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With the world in the clutches of recession, owning a property is becoming a more and more remote possibility for many. But it remains most people’s dream to have a home which they can call their own. You too can have your dream home and this can be achieved by getting a mortgage. But it has become all the more difficult to save money which can be used for buying the roof over your head. Now you can have a home with the aid of a mortgage, this is a loan that is given against the property that you have bought and you have to pay a stipulated amount over a fixed period which includes both the capital and the interest. Capital refers to the amount of money that you have taken from the mortgage lender and interest refers to the amount that the lender levies for the money that is being lend to you. This is the way that this business functions and in this manner both the parties are being benefited.
Now you must be wondering that from where exactly you would be able to procure this mortgage which is being so largely being advertised in UK. There is absolutely no need to get all worked up; you will be able to get all the details pertaining to UK mortgage by logging on to the internet. There are many firms and companies which have been in this particular field for many decades and have helped thousands of people realize their dream of owning their dream property, by lending them the required amount of money by mortgaging their property. You can go through all their terms and conditions and in case you are not able to understand then you can also contact their customer care department and talk to one of the executives and they would be more than ready to clear all your doubts so that you will know exactly how to go about the mortgage.
In case you are planning to get a UK mortgage then it is very essential that you do the required research before you home on to a particular lender or bank. You should find out the amount of interest that each one will charge and if there are any hidden costs because later on you should not be taken by surprise. Never be in a hurry because remember that you are investing for your dream project and there are many tricksters out there ready to pounce on the first innocent victim. You should try to get at least three quotes from three different mortgage lenders who are authentic, then you should compare their rates and which you feel is the most reasonable and affordable try to fix the deal with that lender. Banks also will lend money on mortgages, so if you feel that you can strike a better deal with the bank then you can go ahead.
The mortgage lender before lending you money will first and foremost value your property and based on that only they will give you loan and you should remember that has long as the mortgage is there your property will belong to the lender. You are supposed to pay a fixed amount for a fixed period of time till the lender recovers the capital as well as the interest amount, only after that will the property truly belong to you. You should ensure that you do not default on your repayment, because if you do not pay the stipulated amount to the lender then he can take action against you and if the do not pay for a prolonged period then there are very high chances of losing the property.
There are different kinds of mortgage loans in UK like standard variable rate, fixed rate, capped rate, variable rate, tracker rate, discount rate etc. according to your convenience you can decide which kind of loan will suit you the best. It is also good to take a mortgage loan if you need to buy a house but ensure that the amount you take should be within your capacity to repay during the stipulated period, otherwise you will end up losing your property to the mortgage lender which can be very traumatic.
UK house price predictions
Nowadays owning a house seems to be a distant dream to many of us. But it still remains embedded in the DNA of every young British person that part of life’s plan is they will own their own home.
After the financial crisis of 2008 onwards the number of home loans collapsed. But things are getting better and the dream is returning. There are now many more companies and banks which are ready to lend money for buying a property. First they assess your paying power because when you take a loan you have to pay back the money along with the interest in instalments over a certain period of time.
This involves a lot of paper work and you will have to furnish all the details about your financial and the employment status so that they are able to ascertain whether you would be able to repay back the loan. There are a variety of UK mortgage and you can choose the one according to your paying capacity. It is always better to take only that much amount of money has loan which you would be able to repay; otherwise your mortgaged property will go into the hands of the mortgage lender.
In case you are among the few lucky ones who do not have to bother much about the financial aspect then you can always buy your dream house with out much of a hassle. Before you venture out on house hunting it is advisable to study the market trends and what are the going rates in different parts of UK. You can always approach estate agents who are really clued up about all the going rates. They keep themselves abreast with the forecasts and predictions made by the
estate gurus who have specialized themselves in this area of studies. It is always better to get acquainted to all the latest updates and market trends so that you would have a clear picture. It is better not to fall for speculations which will definitely be doing rounds because the UK house prices will indeed be a very happening topic which will interest a lot of people. There would be certain magazines and newspaper which will have certain pages exclusively dedicated to the UK house price forecasts and predictions. So it is advisable to subscribe to these newsletters so that you can keep yourself updated as to the prices so that when you decide to invest in a house you would be making the right choice.
Though a group of people might be of the opinion that since the entire world is going through recession, hence the house prices in UK too would be affected and it might crash, but it is better not to believe such kind of talks because according to few well known UK economists the house prices will not decline but it will only rise. If you are interested to know more about buying a home then you can take the aid of the internet, there are many web sites which will provide you the details of the estate agents. Mostly when you decide to buy a house you approach estate agents because they would know exactly the houses which are for sale and it is better to tell them your budget because then they will show you those houses which will fit into your budget. It is always better to go through these agents because they will be able to guide you through the entire process of procuring a house. In case you want to get a mortgage then they will know the exact people whom to approach so that you are able to get the mortgage with the least amount of fuss.
When you are dealing with estate agents beware of cheats because some of them are not interested in getting you a good house but are all out to just make some quick buck. So always make sure that the agent has a good reputation and has been in this field for quite a while, be careful of smooth talkers because they might actually not know their job well and in the bargain you might end up with a house which is not to your liking. So it is always better to do a detailed
research and try to keep your eyes and ears open about the UK price predictions made by the economists and estate experts in the various parts of UK so that you would not get conned while buying your dream home.
