why-is-property-insulation-important

Why is Property Insulation so Important?

Home insulation is not a new concept in the UK, although it has had somewhat of a resurgence in the last few years This has culminated in the UK Government’s recent rolling out of their Green Homes Grant (more information), which provides homeowners and landlords with funding to make their properties greener and more energy efficient.

The responsibility for insulating and properly caring for properties in this way falls on whoever owns the property and therefore tenants and residents who have a landlord or management company will need to discuss improvements to insulation with the relevant, managing party.

 

Property-insulation

 

How Does It All Work?

The process of insulating a property and making it more energy efficient is fairly simple and there are a number of ways in which it can be achieved, with the most popular methods being:

  • Installing a new boiler
  • Installing double glazing
  • Loft insulation
  • Cavity wall insulation
  • Under-floor insulation

 

Installing a New Boiler

Older boilers are not as efficient as newer models, which utilise gas more efficiently. As boilers age, they also tend to run in to various problems (particularly when they are not properly serviced over the years) such as fan and motor problems and components of the boiler becoming aged and overused. Although it is entirely possible to keep boilers running for many decades, as time goes on, the boiler is more likely to use more gas less efficiently, being worse for the environment and your bills.

 

Installing Double Glazing

A tried and tested method for improving energy efficiency and improving the integrity of the building in question’s envelope (the barrier that separates the inside and outside environments.) The better the protection between the interior and exterior environments, the better heat will be retained in the cooler months and cooler air maintained in the hotter months. Also, double glazing will help keep the property at a more stable temperature, putting less strain on the heating and therefore boiler.

 

Loft Insulation

The loft or attic of a property is usually where much of the heat is lost from the property in question. Heat rises and therefore it is logical that the highest point of the property [the loft] ill be where a large amount of heat is lost. Insulating the loft and attic means that less heat will be lost and will be contained within your property, allowing for less work being required by the central heating and boiler.

 

Cavity Wall Insulation

In the case of many early 20th Century properties, there is a gap [cavity] between the interior wall of the property and the exterior wall. This was designed so that the elements outside such as the rain and moisture cannot penetrate into the property. However, a major drawback of these designs of property is that the cavity allows cold air to infiltrate by filling the cavity, the building envelope is better secured and the property will be more energy efficient, greener and better for the environment.

 

Under-Floor Insulation

Surprising to many people is that the underfloor region of their property is poorly insulated. Underneath the flooring you will have in your property, be it carpet or otherwise, there will be the floorboards and underneath will be the joists, supporting the floor and then usually, a gaping space. this space allows for cold air to penetrate, making the property less energy efficient. Fixing this by insulating this is a great way to improve the energy efficiency and retention of your property.


property-block-management

What is Property Block Management?

Block management is a crucial element to take account of when it comes to the upkeep and maintenance of residential property blocks. As a service that is needed by both the block owners and landlords as well as individual leaseholders within the development, having a properly managed block can be the difference between a high turnover of tenants and leaseholders and longer, established parties.

Effectively managing a block is specialised and requires skilled experts with the right knowledge to ensure all parties’ interests are taken care of and tenants are able to live in comfort and peace. There are many companies that offer block management services but it remains important to research and check reviews and opinions about each to make sure you choose the best block management provider for your needs and requirements.

Furthermore, this service is equally applicable to both small and larger blocks, with the needs and requirements simply being on different scales for each. Moreover, by having well managed and well looked after residential blocks, the likelihood for conflicts with residents, leaseholders and tenants is greatly reduced as effective block managers will be able to address and rectify any issues before they escalate.

 

What-is-Property-Block-Management

 

What Does Block Management Entail?

Whilst there are a few similarities between block management and traditional property management, the challenges faced when looking after a block with potentially tens or even hundreds of residents as opposed to a property with a handful are very different. There are different legal implications, laws to be accounted for and services that need to be provided when the property in question is a block as opposed to a single housing unit or a house.

