The most recent announcement by the ECB slashing their interest rates by seventy-five basis points has been warmly welcomed by Healy Hynes of Hynes Real Estate Alliance. The ECB move now makes their benchmark rate less than half of what is was in October when it stood at 5.25%
The European Central Bank 0.75% cut to its main lending rate brings the bank's rate down to 2.5%. This decrease comes on top of two previous cuts of half a percentage point each over the past two months.
The reduction is aimed at reducing mortgage repayments, making borrowing cheaper and putting more money in the pockets of consumers. A number of Irish banks have already promised to pass the reduction on to their customers.
Healy Hynes of Hynes Real Estate Alliance has welcomed the move saying it will help to bolster the property market. “It’s a buyers market out there and any move that makes housing more affordable to buyers has to be welcomed.”
The next step according to Mr. Hynes is for the banks to ensure that lending is made available to buyers who wish to take advantage of the massive improvement in housing affordability that has taken place in recent months.
Tuesday, 9 December 2008
Yields from residential properties are up on average 18%
Yields from residential rental properties are up on average over 18% on last year. While average rental rates are down between 5% , there has been no decrease in certain areas such as Athlone, Killarney and Tralee and yields have improved nationwide. Average yields for 2008 are at 4.25% up by 15% on last year. In 2007 the group reported average returns at 3.7%, compared with returns of between 2.8% - 3.2% at the end of 2006. Yields this year are as high as 5.4% in areas such as Balbriggan and are at the 5% mark in Ashbourne and Nenagh, according to figures released by Real Estate Alliance. Yields are between 4% and 4.5% in Drogheda, Newbridge, Lucan, Maynooth, Longford, Tipperary, Trim, Cork (Charleville), Callan, Blessington and Tralee. Cavan and Navan are reporting yields of 4.8%.
Monday, 24 November 2008
REA welcomes rate cuts
Real Estate Alliance has welcomed Mondays announcement by AIB to slash their homeloan rates to match the current ECB rate of 3.5%.
The new rate which is around 2 percentage points lower than the next nearest competitor is available to first time buyers and is fixed for 12 months.
“This announcement by AIB is a recognition that interest rates are on a continuing downward cycle and offers an incredible deal to first time buyers”.
The cut, equivalent to 4 ECB rate moves, further increases the affordability of housing which has been gathering pace throughout 2008. The cost of a €230,000 mortgage over 30 years under this scheme is now just €1,032 a month – before mortgage interest relief, over €300 a month less than the next nearest competitor.
The new rate which is around 2 percentage points lower than the next nearest competitor is available to first time buyers and is fixed for 12 months.
“This announcement by AIB is a recognition that interest rates are on a continuing downward cycle and offers an incredible deal to first time buyers”.
The cut, equivalent to 4 ECB rate moves, further increases the affordability of housing which has been gathering pace throughout 2008. The cost of a €230,000 mortgage over 30 years under this scheme is now just €1,032 a month – before mortgage interest relief, over €300 a month less than the next nearest competitor.
First tip to deal with the recession
BE POSITIVE
It’s important to look beyond the short term to the medium and longer term:
- Stay positive about what makes your business great
- Stay positive about your passion for the business
- Stay positive about the future you will create for your business and yourself
- This will have a knock-on effect on other people in the business, your customers and your suppliers
It’s important to look beyond the short term to the medium and longer term:
- Stay positive about what makes your business great
- Stay positive about your passion for the business
- Stay positive about the future you will create for your business and yourself
- This will have a knock-on effect on other people in the business, your customers and your suppliers
Wednesday, 19 November 2008
We have the experience to guide our clients
Real Estate Alliance consists of 40 offices around the country with each member in business for an average of 45 years each. “We have the experience to guide our clients through this”, said the incoming Chairman, Paul Grimes. “Our members are long-standing in their communities and have the expertise to get through these challenging times. We were never under any illusions that the property sector is cyclical. We have been through recessions before and come out the other side. Many of the Real Estate Alliance agents are lucky in that they are not overly dependent on the residential market, which has been hardest hit and as such they are busy doing rent reviews, rating appeals and giving professional services to our clients.”
steps in budget were good for first time buyers
“The steps in the budget to increase mortgage interest relief, combined with interest rate reductions, means that first time buyers can take full benefit of the reduced prices the market is now offering”, said Mr. Hynes.
REA welcomes EBS affordability study
Real Estate Alliance members welcomed the results of the EBS affordability study published last week. According to the joint EBS / DKM report the average working couple buying their first home is now paying around 20% of their net income in mortgage repayments, compared with 26% two years ago. This 30% improvement in affordability is expected to strengthen even further once the most recent round of interest rate reductions is passed on to consumers. With more interest rate reductions in the offing, first time buyers will find themselves better off than they have been in many years.
banks need to recapitalise
As long as transactions cannot be completed the situation in this country will not improve and the implications of this are far reaching”, commented, Michael Boyd, incoming Vice-Chairman of Real Estate Alliance. “The recapitalisation of the banks is now being accepted as inevitable. The sooner this happens the bettter as the country will be taken off hold and business, and personal transactions can recommence, benefittting the economy as a whole”, said Mr Boyd.
Paul G.Grimes appointed as Chairman
Real Estate Alliance, the national property group comprised of some of the country’s longest established estate agents, held their AGM in The Heritage Hotel in Killenard, Co. Laois on Friday, 14th November. The availability of funds and affordabilty were key items on the agenda as the group looked at what the months ahead may bring for the property sector. The appointment of Paul G. Grimes, Director of Grimes Real Estate Alliance in Ashbourne and
Skerries, as Chairperson of the national property group and Michael Boyd of Boyd's Real Estate Alliance of Kilkenny as Vice-Chairperson were also ratified by the group.
Skerries, as Chairperson of the national property group and Michael Boyd of Boyd's Real Estate Alliance of Kilkenny as Vice-Chairperson were also ratified by the group.
Wednesday, 12 November 2008
Now is a great time to buy a house - prices are down
STEP AHEAD OF THE CROWD
Now is a great time to buy a house. Prices are down, interest rates are falling and vendors are anxious to sell. The house that you’ve had your eye on for a while is better value now than it’s even been.
Not only that but if you’re looking to trade up from your current home, the price difference between the two is smaller now that ever. So even if the value of your house has fallen, the value of the house you really want has fallen even more, making it even more affordable than ever.
The changed economic climate means that right now buyers have an opportunity not presented in decades and once the market does, recover, which undoubtedly it will, you will look back and smile at the decision you made.
Now that’s one way to look at it. You could also so that right now is a terrible time to buy. Prices might drop even more and if more homes come on the market, will buyers get desperate? The why not wait them out.
The fact is that right here, right now, sellers outnumber buyers. Market sentiment is negative and as a result it can be confusing for buyers, hence they might be inclined to wait a few more months.
“People are worried that they’ll buy too soon and have negative equity by the time the deal is done”. Said Healy Hynes of Hynes Real Estate Alliance.
“What they really need to do is decide if they’re serious about buying, because their concerns are also vendors concerns. The same newspapers are being read and same radio chatter being listened to by both sides.
By getting active about buying, rather than waiting passively for prices to drop even further, you can get ahead of the market, because waiting is exactly what the crowd is doing.
It’s the people who get in first that make the greatest deals in any marketplace. Be it in shares, equity or homes. “By the time the papers are saying the market has recovered and prices are going back up again, the smart buyers will already have made their deals and will be reaping the rewards.” Continued Mr. Hynes.
The questions you need to ask yourself is do you want to be one of the crowd or do you want to be one step ahead of them?
“If you get out there now you can negotiate a much better deal from the anxious vendors that you will if you wait until the papers say the market is picking up, because the vendors are reading the same papers you are and will therefore feel they can negotiate from a stronger position and will be less inclined to deal.”
