How To Purchase House

The investment quandary as to the best method for acquiring foreclosed property at heavily discounted prices inevitably surfaces at the same stage in the real estate cycle every ten to twenty years. After housing booms and home prices correct back to affordable levels, real estate investors are suddenly inundated with an almost overwhelming supply of potential homes to choose from. These prospective buyers peruse city blocks searching for evidence of distressed properties that might lead to investment opportunity by taking dead lawns, unpaid utility notices, and default notices all into account. They investigate “For Sale” signs with “Bank Owned” or “Foreclosure” riders attached. Technologically savvy bargain hunters browse websites online to identify properties in default. These opportunists also compare notes with one another at various social functions, water coolers, chat rooms, and anywhere else real estate is spoken. Here they may learn that in order to obtain the most lucrative price, investors are best served to purchase property directly at a foreclosure sale on the court house steps. Regardless of the preferred method for locating distressed properties, it is imperative to thoroughly comprehend the different foreclosure processes in order to develop and implement a successful investment strategy. If a homeowner fails to make prescribed loan payments to the bank, the borrower is deemed to have defaulted on the loan. If the delinquent payments are not cured in a timely fashion, the lender is permitted to foreclose on the property to acquire title to the home as security for the unpaid debt. For national investors it is important to understand that lending practices and foreclosure procedures vary from state to state. For example, some states are considered “mortgage” states while other states prefer the “deed of trust” method of lending and holding title as security for the loan.MORTGAGES Mortgage states utilize a two party security system where a mortgagor (or borrower) provides a promissory note to a mortgagee (or lender), along with a voluntary lien called a mortgage that serves as security for the borrower’s promise to make the loan payments described in the promissory note. Since title to the property resides with the borrower when the mortgage is created, foreclosures in mortgage states can be relatively lengthy and costly for banks to pursue. Further, mortgages also provide borrowers redemption rights that allow borrowers a specified period of time after the foreclosure and ultimate sale to a third party to pay off the original loan amount and regain title to the property. As a result, buyers at foreclosure sales in mortgage states must be aware that they will often be unable to obtain clear title to foreclosed homes as the previous owner will likely be afforded the opportunity to pay off the original promissory note and reclaim the property.DEEDS OF TRUST A minority of states that include California favor the three party deed of trust system due to the relative cost efficiency and expediency provided to lenders in the foreclosure process. Additionally, lenders are often able to provide buyers of foreclosed property clear title as no right of redemption exists for borrowers. The Deed of Trust process involves a trustor (or borrower) that gives a promissory note to the beneficiary (or lender), and the trustor also gives title through a trust deed to a trustee (neutral third party) as security for the note. The important difference here is that title to the property is held by the trustee rather than the borrower. The trustee is typically a neutral third party designated by the lender to hold the deed of trust during the loan period with the power to more easily administer a foreclosure sale in case of default by the borrower. It is clearly important to determine whether one is bidding on a property that was subject to a mortgage or a trust deed at a foreclosure sale. This differentiation can often be confusing as many real estate professionals and experts in deed of trust states will often casually refer to home loans as mortgages. Many lenders in these states will refer to themselves as mortgage brokers or mortgage companies when they actually originate promissory notes secured by deeds of trust. Deed of Trust states also refer to foreclosure sales as trustee’s sales, where the highest bidder purchases the property in an auction setting. However, purchasing a home at a trustee’s sale can be a risky proposition as the buyer has little or no opportunity to inspect the home prior to purchase. Further, the buyer must pay with all cash as financing is typically not permitted at trustee’s sales. There is also no guarantee that the property is not currently occupied by tenants or a previous owner. Finally, purchasers at a trustee’s sale are not protected against clouds on the property’s title like tax liens from a previous owner’s unpaid property taxes, so title insurance is often unattainable for buyers at trustee’s sales.REAL ESTATE OWNED (REO) If a home is not sold to a new buyer through the foreclosure process, the lender holding the promissory note will often acquire the property and attempt to sell it on the open market to a new buyer. Once title to the home that once served as security for the unpaid promissory note is transferred to the bank, the property is deemed real estate owned (REO) by the bank. The bank will then typically retain a REALTOR® to market the property for sale at a price below market value, remedy any defects on title, remove any tenants or squatters occupying the property, and often retain contractors to repair any major physical defects in existence on the property. Although the typical price paid for an REO property may in theory be slightly higher than buying at a foreclosure sale, purchasing an REO property is clearly a much less risky proposition. REO sales also provide investors adequate opportunity to inspect homes prior to making offers to purchase, and buyers are permitted to utilize financing when purchasing these bank-owned properties. Whether purchasing foreclosed or REO properties, the various risks and rewards associated with an investment may not only depend on the characteristics of the home itself, but also the type of security the home provided to the previous owner’s lender. In order to avoid the displeasure of telling foreclosure horror stories in real estate investment circles, an ounce of diligent research into a property’s financial history can prevent a pound of investment headaches.

