Ambitious buy to let landlords are finding it more difficult to expand their portfolios of properties as banks like Lloyds, which includes HBOS, impose new borrowing limits.

Last week Lloyds announced that its lending to landlords would be capped at £3 million and a maximum of 9 properties. Prior to this announcement, the bank would have lent £6 million on as many as 18 properties. It is not known how this will affect landlords who need to refinance their portfolios as their existing finance deals come to the end of their term, but presumably these landlords will have to diversify their borrowing to new lenders. Whether they will find new willing borrowers will depend on the equity within their property portfolios.

This move by Lloyds is another symptom of the finance sector wishing to diversify and reduce their exposure to the buy to let market which has been so badly hit during the current recession. Many landlords invested heavily in city centre apartments only to see the value of these properties fall by 50 per cent in cities such as Leeds, Manchester and Bristol.

First time buyers once again have the opportunity to get their mortgage deal without paying an up front application fee.

Since the credit crunch first bit, application fees have steadily risen to a typical level of £995 – although some lenders are charging as much as £1,498. It’s not as if the pain of paying these fees can be added to the mortgage as many insist they are paid upfront.

But now a small band of lenders have bucked the trend by offering fee free deals to first time buyers and well healed homeowners whom want to move up the housing ladder. However, they give with one hand and take with the other! You effectively pay for the fee free privilege by paying a higher rate of interest. In broad terms this means that anyone wanting to borrow £100,000 or less will be better off on a no fee deal even if the interest is a touch higher. But the bigger the mortgage, the more important it becomes to get a keen rate even if this means paying a fee up front.

If you want to check out some fee free deals, speak to Britannia, Northern Rock and Alliance & Leicester.

The lenders’ generosity is tempered however. If you want one of their fee free deals, you’re likely to have to stump up a big deposit – around 30%, and most of these deals apply to fixed rate mortgages.

Top economists say that UK interest rates could remain low for years. Their forecasts come as the Bank of England hinted that if necessary, it would continue to pump money into the economy, thereby depressing interest rates.

Only a month or two back economists were forecasting that base rates would begin to rise from their all time low of 0.5% but now their expectations of a rise are being pushed back. There have even been forecasts that the 0.5% rate could last for years!

But other economists warn that things could change markedly after the election next year. They say that as government spending will have to be cut to close the budget gap, interest rates could have to rise.

All very confusing isn’t it?

The Northern Rock has already admitted that it costs about £25 a month to administer a mortgage that is in arrears so why do many other lenders continue to charge up to £115 a month for those in arrears? Is it punishment or profit? You decide!

And this problem is not small – the figures are huge. Figures from the Council of Mortgage Lenders show that there were 399,000 accounts in arrears at the end of last March. That means that they are charging nearly £46 million each month in arrears charges when the true cost is just under £10 million.

If the homeowner has equity in their house then these charges don’t seem to matter to the lenders as they will get their money back as and when the property is sold. So they don’t spare the horses on any other charge either. Say for example, you want a debt councillor from your lender to come around to see you – that’ll be another £100 please! And if the lender has to repossess and sell your property your eyes will water when you see what they typically charge for estate agents fees – we’ve heard of 5% of the sale value. Who would dream of paying an estate agent 5% when the market norm is 1.5% at the most?

And if the lender has had to change the locks then a pair of locks on the front and back doors will typically cost £400 plus a further “management handling fee” of £50.

It seems all wrong to us. People who have their backs to the financial wall should not be preyed upon. Yes they should pay the costs incurred in sorting the situation out but what we are hearing of amounts to out and out profiteering on the most vulnerable.

It must be stamped out!

We in the UK have some of the highest house prices in the world – but does that really mean we’re richer? There is a paradox here. Our house prices are high because there is a constraint on the supply of houses. If overnight we could construct a million houses in the right locations, which would increase our housing stock by about 4%, we might assume that the nation’s wealth would increase.

But such a sudden increase in housing supply would probably lead to a collapse of prices in the entire housing market – and lead to a reduction in our national wealth even though there were 4% more houses.

This paradox lies at the centre of our national obsession with the price of houses. We feel rich when house prices are rising and tend to borrow more against them to finance fancy cars and holidays. But at the same time we forget the obvious: that apart from a lucky few with castles in the country, higher prices force us to live in smaller and poorer houses that we would like to live in.

