According to some reports this week, the first signs that the post-lockdown housing boom that began when the government opened up the housing market at the beginning of June 2020 has begun to give way to greater caution.
According to the online housing news portal Housing Today, this is due in large part to a drop-off in demand from first-time buyers who have begun to find it harder to secure lending in an increasingly uncertain economy.
The website goes on to say that the activity in the market is driven by existing homeowners who may be better placed in terms of job security to satisfy nervous lenders and who have more existing equity to put down to further mitigate lending risk.
Whilst that may be bad news for some of those who are trying to get onto the first rung of the housing ladder, it does also open up some opportunities to thrive in a market where there is perhaps less buyer competition.
Just because there is more scrutiny among lenders doesn’t mean the building societies and banks aren’t still lending to first-time buyers … it just means they want greater certainty about the risk.
That’s where working with an experienced professional mortgage adviser can help you.
Typically, buyers – whether first time or otherwise – can use two approaches to secure borrowing for the property they want to buy.
The first is to source the mortgage product themselves and then go through the application process directly with the lender.
There’s nothing inherently wrong in this strategy – as long as you know what you’re doing and you understand what the lender’s priorities are in terms of how they assess and then make decisions about the application in front of them.
The loan-to-value will be a key factor. This is the percentage of the house value they’re being asked to lend against. The lower that figure, the less risk involved and the more confident they will be about lending.
Long-term ability to meet the repayment commitment is another key consideration, and employment and salary history are key here. Similarly, financial history and ongoing financial commitments are a big part of any application assessment.
Understanding why the lender wants the information it has requested can be a real advantage in deciding how the information is presented.
And for those who are selling an existing property to move, it’s worth bearing in mind that there’s no great advantage in staying with your existing lender.
I still meet clients who seem genuinely surprised that their historic relationship with their lender isn’t taken into consideration (at least on the surface of things) when they apply for a new mortgage with them.
What they forget is that a new mortgage is a new risk for the lender – especially in the less than predictable times in which we currently live.
The second approach is to use a professional mortgage adviser to handle your mortgage application for you.
That does cost a bit of money – our fees for arranging a mortgage are at the bottom of this article – but what you get for that outlay is the reassurance of knowing your application has been assembled in such a way as to give you the best possible chance of it being accepted.
In fact, an experienced broker or adviser will be able to see the potential pitfalls in your application long before it is submitted – giving you and them the chance to try to remove stumbling blocks before they even become stumbling blocks.
Your mortgage adviser can also give estate agencies the confidence they need to be able to recommend you as a buyer to their client.
If you’re in a shoot-out with another potential buyer and a reputable, regulated and professional mortgage broker is able to tell the agent that they’re confident you are a proceedable buyer, that gives you a real advantage over someone who may only have a mortgage agreement in principle.
(A mortgage agreement in principle is good, but at its most basic level, it’s simply the mortgage company confirming that based on the unverified information you’ve supplied, they would be prepared to lend you a certain amount of money. Things can change rapidly once a lender starts an in-depth review and credit check.)
An agent will know that the mortgage adviser has already pre-checked much of what the lender will review (usually with the exception of a full credit check), and so will find you a more attractive option as a buyer than someone who isn’t able to provide the same confidence.
With many first-time buyers shying away from purchases in a shrinking economy – partly, perhaps, because the lenders have narrowed the range of available products and reconfigured their minimum deposit thresholds – those who are still in the market to buy will find themselves with a lot more choice.
So before you decide to shelve your plans to buy a new home, why not give us a call and see if we can help you to make your dream house a reality?
Please note: all information contained within this article was accurate at the time of publication.
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.