Bank of Mum & Dad – An Alternative to Gifted Deposits

Gifted deposits are on the rise, (Property Industry Eye, Apr 2017). There has been an increase in parents offering financial help to their children in a bid to get them on the property ladder. This can take the form of a gifted deposit which is a non-returnable gift of money forming all, or part, of a deposit. Some parents prefer not to part with their hard-earned money. Below is an alternative, which we endured last year.

It came out of the blue, with no warning.  Our eldest daughter telephoned to ask if she could come and live with us for a year.  And when I say she, I include her partner and six-month old beagle. They had decided that it would be impossible to save for a property and pay rent at the same time.  They were right, of course.  It is a tall order. 

I gave a cautious yes, subject to agreement from Lee, which was by no means a given.  He took it fairly well, then turned pale and went for a long walk. Our daughter is a boomerang child and had already returned home several times since she first left. He was worried that if he let her back in, she would stay forever. 

We entered negotiations with our daughter and decided that both sets of parents would share the load.  They would live with us for the first six months and then with the other set of parents.

There were challenges to overcome.  We have different standards of tidiness and different expectations of dog behaviour.  The beagle considered rules to be something that only applied to other dogs. She took control of the household for the duration of her visit. But six months came and went without any serious disagreements and they moved into her partner’s parents place earlier this year. 

It is now summer and they have moved into their own house and have their own mortgage. They managed to save £12,000 in a year from not having to pay rent. It is more money than we could easily have given and it has been a relatively pain-free way to help.

So, if you have a spare room and limitless patience it is worth considering this option.  If you would rather pay a gifted deposit, than allow your adult offspring to return home ever again, give Lee a call on 01242 673341 for more information.

NB: most banks and building societies accept gifted deposits. They will need a letter from the donor to confirm that they will have no legal right to the money once the purchase is complete.  A word of warning – gifted deposits may have inheritance tax implications. They cannot usually be accepted if they originate from overseas.

 

Do I Need a Mortgage Broker?

The Cotswold Mortgage Broker is an approachable, family-run firm in frequent contact with prospective clients, looking for guidance on a range of mortgage related questions.  We are always pleased to advise without expectation of custom.  One of the most frequently asked questions is ‘Do I need to use a broker?’

The short answer to this is no, and where appropriate, we advise our enquirers accordingly, even though it may seem like we are turning away business.  Reputation is everything and we won’t take a fee that we cannot justify.

The truth of the matter is that if you are looking for a mortgage, you are employed, have good equity and no credit impairment in the background, you are probably better off applying to your existing lender in the first instance.  The same applies if you fulfil this criteria but are looking to move, though if you are a first time buyer, you may well benefit from a broker researching for you.  Regardless, we are always happy to ‘shop around’ on your behalf and if we can save you money, then we will advise you accordingly.  If we cannot save you money, or the amount you save is not worth the hassle of changing lenders, then we will tell you honestly at the outset. 

So, when would you use a mortgage broker? For almost any other scenario.  Every lender has a different underwriting process so where one may have stringent guidelines that preclude self-employed workers, another will not.  Where one will decline the case if the applicant has a CCJ, another will take that client.  If your income multiples are insufficient, if you receive other sources of income, if your age is a factor, if your house is of an unusual construction, if you are purchasing for investment or you have been declined by a lender, then that is when your mortgage broker comes into his own.

Mortgage brokers are highly regulated, regularly scrutinized and work just for you.  At the Cotswold Mortgage Broker, we have decades of combined experience in mortgages and property.  If you become our client, we will find you the most suitable deal, steer you through the application process, manage your expectations (mortgage applications, like conveyancing, are rarely swift-moving) and we will fight like tigers to ensure that your application goes as smoothly as possible through underwriting.  We cannot promise it will be entirely stress free as the underwriting process regularly changes, but we promise to find you the most suitable product for your aspirations, save you money wherever possible and guide you all the way.

