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Frequently Asked Questions

Contents:

Commercial Mortgages FAQ's

UK Commercial Mortgages

A commercial mortgage is probably the best way to finance the purchase of buildings and land for business purposes and it provides a most flexible and affordable finance solution. Commercial mortgages are specialist and the lender has a legal claim over the property until the loan has been repaid in full.

Remember when arranging a mortgage; always consider its effects on your cash flow and assets. This section will give you a general overview about Commercial Mortgages, but it doesn't replace professional advice in any way. You should always consult your accountant and a commercial mortgage specialist before finalising a loan to make sure you understand exactly what the benefits are and in order that you avoid any complications.

Commercial Mortgages are structured in several different ways, but the two most important aspects to consider are the interest rate and the repayment schedule for the mortgage.

The two interest rate options are;

Commercial Fixed Rate:

This method features a set interest rate for a fixed period of time. Once this period has ended the normal variable rate is paid. Arrangement fees are normal when taking this type of mortgage.

With a commercial fixed rate you may incur an (ERC) early redemption charge, which may extend beyond the fixed rate term. For example the fixed rate may only apply for 3 years but the penalty period may be an extra 5 years during which time you must pay the variable rate of interest to the lender or pay a charge to exit from the mortgage.

This practice is widely frowned upon and many providers now offer fixed rate mortgages with no penalty for extra payments or amendments to the agreement once the fixed rate period has ended.

People tend to choose a fixed rate mortgage when they expect interest rates to rise or need to stabilise their monthly payments.

Commercial Variable Interest Rate:

The variable interest rate is an interest rate that mirrors and changes in line with the Bank of England's Base Rate. The current market rate and a set premium above that rate are charged by the lender throughout the mortgage term, which constitutes the interest rate payable. You will usually get a lower interest rate on variable interest rate than on a fixed rate mortgage.

The advantage of a variable interest rate mortgage is that you save money when the market rate decreases. The flip side to this is that you are not covered from an increase in the market rate. This simply means the interest rate you pay will increase with the market rate.

Advantages:

Retain Ownership:

Instead of raising funds by selling a share in the property or the business to an investor, you retain complete ownership. The lender is only entitled to an interest return on its mortgage, not a percentage of ownership that an investor would expect. Also they can only exercise the right if you default on payment. You retain all the benefits of ownership in an asset that has the potential to increase in value.

Tax advantage

Interest payments on your mortgage are tax deductible and are made with pre-tax money.

Better Cash Flow

A mortgage gives you access to capital that you would not normally have access to with minimal up-front payments and the flexibility to design a repayment plan that suits your needs.

Simplified cash flow management

Mortgage schedules are pre-set, making cash management more predictable.

Disadvantages:

Collateral

The nature of a mortgage requires you to pledge the purchased property to the lender. If you default on the mortgage, the lender is able to foreclose the property and sell it to repay the outstanding money owed to the lender. Make sure when the mortgage is repaid; the lender is obligated to release the mortgage and is required to make available any government files acknowledging this release.

Defaults

The lender may define a variety of events that will constitute a default on the mortgage, including failure to make any payment on time, bankruptcy, insolvency and breaches of any obligations in the mortgage agreement. Try to negotiate an advanced written notice of any alleged default, with a reasonable amount of time to cure the default.

Debt Solutions FAQ's

What is a Debt Management Plan (DMP)?
A DMP is an informal agreement designed to allow a person who is struggling to meet their monthly debt repayments the opportunity to make a single more affordable monthly payment via a debt management company.  In return for a management fee the company passes these payments to the creditors until their debts are cleared.  The most important part of the management companies duties should be to negotiate an interest and charges freeze on the debtors outstanding accounts and then regularly ensure that creditors continue this freeze during the term of the DMP.  They should also ask creditors not to take any legal or recovery action providing the debtor keeps making their regular payments. Amongst their duties the management company also agrees to handle/reply to creditors letters and enquires

Is a Debt Management Plan a Loan?
A debt management plan is not a loan.

Will I be credit checked?
Since a management plan is not a loan you will not have to be credit checked.

Will I keep getting letters and phone calls from my creditors?
It is highly likely that you will still receive letters and phone calls from your creditors as the agreement reached is informal and therefore not legally binding. However, these letters and calls should become less frequent the longer the plan is in place and the creditors realise they are receiving regular payments.

Can I pay more or less if I want to change payments?
Because the plan is informal you can alter your payments to suit your circumstances. If your circumstances change you can raise or lower your payments.

Do I need to change banks?
If your current bank is also one of your creditors then you should change your bank to one that you do not owe any money too. If you fail to do this there is a strong possibility that when your wages are paid into your current bank account, they will keep your money and offset it against what you owe them.

