More ways to secure a mortgage

Buying for the first time will stretch your finances to the limit. But if you are willing to compromise, there are options available to help bridge the affordability gap finds Bea Oaff

The good news for people trying to leap onto the property ladder is that there are more ways than ever to secure a mortgage. All this choice, however, creates its own challenge. First you have to identify what is available. Then understand the various pros and cons. Finally, you have to decide on a loan that is right for you. But while this may be difficult, it doesn’t have to be impossible.

The Council of Mortgage Lenders confirms that first time buyers now have a huge number of options open to them. “It is true,” says spokesperson Bernard Clarke. "A few years ago, things were relatively limited. But today there are a variety of possibilities."

So – let’s take a look at the options.

Interest only mortgage

An interest only mortgage allows you to defer paying off the capital – or value of your property – instead only paying the interest. The result, clearly, is that initially you have lower repayments and more time to ready yourself for the remaining overall repayments. However, the loan will take longer to pay off, which ultimately makes it much more expensive.

Some lenders expect and some oblige you to take out an investment to eventually help you pay off the capital although the sooner you convert to a repayment mortgage, the more interest you save over time. However uneconomic and risky over a longer period, many first-time buyers continue to use interest-only as a quick fix on to the housing ladder.

Fixed rate mortgages

These home loans give you a guaranteed interest rate, usually for two to five years. Because the monthly repayment stays the same for the deal period, mortgage lenders often extend the amount they are prepared to lend. These loans give you greater control over your budget but if interest rates actually go down you will be locked into a deal that is suddenly uncompetitive.

Typical of a fixed rate mortgage is Britannia’s offering of 4.99 per cent.

Borrowing more

Some banks and building societies will lend not just three times your income but five or even six times. To qualify you will have to be an exceptionally safe bet. Then of course you must manage your money incredibly astutely, for if something were to go wrong, it could go very, very wrong.

Amongst others offering offer higher loan to income mortgages are Standard Life, Northern Rock, the Woolwich and Manchester Building Society.

100 per cent mortgages

As the name suggests this type of mortgage covers the whole cost of the property. Possibly a daunting prospect for some, it can make financial sense for many. According to the Halifax, first-time buyers take five years to save the average deposit of around £24,000. With house prices rising far quicker than savings rate, it can simply be more economical to borrow the full amount despite paying a higher interest rate for the privilege.

Those offering 100 per cent mortgages include Northern Rock, Coventry Building Society, Portman Building Society and the Royal Bank of Scotland with interest rates starting at 5.49 per cent.

Guarantor mortgage

A guarantor mortgage allows a person with some collateral behind them - usually a parent or relative - to agree with a lender to cover your mortgage should you default on it. This extra security can stretch the amount the bank or building society is willing lend. While such assistance may be useful, it may not be problem-free. Our experts warned that some guarantors can assume a right to comment on the way you are managing your finances and, therefore, your life.

Lenders who offer guarantor mortgages include Newcastle Building Society and the Co-op with interest rates of 5.49 per cent and 4.74 per cent respectively.

Bank of mum and dad

This option has many of the advantages and disadvantages of the one above. So, to stress, beware the strings and obligations of familial arrangements.

Buying with friends

In this case you not only have a financial arrangement with someone you are close to, you have a domestic one too. For singletons the benefits of multiple salaries and pooling savings are plain. A legally binding document outlining each person’s rights and responsibilities can help to ensure this arrangement goes smoothly. But it will not guard against life getting in the way if one of you is made redundant, has a breakdown, or falls in love and wants their new partner to move in. Birmingham Midshires, the Woolwich and Skipton Building Society are some of the better known names prepared to lend on up to three incomes.

Shared-home ownership

Run by charitable housing trusts and part government funded, shared-home ownership is a scheme that essentially gives you a mortgage-rent combo. You take out a mortgage on what you can afford and you pay rent on the rest to the trust itself. When you sell, the sale and price growth is divided according to each partner’s equity stake. Although full of obvious advantages, there are lesser known disadvantages. Perhaps most significantly, some of the properties available are not always ideal and so don’t necessarily compare well to the rest of the residential market, so re-sale gains may be restricted. Abbey, Britannia, and the Portman Building Society are among those who will lend on a shared-home ownership basis.

A cheaper property

If you can get the price of your property down you may then be able to convince a lender that you are in a position to afford it. There are various ways to do this. The keys ones are finding a place that needs ‘some attention’, one that is further from your ideal location, and one that is off-plan, where - as it is still at its drawing stage - it comes with a discount. When taking this route there are many factors to bear in mind, the most crucial predictably being the location. If a house is not based in a desirable area its resale gain may be limited.

So, if that is an overview and an assessment of your options, exactly how do you decide which is right for you? Ray Boulger, spokesperson for the mortgage specialist advisor John Charcol, offers this guidance. “Get yourself properly informed about what your options are. Recognise that each one of them will involve some sort of trade off. Then weigh up those various trade offs until you come to the one that is most acceptable to you.”

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11 people indicted in mortgage fraud scheme

MIAMI (AP) - Eleven people have been indicted in a mortgage fraud scheme, using phony and stolen documents to get ten (m) million dollars in mortgage loans.

Federal prosecutors say the group allegedly obtained mortgages using counterfeit documents and fake or stolen Florida driver's licenses and Social Security numbers to purchase properties.

