Offset mortgages could ‘make world of difference to landlords’

Offset mortgages could ‘make world of difference to landlords’

Speaking on Family Building Society’s Lunchtime Learning session on offset mortgages, Paul Roberts, senior account director at Family Building Society, explained that offset mortgages used to be “quite popular”, but there have been fewer lenders offering these products as interest rates fell to low levels.

Roberts continued: “They went out of fashion when interest rates were one and two per cent, but, gradually, I think they will come back into fashion. I think, specifically for buy to let, the fact that you can no longer offset the interest the same as you used to be able to do is very significant for landlords.”

He said that, with the mutual’s deal, landlords could fully offset the mortgage, making it “really useful” for landlords to build up a “slush fund” so they can go out and find new properties.

“It means they’ve got the cash there and they’re not having to do bridging finance at some point down the line, and it’s a time-saver with one fee of £999 as a general rule of thumb on a case up to £500,000 rather than one per cent fees for bridging. It could make a world of difference.”

Nathan Waller, business development manager (BDM) at Family Building Society, added that offset mortgages were “designed for portfolio landlords” as they generally had the “additional monies that are available”.

He explained that usually portfolio landlords could have five properties or more producing rent that would go into a current account that may not offer a good amount of interest, so an offset saver account would “really benefit them the most”.

“We are perfectly fine with portfolio landlords. We don’t background stress a portfolio, we effectively look at the property that we’re taking the security over, and as long as the mortgage that we’re taking is in personal names, then that’s perfectly fine.

“It’s all based on the individual and we’re always happy to have a chance to see what we can do for them. There’s no limit to how many offset mortgages they can have with us either, so they can look to have a couple of different ones depending on their/our exposure to their portfolio as a whole,” he added.

On 4 March, Family Building Society hosted a masterclass on the opportunity of offset mortgages.

 

Watch the full 44:58 video, hosted by Anna Sagar, deputy editor of Mortgage Solutions, with guests including Paul Roberts, senior account director, and Nathan Waller, business development manager at Family Building Society.

Still time to register for the Family BS masterclass on offset mortgages

Still time to register for the Family BS masterclass on offset mortgages

Paul Roberts, senior account director at Family Building Society, and Nathan Waller, business development manager (BDM) at Family Building Society, will present the session.

It will take place online from 12.30pm to 1.15pm. 

The masterclass will cover the different types of offset mortgages in the market and the ways they can help both residential and buy-to-let (BTL) borrowers. 

Individual customer circumstances and product features will also be discussed through case study examples, to help brokers understand the offering and maximise on the opportunities available to both them and their clients. 

To register, follow this link: https://www.workcast.com/register?cpak=3344674778026034 

Registration opens for Family BS masterclass on offset mortgages

Registration opens for Family BS masterclass on offset mortgages

The masterclass will be given by Paul Roberts, senior account director for Family Building Society, and Nathan Waller, business development manager at Family Building Society.

The session will take place on 4 March from 12:30pm to 1:15pm.

The session will outline the different kinds of offset mortgages and how they can support a wide range of customers in the residential and buy-to-let (BTL) space.

It will also look at specific products and customer traits through case studies to help brokers maximise the untapped opportunity that offset mortgages present in the current mortgage market.

To register, follow this link: https://www.workcast.com/register?cpak=3344674778026034

A coherent housing policy will fix broken system – Family BS and LSE

A coherent housing policy will fix broken system – Family BS and LSE

The report from the London School of Economics (LSE) commissioned by the Family Building Society suggested the use of existing stock, encouraging downsizing and changes to property tax. 

Speaking on a presentation to announce the report, Mark Bogard, CEO of Family Building Society, said the number of housing ministers appointed in government was “unacceptable”. He said there was a need for integrated policy and a shared objective across politics and proposed that housing become a great office of state. 

Referring to Lord Mandelson who wrote an introduction to the report, Bogard said a guiding hand was needed to ensure “policies are consistent and do not pull in opposite directions. This must come from the top of government. The Housing Minister needs the power to deliver. The Housing Minister should be one of the great offices of state”.

