Buyers take risks to avoid the £1m hike in stamp duty

The new stamp duty hike for all properties worth over £1m is just over month away. In a recent article Buyers rush to beat rise in stamp duty I mentioned the implications of the rise in stamp duty due to take place on the 6^th April.

To avoid the increased rate of stamp duty buyers are preparing to rent back properties to sellers, after the completion date, which could be risky for buyers, especially if they are raising a mortgage to buy a house, as they could be in breach of their mortgage contract, as most mortgage companies insist on vacant possession of a property upon completion.

The risk of renting back a property could result in the mortgage company calling in the loan, and they would be within their rights to insist on converting it to a buy-to-let mortgage, which would be at a much higher rate of interest.

If you are considering this option then the best way to avoid any problems would be to contact your lender and get permission to rent back the property for a short period of time.

Many buyers will not take into consideration that the date of completion is the relevant date, which will probably result in the banking system being put under immense pressure in the run up to the 5^th of April - potentially causing chaos for buyers, sellers and solicitors.

Did you know...

• This year we celebrate our 20th Birthday
• The busiest day for property on the internet is MONDAY
• Last year we collected nearly £8 million in rent for our clients
• We moved over 1,000 people last year
• In 2011 we aim to raise over £20,000 for good causes
• Nearly 3/4 of properties sell in 3 weeks
• Over half our new business comes from recommendations
• We have 27 branches

Cash rich property bargain hunters push prices down

Cash rich bargain hunters are pushing down property prices in the UK’s hardest hit locations, according to Rightmove.

The latest housing analysis published last week by Rightmove reveals that a three tier market emerging in the UK. It says that home owners in the most economically depressed areas of the country are being forced to sell their houses for less than the current market value, while in the elite parts of London prices are expected to rise by nearly 3% this year, and the third tier is first time buyers who cannot get mortgage funding to buy a property.

Although there is growing competition in the lending to first time buyers, mortgage lenders are only willing to lend to people with at least a 25% deposit. Therefore they are reportedly gearing to chase the minority market of equity heavy to buy to let investors, which means that mortgage funds are being denied to those who need them most.

Bargain hunting bottom feeder’ investors are expected to become more prominent in the second half of the year and will push prices down in the areas worst affected. And while there is evidence of growing competition to lend in this traditional first time buyer market segment, lenders are not looking to support the greater volume of deposit light first time buyers, it says.

‘Agents report that cherry picking lending practices are leading to some dysfunctional and desperate behaviour to solve housing needs,’ said Rightmove director Miles Shipside.

‘Some average sellers of yesteryear are now trading up by letting out their own home and renting the next rung up the ladder as they cannot get a suitable mortgage to sell up and buy a more spacious house. The accidental landlord is now being joined by the deliberate limbo landlord,’ he explained.

‘Meanwhile, professional investors are being funded by lenders to buy starter homes, condemning many of those who would have been first time buyers in the past to be permanent residents of the rented sector,’ he added.

The report also indicates that the number of new properties coming to market remains subdued as a substantial element of the mass market is locked in to their existing homes. Average unsold stock levels per agency branch have now declined for five consecutive months, falling from a peak of 78 properties to the current level of 69.

Unless the government can come to some agreement with lenders to accept a lower deposit, then it looks as though the market will continue to be subdued over the next few months.

Consumer giant Which? calls SRB firms 'shoddy'

Advice on SRBs (sale and rent backs) given to the people most struggling to pay their mortgage, is woefully inadequate according to consumer giant Which?

According to a recent Which? investigation the money advice given by these firms is ‘shoddy’ and they have reported their finds to the Financial Services Authority, the UK’s financial watchdog.

SRB, Sale and Rent Back is usually a last resort for people who are struggling to pay their debts but would prefer not to sell their homes. Most firms offer between 60% to 70% of the market value of a property. FSA rules mean that SRB firms must offer you a short hold tenancy of at least five years, but after the initial rental period they may ask you to leave your property.

In 2010 the FSA introduced new regulations to protect homeowners in debt, which means that all SRB advisors must explain carefully the terms of their policies. Including whether it is an intermediary and, if so, how many companies it deals with and whether those companies are authorised. It should also discuss how much any fees, commissions and charges are likely to be. The firm should explain this verbally, too, and in writing.

However Which’s investigation highlighted that most firms are still not complying to FSA rules. Which? contacted 17 advisers across nine firms, and seven of those advisers failed to discuss whether SRB was the right option for the customer. One advisor gave a quote that would have left their customer enough money to pay off their debts, the very reason why they had contacted the advisor in the first place.

‘It’s simply unacceptable that people are receiving shoddy advice about such a huge financial decision,’ said Which? chief executive, Peter Vicary-Smith.

‘Not only are regulated firms not doing enough to ensure vulnerable consumers make the right choices, some are offering sale-and-rent-back that aren’t authorised to do so. The FSA must tighten the screw on these firms to make sure the rules are followed and consumers are protected,’ he added.

Which? Money said that two companies, Property Locksmith and Rapid Property Group, have both been reported to the FSA.

Shortage of farmland send prices to an all time high

A shortage of farmland, sent prices to an all time high in the last half of 2010, according to RICS, The Royal Institute of Chartered Surveyors.

The RICS report indicated that commercial farmers are currently keen to expand production to capitalise on over inflated commodity prices. This in combination with declining land availability resulted in prices rising to all time highs during the last six months of 2010.

