Live mortgage advice web chat

Moderator : Right, fire way

Cucumber_girl: If you go for a fixed mortgage are you better off going for a 2, 3 or 5-year one?

Lesley_Anne_Creffield It depends on the individual. Most fixed rate mortgages lock you in for the term of the fix and if you want to change your mortgage before then you could end up paying a penalty. It also depends on what you think interest rates are going to do. I would talk to an independent financial adviser or mortgage adviser to help you work out what is best for you.

trixie: I want to buy a property which needs doing up but haven't got cash to do the work. Can I somehow use my mortgage to borrow money to do the place up? How would this work?

Andrew_Lawrence : There are certain lenders that will look at this facility.

Andrew_Lawrence : Typically they usually lend between 100 and 130% of the property's valuation. Usually anything over 100% is on an unsecured lending facility

Cucumber_girl: How many of you own your own home? I still rent and I'm 33!

Rod_Murdison I own my own house and have two buy-to-let properties.

Lesley_Anne_Creffield : I own a couple of properties - renting out to some people.

Lesley_Anne_Creffield : The chap who asked the question - has he thought about shared ownership? This means he can rent and can also own part of the equity of the property - which means he would have a share in any increase in the value of the home but it is not as expensive as buying outright.

jenny: Aaargh! I'm a first time buyer and completely confused about the range of choices. Any tips for what I need to think about to help me make up my mind?

Rod_Murdison : For the first time buyer a high multiple of income is a consideration. Another point to be aware of is not just deposit money but also additional costs such as legal fees and whether a mortgage indemnity premium may apply and stamp duty.

Rod_Murdison : Before entering the industry I was scared to death when my solicitor suddenly presented me with a mortgage indemnity bill I wasn't aware I had to pay.

Rod_Murdison : Be aware of how frequently the interest is calculated and the different kinds of mortgage you could opt for and which would suit you best. You need individual advice here.

Andrew_Lawrence : It is very good for the first time buyer to seek professional advice. They could be locked into a deal for a long period of time and could be locked into a property for a long period of time.

Rod_Murdison : I would beware of anything an estate agent tells you.

Andrew_Lawrence : Remember you are not legally obliged to see the estate agent's financial adviser. Make sure you get the best deal for you not for the estate agent.

feline_fifi: Why is 25 years the normal term for a mortgage? Are the times when this should vary?

Andrew_Lawrence : It all depends on the individual. Something we do at the YIG is sit down with our customers and see what is affordable.

Andrew_Lawrence : We don't always recommend a 25 year mortgage. It doesn't always suit the client.

Andrew_Lawrence : If they can pay it off sooner it can result in a lesser mortgage cost to the client.

Rod_Murdison : I don't know in origin where the 25-year period came from. In recent years it has become more flexible and people can take a loan over 30 years

Rod_Murdison : And the opposite is true - it can be a shorter period too. It used to be that lenders would expect a mortgage to end at pension age but now some will lend past that if the circumstances are right and the individual can afford to pay the mortgage.

Lesley_Anne_Creffield : It all depends on the individual. There is talk in the market of lifetime mortgages.

Moderator : Please remember that this is very general advice and ideally you should consult an independent adviser to give information for you and your particular situation. You can find your nearest independent adviser very simply by typing in your postcode here. http://www.tiscali.co.uk/money/find-an-ifa/

katy: I'm thinking about remortgaging. Roughly how much do I need to be able to save - in order to offset all the costs of the remortgage and the time and hassle involved?

Lesley_Anne_Creffield : I think, first of all, a remortgage doesn't mean hassle at all. It can be fees-free for legal and valuation fees and is literally a change of lender.

Lesley_Anne_Creffield : People should remortgage on a regular basis to get the best rates available at that time.

Rod_Murdison : I completely agree. It has become clear that your friendly building society is not your friendly building society and if you stay on they take you for a mug. They often offer better rates to people taking out a new mortgage than to people with existing deals.

Rod_Murdison : But you must remember when remortgaging that you never get anything for nothing. Sometimes you might pay a higher rate of interest for a fee-free deal and a lower interest rate on a mortgage where you pay the fees yourself.

Lesley_Anne_Creffield : People see it as much more complicated than it is. It should be as simple as changing bank accounts - seamless and simple.

eastender: In your opinion do you think financial advisers offer independent advice? Should I follow their advice or go to the individual lenders myself?

