Episode Transcript
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Speaker 1 (00:00):
in this episode of
the podcast I'm going to be
covering off some stuff aroundthe mortgage market and how
that's going at the moment.
I can answer some kind of keyquestions.
Some of our clients ask usabout mortgages and that we see
being asked all the time.
They'll be right at the end.
So stick around right at theend to listen to the kind of
frequently asked questions weget and it'll be a little bit of
a rant around the 20 mile anhour limit that's coming into
(00:22):
Wales at the moment.
Welcome back to the podcastFlying solar.
Today Shane is wearing hishollybabs somewhere on a cruise
in France.
I think it's France.
(00:42):
Yeah, he is on a Disney cruise.
He's probably enjoying himself.
Don't know whether wherethere's like mine, because it
looks a bit rough out in Europeat the minute but yeah, I'm sure
he's enjoying himself.
So, yeah, it's just me on thepodcast today.
So we're going to kind of coveroff a few kind of things I
mentioned in the beginning andthe mortgage market, because
that's a big one we're kind ofhearing a lot about the moment.
(01:03):
But I want to have a bit of arant Well, kind of I say rant,
it's more so on the way to workthis morning 20 mile an hour
limits.
They're coming into Wales thickand fast.
Can't remember exactly whenthey're coming in, but if you
ever driven a 20 mile an hour itis literally like you're going
backwards.
It is so slow and it's reallyweird because from what I kind
(01:23):
of read is all to do with noisepollution and emissions and
things.
But I'm sure my car is louderwhen I'm in lower gears, kind of
going really slow.
And how does that affect thingslike electric cars, because
they're quiet all the time sothey're not actually given
permission, so they still haveto drive a 20 mile an hour.
Are they going to change thatkind of rule?
I'm not really sure wherethey're trying to go with this,
(01:46):
but it kind of feels likethey're trying to reduce the
amount of cars on the road andexpect you to kind of get public
transport and get your bike towork.
Well, that's not going to workfor the vast majority of people
because I'm not going to cycle11, 12 mile to work, then 11, 12
miles back home when I've gotto pick my kids up, I've got to
(02:08):
be home for certain times, gotto go to client meetings, I have
to take my car to work and wealso have an electric car as
well.
So it might be impenalisedbecause I've gone down that
route.
I don't know.
But I'd be interested to knowwhat Mr Drakeford has to say
about that, because I thinkthere's a different motive
beyond what they're doing,because our public transport in
Wales is certainly not geared upto deal with that.
(02:29):
I went to catch our train fromhome in the Cardiff recently and
three trains got cancelled onthe bounce, so I had to take my
car in the Cardiff.
So I tried my best, mrDrakeford, to use public
transport, but sadly it's flawed, so I don't know why.
The parts are kind of UK, thisis kind of coming in, but it is
in Wales at the moment and it'sbeing rolled out a lot of places
(02:50):
, and they've got their speedcameras out already trying to
catch you doing more than 20mile an hour.
The funny thing is, though,actually I was behind a learner
driver today.
Now, whenever you're behind alearner driver, they generally
do sort of five mile an hourunder the speed limit anyway.
So if it's a 30 mile an hour,they're only doing 25.
What I kind of found thismorning was that I was second
(03:11):
learner driver.
It was doing about 10, 12 milean hour in a 20 mile an hour
zone.
So that was really slow.
I'm sure I saw a few peoplewalking past me quicker, but
that's another thing.
But the mortgage market, let'stalk about it.
It's an interesting place atthe moment.
It's been a pretty interest intimes.
(03:34):
Since kind of last year,interest rates have been rising
rapidly.
The Bank of England put it upagain this month and I do think
we've got a potentially a couplemore rises.
I think we're going to getourselves close to 6% because
they have this idea that whatthey're doing is going to reduce
inflation.
(03:54):
But I'm not convinced it will.
I'm not sure we're looking atthe right dynamics that are
actually affecting the inflationat the moment, because one of
the big couple of the big thingswhich are affecting inflation
is the price of fuel.
You know the kind of runningour house which would not really
feel the effects of it.
That so much at the momentbecause we're in the summer, but
as soon as we have the winter,which I think is going to be a
pretty golden one, judging bythe state of our summer this
(04:16):
year and it was a few people hadkind of heating on, I think
near us you see the boilersgoing pretty fast around the
houses.
But I think these bigger thingsthat are causing the inflation
is cost of fuel, general cost oflivings going up with regards
to food, what you can buy andall that type of stuff.
And I know what they're tryingto do.
(04:39):
They're trying to increase theinterest rates on the mortgage
to try and stop people spendingmoney.
But what they're not taking intoaccount and we've seen this.
