We are a leading provider of impartial mortgage advice in London and the South East, specialising in all types of mortgages. We are experts in large residential mortgages, buy to let mortgages, development finance, bridging finance and commercial mortgages. In addition to high street lenders, we have comprehensive links with private banks, boutique lenders and offshore banks. Working with these financial institutions, we are dedicated to finding our clients the best possible mortgage interest rates available and a product that is best suited to their needs.

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Summit Capital Mortgages LLP
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Tuesday, 06 March 2012

High Value Mortgage Review

As much of the UK property market limps on, the one sector that continues to defy the odds is the high value sector.  A recent survey by Savills suggested that 63% of all of purchases in the prime London new-build residential market were by international investors. However, with the bonus season upon us, there are still a high percentage of UK buyers looking to invest in what they see as a “safe” place to put their money. A vast majority of these buyers, whether they are from the UK or overseas will look to raise a high value mortgage on these purchases. One of the main reasons for this is that high value mortgages offered by UK and international private banks do not seem to be tightening their belts, like the high street lenders. Many of these private banks see the mortgage as a good way to start a relationship with a new client and are able to offer variable rate deals priced as low as 1.5% to 2% pay rate, which massively undercuts what is available on the high street.

One additional advantage of borrowing from a private bank is that they will treat each application on a case by case basis, rather than adhering to strict criteria like the high street banks. Private banks are often willing to lend to high net worth families even if their personal income does not fit the traditional 4 – 5 times income requirements.

Many private banks also have not turned their back on interest only mortgages like the high street lenders. They understand that the borrowers often have complex financial positions and may look to keep their monthly costs down, whilst investing elsewhere to build up the capital to eventually repay their mortgage. Private banks are also happy to consider investment bankers and company directors that receive bonuses on an annual basis, that will be used to repay the debt.

 If you would like to discuss a high value mortgage, then please contact Summit Capital Mortgages on 0203 432 1423.

Tuesday, 14 February 2012

RIP Interest Only?

Since the mortgage market internally combusted 4 years, there has been one topic which seems to attacked more and more by the FSA....Interest Only Mortgages. The knock on effect of this, is that lenders are becoming increasingly cautious about offering these kind of loans. A couple of years ago, we were still able to offer interest only mortgages up to 85% LTV, however, now the standard with most lenders is 75%.

Santander took this one step further last week, by reducing the LTV on their interest only mortgages to 50%!!!

What does this mean to Joe Blogg on the street?

Firstly I'm pretty sure there will be a lot of disappointed individuals in the next few months, who have spoken to Santander recently and are expecting to take their mortgage out on an interest only basis when they find their next home. Seeing as last year, Santander has a market share of 18%, that means there will be a lot of disgruntled people out there.

However, that doesn't worry me as much as the current mortgage owners who will be looking to refinance their current Santander mortgage when it is up for review. No longer will these borrowers be able to renegotiate their current mortgage with Santander unless they conform to the new criteria. If they aren't able to or don't want to change their mortgage to capital repayment, they will then need to search elsewhere for a new mortgage. Great news for a mortgage broker you declare! Not if all other lenders follow suit and start tightening their interest only criteria, which is a likely scenario. So the end result could be thousands of borrowers stuck on the SVR's unable to move else where.

Now don't get me wrong, some of the lending that went on in the past was completely wrong. A 60 year taking out a 90% interest only mortgage without a repayment vehicle, was never going to repay his mortgage. However, an individual borrowing £500,000, but with a good history of annual bonuses of around £100,000 is pretty likely to be able to may down the debt.

I have no problems with lenders tightening their criteria, but they must be sensible about this. Would it not be a better option that applications for interest only mortgages must be accompanied by proof that the borrower will be able to repay the debt? Whether this is a 3 year track record of bonuses or evidence of a suitable repayment vehicle.

I fear that for the time being interest only will become tougher and could eventually become extinct. I just hope that when the dust settles in a few years, some lenders will reassess their situation and resurrect sensible interest only lending.