Mortgage Reviews

Perhaps the biggest challenge facing potential homebuyers is the issue
of how much deposit is required to attain a home loan. There are many
misconceptions about how much deposit is actually required, and good
Perth mortgage brokers can offer invaluable advice and guidance when it
comes to a buyer’s options with regards to this.

The deposit is one of the most important factors which will determine
the success or failure of a home loan application. The amount of deposit
that a buyer can put down will impact upon future repayments, amount to
be borrowed, and the amount of interest which will be payable over the
term of the loan. It will also have a significant impact upon whether
loan approval is likely.

Mortgage lenders and banks will have
differing criteria governing what monies can be used as a deposit; the
more money saved for a deposit, the more likely it is that a mortgage
broker will be successful in negotiating the waiving of certain fees,
and a lower interest rate on the loan.

As a general rule of
thumb, most banks will require a minimum of five percent of the purchase
price as deposit, and this must be in what is referred to as “genuine
savings”. This is actual money which one has had in a bank account for a
period longer than three months, at minimum. This money is used to
demonstrate a pattern of savings behaviour.

It is always advisable to have as much money for a deposit as possible
(and one must not forget that fees such as stamp duty and legal fees
must also be covered over and above the purchase price of the property).
The greater deposit paid, the sooner a home loan will be paid off. More
equity in the home will be available. Some lenders will even offer a
discounted rate for interest when a large deposit is offered.

Persons who are self employed or who have income which is erratic can
have a more difficult time gaining a home loan. If one in this situation
seeks to borrow more than eighty percent o the value of a property,
Lender’s Mortgage Insurance may be necessary in order to be approved for
a home loan. This insurance, payable by the borrower, protects the
lender in the event that a borrower cannot make repayments and the
property does not sell for a price that will cover the loan.

One
should always aim to have as much deposit as possible when buying a
property – yet in reality, and with the current economy and the expense
of daily modern life, this can be very difficult to attain. This is why
it is so highly recommended to enlist the services of superior Perth
mortgage brokers. These professionals can help a buyer traverse the
minefield of loan products and find the perfect loan for each
individual’s circumstances.

Over the last six years the number of deals available to high value
mortgage clients has been decreasing. As lenders have fallen by the
wayside and those that remain have become more reluctant to lend, the
choice of large mortgage deals has fallen sharply.

However, new research has found one area of the
residential property sector which has benefited over the last six years:
those buyers who are seeking a large mortgage and have a large deposit.
Typically these buyers will be high net worth clients looking to borrow
less than 60 per cent of their home’s value. The number of deals
available to these clients has increased significantly during this time
as lenders compete for such low-risk business. Here, we look at the one
area of the mortgage market that is seeing strong competition, in
contrast to the major part of the market in the UK.

Research
from financial analysts Moneyfacts has discovered that the number of
mortgage products in the 60 per cent ‘loan to value’ bracket has
rocketed since 2007. There are now approaching 500 deals available for
people with a 40 per cent deposit, compared to just 21 in October 2007.

Sylvia Waycot, of Moneyfacts.co.uk, said that in 2007 lenders offered
high loan to values as a norm. High income multiples and sub-prime were
not automatically rejected. This all changed in 2008 with the onset of
the banking crisis. High loan to values quickly disappeared and even
today are few and far between. They were predominately replaced with the
60 per cent loan to value which is virtually risk-less to any lender
and as a result, the first-time buyer market has stagnated.

At
times price wars have broken out between lenders keen to secure high
deposit mortgage business. Banks in the UK such as HSBC have even
offered five year fixed rate mortgages at under 3 per cent.

Hugh Wade-Jones, director of London mortgage adviser Enness Private
Clients, said that while mortgage deals for first time buyers and for
those seeking higher loan to values are hard to come by, there are
plenty of deals if you are a large mortgage borrower looking for under
60 per cent ‘loan to value’. The low risk nature of this type of
borrowing has led many lenders to offer superb rates in order to attract
good quality large mortgage business.

As well as the mortgage
deals reported by MoneyFacts there are countless more products available
through private banks in the UK and overseas. High value mortgage
clients who need over 500,000 at a low “loan to value” have a superb
choice of deals right now.

