Mortgage Decisions in 20 Minutes, But Beware

Well, that’s a decision in principle in 20 minutes at least, but it still shaves a lot of time off the normal application process.  HSBC has rolled out its new ’20 minute’ system in a bid to meet growing consumer demand.

People no longer want to visit their bank or building society to fill out mountains of paperwork or face scrutiny in a stuffy office.  They want quick results from remote services they can access from anywhere.  More and more lenders are beginning to recognise this trend and offering user-friendly and more responsive application systems.

However, convenience can sometimes be a bad thing.  Let’s say you apply online for one mortgage product and get turned down, there is nothing to stop you going to another lender’s website and starting another quick fire application and continuing the process until you find a lender that gives you a decision in principle.  If you do decide to do this you could be setting yourself up for huge problems.  Every time you make a fresh application it leaves a ‘footprint’ on your credit file.  Each lender will run a credit history search on you and a record is left of that search and made available for all potential lenders to see.  Now, if they see you have made a lot of applications in quick succession they are going to smell a rat.  Lots of searches on your credit file can often result in you being turned down flat for a mortgage by every future lender you approach.

Whilst it’s never been easier to apply for a mortgage online, unless you are certain of the product you want to apply for and the likelihood of being approved, you should always get some advice from a qualified whole of market mortgage advisor.  They will have access to the latest mortgage products available and have the expertise to choose the right product to suit your needs.  Even if you have a poor credit history or low deposit, there is usually a product that fits the bill although interest rates will be higher with these products.

In the 20 minutes it could take you to apply for a mortgage and get turned down, you could have spent the same time chatting to a mortgage advisor and getting some sensible advice and a great deal.  That’s not to say you will get turned down of course.  Many lenders have different lending criteria and even those with an excellent credit rating can get turned down.  Mortgage advisors know the market, the criteria you need to meet, and how to overcome potential problems.

To get a free telephone consultation with an impartial mortgage advisor please complete the form below.

High Loan to Value Mortgage Approvals Peak

A report released by chartered surveyors e.surv revealed that mortgage approvals on deals of 85% LTV and higher reached peaked in the month of August.  These figures account for 10% of total approvals.

However, e.surv said that whilst these figures are encouraging, they should not be seen as a sign of long-term market recovery.   High loan to value approvals are still less than half of the peak experienced in August 2008.

More and more lenders are starting to ease their lending criteria slightly and this has helped to fuel an increase in the number of ‘low income buyers’.  The greatest growth has been experienced on properties with a value of up to £125,000 – these are typical first-time buyer homes.  These homes accounted for 24% of all approvals.

Richard Sexton, business development director of e.surv said: “The uptick in high LTV lending is encouraging, and lenders may still be trying to garner market share. But we shouldn’t get too carried away and begin hailing this as a portent of long-term recovery.

“High LTV lending still lags well behind the levels we saw back in 2008 and a slight loosening in criteria only makes a small dent in the vast backlog of buyers stuck in the rental market.”

He added that many high street banks and building societies are still constrained by the weak market and other factors such as strict regulatory controls.

Sexton said; “For those who can get mortgages, the good news is that fixed rate deals seem certain to remain particularly cheap.  The UK has been like a fortress in repelling the international economic contagion, which is good news for borrowers as it means repayment rates will stay low for some time to come.”

Finding the right mortgage product to suit your circumstances is a lot easier if you get independent mortgage advice.  A mortgage broker will be able to give you a whole of market appraisal of all mortgage products including those lenders offering higher LTV products.  We reported last week that the 100% mortgage is back and it looks likely that lenders will slowly start to increase their LTV percentages although strict controls will still be in place.

Google Gets in on the Mortgage Game

Do those clever people at Google ever sleep?  It’s been reported that Google is piloting a UK mortgage comparison website.  You may have already seen its online advice service called Google Advisor and Mortgage Strategy.  This was launched in May in the US and the new pilot scheme in the UK, called Compare UK Mortgages is thought to be very similar.

The website works in much the same way as any other comparison website although Google has ensured you get to see their website before any others of the same nature.  If you were to search for ‘mortgage’ or ‘compare mortgage’ in Google for instance, you would see the Compare UK Mortgages link at the very top of the search results.  Just where you would expect to see any Google service in fact!