In this context, higher house prices make us poorer.

Traditionally recent university graduates were offered special mortgage terms – but how times have changed.

Until recently if a graduate remained loyal to his or her student bank, they were promised more generous income multiples, lower interest rates and even help with paying their stamp duty. Today, virtually every special deal has gone.

A few lenders will allow degree holders to have a mortgage with a lesser deposit, say 15% rather than 25%, and sometimes offer them a fraction off the interest rate but it’s nothing to be overjoyed about. In the absence of the old special deals, experts are advising graduates to shop around along with all the other prospective homeowners.

Some experts are advising these first time buyers to take a fixed rate mortgage as the cost of home ownership takes many first timers by surprise and it make the adjustment a little easier if they have at least one household expense set in stone. But graduates how are sure that their incomes will rise steadily and make their mortgages increasingly affordable, may prefer a tracker. Currently, the rate on a tracker is lower than most fixes.

Meanwhile, recent graduates are being warned about fraud. Young professionals in rented accommodation are the main targets for fraudster’s intent on stealing identities. They are being advise to regularly check their credit file to ensure it is clean.

Property Surveyors are running scared. Having seen hose prices dive by up to a third, they are covering themselves by taking a conservative value and then knocking off some more.

This can be devastating for some applicants. The ultra low valuation cuts the value of equity they will own in their house and this can result in the mortgage company pushing up the interest rate they are charged and this can cost them hundreds of pounds every month. And in some cases it can even result inn their application being refused.

So if your Surveyor knocks down the value of your house, contest it. Remember, you must accept that prices have fallen but if the value still comes in well below what you think it’s worth, complain. To get anywhere with this, you’ll have to base your estimate on facts not just your annoyance – and remember, if another surveyor has to come out, that’ll be another set of survey fees! But if the low valuation has pushed you into a higher interest band with your lender, it might be worth it.

One of the results of the credit crunch has been the big difference between the interest rate charged to those with just 10% equity as against those with much more. If you have 40% equity you could currently get a 2 year fixed mortgage for just 3.34%; with 25% equity the rate rises to 3.99%; and it’s 5.99% for those with less equity. This 5.99% rate pushes up the monthly payment for a typical £150,000 mortgage by £205 per month.

But as we’ve said, if you do appeal against the valuation you’ve been given, do support your claim by reference to the size and character of your house in comparison to other houses which have been sold recently in your area.

Home Information Packs, HIPS for short, which have to be prepared before you can put your house on the market, are making estate agents loads of money by taking advantage of their position. Great for them but bad if you’re a seller!

A survey found that some estate agents are charging double the price that a specialist HIPS provider would charge. The result is that many sellers could save upwards of £130 by shopping around.

Apparently the Halifax estate agency was the dearest taking a typical three bedroomed freehold semi. For that they charged £413 – but a HIPS specialist such as Fridays Property Lawyers would have charged just £189, giving a saving of £224!

And when it comes to leasehold properties the cost are even higher due to the additional legal work involved.

The Government imposed HIPS on to home sellers back in 2007 despite constant opposition from solicitors, mortgage providers and estate agents. The Government claimed that the selling process would be faster and more efficient with the HIPS containing information for the potential buyers on planning searches and the energy performance of the property.

So our advice is, get a quote for a HIPS off your estate agent and then go online and see how much you can save.

Experts are warning that a second wave of house repossessions could hit the country. Whilst repossessions were down 10% on the previous quarter, the outlook continues to look bleak.

Industry figures have revealed that the number of households in serious arrears has rocketed by almost 50% during the last 12 months. Against this background, the Government has been applying pressure on lenders to go softly on those behind with their payments. This to some extent has suited the lenders as house prices have dropped up to 335 in some areas and they want prices to recover somewhat before they take action.

This situation has led Shelter, the housing charity, to warn that as interest rates, house prices and unemployment rise, we could see the second wave of repossessions.

Currently 2.5% of households are significantly behind with their repayments – some 205,600 homeowners. It is this group which is most at risk as they could be taken to court at any time. But the Council of Mortgage Lenders insists that it’s members are doing everything they can to help those in arrears.

The interest you are charged is as much a reflection of the lenders’ financial circumstances as it is of yours. These are the main factors that affect the interest rates you pay:

The Bank of England’s official Base Rate
These days this affects saving rates more than lending rates. Only Base rate tracker mortgages are directly affected by movements in the Base Rate.

