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The continued rise of the self-employed

The Office for National Statistics (ONS) regularly conducts analysis of the UK labour market statistics and long-term trends. Given all the news about Brexit and leadership elections, most of the press did not pick up on the ONS release in May which focused on self-employment.

The latest data revealed that the number of people who were self-employed in the first quarter of 2019 (January to March) increased by 90,000. Over the same period, the number of UK nationals aged 16 years and over who were in employment increased by 190,000. There are now a record number of people working for themselves at just over 4.9 million and more and more are classified as self-employed.

The rise of people in self-employment seems to be an unstoppable trend and this can present both an opportunity and a problem for lenders and brokers. However, self-employment is a broad term and digging into the detail can reveal more information about what this means.

A breakdown of self-employment

The classification of ‘self-employed’ includes the conventional situation of people who work for themselves or independent contractors, for example, builders and plumbers. It also includes those who work through online platforms or what is increasingly known as the “gig” economy. The gig economy has what is known as a ‘task-based’ demand for labour.

The ONS reports that self-employment increased significantly between 1980 and 1995, and again from 2000 onwards. This recent increase has been driven by the rise of the gig economy, which itself has been growing due to the technological platforms which make it easier for people to become self-employed. The technology has decoupled jobs from physical location and people can now work from anywhere at any time.

Part-time or full-time?

A larger proportion of self-employed people worked on a full-time basis (71%) than part-time (29%). Of the self-employed that worked full-time, 78% were men and 22% women. Of those that worked part-time, 60% were women and 40% men. These statistics show that women who were self-employed tended to work on a part-time basis, while men tended to work on a full-time basis. Given that more women than men are involved in providing childcare, which requires flexibility, it’s no great surprise. In general, fewer men than women engage in caring activities in the home.

Industry sectors

Self-employment in the construction sector dominated other areas of the economy. In the report, construction was the largest employer of self-employed workers (20.3%), followed by the professional, scientific and technical activities sector (12.8%), distribution (7.9%), administration and support services (7.3%), and transport and storage and health and social work (each at 6.5%).

What this means for the home buying

The accepted wisdom in the mortgage industry is that those working for themselves present a higher risk. However, is a doctor working in private practice more at risk than a middle manager in retail?

There are two things required to make a success of lending in the self-employed sector. One is having experience and a clear understanding of the needs of self-employed homeowners. This leads to the development of products built around the applicant’s specific requirement. The other is the ability to provide high quality advice and identify the right mortgage for the circumstances.

Research produced recently show that 98% of borrowers who used an adviser said they found them valuable and 95% would recommend using one to family or friends. Additional data shows that there are almost 12,000 mortgages available through advisers, compared to only 2,000 directly2. I think that those predicting that technology will replace advisers could find themselves slightly wide of the mark.

Self-employment will continue to be a growing sector. Professional services, science, technical services and construction are going to drive this boom and account for the lion’s share of the customer base. What’s required is that brokers and lenders work together to build up a detailed picture of the person looking for a loan.

We have been analysing these sectors for many years and know the importance of providing bespoke products. Some lenders have specific red lines, but we think flexibility is more important than fixed criteria. It’s why we only ask for one year’s accounts as we know that most of the analysis goes beyond what a document describing the previous 24 months of activity can provide. Manual underwriting is very important when it comes to dealing with self-employment, and knowing the applicant’s employment experience and the detail of the sector is even more important.

If the right products are coupled with excellent advice then those working for themselves will no longer face barriers to home ownership.

1 Office for National Statistics, May 2019
2 Mortgage Strategy, June 2019

Middle Aged Mortgage Concerns

If you were looking for your first home in the 1990s, the range of mortgages available would have looked radically different. Those first-time buyers are now firmly planted in middle age and have a completely different set of challenges when it comes to housing, mortgages and their families.

A study into the happiness of people across different age groups identified that people in middle age are often the most anxious and unhappy people in the population. Those aged 45 to 59 reported the lowest levels of life satisfaction, with men on average less satisfied than women1. Researchers said one possible reason for the lower well-being scores among this age group might be the burden of having to care for children and elderly parents at the same time. The changes to the economy and lifestyle trends has had a significant impact on this group in the UK.

Support for children

The ‘Bank of Mum and Dad’ has been an increasingly influential lender in the UK housing market. In 2018, it was the equivalent of a £5.7bn mortgage lender2. Research suggests that it is supporting more people than ever before. 27% of all buyers received help from friends or family in 2018 which is up from 25% the previous year. This accounted for the purchase of nearly 317,000 homes.
Estimates suggest that one in four housing transactions in the UK are dependent on support from parents who are helping their children with a deposit. However, if the squeezed middle continues to find it tough financially then this source of investment could dry up and that would be an issue for the first-time buyer market.

