Negative equity from 110 per cent mortgages

So-called ‘110 per cent’ mortgages, which do not require an initial deposit from holders, are becoming an increasingly popular option among home buyers, with house prices in the UK growing fast.

First-time buyers in particular, who tend to be younger and have little or no savings, find them particularly appealing.

However, industry experts, including those at Baronworth Investment Services, counsel against seeing taking out such a mortgage as a risk-free endeavour.

Michael Brill, a director at the company, said that the ideal 110 per cent buyer was “The young professional… who hasn’t got a deposit and knows they are going to have a nice increase in salary in a couple of years time.”

However, he warned that “if we have a crash in property with a negative equity from a 110 per cent mortgage”, holders “could end up with further negative equity.

“That is one of the big disadvantages”, Mr Brill surmised.

The Council of Mortgage Lenders (CML) recently revealed that the proportion of first-time buyers in the UK rose from 48 per cent to 56 per cent in 2006.

Tags: proportion, couple, professional, increase, Economic history, salary, house prices

The death of DIY?

The Great British love affair with DIY may be coming to an end as people become more concerned about making a claim on their home insurance.

Research by Woolwich Mortgages shows that more and more people are turning their backs on DIY and opting to get professionals in to do the job instead.

Nearly half of those questioned said that they do not enjoy DIY, with 37 per cent avoiding the work in case they get it wrong and have to claim the money back from their insurer.

A further 40 per cent say that they simply do not have the time, while 22 per cent see DIY as a chore that takes up valuable leisure time.

“It seems that the phrase ‘time is money’ applies to the UK’s new DFYers (done for you-ers),” said Andy Gray, head of mortgages at Woolwich. “People think their own time is precious and with the added concern that they are not going to do a good job, people are increasingly turning to experts to get the job done.

“Home improvements can make a tangible difference to the value of peoples homes, but a bad standard of work can drag the price down.”

Some tasks are considered to be more worthy of hiring a professional than most, with 65 per cent saying that electrical work should be left to a qualified individual.

Plumbing is also avoided by 63 per cent, building an extension by 59 per cent and installing a new kitchen and bathroom by 58 per cent.

Interestingly, 35 per cent of people think that painting and decorating should be done by a professional, while 38 per cent think the same about erecting a shed.

Tags: home insurance, difference, time, affair, added concern, andy gray, home improvements, professional