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Nathan Cole

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  1. In this week’s mortgage memo, we are discussing the slowdown in the purchase market, lenders hit by a Covid outbreak and a new player in the professional mortgages market.

    Purchase market slowing down… 

    We have seen a significant decline in purchase enquiries in the last couple of weeks. We believe this is due to the end of the SDLT holiday approaching and buyers holding off to see what happens and whether it is extended or not. There are calls from across the industry for an extension as there are fears the end of the holiday could see a cliff edge fall in transactions. However, with prices having risen so significantly and eroded any savings it may not be worth buyers worrying too much about the deadline… 

    • There are other factors at play, including a lack of supply, with the new stock of homes down 12% in the first 2 weeks of 2021 according to Zoopla which will keep prices high for the foreseeable, until people are comfortable with having potential buyers in their homes. 
    • The timescales to beat the SDLT deadline, unless extended, are now too short for most purchasers even with lenders returning to normal processing times… If the holiday is extended, we can expect an increase in purchase enquiries almost immediately.  
    • We believe that the next couple of months will be slow until lockdown eases and people become more comfortable with both putting their houses on the market and in viewing property and with the optimism generated by the vaccine, we expect we will see a boom in purchases in the summer months, very similar to 2020 in terms of a tumultuous year of peaks and troughs in demand. 

    Lender hit by Covid outbreak amongst underwriting staff

    A lender we work closely with has recently suffered from a Covid outbreak within its underwriting team and thus had had to withdraw all sub 80% products on account of reduced capacity. This highlights just how difficult the situation is facing lenders at present as they try to manage an enormous workload with staff safety and is indicative of why we have seen longer processing times in recent months.  

    • We wish everyone involved a speedy recovery. 
    • It remains important that buyers understand that this situation remains fluid and to maintain expectations for increased processing times when making a purchase. 

    Professional mortgages seeing new player with increased loan-to-income ratios 

    Platform, the Co-op’s intermediary lending channel has recently announced increased loan-to-income multiples for newly qualified professionals, i.e., those with professional qualifications such as accountants and the like, to 5.5x income.  

    • Other lenders like Clydesdale and some specialist building societies already do the same, however it is good to have another lender to join them. 
    • This highlights the way in which lenders are competing for the lowest risk propositions available and are rewarding these types of borrowers accordingly. Ultimately, in this post-pandemic lending landscape with employment under greater scrutiny, those who can easily show that their employment is secure in the long term are in a better position.  
    • We believe with rates already low and not much margin to decline further, we will see criteria and product innovation becoming more prevalent in 2021 as lender ease restrictions tightened at the beginning of the pandemic and look for niche areas to operate within and make a good margin.  

    Best mortgage buys for the week  

    Another significant fall this week in the best 2-year discounted variable rate mortgage available, down 0.2% to 1.29%, making it highly competitive with the standard 2-year tracker and 2-year fixed. Some smaller decreases in the 3 and 5-year fixed both down 0.01% to 1.21% and 1.26% respectively. Again, as only a few percentage points more than the 2-year fixed we may see more borrowers opt for these medium-term mortgage types in the coming weeks and months. All other rates and the lenders offering them remain the same.  

    As it stands it is important to remember that these rates are only available at low-LTVs and on remortgages for the most partand significantly higher rates if a purchase. For instance, the difference between the best 2-year tracker for remortgage and home mover is 0.3%... 

    It is important to note that lenders across the board have changed their lending criteria, so to get an accurate picture of what is possible in your specific circumstances, please contact us and one of our expert consultants will be more than happy to assist you. 

     

    Mortgage Memo - 3rd February.png

  2. The main talking points in the mortgage market this week are lenders continuing to open-up despite the new lockdown and Santander creating huge restrictions for self-employed applicants…

    Mortgage market continuing to open-up despite the pandemic and new lockdown

    Despite the new National lockdown and surge in cases and deaths in recent days confidence in the property market is continuing to grow, illustrated by further lenders returning to 90% LTV this last week, including HSBC and Coventry Building Society. This comes despite numerous commentators suggesting a fall in prices is coming this year…

    • We have seen the large number enquiries continuing of late despite the current situation and it seems that this lockdown and now talk of restrictions remaining in place for the long term has further entrenched buyers desire to move to have more space both for work and outdoors.
    • With prices having risen so much in the last 9 months lenders have some more wiggle room if prices are to fall, unless they fall in a significant way and moreover, borrowing at this LTV remains relatively expensive and is more a akin to a 95% LTV pre-pandemic.