Retirement Expectations

Those approaching retirement and retirees have very different views about their lifestyle and expectations have certainly changed over time. Retirement plans may have once have extended to spending time at the allotment or a round of golf. However, those approaching the last third of their lives hatch plans that were unimaginable to their parents and grandparents, and there is a desire for much more. People stay healthier and more active for longer, they want to travel and even continue work in a part-time capacity. This gives them different aspirations and options. The over 65s are set to account for a quarter of the UK’s population within the next 25 years3. Currently, 6.5 million households in England are headed by someone aged 65 and over4.

Working longer

As the population ages, so will the UK workforce. A report from the government which looked at the ‘Future of an Ageing Population’ claimed that the productivity and economic success of the UK will be increasingly tied to that of older workers5. Their conclusion is that enabling people to work for longer will help society to support growing numbers of dependents, while providing individuals with the financial and mental resources needed for living longer. The report concludes that to maintain the nation’s economic wellbeing, it will be critical to support fuller and longer working lives, removing barriers to remaining in work, and enabling workers to adapt to new technologies. Those in the middle of their lives can expect to remain in work for longer in a more flexible workforce

Mortgages for the middle aged

The needs of the middle aged are very different when it comes to housing and there is a responsibility, and a large opportunity, to help this segment of the mortgage market. We have seen two distinct trends emerging.

At Saffron Building Society, our conversations with customers have shown that many want to be able to efficiently support their families financially in the early years of home ownership. However, rather than just simply gifting their children and grandchildren the money, they want to lend it with a view to being able to have the money returned years later. These funds are often needed for retirement and may also be earmarked for care costs for elderly relatives. Customers often want this to be an easy to use facility where the lender manages the process rather than having to draw up legal agreements.

The second trend we are seeing is for lending into retirement. When people have so much equity in their property they are looking to release this value to support their lifestyle, retirement or family members. This is not just a call for equity release although that is clearly one of the options. The difference is that the mortgage might work on an interest only basis with a view to downsizing your property to pay off your loan after you are semi-retired or have stopped working altogether.
We have developed specific products to help customers. For brokers, I think there will be a large and growing opportunity as it’s not uncommon for people with these needs to have complex circumstances. The expertise a broker can bring is critical and highly valued by potential customers. In the future, we expect this sector of the market to grow.

1 BBC News
2 Legal and General
4 Age UK
5 Government Office for Science

The growth in rental and HMO

Earlier this year, The Office for National Statistics produced two separate pieces of research analysing the state of UK housing. A review of the ‘Housing Affordability in England and Wales’ and ‘The UK Private Rented Sector’ provides solid evidence of recent trends and an indication of where we are heading next.


The latest research indicated that, on average, full-time workers can expect to pay just under eight times their annual workplace-based earnings to purchase a home in England and Wales1. Last year affordability stayed at similar levels in 2018 but this follows five years of decline.

Looking at the regions, 77 local authorities became less affordable over the last five years. Unsurprisingly most of these were in London, the South East and the East of England. There were no local authorities in which affordability improved.

Copeland, in the North West of England, remained the most affordable local authority with average house prices being two-and-a-half times the average workplace-based annual earnings. Kensington and Chelsea remained the least affordable with average house prices being nearly forty-five times workplace-based average annual earnings.

I found it fascinating to see that new-build properties were estimated to be significantly less affordable than existing dwellings.

Private Rented Sector

We all know there has been an increase in the private rented sector but the analysis paints a detailed picture of where we are right now. The number of households in this sector in the UK has increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million2.

Younger households are more likely to rent privately than older households. In 2017 those in the 25 to 34 years age group represented the largest group at 35%. However, households in the private rented sector have been getting older over the last ten years. The proportion of households with occupants aged 45 to 54 increased from 11% to 16%.

62% of households in the private rented sector in the UK had spent less than three years in the same accommodation and only a small proportion (4%) had been in the same residence for more than 20 years.

More people living alone

A report in The Guardian in April revealed that there has also been an increase in the number of people living alone. The number of those living on their own increased by 16% between 1997 and 2017, to 7.7 million and it is predicted that nearly 11 million people could be living alone in 20 years’ time. The new research found that the rise in single-person households was greater than the population increase of 13% and was concentrated in midlife and older age groups.
This increase in single living reveals the trends we can expect over the coming years in the mortgage market.

Houses of multiple occupation

Many landlords know that ‘homes of multiple occupation’ (HMOs) can make very good investments. HMOs have the potential to provide rental yields that cannot be achieved with standard buy-to-lets. Add this to the reduction in affordable houses and the increase in the rental market, and with more people now living alone it is easy to see why this area is bound to grow if these trends continue.
Saffron Building Society have launched their own range of HMO mortgages and we expect other providers to follow. It will pay mortgage brokers to know the requirements in detail as this can be a complicated area. HMOs offer many benefits but there is also more to think about.

The benefits of HMOs

The largest benefit of HMOs is that rental yields can be as much as three times higher4. There is less risk of ‘void periods’, which occur when the property is empty between rental periods. With multiple occupation this risk is spread across multiple tenants. This also applies to arrears; with multiple tenants, landlords are less exposed if one of them falls behind with the rent as there will be others still paying.

