We are advising clients to consider overpaying where possible while they are on a lower mortgage rate to soften the potential increase in the monthly payment when their existing rate comes to an end.
This also means they are refinancing a smaller balance onto a potentially higher rate.
A lower mortgage balance may help with the loan-to-valuation if a re-finance is required to secure a new rate.
Another thing is making sure to educate our clients on the different types of products that are available and where they might be able to benefit within these.
However, there are other options available that may be more relevant in the current market, depending on the client's preferences and profile, such as variable rates which may suit some clients.
We are also carefully considering the way banks issue their offers within our recommendation, and the length of time offers are valid for.
Some banks will issue an offer which is valid for six months from the date of the application submission and some will issue it for six months from the date of issue, which sometimes can give us an extra couple of months enabling us to secure a rate earlier.
For purchase applications we are carefully considering which banks allow a change of property once the offer or application is in progress, in case the chain falls apart.
FTA: Has mortgage business tailed off amid this economic uncertainty or is it still booming?
JB: We are still, for the time being, very busy! However, the type of business that we are working on has shifted and we are doing much more remortgage business than purchase business.
We are seeing the banks’ processing times increasing and applications are taking longer to be agreed due to the volume of applications they are receiving, but again this is mostly remortgage business.
On the purchase side everything is very sticky, everything is taking longer and if mortgage offers lapse, then the cost of borrowing is making people think twice about whether this is the right time for them to purchase or move house.
Some clients have decided not to proceed with a purchase.
For new purchases it’s likely there will be pressure on the mortgage valuation figures.
If prices cannot be renegotiated and the deal falls apart, some banks will not allow a change of property during an application without a new product being selected.
And, at the rate they are changing/increasing we need to have more certainty that they retain the original rate.
FTA: What does Britain need to help mend the housing market?
