Mortgage Market Review & You


How will this affect you, the
As consumers you may or may
not be aware of the Financial Services Authority’s mortgage market review.  This was a review conducted by the FSA over
the last few years, of how the mortgage market conducts itself.  This review was heavily influenced by the
financial crash in 2008.  The FSA issued
the policy statement (PS12/16) and the final rules which will come into effect
on 26 April 2014.  However, in the
majority of cases, most lenders have anticipated these rule changes within
their criteria or have already put into force those items raised by these new regulations.  These new regulations fundamentally alter the
mortgage market for you as consumers. 
So, I would advise all consumers to make themselves familiar with some
of these new regulations.  The following
is an example of the type of changes and how it will affect you, but I would
suggest that the regulator is not regulating but defining the market.


An example of how these regulations
will affect you is a very lose term called responsible lending.  These terms are deliberately lose so that
each lender may interpret, and therefore be hung by, the regulations themselves.  So, how does it affect interest only?  The majority of lenders will now not accept
interest only in its strictest sense unless the loan to value is extremely
small and is backed up by investment products such as endowments.  Given the fiasco in the past over endowments
and miss-selling of endowments, in effect this kills the concept of an
endowment-linked interest only mortgage. 
Also these interpretations go further; in the past if you wanted an
interest only mortgage you would set up a repayment vehicle such as an
endowment or modern day an ISA at point of application.  However, these new changes preclude this as
the endowment or ISA needs to be existing prior to application.  This wasn’t even a requirement before the
endowment miss-selling scandal. 
Therefore again, killing new interest only, asset backed mortgage
applications.  Only those clients who have
been on interest only with asset baked provisions can obtain a new interest
only mortgage.  How about if you wanted
an interest only mortgage on the basis of selling your property to
downsize?  There are a handful of lenders
that will consider this but, of those, the majority will only accept the application
if you can prove that you either have 50% loan to value and/or sufficient
equity and capital resources to have over £150,000 at the end of the mortgage
term.  So, again, this kills the interest
only mortgage market.
But why is this a problem?  When comparing the financial benefits of a
repayment verses an asset backed interest only mortgage, or indeed resale of
property interest only mortgage, one should consider investment returns long
term versus interest rates and also house price increase on the basis of later
sale.  Right now, the Bank of England
base rate is ½% so I think most people would agree with me that we are in a low
interest period.  I think most people
would also agree that house prices are at an all-time low.  Also, one has to consider that if you were to
put £10,000 in a cash- based ISA you can achieve a return of 3 or 3½%.  One wold also suggest that if you were to put
your money in an equity based ISA whilst very volatile, again it would be fair
and reasonable to suggest that you would achieve 5% return in the medium to
long term.  So if these are compared,
clearly from a financial point of view it would be fair to suggest that an
asset based mortgage would be financially more astute than a repayment mortgage.  Classically, in a high interest rate period,
a repayment mortgage is better than as asset backed product on the basis that
one would have to achieve such high levels of growth to outperform the high
interest rate.  With this in mind I would
actually argue that, right now, interest only should not be being killed by the
regulator as it is a fully justifiable and potentially financially astute
repayment method, but if the only people that can have it are those detailed
above, ie those that have already had it, then the regulator is controlling the
market not regulating the market because, clearly, one should be allowed to
consider this type of arrangement.
If you would like more
information on how the mortgage market review may affect you or require
financial or mortgage advice please contact 01636 870 069 for your free
Philip Dales Dip PFS Certs
DALES Independent Financial
Advisors, are a whole of market mortgage broker and Independent Financial Advisors.
Authorised and Regulated by the Financial Services Authority.

Market Leading Buy to Let Rates

101: Things we DO like to talk about. 

Buy to Lets. 

The Buy to let market can be a little intimidating, not many people know all that much about it, but in the currently depressed housing market a buy to let can be picked up quite cheaply.

With first time buyers finding it difficult to get on the mortgage ladder and buy their first home there is an ever increasing need for rented housing.

Locally in Newark and Nottingham there is very strong demand for rental properties in and around employment centres, with strong rents from incoming migrant workers unable to get on the mortgage ladder, with little or no deposit.