Do I need to cancel my direct debits?
You should cancel your direct debits to your creditors to avoid the possibility of them being paid twice. However, you should continue to pay your normal household bills, car insurance etc.

How will I know my creditors are being paid?
You will continue to receive statements from your creditors showing the balance on your accounts. This is your opportunity to confirm they have frozen the interest and charges on your accounts.

Will this affect my credit rating?
It is more than likely that the management plan will have an effect on your credit rating as you will not be making your contracted repayments. However, if you are seen to be making regular payments through your plan then this should have a positive effect. You should bear in mind that if you are currently experiencing debt problems it is a possible that one or more of your creditors may have already recorded this information with a credit reference agency such as Equifax or Experian.

Does it make a difference if I am a homeowner?
It makes no difference whether you are a tenant or homeowner or if you are living with your parents, however, if you are a homeowner, it may be better for you to use the equity in your home to clear your debts and to make a fresh start. Our consultants will talk to you if this is an option that you should consider.

Do I have to tell my partner?
We believe that it is always best to be honest with your partner. However, you only have to tell your partner if you have shared debts and/or you need your partner's income to be taken into account to support a management plan.

Does a management plan cover all of my debts?
A management plan can only cover your unsecured debts and arrears.

What is the difference between a secured and unsecured debt?
A secured debt is a debt secured against an asset that you own. Typical secured debts will be a mortgage, a secured loan, a car loan, etc. An unsecured loan is any loan not secured on an asset, such as a bank overdraft, a personal loan, a credit card, store card, etc.

Do creditors always accept reduced payment offers?
Creditors do not have to accept any offer of repayment below the contracted minimum. However, they are normally prepared to accept reduced repayment offers where you are able to demonstrate that you are making reasonable payments and that you are committed to repay your debts.

Can creditors refuse to accept payments under a management plan?
It is a principle of law that creditors must accept all offers of payment you make to them.

Will I receive a Default Notice?
You will be in default on your original credit agreement and a creditor is therefore entitled to send you a Default Notice. Creditors send out default notices to protect their own legal position and they are often perceived to be worse than they really are.

Endowment Compensation FAQ's

How do I know if I should complain?

If you know or suspect that you were misled, given bad advice or sold an inappropriate policy then you should claim now. But even if you’re not sure, or can’t exactly remember discussions from the time, you should contact us anyway. We can quickly tell you whether you have a possible claim – and remember that with us it will cost you nothing to find out.

Are there time limits for complaints?

You have a limited period to make a complaint. Broadly speaking this is normally 3 years from the time you became aware (or should have become aware) of a high risk that there might be a problem. In some cases Companies are obliged to tell you when you only have 6 months left to lodge a complaint but to be safe our advice is always to act now.

How much will it cost me?

Absolutely nothing! With our “No Win, No Fee” service we undertake to do all the work to present and chase-up your claim free of charge. You only pay a fee when we have successfully secured compensation for you – and then only 33% (plus VAT) of the claim settlement amount.

How much will I get?

The method of calculation is complex, but essentially it looks to put you back into the financial position you would now be in if you had selected a repayment mortgage rather than an endowment. Whilst the current endowment policy value does form part of the calculation, it is important to realise that any compensation figure is likely to bear little resemblance to a "shortfall projection" you might have been quoted. We of course endeavour to drive any offered figure as high as possible on your behalf.

How long does it take?

There are certain rules in force and, generally, Companies must give an initial response within 8 weeks of a complaint being lodged. We will regularly chase-up the Company to ensure they are processing your claim quickly and efficiently.

What if I bought the policy from a friend?

Many people did. In most cases that friend has since moved on to a different job and would not therefore be directly involved in the claim process. And remember it is the Company’s responsibility to prove the advice was suitable – not the individual salesman’s.

Is it too much hassle?

For many people it is too complex and confusing which is why so few have actually done anything about it. This is precisely why our service was set up – to take the hassle away from individuals. We do all the preparation, presentation and following up of your claim for you, leaving you to relax in the knowledge that you have expert professionals fighting on your behalf.

What if the adviser I bought from has gone away?

This doesn’t matter. There are very specific rules dealing with “departed firms” setting out who has the responsibility to prove the advice was correct. We can also refer cases directly to the Ombudsman service where no Company any longer exists to accept responsibility.

Am I guaranteed to get compensation?

There can be no absolute guarantee that you’ll get compensation, or how much you might get. But our process ensures we help qualify your claim first and only present cases where there is a strong likelihood of success. Remember too, we only get paid if we successfully secure compensation for you so it is in our interests as well as yours to fight for the compensation you are entitled to.

Do you only deal with endowment complaints?

Although we find that 90% of our work involves endowment & mortgage mis-selling, we do offer our service in respect of poor advice in relation to any financial matter. Please contact us with your specific enquiry if you have concerns on other areas.

