Michelle Kent - Mortgage & Protection Adviser

What a great review! ☺️

Always really very grateful when clients take the time to submit reviews.

Product Transfers

A Product Transfer is a process used to secure a new rate with the existing lender, instead of re-mortgaging to another lender when a rate ends.

There are typically two situations this is recommended. The first is when someone’s circumstances mean they can’t get a mortgage with another lender. This could be for various reasons - such as someone’s earning less money, aren’t working at all, have recently gone self-employed or affordability doesn’t fit for whatever reason. In these instances, a Product Transfer should still be an option (as long as there are no arrears & a payment holiday isn’t in place).

The other reason for a Product Transfer would be that the current lender has the best alternative rate than the rest of the market.

There are no credit searches or income evidence etc required for Product Transfers. This makes the process quick and easy.

Many brokers can get preferential rates via their network, so it’s always worth checking the options available that way; they may be able to get a better rate than those being offered direct by the lender. They’ll also check the whole of market (assuming they’re a whole of market broker), so you can be sure all options have been considered.

A Product Transfer can usually be secured around 3 months prior to the current rate ending - some lenders will allow this a little earlier.

Re-mortgages

A re-mortgage isn’t only for when someone wants to borrow more money. It’s also used to obtain a new rate from a different lender when an existing rate is coming to an end.

When a rate ends, the mortgage goes onto the lender’s Standard Variable Rate (SVR). This is usually higher than the rate that’s ending, which means the monthly repayment will increase. To avoid this, a re-mortgage is arranged.

When re-mortgaging, income is verified & affordability (& credit) checks are carried out, so payslips, bank statements etc are required.

The re-mortgage process can be started around 6 months prior to the rate ending - which really helps at the moment, with the rate increases taking place so frequently.

The prediction was correct!

The Bank of England base rate review is today & predictions are it will increase to 1.25% (up from 1%).

In December the rate rose to 0.25%, which means a 1% rise to date, assuming the above. The prediction was a 1% increase over the course of this year!

The reason the base rate is frequently being increased? To help bring inflation back down - although this is a slow process. High interest rates means borrowing is more expensive, which then means people tend to save rather than spend, which helps reduce inflation. In theory.

Due to the predicted base rate rise today, lenders have already increased rates overnight!

If you do intend seeking a mortgage, best to look into proceeding sooner rather than later, if that is possible for you.

Rates are only secured when submitting a full mortgage application (you need to have secured a property for this, if your mortgage is for a purchase).

Maybe a glimmer of hope for some….will be interesting to see what they come up with - & when….

⬆️ The Standard Variable Rate (SVR) is really starting to climb now, as a result of the multiple Bank of England base rate increases. The SVR is the ‘default’ rate a mortgage reverts to when the initial rate ends.
So, if someone took a 2 year fixed rate of, say, 1.98% they effectively locked that rate in for 2 years. When that 2 year period ends, the rate applied to the mortgage switches to the lender’s SVR. At the moment, this means the mortgage repayment will increase, & probably quite significantly too.

The aim of the game is to line up a re-mortgage or Product Transfer, so that a new rate kicks in when the current rate ends. That way, if timed correctly, the SVR can be avoided 🤞🏼
The SVR is typically higher than the other rates available at the time, so it’s usually advisable to switch to a new rate.

It’s rare that anyone would need to go onto the SVR, yet Habito reported in March 2022 that 27% of mortgage holders were on the SVR 🙈 - a further 18% didn’t know if they were on the SVR. They could be saving a decent amount of money by switching to a new rate - let’s face it, that extra money is very much needed currently!

I’d suggest looking into a new rate around 6 months before the initial rate ends.
If already on the SVR, please make it a priority as a re-mortgage takes a few months to go through.

Just let me know if you’d like any guidance on this, whether it be timings or options.

To check if you’re on the SVR, if you’re unsure, most lenders have this information available online if you have access to your account (look for the end date of your rate). Otherwise, you can call them. If your monthly repayments have been increasing over the last 6 months, it’s probable you’re on the SVR - unless your initial rate was a tracker or discounted product, as opposed to a fixed rate.

My previous post referred to rates increasing but highlighted they’re still pretty low looking back over the years.

The Bank of England base rate is currently 1%. It was last at 1% in 2009 & has been below 1% ever since.

