Mortgages London | Mortgages in London

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As it is revealed that house prices are close to being level with 2007 prices, the property market is seeing the rest of the UK catch up with London. Mortgage advisors in the city have said this is due to the revival of 90% mortgages and an influx of first time buyers who can afford to take out a loan. London property prices have risen by just under 15% since this time last year, and this has in turn affected the property prices across the country.

For anyone looking to buy a house in the near future, London mortgage advisors are suggesting that borrowers make the most of the favourable mortgage deals available now by getting a short term fixed rate mortgage at a competitive rate from a mainstream lender. With the market becoming more competitive, it is possible to get unmissable deals direct from a high street bank or building society that are just as good as mortgages from an independent broker.

One of the best deals available at the moment is from the Cooperative Bank. The bank has been enjoying rising popularity recently thanks to an ethical policy that promises to invest money in ventures that do not harm the environment and actually promote ethical campaigns, as such it has also launched a mortgage product designed to benefit first time buyers in London. With London property prices being higher than anywhere else in the UK, it takes much more saving to raise sufficient deposit, and even then, the less of a deposit a borrower can put forward, the higher the interest rates on the mortgage will be.

Mortgage advisors are therefore recommending that Londoners check out the two year fixed rate mortgage with an LTV of up to 90%. This mortgage product has a fixed rate of 2.95% for two years, reverting to a standard variable rate after this term which is currently 4.24%. The advertised application fee is £999 which incorporates an £849 arrangement fee with a booking fee of £140 on top of that. Borrowers can expect to secure up to £1.5 million, which despite the continued rise in property prices, should be more than enough to purchase a property in London.

Properties in London are notoriously more expensive to buy that anywhere else in the UK. House prices in the city can make it difficult for Londoners to buy a home in the area they have grown up in when they decide they are ready to invest in a property. Thankfully, new low rate mortgages from the Yorkshire Building Society might make London properties an affordable investment for cash strapped buyers.

The Yorkshire Building Society is the second biggest building society in the UK, and it has been cutting mortgage rates continuously this year in a bid to double the number of borrowers on its books. By making low rate mortgages more readily available, it hopes to attract more Londoners who are trying to get on the property ladder. The product launch means that a further 0.44% has been knocked off all fixed rate mortgages available from Yorkshire.

The new packages include two two year fixed rate deals, for which you will need a 25% deposit. One has a rate of 2.95% and an arrangement fee of £995 and the other has a fixed rate of 3.05%, and although it comes with the same arrangement fee, there will be no charge for valuation and legal costs. There are also two three year fixed rate mortgages available too, which also require a 25% deposit. Arrangement fees are the same as the two year deals but the interest rates are 3.89% and 3.99%, with the higher rate once again in lieu of free valuation and legal fees.

For anyone finding it difficult to stump up a deposit of 25%, the lender has also reduced rates on 85% LTV packages, offering two year fixed rate mortgages from 4.39%. The low rate mortgages will help boost the already booming property market in London and give both first time buyers and those who are ready to remortgage a chance to invest their money wisely.

Despite the concerns over European debt, London mortgage rates remain attractive as the Bank of England keeps interest rates at 0.5%. This will be the 14th consecutive month that rates have been held so low, and it is predicted that these levels are here to stay; at least until the political unrest within the UK begins to be resolved.

Interest rates have to be kept low, as any rise during the current political and economic climate could send the UK spiralling into a financial black hole that would be incredibly difficult to recover from. As such, whatever the outcome of the hung parliament, the coalition will have to keep interest rates low to prevent further economic decline.

This is good news for anyone interested in London property investment as it appears there has never been a better time to get a mortgage. The current mortgage rates will encourage investment in London properties which will in turn help the economic recovery by providing the foundations for a strengthening housing market.

One of the best products on the market at present is a tracker deal from Market Harborough that has an initial rate of just 2.49% over 2 years, ideal if interest rates remain at their current level. However, in the event that rates rise before the two year initial term is over, anyone that has taken out this loan can switch lenders to take advantage of lower mortgage rates without paying an early repayment charge.

