Items Tagged With building society

We can add the following to the basic 15 Steps To Reducing Your Mortgage:

1. Buy a house rather than a flat
   
   
2. Always keep your monthly payments WITHIN THE MONTH CONCERNED - even a few days out can cost you dear for the rest of the year, or when taking out another loan
   
   
3. Go direct to the lender
   
   
4. Try NOT to take out a mortgage with the same bank that holds your current account - they say that power corrupts and absolute power...
   
   
5. DON'T take out a foreign currency mortgage
   
   
6. Unless you really need to, avoid taking out a long term fixed rate mortgage - rates tend to be high and you almost always never do it at the right time
   
   
7. Don't over-capitalise the property with "improvements" - buy as large a house as you can, rather than one you have to keep adding to
   
   
8. If your eyes really are bigger than your pocket, consider a "split equity" type of deal (more of these later)
   
   
9. Choose well and stick with your decision - like good investments a good mortgage is worth sticking with rather than switching from one fad to another, particularly when you consider the charges involved in remortgaging

To make a success of obtaining, or changing, a mortgage it's important to develop the same attitude as the lenders and brokers themselves. In particular, it's vital that you think of mortgages as 'products' - items that are bought and sold.

Seems odd, I know, but that's exactly how banks, lending houses and, increasingly, building societies think of mortgages - packages of money that are bought and sold.

Today, a lender 'buys' blocks of money in the market at the best price that it can (i.e. borrows at the lowest possible rate over base). It then 'sells' that money to customers (i.e. lends it out) at the highest possible rate that it can get. The difference is the profit that the lender makes.

As a happy shopper hardened in the white heat of the consumerist 21st century, your job is to buy at the best price you can. That means finding out who's offering what and when.

Many housing associations are buying repossessed properties for these very reasons and then renting them out after the necessary works have been done. They have the money in hand to carry out the renovations and are very unlikely to default on the loans. They are therefore considered 'safe' pairs of hands by lenders.

This benefits everyone because the more repossessed properties are taken out of circulation, the more other house prices can rise. The more values rise, the more companies can grow as businessmen can once again secure their loans to expand. The depth of the last recession in the UK was as much to do with credit squeeze (individuals and businesses not being able to borrow) as it was with temporarily high interest rates and a drop in overseas business.

• Who is the vendor?

Is the vendor the original house-holder, a building society/bank, or the vendor's employer? In the latter two cases you're in, because their priority will be 'getting shot' as soon, AND EASILY, as they can. Don't make things hard for them. If you're involved in a long chain sale on your side (i.e. the purchasers of your property have to sell theirs first before they can buy yours etc.) you'll be of less interest than a "cash" buyer or a first-time buyer.

If you ARE a cash buyer (i.e. you've got no property left to sell) then push HARD on the price - you're just what they want and BOTH sides know it.

And finally:

• NEVER make your final offer your first one

If you can afford to go higher, don't give the vendor that knowledge. Go LOW to start off with and then see what the counter position is. However, don't be silly with that first offer. The vendors may consider you a time-waster and simply dismiss you out-of-hand. Ask the estate agent what THEY consider a fair valuation and then go below that. You'll all probably end up at their figure anyway, provided there aren't large amounts of extra work that need doing on the building.

Getting the property at the right price is not only important from the point of view of how much you'll pay, it is also vital to whether you'll get a mortgage or not.