Size of the Turkish Mortgage Market

The Turkish mortgage market has shown promising growth in the last few years. While the existing mortgage loans had a share of only 0.6 percent of the GDP in 2004, the share jumped to 2.6 percent in 2005, and then to 4 percent in 2006. Currently the existing mortgage loans are about 31 billion YTL, which is about 5 percent of GDP.

These statistics clearly show that mortgage market has been growing faster than the rest of the economy. As described below we expect that it will likely to continue this trend in the near future too. The rapid growth has been fueled by primarily by economic factors such as falling interest rates and improving economic stability but also by characteristic factors for Turkey such as solid population growth and strong ownership culture.

For 2008 we anticipate that the fast growth in the mortgage market will continue amid the continued decrease in the interest rates. Assuming that inflation will move towards targeted 4 percent and Turkey’s macroeconomic indicators will not get weaker in 2008, we expect that the interest rates will continue to fall in 2008. In addition, when the secondary mortgage market starts, capital markets will start to share the risk of mortgages and the cost of getting a mortgage loan will likely decrease further.

Based on these conjectures, we anticipate that the annualized growth in the mortgage market in the beginning of 2008 will average about 40 percent and then will accelerate to about 50 percent as long run interest rates decrease to 1 percent in the second half of 2008. Based on these predictions, we find that by the end of 2008, the mortgage loans will be about 47 billion YTL, making about 6.5 percent of the GDP then.

Looking even further, based on the assumption of continued decrease in the interest rates, and recently announced plan of inflation falling to 4 percent as planned in 2008, 2009, and 2010, our models predict that by end of 2012 the mortgage loans can be as large as 15 to 18 percent of the GDP.

Let’s also note that we believe that there two major risks to our forecasts for 2008: The first is a turmoil in the global economy and especially world’s financial markets driven by a recession in the USA. The second one is a domestic financial crisis probably caused by a current account imbalance. In either case, it would be very hard to predict the growth of the mortgage market for 2008.

Predictions on the Structure of the Mortgage Market

We believe that in 2008, the Turkish mortgage market structure will start to see several important changes:

1) Increase in refinance activity: Currently the majority of the new mortgage agreements are issuances of new mortgages and refinancing of mortgages does not take a large share in the market, however, we believe that starting in 2008, the refinancing will start to take a significant share in the market amid the decreasing interest rates. If the interest rates continue to decrease, the share of refinance activity can be even more than half of the total mortgage applications in a very short time.

2) Variable rate mortgages: Currently 99.9 percent of all mortgages are fixed rate mortgages. This is not surprising as variable rate instruments are very new in Turkey and the risk and benefits of these new instruments are not very understood yet. In addition, the very large movements in the interest rates and exchange rates in early 2000s and accompanying bankruptcies are still fresh in the memories of Turkish people and created a crisis-awaiting culture. However, we believe that the advantages of the variable rate mortgages will start to draw more people and its share will start to increase slowly in 2008. But for this, banks should reduce the interest rates of the variable rate mortgages, which did not happen so far because of the lack of competition in this type of products. We anticipate that as the competition among mortgage lenders increase, we will start to see more favorable variable rate mortgage instruments soon.

3) Lending institutions: Currently all mortgages are offered by banks; however, in 2008 consumer funding companies that are allowed to invest in capital markets to create funds for the home loans will start to offer mortgages. These new lenders will start to change the market structure as they may be less structured and flexible than the banks.

4) Secondary mortgage market: Secondary mortgage market is expected to start in 2008. We expect that at the beginning, the secondary market will be experimental without causing a significant immediate change in the interest rates, however, as the market matures, it will be one of the most important pillars of the mortgage market. It is hard to predict the role of the secondary market right now, but it is worth noting that secondary mortgage markets tend to play an important role in a few years after it started. For example, in the USA, mortgages trades in the secondary market started in 1970, and in 1972 it represented 4 percent of the total mortgage debt, the share increased to 9 percent in 1979, and then to 16 percent in 1982. In order to see comparable growth in the Turkish secondary mortgage market, corporations such as Freddie Mac should be founded, otherwise, the growth will be much slower.

