Monday, 27 July 2009

Getting on the Housing Ladder and Mortgages

I've been helping my colleague R look at houses for her and her boyfriend to buy via a 90% mortgage (they have a reasonable deposit for their ages) today and I have to say even though I write things about how difficult it is for young people to get on the housing ladder and get mortgages I didn't realise to quite what extent this is true in the aftermath of the credit crunch/recession!

For example the first place we looked at was little more than a box and it was £130,000. The next place was better and actually reminded me of the place I used to rent before my present home which was a funny feeling. But even that was £136,000 which they would have trouble getting a mortgage for with their current circumstances/income.

It all looks a bit depressing for wannabe home owners.

Still after that we went to a nice resturant where we had a full vegetarian breakfast which was just what we needed followed by a drive to the sea and a brisk walk along the beach to forget about home hunting and mortgages.

Overall it has been a really nice day.

Tuesday, 20 May 2008

Mortgage Information

A mortgage is a method of using property (real or personal) as security for the payment of a debt.

The term mortgage (from Law French, lit. death vow) refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan.

In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately. See mortgage loan for residential mortgage lending, and commercial mortgage for lending against commercial property.

In many countries it is normal for home purchases to be funded by a mortgage. In countries where the demand for home ownership is highest, strong domestic markets have developed, notably in Spain, the United Kingdom and the United States.

At common law, a mortgage was a conveyance of land that on its face was absolute and conveyed a fee simple estate, but which was in fact conditional, and would be of no effect if certain conditions were not met --- usually, but not necessarily, the repayment of a debt to the original landowner. Hence the word "mortgage," Law French for "dead pledge;" that is, it was absolute in form, and unlike a "live gage", was not conditionally dependent on its repayment solely from raising and selling crops or livestock, or of simply giving the fruits of crops and livestock coming from the land that was mortgaged. The mortgage debt remained in effect whether or not the land could successfully produce enough income to repay the debt. In theory, a mortgage required no further steps to be taken by the creditor, such as acceptance of crops and livestock, for repayment.

The difficulty with this arrangement was that the lender was absolute owner of the property and could sell it, or refuse to reconvey it to the borrower, who was in a weak position. Increasingly the courts of equity began to protect the borrower's interests, so that a borrower came to have an absolute right to insist on reconveyance on redemption. This right of the borrower is known as the "equity of redemption".

This arrangement, whereby the mortgagee (the lender) was on theory the absolute owner, but in practice had few of the practical rights of ownership, was seen in many jurisdictions as being awkwardly artificial. By statute the common law position was altered so that the mortgagor would retain ownership, but the mortgagee's rights, such as foreclosure, the power of sale and the right to take possession would be protected.

In the United States, those states that have reformed the nature of mortgages in this way are known as lien states. A similar effect was achieved in England and Wales by the Law of Property Act 1925, which abolished mortgages by the conveyance of a fee simple.

Motgage Terminology

Like any other legal system, the mortgage business sometimes uses confusing jargon. Below are some terms explained in brief. If a term is not explained here it may be related to the mortgage loans rather than to the legal process.

Conveyance This is the legal document that transfers ownership of unregistered land.

Disbursements These are all the fees of the solicitors and governments, such as stamp duty, land registry, search fees, etc.

Freehold This means the ownership of a property and the land.

Land Registration This is a legal document that records the ownership of a property and land. This is also known as a Title.

Leasehold This means the ownership of the property and land for a specified period, which may be sold separately from freehold, which may be owned by another person.

Legal Charge This is a legal document that records the data of the rightful owner of a property or land.

Mortgage Deed This is a legal document that stated that the lender has a legal charge over the property.

Sealing Fee This is a fee made when the lender releases the legal charge over the property.

Wednesday, 27 August 2003

Increasing Mortgage Interest Rates and the Economy

Is the Economy Really Improving? Or better, are jobs being created? Thanks to increasing mortgage interest rates, Douglas Duncan, chief economist for the Mortgage Bankers Association thinks that 100 to 200 Mortgage Brokerages will disappear in the next 2 to 2 1/2 years, resulting in the loss of 100,000 jobs.

This is on top of the thousands of jobs that will be lost thanks to call centers closing if the telemarketers "do not call list" is implemented. Additionally, Microsoft has hired salesmen to hawk software that allows companies to run more efficiently and thus lay off employees.

The stock market may be going up, GDP may be rising as well, but more than one headline has called this a "jobless recovery." As our economy continues the transformation from a manufacturing base to whatever the future holds, we need to put our heads together and figure out how to cope.

Are we going to be a in a mortgage bubble that busts sometime in the next decade causing economic havoc?

Tuesday, 1 July 2003

Property with subsidence, problem getting a mortgage

The day started off fairly exciting as a client found a house they liked the look off and phoned up to apply for a mortgage and to view it. It turns out though that the house (two-bedroom terrace) is cheap because it had a subsidence problem (which is all better now) but which will mean it could be a problem for them to get a mortgage on it. I'm not sure i'd want it if its going to slide down a hill, but then I won't be living in it!

The estate agent has sent them the details and that of another (three bed town house) just in case.