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Mortgage and Home Loan News: Co-op withdraws interest only options

Thu, 03 May 2012 16:22:45 +0100

The Co-operative Bank has become the latest lender to decide that it will no longer offer mortgages on an interest only basis.

It said that despite the popularity for the scheme, uncertainty over how balances would be paid at the end of the term plus a lack of certainty on interest rates means the decision was called for.

The FSA has made changes to how interest only mortgages can be offered as part of its Mortgage Market Review recently, with new guidelines set to come into force next year.

James Hillon, head of mortgages at The Co-operative Bank said: "The mortgage market has changed greatly in the last four years and as a responsible lender we closely monitor these developments."

The decision will now affect how the bank's existing customers pay back the mortgage.

Interest only mortgages have been increasingly used by first time buyers as a way of keeping repayments down in recent years, but the long-term ramifications of them not having a subsequent repayment vehicle could lead to them having to sell their home at the end of the term.

Mortgage and Home Loan News

First Time Property Buyer News: First NewBuy purchase is completed

Mon, 30 Apr 2012 17:11:11 +0100

New build broker Mortgage Talk has arranged the first NewBuy mortgage for first time buyers in the country.

The government backed scheme, which enables people to gain ownership of their first home by offering them the chance to put down a deposit of just five per cent, was launched on March 12th.

And 27-year-old Henna Rai became the first person to complete under scheme last week when she took ownership of a new Bovis Home in Peterborough.

She said: “I was done with renting and living with other people and felt it was time to do things on my own and stand on my own two feet.

"This is my first place and it really feels like a new chapter of my life – it’s great to be spending money on my own mortgage rather than someone else’s.”

Lisa Burns-Kent, head of new homes sales at Mortgage Talk, said that the firm has seen a influx of interest since the scheme launched and she expects many more completions to go through in the next few months.

First Time Property Buyer News:

First Time Property Buyer News: First time buyers should do all they can to improve their credit score

Mon, 30 Apr 2012 10:43:04 +0100

As well as ensuring that they have saved up an adequate deposit, first time buyers should do all they can to ensure their credit history is in tip top shape.

Catherine Hearnden, director of MyMortgage Direct, says that while finance is becoming more available for would-be first time property buyers, lenders are still only looking to take on those with a exemplary financial past.

"What we are finding is that your credit file has to be absolutely squeaky clean, so if you think that you are going to start saving up for a deposit and you might be thinking of taking out a mortgage in the next few months or few years even, then you need to check your credit file and check what is on there," she said.

"We have found that there has been an increase in identity fraud which stops you getting a mortgage because, until it is sorted out, the lenders won't lend. We have seen an increase in them refusing loans just because of tiny defaults, poor credit and for not being on the electoral role."

Contrary to what you might think, having no credit whatsoever can also work against you. If you haven't ever borrowed money before via things such as credit cards and personal loans, it is likely your credit score is low due to a lack of history.

Those who have had a moderate level of debt and have always maintained their payments on time generally perform better when it comes to credit scoring.

First Time Property Buyer News

Landlord and Tenant News: Knowledge gap exists for accidental landlords

Fri, 27 Apr 2012 13:40:48 +0100

The number of accidental landlords in London has grown significantly over the past couple of years, but one property expert is concerned that the trend is leading to a culture of people letting out their home without first learning what it means to be a property professional.

Marie Parris, managing director of George Ellis Property Services feels far too many people have jumped into the private rental sector out of desperation to move rather than a real desire to make money out of their home.

Accidental landlords are people which due to the current state of the housing market have decided to rent out their existing property and then move to a new one.

It can be a smart move if you happen to live in an area where rental yields are high and profit is easily made.

But many people do it just as a way of playing the system because they’ve seen a house and like Verucca Salt they ‘want it now’ rather than getting into a chain involving the sale of their own property.

And it’s these people Ms Parris is worried don’t have the knowledge to be a landlord effectively.

“As landlords there are myriad laws, regulations and guidelines we need to adhere to. Accidental landlords are likely not to have that knowledge, and you tend to find it's those landlords who are getting into problems,” she said.

