Thursday, July 06, 2006

Getting The Perfect Mortgage-Affordability

As mentioned before one of the main factors to consider when considering a mortagge is affordability.

Think of borrowing around three times your gross annual salary. Couples can generally borrow three times the larger salary plus one times the smaller, or two and a half times the joint salary. Some of the lenders today will allow you to borrow up to six time your
salary. This should be sufficient in purchasing the house of your dreams. However if the interest moves up by 1-2% you could find yourself in a spot of trouble with regard to repayments.

You should consider greatly the family or household circumstances regarding how much you can afford to spend. The house of your dreams could slowly become the house of horror. It is nice to be able to go out with your wife or partner for a meal or drinks, and not have to worry about paying the mortgage.

The repayment on your mortgage should not be greater than 40% of your net monthly income. If it is more than this, then you could be borrowing too much and payback and money problems can arise.

More cost implications

Getting a mortgage is not the end of financial side of things. You also need to have enough cash to pay for all the extras that come with buying a house e.g. stamp duty, solicitor’s fees, removal costs, surveys, estate agents fee´s. A list of all the extra´s can be obtained from your mortgage lender.

Surveys Fees and Searches
¯ Mortgage valuation survey - from £170
¯ Homebuyer’s survey - from £250
¯ Full building structural survey - from £350
¯ Arranging the mortgage £200
¯ Legal Fees £400
¯ Land registry fee £100
¯ Other searches from £70
Stamp duty
Stamp duty must be paid on all property transactions over £60,000. There are exceptions in some disadvantaged areas of the UK where the level is £150,000.
Also some stamp duty exempt places around Britain. The Inland Revenue website lists all the areas that qualify.
£60,000 0%
£60,001-250,000 1%
Over £250,000 3%
Over £500,000 4%
The amount of duty paid on the house purchase, is for the full amount of the purchase, not the amount over the Taxable amount.
As you can see from the fees above, getting a mortgage is just the tip of the iceberg. With all the arrangement fees, building fees, search fees, legal fees and stamp duty, your mortgage and expenditure has just gone up over £1000, this is without adding on the stamp duty for your potential home. If you decided to buy a home for £200,000, you will have pushed your moving expenses into the region of £3000, before you have even received the keys to your property.

You should take all these hurdles into consideration when looking for a new home and try to save a little to help pay for these extra expenses. Not only do you have the legal side of things, but there is also the moving side and decorating to consider. All these factors should be taken into account when deciding to buy your new dream home.

Friday, June 23, 2006


Choosing a Mortgage
A house is the biggest purchase most of us will make. So sorting out a mortgage quite early on in the process of buying a home is most defiantly a priority. Having your mortgage ready to go will make a lot of difference when you are bidding on a property. Having a mortgage in place will signal to the seller that you are ready to move and serious about it too!

Most mortgage lenders will let you know the terms under which are willing to offer you a mortgage up to a certain level as you start looking; this is called a mortgage in principal and will depend on your income? The application is finalised upon deciding which house you want to buy. However, it is still possible to sort it all out once your offer has been accepted.

The total amount of revenue you are allowed will depend on your income, who you are buying a home with (if you are buying a home alone then this is self explanatory,) a partner, friend or an associate and the an appraisal of your capability to repay the initial loan. These factors will all contribute to the amount you can borrow. There are a number of ways to find a mortgage. The two best and well known ways are, Direct through a bank or building society, or a mortgage broker. These two ways can be done either, over the phone, on the internet and in person. As this is probably the largest purchase of your life, I do like to speak to someone face to face, this way you can ask as many questions as you see fit.
Some people feel save and more comfortable obtaining a mortgage from a high street name, and also find it convenient to have their mortgage with the same bank they have their other financial dealings with e.g. Direct debits and personal accounts. Alternatively, going through a mortgage broker does ensure you get a choice of a wider range of mortgage products and deals.

There are thousands of mortgage products to choose from, and the market can get very confusing. Do a little research before you decide to take out a mortgage and find the best one that is suitable for you.

Have a think about what you find would be the most appropriate mortgage suited to you:
Would you like to take ’payment holidays’ if your financial
circumstances change i.e. you need some holiday spending money, or some extra Christmas money, or alternatively pay off extra if you have more money at the end of the month.
Cash back incentives mortgage offers you an extra cash sum when you take it out. This way you can use your cash incentives to pay for any house hold peripherals you may need or you may use the incentive for solicitor´s fees.

