Understanding Mortgages


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Choosing a mortgage is about more than just finding a good rate. It’s a decision that should take into account you finances, your lifestyle, your attitude towards risk, and a bit of crystal ball gazing too.

Below is a run through of the basics: different repayment methods, different loan types, some special cases, and some pitfalls to avoid.

Mortgage Advice

Paying it back: Repayment or Interest Only

At the most basic level, the first choice you have to make is whether or not you take out a repayment mortgage, where you pay off some of the money you have borrowed each month, plus the interest owing.

Or you could opt to fort an interest only mortgage, where you pay off no capital. Your monthly outgoings will be reduced, but you do need to find some way of repaying the amount borrowed, such as an investment ISA, or a pension scheme.

It is also possible to go the interest only route for the first few years of your mortgage and then switch back to a repayment loan. This can be useful for first-time buyers who think their income will rise – but be prepared for the higher monthly costs when you switch to the repayment deal.

Standard Variable Rates & Other Deals

Next you will have to decide which type of mortgage product suits your circumstances the best.

Lenders have a basic rate, called their Standard Variable Rate, which tracks, but is usually higher than, the Bank of England’s Base Rate.

However, lenders also offer special mortgage deals for specific time periods – when the deal expires you go onto the Standard Variable Rate. At this point you can choose another deal or remortgage with another company.

Here are some classic deals offered by lenders:

Fixed Rates

The favourite for borrowers on a tight budget, a fixed-rate mortgage guarantees you the same monthly payment for the lifetime of the product. The rate of interest may be slightly higher, but the ability to fix your payments for in between one and ten years can be worth it for peace of mind.

Although there is often talk of 25-year fixed-rate mortgages, a period of two to five years is more usual, with the interest rate increasing with the length of the product.

Discounted Rates

With a discounted mortgage you benefit from a low interest rate for any given period, usually a few percent off the lender’s standard variable rate (SVR) for a year or two. This may offer a cheap headline rate, but is more risky proposition. Any changes in your lender’s SVR will affect your monthly payments so you need to know you can cope with a rise.

Stepped Rates

These are similar to discounted in that you start off on a low initial rate, which then ‘steps up’ to a higher rate after a period of time, but both rates are fixed in advance. The general rule is the lower the rate, the higher the stepped rate.

Tracker Mortgages

A tracker is much like a discounted mortgage, but it shadows the Bank of England base rate for an agreed period of time, e.g. 0.02 percent above base rate for two years. This can be the cheapest mortgage on the market, but it carries the risk of higher monthly outgoings if the bank base rate rises.

Capped Mortgages

With advantages of both the fixed and variable rate mortgages, a capped mortgage insures you against interest rises over an agreed level, but if the interest rates fall significantly your monthly payments can come down too.

Of course, for such a good option, you will often pay a higher interest rate.

Flexible Mortgages

Designed to suit the needs of borrowers, rather than lenders, a flexible mortgage allows you to make overpayments, and take payment holidays as your finances fluctuate.

However, flexibility comes at a price, as you may find that the higher rate is not worth it when many more conventional mortgages are now offering similar features.

Cash-back Mortgages

The idea of a cash-back mortgage is that on completion the lender gives you a lump sum, either a fixed amount, or a percentage of your loan, to spend on whatever you want. But, for your cash handout you will have to put up with a higher interest rate, and you will be tied into the deal for a set period, so make sure you wouldn’t be better off getting your lump sum elsewhere.

Offset Mortgages

Strictly for those with substantial savings, an offset mortgage uses your funds to offset the mortgage. So, if you have a £100,000 mortgage and £25,000 savings, you will only pay interest of the £75,000 difference. It’s a good way to make use of your savings, it’s tax efficient if you pay a higher rate tax, and it means that you can pay off your mortgage quicker, but you may pay a higher rate.

Working out whether or not an offset mortgage will save you money can be complicated, and it is probably worth taking advice from a mortgage adviser.

Self Certification Deals

If you are self employed and don’t fulfil the lenders’ usual requirements you may be able to get a self-certification mortgage. Obviously, if you aren’t in secure employment you pose a bigger risk to lenders, so you can expect this to be reflected in the interest rate, although the bigger the deposit you can put down, the better rates you can find.