The Government’s Funding for Lending
scheme has been a contributing factor to the increased choice of deals.
There were 87 new products at 60 per cent loan to value in the first few
months of the schemes introduction. However, some experts believe the
government initiative is not targeting the right type of borrower as it
was designed to help first time buyers without a large deposit. Yet the
number of new deals available for those with only a 10 per cent deposit
remains limited. It has simply improved the choice of deals for those
seeking a large mortgage, who already had a good range of choices
anyway. Only time will tell if the government’s new Help To Buy scheme
will redress this imbalance.

In the 2000s some British mortgage borrowers who were sold complicated
foreign currency mortgages are suffering a disadvantage with high
repayments and increasing debt because of large fluctuations in exchange
rates. The hardest hit borrowers have been those with home loans linked
to the Japanese yen which has recentlyrisen to levels not seen in over
20 years.

Many experts believe that these foreign currency mortgages should never
have been sold to clients who did not fully appreciate the risks
attached to such deals and urge clients to always take professional
advice regarding foreign currency loans.

Japanese yen foreign
currency mortgages were sold in the early to mid 2000sin order for
borrowers to take advantage of the low interest rates in Japan at a time
when interest rates were not low in the UK. This meant that monthly
mortgage repayments were less expensive than for a normal UK mortgage.
In 2004the difference in yen mortgage interest rates and sterling
interest rates wasabout 5 per cent so the savings were substantial.

However, the risk associated with a mortgagesin a foreign currency is
that if the foreign currency increases in value against sterling, the
monthly repayments go up in equivalent sterling terms. In addition, the
total amount of the debt in sterling also rises.

Shocking
figures that illustrate just how great this risk is show that a Japanese
yen based mortgage equivalent to 500,000 in 2004 would have increased
to a debt of 770,000 by 2009 and a staggering 855,000 by 2012 because
the yen-sterling exchange rate had risen from 200 to 117 to the pound
over that period.

Japanese yen, Swiss franc and US dollarmortgages were all sold by
well-known British banks in particular to UK expats living overseas, but
experts have argued that foreign currency mortgages are only suitable
for sophisticated investors who understand the risks. Foreign currency
mortgages can be a good solution for some high net worth clients who,
for instance,do not receive their income in sterling or who have major
assets in foreign countries. Such investors can benefit from this type
of deal but banks were selling these loans in the 2000s to less
knowledgeable investors as a means of just reducing the interest rate
payable. There was no managed multi-currency loan arrangement to hedge
the associated risks so it proved to be a highly risky strategy.

Some of the borrowers whose mortgages have been adversely affected by
the yen exchange rate rises have reported that they were not fully
warned of the dangers of such loans. Furthermore, many of them are not
covered by the UK financial services jurisdiction so cannot have their
complaints investigated by the UK’s financial ombudsman.

High
net worth mortgage experts believe that foreign currency mortgages are
harder to obtain now than they were 10 years ago but many banks still
offer this facility in the UK. Anyone considering such a home loan
should take professional advice from a high value mortgage broker with
experience in this type of lending and ensure they fully understand the
risks before agreeing to such a loan.

Attracting to leads to your mortgage brokerage is a vital step in
growing your business. After all, your business needs customers in order
to thrive. Leads are people who are interested in your products and
services. The goal of mortgage lead generation is to find those people,
share information about your products and services, and get as many of
the right people to buy your products or services. Both online and
offline lead tactics can work. Below are a few ways to attract leads to
your mortgage brokerage.

Offline Mortgage Lead Generation Tactics

Offline mortgage lead generation refers to practices that do not
involve the Internet. For example, direct mail is considered an offline
lead generation tactic.

Direct mail – Use the types of products
you intend to market to guide you in purchasing a suitable mailing list.
For example, if you intend to market reverse mortgages, you will want
to target homeowners over age 62. Similarly, if you are marketing
refinancing, you might want to target homeowners who have been in their
homes for at least a year.

