Introduction to Home Reversion Plans

Friday, May 30, 2008

A home reversion plan is an arrangement where the following conditions are met:-

The plan provider buys all or part of a qualifying interest in land or property. The seller is entitled to occupy at least 40% of the land as a dwelling.The arrangement specifies one or more qualifying termination event at which point the arrangement will end.

A qualifying termination event is where:-

The person becomes a resident of a care home

· The person dies
· The end of a specified period of at least 20 years, beginning with the day the seller entered into the arrangement.

A home reversion plan is different than a life time mortgage.

The differences are as follows:-

The homeowner transfers ownership of some or all of the property to a company in exchange for a cash sum or an income

No interest is paid to the company

The original owner retains the right to live in the house until death

On death, the property (or part of it) reverts to the company which is where the term ‘home reversion’ comes from.

Again drawdown facilities are available and the funds can be used to be an annuity for life as a steady income or cash lump sum can be taken.

Minimum Val range from 80k to 100k
Minimum age is 65 to 70 or joint age of 140
Not permitted in Scotland due to 20 year limit on residential leases.

For more information call Solution Mortgages on 0845 123 1260.

Introduction to Lifetime Mortgages

A Lifetime Mortgage is an open ended mortgage with no specific term, full repayment of the loan occurs in the event of one of the following occurring:

• Death
• The borrower moves to live elsewhere i.e. residential care
• The borrower moves to another residence
• The borrower sells the property
• The lender exercises its legal right to take possession under the mortgage contract.

While the borrower occupies the property as a main residence, the arrangement can be on the basis that:-

• No regular payment of interest or capital is required, although interest can be charged and rolled up to be repaid at the end of the mortgage; or

• Payment of interest will be required but the capital is not repaid until the end of the mortgage; or

• Payment of interest and partial repayment of the capital may be required, but full repayment of the capital is not required until the end of the mortgage.

The majority of lifetime mortgages are on an interest roll up basis, although some are arranged on a straightforward interest only basis. This means that the younger the client the more interest is going to be paid over the lifetime of the mortgage as interest is being paid on the interest rolling up. Draw downs can be made which reduces this problem.

As clients get older larger LTV can be achieved, for example 25% LTV at age 60 and 50% LTV at age 89.

Min Val can range from 30k to 100k depending on provider with minimum age of 55 to 60.

Contact Solution Mortgages for more information on 0845 123 1260.

Do not ignore mortgage problems

Borrowers who are concerned that they may be unable to meet their mortgage repayments should not ignore the issue.

You need to make every effort to speak to your existing lender and advise them of the problem. They can only help if they know about the situation.

There are range of options that you could come to with your lender such as switching to interest only if you are on a capital repayment mortgage etc but you need to speak to your lender first, preferably before you miss a payment.

There are also other possibilities of re-scheduling the loan or extending the term of your mortgage or you may even be able to agree a payment holiday if your mortgage provider will allow this.

Each option can be explored and tailored to suit each individuals circumstances.

You can also speak to the Citizens Advice Bureau about your issues who may be able to help.

Whatever you do do not bury your head in the sand.

If you anticipate incurring mortgage arrears you may also feel free to call Solution Mortgages for free information about how you can deal with the situation on 0845 123 1260.

Make your home work for you

Thursday, May 29, 2008

YOU'VE WORKED HARD TO MAKE IT A HOME, NOW MAKE YOUR HOME WORK FOR YOU!

Are you aged 50 or over?

Would you like to release equity from your home safely and securely, without having to leave?

Solution Mortgages would like to introduce you to SYH Charterhouse, who offers a Home Reversion plan that allows you to stay in your home for the rest of your life and release a substantial cash sum.

There are two options available – both allow you to release money from your home yet stay there for life. This is through a secure lifetime tenancy that is guaranteed through a lifetime lease.

The Rental Home Reversion Plan means you sell your home in return for a generous cash sum and rent it back at a discounted rent. You are granted the right to continue living in your home - for life.

The Standard Home Reversion Plan allows you to sell your property for a slightly smaller cash lump sum, whilst still guaranteeing the right to remain there rent-free for life through the secure lifetime tenancy.

