Northfields

Calling All First Time Buyers – Get Your Mortgages Now!

The Bank of England has stated that first time buyers may be able to take advantage of the growing number of available mortgages in the first three months of 2012.

More Mortgages Available
Its latest Trends in Lending report The Bank of England stated that "lenders expect the availability of secured credit to households to increase slightly in 2012 Q1, with the rise concentrated on borrowers with high LTV [loan-to-value] ratios".  The greater amount of finance would help many people who are continuing to rent make their first steps onto the property ladder.  HSBC, alone has pledged to lend £3 billion to first-time buyers.

Less Deposit Required
Granted, that many of the mortgages on offer will focus on people with large deposits, but there are growing numbers of higher Loan to Value (LTV) mortgages being offered. 

Moneyfacts, the financial data provider has said that although lower LTV mortgages are making something of a comeback, there are not enough deals available to meet the demand.

The number of mortgage products available for residential purchases has increased from 2,527 to 3,180 in the past 12 months.  90% and 95% loans have made a noticeable resurgence.  However, many mortgage deals tend to be around for just 27 days before becoming fully subscribed, compared with a historic average of 30 days.

95% Mortgages
Moneyfacts found 49 mortgages available at 95% loan-to-value (LTV).  This figure is more than double the 24 mortgage products on offer in January 2011, and gigantic increase from the mere three products you would have been offered in April 2009.

90% Mortgages
There are also 280 deals on offer at 90% LTV.  This number shows a rise from the 199 mortgage products on the market in January a year ago and a staggering improvement on the 72 mortgages available in April 2009.

Why First Time Buyers Shouldn’t Wait to Buy

1.  End of the Stamp Duty Holiday - The higher number of lenders willing to lend to first time buyers as well as the low-deposit deals on offer might tempt first time buyers to get the property transactions underway,  but add to that the end of the current stamp duty holiday and there should be plenty of motivation to get first time buyers viewing properties.  As of the March 24th, first time buyers who make a property purchase up to the value of £250,000 will be spared the expense of stamp duty.  That is a saving of up to £2,500.

2. Concerns that Lenders May Further Tighten Lending Criteria– With the weak economy, particularly considering fears created by the crisis in Eurozone countries, there is a concern that banks and building societies may further tighten their criteria as 2012 progresses.  So, it is best to take advantage as a first time buyer of a period when lenders are focused on lending to you, before conditions change.

Currently, there is the biggest choice of mortgages for those with 40% deposits, with 393 mortgage products found by Moneyfacts.  This figure is up from 271 deals in January 2011 and 280 in April 2009.

"First-time buyers are always going to struggle to find an often unrealistic 40% deposit, so thankfully we are seeing the 90% and 95% LTVs start to return to the market," Moneyfacts spokeswoman Sylvia Waycot was quoted as saying in the Guardian. But she adds: "A lot of providers still prefer the assurance of a proven track record, which is shown by some of the incentives offered to those remortgaging such as free legal fees, free valuations or cashback.

"Despite an increasing number of mortgages appearing on the market, they are only around for an average of 27 days before being fully subscribed, which just goes to show there are still not enough mortgage deals around to satisfy demand."

Moneyfacts acknowledges that the improved figures remain a "far cry" from the choice available before the financial crisis, with nearly 12,000 deals offered in 2007.  However, these figures call to mind the conversation one of our Northfields Sales Managers had with a vendor at the beginning of the credit crunch.  Our Sales Manager explained that the number of mortgage products had dropped and quoted him a three digit number that would have disappointed most people.  Surprisingly, he laughed.  He said that when he had bought his property just after World War II there had been 3 mortgages available – total.  In light of that, with 3,180 mortgages available today, we are 1000 times better off.

If you want to take advantage of the increasing number of first time buyer mortgages available before they become over-subscribed, contact Northfields and we can refer you to an independent mortgage advisor who can look at all the mortgages available and find the best deal for you.  Remember that independent advisors will often have access to deals that won’t be available from high street banks.  Don’t leave it too late, call us on 0208 840 6666 or e-mail at sales@northfields.co.uk to be referred for your free, no obligation mortgage consultation.

Does HSBC’s panel of solicitors signal the death knell for choosing your own conveyancing solicitor?

The Guardian reported yesterday that, “Customers can no longer use legal representation of their own choice when getting a mortgage through HSBC”.

If you choose to buy your home with a mortgage provided by HSBC you will be limited to using one of a selected panel of 43 firms or face paying extra.  The  chosen panel has been handpicked by the bank to do their legal work.

Prior to this point, customers were free to choose whatever solicitor most appealed to them, from a family lawyer, the solicitors with the best fees or the solicitor that inspired the most faith.  Previously, customers could choose their own legal representation and the firm would act for HSBC too.

