Mortgage | Property Investment | Finance Guide

Home loans may seem hard to secure for many but there are ways of improving your chances of getting a mortgage. Lenders may have tightened their belts a bit recently but there are some great offers out there to encourage tentative buyers. The trick of course is securing a good deal.

Here, we take a look at how to give yourself the best possible chance of getting a mortgage.
1. Check out your credit rating

Bad credit will severely restrict your options. Applying for a copy of your credit file with Experian and Equifax is an absolute must. These days, people change addresses on a more regular basis than they did in the past. Your credit file may throw up some surprises and inaccuracies. If the details are incorrect or out of date, it is possible to have them altered.
2. Put your name on the electoral roll

A significant proportion of first time buyers don’t know that this is necessary when it comes to home insurance loans. Getting a mortgage will be much easier if lenders can check that you actually live at your current address.
3. Get a credit history

Never had a credit card or mobile phone contract before? Lenders like to see evidence that you have the ability to pay off debts. If there’s no evidence at all, they become wary. One way of improving your chances of getting a mortgage is to take out a minor loan or get a credit card and pay off the balance. Lenders are looking for evidence that you pay off loans in full and on time.
4. Pay off outstanding debts if possible

Lenders will ask for information on your monthly outgoings. This can have an impact on how much you will be able to borrow.
5. A broker

A broker can be invaluable when it comes to getting a mortgage. They know the market back to front and have access to deals that often aren’t available on the high street. Go independent if you want impartial advice. Ask friends, family and colleagues for recommendations.
6. Keep your loan request realistic

Only ask for as much as you can really afford to repay. Your request is highly likely to be refused straight off the bat if you ask for too much.
7. Avoid applying for multiple property mortgages

Avoid applying for multiple mortgages in a short space of time. Remember, each lender will perform a credit check. If a large number of checks are performed in a short time period it can have an adverse effect on your credit rating.
8. Make sure all your paperwork and finances are in order

Fraud checks are carried out by lenders (for example, 1 in every 1000 applicants may be checked for fraud) so make sure your slate is as clean as possible. If you do happen to be selected, be patient. It will hold up your request for a short time.
9. Make sure you understand the mortgage types available

Do your research, get as much advice as possible and apply for products that are suited to your personal circumstances. You’ll have a much better chance of getting a mortgage if you apply for appropriate products.
10. Be prepared to compromise and change plans

If the property you’ve spotted is simply too expensive and you can’t borrow enough money, downsize or look elsewhere. Keep an open mind and look at different houses and flats. You may find a gem that didn’t tick all your original boxes.

Recent years, many people have widened their horizons and plan to invest in the foreign country. Thus, sophistication and size of the overseas buy-to-let mortgages market has also improved. The investors are progressively looking in foreign countries to find safer marketplace with better development prospects. However, the best buy-to-let mortgages are a loan on a possessing that one does not live in. They are termed as specific products planned for situations in which housing property is bought with the purpose of leasing it out. In short, it is a kind of investment. Nowadays, the mortgage has become more specialized one.

It is because the fees and rates of many advances in the marketplace have increased dramatically. The best buy-to-let mortgages are well thought-out as a kind of residential advance. They are in reality, taken into consideration by the fiscal authorities as marketable mortgages. This way, they are quite similar to investment products available on profitable properties. The lenders normally assess the mortgage applications on the basis of expected property rental income. The mortgages even consider the probable outgoings like monthly credit payments, income received from sources like applicants salary and so on. This is a reason behind the rising popularity of the advance.

The best buy-to-let mortgages are in general issued to the highest 85% advance loan/value ration. However, few money lenders had earlier introduced around 90LTV products. Recently, the loan/value has dramatically declined as the credit market experiences chaos. This means nearly all property investors have to fund a deposit amount to structure the deficit or shortfall. Nevertheless, the market for buy-to-let advances has risen considerably over the past few years. Importantly, they have turn out to be more sophisticated one. In fact, property investment also boomed in the United Kingdom during this period. Many people made use of this means to offer long term monetary security and supplement their earnings for the retirement period.

A flexible tracker mortgage is a great way to make savings every month. A tracker mortgage works in such a way that it follows the interest rate which is set by the Bank of England. In times of the countries financial difficulty interest rates will be lower. Unlike other fixed mortgage,s a tracker mortgage could have different repayments every month as the interest rate changes. The repayments on your mortgage can go up or down depending on what the market is doing. The interest rates governed by the Bank of England are only the base rate so mortgage lenders may charge more on top. If you have a relatively low mortgage payment each month it can see this go down even more. Tracker mortgage are also available on an interest only basis and the repayments will only be calculated on the interest and not the capital.