The transaction based measure of prices, which includes residential land, stood at just under £17,000 per hectare, while opinion based, which covers just bare land, approached £14,500 per hectare. Both prices measures rose by roughly 6%, the RICS Rural Land Market Survey which covers England, Wales and Scotland shows.

During the last six months of 2010 all areas of Great Britain experienced rising farmland prices with the exception of Scotland, with prices there falling by 8%. The East Midlands saw the strongest price rises, up 17%, followed by the North West at 12%.

Farmland was most expensive in the North West at £17,300 per hectare, while the cheapest land was in Scotland, priced at £9,100.

Demand continued to strengthen for both types of farmland, but 55% more surveyors reported demand rose rather than fell for commercial farmland, compared to only 6% for residential. This marks the fourth year running where the pace of demand for commercial outperformed residential. Residential farmland demand remains more subdued, as it broadly reflects the national housing picture.

Given the lack of land availability currently available surveyors expect the recent trend in farmland prices to continue over the coming year, with a strong growth in the commercial market but a flatter trend in the residential sector.

First-time buyers average age is now 38

The age of the first-time buyer has increased again from 36 to 38, as borrowing hits an all-time low. First-time buyers are being forced into renting accommodation which can sometimes be more expensive than buying a house. The period of tenancy is also increasing as buyers are forced into a circle of paying rent, which is not enabling them to save up enough money for a deposit.

Borrowing problems tend to arise when first time buyers have less than a 25% deposit to put down as an initial payment, the property market is viewed as unstable at the moment, and banks want to guarantee that they will see a return on their lending.

The showing of ‘how to blow a fortune’ on Panorama, BBC 1 this week, covered the issue of banks easy lending in Ireland - 110% mortgages, landlords borrowing huge amounts of money over the phone, of some clients being sold 40 year mortgages. Light touch regulation of our banking system and access to cheap funding on the wholesale markets fueled the boom in the Irish housing Market. This question remains, so why does the banking system have to go to two extremes when considering who they lend money to?

If you are a first-time buyer and have been affected by any of these issues then please get in touch with one of our branches today and we will be more than happy to discuss your mortgage options.

Hertfordshire

• Bishop’s Stortford
• Sawbridgeworth

Essex

• Braintree
• Chelmsford
• Great Baddow
• Great Dunmow
• Harlow
• Saffron Walden
• South Woodham Ferrers
• Stansted

Yorkshire

• Haxby
• Huddersfield
• Hull
• Morley
• Hebden Bridge
• Cottingham
• Pocklington
• Willerby

Lancashire

• Westhoughton
• Bolton
• Horwich
• Harwood

Nottinghamshire

• Nottingham
• West Bridgford

Staffordshire

• Stafford
• Cannock

Cheshire

• Chester

Buyers rush to beat rise in stamp duty

Buyers are rushing to beat the 6^th of April rise in stamp duty to 5% for properties over £1 million.

A buyer purchasing a house for over £500,000 will have to pay 4% stamp duty, so for example a home costing £1.1m will cost £44,000 in stamp duty.

From the 6^th of April homes over £1m will attract a 5% duty, so that £1.1 million property requires £55,000 duty.

This is expected to impact more expensive homes even harder – for example buying a £2.5m house will currently involve buyers spending £100,000 on stamp duty, and this will go up to £125,000 as from April.

For clients who are concerned about the rise in stamp duty the best advice would be to have a mortgage agreed in principle. If your purchase is subject to the sale of a property, then ensure your buyer is in a full cash position. These questions are necessary in the current market. Then make sure you use a solicitor who has a reputation for pushing transactions through quickly.

Another way to meet the deadline would be to complete before your anticipated move, so for example if the sellers don’t want to move out until the end of April you could complete before the 6^th and you could sign a legal agreement ‘license to occupy’ allowing the vendor to occupy post-completion.

For a seller, the potential problem is if a buyer does not emerge before April. If you are a seller and you do miss the stamp duty deadline then it might be advisable to see whether you can drop your property price just below the thresholds, then ask for a ‘cash payment’ for fixtures and fittings, as long as these are not enormous figures, then HMR might be concerned about tax evasion.

As with all advice, we realise that all of our clients circumstances are individual, so if you would like specific advice on your concerns relating to the stamp duty rise then contact one of our 26 branches in your area for more information:

Hertfordshire

• Bishop’s Stortford
• Sawbridgeworth

Essex

• Braintree
• Chelmsford
• Great Baddow
• Great Dunmow
• Harlow
• Saffron Walden
• South Woodham Ferrers
• Stansted

Yorkshire

• Haxby
• Huddersfield
• Hull
• Morley
• Hebden Bridge
• Cottingham
• Pocklington
• Willerby

Lancashire

• Westhoughton
• Bolton
• Horwich
• Harwood

Nottinghamshire

• Nottingham
• West Bridgford

Staffordshire

• Stafford
• Cannock

Cheshire

• Chester

London property shortages cause prices to increase

Prime London property prices are predicted to see a growth of 2.5 per cent, over 2011, this increase is due to a current shortage of property and a continued strong demand for properties in London.

A combination of this and anticipated improved economic conditions are expected to deliver further positive growth over the medium term.