Mr. Hynes has this analogy to make. "It's like when you find a dress that you really, really like. It’s the right cut, right size and right colour for you, so you wait for it to be on sale. Then the sale starts and they don't have your size. Theoretically, you’ve saved 30% but you don't have your dress! The only difference is in this case you might still get it at the same price."
“Right now is a perfect time to buy, because of a concrete significant and accumulating increase in buying power," says Healy Hynes. Interest rates are lower now than they have been in years and will continue to drop for quite a while yet. And if you’ve been living in your current home for a while, you’ve build up a significant amount of equity, regardless of the state of the current market.”
Mr. Hynes recommends that buyers check out the websites and call the auctioneers to find out exactly what’s on the market right now. By not being aware of what’s out there, the house that you’ve been looking for could be sitting there waiting for you.
Mr. Hynes is particularly pointing his advice to first time buyers and families looking to trade up.
“Historically speaking it’s the investors who are really attuned to getting into the market.” Mr. Hynes pointed out. “They’re the ones who are used to dealing and normally snap up all the bargains when they come available.”
For many years, they were berated for squeezing out other sectors; particularly first time buyers, and steps were taken by the government to address this situation.
According to Mr. Hynes, the market itself has now presented an even better opportunity to homebuyers to get one up, as they say.
“Investors normally use the equity in their portfolio to gear up to buying” said Mr. Hynes “and families release equity by selling their existing homes. The former approach is a lot more costly and as such the families now have an edge which they can use to their significant advantage”.
The one certainty in life is that one side of the market will never stay on top forever. As we all know, it can turn very quickly and a market like this that’s been low for a while is ripe for a comeback as lower prices stimulate investors.
Healy Hynes is a director of Hynes Real Estate Alliance, Athlone and chairman Real Estate Alliance, Ireland’s leading network of qualified property consultants.
Now is a great time to buy a house. Prices are down, interest rates are falling and vendors are anxious to sell. The house that you’ve had your eye on for a while is better value now than it’s even been.
Not only that but if you’re looking to trade up from your current home, the price difference between the two is smaller now that ever. So even if the value of your house has fallen, the value of the house you really want has fallen even more, making it even more affordable than ever.
The changed economic climate means that right now buyers have an opportunity not presented in decades and once the market does, recover, which undoubtedly it will, you will look back and smile at the decision you made.
Now that’s one way to look at it. You could also so that right now is a terrible time to buy. Prices might drop even more and if more homes come on the market, will buyers get desperate? The why not wait them out.
The fact is that right here, right now, sellers outnumber buyers. Market sentiment is negative and as a result it can be confusing for buyers, hence they might be inclined to wait a few more months.
“People are worried that they’ll buy too soon and have negative equity by the time the deal is done”. Said Healy Hynes of Hynes Real Estate Alliance.
“What they really need to do is decide if they’re serious about buying, because their concerns are also vendors concerns. The same newspapers are being read and same radio chatter being listened to by both sides.
By getting active about buying, rather than waiting passively for prices to drop even further, you can get ahead of the market, because waiting is exactly what the crowd is doing.
It’s the people who get in first that make the greatest deals in any marketplace. Be it in shares, equity or homes. “By the time the papers are saying the market has recovered and prices are going back up again, the smart buyers will already have made their deals and will be reaping the rewards.” Continued Mr. Hynes.
The questions you need to ask yourself is do you want to be one of the crowd or do you want to be one step ahead of them?
“If you get out there now you can negotiate a much better deal from the anxious vendors that you will if you wait until the papers say the market is picking up, because the vendors are reading the same papers you are and will therefore feel they can negotiate from a stronger position and will be less inclined to deal.”
Mr. Hynes has this analogy to make. "It's like when you find a dress that you really, really like. It’s the right cut, right size and right colour for you, so you wait for it to be on sale. Then the sale starts and they don't have your size. Theoretically, you’ve saved 30% but you don't have your dress! The only difference is in this case you might still get it at the same price."
“Right now is a perfect time to buy, because of a concrete significant and accumulating increase in buying power," says Healy Hynes. Interest rates are lower now than they have been in years and will continue to drop for quite a while yet. And if you’ve been living in your current home for a while, you’ve build up a significant amount of equity, regardless of the state of the current market.”
Mr. Hynes recommends that buyers check out the websites and call the auctioneers to find out exactly what’s on the market right now. By not being aware of what’s out there, the house that you’ve been looking for could be sitting there waiting for you.
Mr. Hynes is particularly pointing his advice to first time buyers and families looking to trade up.
“Historically speaking it’s the investors who are really attuned to getting into the market.” Mr. Hynes pointed out. “They’re the ones who are used to dealing and normally snap up all the bargains when they come available.”
For many years, they were berated for squeezing out other sectors; particularly first time buyers, and steps were taken by the government to address this situation.
According to Mr. Hynes, the market itself has now presented an even better opportunity to homebuyers to get one up, as they say.
“Investors normally use the equity in their portfolio to gear up to buying” said Mr. Hynes “and families release equity by selling their existing homes. The former approach is a lot more costly and as such the families now have an edge which they can use to their significant advantage”.
The one certainty in life is that one side of the market will never stay on top forever. As we all know, it can turn very quickly and a market like this that’s been low for a while is ripe for a comeback as lower prices stimulate investors.
Healy Hynes is a director of Hynes Real Estate Alliance, Athlone and chairman Real Estate Alliance, Ireland’s leading network of qualified property consultants.
Credit Cards - What you need to know
What You Need to Know about Credit Cards.
If you’ve been thinking about moving house and have been put off by thoughts of a higher mortgage and how that may affect your lifestyle, it could be an opportune time to look at your current expenditure, not only what you’re spending, but also where are how you’re spending it. Credit card debt is the most expensive form of financing available, and although quick and easy to use, there are ways and means of reducing your expenditure and freeing up your cash for more worthwhile endeavours for example, how much do you actually know about the rate your being charged and how it’s calculated on your card? Understanding just how interest rates work can help you see how important small differences in rates and payment amounts can be.
Interest Rates are Compound.
It is important to remember that what you owe is compounded – that means you pay interest on the interest you owe from the month before. That means that if you’re paying 2% per month in interest, you’re not paying 24% per year – you’re actually paying 26.82%. Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing.
A Thought Experiment.
Here’s a question: would you rather have €1 million, or €10,000 in a savings account earning 20% per year in compound interest?
Well, let’s see how that €10,000 would grow. After 10 years: €61,917. 20 years: €383,375. 30 years: €2,373,763. 40 years: €91,004,381. 50 years: €563,475,143.
So after fifty years, you’d have over €500 million?! Well, not so fast. Of course, you have to take inflation into account – if we say inflation is 5%, then that money would have the buying power that €10,732,859 does today. Still, that’s not a bad return on your investment of €10,000, is it?
That’s the power of compound interest, and the way the credit card companies make their money (it’s also the way pensions work, and the reason the prices of things seem to rise massively as you get older). Be very, very afraid of compound interest. Or, of course, you could start saving, and be very glad of it…
Compound Interest Adds Up.
Let’s work through an example on a more real kind of scale. Let’s say you have an average unpaid balance of €1,000 on a card at 15% APR.
You will owe €150 in interest for the first year you borrow. However, this amount is then added onto the balance, and interest is charged on that. The second year, you’d owe another €172.50, for a total of €1322.50. It goes on, with totals like this: €1,520.88, €1,749, €2,011.35.
After just five years at 15%, you’d owe double what you borrowed. And after 10 years, you’d owe four times what you borrowed! Bet you weren’t expecting that. If you let something like that carry on for long enough, you’ll end up paying back that credit card for years afterwards, paying back what you borrowed many times over and still not clearing the debt. Most people don’t work this out, and feel that the payments must simply be their fault for spending too much money to begin with.