    Max 60% LTV for self-employed borrowers from major high street lender

    The self-employed have had a tough time when it comes to getting mortgages since the advent of the Covid pandemic. Self-employed borrowers are seen as higher risk for lenders and with the higher levels of scrutiny required for the applications it is taking lenders far longer to process cases, however no lender has gone as low as 60% for a maximum LTV until Santander now - there is good reason though…

    • This highlights just how incredibly long it is taking to underwrite self-employed mortgages – 40 working day average from application to offer for Santander, which has got to be close to the worst in the industry and thus likely to be delaying normal business too. This therefore is not so much a question of self-employed borrowers risk profile increasing, but more of means for Santander to manage their timeframes for processing.

    Over 500,000 people in rent arrears – more bad news for landlords

    According to recent research by Citizens Advice, circa half a million private renters are behind on their rent – this is 11% of all private renters. Moreover, the government have once again quite rightly extended the ban on evictions and thus this could mean some landlords may have seen a rental void approaching a year now…

    • Private tenants have not had any structured way to defer payments in the way that homeowners with mortgages have and thus they have been placed under even greater fiscal pressure given the circumstances.
    • It is a very difficult situation as you do not want to see people being evicted and made homeless, but for landlords this could put them in a very precarious financial position and thus we could see more landlords exit the market in the coming months and this could be accelerated if prices start falling…
    • Many people perceive landlords as very wealthy and can afford to take the losses, but many rely on rental income as their income like a pension. Mortgage holidays taken will have often finished now and merely push a problem down the road as the debt still has to be paid.

    Best mortgage buys for the week

    We have seen one rather significant fall this week, with the best 2-year fixed now at 1.05% (a decrease of 0.09%). We shall see if other lenders follow suit and if this lender will remain at this rate or is simply doing so to drive business levels as they have capacity in the coming days. All other rates and the lenders offering them have remained static.

    As it stands it is important to remember that these rates are only available at low-LTVs and on remortgages for the most part, and significantly higher rates if a purchase. For instance, the difference between the best 2-year tracker for remortgage and home mover is 0.3%...

    It is important to note that lenders across the board have changed their lending criteria, so to get an accurate picture of what is possible in your specific circumstances, please contact us and one of our expert consultants will be more than happy to assist you.

    Mortgage Rates 14th January.png

  3. Good afternoon @carlosdici My first thought is that you need have to remember that the minimum equity/deposit for a BTL would be 25%, so by taking the additional borrowing you would be increasing your existing home up to circa 90-95% LTV, which means that you would need to reduce this mortgage down again when converting the property into a BTL in the future. If you would like to talk through your options in detail, to determine the best route for yourself, then I would be happy to arrange a conversation with you. Please do reach out if you still require some advice. Best
  4. Good afternoon Ally, There are short term products available with no early repayment charges, which you could use if you are only modernising/updating the property...but the majority of lenders do not allowed works to be carried out to the property during the term of the mortgage, which is why people will utilise bridging/development finance whilst the works are carried out. If you would like to talk through your options in more detail, then I would be happy to arrange a conversation. I regularly work with financing refurbishment projects, development sites, etc. Best regards
  5. Good afternoon @devine999 I hope you are well. I noticed nobody has responded to your post yet, and if you are still looking for some advice then I would be happy to arrange a conversation with you to go through your points. The company I work for has access to all of the lenders in the marketplace and we specialise in complex property finance (Bridging, Development, Commercial, High Net Worth etc.) Thanks and I look forward to speaking in the near future. Best regards Nathan Cole
  6. Good afternoon @arjunb I hope you are well. I regularly work with bridging/development finance and would be happy to arrange a discussion if you require some advice. Please feel free to reach out and we can arrange a time to speak. Best regards Nathan Cole
  7. Happy New Year!

