Information on terms and structure of mortgages and how they are calculated
Recent figures have revealed that mortgage approvals climbed 21 per cent in July this year from the previous year.
Richard Sexton, director of e.surv, a chartered surveyor has said that “Confidence is seeping back in to the mortgage market.” Read more
Sub-Prime Mortgages Make a Return to the Market.
It seems that in the wake of the funding for lending scheme sub-prime mortgages are once again re-emerging.
Sub-prime mortgages were extremely common before the credit crunch but disappeared completely by 2008. These particular mortgages were widely blamed by many as the cause of the financial crisis. Read more
High Loan to Value Loans are on the up……
The boom years have been and gone and most consumers are glad to see the back of crazy deals such as Northern Rock’s 125 per cent ‘Together mortgage.’
But the demise of high loan to value deal of 90 per cent or 95 per cent has hit first time buyers hard along with a boom in house prices lifting the cost of deposit to new height. Read more
Mortgage Jargon needs to be clearer!
Mortgage lenders have gone to great lengths to revitalise the housing market by producing innovative and competitive products.
Moneyfacts, a comparison website, states that interest rates have plunged to all time lows. The rate on five year fixed deals has dropped almost 50 per cent since 2008 to less than 4 per cent. Read more
Can You Buy a Property with no Deposit at the Moment?
Getting a foot on to the property ladder is a tricky business, especially with the demand of high deposits from lenders before they will even consider lending.
In the height of the property boom there was an abundance of deals and lenders that were willing to lend 100 per cent of the value of a property.
But 100 per cent mortgages have been practically non-existent since the credit crunch and mortgage meltdown. This is purely due to the fact that these particular deals were partly to blame for the financial crisis.
One of the biggest risks with 100 per cent mortgages is that they instantly mean borrowers are in negative equity.
Realistically then it is now extremely difficult to borrow 100 per cent of a property’s value.
The Aldermore bank did launch a 100 per cent back in September 2011, it is a family guarantee mortgage which comprises a 75 per cent mortgage combined with up to a 25 per cent secured loan guaranted by the borrowers parents, step parents or even grandparents. Although no money from the guarantor is required up front.
More recently Bath building society launched a 100 per cent loan to value (LTV) mortgage which is a 3 year fixed rate guarantor mortgage with a 5.29 per cent rate.
Borrowers wanting to access this deal must be at least 21 and have a minimum income of £25,000 and have been either employed for 12 months or self employed for 3 years.
The deals also requires third party collateral in the form of a charge on the parental home equivalent to 25 per cent of the house being purchased.
Dick Jenkins, chief executive of Bath building society, states “the 100 per cent parent assisted mortgage scheme is intended to open up home ownership to a wider demographic in a responsible sensible way”.
Borrowers should also not assume that new build properties are going to be out of their price range as many construction companies and property developers can provide accessible ways to get on to the property ladder.
Developers will sometimes offer to lend potential buyers the money they need for a deposit.
So how it works is that the developer may lend say 20 per cent of the property value and ask for this to be repaid in 15 years. Meaning that the potential buyer would only need to apply for an 80 per cent mortgage, which are far easier to come by and far more affordable than a 100 per cent mortgage deal.
All this said recent data has suggested that first time buyers with smaller deposits are making up a bigger share of house purchase loans, meaning that the market continues to be favourable for those looking to buy their first home.
Paul Smee, director general of the Council of Mortgage Lenders (CML), said “more borrowers are taking out higher loan to value mortgages than any other time in the last 4 years”.
Fee Free Mortgages.
It appears that as a result of the funding for lending scheme, many types of mortgages have never been cheaper.
Banks and building societies have cut interest rates on many of their mortgage deals to the lowest ever levels, but it now appears that the back door hike in mortgage fees wipes out the benefit for many buyers. Read more
A mortgage renewal is a statement that is sent out by a lender to its customers at least 21 days before the end of their particular mortgage deal, be that a fixed, discounted or tracker.
This statement usually contains information about the balance remaining on the mortgage and also it current interest rate. Read more
It is easy for borrowers to think that in the current climate switching to a mortgage deal with a better rate will save them lots of money, but things are never that simple.
Early redemption penalties have become an increasingly common feature of most mortgages over recent years. Read more