HOT T PICS M O R T G A G E & P R O T E C T I O N
INSIDE THIS ISSUE:
Aviva Win the protection clients you want. Faster
Together Bridging loans market remains resilient
Age Partnership It’s equity release but not as we know it...
Halifax Four reasons your client wants a product transfer
CPD expertise. AIG Life support.
Continuing Professional Development
Our CPD Life Support materials
> What is CPD? Continuing Professional Development refers to the process of tracking skills and knowledge that can be applied professionally. The new CPD quota came into force on the 1 st October 2018. > What is the new IDD quota? The Insurance Distribution Directive (IDD) is EU law which sets regulatory requirements for those designing and selling insurance products. From the 1 st October 2018, all advisers selling protection must complete 15 hours of focused CPD annually. These are included in the 35 hours of CPD the FCA already has in place. > AIG Life support As a seller of Protection you cannot avoid the new quota, but we can make it easier for you. We have developed a one-stop online hub for all your CPD Protection needs. It’s part of our on-going commitment to support advisers however we can.
Our bespoke interactive hub has materials that qualify for CPD and are available to download and watch instantly. These will cover a wide range of topics, including Foundation Level, Business Protection and Wealth Protection. New content will be added regularly.
Critical Illness Income Protection Enhanced Gift Trusts Key Person Cover Planning for Later Life - Care Cover
Get CPD ready today. Visit www.aiglifesupport.co.uk
For adviser use only. AIG Life Limited. Telephone 0345 600 6820. If calling from outside the UK, please call +44 1737 441 820. Registered in England and Wales. Number 6367921. Registered address: The AIG Building, 58 Fenchurch Street, London EC3M 4AB. AIG Life Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. The registration number is 473752.
INTRODUCTION – 3
Welcome to the first edition of our new mortgage & protection magazine, Hot Topics. New for 2019 is Tenet’s Hot Topics magazine - a dedicated channel utilising the expertise of mortgage & protection providers. The content will provide you with a range of solutions, market insight, opportunities and business support tools, which can be adapted to
The current environment in the UK is causing evolutionary change in the way brokers and lenders must meet customer needs. The market is evolving, customers’ personal circumstances are also changing, and some lenders are struggling to keep up. Bank of Ireland ask, ‘what impact does this have on the growth in contractor employment, increasing demand and lack of supply of housing and does it impact remortgages?’ The Exeter appreciate that it can be challenging to persuade your clients of the importance of protection insurance, which is why they are committed to making it more accessible, continuing to bring quality, affordable life cover to those who need it the most.
AIG’s critical illness package covers even more thanks to their optional total disability add-on. It works by giving customers extra financial help if they fall ill, regardless of whether they’re in work or not. Inside there is further content from More2Life, Halifax, Keystone Property Finance, Norton Broker Services, NatWest, HSBC, AGE Partnership and Together. We hope you find this magazine an informative read, keeping you up to date with the mortgage & protection markets.
suit your business models. Featured in this issue:
With more than eight in 10 advisers saying they want more protection clients, Aviva has unveiled a new one stop shop to help them get there.
4 - TENET EVENTS
Tenet Events - See what’s coming up...
Our events programme includes everything you need to keep abreast of the latest developments in our industry and latest sales tips, as well as providing a ‘one stop shop’ for all your CPD. Tenet events are open to advisers and support staff from all three Tenet brands. Coming soon… Mortgage Expo events – starting June 2019 These events have been organised to assist you in maximising the potential in your business by writing a compliant and fully protected mortgage to safeguard your clients throughout the lifetime of their mortgage. Each expo will focus around our trade fair, giving you the opportunity to meet our lender partners and explore their latest products and offerings. We will also host breakout sessions throughout the day, led by our lender partners. Target audience: Mortgage advisers Timings: Approx. 9.30am – 2.00pm CPD: Approx. 1 hour & 30 minutes unstructured CPD
Session synopsis As part of the Virgin Money webinar we will be looking at some of the key changes that we made in 2018. We made a number
of propositional changes and want to ensure that you’re aware of how Virgin Money worked hard, listening to your feedback and doing our best to support both you and your customers. We’ll then take a look at some of the key areas of our proposition we believe can really support during a tough market. We’ll take a look at how we are supporting the challenging first time buyer market, the new build market, the ever complex BTL market and some key areas to support your self employed customers. We will also spend some time looking at how we always work hard to make our relationship with you a true partnership.
