Buying, selling and letting - Monday, March 31, 2003

Children’s rooms can be a challenge even for the most experienced decorator. But decorating a child’s room successfully can be very satisfying – creating a space that a child enjoys spending time in is rewarding.

Have a clear idea of how your child will use the room – Obviously a child’s room is for sleeping in, but it may be used for a variety of other activities as well. A bedroom can also be a place to play, work or spend time alone. Take this into account in the decorating scheme and incorporate space and the right furniture for all the room’s uses. The more versatile the space, the more comfortable it will be for your child.

Involve children in decorating decisions – Most children have their own opinions about their environment from an early age. Involving your child in planning the way their room will look and allowing them to make some of the decisions will help to ensure you create a space you can both live with.

Choose versatile furniture – Modular furniture or adaptable furniture which can be used in many different ways is an advantage in a child’s room. A square box can act as storage, a table, a stool or even the cornerstone of an imaginary castle.

Plan storage from the child’s point of view – Can your child find and put things away without your help? Hanging rails should be low and easy to reach. Open shelves are better than hard-to-open drawers or boxes that are difficult to carry and find things in.

Make things easy to find and even easier to put away – Put often-used at their eye level. Save higher shelves for fragile or seldom-used things. Store books, CDs or computer games in boxes rather than on shelves where they will be easier to rummage through and less likely to look untidy.

Contain smaller toys – The old adage, ‘A place for everything, and everything in its place’ is a golden rule for children’s rooms. Keeping small toys together in tubs or shoe boxes and labelling the containers will make it easier for both of you to remember where things should go.

Avoid clutter – Too many items in the room can make it harder to keep tidy. If your child has a large number of toys, consider ‘rotating’ items – storing some things out-of-sight in containers that can be reintroduced when the current selection becomes tired.

Encourage your child’s creativity – Stencil or paint blinds, bedding or furniture. Paint part of the wall with blackboard paint and supply some chalk. Work on a mural together or set aside one of the walls as an ‘art gallery’ for drawings. It can be enjoyable to work on ‘projects’ together as it gives your child a sense of pride and achievement in their room and is a refreshing alternative to more expensive decorations.  

Adapt ‘grown up’ solutions – Many storage options designed for adults or other rooms in the house can also be used to great effect in children’s rooms. Kitchen racks and storage units, bathroom door or shower tidies, under-bed or closet storage bags can work well.

Close the door – On those days when the generation gap seems particularly wide, it may be helpful to remember that you can always close the bedroom door. Most parents would agree that sometimes it’s a useful way of solving decorating disputes – as well as giving both of you some defined space for your respective creative expressions.

At the beginning of 2002, Paula John of Your Mortgage magazine asked a number of industry experts for their predictions on the state of the housing and mortgage markets at the year’s end. Johnny Turner looks at how accurate they were

For the twelfth year running, Your Mortgage magazine asked prominent mortgage lenders and advisers to predict how much house prices would move during the year, as well as to forecast what mortgage rates would be as 2003 dawned.

The experts predicted that house prices would keep rising throughout 2002, despite rumours about recession that were circulating at the time. They said, however, that prices could not continue rising at the ‘unsustainable’ rate that the housing market saw in 2001. We now know that prices defied expectation last year and that 2001’s rises proved very sustainable indeed.

As we enter 2003, there is still trepidation over the state of the economy and the word ‘unsustainable’ is yet again one of the favourite adjectives of housing market pundits. But 2002 was full of horror stories about the collapse of the pensions market and underperforming shares – and people still consider bricks and mortar one of the safest long-term investments there is. House prices rose by a phenomenal 25 per cent over last year, according to Nationwide Building Society, which makes the experts’ forecasts in this area look positively timid. The average prediction was 4.66 per cent. The most accurate prediction came from Egg, whose director of lending Trevor Field thought the annual rate of house price inflation would be eight per cent. The least accurate was Woolwich, predicting a rise of only two per cent.

