There are many different types of mortgage products available on the market today, even if the number of products is rapidly coming down in the falling economic climate. Choosing any particular type of mortgage does close down the field of choices, but whatever you choose, you are taking a gamble.
Not one of us can say for certainty whether loan rates will hold fast, increase or decrease over the next 12 months, let alone the next few years or the life of your next mortgage. Whatever you choose and you may not be able to afford repayments, which could cost you your house.
It is far the best idea to check your circumstances with a mortgage broker and ask him or her about what types of mortgages should suit you and your outlook. But many of the terms can be confusing and you want to ensure that the advice that you are about to receive is correct and in your best interests. Mortgage brokers aren’t allowed to advise based on what mortgages or potential lenders will pay them the best commissions. But that concern should still be in the back of your mind.
Worse still, some brokers might not even be willing to advise you on what products are likely to be best for you, fearing that if in a few years you don’t like the products they so diligently found for you and arranged, you might turn around and sue them. That’s how the process has left me feeling when I’ve been in that situation.
So if you are desiring a mortgage and are about to set out on the long road of trying to compare mortgage interest rates from everything that you find suitable, what exactly is this contract that you are signing up for?
And it is just that – a contract. It’s a contract between you and the lender that they will lend you a enormous sum of money and that for the next however many years you will pay them back in small amounts. Don’t pay them back for too many months and the contract allows them to take your house off you, evict you from the house and sell the property as quickly as they can for whatever they can get for it. Only if the house sells for more than the remaining mortgage, plus costs incurred in this process, may you see anything for your, potentially, years of repayments. And the lender would much rather sell the house quickly and recover all of their money, than hold out for a realistic price which gives you a fair share, but might take months to achieve a sale.
As with many products and services in life, shop around for a mortgage broker and ask them which of the mortgage interest rates currently available are best for you. Fill in several forms to get mortgage brokers to contact you and see what advice they can give you and what mortgages they have on offer. When you are getting a few sounding the same, you know you should be getting a good answer there.
If you have been trying to compare mortgage loan rates in the current financial climate, you will be aware of just how complicated that once simple task can be. Mortgages are constantly being dropped from the market and replaced by new products and many products that were available are just being dropped.
Of the 10,000 plus different type of products that were available last year, many mortgages have fallen by the wayside without being replaced. There is far less choice on the market and those that are out there are becoming more and more trying to get hold of.
At the same time, many banks are struggling to borrow the cash they need for themselves to be able to lend mortgages. Finding a mortgage is becoming increasingly more frustrating. And if you are one of the many thousands in the unlucky situation whereby you have a current mortgage deal that is about to end and you are needing to remortgage in order to save yourself from a huge rise in repayments, you may have your work cut out.
Many of the mortgage loan rates out there on the market now come with many strings attached. The days have gone when there was a choice of banks who were willing to lend you far more than the value of the home you are buying, at least for now, anyway. Instead, some of the best products are only made to those homeowners who are luckyenough to be able to put down a good sized deposit – 25% in some cases. This means that if you are after the best mortgages, which are usually the ones shown in comparison charts, you can only be borrowing three quarters of the value of the home you are buying.
Hopefully, for many people who are looking at remortgages that isn’t too much of a problem as their home’s value has probably increased in value a lot since they first bought it. But first time buyers and those who’s property have decreased in value since purchase, might find themselves struggling for a mortgage offer.
Tie into this the woes that many lendersare now not lending to people whom they previously would have happily leant to, and the thousands of products you are viewing in a mortgage table is vastly reduced.
But jumping through all of these hoops doesn’t need to be an awkward job for you. There are still plenty of mortgage brokers out there looking to make a living and they do that by offering their services for free and finding you the best mortgages possible. Although it maybe seems a good idea to trawl through mortgage tables, these days that can give you a lot of wrong answers. So get the experts to do the leg work for you!
Background To Reclaiming My Bank Charges
Reclaiming Unfair Bank Charges has been in the news a lot recently and there are a lot of people are reported to be being very successful with their claims. But are you entitled to claim? Do you have to use a solicitor?