Reasons to release equity with SYH Charterhouse Home Reversion

People release the equity from their home for a number of reasons. You may want to release cash for home improvements, a new car, to buy a holiday home, or that dream holiday! You may just want to get your hands on a large sum of cash to pay off a mortgage or other debts, or to help out family or dependents.

Whatever the reason, SYH Charterhouse may be able to help you. Their Home Reversion products are available to people aged 50 plus - and for joint applications, if one partner is over 50, the other can be as young as 45!

Key benefits of Home Reversion

• A tax-free lump sum – to use as you wish!
• You have the right to remain in your home for the rest of your life.
• No worries about future house prices or interest rates – Home Reversion is not a mortgage.
• Predictable costs.

Key things to consider with Home Reversion
• Your tax position may alter.
• Your entitlement to any means-tested benefits may be affected.
• Your estate may be reduced – reducing the inheritance you can leave to any dependents.

Let us introduce you to SYH Home Reversion now – call Solution Mortgages on 0845 123 1260, and we will arrange for them to contact you.

Solution Mortgages acts as an introducer to SYH Charterhouse, who are authorised and regulated by the Financial Services Authority to arrange Home Reversion Plans.

This is a Home Reversion Plan arranged by SYH Charterhouse Ltd. The Home Reversion Plan offered allows you to remain in your home and sell it to a reversion provider for a cash lump sum. As a result your estate may be reduced and means tested benefits affected.

To understand the full features and risks, please ask for a Personalised Illustration. If you do go ahead with the Home Reversion Plan, an administration fee of £300 is payable to SYH Charterhouse upon application.

Interested in Home Reversion Plans?

Ask yourself the following:-

• If you were able to stay in your home for the rest of your life, would this be of interest to you?
• There is a product that enables you to stay in your home for life and still release a generous cash lump sum. This involves selling your home and renting it back at a greatly discounted rent for the rest of your life.
• If this is of interest to you, give Solution Mortgages a call on 0845 123 1260 and we will arrange through our partner lender SYH Charterhouse to give you a call to discuss the plan in more detail.
• Solution Mortgages & SYH Charterhouse is authorised and regulated by the Financial Services Authority.

Call Solution Mortgages on 0845 123 1260 for more information.

Need a Home Reversion Plan?

Home reversion plans can be arranged through Solution Mortgages. Most of our customers have encountered the following issues:-

• Unable to find suitable terms for a new mortgage
• Struggling with mortgage repayments now that they are paying the Standard Variable Rate
• Coming up to retirement with a lump sum to pay off
• In retirement and unable to pay off their mortgage or personal debts
• Divorce/separation

To be suitable for such a product a customer must:-

• Be aged 50 or over
• Have at least 50% equity in their property - dependant on age

For further information on Home Reversion Plans please call Solution Mortgages on 0845 123 1260.

Benefits of Home Reversion Plans

Please see below the list of benefits of Home Reversion Plans through Solution Mortgages:-

• Minimum property value £75,000
• No maximum release amount
• Minimum age 50 for single applicants, 45 for joint applications when other applicant is 50+
• Ex-local authority properties accepted
• Both rental and rent free options available
• All properties accepted subject to survey
• Home Reversion Plans provide a Lifetime Tenancy
• Properties purchased throughout England & Wales

Rent calculation as follows:-

Calculations for the rent on the rental home reversion plan are based upon £48 per £100,000 of the property value.

Contact Solution Mortgages today on 0845 123 1260 for more information.

Mortgage products not around for long

The average time a new mortgage product is available at the moment is 2 weeks. This is down from 30 days in 2007.

Some deals are disappearing in the space of 6 days especially when their are changes to the base rate.

Banks and building societies are having to constantly monitor their products due to the current uncertain market. Regardless of whether demand is increasing they are having to reduce the level of funds on offer.

This is due to demand on the processing departments of banks which obviously affects service, so rather than be swamped they withdraw the product.

It is also due to the constant changes in swap rates in the wholesale money markets, as in the case of Abbey, who reduced their rates last week but have now put them up 0.65%.

If you have any questions on remortgages please speak to Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk

Need a secured loan?

Wednesday, May 28, 2008

Are you in need of a secured loan?

