Precise Mortgages, the specialist lender, has today refreshed its entire range of residential second charge loan products.
Rates start at just 4.55% and the products are targeted at Prime and Near Prime residential customers. The range is specifically designed to allow mortgage intermediaries an alternative solution to a remortgage and in many cases a second charge loan is more appropriate.
The continued development of Precise Mortgages’ second charge proposition re-affirms its belief that second charge loans should become a natural consideration for all mortgage intermediaries.
Additionally, customers with a less than perfect credit history can now benefit from a competitively priced, near prime range, where rates start as low as 5.55%.
Highlights of the new range include:
|Prime||Prime||Near Prime||Near Prime|
|£10,000 to £30,000||4.70%||5.70%|
|£30,001 to £200,000||4.55%||5.55%|
|£200,001 to £500,000||5.75%|
Alan Cleary, Managing Director of Precise Mortgages says: “We continue to drive good customer outcomes through product design. This latest change sees rates reduced across the entire second charge loan range. Mortgage Intermediaries trust what we do and know that loans of this type are now a viable option for many customers.”
He adds “We are delighted to offer the right solution for all customers that may be locked into their existing mortgage as a result of criteria changes or simply because they want to protect their current mortgage rate.”
Further product information and a list of authorised Master Brokers and Packagers is available at www.precisemortgages.co.uk
Alan Cleary, managing director at Precise Mortgages, argues the financial and legal framework for becoming a landlord has never been more complex.
My daughter is flying the nest and moving to The Big Smoke. Having qualified as a teacher last year, she has been working in the West Midlands, living at home while diligently saving for a deposit for her first flat.
Seeing her brother living and working in central London, she is longing for the bright lights of the city to replace the drudgery of suburbia. Having been young once myself, I understand the attraction.
I have been employed in the mortgage market for nearly my whole working life and like to think I know quite a bit about both products and housing. However, I have gained a new perspective on things since my daughter started to investigate where she would live come the start of term.
Even if she had saved her entire teaching salary for the past year and I had gifted her £75,000, the combined total would be insufficient to put down as a deposit on a property near the school she will be teaching at.
Of course, I knew that would be the case but, nonetheless, £500,000 for a doer-upper in Kilburn? I also notice just how far Hampstead has spread: when I lived in Kilburn 20 years ago, it was called Kilburn, not South Hampstead. This is surely a breach of the Properties Misdescriptions Act.
So I started pondering whether I should buy a property that both my son and daughter could live in.
After some thought, I was not convinced that buying in London right now was sensible. Probably better to wait until we knew what the impact of quantitative easing unwinding would be, as I have a suspicion that house prices (alongside many other assets classes) have been inflated as a result of loose monetary policy.
In addition, an interest rate rise is expected in the foreseeable future and I am interested to see what the outcome of that will be.
But my next chain of thought was that, if I was to treat this as a buy-to-let rather than a second property, and was to raise a mortgage that would be a regulated buy-to-let, this would drastically cut down the choice of mortgage products available.
OK, this might still be workable, but what about the summer Budget? The tax allowances available as a landlord are being phased out. While I do not believe the changes will have much bearing on whether buy-to-let is a good investment or not (and, as I am thinking about it as a home for my children, the tax issues become somewhat irrelevant), what matters is the notice the Chancellor has given to landlords. I doubt if the Government wants to manage the private rented sector but I believe the Treasury would like to enjoy the successes of the market, increasing its revenues in the process.
One of the last considerations I deliberated over was the fact that I did not want to be a civil servant. Never had, never would. However, the recent announcement that landlords will face tougher penalties (including prison) if they persistently allow illegal immigrants to rent their property effectively means they have become an extension of the Home Office in policing immigration.
By this point my motivation was waning. Buy-to-let has never been an investment that one should enter lightly but the financial and legal framework has never been more complex. Indeed, the case for taking professional advice before becoming a landlord has never been greater.
But I need not have worried. After I had spent days thinking about the pros and cons, my daughter told me she would much rather rent a room in a shared house than live with her brother.
*Some of the above has been exaggerated slightly for comic effect
Simon Carr, Sales Development Director
OK, in my last blog I discussed the imminent arrival of the ‘newborn’. In a little over seven months we’ll see the birth of MCD, the emergence of a new era. But right now you could argue that many firms in the mortgage sector are still in denial (is this really happening? YES) or simply recognise the embryonic stage they are at.
Definition: Embryonic is an adjective that means ‘of an organism prior to birth or hatching’. If something is described as embryonic, it's just starting to develop or come together.
By now you will have all obtained the relevant Interim Permissions and submitted (or shortly plan to submit) your application for full authorisation; or have prepared your application to vary your permissions to continue to offer products when the new arrival makes its appearance in March. FYI, this is one arrival that will be making its appearance on its due date – there will be NO prospect of a two week ‘overdue’ grace period. If you’re not ready your ‘pride and joy’ won’t be coming home aka you won’t be able to trade – that’s a fact - the reality of 21st March 2016.
In March 2016, the FCA will recognise a second charge as a loan secured on land largely in the same way as a first mortgage and will treat them pretty much the same. The advice and the way products are structured will be similar. The new ESIS illustration and binding offer documents will lay out information for the consumer in the same way for both a first mortgage and a second charge loan. Second charge loans will then be subject to MCOB (and not CONC) and the loans will be written as regulated mortgage contracts and not regulated credit agreements.
