Further to last week’s post, Cheltenham & Gloucester have announced a new product at 90% loan-to-Value and a reduction in their five-year fixed rates at 85% loan-to-value.
The new 5 Year fixed rate at 7.19% doesn’t look particularly appetising on paper; with a £995 arrangement fee, Early repayment charges staggered at 5% in the first two years and: 4,3 & 2% consecutively for the remaining years, a valuation fee of £300 based on a loan of £100K, with APR at 4.8% and a reversion rate currently at 2.5%, but it does reflect the general easing of criteria and willingness to lend at higher loan to value.
Again the reduction of .1% on their five-year fixed rate at 85% loan to value won’t have Mortgage Brokers dancing in the streets, but it is a small step in the right direction.
It now has a five-year fixed rate of 6.89%, a £995 arrangement fee, Early repayment charges staggered at 5% in the first two years and then 4,3 & 2% consecutively for the remaining years, a valuation fee of £300 based on a loan of £100K; APR at 4.6% and a reversion rate currently at 2.5%.
As usual, refer to the Key Facts Illustration before deciding on a Mortgage and seek independent Mortgage Advice to ensure the product is suitable.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
We do not usually charge a fee for mortgage advice, although you may pay up to 1.5% of the loan amount. Some buy-to-let and commercial loans, are not regulated by the Financial Services Authority.
The Bank of England announced yesterday that the bank base rate will remain static at 0.5% for another month, which is good news for the housing market, prospective borrowers and mortgage brokers.
In conjunction with massive falls in the London Interbank Offered rate recently and small falls in swap rates, the stage looks set for continued reduction in mortgage interest rates over the coming months.
HSBC and Lloyds Group announced large rate cuts in the lower loan-to-value range last week, and over the past few days, several lenders have announced changes to rates and criteria higher up the loan-to-value range.
While there has been little change in higher loan-to-value rates in the 80% and upwards category, there is a feeling among the mortgage advice community that things will now start to ease here too. Perhaps for remortgages in the first instance, but potentially for new purchases also.
Whilst it’s unlikely we will see any products at 95% for new purchase soon, things appear to be moving in the right direction, which can only be good news for homeowners and the economy at large.
Woolwich have announced changes to their 4.19% fixed rate until 31/10/2011 mortgage product at 70% Loan to value.
The product was restricted to a maximum loan amount of £200,000 and a minimum loan of £100,000. The amendments now allow maximum borrowing of £1 million and minimum borrowing of £50,000, opening the product up to a much wider audience, to the delight of Mortgage Brokers and borrowers alike.
The product remains the same otherwise with a £499 arrangement fee. The APR is 2.5%, and the reversion rate is 1.99%. Based on a loan of £100,000, other applicable fees are; a valuation fee of £295, a land registry fee of £200, a lender Conveyancing fee of £126 and a £35 completion fee. Early repayment charges are 3% until 31/10/2011.
As usual, consult a mortgage advisor and request a Key Facts Illustration about the mortgage before deciding.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it. We do not usually charge a fee for mortgage advice, although you may pay up to 1.5% of the loan amount. Some buy-to-let and commercial loans are not regulated by the Financial Services Authority.
I wrote a couple of weeks ago about the number of enquiries mortgage brokers receive about buying without a deposit.
But I forgot to mention a couple of other important ways to buy without a deposit in my previous post.
Firstly it is possible to arrange a gifted deposit from relatives; or even possibly another interested party, using a contract which entitles them to a specific share of the property. This contract would allow you to buy the interested party out at your choice; or give them a share upon any sale.
This device gives the giftor a legal right to some of the sale proceeds, even if values continue to fall, and much more certainty of receiving their gift back in the future.
Also, those who are lucky enough to have the right to buy a council property may be able to buy without a deposit as well because many lenders will accept the discounted value of the property as the deposit as long as their valuation reflects the council’s figures.
However, if you are eligible for a Right to Buy but live in a council flat, don’t get too excited, as many lenders are restricting their exposure on flats due to the flood of 1-bed properties built during the boom.
So if your property isn’t a house, it is a good idea to speak to a mortgage advisor and see whether a deposit will be required.
Halifax has just announced a drop in their house price index for June of 0.5%. This suggests that the worst may not yet be over for property values, despite promising rises in similar indexes over the past few months.
But there is a general feeling among the industry now; that the bottom is out, and while prices are likely to remain relatively stable for at least the next year due to a lack of mortgage products, there is some good news for people looking to borrow.
Recent research from Unbiased.co.uk suggests that many people now believe they can only borrow between 0.5 and 2.5 times their income when arranging a mortgage.
And only 24% of the UK population believed they could get a mortgage for more than four times their income.
The truth is that most lenders would accept four or more times the primary income as a guide, or perhaps 3.5 times joint income. The difficulty is really for those with dependent children, which has started to play a more significant role in lenders’ assessment of affordability and those people who have existing credit commitments which will continue to run after the mortgage completes.
If you have significant savings and existing loans, which have a short term to run, it may be worth considering paying off loans before applying for a mortgage. To assist your maximum loan and affordability calculation, particularly if you have children.
If you are unsure how much a mortgage lender will consider lending you, many now have calculators, which indicate the maximum loan, available on their websites, but the results of these are often questionably simplistic.
So if you want to know how much you can borrow, call a mortgage broker.