One Percent of Difference.
One more thing. You might think there’s not that much difference between a card that charges 15% APR and one that charges 12% APR. Let’s see the difference the lower rate would make to that €1,000 borrowed for five years. Remember, after five years at 15%, you owed €2,011.35.
At 12%: €1120, €1254.40, €1404.93, €1573.52… €1762.34 after five years. So you’ve saved €249.01 from that 3% difference in APR – in other words, you’ve paid almost 25% less interest.
When you’re dealing with credit cards, you’re playing with fire. Unfortunately, there are plenty of people out there who don’t realise that, and make all sorts of dangerous mistakes with their credit cards every day.
Paying Late.
If you don’t set up any kind of automatic payment, then it can be tempting to just put your credit card bill on a pile and get to it when you have time. Before you know it, a few weeks have gone by and you’re late. If you leave it to the deadline, you might find that the payment won’t get there quickly enough – it’s not a deadline for sending the money, it’s a deadline for them receiving it.
Paying late is a big mistake for an awful lot of reasons. You will almost certainly be charged a late payment fee, and your late payment will go on your credit report for everyone to see. You may also find that you lose any good rate you had, and your debt is automatically thrown onto the very worst rate the company offers.
To avoid late payment, you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.
Being Taken in By Rewards.
It is never, ever worth getting a higher-interest card simply because it offers some kind of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is unlikely to be more than you would pay in extra interest – after all, why would they give you free money? All ‘rewards’ do is pay you off with your own money to make you feel like you’re getting something for nothing. You’re not.
Collecting Cards.
Seeing some people opening their wallet or bag is a scary experience. It looks like they have about a hundred credit cards in there, some of which they haven’t used in years. They have trouble keeping track of all the different cards, balances and interest rates. Don’t be one of these people. Too many cards makes you look over-committed in your credit report, and could get you turned down for a home loan.
Maxing Them Out.
Your limit is just that: a limit, not a minimum! Whatever you do, don’t get a card and immediately spend your whole limit. This looks very bad. It is better to spend about halfway regularly and pay it back. Wait for the company to increase your limit (which they quickly will), and then you’ll get that extra money without the stigma of having a maxed-out card.
Not Reading the Terms and Conditions.
Don’t sign anything you haven’t read! I know it’s hard going and you’re busy and all, but if you can’t manage to read the terms and conditions then you shouldn’t get the card. Pay special attention to any future increases in rates, and what kind of fees you can be charged.
When you’re looking at a credit card offer, take a look at the small print – it seems like a maze, but it’s vitally important. With the trend nowadays towards easier-to-read ‘summary boxes’, there aren’t as many excuses for ignoring the terms as there used to be. Anyway, credit card lenders are devious, and there are plenty of things there designed to catch you out – here’s what you should be on your guard against.
Annual Fees.
Even though you’re already paying them interest, many credit cards still charge you an annual fee. It’s not as common as it once was, but it’s still around. You should be especially careful to check for fees on Gold and Platinum cards – even though they’re not that hard to get any more, they still tend to charge much higher fees than normal cards.
Penalty Charges.
Pay attention to what kind of fees you’ll be charged for a late payment, or if you take a cash advance, or if you accidentally exceed your limit on the card. Some cards have unjustifiably high fees, and you shouldn’t sign up for them.
Interest Method.
This is one of the most overlooked of all the things in the small print, just because it’s so hard to understand. Essentially, every company has a slightly different way of working out how much interest you should pay each month. There are three main methods:
With the ‘adjusted balance’ method, you are charged interest on whatever your balance was when the company sent the bill. Another version of this is the ‘previous balance’. You’re charged interest on your balance as it stood at the end of the billing cycle before this one, regardless of how much you’ve spent or paid off since. Odd, but easier to understand.
Then there’s the average daily balance. This is the most complicated, but also the most common now. Your balance from the end of each day in the billing cycle is added up, and then divided by how many days there were, and interest is charged on this amount. This method is only good for you if your balance jumps around a lot, as it avoids you paying lots of interest on a balance that just happened to be large on the billing date.
Also, make sure you look at the rate of interest each month, they can change.
Grace Period.
Check that the card you’re looking at has a grace period on purchases. Otherwise, you could end up being charged interest from the minute you spend. Almost no cards have a grace period on cash advances or credit card cheques, however.
Currency Conversion Fees.
If you plan to use your card abroad, you should take a look at how much the card charges for transactions made in other currencies. Some cards can be much more expensive than others.
Take a look at your credit card and how much your spending on it. There are many great offers out there from other providers and by examining them, you may well find yourself saving a lot of money.
If you’ve been thinking about moving house and have been put off by thoughts of a higher mortgage and how that may affect your lifestyle, it could be an opportune time to look at your current expenditure, not only what you’re spending, but also where are how you’re spending it. Credit card debt is the most expensive form of financing available, and although quick and easy to use, there are ways and means of reducing your expenditure and freeing up your cash for more worthwhile endeavours for example, how much do you actually know about the rate your being charged and how it’s calculated on your card? Understanding just how interest rates work can help you see how important small differences in rates and payment amounts can be.
Interest Rates are Compound.
It is important to remember that what you owe is compounded – that means you pay interest on the interest you owe from the month before. That means that if you’re paying 2% per month in interest, you’re not paying 24% per year – you’re actually paying 26.82%. Charging interest monthly instead of yearly is a trick to make it feel like you are paying a very low price for your borrowing.
A Thought Experiment.
Here’s a question: would you rather have €1 million, or €10,000 in a savings account earning 20% per year in compound interest?
Well, let’s see how that €10,000 would grow. After 10 years: €61,917. 20 years: €383,375. 30 years: €2,373,763. 40 years: €91,004,381. 50 years: €563,475,143.
So after fifty years, you’d have over €500 million?! Well, not so fast. Of course, you have to take inflation into account – if we say inflation is 5%, then that money would have the buying power that €10,732,859 does today. Still, that’s not a bad return on your investment of €10,000, is it?
That’s the power of compound interest, and the way the credit card companies make their money (it’s also the way pensions work, and the reason the prices of things seem to rise massively as you get older). Be very, very afraid of compound interest. Or, of course, you could start saving, and be very glad of it…
Compound Interest Adds Up.
Let’s work through an example on a more real kind of scale. Let’s say you have an average unpaid balance of €1,000 on a card at 15% APR.
You will owe €150 in interest for the first year you borrow. However, this amount is then added onto the balance, and interest is charged on that. The second year, you’d owe another €172.50, for a total of €1322.50. It goes on, with totals like this: €1,520.88, €1,749, €2,011.35.
After just five years at 15%, you’d owe double what you borrowed. And after 10 years, you’d owe four times what you borrowed! Bet you weren’t expecting that. If you let something like that carry on for long enough, you’ll end up paying back that credit card for years afterwards, paying back what you borrowed many times over and still not clearing the debt. Most people don’t work this out, and feel that the payments must simply be their fault for spending too much money to begin with.
One Percent of Difference.
One more thing. You might think there’s not that much difference between a card that charges 15% APR and one that charges 12% APR. Let’s see the difference the lower rate would make to that €1,000 borrowed for five years. Remember, after five years at 15%, you owed €2,011.35.
At 12%: €1120, €1254.40, €1404.93, €1573.52… €1762.34 after five years. So you’ve saved €249.01 from that 3% difference in APR – in other words, you’ve paid almost 25% less interest.
When you’re dealing with credit cards, you’re playing with fire. Unfortunately, there are plenty of people out there who don’t realise that, and make all sorts of dangerous mistakes with their credit cards every day.
