Interest rates - can they get any lower

Required Reading


  


Interest rates - can they get any lower


Interest rates

When you take out an endowment mortgage, the loan is outstanding for the whole 25 years. In theory, the building societies don't like this and without exception they charge a slightly higher interest rate on the loan. At the time of writing, most of the largest building societies were charging a 0.5% differential over the basic mortgage rate -that is, 113/4 %.

The main exceptions were the Abbey National, Halifax, Nationwide and Woolwich, who all charged a .25% extra. The banks, on the other hand, charged 1% extra (with the exception of Lloyds, who stuck to the 0.5% differential).

The difference is not great. Assuming that tax relief is available on the loan, for every £11,000 the interest payable per month would be £16.56 at 11.25 /0%, £16.70 at 11.5% and £16.85 at 113/4 % net of basic-rate tax.

You should also bear in mind that while with a repayment mortgage (of whatever sort) you are getting tax relief on only part of your payments to the building society -i.e. not on the capital portion with an endowment mortgage your payments to the society are all interest and therefore qualify fully for tax relief (subject to the limit of £130,000).


More on self employed mortgages

Life assurance aspects


An endowment policy is a life assurance vehicle which combines insurance and savings in one package. However, as we have seen, the `low-cost' version normally has a sum assured of about half the value of the loan you have taken out.

This means that, were you to die before you had paid in many premiums, the sum assured would not be sufficient to pay off the loan. So what the life companies have done is to pack into their home-loan low-cost endowment an element of term assurance, to cover the missing bit before the profits have built up to a sufficient sum. You therefore need have no worries on that score. You should, however, remember that, if you do die, the mortgage is only a part of the . . .... see: Life assurance aspects


Current Mortgage Offers

  • At Commercialise Yourself you can compare mortgages using our repayment calculator, look for special offers for first time buyers or for 95% loan to value mortgages and see the most popular choices, Nationwide, Accord etc, we now even have a buy to let section for the brave or heart or strong of pocket! You can send us an email if you want to know more about mortgages and what we do and we will get back to you as soon as we are able. offers@commercialise.org.uk

     

    Finding the right mortgage can be stressful, but we’re here to help you every step of the way.

    Even if you have no proof of income, poor credit rating or facing repossession of your home, we can normally say YES (even if the high street lenders have said NO)!

    Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The overall cost for comparison is 7.9% APR. The actual rate available will depend upon your circumstances. Ask for a personalised illustration. There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but our average fee is 2.36% of the loan value. We are authorised and regulated by the Financial Services Authority for regulated mortgage and non-investment insurance contracts.