Mortgages Uncovered

On April 6th 2007, regulation for equity release mortgages came into place.  Now, one year later, advisors now need to have a separate qualification in equity release mortgages in order to advise on them.

So no doubt we will be seeing more advertisements for the Certificate in Regulated Equity Release(CeRER).  Due to our aging population and the amount of equity those who have held a mortgage for ten years or more probably have, this is seen as a growth area Read the rest of this entry »

When I applied for my first mortgage, I remember my family, my work colleagues and my friends all telling me to ‘stretch’ myself and apply for the most expensive house I could afford.

The reasoning behind this train of thought was the seemingly ever-increasing value of houses.  If house prices increased on average by 10% over a couple of year, then having a more expensive house generally meant that you were making more money and gaining more equity in your home.

The question is, do you Read the rest of this entry »

Scottish Widows has withdrawns both its two and three year fixed deal mortgages – and gave its brokers only half an hour’s notice!

According to the email they received, this was due to a huge volume of mortgage applications and the current unique market conditions.

It was only last week they pulled their five year fixed rate and tracker deal mortgages in order to cut the backlog of applications.

Temporarily, they also stopped accepting Read the rest of this entry »

According to research by market analysts Mortgage Monitor, around 340,000 UK homeowners took out five year fixed rate mortgage deals in 2003.  Now that their mortgage deals are coming to a close, the increased cost of mortgages has many in danger of defaulting on their mortgage.

Some of these people will see their mortgage payments increase by up to 35%!   23% of those involved in the research said that they were worried about their new payments whilst many more said they had no idea how they would meet the payments.  The study involved 1143 mortgage owners.  14% suffered insomnia Read the rest of this entry »

A portable mortgage means that if you move house then you can effectively take your mortgage with you and have the same terms and conditions on your new mortgage.

However, sometimes people will sell their current house and not buy their new one immediately.  To stop people doing this, a redemption penalty is usually applied.

For example, my current mortgage (with Northern Rock as it happens) is portable.  If I were to sell my house now and not buy immediately, I would have to pay a redemption penalty for paying the mortgage off, which is about £3000 if I remember correctly.

However, if I then buy a new house within the period of my deal, I can claim my redemption penalty back proportionately.  As an example, if my mortgage were £100,000 and I paid it off when I sold my house, I’d pay them £3000.  If I then bought a new house and took my mortgage out again on the same terms at £100,000 or more, then I’d get my £3000 back.  BUT if my new mortgage was for just £80,000 I’d have a smaller mortgage – just 80% of my original one.  They would then refund me 80% of my £3000 redemption penalty, i.e. £2400.

A word of caution however – I know from acquaintances who have been through this that you do have to actually get your solicitor to ‘remind’ them to give you the redemption fee back.  If you don’t ask for it, you don’t get it – so as usual, read the terms and conditions!

Under the current scheme, a MSP can claim up to £11,400 per year towards interest on a mortgaged second home in the city of Edinburgh.

An independent review has now recommended this scheme to be scrapped.  In future, they will need to either rent a property or use a hotel.

I think this move is absolutely the right thing to do, why should public money be used to fund MSP’s buying a second home, which effectively is what it does.  It makes it cheaper for them to buy a second house – gees, if someone would pay the interest on a mortgage for a second property for me, then I’d do it!  They get to keep any profit when they sell the house.

The recommendation is likely to be accepted and more than 25 MSP’s currently using the scheme are resigned to losing this benefit.  Since the benefit was introduced, its helped MSP’s buy more than £5.8 million worth of property, saving them £1.2 million in interest.

The new recommendations also state that MSP’s should not be able to rent from close relatives and any rented office space should be independently assessed.

These changes took them long enough – former MSP Tommy Sheridan recommended the scheme be scrapped seven years ago!  Sheridan also said that MSP’s should be made to pay back any profit on the house sales as:

“It is a disgrace that MSPs have taken so long to drag their snouts from the trough. MSPs of all parties in the parliament have pocketed huge sums from speculating on the Edinburgh property market at the taxpayers’ expense”

I like Tommy Sheridan!

In our earlier article, we talked about how Northern Rock had deliberately increased its rates so they were uncompetitive and deliberately would not attract new business.

Now, they have made a determined move away from the sub-prime, low income mortgage market completely Read the rest of this entry »

In today’s Budget, Alistair Darling has said that he will be publishing a report recommending more long term mortgages.  Darling wants lenders to encourage 15, 20 and 25 year mortgage deals and he wants them to become more flexible.

Longer term mortgages would make the property ladder more stable and accessible, and to encourage lenders to do this, he said they need access to more low cost funding.  To this end, he is likely to recommend that the Financial Services Authority (FSA), the Treasury and the lenders to get together and create new banking solutions.

If borrowers continue to take up two and three year fixed-rate deals, this leaves them exposed and vulnerable to interest rate rises when those deals end.

We think this is a good idea for those on low incomes or first time buyers, but personally I doubt I’d take one up – they’d have to be something pretty flexible and special for me to be interested, but we’ll judge when we see them.

Hamptons Mortgages has today revealed that the number of mortgage completions slumped by 11.49% last month when compared to the same period last year.

Hamptons Mortgages believe that this is evidence that despite Read the rest of this entry »

Fraudulent solicitors? Surely not! Don’t they make enough money without resorting to fraud?

The Solicitor’s Regulation Authority (SRA) has launched an investigation into an unconfirmed number of solicitors, between 40 and 60, who they suspect may have been involved in mortgage fraud.

This has come about at around the same time as the Serious Fraud Office (SRO) is investigating Read the rest of this entry »