The second webinar will be hosted by NatWest Intermediary Solutions entitled Technology & Innovation in the new build market - presented by Andy Ingham, Corporate Account Manager
Technology continues to shape the intermediary marketplace and in this presentation we’ll focus on what innovations are being made in the new build sector, including the improvements we’ve made at NatWest Intermediary Solutions in regards to our service and proposition, but also
what the houses of the future may look like! To book your place on this webinar visit: http://webinars.tenetgroup.co.uk/webinar-2-2019
06/06/2019 Leeds 13/06/2019 London
Amba Hotel 20/06/2019 Birmingham Marriott Forrest of Arden
01/03/2019 Virgin Money
Welcome to True Partnerships! Technology and Innovation in the New Build Market
To book your place on a Mortgage expo visit: www.web.cvent.com/event
29/03/2019 NatWest Intermediary Solutions
Webinars Tenet will host a live webinar with a single provider or lender which you can view from the comfort of your home or office. You will have the opportunity to view the webinar and interact with the speakers, asking any questions you may have. These webinar events now offer CPD for 30 minutes (mortgage & GI related webinars will offer unstructured CPD). We would recommend advisers book onto the annual programme of webinars and then opt out as and when they are not available or when the content is not relevant. Book onto all webinars: www.web.cvent.com/event Target audience: All advisers Timings: Friday mornings - 9.30am - 10.00am CPD: 30 minutes structured per webinar / 30 minutes unstructured for lender webinars The first webinar was hosted by Virgin Money entitled True Partnerships - presented by Kim Dickinson, Senior
31/05/2019 Post Office for Intermediaries 28/06/2019 Shawbrook Bank 27/09/2019 Together 25/10/2019 The Exeter 29/11/2019 Precise Money
TBC TBC TBC TBC
If you have any queries, please call the events team on 0113 239 5334 or email firstname.lastname@example.org .
Date for your diary… We're delighted to invite all advisers and support staff to our Adviser Forum, which will be held at the Queens Hotel, Leeds, on Thursday 5th December 2019. More information for this event will be provided throughout the year, so watch this space!
Business Development Manager Now available to view on demand… http://webinars.tenetgroup.co.uk/webinar-1-2019/
MARKETING TOOLKIT – 5
GROW your business with help from Tenet…
Pick from our range of support leaflets, brochures, posters and adverts covering a wide range of themes, which are ready to use straight away…
Boost your business this spring by visiting our marketing toolkit area of the extranet… A key benefit is that we streamline compliance processes by pre-approving most of the marketing support that’s available to make it quick and easy for you to use. We’ll also add your logo and contact details. Most of the support is available without charge you just cover the cost of printing the materials or the cost of placing an advert as relevant. The social media content has been designed for Facebook, Twitter and LinkedIn, and is designed to work alongside
advert images which have been produced as JPEG images. In many cases it is necessary to include the relevant advert image to make the post compliant (as it carries any necessary risk warnings) but there are also some posts which can be posted with or without an advert. These posts are all designed to be added on your own social media page as a free way of promoting your business, alongside other posts of a non-promotional nature. How to utilise the marketing support You can see all the existing support by visiting the extranet, clicking on ‘grow your business’ on the top menu bar and then clicking the marketing toolkit tab. Alternatively, simply put ‘marketing toolkit’ into the extranet search box.
Don’t forget to take advantage of our range of social media posts and adverts…
If you need any help, call 0113 2390011 and ask to speak to the Marketing Team or email email@example.com
Win the protection clients you want. Faster. Take your advice business to the next level with Adviser Business Accelerator. Discover tips, tools and guides to help you win more protection clients and boost your profits. All at the click of a mouse button.
Help your firm fly higher.
Aviva Life Services UK Limited. Registered in England No 2403746. Aviva, Wellington Row, York YO90 1WR. Authorised and regulated by the Financial Conduct Authority. Firm Reference Number 145452. TR01445 11/2018
AVIVA – 7
Win the protection clients you want. FASTER
With more than eight in 10 advisers saying they want more protection clients, Aviva has unveiled a new one-stop-shop to help them get here. Aviva has launched a new online hub to help financial advisers boost the protection side of their business. The ‘Adviser Business Accelerator’ website includes expert tips and step by step guides to help advisers get more from their business development and client acquisition efforts. Jim Hunter, National Sales Manager at Aviva, said: “We know from our research that many advisers – 86%, in fact – see protection as key growth area for their business. We also know that many don’t have as much time to dedicate to achieving this as they would like. That’s why we’ve launched Adviser Business Accelerator.
“The new hub is designed to help advisers grow the protection side of their business more quickly by giving them access to expert advice and tips. Tips which are also easy to put into practice.” A simple way to rack up CPD hours Topics covered by the new hub include: winning more business through your website; getting more referrals; networking with ease; simple marketing planning; and how to dominate your local market. Advisers can also access a library of more than 60 ‘Marketing in minutes’ guides – simple client acquisition and business-building tips which are quick to read and almost as quick to implement. Mr Hunter added: “The way the site is structured makes it easy for advisers to dip in and out of the content they need, whenever they happen to need it.
“Plus, it gives them an easy way to achieve the 15 hours of unstructured CPD they’ll now need to bank under the Insurance Distribution Directive – at the same time as learning something that could benefit their business.
Each of the articles and step-by-step guides can be used towards the 15- hour target, so advisers can learn something that’s going to be useful to their business whilst doing the reading they need to by law.”
For more information and to sign up free, visit adviserbusinessaccelerator.aviva.com
Our bridging loan helped The Clarks to downsize before they’d even sold. The upside of that, we helped them do it.
Lending for the new normal.
At Together our experience spans over decades and tens of thousands of bridging loans. So no matter the circumstances our flexible approach to lending means that it’s perfectly normal to us. Find out how we do things differently at togethermoney.com/bridging or call 0333 363 4904
For professional intermediary use only. ‘The Clarks’ has been used for illustrative purposes only.
