It’s been a few months since I last wrote about Brexit and its likely impact on interest rates, the mortgage sector and the residential property market. That was not long after the deadline for the UK to leave the EU was extended to the end of October. So, now that we’re roughly halfway between the last deadline and this one, what’s changed? On the one hand, nothing much has changed at all. There’s no more clarity now on how we’ll leave the bloc (or even, perhaps, if we’ll leave) than there was three months ago. But politically-speaking, on the other hand, everything has changed. We have a new Prime Minister working with an even more slender majority than his predecessor and leading a party that, if anything, is more divided than it has been at any point since the EU referendum. He chairs a cabinet that is loudly pro-Leave and, publicly at least, completely aligned to taking the UK out of Europe on October 31 come what may. Outside the inner sanctum of the cabinet, former senior ministers warn of chaos ahead if Britain is allowed to crash out of Europe without a deal, while the apparatchiks of central and local government ramp up their preparations for No Deal. Labour is said to be planning a vote of no confidence in a bid to force a General Election. The Liberal Democrats have a new leader in Jo Swinson, and her fiercely pro-Remain party is attracting membership applications from former Tory MPs, disillusioned with their brief stint as part of the Change UK party. All in all, things have certainly been better within Great Britain PLC. But what does the uncertainty mean if you’ve got a mortgage or you’re thinking of buying and/or selling your home? Naturally, it depends on what you read, who you listen to and whether you’re on the Winnie the Pooh or Eeyore side of the optimism/pessimism divide. But amid the more outlandish crystal ball-gazing, there have been some interesting and well-informed hypotheses doing the rounds recently. The general consensus seems to be that a No Deal Brexit would substantially increase the chances of an economic downturn. Some commentators have stopped short of predicting a full-on recession, but others haven’t been quite as shy. According to the Guardian’s personal finance and consumer correspondents, this may not be a bad thing for homeowners where interest rates are concerned. Their joint article talks of mortgage interest rates returning to their sub-1% levels of 2016 and even of the Bank of England imposing a zero rate to ease the transition to a new trade arrangement with the rest of the world. Such a move would undoubtedly be welcomed by homeowners who suddenly find their mortgage rates significantly reduced. But the other side of that coin, of course, is the resulting misery for savers and investors. As for house prices and whether now is the time to buy or sell, the same article suggests that trying to predict whether to move before or after October 31 is more likely to be a lottery. Having said that, the fact remains that if you consider your finances to be insulated from the immediate impact of Brexit – whether with or without a deal – then when you move is less of an issue. The only question at that point is whether you can sweeten the process by winning out on the price at which you agree to buy and securing the market value of the house you sell. The Daily Mail’s financial website This Is Money reports that there’s been a growth in the appetite for long-term mortgage deals, including the recently-trending 10 year fixed product some lenders are offering. As I said in our recent article on whether you should fix your mortgage rate, we’d advise caution when it comes to locking on to a long-term deal. They tend to be more expensive and if rates do come down – which is a distinct possibility over a period of a decade – then you’re going to lose out in the long run. There are circumstances where a long-term fixed product might be right for you – but I would strongly advise getting advice from a professional mortgage expert before you commit. And then there are the conflicting calls in the Express and Times for the Bank of England to either raise interest rates and demonstrate its commitment to – and confidence in – Brexit (Express), or cut rates ahead of Brexit to ease the impact on the economy (Times). So, even the papers are divided on the best approach to fiscal policy. The fact is, we won’t have true clarity until October 31 arrives. In the meantime, the world keeps turning and life goes on. My advice is always that you should take any long-term financial decision – such as buying a house – in the context of your long-term financial security, and ultimately that comes down to the answer to the question of whether your potential financial exposure is controllable. Any investment is a risk – but calculated risks, where you’ve looked at the worst-case scenarios and demonstrated you can survive them, are always going to be preferable to walking into a commitment blind. The best thing you can do if you’re thinking about moving in the next three months is get some advice from a professional broker and a financial adviser – and factor that advice into your decision. Need more information about your mortgage options? Take a look at our short guide to remortgaging. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
We often talk and write about the importance of making sure you start to plan early when it comes to managing your mortgage. Although the stricter regulatory environment that’s evolved since the economic crisis began in 2008 has resulted in much greater protection for borrowers and lenders alike, those who already have a home loan can still be tripped up by failing to plan for the end of a fixed deal. Typically, your lender may give you between 8- and 12-weeks’ warning of your fixed loan coming to an end. Fixed deals give homeowners certainty over their payments and, as a result, they can prove cheaper over the long run if a rise in interest rate would otherwise result in higher repayments. But while the post-2008 regulatory changes have brought changes in the way banks and building societies lend and the criteria they use to assess affordability, it’s still the responsibility of borrowers to look for a better deal at the end of their fixed term – your lender won’t do it for you. The danger for borrowers in delaying is that when your existing mortgage deal does come to an end, your lender will simply move you to their standard variable rate (SVR), which may well be more expensive than the one you’re currently on. The result of that is you’re going to pay more over the lifetime of your loan than you would do if you switched at the end of your existing deal. The reality, though, is that for many people