Welcome to The Mortgage Guide UK
The housing market is very cyclical. It is not just prices that can be volatile, but also equity withdrawal and debt repayment. In the boom years, property owners were taking £50bn of equity withdrawal every year. Mortgage equity withdrawal was adding nearly 9% of consumers spending power. Mortgage equity withdrawal involved re-mortgaging house to gain …
What is the best way to try and save money on your mortgage? These are a few tips which might be worth considering. Use Current account mortgage./ Offset mortgage These are increasingly common. It is a way to combine a current account with your mortgage balance. If you have any spare cash in your current …
1. Don’t stay on existing accounts out of loyalty. If you stay with your existing mortgage company for the duration of the mortgage term, they will thank you very nicely for paying much more than necessary. It may be a bit of hassle to remortgage; but, if you could save £100 a month, then you …
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Do you have significant debts as a result of overspending? If you do, you are not alone. Modern society makes it particularly easy to spend more than we really should. However, if you want to clear your debts and have greater peace of mind, it is important to tackle the root cause which is overspending. …
Many people miss out on a potential rebate or refund because they are reluctant to write a letter of complaint. For example, in the UK, there has been an investigation into the misselling of loan insurance (payment protection insurance). It has been estimated that the insurance schemes are so profitable that the banks keep upto …
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These are products which can seriously damage your financial wealth. In some cases, the products can be OK if used carefully. But, often the principle seems to be merely taking advantage of the unwary consumer. Some of these products are blatantly bad value; but, others have their charges cleverly hidden. Make sure you don’t get …
The death of a spouse or partner can virtually send a person into a catatonic state. Almost the last thing on their mind are legal and formal matters. When the family are ready to confront financial issues there are several things to be borne in mind that may help the bereaved. Bereavement Payments and Allowances …
The rise in number of mortgage defaults is caused by many factors. In the US, and to a lesser extent in the UK, increasing numbers of homeowners are struggling to meet their mortgage payments and are facing the possibility of their home being repossessed. If this is the case and you are Struggling to Pay …
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Do not get uptight about your own finances but learn the simple basics so you feel on top. There are some approaches that will help you factor in risk and guide you to achieve your longer term goals. If you consider a 45 year working life even at a modest salary you will probably earn …
To predict inflation the MPC looks at statistics such as Present inflation data Commodity prices especially oil Manufacturing output prices Nominal wages increase House Prices Levels of Mortgage borrowing Number of Home repossessions Stock Markets Consumer spending and consumer confidence, the level of consumer borrowing is also important Exchange Rates Import Prices (20% of RPIX …
There are 2 types of Monetary Policy: 1. Direct Control of the Money Supply: This was used in the early period of Demand Management, but hasn’t been used in the UK in the 1990s. 2. Influencing the demand for credit by using interest rates. This is the main tool of current UK monetary policy …
By far the largest element of money supply is bank deposits; therefore banks play a crucial role in the monetary system. Clearing banks: These are the main UK retail banks, members of the Clearing House Association The Clearing system is a means of settling bank’s debts with each other on a daily basis. It enables …
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Independence of the Bank Of England In 1997 the Bank of England was given independence to set interest rates. It is argued that politicians often took political factors into consideration when setting Interest Rates e.g. before an election they could cut rates to speed growth but this may cause inflation. However the govt still retains …
The Role of the Financial Sector in the UK economy Financial intermediaries: These have the role of providing a link between those who wish to borrow and those who wish to lend. They provide 4 functions Expert advice Expertise in channelling funds. E.g. into the accounts with the highest yield Maturity transformation. Can make loans …
Monetary policy involves the manipulation of the Money Supply or the rate of interest by the monetary authorities. Monetary Policy used to be carried out by the government, but it is now the independent Bank of England which sets the interest rate. The purpose of Monetary policy is: 1. Target the rate of inflation. Government’s …
The discount and repo markets Specialise in borrowing and lending for short periods of time They lend money S.R. to gov’t and firms by buying bills of exchange. To do this they obtain money from banks by borrowing money at call from banks and selling banks bills DH enables banks to earn interest on …
Criticisms of The MPC approach An inflation target is not enough. If the MPC just targets inflation this may lead to lower growth or higher unemployment If there are shocks to the economy such as higher oil prices this may increase inflation, keeping it in the target may cause a recession. Fine Control of Monetary …
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Problems in the London Housing Market First Time Buyers struggling to get on Property Ladder House prices have been rising faster than incomes, making it more difficult for first time buyers to get on the property ladder. The Halifax estimates that first time buyers in London, need an average deposit of over £41,000. Therefore, to …
Affordability. The ratio of house prices to disposable incomes. Also can be measured by measuring ratio of incomes to average mortgage interest payments. Affordable Housing. – Housing that is within the budget of key public sector workers and first time buyers. Generally, there is a shortage of affordable housing in the UK – affordable housing. …
When the owner accepts the offer on a property, the buyer will usually not yet have commissioned a building survey nor will the buyer have yet had the opportunity to perform recommended legal checks. The offer to purchase is made “subject to contract” and thus, until written contracts are exchanged either party can pull out …
Very Expensive In the UK the price of houses has increased so much it is becoming increasingly difficult to afford a mortgage. To get on the property ladder many first time buyers are using income only mortgages and or borrowing up to 6 times their income. This means that often a very high % of …
Ownership There is a sense of ownership and belonging. Personal Tastes. You are free to make changes and decorate the house according to your tastes. If you rent, you will be limited in making alterations and decorations. Avoid Paying Rent in Retirement . Buying a house can be seen as an investment for your retirement. …
Mortgage Equity Withdrawal involves homeowners taking out a bigger mortgage loan to be able to take out cash from the value of their house. Mortgage Equity withdrawal is a way of converting wealth into disposable income. An increase in house prices on its own doesn’t increase consumer spending. However if people can remortgage then they …
With house prices in the UK averaging nearly £200,000, getting a mortgage has never been more difficult. In addition, immigrants into the UK, face additional hurdles in getting a mortgage because they may struggle to prove that they have a valid credit history and have a suitable deposit. If you do immigrate into the …
It is important to work out a plan to know how what kind of mortgage payments you will be able to afford. A rough guide to mortgage affordability is given by income ratios. For example, many banks will be reluctant to lend more than 4 times your annual income. Therefore, if you have an annual …
Will the Government help, if struggling to meet mortgage payments? The government only gives limited help for those people eligible for income support. If you are stuggling to meet mortgage payments and fear your home could be repossesed, these are some of the steps you can take to meet your mortgage payments and avoid repossessions …
Different Types of UK Home Mortgages When considering which mortgage to take out, a home owner is offered a bewildering range of mortgages. See: Different Types of Mortgages However, there are a few key differences. 1. Repayment vs Interest Only Mortgages A standard repayment mortgage means that you pay both the interest on the loan …
An offset mortgage is a mortgage where the bank combines your mortgage account with your savings account. This means that if you have savings in your current account you can automatically use these savings to pay off your mortgage, saving you potentially large sums of money in both interest and tax. An offset mortgage works …
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A 2nd Mortgage loan is a loan taken while the 1st mortgage is still being paid off. A 2nd mortgage may be preferable to remortgaging the existing mortgage loan. The 2nd mortgage loan will usually be secured against the existing home equity. Getting a second mortgage loan is a way to be able to invest …
One advantage of Flexible mortgages is that they allow you to make extra payments. This means that paying extra each month, or making a one off lump sum payment the mortgage will be paid off sooner. If you can afford to do this then you will pay off your mortgage earlier and save significantly on …