Money market interest rates
There are two interest rates which are very influential to the you are charged. Firstly, there’s what’s called the LIBOR rate. This is the rate banks pay to borrow money from other banks for short periods. Then there’s the SWAP rate. This is the rate banks pay for borrowing money from other banks for longer periods. These interest rates particularly influence the cost of fixed rate mortgages and those tracker mortgages that are linked to LIBOR.

The bank’s money supply
The principle is simple: If the lenders are short of money to lend but the demand is there, they’ll charge more and vice versa. At the moment the mortgage companies are using higher interest rates and higher deposit requirements to effectively control demand. As their coffers are replenished you’ll see lending criteria being relaxed.

Pressures on lenders to increase their cash reserves
Post credit crunch, the Financial Services Authority has forced lenders to hold twice as much in cash reserves. This means they have less to lend. And as we all know, some of the banks owe the Government billions which they’ll have to repay. This all creates pressures on them to increase their profits. How to the respond? Guess what, they charge us more!

Your Deposit
The bigger your deposit the more equity you’ll own in your home – and bankers like you to have plenty of equity - as that means they’re more certain to get back the money they lent you, if things go wrong. This means that they entice borrowers with plenty of equity by offering them the lowest rates.

Your Credit Score
The large credit agencies such as Experian, constantly collect information about your finances. They know who you owe money to and who you have applied to for credit and whether you’ve missed any payments. They also record defaults and County Court Judgements etc. They then use all this money to score you for your credit worthiness.

The lenders of unsecured loans and credit cards also use this information to decide not only whether to lend you money, but what rate to offer you.

Have you noticed the mortgages being promoted at just 2.49% per annum? It’s hard to argue with these super low rates. But be warned they are not always what they appear.

Low rate mortgages are all the rage at the moment but check out the small print and some of the gloss wears off. Take the deal being offered by Lloyds TSB. Depending on the size of your deposit it comes with an interest rate of between 2.49% and 2.59%. But you haven’t got long at that rate – that rate only lasts until February next year, seven months. After that borrowers automatically move to a fixed rate of between 5.49% and 5.59% until November 2012.

These higher rates are at least half of a percent more than comparable three year fixes from lenders such as the Woolwich and Alliance & Leicester.

There is also a question of whether it’s sensible to fix for less than 12 months. Very few commentators are forecasting that interest rates will rise in the short term. In mid 2010 and beyond, yes, but not until then.

So if you are tempted by these super low rates, check out the small print and think hard. Better still, take professional and independent mortgage advice.

Some insurance companies only have one in one hundred endowment policyholders on target to repay their mortgage and over 3 million homeowners have been warned that their policies will not fully repay their mortgage when the time comes.

With-profits endowment policies were sold a reliable way to repay your mortgage as the insurers added an annual bonus to the policy every year and then added one big bonus at the end of the policy’s term. Projections were then used to show how the bonuses would add up to produce an investment sum that would exceed the money you took out on your mortgage. Throughout the 70’s and 80’s Policyholders were assured that this was the savvy way to finance the repayment of your mortgage. They had never failed to perform and they never would.

Never say never!

The insurance companies all blame the failure to reach investment targets on the performance of the investment markets, it’s not their fault! But if that was the whole reason why is Standard Life facing 98% of its policies behind target whilst Royal London only has 2% behind target? It seems clear that the worst performing insurers cannot entirely blame the stock market. In actual fact, to us it seems that the insurers themselves are to blame!

Another question supports our belief. The insurers have resolutely failed to explain how policies that were previously on target can suddenly fall behind so much. For example, last year only 19% of the Pru’s 164,000 endowment policies were likely to fall short of their target. That figure has now risen to 74%. How come?

Perhaps the insurance offices would care to explain.

Some mortgage companies are actually paying borrowers up to £25,000 or 10% of the value of their outstanding mortgage, to take their mortgage to another lender. It’s all because they need to down-size their mortgage portfolios in the wake of the credit crunch.

The problems are particularly difficult for the companies that lent to those borrowers with relatively poor credit track records – the sub-prime market. And it is precisely these lenders who are paying the highest rates of interest.

