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Thu 5th Jun, 2008
Posted in Bad Credit, Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Inflation, Homeowners, House buying, First time buyers, Spending, Unsecured loans, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Rental property, Debt management at 12:02 pm by admin
More and more existing home owners are find it harder to sell their homes as fears of recession keep people from moving. But in an ironic twist, first time buyers are unable to take advantage of the new low house prices because of a lack of affordable home loans on the market.
The growing concern over the state of the economy is making many people more unwilling to overstretch themselves by buying a new home now. New figures published by the Halifax have shown that house prices fell by their sharpest rate in more than fifteen years in May.
Many buyers were hoping for a fall in borrowing costs when the Bank of England dropped the base rate to 5%. However, lenders have been unable to pass on the cut as the Libor rate remains high and liquidity low. Loans of all types have been affected.
The Bank of England is due to announce its latest interest rate today and is widely tipped to leave the rate at 5%. Consumers may feel this is a blow, but with the Government worried about inflation, the Bank is unlikely to cut the rate again yet.
Halifax’s chief economist, Martin Ellis, said: “The decline in prices is caused by the difficulties created for potential house purchasers by the rapid rise in house prices in the last few years, a squeeze on spending power and the reduction in credit availability,”
Halifax warn that house prices could continue to drop next year. This is potentially good news for those waiting to afford their first home, but may still not be enough to counteract the credit crunch.
Britons have seen their wages rise 4% in the past year, a stark contrast to the 9% rise in fuel prices seen and the 7% increase in food costs.
Sadly for many, property rental prices have also been increasing as more buy-to-let investors pull out of the market, leaving a diminishing pool of properties available for rent.
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Tue 27th May, 2008
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Homeowners, House buying, Buy to let, Financial products, Property, Financial news, Housing news, Borrowing, Secured loans, Rental property, Debt management at 1:04 pm by admin
It has been revealed by Paragon, the UK’s third largest buy-to-let lenders, that it is suffering from the impact of the global credit crunch and may follow in Northern Rocks footsteps by becoming its latest victim.
The company has said that it can no longer borrow the amount of money it needs in order to sustain its business. The company has decided to cut the number of buy-to-let loans it offers by roughly half in the coming year. Other banks are expected to follow a similar lead.
Other buy to let lenders have also had to take urgent measures to raise ready cash including Bradford & Bingley which is the UK’s biggest buy-to-let lender.
If there is a shortage of available home loans in the buy-to-let category buyers will be sucked out of the market. This will further decrease demand for housing amongst buy-to-let investors and send prices dropping further. Ironically, this raises the price of rental property, as fewer properties are available to rent.
The statements by both buy-to-let lenders provides yet further evidence that the global credit crunch will take down more victims in a similar manner to Northern Rock. At the moment many banks simply cannot raise any liquidity because inter-bank lending rates are so high.
As a result of a short supply of liquidity many home loan deals are being withdrawn by banks from the market as well as turning away an increasing number of borrows. Borrowers looking for credit cards, personal loans and mortgages will find it increasingly difficult in the coming months to get their hands on credit.
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Fri 2nd May, 2008
Posted in Consumer Credit, UK Finance, mortgages, Homeowners, House buying, Spending, Property, Financial news, Housing news, Borrowing, Equity release, Secured loans, Rental property at 4:49 pm by admin
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.
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Tue 4th Dec, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Remortgaging, Student debt, Financial products, Spending, Property, Borrowing, Equity release, Secured loans, Rental property, Home Improvements at 1:01 pm by admin
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.
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Fri 27th Jul, 2007
Posted in Bad Credit, Consumer Credit, Banking, UK Finance, mortgages, Consumer debt, Homeowners, House buying, Buy to let, Property, Financial news, Housing news, Borrowing, Personal debt, Secured loans, Rental property, Fraud at 12:05 pm by admin
The devastation caused by mortgage fraud is becoming a major problem in the UK. It costs lending companies and homeowners millions of pounds each year. However, most of it cannot be prosecuted, because many of the fraudsters are from foreign countries that do not collaborate with UK enforcement authorities.
