February 2011 Archives
UK Mortgages – Need To Know Information
Whatever stage of the mortgage game youre at, unless you happen to be a qualified financial advisor, solicitor and broker all rolled into one, youll need professional help to find and arrange your loan. This guide presents some basic information on mortgages, but youll need to take specialist advice for your individual circumstances.
Having a general awareness of the processes involved and an idea of whats available to you should help you to make the right decision when you choose your mortgage.
You should be aware, too, of the difference between information and advice. Anyone can give information, and a survey of the web will offer literally thousands of pages about mortgages. Be aware of the legal aspects of mortgages and finances any agreements should be in writing, and you should check all documents carefully before signing. Verbal agreements and information should always be backed up by written copies. Below are some useful starting points for you to explore. Good luck!
Information
The web offers any amount of information on mortgages check that the pages are recent as rules and offers change constantly. Good sources of official information are:
The Financial Services Authority includes a guide to money, mortgages and debt, plus details of regulatory bodies and ombudsmen www.fsa.gov.uk
Direct Gov general information on finances and benefits
www.direct.gov.uk
Inland Revenue check the tax rules that apply to you
www.hmrc.gov.uk
Advice
Anyone offering you advice should be a qualified professional. They should be registered with an appropriate independent regulatory body, and you can ask to see copies of their qualifications. Theres a lot of free advice out there, that should help you without obligation, and its worth taking advantage of.
Independent Financial Advisors
Find an advisor at www.impartial.co.uk and a mortgage specialist at www.unbiased.co.uk
Solicitors
Often family or friends will recommend a solicitor, otherwise look for one that specialises in conveyancing and house buying. Check www.lawsociety.org for professionals in England and Wales, and www.lawscot.org.uk for Scotland.
If you have a query or complaint
The FSA are now the body that regulates financial professionals and lenders the Financial Ombudsman can investigate complaints or disputes and usually resolve them. Contact the professional or lender first they should have a complaints procedure. If you are still not satisfied, you can ask the ombudsman to consider your case: www.financial-ombudsman.org.uk
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(The websites of the respective law societies of England & Wales and Scotland are the place to find out how to make a complaint about a solicitor or firm, see above.)
UK mortgage and remortgage deals
Mortgage is a way of securing a debt by using your own property as a guarantee to the lender. If For some reason you cannot pay your debt in time you may lose the property. The term mortgage itself refers to the debt and also to the legal device used when securing the property.
In the countries where properties are highly demanded and the prices are quite elevated, there are strong loan and mortgage markets. The UK mortgage market is famous for this reason, it is one of the best in the world, and the competition is very high. The main difference between the UK mortgage market and the ones in other countries is that in the UK the state is not interfering with it and all the loans are funded by banks or credit unions. Also one can find a lot of types of loans in the UK mortgage market.
The UK mortgages are of different interest rates. These rates can be:
-fixed rates – they remain constant for all the period of the loan, usually up to five years because loans with fixed rates that last more than five years are not that popular.
-variable rates – the interest rate of the UK mortgage varies in time, depending on the agreement between the lender and the client
-discount rates – variable rates that benefit of a discount for a period
-capped rates – a mixture between variable rates and fixed rates – the interest rate may vary but cannot raise over a certain fixed limit
Furthermore, these UK mortgage rates may also be combined, depending on what the lender and borrower agree on.
Lenders in the UK are usually also asking for a valuation fee, required to pay an observer that must visit the property and evaluate it in order to make sure that it can cover the UK mortgage amount.
Sometimes after taking a remortgage loan you may wish to switch the mortgage to another lender that asks for lower interest rates, so that you can save some money. This is called remortgaging. The UK remortgage market is also very innovative and competitive, almost half of the mortgage applications are in fact for remortgages.
An advice on UK remortgage is to only remortgage your loan if its interest rate drops under 2% under your current interest rate. But the interest rate is not the only thing that should be taken into account when thinking about a UK remortgage. Also consider the amount of time that you plan to live in your home – it has to be enough to cover the costs of the mortgage.
Tips for Refinancing Mortgage
Refinancing home mortgage is one way to make the most of your money. Many people find it a smart tool. This is true to an extent and also depends on prudent judgment and good assessment of certain things such as your personal goals and your homes current and past value, plus the particulars of your current loan. Refinancing is no doubt a good option and a smart way of maximizing your saving if you take all these conditions into account. Otherwise home mortgage refinancing may not make any sense at all and may prove to be a futile exercise.
