Mortgage plan to help first-timers; Mortgage expert David Wilson looks at some of the most common concerns of today's homebuyers.
The plan is that the Government will underwrite part of the mortgage so if a property is sold for less than what is outstanding, the lender will be able to recoup their costs.
The scheme is hoped to kick-start the housing market and it is recognised that first-time buyers, and new-build property, are crucial to this being achieved.
It is hoped that the scheme will help 100,000 people after it is launched in spring 2012 with the details still to be confirmed regarding the applicable rates and fees. So make sure you look for the announcements then.
I CURRENTLY have a mortgage with Bank of Ireland and I understand that my mortgage rate will increase next year when my mortgage is transferred to The Mortgage Works.
What sort of increase could I be looking at? Today 14,000 borrowers with Bank of Ireland mortgages will be transferred to The Mortgage Works, part of Nationwide, following the purchase completed by the building society in 2009.
The transfer will see those borrowers who are currently on Bank of Ireland's standard variable rate, (SVR) which is 2.99%, increase to a rate of 4.79% with The Mortgage Works. This could mean an increase in monthly payment of over pounds 140 (based on a pounds 150,000 mortgage).
If you feel you are going to be adversely affected by this transfer then the advice would be to review your mortgage deal with an independent adviser to see what your available options could be.
I HAVE been looking to move into a larger property for a number of months now as I need more space, but I can't seem to find anywhere that fits my limited budget. Would my mortgage lender consider lending me more to extend my current home? There are a number of mortgage lenders who will consider increasing your mortgage to cover home improvements.
Given the current difficulties in the housing market it can sometimes be worth considering extending or creating extra space in a property instead of trading up the property ladder. Before you decide on this option and approach your mortgage lender it may be worth considering the following: ? Property value - are the proposed improvements going to increase the value of your property to a level which warrants the investment? Loan-to-value - do you have sufficient equity in your current property to allow you to release the required money to carry out the work? Speak to your mortgage lender or your adviser to see what is available. ? Budget - not only ensure that you budget correctly for the work required but also that you budget for the increase in mortgage payment. As with any mortgage it is also worth considering what happens if rate rises to prevent any future difficulties.
Insurance - if you make changes to your property, and also your mortgage balance, then you will need to look at your insurances to ensure that they are still providing the required level of cover and also that they are affordable if changes are required.
Speaking to your current lender or a mortgage adviser will allow you to explore these options easily and also ensure that you don't waste any time with any lender where your plans aren't within their criteria.
? David Wilson is practice principal of NE Money IFA, tel: 0191 236 1042, or go to www.nemoneyifa.co.uk
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|Publication:||The Journal (Newcastle, England)|
|Date:||Dec 3, 2011|
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