Back to the beginning though and it was during the mid-1990s that the infrastructure of the internet became fast and stable enough to enable a few enterprising operators to write software that would link like minded gamblers together.  The additional attraction was the ability play poker, Internet Roulette, blackjack or some other game against (or with) someone on the other side of the world for real money.  If the first online casinos thought that the potential customer base for this new business model was massive, they can only have underestimated it.

Online Poker Table

In the next few years, online casinos providing a wide variety of casino games and slot machines sprang up to take advantage of what was clearly massive demand.    These were still the early years of this industry of course and there were many unscrupulous operators looking to take advantage of the opportunities to cheat.  How did a punter know if Blackjack cards were fixed or not?  What about the Roulette wheel?  Some sort of regulation was needed and many countries and territories set up their own regulatory authorities.  Gradually the biggest sites gravitated to these licensed territories and the industry was on it’s way to some sort of legitimacy.

The major setback so far for the relatively new industry has been the decision in the United States to try and legislate against the industry and stop it’s own citizens playing for real money.  Since 2006 the American-facing industry has been decimated and this has removed a massive chunk of revenue from the global market.  Happily, the next year or so should see a return to common sense, Casino Bonus Codes and online gaming in States.

It’s now an industry which is worth billions every year so when you hear of an all-encompassing recession in western economies, don’t forget that there are some industries which are stronger than ever.

I play a bit of poker online and I also like Online Keno and for that reason I know my way around the vagaries and the pitfalls of online casinos.  The inquisitive gambler can take his or her pick of thousands of websites which offer a bewildering array of incentives the new customer.  The skill is in choosing which is the best one for you.  Occasionally an Online Kasino which catch your eye with a certain deal which looks good.  It was one of these deals which attracted my attention as it offered genuinely free money.  This happens occasionally and the trick is to search for a ‘no deposit casino’.

This means that the casino will give you money just for signing up; obviously you can’t withdraw the money but you can withdraw any profits you gain from wagering this money.  So here’s what happened to me – I gladly accepted my free £10 and headed over to the poker lobby.  These lobbies can take a bit of working out but eventually I found a Texas Hold’em tournament which cost about £3.50 to enter (that’s called the buy-in).  The prize was about £50 plus a bit extra depending on how many others entered.

Of course the happy ending is that I won the tournament.  Using the required ingredients of luck, timing and a tiny amount of skill I gradually saw off the 60 or so other competitors until the final, remaining few when my chip stack was so proportionately large that I couldn’t really lose.  A few minutes later the big prize was mine.  I still use this bankroll to finance the tiny-stakes games and Novomatic Slots I usually play.

Anyway, the lesson is that if you look hard enough and are prepared to invest a little time, you may just get a moderate financial reward for nothing.

Some weeks ago we wrote about the Mortgage Indemnity Scheme which aimed to provide selected lenders with the ability to offer 95% mortgages to first time buyers.  The NewBuy scheme actually appears to be pretty similar with a few provisos and this is how it works:

• The scheme is open to buyers of new builds, whether it’s their first house or not.
• Three lenders, Barclays, NatWest and Nationwide are on board to offer 95% mortgages up to 95%.
• The government (via the taxpayer) and the building company will be co-guarantors of part of the loan.  The builders will pay 3.5% of the sale price into an escrow account where it will remain for seven years.  The government will act as a guarantor to another 5.5%.
• The upper limit for the NewBuy scheme is a mortgage for £500,000.

As with the Mortgage Indemnity Scheme, the idea is to kick start the market for new homes, giving the construction industry a much-needed boost in the process.

PM David Cameron with prospective buyers

Right To Buy

On the same day, Prime Minister David Cameron confirmed that the old system of right-to-buy for council house tenants (social housing tenants) is being ‘re-booted’.  The scheme was essentially a way to provide discounts for those in council-provided housing to buy their own residence.  The government believes that home owners will have more respect for their property and surroundings than those who just rent.

Those wishing to buy will be eligible for a 35% discount after living in the house for five years. Discount cigs provide the same sort of saving. Every additional year will provide an extra 1% discount up to a maximum of £75,000.  A flat/apartment tenant will get 50% discount after five years and then an additional 2% per year.  It will remove the necessity for the less well off to become involved with bad credit loans.

