Over the years, I have been quite non-committal when asked about giving mortgage advice to my friends.
My standard approach is to suggest they find a broker or independent financial adviser and I will give my opinion on their advice. The reasoning behind this is two-fold.
The first is that I don’t want to know about their intimate financial well-being, as I’m scared I might look at them in a different light. The second is I’d rather not risk a friendship for the sake of a couple of hundred quid.
I’m happy to report that on every occasion the advice given has been sound, and it is refreshing to be reminded what a friendly and proper industry we work in.
Friends outside the industry are often better placed to point out idiosyncracies in the industry, and a couple stick in my mind. One was an established school teacher from South Africa with permanent rights to reside in the UK.
He was told by his IFA that as a first-time buyer he was at distinct disadvantage as he did not have any personal debt; it took me several minutes to ensure my story concurred with the IFA, as strangely he was right – however this does appear to be nonsensical as my mate had savings at the end of the month.
The other humdinger was a friend advised to take a popular 125 per cent product, as the broker felt it would allow him to kit out the pad in a cost-effective way – but when speaking to his parents who complained that this was plunging him into something they had suffered called ‘negative equity’, and that he’d be stuck in the property for a decade, they were surprised that lenders wanted to get back to those heady times.
Not quite right, of course, as the borrowing above the 100 per cent was unsecured, but nevertheless – knowing what a thrift he was – I very much doubt the additional borrowing would have gone on a new stove.
I’ve talked in the past about how well we get on as individuals within a competitive industry, and in light of the recent turbulence in the market how genuine friendship has been extended. There have been lenders setting up emergency replacement helplines.
One lender called me directly to talk through how it was willing to extend its normal criteria to mirror that of another ailing lender to protect our relationships with our brokers. The cynics among us might call this opportunism rather than true friendship – and I tried one helpline that went through to a lender’s retention divisions’ answer phone – but on the whole, I believe we’ve been rallying around.
Initially some of our brokers thought we as a packager were being difficult or trying to cover our tracks as offers were pulled as funding dried up. Now there has been a realisation and we are getting praised for our ability to help in the replacement process. Through these testing times, trust has never been greater as everyone realises we are in this together and all benefit from the waving chequered flag of completion.
We have also heard tales of packagers honouring broker procuration fees for lenders who are not in a position to pay them.
CVs have regrettably been piling into headquarters. Established friendship and networking helps here in terms of selection. Interestingly the high profile ones now often combine their whole management team as a job lot – demonstrating once more the trait of loyalty in friendship.
Looking forward, new friendships will be made in the quest for survival – let’s hope it’s not a question of dropping Billy for Jonny but remembering first and foremost the friendships that stuck by you through thick and thin.
Mainstream
- First Active has restricted its 100 per cent loan-to-value (LTV) product to applicants of various professions.
- Scottish Widows Bank has launched a free SMS text messaging service.
- Cheltenham & Gloucester has simplified its product range.
- Advantage no longer lends to first-time buyers.
- Amber Homeloans has pulled all its products back to a maximum of 85 per cent LTV.
- db mortgages has tightened its view on flats.
- CHL has reduced its loan sizes and now limits its new build exposure to the lower of 10 properties or 20 per cent of the development.
- UCB Homeloans has improved its rental calculation to 110 per cent at Bank Base Rate plus 0.5 per cent.
- GMAC-RFC has reduced its unusual 89 per cent LTV to a more standard 85 per cent LTV.
- Mortgages plc has withdrawn its 95 per cent LTV range, reduced self-cert and new build to 75 per cent LTV, and reined loan sizes back in.
- db mortgages now does not accept buy and rent back schemes. Its interest rates have also risen between 1.5 per cent to 2.3 per cent, depending on the plan.
- Money Partners’ no reference scheme is now restricted to 75 per cent LTV.
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