HSBC decided to change the status quo after warnings over mortgage fraud from the National Fraud Authority.  Mortgage fraud costs the industry £1bn a year, prompting an edict from the Financial Services Authority instructing lenders  to work with conveyancing solicitors with whom they have a relationship. 

If a house buyer chooses to use one of the HSBC solicitors panel, they will have a fixed legal cost.  If, the borrower elects to choose to use their own solicitor they must pay a separate fee of £192 (£160 plus VAT) for HSBC's lawyer. In most cases that will be more expensive than using the panel.

These measures by HSBC may seem a bit draconian, but they are not the first mortgage lender to dictate who they would like to carry out their end of the legal work.  Lenders, including Santander and Nationwide have been becoming increasingly more picky about which solicitors they will work with.

However, HSBC’s panel is the smallest.  The smallness of the panel has come into question, after the Law Society cast doubt on the ability of such a small selection of firms being able to adequately handle the volume of work.  The Guardian quoted, Chief executive Desmond Hudson said: "Although HSBC has a relatively small share of the mortgage market, such a low number of firms could struggle to provide for all consumers – those [customers] who struggle to communicate other than in person or those who would prefer to use a local solicitor with the service they seek.

"The disabled, those living in rural areas or even those wishing to simply use their family solicitor will either have little choice but to opt for the same solicitor as HSBC – one of their panel firms – or pay twice over, for their own solicitor as well as HSBC's legal fees."

HSBC has said that they will take applications from firms who want to be added to the panel.  The panel itself will be managed by Countrywide. 

What are the benefits to you?

If you were to use a set panel of solicitors you may have the advantage of:

-          Lower conveyancing costs

-          Fixed rates (there would be no surprise costs at the end of the process)

-          “valuable guarantees”, as HSBC puts it,  should the seller pull out

-          Less time and hassle to find a reputable solicitor

-          Guarantee of better quality service as all firms are approved through the Law Society’s quality scheme

What will it cost?

Costs are usually related to the value of the home being purchased. 

Property costing up to £100,000 - £399 (plus the usual costs for stamp duty, searches and other disbursements)

Property costing from £300,000 - £500,000 - £549 (plus the usual costs for stamp duty, searches and other disbursements)

For customers selling as well as buying they could get a separate quotation for the work to be carried out for the second transaction.

Is this the new norm?

Eddie Goldsmith, chairman of the Conveyancing Association, said that the lower cost of using the panel will convince most buyers to use the panel.  Goldsmith also predicted that more lenders will begin to do the same as HSBC, so we could be seeing a trend that will become the new norm. S

If you are looking for a reputable and affordable conveyancing solicitor, Northfields can help by recommending one of the solicitors we have worked with for many years.  As estate agents are constantly working along with conveyancing solicitors to make your property transaction as smooth as possible, we know all the best solicitors who offer value and great service.  Call us on 0208 840 6666 or email us at sales@northfields.co.uk to be referred to a solicitor that we think will help you best.

New Mortgage Regulations to be Released by FSA in 2013 Are a Welcome Change

The BBC recently reported that the The Financial Services Authority (FSA) are going to be introducing new mortgage rules in 2013 which are designed to prevent risky mortgage lending.

Risky mortgage lending is what of course, kicked off the problems with the economy.

Not only are the new FSA rules meant to protect the state of economy by using what they feel are “common sense” standards to evaluate the level of risk for a bank in lending to a particular borrower, but will also protect borrowers themselves from borrowing more than they can afford.

Mortgage lenders will be expected to better assess whether or not a loan is beyond the means of the borrower.

The BBC quoted Lord Turner, chairman of the FSA, as saying: "While the excesses of the pre-crisis period have largely disappeared from the current market, it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return."

Learning from Past Mistakes

The hope is that the new regulations will prevent lenders from becoming complaisant.  The new rules are meant to prevent any back sliding of standards so that mortgages are not awarded to borrowers with only superficial checks into the applicant’s ability to keep up payments on their mortgage.

No more will mortgages of 125% like the “Together” mortgage, formally offered by Northern Rock, be allowed.  Nor will lenders be able to lend excessively, allowing borrowers to have mortgages worth up to 7 times their salary.  Nor will self-employed people be allowed to exaggerate their actual income using "self-certified" mortgages.

What the new rules mean for you

The main aim of new proposals (which are still being finalised) is to make sure that buyers are able to realistically repay their mortgage.  However, other elements like ensuring that mortgage applicants are given the correct advice and at the right time are also within the prevue of the new regulations. 

Under the new regulations, lenders will now be expected to:

• assume interest rates may rise from their current low levels.
• not let borrowers rely on the possibility of rising house prices to claim they can eventually repay.
• assess interest-only mortgages as repayment ones, unless there is a "believable" source of money to pay off the loan.

