Insurance

When you are discussing insurance for loans, there’s one thing you have to keep in mind.   The person selling you the insurance has no interest in keeping your costs down.  The more you pay, the better for them!  In actual fact, the majority of people end up paying far more than they need to for their loan insurance.

So what can you do to make sure you don’t pay too much?  Here are some suggestions.

1. First and foremost, remember that there is no need to purchase your insurance from the provider of the loan.  In most cases, you are better advised to look for a free-standing PPI (payment protection insurance) – an insurance broker can advise you about buying these.  You can usually use just one of these to cover all your loans and credit agreements, so you don’t have to take out a separate policy for each one.  What’s more, they are much less expensive.  A policy from the lender will usually be quoted at between £10 and £30 per £100 of the loan amount, whereas some PPIs are quoted at £1-£2 per £100.  A big difference!

2. There are various things you can cover for in a loan insurance policy.  Most people find that some of the contingencies covered in the policy are irrelevant to them, so they are actually wasting money.  Look for a good policy that will allow you to insure for only the elements that apply to you.  For example, if you are not employed, there is no point in paying for cover against being made redundant.

3. Be careful how you pay your premium.  Don’t pay it all as a lump sum up front, or you won’t get any of it back if you pay off the loan early.  And if you are buying the lender’s insurance, don’t let them roll it into the loan.  This means you will pay interest on the insurance as well as the loan!  Have the actual premium instalments added to your monthly statement or even better, buy a loan insurance policy from an independent provider.

Insurance for loans can be very beneficial – it can provide peace of mind, and greatly relieve the stress of unwelcome life events such as accidents, serious illness or redundancy.  However, it can also add considerably to the cost of the loan if you’re not careful.   Many people just pay up without realising that they are paying too much.  Don’t be like them – think what you could do with the extra cash!

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Mortgages

More than 30 lenders withdrew their various offers of tracker mortgages from the market citing reasons of re-pricing. However, the surprise cut of base rate by 1.5% has forced many lenders to increase their margins by two-fold on tracker mortgages and starting this week, many banks and mortgage giants have reintroduced tracker deals for existing home owners. For example, Halifax, UK’s largest lender has reintroduced its two-year tracker deals for individuals who have a deposit of 25% at a rate of 5.14%, or 2.14% above base. Homeowners who have a 25% deposit with Mortgage major Lloyds TSB can hope to pay 2.09% above base. Last week, Abbey’s two year tracker was 1.29% compared to the current 1.99% above the base rate.

A tracker mortgage is a very commonly used product in the UK and is nothing but a loan secured against a real estate property and the interest that is charged promises to have a definite relationship with the base rate of Bank of England. Tracker mortgage rates are usually cheaper than fixed or flexible rate mortgage. However, the unique part of tracker mortgage rate is that even though the cost of a tracker mortgage dips with falling interest rates, it does not guard the owner against rising interest rates.

When it comes to remortgaging, individuals get mostly attracted to cheap mortgage rates which in most of the times happens to be a discount or tracker mortgage. However, there is a subtle but important difference between tracker mortgage rate and discount mortgage. While discount rates are connected with the standard variable rate of the mortgage provider, a tracker mortgage is linked with the base rate of Bank of England. A tracker mortgage mirrors the current financial situation and its interest rates are cheaper than fixed mortgage rates.

If you are looking for small payments at the early stages and willing to take the risk of higher payments in the future, then tracker mortgage are best suited for a person like you. However, like all loans, you must read the fine print before opting for tracker mortgage. If the interest rate is set well below the base point for 2 years, you can have some lenders stating that they will assess the situation once the base rate falls too low or some even mentions that you have to a pay a minimum rate if the interest falls much below expectation. Such conditions defeat the entire purpose of opting for a tracker mortgage.

You have to be intelligent to know when to go in for a tracker, fixed or capped rate option. At a time when chances of base rate falling are very high in 2009, it would be only but foolish not to opt for a tracker rate mortgage. As a borrower, you can also look for trackers that provide a drop lock choice which enables you to move to a fixed rate any time you wish. So now is the right time to opt for tracker mortgage rate with interest rates falling sharply.

By Nancy Dodds of Financemate.co.uk

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Commercial

If you have ever applied for a personal or residential mortgage, you may be under the false assumption that applying for commercial mortgages is equally simple. This is in fact not the case, commercial mortgages are significantly trickier to apply for successfully, let’s take a look at some of the main reasons for this.

