Remortgaging During Coronavirus Outbreak | James Kinns From The Mortgage Store

Home » Remortgaging During Coronavirus Outbreak | James Kinns From The Mortgage Store

On The Mortgage & Protection Podcast, The Mortgage Store Director James Kinns discusses how you can adjust your mortgage during the Cornavirus outbreak to give yourself more financial security, and why it makes sense to get an offer for your remortgage now whilst rates are as low as they have been.

Alex Curtis (Host)
Hello, and welcome to the mortgage protection podcast. And this time we’re with James Kinns from the mortgage store. James, how you doing?

James Kinns
Very well, how are you?

Alex Curtis
I’m all right. Thank you all well got used to saying I’m alright. But it’s we’re in the midst of lockdown. It’s I think it’s what we March the 25th. Today.

James Kinns
Yeah, absolutely.

Alex Curtis
Well, that’s one thing losing track of days because we’ve been I’ve been sat in the same room for not been outside.

James Kinns
I know the feeling.

Alex Curtis
So yeah, I mean, we want to talk about really remortgaging in this kind of time, because naturally, there are people’s deals will expire, that’s not going to be affected by lockdown or, you know, business closing, things like that people are still going to be maybe thinking about moving and there’s all sorts of things going on and you what I think I said to you off air is that maybe people think it’s best to wait until this blows over to deal with it. But actually, I think it’s probably a good time to kind of assess your options, see where you’re at now, because because rates have been really good for a while, right?

James Kinns
Yeah, indeed. I mean, yeah, it’s, of course, a very challenging market with everything that’s going on at the moment. But I think the same in terms of general enquiries, and certainly how I feel myself, a mortgage is just making sure that given the economy and where we are, is that you just, it’s crucial to keep your payments as low as you possibly can, obviously, and there’s lots of different incentives, those offers that the government have put in place to try and help people come through this difficult period of time. So, yeah, without doubt, I think at the moment is a great time to look at remortgaging, rates have never been so low and just as a quick note, I looked at it through some rates this morning for some clients is that rates are as low as 1.14% on a two year deal for someone who’s got a 40% equity in their current property. So yeah, and even with a 90% loan to value mortgage rates are still as low as 1.79% so and they’re both two year fixed rate. So it’s a great time to look at those remortgages and just ensuring that you’re keeping your payments to the absolute minimum to avoid going on to the the banks, or the building societies’ standard variable rates, which typically are what currently now given the Bank of England base rates change anywhere from sort of three and a half, up to sort of 5% typically. So that’s what you kind of want to avoid. I think just with surveyors, especially at the moment, which we touched on off air, Alex, is just the surveryors can’t get out to people’s properties at the moment or find it very, very difficult to so I think, looking at those scenarios is to get yourself a good rate secure early so that you’re not in that sort of position where your rates are going from a fixed rate on to a lenders high variable rate and I think that’s the bit to ensure.

Alex Curtis
Yeah, absolutely. So if I were to give you a call say today, and we get a kind of an offer, how long would that kind of last for say, if I did want to sort of keep that in, keep hold tight and maybe wait for a little while lets say that my deal is not going to expire for another four or five, six months or something.

James Kinns
Yeah, fine. And then we are at the moment talking to all of our clients that have got rates that are due to expire in the next six months. So now, for us, that’s our our business model and is something that we look at, if you’re looking at simple rates, switches which is just where you’re, you know, renewing a rate with your existing lender, you can’t do that typically, unless you’re within three to four months, but the discussion we’re having is that six months remaining, let’s at least get that conversation going to understand exactly where you are from a financial point of view and basically sort of get it prepped, ready that as and when those renewal rates are available that we can jump on board straightaway and make sure that like I said the the rate isn’t going to go up. But other lenders you know, it’s not just about looking at rates which is with current lenders, which is the easy solution sometimes, but not necessarily the best option for a client. So I think it’s looking at the whole market, which we are a broker that definitely will do that for you and making sure that we are securing the most competitive rate that’s available given, obviously, your circumstances. So, yeah, six months to us is important. Some lenders will offer a six month mortgage offer. So at the point we apply for that mortgage, the rate is secured. And oh, in theory, that mortgage offer will sit there in place up until the rate that you’re currently on would expire, at which point, day one, it switches over on to the new rate, and just keeps things competitive from that point of view. So it’s very similar, I suppose to look at some of these utility providers and people like that nowadays where you don’t want to be dropping off a benefit. A benefit rate is such a beneficial rate for that one or two year periods because you go into this variable rate, which is extremely high and that’s what we’re effectively trying to do and to cure rather than leaving it to the last minute where obviously there’s more pressure to get the mortgage arranged and, you know, it’s not just getting the mortgage carried out on some of the remortgages, we’ve got to get valuations carried out potentially. And also, there’s the legal process if you are changing lenders, so yeah, for us, getting that six months in advance, sort of situation is ideal, certainly for us and also from the clients give them the peace of mind and with rates being low, then it gives them peace of mind that way as well.