Our broker fee (heavily discounted for first time buyers and returning customers) only becomes payable when your mortgage is offered.  If our efforts don’t result in a mortgage offer, then you don’t pay our fee.  Unlike some other brokers, we NEVER charge our broker fee or any part of it up front.

If you would like advice or guidance on any further mortgage related matter, call Lee on 01242 673341

Showing a house – what they don’t tell you……

In a former life, before becoming a mortgage broker, Lee was an estate agent (don’t judge). This month he shares tips on the best way to get your property ready for viewing

Home protectThe do’s & don’ts of showing a house ought to be obvious but from past experience we’ve found that in the excitement of the move, people forget to give their house its manicure, leg wax and makeover and get it in good shape for its big date with the viewing public.

It’s easy to make a house appealing.  From the moment a viewer leaves their car, walks up the clean, weed-free pathway into the tidy hallway with the aroma of freshly perked coffee, their mood is already receptive to the charms of the property.  However, this glitch-free scenario does not always play out in real life.

One particular problem is clutter; especially when the home owner is oblivious to it.  Rooms always look smaller than they are if over-filled with large, dark or mismatched furniture.  Add to that surfaces strewn with miscellaneous knick-knacks, cupboard doors that don’t shut because they are filled to bursting point and bookcases stuffed beyond reasonable capacity and you can be sure that the viewer is distracted from the more pleasing aspects of the property.

So de-clutter – give anything you don’t need to charity, stow all the ornaments away – you have to pack for the move anyway and if you haven’t opened the boxes in the garage/attic/store room since your last move, you don’t need them.

Buy a big tin of Magnolia to paint and freshen up the house, tidying the paintwork as you go and de-personalising the property (you don’t want to be remembered as the vendor with the lime green bathroom no matter how nice you may have thought it looked at the time).  Re-grout your bathroom tiles, polish the chrome and hang new kitchen doors if they are looking tired.

Pay careful attention to cleaning your house – sweep away cobwebs, keep carpets vacuumed and clean the windows.  Check the front door – paint it if necessary then take the lawnmower out of retirement, mow the grass, weed the beds and consider purchasing some cheap, flowering plants to brighten things up.

There are some things that it can be hard to discuss with a vendor.  Just because they love ‘Mauler’ & ‘Killer’ their two Rottweilers it doesn’t follow that viewers will.  Pets are best kept away from the property and pet accessories should be removed until after the viewing.  Which leads me on to the awkward subject of cat litter trays, which should be neither seen nor smelt.  We will never forget the vendor who insisted that every viewer took their shoes off at the front door of the property.  Unfortunately, he owned an elderly cat with very poor aim, invariably missing the litter tray positioned carefully in the centre of the hallway.  Prospective purchasers frequently left the property with cat-urine soaked socks.  Needless to say, the house did not sell.

The other unmentionable is the over-enthusiastic vendor.  Whilst it may seem helpful to follow the viewer around the house pointing out all the electric sockets and each & every light switch, a potential buyer needs to feel comfortable in the house and this is more likely to happen if they are left alone with the agent.  Worse still is the vendor who feels the need to discuss every flaw in the house, recount horror stories about the behaviour of the next door neighbours and mention all the deficiencies in the local schools.  Far better to leave the house, walk the dogs & let the agent get on with it.

That old cliché about freshly brewed coffee works surprisingly well.  There is nothing more off-putting than entering a house to have one’s nose bombarded with strong, unfamiliar or unpleasant smells.  Try to avoid cooking highly-spiced curries – save your baked kippers for another day.  Instead burn a candle or use an air freshener. Try highly-scented cut flowers – sweet peas have a glorious smell.

And when your house is all dressed up, smells beautiful and is clean and sparkling – don’t spoil its big date by keeping it in the dark!  Make sure the lighting is suitable for the time of day and try to avoid viewings after dusk.  Above all, make sure that curtains are drawn & perhaps even consider removing heavy drapes.  Use mirrors to make the most of the light & space and before you know it you will have received a great asking price offer……

From there it’s just a simple matter of arranging the mortgage & insurances for your new property, pack your boxes and pick up your new keys!