For example, it is very common in the case of residential blocks for the block and the freehold to be owned by one party [the freeholder] and individual flats owned by other parties [leaseholders]. The leaseholders will each pay service charges, also known as ‘ground rent’ to the freeholder, whilst tenants of the leaseholders will pay rent. It is however, the ultimate responsibility of the freeholder to ensure the block itself is properly managed and this is where a block management company come into the equation.

It is important therefore to also understand the differences between leaseholders and freeholders to know who is responsible and accountable for what.

The responsibilities of the nominated block management company will include:

  • Money and service charge collections
  • Health, safety and security
  • Maintenance and repairs
  • Insurance and legalities

 

Money and Service Charge Collections

Each leaseholder, who owns a specific flat or apartment in the block will be liable for service charge payments to the freeholder. This will be collected by the block management company who will then pass on these fees to the freeholder as part of the service they are paid to provide. Other payments and charges may need to be collected by the block manager too. For example, if any resident needs to pay for anything affecting the block, for example if they break a communal window, this will be collected and facilitated by the block manager.

 

Health, Safety and Security

Ensuring the block is safe from any hazards such as dangerous wiring, asbestos and other health hazards is part and parcel of what management of all blocks will include. Furthermore, the block management company should carry out regular site inspections to make sure nothing is amiss and nothing dangerous is present. For example, corridors that are full of rubbish or peoples’ possessions can pose a significant fire hazard by obstructing exits and safe passages. They will also be responsible for making sure the property is secure, with communal doors and main access points not vulnerable to intrusion and trespassers.

 

Maintenance and Repairs

It is inevitable that with numerous people all sharing the same corridors and communal areas that there will be a degree of wear and tear and that there will be things that from time to time will need fixing and replacing. Block managers will identify these issues and what needs doing and will allocate tradespeople, cleaners, gardeners and otherwise to take care of these things so that the residents and leaseholders need not worry.

 

Insurances and Legalities

In addition to the buildings insurance required, the management company will ensure that all relevant legislation and regulations are taken care of and abided by as they should be by tenants, leaseholders and landlords.


secured-and-unsecured-lending

How Does Unsecured Lending Work?

Whilst both secured and unsecured lending sources have been around for many years, there are numerous significant differences between these two useful sources of finance. With secured loans such as mortgages and logbook loans allowing the borrowing of larger amounts (up to millions of Pounds in some cases) and unsecured loans offering an increased degree of flexibility and convenience, it is important know the major differences between both and the benefits of using one form of a loan or another.

Unsecured loans on the other hand, including the likes of instalment loans, payday loans and many other options, allow the borrowing of smaller amounts but in a quicker time-frame than most secured loan options. Both categories of loans have their preferred uses and almost all forms of regulated loans will have their restrictions with regards to amounts that can be borrowed, credit checks and regulatory framework and underwriting procedures.

Moreover, both forms of loans are able in cases to be used for personal, business and property-related cases to different effects. For example, a bridging loan may be used for a property purchase as part of an investment portfolio, whereas mezzanine finance (a variation of bridging loan) is more likely to be used for business purposes.

It is therefore important to understand what common types of unsecured lending include as well as how and where they differ from secured loan options available in the UK.

 

Common Types of Unsecured Loans

Unsecured loans in principle are as simple as a prospective borrower making an application for a desired sum of money to be repaid over an agreed timeframe, with interest added; making a profit for the lender. In past years, the most common route of acquiring an unsecured loan was via one’s bank.

 

Woman-organising-payday-loan

 

A conversation with the bank manager and some quick checks of one’s overall financial status was all that was needed in order to secure a much-needed loan of potentially several thousand Pounds. Nowadays however, there are more options than ever and the process differs.

Payday Loans – Perhaps the best-known and most widely recognised form of unsecured loan, payday loans have been around for quite a while. They allow a borrower to borrow a smaller amount; usually up to around £1,000 to be repaid on the next payday. These loans are often referred to as ‘emergency loans,’ as they tend to be used when un unexpected bill or expense pops up and the borrower needs to be tided over until their next payday where they will clear their debt and the interest I none go.