    As we are now entering 2021, I thought I would provide an update on the current mortgage market...

    At a glance: 

    • Brexit deal leads to a surge in enquiries from overseas buyers 

    • Big rush expected as buyers look to beat the SDLT deadline… but will they make it through? 

    • With Bitcoin at a record high will more lenders start accepting it as a form of deposit capital? 

    Brexit deal leads to a surge in enquiries from overseas buyers 

    After what feels like an eternity a Brexit deal was finally agreed and is now in action. Whether the deal was good or bad is not particularly relevant in this context, what it does bring is certainty and this has seemingly led to a surge in enquiries overseas buyers, both expats and foreign nationals looking to purchase UK property and thus requiring finance.  

    • From the 1st April 2021 overseas buyers will be subject to an additional 2% SDLT on top of the 3% additional homes surcharge and thus purchasers will want to complete to make savings in this regard.  

    • Whilst certainty is a driver in any economy, the economic repercussions of Brexit alongside the Covid pandemic are likely to hit the housing market which has remained entirely unscathed of late.  

    Big rush expected as buyers look to beat the SDLT deadline… but will they make it through? 

    The Treasury had stated that there will not be any extension to the SLDT holiday, and thus those buyers looking to make savings need to get their skates on. As we have discussed before all parts of the property purchase and sales process are under pressure, from solicitors to lenders and thus the process is taking far longer than usual. We suspect there will be a huge demand in the coming weeks, depending on whether a more stringent lockdown is brought in or not, and we will likely see many buyers missing the deadline.  

    • With the deadline approaching, it is likely many people will miss it and thus if they cannot find or borrow the extra money for the Stamp Duty the transaction is at risk of falling through. With prices already inflated and expected to fall following the end of this holiday could we see buyers hold out in the first quarter of this year to see how the market responds? We suspect now, Tier 4 and the potential for a third even stricter lockdown will likely further entrench the trend for people looking to upsize and benefit from more space. 

    • Despite the Treasury’s statement, given this government penchant for U-turns that could very much mean the opposite and the SDLT holiday is extended until the summer at the least.  

    With Bitcoin at a record high will more lenders start accepting it as a form of deposit capital? 

    Bitcoin has recently surpassed the $30,000 mark and appears to continue to climb as investor seek to diversify and institutional investors look to capitalise on the potential gains in the crypto markets. So, what does this mean for those who hold enough Bitcoin to use as a deposit for a house? Part of  

    Bitcoin’s appeal is that it exists outside of the mainstream, but this is precisely why it is also difficult to use with purchases that require scrutiny such as property transactions. It has historically been linked to nefarious activities due to its difficulty in tracking transactions and the fact you do not need a bank account with the usual verifications to hold the currency and thus lenders are wary of it, and thus there are only a handful that will accept Bitcoin (once sold to pounds of course) as a means of a deposit, but this does include some mainstream names. 

    • We suspect more lenders will begin to accept Bitcoin and potentially other crypto assets as they become increasingly mainstream and given the upward trend in the price may even develop products that utilise this capital growth.  

    • Some investors also expect to be able to use profits from these investments as income, however this is not possible either like with many other investments. 

    Best mortgage buys for the week  

    We have seen falls in the 3 and 5-year fixed rates of 0.04% and 0.02% respectively over the Christmas break and all other rates and the lenders offering them have remained static. 

    As it stands it is important to remember that these rates are only available at low-LTVs and on remortgages for the most part, and significantly higher rates if a purchase. For instance, the difference between the best 2-year tracker for remortgage and home mover is 0.3%... 

    It is important to note that lenders across the board have changed their lending criteria, so to get an accurate picture of what is possible in your specific circumstances, please contact us and one of our expert consultants will be more than happy to assist you. 

    image.png.981fda482fa5b579708152577f97c094.png 

  8. An interesting week in the mortgage market, with the war on rates now beginning as confidence returns to the market... 