Paying Late.
If you don’t set up any kind of automatic payment, then it can be tempting to just put your credit card bill on a pile and get to it when you have time. Before you know it, a few weeks have gone by and you’re late. If you leave it to the deadline, you might find that the payment won’t get there quickly enough – it’s not a deadline for sending the money, it’s a deadline for them receiving it.
Paying late is a big mistake for an awful lot of reasons. You will almost certainly be charged a late payment fee, and your late payment will go on your credit report for everyone to see. You may also find that you lose any good rate you had, and your debt is automatically thrown onto the very worst rate the company offers.
To avoid late payment, you should always post your payment a long time before the due date (at least a week). If you’ve left it to the last minute, phone up and try to pay that way.
Being Taken in By Rewards.
It is never, ever worth getting a higher-interest card simply because it offers some kind of loyalty points, flight miles or whatever. Even if it offers a cash reward, it is unlikely to be more than you would pay in extra interest – after all, why would they give you free money? All ‘rewards’ do is pay you off with your own money to make you feel like you’re getting something for nothing. You’re not.
Collecting Cards.
Seeing some people opening their wallet or bag is a scary experience. It looks like they have about a hundred credit cards in there, some of which they haven’t used in years. They have trouble keeping track of all the different cards, balances and interest rates. Don’t be one of these people. Too many cards makes you look over-committed in your credit report, and could get you turned down for a home loan.
Maxing Them Out.
Your limit is just that: a limit, not a minimum! Whatever you do, don’t get a card and immediately spend your whole limit. This looks very bad. It is better to spend about halfway regularly and pay it back. Wait for the company to increase your limit (which they quickly will), and then you’ll get that extra money without the stigma of having a maxed-out card.
Not Reading the Terms and Conditions.
Don’t sign anything you haven’t read! I know it’s hard going and you’re busy and all, but if you can’t manage to read the terms and conditions then you shouldn’t get the card. Pay special attention to any future increases in rates, and what kind of fees you can be charged.
When you’re looking at a credit card offer, take a look at the small print – it seems like a maze, but it’s vitally important. With the trend nowadays towards easier-to-read ‘summary boxes’, there aren’t as many excuses for ignoring the terms as there used to be. Anyway, credit card lenders are devious, and there are plenty of things there designed to catch you out – here’s what you should be on your guard against.
Annual Fees.
Even though you’re already paying them interest, many credit cards still charge you an annual fee. It’s not as common as it once was, but it’s still around. You should be especially careful to check for fees on Gold and Platinum cards – even though they’re not that hard to get any more, they still tend to charge much higher fees than normal cards.
Penalty Charges.
Pay attention to what kind of fees you’ll be charged for a late payment, or if you take a cash advance, or if you accidentally exceed your limit on the card. Some cards have unjustifiably high fees, and you shouldn’t sign up for them.
Interest Method.
This is one of the most overlooked of all the things in the small print, just because it’s so hard to understand. Essentially, every company has a slightly different way of working out how much interest you should pay each month. There are three main methods:
With the ‘adjusted balance’ method, you are charged interest on whatever your balance was when the company sent the bill. Another version of this is the ‘previous balance’. You’re charged interest on your balance as it stood at the end of the billing cycle before this one, regardless of how much you’ve spent or paid off since. Odd, but easier to understand.
Then there’s the average daily balance. This is the most complicated, but also the most common now. Your balance from the end of each day in the billing cycle is added up, and then divided by how many days there were, and interest is charged on this amount. This method is only good for you if your balance jumps around a lot, as it avoids you paying lots of interest on a balance that just happened to be large on the billing date.
Also, make sure you look at the rate of interest each month, they can change.
Grace Period.
Check that the card you’re looking at has a grace period on purchases. Otherwise, you could end up being charged interest from the minute you spend. Almost no cards have a grace period on cash advances or credit card cheques, however.
Currency Conversion Fees.
If you plan to use your card abroad, you should take a look at how much the card charges for transactions made in other currencies. Some cards can be much more expensive than others.
Take a look at your credit card and how much your spending on it. There are many great offers out there from other providers and by examining them, you may well find yourself saving a lot of money.
Making the most of your viewing - Donna Hynes
In a changing residential marketplace, it’s more important than ever to make sure that you maximise every opportunity presented and viewing are a great opportunity for both the buyer and the seller. It gives the seller the chance to showcase their home and the buyer can view the home in all its glory. Buyers love to scope out potential homes and many offers have been made at viewings. After all, viewings are really sales presentations. In order to have a successful viewing and make sure that the buyer gets the best impression possible of your house, there are some tasks that should be completed by the seller beforehand.
The most obvious task is cleaning. The house should be spotless, including appliances. If you work full time and don’t have the time to get the house cleaned, hire a house cleaning service. The money spent is well worth it if you are able to sell quickly. It might be hard to keep it clean if you are still living there, but you should make a concentrated effort to try.
Keep foul and mysterious odours away.
The first thing a potential buyer will notice is an offensive odour and you will probably never see them again. Regularly inspect your home for potential odour sources and keep a steady supply of candles and air fresheners on hand. If you have an indoor cat, keep the litter box out of sight and scooped out daily.
Clutter is a major turnoff to potential buyers.
It just isn’t comforting to see piles of clutter everywhere. Keep small appliances stored instead of out on the countertops. Remove photographs and knick-knacks. You want people to envision their belongings in the house. Clean out and organize the closets. If there is no reason for something to be displayed, get rid of it.
If you can, remove non-essential furniture to make the rooms appear larger.
Spacious rooms are more appealing to the eyes. Keep your boxes of junk stored out of sight. It is a good idea to start figuring out what you need and what you can live without. It would be a good idea to have a garage sale before you put the house on the market. If you can’t bear to part with anything, rent a temporary storage unit.
You cannot ignore the outside of the house.
The outside presentation has a major impact on the buyer. Clean the leaves out of the drain gutter, don’t let garden hoses or other tools pile up outside. Pick them up and store them elsewhere. Make the effort to beautify the front entry. If the door handle is rusty or the whole door looks junky, clean it, repaint it, or if necessary, get a new one. Keep the flower beds neat and free from weeds.
Look at the walls and try to put yourself in the buyers’ shoes.
How would you look at the walls in someone else’s house? Is the paint chipping or is the colour outdated? It would be well worth your time to give the walls a fresh coat of paint. Nothing makes a room come alive more than a fresh coat of paint. Give the rooms a little bit of a makeover with new décor that compliments the wall colours. If you have a garden, bring in some fresh flowers and put them in attractive vases.
Establish a pleasant atmosphere by baking bread or biscuits.
Candles add a nice touch along with background music. Classical or jazz music are both good choices. You want to convey style and elegance to your audience. First impressions go a long way.
When trying to sell your house, you should be prepared for a showing at any time. Last minute requests are very common and can turn into offers. You have the option to request 24 hours notice before a showing, but in doing so you may limit your home’s exposure. Try to be as flexible as possible. Accommodating the hectic schedules of a potential buyer will make you and your home look that much better.
It is a good idea to not be present for the showing. Buyers might not feel comfortable in your presence or they might be afraid to ask a particular question for fear of offending you. If they can’t view the house fully, they will probably just move on to the next one. You don’t want that. They are supposed to fall in love with your house.
For more tips on selling your house contact Donna Hynes, Hynes Real Estate Alliance, Church Street, Athlone on 090 6473838.
The most obvious task is cleaning. The house should be spotless, including appliances. If you work full time and don’t have the time to get the house cleaned, hire a house cleaning service. The money spent is well worth it if you are able to sell quickly. It might be hard to keep it clean if you are still living there, but you should make a concentrated effort to try.
Keep foul and mysterious odours away.
