Halifax Fixed Rate Mortgages deals

Personally, I feel that interest rates are likely to fall slightly next year. - See interest rate predictions

However, if your circumstances favour a fixed rate for security and peace of mind. Halifax are offering upto 25 years fixed.

A one year fixed rate is at 6.64% for introductory period followed by 7.75% for the remainder of the mortgage term.

A Two year fixed rate is 6.54%

A 10 year fixed rate is 5.99% for introductory period.

There may be better fixed rate deals in the new year, after we have seen the UK's first rate cut.


Note on 25 Year Fixed Mortgage.

This is the kind of mortgage which would reduce a lot of the volatility in the UK housing market. If people had this kind of mortgage they would not be so susceptible to small changes in the interest rate. It would also make UK monetary policy less effective as a tool for influencing economic activity.

Fixed Rate Mortgages at the Halifax

Getting a Remortgage Quote with own Lender

Currently I am on Standard Life’s Standard Variable Rate of 6.75% paying £878 per month. The mortgage balance is about 137,000 and is for a term of 32 years.

I have been with the standard life for nearly 3 years. Originally the mortgage was a self-certification mortgage. At the moment I thought it would be hard to re mortgage because my income is too low for conventional mortgage deals.

Despite writing frequently about the benefits of Re mortgaging on this mortgage sites I never got round to doing it myself. – Sometimes it is easier to give advice than it is to follow it!
Anyway today I rang up standard life and asked about Re mortgaging. They offered a couple of deals.

1 Year Discount Re mortgage

• 1st year 1.85% discount off SVR
• 2nd Year 0 discount

This deal is tied for 2 years and has no costs of setting up. It means in effect there is an average discount of 0.925% over the two years. In the first year I would save £157 per month. Therefore total savings – 12 * £157 = £1884. This is an average saving of £942 per year.

3 year Discount Re mortgage

For each year there is a discount off SVR of 1.46%. This means that on current interest rates my mortgage interest payments would fall from £878 to £753.73.

This is a monthly saving of £125 but is for 36 months. Therefore total savings over 3 years is £4,101. However for this deal there is an administration cost of £399. Therefore total savings = £3,702. This is an average of £1,234 per year

After the time periods the mortgage reverts back to the SVR, but you are then free to change mortgage again.

The best thing about this deal is that as an existing customer I don’t need to prove any income – you automatically qualify.

Now why didn’t I do this a couple of years ago?

Top Tips for Remortgaging:

• Remortgaging is the easiest way to save lots of money.
• It is Always worth starting off with your existing mortgage dealer. This can be a good way to save on mortgage fees.

Tips for getting a Better mortgage deal

1. Read all the small print. For example make sure you can leave the mortgage deal without incurring any excess penalties.
   
   
2. Choose the right mortgage for your circumstance. For example if you have a large current account surplus you should seek to make use of this positive balance and get a current account mortgage. This is a kind of mortgage where if you have savings in your current account they are automatically used to reduce your mortgage debt. This saves mortgage interest payments and also saves paying tax on your savings; – a double benefit. This is sometimes known as an offset mortgage.
   
   
3. Which is more important money now or money in future? There is often no “right” mortgage, it may depend upon your preferences. For example if you were to take out a 50 year mortgage the standard industry response would be to discourage you; on the basis you will end up paying more interest over the long term. However if it means you can get on the property ladder it is probably a better financial decision than renting. However if you have a low pension you will want to get a short mortgage term to enable you to pay off your mortgage early. Then in your retirement you will have low living costs.
   
   
4. Look for best Remortgage Quote. Most mortgage lenders make their highest profit margins on their existing customers. This is because existing customers stay on the Standard variable rate. However if you seek to remortgage they will probably offer you a much better deal.
   
   
5. Be careful of enticing offers. In an increasingly competitive market many mortgage dealers offer a special discount for the first 6-24 months. These interest rates can be as low as 3%. However if you look closely after the allotted time period ends the mortgage will suddenly jump up to say 7%. Also these mortgage deals often have high penalties for early leaving. When getting mortgage quotes make sure you look closely at all the detail. Make use of impartial advice of a mortgage adviser.
   
   
6. Protect your credit rating. Work hard to avoid missing any credit card payments or mortgage payments. Set up direct debits. If you do miss a payment try to explain to the bank it was a mistake, get lost in the post. Customers with bad credit can get a mortgage but they will end up paying a mortgage premium.
   
   
7. Claim exit fee refund. In the UK if you have remortgaged in the past 2 years you are probably entitled to a refund. The FSA decided the mortgage lenders had increased their exit costs without sufficient justification. If you write to the bank you will probably get a refund of upto £200.

