Archive for the ‘Mortgage Advice’ Category

How To Get The Best Remortgage Deals

Friday, November 21st, 2014

fb - How To Get The Best Remortgage DealsIn the next twelve months an increase in the base rate of interest is highly likely. Rising house prices caused by the government’s Help To Buy scheme have reached levels that are causing alarm at the Bank of England and a rate rise is the only measure that can slow them down.

Home owners may be considering remortgaging in the coming year before rates rise, and this article is a quick guide to help borrowers think about how to get the best deals they can.

One motivation for getting a new mortgage is for locking in a low fixed rate for the next five years. The best deals twelve months ago were at an astonishing low of 2.5 percent.

Deals like that are unlikely to come round again soon as interest rates eventually start to rise, but offers of around 3 percent are currently available.

Loan to Value

The rate you are offered will be based on the degree of risk your home loan presents to the lender, amongst other criteria.

Lenders calculate the degree of risk based on the size of the loan compared to the size of the mortgage.

If you are buying a £100,000 property and you can cover the first £50,000 yourself or with help from family members, you will need to borrow £50,000.

This means your Loan To Value (LTV) ratio is 0.5, and the closer the LTV is to one, the higher the risk and the rate of interest will rise accordingly.

Everything you can possibly do to bring the LTV down will help as it will make you more attractive to lenders, save you money in the long run, and put you on a much more stable financial footing in your new home.

The New Lending World

If you haven’t been to see a mortgage advisor in a few years, you’ll notice a big difference as the rules surrounding borrowing have become far stricter since April this year.

The horror stories of irresponsible lending before the 2008 crash, combined with the government’s massive help to home owners with Help To Buy have led regulators to impose stringent new borrowing rules.

Expect your mortgage advisor to want to see your entire financial history, bank records, confirmation of employment, savings, credit reports and more.

Pay off any outstanding debt, even if it’s just £50 on a store card, any black marks on your credit score could be potentially fatal when it comes to securing a lending decision.

Rates

In Britain there are, in general, three types of mortgage deal commonly available, and these are fixed rate, variable rate and tracker mortgages.

A fixed rate mortgage offers borrowers a degree of security, it means that if the base rate of interest rises in the future, the lender will continue to offer the rate that was set and that offer will typically run for five years. It is a way of future-proofing your mortgage against sudden and unexpected mortgage rises and typically most people choose them.

Variable rates have been popular in the last five years. Whereas fixed rates are ‘fixed’ at higher levels to enable the lender to get as much out of the deal as the borrower (arguably more), a variable rate simply responds to the Bank of England’s base rate of interest.

When the base rate is low your mortgage is cheap, and when the rate is high, it’s more expensive. Rates have been half of one percent for six years but this is likely to end soon, leaving many variable rate borrowers seeking fixed rates.

A tracker mortgage is similar to a variable rate mortgage, as it follows the base rate set by the Bank of England but at agreed set margin (perhaps one percent), meaning that a one percent rise in the base rate will not result in a three or four percent rise from your high street lender.

Financial Planning

If you’ve already got a mortgage and you are thinking about protecting your wealth against future changes in the economy it is important to see this as part of your long term financial strategy.

If you are unsure about what next steps to take with your remortgage or would like to speak to a financial advisor.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

 

 

 

 

5 Estate Agent Tricks That Can Add Value To Your Home

Friday, November 14th, 2014

fb 5 Estate Agent Tricks That Can Add Value To Your HomeA house can be a combination of a financial investment and a family home. It can be a store of personal wealth where adults organize the family finance and children get their first lessons in the importance of having savings. Buying and selling a home can have major financial implications as well as emotional ones, so it can be a good time to get some professional advice from a financial adviser. If you’re selling a home, it can also be worth investing a little time and possibly some money on your home to achieve the best possible price. Here are some suggestions to help you.

Create curb appeal

The first impression of a property is usually from the outside so make sure viewers are impressed. If your garden is a major selling point then it may be worth speaking to a professional gardener for tips on how to make it look its absolute best. For example some strategically-placed lighting could highlight its best features to visitors arriving for evening viewings. Even if you don’t have a garden, you will have an entrance door and some quality fittings (number or name, letter box, door knocker…) can make a huge difference to its appearance.

