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Posts Tagged ‘mortgage’

Home improvement loans are indeed worth taking out. However, rather than using an independent loan company specialising in home owner loans, approach your bank or building society and take extra borrowing on your mortgage as their rates will often be much more favourable.

The reason that I think that home improvement loans are worth while is probably down to television programmes such as grand designs and property ladder.

Both give the indication that as long as you spend the money wisely this will almost immediately add value to your home far exceeding the initial outlay.

Not so much grand designs are they usually build houses on an epic scale, but certainly property ladder indicate that with a few subtle well spent changes here and there you will be quids in.

They often recommend, ensuite bathrooms, knocking down walls, open plan living spaces and new kitchens and bathrooms to increase the value of the property.

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Banking giant HSBC launched a mortgage with a record low rate of below 3% today.

The Premier two-year discount deal is priced at 0.95% below the group’s standard variable rate (SVR), meaning borrowers will pay 2.99% when the latest interest rate cut comes into effect on February 6.

The group said it was the lowest mortgage rate it had ever offered, and it is also the first rate offered to new borrowers to dip below 3% since interest rates began to fall.

Financial information group Moneyfacts also believes it is the first ever mainstream mortgage which does not include an initial discount to have a starting rate of below 3%.

But the deal will only be available to people who have a 40% deposit and qualify to be an HSBC Premier customer.

In order to qualify for a Premier account, people need to either have at least £50,000 in savings and investments held with HSBC, or they have to have a £250,000 mortgage with the group and a salary of £75,000.

However, people do not have to have their salary paid into their Premier account, and the group may waive the requirement for new customers to open one of the accounts as long as they meet the criteria.

HSBC has pledged to double its mortgage lending from its 2007 level this year, and it aims to advance £15 billion to homeowners.

The group also re-entered the market for people wanting to borrow 75% of their home’s value today, with the launch of a lifetime tracker mortgage at 4.09%.

Martijn van der Heijden, head of mortgages at HSBC, said: “As the Bank of England base rate comes down, we have the ability to increase even further the affordability of our mortgages, many of which were already the cheapest to be found on the high street.”

David Hollingworth, of mortgage broker London and Country, said: “While it is an eye-catching rate, for many people it won’t be available even if they have the equity.”

He said the additional requirements introduced a new way of selecting customers, as people would need to have a minimum salary or savings level, as well as a large equity stake in order to qualify for the deal.

He added that potential borrowers should also be aware that the mortgage moved up and down in line with HSBC’s SVR and not the base rate, meaning that there was no guarantee that future interest rate cuts would be passed on.

HSBC has cut its SVR by 2.31% since interest rates fell from 5% in October to 1.5% now.

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Many homeowners have been struggling with debts on their mortgages as a result of errors made by some of the UK’s top banks and building societies.

The mistakes are found with repayment mortgages as figures show that customers have been overcharged in interest payments, some by over £20,000! It has recently been discovered that some customers have been overpaying for over fifteen years!mortgage_debt

What is being done?

BankCheck have been looking into this matter and have revealed that errors made were never detrimental to the lender but always to the disadvantage of the customer.

Alliance and Leicester have responded to this claim by stating that they always carry out regular checks to ensure that customers are not forced into debt by administration errors. However, more worrying claims come from Nationwide and Abbey who have confessed that they do not review customers’ accounts after a mortgage has been accepted.

It has also been found that some individuals have been undercharged for their mortgages and as a result may find themselves repaying their mortgage longer than expected. This will leave the customer with a great deal of unexpected debt repayments thrust upon them to bring their mortgages up to date.

Abbey National have since apologised to their customers for not keeping a watchful eye on their repayments. They blame it on administration errors and lack of communication with their customers. They are acting on these mishaps and customers can expect to receive a new look statement in due course, which will clearly show how many years they have left to repay their mortgage and in turn become debt free.

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Not sure how this might be interpreted but stumbled upon a post by the top financial institutions,HSBC and RBI gathered a panel of industry experts for you to quiz about how to make sure your business survives the Credit Crunch.

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Click to play

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Are you considering about availing a mortgage loan or refinancing of your existing mortgage loan? “Mortgage how much can I borrow” – are you loosing sleep over this question? Do you want to get an answer to the query? There are some elements that come into play for calculating how much loan you would be able to borrow.mortgage1

Important factors that determine how much mortgage you can borrow:

The first element is the value of your house. This would ascertain the amount of equity you possess and also help you get an idea about the highest amount of loan that you can borrow. For instance, if your house is valued at £300,000 and you owe £225,000 on the house, subsequently the highest amount that you are able to borrow in equity is £75,000.

The second element is your credit score. This would decide under which category you come. When you have a poor credit score, then you may not be eligible to borrow the amount to the extent that you could with a better credit score. This is figured out on the basis of a percentage system and the higher your credit score, the nearer you would be to 100% of the value of your home.
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The final factor that the mortgage lenders take into account is your debt to income ratio. This is calculated by comparing your monthly payments for your automobile loan, mortgage loan, credit card debts and others mentioned in your credit report to your gross income amount. However, utility payments are not included. The highest debt to income ratio acceptable for the majority of lenders is 55%. The lesser your debt to income ratio, the higher you can borrow. The formula is quite easy which evaluates the risk of offering you a loan against the return. The poorer your credit score and the higher your debt to income ratio, the less is the possibility of getting the loan and the more is your rate of interest. This information should be sufficient to answer your question, “mortgage how much can I borrow?”

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Deciding to own a home is the easy part but which mortgage do you choose without encountering debt problems?

Banks and building societies are repeatedly tweaking and increasing their range of mortgages to the point where there are so many to choose from, it is impossible to make an easy choice.

To avoid the perils of falling into debt, your prime focus when looking at mortgages should be how you pay back the sum of money that is loaned to you and how much interest you pay on that capital. And you need to also consider your long-term earnings and if you can meet those repayments even in the event of financial difficulty.

Three mortages you should know about

A repayment mortgage will allow you to pay off a small amount of the interest and capital each month. When the mortgage has drawn to an end, you will have paid back everything that you borrowed in full. This is one of the less risky mortgages but if you are unable to meet the repayments every month, you could put your home on the line.

With an endowment mortgage, the customer only repays the interest on the sum borrowed. However, this mortgage also involves making regular payments to an endowment policy. This will allow you to find the funds to be able to pay for the outstanding capital when the interest has been settled.

Interest only mortgages are very popular with buy to let investors and those who are buying their home for the first time as they allow them to simply repay the interest on the loan and worry about the capital later on. This is more dangerous risky, as finding the money to repay the pending capital can be a worrying debt.

As a customer only repays interest on the capital borrowed, great savings can be made in comparison to an ordinary repayment loan. The objective is that the investment made through the endowment policy will be sufficient to repay the mortgage at the end of the term and possibly create a cash surplus.

The main thing to remember with any loan is that you do have to pay interest and a mortgage is a loan. Do not fall into debt by taking on more credit than you can handle or that dream home could turn into a nightmare.

Zen And The Art Of Personal Finance

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