High Ratio Mortgages

High Ratio Mortgages
by Mary Anne Murphy

Do you know what the definition of a high ratio mortgage is?

High ratio mortgages are when you get a loan that covers more than 80% of the value of the property you have mortgaged, in other words the loan value to the home value ratio is higher. When you buy your home, the ideal situation for loans, and for banks, is for you to put down a 25% down payment. However, most people are not able to do this because the cost of homes has gone up considerably from the past.

So, if you are not able to put down 25 percent you can still buy your home with the high ratio mortgages. With this type of high mortgage loan you will be able to put a down payment of 5 percent on the purchase price or in some cases even zero percent down. This will allow you to buy the home you want without you having to break the bank and put yourself into huge debt to come up with the 25 percent.

So how do the high ratio mortgages work? When you get a conventional mortgage the lender will insure the loan themselves because this means less risk for them. Lenders will want to make sure that if you default on your mortgage and the bank needs to force the sale of your home, that there will be enough equity in the property for the bank to get their money back. With the high rate mortgage loans you will have to get default insurance through a third party. The insurance is the key to the high ratio mortgage loans. If you don't have it then you won't be able to find any major lenders that will let you put a down payment of less than 25 percent. The reason for this is because the insurance will protect the lender's interests. Mortgage insurance companies will cover any deficit for the lender if there is not enough equity in your home if you default on the mortgage.

The purchase of mortgage insurance will add to the cost of buying a home but instead of paying for this upfront, most lenders will work the cost of your mortgage insurance into the mortgage payments. It is a good idea to speak to your mortgage broker for all of the details.

Now that you know how it works you need to know who can qualify for a high mortgage loan. The answer is that anyone that is qualified to buy a home can qualify for the high ratio mortgages. Obviously, there will be other factors that are included to determine if you qualify but this is something you will have to figure out with a mortgage lender. Some of the things that will be taken into consideration are how much you make, home much debt you have and so on.

So, if you want to buy a home and you need to do the high ratio mortgages than you will want to talk to a lender to find out what you need to do. Buying a home with high mortgage loans is definitely the way to go if you can't put down the 25 percent down payment. So get started today, learn more information about these mortgages and talk to a lender.

Endowment: Where Should You Be Investing Your Money?

Endowment: Where Should You Be Investing Your Money?
by Charles Newman

Investing money is supposedly a safe discipline, to put a few pennies away for times of need, possibly to make retirement a little more comfortable. However many have recently found, that our financial investments are far from secure and a constant worry. With the UK financial situation shaken up, where is the best place to keep your hard earned savings safe and sound?

Share prices from around the world seem to have been massively affected by recessions faced in the major global economies. Unfortunately savvy investors who invested in the UK and overseas have been hit both times, with the US and Japanese markets also performing badly. Successful traders buy when shares are low and sell when they are high. Some would argue now is the time to buy, however this is a risky approach since there are no guarantees and nothing to stop share prices crashing further.

Property investment a few years ago looked as safe as houses, yet this year house prices have consistently fallen, proving that even the safest, well established investment methods can still be rocked to their foundations. Mortgages have followed suit with the financial recession, meaning consumers are finding it increasingly difficult to get finance to snap up the supposedly cheap houses on the market presently. Again could be a seen as a great time to invest in property if you do have sufficient funds.

Pension schemes have not had the best track record and there seems to be a trend showing public opinion swaying away from investing years of savings in pension schemes and looking elsewhere. A recent example was on 12 September 2007, Northern Rock asked the Bank of England, as lender of last resort in the United Kingdom, for a liquidity support facility due to problems in raising funds in the money market to replace maturing money market borrowings. Overnight customers panicked and stores had queues of customers the following day desperately trying to withdraw their savings. In one incident, police were called to the branch in Cheltenham, Gloucestershire when two joint account holders barricaded the bank manager in her office after she refused to let them withdraw £1 million from their account.

So where should you invest your savings to maximise return and minimise risk? Well the simply answer is no one knows. I believe the best tip is based on an old saying, dont keep all your eggs in one basket. Spreading out your savings could be the best way to safeguard your savings. It is possible to invest 7200 GBP each tax year is ISAs, 30000 GBP in guaranteed premium bonds with national savings and investments. If you still have more money to invest why not think of alternative investment opportunities, for example: endowment policies.

Mortgage: How mortgages work

Mortgage: How mortgages work

A mortgage is "the pledging of property to a creditor as security for the payment of a debt." In plain terms, it is the legal contract that says if you don't pay the loan back (along with all of the fees and interest that are included with it), then the lender can have your house.

• You take out a loan based on how much you can afford and the value of the property, for a length of time agreed between you and the lender
  

• You are charged interest on the loan, usually based on the Bank of England base rate, which is reviewed monthly
  

• You pay the mortgage back in one of two ways, repayment or interest-only
  

• You can choose different deals for your interest rate, such as fixed or discounted
  

• If you've had financial problems in the past and are finding it difficult to get a mortgage, the Council of Mortgage Lenders (CML) has a leaflet that may help.

Endowment Mortgage: What can you complain about?

Endowment Mortgage: What can you complain about?

You may have grounds for complaint if your adviser did not:

• tell you how your money would be invested and explain the risks involved;
  
• explain that an endowment policy is a long–term commitment that often gives a poor return if you cash it in early;
  
• check you were comfortable with the risks of your money being linked to investment performance, including the stockmarket;
  
• check there was a reasonable expectation you would be able to keep up payments until the end of the term; or
  
• explain any fees and charges and how they would affect the return on your savings. If you bought your endowment policy between 29 April 1988 and 31 December 1994, you should have been given ‘product particulars’. These are various details about your policy, including charges and surrender values for the first five years. If you bought your policy on or after 1 January 1995, you should have been given a key features document. This gives details of fees and charges and how they affect your savings over the longer term.
  

You may also be able to complain if:

• your endowment policy finishes after you retire and the adviser did not check that you were likely to be able to carry on paying the premiums after you retired;
  
• you were advised to cancel one endowment policy and take out another;
  
• your endowment policy runs on after your mortgage loan is due to finish; or
  
• you were given a guarantee that the endowment policy would pay off the mortgage loan (though this is likely to be rare).