Until recently the London property market has been dominated by overseas investors, however buyers are starting to be drawn from a broad base, with first time buyers and purchasers, benefiting from a return of bonuses all looking for a place in the City.

However the expected stamp duty increase to 5% for property over £1m is increasingly becoming a factor, especially as the transaction must go through before the 1 April deadline to avoid the higher tax.

As rental prices increase it is often cheaper to buy than to rent an identical property. During the latter part of 2011 we will probably see a further price growth, as signs of an improved economic confidence emerge.

Good News for house hunters as 50% more 90% LTVs are available

Good news for house hunters, especially first time buyers as there are almost 50% more 90% LTV mortgage deals available today, compared to this time last year.

There were only 144, 90% LTV deals in February 2010, and 185 last August compared with 214 today.

There has also been an increase in the availability of 85% LTV deals, with 560 deals on the market today, compared to 310 in February 2010.

Louise Holmes, spokesperson for Moneyfacts.co.uk, says: “Higher loan-to-value mortgages are making a steady return to the mortgage market. This will be welcome news to borrowers with small deposits, particularly first time buyers who have struggled to find products which meet their needs.

“Lenders became risk averse during the height of the credit crunch by withdrawing their higher loan-to-value mortgage products.

“Over recent months some lenders have increased their rates and expanded their number of higher loan-to-value deals, giving indications that the market could be returning to a competitive, rather than risk-based state.”

Source:Mortgage Strategy

Rental market hits record demand

Rental properties are being let five days quicker compared to a year ago, according to new estate agent survey just released. Throughout the UK agents reported a significant lack of property supply with the average number of properties available to let falling by 29%.

In the last quarter of 2010 the number of new tenants registering for rental accommodation increased by 14% year on year.

The rental market hit record demand in 2010, with new tenant registering increasing dramatically in July and September 2010. The growth in the rental market has been mainly due to a large amount of professionals finding it difficult to access finance, or unable to sell their existing properties.

If you are searching for a property to rent then go to :http://www.intercounty.co.uk/

Source:Mortgage Strategy

Mary Porta on C4 accused of "loathsome estate agent bashing'

There has been much talk of Mary Porta's focus on customer service this week, and I think that everyone has got worked up about the sensationalism that is inevitable to make it news worthy, but cut through all that, there was a valid point, like it or not, whether buyers are your clients or not, estate agents need to care and so often they just don't!!

Tips for Landlords and tenants

There is no doubt that rental demand is at an all-time high. So we have compiled a short-guide to make sure that your buy-to-let property will give you maximum return as a landlord and also some advice for tenants over the coming year.

Tips for landlords

It is vital for you to know the market, investigate rent levels and tenant demand in the areas you are thinking of investing in a buy-to-let property. At Intercounty we have 26 branches throughout the UK and we would be able to give you advice on the best possible investments for any portfolio.

From an investment point-of-view it is always advisable to buy properties where you can add value, by improving kitchens or bathrooms, or by adding an extra bedroom, you could potentially increase your investment.

Make sure that you are fully covered by insurance, particularly rent indemnity which will cover you even if your tenant defaults.

Tips for tenants

In today's economic climate make sure that you have carefully considered any decision to terminate your tenancy contract, as you might not find an alternative rental property. News this week revealed that in some areas of London, people are having to put in closed bids to secure rental properties.

Rental prices are expected to increase this year, so you will probably need to budget for an increase when your agreement ends.

You will need to make sure that you have adequate content insurance for your rental property.

It's standard practice for a tenant to provide a Security Deposit of at least one and a half months rent, which is refundable at the end of the tenancy. It is now law that all deposits have to be deposited with one of three officially approved schemes.

Buy-to-let mortgage figures jumped 22% in 2010

It comes as no surprise that the latest figures released by CML (Council of Mortgage Lenders) show that the buy-to-let market increased by 7% in 2010, with the total lending volume rising by 22%.

In the final quarter of 2010, lenders advanced 28,600 new buy-to-let loans worth £3bn. This was a rise of 6% by volume and 7% by value from Q3.

At the end of the year there were an estimated 1.3 million buy-to-let mortgages outstanding, worth £152bn, or 12% of the UK mortgage market by total value or 11.5% by number of the total UK mortgage market.

Between 2009 and 2010, three-month arrears levels dropped slightly from 2.97% to 2.44%. Landlord arrears remain slightly higher than those in the owner-occupied market, where arrears levels also improved from 2.42% in 2009, to 2.16% in 2010.

However, according to CML, the arrears cap has narrowed, with low interest rates helping to lower buy-to-let arrears further than the owner-occupier market. Although, CML director general Michael Coogan said funding remains a key constraint, but demand and performance have improved.

"Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises, but at present there is no indication of these pressures materialising in practice."

As funding becomes more readily available, there will be great opportunities for landlords looking for a long-term investment. Capital Economics estimates that the private rental sector will be home to nearly one in five households by 2015, up from one in seven currently, so it remains crucial that the UK has a vibrant and healthy buy-to-let market.

Home sellers restructure prices

According to the website Zoopla, thirty-seven percent of properties listed on its site had seen at least one price reduction since coming onto the market this year, compared to thirty-six percent in November. The average discount seen across the site to the original asking price stood at 6.9 percent, the equivillant of £18,475, up from £15,879 or 6.1 percent in November.