The winners: Singapore, South Korea and the Philippines

Singapore experienced Asiaâ??s highest residential property price increases during 2006, with 9.5% real (inflation-adjusted) house price rises.

There were also 9.3% real house price increases in South Korea, and 9.1% real house price increases in the Philippines. These were seen in the Global Property Guide House Price Indices, the biggest collection of residential property price indices.

Singaporeâ??s strong 2006 GDP growth rate, at 7.9%, pushed up demand for Singapore property. The Urban Redevelopment Authority (URA) private residential property price index rose by 10% (9.5% in real terms) in 2006.

South Korea also saw a strong rebound in property prices, despite continued efforts by the government to depress the market. The Kookmin Bankâ??s house price index rose 11.6% in Dec. 2006 (9.3% in real terms) from a year earlier.

In the Philippines, strong economic growth and reduced inflation contributed to the continued recovery of the real estate sector. In addition, demand from Overseas Filipino Workers (OFWs) and dual citizens has been strong, pushing prices up. Luxury condominium prices in the Philippines rose 15% (9% in real terms) in 2006, following an 11% nominal price rise in 2005, according to Colliers International.Japan and Hong Kong are laggards

Japanâ??s residential property market continued to fall in 2006, despite repeated attempts by the media to portray the market as rallying. Nevertheless, the residential urban land price index registered a smaller fall in 2006 (-2.8%) compared to last year (-4.7%).

Hong Kongâ??s property market turned negative (-2.13%) in 2006, after impressive gains in 2004 (27%) and 2005 (8%). Higher interest rates in the US, mirrored directly in Hong Kong, were a major cause of the downturn.

Taiwanâ??s messy political crisis seems to have frozen residential prices, with 0% appreciation during 2006. In real terms, Taiwan experienced a decline in house prices during 2006 (-1.7%). During three years prior to the second quarter of 2006, Taiwanâ??s Sinyi house price index rose 17%.

In Malaysia, house prices did not to keep pace with inflation. Malaysian house prices today are at the same level as 1995, in real terms.

Thailand saw the end of ending its strong post-Asian crisis property market recovery, as the political crisis impacted the economy. House prices moved up just 1.9% in 2006 (-2.4% in real terms), after 2005â??s price increase of 7% (1.5% in real terms), and 2004â??s rise of 9% (6% in real terms).

Indonesia managed to reduce 4Q 2006 inflation to 6% from 16% during the first three quarters. With the house price index registering a 6.6% increase in 2006; house prices rose by 0.5% in real terms.The 2007 elections â?? risks abound

2007 is an election year in Korea, Taiwan, and the Philippines, and political uncertainty is likely to increase. There will also be elections in Japan and Hong Kong, but they are unlikely to have much impact on the real estate market. In Thailand, uncertainty will increase if elections are not called. The Philippines. A victory for President Arroyoâ??s party in the upcoming Congressional elections would be positive for real estate. Election years in the Philippines bring money inflows, but also increased uncertainty. But if Arroyo wins enough seats in Congress she will push constitutional change, removing constitutional limits on foreign ownership of real estate and companies â?? good for real estate. South Korea. The economic interventionism of left-of-center President Roh Moo-hyun has been damaging for Koreaâ??s housing market. His support is crumbling, and a less interventionist president may be elected in December. But even if the opposition Grand National Party wins, excessive government intervention in the housing market has a very long history in South Korea.Taiwan. Parliamentary elections at end-2007 will provide a strong lead on whether the Kuomintang (KMT) can regain control of the presidency in 2008 from the Democratic Progressive Party (DPP). President Chen Shui-bianâ??s two terms have largely been spent on keeping him from being ousted. Significant banking and tax reforms have been held hostage by politics. Japan. Half of the seats in the upper house will be contested in July. Seats held by the Liberal Democratic Party (LDP) may be reduced, risking its reform agenda. These seats were won with the help of former prime minister and popular reformist Junichiro Koizumi. Hong Kong. Donald Tsang is up for re-election as chief executive where elections are still largely ceremonial and Beijingâ??s anointment is the only significant factor. Pro-democracy campaigners are hoping and pushing for reforms to full democracy and Mr. Tsangâ??s failure to push for constitutional reforms in 2005 means that this will be his last term.Thailand. The sooner elections are called, and Thailand is returned to democracy, the better it will be for the property market and the economy as a whole. The fate of Thailandâ??s property market hinges on the junta. If the junta prolongs military rule, the market will suffer.