Should you overpay?

If you have a basic repayment mortgage of £125,000, perhaps paying an interest rate of 4% or so for the next twenty five years, overpaying is something of a no-brainer.  It’s been shown in many other sources that paying extra, relatively small amounts on top of your standard monthly payments will reduce the life of your mortgage substantially.  In the example above, paying an extra £50 a month and assuming the interest rate remains the same, the mortgage will end 35 months earlier.  Over a twenty five year period, just under three years may not sound much but it equates to a saving of around £25,000.  Beware of any overpayment penalties your lender may charge though.

So the question is: now that interest rates are 0.5% is there any point in overpaying?  Well the answer is: it depends.  You will of course still pay off your mortgage earlier and the money is going in to an investment – your property, but it’s currently an investment which is not appreciating in value.  Perhaps you could find a better, more lucrative investment for your extra monthly cash.  Plenty of governments run tax-free savings schemes which earn money well above the base rate.  Of course paying oextra on your mortgage is also tax free.

In the end it may be the piece of mind of paying off your mortgage quicker which wins the day.  To add to that we would also note that although interest rates are currently low and will be for one, two, maybe three more years, in the end a healthy economy demands a higher interest rate and the money you put into your mortgage now will pay off when the base rates start rising again.  We say overpaying is still the way to go.

First, take a look at how much money you make. This should be the after tax amount so you can be sure you won’t be short on funds. Ideally your housing costs should not exceed one third of your income to live at a comfortable rate. This includes the mortgage, taxes, and the insurance. This number should be what you spend per month on your home.

If you’re finding this number hard to achieve then try spending less in other areas or looking for a better deal. There’s plenty of homes you can get for under a hundred thousand dollars now in a lot of areas. You could also save a lot of money by getting a lower interest rate.

Make sure to get more than one quote from banks and insurance companies! The differences in cost can be quite staggering. Just a percentage or two less in interest rates could equal hundreds of dollars back in your pocket every month that would be going to a bank. Try looking at online lenders or local credit unions who may offer you a better rate.

If you’re finding your insurance rate is affecting your ideal one third of income position then talk to your agent about a lower rate. There are lots of things you may not need that you could cut. You could get a higher deductible or cut uneccessary coverage. I save a lot of money by getting rid of replacement value of contents. This basically covers your furniture and such. Most of mine was free so I see no reason to spend hundreds of dollars extra per month to insure it! Other things that effect your insurance premiums include the age of the home, being in a flood zone, proximity to a fire hydrant, hurricane shutters, age of your roof, swimming pools, and whether or not you have a dog!

If you’re having trouble getting a down payment there are many first time home buyer programs that will give you a morgage with as little as 3% down. Buying a home through owner financing is also an option if you have poor credit. If you have a 401k you could also potentially borrow money from that to get your down payment, but watch out for fees. Make sure you know all the rules before betting against your retirement fund!

Need more information on mortgage deals, home ownership, and general finance help? Visit Pennyseeds.com for more great financial assistance articles like this one!

Equity release is not a new concept.  As house prices have risen (before the stabilisation of the last few years), many property owners have found themselves in possession of a house which is worth twice or three times as much as they paid for, far outstripping rises in inflation and the aforementioned plateau in price house prices.  Equity release is the term given to the way in which a homeowner in that position can convert some of that inbuilt profit to real cash.  A remortgage is a basic way to achieve that.

Reverse mortgages will release equity

Reverse mortgages are another way of getting some of that cash – it’s available in the United States but largely unknown in Europe.  It’s a federally regulated scheme that essentially allows a homeowner over the age of 62 to borrow money proportionate to the value of the house.  The more your house is worth, the more money you an borrow.  The main advantage is that the borrower never has to pay the loan back; ultimately the lender will take the property on the death of the applicant.  The borrower can take the loan as a lump sum, a series of monthly payments or a bit of both.

