UK Personal Finance

Not only are there huge factors of emotion and stress associated with moving house there are also the burdened costs, that makes the possibility of moving home become a reality. Not to mention the extra cash you will need for the tea and biscuits for the removal men.

Neither the extensive costs nor the sanity strain of moving homes seems to be deterring the British from house- hopping. It appears to be a compulsive quest for Homeowners to continually climb the property ladder. It has been calculated in a survey by Abbey, that Britons will move house an average of 3- 4 times in their lifetime. Excluding property prices, it has been calculated that people who move home around 3- 4 times in a lifetime could be spending up to £54,400, purely based on general moving costs. This nice little some would be enough to buy you a two bedroom apartment in the Costa del Sol, and it is also calculated to be 2.3 years worth of the annual salary based on the average wage, currently.

Homeowners have also said that an average of £16,000 had been spent, when moving last, on lawyer fees, financial advisors, estate agents, removal firms and stamp duty, this cost is additional to what was spent to get their property into a saleable situation. Based on these figures it has been estimated that £28billion alone was spent in 2006 on the general incurred costs of moving house.

There is no secret that moving house is an expensive business, it is undoubtedly the reason why a quarter of the population are loathed to do so. It is astonishing when all the sums are added together from a lifetimes worth of moving homes. Homeowners clearly need all the help they can get, when it is expected that they are likely to spend over two years of the average salary rate.

It advisable for house buyers to look out for the hidden costs when engaging in the decision to move home, it is likely that you may become so caught up in the excitement of moving home that you fail to notice some of the small but relevant costs that arise. It is essential for buyers to ensure they choose the best deal they can find so that they can get the best value. A mortgage is, in most cases, the biggest financial commitment in a person’s life. Therefore, if people are willing to bargain over the fixtures and fittings of there home it will also be a sensible idea that other options are explored to get the best deal when moving home.

It is a good idea to start looking at Early Repayment charges (ERC’s) as they play a part to most mortgages, there are different ERC’s which vary in favourable terms. For example, some mortgages only have ERC’s during the initial competitive rate whilst others can trap borrowers making them pay the ERC’s and the standard Variable rate.

There is no reason why borrowers should have to pay overhanging ERC’s with today’s competitive market giving a wide rang of deals for borrowers to choose. Embarking on a mortgage with ERC’s in the initial terms can make sense but would it not be better still to have no ERC’s at any time? However, you may be likely to pay a little more interest for the benefit, this can be the right decision for those looking for flexibility of freedom.

Exit fees tend to cost around £195- 295, they often come under a number of names including sealing fees, administration charges or deeds- release fees. The charge, however is rising as lenders try to compensate lost revenue from competing rate pricing. It may not seem to be a big sum in the total plan of things but these figures add up, and there has been a rise in the past three years, it is a clear example of the lenders making money out of the consumers. If nothing else it is advisable borrowers should at least aware of what fees are on their deal.

If a higher deposit cannot be provided by the borrower it is important to be aware of higher lending charges (HLC’s). HLC’s are applied by lenders on loans which normally exceed 90% loan value, the borrowers who may not be able to provide a large deposit are viewed as higher risk borrowers and that is why HLC’s can be applied. With today’s market being so competitive it is no longer necessary for first time buyers to pay HLC’s as there are some excellent products, even for those wanting to borrow as much as 100%.

Surveys and solicitors are both crucial in the house buying process, some buyers tend to forget this and find that they receive an inadmissible bill along with a great deal of surprise, which are both very unwelcome at the time. It is important for borrowers to incorporate at least £500 for a typical solicitor’s bill and as much as £900 for a full structural survey.

Another factor that is often erased in borrower’s minds is the re- direction of post. As shocking as it may seem, around a quarter of Britons forget to re- direct their post, putting themselves in danger of identity fraud. It is therefore, not at all surprising that around a half of all identity fraud and theft cases happen at past addresses, in the UK. As already discussed, moving home is stressful and it is therefore absolutely important to re- direct your post. Otherwise you could have a fraudster identifying who you are and your credit information, making you suffer months of misery where you will constantly be turned down for credit and will not even be able to buy something as simple as a new TV.

To solve any issues that may arise with identity theft/ fraud it is important for people moving home to keep on top of their paper work, shred documents that are no longer needed. Contact all financial companies and give a new contact address, make sure that old catalogues that have been used are informed of an address change. The best idea with your post, is to contact the Royal Mail and instruct them to re-direct your post for a year, this will give you chance to inform anyone that has not been told about the change of address and allow for cancellation to be made on things that are no longer in use. Register the new address on the Electoral Roll straight away, also consider registering with the Mailing Preference Services, this will remove your name and address from direct marketing lists that you may have previously been on.

From figures released this month Mortgage Lending is the highest it has ever been as a reaction to the new Interest Rates.  In June Mortgage Lending raised to £34.2bn, a further 9% then the previous month.  In effect Homeowners sought to lower their costs by Remortgaging.