Mortgage fraud takes many forms, including stealing property using various methods of deception, obtaining a money transfer by deception, signing mortgages, and selling third party homes.
Victims are left with no hope of proving that they were not involved in the scam and are accused of hide the proceeds of the scam. Most victims hope that they are protected by banks and loan lenders, but sadly this is not always the case. Many people have been left with 40 year mortgages in their name and what appears to be a history of bad debts and defaults on secured loans.
The Department of Productivity, Energy and Industry (DPEI) closed a buy-to-let scam, in 1995, which promised to help investors make money in the property market. Three companies linked to the scam ended up at the High Court, following confidential investigations by the DPEI.
These companies took “substantial sums of money” and promised that they would help clients to build a portfolio worth £1 million a year.
In 2005, DPEI Minister Gerry Sutcliffe said: “These companies knew that their clients, who had all invested substantial amounts of money, couldn’t make anything like the returns that were promised. The schemes were completely misleading and set up with the sole aim of parting people from their money.”
Consumers are warned to avoid any investment scheme that promises too much, or very little risk. They are also warned to avoid anything that asks for personal information before explaining the company’s intent.
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Wed 4th Jul, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, mortgages, Remortgaging, Consumer debt, Homeowners, House buying, Property, Financial news, Housing news, Borrowing, Equity release, Personal debt, Secured loans, Rental property, Missed payments, House repossession at 1:04 pm by admin
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.
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Mon 4th Jun, 2007
Posted in Bad Credit, Consumer Credit, Homeowner Loans, UK Finance, Remortgaging, Consumer debt, House buying, Buy to let, Property, Financial news, Housing news, Borrowing, Secured loans, Rental property, Bankruptcy at 11:32 am by admin
With buy-to-let the current ‘gold mine’ for young investors, many are finding that their dreams of wealth are quickly turning into a lifetime of pain, and even bankruptcy.
A new study reveals that almost one third of landlords have less than one year experience. This is no bad thing, but novice investors may be less adept at budgeting for interest payments, taxes, and repairs, on their newly acquired properties.
Adrian Turner, chief executive of the Association of Residential Letting Agents (Arla), said: “Buy-to-let investors are starting the new year in an optimistic frame of mind. Private individuals have taken over as the main drivers of the sector and it is clear that they are here to stay.”
However, rental yields hit a five-year low of 5.74pc in 2006. Landlord Mortgages, a specialist buy-to-let broker, said that recent buyers face an income crunch as short-term discounted mortgage deals revert to higher variable rates. This could hit them sooner than expected.
Many have also forgot to take into account that rents will drop, as supply increases, about the same time that their mortgages become more expensive. The bad news increases further for those who remortgaged to finance repairs or took out a secured loan against the property to pay for improvements.
Lenders are tempting new landlords with buy-to-let mortgages with rates of 3.99pc. But after the expiry of incentive periods, the cost typically rises to well above the average rental income yield. Leaving the landlord paying out more money than is taken in.
Adrian Turner said: “This new breed of landlord understands that residential property investment can, and must, take account of the ups and downs of the sales and the rental cycles. They are not spooked by scare headlines about housing.”
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Thu 17th May, 2007
Posted in Consumer Credit, Homeowner Loans, UK Finance, interest rates, mortgages, Homeowners, House buying, Buy to let, Property, Financial news, Housing news, Borrowing, Secured loans, Rental property at 11:02 am by admin
UK consumers who have invested in the buy-to-let market, or are planning to increase their portfolios, are sighing in relief as economists predict that another interest rate hike this week will not slow their quest for wealth.
Despite recent interest rate increases, the buy-to-let market remains active, according to Paragon, a leading mortgage firm.