The FSA has had a change of heart as to whether mortgage applicants should have to detail exactly how they spend their money.  Under the current proposals the lender will check income details and evaluate a broad assessment of what the FSA is calling their "committed and essential household expenditure" instead.

Interest-Only Mortgages

Interest-only mortgages will still be available under the proposed new scheme with the proviso that the borrower must prove that they have a realistic plan to repay the mortgage.  That plan must not rest on the borrower assuming that they can depend on the rising value of their home.

Remortgaging

To allow for remortgaging, however some flexibility is being built into the scheme, so that those who secured mortgages before the new rules were implemented can still rearrange their financing with the same lender.

So if an existing borrower who already has a loan that wouldn’t be allowed under the new regulations will not be locked out of remortgaging.  If you had a pre-existing interest-only loan, a self-certified one, or one with a very small deposit, you will not be prevented from remortgaging.

New Regulations Intended to Allow More People Access to Fianance

The BBc reported that, "Existing borrowers will be unaffected and lenders will have the flexibility to provide new mortgages to some existing customers even where they do not meet the new affordability requirements," the FSA said.

"We will allow lenders to waive the affordability rules when entering a new mortgage contract - providing the borrower has a good repayment history," it explained.

The FSA had proposed changes to lending standards before but many critics felt that it would lock those with good credit histories but unusual lending profiles out of the market.  It is felt that these revised plans will prevent this sort of exclusion.

The new proposals will be welcomed by the self-employed, those in existing self-certified mortgages and people with negative equity.

Paul Smee, director general of the Council of Mortgage Lenders also welcomed this new set of proposed regulations calling them "workable and appropriate".

"The FSA's new proposals seem to strike broadly the right balance," he was quoted as saying on the BBC.

If you need to remortgage now, make sure that you are getting the best possible deal that you can.  Just like you would shop around for the best car insurance quotation, make sure you do some comparison shopping before remortgaging. 

Call Northfields today on 020 8840 6666 or re-mail us at sales@northfields.co.uk and we can refer you to an independent mortgage broker who will be able to provide you with free, no obligation mortgage advice - an independent broker is your best bet for finding the best deal. 

How Will the New Coalition Housing Strategy Affect You?

Last week the Prime Minister announced the launch of a new government housing strategy aimed at getting the housing market moving again, laying the foundations for a more responsive, effective and stable housing market in the future, giving tenants a range of quality properties to chose from, and to improve environmental standards and design quality. While the aims of the scheme are lofty and certainly sound good, can any of these strategies actually help you?

If you are so inclined, you could read the whole of the Coalition government's housing strategy document by clicking the link.  However the main elements of the scheme include:

• a mortgage guarantee scheme to encourage lenders to offer 95% mortgages to buyers of new homes (like the new 1 and 2 bedroom apartments Northfields currently has for sale in Northfield Avenue, Ealing, pictured above)
• an increase in the subsidy available to developers under the "Affordable Homes Programme".
• a change to the rules so that the money from the sale of council houses will go towards the building of new council homes.
• increased subsidies for councils that take over neglected homes which have been left empty for a long time.

How Might This Strategy Help You?

Prospective Buyers

For those people who would like to purchase a new home but have found it difficult to secure a mortgage, the new mortgage guarantee scheme will be the most appealing part of the new strategy.  The aim of this part of the scheme is to guarantee lenders against their losses if certain borrowers fail to repay their loans.  The goal of the scheme is encourage lenders to offer up to 100,000 potential buyers of newly-built properties mortgages even if they only have a 5% deposit, and not the 20% deposit that many lenders are currently requiring.

With many lenders fearing that house prices may fall, large deposits are required to secure a mortgage, thereby, insulating the lender against any potential losses if the market does suffer. 

Essentially, mortgage lenders are protecting their interests if the borrower was unable to pay their mortgage, leading to the property being repossessed and then sold on for less than the value of the mortgage. 

Lenders are also required to put aside a much larger financial cushion in their reserves if they lend with a small deposit rather than a large one as required by international banking rules.

So both of these elements mean that lenders are not approving mortgages for people with small deposits.

How the 95% Mortgage Scheme Would Work

An article on the BBC offered a great example of how the scheme would work:

"Let's suppose you want to buy a newly built flat selling for £100,000 but can only put down a £5,000 deposit.

At the moment your chances of being offered a 95% mortgage for the rest are non-existent.

Under the new scheme, if the developer, lender and you all agree, you may now be offered the 95% loan you desire.

That is because on top of your deposit, which will absorb the first £5,000 of any fall in the value of your home in the event you cannot repay the loan, the lender now has further comfort.

If the price of the property falls below £95,000, the lender will be able to reclaim 95% of any losses it incurs."

At the moment The Council of Mortgage Lenders (CML) says that the exact details of how the scheme will work are stilling being finalised.  However, in essence, the new house builder will contribute 3.5% of the selling price of the home to the lender, which will be held for seven years.  During the 7 years that their funds are held by the lender, the builder will accrue interest on their 3.5%.