So we've spoken to a few peopleabout this.
We've actually seen it in reallife.
We've had people actuallycoming to us asking for help.
It's not something weparticularly help with, but
we've sort of direct it in theright direction.
(04:59):
But people are actually takingloans out now in order to pay
their bills and using theircredit card to pay their
mortgage and their rent.
But I don't think the governmentare taking this into account.
I think they're seeing thatpeople are still taking finance
out, taking loans and all thosetype of things to actually go
and buy luxury goods, but I'minclined to say that isn't the
(05:20):
case in all cases.
I think a lot of people areactually taking finance out now
so they can actually go and paytheir bills Now.
That's a real problem and ifthat's what the government are
not picking up on by increasingthe interest rates, it's not
going to help anything.
All we can have is a huge waveof repossessions and people not
paying their mortgages, and I dothink that is the bigger
(05:41):
picture.
I think, in reality, thegovernment, without having a
crystal ball, is trying to forceus into a bit of a recession, a
bit of a reset, because theylike a reset and if we reset, we
can rebuild, which is not agreat way to treat us in this
country.
But I think everything got alittle bit out of hand.
The interest rates got so low,people took so much borrowing.
People probably took mortgagesbigger than they were.
(06:03):
You know we're seeing it now.
People are coming to us forrefinances now and their
interest rates have gone up.
You know we're considering it.
Some people have been on goodfive-year deals and they're
starting to come up now thisyear, in next year there's going
to be interest in times aheadand especially in the bike-led
market as well.
That's getting pretty rough aswell.
So I think the Bank of Englandwill raise the interest rates
slightly again and at some pointthey are going to have to stop.
(06:24):
I think that's going to staywith us till probably at least
Q4 next year and then we mightsee a bit of a settling down of
the interest rates and themortgages.
But I think we've got to be kindof mindful that interest rates
are going to be high and there'sa lot of stuff in the press
about lenders putting theirmortgage rates down.
We had this with Halifax we'rebringing our mortgage rates down
(06:45):
, we're going to make thingseasier for you.
So we had a lot of clientscontacting us who were with them
saying, oh, our rates have comedown, so we want to check.
They haven't.
They haven't actually reallymoved at all.
So what came down was kind ofcertain types of buyer like
first-time buyer or home mover,and I was the same with a lot of
lenders.
We actually didn't really bringthe mortgage is down, like they
(07:05):
kind of said in the press.
I think they kind of wanted togive some good news but actually
just meant that you know,financial advisor like us would
be bombarded with questions frompeople.
So we hear the interest ratesgone down now they haven't
really.
So it's an interesting time atthe.
I think now is the time.
If you've tried to do yourmortgage before on your own, I
(07:27):
think now is the time you reallyneed to go and see a mortgage
broker To try and get the bestdeal you can, because you know
we do have access to morelenders some in the region of
eighty plus lenders and anyone.
Time can be over 10,000products.
If you go on to the kind ofinternet you're not going to get
the kind of the best deal orone of the kind of fiction.
(07:48):
I'll touch on that a minute.
So it's one of my questions andfrequently ask questions which
I'm going to cover off.
But you know Inflation is stillhigh.
It has been coming down.
Whether it'll hit the targetthey want to get it to, which is
the sort of two percentagetarget, I don't think it.
Well, I think the governmentgot to be a little bit more
realistic with what they kind ofthinking and how they think the
market's gonna head.
(08:09):
So yeah, it's, it's aninteresting time.
I think now's the time youreally need to.
If you're in, you got a mortgage, you really need to speak to
someone professional about it,because it's just not ideal to
go on the internet and try andfind you the best deal.
You might be actually stayingwith your current lender is Is
the best option will most broken, can check that out.
(08:30):
But they also check the wholemarket for you and actually see,
especially if you do invite alot.
That's a really tough market atthe moment because rents are
not kind of compatible with thelenders Calculation they use to
give you the maximum loans,which we find that's really hard
to play some kind of by.
Let mortgages and we have tosay to a lot of landlords you
might consider putting your rentup, because that's what's
(08:52):
driving these things at themoment Is interesting times.
But there are some positives.
You know there are.
You can still get a mortgage.
That's not a problem.
The way lenders are lending nokind of issues yet borrowings a
little bit less because themultipliers and the risk to the
lender.
But they haven't stoppedlending.
That's the one thing.
So if you think in a movie isthe right move for you, you can
afford it, you know, go for it.
(09:14):
Don't kind of don't let all thekind of negative press kind of
put you off with that when youthe kind of things that kind of
said.
So there's a lot they kind oftake in one of the time.
I'm gonna kind of cover offsome kind of common questions we
asked by Some of our clients.