Mortgage approvals grew as a result of this and many people were coming to the end of their Short-Term Fixed-Rate deals.  CML explained lending figures were still Lower Rate then this period last year where it increased to 12%.  CML went on to say although strong levels of lending were expected in autumn; this driven by Remortgaging was expected to make the number of home purchasing to fall.

CML’s director, Michael Coogan, explained that there might be signs in the market for the cumulative effects from the 5 Interest Rate rises.  All effects will become more evident over the next few months; many borrowers with Fixed-Rate Mortgage deals will end the existing deal.

Building Societies Association shows figures to back up the significant drop in gross advances; the figures falling from £5.13m in 2006 to £4.65m last month.  Building Societies also experienced a significant fall in Mortgages Approved this is £6m to £4.6m.

BSA’s head of savings policy, Brian Morris, explains that people who decide to borrow money should be very careful not to overstretch themselves at the time of high Interest Rates and only borrow if they are sure they can afford it.

British Bankers Association have released information that they have seen a slow down in the amount they are lending in Mortgages and Credit Cards. The Net Mortgage lending rate has also rose by £5.3bn this is down from the previous month’s figure £5.8bn and recent monthly average if £5.3bn.

In June unsecured lending remained unchanged, following a fall in may of £0.5bn.  It’s said that as a £0.1bn fall Credit Card borrowing has been cancelled out by the £0.1bn rise in the personal loans and overdrafts.  Also continuing to rise if the Household Savings, deposits into banks are also rising over the month by £3bn, with the monthly average of £3.1bn.

David Dooks, the BBA’s director of statistics, explained that the increase of money on deposit and the unsecured lending shows household budgets seem to be in a good shape.  Chief United Kingdom economist as Global Insight’s, Howard Archer, said that BBA’s and BSA’s Mortgage figures are a general impression that the Housing Market is coming off the boil.  Mortgage activity fluctuates on a monthly basis; falls in the activity are being exaggerating by the activity in 2006 was robust.  Overall all the evidences is pointing to the housing market activity.

HBOS are revising their forecast in the Housing Prices that will rise next year, because of the expected growth in the market.

Some Banking Groups believe that a 6% rise will happen in the growth of House-Price in 2007, but the previous forecast was 4%.  The revision should reflect the greater movement in the prices in January, February, March and April next year.

The Association of Residential Letting Agents (ARLA) believes that the beginning increase of Private Landlords began when housing laws were amended so that it was impossible for tenancy agreements to accidentally become a sitting tenancy.

The initial idea of becoming a Private Landlord seems to be a satisfying idea among people of today, it can also be a very wise financial decision in the long- term period. What could be easier? Borrowing money cheaply, to buy a house or flat and then letting it out to a tenant, while you enjoy the benefits of the rent income and rise in property value.

This is apparently one of the modern concepts of today’s buy- to- let market that has resulted in an increase of Private Landlords. Buy to let borrowing hit record figures at the beginning of the year. The Council for Mortgage Lenders (CML) have confirmed that approximately 152,500 buy- to- let Mortgages were taken out at the start of the year, 17% more than the previous six months. In 1999 figures show that only 1% of mortgage lending were buy- to- let borrowers, which has now increased to 8 %. For lenders this has creating a new area of business.

The majority of private landlords have seen good returns and have experienced growth in their property amount.

The Council of Mortgage Lenders (CML) has confirmed that there has been an increase of 49% in popularity for Offset mortgages over the last year. It has been said that approximately 170,000 Offset mortgages were taken out last year, which are worth around £30bn in total.

An Offset Mortgage allows users to keep balances in different accounts with all balances being offset against each other. Possibly allowing a reduction in the interest paid, which could allow the borrower to repay the mortgage early. They are designed to be flexible, allowing the user to make over- payments and under-payments.

When introduced in the UK in the mid 1990’s from Australia, Offset Mortgages proved to be initially popular and were heavily marketed by Building Societies and Banks. There popularity was diminished with more competitive fixed Rate Mortgage deals. However, recent changes in interest rates have shown that Fixed Rate Mortgages have become increasingly expensive, thus taking a back seat when compared with Offset Mortgages.

The change in interest rates, according to experts has encouraged buyers to choose Offset Mortgages and it is thought that after more than a decade the Offset Mortgage approach has quietly contented the public’s expectations.

A survey has shown first time buyers are borrowing record amounts of money to get on to the property ladder. In April the typical amount borrowed was 3.33 times their income and went up to 3.37 in May. Those already on the property ladder are also borrowing record amounts; in April the typical amount borrowed was 3.01 to 3.03 in May.

In May 89 per cent of first-time buyers took out fixed rate mortgages, which is an all time high that was set in March and 73 per cent of those already on the property ladder also took this root which has risen by 1 per cent from last year.

Last month showed the fastest annual inflation of house prices in two years which was 11.1 per cent. To curb the pressure Interest rates have risen in 5 times from The Bank of England within a year, but the housing market still seems to be holding up.

It is expected by some commentators that the speed of rising house prices will slow down by the end of the year as the recent record rise is felt, but most economists expect that it is only likely to increase by six per cent by the end of the year.