Archive for August, 2008

Foreign Currency Mortgage

Tuesday, August 19th, 2008

Wondering what foreign currency mortgage is all about? It is nothing but a mortgage where you take loan in a different currency other than Sterling. It is mostly used for a couple of purposes namely purchasing property in a foreign country or mortgaging your property in the UK with loan issued in a foreign currency.

However, if you are thinking of mortgaging your property in the UK with foreign currency you must think twice before taking such a step about the risks involved in this kind of transaction. Lenders who offer such kind of mortgages are very few in number and your loan size need to be at least £250,000. In addition, your income should also be £100,000 per annum.

However, the main market of foreign currency mortgages in the UK is UK citizens purchasing property abroad. The UK banks are however, reluctant in to lend for overseas property directly. In most such cases, you may find your bank has a foreign subsidiary or in some case your building society may have one that provides foreign currency mortgage on property in a different country and place of your choice.

The loan terms of foreign currency mortgages are not so attractive than UK mortgages. You will require a deposit of 20-35% of the value of your property to have your loan-to-value ratio fluctuate between 65-80%. Many UK buyers extend their mortgage in the UK to increase the deposit and then proceed to take a foreign currency mortgage on the balance. You have to repay overseas loan in a span of 15-20 years rather than 25 years which is the case in domestic loans. You must take extra precautions while mortgaging your property abroad as it is not monitored by the Financial Services Authority (FSA), and therefore make deals only with reputable brokers or lenders. Even though rates of interest are lower compared to those abroad, you must be aware of the fact that you can be exposed to currency risk. It is advisable to seek financial advice in foreign currency mortgage.

Tough time for Buy-To Let Entrepreneurs

Sunday, August 17th, 2008

The property market in the UK which boomed in the 1990s is about to burst now. The estate agents have taken a backseat and even buy-to let landlords have started calculating their costs. First half of the year has already gone by and buy-to-let landlords are struggling hard with their repayments as mortgage rates which were fixed in easy terms for two to three years are due to end in 2009 and 2010 for most landlords. About 10,000 buy-to-let landlords have a three month backlog with their mortgage due.

With inexpensive deals from lenders in 2006 and 2007, buy-to-let market has experienced a boom over the past several years. However, the picture today has turned bleak mainly because of credit crunch and with the rise of mortgage rates on buy-to-let deals. Landlords who have purchased properties in recent years are now in negative equity as there has been a drop in the average house price by 10 per cent since it reached a height last summer and is expected to drop further. As a consequence, landlords could well be owners of a depreciating property in the future and repayments on the loan could be much more than what was required to buy the property.

Pension analysts say that it is a dangerous strategy to borrow in order to invest in property as in any other kind of investments as both losses and gains are magnified. Buy-to let property therefore should not be used as an alternative measure for pension. However, many feel that saving in the form of a pension scheme come with warning as with merits. Pensioners haven’t fared well like most people investing in other schemes over the last with share prices in UK falling drastically and even in one case more than house prices. Blue-chip FTSE index is low by as much as 19 per cent since last June. However, pensions promise to bring in tax relief and are a long term investment.

Payday Loans Are Easy

Thursday, August 14th, 2008

It is the 20th day of the month and still a few more days left for your next paycheck to arrive and some emergency repair work has cropped up at your place. Are you worried as to how will you finance the small project? Payday loans UK are answers to all such your problems. Payday loans are meant to solve all your cash troubles when you need the most.

Payday loans UK help borrowers repay immediate expenses instead of depending on long term loans. They satisfy your short-term requirements without much of a trouble. It enables the borrower to cover immediate requirements till he gets his salary. What’s more crucial is that people with history of credit problems can also apply and get it approved without much of a problem as there is hardly any credit check done before approval. You can apply fro payday loans UK if you are above 18 years of age; have a regular source of income and a valid current account. These loans are handy but come with very high rates of interest and therefore it is advisable to repay loans immediately. You can avail loans anything from £100 to £1500 for a period of 14 to 21 days. These loans are however, extremely helpful in times of emergency as they are approved within 24 hours. They are fast and easy to apply for. The process is extremely simply. All you need to do as a borrower is to apply filling a simple form and with the aplicaion getting approved, you will get your loan transferred directly into your account. You can even apply for payday loans UK online and because of tough competition, you might be lucky to get your loan at a relatively lower interest rate.

UK Homeowners Fail To Remortgage Homes

Thursday, August 14th, 2008

There isn’t much good news for UK homeowners as repossessions of home reached a 12-year high signifying a bleak picture of the UK housing market.
Almost 18,900 people failed to repay their mortgage payments this year and the number of people in arrears was almost up by one-third in the last three months. People with a record of dismal credit histories have been among the ones who failed to remortgage their homes.

A stern warning has been sent out to mortgage firms by the Financial Services Authority that they are ready for court battles against such defaulters. However, according to some experts the result of mortgage defaulters might be slightly better in Scotland than in the UK because of low prices of houses and fewer people with poor credit history.