The Global Property Guide sees inflation risks to be minimal in Asia in 2006. But other risks threaten the real estate market, particularly the re-emergence of bird flu in several countries, Indonesia in particular.

A decade after the 1997 Asian Crisis erupted, most housing markets in Asia are well on their way to recovery.

Boosted by strong economic growth and strong local and international demand, residential real estate prices in the Philippines, Singapore and South Korea rose by more than 10% in nominal terms y-o-y to Q1 2007.

In Hong Kong, after registering price falls in early 2006, the over-all residential price index is back in positive territory. The index rose 5.2% y-o-y to March 2007. However this is significantly lower than the annual price increases to the first quarter of 2005 and 2004, at 21% and 28%, respectively. No bubble this time

Although property prices in most Asian countries are still below their peak levels, rapid price appreciation has taken place over the past five years, leading to renewed fears that a speculative property bubble is forming in several Asian countries.

The fear is not unfounded; one has only to recall Asia’s spectacular and disastrous property bubbles of the 1990s.

However, the recent price increases are actually recoveries from the previous slump caused by the Asian crisis and other phenomena.

As of Q1 2007, property prices in most Asian countries are in fact still below their peak levels in real terms. Strong housing demand

Current economic and monetary conditions suggest continued strong demand for housing. All economies affected by the Asian Crisis grew by 5% or more in 2006. GDP growth from 2002 to 2006 has been markedly stronger than during the crisis period – 1997 to 2001, although slower compared to the tail-end of the “Asian Economic Miracle”.

As a result of financial and monetary reforms implemented after the crisis, banks and other financial institutions are in much better shape now. Asia’s mortgage market is set for a boom. This is despite the fact that mortgage lenders are more cautious of over-exposing themselves to particular sectors (some pundits worry that banks are actually being too cautious).

Despite recent interest hikes, in line with global interest rates, base interest rates for mortgage lending are generally lower now than before the crisis.

Socio-economic conditions also point to continued strong demand for residential properties. Strong urbanization and population growth has led to high population densities in several Asian cities.

In view of the relatively restrained dwelling price rises, strong economic growth and banking sector caution and healthy yields to be enjoyed on properties in Asia, talk of another bubble seems far-fetched. Other problems

A more pressing concern for Asian economies is the continuation of reforms to improve real estate efficiency and transparency. Transaction costs remain high and the property registration is still cumbersome in several countries.

While Malaysia is encouraging foreign property buyers, Thailand’s military junta is pushing them away. Thailand announced that it is completing a crackdown on foreign companies established for the sole purpose of buying landed properties. While the motivation for this move is unclear, the signal is clear “foreigners are not welcome.” Political uncertainty and policy flip-flaps by the ruling junta are undoubtedly hurting the real estate market.

In the Philippines, proposed property market reforms are languishing in congress. These laws include the establishment of a centralized agency for registering property and a standard property valuation system. Full Report:http://www.globalpropertyguide.com/articleread.php?article_id=93&cid=Economics Team:

Prince Christian Cruz, Senior Economist

Phone: (+632) 750 0560

Email: prince@globalpropertyguide.comPublisher and Strategist:

Matthew Montagu-Pollock

Phone: (+632) 867 4220

Cell: (+63) 917 321 7073

Email: editor@globalpropertyguide.comAddress:Global Property Guidehttp://www.globalpropertyguide.com

5F Electra House Building

115-117 Esteban Street

Legaspi Village, Makati City

Philippines 1229

info@globalpropertyguide.comTerms of Use:

On-line newspapers, magazines, etc wishing to use material from this press release MUST provide a clickable link to www.globalpropertyguide.com

