Vanquis, the specialist credit card provider, recently reported that one in 10 people are being denied a mortgage. In the 24 – 35 age group the number is one in four. In addition, only one in 10 even realise they have a credit issue.
These are some pretty telling statistics.
We all know that life isn’t always straightforward. What used to be unusual, is now becoming the norm. Complexities and irregularities in income, changes in employment and changes in family circumstances all happen. All can have an impact on an applicant’s credit history, and many clients don’t even realise they had bad credit until they are turned down.
But should these types of circumstances prevent a mortgage applicant from getting an affordable mortgage that suits their needs? At TML, we don’t think so.
That is why we have designed a mortgage range where borrowers can be considered if they have had credit blips, require lending into retirement, are self employed, have unusual income and more, We don’t only think these mortgages should be accessible, we believe that they should be affordable and that as a lender we are reliable too.
We are immensely proud that over 98% of offers we have made were issued on the same or better product rate than was applied for following a successful Decision In Principle.
This statistic and several others, not least the fact that 1 in 3 of our borrowers qualifies for our lowest rate (currently 1.89%), led us to the decision to create our #ChallengeTML concept.
We’re continuing to challenge brokers to complete a DIP with us and see if we can give their clients a lower rate. Not only are we confident that we could help, you can apply safe in the knowledge that there’s a probability of 98% that they will get their offer on this basis.
Post by:Alan Cleary
A new type of buy to let mortgage
There are over 1,600,000 buy to let mortgages in the UK and approximately 108,000 buy to let remortgage transactions each year. The remortgage activity is a large contribution to the growth that we are seeing in the buy to let mortgage market as it makes up approximately 60% of the total buy to let lending figure.
Up until now landlords who wanted to capital raise against the equity in their property portfolios had limited options and in most cases they opted for a remortgage.
These new products are designed for the landlord looking to release capital from their investment and can use our second charge proposition in preference to a first charge remortgage. Reasons for using a second charge over a first charge include:
Capital required – the smaller the capital raising element is in relation to the current first charge the more attractive a second charge will become due to blended cost of funds.
Repaying the capital raised – By taking a second charge the borrower could choose to take a repayment loan rather than the more usual BTL interest only loan. This would allow them to pay down the capital raised element rather than simply increasing their long term debt.
Speed – a typical remortgage can take up to 8 weeks to complete, a second charge can have funds released within 1 week of application. When capital raising speed is often a critical factor and the second charge product can leverage this.
ERC – many of the borrowers looking to capital rise on existing investment properties will be ERC free and on a low revert rate – between 2007 and 2011 £105bn of BTL lending was completed, almost all of which will have been on two year products (CML). To remortgage to release capital means taking a new rate with an ERC on the full loan which they may not want to do.
Interest rates – with many BTL investors having reverted from their initial rate to low tracker products a remortgage comes with a higher revert at a later date forcing the borrower into a remortgage cycle and all of the associated costs. For example a typical revert pre 2008 was BBR + 1.75% vs today at BBR + 4.49%, this a material increase which a borrower would be better not changing if they have alternative options which our BTL second charge proposition brings.
Second charge buy to let products offers landlords more choice and I expect to see this market grow over time.