Inform 28th July 2023

Crystal Specialist Finance

Clients looking to raise capital without disturbing a low fixed term deal?

Do you have clients still enjoying a low cost fixed term deal but want to raise capital? Your clients could need some extra money for all sorts of reasons.

For example, they may need to revamp their kitchen or bathroom or upgrade their windows to secure the best price before they sell their house. Or perhaps they need to make a ‘big ticket’ purchase such as a new car or want to support their families financially.

Previously, you may have advised that clients simply remortgage to a new deal or consider a further advance. But with the average 2 year fixed interest rates hitting 6.6% last week, these options are simply not financially viable – particularly if they have a low rate fixed mortgage in place which is part way through its term.

Did you know that clients can raise the funds they need through a second charge bridging loan?

Bridging finance is competitively priced and much cheaper than unsecured borrowing. This won’t disturb their current fixed term deal and with terms up to 24 months – this could be an ideal solution. Giving clients the money they need now and they can exit at a time to suit them – penalty free. Either through the sale of their home (if that is their plan) or through remortgaging at a later date.

At Crystal, we are experts in bridging finance and with our fast track underwriting service and close relationships with lenders, your client could have the money they need in days. Plus, at Crystal, we always offer you –

• Fee FREE bridging – We don’t charge you a fee on your bridging finance deal.
• Valuation FREE bridging – With certain lenders a valuation isn’t required if their LTV criteria are met.
• We pay you up to 55% of the procuration fee.
• Oustanding service and support – which brokers rate as ‘excellent’ on Trustpilot.

https://www.crystalsf.com/

Whether you’d prefer to meet face-to-face, speak over the phone or by video conferencing, our national sales team are on hand to offer support in multiple ways.

Our field BDMs are buddied with an office-based BDM who’s also able to pick up the phone to take your queries and ensure someone’s available whenever you need some help.

And in case you didn’t know, our BDMs can offer support across both Precise Mortgages and Kent Reliance for Intermediaries. So if a case doesn’t quite fit the criteria for one lender, they can see if it’d be suitable for the other.

This allows them to deliver quicker decisions and, ultimately provide your clients with the answers they need.

So for your next buy to let and residential case, please don’t hesitate to get in touch. 

Paymentshield are pleased to announce that Integra have joined their Home Insurance panel.

With over 40 years in UK Home Insurance industry, Integra are an MGA based in the UK with a focus on homeowner insurance products. Their products are constantly reviewed and refined using the latest in-depth data enrichment technologies allowing them to provide competitive quotations based on granular data.

Delivering high-quality insurance and providing their customers is at the heart of what they do. They offer a first-class claims service managed by their UK based global claims partner who provide customer focussed end to end claims handling, utilising a range of market leading field and digital technology-based services.

Joe Bishop, Insurer Relations Director at Paymentshield, said: “At Paymentshield we work closely with insurers to deliver our advisers with the best quality panel that offers a wide scope of coverage, competition on price and the peace of mind that, should their clients ever need to make a claim, they will receive an unrivalled experience.

“The addition of Integra to our Home Insurance panel, will support all of these things and provide advisers with a great opportunity to talk about general insurance with their general insurance clients.”

Integra’s Deputy Chief Underwriting Officer, Tony Dixon, said ‘We’re delighted to be forming a new partnership with Paymentshield. Their unique distribution channel through mortgage and financial advisers opens up a new segment of the home insurance market to Integra.

We’re now able to offer Paymentshield customers competitive household rates driven from our sophisticated pricing models and enhanced quotability derived from our IHP infrastructure. This is an exciting opportunity for both parties, and we look forward to building a successful relationship.’

Supporting your remortgage and product transfer clients with their insurance needs

We all know that generating good customer outcomes is wired into the way advisers think and operate. After all, a failure to possess this mentality would result in very low repeat business rates.

However, when it comes to general insurance (GI) conversations, Paymentshield’s research has shown that one group in particular can sometimes get overlooked: remortgage customers. This can be down to many reasons, including a perception that existing homeowners may not require support with home insurance if they’ve been through the process before, or simply because the client already has an existing policy in place – even though it may no longer meet their needs.

From the research they conducted via YouGov, of 2139 UK adults, only 9% of homeowners said their adviser offered to review their home insurance at their most recent remortgage. There also seems to be some uncertainty over the scope of support advisers can provide, with just 14% of homeowners saying they thought the mortgage adviser would have the main responsibility for checking their home insurance policy was fit for purpose during a remortgage.

Read the full article here.

Our new series of video debates with Mortgage Solutions covers key topics in the Later Life and Buy to Let lending areas

In the second part of our series, Darren Deacon (Head of Intermediary Sales at Family Building Society) met again with Nick Cheek (Managing Editor at Mortgage Solutions).

They were joined by Richard Merrett (Director of Strategic Relationships at Simply Biz) and Greg Cunnington (Chief Operations Director at LDN Finance).