As for interest rates, there was no movement whatsoever from the monetary policy committee of the Bank of England, the body responsible for setting the base rate. A four-decade low of four per cent had buyers in a frenzy as buying remained very popular indeed, particularly in the buy-to-let sector. For the purposes of this survey, the agreed measure of interest rates is the Halifax standard variable rate, currently 5.75 per cent – and in this category the experts fared much better, with an average prediction of 5.66 per cent. Both Charcol and Savills Private Finance hit the bulls-eye with their interest rate forecasts.

Last year’s housing market held many other surprises as well. The north/south divide found itself turned upside down by the end of the year, as prices in London and the South East either slipped slightly or grew more slowly than traditionally cooler markets such as Yorkshire and Humberside. And the fact that so many flocked to the buy-to-let market led to a fall in rental yields in many parts of the country, particularly in London.

As ever, the housing market in 2002 showed itself to be a capricious and unpredictable beast. But whatever the state of the market – and whatever the experts see on the distant horizon – a prospective home buyer is best advised to stick to the basic rules with which any expert would agree: think of property as a long-term investment and don’t borrow more than you can afford to repay. And that is good advice whatever year it may be.

Keep up with developments in the housing and mortgage markets at www .hotproperty.co.uk

As house price have gone skyward, deposits have followed suit – and many are not able to put down the sort of start-up money it takes these days. That’s why no-deposit deals are so attractive to first-time buyers. Christina Jordan of Your Mortgage looks at the 100 per cent mortgage

Buying a home is a pricey business – it always has been – but in the last few years property prices have shot up and moved beyond the reach of many people. Traditionally, those who wanted to own their own home would save up an ample deposit and take out a mortgage. But what are you supposed to do when even a 10 per cent deposit on an average property is over £12,000?

Unless you're very wealthy or you suddenly come into money, you're going to be a long time saving that sort of sum. And to make the problem worse, house prices are currently rising at such a pace that by the time you've saved a deposit it may no longer represent 10 per cent of the property value.

In the face of this difficulty, and with increasing pressure to get that all-important first foothold on the housing ladder, significant numbers of borrowers are turning to 100 per cent mortgages to buy their first home.

Total repay

A 100 per cent mortgage means exactly that – you borrow the entire cost of the property and put no deposit down at all. This is helpful to those borrowers who want to buy immediately – and lenders that offer 100 per cent mortgages argue they enable borrowers to buy while house prices are still within their reach.

David Connolly, product development manager at Mortgage Express, claims there is an affordability gap between the amount customers can borrow responsibly (based on 3.25 times average income) and average property prices. And he believes that in the next few years this gap will widen even more as house prices increase at a faster pace than salaries.

On this basis it could make sense to get a 100 per cent mortgage now while you can still afford a property. But whilst they may sound like the ideal solution when owning a home looks increasingly difficult, 100 per cent mortgages are not necessarily 100 per cent consumer-friendly.

Buyer beware

Quite simply, you are never going to get the lowest rate on the market with a 100 per cent mortgage. In exchange for lending you the whole value of the property the lender will charge you a higher rate of interest. And this will, of course, bump up your monthly repayments.

In general, the bigger the deposit you put down the better the deals you will be able to get. And apart from not getting the cheapest rates, if you borrow 100 per cent you will have nowhere near the same amount of choice.

From well over 1,000 mortgages currently on the market, there are fewer than 30 available to those with no deposit. And of these there are very few fixed rate deals or flexible mortgages.

Sting in the tail

But even if you do get a reasonable rate there could be another sting in the tail – the MIG charge. The MIG – mortgage indemnity guarantee – is an insurance premium that protects the lender should you default on your payments. You have to foot the bill if you are borrowing a high proportion of the property's value and it can cost around £3,000 on a £100,000 property. If you can save a 10 per cent or 20 per cent deposit you can avoid paying a MIG (depending on your lender).

