A new landscape - how to navigate the changing mortgage market

As lenders raise mortgage rates and tighten criteria for borrowers, unbiased.co.uk, the professional advice website, with the help of its expert panel of professional advisers, has gathered advice and tips for consumers on how to navigate the current mortgage market.

1. Karen Barrett, Chief Executive at unbiased.co.uk

“News last week that the Co-operative Bank became the first big high street lender to pull out of the interest-only mortgage market, further reduces the remortgage options available to homeowners withinterest-only loans.  Several lenders, including Santander and Nationwide, will only lend to homeowners with a deposit, or equity of at least 50%.  We know from our own research that one in seven homeowners with an interest only mortgage pay off the interest each month but don’t save anything towards paying off their future debt. With purse strings tight, it’s understandable many people are trying to keep outgoings low by sticking to interest only mortgages, but has the potential for serious problems in the long term, especially as there are fewer remortgage options available to them.

“It can be overwhelming when trying to navigate a complex market where mortgage deals are more limited and come with stricter lending criteria, so consumers should ensure they are as informed as possible before making their choice.  A whole of market mortgage adviser will help you to make the right decisions regarding your mortgage in the context of your current financial situation.  To find a whole of market mortgage adviser or an independent financial adviser simply go towww.unbiased.co.uk and enter your postcode.”

2. David Hollingworth (London & Country Mortgages) – Pay attention to changes across the sector

“Mortgage borrowers’ lives are not getting any easier with some lenders increasing their standard variable rates (SVR) and rates on new mortgages drifting up.  It highlights that despite a static base rate, mortgage rates continue to move, so it is as important as ever to keep your mortgage under close review to ensure that you are getting as good a deal as possible.  Recent SVR hikes will be bound to sting some into action and there are still some excellent rates available, both for those seeking the security of a fixed rate or the transparency of a tracker deal.  However, as lenders continue to grapple with higher funding costs rates are generally on the up so any delay could result in a higher mortgage rate.”

3. Danny Cox (Hargreaves Lansdown) – Don’t rush into buying anything

“Don't rush into buying a property.  In most areas property prices are unlikely to rise this year and may fall.  Therefore sitting on the sidelines, building a higher deposit and biding your time could save you thousands.”

4. Paul White (Belgravia Insurance Consultants) – Run a small credit card balance

“If you think, “I don’t believe in credit”, ask yourself, “Will I ever need a mortgage?” If you do, then it makes sense to run a small credit card balance, just to build up a credit history.  If you haven’t got one, lenders don’t have any information on which to make a lending decision.”

5. James Carter (Independent James)– Get hold of a credit report

“We are frequently surprised by the number of people who aren’t on the voters roll, use different names for credit and utility bills than on their passports and problems can also arise from addresses of flats.  For instance a Flat 3, 100 High St may actually be registered as Top Floor flat, 100 High Street, so we would recommend obtaining a credit report to ensure that all credit is registered and in the correct format to maximise your credit score. Mistakes on credit reports can lead to difficulties in obtaining the best mortgages.”

6. Harry Katz (Norwest Consultants) – Save as much as you can

“Save as much as you can.  If you are a first time buyer you will need a hefty deposit.  If you already have a mortgage it depends on the percentage loan to value. Lenders now want to see much lower loans to value and want to be sure you can afford your payments.  If your loan is around 50% of the value of your home then you can certainly shop around – provided you have sufficient income and no substantial other debts.  Work on the basis that the mortgage should not be more than three times your income before tax.”

7. Justin King (MFP Wealth Management) – Do your research

“Consider the term of the mortgage, don’t just accept the default 25 years.  Are overpayments possible?  Remember the following:

A small over payment can save thousands in interest.Don’t accept the building society or bank’s insurance deal without shopping around.You should always run a credit report before applying for a mortgage.”

8. Bob Riach (Riach Independent Financial Advisers) – Have the correct paperwork ready

“Lenders are becoming increasing vigilant and both first-time buyers and home movers should be prepared to give evidence of their financial position and their ability to afford the mortgage. I always advise potential first time buyers and home movers to have the following documents available before submitting an application:

Proof of ID;P60;Last 3 months payslips;Last 3 months bank statements;Full documented details of any other income;Full documented details of any loans & credit cards.

Many lenders now want to see that the amount stated on the payslips matches the amount paid into the bank.”

ENDS

For more information contact:

Lisa Grando/ Emily Falla/ Maddy Morgan Williams, Lansons Communications:  020 7294 3682

For expert commentary or case studies from over 190 media-friendly IFAs, journalists should visitwww.unbiased.co.uk/bluebook.

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About unbiased.co.uk, the professional advice website

The unbiased.co.ukportal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, ‘find a solicitor’, and ‘find an accountant’. These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2011, unbiased.co.uk fulfilled around 450,000 searches for local, professional advice. 

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