Thursday, 30 December 2010

part 2

The usual advice for those worried about rate rises is to move to a fixed-rate deal, where the mortgage payment is guaranteed not to rise for a set period – usually two or five years. But with house prices sliding downwards, some home owners will find it difficult to secure one of these deals, because they don't have enough equity in their home.

The cheapest fixed-rate deals are currently available only to those with at least 40pc equity in their home. Those with less than 10pc equity are unlikely to be able to remortgage at all.

According to the CML, nearly half a million mortgages have been granted since the start of 2007 to home owners with less than a 10pc deposit. Given that prices have fallen since then, it is likely that far more home owners will now have less than 10pc equity in their home, so will struggle to remortgage.

It is feared that a perfect storm of rising interest rates, falling house prices and widespread job cuts in the public sector could lead to a rise in repossessions next year, as some families find themselves unable to meet mortgage repayments but unable either to remortgage or to downsize in order to clear their debts.

mortgage brokers, are recommending that home owners should be reassessing their mortgage options. "There is now far more choice and better value in the remortgage market, particularly for those looking to secure a five-year deal,'' he said. "Those waiting could find they have fewer options a few months down the line. Not only could the price of fixed-rate deals rise, but if you have less equity in your home as a result of price falls you may not be able to secure the most competitive rate."

While no one knows for sure when interest rates will rise, the reality is that it will happen at some point so a wise borrower should be prepared. Look at your own circumstances: if rates were to rise, could you afford the mortgage? If not, then you should consider a fixed rate. They are unlikely to get any cheaper; indeed, as a rate rise looks more likely, fixes will become more expensive.

"If you are enjoying a cheap SVR [standard variable rate] you can always reserve a fixed rate to move on to in the future. Some lenders will let you reserve a rate for up to six months before you actually take it out.
"If you have a high LTV [loan to value], so remortgaging is difficult, speak to your lender. Many have special deals available for existing customers." These, she said, may not be as competitively priced as the current "best buys" but will at least provide the peace of mind that monthly mortgage payments will be fixed.
A spokesman for the CML said the FSA's affordability tests were a "notional test" and many people who breached these guidelines would in practice still be able to repay their mortgage.

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Monday, 27 December 2010

3m home owners could 'struggle to pay mortgage'

An estimated 3m home owners could struggle to pay their mortgage if interest rates rise in line with predictions from the Confederation of British Industry.

The CBI predicted that higher-than-expected inflation would force the Bank of England to raise rates as early as the Spring and that rates could rise by 2.25 percentage points – to almost six times the current rate – within two years.
With mortgage rates set to follow, this could have dire consequences for the 7m home owners who currently have variable-rate home loans.
According to the Council of Mortgage Lenders (CML), about 2.9m home owners would have mortgages that are no longer deemed "affordable" according to guidelines set down by the City watchdog, the Financial Services Authority.
Even if rate rises were more modest (between 1 and 2 percentage points), an estimated 1.6m mortgages would be deemed "unaffordable" according to the FSA guidelines.
An interest rate rise of 2 percentage points would push up the cost of a £150,000 interest-only mortgage by £250 a month.

Friday, 24 December 2010

Repaying your mortgage part 2

• Move to a fixed-rate mortgage: For many people, now could be an optimum time to move to a fixed-rate deal. The price of these mortgages has come down considerably. The best deals remain reserved for those with at least 40pc equity in their home, but even people looking to borrow 75pc of a property's value have more choice and better-priced deals. Those who opt for a fixed rate have the peace of mind that regardless of what happens to the economy or interest rates their mortgage payments will stay the same.

• Look at "drop lock" deals: These are sometimes called "switch to fix" mortgages and give home owners the right to move out of a tracker or variable-rate deal on to a fixed-rate at any time.
People might think this gives them the best of both worlds: a cheaper variable rate for now but the option to move on to a fix as and when rates rise. Remember though that, when you do move, the fixed-rate deals may be considerably more expensive than they are now. It isn't inconceivable that if a bank saw huge numbers of customers switching it would put its prices up. Home owners also have to pay an arrangement fee to move.
Capped mortgages offer a similar flexibility – giving borrowers a variable rate that will increase, but only up to a certain point.