The design of high-density housing is inextricably linked to the growth of towns and cities: as urban centers have increased in both geographical size and density, housing has had to be provided to accommodate the numbers and needs of the population. Whether highly visible or merged with the existing cityscape, a vast proportion of the fabric of any city is made up of residential space. New Urban Housing looks at a selection of some of the most inventive contemporary projects built in countries around the world.Author Hilary French provides a comprehensive introduction to this building type, from its industrial beginnings in London and Paris to New York City’s Lower East Side and the 20th-century designs of Le Corbusier, Antonio Sant’Elia, and Mies van der Rohe. Lavishly illustrated, the book examines different formal typologies of urban housing: terrace and row houses, quadrangles and courtyards, city blocks and infill (or renovated and reused sites), and towers (more…)

A dwindling house market in the UK could stretch the financial situation for some mortgage lenders according to credit ratings agency, Fitch.

Their research has uncovered that the British housing market is set to see the trend of lower prices continue, but they do not expect to see a collapse of house prices.

Director of Fitch’s London-based Financial Institutions Group, Alexander Birry, warned that a weakening housing market could place added pressure on UK mortgage lenders who may see a downgrading of their credit ratings, making it more expensive for them to borrow on the money markets. However, a rebalancing act of the market is likely to offer opportunities to those with the best access to funding.

Birry said, “Rating actions may occur if a lender shows more vulnerability to a weakening housing market than is currently anticipated. In particular, the performance of certain non-conforming residential loans in a more difficult market represents a key uncertainty.”

Banks are set to find it increasingly difficult to offer competitive mortgage rates if they are forced to spend more money on their borrowing, which will in turn worsen the squeeze on credit; but downgrades are not expected across the board from UK lenders.

Alliance and Leicester have announced though, that they are set to stop writing the vast majority of new mortgages after they suffered losses of £150 million as a result of a recent credit crunch. Their shares also suffered with a reported fall of 2.5 per cent to a record low of 479.5 pence.

The lender also revealed that they were to end the offer of 125 per cent mortgages as a result of the falling house prices leaving many borrowers who relied on their house value increasing, facing financial difficulty.

The packages that usually saw a mortgage with a loan to the value of 95 per cent, with a further 30 per cent as a personal loan had been abandoned because “Alliance and Leicester is a prudent and responsible lender, with PlusMortgage successfully targeting high quality applicants” according to their spokesman, Stephen Leonard.

Elsewhere on the continent the weakening Irish housing market has also affected their mortgage lenders as Irish banks are more exposed to real estate than most others in Western Europe. This has made them susceptible to any significant frailties in the sector. Fitch analyst Matthew Taylor warned, “If the Irish economy achieves a soft landing, which we regards as the most likely scenario, then most Irish institutions should be capable of rising to the challenge without the need for rating action. In the case of a more severe contraction in economic growth, a wider range of rating actions on Irish banks may be required.”

In Spain property prices had fallen dramatically after a housing boom in recent years. This has left mortgage lenders especially weak when banks have significantly increased their exposure to real estate. However, Fitch has concluded that they see more pressure falling on some of the savings banks, rather than the larger, more expansive lenders.

Attempts by Federal and State governments in the first quarter of 2009 to stimulate home sales have resulted in the creation of significant incentives for buyers seeking to take advantage of attractive housing prices across the United States. In order to reduce the large inventories of available homes for sale and thereby stabilize housing values that serve as security for loans held by financial institutions and investors around the world, an irresistible environment for real estate investment has been established that deserves closer examination.American Recovery and Reinvestment Act of 2009Included in what has become otherwise known as the Federal Economic Stimulus Plan, the United States federal government increased the first-time home buyer tax credit previously implemented by The Housing & Economic Recovery Act of 2008 (Summer 2008) from $7,500 to $8,000, and removed the requirement that the credit be paid back in the future. The expiration date for receipt of the credit has also been extended from July 1, 2008 to Dec. 1, 2009. Consequently, homebuyers must have purchased a home after January 1, 2009 and before December 1, 2009 to be eligible for the $8,000 credit. This credit only applies to first-time home buyers purchasing owner-occupied homes and not investment properties.State Tax IncentivesMany state governments are also independently attempting to address housing market distress within their own state lines by enacting legislation that provides further tax incentives for prospective home buyers. For example, the California state legislature passed a new-home buyer tax incentive as a portion of the state’s 2009-2010 budget. According to this incentive, purchasers of new single-family homes, that have never been previously occupied, as their principal residence between March 1, 2009 and March 1, 2010 will receive a tax credit equal to the lower of 5% of the purchase price or $10,000. Therefore, first-time home buyers in California who purchase a new home as their single family residence between March 1, 2009 and December 1, 2009 should qualify for both the Federal $8,000 tax credit and the State of California $10,000 tax credit at the same time, resulting in a combined $18,000 tax savings.FNMA Lending Requirements Relaxed for InvestorsFederal government sponsored enterprises have also reached out to real estate investors by providing them with increased ability to leverage funds and purchase more investment properties. Fannie Mae (FNMA) has announced that on March 1, 2009 it will increase the maximum number of permissible financed properties from 4 home loans to 10 home loans for borrowers seeking to purchase non-owner occupied properties. Investors attempting to take advantage of this policy revision must: have a 720 FICO score or higher, show funds in reserve to cover six months of future payments, pay a 25% down payment, have no history of foreclosure or bankruptcy, have no delinquent payments within twelve months, and provide full documentation of all rental income.Time will only tell as to whether these bold incentives will serve to generate the requisite number of home sales to effectively stabilize housing prices and the economy as a whole. Regardless of whether these enticements will succeed on a macro-economic level, the cumulative effect of astonishing low housing prices and interest rates combined with these new measures has clearly created a housing market ripe for prospective buyers.

