Mortgage & Home Deals

Archive for July, 2007

Mortgage Exit Fee’s

An often overlooked cost when comparing or arranging a mortgage is the exit fee. This is not the redemption penalty but a charge by your mortgage provider for releasing their hold on the title of your property.

The Financial Services Authority have given mortgage lenders until the 31st of July to respond with their justification for the fees. This has already proved too much for HSBC, C & G and Bristol and west who have already decided to scrap their fees. ING Direct and Stafford Railway Building Society have not charged fees for some time.

Alliance and Leicester currently leads the market with an exit fee of £295 which has rocketed over the last couple of years.

Whilst there is an obvious cost to mortgage companies due to the work required to release their charge there is also a massive difference between a reasonable £30 cost and blatant profiteering by charging £295. If you are currently looking for a mortgage this cost is well worth considering a mortgage broker such as www.firstforfinance.net will be able to advise you on the full costs of your mortgage.

If your exit fee has risen sharply since you entered into the mortgage check out www.moneysavingexpert.co.uk which is treating this cost the same as bank charges and gives information on how to recover the charge.

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Will mortgage rates rise after the election? Home buyers think so.

Home buyers are jumping in ahead of the election in order to buy before a perceived mortgage rate increase would put a home beyond their reach. Also the Liberal Government suggestion of making people save for a 20 percent deposit has paniced many first time home buyers to act now.
Political debate about housing affordability, and promises to lure first homebuyer votes, are also weighing heavily on would-be homeowners.
Woodards real estate group chief John Piccolo said the election’s impact on interest rates were also a consideration. “There seems to be a bit of frenzy among house hunters at the moment, and that may be because of the perception that after the election, the interest rates are more likely to go up than down,” Mr Piccolo said. “I think that’s creating some pent-up demand.” Prime Minister John Howard is yet to name an election date for this year. Election to ‘clam’ marketReal Estate Institute of Victoria chief Enzo Raimondo said an election would usually calm the market right down. “Historically, what happens before an election is announced is everything stops,”
Mr Raimondo said. “People want to know the outcome before they spend their money.” But Mr Piccolo believes first-time buyers are taking a “better the devil you know” approach. Affordability hurdleHousing Industry Association chief Caroline Lawrey said would-be first homebuyers were certainly watching the affordability debate closely. “If there’s one party suggesting the first homeowner’s grant might double, then you could understand why a young person would want to wait until after the election to buy,” Ms Lawrey said. This month, Opposition Leader Kevin Rudd proposed a range of affordability initiatives. The initiatives included tax breaks for investors who build affordable housing, a tax-free savings account for first homebuyers, and increasing the first homeowners’ grant for low-income earners. Treasurer Peter Costello responded with a proposal to release Commonwealth land for housing, calling on states to do the same. But State Planning Minister Justin Madden is keen to argue Victoria doesn’t have a problem. Property prices risingOver the weekend, Mr Madden launched new figures on property price growth during 2006. He said the 6 per cent rise in Victoria’s median price showed the market had returned to “sustainable levels of growth”. But Mr Raimondo said he didn’t believe affordability improved last year. He predicted house prices would rise well above the 6 per cent this year.
Source: The Herald

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Different Mortgage Types

We have all seen the TV adverts for a famous high street bank where the guy reels of hundreds of different mortgage products, triple decker tracker and so on.

There are several types available; they are all different ways of funding your house purchase or remortgage.
Below is a list of common mortgage types, though not conclusive it will at least give you an idea.

Standard Variable Rate
The SVR is the standard rate of interest charged by the lender. The rate can go up and down. This is the rate your mortgage will go to when your initial discounted, fixed, tracker, capped or cashback rate has run its course. This rate is set by the mortgage lender.

Discount
A certain percentage below the lenders SVR. For example a 2% discount from an SVR of 6.5% gives a rate payable of 4.5% for an agreed period. Some discounts are ’stepped’ over a period of time e.g. a 2% discount in year 1 and a 1% discount in year 2. Early repayment charges may apply.

Fixed Rate
A fixed monthly interest rate. It will not change for the duration, for example 2 or 5 years. Will move to the lenders SVR at the end of the period. Early repayment charges may apply.

Tracker Mortgage/Remortgage
Linked to a specific rate, normally the Bank of England base rate but can be linked to LIBOR as well for a specific amount of time. E.g. Bank of England base rate is 5% tracker is -0.65 rate payable is 4.35 variable.