The first thing a potential buyer will notice is an offensive odour and you will probably never see them again. Regularly inspect your home for potential odour sources and keep a steady supply of candles and air fresheners on hand. If you have an indoor cat, keep the litter box out of sight and scooped out daily.
Clutter is a major turnoff to potential buyers.
It just isn’t comforting to see piles of clutter everywhere. Keep small appliances stored instead of out on the countertops. Remove photographs and knick-knacks. You want people to envision their belongings in the house. Clean out and organize the closets. If there is no reason for something to be displayed, get rid of it.
If you can, remove non-essential furniture to make the rooms appear larger.
Spacious rooms are more appealing to the eyes. Keep your boxes of junk stored out of sight. It is a good idea to start figuring out what you need and what you can live without. It would be a good idea to have a garage sale before you put the house on the market. If you can’t bear to part with anything, rent a temporary storage unit.
You cannot ignore the outside of the house.
The outside presentation has a major impact on the buyer. Clean the leaves out of the drain gutter, don’t let garden hoses or other tools pile up outside. Pick them up and store them elsewhere. Make the effort to beautify the front entry. If the door handle is rusty or the whole door looks junky, clean it, repaint it, or if necessary, get a new one. Keep the flower beds neat and free from weeds.
Look at the walls and try to put yourself in the buyers’ shoes.
How would you look at the walls in someone else’s house? Is the paint chipping or is the colour outdated? It would be well worth your time to give the walls a fresh coat of paint. Nothing makes a room come alive more than a fresh coat of paint. Give the rooms a little bit of a makeover with new décor that compliments the wall colours. If you have a garden, bring in some fresh flowers and put them in attractive vases.
Establish a pleasant atmosphere by baking bread or biscuits.
Candles add a nice touch along with background music. Classical or jazz music are both good choices. You want to convey style and elegance to your audience. First impressions go a long way.
When trying to sell your house, you should be prepared for a showing at any time. Last minute requests are very common and can turn into offers. You have the option to request 24 hours notice before a showing, but in doing so you may limit your home’s exposure. Try to be as flexible as possible. Accommodating the hectic schedules of a potential buyer will make you and your home look that much better.
It is a good idea to not be present for the showing. Buyers might not feel comfortable in your presence or they might be afraid to ask a particular question for fear of offending you. If they can’t view the house fully, they will probably just move on to the next one. You don’t want that. They are supposed to fall in love with your house.
For more tips on selling your house contact Donna Hynes, Hynes Real Estate Alliance, Church Street, Athlone on 090 6473838.
A Challenging Economic Adjustment - Jim Power, Chief Economist Friends First
Economic Backdrop
The latest official growth data on the Irish economy do not make for pleasant reading. The data show that in the first quarter of 2008, GDP contracted by 1.5% compared to the first quarter of 2007, while GNP expanded by just 0.8%, which is the slowest annual growth rate since the first quarter of 2002. The key weakness is in construction activity, which declined by 18%, with the housing component down by 30%. Exports expanded by just 0.5% in the first quarter, which is the slowest growth rate since the third quarter of 2003. Consumer spending increased by 3.5%. This was stronger than expected, but largely reflected spending by Irish residents travelling abroad and spending on services such as health and education. Spending on goods was very weak.
In overall terms, the first quarter data do not suggest an economy in recession, but do suggest an economy that is slowing sharply, with housing the main contributor. It is clear however that the housing weakness is spreading to other areas of the economy. Subsequent evidence would suggest that the economy actually went into technical recession in the second quarter, which is defined as two successive quarters of negative growth,
The main contributor to the slowdown in the economy is the adjustment that is occurring in the housing market. The boom in the housing market in recent years has been a key driver of employment in the economy, tax revenues, consumer confidence, consumer spending, the Irish equity market performance and overall economic activity. Given the key contribution made by the housing sector to economic activity in recent years a housing market adjustment was always going to be a painful experience for the economy and that is turning out to be the case.
However, the pressures arising from the housing adjustment are being exacerbated by rising food and oil prices, the contraction in credit availability as a result of the sub-prime crisis, the sharp slowdown in the US and UK economies, and adverse exchange rate movements.
A decline of 10,000 in the number of houses built knocks up to 1% off economic growth. This sharp slowdown in house building was inevitable at some point, as house building had reached unsustainable levels in recent years. However, the adjustment to more normal housing market conditions is exacting a heavy price, and in particular is having a very negative impact on unemployment, tax revenues, consumer sentiment, and economic activity in general. Furthermore, the sharp hosing adjustment has caused a dramatic crash in the Irish equity market.
It is clear that the housing adjustment is not yet over. Prices are likely to fall further over the coming months and building activity will remain very weak and will continue to act as a drag on economic activity well into 2009.
The Economic Outlook
2008 is certainly turning out to be a challenging year for the Irish economy. Unemployment is rising, consumer spending is weakening, house prices are still falling and house building activity remains very weak. Given the domestic housing market adjustment and the more difficult external environment as a result of the sub-prime crisis, it is looking likely that 2009 will also be a challenging year.
The key message for Ireland at the moment is that while the economy is currently in a challenging situation due to the ending of the residential house building boom and the more difficult external environment, the future is still bright provided policy makers do the right things in terms of policy making.
The return to more normal levels of house building and the reversal in house prices is a positive development because the trends that were emerging were clearly unsustainable. The construction sector will continue to make an important contribution to growth, with public and private sector non-residential activity set to remain reasonably strong. The ESRI estimates that the annual average housing requirement out to 2015 will be 48,000 houses per annum. However, following house completions of around 48,000 this year, completions could fall to 35,000 in 2009.
Consumer spending is slowing, but this too is desirable and easily understandable after five years of aggressive borrowing and spending.
High level manufacturing activities and service exports will become increasingly important drivers of the economy in the medium-term, while there will have to be limitations placed on the contribution from the public sector in a tighter fiscal environment.
To emerge from the current difficulties it is clear that the housing adjustment will have to run its course, oil prices will have to fall and the external economic cycle will have to improve. Most of these developments will happen, but not before 2010 at the earliest. Most importantly, the global credit crisis will have to end and it appears at this stage that global credit availability will not return to more normal conditions until the second half of 2009.
From a Government perspective it is important not to panic and instead try to take a longer-term strategic perspective. In this context, cutbacks in wasteful spending are now essential. This should primarily focus on the day-to-day spending across all sectors. Over the past 5 years current spending has been allowed escalate out of control and the taxpayer has not got very much in return. This needs to change.
In relation to capital spending, continued delivery of the National Development Plan is essential, but there will have to be some prioritisation. Delivery of the physical infrastructure in areas such as road, rail and airports is essential, as is investment in the hopelessly inadequate IT infrastructure. Focused investment in education and training is also the only response to the jobs that are migrating to low cost locations. Postponing some of the ‘nice to have’ but not essential’ elements of the NDP would be warranted.
Government has been one of the biggest contributors to the escalating cost of living and business costs since the beginning of the decade. Much of this has been driven by the inability to control public sector pay. The new wage negotiations will need to deliver serious wage restraint, particularly in the public sector, as market forces will look after wage growth in the private sector.
In relation to revenue raising measures, increasing general taxes in an economic slowdown would be tantamount to economic suicide. However, looking closely at BIK on employer provided parking would be a decent revenue raiser and would also bring greater equity.
In summary, Government must not now panic. Control of current spending, investment in the quality of the labour force, control of state service costs, public sector pay restraint, and delivery of the essential elements of the NDP, would represent the best contribution the Government could make to the longer-term prosperity of the economy. Populist policies in the run up to next year’s local elections must be avoided at all costs.