According to the Council of Mortgage Lenders (CML) repossessions have risen from 12,800 in the first half of 2007 to 18,900 in the first half of 2008. The situation for the affected people is not likely to improve much with rates of interest remaining the same or increasing.

In this situation when fresh funding is rare, there might be more than one million homeowners who might have their homes at a lesser value than their outstanding mortgage. According to the Treasury chief secretary the government must act swiftly to put a stop to all peculations. The warning bell sounded by CML has led to the setting up of Legal Services Commission, a body which will offer free advice to people who can sense danger of eviction. In the coming years, the demand for social housing will surge and there could be as any as five million people on the wait list in two years.

CML states that the credit sector was hard hit by credit crunch than any other markets which have continued with its good results. According to experts lenders should analyze all other measures before opting for eviction which must be used as a last resort. People are also advised to ask for help whenever they can sense danger.

Car Loans Soar Lenders Increase Rates

Tuesday, August 12th, 2008

Car Company Loans Soar With Other Lenders Increasing Their Rates

You would be interested to know that probably this is the right time to buy your dream car from vehicle dealerships since other lenders have increased not only their interest rates but have rejected loan offers to many as well. The number of people purchasing cars through loans from vehicle dealerships has seen a sharp rise in the last year. Volkswagen is happy to announce that it has already been able to achieve its 2008 target of car loans worth £1bn when in fact there has been an overall dip in car sales in the UK.

Volkswagen’s managing director Graham Wheeler assesses its success to the availability of funds which enables them to surge ahead than other financial organisations. Credit crunch doesn’t affect their lending capacity because of the long term planning they make. Though historically, car finance is expensive than personal loans, several high street lenders over the past year have been increasing their rates of interest. The comparison portal, Moneysupermarket.com states that the average top five cheapest personal loans stands today at 7.7 per cent compared to 6.5 per cent last year. Moreover, those applications which have good credit rating are only being accepted.

Volkswagen is offering loans at a rate as low as 7.8 per cent APR while Renault loans are more than 8 per cent and offering of Peugeot Citrogen starts at 7.9 per cent. The success of car finance products is attributed to two major factors says Tim Moss. At present, personal loans are difficult to get while with car finance your loan is at a less risky zone as it is secured against the metal. Earlier consumers would not opt for car finance as other loans were available at cheaper rates of 6.5 per cent while now many have realised that they are left with little or no choice and that car finance is cheaper compared to personal loans. Though car sales have dipped sharply in the past few months, yet there are some excellent deals if you want to purchase now. Moss himself proudly states that he has just become the proud owner of a brand new Renault at £14,000 which had a price band of £21,500.

Barclays Making Impressive Inroads In Home Market

Tuesday, August 12th, 2008

Barclays’ decision to expand its mortgage lending operations paid off very well and in no time they showed a surprise performance in the home market by the first half of this year. It witnessed a sharp rise in the new mortgage lending business from 6 per cent in 2007 to 26 per cent in the first half. The figures are amazing if we keep the very fact in mind that Barclays has been suffering losses in home loans. The mortgage lending figures improved in 2006 after it acquired the former building society Woolwich and merged it fully with Barclays.

Barclays was able to speed up its mortgage lending figures because of the credit crunch fallout. It happened at the moment when weaker competitors withdrew from the market or were not in a position for fresh investment in new business. Barclays has a record of investing in new businesses with low loans, claims Frits Seegers who heads the global retail and commercial banking. The latest mortgage business has a loan to value ratio of 51 per cent on new lending. Frit Seegers also states that Barclays had a 7 per cent of its £77bn loan book on a loan to value ratio of more than 80 per cent. There has also been a 7 per cent rise in riskier buy-to-let loans. The pre-tax profits of Barclays was up by 7 per cent to £690m mainly because of a grwoth in mortgages.

The pre-tax profit of Barclaycard, UK’s largest credit card provider also jumped to £388m up by 30 per cent because of its foreign expansions. Barclaycard now has a record of rejecting one in every two new applicants as credit card business experienced a steep increase in bad debts. Mr Seegers said that the decision to use stringent lending criteria has proved successful in business. Barclays latest acquisition of Goldfish is the reason behind bad debts that increased from £435m in 2007 to £477m in the first half. Even though there was a growth in customer assets, profts at Barclay’s commercial bank fell to £702m. UK business must be ready to face more bad debts if there is a recession, claims analyst Sandy Chen. An interesting fact stated by another analyst Bruno Paulson of Bernstein is that UK retail customers are yet to experience the impairments with both Barclaycard and UK retail suffering flat impairments. In South Africa and Spain bad debts have also risen as there has been a threefold increase in overall international provision to £294m. But some ray of hope can be gathered from Barclays emerging market trends. There will be a rise in profits by divisions run by Mr Seegers from outside the UK.