TOGETHER – 9
Bridging loans market remains resilient
In spite of widespread uncertainty around Brexit and a housing market slowdown in parts of the country, the bridging loans market continues to grow significantly faster than the mainstream mortgage market. Specialist lender Together believes this can partly be explained by the growth in the number of uses for a bridging loan. As ever, house buyers desperate to move can use such a loan to secure their new property, while the sale of their previous home goes through. However, over time they have come to be used for more diverse reasons. For instance, they are now frequently used by people buying at auction to meet strict completion deadlines, and by people wanting to redevelop or refurbish a property before selling it on. Businesses are also using these loans to invest in new staff, space or equipment that will expand capacity; to buy raw materials before accepting a large order; to build up stocks ahead of an expected rush on seasonal orders; or for buying shares in other businesses. Daniel Owen-Parr Together’s Head of professional sector and auction gave these examples of various scenarios your clients may find themselves in, where they could use a bridging loan:
To buy a dream home “Imagine they’ve found the perfect new- build home, and the builder is willing to sell it at a discount – but only if they exchange contracts within three weeks and complete within four. “With such a tight timeframe, and a chain on the sale of their existing property, they might end up missing out. However they could secure the new property with a short-term loan, provided they have savings to cover any Stamp Duty, conveyancing fees, legal and moving expenses. “This loan would last typically up to 12 months, and they’d have no monthly repayments to make – so wouldn’t be paying two mortgages at the same time. Instead, the interest is ‘rolled up’ and repaid with the initial loan – which they can do whenever the sale of their old home is complete, and they receive the funds from the buyer. “As their home is involved, the loan would be regulated by the Financial Conduct Authority (FCA).” To secure an investment property at auction “If your client buys at auction, they have to put down a 10% deposit there and then – and they could lose it all if they don’t complete within 28 days. “Buying a former commercial unit – for instance, an old bank building at auction – to turn into flats could represent a profitable venture. But if they then find
themselves let down by their usual finance provider, because the building is classed as a non-standard property, they’d have to act fast to arrange alternative funding. “Traditional mortgages can take far longer than four weeks to complete, but they could turn to a bridging loan to both secure the purchase, and complete the conversion.”
To buy a new business premises “Imagine your client owns several units on a business park, and are considering investing in another. One of the neighbours needs to clear a tax bill, and quickly, so they’re willing to sell their unit to raise the funds. The catch? HMRC are demanding payment within three weeks. “If your client decided to invest in the unit, their bank may be unable to provide the money needed at such a short timescale. They could take out a bridging loan to cover the purchase cost, secured against the other units on the business park that you already own. This satisfies the vendor’s timescales, and gives their bank time to arrange longer-term borrowing.
Find out how we do things differently at www.togethermoney.com or call 0333 363 4904
Sharing our success For over 150 years HSBC has connected customers to opportunities, enabling businesses to thrive and economies to prosper, as well as continuing to invest in growth and innovation to make banking simple, safe and sustainable. Deeply rooted in the UK, our dedicated ‘HSBC UK for Intermediaries’ channel continues to offer the flexibility and functionality needed to provide a For HSBC UK, 2018 was one of the biggest in our 153-year history and definitely the most monumental in living memory. In response to the Financial Services (Banking Reform) Act 2013 we set up a separate ring-fenced bank to serve 14.5 million personal and business customers in the UK and UK Private Bank clients. This was one of the largest projects ever undertaken by the bank and required the reconfiguration of core banking platforms and payments infrastructure, including the successful separation of over 250 IT systems from the rest of the Group. In addition, 400,000 bank accounts were transferred to new high quality service to you and customers. Here are just a few of the reasons why together we thrive .
We’ve grown We are now live with over 80 Intermediary firms - around 13,000 brokers have access to our mortgages.
Technology upgrade Delivered a new Intermediary mortgage application platform, revolutionising how we work with intermediaries.
People powered Delivered Breakfast Seminars around the UK educating our brokers on technology, fraud and the economy.
HSBC UK sort codes and all HSBC branches in the UK were rebranded HSBC UK. This was completed on 1st July, six months ahead of the legal deadline. We have now moved into our new headquarters in Birmingham, a bespoke new building with extremely green credentials representing part of a £200 million investment that HSBC has placed within the West Midlands. Around 2,500 HSBC colleagues are now working from this new building in the centre of Birmingham. We are the first building to be completed in an area of great regeneration, so while we will be in the middle of significant construction work for the next few years, including the Birmingham City Council extending the tram network with it running parallel to our HQ, we are lucky enough to see the area transform before our very eyes.
HSBC UK Bank plc. Registered in England & Wales with number 09928412. Registered Office: 1 Centenary Square, Birmingham, B1 1HQ, United Kingdom. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Our Financial Services Register number is 765112. ©HSBC Group 2019. All Rights Reserved. X2892
95% Help for FTBs Introduced 95% LTV mortgages and extended the maximum lending term to 35 years.
We’re committed A number of improvements have been made to reduce Packing Requirements and Time to Offer. 100%
Award winning Richard Beardshaw was named Best Head of Sales at this year’s British Mortgage Awards.
Helping hands Significantly increased our telephony team, handling over 200,000 calls in 2018 and our field based teams, offering local face to face and distance support.
Shaking things up Awarded ‘Editor’s Special Award’ at the Your Mortgage Awards 2018/19, in recognition of how we have engaged with mortgage brokers and shaken things up in the market.
