Some Remortgaging Complications You Should Be Ready For If They Arise
After several years in the doldrums it is only now that confidence in the UK mortgage market is starting to return. The recession and other well documented economic problems over the last three years have led to falling house prices and a severe contraction in mortgage lending, although there are signs that deals on remortgages are starting to improve.
Before 2008 it was common for banks and building societies to offer 100 per cent mortgages. This meant that first time buyers were able to get onto the property ladder without having to put down a deposit. Some lenders, including failed bank Northern Rock, even offered 125 per cent loans where borrowers could take out additional funds to furnish or redecorate their new property.
One of the main repercussions of the ‘credit crunch’ was that lenders immediately reduced the maximum ‘loan to value’ (LTV) limit on their mortgages. This meant that high LTV deals – 95 and 100 per cent mortgages – were largely abolished.
Now, several years later, many lenders will still only agree mortgages up to around 75-80 per cent of the value of a property. This has had a negative effect on first time buyers, many of whom simply can’t afford to save up the deposit needed to buy a property.
The tighter lending criteria has also meant that many people with an existing mortgage have found it very difficult to find a remortgage deal, as lenders are often still requiring a 85% loan to value application to proceed, meaning that you would need to have 15% equity built up (paid off) in the property to change to a different mortgage deal.
Many households are therefore left in a position where they have to wait for their property value to increase or for lending criteria to be relaxed in order that they can borrow a higher proportion of their home’s value. In the current economic climate, neither of these things seems likely to happen soon.
For those mortgage loan customers who currently have enough equity in their home, re-mortgaging is much easier, and there are excellent deals on the market. For those who plan to hold on to their existing mortgage provider; there should be a relatively straightforward procedure to access additional funds.
If you have a mortgage with an introductory rate such as a fixed or discount rate period that is coming to an end, you should contact your lender to see what they can offer you. Then you can compare this to the marketplace to see if other lenders can better the deal.
If you are in this position, it is wise to shop around and compare remortgage rates before you take a deal offered by your current lender. Make sure you take any costs incurred as part of a remortgage into account when deciding whether to stay put or to switch to another provider. Costs can include valuation, arrangement and legal fees.
In order to work out which is the best remortgage product for you, it is wise to take professional advice from a mortgage broker. Brokers can research the market on your behalf to compare the best remortgage deals with the products you may have been offered by your current lender. They can also calculate whether a remortgage will save you money.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
Is There Anything Homeowners Can Do as House Prices Continue to Fall Acroos the Board?
House prices are now 2.3 per cent lower than they were a year ago. That’s the latest finding from the Land Registry who also report that property prices in England and Wales fell by 1.1 per cent in March 2011 alone.
Many lenders have confirmed that house price movements have remained stagnant for the last half of 2010, and that there appears to be little sign of growth in the early part of 2011, however it would seem that this is in direct correlation with other UK markets which have also seen sluggish growth in the first quarter of this year.
The Land Registry records all completed mortgage sales in England and Wales when working out its statistics, so as a set of data they are about as reliable as numbers get. They show that house prices are still declining and have fallen consecutively each month since August 2010, with the noted exception of January this year, which showed a slight increase.
In London house prices have grown in value by a tiny 0.8% over the last year, far below even the most modest of forecasts, but this is the only region to have recorded any increase. At the other end of the spectrum, house prices in the North East of England slumped over the same period by more than 9% and in Wales by 7 %.
As consumers slowly begin to rebuild their trust in banks and building societies and with property becoming more affordable many people expected the housing market to recover more quickly.
There are signs that things are improving. According to HM Revenue and Customs, there were eleven thousand more house sales in England and Wales in March 2011 then there were in February as the number of sales rose to 66,000.
Bank of England figures also show that mortgage approvals have risen in the first quarter of 2011 and they expect the number of transactions to continue to rise over the next few months. As the Bank of England Base rate remains at its record low level of 0.5 per cent, remortgage rates remain extremely competitive and these are attracting many borrowers.
