Michael Knight’s Blog

In days gone by, at the end of your special deal, you had a good look around (hopefully via a whole of market broker!) and moved to another lender as the rate was better and it cost nothing to do so. In 2008 the market started to change with the restriction in credit meaning that lenders decided that keeping their existing customers made financial sense.

This was good news in a way for customers as taking a new deal with the same lender is much less hassle than moving to a new lender. However, in exchange for the simplicity, lenders were able to charge high arrangement fees with customers reluctant to go elsewhere for fear their credit rating or loan to value would prove to be insufficient.

In a way therefore, competitive retention products have killed a vibrant open market for customers to shop around in. Often lenders will only offer 1 or 2 products to existing customers which means only rarely are their true needs satisfied. Still, if you’re between a rock and a hard place………………….

So what should anyone do if their deal is coming to an end in the next 6 months? Easier said than done but reducing the existing mortgage balance or clearing other debt is a must. Lenders are looking at loan to values more than ever when calculating the interest rate they will offer and other credit in the background makes you a more risky proposition, particularly if you are close to your limit.

Obtain your credit record and make sure nothing  untoward appears on it - identity theft is on the increase and the time to discover it’s happened to you is not when you’re looking for new finance. Ensure you are still on the voters roll, mistakes happen and clients I know have been removed for no reason. Make sure you make all repayments to credit commitments on time as even one late credit card payment can have an adverse impact on your record.

So, in answer to my own question, I don’t believe re-mortgages are dead. Every person’s situation is different and needs to be examined. Even if it means you do take a replacement product from your lender, at least you know it’s the best deal you can get.

Call me on 0845 029 1962 or email michael@michaelknightmortgages.com

Many people ask me about this area and it one where I urge caution. As more and more people find their credit commitments becoming untenable, they want to find a way out and start again. There are ins and outs to the various solutions and it is essential that advice is taken before committing to one of them.

There are many companies offering products but at the root of it, they want to earn money. No problem there but there are free sources which should be used first. Firstly, the Citizens Advice Bureau gives completely unbiased advice although it can be difficult to get in to see someone. Find them at www.citizensadvice.org.uk. Another is a registered charity called Consumer Credit Counselling Service (CCCS) which is dedicated to providing confidential, free counselling and money management assistance to financially distressed families and individuals. They have a good website at www.cccs.co.uk and they will call when is best for you.

The following list shows different remedies in descending order of seriousness:

• Debt consolidation - amalgamating all debts under a new loan to reduce outgoings by increasing the term over which the debt is repaid. Could be difficult to obtain in current credit conditions and/or how existing commitments have been maintained.
• Informal arrangements with creditors - contacting each creditor to propose reduced payments or freezing of interest. Could be daunting for the inexperienced and no guarantee of success.
• Administration and composition orders - a court order which covers existing debts where the court makes the payments to creditors on a pro rata basis for a fee. A composition order is where only a proportion of the amount owed is repaid.
• Debt Management Plan - an arrangement between an individual and their creditors to repay outstanding debts brokered by a third party. The third party distributes the money on amonthly basis to creditors taking a proportion of the payment in fees.
• Individual Voluntary Arrangement -  constitutes a formal repayment proposal presented to a debtor’s creditors usually via a third party such as an insolvency practitioner. Typically the arrangement will last for 5 years and must be kept up to date or can be revoked.
• Petitioner bankruptcy - a legal proceeding where an insolvent person can be relieved of financial obligations, but loses control over bank accounts, and future financial options. Bankruptcy is a last resort for those with debt problems and although may wipe the slate clean (to some extent) interms of debt, it is extremely harmful to your credit rating and will no doubt effect the way you are handled by financial organisations in the future.

If you are concerned with your level of debt and would appreciate an informal chat, call me on 0845 029 1962 or email michael@michaelknightmortgages.com

With the recession turning into depression (according to the commentators) many people are deperately looking to minimise their outgoings. For some  that is cancelling their gym subscriptions, others cutting down on entertainment - others unwisely might be eyeing up their insurance policies.

