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The credit crunch has had a significant effect on buy-to-let landlords over the past 12 months: the number of landlords accruing more than 3 months of arrears doubled in the second half of 2008, hitting an incredible 27000 – this figure was almost 4 times higher than the 7,500 landlords with more than 3 months’ arrears towards the end of 2007.

The Council of Mortgage Lenders has also disclosed that 4000 properties on buy-to-let mortgages were repossessed in 2008, compared to 2000 in 2007; an increase of 100%. Although these figures sound alarming, it is important to bear in mind that these repossession figures represent around 0.4% of all active buy-to-let mortgages, there are 1.15 million such mortgages within the UK. In fact, around half of the buy-to-let mortgages in 2008 were take out by soundly-established landlords who took advantage of competitive interest rates to remortgage their properties.

However, it is impossible to deny that the number of buy-to-let landlords with mortgage arrears has risen sharply, and this is due to several factors. Like many private homeowners, landlords have been adversely affected by the rise in unemployment and the slump in house prices, many have found it hard to find tenants for their properties in order to repay the mortgage, or tenants in properties  may fail to pay their rent as a result of losing their jobs.

Also, due to the current economic climate, rents have been forced down and both a fall in rent and a loss of tenants will undoubtedly affect a landlord’s ability to pay the mortgage (make sure you rent your property for the maximum possible rent). This leads to properties being repossessed, in turn meaning many tenants are evicted. Homes are also taking much longer to rent in the current economic climate – 70 days on average – and this means no rental income for landlords for several weeks.

Unfortunately, when credit was easily available and  house prices exceedingly high, many people with no adequate experience thought entering the property market on a buy-to-let mortgage was a failproof way to make money in the form of a long-term investment – it is these inexperienced landlords that are struggling now.

They cannot sustain an empty property or properties and, in the current climate, may struggle to sell these properties quickly enough. Evicting tenants who are not paying their rent also takes time, again meaning no rental income for the property – this leads to arrears and subsequent repossession for some inexperienced landlords.

If you have a buy-to-let mortgage and are struggling with repayments, do not ignore it – seek help right away. Contact your bank to explain the situation (before the first missed payment, if possible) and they will be much more likely to offer help. They may offer you a payment holiday until your finances are in better order, or they may allow you to make reduced payments for a set period.

If you have a repayment mortgage, consider saving money by transferring to an interest only mortgage (most landlords have these). If you can prove your cashflow problems are only temporary, your lender is much more likely to agree to an amicable solution.

If you feel too nervous about approaching your lender yourself, seek the help of specialist debt agencies such as the Citizens’ Advice Bureau or the Credit Consumer Counselling Service (CCCS), they can provide you with free invaluable advice and liase with your lender on your behalf, in order to try and reach a solution to your problem.

If you are coming to the end of your mortgage deal, you may be able to save money by taking advantage of the current extremely low base rate through remortgaging; even if your credit history prevents you from doing so, you may be able to save money by simply switching from a fixed rate to your lender’s SVR, taking into account the low interest rates at present.

Ellie Irwin of the National Landlords Association says;

“Undoubtedly, these are challenging times for landlords. However, professional landlords are better equipped to deal with rental arrears than smaller, ‘buy-to-let’ landlords.

Ensuring a house is competitively priced, marketing a property before tenants leave to avoid a void period, and keeping in regular contact with their tenants are all ways in which a landlord can avoid falling victim to the recession.”

Experienced landlords always have a contingency fund to cover lean periods, and this is a very sensible thing to have; when you do have tenants and are yielding good rent, save some of this in order to cope when your property is unlet or to pay for essential maintenance works.

It is natural when times are hard to look for ways to save money, but do not pennypinch in the wrong areas: for example, a letting agent may cost money but can help you find a tenant quickly in the event if your property being vacant and they also oversee the tenancy of your property. If you were to get rid of this service, you would be responsible for all this, adding more stress to an already stressful situation.