Mortgage approvals rose by 1,000 in March and just under 50,000 home loans were agreed in the month. Whilst this figure is lower than in the ‘boom’ times, it does represent an increase on the six month average and so perhaps there is cause for optimism. However, in the first quarter of 2011 there were only 174,000 house sales and this is the second lowest quarterly figure on record.
With many people unable or unwilling to move home, the availability of excellent remortgage deals has meant that people are still switching their mortgages. Many people have come to the end of their fixed or discounted rate deal over the last few months and have seen their mortgage revert to their lender’s ‘standard variable rate’ (SVR). SVRs can often be uncompetitive in relation to other mortgage deals.
In previous years, remortgage deals a popular way for asset rich but cash poor homeowners to raise finances for essential home improvements or luxuries. In these tough economic times, however, this is far less common. Re-mortgages are generally completed as people try to find new ways of saving money on their monthly mortgage costs – the biggest household expense.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
Rock Posters and Memorabilia as an Investment
A poster of the Stranglers or a pin up of Wham may have been kept by you for sentimental value. However have you considered their investment potential as the generation that values those bands get older and have money at their disposal to spend on memories. Suddenly collectors are realizing that vintage original posters are worth something.
The high priest of rock memorabilia himself, Jeff Gold, who spent his career in the music industry before ending as a executive and Warner Bros. believes all it takes is carful but wise decision combined with good taste to buy a poster and see it appreciate in value.
As in any type of investment, there is no ladder to the top or get rich quick scheme. However the traditional investment vehicles are as bad as they ever have been, with interest rates at historic lows, savings and ISA’s are actually losing money with inflation eating into cash pots, investors are on the look out for more unconventional vehicles for their cash.
Until 2008 the main investment that most people were considering was property. At dinner parties up and down the country people were discussing the money they had made in property. People came to believe that property could only go one way and that was up – the classic delusion in an asset boom. Most people now realise property is not the get rich quick certainty it was previously and so are looking for other investments.
With the bank reforms not set to kick in until 2019, and the Euro about to collapse at any minute, many people do not trust stocks, shares, bonds or even some of the banks themselves. Until stability returns to the banking sector, it’s time for some real innovative thinking for investment opportunities.
If now is the time to broaden your investment horizons then getting involved in the memorabilia market may be a way to hedge your bets. It may also be worth exploring other alternative investments like classic cars or wine or everyone’s favourite at the moment namely Gold. The problem however is that many of these have already been discovered and prices may now be tool high. Look for example at the soaring price of Gold.
Rock posters and similar products still offer the opportunity to pick up products with investment potential at very reasonable prices. The right items can reach very high prices. Beatles memorabilia for example are very sought after. A poster from their American tour was sold for well over $60,000.
It not just the memorabilia of the greats that brings in a pretty penny, a 2003 poster from the rock duo The White Stripes was sold at auction for $1600, not bad when it was bought for $15 eight years ago. That is a mere ten thousand percent profit, if that does not make investors look twice then they should not be investors.
You only have to see the popularity of memorabilia fairs at the present, or walk into any Hard Rock Caf© for that matter. But was has really fuelled growth and value are eBay and e-commerce; it has allowed more people to search and become involved with these transactions. But the number of items will never match the demand, making sure prices continue to rise healthily for owners of such items.
As with all markets there will always be ups and downs. No market appreciates in a straight line. However if this is an area that interests you then it may well be worth investing the time and effort to research and invest in it to broaden your portfolio and increase your returns. You may be able to spot bargains today that will be worth a lot in years to come.
Marcus Selmon writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
Equity Release From Your Current Property Can Give You The Cash To Finance Your Dream Home Improvements
Remortgaging has become increasingly difficult over recent years as lenders have tightened their criteria. The days of 100 per cent mortgages for first time buyers and 125 per cent deals for people looking to remortgage have long gone. This has made it tough for many people to borrow money to fund essential home improvements.
Before this time, many people were able to obtain a mortgage whereby they borrowed more than the property was worth and spent the additional funds on buying furniture for their new home, jetting off to a far destination or buying a brand new car.