The benefits of the securitization are reduced interest rates for the borrower, increase in the credit availability, liquidity increase for the lenders, and increased efficiency in the mortgage markets.

When mortgage markets merge with the capital markets through securitized mortgage loans, the market interest rates will quickly impact the mortgage interest rates.

Briefly, we expect that in 2008, growth of the mortgage market will continue its pace and in addition it will continue going through important structural changes that will cause even more growth in the coming years.



Sell and Rent Back

Contrary to what you may think, you don’t manage your credit applications and payments in a vacuum. Your credit behavior (as some have learned the hard way) is tracked by credit bureaus such as Equifax Canada and TransUnion of Canada.

This information is tabulated, and then you are assigned a credit rating. It’s important for you to maintain as high a rating as possible. The following information shows you how you can be sure to earn a good score, and why it’s so important to do so.

Lenders Have Access To This Information.

Think about it. When you decide to apply for a mortgage for a home purchase, or a hefty loan for home renovation – don’t you want A+ right up there beside your good name?

Your Good Name Is Really What It’s All About.

In the financial world, your credit profile is your reputation. If you have a good record, it means smooth sailing ahead for you. If your record isn’t all it should be, you might be in for a bit of rough weather when it comes to acquiring the monies you need — at the interest rates you want.

Your Payment History.

Credit card debt — is one of the most important factors considered when your score is being tabulated. Any missed, late, or neglected payments are duly noted. Not only does a prompt payment history buff your credit image — it saves you money in interest, and assures a quicker retiring of that debt too.

Timeliness Of Payments.

Actual amount of payments, the state of your credit card balances versus credit available, the number of cards you own, the frequency of your requests for more credit – These are just some of the tidbits of personal financial information that make up your credit profile. This comprehensive history is compiled to show lenders how reliable a debt risk you are. To put it simply they want to know whether or not you are credit worthy.

Your credit score is established with a mathematical formula.

Various factors are weighed and balanced and given a certain percentage value towards your final score. Credit bureaus also take into consideration — in addition to factors already mentioned — your existing debt burden, your actual and potential income (remember you do give out these details when you apply for credit), your debt to income ratio, your past financial problems (any bankruptcy or foreclosure remains a long time on record), your job stability -

essentially any piece of public information that helps build an accurate as possible risk assessment of you as debtor.

Your Credit Rating Is A Fluid And An Ever-Changing Thing.

It is dependent upon your present financial circumstances and any actions you make. The credit bureaus always follow your money trail. Because the formation of your profile is an on going thing, it’s vital for you to consistently practice reliable and responsible debt handling. The good news? The ever-changing quality of your credit rating allows you to continually aim for a higher score. Think of your rating — not as a burden — but as a challenge and an opportunity.

Infrequent Requests For Additional Credit?

That’s a really good sign to a lender. Keep in mind that mortgage and loan shopping won’t impact you negatively if it’s done in a concentrated time period. The credit bureaus interpret this flurry of activity positively — as long as it doesn’t occur too frequently. You want to look savvy, not desperate.

How Much Plastic Is Too Much?

Too many credit cards red flag you to potential lenders. Limit your cards to three or four, and try to maintain longtime use of at least one card. This is a key way to build up an excellent credit history. The amount of credit you use, versus credit available, is really telling too. Keep your balances low.

It’s Your Right To Pull Up Your Credit Report Profile.

This is something that is in your interest to do so. (You can do this online at www.equifax.com). Experts advise you to check it out at least once a year. Doing so gives you the opportunity to correct any errors or misinformation that may be there. Practice reliable and responsible debt management.

Then, when you do actually need money for a major undertaking (like the purchase of a home), your credit rating will be an asset, not a liability.



