Apply Now For Your FREE Loan Quote!
Tue 5th Aug, 2008
Posted in Borrowing, Consumer Credit, Equity release, Financial news, Homeowner Loans, Homeowners, House buying, Negative equity, Property, Remortgaging, Secured loans, UK Finance, mortgages at 12:59 pm by Steve Smith
It’s been a turbulent year so far on the housing market, with Nationwide reporting prices showing their biggest annual fall since 1991, the year of Nationwide’s first survey.
The average home has now dropped by £17,000 in the last year, according to Nationwide – bad news for anyone hoping to sell and re-buy using equity in their home: The equity may just not be there any more.
Homeowners who took out interest-only or 90% or greater home loan deals are particularly at risk of losing everything if they fall behind on loan repayments. Those who need to sell up and were banking on rising prices to give them equity for a new home are having to stay put or face negative equity.
Fionnuala Earley, Nationwide ’s chief economist said: “The weakening economy and poor housing market sentiment do not suggest that the market will recover quickly.”
However, the National Housing Federation has said that it expects house prices to rise by 25% by 2013, due to the lack of new houses being built. Demand is expected to outstrip supply in a few years, pushing prices back up.
In the meantime, economists are predicting that the Bank of England will be forced to cut the base rate as a means of curbing inflation, as fuel and food prices continue to rise.
Permalink
Fri 2nd May, 2008
Posted in Borrowing, Consumer Credit, Equity release, Financial news, Homeowners, House buying, Housing news, Property, Rental property, Secured loans, Spending, UK Finance, mortgages at 4:49 pm by Steve Smith
Whilst it is still cheaper to buy a property and pay a mortgage over 25 years than it is to rent a property, the saving made by homeowners has gone down by 75% in the past year according to new research.
Figures show that over a traditional 25-year period of a mortgage, buying a property costs an average of £437,925. This figure is only slightly ahead of the average for renting a property for 25 years which cost an average of £443,736.
While in past years buyers could have expected to save somewhere in the region of £24,000 over 25 years, the impact of rising interest rates and rising house prices means now that the difference between buying and renting has fallen to just £5,811.
In some areas of the UK it is actually now cheaper to rent a property than it is to buy one.
Northern Ireland is a particularly bad area for buying when compared to renting. Property prices have gone up by 40% in the past year meaning that the average house buyer will now pay £572,814 for their property over 25 years while renters will only pay £392,097 for renting the property over the same period. This means by renting a property you will save a massive £180,717 over 25 years.
While the figures do include maintenance costs they do not include set-up costs for home loans. The figures also suggest that it would be cheaper to rent a property in Wales, the north-west of England, Greater London and Yorkshire.
Obviously these figures look at the matter solely from the view of payouts, and not from the security gained from home ownership. Additionally, equity grows as home loan repayments are made and as house prices rise, allowing homeowners to borrow secured loans against their property for both property improvement and equity release purposes.
Permalink
Tue 4th Dec, 2007
Posted in Borrowing, Consumer Credit, Equity release, Financial products, Home Improvements, Homeowner Loans, Personal loans, Property, Remortgaging, Rental property, Secured loans, Spending, Student debt, UK Finance, mortgages at 1:01 pm by Steve Smith
It is amazing how many parents invest tens of thousands of pounds into their student’s education without ever thinking about their living arrangements. In fact, many students are left to scramble for whatever they can afford, and decorate with left over pieces and junk.
Our environments play a vital role in our emotional wellbeing. Most parents know this. The concept of borrowing a secured loan, or a mortgage, to redo a teen’s room, a den for entertaining, or the basement, makes common sense. But, parents rarely see the importance of treating a dorm with the same respect and concern.
Students need a place to unwind and relax, but it must also be an individual statement that lets them continue to grow emotionally, amid the confliction and confusion of a dorm, or student housing.
Student housing décor goes far beyond picking a wall colour and a couch. Many parents are shocked to realise that student housing often lacks a respectable bathroom. Adding a pure water dispenser, a new toilet seat, and fixing the window coverings can be expensive, but they are vital to a student’s well being.
A secured loan is the best way to do this. It frees enough money to do the job right, in the least amount of time. And, it can be paid back quickly, without high fees and penalties, depending on whether the property was leased for one year or longer.