The Government has introduced a number of measures to help homeowners during the recession, yet these do not apply to those with buy-to-let mortgages (for example, the State Mortgage Rescue Scheme does not apply to second houses. Thus, the Government really needs to do more to help protect landlords from repossession.

In the meantime, if you get into trouble with your buy-to-let mortgage remember to contact a free debt advice charity and your bank as soon as possible.

Mark Jenkins is a writer for HouseRepossession.co.uk. Independent guidance on all aspects of repossessed houses for sale, quick house sale, debt consolidation and 90% LTV Mortgages.

Article Source:http://www.articlesbase.com/mortgage-articles/recession-creating-problems-for-buy-to-let-landlords-890404.html

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Many homeowners who are having trouble might be eligible for a mortgage loan modification without realizing it. A mortgage loan modification is a win for you but less helpful to the bank in the beginning, because they lose money on the initial loan. You should not be surprised that lenders will make every attempt to maintain the terms of the original loan. Sooner or later, however, you are in a situation where defaulting on your loan and getting foreclosed on are unavoidable. When the situation reaches this stage, the wise response is to mull over a loan modification.

Homeowners can do a number of things before having to foreclose. It is smart to contact your loaner, when you realize that your finances are becoming tight.  In addition you can do a Google search and learn about the alternatives available for loan modification. Obama’s Home affordable Program is designed to help homeowners facing financial hardship to stay in their homes. It is wise to look for assistance in figuring out the process by using a program like this.

Loan modification modifies your present mortgage so you can make payments on time. Your mortgage payments can be decreased by lessening theprinciple amount so that it’s equal to the current value of your house, cutting the interest rate to make it fixed, and/or making the mortgage go for a longer time. Start fresh with a new loan, late payments can be added back into your new loan.

It can be a long process and you are required to meet eligibility criteria for loan modification approval. In the beginning, what you need to do is prove that you are indeed going througha  tough time. It’s a benefit if the difficulty was not your fault. Some hardships are beyond your control, like getting separated, a dying family member who used to contribute income, getting sick, having a bad mortgage,being called for military duty, or job loss. High amounts of credit card debt will  you unless you can prove that you had to incur the debt to buy food and pay down bills, even if the debt is a hardship. It is like walking a fine line.

You must prove to the bank that your intent is to keep making mortgage payments. You will be required to create a budget. The mortgage loan modification programs have many stipulations, one is that the revised mortgage payment cannot be in excess of thirty-one percent of the gross income you earn in a month. This will make it easier to plan a budget that suits you.

You must investigate a loan modification before you lose your house. Lenders prefer to sacrifice six or eleven thousand dollars on a loan instead of having to foreclose on and manage another property. A bank is ready, today, to help you with your financial needs. Millions of homeowners will take advantage of a loan modification program in order to stay in their homes during these tough times.

Download and print out this home loan modification checklist right now. It will prepare you to be approved no matter what loan modification program you use.

Article Source:http://www.articlesbase.com/mortgage-articles/here-is-how-a-mortgage-loan-modification-can-keep-you-in-your-home-890689.html

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A second mortgage loan is based primarily upon these two conditions. A mortgage loan can be broadly understood as a kind of contract or a legal agreement, in which the borrower’s property is pledged as a security or collateral guarantee, and the borrowed amount or credit is generally repaid in small packets of predefined amount, which are also referred to as installments. As per the contract or the agreement, the buyer promises to repay the principal amount or the actual loan amount, and its interest, over a fixed period, also known as loan tenure in a regular and orderly manner. A lien is understood as a legal right or a claim imposed by the creditor or lender upon the property, against which the credit is taken or borrowed. In a simple language a lien means the creditor has a legal right to dispose off the debtor’s property, in case of defaults or the debtor’s inability to pay the loan installments.

A second mortgage is an additional mortgage loan, which is added to your first or original mortgage loan. Since the new mortgage loan is attached in conjunction to the first or original mortgage, it’s generally referred to as a second mortgage loan – second because it falls at number two position in relation to the main mortgage loan. This second mortgage loan has all the characteristics of its original or main loan. In short, you’ve a condition in which two mortgage loans remain side-by-side, each loan with its unique set or terms and conditions.

