Tips On Remortgaging & Buying A Property In 2024
Listen to the interview for FREE on Apple Podcasts, Spotify, SoundCloud, or watch the interview below & on our YouTube channel
In this episode of the MLC Show, host Sean Rogers sits down with Michael Lawlor, a seasoned mortgage broker and financial advisor from Integrity Wealth Management, part of the Mortgage Advice Bureau, to explore the intricacies of remortgaging and securing a mortgage in the ever-evolving property landscape of 2024.
With a keen focus on empowering listeners with actionable insights, Michael shares a wealth of knowledge on how to make the most informed decisions when considering property transactions.
Key Takeaways:
-Navigating the 2024 Property Market
-The Importance of Expert Advice
-Benefits of Remortgaging via a mortgage broker
-Crucial Tips for Securing a Mortgage
-Assessing Risks and Opportunities
-Long-Term Financial Planning
-Q&A Session:
This episode of the MLC Show is a must-listen for anyone looking to make informed financial decisions regarding a remortgage or moving home in 2024.
Michael Lawlor’s extensive knowledge and Integrity Wealth Management’s commitment to client success ensure that listeners leave with a clearer understanding of their financial future and the steps to achieve financial freedom. Whether you are a first-time buyer, or your fixed-term interest rate ends in 2024, or you are wondering whether now would be a good time to move home, this is a MUST for you!
MORTGAGE BROKER SUPPORT:
If you live in England & Wales and would like to reach out to a mortgage broker you can get in touch with Michael here:
Tips On Remortgaging & Buying A Property In 2024
Michael Lawlor of Integrity Wealth Management has been involved in mortgage advice since 2004. Michael worked for a large estate agent in central London and took the step in 2000 to start growing his own mortgage business, with the main focus on building a team around him that are passionate about customer service and ensuring they secure the best mortgage deals for their clients.
The interview was conducted in September 2023
Inflation in the UK dropped to 6.8% in the year to July 2023 from 7.9% in June 2023. However, the Bank of England is expected to raise interest rates again on the 21 September 2023 in an effort to bring inflation down. Michael, can you give some examples of the best two-year and five-year fixed products on the market currently for people looking to buy a home and also those looking to remortgage?
Yes, there’s not a lot of difference, to be honest with you. And the rates still aren’t fantastic. When you look at a kind of a two-year fixed, you’re looking at rates close to 6%. So just a fraction below 6%, five-year fixes around the five and a half, maybe five and a quarter, depending on your loan to value.
And to get just above 5%, you’ve got to be willing to fix in for ten years, which not a lot of our clients currently are on those rates. We’re still doing the vast majority of our business on two-year fixes.
For people who are looking to buy in 2024 or remortgage in 2024 do you think they’re best accelerating that? Are they best delaying that? Or should they stick to their original plans in respect of 2024? And also, where do you see the rates going over the next six to twelve months?
It all comes down to your individual circumstances. When I speak to clients now, I say to them, look, I’m not going to try and talk you out of not buying, but just make sure you’re not overpaying. Look at where the market is, look at the property carefully, how long it’s been on the market for, and work out what you’re going to afford.
And long term as well, the conversations we have with people is if you take for example, a 35-year mortgage, you need to be able to afford it for those 35 years, what are your plans?
So, we’re having much more in-depth detailed conversations with people ask what are your long-term plans? What are you going to be doing in the future that’s going to enable you to pay this mortgage off?
It’s a long term to have a mortgage 30-35 years. So, whenever I have conversations with people, I’m talking to them about how quickly can you pay it off? Talking to them about making overpayments on the mortgage, trying to talk them out of buying that expensive sports car on finance and things like that. The mortgage is the biggest commitment that you have. Try and get that paid off as quickly as possible.
When people are taking out a 35-year mortgage how important is it to have a solid exit plan? Is that exit plan to downsize as an example? How will they afford that if it is post-retirement?
When I’m advising clients, I’m looking to build a relationship for the whole period of their mortgage. So, whether it’s 25 or 35 years, I always want to try and give them the best advice possible and I say to them we can get you these mortgages, but you’re the one who’s got to pay it back at the end of it.