It was a fascinating discussion about an evolving, sophisticated and resilient market. The panel debated:

• Part 1: an overview of the Buy to Let market, what the reality is for a landlord and what challenges they’re seeing. Despite the challenges in the sector and the ‘doom and gloom’ in the national press, there are real opportunites particularly in the product transfer and remortgage arena.
• Part 2: what innovative products there are in the market and how they see the future of the Buy to Let market. Should every landlord have an offset mortgage in their portfolio?

Watch the latest two videos here!

Aldermore today announces three brand new pledges for its broker partners. The lender’s public display of commitment comes as the broker community continues to navigate ongoing unpredictability in the mortgage market.

Chief among these pledges is Aldermore’s promise to offer at least one full working day’s notice of any product withdrawal, as well as guaranteeing 10 days to convert a decision in principle (DIP) into a full mortgage application.

Here are Aldermore’s three pledges to brokers in full:

1. We will give you at least one full working day’s notice of any product withdrawal and give you 10 days to convert a DIP into a full mortgage application.
2. We will let you select a cheaper rate for your client at any time up to completion with no charge for you or your client.
3. We will contact you up to 6 months before your client’s deal matures, so you can help them decide what to do next.

Nicola Goldie, head of strategic partnerships at Aldermore, comments: “Whilst lenders are doing their best to react to an unpredictable market, it’s vital that we work together and offer brokers as much notice as possible when making changes to our product ranges. We know firsthand just how difficult brokers are finding it right now. Hopefully these three pledges provide much-needed certainty and clarity for them.”

The first pledge is expected to be welcomed positively in the market, with many brokers and The Association of Mortgage Intermediaries (AMI) taking a stand against late-notice product withdrawals recently.

Aldermore is one of the first lenders to stand up and pledge a full day’s notice to help brokers and their clients in these challenging times.

Andrew Montlake, managing director of Coreco, adds: “I’m thrilled to see Aldermore showing their commitment to the broker market and really listening. Brokers desperately need reliability and clear communication from lenders, for their own benefit as well as for their clients. In an ideal world we’ll start to see more lenders committing to these sorts of pledges in the near future.”

Exclusive Summary

• Residential Rental yields across England & Wales reached levels of 6.3% in Q2 2023
• House Prices down by 3.5% in Q2 2023 compared to the same period in 2022
• Average amount borrowed on BTL properties fell from £197K in Q1 to £174K in Q2 2023 (Based on Fleet data)
• Gross rental income in excess of £1,000 per calendar month now achieved in 6 out of 10 regions across England and Wales
• Opportunities for landlords to take advantage of high rental incomes

Read the full market update here.

At Buckinghamshire Building Society, we understand that managing your money can be tricky, even more so when difficult life events occur. These situations may heavily impact your financial situation or even mean that bills, mortgage payments and other obligations may be missed or forgotten.

Two years ago, Tomasz’s partner passed away. The pair never married but had two young children together and a home. Unfortunately, due to reduced household income, he was not able to make his mortgage payment and fell into arrears for 6 months and defaulted on his unsecured credit accounts.

Eventually, once probate had gone through and Tomasz received the life insurance payout, he was able to set some money aside to cover essential living expenses, clear his mortgage arrears and other forms of debt. Once back on track, Tomasz knew that he ought to look for a new house, nearer his family.

He found a property that he wanted to purchase and needed to secure a mortgage for 70% LTV, so contacted a broker to help him.
Tomasz is employed in a well-paying job and would fit affordability requirements for many lenders, however his financial situation over the last two years was of great concern for many. Tomasz’s broker then suggested that they approached Buckinghamshire Building Society. His broker knew that the Society offered bespoke underwriting and looked at each case individually. They aimed to enable homeownership for those who otherwise would find it difficult with more “mainstream” lenders.

In assessing this application, the underwriters were understanding of Tomasz’s situation and could ascertain that he was very responsible with his money both prior to and after falling into debt. Our underwriter’s had confidence that he would be able to fit our affordability requirements.
As such, he was granted an offer and the family were able to start afresh in their new home.

If you’d like to find out more about our Impaired Credit range, or any of the mortgage products we offer here at Buckinghamshire Building Society, contact one of our knowledgeable Key Account Managers. You can find yours here…
www.bucksbs.co.uk/intermediaries/find-your-key-account-manager/

Over the last two months, we’ve launched a series of criteria changes designed to streamline the mortgage process for both brokers and customers. The updates are part of our strategic development to ensure that our products and services reflect the changing needs of the modern borrower and are in line with their lifestyles and employment patterns.

The headlines:

• Product selection at DIP stage – Giving you the gift of time!
• Maximum loan size increases to £1.5million
• Bank statements no longer required for majority of cases where LTV is 80% or below
• Now accepting mortgage applications from individuals currently in a probationary period
• Making self-employed applications quicker and easier
• Making it easier for contractors to secure a mortgage

And we’ve still got a biggie to come, which we hope will be of interest. Only a couple of weeks to wait for that one to launch!

