After almost two years of historically low interest rates, the only way for interest rates to go is up, so is it time to opt out of the emotional rollercoaster of interest rates and choose a 10 year fixed rate mortgage deal?  They might have disappeared since the days of before the credit crisis, but a recent article in the Daily Mail asked this very question and pointed out two main issues that may suggest the long term fixed rate deal may be about to see a huge revival.

The first is the rising costs of remortgages. Where application fees were once as little as £299, nowadays the typical arrangement fee varies from £999 to £1499 or even as much as 3% of the mortgage balance for the best rates with valuation and legal fees on top. With rates this high perhaps it does make sense to fix for a longer period.

The other major factor is the historically low interest rates. There is only one way to go now and with rising inflation, the gradual phase-out of the bailing out programme for banks, the oil crisis and many more economic factors that indicate the next few years are going to be tough ones. With this in mind, the hassle and stress of remortgaging now may seem nothing when we look at doing the same in a few more years.

Of course, such a long term fixed deal does not come without its disadvantages. Although most mortgages are portable so you can still move home, it would cost dearly to opt out of the fixed rate before its term ends or want to pay off more than 10% of the balance.
Interest rates are changing rapidly but currently are little more than a five year fixed deal so if it’s a route you are considering going down, then it could be time to switch.

As any mortgage advisor will tell a customer looking to apply for a mortgage, it is important that if they ever find themselves struggling to maintain their household expenses or other bills it is important that the mortgage payment remains a priority in order to avoid the risk of losing the property.

Over the last couple of years, whilst the interest base rate has remained at its record low of just 0.5 percent, many people have become somewhat complacent. Indeed, the research from Nationwide appears to back up the thought that some will find it a huge shock when the interest rates start to increase once more.

A mortgage specialist from Nationwide, Martyn Dyson, stated:

“We have done some research recently and that shows that customers have got a different attitude to their mortgage than other things. They seem to spend a lot of time planning for big-ticket items – such as buying a TV, a car or a holiday – but when it comes down to mortgages, it doesn’t seem to be the same.

“It is a good time now for people to take stock of their position, speak to their lender and find out what their options are.

“There is a real opportunity for people to start planning their mortgage now and maybe even save some money which would put them in a better position for when the base rate does start to increase.”

Mr Dyson went on to add that, although perhaps not quite as exciting as other purchases such as purchasing a new car, the mortgage payment is a big commitment and ‘fundamental’.

CeMAP training is required to become a fully qualified mortgage advisor in the UK. Mortgage advisors are available to help choose the right mortgage for your circumstances and would always advise that a mortgage payment remains a top priority, followed closely by loans secured on the property, hire purchase agreements and other such bills.

Help is actually available and any good mortgage adviser will tell you that the sooner you contact the mortgage lender and keep them informed, the sooner they may be able to help you.

According to an article by Directgov, the majority of mortgage lenders are very keen to ensure they can work with any struggling customers to help them prevent the situation from escalating.

Your payment history will usually be taken into account when working out actions. Options lenders may look at include a temporary payment reduction, an agreed payment holiday, extending the mortgage term or placing you on interest only for a period. By paying as much as you can, this demonstrates your commitment to the lender.

According to Directgov:

“If you’ve already fallen behind, your lender will suggest a way to pay off the arrears gradually, alongside your usual payments. If you can’t meet the extra payments, you may be able to delay them for a while or add them to your loan. Again, it depends on your track record.”

If you are struggling due to redundancy, then check for any benefits to which you might be entitled, such as Working Tax Credit, Child Tax Credit or Council Tax Benefit. Free advice is also available from places like the National Debtline or your local Citizens Advice Bureau.

Those training to become mortgage advisors will learn about this aspect of mortgages on their CeMAP training course too.

According to this report, not all lenders have a competitive SVR and for many, there are some cheaper tracker and fixed rate deals out there. Before you grab your calculator however, remember to check all the costs associated with the mortgage deal rather than just looking at the headline interest rate.

Many experts believe that after 22 consecutive months at the all-time record low of 0.5 percent, the Bank of England is highly likely to raise the interest rate now that inflation has increased to 3.7 percent. Those with variable rate deals who has concerned about the effect of any rises should look at remortgaging to a fixed rate deal to insulate themselves from any rises during their fixed rate period.

