Mortgage Basics

A mortgage is a loan which is secured against a property. There are so many mortgage deals available that it is important that you look around for the best rates and the deal which is most suited to you.

Types of mortgage

Variable - This means the interest rate goes up and down in line with the Bank Base Rate.

Discount - This means there is a reduction on the variable rate for a certain period of time.

Tracker - A base rate tracker mortgage tracks the BOE's base rate and changes in accordance, with a constant differential, set by the lender.

Fixed rate - This means that the interest rate is fixed for a set period.

Capped rate - Self explanatory. The interest rate is variable but cannot go above a pre-arranged limit.

Cashback - This means that you will get a lump sum in cash upon completion of the deal.

Flexible Mortgages

Flexible mortgages allow you to overpay, underpay, borrow back overpayments and take payment holidays. Interest is calculated daily on a flexible mortgage and there are no redemption penalties.




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Northern Rock Equity Release

Northern Rock has announced the launch of an equity release mortgage scheme which allows retired homeowners to release some of the equity in their home, while also protecting a proportion of the eventual value of their property. They will also have security of tenure with right to live in the property for life.

The scheme, aimed at homeowners aged 60 or over, allows borrowers to release a lump sum with the added bonus of setting aside between 10 and 50 percent of the sale value of their property, thereby providing a potential legacy for their family.

Fixed interest rates, which are set for life, are from 6.99% (7.6% APR) for those who are releasing a smaller proportion of the equity in their home or from 7.19% (7.8% APR) for customers wishing to maximise the total amount of released equity.

No monthly repayments need be made during the term of the loan and interest which is added to the loan on a regular basis is rolled-up and then repaid from the final sale of the home.

For more information, visit Northern Rock website.

ISA Guide

An ISA is a tax efficient individual savings account, launched in 1999 to replace PEPs and TESSAs. The requirements for taking out an ISA is that you be 16 or over (although you can only invest in the cash side of an ISA until you are 18) and that you are a resident of the UK. You cannot hold a joint ISA with someone else, or have one on someone else's behalf.

Limits on Investment

You can save up to £7,000 per tax year until the tax year ending April 5th 2005. Beyond this date, you will be able to £5,000 per tax year. You can invest lump sums, but you must confirm with the ISA provider as to what the minimum amounts you can invest as this will vary.

Maxi and mini ISAs

ISAs come in maxi and mini forms and there are investment limits on each. Every tax year, you are able to invest up to £3,000 in cash in a maxi ISA, up to £1,000 in life insurance and the balance up to £7,000 in unit trusts, stocks and shares.

Currently, you are able to invest up to £3,000 in a mini ISA, up to £1,000 in life insurance and up to £3,000 in unit trusts, stocks and shares. You are not able to buy a maxi ISA in the same tax year as buying a mini ISA and vice versa.

CAT Standard

The Charges, Access and Terms (CAT) Standard, was introduced by the Government to help savers choose an ISA that is simple, clean and fair. It does not mean that a product has been endorsed or approved by the Goverment or guarantee in any way that your investment is risk free (especially in stocks and shares ISA).

Tax Benefits

Eligible individuals will find an ISA is a tax efficient investment. Benefits include income and capital gains tax benefits, not having to declare an ISA on your tax form and the ISA manager will claim back all the income tax for you.

Sainsburys Credit Cards

Sainsbury’s Bank has announced the launch of its new Standard and Platinum credit cards, which offer customers a 0% APR for purchases for a full twelve months.

New research commissioned by Sainsbury’s Bank reveals that 4.3 million people intend to take out a new credit card which offers an introductory rate of 0% APR on purchases within the next 12 months. Collectively, these people intend to spend £9.5 billion on their new cards during the introductory period, with the average person anticipating that they will spend £2,225.

However, Sainsbury's Bank notes that as most 0% APR deals last only six months, some people will not be able to clear their balance within that time.

Sainsbury’s Bank is the only provider to give customers a whole year over which to spread the cost of their purchases. Currently, there are 54 0% cards on the market, of which 41 last for six months or less. Sainsburys believes that many people will welcome the opportunity to spread their payments over a longer period.