    The war on rates begins now confidence returns to the market  

    While rates are very low for some mortgage types, these are reserved for the lowest risk borrowers, in other words those with large deposits or large amounts of equity and the ability to borrow at lower income multiples. However, with the return of mainstream lenders to the 90% market, it was only a matter of time before competition on rates ensued and there is now a downward trend in this part of the market, with major lenders such as Nationwide and TSB beginning to make cuts, we expect others to follow as lender pitch for these premium rates before they fall. 

    • Currently, despite these cuts, the cost of borrowing at this level remains high (>3%), but it has been falling fast so far. We would suggest that providing there are no major shocks to the economy or housing market, rates will continue to fall, but it will take a while to reach pre-pandemic levels as before the return of 90%, lenders were simply not lending in this bracket anticipating a significant fall in prices and now they are anticipating less of a dramatic fall and more an adjustment so to speak and are in effect pricing for a 95% LTV mortgage. 
    • This change is also linked to a change in demand in the market, leading to lenders having to make these cuts to attract customers and increase the affordability of their products. 
    • The best rate available currently from a mainstream lender is 3.24% and we believe we will see sub-3% in the near future, however for this to happen 80 and 85% rates will likely need to reduce too which we haven’t seen on a large scale yet. 

    Why we believe London property will boom in the New Year  

    There has been a paradigm shift in the property market this year and the home has become, amongst other things, an office, school, and the base for leisure activities… all of which led to people asking big questions about where they live and whether it fulfils their needs. In a lot of cases people answered that question with an emphatic no, and the purchase market has since boomed, helped by the SDLT holiday. This left several people, including us, wondering if cities like London would change in the long term as we saw many clients buying in the countryside to increase their access to space. This has now slowed down, and it was possibly the case that this just pushed moves that were already on the cards forward. The draw of cities is the nexus of labour, social and cultural factors and people have missed out a great deal on the latter two this past year. With the advent of the vaccine and a slow return to normality we believe we will see London property boom as people want to be close to the action again and while the countryside will work for some people it will not for others… 

    • We have already seen an increase in enquiries in London property this past few weeks and a significant fall in people looking to move out, including less let-to-buy mortgages and the like. 
    • Do not just take our word for it, Savills, and Knight Frank both predict London property will increase in value by 12.7% and 15% respectively between now and 2024. 
    • Not all London property is created equally and houses/flats with gardens in central areas (zone 1 and 2) will command an even greater premium.  
    • With people still likely to work from home, not wanting to get public transport and a drive to encourage people to get out of their cars and cycle or walk, we think the biggest gains will be made in Zone 2 and Zone 3 where people can easily navigate the city and access all it has to offer…once it is open… 
    • Regardless of Brexit, London is still a major global city, offering some of the world best culture and entertainment and lifestyle and thus will remain highly attractive to national and international buyers alike. 

    Best mortgage buys for the week  

    While we have seen competition pushing rates downwards at higher LTVs, at best buy level this week we have only seen an increase in the 2-year fixed rate mortgage now at 1.14%, otherwise all other rates remain static.  

    As it stands it is important to remember that these rates are only available at low-LTVs and on remortgages for the most partand significantly higher rates if a purchase. For instance, the difference between the best 2-year tracker for remortgage and home mover is 0.3%... 

    It is important to note that lenders across the board have changed their lending criteria, so in order to give you an accurate picture of what is possible in your specific circumstances, please contact us and one of our expert consultants will be more than happy to assist you. 

     

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  9. Good afternoon, Welcome to the forum! I regularly work with limited company buy to let applications and would be happy to provide you with some guidance if required. Please feel free to reach out if you are still in need. Best regards Nathan Cole
  10. Good afternoon Mike, It is possible to get an interest only mortgage on a residential property, but the criteria surrounding this varies from lender to lender. As an example, there are usually requirements surrounding income and equity within property. Please do let me know if you would like to discuss this in more detail though, happy to talk you through the options. Best regards Nathan Cole
  11. Good morning Niall, Apologies, Property Hub has an extremely small storage limit on their inbox and I had not realised this was full! Hopefully they will increase this one day and also setup a notification for a full inbox. I have managed to clear some space now, so please feel free to send me a message if you would like to speak. I am always happy to help. Best regards Nathan Cole
  12. Thank you your messages Ollie. Friday works well, I have replied to your private message with my contact details. Best regards Nathan Cole
  13. Hi @oli-t Welcome to the forum! I regularly work with LTD company applications, ranging from first-time buyers to portfolio landlords. I'm happy to speak if you require a bit of advice...please feel free to send me a message and we can arrange a suitable time to speak. Best regards Nathan Cole
  14. Good afternoon Nick, I hope you are well. I regularly work with investors looking to develop/refurbish properties and would be happy to arrange a discussion if you require some advice. As an example, a couple of projects I have on my desk at the moment are... Development Finance for a conversion of a Multi-unit block Development Finance for 4 ground up units Bridging Finance for a HMO conversation Bridging Finance to help secure on onward purchase, during a chain break 5-year term loan on a plot of land Please feel free to send me a message if
  15. For those who are interested, please see below a rundown on the current mortgage market... 