A property that is leased for more than one year offers the parents some leveraging. They may be allowed to upgrade the bathroom, add a heating unit, and improve elements which would be the landlord’s responsibility if the housing was a permanent residence.
Permalink
Thu 4th Oct, 2007
Posted in Borrowing, Consumer Credit, Consumer debt, Debt management, Equity release, Financial products, Homeowner Loans, Personal debt, Personal loans, Property, Savings, Secured loans, Tenant loans, UK Finance, Unsecured loans, interest rates at 11:10 am by Steve Smith
No matter what you want to buy, it seems that everything is expensive today. A handbag can cost £5000, a sofa can cost £10,000, but when it comes to borrowing, consumers need to consider the fact that the retail price is not the total price paid for the product.
A £50,000 wedding does not cost £50,000. Instead, it costs the original capital and the accumulated interest. While £50,000 will not buy a dream wedding any more, it does take a major chunk out of a person’s savings or home equity.
The important consideration when making a big purchase is value. Many people buy a £5,000 sofa instead of a £10,000 sofa. The first couch is worthless long before the loan is repaid. The second piece of furniture may not only retain its value, but it may even increase in value depending on the market and the demand.
The next thing to consider is the interest. Many people borrow on unsecured personal loans instead of secured loans. Releasing equity from your home can be a good idea if it saves you money.
Many people believe that finance companies cannot force the sale of a home to repay a debt if the borrower defaults. This is no longer true. In fact, a company can ask a judge to force the sale of a home for a relatively small loan. So, paying the extra interest for an unsecured loan, or a personal loan, is no longer ‘wise borrowing’.
The cost of borrowing has made it impossible to grab the first financial product offered.
Permalink
Mon 1st Oct, 2007
Posted in Borrowing, Consumer Credit, Equity release, Financial news, Home Improvements, Homeowner Loans, Homeowners, Housing news, Personal loans, Property, Remortgaging, Secured loans, Spending, UK Finance at 1:29 pm by Steve Smith
As governments work to improve emissions and environmental waste, municipalities are forcing new home builders to build environmentally-friendly homes. Many municipalities in the UK will soon implement regulations demanding that homeowners must replace old, fuel-wasting, polluting appliances and heating systems with new environmentally friendly systems.
This is a global concern. The Ford auto company recently discontinued their heavy luxury car because they could not feasibly convert it to run on low emission fuels.
The first step to an eco-friendly and healthier home is to replace the duct work and heating system with energy efficient and low emission equipment. This could include replacing electric with solar water heaters, or water heaters that heat water as its needed, and updating the furnace to a new energy-efficient model.
Energy-efficient models should be used in tandem with timers that turn them on when needed, and turn them off to eliminate energy waste.
As homeowners pay more attention to lighting and ventilation in old homes, venting and windows are moved to create balance, instead of being placed at geometrically balanced segments of the wall.
Windows maximize natural light, and incorporate solar heating. Good venting removes contaminants from a room, and reduces the need for air conditioners.
The initial investment is substantial, but the long term benefits are expansive. Many analysts suggest that now is the time to ‘go green’ before the demand spikes and the prices increase. Others say that prices are likely to drop as products become more mainstream.
Even now, a consumer can expect to borrow a £20,000 to £50,000 mortgage or secured loan to completely upgrade their existing home. An underground heating system, which takes heat from the earth could see a homeowner needing a £15,000 home improvement loan to implement. The cost may not be cheap, but big savings can be made on heating and electricity bills.
Permalink
Thu 13th Sep, 2007
Posted in Borrowing, Consumer Credit, Equity release, Financial news, Financial products, Home Improvements, Homeowner Loans, Homeowners, Property, Remortgaging, Secured loans, UK Finance, mortgages at 12:48 pm by Steve Smith
With all the debt management products on the market, the most overlooked is leveraging equity from the home. The practice of releasing equity to manage debts, improve lifestyle, or add equity to property is not new. However, the idea of releasing equity from your home and using the money to build wealth is a recent notion.
In the past, people worked to pay off their mortgage and escape debt. Today, people are releasing that equity, investing it in businesses, property, and stocks, and building wealth.
This wealth is then returned to the investment fund and used to continue building wealth. This is fairly secure, as long as the investor doesn’t become involved in any high-risk ‘get rich quick’ schemes.
