Mortgage Advice
We realise that in this current economic climate your mortgage is one of the most important aspects of the property transaction. You need a mortgage that is tailored to your lifestyle and income, so that you are not burdened with excessive financial pressure.
For your mortgage needs please contact Hal Ferns, Independent Financial Advisor. Hal is authorised and regulated by the financial services authority ( 231678 ) and will be happy to help in any way he can. Part of the many services Hal can provide will enable you to compare a wide range of products to find the ones that best suits your individual situation and needs. Hal can be contacted via our office on 01420 473333 or 07961 896197
The importance of a well structured mortgage plan cannot be underestimated; if you do not keep up with repayments on your mortgage then legal action is swiftly carried out.
Getting the right type of mortgage is a vital aspect when buying your new property. There are many different types of mortgages available on the market for you to get your head round.
Some of the main types available are:
Variable mortgages
Each lender sets their own SVR so they can vary considerably. Generally this means that if the Bank of England puts the interest rate up or down, your Standard Variable Rate (SVR) will almost certainly follow, though not necessarily simultaneously. If rates go down, you'll save. If rates go up, so will your repayments - so you need to build some flexibility into your budget if you decide to go for this type of mortgage. The main reason someone may consider this type of scheme is to avoid any early repayment charges if they do not anticipate having the mortgage for long.
Discounted variable
This type of mortgage sets the rate you pay below the lender's SVR for a set period, for example two years or three years. If your discount is two per cent, when the SVR is seven per cent then your mortgage rate will be five per cent. If the SVR rises by one percent, your rate also rises by one percent. At the end of the discounted term, repayments go back to the SVR.
Tracker
This mortgage follows the interest base rate as set by the Bank of England. It usually stays a set amount above or below this rate for the period of the loan. Some longer-term trackers also offer an initial discount. The benefit of a tracker, as opposed to a discount from the lender's SVR, is that if the Bank of England reduce the base rate then your rate will reduce simultaneously, whereas if you are discounted from the lender's SVR, there is no guarantee if, when and by how much the lender will follow suit, as they are not obliged to do anything. Tracker mortgages remove this conflict between you and the lender.
Fixed rate
A fixed rate mortgage is a way of guaranteeing your payments for a set number of years. This means that whatever happens to the Bank of England base rate or the lender's SVR, your payments remain the same. If rates go up you will be better off and if rates go down you could be worse off, but the main benefit is you know what you need to pay each month and can more easily budget for it. Fixed rates can be from one year to the whole mortgage term. Generally, shorter term fixed rates are lower and more attractive, so shorter term rates of two to five years are the most popular.
Along with different mortgage types, there are also varying types of insurance policies available as protection for your mortgage. Insuring yourself against possible accidents or illnesses ensures that you do not leave your family lumbered with repayments if you are not around.
Term Assurance :
Decreasing Term Assurance Plans provide life cover which decreases roughly in line with the reduction of your outstanding mortgage. Whilst you might expect the mortgage to be repaid in the event of your death, in some cases the lump sum is not enough to repay the mortgage in full. However, these types of insurance plan means that you do not have to pay for more protection than you actually require.
Level Term Assurance Plans are simple, low cost arrangements that provide life cover for the agreed lump sum, during the agreed term.
Critical Illness Cover:
Many of us take out insurance for our mortgages in case we die, but few of us cover against if we suffered critical illness or disability.
Critical Illness cover is designed carefully to provide a lump sum on death or diagnosis of any critical condition as defined under the terms of the policy. This means that money will be available at a time when a critical condition or disability may affect your financial position or ability to earn.
Income Protection:
Income Protection Benefit provides a monthly benefit should you be unable to work due to incapacity caused by accident or illness, resulting in a loss of earnings. This allows you a degree of financial stability until you recover and return to work, no longer suffer a loss of earnings, in the event of your death or until the policy expires.
The level of weekly benefit proposed for Income Protection policy is based around your current earned income. The amount that might actually be paid in the event of claim is affected by two things. Firstly, the amount of any increase in income and secondly, your entitlement to the Incapacity Benefit paid by the State
Buildings and Contents Protection:
Our buildings and content protection is designed to cover your home and the possessions within it for almost any eventuality.
The insurance of the property against major damage such as fire and other risks will normally be a condition of your mortgage lender. In addition to your bricks and mortar, the contents on your house are extremely valuable and this type of protection ensures that, in case of any accident, you are not left paying the price for your uninsured contents.
