Past Articles for the Houses and Mortgages Category

Homeowners who want to secure a competitive rate for their next mortgage may need to “introduce equity” in order to do so, it has been suggested.

According to Al Elliot of the Homeowners Advice Centre, those whose current mortgage deal is coming to an end have two options available to them.

“[Borrowers] can revert to standard variable rates (SVR) or try to remortgage,” he explained.

However, he noted that “the jump won’t be quite as big as borrowers expected”, for those who do opt for an SVR morrgage due to the falling base rate, which could make such a finance package attractive to those who are looking to become debt free.

He also warned that lenders are not necessarily going to pass on the interest rate cut, as they may risk “risk a cash-flow crisis” by reducing borrowers’ repayments by too much.

Research conducted for Cheltenham & Gloucester found that 32 per cent of people would opt to pay a higher rate of interest on their current mortgage than risk rejection from another lender.

By Tom Musk

Share This

Mortgage lenders should offer more support to homeowners who are struggling to meet their mortgage repayments, it has been claimed.

According to advisor at the Homeowners Advice Centre Al Elliot, lenders should offer reduced repayment plans instead of considering repossession, as “the last thing [they] want is to try and sell in today’s market”.

“It seems to me that it serves nobody’s interest to possess and force a sale in today’s market,” he explained.

Should such a method be implemented by banks, those who are struggling with debt would be able to increase their repayments when they are in a more stable financial position, or sell their property to repay their lender in an effort to become debt free.

Research from the Council of Mortgage Lenders stated that in October 2008 it expected 45,000 properties in the UK to be repossessed during 2008.

This figure represents 0.38 per cent of mortgages in place in the country.

By Tom Musk

Share This

Borrowers whose current mortgage deal is coming to an end have been urged to remain patient in order to find the best new deal.

Head of mortgages at moneysupermarket.com Louise Cuming issued the advice following last week’s interest rate cut, which has resulted in many lenders issuing new mortgage packages.

She explained that some customers may be able to save money by being switched to their current lender’s standard variable rate, while those who are moved to a fixed rate may be better off looking for a new deal elsewhere.

“Borrowers should make sure they are fully aware of the rate their provider moves them to at the end of their deal,” she explained, adding that “shopping around” is necessary before agreeing to a new mortgage.

Those who are looking to become debt free by paying off their mortgage as soon as possible may wish to follow Ms Cuming’s advice.

Abbey recently announced a cut in the interest rates for it two-year fixed-rate mortgages, bringing them down by up to one per cent.

By Tom Musk

Share This

The recent cut in interest rates could help borrowers pay off their mortgage up to six years sooner, it has been claimed.

In news that may interest those wanting to become debt free, director of mortgage firm John Charcol Drew Wotherspoon stated many borrowers can use the current economic climate to their advantage.

“As interest rates fall, it provides the perfect opportunity for borrowers with trackers to pay their mortgage back quicker, without noticing any difference in their pocket every month,” he explained.

He advised borrowers to keep their mortgage payments at the level they were before the Bank of England’s decision last week in order to take years off the time needed to repay their lender.

Alliance & Leicester recently announced it is to relaunch its two-year base rate tracker mortgage after the deal was withdrawn following the rates cut.

Interest on the new finance option will be set at 4.89 per cent.

By Tom Musk

Share This

Lenders should be following the new guidelines for best practice when it comes to repossessions, one expert has said.

According to a spokesperson for the Money Advice Trust, lenders must now prove they have tried every course of action to a County Court before attempting to repossess a person’s home for missed payments.

The spokesperson stated that the credit industry, the charity sector and the government are all working towards influencing best practice in the mortgage market, which could also affect people with credit card debt.

“I think in the short term that is as much as they can do,” she said, adding that “lenders will definitely be looking at their lending criteria” in the long term, which could mean stricter standards for mortgage, loans and credit card applications.

Around 45,000 homes are to be repossessed in 2008, the Council of Mortgage Lenders has predicted.