Landlord and Tenant News

First Time Property Buyers News: Buying with friends and family could be an option for first time buyers

Thu, 26 Apr 2012 12:46:07 +0100

Potential first time buyers who are struggling to raise the deposit needed to get a mortgage should not rule out buying with family and friends as a way around the problem, the National Association of Estate Agents (NAEA) has said.

However, because buying a house is often the biggest move a person makes in their entire life, weighing up all options and ensuring that agreements are set out correctly is imperative when it comes to making a joint purchase.

Wendy Evans-Scott, president of the NAEA, said that although more mortgages are becoming available for first time buyers, the government has not helped their predicament recently by refusing to extend the stamp duty holiday previously available on purchases up to £250,000.

However, she added: "Splitting the cost of a substantial deposit, maintenance and mortgage repayments could make owning a home a more realistic aim for many would-be first time buyers.

“I would, however, advise anyone looking to enter into joint ownership that a transparent relationship between all parties is imperative if the process is to go smoothly. That is a vital step whether you are buying with family, friends or another third party."

To help first time property buyers, NAEA has set out five key recommendations. These are;

Consider your mortgage options – With a combined income and higher deposit more products will be available to you so researching and understanding how interest rates work and weighing up the pros and cons of varying fees is of the utmost importance.

Think about what will happen if things go wrong – This could involve getting a solicitor to draw up a co-ownership contract between you and the person you are buying with and an agreement is already in place if one party’s circumstances change.

Keep all your paperwork in order – Effectively this is a business agreement between the two of you. Ensure that all paperwork is drawn up in both names and all parties have easy access to them.

Make an inventory – This will ensure that if things go wrong you will easily know who owns what.

Be realistic with timeframes – If you are buying with a friend it is likely that this relationship is only temporary, so look at this as more of a short-term investment rather than a home for life.

First Time Property Buyers News

Mortgage and Home Loan News: Five year fixed rates fall to two year low

Wed, 25 Apr 2012 13:34:07 +0100

Good news for people looking to buy a property, UK mortgage rates have come down slightly in the past 12 months.

A new study by Moneyfacts.co.uk has found that the average five year fixed mortgage rate has fallen from 5.59 per cent last year to 4.89 per cent today.

And that’s even lower than in April 2010, when the average five year fixed product stood at 5.87 per cent.

Louise Holmes, spokesperson for Moneyfacts.co.uk, said that fixed rate mortgages remain popular amongst those looking to step on to the property ladder as well as those remortgaging because they offer the reassurance of a set monthly payment.

This is particularly beneficial when it comes to planning budgets.

She added: “Interest rates are predicted to stay at the historical low of 0.50 per cent for the foreseeable future. Borrowers would be wise to take advantage of the low mortgage rates, however, as lenders will begin increasing product rates once interest rates rise.”

However, the rate is often not the biggest concern for potential first time buyers, raising an adequate deposit is.

Mortgage and Home Loan News

First Time Property Buyer News: Five year optimism for first time buyers

Wed, 25 Apr 2012 12:40:17 +0100

Optimism amongst potential first time buyers is growing and many expect to take their first steps on the property ladder within the next five years, a new study has claimed.

According to the Post Office, one in eight people (12 per cent) say they hope to buy their first home in the next half-decade.

Of that number, 22 per cent said they will be looking to buy in 2013, while 14 per cent are expecting to own a home before the end of this year.

Mike Cook, head of mortgages at Post Office, said: "First time buyers are the life blood of the property market and our research shows that challenging stories about first time buyers and wider economic issues have not dampened aspirations to get on the housing ladder.

“It is also interesting to see that despite the resurgence of 10 per cent deposit mortgages recently, the average first time buyer is aiming for the cheaper rates available at 15 or 20 per cent deposit - even if it takes that bit longer to save."

Some 45 per cent of those questioned said that they plan on saving up their own deposit. 28 per cent said that they will get help from their partner, while 16 per cent are hoping to receive help from their parents.

First Time Property Buyer News

Mortgage Rate & Home Loan News: One in seven on interest only with no way of ever repaying

Thu, 19 Apr 2012 11:09:08 +0100

One in seven mortgage holders are on interest only deals with no vehicle to repay back the capital at the end of their term.

According to a new study from unbiased.com, 1.6 million households are merely paying the interest on their mortgage and not saving anything towards clearing their debt in the future.

