Welcome to the April 2009 Issue of the Mortgage Broker Newsletter.
The last few weeks has definitely felt a lot more positive with consumer confidence much higher then in previous months. Activity in house buying seems to improve as the number of enquiries we have had for new purchases remains as strong as ever.
The mortgage market however has contracted and for the first time we have seen the downside of the current merger between Lloyds and HBOS – the victim being the buy to let and self employed mortgage products.
Cheltenham & Gloucester (part of the Lloyds group) will now not lend to clients who have more then 3 investment properties within the enlarged group. Bank of Scotland who have been the only available lender with funds for applicants who have been trading for less then 12 months have sharpened up their criteria and limited the maximum loan to value for 60% from 75%.
For those of you looking to buy your next dream house or investment property, it is worth noting that you will never be able to buy at the very bottom of the housing market. The experts that try to predict the bottom of the market will be either extremely lucky or extremely wealthy and owners of crystal balls.
Mortgage Deals of the Month
Every month our advisers scour the whole of the market to bring you what they consider to be the best mortgage deals currently available. As you know lenders change their rates on a frequent basis so don’t hesitate to contact us if you are looking for a new mortgage or wanting to change your existing deal for a better one.
The Best Residential Mortgage Deal for April is…
3.65% fixed until 02/07/2011 – FREE legal fees, FREE valuation, £999 lender set up fees
£616 per month based on a 25 year repayment remortgage for £120,000 on a property valued at £200,000. 60% maximum loan-to-value, the deal reverts to the lenders SVR which is currently 4.24%. The overall cost for comparison is 4.3% APR. An Early Repayment Charge of 3% of loan until 02/07/2011. £995 Lenders arrangement fee.
To grab this great deal while its still available please call one of our specialist advisers quoting "AprilDeal" on 0845 6076193 or click here to fill in a brief enquiry form and we will get back to you within 30 minutes.
The Best Buy to Let Mortgage Deal for April is…
3.49% above the Bank of England base rate until 30/06/2012, CAPPED at 5.49% (3.99% at today’s rate) The deal then reverts to the lenders standard variable rate of 4.74%. The deal comes with a FREE valuation and FREE legal fees!
£405 per month, based on a 120k mortgage on a 200k property interest-only over 20 years, £1999 lender arrangement fee, maximum 60% loan-to-value, the overall cost for comparison is 4.8% APR. An Early Repayment Charge of 4% of the outstanding loan is applicable until 30/06/2012.
To grab this great deal while its still available please call one of our Buy To Let specialist advisers quoting "AprilDeal" on 0845 6010153 or click here to fill in a brief enquiry form and we will get back to you within 30 minutes.
Fix, Track or Stick?
Right now one of the most pressing questions facing mortgage borrowers is do you fix, track or stick – get a fixed rate, go for a tracker mortgage or stay on your standard variable rate?
It’s a tough decision because each one offers borrowers plenty of advantages in this low base rate environment – the question is what is the best choice for you, in the short-term and in the long-term?
If you are coming to end of your current deal, you may think it’s a good time to lock into a fixed rate for a few years. Because the base rate is at just 0.5%, there are some very low fixed rates out there for two, five or even ten years. If you decide on fixing, you would be taking advantage of a rate that you will almost certainly be unable to get hold of next year or the year after, when the base rate goes back up.
Of course, fixing for a few years means you have to make a plan to go with that mortgage – locking in for four or five years a big decision, and one that shouldn’t be taken too lightly. And there is always the option of a tracker…
If you choose to take a tracker mortgage right now you would be taking advantage of the lowest base rate in the history of England. This means trackers have never been as cheap as they are right now and tracker borrowers have never paid so little for a mortgage. And because the Government have been so keen to help people get by in the recession, it has made sure that all the banks’ trackers have followed the base rate down.
A tracker does come with risks, obviously. If the base rate were to rise, your mortgage rate would follow. This could cause some serious rate shocks, especially if the Bank of England had to put the rate up rapidly to combat inflation in the coming months. So with a tracker you need to know how much you may have to shell out if rates do rise, learning to take the rough with the smooth. Or, of course, you choose to not take out a new mortgage and just stick with your current deal…
Because the base rate is so low, if you have come to end of your mortgage you will have moved over to a standard variable rate that is very low indeed. So by doing nothing, you will be paying a lot less for your mortgage. So do you stick and stay where you are?
Well not really. If you stay on your low SVR you will be paying less, but you will also be missing out on the opportunity to fix with a low rate or missing the opportunity to possibly pay even less on a super-low tracker, should the base rate fall even more.
You will also possibly lose out on taking advantage of what’s left of your home’s equity. Because house prices have been falling, the chance to get a mortgage with your current loan to value is dwindling. Essentially, the longer you wait to take a new mortgage, the less your house will be worth. So where once you had maybe had 30% of your home’s equity, now you may only have 15% - a big change, and one that will be reflected in your future mortgage rate.
So sticking might seem like the right choice now, but will you rue the decision in a year’s time, when the base rate has risen, your LTV rate has also risen and all the cheap fixed and tracker mortgages have gone away?
The choice is yours – fix, track or stick. Talk to a mortgage adviser about your options and which ones will be benefit you in the short-term and in the long-term.
Affordability On The Up
New research has found that the proportion of earnings devoted to mortgage payments has fallen significantly over the past 18 months.
Halifax has revealed that the typical mortgage payments for a new borrower has fallen from a peak of 48% of average disposable earnings in Autumn 2007 to 31% in the first quarter of 2009.
The bank says as a result of these latest findings, mortgage payments relative to earnings are now below the long-term average of 37%, recorded over the past 25 years.
Talk to your mortgage adviser about your affordability and find out how much you could be paying for your mortgage.
