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The ultimate DIY job

Thursday, September 29th, 2011

Every year in the UK around 15,000 couples take on one of the most testing challenges a relationship can experience. No it’s not entering a Mr & Mrs contest, nor is it listing each other’s faults, it’s more serious than both of those, it’s building their own home.

A rewarding challenge

At a time when mortgages for first time buyers have never been harder to find, it would seem ludicrous that couples should actually think of going out, finding a loan provider and taking out new home insurance on a property that doesn’t even exist, but thousands do and though it isn’t easy, the great majority will tell you it’s the best thing they ever did, apart from that special day of course.

Land prices have dropped

In fact building your own home may not be such a bad idea. The current stagnation in the housing sector has not just been restricted to house prices; the cost of land has also plummeted. If you bought a plot of land in 2008 for £100,000 the same plot of land today would cost about £75,000, so there is plenty of scope with regard to costs. Of course it will help if the couple have some of the skills that fit comfortably into house building as well as an appetite for hard work.

The profit is all yours

The other great financial benefit comes in at the end of the build. If a building company can complete a house for £200,000 they then bump the price up to make the profit that all companies need to survive. This does not apply to someone who is building a home for themselves. Looking at the bare facts one can easily see the sense it makes, but what must not be underestimated is the time it will take to create the property, it could take up to a couple of years.

New builds VAT exempt

For those serious about the prospect of building their own home, further good news is that a lot more mutual societies are prepared to lend money out on this type of project. Norwich and Peterborough, Chorley, Ipswich and Hanley are just a few of the societies now prepared to provide a mortgage and household insurance to people with the determination to self build. And one last financial gain you get with building a new home is that they are VAT exempt and that should also apply to materials and labour done by any professionals who are employed on the project.

Tags: Build Your Own Home, Home Insurance, household insurance, Mortgage Lenders, mortgages
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More gloomy news from the CML

Thursday, June 2nd, 2011

The level of home owners likely to see their homes repossessed by loan companies is predicted to rise this year as the effects of the government cuts, inflation fuelled energy prices and basic bills such as home insurance costs nudge thousands of homeowners to the edge of bankruptcy.

Increase will last for two years

The prediction by the Council of Mortgage Lenders (CML) is yet another piece of bad news from an organisation that of late seems to specialise in that department. Last month the CML announced that the level of borrowing in the month of April was the lowest it had been in any April for 20 years which caused a collective groan amongst estate agents nationwide. Yesterday’s grim figures suggest that the number of homeowners who will metaphorically have the rug pulled from beneath their feet this year will be around the 40,000 mark, an increase of 4,000 on 2010 figures, and if that is not bad enough, the figures for 2012 or even worse. They predict that 45,000 will lose their homes in that year.

Thousands more affected

It is the first time since the fortunes of the economy started to go downhill that the CML have actually predicted for a longer period than 12 months, which does make one wonder if they are actually getting quite fond of releasing bad news. However, the ones who will be really hit hard are those homeowners who find they can’t make up their arrears. The figure of 9,000 more mortgage holders losing a grip not just on their finances but the bricks and mortar around them in just two years is a sad reflection of just how hard the austerity measures are beginning to bite; it is in effect a 25% increase in the number of homes going under the hammer at the behest of county courts.

Small percentage but massive consequences

In all, the figure of 45,000 is less than 0.5 of all mortgages taken out in the UK, but that hides the real heartbreak felt by those who have to hand their keys back to the bank. Hard times usually see people cut back on items that perhaps they should think twice about. The level of repossessions suggests that home insurance in all its forms may be more valuable than some households imagine. It also suggests that loan providers who were persuaded by the Government to relax their rules on repossessions may now be preparing the nation for a change of direction.

Tags: Council of Mortgage Lenders, Home Insurance, home repossession, mortgages
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Bank survey reveals sad plight of would be borrowers

Tuesday, May 31st, 2011

A survey carried out for the High Street Bank, Halifax, reveals today just how disillusioned a generation of workers in the UK are, and how they view the prospect of purchasing homeowner insurance as an ever dwindling dream.

Generation of tenants

The report shows that a whole generation is becoming reconciled to the fact that they may never be able to afford a home of their own, as banks make the qualifying criteria for getting a mortgage more difficult. The report shows that although the vast majority of 20 to 40 year olds want to follow in their parents footsteps and possess a home of their own they are quickly coming to realise that they are trapped in a financial straightjacket.

Huge survey, huge deposits, huge disappointment

The report is more worrying because of the number of people who took part. This was no bite size sample, over 8,000 were questioned and 9 out of 10 still aspired to have their names on a mortgage deed, however, the stress of actually applying for a home loan and the damaging effect on one’s credit rating when being turned down was turning more and more people away from pursuing their dream.

Of course the main factor quoted was the huge deposits most banks are demanding before they will hand out a mortgage, the report shows that many of those questioned had tried to save the cash but realised it was beyond their reach. It seems as though we now have a generation who through no fault of their own will be buying home contents insurance on a house they rent rather than one they own. It is not only a worry for them; it should be a worry for the banks.

Impact could be far reaching

If the UK suddenly becomes a nation of tenants then the banks will be bidding goodbye to a source of revenue that has kept them wealthy for a long time, mortgages have been the lifeblood of the Halifax and other banks for a long time. To this end the Halifax has declared to take action on the report by the National Centre for Social Research immediately.

New approach from the Halifax

A spokesman for the bank said it would have new measures in place by midsummer to give prospective mortgage applicants a comprehensive insight into its lending requirements before they start the process. It will involve prospective buyers being given a promise of the amount the bank will lend to them. The process won’t show on their credit report, and if their application is rejected, the reason why, with tips on how to become more successful in the future will be given.