Buy to Let mortgages come in two basic flavours:

The first is the more difficult to get hold of, where the lender basis the loan not on the property but on the person borrowing. These are not the mainstream of buy to lets, but are often the best deals.

The much more common is the standard buy to let mortgage, where the mortgage is based on the properties ability to wash its own face, or rather that the rental is sufficient to pay the mortgage plus a small amount. Usually the calculation used by the lenders is 125%, in other words the rental assed by the valuer must be at least 125% of the mortgage payment based on a an interest only loan.

After this basic criteria there really is not much more to it, there are nuances for each lender, for example, some lenders will not accept any applications from first time landlords, whereas others have special deals for such. The Maximum number of properties available under one particular lender can vary widely with some lenders only allowing 3 properties to some allowing any number up to a total value of £3,000,000 or more.

There are a few other things to consider, usually buy to lets are not regulated buy the Financial Services Authority unless special conditions apply, such as the property will be let to a relative, and therefore some lenders will not consider this type of buy to let. However, in most circumstances this should not affect the manor of the advice you receive.

Currently the Market leading 2 year buy to let mortgage is 3.39% fixed until 31.08.2014 with a maximum Loan to Value of 60%. Which has been launched today, by one of the mainstream buy to let lenders.

Usually the maximum loan to value is 75%, meaning that the lenders usually expect you to be able to deposit at least 25%. However, there are executions to most rules and this is no different, some lenders do offer some schemes with an 80% Loan to value maximum.

Beware of the fees: Buy to lets tend to be slightly more expensive than standard mortgages, recently the interest rates for buy to lets have been running at what appear to be quite low interest rates but beware the fees on buy to lets can be high with some lenders charging percentage based fees.

Most lenders do not expect you to instruct an agent to run the property, just an Assured Short-hold Tenancy agreement with the tenant, which can be downloaded from the net or picked up from your local WHSmiths. This is a very standard landlord and tenant agreement protecting both of you.

There is also the possibility of Let to Buy, this is where you let out your existing property to enable you to purchase a new home as your main residence. Most buy to let lenders have special criteria and deals available for this type of buy to let. The big benefit of this type of arrangement is the ability to brake the chain and not have to sell off your property, given the current market this is a very viable option for most people to consider.

If you would like more information on Buy to Lets, Let to Buy’s, the 2 year deal mentioned above or other financial or mortgage advice, please contact us on 01636 870 069 for your free consultation.

Philip Dales Cert PFS Certs CII (MP & ER)

DALES Independent Financial Advisors, are a whole of market mortgage broker and independent financial advisors. Authorised and Regulated by the Financial Services Authority.  The Financial Services authority do not usually regulate Buy to Let mortgages.



every woman ought to know…..
men and women are created equal, but some have been more equal than others.
The gender directive is meant to address
this and it does!
However, do we all want what is fair and
what we may have campaigned for, what have we done?
In our pursuit of equality have we got more
than we bargained for?
Statistically women live longer than men, therefore life and protection premiums cost us less than men!
We want to be equal so after the 21st Dec 2012 we will be.
Obviously in the interests of fairness and the politically correct times that we live in, us ladies will have to pay
the same as our men, gone will be the reduction that women have previously
enjoyed their life insurance and protection premiums will be the same.
Life premiums for women could rise as much
as 15%, what does this matter, because 59% of WOMEN don’t even have any life
This is a bit silly of us, ladies, he deserves life insurance and income
protection why don’t we?
Society dictates that she can and should earn as
much as him, be the domestic goddess, nurture the children and strive to be as
successful as any man, in fact 40% of women are the main earner*, her life and
salary really is as important as his. 
Advising Director)
Sources: National Statistics Online, March 2012, HM Treasury, DEC 2011,  Opinium research for Bright Grey,
Jan 2011
For more information or advice on Life Cover, Life Insurance – Life assurance and income protection contact DALES Independent Financial Advisers: at, or go to our web site Telephone: Nottingham office: 0115 832 0265 or Newark Office: 01636 87 00 69

DALES Independent Financial Advisers, Nottingham & Newark. Authorised and regulated by the Financial Services Authority: 496107.