The company stated that the figures represent ‘a clear indication of buyers becoming more realistic’ in their expectations and ‘will be a welcome sign to buyer’ as it will help to reduce the gap between the asking price and what buyers are willing or able to pay.

Discounts as expected, were largest at the top end of the market. According to Zoopla properties listed for sale at more than £1m, the average discount had climbed to 10 percent off the original asking price, up from 8 percent in November.

At Intercounty we are experts in the property market, we will be able to give you an accurate price for your home, based on the current market value.

FSA proposes interest rate cap

The FSA is proposing a cap on the interest rates lenders can charge for credit-impaired mortgages.

The discussion paper on Product Intervention released last week, the FSA gives the examples of capping risk-based charges such as the level of interest charges on impaired credit mortgages, however they admit that it’s difficult to get it right.

It also proposes capping the amount lenders could charge those in mortgage arrears.

It says: “Price capping may be a means of tackling the most serious cases of mass consumer detriment, where firms are making excess profits by exploiting a lack of consumer sensitivity to, or awareness, prices. In such cases, it may be appropriate and feasible to cap prices.”

But the paper adds: “If we do consider this option in the future, it may be as an interim measure in extreme circumstances, until a more finessed approach, using other regulatory tools, can be formulated.

“This may not necessarily require an extensive exercise to determine the most appropriate price, but a short-term measure to find a price that is sufficient to reduce incentives to help stop a particular problem growing while a permanent solution is put in place.”

The FSA also acknowledges that there are numerous difficulties in enforcing price caps and that it is a blunt tool.

Auction House - moves to London

News that Auction House moved to a central London office hit the press last week. The London Auction room will be run by established and well-respected auctioneer, Andrew Binstock, who will be accompanied by his current team.

The company’s first sale is due to take place on the 8 March, at the Danubius Hotel, in Regent Park.

Auction House Director Roger Lake said, “This is a landmark move for Auction House. The brand is already acknowledged as the fourth largest auctioneer in the country and the biggest outside London. Now we can bring the same level of service to the city as we’ve successfully delivered in the regions.”

Auction House had an impressive 2010, selling over 1,000 properties (1,066) during the year, with a total value of £97m, and at a success rate of 75 per cent - well above the national average.

Andrew Binstock said, “My team and I are delighted to be joining Auction House. The company has experienced a meteoric rise over the past couple of years, gaining an enviable reputation for dynamic marketing and successful selling all over the UK. Now, as part of the Auction House network, we will be able to combine our local knowledge and regional contacts with the strength of a national brand.”

Roger Lake added, “Auction House is already the market-leading property auctioneer in Cumbria, Yorkshire, Lancashire, Cheshire, Lincolnshire, Norfolk and Pembrokeshire. Launching an office in the capital means that we will be able to compete with the specialist auctioneers that service the Greater London market and its population of around 8 million. We’re confident that in Andrew and his team we’ve found the perfect people for the job!”

Cheap, sustainable design could help ease housing crisis

An independent research report, commissioned by RICS, claims that traditional building methods must make room for more cost effective designs if the UK’s growing housing crisis is to be alleviated.

There are approximately 80,000 new homes being built each year, well below the level required to meet a bursting population.

RICS research highlights a series of low-cost housing solutions that could ease national shortages considerably, and ensure that affordable houses are more readily available to both local authorities and first-time buyers.

Low-cost housing would involve making use of off-site construction methods, recycled materials and innovative structural design, which will speed up the build process and have less environmental impact. Many of the designs would be easily segmented and extended, eliminating the need for costly renovation work, and enabling homes to evolve as the needs of the occupiers change.

Case studies

Modular homes are self-contained whole houses with bathroom and kitchen, and can be priced anywhere from around £20,000. These are constructed off-site inside 12 weeks and then transported to the given location.

Homes made from recycled plastic are also available, created using a new material called ‘Thermo Poly Rock’. These homes are built from 18 tones of recycled plastics and minerals that would otherwise have been consigned to landfill.

Google bins its property maps search

It was a surprise to read the headlines about Google Maps dropping its property search this morning. The search engine giant who offered a free service to estate agents, has decided to end its service next month. Google blames its proposed retraction on low usage. Google maps is currently available in the US, Australia, New Zealand, the UK and Japan.

This news resulted in Rightmove’s shares going through the roof, to £8.18, an all-time high.

In a low-key blog, Google’s vice president Brian McClendon stated: ‘One of the key philosophies is to take risks and to experiment. To that end, in July 2009 we announced the ability to find property for sale or rent directly on Google Maps.’

There is a hint that Google might, however, return to the fray.

 The blog continues: ‘We’ve learned a lot … Yet we recognise that there might be better, more effective ways to help people find local real estate information than the current feature makes possible.

’

‘Real estate companies can also continue to use tools from Google to help connect with buyers and renters who use the internet to research properties. For example, companies can use the Google Maps API to embed customised maps that are useful to potential clients right on their own web pages. Our Google for real estate professionals site contains various methods for generating leads and improving real estate business operations.’

At Intercounty we have developed our very own app, to help you find your ideal home on the move, for more information and for your free download visit itunes

Loans and mortgage products top consumer online searches

According to recent research by Greenlight, 61% of the 2 million UK consumer searches conducted online for retail banking-related services last October were for loans and mortgages.

