Va mortgage financing

At first sight the answer would appear to be very little. Despite the usual suspects predicting a collapse in the housing market at the start of this, and every other year come to think of it, house prices are up nearly 10% on 2005. The average UK house is now worth 172, 000 and it is rising in value at the rate of 41 a day.Many so-called experts also predicted a decline in the buy- to- let- market, but the sector continues to grow at a record pace.

In the six months from January to June 2006, the market was up 17% on the previous year in terms of volume and 20% up in value. Buy- to- lets now account for 8% of all UK mortgage lending.First time buyers have continued to struggle to get on the property ladder whilst paradoxically the number of people investing in second properties overseas has continued to increase. Apparently 1.2million have a property abroard, lured no doubt by cheap flights, lower interest rates and the rising equity in their UK homes. We have had two hikes in interest rates, but neither of them surprised any of us, nor will the next and probably last one, providing we get it within the next six months.Weve seen lenders moving away from the traditional multiples of income calculations to determine loan size towards affordability models and sophisticated credit scoring, and we ve seen the piloting of the much criticised HIPs programme which may or may not, see the light of day next year.The FSA, the industry watchdog is finally beginning to flex its muscles having taken over the regulatory job two years ago, but the man on the street would hardly have noticed. So you might think that the mortgage market is like a wave on the sea- a continual surface agitation which leaves the depths untroubled. But youd be wrong. For as I recently mentioned, a revolution is taking place and its to all of our benefit.The revolution is based on lenders technology.

The entire mortgage process is being brought into the e-commerce era and it enables brokers like me to transact almost everything online. From now on agreements in principle, mortgage offers, valuations and completions will happen in hours and days rather than months. The outcome will be that the loan you requested will be in your account quicker than you could have ever imagined last year.

Not a lot of people, as the saying goes, know this yet, but there are a number of changes taking place in the mortgage market which are revolutionising the industry. The good news is that you will be the beneficiaries. The changes will prove, if proof was ever needed, that the UK mortgage market is the most competitive in the world even if its properties are amongst the dearest.The first change concerns the number of lenders. There are now more of them which means more competition, which means better and more innovative products and more competitive rates. At the start of this year there were around 152 lenders from whom you could obtain a mortgage. Since then we have had Morgan Stanley, Deutsche Bank, ING DIRECT, UX, and edeus entering the fray and more are on the way.

On the other side admittedly, we've lost the Portman Building Society to the Nationwide, but the fact is that you now have 57,000 mortgage products to choose from. What other market can you think of with such diversity!The second and perhaps the most significant change concerns new technology which is aimed at streamlining the entire mortgage process, making binding offers and speeding up the delivery of mortgage funds into your bank account. Whereas at the start of this year it took an average of six weeks for a remortgage to complete, you can now do this with one new lender, edeus, in just days. Completions on purchases still take longer, but soon their lead-times will also be dramatically reduced thanks to automated valuation models, which could make physical valuations history.Existing lenders, youll be pleased to know, are not allowing the new entrants to have it all their own way and in order to protect their market share they are rising to the technological challenge.

In September we had GMAC make the first ever instant offer and next year one major lender is claiming that it will be able to offer completions on remortgages, within one hour providing you are an existing client! It seems that the penny has finally dropped with lenders- though not all- that customers want better, faster service and they want it now. The third and final, at least for now, part of the revolution is that the high street banks, in search of higher margins - are making even deeper inroads into the non conforming mortgage market - thats the sector that cater for people with a poor credit history, or are self employed. A few years ago this would have been unthinkable, but the times are a-changing and its all good news for you.

To fix, or not to fix your mortgage repayments, that is the question. And if you do decide to fix over what timescale should you do soIf it was up to the Government we would all be on 25 year long-term fixed rates. This they believe would bring an end to forever increasing house prices, allow more first time buyers to get on the property ladder and in general bring a much needed stability, so they argue, to the housing market. Yet two years on from the Miles Report which suggested the need to the Government for long term fixed rate products, very few of us have taken actually taken them up.The advantage of a fixed rate deal of course is that you know exactly how much it is going to cost - for example 4.40 per cent for two years which is currently on offer from the Nationwide. It doesnt matter if interest rates rise or fall over these two years, your monthly repayments over this timescale will remain the same. This perhaps explains why so many first time buyers like fixed rates.

They know that their money is going to be stretched in the first few years that they own their property and knowing precisely what their outgoings will be every month gives them a great deal of financial security and comfort.The dilemma with fixed rates, and this doesnt just apply to first time buyers, is how long should you fix your mortgage for Two, three, five, ten or even twenty five years Unfortunately the answer will vary from individual to individual, because no two peoples circumstances are exactly the same, and no one knows for certain-not even the Governor of the Bank of England- whether interest rates are going to rise, fall, or stay the same over the period for which you fix your rate. At the moment ten years rates are as competitive as two year rates, but borrowers, quite rightly in my opinion, are reluctant to tie themselves up for so long.In the City the belief at present is that there is more chance of a rate increase than a rate cut in the next twelve months and if you believe this to be the case then perhaps you should opt for a fixed rate now. Just dont, in my humble opinion, go for anything more than a two year fix.

Every year we make New Years resolutions to lose weight, quit smoking, start exercising, etc. But what kind of resolutions should we be making about a new mortgage Heres a few suggestions.Get your finances in order. Reduce monthly commitments wherever possible and save as much as you can for a deposit. Check your credit rating and address any issues. This will give you an insight into how lenders will assess you from the point of view of their risk. Equifax provides on-line credit reports and credit ratings which you can obtain directly from them or via an online mortgage broker.Be vigilant. Last year lenders were preoccupied with the new regulatory environment meaning few new or innovatory products were launched. This will soon change so keep your eyes peeled for some attractive deals. Dont overpay for advice. Ask your IFA or broker the following questions before deciding whether you want to use their services.

Will you give me independent advice or are you linked to one of the lenders Do you have access to every mortgage product and can you give advice on them all What are your fees and what exactly do they coverConsider a tracker mortgage. With interest rates likely to fall this year tracker mortgages will make sense. Protect your mortgage. It is vital that you take steps to protect yourself against mortgage arrears. Nobody expects the worst to happen, but if you should fall on hard times a mortgage payment protection insurance policy will give you the breathing space required to get back on your feet again. If you already own your own home and havent changed your mortgage for a few years youre probably paying too much. Remortgaging is a good way to save money either by escaping form a high fixed, or standard variable interest rate.

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