Can I go straight to the Ombudsman?

No – there are very clear rules laid down by the Regulators about how complaints and claims must be handled. We must give the Company who is responsible for the advice the opportunity to settle the case first. But we do of course retain the right to go to the Ombudsman subsequently if we are not happy, or don’t agree, with the Company’s decision.

What if my endowment is now used just for savings and not linked to a mortgage?

You have the same rights to complain, although the compensation calculation may be different.

Am I unable to claim because I bought the policy before 1988?

It is true that the claims process is a lot less straightforward on policies bought before the introduction of the Financial Services Act in 1988. However, some Companies have voluntarily agreed to review such cases so it is certainly worth submitting your enquiry for us to examine.

Mortgage FAQ's

What is a mortgage?
A mortgage is a means by which a "borrower" receives a loan from a "lender", normally a building society or bank, in order to purchase a property. The loan is repaid over a set number of years (often 25 years but this might vary) in monthly instalments. The purchased property acts as security for the loan. If the purchaser fails to make their repayments, then the lender would be entitled to repossess the property.

What is the rate of Interest?
The rate of interest is an amount of money, included in your monthly mortgage repayments, giving the lender a financial return on their loan.

What will the interest rate be on my mortgage?
Over the course of your mortgage, the interest rate you will pay on your loan will vary. This means your monthly repayments will also vary. It is important to allow for this when calculating the amount you can afford to borrow. Amongst other factors, the rate of interest is affected by the performance of the economy and therefore difficult to predict. For this reason, lenders have introduced a number of different schemes, some of which offer some guarantees to the amount of interest you will pay.

What is a flexible mortgage?
A flexible mortgage allows you to make additional or lump sum payments in excess of your scheduled amount, enabling you to pay off your mortgage early. By reducing the capital amount of your mortgage in this way, you are also reducing your monthly interest payments. You may take this money back at any stage or use it to take a repayment "holiday".

What is the difference between fixed, discounted, capped, and variable interest rate mortgages?

Variable interest rate mortgages: - The interest rate on your mortgage will vary, unrestricted, up and down over the period of your loan dependant on the performance of the economy.

Fixed interest rate mortgages: - The lender will guarantee you a set rate of interest on your loan, normally for a specified number of years. Once this period has expired, your interest rate will revert to the normal variable interest rate.

Capped interest rate mortgages: - The lender will guarantee that your rate of interest will not rise above a set interest rate. However, if the normal interest rates fall, the rate of interest, the lender charges you, may also fall.

Discounted interest rate mortgages: - The lender can guarantee a discounted amount of anything, but normally up to five per cent, off your interest rate. This means the interest you pay will still vary up or down but at a lower rate than the general interest rate. Normally, this is for a set number of years. Once this period has expired, your mortgage will revert to the normal variable interest rate.

What are the different ways you can repay a mortgage?

Repayment Mortgages: - This is a straight forward loan. Each month you make repayments to the lender. These repayments will be made up of an amount to pay off the capital of the loan and an amount to pay for the interest charged on the total of the loan.

Endowment Mortgages: - Your monthly repayments on an endowment mortgage are split two ways. One part of your payment goes to your lender and the other goes to an investment fund (normally managed by another company). Your monthly repayment to your lender only pays off the interest charged on your mortgage, not any of the capital. This means, that at the end of the period of your mortgage, you still owe the mortgage company the same amount as you initially borrowed. Your monthly payment to the investment fund, normally linked to units, builds up an amount, which will be used to pay off your mortgage at the end of the term. The amount of money returned from your investment fund depends on how your policy has performed over the years. There is no guarantee that there will be enough to pay off your mortgage. However, they are designed so that you may actually receive a cash lump sum in addition to being able to repay your mortgage, or you may be able to repay your mortgage early, saving you interest payments.

ISA Mortgages: - ISA stands for Individual Savings Account. These are schemes which allow individuals to invest in shares and bonds up to a certain amount without paying tax on the profits. An ISA mortgage works in the same way as an endowment mortgage, see above. The main difference between the two is that your investment fund is based purely on shares and bonds rather than units.

Pension Mortgages: - When you retire, you are currently allowed to take a proportion of your pension as a tax free sum. A pension mortgage works in the same way as an ISA or endowment mortgage (see above). The difference between them is that a pension mortgage is linked to your pension, using this tax free sum to pay off your mortgage. This mortgage enables you to take advantage of the pension tax benefits.

Poor Credit Mortgages FAQ's

I have a Poor credit record; will I still be able to get a mortgage or loan?

Usually, we are able to help most of the people who approach us for a mortgage or secured loan. The terms being offered, however, will vary according to how greater a risk you appear to be. If you have CCJ's, Defaults, Loan arrears or Mortgage arrears, you must expect to pay a slightly higher rate of interest.

