Millennials, Generation Rent, Generation Y. However they’re described, the financial situation faced by some of those born between the early 1980s and late 1990s has been well documented.
A competitive job market, take-home pay eroded by higher living costs and large student loan repayments are leaving many feeling owning their own home is becoming an increasingly distant dream.
These borrowers might be finding it more challenging trying to borrow from high street banks. This means more people are renting, giving them less opportunity to save for the deposit they need to purchase their own homes.
Fortunately, specialist lenders like Precise Mortgages offer products to help those underserved by the high street get a foot on to the housing ladder.
We offer products for borrowers looking to buy a new build property using the government’s Help to Buy scheme, including those who might only have a small deposit or a less than perfect credit profile.
Borrowers contribute 5% of the purchase price as a deposit. The Help to Buy scheme provides a five year interest free shared equity loan of 20% of the purchase price, which increases to 40% for borrowers living in London. We then provide a mortgage for up to 75% of the purchase price (55% in London).
We also offer products to help people who are renting a local authority or housing association property and would like to purchase it under the Right to Buy scheme.
The Right to Buy scheme makes properties available at a discounted purchase price to help people make the house they’re renting their permanent home.
Borrowers must have been a local authority or housing association tenant for at least three years to qualify for discounts which can be as much as £77,900 outside of London or £103,900 in London.
With first time buyers finding it tough to get a mortgage, more parents are giving their children a helping hand in raising funds for a deposit. For situations like this, second charge loans are a viable alternative to remortgaging. The loans can be used for any purpose and could be ideal for those looking to raise capital by releasing equity from their existing residential property.
Rates start from 3.82% for our Help to Buy products, from 4.89% for our Right to Buy range and from 3.70% for our second charge loans. We consider customers with less than perfect credit histories for all of our products.
For more information, visit www.precisemortgages.co.uk
Chancellor Philip Hammond’s spring Budget raised the hackles of hard-working people across the country. Not only did he announce a tax hike for the self-employed in the form of increased National Insurance contributions but he also hit small business owners and pensioners by cutting the short-lived tax-free dividend allowance.
From a government that has repeatedly promised to support the so-called ‘JAMs’ (families ‘just about managing’ financially), it was slightly unexpected.
Within a week, Hammond had U-turned on the decision to raise NICs – prompted by an overwhelming public backlash and the apparently late realisation that the Tories had actually promised in their last election manifesto to leave NI frozen until 2020.
There was no such U-turn on dividend tax. And those hit by cuts to the dividend allowance are also largely self-employed. If newspapers are to be believed, they remain pretty bitter about what they perceive as a backhanded swipe at hard-working individuals who have provided jobs and incomes to hundreds of thousands of people.
There will be implications for homeowners, whose incomes will drop as their tax liabilities on dividends rise after April. This is already an issue for those who need to remortgage now because their income will be affected within the term of any mortgage they take today.
Lenders are obliged to consider affordability in the future as well as now, and the Government’s recent to-ing and fro-ing on taxes that affect this is unhelpful. It causes confusion and fear among borrowers.
In practice, I doubt it will make a huge difference for most borrowers – the tax-free allowance is falling from £5,000 to £2,000, meaning the loss of income will be only the tax payable on the difference. But it further muddies the perception thousands of borrowers have of today’s market: that variable income and self-employment make it more difficult to get a mortgage.
Good brokers know this is just a perception. It may take more experience and effort to place a case with a more complex income profile, but it is not impossible. In fact, I would argue that it is not even difficult.
In the three years since the MMR rules came in, specialist lenders and building societies have made leaps forward to offer self-employed borrowers mortgage finance they can afford. The perception that these borrowers are locked out is nonsense – a fire fuelled by those who rely solely on a rate-sorting sourcing system or going to their high-street lender, only to be turned away by an automated message.
It is true that underwriting mortgages for the self-employed and business owners is less straightforward – some lenders struggle to deal efficiently with the variety of borrower circumstances – but there are 5.5 million people in this position in the UK and they are not all living on the streets.
