Oak Tree Mortgages Blog

Rents reach a record high. Could now be the time to buy?

The average rent paid by tenants in England and Wales reached a record monthly high of £692 in April, according to a recent survey.

Locally, some are paying much higher rents than the average.

For many clients, we often find that arranging a mortgage over a longer term either matches or lowers their monthly housing cost compared to renting.

Of course, owning your own home brings responsibilities. But being a home owner also brings security.

Many landlords and what we refer to as “accidental landlords”. Maybe they couldn’t sell their home a couple of years ago and decided to rent their property out. Many of these “accidentals” have decided to sell recently or are planning to sell.

This type of landlord should make tenants nervous. You can only stay in the property for as long as your tenancy agreement allows and once this has expired, it’s up to your landlord whether they renew the contract.

Of course, renting for some people is absolutely the right thing to do. If your life is about to change, maybe a new job or a re-location is just around the corner; buying a home probably isn’t the right thing to do.

I wonder how many people have decided to rent because they either think or have been told they can’t get a mortgage. How many of those people only went to their own bank. And how many think you need a 25% deposit to get a mortgage?

As mortgage advisors, we have seen the mortgage market evolve in 2011.

Lending criteria is still very fragmented. A “no” from one lender does not necessarily mean a “no” from another. This is where a good broker can help in matching you to the right mortgage lender.

We can also report that we have a very good selection of mortgages available with a 10% deposit and even a mortgage requiring only a 5% deposit to help make the transition from tenant to home owner more realistic.

Call us today on 0121 733 8833

Your home may be repossessed if you do not keep up repayments on your mortgage

Oak Tree Mortgages are authorised and regulated by the Financial Services Authority

Green Shoots in the mortgage market

Look closely, and you will see green shoots in the garden and in the hedge rows. The days are getting longer. Spring is almost here!

With the optimism that spring heralds; thoughts turn to the year ahead, our hopes and aspirations.  

Are you considering moving home in 2011, or possibly buying your first home? Maybe you have a mortgage and are worried that interest rates might increase?
 
According to the Council of Mortgage Lenders, mortgage brokers introduced 66% of all first-time buyer mortgages and over half of all other mortgages in 2010.

Time and time again we see clients who have previously made the mistake of believing loyalty to their bank or building society will save them money; we often prove that this is not the case.
 
For those looking to move or re-mortgage, we understand that some homeowners are faced with little or no equity in their home.  It’s still worthwhile taking some advice. Your current lender may not be your best choice and may not even lend to you.

The mortgage market can be a confusing and daunting prospect.  Consumers need help and support when searching for a suitable product. This is where mortgage brokers excel and add value. We are adept at matching a borrower with a lender, potentially saving time and money for both parties.

The busy start to the year reported by estate agents indicates that many first time buyers feel that 2011 is a good time to step onto the property ladder.  There are 50% more mortgages where a 10% deposit can be used compared to the same time last year. 

Some lenders will even accept part of the deposit being paid by the seller or New Home builder to help people realise the initial down payment they need to buy a property.
 
Owing to the persistent negativity of the media, many buyers feel that they have few choices.  An appointment with Oak Tree Mortgages could help you save money, or take your first steps towards home ownership.

Call us today on 0121 733 8833

Your home may be repossessed if you do not keep up repayments on your mortgage

Oak Tree Mortgages are authorised and regulated by the Financial Services Authority

"Cautious Carols Comeuppance" - our thoughts for 2011

In the BBC series, The Apprentice, Lord Sugar mocked that he didn’t want a “Cautious Carol”. For many, the property market of 2010 was the year of the Cautious Carol.

The election, the long awaited “emergency budget” and concerns about job security all took their toll on Carol’s nerves. Could Carol be a little happier this year?

At Oak Tree Mortgages, we think that 2011 will be a very important year for the economy and the property market. We believe that Cautious Carol has had her day.

With thousands having delayed their house move last year, estate agents are reporting a huge up turn in enquiries.

The National Association of Estate Agents report that out of 700 agencies surveyed, almost two thirds said that the number of house hunters registering in the first two weeks of January was much higher than they would expect for this time of year.

On the supply side, Rightmove reports the number of new sellers is at a two year low.

This mismatch between higher demand and lower supply will, in our opinion, support house prices over the coming months. Within a relatively affluent borough, we believe the fundamentals of the local economy will help support a stable local housing market.

The cost of renting a property continued to rise last year. In some cases, the cost of home ownership compared to renting has almost been equalised. There is still a perception that rent is “dead money”.

Have you noticed how the price of food and petrol has increased over recent months? Inflation currently stands at 3.7%, above the governments target. Higher inflation may be a cost the Bank of England is willing to accept in the short term to support the recovery.

As and when interest rates are increased in Europe, the bank will, we believe, have no choice but to raise the base rate to protect the pound and to prevent further inflation due to the rising cost of imports caused by a weak currency.

If Carol wants to secure a relatively low interest rate on her mortgage, now is the time to do so. The expectation of higher interest rates will soon begin to filter through to higher mortgage rates.