Nowadays, this is not possible, but for those over 50 it is still possible to unlock some of the money in your home in order to use the funds how you wish. You could go on a well deserved holiday, but many opt to use the funds in order to undergo home improvement projects to add value to the property.
Equity Release remortgage rates are hugely variable. A standard fixed rate is 7.84% but this includes a lump sum and no inheritance guarantee. A standard flexible option is normally priced at 7.14% but includes inheritance guarantees. For the purposes of this article we have looked at Aviva’s rates, so other lenders might offer differing deals.
Once the equity is released, you can use the money to fund home improvements including a new kitchen or bathroom, installation of central heating or even an extension or conservatory. This can help you maximise the value of your property.
Once you reach retirement age, you may find that you have more time available to do the things that you’d been putting off for various reasons, such as improving your home and doing repairs on the property. A remortgage on your equity release mortgage can help you to fund such ventures.
Your property could be improved by simple jobs such as new windows and doors or new guttering or drainpipes. Home improvements do not always have to be significant or require structural alterations.
Creating new features such as carpeting or double-glazing, maybe adding a brand new front door or building a fence/brick wall would enhance the value of your home. Be mindful that home improvements don’t always have to be major structural jobs.
In the world of equity release, one thing to note is that there is a huge variation on the remortgage deals that are available. Interest rates can vary by as much as 5% from lender to lender, so it is extremely important to do your homework. If you don’t know where to start, speak to a mortgage adviser as they will have extensive knowledge of the industry and the products available to you.
Seeking specialist advice is recommended before agreeing to any equity release scheme. A financial advisor can outline the various options available to you and they may also be able to establish whether there is any council or government funding available for essential repairs or redecoration required in your home.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
No Home Improvement is Out of Financial Reach With Equity Release From a Remortgage
If you’re looking for a way to maximise the value of your home, undertaking home improvements is a great idea. However, obtaining the finance to fund refurbishment work hasn’t been as easy since the ‘credit crunch’ of 2008. Switching your home loan from one lender to another and raising additional cash has become more difficult since the well publicised problems that contributed to the global financial crisis.
You can take out a remortgage with a new lender or remain with your existing one, and with a wide range of remortgage deals available, you’ll be spoilt for choice. You are able to fix your interest rate, obtain a discount or even take payment holidays and make overpayments depending on the type of remortgage product that you obtain.
As lenders continue to loosen their lending criteria, remortgage rates have improved. However, with some many deals in the market it is wise to seek professional advice if you’re looking to remortgage. A qualified mortgage broker can scour the market to find the best deals for you as well as advising you on what sort of remortgage will be the most appropriate. With products and lending criteria changing daily, a broker can help you keep on top of the mortgage market.
For those over the age of 50, equity release mortgages are available whereby you sell a proportion of your home to the lender, so only the interest is payable and this is only due for repayment on death or sale of the property. Remortgage deals are available for these types of mortgages too, and can allow you to pay for home improvements.
If you want to maximise the value of your property, adding extra living space is often a good place to start. A loft conversion or extension can be expensive but can add a significant sum to your house value. A new bathroom or kitchen is also a good way of increasing the sale price of your home.
By making improvements to your property it makes it more attractive to potential buyers as they do not have to spend time and money on undertaking this work themselves. And, of course, it makes your home a nicer place to live in whilst you are selling.
Improving your property does not necessarily have to include significant structural or refit work. Simply by redecorating your home in neutral colours can make it much more appealing to buyers as well as making it look more modern.
As part of any remortgage deal you will have to have your home valued by a qualified surveyor. You will also have to complete a detailed remortgage application form and you are likely to have to provide documentation including identification and proof of your earnings. There may also be costs involved in the remortgage process, depending on the lender concerned.
There is sometimes some government help that can be accessed. Energy Efficiency and Housing Renovation money can sometimes be used to make your home more environmentally sound; this depends on the type of property owned. It is worth asking a specialist regarding the necessary criteria and eligibility to access this type of funding.
