Wentworth Financial Services

Procter and Gamble set to lay off 1600 jobs

2012-01-31T19:10:00.000Z

Procter and Gamble set to lay off 1600 jobs. With unemployment rising you should seriously consider protection.

Procter & Gamble's plans to axe around 1600 non-manufacturing overhead including areas of marketing, the minds behind the great 'The Man Your Man Could Smell Like' Old spice ad. They are banking on digital marketing (Facebook, twitter etc) ahead of traditional marketing techniques to help contain media spending long-term.

The Man Your Man Could Smell Like - Old Spice

This just shows how important income protection really is and that no job is a safe bet. Complete your details for expert advice on suitable income protection or mortgage payment protection insurance.

I'm on a horse!

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2011-11-22T12:01:00.001Z

100% mortgages are back, we have an exclusive rate with a lender offering 100% mortgage (that's no deposit)

The mortgage is a family guarantor mortgage, meaning the lender will take a charge on your a parent or grandparents property as well as the mortgage charge on your property, this is to reduce their risk of negative equity (when you owe more than the property is worth).

The lender has some set criteria for this mortgage so it is therefore not available to anyone. Take a look at the qualifying criteria below to see if the lender would consider you: -

Must be age 25 or over.
Must have at least 2 years clean credit record, with no CCJs in the last 3 years.
Appluicants must be able to afford the mortgage payments themselves.
Must be first time buyer(s).

If you pass the above entry criteria and would like some advice about 100% mortgage then visit our site and complete our mortgage enquiry form.

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Governments FirstBuy Scheme for First Time Buyers is underway

2011-10-14T11:11:00.001+01:00

The Governments FirstBuy shared equity scheme to help first time buyers step on the property ladder is now well underway.

The FirstBuy scheme has been up and running for just over a month now and many of the National Builders are offering this scheme on their new build. As an independent whole of market mortgage advice firm we can offer advice for first time buyers considering this type of shared equity purchase. So what's the details of the Government FirstBuy scheme: -

Typically you would still need to provide a minimum of a 5% deposit, you can obtain a mortgage from one of large panel of lenders who specialise in Equity Share mortgages, This would form 75% of the property value then the final 20% would be offered via a combination of a 5 year interest free secured loan from both the Government and the National Builder (typically 10% each).

That said I'm looking for introductions to the Sales Directors at TaylorWimpy, Bovis Homes, Lovell Homes, and other such national builders who are offering FirstBuy schemes in Merseyside & Cheshire areas.

Also if you hear any young couples/families saying things like 'I'll never own my own home' then please refer them on to Wentworth Financial Services who will do their best to assist them.

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Right to buy scheme re-introduced

2011-10-06T12:38:00.000+01:00

Conservative conference - Help for national builders to build more social housing, the re-introduction of right to buy scheme to help fund the new builds.

This week the Conservative government have re-introduced the Right-to-buy scheme to allow people in social housing to purchase their property at up to 50% discounted market value. The money raised from selling the social housing will help fund the building of new social housing and help the stagnant national building industry.

So the Government are prepared to sell off more social housing, just like when Margret Thatcher first introduced the Right to buy scheme in the 1970s. This does not help those first time buyers out there working hard to build a deposit so they can step onto the property ownership ladder. Do you think this is fair? Have your say, please leave your comments here.

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US Credit rating downgraded

2011-08-06T17:02:00.000+01:00

The United States credit rating has been downgraded by the leading credit rating agency Standard & Poor's.

The US has always had a AAA credit rating ever since credit rating have been applied to econimic countries. This is the first time the US has been downgraded from the top spot, it now sits at AA+ one notch below, due to negative outlook on the US economy and citing concerns over budget deficits.

Standard & Poor's indicated that the downgrade was due to the deficit reduction plan not gooing far enough.

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Low 3.89% fix rate for 5 years

2011-07-04T09:50:00.000+01:00

New market leading 3.89% fix rate mortgage for 5 years. Is it now a good time to lock into a long term low fixed rate?

With interest rates threatening to rise due to soaring GDP & RPI it's no wonder lenders are trying to entice house buyers and remortgages into new medium to long term fix rate deals. However caution should be taken when researching mortgages, it's not just the initial rate figure which makes up the mortgage product, their are many facets to a mortgage including the lenders fees (arrangement, booking, valuation), penalty charged or early repayment charges and when they apply. Whether the mortgage is suitable to you and your circumstances, your loan to value, income, employment status, type of property etc etc.

However, taking these into consideration one of the main lenders have come up with a market leading 5 year fix rate deal at 3.89% with a £900 (£400 for first time buyers) arrangement fee which may be added to the loan if required. plus a non refundable £99 booking fee to secure the rate. Many lenders are charging around the £1000 mark in fees for fix rates and to obtain a fix rate for 5 years at such low levels is well worth it.

The fix rate reverts to the lenders standard variable after the 5 years which is currently 3.99% and the overall cost for comparison is 4.1% APR.

To find out more about this exclusive rate then visit our site and complete your details: -
Market leading 5 year fix rate

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95% Mortgages back

2011-05-04T18:12:00.000+01:00

Boost for first-time-buyers, today a number of lenders have announced new 95% mortgage rates meaning only a minimum 5% deposit required.

