Click here to see how we are getting on in Movember.
Click here for advice on going for a fixed rate or not.
Click here for information on guarantor mortgages for first time buyers.
The Four Mustachteers!
Since early November Ben, Andy, Neil and Jon have been growing their "Mo's" to rasie awareness and support Movember - a charity dedicated to prostate and testicular cancer.
We are still totting up the total rasied from donating £5 for each life insurance policy taken out in November and will soon announce the final figure.
For all those that have mentioned or sniggered at our lame attempts - thanks for the encouragement. We'll be back again next year to give it another go.
Anyone for DECEMBEARD!!!!
If you would like to add your support - in a financial way please visit the link below.
Please regsiter your support at
Left to right: Andy, Neil, Ben and Jon - Tashtastic!
Mortgage: To fix or not to fix, that is the question.
The debate of whether ‘to fix or not to fix’ has entered new territory this month.
At a time when a low 0.5 per cent base rate should be making trackers the more appealing option, the interest rate at which banks lend to one another is increasing throwing a spanner in the works, making fixed rates the more appealing option.
So what should you do? Let’s take a look at the options…
Should you be ‘fixing’?
We need to look at the wider economy to understand the influences at play.
The Bank of England base rate is at 0.5 per cent, and has been for the last 32 months and the forecast is for it to remain there throughout 2012. However, recently the three-month London Inter-Bank Offered Rate (Libor) – the rate at which banks lend to each other – has hit one per cent.
It is now at it’s highest since Summer 2009 and the gap between the base rate and the Libor is, in real terms, cavernous.
When the Libor rate starts moving upwards the cost to the banks of borrowing from one another goes up and accessing funding becomes harder – this has a dramatic effect on the mortgage market.
Just look at what happened to Northern Rock! You probably know this already but the majority of their lending was based on borrowing from other banks. As the cost of borrowing began to rise in the Libor market, Northern Rock’s creditors worried that they wouldn’t get their money back – this in turn meant that they were unable to borrow, meaning they were unable to continue to do business!
In principle this is now happening to countries like Italy, Greece, Portugal, Spain etc., but on a much larger scale!
In the past a rise in the Libor rate signals impending base rate rises, however, with such financial turmoil the banks are fearful of lending.
This has a two-fold effect. The banks are reticent to lend to one another with the knock on effect that they don’t want to lend to us. The result is lending is becoming increasingly expensive and trackers seem to be suffering most.
Not only this, but the financial stresses being suffered in the Eurozone are also having an effect, particularly for anyone with a small deposit trying to buy a home.
Problems in the Eurozone present a major worry to the UK’s economy and with impending threats form writing off Eurozone debt, the banks may be forced to withdraw lending further.
In recent months the higher loan to value market has seen significant improvements but, with this new added pressure, the appetite to lend will undoubtedly decrease hitting these products first and ultimately seeing rates start to rise.
The key is to look medium to longer term when it comes to mortgages, with either a lifetime tracker, although there are risks here too, or a long-term fixed-rate deal lasting for, say, three to five years.
The argument for not fixing
With the lenders already reacting to the changes, rates are already starting to move upwards with four lenders in the past few weeks increasing their rates by as much as 0.2 per cent.
Even though these changes are not all on the way up, the likely trend is for rates to increase further.
Looking across the market, the rate increases are not only being applied to trackers. Some fixed rates are seeing rate rises too. This leads to thinking that if you are looking for a mortgage or a remortgage at the end of your term the upward trend in rate rises would advise there is little to be gained by waiting.
However, when it comes to choosing between a fixed-rate or tracker, fixing may not necessarily be the answer.
With the rates on offer rising, the issues in the Eurozone it is candid to suggest that the base rate will not be increasing anytime soon.
This may lead one to look at the initially low rate trackers on offer. A word of caution though, if you are uncomfortable with uncertainty you may prefer to look to lock an attractive fixed rate before they see too much upward movement.
