Belfast Telegraph

Sunday 23 November 2014

Personal Finance Questions: I see house prices are continuing to drop.

Question : I see house prices are continuing to drop. We are considering buying a house. Can you tell me how possible it is to get a mortgage and what do you need to do to convince the lender?

Answer: House prices have fallen substantially. The price of a new house in Northern Ireland has dropped by a quarter in the last four years and the average price of a home has fallen by nearly half.

Mortgages are obtainable, but you must put up a reasonable deposit. Some mortgage lenders will lend as much as 95% loan to value - leaving you to find a 5% deposit. But some of the best loan rates require higher deposits.

Many of the best mortgage deals are offered by building societies - to compare, use a money comparison website, such as www.moneyfacts.co.uk. The lowest rate currently shown by MoneyFacts on a variable rate mortgage is with HSBC, at 3.84%, on a maximum 90% loan to value.

You might opt instead for a fixed rate mortgage, such as that from The Co-operative Bank, which offers 3.59% fixed for five years - but only at 75% loan to value. Some of the best deals are exclusive to mortgage brokers, so it is worth consulting a broker - but choose one with care. Mortgage lenders need assurance that you have the necessary deposit; that your earnings are regular, secure and sufficient to cover your repayments.

You must have a good credit history: your credit reference score will be affected by whether you are on the electoral register, and not in default or arrears with any loan or credit account.

Question: The company I worked for has closed. I have been paying into a company pension scheme for years. Is all that money gone?

Answer: No. Employers are not allowed to raid company pension schemes to pay off creditors.

If the pension scheme has been illegally raided, or if the scheme is in deficit when the company ceases trading, you and your colleagues should be protected by the state-backed Pension Protection Fund.

The Pension Protection Fund protects employer pension schemes in the UK. It guarantees to pay employees the pensions that were promised by their employers, including to former employees who are already receiving retirement income through their former employer's scheme.

The PPF also compensates members of pension schemes that have been defrauded by employers, directors, or others.

It is funded through a levy on other pension schemes.

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