Today Wednesday 4th May both Nationwide and Skipton Buildings Societies have announced new mortgage ranges for first time buyers. With a minimal deposit of 5% of the purchase price this shows a great sign that the mortgage market it starting to pick up and lenders appetite to lend to first time buyers at high loan to value rates has returned.

Nationwide require first-time-buyers to have setup a savings account with them saving at least £50 per month. The account must have been running between 6months and 3 years in order to qualify for Nationwide's 95% product range.

Skipton requires no such savings account and it's new 5.99% 2 year fixed rate having an arrangement fee of £195 is available from today.

Need first time buyer mortgage then look no further than our independent mortgage advice service.

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Help For First Time Buyers

2011-03-23T14:01:00.000Z

Chancellor George Osborne announces new Government-backed shared equity scheme to help 10,000 first-time buyers .

George Osborne has today announced in the Budget that he is to fund a £250m package to get first time buyers on the property ladder. The 'First Buy scheme' is aimed at getting 10,000 first time buyers to be able to purchase a newly built flat or house.

The buyer must still provide a small 5% deposit, however a further 20% will be provided by the home builder and government by way of a low cost loan. The loan will be interest free for the first 3 years. This means that the buyer can seek a mortgage with a 25% deposit and obtain significantly lower rates.

The government funding for this scheme is expected to come from the new bank levy introduced by the Chancellor in the last budget.

If you are a first time buyer and would like more information on this then bookmark our site for regular updates on this First buy scheme

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Rates now due to rise in May

2011-02-16T09:55:00.001Z

The Bank of England Governor Mervyn King has suggested that the Monetary Policy Commission are likely to raise bank base rate in May.

In his letter to the chancellor George Osborne, Mervyn King explains the high rate of inflation as three things:-

The higher rate of VAT.
The fall in sterling in 2007/08.
Recent increases in commodity prices, mainly energy.

It is also believed that inflation will increase further from 4% currently to between 4-5% in the next few months, due to further increases in the world commodity prices. What this means is that the Bank of England base rate is expected to rise now in May and with further rate rises possible later in the year.

What does this mean to you?
If you have a mortgage, secured loan on a variable or tracker rate or even been benefiting from the lenders standard variable rate for some time, it is now the time to remortgage onto something more secure a fixed or capped rate.

If you need some remortgage advice, click the link and complete your details and we will contact you with your options.

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Fixed mortgage rates on the rise

2011-01-13T11:14:00.000Z

Fixed mortgage rates could soon be on the rise. now is the time to remortgage onto a low fix rate

Fixed rates have been historically low for the past 12 months but is this all going to end. Since fixed mortgage rates are triggered by the corresponding swap rates and since November 2010 these have been slowly rising it is likely to put pressure on the fixed rate mortgages available today, add to this, the effect that the bank of England base rate has been at an all time low of 0.5% for 21 months and it is feasible that there may be some movement this year in the bank base rate. This all adds pressure on current 2 and 3 year fix mortgage rates.

There is no better time to remortgage onto a fix rate than now. Why not take a look at our remortgage rates using our website.

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Natwest to ban interest-only for 1st time buyers

2010-11-30T18:33:00.000Z

Natwest has declared it will ban interest-only mortgages for first-time buyers. The state owned bank has further hindered a revival to the housing market.

Natwest has declared it will ban interest-only 1st time buyer mortgages. The state owned bank has further hindered a revival to the housing market. Natest state that 'as a responsible lender, it is prudent for first time buyers to build up equity in their property by reducing their capital from day one, particularly in times of economic uncertainty. Repaying capital from the outset will help to protect first time buyers from the possible threat of negative equity in the future.

This move from RBS group shows they have little faith in house prices increasing in the near future, since there would not be any threat to negative equity in this instance. It further backs up noise of a possible double dip recession, loss of public sector jobs and a rise in repossessions will at best halt the house prices or worse show further declines in house value.

This move by RBS group follows identical moves from Coventry Buildings Society, and similar moves from Northern Rock banning interest-only on mortgages over 75% loan to value, and Lloyds banking group banning interest-only on large loans.

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Article - Key man insurance

2010-09-22T14:42:00.001+01:00

If your small to medium size business relies heavily on one or more individuals then your business is at serious risk should anything happen to that individual. Key man (person) insurance is an insurance product which will provide the business with protection should the worst happened to your key individuals.

Many small to medium size businesses have started from a small group of employees who have specialists skills and knowledge fundamental to the running of the business. Whether this be financial, technical, sales & marketing these skills may not be transferred to another individual quickly. This therefore leaves the business relying on one or two key individuals to ensure correct operation, maintaining cash-flow and keeping a steady growth within the business.

When assessing your business to see if you have any key individuals, it is important to think how long it would take the business to recover to normal operation if the particular key man was removed from your day-to-day operations? Does the key person significantly contribute to the profits of the business? Is there significant cash-flow to maintain the profits during the period of handover if the key person died or took a serious illness such as cancer? What would the cost of training a replacement be? These are all important questions you should be able to answer for your business to ensure the risk to the business has been managed.

How key man insurance works

Key man insurance can be used to mitigate the risk to the business of losing a key person within the firm. It would provide a lump sum amount to aid cash-flow which can then be used to ensure projects continue as planned, provide funds to recruit and train a replacement. If your key person has taken ill with a serious illness such as heart attack, stroke or cancer the funds can be used to recruit and train a temporary replacement whilst still offering your key man a salary whilst they take a timely recovery. Think of how important this benefit would be to the individual as well as the business.

Lets take a look at an example. Mr Jones works as an Electrical Engineer for ABC Alarm Systems he is responsible for the design of new alarm systems and is currently heavily involved on a new high profile project which has buy-in from an number of customers already. Looking at two examples, one where ABC Alarms Systems have no key man insurance in place and one where they do: -

ABC Alarm Systems own a policy on Mr Jones' life:
Mr Jones dies -> Policy proceeds paid directly to AAS -> AAS have funds to maintain profits -> AAS have funds to find and train a replacement

ABC Alarm Systems have no cover:
Mr Jones dies -> Emergency cover needed £ -> Loss of customers/reputation in the market/No confidence from creditors

It would be a good idea for ABC Alarm Systems to contact their local tax inspector. This will help them to understand tax relief on the policy premiums and the tax liability on any payments made in the event of a claim.

On a normal Key Person policy, the benefit paid to ABC Alarm Systems would be treated as a trading receipt. This means it would be subject to corporation tax at the company’s rate for that financial year. It would therefore, make sense if the sum assured was based on gross profits so any tax liability at point of claim will be accounted for.

How much cover is needed?
This would depend on a number of factors, some of which you have already considered above: -

Key persons salary
Total payroll for the business
Gross profit of the business
Recovery period (time to return to normal operation)

The following calculation will provide a guide to how much cover would be required for a key individual in your business: -

Sum assured = (Key Persons Salary / Total Payroll) * Gross Profit * Recovery Period

For example if the key person had a salary of £35,000 and the total payroll was £250,000 with a gross profit of £350,000 and recovery period of 3 years.

Sum assured = (35000/250000)*350000*3

Sum assured = £147,000

To summarize

This is an insurance product which can protect your business from the risk of loosing your key individuals who are fundamental to your businesses profits. The lump sum amount received from a policy payout can ease cash-flow and provide the funds to recruit and train a replacement.

About the author:

Steve Wentworth formed his firm Wentworth Financial Services in November 2007 having been in the industry since November 2002. If you require a meeting to discuss key man insurance or other forms of business protection visit our business website.

Read the original artcle in context at http://www.wentworthfs.co.uk/articles/key-man-insurance-004.aspx

Article - Importance of Independent Mortgage Advice

2010-09-22T14:36:00.001+01:00

The purpose of this article is to explain the benefits of seeking independent mortgage advice when looking to either purchase or remortgage a property. The Financial Services Authoriy (FSA) have set out a number of key words which represent the numerous types of advice an individual can seek. This article will try to explain these, however our focus is on the most important and customer beneficial of these 'Independent Mortgage Advice from the whole of Market'.

Types of mortage advice

So what are the different types of mortgage advice and where would you expect to find them?

Non-advice
This type of mortgage broker offers the least consumer protection, they will simply ask a set of questions to narrow the customers requirements and thus filtering the number of mortgages available. They then present the customer with a small list of possible mortgages for the consumer to choose one appropriate. The consumer protection here is based on the script of questions the broker asks. The script is a process determined prior to the consumer appointment, and is impersonal. Therefore specific personal cirmcumstances are unlikely to be assessed. It also assumes that the customers answers are factually correct and the final choice is made solely by the consumer. Although no advice is offered these brokers do handle the arranging of the mortgage on the consumers behalf, and therefore dealing with all the chasing and removing stress from the process.

Where would you expect non-advised brokers to exist?
Well believe it or not many non-advised brokers are within the high street banks and building societies.

Advice-only
This type of services is where a mortgage adviser uses their knowledge and skills to provide the most suitable mortgage to suit a consumers personal circumstances. This will involve a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations, all of which provide key facts on a consumers requirements, and therefore a means for the adviser to identify suitable products. The adviser will not however, handle the arranging of the mortgage, and therefore the consumer would need to deal directly with the bank or buildings society to arrange the mortgage.

Where would you expect advice-only advisers to exist?
These advisers generally do not exist alone this is often a service provided through the 'Independent Mortgage Adviser' type below. And often comes about when the most suitable mortgage is only offered direct through high street (i.e. not through mortgage advisers/brokers). The adviser would therefore offer an advice-only option to the client and often charge a fee for this service. Although the client must deal directly with the bank or building society their mortgage adviser often provides support to the consumer.

Tied mortgage advisers
Tied mortgage advisers come in two forms 'only offering mortgages from one lender or its own mortgages' or multi-tied 'only offer mortgages from a limited number of lenders'. This clearly limits the number of mortgage products available to match a consumers personal circumstances and in a lot of cases they may not be able to offer the most suitable mortgage product and therefore advice may result in the best mortgage they can offer, being woefully inadequate.