Telemarketing – Telemarketing
involves calling potential or existing customers at their homes or
businesses. Many consumers are on the national Do Not Call list, making
it important to use care in purchasing lists to ensure compliance. It’s
often smart to call past customers periodically, especially if rates
have fallen and they could benefit from refinancing. Loan performance
software is helpful in identifying existing customers who could benefit
from a new loan product.

Events – Home improvement shows are
filled with homeowners looking to improve their properties, making them
ideal for generating leads for refinancing. A popular way to capture
names and phone numbers of leads is to hold a contest and have each
person fill in an entry form with their contact details. The downside to
this technique is that many people will enter for a chance to win, but
may not be in the market for a mortgage.

Online Mortgage Lead Generation Tactics

Online mortgage lead refers to lead generation practices that occur
online. The most common tactic involves using SEO or pay per click
advertising to direct interested people to specific mortgage “landing
pages” filled with compelling information and a call to action. The call
to action could be to call an 800 number or fill out a form.

Do-it-yourself online lead generation – Some mortgage companies have the
talent and resources to launch their own SEO campaigns to direct
mortgage leads to a landing page with an online form. As leads come in,
they direct them to brokers who call the lead, make the pitch, and
hopeful, close the deal.

Buying mortgage leads – Buying leads
from a third party lead provider is another tactic that can bring fresh
leads to your business. The lead generation provider invests in SEO,
website development, advertising, and more to generate as much traffic
as possible. From there, leads are captured and sold to mortgage
brokers. The benefit to using such a service is that you can specify
exactly what type of lead you are interested and pay only for mortgage
leads that make sense for your business.

Both offline and online
mortgage lead generation can bring a steady flow of leads into your
sales pipeline. No matter which lead options you choose, pay attention
to your conversion rates and continue fine-tuning the performance of
your mortgage lead generation campaigns.

Low risk home loan borrowers who have a mortgage at a low loan to
value, so that they have significantly more equity in their homes than
the amount they have borrowed, are the main beneficiaries of the record
low interest rates currently available in the UK. This low rate
environment in the current mortgage market means that home loan lending
is rising.

In addition to the low rates available (due to the
Bank of England’s base rate holding at a mere 0.5 per cent for nearly 5
years), there has also been increased competition between lending
institutions and two government schemes to encourage lending. These
facts have led to some of the lowest mortgage rates the UK has ever
experienced. But the benefits of this low rate environment are really
only available to the low risk borrowers.

High net worth mortgage clients benefiting from some of the lowest mortgage rates ever

With the UK governments Funding for Lending and Help To Buy schemes
offering banks and building societies access to inexpensive funds they
are able to offer some genuinely low rates, especially for high value
mortgage borrowers who are perceived as low risk.

It is these
high value, large mortgage borrowers with low ‘loan to values’ that have
benefited most because the most competitive mortgage deals are reserved
for those with a deposit of 30 percent or 40 per cent; a level that is
plainly unlikely to be available for young first-time buyers. The real
winners in this situationare the relatively small numbers of potential
home buyers who fall into the low risk category of lending.

Given that first time buyers are the life blood of the property market,
this situation cannot continue forever without further damage to the
already stagnant market. There will come a time when the lending
criteria imposed by banks and building societies will have to be
adjusted if they are to have any volume of business in the home loans
sector. There is an enormous potential market for first-time
buyersmortgages that is not being serviced while the few who are
fortunate enough to be able to borrow will see increasing competition
between lenders for their business. Loans at higher LTVs may soon start
to appear in greater numbers.

It is obvious that certain types
of borrower with plenty of equity and a high, secure income have seen
the cost of their mortgages fall significantly in recent years. Islay
Robinson, director of million pound mortgage specialist Enness Private
Clients believes that deals for borrowers with a 30 per cent to 40 per
cent deposit available have rarely, if ever, been lower. And, the
private banks and other non-traditional lenders thatLondonmortgage
brokers speak to on a daily basis have a keen appetite to lend to high
net worth finance clients.

For the mortgage market in the UK to
return to pre-credit crunch levels, these sorts of deals are going to
have to become available for first time buyers and those borrowers with
only 10 to 20 per cent of the purchase price available as a deposit.
Nevertheless, low risk, large mortgageborrowerswill continue to benefit
from superb deals.