Passive Income

Investment Mortgage – More commonly known as a buy-to-let mortgage, this type of deal involves getting a mortgage on a property which you intend to rent out to someone else. Instead of being calculated according to your income, an investment mortgage is calculated based on the projected income from your investment, for example a house being rented out as student accommodation. A BTL mortgage deposit is typically 10%, and is available is a repayment or interest-only option.

Key Worker or Shared Ownership Mortgages – These are a newer type of deal which allows someone in rented accommodation from a Council or housing association to purchase part of the property they occupy, while still paying rent on the other half. This option is also available for ‘key workers’ such as nurses, teachers or police officers, who are typically on lower incomes. First-time buyers can also benefit from these schemes, as there are some which allow part-purchase of new homes from participating builders.

Offset Mortgage – If you have substantial savings, an offset mortgage can be a great way to keep your repayments to a minimum. It takes the amount you have in a savings account and counts this towards you total mortgage debt and therefore reduces the amount you owe. When you earn interest on your cash savings, you avoid paying interest on the equivalent amount of your mortgage. The principle is similar to a current account, or combined mortgage (see part 1).

Overseas Mortgage – This is self-explanatory; it’s a mortgage you take out on a property abroad. It typically involves more work and potentially higher admin costs, and of course if you’re planning on renting out the property to tourists you need to make sure the demand is there. But if you choose the location carefully you could reap the rewards and recoup your initial costs. Different countries have different property laws so you’re better off consulting with a specialist overseas mortgage broker before making any final decisions.

Pension Mortgage – This is a form of endowment mortgage, with the repayments going towards paying the interest each month. But instead of investing directly in shares, a pension mortgage requires you to pay an additional sum into a pension plan to cover the capital at the end of the term. This is still tied to the Stock Market and therefore cannot guarantee to cover the whole capital at the end. Payments into the pension plan must be kept up regardless of other financial hardships if the final sum is to stand a chance of clearing your capital, but as a pension plan is not legally accessible until after the age of 55, some of the temptation to spend it is removed. One major disadvantage this has over a repayment mortgage is that there is no opt-out; you’re tied to the deal until you reach retirement age. Potentially this could mean a term much longer than the standard 25 years, and therefore more interest would be paid.

Repayment Mortgage – We come to the mainstay of the mortgage industry, and the most common type of deal. A repayment mortgage is the only way you are guaranteed to have full ownership of a property at the end of the term, provided you’ve kept up with repayments. The amount you pay each month on this type of mortgage is used to pay off part of the interest and part of the capital, so there is nothing left to pay at the end of the mortgage period. The early years of a repayment mortgage are mainly spent paying off the interest and only a small amount of the capital, but this is often preferable to other types where you pay off nothing but the interest.

Remortgage – If you’re part-way through paying off your mortgage, and find you need a large amount of cash for repairs, renovations or perhaps even a holiday or wedding, you could remortgage your home and release some of the equity on it. This often involves switching lenders to find a better deal i.e. a lower interest rate, or perhaps taking out a new mortgage for the full property value and using this cash to pay off your current, lower, one. But be careful if you decide to do this, as there may be an early repayment penalty on your existing mortgage.

Self-certification Mortgage – Often assumed to be only for the self-employed, this type of mortgage is useful for anyone who cannot guarantee or prove an exact income amount or do not wish to disclose their total annual salary. People such as seasonal workers or freelancers, or perhaps company directors who do not have a fixed annual salary are all eligible for a self-certification mortgage. Other than the standard credit checks, there are no checks made on your financial status, income or employment record, so it stands to reason that a good credit rating is necessary for this mortgage.

Standard Variable Rate Mortgage – An extremely common type of mortgage, this takes its interest rates from the base rate like a tracker mortgage, but charges a higher additional percentage. So, the interest rate you pay will fluctuate when the base rate does, but you may pay 2% over instead of 0.75% (see part 1 of this guide for more details on base rate tracker mortgages). In addition, any drops in the base rate won’t necessarily pass benefits to you straight away, as the interest on these mortgages tends to be calculated monthly or annual rather than daily. Those with poor credit scores will end up paying a higher additional percentage than those with good credit histories.