• Talk to your lender: If you don't have sufficient equity in your home, talk to your mortgage provider. Some, such as Nationwide Building Society and Halifax, offer deals solely for existing borrowers, even those in negative equity. These will not be as competitively priced as the best-buy deals, but may offer security via a fix or enable those stuck on mortgage deals to move home.

• Take out insurance: Those worried about rate rises can buy insurance. MarketGuard offers a two-year policy called RateGuard. Home owners pay a monthly premium and the policy will pay out if rates rise by more than 1 percentage point. There are other derivative-based products sold by companies such as John Charcol that offer cover for longer periods, but these are aimed at wealthier, professional buy-to-let investors who have to meet income criteria.
As with any insurance, there is a risk that you pay the premiums but never claim. As RateGuard is only a two-year plan there is the chance that rates won't start to move significantly until the end of the policy. Prices start at £30 a month for a £100,000 mortgage.

• Change your mortgage terms: Anyone having trouble paying their mortgage should contact their lender. It may be able to offer short-term measures to ease the burden. These could include switching to an interest-only mortgage, extending the term or taking a payment holiday (this may only be possible if you have previously made overpayments). While these measures are likely to increase the cost of your mortgage overall (you will be paying interest for longer), they can help reduce payments in the short term.

For more information visit

Thursday, 23 December 2010

Repaying your mortgage

If future interest rate rises could leave you struggling to repay your mortgage, you need to take steps now to protect what is probably your biggest asset.

Mortgage brokers say it is important to stress-test finances to ensure you can continue to meet your home loan repayments, regardless of economic circumstances. The tips below should help.
• Increase your monthly mortgage payment: If you can raise your payment now, it will lessen the impact of future rate rises. This ensures that more of your capital is paid off. Not only will this reduce the length of your mortgage (reducing overall interest charges), but it could improve your equity position when you remortgage.
Most lenders should allow you to do this without penalty, but check that you will not incur a fee. Alternatively, you can use a lump sum to pay off a proportion of your mortgage. Most lenders allow you to pay off 10pc of the balance without redemption penalties (this may not be possible in a fixed-rate or other introductory deal).
• Start saving: In mathematical terms it makes sense to use any spare cash to pay off some of your mortgage rather than save in the bank, because banks will charge you far more on a loan than they pay on your savings. But you might want to build a nest egg instead.
This gives you more flexibility, particularly if you are worried about losing your job. "Borrowing back" money you've overpaid on your mortgage can be expensive, unless you have a flexible or offset deal, and even with a flexible deal you may not be able to access as much money as you expected if your circumstances have changed. If you build a savings cushion you could use it to pay higher mortgage costs.

For more information visit

Tuesday, 21 December 2010

Power of Attorney

Q I hold an enduring power of attorney for my elderly widowed mother, who is now living in a care home. The time has come to sell her house. She and I both own our homes outright. If I sell my house for £150,000 and my mother's house for £200,000 and I buy a new house for £300,000 with this money and move there, is it best to buy the property in my name alone, my mother's name alone, or in our joint names?
Unfortunately, my mother is not capable of making a will. I am the only surviving offspring and I am making the assumption that she will predecease me. She is 93 and I am 60 and single, with two sons.

A Were you an only child, the fact that your mother has no will would not matter as you would inherit her entire estate. However, as you say that you are the only surviving offspring, I'm assuming that you had siblings but that they have died. If this is the case, when your mother dies, the intestacy rules say that her estate will be shared out equally between all her children. So if there were three of you, for example, you would each get a third of your mother's estate. With siblings who have died, their third share goes to their children – your nieces and nephews or their children if they have died.
The reason for explaining this is that it might affect your plan to use your mother's money to buy yourself a home. If you did have siblings, your home might have to be sold on your mother's death to ensure that your siblings' families received their share of your mother's estate.
But whatever your family situation, the fact that you have power of attorney does not mean you can help yourself to your mother's money. So, if you were to use the proceeds of the sale of her house to buy a new property, you should reflect her contribution to the purchase by putting the property in your joint names.
An additional risk in doing what you propose is that you could run out of money to pay for her care home. So, you could end up having to sell your home to release cash to keep up with the care home fees.

for more information on the responsibilities of a Power of Attorney visit  Abbey Broadway

Monday, 20 December 2010

mortgage and the unemployed

Government changes to mortgage benefits for the unemployed will bring misery in 2011 for thousands of people struggling to keep a roof over their heads, a leading homeless charity has warned.
The rate at which Support for Mortgage Interest, a benefit paid to unemployed people, is calculated was cut by 40% from 6.08% to 3.63% at the beginning of October. The charity Shelter is already being asked for advice by homeowners threatened with repossession, as thousands of people face the loss of their homes early next year.

