I was interested to read that the Loughborough Building Society has decided to do away with upper age limits across its mortgage range. A direct response to the growing number of people looking to extend mortgages into retirement. The news came days after we had published the top criteria searches undertaken by advisers in residential and buy-to-let sectors.
The number one search was asking which lenders had upper age limits and if so what they were. From the volume of searches, it was easy to see that because so many brokers were looking at this particular data set, it provided further evidence of the growing number of cases brokers are dealing with for older lives looking to buy and downsize or remortgage to free up capital.
This was just an example of the kind of information advisers are searching for when they need to be confident in recommending a lending solution to their customers. As brokers ourselves, we had found that although the data was out there, it took phone calls to multiple lenders in order to get the kind of unequivocal answers we needed. Too many written sources and sourcing systems would state that Lender A could entertain an application with the specific issue that the broker was concerned about, but the conditions for acceptance were unclear or missing. The default in so many cases is ‘Refer to Lender’.
Apart from lack of specific data, the issue is magnified by the number of lenders which need to be checked. It is therefore becoming very important for brokers to be able to find all the answers they need in one place.
If we take, as an example, a property where it is believed there is a Japanese Knotweed infestation.
One major lender on our system will consider lending and the detail we have compiled is particularly specific. The notes say:
If present within 7 metres of the property boundary, the applicant will be required to obtain a specialist report in respect of eradicating the plant, including an insurance backed 5 year warranty against re-appearance of the plant, and if necessary, repairs to the property and services will be required for the valuer to make a full assessment of the property’s suitability.
- If more than 7 metres from the property boundary, written confirmation is required from the applicant confirming that they are aware of the presence of this invasive plant and the adverse effects it could have on the property should it spread closer. It is recommended the applicant seeks their own independent professional advice regarding the risk this plant might impose.
While another takes a different view:
- During the valuation process the valuer may identify special risks that must be detailed within the report, this includes invasive plants such as Japanese Knotweed.
- When recommending a property, the valuer must assess each case on its merits using their experience and local knowledge, taking into account the guidance and standards notes provided by the Bank, and Royal Institution of Chartered Surveyors. Where an environmental issue is identified, the case will be assessed on its merits taking into account such factors as marketability, mortgageability and insurability. Underwriters must follow the valuer guidance and progress the application with this in mind.
Finally, here is another lender who sums up their requirements in very few words:
Acceptable subject to specialist report confirming treatment & guarantee of works.
One of the aspects of the industry which makes it fascinating, but also frustrating for advisers, is the different approaches taken by lenders when it comes to what they will or won’t accept. Underwriting is personal to each lender and, outside of the more basic similarities around LTV, income and expenditure for example, some lenders, as we have seen, can take very different stances over how they treat a particular issue.
The mortgage intermediary community provides a fabulous service to its customers. Thanks to today’s professional mortgage advisers, allied to whole of market knowledge and the consistent demand from the public to deal with a human agency, it is not surprising that intermediary activity in the mortgage market is so dominant.
But brokers need the right tools to help them negotiate the increasingly complex cases with which they are being presented. Sourcing systems have been around for some time and are indispensable. Online services are continuing to evolve and deliver the promise of speeding up processes and encouraging 24/7 communication between lender and broker among other benefits.
The latest helpmate, an online depository of accurate lender criteria in one place, is already beginning to make its presence felt in today’s increasingly complex lending environment.
Jason Hegarty is director of Criteria Hub