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Things aren’t always as bad as they seem

The Halifax have just announced a small drop in their house price index for June of 0.5% which on the face of it would suggest that the worst may not yet be over for property values despite promising rises in similar index’s over the past few months.

However there is a general feeling among the industry now that the bottom is out, and while prices are likely to remain fairly stable for at least the next year due to lack of mortgage products there is some good news out there for people looking to borrow.

Recent research from Unbiased.co.uk suggests that many people now believe that they can only get between 0.5 and 2.5 times their income when looking to mortgage and that only 24% of the UK believes they could arrange a mortgage for more than 4 times their main income.

The truth is that most lenders will accept four times main income as a guide or perhaps 3.5 times joint income however 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 are holding significant savings and have existing loans which have a short term to run it may be worth considering paying off loans before applying for a mortgage in order to assist your maximum loan and affordability calculation particularly if you also have children.

If you are unsure how much a mortgage lender will consider lending you many now have useful calculators which will give you an indicator of their maximum loan available on their websites.

Getting the right advice

As a mortgage advisor you often have to try and combat the expert opinion of “the bloke down the pub” and even apparently knowledgeable sources.

Whilst looking for a table of current standard variable rates recently I came across this quote on fool.co.uk;

“First of all, let’s look at Standard Variable Rate (SVR). This is the standard rate of interest that lenders use and like it says, it is variable. This is because it is linked to the Bank of England base rate – so whenever that goes up, so will your mortgage rate and thus so will your mortgage payments.

However, SVR Mortgages aren’t just linked to the base rate, they’re usually set at around 1-2% higher. This makes this type of mortgage very expensive.”

Any mortgage broker worth his salt would cringe at the apparent advice that SVR’s are linked to the bank base rate and will move in line with them. Any borrower whose SVR is still standing above 3% is probably more than aware that this is not the case.

Actually the lenders SVR is a rate that could move in relation to many things including the LIBOR rate, bank base rate and just as importantly the need to attract savers in order to lend money in the first place which is one of the key reasons why the full extent of the cuts in bank base rate has not been passed on by many banks as well as their obvious need to re-capitalise.

What’s the point you ask? When you’re looking to find out what to do with your mortgage speak to a qualified and authorised mortgage broker whose advice is properly scrutinised for accuracy

If MP’s are claiming for mortgage interest don’t the public own the property?

I can’t help but get embroiled in the MP’s expenses debate seeing as it’s the only subject the BBC news feed on my website seems to be covering.

I have just this chestnut to offer;

If MP’s are claiming for their second homes but they are actually paying a mortgage with that bill then surely WE the taxpayer own the property?

I was just wondering because I am pretty sure it stipulates in their expenses rules that they are not allowed to gain financially from any claims they make. And I think buying a house for them might constitute a financial gain!

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 TYPICALLY CHARGE AN ADVICE FEE OF £299 PAID UPON FULL MORTGAGE OFFER. SOME BUY TO LET AND COMMERCIAL LOANS ARE NOT REGULATED BY THE FINANCIAL CONDUCT AUTHORITY
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