If you need to get on to the housing ladder immediately, then a 100 per cent mortgage could be worth considering. But go into it with your eyes open. You may be paying over the odds in return for your mortgage and there could be other costs involved. If you're happy with that and you aren't under any illusions that property prices will only ever move upwards, you could find that helping hand on to the property ladder. But if you want the biggest choice of the most competitive deals, get saving for that deposit now.

Unpaid rent

It is every landlord’s worst nightmare to discover that the rent has not been paid. The law at present often appears to protect only tenants and allows them to stay ‘rent-free’ in a landlord’s property for months at a time whilst the landlord follows a maze of rules and regulations to get possession lawfully.
For commercial landlords this is expensive and time-consuming. However, for the increasing number of private landlords, who may only own one property which they rent out to just cover the mortgage and other outgoings on the property, it can be disastrous.

We at Sykes Anderson believe we have found the easiest way to guide landlords through the quickest route to possession. We have already shared our expertise with the Small Landlord’s Association, who, from the flood of enquiries we have had, appear to have found our information very useful. Please see our brief Guide to Obtaining Possession

We offer a variety of ways in which to deal with the costs of gaining possession. If you would like us simply to deal with the whole matter from the beginning to end, with the minimal input from yourself, we are happy to provide our full, private service at our published hourly rates, although we are always happy to give an estimate of the likely overall cost.

Alternatively, if you feel confident you can do most of the legwork yourself, but would like to be reassured that at crucial times you are doing the right thing, or want assistance in, for example, drafting the court proceedings, our Pay As You Sue service will suit you. At all times you will appear to be acting in person. However, we can be called upon at any stage to help out and will agree a fixed fee with you beforehand. Here are a few examples of the fixed fees we can offer:

Single Consultation to Advise - £75
Drafting & Service of Notice Seeking Possession - £150
(includes providing an affidavit of service)
Drafting Possession Proceedings - £150
All prices exclude VAT at the prevailing rate.
If you would like any more information about this area of law, please contact David Newton on 0207 702 1914.

All prospective instructions are subject to acceptance by us and to our standard terms and conditions.
A guide to gaining possession of residential tenancies
Below are the basic steps required to obtain possession. These will allow you to see how much assistance you are likely to need, and will ensure that you do not fall foul of the very strict rules and regulations that can often simply send you right back to the start of your proceedings just when you think you have almost won.

STEP1

Decide what type of tenancy your tenants have. Most residential tenancies entered into after 28th February 1997 will be Assured Shorthold Tenancies. If you are unsure, you will need to take legal advice.
Warning: Just because an agreement calls itself a particular type of tenancy, it does not always mean that it definitely is that type of tenancy in practice!

STEP 2

Draft the correct Notice seeking possession to serve on the tenants. There are two main types of notice – s.21 and s.8 – both named after the appropriate sections of the Housing Act 1988 which describe how and when they can be used.

Briefly, s.21 notice is for assured shorthold tenancies, whose minimum term has expired, and which you now wish to end – even if there are no rent arrears or problems with the tenants. The minimum notice period is two months under this notice.

S.8 notices are used for Assured Tenancies (which are not shorthold), and if there are rent arrears or other problems with the tenants. The minimum notice is two weeks under this notice, but certain factors must be met to be able to use such a short period. Otherwise, it is two months. This notice needs to include verbatim, the relevant statutory grounds it relies upon for possession.
Both notices must be completed correctly, giving the date they are served and the date by which the tenant must vacate the premises, or court proceedings will be started.
Warning: In some circumstances, you will need to calculate your notice period to end on the last day of a rental period – read the notes on the notice carefully!

STEP 3

Serve your notice on all tenants. This technically can be sent by first class post to the tenants, but if they claim they did not receive it, you will not be able to prove service. Therefore always serve the document personally on the tenants by handing it to them, or by putting it through the letterbox of the property they are renting. You can do this yourself, but again, if the tenants maintain you did not do this, it will be your word against theirs. Therefore, either use a professional Process Server, or a third party. They will then need to provide you with an affidavit of service. This is a sworn document explaining when and how service of the notice was effected and annexing a copy of the document that was served.