The following growth outlook is suggested, but is heavily predicated on an improved external economic environment and a freeing up of global credit conditions in the second half of 2009. If these do not materialise, the slowdown in the Irish economy will be more pronounced and of longer duration.
(average)
2007
2008f
2009f
2010f
GDP
6.0%
-1.0
1.2
3.5%
GNP
4.1%
-0.2
0.5
2.5%
Consumption
6.3%
1.5
2.0
3.0%
Investment
-1.8%
-15.0
-6.0
2.0%
Government
6.0%
3.8
3.0
3.0%
Exports
6.8%
4.5
4.5
4.5%
Imports
4.1%
3.0
3.2
3.5%
CPI
4.9%
4.6%
3.5%
3.0%
Unemployment
4.6%
6.3%
7.5%
7.8%
House Completions
78,027
48,000
35,000
40,000
F= forecast
* NOTE: THIS ARTICLE IS BASED ON DATA AVAILABLE UP TO JULY 9th 2008
The latest official growth data on the Irish economy do not make for pleasant reading. The data show that in the first quarter of 2008, GDP contracted by 1.5% compared to the first quarter of 2007, while GNP expanded by just 0.8%, which is the slowest annual growth rate since the first quarter of 2002. The key weakness is in construction activity, which declined by 18%, with the housing component down by 30%. Exports expanded by just 0.5% in the first quarter, which is the slowest growth rate since the third quarter of 2003. Consumer spending increased by 3.5%. This was stronger than expected, but largely reflected spending by Irish residents travelling abroad and spending on services such as health and education. Spending on goods was very weak.
In overall terms, the first quarter data do not suggest an economy in recession, but do suggest an economy that is slowing sharply, with housing the main contributor. It is clear however that the housing weakness is spreading to other areas of the economy. Subsequent evidence would suggest that the economy actually went into technical recession in the second quarter, which is defined as two successive quarters of negative growth,
The main contributor to the slowdown in the economy is the adjustment that is occurring in the housing market. The boom in the housing market in recent years has been a key driver of employment in the economy, tax revenues, consumer confidence, consumer spending, the Irish equity market performance and overall economic activity. Given the key contribution made by the housing sector to economic activity in recent years a housing market adjustment was always going to be a painful experience for the economy and that is turning out to be the case.
However, the pressures arising from the housing adjustment are being exacerbated by rising food and oil prices, the contraction in credit availability as a result of the sub-prime crisis, the sharp slowdown in the US and UK economies, and adverse exchange rate movements.
A decline of 10,000 in the number of houses built knocks up to 1% off economic growth. This sharp slowdown in house building was inevitable at some point, as house building had reached unsustainable levels in recent years. However, the adjustment to more normal housing market conditions is exacting a heavy price, and in particular is having a very negative impact on unemployment, tax revenues, consumer sentiment, and economic activity in general. Furthermore, the sharp hosing adjustment has caused a dramatic crash in the Irish equity market.
It is clear that the housing adjustment is not yet over. Prices are likely to fall further over the coming months and building activity will remain very weak and will continue to act as a drag on economic activity well into 2009.
The Economic Outlook
2008 is certainly turning out to be a challenging year for the Irish economy. Unemployment is rising, consumer spending is weakening, house prices are still falling and house building activity remains very weak. Given the domestic housing market adjustment and the more difficult external environment as a result of the sub-prime crisis, it is looking likely that 2009 will also be a challenging year.
The key message for Ireland at the moment is that while the economy is currently in a challenging situation due to the ending of the residential house building boom and the more difficult external environment, the future is still bright provided policy makers do the right things in terms of policy making.
The return to more normal levels of house building and the reversal in house prices is a positive development because the trends that were emerging were clearly unsustainable. The construction sector will continue to make an important contribution to growth, with public and private sector non-residential activity set to remain reasonably strong. The ESRI estimates that the annual average housing requirement out to 2015 will be 48,000 houses per annum. However, following house completions of around 48,000 this year, completions could fall to 35,000 in 2009.
Consumer spending is slowing, but this too is desirable and easily understandable after five years of aggressive borrowing and spending.
High level manufacturing activities and service exports will become increasingly important drivers of the economy in the medium-term, while there will have to be limitations placed on the contribution from the public sector in a tighter fiscal environment.
To emerge from the current difficulties it is clear that the housing adjustment will have to run its course, oil prices will have to fall and the external economic cycle will have to improve. Most of these developments will happen, but not before 2010 at the earliest. Most importantly, the global credit crisis will have to end and it appears at this stage that global credit availability will not return to more normal conditions until the second half of 2009.
From a Government perspective it is important not to panic and instead try to take a longer-term strategic perspective. In this context, cutbacks in wasteful spending are now essential. This should primarily focus on the day-to-day spending across all sectors. Over the past 5 years current spending has been allowed escalate out of control and the taxpayer has not got very much in return. This needs to change.
In relation to capital spending, continued delivery of the National Development Plan is essential, but there will have to be some prioritisation. Delivery of the physical infrastructure in areas such as road, rail and airports is essential, as is investment in the hopelessly inadequate IT infrastructure. Focused investment in education and training is also the only response to the jobs that are migrating to low cost locations. Postponing some of the ‘nice to have’ but not essential’ elements of the NDP would be warranted.
Government has been one of the biggest contributors to the escalating cost of living and business costs since the beginning of the decade. Much of this has been driven by the inability to control public sector pay. The new wage negotiations will need to deliver serious wage restraint, particularly in the public sector, as market forces will look after wage growth in the private sector.
In relation to revenue raising measures, increasing general taxes in an economic slowdown would be tantamount to economic suicide. However, looking closely at BIK on employer provided parking would be a decent revenue raiser and would also bring greater equity.
In summary, Government must not now panic. Control of current spending, investment in the quality of the labour force, control of state service costs, public sector pay restraint, and delivery of the essential elements of the NDP, would represent the best contribution the Government could make to the longer-term prosperity of the economy. Populist policies in the run up to next year’s local elections must be avoided at all costs.
The following growth outlook is suggested, but is heavily predicated on an improved external economic environment and a freeing up of global credit conditions in the second half of 2009. If these do not materialise, the slowdown in the Irish economy will be more pronounced and of longer duration.
(average)
2007
2008f
2009f
2010f
GDP
6.0%
-1.0
1.2
3.5%
GNP
4.1%
-0.2
0.5
2.5%
Consumption
6.3%
1.5
2.0
3.0%
Investment
-1.8%
-15.0
-6.0
2.0%
Government
6.0%
3.8
3.0
3.0%
Exports
6.8%
4.5
4.5
4.5%
Imports
4.1%
3.0
3.2
3.5%
CPI
4.9%
4.6%
3.5%
3.0%
Unemployment
4.6%
6.3%
7.5%
7.8%
House Completions
78,027
48,000
35,000
40,000
F= forecast
* NOTE: THIS ARTICLE IS BASED ON DATA AVAILABLE UP TO JULY 9th 2008
Keeping Positive - Paul McElhinney explains your options when you find yourself in negative equity
WHAT IS NEGATIVE EQUITY?
Negative equity is the term commonly used to describe the situation of having a home that is worth less than your mortgage. The truth about negative equity is that it doesn't matter to most of us unless you have to sell or you have to remortgage. Home ownership is a long-term business and there is no easy solution to the problem of negative equity. You may want a bigger house or need to move to a different area for employment reasons or in the worst case be unable to meet you mortgage and have to surrender you house to your lender. However, for those whose finances and circumstances allow, the answer is to stay put, realising that eventually house prices are likely to go back up again. The following points are suggestions of possible options to explore.
HELP FROM YOUR LENDER
Lenders do not generally want to repossess properties. It is a costly procedure and the end result is that they have to sell the property and so crystallise their loss as well as yours. Even if – as some lenders are currently doing — they keep hold of the property for the time being and let it out, it involves costs and administration problems they would prefer to avoid.