Fee Free Mortgage by Yorkshire Bank

Tuesday, August 12th, 2008

If you are approaching the deadline of the current mortgage deal, then it’s just the right time to switch to a fee-free package being offered by the Yorkshire Bank. Yorkshire Bank has come out with a fee-free mortgage deal for customers who wish to remortgage their properties this August. It is a limited period offer applicable to a variety of the bank’s fixed rate, tracker mortgages, flexible and offset.

Well, first time buyers don’t be disappointed! You too can avail this offer. If you are using your individual solicitors, the Bank will also waive its valuation and legal fees. However, customer using Rapid Repay and Flexible Repay will need to pay £200 as legal fees. Head of retail for Yorkshire Bank, Gary Lumby showed his human side by expressing that he can understand the pinch people are feeling and therefore wishes to make mortgages affordable to the customers.

So there is now good news for homeowners. If you want to change to a standard variable rate when your mortgage term gets over, Yorkshire Bank will help you in looking for the right mortgage rate and will not claim the arrangement fee.

Buy-to-let Mortgages Experience A Dip

Tuesday, August 12th, 2008

If you are an inexperienced landlord planning to go in for a buy-to-let mortgage project, then probably you have some tough times ahead. The figure of buy-to-let mortgages has decreased considerably by a margin of 93% in the last year. This has left hundreds of landlords in lurch failing to get good deals.

According to the Daily Telegraph, the number of mortgages available now is 307 compared to 4,384 last year. Small time landlords will face the pinch as there is going to be a steep fall in buy-to-let loans and almost 110,000 landlords do not have enough properties to help them cover the blow they are going to face following a dip in the market rates. These novice landlords will also have to adjust to the higher rates of interest on the existing mortgage deals. The picture for buy-to let-mortgage rates isn’t very rosy either. The research done reveals that rate of buy-to-let mortgage has increased from 0.63 per cent to 7.46 per cent in the past year. So the higher interest rates mean that landlords will have to either increase rents or compensate the deficit themselves.

Lenders are too becoming strict with their rates. They have now set the rental income at 19 per cent higher than the monthly mortgage repayments which has increased from 13 per cent a year back to be eligible for a buy-to-let deal. With the market rates also on the rise, lenders also have to increase the rent by 15 percent to keep pace with the market trend. So it is not just a bad time for landlords but tenants and developers too must be ready for hard times ahead. According to Louise Cuming, in charge of mortgages of MoneySuperMarket states that it will be tough for landlords planning to remortgage buy-to-let properties as lenders would be expecting heavy deposits or increasing interest rates. So the time has arrived for landlords to do a rethink about their properties and whether they wish to stick on given the current scenario. Some landlords may be even forced to sell their properties at a loss. The Council of Mortgage Lenders reveals that there are about 1.1 million buy-to-let outstanding mortgages. Some shifted to lender’s standard variable rate (SVR) almost reluctantly as they had very little option left. Mortgage broker of Savills Private Finance, Melanie Bien said that many landlords have decided to stay with the SVR rather than pay a price of 2 to 2.5 per cent to move to an unspectacular rate. Since novice landlords neither have the extra cash nor a surplus of properties they have to depend on the savings to adjust the shortfall.

Hastings Broker Fined

Thursday, August 7th, 2008

Hastings Insurance Services is fined £735,000 by Financial Services Authority for unfairly treating customers and cancelling their car policies. Hastings Insurance Services cancelled about 4,550 car policies which were not priced correctly. But the amazing fact is that the incorrect polices have been a result of an internal system error and not due to any miscalculation on the part of the customers.

Some of the customers paid lower premiums than what was expected because of inappropriate quotes being given by the broker. However, with the discovery of this mistake, Hastings promptly cancelled the policies of those customers.

According to FSA, Hastings was too prompt in canceling the policies and should have investigated the matter in depth before taking such drastic action. They should have thought of some other remedial measures. The City regulator was also harsh in his statement. He accused that Hastings was only considering its financial loss and was not bothered about the effect it could have on the customers. Hastings has now decided to write to all the affected customers and offer them compensation.

The broker agreed to settle the case early to spare himself of a fine of £1m. He was quick in analysing the damage he has caused and was lucky to receive a 30 per cent rebate on the fine.

Should You Buy A Car

Thursday, August 7th, 2008

Planning to buy a car? Do you feel you have the necessary resources to be a proud owner of a car? The answer might be yes, but think again before purchasing your car. With the rise in premiums, think if you really require a car or are you buying it just for your social standing. Do you think you receive value for the amount you pay for the maintenance costs, road tax and fuel that your car consumes?

UK is one of the few countries in the world that have good public transport network. However, there are still few areas that require investment for repair and development. But the big debatable question is what comes first – the investment or the customer? The perpetual problem with the people in the UK is making them use public transport instead of their private cars. If you are in London, you are sure to find a bus to take you to your destination. But Scots aren’t that lucky!

They can’t simply dump their cars at home and use facilities like the bus or train as there aren’t too many services as such. People have lost trust in some of the public services preventing people from using such services.

So until public transport is easily available and cost effective at the same time, people will be tempted to use their cars!