Where would you expect tied mortgage advisers?
High street branches. A consumer calls into their local building society branch and their in house mortgage adviser can only offer mortgage products from that building society. Consumer choice and mortgage product suitability are considerably reduced. Whats more, high street branches often offer low mortgage rates/fees as a loss leader (marketing term to bring in business) and then try to sell their tied insurance products which are often also woefully inadequate and expensive.

Whole of market advice
By far the best coverage these advisers can offer mortgages from all the UK mortgage lenders (having mortgage adviser/broker routes). The vast amount of mortgages available through these advisers is likely to cover the individual circumstances of a consumer. Whole of market mortgage advisers offer advice through conducting a full fact finding interview, affordability assessment, discussion on the consumers future plans and aspirations and then can arrange the mortgage through the lender thus aleviating the stress which comes when purchasing a house.

Where would you expect whole of market advisers?
These advisers are usually separate firms often found in the yellow pages or through the internet they are sometimes linked to estate agents. On an initial meeting mortgage advisers should declare if they are whole of market and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is whole of market then ask them.

Independent whole of market mortgage adviser
Finally this type of adviser has the ultimate scope of the mortgage market, not only can they offer mortgage advice from the whole of market (lenders with mortgage adviser routes) but can also offer an advice only process if they identify a high street direct deal is more suitable. The 'Independent' statement indicates that the adviser must offer the consumer a fee based service if required. This means that rather than the adviser taking commission as payment for the mortgage advice, the consumer can opt for paying a broker fee and any commission is rebated to the consumer. The benefit of the fee based service is the consumer knows the adviser will not be swayed by higher commssion mortgage products when selecting a suitable mortgage, however these days this is highly unlikely as the mortgage adviser must prove to the regulator why a particular mortgage is most suitable. Some occassions where the commission is quite considerable this would mean the consumer could receive more money than the broker fee paid and therefore would be better off taking the fee based approach.

Where would you expect to find Independent Whole of Market Advisers?
Like the author of this document Independent Mortgage Advisers are usually separate firms often found on the high street, yellow pages or through the internet and they are sometimes linked to estate agents. On an initial meeting an independent mortgage adviser would declare that they are whole of market and that they offer a fee based approach if required and this will be disclosed in the 'Initial Disclosure Document' they provide you. If you are not sure if an adviser is independent and/or whole of market then ask them.

What do independent whole of market mortgage advisers do for consumers?
The benefits of opting for an independent whole of market mortgage adviser include but are not limited to the following: -

Treat customers fairly.
Take time to gain key factual details of the consumers personal circumstances and aspirations.
Support and inform the consumer from initial enquiry right through to completion and beyond.
Provide an informed view on the housing market in general (price negotiation, leasehold issues etc).
Provide a individually tailored service specific to the customers needs, not a faceless "one size suits all" (non-advised) service.
Advise consumers to thing about their long-term intersts as well as the short-medium term thus minimising risks.
Work for the consumer – estate agents, lenders and insurance providers have a different agenda.
Explain the features and benefits of different mortgage and protection options.
Free to act based on conscience and fairness as not usually directly targeted on specific areas.
Protect consumers data and privacy.
Provide general support during what is acknowledged to be one of the most stressful events in life.
Provide a knowledgeable "Ally" in what can be a very worrying process.
Provide proficient, impartial, examination of mortgage products.
Identify when specific lending criteria restricts consumers personal circumstances.
Expert guidance in complex scenarios (shared ownership/shared equity, right-to-buy, adverse credit).
Identify the potential lender in unusual situations, thus avoiding the need for multiple credit checks.
Select the best protection providers for consumers with health issues or unusual insurance histories.
Choose the most appropriate products, from the whole of market for each aspect of a consumers mortgage and protection needs, and thus increasing their ability to afford their commitments, even when things go wrong.
Highlight unusual exclusions on protection and general insurance products.
Ensure the provision of appropriate and customized protection products.
Quickly find an alternative lender if declined without wasting the consumers time.
Can arrange property insurance in ample time to be ready for exchange of contracts on purchases.
Encourage competition and innovation from lenders.
Assist in calculating affordability, ensuring that consumers can afford their mortgage and protection commitments, along with their other commitments.
Perform data input/entry for the consumer, reducing errors, omissions and most importantly non-disclosure.
Take responsibility for the advice and recommendation provided, thus increasing consumer protection.
Protect the consumer from corporate sales tactics used by some lenders and estate agency chains.
Understanding the urgency of some transactions and "go the extra mile" to meet deadlines.
Collate, verify and suuply documentation for the lender, thus reducing delays in processing and expedite the process for the consumer.
Liaise with third parties in the transaction, tracking progresss and any developments updating consumers throughout.
Use past knowledge and awareness to predict problems and resolve them in advance.
Act as advocate for the consumer during the application process.
Explain the mortgage offer and assist in fulfilling the offer conditions.
Can find appropriate lenders and insurers for unusual properties ( thatched roof, flying freehold flats etc).
Protect consumers from aggressive third-party marketing.
Often personally available outside of normal working hours to answer questions or resolve issues.
Care about consumers and provide an ongoing long-term service, often several generations of the same family.