So we sniff an opportunity! If you took out a mortgage when your credit record was, well let’s say “less than perfect”, but your record has since improved, try asking your lender if they will pay you to move your mortgage elsewhere. You might get a rather nice surprise. Then you can use that money towards the deposit for your replacement mortgage and the odds are that you’ll end up with a mortgage at a much lower interest rate than you were previously paying. We know of one family who did this and their monthly repayments fell from £475 to £240.

But a word of warning. Check out how much equity you have with your existing mortgage. With house prices having fallen, even with the “goodbye payment” you may still not have enough equity in the house to fund the necessary 10% deposit you’ll need for the replacement mortgage. If you’re going to have a difficulty funding a 10% deposit with everything taken into account, the deal’s not on.

Sale and lease back arrangements are where the homeowner sells their house to a third party at a knock down price and then rents it back. It’s been one of the options people have had when they are in financial difficulties but are desperate to remain living in their house.

One of the problems has been that some unscrupulous landlords have thrown their tenants out after the first year and then gone on to sell the property at a healthy profit. The Financial Service Authority which now regulates these deals has already said that such actions are unfair.

Last week the Birmingham County Court backed up the FSA’s view. The Court said that a couple from Shropshire could remain in their house even though the company they had sold it to had stopped paying the mortgage. In fact the judge said that they could remain in the house for life by either renting from the mortgage company that had repossessed the house or buy it back.

Whilst this shows the way the English courts are thinking, the judgement in Birmingham doesn’t represent a legal precedent. Precedents can only be made in the High Court.

So if you are court in a similar position, before you take ant action, talk to the experts at the Citizens Advice Bureau to see whether they agree that you have been treated unfairly.

Mortgage lenders now believe that 1 in 10 borrowers owe more on their mortgage than their house is worth. But the position does vary depending upon which area of the country you look at. For example, the East Midlands is particularly bad in cities like Northampton, Derby and Nottingham with up to 23.6% of borrowers facing negative equity.

Whilst we have seen growth in house prices over recent months, commentators are warning that the worst may not be behind us. We warned about this very point last month and we still believe that the green shoots of the housing recovery will die back. If housing prices do go into reverse again, the curse of negative equity could easily hit 1 in 3 borrowers.

This is very worrying, not just for those afflicted because many more of them will end up in default and subsequent repossession but also for the housing market at large.

Negative equity prevents people moving home because they cannot afford to buy another home if they sell. This means that the supply of homes to estate agents is restricted and, somewhat perversely, this tends to push prices up. Then as the supply of houses increases again, unless mortgage financing becomes easier, prices edge back again.

If you are in negative equity, don’t panic. Negative equity is only a problem if you have to move or remortgage. Your best bet is to ride out the storm – this may take time but for many it’s the only option.

Now that the interest rates on fixed rate mortgages have shot up, it may be a good idea to consider a tracker mortgage with a cap.

The way capped trackers work is that you would pay their current interest rate, which should be around 3%. Ah, I can hear you saying, but you’ve been telling us that the bank of England’s base rate is going to rise – so that tracker rate will rise too. Yes that’s correct, but if you have your interest rate capped, the rate on your tracker will never be higher than that cap and that limits your upside risk.

Take First Direct for example. The cap on their new tracker mortgage is set at 4.99% until 2012 whilst the rate you’d currently pay is 2.98%.

This means that if interest rates were to rise by more than 2% then you would have the security of knowing that 4.99% was the absolute ceiling on what you’d have to pay.

So you have a dilemma – go with a tracker and accept that you’ll have to pay more as interest rates rise or pay more now with a fixed rate mortgage knowing that you’re paying more now (than a tracker) but sitting comfortably knowing that your payments won’t rise until the fix terminates.

So we’re back to difficult decisions in the mortgage market! Our advice is take advice and get a mortgage professional to help you get your decisions right.

It’s a fact that the law says that you must have an up to date Home Information pack before you put your home on the market. But it seems that half of house sales are going through without one!

So the law is being ignored or dodged.

And Local Authorities are doing little to enforce the law and the discredited paperwork. And discredited it certainly is as few if any purchasers care a damn about it and even fewer read them when they are available!

Apparently, long ago Local Authorities informed the Government that the regulations were unenforceable and it would cost too much to make it worthwhile pursuing sellers who did not have a HIP’s pack.

Even a report from the Trading Standards found that 5 out of 6 HIPs reports were misleading and not worth the paper they were written on.