The government will also provide money to add to the lenders financial cushion to the tune of a further 5.5% of the sale price.  Between the builder and the government the lender will be holding 9% of the sale price of the property as a contingency fund against any potential losses. 

The scheme will ensure that the lender will have insurance for 95% of its loss if the borrower defaults.

Who Can Benefit From the Scheme?

• buyers who want to purchase a newly built home and would like some help
• lenders who choose to participate
• property builders and developpers who choose to participate

If you do not want to participate in the scheme you don't have to, but conversely you will not automatically be granted the benefits from the scheme.

Is There A Time Frame or Limit on this Scheme?

The short answer is "We don't know".  No limits on the scheme have been stated by the government, so we don't know how much money will be available, nor how many people might be able to take advantage of the scheme. 

We do know that currently the scheme applies only to England, but similar models are being considered for the rest of Britain.

Does This Scheme Put an End to Negative Equity Worries?

No.  If a buyer misses their mortgage payments and defaults and then sells their home to pay the mortgage in full, they will still be liable if the subsequent sale price of their home is less than what they borrowed to purchase the house.  If you are not sure exactly what negative equity means, click the link to find out.

So under this new scheme, if you defaulted on your mortgage, the lender could recoup 95% of its own loss, then chase you for the loss too.

If you had any money that the lender could then claim, they would use the funds recouped from you to repay the insurance payment they held from the scheme.

In other words, the scheme does not protect the buyer against the loss of their home, it protects the lender from loss of the money it lent to you.  As the buyer, you indirectly benefit because the lender being insured against loss allows them to loan money to you that you otherwise never have been able to obtain to purchase your home. 

Essentially, the scheme greases the wheel of the mortgage lending processes freeing up funds for buyers to access.

If you do want to be insured against defaulting on your mortgage payments you will need to arrange for your own mortgage payment protection policy. For advice on how such a scheme works, speak to an independent mortgage broker who can find the right type of cover for you. Call Northfields on 0208 840 6666 or e-mail us at sales@northfields.co.uk and we can refer you to an independent broker who can advise you on how to protect yourself.

If you are interested in taking advantage of the scheme, you'll need to start looking for newly built homes.  Why not start by looking at these gorgeous 1and 2 bedroom luxury apartments for sale in Northfield Road in Ealing. 

Or browse the properties Northfields currently has available for sale by clicking the link. 

Ask the Agent: How Can I Get a Mortgage When I Am Self-Employed?

With the Bank of England’s Monetary Policy Committee having voted once again this November to keep the base rate on hold at its historic low of 0.5%, mortgages should be more affordable than ever.

But the MPC’s decision does arise from a struggling economy, even backed up with £275bn quantitative easing measures as decided at the October 2011 meeting. 

However, one interesting and optimistic side to recessions and economic uncertainty, is that periods such as this usually see a rise in entrepreneurialism.  Those people who have lost their jobs start a new small business rather than searching for a new job.  Often, with positive life changing effects for the new business owner.

However, one downside does emerge from such an exciting new venture – it can be harder to find a mortgage when you are self-employed. 

Hurdle No. 1 – Proving Trading History

According to an article on the Mortgage Advice Bureau website, reporting on research by Kensington, the ability to provide adequate trading history is a block to accessing mortgage financing.  This factor is particularly problematic if the new business was started in response to the credit crunch and there may be no trading history. 

In a survey of 619 intermediaries (that is, mortgage brokers and other independent representatives), 42% said proving trading history is the biggest barrier for self-employed borrowers.

Charles Morley, head of sales at Kensington, says: “While many successful small businesses emerge from recession, it is not unusual for a high street lender to ask for three years’ trading history.

Hurdle No. 2 – Complex Income Structures

Ask any self-employed person and they will tell you that it is wise to have multiple income streams so that if one dries up you can always fall back on another.  Diversification is vital to ensure that you don’t put your proverbial eggs all in the same basket.  However, this again, can prove to be an obstacle when trying to apply for mortgages.

In the Kensington findings, 23% of mortgage intermediaries flagged complex income structures as a difficulty in proving to lenders that self-employed people were able to pay the mortgage. 

Morley from Kensington points out: “And whereas the self-employed will often have a complex income structure from more than one source, automated decision making systems (used by mortgage lenders to evaluate mortgage applications) take a more black and white stance on affordability.”

Hurdle No. 3 – Standard Scoring System

When you apply for a mortgage, the lender will put each applicant through a standard credit scoring system.  Unfortunately, many intermediaries, amounting to 15% of surveyed brokers said that self-employed circumstances do not fit standard credit scoring systems, making it difficult to proved credit worthiness.