Very few people are over-insured - the vast majority are under-insured. What you need is to use this checklist:

• Why did you buy the policies in the first place. Is the need still there?
• Does it do what is says it is going to do?
• Do you have cover elsewhere which can suffice?
• Does your employer build in protection in your employment contract?
• Can you get it cheaper elsewhere?
• Can you cut bits out while retaining core benefits?

When reviewing your existing cover, it can be a wise move to have an experienced adviser with you who can ask the simple questions above. Sometimes we can’t see the wood for the trees and don’t know what alternatives might be available.

If for instance you took your life insurance through your lender, it is unlikely you got the best value product on the market. They do have their offices to maintain after all! And if it was 3 or 4 years ago, regardless of where you bought it, as prices for life cover have tumbled you could save money despite being that much older!

A word of caution though if you included critical illness in your original plan. As medical science improves and conditions become more treatable, newer policies have different definitions of what constitutes a critical illness. You might find that by changing policy, you lose these definitions and are in effect worse off if you need to make a claim.

So what do you do now? Simple call me on 0845 029 1962 or email michael@michaelknightmortgages.com and we can run through what you’ve got and see what we can do to reduce your outgoings - without compromising you and your family’s needs.

The Council of Mortgage Lenders reports that 0.1% of all mortgaged properties repossessed in the third quarter of 2008, up slightly from 0.09% in the second quarter. What this means in ‘real money’ is that this equates to 11,300, 12% higher than the 10,100 in the second quarter (source www.cml.org.uk/cml/media/press/1999).

The bad news is that this looks like increasing the yearly total for 2009 to be around 45,000. Looking more locally to Northamptonshire, black spots appear to be in Corby and Kettering but all towns are experiencing rises in repossessions.

Is there a way out of this? Depending on individual circumstance, it may be that the original mortgage contract was flawed or unenforceable - the consequences are that any repossession proceedings would not be possible.

If this is of concern or interest to you (or friends, family or colleagues), why not give me a call on 0845 029 1962 or email at michael@michaelknightmortgages.com? This service is entirely FREE for repossession reversal applications

While many mortgage holders with tracker products are celebrating recent falls in the Bank of England base rate, the reverse is true of most investors. With interest rates falling to 4% and in most cases lower, this can have a significant impact on the income this can produce. Alongside rising prices for essentials such as gas and electricity means that budgets are being stretched as never before for those on restricted incomes.

For those people aged 55 and above and own their own home, equity release can be a solution to increase income or provide a lump sum for home improvements, helping children out or even a luxury cruise. Equity Release is not suitable for everyone however and it is essential that advice is obtained by a suitably qualified person.

You should look for a product which offers at least the 2 following features:

• a no-negative equity guarantee
• guaranteed right to live at the property for life (or moving to long-term care)

Products now are more flexible and you can choose to take the full amount released, or more commonly at the moment, in ‘portions’. The latter option called drawdown has gained favour as interest rolls up less quickly and potentially more can be passed on in the estate on death.

As well as providing income or a lump sum, releasing equity will reduce the inheritance tax liability as the debt is taken into account when looking at the overall value of assets. As a result however, it is advised that the family is involved in discussions to ensure that any decisions made are mutually agreed. Independent legal advice is also essential to make sure any agreement entered is fully understood as it can be expensive if the wrong option is taken.

Michael Knight Mortgages for Equity Release is authorised by the Financial Services Authority to offer advice on this area and many pertinent questions are answered on the website www.releasequity.com.

If you want to find out more, why not call me on 0845 029 1962 or email michael@michaelknightmortgages.com.

Following a recent client review, it came to light that on two secured loans taken out (not via myself I hasten to add!!), a grand total of over £11,000 had been added for Payment Protection Insurance premiums! For those of you not in the know, this cover is designed to protect the customer in the event of being unable to work through accident, sickness or unemployment by covering the monthly repayments until return to work.

A worthy intention you might think. However, the policies only protect for 5 years and obviously if the loan term is longer, then there is only partial protection.

The obvious downside is that the cost is absolutely massive in comparison to the benefit and may not be appropriate to the customers needs. In fact, there have been recent fines to major providers such as Alliance and Leicester for mis-selling of these policies.