A Question of Loyalty

LoyaltyThe subject of a certain motoring organisation and their pricing policy arose during a conversation with a family member last week.  The family member concerned, having been a member of the said organisation in excess of 50 years, discovered he had been paying greatly in excess of the discounted rate given to new customers for many years.  When he challenged the lack of loyalty to long standing members, the customer services operative seemed baffled, implying it was the FM’s fault for not phoning and asking for a discount each and every year. Whilst a long way from ideal, it is at least, an option for young, fit and able bodied people but not always possible for the elderly.  Some find it harder to ‘shop around’.

Likewise, the utility companies have jumped on the same bandwagon caring nothing for loyal customers who remain with them, rewarding those who jump ship every year.

Loyalty, “a strong feeling of support or allegiance” according to the Oxford dictionary, seems to have become a dirty word in business terms.  It is absent entirely from call centres and unused by many salesmen who are only concerned with new customers, considering long standing customers a commodity to gain extra fees.

The Cotswold Mortgage Broker is four years years old and we have not increased our fees from the day we started.  We decided from the outset that we wanted to make loyalty a key feature of our company and not only do we discount our standard fee by 50% for first time buyers, but we also reward loyalty to the tune of a 50% discount from the standard fee of £495.00 for every subsequent mortgage after the first.  No customer is ever asked to pay a full broker fee more than once, not even if we arrange a string of buy to let mortgages. Furthermore, our fee does not become payable until the property or re-mortgage completes. If the property purchase does not happen, we do not get paid, regardless of how much time we have taken to process the application.  

We hope this approach sets us apart from other Mortgage Brokers.  We care about our customers and want them to come back to us.  Loyalty is important – it matters.

Mortgage Market Review – Managing Expectations

clockThe much heralded mortgage market review is now upon us and the consequences of this new legislation are taking shape.  Designed to “hardwire common sense” into the mortgage application process, MMR has brought stringent affordability checks combined with ‘stress’ testing to take into account future interest rate increases. 

The effects so far have been mixed.  We have encountered stress testing by lenders projecting interest rates up to 7% before agreeing the mortgage.  Affordability checks have produced questions about food types, pets, and shopping habits.  One of Lee’s colleagues was asked to clarify her client’s shoe purchase tendencies last week!

The biggest effects so far have been an increase in timescale.  High Street lenders have seen their average mortgage interview time change from 45 minutes to up to 3 hours per appointment and, anecdotally, estate agents are reporting long periods of inactivity in chains while buyers wait for a mortgage appointment. 

So far, we are pleased to say that all mortgages submitted by The Cotswold Mortgage Broker due to complete post MMR, have been offered without undue delay.  However, it is important that buyers are fully prepared for a longer wait than usual and should allow at least 12 weeks for conveyancing.  That’s not to say it can’t happen quicker, but this should be seen as a silver lining rather than the norm.

We have seen a steady increase in enquiries over the last three weeks as clients begin to appreciate the convenience of using a broker able to conduct a mortgage interview at the customer’s home outside normal working hours.  This avoids the inevitable queues of High Street Lenders and is a much more comfortable experience for all concerned. The process is quicker still if all documentation requested prior to the appointment is readily available when Lee arrives.

If you are having any difficulties in securing a mortgage appointment, or like one of our newest customers, have been made to wait three weeks for an approval in principle, please call Lee on:

 

01242 673341 07900 554819

or email lee@cotwoldmortgagebroker.co.uk

A Day in the Life of a Mortgage Broker

Its 9.15 Monday morning and the phone is ringing off the hook as it did several times yesterday afternoon.   And despite the fact it was Sunday afternoon, it was answered.  Lee is nothing if not dedicated to his customers which is great for them but less so for me as we had friends due round.  Oh the joys of working from home!

But I digress.  Back to Monday morning & Lee picks up the phone.  It’s a call from a lender.  One of our client’s is depending on the quick arrival of her mortgage offer but the underwriters have decided they need to see further documentation before they can issue it.  Lee phones the client.  She is at work but her mother is home and can retrieve the paperwork but she doesn’t drive.  It’s not a problem though.  Lee considers it part of the service and jumps in his car to collect it.  The client is local so he is back in half an hour and faxes the papers to the lender straight away.

