The end of the credit crunch?

FRIDAY September 19 saw the biggest one day rise ever for the FTSE 100.

 

This followed the news that the U.S. government had decided to bail out the American mortgage market with a multi billion dollar salvage plan, following the near dramatic failure of the two largest mortgage lenders in the country, who between them hold mortgage debts in excess of $5 trillion.

 

The changes in our own financial sector over recent weeks has been no less dramatic with the news that Lloyds TSB were to take over the UK’s largest mortgage provider, HBOS, resulting in a high street super bank. And the Bank of England will be making available billions of pounds for the high street mortgage lenders, in a bid to settle down the UK housing market.

 

Wounds won’t heal overnight, but many believe that this could be the beginning of the end for the credit crunch. Only time will tell of course, and consumers in the mortgage market should continue to keep their wits about them. Independent Financial Advice has never been so relevant, and with many lenders starting to adjust their rates back to more favourable levels, now could be the time to start looking again to secure the most appropriate deal for you. If you are thinking of making your first tentative steps back into the mortgage market, make sure you are in the strongest possible position. Checking your credit history is a great place to start as this could save lots of time when you really want to nail the best possible deal.

 

                 You should start by checking your credit report. This is your personal credit history of what you’ve borrowed, such as loans, mortgages and credit cards, plus your repayment record and other information that lenders take into consideration when they decide whether you are a good risk.

                  Items in your credit report, along with details from your application, are used to calculate a credit score, which will determine whether you receive an offer and how much interest you will pay, so it makes sense to ensure that everything is up-to-date and accurately reflects your circumstances.

So lets all keep our fingers crossed that this is the start of the recovery we are all looking for. And feel free to contact us to discuss your own personal circumstances.

A lifeline for first time buyers

FIRST time buyers continue to be the focus for the UK housing market.

 

With talk of changes to the stamp duty rules the importance of first time buyers has been taken into consideration by the government.

 

The success of the whole housing market hinges on first time buyers entering the market. But for many it’s still difficult to get your foot on that property ladder.

 

We were contacted by a young couple having problems obtaining a mortgage to buy their first home.

 

They had saved a deposit and had found the perfect property. They approached their bank but were knocked back straight away. Unfortunately, the other high street lenders wouldn’t look at their case either.

 

Like thousands of other first time buyers they had missed the odd payment on their credit cards, and this went against them from the start. A friend told them to contact us, and we agreed to look at their application.

 

As Independent Mortgage Advisers we were able to source a number of possible solutions for them within a couple of days. With access to the whole of the mortgage market we have access to deals that the high street just can not offer.

 

With just a 5% deposit and a less than perfect credit history, we were able to secure a mortgage deal for them. 

 

A 2 year fixed rate (great for first time buyers as it fixes mortgage costs for the first 2 years) and a low arrangement fee, which could be added to the loan to keep up front costs as low as possible.

 

They thought they had been frozen out of the property market, but thanks to their friend’s recommendation to talk to us, they are now settled into their new home.

 

 

Top investors ‘BRIC’ it

WITH further reductions in house prices predicted for this year – up to 9% according to Halifax, the UK’s largest mortgage provider – people are understandably cautious about investing further into what has traditionally been a strong sector.

 

The message is ‘don’t be put off’. If you are looking to buy a house for yourself, or as a long-term investment, there are still gains to be made, albeit over a longer term.

 

Choosing the right mortgage is essential, as you need to be sure that you have secured the best possible terms for your own personal circumstances.

 

What is right for your friends may not be right for you, and you should always seek independent financial advice when making what could be life changing financial decisions.

 

Competitive Variable, Fixed, Tracker, and Discount deals are still available so call and ask for details.

 

For those wanting to invest shorter term, say 5-10 years, property is much less attractive at the moment. Instead you should consider what is happening in the world around you.

 

Remember this anachronism: B.R.I.C - Brazil, Russia, India and China.

 

These ‘emerging’ markets have delivered incredible returns over recent years and many investors who have traditionally looked at property as their main investment are now looking further afield for greater potential returns on their savings.

 

The consumption of the world’s natural resources such as copper and tin by these countries is phenomenal, and so another sector worth a look is the ‘Natural Resources’ sector.

 

There are a number of investment opportunities that will give you access to these sectors in a tax efficient manner, and if you are looking to try and make your savings work harder for you, and keep ahead of an increasing inflation rate, they are certainly worth a look.

Rent or buy?

NATIONWIDE confirmed a further 0.9% fall in the UK house price this month.

 

This is the 8th month in a row prices have fallen since their high in October 2007 and the downturn has led to enquiries asking if it is now a good time to rent.

 

The UK is unique in Europe, as most other countries already have a higher numbers of people that rent, rather than buy. The UK is obsessed with buying property. An English man’s home is his castle after all.

 

But consider some of the downfalls associated with ownership, and renting starts to look more attractive.

 

When you rent, the maintenance of the property is paid by the landlord and you can move more easily than those who have to sell and buy to do so. And if you’re renting and house prices fall, would you care?

 

A big advantage of renting is that you can stay in control of your savings, rather than having the majority of your wealth tied up in bricks and mortar. This allows you to invest more strategically to build funds for future use.

 

One use for these savings could be long term care in old age. If your money is tied up in your home, it could be taken from you to pay for your care. This results in a smaller inheritance for your family and high levels of stress when you are least able to cope with it.

 

But the UK is still in love with property ownership, and will continue to be so.

 

We should consider how to ensure our homes are left to our loved ones, rather than paying for our care in old age. This can be done, but independent financial advice should be taken to ensure that it is done correctly.