Equity release loans, or lifetime mortgages, have become increasingly popular over the course of the past few years, as more and more people use them to provide additional funding for their retirement, or to repay existing loan debts.
Despite their growing popularity, equity release loans are still a very complicated and potentially high risk loan product and as a result of this, it is advisable for those home owners who are considering taking out an equity release to seek professional advice from an independent financial adviser.
According to the latest figures from the equity release loan trade body SHIP (Safe Home Income Plans), around 90 per cent of all equity release loans taken out over the course of the fourth quarter of last year, were done so by using the services of an independent financial adviser (IFA).
This amounted to a total new loan amount of £193.3 million, where the borrower took advice from an IFA before choosing a loan deal, compared with just £22.6 million worth of loan sales which were sold directly by loan providers.
SHIP said that this was the highest percentage of new loan business written by loan brokers and IFA’s since their records were first kept, back in 2003, which highlights how seriously people are starting to value professional advice in such matters.
Apart from being able to advise on the most suitable provider for an equity release loan, an IFA can also give valuable advice on whether or not an equity release loan is the right product for a particular individual.
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In March 2010 the UK government announced a stamp duty concession to make it more affordable to buy your first home. This exemption will end in March 2012.
A concession in the 2010 budget that allowed first time buyers to avoid paying stamp duty on home purchases under £250,000 will end on the 24th of March 2012. Why was this deal established and why is it being scrapped? What difference will this make to people buying their first homes in the future?
This plan was initially established to give a financial boost to people taking out a mortgage for the first time. From March 2010, a first time buyer would not have to pay stamp duty tax when they bought a property as long at its value did not exceed £250,000. At the time, the government anticipated that this would help 9 out of 10 people who qualified, saving them up to £2,500. It was hoped that this would stimulate the housing market as a whole by making it easier for people to join the system.
This concession was always projected to last for two years so it is no surprise that it will end in 2012. Th
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Young males aged between 25 and 34 in the UK are better at putting money away into savings than older generations are, according to a new survey conducted by National Savings and Investments, despite the fact that another survey shows that this age group also have more personal loan debt and bad credit loans than other age groups.
The survey found that the typical saver between the ages of 25 and 34 is putting away an average amount of £104 on a monthly basis, well above the national average savings figure of just £88.
Apart from financial security and being able to avoid taking out personal loans in the future for the things they need to purchase, such as a new car, for example, one of the biggest reasons for this increased level of savings is to build enough of a pot to cover the cost of a deposit on a house, in order to meet lenders’ restrictive loan to value levels.
Many younger people between the ages of 16 and 24 are also managing to save on a regular basis, with an average savings amount of 7.8 per cent of their monthly income, which is the best of any age group.
Whilst many in this group are saving for holidays or a car, so that they do not have to take out a holiday or car loan, others may have learned a lesson by seeing the financial position of their parents, many of whom are burdened with personal loan and credit card debt on top of their home owner loan repayments and increasing utility bills.
Whilst this is clearly good news, the flip side of this situation is that the same age group also account for the highest percentage of Debt Relief Orders for bad loan and credit card debts, which highlights the need for better financial education in schools from an early age.
Navigating the final aspect of the house buying process can be tricky. It is advantageous to know what hidden costs are lurking at the finish line.
One of the last parts of the home buying experience is the transaction of closing costs. The buyer will need to show up at the closing, when all the documents are signed, with around two to six percent of the cost of the mortgage in hand to cover what is called closing costs. While fees vary from lender to lender, this is a general standard in the industry. At times, concluding tolls are known as “originating points”; one point equals one percent of the mortgage amount.
What should a prospective buyer do to make sure he or she has enough money to cover the entire home transaction? For one, a buyer should never raid the 401(K) account to cover these pesky fees. Postponing 401(K) contributions and/or asking family to help chip in money are two common tips to avoid the pitfalls of closing costs.
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— Alexander Marian @ 11:27 am — 
February 9, 2012