Income Protection Task Force (IPTF) Survey
Over the next few months, the IPTF plans to produce educational and helpful income protection (IP) focused content that can be distributed and used by networks and advisers.
To ensure that this content is as helpful as possible, the IPTF has asked AMI members to complete its survey. This is an excellent opportunity for mortgage and protection advisers to share views on the year ahead for IP and the biggest barriers faced when it comes to writing more protection.
The survey should only take a couple of minutes to complete and can be accessed here.
Click here to see previous newsflashes
Top tips for holiday let cases
Holiday lets have become a popular choice for landlord clients in recent years and following the Covid-19 pandemic, the demand for UK staycations is soaring.
The rise in Brits holidaying at home in the UK and improved rental demand has led to lenders returning to this niche buy-to-let sector.
Sourcing holiday let mortgages is slightly different from regular buy-to-let and there are certain points to check with your clients at the outset:
Location
Most lenders will expect the property to be in a prime holiday destination for example Cornwall, Devon and Brighton.
Rental coverage
Some lenders will need a local Holiday Letting Agent letter to confirm anticipated rent in low, medium and high season. An average of these will then be used in the calculation.
AirBnB
We work with a number of lenders that offer finance on holiday let advertised and run as an AirBnB. Further location restrictions may apply to these properties and those using elements of ‘serviced accomodation’, which is common amongst AirBnBs, should also be checked with the potential lender.
Parks and covenantsSome holiday let properties have restrictions on how they can be used and let too which may affect the number of lenders to choose from.
QUESTION OF KNOWLEDGE
Think you know HMO?
With the end of Q1 quickly approaching, the March Question of Knowledge is here!
- Friday 26th March
- 12PM | Approx. 1 Hour
Nicola Firth, Roger Morris and Liza Campion will once again be occupying the virtual communal area for their monthly discussion, this time based around HMO’s!
We will be focussing on:
- The history of HMO
- Licensing and Planning
- Selective and Additional Licensing
- Article 4
- Understanding how lenders assess Communal Areas
- DSS tenants, subletting and lodgers
- Short-form and Longform valuations
Attendees who attend the full session will be sent learning certificates which can be used for CPD.
We encourage brokers to ask questions during the event, but if you would like to provide us with any questions you have in advance, please supply when registering below. We will do our best to get through as many as possible during the live session.
We’re here to make sure we are #KeepingAdvisersAdvising so if there is any further information or support you feel you need, please don’t hesitate to contact our broker support team on either 01226 107077 or support@yourknowledgebank.co.uk.
Ipswich Building Society Search criteria
We will now accept personal searches or search insurance on both purchases and remortgages subject to:
- A suitably qualified search agent carries out the personal search and has indemnity insurance that adequately protects us or
- The search insurance policy adequately protects us
The Solicitor must also confirm that the title is good and marketable and personal searches are subject to the search firm subscribing to the Search Code monitored by the Property Code Compliance Board.
Guidance and changes made
Since May 2020 we have communicated guidance around income and some temporary changes we have made to ensure we continue to lend responsibly and support our clients during this difficult time. The below is a summary of the guidance provided and changes we have made:
Employed Applicants – Furloughed / Reduced income
The Coronavirus Job Retention Scheme was put in place by the Government to help employers whose operations have been severely affected by coronavirus to retain their employees and continue paying either part or all of their employees’ salary.
Where a customer has been furloughed by their employer we will require the latest payslip to show the customer has returned to work and is being paid in full by their employer.
If furlough income is still showing on the latest payslip customers will need to wait until their next payslip is available before applying. A letter from the employer with an expected, or confirmed, date for return to work will not be accepted.
For customers who may have returned to work but on a reduction in their usual salary this reduced level of income should be keyed.
Bonus, Commission and Overtime income
The allowable proportion of Bonus, Commission and Overtime income used in our affordability assessment has been reduced from 60% to 30% to reflect there may be an increased element of variance in these income types.
Bonus, Commission and Overtime must continue to represent a regular and sustainable feature of the client’s income. These income types should be keyed as per existing guidance and usual income verification requirements apply.
Self-employed income
A temporary change is being made for applications with any element of self-employed income which will be subject to a maximum Loan to Income (LTI) of 4.49x. The Halifax Intermediaries website affordability calculator includes a new question: ‘Does any applicant have any self-employed income?’ to ensure the correct LTI is applied to the affordability result.
To ensure we can fully assess individual circumstances, some applications in receipt of self-employed income may be referred for a review by our underwriters and the system next step messages will advise the latest three months’ bank statements are required on these cases.
