Mortgage Tip of the day
For Mortgages it is important to speak to either a qualified financial advisor or your bank or buiding society for details of the best mortgage rates available and as always the more quotes you get the better your final rate is likely to be.

 TYPES OF MORTGAGES.
 
Although you will hear various words used like tracker,endownment,offset etc mortgages are generally of two main kinds. REPAYMENT MORTGAGE or INTEREST ONLY MORTGAGE.
 
With a repayment mortgage your monthly repayment pays both capital and interest. With an interest only mortgage you are only paying the interest so you will need another vehicle to create the funds to pay back the capital. This is the endownment mortgage that has taken a lot of flack as many holders of this type of mortgage are finding that the value of the investments to repay back the capital are insufficent.
 
FIXED RATE MORTGAGES.
 
As the name suggests these are mortgages where the interest rate is set so if interest rates rise you will not pay any more. These are great when interest rates are rising but not so good when rates are falling. 
 
 STANDARD VARIABLE RATE MORTGAGES (SVR)
 
With these the payments rise and fall according to the interest rate at the time. People with this type on mortgage were hit very hard when interest rates hit 15% after Black Wednesday (16/09/1992)
 
TRACKER MORTGAGES
 
This is oftern cheaper than a SVR at the start as tracks base rate at a fixed % until it reverts to a standard SVR mortgage.
 
OFFSET MORTGAGES
 
These mortgages link your savings and  mortgage so you only pay interest on the difference between the 2 figues.
 
CAPPED MORTGAGES.
 
These are similar to fixed rate mortgages as the interest rate will nor increase beyond a certain point. They often have a minimum rate they can fall to as well as a maximum rate they can rise too.

What is a Muslim Mortgage and why is it different?

Traditional UK mortgage products are generally unsuitable for Muslim customers as they are not compatible with Islamic (or Sharia) law. Under Islamic law, the payment or receipt of interest is forbidden. This requires a change to the book keeping and computer systems of banks and building societies; but a number of lenders have developed mortgage products specifically for Muslims.

Typically, under an Islamic mortgage arrangement the lender will purchase the property and then sell it on at a higher price to the customer, who will then pay back the capital over a set period of time via monthly capital payments. Alternatively, the customer could pay the lender a 'rental payment' for use of the property and then, once the agreed period of time has elapsed, ownership of the property is transferred to the customer.

At present, only a handful of lenders operate in the Islamic mortgage market in the UK largely due to the complexities of these mortgage products.

TIPS WHEN THINKING ABOUT A MORTGAGE LOAN
1/ Consider Trying to over pay the mortgage!
 
For example, if you borrow 100,000 at 6% over 25 years, you'll pay it back at 643 a month. The total charge for credit will be 93,000.

But if you can overpay by 100 a month you'll clear the loan in less than 19 years, giving you 6 years of mortgage-free living and saving a staggering 25,000 in interest and saving you thousands of pounds.

2/ Consider whether you really need such a large mortgage.

It makes me smile that people with 0-2 kids want a mansion, when two generations ago their grandparents were sleeping six to a small property, and they managed just fine.

3/Start saving asap.

Every pound saved is a pound towards your deposit. A pound towards your deposit is a pound you'll not be paying interest on. People think it is great if they get a 95-100% mortgage. But it's their lender who are laughing at the bank.

4/Shop around for mortgage quotes.

This one is very obvious but it is surprising how many people take the first mortgage offer that their bank or broker offers. You should be looking to get at least 4 quotes.

5/Check your credit report.

Because lenders place so much on this you should check it out before applying as it has been reported that as many as 50% of all credit reports contain inaccuracies. Allow time to review and correct any as this could save you 1000's of pounds. You can get your credit report for free from EXPERIAN

6/Get your mortgage Pre-Approved.

This gives you additional bargaining leverage. A home seller may be more likely to accept your offer with pre-approval than another buyer without it.

7 /Read the weekend newspapers.

These normally list some of the best mortgage rates available in their weekend money columns.

8/ Look at the list below for the UK's largest mortgage lenders. 

The Tip here is that if they were not offering a competitive deal they would not have such a large share of the mortgage market.

9/ Look at the mortgage facts page on the right to see the rates various mortgages were costing on the last update. (remember these are historical mortgage figures) 

 

TOP 10 MORTGAGE LENDERS/PROVIDERS BY GROSS MORTGAGE LENDING IN 2007 
HBOS 20.1%
ABBEY 9.8%
NATIONWIDE 9.3%
NORTHERN ROCK 8.1%
LLOYDS TSB 8.1%
BARCLAYS 6.3%
RBS 6.2%
BRADFORD & BINGLEY 3.9%
ALLIANCE AND LEICESTER 3.6%
HSBC 2.8%
 
 



10 MORTGAGE AND UK PROPERTY FACTS AND FIGURES
1/ The average outstanding mortgage in the UK is 103707.
2/ In the second quarter of 2008 39,078 mortgage possession claims were made.
3/An Equifax surveyed showed that 20% of homeowners were worried about their homes being repossessed. 
4/ The average mortgage loan size taken out in August 2008 was 117,000 and was an advance of 75%. 
5/ 34% of mortgages taken out in June 2008 were interest only mortgages and of these 24% had no plan attached to re-pay the mortgage capital. 

6/ In the 1st half of 2008 there were 11,741,000 mortgages on UK properties and 1.33% of these mortgages were in arrears.

7/ In August 2008 these were the average mortgage rates.
FIXED 6.12% (58%)
DISCOUNTED 6.01% (7%)
TRACKER 5.95% (31%)
SVR's 6.06% (3%)

8/ Savills expect UK properties to drop 16% this year and another 11% during 2009 with prime property in central london seeing sharpest falls.

9/ Declines in house prices in London are forecast to be 30% from peak to trough but could be substantially higher if city job losses exceed projections.

10/ Estate Agents in England and Wales sold an average of only 10.9 properties per firm in the 12 weeks to the beginning of november according to the Royal Institution of Chartered Surveyors.
 
Bonus Fact
Savills are forecasting rental values on london  properties to drop 7% due to falling demand from city workers.


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