• Commercial mortgages operate under a very different set of lending criteria to personal mortgages. If you do not understand these criteria, and do not have the time to research and learn how these criteria work, then you will find that your application will probably be unsuccessful.

• The application process for commercial mortgages can differ significantly between lenders, you will need to approach a wide selection of lending establishments to receive the best financial product for your needs, meaning you will need to track and control multiple applications that will probably follow completely different processes.

• When applying for commercial mortgages, you will be asked to submit a wealth of supporting documentation; this can include a full business plan showing the effect of the mortgage upon your company’s financial forecast, and a fully audited set of company accounts. These documents will need to be prepared in a format that the lender you are approaching requires them, as discussed above, there are very few standards across lenders, and you may well need to produce several version of each document, one for each lender.

• Individuals who are seeking their own commercial mortgages will not have access to the full range of lenders and mortgage products, only qualified professionals will be able to contact all lenders directly, requesting information about their specific products.

The best way to acquire the best in commercial mortgages is to contact a professionally qualified commercial mortgage broker. By selecting a good broker you will have access to all of the skills needed to make sure that your application is approved and you receive the best from your mortgage product. A broker will be able to assist you in creating and distributing the required supporting documentation to a whole range of lenders in one shot, they have access to a far wider range of products and are able to submit a single, unified application to multiple lenders at one time. This means the entire application process is vastly simplified. Your broker will also be able to search a wider range of products, meaning you are more likely to get the best in commercial mortgages, many of these products are made only available to brokers, without a broker you would not be able to apply for them, these are often the premium commercial mortgages, and represent the very best products the lenders offer.

To sum things up, applying for commercial mortgages is a vastly more complicated affair than applying for a personal mortgage; you would be best advised to seek the services of a qualified commercial mortgage broker to act on your behalf as your point of contact into the major lending establishments.

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Holiday let

Unlike more conventional buy to let mortgages, holiday let mortgages can be significantly more difficult to arrange. A vast majority of major lenders will not finance the purchase of a property that is primarily going to be let as short term holiday accommodation. Additionally, holiday let mortgages are deemed to facilitate a form of commercial enterprise, meaning further selection criteria may apply. In many ways holiday let mortgages are something of a hybrid financial product. On the one hand they are supporting a commercial venture and on the other hand they are being used by individuals who wish to expand their property portfolio.

The concept of investing in residential property via the buy to let market has become increasingly popular in recent years and people have been quick to indentify holiday accommodation as a possibly more lucrative and secure form of acquiring new properties. Holiday let mortgages allow the buyer to purchase a property with none of the associated risks of the standard buy to let business model. Holiday makers pay a premium for the use of holiday accommodation and they pay in advance, meaning more income being derived from a more secure stream.

Much like standard buy to let mortgages, holiday let mortgages will only usually provide 70% to 80% of the actual purchase cost of the property, borrowers will need to find a significant deposit from their own resources. Many lenders will also insist that the property in question has a minimum value of around £70,000 which in today’s property market is not such a large hurdle.

Holiday let mortgages can be a great way to achieve financial freedom by accruing property assets which quite literally pay for themselves. If we consider that the only initial outlay will often be the deposit, and that many properties will make sufficient income to fully cover the holiday let mortgage repayments, then it becomes clear that this particular form of investment is particularly attractive to those people who find they have limited funds.

The marketplace for holiday let mortgages is still fairly young and is slowly evolving into a mature field, much in the way that buy to let mortgages have developed over the past decade. Now is the time for those who are considering holiday let mortgages to act, right now the process of applying for this form of finance dissuades many people from entering the market, once the products have evolved and the application process becomes more streamlined, many people who were previously deterred from applying for holiday let mortgages are bound to revisit the option once more. The market will become flooded and the real bargains and profit will begin to dry up.

If you are seriously considering holiday let mortgages as an option to build your personal wealth by acquiring a portfolio of holiday accommodation, then you are advised to seek the advice of a professional broker, who will be able to assist you in finding the best holiday let mortgages for your needs.

Enhanced Wealth are a specialist provider of holiday let mortgages, you can visit our dedicated holiday let mortgage website here http://www.holidayletmortgages.co.uk

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