A secured loan is designed for homeowners only and allows you to use the equity in your property as security. The equity in your property can be unlocked and turned into cash to be used for virtually any reasonable use.

Unlike a remortgage with the majority of secured loans there are no survey costs or solicitors fees to pay.

We have a range of plans with attractive rates and repayment terms of up to 25 years to choose from. Typical rates are 11.4% APR variable.

With most of our secured loans we can offer a flexible repayment scheme where you have the choice to pay as little as the minimum repayment or to make extra payments if you wish. Making extra payments each month may reduce the amount of interest payable and the number of installments you need to make.

If you are interested in applying for a secured loan (homeowner loan) please feel free to call Solution Mortgages on 0845 123 1260 or apply online at http://www.solution-mortgages.co.uk/

Have you been turned down for a remortgage or secured loan?

At Solution Mortgages, we have a new facility available which may benefit you if you were looking to raise finance but have been turned down for a remortgage or secured loan.

Available through Solution Mortgages, loans are available as follows:-

Loans available between £7,500.00 - £18,000.00

Employed / Self-Employed & Contract Workers accepted

Mortgage Arrears Accepted

Homeowners only

No Equity in Property required

Funds are secured by way of an equitable charge on your property. If you have recently been declined a remortgage or secured loan, please feel free to call Solution Mortgages on 0845 123 1260 or apply online at http://www.solution-mortgages.co.uk/ by completing the call me back form.

Please note we will need your bank details – i.e. Name, Sort Code, Account No and Time at Bank. Decisions on lending may take up to 24 hours.

Equity Release

Tuesday, May 27, 2008

Equity release is a growing market with an 11% rise in this type of lending form 2006 to 2007. The market could potentially double by 2010.

The sale of Northern Rock's £2bn equity release portfolio to J P Morgan shows the demand for these assets are high. The market is set for long term growth, both from lifetime mortgages and home reversion plans.

A potentially falling housing market may even boost the home reversions side of the market. With a lifetime mortgage the debt continues to roll up subjet to a no negative equity guarantee and so can consume a greater proportion of a home if prices are falling.

With a home reversion a homeowner sells a fixed proportion of the property up front, leaving the risk over the price in the hands of the equity release provider and banking the cash.

For a fast remortgage speak to Solution Mortgages on 0845 123 1260 or apply online at www.solution-mortgages.co.uk

Buy to Let

Friday, May 23, 2008

Demand for buy to let mortgages from landlords appears to remain strong. Many landlords have no intention of selling their property. In fact in a recent survey by The Association of Residential Letting Agents (ARLA), 40% said they would continue investing in 2008. The survey had been carried out after the liquidity crisis had begun and therefore those questioned had already digested the current situation of tighter lending criteria and weaker prospects for the housing market.

The tougher lending criteria in the buy to let sector means lower loan to value (LTV) ratios and higher required rental cover on interest payments. However rental demand is now very strong and is being boosted by delayed purchases and people who have sold properties recently.

Landlords are also optimistic at the moment as they see the current situation as a buying opportunity as they can drive a harder bargain while negotiating new purchases but also they are able to command higher rents.

It has been reported that rents rose on average 6.3% in the 3 months to November 2007 which would equate to an annualised rate of 28%. Even with flat house prices this means that yields are set to grow. Void periods are also likely to be few and far between with landlords on average finding tenants in less than 2 weeks.

Buy to let is also performing well on credit quality as arrears figures have remained on a level for the last 2 years at just 0.61%.

If you are interested in a buy to let mortgage call Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk

Mortgage market

Thursday, May 22, 2008

Following the continued turmoil in the credit markets the mortgage market continues to struggle on and although business has slowed the market is not closed for business.

The number of approvals for house purchases has dropped to the lowest number since the 2004/05 slowdown in the housing market. The slowdown then followed a series of interest rate hikes by the Bank of England but quickly recovered following a single cut.

This time the slowdown is likely to last longer and purchase approvals are likely to fall below the 2004 level. It is also difficult to separate market trends from the effect that HIP's have had on the situation.

Demand from new buyers is lower but remortgaging is still fairly active. A large number of borrowers still need to refinance their expiring deals so business should remain fairly brisk.

