Tag: mortgages

Nationwide unhappy with Compensation Scheme Contributions

Posted by admin – July 23, 2009

The largest building society in the UK has said its profits have been slashed by an “unfair” amount of contribution required for a savings protection scheme.

Based on Pre-Tax figures from the last tax year, Nationwide Building Society profits were down 69% to £212 million.

Nationwide has said the £241m paid to the Financial Services Compensation Scheme (FSCS), used to cover savers for up to £50,000, was “illogical”.

Falling interest rates have also resulted in lower returns from mortgages, which were also squeezed by bad debt.

Nationwide talked of a number of knock on effects caused by these ‘bad debts’, which included a sharp increase in missed mortgage repayments, hitting £394 million.

But Nationwide has said that even after everything the recession has had to throw at it, it still remains strong.

Graham Beale – chief executive at Nationwide, said that the building society was the only major banking institution in the United Kingdom to refrain from raising capital or require aid through government bailout schemes.

“This reflects a combination of our naturally high capital and prudent lending practices which are the hallmark features of a strong building society,” he added.

Nationwide added that just 0.6% of its mortgage customers were more than 12 weeks in arrears – significantly less than the figure recorded by the Council of Mortgage Lenders industry – an average of 2.39 percent based on figures from 31 March.

Nationwide profits were also affected after the merging of the Portman, Cheshire and Derbyshire building societies.

But Nationwide was unhappy at how the contributions had been calculated by the FSCS.

“We regard the fact that the FSCS charge is not linked to the level of risk posed to the financial system by individual institutions, but instead is allocated by share of the retail savings market, as illogical and unfair, producing a disproportionate outcome for the low risk retail funded institutions, particularly building societies.” Mr Beale said.

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Can You Save Money From The Base Rate Cut?

Posted by admin – January 13, 2009

The Prime Minister, Gordon Brown, and the Chancellor, Alistair Darling, recently announced some welcoming news to the nation, stating that the base rate was going to be cut a day ahead of the Monetary Policy Committee meeting. The base rate was cut by 0.5%, which was the biggest cut for some time, and many consumers hoped that this meant that their borrowing costs would fall and leave them with more disposable income each month

The news of the rate cut was welcomed by industries and consumers around the country, and many were hopeful that they would be able to save money on their outgoings as a result of the base date cut. However, whilst it is natural to assume that a cut in the base rate means a cut in variable borrowing costs this is not always the case, and not all borrowers will benefit from the base rate cut

Following the announcement of the rate cut a number of mortgage lenders said that they would be passing on the half point cut to borrowers, and this means that some borrowers and remortgagers may be able to benefit from lower repayments. However, a large number of lenders have failed to pass on all of the rate cut, and some have not passed on any of the rate cut, so there are those that will not see their mortgage repayments falls as a result of the cut

Whereas in some cases, where the lender does pass on the rate cut, consumers will benefit and save money on their borrowing costs due to the rate cut, there are other new borrowers and existing borrowers with less scrupulous lenders who will not benefit because the lender decides that the rate cut is not going to be applied or takes time in passing the rate cut on to borrowers. Many lenders of mortgages have been accused of pocketing the money from the rate cut by refusing to or delaying passing it on to consumers.

The base rate cut may mean that compared to a few months ago you can now get a more competitive rate on interest on credit cards, loans, and mortgages, although there is no guarantee, and any rate cuts may be conditional, such as only available to those with large deposits to put down in the case of mortgages. Make sure that you shop around to try and find the best rates – this is something that can be done quickly and conveniently online

Many people who have been paying over the odds on their mortgage may decide that now is a good time to switch to another lender and find a mortgage with a more competitive interest rate. However, whilst this may prove effective you should remember that there may be arrangement and other fees involved, and this could make it less worthwhile to change. Check out what fees are involved and how much you will be charged before you switch your mortgage or loan to another lender, even if the headline rate appears tempting

What Is Your Property Really Worth?

Posted by admin – January 1, 2009

Just about a year ago many homeowners in the UK knew just what the value of their properties was, having tracked soaring home prices that had been rocketing for the past decade. However, over the past year there has been a turnaround in the housing markets, with house prices plummeting month on month according to reports, and this has left many homeowner unsure as to what their house is now worth.

There are many reasons for the falling prices of homes for homeowners, mainly being the current credit crunch, which will new house buyers off the market as there are no mortgages available anymore.

