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Many borrowers repaying arrears

[ Posted September 14th, 2009 ]

The Building Societies Association (BSA) has reported the results of their research over the last two years, and it shows good news for financial recovery and the success of the government’s schemes to aid borrowers to keep their homes.

According to their report, 97% of borrowers who went into arrears during the last two years have been able to repay those arrears, or are currently repaying them, and are thus able to stay in their homes.

Paul Broadhead, who is head of mortgage policy at BSA, pointed out that this underscores the importance for borrowers that they must not ignore their financial difficulties, but rather approach their lender immediately. If caught in time, the lender can consider "all reasonable options to assist the borrower."

And these statistics show that by working together, many borrowers are able to save their homes.

Avoiding percentage-based remortgage fees more difficult

[ Posted September 13th, 2009 ]

Banks and building societies have long been criticized for the high application fees they charge for mortgages and remortgages.

Many times these fees are added to the total mortgage debt (adding to the interest one has to pay), and increases the cost of the loan by thousands of pounds. They do it because it is one method for them to stay profitable, but for the consumer, it can make loans difficult to acquire or pay off.

The website MoneyExpert has recently reported that mortgage lenders are intent on applying fees based on a percentage of the loan they are providing.

MoneyExpert is especially warning those remortgaging to take account of such charges and be aware that over the past twelve months there has been a 14% rise in the number of products demanding a percentage rate. According to the price comparison website, mortgages with percentage fees now account for 49% of the market, with lenders charging between 0.4% and 2.5% of the value of the loan. This study also reported a decrease in the number of fixed-rate deals charging a set fee, from 57% to 51%.

Interest rate remains at 0.5%

[ Posted September 11th, 2009 ]

In a sign that the financial system is gaining an increased confidence in the economic recovery,the Bank of England has ket interest rates at 0.5% for the sixth month in a row. Although rates are expected to stay at this level until well into next year, some financial analysts expect credit conditions to continue to be tight. Low prices are tempting people back into the market, and the prices are beginning to rise, but securing finance continues to be a problem. Lenders must relax their criteria, is the general consensus. The housing market will only recover when as many people as possible are able to purchase mortgages again.

The Bank of England, otherwise known as the Old Lady of Threadneedle Street, is the United Kingdom’s central bank . The Bank was founded in 1694, nationalised on 1 March 1946, and gained independence in 1997. It is the centre of the UK’s financial system. In addition to maintaining the Bank Rate paid on commercial bank reserves at 0.5%, their Monetary Policy Committee (MPC) is also going to continue its programme of asset purchases totalling £175 billion financed by the issuance of central bank reserves. That programme is expected to take another two months to complete.

What signs to follow?

[ Posted September 9th, 2009 ]

One day we report that the government has launched a new scheme aimed at helping distressed homeowners remain in their homes. The next day we report that studies and statistics show that the housing market is picking up. This can be very confusing. Dare you buy a home in today’s market, or not? Should you wait a few more months, just to make sure the recession is indeed easing? The key is to look at the lenders. Are they loaning money now? With excellent mortgage plans, especially for first time buyers? Then now may be the time to buy your new home. Even if you have bad credit, credit repair, sub prime and nonconforming lenders can help you now.

Before you undertake any financial transaction, but especially anyone so large as buying a home, you need to educate yourself about every aspect of what you’re doing. Your solicitor should be able to help you in this regard, but in addition, you need to compare mortgages offered by all lenders, to find the one best suited for you.

Consumers becoming more confident in housing market

[ Posted September 8th, 2009 ]

Moneysupermarket (a British price comparison website-based business specialising in financial services) reported that the number of consumers seeking mortgages to purchase a property now outweigh remortgagors. In addition, the number of people looking to remortgage their home fell as well. These figures would indicate that the public is now more confident that home prices have stabilised. With home prices so low now, they are convinced that they won’t fall any further, and are now willing to buy.

Numbers do not always tell the whole story, of course. The drop in remortgage searches may be because homeowners have learned that reverting to the SVR (standard variable rate) of their current mortgage is more cost effective in the short term. There are risks, of course. By not considering the cost implication of an increase in their SVR, they could get an unpleasant shock when rates increase, a shock that could be avoided if they remortgage now. Most, if not all, lenders’ websites and mortgage information sites have calculators that allow the consumer to input their various figures to find out if remortgaging will save them money over the long run. Take advantage of these tools, and of the current climate, if you possibly can, to find the best mortgage rates for you.

Borrowers encouraged to talk to lenders about repayment difficulties

[ Posted September 8th, 2009 ]

In the current mortgage crisis, many borrowers are losing their homes for a variety of reasons. One of these is that they ignore their payment problems, and do not talk to their mortgage lender until it is too late to do anything to help them. There are many reasons for this – many people do not like to meet trouble head on, and hope that if they will ignore it it will go away or solve itself. When it comes to their mortgage, that rarely happens. In an effort to educate the populace about this, and other problems, the government has launched a new Information Scheme, which will help borrowers learn to take control of their repayment problems, most of all by discussing these problems with their lender as soon as possible.

According to Council of Mortgage Lenders (CML) director general Michael Coogan, most customers who are "committed to solving their problems and working with their lender" can successfully solve those issues. The information scheme consists of a series of advertisements – in newspapers, online and on billboards – to alert borrowers to the schemes the Government has put in place to help them to prevent repossession.

Here’s the external link:

There’s also a scheme to help at risk individuals keep their homes, if they qualify.

Here are the criteria from the website:
o be eligible for the scheme your household must include someone in ‘priority need’.
This could be:
* a pregnant woman
* someone with dependent children
* someone who is vulnerable because of old age or a physical or mental impairment

You’ll also need to meet the following criteria:
* your household earns less than £60,000 a year
* you don’t own a second home, including a home abroad
* the value of your mortgage (and any loans taken out against your home) is less than 120 per cent of the value of your home
* the value of your home isn’t higher than certain levels set for each region – ask your council about the level for your area

When you apply for the scheme, your local housing authority will talk you through some other criteria that you’ll need to meet.

Equity Release Options Can Help

[ Posted September 8th, 2009 ]

Pensioners can save up to almost £500 per month if they choose to use equity release as a way to repay their debts. The equity release market here in th UK is made up of essentially two types of equity release plan.

The most popular plan is the lifetime mortgage. In this plan, the homeowner is given a sum of money based on the value of the house. They will continue to own the property, but the lump sum, and the interest which accrues, is payable when the home owner passes away, or moves permanently out of the property.

In the reversion plan, the homeowners sells all or part of the property to the equity release provider, but is allowed to remain in the home rent free until he or she passes away, or moves permanently out of the home.

The UK equity release market is fully regulated, and both these plans are managed by the Financial Services Authority (FSA). It is important for pensioners to consult a solicitor qualified to advise them in these matters.

One drawback of these equity release plans are that they lessen the size of the pensioner’s estate. In response to a dearth of information about equity release, six solicitor firms in 2008 formed the Equity Release Solicitors Alliance. Their website is aims to provide every client with cheap, affordable and best mortgage loans in the UK market, however the actual mortgage rate available will depend on client's financial circumstances and credit history. Although, has made every effort to ensure that the mortgage rates listed are correct, it bears no responsibility in case of an error. 
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