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Feb 22, 2007 Comments Off

Fast Remortgage


We live in a fast paced society where peoples need to have instant gratification is prevalent. Whether it is instant access to download music at the click of a button or a 2 minute microwaved dinner, people what their goods and services instantly or they go elsewhere or lose interest and move on.

Managing your personal finances is also heading this way. Banks and lenders are at the cutting edge of technology offering sophisticated online banking, automated telephone banking and the ability to arrange mortgages and loans without leaving your house. All of this is making managing your finances a lot easier and quicker whilst making personal finance more accessible to the masses.

Consumers need for speed has also spread through to the remortgage process, a process that traditionally could take up to two months before the funds clear. But the lenders use of technology and desire to give the customers what they want has meant that this process has now been cut right down and a remortgage can complete in a matter of weeks.

One of the easiest and simplest ways to save money is to remortgage to get yourself a better interest rate. But in years gone by when you needed to free up some cash quickly a remortgage would not have been the fastest option. This is no longer true, remortgaging to another lender or product can provide you with a quick way to raise money. Although depending on your circumstances you maybe liable for an early repayment charge, which is a penalty for breaking the deal with your mortgage lender.

Click Here To Remortgage Fast

The recent developments in technology have seen the increased usage of automated valuation systems or AVMs in the mortgage application process, which means that almost instant offers are now available.

AVMs utilise electronically stored data about house prices so valuations can be carried out in real time as opposed to having to send someone out physically to carry out a valuation. This means that cases can now be completed in a matter of weeks or less.

For those cases where an AVM can not be used it will automatically instruct a physical valuation and automate the whole process save lots of time and administration costs.

This is great news for those borrowers that need a fast remortgage. With all those Christmas debts to pay off and the sharp hike in interest rates many homeowners have fallen into debt.
With many homeowners failing to keep up with their mortgage payments and sinking further into debt a remortgage is a great solution to pay off any outstanding debts, clear arrears and switch to a new lender for a better deal. Now all of this can be done very quickly, in a matter of weeks. This is great as it stops the homeowner falling further into debt and facing the prospect of repossession.

If AVMs are adopted by more lenders at the start of the application then you will be able to remortgage to a deal of your choice in a matter of days.

But don’t forget to make sure that remortgaging is your best option, as sometimes a further advance or secured loans will be more cost effective. Speak to your mortgage broker before you decide.

Related Links: Adverse Credit Remortgage Mortgage Arrears Commercial Remortgage

Feb 22, 2007 Comments Off

Buy to Let Schemes

Buy to let schemes have become increasingly popular in the last few years and many mortgage lenders are now more than happy to finance a buy to let mortgage on most sound investment properties. This is due mainly to an increasing number of people wishing to take advantage of the continuing rise in property prices and the shortage of property for rent in the private sector.

To the potential buy to let investor, the prospect of rental income and a possible capital gain on disposal of the property is an extremely enticing one. This factor coupled with poor stock market performance in recent years has added to the property investment boom.

The fierce competition in the marketplace has now meant that the rates have become almost comparable to that of owner occupier mortgages. Traditionally interest rates have been higher for buy to let schemes and although this is still the case; the gap has significantly reduced in recent years making these schemes evermore viable for investors. A buy to let mortgage presents a greater risk to the lender because:

# There is no guarantee as to the consistent availability of tenants. Any periods during which no rental income is being received will affect the borrower’s ability to keep up the monthly repayments.

# The borrower may adapt a different attitude to the buy to let mortgage than if the property were his own.

# The value and saleability of the property may be adversely affected if it is badly treated by tenants and not maintained properly by the landlord/borrower.

Many buy to let mortgages are now available on a fixed or discounted rate. The terms and conditions of the mortgage will be similar to those of a conventional mortgage. They will usually contain a lender’s arrangement fee and an early repayment charge.

The main difference when applying for a buy to let mortgage, to that of a conventional mortgage, is the method of deciding suitable affordability/deciding how much to lend the applicant. The amount of the permitted advance is usually calculated on the basis of the expected monthly rental income being around 125% of the monthly payment of the loan – This is as opposed to using income multiples.

It is possible to arrange buy to let mortgages for up to 80% of the property value. The investor must first ensure that the rental income would cover the mortgage repayments and also the running costs.

The lender will ensure that a suitable form of tenancy agreement is used so that it is not prevented from obtaining a possession order in the event of default.

Potential buy to let investors will need to consider the following points:

# The location of the property. This is a very important consideration as different areas will have different demands for rental property. There are areas around the country where there is an abundance of property for rent, and not enough potential tenants to match the supply. On the flip side of course, there are hotspots around the country with limited rental properties available, which could produce a higher rental yield by investing there.

