# Mortgage Solutions podcast Episode 2

https://www.youtube.com/watch?v=0PMz9sE2BQA

[00:02] [music]
[00:15] Hello and welcome to the Family Building Society podcast where we'll be discussing the growth in low and no deposit mortgages, how family's 100% deal differs to others available, and how the increase in high LTV mortgage options and their variations benefits the market.
[00:31] I'm Samantha Partington, freelance journalist for mortgage solutions and today I'm joined by two of family building society's mortgage experts and business development managers, Neil Cadwalada and Arif Car.
[00:44] The FCA's drive for mortgage reform and its keenness for lenders to innovate has given way to positive changes in lenders mortgage policies and as a consequence we've seen more low or no deposit mortgages launched.
[00:57] I wanted to come to you first Arif.
[00:59] How much of a need for
[01:02] This innovation was there?
[01:06] Oh, I mean absolutely massive, uh, huge because, um, where you got to think about sort of if you trail back, um, the main difficult, there's a few obstacles for young, for the young generation getting on a property ladder.
[01:19] And two of the main obstacles is one is the property prices and second is couple of affordability, um, is being able to save up a deposit, cuz majority lenders do want at least a 5% deposit.
[01:37] So, if you're in a situation where you're you'll be offered products where you can put very little or no deposit, no deposit at all, that will that will answer that will meet an unmet need in the market.
[01:50] Cuz if you're a couple first time buyer in your 20s and you're renting, um, and you're in London, Southeast in a major city, it will be quite difficult.
[02:00] It's probably quite difficult you saving a deposit.
[02:02] So having a high altitude.
[02:05] Product is a, it answers a very big unmet needs in the market.
[02:10] And so I think it was there was a massive need and it was good that lenders are doing it and obviously we're doing it as well.
[02:17] And what about email?
[02:18] Yeah, kind of affordability pressures.
[02:21] Uh obviously are there not only of kind of people that having to rent, pay the rent, pay the bills, student repayment of student loans which is kind of quite in focus in the press at the moment.
[02:34] Um, the FCA are trying to cajole lenders into reviewing their LTI and their kind of the multiples.
[02:47] Um, the only kind of thing that does happen in the background is as we've all seen in the last like month or so that ONS data then will go against that and it drives down affordability.
[03:00] Um, so as much as it's like giving with one hand and taking away with the other, um, because of that, that's why we need.
[03:07] These higher LTV um kind of products to get people out of rented accommodation and get them onto the property ladder.
[03:17] Uh because I mean the the the property market in the UK is the engine of the UK.
[03:20] Uh so we do need to get people purchasing and and moving home really to be honest.
[03:27] So there are already and there have been for some time 100% LTV and joint borrower sole proprietor mortgages available.
[03:36] Um but earlier this year we saw Family Building Society increase its loan to value to 100% which was great news.
[03:43] Um how does your mortgage differ to what's already out there on the market?
[03:49] I think the main thing to um immediately get out there is that there are a lot of high LTV products out there.
[03:59] Um and if I'm totally honest, the ability for somebody who applies for to actually attain that mortgage with other lenders.
[04:07] Uh, has been quite hard.
[04:11] Um, I was actually talking to another BDN this morning, and um, he mentioned that he was at a presentation where one uh lender who recently um um actually kind of uh brought out a high LTV um product, and less than 20% of the people actually applied for it were able to attain it.
[04:31] Uh, which is kind of pretty damning kind of stat, um, because uh, as has been kind of noted by a lot of the um, and I will say kind of some of the products out there, you've got Santander, you've got Skipton, um, you know kind of, and there are others out there, there are quite a few different hurdles for somebody to actually um jump through to actually attain that mortgage.
[04:55] Uh, and I think the difference with ours, especially in family building sites because we brought 100% lending, is that we've removed a lot of those hurdles.
[05:07] Um, and I always kind of say that, um, you.
[05:11] Know, not going into it in too fine.
