Overwhelmed by all the mortgage advise you are being given?

First, get some free advice.  The company should not charge you for advice. They are there to help you through the process. If they want to charge you, then it may not be the best advice.

Next, decide how much you can afford to borrow. Be realistic on how much you can pay on a mortgage each month. Then look for houses in your price range.

Once you find a house, find a broker that deals in mortgages. They are much more helpful with people who have a house in mind because that is how they make their money. They only get paid when the mortgage is in place so they will try to get the mortgage for you.

The first thing you ask a broker is, “Do you provide a whole of market quotation?” If they do not, then simply thank them for their time and walk out. Not getting a whole of market quotation can cost you a lot of money.

After getting a first quotation, get a second quotation. You need at least two quotations. It can either be from two brokers or one broker and one from the high street.

Once you find a broker with a good quote, you can proceed to buying the house.

The Council of Mortgage Lenders (CML) has welcomed the implementation of a Government measure designed to reinforce lenders’ policies of forbearance for borrowers facing temporary and resolvable mortgage repayment problems, to minimise repossessions.

Lenders’ actions, supported by debt advice, help develop affordable repayment plans for borrowers committed to getting through short term financial difficulties. Repossession is a last resort.

Lenders already show significant forbearance to borrowers facing temporary difficulties, to enable them to keep their homes where this is possible. This core principle is already underpinned by regulatory rules and industry guidance. The scheme is a helpful additional tool - although the CML does not expect that the guarantee will be triggered in many cases, as the scheme is aimed at borrowers who expect to be able to resolve their difficulties and resume full mortgage payments within a year or two.

Some lenders have confirmed their participation in the home-owner mortgage support scheme (HMS) under which the government will provide a guarantee in some circumstances against part of the risk of future loss that lenders face by allowing borrowers to under-pay on their mortgages for a temporary period.

Other lenders have concluded that, while they support the principle of reasonable forbearance, they would prefer to help their borrowers outside the scheme and without calling on government financial support. The CML sees HMS as simply one means to an end. What matters is how lenders are working with their borrowers through periods of difficulty where they believe these can be resolved, not whether they are using HMS in itself.

CML director general Michael Coogan said: “Lenders are working strenuously to keep borrowers in their homes where they have a good prospect of being able to get back on track and sustain their home-ownership in the long term. The government is helping, through changes to Income Support for Mortgage Interest, the mortgage rescue scheme, and now the home-owner mortgage support scheme.

“Lenders fully recognise their responsibility to keep people in their homes where repossession can be avoided. The fact that some lenders are utilising the new scheme and others are not indicates simply a difference in their approach to forbearance, not in their commitment to it.

“It is likely to be some months before it will be possible to assess the impact of the various industry and government measures. The CML expects to be able to update its forecasts on arrears and repossessions, taking into account these measures as well as the prospects for employment and the wider economy, over the summer. Current forecasts are for 75,000 repossessions this year and 500,000 mortgages in arrears of three months or more at the end of the year.”

Elizabeth Coleman from the The Sunday Times recently reported that Homeowners who locked into expensive fixed-rate mortgages a few months ago could be thousands of pounds better off by exiting early and paying penalties. Advisers are urging borrowers who locked into deals at the height of the credit crunch to break their contract, despite exit charges and rising remortgage fees. Borrowers with a 25% deposit who took out Nationwide’s two-year fix at 6.25% on a £200,000 interest-only loan in June could save £4,489 if they switched to Cheltenham & Gloucester’s 4.79% tracker.

That is even after forking out Nationwide’s 1.5% early redemption charge and C&G’s £2,094 upfront fee, according to independent broker Savills Private Finance.

Those who have a 40% deposit could do even better by applying for HSBC’s market-leading 3.99% lifetime tracker with a £799 fee — saving £8.900 on the mortgage. Swap rates, used to price fixed-rate loans, have fallen to 3.24% from 6.45% five months ago. That has brought down the rates offered to consumers. The best two-year fix, from Abbey, is now 4.79%, compared with 5.74% from Britannia a month ago. The best tracker is HSBC’s lifetime deal at 3.99%, compared with 5.59% from Woolwich last month, according to data firm Moneyfacts. Les Jacobs, of Mortgage Monitor, the broker, said: “We’re seeing many frustrated homeowners who locked into deals in search of stability, but are now paying over the odds. “Review — and you can yield huge savings.” With Bank rate expected to come down again next month, after this month’s 1.5 percentage point cut, trackers are in demand, but are difficult to find. A mere 30 two-year trackers are on offer today compared with 68 a month ago. Nationwide, the UK’s biggest building society, is not offering any at all despite cutting fixed rates last week preventing new borrowers taking advantage of further interest rate falls. It said it was reviewing its range and would re-enter the market “in due course”. However, you can still save money by moving from one fixed rate to another as David Roberts, 40, of Chigwell, Essex, found. The print company owner had been paying the Woolwich 5.84% since November on his £400,000 mortgage, but has moved to Abbey’s 4.49% rate. He stands to save £5,000 over the two-year term of the loan, notwithstanding his old lender’s 1% early payment penalty and Abbey’s £995 fee. He said: “When I was looking to remortgage at the end of last year the Woolwich deal was the best but when our broker suggested we switch and pay 1.35% less we jumped at the chance.” n Scottish Widows has become the latest lender to launch a rate that tracks above, not below, its standard variable rate.

