Mortgage News Article

06.11.08 by Andrew Montlake

Read The Smallprint

As far as mortgages are concerned the battleground for lenders is shifting from actual rate costs. The new frontier is now all about criteria and the underwriting process. In this environment small-print is king.

Many lenders seem to be falling over themselves to make it harder for certain people to get a mortgage, with tougher underwriting policies and stricter rules and regulations all round.

Whether this is around Buy-To-Let landlords, interest only, income multiples, self-certification or putting in collars on their tracker rates; some lenders are now only lending to people who are 5 ft 9 ins, with blond hair and blue eyes, size 10 feet and go by the name of Colin!

It is important you look at the small print even more carefully than usual. All these issues again make it very difficult for the average punter to know just what is the best product for them as the Best Buy Tables seem to be getting more and more superfluous.

Although one lender may have a slightly better headline tracker rate, they may have a collar which limits how much the rate could fall to, for example 2.75%. Whereas a lender with a slightly more expensive rate may have no such limit and guarantee that its variable rate will never be more than 2% above Bank Base, therefore passing on cuts immediately.

We have also seen at least one lender re-valuing clients properties and reducing their pre-agreed additional borrowing amounts on offset mortgages, arguing that property values have fallen therefore the loan-to-value bandings are being breached.

At the moment independent advisors are worth their weight in gold, and whilst that seems to be an obvious statement for a biased broker like myself to make, demand for broker services and professional advice is arguably stronger than ever.

A good broker will keep you informed of all the small print so you can make an informed decision.

The days of picking the cheapest rate at the top of a table are long gone.

News Archive

Monty's Mortgage Blog

06.01.09

A Cut, But By How Much?

The debate this week is around the next expected cut in the Bank of England Base Rate that is likely to be announced, with the main question being how much the cut is going to be, either 1% or 0.5%.

Read more... | Subscribe

Call us:

0845 330 0809

Or contact us with a question: