Mortgage Agreements in Principle - What steps should you take beforehand?

Whether you’re a first time buyer or an old hand at the mortgage game, if you need a mortgage you’ll also need a mortgage agreement in principle to proceed with your house purchase.

Just to clarify, a mortgage Agreement In Principle (AIP) is where the lender will carry out a credit score on you and give you an indication that they would be willing to lend subject to valuation. Some lenders refer to it as ‘decision in principle’.

As they are going to carry out a credit score this is likely to leave a ‘footprint’ on your credit file and technically this can affect your credit rating. If this is the case then you want to be prepared, as you want the best chance possible to pass the credit score.

Check Your Credit Report Before Applying For A Mortgage Agreement In Principle

First of all check out your credit report and see how you will look to any potential lender. I always point people towards Noddle.co.uk as it is a free for life rather than one of those free for 28 days then we’ll charge you as you will inevitably forget to cancel. That said lenders tend to use Call Credit (Noddle), Experian and Equifax. So if you don’t think you are getting the full picture from Noddle then you might want to try the other two.

Once you have got your credit report you might need to act upon the information. For example if there has been activity on your file you don’t recognise you’ll need to find out what it is and if it is negative, get it sorted.

If you don’t have a lot of credit this can also be negative. In these circumstances I often recommend you get a credit card wherever you can (try your bank in the first instance) and use the card sensibly. Maybe fill the car up once a month with it and then pay the bill in full. After a few months you should see an improvement in your score.

Of course if you want to get an agreement sorted now regardless of your credit score then make sure you have all the correct information available regarding:

Income – last three months payslips and p60, do you get bonuses or commission, if so then have the exact figures for the last year.

Expenditure – how much do you pay for loans, Hire Purchase, Childcare etc.?

Credit Cards – is there an outstanding balance, even if you pay off each month you’ll need to know how much is outstanding today.

Deposit – You’ll need to know how much you are putting down as a deposit so the lender carrying out the AIP can put you in the right loan bracket.

Some lenders leave a credit footprint on your file so the more times you applying the worse it can be for you. However, some lenders don’t leave a footprint on your file so if you can find them you are having a shot at nothing that won’t affect your score. Most brokers will be able to point you in the right direction.

I hope these tips help and if you need any further guidance then feel free to get in touch.

Where to Buy in Surrey if you Commute to London

f you work in London and don’t want to live in the capital, Surrey is a popular choice for commuters. My own town of Farnham is a case in point, both the 06.58 and 07.28 to London Waterloo are packed with bleary-eyed Farnham residents making the 53 min journey up to the smoke.

Farnham is almost the end of the line for most London commuters (certainly it’s a far west as you can go in Surrey). Not many people want to commute for more than an hour; especially when you’ve also got to get from a mainline London station to work in another part of the capital.

Fortunately there are plenty of Surrey towns offering great properties, a great place to live, and a comfortable commute. I’ve been playing with an online calculator from TotallyMoney that helps locate the right commuter town for you. It compares journey time, the cost of a season ticket, life satisfaction and house prices to help narrow your search down.

The ‘life satisfaction’ rating is based on the Office of National Statistics estimates of personal wellbeing for UK local authorities.

Top Commuter Towns In Surrey

Here are the top commuter towns in Surrey:

Redhill

• Travel Time: 31 minutes

• Season Ticket: £3528 p/a

• Life Satisfaction: 8

• House Prices: £409,787.00

Horley

• Travel Time: 35 minutes

• Season Ticket: £4060 p/a

• Life Satisfaction: 8

• House Prices: £410,320.00

Earlswood

• Travel Time: 43 minutes

• Season Ticket: £3580 p/a

• Life Satisfaction: 8

• House Prices: £245,321.00

Epsom

• Travel Time: 37 minutes

• Season Ticket: £2732 p/a

• Life Satisfaction: 7.86

• House Prices: £534,124.00

Woking

• Travel Time: 28 minutes

• Season Ticket: £4256 p/a

• Life Satisfaction: 7.73

• House Prices: £516,562.00

You may have noticed that the top 3 commuter towns according to TotallyMoney are all on the same trainline with the option of going to London Bridge or London Victoria. Redhill and Horley were also on our list of 10 Affordable Places To Buy In Surrey, perhaps another reason to check out these towns if you’re looking to relocate?

Of course, there are many other popular towns in Surrey that don’t make this top 5. Godalming, Haslemere, Chobham, Farnham and surrounding areas etc., all appear regularly in ‘best places to live in Surrey’ lists and many of their residents commute to London. House prices and the cost of a season ticket make them more expensive but no less convenient.