Income should continue to be keyed as per existing guidance and usual income verification requirements apply. Bank statements are only additionally required when requested.
Following manual assessment an underwriter may request additional information and will take into consideration the following:
- The stability of and long term history of the business within their sector
- The availability of funds to meet their fixed commitments e.g. rent/utilities
- The likelihood of returning to normal profitability/trading levels in the future if these have been impacted in recent times
Please provide any information that will assist with the assessment on submission of the application by uploading a document containing relevant details via our document upload system.
As a reminder where bank statements are required they should meet the following requirements:
- Be held in client or trading name as per the application information.
- Cover the latest three full months.
- If no income is showing on the statements, these must still be provided to help underwriters review the individual circumstances.
Contractor income
For contractors providing a copy of the contract as proof of income, a latest bank statement showing the salary credit or latest payslip must be provided.
Applications must meet our current contractor lending criteria and please note the gross value of the contract to be keyed as income should now be calculated based on 46 rather than 48 working weeks. This is a permanent change.
Zero hours contract income
Where you have established or income evidence shows your customer is on a zero hours contract, existing lending criteria and income verification requirements should be followed.
The customer must have been employed on a zero hours contract for a minimum of 12 months and the total income earned over the 12 months should be keyed.
If there are different types of income these must be keyed separately for example, bonus, commission and overtime.
Where a zero hours contract customer is currently not in receipt of any income, is furloughed or is receiving a significant reduction in income compared with their average over the last 12 months (i.e. as evidenced on the latest pay slip), the application will not be considered at this time.
Where a customer is employed by a nursing bank on a zero hours contract then the usual Nursing Bank Staff policy should be followed.
New jobs and pay rises
We can continue to accept income from a new job not yet started, or a pay rise to be received, as long as the new job will start or pay rise take effect within a reasonable timescale. A copy of the employment contract or a pay rise letter to confirm the new position/income will be required.
Products between 85% and 90% loan to value (LTV)
For home mover and first time buyer products available above 85% LTV enhanced criteria apply to their availability:
- These products are not available for new build properties or other schemes
- An enhanced credit score requirement will be applied
- A maximum 4.49x loan to income (LTI) cap will be applied as part of our affordability assessment
- Commitments to be repaid upon completion – any current credit commitments will be deducted as ongoing in our affordability calculation even where declared as ‘to be repaid’
We continue to monitor the situation closely to ensure we make the right decisions to support our customers during these difficult times.
Please check our website for our latest criteria.
Making Things Easier for You
Your clients want to get into their new homes as quickly as possible, and we’ll do whatever we can to make that happen. Starting with those key bits of admin that can make all the difference:
‘we’ll aim to review any extra documents requested at initial underwrite within 24 hours’.
Karen Appleton, Head of New Lending, Skipton Building Society:
“In practical terms, that means we’ll process offers as soon as possible on your fully packaged cases. And, if we need any additional documentation or if an underwriter requests it, we’ll aim to review it within 24 hours of receipt to make sure your case stays on track and doesn’t get pushed to the back of the queue.”
See some of the other ways we’re Making Things Easier for You.
My Care Consultant newest report
Pure Retirement recently supported The Equity Release Council alongside My Care Consultant to launch the Council’s newest report, ‘Solving the social care funding crisis: perspectives on the contribution of property wealth’.
The report has prompted a wider conversation that addresses the social care funding crisis and explores the role of property wealth in supporting a broader, more sustainable care funding solution with features from a host of industry specialists including Jacqueline Berry, Managing Director at My Care Consultant.
Pure’s CEO, Paul Carter, brought his insight to the report with a feature on how equity release could help “bridge the gap” to help fund care. He highlights the latest market and customer figures which revealed that 60% of over-50s are fearful of having to move into residential care homes and over half have not thought about how to pay for future care needs.
Quickly get the underwriting information you need for Diabetes, BMI and more
Legal & General have developed an online tool (Virtual Assistant) to give you quick access to the information you need during pre-sale. By answering a few simple questions you’ll get immediate sight if the cover would be accepted, along with an indication of any rating for Diabetes, BMI, Cholesterol and Hypertension. In addition, they have also added the ability to look up the typical medical evidence we may need for different types of cover, based on your customer’s age and benefit amount.
How to access this information?
Step 1 – Log into OLPC using your usual login
Step 2 – Locate the ‘Do you have a question?’ box at the bottom right of the screen
Step 3 – Select MUTAL tools (New) from the dropdown and get started with medical pre-sales support at your fingertips
They have also created a handy video to demonstrate how it works.