Are solicitors required to reclaim bank charges?
If your claim isn’t going to be complicated then there’s probably no reason to get a solicitor involved when you are reclaiming your bank charges. At the very worst, most of the claim can be handled through the small claims courts and probably from your own home if the banks play ball.
But if your claim is large or you know you just won’t bother reclaiming yourself without help, then the cost is possibly worth it. But look for a no-win no-fee solicitor and check what their charges will be.
If you have paid unfair charges, make sure you claim them back them from your bank.
Whether you go it alone or appoint a solicitor, or start off yourself and seek professional help if the bank uses their tricks to delay the case, remember that it is important to continue your claim. If you stop, lose interest or just forget to continue to the next step, then the bank has won. If this is likely to be you, write down the steps in your diary or get in touch with a solicitor who advertises support for reclaiming bank fees.
During a 2006 ruling that credit cards should only charge no more then a £12 annual fee the Office of Fair Trading declared that certain bank charges were unlawful as well as being unfair. This opened the opportunity for people to reclaim unfair bank charges, charged within the previous 6 years.
A penalty clause is not permitted in British Law. This means that charges incurred for going overdrawn etc must be directly propotional to what it has cost the bank to deal with the situation. So if it costs £2.50 to send a computer generated letter, then the charges should not exceed £2.50.
Yet when customers go overdrawn in the past, banks have automatically sent customers a standard letter telling them they are overdrawn whilst imposing charges from £20 upwards. This is usually in addition to the interest charges imposed for unauthorised overdrafts or being overdrawn.
There are other unlawful bank charges and these are being successfully challenged by customers with banks refunding these unlawful fees. These unfair fees include:
• Returned Cheques
• Unpaid Cheque
• Account Misuse
• Fee For Exceeding Authorised Overdraft Limit
• Overdrafts
• Unarranged Borrowing
• Unpaid Standing Orders
• Unpaid Direct Debits
• Card Misuse
• Late Payment Of Credit Cards
• Late Payment Of Store Cards
• Late Payment Of Catalogue Purchases
When you are considering a remortgage, there are a number of charges that lenders might not spell out as much as borrowers might like them to. They are always mentioned at some point and in the end may add up to quite a lot of cash. But remortage tables in their basic form won’t spell them out. So when you are trying to compare mortgage loan rates through online charts, don’t forget to delve more deeply to see what hidden fees you might unearth.
To understand what these fees are going to end up costing you, it is worth either asking an independent financial advisor for assistance or at the very least get a list of what the total repayments will be, including all fees.
Here’s some examples of what you might want to be looking out for when trawling through the mortgage tables in search of mortgage interest rates.
Exit Fees – if you do not continue the mortgage to the end of its term and instead repay it early then the bank may try to charge you an exit charge to cover their paperwork costs that are involved in ending the mortgage. This may even be charged at the end of the mortgage whether it is paid off early or not. Previously these have been insignificant fees that don’t really add up to much in comparison with the figures involved in a mortgage, but some lenders have hiked up these fees to try to make more money. This is taking advantage of the small print saying that fees can be raised and can result in incredible rises.
Standard Variable Rate – this is the standard mortgage rate that the bank will charge you once your introductory period is up. It is usually about a couple of percentage points above the standard base rate. This is where the lenders make their cash through those customers that don’t try to swap mortgages when the introductory offer finishes. If you are on the standard variable rate and the tie in period has ended, then it is high time to look at those mortgage charts.
Higher lending charge – long gone are the days of the 125% mortgage, or at least until the building societies forget how badly they had their fingers burnt this time around. Most of the mortgage charts show the best buy deals and have various hoops to jump through, such as not lending more than 75% of your new property’s value. If you are borrowing more than the cutoff, then the lender may charge you a higher lending charge.
Early redemption charges – if you want to end your mortgage earlier than the offer or tie in period, there is usually an early redemption fee. This might be shown as an amount of cash or so many months’ interest. Quite often after the fixed or tracker rate ends there is a tie in period during which you cannot change from the standard variable rate without incurring this early redemption fee.
