What is a Vendor Gifted Deposit?

In certain cases, money saved through negotiation on a property can be used as what's referred to as a "Vendor Gifted Deposit".

Here is an example of how a deal such as this would work: Let's say that you find a property advertised at £90,000. It would certainly value at this price but you manage to negotiate a buying price with the vendor of £75,000. What you now need to do is get the seller to price the property in the sale contract at £90,000 and give you £15,000 back at completion. The net result is that you have a mortgage for £75,000 as you would have always done; the vendor receives £75,000 as they would have always done, however now the bank is satisfied that the need for a deposit has been met.

When organising a Vendor Gifted deposit, there are two rules which must be met. Firstly, not all banks accept this method of providing a deposit - so you must find a bank who does. Secondly, the surveyor must agree that the asking price is fair. In other words, we cannot over-inflate the asking price to make it look like a deposit is there.

At the moment, Bank of Scotland and Woolwich will still accept a 5% vendor gifted deposit, whereas Halifax will still do 10%. It is widely thought that this loophole will be closed in the near future.

Vendor gifted deposit is the easiest way of purchasing a house if you don't have at least a 5% deposit to put down.

If you don't have a deposit then I would recommend using the Vendor Gifted Deposit method. Note though that the banks who allow this will not allow unlimited over payments - just 10% per annum. Therefore you need to reduce the term at the outset if you'd like to get your mortgage finished as early as possible.

Ross Taylor is the author of "Money, Mortgages and Magic" and "The No B.S. Credit Crunch Ready Guide to Buy to Let in 2008". Ross is a successful Financial Adviser specialising in First Time Buyers and Buy to Let. He owns over £2million worth of property in the UK and regularly gives lectures on Financial Planning. To read more by Ross please visit http://www.uncommonadvice.co.uk

Article Source: http://EzineArticles.com/?expert=Ross_Taylor

Increase the Chances of your Property Selling by 100%

In the future, if Marketing students need to write an essay about a "Buyers Market" then they could do no better than a case study of UK property in 2008. More and more vendors are beginning to realise that they need to something special to sell their house - but many are still oblivious to what is actually going to sell their house. In reality there are only four rules to maximise your chances of getting a sale
1. There is no shortage of stock out there. For your house to be noticed above all the others then you need to be presenting it at it's very best. Get the kids toys hidden in the garage. Give the house a lick of paint. Get the front door washed down and the stairs hovered. If you can't manage these things then you need to drop the asking price into the first banding that makes your place look like Buckingham Palace.
2. Again - there is no shortage of stock out there. Your house must be keenly priced or it will sit on the shelf for a year. Have a look on Rightmove and bring up your competition. If rule 1 (make your house the most attractive amongst it competition) does not fit then you must make it the cheapest in its group. If you can't make it the cheapest in its group, perhaps because you have no equity, then you'd better get the feather duster out!
3. Not all Estate Agents are equal. Ask your agent how they finished in the last board count (they'll know what you mean). If they weren't first or second then dump them. Don't go multi - you'll look desperate and the individual agents will try less to sell your property as they may put in a lot of effort only for someone else to steal their glory. Get a board up - a good 25% of sales will come from people on your street or individuals visiting them. Get into the 21st Century. If your agent is not on Rightmove then they just aren't in the game.
In reality - only 1 in 10 properties that are currently on the market will be abiding by these rules. So if you currently can't sell take a good look at your situation.
In "Mortgages, Money and Magic" I have written an 88 page plan showing how you can buy a property with little or no money down and then go on to own that property outright within 10 years. Visit http://www.uncommonadvice.co.uk to learn more.
Article Source: http://EzineArticles.com/?expert=Ross_Taylor

Dealing with Negative Equity

Negative Equity basically means that the size of your mortgage AND any secured loans you may have is greater than the value of your house. The scourge of the 1990s is back in a big way and is set to engulf a whole new generation of home-owners. International investment bank Morgan Stanley has said that 1.2 million British homes could be in negative equity before the end of next year. Contrary to speculation and rumours, being in Negative Equity does not mean that you will automatically be threatened with repossession by your lender.