See more on: remortgage quotes

Non Status Mortgages UK

Non Status and Sub Prime Mortgages

Non status or Sub Prime Mortgages are often known as bad debt or bad credit mortgages. They have been in the news recently because of America’s problems with its sub prime mortgage market.

Sub Prime lending means lending to people with bad credit histories. (e.g. those with missing credit card payments, unauthorised overdrafts e.t.c.) It can also apply to people on very low incomes without bank accounts.

Loan sharks are an extreme example of non status / sub prime lending. This type of lending is geared towards those with no bank accounts and is often unofficial. Interest rates have known to be extortionate; up to 50%

Sub prime mortgages are similarly mortgages for people with bad credit histories. It involves getting an unconventional mortgage like a self certification mortgage (income doesn’t have to be proved). Unconventional mortgages also include:

• Interest only mortgages
• 40 – 50 year mortgages.

Because sub prime and non-status mortgages are geared towards people with bad credit histories they are more risky for the lending institution. Therefore as a financial compensation for the bank they will usually charge a higher interest rate than on a mortgage with good credit history.

UK Sub Prime Mortgages

In the past year there has been a big growth in the non status - sub prime market. In particular it is worth checking out deals from HSBC, Royal Bank of Scotland and the Alliance & Leicester. These banks have been targetting the sub-prime market.

Problems with Sub Prime Mortgages in US

There has been a record amount of bankruptcies in America involving lenders involved in sub prime mortgage lending. For example HSBC revealed at the start of March that it had to write of over $10.5bn in bad debt. This is largely because of defaults of sub prime mortgages.

Part of the problem in America was that in recent years house prices rose much faster than the rate of inflation. With rising house prices and historically low interest rates, lenders were encouraged to lend more generous payments and give more risky mortgage deals. However now that house prices are falling and interest rates potentially rising it makes the likelihood of further debt default likely.

This is also a potential problem in the UK. House prices have been consistently rising due to constraints in supply but the average house price to earnings ratio has increased making them overvalued. Therefore it is possible house prices could fall in the future. This would definitely make the lending institutions think more carefully about lending to “risky borrowers”

Sub Prime mortgages are generally more susceptible to a period of rising interest rates. This is because the mortgage interest payments for those with a sub prime mortgage are generally a higher % of their disposable income than those with a standard mortgage

See: Different types of Mortgages

Unconventional Mortgages

Halifax 100% mortgage offer

Many first time buyers struggle to get onto the property ladder because they are unable to save up a deposit. As house prices rise the minimum deposit is at least £10,000 on a £200,000 house. Many lenders such as the Halifax are offering 100% mortgages. The interest rate on 100% mortgages is usually a little higher than standard mortgages. 100% mortgages will only be available to people with good credit terms.

Other 100% mortgage lenders

• The Royal Bank of Scotland,
• Bradford & Bingley
• Northern Rock will lend up to 120%
• Abbey National
  

Also many local, regional lenders may be willing to lend upto 100% of the value of the house if you wish to buy in the local area. For example The Cumbria. ,Cheltenham & Gloucester

See: different types of Mortgages

Mortgage guide first time buyers

Halifax mortgage calculator

Top 10 Mortgage Tips

Advice on getting the best out of your mortgage and help on getting your first mortgage

1. Save a deposit. If you can save or borrow 5% of your house price then most mortgage deals will become much more attractive. Generally 100% mortgages are more expensive and you may also have to pay mortgage indemnity insurance. If it is difficult to save for your first mortgage consider a loan from friend or parents to get you on the mortgage ladder.

Read: top 10 Mortgage Tips

see also: Top 10 UK Mortgage Lenders

UK Government Mortgage Subsidy

Open Market Homebuy is a Government-backed scheme that aims to help certain groups of people who can not afford to buy a home on the open market without assistance The ’Homebuy’ scheme provides you with an equity loan equivalent to 25 per cent of the purchase price of a property.. The loan is paid back when the property is resold and the amount paid back is 25 per cent of the value of the property at the time of sale.
The Housing Corporation and some local authorities fund the schemes and offer them through housing associations. Demand is high and some local authorities may tailor the scheme to meet housing needs in their area. There may be a waiting list in some areas. The scheme provides access to additional money called equity loans, which run alongside a conventional mortgage loan.

Two equity loans, each worth around 12.5% of the value of your home, are provided:

· the first is provided by the same lender that you select to provide your conventional mortgage loan; and
· the second is provided by the Government and administered by a HomeBuy Agent

– a housing association in England that has been appointed to operate the scheme.

No interest is charged on either of the equity loans for the first five years and you will never be charged interest or need to make monthly payments on the HomeBuy Agent’s equity loan. However, the amount you will have to repay the lender and the HomeBuy Agent will be linked to the value of your home at the time you sell it, plus a redemption fee where this is levied’.