Many people are finding they are in difficulties financially at the moment and with the crumpling state the housing market is in at present, new problems are rearing their heads that many homeowners will not have previously thought of.
With tumbling house prices over the last couple of years and more falls expected, it is certain that there are a large number of mortgage holders on the market for whom their house price is worth far less now than when the bought it a year or two ago. If you are one of these people and are not intending on selling your house, then you might think you are not affected, but how wrong can you be?
If you are in the position of needing to sell your property and it is under the original buying price, then you could be in real problems as you might find the mortgage isn’t covered by the sales price. In this case, you really should speak to a good local financial advisor as soon as you can to investigate what options could be open to you.
But back now to those home owners that are not planning to sell their properties and are happy to sit and wait for the housing market to recover. Here we can also include those that are having to sell, but know that the house price is still covering the mortgage and allow for the fact that that with the price of their next house also falling, the bridge between the two homes is less.
What is the problem for these borrowers? Well many mortgage holders who bought a house at the peak of the property prices will have bought them with fixed mortgages. If you secured a 5-year mortgage, then you may have a few more years before you need to worry. But if you secured a very low rate with, as goes hand in hand with the best rates, a short fixed term, you might be in need of a new mortgage very soon.
Two years ago, some lenders were happy to lend 125% of the house value. This is not the case any more and many banks are punishing those borrowing more than 75% with higher interest rates. Even if you only borrowed 75% of the home ’s value when you bought it at its peak price, if it has lost 10% of the value so far, then your next mortgage now has to be for almost 85% of the home’s value, even though you are not borrowing a penny more.
This difference is purely because the price of your property has fallen, nothing else. But if you borrowed 90% or more, then you could now be looking at an impossible 100% mortgage at least. Many lenders will now not touch you, even though they were probably clamouring for your business when you first bought your house.
What can you do? Well seeking good professional advice from a financial advisor is a good start. Get him to help you compare mortgage rates for free for those products that are open to you – get him just to show you the best rate that apply to your circumstances. If you compare the best mortgage rates and none are affordable, then ask for other options from him. Extending the loan can be costly in the long term, but you may be able to move other finances around.
Whatever you do, it is always worth starting to look early, rather than leaving it to the last minute. You can always swap to a better deal later, but if the search takes too long, you could be out of time if you keep putting off the dreaded deed.
If you are in the process of considering if you are ready to apply for a mortgage, loan, new credit card or any other form of credit, then you might have sensibly decided that it is time to review a free credit report. With credit so difficult to come by at present, this certainly is a good and recommended move and could potentially avert the disaster of being refused in error.
But do you know how to check credit reports and realise it is very easy and free? If you have been refused by a lender then the first step is to write to the credit reference agency that they used asking for a copy of your report. Then check the report and have any errors corrected.
It is more recommended to do the check before applying for the credit – close the stable door before the horse bolts! Credit reference agencies help you to check your report online and there are many systems about that will give you regular reports as things change on your credit status. Usually there is a free trial, or so much of the information is free, followed by a paid membership or payments for extra facilities.
If you want to check you report in advance of taking out credit, then the free trials are usually enough. Quite quickly you can have access to your credit information and see the data that the lenders will be looking at as part of their decision calculation. Some reports will even give you an approximate indication of your credit status.
On top of the report, the future lender will also take into account your income, which the credit report will not include. This means that it is only an approximation, but it will show you any nasty surprises, such as loans that you forgot you had missed previously.
Once you have seen your credit report file and checked it, you might have found slight errors in the report. In this case you need to write to the lender that provided the invalid data and ask them to amend their records. Once they have done this, they will then update your credit report.
It may also be possible that there are searches recorded on your credit report you do not recognise. These are recorded every time a potential lender views your report in order to decide whether to lend you money. If any of these are not initiated by you, it is worth checking them out. If there are a lot of these, or for a lot of money, then be very careful with your checking as it can be a sign of identity theft.
