Gain insights into the current mortgage market with Ephraim Angus from Aspire Financial Services and understand the importance of having the right insurance policies in place. This interview offers useful information for first-time buyers, landlords, and those seeking commercial financing.
Devon Business: Thank you for this opportunity to gain insights into mortgaging and remortgaging in the Southwest. What led you to Aspire?
Ephraim Angus: I worked in London for several years in IT sales, focusing on technology and software. However, when we moved to the Southwest, I decided it was time for a career change, so I transitioned into the mortgage space. Given that the industry is highly regulated, it made sense for me to be part of an established network while still working as a sole trader. I joined Aspire in March 2020, just two weeks before the lockdown began. At that time, none of us knew what lay ahead.
Devon Business: Indeed. The mortgage industry has faced huge challenges over the past few years. Where do you see it going today?
Ephraim Angus: That’s the million-pound question, isn’t it? The Bank of England controls the interest rates and they put them up to reduce inflation. The rates do tend to come down with increased stability. Politics can have a huge knock-on effect, for example, the disastrous mini-budget that had a drastic effect on borrowers. However, there are now indications things will improve, especially with a unified approach from a new government.
There are many factors at play, including supply and demand. There’s a shortage of rented accommodation as landlords have felt squeezed out through tenancy reforms. So that needs to be addressed. It will certainly help if more houses are built. When there are more buyers than houses, prices do come down. However, developers tend to build just enough to keep people buying at top prices. Builders also face the challenges of gaining planning permission, however, these may be simplified under a new government, which would be a positive move.
Devon Business: When determining mortgage rates and borrowing capacity, what factors are considered more heavily: the equity in the property or the homeowner’s income?
Ephraim Angus: The equity in the property determines the loan-to-value (LTV) ratio. LTV dictates the rates, and different lenders have different rates. Most lenders use a fairly consistent affordability calculator. Generally, the borrowing capacity is about 4.5 times the combined income. If someone wants to borrow five times their income, some lenders will consider that under certain conditions. In rare cases, you can get up to 5.5 or even 6 times the income, typically available to high earners (over £100,000 combined income) or certain professions like accountants and barristers. There’s also a specialist provider catering to blue light individuals (e.g., police) offering up to 5.5 times the income. So there are many options out there.
Devon Business: Who are your main clients? Is it new people on the property ladder or remortgages?
Ephraim Angus: I predominantly work with first-time buyers, landlords, and HMO landlords. We would like to do more remortgages. Some homeowners tend to stick to their existing lender and miss out on getting a far better deal. If you just go to your existing lender and pick what’s available, who’s to say you’re getting the right one? By going to an independent broker, they can provide a full assessment with different options. This can certainly help to save money in the long run. Even £50 a month adds up over the years. If we can save you £100 or £200 a month, switching to another lender may help you shorten your mortgage term by a few years.
Devon Business: Are mortgages usually fixed for five years?
Ephraim Angus: The term could be two, three, five, or even ten years. There are also lifetime fixes available, so it can be quite difficult to decide on the right one. This is why it’s beneficial to consult with a broker to get expert advice since they have the necessary knowledge. When you hire a broker, you provide them with all your personal and financial details. They will then search the market for the most suitable deal and come back with a recommendation tailored to your circumstances and goals. This ensures you get the best possible option.
Devon Business: Do you have an example of a client that you’ve helped recently with a new mortgage?
Ephraim Angus: I recently helped a first-time buyer whose mortgage is about to complete in two weeks. They encountered a credit issue after missing a direct debit payment during a bank switch, leading to a two-month arrears mark on their credit file. Despite this, we found a sympathetic lender who overrode their policy and secured a favourable rate for the clients just before a rate increase. This case highlights the value of working with a broker. We can advocate for clients, leverage industry contacts, and navigate strict systems to secure better rates, often saving clients money.
Devon Business: What about an HMO purchase? / buy-to-let mortgages?
Ephraim Angus: Yes, one of my most recent HMOs was for a landlord purchasing their second property. There were complications with the insurance because the property was in a coal mining area, requiring specialist coverage. Additionally, there were no building regulations documents available, which also necessitated specialised insurance to complete the purchase. Despite these challenges, we successfully navigated the process, and the client was very happy with the outcome.
Regarding buy-to-let mortgages, landlords typically need to put down a 25% deposit. Unlike personal mortgages, where your income is assessed, buy-to-let mortgages primarily consider rental income. However, this became a nightmare for both landlords and renters two years ago when the rates increased. Many landlords with 75% mortgages found that their rental income was no longer sufficient to cover the higher rates. As landlords’ mortgages came up for refinancing, rates jumped from around 2% to as high as 5%, 6%, or even 8%. Some landlords had to inform their tenants of substantial rent increases to cover these new costs. This forced many to raise rents, contributing to the squeeze in the rental market. Others were forced to sell their properties. Having a mortgage broker can therefore be a game changer for private landlords as we examine various scenarios and guard against these types of problems.