Hurdle No. 4 – Self-Employed People’s Perceptions

12% of the mortgage brokers asked felt that the self-employed’s own perception of how difficult mortgage finance is to obtain is the greatest obstacle.  While many people see the hurdles that self-employed people have to overcome to secure financing, many don’t realise that there ways to overcome these issues. 

Self-Employed Solution

Being your own boss does not mean that you have to sacrifice your own home. 

As Charles Morley, head of sales at Kensington, says: “High street lenders are often unable to consider the more complex circumstances of a customer who owns their own business, but intermediaries have access to lenders, like Kensington, that are able to take an intelligent approach, with decisions made by experienced underwriters.”

Independent mortgage brokers are not limited to one set of mortgage products like a high street bank would be.  Your broker can look across the entire market and pick a mortgage lender who is more likely to award a self-employed person with the finance they need. 

Mortgage brokers will also know the ins and outs of mortgage applications and will be able to tell you how to fill out the application for a particular lender for the best chance of success.

Not only that, mortgage brokers often have access to special rates and deals that are not even available on the high street, in the end, making your mortgage more affordable.

According to Kensington’s research, the average mortgage intermediary receives six enquiries from clients who consider themselves to be self-employed each month.   This means that the average mortgage broker will have the opportunity to place, on average, over 70 self-employed mortgages each year.  That’s experience you can bank on.

To be referred to an independent mortgage broker who can give you no obligation advice on getting a mortgage call Northfields on 0208 840 6666 or request a referral via e-mail at sales@northfields.co.uk

Some Good News in October’s Property Market

There were some positive indicators for the property market in Rightmove’s latest House Price Index Report this fall. 

First of all, there was a 2.8% monthly rise in new sellers’ average asking prices across the nation with 4.7% rise in asking prices in London and the South.

And secondly we experienced a two year high in mortgage approvals.  

Although there is still a great deal of uncertainty in the global financial markets, particularly with the ongoing concerns in the Eurozone, those of us who live in the more affluent south of England have “some grounds for hope of market recovery” as Miles Shipside, director of Rightmove put it. 

Shipside also commented that: “Wider access to mortgages and rising asking prices are early signs of increasing demand, giving home owners some grounds for hope of a market recovery. However, the reality is that there is further evidence of the two-tier twist which is dogging the return to more widespread liquidity in the housing market. While those in the affluent south may have cause to celebrate their prices being well up on this time last year, prices in the north continue to go backwards, leaving the widest price gap ever. For the average asking price of a property in the south you could now buy two average properties in the north and still have enough change left to buy new carpets and curtains.”

The Highs and Lows of Higher Property Prices
For those people who do own property in London or in the South East, South West or East Anglia, the idea that their properties have increased in value even further  is welcome news.  However, for those people who want to buy property, whether for the first time or to move up the property ladder, these record asking prices are not exactly of benefit. 

You would be forgiven for thinking that the economic downturn should have led to reduced property prices.  And certainly, in the North that has been the case where asking prices for properties have reduced by 9.6%.  However, four years after the start of the credit crunch property prices for homes new to the market have risen by 5.4% in the south. 

Shipside adds his thoughts by sayinmg, “Existing home-owners in the highest priced regions are seeing the value of their bricks and mortar increase even further, though it is at the expense of buyers who are faced with the highest ever asking prices. Those trading up will benefit from already being on the housing ladder, though the gap to trade up to the next rung is a bigger financial leap when prices rise like this and desirable homes are in short supply. Those who are not property owners, such as first-time buyers or those taking an ownership break in the rented sector, will either have to spend more or compromise on what they can afford”.

What is buoying the market up in the South?
To ensure activity in the property market, you need buyers who have:
-  access to finance through the ability to raise a substantial deposit
- a secure job to fund repayments

The south of England has far more people who meet these key criteria and these variables are underpinning the market in London and the south.

Added to that, if buyers perceive prices to be rising, people tend to act more quickly to complete their property purchase in a bid to ensure that their dream home is not priced out of their range.  This effect is at least partly responsible for the higher volumes of sales in the south.

The Mortgage Factor
In August, the Bank of England’s mortgage approval figures stood at 52,410.  With the figures adjusted to account for seasonal variances, mortgage approvals were at their highest level since the end of 2009. Rightmove’s report points out that “While still half the average number seen from 2000 to 2006, it is worth noting that they are nearly twice the 26,333 seen during the trough in April 2008.”  Other factors which have seen mortgage approvals rise included the continuing record low base-rate and lenders competing amongst themselves to attract deposit rich borrowers.

Trading Up
Home owners with adequate equity will have plenty of opportunity to move up the property ladder.  Activity levels for those trading up to a bigger or better property will likely increase due to increasing prices which will motivate buyers to act sooner rather than later. 

