Mortgages should be straightforward - you borrow money to buy a house and pay interest on the loan.
But after a few enquiries, you soon realise that it’s not so simple after all.
In a hugely competitive market, building societies and banks are continually updating and extending their range of mortgages. The list is already extensive enough to baffle all but the most determined.
The most important points are how you pay back the capital you borrow and how you pay the interest on it.
Paying back the capital
You can either pay a little at a time as you go (repayment mortgage) or pay it all off at the end (Endowment, Isa and pension mortgages).
Repayment mortgages - Each monthly payment pays off a little of the underlying debt, as well as interest on the loan. At the end of the term the mortgage is cleared.
Endowment Mortgages - You use an endowment policy to provide life insurance and save funds to repay the loan at the end of the term (usually 20-25 years). If the investment performs badly, you could face a shortfall on your loan at the end of the repayment period.
Individual Savings Account (Isa) mortgages - These work on the same principle as endowments, but use an Individual Savings Account as the loan repayment method. If your investment performs badly you could face a shortfall at the end of the mortgage term.
Pension mortgages - Are similar to both ISA and endowment mortgages, but work on the basis that pensions (both private and company) provide tax-free cash on retirement. At the end of the mortgage term the loan is paid out of your tax-free lump sum. They are not often used as it can be risky linking pensions to other investments.Paying the interest You have to pay interest on any debt, and mortgages are no different. They differ only in the range of options offered.
Variable rates - This means you pay the going rate on your loan. The mortgage rate changes every time interest rates change or, as in most cases, the overall effect of any interest rate changes is calculated once a year and payments are altered accordingly. Whatever kind of mortgage you start with, it is likely to change to variable rates at some point.
Fixed rates - The interest rate is fixed for the period agreed - often two to five years. These are ideal for budgeting or if you think rates might increase. You do not benefit if rates fall, and will face penalties if you try to quit. Very low rates may tempt you, but they can be used to trap you into paying over the odds. See check how long you will have to stay with the lender before you can switch without penalty.
Capped rates - These are fixed, but if rates fall you pay the lower rate. Such deals can be a good buy for budgeting.
Cash back deals - This is when lenders offer money back if you take out a particular product.
Discounted rates - Under this type of mortgage the borrower is offered a discount off the lender’s variable rate. The rate paid will fluctuate in line with changes in the variable rate. The discount applies over a set term.The 10 key pointsThe government has given homebuyers a list of vital checks to help them find their way through the mortgage maze.
The government suggests buyers should ask these 10 questions before agreeing a mortgage with a lender.
How much can I afford to borrow?
This deals with such questions as “What will the cost be each month?” and “What fees will I have to pay?”
How can I tell which mortgage rate is best for me?
What is the best type of mortgage for me?
This deals with how to understand the jargon, such as “What do fixed rate, variable rate, discounted or low-start, and flexible mean?” and “Will this mortgage suit my circumstances now and in the future?”
How should I repay it?
“Why are you trying to sell me an endowment policy, or a pension or an Isa?”, “Why is it best for my circumstances?” and “What commission are you being paid?”
Can I make lump sum payments to reduce the size of the loan?
Are there any redemption penalties?
Does this mortgage come with compulsory insurance?
What other charges will I have to pay?
What happens if I can’t pay?
What about the small print?
Author : Kirberts
Website : http://www.kirberts.co.uk/
Senin, 09 Maret 2009
Mortgages should be straightforward - you borrow money to buy a house and pay interest on the loan.
For entrepreneurs who want to get away from renting properties for their businesses, a business mortgage can be helpful. If you can’t afford the conditions in commercial development finance or not capable for 100% development finance, the business mortgage is the right option for you.
The 100% development finance may be provided from development finance UK to acquire property. But if you can’t afford the amount and the terms used, you can still acquire property through business mortgage — only that it entails mortgage arrangements. Another difference of commercial development finance and commercial mortgage is that while commercial development finance, with 100% development finance arrangement, requires the part ownership of the lender with the sale or rental profit from the output of the development project, business mortgages is solely for the business owner, except that he is paying mortgages to the lender.
There are several ways that the business mortgages can be utilized throughout the business world. But before you can get it from development finance UK and utilize it effectively, you need to know the basics of the business mortgages. First and foremost there is an obligation attached to business mortgage. Understanding the in’s and out’s of business mortgages will allow you to facilitate the biggest return from the equity that business mortgages release.
When looking into business mortgages, you would invariably find that there are two distinct types. One is the ‘Owner Occupier Business Mortgages’. This is where the borrower is looking to buy property and/or land for their business operations. The second is the Commercial Investment. This refers to the borrower purchasing property/land as an asset that can be rented out.
By using business mortgages from development finance UK, you can have a superior cash flow since it provides access to capital that you would not normally have with minimal up front payments and the flexibility to formulate a repayment plan that best suits your needs. Also, business mortgages let’s you retain ownership in the property. This means that that instead of raising funds by selling a share in the property to an investor, you retain complete ownership and all the benefits that goes with it such as having an asset that can increase in value. Business mortgages also have tax advantages. The interest on payments is tax deductible and made with pre-tax money.
Author: Cherry Bonachita
Selasa, 03 Maret 2009
Over the past few decades the interest rates for a home financing have gone from high to low. Early in the eighties the average interest rate for a home mortgage was roughly eighteen percent, but these days we are now seeing the interest rates for the same exact loans around five or four percent. This is largely due to how our economy has been progressing throughout the years and how banks are trying to make large loans viable to consumers.
