Wednesday 12 December 2007
Why use a mortgage broker?
I find it very strange that all mortgages are not arranged via an independent mortgage broker.
Whether you are buying a property for the first time, moving home or looking to remortgage, the same options are open to you when arranging your mortgage.
Go to your own Bank or Building Society, stay with your existing lender, use the services of an independent broker, utilise the services of an Estate Agent, search the internet and apply direct.
From the options above, the only way that you will ensure that you obtain the best deal is to use an independent mortgage broker.
"He would say that", I hear you clamour, "only interested in increasing his own business".
It is an actual fact though and generally, those that do not use an independent broker, go elsewhere because they have been bullied by an Estate Agent (your offer will look much better if we arrange your mortgage!), you cannot be bothered and use your own Bank or stay with your existing lender, or you think you know better than a qualified advisor and arrange the mortgage yourself!
Banks and Building Societies should actually receive very few "direct" applications - without shopping around, how can you possibly know you are receiving a good rate?! This method is for the VERY lazy!
Estate Agents must surely have a conflict of interests? They are morally obliged to act for the seller of the property. Furthermore, in most cases, you will find that although they advertise their services as "independent", they do not use all lenders and therefore you will never know if you have received the very best deal. Under the Estate Agent's Act, they are not allowed to insist you use their mortgage advisor - this is ILLEGAL. Do NOT be bullied!
The people that try to arrange their mortgage direct are the strangest of all the above! I would agree that there is an enormous amount of information available on the internet, but who would want to spend all that time researching something, when a qualified broker will do that free of charge?
There are several other reasons why using an independent broker is the only sensible way to proceed:
Not all lenders deal directly with the general public - some will only accept mortgage applications via an authorised mortgage broker.
Many more mortgage products are available via a mortgage broker. Lenders would prefer to do ALL their business via mortgage brokers as this reduces their costs. For this reason, many lenders offer incentivised products via brokers to give customers a reason to choose this method of application.
When searching online, it is almost impossible to compare products on a like for like basis - lenders have different variable rates - valuation fees / arrangement fees / legal fees vary from one lender to another - exit fees are different - reversion rates are different - the ability to port the mortgage if you move varies - the rules regarding further advances varies - the list goes on and on and on.....
I rest my case - why would anyone not use an independent mortgage broker, when it does not have to cost them any money at all!
Tuesday 20 November 2007
Life Insurance
Why take out Life Insurance or Critical Illness?
The importance of life insurance or critical illness benefit may vary at the different stages of your life.
As a minor (under 18 years of age), you will have no financial commitments and few responsibilities. Protection insurance is not appropriate at this stage.
As you grow older you will progress through the stages of life – first job, moving out of the family home, living with a partner, buying a house, having children, buying a bigger house etc.etc..
Your requirement for life insurance and critical illness benefit will increase with added responsibility. It would be important for any debt (loans or mortgages) to be repaid on your untimely death and also to provide any loved ones left behind with sufficient money to continue living to an acceptable standard. Without sufficient insurance, the family home may have to be sold, with further upheaval at an already traumatic time.
Furthermore, you may suffer a critical illness that meant that you were unable to continuing earning the same amount of money that you have become accustomed to earning. Without protecting yourself adequately, you may have to sell your home and your life style may change to an unacceptable standard.
The cost of Life insurance and Critical Illness benefit will vary according to your age, whether you smoke, your medical history etc.etc… There is one factor that is certain though – the younger you are when you commence the insurance, the cheaper it will be, with many policies guaranteeing not to increase the premiums as you become older.
So act now as you never know what might happen tomorrow………..
Life Insurance Facts
Life insurance would be used to ensure that on your death, a lump sum is paid to either a specified beneficiary or to your estate.
This may be taken with a view to repay a debt, mortgage or loan and / or to provide a lump sum to enable your loved ones to maintain their current lifestyle after the inevitable loss of income.
Life insurance can be arranged on either a sole name basis or on a joint basis with another person.
Life insurance can also be arranged on either a “level term” basis, where the amount insured remains the same during the term of the insurance, or on a “decreasing term” basis, where the amount insured reduces over the term of the insurance – this would typically be used to protect a repayment mortgage.
There are further options that can be chosen on application:
“Waiver of Premium” this would “pay” your premiums in the event you were unable to work due to accident or illness.
“Increasing benefit” is an option that would allow you to increase the level of cover in the future, resulting in an increase in premium.