Variable rate mortgages are becoming more popular as consumers seem to anticipate falling base rates, but I wouldn't be to sure with the threat of inflation causing the MPC a problem.

Consumers have also been left disappointed by lenders failing to pass on base rate cuts and have actually seen some fixed rates increase despite lower swap rates. On top of this arrangement fees have risen considerably. After years of intense competition lenders are now looking to restore margins and some have opted to lower their market share. Supply of credit is waning.

In the sub prime sector, lenders have had to stop operating because there is no appetite for securitised mortgaged assets. If a new alternative to securitisation is not found the mortgage market will have a £30bn shortfall a year as retail deposits do not match the demand for mortgage borrowing.

For a fast remortgage speak to Solution Mortgages on 0845 123 1260 or apply online at www.solution-mortgages.co.uk

Debt delinquency

Wednesday, May 21, 2008

With the effects of the credit crunch still in our midst there is a likelihood of rising debt delinquency in the UK, both in mortgages and in personal debts.

The latest mortgage arrears data for the first half of 2008 has not recorded a marked increase yet, but evidence suggests that more homeowners have fallen behind with their payments since then.

Lower interest rates will help, but this is looking more and more unlikely at present due to rising inflationary pressures and it is more likely that rates will remain around the 5% mark for some time. It has been suggested that rates would need to hit 8.25% to replicate the debt crisis of the early 1990's.

When the Bank of England base rate was at 5.75%, the bank acknowledged that many households were pushed beyond their comfort zone. The current base rate of 5% is offering some relief, but some of those refinancing from cheap fixed rates that they had taken out 2 or 3 years ago may struggle with today's higher rates.

The number of repossessions are likely to rise in the second half of the year with some commentators believing they will rise sharply. However when looked at as a percentage of the number of mortgaged households in the UK, the figure for repossessions is quite small and far from the figures (guess work!) that the media report.

For bad credit remortgages speak to Solution Mortgages on 0845 123 1260 or apply online at www.solution-mortgages.co.uk

Sub prime

Tuesday, May 20, 2008

The impact of the liquidity crisis is still being felt hardest in the sub prime sector.

The sub prime and self cert sector in the UK accounts for around 9% of the mortgage market and this looks likely to shrink.

The current premium interest rates are likely to remain for sub prime borrowers for some time. Currently rates are ranging from 5.9% to 9.5% depending on the level of adverse credit.

With competition in the sub prime mortgage industry now much less intense than it was 6 months ago, the lenders that are still in a position to lend have no need to compete on pricing and are able to concentrate on margin. Even now lending volumes are lower these lenders are able to restore their margins and therefore hit their forecasts.

Only yesterday there was another casualty of the crisis announced. Future Mortgages has decided to cease lending and close at the end of May.

Sub prime volumes are probably down around 30% - 40% and the heavy adverse and high loan to value (LTV) areas of the sub prime market are all but non existent.

Is this an end to the sub prime sector?

Probably not.

More borrowers than ever, who previously would have qualified as prime borrowers are unable to meet the tougher criteria and will need to look at sub prime lenders for mortgages. An example would be that 6 months ago lenders might have accepted 2 years clean credit history to qualify as prime, but now most would want at least 3 years.

Also with rising fuel bills, food costs and increasing council tax bills and all the other forms of taxation that the Government continually look to implement , UK borrowers are finding it more difficult to meet their payments. This again will force them down the sub prime route where looking to arrange finance.

The wholesale markets for mortgage backed securities will not be closed forever and the sub prime sector meets a real need in the market and therefore the cycle will turn again in its favour.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk

Completion ratios are higher at Solution Mortgages

Monday, May 19, 2008

The credit crunch has led to an improvement in application to offer ratio's at Solution Mortgages.

Although the credit crunch has had a noticeable effect on business levels, it has meant that staff have more time to devote to each case they handle and therefore ensure applications were packaged to the highest standards. This has also been the case in the new business department.

As a result, over 90% of applications now reach the offer stage.

This could also have something to do with the fact that heavy adverse products are no longer available. These type of cases were always more difficult to get through and were sometimes more speculative.

The quality of business is so much better pre credit crunch which helps as lenders are now so choosy who they lend to.

