Mortgages are part of Pat Bunton's central nervous system
Pat Bunton, from London & Country Mortgages, has an inordinate number of brain cells dedicated to mortgage matters.
Our viewers put his neurons to good use in his final 'Ask the Expert' for Working Lunch.
As usual, click on one of the questions in blue below to skip straight to that answer, or scroll down the page to read them all.
PAT BUNTON'S ANSWERS
1. If I pay off my mortgage early and cash in the associated endowment, I can save £3000 over the next three years. Is there a catch I haven't spotted?
No, just check whether or not there are any penalties being imposed by the endowment provider for early encashment - if there aren't go ahead safely, if there are, understand how much and make a balanced decision.
2. I have two years left on a five year fixed rate mortgage with penalties for early redemption. I have fallen into negative equity. Is there anything I can do other than make payments and hope that one day the value of the property is more than the loan?
Not really I'm afraid, the negative equity means you can't switch your mortgage elsewhere and we saw similar issues in the early 1990's, the hope has to be that property prices will go higher in the future and that you will get out of negative equity. We are a small island, there are not enough houses being built and we have a growing population so most factors in the medium and long term point to house prices going up, not down.
3. I want to help my son who can't pay his mortgage. I have equity in my house (£350,000), investments (£70,000) and my pension (£18,000 p.a.) Is one preferable over another for lenders as an asset to secure his home?
Clearly the best way would be to use either your savings or income to help your son in the short term. You would need to consider if you could afford to help him from your pension income and if you needed to raid your savings then assess what those savings are to ensure you do so as efficiently as possible.
4. I want to help my daughter and son-in-law with their deposit to get a bigger property. What do lenders prefer in this case? Should I cash in my ISAs and/or bonds, or take out a new mortgage?
Lenders are generally happy to lend at lower LTV's and the greater the deposit you have the better the rate they will offer so generally assistance with a deposit is the best financially. However you might not want to give money over, so uou could also act as a guarantor. Lloyds also allow a loan up to 95% with a 20% amount on deposit - charge on deposit for 3 ½ years at a fixed rate of 3.75% gross - if LTV drops below 90% the charge on the deposit is released.
5. I am self-employed and finding it very difficult to obtain a mortgage. Is there any help for people like me who cannot prove income? Any chance lenders are going to loosen their belts?
This is the type of case where a self-certification of income mortgage may have helped in the past. These basically allowed you to declare what your income was, but not force you to prove it via accounts. Lenders are no longer offering these and the FSA has stated very loudly that they are now seeking to outlaw them, so there is little prospect of the loosening you require. The problem here seems to be that abuse of self-cert by some in the past (to artificially over inflate their incomes) has meant that FSA in knee jerk fashion is going to stop anyone using this type of product, even if there is a completely legitimate reason for it - for example if you're 9 months in and don't have any accounts, but can see how things are going.
6. I have a mortgage that is part interest only and part repayment. I am considering making overpayments but wonder if this would all go towards reducing the capital owed or would it somehow go towards paying the interest only part, so not cutting back the capital?
Any overpayments will pay down the amount owed by a corresponding amount. This will reduce the interest charge each month and can save you a lot of money in the long run.
7. I have to re-locate my job or be made redundant. I want permission from my mortgage lender to rent out my property. If they agree, will I get to keep the low tracker rate I'm currently on? (I only have 10% equity in his house, if that makes a difference)
Most lenders will allow this in those circumstances and are obligated to try and help borrowers in situations like this where potential redundancy, rather than plain old choice is the key driver.
8. My husband and I are approaching retirement age and would like an interest only mortgage until one of us dies, then use an equity release scheme to pay part, or all, of the mortgage off. What do you recommend?
Limited choice really. Many lenders are running away from this, not least of all because FSA has made noises about interest only mortgages beyond retirement. One size doesn't fit all and for some where income is in place this would make perfect sense and would be better than interest rolling up compound. Halifax has a scheme for over 65s where they have income and where they will allow the borrower to take an interest only mortgage on up to a 40 year term. Coventry Building Society can look at people up to 85 years of age too, but generally this is an area that has become more difficult in the last year or two - in large part due to regulatory scrutiny from the FSA.
The views expressed are those of Pat Bunton not the BBC.