What’s your plan to be able to get this mortgage paid off? It’s not good enough that you’ve got parents that might leave your house where we are in North London, it’s very equity rich, even a not very fancy house is going to be about a million pounds.
Something quite decent is probably more towards the 2-million-pound mark. So, there are a lot of clients that we deal with that have quite well-off parents, but I always say to people, you cannot rely on that you must have your own plans.
How are you going to get this mortgage paid off and how are you going to cope if interest rates do go up even higher?
Focusing on first time buyers for a moment, what would your advice be for first time buyers in terms of planning, strategy, and timing when looking to purchase the first home? I’m thinking of the people who might be renting right now, and they’re thinking about buying their first home either as an individual or it might be with a partner. Are there any bespoke products that they may not have heard of?
Where we are in North London, it’s a bit of a nightmare for people at the moment. Mortgage rates have gone through the roof, so it’s very expensive for people to buy.
The prices should be falling much more than they have done. But we are a nation of home buyers, the market doesn’t necessarily always react in the way that it should do in terms of house prices. So, the big problem that people have got, if they have to rent, is that the rents are also through the roof.
It’s very difficult to save. So, you’re caught between a rock and a hard place at the moment for first time buyers. Unless you’ve got parents you can stay with to try and increase your deposit or your family can help, it’s very difficult in terms of advising people what to do.
It’s a case of you just have to make your own mind up. These are the options that I can advise you on, but the people trying to save who have to rent is very hard because there are just not very many properties to rent and the ones that are available are super expensive.
One bed flat’s that went for maybe 1200 a month a year ago could be 1600 per month now in this area. So, it’s very tough for people to try and save that deposit. In terms of making a leap onto the property market, if they can get the property at a good price, we just look at all of their options.
And we’re quite lucky, as I mentioned previously, in the area that we are based, we do a lot of joint borrower sole proprietor type mortgages where you can get help from a family member to help you onto the property ladder.
We try and explore all of the options. If they’ve got older parents with a lot of equity, can they help them out in some way by releasing some of the equity? There are some products out there that require lower deposits, etc. if you can get some parental help.
It’s just a case of exploring all of their options and saying, look, “you really need to sit down as a family and work out what the best options are for you without affecting your parents lives as well, because they might need that money at a later stage for family care, as no one knows what the future holds.”
I was reading there’s been an increase in landlords selling up. Is this something that you’re seeing yourself? And if so, what would your advice be for tenants interested in buying from the landlord or wanting to explore that as a possibility in the future?
Yes. Again, it’s not something that we’ve seen in this area in terms of a mass exodus of landlords, because I’m more dealing with what you might call your dinner table landlords, where they buy two or three and they’re buying them either as pension pots or to help kids get on the property ladder in the future.
Where we are, it’s very expensive to buy. So, they want to try and keep family members in the area, if possible. A lot of the products we were doing on the buy to let’s have fixed the rates because of the stress test. So, we haven’t seen a mass sell-up.
But from speaking to some of my other colleagues, I’m part of the Mortgage Advice Bureau network, a lot of my colleagues are based all over the UK and they’re seeing quite a lot of landlords sell up. So, it’s not something I’m potentially seeing a lot of, but I know that it’s definitely happening out there in the market.
In terms of buying off your landlord, have a chat with them, just explain that obviously, you can avoid estate agents’ fees, which depending on the price of the property, can be quite expensive.
Try and build a good relationship with them. Will they sell it to you at a slight discount? Probably not, but it doesn’t hurt to ask a question and have that conversation.
The vast majority of mortgages we do for first time buyers have huge parental help.
For anyone looking to move house, they’ll be conscious about property prices and the current trajectory. There’s a lot of debate about that at the moment. What’s your view on property prices over the next six to twelve months and what advice would you have for people in that regard as well? Should they still be definitely sticking to the plans? Is it something they should probably keep a watch and brief on for six to twelve months if they’re thinking about moving house? What would the risk be with either strategy?
