Client requirements

Arranging a mortgage for a prominent actor who over the last years has had fluctuating income. 

Challenges

The client had invoiced income that had not been accounted for in the current years accounts as these were not due for another six months. 

Solution 

Presenting the case to a lender using the actor’s portfolio within the movie and entertainment industry (IMDb) in addition to using an agency ledger that clearly detailed invoiced work we were able to use an accountants prediction to enable sufficient borrowing for our clients requirements. 

We were able to take what appeared as specialist borrowing requirements and place this with a high street lender achieving a competitive mortgage rate.

Client requirements

The quite simple sounding task of selling and buying can seem complicated when it is your first time going through this process, considering pressures through the house buying process of: calculating how much deposit you are going to have: how you go about clearing Help To Buy (HTB) on the existing property: calculating your maximum borrowing capacity for the new purchase.

There are many moving variables when going through a sale and purchase and we are well equipped to alleviate the pressure of accuracy through this quite daunting task.

Challenges

All of this considered our client faced another hurdle when approaching lenders directly in that their Decision In Principles (DIP) kept declining. They had tried several time to obtain a DIP through different high street lenders who all had very competitive rates. But, that had all declined our customers based on their internal credit score*. 

Solution 

Equiped with all of the evidence by way of documents (mainly the checkmyfile credit report) and listening to their experiences we were able to help the customers understand exactly what an internal credit score is and how it was impacting their Agreement In Principle (AIP) outcomes.

Their smaller deposit (5%) and high credit card utilisation was having a negative impact on the credit score through their Mortgage In Principle (MIP) but now with all of the information we could place this with a lender who has competitive rates. The difference being we know the new lender does not credit score.

Initially the client was prepared to approach specialist lenders for their DIP/ AIP/ MIP. This can be a potential solution where these lenders score card requirements are not as high as it is with high street lenders. However, you pay for the priviledge. Where we are unlimited to first charge lenders we can approach who lend via intermediaries we were able to provide an option where the rate was competitive and removed the credit score card entirely by going to a lender who does not do this. 

The high credit card debt was built up through a plausible reason - doing their house up to maximise their sale price - and where we could evidence this it meant we could find a lender who will manually underwrite the case and look at plausible explanations (backed up by evidence). 

*see credit score on our Mortgage Jargon Buster for more info 

Client Requirements

A British person who has lived and worked in Canada for the past 15 years and had only recently moved back to the UK and needed to buy a house urgently.

Challenges

Due to the recent return from Canada to the United Kingdom there was a need for speed to complete and get the keys for a new home.

The only income the individual receives is an income paid in Canadian dollars. This income is credited into a Canadian bank account and then transferred to the UK for them to live off.

Solution

The mortgage enquiry had limitations within the research, including but not limited to: time in the UK: time from mortgage application to completing and moving into the property: foreign income: allowance income (government backed) opposed to earned income (worked for).

When there are no elements of criteria to consider (no limitations) this would mean you have 100% of lenders available that lend via intermediaries in the UK. For this particular mortgage enquiry for a customer that has lived in the UK for 1 month the percentage to below 25% of lenders. 

Then add in taking the mortgage until the customers 80th birthday and this list of available mortgage lenders reduces further. 

To provide a mortgage solution we gather information around key factors before researching as sometimes we would need to lean on relationships we have with lenders. Critical information in this instance includes:

• Who does the customer bank with
• Do they have a credit footprint in the UK (unsecured credit or current account)
• Is the income the customer has ongoing and sustainable

We found a solution allowing the customer to purchase a home immediately and save on rental costs. The client successfully moved into their new home just over 2 months after returning to the UK.

Client requirements

Back in 2019 we had an enquiry which has come through as a first time buyer for an older gentleman. Can you get a mortgage over 50? Absolutely!

Their search has led them to look into purchasing via the use of the government scheme Shared Ownership; regulated by Homes England and after going through the Homes England affordability calculator and passing eligibility with the Housing Association, we considered the mortgage calculations, concluded on products, and within one week we had an offer.

Challenges

Unfortunately, this transaction did not complete.

House purchases can go wrong for an array of reasons:

• Failing credit score.
• Change of affordability.
• Any material change, such as income or expenditure.
• Seller or Vendor pulling out of the transaction.

Solution

A year on and amidst the Covid 19 pandemic he got back in touch with us; to calculate his affordability and to consider what mortgage options and mortgage rates were available this time (2020 mortgage). He was going to purchase this property outright, without a government scheme.

Buying outright when you have been looking at government schemes typically means you are looking at a higher loan to value. What is loan to value (LTV)? It is the obvious risk indicator to lenders, and it drives products and their subsequent criteria. For example, at higher LTV’s you may have restrictions on property types.