The drawbacks of HMOs

HMOs can be more complicated to manage. There is more legislation and there are more planning requirements than with more straightforward buy-to-lets. Some landlords find it harder to raise finance, but we have tried to simplify the process through a combination of our expertise and new product range.
Not every property can work as an HMO, so the number of suitable properties in an area might be limited compared to single lets. Capital growth can sometimes be lower, as when a property has been converted into an HMO the resale market consists almost exclusively of specialised landlords.
Finally, the up-front costs of an HMO start-up can be higher than traditional buy-to-lets, as the property often needs refurbishment to comply with additional environmental health and fire regulations.

The future of HMOs

We believe that HMOs are going to be a major growth area for the foreseeable future, and brokers will be able to benefit if they focus on this segment and are working with flexible lenders who can help.

1 Housing affordability in England and Wales , ONS
2 Housing affordability in England and Wales, ONS
3 Nearly one in seven Britons could live alone by 2039 , The Guardian
4 The Cases For And Against Investing In HMOs in 2019, , Property Investments UK

Will technology be the biggest driver of change?

In April, The Telegraph1 published an article analysing the performance of fintech companies and challenger banks. Not a day goes by without the trade and national press releasing stories explaining how technology will overthrow the large established players, and how new brands will dominate the provision of financial services. But contrary to the usual news flow, this article had a very sobering tone and illustrated that the new entrants were some way short of the radical shake-up many were predicting.

The number of people switching current accounts is closely researched and shows the propensity of people to move away from established patterns of financial management. The current account is central to many people’s finances and provides a suitable benchmark for people’s attitude and behaviour.

Inertia remains strong

The latest current account switching figures to be released showed that the number of people switching had fallen by 3% between the first quarters of 2018 and 2019. Moreover, the number is falling, and not increasing as many had forecast.

In addition, the economic reality and the costs involved in providing new services are beginning to bite. At their launch, some new entrants were promising to offer services more cheaply than the established players. However, there are now signs of repricing as the need for income grows. If customer numbers are below forecast and income is down, the shortfall has to be made up from somewhere.

This could be an indicator of just how far technology will change the industry.

Housing and Lending

What will the lenders of the future look like? Who will lead and who will lose market share? What will determine success? Is technology the critical driver of change? We have been discussing these questions for some time now at our head office in Saffron Walden, and have concluded that while technology will undoubtedly have a role in shaping the industry’s direction, other factors are more significant. Many of you may have heard this said of technology:

“We always overestimate the change that will occur in the short term, and underestimate the change that will occur in the long term.”

I think we are at a similar point in the mortgage industry. Technology will have a role to play but I think this will be felt over the long term. In the short term, it will continue to grab headlines but not have as big an impact as other factors.

Speed to Market and Choice

We believe that the ability to help people with complex requirements will be the biggest driver of change in the market. With macro-economic and political uncertainty likely to continue for the foreseeable future, launching niche products and adapting to unusual circumstances will be more important than innovation in IT. Sound judgement, backed up with experienced underwriting, will be the most valuable assets for lenders and brokers.
Recently, we’ve been adapting products in response to analysis of the prevailing conditions and the increase in requests from brokers. For example, we have made several enhancements to our self-build mortgages; we’ve developed an option for self-builders who have less money up front to start their development and we now accept applications with outline plans rather than full planning permission.

We’ve also launched a family support mortgage to help simplify inter-generational lending and opened our buy to let Mortgages to limited companies.

That’s not to say that product alone will be the critical factor. Customer experience and simplicity will be important in any part of the financial services industry. Again, those able to take a fresh look at where the pinch-points are will gain an advantage. We do not force brokers down different distribution channels for self-build, but allow them to deal with us directly to keep the process simple.

A refined understanding of customer segments, and the methods of distribution, will have a massive role to play over the next five years. Technology will be able to support this, but it won’t be the silver bullet.

Agile Methodologies

One thing we can learn from technology is successful implementation. ‘Agile software development’ refers to a group of software launch methodologies based on iterative development, where requirements and solutions evolve through collaboration between cross-functional teams. ‘Agile’ generally describes a disciplined project management process that encourages frequent inspection, adaptation, and rapid innovation.

While the industry may view the majority of building societies as solid and staid, nothing could be further from the truth. We believe the winners in lending will be those who evolve and adapt the quickest. Identifying the gaps means we can quickly react and launch new products to make sure that we’ve fully covered the breadth and depth of the market.

The Future

It’s impossible to predict who the top lenders will be in five years’ time but I think the best lenders will have certain characteristics. We believe they will be the ones that can consistently monitor changes in the market and fill the gaps with refined products which are easy to apply for.