Lesley_Anne_Creffield : Independent financial advisers have to, by the very nature of it, be independent of bank, building societies and insurance companies.

Lesley_Anne_Creffield : We are regulated by the financial services authorities and are required to give the client the best advice for them.

Rod_Murdison : Estate agents who are independent estate agents are not necessarily independent in financial services. They can be independent solely in terms of their mortgage advice and they can be tied to an insurance company for the life insurance side of things. They will only recommend the insurance of the company they are tied to which might not be the best or the cheapest deal for you.

Lesley_Anne_Creffield : 9 out of 10 are tied to insurance companies and you need to remember that.

sdoumu120: There was talk of paying a mortgage bi-monthly a few years ago. This aimed to reduce interest - is it still an option?

Rod_Murdison : I think it has been superseded by overpayment on daily interest repayment mortgages. That has an immediate effect of diminishing the capital on a repayment basis mortgage, therefore the interest on the outstanding sum would drop.

Rod_Murdison : It has the added advantage that you have the flexibility of draw down and take money out if you need it.

Lesley_Anne_Creffield : It gives you the facility of making any payments at any time and reducing the interest

Moderator : Question sent in advance: Hi - I am a first time buyer, looking for a mortgage of £35,000. I would like to pay it off as soon as possible. What would be the best mortgage for me and would there be any penalties for doing this? Thanks Liz

Lesley_Anne_Creffield : If you want to pay it off very quickly you are better off with a flexible mortgage, normally a base rate tracker, and there wouldn't be any penalties

Andrew_Lawrence : You must be aware and choose a mortgage that does have any redemption penalties, and allows you to overpay. The main consideration is not to have penalties. Fixed rate deals can lock you in.

Lesley_Anne_Creffield : Make sure interest is charged daily.

barrow93: Hi I currently have a £20K mortgage balance and am looking to borrow a further £12K to consolidate other debt, and pay off over 3 years. My current mortgage is with Abbey who will not add the £12K to the mortgage as it is not for "Home Improvements". They will give me a loan at 6% but their minimum term is over 5 years. Can you advise the best means of achieving my requirements please.

Lesley_Anne_Creffield : Lenders will give advances on mortgages for capital raising for most circumstances.

Lesley_Anne_Creffield : The one that springs to mind that they can't do is tax bills. But to consolidate loans that is a feasible reason for remortgage.

Rod_Murdison : The other temptation if they will not budge is to remortgage and go for a larger sum from someone else.

Andrew_Lawrence : Just make sure you don't have any penalties on your current mortgage before you decide to remortgage.

Andrew_Lawrence : Consult your local IFA or independent mortgage adviser.

Moderator : Please remember that this is very general advice and ideally you should consult and independent adviser to give information for you and your particular situation. You can find your nearest independent adviser very simply by typing in your postcode here. http://www.tiscali.co.uk/money/find-an-ifa/

Cucumber_girl: Do you legally have to take out life insurance to get a mortgage? Both my partner and I have 'death in service cover' from work - yet we've been advised to take out life insurance as well. Is it just a scam for mortgage brokers to make more commission?

Andrew_Lawrence : Life assurance is not always required with regard to a mortgage. However a lot of tied advisers will try to promote life assurance products and almost give the customer the impression they have to have this product.

Andrew_Lawrence : It is not mandatory. Life insurance is not a condition of the loan according to the compliance board.

Andrew_Lawrence : However banks and building societies have come under criticism for using bullying tactics for promoting life insurance

Andrew_Lawrence : The questioner may have life assurance but they should pay attention to critical illness cover as this is important for the mortgage - if you became ill and could not work.

Lesley_Anne_Creffield : It is not mandatory, but it is advisable especially if they are covered by death in service. The money is paid to the trustees and they are not legally obliged to pay it out to the person named in the death in service form.

Rod_Murdison : It may sound a bit flip but depending on their notice period at work if they have one month's period at work their current life insurance could end in just four weeks

Rod_Murdison : If they are relying on that it implies that they are depending on staying with the same employer for the rest of their lives.

Rod_Murdison : If you leave or get sacked you just have a few weeks to sort it out. What happens if you can't get a new job and you are trying to purchase life assurance when you are much older and are ill?

trixie: What percentage of your monthly income should your mortgage outgoings be without getting yourself into financial difficulties?

