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FIXED RATE MORTGAGES-ADVICE TO ACT NOW

With mortgage lenders offering fixed deals at rock-bottom rates, now is the time to take advantage of what's on offer

Borrowers tempted by a fixed-rate mortgage at a rock-bottom rate should get their skates on to secure a deal.

"Money market rates which are linked to fixed-rate pricing have been rising for some time – so the current low rates may not stick around," warns David Hollingworth, from broker London & Country. "While a few more providers might cut rates slightly, there's little to be gained by delaying taking advantage of the current deals."

Yorkshire building society cut its 10-year fixed-rate to 3.89%, making it the cheapest deal of this type ever to hit the market. However, given the long-term commitment this involves, two-year and five-year fixes are likely to be more popular among borrowers.

Several lenders have slashed rates on these deals. Yorkshire cut its five-year fix to 2.44%, with a maximum loan-to-value (LTV) of 65% and a £1,475 fee, taking the rate to a new market low.

Chelsea building society shaved just 0.05% off its two-year fixed rate to reduce it to 1.64% making it the lowest on offer. The mortgage is available at up to 65% LTV and has a £1,675 fee.

 

Hollingworth says that while two-year fixes look particularly low, five-year deals could be a better option as they provide protection for longer.

Other attractive fixed rates include a five-year deal from Halifax at 2.45% and a £1,995 fee, while Tesco bank has one at 2.49% with a £1,495 fee – although both are only available up to 60% LTV.

Barclays mortgage arm Woolwich cut its three-year fix to 2.55% available at up to 70% LTV with a £499 fee and free legal work for a remortgage.

Although the very lowest rates still carry big fees that borrowers should be sure to factor in, there are also options with low or no fees. Woolwich introduced a "Great Escape" five-year fixed-rate deal for remortgage borrowers at 3.99% with no fee, free valuation and legal work plus £250 cashback.

Adrian Anderson, director of mortgage broker Anderson Harris, adds: "Borrowers will be wondering just how low fixed rates can go after some lenders cut rates again, and whether they should hold off in case rates fall again before taking the plunge and securing a deal. But if you can secure what is one of the historically cheapest fixes ever, it makes sense to do so now."

Cheaper loans should give boost to house sales

Cheaper loans should give boost to house sales.

MORTGAGE rates could drop below 1.5 per cent as a host of new lenders prepare to enter the market in the coming months, experts said this week.

Increasing completion means householders could see typical repayments tumble by as much as £600 a year.

 

New lenders are likely to be attracted to the market by the availability of cheap loans from the Bank of England and the relaxation of regulations.

Experts think they will then be in a better position than existing high street lenders to pass savings on to borrowers.

Among those expected to enter the market later this year are Home & Savings Bank and NBNK, which was in the running to buy 630 Lloyds branches.

 

Industry experts think rates could fall by up to 0.2 of a percentage point because of the new lenders and the renewed appetite for lending among existing banks.

Ian Gordon, a banking analyst at Investec, said: “Would-be new entrants are encouraged by both cheap funding and easier capital requirements. But, perhaps more importantly, the ambitions of the incumbents are changing. Lloyds, for example, plans to swing back into positive net lending in the second half of this year. There are plenty of reasons to believe that some downward pressure on mortgage pricing can be maintained.”

The lowest rate on a two-year tracker mortgage is currently 1.69 per cent offered by Chelsea Building Society,

 

The lowest rate on a two-year tracker mortgage is currently 1.69 per cent offered by Chelsea Building Society, which could potentially drop to 1.49 per cent.

Meanwhile, the best rate on a two-year fixed loan is 1.7 per cent from the Post Office, which would drop to 1.5 per cent.

A fall of a fifth of a percentage point would equate to monthly payments reducing by £50 a month – or £600 annually – on an interest-only basis, according to broker Anderson Harris.

Under the Government’s Funding for Lending Scheme, banks and building societies can borrow at rates as low as 0.75 per cent.