The vast majority of lenders use one of two major credit checking companies (Experian or Equifax) and these companies hold information just about the whole adult population of Britain so if you, or someone at your address has defaulted, got a county court judgement or otherwise had financial problems, then it will be on record.

This record is searched every time you apply for a mortgage, loan, H.P., credit card, store credit or any other form of borrowing so your history will affect the terms on offer to you or whether or not you can obtain a loan at all.

High Street banks and Building Societies will as a rule not help anyone who has experienced problems in the past few years, there are however, many well established and reputable financial services companies who offer loans based on your present circumstances rather than your history. Click here for more information.

What is a Poor Credit Remortgage?

A Poor Credit Remortgage is the process of paying-off one mortgage, from the proceeds of a new mortgage, using the same property as security if you have poor credit.

The advantages of remortgaging include saving money by having a fixed or discount rate, consolidating existing credit or raising cash for home improvements, car, business etc., or a combination of all these benefits, even if you have poor credit.

To find out how you may be able to drastically reduce your monthly outgoings, even if you have poor credit, give us a call on 08432 897 822.

Remortgage FAQ's

What is a remortgage?
A remortgage is the process by which you change from your current mortgage to a new mortgage. A re mortgage means you are ending your current mortgage scheme and switching to a new scheme. A re mortgage generally involves changing mortgage lenders because most lenders do not generally offer re mortgage schemes to existing customers.

What purpose does a remortgage serve?
A remortgage can be used for the purpose of gaining lower interest rates on your mortgage or raising finance through releasing equity. Releasing equity is a good way of raising additional finance. If your home has positive equity - its market value is greater than the outstanding mortgage - you can increase the size of your mortgage.

Why have remortgages increased in popularity?
Today, home owners are less likely to show long-term loyalty to their mortgage lender, instead preferring to remortgage if it results in a better deal. Transferring your mortgage to a new lender can save you money and raise finance. In addition, homes throughout the UK have increased in value over the years, meaning that many home owners are experiencing positive equity. In their cases, they could elect to remortgage and release this equity, raising additional finance.

What are the benefits of a remortgage?
Remortgaging is a great way of saving money, as it is likely to lower your mortgage interest rates. A mortgage is also one of the cheapest forms of loans around, so if you're looking to raise finance, it makes sense to remortgage your home.

Why should I remortgage?
Remortgaging should be considered for a variety of reasons:

For a Lower interest rate: - A remortgage can allow you to gain a better rate of interest and reduce your monthly mortgage repayments.

For Debt consolidation: - A remortgage can allow home owners to consolidate their existing debt into one manageable monthly payment. Debt consolidation makes life easier in the short term and makes savings in the long term.

CLICK HERE TO FIND OUT HOW MUCH MONEY YOU CAN SAVE

To Raise finance: - A remortgage allows home owners to raise finance. As its interest rates are among the lowest of all loan types, a re mortgage is an ideal solution to finance issues. Typical reasons for raising cash via re mortgage include home improvements, car finance, arrears and debt issues - In fact any legal purpose.

If you are a home owner and are looking to gain lower interest rates or raise finance, We can help you to find the right re mortgage deal for you.

Adverse credit records, CCJ's, mortgage arrears or debt issues WILL NOT affect your eligablity for a remortgage.

Secured Loans FAQ's

What is a secured loan?
Secured loans in the UK are mainly categorised by the fact that they are for homeowners. This means that the person taking out the loan uses their home as collateral. Should you fall into difficulties or are unable to make the repayments on your loan you will sooner or later lose your home. This is why before taking out a secured debt consolidation loan it is vital that you solve the route of your debt problems and make sure that you have budgeted fully and can cover the loan repayments.

Secured loans are also different from unsecured loans in the following ways:

Secured Loans Are Easier To Be Approved For: - Due to the fact that you are in effect betting your home on the fact that you can repay any secured loan taken out, you will find it easier to be approved for this type of loan. unsecured loans are more difficult to come by as they provide more risk to the loan company.

Secured Loans Offer Cheaper Interest Rates: - Again, due to the decreased risk of the loan company, people looking for secured loans will find that the interest rates they will have to pay will be much cheaper. Unsecured loans will find that they have to pay interest at a higher rate.

Loan Companies Are Less Likely To Act Immediately And Drastically On Payment Defaults: - The fact that you are a homeowner who is risking their house, you will more often than not find that should you not be able to keep up repayments on your loan you will be given more time to recover from this than unsecured loan holders. This is a rule of thumb but is by no means a guarantee and we advise you wholeheartedly to make 100% sure that you can keep up all loan repayments before you make your application.

Secured Loans Take Longer To Process: - The above statement is correct. However, due to the much cheaper interest rates available for Secured Loans the extra time it takes to go through is well worth the wait.

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