To compile the report Retail Banking October 2010, Greenlight used industry data to classify 750 of the most popular search terms consumers used to find providers of bank accounts, credit and debit cards, mortgages and loans.

It reveals searches for loans keywords were the most popular, accounting for a third of all searches for retail banking products. Mortgages followed with a 28% share, then bank accounts, 24% and credit cards 16%.

The term ’mortgage calculator’ was searched for 135,000 times in October, which accounted for 7% of all retail banking-related searches and 24% of specific mortgage-related searches. With searches for the term having peaked in January 2010, Greenlight expects this January to see a similar rise as consumers will reassess their finances for the New Year.

In natural search, MoneySupermarket achieved 67% visibility in October and ranked in top position in Greenlight’s league table which charts the 60 most visible sites; however, it ranked at position one for 232 of the 750 keywords analysed, having previously ranked in the same position for 260 terms.

Halifax was the best performing direct provider. It ranked at position one for 14 of the keywords analysed and featured at position five for the term ’mortgage calculator’.

MoneySupermarket was also the most prominent online advertiser in paid search overall.

However, unlike natural search, it was not the most visible for consumer searches pertaining to bank accounts, credit cards and debit cards or mortgages. KnowYourMoney, CompareAndSave and HSBC, respectively, topped the visibility ranks in those segments. MoneySupermarket was, however, the most visible site to the consumer for loan-related searches.

To gauge social media interaction with brands, Greenlight monitored the Facebook and Twitter accounts of the top 15 brands in its integrated league table which shows the most visible websites in both natural and paid search. Brands were ranked based on the cumulative value of their ’fans’ and ’followers’, a score which Greenlight terms Social Media Popularity Index.

uSwitch had the most active accounts, cumulatively producing 238 ’posts’ and ’tweets’ in October. Content included latest financial news as well as up-to-date deals on banking products.

Source: Mortgage strategy

Which? Hits mortgage providers

Which? Money has revealed that mortgage providers are charging their customers over 39 different types of mortgage fees. It states that the number and level of fees has gone up since the beginning of the financial crisis, with four in five two-year tracker mortgages charging over £990 in set-up fees in 2010, compared to one in five in 2007.

Set-up and additional fees can include anything from booking, administration, arrangement and valuation fees, to charges for falling into arrears, changing from interest-only to repayment and choosing to take out buildings insurance with another mortgage provider.

Which says most lenders now charge more than 20 types of additional fee, with Newcastle Building Society having 29, closely followed by Ipswich Building Society with 28 and several others on 27.

However, a handful of providers have kept the number of charges to a minimum – Stafford Railway charges just three types of fee.

But a spokeswoman for Newcastle Building Society, says: “As part of our Treating Customers Fairly policy we choose to be transparent as an organisation and ensure our customers have easy access to the information they need, the disclosure of mortgage fees forms part of this.’

Finding the right mortgage used to be simple, but now consumer’s need to make sure they ask about all of the costs associated with applying for mortgage products.

Source: Mortgage strategy

Part-exchange properties - first rise since 2007

Research conducted by LSL Property Services revealed that purchasing involving part-exchange properties rose by 13% in 2010 to 13,732, the first increase since 2007.

The part-exchange market boomed during 2007 and early 2008, with transactions hitting 36,799 and 32,959 respectively. However in 2009 transactions dropped by 69% year on year to 12,164.

So what is attracting customers to part-exchange? Customers who participate in part-exchange schemes don’t have to worry about selling their properties and have reduced costs normally associated with buying and selling a property. However these type of schemes are dependent on new properties being built - private new home development has steadily increased in the last year, with 21% more new homes built in England in Q3 2010 compared with 2009.

Ian Long, managing director of St Trinity Asset Management, says levels are well below the peak but are looking more positive.

In the first three quarters of 2010, 65,800 new homes were built in the private sector - 5,090 more than in the whole of 2009.

At the end of 2010, developers had approximately 1,060 unsold second-hand homes in their inventories - a 12% jump from approximately 930 a year ago.

At the peak of the part exchange market, developers had an estimated 2,830 new build part exchange homes on their books at the end of the financial year 2007.

Source: Mortgage strategy

All you need to know about mortgages...

We have compiled this quick guide for our clients and followers who are looking into raising a mortgage for either a first or second home. Some of our clients are also thinking about changing their mortgage type, as pressure is put on the Bank of England to increase interest rates this year.

Repaying your mortgage

There are basically two alternatives: Repayment (or capital and interest), and interest only

Repayment mortgage

With a Repayment mortgage you pay part interest and part capital repayments to the lender each month and in this way the capital debt outstanding is reduced until the loan is repaid.

An Interest-only mortgage

With an interest only mortgage, you make no capital repayments until the end of the term. Instead payments may be made into an investment designed to repay the loan at the end of the mortgage term. with this type of mortgage there is a risk that the value of the investment may not be enough to repay the debt. The most common forms of investment used are endowments. ISAs or certain types of pensions. During the mortgage term you pay only the interest to the lender on the outstanding balance.

Combination

Some lenders are able to offer a combination of the above which may be more suited to your individual circumstances.

Interest rates

In addition to the standard variable interest rate., there are many different schemes available. fixed, Discount, capped and collar, Flexible or even a combination of some of the above.