However, you are going to have issues ahead of you which could cause a lot of sleepless nights. When your current mortgage deal ends it will be impossible to switch to a competitive new product unless you have a large windfall of cash in order to reduce your outstanding debt. Consequently you will be stuck on your bank's Standard Variable Rate (SVR) which will be somewhere between 6.5% to 10% and above. For most people this will lead to much larger monthly payments. Also, because the rate is variable it could rise in the future as the government puts pressure on the Bank of England to control inflation.

This jump in monthly payments is referred to as "rate shock" and this is what you should be really worried about. If your mortgage was to go up by £500 a month, would that cause you problems? Don't take it lightly, higher mortgage payments lead to arrears and arrears lead to repossession. Already, there have been more repossession procedures started in 2008 than in any other year since 1992. It doesn't matter if you live in a slum or in the best neighbourhood in town - the bank don't care. Families are being moved out of their homes under force because they can't come to terms with the rate shock.

Can you imagine the shame? Can you imagine the embarassment of having to phone an estate agent to go back into a property which was once your family home? How would it feel to look your children in the eye when you are in the waiting room at the council emergency housing office?

Repossession is not the end of the matter however. What most people don't realise is that you still have responsibility for the property until it is sold. When the locks get changed - you are charged. Also, with today's market it is not guaranteed that the property will sell quickly. As the market shrinks the debt piles up and the likelihood of a repossessed owner getting on the ladder again shrinks and shrinks.

So what should you do as a homeowner with negative equity? Well the answer to that is really based on your own circumstances and independent advice should be sought. It is universally the case, however, that you can create equity more easily than you first realise. By channelling cash into the right funds, taking a long term view and paying yourself first, Negative Equity can quickly become a thing of the past.

Pay off your Mortgage in 10 years - avoid the 7 Deadly Sins!

It’s amazing how many of the new ideas and theory’s that come out are simply a rehash of previous doctrines. Look at the Law of Attraction – and then compare it to ideas set out in the bible 2000 years ago, “ask and it shall be given unto you, seek and ye shall find”. In “Mortgages, Money and Magic” I set out a plan as to how any average couple can buy a property without requiring a deposit and then go on to own that property outright within 10 years. Obviously you can’t make an omelette without breaking some eggs. Sacrifices have to be made. Here I will look at the 7 main sacrifices as they relate to the 7 deadly sins.
Envy – When someone buys themselves a new car or a new holiday you are going to be jealous. You have to realise though that you don’t need material things to make yourself feel better. The person with the new car has probably dug themselves deeper into debt to get the short lived buzz of having something new. Think of the car, the holiday or anything else that will be available to you when the millstone of a mortgage is taken off your neck. Sacrifice getting a new car – stick to secondhand.
Pride – It’s good to support your team, but with the average in the Premiership season ticket at £615 it’s not cheap. Try to achieve value for money in everything you do. Learn to do without. I can guarantee you that going to football matches is something that can quite easily be substituted for other less expensive pastimes. Sacrifice going to the Football.
Sloth – You get nothing for nothing. In order to pay off your mortgage within a decade it is necessary to get off your bottom and actually earn some cash. The beauty of my plan however is that I can show you how to do it without being a city whiz kind. An “average” job paying £22,000 to £26,000 would be sufficient. If necessary sacrifice evenings and weekends now so that your mortgage is paid off by the time you reach middle age. You’ll have more time than ever when your mortgage is paid off whilst your contemporaries are still struggling.
Greed – it’s never good to have too much of something so make your money compartmentalized. You should have a fund for repairs, a fund for food, a fund for clothes etc. By separating your cash out it makes it much harder to get greedy. All greed is ultimately self-destructive but make sure you sacrifice the worst source of greed – alcohol.
Wrath – Don’t get angry when someone lights up next to you, think of the money they are burning away when they buy that packet of ciggies – and feel safe in the knowledge that you will be mortgage free whilst they are literally burning cash daily. Sacrifice the fags.
Gluttony – there is no need to be a glutton with takeaway after takeaway when it is possible to eat like a king for 50p a night. Get creative in the kitchen and your wallet AND waistline will benefit.
Lust – having a sex drive can be the impetus for a lot of good change in your life, but draw the line when the lust inside you means you are throwing money down the pan. Make sure you embark on this plan with the person you intend to be with for the duration. Sacrifice the casual relationships.
In summary, without winning the lottery or having a massive life insurance payout, paying off your mortgage within 10 years is going to take many sacrifices. Deep down we know that these sacrifices are for the best because the Seven Deadly sins are all instinctive. They are innate. To achieve the goal you must: sacrifice the new car; sacrifice the foreign holiday; bring in at least an average wage; sacrifice cigarettes and alcohol; sacrifice the takeaways and sacrifice the casual sex.
If you have the strength of character to achieve this then you are well on the way to being able to pay your mortgage off in a decade.

