Mortgage Loan Lottery

I was speaking to a loan valuer recently and he mentioned a bizarre situation that cost a purchaser many hundreds of pounds in fee costs.

The Valuer (Bob) was sent a property loan valuation instruction on a Victorian house in the south of England. On inspection Bob noted that the rear kitchen/bathroom wing of the building was constructed in half-brick form, common for the period in that district. Technically this part of the home was below habitable standard notwithstanding these walls had been weather-proofed externally and set internally with a dense render. The ratio of sub-standard wall to cavity full-standard walling was about 20 per cent.

Bob prepared his report in accordance with that Loan Company's Valuers Manual and they accepted it and offered the client purchaser loan finance accordingly.

Unbeknown to Bob as his report was being considered the client purchaser decided to change lenders for a better interest rate just announced by Company B. Ten days later Bob received, by pure chance, the instruction to value the same home again.

Bob prepared another report. However, this second report was very different from his previous report. The second report simply said that the home did not comply with that Loan Company Valuers Manual criteria and was declined as being acceptable security. In other words no loan could be offered.

The reason behind this change in adequacy of security was stated as being that the wall construction was sub-standard and the Loan Company did not lend on sub-standard forms of construction.

Bob had been paid 400 pounds sterling in total for his two inspections. The client had paid over 700 pounds sterling in total mortgage application fees. Estate Agents in the property chain were many thousands of pounds out of pocket on lost commission charges. The rippled effect caused these individuals, and many others, massive loss of revenue, waste of time and effort plus related stress and disappointment.

Who was to blame for this bizarre situation?

It may be unconventional but I believe it is the Loan Companies en-mass. The Council of Mortgage Lenders, the body that regulates loan lending, considers allowing individual companies the right to have differing lending criteria is satisfactory even if the public are not told these vital policies.

I am sure each Lender is, in the small print somewhere, under a duty to publish their leading criteria and so "it is not their fault that customers choose not to read lending terms given to them".

So what can be done about this bizarre situation?

This is the easy bit but is something that seems to always be talked about but never completed. How about we properly regulate Estate Agents including the introduction of standard examinations upon a syllabus that includes construction recognition and general property compliance issues to Lenders Valuer Manual criteria. OR.......

The Council of Mortgage Lenders should be granted the power to issue only one set of lending criteria to all Valuers on behalf of all Lenders.

Any system, as is currently in place, that throws the emphasis on to a non-trained ordinary member of the public to decide matters of technicality of construction, is fundamentally flawed and unfair.

I believe the Office of Fair Trading are failing in their duty to provide effective monitoring and regulation in a marketplace that is well known for its protectionist and monopolistic tendencies that operate against the best interests of the consumer.

I also believe the Royal Institution of Chartered Surveyors has too long buried its head in red-tape to accept the real challenges before it: why have they not recognised this simple fundamental market flaw that places their membership is a rather strange relationship with the end client, the home buyer.

By the way --- if the Home Information Pack scheme had had a Sellers Survey (like the system that currently operates in Scotland) included then none of this nonsense would be possible. Oh well, we cannot expect too much from weak Government and less than fully impartial market Regulators, can we?

Stuart K. Parrett FRICS, MAE, dipHI is a Chartered Surveyor and owner of PROinspect Consultancy based in southern England. He is a residential property specialist and has over 35 years local experience plus Courtroom skills. He is a Home Inspector, Valuer, Thermal Imaging Consultant and Expert Witness.

To contact Stuart or to obtain more free information plus product recommendations and fee quotations visit him at http://www.proinspect.co.uk

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125 Percent Mortgage Loan

So changing circumstances can adversely effect your ability to service the loan. It must also be realized that although you may wish to consolidate unsecured debt for example credit cards and loans you will be placing unsecured debt on to a secured loan.

A typical example might be where 95% of the mortgage consists of a secured loan on the property and the rest, the extra 30 % is an unsecured loan. The two amounts will normally be at the same rate which could be for example fixed or variable and both will run the same term. Some terms may stretch to 35 years long.

The advantage of a long term is to be able to have lower monthly repayments providing the mortgage is capital and repayment. However the downside would be the large amount of interest you will be paying to a lender over 35 years, the long term could possibly take the client passed their retirement date and servicing the loan should be considered. Ideally if you are able to make regular over payments along side your monthly mortgage payments or make large lump sum over payments you will reduce the term of the loan and make saving on the total interest you will be paying back to the lender.

Advantage

You may potentially purchase a home if you have no savings for a deposit and solicitors fees etc.