Instalment Loans – These loans follow a similar premise to that of payday loans in that whilst they may be of slightly larger amounts, they still tend to be smaller amounts (also up to around £1,000.) However, where these differ from payday loans is that instead of having to pay off the loan plus interest in one go, the borrower agrees with the lender to repay over a pre-agreed timeframe, which will be anywhere up to 12 months. This means that the repayments are much more manageable for the borrower as they will be repaying their debt spread over a longer time.

Guarantor Loans – Guarantor loans in themselves are nothing new. These work by the borrower being able to borrow a larger amount than instalment or payday loans as the loan amount and their debt is guaranteed by a third-party guarantor who agrees to cover the debt and repayments should the primary borrower default. This works in a similar way as having collateral on a secured loan may, in that there is a degree of security for the lender that the borrower and the lender both have fall backs in the case of missed payments. These loans allow larger amounts to be borrowed (up to around £10,000.)

 

What Are the Differences Between Secured and Unsecured Loans?

Whilst both secured and unsecured loans can sometimes be used for similar and sometimes even the same purposes, there are several differences between these two categories of loan which are important to be considered when making the choice of which loan and which specific type of loan to apply for:

  • Security on the Loan

Arguably the most important difference between secured and unsecured loans is the very nature of both types. Secured loans require a high value asset; usually a property or vehicle to be used as collateral on the loan. This acts as a form of security meaning that if the borrower cannot repay, the lender has the power to seize the asset to recoup their costs and repay debts owed by the borrower.

  • Amount Borrowed

Because secured loans have collateral, it is possible to borrow significantly more when it comes to secured options as opposed to unsecured equivalents. It is always important to know how much you can borrow when applying for any loan. For example, mortgages and bridging loans can be in excess of £10 million depending on the exact nature and value of the property or properties in question. Unsecured loans in general however, only tend to lend up to a few thousand Pounds as the risk is greater to the lender, with no security on the loan. Business loans though are different as more money can be borrowed. However, these processes are different.

  • Interest on Loans

Because of the increased risk to the lender, most unsecured loans have higher interest than their secured equivalents. This is to offset the risk of the borrower potentially not paying off their debt. Secure options however, have far less risk associated with them as the borrower will agree to the lender being able to seize the asset used as collateral should they default.

  • Length of Repayments

Unsecured loans for the most part are paid of within 12 months. For example, an instalment loan may be spread over the course of 12 months by which time the debt should be settled and paid off in full. However, generally, an unsecured loan will be repaid much sooner than this as the loan amount is significantly less than a secured loan (usually.) Secured loans on the other hand, such as mortgages may stretch over a number of years; sometimes more than 20 years. This is because someone borrowing say £500,000 as a mortgage will not be able to repay this in a year and will need more time to cover these costs compared with an unsecured loan of much less.

  • Credit Checks

Whilst lenders now carry out credit checks and assess credit and spending behaviour for all nature of loans, secured loans will generally entail more rigorous checks as with a larger loan amount, the lender needs to be sure the borrower has the means and the credit behaviour to repay their debt. Unsecured loans such as payday loans however, do carry out credit checks but these will not be as rigorous as those for a secured loan such as a bridging loan or mortgage as the amounts of money associated are much less, making the cost of carrying out more rigorous checks less of a requirement for many.

  • Property Purchases

In order to purchase a property, the vast majority of people need a mortgage or secured loan of some kind. The loan is provided and the debt is secured against the property or development in question. This is the driving force behind the lender’s provision of the loan. If the property is worth less, then less can be borrowed; the loan-to-value (LTV). However, if one doesn’t have a property with which to secure the loan, they will be unable to purchase a property in this way. For example, a tenant who rents their property from a landlord, is unable to secure a loan against their place of residence as they do not actually have ownership.