For more information about Sainbury's new credit cards and to compare deals with many other UK credit cards, visit Credit Card UK.

Basic Investment Guide

Traditionally, investment has been seen as something done only by the very rich while the rest of us make do with simple savings accounts with our existing bank. However, times have moved on, and we can "play the market" these days.

There are plenty of web sites, for example, that allow you to deal in shares with just a basic understanding of the market.

That's not to say there is no risk involved, so you should never anything more than you have to spare.

Investment Trusts

Investment trusts are companies that invest in other companies through purchasing of shares. An investment trust is created by making a share issue, just as with any other company. The finances raised by this are then invested in a portfolio of shares.

Basically, you own a percentage of the fund, in proportion to the number of shares you have, and these shares can be bought and sold just like any others.

OEICS & Unit Trusts

Unit trusts are pooled investments that are managed by a professional. Almost all unit trusts use the money from investors to invest in a wide ranging portfolio of different company shares.

An open-ended investment company (OEIC) allows private investors to invest across different shares, but instead of buying units in a trust, you buy shares in an OEIC. An OEIC shares trade at one price, rather than different prices for buying and selling, in the same way as you do with a unit trust.

Derivatives

Derivatives are starting to appear on the retail market, but can be complicated, so you should understand what you are doing. Basically, you are betting on numerical outcomes. Great care should be taken with derivatives because they are not for beginners.

For more information about deriviatives, visit Derivatives US.

Mortgage Guide

Mortgages come in a wide variety of flavours to suit every need. However, such varied choice can cause confusion among first time buyers. Our guide will help you determine which is the right mortgage for you.

What is a mortgage?

A mortgage is a loan from a bank or building society that is used to pay for the purchase of a home or property. The lender is repaid the full amount (plus interest), over a period of time, in monthly instalments.

Standard Mortgage

A standard mortgage is one with a fixed interest rate and which has fixed monthly payments over the life of the loan.

Flexible Mortgage

A flexible mortgage, as the name suggests, is flexible around today’s lifestyle. Allowing you to make lump sum payments, borrow back money, take payment holidays or make underpayments. Interest is calculated daily, which means you don’t pay interest on repayments you have already made. Flexible mortgages usually have a higher interest rate than standard mortgages, but you can pay your mortgage off early which is a huge attraction for many people.

Remortgage

You can pay off your existing mortgage in full by taking out a new mortgage on a property with a new lender and using the money from that. This is known as remortgaging and is a common practice in today’s market. The reason for remortgaging is to gain preferential and competitive rates and to save money on interest paid over the complete term of the agreement.

Commercial Mortgage

A commercial mortgage is a loan made on real estate collateral, other than a residential property, in which a mortgage is given to secure payment of principal and interest. A commercial mortgage may be affected by the credit history of the business in question, or the individual owner of the business.

Adverse Credit Mortgage

Known by many names such as “non-status mortgage”, “bad credit mortgage” or “sub prime mortgage”, it is estimated that 1 in 4 British people would not qualify for a standard mortgage from a high street lender. For this reason, there is now a big market in helping people with previous credit problems. You may pay slightly higher interest rates because you are considered more risky by the lender, but if you pay off your mortgage in full, you may find your bad credit rating is repaired.

For more information about these and other types of mortgages, visit Mortgage UK where you can also apply for a mortgage online which takes just a few minutes and a single form to complete.

Housing Market Steady, But No Sign Of Crash

According to a news story over at Yahoo, the UK housing market is currently turning but showing no signs of decline in prices. Instead, there is a steady rise in prices, suggesting the market is shifting in favour of buyers who can negotiate for bigger discounts than in previous months. [Full story]

UK Borrowing Boom

According to the BBC, levels of borrowing in the UK continue to surge, despite the prospect of increasing interest rates. "When you take into account mortgage lending and consumer credit combined, households remain very happy to borrow and spend," said Philip Shaw, an economist at Investec. "It is all pointing towards continued buoyancy in the housing market." [Full story]