by Mark Johnston
Christmas is never a cheap time, presents, family feasts and office parties all take the toll on everyone’s purse strings but would be first time buyers should beware this festive season.
The financial services industry is still waiting to see the outcome of the proposed plans by the Financial Services Authority to tighten regulation within the mortgage industry. The city regulatory has delayed the publication of its mortgage market review but it will almost certainly feature some sort of affordability test.
First time buyers are being warned to curb their spending over the festive holidays if they are looking to find a mortgage in 2011. The new plans may force banks and building societies into checking to make sure potential borrowers can afford a home loan. It is expected that lenders will look to see how much spare income a borrower has after all outgoings are taking into consideration. This could well mean that taking out a gym club membership of signing a new mobile phone contact could be the thing that stops them from getting a mortgage.
New reports are suggesting that lenders will have to take into consideration whether would be borrowers have slipped into the red over the festive season due to excessive spending and will also take contractual outgoings like gym memberships and mobile phone bills into consideration in the same way council tax and utility bills are.
Whether the results of the mortgage market review mean that lenders have to follow strict new criteria or not it’s always worth reviewing non essential spending and monitoring current accounts to make sure that spending doesn’t get out of control. For those that are looking to buy early in the new year there are some great deals at the moment especially for first time buyers as the market has previously all but dried up to those with less than a 25% deposit.
The Norwich and Peterborough building society has a very reasonable two year discounted variable rate mortgage which is topping some of the best buy tables at the moment. The deal has a 2.95% rate at 4.4.% APR and only requires a 15% deposit as the loan to value is 85%.
Other deals include the Hinckley and Rugby building society which is offering a 90% loan to value mortgage at 4.59% (5.6% APR) for a discounted variable loan. Furness building society has a 3 year discounted variable rate mortgage at 3.29% which has a 80% loan to value so a higher 20% deposit is required. The cost for comparison is 5%.
The banking giant HSBC has an excellent 2.79% discounted variable which reverts back to 3.94% after two years. Again, it has a 80% loan to value so a higher 20% deposit is required. Those who are looking for a fixed rate mortgage could check out HSBC’s two year fixed rate mortgage at 3.49% which reverts to their standard variable rate of 3.94% after the two year period. The loan to value is 80% and cost for comparison is a great 4% APR.
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