There are a number of reasons why you may be looking to get your home valued. You may be thinking about putting your property on the market and moving on, in which case you clearly need an idea of what you will get for it. You may be thinking about borrowing against the equity in your house, and will need to provide the lender with details on the price of the house. You may simply be curious to find out what your property is not worth of nearly a year of month on month house price falls.

It is vital in the current climate to try and get the most accurate valuation on your home so that you know what the property is worth following nearly a year of home price drops. You can get an estate agent to come out and provide you with a valuation on the home. However, there is a risk that you could end up with a valuation that is either too high or too low depending on whether the estate agent is looking to get increased commission on the sale of the house or whether the estate agent wants to try and get your property sold as quickly as possible.

It is therefore a good idea to get around three surveyors from different estate agents to come and look at the property in order to provide you with a valuation. Obviously, you should not mention that you have already been given a valuation, as otherwise each estate agent may base his or her valuation on the one that you have already received. Your aim should be to get a totally independent figure from each one so that you can see whether they all come to roughly the same conclusion with regards to the price of your house.

In addition to getting estate agents to come out and provide you with valuations on your house it is also a good idea to do a little research yourself. For example you can go online or check the papers and see what similar homes in your area are selling for in order to get a better idea of the price of your house. Armed with this information as well as the valuations from the various estate agents you will have a far more accurate idea with regards to the worth of your house.

If you are putting your house up for sale and you find that the value of the house is now far less that you had hoped you need to bear in mind that inflating the asking price in the hope of getting more money could result in your house failing to sell in the current climate.

If your property does not sell at your desired price and you still have equity in your home, then home-owner loans could help to improve your current home removing the need to move. For more information on property prices and finding out your properties worth read the articles on try and buy your next home

Minimise On Your Mortgage Interest

Posted by admin – November 21, 2008

There are many ways to cut the costs associated with paying off a mortgage. The interest rate you pay on the loan is a significant cost, but it is not the only one. When you sign the final mortgage papers, there are closing costs involved. These include the cost of the legalities of the mortgages, the title search, appraisal fees, loan administration fees and other aspects of getting the mortgage approved. You can cut down on the full cost of the mortgage by paying these upfront rather than adding them to your loan balance. They then become part of the balance upon which the interest is calculated each month and add a larger sum to the overall amount you have to repay

The interest rates play a significant role in how much it will cost you to finance your mortgage. If you opt for a shorter repayment term, you will reduce these costs even though you will have a higher monthly payment. The interest you pay each month is based on the amount of your outstanding balance and even though a portion of your payment does pay this interest, when you make a higher payment, you are also paying off more of this balance. As the balance becomes less, so does the amount of interest that you pay each month

In order to get the best rates on mortgage loans, you do need to have an excellent credit rating. If you are contemplating purchasing a new home, you should request a copy of your credit report to see if you have any negative items showing. If you have adverse credit, you will be charged a higher rate of interest because lenders will see you as a poor risk for repayment. If you do have a low score, you should take steps to improve your rating to increase your chances of getting the best possible rates and reduce your mortgage costs. The higher the amount of interest you pay, the higher your mortgage costs will be

Making repayments in addition to your regular mortgage payment can also help you avoid paying too much for your mortgage. Many lenders allow you to make repayments once or twice a year. This will substantially reduce the balance of the loan, which affects the amount of interest you pay and the term of the mortgage. If you have some money left over each month, you can put it in a savings account and then when the time comes when you can make a repayment you can withdraw the money or transfer it to your loan account. There are also lenders that will allow you to make more than the required monthly payment each month. It is surprising to find what paying an extra few pounds each month will do to cut down on your costs

The length of the term you choose can determine the cost of your mortgage. The shorter the term you choose will help you pay off the mortgage quickly. If you can afford to have higher monthly payments, this is one option you can use to save money on the cost of borrowing.

Consider different repayment options to cut down on the amount of money you pay in interest. Choosing a bi-weekly payment plan, for example, will cut years off the term of the mortgage in the two extra payments you make each year. You make the payments every two weeks so that instead of paying the interest based on the outstanding balance each month, you can have two reductions in your interest

Things To Help You Find A Suitable Mortgage

Posted by admin – November 11, 2008

We all want to try and get the best package when it comes to getting a mortgage, especially considering how tight affordability has become as a result of the global credit crunch. It is important to make sure that you get a mortgage that is affordable as well as suitable, as the security of your very home depends on your ability to cope with the mortgage. This is one reason why you need to put plenty of thought into which is the right mortgage for you rather than taking the first one that comes along.