1 Challenger banks are failing in their job to shake up the market and get people switching, The Telegraph April 2019

Saffron launch niche Houses in Multiple Occupation (HMO) mortgages

A report in The Guardian1 in April revealed that there has been an increase in the number of people living alone. The number of those living on their own increased by 16% between 1997 and 2017, to 7.7 million and it is predicted that nearly 11 million people could be living alone in twenty years’ time.

The changes to Buy-to-Let regulation have also resulted in landlords looking at how they can maximise rental yield. Houses of Multiple Occupancy have become a key area of focus. A combination of more people living alone and the increased rental yield means that this segment of the market has great potential to grow further.

At Saffron, we have introduced a series of niche HMO Mortgages designed to not only increase landlord’s income, but in the most efficient way possible creating new opportunities for intermediaries and their customers.

Our four new products form part of our expanding portfolio of specialist mortgages. The key features of the product are:

Product key features:

Small HMO BTL:
3.37% fixed until 31.10.2021, 75% LTV (2 Year)

Large HMO BTL:
3.67% fixed until 31.10.2021, 65% LTV (2 Year)

Small HMO BTL Light Refurb:
3.64% (SVR-2.0%), 3 Year Discount, 75% LTV

Large HMO BTL Light Refurb:
3.94% (SVR-1.7%), 3 Year Discount, 65% LTV

Target Market

The Small HMO products are designed for experienced Buy-to-Let investors looking to purchase their first HMO property (maximum tenants 4), add to their existing portfolio of HMO properties or re-mortgage an existing HMO mortgage. The Large HMO alternatives relate to properties designed to accommodate up to 6 tenants.

Wider options for landlords include HMO products where properties require a level of light refurbishment prior to renting the property. This may be cosmetic work, work to meet HMO regulation or light internal structural work to create additional bedrooms.

In addition to the new HMO mortgage options Saffron is introducing an improved 3.44% (SVR-2.2%) 3 Year Discount BTL Light Refurbishment product with an LTV of 75% giving even further choice to those wishing to secure an income from rental property.

These new mortgages are open to applications from private landlords or landlords operating as a limited company.

Where to go for more details

Full product details can be found here.
If you have any questions please speak with our Business Development Mangers, who will be happy to help:

Holly Andrews: 01799 582885
Katie Sharpe: 01799 582923
Gemma Reynolds: 01799 582925

Brokers can easily submit a case via our online broker portal.

1 Nearly one in seven Britons could live alone by 2039, The Guardian April 2019

2019 – Reasons to be cheerful

I speak to brokers on a regular basis and it helps me to understand the challenges which they and their clients face. Recently, I’ve noticed that some feel downbeat about the future and are wondering whether the current economic and political climate is grinding our industry to a halt. While I understand their caution and anxiety, I also think there are a number of indicators which suggest that there is no need to panic right now.

Reasons for optimism

There is a lot of interesting data available which reveals that things might not be as bad as the headlines make out. In March, the news outlined that the economy staged an unexpected fightback. Although most economists had forecast that growth was out for the count, January revealed that manufacturing and retail sales growth recovered from a weaker end to 2018.

The Office for National Statistics reported that monthly GDP growth jumped to 0.5% in January, the biggest rise since December 2016, and was a reversal of the 0.4% drop in the final month of 2018. Economists have now started to predict a stronger growth in the first quarter1. The Chief Economist at PwC had this to say about the latest figures:

“There are no signs yet that uncertainty over Brexit has pushed the economy as a whole into recession. If an orderly Brexit can be achieved, then the economy should pick up speed again in the second half of this year.”

The latest mortgage trends

So how is the mortgage industry faring as Westminster battles to reach some sort of agreement? UK Finance reported positive news at the end of 2018. In November, there were 36,200 new first-time buyer mortgages completed, 6% up on the previous year. With £6bn of new lending in the month, annual lending was up 9%2.

In January, FT Adviser3 quoted figures from the Equity Release Council which suggested that the market would reach the £4bn mark in 2018, up from £3.06bn in 2017. This made it the fifth record-breaking year in a row. According to a poll of 100 advisers in the same article, 86% expect the value of the equity release market to increase further in 2019.

It would be wrong to proclaim blindly that there is no reason to be cautious in the face of positive indicators. However, it’s also wrong to suggest that the latest political and economic uncertainty is currently grinding everything to the total standstill that many feared.


We all know what uncertainty does to business and consumer spending decisions. But is there a way through all this so that we can thrive and help to give consumers confidence in their decisions? Can brokers and mortgage providers help? Ikujiro Nonaka is a Japanese organisational theorist and in 2008 the Wall Street Journal listed him as one of the people most influential on business thinking. He famously had this to say about uncertainty:

“In an economy where the only certainty is uncertainty, the one sure source of lasting competitive advantage is knowledge.”

Advisers and mortgage providers have to be able to adapt and evolve in an environment where certainty is likely to be scarce for the foreseeable future. However, if all areas of the industry can continue to be a trusted partner to those looking to move home, build a new house or develop their portfolio of buy-to-let properties then the causes of pessimism can be reduced.