About the author

Steve Wentworth formed his firm Wentworth Financial Services in November 2007 having been in the industry since November 2002. If you require an independent mortgage advisor or if you'd like to browse typical mortgage rates then take a look at our website.
Read the original article in context at http://www.wentworthfs.co.uk/articles/independent-mortgage-adviser-003.aspx

Article - What is Critical Illness Cover

2010-09-22T14:20:00.002+01:00

According to the Association of British Insurers' (ABI) 'Statement of best practice for Critical Illness Cover' Critical illness cover means insurance which pays out on meeting the policy definition of a specified critical illness and where all of the following illnesses are included: -

Cancer - excluding less advanced cases.
Heart attack - of specified severity.
Stroke - resulting in permanent symptoms.

Therefore if you have an insurance policy were the insurance provider pays out a lump sum amount if you suffer any of the above then it is likely to be a critical illness cover policy.

What other critical illnesses are covered?

Many critical illness insurance providers include many more illnesses than the minimum required of Cancer, Heart attack and Stroke in their policies. However the list of critical illnesses varies between provider therefore, if you are unsure which provider offers the most appropriate cover for you then you should seek advice from an independent insurance adviser. However, this article should assist with how to compare providers based on the critical illnesses covered.

The ABI have defined a list of standard definitions called the model critical illnesses, whereby insurance providers must use these definitions if they offer cover of that particular illness. A total of 23 model definitions exist in the ABI's Statement of best practice for critical illness cover. These are: -

Alzheimer’s disease [before age x] – resulting in permanent symptoms
Aorta graft surgery – for disease
Benign brain tumour – resulting in permanent symptoms
Blindness – permanent and irreversible
Cancer – excluding less advanced cases
Coma – resulting in permanent symptoms
Coronary artery by – pass grafts-with surgery to divide the breastbone
Deafness – permanent and irreversible
Heart attack – of specified severity
Heart valve replacement or repair – with surgery to divide the breastbone
HIV infection – caught [in the UK] from a blood transfusion, a physical assault or at work in an eligible occupation
Kidney failure – requiring dialysis
Loss of speech – permanent and irreversible
Loss of hands or feet – permanent physical severance
Major organ transplant
Motor neurone disease [before age x] – resulting in permanent symptoms
Multiple sclerosis – with persisting symptoms
Paralysis of limbs – total and irreversible
Parkinson’s dise ase [before age x] – resulting in permanent symptoms
Stroke – resulting in permanent symptoms
Terminal illness
Third degree burns – covering 20% of the body’s surface area
Traumatic head injury – resulting in permanent symptoms

When comparing insurance providers critical illness cover policies, you should read their Key Features Documents and check for the list of illnesses covered by the policy against this list, if the provider offers all and more then it is likely to be a comprehensive policy. Where more illnesses are listed there are no further model definitions through ABI therefore the insurer will use their own wording so you should investigate these further. Many insurance providers include 'Total Permanent Disability' as an illness, this illness may be measured by assessing the person's ability to perform certain of the following: -

The insured person's "own occupation".
"Suited occupations".
"Any occupation" whatsoever.
Number of specified activities – for example, activities of daily living or functional ability tests.

Insurance providers can use one or more of the above definitions for their Total Permanent Disability illness definition.

What other benefits may be included?

Critical illness cover policies include a number of further benefits again these vary by insurance provider. Some of these benefits include: -

Child critical illness cover – an identical or subset list of critical illnesses for the children of the policy owner, provides a payout of typically 25% of the policies sum assured or to a specific capped amount.

Waiver of premium – the insurer will cover payments should the policy owner falls ill and is unable to work. This benefit usually is subject to an additional premium.

Indexation – an option to allow the sum assured to increase each year with inflation this can be by a set percentage or the retail prices index RPI.

Option to increase cover – allows increases to the sum assured amount without further medical evidence subject to a life changing events such as getting married, becoming a parent or moving home.

What you should look out for.

As well as the illness definitions the ABI have also defined model exclusions to be used on policies where they apply. These will appear under the heading 'When will the plan not pay out?' in the policies Key Features Document.

Alcohol or drug abuse
Criminal acts
Flying
Hazardous sports or pastimes
HIV/AIDS
Living abroad
Self inflicted injury
Unreasonable failure to follow medical advice
War and civil commotion

Insurers will use these definitions where they apply and include some of there own exclusions where necessary, a typical exclusion often included is non disclosure of medical facts. You should be comfortable that these exclusions do not put you at risk.

What else

Critical illness policies are often combined with some or all of the following thus providing a full protection plan to suit your requirements: -

Life cover

Income protection (or Permanent Health Insurance)

About the author

Steve Wentworth formed his firm Wentworth Financial Services Ltd in November 2007 and has been in the Mortgage Industry since November 2002. For an immediate quote for the best critical illness cover then take a look at our website.

Read the original article in context at http://www.wentworthfs.co.uk/articles/critical-illness-cover-002.aspx

Article - How UK Mortgage Lenders Calculate Mortgage Payments

2010-09-22T14:09:00.000+01:00

An article providing guidance on how mortgage lenders in the UK calculate your mortgage payments.

There are no set rules defined by the Finacial Services Authority (FSA ), however lenders must be accurate on the illustrations and mortgage offer documents they supply to you.

How interest is charged

Mortgage lenders use a number of different methods for charging interest, these methods fall into one of three categories: -

Daily interest charging.
Monthly interest charging.
Annual interest charging.

Annual interest charging

The most simplest of these is the annual interest charging method, this is certainly the oldest method adopted by lenders. Interest is charged at the start of the year based on the mortgage balance figure. This interest amount is then divided through the 12 months of the year for each payment for an interest-only mortgage or combined with capital for each payment if a full repayment mortgage.

Interest-only calculation

So with a balance of £100,000 and a rate of 6.5%: -

Full repayment calculation

so with a balance of £100,000 and a rate of 6.5%: -

Monthly interest charging

With monthly interest charging, the annual interest rate is first divided by 12 to establish a monthly interest rate. This new monthly interest rate is then applied to the mortgage balance to calculate a monthly interest charge for each payment on an interest-only mortgage or combined with capital for each payment if a full repayment mortgage.

Interest-only calculation

So with a balance of £100,000 and a rate of 6.5%: -

Full repayment calculation

so with a balance of £100,000 and a rate of 6.5%: -

As you can see there are benefits to having a monthly interest charged mortgage over an annually charged one if your mortgage is a full repayment mortgage as this example shows a saving of £8 per month.

Daily interest charging

Many mortgage lenders in the UK have now adopted daily interest charging methods, this method is far more complicated and many lenders have their own rules on how they calculate daily charges of interest. Therefore for the purpose of this article the following method will be used, this should provide a guide to how much savings can be made with a daily interest charging method. In order to calculate the daily rate of interest we start with the annual interest rate and divide this through by 365.25 days (0.25 being the leap year). We must then multiply this by the days in any particular month. However you do not make mortgage payments every single day so these charges are rolled up and charged to you on a monthly basis. The main benefit with daily interest charging comes when you make over-payments reducing your mortgage balance immediately benefiting from lower interest being charged. Daily interest charging is often used with flexible mortgages, offset mortgages and current account mortgages as these present huge benefits to the borrower.

Dealing with rate changes

Most of today's mortgages start of with a special offer rate for a period of time then the mortgage often reverts to the lenders standard variable rate. For example a 4.5% fixed for 2 years followed by the lenders standard variable rate currently 5.6%. How do you calculate what payments will be in 2 years time once the special rate period has expired? Simply put you just start over using the new balance, and remaining term. So based on an original loan amount of £100,000 and mortgage term of 25 years

Interest-only mortgage

then mortgage payments after the first 2 years will increase to: -

Full repayment mortgage

In order to calculate the new mortgage payments after the first 2 years we must first calculate the new balance as capital will have been paid for 24 months: -

Now we have a balance for 2 years in the future we can start over with a new balance and a 23 year term: -

Lenders will use a similar process to this when a variable rate changes during the term of the mortgage. They will first inform you of the rate change and then calculate the balance and start over with the remaining term, balance and new rate.

About the author

Steve Wentworth formed his firm Wentworth Financial Services in November 2007 having been in the industry since November 2002. If you require an Independent Mortgage Adviser or wish to find typical mortgage rates then visit our website. Read the original article in context at http://www.wentworthfs.co.uk/articles/mortgage-calculator-001.aspx

Average first time buyer age rising

2010-09-10T13:19:00.000+01:00

Average age of single first time buyers to rise to 43 according to research by theNational Housing Federation.

The Federation, which represents England’s housing associations, said the report highlighted the scale of the country’s housing crisis warning home ownership is becoming more of a dream than a reality for most young people. The average 21 year old will have to wait until there mid forties before they can afford to get the foot on the property ladder, and in London the expected average age rises to mid fifties.

The problem is related to the banks and buildings societies restriction on lending close to the value of the property. Lenders are requiring first time buyers to have large deposits, thus preventing many individuals to step on the property ladder. Individuals are unable to save as they are paying high rents, public sector pay freezes further more there is no incentive to save when saving rates are at an all time low.

For typical mortgage rates check our mortgages section.

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Economy grows by 1.1%

2010-07-23T13:12:00.000+01:00

The UK economy has grown by 1.1% in the second quarter of 2010 according to figures from the Office of National Statistics.

With the first quarter of 2010 having a low growth figure of 0.3% this significant 0.8% increase in growth shows our economy has been boosted by business services, finance and construction. An increase in GDP of 1.6% compared with the second quarter of 2009 however economist predict this rapid increase in growth is unsustainable and it is likely to reduce to lower levels of growth from quarter to quarter.

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Spain Win World Cup 2010

2010-07-11T22:15:00.002+01:00

Congratulations Spain - Felicitaciones España - World Cup 2010

Spain wins the 2010 World Cup in South Africa with a goal in extra time from Iniesta (116 mins). The double winners of the European cup in 2008 now take the World Cup trophy home to Spain for the very first time.

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Emergency Budget

2010-06-22T17:45:00.000+01:00

Some key measures announced in George Osborne's first budget under the new Coalition government.

VAT increase to 20% - From January 4th 2011 VAT will rise from 17.5% to 20%. Food and children's clothing will remain VAT exempt says chancellor Osborne.

Income Tax allowance rise by £1,000 - Personal income tax allowance to be increased by £1,000 in April to £7,475 - worth £170 a year to basic rate taxpayers. It is expected that 880,000 of the lowest-paid will be taken out of income tax altogether.

Child benefit frozen for 3 years - In his emergency speech today George Osborne announced that child benefit will still be available to everyone, however it will be frozen for the next three years.

Family Tax credits capped at £40,000 income - in addition Chancellor Osborne will reduce tax credits for families earning over £40,000 from next year.

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Buy to let mortgages with only 20% deposit

2010-05-10T11:35:00.001+01:00

Buy to let mortgages now available with only a 20% deposit. Such mortgages have not been seen for the past 2 years.

Since the past 10 months have shown a regular increase in house prices and that we are now over 10% up on this time last year. Lenders are now happy to increase their lending limits (Loan to value or LTV) to 80%. Meaning landlords only need to provide a 20% deposit to purchase a buy to let property.

With many professional landlords being unable to expand their portfolio over the past 18 months as they have reached their maximum lending. This is encouraging signs. If you need assistance with your buy to let mortgage use the contact me facility on our website, or call us on 0845 805 4350.

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Budget: No stamp duty for first time buyers

2010-03-24T14:48:00.000Z

Budget: Darling has raised the stamp duty threshold to £250,000 for first time buyers from midnight tonight (24th March 2010)

The Chancellor has confirmed another stop gap holiday for first-time-buyers only and raised the stamp duty lowest threshold from £125,000 to £250,000 from midnight 24th March 2010 for a period of 2 years. The Chancellor estimates to help 9 in 10 first-time-buyer in providing this holiday. The holiday will be funded by raising a levy of 5% on houses purchased above £1M.

There were calls from many in the mortgage and housing markets to extend the Stamp Duty holiday beyond December 31 2009 and reform the current ’slab’ system where Stamp Duty is charged as a percentage of the total purchase price depending on the value of the property. The government have failed to address this issue of unfairness in the way Stamp Duty is levied across the board.

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UK out of recession

2010-01-26T13:26:00.000Z

The UK economy has now come out of recession after figures for the last quarter of 2009 show a very weak 0.1% growth.

The first quarter of growth in the economy since 31st March 2008. We have seen 6 quarters (18 months) of recession in the UK and we are only now seeing a quarter of growth at a significantly low level of 0.1%. This early figure of 0.1 could infact go up or even down once further results come in, if it where to come down we could quite easily fall back in to recession.

The UK is the last major economy to recover from recession after Germany and France recovered in the summer 2009 whilst USA and Japan emerged from recession also last year.

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Stamp duty still to end on 1st Jan 2010

2009-12-09T14:20:00.001Z

Pre-budget report - Chancellor Darling has not extended the stamp duty holiday. Stamp duty will now be charged at 1% on properties bought over £125K.

Properties under £175,000 are currently exempt from stamp duty, but the threshold is due to return to the original £125,000 level next year. Chancellor Darling could have extended the stamp duty holiday or better still reformed the stamp duty levels completely. He has chosen to ignore this completely and handed another blow to the property market.

The government has however extended its support for the Mortgage Interest Scheme for a further 6 months.

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House prices increase again in November

2009-12-03T10:32:00.000Z

November sees another rise in the average house price, the average house price now around the levels seen early 2006.

According to Nationwide's House Price Index another 0.5% rise in November like that shown in October this leaves the aveage house price now at £162,764. The average house price of a typical property is now a 2.7% higher than a year ago and now at a similar level to where it was in early 2006 eighteen months before the start Northern Rock debacle. The 3 month on 3 month rate of change - generally a smoother indicator of the near term trend - dropped to 2.8% from 3.5% in October and 3.8% in September. This suggests that house prices are now rising at a more moderate pace than in the spring and summer months, when they experienced a very strong bounce form the early 2009 lows.

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Comparison websites are not trusted

2009-11-18T12:00:00.000Z

Comparison websites are not trusted according to Which! They do not provide a good enough service to clients.

In a comparison site satisfaction survey, Which? Money found that the average customer score for these websites was lower for than any other financial sector it has surveyed; no site scored higher than 50%. Only three in ten said they trusted them to find the best price available, while two thirds thought they would be presented with products that make the websites the most commission.

A quarter of people said they did not buy through a comparison site because they found a cheaper quote elsewhere and 12% said they were unhappy with the quotes they were given.

These site show a distinct lack of financial advice and guidance. Users are presented with best buy tables which ussualy are unsuitable or unavailable for the average user. For products like mortgages or life and critical illness policies these websites fundamentally fail the user by not performing an indepth assessment of the clients requirements and personal circumstances such as what would be done through a mortgage or protection adviser such as Wentworth Financial Services.

If you require an indepth assesssment for mortgages, life insurance and/or critical illness cover follow the links to our website for a quote. Unlile the price comparison sites we have numerous methods for dealing with our customers, face-to-face for those users in Merseyside, Cheshire area. Telephone UK wide, or via email UK wide.

