Posts tagged ‘mortgage’

The FCA’s new mortgage rules put affordability first

From Saturday 26 April, the Financial Conduct Authority (FCA) is giving mortgage lenders and advisers in the UK new rules to follow when you take out a home loan. The principle is that your mortgage should suit your circumstances – and that means it must be affordable, writes Linda Woodall, director of Mortgages and Consumer Lending at the FCA.

Linda Woodall

The FCA’s Linda Woodall says new mortgage rules put affordability first

We’ve brought in these rules after reviewing the mortgage market to see how it can work better for consumers. Before the financial crisis, more and more people were being given mortgages without any real evidence they could afford them – a trend fuelled by cheap credit and rising house prices. This led to some people falling into arrears or even losing their homes. Without historically low interest rates since then, many more may have been caught in the same trap. It was clear that something had to change.

A mortgage is the biggest financial commitment most of us will ever make, and it can be hard to make an informed choice from the wide range of deals available. We think everyone who needs it should have professional advice, so you get a loan you can realistically afford to pay back.

Under our new rules, lenders will have to be satisfied you can afford your mortgage. If you’re using a financial adviser or mortgage broker, they will have to discuss your needs and circumstances and make sure you meet the lender’s criteria when they recommend a mortgage for you.

There are exceptions to the rules – for example, some people can choose a mortgage deal without taking advice, and people remortgaging with their existing lender won’t always need to go through the same level of affordability checks. In most cases, though, your lender will have to check your income and basic spending, and any other financial commitments. They will also look at how predicted interest rate rises could affect your mortgage payments.

The point of this isn’t to examine every penny you spend on things you enjoy, or to stop you getting a mortgage. It’s to make sure you can afford what you need as well as your mortgage payments, as far as can be predicted. We’ve specified what lenders must check as a minimum, but each lender can decide for themselves how much more detail they want go into with you.

Many advisers and lenders are already doing these checks with their customers. We’re taking a common sense approach to avoid the problems of the past, and create a sustainable and healthy mortgage market that works well for both lenders and borrowers.

April 22, 2014 at 10:16 AM Leave a comment

How can I get on the property ladder?

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

It’s almost impossible to open a newspaper today and avoid a story about the problems facing first-time buyers or those who want to move to a new home. The issues start with cost: last month, the average asking price of a UK home increased by £911 to £228,298, according to the latest figures from FindaProperty.com.

Rising prices and difficulties securing a mortgage are forcing first-time buyers to look at other, more creative options, to get on the property ladder

But it’s not just the price of a new home that’s making it more difficult for buyers. The other problem is the struggle to secure a mortgage.

The double dip recession and the worsening Eurozone crisis has led the Bank of England to warn that homeowners could face higher mortgage repayments as lenders raise interest rates to recoup costs.  A repayment hike can be devastating for many homeowners on standard variable rate mortgages, who could end up paying thousands of pounds a year extra. Lenders are also passing their extra costs onto many fixed rate deals too.

The pressure on lenders to raise lending interest rates also makes the situation worse for so-called mortgage prisoners – those who can’t afford to buy a home because the change in the mortgage market means they would not be able to negotiate a new mortgage. The unfortunate effect of this could be a slowdown in transactions as lenders become even more picky about who they are willing to offer mortgages to.

But there are option for wannabe home owners – so long as they’re willing to think creatively.

For instance, new research by FindaProperty.com reveals that buying a property with friends could be the answer to many first-time buyer woes.

It turns out that three friends clubbing together to buy a three bedroom home is the most cost effective route onto the property ladder for those who are willing to share.

Not only is the average mortgage repayment for a three-bedroom house in the UK, spread equally between three occupiers, £334 per person, but the monthly repayments of this size account for an affordable 19% of the average net wage across the UK.

Buying a property with friends could also lead to a larger deposit – something mortgage lenders particularly value at the moment. It could also lower the associated costs of moving – so council tax and utility bills will be lower.