At lenders where there is experience of reading financial accounts and SA302 statements – and understanding a borrower’s business income – writing these loans is just another day at the office.
Brokers sit at the coalface of this, with the opportunity to help or hinder clients. In a market where reliance on technology is becoming more and more obvious, they have a responsibility to highlight just how many choices these borrowers have, even when technology does not always bring them up within a few seconds.
The Budget highlighted how hard done by the self-employed and small business owners are feeling at the moment. Inflation is rising, the pound is weak and we are on the brink of Brexit. But they continue to form the powerhouse of Britain’s economic growth. Some lenders are supporting them, so make sure your clients know it.
Precise Mortgages, the specialist lender, has welcomed Ian Scarrott to its sales team. Ian will work predominantly in the North West, providing expert support to their network of intermediaries.
Ian will work as Business Development Manager in the Blackburn, Bolton, Chorley, Crewe, Fylde, Liverpool, Manchester, Oldham, Preston, Stockport, Stoke-on-Trent, Warrington and Wigan areas.
Ian has joined Precise Mortgages from TFC Homeloans, where he acquired extensive market experience and developed a range of key broker contacts.
Jamie Pritchard, Precise Mortgages’ Head of Sales, said Ian was an outstanding new addition to the team.
“I’m delighted that Ian has chosen to join Precise Mortgages and support our network of brokers in the North West,” he said.
"Ian is a perfect fit for us. With his extensive knowledge of the industry and wealth of experience from his time at TFC Homeloans, Ian will be a real asset to the team.”
Charter Court Financial Services (CCFS) has been ranked third in The Sunday Times 100 Best Companies to Work For 2017.
CCFS employs more than 450 people at its headquarters in Wolverhampton. It offers an award-winning range of mortgages, and savings products which regularly feature at the top of the best buy tables.
The Sunday Times 100 Best Companies to Work For is an annual survey ranking the cream of Britain's happy and motivated workforces. Its appearance each year is now a highly anticipated event in the business calendar.
The survey is widely acknowledged as the most extensive research into employee engagement carried out in the country due to the methods of data-gathering and analysis it uses. Scores and ratings are based on employee opinions, and each year the questionnaires are revised and updated to reflect current workplace concerns.
Ian Lonergan, CEO of CCFS, commented: “We’re delighted to be named in the top ten of the Sunday Times 100 Best Companies to Work For survey for the second year running. We would not have been able to achieve this prestigious award without our fantastic employees. This accolade, which is voted for by our employees, is a great acknowledgement of the culture and working environment we’ve all worked so hard to achieve.”
Precise Mortgages, the specialist lender, has put its Buy to Let calculator online so that brokers can see how much their clients can borrow.
The introduction of new PRA rules on Buy to Let affordability has left some brokers confused as lenders publish their new criteria. Many lenders have used a ‘bucket’ approach which has seen Interest Coverage Ratios (ICRs) increased to 145%. It means that many landlords can no longer borrow as much money as they did before the rule change, and in some cases will lead to a decline.
Precise Mortgages has done something different in launching bespoke ICRs which take every customer’s individual circumstances into consideration. The lender claims that in many cases its ICR calculation will help landlords get the buy to let mortgage they want. One example cited is where joint applicants have different tax positions, such as one being a higher rate tax payer and the other being a basic rate taxpayer. Worked examples have been published on the lender’s website which show how a bespoke ICR will return larger loan sizes than the ‘bucket’ approach.
Alan Cleary, Managing Director for Precise Mortgages, said: “Our Buy to Let calculator allows mortgage intermediaries to know how much their clients could borrow from us before they start the application process.
“They will also be able to compare and contrast different ways of setting cases up in order to achieve the best outcome.
“The calculator is similar to the one used by our underwriters to assess cases so it will save intermediaries and us time and effort. We believe that in the majority of cases a bespoke ICR will be superior.”
To find out more about the calculator and how it could help your customer get the loan size they want, click here.