Also on the call was Tony Travers, professor at LSE, who said the “political salience” for housing was “low”, which gave the impression it did not matter and was not that important. 

He also said there was a lack of imagination regarding stamp duty and politicians preferred to keep it rather than reform it. 

 

Optimise existing stock 

Bogard said the government could consider optimising existing stock by encouraging older homeowners to downsize.  

In the report, it is suggested this could be done by waiving stamp duty for the over 65s which would free up moving costs and increase tax revenue for the Treasury. 

Bogard said politicians found it easier to focus on the demand side of housing by creating policies to boost house building but said there needed to be a strategy to make the most of current homes.  

The report noted that local housing targets were only advisory, and the government had failed to build 300,000 homes a year as proposed. 

Tony Crook, professor at the University of Sheffield, who authored the report, said better use needed to be made of the housing the UK already had by taxing the existing stock differently. He suggested aligning council tax to property values, adding: “Those living in the most expensive homes pay more, with funds easing local authority, finance, and also help to fund more social housing.”

Christine Whitehead, professor at LSE, who also authored the report, said such a change could provide a flow of funds to local councils. 

Whitehead said a joined up approach for housing was needed and getting governmental departments to work together was more important than getting politicians to work together. 

“What needs to be done to help all the relevant departments, which is not just the Treasury, it’s not just the Bank of England, it’s not just the DWP [Department for Work and Pensions]. It is many departments, 9 of them at the last count, which need to work together with local authorities and the private sector to work to the same strategy,” she added. Whitehead said each department only had an understanding of their own position.

 

Policy proposals 

The report also recommended stabilising the private rental sector, as it suggested that rising costs were resulting in higher rental prices which made it harder for renters to raise a deposit.  

It said the taxes imposed on private landlords in the UK made them the “most tax disadvantaged in all developed economies”. The report said landlords were considering exiting the market because of this, despite demand already outstripping supply. 

The report said a stable private rental sector for all incomes was required. 

It proposed the introduction of longer term fixed mortgage rates, saying this would provide stability in the market. However, it noted that being locked into long term debt could have financial implications. 

The report said the number of first-time buyers would fall unless the government developed new initiatives to support the demographic. It said any support should boost supply, rather than prices. 

Changes to the planning system were also put forward, such as reducing the time it takes to get individual permissions processed. 

 

A ‘consistent and coherent approach’ 

Whitehead and Crook said: “Without a more consistent and coherent approach housing conditions can only get worse. What we need is a strong government working across all government departments as well as private and public sector housing organisations with all following the same road map. Unless they do this, opportunities that can help frame and realise a positive future will not be grasped.” 

Bogard said: “Solving the housing crisis is not that hard if government works with other stakeholders and pursues coherent policies introduced over a sensible timescale. And some things that would make a big difference could be done immediately.  

“The government’s latest long-term plan for housing does not address the issues highlighted in our report. Specifically, there is no mention of making the existing stock more efficient, creating more social rented housing, proper support for home ownership, creating a more effective and affordable rented sector or setting achievable targets and updating local plans to reach those targets.  

“There has to be greater coherence, consistency and resilience in housing policy which is why we need a Minister of Housing as one of the great offices of state – not a repeat of the shambles of the last 25 years.”  

Metro amends policy requirements; FHL and Family cut rates – round-up

Metro amends policy requirements; FHL and Family cut rates – round-up

The changes will streamline what is needed from mortgage customers but also widen the number of employed and self-employed contractors eligible for a mortgage.

The lender has also simplified its packaging requirements for employed, self-employed and contractor applications.

On the self-employed side, the lender has introduced an accountant’s certificate for cases under £1m and the minimum time trading has been lowered to two years, although two years of figures are needed.

From an employed perspective, the lender will no longer require minimum time in a current role, only one payslip is needed in the current role and one from previous role.

The minimum time in employment has been lowered to six months for both primary and secondary jobs.

