Mortgage rates still increasing...

The UK Property Market

From mid-December 2021 to mid-September 22, the Bank of England base rate increased from 0.10% to 1.75%. The number is expected to increase again by 0.50% to 2.25%.

This period of inflation we currently find ourselves in is mostly to blame. Central banks are trying to reduce the demand for goods and services by increasing the interest rates, which, in theory, should simmer inflation.

However, GDP was flat for the three months to July 2022 – and, as a result, we have the perfect storm. With GDP being flat, the cost of everything else increasing hugely.

There could be light at the end of the tunnel, yet new figures released in August showed pressures slowly easing as inflation dropped to 9.9% in August, down from 10.1% in July.

How's the mortgage market looking?

In mortgage terms, businesses like Mesa Financial have seen a 300% increase in 5-year fixed mortgages since November 2021 and have forecasted that the increase in interest rates will slow down soon.

One big reason for the hike in interest rates was lenders could not deal with current business levels - this was partly due to the panic in the market of households trying to fix their existing mortgages.

A tactic of lenders to manage workflow is to increase interest rates so that mortgage brokers and advisors do not place business with them during that time.

What to do through a rising rate environment?

Mesa Financial deliver high-value residential mortgages in London, and believes, as a business, that during this time, it's even more imperative to stay close to your advisor and discuss your personal circumstances that allow you to run through several financial scenarios with them.

To provide more stability in the market, Mesa Financial has promised to lock in mortgages for clients up to nine months before old mortgages finish - this helps to save huge sums of money, especially amongst those households with large mortgages.

On top of this, high street banks no longer deliver a helpful, personal service, as you would find with a local advisory firm, which invites their clients to contact them as often as they wish.

Mesa Financial believes that through constant communication, together, you can mitigate the risk of rising living costs and build solid mortgage structures that work for your circumstances.

Case Study
£1.27m Remortgage on Surrey Mansion Mesa Financial's specialists are experienced in finding the right financial solutions, even in some of the most complex cases. Borrowing with complex income There is a huge myth that getting a mortgage for self-employed limited company directors is extremely difficult. At Mesa Financial, we love working with limited company directors. There are lenders in the market that are excellent at providing mortgages for these clients, and this case is a prime example. In this particular instance, our client had a complex structured income as they were the director of a development company. This means that the income through the business was erratic and came in random lumps. This causes an issue for lenders as it's extremely hard to predict the cash flow which can have an effect on mortgage serviceability. Another issue was the fact their current mortgage rate was not due to be finished for another 6 months. Due to the raising, rates are mission was to mitigate our client's risk on such a big borrowing. Challenges of being an LTD company director One of the biggest challenges LTD company directors face when looking to borrow money is the fact that they normally keep their income and dividends drawings to a minimum of what is required for essential living costs. Most lenders will then assess the mortgage based on dividends plus salary. This can be a huge detriment to LTD company directors and can cut any borrowing potential massively. At Mesa Financial we have built relationships with lenders that understand this profile of clients, which means they can assess the whole picture and lend against company profits even if the dividend drawings and income are smaller than required. The result for the client: £1.27m mortgage Interest rate – 2.19% 5 yr fixed Total LTV – 40% Interest Only Borrowing was more than 10x dividends and salary.

Case Study

£1.27m Remortgage
on Surrey Mansion

Mesa Financial's specialists are experienced in finding the right financial solutions, even in some of the most complex cases.

Borrowing with complex income

There is a huge myth that getting a mortgage for self-employed limited company directors is extremely difficult.

At Mesa Financial, we love working with limited company directors. There are lenders in the market that are excellent at providing mortgages for these clients, and this case is a prime example.

In this particular instance, our client had a complex structured income as they were the director of a development company.

This means that the income through the business was erratic and came in random lumps.

This causes an issue for lenders as it's extremely hard to predict the cash flow which can have an effect on mortgage serviceability.

Another issue was the fact their current mortgage rate was not due to be finished for another 6 months. Due to the raising, rates are mission was to mitigate our client's risk on such a big borrowing.

Challenges of being an LTD company director

One of the biggest challenges LTD company directors face when looking to borrow money is the fact that they normally keep their income and dividends drawings to a minimum of what is required for essential living costs.

Most lenders will then assess the mortgage based on dividends plus salary. This can be a huge detriment to LTD company directors and can cut any borrowing potential massively. At Mesa Financial

we have built relationships with lenders that understand this profile of clients, which means they can assess the whole picture and lend against company profits even if the dividend drawings and income are smaller than required.

The result for the client: