Monthly Archives May 2010

Mortgages for Millionaires

Now a millionaire doesn’t necessarily have to have £1 million in the bank. It’s possible to be considered a millionaire if you own assets like a house/yacht/racehorse that are worth a million or so.

Owning a house worth £1 million or more with a mortgage of £750,000 doesn’t technically make you a millionaire until the mortgage is paid off or the house goes up in value and the mortgage goes down.

And when a house already worth £1 million or more goes up in value, it does so by the same percentage as the average house (roughly speaking) so the increase is more significant.

£100,000 house goes up 10% = £110,000 (+ £10,000)

£1,000,000 goes up 10% = £1,100,000 (+£100,000)

Keep a £1 million house for 25 years and based on the average house price increase from 1975 to 2000 the value could increase by 104% (http://www.housepricecrash.co.uk/graphs-average-house-price.php) making it worth £2,040,000.

If the mortgage was a 25 year repayment mortgage you’d then be in a position to downsize to a £1,000,000 house and have £1,040,000 in the bank.

If the mortgage was interest only then you’d still be able to buy the £1,000,000 house outright but without the money in the bank.

But buying a house worth more than £1 million with a mortgage above £500,000 often puts the buyer outside the mainstream criteria and into the hands of specialist teams and lenders.

Which is actually a good thing!

It makes finding a lender a little more tricky in the first place but the actual deals and offers available are actually pretty good! In fact, in some cases even better than the high street and with more favourable terms.

Compare one example I was recently discussing with the next best mainstream offer (rates subject to change!):

The scenario, 80% Loan to Value, interest only, tracker with no early repayment penalties.

The options:

Mainstream (High Street), for a customer at 80% LTV remortgaging at £100,000

= No trackers, just a 5.99% variable from Shepshed Building Society and only available if you live in Leicestershire (LE), Derbyshire (DE) and Nottinghamshire (NG).

Specialist, for a customer at 80% LTV remortgaging at £1,000,000

= Tracker at BBR (0.5%) + 2.25% = 2.75% for 5 years with no redemption penalties.

So specialist brokers who use lesser known lenders can get access to some extremely good rates and offers for mortgages over £1 million at high LTV’s where mainstream lenders are reluctant to venture.

Some compensation perhaps, now the 50% income tax rate is in effect! (If your income is PAYE that is…)

The fact that rates and offers are available for this niche makes you wonder why the same isn’t available for everyone?

Surely risk is still risk?

Or perhaps it’s because the lenders who can offer such deals aren’t the ones who are still reeling from the affects of toxic debt and irresponsible lending policies…

Tribute Paid to Cash Machine Inventor John Shepherd-Barron

This is an article I’ve been sent so apologies if you’ve read it somewhere else.

There is no doubt the cash machine has had a massive impact on the way we access and ultimately spend cash across the world and so respect is most definitely due.

‘Tribute Paid to Cash Machine Inventor’ – Good one! Wish I’d thought of that…

And the facts are quite interesting too! 20,000 cash machine transactions in a single minute!

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John Shepherd-Barron, the man credited with inventing the world’s first cash machine, has died at the age of 84. Mr Shepherd-Barron’s invention has transformed the way that we get hold of our cash, not just for us in the UK but for people across the world. From humble beginnings, the cash machine has grown to the extent that last year UK cardholders withdrew £193 billion from cash machines.

The world’s first cash machine was installed at a branch of Barclays bank in Enfield, Middlesex.  On 27 June 1967 actor Reg Varney, later to star in the TV series On the Buses, made the first ever cash machine withdrawal. The first cash machines were very basic: they were only ever located at bank branches and relied on a token being inserted, which was obtained from counter staff, rather than a plastic card that we use today. Today’s machines are much more sophisticated – enabling customers not only to obtain cash, but top up their mobile, check their balance, request a statement and change their PIN. While cash machines were once a novelty, they have become part of daily life for most of us. LINK, operator of the UK cash machine network, last month recorded 20,000 cash machine transactions in a single minute.