Karen Barrett, chief executive at unbiased.co.uk, said: “With incomes squeezed, it’s not surprising that many people are trying to save money by sticking to interest only mortgages, but this is a potential ticking time bomb.”

She added that worry factor is the large number of people who are approaching retirement age but still have an interest only mortgage and no means to pay it off.

At present most lenders are clamping down on usage of interest only lending as a way of obtaining properties which would be unaffordable under normal circumstances.

At the same time, the Financial Services Authority (FSA) is increasing its requirements on interest only UK mortgage debts as part of its latest Mortgage Market Review.

UK Mortgage debts

First time property buyer news: 95 per cent mortgage availablity on the increase

Tue, 17 Apr 2012 14:20:00 +0100

The stamp duty holiday for first time buyers may have recently ended but there is still some cheer for people looking to make their maiden voyage into the property market.

Moneyfacts is reporting that the number of mortgage deals available up to 95 per cent loan to value (LTV) has more than doubled during the past 12 months, rising from 27 to 61 today.

At the same time the amount of products available with a maximum LTV of 90 per cent has also increased from 228 last year to 316 this month.

Louise Holmes, spokesperson at Moneyfacts.co.uk, said that the figures spelled good news for first time buyers, particularly ones that have struggled to raise a significant deposit.

"Over the past couple of years we have seen the high LTV mortgage market stage something of a comeback, mainly due to high demand from borrowers with limited deposits," she said.

"The first time buyer market is often considered to be the life-blood of the housing market and mortgage lenders recognise this."

Buy to Let Investment News: Buy to let market to continue growth

Mon, 16 Apr 2012 10:46:51 +0100

The buy to let market is set to continue flourishing this year despite concerns to the contrary, a mortgage brokers firm has claimed.

A new report from Paragon Mortgages estimates that landlords will significantly add to their existing portfolios during the remainder of 2012, while 23 per cent of all buy to let business will be conducted with people investing in property for the first time.

The brokerage says that mortgage enquiries from established and would-be landlords made up more than a fifth (21 per cent) of all the enquiries it dealt with during the first three months of this year.

"It is particularly interesting to see the increase in first-time landlords entering the market, this not only demonstrates confidence in the market but also that buy-to-let remains an attractive business," John Heron, director of Paramount Mortgages, said.

Figures produced by the Council of Mortgage Lenders (CML) show that buy to let market grew by 20 per cent in 2011.

Mortgage and Home Loan News: Demand for new mortgage deals high

Wed, 11 Apr 2012 12:26:10 +0100

According to new figures, the number of people looking to remortgage their property hit an all-time high last month.

Online advisory site unbiased.co.uk has revealed that 37 per cent of all searches last month came from people looking to raise funds or a agree a new deal on their current home.

Karen Barrett, chief executive of unbiased.co.uk, said: "Our consumer search has seen an increase in the number of people searching for remortgage advice, indicating borrowers who are worried about lending criteria getting tighter are now taking the opportunity to ensure they can obtain the best rate before it becomes harder to switch to a better deal."

She added that the number of mortgage deals on the market could become sparse next year as lenders tighten their belts due to new rules from the Financial Services Authority’s (FSA) Mortgage Market Review.

This is part of the FSA’s clamp down on irresponsible lending, but many perfectly normal borrowers are likely to also feel its impact.

Mortgage and Home Loan News

Mortgage and Home Loan News: Building society lenders grows considerably

Fri, 30 Mar 2012 09:47:46 +0100

Gross mortgage lending from building societies and other mutuals grew by 28 per cent year-on-year last month, the Building Societies Association has revealed.

The number of new mortgage approvals rose by 31 per cent on February 2011 and 29 per cent on the month previous.

It is believed that the large number of first time buyers seeking to push a purchase through prior to the end of the stamp duty holiday last week as a big factor in the increased figures.

Adrian Coles, director general of the Building Societies Association, said: "Gross lending and new mortgage approvals by mutuals continued to rise year-on-year in February, despite growth across the market as a whole remaining relatively flat.

“The strong financial results released by a number of mutual lenders in recent months show that the sector is well positioned to offer market leading products to its customers and are open for business."