Alex Curtis
Absolutely, because if if rates were to get lower, you could still then look at getting another offer later on, right for whether it’s from someone else, or maybe the same lender, but you can’t go back in time.

James Kinns
Correct, yeah.

Alex Curtis
It feels like a bit of a no brainer, really, to get something locked in. Now, even if you find something better, later on, you can fall back on it. Whereas you’ll be kicking yourself if rates go after this kind of issue.

James Kinns
Yeah, exactly. We will do that as part of our process for a client as I’ve just said, monitor the rates as things change over that six month window. So, you know, again, it comes back to if there’s a if there’s a particular lender that’s got the best rate, but they only offer a three month offer then obviously, we can diarise it for the month prior to expiring, but we will look at it. If someone is keen to secure a rate six months in advance, then obviously we’ll be recommending the right lender for them, but with a view to monitoring that rate over that six month period just to ensure that still competitive at the point, you know, it completes.

Alex Curtis
What can I do if I’m thinking let’s say my deal is about to expire during this kind of crisis? In the next sort of month or so? Or maybe I’m on the SVR right now, yeah, but I want to move it. Are there any sort of temporary offers? Or can I get a better offer than the SVR but not have an early redemption or anything like that?

James Kinns
Yeah, absolutely. So it’s actually quite recent for quite a few clients that are sort of on the market or just recently or certainly keen to move and they come to the end of their rate. So whether customers are with one particular bank, but their existing bank didn’t offer a fully flexible mortgage. So it’s either a case of drop onto the variable rate which at that time was 4.24% Or if not, like you said, they didn’t want to tie selves into another rate with that same lender and then if you have to worry about the sort of porting and transferring of that mortgage, so what we actually arranged for them is to switch to a different lender that does offer them that flexibility so that they could repay and move that mortgage at any point without any cost. And that was the crucial bit. So yeah, we switch them to a different lender that allows them the flexibility, but it kept their rate at a really competitive point in the market. And they’ve benefited massively because it was a tracker rate mortgage, it gives them the flexibility and obviously given the recent changes with base rate dropping from what was at the time 0.75%, down to 0.1% Now, it’s obviously you know, they’re saving significantly just on the back of that. So one is giving them the flexibility, but luckily, they’ve also benefited from the reduction in base rate, so yeah, 100% Alex.

Alex Curtis
Yeah, I mean, again, that sounds like an absolute no brainer having a tracker that is ‘temporary’ with no early redemption, while rates are as low as they are. Yeah. So it literally, there’s quite a few options, it doesn’t feel, I mean, I don’t want to put words in your mouth and I’m not sure if that’s correct or not, it doesn’t feel like there’s any reason to go on an SVR or sit on one.

James Kinns
Absolutely not, you are paying way too much. And again, that’s that’s what it’s about if it would be very different if there weren’t these flexible mortgages around but there are a handful of lenders maybe more that allow us that type of flexibility, which, like I said, when we can get them back into a competitive place in the market. Albeit, like I said, if they wanted a fixed rate long term, then you are typically going to commit, albeit saying that there is one particular building society that does offer a fixed rate with full flexibility. So you’ve got the options, but the fact that a tracker rate has no penalties, you can switch to a fixed rate any point anyway, even if you decide not to move, so that’s an easy an easy switchover anyway, full stop and if you then decide to move and you want to then explore the whole market you’ve also got that sort of facility as well. So yeah, it’s a no brainer from that point of view. They’ve certainly got nothing to lose.

Alex Curtis
Absolutely. My worry is that I think a lot of people knowing the numbers of what people search on Google, people just search for things like remortgage calculator or mortgage calculator or mortgage rates, but that information is only as good as what you put into it. And if you’re not aware of all these scenarios, I think there’d be a lot of people that this is their first time they they’re unaware of or I don’t think it’s that clear a lot of the calculators that I see that it does feel like you kinda need to chat through.