STEP 4

Once the notice period under the Notice has expired, you will need to check whether the tenants have vacated voluntarily. Some may simply disappear with the premises being left empty, and others will remain living there. If the tenants are still in the property, there is nothing you can do, except start court action.
Even if the tenants themselves are not at the property, if their belongings are still there you will need to act cautiously. This may mean they have simply gone away for a few days and will be returning. In such circumstances, you cannot take possession of the property at this stage – it will still be considered an unlawful eviction. If in any doubt, leave matters for a few days and make a return visit, or ask the neighbours.
Warning: Be careful not to appear to be harassing the tenants. Take a third party along as a witness, and always telephone the property before you visit.

STEP 5

If you need to start court proceedings, you will need to decide which route you wish to take.
Accelerated Possession Proceedings allow you to obtain a possession order without a court hearing, providing that the tenants do not defend the action, and that you have provided all the relevant information and documentation with your sworn affidavit which starts the action. In theory, if all goes according to plan this route should give you a possession order within two months of the proceedings being issued, but courts vary in their turn around time.

Warning: You cannot claim an order for rent arrears through this route. However, if the tenants are likely to disappear once they are forced to leave, or do not work, such an order would be worthless in any event. The alternative is to commence a separate debt action against the tenants once they have vacated the property, but you will need an address to serve such proceedings on them.
The normal Possession Proceedings route involves providing Particulars of Claim to start the action, but these do not need to be sworn and no documents need to be provided at the outset. There will be a hearing listed to deal with the matter. However, if the tenants do not defend the action, a possession order can still be made fairly quickly. Again, timing varies a lot between courts.
You have no choice on the court you wish to use. Only one County Court will have jurisdiction for your property. This will be the court for the district in which the property is located. If in doubt, call the nearest court  and check with them.

STEP 6

Once you have obtained your court order, the tenants should leave on the date given in that order. However, many do not. You will then need to take enforcement action.
Please refer to STEP 4 as to how to ensure the tenants have actually vacated. If you are in any doubt, it is best to take enforcement action.
You will need to apply to the same court that made the possession order for a Warrant of Possession.

The Royal Bank of Scotland has outlined the savings that home owners can make by taking advantage of the overpayment facility on a flexible mortgage. By making even small overpayments it is possible to cut down on the length of the loan, thereby making very substantial savings.

With their Flexible Choice mortgage, like all of the Royal Bank of Scotland’s home loan products, interest is calculated on a daily basis, making the effect of adding a little extra to the monthly mortgage payment startling. ‘For less than the cost of a daily cup of coffee, half a pint of beer or scratch-card, people with a mortgage can make substantial savings in both time and money and enjoy a long-term rate which undercuts every other bank’s SVR,’ says Peter Wood, product director of mortgages at RBS. An overpayment of just £1 a day on the Flexible Choice could knock £8,545 in interest – and three years – off a £75,000 25-year mortgage, says Wood.

Payment holidays are also an option on this mortgage. Get more information on Flexible Choice and other Royal Bank of Scotland mortgage products at www.rbs.co.uk.

Northern Rock announces new 10- and 15-year fixed rate deals at a rate of 5.99 per cent. After the fixed period the rate reverts to the lender’s variable mortgage base rate. More details will become available shortly. Ring 0845 601 1581 or visit www northernrock.co.uk to apply.

UCB Home Loans, Nationwide's specialist self-certification lender, has launched a new remortgage package, which features free processing, including a free valuation and cashback of £250. It allows borrowers to choose between a fixed or tracker mortgage at the same rate of 4.99 per cent.

The remortgage offer is being launched at a time when remortgaging is at its highest level so far this year, according to latest figures from the Council of Mortgage Lenders. The package is available on the UCB Home Loans’ FlexiPlus two-year tracker mortgage and on the two-year fixed rate loan. There are no extended tie-ins and the remortgage deal is available for a limited period. Find out more about these products at www.ucbhomeloans.co.uk.

