by admin | Oct 18, 2019 | Mortgage News
Over the last few years, there’s been a big marketing effort on the part of the “go-direct” brands. The irony of this is that actually these brands are not encouraging you to “go direct”, they are encouraging you to use their website to make your decision instead of either actually going direct or going to a proper, human mortgage broker, who can give people professional advice customised to their situation. To see how this works in practice, let’s look at the three different situations.
The “go-direct” brands
The “go-direct” brands are basically, affiliate-marketing sites. That means they get paid a commission for referring people who then go on to become customers. In other words, they work on exactly the same basis as the mortgage brokers they advise you to avoid using. They simply use computer algorithms to try to replicate the knowledge and expertise of a financial professional. Even though many jobs are currently being replaced by computers and there may come a time when artificial intelligence can do as good a job as a highly-skilled human, that time is still far off and as, when and if it does come, the “go-direct” sites are still likely to offer limited options in comparison with going to a human mortgage broker for the simple reason that some companies refuse to work with them for various reasons, many of which revolve around the fact that these sites encourage people to compare deals on headline price rather than looking at the specifics of the offer and the overall value it could provide.
Genuinely going direct
Genuinely going direct can be a perfectly feasible option, if you know your way around the mortgage market. If, however, you don’t you can spend a whole lot of time and energy looking for the best deal and still wind up not finding it or finding it and not being accepted for it. An often-overlooked fact about mortgage brokers is that they will not only make sure that they only suggest deals for which you have a decent chance of being accepted, but they will help to make sure that your application ticks all the right boxes (literally and metaphorically) to maximise your chances of being accepted and they may even have contacts with lenders which they can use to help turn a borderline case into a yes.
Going via a mortgage broker
There are basically two sorts of mortgage broker. One sort charges a direct fee to the client. The other works on commission. Neither sort is right or wrong and neither is better or worse than the other. Both sorts of mortgage broker will be working on behalf of the client and aiming to get them the best, possible mortgage deal. Their continued success depends on having a constant stream of satisfied customers (ideally customers who are satisfied enough to recommend other people). Mortgage brokers are, essentially, the average person’s guide through the labyrinth of the mortgage market. They can be very useful even if you’re “the perfect buyer” and hence in a solid position to find a good deal for yourself. Mortgages may carry relatively low-interest rates (meaning as compared to standard consumer debt) but they are usually for large amounts and hence the difference between a good deal and a great deal can add up to be an awful lot of money over the years. If you already know you are a less-than-perfect buyer and/or you are aiming to buy a more niche property (or to build your own home), then the more you should think about going to a mortgage broker rather than trying to go direct.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Oct 10, 2019 | Mortgage News
It’s no secret that it can be tough to get on the property ladder, either as a genuine first-time buyer or as someone who’s bought before but gone back to renting for whatever reason, for example, to spend some time abroad. The good news is that, in spite of all the challenges, it is possible. Here are some tips to make it happen.
The less you spend on rent the more you can save
This may seem like stating the blindingly obvious but it’s one of the many realities of life which can be a whole lot easier in theory than in practice. To be perfectly blunt, putting together the deposit you will need to buy a home of your own is likely to be a lot easier if you are prepared to make compromises on where you live in the present. Living with your parents may be the ultimate example of this (their house, their rules) but this is not necessarily a practical option for everyone.
For those living away from home, making compromises may involve choosing a smaller space over a bigger one, accepting a longer commute, or choosing a less-desirable area over a more chic one. Obviously, all of these options have to be subject to the common-sense test. There is a limit to how small a space a person can reasonably live in for an extended period of time and there is no point in choosing to live in a place where the housing is affordable but the commute is long if it means that you are just swapping housing costs for commuting costs (and time) and you clearly want to avoid living in a place which is actively unsafe. All the same, however, all things being equal, you should probably give preference to the place with the lowest housing costs as rent is typically a substantial expense and hence anything you can do to reduce it can make a real difference to how quickly you can save for a deposit.
Always look for ways to increase your income
The nature of your employment will largely determine how feasible it is for you to earn extra money in your main job, but if you’re in a position where you get a fixed salary for (officially) fixed hours and have little scope to earn extra on top and you’d prefer to stay in that job, at least for the foreseeable future, then you can still look for other ways to earn extra money. Getting a second job can bring all kinds of complications (including your current employer being unhappy about it, you new employer making requests which conflict with your main job and your tax being messed up, although this last should not happen), but there is nothing to stop you setting yourself up as self-employed and building your own little side-hustle. Just remember that you will need to register as self-employed and pay taxes on whatever you earn.
