Lack of fee transparency for banks selling mortgages...

The lack of transparency in the mortgage industry has been somewhat of a bugbear for Enable Independent, unlike banks we keep all of our fees transparent, whereas if you go to a bank they hide their fees within a mortgage package.


Mortgage brokers by law have to disclose their charges up front, where as banks do not have to, which often gives the impression that banks’ mortgage services are free. Banks also receive incentives to sell mortgages to customers, and unlike independent advisors such as Enable Independent they are stuck with the mortgage products from their particular bank, which might not be the best for your needs. Whereas an IFA can access all of the mortgage products available on the market, making sure the mortgage fits your needs and not the other way around.

However this might all change in the future as the newly elected Lib Dem MP for Eastleigh and former mortgage broker Mike Thornton, they want banks to be made to be more transparent with their charges, which at the moment is obscured within the mortgage rate, staff salary or bonus.

LSL Property Services mortgages director David Copland says: “It is a problem that has always been prevalent in the market. Bank advisers do not show the cost of the advice through the salary or sales incentives loaded on.

“I wish it would change but it is not going to happen because it is too difficult for banks to work out their costs and say this is what we are paying the adviser for the mortgage.”

Until some real legislation comes into place it looks as though banks will get away with hiding their fees within their mortgage products. At the moment inexperienced bank staff can sell mortgages, where as an Independent Mortgage broker has to have several qualifications, and they normally have years of experience within the industry.

If you would like speak to a mortgage broker with years of experience why not come and speak to Richard at Enable, all of our fees are transparent and you will be talking to an experienced mortgage broker not a glorified sales man, and he will be able to give you a choice of mortgage products from across the market place.

In respect of residential mortgage advice Enable Independent charges a fee of 0.35% of the loan amount subject to a minimum of £500. Any payment we receive from the lender is offset against the fee charged by us. Therefore, for a loan amount of £150,000 our fee would be £525 less anything received from the lender. By charging for our services we are able to provide you with details of all lenders, including those who do not pay fees to advisers. For equity release mortgage advice we charge a fee of 1.00% of the loan amount subject to a minimum fee of £800. For adverse credit mortgage advice we charge a fee of 1.00% of the loan amount subject to a minimum fee of £800.

The Financial Conduct Authority (FCA) does not regulate some forms of buy to let mortgage.

Property investment.....what you need to know

In 2007, property investors had a roller-coaster ride.  As a result, many surviving investors gravitated towards the high-end, prime or luxury market, particularly in coveted areas with low supply such as central London. But remember real wealth management can be global and long term. Most financial portfolios will contain some property and at reputable wealth management providers like Enable our IFA’s can advise.

Another part of the world where property is at a premium is Hong Kong which remains the world’s most expensive place to buy a home, and prices have gained more than 78 per cent since early 2009 on record low mortgage rates and an under-supply of new units.

Closer to home – and in spite of the fact that properties worth more than £2m are now subject to 7 per cent stamp duty, a rise of 2 per cent from the Budget in March – the number of transactions in the UK remains largely unaffected. There were 1,518 property sales worth at least £2m in 2011, a rise of 5 per cent from 1,442 sales in 2010 and the highest number in this price bracket since records began in 1995. Purchases of properties topping the £2m mark were also 2 per cent higher in 2011 than at the peak of the housing market in 2007. In addition, the number of properties selling for more than £5m rose by 22 per cent from 128 in 2010 to 156 in 2011, providing further evidence of strength at the top end.

Rental Properties - your rental portfolio

The new from the Association of Residential Lettings Agents (ARLA) states that increased demand for rental property is sparking a renewed interest in the PRS in parts of the UK. If you are looking to invest in property achievable rent levels on residential property have risen in the last six months, according to 60 percent of ARLA member agents, and have outperformed other investment classes consistently for the past two years.

The average period for which a rental property is empty in between lets is just 2.7 weeks per year, down from an average four weeks two years ago. Ian Potter, Operations Manager at ARLA, said: “Three quarters of our members are reporting that demand for rental property is outstripping supply and, with rental returns currently at 5 percent, anyone thinking about investing a property to rent could be well-placed to consider their options in the coming months.”

“Our research shows that prudent landlords are moving quickly to expand their portfolios, with almost a quarter (23 percent) reporting that they have bought properties in the last year. The most popular regions for investment are the North West, Midlands and Central London. In contrast the Rest of London saw the fewest landlords buying property.

Reputable IFA’s like Enable of Bishop’s Stortford could help you look at your investment portfolio with a view to a buy to let mortgage even if it was appropriate to your means and plans. Not everyone is cut out to be a landlord, but at the same time a good letting agent should be able to help you navigate the market should you choose to invest.

Safe as houses...

Recent industry data seems to indicate that buy to let property investment continues to be one of the best ways to invest at the moment.

Statistics from the Halifax reveal house prices increased by 1.2 per cent in October with the average home in the UK now valued at around £163,311 and the rental market has continued to go from strength to strength as first time buyers struggle to get on the property ladder.

Almost four million homes were designated in the Private Rented Sector (PRS) in 2010, providing homes for one in six households and the Countrywide agency says rental properties now take an average of just 12.7 days to be let, with an average of five prospective tenants competing for each property.

Ray Withers, director of buy to let experts Property Frontiers, added: “With demand outstripping supply in the buy to let market, those with enough capital to invest in the growing buy to let arena are benefiting from some of the highest monthly returns on record.”

Perhaps unexpectedly the North West has enjoyed a 20 percent rise in rental rates this year alone and in Liverpool demand is outstripping supply probably due to the reduction in home ownership and the number of new homes being built (well below the Government target of 250,000 per annum). Meanwhile, demand for accommodation in and around the city centre also continues to rise as more students and young professionals enter the area.

Independent Financial Advisors like Enable of Bishop’s Stortford can help you look at your investment portfolio.

When to buy a house - Safe as Houses

In the news recently the National Housing Federation’s independently-commissioned Oxford Economics Report predicts:  Home ownership in England will slump to just 63.8% over the next decade - the lowest level since the mid 1980s – locking an entire generation out of the housing market.  According to a new study,  huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline in recent years and the downward trend will continue for the foreseeable future.

The Federation warned the housing market will be plunged into an unprecedented crisis as it forecast steep rises in the private rental sector, huge social housing waiting lists, and a house price boom – all fueled by a chronic under-supply of homes. 

According to Oxford Economics, who were commissioned to produce the forecasts: 
In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021.

In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021.

The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%.

The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016,

As investors what should you do? If you own a property hold on to it if you have the capital maybe buy to let is not such a bad idea again? Enable IFA's in Bishop Stortford can help you talk through what to do.