However, the amount they borrow is linked to the amount they lend to households and businesses.

Mark Harris, chief executive of SPF Private Clients, said: “New mortgage entrants can only be good news for borrowers. With more lenders we expect to see improved lending conditions with better pricing and availability.”

 

Mortgage expert Dominik Lipnicki, director of www.yourmortgagedecisions.com, said the situation was “fantastic” for a select group.

 

“You will still need to have a fair amount of equity, a guaranteed income and a very significant credit rating.”



Buying A Leasehold Flat

If you are offering to purchase leasehold flat there are a few things you should know before you call the estate agent to make an offer. We know it can be tempting to jump right in especially if you have fallen in love with the flat, but you must do your homework or you could make a very costly mistake!


1) How long is the Lease? Remember if it is less than 80 years it will affect the value of the flat and your mortgage broker may be wary of the short lease, so make sure you check with your lender that they are happy with the length of the lease. A short lease also means that you will most likely have to extend the lease at some point and you need to have some idea of how much this would cost. Remember, in most cases you would need to own the property for two years before you are eligible to extend the lease, so keep that in mind. You may be happy to buy a flat on a short lease but you have to think ahead to when you might want to sell it and not restrict your future sale by having an unattractive short lease

2. What restrictions are there in the Lease? Make sure you find out if there is anything that is prohibited in the lease. For instance it is very common that pets are not allowed in certain buildings. If you love the flat but your cat can’t make the move with you then you have a very hard decision to make!

3. What are the service charges and ground rent on the property?  Most leasehold flats will have a service charge for maintenance of the building set by the Freeholder. If you purchase the property you will have to pay this charge, usually in instalments throughout the year. This could be anything from a couple of hundred pounds to thousands of pounds for large purpose-built buildings. There will also be a ground rent charge for you to pay yearly, this is usually not a large sum, say around £50-£250 but you need to check it because sometimes it can be many hundreds of pounds.

4. Who are the managing agents?  This is important that you want to find out as much as you can about the managing agents as they can either make your life much easier or much more difficult! As the owner of a leasehold property you are often at the mercy of the managing agents both financially and when it comes to day to day thing like the tidiness of the common parts. So do your research! You could Google them and find out about their reputation. Ask other people in the building if they have dealt with them before and what they think of them. Lastly, make sure you understand when and how you have to pay the service charge to the managing agents and exactly what it covers. If you are going to pay as much as £3000 a year or more, which in London is not uncommon  these days then you need to know how the managing agents are spending that money and that you are comfortable with those charges before you purchase.

It is important to be clear on these costs and questions to make sure you can not only afford the flat itself but you can also afford the yearly payments that come with it which are separate to your mortgage.

Building a Buy To Let Portfolio

Thinking of starting a Buy to Let portfolio.

We just saw this great article on the This is Money site.

Its well worth reading if you want an insight in to this great way to boost your pension.

http://www.thisismoney.co.uk/money/mortgageshome/article-2332321/How-build-buy-let-empire-Thousands-doing-prop-pension-YOU-joining-them.html

HELPING THE 1ST TIME BUYERS

First-time buyers costs checklist - the costs you need to think about before buying

Dreamview Estates realise that being a first time buyer can prove to be diffficult in these time. As part of our service we have put together so points that may help you on the raod to becoming a homeowner

Saving up for a mortgage deposit will be at the top of the list for anyone with their heart set on buying a house for the first time.

But what prospective property owners often don't realise is there are a number of other costs - sometimes running into the thousands - which also need to be thought about before it's possible to work out how much of your savings can be used as a deposit.

To help we have tried to provide a list of fees and costs.

Make sure you have included all of the costs below in your overall buying or moving budget before you take out a mortgage. Fees vary by lender, value of property and mortgage size.