I guess it’s so difficult to time the market right as a buyer in terms of prices, unless something happens to interest rates, I think prices have got to come down a bit more. The only thing I think you’ll see, is what we’re seeing in this area, is if people can’t get the prices they want, they’re just not selling.
So, we have a massive shortage of family homes. You’d be amazed that there’s still a lot of money in London, so there’s a lot of competition. The average mortgage that we’re doing at the moment is being reduced greatly because people are still buying, but they’re taking out smaller mortgages whereas before they would be willing to borrow a little bit more and leverage up a little bit.
Now they’re cashing in other assets that they’ve got and trying to keep the mortgages as low as possible.
Also, when we’re remortgaging, we’re seeing people hugely reduce their balances. People are trying to borrow as little as possible. I can’t blame them, given the interest rates, but in terms of advice on whether should you buy now or not, I would just say it’s probably always a good time to buy, as long as you don’t overpay on the property.
If I was a first-time buyer, I’d be trying to negotiate super hard, I’d be trying to save every last penny with my offer.
What’s your advice to people who have a fixed term mortgage ending in the next twelve months? They may have taken out a mortgage on a very low interest rate originally and they are worrying about the impact increased interest rates will have when they come to remortgage.
We are reaching out to people at least six months in advance. Often, we are going out some twelve months in advance to have these conversations to say, look at 6%, this is what your mortgage payments are going to be looking like.
I mean, I’m going to put my neck on the line here and say in terms of my prediction for rates, I think they’ll be about a percent lower by midpoint next year (2024).
It’s a bit bonkers to try and predict it, but that’s put my neck on the line and give my personal opinion on what I think will happen economics-wise. We’re just saying to people, look, be prepared. This is what’s happening with interest rates. Cut back where you can. These expensive gym memberships, the car finance when it comes up, can you arrange a slightly cheaper car? We live in this society now where it’s very much keeping up with the Joneses. Do you need to go away on as many holidays? Etc.
These are all the kind of decisions that you need to make and it’s not easy to make.
If someone has got a fixed term remortgage coming to an end in say three months’ time and beyond what can people start to look at right now that would increase the prospects of them being able to remortgage on the best terms possible?
Obviously, speak to a mortgage broker as early as possible just to get some advice.
Most lenders will let you secure a product six months in advance. And with a lot of lenders, the products are cancellable. So, we always say to someone, secure something as early as possible that’s cancellable, and then just keep reviewing it. So basically, once we do a deal for a client, we just check in at least once a month, just in terms of where rates are, and keep the client updated on that.
We’ve got this for you, let us take away that stress. So, if you speak to a broker, they can take that part of that away for you. As I mentioned, when we’re dealing with clients, we don’t want to do one fixed term remortgage and never speak again.
We want to do a remortgage and help look after you over the next 25 years. We want to be your mortgage person. We don’t just want to be your mortgage person, we want to be the person that when you’re down the pub, you’re telling them about Mortgage Mike and how he’s looked after you.
We want to be the person clients feel they can recommend, and they can trust us and we’re going to look after them. We try and put the client at the forefront. So, whenever I’m making a recommendation to someone, I always try and get as much information, and I try and advise them as if I were in their shoes.
In terms of non-standard borrowers, I’m thinking more people who might have bad credit seeking a mortgage, people who might be self-employed seeking a mortgage, as an example what kind of support can you give for them? Are there any bigger challenges than normal right now in terms of securing lending for them than perhaps a couple of years ago?
Self-employed has always been a challenge. We’ve got a tonne of self-employed, probably more self-employed clients than employed clients, but it’s always a challenge because people always try and keep their taxes as low as possible to try and be as efficient as possible. We look at the various different lenders and one of the great things that have is we can actually speak directly with them.
We’ve got great relationships with all of the lenders and the business development managers of the lenders, and we’ve been doing nothing else but this for a long time and we’ve got a very experienced team here. So self-employed people are pretty straightforward in terms of the advice that we can give to them. We try and speak to people as early as possible and say, look, “This is what you need to do to put yourselves in the best possible situation”.
Speak to your accountant. Also speak to a mortgage broker, because we can tell you how lender is going to look at it for you in terms of people with adverse credit.