Disadvantages :

Higher interest rate

Few lenders offer a such mortgages so choice is limited

Not available as a Self Certification loan (self cert)

Not available to clients who have an adverse credit rating (bad credit)

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Mortgages for Overseas Property

For most people, buying an overseas property is a dream. However, with all the intricacies and complicated procedures with overseas banks, developers and solicitors, a lot of people get discouraged with the concept. However, the overseas property mortgage in the UK has undergone a sudden surge in the recent years.

This can be attributed to the growing number of people wanting to buy properties abroad for reasons of settlement or property investment and actually do something to achieve it. The majority of these people are retirees seeking a more peaceful abode, while at the same time enjoying tax benefits.

Overseas Investment Mortgages

A good number are simple investors who have seen how promising overseas investments are fast becoming. The strength of the pound is a major contributor to this improving trend. Also, the mortgage market both in the UK and in overseas banks has also become more flexible. If you are one of those seeking to buy properties overseas, you will probably want some mortgage to finance your investment.

In terms of getting a mortgage, you will be faced with two very common choices: getting an overseas mortgage or settling for a local one in your local UK bank.

An overseas mortgage is available in most countries with an established overseas property market. This includes most of Europe (Spain, France, Switzerland, and Italy) and the United States of America. Relatively new to the industry are Greece, Poland, Bulgaria, Cyprus and Turkey, among many others.

Similarities Between Overseas and UK Mortgages Overseas property mortgages are much like your ordinary one that you get from any UK bank. You are taking out a loan that is secured against your own property. You have to apply for a loan, wherein you need to submit necessary documents to prove your income. In both cases, your documents and finances will be reviewed, and your mortgage will be approved if everything looks seamless. The entire procedure for getting an overseas property mortgage is very similar as well.

Differences Between Overseas and UK Mortgages

There are major differences that can be seen between getting a UK mortgage and an overseas loan. It is important to note that the very nature of the market abroad means that everything about it works quite differently from the normal and typical approach that the UK market has adopted. For example, many lenders in other countries in Europe generally do not offer mortgages based on interest only or on the concept of buy-to-let.

They base the mortgage amount on your actual earnings rather than the potential rate you may receive. Consequently, the income multiplier that is all so common in the UK is not typically used in banks abroad. Instead, the affordability model is predominant. This model in turn, relies on the debt-to-income ratio that you have. You need to prove that no more than 40% or less of your income goes into paying debts and mortgages (including the one you are applying for).

By far the most obvious distinguishing difference between a UK-based and an overseas mortgage is the currency that the mortgage is to be denominated in. So if you buy a property and get a mortgage, you will be earning in sterling pounds but you will have to pay your mortgage in a foreign currency (USD, euros, and so on).

Advantages of an Overseas Mortgage

Getting an overseas mortgage has considerable advantages. Foreign banks and lenders have become very flexible when it comes to lending to UK buyers. This is largely part of their strategy to draw in more investors and property buyers. As if that was not enough, interest rates in the Euro zone for example are sometimes lower than rates in the UK.

Overseas mortgages are effectively back-supported by the foreign property market. So if you buy a property in Spain on a Euro mortgage, your interest rates will likely be based around the rates in the Euro zone as set by the European Central Bank. Today, most of these rates are less than those offered in the UK. Considering this and depending on the amount of loan, you may have a big difference in your monthly amortization and repayment.

Disadvantages of an Overseas Mortgage

The main disadvantage that can be discouraging about overseas mortgages comes from the fact that it uses another currency. This adds a relatively thick layer of risk into your investment. With this set-up, you earn in sterling pounds and pay in another currency. The sterling pound equivalent of your debt in another foreign currency will surely fluctuate with time as the exchange rates go up and down. If you are unlucky, and the rates move against you, the sterling equivalent may become so low that you actually end up with so much more debt than you originally had.

Another disadvantage to be pointed out with getting an overseas mortgage is the physical and communication barrier that exists. If you buy a property in Cyprus, for example, you would need to visit the country at least once to arrange your paperwork or to personally attend to matters regarding your mortgage. (You can ask a lawyer or solicitor, but nothing matches being fully aware.) Also, in countries where only few people can speak good English, communication will prove to be difficult.

There is definitely no room for miscommunication in mortgage application and processing, either oral or written. You will need to demand all transactions and documents be written in English. Which one is better? One can not say that getting a UK mortgage is better than getting an overseas mortgage. What is good for you may not be good for another. While UK based mortgages are generally easier to proceed to (considering how used you are with the system), the rates can be very slightly higher.

On the other hand, overseas mortgages may prove lower in terms of interest rates, but the additional procedures, permissions, and other complicated systems may take more effort, time and money on your part. The best thing to do is to consult an independent specialist who can offer you objective advice on your options considering your current circumstances. Remember that all decisions about investing abroad should be informed and wise, and more importantly, realistic.