Make sure viewers are comfortable when they arrive

Viewers aren’t exactly guests but they are people you want to stay in your home for a while and be in a mood to appreciate it. Make sure that there is somewhere obvious and convenient for them to put their coats and consider having some extra pairs of slippers to offer them (which might also be good for protecting your floors). Be prepared to offer tea or coffee and some quality biscuits and serve them in attractive cups or mugs.

Remember allergy sufferers

Common allergies include nuts, pet hair and pollen. It’s therefore worth taking steps to remove any of these before viewers arrive. While fresh flowers can look very attractive and some viewers will love them, they are unlikely to win you any brownie points from people with hay fever. Green plants and/or fresh fruit, however, are more allergy-safe and also attractive choices. Remember to put them in containers which match with the overall décor of the room.

Make sure your home passes the sniff test

Any potentially offensive odours need to be properly banished. With a view to this, if anyone is in the habit of smoking in the house, then they need to stop doing so until the house is sold and the house will need to be thoroughly aired. If there are young children or pets that may have accidents then you need to have something on hand to deal with them quickly. If you have a cat who uses a litter tray then it may be worth upgrading to an enclosed one in case your cat chooses to use it when you have viewers. Empty it promptly outside of viewing times and keep pet cages scrupulously clean. While it may be tempting to try to use scent to enhance the atmosphere of your home, it’s worth remembering that individuals react to scents differently. You therefore run the risk of accidentally fragrancing your home with a scent that you love but your viewer hates. It’s also worth remembering that pregnant women have an enhanced sense of smell and so even light scents may seem overpowering to them.

See your walls and shelves as others may see them

Remove anything which could be remotely controversial, such as an object showing affiliation to a sports team or political organization. Take a long, hard look at everything else and decide if it is in keeping with the image of your house that you want to give. A studio portrait of your children could be an attractive feature in a family home but basic family snapshots are probably better moved out of sight, along with children’s paintings and home-made gifts etc.

Making The Most Of The Recovery

Friday, May 9th, 2014

It was announced a few weeks ago that wages rose faster than inflation; a statement that coincided with the news that house prices increased on average by 1.9 percent across the country and unemployment continued to fall.

12 May Blog Promo ImageAll of this is welcome news and long overdue; as a nation we’ve struggled through six long difficult years since 2008 and whilst many are still cautious about the recovery, the signs are that it will continue.

The economic crisis in 2008 was created by governments and their policies, and it was created by banks and the companies that audited them. But it was also created by us. The great crash of 2008 was caused by a decade of spending and borrowing on the part of the general public that probably has no precedent.

Now that the return to prosperity seems to have arrived, there’s a chance for all of us to do things differently this time, and to ensure that our own personal good fortunes can be more sustainable.

During the Great Depression in the 1930s the economist John Maynard Keynes argued that governments should operate a ‘counter-cyclical’ policy, meaning that they should save during the times of surplus and spend those savings during times of dearth.

This meant that upswings never became unsustainable booms, because the government taxed wealth in order to save it, and then they could spend their way out of trouble during downswings.

There is much to be said for this common sense approach, and even the Chancellor George Osborne has pledged to run a budget surplus by 2018. Whilst Keynes was writing primarily about what governments should be doing, there is no reason why we can’t take on his advice at a personal level.

This suggests that the next few years for all of us need to be about employing a counter cyclical mind set and making simple, prudent decisions that will future-proof ourselves financially, not just for years but for decades. As the Chancellor put it recently, we need to ‘mend the roof while the sun shines.’

In too many instances in the decade 1998 to 2008, people were encouraged to believe that the good times would never end and that the low prices that globalised manufacturing could bring, along with an artificial housing boom would continue to deliver magic money.

Our sobering economic experiences, which have lasted longer than the Great Depression itself, have indicated otherwise, and there can be few illusions any more about how long the good times will last if we are careless. Here, then are some simple rules for a more sustainable future.