Take care of your credit rating
If you’ve saved and worked to put together a solid deposit, it would be heartbreaking to be turned down for a mortgage because of silly mistakes such as going over the limit on a credit card or missing a payment. Standard advice here is to put all payments on Direct Debit so that you never miss one, however, there is an alternative approach, which may save you a little money, at the expense of some organization. Put as many payments as you can on manual and pay them the moment you have the money to do so, for example on payday or when you get your earnings from your side hustle (remember to set aside money for taxes). This will minimize the interest you pay.
Your property may be repossessed if you do not keep up repayments on your mortgage.
by admin | Sep 27, 2019 | Mortgage News
In the UK, interest rates have now been so low for so long that even those who are, technically, old enough to remember the double-digit inflation of the 1980s, may have forgotten what it meant in practice. It meant that cash deposits could bring could returns for savers – but borrowing could be eye-wateringly expensive. With Brexit on the horizon and a “no-deal” looking close to certain, now may be a good time to go over interest rates, the theory and practice.
When currencies weaken, interest rates tend to go up
The Monetary Policy Committee of the Bank of England is tasked with keeping inflation at exactly 2%, but since this is the real world, it is allowed a 1% “margin of error” either way. If inflation falls below 1% or rises above 3%, however, the Bank of England has to write an open letter to the chancellor explaining what it intends to do about it. If inflation falls below 1%, the BoE has two options. It can lower interest rates (assuming there is room for it to do so) or it can implement a programme of quantitative easing. When inflation goes up, however, the BoE’s only option is to increase interest rates.
The Brexit question
If Sterling weakens due to Brexit (or for any other reason), it will increase the cost of importing goods from overseas. If this cost is offset by gains elsewhere, such as inbound tourism, then the net effect may be zero (or close to it), but if it is not, then either the UK will have to cease (or severely limit) its imports and/or inflation will increase and in the latter case the BoE will be forced to raise interest rates to meet its 2% target.
The only other option would be for the government to change the inflation target in some way, either by permitting inflation to go higher or by changing the means by which it is measured (such as the change from the Retail Price Index to the Consumer Price Index). This is certainly possible, but it would be politically challenging. Allowing inflation to rise would potentially impact everyone, including borrowers, whereas allowing interest rates to rise would benefit savers but hurt borrowers. Raising interest rates would also, at least potentially, make Sterling more attractive on the international markets, thus potentially bringing the value of the currency back up and lowering inflation naturally. Having said that, this tactic did not work for John Major back in 1992, when the UK exited the ERM.
What this means in practice
In very blunt terms, Brexit could mean that savers finally get to see better returns on their cash deposits and borrowers start to see an increase in the cost of financing their debt. Having said that, it is still very possible that savers will not see enough of a benefit to make it worth their while to readjust their asset allocation in favour of cash. Borrowers, by contrast, will have no option but to swallow up the higher interest rates as they will be reflected across all lenders albeit to varying degrees. This means that it is now critically important for borrowers to do everything in their means to pay down debt as quickly as possible and the higher the level of interest payable on the debt, the more important it becomes to pay it down. If borrowers are unable to pay down their debt immediately, for example, if they have mortgages with long terms, then it may be worthwhile to switch to a fixed-rate product so at least they will have the security of knowing what their payments will be over the life of the product. As always, however, individuals will need to do their own sums to see if this approach makes sense in their own situation.
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by admin | Sep 21, 2019 | Insurance News
Summer, such as it was, is now very definitely over and autumn is starting to make itself felt. Depending on your point of view, we’re now either coming into the season of hot chocolate and hygge or coming into the season of cold, wet weather and general misery. Even if you love the cooler months, the fact still remains that they do bring their own challenges, but the good news is that you can protect yourself against them by “self-insuring” (following good practices) and taking out formal insurance cover.
Insuring your health
Even though minor illnesses and injuries and frankly part and parcel of autumn and winter seasons, you don’t just have to cave into them. Just being sensible about what you eat and drink can go a long way to boosting your immunity and if you make time for exercise as well, especially outdoor exercise, then you will put your body in a much better place to ward off the cold-weather nasties.