You can buy separate insurance at a fraction of the cost of the cover described above. For instance, my client had been charged £8,500 to cover a monthly repayment of £475 for 5 years. Even worse, interest is charged on the premium for the term of the mortgage. This is the monthly equivalent of £141! A standalone premium would be in the region of £16.50!!

There are various reasons why you may have been mis-sold Payment Protection Insurance and finding out is free and simple - call me on 0845 029 1962 or email michael@michaelknightmortgages.com .

With the government introducing measures to help people cope with the loss of income and stay in their homes, you might ask why this blog is important?

Many people are further down the line however and if not already repossessed, due to be shortly. The great news is that I have linked with one of the largest claims management companies in the UK who now offer a FREE service to help overturn or prevent repossessions.

Contact me at Michael Knight Mortgages and via my agency with Cartel Client Review early enough once your lender has threatened legal proceedings and, if accepted, our solicitors will negotiate with your lender, and the courts if necessary, to try and find an alternative to repossession. Remember that the courts do not want to see people lose their homes and our legal experts will do all they can to negotiate a solution that prevents this.

 If you have been previously subjected to a repossession, through Cartel Client Review we may be able to assist you in a claim for compensation. The repossession unwind is a two stage process. The first stage is to pursue a claim for contract irregularities relating to the mortgage involved.

If this results in a succesful claim we would then progress to the second stage and look to claim against what may have been in effect a wrongful repossession.

With the depressing news all around us of the economic downturn and companies shedding jobs, isn’t it great to hear of some good news! Following the launch of Michael Knight Mortgages in 2009, I am delighted to confirm the availability of a superb Unemployment Insurance policy which can give you peace of mind.

If you want to cover just your mortgage or even a bit more to cover other costs, and you want a maximum payout period of up to 24 months, at a very reasonable price, then why not contact Michael Knight Mortgages at michael@michaelknightmortgages.com ?  

The policy is very flexible and you can specify how soon you want the monthly benefit to be paid out. If you need it after 31 days, you can have it - if you can wait for 90 days, no problem. The rule of thumb is the quicker you take the benefit, the higher the monthly cost.

The benefit is tax-free and can be paid for up to 12 or 24 months.

Where this policy scores highly is that it is available just as unemployment cover - many competitors insist you have accident and sickness benefit as well which pushes the cost up. Additionally, it is often available only to new borrowers or people moving home - the policy I offer can be taken up by existing borrowers as well.

There is an important proviso however - you must not be under notice of redundancy, or your employer must not have announced that redundancies will be taking place. The cover would not be valid if taken and therefore a waste of money. To further protect the insurer, there is also an initial waiting period of 3 months before the cover becomes ‘live’. After this time, whatever waiting period you select comes into play.

All in all, a very valuable protection for you and your family. If you want to find out if you can take this up, call me on 0845 029 1962 or email michael@michaelknightmortgages.com .

Looking to buck the gloomy news which is being reported everywhere, I have launched Michael Knight Mortgages to address the real needs of my clients.

Major concerns at the moment revolve around redundancy, repaying debt  and reducing costs.

I am pleased to say that I have access to a brilliant unemployment policy where you can cover your mortgage repayments (plus additional costs) for up to 24 months. Very competitive premiums and flexible starting periods means you only pay for what you need.

Many people are finding that keeping up their loan and credit card repayments is proving more and more difficult. There are a variety of debt solutions but finding a trusted source for that advice is not as straight forward. With my good reputation for giving customer centered advice in plain  english, I can advise on the best solution for you, whether it is a debt managment plan, IVA or even bankruptcy.

For those who want to rein in their necessary expenditure, I offer an excellent range of insurance products for buildings & contents, life and critical illness cover and income protection. In fact, with the latter two areas I am so confident I will reduce your premiums (on a like for like basis), if that is not the case, I will pay you £25!

More blogs giving more detailed information will be following shortly. If you can’t wait, why not give me a call on 0845 029 1962 or email michael@michaelknightmortgages.com