The various schemes introduced by
the British government during the past year or so, such as Funding For Lending
and Help To Buy, have resulted in driving down average mortgage rates to below
4 per cent. But what has had a more significant effect on the number of home
loans being approved is that banks and other lending institutions have also
been gradually making their lending criteria less stringent, making it easier
to obtain a mortgage, even for those not in permanent employment.
This is good news for professional
workers who typically work on relatively short-term contracts but have high
earnings, such as IT contractors. And for the first time since the start of the
economic slump, some lenders will now approve a mortgage for professionals such
as these providing they meet a minimum income requirement.
There are thousands of highly qualified,
experienced professionals who work on a contract basis, often for the whole of
their career but since the start of the recession it has been much more
difficult for this category of worker (even a high net worth individual) to
find a lender who would approve their home loan application.
This relaxing of lending criteria is
a sign that banks are at last starting to make more sensible underwriting
decisions with a view to helping potential customers. However, self-employed
people, or freelancers without a contract,are not benefiting from the relaxed
rules and will still have the affordability of any loan assessed based on the
last three years' accounts.
Another sign that banks are becoming
more flexible in their approach to lending has been the launch of buy to let
mortgage products aimed directly at the ex-pat community who want to buy a
property in the UK to let out while they continue to live abroad. Such deals
are available right up to a £1 million mortgage and, in some cases even more.
There has been a big rise in demand
from expats looking for Buy-to-Let products, maybe as a result of the housing
stock becoming more affordable during the economic downturn in relation to
salaries. Much of this demand is from people who already own a portfolio of
properties rather than first time landlords but have often found it difficult
to obtain a UK mortgage because they are not resident in the UK.
As the property market as a whole
continues to undergo adjustments to the new economic climate, the Buy to Let
market is becoming a specialist area with respect to funding and several
specialist lender/mortgage broker partnerships are developing to meet
customers' needs in this area.
New types of property loan deals for
ex-pat buy to let customers, for instance, is further indication that some
banks and other lending institutions are willing to offer innovative products,
especially to high value mortgage clients. Many specialist mortgage brokers in
London in particular deal with a large number of British citizens living and
working overseas and new products are providing them with a range of
alternatives when looking to invest in property in the UK.
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