    At a glance: 

    ·         Second lockdown and the mortgage market 

    ·         A competitive “green” mortgage… finally 

    ·         LTV restrictions for self-employed borrowers 

    Second lockdown and the mortgage market 

    With infection rates spiralling across the country a second lockdown was always an inevitability, however this time the property market is not going to be shut down as in March. However, the question remains how many people are going to be out and about viewing property given the circumstances? Ultimately, this is likely to entrench the current trends for those looking to move to houses with more space, both outdoors and to work remotely, and means areas outside major cities are likely to see higher demand than pre-Covid.  

    • A second lockdown and the corresponding economic repercussions are exactly why mortgage lenders have been being cautious of late and this is likely to cement this position for lenders going forward. We expect to see further restrictions on borrowing certainly for those with deposits smaller than 20%, with these products almost certainly becoming even harder to find, and those that are available will charging even higher rates to account for the risk. 
    • The housing boom and corresponding number of mortgages issued has defied the economic reality and given that there does not appear to be a silver bullet currently for Covid we could see buyers taking the plunge sooner, rather than later, benefitting from the Stamp Duty Holiday and looking to acquire a property that will make living in the new normal more enjoyable – keeping the housing boom going in the short term. 
    • So far the crisis has disproportionately affected younger people, who are more likely to be renters, however as the economic outlook remains highly uncertain, with unemployment now rising across the board, the market will come back to earth with a large shock unless the SDLT holiday is extended in the medium term… 

    A competitive “green” mortgage… finally 

    Homes in the UK account for circa 15% of emissions and thus are a key area if we are to become carbon neutral as a nation in the relatively near future. We have been waiting a while for a lender to offer mortgages at a competitive rate to borrowers who are purchasing energy efficient homes, with A and B EPC ratings, and NatWest has just launched a new product doing just that. The rates look generally better than their normal purchase rates and previously lenders only had products like this for quirky green eco builds, help to buy green new builds or were offering cashback after completion for bringing up EPC ratings (but at nowhere near this rate).  

    • Products like this are essential if we are going to see and increased number of people considering the energy efficiency of their home and it is a good policy to reward those who are benefitting the environment. 
    • This product is purchase only now, but it would be great to see a remortgage product too, to reward those who since buying their property have increased the EPCs. This would be the natural next step to also reward those already in more eco-friendly homes. 

    LTV restrictions for self-employed borrowers 

    More bad news for self-employed borrowers as Nationwide, one of the largest mortgage lenders in the UK, has curtailed LTV to 85%. This combined with the limiting of income multiples and more restrictive and stringent application process, means self-employed borrowers are facing an ever-increasingly difficult position, meaning they can borrow less in terms of the total borrowing amount, require larger deposits and need to prove the viability of their businesses going forward in the face of far higher levels of scrutiny.  

    • 85% LTV is in effect becoming the key battleground across the board for lenders, for all types of borrowers and for the most competitive rates you need even deeper pockets and at least a 25% deposit.  
    • Despite the high number of restrictions there remains a great deal of demand for self-employed mortgages and this is indicative of how much people want to undertake moves at the moment, both to save on Stamp Duty and to improve their homes given the amount of time we are all spending inside at present.  