Industry planning

The change in people’s attitudes and behaviour over the last five years has been remarkable as the country adapts to austerity and Brexit. Who would have thought that people would feel comfortable taking out a mortgage which would run into their retirement? Could anyone have predicted that people would be taking out a mortgage with income from several different sources when some of those income streams were on fixed term contracts?

I think there is still room to be positive if lenders can be flexible and anticipate new trends in the market. At Saffron, we launched our ‘Lending into Retirement’ product precisely because of the growing demand from people in their 50s. We have developed a process to make sure we can analyse, create and adapt products rapidly as we move through uncertain times.

We believe that brokers can also continue to thrive as their experience and knowledge will become an invaluable commodity. People with complex income will value a broker’s ability more than ever if they are under pressure and short of time. And, to repeat the wise words of Ikujiro Nonaka, ‘the one sure source of lasting competitive advantage is knowledge.’

1 The Guardian, March 2019
2 UK Finance, UK Finance’s Mortgage Trends Update for November 2018
3 FT Adviser, Janaury 2019

Retirement Interest Only (RIO) Mortgage – Benefits, Identifying Customers and Power of Attorney (POA)

We recently launched our Retirement Interest Only mortgage (RIO) to provide more flexible borrowing options for those in retirement. Our RIO mortgage is designed for those wanting to borrow money against the value of their property. The repayment of the loan is on an interest-only basis and there is no fixed term defining when it has to be repaid. Instead, the loan is repaid when the applicant reaches a major life event such as long-term residential care or when they die.

Helping you identify customers

What do potential customers look like? We’ve provided some hypothetical examples to illustrate the types of customers we think could benefit from the RIO product:

Moving House Later In Life

Jan and Dave are in their early 70s living in a beautiful country cottage. However, they want to move to a house nearer to their local town so that they can walk to the shops and be closer to their family and friends. It would require a small mortgage to cover the costs of the move and for the extra value of the house they were looking to buy.

They both have a good defined benefit pensions which means they have a secure income. Discussions with their local bank have been unsuccessful, and they feel they are struggling to find a lender that would understand their circumstances in detail rather than just looking at their age.

These would be ideal customers for the RIO product. If your client has a solid income and is able to service the repayments, then they can borrow money on an interest-only basis and repay the capital at a much later date.

Home Improvements

The RIO mortgage is also suitable for people who need money to make improvements to their home. Kim and Clive are in their late 50’s, both retired and are mortgage free, but they don’t have the money to make alterations to their property. They would like to make some home improvements and build an extension and therefore need to borrow money to make this possible.

A RIO mortgage would enable Kim and Clive to access money tied up in their home and borrow money on an interest-only basis and repay the capital at a much later date.

Alternative Use of Capital

John and Barbara have an interest-only mortgage with a repayment vehicle in place. However, they have decided that when the repayment vehicle pays out they want to use the capital to help their children onto the property ladder and to help their parents move into more suitable accommodation. Their children are struggling to save for a deposit and their parents need more support but live many miles away.

They know that their income could support the monthly payments of a RIO mortgage and that their pension would also enable them to keep comfortably on top of future payments. In conjunction with the repayment vehicle maturing, the RIO mortgage would enable them to pay off the outstanding balance on their existing mortgage as well as to help two generations of their family.

Repay Capital on Interest Only

In some instances, borrowers with an interest-only mortgage may have insufficient capital to pay off the balance at the end of the term. Joy and Kenneth have found this can be an extremely stressful situation, and feel under pressure to move or take a high interest loan to cover the shortfall. But with the RIO mortgage, a forced move for Joy and Kenneth can be averted and it provides the capital required to cover the existing loan. Instead, the loan is repaid when Joy and Kenneth reach a major life event such as long-term residential care or when they die.

Power of Attorney (POA) – The Benefits and RIO

We currently offer two RIO products, one for customers who have a POA and one for those who don’t. The product for customers with a POA in place costs slightly less than the one for those who don’t. So, what are the benefits to your client of a POA?

Unfortunately, it is a fact of life that as we get older we become less capable, physically or mentally, increasing the risk that we are no longer able to do even the simplest tasks. The loss of mental capacity is a growing problem and people are generally unprepared for it as they think it will never happen to them – but a person is diagnosed with dementia in the UK every three minutes (Source: Alzheimer’s Society).

Mental incapacity may lead to inability to manage one’s affairs, no matter how simple or complicated, at which point someone else must take over that responsibility. Having a mortgage is probably the biggest financial commitment any of us will make, no matter what our age. Without appointing a trusted person to start looking after your financial affairs immediately in the event of mental incapacity, you risk losing your home.