Andrew_Lawrence : Each different lender gives their individual decisions - the majority are around 60%

Andrew_Lawrence : I think a professional opinion should be sought on this. The income criteria are there to protect the customer. Therefore this guidance should be kept in mind. And remember, if you lie on your application you commit mortgage fraud.

Lesley_Anne_Creffield : If the lender is lending 3.75 times income you should only be paying 25% of gross income.

Andrew_Lawrence : It is not so much what percentage of your take home pay, as it is really up to the individual to decide what they can afford.

Rod_Murdison : If they don't want to go without life's little luxuries like bread and food.....

Rod_Murdison : The difficulty is that standard multiples of income are applied despite the fact that interest rates are half what they were 15 years ago

Rod_Murdison : But no one has come up with a better method than the income multiple methods at the moment

Moderator : Please remember that this is very general advice and ideally you should consult and independent adviser to give information for you and your particular situation. You can find your nearest independent adviser very simply by typing in your postcode here. http://www.tiscali.co.uk/money/find-an-ifa/

Guest40039: What is your view on interest rates over the coming year?

Andrew_Lawrence : At YIG we believe that interest rates will go up by half a percent this year. We believe a lot of our lenders have the same view.

Andrew_Lawrence : If you look at most of the recent fixed rates lenders have incorporated a 0.5% rate rise

Andrew_Lawrence : But obviously we don't have a crystal ball.

Rod_Murdison : I think the government's will is still for us to join the euro so they are in a cleft stick at the moment. They want us to come down to the level of European interest rates.

Rod_Murdison : The setting of interest rates is a bit of a blunt instrument to beat the economy with at the moment . We think there will be two 0.25% rises this year.

Lesley-Anne_Creffield : As a matter of interest European interest rates are coming down today. Having talked to several fund managers in the last couple of months their view is that by the end of 2005 the Banks rate will be around 6%

Moderator : Time for 2 more questions...

palacepepp: Ex-council properties are cheaper. Are there any issues with buying an ex-council property I need to be aware of?

Lesley_Anne_Creffield : The biggest one of all is always location, location, location.

Andrew_Lawrence : The main thing with the right to buy property is that they get a discount. If you sell or rent out that property within three years you have to pay back the discount. You are locked in for three years

Andrew_Lawrence : But generally the advantages outweigh the disadvantages if you are a council tenant.

Andrew_Lawrence : It depends how long someone has lived in the property to qualify for a discount and what level discount they will receive.

Pedro: Is remortgaging a good way of paying off credit card debits?

Lesley_Anne_Creffield : Interest rates on credit cards are extraordinarily high. Interest on mortgages are much lower. However should credit cards be paid off by additional borrowing? You must make additional payments to your mortgage to repay the borrowings as quickly as possible. Too many people get used to having extra money and never repay the extra and are therefore paying it over 20 years

Andrew_Lawrence : You need to be aware that you now have a secured debt on your property. It is no longer unsecured. If you fail to pay it back your home could be repossessed.

Andrew_Lawrence : You also need to ensure that you don't run up the same debts in future. Don't view it as extra money in your pocket.

Andrew_Lawrence : Don't place the debt over a 25-year period, do it over a shorter period. It is only short-term tactic not a long-term solution

Rod_Murdison : They don't want to discover that they spend more than they earn. This can work as a short-term fix for a one-off problem. But don't repeat the problem.

Pedro: I was thinking of paying it back over no more than 10 years.

Andrew_Lawrence : It depends on your own circumstances if you can pay it off in a shorter period of time it would be better for him.

Andrew_Lawrence : Take professional advice and aim to pay it off a s quickly as possible.

Rod_Murdison : Daily interest again.

Moderator : Well thank you Rod, Lesley_Anne and Andrew, thanks for your time today, and for your little nuggets of info. Any final words from you? Have you enjoyed today's chat?

Lesley_Anne_Creffield : Yes, I have.

Rod_Murdison : It has been an interesting experience

Andrew_Lawrence : Yes, Thanks

TD: Thanks you three :-)

Pedro: Great. Thanks

Moderator : Well they seemed nice

Moderator : Thanks to everyone, hope you enjoyed it.

Contacts:

Lesley-Anne Creffield The Morgan Group tel 02920 453950

Andrew Lawrence Yorkshire Investment Group 01977 696252

Rod Murdison Murdison & Browning 020 8325 6497