Current Fixed-Rate and Tracker Deals
2 year fixed 2.24%
3 year fixed 2.89%
4 year fixed 4.09%
5 year fixed 3.49%
Tracker 1.99% (1.49% above bank base rate)
Lifetime tracker 2.8% (2.3% above bank base rate)
A guide to guarantor mortgages for first-time buyers
Are you a first-time buyer desperate to get your first rung on the property ladder but simply don’t earn enough or have sufficient deposit? And with the government announcing renewed help to boost the property market for first-time buyers, now might be the perfect time to look more closely at what is available out there.
There may be some hope in the shape of a ‘guarantor mortgage’.
Not commonly known or available from your typical high street lenders it offers a practical solution to first-time buyers who have a parent or relative willing of offer financial security.
These mortgages come in many varieties and even have a couple of guarantor schemes with a loan to value (LTV) of 100% - making it possible for those with no deposit, getting a chance to buy a home.
This may be the solution to you, so it may be worth talking to us to see if they could work in your situation.
Let’s look at how they work…
Guarantor Mortgages – how do they work?
They key word here is ‘guarantor’. Just like a normal mortgage you take it in your own name but the ‘guarantor’ provides assurance for the repayments.
Your guarantor is typically a close family member, like a parent or sibling but it can be a more distant relative such as a grandparent or aunt or uncle. If you were unable to make the repayment then your guarantor would be liable for making the payment on your behalf, providing the element of security that the lender requires.
There are generally two types of guarantor mortgage schemes, full liability and limited liability.
In the case of a full liability mortgage, the guarantor backs the total loan. Should you go for the limited liability option your guarantor will only provide a guarantee for the part of the mortgage, usually the proportion the borrower cannot afford.
A word of caution.
Guarantor mortgages are not an ‘easy option’. They should be looked upon as a stepping-stone to taking on a mainstream mortgage. The intention is for them to act as a short-term solution to help first-time buyers.
The lender will be looking for candidates with good credit history and on course to be getting a good salary in the future.
And it’s not just the borrowers who will be scrutinised. It goes without saying that, your guarantor will need checks – largely to ensure they have a large enough income to cover repayments.
It’s important to consider factors such as: the guarantor needs to be under 75 years of age, often under 65; they must be resident in the UK; the guarantor must be made aware of how this could affect them financially; and should the borrower default how this will affect their ability to get a mortgage of their own should they need one.
It is therefore essential both borrowers and guarantors get solid financial, even legal, advice before beginning on the process.
The benefits of a guarantor mortgage.
The guarantor mortgage is a great way for you to borrow more than your income multiple would usually allow.
For first-time buyers struggling to get on the property ladder they can provide a neat solution and can open the possibilities for people whose parents cannot help with deposits etc. to fund the purchase. And as most of those that love us would like to inject some cash to help you buy your first home, it’s not always practical or available.
It may also be more advantageous for parents or relatives to help in this way rather than reducing their own capital savings.
And now the down side.
You need to remember that these mortgages require the guarantor to take on a huge responsibility.
Everyone involved needs to be aware of the consequences of what you’ve signed up for, and for those acting as the guarantor, this is essential.
Also not everyone can be a guarantor. Age is a factor as it not having sufficient spare cash after your own outgoings will result in your not qualifying.
Finding a guarantor mortgage needs specialist help as these mortgages are not widely available as not every lender provides them.
You will usually also find that lenders will want you to take on the full responsibility of the mortgage and will sometimes insist on this after three to four years, something to bear in mind.
I’m interested, how to I get a guarantor mortgage?
Research has shown that only 21 per cent of parents have ever heard of these types of mortgages, so you are not alone there.
The market isn’t exactly flooded with them and as first-time buyers are finding it hardest to get onto the property ladder, many give up before getting sound financial advice.
Typically the first-time buyers we help to secure these mortgages have tried unsuccessfully looking on comparison sites or speaking to the high street banks and building societies.
With our ability to look at the whole-of-market we should be able to help you nail down the right deal.
While most guarantor mortgages require a decent deposit, there are currently two 100 per cent LTV deals available.
Now might be the perfect time to think about getting on the property ladder and a FREE chat could open up all the possibilities to you.