The Mortgage market is vibrant!
Having written this column every week since early 2009, a lot of people ask me “how do you know what to write each week, it must be difficult?” But actually, there’s so much going on, I could easily fill more than my 350 word column consistently. The mortgage market is vibrant with both activity and positivity. Mortgage product offerings are at their highest for some time and lenders appear to want to lend!
The bottom line is that a mortgage is the biggest debt you’re likely to ever take on, so you need to do your homework and understand more than just what the national press decide to publish about the Bank of England base rate being held at 0.25% again, or how much profit the banks are currently making! Or what a mate says in the pub!
Advice is crucial and ideally from a company who can offer ‘whole of market’ mortgages, not just products from a limited panel of lenders, like some Estate Agency chains or a Bank/Building Society who only offer their own or a limited set of products.
Most lenders have a set of rules and criteria that need to be met even before requesting a decision in principle (stage at which you are credit searched for pre-approval). For example, one lender has a debt utilisation rule at 70%. So, if you had a credit card with a £1k limit and you had a balance of £701, you will be in excess of their 70% rule which means you would be ineligible for this lender. Another stipulates you can have no more than 8 unsecured credit cards or loans at the point of application. We tend to see customers have a number of debts within this ruling, but who keep open old debts with zero balances. This can push them over the lenders stipulations. Others won’t look at gifted equity, or assist where the customer has had a break in employment in the last twelve months, or lend on properties with a flat roof, and so on.
All of these are little idiosyncrasies that should be known by anyone advising on a mortgage. Thus saving time and probably unnecessary credit searches being carried out. Remember, the more credit searches you have against your name, the more likely your credit score will decrease, which may affect your ability to obtain finance. Whoever you talk to about your financial requirements, make sure you say at the outset that you do not want to be credit searched, unless you give them the authority to do so or a product has been thoroughly researched.