If you’re looking to move to a commuter town in Surrey and need a mortgage, I’d be delighted to talk you through your options. Call 01252 759 233 or email richard@thesurreymortgagebroker.co.uk

Mortgage Valuations - What's the Process?

If you are looking to purchase a property and need a mortgage to do so, your lender will require a lender’s valuation.

House buying has all sorts of jargon and terminology wrapped up in the processes, so it’s important to know what all of them are really about. Here’s what you need to know about your lender’s mortgage valuation, and how it affects you as a buyer.

What is a mortgage valuation report?

The mortgage valuation report gives your lender some independent confirmation of the value of your property, to ensure their investment is well placed.

The valuation will also tell the lender if there are any major problems with the property which could affect its value. It will check the prices of similar properties in the local area, and that your property is not one of a type which they will not lend against, such as those in a high flood risk area.

What happens during the mortgage valuation?

Your lender probably already has a relationship with a surveyor, and will contact them themselves to arrange a suitable date for the survey. In most cases, this will take place within two weeks of your mortgage application.

The valuation surveyor will visit your prospective property, and will inspect for condition and any major problems. This whole process will take only 15 – 30 minutes and will only usually pick up on obvious, visible problems. Their report back to your lender is short, just two or three pages usually, and although you may receive a copy of it, it’s not particularly beneficial to you.

What is the valuation fee on a mortgage?

Typically this will cost between £150 and £1,500 depending on the value of the property you are buying. Normally you, the buyer, will pay the fees for this valuation, this can be an upfront cost or added to the term of your mortgage. In some cases, lenders may waive these fees as part of a package of offers for you, but this varies from lender to lender. Check your mortgage terms and conditions early on, or ask your lender about survey fees, to make sure you know what you’re responsible for.

Don’t rely too much on a mortgage valuation

The mortgage valuation is commissioned by your lender, and is conducted for their benefit, not yours. The inspection is too brief and too standardised to really provide any insight into the condition or true value of the house. While you can certainly expect to receive a copy of the valuation report, or at least an excerpt of it, you should not rely on this to inform any offers you make or your purchasing decision.

In order to be fully informed about the condition of the property you’re considering purchasing, you will need to commission your own homebuyers survey. This is usually done through an RICS surveyor, who you can find on the RICS website.

What is in a homebuyers survey?

You have a choice of survey types available to you, to suit your needs as you see fit. These include:

• The RICS condition report: The most basic report available, this is a quick, easy way to ensure everything is OK. It’s most suitable for relatively new properties.

• The RCIS homebuyers report: A more detailed report, this will take around two to four hours to take place, and includes advice on any repairs or maintenance issues with the property.

• The SAVA Home Condition Survey: This covers pretty much all the things the RCIS homebuyers report would cover, but without any market valuation included.

• The RCIS building survey: This is the most thorough survey you can get, this is an ideal choice if you are buying a period property or something which needs a lot of work. It’s also a good choice for homes of a non-standard construction, and will generally take around a day to complete.

• New build snagging survey: in addition to these survey types, if you are looking to buy a brand-new property, you can have a quick and inexpensive ‘snagging survey’ done. This flags up any defects, cosmetic issues and other problems, so that your contractor can rectify these issues before you move in.

Whatever your property valuation has said, you should always instruct your own thorough survey in order to ensure you are not hit with any nasty surprises later down the line.

If you’re ready to explore different mortgages and find one that’s right for you, give me a call. I’d be delighted to talk you through your options. Call 01252 759233 or email richard@thesurreymortgagebroker.co.uk

Up or Down? What are Interest Rates like to do next?

At this time last year, the financial market was predicting fairly confidently that the interest rates would be rising by the start of this year. However, the reality has been something quite different. Numerous political, economic and global events have meant that what we actually saw was the Bank of England further slashing interest rates from 0.5 per cent to 0.25 per cent in August 2016.

So where will our interest rates go next? It seems almost impossible that they could be reduced any further, what with the current rate being the lowest ebb in history. But when should we expect them to rise, and how much? Let’s investigate.

What’s happening to affect the current interest rates?

We’ve been through an eventful year or two when it comes to major changes to the UK’s economic influences, for example:

• Economic concerns: In recent years, we’ve been suffering a period of negative inflation. Weak economic data coupled with concerns over a slowing global economy have led to much uncertainty over how and when things will change.

• Brexit: Prior to this, the Bank of England (BOE) had been discussing forthcoming rate rises. After the vote, and predicting an economic slump, Mark Carney announced the interest rate cut and a new bout of Quantitative Easing to try and stimulate growth.