Double act Approved double the number of mortgages in 2018, making HSBC UK the fastest growing intermediary lender in the market.
We’re consistent Our pricing strategy aims to place us in the top quartile across all product LTVs and terms.
This is very fitting, given the transformation that has taken place within HSBC’s Mortgage business. We have worked extremely hard to systematically grow our broker panel, making our products available to more of the broker market. Also, the amount of work that goes into the due diligence should not be under-estimated, a ‘must do’ given we operate in such a highly regulated industry. Our processes have also been transformed thanks to our broker platform – digital integration has reduced packaging requirements, income and expenditure requirements have also reduced along with our time to offer. We have increased the size of our BDM and telephony teams, with gender and diversity inclusion at the heart of our policy to ensure our colleagues are representative of the customers and markets they serve.
Product development remains a key priority for us. Introducing 95% LTV mortgages to our product range and increasing maximum lending term to 35 years has helped make property ownership more affordable to those with a smaller deposit without compromising our high quality of lending. We are proud of the great in-roads we have made in the broker market in the last 12 months and the momentum HSBC UK for Intermediaries has generated going into 2019. This year will be another chapter of continuous improvement, making the broker journey more frictionless, whilst providing attractive products for your clients who want to get onto or move up the property ladder.
Together we thrive
NatWest Intermediary Solutions Committed to supporting you and your mortgage customers To help you and your customers we: • Take different income types and benefit payments into consideration • Consider family gifted deposits and equity for first-time buyers • Provide an easy-to-use affordability calculator that mirrors the one our underwriters use Mortgages for how life is now.
ONLY FOR USE BY MORTGAGE INTERMEDIARIES
NATWEST – 13
Secure Document Upload Facility with NatWest Intermediary Solutions
In June we introduced a couple of solutions that allowed brokers to feel confident about the security of documents that they send to us in form of TLS and Egress Switch. We also informed you at that time that we were working on a facility that would enable you to upload documentation to our website. We are very pleased to confirm that this facility went live in December and it enables brokers and their administrators to directly upload documents in support of any applications submitted through our website: www.intermediary.natwest.com Prior to launch we piloted the secure upload service for 4 weeks with a number of brokers, who have been extremely helpful in shaping the finished service. Please review the simple steps outlined below in order to use this service. When you create your case on intermediary.natwest.com Within 4 hours of the application being submitted you will receive an email from us confirming the mortgage reference number of your application and when you log into our website and select the case the mortgage reference number will be shown against your client details. Select ‘Packaging Requirements’ from the summary header and case specific packaging guidance will now be displayed.
An option ‘Proceed to Upload Documents’ will be available below the packaging text. You will then be able to upload PDFs and Jpegs up to 10MB in size. Neither individual certification nor Certification Face sheet is required when using this method. You will see on screen confirmation that the documentation has been successfully submitted and the status will change to ‘Submitted’. Once the attached proofs have been recorded on our system (within 4 hours of submission) the status will change to ‘Received’. There is no need to pick up the phone and verify receipt. Administrator access Where you have an administrator to send us documents on your behalf, we have created a separate Admin access specifically for document upload. Administration staff can complete the instant registration by clicking on ‘Register with us’. Administrators will be restricted to uploading documents and will not be able to key illustration requests, AIPs or FMAs. For data security they will only be able to view the documents they have uploaded. Now that the system has been extended to enable different people to access the same case it is important that both advisors and administrators exit the website using ‘Log off’ to avoid a case being locked. If you have any questions please do not hesitate to contact your Business Development Manager.
“This is a further demonstration of our commitment to the broker market and an example of how we are constantly striving to offer the best service possible to brokers. We are confident this enhancement will reduce processing time by improving legibility of documents and removing the requirement for certification”. Andy Ingham Corporate Account Manager
Norton Broker Services
“How much can I borrow?“ is likely to be a question we have all been asked. Unlike many first charge lenders, Second Charge lenders do not offer a standard lending calculator so quite often affordability can be a sticking point in a complex secured loan case. Secured loan lenders assess affordability differently.
Here are a few key points;
Lenders affordability is based on income and expenditure.
Lenders who will use real life figures for monthly outgoings
Products are available where they are stressed on the pay rate.
Income Criteria Guide Employed • Minimum 3 months employed with 3 months payslips. • Lenders will use regular bonus/commission, 3 months payslips will be required. • For those is receipt of a car allowance lenders will generally take 100% of this income into account. • Agency workers considered, minimum 12 months continuous employment with the same agency. • Zero hour contract workers, minimum of 6 months in employment. Self - employed • Applicants who own more than 25% of a company will be classed as self employed. • Minimum 12 months Trading with 1 years accounts. • For sole traders income will be evidenced through a Tax return, Accountants Certificate or accounts. • Limited Company Ownership income will be verified using Accountants Certificate or accounts. • Dividend income will need to be evidenced on an accountants certificate. • Lenders will consider using an accountants projection for the income although a large increase in income will require an explanation. Pension income / Lending into retirement • We will require the most recent award letter as proof of pension income. • 2 months bank statements showing the income received. • Lenders will take clients working income until their 70th birthday related income
NORTON BROKER SERVICES – 15
Child Benefit • Lenders will consider taking into account 100%. If the benefit is set to end before the term of the loan, the lender will require a viable explanation on how the income short fall will be covered. • Income will need to be evidenced on a bank statement. Child Tax Credits / Working Tax Credits • 100% of Tax Credits can be used for the term of the loan. Should the income stop before the loan ends, a viable explanation will be required on how the income shortfall will be covered. • We will require the most recent award letter and 2 months bank statements as evidence Child Maintenance • Only court ordered maintenance will be considered. • We will require the award letter detailing the income received, as well as proof shown on the applicants bank statements. • 100% of this income can be used if in receipt for the term of the loan. Foster income • Selected lenders will consider 50% of any foster income. • We will require bank statements showing the income received. PIP/ DLA • We can use 100% of any PIP/DLA / Invalidity benefits. • We will require the most recent award letter showing the amount received. • Income must be shown on the latest 2 bank statements.