If you have any questions regarding this article, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk

Mortgages

Friday, May 16, 2008

Getting your first step on the property ladder can be the most daunting thing a person ever does.

With Solution Mortgages we can make life simpler and help make those steps a little easier.

We provide a range of mortgage options for clients and cater for:-

• First Time buyers
• Self Certification
• Buy to let
• Right to Buy
• Credit impaired
• Commercial
• Lifetime mortgages
• Home reversion plans

Solution Mortgages also have a range of mortgage products that are ideal for those who want to remortgage their property. So if you are looking to release equity from your home or simply reduce your mortgage payments you should speak to our mortgage department.

We can also help those clients who may have had credit problems in the past/present and have products tailored for those with unlimited adverse (restricted to 65% LTV), ccj's, arrears or bankruptcy orders.

If you have bad credit problems and are in need of a bad credit remortgage, please feel free to contact Solution Mortgages on 0845 123 1260 or apply online at www.solution-mortgages.co.uk

Motor insurance

Thursday, May 15, 2008

Solution Mortgages can now offer you motor insurance through Autonet Insurance Group. This cover's bike, car and van insurance.

Autonet are one of the country's largest independently owned insurance brokers and have formed excellent relationships with many of the UK's leading insurance companies. Every policy is individually tailored to match the requirements of the policyholder.

As you input your information on-line, they will immediately build a full policy to suit you at the lowest rate possible.

They constantly check prices using their advanced computer systems so that you always get the most competitive rates on the market. If they don't offer the cheapest bike, car or van insurance they will quite happily give you a refund if you find cheaper insurance cover elsewhere giving you the same cover and you can provide written proof within 48 hours of having taken out cover with them, you may cancel and receive a full refund.

You can get a quote by clicking on the motor insurance tab on our website and follow the links.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at http://www.solution-mortgages.co.uk/

IVA

Wednesday, May 14, 2008

An IVA (individual voluntary arrangement is a debt solution for consumers who have unmanageable debts and who want to avoid bankruptcy. An IVA is regulated by the Insolvency Act and can only be set up by a licensed insolvency practitioner.

An IVA is available to borrowers who can not repay their unsecured debts within a reasonable time frame, usually 8 to 10 years. These borrowers will offer their creditors five years of repayments at a level they can afford, with a contribution from any assets, such as equity in their property. Creditors are presented with a detailed proposal and then vote on whether or not to accept the terms offered. If over 75% of creditors vote to accept, the arrangement becomes binding on all involved.

For creditors to agree an IVA, they must believe the solution will offer them better returns than the alternatives. Most IVA proposals will contain a comparison of bankruptcy return against IVA returns. Bankruptcy usually provides lower returns than an IVA because it is an expensive process and income payments for bankrupts are only required for 3 years not 5.

Debtors who choose the IVA option rather the bankruptcy must be prepared to pay more money overall to clear the debts. This can still be beneficial fro them because they will avoid many of the restrictions a bankruptcy would impose. An IVA will allow more flexible treatment of the equity in their homes.

The downside of an IVA is that if debtors break the terms of the arrangement, they will be at the mercy of the creditors. It is therefore important that a debtor only agrees to terms that they can comply with i.e afford.

If you would like to discuss your options in relation to an IVA, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk

Struggling to meet your mortgage payments?

Tuesday, May 13, 2008

If you are struggling to meet your mortgage payments you should be aware of how your current lender will view and act on the situation.

Anyone struggling with their mortgage payments must liaise with their current lender immediately to see if there is a way for the problem to be rectified.

Your lender will usually ask you to complete an income and expenditure summary form, which will help assess if there are any ways in which you can reduce your outgoings and use your income more effectively. You should also be advised to speak to the Citizens Advice Bureau or Consumer Credit Counselling Service for free and impartial advice.

The lender will also discuss your financial situation, including the payment method of your mortgage. It may be that if you have a capital repayment mortgage you could switch to interest only for a period while you get on top of your finances. The lender will be keen to try and attempt a short or long term solution appropriate to your circumstances.