Charles Morley, director of mortgage distribution at Metro Bank, said: “Purchasing a property is often a stressful process. We hope that these changes will go a little way towards easing that strain and ensuring that paperwork doesn’t get in the way of someone taking their first or next step on the property ladder.”

 

Foundation Home Loans cuts core BTL rates

Intermediary-only specialist lender Foundation Home Loan has lowered rates in its core buy-to-let range by up to 0.2 per cent.

Two-year fixed rates in its F1 and F2 have fallen by around 0.2 per cent, with the former coming to 6.54 per cent and the latter to 6.69 per cent at 65 per cent loan to value (LTV). Both are subject to a 1.5 per cent product fee.

The lender’s standard two-year houses in multiple occupation and short-term let fixed rate products have been lowered, beginning from 6.79 per cent and 6.94 per cent respectively.

The firm’s F1 limited edition seven-year fixed rate is priced at 6.54 per cent at 75 per cent LTV with a one per cent fee, and its F1 limited edition two-year fixed rate is 6.49 per cent up to 75 per cent LTV with a £1,495 fee.

Tom Jacob, director of product and marketing at Foundation Home Loans, said: “There’s no getting away from the fact that much of 2023 has proved to be a challenge for many landlords. However, it’s also fair to say that the back-end of the year has shown there is light at the end of tunnel with positive swap rate movement and increased competition across the sector helping to alleviate some affordability concerns.

“Our latest raft of rate reductions should further encourage landlords to evaluate their options over the closing weeks of the year and let me reassure them – and our intermediary partners – that there are more positive actions in the pipeline as we look to enter 2024 with a bang.”

 

Family BS lowers owner-occupier and buy-to-let costs

Family Building Society has reduced rates in its owner-occupier range by up to 0.4 per cent and its buy-to-let range by up to 0.55 per cent.

It two-year owner-occupier products for interest-only and capital repayment have been cut by 0.5 per cent and five-year products have gone down by up to 0.4 per cent.

Examples of changes include its repayment two-year fixed rates which starts from 5.74 per cent and five-year fixed rates begin from 5.14 per cent.

Interest-only two-year rates now start from 6.39 per cent, and the interest-only five-year fixed rates begin from 5.79 per cent.

For buy to let, five-year fixed rates have fallen by 0.55 per cent and start from 5.59 per cent.

Family Building Society has also introduced new two-year fixed rate option for UK landlords, limited company special purpose vehicles and expats, with rates now from 6.09 per cent.

The firm has also withdrawn its discounted variable rates barring offset, joint borrower sole proprietor and expat products.

Keith Barber, Family Building Society’s director of business development, said: “These significant reductions across our owner occupier and buy to let range will go some way to help older borrowers and landlords struggling with affordability and who need the flexibility and common-sense underwriting for which we are widely known”.

‘People aren’t ready for the pipe and slippers. They want to use their homes to benefit themselves’ – Family Building Society

‘People aren’t ready for the pipe and slippers. They want to use their homes to benefit themselves’ – Family Building Society

Speaking at wide-ranging Mortgage Solutions Masterclass session on 31 October, Darren Deacon, head of intermediary sales and Nathan Waller, business development manager at Family Building Society were clear that, with an aging population, increased pension freedoms and house prices rising quicker than incomes, there was a growing need for lending into later life.

However, the opportunities in the market would only be realised if all those within the sector – brokers, lenders and customers alike – educated themselves on the intricacies surrounding the later life lending sector.

Within the presentation, Waller and Deacon highlighted nuances such as how different income could be used to finance loans; the power of manual underwriting; and the importance of using standard mortgage products rather than rushing immediately to equity release.

 

Education, education, education

Deacon noted that the market for later life lending was rising as the population aged. He said: “Residential lending where the term extends into retirement accounts for 60 per cent of all lending. This demonstrates the size of the market. These people will still need a mortgage or some kind of borrowing well into later life. So you can see the size of the opportunity.”

Deacon also highlighted the fact that there were a variety of diverse factors behind borrowers’ decisions. These included their own aspirational needs, changes to pensions as well as providing for their children and grandchildren.