There is a sense of urgency about moving to a fixed rate deal though, as mortgage lenders are also finding the rates they themselves borrow funding at are also rising, meaning the fixed rate deals may also become more expensive.

According to moneysupermarket.com a borrower with £150k outstanding on a 25 year repayment tracker deal at 2.17 percent now pays around £648 per month. Just a 0.25 percent increase would push that repayment up by £19 per month.

A CeMAP-qualified mortgage advisor will be able to help you to compare the different mortgage deals open to you, taking into account any additional fees or products, so you can find the right deal for your circumstances.

CeMAP training

CeMAP

With any form of distance learning, a major component for anyone is the ability to motivate yourself and be self disciplined. For many people, working an eight hour day in the office and then coming home to do their CeMAP training can be challenging. Therefore, before you sign up to doing CeMAP training via home study, be certain that you can promise yourself that taking your CeMAP training at home is possible. Consider your timetable – would you study at weekends, in the evenings or the mornings? Will your family support you in your efforts? The investment in your time is perhaps even more important than the financial commitment.

Think also about your ability to study material with the help of a live teacher stood before you to help you. Whether you choose to study from printed out materials or study CeMAP online in front of your computer, both of which are possible, you should consider how much support is offered. Good CeMAP training courses, even home study distance learning CeMAP materials, should present the material in a variety of ways – some students like theory written plainly in front of them, others like real life examples and self-test questions are important to confirm your understanding is correct. If you choose a good CeMAP training provider then the materials should have been put together by someone with both a working knowledge of the mortgage industry and knowledge of teaching and understanding.

Consider also where you will study. Will you go to the library, work in the spare room or from the kitchen table? To ensure effective home study, you should minimise distractions, whether it is from loving children, a partner or pets. Ensure you will have the right amount of alone time for study.

Completing your CeMAP training, and whether to study this using distance learning, is a decision you need to take with your eyes wide open. If you feel you can identify and resolve distractions, discipline yourself to make time for study and organise yourself, then CeMAP training could prove a fruitful opportunity for you to further yourself.

At Beacon Financial Training, all our CeMAP courses, including our home study distance learning options, have been put together by an ex-professional teacher who also has years of experience working as a mortgage advisor. All our home study courses also include tutor support via email and telephone where necessary.

People skills: many people with good customer-facing skills enjoy working in the mortgage industry. A mortgage advisor deals with people from all walks of life and advises them on finding the best mortgage for their circumstances.

Self motivation: Many mortgage advisors are self-motivated. Personal motivation is a skill most of the employers in this area are seeking. Whether you choose to work as a mortgage advisor for a particular lender, to become an independent mortgage advisor for a firm or to ultimately work as a self-employed mortgage advisor, self motivation is a huge plus point. For those not yet working in the mortgage industry, doing CeMAP training independently is a great way to demonstrate this attribute.

An interest in the industry: Employers want to know that you are interested and passionate about the mortgage industry. This is one industry that interests almost everyone in some form or another, because most people will want to apply for a mortgage at some point; mortgage advice is a real-life subject and of interest to some degree to almost everybody. CeMAP training is an investment into your future and the right training will incorporate a variety of learning methods to suit each individual, ensuring that you can understand the materials easily.

CeMAP training is compulsory to become a mortgage advisor and at the time of writing, the Financial Services Authority (FSA) is proposing that the CeMAP qualification becomes compulsory for many more people involved in some way in the sale of a mortgage, so if you intend to have a career in the financial services industry, then you will need a CeMAP training course to open numerous opportunities for you.

Yet the whole house-buying process can be made a whole lot easier by knowing a few important titbits of information, so here are a few top tips for the first time buyer:

How much should I spend?

In years gone by, first time buyers were often advised by well-meaning friends and family to ‘stretch themselves’. This advice was often brought about by seeing house prices rising in recent years and although it worked out for some, over-stretching could be the reason why some people found themselves quickly facing financial strife when the credit crunch started.

As a result of the credit crunch, many mortgage lenders have really cut back on affordability and tightened up their borrowing criteria. Yet most will use affordability measures such as 3.5x the chief earner’s income (before deductions of tax) plus 1x the second earner’s income or alternatively, 2.5x the joint incomes – whichever calculation is the highest.

