Posts Tagged ‘Mortgage Advice’

Mortgage Broker Q & A – Removing a party from a mortgage

Friday, October 30th, 2009

Question – I have a joint mortgage currently and we want to change it to being solely in my name or my partners what do we need to do?

Firstly you need to establish whether your existing mortgage is still within any tie in period and what penalty there is if so. Then you need to check with the lender whether they are happy for the mortgage to be in only one of your names, which will mainly come down to their assessment of whether it is affordable to you as a single applicant.

They will re-assess the affordability of the case as if it was a new mortgage. If they are happy that you can afford it alone then a new mortgage contract will be required and there will be costs involved with the legal process of making the transfer of equity. However if they are not happy you will not be able to make the change without finding a lender that does believe you can afford the mortgage in your sole name. As it’s a contract the only way to make the change if your existing lender is not satisfied is to change lender and this is where it becomes important to consider any early repayment charges and whether it is best to wait until these penalties cease.

As well as affordability the lender will usually re-assess you as a credit risk and possibly the property value. If however you are considering this because of an impending bankruptcy this will not actually prevent the property from being seized which is a common myth.

As usual if your need further information about this call 0845 4594490 to a speak to a mortgage advisor about your own circumstances.

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Mortgage Broker Q & A - Mortgage on a freehold flat

Wednesday, September 30th, 2009

In Q & A we take a look at some of the questions mortgage advisors answer on a regular basis.

Question; I have been told it’s difficult to arrange a mortgage on a freehold flat, why is this?

In a freehold you are responsible for the maintenance and insurance of the building and own the land on which it is built, which in the case of a normal house is a good thing.

However in the case of a flat this means that there is no clear definition around who is responsible for which parts of the building. Your roof is your neighbour’s floor and your floor is someone else’s roof.

Imagine then that your upstairs neighbour leaves his bath running and your roof collapses, whose responsibility is this now? If your neighbour has no insurance then it could get pretty messy and that’s why as a mortgage lender it’s a bit of a no go area.

This problem can also occur with what’s known as a flying freehold, this is a maisonette or house where some of the property extends over or under another property on a freehold tenure.

If you are in need of a mortgage on such a property they may be steps you can take to go about getting one so call 0845 4594490 to speak to a mortgage advisor for specific advice on the area.

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Mortgage Calculators for maximum loans are a waste of time

Friday, July 31st, 2009

The next part of my why you should use a mortgage broker theme of the week is the humble affordability calculator.

We do a little pay per click advertising on the various search engines, this is no secret. But it surprised me to see so many hits coming through the somewhat spurious term “mortgage calculator” and it occurred to me that rather than this being people searching to find out what their monthly payment would be (as pretty much everyone has one of these calculators) it is probably people looking to see how much they can borrow.

If this is the case and you are reading this article because you were looking to find that out let me explain something, calculators that purport to tell you what the maximum you can borrow is are a waste of your time. Plain and simple.

The reason is this, every lender will take a multiple of your income and your partners if applicable or a percentage of your gross or net income and the sum will be different with ever lender. They may then deduct your loans and other credit commitments (but the way they do this will also be different with every lender). They may deduct a figure for each dependent child you have, and they may use their standard variable as a basis for affordability or the product rate you will be borrowing if they use a rate to calculate it at all.

Clearly a calculator cannot be set up to work out the maximum based on all the different methods of assessment used, so they use a “best case” method to give you a rough idea. This might seem useful but if the best case happens to be a bit optimistic it could cause you some big headaches and if it is woefully underestimated then you might miss your dream home based on poor information. The only calculators that are reliable are those on lenders websites, but they only work for that lender and will often be based around your credit score anyway which you cannot predict.

Affordability assessment is very complex and is an ever changing landscape, so if you want to know what the maximum you can borrow is speak to a mortgage advisor as that’s what we’re here for.
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Mortgage Advice VS Comparison Sites

Thursday, July 30th, 2009

There’s some big shifts in the market at the moment which are affecting all mortgage advisors quite a bit, and one of the biggest trends is the growing movement towards self execution facilitated by comparison websites.

Now I am a fan of the internet and I even support the comparison websites as they do have a valid role to play. But Financial Advice and Mortgage Advice are not defunct because of them and I want to give you some points to consider in my posts this week.

I had a scenario recently of someone looking to buy a second property as an investment and repay a mortgage over a very short term perhaps 10 years. The client was self employed and wanted a product without any tie in.

Now in this scenario he would have very high monthly payments, and it is a tricky market for affordability at the moment. The best rate product for his requirements also had an offset facility so I suggested he could increase the term of the mortgage reducing the payments he had to make and make the loan look more affordable. However as it was offset he could pay as much as he liked extra and this would then reduce the mortgage term back in line with his requirements.

This meant that he wouldn’t have to make the high payments but could do so if he wished, and for a businessman in the credit crunch that is a very useful option to have.

I think this is a prime example of how mortgage advice plays a very different role to a comparison site. In this case it wasn’t about getting a lower cost, but using a products features to improve his chances of getting the loan, and to reduce the financial risk to him and his business without increasing the cost. That’s why a Mortgage Broker is well worth speaking to regardless of how much experience you have of mortgages.

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