    Best mortgage buys for the week  

    After several weeks of no movement whatsoever we have seen a decrease of 0.04% in the 2-year fixed rate with a reduced arrangement fee of £999. The 3-year fixed has increased by 0.04% and the 5-year fixed has decreased by 0.02% bringing these rates closer to parity again and now a key battleground for lenders. All other mortgage rates and types offering these rates remain unchanged this week, however this does not illustrate the full picture as these rates are only available to the most low risk borrowers, those with significant equity in their properties in the case of remortgages or significant deposits in the case of purchases and thus a low LTV.  

  16. Hi @ld2x07, I notice nobody has provided you with any recommendations...I work for a London based brokerage, who has access to all of the lenders in the market place and I would be happy to assist if you require any advice. Feel free to send me a message if you are still in need. Best regards Nathan Cole
  17. This is our take on recent news in the mortgage market. Our views are often cited in several national publications, including; BBC News, The Times, Telegraph, City AM, FT Adviser and Daily Mail, as well as a number of key trade publications, so this should keep you ahead of the curve. If you have any questions on any of these stories, or would like further information, please do not hesitate to get in touch.

    https://www.privatefinance.co.uk/news/blog/2020/09/28/private-finance's-weekly-mortgage-memo---28th-september-2020

    street-ukd13259ed8c456569a0f5ff00008768c6.jpg

  18. Good afternoon, This is an extremely limited market and it would depend on a number of factors (Nationality, Country of Residence, Income, etc.) but there is certainly a lender who can offer limited company buy to let mortgages to non-UK based foreign nationals. I have done a similar case for Irish nationals based in the US previously, although this was pre-pandemic. If you would like to explore this further, then please do let me know. Happy to talk through the options with you. Best regards Nathan Cole
  19. Hi Nicholas, This is criteria that varies from lender to lender...some will require the property to already be on a Buy to Let mortgage and others are comfortable with the route you suggested. If you would like to discuss this in anymore detail, then please do feel free to get in touch. Happy to talk you through your options. Best regards Nathan Cole
  20. Good afternoon Richard, I split my time between London & the West Midlands and would be happy to arrange a conversation if you require some advice. With regards to the property being a HMO, this all depends on the setup and whether the tenants are on individual tenancy agreements...as some lenders will allow up to 4 tenants on one tenancy agreement for a standard buy to let mortgage. Please feel free to pop me an email with a couple of suitable times to speak. My email address is nathan.cole@privatefinance.co.uk Best regards Nathan Cole
  21. Without knowing your exact circumstances I cannot say for sure...but 4.5% is quite high for a LTD Co. mortgage. This is likely to be down to the fact you are a first time landlord, as there are much better rates available in the market for LTD Co. You are correct that once you already own a BTL/have lettings experience, this can open the market up somewhat for you and alternative lenders should be available. I hope this helpful, but please do reach out if you would like a 2nd opinion, always happy to check you are making the right move. Best regards Nathan Cole
  22. Good morning, I regularly work with expats all over the globe, helping them to secure residential and buy to let mortgages. If you require advice and are still looking for an solution, then I would be happy to arrange a conversation to discuss your options with you? Please let me know your thoughts. Best regards Nathan Cole
  23. Hi @johnprop Without knowing the exact details surrounding your scenario I would not be able to comment on the best route for you. I do regularly work with individuals in similar positions to yourself though and would be happy to arrange a conversation if you would like to discuss your buy to let mortgage in more detail? Please see free to send me an email with a couple of suitable times for your to speak and I will clear my agenda for a discussion. Best regards Nathan Cole
  24. Good afternoon, Thank you for your message and that's no problem at all. My details can be found in my signature below, but you may need to go into your PropertyHub settings first and turn on 'View Signatures'. Just in case this is not possible...my email address is nathan.cole@privatefinance.co.uk I look forward to speaking in the future. Best regards Nathan Cole
  25. Hi @annab There are lenders who are comfortable with lending on sites of 6-7 residential properties and also lending to two extended families...but I would need quite a bit more information before I could suggest any lenders to you. It may be the case that not all of the family members are required on the mortgage application, which would simplify the transaction, but until I know your personal circumstances I could not say. I would be happy to take a look into this for you, please do feel free to send me a message across and we can arrange a suitable time to speak. Best r
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