One solution is to invest in mortgage insurance. For anyone with a mortgage over £500,000, the Interest Rate Protector will pay for a portion of the repayments on your mortgage when interest rates increase above a certain threshold, thus avoiding debt problems. If you decide to pay for five years worth of protection on your mortgage you will need to pay a premium of roughly £17,500 which will cap the Bank of England’s base rate to 3 percent.

However, this is assuming you are comfortable in predicting when the interest rates are likely to rise. Some experts predict that they will rise by January 2011, while others are not expecting it to happen until later on next year. If you are feeling confident in the long term financial outlook then pursuing mortgage insurance may be a better option than a fixed-rate, five year mortgage

You could also choose a capped-rate mortgage, currently offered by Coventry Building Society. It has introduced a 4.99 percent cap based on a capped tracker mortgage for three years, running at 2.5 percent higher than the base rate. You would pay 3 percent and, assuming interest rates increase, you would not have to pay above the 4.99 percent cap for the length of your mortgage.

Additionally, if you possess £17,500 that you could use for mortgage insurance then you could also consider placing this money in a savings account, using the highest interest rate possible. You could then pay any additional mortgage interest when rates start to rise.

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I have been getting a lot of questions about this lately, so here it is broken down. The equity release process goes through the following steps –

1. You will be offered a free personal home consultation that will provide you with all the necessary information about the schemes and will also answer your queries. They will also evaluate your choice and accordingly guide you.

2. They will then go about researching the perfect schemes for you. ( Week 1)

3. In the second week, the consultants will visit you and give you a brief synopsis of the scheme ideal for you. If you give your consent, you will have to fill some important documents. (Week 2)

4. The company will then process your application and will pass it on to the concerned equity release provider. (Week2)

5. The provider of the equity release will then send a local independent valuer to your house to make an independent evaluation of your house. (Week 2-3)

6. You will then receive an offer from the lender which will then be checked by the solicitor. (Week 3-4) The offer will contain the following- 1) The amount the lender is willing to offer. 2) In case of drawdown lifetime mortgage, it will specify the amount of money you can withdraw over a period of time. This will be based on your age or the independent evaluation made by the valuer.

7. Once the solicitor approves of the plan, you will have to visit the company to give your final confirmation. They will then sign the required certificate to the lender to release the amount. (Week 6-7) or (Week 9-10 for home reversion plan)

8. The solicitor then receives the amount. He uses a part of it to pay off the charge on your mortgages and will also deduct the company’s as well as his own commission. The balance that you receive is for yourself. (Week6-8) or (Week 10-12 for home reversion plan)

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Lifetime mortgages are also known as Roll Up Mortgages and are loans that use the home of the borrowers as security. Lenders will usually offer the homeowner a lump sum of cash or the ability to receive some amount of income on a monthly basis, or a combination of the two. The value of the property is what is used to determine what amounts are offered.

With these mortgages just like most other mortgages there is an interest charge on the loan. The difference lies in the fact that the customer will not need to pay it. What happens is that the interest is added to the principal or ‘rolled up’ as it is called. Thus a compounding interest is used.

Once the home is sold then both the interest and principal would have been repaid. Because the interest is compounded there is a possibility that over time it will be greater than what the property is worth. This situation does not concern the customer as there is a no negative equity guarantee that is attached to most lifetime mortgages. The lender accepts the risk should it arise.

The amount of money that can be borrowed for the home equity release is determined by the lender who will consider amongst other things the age of the applicant. It is normally given to persons over the age of 55 years.It is important that if you have any questions that you need answered, that you write them down and ask them of your lender prior to entering into a Lifetime mortgage.

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The ‘Home Information Pack System’ (HIPS) was designed to limit the number of property sales falling thorough by ensuring that the seller provides a comprehensive packaging of information with regards to the property in question. The HIPS pack consisted of several documents, including an Energy Performance Certificate (EPC), standard searches, Home Condition Report and sustainability information.

The system had been introduced in late 2007 and was already gathering controversy, for example the cost of the HIP, between £300 and £600 was putting off property sellers, and that it was too much extra hassle, as people now had to gather extra documents to progress with a house sale.