Financial companies are becoming familiar with the concept of leveraging the money in your home to build wealth, instead of hoarding it. A cautious person can release the equity in their home, and earn enough money in 10 -15 years to restore the money.
With a good investment strategy, the homeowner will have their home loan repaid before the end of the mortgage term, and give the homeowner thousands in profits.
Playing it safe can be dangerous. Many people will not hesitate to apply for a second mortgage, or a secured loan to help them escape an emergency. People will draw equity from their home when they are ill, lose their job, or have a family crisis. However, they will not withdraw the money to build wealth.
Prevention is a better strategy than waiting until you are in trouble and then trying to dig yourself out of the hole.
Permalink
Tue 17th Jul, 2007
Posted in Borrowing, Budgeting, Consumer Credit, Consumer debt, Credit Card, Debt management, Equity release, Financial news, Homeowner Loans, Homeowners, Housing news, Inflation, Personal debt, Personal loans, Property, Secured loans, Spending, UK Finance, interest rates, mortgages at 1:02 pm by Steve Smith
Over the last five years rising mortgage payments and living costs have affected households to the point where they now have a significantly smaller portion of income to spend on discretionary purchases. After tax contribution, mortgage payments and household bills have been deducted from an average family’s gross income there is just twenty two percent of the gross income left over for families to spend on items such as clothing, video games, media products, or other electronic equipment. In 2003, twenty eight percent of gross income was left over for the average family to spend on discretionary purchases.
As the household costs continue to rise, many consumers are adversely affected. The increase in mortgage payments that has been driven by the four interest rate rises since last August is having a big impact on consumers. Over the past two years, strong consumer spending has been the power behind Britain’s economy, however figures now show that spending has decreased slightly. Although consumers are taking out secured loans against the rising value of their homes, many retailers are concerned that the spending squeeze is likely to intensify as interest rates are expected to hit six percent by the end of the year.
As basic household bills are increasing, many households are being affected and are therefore cutting down on unnecessary expenses, such as clothing, shoes, or unnecessary electronic equipment. It all depends on the family’s choice and importance of ‘luxury’ items. Whatever the choice may be, there has been a slowed consumer spending growth throughout the country as many households are now stretched with their mortgage repayments and other household bills. Customers are now asking whether the purchases they once put on a credit card or personal loan without a thought are now really necessary.
Permalink
Wed 4th Jul, 2007
Posted in Borrowing, Consumer Credit, Consumer debt, Equity release, Financial news, Homeowner Loans, Homeowners, House buying, House repossession, Housing news, Missed payments, Personal debt, Personal loans, Property, Remortgaging, Rental property, Secured loans, UK Finance, mortgages at 1:04 pm by Steve Smith
Due to the rise in interest rate there have been a growing number of sale-and-rent-back property companies that are signing on overstretched homeowners. These sale-and-rent-back deals seem attractive to borrowers who are in arrears, especially when companies claim that the deals are conducted swiftly and quietly with no need to tell neighbours or family. However, before a homeowner considers a sale-and-rent-back deal they should make themselves well informed of the process and ensure that they know everything there is to know about sale-and-rent-back deals. Here is just some general information regarding a sale-and-rent-back deal:
A sale-and-rent-back deal is when a sale-and-rent-back company purchases someone’s home for less than the market value, typically 70% to 80% of the value. All the fees and costs are paid for the sale are generally paid for by the company, and then the property is rented to the original owners at market rent, or often less than their mortgage payment. The cash from the purchase can then be used to pay off their existing mortgage as well as any other outstanding secured loans or debts, and remain in their home. Often a company may offer the owners an opportunity to buy back the house at market value at a later date.
For many the idea of selling their home for tens of thousands less than with it is worth seems like a foolish idea. However, for those who are falling into arrears on home loans and risk repossession, the idea of a sale-and-rent-back deal seems like a simple way out of debt. However, homeowners who are interested in a sale-and-rent-back deal are advised to educate themselves about the process and to check out the sale-and-rent-back company that they choose, as there are some companies who are legitimate and want to build a reputation, while there are other companies that are only out to make a quick buck. Homeowners are advised to be cautious.