Carer’s Allowance • We can use 100% of any carer’s allowance.
• We will require the most recent award letter showing the amount received. • Income must be evidenced on the latest 2 months bank statements.
Lodgers income • This is only considered by selected specialist lenders. • There must be an AST in place for the lodger. • Income must be evidenced by 2 months bank statements.
Investment income / Rental income • Lenders will use 100% of the profit from investment and rental income. • Income must be evidenced through a Tax Calculation and Tax Overview, Accountants Certificate or accounts. Traditional sourcing systems do not play a part in assessing the affordability of a deal, as a brokerage and working from a large panel of lenders we devised a formula to help assist our brokers in assessing affordability by using a basic sourcing system. It is important to stress this is an approximation rather than an exact science.
How do we make the jump from Sourcing System to Lending Calculator? The process itself is fairly simple. Essentially you’ll need 3 key pieces of information
1 Net monthly income 2 Monthly Expenditure 3 Loan quote from a sourcing system
Once you have this information you’ll need to take the monthly expenditure and add on £100 plus the cost of the loan. Once you have this figure subtract it from the net monthly income, as long as there is surplus income we have the potential of placing the deal.
16 - BANK OF IRELAND
Changing markets bring new challenges for brokers
The current environment in the UK is causing evolutionary change in the way brokers and lenders must meet customer needs. Customers’ personal circumstances are also changing, causing a shift in mortgage requirements. This shift is rapid and some lenders are struggling to keep up. Brokers have limited options, especially when it comes to sectors that need more support, such as new build and contractors. Growth in contractor employment 15.1% of the UK is now self-employed¹. Contracting is also on the rise with many looking for a better work-life balance. Many contractors struggle to meet lenders’ criteria, and it becomes challenging for brokers to find mortgages that cater for different types of income and employment. Lenders tend to look at contractors as self-employed, or consider a small portion of their income rather than its entirety. However, contractors can have just as stable and reliable incomes as those in full time employment. Some have committed daily rates, holiday and sick pay benefits, as well as transferrable skills which could make them more employable. Some also benefit from a better income than if they were traditionally employed.
We’re already seeing an increase in contracting employment and some firms have started offering similar benefits to those who would be full time employees. All of these variables mean standard automated application systems may not accept these applicants, even though they’re credit worthy and reliable borrowers. It’s frustrating for both the customer and the broker. But we’re seeing more lenders adapting to these changing markets and working with brokers to understand how they can serve customers better. After all, a growing market means more sales opportunities. Increasing demand and lack of supply New builds and Help to Buy: Equity Loan mortgages can also be a challenging market for brokers. There was a 12% increase in new houses being built from 2017 to 2018 to meet demand². An increasing population, higher rates of divorce and a slowing rental market are all contributing to this demand for new homes to be built quickly. However, these types of mortgages need extra support and different requirements to standard mortgages. Developers are under pressure to deliver on short turnaround times. They want quick customer and lender decisions, so they can complete as soon as possible to meet their operational targets. New build brokers are faced with a limited number of lenders who specialise in these mortgages, meaning they tend to choose the same lender who will accept the case and complete the application quickly. This gives brokers little choice when it comes
to finding a mortgage that best meets their customers’ needs. As well as being flexible to meet developers’ requirements such as extending mortgage offers and day one valuations. However, one of the positives to take away from these challenges is that there’s been a recent increase in new build purchases using the Help to Buy: Equity Loan scheme. This has given developers the opportunity to sell more profitably and accelerate building plans. Quarter one of 2018 had the strongest first quarter to date, with completions up 24% on quarter one in 2017³. Impact on remortgages The evolving new build and Help to Buy market offers a more affordable way to buy. So it’s shaping the style of new homes being built and the behaviours of buyers. The first steppers are buying three bed homes instead of two bed flats, for example. This suggests borrowers may stay in that property for longer and have less incentive to take advantage of remortgaging Help to Buy: Equity Loan properties. The market is evolving, which raises many questions. In particularly, what are lenders doing to meet customer needs? What could lenders, such as Bank of Ireland UK, be doing to make brokers’ lives easier? We’d love you to share your thoughts. Help shape our future together by contacting your Business Development Manager and joining our broker feedback community.