One thing that you should avoid doing is assuming that your bank is going to provide you with the best offer, as this is not always the case. You may find that you can get far better rates and offers elsewhere, so it is important not to make assumptions. Even if you have been with your bank for many years you will most likely not get a better deal than anyone else applying for a mortgage through that lender

Taking the time to shop around for a good package and to compare different lenders is extremely important, as this is the key to finding the most competitive offer for your needs and circumstances. You can compare mortgages from a wide range of lenders online with ease and convenience, so you won’t have to go to any undue hassle, and you could save yourself a fortune by simply comparing mortgages from different lenders.

The world of mortgages can be confusing these days, and this is why the help of an industry professional with experience in the field can really help. Mortgage brokers are used by many people that are looking for a good package, and you could benefit from the services of a broker. However, do make sure that your broker covers the whole market and not just certain lenders, as otherwise you could be restricting your chances of getting the most competitive offer.

You also need to know which areas of mortgage to compare whether you are looking at fixed rate mortgages or other types, as again this will help to boost the chances of finding the most suitable and affordable loan. Some of the areas to look at and compare include any upfront fees and charges, the terms and conditions of the mortgage, the repayment periods on offer, the eligibility requirements from the lender, and of course the typical APR that is charged on the loan

If you have found a lender that you feel may be suitable then it is worth asking them to quote you an APR and advise what your monthly repayment will be, as this is the only way that you will be able to determine whether you can afford the mortgage repayments and therefore whether the mortgage loan is going to be suitable for you

Finally, remember that you do not have to take out payment protection insurance, or PPI, on your mortgage from your lender, as you can shop around for this and could find that it is available far cheaper elsewhere

Should You Buy

Posted by admin – November 5, 2008

The slump that the housing market has seen in the past several months has created a lot of confusion concerning whether the current real estate environment presents a great opportunity to purchase homes or is better left alone until it picks up economic momentum. Expert investors are very contested on the issue, with groups forming sides that correspond to both sides of the question, “Is now the right time to buy?”

The issue revolves around the recent mortgage crisis that has caused a surge of foreclosures which have managed to flood the market with new homes. With a swelling number of homes available for sale, property values have dropped significantly and continue to do so while more people struggle with meeting their mortgage payments. Despite the negative elements and provided you have access to various mortgages, this situation is like a cloud with silver lining; the dropping prices of homes means that, for a lot of people — especially those new to the real estate scene or young couples looking to possess their first home — buying a home now is cheaper than it has been in years.

However, with the loan businesses wary during these troubling times, securing a loan to afford a home now can be a very tricky or outright difficult effort, especially if you don’t have the greatest credit. So, with these conflicting aspects of the real estate landscape, when would be a good time to finally go out and buy that new home?

The optimistic experts believe that the current circumstances present a great opportunity to find outstanding property at rock-bottom prices. If you possess good credit and you plan to stay in a home for a few years, then purchasing a home now is a wonderful way to take advantage of the low costs of ownership while maintaining a solid investment that will pay off for years to come. Although the prices may drop lower in the future, they believe that, over time, the differences in price won’t make much of a difference when you consider just how much you are saving already. Furthermore, if you can manage to find and establish a low interest rate right now, then you’ll be able to save a considerable amount of money when house values climb again.

The more skeptical experts don’t agree with that assessment, however. Many of them believe that the current circumstances are only the beginning of the slump that has defined real estate for 2008, and that these financially downtrodden times will only continue to lower the value of homes, a possibility that will make buying a home in the future a remarkably better deal.

In fact, they believe that home prices are still relatively high. The housing boom of the past several years has contributed to doubling or even tripling the value of homes, creating an environment of extremely expensive, valuable properties that can stand to lose plenty of value before becoming a truly good deal.

Prices are also still adjusted to what people expect their homes to sell for based on the values given a couple of years ago. As these people realize that their homes aren’t  going to sell for their initial estimates, they’ll be more willing to drop the prices even further and present an even remarkable opportunity to find a home at a fantastic deal.

Whatever the differences may be between the experts, one thing they all agree on is that while homes are cheaper than they’ve been in years, loans are harder to obtain and there are stricter requirement for getting a mortgage. Buying a home now may be cheap, but it may not be easy.