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New build mortgage advice needs to improve – Calder

by: Craig Calder, director of intermediaries at Barclays Mortgages
  • 26/10/2018
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New build mortgage advice needs to improve – Calder
New build and housing supply are never too far from the headlines, but September was a bumper period for coverage across this sector.


It also proved to be a huge month for Barclays due to our link-up with the government to help provide funding lines for a greater number of small and medium-sized developers and housebuilders.

The construction of affordable new homes, bolstering of supply lines and supporting housebuilders of all sizes – be it through planning, finance or land availability – are factors which will long remain at the heart of the housing and mortgage market.

When it comes to mortgages we are seeing some welcome competition across lenders, large and small.

Lending criteria is also improving.

I read a comment from Craig Hall, head of broker relationships and propositions at Legal and General Mortgage Club, who stated that there were currently 25 providers willing to lend up to 90% loan to value (LTV) on new build houses.

However, he added that there was still a little way to go in extending affordability to first-time buyers as only nine lenders were currently willing to lend up to 95% LTV.


Poor quality building

This is not the only issue, concerns surrounding quality and price premiums are also still evident.

According to analysis from property adviser London Central Portfolio (LCP), new build house prices in the wealthiest parts of London are 44% more expensive than existing homes – even though transactions in the sector have plunged by 16% over the past year.

In addition, BLP Insurance found that 24% of people considered a lack of build quality to be a major disadvantage when buying a new build home compared to an older property.

Despite the positive raft of recent government interventions and lender improvements, these are age-old concerns which shouldn’t be glossed over.


Advice improvements

Another new build area which needs improvement is the advice process.

This was outlined in research from housing association Aster which suggested that people who have bought shared ownership homes do not understand their long-term options.

More than half of those surveyed were not aware of the scheme’s flexibility, while only one in five understood how moving from one shared ownership home to another worked in practice.

As lenders and intermediaries, we can’t influence potential borrowers on what kind of property they are looking for, but we can help open the door to the types of solutions which best match their requirements.

In a similar vein, as an adviser you are not a building inspector, valuer or surveyor and it’s important to highlight that buyers need to undertake sufficient research when entering into any property transaction.

However, there are areas where they do need good, holistic, professional advice, predominantly when it comes to initiatives and schemes such as Help to Buy, shared ownership and when receiving financial support from family members for house purchases.

There are also remortgage solutions to consider for clients across such schemes whether it is for staircasing purposes or paying off loans in full.


Client for life

Opportunities will continue to emerge in this sector, and intermediaries who are well-practiced on all new build lending options and individual lending criteria will be best positioned to support clients through this complex area.

They will also be the ones who are more likely to turn such homeowners into a client for life rather than merely a one-off transaction.




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