James Kinns
Yeah, it’s not an easy one. I think sometimes you you get drawn into the sort of comparison websites that are there. And obviously, we see a lot of clients that are rate chasing as we describe it, where they’re just looking at the the headline rate, and that’s what they’re trying to do, which I completely understand in some ways, but what what we encourage or what we will do as part of our sort of conversation and calculations is look at not just the headline rate but actually what the cost is to that customer over that benefit period as in how long that fixed rate or tracker rate is for. So you’re looking at the arrangement fee that the bank is going to charge potentially, and how long that rate is over. So we look at the true cost over the fixed or tracker rate period. And that’s typically where we’ll give our advice to a customer because some banks are charging as much as £2000 for an arrangement fee, but they will have the most competitive rate in the market. So the two year fixed rate I touched on earlier at 1.14%, which is available up to I think 60% loan to value that has got a £2000 arrangement fee. The next available rate is 1.19% so only fractionally higher, but that’s got £1000 setup fee. So depending on what the loan size is, it will allow us to obviously determine which is the most suitable rates to that particular client in terms of the overall cost. So it’s important not just to go rate chasing, it’s also important to look at the overall costs associated and in actual fact whether there’s the package that gives them say for example, a free valuation and also potentially free legal fees, or some form of cashback, to cover the legal fees that are associated with a remortgage because it’s very basic legal work, there’s still a process that needs to be carried out. So, we typically will look at lenders that offer those types of incentives or packages. And again, all these things we will look at as part of the the advice that we give.

Alex Curtis
And are there certain situations where maybe you could keep me with the same lender saying that lender is my my bank? Who i bank with, if I get a really good right with them, is there any situation where you can sometimes use brokers to get better rates than what I can get directly?

James Kinns
Yeah, absolutely. And it’s not the same across the board, obviously. So different lenders will sometimes offer better rates through brokers, and that’s typically been the way, there used to be this dual pricing issue where it used to be cheaper with the bank direct than it was through brokers. That changed a few years ago now. And as brokers, we tend to get the better rates now than the branches or the banks direct. So it’s kind of swung sort of full circle really, I suppose on that front. So yeah, absolutely, Alex, that’s the main thing is that the peace of mind by speaking to a broker rather than just dropping back into the bank directly when you get that letter on your doorstep is just think about what else there is out there in the market. And often there is a cheaper rate available than than just what your existing bank is offering. So. So yeah, so 100%. And I think that the rates which will product transfers are described, you’ve only got I think it’s three months, typically three to five months is the normal range of when you can secure a rate with your current lender. The process is a bit quicker don’t get me wrong, there’s no valuation or legal requirements at all. There’s no credit score, or assessment from from an income or outgoing point of view. So it’s very, very simple. Like I said to you, the peace of mind, I suppose, with speaking to us that we can offer the product transfer or rates switches with the existing lender but also look just to make sure that no one’s missing out on a rate with an alternative lender that will save them you know X amount over that 2, 3 or 5 year period whatever it might be for the next deal so yeah, I think that’s that’s crucial

Alex Curtis
And then this me giving you a call let’s say I’ve found a good offer myself, but I’m after hearing this I’m thinking on probably I should speak to James. I assume it’s all gonna cost me anything up front from you guys just have a look?

James Kinns
Correct, yeah, we offer a free consultation in terms of looking at rates and depending on circumstances you know, we sometimes operate on a no fee basis anyway, full stop. So like I said, you there’s the peace of mind that they’ve got certainly nothing to lose up front to have that discussion, and allow us to look at look at the options that are available to them. So yeah, exactly that it’s a it’s a no brainer from that perspective that you’ve got, something’s going to look at the whole market and just ensure that you’ve got the best possible rate.

Alex Curtis
And then just touching on the whole of market, I think some people probably not aware of all the other lenders. People, some people may think the whole of market is the the High Street banks that they know. But there’s a lot more lenders out there aren’t there?.

James Kinns
There are indeed, yeah, and I think we’ve certainly seen that over the last, you know, 3, 4 or 5 years is that people have got complex situations, you know, income from different sources or people maybe where they’ve had sort of potential credit issues and things like that. And that may have, you know, proved more popular this year, obviously, with everything that’s going on. So, yeah, it’s not just your High Street banks, you know, we have access to all sorts of different lenders out there that will accept you know, people’s sort of adverse credit history such if you’ve had credit issues in the past, but also people that have got income from different sorts of income streams, you know, people that have maybe got some benefits or they’ve got different self employed income, etc, etc. So yeah, 100% we’ve got access to all of those lenders and some fantastic relationships as well with those. So if sometimes the case doesn’t quite fit in terms of criteria that subject to be in a good case and someone that maybe has got a good level of equity in the property, then there’s definitely options out there and that’s the good thing is you there’s more and more lenders that are definitely have got the appetite to lend which is which is great.