Why avail a second mortgage loan?

Now, if two loans are to share the same mortgage, i.e. the same security or collateral guarantee, what’s the need of going in for a second mortgage? The answer’s quite simple. When people go in for a mortgage loan, they understand the significance and the importance of a lien. Debtors know for sure, if they default, or end up with unforeseen circumstances and are unable to pay off their dues, the creditor holds a legal right to sell of the house offered as security and recover the dues. So individuals are very cautious about secured loans, and generally avail just enough credit to satisfy their requirements. As a result, the full potential of the lien is not utilized. It means if the property is worth $1,00,000/- a mortgage facility of $40,000/- or $50,000/- is generally availed against the security. The remaining potential is left unused. That’s where a second mortgage comes in. If the borrower desires additional cash, or has a need to finance some requirement, the unused potential left over from the first mortgage activity can be used for the additional mortgage. Due to this, the second mortgage is also referred to as a home equity loan. The two terminologies can be used in lieu of each other.

Advantages of a second mortgage loan

• The homeowners have to pay a smaller down payment, and in some cases, the down payment is totally avoided, to avail the additional credit. During the transaction, the homeowner has the option to break up the total loan amount into two separate loans referred to as a combo loan. The encumbrance or the risk factor is distributed between the two loans, allowing higher combined loan-to-values and a much lower blended interest rates.

• The additional funds can provide a homeowner with much needed cash to improve the quality of their home or pay off high-interest loans. The biggest advantage is it’s possible to avoid a refinance of the existing first mortgage.

• Second mortgage helps homeowners to avoid paying PMI, or private mortgage insurance. The resultant savings can be substantial depending upon the loan break down, and often saves the homeowner hundreds of dollars a month, in terms of additional expenses. If the first loan is kept at or below 80% loan-to-value, the additional PMI is not required to be paid.

• The monthly payments on the second mortgages are ideally low as compared to its first mortgage. The homeowners end up with a substantial amount of liquidity, which can be used to pay of existing loans or even finance a commercial project.

• The second mortgage is offered for both adjustable and fixed-rate options, so many options are available to choose from and to find the exact credit facility to fulfill your needs.

Article Source:http://www.articlesbase.com/mortgage-articles/what-is-a-second-mortgage-loan-891382.html

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Adjustable rate mortgage basics

An adjustable rate mortgage (ARM) is quite different from a fixed rate mortgage in many ways. The major difference in a fixed-rate mortgage is that the interest rate stays the same during the entire tenure of the loan. With an adjustable rate mortgage, the interest rate changes periodically over a period of time. The change of interest rate usually occurs in relation to an index, and your payments may vary as and when this index goes up or down. Banks and credit companies usually charge a lower initial interest rate for ARMs in comparison to fixed rate mortgages. The starting interest rate “period” ensures that the monthly mortgage payment amounts are lower for an ARM, rather than a fixed rate mortgage for the same  amount of loan. An ARM could also be more affordable than a fixed-rate mortgage over a longer period of time

Adjustable rate mortgages advantages

You may wonder why anybody would consider an ARM as a “good” idea. It actually depends upon your specific financial circumstances and loan paying options. Some examples of when an adjustable rate mortgage may make sense for you are:

• If you can avail a significantly lowered interest rate with an ARM as compared to a fixed rate mortgage, and you don’t anticipate a significant increase the economic index over the life of the mortgage, going in for ARM proves to be more beneficial.

• If you plan to stay or maintain your home for a few years at least, allowing substantial time for any drastic interest rate/index increase, the ARM can help you with an attractive interest rate.

• If you expect a substantial increase in your monthly income over a period of time, and you may be planning to buy a larger home later on, availing long term APR might provide ample opportunities for a lowered interest rates, since the current market trend suggest a gradual decrease in lending rates and the indices keep on fluctuating in the borrower’s favor.