Remortgaging seems like an easy way to save large amounts of money. But it pays to be aware of the potential pitfalls before you sign on the dotted line, warns Andrew Stuart of Your Mortgage magazine

Remortgaging is catching on. Increasingly, borrowers are realising that while they owe their existing lender a large sum of money, they don’t owe them a debt of loyalty, and they may be able to get a better rate by moving their mortgage elsewhere.

But borrowers need to work out their sums and consider the full implications before they remortgage. ‘It is essential to make sure that remortgaging is definitely worth your while,’ warns Debbie Staveley of Bristol & West. ‘You need to ask yourself “why am I considering remortgaging?”, and then measure the potential savings against all the actual and expected costs involved.

Remortgaging could save you thousands of pounds, but you could find that you lock yourself into an expensive and wholly unsuitable deal unless you are fully aware of all the potential remortgage pitfalls.

Redemption costs
If you have an existing fixed, capped or discounted rate mortgage, or if you received a substantial cashback when you took your current mortgage, there is a real chance that an early redemption penalty will apply on your loan.

Typically, you will have to pay your existing lender a number of months’ interest  should you cash in the loan before the end of the period in which you are enjoying the benefits. And watch out for overhanging redemption charges, which may be levied years after the fixed, capped or discounted rate period has run out. If you had a cashback, then you will be expected to repay some, if not all, of the money you received if you move your mortgage elsewhere.

It is important to work out the redemption costs carefully, because even if you move to a new lower rate, it may be many years before you receive any real benefit. Remember, it may make sense to wait until the redemption penalty period has passed before you switch your home loan.

New penalties
It may cost you next to nothing to change your mortgage if your current loan has no early redemption charges. However, be careful when selecting a new mortgage with a low interest rate, as the price you may have to pay in the future for the lender’s initial generosity could be early redemption penalties applied to the new loan.

It pays to shop around, as some lenders don’t charge any redemption penalties at all, even on fixed and discounted rate home loans.

Of course, you might live happily ever after with your new lender and never pay a redemption penalty. But you need to ask yourself whether you will really stick with the new lender for the remainder of your mortgage life.

Out of the frying pan
In a fiercely competitive market, nearly every lender is keen to attract remortgage business – they are, after all, probably losing many of their own customers to other borrower-hungry lenders and need to balance their books. And most lenders are prepared to offer a range of deep discounts, low fixed and competitive capped rates which match up to the deals they offer home buyers in order to attract remortage customers.

It is easy to believe that the grass is greener and switch to a new lender offering low rates and the promise of tip-top customer service. However, you should bear in mind why you are currently considering changing your home loan: you are probably looking for a better deal than your current loan. Even if your new lender currently offers an attractive interest rate, can you be sure whether they will continue to do so in the future?

Look at the lender’s standard variable rate (SVR), which should provide a measure of its current competitiveness - a low rate should mean that it is looking after its existing borrowers as well as new customers. And ask for evidence of how the lender’s SVR has measured up to other lenders’ SVRs over, say, the last five years.

If the lender has been operating for only a few years, remember it may be ‘buying in’ business and won’t be able to maintain such a competitive rate in the future. Remember, there ought to be substantial payment savings or special benefits attached to the new loan if it is to be worth remortgaging to a new lender.

Loss of benefits
If you took out your current mortgage before 2 October 1995, you should qualify for much more generous help with your mortgage payments from the state should you become unable to work than if your home loan was taken at a later date.

For those who took out a mortgage prior to that date, the state income support to qualifying borrowers kicks in after eight weeks of claiming, and is worth 50 per cent of the interest for the next 18 weeks and 100 per cent after that date. For mortgages taken out after 2 October 1995, the borrower gets no help with interest payments for the first nine months of making a claim.

A borrower whose existing mortgage arrangement predates 2 October 1995 risks losing their right to the more generous state income support terms should they remortgage for a larger loan from a new lender.