In this instance we had to consider several different lending criteria, as follows:

Age

We must factor in the customers’ age and their occupation, as where the mortgage term (the total length of time you could keep that secured loan for) may take you to an age whereby it is not realistic to continue to do your job. The best example for this is considering a police officer. Could they do the same job they do now at 60 years of age?

Retirement

In line with the above, we therefore need to consider where income would come from at that time ie changing jobs or would you look to retire at that age. Lending into retirement is a subject heavily debated and scrutinised by the regulator, The Financial Conduct Authority.

Studio

Through the application, whilst the above (income and expenditure) is important; lenders will also factor in the scenario of arrears leading to repossession, and this comes in the form of underwriting the property by means of a valuation. A property valuation is required for all mortgage applications and can sometimes be free of charge. There are several things you do need to consider. With a property such as a studio flat that this particular customer has agreed an offer on, subject to contract, we need to then achieve a mortgage offer with a lender who will be happy with the considerations of:

• Studio square footage.
• Lease years remaining.
• Ground rent.
• Ground rent review.
• Service charge.
• Cladding/EWS1/any combustible materials.

Once these considerations were ticked off to be satisfactory, we were underway with the mortgage application. The time from mortgage application to achieving an offer is currently between 1 to 2 weeks in scenarios where there is furlough income. Typically, this is a little longer.

In this instance whilst of course the criteria around getting the mortgage offer was important, the considerations of this mortgage being repaid before retirement; and the current income is incredibly important. For an older mortgagee we communicated very clearly around his mortgage needs on specific areas:

• Term – reducing the term so that it was short enough that it was realistic for him to continue working until the age the term took him to, but also ensuring at the same time the mortgage payment was affordable.
• Mortgage repayment basis – we took this on a capital and interest repayment basis so that the capital balance reduced down to £0 throughout the term; meaning the customer would not need to worry about how to repay the mortgage balance at the end of the term as it would be fully redeemed.

The time it took from mortgage application to completing and moving in was 3 months, which on average at the moment, is about right. With a happy customer following completion and our fee free service he has already referred a work colleague to us for their mortgage needs to be discussed.

Adam Hollidge
Hawke Financial Services LLP

Stamp duty holiday: SDLT Rush 2

Are you a person(s) looking for your perfect mortgage option? Considering taking advantage of the stamp duty holiday?

It is possible to exploit the opportunity the government has provided in the Budget to extend the stamp duty holiday and here is an example of a couple we helped in the stamp duty rush volume 1.

Challenges

Our customers were introduced to us from a local estate agent in early December, and what is different when using a local mortgage broker to approaching a lender directly is speed.

The time it takes to get in touch with us, ask quick fire questions and to get further understanding of any technical jargon involved with the largest transaction in most people’s lives is much quicker than approaching a lender.

We had refined the lending options by the 8th December, our focus moved to:

• their mortgage calculation being driven by keeping their payment in line with the rent they were paying.
• the speed in the time it took from their mortgage application to obtaining their mortgage offer (beat the March Stamp Duty holiday deadline).

We set the goal posts and they had their offer accepted on their dream home, and our only fear was the time scales of lenders at that time. So, the expectation was that even though we had collated all of the documents required by the lender, is that down to the sheer volume of business the mortgage underwriters were dealing with would it take too long to meet their objectives?

Solution

The submission of the mortgage application was on the 9th December.

Another benefit of using a broker is speed coinciding with accuracy in providing the correct documents to the lender for an underwriter decision making process to be made easier. We gathered everything required in the first meeting and following perfect packaging, we obtained an offer within 3 working days (the expectation was that it would take 24 working days).

A beautiful Christmas present by the 14th December the worries of the stamp duty deadline were negated and they had their mortgage offer.

As a mortgage advisor we will alleviate the pressures of the mortgage process so you should not have to worry. In this instance we had considered criteria, speed and fortunately it paid off to get them their 85% loan to value with a competitive mortgage rate of 2.69% – comparable rates now are 2.50% (2 year) and 2.71% (5 year).

In this instance to get the mortgage transaction over the white line in record speed they did have an automated valuation which does help for a quick mortgage application timescale. Further, they had a great relationship with us communicating their independent mortgage advice, providing them with reassurance that everything was as it should be and a great solicitor dealing with matters such as local searches and the mortgage deed in a timely manner.

Where the Chancellor has extended the stamp duty holiday this pressure on timescale will happen again, so it is best to get all of your information prepared well in advance, with lots of changes coming up such as:

• New tax calculations available in April for self-employed people.
• The 95% loan to value products coming back in mid-April 2021.
• Government schemes such as shared ownership and help to buy still available.

Why not go into “unlock-down” period with confidence you can achieve your aspirations of buying your dream home…?