Mousetrap Mortgages

As lenders fall over themselves to offer ever more attractive mortgage offers, borrowers must first do their maths before embarking on an enticing deal offering a low introductory interest rate or a fee free deal.  How does an introductory rate of 2.25 per cent grab you? What about a fantastic mortgage deal with no fees or charges attached?

In the current climate borrowers are understandably anxious about the mortgage market and in particular the impending increases in the Bank of England Base Rate. It is all too easy to be enticed by such eye-catching mortgage offers. Borrowers should be wary however of such deals. Mortgage experts have identified that many such deals often carry a significant sting in the tail. In the case of jaw dropping introductory rates of interest, homeowners will be locked into the deal as the interest rate inevitably increases. Those borrowers who wish to move their mortgage early face hefty early repayment charges for the privilege.

The mortgage lender Abbey is the latest in a long line of High Street lenders to introduce one of these ‘mousetrap’ mortgage with extended tie in periods. Abbey who is the second largest mortgage lender in the United Kingdom first pulled the mousetrap mortgage off their shelves in 1998 but conversely carried out a U turn when it reversed its decision last month when it launched a home loan with an 18 month tie-in period.   Abbey are by no means on their own offering these mousetrap mortgages – Portman Building Society also offers extended tie-ins as does the Cheltenham & Gloucester, West Bromwich and Market Harborough.

On the flip side, mousetrap mortgages can be a very good way for first time buyers to get on the property ladder – Similarly to a discounted mortgage, this can offer minimal monthly payments in the early stages which might suit a professional expecting a significant pay rise in the need future or indeed an individual in professional training.  Many mortgage products with extended tie in periods will leave the borrower paying the lender’s Standard Variable Rate (SVR) for a further 18 months.

Lender’s Standard Variable Rates are usually several basis points higher than the Bank of England Base Rate. If extended tie-in periods do not appeal then there are of course other options available to the borrower. Most fixed rate mortgage products no longer carry overhang charges which means that after the fixed rate period comes to an end, the borrower is able to move their mortgage without being faced with any Early Repayment Charge. 

Bad Credit Secured Loan

A debt consolidation secured loan is becoming a very popular way of reducing outgoings by consolidating unsecured debts into one affordable monthly payment.

 This is achieved by obtaining a lower rate of interest on the secured loan compared to the traditionally higher rates of interest on unsecured borrowing. This will include types of finance such as credit cards, unsecured personal loans, car finance etc. Debt consolidation means all your debts are merged into a loan with the one lender. Thus instead of having various payments to many different lenders, you would just pay instalments to only one lender. This could mean massive savings every month. You can repay a debt consolidation secured loan over a term to suit you. These terms will range from 5-30 years typically. The amount is subject to equity and status can vary from £5,000-£100,000 for your debt consolidation secured personal loan.
 

When consolidating credit into a secured loan it is important to remember that what was once unsecured credit would then transform into being secured on the property. This of course would then mean that if you do not keep up repayments on your secured loan your home can be repossessed. This is an important consideration as the nature of unsecured credit means that you do not risk losing your home if you cannot keep up with the repayments.

Even if you have an adverse credit history you will still be able to get finance to clear your debts off, in the form of a bad credit secured loan.

Make sure you shop around and get some quotes before signing on the dotted line!

Another Increase In Mortgage Lending

Recent figures just out from the council of mortgage lending have yet again highlighted the continued buoyancy of the UK property market.

Mortgage lending rose again in the month of October. This is according to the CML (Council of mortgage lending).

The latest figures out from the CML also show that a further £30.3 billion was lent to home buyers in October.

That was 4% more than in the same period in September and 12% higher than in October last year.

Separate figures showed that borrowing on credit cards issued by the main UK banks fell for the sixth month in a row. This was down by around £385 million in October.

The British Bankers Association (BBA) said: “Credit card lending continued to fall, as it has in most months of this year, though other consumer credit was stronger than of late.”

The mortgage industry widely expects the housing market will start to cool off after a strong start to the year. This of course is in the wake of the Bank of England’s latest interest rate rise from the– For the second time this year.

“For yet another month the housing market is proving itself to be in robust shape,” said the CML’s director general Michael Coogan.

“But with interest rates rising for the second time in three months, we anticipate a modest slow down in house sales and mortgage approvals as 2007 progresses,” he added.

This may now prompt a slow down, although so far there has been little evidence of any slowdown as borrowers have ignored the first rate rise in August and have continued borrowing.

House prices have been accelerating gently for most of the year, with all the leading surveys showing that prices are now rising at around 8% a year.

Home Improvements

First time buyers receive a great deal of attention at the current time due to the increasing difficulty of making that first step on the property ladder. It is rarely documented however of the difficulties facing homeowners looking to move up the property ladder which is too becoming increasingly difficult.

Recent research shows that the average upscale from a two to a three bedroom property now stands at £27,100. Those looking to upscale from a three to a four bedroom house face the biggest hike in price at £64,032.

As a result of these differences in price, coupled with the fees involved in moving home, more and more people are looking to improve & extend their current home to take the effect of upsizing.

When buying a property, many property developers will look at the potential to improve, modify and extend in order to increase the value. This is also a technique now used by many buyers looking at the potential for home improvement.

