Time to fix that Variable

Variable mortgages are amongst the most popular mortgages on the market, because of their comparative simplicity and easiness for most consumers to understand. The principles of variables are relatively basic: each lender sets his own Standard Variable Rate (SVR). Whilst these are in line with the base rate set by the Bank of England, they are not the exactly same as that base rate. This is where the lenders of variables make their money: by shadowing the Bank of England’s base rate, they can increase their SVRs if the base rate increases. However, if the base rate drops, they can mirror that drop but without plummeting so far as to jeopardise their profitability.

Whilst they are a relatively simple concept to understand, consumers with variable mortgages are more than likely paying interest rates that could be streamlined by seeking another lender. In addition, consumers who use variables are not guaranteed to reap the benefits that rate changes can offer, such as cheaper repayment bills.

For those looking to reduce their outgoings, there has never been a better time to shop around. With lenders mindful of taking on too much debt, some are actively encouraging borrowers to look elsewhere by offering incentives such as the waiving of redemption charges or even by offering to pay off a portion of the original loan. Whilst variables are easier to comprehend than other mortgages, the fact that they do not have to adhere entirely to the base rate might incline consumers to shop around. Which isn’t to say that variables are a bad idea; it may simply be that there is another lender who offers a better SVR than your current one.

House Prices Update

The prediction for house prices in 2010 seems to have divided the experts. Before the onset of the recession, the UK was enjoying a period of economic prosperity and house prices had reached unprecedented highs. However, many homeowners watched with dismay as, under the grip of the credit crunch, the value of their homes flat-lined and then plummeted in a comparatively short space of time. The marketplace became sluggish and, as people decided to hang onto their money, it came to a virtual standstill. So now, given that we are leaving the economic downturn behind us, what are the predictions for the housing market over the next 12 months?

Global real estate advisors, Jones La Salle believe that the recent rise in house prices is rooted in fragile economic fundamentals, such as the weakness of the pound boosting overseas investment and a boost from the stock market recovery. Bearing this in mind, they predict that the present recovery will “stall next year.”

However, Philip Harvey of Property Vision believes that with demand threatening to outstrip supply, house prices will rise in certain areas. They believe that: “Areas such as East Sussex and Kent, which have been lagging in the recovery, will benefit from this effect and there will be a direct impact on prices.”

Despite the different stances taken by economic experts, one thing is certain; the recovery of country’s economy is likely to be slow and we are not likely to see house prices achieved in the early part of 2009 returning in the immediate future.

Lenders Waiving Early Redemption Charges

For many, their mortgage has been a loan in which they have been tied into, unable to afford the redemption charges involved to allow them to shop elsewhere and get a better deal. Not only have the redemption charges prevented consumers from saving money on their existing mortgages, it has also prevented them from consolidating their debts. If the interest rates on an existing mortgage are comparable to or higher than the rates on their debts, there’s little point on considering debt consolidation of this sort. However, in the light of the recent credit crunch, the tables have turned in favour of the consumer.

In an unparalleled chain of events, many lenders have actually been offering sweeteners to the consumer to encourage them to take remortgages with other companies. These have taken many forms, but the one that could have the most impact is the waiving of redemption charges. One such lender is the Bristol and West. According to the Telegraph, they have written to 140,000 borrowers offering to waive redemption charges in the event that they want to take their business elsewhere. The offer is being made to borrowers on fixed rates of various lengths such as two, three and five years, but all are due to expire within 13 months, a spokesman said. Northern Rock, a well known mortgage provider has been known to also offer this option to their borrowers.

For anyone considering shopping around for a new lender, it seems that there couldn’t be a better time. With no redemption charges to pay and some lenders, such as the GMAC, even offering to pay off a portion of the loan, a remortgage could become a happy reality for many consumers, and the solution to reducing overall debts.

Debt Consolidation

Just before the credit crunch, the UK was experiencing a boom. This prosperous period caused many consumers to take out extra home loans, adopt extra credit card debt or renovate their homes. Once the crunch started to bite, some of these people found themselves staring at a mountain of debt that was bigger than they had expected it to be. Others faced the trauma and financial stress caused by redundancy, which resulted in the same situation right across the country.

If you’re looking at outgoings that are threatening to exceed your income, then maybe it’s a good time to consider debt consolidation. In short, you put all your debts together as part of one loan and the biggest loan you are likely to have taken out is your mortgage. Using debt consolidation, you can streamline your payments by looking for a mortgage that offers you better interest rates than those incurred by your other debts, and remortgage to include those sums within the loan. Using this system, you can save hundreds, if not thousands, of pounds in interest fees. In addition, if you shop around you might even be able to find a lender that offers you better interest rates than those offered by your current mortgage provider, saving you even more money.

