Property and economic update

So London wins the Olympic bid. This is great news, especially if you own property in and around Stratford and the East End. This region will prove to be a great area in which to invest over the coming years, and should have a knock on effect to the rest of London. Undoubtedly, property prices in the east will now begin their skyward trend as the region undergoes huge regeneration and infrastructure improvements. So good news all round, but what happened to house prices in general during June?

Well, for the first time in a long, long time both the Nationwide and Hometrack are in total agreement. They have both reported an overall fall in the average property value by 0.2%. This is without doubt firm evidence that the market is continuing to stagnate rather than fall. Of the 57 Hometrack regions, 1 saw a price increase, 9 remained static and 47 witnessed a decrease. Northumberland headed the results with an increase of 0.1% whilst Norfolk was the worst performing region with a decrease of 1%. These are tiny figures though and really all we are seeing is a static market with slight fluctuations.

John Wriglesworth, Hometrack's housing economist comments: "We expect house prices to continue to bump along the higher plateau over the coming months. Whilst the market is stagnating it is showing absolutely no evidence of crashing. All talk of a pending housing recession is total clap trap".

Fionnuala Earley, Nationwide's group economist says: "If interest rates do move south in the Autumn, affordability will improve and may mean that only small price adjustments will be necessary to bring some liquidity back to the market. Thankfully, recent stability in the housing market means that it is not a concern to the MPC right now, but their decision at the next meeting will have big implications for what happens next".

So the market has now been static for almost a year. This can only be viewed as good news for the property investor as any potential volatility subsides and the risk of a crash diminishes. But with interest rates looking likely to head downwards in Autumn, property prices may start to edge upwards slightly by the end of the year, with a return to growth in 2006, albeit limited.

Three steps to enhancing your personal performance! By Jerry Clark

Are you having trouble working out how best to attain your personal and financial goals? Jerry Clark, a leading motivational speaker, explains how to enhance your personal performance in just 3 easy steps, and be more confident about reaching those goals quickly.

1. Clarity of Outcome: Before you begin any endeavour, know in advance what you want your outcome to be. By getting clear on your outcome, you will be using the awesome force of what I call the future pull. In other words, the future you create for yourself pulls you closer to it and empowers you to take the proper actions in the present. So before you do anything else as it relates to your personal or professional life, take time to get crystal clear on what your desired outcome will be.
2. Consolidation of Power: This is a fancy word I learned in 1982 while taking Martial Arts. It simply means focus. Since you have a certain amount of time, energy, and money to devote towards accomplishing your outcome, it's important to know which activities you should direct your resources towards. If you don't take the time to determine which of the multitude of possible activities will provide you with the highest payoff, you may find yourself squandering much of your resources. Thus, apply the 80/20 rule here. The 80/20 rule states that 80% of your results will come from 20% of your activities. Therefore, it's important for you to concentrate your efforts on the 20% of the activities that will get you 80% of the results. Most people concentrate on the 80% of the activities that will get them only 20% of the results.
3. Commitment to Disciplines: This is where you actually execute your action plan. Once you know which areas you will be focused on, you can now get busy by moving ahead in those areas. It's important to remember that consistency is the key at this stage. By doing the small simple disciplines on a daily basis, eventually the compounded effect will kick in and you will collect your outcome. Every day in every way, you're either performing simple disciplines or simple error in judgments. Apply this simple three-step process and watch what happens to your personal performance levels and your ability to generate wealth.

"Your PURPOSE explains WHAT you are doing with your life. Your VISION explains how you are living your PURPOSE. Your GOALS enable you to realize your VISION."
- Bob Proctor, Author and Speaker

"Courage means to keep working a relationship, to continue seeking solutions to difficult problems, and to stay focused during stressful periods."
- Denis Waitley, Author, Speaker and Trainer

How credit reports work

There are very few of us who can get through life without borrowing money at some point. After all, how many people do you know who could buy a house without getting a mortgage?

To some extent we are, therefore, dependent on those who are prepared to lend us the money we need. Credit is much more easily available these days - some say too easily - but, nevertheless, you still have to jump through some hoops to get what you want. If you want to be able to manage your money efficiently, particularly if you're in debt, it's as well to be aware of what those hoops are.

Lenders will base a decision on whether to lend you money on three factors: your application form, your credit files and your credit score.

Application Form
From this, the lender will not only get the basic information from you such as your name, age and address and how much you want to borrow but also how much you earn, whether you are a homeowner and what you want to borrow the money for.

Some of the questions might seem quite irrelevant to you - after all, why should it matter whether you are married, single or divorced? However, the information you give will be used as part of a lender's credit scoring process, so it's important for the lender to be able to build up a profile of you and your circumstances.

Credit Files
In case you aren't aware of it, each time you apply for credit of some sort, whether it be a bank loan, credit card application or Hire Purchase, your prospective lender will carry out a search with their preferred credit reference agency to establish whether or not you are creditworthy.