Products such as this are ideal for Londoners who want to invest in a property now. It must be stated however that this product comes with a higher than usual arrangement and booking fee of £1,250 and requires a 25% deposit. It is estimated that the average price for a London property is £368,825, which means that a the minimum deposit would work out to be in excess of £92,000.

For London buyers, free mortgage advice is in abundance from brokers who want to sell a product regardless of whether it is really the right package for the borrower. An interest only mortgage is one such option that is often touted as being in the borrower’s favour. We all want to reduce our monthly outgoings and save a bit of cash for a rainy day, but opting for an interest only mortgage could in fact cost more than you imagine in the long run if not managed properly.

There are, of course, instances where an interest only mortgage is the best option, either as a temporary respite when times are hard, or for those whose circumstances mean a windfall is coming their way to pay off the remaining mortgage debt, or a large proportion of it. Unfortunately, many borrowers fall into the interest only trap to discover that they get used to their new budget and find it difficult to get back to normal repayment terms. This often results in the debt remaining untouched once the interest is cleared, and ultimately costing the borrower more to pay off, or worse still, the borrowers has to resort to selling the property to clear the debt.

Those offering free mortgage advice in London are advising that borrowers should switch to interest only for a limited period and only if they are in serious danger of losing their home through missed repayments. This mood in the mortgage market is being backed by the lenders themselves as Northern Rock have just announced that an interest only option will only be available to borrowers with over 25% equity in their home. This works to not only discourage those who don’t need to reduce mortgage repayments from falling into cheap repayments for longer than necessary, but it also helps protect the investment made by the lender.

Another incentive is to offer those who keep to repayment terms a lower rate of interest than the interest only option. Currently repayment plan interest rates stand at 2.59% for a tracker, and 4.69% for a fixed rate, compared to interest only of 2.79% and 4.89% respectively. If you own a London property or are considering investing in one, make sure you get free mortgage advice that won’t end up costing you your home in the long run.

You’d be forgiven for being confused about the current state of the London housing market, with one London mortgage broker saying that the industry is experiencing a pre-election lull, and another claiming that the market hasn’t been this good since 2007. Where the confusion lies depends on what end of the market you are talking about.

The average homebuyer is applying for a mortgage of about £150,000 for a property that is around the £200,000 mark. This can buy a cosy family home in London, or a plush studio flat, depending on your circumstances, but generally a property of this value is within the reach of those with modest earnings. However, it is this demographic that are living to a tight budget, and with a possible variation in interest rates, their mortgage repayments could potentially be unaffordable. For this reason, it is the average homebuyer that is shying away from applying for a mortgage, and therefore creating a lull in the mortgage market.

In stark contrast, high net worth borrowers are applying in increasing numbers for mortgages in excess of £500,000, thus creating the fantastic mortgage boom – likened to 2007. It’s all about perspective. According to London mortgage brokers, the trend is due to a weak pound, and wealthy foreign investors are making the most of the opportunity to buy a property in City. There is a noticeable increase in sales of properties at the top end of the market, in particular properties worth in excess of £2m in desirable areas such as Hyde Park. It has been estimated that sales of this type of property has increased three fold during the first three months of this year.

It seems that for mortgage brokers specialising in the top end of the market, applications are coming in thick and fast, bringing job security and profits; but for those who are trading at the lower end, business is slowing considerably, and causing concern for some brokerages. It cannot be denied that the figures are generally looking good for London mortgage brokers, as there are more desirable properties in the city and the south east generally than elsewhere in the country, but the true state of the industry may paint a different picture altogether.

With the election on the horizon, those who are interested in the property market might want to consider the prices of properties in different constituencies and the affect this might have on a mortgage. It transpires that properties in a conservative constituency are on average worth 53% more than homes in a Labour constituency. This means that if you are hoping to find cheap London mortgages, you should be targeting areas that support the red team; but be aware that this may not reap monetary rewards in years to come.

According to recent research typical homes in conservative constituencies come in at around £255,000, Lib Dem  areas have an average of £230,000 and Labour trail way behind at £170,000. Although this is an interesting cross section of the demographic in itself, the increase in value in each of the constituencies is equally as interesting, and could be important news for investors.