However, debt consolidation is not to be thought of as an instant cure-all. At the end of the day, you are still borrowing money and that money still has to be repaid. The longer your loan exists, the longer you will be paying interest, so talk to an independent mortgage advisor to be sure that this is the best thing for you.

Right Time to Remortgage?

Your mortgage is probably the biggest single financial commitment in your life and meeting the repayments can be a stressful business for a variety of reasons. Choosing to remortgage, if done wisely, can save you a lot of money. In essence, you are simply moving your debt from one lender to another but, if you’ve done your homework, your new lender should be offering you a better deal. Before you consider taking out a remortgage, you could challenge your current lender as you may be able to get a better deal.

In addition to saving money, there are other times when you might want to consider a remortgage. You might be buying a larger and more expensive property, in which case taking out a remortgage for the extra money will allow you the freedom to do so. Alternatively, you might find that you have outstanding debts. If these debts charge a higher rate of interest than the one offered by your mortgage, then consolidating them under the umbrella of your mortgage can actually help to reduce your outgoings. Or, it might be that you’ve suddenly got some more money – perhaps a pay rise or an inheritance – and you want to make a dent in your existing debt, but your current contract won’t allow it. Taking a remortgage with another lender might allow you to make bigger repayments.

Since the recent economic downturn, lenders have become a bit more choosy about who they lend to. To be certain of having your remortgage application considered, you need to have a good credit history. A remortgage can help streamline your debts and, in the long term, save you money.

What would your family do if you were unable to work?

Are you the main breadwinner for your family? Is it you who puts the food on the table and pays for the roof over your loved ones heads? These days life isn’t easy for many at the best of times. How would the family cope if you found yourself the latest unemployment statistic, losing your job through the recession? What would you do? Would you have enough to get by over the next couple of months, let alone the medium to long term? Would you be forced to sell your home? What if your home isn’t worth as much as you’d hoped, maybe you’re even suffering from negative equity? Options as well as funds would quickly run out.

Are you insured against unemployment? You would be well advised to consider it: protection against the worst of times and comfort in the best of times knowing that all would not be lost if you lost your income.

Using that disposable income to protect your life and your home

Nobody knows what tomorrow might bring, what’s around the corner. That’s why insurance exists. Insurance is there to protect us against the unforeseen, the threats and the challenges of life. When it comes to your home and your family’s long-term security you can’t be too protective. Imagine if something happened to you - an accident, illness or worse. How would your family cope? Who would pay the bills and the mortgage? How could you keep things going financially in tough times or times of crisis?

Well instead of waiting until it’s too late, take action now. If you have any spare disposable income then invest it in the future, put it aside as protection for your family. As the old maxim goes, ‘Take out as much insurance as you can afford’. These are wise words, words that many smart homeowners were glad to have taken heed of when good times turned to bad.

The importance of life insurance

It’s important to provide for the safety and security of your loved ones. Not just for today but for the future. After all, how would your family cope financially in your absence? Things like the mortgage, the bills, council tax and all the rest. They all stack up. How would your family deal with the challenges? If you’re not there to contribute then who will and how?

Life insurance really is a smart move. As the old life insurance headline says, ‘Money if you die. Money of you don’t.’ If you do die then you’ve done the right thing and provided for your family and they will be taken care of financially. You can take comfort in that knowledge long before the insurance need come into effect. As well as paying out when you die, investment policies can also be cashed in during your lifetime.

Clearly the sooner you arrange a policy, the more value it will accumulate. Don’t delay!

What is ASU?

ASU stands for Accident Sickness & Unemployment Insurance. It’s your financial safety net in the form of income protection or permanent health insurance.

No-one knows the future. That’s why many wisely invest in ASU. Just ask yourself, what would you do if your firm closed down and you lost your job? What if you fell ill and were unable to work? How would you and your family cope? How would you pay your mortgage and your living expenses? Life’s tough enough these days as it is. Making ends meet isn’t easy, even with a job. In this climate of uncertainty, employment, financial security and providing for your family are major concerns. Without a job life could get tough without some form of back up like ASU.

There are many types of ASU protection available with a whole range of waiting periods, premiums, entitlements and features. Check the market to find the cover that might best suit you and your family or take advice from an expert.

Victims of negative equity

It wasn’t difficult to get swept up in the mortgage and property boom of the early and mid 2000’s. With buy-to-let’s, re-mortgages, speculative property investments and the rest, many mortgage borrowers felt that the appreciation in their property value insulated them against any repayment issues that might arise in the future. Obtaining credit was easy and whole property cycle became a ‘money go-round’, especially for those who got out before prices started to tumble.

For those left in the market and committed to properties that had fallen in value the only thing they had to look forward to was negative equity. Trapped in properties worth less than they’d cost, victims of negative equity have either had to sit tight and wait for the market to recover or sell up at a loss. Record low interest rates and the early signs of economic recovery have stimulated the market a little over recent months but still many home owners are left owing more to their lender than their property is currently worth.