the lender.
3. Its a lower volume business, meaning lenders can control their restricted lending facilitys.

For example, Woolwich last week launched 3.88% 2 year fixed buy to let rate (£1999 arrangement fee, 4.10% APR).

So if you can find a rental yield of more than 4.10% you should in theory be in a positive cash flow situation. With lower property prices and higher yields, this is not as difficult as it once was. Which as I said, surprised me, even though it shouldn’t have. We do, after all, believe in the attached clock.

London’s Buy to Let mortgages will be big news in 2012 and beyond…

After two years of banks of miserly funding for first time buyers, rates have dropped recently to seemingly more competitive levels.

The days of requiring a 20% deposit even before a bank would talk to you are slowly disappearing.

Barclays (Woolwich) this week launched a 90%, 3yr fixed at 4.99%, with no arrangement fees. (Overall Cost for  comparison 4.3%APR.) Not only is the rate good – sub 5% really is a new barrier broken, but also the arrangement fee helps. (Although really a first time buyer could be helped in different and more innovative ways than this).

So availability has grown and there are now over 200 mortgages at 90% loan to value. This really does represent some much wanted competition in this market.

Back in 2010 mortgage brokers report that the average 90% rate from the whole of the market was 5.87%.

This extra serious competition can only be good for the market and a much needed helping hand for London’s first-time buyers.

Attempts by property purchasers to buy property and avoid paying Stamp Duty Land Tax have been on the rise in recent years and all over the news in recent days.

A quick google search for the terms throws up quite a lot of discussion and also a new of firms offering these schemes.

Whilst the attraction of these schemes is obvious, whether they actually work is not so clear. It seems hard to find any conclusive evidence of whether they work or not. The further confusion allows around the rules, which allows HMRC 10 months from completion of the purchase to challenge the scheme.

No -one is really confessing whether they work or not.

You can however see why the schemes are being actively marketed, where the arranger splits the saving, typically on a 50:50 basis with the applicant.

Certainly as London mortgage brokers, specialising in large mortgage loans, we are constantly being approached by firms asking us to market their schemes.

They really grew out of the Credit Crunch. When Solicitors and tax planners suddenly became quiet, as commercial and residential transactions plummetted, they needed to find new sources of revenue. It seems these schemes were being used on much higher transaction values, but are now are becoming available to all through these new providers.

What happened last week was telling. Bascially HMRC went public saying that is was now challenging these schemes. No why would they do that unless they were losing revenue?