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It's time for first time buyers to purchase

2009-10-09T12:10:00.001+01:00

It's now time for first time buyers to enter the housing market and purchase rather than continue renting.

According to research from Abbey Mortgages - Buying is cheaper in every region except London - The average rent outside London in £434 per month whilst the average mortgage is £382 per month.

First time buyers having a good 20-25% deposit could benefit from the lower mortgage rates and make a possible monthly saving of £52 per month. Prospective buyers in Wales are set to make the biggest monthly savings at over £90, followed by those in the North West over £87, and Yorkshire over £77. Buyers in East Anglia will see the least savings of around £2.50 per month.

This research shows there is hope for first time buyers but underlines the importance of saving for a decent deposit, in order to benefit from the better mortgage deals.

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August house price index

2009-09-23T11:25:00.001+01:00

August once again shows an increase in the average house price in the UK. A 1.6% increase making the new average house price £160,224.

The price of a typical house rose for the fourth consecutive month in August, increasing by 1.6% on a seasonally adjusted basis. The 3 month on 3 month rate of change - generally a smoother indicator of the near term trend - rose from 2.7% in July to 3.3% in August, the highest level since February 2007. At £160,224, the average price of a typical UK property is still slightly lower than 12 months ago. However, if house prices continue to increase month on month we will soon reach a point where the annual house price has increased and this will hereby mark a huge improvement in the sector.

Economic Outlook Brightens

2009-09-23T10:58:00.000+01:00

According to the CBI the UK economy is expected to emerge from recession through modest growth in the third and fourth quarters of this year.

Both globally and in the UK production is starting to increase. However, the pace of recovery in 2010 is expected to be slow. "The outlook is improving as the UK draws strength from quantitative easing, a weak pound and a recovering global economy. Although growth this quarter should mark the end of the recession, conditions in the UK will remain tough for some time yet, and it is difficult to see where demand growth will come from." [Richard Lambert, CBI Director]

Quatative easing - was the governments approach to improving lending to businesses and the mortgage market. This is effectively printing money, they payback of which will be either public sector cuts or tax increases hence this is why the political parties are now talking around these factors in there press conferences.

Average house price increase for July

2009-08-02T20:03:00.000+01:00

July is the third consecutive month where typical house prices have increased. This is now the forth monthly increase in 2009.

Although house prices are still 6.2% lower than they were 12 months ago, the last 5 months have shown significant improvement and it is now believed that by December the average house price will be up on what it was December 2008. Just a few months ago this idea was unthinkable since significant decreases in the house prices occurred toward the back end of 2008 and early 2009.

The average house price now sits at £158,871 which is 1.3% up on June's figure of £156,442.

Average house prices increase for June

2009-07-03T15:58:00.000+01:00

House prices have once again increased for the third time in four months. First quarterly increase since December 2007.

According to Nationwide's statistics the averagre house price in the UK rose by 0.9% in June 2009 and now sits at £156,442. These recent rises are thought to be to a shortage in the supply of houses in recent months. This is likely due to many would be sellers removing their properties from being marketed due to lack of demand in 2008. Therefore the low supply is supporting house prices for the time being.

Lloyds TSB Banking Group Changes

2009-06-11T21:43:00.000+01:00

Lloyds Banking Group have announced plans for streamlining their mortgage businesses. The C&G brand will be removed from the high street however will continue to operate in the mortgage market.

Intelligent Finance will not take any new mortgage business but will continue to provide services to existing customers, Intelligent Finance will concentrate on savings business in the future. Bank of Scotland will continue to serve existing customers but will only take new business through its high street branches in Scotland.

House Price Index for May 2009

2009-06-11T21:26:00.000+01:00

House prices have increased for a second month in the last three. An increase of 1.2% in May follows shortly after the previous rise in March of 0.9%.

The average house price now sits at £154,016, still 11.3% lower than a year ago. However, this marks a significant improvement from the annual decline of 15.0% recorded in April. This increase may be due to the drop in supply due to many would be vendors deciding to stay put, or holding out to see whats happening with the market.

Extending the stamp duty holiday

2009-05-08T20:05:00.000+01:00

The Chancellor announced in the Budget that the stamp duty exemption on house purchases below £175,000 will be extended until 1st January 2010.

The chancellor announced a holiday from Stamp Duty Land Tax (SDLT) in September 2008 exempting any purchases of residential property of not more than £175,000. The measure applied to acquisitions between 3rd September 2008 and 2nd September 2009 inclusive.

Legislation will be introduced to extend the increased threshold to land transactions where the effective date for SDLT is before 1st January 2010. Thereafter the SDLT threshold for residential property will revert to its previous value of £125,000.

House Price Index March 2009

2009-04-02T14:58:00.000+01:00

House prices are on the rise, are there green shoots of market improvements or is it too early to talk of house price recovery.

According to Nationwide's House price Index for March there is a surprise bounce in house prices, up 0.9% on February 2009's figures the average UK house price now sits at £150,946. It is far to soon to see if we are on the road to recovery, but does provide a good sign that people are returning to the market and buying again.