Work out how much you can afford if interest rates rise – which remember, they will because it’s at its record low at the moment.

The cost of house-buying

Everyone who buys a house for the first time remarks how much more it cost than they thought it would at first. Remember the best mortgage rates often come with high fees – speak to an independent mortgage advisor to make sure you get the best overall deal, taking into account both rates and fees. Remember that if you choose to add the fee to the mortgage, you’ll pay interest on these for the life of the mortgage, which could prove very expensive.

There is also building insurance, contents insurance, ground rent / service charges, life insurance if it is a joint mortgage or you have dependents as well as council tax and the usual bills.

Choosing your home

When you have found the property you like, see it a second time and take a friend with you. Be methodical, take notes and check things. Ignore anything like colour schemes or furnishings that don’t come with the house and instead, open cupboards and drawers in the kitchen, check the workings of the bathroom and test the central heating. Ask to see utility bills or council tax bills so you know the average cost for running the property.

How much to offer?

Once you’ve decided on the property, now is the time to negotiate. There are some good deals to be had at the moment, but your opening offer is important. Decide on your ultimate final offer before you start negotiations. If the property is on the market for £140,000 for example, and you can afford £135,000 then start the bid around £130,000. Act quickly if you feel the house is undervalued or in a hotspot, then be sure to act fast but don’t be rushed into bidding something that you can’t afford.

Mortgage Interest Rate

Consider what interest rate you may be paying on your mortgage at the moment. If it is a low rate, then you are probably unlikely to get that low rate again in the future so rather than pay off the mortgage altogether it could be an idea to keep some borrowing at least on this rate because it is cheap borrowing.

Great Long-Term Savings

Paying off a chunk of the mortgage could be a far better use of your money if it is sat in a low-interest savings account. Even the higher rates of interest at this time may not be that tempting and in many cases, may require you to tie your money in. When you make overpayments on your mortgage, you could save yourself thousands in interest and shave years off your mortgage.

Emergency Buffer

Although it can be an excellent idea to make overpayments on your mortgage if you can afford them, bear in mind how difficult or time-consuming it might be to try to borrow that back if you later need it. Consider how much you need for any unforeseen emergencies. Whether it’s a broken boiler or an unfortunate redundancy, consider how long your savings would last if you needed to survive on them.

This prediction states that 5.5 million homeowners will be turned into ‘mortgage prisoners’, meaning they will not be able to remortgage their present mortgage offer or be able to get a home loan.

The report was published last week by the Council of Mortgage Lenders (CML) saying that approximately 50% of the 11.4 million mortgage holders in the UK are likely to be affected.

It states that 20% (about 2.2 million people) will find that they are effectively ‘excluded’ from the mortgages available, because the mortgage they currently hold would not have been granted to them under the suggested new FSA rules.

Another 30% (about 3.4 million) would be able to borrow a figure lower than they already have on a mortgage, meaning when their current deal ends, for instance a fixed rate or discounted rate, they would be unable to get another mortgage elsewhere.

The new proposals make changes that are potentially explosive, as described by the Daily Mail. They will drastically alter whether or not someone can be accepted for a mortgage, for how much and what sort of deal they could have.

The CML’s Michael Coogan described the proposed rules as:

‘an over-reaction to past problems’

He went on to warn:

‘As a consequence, (lenders) will not lend to as broad a range of potential customers.’

Even the financial industry, renowned for being perhaps somewhat slower than other industries for embracing new technology, have now taken on the internet and mobile technologies available – with mobile banking, internet banking and electronic checks now commonplace.

Yet it has taken a little longer for the financial training courses, for qualifications such as the CeMAP (to become a mortgage advisor), the CeFA (the equivalent for a financial advisor) and other such qualifications to move to the digital age.

Now you can study CeMAP from home, using specially designed distance learning materials. Almost every financial training course provider who supplies home study materials will find it is the most popular form of study now. The recession has made them even more popular, as people look to save money and avoid classroom study where they can.

At Beacon Financial Training, we not only offer a CeMAP and CeFA distance learning package that you can study at home, but we also include free tutorial support. Our materials were designed by a professional teacher-turned mortgage advisor, so our materials are user-friendly and easy to understand even to those outside of the industry. Our tutorial support means you can be sure that you will understand even the most difficult concepts and ask any questions that you want to a qualified tutor.