 Some families, have been told by their lenders,  that they will start proceedings to repossess their home in January if they cannot find an extra £££’s a month to make up the shortfall in their monthly mortgage interest payments following the SMI cuts.

Single parent families who have  never claimed benefits before and are considering this as an option whilst kids are still at school  thought to seek help from the welfare state  – to support people in times of need."
Although the government and regulator the Financial Services Authority have urged lenders to practise forbearance where borrowers are struggling to meet monthly mortgage payments

Families have  been placed in a position where they can no longer afford their mortgage repayments because of the cut in benefits from the government and changes in their circumstances. We have been working with families to provide them with time to try to find an alternative way to make up the shortfall in their mortgage repayments. We have specifically extended short-term forbearance measures in the immediate aftermath of the benefits reductions and continue to assess each and every case individually.

"Incepting litigation does not mean repossession will happen. In fact, over 80% of such customers rehabilitate. It is very common for customers in this circumstance to consider selling their property, and if they speak with our litigation department we will always work with them to find a mutually acceptable solution. Repossession is always a last resort for lenders"

Families has put their home on the market in an attempt to sell, but it still means they and their children will have to move into rented accommodation early next year. They are just some of many people who have contacted Shelter about cuts to SMI payments

For possible refinancing with your existing lender click here

Saturday, 18 December 2010

uk property prices

Stop press: Just in from Nationwide

Each month the Nationwide Consumer Confidence index gauges the UK population's view about the country's current and future position. It also measures how bullish Britain's consumers are about their own finances. The Expectations index monitors consumers' views of the economic and employment situation in six months time.

What's the latest?

November's overall Nationwide consumer confidence survey has just hit a 20-month low. Britons are fretting about the likely impact on jobs, and disposable incomes, of the government's spending cutbacks. The Expectations index was driven down too.

What does this mean for UK house prices?

The Nationwide Expectations index has led annual changes in Nationwide's UK 'all houses' price index by about three months. This latest survey points to a sharp year-on-year fall in Britain's house prices.

one mans pain is another mans gain whilst selling to move up the property ladder can frustrate existing homeowners trying to sell, this does provide a ray of hope for first time buyers with a reasonable deposit and most importantly with a good credit score to have a chance to secure a mortgage from lenders

If your a first time buyer looking to take advantage of falling property prices visit a one stop shop for finance and legal property issues 

Wednesday, 15 December 2010

Have you made a will yet

Making a Will lets your loved ones know you cared enough to 'sort things out' in advance, and we are here to help you through this process, in the comfort and privacy of your own home.

This process is quite straight forward it can be done by a Solicitor or by a professional will writer who can take instructions by telephone or home visits usually lasting around an hour.There are generally 4 types of wills, Single, Mirror ,Property Trust,Discretionary

Types of Will Explained

A Basic Will is suitable for people who wish to have a straightforward Will in place to ensure that their assets pass to whom they wish.

By preparing a Basic Will, you can choose who you wish to appoint as your executors and guardians of children under 18. You can also make specific gifts of money or property and decide who is to receive the remainder of your estate. Funeral requests can also be included.

It may be that you have an existing Will in place already, but that your personal circumstances have changed and you need to update your Will.

Basic Mirror Wills

If you are married, in a civil partnership or cohabiting, you may prefer to make Basic Mirror Wills so that your spouse or partner's assets are protected too.

Property Trust Wills

Property Trust Wills can be prepared to protect at least one half of the value of your home from care fees in the event that the survivor of joint home owners requires residential/nursing care later on in life.

Property Trust Wills can also be used to protect your children's inheritance in the event that your spouse/partner re-marries after your death.

Discretionary Trust Wills can be prepared to protect assets or the interests of beneficiaries themselves (i.e. if one of your children has learning difficulties or is having matrimonial or financial problems).

Discretionary Trust Wills are also appropriate where there are business interests, to maximise the availability of Inheritance Tax relief without compromising your long term aims for the family.

For more information on how a well drafted will can save your family money via Tax click here