Alex Curtis
Fantastic. And then just if I’m just trying to put myself in a lender shoes just thinking about the payment holidays that are happening at the moment. So I don’t know the answer to this. I’m not sure if you do, obviously it’s just been announced. But if someone were to take that payment holiday, I’m presuming some of the lenders may not want to do a transfer during that time. Is that right or am I wrong?

James Kinns
Yeah, it’s an interesting comment because obviously we’re waiting for further news. So we’ve had some feedback from a couple of different lenders that are out there. But yeah, I mean, what they are saying is that your mortgage will not be classed as being at risk for taking a payment holiday with everything that’s going on. So yeah, you can rate switch during that period of time. So it is almost within that three month period that you’re taking a payment holiday there are there are rates, which are available, and you also can remortgage potentially as well during that period of time. So there’s lots of different scenarios. But again, like I said, we’ve only really got probably a handful of lenders that have committed at this stage about how they’re going to treat the payment holidays as well as obviously what they will do in terms of product transfer, or rate switch scenarios and things like that. So, but yeah, the handful that we’ve had through so far, certainly not put any obstructions in front of us to say that they wouldn’t accept someone looking to rate change at that point. So yeah, that looks okay.

Alex Curtis
Okay, and then also, I’m thinking that it’s probably worth having a chat if that because it’s obviously Wednesday, the 25th of the minute. I suppose what you don’t want to be doing is taking that payment holiday before looking at what’s out there. I guess it’s worth having that quick conversation. Just checking your options, perhaps before diving straight in with the holiday, would you suggest?

James Kinns
Absolutely yeah, I mean, it’s is very, very difficult at the moment to get hold of the banks to even discuss obviously a payment holiday. Some of the banks are creating online systems now where people can put those requests in. But yeah 100% because there are certainly with putting remortgage cases through at the moment where customers have actually decided to just drop onto interest only for the for the time being and that’s kind of their strategy for the next year or two years, you know, but it’s quite easy to change from interest only to back to repayment even during a fixed or track rate periods. It doesn’t mean you’re tied to interest only for the next two years. But it really does depend obviously on the on the lenders, and what equity that you’ve got in your property when it comes to remortgage and and what they will allow. But yeah, just as I wanted to touch on that point about lenders becoming more flexible with looking interest only. So yeah, it’s definitely worth the conversation and we can give them that guidance as to what is the best way forward in terms of their own individual situation, I suppose.

Alex Curtis
Yeah, absolutely. So to summarise pretty much whatever your situation is at the minute. I think there’s a lot of people as well just don’t know they’re currently on an SVR. So it’s kind of worth, I’m assuming if I’ve got some original documents from when I took it out, if I’ve got that, do I need anything else if I give you guys a call

James Kinns
No, exactly. So some lenders, we can log on to the banks sort of portal and just get an account summary. So not too in depth in terms of information sharing, but it’ll literally give us a snapshot of the client’s current mortgage, confirm if they are in a standard variable rate and what that rate is, or if they’re obviously still, you know, on a fixed rate of some description and come into the end of it. So it will give us a snapshot. So all we need in that scenario is normally up to the customers name and an account number that will give us that information so that we can obviously then just explore what the options and things are out there in the market. But yeah, so if not paperwork, so a mortgage offer, or the illustration that maybe they had when they originally took out the mortgage, or if not an up to date mortgage statement. So normally one of those documents will confirm what they’ve got but like I said to you it’s a case of having that conversation with us and we can talk him through it.

Alex Curtis
And then last question, I know the lenders have Very hard to get hold off but it sounds like you’re all you guys are all working from home got your mobiles or your equipment etc.