If you are still unable to meet your mortgage repayments the lender will usually have a collections team who will call you to arrange what is called a true concession. This involves making an arrangement to collect a mortgage payment that is less than the sum you usually pay. This may provide a short term solution but the whole debt, including any shortfalls and arrears will still have to be repaid in the future.

Where you are struggling to meet your payments it is also useful to ensure you prioritise your liabilities to address and safeguard your individual and domestic circumstances.

Lenders do not want to see borrowers getting into arrears as it is in no ones interests. It is essential that if you start to fall behind on your mortgage payments you contact your lender as soon as possible. Communication is the key.

If you have incurred mortgage arrears and you want to discuss your options, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk

Buy to let still popular

Monday, May 12, 2008

Buy to let investors remain undisturbed by the credit crunch and see the situation as an opportunity to buy bargain properties.

A large proportion of our buy to let clients believe that current market conditions present them with good buying opportunities.

Clients are confident about rental demand holding up or increasing in the coming months.

Experienced landlords have come to the fore since the credit crisis begun, with the majority of this type of client making up a greater proportion of our buy to let clientele.

With demand for rented accommodation rising, it is not surprising landlords are feeling upbeat.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk

Mortgage market outlook

Friday, May 9, 2008

At Solution Mortgages we like to keep people informed as to what is going on in the mortgage market and how it is effecting our clients.

The market continues to fluctuate and is still struggling to cope with the events of the past 9 months. A clear indication of just how hard the financial environment really is can be seen daily in the financial press as lenders, large and small, battle to resolve their own liquidity problems.

However, the recent cash injection by the Bank of England into the UK financial system is a positive move for the industry, and conditions may be stabilizing with some large institutions making moves to sell off some of their more highly rated leveraged loans.

The market will recover, and it is likely that things will be very different as this takes place. However, many commentators including the Bank of England (BOE) now believe that we are bumping along the bottom of this crisis and hopefully we can now say that the worst is behind us.

There will undoubtedly be some further difficulty along the way, but tentative signs of recovery can now be seen.

Our completion figures for April 2008 were relatively high and our completion times from initial contact to completion stood at an average of 18 working days which in the current climate is extremely good. For those people looking for a fast remortgage you can see that we will not disappoint.

If you have any questions on this article, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us at http://www.solution-mortgages.co.uk/

UK interest rates held at 5%

Thursday, May 8, 2008

The Bank of England's Monetary Policy Committee (MPC) has decided to leave interest rates unchanged at 5%.

Some in the mortgage industry would have like to see a 0.25% cut but as a company we feel it was the right move. The risks to inflation are to great to warrant a further cut and the effects of the 3 previous interest rate cuts along with the banks recent decision to offer government backed securities in exchange for mortgage backed securities are yet to be seen.

The inflationary fears seem to outweigh the reported decline in house prices and The Chartered Institute of Purchasing & Supply (CIPS) reporting the slowest growth within the services sector since 2003.

Inflation in March has allegedly remained stable at 2.5% but we find that figure skeptical on the basis that this target is set by the Government and takes very little into consideration ie the cost of housing or petrol. The Office for National Statistics says that it looks carefully at what average families pay for goods and services, many of the groups representing the elderly and the low-paid insist that the true rate of inflation is a lot higher than 2.5% or even 3.8%.

Some had thought that rates may have been reduced to stave off an economic recession which is still very possible. The news will be disappointing for homeowners who are already up against the wall and struggling to source new competitive mortgage deals.

It should also be remembered that MPC members have a duty to combat inflation rather than to prop up growth.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260, or visit us online at www.solution-mortgages.co.uk

Bankruptcy too lenient?

Wednesday, May 7, 2008

Bankruptcy rules could be blamed for making the effects of the credit crunch even worse.

Made under the Insolvency Act 1986, bankruptcy is an order against an individual debtor (not a limited company) which signifies that he/she is unable to pay his/her debts. As a result of bankruptcy, bankrupts cannot trade or act as a company director.

Bankruptcy is often seen as an easy way for consumers who had failed to get a second chance. Have the reforms to the bankruptcy rules led to abuse?

Reforms to the Bankruptcy rules took place in 2004 which allowed bankrupts to be discharged after 1 year instead of 3. This has possibly led to a belief that money can be borrowed, regardless of whether it can actually be repaid due to the more relaxed attitude. This has led to lenders being left wide open to losses.