Self-certification mortgages are available as all the usual types of product – fixed rates, capped rates, discount rates tracker rates and buy-to-let.

Buy-to-let

If you want to invest in a rental property you will need a buy-to-let mortgage.

You will typically have to put down 20-25 percent of the property’s value as a deposit. The final decision on whether to lend you the money is usually based on either a combination of your income and the rental potential, or solely on the rental potential of the property.

Because there are so many mortgage options available why not contact online estate agents turtle homes and we’ll put you in touch with a whole market mortgage broker.

How much can you afford?

Finding the ideal property

How to get the most from viewings

Making an offer

Conveyancing

Getting Ready

The Big Day!

What happens if I struggle to sell my house online?

At turtlehomes.co.uk we regularly analyse all of our housing stock to make sure that they are marketed in the best light to maximise the chance of selling.  There are various factors in particular that we look at, I’m going to focus on these in further detail.

Are you advertising in the right places? 

Over 80% of house hunters find their property online with most of those visiting the main five property portals.  Find out which websites your agent advertises on, if you are not on all five then your property is not receiving the exposure that it deserves.  An online estate agent will list on literally hundreds of websites.  If you are on these websites but still not receiving the number of leads that you expect then the first thing you should check is the Click Through Rate. 

Click Through Rate 

The Click Through Rate is the number of times a home-hunter chooses to click through from seeing a property’s summary details on the search results page of a website, to view more information about the property on its own details page.  Basically the higher the Click Through Rate then the more people viewing the property then the greater the chance of leads.  Ask your agent what your CTR is, if it falls below 5% then something is wrong either with your asking price or the presentation of the property. 

Presentation 

The presentation of a property is the best way of attracting leads.  On the summary page it is important to offer the best reasons possible for a prospective buyer to click through to your property.  The main photograph is critical; it needs to show the property in the best light.  It is also advisable to change the image to an internal photo or simply use a front shot from a different angle.  Research shows that houses hunters regularly trawl websites and by swapping and updating the property images you are more likely to be noticed. 

Price 

If improving and changing the property presentation doesn’t improve the click through rate then the only answer will be to reduce your asking price.  Your estate agent should be able to provide you with valuation reports which will show you how much similar houses in your area are being marketed for. 

Author – Richard Tuck B.Sc – online estate agents – turtlehomes.co.uk

What is the NAEA?

The National Association of Estate agents is the professional body for estate agents in the United Kingdom.  It was founded in 1962 with the goal of upholding good practice and high professional standards. 

NAEA is membership organisation which falls under the NFOPP (National Federation of Property Professionals) group with also comprises the ARLA (Association of Residential Letting Agents).  The NAEA also incorporates a number of smaller groups including ICBA (Institution of Commercial and Business Agents), NAVA (National Association of Valuers and Auctioneers) and NAEA International (incorporating the Federation of Overseas Property Developers, Agents and Consultants). 

Today the Association has over 10,000 members across the world that practice all aspects of property including residential sales and letting, property management, business transfer, auctioneering and land. 

Key roles of the organisation include providing guidance for property professionals across a broad spectrum of disciplines whilst campaigning to make the property market more efficient and user-friendly for the home buying and selling public. 

Members of the National Association of Estate Agents are expected to gain an entry qualification in order to join.  Members are then required to abide by a code of conduct, they must meet minimum standards relating to professional and ethical practice. 

So by choosing to use a member of the NAEA you can feel confident of receiving good service. 

Author – Online Estate Agents – turtlehomes.co.uk

Turtlehomes.co.uk seventh most successful online estate agent in the UK

A former ‘for sale by owner’ website has become the most successful online estate agent, says a new report which makes the first analysis of online estate agents. 

The report commission by ‘The Estate Agent’ the magazine of the NAEA undertook comparison of online estate agents, looking at their prices, services, year established and the quality and popularity of their websites.  the quality of each online estate agent’s website was judged using an online tool known as Website Grader (WG) which compares various factors to give an overall score out of 100.  The factors include online visibilty, online popularity and the structure and features of the website.

