The Big Money Guide

Tag: mortgages

  • Save Money with a Fixed Rate Mortgage

    Save Money with a Fixed Rate Mortgage

    With a large number of Britons struggling with debt problems, the news that the Bank of England might well increase its base interest rate in 2015 was certainly not welcomed by anyone.

    Homeowners who are on the Standard Variable Rate (SVR) offered by their lender or are approaching the end of their current deal can save themselves a lot of money if they take action soon, says the comparison website MoneySuperMarket.

    The site’s Dan Plant commented that homeowners should reconsider the options they have at their disposal as far as mortgages are concerned before the Bank of England decides to hike its base rate.

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    He added: “The minute the base rate rises, and possibly even before, lenders will increase their rates as well, resulting in an increase in mortgage payments.”

    Plant went on to say that people who want to control their monthly expenses have no better option than to opt for a fixed interest rate, which will avoid future shocks and protect them against rate increases.

    The site did some research and came to the conclusion that borrowers who are currently paying 4.99% interest on an SVR loan could save as much as £4,749 if they changed over to the best deal that is currently available in the UK: a 2-year fixed rate mortgage offered by HSBC at only 1.49% per year, with a £1,999 arrangement fee.

    Someone who currently pays 3.99% would save up to £2,609 over a 2-year period with the same deal. If the base rate increases during that time, he or she would save even more.

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  • Tenants Have Less Protection Against Financial Disasters

    Tenants Have Less Protection Against Financial Disasters

    New research by insurance firm Aviva reveals that many of the seven million people in the UK who are currently renting a property are more vulnerable to debt problems should they suffer a sudden and unexpected loss of earnings or incur unforeseen expenditure.

    The study revealed that, while 13% of those living in a home with a mortgage have income protection, only 2% of individuals who live in rented accommodation have this type of insurance. For further advice, consult a real estate attorney.

    When it comes to critical illness cover, the situation is much the same, with 19% of homeowners having cover, compared to only 3% of those who rent.

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    A similar picture emerges when we look at life insurance: just over half (51%) of those who live in a home with a mortgage have life insurance, while the percentage drops to 23% for those who are renting.

    There is also considerable disparity between the two groups when it comes to home contents insurance, with 73% of home owners financed with mortgages being protected by this type of insurance, compared to the 40% of those who rent accommodation.

    The company’s protection director, Louise Colley, said: “When someone takes out a mortgage they are often asked to consider how they might pay it if they were seriously ill or if sadly an income-earner was to die.”

    She added: “If a family rents, these conversations may not happen, so there’s a risk that if a renting family loses an income, they may not have the protection that could help to pay the rent and cover the bills.”

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  • Housing Costs Eating Away at Disposable Income

    Housing Costs Eating Away at Disposable Income

    If you ever wonder why you still haven’t figured how to get out of debt after so many years a new study might have the answer: it’s simply because average weekly wages have failed to keep pace with the rising cost of living. Almost everything we buy has suffered from price hikes due to inflation and profit hungry companies – particularly in the last few years.

    Research by estate agents eMoov found that the cost of 20 cigarettes has increased by 4,370% over the last 40 years, the Daily Mail newspaper by 3,000%, cinema tickets by 2,133%, postage stamps by 2,067% and house prices 1,879%.

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    Compare those figures with average weekly wages that increased from £32 in 1974, to £517 today – an increase of 1,616%.

    The cost of the average house has gone up from £9,927 to £186,544 since 1974. To place that into perspective: it means that the average worker had to work 310 weeks to cover the cost of the average house (without interest) in 1974. Today the same worker has to work 360 weeks to cover the cost of the same house. To put that differently: the monthly mortgage repayment is gobbling up an ever-increasing share of workers’ income. Conuslt a premesis liablity lawyer for expert advice.

    While one could argue that people should be prepared to cut down on cigarettes and entertainment, housing is a basic living expense – and the study shows that it is taking up an ever growing share of the pie, leaving ordinary Britons with less disposable income.

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  • Rate War Predicted for Fourth Quarter

    Rate War Predicted for Fourth Quarter

    At last there is some good news for debt-ridden British consumers: instead of the expected increase in mortgage rates, about which we have written repeatedly in the past, the rates might actually be heading down in the near future.

    The news comes after a survey by the Bank of England released a few days ago predicted a meaningful narrowing of mortgage rate spreads during the final quarter of this year. It also renewed fears over the economies of Eurozone countries.