It’s important to remember than none of these mortgages are mutually exclusive. For example, you could have overseas mortgages with capped rates, or remortgage from a tracker base rate to a standard variable rate. In all circumstances, it’s best to seek expert advice and shop around for the best rates.



Sell and Rent Back

There are many stresses associated with home buying – both financial and emotional. And frankly speaking, it doesn’t help that the process comes with its very own foreign language. While your mortgage broker can help de-mystify these terms, it helps to have a bit of a primer on what some of these terms mean. After all, it’s your money and your home we’re talking about; as a Mortgagor, you have a right to understand what you’re reading. (You didn’t know you were a mortgagor? Read on…)

We’ll start with Amortization” and “Term”. Both refer to periods of time in the life of your mortgage, and you’ll want to be sure that you understand the difference.

The amortization” of your mortgage is the length of time that would be required to reduce your mortgage debt to zero, based on regular payments at a specified interest rate. The amortization period is typically 15, 20 or even 25 years, although it can be any number of years or part-years. You could establish that you are able to make a certain payment each month of say $950 for your $130,000 mortgage at 5.5%. In this case, your amortization period will be just under 18 years. Or you could tell your broker that you’d like to be mortgage-free in just 10 years. With an amortization period of 10 years at the same interest rate, your $130,000 mortgage will cost you about $1,407 per month. That’s a tougher monthly payment, but you would save thousands of dollars in interest. (More than $35,000, in fact.) As you arrange your mortgage, then, keep in mind that your amortization period may be fairly long — although the shorter you can make it, the less you’ll wind up paying for your home in the long term.

The “term” of your mortgage will typically be shorter. The “term” is the duration of your mortgage agreement, at your agreed interest rate. This will be a very specific length of time, although you will have several choices. A 6-month mortgage is a very short-term mortgage. A 10-year mortgage will be one of the longest terms, generally with a higher rate of interest to represent the higher degree of uncertainty in the economic outlook. After your mortgage term expires, you will need to either pay off the balance of the mortgage principal, or negotiate a new ontario mortgage at whatever rates are available at that time.

Now, back to the term “Mortgagor”. This is one of three very similar terms: “Mortgagee”, “Mortgagor”, and “Mortgage”. A Mortgagee is the lender of the money: a bank, company, or individual. A Mortgagor is the borrower: the person or persons (or company) that is borrowing the money, and who will pay it back to the mortgagee. The Mortgage, of course, is the legal document that pledges the property as a security for the debt.

Still confused? Speak with a mortgage professional. Get the best mortgage suited to your needs and all your questions answered in plain talk.



Passive Income

There are both advantages and disadvantages to adjustable rate mortgages. Your lender may be pushing an adjustable rate mortgage for any number of reasons, including that they are more profitable for the lending company. If you only look at the advantages of an adjustable rate mortgage, they can sound pretty good. You start with a lower interest rate, which means lower monthly payments. Because of the lower payments and rate, you may be able to afford a larger mortgage. Your lender may be pitching it as a way to buy a bigger house than you could otherwise afford, or suggest that it’s a good way to get into the housing market. Most commonly, the lender may suggest that you should take the adjustable rate mortgage for now, and refinance later when the rates adjust up.

While all of these things are true, there are also cons to an adjustable rate mortgage. It’s important that you consider both sides of the issue before making a decision on the type of mortgage that you want to take out.

What an adjustable rate mortgage is

Unlike a fixed mortgage, which comes with a specific interest rate that remains the same for the life of the loan, an adjustable rate mortgage (ARM) has an interest rate that fluctuates according to a specified index. Your adjustable rate may be tied to the interest rate on Treasury Bonds, to the Consumer Price Index or to a number of other indicators. If that index rises, your interest rate – and your monthly payment – will rise. If it drops, so will your interest rate and monthly payment.