Melanie Bien at Savills said it signalled lenders were becoming less inclined to peg variable rate deals to Bank rate.

BBC News reports that the number of mortgages handed out by lenders rose slightly in February but activity in the market remains weak, according to a lenders’ group.

Loans for house purchases in February in the UK rose to 24,300, up by 4% compared with January, the Council of Mortgage Lenders (CML) said.

But the group warned that activity in the market remained at a “very low level historically”.  And first-time buyers had to find a record typical deposit of 25%.

“We are not convinced that underlying trends have shifted sufficiently to change our forecasts for mortgage market activity in 2009, but there are some positive signs for later in the year,” said CML director general Michael Coogan.

“Some large banks are making more funding available through enhanced lending commitments, which is helpful but will not satisfy consumer borrowing demand on its own.”

Remortgaging down

The number of home loans completed for all house buyers rose slightly month-on-month, but the total value of these homes remained unchanged at £3.1bn.

While the figures, which echoed earlier data on mortgage approvals, suggested some lift for the housing market, it remains in stark contrast with recent years.

The number of mortgages completed was running at about one-third of the average February total of 76,000 loans for house purchase between 2002 and 2007.

The CML also reported a 20% decline in the number of remortgaging deals, down from 44,000 in January to 35,000 in February.

Lenders’ standard variable rate (SVR) deals are tending to be more attractive than new fixed-rate deals for owners, with interest rates having plunged in recent months.

Falling house prices also mean householders have less equity, excluding these people from the best deals, which require a large deposit.

But with the Bank rate unlikely or unable to fall further, new home loan demand is shifting back to fixed-rate deals, rather than mortgages which track the Bank rate.

In February, 56% of new loans were at a fixed rate, up from 49% in January, while 31% were tracker products, down from 38% in January.

First-time buyers

The situation remained tough for first-time buyers. They typically had to find a deposit of 25% - a record amount - and so only 9,400 home loans were completed.

KEY STATISTICS
25%: Typical first-time buyers’ deposit
4%: Rise in mortgages completed in February compared with January
47%: Fall in completed mortgages for house purchases compared with a year earlier
Source: CML

“Such amounts remain out of reach for all but the most affluent buyers, for example people returning to home ownership after a period of renting, divorcees, or those who get financial assistance from their family,” said Mr Coogan.

This total of completed loans to first-time buyers was up 7% compared with January, but 46% lower than the same month a year earlier.

These figures are not seasonally adjusted. A pick-up in mortgages would be expected after a lull at the start of the year. The completion figures tend to lag behind other mortgage data.

Previously, the CML reported that gross mortgage lending in February was at its lowest level for any month since February 2001.

The CML said its members’ ability to lend was drying up, because too many savers were choosing to put their money in National Savings policies.

National Savings & Investments (NS&I) has raised much more than its original forecast as savers searched for a completely safe home for their money.

Mortgage interest payments are consuming less of borrowers’ incomes as those able to get a mortgage are stretching themselves less financially and beginning to benefit from reductions in bank rate, according to the Council of Mortgage Lenders (CML).

Interest payments typically consumed 18.2% of a first-time buyer’s income in November, the lowest proportion since February 2007. Home movers in November typically spent 14.4% of their income on interest payments, the lowest proportion since April 2006.Lenders have cautiously tightened their lending criteria as a result of the shortage of funding and falling house prices. The improvement in affordability is largely due to the fact that borrowers who are able to obtain credit are lower risk and less stretched.There were 12,400 loans to first-time buyers worth £1.4bn in November, compared with 15,400 loans worth £1.8bn in October. The average first-time buyer put down a deposit of 18%, the largest it has been in 35 years of available data.There were 20,600 loans to home movers worth £3bn, compared with 24,600 loans worth £3.7bn in October. The average home mover deposit was 32%, the largest since November 2004.There were 33,000 house purchase loans worth £4.5bn in November, the lowest level of activity since the CML began collating monthly data in 2002. Gross lending declined 24% from October to £14.2bn, and down 53% from November 2007.Remortgaging declined by 25% from October to 52,000 loans worth £7bn. The CML expects remortgaging to continue to fall in coming months as reversion rates are attractive relative to many new products on the market and borrowers with low levels of equity will have fewer remortgaging options.CML director general Michael Coogan said: “Limited mortgage funding and reduced consumer demand will weaken lending activity further in coming months. The flow of funds to the mortgage market will not improve this year without further intervention by the Government.“Lenders are currently juggling attempts to help existing borrowers and savers, and maintain new lending and deposits. And the Government too is facing the difficult decision of how to share out limited resources to help small businesses as well as the mortgage market’s existing borrowers in difficulty and prospective borrowers shut out of the market.“Affordability is improving for those who are able to access a mortgage, but saving for a deposit will still be a constraint for many would be first-time buyers. Borrowers who are benefiting from lower mortgage rates should over-pay if they can afford it to reduce their mortgage balance and protect themselves against falling house prices. And now is also a good opportunity for borrowers on interest only mortgages to switch to repayment mortgages to use this period of low interest rates to start to pay down their loans.”

