Monday, October 03, 2011

Guest blog - Quick Move Now

This month I have invited the team at Quick Move Now to present a guide to the top 10 unusual UK mortgages:

1. Muslim mortgages

A large Muslim population in many cities in the UK now means many lenders are offering Muslim mortgages. These are ones that comply with Sharia Law.

2. Unusual home mortgages

Unusual homes such as lighthouses, windmills, barges or even shipping containers may need a special type of mortgage. Many high street lenders and mainstream insurers may be loath to take on such business, preferring instead the more straightforward flats, family homes and bungalows found in every town and village. As a result, many lenders and insurers will charge a premium to those opting to live in more individual surroundings.

3. 125% mortgages

This is where the lender will advance funds up to 25% more than the purchase price or re-mortgage valuation. The funds are obtained purely with proof of income. Applicants normally need a very good credit history. Lenders who offer this special type of mortgage include Northern Rock, Mortgage Express and BM Solutions.

4. Builder deposit mortgages

This is where a builder genuinely provides 5%-15% deposit without the need for you to provide one for yourself. This has to be a medium sized local builder or a large national builder.

5. Self certification mortgages

These are designed for self employed people and those who find it hard to prove their earnings. Borrowers state their own income and the mortgage amount is based on the declared earnings. Self cert mortgages are open to abuse by people fraudulently declaring their earnings to be higher than they are. This is, however, a criminal offence. The FSA (Financial Services Authority) estimates self cert mortgages make up 6% of the market.

6. Shared equity mortgages

Ideal for first time buyers, shared equity schemes allow people who are struggling to get on the housing ladder a chance to buy a property in partnership with the lender or government. Under the Government HomeBuy shared equity scheme you buy 75% of a property yourself with a shared equity mortgage from a select number of lenders and the remaining 25% with the help of a 'top up' shared equity home loan from the mortgage lender and the Government. After 5 years, a small amount of interest is payable on the ‘top-up' shared equity loans which are fully repayable when you sell the property. When you sell the shared equity property you may have to also forfeit a portion of any increase in equity.

7. Shared ownership mortgages

These often occur in partnership with housing associations where the tenant elects to buy a percentage of the house and pays rent on the rest. You may be able to increase your share as time goes by, sometimes to 100%; this is called 'staircasing'.

8. Euro mortgages

A Euro mortgage is basically the same as a UK mortgage except it is denominated in euros rather than pounds, and its rate will be allied to the interest rate set by the European Central Bank. Switching your mortgage away from pounds to euros may seem attractive for pro-Europeans or a chance to make some money on the currency markets, but is it worth risking your biggest financial commitment? Switching to a euro mortgage for most people is a high-risk gamble, which could easily backfire. Currency markets are fairly volatile - and you could get caught out.
9. Guarantor mortgages

With a guarantor mortgage a parent or close family member can either cover the shortfall in the mortgage needed to cover the borrowers income or can cover the full mortgage amount. By covering the mortgage, or part of it, the guarantor is liable to make payments if the principal slips into arrears or defaults. For instance, if you earn £20,000 you could borrow £80,000. If the property you want to purchase is worth £130,000, there is a shortfall of £50,000 that the guarantor would cover. The mortgage lender will assess the guarantor’s income, current mortgage and other financial commitments to ensure that they can cover the loan amount.

10. Buy-to-let mortgages

Buy to Let Mortgages are mortgages specifically designed for people who want to invest in the property market by purchasing one or more houses and letting them out to tenants. The Owner is then able to benefit from any appreciation in the capital value of the house itself. They are also likely to be able to maintain the property and meet much of the loan repayment from the revenue realised by letting. The buy to let phenomenon has driven house prices higher over the last few years while making a broader section of rental accommodation available. Most buy-to-let mortgages are interest only, and the max amount borrowed is usually 80% of value of the property. Rent often has to be 125% of the monthly repayment (although this has recently relaxed because of rising house prices)

Quick Move Now are one of the leading house buying companies in the UK. They pay up to 90% of the value of your house and can turn around in as little as 7 days. Visit for more info.