Why adjustable rate mortgages can be attractive

When lenders approve a fixed rate mortgage, they are placing a finite limit on the amount of money they’ll make from that mortgage. An adjustable rate mortgage offers the lender the possibility of making more money if interest rates rise over the life of the loan – which is a good possibility. To offset the limit on fixed rate mortgages and make adjustable rate mortgages more attractive to home buyers, lenders typically offer lower interest rates on adjustable rate mortgages than they do on fixed rate mortgages. In essence, they are offering borrowers a more attractive rate in return for assuming the risk that their mortgage rate and monthly payment will rise over the term of the loan.

The down side of adjustable rate mortgages

When looked at in that light, some of the cons of an adjustable rate mortgage become obvious.

1. Interest rates can go up, raising monthly payments as well.

Most borrowers understand and accept that their monthly mortgage payment may rise, but are willing to take the chance that their mortgage will continue to remain affordable. It’s important to know the caps on interest rate rises by which your lender is bound. When you shop around for the best adjustable mortgage, it’s important to look further than the initial interest rate so that you understand exactly what expenses you may be agreeing to.

2. Over time, payments nearly always surpass the payments on a fixed rate loan for the same amount.

If you’re planning to stay in your home for the long haul, this can be an important consideration. Depending on the specific loan agreement that you make, it may be several years before the interest rate and monthly payment reach and surpass the monthly payment for a fixed mortgage. If you’re only planning to stay in your new home for a few years, this can work to your advantage, because you’ll be paying lower monthly payments for most of that time. If, on the other hand, this is your dream home where you plan to live the rest of your life, a fixed rate mortgage is probably more economical.

3. Fluctuating payments can make it difficult for you to make a budget.

While many ARMs only adjust once a year, some may adjust as often as once a month. More frequent adjustments can make it very difficult to fit your monthly mortgage payment into your budget because you will only know what your next month’s payment will be when you receive your notice. Even in the longer term, a fluctuating mortgage payment can make it difficult for you to plan long-term savings and investments.

4. If fixed rate mortgages become favorable enough that you decide to switch, you’ll have to refinance and incur the costs and fees related to refinancing your mortgage.

5. The annual interest cap may not apply to the first interest adjustment, and it may be a big one.

Many lenders offer very low initial interest rates on ARMs to attract first time home buyers. Often, these mortgages exempt the first increase from the annual cap on adjustments. This can be especially difficult if the ARM was one of the hybrids that offered a low fixed rate for one to five years, with a jump to market interest rates at the end of the specified period. When that happens, your monthly mortgage payment can suddenly rise by hundreds or even more than a thousand dollars.



Rent Back

With the 40 year mortgage becoming increasingly common in states such as California, where high home prices make mortgages less affordable for the average home-buyer, the latest mortgage product has been rolled out-the 50 year mortgage.

During the 1980s, mortgage interest rates in America topped 18%, prompting the introduction of the 40 year mortgage. The 40 year mortgage increased in popularity again in 2005, when Fannie Mae introduced a program to offer these extended-term mortgages. In 2007, approximately five percent of all mortgages are 40 year mortgages, with that figure reaching 25% in high-cost housing markets such as on the West Coast. With the 40 year mortgage becoming a more main-stream product, the 50 year mortgage has been introduced. While this type of mortgage further reduces the monthly cost of loan repayments, there are some definite disadvantages involved.

The Pros

The main advantage of choosing a 50 year mortgage is a fairly obvious one-the extended terms of the mortgage make monthly repayments lower, and it means that owning a home becomes more affordable. There’s not always a huge difference between the monthly repayment on a 40 year mortgage and on a 50 year mortgage, but those few dollars can mean the difference between affording your own home now and having to wait a few more years to save a larger down-payment.

One of the important things to note about the 50 year mortgage is that after the first five years, the interest rate is adjustable. That means after the fixed-rate period is over, your interest rate can increase and decrease along with current market rates. This is one of the aspects of the 50 year mortgage that keeps that initial interest rate so low. If you’re looking for a low-cost mortgage with a view to refinancing within five years, the 50 year mortgage can be a good way of approaching this.