Remortgaging has other benefits too, such as being able to consolidate unsecured debts, and to obtain lower interest rates, but as mentioned it is a good idea to seek help from a mortgage professional before signing up for anything.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
A Bad Economy Lead to a Stack of Bad Debt – Make Sure You Control It Before It Controls You
Recent official government figures have shown that the economy in the UK continues to struggle. While the worst of the recession may be over, the recent GDP reports showed a ‘picture of continued weakness in the UK economy’. Combined with rises in fuel and energy bills, public sector spending cuts and wage freezes, many households in the UK are struggling to pay their monthly commitments.
Excluding mortgages, the average household debt in the UK is now £8.144, rising to £15,661 if households with unsecured loans are taken into account. These are the latest findings from Credit Action, a leading UK debt charity.
The charity also reports that a staggering 337 people in the UK are declared bankrupt or insolvent every day whilst 1,392 people lose their jobs daily.
In the UK, the CAB, and organisation offering debt advice deal with over eight thousand debt problems every day. According to the CAB, the average debt in the UK is increasing and more and more people are seeking advice on how to deal with their inability to afford their monthly repayments.
Much of the individual debt in the UK is on unsecured loans and credit cards. Unsecured borrowing is often charged at high interest rates as the lender has no security or ‘collateral’ for the loan. For households in this position it may be possible to consolidate unsecured debts onto their mortgage, meaning they can benefit from preferential remortgage rates rather than having to pay high interest rates.
As well as reducing the interest rate charged on the debt, remortgaging also helps streamline finances by consolidating lots of small debts into one monthly payment. Instead of dealing with a number of creditors on loans and credit cards, homeowners only have one payment to make every month. It can also significantly reduce your monthly outgoings which may be ideal if you are struggling to meet your household bills or you’ve had a wage freeze at work.
You could possibly be looking to reduce your debt repayments each month and then later increase your repayments when your financial state improves. Remortgaging in order to cover your debts will lock a wide range of varying repayment rates into one simple standard rate, invariably a lower rate too, this gives far more clarity as a borrower.
If you’re planning to remortgage it is advisable to speak to a mortgage broker or financial advisor. When consolidating debts there are lots of calculations be made to establish the most cost effective way of repaying your debts. For example, you may wish to pay the mortgage over a longer term than the debt you’re consolidating.
If your particular financial situation is rather poor, there might only be a small number of remortgage rates that you can access, however, there is no reason to lose hope, as there are some high street mortgage lenders who will specialise in offering these types of product.
Accessing finance through a remortgage deal, in order to consolidate an existing unsecured loan, in these current turbulent financial times might possibly be an ideal option for many homeowners who have found themselves stuck in the hard position of falling incomes and spiralling costs.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
When Looking For Refinance, Consumers Should Look at Remortgage Options Rather Than Debt Consolidation
There are plenty of reasons why a homeowner might want to remortgage their property; one of the most common is that the homeowner hopes to take advantage of a better rate of interest offered by a competitor. This is especially common if an individual’s current mortgage was lent to them with a fixed rate deal which is scheduled to revert to the mortgage lender’s standard variable rate, which may often be very expensive.
As well as saving money there are other compelling reasons to consider a remortgage. Many people use the equity in their homes in order to consolidate other debts such as loans or credit cards. Others look for remortgage deals when they want to move home. Releasing the equity from your current home can fund the deposit for your new house whilst allowing you to keep your existing property as an investment. You can also use the rental income to cover your mortgage repayments.
Many people consider a remortgage when their current mortgage deal is expiring, but it’s important to bear in mind that remortgaging isn’t just an option when your existing fixed or discounted rate is coming to an end.
Anyone looking for a remortgage deal should be mindful of the terms and conditions of their existing home loan, as the mortgage agreement normally carries penalties designed to penalise those hoping to switch to a new lender.
It is vital however, that before you seek to remortgage your home that you check the existing mortgage conditions, as there may sometimes be penalties imposed for redeeming the mortgage early, and remortgaging is classed as redemption in most cases.
This penalty, known as the early repayment charge, commonly applies to mortgages that are still within the introductory rate period. So a 5 year fixed mortgage may have an exit penalty on it until the 5 years have elapsed.
Another reason that people may look to remortgage rather than starting a brand new mortgage is that the associated costs with a remortgage are generally lower.