Since 2000, the highest the the base rate has been is 6%.

Without Googling, what do you think the highest base rate has been since 1975?

Moneyfacts - average two year fix moves past 3%. The highest fixed rate since March 2015! 😯

This seems high when rates have been typically (depending on how much equity/deposit someone has) between 1% and 2% for some time but, historically, 3% isn’t actually too high.

Unfortunately the prediction is that rates will increase further. This is exactly the reason lenders ‘stress test’ with their affordability checks - it’s not just about ensuring a mortgage is affordable at the time, but also in the future.

So, if you’re planning to buy/move, or if your existing mortgage rate ends this year, it’s worth locking in a new rate ASAP before they go up any further!

🛑 *Check the end date of your current rate now!*

If switching rates (via a re-mortgage or Product Transfer), you can usually lock rates in 3-4 months beforehand - sometimes longer. I’d suggest making initial enquiries 6 months prior to the rate ending.

If buying/moving, with most lenders a rate can be secured when submitting a mortgage application, which can’t be done until you’ve had an offer accepted on a property (as the Mortgage Offer is property specific).
However, there is a lender who allows rates to be secured for a period of time when obtaining a Decision in Principle (AKA Agreement in Principle) - no property is required for this!

An extract from Martin Lewis’/Money Saving Expert weekly email; couldn’t have put it better myself!

Great feedback today from a new client kindly referred to me:

“Thank you for such an insightful conversation, really pleased with the amount of info you provided and the way you explained the choices.”

This week I had a chat with a new client looking to buy their first home. They were sadly diagnosed with cancer 2 years ago. They thought they’d taken Critical Illness Cover with their Life Cover. However, they had only taken Life Cover.

During the call with the provider, checking their cover, they were callously told how much they would’ve received, had they taken the cover, & were also told if they become “terminal, let us know as we’ll pay out the Life Cover”!! Yep, they said those things!! 🤦🏽‍♀️

Please, please, please do take the time to check any cover you take - be sure it’s suitable for you personally & that you know exactly what you’re getting (&, equally as important, what you’re not). This applies to any forms of insurance too (home, car, mobile, pet etc). If you’re unsure, ask your adviser to explain. Or feel free to get in touch & ask me to explain &/or answer any questions.

Having been signed off last week with a green assessment result with my new firm, I’ve now got system logins & am good to go again.

I’m not looking forward to seeing the change in rates over the last few weeks 🙈 The next Bank of England rate review due in a couple of weeks too!

It’s not easy, island life!! 😎😂 Settling in well!

Happy Easter all! 🐣

Apologies for the lack of posts - lots happening at the moment - the majority of which are great! 💼📦⛴🏘😎 (& 🤧🦠)

Couldn’t help but share this email extract - so many lovely conversations recently & kind referrals, which mean so much. I love helping people!

What a great way to end the week - two very happy clients!

👀 I posted the below last month.
🎉 Great news, this option is available (from tomorrow) for those First Time Buyers with just a 5% deposit!!

More lovely client feedback!

This is what a broker does….

Mortgage rates are due to change tonight with very many lenders; generally they’re increasing for the lower Loan to Values (those with higher deposits/more equity) & decreasing for the higher Loan to Values (smaller deposits/equity).

I had two applications booked in to be submitted tomorrow; one each of the above.

We had to re-jig today’s allocations to ensure the lower Loan to Value application was submitted today to secure the lower rate with HSBC.

Tomorrow I will re-source to check if a better rate can be secured for the higher Loan to Value application, to see if I can get a better rate.

A crazy busy day, but two very happy clients as a result & that is what it is ALL about!

Another great client email to start the working week!

Staying with First Time Buyers for the moment….

There is currently the potential for First Time Buyers to borrow up to 5.5 x income with a 10% deposit.
😯This does actually apply to anyone who hasn’t owned a property for 3 years, so not strictly just available to First Time Buyers! 🙌🏼

As always, there is criteria that applies to this offering, which includes having a minimum income (varies whether a joint or sole application), it’s not available to the self-employed and a 5 year fixed rate needs to be taken.
Applies to resale (‘second hand’) houses.
New builds and flats require higher deposits
*Other criteria also applies*

Let me know if you’d like to know more and/or to see if you’re eligible.

Are you a First Time Buyer perhaps struggling to get on the property ladder?