From: Housing Corp

The main groups of people to be helped by the scheme are existing tenants of housing associations and local councils, people on housing waiting lists for social rented housing, key public sector workers in London, the South East and the East of England, and some other priority first time buyers. This covers Police, NHS workers and other public sector workers.

For more information

See also The Right to Buy scheme which allows council tenants to buy their homes at a discounted price, provided that they meet minimal qualification criteria.
To qualify for the Right to Buy you need to have been a public sector tenant for a minimum of two years.

See also: Mortgages for first time buyers

Mortgage Lenders offering Mortgages Over 40 Years

40 Year Mortgages
Alliance & Leicester
Birmingham Midshires Building Society
Bradford and Bingley Building Society
Britannia Building society
Chelsea Building society
First Direct.
Halifax
Nationwide BS
Natwest Building Society

45 Year Mortgages
Exclusive connections, Mortgage express

47 year Mortgages
Intelligent Finance

52 Year Mortgages
Direct Line,
Royal Bank of Scotland
The One Account

See also: Benefits of Getting a 50 Year Mortgage

Bad Credit Mortgages Cost Increases

Homeowners who have bad credit histories are paying more than even for mortgages. According to Moneyexpert.com the charge for a bad credit mortgage has increased by 14% to a figure of £923. The high charge is justified on the ground of the increased risk associated with lending to people with bad credit histories. However when getting a mortgage quote it is worth looking around because the cost can vary. Some bad credit specialists do offer lower prices. Remortgage Guide

Getting Best Remortgage Quotes

Tips for getting best remortgage quotes in UK

Remortgaging can be one of the best financial decisions you can make potentially saving you £1,000s over the course of your mortgage term. However it is important to make sure you get the best type of mortgage to suit your needs. There are an ever increasing number of mortgages on the market, and some have various features which make them more suitable for some people rather than others.

The good news is that if you are seeking to remortgage financial institutions usually offer a much better rate than to their existing customers. It sounds strange but thats the way the UK mortgage market works.

see types of mortgages in UK

Costs of Remortgaging in the UK

The costs of remortgaging in the UK have increased in recent years. This is in part due to rising exit costs associated with transferring your mortgage from your existing lender to a new lender. For example the Alliance and Leicester has increased its exit fees from £90 to £150; The Halifax has more than doubled its exit fees from £55 to £125 in the past 10 years. However a new report by the FSA has revealed that they are going to compel mortgage lenders to explain and justify any increase in mortgage exit costs. There is also the possibility of them having to refund existing customers if it is proved they have been overcharging. This is good news for those looking to remortgage. However it is worth remembering that even with high exit costs the potential benefits from remortgaging could be siginficant. It is possible that exit costs could be redeemed within 4 months. See: Remortgage Guide

See also mortgage exit fees at money net

40 Year Mortgages Benefits and disadvantages

A recent analysis of the lending policy of the top 125 mortgage lenders found that approximately 30% were now offering mortgage terms of 40 years of more. Furthermore this trend to longer mortgages is becoming more popular as first time buyers struggle to get on the property ladder.

Long term mortgages of 40 years and more have been criticised by some consumer groups who argue it is likely to increase the debt burden on householders. There are some problems inherent in 40 year mortgages.

1. Buyers will pay much more interest the longer the mortgage term is. This effectively reduces their disposable income over the period of their mortgage.

2. It maybe some people are continuing to have a mortgage into their retirement. Thus there are concerns as to whether people will be able to pay their mortgage payments in retirement.

3. Longer mortgage terms are often synonymous with borrowing far greater amounts. It enables consumers to get mortgages upto 5 or 6 times there salary. This increases their potential debt burden if interest rates were to crash or house prices were to fall. It makes the consequences of negative equity more serious.

4. Longer mortgage terms have enabled more people to keep buying and thus have been inflating house prices above their sustainable level

However despite these criticisms there are certain advantages of 40 year mortgage terms.

1. Without a 40 year mortgage many UK first time buyers would be unable to buy. In the long term buying is a better option than renting. It is true people may have mortgage payments close to retirement, but if they continue to rent rather than buy then they will also have to pay rents.

2. Over a period of 40 years inflation will reduce the real value of mortgage payments, making them easier to pay.

3. Home ownership gives greater stability than renting. If you stay renting then you are always at the mercy of a landlord.

4. If your financial situation improves then in the future you should be able to switch your mortgage to a more flexible system which allows owners the option to pay off the 40 year mortgage early.

It seems that 40 + year mortgages are here to stay. They are a response to the changing climate of the UK housing market and a reflection of increased flexibility. Whilst house prices remain valued at these record levels they will continue to remain an attractive option to UK homeowners

More on 40 Year Mortgages at BBC