Scru­ti­nise small print on those tempt­ing mort­gage deals

Yorkshire Post - Property - - PROPERTY - Framz Muelthaler

AN­SWER: There is no doubt what we are wit­ness­ing is a price war be­tween mort­gage providers. HSBC, NatWest and San­tander are of­fer­ing record low five-year fixed rates be­low three per cent. These rates cer­tainly come as a sur­prise as many of us be­lieved rates would continue to climb, leav­ing many con­sumers ex­tremely cau­tious.

There re­ally hasn’t been such a tempt­ing of­fer and it looks like they are set to stay. Natwest, HSBC and RBS, to men­tion a few, are all of­fer­ing ex­cit­ing deals to prompt you to con­sider your op­tions. How­ever, the say­ing “if it sounds too good to be true it prob­a­bly is” springs to my mind and my rec­om­men­da­tion would be you that you must read the small print.

It is true that five-year fixed rates be­low three per cent have never been seen be­fore. So if you are on a tight bud­get, a fixed rate pro­vides you with the lux­ury of know­ing pre­cisely what money you need and when – which is a real lux­ury in to­day’s un­cer­tain cli­mate. How­ever, the small print is im­por­tant and with such a good deal comes hefty con­di­tions.

The catch is you are look­ing at a loan to value per­cent­age of 60 per cent at the least, some are stip­u­lat­ing 75 per cent. With such big de­posits of at least 40 per cent cou­pled with the huge ar­range­ment fees and you can see why these tempt­ing deals aren’t avail­able for ev­ery­one.

Still, it’s fair to say the mar­ket is cer­tainly shift­ing; just this month the su­per­mar­ket gi­ant Tesco launched its own mort­gage prod­uct, which they claim will be linked to your Club­card points if you are a Club­card mem­ber. My point is ul­ti­mately it pays to shop around and take the best ad­vice you can be­cause you never know what will be on of­fer this time next week. AN­SWER: There is a lot you can do here and it’s mainly con­cerned with tight­en­ing your belt and prov­ing to a lender you are the sort of re­spon­si­ble cus­tomer they want.

Your credit score is re­ally im­por­tant and if you have a his­tory of bad debts, an abun­dance of credit cards at their limit and var­i­ous other store credit and loans, then for­get it.

This sim­ply il­lus­trates that you spend be­yond your lim­its or, more im­por­tantly, that you have too many fi­nan­cial com­mit­ments mak­ing you un­able to ac­com­mo­date a mort­gage pay­ment.

Pay off your debts or re­duce them. Pay off the bal­ance of your credit cards and then can­cel the cards. Fail­ing to can­cel them means your bor­row­ing fa­cil­ity is still live and is still on your record – this is viewed neg­a­tively when scor­ing your fi­nan­cial abil­ity to pay a mort­gage.

If you are for­tu­nate enough to have par­ents who will pro­vide you with a de­posit then you are blessed. The rest of us shouldn’t dis­miss the Bank of Mum and Dad, as there are a se­lect num­ber of mort­gage deals where your par­ents’ eq­uity in their own home can act as a guar­an­tor on your mort­gage. Some lenders also of­fer off­set deals, where par­ents use their own sav­ings to re­duce the de­posit you need.

With­out wish­ing to sound like older fam­ily mem­bers, it re­ally is a case of look­ing af­ter your pen­nies and the pounds will look af­ter them­selves. Save as much money you can, con­sider what you are re­ally spend­ing your money on. Sav­ing money and us­ing that to in­vest in a mort­gage at a time when prop­erty prices and mort­gage rates are low is set­ting you up for the fu­ture. Take ad­vice, speak to an in­de­pen­dent mort­gage bro­ker who can help you fo­cus on what sort of deals could be avail­able to you.

Franz Muelthaler is a mort­gage ad­viser for Hol­royd Miller, Wake­field, www. hol­roy­d­miller.co.uk.

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