• The fall of the pound: Since the Brexit vote, the value of the pound has fallen by around 20 per cent. This has caused inflation to spike, which tends to lead to an increase in interest rates, although the BOE’s predictions did not fit with this.

• Trump: Donald Trump’s victory across the pond has added some uncertainty to the future of interest rates. Because he is planning to spend, spend, spend on infrastructure and building in the US, inflation over there is anticipated to rise, which could have a knock-on effect here in the UK too.

These events are undoubtedly responsible for the unexpected rate cut we experienced in mid-2016, and for the continued uncertainty over the future of our interest rates.

Predictions for the future

We’ve seen some wild predictions about the future of interest rate rises. Here are some of the most commonly encountered predictions you might come across right now:

• Financial experts: The first interest rate rise will occur in late 2019, raising the rate to 0.75 per cent. Following this there will be a further 0.25 per cent increase at regular intervals, with the rate at the end of 2020 predicted to hit 1.25 per cent.

• Lenders: Mortgage rates are extremeley competitive and I’ve always said that the lenders pay economists to analyse the markets who are in a much better position than I to predict but take a look at what you can get on the market for a five year fixed rate. Less than 2% is readily available with a reasonable deposit, if the lenders are happy to lend at this rate then they don’t think rates are going up significantly.

• The Bank of England: BOE, at their last meeting of 2016, predicted that high inflation and slow wage growth would keep households financially squeezed into 2017. They voted to keep the rate at 0.25 per cent and, barring any major changes, are not likely to change this in the near future.

• Commentators: Larry Elliott, Economics Editor for the Guardian, predicted that although rates are going up in the US, they are going nowhere in the UK. However, the Telegraph’s specialist, Roger Bootle, predicted rates would hit three per cent within three years, and five per cent eventually. I heard Roger Bootle speak at a conference late last year, he was very interesting but I can’t agree with him that rates are going to be at 3% within three years.

• Howard Archer, chief UK economist at IHS Global Insight: “The Bank of England could become increasingly nervous about the inflation overshoot and feel compelled to raise interest rates – although we suspect that this would be more likely in 2018 than in 2017.”

Despite a range of opinions and predictions seen here, for the most part the outlook is very similar: Nothing will be happening in the very near future. Whether that holds to be true, only time will tell, although we can look to certain economic indicators to give us, at least a little, advanced warning.

Economic indicators for the BOE rate rise

Some key economic indicators will play an important part in whether interest rates rise, fall or stay the same. These factors include:

• Inflation: In April 2015, it was at -0.1 per cent. It’s currently at 1.8 per cent and the National Institute of Economic and Social Research estimates it could get as high as 4 per cent in 2017. If the rate suddenly spikes, the BOE could be forced to raise interest rates sooner than planned. Historically raising interest rates has been a way of calming inflation so if inflation gets out of control this could lead to a rise, however in more recent times the Bank of England have not used this tool in their armoury. They appear to have preferred the waiting game.

• MPC support: For years, some members of the Monetary Policy Committee (MPC) have argued for a rate rise, but since the Brexit vote, this has changed. For a while, the committee even argued for a lowering of the rate to 0 per cent, so it remains to be seen how this support will swing as 2017 plays out.

• Strength of economy: The BOE lowered the base rate in 2016 in anticipation of a weakening UK economy. However, this has not happened as predicted, which strengthens the case for a rate rise, rather than any further rate cut.

• Unemployment: Unemployment is still falling. In the three months to December, the number of people out of work fell to 1.6 million, an 11-year low. Despite this, the growth of wage values has become somewhat slow, all of which could impact the timing and level of rate change.

• Wage Inflation: As I’ve just noted wages have not been rising in line with inflation and this affects consumer spending. An economic tool the Bank of England to kurb spending is to raise interest rates, I just can’t see that happening whilst wages are not rising quickly. It is this indicator that I would suggest you focus on. When wages outpace inflation for a sustained period then interest rates will rise.

Predicting whether mortgage interest rates will rise or fall is a bit like consulting a crystal ball. Things happen which change even the strongest of predictions, so it’s hard to make any firm judgement on what will happen to our interest rates in the future. However, if you want an early indicator of potential rate changes, it’s a good idea to keep an eye on these indicators, as they could give an early warning of any forthcoming change.

