We have put together a list of the best mortgage tips to help you along your way.
For most people, buying a property is the biggest financial decision of their lives.
The savings you can make depend on how effectively you plan and how much time you spend scouring the market to compare the thousands of mortgage deals.
As well as having more lenders in the market, there are also more products available. While the increased choice is welcomed, it has brought problems. There is information overload and some find themselves making decisions based on the success of the providers’ marketing.
It is ever more crucial to choose the right deal to suit your needs.
After owning a property for many years there comes the possibility of borrowing from your property for equity release. This can be fraught with danger so be careful.
Many retired people who manage on a small pension and limited savings are also living in properties which have soared in value in recent years and with the average house price in England and Wales now standing at £184,924** people may be not be aware of the true value of their home.
Lifetime mortgages, also called home reversion, home income plans or Equity release plans, are a way of unlocking this wealth. This can be to buy that new car, pay for a holiday, home improvement, Inheritance tax planning or simply to make daily life more comfortable.
These schemes essentially allow you to borrow money against the value of your home, with the debt being repaid from the sale proceeds after your death.
Releasing Equity From Your Property
• Use an independent financial adviser who offers you a fee option – You’ll be more confident they are acting in your best interests. Age Concern and the Financial Services Authority, the UK’s chief financial watchdog, both recommend getting independent financial advice before proceeding.
• Always find out about fees and grants and consider trading down before releasing cash – it may well be the cheapest option.
• Consider the drawdown option. Some companies allow you to set up the scheme but borrow when you need it. This will save you a lot of interest.
• Check to see what impact the equity release plan will have on your state benefits.
• The members of SHIP agree to provide a fair, simple and complete presentation of their plans. The benefits, obligations, variables and limitations must be clearly set out in their literature, including all costs which the applicant has to bear in setting up the scheme as well as the position on moving, the tax situation and the effect of changes in house values.
• Make sure you have the freedom to move to another property if needs be at a later stage.
• Some plans are still being sold with standard variable rates. Be careful with these in difficult market conditions.
Mortgage and Debts
• Consider putting all your debts together with the cheapest source. A mortgage is a very cheap way to borrow money. By consolidating you will reduce your payments. If you then keep your payments the same, the total debt will be repaid sooner.
• Ensure you can pay the mortgage repayments, or total cash amount in full, should you die early, have an accident, become sick or temporarily unemployed.
• Appoint an IFA to check your mortgage every year. If you do move lender to get a better interest rate, be careful about extending the term of the mortgage which could end up costing you more overall.
• If you rent a property out, remember the mortgage on that property is tax deductible against your rent. Consider paying off your own mortgage before the rented property mortgage.
• If you are concerned about your endowment check to see if all future payments to it plus the surrender value will pay off the mortgage quicker. Do not encash the plan unless you get advice.
• Consider the possibility of auctioning your endowment to get a bigger value.
• Think carefully before securing other debts against your home. Your home may be
repossessed if you do not keep up repayments on your mortgage.
• Ensure your home and contents are adequately ensured. Consider policies with unlimited sums insured for peace of mind.
• Ideally, arrange home and contents insurance with the same insurer, to avoid disputes whether fixtures and fittings are ‘buildings’ or ‘contents’.
• Do not accept home insurance from your mortgage provider without first asking your IFA to check the competitiveness of the policy against what is available on the open market.
“An IFA can help you choose the right solution to purchase a property”
With over 20,000* Mortgages to choose from, where can you go?
Contact Worldwide Financial Planning today. We’ll help you choose.
* Source: Trigold 15/12/06
**Source: BBC Website
‘Your home may be repossessed if you do not keep up repayments on your mortgage’
Need further advice? Contact your mortgage adviser on:
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Your home may be repossessed if you do not keep up repayments on your mortgage.
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