An improving economy and increasing house prices will see a vast increase in remortgage applications over the coming months, according to a leading niche brokerage.
Taj Kang, Operations Director of specialist broker Contractor Mortgages Made Easy, says that rocketing house prices combined with continuously low unemployment could mean salvation for those who have previously felt ‘trapped’ on high mortgage rates.
“For a number of years now there have been swathes of people who have felt trapped on high mortgage rates, unable to move elsewhere as a result of a floundering economy and low levels of equity.
“Recent news, such as yet further increases in London property prices, could well mean that this pressure is relieved, and that people can find the right solution to their mortgage woes.”
Figures released by the Office of National Statistics (ONS) have revealed that UK property prices rose 11.7% during July, with six regions of the UK now having average values higher than pre-credit crunch levels of late-2007.
London leads the way with a 19.1% increase, amidst a tempering of inflation to 1.5% in August, from 1.6% in July.
“Whilst this is tremendous news for those who have homes with good levels of equity in London, it is leading to another problem at the opposite end of the scale, as more borrowers than ever before look to take mortgage terms past the historical average of 25 years” adds Taj.
As a specialist broker, Contractor Mortgages Made Easy have worked almost exclusively to find solutions for those working on shorter-term contracts for a decade. A workforce which traditionally has higher than average levels of excess income. They are, however, beginning to see a pattern emerging, says Taj.
“Our clients generally are very well paid for the work that they do, and as a result it is more about finding the right solution and having applications assessed correctly to reflect this. Even we however are beginning to notice that more borrowers than ever before are taking terms to 30 years and beyond, in order to keep initial costs low, and aid affordability testing.”
A common problem for contractors has been in getting lenders to assess the correct income, with many complaining of being treated as self-employed – an approach that, given recent changes to the mortgage market, has proved catastrophic to some.
“Assessing a contractor as self-employed is a little trying to strap a saddle on a Zebra – it looks vaguely similar but deep down it’s a whole different animal to the one that you actually intend to take for a ride. By taking the wrong income into account, affordability will be drastically reduced – potentially hampering an application.
“By speaking with a specialist, you can ensure that you’re solving the problem in the correct way, rather than actually creating further headaches for yourself.”
Article By: Mark McBurney, Senior Mortgage Consultant at Contractor Mortgages Made Easy
Media Contact: Raman Kaur, Public Relations Manager
Tel: 01489 555 080