Think mortgage broker if struggling for a deal

THE housing market has been bubbly despite all that coronavirus has thrown at buyers and sellers.

House prices last month were 5.4 per cent higher than in January 2020, according to the Halifax.

HM Revenue & Customs property data jumped for the eighth consecutive month in December. Year on year, transactions surged 32.1 per cent over December 2019 – 63.6 per cent on a non-seasonally adjusted basis.

The EY Item Club points to pent-up demand and the temporary stamp duty holiday as largely driving activity. It predicts mortgage lending will continue to rise, albeit at a slower rate. Citing the successful rollout of the vaccination programme and the EU-UK Brexit settlement, it forecasts a 2.3 per cent increase in mortgage lending, down from three per cent growth in 2020.

This is all good news for those looking to get on the housing ladder and others seeking to go to the next level.

It has also been good news for the major High Street contenders, churning business via computer automated underwriting.

However, what if you don’t fit the standard criteria?

Large numbers of applicants can fall between the cracks – the self-employed, those with blips on their credit history, people on fixed term contracts, and the retired.

This is where the big players can sometimes prove slower and less flexible.

The solution could be to turn to a mortgage broker.

They might guide you in the direction of the many specialist lenders with which the public are generally unfamiliar, companies light on their feet and more willing to assess individual circumstances. And their services are not just available to first-time buyers. For existing property owners, re-mortgaging in the current climate – perhaps they have taken a payment holiday or furlough – can be a trial. An experienced broker might be able to help. Indeed, for years they have been advising borrowers who have found it difficult to access mortgage funding, the sort of person who, after the last 12 months, could now find themselves out in the cold if they don’t fit the tick box that the larger lenders adhere to, where maximum loan-to-values are conservative, choice of deals is restricted, and lending criteria is tight.

The self-employed had a particularly tough 2020 under the Covid cosh.

It can be tricky at the best of times for them to verify their income. Now it is much harder. Previous turnover figures may offer little guidance for future trading. Is the business even viable?

Specialist lenders are likely to be probing too, but can take a more personable and friendly approach to assessing income compared to the high street monoliths.

Some, for example, will offer mortgages to those with just one-year’s accounts.

Individually tailored deals may also be possible for others working either on a sub-contracted basis or on fixed term contracts.

Another sector that doesn’t conform to the norm is retirees.

Mortgages can be taken out well into a client’s 90s then repaid either using equity release or money from savings.

The market for retirement interest-only mortgages has been expanding.

Consumer group Which? highlights many reasons why older borrowers might want to take out a mortgage – to purchase a retirement property which better suits their needs, to release cash so as to top up their pension income, or to gift money to a loved one to help them purchase a property.

It is thought around 40,000 interest-only mortgages will mature each year between now and 2032 with the borrower aged 65 and over.

All-in-all the broker approach is worth exploring and you have their service from start to finish of the mortgage process unlike larger organisations.