Remortgaging can often also allow homeowners to release equity that is locked up in the property. The additional funds that you borrow can then be used to take on home improvement projects such as extensions, conversions or redecorating the interiors of your property to make it more desirable to potential buyers in the future.
The released capital can also help if you have unsecured debts, as these can then be secured against the house which means that the interest rates will be lower, and so subsequently will your monthly repayments. This can help with your general financial stability.
Carrying debts with different lenders can be hard to keep up with, and it is far easier to deal with a single creditor (i.e. your mortgage lender), and far less stressful. You can be safe in the knowledge that you will have one single monthly repayment on your entire debt, and if you opt for a fixed rate you’ll know exactly what you’ll be paying back each month which offers peace of mind.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
With the Property Market as Bad as it is, Reinvesting and Renovating Your Property is the Wisest Course
The property market in the UK continues to struggle with a lack of mortgage finance, a shortage of buyers and prices continuing to fall. So, it’s no surprise that many homeowners have scrapped plans to move and have instead remortgaged in order to improve their properties. If you have space for a conservatory or extension or if you have an unused garage or loft that you could convert then you could add significant value to your home. And, a remortgage can be the perfect way of raising the cash you need to complete the work.
A Lack of Active Buyers: Many people look to move home in order to benefit from more living space. However, if you are struggling to sell your home then you could consider adding extra space to your current home. You could build an extension to add an extra bedroom or to benefit from a larger kitchen, removing the need for you to move house.
You might find that you are part of a growing trend across the UK if you chose to renovate your property. Editor of Home Building and Renovating Magazine Jason Orme said there were “in the region of 100,000 to 200,000 projects undertaken each year.”
The type of property you live in as well its location will determine what sort of renovation projects are feasible. Each project is different and the costs of the work and time taken to complete will vary wildly.
For example, a single story extension to your home would take around 12 weeks to complete, and you can expect to add another 3-5 weeks to the build time if the extension is to be on two storeys.
More and more homeowners are opting to remortgage and fund home improvements since the mortgage and property markets have become so sluggish in recent months, and while interest rates are still very low it is a very popular option indeed.
If you want to renovate or refurbish your home then a great remortgage deal could help you. A remortgage lets you release some of the equity from your home, allowing you to fund improvements. For example, converting your loft into a new bedroom can make your property more attractive to potential buyers as well as adding value.
Value is added generally by increasing the size of the property, adding rooms, converting unused space and generally improving on the property so that it is bigger, better and more beautiful than it was before. Of course, a well kept and fresh home will attract more buyers in the future.
Bear in mind that any significant refurbishment work is likely to be expensive and will turn your home into a building site for a few weeks. “Extension projects can be cheap, non-disruptive or fast, but are rarely all three,” Orme adds.
Act Soon or Lose Out: With interest rates remaining at their current record low, now could be the perfect time to find a remortgage deal. There are some great rates available in the market and remortgaging can let you raise the cash you need to undertake a building project on your home. Not only will you add extra space but you could add significant value to your property.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
Northern Rock Are Rewrting Their Rulebook and Strategy When it Comes to the Remortgage Market
More mortgage customers will be able to stay with Northern Rock when their deals expire under a change to the bank’s remortgage strategy. The bank will continue to repay their government loans faster than expectations whilst retaining borrowers rather than forcing them to look elsewhere for a remortgage deal.
The once stricken building society Northern Rock recently altered its plans over remortgage deals. The troubled lender explained that it hoped to amend its plans in order to bring down the extent of its mortgage portfolio more gradually than previously announced.
The funding to mortgage consumers will be increased over time, to try to aid the financial recovery of the UK mortgage and financial markets.
The EU rules have some part to play in Northern Rock’s plans, since one of the major changes that the lender will make will see them offering strongly competitive deals to fewer new clients who may have been offered new deals with other competitors, in a bid to prevent their books from becoming too large.