The small print is as follows:

• You must be over 62.
• You must live in the house.
• Each deed holder must be on the loan application and meet the appropriate requirements.
• The current mortgage must be paid off or be lower than the loan amount.
• You must keep up with taxes and home insurance for the life of the loan.
• Just like a mortgage, there will be closing costs but this can be incorporated into the loan.

It’s not a perfect scheme but it does enable those who apply to enjoy that equity if they are cash poor.  Don’t forget though, your house is your kid’s inheritance so perhaps run the scheme by them if you’re thinking about it……..

This being said, the UK still owns one of the leading mortgage markets in the world so having a mortgage is vital to you as a potential buyer obtaining a property. Price comparison sites are therefore the answer when confusion arises when looking for a mortgage. You can easily sort out how how much you want to receive, for how long and the best interest rates. The site will then give you a usually honest feedback of the best banks and building societies that fit your requests. Online comparison sites such as Money Supermarket are most popular.

The thing about price comparison sites is that they are usually sponsored by the organisations they are comparing. For this reason, you will find that the first three or five results that you see after you have made a product search are, on some sites, in parallel to sponsored listings rather than to the best deal that is available. Also, it is better to compare on a site that includes all the providers in its search, as this will have a great impact on the results and perhaps even your final price! Overall, price comparison sites are a good tool and if used well, could save the consumer hundreds of pounds, therefore there will be more money to spend on that new BMX!

Welcome to 2012 then and it looks like the stagnating value of residential properties will continue for most of 2012.  Predicting house prices much further ahead is a largely pointless activity, especially given the current economic woes in mainland Europe.

According to the Nationwide Building Society, the average house price is now just under £164,000, that’s a level which we haven’t seen since since early 2004, apart from a brief dip at the beginning of 2009.  House prices have actually risen in London, for reasons which we’ve explained before, which means that in the rest of the country the values will have dipped slightly.

The Halifax Building Society has also said that their figures show a fall of 1.3% in the value of residential property.  Their figures reveal an average house price of just over £160,000.

Broken down region by region, the U.K. land registry also shows a disparity between house prices changes as follows:

Essentially the further North and away from London one travels, the bigger the falls in value.  If you’re house is in commuting distance the fall is minor – up in the north-east and north-west it’s around 5%.

Commentators suggest that the U.K. housing market is proving itself to be resilient but the reality is that no one is buying and no one is selling; this is artificially propping up the  values and it won’t be until credit in the mortgage market frees up and prospective buyers are able to qualify for reasonably priced mortgages that we’ll really see any realistic moves in property prices.

Less Credit Available In 2012

Added to the stagnation in the value of house prices is the unwelcome news that mortgages may become even harder to obtain.  If you didn’t think that was possible you’d better think again; lenders who responded to a Bank of England survey say that the possibility of worsening economic conditions in Europe, added to a flat U.K. economy and  tighter household finances mean their ability to lend will be hampered.  Banks with major credit liabilities in struggling countries such as Portugal, Greece and Italy will be the ones introducing more strict criteria into their products.

Interestingly, in mid-December, the Financial Services Authority (FSA) will introduce new ‘common sense’ standards in 2013 which will govern the way mortgage companies lend to consumers.  It hardly seems relevant now but there was a time when applicants were able to ‘self-certify’ their own applications, meaning one could essentially make up a salary to get a mortgage approved.  It was also possible to obtain a mortgage for seven times an applicants salary in some cases and perhaps the most famous piece of irresponsibility was Northern Rock’s ‘Together’ mortgage which lent applicants 125% of the property value.

A huge economic crash brought all that to end of course and it’s difficult to predict a time when banks and other lenders will start lending at ‘normal’ terms again.  It’s certainly a case of bolting the stable door after the horse has escaped but, as the chairman of the FSA, Lord Turner, explains: “….it is important to ensure that better practice endures in future when memories of the crisis recede and the dangers of poor practice return.”

On Tuesday evening the Reserve of Bank of Australia reduced the interest rate by 25 basis points.  Although not as badly affected by the economic events of 2008 onwards and the current fun and games in Europe, Australia is still a moderate player in the global economy and events around the world effect it accordingly.  The RBA’s stance in lowering the rate reflects the challenging economic conditions in Australia and around the world.