Finally, the 50 year mortgage is typically a safer way of affording a home if you’re unable to afford a conventional 30 year fixed-rate mortgage. Options such as interest only loans or balloon mortgages offer initial lower payments, but these come with some very risky drawbacks. Unlike other low-initial-cost mortgage options such as the interest-only mortgage, there’s no possibility that you’ll end up with negative amortization with a 50 year mortgage. This makes it a much safer way of achieving a lower-cost mortgage.

The Cons

Of course, the 50 year mortgage has some drawbacks of its own. Tacking that extra ten years onto the terms of the loan means you add a big chunk of interest, making the total cost of the loan significantly higher. That 50 year long will reduce the amount you must pay each month, but over the life of the loan it’s going to cost you. In addition, the interest rate on a 50 year mortgage is typically slightly higher than with a 30 year or even a 40 year mortgage. Longer terms mean increased risk for the lender, and you pay for that risk with extra percentage points on your interest rate. It may not be much-less than 1%-but even that adds several thousand dollars to your loan total.

Another disadvantage with the 50 year loan is a result of the way in which mortgage payments are structured. All conventional mortgages are front-loaded with interest, meaning that the first years of repayments are almost all interest, and you don’t start paying off a significant amount of principle immediately. The longer the terms of the mortgage, the longer it takes to build up equity in your home-more than twice as long to build up just 20% equity in comparison to a 30 year mortgage.

A related problem with this very slow build-up of equity occurs in cases where your down-payment is less than 20% of the home’s appraised value. In these cases your lender typically requires you pay for private mortgage insurance until you reach that 20% equity figure. With a 50 year mortgage, it’ll take much longer to reach 20%, so you’ll be paying extra for private mortgage insurance for much longer than with any other type of loan.

What does this mean for Home-Buyers?

For people who find that the 30 or 40 year mortgages aren’t affordable, the 50 year mortgage can make the dream of home-ownership a reality, but these mortgages are best used with a view to refinancing as soon as possible. The 50 year mortgage shouldn’t be considered a long-term loan, simply because those extended terms are so expensive in the long run. As long as you’re planning to refinance within five to ten years, the 50 year mortgage is a good alternative to riskier low-cost products such as the interest-only mortgage.



Real Estate Professionals

There has been a lot of talk about adjustable rate mortgages these days. Are they to blame for the housing crunch and the problems that people are facing? Not necessarily. There are still adjustable rate mortgages out there that can be the best options for hopeful Denver home owners. These can be goodDenver mortgage products.

How Does An Adjustable Rate Colorado Mortgage Work?

If you want to understand a Colorado mortgage with an adjustable rate, it is a mortgage which has an interest rate will change at a certain point, depending on other key interest rates rules connected to home lending. During the loan, the adjustable rate Denver mortgages will move up and down and effect the interest paid on the loan.

There will be a period in which the interest rate on a Colorado mortgage product is fixed. After that, the adjustable rate loan (also known as an Adjustable Rate Mortgage, or ARM) will change depending on the current rate (and the terms of the Colorado mortgage deal as well as current market conditions). The fixed rate the loan starts with is usually much lower than a person would have gotten if they had qualified for a fixed-rate loan. So, for a certain amount of time, the rate will be fixed and the payments will be consistent, predictable and very low, but after that period, in sometimes two to five years, the interest rate and mortgage payment will change at set periods of the loan.

Are There Any Adjustable Rate Denver Mortgage Worries?

Of course, there is a risk that goes along with an adjustable rate Denver mortgage, but this is what allows lenders to give borrowers a lower rate at the beginning of the term. This is what makes them different than fixed-rate Colorado mortgages, which may have a higher initial rate.

The risk with the loan comes because what the interest rate will eventually become is unknown at the outset of the loan. So then the mortgage payment becomes equally unpredictable. If you have an adjustable rate Colorado mortgage that goes into its adjustment period, you will see your mortgage payment fluctuate. But there is a ceiling to how much the rate can change and how often the rate can be adjusted.