References: ¹ONS: https://www.ons.gov.uk/ employmentandlabourmarket/peopleinwork/ employmentandemployeetypes/articles/ trendsinselfemploymentintheuk/2018-02-07
²Ministry of Housing, Communities & Local Government https://assets.publishing.service. gov.uk/government/uploads/system/uploads/ attachment_data/file/770923/House_Building_ Release_Sep_2018.pdf
³boi4i.com https://www.bankofireland4intermediaries.co.uk/ news/5-years-of-the-help-to-buy-equity-loan- scheme/
for New Build for Contractors for Existing Customers for You
We’re Right Here for You • Award winning application system and products • 11 day App to Offer time • 24hr App to Offer time for product transfers • Proc fees on product transfers, including Buy to Let
Contact us We’re here to help from 8:30am to 6pm, Monday to Friday on 0345 266 8928*
*Lines are open 8.30am – 6pm Mon to Fri. Call may be recorded for training and monitoring purposes. Calls cost no more than calls to geographic numbers (01 or 02). Calls from landlines and mobiles are included in free call packages. Bank of Ireland UK is a trading name of Bank of Ireland (UK) plc which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England & Wales. Registered Number: 7022885. Registered Office: Bow Bells House, 1 Bread Street, London, EC4M 9BE. G0058 boi4i.com
Specialist buy to let lender
Buy to let mortgage options for...
✔ Trading& SPV Ltd Co's ✔ Individuals ✔ Portfolio landlords – no maximum portfolio size ✔ Ex-pats ✔ No minimum income required ✔ First-time landlords
✔ Remortgages within 6 months ✔ Flats above commercial ✔ HMOs - up to 8 beds ✔ Multi-unit properties - up to 10 flats ✔ New builds - flats to 75% LTV - houses to 80% LTV
FAQs: Buy to Let Lending on HMO’s
Q. Will Keystone lend on HMO properties? A. Yes, we will lend on HMOs up to 8-bedrooms to a maximum of 75% loan to value. We will accept HMO applications from individuals, LLPs, SPVs & trading limited companies. Q. Does the applicant need to be an experienced landlord? A. Yes, the applicant must have owned and let a property for 6 months or more. The applicant does not need to be a homeowner. Q. Do you need an HMO licence to be in place? A. An HMO licence is required if the local authority deems it necessary through mandatory, additional or selective licencing. If a license is required on a pur- chase transaction we must receive evidence that the landlord has applied and had confirmation that the part 1 of the HMO licence (a fit and proper person check) has been approved .
Broker Hotline: 0345 148 9086 I Visit: keystonepropertyfinance.co.uk
KEYSTONE PROPERTY FINANCE – 19
The Specialist Buy To Let Lender
Keystone relaunched on the 10th September, with CEO David Whittaker, as a full in-house lender, after six successful years of specialist buy to let funding with over £400m of completed loans in partnership with other lenders. When in a partnership arrangement there are certain functions which are not required, but as a lender these are essential which meant Keystone had to recruit many new members of the team and set up new offices from which to trade. Keystone has always had a strong external sales team which has now been augmented by the addition of an internal sales team, who help brokers with their complex enquiries and guide them through the entire process from start to finish. Following the significant changes to the buy to let market over the last two and half years, the short comings of the current processing platforms used by other lenders was identified early in the process with the help of Mortgages for Business. None of the current mortgage platforms were agile enough to process and cover trading and SPV limited companies including layered structures, portfolio
landlords and the most recent changes to HMOs and EPCs. It was decided early in the process to accommodate these and other changes into Keystone’s new bespoke cloud-based system called MyKeystone. The system is highly adaptable to broker requirements, market demands, changes and allows Keystone to provide API integration with external customer management systems. The MyKeystone system allows brokers to produce illustrations and AIPs. By completing a short five-minute form, the broker will be able to receive an instant AIP decision which includes a completed EID check on their client. The system will automatically copy across the client’s information provided for the illustration and use it to populate the full mortgage application fields. In addition, to reduce workloads for the broker, the system enables brokers to clone the full mortgage application as and when their clients wish to submit further or multiple applications. The major focus of the MyKeystone system is to make sure it does what brokers would like and not what lenders tell brokers they have to do. A good example of this is that the system has been integrated with the Buy to Let Hub using eTech software to help assess portfolio landlord applications in light of the recent PRA changes. Keystone is now offering competitive rates starting from 2.99% and with lending criteria which provides funding to Trading and SPV limited companies as well as LLPs, remortgages within 6 months of
ownership, HMOs up to 8 Beds, Multi Unit blocks of flats, Ex-pats all with a minimum valuation of £75,000, which allows many more complex BTL enquiries to be processed. Keystone wants to listen and help make the application process easier for brokers as well as understand what they want and expect from a lender. The MyKeystone processing system has already been evolved following broker feedback and will continuously adapt to help reduce brokers workload.
The buy to let market over the last two and half years has become more advisory led and less transactional, brokers need lenders to support and assist them during this transition. Keystone Property Finance is extremely well placed in the market to do this as they have supported brokers with all types of complex buy to let enquiries for the last six years.
The new members app that gives you free, direct access to medical experts whenever you need them.
HealthWise is available to all members of The Exeter and their immediate family, without the need to make a claim. Simply download to a smartphone or tablet. Members will need their policy details in order to activate their HealthWise account.