Interest rate on the mortgage is guaranteed to be fixed for a period of time? This is a safe bet, if you mange your funds on a monthly basis and like to know exactly what is to come out of your account.
When you come to make your decision, always review the mortgage code.
The mortgage code sets out minimum standards that mortgage lenders and intermediaries have to meet

A six part series focusing on The perfect mortgage

Dos & Don'ts With Personal Loans

Read an incisive article from the Motleyfool and thought i should share asa it contains quite a few outstanding points

Did you know that there are probably around 400 to 500 different personal loans on the market at any one time ? Where on earth do you start?
The important thing is to shop around but what follows is a list of fundamental 'Dos' and 'Don'ts' that should point you in the right direction.
Be wary of 'typical' APRs. This means that the interest rate you pay depends on your personal financial circumstances. Although two-thirds of borrowers must be given the 'headline' typical rate, you might not qualify if your credit history isn't spotless or you don't fit the lender's ideal customer profile.
Compare the cost of loans by looking at the Total Amount Repayable (TAR) as well as the Annual Percentage Rate. This shows the total amount in cash that you're expected to repay, including all monthly repayments, fees and charges. Generally speaking, the lower TAR, the better the deal.
Opt for a fixed interest rate rather than a variable one. This means that your monthly repayments stay fixed throughout the life of the loan, which not only helps with budgeting but also ensures you don't get any unpleasant surprises.
Check out the penalties for early repayment. Around seven out of ten personal loans are paid off early, so look for a flexible loan that allows overpayments and watch out for loans that charge hefty fines for early settlement.
Get a secured loan. These are like mortgages and mean that if you have trouble making repayments, you can lose the roof over your head. An unsecured personal loan shouldn't put your home at risk.
Go to your local bank branch for a personal loan. High-street banks don't usually feature that often in the Best Buy tables for personal loans, so make sure you shop around and compare costs before choosing one.
Automatically sign up for the expensive Payment Protection Insurance (PPI) that'll invariably be offered to you. Although it may be reassuring to think that it'll cover your monthly repayments if you lose your job or can't work because of accident or ill health, or pay off the debt if you drop dead, it's massively overpriced. If you want some form of loan protection, buy a stand-alone policy from companies such as Paymentcare or Burgesses or even the Post Office. It'll be much cheaper.
Fall for loans with gimmicks such as repayment holidays and 'buy now, pay later' deals. Ultimately, you'll pay for such 'benefits' so opt for a simple and straightforward loan instead. Complicated products are often more expensive.
One final point is that if you're using a personal loan to consolidate various debts, don't forget you will simply have switched your debts to a new lender. The total debt will still exist and it'll only be paid off when you actually finish paying off the loan so don't be fooled by the notion that you've 'cleared' your credit card!

Article Written By Jane Mack business columnist at the Motley)

Thursday, June 22, 2006

Mortgage lending up And LandLords Are makinga Killing

The boom in property prices shows no sign of abating with official figures recording the highest ever seasonal mortgage lending and approvals for a May period last month.

MORTGAGE lending strengthened during May, reflecting the upturn in consumer confidence, figures showed.
A total of £28.7bn was advanced through home loans during the month - the strongest May figure since records began in 1995, according to the Council of Mortgage Lenders.
This was 18% higher than April's figure and 30% up on May last year. The record lending figure for a single month is £28.9bn, recorded in July 2004

In ley man terms more people are buying houses and the property is continually increasing


Intrest only mortgages seem to be a resnably good deal especially fror first time buyers until you realise you are only making payments on the intrest and you are still faced with repaying the original purchase price.
This is the dilema millions of first time entrants and already existing property owners still face ,a growing burden to incresinly deep into your pensions and savings in order to make repayments while still stuck with with owing the original purchagse price to the lender.

A survey by mortgage broker Purely Mortgages reveals that nearly a quarter of homebuyers - 2,300,000 - in the uk are repaying only the interest on their home loans.
It means that despite years of shelling out on their homes, they will end up owing exactly what they did when they first bought it.Interest-only deals, this is fully understandable as this tends to ppeal to those on budget Latest figures from the Council of Mortgage Lenders show that one in seven first-time buyers and more that a fifth of home movers are opting for an interest-only loan.

So what is An Intrest Free Mortgage in the True sense of the Term?

An interest-only mortgage means your monthly payments cover only the interest on the loan. They do not pay off the amount you owe. So, at the end of the mortgage term, assuming you have made all the interest payments, you will owe the same amount that you borrowed at the beginning. You need to have a lump sum available to pay the mortgage back in one go at this time. Make sure you make arrangements to pay off the loan when the mortgage ends. If you don't, you could lose your home

So if you do have a concern with the burden and intrest only mortgage places on you it would be wise to consider switching to a capital repayment mortgage as a regular review of your ability to pay ensures you are a 100% sure you can continue to maintain the payment of the original capital

Though you pay an initial administration fee for switching to a capital repaynment vehicle it is definately worth as it would eventually end of saving you hundreds of pounds


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