Insights from the UK and beyond
UK mortgages: “It’s not all doom and gloom”
– Jane King is an independent mortgage adviser at Ash-Ridge Asset Management. The views expressed are her own. –
In the current climate, we have the irony of property suddenly becoming more affordable and yet lending is down by 52 percent in the year to January. The commonly held view is that it is almost impossible to get a mortgage and many first-time buyers are still frustrated in their efforts to get on the ladder. But it’s not all doom and gloom.
Firstly, there are providers with funds who want to lend. What they don’t want is the sub-prime type of borrower that got many banks into trouble in the first place, and this is set to be the long term approach of many who decide to remain in this market. This will be good for future stability and something that should be encouraged.
Anyone seriously looking to purchase or remortgage should take independent advice from a properly qualified mortgage adviser (try www.impartial.co.uk). First meetings are usually free of charge.
For first-time buyers and key workers there are government-funded schemes available, which are not widely advertised but are incredibly popular. The criteria and flexibility have widened in recent times and the schemes now encompass many individuals who would not have qualified in the past.
For key workers such as policeman and nurses and other eligible groups there are Shared Equity Schemes whereby you purchase part of your property and rent the remaining portion.
Try your local housing association in the first instance – they will let you know what properties are available and will advise as to your eligibility. An independent mortgage adviser will have access to the lenders who provide the mortgages for these shared equity loans and will be able to find you the best deal for you. I cannot recommend these schemes highly enough and as new funding is often released in April, the timing could not be better. For information about housing associations try Directgov.
For borrowers looking to remortgage, they should compare their current lender’s offering before moving. With low interest rates, it’s often not worth moving lenders once arrangement, valuation and legal fees are taken into account. A good adviser will always make this comparison before recommending any alternative.
When you start looking you will find that, because of low interest rates, there are some great deals out there. If you have a hefty deposit or plenty of equity in your property then you can access some very competitive rates. For a list of some of the best deals go to moneyfacts.co.uk
Do not be tempted to consolidate debt and secure this against your property. This can seem like a good idea but needs careful thought. In today’s uncertain environment one option is to insure your mortgage payments against redundancy if you are eligible.
Although the government has offered limited help for those facing arrears, the details are still sketchy and will only cover interest payments. If you are facing repayment problems, always contact your lender as soon as you can, as it will have options available to you – it is not in the lender’s interest to repossess.
Do not assume that your usual High Street bank has all the answers – shop around, use the Internet and ask friends and colleagues for recommendations.
I believe that this situation will continue at least until the end of 2009 – the recovery will only start when consumers regain their confidence in the economy and are comfortable that their jobs are relatively safe.