HealthWise connects members with medical experts at their convenience, so they feel better faster. We’ve tailored HealthWise to the needs of our members and the type of cover they have, so they get the most from the service. Benefits include: GP on demand Second medical opinion Physiotherapy Mental health support
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Call our sales team on 0300 123 3207 or email firstname.lastname@example.org
Lifestyle coaching Nutritional advice
Find out more at
The Exeter is a trading name of Exeter Friendly Society Limited, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Register number 205309) and is incorporated under the Friendly Societies Act 1992 Register No. 91F with its registered office at Lakeside House, Emperor Way, Exeter, England EX1 3FD.
THE EXETER – 21
Real Life. Life cover for hard to insure clients
Discover Real Life - making protection more accessible At The Exeter, we’re committed to making protection more accessible, even to clients living with a serious medical condition. Our life cover has now been extended to reach those hard to reach clients who may have been declined cover elsewhere. Together, our two plans Managed Life and Real Life, can surpass expectations. We don’t have to persuade you, but we know how challenging it can be to persuade your clients of the importance of protection insurance. Despite what people like to think, ill health and bereavement can happen when we least expect it. Our report ‘An unhealthy situation’, highlighted the scale of underinsurance amongst people with health conditions that often increase their need for financial protection. The report shone a light on a growing problem; that many of those who have perhaps the greatest need for protection, are the least likely to have adequate, or in some cases any, cover in place. We surveyed 2,000 people across the UK and found that among cancer sufferers, two thirds didn’t have a single protection product. The situation was similar for sufferers of type 2 diabetes, those with high BMI or heart conditions.
Commenting on the findings, Steve Bryan, Director of Distribution & Marketing at The Exeter said: “With an ageing population and the diagnosis of conditions like diabetes and cancer on the rise, it is worrying to see this research lay bare the scale of what we know is a growing problem.” “1 in 2 of us will get cancer in our lifetime, whilst there are currently 7 million people in the UK suffering from a heart disease, two conditions which are likely to make protection much more difficult for people to access. Our research indicates that over 65% of people who suffer either condition, have no protection in place at all.” Real Life is life cover for hard to insure clients, who have suffered either serious or multiple health conditions; they may have even been declined life cover by another insurer.
You know it is vital for your clients to have adequate life cover in place. So, discover how Real Life can open up a whole new market –to date, we’ve offered cover to over 95% of all applicants. Focusing on your clients’ health We’re living longer, but suffering longer periods of ill health. With Real Life, we may be able to cover people living with a serious medical condition, such as: • Cancer
• Type 1 diabetes • A BMI up to 55 • Complex heart conditions • Multiple conditions. Don’t miss out on an opportunity
The report also showed that more than half of advisers say it’s too difficult to get protection for clients with a medical condition, with one in ten usually referring them to a specialist adviser firm. We are making protection insurance more accessible, and continue to bring quality affordable life cover to those who need it the most.
of type 2 diabetes sufferers have no protection at all. of obese people have no protection at all. 61% 66% 60% of cancer sufferers have no protection at all.
You know it is vital for your clients to have adequate life cover in place – help them by speaking to our sales team on 0300 123 3207 or contact us on email@example.com .
AGE PARTNERSHIP – 23
It’s equity release but not as we know it…
Equity release has changed a lot over the years. There was a time when it was all thought to be about taking people’s houses off them and robbing the children of their hard earned inheritance. For many years there has been a stigma attached to the products, with many wrongly associating them with the old shared appreciation mortgages, however times are changing and even Martin Lewis is saying positive things about equity release. There’s no denying it, if you look at the last few years or so, some of the products design and charges left a lot to be desired. The marketing wasn’t much better either, with images of glamorous oldies with shiny white teeth sitting in their new conservatory or enjoying yet another cruise. Nobody can deny that equity release can be expensive, if you take out a loan that you don’t make any payments towards the cost of that loan is of course going to rise. The good news though is that behind the shiny dentures and waves lapping against the starboard side, there is a growing reputation that equity release might not be all that bad...and it has many uses. It’s worth taking the time to look at some of the recent product developments and some of the features that you may or may not be familiar with: • Competitive interest rates that are fixed for life but also come with 2, 3 - and 5-year options. • Defined early repayment charges for changing customer needs in later life.
• More ways than ever to manage interest, with roll up, monthly repayments and ad-hoc overpayments available. • Flexible drawdown facilities giving clients control over how much they release and saving interest at the same time. • A new range of home income plans allowing customers to take a monthly income via an equity release plan. • Buy-to-let lifetime mortgages allowing landlords aged over 55 release tax free funds from their property portfolio. We speak to lots of brokers and advisors who are falling over themselves to get in to equity release, and many of those who think they have no need for it. Do you have clients that are coming to the end of an interest only mortgage with no capital in the bank? Do you have clients over 55 who want to move house and need a mortgage? Do you have clients that are getting divorced? Do you have clients with IHT planning needs? Do you have clients that don’t want to go into care but would rather have care at home? Do you have clients that need to modify their property? Do you have clients that don’t want to downsize? Struggling in retirement with everyday costs? I’m being repetitive but the reality is that equity release could help in all these situations and many more. We’re a huge advocate of equity release, and we’re not asking you to be, just consider the options. The good news is that there are routes to market for everyone. You can get qualified or you can refer with no risk to you. Help is out there for you and your clients, just go and seek it.