So you use, when we hear a lot,do I have to use the estate
(09:35):
agent, solicitor or financialadvisor?
That's an interesting one.
Now a lot of estate agents Willsay that you have to use them
and the reason you have to usethem is because you speed the
process up and Means that you'remore likely to buy the house.
Now I got a couple of views onthis.
When I kind of get it from theestate agent point of view is
(09:58):
the fact that if they use theirown financial advisor, their own
solicitor, it can control theprocess.
So it means that they cancontact and they can keep the
seller informed of how thebuying process going because
they've got the solicitors closeto them and they've got the
financial rise close to them.
Now there's a little bit of agray area over the fact that
(10:19):
actually you probably need thirdparty consent to actually have
these conversations because theagreement will be with you and
the financial rising, you andthe solicitor.
By thinking estate agents,solicitors, have probably a bit
of a kind of deal going on there.
So I understand from that pointof view, but you cannot be
forced to use their financialrise in their estate agent and
their solicitor.
(10:39):
There's actually guidance whichis set out by the regulator of
the estate agents to say thatthey cannot force you to do that
.
You can't basically be made touse their in-house.
You can't take independentadvice because what you will
find with a lot of the biggerestate agents, the mortgage
brokers in-house are notindependent.
They do have a tied element tothem.
(11:01):
They can only use certainproducts.
And the other thing is thereason a lot of estate agents
are using it, anselist and theusing this is because they're
getting kickbacks.
They run the business, they'retrying to get as much income as
they can in from differentsources, so there'll be money
kind of flowing.
So it's in their financiallybeneficial interest to use their
own financial riser Anselist.
But what they can't do is forceyou to do it.
(11:23):
If they do try and force you todo it, getting in touch with us
, I can send you the code whichis in the estate agent's
effective governing body whichsays they can't do it, and if
you quote that to them they willkind of leave you alone.
But I've used some horrorstories recently.
I'm on effectively a mortgagecommunity with sort of like
4,000 different advisors onthere in the UK and there's been
(11:44):
some horror stories of whatsome estate agents are doing,
actually to the point wherethey're threatening clients in.
You know we won't put youroffer towards what will pull
your offer from the sellerBecause you're not using our
financial riser.
I'd be interested to know ifthe actual seller knows that
some of these tactics are goingon.
But it's quite interestingwhat's going on.
So, no, you don't have to usethem, but there are some
(12:05):
benefits to potentially usingthem.
In fact, they can kind ofcontrol the process.
But I'll leave that kind ofcall up to you, but don't be
pressuring to doing it.
Okay, now another one we have.
We've had this from clients inthe past and we still kind of
get it.
We get an email saying I foundthis great rate online.
Send us a screenshot.
Why have you offered this rate?
Okay, and I'll have a look atit and I'll say, okay, that's
(12:27):
fine.
So we're going to have a look,we'll do some research and we'll
come back and say, okay, use anexample of one.
Client came to us and said Iwant this rate.
This is much lower.
So we looked at it and it was adiscounted variable rate.
Now what that means isdiscounted off the lender's
standard variable rate.
So therefore it's not a fixedrate and it can go up and down.
(12:48):
So I went back to the clientgame and call and said, okay,
great, got this rate, we can doit for you.
So it is a brilliant rate.
But you asked us for a fixedrate mortgage and they said oh,
is that not a fixed?
I was so explained them that itwasn't and they were quite
shocked at the fact that, as faras they were concerned, on
looking online, it looked like afixed rate mortgage.
(13:08):
Now, I don't know how that wasportrayed on the online kind of
portals which they kind oflooked in, but that's a common
one where people see this rate3.24%, and the best fixed is
four and a half.
Well, they don't realize it's adiscounted rate.
Now, there's nothing wrong withdiscounted rates, but they're
not for everyone because they'renot fixed and these people
actually wanted a five year fix.
So this was nowhere near whatthey wanted.
(13:29):
So once I explained to them Now, then we've had others where
they come to say this is greatrate, it's with, for example,
lloyd's Bank and it's this ratereally low.
So then I'll go and have a lookand I'll come back to the client
and say that's great, yes, wecan get you that rate.
Can you just give me yourpremier banking account number?
And they'll say why don't Ibank with Lloyd's?
(13:50):
Ok, well, this rate is onlyfour premier bankers with
Lloyd's or Barclays on that West.
Now, none of this is actuallyin the kind of main print of
when you go sourcing for thesemortgages.
All you do is you put in thisis how much my mortgage is.
This is, I think, is worth this, what's your, and they'll just
bang out as many rates as itpossibly can at you, but it
won't tell you the individualdetails of it.