There are potentially options!

Have you considered the Help To Buy scheme (nothing to do with the Help To Buy ISA)?

*Only a 5% deposit is needed

*An equity loan of 20% is then made available (for which only £1 a month is payable for the first 5 years - from year 6, interest is paid; the loan is therefore not reducing. However, when the property is sold, 20% of the sale price is repaid - or a re-mortgage may be possible (circumstances, income etc dependent) to raise the monies to repay the loan if not wishing to sell.

*A mortgage of 75% is therefore obtained

This means a great mortgage rate (massively beating the mortgage rates when using a 5% deposit without the scheme) - which potentially enables overpayments to be made on the mortgage (subject to limits) which, in turn, may help build up equity in the property aiding further the ability to raise monies later to repay the equity loan.

For more information, feel free to get in touch.

I highly recommend this at any time, but especially in the run up to getting a mortgage.

How to do a direct debit audit Learn how to spot cash leaking from your bank account, how to cancel a direct debit and stop your old subscriptions with MoneySavingExpert

Are you aware of what costs are involved when buying/selling, and when these are payable? Typically, there are as follows:

Selling:
*Estate agent’s fees - payable at completion
*Solicitor’s fees - majority paid at completion (usually a small amount is requested ‘on account’ at instruction)
*Removal costs - usually payable at/following completion (a deposit may be required to secure booking)
*Early Repayment Charge to end existing mortgage early (if not porting/transferring the mortgage) & a mortgage exit fee - payable at completion

Buying:
*Lender product fee (not all products have fees) - often this amount is added to the loan, but can be paid upfront at mortgage application
*Valuation/survey fees (if applicable) - paid at application
*Mortgage broker fee (if applicable) - check with your broker when this is payable, as it can vary
*Solicitors fees - search fees paid upfront, balance costs usually paid a few days prior to completion
*Deposit monies - payable to solicitors a day or two prior to exchange
*Stamp Duty (if applicable) - payable to solicitors a few days before completion
*Removal costs (as above)

**Don’t forget, when budgeting, to include insurance related costs too. Insurance to protect yourself/family, as well as the insurance to protect the building & contents should be considered.
There’s no real point in insuring your home (although it is compulsory!) if your income isn’t insured! Hence the quote you’ll see on all mortgage documentation “your home may be repossessed if you don’t keep up the repayments on your mortgage”**

Very pleased with this email, received today, following a short initial chat with a new client:

“It was so lovely to speak to you today. I’m so pleased that we were introduced! ….As mentioned, we’ve literally just started on this journey, and my half hour call with you gave me so much more insight than hours of Googling this weekend!”

Last one of the week. Thank you to everyone who’s provided feedback 🙏🏼

When obtaining a mortgage, would you like to receive guidance/referrals to other services, such as solicitors, Buildings/Contents insurance, Will writing, removal companies?

Yes or No?

How would you prefer your mortgage adviser to engage with you?

1. Formally, fact-based, no chit chat

2. Friendly - more of a chat about mortgages with the required information included

3. As if they were your friend/mate

More than a bit late with todays question! 🤦🏽‍♀️

When would you prefer to speak with/see a mortgage adviser to discuss mortgage options?

1. Weekdays, 9-5
2. Weekdays, evenings
3. Saturday
4. Sunday

A handy tip, if you intend obtaining/renewing a mortgage; get your paperwork in order!

Ensure addresses are correct on all documents - ID, bank statements, payslips etc. Have them updated if they’re not.
*There is no charge purely to update your address on a Driving Licence (a common misconception).

Check you’re on the Electoral Roll at your current address too.

As mentioned in a previous post, it’s worth checking your credit file - even if you don’t believe there to be any problems.
I’ve had clients who have only established CCJs on their files when applying for a mortgage, that they were genuinely unaware of - these have been either errors or legitimate entries due to addresses not being updated with the likes of the DVLA, for example, so they had no knowledge of the proceedings.

Missed payments, defaults, CCJs, IVA’s, arrangements to pay & bankruptcy will all impact your ability to obtain a mortgage. Not all mean a mortgage is impossible, but they will potentially result in a higher rate & probably not with a mainstream lender (depending on the entry).

Interestingly, in my experience, more often than not, these adverse entries are made by communications or telecommunication companies - so do be mindful when cancelling contracts & changing addresses!