London home owners in particular will enjoy the biggest growth in equity and should be feeling positive about trading up. However, as Rightmove points out “there are signs that the distance to the next rung of the ladder may be getting too high for some in the capital as the number of new sellers coming to market is 13.9% down compared to this time last year.”  Some London sellers may find that they need to consider slightly less pricey areas to get the type of property that they really want.  A smart move would be to look at areas that are thought to be up-and-coming or that are experiencing a certain degree of regeneration, such as Brentford or Hanwell.

Shipside of Rightmove concludes: “Low rate mortgage deals will only benefit those with the requisite high deposits, and at the moment the best equity growth has been seen in the London market. With record prices in the capital, some will be priced out of the best areas and will either have to stay put or look for value further afield.”.

The Best Mortgage is the One With the Cheapest Rate, Right? Not Necessarily

If you are remortgaging or taking out your first mortgage on your first home, you might think that deciding between mortgage products is easy.  You just go for the mortgage with the cheapest rate - or do you?

Many lenders charge fees that you are required to pay when you take out a mortgage, including arrangement and valuation fees.  These fees can add thousands to your bottom line so you must factor these fees into the costs.  Once you've crunched the numbers, you may find that a mortgage product with a low rate that once looked like a bargain, will actually cost you more.

Watch this video from Moneysupermarket.com to get an idea of how to calculate the cost of your mortgage including the fees:

As the video points out the fees on mortgages can take many forms from a flat fee to a percentage fee.  The fees may also be called different things depending on the lender.  You may find the fee called a booking fee, completion fee or administration fee.  Some mortgages may come with more than one of these fees attached, so be sure that you are aware of all the fees involved.

The Which site found that mortgage fees have increased over the last few years.  By way of comparison, the average fee in November 2005 was just £411, whereas the average fee in August 2011 was £1,201 - a rise of almost 3 times the price in 6 years.

The other thing to factor in to your mortgage decision is that you will also have to pay interest on the amount of the mortgage arrangement fee for the duration of the life of the loan.

Mortgage valuation fees

When you take out a new mortgage your lender will require a mortgage valuation on the property.  The purpose of this valuation is to establish the current resale value of your property.  This valuation protects the lender's interests, because if you were to default on your mortgage payments and they were to repossess the property, they need to make sure that they would recoup their costs when it was sold.  To understand the mortgage valuation better and what to do if your property is downvalued, click the link.  You will be responsible for paying for the mortgage valuation.

It is worth noting at this point that the mortgage valuation does not look at the structural soundness of the property.  A mortgage valuation is just about the value of the property when resold and will not give you much information about the condition of the property.  Therefore, to protect your own interests, you should commission a Homebuyer's survey or a full building or structural survey. To understand what type of survey would be the best in your particular situation, read this article about what type of survey you should get when buying a property.

Other Fees You May Want to Take Into Account

1) Higher-lending charge - Another fee to watch out for is the higher lending charge.  If you are borrowing a high proportion of the property’s value you may have to pay this type of fee.
2) Early repayment charges (ERC) - During a specified period of your mortgage deal, it is usual to be required to pay a penalty to get out of the mortgage. This fee might take the form of a percentage of the amount of the loan still outstanding. Aim to avoid mortgages with ERCs that last beyond the initial deal period.
3) Exit fees - some mortgages may incur an exit fee for closing your mortgage account when you pay your mortgage off or switch lender.

As the video stated, there are several ways to help you calculate the overall cost of your mortgage, taking into account the fees involved.  Which has a mortgage calculator that does take fees into account - click the link to make use of the mortgage tool. 

However, as the video recommended, by far the best way to ensure that all factors have been taken into consideration when calculating the cost of a mortgage is to consult an independent mortgage adviser.  Using an independent mortgage adviser, as opposed to one that is affiliated with particular lenders, is that you will be sure of more objective advice.  An independent broker can look across the entire mortgage market and compare all the available products and their fees and calculate the total cost for you.  Not only that, but independent brokers are often able to get rates and deals that you won't find on your own on the high street.

To be referred to a reliable independent mortgage broker, call Northfields on 0208 840 6666 and we be pleased to get a trusted advisor to give you some free advice.

Think a Capped Mortgage Is a Great Idea? Think Again.

If you are remortgaging, you might be thinking about a capped rate mortgage to protect yourself from future interest rate rises. It sounds like a safe option, but it is the smart option?

Actually, mortgage products that place a cap on future rate rises could end up costing more than fixed-rate equivalents

Moneyfacts recently released date that uncovered the fact that in the past two years the number of capped-rate mortgages available jumped from 1 to 39 products.

What is a Capped Rate Mortgage?

Essentially, capped-rate mortgages are similar to variable-rate mortgages in that the mortgage rate may go up or down in accordance with interest rates. However, what makes them different is that they have a limit, or cap, above which the rate cannot go during the offer period.