Critical Illness Benefit Facts
Critical Illness benefit pays out a tax free lump sum on the diagnosis of any one of a number of serious illnesses that would vary from one insurance company to another.
In general, they would include:
· Cancer
· Stroke
· Heart Attack
· Kidney failure
· Multiple Sclerosis
· Rheumatoid Arthritis
It can be used to repay a debt (mortgage or loan) or replace income during a lengthy period of illness.
The benefit does not have to repaid even if you make a full recovery and return to work!
Be aware of the high statistics in relation to being diagnosed with a critical illness:
1 in 3 men aged 30 will have a stroke, cancer or heart attack before their 65th birthday!
1 in 5 women aged 30 will have a stroke, cancer or heart attack before their 65th birthday!
Wednesday 7 November 2007
BUY TO LET
With other investment returns continuing to fall, or to be less certain, the market for Buy to Let seems to be continuing to thrive, despite the general "slow down" in the housing market.
The concept of borrowing someone elses money, and having a tenant's rent pay for the mortgage interest, to make you money is certainly extremely sensible!
Tailored Mortgages specialise in this field and some key information follows with an example of how you can increase your wealth at the end.
BUY TO LET Mortgages are available with only a 10% deposit and sometimes with NO proof of rental / earned income!!
Tailored Mortgages charge NO BROKER FEES!
Many landlords refinance their existing properties to release capital to buy MORE properties!
Recession proof? – If interest rates rise, more properties will be repossessed, therefore there will be an increased demand for rental property, driving up the rental received!
We provide a full advice service – from a new landlord looking to purchase their first property, through to the experienced landlord with a substantial portfolio!
We can give advice on the best type of property to purchase, to ensure that you maximise your return!
In certain circumstances – buy WITH NO DEPOSIT!!
BUY TO LET EXAMPLE
Property purchase price £100,000
Mortgage £ 90,000
Interest cost / month 450
Additional costs 25
Total monthly cost 475
Rental received 500 / month
You will find that you will not make much (if any) money on a monthly basis – your return will be received in the capital growth.
With a 5% annual increase in property values:
£100,000 property after 5 years will have increased to @ £128,000
Your share will have increased from £10,000 to £38,000
That represents an increase in your capital of 380% in only 5 years !!!
The concept of borrowing someone elses money, and having a tenant's rent pay for the mortgage interest, to make you money is certainly extremely sensible!
Tailored Mortgages specialise in this field and some key information follows with an example of how you can increase your wealth at the end.
BUY TO LET Mortgages are available with only a 10% deposit and sometimes with NO proof of rental / earned income!!
Tailored Mortgages charge NO BROKER FEES!
Many landlords refinance their existing properties to release capital to buy MORE properties!
Recession proof? – If interest rates rise, more properties will be repossessed, therefore there will be an increased demand for rental property, driving up the rental received!
We provide a full advice service – from a new landlord looking to purchase their first property, through to the experienced landlord with a substantial portfolio!
We can give advice on the best type of property to purchase, to ensure that you maximise your return!
In certain circumstances – buy WITH NO DEPOSIT!!
BUY TO LET EXAMPLE
Property purchase price £100,000
Mortgage £ 90,000
Interest cost / month 450
Additional costs 25
Total monthly cost 475
Rental received 500 / month
You will find that you will not make much (if any) money on a monthly basis – your return will be received in the capital growth.
With a 5% annual increase in property values:
£100,000 property after 5 years will have increased to @ £128,000
Your share will have increased from £10,000 to £38,000
That represents an increase in your capital of 380% in only 5 years !!!
Monday 15 October 2007
Property Valuations
There seems to be an enormous differential in peoples opinions of property values!
We recently had a property valued for remortgage purposes in Wimbledon and felt that having done our own research looking at similar properties sold in the vicinity and asking local Estate Agents, a value of £425,000 would be sensible.
We instructed a valuer to visit the property and initially did not advise them of our opinion as to the value. They provided a valuation report and declared a value of £325,000!!
Upon challenging this valuation and providing suitable comparable evidence of sold properties to back up our estimated value of £425,000, the valuer revised their value to £375000!!
The strange thing about this, was their original comparable evidence was based upon sold properties in a different London borough!