Lending seems to be picking up if the data released by Bank of England is to be believed. In December, there was an increase in the number of loans provided, when compared to the number of approvals done in November. The average of the last 6 months has also been beaten in the month of December. The Government had launched the scheme to boost lending, which is called as the Funding for Lending. These loans are available to not only individuals, but also businesses. The lending rates have also been decreasing and this has helped to obtain an encouraging figure
as far as the housing market is concerned. The Credit Conditions Survey, which has been conducted by the Bank of England has observed that the loans are available to people. Though the change may have only started, it is sure to
continue over a period of time. In spite of the rosy picture, there are some people who are much more cautious because the approval of mortgages has not crossed the usual average and is in fact below the average.
According to Howard Archer, who is at HIS Global Insight, there may be a gradual pick up in the market, which had its lows in mid 2012. The funding for Lending is the main scheme that seems to have helped boost the sentiments according to him. Council of Mortgage Lenders has also reported that the number of loans that have been provided to people who have applied for the first time. There has also been a general increase in the number of loan approvals, according to them. Hometrack has published the results of a survey that suggests that many of the estate agents feel that the housing market will improve from the present. The house prices have been a mixed bag over the months.
Similarly, the Building Societies Association has also released data that more than 3 billion pounds of mortgages have been approved in the month of December alone. This includes remortgaging and also house purchases. As the scheme for Lending by the Bank of England becomes more popular, there is sure to be an increase in the lending in the mortgage markets. The data from various sources also show that the credit card lending has increased over the last few months. Though the consumer credit has been on the rise, the borrowings are not strong enough. Though the borrowings have increased, the long term averages have still not been surpassed. All the data point to the fact that the consumers are not interested or are wary in obtaining new loans. The feeling is also that many people are trying to reduce the debt that they are in.
In the last four years the Bank of England has kept UK interest rates at an all time low of 0.5% and pumped a staggering £375bn into the economy. As a result savers have lost out and companies have been forced to top up pension funds rather than using spare cash for growth investment. The banks quantitative easing policies have been
described as a “monumental mistake” and are being pressured by Thread-needle Street to increase interest rates.
Restless economists are calling for more action from the UK central bank. In response, the new governor, Mark Carney declared the bank´s policy options are far from exhausted and suggested he would take aggressive action to ensure “escape velocity,” in order to avoid a triple-dip recession. Speaking at the World Economic Forum this
week, Carney said, “There remains considerable flexibility – which includes the use of communications, which includes the use of unconventional measures.”
Can Carney save UK economy?
Carney was handpicked for the role as Governor of the Bank of England by George Osborne. His reputation soared after he managed to avoid the global crash that gripped the world during his tenure as the governor of the bank of Canada. He has now been handed the task of reviving the UK economy and overturn the mess his predecessor Sir
Mervin King appears to have left behind.
A report presented in the House of Commons this week confirmed that the central banks QE program has squeezed the incomes of families and individuals and restricted companies from investing because the law regulates they have to top up pensions in the event of a shortfall. In effect, QE has had the opposite effect of what the bank supposedly intended. And this in a country that is supposedly a democratic society!
Pensions expert, Ros Altmann said the banks policies devalued the incomes of pensioners and has hampered spending power. The bank themselves admitted that “everybody is feeling the pinch” because inflation is running at a higher rate than the increase in wages. The bottom line is QE drives up prices which subsequently reduces
demand. Altmann added that without quantitative easing the “the economy will be freer to grow than if we do.”
If Carney is to rescue the UK economy he has to reverse the status the policies in the last four years have left. Instead of reviving the UK economy by keeping interest rates at an all-time and preventing the financial growth of companies and individuals the Bank of England has prolonged the UK recession.
UK house prices enjoyed the fastest rate of growth in January, but leading mortgage lender, Nationwide say that the low number of first time buyers is a “cause of concern.” The government backed Funding for Lending Scheme which was launched in August last year has made cheaper mortgages widely available, but with the average house
price in the UK costing £162,245, young people are still being priced out of the market.
In the past first time buyers have accounted for 40% of housing transactions with around 32,000 buyers a month in England and Wales. Since the housing market collapsed in 2007 that figure has dropped to around 20,000. Despite FLS making mortgages more accessible to buyers, banks are still demanding a 20% down payment which first time buyer´s cannot meet.
Despite the Nationwide describing the UK housing market as concerning they do believe there are “encouraging signs” thanks to the Bank of England´s Funding for Lending Scheme that allows mortgage lenders more access to more than £80bn of low interest finance. The scheme has helped to fuel the housing market in the last few
months but in doing so will also cause house prices to gradually rise.
Soaring UK house prices
The current housing situation in the UK has to be one of concern for future generations. We are currently in what has been dubbed the “Boomerang Age” whereby teenagers leave the family home to attend University, but return back to their parent´s home with huge debts and no chance of securing a mortgage. Even if they find employment increased rent prices and high repayments on student loans is a strain on their income.
The inevitability is that children will be living with their parents well into their twenties, if not their thirties. Some parents are taking out second mortgages to help get their children on the property ladder, but this could ultimately affect their retirement funds. FLS has made interest repayments on mortgages affordable for now, but they will increase in four years and is likely to cause financial distress for borrowers.
Another scenario is people who choose to rent may be doing so for years and never actually own their own property. This will decrease the value of their estate and children of future generations will not receive much inheritance. In turn they will not be able to afford their own property either. If UK house prices continue to rise and young people
are so saddled with debt they cannot afford a mortgage, future generations in Britain will never own property.