Never rent! There are easy rules to follow to find your perfect house!

You can’t get rich renting. You can’t get rich renting. You can’t get rich renting.
If you rent for a lifetime then you will spend hundreds of thousands of pounds and end up exactly where you started – owning nothing. If you buy a house and pay down your mortgage you will eventually own a tangible asset. Unfortunately for us, Houses aren’t available for £99 down at your local IKEA. Most of us are going to need to take on debt in the form of a mortgage in order to make a house purchase. At the moment, due to the Credit Crunch, many people are seeing renting as a better alternative to taking on a mortgage, and who could blame them? Mortgage rates are the highest they have been for decades, large deposits are required – and what for? The house you buy is likely to be worth a lot less this time next year. Remember though that you can’t get rich renting! So how do you work your way through the maze and decide how much of a house is enough? Here are the easy rules I would follow:

· Visit www.rightmove.co.uk
· Search for properties for sale in your town.
· In the search filters only look at resale houses with 3 bedrooms and display with lowest prices first.
· Ignore properties in the worst two areas of town.
· Write down the first 3 properties you come across which are available with Off Road Parking.
· View all 3. Offer the same amount of money on all 3 (at least 10% less than list price). Work upwards until the first acceptance.

I recommend offering the same on all three houses because this is not a beauty contest. From the outset I would make my intentions clear to the Estate Agent. I would say something like, “I am interested not only in this property you have to offer Mr Estate Agent, but also another two with your competitors. I have no particular favourite – I just want one of them at the cheapest price possible”. I guarantee you that as soon as the Estate Agent knows that you are also looking elsewhere they will redouble their negotiation efforts with the vendor. If two agents come back at the same price then pick the one you prefer – thinking long term.
I guarantee you that in three quarters of the UK you will find a property available that fits within the above criteria at under £125,000.
Have a look at www.uncommonadvice.co.uk to find out how you can then go on to purchase that property and pay the mortgage off within 10 years.

The stupidest thing people say about property

The stupidest thing I hear people say at the moment is "I'm waiting until the property market bottom outs until I buy!". Who do you think you are - Donald Trump. The reason this is such a crazy thing to come out with is because:1. There is no such thing as a UK property market. Even within a single street house prices move as amazingly different paces. Take the example of a street I know well. On this street I've seen 3 bed terraces sell for £100,000 then £90,000 then £80,000 over the last 6 months - but try telling this to Mr. Hard Nosed Vendor at no.42 who is sticking to his guns with an asking price of £129,950! If we can't get a single message across within the space of 200 yards, what chance across the whole nation?2. Who knows when the market has hit rock bottom? I jokingly said at the start that you'd have to have the business acumen of Donald Trump to time the market but perhaps this analogy is not too far from the truth. How many people do you know who purposefully timed the 80s property boom correctly? How many got in and got out of the Dot Com boom in the black? How many made a killing when gold tripled between 2006 and 2008? How many bought Vodafone stock the week before they got a 3G licence? I'm going to guess that the answer to all these questions is none or not many. So why, oh why, do we listen to the pub know it alls when it comes to property? 3. Just because you wait for the market to bottom out doesn't mean that everyone else will. There is an old saying that the deal of a lifetime comes along every week - and this is as true in property as it is in other investments realms. Whilst you are waiting for the perfect deal others will have bought crackers? Don't get paralysis by analysis. By all means do your research and due dilligence but make sure that when a deal fits you don't let it pass by - just in case the market hasn't quite reached rock bottom.
In summary realise that there is no such thing as the UK housing market no matter what the Daily Hate may like to tell you. If you find a property that is a good deal then don;t rest on your laurels. Buy when the sale is on!