Rock to revive mortgage lending
Posted February 26th by Nigel
Northern Rock is to start lending with extra cash from the taxpayer, it has been announced.
It is part of government plans to boost lending generally, and reverses its earlier policy of winding down the bank's loans.
The Newcastle-based bank will now embark on a radical change in its lending policy. Instead of running down its mortgage book, it aims to lend an extra £5bn in new mortgages this year and up to £9bn from 2010.
To help fund this, the Treasury will provide an extra £10bn in taxpayer’s money to the bank.
"This is good news for customers of Northern Rock and for consumers generally, who will benefit from an increase in mortgage availability.
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Making sense of mortgages
Posted February 19th by Nigel
At mortgages4me, we understand that for many first time buyers and those unfamiliar with the purchase or remortgage process, it can be difficult to understand what the technical terms related to mortgages actually mean. Whilst we always recommend that you take your mortgage advice from an independent, qualified professional, we also believe that you should arm yourself with as much knowledge as possible; this means that you will be able to take a more active part in the mortgage acquisition process.
The brokers at mortgages4me have access to all the mortgage products on the market and many that you won’t find on the high street, which means that there is a huge and potentially bewildering choice. We are happy to guide you through the whole process and explain anything you don’t understand. For starters, you could take a look at our mortgage glossary.
If you would like to discuss your mortgage requirements contact us today; we’re happy to help.
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Building societies are opposed to more rate cuts
Posted February 12th 2009 by Nigel
The Building Societies Association (BSA) has called on the Bank of England not to cut interest rates this week.
The Bank Rate has been cut four times since October 2008. The reductions saw interest rates fall from 5.75% prior to the run on Northern Rock in 2007 to 1.5% most recently. As a result, incomes from savings have dropped by almost 75%.
Another reduction in interest rates now will discourage people yet more from saving. In turn, this will further disrupt new money being invested into the mortgage market, which is already significantly short of lending potential.
The Council of Mortgage Lenders (CML) recently advised borrowers who have seen their interest payments slashed to take advantage of this situation, by repaying their mortgages at their old, higher, rates and using the extra payments to pay off their mortgages early.
The Bank of England's Monetary Policy Committee (MPC) meets on Thursday amid widespread expectations of a further reduction in the cost of borrowing.
Mortgage approvals on the increase
Posted February 12th 2009 by Nigel
The number of new mortgages approved for home buyers picked up slightly in December, says the Bank of England.
There were 31,000 mortgage approvals, up from 27,000 in November, but still the second lowest figure on record.
Activity in the housing market remains very depressed. As a result, the amount of mortgage lending in December was low, said a spokesman from the Building Societies Association (BSA). Over the whole of 2008, lending slumped by 58%. There were just 519,000 home loans approved, which is in stark contrast to the 1,250,000 in 2007.
House prices are widely expected to fall further and unemployment is rising, so potential buyers remain cautious and are staying out of the market as they wait for it to stabilise.
Buying a house
Posted February 6th 2009 by Nigel
It has been said that buying and moving to a new home can be one of the most stressful events you can undertake. There is a lot to organise, it’s normal to experience delays and, unfortunately, things can go wrong.
However, there are things you could do to try and make the process easier. Take a look through the mortgages4me property buying advice below. We hope it helps!
How Much Can You Borrow?
If you are hoping to buy a house by yourself, lenders commonly offer around three to four times your income. For example, if you earn £30,000 per annum, you may be able to obtain a loan for around £90,000 to £120,000. If you are borrowing jointly, for example with your partner, offers of 2.75 to three times joint income are not uncommon. Some lenders may offer larger loan amounts if they believe that you have the disposable income to cover the repayments. To get a rough idea of how much you may be able to borrow, take a look at the mortgages4me calculator.
Deposit
It is usually best if you have a deposit, as lenders sometimes offer a lower interest rate if you are borrowing less than 100% of the property’s price. The proportion of the house price that you require as a mortgage is known as a loan to value (LTV). For example, a house price is £100,000 and you have a deposit of £10,000; you therefore require a mortgage of £90,000 and the LTV is 90%.
