Arranging an overseas mortgage – advising the customer
Simon Conn, senior partner at Conti Financial Services, warned potential clients that a cooling-off period was essential when purchasing an overseas property.
For those brokers considering entering the market he had the following advice: “The market potential is enormous and rewarding but not to be entered into lightly.
“It is a time consuming process with a large degree of bureaucracy and time differences to deal with. Only 1 in 10 people advised proceed with the sale.”
Andrew Callen, director at Powell Callen Solicitors, emphasised the importance of making a local will and investigating tax implications fully.
He highlighted Croatia as a potential ‘hotspot’: “The Croatian government are set on quality not quantity and are determined to prevent excessive low value property,” he said.
“UK inheritance laws are accepted and there is a tax treaty between the nations which when added to a good, judicious system makes it a very interesting proposition.”
Lifetime mortgages and home reversion plans.
Dean Mirfin, business development director at Key Retirement Solutions, encouraged brokers and providers to tap in to the market.
He said: “Intermediaries have to put in the work and they should not underestimate the time involved but the rewards are there to be grasped. The potential of the home reversion market is massive, at the moment it is only being sold to 1 per cent of the possible market.”
Buy-to-let
Andrew Lees, sales director at Paragon Mortgages, explained that the private rental sector accounted for 10 per cent of the UK market, with more than 85 per cent of buy-to-let owned by professional landlords.
He said: “There is no evidence of a crash in the buy-to-let market. Rents are moving up again and rental income was up in October. All the negative press was two years ago now. Brokers should target portfolio landlords.”
The developing market and awareness of commercial mortgages
Philip George, managing director of Commercial First Mortgages, continued the theme of another huge potential market which is as yet relatively untapped.
He said: “Only 15 per cent of commercial lending comes through intermediaries compared to 80 per cent in America. This shows the scope for brokers in the market.”
Protecting the mortgage investment
Roger Edwards, head of products at Bright Grey, warned brokers to ensure customers understood critical illness cover or face a mis-selling scandal.
He said: “It is imperitive that brokers and customers understand the strict criteria involved in something like critical illness cover.”
Tomorrow’s market today
John Wriglesworth, chief economist for Hometrack, gave his views on first-time buyer lending multiples.
The average first-time buyers’ income multiple is now around 5.6. A modest fall in house prices could take this below 4. But when house prices peaked in 1989 the muliple was 4.8 while interest rates were around 13 per cent.
He said: “Offering first-time buyers multiples of seven times their salary is considered irresponsible in the current market, but historically it looks affordable.
“They were much less affordable back in 1989 and no-one batted an eyelid. Affordability should be looked at not just house prices.”
Kevin Duffy and Jonathan Cornell of Hamptons Mortgages gave their predictions for 2005.
· Long-term mortgages will not become any more popular. Interest rates are too unpredictable and early surrender terms too punitive.
· Fixed rate mortgages are likely to become more popular as swap rates fall.
· More product innovation.
Duffy said: “Innovation has been stifled by the regulatory changes, but I think some good ideas could come to the market once things have settled.