The indictment lists seventeen Broward County properties purchased with the loans.

All the defendants are charged in a conspiracy to commit mail fraud, wire fraud and aggravated identity fraud, and with several counts of mail fraud, wire fraud and aggravated identity fraud.

2 men are charged in home loan scheme

By Jo Napolitano and David Heinzmann, Tribune staff reporters. Tribune staff reporter David Jackson contributed to this report

A member of the Gangster Disciples and a North Side mortgage broker ran a mortgage fraud scheme for at least two years that ripped off "unsophisticated" home buyers for hundreds of thousands of dollars, authorities charged Tuesday.

The money that unwitting victims lost in the real estate schemes allegedly lined gang member Terry Faulkner's pockets and filled his three-car garage in Tinley Park with expensive cars, including Bentley and Maybach sedans that each cost more than $150,000, prosecutors alleged.

Faulkner, 41, and Rodrigo Navascues, of the 1900 block of North Wood Street were both arrested Tuesday and charged with one count of being the organizer of a continuing financial crime enterprise, a Class X felony, prosecutors said. A Class X felony carries a sentence of up to 30 years in jail.

Investigators also searched the offices of URB Inc., a Lincolnwood-based real estate buyer, on Tuesday. A search warrant application filed in court by investigators claimed that the owners of URB were involved in the scheme, providing cheaply bought houses to Faulkner, who in turn sold them at inflated prices to victims.

No URB officials have been charged in the case.

The investigation into mortgage fraud began in May, growing out of an ongoing gang intelligence probe of Gangster Disciples drug dealing on the South Side, said Police Supt. Philip Cline.

More than a dozen Chicago police and suburban officers descended on Faulkner's half-million-dollar house in the 7800 block of Joliet Drive North at 7 a.m. Tuesday morning, taking with them five luxury cars, including a Maybach worth more than $150,000 and a Bentley prosecutors valued at $193,000.

According to the search warrant application, this is how Faulkner's schemes worked:

Real estate dealer Brian Urbanowski, who runs URB and another firm, XEZ Inc., bought numerous distressed South Side properties for low prices, many of them acquired at tax auctions.

(Urbanowski has not been charged with any crime, and he could not be reached for comment Tuesday evening. He is described in the search warrant application as a Faulkner "confederate" who profits from Faulkner's allegedly fraudulent transactions.)

Faulkner would locate victims with an unsophisticated understanding of real estate transactions and entice them into becoming a real estate "investor," promising they would reap a windfall profit with no up-front money, according to the search warrant application. Faulkner would then select an URB or XEZ property and offer it for sale to the "investor."

Faulkner would bring the victim to Navascues, a mortgage broker, who would create a mortgage application that inflated the would-be investor's income, assets and savings, making the applicant appear credit-worthy when in fact he or she was not, according to the search warrant application.

Then an appraiser in Palos Heights would assess the property at a "wildly inflated price," the search warrant application said. The appraiser has not been charged with any crime. Police searched that Palos Heights office Tuesday.

The victim would obtain a mortgage loan and buy the home at the inflated price. At the closing, the loan proceeds were wired to Urbanowski, or URB, according to the search warrant application. Urbanowski or his company "reaps a huge profit, usually amounting to 200 percent of investment," the application said.

The victim, meanwhile, is left with a dilapidated building and a mortgage he or she cannot repay.

Faulkner declined to comment as he was led out of his Tinley Park house in handcuffs late Tuesday morning, using a beige suede jacket to cover his face.

Police said they conducted similar raids at other locations, including the appraiser's office, URB's headquarters, homes owned by Navascues in Bucktown and Wicker Park, the Northwest Side office of his firm, Hammer Financial, and another house in Country Club Hills.

Authorities say they've seized all of Faulkner's assets, from the cars and flat-screen televisions to the pants he was wearing at the time of his arrest. He has two young children, including a young boy who was present at the time of his father's arrest.

Neighbors said they had noticed Faulkner's extravagant lifestyle, especially the cars.

"He told me he was in the rehab business," said James DeMarie, who has lived on the block for 12 years. "They didn't seem to be home a lot."

DeMarie said the suspect moved to the neighborhood in July. DeMarie said that when the suspect was married last summer, a chartered bus carried his relatives to the neighborhood to celebrate; unfortunate timing for DeMarie, who was supposed to show his house to prospective buyers and worried about the ruckus.

Still, he described his neighbor as a friendly man who once offered cash to buy an expensive motorcycle from DeMarie.

Faulkner took pains to look legitimate, handing out a business card saying he worked for a company called Reliable Rehab, based in Chicago's South Side. The card also noted he was an "URB agent."

Art Hannus, a former Chicago police detective who lives behind the suspect, said he had long suspected something was awry.

Although the subdivision is one of the most stately in Tinley Park, no one else in town is driving a Bentley, he said.

Florida Mortgage loan calculators

Buying a place is a large investing and a dreaming for most people. It is generally a one-time investment for most people as it affects a batch of money. This is the ground most people look for a mortgage or a loan while purchasing a house. The Florida existent estate marketplace is currently flourishing with falling interest rates and easy loans. Mortgage loaners are offering respective sorts of loans and particular mortgage loans to pull customers. There are also different bundles of loans to lawsuit all demands and preferences, even those of bad credit rated customers.

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