When securing a mortgage, it pays to start early

Written by Andrew Johnson, Associate

Sometimes it pays to make decisions at the last minute. 

Perhaps you're still waiting to finalise your summer holiday, safe in the knowledge that a little Mediterranean sun can be had at a fraction of the price if you have the nerve to book a few weeks before leaving.

The same can't be said for your mortgage. I'm currently advising two clients with differing approaches to the purchase of their next home. For one, I negotiated their fourth mortgage offer in six months, each of which we revisited as inflation eased and lenders cut prices. The second put a property under offer and only then called me to arrange their mortgage. I secured him a great deal, but time was tight and it was by no means guaranteed.

The high street lenders have called a temporary truce in their price war and we're unlikely to see meaningful reductions in mortgage rates until a cut to the Bank of England base rate comes into view. Investors put the odds of a first cut in June at about 50% and a lot depends on the degree to which inflation continues to fall.

Rates are steady, but there is still a lot to consider. Engaging with a broker several months before a purchase can have a transformative effect on your client’s ability to secure the home they want. This is particularly the case in today's market; lenders are eager to grow their market share and, when they can't cut rates, they introduce new products or tweak their criteria.

That can include longer terms. Typical 25-year terms keep moving out, and some deals are available at 40 years, which can be a good option for borrowers that are eager to keep monthly payments low. Some lenders are happy to offer deals for which borrowers only need to service the interest, which can radically reduce monthly payments. This isn’t an option I recommend to everybody – clients need a strategy to repay the capital – but these are conversations worth having early so buyers know exactly how much they have to spend and what it’s going to cost them.

After four volatile years in the property market, the 2024 spring trading season has made a busy start. Activity levels are approaching long term norms and an April 11th survey of lenders by the Bank of England suggests that demand for mortgages will keep picking up right through the summer.

If you have clients thinking about their property purchase or remortgage, perhaps now is the time to help them steal a march on the competition. Get in touch with our mortgage specialists via mortgages@knightfrankfinance.com