Bearing in mind that the "valuers" are supposed to be the experts, I find it rather odd that they valued the property so low in the first place and when presented with material facts, they felt compelled not to agree with the valuation of £425,000 but only "meet us halfway" with a valuation of £375,000.
Despite further evidence to support our "case", the valuer refused to increase the valuation any further, so we instructed another firm to carry out a second valuation.
This company valued the property at the £425,000 without query!!
What is going on?
I thought that we had enough problems with inexperienced / optimistic Estate Agents valuing properties for sale, but surely valuers should be more knowledgeable and provide an accurate valuation?
This seems to be a growing problem, with more and more valuers seriously under valuing properties.
I appreciate that the housing market is "cooling", but I don't believe that in most areas property prices have fallen yet and I don't think that it is the position of a valuer to try to drive prices down!
Has anyone else had similar problems??
We recently had a property valued for remortgage purposes in Wimbledon and felt that having done our own research looking at similar properties sold in the vicinity and asking local Estate Agents, a value of £425,000 would be sensible.
We instructed a valuer to visit the property and initially did not advise them of our opinion as to the value. They provided a valuation report and declared a value of £325,000!!
Upon challenging this valuation and providing suitable comparable evidence of sold properties to back up our estimated value of £425,000, the valuer revised their value to £375000!!
The strange thing about this, was their original comparable evidence was based upon sold properties in a different London borough!
Bearing in mind that the "valuers" are supposed to be the experts, I find it rather odd that they valued the property so low in the first place and when presented with material facts, they felt compelled not to agree with the valuation of £425,000 but only "meet us halfway" with a valuation of £375,000.
Despite further evidence to support our "case", the valuer refused to increase the valuation any further, so we instructed another firm to carry out a second valuation.
This company valued the property at the £425,000 without query!!
What is going on?
I thought that we had enough problems with inexperienced / optimistic Estate Agents valuing properties for sale, but surely valuers should be more knowledgeable and provide an accurate valuation?
This seems to be a growing problem, with more and more valuers seriously under valuing properties.
I appreciate that the housing market is "cooling", but I don't believe that in most areas property prices have fallen yet and I don't think that it is the position of a valuer to try to drive prices down!
Has anyone else had similar problems??
Thursday 16 August 2007
Bank Base Rates
What is happening to interest rates?
With the current BOE base rate now sitting at 5.75%, have we reached the peak of the latest cycle?
Although inflation seems to have become more subdued, it still looks likely, when considering the Bank of England's minutes from their latest meeting, that interest rates would be increased to 6% in the not too distant future. This would take interest rates to the highest they have been since January 2001! It might also be prudent to allow for a further rate rise, taking interest rates to 6.25%, the highest since December 1998!
Unfortunately, the inflation figures have been largely caused by the rise in the cost of gas / electricity / fuel etc... With the monthly cost of most people's mortgages increasing, together with the increased fuel costs and below than inflation wage increases, many are finding that they have less and less available to spend each month.
Furthermore, many people will be coming to the end of fixed rate deals that were arranged when interest rates were at their lowest point and will be in for a shock with their payments possibly doubling overnight.
These combined factors will certainly not help our economy in general, with the small retailers and business's suffering with reduced sales and profit margins.
Are the Bank of England trying to use interest rates to control house price inflation - if so, I think that they should go back to studying basic economics! Supply and demand. We are in a situation where we live on an island with not enough housing stock for too many people.
This again is not helped by our current immigration rules, allowing more and more people to reside in the UK!
With the current BOE base rate now sitting at 5.75%, have we reached the peak of the latest cycle?
Although inflation seems to have become more subdued, it still looks likely, when considering the Bank of England's minutes from their latest meeting, that interest rates would be increased to 6% in the not too distant future. This would take interest rates to the highest they have been since January 2001! It might also be prudent to allow for a further rate rise, taking interest rates to 6.25%, the highest since December 1998!
Unfortunately, the inflation figures have been largely caused by the rise in the cost of gas / electricity / fuel etc... With the monthly cost of most people's mortgages increasing, together with the increased fuel costs and below than inflation wage increases, many are finding that they have less and less available to spend each month.
Furthermore, many people will be coming to the end of fixed rate deals that were arranged when interest rates were at their lowest point and will be in for a shock with their payments possibly doubling overnight.
These combined factors will certainly not help our economy in general, with the small retailers and business's suffering with reduced sales and profit margins.