Of course there are some practical concerns to keep in mind if you take this route. Be sure to speak to a solicitor and have a contract drawn up about what should happen if one friend wants to leave the arrangement. But as a leg up into the world of property equity, sharing with friends could be a sensible first-step on the road to full home ownership.

June 8, 2012 at 9:35 AM 1 comment

We’ll pay your mortgage or rent for one month – enter our competition now

This is a legacy post from the findaproperty.com blog which is now maintained as an archive within the Zoopla blog. Links have been preserved.

Things can be a little tough at the moment, which is why we’ve just launched a new competition that gives you the chance to have your mortgage or rent paid for by us for a month.

It’s easy to enter – all you have to do is click through to the Happy Place and register. All the terms and conditions are there for you too.

Enter now and don’t forget to spread the word and tell your friends.

October 10, 2011 at 12:57 PM Leave a comment

Five homeowner tips to beat a recession

Our top tips on how to manage your finances to survive and thrive, even in a property market downturn.

1. Get on top of your mortgage payments

  • With interest rates at historical lows, check that you are on the best deal.
  • If your current deal is up, remortgage at a good rate. Get a free mortgage quote.
  • If you get behind with payments, speak to your bank immediately.

2. Review your monthly expenses

  • Do you really need that 3 pound gourmet coffee every morning?
  • Eat in more often – and have fun and get healthy from cooking from scratch.
  • Get a better deal on your home insurance by shopping around? Get quote.
  • Reduce monthly electricity and gas bills by switching providers.  Save money.

3. Consolidate or sort out your debts

  • Try to create and stick to a schedule so you can pay debts off little and often.
  • Avoid credit card – it’s usually very expensive compared with a bank loan.
  • Consider an IVA or Debt management solution.  Get free, no obligation advice.

4. Consider downsizing or equity release

  • You could reduce your mortgage by selling and moving to a smaller home.
  • Relocate to a great value area like Shropshire, Dorset or Norfolk.
  • Consider releasing equity in your home through a secured loan.  Get loan quote.

5. Be smart about renting or buying

  • Rental activity has grown recently as people fear losing capital as prices fall.
  • However, buying at the bottom, if you can time it right, can make you money.
  • If buying in a down market, look for price reductions and don’t overpay.
  • Search thousands of Zoopla homes to rent in England, Scotland or Wales.

April 22, 2009 at 2:08 PM Leave a comment

10 Bad-Ass Reasons To Buy Now

Ok, look, I’m not completely mad – I do know that finance is a big issue at the moment, and that many people are concerned about job security. But it’s not all doom and gloom.

Lenders are beginning to loosen up just a smidgen – and if you have the money to hand, the market is starting to look enticing.

So – drum roll please! – here are my 10 bad-ass reasons for buying now:

1. Prices are falling within reach – they’re down £35,000 on average since last year, says the Nationwide.

2. Lenders are beginning to loosen up – more are now offering LTVs at 80-90 per cent.

3. Affordability has improved significantly and is close to its long-term trend.

4. You’ll get poor returns on savings at the moment so your deposit isn’t going to grow much.

5. Interest rates are at an all-time low – and mortgage rates, already historically low, are edging down too.

6. Buyers are relatively thin on the ground so there’s less competition out there. Vendors are keen to do a deal – there’s an average of 12 per cent currently being haggled off asking prices.

7. There’s a growing consensus that prices are beginning to bottom out – and not just among agents. Capital Economics thinks this will happen in H2 2009. So the window of opportunity is narrowing.

8. Market activity could pick up (albeit modestly) if mortgage backed securities free up lending – a scheme will be launched in April. Also talk of the post office and local authorities offering mortgages.

9. The increase of the stamp duty threshold to £175,000 has cut cost of entry to market.

10. Better to buy before the bottom than end up on the wrong side of a rising market – and things could pick up quite quickly as falling prices and increased lending draw in more buyers.

Completely mad? If you’re waiting on the sidelines, when do you think will be the right time to buy?

February 3, 2009 at 3:47 PM 2 comments

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