Of the three factors that enable a lender to decide whether to loan you money, your credit files are probably the most important. Although only authorised organisations are permitted to gain access to them, they serve as an open book to those organisations about how well, or how badly, you manage your finances. Fortunately, you have a right to see them too so it's a good idea to send off for them occasionally to make sure the information they hold is correct.

There are three credit reference agencies - Experian, Equifax and Callcredit - and they all hold information gleaned from the electoral roll such as your address details and the names of others who live at the property. They also contain details of any County Court Judgements and bankruptcies. Alongside that will be information passed on to them from various banks and building societies about your payment history for cards, loans, mortgages etc, that you already have.

Note that not all financial organisations share all the information they have on you with all three of the agencies, and most only refer to one of them when checking you out, so it's quite likely that one agency does not hold a complete record of your credit history. However, since your payment records will affect how you decide to manage your finances, it's important that the information any agency holds about you is up-to-date and correct.

So, what does a prospective lender see when they bring up your credit file?

Every time a search is carried out it is logged on your files and that information is available to every other lender who needs to access them. In some cases, this can go against you - for example, if you have approached several banks, it might appear that you have looking for lots of credit and have been turned down even though you may have a perfectly good reason for not proceeding. However, lenders are beginning to realise that a mere search may simply be an indication of a prospective borrower shopping around for the best deals and consumers can also ask lenders not to carry out a search in the early stages if they are simply making an inquiry.

At the moment, the details of anyone with the same surname living at your address will also probably show up since it will be assumed that your finances are linked in some way - for example if you are a husband and wife. However, if you're living at home with your parents or sharing a house with a relative then you could be turned down for credit simply because they're not particularly creditworthy.

If you go ahead with your application and you meet your monthly obligations on time, then your payment history for that particular borrowing will show up on your file as a series of zeros for each card or loan that you have. If you are late with your payments your track record is automatically altered even if you miss just one payment.

For example, let's say you take out finance to buy a dishwasher over a six month period and you miss payments four and five and then catch up; your file will state 000120 ie: in month four you were 1 month behind and in month five you were 2 months behind.

Most prospective lenders aren't too worried about the odd missed payment especially if you've clearly caught up and have a series of lovely zeros after the missed payments - sometimes people do simply forget to pay their credit cards, after all. It's the Default notices and County Court Judgements which are most likely to be of concern and as these stay on your files for six years, even if you eventually manage to pay them off, it can still affect your chances of getting further credit. You'll either be turned down flat or you'll be charged a higher-than-usual interest rate.

There aren't many ways to fix your credit files if they don't look too good but you should certainly start by making sure that the information on them is correct. The credit reference agencies will rectify factual details if a mistake has been made.

If you have a bad record because of late payments, defaults or County Court Judgements, then there's not much you can do to improve matters except to make sure that your payments are on time in the future. However, if you've missed a few payments for reasons that you think should be taken into account, you're allowed to write a short explanation for your file so that it shows up when lenders run a credit search on you. For example, you might have been in hospital at that particular time or temporarily unemployed.

Ultimately, the only way to improve your credit rating is to pay off the debt. Lenders should automatically notify the agencies that any default is satisfied but it's as well to check your files to ensure this is done. Alternatively, you can ask for a letter of satisfaction from the lender, which should then be sent to the agencies with a covering letter. Future lenders will at least be able to see that you did pay the debt off.

Be aware that certain things don't look good on your credit report. Having too many cards and loans, even if you've been paying them off on time, might raise an eyebrow. The searcher will see how many credit cards you've got, the amount of credit that's available to you and the balances you've got on each of them. They might wonder if you're getting in over your head.

Equally you could be rejected for a loan or a credit card simply because you're too good at paying off your debts and that simply may not be profitable enough for them. Don't be too offended by this - take the trouble to find a lender who likes a good payer instead.

Problem tenants? - Tread carefully

We recently heard of a situation where someone who had been renting a property for the past five months had announced that they were leaving. A six-month 'break' clause in the contract allowed them to do so. The problem is that their finances were not in order at all. They hadn't managed to pay the last month's rent, or that of the month before.

A recent survey by the National Landlords Association (NLA), suggests that using kid, rather than boxing, gloves is the best tactic when dealing with such situations. David Salusbury, chairman, of the NLA, says that about half his members - who, on average, have nine tenancies in their portfolio - have at some point had tricky tenants. "Over half of those said they successfully used the softly-softly approach to get the rent paid and were able to negotiate a conclusion. Only 36% had to resort to an eviction order to get rid of tenants, mostly the unpaying kind. But that was very much a last resort."

Court orders are very tiresome for a number of reasons, and any experienced landlord will know that it is better to stay on speaking terms. Tenants don't want to go to court any more than you do, because if an eviction order is granted, they will have a county court judgment against them and will be blacklisted from future lettings, credit ratings and so on.