Contact your lender and ask if there are any schemes they run to help with negative equity. Some lenders may have packages for their existing borrowers but usually only if you have a good payment record. There may be a maximum amount of debt on your old mortgage that can be included in your new mortgage. Also you may have to pay off the old mortgage debt over a shorter time period than a usual mortgage, such as ten years rather than 25 years. This is not necessarily a cheap option as the interest rate may be higher and there may be a fee. You are also putting your new home at risk if you cannot keep up the total mortgage payments on the new home. Payments will be larger than normal because of the shortfall having been included.
Some lenders may agree to accept less than the full amount of the shortfall debt by securing part of the debt on a new property as part of your mortgage and writing off the rest. Some schemes ask for a guarantor on the new loan (such as a relative) and may want the loan secured on their home as well as your own. You may be able to clear the negative equity by obtaining an unsecured loan from your bank or building society. This will probably be more expensive than a secured loan because a higher rate of interest is usually charged, but an unsecured loan does not put your new house at risk. The loan may also be over a shorter period which would mean the monthly payments are likely to be larger. A limited number of lenders may run schemes that offer assistance to all borrowers. So you can apply even if your mortgage is with a different lender. Shop around high street banks and building societies and ask about these schemes.
RENTING OUT YOUR HOME
Another option is renting out your house with your lender's permission. Some lenders add an extra percentage on to the mortgage interest rate for allowing you to rent out the property. You could ask them to waive this if it will cause you hardship. You also need to check if your buildings and contents insurance will be affected by renting the house out.
It can be difficult to deal with letting your house if you live far away. You may need to ask an estate agent or letting agency to act for you and find tenants. Your lender may say that you must use a specific agency and type of tenancy agreement. It is also worth approaching local housing associations. These are sometimes willing to take over renting out your property to people on their waiting lists. If you rent out the house then you will have to find alternative accommodation such as a private tenancy or moving in with relatives. This may be useful if your aim is to move to another part of the country. You may be able to buy another property with a new lender if your income is sufficient. Most lenders are likely to be reluctant to do this except in very specific circumstances.
Remember you will still be liable for the mortgage when your tenants leave, and the rent you get may not cover the whole monthly mortgage payment. You will also be responsible for repairs to your property.
SELLING YOUR HOME
You may have to sell your house and you may have to prove to your lender that sale is the last resort and the sale is in everyone's financial interest You will need to persuade them that you have obtained the best possible price for the property. Point out that if the house was sold by the lender they would be likely to get a much lower price as the property would be empty and could fall into disrepair. Provide your lender with full information about your financial circumstances. You will need evidence from several independent estate agents that you have found the best sale price for your home. The lender may ask you to sign an extra agreement saying how you will repay the shortfall debt.
SURVIVAL TIPS
· Treat mortgage payments as if they were rent: you have to pay for somewhere to live and mortgage payments should mean you eventually own an asset
· Do not just walk out on the debt. Lenders can now keep records for longer than before and are unlikely to forget bad debtors.
· Bear in mind that the national average house price remains slightly higher than it was a year ago – and short-term setbacks are unlikely to reverse the long-term upward trend.
· Pay more off some of your mortgage if you can afford it – most flexible mortgages allow you to repay up to 10 pc of the outstanding debt.
· Simple home improvements, such as a lick of fresh paint, can raise the value of a home.
· Take in a lodger and use the money to reduce debt.
Negative equity is the term commonly used to describe the situation of having a home that is worth less than your mortgage. The truth about negative equity is that it doesn't matter to most of us unless you have to sell or you have to remortgage. Home ownership is a long-term business and there is no easy solution to the problem of negative equity. You may want a bigger house or need to move to a different area for employment reasons or in the worst case be unable to meet you mortgage and have to surrender you house to your lender. However, for those whose finances and circumstances allow, the answer is to stay put, realising that eventually house prices are likely to go back up again. The following points are suggestions of possible options to explore.
HELP FROM YOUR LENDER
Lenders do not generally want to repossess properties. It is a costly procedure and the end result is that they have to sell the property and so crystallise their loss as well as yours. Even if – as some lenders are currently doing — they keep hold of the property for the time being and let it out, it involves costs and administration problems they would prefer to avoid.
Contact your lender and ask if there are any schemes they run to help with negative equity. Some lenders may have packages for their existing borrowers but usually only if you have a good payment record. There may be a maximum amount of debt on your old mortgage that can be included in your new mortgage. Also you may have to pay off the old mortgage debt over a shorter time period than a usual mortgage, such as ten years rather than 25 years. This is not necessarily a cheap option as the interest rate may be higher and there may be a fee. You are also putting your new home at risk if you cannot keep up the total mortgage payments on the new home. Payments will be larger than normal because of the shortfall having been included.
Some lenders may agree to accept less than the full amount of the shortfall debt by securing part of the debt on a new property as part of your mortgage and writing off the rest. Some schemes ask for a guarantor on the new loan (such as a relative) and may want the loan secured on their home as well as your own. You may be able to clear the negative equity by obtaining an unsecured loan from your bank or building society. This will probably be more expensive than a secured loan because a higher rate of interest is usually charged, but an unsecured loan does not put your new house at risk. The loan may also be over a shorter period which would mean the monthly payments are likely to be larger. A limited number of lenders may run schemes that offer assistance to all borrowers. So you can apply even if your mortgage is with a different lender. Shop around high street banks and building societies and ask about these schemes.
RENTING OUT YOUR HOME
Another option is renting out your house with your lender's permission. Some lenders add an extra percentage on to the mortgage interest rate for allowing you to rent out the property. You could ask them to waive this if it will cause you hardship. You also need to check if your buildings and contents insurance will be affected by renting the house out.
It can be difficult to deal with letting your house if you live far away. You may need to ask an estate agent or letting agency to act for you and find tenants. Your lender may say that you must use a specific agency and type of tenancy agreement. It is also worth approaching local housing associations. These are sometimes willing to take over renting out your property to people on their waiting lists. If you rent out the house then you will have to find alternative accommodation such as a private tenancy or moving in with relatives. This may be useful if your aim is to move to another part of the country. You may be able to buy another property with a new lender if your income is sufficient. Most lenders are likely to be reluctant to do this except in very specific circumstances.
Remember you will still be liable for the mortgage when your tenants leave, and the rent you get may not cover the whole monthly mortgage payment. You will also be responsible for repairs to your property.
SELLING YOUR HOME
You may have to sell your house and you may have to prove to your lender that sale is the last resort and the sale is in everyone's financial interest You will need to persuade them that you have obtained the best possible price for the property. Point out that if the house was sold by the lender they would be likely to get a much lower price as the property would be empty and could fall into disrepair. Provide your lender with full information about your financial circumstances. You will need evidence from several independent estate agents that you have found the best sale price for your home. The lender may ask you to sign an extra agreement saying how you will repay the shortfall debt.
SURVIVAL TIPS
· Treat mortgage payments as if they were rent: you have to pay for somewhere to live and mortgage payments should mean you eventually own an asset
· Do not just walk out on the debt. Lenders can now keep records for longer than before and are unlikely to forget bad debtors.
· Bear in mind that the national average house price remains slightly higher than it was a year ago – and short-term setbacks are unlikely to reverse the long-term upward trend.
· Pay more off some of your mortgage if you can afford it – most flexible mortgages allow you to repay up to 10 pc of the outstanding debt.
· Simple home improvements, such as a lick of fresh paint, can raise the value of a home.
· Take in a lodger and use the money to reduce debt.