The Conservatives had pledged to scrap HIPS, and sure enough when they came into power as a coalition with the Liberal Democrats, HIPS was scrapped on the 20^th May 2010. According to The Guardian, who reported on the scrappage of HIPS, the statistics were shocking. Within seven days of the scrappage, new property registrations increased by over a third. Stephen Armitage, of Winkworths in Sheffield, has already reported an increase of property registrations by 20% when HIPS were scrapped. “The properties coming on our books are more in the £100,000 to £150,000 range, probably homes belonging to people with less disposable income to put towards the house move. The market has been more challenging in the north, and paying £500 for a Hip would be a sizeable outlay when there is no certainty that they can sell.”

It seems that the cost of a HIP was the reason why sellers were put off selling their property in the first place. The Managing Director of Countrywide Robert Scarff said “Properties have been selling very quickly in London and the south, but sales boards have stuck around a it longer in the north. If you are in one of those parts of the country where the market has been slower, you would have thought ’There are already three properties up for sale in my road. Why part with £500 when I might not get it back for a while, if at all?”

Therefore the HIPS pack had actually made the housing market worse off instead of making it any better off by providing more information about the house. The statistics after the scrapping of the HIPS is shocking.

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Currently many old people haven’t got much money to live on. Their pensions may not cover costs adequately, or they want to raise the extra cash to enjoy retirement and go on cruises and holidays. Despite having little funds and pensions, they may possess large houses which are valuable assets with money locked in them.

Releasing home equity allows this money to be released, so the money can be used for home improvements, holidays or can be spent on the grandchildren, while being able to live in their own house. The other option would be to downsize, sell and buy a smaller, but that would be costly and may involve lots of hassle of finding a buyer and taking months to complete for instance.

Releasing home equity allows money to be paid in small, monthly amounts, or in one big lump sum. A lump sum which could be thousands will allow for large purchases like cars, cruises or holiday homes while smaller payments like a couple of hundred pounds a month may add to a regular income for extra groceries, heating or buying small gifts for the grandchildren.

To be eligible for an Equity Release Plan (ERP), a person needs to be at least 55 years of age, have a property in good condition with no outstanding mortgages or loans. They may be offered by individual companies or by larger monetary companies like Aviva or the local bank.

An ERP is good for any pensioners because it avoids downsizing, so no moving is involved to release equity, often there is no tax on the cash from this process, plus the equity released can be utilised if going into a care home, so the children don’t have the burden of paying these expensive bills and it also means not having to sell the house to pay for these bills. The ERP does not mean there is nothing left in the estate for the family inheritance, the house can be sold, the funds can pay off the ERP and there is still cash left over for the family.

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These days there are many older couples who have only gotten married recently, are owners of their respective house, and who do not live together. There are a number of reasons for this and often there is a problem with picking one as the main residence.

What normally happens to older couple who just got married is that their solicitor or your accountant will insist that you choose one as your main residence inside of two years of marriage. You may find it hard to believe that you have to do this but according to UK law any couple that is married or are civil partners there should only be a single property between them. This is in order for the couple to qualify for certain exemptions. Otherwise taxes will apply to each property individually.

Choosing which property to use as a main residence can be difficult but seek the advice of your accountant to help you with this. Keep in mind that you will be paying more taxes when you keep each property. Also if the court is made aware of no nominated main residence after the two year period, it will make the decision for the couple.

If both parties were to decide to sell their respective home and also claim that is the couple’s main residence the courts will want to see proof of this status. This would include them checking your tax forms to see which address is on it. Also they may check your workplace and the information you would have provided there. The home that you spend most of your time together will also be considered.

When spouses have two properties and choose one as their home the main disadvantage they have concerns capital gains tax and that arises when they are selling the other property. The tax applied will be determined on a valuation done and they are likely end up paying a higher tax rate.

To take advantage of the exemptions it is best that couples who each have their own property when they got married, nominate a primary residence and to do so with two years.

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For many older persons one of their desires is to be able to live their retirement years in peace doing what they want. They also want to financially secure, with a nice home, and the time to enjoy it all. One way for this to be achieved is through home equity release.
Usually after many years your home equity would have built up and it will be even more should the housing market take a more positive turn. It is this equity that will be involved in an equity release. With an equity release program the homeowner will sell the equity in their home to receive an income over a number of years and still be able to use their home. Upon the owners death the income provider will take possession of the home as repayment for providing the value of the equity. This is what makes the home equity release program a viable option for senior citizens.
Some of the other benefits of home equity release include:
· Once agreed upon a lump sum of cash is readily available or can be had as an annuity that last for as long as the homeowner is alive.
· The taxes you will be required to pay on your estate will be reduced.
· Should the real estate market have a downward turn the No Negative Equity Guarantee attached to the option will protect the borrower completely.
· Should the rate of interest fall the borrower will not need to refinance the mortgage.
This kind of program is really only available to homeowners who are over 55 years old.