Below is a list of items we think are some of the most important

Deposit - mortgage providers will need you to save at least 5 per cent of the cost of the home you want to buy, but the more you save the better your mortgage choice and the better the rate you get - a 15 per cent deposit gets you a much better deal. So if you want to buy a home costing £150,000, you’ll need to save at least £7,500 (5% deposit) to £22,500 (15% deposit) or more.

Mortgage set-up fees - some lenders charge a reservation fee (or equivalent), usually to reserve funds on a fixed or tracker deal. The typical cost is between £99 and £250 and may be refundable if the mortgage application falls through before completion (check this before you pay for it). Others will just have an arrangement fee.

Mortgage arrangement fee - some mortgage products will incur another upfront fee, which some lenders call an ‘arrangement fee’. This may be in addition to a separate booking fee. It can cost up to £2,000 (sometimes more) and can be paid upfront or typically added to your mortgage amount. You will have to pay interest on the amount over the life of your mortgage, increasing its cost, if you decide to do this.

Valuation and survey fee - this is charged by a mortgage lender to value the property you are buying. It costs between £150 and £1,500, depending on value of the property and level of the survey you choose (more details below). These range from a straightforward valuation, which satisfies a lender your property exists and they can get their money back if you default, to a homebuyers report, where a professional looks round the property for you, and a full structural survey, which involves an in-depth investigation. Some lenders will pay a valuation for you.

Mortgage account fee - this is a single fee charged by the lender when you take out your mortgage to cover set up, maintenance and closing down costs of your account. Pay one of these and you won't have to pay a separate exit administration fee when you repay your mortgage. It's typically £100 to £300. However, it is more likely you will not have one of these and have to pay an exit fee if you leave your lender before the full mortgage term is up, ie you remortgage or sell and get a new mortgage on another property. This is a separate cost from the arrangement fee.

Higher lending charge - if you're borrowing most of the value of the property, the lender may charge a fee to take out insurance cover. This protects them in case you can't cover the costs of your repayments and they have to sell your house at a loss. The lender can still chase you for the shortfall.

The amount will depend on how much you borrow, and how much you're contributing as a deposit. If you do have to pay one, it’s usually around 1.5 per cent of the amount you’re borrowing. So, for example, on a mortgage of £150,000, this would be £2,250. These are much less common than they used to be.

Searches - you can incur a fee for searches to the local council to check whether there are any planning or local issues that might affect the property’s value. They may also instruct a drains search at the same time. These are usually done by your solicitor. This can cost between £250 to £300.

Legal Costs - you will need to pay your solicitor to carry out the legal work. This costs around £500 to £750 plus VAT.

Stamp Duty - this is paid on land and property transactions in the UK. This is paid by the buyer and costs between 0 per cent to 7 per cent of the purchase price of the property. The percentage are based on scales from £125,000 upwards.

Survey - this is paid by the buyer to a surveyor to check for structural defects on the property. There are three types of survey:

Home condition survey – this is the most basic and cheapest survey. It’s best for new-build and conventional homes. Typical cost: £250.

Homebuyer’s report – this is a fuller survey, looking thoroughly inside and outside a property. It also includes a valuation. If you are choosing this option, you should see if you can get the valuation and homebuyer’s report done at the same time to cut costs. Typical cost: £400+

Building or structural survey – this is the most comprehensive survey and should always be done on older or non-standard properties. Buyers often skip one of these as they cost the most, however, they should pull up any problems with a property that could be very expensive to fix, which can then be negotiated with the seller before you buy, and doing this may save you much more than you pay for the survey. Costs £600+

 

Registration of title. The cost of this will vary on the value of your property.

Telegraphic transfer fee - paid by the lender to transfer the mortgage money to the seller’s solicitor. Usually between £40-£50.

Building insurance fee - some lenders will cheekily charge their customers if they choose to take out buildings insurance with a different company. This will cost around £25.

Moving costs - this cost is paid to the removal firm to move, pack and relocate your possessions. 

Remember: You may not have to pay all of the above fees. But you will need to factor these charges in when working out how much you can stump up for a deposit.