Why Capped Mortgages May Not Be the Answer

Although these mortgages seem really appealing from the outside, particularly in our uncertain economy, it does not mean that they are all the cracked up to be (or should that be “capped” up to be?).

Michelle Slade of Moneyfacts explains that as the Bank of England is unlikely to put the base rate up substantially at any time soon, mortgage holders “are unlikely to ever hit the cap" and would therefore be best off choosing either a variable-rate deal such as a tracker, or a fixed-rate mortgage.

The reason that capped rate mortgages may not be the best option is that you have to pay for the security offered by the cap. As a general guideline, the rates on capped mortgages are typically about 0.5% higher than for a similar variable rate deal.

When Will Interest Rates Go Up?

A large part of the reason that experts, including those at Moneyfacts, are not currently recommending a capped rate deal is that many believe that interest rates will remain at their current historic low until at least the middle of next year, at the earliest. Some experts think that the base rate won’t even be raised during the course of 2012.

Remortgaging?

With so many mortgages to choose from it can be difficult to know what is the best product for you. Get an idea of some the products that might work for you by using the Mortgage Advice Bureau's Mortgage Search online tool here.

Are You Sure That You Have the Best Mortgage Deal?

Even if you were not planning on remortgaging, are you absolutely positive you are saving all the money you could be on your mortgage? Check to see if there is a better deal available on your mortgage with thisMortgage Checker online tool.

To be referred to an independent broker who can look at thousands of mortgage products on your behalf and find the best deal for you, call Northfields now for a referral on 0208 840 6666 or email us at sales@northfields.co.uk. It is free and there is no obligation, so why not make sure that you are not spending money that you don't need to?

You're an Honest Person, Why Should Mortgage Fraud Matter to You?

Exaggerating your income at a dinner party is one thing, but lying about your salary on a mortgage application is another thing entirely.  Sadly, cheating on your mortgage application is a £1 billion a year problem.

Her Majesty’s Revenue and Customs (HMRC) has come up with a solution.  The new scheme involves HMRC partnering with mortgage lenders to sniff out fraudulent mortgage applications.

Under the scheme, those people who lie about their salaries to get a larger mortgage could face prosecution.

How Does the Scheme Work?

HMRC will now be helping mortgage lenders to flush out payslip fraudsters.  Whenever a mortgage lender feels there is something untoward about an application, the taxman can verify the applicant’s income.

So whether the fraud takes the form of an inflated salary or if it involves fake payslips or bank statements the support of the HMRC means that there is a very high chance of fraudsters being found out which could result in an investigation and possibly prosecution for fraud.

The minimum a mortgage cheat could expect as the outcome is that their application will be refused and they won’t be able to buy a property.

The scheme has been given the green light after a successful pilot program which involved two unnamed lenders.  The voluntary "mortgage verification scheme" was officially launched at the beginning of September.  The scheme was a combined effort between HM Revenue & Customs, the Council of Mortgage Lenders(CML) and the Building Societies Association.

Under the scheme lenders pass on applicant's details to the HMRC. These details will then be checked against tax and employment records to ensure that what the information on the application regarding income is the same as the information held on the HMRC databases.  If discrepancies are found, not only would the mortgage application be refused, but the applicant could find themselves being investigated by HMRC.

HM Revenue & Customs has set up a dedicated team to deal with investigations, which will cost lenders £14 a time.

Who Will be Investigated?

Mortgage lenders conduct their own checks and investigations into an applicant’s income.  Should there be any reasonable suspicions following these standard checks, the lender could then appeal to the HMRC for further investigations.

You might be under the impression that cheating on a mortgage would be limited to self-employed people, freelancers or others will complicated earning structures.  However, there are employees on the PAYE scheme who have been known to commit mortgage fraud, too.

Why The Scheme Should Matter to You

“I’m not a fraudster, so what does it matter to me if this scheme has been developed”, you might be saying to yourself. 

Well, for one thing, this scheme will help them to lender more responsibly and keep the risk to banks down.  In the aftermath of the credit crunch we have all become increasingly aware of how important that is.

It stops liars and cheats from getting mortgage funds, but it also helps lenders have confidence about a borrower’s credentials.  If there was any doubt in a lender’s mind about a certain applicant, their mortgage application could have just been refused.  With this new scheme, those doubts can be put to rest, so honest applicants will avoid refusals.

You’re Honest – Is Your Mortgage Broker?

Again, if you’re thinking that none of this mortgage fraud applies to you, you may want to think again.  In some cases, when a false declaration of salary is made on an application form, it is the mortgage broker and not the applicant who is the perpetrator.  The Financial Services Authority (FSA) banned 95 mortgage brokers in the last four years for such offences. 