Santander

Scraps hefty exit penalty for ‘on the ball’ mortgage switchers

Santander has updated its mortgage policy that could have left existing borrowers who signed up to a new fixed rate with it months ago paying thousands of pounds in charges if they cancelled and switched away.

Santander mortgage borrowers who signed up for a fixed rate product transfer with the bank up to four months before their current deal matured could have faced an early repayment charge (ERC) if they wanted to leave the lender.

The charge would have been triggered if the borrower accepted the new product transfer – where you switch your existing mortgage to a new deal with the same lender – but then cancelled anytime, even months before it was due to start if they decided to switch to another lender.

The only way to avoid this charge was to take up another mortgage product with Santander.

An exclusive YourMoney.com investigation uncovered that out of 14 major mortgage lenders, Santander was the only one to penalise product transfer borrowers in this way.

But, since our investigation, the bank has updated its policy to remove this penalty, and Santander confirmed it intends to update the wording on its website in the “coming weeks”.

It currently states: “Once [the customer has] accepted the offer [product transfer] they won’t be able to cancel it unless they are booking a replacement deal with Santander”.

Had the policy not been changed, it meant existing Santander borrowers who secured a product transfer (fixed rate deal) could have faced an ERC of five per cent of the outstanding mortgage balance simply for changing their mind and moving to a new lender, such as if they had found a better deal.

Based on the average mortgage advance of £220,565 in the UK, a Santander customer who secured a five-year fixed rate deal as part of a product transfer could have ended up paying a £11,028 ERC penalty.

This is because Santander charges a five per cent penalty for exiting a mortgage deal within year one of a five-year fixed rate.

‘Penalising borrowers…not in the spirit of the Mortgage Charter’

One broker said it was good to hear the restriction had been lifted.

Nicholas Mendes, mortgage technical manager for mortgage broker John Charcol, said: “It’s good to hear that Santander has updated its product transfer restrictions. Penalising existing mortgage holders who are on the ball and arrange a product transfer months in advance, who have since decided to remortgage to another lender to ensure they get the best deal, was not in line with the spirit of the Mortgage Charter.”

To support anxious borrowers, Chancellor Jeremy Hunt drew up the Mortgage Charter, a set of commitments that the UK’s principle mortgage lenders have agreed to follow to help borrowers who may be struggling amid the current cost-of-living crisis and market turmoil.

Among measures which include allowing borrowers to switch to an interest-only mortgage or extend their mortgage term, customers approaching the end of their fixed rate deal now have the chance to lock in a deal up to six months ahead. According to the Charter, customers who do so must be allowed to request a better like-for-like deal with their lender right up until their new product term starts.

Santander confirmed to YourMoney.com that it had updated its approach to give customers increased flexibility based on the Mortgage Charter. All mortgage customers can cancel their new product up to 14 days before the new deal is due to start if it is no longer needed.

Further, from 25 July, the bank will also allow borrowers to book new deals up to six months in advance, extending the current four month limit.

Rates soared as remortgagors urged to lock in early

Over the past 12 months, five-year fixed mortgage rates have jumped from 4.02 per cent to 6.31 per cent, according to data site Moneyfacts. As rates soared, brokers and experts urged homeowners to secure deals in advance of their current deal maturing. Typically, homeowners can secure a deal up to six months in advance which would somewhat help protect them in a rising rate environment.

And with 1.5 million fixed rate mortgage deals set to expire in 2023 – 800,000 in the second half of the year – according to trade body UK Finance, homeowners have been braced to expect to pay hundreds of pounds more on their mortgage bills after rolling off sub-two per cent deals secured in the last five years to above six per cent now.

A major advantage of choosing a product transfer with your current lender, instead of remortgaging to a new lender, is not having to go through an affordability or credit check again as long as you are not increasing your mortgage balance or mortgage term.

For borrowers who have suffered a credit blip or who have changed jobs and now earn less since taking out their original mortgage, this is an attractive option. That’s because these changes could result in a remortgage with a new lender being declined.

However, for homeowners who secured a product transfer amid the mortgage frenzy, they may now want to cancel their product switch if mortgage rates have fallen since they locked in; their remortgage needs have changed and they need to raise extra money for urgent home repairs or debt consolidation; or if their circumstances have improved and they are now eligible for better rates with another lender.

Lenders’ product transfer switch policies

Mendes said: “While its beneficial to plan ahead to ensure you secure the best deal, you need to equally make sure you’re aware of the lender cancelation policy if you decided to opt for a new deal or it could be a costly mistake.”

YourMoney.com analysed the mortgage switching cancellation policies of 14 leading lenders. Here are our findings:

Check the deadline

A Santander spokesperson said: “We are committed to supporting our customers and in line with the Mortgage Charter, customers who accept a mortgage offer with Santander can cancel their deal up to 14 days before their new term is due to start without any charge.”