Mortgages Uncovered

Under new plans drawn up by the City watchdog, self employed persons will have to wait at least two years before they can get a loan. New business traders will thus not be able to buy their first home or even move house. This also means that those people who find that their one year introductory mortgage is coming to an end will be stuck on the standard variable rate until their two year trading anniversary.

The change has come about because from today lenders will have to confirm their applicant’s income which means that self-cert mortgages are effectively a no-no.

So how do you get a mortgage if you are self employed?

You now need to show two years tax returns or two years company accounts’ to get a mortgage if you are self employed.

It seems that the mortgage market is not recovering as well as expected, after reports that the number of mortgage products available in the UK dropped in the two weeks up to the beginning of July. At a time of year when many homeowners feel the need to move, this is not the news the new government expected.

The figures produced from Moneyfacts.co.uk stated that although the figures are much better than at the start of the year, when there were only 1600 products on the market, the numbers have stalled with little change to the 2600 products currently available.

The banks have also stated that they expect lending to fall over the next three months prompting fears that a new mortgage squeeze could be on the way. Mortgage rates are still dropping slightly, which is good news for borrowers, but it remains to be seen what happens in Q3 and Q4.

It can be really easy to get a mortgage from your bank or building society. You just have to walk in the door and because you are a current customer, they will blind you with technical jargon and what seems like great figures and you will leave with a mortgage in place. However this is really not the way to do it.

Banks and Building Societies will only have a limited range of mortgage deals and will fob you off with one of their own offers. What you need to do is spend a little time researching the market to find the best deal. If you use a website that offers a range of current best buy deals, you will be able to compare quotes and choose the most suitable deal available. Mortgage companies are falling over themselves to find suitable borrowers and by getting the best deal you could save a considerable amount of money.

According to the most recent reports there are only 2,282 mortgage products are on the market today. This means there have been falls in the number of home loans available.

This figure shows there is around ten times fewer loans around today compared to two summers ago. Although this must mean that there is lack of choice for the mortgage buyers it does mean that its now easier for brokers to recommend which Mortgages are suitable for individual consumers simply due to lack of variety which is frustrating as yet again the only people look set to loose out are the consumers-with a lack of choice it means there is higher potential that they will take up a mortgage which isn’t right for them.

Buying a home for the first time can be expensive at any time in ones life but now more so than ever. Many people are resorting to renting or even setting up home with friends as a way of being able to finance it. Most mortgage lenders require a deposit of at least five to ten per cent of the value of the property you wish to buy.

As the price of property increases, the deposit can become expensive. A lot of first time buyers are ex students whom also carry the burden of student debt so is getting a mortgage really the best thing to do or is it only going to get them into more debt which they will struggle to repay. It will leave almost their entire income to cover the mortgage repayments.

People that have a fixed rate mortgage cannot get out of their contract resulting in them not being about to take advantage of the low bank rates at the moment. Many people are now paying way over the odds due to being in a fixed rate mortgage a person paying five hundred pounds a month could probably save themselves a hundred to hundred and fifty pounds a month. So which type of mortgage is the best, as they all seem to have their problems in the current economic climate?

According to reports the Abbey National have the best fixed rate loan around at the moment at one time people would have jumped through fire to get paper work all sorted but now everyone is edging on the side of caution and they have reason to.

A few years ago it was said that getting an endowment mortgage was the way forward as it allowed buyer to receive cash in hand at the end of the fixed period. Now as many people know or are finding out, there are people with large short falls in the repayments of their mortgages.

Its now said that One in Three Endowments Will ‘Definitely’ Fail to Pay Off the Mortgage not only that but more than 60% of policyholders are likely to face a bill to top up their mortgage due to an underperforming endowment policy. These are sad facts as many people went into their contracts with the idea that it was going to benefit them not financially cripple them.

The administration of Obama is broadening it’s mortgage refinancing programme to allow more borrowers hit hard by falling home prices to take part. Loans are now worth up to 125% of the value of their homes and people are now eligible to refinance their homes under the Obama foreclosure prevention plan. Previously, the limit was 105%.

How many more people will be drawn to the program now, however, remains questionable, especially since mortgage rates are on the rise but the administrations have predicated that 4 million to 5 million mortgage borrowers would be helped with the broadening of the programme. So basically it would seem giving mortgages to the people who cannot afford to pay a mortgage has increased the problems of toxic debt that started the banking problems in the first place.

Politicians described the figures as “absolutely pitiful”, saying it didn’t begin to address the true extent of the problem facing Britain’s homeowners yet almost 1,000 homeowners are being evicted every week. Housing Minister John Healey said: “We have put in place help for home owners struggling with their mortgage at every step of the way.”

But the problem is now so great that the Government is supposedly establishing a new team to fast track the cases of those most at risk of repossession. The idea is that under the new scheme families that are eligible can either sell their home and become tenants of it or get an equity loan.

Within the Times newspapers recently, the paper has talked about an particular instance which saw a customer of Northern Rock turned down when he tried to take back his mortgage overpayment by withdrawing from what is called his ‘flexible’ mortgage.

There are many people who have these flexible mortgages with Northern Rock and have also been told that they may overpay but based on understanding that they may later withdraw their money back if they wished to do so by making a telephone call to the bank.

Apparently, a reader of the Sunday Times overpaid £1 million on their £3 million mortgage account and then tried to withdraw back £25,000 only to be surprised when met by a series of questions regarding his outgoings before he was referred to an underwriter.

Now it is official that Northern Rock customers may no longer have the option to withdraw overpayments.

An independent mortgage broker, Ian Gray told The Times Newspapers;

“This is yet another example of lenders tightening criteria for borrowers unexpectedly. Many people took out those flexible deals with the promise that it was a place to park cash and they could get it next day with a phone call. There are now serious questions about whether they can get their money.”