ARM disadvantages

The two biggest disadvantages to signing an ARM can be:

• You are exposed to the “risk” of the index going “up” and increasing your interest rate if the market fluctuates against your requirements. So there’s a certain tolerance level or risk associated with ARMs. If you plan to benefit by availing advantages of a discounted ARM, you might have to undergo a significant increase in your mortgage payment as soon as the second year of your mortgage.

• Negative amortization can result into you owing more on your home than your expected amount originally worked out. Amortization is the process by which your loan amount gets reduced as you keep on paying your payments or monthly dues, however, if you realize that your ARM is increasing more quickly than your ability to make your mortgage payments, the mortgage company is likely to apply any partial payments to your interest amount first. If the partial payments “paid” by you are not sufficient to cover the full interest amount due for a particular month, the same can be added into the principal amount of your loan. This, in effect, increases your principal balance.

More about “payment limits” or “caps”

You can make sure that your adjustable rate mortgage payments do not grow beyond your “paying” limits is to make sure your mortgage is associated with a “maximum” limit or a “payment cap”. A “payment cap” typically helps to control the limit of the repayment amount you are expected to pay at the end of each month. The problem is that majority of the mortgage “deals” do not provide an “upper” limit or “cap” subjected to the interest rates. If this happens, it can lead to negative “amortization” since the monthly outstanding dues cannot cover the net payable monthly interest for the mortgage.

Even if you do get a payment cap and an interest cap simultaneously, and you are able to limit the maximum amount payable each month and the maximum interest rate applicable for the same amount, you may still end up with issues. Interest caps will help to keep your interest rates down regardless of index highs, but the terms associated with the mortgage note will facilitate the mortgage company to pass on the “increases” forward on to the next “adjustment“ period. It means if at the end of first year if the interest rates go up by 2% and you have an interest rate cap of 1%, the mortgage company can charge you the remaining 1% at the end of the second, even if the indexes go lower down for that year.

Article Source:http://www.articlesbase.com/mortgage-articles/adjustable-rate-mortgage-arm-basics-891383.html

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Whatever the difficulty, we understand how it feels to choose between a mortgage payment and groceries. We understand what it’s like to have continual phone calls from your lender … calls at home, calls at work and letters in the mailbox.

You need to save your home but your lender is asking for too much money. You’re not asking for them to forgive the loan but you need help creating a payment plan that you can handle. You just need someone on your side to negotiate with your lender to get you back on track that is where we come in.

We have caring people who want to help you save your home and get you back to where you need to be. We want to help you get back in charge of your finances. Contact HLM LLC today.
You’ve probably tried to talk to your lender but their phone operators have one answer, “Payment in full.” Or maybe you call them and they don’t call you back. There are options. We have good relationships with mortgage companies across America. If you truly can afford your home and are sincere about getting your finances back on track, we can negotiate a payback-plan that is acceptable to your lender and within your new budget. They’ll talk to us. They appreciate our thoroughness and sincerity.
We’re trained to help you. It’s more than just a job…it’s our mission! We know the mortgage foreclosure process and steps that are available to save your home and stop the foreclosure. We correspond daily with mortgage company principals nationwide and have a solid reputation with them. As a third-party negotiator we have the ability to represent you to the lender in a professional manner. Let us give you the foreclosure help you need by negotiating on your behalf with your lender to save your home.

We have many strategies to help you save your home. Our counselors will make a detailed financial portfolio of your current situation and devise a plan that will keep the mortgage company satisfied and yet give you the breathing room you need to enjoy your home. We need to know: Can you afford the home you’re living in? Do you have a good-faith payment you can put toward your delinquency to show your lender that you are serious about resolving this matter? If you answered “yes” to these two questions, you are well on your way to securing your home.

Thanks & Regards

       Author

 ZARAK KHAN

Email: [email protected]

<a= href=”http://www.homeloanmodificationllc.com” >home loan modification</a>

MY name is Zarak Khan. I help people stop foreclosure by working with people who are behind on their mortgage payment. I can either work a loan modification which will let you keep your home or do a short sale or short refinance in which case you would have to sell your home. My hobbies are financial deals. Right now we are helping people by loan modification program. This really helps thousand of people.

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