mortgages

There was some hope for the thousands of British people struggling to get onto the UK housing market after the Chancellor announced plans for a tax break for first-time buyers for the next two years.

The Chancellor Alistair Darling revealed that the Government would stop demanding stamp duty on all homes under £250,000 bought by first-time buyers, offering them a saving of as much as £2,500 – something that could go a long way in helping first-time buyers afford their first mortgage.

Hannah Mercedes-Skenfield, mortgage channel manager at moneysupermarket.com says: “This will be a well needed helping hand to many first-time buyers who have been struggling to step onto the property ladder for some time.

“Even a one per cent saving can make a significant difference to someone looking to buy their own home, particularly if that means they can now put down a cash deposit quicker or increase the value of their deposit.”

But moneysupermarket.com warns that banks still require a cash deposit of around 20% for a decently-priced mortgage and that there are still huge barriers in place for all borrowers – those without a big deposit will still face having to pay higher mortgage rates as a first-time buyer.

This is why, even with the tax break, first-time buyers must seek out professional mortgage advice. The break will help many people amass the thousands needed for a deposit but the mortgage rates for first-timers are still high and people need to be financially aware and prepared before they sign up to such a huge responsibility. A mortgage adviser can help in making first-time buyers more aware of what they are getting into and can help them prepare for a lifetime of successful mortgage repayments.

SOURCE: HM Treasury, moneysupermarket.com, 24/03/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

It is cheaper to get a mortgage now than at any other point over the last five years according to mortgage lenders – but are you experiencing a cheap mortgage?

Home buyers in November needed to use less of their income to cover their mortgage interest than at any time for more than five years, according to new data released today by the Council of Mortgage Lenders.

In particular it has found that home movers are experiencing a low debt burden by historical standards – they typically needed only 10.6% of their income in November 2009 to cover mortgage interest payments, down from 11.1% in October. The CML says this is the lowest debt burden on home movers since the CML started recording this data in 1974.

The debt burden on first time buyers also reduced, with only 14.4% of their income needed to stay on the housing in November, down from 15.1% in October – the lowest it has been since May 2004.

Michael Coogan, director general of the CML says: “It is encouraging to see that mortgage interest payments are so affordable for home movers and first-time buyers. But with substantial deposits still needed to secure a mortgage, the market will continue to be relatively restrained for some time to come.”

If you are not experiencing the same from your mortgage and are struggling to cover your mortgage repayments each month, it might be time to talk to a financial adviser. They will help you search the UK market for a cheaper mortgage deal, will help you rearrange your finances and will do all they can to make sure you are spending less of your income on your debts.

SOURCE: CML, 14/01/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

It seems that home affordability for potential first-time buyers has improved significantly over the year as Halifax reveals that first-time buyers are able to afford homes in two out of five areas in the UK.

The bank has found that in 2009, the average price paid by an first-time buyer was affordable for someone on average earnings in nearly four in ten of local authority districts. This is compared to a poor 2007, when only 6% of areas were affordable. In fact, nearly a quarter of local authority areas became affordable between 2008 and 2009.

This is all because the proportion of earnings devoted to mortgage payments by a potential new first-time buyer on national average earnings has almost halved from a peak of 50% in June 2007 to 27% in November 2009 – the current level is below the average over the past 25 years of 34%.

On top of all this, there are signs that mortgage lending criteria has stopped tightening – according to industry-wide figures, the average deposit put down by a first-time buyer has been unchanged as a percentage of the purchase price since early in 2009 following a significant increase in 2008. Also, the number of live mortgage products for first-time buyers has risen by 33% since April, to 1,610 in December 2009.

Martin Ellis, housing economist at Halifax, says: “Housing affordability for potential first-time buyers has improved substantially over the past two years due to the combination of lower house prices and reduced mortgage rates.”

Talk to a mortgage expert to find out whether you are eligible for one of the 1,610 first-time buyer loans on the UK mortgage market. You might be surprised to find that you are not only able to find a first-time buyer loan, but able to find a loan that’s reasonable and flexible.

SOURCE: Halifax, 03/01/10

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

A housing charity is calling on an increase in tax breaks for people who rent out a room in their house to lodgers in an attempt to a make some extra money.

Currently, people who rent out a room in their home are allowed to earn £4,250 in rent before they are taxed. But Shelter argues that this amount hasn’t changed since it was set in 1997, even though the rents charged on rooms have more than doubled over the same period.

The charity says more homeowners may choose to rent out a room if they didn’t have to worry about tax repercussions. It says this would not only help people get a roof over their heads but it might also help a lot of people who are struggling to make ends meet and struggling to keep up with mortgage payments.

Kay Boycott director of policy and campaigns for Shelter says: “The current threshold is far too low and is likely to put people off letting out rooms due to the need for completion of a tax return and payment of income tax on the rental income.

“In the current economic climate, many homeowners are battling to meet their mortgage payments and many are looking for options to maximise their income. If the rent-a-room threshold was higher and the scheme better publicised, it could prove a real incentive for people to take in a lodger, and the take up of rent-a-room opportunities could increase.”

Shelter says that the threshold should be raised to £9,000 a year to reflect rising rents. It says this would make more efficient use of housing stock, while also supporting those who could benefit from an additional source of income.

If you are struggling to keep your mortgage under control, a lodger is a great way to earn some extra income. Talk to your mortgage adviser about making the most of your assets during this downturn.

SOURCE:  Shelter, 12/11/09

To Keep up with news and comments on the current adverse credit market please visit the Adverse Mortgage Blog.

‘Bad’ credit card firms targeted (ITV.com)
The Government has told credit card companies to stamp out bad practice within their ranks.

Box your way out of trouble (News Of The World)
IT’S like standing between two boxers and being CLOBBERED from both sides. In the blue corner lurks that old bruiser Impending Recession —where people urgently need to pay off debt or cut its cost.

What’s Wrong With Berkshire Hathaway? (The Motley Fool)
Do you fancy buying shares in an investment company run by the world’s greatest investor? After recent share price falls, now could be a great opportunity to invest in Warren Buffett’s Berkshire Hathaway.

Customers face remortgage nightmare as nationalised Northern Rock sheds ‘flexible’ deals (Sunday Herald)
Scottish borrowers could struggle to find a mortgage following the nationalisation of Northern Rock. If they cannot switch to another lender, they could eventually lose their homes.

Letters: Politicians’ pasts (Independent)
Time will tell whether Barack Obama is a great leader or simply a great orator, but his election campaign made McCain’s look like something the Women’s Institute had cobbled together on a wet Wednesday. Admitting to using drugs in his younger days was a masterstroke – voters respected his honesty and it strengthened his image of the black kid who made good.

Anger at 222% Christmas credit card (Independent)
Major high-street retailers are targeting poor families with bad credit records to prop up their Christmas sales during the credit crisis.