Why a House Price Crash is GOOD for your Wealth!

Written by Peter Parsons


Continued from page 1

The third group arerepparttar 'professional landlords' These 'buy to let' specialists make a living from purchasing property and renting it out to coverrepparttar 139537 mortgage. The difference betweenrepparttar 139538 mortgage costs andrepparttar 139539 rent is their profit. As an extra sweetener, if judged correctly, a pro landlord can sell a property and make a large capital gain, usually with good tax breaks. Anecdotal evidence collected by www.mortgagedown.com suggests a lot of selling activity from pro landlords around about 2002 to 2003, as they used good business sense to determine that property prices had climbed vertically to a point where only a crazy gambler would still hang on and 'let it ride'. The ones that exited are already in cash, and so looking forward to a crash, as it provides an opportunity to pick up new property at 'yields' that will make them instant monthly profits ANDrepparttar 139540 chance for rapid capital growth sometime overrepparttar 139541 next 10 years. The ones that didn't exit are inrepparttar 139542 business for yield, and sorepparttar 139543 actual nominal price of their properties is of no real consequence to them (unless they are forced to sell up for health reasons etc). As you can plainly see,repparttar 139544 pro landlord group WANT a crash - it's a new buying opportunity, unlikerepparttar 139545 current situation where flat or even negative yields prohibitrepparttar 139546 prudent landlord from expanding their portfolios.

Who is left? Two more groups. The fourth group isrepparttar 139547 amateur landlord,repparttar 139548 'BTL newbie'. Sniffingrepparttar 139549 scent of easy money, this crowd jumped ontorepparttar 139550 buy-to-let gravy train far too late inrepparttar 139551 boom, or thru inexperience or downright lack of aptitude forrepparttar 139552 game bought at ludicrous overvaluations, meaning their 'investments' had to be subsidized, and HAD to appreciate in value in order to justifyrepparttar 139553 cost. Allegedly,repparttar 139554 pro landlords sold to this group, often utilizingrepparttar 139555 service of 'Become a Property Millionaire' type seminar companies to suck inrepparttar 139556 gullible and get them to sign onrepparttar 139557 dotted line as well as contribute a few thousand forrepparttar 139558 privilege!. Anyone who bought a 'spare' property withinrepparttar 139559 last 2 or 3 years falls into this group, and will be hurting badly by now. A crash will most likely wipe them out as they face decades of subsidizing tenants just forrepparttar 139560 chance to get their money back, plus allrepparttar 139561 hassle that goes with being a landlord (leaky roofs, service charges etc etc etc).

The fifth and last group arerepparttar 139562 recent first time buyers who panicked and bought withinrepparttar 139563 last 2 or 3 years despiterepparttar 139564 obvious housing bubble that had already formed. Whether thru fear or greed, they jumped on boardrepparttar 139565 housing train just before it derailed, and they will also get badly hurt inrepparttar 139566 crash.

This means, of course, that 3 out of 5 groups either don't care about a crash, or actively want one. As they comprise over 80% ofrepparttar 139567 population, it is therefore brutally apparent thatrepparttar 139568 present 'perfect storm' house price crash currently building up is, in fact, inrepparttar 139569 interests ofrepparttar 139570 majority ofrepparttar 139571 population! Only a small number of recent buyers with no common sense, a small pack of greedy 'wannabe landlords' and those who released insane amounts of equity from their homes to buy plasma TVs and fancy holidays will actually get hurt. Me? I'll be buying a house or 2 probably around 2006, whenrepparttar 139572 yield indicates it's no longer a silly purchase. Markets always find a way to punishrepparttar 139573 most inept, andrepparttar 139574 housing market is, after all is said and done, a market.

Peter Parsons writes house price articles for www.mortgagedown.com , the place to get advice on how to lower your mortgage


Mortgage Glossary of Terms

Written by Commercial Lifeline


Continued from page 1

Liability This relates more to commercial mortgages. With a commercial mortgage liability forrepparttar repayment ofrepparttar 139516 loan depends onrepparttar 139517 legal structure ofrepparttar 139518 business:

A sole trader will be personally liable forrepparttar 139519 mortgage debt. Personal assets could be seized ifrepparttar 139520 business defaults. Partners are jointly liable forrepparttar 139521 debts ofrepparttar 139522 partnership and their personal assets are at risk With a limited-liability partnership and a limited company,repparttar 139523 liability falls firstly onrepparttar 139524 business rather than onrepparttar 139525 individual partners and directors. The lender may take a floating charge on business assets in general, rather than simply onrepparttar 139526 current property being purchased. The lender may also insist on personal guarantees as a condition of grantingrepparttar 139527 loan, in which caserepparttar 139528 partners and directors may be held personally liable anyway.