Paragon said that landlords are still planning to increase their property portfolios, and were to increase the value of their portfolios by 4.8 per cent in the next year.
The firm has seen a “sustained” growth in rent in the past quarter. Rents rose from £9,665 in November to £10,334 in February, an increase of 6.9 per cent. This will bolster the buy-to-let market, even for investors who are planning on securing loans on their current properties.
“Suggestions that buy-to-let activity is influenced by fluctuations in interest rates, with business going up when rates fall and going down when rates rise, is unfounded,” commented chief executive of Paragon Nigel Terrington.
Birmingham Midshires predicted that the buy-to-let market will account for one fifth of all new homes purchased by property investors in 2007.
Many consumers took the plunge into the buy-to-let market last year, hoping that the soaring house prices would improve the rental market. For most, the risk paid off handsomely. Even those who borrowed homeowner loans to finance their portfolio growth have seen a profit.
House price expectations are at their highest since April 2004. Market experts predict that the post-Easter boom will improve the market even further.
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Tue 1st May, 2007
Posted in Consumer Credit, Personal loans, Homeowner Loans, UK Finance, interest rates, mortgages, Consumer debt, Spending, Credit record, Property, Unsecured loans, Financial news, Borrowing, Personal debt, Rental property, Bankruptcy, Debt management at 12:49 pm by admin
Millions of UK adults have insufficient life insurance to cover their debts. Unfortunately, most consumers see personal loan debts as temporary, and do not provide enough life insurance to cover them – leaving their family unable to cope if they die.
The average household in the UK has accumulated a personal loan debt - excluding mortgages - of £8,793. This can be devastating for a stay at home spouse who has children to raise, bills to pay, and council taxes. Even if the life insurance repays the mortgage, many women returning to the work force will not earn enough to cover the high monthly repayments and interest on unsecured loans.
Many sole-income earners are not taking into consideration that the stay-at home spouse may not have established a good credit rating. This means that they may be forced to repay the loan in full upon death.
Households should also take into account lost wages through the bereavement period, and the length of time it will take to obtain employment. In fact, considering re-educating the surviving parent may be the only responsible option for larger families.
This forces the surviving parent to rely on high interest unsecured loans to pay the bills and driving them into bankruptcy, within a matter of months.
Consumers charity organisations are encouraging adults to prepare for their death in light of the increasing rents and interest rates.
The major ‘overlooked’ issue concerning death is the death of the stay-at-home parent. The major income earner rarely considers the cost of daycare, travel and tuition for sports and lessons, and house cleaning and laundry services.
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Fri 27th Apr, 2007
Posted in UK Finance, mortgages, Homeowners, House buying, Property, Financial news, Housing news, Rental property at 10:56 am by admin
Many adults are dismissing the idea of owning their own home - despite the growing number of affordable ownership schemes available in the UK. This is a disturbing trend, as potential homeowners are paying ridiculously high rents, far in excess of a mortgage, in some areas of the UK.
Research commissioned by the East Thames Housing Association states that 60 per cent of renters are unaware that schemes have been set up to help them buy a home.
A quarter of UK adults believed that shared ownership was only an option for key workers, whilst one in ten believe the schemes are only available to the unemployed or disabled.
Kate Worley of East Homes, part of the East Thames Group said: “Our survey showed that too few people understood what shared ownership meant.
“Either that or they don’t realise it’s available to a wider selection of people than they might think. If someone has a regular income but can’t afford to buy a home locally with the help of a mortgage, then New Build HomeBuy could be for them,” she added.
New Build HomeBuy refers to the scheme previously known as shared ownership.
The scheme allows tenants to buy part and rent part of a property. The tenant has the opportunity to buy more of the property as they are able to afford it. This can be an affordable alternative to may young families.
While many homeowners are afraid of sharing a home with friends or family, with just cause, the programs like New Build HomeBuy do not share the home with an individual, but with a corporation.
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