General benefits of having a POA in place:

• You can decide now, while you have mental capacity, who manages your finances should you lose capacity in the future
• It’s cheaper to do it now than your loved ones having to make an application to the court*
• It’s legally binding so no-one can ignore it
• It helps your loved ones deal with your affairs more quickly
• It can avoid problems with access to your monies to pay bills, including the mortgage and ensuring such things as repairs to the property can be arranged
• It provides you and your loved ones with peace of mind
• An attorney does not have to live in the UK

* If you do not register a power of attorney before losing mental capacity, relatives have to apply to the Court of Protection to be appointed as a deputy. The process of deputyship however can be a long and expensive affair and potentially result in delays of up to 12 months, which can significantly impact an individual’s affairs. In comparison once an LPA has been registered with the Office of the Public Guardian it can be used immediately, providing instant reassurance to the donor and their relatives, the process to register a power of attorney can take up to 10 weeks.

Specific benefits relating to RIO Mortgage:

As above, the borrower can rest assured that their Attorney will be able to deal directly with Saffron to discuss the mortgage and to ensure that repayments continue for as long as are needed.

In turn it provides Saffron with someone they can contact immediately should any problems arise with the mortgage.

Should the borrower be unable to live in the property anymore e.g. move into long term care, then both they and Saffron know that the Attorney will be able to deal promptly with the sale of the property – which maybe essential to fund the care home costs.

The above does not constitute advice or a recommendation. It is simply a summary of potential benefits of having a POA in place. For more information we suggest your client discusses this with their solicitor. The link below gives a useful overview:
They can also contact the Office of the Public Guardian:
Phone: 0300 456 0300
Textphone: 0115 934 2778

There’s no place like home – particularly when it comes to a Self-Build

Anita Arch, Head of Mortgage Sales at Saffron Building Society introduces us to one ‘self-build’ family who went all out to build their dream home.

One of the most satisfying aspects of what we do at Saffron Building Society is helping people fulfil their home ownership ambitions. As a mortgage adviser you’ll come into contact with people every day with a big plan or a desire to alter the direction of their lives through the purchase of their home. With improving weather on the way and the optimum seasons for construction, there’s no better time to outline the merits of a self-build mortgage to your customers.

Below is an account of how we helped a family fulfil something that was of vital importance to their future. Matthew Switzer lives in an Essex village with his wife Sarah and two children aged three and five. He agreed to tell us about his experience of building his own house. We felt this inspiring story was worth sharing with you to illustrate a real life, self-build homeownership story and what your customers can achieve.

Originally, their plan was to move to a larger house in the village so that they could provide a garden for their children to play in. However, the price of properties with the space they wanted was out of reach, which presented a dilemma. Should they move away from their home village or review their expectations?

An alternative approach

Matthew and his wife knew of some land that they believed would be an ideal location to build on. They approached the land owner and described their plan to see if they could purchase a plot. Matthew explains:
“We wanted to see if the land owner would release a plot for us for two houses. There was no planning consent at the time so we wanted an agreement which gave us the option to buy only if any consent obtained provided exactly what we were looking for. Before we went ahead we wanted a legally binding agreement. Thankfully, the land owner agreed so we prepared an application and submitted the plans.”

The application was approved. Matthew and his wife had friends who were interested in building the other property on the plot, so they were all overjoyed that the project had been given the green light.

A new start

Matthew and his wife then set about trying to plan and finance the project. Their ideal home was a three to four bedroom house with a garden that would give their children space to play. The first step was trying to secure finance which they did through one of Saffron’s specialist self-build products.

Experience and advice

Matthew’s wife is a secondary school teacher who took a break to look after her children when they were born. She was also responsible for the project costings. Matthew explained their experience along the way:

“Self-build mortgages are different from normal ones as you have to plan in stages and draw down the money at specific points. It can be stressful because before funds are released there is a lot of information to provide, such as the costings of the plan, drawings and building regulation approval. Saffron allowed us to draw-down funds as required to suit our project once we had their underwriter’s approval. Some lenders who won’t release funds until certain stages are complete. The flexibility made it easier on the cash flow during the construction phase.

The process for payments can take seven days so the details really matter. The timing of the payments is critical, as you can’t afford to have the building stop with no money to pay for the next stage. Saffron has been really helpful in guiding us through this process and explaining everything we need to know. When problems have arisen they have always been there to help, they’ve been a life saver.”

Matthew is an air traffic controller and took on of the role of project manager of the build to save money. You would have thought that his experience with a profession carrying so much responsibility would prepare him for the task ahead.

“My job at the airport means I work shifts, and this has been most helpful as I’ve been able to spend a lot of time on site. I’ve been able to speak with the builders and tradesmen to make decisions, and if I hadn’t been there they would have had to make those decisions themselves. That’s been critical to getting exactly what we wanted rather than leaving anything to chance. I have been surprised by the number of decisions I’ve had to take each day.”


The project started in April 2017 and the planning took seven months. The groundwork began the following November with the Switzer family recently moving into their new home last Summer. Has it been worth it?
“It’s been tough and there have obviously been some stressful moments. It’s a timber framed house and the frame went up in ten days. We were so excited as our dream became a reality and we could see how close we were to the end. I’d recommend it to anyone, but being prepared and having the right people to work with have been so important.”