One of the best ways to deal with unpaid rent is to draw a line under what is owed and then spread repayments over the next six or 12 months. Or find out, what's best for individual tenants. We have heard of tenants paying on a weekly rather than monthly basis, because it's far easier for them to cope that way.

Quite apart from anything else, chatting it over is a far cheaper option. The average cost of evicting tenants via the courts is more than £800 and the process can take up to six months. A typical monthly rent is £850 and, on average, 5.1 months of rent - more than £4,300 - is owed by the time a court order is in force. A small and, presumably, deeply unhappy minority of landlords (8%) say it can take more than a year to get tenants out.

Negotiation is the key. Communicate with the tenant. Problems can be nipped in the bud by early contact. Then, if that is not working, and only as a last resort, go for the courts.

If your agent is responsible for rent collection then it's down to them. But, crucially, you need to be on to the agent sufficiently regularly to almost be a nuisance to them. You must keep your concern high on the agent's agenda.

One thing that is absolutely crucial is to be flexible and understanding. The tenant may have genuine reasons for not paying. Try and be understanding and see if there is a compromise you can reach. It's good business to treat your tenants well, and, obviously, you must act within the law. You are not allowed to put their belongings on the street, change the locks or harass them, and of course, you are not allowed to take possession of your property and evict them without a court order.

So keep smiling - and remember your tenants probably want to arrive at a solution as much as you do.

"If you believe you can, you probably can. If you believe you won't, you most assuredly won't. Belief is the ignition switch that gets you off the launching pad."
- Denis Waitley, Author, Speaker and Trainer

"When you make a mistake, don't look back at it long. Take the reason of the thing into your mind, and then look forward. Mistakes are lessons of wisdom. The past cannot be changed. The future is yet in your power."
- Phyllis Bottome 1884-1963, Writer

Why you should use a mortgage broker

So you're looking for a mortgage, but with the introduction of so many different products and the boggling complexity of the small print, is it wise to go it alone?

When applying for a mortgage, there are two routes that you can take. The first is to go directly to the lender. This is fine if you are confident that you really know what you are doing and can keep on top of the process, but most people tend to opt for the second option and employ the services of a mortgage broker.

But why do most people use a mortgage broker? Isn't it always cheaper to cut out the third party in any deal? Well, this is not necessarily so with a mortgage broker because amongst other things they can offer some fantastic deals that you simply won't get directly from the lender. However, the advantages go way beyond this. Take a look at the following points:

• The mortgage market is complex and a broker is normally far better placed to advise on the different schemes and policies available.
• A mortgage broker will also have details on the latest special offers available, sourced from around the market.
• Some of the special offers will only be available via a mortgage broker because he can bring economies of scale to a mortgage lending company.
• If you have a bad or problem credit rating, problems proving your salary or need to borrow more than the property is worth then seeing what a mortgage broker can do is normally the best route to take.
• Some mortgage brokers develop a product that they feel their clients will buy and then approach the lending companies to finance it. You therefore will often find that mortgage brokers offer products that the lenders don't offer directly to the public.
• Mortgage brokers also specialise in buy-to-let deals and can offer excellent and broad advice on this topic due to their experience.
• Mortgage brokers get paid either by their clients or by the lenders as a so called finders fee. It's therefore worth while to check out these facts and other associated costs before you commit any capital.

For most people using a mortgage broker is a win-win situation. Firstly, better deals are normally offered and secondly you've got an expert looking after your interests. And remember a mortgage for most people is the single most important financial decision of their life.

Need mortgage advice?

Maybe you're thinking of buying an investment property, or you need to release funds tied up as equity in your house. Perhaps you just want to find the best mortgage rate for your own individual circumstances and cut your mortgage payments. Why not call our mortgage department today? Our resident mortgage advisers will give you the best possible advice to suit your requirements. Call them today on 01252 737575.

What's available?

We currently have the following investment opportunities.

• Equity Chambers, Bradford
• OE, Paradise Street, Oxford
• The Wharf, Titford Road, Oldbury, Birmingham
• Marco Island, Huntingdon Street, Nottingham
• Belvoir Street, Leicester
• Thames View, London Road, Purfleet
• Leeds 43, Dewsbury Road, Leeds
   
• Mill Hill Gardens, Budapest, Hungary
• Sun Palace, Budapest, Hungary

Please go to www.propertyforlife.com/discount_prop.php for full details and look out for more great opportunities coming soon!

Make some extra money?

The 'Property for Life' referral programme is a great way to make extra money. Take a look at the table below to see just how much. If you know of anyone who is interested in purchasing investment property why not refer them to us. It's simple, if they buy you make money, and the more they buy the more money you make. Take a look at our website for full details www.propertyforlife.com/tellafriend.htm

Back issues

Remember, you can read any of our back issues by following this link to our web site www.propertyforlife.com. If you missed one, or you want to read that really interesting article but can't remember where you put it, you will find it all here.