To protect yourself from dishonest mortgage brokers, first check the mortgage brokers is registered by the FSA.  The register is available online at  http://www.fsa.gov.uk/Pages/register/index.shtmlor call 0845 606 1234.  The online records allow you to check the broker’s history, including any disciplinary action. 

There is major incentive for using a FSA registered broker – if you don’t use an FSA registered broker you will not have any recourse if mortgage fraud by a broker is uncovered.

Don’t put your home buying at risk, use a FSA registered broker.  Call Northfields today on 0208 840 6666 or email us at sales@northfields.co.uk and we can refer you to a registered and reliable independent broker.

Mortgage Lending Up and Arrears Down

The Council of Mortgage Lenders had two pieces of good news this August. Firstly that mortgage arrears and repossessions are holding steady and secondly that that lenders approved more mortgages this past June.

With so much discussion in the news about the European debt crisis and US credit rating downgrade, it is great to hear some good news about the UK housing market. Although, neither of these revelations are big jumps that mark a major turnaround, they still very welcome.

Mortgage Arrears and Repossessions Steady

The Bank of England again decided in August to keep the base rate at the historic low of 0.5%. These low interest rates have the direct effect of keeping the level of mortgage arrears and home repossessions steady, according to the Council of Mortgage Lenders (CML).

The base rate remaining low has helped many people to continue paying their mortgage. This is particularly important in a financial climate where people may be out of work and where the cost of living is rising due to rising utility bills and petrol, for example.

On the whole, the number of people who have lost their homes owing to an inability to make mortgage payments was down by 7% in the first half of 2011 compared with the first half of 2010, and 28% down on the first half of 2009.

"Mortgage repayment problems have stabilised against a current backdrop of stable employment and low interest rates," said CML director general Paul Smee.

The CML has predicted that the number of repossessed homes will rise to 45,000 in 2012.

"Despite current uncertainty in financial markets, we see no need to revise our forecasts. Anyone with debt worries should take advice and speak to their lender at the earliest opportunity, as most temporary financial problems can be resolved," Mr Smee said.

More Mortgages Approved in June

The total number of new mortgages rose by 22% from May, to 46,700.

Although the rise in lending is relatively modest compared to pre-credit crunch levels or even to last year’s figures, the CML dubbed the statistics “encouraging”. The number of new mortgages arranged in June was back to the level recorded last October. The figures were 63% higher than in January 2011, when new mortgage lending levels were at their lowest monthly level for nearly two years.

We can look forward to more positive figures to come as it is expected that there will be more house sales completed in July, so these figures may continue for a while.

More Buy to Let Mortgage Approvals

The latest figures from the CML shows that the number of buy-to-let mortgages being approved have risen by 29,000 in the second quarter of the year, to 1,342,200.

Buy-to-let mortgages now account for 12.4% of all mortgages. This figure is staggering as it is the highest proportion on record since the buy-to-let market took off at the end of the 1990s.

At the same time that buy-to-let mortgage approvals are up, arrears among buy-to-let mortgage holders continue to fall.

Another historic high was revealed by the CML’s latest report because for the first time since 2088, arrears rates for buy-to-let mortgages were now lower than in the owner-occupied sector.

More First Time Buyer Mortgage Approvals

Even more optimistic is that mortgage approvals for first-time buyers reached a 10-month high, up 24% from May to 18,100.

The increase in first time buyer mortgages seems to indicate that more first time buyers seem to be able to amass the larger deposits required by lenders. The average deposit required by lenders currently stands at 20% of the value of the home. The figure has dropped slightly from the 25% that was the norm in 2009, but is still considerably higher than the historic average of 10%.

"If you consider the buy-to-let recovery alongside the increase in first-time buyer numbers, it appears that first-time buyers are not being displaced by buy-to-let landlords but are holding their own in a restricted market," Mr Smee said. This is surely good news for people who have been unable or delaying the sale of their first property to move up the ladder. With more first time buyers and buy-to let landlords securing finance, the chance of selling a 1 or 2 bedroom starter home increases.

Smaller Deposits Required

Some experts believe that the rise in mortgage approval numbers is down to lenders asking for smaller deposits.

The market now has plenty of competitive 90% products available with 95% LTVs (loan-to-value) mortgages also reappearing.

House buyers are also being aided by a fall in the interest being charged on new fixed-rate deals. The financial data service Moneyfacts said the average five-year fixed-rate deal was now at its lowest level since 1988 now at 4.99% - the first time in 23 years that the average rate was below 5%.

In real terms, that means that a person who chose the average five-year fixed mortgage today would be paying £117 per month less than someone who secured the deal in September 2009.

If you have been putting off buying or selling your property until the market looked better, now may be the time to make your move. If you are not sure if you could secure a mortgage, we can refer you to an independent mortgage broker who can find the most affordable mortgage product that suits your situation. Call Northfields today on 0208 840 6666 to register your details or register online by clicking the link.