That’s actually where I started out. I helped people with adverse credit when I started out as a mortgage broker. So, we get the credit file as early as possible and then we can try and give people the right advice. It is vital of course to pay your bills and pay them on time.
But lots of people, for lots of different reasons, sometimes they do have the money, but they’re not very good with the money, that they can run into situations. So, we just try and find a little bit more about the client, why these situations have happened, and sometimes we can explain it to lenders, and we can get things through.
That even surprises me sometimes when you think they’re not going to have the opportunity at all. We do the agreement in principle, and it declines based on their credit score and then you go to the lender, and you try and explain it to them in a little bit more detail.
I tweeted about one I had a few weeks ago with HSBC where it was declined on the credit score, and it was a very minor blip. I didn’t think that the lender would do it, but they did in the end.
Why should I still consider going out to a mortgage broker rather than just sticking with my existing lender and going through a renewal? Why should I look at remortgaging with a different lender?
If you speak to a mortgage broker and you speak to your existing lender, you’re in a much better place to know that you’ve got the best deal. You don’t have to use a mortgage broker but at least speak to one and get their opinion, maybe even speak to two mortgage brokers.
It is worth just checking in with a couple of mortgage brokers, use their time, utilise their knowledge. With the software that we’ve got now, most times we can check within five minutes, whether there’s a better deal for you. And quite often I’ll have a conversation with someone, I’ll say, “Look, I’m only going to be able to save you a couple of hundred pounds. It’s not worth doing it just go direct to your lender and next time you come round to it, just check in with me again”.
As I say, it takes five minutes of my time. I’m more than happy to give those five minutes. You’ll have to listen to me and give you advice on the products, but I can just do a quick sense check for you and then if you want some more information, we’ll obviously have a much more in-depth conversation about it. Nothing to lose, everything to gain.
I suppose some people might feel that if, let’s say, their fixed term mortgage is coming to an end in six months’ time, some people might think, well, if I reach out to a broker now, might I incur an increased rate prematurely? Might there be any repayment charges? Might it hurt me financially in the meantime, is that fair? Also, what’s the risk if they leave it till the last minute and the fixed rate term is about to run out with an imminent standard variable rate kicking in and they come to you and say, hey, I’m a month away from this, can you help me?
We get that more than you believe. So, we reach out to people early. We have a system via Mail Chimp where we email everyone about their mortgage renewals.
Despite this I get so many people the month before just get back in contact, saying “Can we look at this now?” Often it is a case of “if we’d have looked at this six months ago, we might have been able to save you 1%.” That could be £10,000+ over even only a couple of years on some of the loans that we do.
My recommendation to everyone is to look as early as possible, make sure you are securing something that it is cancellable. So, with a lot of the lenders, they will let you book a rate six months in advance, but you can cancel it. So that’s, again, the benefit of speaking to a broker because they’ll be able to run through all of those options for you and make sure you’re not being tied into something because as I say, it’s definitely worth reviewing it.
And rates are just starting to come off a little bit. Nothing to get too excited about, but we’ve seen some more lenders reducing today. So, depending on the size of your mortgage, that could save you a couple of thousand pounds over the fixed period. So, it’s worth looking at as early as possible, but keep reviewing it and if you’ve got a good broker, that’s something that they will do for you.
So, over the past few weeks we touched on one of the bad credit examples. Are there any other anonymous case studies of interest where you’ve overcome particular challenges for clients?
Just one that springs to mind was where they were self-employed, and had a couple of streams of income. Again, where we’re very fortunate again we can run this past a business development manager in advance.
The great thing is, it’s not always a yes, sometimes we get a no. And then we are not wasting everyone’s time for six, seven weeks with a particular lender, we get a quick response and then we come back and put it with the right lender.
So, we get the job done correctly the first time. That is what we pride ourselves on. Putting the case with the right lender rather than just chucking it in and seeing what happens. The time element can be quite expensive for people, especially if they’re remortgaging.
And where the standard variable rates are now half a month on, those can be super expensive for clients.
Michael Lawlor of Integrity Wealth Management was interviewed on 6th September 2023.
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