Matthew’s top tips for self-build

  1. Planning – you probably don’t need me to explain how vitally important this is! The project management was really tough and I didn’t realise just how much was involved, nor the importance of the order of the tasks.
  2. Experience – our friends were six weeks ahead of us on the project so it has been helpful to learn from them. You may not be that lucky with your own project but try to speak to people who have been through it.
  3. Finance – while the price of the mortgage is important, what we found vital is having someone you can work closely with. Someone very close to the project who understands what you are trying to do has been a life saver when the pressure is on.
  4. Be available – if you are not paying for a project manager you need to be available on site to make quick decisions, and ensure everything is as you expect it to be.
  5. Tradesmen – once people knew it was a self-build they were very helpful. All have been brilliant and very accommodating, so make sure when you explain the project that you assess whether those involved share your desire to get it right.
  6. Be resilient – over Christmas there were three heavy snow falls which made things difficult. We had no choice but to crack on and keep the timings on schedule.
  7. Relationships – build a relationship with your local timber and building merchant. Not only can they offer advice, but when you suddenly find yourself short on materials or the wrong thing is delivered, they will often pull out all the stops to help you out. This can avoid costly delays.
  8. Accuracy – get a quantity surveyor to look over your plans. Knowing the right amount of materials to order is vital and will help with timing and budgeting.
  9. Internal – make decisions on kitchens and bathrooms early. Although they won’t be fitted until towards the end, the location of services is often based on the fittings you plan to purchase.
  10. Involve the whole family – it’s very easy to get bogged down with the daily stresses and decisions on site. Most weekends our children came to view the house and see their bedrooms, for example. It helps them to feel part of the project and reminds everyone of the end goal.
  11. Building control – speak with your local building control officer who is there to help rather than catch you out. Our inspector has been invaluable in sharing knowledge.
  12. Costs – be prepared to accept that some things will cost more and some will cost less. It’s a balancing act and sometimes you have to reign in the luxuries a little.
  13. Energy efficiency – for us, investing in renewable energy sources and insulating the house to the highest level we could afford was really important. The fabric of the house cannot be changed easily, but changing the bathroom suite or upgrading appliances in the kitchen can all be done in the future if required. Installing solar panels or underfloor heating for example needs to be incorporated during the build not afterwards.

Matthew’s story is an inspiration to us all and what can be achieved through a self-build mortgage.

Full product details can be found here.

Brokers can easily submit a case via our online broker portal.

If you have any questions please speak with our Business Development Mangers, who will be happy to help:

Holly Andrews: 01799 582885
Katie Sharpe: 01799 582923
Gemma Reynolds: 01799 582925

Customer experience more important than ever before for brokers

Finding the right mortgage is no longer just about getting the numbers right. Customers increasingly want something more personal and tailored to them. Figures have revealed mortgage brokers enjoyed a 23% leap in fees in 2016-2017 as more and more people turn to them for advice 1. This shift towards broker-led deals is further backed up by The Council of Mortgage lenders who reported that two thirds of mortgages are now arranged through brokers2.

The shift towards a more customer-centric experience is impacting the way deals are done – purely transactional arrangements are being replaced by rapid, tailored services with the focus on the client while mortgage lenders are taking a much closer look at their relationship with brokers.

In the battle to acquire clients, it’s clear the lines are being drawn between those who offer a great experience and those who don’t. I firmly believe it’s the brokers that go the extra mile that will grow and thrive.

Why the shift towards customer experience?

There are several reasons why house buyers are gravitating towards brokers, not least of which was the financial crisis of 2007/8. The subsequent tightening of lending criteria, combined with much tougher rules introduced under the Mortgage Market Review is in part responsible for the increasing use of brokers. Clients want clarity and certainty that their application will be successful as well as an expert to steer them through complex legislation.

In addition, the consumer has become more powerful than ever before thanks to the dominance of social media and the internet. Disgruntled customers now have a voice which can be heard by thousands, or even millions of people online. If they don’t like the service they receive, they will post about it and review it for others to see. United Airlines saw $1.4 billion wiped off its share price last year after a video of a passenger being forcibly removed from a plane went viral. Businesses, who don’t focus on customer experience or have customers share their bad experiences online, whether mortgage lenders or otherwise, risk serious financial and brand damage.

First impressions count

Brokers are on the front line when it comes to mortgage applications and they have the power to demystify the process for applicants. How they behave from the start will shape the way the relationship proceeds. Successful brokers know they are there to meet the needs of their clients, explain jargon and make the whole application as smooth as possible. They also know that in order to stand out from the competition they need to differentiate themselves.

As employment patterns become increasingly complex with zero hours contracts, self-employment, and multiple jobs, a broker can act as trusted support – someone who can navigate their way through the many products on the market and identify lenders flexible enough to help.