It is often noted that over the last ten years the price of an average home in the United States in “real term” has more than doubled.
What this means is that you were able to sell your home, in essence to cash in your chips as it you were at a gambling casino, and buy a representative basket of other non real estate goods – be it tomatoes, movie admission passes, corned beef, cars, garden plants you would be able to buy double the amount that you would of just 10 years ago.
I am sure you noticed that along with your new found wealth as a result of your real estate investment that your housing and realty taxes increased as well. Not only are you rich in terms of net valuations but you also having higher taxes on your property.
Property taxes are assessed by cities and municipalities on the “assessed valuation” of the home or property. In the end it your annual property tax bill, that comes in that nice official envelope from realty tax central all comes down to the valuation of the property on hand. It is often said that you can count on two things in life – death and taxes. Property tax is an “ad valorem” tax that an owner of real estate or other property pays on the value of the property being taxed. Sure you are rich – in terms of the valuation of your house but simply put – the more your house is worth, the more realty tax you will pay and be paying every year.
Unfortunately what has happened is that most Americans are not diversified in terms and their assets and investments. With the stock market crashes and low interest rates paid it seemed that the only place that “they could make money’ was in their house. Low interest rates allowed many to purchase houses, condos and even vacation cottages and condos that they could never afford otherwise. Low interest rates meant low mortgages.
Many could now afford substantial properties that they never could have afforded in any way before. The circle went round and round- low interest rates meant others could afford those properties as well. Housing prices went as a result of the increased demand. The home buyers now congratulated themselves on the wise choice of their investment in their home. Real estate it turned out was a million times better an investment than anything else. A million times better than the risky stock market, Interest rates on certificate of deposit would have paid you virtually nothing. On top of that a feeding frenzy arose in the real estate market as people who were not buyers of real estate or who had planned to be in the future rushed into the market in a panic lest they be “locked out forever” of their dream of buying a house , condo etc.
The fallacy in this logic is that these people are house rich and cash poor. They had not diversified their investments. At the time it seemed like a wise idea – in terms of rates of return and other options. After all they “only made so much land” and “real estate always goes up”.
Back to the topic of taxes and realty taxes. The housing bubble has “burst”. Housing prices seem to be in a correction – on the way down.
You may well wonder. If the value of my house has come down so should my realty and house taxes. Don’t count on it. Actually it is highly if ever doubtful. Your city or municipality needs that revenue stream as much as you do or perhaps even more. You at least can “cut back”. You can eat hamburger instead of steak, you can choose not to purchase that new car you wanted. However your tax money has been incorporated in budgets and planning for a long time coming. It’s spoken for. On top of that you can hardly expect that civil servants will take a pay cut or that the whole civil service will become amazingly productive – at least in the near future.
What can you do? It all comes down to valuations and homework. Have your house value assessed. You can do an initial assessment by comparing your home to other homes in your area that were recently professionally evaluated. You can check on the internet and with local real estate agents what similar housing and real estate in your area has sold for. Not so much the asking price but rather the actual sales price.
Now that you have a good general idea from a couple of sources it may be wise to spring and hire a professional property evaluation or property inspection service. You can find these services in your local yellow pages or with a search on the internet. If you are stuck and cannot find one- ask a local real estate agent or company.
Next compare your taxes to other similar priced properties. First in your area and later outside your direct area, but in your municipality.
Many cities now actually list home valuations and taxes on the internet freely to the general public. If not real estate listings may give you the data.
In the end it all comes down to valuation of your property. You can file an appeal of your realty taxes. Your case can rest on two points of discussion. First that your home taxes are out of line and too high, compared to other similar properties. Second you can argue that the valuation of your house upon which these property taxes are based is wrong. According to the cities own calculations you should be paying much less tax.
In the end as they say “It’s Your Money” “And Your House”. Ensure you do your homework of property valuations and tax rates in a thorough, detailed and systematic manner.