He said: “People aren’t ready for the pipe and slippers. They want to use their homes to benefit themselves and their families.”

Meanwhile Waller did not shy away from listing the challenges that exist for each segment of the market. For lenders, purchase business had slowed and swap rates, until recently at least, had been rising sharply; for brokers, there have been frequent rate rises and product changes; and customers were being restricted by tighter affordability and stricter criteria.

Waller said: “It’s a tricky time across the whole industry but the quickest way to overcome these challenges is with education. This is a key time for advisers to show their worth to their clients.”

And in terms of education, Waller was adamant that advisers played a vital role in the process and said that those who can take a more hands-on and knowledge-driven direction would reap the benefits.

He said: “Advisers need to create a more manual approach. To explore what customers have built up. This means looking at pension products – for example, asking if clients have a SIPP or a SASS; exploring investments; using a client’s buy-to-let properties or company directorships. It’s all about advising on a client’s circumstances, not just for now but for the future.”

Watch the full video below, hosted by Nick Cheek, managing editor at Mortgage Solutions, Darren Deacon, head of intermediary sales and Nathan Waller, business development manager at Family Building Society

Mortgage Solutions partners with Family Building Society to deliver later life lending masterclass

Mortgage Solutions partners with Family Building Society to deliver later life lending masterclass

The online event will take place on Tuesday 31 October at 12.30pm – 1.15pm

Entitled ‘Bridging the generation gap: How to overcome obstacles in the later life lending market’, the session will highlight the need for lending in later life and provide insight on the opportunities for brokers to capitalise on within this space.

This masterclass will cover:

Speakers

Darren Deacon – head of intermediary sales, Family Building Society

Nathan Waller – business development manager, Family Building Society

Chair: Nick Cheek, managing editor, Mortgage Solutions

How to register

Taking place online on Tuesday 31 October, this event will be accessible from your home or office, via a laptop, tablet or mobile.

Register to attend here: https://www.workcast.com/register?cpak=6949242194654174

Once registered, we will send you details on how to access the event nearer the time.

If you are having trouble with the form, please refresh your page. If this still doesn’t work, please email lorraine.francisco@ae3media.co.uk.

Exclusive: Family BS to increase PT proc fees

According to brokers, the change will align proc fees with owner occupier and buy-to-let new business purchases and remortgages.

Product transfers have been growing in popularity as more fixed rates come up for maturity and they can offer improved pricing and bypass affordability checks. Another factor could be falling house prices and product transfers not needing a property valuation in most cases.

Brokers have called for proc fees for product transfers to be in-line with purchase cases, pointing to heavy administrative workloads, increased refinancing volumes and the comprehensive advice involved.

 

Family BS: ‘Proc fee increase recognises additional work’

Darren Deacon (pictured), head of intermediary sales at Family Building Society, said: “We appreciate the hard work that intermediaries do in this ever-changing interest rate environment. In the wake of Consumer Duty, the advice process that intermediaries follow for arranging a product transfer is very similar to arranging a new mortgage. They still need to complete a full review of the client’s needs to ensure that the product transfer is the right solution.

“With the work on product transfers becoming more complex, this procuration fee increase recognises this additional work and demonstrates our continued support to intermediaries, in what continues to be a difficult market for many.”

Mark Harris, group chief executive at Savills Private Finance, said: “Family Building Society should be applauded for making this change. The product transfer market is fractured and brokers are not being rewarded appropriately. I hope this is a signal to other mortgage lenders.”

Know Your BDM: Neil Cadwallader, Family BS

Know Your BDM: Neil Cadwallader, Family BS

What locations and how many advisers and broker firms do you cover in your role? 

I cover Gloucester and Cheltenham, south Wales and the South West of England, down to the Devon-Cornwall border. In my previous role as a BDM for Coventry Building Society I covered much of the same ground, so I know the mortgage brokers and other intermediaries well. In addition to the 800 or so brokers I know from my Coventry days, who I am introducing to the Family, I also have a further 1,000 prospective brokers on my patch. Some 90 per cent of mortgage applications come from brokers, so keeping them up to date about the Family’s offerings is very important. I have set myself a target of a dozen or so face-to- face meetings a week. 

