Obtaining a mortgage in surrey is no different to any other part of the country.

Below is an atricle by mortgage broker Andrew Montlake of Coreco, which was published on the BBC site. It makes some very interesting observations.

“The dark art of obtaining a mortgage”

Money Talk by Andrew Montlake

In recent weeks there has been a lot of talk about a decline in the levels of lending for mortgage purposes by both banks and building societies.

The British Banking Association (BBA) suggested that the main cause of this was a lack of consumer demand. This is not quite the case.

Lenders suggest they are providing almost all their applicants with the mortgages they apply for directly.

But there are many tales of woe from seemingly decent borrowers who have either been turned down or, more commonly, been told that they can only borrow a lot less than they need.

Difficult for borrowers

The difficulties some face in obtaining finance is all the more frustrating because the number of overall mortgage products has increased.

There are now some excellent choices, whatever your individual views on interest rates are.

Trackers under 2%, five-year fixes below 3.7% and deals that allow you to enjoy a low tracker now and to switch to a fix without penalty at any time are on offer.

Many of these products come with a free valuation and legal fees paid for remortgages.

Whilst this all sounds great, the reality is that most of these products are only available in the low loan-to-value, (LTV) arena, around 70% and below.

In order to really help the country as a whole however, there has to be more innovation in the 80% to 90% loan-to-value market.

Lenders who currently operate in this area, seem to make it very difficult for many borrowers to actually obtain the offer they request.

‘The dark art’

For those looking at borrowing, getting your documentation right and preparing before you start applying for a mortgage is key.

“The amount you can borrow is no longer simply linked to a multiple of your income”

The first hurdle to overcome is the dark art of the lenders credit score.

This can be tightened and loosened at will as a lender decides exactly when to increase or decrease their lending levels.

A good three-year address history is a must and it helps dramatically to be registered on the voters roll at your current address.

The amount you can borrow is no longer simply linked to a multiple of your income, but on an affordability basis linked to the credit score.

Monthly outgoings are taken into account, so a small credit card you could pay off, but choose just to pay the minimum, will affect your borrowing.

The number of dependents you have also has a bearing, as will any outgoings many take for granted such as childcare….

This means that although they may be on the same incomes, a couple with no children or credit card debts may be able to borrow substantially more than a couple with two children and outstanding credit card balances.

Payslips and bank accounts

In terms of documentation, lenders will want to see your last three months payslips and last P60 as well as potentially your last three months bank statements.

These must be sequential with no single statement missing.

Be warned that many lenders do not like internet bank statements, even though they encourage their own customers to switch to online statements.

If purchasing, proof of the deposit monies will also be required.

If this is a lump sum that has suddenly appeared in your account then they will want to know the origins of this.

Self-employed

For those who are self-employed or have more erratic income, lenders are generally asking for much more documentation.

Apart from the last two years accounts and possibly the last 12 months bank statements, lenders have also been asking for form SA302, which shows the tax calculation made by the Revenue.

This is something that many do not necessarily receive as a matter of course and will need to be specially requested, slowing down an application.

The frustrating part is that there seems to be no uniformity to what lenders will ask for and when.

Decent independent mortgage brokers will know which lenders are moving quicker than others and what they are likely to ask for at any given time.

Prudent

The days of simply chasing the cheapest rate, armed with a passport and a smile, are long gone.

As with most things in life, cheapest does not necessarily mean the best.

The lender may not lend you the required amount in the timescale needed at all.

Of course, it is not necessarily a bad thing that lenders have become more prudent.

But there are many good borrowers who are being turned away every day for reasons they cannot quite fathom.

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I can agree with many things that Andrew Montlake of Coreco says

This piece was taken from the BBC site

The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent, professional advice for your own particular situation.

The value of property in Camberley went up last week and then it went down…What.. Talk about confusing.

First of all Nationwide Building Society put out a press release saying that property prices were up 0.9%. Wow we all thought as we listened to the news, things are bottoming out, meaning house prices have got to their lowest value since the recession began and now they are starting to rise.

Now where’s that copy of the Star newspaper, I’ve got to buy me some houses…

But then the following day, The Halifax came out with an opposing story saying that prices had fallen 1.9% in March..Who do you believe?

The Facts of Life

The sad fact is and I have said it before, the public relations machines of these large institutions have to justify their existence by putting out the odd story that gets the attention of the media.

Of course I haven’t read up on where Nationwide get their information from, they do have a lot of statistics to go on, as they give out quite a number of mortgages each year. But statistics can be interpreted many different ways and The Nationwide Pr/Media department, took one “headline” statistic and that became their story.

Over the last few years, during the lead up to the recession, Nationwide were always coming out with sensationalist stories, (they must have a very imaginative head of media who came from the School of Media Sensationalism).

Of course, we all want the value of property to rise and Nationwide wants to put out positive stories, but they have been premature.

The Halifax Building society came out the day after Nationwide’s sensational 0.9% story saying that property prices are down 1.9%, so who do you believe.