Brian Murphy, head of lending at Mortgage Advice Bureau, added that the figures show that building societies are committed to lending and people who are looking to buy a property can expect to find some good deals.

Mortgage and Home Loan News: Coventry release new buy to let range

Tue, 27 Mar 2012 16:47:30 +0100

Coventry Building Society has launched a new range of buy to let mortgage products with low interest rates.

The headline product is a 3.75 per cent two year fixed rate at 65 per cent loan to value. It has a £250 booking fee with a £2,249 arrangement fee added to the loan.

It’s an attractive deal for those landlords looking to remortgage or purchase a higher value property, but obviously you’ll need to put down quite a hefty deposit or have a considerable amount of equity if arranging a remortgage and the fees are far from the lowest around.

Colin Franklin, sales and marketing director for the society, said that low rates are important for those which are looking to borrow higher amounts.

He added: “The fees attached to mortgage products are often perceived as something to avoid, but in some cases you can save money on your mortgage by paying a flat fee and getting a lower interest rate in return. So borrowers requiring larger mortgages may be better off with a flat fee rather than a percentage fee.”

Other rates on offer are two year fixed rates at 3.99 per cent and 4.25 per cent. They both have booking fees of £250 and the arrangement fees are £1,749 and £999 respectively.

First Time Property Buyer's News: Halifax launch mortgage pays half off stamp duty costs

Wed, 21 Mar 2012 13:56:26 +0000

The Halifax has launched a new mortgage rate which it hopes will help to alleviate the problems many potential first time buyers will have after the stamp duty holiday ends on Saturday.

The terms of the new product mean that the bank will pay half of a first time buyer’s stamp duty costs, potentially saving them up to £1250.

The deal is fixed for two years at 5.99 per cent does not have a product fee and is available for purchased between 85 and 90 per cent loan to value (LTV).

Stephen Noakes, mortgage director, Halifax said: "Over the last two years, the stamp duty exemption has helped 40 per cent of first time buyers. Now that it's coming to an end, we're keen to do what we can to continue to support those buying their first home, and soften the blow of a stamp duty bill at what's already an expensive time."

Recent research from the Halifax found four out of ten first time buyers in the past two years have benefitted from the stamp duty holiday.

First Time Property Buyer's News: Average deposit exceeds 20k

Wed, 21 Mar 2012 13:54:34 +0000

New research shows that the average first time buyer is saving a deposit of more than £20,000.

According to the study conducted by unbiased.co.uk, an average home for someone taking their first step onto the property ladder costs in excess of £153,000 so to arrange a mortgage at 85 per cent loan to value (LTV), they would have to save up £22,706.

And if they wished to access more competitive deals at 75 per cent LTV, they would need to save £38,206.

Karen Barrett, chief executive of unbiased.co.uk, comments: "Our latest research highlights the gap between the amount first time buyers are able to save up and what is needed to access the most competitive rates in the market.

“While saving towards that initial deposit is no easy feat in the current economic climate, the figures show that if first time buyers' aim towards a larger deposit they could save significantly on their yearly repayments. Long gone are the days of 100% LTV mortgages and £10,000 deposits.”

Last month, unbiased.co.uk revealed that the number of enquiries it has received from potential first time buyers in January was at its highest level for 23 months.

First Time Property Buyer News: One in four benefited from stamp duty holiday

Mon, 19 Mar 2012 14:32:03 +0000

According to research conducted by the Halifax, one in four first-time buyers have benefited from the stamp duty holiday since it came into force in 2010.

The break, which allowed first time property buyers not to pay the tax on purchases up to £250,000, is set to revert back to the standard starting point of £125,000 this weekend, and the Halifax believes this will mean that 45 per cent more first-time buyers will end up shelling out.

People in London and the South East have benefitted most from the holiday, with seven in ten first-time buyers not having to pay stamp duty in the past two years.

Martin Ellis, Halifax housing economist, said: "Returning the threshold to £125,000 will hit those buying their first home in these parts of the country most.

"The doubling in the starting threshold has been a significant benefit to those who have benefitted during a time of economic and financial difficulty for many. A first-time buyer making a purchase of £200,000 will see their buying costs increase by £2,000."