    The IMF warned of a slump in Eastern Europe and the German economy posted weaker than expected results, causing stock markets across the globe to plummet.

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    This means banks will have no choice but to compete for limited demand from consumers, and cutting interest rates might be the best option open to them.

    Credit availability dropped for the first time in two years, which lenders attribute to a changing risk appetite, the Mortgage Market Review and expectations for residential property prices. Lenders reported that they were less prepared to lend more than 90% Loan-to-Value for the first time since the Bank started asking this question last year.

    The survey also mentions: “Many lenders noted that operational issues associated with the implementation of the Mortgage Market Review had pushed down on credit availability over the summer.”

    Credit score criteria were also reported to have become stricter during the third quarter, which is consistent with the drop in availability.

    Lenders, however, expect both approval rates and loan availability to increase during the fourth quarter because of ‘market share objectives’.

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  • Expensive Bills and Mortgages Prevent Britons from Becoming Homeowners

    A new study reveals that nearly 25% of tenants now have no other choice but to spend half or more of their income on rent. The study also found that 30% of tenants consider their rent bills to be unaffordable.

    SpareRoom.co.uk, who conducted the study, also discovered that nearly 20% of tenants never expect to be able to afford their own home. This is double the number recorded in 2011.
    A lack of mortgage availability, rising house prices and increasing rents all play a role in the negative sentiment among renters.

    According to the latest statistics published by the Land Registry, the average house now costs £178,000 – very close to the record level of 2007. In London this can be as high as £500,000.

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    A director of SpareRoom.co.uk, Matt Hutchinson, stated: “For nearly one in five of Britain’s ever-growing population of renters, aspirations of home ownership are slipping away.” He also called the increases ‘unstoppable’ and says that first-time buyers are particularly hard hit. Many Britons, he added, would simply have to reconcile themselves with becoming lifetime tenants like their European counterparts.

    This might be easier said than done. Britons are used to owning their own homes, and they would do just about anything to make that dream a reality, including emigrating. A recent Santander study found that more than a million people were prepared to emigrate if that would mean being able to own a home. Others were prepared to cut down on new cars and holidays.

    Apart from not being able to buy a home, an increasing number of Britons are nowadays slipping into debt, usually harming their credit ratings in the process. Many of those individuals would benefit from professional debt management advice to get their financial affairs back on track if they ever hope to save enough for a deposit on a home.

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  • House sales in the UK are set to rise

    House sales in the UK are set to rise

    According to the Royal Institution of Chartered Surveyors’ house sales in the UK are set to rise. The next three months are looking positive for the UK housing market.

    Rics have predicted a rise in UK house sales and have put this down to the support for mortgage lending. In recent months the Bank of England have launched their Funding for Lending scheme which has worked to support the UK housing market and mortgage lending.

    The scheme is designed to help lenders by making cheap funds of around £80bn available to mortgage lenders. The lenders are then required to lend money to both commercial and personal borrowers. By doing so they are helping to boost lending rates and making mortgages more readily available.

    The rise in house sales is set to be the highest since May 2010. This is really positive news for those who are looking to purchase a property. A spokesperson for Rics has said, “Although we would caution against reading too much into this, there are some grounds for believing that activity could pick up over the coming months.”

    Money management

    If you are currently saving to buy a property then this will be good news for you. When looking to take out a mortgage it is important that you speak to an expert. Understanding the best mortgage rates for you and your financial affairs is essential.

    If you are struggling to manage your current monthly budget, and are planning on purchasing a property, then you may wish to get some expert advice. There are many different ways to handle your debts and a debt management plan could help you to take more control of your finances.

    Failure to keep up the repayments on your mortgage could result in repossession. That is why staying on top of your monthly repayments is key. But a better understanding of your finances will help you to keep on top of your budget and ensure that you maintain your repayments.

    Here are a few tips to stay in control:

    • Check your current direct debits to make sure you are not paying out for things you no longer use
    • Try to reduce and limit any unnecessary spending
    • Try to pay off your credit card as soon as you can
    • Do not stretch yourself too far. If you feel your mortgage repayments could be more than you can afford then speak to an expert
    • Shop around for a good savings account
    • If you are struggling to pay off your debts speak to a debt management company

    There is no need to suffer in silence. Always speak to an expert and get advice on your financial matters. It could help to save you money and protect you from further debts.

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