The fallout from the crisis that engulfed Northern Rock three years ago seems to continue in nee guises. The current problem caused by the immense pressure that mass remortgaging was imposing on other lenders, whose store of available credit was being diminished. Northern Rock has claimed that repaying its bailout loan was its top priority and that a vigorous mortgage redemption policy was a significant part of that goal.
According to a spokesperson from Northern Rock, the new venture has been extremely successful, and this has meant that they have been able to stay within their budgets to repay the government loan and in fact improve on their targeted repayments.
Northern Rock has recognised the degree of public anger since its 2008 bailout and has tried to demonstrate some degree of social and political conscience. The strategy, which supports both its customers and the wider economy, is designed to reflect this. It will mean slower repayments of bailout loans though the Building Society says it is still on track to meet its obligations, even with this new strategy.
A spokesman for Northern Rock said, “Reflecting this and in order to support Government policy to increase mortgage lending capacity in the market, the company confirms that it is slowing down the rate of mortgage redemptions.” The society also claimed that the decision would not affect customers in other areas of the business.
They further commented that although they anticipate a slowing of loan repayments, which they do still intend to meet the targeted amounts in terms of loan instalments. In 2010, remortgage levels dropped to the lowest figures in ten years, with figures being released month on month showing drops of a fifth on the previous month.
The decision by Northern Rock to retain more of their borrowers will come as a blow to mortgage brokers who were already facing a slow market. With fewer Northern Rock borrowers to advise, remortgage numbers may be set to fall again. With lenders still reluctant to lend and many people paying record low rates on their mortgages, it seems unlikely that there will be a sudden increase in demand for remortgages in the near future.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.
You Can’t Sell Your House No Matter What You Try But Want to Move Desperately, What’s Going On?
House prices remain volatile at present, but what are property owners thoughts on selling if they’re unable to get buyers who can finance a purchase? A leading UK building society has recently confirmed that property values have decreased by almost half a percent, and over 1 percent in the past year. Another lender reported a reduction in property prices of almost one and half percent in April compared with the previous month.
Indicating that 2011 is going to be one of the toughest years on record for the property market, the Bank of England has revealed that 60% fewer home loans were agreed in March than February. The market is stagnant, so are the vital tips that any home owner looking to sell needs to know?
The first thing to remember is that you need to ensure your property is priced in line with the area. If the buyer can get the property cheaper nearby, the likelihood is that they will opt for the cheaper property. If you feel that the property may have been valued at a higher amount than it’s actually worse, there is no harm in getting a second valuation done to confirm.
You have to be prepared to price your home realistically, ignoring what it may have been worth several years ago. However, if the price is as low as you can possibly go, you may need to employ a different strategy.
Remortgage With a View to Letting: One option is to retain your current property, remortgage it to release the equity and let it out. With the Bank of England Base rate at a historic low level, there are plenty of excellent remortgage rates available. If you have some equity in your home you can release this money and add it to the deposit you have saved for your new property.
Letting out your existing property, with the additional rental income paying the mortgage instalments, will give you the opportunity to make your move. Holding on to your precious investment will in addition give you the chance to sell up when the market makes a recovery.
One option if you are extremely desperate to sell your home, and are unable to find a buyer is to use a home buy scheme. They will buy your home in cash and there is no need to put the property on the market.
Because these companies will buy your house quickly, often there is little chance to question the deal you are getting. Without an estate agency they save themselves commission fees, but they limit your ability to get a good price. If a house needs to be sold on in a hurry due to divorce or to divide an inheritance, these are an option.
Property Auctions: Increasing numbers of people are entering their homes into a property auction. Many auction bidders are property professionals who are looking to snap up property as cheaply as they can before refurbishing and reselling. Bear in mind therefore that you may not achieve a very high price for your home if you sell it in this way.
The advice is that if you can hold onto your property for a while longer, then do so. With remortgage rates remaining low, and a sluggish recovery of property values it is far better to wait out the storm and sell your property when you can get a better price for it. Try contacting a few lenders for an agreement in principal, and this will give you an idea of whether you are eligible to apply for a remortgage.
Howard O’Gollegos writes for Just Commercial Mortgages.com the UK’s No.1 site for the latest commercial mortgage rates and commercial property finance news.