As a general guide, it is wise to have at least 10% of the price available as a deposit, but ideally around 25% is best. Due to the current financial climate, lenders are often less willing to grant loans on properties where the LTV is high.
Finding a Property
Contact the estate agents in the area in which you are looking to buy. Describe what you are looking for and ask them to send you information regarding suitable properties that become available.
Try and arrange to see as many properties as you can in daylight. If you view a property you really like, it is wise to return for further viewings and you could even take a friend or relative with you for a second opinion.
The internet is also a useful research tool. Most estate agents have a website and it is simple to view suitable properties online.
Making an Offer
To decide how much to offer, you should consider how long the property has been on the market and whether it will need any work. If it has been on the market for some time, it could be overpriced – perhaps you could check other, similar properties in the area for comparison. If it requires work, how much of your own money will you have to spend? If your offer is accepted, you should ask for the property to be taken off the market. This can help to prevent gazumping.
Arrange Your Mortgage
When choosing a mortgage, you can either find one yourself or you can use an independent mortgage adviser, such as mortgages4me; this can make the process of buying a house a whole lot easier and a lot less stressful.
Perhaps most importantly, an independent broker will search the entire market place to find the mortgage deal that suits you best. In addition to this valuable service, the advisers at mortgages4me have developed excellent relationships with many lenders and have access to products that are not available on the high street. This gives you even more choice and flexibility, which you will stand you in good stead when making such a large financial commitment.
Once the application is complete and has been submitted, the lender will carry out credit checks and then tell you if your application has been accepted in principle. (Please note that acceptance in principal does not constitute a formal offer.)
You must then appoint a solicitor or conveyancer to look after the legal side of things. If you cannot find one yourself, mortgages4me can recommend one from our extensive list of professional contacts.
Arrange a Survey
The property will need to be valued in order to establish that it is worth the asking price before your lender agrees the loan. There will be a cost for this survey. If the lender is happy with the results, you should receive a formal offer within about two weeks.
However, this is only a basic valuation survey and is not usually enough if you want to find out of any potential problems with the property. A homebuyer’s report or full structural survey will help give a clearer picture on any problems you could face in the future in regards to the property. These types of survey are more expensive, but are certainly useful and provide peace of mind.
The Contract
As long as your solicitor hasn’t uncovered any legal problems, he or she will present you with a contract; the seller also has a contract they must sign. Once both contracts have been signed, they will be exchanged. You then have to pay the deposit to your solicitor, which you would lose if you were to subsequently pull out.
Completion can take around four weeks. The funds are passed on to the seller and you are given the keys.
What Could Go Wrong?
Unfortunately, there are a few things that could go wrong. For starters, your offer could be refused. Only proceed with a higher offer if you can really afford it; do not make an emotional decision.
It is possible that you could be gazumped. This can be a very annoying and testing time.
Another possible problem is if the seller backs out, which can happen at any time until the contracts are exchanged. This situation can be reversed and you can back out after exchanging; however, as stated above, this will result in you losing your deposit.
We hope this information has been useful to you. Please note that there are many factors to consider when considering a property purchase and this article cannot possibly cover all of them. We strongly advise that you take advice from a fully qualified, independent financial adviser and the team at mortgages4me is happy to help. If you would like to discuss any of the points raised in above, please contact us today.
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If you would like more information on the article above or would like to speak with one of the team call us free on 0800 652 5636.
The views given in this blog are those of mortgages4me, a trading name of Smith & Pinching Financial Services Ltd, which is authorised and regulated by the Financial Services Authority. These views are market and economic views and should not be interpreted as giving advice. Whilst every care has been taken in producing this blog, Smith & Pinching Financial Services Ltd will not be held responsible for any inaccuracies, omissions or misquotations. Registered office: 295 Aylsham Road, Norwich, Norfolk, NR3 2RY.