Many big names have got in on the ‘sponsored links’ action with Woolwich, Royal Bank of Scotland, ING Direct, NatWest and Lloyds TSB all showcasing their products with many more expected to follow.

In order to gauge feedback on the website, participants are able to take part in a customer survey.  Some of the questions featured include their thoughts on using a mortgage broker and how they have searched for a mortgage in the past.  Google seems to be taking this quite seriously and with good reason.  More and more consumers are using comparison sites for a wide range of financial products these days, but in an ocean of similar sites it’s still early days and Google has a lot of competition from established comparison sites.

Justin Rees, director of marketing and partnerships at LeadPoint UK, says: “Only time will tell how successful this service will be and what other products will be arriving in the UK.

“It will also be interesting to see how many of the direct marketers that spend millions of pounds each year generating financial services leads through Google react to this latest development.”

However, he did add how it will be a good initiative for the lead generation market as a whole.

“Usually when Google enters a new market it requires all the incumbents to step up in order to compete so hopefully this innovation will be good for consumers and the adviser community as the current lead generation companies will have to work even harder to improve their services.

“The UK has a strong tradition of intermediary-based advice and long may this remain so.”

Earlier in March this year Google bought BeatThatQuote.com for almost £40m.  When you consider how many consumers now use comparison websites it was only a matter of time before Google took the initiative to start offering their own mortgage comparison services.

It makes sense if you are looking to buy your first or next house to weigh up all the mortgage options.  More and more products are being released on a daily basis and you could find an excellent deal by spending five minutes entering a little information on a comparison website.  We’ll be keeping an eye on Google and will let you know of further developments and services they may be releasing.  Watch this space…

Are you wondering: what will the interest be on my mortgage this year?

The upside of the credit crunch fuelled recession has been, for many British families, lower mortgage repayments on loans. Despite the media’s love for doom and gloom these lucky souls have been going about their business not believing their luck. The mortgages in question are those calculated at the lenders’ standard variable rate (which may or may not be tied to the bank of England Base rate) or tracker mortgages (About 1,500 C&G customers on tracker mortgage at 1.01% below Bank base rate have been paying no interest at all on their home loans since March 2009! according to Citywire).

Historically low interest rates have meant that some homeowners have actually found an extra few hundred pounds in their bank account each month as a result of the Bank of England’s efforts to buoy the housing market and avoid an even greater disaster of a recession.

Those who have a mortage with a lender who ties their variable rate to the BoE base rate have been the happiest, or those with tracker mortgages.

However some banks (such as Standard Life) have an arbitrary standard variable rate that they set themselves. (Remember that kid that wouldn’t let you play with his ball unless you agreed to his version of the rules?)

Some of these lenders whose SVR is not tied to the bank’s rate are starting to hit many UK homeowners with a rate rises in an efforet to recoup losses made elsewhere reports citywire this week.

Our own Professional Landlord recently sold a house due to his mortgage company (Standard Life) keeping their SVR for low LTV customers at 6.67% despite the base rate sitting at 0.5%. A remortgage deal for an existing customer? Why no sir, those are reserved for our special new customers only sir.

In fact Buy-To-Let investors tend to fare worst in these circumstances and are seen as fair game by lenders as their interests are also commercial. Or so the argument goes.

A quick and dirty list of Lenders’ SVRs shows some disparity:

Marsden building society 5.95%
Mansfield building society5.59%
Ipswich, Scottish and Cambridge building societies and Accord Mortgages, most of which are well over 5%.
Skipton SVR 4.95%
Norwich & Peterborough 4.85%.
Natwest 4.00%
Santander SVR 4.24%
Nationwide Building Society SVR 3.99%
HSBC SVR 3.94%
First Direct SVR 3.69%
Halifax standard variable rate (SVR) 3.5%
Barclays SVR 2.49% (via the Woolwich)

Sources: Citywire & Mortgage Rates

Most analysts agree that the BoE base rate will rise from 0.5% this year, but moderately and towards the end of the year – into 2011 looks a bit far out from here to say but again moderate increases are expected.

So what can we learn from this? If you’re remortgaging or getting a mortgage then tracker deals inherently are a gamble of sorts and you could get lucky like those C&G customers above, or you could get unlucky and we could enter a period of high inflation – or something in between. If you are taking a new fixed rate deal then look carefully at how the lenders’ SVR is calculated – is it the arbitrary judgement of the boardroom or is it contractually tied to the BoE base rate?