Properties in Labour constituencies have increased the least, and those in Liberal Democrat areas have increased the most – 177% and 190% respectively since 1997 when Labour first came into power. Homes in Tory areas increased in value by 179%, barely beating the figure of the current party leaders. Most of the boroughs in London are under the umbrella of the labour party, which would indicate that London is the place to find mortgages cheaper than elsewhere.

However, the figures show that although the Conservatives have fewer homes in their constituencies, 7.2 million, they are in fact worth the same as all the 11.7 million properties in Labour constituencies put together, a whopping £1.9 trillion. This is in stark contrast to the 2.2 million Lib Dem homes worth just £0.5 trillion. Whether or not his will affect the way that voters view the upcoming election is unclear, but it is certainly another factor to consider, and not just for those investing in property.

Anyone looking to secure a cheap mortgage will be following the political game closely over the next few weeks, especially with speculation about rises in interest rates. To get the most out of a mortgage however, it might just be worth investing in a property that is likely to increase in value significantly over the coming years. As seductive as cheap mortgage deals may seem, they could in fact be a false economy.

During the recent credit crisis, London lenders decided to reduce risk of bad debt by shying away from certain areas of the mortgage market. This included putting their faith in first time buyers and buy to let ventures, backing a borrower with bad credit with a sub-prime mortgage and handing out large mortgage loans. However, as mortgage applications have been rising and the market is making a slow recovery, some lenders are reverting back to the good old days and offering high net worth customers large loans with lower mortgage rates in London.

The types of loan we are discussing here are understandably well out of the reach of the average Londoner, but for people wanting to buy an abode in Chelsea for example, it could be just the ticket. Cheltenham and Gloucester are now offering a two year fixed rate loan at just 3.99% for mortgages between £1m and £2m with a 40% deposit. This means that the mortgage rates for this type of loan have been lowered by 1.9% from 5.29%.

Whether or not this will cause a flurry of applications for larger loans remains to be seen, but it does mean that lenders are offering big money borrowers similar rates to those who apply for a far smaller mortgage. The trend for handing out large loans appears to be across the board, with Barclays and The Royal Bank of Scotland following suit.

It is thought that the decision to offer high income borrowers lower mortgage rates is a strategy to improve the lot of banks generally. By enticing high earners through the door with low rates, they can then sell their other products and take advantage of hopefully healthy bank accounts; and London is the right area to do this in. Not only does the city have a higher proportion of wealthy workers than elsewhere in the UK, it is also where many multimillion pound townhouses are located.

Prices for property in London have always been on the steep side and usually reserved for those who can afford to shell out £2-3xx,xxx for a semi or significantly more for a detached house. The average property price in Kensington and Chelsea comes in at just over a million pounds, yes the £1,000,000+ mark will get you a lovely flat, or if you’re feeling frivolous and have £2,000,000+ you could purchase a nice terrace or semi-detached house. Of course these numbers also reflect the fact that a ‘flat’ in Chelsea is usually the size of most houses so we can’t take the figures too much to heart.

Extortionate property prices aside, over the past year we’ve seen an annual increase of approximately 7.6% on property in the Greater London area, with the City of London and Richmond with the greatest increases of 24.4% and 22.3% respectively. There have also been losses in Barking and Dagenham, and the City of Westminster at 9.3% and 9.6% respectively. These figures are quite positive considering the house price crash of 07/08 and are particularly encouraging considering the current economic climate.

We must remember however that the Stamp Duty holiday for properties underneath the £175,000 threshold was applicable last year which would have artificially increased prices and sales, as January 2010 saw mortgage applications half, with only a 6% increase in February.

So over the board it’s a very shaky time for people looking to purchase a property, the rule of thumb tends to be expect property prices to double every 10-15 years, in London this figure seems to be a little shorter at 7-10 years as demand to live in the inner city will always outweigh the demand to live in the middle of no-where. However one must question have much further London can expand before we have to build another M25 around outer London.

For those of you looking to purchase a property in London and would like the best deal on your mortgage have a quick look at our mortgage calculator, then proceed to get a free quote from a dedicated advisor.