Whilst the government has remained tight lipped about the future of HIPs the same cannot be said of the Conservative Party. Their housing spokesperson said that they will scrap HIPs packs saying, “We do not condone breaking the law. But rather than feebly attempt to enforce this bad law, the HIPs regulations should just be scrapped. Conservatives will scrap the packs.”

For the first time since the credit crunch struck, first time buyers can now get a mortgage with a 10% deposit. For some two years now, lenders have run scared of high loan-to-value mortgages as house prices fell away. But as prices begin to stabilise, lenders are re-entering the market.

Industry research shows that 21 lenders will now consider low deposit mortgages – although that’s a mere fraction of the number during the property boom years. (HSBC, NatWest, Yorkshire bank and Britannia seem the best)

Nevertheless it’s great news for first time buyers.

But as with all these things, there’s a sting in the tail. The cost of these low deposit loans is high. The average rate charged is close to 6.25% - that’s 5.75% over the Bank of England’s base rate for a 2 year fixed rate.

Before you dash out, consider what could happen when the fix comes off in two years time. Say you took one of these loans and base rate increased significantly during the next 2 years (as it most certainly will). Despite what optimists are saying we remain very worried about house prices and say we are right. What could happen in two years when the mortgage fix comes off?

Well, if the housing market remained down in the dumps you would probably have equity in your home of between 5% to 15%. At the lower end you’d be forced to stay with your lender and accept their standard variable rate. At the higher end you’d have enough to go mortgage shopping for a new fixed rate deal. But it’s touch and go.

Now add the scenario is that prices do continue to fall albeit at a slower pace, and you also need to move, say with your job. As you started with just 10% in your home you’d be lucky to clear that to put down as a deposit on your next home and that would mean that your next home would be rented. Your back to saving up again.

I know that some people will criticise me, but I think it is too soon to go for a 10% mortgage bearing in mind that interest rates are going to rise and the direction of the housing market is by no means clear. I’m not the only one that believes that the current upward movement in house sales and prices is a false dawn. The market still has lots of problems to face and lots to prove.

Landlords financing their properties on buy-to-let mortgages are 3 times more likely to default on their mortgage payments than normal borrowers. This has led to a spate of repossessions.

Between January and March this year, 4,100 buy-to-let properties have been taken back by the lenders. 1,700 were repossessed and 2,400 were transferred to “receivers of rent” who then took over the running of the properties.

Few tenants would be aware that their landlords were in financial trouble, so often, the first sign of a problem is when the bailiff comes knocking and they discover that the property is about to be repossessed.

So now the Government is proposing to bring in laws to protect tenants. But an existing law helps them if they are part way through a tenancy agreement. It’s called the Law of property Act 1925. Under this legislation, the lender can appoint a receiver of rents to take the property from the borrower. These receivers are often insolvency practitioners or chartered surveyors and operate independently from the lender and the borrower. But it is up to the lender to decide whether to apply for repossession or appoint a receiver of rents.

If you are a tenant and are up to date with your rent, the law says that you have the right to remain in the property until the end of your tenancy agreement. If you are not up to date, then you have effectively broken the agreement and you can be evicted.

A problem sometimes arises when the lender is not aware that the borrower had rented their property out. In this situation, the tenancy agreement is not normally binding on the lender. The lender will consider the agreement as fraud on the borrower’s part and therefore the tenancy agreement becomes void. In those situations the lender can decide whether to opt for immediate repossession or go down the receiver of rents route. In today’s difficult property market some lenders prefer to keep the rental going and hold the property until the housing market improves.

If you are a tenant and know that your landlord is in financial trouble, you should consult your solicitor.

We told you on the 8th June to get your mortgage fixed before rates went up. Well, if you haven’t yet taken our advice, you’d better hurry!

Nationwide set the trend last Friday when it withdrew its whole range of fixed rate mortgages and replaced them with rates 0.86% higher. We expect other lenders to follow suit with similar increases and the Yorkshire and Woolwich building societies have already withdrawn their lowest rates.

As we have repeatedly warned, the bank of England will be forced to raise interest rates sooner or later. Their base rate cannot remain at 0.5% for ever. The fears emerging about oil prices and the signs of house prices stirring will only serve to bring the increase closer. On top of that we are seeing the banking industry generally, staking steps to increase their margins.

So the message to borrowers is clear – get a fix now or you may be too late.