Are the Bank of England trying to use interest rates to control house price inflation - if so, I think that they should go back to studying basic economics! Supply and demand. We are in a situation where we live on an island with not enough housing stock for too many people.
This again is not helped by our current immigration rules, allowing more and more people to reside in the UK!
Wednesday 18 July 2007
Estate agents act
Are you totally fed up with the lies told by Estate Agents in an effort to make you arrange your mortgage with them?
Are you advised that you cannot view or offer on a property until you have seen their mortgage advisor?
This is ILLEGAL!!
An Estate Agent can and should ensure that anyone that puts an offer on a property can actually proceed - in other words, they have agreed a sale on their property (if they have one to sell) and they are in a position to obtain the necessary finance to purchase.
However, if you have already spoken to another mortgage broker and they have confirmed that you will be able to obtain a mortgage, provide the Estate Agent with your mortgage brokers name and telephone number and suggest that they call to confirm your ability to proceed!
If they still insist that you must speak to their mortgage advisor, I suggest that you draw their attention to the Estate Agents Act (see below), or threaten to complain to the Office of Fair Trading! DO NOT GIVE IN
Be aware that although some Estate Agents can provide independent mortgage advice, most only use a very small panel of lenders, will probably be "tied" to one insurance company and may even charge broker fees!
Tailored Mortgages is an independent broker and is authorised and regulated by the Financial Services Authority. We have a duty to ensure that we "Treat Customers Fairly". Please be aware that at the time of writing Estate Agents are not regulated and the only sensible way to complain is through the Office of Fair Trading.
Together we can stamp out this illegal and unprofessional behaviour.
Estate Agents Act 1979
This is an extract taken from the Estate Agents Act relating to “AVOIDING BIAS”.
You must not discriminate against potential buyers because they don’t want, or might refuse, to take services from you or a connected person.
For example, you must not:
· refuse to provide information about a property to
these buyers.
· take longer to send property information to these
buyers, compared to others.
· set additional requirements, as a condition of passing
on an offer, eg, forcing them to have a mortgage
survey before you will pass on their offer to your
client.
In summary, estate agents cannot discriminate against you because you don’t want to use their financial services.
So called “preferential listing” is not permitted. This is when buyers are told that they will be put on an open and fast-track priority or preferential service list if they take financial services, such as insurance or a mortgage, offered by the estate agent.
If you believe that an agency has failed to meet its obligations, you can complain to your local trading standards department.
Are you advised that you cannot view or offer on a property until you have seen their mortgage advisor?
This is ILLEGAL!!
An Estate Agent can and should ensure that anyone that puts an offer on a property can actually proceed - in other words, they have agreed a sale on their property (if they have one to sell) and they are in a position to obtain the necessary finance to purchase.
However, if you have already spoken to another mortgage broker and they have confirmed that you will be able to obtain a mortgage, provide the Estate Agent with your mortgage brokers name and telephone number and suggest that they call to confirm your ability to proceed!
If they still insist that you must speak to their mortgage advisor, I suggest that you draw their attention to the Estate Agents Act (see below), or threaten to complain to the Office of Fair Trading! DO NOT GIVE IN
Be aware that although some Estate Agents can provide independent mortgage advice, most only use a very small panel of lenders, will probably be "tied" to one insurance company and may even charge broker fees!
Tailored Mortgages is an independent broker and is authorised and regulated by the Financial Services Authority. We have a duty to ensure that we "Treat Customers Fairly". Please be aware that at the time of writing Estate Agents are not regulated and the only sensible way to complain is through the Office of Fair Trading.
Together we can stamp out this illegal and unprofessional behaviour.
Estate Agents Act 1979
This is an extract taken from the Estate Agents Act relating to “AVOIDING BIAS”.
You must not discriminate against potential buyers because they don’t want, or might refuse, to take services from you or a connected person.
For example, you must not:
· refuse to provide information about a property to
these buyers.
· take longer to send property information to these
buyers, compared to others.
· set additional requirements, as a condition of passing
on an offer, eg, forcing them to have a mortgage
survey before you will pass on their offer to your
client.
In summary, estate agents cannot discriminate against you because you don’t want to use their financial services.
So called “preferential listing” is not permitted. This is when buyers are told that they will be put on an open and fast-track priority or preferential service list if they take financial services, such as insurance or a mortgage, offered by the estate agent.
If you believe that an agency has failed to meet its obligations, you can complain to your local trading standards department.
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