(14:12):
And we've had other ones wherethey've kind of come to us and
like, yeah, we can do that, fine, this is five thousand pound
feet.
The lender like so I didn't seethat and it doesn't explicitly
say, or it doesn't have, itmight be a remortgage and it
doesn't have free valuation orfree legal.
So be very careful about whatyou shop and online.
Ok, and also bear in mind thatthese online sites are making
money from every referral theysend through to the mortgage
(14:35):
lender, so they have a kind ofbeneficial interest in sending
you to those places.
Ok, so that's an interestingone and it's one.
We get a lot.
And that's why I say look, youknow, we are mortgage brokers.
We are professionals in what wedo.
We've been doing a long time,especially in our company.
We've been doing this over 15years.
We're professionals in what wedo.
(14:56):
You know you don't go to thekind of dentist and tell the
dentist actually can you takeout this to us?
I think it's really bad.
But that's the dentist.
They're the professional youtrust them.
You need to trust you more,brother.
We're not Commission and anyfees on mortgages.
A pretty level playing field isnot much in it.
They don't actually pay a lotof commission anyway.
(15:17):
So people are not sending youto a different lender because
they think it's going to getthem more commission.
Mainly why you'll choose acertain lender is Speed of
processing.
The best rate fits yourindividual criteria as a client.
So they did not really go in atit from a point of view we're
going to make more money from it.
They're trying to do the bestfor you, okay, and they'll
(15:38):
explain that you especially.
If they haven't explained that,ask them.
They'll explain why they use acertain lender.
So that's kind of one way wekind of need to look at it.
What's the bike that market likepretty tough at the minute.
That's when we get asked a lot.
Interest rates are high.
The rental calculations don'talways fit with properties, so
it's a little bit of a toughermarket.
(15:59):
But you can get mortgages outthere.
You just got to be mindful.
Not on every deal I could useto would fit now, because by
that interest rates are veryhigh.
You know they generally got afive or six percent sort of
market or hiring them and someof the commercial rates even
higher again.
Another one which I wouldn'tsay.
We always got lots of questionson.
What I see a lot around is byself employed getting mortgages.
(16:20):
Now there's a lot of companiesout there where by as an owner
or director you don't take allthe money you could do out of
the company.
You kind of leave a lot of whatwe call profit in the company.
So you might only draw minimalsalary and dividends class all
you actually need.
And if you draw more you'regoing to pay more tax.
So you leave a lot of kind ofmoney in the company.
(16:41):
So that's what we would callretained profit.
Now so let's just say forargument's sake, you drew salary
and dividends of up to 50,000.
So you stay in the kind ofbasic rate tax sort of area and
therefore you wanted a mortgageand say the maximum you get was
four times that.
You get 200,000 pound mortgage.
Okay, but you might have200,000 pound retained profit in
(17:07):
the business year on year.
So that would mean playing thesame four times in multiplier.
You can actually take an 800,000pound mortgage.
And you might think, wow, howdoes that happen?
Well, because Lenders look atit from a point of view that you
could take that money out ofthe.
You just choose not to becauseyou don't pay tax on it, so it
is affordable.
If you needed to, you couldtake the profit to pay the
(17:28):
mortgage.
And Look at the history of howlong this happened.
It's not just the one off.
You've got this retained profitis a little bit more due
diligence to it, but there are ahandful of lenders who will do
this.
Now we've come across this.
Before.
We dealt with a couple ofclients in London who had been
to various kind of mortgagebrokers around.
I think they've been to five orsix and every single one looked
and said your salary anddividends is X amount.
(17:50):
We can only get you this.
They came to us and we saidthat's great, yeah, you're
looking for 1.5 1.6 millionpound mortgage.
Yeah, we can do that andthey're blown away the fact that
actually could be done and it'sall a jit miss.
All done through the land is allabout retain profits, is a lot
of due diligence, you have toprovide a lot of information,
but it can be done and you'renot paying a premium rate either
you.
You You're not paying a highrate for that service.
(18:11):
It's actually there for you,the mainstream lenders.
They really gotta do, but thereis only a handful of them and
you've got to know the kind ofprocess now to kind of do it.
So that's why it once again, IGo to the fact that don't just
go to your bank, don't just goonline, because you might just
get a computer says no, whenactually you might need
experience of a mortgage brokerwho understands how self
(18:32):
employed market works and theycan help you with that.
So there's just some of thefrequently asked questions we
kind of get asked.
I'm covered off.
Will cover off a few in anothervideo when we kind of do some
topics.
Yeah, so that's all from today.
She'll be back next week.
This podcast is coming thisweek while he's on his hollow
Bob's in France, sending himselfprobably not this, probably
raining, and I'll see you nextweek.