So, Carol, if you have been waiting and waiting for the right time to move, 2011 really could be your year!

If you or Carol would like some advice about your mortgage options, talk to Oak Tree Mortgages.

Call us today on 0121 733 8833

Your home may be repossessed if you do not keep up repayments on your mortgage

Oak Tree Mortgages are authorised and regulated by the Financial Services Authority

Mortgages: Where are we now?

“No deposit? Don’t worry! Thousands of products to chose from. Poor credit history? Never mind! Can’t prove your income?”….

 

This was the mortgage market prior to the Credit Crunch. Now, fast forward to the present…

A customer needs to be able to prove they can pay. A borrower needs to have a stake in the property they want to buy, they need a deposit! If they have borrowed money before, has this been paid back on time?

 

The financial services industry has gone back to basics. Does this mean things are simpler?

 

Lenders are certainly a lot pickier. They decide who to lend to, and there may be strings attached.

 

On a £100,000 mortgage, an interest rate that is 0.25% cheaper will save around £21 per month. This saving can easily be swallowed up in overpriced insurance premiums sold by the mortgage lender. If you don’t sign up to the lenders insurance, will that jeopardise your mortgage application?

 

When we go shopping, we usually know what to expect. We have been to the shop before; we can see how long the queue is.

 

Arranging a mortgage is an alien process for most people. Do you really know if the mortgage lender will process your application quickly? Will delays result in you losing the home you wanted?

Going from lender to lender can be demoralising. The amount a lender will lend based on your salary still varies massively.

 

For the self employed, will a lender look at the most recent years’ accounts or an average over three years? Did your turnover dip during the recession? How will this impact on the amount you can borrow? How long do you need to have been trading for?

 

Do you get dejected and give up and fall into a negative mindset, “mortgages are so difficult to get!”

 

A good adviser can guide you through the different lenders criteria as well as find you a mortgage most suited to your needs and demands.

 

Not all mortgage lenders are happy to post their mortgage products on comparison websites. Smaller building societies often prefer to channel their mortgages through a select number of professional advisor's rather than be inundated with thousands of applications from websites or customers they have no relationship with.

 

Lenders are looking for brokers to direct the right type of borrower to them. The broker will have already done the leg work, checking the client fits the criteria. The lender avoids wasting time in processing applications that will be rejected and the borrower avoids the stress of a failed mortgage application.

 

With the lending landscape having completely changed over the past 4 years, taking good advice has never been more important.

 

If you would like some advice about your mortgage options, talk to Oak Tree Mortgages. Oak Tree Mortgages are a whole of market mortgage broker. They are not affiliated to an insurance company and do not charge a broker fee.

 

Call us today on 0121 733 8833

 

Your home may be repossessed if you do not keep up repayments on your mortgage

 

Oak Tree Mortgages are authorised and regulated by the Financial Services Authority.

What's your current mortgage rate?

What is your mortgage interest rate at the moment? How many people would honestly be able to answer this question without searching through their home-file?

 

In the past, people usually looked around for a better mortgage at the end of their fixed or tracker rate. Going onto the Standard Variable Rate (SVR) used to be seen as something to avoid. 

 

There is a misconception that the SVR is lower for every mortgage borrower. The reality is that the low Bank of England base rate is helping to hide that fact that many people are paying well over the odds on their current mortgage.

 

Many borrowers have found to their cost that each mortgage lender is responsible for deciding what to charge on the SVR.  They can, and have increased the rate even though the Bank of England rate has remained unchanged for some time. The first you will know about this is when the letter arrives from your lender increasing your mortgage payments.

 

Lenders rely on savers to provide them with the funds to lend back out as loans and mortgages. If they fall short of funds, they need to attract new savers. Offering a plumb rate to savers often involves them increasing the cost of borrowing for their existing borrowers.

 

Your SVR may not always be the same as other borrowers with the same mortgage lender.  For example, some customers of Lloyd's/C&G or Nationwide will be paying just 2.5% - this is not the case for all of their customers. More recent borrowers with these lenders are treated differently. The new rate is 1.49% higher than the old rate; at 3.99%. Some other lenders charge anything between 4 and 5%.

 

The dangers of reviewing your mortgage with your current mortgage lender...

Your own mortgage lender certainly won’t want to tell you about mortgages available from their competitors! Never rely on your lender to give you an impartial view, even of their own products!

Your own lender would rather secure your re-mortgage business, in house.   Their staff will be incentivised to ‘sign you up’ to a new mortgage product.  Even if you have a decent, low cost SVR rate, it is in your lenders interest to move you onto a new product with the higher SVR at the end of your deal.

 

With VAT and taxes due to rise next year, and benefits facing review, every household is likely to be affected by the austerity measures planned.  To sit on the SVR and ignore the potential savings in the face of higher taxes and frozen wages is something few of us can afford to do. 

 

A decent whole of market adviser can help you review your current mortgage.  An honest and ethical adviser will tell you when it’s not right to change. For many people, doing nothing is simply lining the pockets of the bank or building society to whom they remain loyal.