So, MCOB 4 should then be a crucial consideration for all serious practitioners in the mortgage intermediary space. In your initial disclosure you have to detail the scope of service and ensure the product providers cover a sufficient composition of products across the market. The selection of providers and associated products should not disadvantage your customer. Only if the product coverage is sufficient can you describe your proposition as unlimited, otherwise you have to detail your limitations.
Now consider the introduction of a second charge loan as a regulated mortgage contract, and consider the customer’s requirements as a facility – the customer does not know if a second charge loan or first charge mortgage is the most suitable solution – that’s down to the mortgage intermediary. And you will also be obliged to explain the availability of other alternative finance options (such as further advances and unsecured loans) and the basis of your remuneration.
So, in the next 3 months (the clock is ticking), what do you need to do? Plan, plan, and plan. Consider your choices and please, please discuss your birth plan.
Who should you discuss your plan with, I hear you ask? If you’re directly authorised, then discuss with your compliance function or if you are an appointed representative, engage your network.
Review Review the post-dated version of MCOB 4 here Develop your birth plan. Discuss your birth plan – get it right. Start considering the customer’s requirements as a facility and do not automatically default to a mortgage. Test the Master Broker market to determine the right solution for your customers.
Remember, 21st March is coming, don’t be surprised and PLEASE heed my warning...
A chaotic mad dash as you are racing towards the due date will be too late – people will not be impressed, you will not be prepared and, of course, no one wants to upset ‘Mother’!
Precise Mortgages, the specialist lender, has today launched a range of buy to let second charge loan products. Rates start at just 5.95% and the products are targeted at prime landlords wishing to raise capital from the equity in their buy to let portfolios. Up until now there have been very few options for these customers other than remortgaging, but in many cases it would make more sense to take a buy to let second charge loan. Precise Mortgages estimates that the buy to let market is to hit £30bn of gross advances this year and approximately 50% of that will be remortgages.
Highlights of the new range include:
Alan Cleary, Managing Director of Precise Mortgages says: “We expect to see approximately 108,000 buy to let remortgage transactions this year and many of these landlords may have been financially better off if they had access to a competitive buy to let second charge loan product instead. Now they have.”
Simon Carr, Sales Development Director
In March 2016 the second charge loan industry bids farewell to the over restrictive (and ageing) Consumer Credit Act – legislation which was originally introduced to offer protection to the consumer. Now don’t get me wrong – in all of my blogs and articles; even in the products we have designed for the second charge market I’d like to believe that positive customer centricity has been common throughout.
The Consumer Credit Act 1974 (and subsequent amendments) has attempted to remain up-to-date and current. Whilst on the whole, it has, I firmly believe, also held back innovation in the second charge loans market due to restrictive conditions placed on product design. As a result, this has prevented alignment to the mortgage sector and ultimately, stifled product innovation.
March 2016 sees a new dawn for second charge loans with the FCA finally regulating this industry through its mortgage rules - MCOB (or, Mortgages and Home Finance: Conduct of Business sourcebook to be specific). Many experts are predicting a slowdown...me? I truly believe this market could grow beyond everyone’s expectations. **Caveat coming up now** If of course sourcing systems realise that an opportunity exists to source solutions that are based on the facility - not by tunnel vision – “So you want a remortgage to raise £40,000?” – then that’s what you’ll get, or, “You want a loan for £40,000?” then that’s what you’ll get.
Take five to sit back and let me get your imagination running wild...imagine a world where sourcing systems provided quotes for the facility on both first and second charge loan solutions....enabling blended rates and costs to be compared against the entire remo vs. safeguarding the low rate first mortgage AND securing the additional finance on the second charge loan.
Now that would be insane.
It would be like the first time Peter Kay tried garlic bread…..“GARLIC”......“BREAD” – never the twain should meet! Garlic bread seems to be the default position for any bread and garlic combo. Fast forward to March 2016 - consider having the remortgage and second charge option during the same conversation with your customer – now that’s GARLIC BREAD!!
The move from the Consumer Credit Act to full FCA mortgage regulation heralds the first opportunity to change the second charge loans market for good.
So what will you see?
Just take a look at the first mortgage market for inspiration. ERCs, no ERCs, val fees and changes to the way fees are charged (pay upfront, deduct or add to loan) all lending themselves to a little thing called product innovation.
I guess what I am saying is second charge loans will be able to stand shoulder to shoulder with first mortgage products – the end result? Lending solutions chosen based on what’s right for the customer. I do believe mortgage prisoners (price and criteria-driven) will continue to be attracted to the second charge sector but what you will see are more prime customers migrating to seconds.
There is more good news as you will see less of those adverts targeting “any/any adverse levels” or lenders considering less than responsible evidence of self-employed income. You will start to recognise these loans as suitable and not simply – this is all you can have!
With just shy of 9 months to go, my blogs will begin to talk about the steps intermediaries need to take in order to prepare for next year. (Can you hear a trumpet solo beckoning in the distance? The theme tune is coming...)
SPOILER ALERT! The Mortgage Credit Directive (MCD) is like expecting your first child. You know their imminent arrival date, as does everyone else... You think you are prepared and then before you know it, the little one is here and the nappies are still on the shop shelf whilst you are covered in... (I’ll leave it to your imagination here!) Do not be surprised and I warn you all now – rushing around the night before the MCD ‘due’ date will be too late – read my next blog to avoid disappointment, you know it makes sense.
And so, your favourite bit of the show, to your theme tune....
Education, that’s what you need, if you wanna be the best, if you wanna beat the rest. Education’s what you need if you wanna be a mortgage broker!
(Play the theme tune.)