It can be difficult enough to buy property, with many considerations that must be taken into account. There are many issues that can reduce property value let alone increase it; however the type of property you buy can dictate your ability to improve it or even make any additions at all.

The type of property that best suits improvement will depend on the nature of work you would like to perform. For example, if you are planning to convert a loft in an extra room then it is important that there is enough room to stand up in.

Sometimes the easiest and cheapest way to increase your home’s value is to invest in an improving, up and coming area. Signs that an area’s property market is set to improve can be relatively easy to find. These signs may include looking at particular areas or streets that are already popular with buyers. It is often the case that as particular streets or areas increase in value, buyers are priced out of their preferred location, so move as near to it as they can afford.

The important thing to remember is that there is no guarantee that any improvements made on your property will result in an increase in value. Buyers in different locations will be after different things. It is an important consideration to ensure that you are offering potential buyers what they really want. For example a conservatory may be appealing to some but not to others

A good yardstick is often to consult the local estate agents who much a property would be worth subject to improvements being carried out, such as a new kitchen or a conservatory.

Often it’s the smaller, cheaper improvements that can generally offer higher returns than the more expensive ones. The larger and more expensive jobs such as converting your loft or basement may seem appealing to buyers, however they are often unwilling to pay a premium that meets the expense and effort of carrying it out.

The cost of any home improvement and the likely return will vary hugely on the type of property and the area that it’s located. Very few developments come in under budget with the majority coming in over budget. Quote received from builders can often be on the optimistic side. It is therefore prudent to over budget for works
Below is a rough guide of the costs versus the benefits:

Loft conversions:
Cost: £15,000 to £35,000
Potential value increase: £20,000
Difference: - £5,000
A loft conversion must be done properly in order to increase the value of your home. A very important consideration is that it cannot be classed as a loft conversion unless it meets specific building & planning regulations. Your local council will be able to give advice on what those rules are.

Basement conversion:
Cost: £100,000
Potential value increase: £20,000 to £25,000
Difference: - £77,500
A basement conversion is among the most expensive of home improvements. Recouping the initial outlay when selling the property is very difficult let alone making a profit. In some case it can however be very beneficial when selling the property if used as an extra bedroom.

Extension:
Cost: £30,000 to £50,000
Potential value increase: £20,000 to £25,000
Difference: - £17,500
An extension is fast becoming a popular alternative to moving home in order to upsize. You will usually have to sacrifice garden space which can of course have a negative impact on your home’s value. Before commencing with any planned work it is important to consult your local council as there may be restrictions on the height and proximity to boundary lines of any addition.

Off-Road Parking:
Cost: £1,000
Potential value increase: £5,000
Difference: + £4,000
Again, this work requires consultation with the local authority as the job may involve altering the height of the curb. This can prove to be one of the cheapest and most effective improvements that can be carried out.

Conservatory:
Cost: £10,000 to £15,000
Potential value increase: £12,000 to £19,000
Difference: £3,000
Conservatories may not seem quite as attractive in today’s market as they once would have done to the potential buyer. Adding a conservatory is an expensive exercise and would perhaps be best considered for personal use rather than as a tool to increase the value of the property.

Secured Loans can provide a great way to fund your home improvements. See what what deals you can get on home improvement loans by visiting http://www.any-loans.co.uk

Credit Ratings And Secured Loans

There are many factors that affect your credit rating from the obvious to the not so commonly known. These things will become apparent when you go and apply for secured loans, home loans, etc.

Poor debt management is the most obvious factor that will affect your credit rating such as missing your minimum monthly repayments on your mortgage or secured loans. This in turn can lead to higher borrowing costs in the future.

There are however many other factors that to the average person may seem completely irrelevant but to the credit scoring companies say a lot about how you are likely to manage your finances. For example, an applicant with a mobile phone but no telephone landline might be seen as a fairly high risk to the lender. This is because lenders worry that if you only have a mobile phone, you would be harder to locate if you were to default your secured loan payments.

Whether you rent or own your own home could have a great influence. Being a tenant is not looked upon favourably. If you are a temporary worker, unskilled labourer or self employed, this could also count against you.

Another circumstance which could affect your score is down to where you live in the country. ‘Postcode profiling’ is becoming an important part of the credit scoring process. In this way lenders can look to avoid lending to those who live in less desirable neighbourhoods.

The following gives a list of the common ways to blacklist your credit rating:
- Living abroad.
- Not staying on the electoral roll for long enough.
- Moving frequently
- Renting a flat
- Becoming a victim of identity fraud
- Reapplying for a secured loan immediately after you have been refused one
- Not paying your yearly car tax to the DVLA on time
- Signing up for lots of credit cards within a short period of time for the free gifts and special offers

Most high street banks and building societies will only grant secured loans to those who have either good or excellent credit. There are specialist lenders however that would be willing to accept applicants with poor credit records. These are know as bad credit secured loans.

For those with an impaired credit history, the process of ‘credit repair’ is achievable over time. The first step to recovery is to settle your bad debts and meet payments on your existing secured loans. All unpaid credit and county court judgements (CCJs) will stay on your credit file for 6 years. These will be marked as settled as and when they are paid. This is usually taken into account when you’re making future credit applications.

Lenders will often allow you to write a statement to balance out a bad report, which could explain circumstances that might have tarnished your credit rating. So next time you are looking for a secured loan make sure you understand the factors that will effect not only your chances of being accepted but also the rates.