Surprisingly, iSold, the Spicerhaart venture backed by Tesco, does not feature in the top seven online estate agents ranked by quality of website:

  • The Little house Company
  • My Property for Sale
  • Half a Percent
  • 121move
  • House Revolution
  • House Network
  • Turtle Homes

The reports author, James Cole of The Big property list, said the online estate agency sector is characterised by new entrants or former estate agents starting up online.

How to ensure that your property sells online

Nowadays, almost anyone that is looking to buy a property will firstly browse the internet.  It is therefore vitally important that your estate agent will advertise your home on as many of the major property websites as possible. 

Once listed the secret is ensure that your property stands out from the crowd, and potential viewers actually click on your listing to find out more information.  Once there, if they like what they see, and the description matches your criteria then you have a better chance of gaining a viewing. 

So how can you ensure that your property is clicked on rather than somebody elses? 

Price 

You need to ensure that the price is achievable.  There is no point trying to ask for too much money, you simply won’t generate any viewings.  Ask your agent to provide you with a “Best Price Guide” so you can gauge whether your asking price is competitive.  If it isn’t then potential buyers will simply bypass your listing for one that is. 

Presentation 

Your property needs to be presented in the best possible light and this needs to be communicated with photographs to potential purchasers.  Ensure that before your estate agent visits that your home is immaculately clean and tidy, not only inside but also externally.  You are planning to move house anyway, so ensure that all clutter and oversized furniture are removed.  Its all about first impressions, if the photographs look appealing the click-through rate will increase. 

Property Listing

Ensure that your property is listed on the top property websites, if it isn’t you will be missing out on potential hits. The cheapest way to do this will be to employ an online estate agent. 

Summary 

Get your price right, get the presentation right, list your property where it will gain the most exposure.

How to use social media to help sell your house

In such a tough housing market, many vendors are using more and more creative ways to help secure a sale on there property. 

Social media websites are increasingly becoming part of peoples everyday lives.  Facebook has over 500 million active users as at July 2010 and Twitter has 100 million active users. Communication via Tweets and status updates is set to overtake that by email and text messages in the next few years.  In essence it has become mainstream and people are using social media in more constructive ways, for instance to sell their homes. 

So how can this help you sell your house you may ask?  Well unless you have a friend, fan or follower that is looking to buy a house and your house happens to fit you requirements exactly it will be very difficult. 

There are instances such as Peter Bouvier in Southampton who created his own website to advertise his home and posted it on Twitter.  He claims to have generated 30 viewings and agreed a sale without an estate agent. 

In real terms, however, using an estate agent to sell your house will provide you with the best chance.  Look out for online estate agents who embrace the power of the internet to its full potential.  Turtlehomes.co.uk for example will create a specific page on their website for your property and then create links to it from facebook, twitter and YouTube.  They have created a large following of fans and followers over the last two years.  While many fans are not in the market for a home, they’ll often forward the listing to friends who are.  The listing gets passed from one page to another, generating a lot of exposure..

How can I save money through an online estate agent?

If you sell your house online you’ll make massive savings.

According to consumer body Which? Choosing an online estate agent instead of a traditional high street estate agent could save you on average more than £3000 in fees. Another benefit is the fact that a lot more people choose to search for property online rather than visiting the high street. Recent surveys show that as much as 90% of purchasers find the right property to buy by searching online property websites. Despite this, over 90% of vendors still employ a traditional estate agent according to the Office of Fair Trading when it comes to selling property.

If you take the example of travel agents then more and more people will use an online estate agent as the advantages become more apparent. Online estate agents are able to keep there costs down by operating out of a single call centre rather than having a network of local offices. By employing the latest computer systems and by advertising through a network of property websites they are able to cover the whole of the UK.

The only drawbacks are that you will have to accompany your own viewings and you do miss out on the local knowledge of the high street agent. But taking into account the fee savings, that is a small price to pay. Turtlehomes.co.uk are just one of many online estate agents and will market your property for less than £600 +VAT. Looking at their listings they currently advertise property across the UK from Rochdale to Leigh-on-Sea.