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Mortgage Information

Home owners will soon have just three months to sell their homes or be forced to re-issue the seller's information pack at an estimated cost of £1000 for the average semi-detached home. This would be in addition to the original £1000 paid out for the original sales pack. Much has been written about the Home Information Packs (HIP's). Here we aim to examine the final details, just released.

From June 2007 it will be compulsory for all sellers to produce a dossier containing certain basic facts regarding the sale of the property. Ministers estimation of the costs of this survey are £776, a figure that the experts dispute. They say the figure is much more likely to be £1000. These figures are based on an average semi.

The information given in the dossier includes searches, deeds, description of the property and an energy efficiency rating. However, it appears that there are some rather worrying exclusions in the list. For example, there is no reference to rights of access, ground stability, natural subsidence or effects of mining. Risks of flooding are not included; neither is contamination from radon gas or other substances. Telecommunication links seem to have been overlooked too.

Despite this cost to the seller, it appears that if a buyer is borrowing in excess of 80% of the property value, they'll still be expected to commission and pay for valuations. With regard to the three month time limit on sales, it appears that mortgage lenders will refuse to advance cash to buyers where the HIP is over three months old. Also, if house is taken off the market for over 28 days within those three months, a new HIP will have to be obtained. Where the reason for the property being off the market for 28 days was connected with a sale, the rule would not apply.

Where a property is marketed for sale on a private website or even by a for sale sign in the garden, the failure to supply a HIP will result in a fine of £200 per day.

In reaction to the announcement of these regulations, a Tory spokesman was quoted as saying the packs were "expensive, deficient and dangerous. The refusal to tell families whether the back garden will be safe for their children or of potential flood risks, delivers a serious blow to the credibility of these packs."

The Law Society are concerned that there may be significant defects in the scheme in the there is no provision in the regulations for information within the HIP to be authenticated or confirmed by the seller. They are of the opinion that there should be a warning that reinforces to the buyer the risk of taking on substantial liabilities and commitments.

When you take into consideration the fact that the VAT alone from these packs will bring in £111m per year into the treasury you realize why the Government has been accused of yet another stealth tax implementation.
So there you have it. It appears to be that, for better or worse, HIP's are here to stay.

Mortgages: Short term advice

There are some new types of home loans coming onto the market which are being advertised at present. Several of the mortgage companies are offering variation of them and they are being marketed as "lifetime" loans. So might this be the end of the short-term mortgage? Not necessarily so, it appears that there are still bargains out there for those prepared to shop around.

Mortgage brokers usually advise discounted short term mortgages and advise clients to regularly shop around after the two year discount has come to an end to obtain an even better deal. These clients are known to the insurers as "rate tarts". But who can blame them for obtaining the best possible deal, especially as the broker does all the work for them, making the whole procedure painless and trouble free.

First of all, if you need to borrow over £150,000 the above advice is still without a doubt the very best and asking your broker to shop around for discounted rates is, in our opinion, essential.

For borrowers of less than £150,000, some of these new mortgages appearing on the market initially sound tempting. They are classed as low-rate "lifetime" loans. Abbey and Woolwich are two of the building societies offering flat-rate low cost home loans, amongst others.

The Woolwich has a lifetime tracker mortgage rate which has a guarantee of staying at 0.19 percentage points above base rate. At present the Bank of England's base rate is 4.50%, therefore the rate is 4.69%.

Conversely, the Portman Building Society's two year fixed rate plan presently stands at 4.19%, still cheaper than the Woolwich "lifetime".

You do, however, have to factor in the cost of shopping around, which we have listed:

* Legal fees £350 on average.
* Application fee £499.
* Valuation fee £300 on average.
* Deeds release fee £199.
This is worked out on a loan of £150,000. The above sums come to just under £1,350 and the saving on interest over the Woolwich comes out at £1,500. This means that there is a very small saving on the Portman deal at two years. You would need to find another tempting deal and be ready to switch to it at the end of this period as a 6.5 per cent rate would come into force otherwise.

Abbey's Flexible Plus tracker has a slightly higher rate than the Woolwich, at 5.09% but, as the name implies, it is very flexible and will allow you to reduce the amount of money borrowed by offsetting your mortgage and also permitting you to withdraw money from the mortgage.

One advantage is that you can make use of the mortgage as a type of savings account. Money withdrawn is charged at the mortgage rate.

To sum up, these new loans do seem to be competitive, but the mortgage market alters all the time if you're out for the very best deals, check with your on-line broker and find out what's available out there.

They'll search the whole market and get you the very best deal. That's what they're there for!

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