By now there are 5 messages on the answer phone.  Two are from potential new clients.  Lee phones them back immediately and takes detailed notes of their requirements.  One is a first time buyer and completely new to the mortgage process.  Lee was an estate agent before he was a mortgage broker so can easily give his young client the guidance he needs.  Lee already has an 8.pm appointment tonight but the first time buyer has seen a property he likes so Lee arranges a home visit for 6.30.

The second call is from a previous client.  He is purchasing another buy to let property and his wife recently gave birth to their third child so he wants to increase his life cover.    Lee takes ten minutes for a chat (they always got on very well) and arranges to pop down to Bristol on Thursday to complete the paperwork.  

“Don’t forget to discount the fee,” he reminds me. 

We discount our fee by 50% for first time buyers and for any customer who uses us more than once – loyalty is a big deal and should be rewarded.

“Don’t go via Matala’s” I retort.  There is an Indian spice shop in Bristol that Lee spends far too much time and money in whenever he is down that way.  He is a big curry fan.

The door bell goes and a shadow looms against the glass front door.  It is a one of the Business Development Managers who has come to discuss the latest mortgage products.  Lee puts on the kettle, grabs some digestives and listens.   I watch Lee’s face as he processes the information.  You can almost see the light bulb above his head as he works out which clients could benefit from the new products.

As the representative leaves the postman arrives bringing a couple of mortgage offers.  Lee checks the details and rings the clients with the good news.  One of them asks if Lee can help with her buildings and contents insurance.  Lee sources the best product, calls her back and completes an online application.  She asks Lee if he might be able to help her friend Mike who has just had his mortgage application declined by a high street lender.

Lee telephones Mike, chats for a while then puts down the phone looking grim. 

“He’s had two pay day loans, “he sighs.

We exchange glances.  Pay day loans are the kiss of death to mortgage applications.  It’s a terrible shame that people don’t understand the consequences of taking these loans out. 

“He seems such a nice lad,” says Lee shaking his head sadly.  We both know he won’t be able to help.

It’s now 1pm and Lee breaks his day by walking our grumpy border terrier.  He lets the chickens out and sits back down at his desk for an hour’s admin while the chickens potter past the window.

2pm arrives and Lee prepares for his evening appointments based on the information he has already taken.  He sources a selection of suitable mortgages and is just printing off his recommendations when the phone rings.  It is a lender calling with bad news.  A heated conversation ensues but the upshot is the underwriter won’t allow the mortgage.  Unfortunately no matter how carefully we research, things do go wrong sometimes.  Mortgages are approved in principle but something in the full application may spook the lender and provoke concerns about their level of exposure.  In this case, there has been some undisclosed credit and it has produced an unequivocal “No”.

Fortunately Lee usually researches with a ‘back-up’ lender in place.  He immediately contacts the other lender who anticipates a successful application even with the credit problems and Lee phones the client to explain.  It turns out the client had genuinely forgotten to enter one of his wife’s credit cards on the application but is happy to proceed with the new lender.  Lee books another appointment for tomorrow night to sign the new paperwork. 

Lee spends the rest of the afternoon sourcing bridging finance for one client and public liability insurance for a horse show for another while I man the phones . He grabs a quick bite of tea (curry) and gets suited and booted for his evening appointments.  Just before he leaves, the fax line rings and a mortgage offer churns through.  It is for the client he collected the documentation for earlier in the day so he tucks the mobile under his chin & calls her with the good news as he walks out the door.

It’s 9.25 by the time Lee gets home.  He opens his briefcase and puts both lots of paperwork on his desk ready to process tomorrow.  It looks like he can help both clients so he’s in a good mood.   He checks his email before settling down for the evening television.  Among the new enquiries and emails from lenders is an unexpected and rather heart warming testimonial; a perfect end to a long day.

By Jacqui Beard