So next time when you consider refinancing home mortgage, before doing so consider the following point:
First, know your homes value. Assess the value of your properly. Find out whether it is increasing or decreasing. It is very likely that real estate prices always go up. Hence currently it is likely that your home value has also gone up. However, there are also certain conditions when real estate prices come down. So dont ever take for granted that your home value has gone up. Call up a mortgage lender or a local realtor and find out the current real estate prices. If it is going down, defer your home mortgage refinancing until the situation is favorable.
Another aspect that you need to look at is for how long d you intend to stay in your present home. If you stay for long years, long enough to pay off the points as well as closing costs of refinancing, then you may go for refinancing. However, if you intend to look at other homes in the near future, refinancing of your homes mortgage will not make any sense.
Find out what is real motive of refinancing of your homes mortgage. If it is to reduce debt, do something that will increase your home value. You can in fact consider renovation before refinancing it so that its value goes up. Investing in renovation is not a bad idea because the amount you have spent in doing so will give better returns in the long run. It is worth investing.
If you consider the above points, refinancing your homes mortgage may give you wonderful results. Monthly mortgage payments can be reduced to a certain extent and you can save more. Lower interest rates mean lower payment and increased saving. Suppose you owe 100,000 on your homes mortgage on a thirty-year conventional loan taken at an interest rate of 6.5 percent, your monthly payment will then be 632. If you can lower that interest rate to 5.5 percent then your monthly payments comes down to 567. This means you can lower your homes monthly payment by 68, which is a big amount.
Since you are not an expert on home mortgage refinancing, it is always better to consult realtor or mortgage lender before taking any decision. They will help you to determine which type of loan is best to refinance your home mortgage. All said and done, refinancing home mortgage is done taking advantage of fluctuating real estate prices.
Tips for Mortgage Refinancing and Debt Consolidation
Many people discover that their credit card debt is out of control when they get their monthly bank statement. Mortgage payment, everyday spending, services and occasionally getaways or dining out can bring your balance over-the-limit fees. Its time to consider debt consolidation to save your money – credit card balance transfer, home equity loan or mortgage refinancing.
One of the best ways to obtain debt relief is by consolidating your debts with a mortgage refinancing if the timing is right. Refinanced mortgage is a form of debt help for the borrower, who will be able to pay down the old mortgage with the money of a new loan. The benefit of mortgage refinance is based in not only debt consolidation of other debt, but in getting a lower interest rate, lower pay off, and taking cash out of the home equity. Although every borrower may have their particular reason for applying for a new loan, all of them share the desire for debt relief by reducing their mortgages’ interests rates and liquidating cash from their home equity when possible. Mortgage refinancing usually costs a couple of thousand pounds in closing cost besides the time you spend on research, application etc. Debt advice on home mortgage can easily be obtained through the mortgage lender, mortgage broker, financial institutions and Government Consumer Protection Offices.
Because secure loans and mortgages are backed up by collateral property or a guarantee for any other sort of asset, lowering the rates means more savings and debt relief. Mortgage refinancing could quickly reduce your debt if done properly. Mortgage refinancing lets you cash out your equity to be applied for debt relief purposes, and allow you to qualify for lower rates than a home equity loan. A single mortgage is often considered less risky than having two loans.
Taking a shorter term in your mortgage refinancing may further lower the interest rate. For instance, if your original mortgage is a 30-year loan, you may consider a 15-year mortgage while refinancing the loan. The monthly payment of a 15-year loan is about 20-30% higher than the one of a 30-year mortgage, not as high as out intuition tells us.
Genuine debt help comes when you weigh the pros and cons of debt consolidation. Obtaining a mortgage refinance may be the best option for debt relief, remembering that you will have to follow a similar process like the first time application so make sure to keep a good credit history before you apply. Be sure to get mortgage quotes from at least three mortgage lenders before you commit. Weight the pros and cons of your current mortgage, and compare the actual interest rates you are paying off in comparison to those resulting from your new debt management perspective, considering collateral involved in the debt and possible future risks as well. Your financial adviser can offer valuable advice for your debt relief.
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