Other cash machine facts:

• At the end of 2009 there were more than 63,000 cash machines in the UK compared to just over 22,000 in 1996.
• In 2009 we made 2.9 billion cash machine withdrawals, taking out £193 billion in the process. In 1996 we made 1.6 billion cash machine withdrawals, taking out £80.2 billion.
• In 2009 more than 42,000 cash machines were situated away from bank branches. In 1996 a mere 4,000 were situated away from bank branches.
• In 2009 the average amount withdrawn per cash machine visit was £66. In 1996 it was £50.
• More than 80% of our cash is obtained through cash machines. 34.7 million adults now regularly use cash machines compared with 26.1 million of us in 1997. 
• The busiest day of the week at cash machines is Friday and the busiest second ever was on 30 April 2010 at 12:10:52pm when there were 433 transactions.

Currently on the Lips, it’s Over for the HIPs!

……..and, they’re gone. HIPs are no longer required when selling a house.

Did they make much difference while they were around? It’s possible a number of houses remain unsold due to a poor energy rating (although the hole in the roof was obvious) and they will stay that way because Energy Performance Certificates are still required.

EPC’s were about the only useful piece of information in a HIP although the sustainability information required for newly built properties is quite interesting for today’s environmentally conscious homebuyer.

EPC’s are provided by accredited energy assessors and should cost around £100 for an average sized house but the price is set by the accredited firm so watch out if you’re in Surrey!

Information about how to get an Energy Performance Certificate can be found on the Direct.gov.uk website and a database of accredited assessors can be searched from the Landmark website to help you find someone local.

But how much of a consideration is it to a prospective buyer? OK, so if you go shopping for a fridge or washing machine you may favour a more efficient one over another but when it comes to houses are buyer’s decisions really affected by the energy performance?

Most people buying a new home will budget for decorating and making changes and this can easily include loft or cavity wall insulation and even new double glazing.

And while it’s still free to read the Times online I like the second comment made by one of their readers on their article about the end of HIPs.

Anyone thinking about or in the process of selling or buying should read the information on the Government’s Communities website but the potential price of an EPC is quoted as £150 on that site so it’s up to you which one you want to read!

What about people who have just paid for a HIP? – I imagine that’s something that will have to be taken up with the HIP provider… Negotiating a partial refund for the provision of the EPC is worth a shot.

Lastly, how many people has this decision just put out of work? Swings and roundabouts…

Online Food Shopping – It’s All Good (Almost)

Online food shopping is not a new thing but it is most definitely a growth sector with more and more people seeing the benefits. In fact, in January the news predicted online food shopping will double in five years.

Personally I think this is an underestimate because there are so many advantages and once people are comfortable with the concept they will do it again and again.

Some of the major benefits of online food shopping:

1/ Ordering shopping from the comfort of your own home – no need to fill the car up with kids, struggle with parking, push a trolley around, stand in line, load the car, getting home to find you’ve forgotten an essential ingredient for tonight’s dinner…etc.

2/ You can set up ‘favourites’ in your online account which can be re-ordered at the click of button – even more time saved, great for eating a regular balanced diet or for dieting in general, less temptation to buy ‘treats’ & snacks.

Have you noticed – Shopping in a supermarket when hungry often leads to the buying of junk, easy cook food and items that just don’t really go with anything else you’ve bought. Shopping on a full stomach will inevitably lead to a more conservative trolley full.

3/ Brand buying is no longer an issue – if you don’t like to buy own brand products because  you think it makes you look cheap then online shopping is discreet and nobody will know if you choose to save a few pounds with low cost alternatives.

Tip – if you like smoothies and regularly buy a variety of fruit that you have to wash, peel, chop and blend then here’s a money and time saving tip – Buy supermarket own brand tinned fruit (in juice, not syrup). Prices can be under 20p per tin to make 3/4 of a pint. Just open the tin, slop it into the smoothie maker and in seconds you have a mixed fruit smoothie with no mess and less cleaning.

4/ Environmental Impact – for every person who buys their food online then that’s 1 less car driving to the supermarket and back. 1 delivery driver can make multiple drops in one trip thereby cutting down on pollution.

5/ Environmental Impact – (again) – many of the delivery companies will take away your old carrier bags! There aren’t enough places around and about to deposit carrier bags for recycling so this gets rid of them in a green and easy way.

Of course there are some disadvantages to online food shopping such as not being able to hand pick your meat, fish or vegetables and it’s a bit of pot luck to get the best cuts etc.

Online food shopping will never completely replace the aesthetic appeal of browsing around shops but in years to come the face of supermarkets could change considerably with less essential items on the shelves and more coming direct to your door.