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The Debt Test: Are You Making Out A Mountain Out Of Your Mortgage?
According to the Council of Mortgage Lenders, first-time buyers are the most susceptible group of homeowners to debt, as they are more likely to have higher loan-to-value ratios and commit a higher proportion of their income to mortgage repayments. Despite their susceptibility to debt, there is evidence which indicates that insurance take-up and employee benefits provide recent first-time buyers with a safer foundation than the general population of mortgage borrowers. The Council of Mortgage Lenders (CML) has become increasingly concerned about the ability of current and future home-buyers to pay back mortgages in the event of changing circumstances. Over the past five years, the CML and its partners within the Sustainable Home-ownership Initiative, have sought to improve this issue. Contributing factors to the problem include increasing personal debt levels and a less certain economic environment. This has provoked concern about the sustainability of home-ownership and consumer understanding of financial products, ensuring that the issue of mortgage risk is at the top of the agenda for the UK Government, industry regulators and public as a whole. Over the last year, the Sustainable Home-ownership Initiative has debated the most effective move forward to increase home-buyers' awareness of potential debt and protection from unforeseen events with insurance products, specifically Mortgage Payment Protection Insurance (MPPI). The Financial Service Authority is leading the way to help raise awareness of debt prevention with the "Debt Test" initiative. According to research carried out by the Council of Mortgage Lenders, two thirds of recent first-time buyers say that an online debt test designed to help them assess potential triggers of debt and highlight future borrowing risk would be useful. The mortgage market is also watched very closely by the consumer research website, moneynet. In addition to tracking market behaviour, property values and homeowner incomes, moneynet have endeavoured to become increasingly proactive about educating their visitors, so they fully understand the complexity of the relevant financial products. In addition to their mortgage comparison service and mortgage protection options, moneynet published a comprehensive mortgage guide earlier this year, as part of its series of consumer product guides. Moneynet isn't the only site to offer enhanced information services; Which? also offers a detailed mortgage guide and mortgage search tool powered by Moneyfacts. Both "Switch with Which?" and moneynet take the consumer through the types of deal available, detailing the different interest rate structures including fixed rates, capped rates, discounted rates, stepped rates and standard variable rates. The CML state that there is much evidence to show that first-time buyers appreciate this information, including the "debt test", more so than older households. This is perhaps due to the fact that many first-time buyers have to borrow much more for their initial property, due to high prices, and that they have generated more personal debt than their parents' generation. Whilst personal debt remains a major concern for the finance industry, the government and the public, financial stability remains possible with education. * * * * * * * * * * * * Resources: http://www.moneynet.co.uk/mortgage-guide/index.shtml http://www.switchwithwhich.co.uk/mortgage/index.html http://www.cml.org.uk/ Rachel writes for the personal finance blog Cashzilla: http://www.cashzilla.co.uk/
Construction Loan Basics It might not be too big of an exaggeration to say that the construction loan is one of the more daunting aspects of building your custom home. Before we started our project, I had nightmares about trying to pay two full mortgages at the same time (our existing mortgage and the construction loan), and I didn't see how it was at all possible. However, the reality ended up much more reasonable than I dared hope.COLLATERAL: Many ? but not all ? mortgage companies require you to own your land first before you apply for the construction loan. That way, if the borrower defaults, the bank has a way to recoup their investment. Some banks will let you roll in the land purchase with the construction loan, but you may ...
Consolidate Your Debt With A Home Equity Loan And Improve Your Credit Score A home equity loan is a loan based on the difference between what your current home value is and what you currently owe on your house. There are also mortgage companies that will loan a little over the equity you have in your home. They can usually do this safely because most homes appreciate in value over time.If you have credit card debt at a high interest rate, or even at an average rate, you may want to consider getting a home equity loan to consolidate your credit card debt for a few reasons.1. Having the credit card, but not being maxed out, or having the credit card paid off will boost your credit score. The amounts you owe make up about 30% of your credit score, that could be a huge difference if those acco...
5 Tips For Savvy Use Of Your Home Equity Line Of Credit Tapping your home's equity to pay college expenses, consolidate credit card debt or even to buy a new car or boat is common place. Many economists attribute the additional buying power afforded consumers through home equity debt as a primary reason the nation's economy has been able to emerge from the recent recession. Yet, aside from simply allowing consumers to spendmore, the flexibility and efficiency of a home equity line of credit (HELOC) can...
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Mortgage Cycling May Be Your Best Bet For Equity Buildup And Investment Real Estate Mortgage cycling is a system that relies on solid budgeting, equity lines of credit and use of an open credit card. Whether you use ... |  |
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| Financial Rebirth Through Remortgage Seldom in ones life do we get a chance to alter the mistakes we made in the past. Remortgage offers a once in a life time opportunity to change from a mortgage to another that is more desirable.So what are the mistakes that Remortgage will help cure? With the interest rates falling, mortgages taken years ago will appear to be excessively charged. Mortgagors vie for the new rates of interest by taking the new mortgage.But there is little guarantee that the rate of interest will be constant at this point or will not fall be... |  |
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| Home Loan Confusion Continues Unfortunately, most Americans still do not understand how home loans work and how to take advantage of the wide array of programs available. The way I see it, people are still confused about mortgages in general and real estate finance, in particular.Just last week, a friend of mine told me he was buying a house. He was pre-approved for a loan, he said, and I was very happy for h... |  |
| Find The Best Mortgage Company If you do not wish to commit to living in one place for at least a few years, then owning a house is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner. But if you think you are ready, you probab... |  |
| Home Mortgage Loan Pre-approval Online ? Keys When Applying For A Mortgage Online Applying online for a mortgage is very fast and easy. Just make sure of a few things before you start to look for places to ... |  |
| A Home Equity Loan ? Is It For You? Home equity loans are often touted as being the solution to so many things ? giving you access to money for home repairs or improvements, a way to consolidate debt, finance... |  |
| Fixed Rate Mortgage Vs. Adjustable Rate Mortgage The most basic distinction between types of mortgages that are available when you're looking to finance the purchase of a new home is how the interest rate is determined. Essentially, there are two types of mortgages - fixed rate mortgage and an adjustable rate mortgage. If you choose a fixed rate mortgage, the rate of interest that you are paying on your mortgage remains the same throughout the life of the loan no matter what general interest rates a... |  |
| Home Equity Loan ? Still A Better Idea Than A 401(k) Loan Anyone who borrows money is always looking for the cheapest source of funding. That makes sense; no one wants to pay more in interest than is absolutely necessary. And anyone with a sizeable amount of debt, such as credit card debt or a student loan, would be wise to consolidate their debt with a lower interest loan. One source of such a loan is a 401(K... |  |
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