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According to the experts, the prices will not go down in the near future and they are likely to remain the same in the next few months. The increase in the prices has prompted a lot of property investors to buy houses in the Luxury designer bedding to tide you over until then. If you are a little short on money, there is nothing to worry about you should try to save the money for the future and wait until the house prices take a plunge.

The house prices rose by 1.2% in January this year despite the decision of the government to reduce the stamp duty on house acquisitions. The prices have increased by 8.65% since January last year and it is unlikely that the price will rise too much further than that.

But since it is difficult to truthfully predict what housing prices will do in the near or distant future, it is best to keep abreast of what is happening in the marketplace. Though prices may be tending upwards anything can occur to reverse this trend.

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Last summer the FSA came across problems with the manner in which persons who were having difficulties making their mortgage payments were deal with. It specifically looked at third party administrators and specialist lenders.

Lenders have had a lot of criticism concerning the charges they impart on homeowners who have fallen behind in their mortgage payments. Some lenders charge as much as £150 for any visit debt counsellors have to make, and £300 for engaging the services of a solicitor.

To add more pain, those with arrears may also have to pay a fee of £60 each month by lenders even if they reach some sort of arrangement concerning the repayment of the existing arrears. The new proposal tries to eliminate this fee hence giving those with repayment difficulties extra breathing space.

The proposals also aim to stop lenders from adding arrears charges on to early repayment charges. Lenders will also not be allowed to charge interest on any outstanding fees, and if customers with arrears make a payment it must be used to satisfy any arrears first prior to being used to pay the fees.

Firms have also been called on to keep a record of all telephonic conversations about what is owing on a mortgage between them and the borrower. They will also need to keep these records for at least three years.

Currently there are close to 200,000 people who have arrears of over 2.5% of what is left on their mortgage, according to the latest figures of the Council of Mortgage Lenders.

The proposals also set out the obligations of lenders to their customers. These are to be quite clear and easily understood. It also sets out certain standards firms will need to meet to guarantee homeowners fair treatment when they find themselves in financial difficulties.

In other news, as most of you know it was this recent weekend that we moved down south, and I cannot even begin to tell you what a disaster it truly was. Other then the rainstorm when we were loading the truck, half of my things being forgotten at the old flat, and the loss of just about all the fasteners for my flat pack furniture, it was seamless! Oh well, the point is that it is done now, Dan and Mia I can’t begin to thank you enough for all the help.

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The Christmas and New Year period can often bring vital momentum to the housing market as people choose the start of January to finally make the move that they have been mulling over throughout the previous months. A brighter than expected January 2010 has exceeded expectations however and the buoyant start to the year has seen house prices rise by 1.2%.

There has been a string of positive, if quirky, stories about the propery market this week with news that a house boat in Chelsea is for sale at a cool million pounds and that a rather ramshackle beach hut, sans door, has sold for £40,000. Taken in themselves they could be an indicator that the silly season of news has arrived early but when seen as part of a wider picture they indicate a growing optimism that there is light at the end of the recessionary tunnel.

The 1.2% rise occurred in the first week of January 2010 and the five weeks leading up to January 9th revealed a healthy overall increase of 0.4% in the price of housing, giving a UK average house price of £222,261.

Estate Agents and property websites across the country have been surprised by the rise that has bucked the trend of gloomy predictions and less bright economic indicators from other sectors.

Miles Shipside, Commercial Director of the property site Rightmove talking to The Telegraph today, said: “This rise in asking prices is an early indicator that new sellers in 2010 have the confidence to try for a higher price, as the index was lined up for a fall until the turn of the year.” Mr Shipside went on to explain that the optimism of these January buyers had helped to reverse a predicted 1% fall in house prices.

It seems that this is the first ray of light, a possible silver lining, peeking out but there are still two large, dark clouds looming threateningly overhead. The recession is holding onto the UK for longer than expected and rising inflation and unemployment could prolong the fiscal malaise. The General Election, due in Spring or Summer 2010, is also casting a pall of uncertainty over the medium term future of the market as potential buyers may wait to see what impact a new government has on their wallet before committing to any significant spending. In these times, however, we must be thankful for all good news and I for one believe that these encouraging January figures are the precursor for a year of sustained, and better than expected, growth for the housing market.

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