At times of very low interest rates you can find yourself making huge savings but this money should be kept as mortgage rates may rise and so will your mortgage repayments. This can sometime catch home-owners unaware so if you have a tracker it would be a good idea to keep an eye on the property market and interest rates. It would always be best to have your tracker mortgage for the shortest term possible. If mortgage rates rise and keep on rising it will be a good idea to change to a fixed interest rate as soon as you can. Using a fixed rate guarantee our payments will be the same each month.

Tracker mortgages are for home-owners who are willing to take a risk. If you have no spare money at the end of each month it would not be a good idea to pick a tracker mortgage and most mortgage advisor’s would advise against it.

The competition among the Mortgage companies in UK has become more competitive when some Banks introduced interest only (IO) mortgages with amended conditions. Even before the world economical crisis the people in UK had bad experiences in interest only mortgages. The experts in UK believe that this type of risky mortgage arrangements should be wiped out of the country.

According to the Interest only mortgage schemes the mortgage holder has to cover interest payments monthly but the monthly mortgage payment will turn down in the month following an extra payment. At the end, the capital payment will be accumulated to a big amount.

The Chancellor, Alistair Darling is accused of using the recovery of recent house prices as an excuse to help the first-time buyers and not support the housing market. While he has not announced an extension to the stamp duty holiday on properties worth less than £175,000, but tries to earn extra revenue from a forecast revival in the housing market. As a result, the tax will once again be levied on all homes worth more than £125,000 from January 1.

Prices edged up in the Midtown, City and Docklands housing markets in the second half of 2009, with an average rate of growth of 3%. Transaction levels remained relatively low, however, and the upward tick in prices had as much to do with the lack of stock for sale as any demand side factors. Given the absence of mortgage finance on reasonable terms, if there had been a bigger supply of property for sale it is possible that there would have been no increase in sales prices in 2009.

Taking a chronological view, July was the tail end of the unexpected boost to the market from equity-rich buyers that had started in March 2009. August is the summer holiday season and is traditionally quiet, but the normal September boost to sales transactions did not occur, although there was evidence of purchasers from the euro-zone buying apartments for family members at London universities. This led into a typically quieter 4th Quarter, with low levels of transactions and no further evidence of price increases. The impact of the interplay of supply and demand factors led to 6% increase in sales prices across Midtown, Bloomsbury property price and Docklands in 2009. The price of the illustrated average one-bedroom flat increased by £20,000 during
2009 from £318,000 to £338,000.

In a continuation of the trend in the first half of 2009, it remained the case in the second half that 70% of all transactions in our Midtown, City and Docklands offices were from 100% cash buyers. It was notable that there were fewer overseas buyers in the market in the second half of 2009, in spite of continued weakness of the pound against other currencies, especially the euro. The absence of mortgage finance from British banks available at reasonable terms is hugely influential to the sales markert.

Fashion designer Delia Seaman regretfully admits that sales at her West Hollywood boutique are still suffering amid the recession. She has put her 1920s Spanish-style bungalow up for sale, and after Realtor fees and closing costs, she believes to clear up little or nothing beyond $922,000, the price she paid for the property four years ago– something close to the now asking price, of $999,000.

Seaman even says, her yearly mortgage payments, insurance and property taxes has exceeded what she would have spent renting a similar home annually. According to her the whole housing dream is kind of a joke, and says “I paid in for four years and got nothing. I wish I’d never bought.”

Seaman’s property agent, John M. Barrentine, calculates that her house would yield close to $1 million in a sale but less than 3% of that (or $30,000 a year) in net annual rent if leased out. She would be better off selling and putting her money into California municipal bonds. Buy you rent?

There are currently 101 different mortgages available to people looking to borrow 90pc of their home’s value, down from 122 at the beginning of the year and 903 in July 2007, before the credit crunch struck.

But the number of home loans aimed at people with a 40pc deposit has soared during the same period, rising from just 17 in July 2007 to 251 in January this year and 320 now.

Financial information group moneyfacts.co.uk said the fall in availability of mortgages with a 90pc loan to value ratio (LTV) showed that first-time buyers were continuing to be ignored by lenders as they cherry-picked lower-risk customers.

Banks and building societies are also failing to pass on falls in their own funding costs to people borrowing a high proportion of their home’s value.

The cost of the average two-year fixed-rate mortgage for someone with a 10pc deposit has fallen by only 0.12 of a percentage point to 6.12pc since September 2007, despite the Bank of England base rate dropping from 5.75pc to a record low of just 0.5pc during the same period.

The margins that lenders charge on these products have also soared during the same period, from just 0.02 of a percentage point above two-year swap rates, on which the deals are partially based, in September 2007 to 1.34 percentage points a year ago, and a massive 4.25 percentage points now.

From -  http://www.telegraph.co.uk/financ