Less is more
Traditonally, remortgages were associated with debt consolidation – the reorganisation of a messy state of financial affairs, rather than a sensible and proactive way to make more of your money. However, plenty of people are still attracted to sorting their finances out and transferring debts with high rates of interest to a home loan, since a mortgage is the cheapest way to borrow.

For example, the annual percentage rate (APR) charged on some credit cards can be over three times the mortgage rate, and plastic is even more expensive after discounts are applied to the home loan. Similarly, personal loans can work out twice as expensive as mortgage rates. So if you have racked up a large credit card bill and you have a loan, it can make sense to roll these up into a mortgage. You might want to borrow a bit extra while you are about it to pay for your summer holiday, for example. And you could find that the monthly payments for your remortgage are less than the total outgoings you pay on all your separate debts.

But remember that in the long run you may pay considerably more for your remortgage than you would by keeping all your debts separate. This is because loans, for example, are structured to be repaid over much shorter period than mortgages – typically over three to five years. And the high interest charged on credit cards ought to prove a strong enough incentive to clear the debt sooner rather than later.

If you’re self-employed and have tried to get a mortgage, you’ll be aware that it’s not always easy. But things are changing. Paula John of Your Mortgage magazine looks at a market that lenders are finally starting to take seriously

You may be coming up fast on the heels of Bill Gates, with a deposit the size of the Silicon Valley, but you could still have problems finding a mortgage if you are your own boss.
An estimated 3.2 million people in the UK qualify as self-employed. This figure includes freelancers and contract workers, as well as those who have set up their own business.
Traditionally, high street lenders have welcomed self-employed borrowers with less than open arms, if at all, while penalising them with higher interest rates.

But the good news is that growing numbers of self-employed workers in the UK and an increasingly competitive market mean there are more options for borrowers than ever before. So how do you find the mortgage you want?

Prove it

The first thing most lenders will ask for before agreeing to give you a self-employed mortgage is two to three years' worth of audited accounts. Not surprising when figures show most businesses that fail do so within the first two years of trading. Even freelance and contract workers are likely to be asked for proof of previous years' income, to help lenders assess whether they are in a good position to afford the monthly mortgage payments.

According to Jane Harrison at London & Country Mortgages, if you have evidence of your income over the last three years you should have no problem taking out a self-employed mortgage with most mainstream lenders, at 'standard' mortgage rates.

But even if you do have three years of audited accounts to hand there could be further obstacles in your path, preventing you getting the mortgage you want. For instance, a good accountant will minimise the tax liability on your income – sounds great, but it's a double-edged sword when it comes to taking out a mortgage. This is because it makes your business appear less profitable, which is not an attractive proposition for lenders looking for proof that you will pay back the mortgage without problems.

Self-assured

There is another option open to you. Self-certification mortgages allow you to certify your own income, by signing a document stating how much you earn. You do not need to provide audited accounts for the past two or three years – ideal for new business start-ups.
If you are already a homeowner expect to be asked to show the lender existing mortgage statements. Alternatively, first-time buyers will need rental references from their landlord.

There are a number of specialist lenders who cater especially for the self-certification market. These include Birmingham Midshires, Bristol & West, UCB Home Loans and Mortgage Express.

One of the advantages in dealing with specialist rather than mainstream lenders is that they are more likely to assess each mortgage application on its own merits rather than using standard selection criteria.

Self-interest

However, be aware that you will pay more for a self-certification mortgage than you would for a straightforward self-employed mortgage, because the potential risk to the lender is greater.
The amount of money that you can borrow, as a percentage of the value of the property – the loan-to-value (LTV) – is normally less than lenders will loan on standard mortgages.
The maximum LTV offered on most self-certification mortgages is 75 per cent, although some lenders, including Birmingham Midshires and UCB Home Loans, have a maximum LTV of 85 per cent.

Most lenders will lend up to 3.25 per cent of the stated or predicted single income on a
self-certification mortgage. They will also carry out 'affordability' calculations, comparing your income with your outgoings, to assess whether you can afford to repay the loan.