the prospect of remortgaging to a new deal – either with your existing lender or a different one – can be a source of some anxiety. Most lenders now treat a remortgage as a new application, so the days of ringing up your lender and simply asking to be moved to their cheapest rate are long gone. As a result, people worry about all sorts of issues from whether they’ll meet the stricter affordability criteria to whether they’ll be able to find or provide the paperwork they need to complete their application. In fact, a 2018 survey suggests 41% of people find the application process to be stressful, so it can end up being one of those things people keep putting off until tomorrow. The truth is the application process can be quick provided you have all the information you need easily to hand, but leaving everything to the last minute is likely to simply increase your stress levels rather than reduce them. So, we always encourage our clients to take early action to ensure they transition smoothly from their existing mortgage product to a new one. And working with a professional mortgage broker can relieve most of the stress anyway, because your broker should be working with you to ensure you have the right documents and to pre-assess your financial circumstances to ensure you have the best possible chance of your application being approved. If you’re currently within six months of the end of your existing fixed deal, this is a good time to begin thinking about switching. Some lenders – Barclays, Nationwide and Santander among them – are trialling schemes that allow their existing customers to agree a new fixed deal up to 6 months before their current one ends. Clearly that’s more to do with lenders improving their customer retention rates than it is altruism on their part, and it’s not necessarily the case that the deals they offer will be right for you. As is the case with any financial commitment you make, it’s wise to consider carefully whether the deals available from your existing lender are right for your particular needs and circumstances. A good mortgage broker will be invaluable to you in making that decision. But if you decide those products are appropriate for you, then agreeing a deal now that will be come into effect in the New Year could make some sense. Given the likelihood of interest rate rises in the future, one of which could arrive before we see in 2020, even fixed mortgages could be more expensive in January than they are now. Having a clear plan to ensure you enjoy the benefit of the best possible mortgage deal is crucial if you want to futureproof your repayments and ensure you don’t end up paying far more than you need to. At Oportfolio, we’re mortgage experts and can help you to make decisions about your finances that not only suit your circumstances today, but also take into account your plans and aspirations for the future. Why not give us a call to talk to us about your current mortgage arrangements and find out how our experience, expertise and access to products you won’t find on the High Street or online can help you to make the most of your mortgage. And to learn about some of the things you’ll need to consider as you plan, take a look at our short guide to remortgaging. To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage.
You’d think it would be the easiest thing in the world. You’ve been highly successful in your life, invested wisely and, by anyone’s standards, you’re comfortably wealthy and able to buy just about anything you desire. Anything, that is, apart from a mortgage. Bizarre though that might undoubtedly seem, it’s a problem that faces many high net worth individuals (HNWIs) – and there’s a simple reason: because income taken by HNWIs is often not from conventional sources and wealth can be tied up in long term investments, lenders see them as high risk. Income is the single most important factor for mortgage lenders in determining whether to approve an application or not, and the processes that banks and building societies now need to follow in order to meet regulatory requirements don’t give much room for discretion. Indeed, the wealthier an individual is, the more complex their finances can be, making it even more difficult for lenders to unravel the information they need to see. With investments straddling multiple portfolios, perhaps not all of them made easily liquid, and income irregular or even, on the surface of things, non-existent, a mortgage application can be challenging at best for HNWIs. Interestingly, instances where HNWIs are refused an overdraft facility, credit card or mortgage are more common than many people perhaps think – and that’s largely because the criteria by which affordability is defined are often highly specific. The very nature of investment is risk-based and so it shouldn’t be too surprising to find lenders being cautious around those who appear to have sizeable exposure, even though the net value of their investment assets is high. And given the economic events of a decade ago, few of us are going to lament a lending process that seeks to prevent them happening again. But it does lead, inevitably, to frustration among HNWIs who find themselves at the mercy of an inflexible affordability assessment that doesn’t take account of a more holistic view of their financial circumstances. Ultimately, the lenders that are prepared to adapt their businesses to meet the needs of both the majority of ‘ordinary’ borrowers whilst at the same time servicing the particular needs of HNWIs are in a minority. That said, it doesn’t mean there aren’t lenders out there who have the expertise and knowledge to be able to service the needs of the very wealthy – which is why those people looking for a mortgage but who have unique finances should seek specialist advice from a broker or adviser who has access to the right network to help. Equally, with the right preparation and groundwork around demonstrating income, it’s still possible for those with what lenders might view as challenging or complex financial circumstances to access conventional mortgage products. Again, it comes down to getting the right advice from the start. At Oportfolio, we’re mortgage experts and when it comes to offering support and sound advice, we have a wealth of experience in advising people from all walks of life and backgrounds. If you have an unconventional financial set-up and think you might struggle to demonstrate affordability to a potential lender, why not come and have a chat with us? We can offer you the right advice to improve your chances of finding the right mortgage to suit your needs. Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story! To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.