How-interest-rates-affect-mortgages

How Interest Rates Affect Mortgages

It was announced in November 2017 that the UK base rate will increase for the first time in over a decade. In July 2007, rates went up from 5.5% to 5.75%. Now, rates have risen from 0.25% to 0.5% as of 2nd November 2017. The base rate had been at a historic low since August 2016, at a rate of 0.25%. But what does this mean for interest rates on mortgages and private mortgages?

To start with, it is important to outline what the base rate is, as it affects not only mortgages but also the following:

  • Loans
  • Credit cards
  • Savings

It is thought that credit card rates are expected to rise, as well as overdrafts and personal loans.

 

What is the Base Rate?

This is the official borrowing rate as designated by the Bank of England. The rate dictates what savers will earn and what borrowers will be paying. Any changes to this bate rate is dependent upon the Monetary Policy Committee (MPC) which is the Bank of England’s group that meets eight times a year in order to discuss the rate.

As a result of this recent change, it is likely that many people’s mortgages will rise in cost, whilst savers will have more chance of receiving better returns on their savings. Estimates suggest that will be around 45 million people who will receive better returns on savings accounts. For example, those who have saved £10,000 will collect £25 extra in interest each year.

 

How much will mortgages go up by?

This depends on the type of mortgage a home buyer has. For example, a bridging loan will be affected differently to a traditional mortgage. Currently, there are around 9.2 million people in the UK who have a mortgage, and half of those are on a tracker rate. Whatever the type of mortgage someone has, it is often the case that the bigger the deposit or equity you have, the better the interest rate.

 

mortgage-agreement

 

It is also possible to check online how much extra or less will be paid as a home-owner based on the interest rate increase through using one of the interest rate or fall calculators available. These useful tools calculate mortgage amounts, the duration and the type of mortgage it is and then predicts what the increase or decrease will likely to be.

 

Fixed Rate Mortgages: Will Interest Rates be Increased?

94% of new homeowners are on fixed rate mortgages, lasting on average two or five years. A fixed-rate deal is when a home-owner pays a known, fixed rate for a set period of time. Overall, around 57% of homeowners are on fixed rate details. The interest rate increase will depend on when this loan is expected to end. Borrowers will likely to see no immediate increase, but at the end of their two-year fix for example, they could end up with a higher rate of repayment or a new deal that is more expensive.

However, it could be cheaper, as it does also depending on when this fixed rate mortgage was taken out, so it is important home-owners check with their lender.

 

Variable Rate Mortgages

35% of homeowners in the UK are on variable rates. A variable-rate deal is when lender is able to move the interest rate at their discretion. It is more likely to be the case that if the mortgage a person has hasn’t changed in at least five years that it is a variable rate mortgage. Variable rate mortgages then, have an increased chance of being affected by a rise. It is likely the rise in interest rate will mean the average home buyers mortgage (that is, the average in the UK of £175,000) will rise by roughly £22 a month.

 

Tracker-Rate Mortgages: Will Interest Rates Increase?

Also known as ‘base-rate trackers’ or ‘bank-rate trackers,’ they are less common as they once were amongst home-owners. Tracker-rate deals work on the basis of the rate paid moving up or down in accordance with the Bank of England’s Bank Rate. In terms of the recent interest rate increase, this means that if a home-owner paid a tracker paying a bank rate plus 1.25 percent, now the bank rate has risen to 0.5%, the mortgage will rise as a result to 2 percent.


selling a home

Bridging Vs Traditional Mortgages

Most people are aware of mortgages and property finance in general with mortgages having been used by millions of homeowners for many years and the concept of property finance being well-established. Everyday mortgages are generally used to secure a fixed amount of money against an agreed portion of equity of a property. Bridging loan arrangements are a more specialised process that is not as well established but that is increasing in its popularity.