The marketing wasn’t much better either, with images of glamorous oldies with shiny white teeth sitting in their new conservatory or enjoying yet another cruise.
Web: agepartnership.co.uk/tenet Tel: 0808 145 2269 Email: firstname.lastname@example.org
24 - HALIFAX
Advisers and Lenders can help support today’s first time buyers First time buyers have to leap over some huge hurdles to buy a property and it comes as no surprise that today’s younger adults are less likely to own their home than their parents’ generation.
In fact, the number of 20 to 34 year olds living with their parents rocketed from 2.7 million in 1996 to 3.3 million in 2013 and has since remained around 3.4 million, according to the Office for National Statistics. The percentage living with their parents has risen from 21% in 1996 to 26% in 2017. One of the biggest hurdles is house prices, which have risen a massive 554% in the last 30 years, says Halifax. The average income of first-time buyers is now £41,500 according to UK Finance, but in some areas of the UK, you need to earn even more, or have a large deposit, to get on the ladder. No deposit, no deal According to Halifax, first time buyers in London, put down an average of £112,604 while in Northern Ireland the typical deposit is £16,814, so intermediaries face very different first time buyer client challenges depending on their geographical location. They may only need to save 5% upfront but that can still be a huge sum in London and the South East. Plus, they still need to demonstrate affordability. More robust lending criteria mean the numbers don’t always stack up without a bigger upfront deposit. As a result, the average first time buyer deposit has doubled over the last decade from £17,740 to £33,339. Manage expectations As you know, outgoings are reviewed for affordability but this is something your first time buyer clients may not be aware of. It’s always worth highlighting to your clients from the off the importance of having control over their monthly budget. Be positive about their options but also manage their borrowing expectations, so they set out with a realistic approach. Many first time buyers already recognise these challenges. Halifax found that they
think the biggest barriers to buying are job security (65%), saving a deposit (58%), household finances (31%) and availability of mortgages (31%). But it’s not all bad news. Reasons to be cheerful Despite significant barriers, first time buyers are still buying – in growing numbers. The number of first time buyers reached 359,000 in 2017, after six years of increases. This is a rise of 87% compared to an all-time low of 192,300 in 2008 and first time buyers now account for half of all house purchases with a mortgage. Government support, low mortgage rates and high levels of employment have all supported them, in addition to the scrapping of Stamp Duty for the vast majority last year. The intermediary boost Intermediaries also play a key role in helping first time buyers by finding them the best deal and, importantly, preparing their application so it goes through smoothly first time. According to the Intermediary Mortgage Lenders Association, three quarters of first time buyers’ mortgage applications via intermediaries resulted in a completion during the last quarter of 2017. This compares with just over half (53%) a year earlier, as first time buyers benefitted more than any other customer group from improving access to mortgage finance during 2017. Lenders are helping too, remaining competitive at higher LTVs, designing innovative new products to support first time buyers, such as Halifax Intermediaries’ £1,000 cashback deal, Help to Buy, Shared Equity / Shared Ownership and longer terms to ease affordability constraints. According to the latest figures from the Financial Conduct Authority, first- time buyers have the longest average
mortgage terms of all types of borrowers. The regulator noted that, in 2016, 62% of first time buyer mortgages had a term longer than 25 years and 34% were longer than 30 years. The most common mortgage term for first time buyers is now 35 years. There’s also Help to Buy, the government scheme assisting those purchasing a new build home to get on the ladder with 5% upfront. With over 20 lenders offering over 250 Help to Buy mortgages (according to Moneyfacts) there is plenty of choice. Sustainable growth The housing market needs first time buyers to provide liquidity. They’re the first link in the housing chain, enabling second steppers to trade up and keeping the market moving. They’ve increased in number over the last few years, but sustaining this growth is crucial, in spite of Brexit, wider economic and political uncertainty, and the impact of the end of Help to Buy in 2021 in the new build market. A greater choice of higher LTV mortgages at competitive rates is one way to do it, and family support, whether through a direct cash contribution or a guarantee is an increasingly popular approach, along with longer terms. Boosting supply is the other side of the coin and the government has pledged to increase new home building to 300,000 a year on average by the mid-2020s. Whether or not those levels are reached, first time buyers will remain a vital part of your client mix and many rely of the experience, knowledge and independence that intermediaries can offer. By recognising that this sector is more complex now than ever before and keeping up with changing trends for first time buyers, you can help them onto the ladder and gain a satisfied long-term client.
For the use of mortgage intermediaries and other professionals only If you do not have professional experience, you should not rely on the information contained in this communication. If you are a professional and you reproduce any part of the information contained in this communication, to be used with or to advise retail clients, you must ensure it conforms to the Financial Conduct Authority’s advising and selling rules. Halifax is a division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ. Bank of Scotland plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 169628. Information correct at June 2018.Page 1 Page 2 Page 3 Page 4 Page 5 Page 6 Page 7 Page 8 Page 9 Page 10 Page 11 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 18 Page 19 Page 20 Page 21 Page 22 Page 23 Page 24 Page 25 Page 26 Page 27 Page 28
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