Wednesday, 30 April 2008
REA Take Over Punchestown Races
- Real Estate Alliance
The great and the good were out in force at this year’s Punchestown Racing Festival thanks to Real Estate Alliance. Racing on Thursday, (24th April), was one of the highlights of the festival featuring the Real Estate Alliance three mile handicap hurdle. The race prize was increased in value to €50,000 this year which lead to much excitement and speculation about the race. On the day Paul Carberry on Hidden Agent won out.
The Real Estate Alliance Handicap Hurdle is an extended handicap hurdle for four year olds and upwards rated 88-130. This is the first race sponsorship that Real Estate Alliance has entered into and they entertained 220 corporate clients on the day also including many people from (insert area) such as (insert names from some people in the pix, well known local people etc).
Commenting on the sponsorship Eimer O’Keefee (CEO) of Real Estate Alliance were delighted to be part of this year’s Punchestown Festival and in particular the Real Estate Alliance Handicap Hurdle. The whole event was a great success and I believe that quite a few of our guests got luck so we all went home happy on the day!”
Real Estate Alliance is a strategic marketing alliance comprising some of the country’s best-established auctioneers and estate agents. All Real Estate Alliance members are members of the Irish Auctioneers and Valuers Institute (IAVI) or The Society of Chartered Surveyors (SCS) and, with one quarter of the alliances firms in business for more than a century, Real Estate Alliance offer thousands of years experience in property in Ireland. Real Estate Alliance member firms draw on vast experience in offering clients a top class service in residential, commercial, valuations, sales, purchases, lettings, agricultural lands as well as land development for housing sites, acquisitions, planning, zoning and professional consultancy, including rent reviews, arbitrations, CPO’s, lease renewals and appraisals.
Friday, 4 April 2008
REA and Punchestown join forces
Punchestown today announced yet another sponsorship deal for its 2008 festival, this time with Real Estate Alliance, the Irish property group of auctioneers and estate agents. Real Estate Alliance will sponsor the Real Estate Alliance Handicap Hurdle of €50,000run over 3 Miles on Thursday, April 24rd.
The race, run over three miles has been increased in value by €20,000 this year and is sure to complement a super race program for Thursday, April 24th. It is an extended handicap hurdle for four year olds and upwards rated 88-130. This is the first race sponsorship that Real Estate Alliance has entered into and they will be entertaining 220 corporate clients on the day also.
Announcing the sponsorship deal, Dick O'Sullivan, manager of Punchestown commented ‘We are delighted to have Real Estate Alliance on board as sponsors at the 2008 festival. Each sponsor is incredibly important to the festival and its success and I have no doubt that the extra €20k added to the prize value will attract a top class field. We are delighted to see that National Hunt racing continues to attract new sponsors such as Real Estate Alliance.’
The race, run over three miles has been increased in value by €20,000 this year and is sure to complement a super race program for Thursday, April 24th. It is an extended handicap hurdle for four year olds and upwards rated 88-130. This is the first race sponsorship that Real Estate Alliance has entered into and they will be entertaining 220 corporate clients on the day also.
Announcing the sponsorship deal, Dick O'Sullivan, manager of Punchestown commented ‘We are delighted to have Real Estate Alliance on board as sponsors at the 2008 festival. Each sponsor is incredibly important to the festival and its success and I have no doubt that the extra €20k added to the prize value will attract a top class field. We are delighted to see that National Hunt racing continues to attract new sponsors such as Real Estate Alliance.’
Monday, 25 February 2008
60% expect prices to decrease.
Approximately 60% of those surveyed expect property prices to decrease this year with 30% expecting no change. Only 40% of respondents expect interest rates to rise in 2008 while over 60% stated that they felt there was value in property in the current climate. The vast majority of those hoping to purchase a home this year will require financial support from a lending agency, however, nearly 40% of the sample had not yet addressed this matter.
Price and Location Key
In the results of the Buyer Survey, Price and location emerged as the two most important factors to potential property buyers. Over 60% of people stated that they did not want to be more then 45 minutes journey time from their place of work. Proximity to schools, shops and other amenities were also important. Most purchasers do not appear to be as keenly interested in the type of property they choose (be it new or second-hand), the orientation, the garden size or its eco-credentials. Instead they seem open to a range of different property types provided that both the location and the price are right for them and for the needs of their family.
Wednesday, 6 February 2008
A Real Insight into a Buyer's Market
Real Estate Alliance today revealed the findings of the Real Estate Alliance Buyer’s Survey, which uncovers the opinions of those who are already active or expect to be active in the property market in 2008. The survey gave an insight into the types of buyers active in the market place with 35% of those surveyed looking to trade up, making this group the most active in the market place at the moment. 30% were first-time buyers and 28% were investors with the remainder looking to downsize. 45% of those surveyed did not have a preference over a new or secondhand home. More than half the first-time buyers surveyed plan to buy alone while 65% of investors intend to purchase with a partner or spouse
Monday, 28 January 2008
Outlook for 2008
With the uncertainty over stamp duty is now gone, we are operating in a new dynamic, free from speculation. Crucially, it seems that interest rates are no longer rising. In fact, many expect that rates will fall in 2008. Coupled with the increase in mortgage interest relief housing affordability will improve substantially in 2008. These factors will combine to breath confidence into the market in 2008.
Thanks to changes in stamp duty those looking to trade up are now in a stronger position. This is a sector of the market that has been holding off on making the move for the last 12 – 18 months and their reemergence into the market will be a welcome boost. Investors too can take heart with rents on the up and interest rates on the way down.On the upside the cooling off of the market in 2007 has meant that speculation and unrealistic vendor expectations have been removed from the marketplace. Vendors are now more motivated than they have been in recent years to sell. Purchasers who may have put their lives on hold for 18 months are now looking at a much-changed market and are seeing real value emerging.What has been lost sight of in the last number of years and what we may have all gained from this reality check is that a house is not a 12 – 18 month exercise in making money. Over 75% of all buyers opt for mortgages of greater than 20 years, it therefore makes sense to look at property in this timeframe or at least in a 5 – 10 year window when they may be thinking of moving.
So what’s the prognosis for the future you may ask? Well, we are most likely looking at a year of flat prices, followed by a gradual resumption of the upward cycle.
Thanks to changes in stamp duty those looking to trade up are now in a stronger position. This is a sector of the market that has been holding off on making the move for the last 12 – 18 months and their reemergence into the market will be a welcome boost. Investors too can take heart with rents on the up and interest rates on the way down.On the upside the cooling off of the market in 2007 has meant that speculation and unrealistic vendor expectations have been removed from the marketplace. Vendors are now more motivated than they have been in recent years to sell. Purchasers who may have put their lives on hold for 18 months are now looking at a much-changed market and are seeing real value emerging.What has been lost sight of in the last number of years and what we may have all gained from this reality check is that a house is not a 12 – 18 month exercise in making money. Over 75% of all buyers opt for mortgages of greater than 20 years, it therefore makes sense to look at property in this timeframe or at least in a 5 – 10 year window when they may be thinking of moving.
So what’s the prognosis for the future you may ask? Well, we are most likely looking at a year of flat prices, followed by a gradual resumption of the upward cycle.
Wednesday, 2 January 2008
Farming land remains a sound investment
All sectors of farming performed well in 2007 with improved demand for grain, milk, potatoes and yields were also good. This resulted in increased confidence amongst farmers when buying and leasing land. 2007 has seen a strong demand for tillage farming land across the country. The market is particularly buoyant and has experienced price increases of 10%, largely due to the scarcity of grain globally which has fueled demand for tillage farming. According to Real Estate Alliance members the cost of an acre now varies between €15 - €20k per acre with some parcels fetching up to €30k per acre. Rental costs of tillage land have also climbed this year across the country.
Subscribe to:
Posts (Atom)