Whilst traditional mortgages are usually used by homeowners to purchase or refurbish their place of residence, bridging loans are a slightly different offering and therefore may at times need a broker to facilitate its arrangement. For example, a bridging mortgage to be used for business purposes may specialised and experienced corporate finance brokers to arrange it.

Traditional mortgages on the other hand have different requirements. For example, if one is self-employed, an accountant may be required to order finances in a clear and positive way for the prospective mortgage lender to be able to understand the financial position of the applicant (source: Martin Tiano & Co Accountants).

Ultimately however, both a mortgage and a bridging loan have a very important role to play in the wider property lending industry in the UK.

 

Popular Types of Residential Mortgages

Unlike commercial property finance options and mortgages for buy-to-let purposes, residential mortgages and mortgages for peoples’ main place of residence are deemed Regulated Mortgage Contracts which means that for the most part, their repayment and interest terms are much more favourable as they are designed for a borrower’s main place of residence as opposed to for investment purposes.

Commercial and buy-to-let arrangements on the other hand will have additional arrangement fees, interest payments and clauses; all of which tend to add up, increasing repayment costs.

 

Everyday Mortgages

 

Purchasing-home-with-mortgage

 

Mortgages are the most utilised form of secured property finance in the UK and arguably the world. Usually used in order to purchase a property, the premise of a mortgage is quite simple. The borrower finds a property they desire to buy and assess their income and savings. They will likely need to be able to put down a deposit, which will be a percentage of the property’s value, for example 40%.

Then, they apply for a mortgage with a bank or other lender or broker who will assess their finances, income and financial stability. All criteria being satisfied, the lender will then agree to lend a proportion of the property’s value, for example the remaining 60% plus interest to be repaid over a predetermined period of time. With mortgage amounts often being in the hundreds of thousands of Pounds, it is not uncommon for a mortgage to be repaid over a period of 10 years or more.

The interest on the mortgage is variable too and there are numerous arrangements that can be agreed:

  • Tracker Mortgages...

These are mortgages where the interest rate is determined by the Bank of England base rate. This is set by the Bank of England and is subject to change during the year. In effect, if the Bank of England raises interest rates, this will be reflected in the required payments and interest amount on mortgage repayments.

  • Fixed Interest...

This is where the borrower and the lender agree to fix the interest rate for an agreed period of time; usually few years. The benefit of these types of arrangements is that should the interest rate be agreed at say 0.25% and the Bank of England then raises rates to 0.5%, the borrower’s interest will remain at the fixed amount for the agreed period of time, after which they may revert to the current interest rate or remortgage. However, a drawback of these types of interest arrangements is that should the interest rate be lowered, the mortgage’s interest will remain fixed too.

  • Interest Only Repayments...

These are somewhat less common but they are used. In these cases, the borrower would only repay the interest each month, having to then repay the outstanding balance; the actual loan amount in full at the end of the mortgage’s term. These are often used by those awaiting the sale of a high value asset to cover the repayment amount.

 

Bridging Mortgages

 

Consider-bridging-loans

 

Bridging loans are different to traditional mortgages in that they are a much shorter term financial arrangement. Also secured against a property, a bridging loan is often used to purchase a property whilst an initial property’s sale is impending or in the process of going through.

For example, a homeowner may be looking to upsize their home and move to a larger property. Having found the property they wish to move to and having put down a deposit on it, they may run into fairly short-term issues. For example, they may have found a buyer who then pulls out of the process late on, breaking the sales ‘chain’ and leaving the current owner in the lurch, having to find a new buyer quickly to avoid losing a deposit of potentially many thousands of Pounds.

In such cases, a bridging loan can be taken out. The homeowner would use the bridging loan to buy their desired property, awaiting the sale of the first one. There is then a period where they effectively own two properties, but once the buyer of the first one is secured and confirmed, the sale amount is used to pay off the majority of the bridging loan, whilst any remaining repayment amount is paid off via the remortgaging of the new property at a much lower rate than the bridging loan.