Property

Britain’s economy is largely based on housing, and the property market is one of the most powerful forces pulling us out of recession. If you have decided to move recently or are hoping to add value to your property through a re-mortgage, you have to think of your decision as a key aspect of your long term prosperity.

New banking regulations being introduced this month will make it very hard for you to over extend yourself to the unsustainable levels of 2008, and if you want to borrow more ambitiously, you will need to prove that your finances have a clean bill of health.

This seems like a painful imposition, but in reality it is timely and necessary as the country gets ready to indulge in a frenzy of house buying and selling (Britain’s favourite obsession). Preventing a significant percentage of the home owning population from defaulting en mass the next time the economy runs into trouble could be one of the real golden legacies for the government.

If you have your eyes set on a dream property that will require excessive borrowing to afford, it might be the moment to ask whether it is worth saddling yourself with potentially unmanageable debt? The property has to be something that works for you, not the other way round, meaning that it needs to appreciate in value and (obviously) be a nice place to live, instead of simply it being somewhere you slave all day to afford.

Not only does this make sense in the immediate term, but also in the longer term too. Remember, when the storm hits again (and one day it will, rest assured), the ones who weather it will have assets and the ones who don’t far too well will be saddled with liabilities.

Savings

In the last budget the government announced that it would be raising the upper limit on ISAs to £15,000 from July 2014, allowing you to save far more each year without HMRC taxing the interest. In addition to this, the entire amount saved could be cash, whereas previously half had to be in stocks and shares.

To say that this has been welcome news by the savings industry is something of an understatement, and for individual savers it presents an excellent opportunity to see more returns on their wealth. Remember Keynes big idea? In a very subtle way the government is encouraging all of us to emulate his thinking and set up our own counter cyclical policy.

By saving in a regular and sustainable way and getting into the habit of tucking a little bit away each month, preferably somewhere like an ISA that is tax efficient, we can do wonders for our own financial stability. Not only could savings eventually go into sound investments like property in the future, but it is our insurance against tough times.

This all sounds rather obvious, doesn’t it? It bears repeating however, that because so few people between 1998 and 2008 saved at all, in fact quite the opposite occurred, and a relaxed credit environment led to a level of personal indebtedness of staggering proportions.

Debt

This one is simple. Pay it off as quickly as you possibly can. There is no one thing more injurious to financial health than borrowing, and if financial good times are about anything, they are about freeing yourself from this burden.

Credit cards, store cards, personal loans, and hire purchase agreements collectively represent the biggest threat to your future financial stability. In 2009, when the economy really took a nose dive, it was personal debt that was one of the first things that lenders called in, with countless customers desperate to appease ever growing queues of creditors.

There are some instances where borrowing is prudent, such as a purchase of a house or an investment in a small business, or a career development loan, but in most other instances it is a luxury that perhaps we as a society can ill afford. As a culture, most of our ideas about borrowing were formed back in more stable times (i.e. the 1960’s).

Back then the lender was more prudent and kindly and who one could meet in person and who would advise you on what you could afford to repay; in effect he acted as a brake on the system and offered advice how much to borrow.

Since the 1980s, the lending arms of certain business have not acted as advisory services so much as they have become salesmen, operating from call centre’s and looking to sell you their products (in short, to increase your personal indebtedness to them as much as possible).

Also borrowing was always predicated on the assumption that future personal financial stability was assured and that all of us would gradually become better off over time. Even though we are experiencing good times again now, there is no indication that these will last forever and it is vital that should there be another down turn, you can face it debt free.

It is true to say that we live in a very different financial world to the one we left in 2008, and most likely things will never be quite the same again in terms of our attitudes towards money, spending and saving.

This may be an unqualified good thing, as a lot of those attitudes and beliefs about money were long past their sell by date and resulted in a lot of financial pain. The past half decade has taught us some serious and challenging lessons about money and debt and now that the economy is starting to improve, we have to put those lessons into practice.

If you are thinking about getting financially fit now that the worst of the recession seems to be over, it might be an idea to see an independent financial advisor who can help you look at how you manage your money and suggest ways to make it work for you.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

For more information please contact us today.

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