First Time Property Buyers News: Many first-time buyers fail to look at what is important when buying a home

Fri, 16 Mar 2012 17:15:32 +0000

While the prospect of owning your first home is undoubtedly exciting, new research from HSBC shows that many first-time buyers are so wrapped up in getting a foot on the property ladder that the ignore faults the property may have.

Just six per cent of people questioned said that they considered the cost of updating their property before they agreed to buy it, only four per cent looked at the condition of nearby homes, and a miniscule five per cent said that they looked for signs of subsidence.

Asked what they felt were the most important factors when looking for their first home, 25 per cent stated location, 27 per cent opted for outside space, while 21 per cent said it was local amenities.

Peter Dockar, Head of Mortgages at HSBC said: "It is important that first- time buyers consider more than just their immediate desires when looking for their first home, as otherwise they could well be in for a financial headache further down the line.

"While in the excitement of searching for their first property they may not like to think about the required maintenance or, the condition of items such as the boiler, these will be a concern if it is something that they have to pay to fix at a later date.”

"Buying a home is a serious financial commitment so it is important that first-time buyers do their homework and are aware of all of the potential costs involved to ensure they can maintain the value of what is, after all, likely to be the biggest asset for most."

A group of estate agents were asked their thoughts on what is important when it comes to buying a property and their replies were significantly different to those given by first-time buyers.

Some 49 per cent said the most important thing is the property’s condition, while 33 per cent cited potential for future development.

First Time Property Buyers News: Higher LTV mortgages becoming increasingly available

Thu, 15 Mar 2012 14:06:05 +0000

Availability of higher loan to value (LTV) mortgage deals for first time buyers is on the up.

In addition to the recent news that several lenders will be backing the NewBuy Guarantee scheme by providing products up to 95 per cent LTV, it is likely that many banks and building societies will look to target people looking for their first property with other attractive deals.

This is according to Tim Lambert, head of investment property at Parallel Investment Management. He believes that while financial markets are still far from settled, more confidence in house values will see lenders being flexible with their offerings.

“I feel the main reason for this is that banks are now more confident that property has been through the worst period now and prices are stabilising in a lot of areas,” he explained.

"Consequently, if a borrower defaults and they repossess, they can be confident in the asset they are lending on. In addition, there is huge pressure from the government for banks to lend to individuals so that the market can return to some normality at least.”

However, he pointed out that while more money is likely to become available it won’t necessarily be cheap to borrow and first time buyers can expect to pay higher fees and rates of interest if they are looking for a higher LTV product.

Mortgage and Home Loan News: Buy to let set to boom this year

Wed, 07 Mar 2012 13:46:21 +0000

Take up of buy to let mortgage products is set to grow faster than any other type of home loan, it has been claimed.

Lee Grandin, director of Landlord Mortgages, believes that mortgage deals for property investors are increasingly becoming more available because lenders are beginning to realise that it is one of the few areas where market is still growing.

Indeed, a recent study conducted by Mortgages for Business found that three in five landlords are looking to extend their portfolios this year, while 63 per cent will need to refinance their existing properties.

"I think the market will start to increase proportionally more than any other mortgage sector. It is definitely a sector in the growth phase again," Mr Grandin said.

"Availability is there, but maybe there is just a shifting of lending towards buy-to-let as opposed to other types of mortgages. Lenders seem to be very keen to lend to landlords as opposed to residential property owners."

Landlord and Tenant News: Landlords looking to extent portfolios despite concerns over lenders

Mon, 05 Mar 2012 10:28:40 +0000

Three in five property investors will look to extend their portfolios over the next six months, claims Mortgages for Business.

Strong performance from the private rental market plus the availability of new mortgage products has give landlords the incentive to add new homes to their books.

Despite this, many still feel that lenders are not doing enough to help them.

Mortgages for Business' inaugural Property Investor Survey found that 62 per cent of the 185 landlords questioned believed that banks and building societies could offer them more support than they do at present.

Of that number 20 per cent feel that lenders should look to reduce their product fees, while 18 per cent believe that deals with high loan to value (LTV) ratios should be made available.

David Whittaker, managing director at Mortgages for Business, said: “Landlords remain confident about the future of the private rental market and plan to expand their portfolios over the coming months.

"However, more and more investors are exploring which options will give them the best returns on their investment."