The big question for mortgage holders in Australia will be whether the big four banks – Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, Westpac Banking Corp, National Australia Bank Ltd – follow the prompt and pass the decrease on to the customers.  Treasurer Wayne Swan clearly feels this should be the case but so far there has been no movement from any of the four big lenders.

A similar decrease last month did lead to a decrease in the rates from all but National Australia Bank but this month has seen a downgrading in all the banks credit ratings from Standard & Poor, leading many commentators to speculate that a failure to pass on the rate decrease is an attempt to shore up their finances;  the credit rating drop means credit required by the banks will cost more.

Unsold Australian property

Short of some sort of legislation, it’s hard to see what Swan can do to persuade the banks to pass on rates decreases to their borrowers – it’s economically important for the customers and politically important for Swan; 90% of mortgages are variable rate and the big four banks control 80% of the entire mortgage market.

Swan made the point that Australian banks are among “….the most profitable banks in the world” but his only advice to customers was to swap their accounts if they weren’t happy with the behaviour of the lenders.  We’re not the first website to pass negative comment on the disproportionate power of Australian banks and for sure we won’t be the last.

Australian Mortgage Applications Up

In contrast to the above story, in November the Australian Finance Group recorded an 18.4% increase in mortgage applications countrywide.  AFG is the countries largest lender and a good indicator of underlying financial trends.

The two stories here may seem to contradict each other in certain ways but the AFG’ figures are pretty clear that the increase is due to November’s rate decrease which, as stated above, was passed on to three out of four of the big banks.  It also comes on the back of a consistent slowing down of the mortgage market for various reasons including unaffordable products for first time buyers and high property prices in general, something that is deterring potential buyers in economically uncertain times.

The current economic climate means that many property owners have found themselves in desperate financial straights and the Australian Bankers Association have responded by setting up a website – www.doingittough.info – to provide customers with some handy advice if they feel they are slipping into debt.

The British Labour party have predictably called the new government proposals “too little, too late” but the ruling coalition believes that their new measures could help around 100,000 people in England & Wales who are struggling to get on the housing ladder.  An average first time buyer is now over 40.

The problems for first time buyers are familiar to us all – low housing stock, lack of affordable mortgages and and very few new houses being built – and the mortgage indemnity scheme is designed to address at least one of those factors.  It will provide those who qualify for the scheme with up to 95% mortgages which will still come from the usual lenders but the government will underwrite some of the risk.

Mortgage Indemnity Scheme

The theory is that the knock on effect of the scheme will be an unblocking of the housing market in general.  If first time buyers can start buying again, houses further up the chain will start moving as well.  Developers will become involved again and begin to build new houses and it’s that activity which can have a beneficial effect on the economy by getting people back to work.

David Cameron (right) and Nick Clegg

Along with the mortgage indemnity scheme there are a number of other measures the government coalition is planning and it is hoped that these will complement the headline-grabbing part of the proposals:

• A £400 million fund to aid developers in kick-starting housing developments which have stalled.
• A focus on supporting social housing (council house residents) to revitalise the once popular right to buy scheme.
• More government owned land to be made available for building projects.
• A renewed look at those development projects which have ground to a halt, usually because of planning restrictions.
• A £150 million fund to investigate and revitalise unused housing.

Objections

Some of these proposals will not be popular with various groups, especially those who object to the relaxation of planning laws.  Stalled housing developments have stalled because local people may have genuine objections to the proposals facing them; will they now lose their right to object?  Local pressure may also be the reason behind the government making it’s own land available for new developments – planning permission may be easier.

With regard to the ‘right to buy’ scheme for social housing residents, there will undoubtedly be many who feel the fund would be better spent helping potential first time buyers who live in private rented accommodation rather than those already subsidised by the local authorities.

Of course the whole mortgage indemnity scheme is being backed up by taxpayers money; the governments money is our money and from a wider perspective the taxpayer will once again be underwriting the risks taken by the lending institutions.  If the scheme works it will certainly give a boost not just to first time buyers but the economy in general as the housing market loosens up.  If it doesn’t work and if the lenders continue to prevaricate on mortgage approvals, all we’ve done is chucked a load more money away.

It had better work then.