One of the big questions around homeowner mortgages at the moment is whether it’s best to tie in for a relatively short fixed deal – or go for the longer term security offered by 5- or even 10-year fixed product. With latest industry figures from the mortgage market showing an upturn in lending during May compared to April – a trend that has even seen the buy-to-let sector bucking a general decline – it’s a tricky conundrum, made trickier by the uncertainty over what a potential no-deal Brexit might bring. The attraction presented by a 5-year fixed deal can’t be under-estimated. Earlier this year, the Daily Mail’s personal finance website This Is Money reported that 5-year deals cost almost the same as their 2-year counterparts. In addition, such a product would effectively bomb-proof your mortgage payments in the event of a sudden dent in the economy. It’s not hard to see why some customers might be tempted. What you need to consider, though, is the trade-off that means you risk becoming stuck with a deal that sees you paying over the odds if or when interest rates take a downward turn. Now, realistically, that’s unlikely in the very short term. Indeed, all the signs are that if interest rates are likely to move, it will be up rather than down over the next couple of years. But beyond that? There are no crystal balls and no guarantees. One of the worries some people may have about taking a 2-year deal right now is that 24 months may not be long enough to see out any post-Brexit bumps in the economy (always assuming the UK leaves the EU on October 31). And what of the 10-year deal – the big daddy of the personal mortgage that is now finding favour with some High Street lenders? Well, generally speaking 10-year deals are more expensive to begin with and, of course, the same concerns that relate to a 5-year fixed deal become even more acute in the context of the payments you’ll be making over a decade. They’re also not as widely available – the lack of choice is one of the reasons they cost more – which means you’re going to spend a decade with a lender that may not be able to offer you the support in other areas of your finances that a competitor might. Having the security of knowing exactly what you’re going to be paying every month for a longer period of time has distinct advantages – particularly if you’re expecting your other costs to increase (maybe you’re starting a family or planning a wedding, for example) – because it allows you to have a clear budget. But long-term mortgage products aren’t for everyone and there are a number of things you’ll need to consider before you opt to tie yourself into one lender for the long haul, among them: What are the exit fees? If you want to get out of your agreement early, are the fees going to be punitive? What are the set-up costs? How much will it cost you to set up the mortgage to begin with? How much extra will the repayments cost you? It’s all very well having a fixed repayment but calculate what you’ll be paying over the lifetime of each different product and then decide whether the additional cost is worth it. Are there any special conditions attached to the mortgage? In other words, read the small print and identify any potential surprises! What does the future hold? None of us know for sure what’s in store 2, 5 or 10 years from now, but most of us have a rough idea of what we’re hoping to do and achieve. If emigrating to Australia is a dream, then maybe a 5 or 10-year deal isn’t the right product, no matter how enticing the security. If you’re in the fixed deal conundrum, we can help you. At Oportfolio, we’re mortgage experts with many years of experience helping our clients to choose the mortgage that best suits their needs for today and tomorrow. Why not get in touch and have a chat with one of our friendly advisers and see how our expert advice and support can help you to buy your dream home or remortgage to a better deal. Want to know how other clients felt about working with Oportfolio? Watch Gus and Selena’s video story! To find out more about our friendly and professional mortgage service, fees and what we can do to help make sure you’re not paying over the odds for your mortgage, why not visit www.oportfolio.co.uk or give us a call on 020 7371 5063. Oportfolio Limited is an appointed representative of Primis Mortgage Network, a trading name of First Complete Limited which is authorised and regulated by the Financial Conduct Authority Your property may be repossessed if you do not keep up repayments on your mortgage. Oportfolio Ltd fees are payable on application. We charge a broker fee for property purchases of £495 and a remortgage/further advance fee of £395. Our product transfer fee is £295.