And these are just some of the types of mortgage available !!

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Mortgage and other debts explosion sparks enquiry

An inquiry into home lending practices is to be launched as new research reveals a sharp jump in the number of households going into debt or drawing on their savings to make ends meet.
The financial divide is growing between those struggling under debts and those with the resources to pay off their home, according to Melbourne Institute research.
Rising interest rates and the drought have led to an increase - from 10.8 per cent to 15.1 per cent over the past year - in the number of people running into debt or drawing on their savings.
The parliamentary inquiry, which will report before the election, responds to concerns that lenders are breaching the banking code in their tough treatment of people in financial difficulties.
Leader of the inquiry, Liberal Bruce Baird, said it would also look at declining credit standards and the level of home loan defaults.
“Given comments by the governor of the Reserve Bank and a recent report by the banking ombudsman, we wanted to see if there were issues in the approaches taken by the various banks,” he said.
Negative equity in focus
Labor committee member Craig Emerson said parliamentarians were particularly concerned about western Sydney and the Illawarra region where many people now owe more on their mortgages than their homes are worth.
“Committee members support the deregulation of the financial system but one consequence has been that existing and new entrants into the market have sought to capture market share as a top priority and that has led to very aggressive lending practices,” he said.
The Melbourne Institute research shows that the number of people devoting more than half their salary to debt has increased from 5.9 to 7.5 per cent over the past year.
Rural stress
Financial stress is greatest in rural districts, where the number of people running into debt or drawing on savings has soared from 9.9 to 20.8 per cent.
But there has also been an increase in metropolitan areas. The number of people succeeding in saving some of their income in metropolitan districts has dropped from 57.7 per cent to 50.7 per cent in the past year.
The study confirms Reserve Bank research showing that people with the highest debt service burdens are generally those with higher incomes.
More than 80 per cent of people earning less than $40,000 a year spend less than 10 per cent of their income on debt. Most are either in the rental market or, in the case of age pensioners, have a fully paid-off home.
The survey nevertheless found that 28.8 per cent of the people who spend more than half their income on debt service earn $50,000 or less.
Source: The Australian

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Mortgage Loan Leads - Plenty Of Variety To Choose From

In the mortgage business, you need to always have a steady stream of new potential clients. Since the average person does not need a new mortgage all that frequently, repeat business is just not as frequent. Fortunately, there are many good companies out there that will trade mortgage leads. Figuring out which ones are the best will require research on your part, but that being said, you can’t really know what kind of mortgage leads you’re getting until you start to buy them.

Buying leads in bulk, fresh and with a live transfer can work, but it might result in a case of working hard, rather than smart. For example, if you make it a habit to regularly buy 50 leads at $2 per lead, you may close one mortgage loan out of all those leads. Sometimes it will work, and sometimes it won’t. That can add up to a lot of frustration (and extra cost) very quickly.

Buying fresh (real time) leads can work more cost-effectively. You could take the same $100 you would have spent in the above scenario, and instead get about three to five fresh leads consisting of purchase leads and refinance leads. You’ll probably want to set up a filter beforehand: specific to state, type of loan, credit, Loan to Value, loan amount, and so on. When a lead comes in and matches the filter, it is automatically streamlined straight to your email account, and is only about ten minutes old. Talk about a fresh lead!

Another approach to try is the live transfer lead. This is an alternative to getting fresh leads through email. This might sound better than it actually is in reality however. Picture it: you sit at your desk, and wait for the lead company to transmit customers to you via telephone. However, what if you step away from your phone? If that should happen, the call will end up going into your voicemail, or worse, the potential customer will hang up without leaving a message. This could also amount to working harder instead of smarter. You really don’t want to be held hostage at your desk by the phone.

Before investing with companies to find the best mortgage leads, perform proper due diligence. Ask about and understand the companies’ terms of service, and find out what their return policy is. Call the company and speak with a sales representative, and don’t be afraid to ask for a free trial of their services. Does their service at least include a free lead or a credit towards your first deposit? If the company is truly confident of the quality of their leads, then they should not have any problem accommodating you at all.

Many loan officers have been successful with all the different lead types mentioned above. Some may work fantastically for you, while others may wind up being a dud. If you find that making a particular type of lead work for you is too much of a struggle, just pick a different kind of lead!

By: Kathy Hildebrand

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