Standard variable rate

With this type of mortgage your payments will go up or down when the lender’s mortgage rate changes. Most standard variable rates tend to move in line with the bank of England base rate but there is sometimes a delay and there is no guarantee that the lender will pass on the full effect of the increase rates come down.

A “tracker”

This is a varible rate where the intersrt rate is set amount above or below the Bank of England or some other base and so always “tracks” charges in that rate. Some people are considering changing their existing tracker mortgages, as rates are predicted to increase this year.

Fixed rate

The rate is fixed for specified number of years, so you know what your payments will be over that period. following this period, the rate will usually revert to the lender’s standard variable rate.

Discounted rate

A discounted rate gives you a reduction of, for example 1% off the varible rate for a specified period. So although the rate may rise and fall you will be be paying less than the variable rate for this period.

Capped rate

Your payments are variable, but they are guaranteed not to rise above a set level (the “cap”) during a specified period. These schemes may sometimes include a “collar” or minimum rate level which is the level the rate will not fall below. Following this period, the rate will usually revert to the lender’s standard variable rate.

Flexible mortgages

These are various benefits which usually include the ability to vay monthly payments in line with your changing circumstances, They may also allow you to take payment holidays and to borrow back any overpayment you have made. Because of their flexible nature and the variety of schemes available it is not possible to give a full description here, but your mortgage advisor will provide more detail if you are intersted in this type of loan.

Current account mortgage

This is a flexible mortgage linked to your current account. some companies in this sector also link savings accounts, credit cards, mortgages and personal loans together into combined accounts. With this type of mortgage, you are only charged interest on the net account you owe the lender, after netting off savings or current account balances againsy the amount of you mortgage.

Cashback

Some loans o offer a lump sum which is paid out following completion, with a mortgage charged at the lenders variable basic rate. Smaller cash backs may be offered with reduced rates and other incentives as a combination package. These type of mortgages will typically have early redemption charges which would apply if you redeemed within a specified period after completion.

Buy to let mortgages

A buy to let mortgage enables you to buy a property with the purpose of renting it out. A deposit of at least 15% of the property’s value may be required.

What is APR?

All lenders have to quote an Annual Percentage rate (APR) in addition to their standard interest rate. this is to help you compare different schemes. The APR can be confusing but, as the calculation of APR takes into account other costs such as the arrangement fee and indemnity premium, it gives a more accurate indication of which mortgage is likely to be most expensive. Although the principle is the same, different lenders use varying assumptions for their calculations.

A mortgage is a loan secured against your home. Understanding the many different mortgages can be a confusing business unless you take professional advice. If you would like some more information on our mortgage products, then give our team a call today on 0845 073 6628.

Busy home buying period, despite finance hurdles

Finance still remains one of the biggest hurdles to home buyers and sellers in the UK. The latest report from the Royal Institution of Chartered Surveyors published this week showed that the property market remains mixed.

December sales were made more difficult due to the impact of the snow. However at Intercounty we experienced a very busy period last month and this month, despite predictions and concerns of a slow down in 2011.

In the three months to December, the average number of completed sales per surveyor stabilised at an average of 15.2, up from 14.8, says the RICS UK Housing Market survey.

More positively, surveyors’ expectations for sales over the coming months edged up, with 8% more expecting sales to increase rather than decrease, up from 6% in November. Many respondents suggested that the market would begin to pick up again in the Spring.

The key issue now seems to be making mortgage finance more readily available. If you would like more information about some of the great January and February mortgage deals that we have on offer, then contact our team today on 0845 073 6628, for no obligation advice.

Inflation could edge up to 4% by spring | News | Mortgage Strategy

Inflation could edge up to 4% by spring | News | Mortgage Strategy

A quarter of home owners have underinsured homes

A new report published by Direct Line, has revealed that a quarter of home owners are underinsured by undervaluing their home contents.

Research into The Hidden Value of British Homes shows £212.9bn worth of possessions in UK homes are at risk. On average 26% of people with contents cover are underinsured by £20,000 - with £138.5bn at risk in total.

Most worrying is that one in five have no insurance for home contents at all, which leaves on average £74bn of possessions completely at risk.

You might be making personal or family cut backs at the moment, but insurance is one area where you must make sure you stay fully covered. There are some really competitive home insurance policies in the market at the moment.

It can also be easy to forget to insure acquired items from an inheritance or a latest purchase, so make sure you try to review your insurance needs on an annual basis. By not insuring your home for enough money puts your belongings at risk. The easiest way to work out how much cover you need is to work your way through each room of your house, totaling up the amount of items and value in each room.

The report also found that among those with contents insurance, 39% had not adjusted the value to account for inherited heirlooms such as jewelery, furniture and antiques.

A total of 4% did not realise that the amount of contents cover on their home insurance would need to be adjusted or simply admitted they had not got around to it.

Landlord confidence hits an all time high

We are now two weeks into 2011, and the buy-to-let property market is stronger than ever, and landlord confidence at an all time high.

The January Upad Landlord Confidence Index revealed that 63% of residential landlords are more confident than last month, up from 60% in December. The main reason for this was a higher demand from tenants.

This is the highest we have seen landlord confidence since January last year. However they still have a number of concerns. Finance for properties remains difficult to access, which has made it difficult for landlords to increase their portfolios to meet increased demand for rental property. In a time of high unemployment it would make sense for landlords to have a greater access to finance to buy new property so that they can bring more properties onto the market, which will make house rental prices more affordable.