Share This

Mortgage borrowers looking to reduce their debt have been urged to resist the temptation to switch to an interest-only package by a price comparison website.

Moneysupermarket.com has advised those considering of making the move - possibly in an effort to avoid bankruptcy - to do so as a “last resort”, as it will result in the cost of the mortgage increasing “dramatically” over the long-term.

Head of mortgages at moneysupermarket.com Louise Cuming acknowleged that many people may see interest-only mortgages as a way of making “some extra cash” available.

“Unless you really can’t afford to continue making repayments at the current level it could be a very expensive mistake,” she stated, adding that switching in order to fund their current spending habits should not be considered as an option.

The government recently announced the launch of an £11.5 million scheme to educate young people about the importance of managing their money, both now and later in life.

Share This

Repossession levels increased during the second quarter of 2008, new figures from the Financial Services Authority have revealed.

According to the new data, instances of homes being repossessed - which may have occurred due to owners falling into debt or becoming bankrupt - increased by 71 per cent during the period, resulting in over 11,000 people losing their homes.

The same period last year saw 6,746 people have their property repossessed due to failure to meet mortgage payments.

And 312,000 people are now in mortgage arrears, the report revealed, a 16 per cent increase on figures from the second quarter of 2007.

The Homeowners Advice Centre has urged property owners struggling to meet their mortgage repayments to talk to their lender “as soon as possible”.

Advisor for the body Al Elliot suggested that people in such as position may wish to consider switching to interest-only payments until they are able to repay the full amount.

By Tom Musk

Share This

Property repossessions are set to increase before the end of 2008 due to many owners defaulting on their monthly repayments, one property expert has predicted.

Aaron Turner of look4aproperty.com has stated the country’s middle classes will suffer as a result, especially those who rely on self-certification mortgages usually issued to the self-employed.

“These mortgages - known as Alt A - are one up from subprime, the riskiest category,” Mr Turner explained, adding that because nearly three million loans in the UK are used for such mortgages, “professional people” will begin to feel the threat of repossession.

And those worried about such action occurring may wish to seek debt advice from their bank or a financial advisory service.

Mr Turner’s views are shared by Al Elliot, advisor for the Homeowners Advice Centre, who recently stated that repossessions will increase in the coming months if lenders do not put their customers’ needs ahead of the desire for profit and pass on the recent interest rate cuts.

By Tom Musk

Share This

Homeowners who are struggling to make their mortgage repayments have been urged to contact their lender over the issue as soon as possible by the Homeowners Advice Centre.

Advisor for the body Al Elliot noted that, in order to reduce the risk of repossession, homeowners who cannot meet their payments need to talk to their bank or other lender “sooner rather than later” about getting mortgage debt advice.

“[Talk] about swapping to interest-only payments as most lenders will refuse to do this if you are in arrears,” he advised.

And he also urged those who do move to interest-only payments to switch back as soon as their financial situation allows, otherwise the homeowner will become liable for the full mortgage balance once the loan period expires.

Research conducted for Cheltenham & Gloucester in September revealed 42 per cent of homeowners worry about the lack of mortgage options available to them

By Tom Musk

Share This

Natwest and Royal Bank of Scotland have offered customers additional debt help by reducing rates on their fixed-rate mortgages.

Customers who opt for fixed deals will benefit from rates that have been lowered by 0.35 per cent to 0.60 per cent, as well as smaller arrangement fees that have been cut by up to £500.

The new rates are available for those looking to remortgage or buy their first property, the banks revealed.

They can choose from two or five-year fixed-rates deals, with loan-to-values ranging from 75 per cent up to 95 per cent.

Andy Fell, director of branch mortgages, commented: “We remain committed to making lending available to ensure we support our customers during these challenging economic conditions.”

Meanwhile, Abbey has also cut rates on its three-year fixed mortgages after its research showed that fixed deals are still growing in popularity - despite the Bank of England’s base rate reduction, which lowered the cost of tracker products.

Share This