Tags: banks, First Time Buyers, halifax, home owner insurance, mortgages
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Halifax reports big drop in house prices

Tuesday, May 10th, 2011

With the UK’s largest mortgage provider suggesting that house prices are beginning to drop significantly in price again, prospective buyers looking to purchase cheap home insurance on a property for the very first time may just see a glimmer of hope on the horizon.

Difference in figures surprising

With the Halifax Bank reporting that their House Price Index dropped a surprising 1.2% in April, compared to March figures, the likelihood of bargains a plenty are out there for those that can manage to get a loan. It should be noted, however, that the figures vary quite considerably from those supplied by the UK’s largest Building Society, the Nationwide, who last week said that there index suggested a fall of just 0.2%. Considering that both major players in the market base their figures on housing values placed on new mortgage approvals it is confusing as to why there should be a big difference.

That doesn’t change the overall picture though, and that is, house prices are still falling and although many prospective buyers would love to get a home insurance quotation on such properties, it is just not happening. The uncertainty of interest rates remaining at their record low level, the price hikes in the shops and garages and the uncertainty surrounding jobs, particularly in the public sector still seems to be having a profound effect on the general public. The situation is not helped of course by the fact that banks still seem very reluctant to lend unless a big deposit is secured.

Value dropped by one fifth

The Halifax confirmed that the latest drop means that the average price of a dwelling in the UK has now dropped 20% from the peak values of August 2007, a sobering thought for all those who bought at that time and also for anyone thinking about entering the realms of house purchase at the time.

Green shoots of recovery?

The Halifax did point out, however, that not everything pointed to further decline. The Royal Institute of Chartered surveyors (RICS) have reported a shrinking of unsold properties on Estate Agents books. The Halifax asserts that this is a sign that house prices could actually soon start to rise.

Time to make a move?

More reason then for those first time buyers with at least some savings to start chasing the new low deposit loan requirements introduced by some loan providers at the beginning of this month and get out there and find a bargain

Tags: First Time Buyers, halifax banking, Home Insurance, mortgages
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Save to buy account ready for launch

Thursday, May 5th, 2011

For many first time buyers looking to get that important first step onto the property ladder, this first week of May 2011 may well prove to be a landmark. Home insurance providers can expect a little more business to be heading their way shortly if other mortgage providers follow the lead of the UK’s biggest building society and start offering home loans only requiring a 5% deposit.

Sounds good despite the small print

The news that the Nationwide Building Society will be offering a home loan only requiring a 5% deposit will indeed be sweet music to the ears of many frustrated prospective homeowners.

Of course it is not straightforward, these things never seem to be, but if a first time buyer opens a save to buy savings account with a £50 deposit and pays in a minimum of £50 per month, then after a period of at least 6 months the saver can apply for the 95% Loan to Value (LTV) mortgage. The savings account offers an interest rate of 2.5% gross per annum although the AER is variable. This applies to balances up to £20,000.

Cash back reward

If the saver does indeed take out a mortgage with the Nationwide through the offer they also qualify for up to a £1,000 cash back reward. Basically the new account will allow new customers the chance to take advantage of a scheme that was only open to existing customers looking to move home.

Good news for ancillary industries as well

The move is bound to cause a stir in the market, and if the banks decide to chase after the custom then it could be good news not only for prospective home buyers, but for people desperate to sell their homes, estate agents desperate to make any kind of sale and of course for home insurance companies waiting to provide policies on new homes.

It could boost the building industry and give a shot in the arm to the Government, who will be anxious to bring about an end to the bad press the current housing shortage is creating. The account will be launched on May 6th and the rest of the loan sector will be watching closely at the uptake.

Tags: First Time Buyers, Home Insurance, loans, mortgages
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Shared ownership still an option

Thursday, March 10th, 2011

With the housing market still in a lethargic state, and mortgages on properties in the Capital seemingly only for those that don’t seriously have to think about getting a job to get by, where does the young professional or the young married couple, trying to make a living in London, turn to for decent accommodation?

Gazumping rears its ugly head

The news that gazumping has now been transferred to the letting sector must be a frightening prospect for the thousands of young people who flock to London to further their fledgling careers. The thrill of landing a job at a prestigious company is now being tempered by the fact that one cannot afford to live anywhere near their place of employment.

Shared ownership better than shared bills?

The rental sector is booming and rents are escalating almost month on month. To find a place of your own in and around London under £1,200.00 a month is becoming nigh on impossible, and for those that hate the thought of flat sharing and working out who owes what and to whom for the monthly home insurance and utility bills, then anything else is worth considering. A young reporter on a national newspaper recently investigated the options available to young professionals ensconced in London and found that shared ownership schemes, once the flagship, future answer to property affordability are still alive but not exactly a cheap option.

The idea of shared ownership has been around for some time and the idea is that people with aspirations of owning their own homes, be they single or couples, but not having the resources to raise a deposit big enough to purchase on their own, buy a percentage of a home with the builder of the property owning the rest. The scheme is designed with the idea that gradually the part owner has the resources to buy the remaining percentage from the builder although this is not compulsory.

Scheme fraught with danger?

Without doubt the idea is good but participants in the schemes do not find the outlay, especially in the early years, too easy to find. Although it is a shared ownership scheme, such things as repairs to the property and household insurance have to be found by the incumbent. This coupled with the fact that the owner is buying a house on the cusp of affordability means many of the arrangements are financially fragile.

The intrepid reporter found that an income of at least £40,000 a year was required for a quarter share of anything decent in Central London plus of course a sizeable deposit. The schemes though are by no way unpopular because the rental situation is so bad

Tags: Home Insurance, housing market, mortgages
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