Life insurance If you have a joint mortgage, life insurance can be acquired that will seerepparttar 139529 mortgage paid of should one of you pass on.

LTV (Loan to Value) The size ofrepparttar 139530 mortgage as a percentage ofrepparttar 139531 value ofrepparttar 139532 property i.e. A £90k mortgage on a house valued at £100k would mean an LTV of 90%.

MIG (Mortgage Indemnity Guarantee) A one off payment made when you set up a mortgage a kind of insurance policy forrepparttar 139533 lender. This offers them protection againstrepparttar 139534 value ofrepparttar 139535 home falling to less thanrepparttar 139536 mortgage. It is generally only charged to borrowers with a less than 10% deposit, but this can vary.

Mortgage A loan to buy a property whererepparttar 139537 property is used as security against you paying backrepparttar 139538 loan.

Mortgagee The company or organisation that lends yourepparttar 139539 money.

Mortgagor The person taking outrepparttar 139540 mortgage.

Non-Status Where a lender may not require income details from you or may accept some previous poor credit history i.e. CCJ's or previous mortgage arrears.

Payment Holiday A period during whichrepparttar 139541 borrower makes no mortgage payments.

Regulated tenancy A legal right to live in your accommodation for a period of time. Your tenancy might be for a set period such as a year (this is known as a fixed term tenancy) or it might roll on a week-to-week or month-to-month basis (this is known as a periodic tenancy).You are a regulated tenant if you moved in before 15 January 1989, you pay rent to a private landlord and your landlord does not live inrepparttar 139542 same building as you.

Remortgage The taking on of a second mortgage to pay offrepparttar 139543 first. The most common reasons for doing this are that another mortgage is available at a better rate or thatrepparttar 139544 value ofrepparttar 139545 property has gone up allowing forrepparttar 139546 opportunity to borrow more money againstrepparttar 139547 property.

Right to Buy For example, a tenant in a council owned property may purchaserepparttar 139548 property at a discount depending on length of their tenancy.

Self Certified Generally when a borrower applies for a mortgage he or she will be asked to provide pay slips or company accounts to prove their income. If it is difficult or inconvenient for you to provide this evidence, you can choose to self-certify your income. This involves signing a declaration which states your income sources and amounts. Lenders will charge you higher rates than average and offer you a more limited range of mortgages if you choose to self-certify your income, in general it's not a good idea to self-certify just to avoid some paperwork.

Stamp Duty Tax paid byrepparttar 139549 buyer of a property set at 1% for properties over £60k, 3% for properties over £250k and 4% for properties over £500k.

Structural survey The most wide ranging check ofrepparttar 139550 structure of a property. This is carried out by professional surveyor and should uncover any defects or faults withrepparttar 139551 building.

Tenancy A legal written agreement between a landlord and tenant that sets outrepparttar 139552 terms ofrepparttar 139553 rental.

Term The period of years over which you takerepparttar 139554 mortgage and repay it.

Term Assurance An insurance policy designed to repayrepparttar 139555 mortgage onrepparttar 139556 death ofrepparttar 139557 insured person. Level Term Assurance covers a principal sum throughoutrepparttar 139558 policy term and pays outrepparttar 139559 full amount on death. Reducing Term Assurance is designed to repayrepparttar 139560 balance outstanding on a repayment type mortgage upon death. Term Assurance may also pay out early onrepparttar 139561 diagnosis of a terminal illness.

Underwriting The process of evaluating a loan application to determinerepparttar 139562 risk involved forrepparttar 139563 lender. This involves an analysis ofrepparttar 139564 borrower's creditworthiness andrepparttar 139565 quality ofrepparttar 139566 property itself.

Unencumbered Whererepparttar 139567 property is owned outright and no mortgages or loans are secured against it.

Valuation A simple check ofrepparttar 139568 property in order to find out how much it is worth and whether it is suitable to secure a mortgage against.

Valuation Fee The fee paid by a borrower to coverrepparttar 139569 cost ofrepparttar 139570 lender checking thatrepparttar 139571 property is suitable security forrepparttar 139572 mortgage.

Variable Rate A type of interest raterepparttar 139573 lender can charge. It goes up and down and your repayments change accordingly.

Vendor The person sellingrepparttar 139574 property.



Commercial Lifeline are Independent UK based Commercial Mortgage Brokers.

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