In order to avoid the risks of an adjustable rate Denver mortgage, the best thing to do is refinance your loan before the end of the fixed-rate period of your loan. Now there is a risk since there is no way to predict when and if and how your loans will adjust. When you refinance your Colorado mortgage, there is a chance your fixed rate will move up.

Positive Aspects of Adjustable Rate Colorado MortgagesThere are some periods in life in which the adjustable rate Denver mortgage could be beneficial to you and your finances. It all depends on your particular situation at the time. Here are some scenarios in which an ARM might work:

• If you plan on selling your home soon

• If you won’t stay in your house for the length of the loan

• If you need to a influx of additional cash-flow

• If you have a low credit score, which won’t allow you to get the best fixed rate. However, you can use the fixed-rate period of the ARM to improve your credit and refinance for a good fixed rate.

• If you have another way out of a mortgage before the rate goes up.

• When you still have good terms and a ceiling on the interest rate.

There are good lenders out there who will be able to work with you in handling your ARM. There are Denver mortgage lenders who have built up a good reputation working with customers to deliver them good mortgage products that won’t be a financial burden.

If you want to discover the advantages of ARM products by working with a Colorado mortgage lender , you need to find someone who has an established business, rather than someone who has not been around a long time and may have more questionable Denver mortgages for sale.

This article is written by J.B. of 1st American Mortgage and Loan, LLC, a Colorado mortgage lender who offers access to information on obtaining a Colorado mortgage loan as well as other information on loans inColorado online mortgage quotes, and rates through his website TrueMortgageQuote.com http://www.truemortgagequote.com).



Real Estate Professionals

Around 3.85 million home owners believe that a non existent state benefit will enable them to keep up with mortgage repayments in the event of losing their income.

Almost one in ten home owners wrongly believe that the government will pay their mortgage if they are unable to do so for reasons such as redundancy or illness, according to new research.

However, the government will not help anyone with mortgage payments for the first nine months of unemployment and after that, unemployment assistance is only offered to a select group of people who have mortgages of less than £100,000.

A further seven per cent of those surveyed by Lincoln Financial Group were not sure whether government assistance is available, and were seemingly unaware that the last Conservative government scrapped state aid in 1995.

Ian Noble, head of strategic partnerships at Lincoln Financial Group, said that the figures were a warning that million of Britons are enjoying a false sense of financial security, believing that the government will provide financial assistance if and when required.

“That is not the case unfortunately. The government is not going to pay for your mortgage if you lose your job, and assuming that it will place people in real danger is a large risk as it suggests they have no other mortgage protection plan in place,” said Mr. Noble.

Indicative of this perhaps is the news that mortgage repossessions are still continuing to rise dramatically, with repossession orders in England and Wales in the first three months of 2006 witnessing a 57 per cent rise.

© Adfero Ltd



Rent Back

What if there was such a thing as a magic card that you could carry with you, which had the power to open doors for you all over the world? You show someone your magic card and ‘voila’, you can have what you wish for. You would want to protect that card very carefully, wouldn’t you? Your credit is a little like that. Your good credit is a passport to financial opportunities. A poor credit rating can be a terrible obstacle… and repairing your credit is often a slow and difficult process.

What you may not know is that you can actually use an Ontario mortgage to re-establish your credit. Canadians are carrying heavier loads of personal debt than ever before. For some, the cost of servicing those debts is itself an obstacle to correcting the problem. Each month can be a chase to make the interest payments to keep the debt afloat. But if debts are rolled into a new mortgage, your credit can improve rapidly, assuming of course that you don’t rack up any new debts!

Here’s how it works:

Perhaps you have maximized your credit cards – and maybe even have a short-term loan or line of credit that you are also trying to pay down in addition to your regular mortgage payments. You may be considered a “high risk” borrower under these circumstances, even if you are managing to squeeze out your payments each month. Your overall payment history is satisfactory, but your debt load is heavy. If you consolidate your debts into a new mortgage, you can better manage those debts while also restoring your credit rating.