Should you remortgage? If you would like to discuss your current mortgage arrangements and whether or not it would be sensible to remortgage and take advantage of our current low interest rates, please give me a call. 01252 759 233 or email richard@thesurreymortgagebroker.co.uk

Tips for Getting on the Property Ladder in Surrey

The Surrey property market is notoriously competitive and expensive, with prime property getting snapped up very fast. This makes it hard for both local Surrey residents and for anyone wanting to move to Surrey from elsewhere in the UK or overseas.

However, there are ways to increase your chances of finding the perfect home, and getting your offer accepted. Here I share my top tips.

Make Yourself Attractive To Sellers!

I don’t expect you to get a new haircut or a makeover – although if you turn up looking scruffy for a viewing it could count against you, as people do make assumptions about others based on their appearance. However there are other ways to make yourself more attractive to sellers that don’t involve your physical appearance.

Actually the first people you need to impress are the local estate agents. They’re the ones who have the ear of the Seller so if you can make a good impression with them, they’ll help you get taken seriously by sellers.

There are three key areas estate agents and sellers will be interested in:

1. Finances: can you afford the property and do you have the finances in place?

2. Circumstances: do you have a property to sell, are you constrained by any other factors?

3. Flexibility: are you prepared to compromise and be flexible? Whether that’s waiting until the Seller has found a property to buy as well, to compromising on completion dates etc.

So what will appeal to sellers and estate agents?

Cash is king so if you’re a cash buyer you stand a good chance of getting first pickings on any Surrey homes in your price range. Next up are those people who only require a small mortgage, for example investment buyers looking for a buy-to-let or property to do up and sell on.

If you do require a mortgage you probably won’t get through the door of most properties currently on the market without having a mortgage ‘agreement in principle’ (AIP). No one wants to waste time with buyers who haven’t tested whether they can get a mortgage. If you want to see if you can, contact me here to find out.

If you’re a first time buyer you’re very attractive as you won’t need to sell a property and any chain starts with you. If you do need to sell your current home, buyers who are prepared to sell and move into rental are also attractive as they have the potential to be the start of the chain too. Failing that, a buyer who already has accepted an offer on their property is the next best thing, although any chain your side could affect your desirability.

Feeling attractive?

When contacting estate agents it’s really important to make sure they can see your positives. Property experts like Kirsty Allsop even recommend outlining these qualities as bullet points on a record card and giving them to the agent.

Having demonstrated that you’re a great buyer, local estate agents should be getting you in to see lots of suitable properties shouldn’t they? Perhaps not. It’s a competitive market in Surrey and there are lots of other house hunters equally or more qualified than you looking for that elusive home. So don’t sit back and expect them to contact you.

Register on Rightmove, Onthemarket etc. to ensure that you get properties arriving in your inbox when they get added, register with individual estate agents, and be prepared to move fast when they have something to see.

Be open-minded too. If they send you details about a property that doesn’t meet your requirements, give them the benefit of the doubt. This is an opportunity to show your commitment to your search, so that hopefully when something more suitable does come up they will get you in quick. It’s also a chance to build relationships with local agents by chatting about your needs, and it will also help you get your ‘eye in’ when viewing future properties.

House hunting inevitably calls for compromises. By viewing plenty of properties you’ll get a better idea of what ‘must haves’ and ‘nice to haves’ are important to you, and where you’re prepared to compromise.

When you follow up with an estate agent after seeing somewhere you’re not interested in, it’s a good chance to highlight your requirements again and any changes. For example, if the house wasn’t right but the area was, make sure you say that you like the area and you’d be keen to see other properties in that neighbourhood. You may then be the first to know when a new property comes up in that part of Surrey.

Often compromises can turn to your advantage. Many towns and villages in Surrey are very affluent and house prices are high. But sometimes neighbouring towns and residential areas are not as pricey, and these can benefit from the ripple effect as wealth spreads to these areas too. While bargains may be hard to find in Surrey, you could still snap up a property that will see above average growth as the area becomes more desirable.

For more affordable places to buy in Surrey, read this blog.

Finally when you do find a property you want to offer on, make sure you highlight those attractive qualities again. If the Seller has more than one offer this is your chance to differentiate yourself from others. If you’re prepared to offer some flexibility on completion dates etc., now’s the time to make sure the agent conveys these positives to the Seller.

However flexibility is all very well, but money talks. The most important thing you need to do to help your offer get accepted is to make sure your finances add up. If you haven’t yet got a mortgage agreement in principle (AIP), now is the time to do it before starting your search.

To get started call me to chat through your attractiveness! If you need a mortgage to buy your Surrey home an AIP won’t cost you anything, but it’s essential if you want a chance at finding the right property.

Contact me today to get started; call 01252 759 233 or email info@thesurreymortgagebroker.co.uk