Is it harder to get self-employed mortgages? Or should you rely on Robo-advice? Not exactly a T-800 (for all you Terminator fans).
Robo-advice: why it seems harder to get self-employed mortgages
With the rate debate now firmly off the agenda (looking at money markets, no-one is expecting any changes to the Base Rate for the foreseeable future.) We can focus on what is becoming a wide ranging debate in our industry, as well as most others – the role of technology.
In our world, the term ‘Robo-advice’ is a bit of a fallacy. The FCA is yet to authorise a firm who offers truly automated advice. What happens in practice is that ‘online’ brokers really have a very slick front end, but are a pseudo telephone advice set up.
One such firm, Trussle, put out a press release last week that stated. “Self-employed least likely group to get a mortgage”. Their figures show that only 76% of Self Employed people that apply with them get a mortgage offer. I found that statistic quite shocking, as if you apply to them you only have a 3 in 4 chance of getting a mortgage offer if you are self employed.
So is it really harder to get self-employed mortgages?
If you were wondering, nearly 94% of our clients get a mortgage offer and 88% of mortgages we applied for last year, completed. We deal with a huge number of self employed mortgages clients and there is no notable difference in their chance of getting a mortgage with us. Our experience is that it is not necessarily harder to get self-employed mortgages if you receive good advice.
This should be no surprise as any online brokerage is set up to deal with huge volumes of simple applications. Whereas our firms is set up to deal with lower volumes of mortgage complex/larger cases, otherwise known as the human touch!
I could write volumes about the difficulties of Robo-advice in terms of mortgages. (Such as truly giving advice as opposed to simply facilitating transactions. And even more crucially, offering advice to protect the clients and their families.) But for now, it is suffice to say that for a good while yet, if you have a larger or more complex requirements, humans are still the best option for now. This also goes to show why we are the most highly rated mortgage broker in London according to Google. If you don’t believe me, please do check.
As highlighted last week, all money market rates have nudged up since the Bank of England held rates on 30th Jan. Which you can see on the chart above.
It very much looks like we have passed the lowest point in this rate cycle so it would be prudent to secure a product ASAP if you are able to. We have already seen Halifax withdraw their market leading variable rate, so expect more lenders to follow suit in coming weeks.
Last week we saw:
3 Month Sterling Libor – up 0.063% to 0.756%.
2 Year SWAP rates – up 0.104% to 0.718%.
5 Year SWAP rates – up 0.098% to 0.730%.
These rates are relevant as most Banks buy in money based on the above markets. Libor often funds Variable rates and SWAP rates often fund Fixed Rates. Lenders will then add a margin to the above to reflect their risk and profit objectives.
2 Year Variable from 1.24%
2 Year Fixed Rates from 1.14%
5 Year Fixed Rates from 1.44%
BTL Rates from 1.19%
The actual rate you will be offered will be dependent on your personal circumstance and deposit level. Please speak to one of our advisers so that they can guide you through this process
Source: Twenty7Tec Feb 2020