Bankruptcy laws should be made more stringent to stop such a lax attitude to what is a serious issue.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk

Will interest rates be cut this month?

Tuesday, May 6, 2008

We have endured another month of liquidity problems in the global market which still 8 months on, shows little sign of abating. There is still a lack of confidence that banks have about lending to each other.

There is still a funding gap between the base rate and London Interbank Offered Rate (LIBOR) which continues to drive mortgage pricing.

It still remains to be seen whether the Special Liquidity Scheme will be effective in restoring confidence in financial institutions.

Inflation has held steady at 2.5% in March (or at least that is what we are being told!), however the impact is being felt in rising costs of food and fuel. If rates are cut to quickly we could end up going back to the days of seventies style inflation - which is very difficult to bring back in line.

The worrying factor is that UK Gross Domestic Product (GDP) growth is slowing. It is likely to be between 1.55 and 1.8% this year, and confidence among consumers is also down.

So, should the Bank of England Monetary Policy cut interest rates this month?

Our view is no. They should hold rates to see if the Bank of England's scheme yields some benefit and also monitor inflation.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260, or visit us online at www.solution-mortgages.co.uk

'At retirement' market set to double in 5 years

Friday, May 2, 2008

The 'at retirement' market is expected to double in the next 5 years to be worth over £30bn a year. The market is likely to grow at 20% a year over the next 5 years creating demand for products designed to convert invested assets into income and income draw down products.

The rapid growth in this market is partly because of the pension sales boom in the late 1980's and early 1990's. Many people who took out personal pensions back then are now coming to retirement. With the prospect of a long retirement ahead they will be looking at ways to shore up their income if their pension fund has underperformed. These people are likely to be asset rich but could still have a poor income.

This should mean that the demand for products such as equity release will increase. These were described in our previous blog and incorporate home reversion plans and lifetime mortgages.

If you have any questions on this article or others like it, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us at www.solution-mortgages.co.uk

Mortgage problems

Thursday, May 1, 2008

The turmoil that has engulfed the mortgage market since August 2007 has left many UK homeowners with mortgage problems. Consumers who have been coming of fixed or discount rates within the last 8 months have found it increasingly difficult to remortgage onto an affordable rate, as banks have been quick to withdraw attractive rates and increase rates even when the Bank of England has been cutting interest rates.

This has also caused mortgage problems for first time buyers who are unable to find suitable mortgages, as many 100% and 95% mortgages have been withdrawn. This in turn could have a negative effect on the UK property market as first time buyers are needed for the market to function properly. The UK's wealth is so reliant on the UK property market that any major downturn could be disastrous for the wider economy. The UK economy is also heavily reliant on the financial service and the service industry in general. We no longer rely or rather have a manufacturing, agricultural or mining industry and therefore as economy we are ill placed when the one sector you rely on is in trouble i.e now.

As in any upturn or downturn, situations are usually over exaggerated one way or another and it seems that this is possibly happening now. There is no denying that the banks have been burnt in the sub prime crisis and have announced write downs of eye watering amounts but it needs to be put into perspective. Write downs are not necessarily physical losses, they are write downs on the balance sheet. If the assets that the losses (i.e predominantly US housing) are secured on begin to increase in value again which is bound to happen at some point, then the banks will naturally recover some of the funds they had written off. Indeed, banks are now at risk of delaying a return to confidence by overstating the losses that will eventually hit the economy. The crisis is taking longer to recover from and more difficult than anticipated because of the risks of adverse news and rumours sparking dramatic falls in mortgage confidence.

The pricing of risk had to be adjusted after years of a booming credit industry but it has now gone from one extreme to the other. The prices implied in some credit markets such as the securitisation market would suggest that Armageddon is round the corner and really the appetite and price should begin to increase.

While downside risks remain, it is likely that the road ahead is that confidence and risk appetite will return gradually over the coming months. A t the end of the day lenders need to lend, that is how they make their money. The financial system cannot grind to a halt.

If you have any questions on this article or are having mortgage problems, please feel free to contact Solution Mortgages on 0845 123 1260 or visit us online at www.solution-mortgages.co.uk