Grant Shapps, housing minister stated last Monday that unaffordable house prices were ‘crazy’ and that he wants to stabilise the market. However it might be more useful if he was to intervene in the finance market, to ensure that both landlords and first time buyers have access to the mortgage products they need.

New VAT rate, how will this impact landlords?

VAT (value added tax) rose from 17.5% to 20% last week. Despite the Chancellor George Osborne indicating that the increase is entirely necessary to fund cuts, economists have warned that the rise may well risk further rises in inflation. Opposition politicians have said it’s a regressive move that will hit the poorest hardest.

So will this have any effect on landlords? Unlike retail businesses or those who charge for services, landlords are not likely to be hit all that hard by the VAT rise. Rents, after all, are not subject to VAT. However landlords will be affected when they buy goods for their properties and also when they buy services such as plumbing help and the like.

If you are a landlord with numerous properties then it might be worth considering registering for VAT. Even if you have already explored this avenue and have decided against it in the past, it might be time to examine it again in light of the new VAT rate.

Even if you are turning over less than £70k per year it might be worth doing, ask your accountant as he will be able to advise you on all the various schemes available.

Funny Year, 2010!

If 2009 had a sense of humour about it, with property prices and sales volumes both holding up well against all expectations, then 2010 must rank among the funniest of all – funny peculiar that is, not funny ha ha!

Certainly not funny for those thousands of people hoping to have moved by now, or even more first time buyers who have been prevented from starting on the property ladder because of prohibitively stringent lending criteria.

And not funny for estate agents either – what the media has tired of throwing at us, other factors have made up for. 2010 started with horrendous freezing conditions which scuppered any hope of an early spring recovery.

But no sooner had the snow melted and there was talk of a general election – never a good omen for the property market as people’s plans grind to a halt. But fate was not content with that – oh no! The possible post-election withdrawal of the Home Information Pack (HIP) all but paralysed the market. Then of course, HIPs actually were withdrawn immediately after the election and fate laughed again as the consequent oversupply of properties on the market depressed prices.

Then, not only did England’s performance in the World cup make everybody laugh/cry, but it also encouraged them to take their eye off the ball property-wise, as prices slid further.

What next? A vicious budget and an unfunny spending review that had even the affluent laughing on the other side of their face followed by predictions of massive job losses and further cuts.

As we exit 2010, hit by unseasonably cold weather, people seem to becoming oddly immune to the bad news. Whilst volumes remain low, prices are up 3.4% on average depending on who you ask, although this has much to do with inactivity at the bottom end of the market.

So all in all a funny year, and whilst we are not laughing all the way to the bank, our clients seem chirpy enough. We’d like to thank them for their patience with us in the past few months, and accepting our excuses about the market, although we have achieved some cracking sales despite everything!

We look forward to an entertaining 2011.

“Mixed Message but a Clear Strategy”

Over recent months the headlines have been littered with reports about the current state of the property market. However anyone following the reports closely will notice that they all appear to contradict one another. Some state that properties are falling and others suggest that there will be rise. This is of course also due to conflicting material being released from different surveys and different media sources.

One would think that the property market would be very easy to measure, but it’s not, because firstly the market moves so quickly and is so fickle that as soon as one report, based on last months figures comes out, this months figures show a different perspective altogether. A prime example of this is a re-tweet I did yesterday about prices falling by 1.3% in December according to Halifax, but figures released by Rightmove showed a slight increase over the same period of 0.4%.

According to a recent Land Registry report is suggest that house prices have decreased by 0.8%. This may be a reflection of poor trading conditions over the spring and summer during election year, followed by the immediate withdrawal of the Home Information Pack, which fueled supply, especially from ‘speculative sellers’. Although we found that transactions were up by 12% on the same period last year and this is still 29% below the long-term norm.

In contrast Rightmove, the property portal who advertise over a million properties nationally, showed a rise of 0.4% in December, despite sellers dropping their prices by an average of just under £7,000. This is of course based on asking prices, not sales achieved, which is a very important distinction. This may account for why asking prices have risen – sellers are aiming to accommodate a low offer by increasing their asking price.

However, by inflating an asking price and assuming that a low offer will follow, is just another way of overpricing a property. Overpriced properties in our experience simply don’t sell. Buyers don’t even make offers on overpriced properties because they don’t view them in the first place, because on they can see that they do not compare well with other properties being advertised. We feel that the task of a skilled estate agent is to first of all ensure that a property is positioned well in the market, so that buyers are attracted to it, and secondly to negotiate a figure as close to the asking price as possible.

Therefore it follows that an attractive, well-researched asking price is the key to selling your property at a time when others are simply too expensive for the current conditions. When some properties are struggling to compete, other accurately priced properties will be the ones that sell.

If you would like more information about any of our services then visit our website or call us and we will make sure that your property is positioned correctly in the market place.

Mortgages more affordable than ever, say Halifax

Mortgages are more affordable than ever, according to Halifax First Time Buyer Review published last month.

Monthly mortgage re-payment costs are now below the long-term average, and 40% of local authorities are affordable for first time buyers, a sevenfold increase on 2007, the report shows. It also reveals that 95% of first time purchases are now exempt

The proportion of disposable earnings devoted to mortgage payments by a potential new first time buyer stood at 27% in September 2010, the lowest since December 1998 and almost half of the peak level of 50% in September 2007. This significant improvement in affordability over the past three years has been mainly driven by a combination of lower house prices and declining mortgage rates, the lender says.