What local estate Agents are saying

Well I can tell you the there is definitley movement in the market, more people are looking at property locally. My friends who are estate agents tell me that there has been an increase in the number of people registering for property alerts in Camberley, Frimley Farnborough and Aldershot.

Also people are becoming more realistic about their selling prices.

I have been in the property related business for 20 years starting off as an estate agent, before moving into the financial sector 12 years ago.

In my opinion, people are waiting for the the value of property to “Bottom Out”, before they get involved in the buying and selling of property again and my estate agent friends are saying that this is happening, that prices are not falling like they were two or three months ago and that now is a good time to buy…But they would say that wouldn’t they.

Conclusion

When the headlines say the value of property is up 0.9% or down 1.9%, they are talking about the national picture, which does not relate to surrey and hampshire.

My advice is talk to a good estate agent who knows his stuff, yes there are plenty of good ones out there and not one who waffles the same old sales lines, that they are famous for.
I can recommend a number of local ones if you wish,  just drop me an email

In the meantime take care and don’t believe everything you hear in the news.

Michael Usher

01276 670777

Hi,

I thought I would publish something that appeared in one of the mortgage business trade journal “Mortgage Introducer”.

I think it goes to show that money is still being lent for mortgages, despite what we hear consistenly in the TV News

“27 January, 2009

In December, net mortgage lending by banks rose by £2.9 billion according to the British Bankers Association (BBA).

This was lower than in November and below the average of the previous six months. Consumer credit remained subdued, falling by £0.4 billion net, while personal deposits rose by £4.0 billion. However, the significant falls in Bank Rate and the financial sector turmoil affected both lender and customer activity in November and December, so monthly movements are less indicative than usual of trends, according to the BBA.

BBA statistics director, David Dooks, said of the latest data: “This first opportunity to compare 2008 with 2007 shows that gross mortgage lending by the main high street banks totalled £170 billion, some 23% below 2007’s total of £221 billion.

However, lending by the rest of the mortgage market was half the previous year’s total, showing how mortgage lending became much more concentrated during the year. The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year which led to a wait-and-see mentality.

“Consumer credit was very weak in December as people reined in their credit card spending, despite early Sales and heavy discounting by retailers. This consumer caution was also reflected in personal deposits, which rose strongly.”

The annual growth rate for net mortgage lending was still in double digits at end-year and reflects the main banks replacing other lenders in the market. During 2008, banks’ net lending rose by £48 billion, compared with £62 billion in 2007. In 2008 as a whole, gross lending was £170 billion, some 23% lower than in 2007.

Approval activity appeared to increase slightly during December, but was more likely to reflect delayed activity from November. In 2008, house purchase approvals were 52% lower than in 2007. Approvals for remortgaging were 14% lower than 2007. Approvals for equity withdrawal & other purposes were 33% lower in 2008 than 2007″

A lot of technical info, but interesting never the less.

Michael mums

Hi,

Getting a tracker mortgage is a good idea right now, sound obvious doesn’t it.

For instance the 0.5% cut to 1.5% last week means a saving of nearly £50 per month on a tracker mortgage of £200k.

Although not all lenders are passing the recent interest rate cuts to their customers.

Nationwide, Norwich & Peterborough or Skipton building societies are among a number of lenders who have not automatically passed on the saving.

Actually there was a deal with the Cheltenham & Gloucester (C&G) where some customers got a home loan at 1.01% below bank rate, should interest rates fall again, they could be just paying of the capital only.

You see it pays to keep in touch with your local, friendly mortgage adviser.

Take care talk soon.

Michael

Need advice, please call 01276 670777. I’d love to speak to you.

mums

Well according to RightMove, at the moment “the housing market is on its knees”.

People are only selling if they have to, such as in the case of changing jobs, bad debt, divorce or of course a family will often sell a house after a relative dies.

All of these situations are regrettable and unfortunate, but these people can be desperate to sell and you could be able to help them.

I know of situations where some people have just given up and thrown in the towel just waiting to be evicted so their home will be repossessed. This is not very good idea. Because somewhere down the line, unless you enter into agreement with the bank or building society to write off your debt after selling the house, (maybe at auction), which frankly is unlikely, they may come after you many years later when you do have some money.

It is far better for them to sell to someone at a reduced price.

So if you are in the position of buying, then I believe this could be a very good time to buy. If you can meet someone who is desperate to sell and you can do a deal which takes 10-15% off the current price and they get enough money to pay their debts without a repossession, then this would be a great deal all round.

There are many ways to raise money for a mortgage and having been in the mortgage business for 20 years, I think I know most of them.

So if you would like some advice free of charge, just give me a call and we’ll have a friendly chat to see if I can help. And if you know of someone who is desperate to sell a property, then why not do them a favour and make an offer, they may just snatch your hand off!!!

So yes I do believe this is a good time to be buying a house. If you can get a mortgage. And this obviously is what I do best, source mortgages, yes they are still out there… but that’s for another day.

Let me have any comments below.

Michael