Improving the mortgage lender/broker relationship

In order for brokers to be able to carry out their job properly they have certain expectations of the lenders they work with. And lenders, if they want to increase market share need to be mindful of the way they interact with brokers.

According to a report by KPMG3 , there are two key things that brokers need from lenders – the ease of dealing with a lender and certainty of decision.

What they don’t want is to go back and forth between client and lender in a long, drawn-out process which aggravates the client and creates a negative experience. They want straightforward advice on the information they need to make an application and they only want to have to ask the client once about it. They also want to be able to conduct deals at speed and get clarity on the lending criteria. At Saffron, we believe that flexibility is key to making this happen.

Is the future really customer-centric?

In short, yes, and there are three essential capabilities lenders and brokers need to develop to deliver improved customer experience.

  • Flexibility to make judgements on complex applications rather than relying on a robo-advice
  • The ability to quickly assess the customer’s circumstances and provide quick decisions on applications
  • A commitment to keep applicants fully informed during the process so that customers are not left frustrated during the stresses of a house move. This includes the ability to communicate in the way the applicants request – whether this is by email, phone, text, live chat, etc…

In 2019 and beyond, both mortgage lenders and brokers need to understand the expectations of the client and how they can best manage them. As customer expectations rise, so must the offerings from lenders, and brokers are an integral part of that.


Lending into retirement

In our daily conversations with brokers there is always one common talking point they raise: “what new, innovative products can we offer our customers?”

One area that Saffron has been exploring with interest is ‘Lending into Retirement’. We have now launched a ‘new’ mortgage option for an ‘older’ customer; a mortgage for those who are looking to downsize and pay their mortgage off month by month once retirement is in progress. This product area gives brokers a golden opportunity to help service the lending requirements of an *increasing number of older households.

Retirement, and our lifestyle in retirement, is changing. In the past, retirement was predetermined. People stopped working in their 60s, and began to live off their pension. This was all very predictable; the period of retirement was defined, and could be short.

Life expectancy

In 1982, average life expectancy in the UK was 72 — just seven years beyond men’s default retirement age of 65. Now, people can choose when they leave the workforce and can plan how they wish to live their lives after full time employment1. People live longer than they used to and also longer than they expect.

Last year a study showed that people in their 50s and 60s underestimate their chances of reaching 75 years of age. For example, men born in the 1940s were interviewed and only 65 per cent thought they would reach the age of 75. The actual figure achieving this age was 83 per cent. For women, their estimate was indicated that 65 per cent would reach an age of 75 but the actual figure was 89 per cent2.

Flexible working

The idea of stopping work at retirement is also changing. In a separate study, two-thirds regard work beyond state pension age as an excellent way of keeping an active mind. Just over three-quarters want to work part-time before retiring completely3. The population as a whole are increasingly looking to alter their working patterns as they get older and to continue to earn money in a flexible manner to fit in with their lifestyle. Retirement now means choice rather than limited options.

At Saffron we believe the providers of financial services need to adapt with the times. We believe in doing more to support the ambition and lifestyles of people in the modern world.

Moving home

Some people don’t think it’s possible to get a mortgage in their 50s and 60s as retirement approaches. At Saffron though, we don’t believe you should be limited by your age and we like to be flexible. Your customers may be over 40 and have seen a property they want to call home, but lenders have already said no. We say, let’s talk further and see what we can do to help.

Lending into retirement

We have just launched our ‘Lending into Retirement – Downsizing’ mortgage, a standard interest-only mortgage with a difference. As the name suggests, it is available to customers who are hoping to borrow into their retirement. This mortgage stands out, as it allows your clients to downsize and pay off their loan during their retirement.

This repayment method and a wide variety of retirement incomes will also be considered. All applications will be individually assessed by one of our expert underwriters. Our aim is to help your clients to work out what is possible.

Customers need a minimum equity in their property of £250,000 but we will consider applications below this level when alternative assets are taken into account. We may also be able to accept a lower equity limit, depending on location.

What’s important to us is to learn about your clients’ circumstances, and then we can work out what we can do to help.

Where to go for help

Full product details. Brokers can easily submit a case via our online broker portal.

If you have any questions please speak with our Business Development Mangers, who will be happy to help:

Holly Andrews: 01799 582885
Katie Sharpe: 01799 582923
Gemma Reynolds: 01799 582925

*Older households set to rise: Daily Moneyfacts Bulletin, 21 September 2018 – The number of households in England is expected to rise by 4m (17%) over the next 25 years, according to the ONS, equating to 159,000 more households a year. Those headed by someone over 65 will make up 88% of this growth, with a rise of 54% predicted by 2041, while those headed by someone under 65 will grow just 3%.

1 HR Magazine, AON, Jan 2019
2 Independent, April 2018
3 Express, May 2018

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Best Service from a Mortgage Provider - Moneyfacts Awards 2014