The North East remains the most affordable region in the UK for first time buyers, 83% of local authority districts here are affordable to FTBs, more than in any other region. The report also shows that only 5% of first time buyers paid stamp duty between April and November 2010 as a result of the temporary increase in the stamp duty threshold for first time buyers from £125,000 to £250,000 announced in March.

Nationally, 39% of home purchases made by FTBs have benefitted from the increased allowance. First time buyers in the South East have benefited most from the change, with almost three quarters, 73%, of first time buyers in the region not paying stamp duty due to the increase.

‘Whilst the tightening in lending criteria experienced across the mortgage industry since the onset of the credit crunch in 2007 deterred first time buyers from trying to secure mortgage finance, there are now encouraging signs of a modest improvement in mortgage availability,’ said Martin Ellis, housing economist at Halifax.

If you would like to calculate how much a new mortgage would cost then go to http://www.thisismoney.co.uk/mortgage-affordability-calculator# and it will do the work for you.

Surprise rise in property prices in December

In December house prices rose unexpectedly, the first gain in over seven months, according to the latest index from the Nationwide Building Society.

The average price of a property in December was 0.4% than a year ago at £162,763, the first monthly increase since May. But prices are expected to fall in the first half of 2011 in some areas of the UK, as demand remains weak.

‘Despite December’s increase, house prices have fallen in four out of the last six months and it would be premature to suggest that the recent downward trend has been broken on the basis of one month’s figures. However, the December figures do underscore the fact the current downtrend is only very modest,’ said Nationwide chief economist Martin Gahbauer.

Prices fell 1.3% in the fourth quarter, declining in 10 out of 13 regions, Nationwide said in a separate quarterly report. The declines were led by Northern Ireland with a 3.4% drop, while East Anglia was the best performing area with a 1.6% gain. Values in London decreased 2% during the period.

‘There is little to indicate that buyer demand is set to pick up materially from current levels. As a result, the slow drift down in house prices is likely to persist in 2011, at least for the first half of the year. Whether it continues into the second half will depend on the flow of new property onto the market,’ explained Gahbauer.

Gahbauer warned that house prices could show greater declines if the Bank of England decided to raise its interest rate above its historic low of 0.5% earlier than he expected next year. ‘On balance, a relatively stable picture, with the possibility of a small price decline, appears the most likely outcome for 2011 at this stage,’ he added.

Other indices show prices falling. The latest figures from the Land Registry’s flagship house price index shows that in November prices fell 0.6% to put the average house price in England and Wales at £164,773.

Hometrack stated that prices fell for a sixth month in December and may decline 2% in 2011.

Overall the property market is in better form that in 2009. Average prices and sales volumes are up year on year, and the pace at which house prices are dropping, by no means show a property crash. The continued difficulty for first-time buyers to be able to finance their new homes is the lack of available mortgages. I’m sure that if we see a loosening of lending criteria in 2011 then the price growth could return sooner than predicted.

House prices cost over £1m in over 200 streets in England

There is no surprise that recent research has shown that homes in London, Surrey, Buckinghamshire and Dorset were among the most expensive in England. With the average home costing in excess of £1m in nearly 230 streets in England.

One of the most expensive streets was Parkside in Wimbledon, South-West London, with average prices of more than £5m.

More than half the top 20 were in London, but Woodlands Road West in Virginia Water, Surrey, was the dearest outside the city, Lloyds TSB said.

This was followed by Burkes Road in Beaconsfield, Buckinghamshire and Brundenell Avenue in Sandbanks, Dorset.

The most expensive street in the north of England was Withinlee Road in Macclesfield, Cheshire, where the average house price stands at £1.6m.

Sedley Taylor Road in Cambridge cost more than any other location in East Anglia, at £1.1m.

However it’s a different story in the East Midlands, West Midlands, Yorkshire and the Humber and Wales which showed no average property values of more than £1m.

Parkside, in London's SW19 postcode district, was followed at the top of the list by Wycombe Square, Blenheim Crescent, Mallord Street and Drayton Gardens, all in the borough of Kensington and Chelsea. Average prices in these streets exceeded £4m.

Kensington and Chelsea was a "prime, central London location" which was attracting "affluent celebrities and ultra-wealthy foreign businessmen, helping to drive up house prices", said Nitesh Patel, a housing economist at Lloyds TSB.

The bank's survey also assessed house prices in Wales, where the most expensive street was Llantrithyd Road in the Glamorgan Vale, with an average price of £789,000.

Good news for property owners in those peak locations. If you would like to see some of our £1 million plus homes, then visit our website at www.intercounty.co.uk.

Home owners injected £6,1bn in Q3

Figures just out from the bank of England show that home owners injected £6.1bn of equity into their homes in Q3 2010 compared with £5.8bn in Q2.

It was the 10th consecutive quarter in which the amount of money people extracted from their homes was negative. Individuals have injected £49.7bn into housing equity since Q2 2008 when the housing equity withdrawal measure turned negative.

The figure is also the biggest net injection of equity people have made into their homes since Q1 2009.

Housing equity withdrawal as a percentage of post-tax income was -2.4% in Q3 2010 compared with -2.3% in Q2 2010.