James Kinns
Yeah, it’s a stressful week get everyone remote and ready but we we have brokers that work remotely anyway and have done for many years but yeah all of our staff are now fully remote obviously have access to all the systems as they would do in the office, you know, telephone systems etc are all connected. So yeah, without that it’s business as usual from our side. So yeah, it’s a case of talking to us, we can look at those options for you and give you that sort of free consultation and like I said, just ensure really that you understand fully what the situation is with the existing mortgage and what your opportunities and rates would be moving forward. And I think that’s the crucial thing just to ensure that we’re keeping their payments as low as possible. When I was going to touch on earlier Alex actually just people that are maybe got a mortgage product that’s coming to an end and they’ve maybe got, as I say, 30 years left on their current mortgage. Or even less, you know, we have options with those clients. They’re not tied to keeping that term exactly the same. So when I talked about earlier looking to reduce payments and payments to the lowest possible amount is that we can actually look to increase the mortgage term during this period of time. I’m not saying that’s the ideal long term, but it gives them a sort of a strategy for the next couple of years, maybe while things might be a little bit uncertain. So someone that’s maybe got 25 or 20 years left in the mortgage, potentially, depending on their age, we could look to stretch that mortgage term that bit longer just to obviously give them a bit of security in terms of what their payments will be, if they didn’t want to switch onto either a payment holiday or if the option of interest only weren’t available. So there’s lots of different options out there. There’s banks now that are lending to age 75 or 80, depending on depending on people’s occupations and pension provisions, that type of stuff, but I can see that the banks have got the appetite there. The criteria is definitely more flexible in terms of what they will and won’t accept. So yeah, for us to just have that conversation. And really just given the correct advice really I suppose.

Alex Curtis
Yeah, I think that’s that’s really something I’ve not thought about as ideally like to say you wouldn’t want to extend that you’re normally looking at sort of shaving years off but actually in this time if there’s something temporarily that we can we can do with the the age of it to bring that those cost’s down everyone’s going be looking at their, their bills. I mean, there’s people talking about getting rid of their life insurance direct debit, and they need that more than ever right now.

James Kinns
Yeah, I agree. Yeah. I mean, it’s, there’s all sorts of options out there in terms of if it’s releasing equity, depending on on where they’re set at the moment in terms of what equity they’ve got currently available in the property, but there’s options to release equity. So, again, you look at, you know, if people are having to take this payment holiday that’s available from the banks, what they do beyond that, in terms of they need some sort of further peace of mind and clarity that we can look at release in equity, whether that’s just for them to have a bit of a buffer moving forward. Whether it’s a case of maybe consolidating some debt, which, again, is a conversation just to make them aware of obviously putting debts into the mortgage, those and some bits would need to cover off on that. But again, it comes back to what is the outgoing on that monthly basis that makes sure that they can, you know, keep a roof over their head and make sure that they’re not in any sort of financial distress. And so there’s all sorts of different options and raising money for taxpayers or business purposes, all sorts of things, which is a bit of a quirky piece of criteria, but there are lenders out there that would allow someone to take money out for that purpose. So, again, having those conversations and just trying to give someone that peace of mind and taking maybe a little bit of pressure off, which at the minute obviously is is going through this difficult time is really, really important thing.

Alex Curtis
Absolutely. I think if you if you kind of sit there, and you’re just not sure and you’re worried about things, it’s best to actually just understand what you can and can’t do and that will kind of naturally you because people just worry about things that are unknown, but when you actually know it, I think it’s going, like you say, peace of mind I think the right word, just yeah, understanding that there that all the lenders understand this situation and that they want to be flexible, more flexible than they have been before. It’s a great time just to have that conversation. People have got loads of time, and I’m probably doing a lot of life admin anyway. And the mortgage is probably the biggest expense and probably the most important thing to have a look at.

James Kinns
Exactly that. Yeah. And it’s a case of like I said, pick up the phone or enquire with us directly. And, you know, we will give them that advice. And hopefully, like I said, take some of that pressure and weight off their shoulders, because it’s obviously a difficult time for lots of people at the moment. So yeah, that’s something I certainly would encourage people to do.

Alex Curtis
Excellent. So if I want to have a chat, what’s the what’s the best number to get you guys on?

James Kinns
Yeah, so contact number 0345 4507885. And we obviously have the channels- online in terms of the website, which is the-mortgagestore.co.uk where you can do an online enquiry, request a callback there’s a live chat as well on there, so yeah, lots of different ways for people to contact us, but also social media platforms as well. So we’re on LinkedIn, Facebook, and also Twitter.

Alex Curtis
Fantastic. Thank you so much for your time that was that was really kind of insightful and really helpful and I hope we encouraged a few people to pick up the phone and just discover what what they can actually do right now.

James Kinns
Yeah, absolutely. Thanks for calling Alex.

Alex Curtis
Yep, cheers. Thank you very much. Bye bye.

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