It is no secret that mortgages in the UK have been hard to come by. As rents increase and mortgages are more and more scarce, debts for individual households continue to rise. But there is some light at the end of the tunnel.
Increase in mortgages
According to the Bank of England, mortgage availability has increased in the past quarter. This is thanks to the Funding for Lending scheme. The scheme was launched with a variety of banks and building societies taking part.
The initial aim was to offer up to £80bn to banks at a cheap rate which helped to lower banks’ costs but, also to increase the amount of debt consolidation loans given. The last three months, in particular, have been especially strong and the scheme seems to have really helped to boost this.
The Funding for Lending scheme has, in turn, helped to increase mortgage availability as the banks’ confidence rises. Speaking out about this increase is Danny Waters, Enterprise Finance CEO, who stated, “There’s no doubt that the supply of mortgages has increased in recent months as a result of the Funding for Lending scheme.
“Unfortunately, the bulk of the loans being made available has been focused on people who are already spoilt for choice.
“Activity within buy-to-let may have come off the boil slightly, relative to the highs of a year ago, but it is still popular and is like to remain that way given the still stringent criteria of lenders. It remains a market with long-term potential.”
Mr. Waters also went on to add that many of the ways in which individuals pay bills, borrow and manage debts, has grown and evolved significantly over the past few years.
The availability of mortgages seems to have increased but perhaps this is not enough to enable you to get onto the property ladder? It can be extremely frustrating and disheartening if you are struggling to manage debts. If you require further advice regarding your debts then a debt management plan could be the way forward.
Despite the initial boost in the economy, it may be taking some time to help you reap the benefits. Speaking to a debt management specialist could be the right course of action for you. The best way forward is to take action today.
There are many planned government initiatives to boost the flagging mortgage sector such as offering guaranteed loans to first time buyers, government-funded mortgages schemes and some of the lowest interest rates ever recorded but it appears that it is going to need more than this to kick start the banks into lending again especially where any element of risk is involved, and who can blame them.
Mortgages advisors now find themselves busier than ever as house buyers look for help in securing a mortgage.
Read also: Financial Crisis – Dynamics and Causes
Cash Out Remortgage – How Does This Process Work?
With the present market conditions, most homeowners treat their homes as piggy banks, readily transforming their equity to cash and using it to repay their credit card debts or for home renovation purposes. You either take out a home equity loan, more commonly known as a second mortgage loan or go for cash-out remortgaging.
This is a process that is very common in the US as well as the UK and while it is known as cash-out refinancing in the US, it is called cash-out remortgaging in the UK, but the concept is the same. If you want to know more about this process, read on the concerns of this article.
What is cash-out remortgage?
When a homeowner struggles to make payments towards his credit card bills or is going through a credit crunch and needs immediate cash, they go for a cash-out remortgage as this is the best option for the cash-strapped but house-rich people.
You can remortgage your home loan for an amount that is much more than what you actually owe on the existing mortgage loan. The homeowners are allowed to repay the extra amount and the existing loan balance over a long period of time.
He will also be given a check of the additional amount so that he may utilize the proceeds in any way possible depending on his needs.
When is it possible to go for cash-out remortgaging?
A cash-out remortgage is only available to those homeowners who have accumulated enough equity in their home. This is an important criterion as the lender can then easily justify the practice of providing funds to the homeowner since he has accrued enough equity in his home. He will also feel that there will be a lesser risk as the home is pledged as collateral while getting the loan.
Not all lenders offer this option of remortgaging at an amount that is much more than what he actually owes on his home loan. And so the borrower has to intimate the lender about his urge to cash-out remortgage his loan.
How can you use the cash that you get from remortgaging the loan?
When you go for cash-out remortgaging, you can get access to immediate cash and there are no restrictions about how you may use this money. You don’t even have to offer any kind of explanation to the lender mentioning the way in which he will use the funds.
You can use it to repay your credit card debts, to repay the pending tuition costs, for renovating your home or for repairing your car.
Therefore, if you’re a struggling debtor, go for cash-out remortgaging and use the cash wisely in making ends meet. Repay the home loan on time too to avert the risk of losing your homeownership rights.
Are We Experiencing a Golden Age in the UK Rental Market?
There has almost never been a better time to be renting out a property. Due to the fact that not so many people can afford to meet the large deposits now demanded by banks in order to qualify for a mortgage, and because equally few people can even qualify for a mortgage, the numbers of people seeking rental properties in all areas of the country are constantly on the rise.
The Residential Lettings Survey from the Royal Institution of Chartered Surveyors has found that 34% more surveyors believe the price of rents is in the ascension rather than in decline.
Plus, due to the fact that there is a limited number of properties available to rent out there, landlords are able to charge a lot more per month than they would have done during a less tumultuous period.
What’s more, as there is still a huge demand for properties to buy, particularly in London, landlords can be confident that if they did want to sell their property, they would be able to do so with consummate ease and be able to expect to receive significantly higher than the asking price.
This, in predictable contrast, is one of the worst times for people to be renting. As the rental market is saturating and the number of new houses and flats coming on the market is very limited, rent prices are going steadily skywards.
Even if someone were to find a property that they liked, that was within their price range, the chances are it would have already been taken by the time they had a chance to see it. Such is the vicious nature and lightning pace of the rental market at present.
This is perhaps why one of the fastest growing rental sectors (now 13% of the market, up from 8%) is the social lettings market, where tenants are forced to accept assistance from the government to secure housing.
The cold truth is that until banks start making it easier for people, and in particular first time buyers, to secure mortgages, the rental market is only going to get more and saturated.
For Letting Agencies
One group who will certainly enjoy this period is, of course, the letting agencies. With landlords keen to get their properties filled and tenants keen to fill them, letting agencies have enjoyed extremely quick turnarounds and very few void periods. They are in a bubble that won’t be bursting any time soon.
How have you been affected by the busy rental market?
Read also: Obtaining The Best Mortgage Deals in UK