At the same time, however, you have to be realistic about what life can bring and about what you can do to be prepared for it. With that in mind, it could be a good idea to take out dental insurance, if not full medical insurance. Autumn rains and leaves and winter ice are all serious tripping hazards, which can easily leave you with damaged teeth – and dental bills can be very expensive. Thanks to the NHS other forms of treatment are often much more reasonably priced, in fact, they may be free, but there may be a lengthy wait for them and the treatments on offer may not be as extensive as you might have liked (e.g. they might not include physiotherapy after an accident or may only offer limited sessions). This is why full health insurance can be a great investment.
Insuring your income
For most people, their income is dependent on their ability to get to work. If your ability to get to work depends on you having your own transport of some sort, then it’s a good idea to give your vehicle a thorough check and take any necessary action before the cold really sets in. You may also need to think about whether you should take any other precautions related to travel in cold weather, such as upgrading your insurance to include accidents and perhaps even a call-out service.
You may also want to think about what would happen if a long-term illness or injury left you unable to work for any length of time (or to function as a parent, a carer or in any other capacity). Depending on your stage in life, you may be able to get by with a basic emergency fund, but if you have people depending on you in any way, such as for childcare, then you may want to look seriously at Critical Illness Cover for protection during long-term illness.
Insuring your property (and its contents)
Most people will probably already have insurance for their home and contents, however, you can reduce the chance of needing to make a claim on your buildings insurance by making sure that you have done everything possible to ensure that it can withstand everything the weather is going to throw at it. Now is also a good time of year to review your contents cover to ensure that it is still an accurate reflection of what is inside your home and to think about any potential large purchases you may want to make, either at Christmas or in the January sales.
For motor insurance, mortgage payment protection insurance, building and content insurance and general insurance products we act as introducers only.
by admin | Sep 13, 2019 | Mortgage News
These days, you don’t necessarily have to go to an interview to get a mortgage the way you usually do to get a job, but other than that the processes are, perhaps surprisingly, very similar. In a recruitment scenario, the recruiter is essentially asking themselves three basic questions:
- Can you do the job?
- Will you do the job?
- Will you fit in?
This is also what mortgage lenders want to know, so your mortgage application should aim to convince them that in your case the answer to all three questions is a solid yes.
Cover your basics, fill in the application the way you are asked
Employers have long used various tricks to work out which job seekers actually read adverts and follow instructions and which do not. One of those tricks is to specify how an application is to be submitted. In the old days it was often colour of ink (black not blue), these days it can be to include a particular word in your cover letter. Mortgage lenders aren’t usually looking to weed out candidates who can’t follow instructions, but they are likely to be using computer systems to process part, if not all, of an application and hence they may specify how data is to be entered into each field. If they do, make sure you follow the instructions. Also, make sure that any data you enter does completely answer the question, otherwise the best you can hope for is that a potential lender requests further information. They may, however, just decline you because you come across as unsuitable.
Can you do the job?
Remember that these days mortgage lenders are obliged to look beyond your headline income figures and think about your likely ability to repay a mortgage over the long term. This means you want to do anything and everything you can to convince them that you will be able to bring in an income over the lifetime of your mortgage. For example, if you had plans to upskill yourself and/or to start a side hustle with a view to bringing in extra money (at some point if not immediately), then it would be a great idea to set the ball rolling before you even applied for your mortgage.
Will you do the job?
A mortgage lender is going to look for evidence of how well (or badly) you have managed your money in the past, which means that they’re going to take a close look at your credit record. Do everything you can to make this look impressive. If you’ve had a chequered financial history, time may be your friend. Negative markers such as late payments drop off after a certain time. If you know you have them, you might want to check when that time is and see if you can hold off applying for a mortgage until after it is past. Once it is past, make sure it is removed correctly. Even if you have a perfect financial history, it’s still a good idea to check your credit record for mistakes (they happen) or to see if you can make any small touch-ups which could help you (like making sure you’re on the electoral register).
Will you fit in?
Does your application fall within the lender’s “comfort zone”? In blunt terms, a lender needs to think about how easy it would be to recoup their money in the event of a foreclosure. Standard, residential properties in popular locations tend to be relatively easy to sell on. Niche properties and properties in more out-of-the-way locations can be rather more of a challenge to sell. Similarly, buyers actually living in the properties, or at least in the UK, are easy to trace, whereas expat buyers may be perceived as rather more of a risk.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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