Property Abroad's directory Les Calvert writes interesting and useful articles on all subjects dealing with overseas property and buying property abroad. With over 400 company websites selling and renting property in almost every country around the world Les is well placed too ffer advice on existing and emerging property locations Visit their flagship site www.property-abroad.com for more details on obtaining an overseas mortgage for buying abroad.

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Mortgage Brokers - Make Sure You Pick The Right One

Mortgage brokers help people get financing for the purchase of a home. A mortgage broker is an independent agent who can quickly and easily check out many different financing options.

A mortgage broker may be of great help to people with adverse credit since they know and understand the industry so well. It is possible to use more than one broker at a time.

Using a mortgage broker comes with many advantages. A mortgage broker has connections in the industry and give your financial information to a variety of lenders. They can find the best deals possible easily. When using more than one mortgage broker you can search an even greater variety of lenders and really hone in on the best deal possible.

Sometimes brokers are working for a lender. It is wise to be careful when dealing with a broker who is also a lender. This is because they are not likely to recommend you to other lenders and instead will only search their own lending institution.

However, the benefit of this is that they will be able to find the best possible loan with their lender and for people with bad credit may even be able to find special financing. If you are going to use a broker that is also a lender then the best thing to do is use multiple brokers.

When using multiple brokers it is a good idea not to enter into a contract with them. If you enter into a contract you may be obligated to take whatever deals they offer even if they are not the best you have found.

The benefits of using a broker are great. However, if you have great credit then you probably do not need a lender to find the best mortgage rates. You can easily do that yourself instead of dragging yet another party into the mortgage process.

If you have adverse credit, though, a broker may be able to find loans for your situation that otherwise you would never know about. They can use their knowledge and industry connections to find a lender who will happily help you finance your home purchase.

Also you will find that a good broker will have access to a large number of specialist lenders that are not available directly to the general public. Such specialist lenders solely lend to people with credit problems or that can not prove their income.

They have a wide variety of products available that cater of all levels of adverse credit, from light to heavy.

Mortgage brokers can be found easily. You can find them in the phone book, online or ask lenders for referrals. Once you find a broker you will have to meet with them in some fashion to give them all your financial information and personal information.

They will need to run your credit so they know exactly what financial situation you are in. The good thing is that they will retain all of this information and will likely transfer it to a lender if you choose to go with one they find, thus saving you a bit of time in the process.

James Copper is a experienced mortgage broker. He works for Any-Loans.co.uk who specialise in the http://www.any-loans.co.uk and http://www.any-loans.co.ukfor people with adverse credit. James also likes to write on most aspects of UK finance and investment.

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Government Plans for Mortgage Industry May Help House Prices

Not only Northern Rock sold off its mortgages to international financiers as securities backed by assets, but nearly all UK banks have used the global marketplace to locate cheap funding. Approximately 25% of all UK mortgages were financed with the sale of mortgage backed bonds.

Approximately £200 billion worth of UK mortgaged-backed bonds are currently trading. It is fairly likely that your mortgage is actually owned by an American pension fund or an Australian hedge fund. While you were under the impression that you had a mortgage from your local building society.

Last summer saw the end of asset-backed securities, causing problems for many mortgage lenders, not just the well-publicised Northern Rock situation. These securities were the source of funds for millions of cheap loans of all kinds, not just mortgages. The inevitable result is an increase in mortgage rates and the scarcity of new mortgage funds.

This shortage has taken the wind out of the sails of a housing market. Basic mortgage backed bonds have led to a few problems; the real trouble has come from other collateralised debt problems related to the US sub-prime mortgage meltdown. These funds have caused a ripple effect of serious problems throughout the regular mortgage backed bonds, market. Firstly, there has been depreciation in the reputation of all securities that are backed by mortgaged properties.

In addition, these collateralised debt organisations with the main buyers of British mortgage-backed securities. However, they are no longer in the market for this kind of wholesale debt purchase. International investors view the British housing market as having some similar problems to those that caused the US mortgage meltdown. Namely, that the British housing market way overpriced and can only go down in the immediate future.

These investors believe that there may be a downturn in the housing market in Britain of as much as 10% over the next 12 months. If these investors do not come back to the UK it could cause serious problems for regular British borrowers in finding loan at a decent interest rate. Recent indications from the Chancellor of the Exchequer, Alistair Darling, that a new kite mark, dedication for mortgage lenders will come into place. This should help to bolster the wholesale purchase of mortgage assets, giving British lenders the much needed cash to fund new loans.

Once in place, this new system would allow European investment houses to purchase 'job lots' of mortgages from high Street, building societies and banks in the UK. This boost would not only be financial. It would also be a psychological boost for the housing market that may well stabilise it, and possibly bring about healthy upswing in new mortgages and house purchase.