 

What personal talent/skill is most valuable in your role? 

Building relationships and trust is the most valuable skill, but that is only the start. Maintaining and building a reputation is the key to doing a good job. You must ensure that you deliver. My maxim is “do what you say you will do”. 

 

What personal talent/skill would you most like to improve on? 

Communication is vital. Zoom and other video calls are helpful particularly when making contact with brokers at larger, national firms or where people no longer go to the office and work from home. However, they are very much second best to face-to-face meetings, particularly when making an introduction for the first time. 

I would like to improve my social media skills. Whilst the Family Building Society has a slick marketing and social media presence, it is very important to improve visibility for both the Family and myself. 

 

What is the hardest part of your job? 

Breaking into new areas and booking appointments with new brokers, just the same as every other BDM in the UK. 

 

What do you love most about your job? 

Meeting new and well-known brokers. The relationship is a two-way thing, work and personal life blurs a little with the role. 

 

What is the best piece of career-related advice you’ve ever been given? Who gave it to you? 

“Under promise, overachieve” and “Do what you say you will do” are the adages of an old Safeway supermarket store manager from Swansea, Richard Harvey, a great manager of people. 

  

How do you keep up to date with developments in the market? 

I subscribe to all the usual mortgage and financial websites as well as the magazines that are still published. Industry topics are of course discussed with brokers and colleagues when we meet. I was an IFA and pension adviser in a previous career, and I also keep up with developments in that sector. 

 

What is the most quirky/unique property deal you’ve been involved in? 

A large property in England that “may or may not” have had a private airfield in its grounds… we will never know. 

 

Tell us about your trickiest case – what happened and how did you resolve the problem(s)? 

We managed to complete a deal in three working days from the offer, from an accountant introducer to one of my larger accounts. A combination of underwriter, completions and legal teams working together avoided what could have been a very costly mistake by the applicant. 

 

What was your motivation for choosing this career? 

I actually like finance (I’m very sad) and, as my partner would say, “I like talking”. 

 

If you could do any other job in the property sector, what would it be and why? 

I would become an estate agent, but with a mission to change the current perception of estate agents.  

‘The importance of intermediaries to landlords cannot be overstated’ – Family BS video

‘The importance of intermediaries to landlords cannot be overstated’ – Family BS video

The first part of the discussion, which focused on opportunities, challenges and media speculation in the buy-to-let sector can be watched here.

In this, the second part of the video panel debate on the buy-to-let sector, our experts highlighted the innovative products in the market with particular reference to offset mortgages, which one panellist said ‘every portfolio landlord should have in their arsenal’ and gave their opinions on what the future holds for buy-to-let, with all three praising the levels of resilience and sophistication in the market.

Greg Cunnington, chief operating officer of LDN Finance, felt that portfolio landlords would ‘begin to tighten their grip on the market as accidental landlords begin to leave’. He also noted that there would be a bigger move to limited company status.

Fellow panellist Richard Merrett, director strategic relationships at SimplyBiz Mortgages, agreed, highlighting the growing sophistication in the market.

He said: “The market has become increasing more specialist. There is a need for a more sophisticated level of advice, which addresses the true complexity in the market. And given that complexity, the importance of intermediaries to landlord clients cannot be overstated.”

Darren Deacon, head of intermediary sales at Family Building Society, rounded out the debate by acknowledging that the market was definitely moving forward, despite headlines in the mainstream press.

He said: “The sector will evolve. People will adapt. While accidental landlords may fall, specialists will be there for the long haul. And lenders will need to be innovative. And that evolution will bring opportunity.”

This is the last in a series of four videos on both the later life and buy-to-let markets, featuring Darren Deacon, head of intermediary sales at Family Building Society, Richard Merrett, director strategic relationships at SimplyBiz Mortgages, Greg Cunnington, chief operating officer of LDN Finance and host Nick Cheek, managing editor of Mortgage Solutions.
The first video on later-life lending can be watched here and the second is available here.