[05:25] Um, uh, using equity within a residential uh property or property within the family family kind of um background or if they want to help um a member of uh the family without actually gifting them any money, what they can do is put it into kind of an interest paying account with family bond society and we just take a simple charge over that for 5 years.
[05:47] But all these to do with these hurdles, all they need to do is keep up repayments on the mortgage, the main applicants.
[05:53] And then after five years, all uh of the charges are actually dispelled.
[05:57] And again, it's hurdles getting into and hurdles getting out of the product that we've removed.
[06:02] And that is a massive differential to some of the other products that are on the market uh at the moment.
[06:10] A first-time buyer coming.
[06:12] To family then would find it much easier, smoother journey to getting that 100% mortgage because their parents or family members are putting that collateral up there as as you know sort of extra safety net then that makes that easier then for that firsttime buyer to sort of have a I suppose a nicer experience through the mortgage journey.
[06:37] Yeah, without doubt.
[06:37] And it it it it kind of it takes some of the stress out of it as well.
[06:40] Um and uh it makes it a cleaner contract.
[06:43] And bear in mind that again we're having a breadth of ages of people that are involved in this in this kind of process and everybody needs to understand what's happening throughout that process.
[06:54] And by having a simplified product such as this then that will actually help everybody's understanding of where they are pre and during and post the application.
[07:04] Um and it's at the end of the day it's it's designed to bring family members together to get people on that on the property ladder.
[07:12] Just a quick an uh anecdote um in one of
[07:16] The areas that I look after, it's a very...
[07:19] There's a lot of community based brokers.
[07:21] And for years I've been hearing parents gifted 50k, parents gifted 100k, parents gifted 150k cash for a newly married couple to buy a property.
[07:31] Unfortunately, um, sometimes, you know, marriages don't last.
[07:38] And as a result of that, if you, as a parent, if you paid in 100 grand, 150 grand and just giving hard cash, half of it is pretty much gone.
[07:47] Um, God forbid if, you know, a couple were to part their ways.
[07:51] So, it's a bit of a safeguard for parents as well.
[07:54] You know, we say, "Look, you know, you can give money."
[07:57] We'll we'll we'll keep it on account for you.
[07:59] We'll pay it back to we'll give back to you after five years.
[08:02] We'll put a charge on the property, you know, so there's no money involved.
[08:04] So it safeguards, it benefits parents in that way.
[08:09] Um, and you know essentially they're not, cuz don't forget it's not easy saving money these days, um, with you.
[08:17] Know cost of living and the price of everything.
[08:19] So if we're able if we're in a situation where we're able to give parents an option where they can help their kids but also get their money back at them 5 years later with some interest or remove the charge on the property after 5 years where they've not had to put hard cash in.
[08:35] I think that's a win-win for everybody.
[08:37] It's a good decent um interest rate as well.
[08:40] I was checking out the terms and conditions of the of the product and um and you know it's it's a competitive interest rate that they're actually getting.
[08:47] So, there is a financial benefit there to the parents when they get that cash back cuz these aren't small sums, are they?
[08:52] You know, they're going to be quite substantial sums if it's 20% of the um property value.
[08:58] Um so, I just wanted to move us on to the the final part of um the podcast.
[09:00] Uh I came across some interesting survey results that I wanted to get both your views on.
[09:06] Um it was a survey that came out recently from um MAB, the brokerage, and um I was quite um shocked by some of these stats actually.
[09:16] It was 73% of.
[09:19] Renters that they'd surveyed were unaware that you could get a 95% LTV mortgage.
[09:23] 80% hadn't heard of a track record mortgage and 70% were unaware of the full range of family assisted mortgages available.
[09:31] That's a really high level of, um, you know, information that they don't know about.
[09:39] Um, so Araf, if I'll stay with you for a moment, you know, there's a big disconnect there, isn't there?
[09:46] How do you think we can more effectively communicate that there are these options out there to young people?
[09:52] Those numbers are staggering and a bit scary actually.
[09:54] Um, but it's I can understand and it's typical.
[09:59] You don't really know about mortgages or how the housing market works until you want to buy one.
[10:05] So, it doesn't surprise me.
