Archive for Mortgage Lenders
Nov
09
Consider Mortgage Payment Protection For Peace of Mind
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If you want peace of mind that you would not be at risk of losing your home to repossession then consider taking out mortgage payment protection. A policy would provide you with an income after so many days of unemployment or incapacity and would payout for a certain length of time which is set by the provider. You would not have the worry of falling into arrears with the mortgage and the lender taking you to court to seek possession of your home. You would be able to make a recovery or look around for work knowing that your mortgage payments were safe.
Lenders will not repossess at the drop of a hat, but they will as a last resort and if you cannot continue paying your mortgage while catching up on the arrears then repossession is a strong possibility. Repossession means losing your home and the memories built up in it. It also comes with stigma of eviction and of course your credit rating is in tatters, which makes borrowing again extremely hard in the future. One way of ensuring that you are not faced with this possibility if you lose your income is to keep up with the payments of the mortgage by taking out mortgage payment protection. Relying on any help from the State is not the best option. You would have to meet criteria set out and even then you would only receive help with the interest part of the mortgage. You could also expect to wait several months before you would see any benefit. If you were relying on savings as a way of keeping up with the mortgage then savings could soon deplete if you were to be unable to work or could not find work for many months.
Mortgage payment protection can be taken cheaply with a standalone provider. This is a better way to take out protection than having it included into the mortgage. High street lenders charge highly for their protection when adding it onto the mortgage at the time of borrowing. A standalone specialist will also provide you with all the information you need to ensure that a policy is right for you. You are able to choose the level of protection that is most suitable. You could insure against accident, sickness and unemployment together, accident and sickness as a standalone policy or just for unemployment. This will reflect on the cost of the cover as will your age and the amount you wish to protect of your mortgage repayment.
When your policy would begin paying out and for how long would depend on the provider. Some policies would provide you with an income tax-free after the 30th unemployment or incapacity date. Other providers could ask you defer from claiming until the 90th day and some could back pay to day one of you being made unemployed or of suffering accident and sickness. Once the term of the mortgage payment protection policy has been reached then the policy would expire regardless of whether you had found work or recovered and gone back to work.
Rent Back
Oct
21
Mortgage Protection Insurance Protects Your Home From Repossession
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Repossession is a huge worry to any homeowner and it can and does happen and sometimes this is a result of either being made redundant or losing your income to accident and sickness. In cases such as this repossession might have been avoided if the homeowner had taken out mortgage protection insurance. A policy would provide you with the income needed for you to be able to meet the repayments each month without a struggle. You would not have to make changes to your lifestyle and cut down on other things in order to be able to keep up with your mortgage.
Mortgage cover is offered when taking out the mortgage with the lender. However in the majority of cases this is often the dearest option for protecting the repayments. A far cheaper solution comes by way of standalone specialist providers. Such providers offer premiums based on your age when applying and the amount that you wish to cover, this is your mortgage payment. All providers will allow you to insure up to a certain amount each month and this is the sum paid to you as a tax-free income. You are able to tailor mortgage protection for your needs. You could take out cover for accident, sickness and unemployment together, unemployment only or incapacity only.
When the mortgage is due you then carry on paying it as you would normally do and this stops you from getting into mortgage arrears. Lenders will have no option but to take you to court and apply for repossession of your home if you fall into arrears. This of course will lead to eviction if the judge believes that you are unable to keep up with the payments and also repay the arrears. Your policy of course stops any of this happening.
When buying mortgage protection insurance from a standalone provider, the policy will differ slightly with each provider. Some may offer protection that would begin to payout after 30 days of you being unemployed or of being incapacitated. Other providers might ask you wait for a period of up to 90 days and then you are able to put in the claim. Cover will last for so long once it has started to payout; providers usually offer either 12 or 24 monthly payments before the policy ends. During this time you would be able to concentrate on finding work or making a recovery.
Mortgage protection insurance earned itself a bad name along with all payment protection products when an investigation began into the sector in 2005. Fines were handed out by the Financial Services Authority which included a mortgage firm who had mis-sold cover. High street lenders give inadequate information which led to consumers taking out cover that they could not possibly hope to claim against. Cover also came at high cost which boosted up loans and mortgages considerably. Consumers should be aware that the products when sold with the correct information regarding the exclusions can and does work as it is supposed too. Ethical providers will ensure that they provide you with the information you need to check suitability before buying.
Sell and Rent Back
Sep
20
A Few Considerations to Note Before Choosing a Mortgage
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When assessing your borrowing ability, what I found is a mortgage lender will take five key factors into account - your income, existing debts such as credit cards or other loans, the amount of deposit you have available, your past credit record and your employment status.
1. Income
Most mortgage lenders use a method known as an income multiplier to calculate how much they are prepared to lend. A ‘three-plus-one’ multiplier basis allows a lender to advance an amount equivalent to three times the main salary plus one times the secondary income.
The income a lender is prepared to take into account varies. But as a general rule, income that is guaranteed or has been received regularly in the past will be considered. In contrast, income that is not guaranteed, such as occasional overtime, will probably be ignored. The lender will also need proof of your income and will probably ask for recent pay slips or previous P60s - forms from your employers detailing your pay in the past tax years.
2. Existing Financial Commitments
If you have outstanding loans or credit card bills, a lender will reduce the sum it is prepared to lend you based on your income. This is because there is already a financial strain on your household budget and the lender does not you to be overstretched.
How much it reduces the loan amount depends on the size of your existing debts. Mortgage lenders tend to adopt one of two approaches - they will either reduce the advance by the size of the outstanding debt or they will recalculate the permitted maximum loan taking into account the monthly cost of a borrower’s existing credit.
3. Size of deposit
Though some mortgage lenders will allow you to borrow a sum equivalent to 100% of the value of your dream home, deals such as these are the exception rather than the norm. Most lenders require a deposit of between 5% and 10% of the value of the home. The bigger the deposit, the more favourably a mortgage lender will look upon you and a wider range of mortgage deals will be made available to you.
4. Credit History
If you have a chequered personal finance history you find it obtain a loan from a mainstream lender. When considering your mortgage application a lender will check whether you have previous mortgage arrears, have had a county court judgement recorded against you or have a bad credit record.
Some mortgage lenders will tolerate past financial indiscretions provided that you declare to them openly in other words, they don’t find out first - and your explanations are satisfactory.
5. Employment status
Though lenders are more aware of the increasingly flexible jobs market, they prefer to lend to people who have displayed job stability in the past or who can show a defined career path. They are less partial to people who constantly change jobs or who have big gaps in their employment history.
On a final note choosing a mortgage is probably the most important personal finance decision you will take. It is imperative that you get it right by comparing the right type of loan option. Take your time, seek help and advice, and don’t be afraid to question anything you don’t understand.
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