Devon Business: Remortgaging seems to be really popular these days?
Ephraim Angus: Yes, one of my recent remortgage clients was a single homeowner who tended to remortgage every two years. Each time she remortgaged, she reduced the mortgage term. For example, her original mortgage term was 30 years, but after her first remortgage, she cut it down to 28 years. This approach allowed her to keep her monthly payments the same while shortening the life of her mortgage and benefiting from better rates as her debt decreased.
When her last remortgage came up, it was just before the interest rates started to rise significantly. I advised her to lock in a rate for five years. She was initially unsure, but six months later, she thanked me for the advice as rates had indeed gone up, and she was glad she locked in the lower rate. Sometimes clients also remortgage for equity capital raising to fund home improvements such as a new bathroom, kitchen, or boiler, making their property more energy efficient. They often ask if they can remortgage to access additional funds for these upgrades, which can add value to their property.
Devon Business: What about insurance?
Ephraim Angus: I offer a range of insurance policies, often clustered under the category of protection. These include life insurance, income protection, critical illness cover, and accident cover, each catering to different needs. Not all insurance companies are the same, so I tailor my advice to each client. When I sit down with a client for a mortgage, I also advise them on how to stay in their property regardless of life’s uncertainties.
For example, good income protection or critical illness policies can provide payouts if you’re unable to work due to illness or injury. Let’s say you have a 20-year mortgage and your monthly expenses, including the mortgage, utilities, and food, are £2000. If you earn more than this, you can insure up to a certain limit, usually about 60% of your gross income, which is paid tax-free. For instance, if you and your partner have a combined income of £4000 a month and need £2000 to cover your bills, you could get a policy that provides this amount if you’re incapacitated.
Depending on your employment contract, you might get full pay for three months and then nothing. An income protection policy would kick in after those three months, giving you the £2000 a month to cover your expenses. This way, if you’re off work for six months, your employer would cover the first three months, and then your insurance would take over, ensuring you’re not left with just statutory sick pay, which is typically insufficient to cover living expenses.
Devon Business: So you handle both mortgages and insurance. What do the other members of your group do?
Ephraim Angus: Within our firm, we have a variety of specialisations. One of my colleagues focuses on wills and estate planning. He markets these services primarily but also handles mortgages and insurance as needed for his clients. Another colleague manages a team of advisors, focusing mainly on mortgages while his team handles the insurance aspect.
Our company operates over a wide area and is part of a larger mortgage club. This club provides compliance support, guidance, training, and more. They support our activities as directly authorised individuals and cover services ranging from wealth management and IFAs (Independent Financial Advisors) to various types of insurance, including health and private medical insurance.
Devon Business: Tell us a bit about your personal life.
Ephraim Angus: My wife Faith and I have two dogs named Chewy and Pepper. I’m also a motorbike enthusiast and part of the Somerset Advanced Riders. I’m a member of the Somerset Chamber of Commerce and the Federation of Small Businesses. They host various events and networking activities. I’m also involved with Round Table, a national and international charity that raise funds for charity. It’s a rewarding experience.
Devon Business: So you’re a biker. What bike do you have?
Ephraim Angus: I have an old Honda VTR Firestorm, a 1000cc sports bike, although it would probably be classed as a sports tourer these days. It’s very loud and makes a lot of noise!
Devon Business: To end off, what makes Aspire stand out?
Ephraim Angus: For me, I’ve always been client-focused. When I bought my first property, I didn’t have a clue what I was doing. I found a broker, and we just went with the first finance option we found without fully understanding the long-term costs. When we got our first annual statement, I was horrified to see how much we paid in interest compared to capital reduction. So, when I talk to clients, especially first-time buyers, I try to educate them on the right strategy.
Many first-time buyers want to purchase a large, expensive house right away. I advise them to consider buying a smaller property as their first home and use it as financial leverage. It’s important to think of the first property as both a home and an investment. By purchasing a more affordable property, they can build equity and be in a stronger financial position when they move to their second home.
I emphasise that they don’t need to buy a tiny, uncomfortable home, but they should balance their decisions between their head and heart. Often, people buy purely based on emotion. I give them an alternate perspective, showing them the potential financial benefits of a more strategic approach. This way, they can make an informed decision and avoid the shock I experienced. Ultimately, if they still choose to buy the biggest property they can afford, at least they do so fully aware of the implications. My goal is to provide nurturing, hand-holding, and perspective so they are prepared for future property purchases and understand the financial landscape.
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