MUTAL is once again open 9am – 5pm as we have listened to recent feedback and added additional resource to this area to ensure they are available to support you.
First-time buyers with just a 5% deposit
First-time buyers with just a 5% deposit will receive a boost as we become the first lender to return to the 95% LTV market.
We’re launching a five-year fixed rate mortgage – exclusively to first-time buyers. It comes with a £995 fee and free standard valuation. It’s available up to a maximum borrowing of £500,000.
We won’t be using the government’s mortgage guarantee scheme for this product and it’s not available for flats, new builds or properties in Northern Ireland.
We were one of just a handful of lenders that continued to offer 90% LTV mortgages during the pandemic and we’ve been monitoring the market closely to ensure we carefully broaden our support to those clients with even smaller deposits.
To qualify for the new product, first-time buyers will be able to borrow a maximum of 4.49 times their income, ensuring prudent affordability; to get an accurate lending figure please complete a DIP.
As the first lender to launch a new 5% deposit mortgage to the market, it’s important we balance demand with being able to offer the high levels of service you and your clients expect. So, this product may be withdrawn at relatively short notice, but we’ll continue to signpost our intentions wherever possible.
A straightforward, human approach to helping the self-employed
We’re getting closer to the 12th April, and there’s fresh optimism for all as we begin to see the light at the end of the lockdown tunnel.
There’s going to be a rush from business owners to re-open and start trading again – I for one will be rushing to my hairdresser!
Whilst, the number of self-employed individuals in the UK is currently unknown as we begin to press ahead to ‘normal life’, what we do know is there has been lots of discussion around how difficult it is for the self-employed when it comes to mortgage applications.
In this short article, we will aim to address this, and illustrate how a straightforward and human approach can assist self-employed borrowers.
Registered dietitian consultations
With the ongoing pressures placed on the NHS showing no signs of easing, we wanted to do more for your clients. That’s why we have updated HealthWise, our member benefits app, giving your new and existing income protection clients access to two new benefits:
Registered dietitian consultations
Up to six registered dietitian consultations each year giving your clients access to one-on-one consultations with an HCPC registered dietitian. This includes support for those with special dietary needs due to health conditions such as coeliac disease or diabetes.
Lifestyle and nutrition consultations
Up to six consultations each year with a qualified nutritionist. Designed to help your clients manage a range of areas that can affect their health and wellbeing, including stress management, poor sleep, or help to increase their exercise levels.
Keeping healthy and saving money with HealthWise
The benefits provided through HealthWise not only offer your clients valuable support, but they are free to access and available to their immediate family. If your clients were to use their full annual consultation allowances, they would save up to £1,800 a year*. That’s an increase of £600 a year at no extra cost. And that’s something worth talking about.
Find out more
To find out more about how HealthWise can support your clients, why not book an online briefing with one of our sales team below.
PROTECT YOUR CLIENT’S BUSINESS IF THE UNEXPECTED WERE TO HAPPEN TO A KEY PERSON
Do you know if your clients have a plan in place to protect the key personnel within their business? The sudden loss of a key person can have a huge impact on the profitability and the survival of the firm. LV= Key Person Cover is designed to protect a business against these risks, for example:
- The sudden loss of a key employee can leave the business without vital skills or knowledge and facing the cost of recruiting a replacement.
- If an employee suffers a critical illness the business might be contracted to continue paying their salary whilst the key person is recovering.
- The company may have borrowed money (often in the form of a director’s loan account) which they may struggle to repay.
- Sole traders who are personally liable for business debt if they died and any debt would be inherited by their next of kin.
Find out more about LV= Key Person cover and Business Protection resources available for you to use to help support your conversations. Alternatively call your usual account manager on 0800 032 4219
Impact Insights – Specialist Lending Market
In this episode, Dale Jannels, Managing Director of Impact Specialist Finance debates some key industry concerns and questions with a panel of industry experts from PRIMIS Mortgage Network, Bluestone Mortgages and The Association of Mortgage Intermediaries. Speaking just before the March budget, they discuss:
– Specialist Lending
– Stamp Duty extension
– Clients who have had adverse
– What should a Broker be aware of in the current climates?
– Help to Buy
– Technology in the mortgage sector
– Thoughts for 2021 and more..
What do the Electrical Safety Standards mean for landlords?
The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 (No.312) came into force for all NEW tenancies on 1 July 2020. From 1 April 2021, all EXISTING tenancies will also need to comply with the legislation.