[10:10] Um and the education piece is quite important here where we need to be educating, uh, the young generation and consumers in general, uh, you know, by simply by doing.
[10:20] A podcast like this, um, or attending events, you know, we go to road shows, we do around table events, um, you know, we're on, uh, we're on, um, online, uh, we have an account on X, I believe.
[10:33] So if they follow lenders, uh, on their social media accounts, you know, they can get mortgage updates, you know, education piece.
[10:43] I think it's quite important, uh, for the young generation because what that will do, it will, it will enable them to prepare from a younger age.
[10:48] You know, if you're 18 and you know about a mortgage and you think when I'm 25, I want to buy a property.
[10:54] If you can put some money aside every month that, you know, and you'll get some interest on it every single year.
[11:00] By the time you're 25, uh, 7 years later, you know, you have, you've got a starting point, you've got a deposit.
[11:07] And a positive knock on effect of this would be there'll be less burden, less, less pressure on your parents to help you.
[11:15] Yeah, absolutely.
[11:15] And, and what did you think of those survey findings?
[11:19] It's, I suppose it just, it bears the.
[11:21] Truth of that need for kind of knowledge.
[11:26] Um, and it's it's quite um I was in a a large account uh visiting a brokerage in Bath this morning.
[11:32] Ended up um just sat at a big table with about three or four BDMs and we're talking about just happened to be talking about high TV and one of the BDMs kind of said, "Yeah, and also it's the fact that it's [snorts] people who have applied for it now feel that they can't get these high TVs because there's going to be it sounds great when it's, you know, it doesn't doesn't do what it says in the tin."
[11:53] You know, you got to jump through too many hoops and and that sort of stuff.
[11:56] And that that is kind of like a negative.
[11:59] But the thing is though is that as I said, you know, with our particular mortgage, uh the family mortgage, um it it that we've removed those those hurdles.
[12:07] But the other thing I was going to mention as well very quickly is that you've got 100% as a family mortgage.
[12:13] You've also got a what's called a joint borrower sole proprietor mortgage at 90%.
[12:17] Uh, and that is an amazing bit of kit because it's it's obvious it's you.
[12:22] Know purchase Remo as well.
[12:25] Um, and it works really well with us because we have high lending ages because what normally happens is you got a younger person uh for whatever reason wants to either purchase, remortgage, can't quite afford it income wise.
[12:38] They normally will bring on it normally is an older person uh bless that comes on to to help with the income in the background and that normally with the high street it fails because you can't they they won't take the higher age.
[12:48] With us cuz we can take that person in the background to 95 years of age using kind of differing assets and so forth uh and pensions and investment incomes.
[12:57] That means that we can give the younger person a much longer term and that's a 90% product.
[13:04] Um so you know there's there's there's more than one product out there that can help them get on the ladder as well.
[13:09] So just to clarify with that then so um the younger person if they were struggling to afford the mortgage just with the or to pass the affordability assessment with just their own income they can invite for example mom or dad or both onto that mortgage um to to.
[13:25] Support them should they need it.
[13:27] But then they don't become an owner of the property.
[13:29] Is that right?
[13:31] They just the property is just owned by the the young person and that they just sort of sit in the background to help with the...
[13:38] Yeah, that's totally it.
[13:40] And up to four applicants and four incomes.
[13:42] So if it was a joint uh case uh that they would be the main applicants and it could be uh one of their m uh mothers and father or or so forth family members in the background that would be helping them with affordability but for tax status all that type of stuff they you know that they're not the owners as such but because we can boost affordability on a 90% product.
[14:03] It's not just 100% um product that's available for them.
[14:08] And that 90% product is amazingly flexible for quite a few different scenarios.
[14:13] Um, and you know, it's not just for first-time buyers.
[14:16] Thanks very much.
[14:16] Thanks, Arif.
[14:17] Thanks, Neil.
[14:17] And thanks everybody for listening today.
[14:19] And please do join us again for our final episode where we'll be discussing the interesting and emerging.
[14:26] Trend of the bank of son and daughter.
[14:29] [music]