According to the press the US housing market is in freefall and the UK housing market is following it. A market that only moves in one direction clearly offers investors opportunities. But how to trade house prices? One of the easiest ways to gain exposure is through spread betting where some companies now let you speculate on the average UK house price and even the average London house price.

Economies thrive on confidence and one of the pillars of confidence in the UK is the value of property. If the whole market grinds to a halt through lack of liquidity then there would be only one direction for it to go. Down. In a market bereft of buyers the prices must fall. With fewer and fewer people able to ‘gear up’ to pay the current prices then I fear this will be the scenario towards which we are heading. A major problem is that once a trend gets set it is very difficult to halt its momentum (witness the property situation in the US). Buyers shrink from putting themselves in hock when they fear that next week / month / year the house they have, so painfully paid for, will have dropped in value. And so stagnation follows. If the housing market locks up then many retailers who thrive on sales to ‘new owners’ will also fail and so on down a long line that ends with recession. At the moment, growth is just enough to keep the tills turning over but without some aid from our central bank I fear that this will not be the case for long.

If I was looking to buy a house now I would just knock 25% off the asking price on the basis that this is where forecasters expect the market to be in a years time. Presumably I would be paying a Mortgage (probably around 7.5%) during that time, have paid 2 to 5% stamp duty on the deal plus numerous other house purchase related fees. If the market did indeed drop as expected a purchaser at current levels could easily be looking at an overall negative cash/asset position of some 30-35% by next year once you include all of the costs. That does not sound too good.

Although for those people who are certain that the markets are in freefall, or for those who feel the UK is different to the US and less affected by sub prime fallout, the spread betting companies have come up with an interesting type of speculation.

You can now spread bet on the future UK average house prices.

How does it work?

Looking at IG Index they make their spreads based on “the Halifax House Price Survey produced by HBOS, the premier and most widely publicised indicator of the UK housing market. So, whether you want to profit from predicted market shifts or hedge against the value of property you already own, you can back your judgement against nationally recognised figures”.

Prices are given in points per £1,000. You simply ‘buy’ if you think the average price is set to rise or ’sell’ if you think it will fall.

The current spread of the Average London House Price (December) market is 258.1 to 264.1 points.

The current spread of the Average UK House Price (December) market is 163.1 to 166.7 points.

(Both December markets expire on 31 December).

So focussing on London, that spread is basically saying you can bet on London house prices being higher than £264,100 or lower than £258,100 on 31 December.

You bet in £x per point. Where a point is £1,000 of the house price. So if you are trading £15 per point and the average house price moves £5,000 (5 points) your profit / loss would change by £15 per point x 5 points = £75.

Taking the above London spread let’s say you think the prices will continue to fall. You could therefore Sell £20 per point at 258.1 points.

If the market does fall to let’s say 249.5 points (ie £249,500) then you would win / lose: (258.1 points – 249.5 points) x £20 per point = £172 profit.

Note that profits in spread betting are tax free*.

But if the UK market has a correction or simply stops falling or if London is more resilient to the current mortgage malaise then the average London house price could be £265,200 on 31 December.

Therefore if the market closes at, let’s say, 265.2 points then you would win / lose: (258.1 points – 265.2 points) x £20 per point = -£142 loss.

Of course, as the example above shows, as with all spread betting, care is needed.

Financial spread betting carries a high level of risk and may not be suitable for all classes of investor. Only trade with money that you can afford to lose. Make sure you fully understand the risks involved. If necessary, seek independent financial advice.

* Note that Tax Law may be different if you pay tax in a jurisdiction outside the UK, it can also change.