Self-aware

You don't have to be self-employed to take out a self-certification mortgage. Barrett believes self-certification mortgages are also ideal for people with a 'non-standard' income.
For those who are self-employed, Harrison strongly recommends that you do not stay in a self-certification mortgage "for too long".

Rest assured, even if you work for yourself, the number of self-employed and self-certification mortgage products are increasing steadily. Whatever you do, take time to look around. You may be self-employed and busy but it's worth being thorough when it comes to finding the best mortgage to suit your needs.

The property boom has turned everyone into Mystic Meg, with forecasts, amended forecasts, predictions and counter-predictions. But who is right? Paula John of Your Mortgage magazine looks beyond the property market’s fortune tellers

In the last decade, house prices on average have risen 150 per cent. This year alone, experts predict that they will grow by a further 20 per cent. Of course, everyone agrees that these red-hot figures are unsustainable, and that the market will cool off at some point. Indeed, we saw a slight cooling off in June, with activity in the market slowing and the number of new buyers falling. But the market remains buoyant and prices in many areas are still sky-high. The question is whether and when there will be a correction – or a crash? Reports are conflicting and confusing.

Mixed messages

According to Woolwich, the number of people expecting property values to increase fell from 64 per cent in May to 61 per cent in June. It suggests that the housing market is slowing of its own accord. Accountancy firm PricewaterhouseCoopers says that mild corrections are due in property hotspots.

At the same time FPD Savills, a leading property consultancy, claims that the house price boom could last for another three or four years across much of Britain. So who is to be believed? And what should prospective homebuyers be doing?

North-South divide

‘In the South East there is more supply coming into the market, as the buy-to-let boom comes to an end and landlords are starting to sell up,’ says David Bitner, director of mortgages at The MarketPlace. ‘So I believe that house price growth in the South East will be flat in 2003. The picture for the rest of the country is fairly positive. I think that, with poor stock market returns hitting employment in London, more and more people will start to move out of the capital. They may go back to a place they have worked before, to where they attended university or closer to family and friends, for example. The result will be upwards pressure on property prices outside the South East’

Do what’s right for you

Despite emphasis on different areas and influences, most experts appear to concur that there will not be a property price crash. A slowdown is due and price 'corrections' may hit London and maybe other areas of the South East first. But the huge growth in property values of recent years simply cannot continue. So regardless of where you are buying, and whether you're a first-time buyer or an existing owner considering taking on a bigger mortgage, do not make your decisions based on speculation about rising property prices.

Buy a property because you want to live in it and because you think it is really worth the price tag – and only if you could afford it if interest rates went up by two per cent. Living on the edge is all very well in some respects, but not if it risks losing the roof over your head.

Bring overcharged for anything makes us angry. So why should we overpay on our mortgage repayments? There is a good reason, says Paula John of Your Mortgage magazine

Since the arrival of the flexible loan from Australia about eight years ago, many people have realised that the old-style 25-year mortgage is of limited effectiveness at a time of rapid changes in employment patterns. Self-employment and contract working are more the norm for many of us, with the cosy days of the job-for-life culture now history.

The flexible mortgage aims to address these changes by allowing underpayments, payment holidays, borrow-back facilities and overpayments. Furthermore, truly flexible mortgages do not carry redemption penalties and, very importantly, they calculate interest daily. And it's this latter feature that makes overpaying such an attractive proposition for flexible customers.
 
So how can overpaying benefit borrowers? With traditional annual interest calculation, things move very slowly at the lender's end over the course of a year. If you paid extra – in January, for example – the interest will be charged on your outstanding capital debt regardless of the extra money. This means you could be paying interest for 11 months on an amount that is more than you technically owe. Your overpayment won't be taken into account until the annual interest calculation takes place, and that's the end of the matter. But if you have a flexible deal and pay the extra in January, the interest on your loan is calculated daily, so your outstanding debt will immediately be reduced along with the corresponding interest.

The way that you do it

Now that the advantages of daily interest calculation are clear, how can you go about overpaying on a flexible mortgage? The simplest way, of course, is to put more into the loan each month than the required standard payment.