With the current worldwide financial climate being in such turmoil, applying for difficult to come by. But many potential borrowers don’t realise the importance of free credit reports from one of the major credit reference agencies.
Without knowing it, your credit report might be presenting facts that may hinder your ability to take out further credit. Some of this may not even be down to you. Worse still, it may even uncover that you have been the victim of identity theft!
Those people that have been rejected after applying for credit should certainly review their credit report data from at least one of the major credit reference agencies, such as Experian. If you have been declined credit, ask the lender who refused you which of the agencies they were using to make their decision and their contact details. Then write to them requesting a copy of your credit file.
It is also well worth asking for a copy of your credit file before applying for a loan so that any errors, or omissions, can be amended before you apply. This could prevent a rejection, which would also be recorded on your credit file and might count against you in the future.
If you don’t already know how you can check a credit report for yourself, then it is very easy to do. The major credit reference agencies will offer a free service if you write to them and ask them for the file information and there are many online services doing the same. As an early identity theft detection method, you can also join schemes whereby you are notified when certain changes are notedon your credit reference file. This would warn you to sudden huge loan applications if someone was trying to clone your identity.
The free credit reports don’t show you exactly how the lenders are going to score you, but they give you a good basis for understanding what they are likely to be using. In addition, lenders will take into account other questions that they ask, such as your history with that lender, your annual household available income and other details they ask you to divulge.
Your credit report won’t have information for anyone else included within your house, but it will include details of who the credit reference agency thinks are financially related to you, for example a spouse. If this information is wrong, then it can be worth getting it corrected.
As an example, if your wife doesn’t share the same surname as you, but has a better credit rating than you, then you may improve your credit rating by marking yourselves as being financially related.
But, if two siblings, or others sharing a surname, live in the same house and aren’t financially related, it is worth ensuring that you are not being marked as having a financial relationship, in case they have a worse credit rating.
Many people are seeing their current mortgage deals coming to an end and are thinking about moving to a new mortgage to save cash. But is it always the case that a lower rate mortgage is cheaper in the long run?
On the face of it, if you can reduce your monthly mortgage outgoings by half a percent then you could be saving yourself a lot of monthly expense. This could be a saving that you can spend elsewhere or if you are unlucky and expecting a huge rise in mortgage outgoings, just a reduction in the increase of the monthly cost.
Using mortgage comparison charts tell you what mortgage is the charges the least on the market right now, but is it available for you? More importantly, will it actually reduce your outgoings in the long term?
Although interest rates have dropped at the moment and are expected to continue this way for some months, some experts believe a reduction is on the cards in the short term. So if you lock into a 2-year, 3-year or longer fixed mortgage rate, by the end of the term you might be paying more than a variable mortgage if you had continued as you are.
On the other hand, we might be surprised by a recovery and interest rate rises and then you would be winning. That’s the nature of this game. But this isn’t the only area in which you could be spending a lot more than you need to.
Look carefully at those best mortgage offers that you see in mortgage charts and read the small print. Look for the upfront fees – arrangement fees, legal fees etc. Take a look at your existing mortgage, how much is involved in completing that? There may be exit and deed release fees. These fees may also exist in the new mortgage – are they significantly higher than now – that’s as good as a cost for the future?
When you look at these fees, how much will you be paying to remortgage? Many lenders allow you to add this to the borrowing, but then you are paying more interest on them for the life of the mortgage. Even more outgoings each month!
If you are able to pay these fees at the time of the move then in the long term that way is going to be more cost effective. But then look at your existing mortgage. If you are having to pay £2,000, maybe even more to swap mortgages, could you instead pay off a small chunk of the mortgage, or at least put that cash away in a high interest account instead? Then take a look at how that would reduce your payments – or work out what your net payments are after the money put aside earns some interest.
Changing to a new bank may not always be the right thing to do. First, speak to your bank and see what monthly charges they can get you down to with your existing mortgage. Then, instead of relying on tables to compare the best mortgage rates, speak to a few mortgage brokers and get them to do all of the leg work for you and write down exactly what you will be left paying each month.
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