Permalink
Tue 3rd Jul, 2007
Posted in Borrowing, Consumer Credit, Equity release, Financial news, Financial products, Home Improvements, Homeowner Loans, Homeowners, House buying, Housing news, Personal loans, Property, Secured loans, Spending, UK Finance, mortgages at 11:01 am by Steve Smith
There has been a lot of speculation in the media recently regarding the possibility of house price drops across the UK. A new special report by Sharlene Goff of the Financial Times highlights yet another fear for home owners. This new report highlights the fact that after years of warnings, house builders are finally starting to bring in a supply of new homes. However, because the new supply of homes will be concentrated in certain areas and at certain parts of the market, they may have drastic consequences for housing prices in these markets, particularly those who have released equity from their homes through secured homeowner loans.
“Secured loans are a great way for homeowners to build wealth through home improvement,” says Abbi Rouse of online loan brokers, Interfinancial Limited. “However, for households close to their financial limit, a fall in house prices could spell disaster for those looking to sell on at a profit.”
Recent years have seen the biggest housing shortage in the UK since the Second World War. However, with a concerted effort from the building industry and incentives from the government, it looks as if thousands of new houses are finally ready to hit the UK market and relieve some of the chronic issues of under supply. This was supposed to ease the pressures that have been continually pushing up house prices.
However, it has been pointed out by many experts in the housing industry that some of these new developments that will be coming on line over the next year, will cause massive oversupplies of certain types of housing in localised areas. For example, while a particular city as a whole may have an overall shortage of housing, certain suburbs may have a glut of three bedroom semi-detached houses as this is what the developers have concentrated on supplying.
“A homeowner who has taken out a loan to add an extension to their home will be expecting to recoup some or all of the cost when they move,” says Rouse. “Typically these home improvement loans are taken out by those looking to move up the property ladder at some point – homeowners in two or three-bedroom properties.”
What this means is that while house prices in the city as a whole may remain fairly strong, the price of three bedroom semi-detached houses in the local area of oversupply would plummet once they became plentiful. This could be terrible news for homeowners who have chosen to carry out home improvements over moving home. These families may now find their house is worth no more than it was before, making their once cheap loan now an expensive option.
There could become a real fear for home owners in areas that look set to suffer from over supply as it will mean that they run the risk of getting into a negative equity situation. Obviously this will depend on how much they owe on their mortgage and on any other debts that they have secured against their home. However, it does look as if negative equity could return to the UK as a real issue.
Permalink
Tue 19th Jun, 2007
Posted in Borrowing, Consumer Credit, Consumer debt, Equity release, Financial news, First time buyers, Home Improvements, Homeowner Loans, Homeowners, House buying, Housing news, Inflation, Personal debt, Personal loans, Property, Secured loans, Spending, UK Finance, interest rates at 10:14 am by Steve Smith
With house prices up just 0.5 percent in May, the property market is slowing. The rise in May is equivalent to just half of April’s rise, which means that the growth over the last three months is just 1.8 percent, the lowest since August 2006. However, despite these figures, the overall growth is still strong with house prices currently £17,000 higher than they were at the same time last year.
With higher interest rates and the threat of more rises to come, the trend of the property market is showing signs of slowing. Economist warn that those who are thinking about stretching themselves by getting a piece of the property market may find that the burden of home loan debt will be a heavy load for a long period of time. With the threat of a hike in the base rate, first-time homebuyers are being told to be cautious when they consider the idea of getting a foot on the property ladder, especially if they are stretching to their limits by doing so.
Britons are finding themselves caught up in debt that they are no longer able to control and the fact that interest rates are rising has put more pressure on those who have a mortgage and a pile of debts. Many homeowners have treated their property as a piggy bank, taking out secured homeowner loans to release cash for holidays and spending sprees. Even those who invested their borrowings in home improvements could feel the pinch as the increase in property value will only be felt when they come to sell.
Despite the recent rises in interest rate the impact of the increase has not had the same impact that was made with previous rate hikes. In 2003/4 interest rates rose from 3.5 percent to 4.75 percent in ten months and the number of homes sold throughout that period of time plummeted from 132,000 a month to 76,000 three months after the last rise. However the recent rises have had a far smaller impact on the property market. This has had economists and the BoE scratching their heads over how they will slow the inflation rate, which still climbs despite the rate rises.
Permalink
« Previous entries Next Page » Next Page »
