Other than interest, is there any charge to get the loans?
You’ll pay a fee of up to 4 percent of the loan, deducted proportionately from each loan disbursement. (Part of the fee is for insurance used to pay off loan defaults; the rest reduces the cost of the loan to the government.) Because of this deduction, you’ll receive slightly less than the amount you’re borrowing.
- posted by Mark Pane @ 8:14 PM 0 comments

 
What’s the interest rate on these loans?
The interest rate is variable (might change each year) but does not exceed 8.25 percent. For July 1, 2004 to June 30, 2005, the interest rate for loans in repayment was 3.42 percent. Interest rates are adjusted each year on July 1. You’ll be notified of interest rate changes throughout the life of your loan.

If you have subsidized loans, you won’t be charged interest while you’re enrolled in school at least half time, during a grace period, or during authorized periods of deferment (click here for more information). Interest will accrue (accumulate) when you enter repayment or a period of forbearance (click here for more information).

If you have unsubsidized loans, you’ll be charged interest from the day the loan is disbursed until it’s paid in full, including in-school, grace, deferment, and forbearance periods. You can pay the interest during these periods, or it can be capitalized (click here for more information).
- posted by Mark Pane @ 5:13 PM 0 comments

 
Mortgage sales hit problems
The housing market has been buoyant over the past few years, but mortgage providers and first-time buyers are both now facing a tough time. Following announcements from the Bank of England that there has been an overall decline in the total number of UK home-buyers, and a declaration from the Financial Ombudsman Service (FOS) that the number of disputes concerning mis-sold mortgage endowments has now hit record levels, it seems that mortgage lenders are facing a bleak time. Add to this the results of a new survey, by the Edinburgh Solicitors Property Centre, which shows potential first-time buyers fear that they may never get onto the property market, and you start to see a worrying picture of the housing market emerge.

The problem with the mis-selling of endowment mortgage products has recently made the headlines in the world of personal finance. The FOS admitted receiving 70,000 new complaints about endowment mortgages, the equivalent of 1,300 a week, compared to just 300 a week three years ago.

The main grounds for complaint revolve around people who believe that mis-selling had occurred regarding policies. Many consumers feel that the endowment product sold to them was unsuitable either because it would lead to financial short-falls, or because the level of risk involved had not been adequately explained to them prior to the policy commencing.

The sheer scale and number of complaints has lead to changes in regulations and the imposition of deadlines for lodging complaints.

"The number [of complaints] we can expect to receive in the current year will largely be determined by how financial services firms meet the new regulatory requirements on so-called re-projection letters. Most of these letters will warn of likely mortgage shortfalls and many will give, for the first time, an explicit deadline by which any complaint must be lodged.", Walter Merricks, chief ombudsman.
The situation is no better for first-time buyers either. Forming a significantly important sector of the house buying market, a recently published study from GMAC, the financial subsidiary of General Motors, carried out by Professor David Miles, who was originally commissioned to investigate the mortgage market by Chancellor Gordon Brown, has found that dramatically fewer first-time buyers than ever before are currently entering into the housing market.
A report from mortgage lender, Abbey, highlighted that the main concern for first-time buyers is not a lack of desire to buy their own house, but rather a fear over whether they feel they can afford to do so. Just over a third of the potential first-time buyers in the survey, indicated that they wanted to buy a home within the next year, however only 5% were confident that they would actually be able to.
These figures are disappointing when viewed against the backdrop of the initiatives by Gordon Brown to help first-time buyers, through the increase in the zero rate stamp duty threshold announced during the budget, and the introduction of shared ownership schemes with purchasers owning between 50% and 75% of their home and paying rent on the remainder.
Recent reductions in the cost of loans for first-time buyers has also occurred, and many experts believe that the base rate may fall further, creating a spark for further reductions in the cost of monthly mortgage payments. These should all be seen as good news, but new buyers still do not appear to be convinced that now is the right time to buy.
“There are other important influences affecting this group other than the straight affordability issue”, GMAC’s, executive chairman, Stephen Knight, reported, “Buying property is seen as ‘settling down’ among 71% of those questioned….More than half of the people studied felt comfortable with delaying buying a property until they are over 30. This matches with the current average age of a first-time buyer, 34.” Stephen Knight also stated that an increasing problem for those who go on to higher education is that, “many graduates, especially those who leave college with large student debts, are unwilling to take on additional financial commitments.”

According to research from Moneynet, first time buyers during May were looking for an average mortgage amount of £135,966 for an average property value of £205,284 on an average salary of £39,027. With the average single UK salary around £24-25k, current house purchases are therefore generally requiring the combined funds available from dual incomes, combined with many young families being worried about job security, Stephen Knight believes there are clearly social and financial issues that need to be addressed.

The greatest worry for a quarter of would-be buyers according to the Edinburgh Solicitors Property Centre is that they feel that if they don’t get on to the property ladder soon, they never will.

References:
Moneynet (http://www.moneynet.co.uk/mortgage-research/index.shtml)
Edinburgh Solicitors Property Centre (http://www.espc.co.uk/)
GMAC (http://www.gmacfs.com/)
Sunday Herald (http://www.sundayherald.com)

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- posted by Mark Pane @ 3:31 PM 0 comments

 
How will I receive my Stafford Loan?
Your school will disburse your loan in at least two installments; no installment will be greater than half the amount of your loan.

Your loan money must first be used to pay for your tuition, fees, and room and board. If loan funds remain, you’ll receive them by check or in cash, unless you give the school written permission to hold the funds until later in the enrollment period.

If you’re a first-year undergraduate student and a first-time borrower, your first disbursement can’t be made until 30 days after the first day of your enrollment period. That way, you won’t have to repay the loan if you withdraw during the first 30 days of classes. (However, you might owe money to the school for a portion of tuition or other fees.)
- posted by Mark Pane @ 10:12 AM 0 comments

 
How much can I borrow?
The amounts you can borrow depend on your grade level in school and on the type of student you are: dependent undergraduate, independent undergraduate (or a dependent undergraduate whose parents are unable to get a PLUS Loan), or a graduate student.
ANNUAL LOAN LIMITS FOR SUBSIDIZED AND UNSUBSIDIZED STAFFORD LOANS




Dependent Undergraduate Students


Independent Undergraduate Student


Graduate/Profesional Student

1st Year


$2,625


$6,625–No more than $2,625 of this amount may be in subsidized loans.


$18,500–No more than $8,500 of this amount may be in subsidized loan.

2nd Year


$3,500


$7,500–No more than $3,500 of this amount may be in subsidized loans.

3rd and 4th Years (each)


$5,500


$10,500–No more than $5,500 of this amount must be in subsidized loans.

Maximum Total Debt from Stafford Loans When You Graduate


$23,000


$46,000–No more than $23,000 of this amount may be in subzidized loans.


$138,500—No more than $65,500 of this amount may be in subsidized loans.

The graduate debt limit includes Stafford Loans received for undergraduate study.

NOTE: For periods of study shorter than an academic year, the amounts you can borrow will be less than those listed. Also, you might receive less if you receive other financial aid that’s used to cover a portion of your cost of attendance.

Your school can refuse to certify your loan application or can certify a loan for an amount less than you would otherwise be eligible for if the school documents the reason for its action and explains the reason to you in writing. The school’s decision is final and cannot be appealed to us.
- posted by Mark Pane @ 6:11 AM 0 comments