Is essential the government's plans to keep the mortgage market buoyant, it has been well publicised over the last year that there is a massive shortfall in the number of houses available, especially for first-time buyers. Therefore, the government is very keen to keep the money flowing keep the new housing estates, blossoming across the country. There is a feeling in the mortgage world of white at the end of the tunnel getting closer, and after budget may soon kick start a new house buying boom.

Joe Kenny writes for Glitec.org, offering mortgages in the UK, visit them today for cheap cheap mortgages or visit Rebuild.org for great mortgage loans.

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No More Mortgage Lender Loyalty

There once was a time when loyalty was rewarded. However times have changed and loyalty to your mortgage lender no longer seems important.

These days the average mortgage lender seems obsessed with attracting new business while few seem interested in providing their existing customers with incentives to remain with them.

New customers are often drawn into taking out financial products from their mortgage lender because of various incentives that are offered to attract new business.

The incentives on offer can include discounts on application fees, discounted interest rates, free valuations, cash backs, and even free gifts.

However, it seems that once the relationship between the mortgage lender and the customers moves beyond the honeymoon stage there is little incentive for the borrower to remain loyal.

Discounts on interest rates generally expire after several years, after which the borrower will be forced to pay the mortgage lender's Standard Variable Rate unless they switch to a new mortgage lender.

Some mortgage lenders will allow for a renegotiation of the interest rate once the discount period expires, but many will not and will instead focus their efforts on attracting new customers rather than keeping their existing ones.

Often this results in the borrower switching to a new mortgage lender to secure a new mortgage product with a discounted interest rate. Although this can attract application fees, the savings in interest payments will usually more than make up for this one-off expense.

If your mortgage is no longer offering you any incentives to remain with your current mortgage lender, try to negotiate a discount instead of paying the lender's Standard Variable Rate.

If that doesn't work, contact an independent mortgage broker to find out what mortgage products are currently available on the market that could save you money.

Remember, if you decide to switch to a new mortgage lender you may be eligible for any number of incentives that they offer to attract new customers. Considering the offer is available, the best course of action for you to take may be to switch your mortgage lender and therefore take advantage of the offer.

If in doubt, speak to an independent mortgage adviser for some impartial advice. A fully independent mortgage broker will help select the right mortgage lender for you based on your individual circumstances.

For helpful articles on Mortgages in the UK and up-to-date Mortgage Lender information visit UK Mortgage Source today

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How to Apply For a Mortgage Loan

There are several types of mortgage (home-buying) loans offered by lending institutions today and it can be a bit daunting, especially if you've never purchased a house before. Other than choosing your property, the type of loan that you get is the most important decision involved in buying a home. A mortgage loan is merely the remaining balance of the property, minus the down payment, that you will borrow and repay.

Depending on your circumstances and the economic climate, your choices are between a fixed-rate loan and an adjustable rate mortgage. The latter are frequently referred to as variable rate, or the more commonly known term ARM.

A fixed rate mortgage is one that charges a certain amount of interest, say 6%, and no matter how high or low the national interest rates throughout the period of your loan, your interest rate never changes.

Of course, the lender will add a few points onto your interest charge when issuing the loan to adjust for their own losses should the interest rate fall during the life of the mortgage. Your major advantage is knowing exactly how much interest is being added to your monthly payment; your payment will remain the same for the life of the mortgage no matter how interest rates fluctuate.

An ARM mortgage, on the other hand is not consistent . An adjustable rate mortgage begins with a very low interest rate for the first few years then begins adjusting the interest depending on the average interest rates of the day. Your house payment will rise and fall monthly, with no floor or ceiling and no way to predict which direction it will go.

After the initial 'reward' period of below-average interest, your budget is at the mercy of interest rates. The average interest rate paid by a homeowner with an ARM is generally lower over the long term than if they had gotten a fixed rate. The fluctuation of payments, however, is a strong incentive to have a reserve of funds in the event the interest rate substantially rises. In the late 70's and early 80's, mortgage rates were as high as 14-16%!

A third type of mortgage loan is a Reset Loan, sometimes referred to as a balloon loan. Like a fixed rate mortgage, a balloon loan has an initial fixed rate of interest (generally the first 3, 5 or 7 years).

The rate on a balloon loan, unlike the fixed rate loan, are about as low as those of an ARM. The drawback of a Reset Loan is the term of the loan; after the initial period of low interest you must repay the entire balance of the loan. There are obvious drawbacks to this type of mortgage loan and homeowners typically refinance their balloon loans when they approach the time of repayment.

As you can see, you have many options when it comes to financing your property. Research, good financial advisors and an honest self-appraisal of your financial health are essential to choosing the right type of mortgage for your new home.

Joe Kenny writes for Glitec.org, offering UK loans in the UK, visit them today for mortgages or for US residents, Rebuild for mortgage loans

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