A guide to fixed vs discounted rates
Fixed vs Discounted Rate: The Mortgage Provider Online Guide There are a huge variety of mortgage products in the marketplace today, and some with very confusing ways of charging interest. Most people, however, have heard about fixed rate and discounted rate mortgages together with that other mortgage foot soldier, the Standard Variable Rate (SVR).
Most people could save money by moving their mortgage from their lenders SVR, which are often as high as 2.5% + the Bank of England base rate. It is usually a question of lethargy or a lack of knowledge which stops people from changing, which is a shame because some lenders exploit this with high interest rates.
A recent article in the financial times (9th March 2007) indicated that lenders for buy-to-let mortgages are now beginning to offer terms which are much closer to those rates being offered in the main stream mortgage and remortgage market.
A recent article in the financial times (9th March 2007) indicated that lenders for buy-to-let mortgages are now beginning to offer terms which are much closer to those rates being offered in the main stream mortgage and remortgage market. This is seen as a real sign that banks and building societies continue to compete for business.
In the face of increasing house prices, mortgage lenders are offering longer mortgage terms. But at what cost?
Mortgages are traditionally taken out over 25 years, 30 years at a push – but house prices have got so high that many would be homeowners have found themselves completely unable to get on the property ladder.
Fixed rate mortgages
The Council of Mortgage Lenders (CML) reported in April that almost nine out of 10 first-time home buyers chose a fixed-rate mortgage loan in February.
Its report added to reports that record numbers of first-time buyers were taking up fixed-rate mortgages amid fears that interest rates will continue to rise. But how safe is a fix-rate mortgage?
Fixed-rates at least offer some protection if interest rates do rise. However, buyers shouldn't be easily persuaded by the low rates of interest alone and should consider all the other costs of a new mortgage.
13 Feb
Posted by admin as Finance
There was more evidence of a market-bucking trend for property owners in the higher rate tax bracket* from the latest Moneynet (http://www.moneynet.co.uk) house price data survey.
House prices showed a slight increase last month (April) for Moneynet-user homeowners. Values edged up from £205,518 in March to a healthy £208,854 in April, according to Moneynet (www.moneynet.co.uk) research.
The cost of an average home leapt by more than £2,000 in April alone increasing pressure for further rate rises to cool down the property market. An average home in Britain now costs £196,745, that's almost £20,000 more expensive than a year ago. The figures mean that homeowners are continuing to borrow record amounts adding weight to calls for further interest rate rises to rein in rising house prices.
With more and more people struggling to get on the property ladder as individuals, there is a growing trend of taking out shared home loans amongst groups of people. The article discusses the complexities of doing this and also the legal side of ensuring a smooth transaction and on-going shared ownership.
Introduction
As a consequence of sky-high property prices, more and more people are clubbing together to take out shared mortgages. This article discusses the different types of Group Home Loans offered by the mortgage lenders, the legal side of doing it and looks at some of the problems of group ownership.
Have you thought about re-mortgaging? More and more people are making this move and lenders are keen to help. See what's in it for you.
Are you paying more than you need for your mortgage? If you've had a mortgage for a few years, do you know even what your interest rate is? Once the initial mortgage deal is done, you tend to forget about it. The payment goes out of your account with alarming regularity. If you're on your lender's standard variable rate, there's no doubt that you can save money by re-mortgaging.
Major UK lenders are now charging buyers an average of £2,000 if they do not have 10 per cent of the property's value as a deposit for a down payment. The 'higher lending charge' will raise over £220 million for banks and building societies in 2007 alone and will affect over 100,000 borrowers. This is not just from mortgages but also remortgages.
However, lenders debate that the charge is just a means of protecting themselves against the higher risks associated with buyers with small deposits. But critics have condemned it as another way for banks and building societies to squeeze money out of their customers. With first-time buyers paying an average of £145,000 on their property, they could end up spending £5,500 on higher lending charges and stamp duty alone.
Loans have never been so cheap and as the base rate has risen, typical loan rates have fallen. This means that the profit margins are narrower then ever for the loan providers and consumers are getting a very good deal that needs to be taken advantage of.
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