And there is another way of overpaying that doesn't even involve increasing the amount you put into your mortgage each month. ‘At a time when interest rates are low, and have dropped quite markedly over the past 12 months, you can simply leave the payments at the level they were previously,’ says Martin Cunningham, a London-based independent financial adviser. ‘If you had left your mortgage payments at the level they were when the rate was six per cent, for example, then you'd have been making overpayments in the intervening period, saving time on your mortgage term and money in future interest charges. This is one of the big advantages of flexible mortgages.’

Pay now, save later

So paying too much is not always such a bad thing. If the waiter brings you a bill for £1,000 for a simple lunch for two, then you have probably good cause for complaint. However, if you're able to make a £1,000 overpayment on your flexible mortgage, then do it. In years to come you may well be having dinner at the Ritz with the mortgage interest you've saved.

New research suggests that it takes just 16 minutes for homebuyers to decide to purchase a home in London and the South East because of fierce competition. With such little time to spare, make sure you know what to look out for.

The agent:

‘Location is very important. Look around the immediate environment and check with the local planners about any plans to build on the surroundings – otherwise the view you’ve spent a lot of money on could be ruined. To create a feeling of space, pay special attention to the hallway because a large entrance makes a great first impression and opens out the whole property. If you want to make big alterations to your home, remember that there is a real shortage of good tradesmen in London and the South East, which is why so many people go for new build.
The Property: Burns and Webber Estate Agents are currently selling homes at Queen Elizabeth Park in Guildford. The new village community being built by Laing Homes and Linden Homes will comprises 525 dwellings. Prices are expected to be in the region of between £230,000 to £650,000. Call 01483 440800.

The developer: Richard Rawson

If you are considering buying a new build property find out how the developer can assist you in the entire moving process – some will help sell your old home, recommend financial and legal advice or allow you to personalise the new home. When visiting a show home, check out the quality of the kitchen appliances, the doors, the coving and the general build of the home. Ask yourself if the house is adaptable as the family needs change. For example, could a teenager’s bedroom be used for a future study? Find out if there are enough plug sockets for computer, telephone and fax.   
The Property: Countryside Properties is selling 74 new homes at the Queen Charlotte’s Place development at Kings Hill Village in Kent. The homes have been designed in a traditional Georgian architectural style, where extra details such as porticoes, railings, balconies and sash windows have been included. Prices start at £289,950. Call 01732 875182.

The agent: Francoise Ellery

The most important point to look for is the size of rooms. Don’t be fooled by a room that is not bigger than a cupboard being promoted as a fourth bedroom or study, and ideally the bedrooms should have fitted wardrobes. Secondly, look at the kitchen. Is it large enough to eat in and is it fully fitted? Find out exactly what appliances will be included in the sale. When buying a brand new house, it is important to look at where the property lies in relation to its neighbours and that it is not too overlooked. Also check that it has been finished properly and all the snagging issues have been addressed.
The property: Parry Jones estate agents are marketing Loxley House, a spacious newly built family house on the outskirts of Dunsfold in Surrey. Set within a rural village location, the four-bedroom home priced at £750,000 will benefit from a large kitchen/breakfast room. Call 01483 893939.

The developer: Tim Sargeant

If you have your eye on a listed property, contact English Heritage or your local conservation officer who will be the best equipped when it comes to surveying the home. If you are buying a converted property, ensure you get good advice from the right professionals before you buy. Do your homework about the selling company you are dealing with and make sure they have a good reputation for reliable after-sales service. Think about the future use of the home. Good design is timeless and will not only offer you ease of use for the years you are living there but will also make it easier to sell when the time is right. 

The property:  Located down Avenue Road in Bishops Stortford, Essex is Stuarts, comprising three exclusive six-bedroom houses built over three floors. Features include an impressive entrance hall, partially glazed garden room and underfloor heating. Prices start at £950,000. Call City & Country Group on 01279 817882.