UK mortgage approvals fell to a fresh record low in November and banks reduced loans to households and businesses in the final three months of 2008 as a deteriorating economic outlook and falling house prices deterred lending, according to data from the Bank of England released yesterday.

Mortgage approvals fell to 27,000 from 31,000 in October, the Bank said. That was below expectations of 32,000 approvals and the lowest figure since the report began in 1999.

The Bank’s quarterly credit conditions survey, also published yesterday, showed that secured lending to households - largely in the form of mortgages - tightened again between October and mid-December and by more than had been expected in the previous survey.

The data came as Halifax, Britain’s biggest mortgage lender, reported that house prices were 16.2 per cent lower in the final three months of last year compared with the same period in 2007. That is the fastest pace of decline since Halifax began keeping records in 1983 and faster than during the recession and housing bust of the early 1990s.

Halifax reported that house prices tumbled by a further 2.2 per cent in December, after falls of 2.6 per cent in November and 2.4 per cent in October. Economists had forecast a 1.7 per cent drop in December and for prices to be 16.6 per cent lower over the past quarter compared with the year before.

The Bank said secured lending was expected to fall again in the next three months, and that unsecured lending - such as credit card debt - as well as lending to businesses had also been cut in the final quarter of last year.

Demand for mortgages and remortgage loans remained broadly stable over the period, while demand from businesses for loans for capital investment, mergers and acquisitions activity, and from the real estate sector fell.

“The further significant tightening of credit conditions for both households and corporates in the fourth quarter of 2008, and the expected continuation of these trends in the first quarter of 2009, bodes ill for business activity, investment, employment, consumer spending and housing market activity,” said Howard Archer, economist at Global Insight.

“Indeed, Bank of England governor Mervyn King has stressed that ongoing very tight credit conditions pose perhaps the most serious risk to the deeply struggling UK economy.”

The continuing weak economic data increase the likelihood of further rate cuts by the Bank next week.

Reported by:  Daniel Pimlott in Londo - Financial Times

Guide for First Time Property Buyers

Buying your first property is a daunting prospect, especially in the current climate. With many different types of mortgage to choose from and uncertainty over the future of UK house prices, it is small wonder that the percentage of first time buyers continues to fall.

A survey conducted by the Council of Mortgage Lenders (CML) has shown that almost half of all first time buyers under the age of 30, receive financial help from a family member to help them provide a deposit on their first home.

This shows a marked increase from the same survey conducted in 2006 which showed that 38% of first time buyers received financial help. Although house prices have fallen by 14.6% this year (according to the Nationwide) first time buyers are not able to take advantage of falling prices as lenders now require substantially larger deposits. The CML reported that the average first-time buyer needed a deposit of £14,500 in 2007, yet in the second quarter of this year, this had risen to £19,000.

The Best Home Mortgage website is an independent guide and gives an overview of the different types of mortgages on offer, the costs you can expect and the decisions that you will need to make when making your first purchase.

If you would like to speak to one of our mortgage experts, give us a call on 0845 8620 866 or fill in our callback form and we will be in touch.

• How much can I afford
• Repayment or interest only
• Which mortgage is right for me?
• Early repayment charges
• Fixed rate or Discounted mortgage?
• Leasehold or freehold?
• Conveyancing and surveys

A new move to make major lenders wait at least three months before taking repossession action has been welcomed by the Royal Institution of Chartered Surveyors (Rics).

“This scheme should use the existing Isa structure allowing use of the full £7,200 limited and supported by an additional government contribution,” Rics said.

Published in Mortgages on 20 November 2008

The Bank of England’s dramatic 1.5% cut to the base rate has made some standard variable rate mortgages cheaper, but are you going to benefit?

Standard variable rate (SVR) mortgages have been a huge no-no for borrowers for as long as I can remember.

That’s because in normal times, you’re much better off borrowing on a mortgage ‘deal.’ So when you first take out a mortgage, you might sign up for a three year introductory deal where you’re paying a better rate than the SVR. Then when the three year period is up, you switch to another special rate deal and avoid the dreaded SVR.

