Archive for March, 2009
Why A Secured Loan?
Tuesday, March 24th, 2009A secured loan is a loan that is secured on a property or an asset. 20 years ago it was very rare for anyone to take out a secured loan with any lender as it was seen as a “last resort” and a desperate measure. Now however more and more people are known to take out secured loans to clear debt, improve their home, go on holidays, and even to buy a new car. Secured loans are not now seen as a “last resort” or a desperate measre for someone to get of credit. It is now known as a cheaper way of borrowing, or even a way or borrowing a large sum of money from one lender. Most secured loan lenders will lend up to and even over £75,000, subject to terms and equity.
In the past there were secured loan plans out where you were able to borrow up to 125% of the value of your home. Now however you can get a maximum of 95% if you have a good credit history, proof of income, and are not already over indebted with other lenders. Most lenders will also want to know what the money is for. Gaining a 95% ltv (loan to value) secured loan is alot harder than it used to be. Now because of the current market conditions in the UK and Europe, many lenders are askign for more information, and proof fo that information than they used to, they are also being alot stricter on their cut-off on the credit checks too.
Although secured loans are harder to get due to the value of houses decreasing, and lenders tightening up their belts, it is still possible to obtain a secured loan, some of them with good rates too. For more information on secured loans, remortgages, credit cards, or life insurance, Advanced Finance Limited can help.
Switching To Interest Only
Monday, March 23rd, 2009Many people are starting to switch to interest only mortgage now that times are hard in the UK with regards to bills, lack of income in many household, and many costs increasing. Having an interest only mortgage is not the end of the world, infact many people consider an interest only mortgage a benefit rather than a hinder. The main benefit to an interest only mortgage is the fact that you have a lower minimum monthly payment than you would have if you had a capital and repayment remortgage product.
Many people try to make extra payments off of their interest only mortgage so that they can try to make the mortgage balance decrease just like a repayment mortgage, but with out high minimum payment every month.
For example, if you have a 30 year £150,000 mortgage with an interest rate of 6%.
Your normal capital+interest repayments will be: £908
If you switch to interest only, the repayments will fall to: £750
The main problem with an interest only mortgage is the fact that yo can get too used to having a low monthly payment every month, that you are then unable to go back to a capital and repayment mortgage due to the increase in your monthly commitments. To be safe with having an interest only mortgage it would be advisable to put the extra money that your saving on your monthly payment away in a savings account if you can, so then when you do then go back to a capital and repayment mortgage, you are used to making the full amount every month, but instead of paying the extra money into a savings account, you will be paying it off of your mortgage.
In the current climate, the temptation to choose an interest only mortgages might be higher. But, with falling house prices it can be more problematic. Falling house prices increase negative equity and with interest only mortgages the negative equity will be greater.
Some mortgage lenders offer an ability to switch between interest only and repayment mortgages (though this has probably become less common since credit crunch).
For more information on interest only mortgages or any other mortgage product, complete our short contact form for an experienced broker to contact you back.
New Mortgage Regulations Restrict Mortgage Loans
Monday, March 23rd, 2009There are plans for new regulations that will see less mortgage products, but will increase the rates offered for the UK savers.
The proposals from the FSA (Financial Services Authority) will restrict UK banks from offering loans to people on low salaries which will lower the risk of people or businesses going into arrears, and will stabalise the UK finance markets for the long term.
Although this seems like a sensible approach, many people are argueing the strain that first time buyers are going to be under if 100% mortgages are wiped out altogeather, and if income multiples are lowered. Would your children be able to afford a 20% deposit on their first house, and be able to have the other start up costs?
Advanced Finance Limited are a national mortgage, insurance, and loan brokerage who offer people finance products that can help. For more information complete our short application for for an advisor to contact you today.