Moving advice

KFH mortgage experts reveal how they help customers overcome the often tricky complexities of buy-to-let, help-to-buy and self-employed applications.

7 June, 2022

The big high street mortgage lenders love a high-production TV advert to sell their products, whether it’s big showbiz names or troupes of flashy dancers. But away from all that razzmatazz, the reality is that 70% of home movers looking for a mortgage use a broker rather than going direct. Brokers are essential in today’s world when very few borrowers fit the ‘bog standard’ description and instead require expertise to get the best deal for their circumstances and kind of property. This is particularly true if you are a landlord, first time buyer or are self employed. These are the kinds of property buyers who need extra help navigating the mortgage approval process.

Med Moroglu, who has worked in the financial industry for 16 years and at KFH for eight of them, is one of the star consultants within the company. “Every lender has a different set of criteria, which changes on a regular basis,” he says. “A good broker matches an applicant’s needs to the lender whose criteria fi ts their situation, so you need to be on the ball and know what’s happening.” Moroglu says Covid has impacted lenders’ risk appetite and consequently mortgage terms have been changing fast and furiously.

For most customers, being able to track the 25,000+ changes during the bumpy months of 2020 was clearly going to be a challenge. He says that this has been particularly hard for self employed buyers. For example, one well-known high street bank now only offers them mortgages with 75% loan-to values – so knowing where else you look can be crucial.

Lenders have seen self-employed workers as more likely to lose their income than employed staff during Covid, which is why some will only accept applicants with larger deposits. “But a big thing that’s changed for the good is that both the self-employed, contractors and those working through partnerships and other ‘non-standard’ jobs no longer need to track down a specialist broker,” says Moroglu.

Contractors and self employed workers think they have to provide two or three years’ worth of invoices before they can get a mortgage, but that’s not true.

Case study: Self employed

“KFH has the experience and expertise within our mortgage team to support any client with any employment background. Contractors and self employed workers think they have to provide two or three years’ worth of invoices before they can get a mortgage,” Moroglu says, “but that’s not true any longer – sometimes one year will do.

More people are setting up their own businesses or are self-employed; the days when the mainstream mortgage market concentrated solely on those with regular salaried jobs are gone.

“I had a couple who were limited company directors and wanted to borrow funds to purchase an investment property. They were declined by their existing lender because they had utilised the government income support scheme and Bounce Back Loan during Covid-19,” he says. “But I was able to find a lender, who was understanding of their circumstances and granted them the amount they needed and at a market-leading rate.”

Moving advice - Kinleigh, Folkard & Hayward

People get a shock because the Help to Buy advertising doesn’t communicate the nitty gritty of pre-qualification.

Case study: Help to Buy

Fred Abayeta, who has been with KFH since 2018, specialises in helping first time buyers apply for a mortgage via the government’s Help to Buy scheme. “A lot of first time buyers buying new build properties assume that getting a mortgage via this scheme is easy because it’s government-backed and on the face of it they fit the basic financial criteria, but it’s very easy to be rejected,” he explains. “My job is to hand-hold them through the application process so that they can work out which properties they can afford.

This also reassures house builders that people we take on viewings are ready to buy and have a realistic estimated budget nailed down.” Abayeta says many people don’t realise that Help to Buy affordability calculations are based on a buyer’s net (rather than gross) pay, and that a borrower’s regular outgoings including pension contributions, student loans payments or train season ticket loans – for example – must not be higher than 45% of their net pay.

“People get a shock because the Help to Buy advertising doesn’t communicate the nitty gritty of pre-qualification, so I help them navigate the application process with a healthy dose of reality,” he says. “I help them by looking at the loan term, being realistic about the size of deposit they can put together, advising them to use the correct interest rate in their calculations and also discussing which outgoings could be reduced by showing them the impact.

“I recently had a first-time buyer couple from overseas who had been in the UK for about a year, staying via a Tier 2 Visa,” says Abayeta. “When applying for a standard mortgage, first time borrowers are usually asked for a 25% deposit. But via Help to Buy they can get a 20% equity loan to get on the property ladder and of course provide 5% themselves. “The couple were in their early 40s and would have had to save for years or wait for a big pay rise or bonus to buy anything in London. But though they were not hopeful, I got their equity loan and mortgage approved and they were over the moon.”

One of the key points many landlords don’t realise is how much information lenders require when approving buy to let loans.

Case study: Buy-to-let

Kerry Golding is a senior mortgage consultant and has been at KFH for five years working across much of its branch network with landlords on mortgage applications. Many are accidental landlords who are referred to Golding by KFH branches, but also investor landlords with up to five properties.

“One of the key points many landlords don’t realise is how much information lenders require when approving buy to let loans, so it’s something we work with landlords on as early as possible in the process and do for them,” she says. “It’s why landlords stick with us – particularly if they’re re-mortgaging – because we have all the information needed to submit a loan application at our fingertips such as rents achieved, running costs and any void periods, for example. “Also, there are a lot of brokers out there who say they know about the current criteria the different lenders are applying to applications, but don’t – whereas KFH always ensure we’re up-to-date with this and that we get regular weekly updates direct from the lenders we deal with.“We recently received an update on how lenders are approaching the looming changes to Energy Performance Certificate minimum band rules – something other brokers may not know about. It’s this sort of thing we’re really strong on.”

A 30-something woman from Muswell Hill came to Golding for advice after inheriting a lump sum from a family member. She was keen to use the cash to get on the property ladder, but not in the way you might expect. “She wanted to buy her first rental property and become a landlord but remain living at her parents, as she wasn’t ready yet to move into her own place, but wanted to start her property journey – I helped her get the best mortgage deal available given her unusual circumstances,” says Golding. This example remains an uncommon one, but Golding says she is seeing more younger landlords seeking to buy their first buy-to-let property but remain at their family home, expecting to then move into the properties themselves two or three years down the line.

Moving advice - Kinleigh, Folkard & Hayward

Contact a mortgage consultant

Speak to the team today to discuss your requirements.