Tony Clement, Senior Mortgage Advisor at Inter City Financial Services looks at current mortgage issues

The mortgage market continues to be 'difficult' to put it mildly.  Indeed it is something of a real minefield at present!  I am providing a few notes here to outline in broad terms the position at the moment(mid/late 2009) in the hope that this will be helpful.  Obviously there is nothing better than a brief chat over the telephone as requirements and situations vary so much - please do not hesitate to contact one of my colleagues or myself at 01792 543500, and we'll be delighted to help.

First time buyers. Things are particularly difficult for first time buyers at present.  To get a decent interest rate you need a deposit of around 20% at least of the purchase price.  This is completely impossible for most people trying to get on to the property ladder.  There are signs that things are improving, but whilst it is possible to get a mortgage with just a 10% deposit the iinterest rates are pretty high.  Sometimes lenders come out with special offers which are only available for  a few days so it is worth keeping in touch, as we have our finger on the pulse, as it were, and if we know that a client is looking for a specific mortgage we can keep them informed.  By the way we are finding that parents or close family are 'chipping' in to help young people to get a start  in the housing market more and more these days, by helping with the deposit either by way of a loan or gift..

Buy to let mortgages.   There has not been  a better time to buy an investment property for many years.............but possibly never a worse time to get a mortgage!!   Because of the reckless lending of many lenders (we won't go into that now!) but also that of some pretty foolhardy landlords taking silly risks, the buy to let market has become very difficult at present. There are now only a handful of lenders actually actively lending, and those that are have some pretty stringent acceptance terms.  The maximum borrowing from any source is 75% of the value or purchase price, and whilst the actual interest rates being charged are fairly reasonable, lenders make up for this with some pretty hefty arrangement fees.

Many existing and would be landlords find all this very frustrating as there are some huge bargains about as far as investment properties are concerned at the moment with great investment potential., but the market is so limited.   Very often, from what many of my existing investment clients tell me, they are prepared to pay the current rate to get a bargain property as the 'extra' payable on the mortgage is far outweighed by the 'profit' on getting a property at a real bargain price! If you are in. or want to get in on the buy to let market, have a chat with me at any time.

Current Mortgage product ending.  Many mortgage payers think that when their current product comes to an end their payments will automatically shoot up!    Whilst this certainly was the usual scenario a couple of years back, currently many of my clients can't wait to get off a current product (which was an excellent rate when they took it out 2 or  3 years ago(!) simply because at the end of their current product they will automatically revert to the current lender's rate, or better still, base rate. We have many clients in the company who currently have quite substantial mortgages on which they are paying an interest rate of 0.5% and we even have a handful of very fortunate clients whose mortgage is actually costing them nothing, because at the end of their particular product the arrangement was that they would revert to base rate less 0.5%      Lucky people!!

BUT A WORD OF WARNING!  When a present product ends, as I say the majority of borrowers will find that their interest rate and monthly repayment will go down.  It is very tempting to breathe a sigh of relief and bask in the pleasure of this and stay on that rate  without thinking about the future.  It's a bit like being in a rowing boat, relaxing and letting the boat drift without  thinking of the rapids which might be around the corner!

Interest rates are currently at an all time low, but one thing is absolutely certain, they will not stay this low for ever!  It may be worth considering planning wisely for the future NOW rather than just waiting! for base rate to start to rise and then look around for a good fixed rate to safeguard future repayments.  Problem is that by that time fixed rates will be nowhere near as competitive as they are right at this moment.

Frankly, it is all a bit of a balancing act - knowing just when is the time to move.  Perhaps the best way forward is to have a word with me, outline your circumstances and requirements, and I can arrange to contact you as soon as I can see that interest rates generally are on the way up so that we can then at least consider your position

 In the meanwhile, if you find yourself in the fortunate position of a much reduced mortgage payment, I suggest you pay extra into your mortgage account to reduce the capital balance which could enable you to get a better rate when the time comes to perhaps fix your repayment. Oh and by the way - havng borrowers on their standard variable rate (or worse) is not profitable for lenders.  If they try and persuade you to take an alternative with them  at renewal, do have a word with us first just in casse your present lender could persuade you to take action which was not in your best interests..


Evening Post, 13/05/09

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Tony Clement and his colleagues at Inter City Finance are available for mortgage advice at
144 Walter Road Swansea SA1 5RW
Telephone 01792 543500
Website www.mortgagesforall.net