# The type of property. Many investors believe that one bedroom flats are easier to rent out than two bedroom flats. They will appeal to a range of tenants from couples to single professionals. It is important in this case to research the different areas to see where the demand lies.

# Property management. Often buy to let investors will use the services of a letting agent. The services of a letting agent will include sourcing and qualifying tenants along with the maintenance of the property. The letting agents will charge a fee for there services and this must be taken into account when working out the rental yield. The fee is usually worked out as a percentage of the rental income.

# The type of tenancy. An assured short-hold tenancy is the most effective lease. This will allow the landlord the right to take possession of the property at the end of the lease.

Along with the initial planning requirements, it is also necessary to consider the potential disadvantages associated with buy to let investment:

# The quality of the tenant can never be guaranteed.
# The availability of tenants again, cannot be guaranteed.
# House prices can fall as well as rise.
# Regular investment must be made as fixtures and fittings will be subject to wear and tear.
# Property is not a liquid asset. If the investor wishes to realise his capital, this cannot be done without first selling it.

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Feb 22, 2007 Comments Off

Mortgage Regulation

Since 31st October the sale of mortgages has been overseen by the Financial Services Authority. Prior to this time, regulation was undertaken on a voluntary basis under the terms of the Mortgage Code. The Mortgage Code was a code of practice which was established by the council of Mortgage Lenders (CML) and overseen by the Mortgage Code Compliance Board.

The role of the FSA is to oversee the regulation of the financial service industry in the UK and which incorporates most of the mortgage market. The FSA and the subsequent regulation brought forward have essentially come about by the need to offer a more efficient safety net for consumers.

Anyone who wishes to sell mortgages, whether they are estate agents or mortgage brokers, must be directly authorised by the FSA or must become part of an FSA authorised network.
Under the FSA regulatory regime there is a very important distinction between information and advice sales. The sales process must distinguish between on one hand cases where advice is given; and on the other hand those where information is given and a series of pre-determined questions are used in order to act as a filter through which a client can narrow down the selection of mortgages.

If you proceed with an information only sale then you will receive solely information about that particular product or range of products – no advice or recommendation will be included. An information only sale is usually only suitable for borrowers who are certain of the type of mortgage that they require. Only individuals who proceed with an advice-based sale can seek redress through the Financial Ombudsman service.

The scheme is designed as a safety net for borrowers which aim to offer compensation when financial firms go bust. In addition borrowers will be able to take their complaint to the Financial Ombudsman Service (FOS) The Financial Services Compensation Scheme in relation to Mortgage advice and arranging will cover the following:

# Claims against firms involved in mortgage advice and arranging: 100% of the first £30,000, plus 90% of the next £20,000. (A maximum total of £48,000).

Where an advised sale takes place, it must be based not only on a consideration of which mortgage best suits the client’s needs, but also on the affordability of the scheme for that client - An increasingly important factor which must be considered in an effort to stem irresponsible lending.

At all points of regulated mortgage sale, borrowers will now receive a ‘Key Facts’ document. This summary document outlines the key features of the mortgage product which will include:

# The fees and costs associated with setting up the mortgage.
# The interest rate applicable and monthly mortgage payment amounts.
# The commission payable to the seller from the mortgage lender in the event of mortgage completion.
# The overall cost of the mortgage for every pound repaid.
# Early Repayment charges (if applicable).
# Overpayment charges (if applicable).
# Any additional features - such as a cash back special offer.

For the borrower, The Key Facts (KFI) document primarily acts a tool to compare different mortgage products on the market. It also aims to make the overall process of shopping around more transparent.

It must be understood that not all mortgage contracts are covered under the watchful eye of the Financial Services Authority. For example, Buy to let commercial mortgages are not covered unless 40% of the property (including the land) is being used as a residence by the borrower or a direct family member.

Key Changes

A "Key Facts" document summarises details and allow consumers to compare mortgages easily Price information in any advertising and marketing material must be clear Both the pros and cons of the mortgage deal must be given in any advertsWhere advice is given, firms must ensure consumers are given a "suitable" mortgage.

Both lenders and advisers have to consider whether consumers can afford the mortgage if factors, such as, interest rates changed Charges must not be excessive.

New standards are being introduced to improve the treatment of consumers with payment difficulties or facing repossessionAdvisers must undertake specialist training.

This is aimed at helping people shop around and making the process more transparent. Salesmen are required to disclose any commissions they are getting and, whether they deal with the whole market or just one lender.

At the point of all sales, consumers now receive a summary document which illustrates the key features of the mortgage, known as a "Key Facts" document. This is aimed at helping people shop around and making the process more transparent.


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