Can you pay today and also over the next five years?

In our heavily regulated mortgage marketplace, the lenders main area in deciding whether to lend, or not, is on your ability to pay the mortgage both today and also in the future.  It's difficult to detail when I have a limited word count, but in the main, lenders will stress test all mortgages against a possible rate rise and underwrite the applicants based on their ability to pay at the higher rates.  The regulators want lenders to ensure the customer can afford their mortgage for at least the next five years.  So, for example, a shorter term deal may be stress tested at a pay rate of 3% plus 3 percentage points higher than the prevailing rate at origination, so in this case 6% (even though bank base rate is 0.5%).  However, a five year (or longer) deal may be stress tested against the pay rate, which might only be 3% in current climates.  This can make quite a difference when it comes to calculating the affordable loan amount over the first five years of the loan, subject to the lenders terms and conditions.  Longer term fixed rates can also be good for the end consumer as they should get the loan they want, but also the monthly payments remain fixed for the next five or more years.

Whilst in the 'planning' frame of mind, and with so much talk about rates increasing, have you reviewed your current financial arrangements to ensure sure you are on the best deal available?  

Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, right now, there are a number of attractive five year deals, and also some ten year deals currently available.  Potentially great value if you know your plans for the longer term and prefer to fix your monthly payments.

Other things to consider - Do you have a Will?  Statistics show that only one in three people currently have a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.  Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more?  Any of these products might be beneficial to your personal circumstances or needs, especially if you have children, and with competition increasing, these types of products are not as expensive as you may think. As always, seek professional and open market advice.

Close shave with Self Cert....and are you covered?

We almost had the return of "Self Cert" this week!  For those of you long in the tooth, back in 07/08, many lenders offered self cert mortgages, giving customers the ability to obtain a mortgage with absolutely no proof of income or affordability.  The history since then is pretty obvious and we must give credit to the regulator for keeping these mortgages out of the market since.  However, for four days last week, one foreign lender appeared to bypass the UK regulations and offered Self Cert loans once again.  And just as quickly as they arrived, they were gone!  Was this just a test and is this the start of things to come?  Having watched the mortgage market brought to its knees and taking over 8 years to recover, let's hope not.

On a brighter note, NatWest have cut some of their rates, available through brokers, by up to 0.49%.  This covers a number of products across their range of offerings, including to First Time Buyers.  Many lenders have cut rates recently and there's even some murmurings that the Bank of England is also under pressure to cut rates, rather than increase them as the economy looks to be 'running out of steam', according to one recent article.  All of this can only be good news for the new mortgagee and budget planning!

Whilst in the 'planning' frame of mind, have you reviewed your current financial arrangements to ensure sure you are on the best deal available?   Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, or a discounted option, right now, all are available at attractive rates in the mortgage market.

Other things to consider - Do you have a Will?  Statistics show that only one in three people currently have a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.
Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more? Any of these products might be beneficial to your personal circumstances or needs, especially if you have children, and with competition increasing, these types of products are not as expensive as you may think.

Another Summer gone....now time for a Financial review!

The summer holidays are over, the kids are back to school, and you may (or may not) be looking forward to peace and quiet and having some time on your hands. However, as the final few months of the year race towards us, maybe it’s time to start thinking about 2012 and what trials and tribulations this may bring.

Without doubt, the only certainty in the current financial markets is uncertainty. When will bank base rate rise? Who really understands what is happening with house prices? Will 2012 mortgage lending be more or less restrictive than what we have seen throughout 2011, especially as the banks scrape and save(!)to pay back the circa £300bn to the Bank of England in early 2012, advanced to them via the Special Liquidity Scheme? Will the world really end on 21/12/2012? Ok, the latter is a Mayan ancient prophecy and has nothing to do with mortgages....!

All of the others point towards ensuring you review your current financial arrangements and determine that you are on the best deal to see you through the medium to long term. Whether you require the security of fixing your payments for an amount of time, or whether you are a bit of a risk taker and might look at a short to a medium term tracker, or a discounted option, right now, all are available at attractive rates in the mortgage market.

Other things to consider - Do you have a Will? Statistics show that only one in three people has a will in place, with the remainder leaving the state to take over and determine how their assets and belongings are distributed, if they die.
Do you have Life Assurance, Mortgage Payment Protection, Accident Sickness and Unemployment cover, Critical Illness Cover, and more? Any of these products might be beneficial to your personal circumstances or needs.

A quick review with an independent mortgage advisor with permissions for access to whole of market mortgage rates and other associated financial products, could be time very well spent.