But all that has changed because, bizarrely, the banking crisis has now forced lenders to price SVRs so competitively that some are now among the best mortgages on the market.

As you know, the Bank of England cut the base rate by a bold 1.5% earlier this month. Since then, the government has put serious pressure on the largest lenders to pass on the cut to borrowers. And suddenly lots of SVRs are attractive.

Most of the big mortgage lenders have indeed chosen to pass on the rate cut, reducing the SVR by the full 1.5%. But, interestingly, Barclays and HSBC — both of which turned down help from the government’s £37 billion bank bail-out — are yet to apply a similar cut. Although HSBC will be reducing the SVR to 5.44% from 5 December.

Nationwide is currently offering the most competitive rate on the market at 4.69%. A borrower with a £150,000 mortgage (over 25 years) would pay just £850 a month.

But, don’t forget, SVRs haven’t reduced across the board. If your mortgage deal is almost up, don’t make the mistake of assuming your lender’s SVR is necessarily a good bet.

At the other end of the spectrum, Chelsea Building Society’s SVR is far higher at 7.24%. Here monthly repayments would set you back £1,083 — that’s £233 more each month than a borrower would pay on Nationwide’s SVR.

Should you choose the SVR now?

If your current lender has a brand new, cheap SVR and your introductory deal with them is due to end soon, lucky you! There’s certainly a case for sticking where you are — at least in the short-term.

Better still, you’ll be moved onto the SVR automatically if you don’t do anything else, so it should be a hassle-free option. And you won’t normally have to shell out for an arrangement fee, or be tied-in if you decide you want to remortgage elsewhere later on.

For those of you with a relatively small mortgage, avoiding high remortgaging fees becomes even more important. It may be more cost-effective to move onto your lender’s fee-free SVR, rather than pay arrangement fees for a special rate with another lender — even if that rate is lower. Make sure you compare mortgage deals on the basis of true cost before you take the plunge.

New borrowers

But what happens if you aren’t an existing borrower? The trouble is — even though SVRs were once the lender’s bog standard, no frills home loan — now they’re far more attractive, many are simply no longer widely available to borrowers.

Nationwide’s SVR is really tempting, but alas it isn’t open to new borrowers or remortgagers. And you won’t be able to get your hands on Lloyds TSB’s 5% SVR now either. This is becoming a pretty common story these days.

SVRs are certainly more exclusive today than they have been in the past, but it’s not impossible to find a competitive deal which is still open to new borrowers.

Bristol & West, for example, offer an SVR at an appealing 5.49% which is available to all new customers.

What’s more, there’s no arrangement fee and no early repayment charge. You will, however, need a deposit, or equity stake in your home, of at least 25% to qualify.

Just one word of warning: if you can find a competitive SVR with a new lender do watch out for the arrangement fees. With SVRs you won’t normally be tied-in, so the lender has no way of knowing how profitable you’ll be to them as a borrower, or for how long. So to boost the lender’s profits in another way, arrangement fees have been creeping up.

Should you stay or should you go?

If you’re starting to think your lender’s SVR could work for you, do bear these points in mind:

• Your lender will decide what rate the SVR will be set at, so there’s absolutely no certainty what will happen to your repayments in the future.
• Your lender may choose not to pass on future base rate cuts. If your lender has already dropped the SVR by 1.5%, they may not be so keen to pass on further reductions to borrowers.
• Other deals may be more suitable for you. If you want to know exactly how much your mortgage will cost each month, go for a fixed rate instead.
• Tracker mortgages look attractive when the base is expected to fall because lenders have to cut the rates accordingly — unlike SVRs. Further reductions are on the cards, so you may prefer this type of deal.

Choosing the right mortgage can be been tricky. If you need help, why not speak to a broker at Best Home Mortgage.

The good news for homebuyers looking for the best home mortgage is that lending rose slightly in October, according to the Council of Mortgage Lenders (CML).

Total lending rose 7% up from the previous month, to £18.7bn. However, last month’s lending was still 44% lower than in October last year, just before the credit crunch triggered the current mortgage drought.

The Council of Mortgage Lenders (CML) said that despite the Bank of England’s cuts in interest rates, lending would remain weak in the next few months and 2008 may be the year which saw the biggest slump in home sales and prices on record.

Some experts have suggested that the fall in mortgage lending may now have reached a trough.

This week the Royal Institution of Chartered Surveyors (Rics) pointed out that its own surveys had shown a recent increase in enquiries from potential new homebuyers, a good indicator of future trends in home sales.

Even if mortgage lending and home sales stabilise at current levels, many experts are forecasting that prices will continue to fall, with some suggesting that they could go down by a further 15-20% in 2009 after a likely drop of around 15% this year.