You may not have considered using a mortgage to refinance and manage your debts, but there are a few significant advantages. Your status as a homeowner can give you access to a lower overall borrowing rate. A house is considered very reliable security, so mortgages often offer the best rates available anywhere. In addition, your credit history enjoys an almost immediate boost, as you begin to make your monthly payments. There are many innovative mortgage options available today, including a new mortgage product that has been designed specifically as a credit repair tool.

This specialized mortgage is good news for clients who are trying to distance themselves from their past credit problems. Debt is controlled quickly – since the new mortgage offers an interest rate lower than credit cards that can dramatically reduce the interest charges on your debt — and your credit typically improves in only a few months.

You probably already know that it makes sense to consolidate your debt into one payment. You can generally enjoy substantial savings on interest charges; you have a more manageable monthly payment and better monthly cash flow. Consider how a new mortgage can help you manage your debts – and make it a goal this year to improve your credit rating.



Quick House Sale

Finding the best offset mortgage deal can be challenging. There is a huge amount of information on the internet and on the high street about offset mortgages, but instead of giving you clarity, it can leave you overwhelmed and confused as to which is the best offset mortgage deal on the market.

What is an offset mortgage?

Offset mortgages link the balances in a borrower’s mortgage account and/or savings account. Interest earnt from the savings and/or current accounts is used against the mortgage debt and in theory; the mortgage can be paid off quicker. An offset mortgage is also flexible and allows overpayments, underpayments, and sometimes payment holidays.

The concept of an offset mortgage is very different from a standard type mortgage and you can’t just compare interest rates to find the best offset mortgage deal. Offset mortgages come in a variety of shapes and sizes that can suit your particular needs and circumstances. Therefore, you need to look at an offset mortgage deal as a whole before you decide which is the best offset mortgage deal for you. The Council of Mortgage Lenders (CML) said in 2006, approximately 170,000 offset mortgages were sold, which was worth £23.9 billion.

Many households looking for a new mortgage deal would be better off with an offset mortgage, yet they account for a minority of the market – about 7%. Most householders tend to settle with what they know, i.e. a traditional type of mortgage, because many people find it hard to understand the potential benefits that an offset mortgage could offer, such as yearly savings, flexibility, and tax benefits.

An independent mortgage broker

To help you choose the best offset mortgage deal for you, it is advisable to seek assistance from trained personnel who give impartial advice, such as an independent mortgage broker. Like any financial service in the UK, an independent body called the Financial Services Association (FSA) regulates them. The FSA applies the Principles of Business to companies, for example, Principle 6 states all customers must be treated fairly, and Principle 7 states information provided must be clear, fair and not be misleading. Therefore, you can rely on independent mortgage advisors to help you find the best offset mortgage deal.

Research by the CML showed that the majority of offset mortgages are sold through intermediaries. By the end of last year, intermediaries accounted for 60% of all offset mortgages sold, compared to 45% in April 2005.

Different types of offset mortgages

Since the first offset mortgage was introduced into the UK in 1997, the number of offset mortgage lenders has increased five-fold over the last decade, and the number and range of offset mortgages has increased to about 250 offset products. For example, the buy-to-let offset mortgage lets borrowers pay in their rental income into their savings/current accounts to offset the outstanding mortgage balance. There are offset mortgages suitable for people with irregular income, such as the self-employed, commission based employees, and first-time buyers.

Offset products are often associated with people moving home and remortgagers, who are slightly older and higher income individuals. However, offset mortgages are now suitable for some younger first-time homebuyers. These include the ‘family offset’ that allows the borrower’s family and/or friends to use their saving balances to offset the borrower’s mortgage debts.

In conclusion

Offset mortgages are growing in popularity and they are being described as a ‘lifestyle tool’ that can help mortgage borrowers maintain control of their finances. An independent mortgage broker can provide invaluable advice in helping you choose the best offset mortgage deal for you.



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