A lot of the people that have bought homes when the interest rates were really high are starting to consider refinancing their home mortgage in order to take advantage of the much lower interest rates of today's economy. If you happen to be one of these individuals and are seriously considering taking advantage of a home refinance you should first consider a few benefits to doing it.
The first thing you are going to want to make certain is that the cost of the refinance is worth the effort that you put into it. The best way to take this into consideration is to ensure that the interest rate you currently have is at least two percentage points above the interest rate that you would be refinancing out. This way you will be certain that you are getting a good deal on the loan and would be saving money over the lifetime of the loan.
Additionally there are some benefits to getting a refinance mortgage from an online lender. The first thing is you will obviously have lower monthly payments on your mortgage. This means it will be much easier to manage and budget for as well as saving you money to spend on other things that you need. How much you are going to save is really dependent upon the difference between interest rates and the length of the home refinance loan that you take out.
Next, by changing the type of loan that you currently have you can take advantage of the weekend financial markets. Some consumers out there had the unfortunate luck of getting an adjustable rate mortgage and have seen their interest rates fluxgate quite a bit over the past few years.
Lastly, you will be able to get money from the home equity that you have built up by getting a bad credit refinance . The longer that you have been in your home the more equity that you have likely built up over the course of your mortgage. By pulling money out you will be able to take care of other debts, or have the money to spend on other purchases that you have wanted to make.
Whenever you consider a major financial decision you should always make certain to do as much research as possible before signing anything. You should consult with a home mortgage refinance professional and see what sorts of deals are available for your own unique situation. Getting in touch with a financial professional could not be any easier. Simply fill out the short form on our site, and in no time you will be in direct contact with a highly skilled home loan professional that can help you go over the best options for you.
Minggu, 01 Maret 2009
Commercial mortgages are obviously different from the normal mortgages as the amount is released for business purposes as opposed to the purchase of a residential property. Unlike the 100% development finance which is generally used for huge residential or commercial property development projects, the commercial mortgage is used to own a property by securing the property in mortgage arrangement. Commercial mortgages can also be used for taking over an existing business, purchasing a brand new building or buying land. It is specifically tailored for the purchase of property such as shops, factories, warehouses and office buildings.
For start up business, the commercial mortgage is suitable for owning the needed property. Commercial mortgages obviously entail a large commitment and are the ideal way of getting a business of the ground or consolidating its position as a market leader. The requirement can, however, change according to the needs and capabilities of the business person. The companies providing development finance UK can make various mortgage arrangements that are suitable to the business’s condition.
Senin, 23 Februari 2009
Owning a home is a dream for most of us, although it is an expensive
one. The monthly payments usually take up a big slice of our monthly
income, and the sudden loss in the event of you or your spouse's early
death may leave your survivors unable to make payments. To make your
family is protected from financial hardship, consider Pick-a-Term
Mortgage Protection insurance.
Pick-a-Term Mortgage Protection has a descreasing death benefit to Life Insurance: Decreasing Or Not? If you go to your local bank, along with the mortgage they will try
match your mortgage balance at the beginning of each year. And because
the death benefit decreases along with your mortgage balance, the cost
of Pick-a-Term is less expensive when compared to non decreasing term
and sell you what they call "mortgage insurance". This is not
"mortgage insurance" but "life insurance" where they protect
themselves by having you buy their policy. You need to be clear how
this operates; you are paying for an expensive policy which they own
and in which they are the beneficary. Further, the amount of the
policy decreases though the premium remains the same. If they
decreased the premium along the coverage, it may not be too bad, but
they don't. The way it is now the policy decreases, you pay for it,
they own it, control it and will benefit from it.
Life Insurance: Decreasing Or Not?
If you go to your local bank, along with the mortgage they will try
Sabtu, 21 Februari 2009
While both reverse mortgages and home equity loans enable senior homeowners to turn the equity in their home into spendable dollars, there are important differences between these two types of mortgages.
First, home equity loans require regular monthly payments in order to repay the loan. These payments begin as soon as the loan is settled. In contrast, a reverse mortgage does not have to be repaid as long as the home remains the senior’s primary residence. In other words, the loan becomes due only when the senior no longer occupies the property.
Second, home equity loans are based on the borrower’s income and credit history. A home equity loan borrower may be required to requalify for the home equity loan each year. If the borrower does not qualify, than the lender may require that the loan be paid in full immediately. However, income and credit are not obstacles for seniors who want a reverse mortgage because there are absolutely no income or credit requirements to qualify. It should also be noted that there are no requalification requirements.
Kamis, 19 Februari 2009
Variable rate mortgages have an interest rate that may fluctuate throughout the term of the loan. Interest rates attached to variable rate mortgages usually move in line with either the Bank of England Base Rate (BoEBR) or the lender’s Standard Variable Rate (SVR) and is quoted as a fixed percentage above one of them. An example of this is a variable rate home loan with an interest rate equalling BoEBR plus 0.25%.
Fixed rate mortgages, on the other hand, have a static rate of interest that is locked in for an agreed period of time. Changes in the base rate or the lenders SVR will not affect the interest rate attached to this type of home loan making this type of product less risky to the borrower as their monthly mortgage payments will not increase.
There are several different types of variable rate mortgage products including tracker rates, discount rates, and capped rates. Tracker rate mortgages and discount rate products have no upper or lower limit and therefore offer the borrower no protection against excessive interest rate rises. They also, however, offer the borrower the potential for substantial decreases in the interest rate attached to the variable rate home loan helping them to save money.
Capped rate mortgages have an inbuilt upper limit above which the interest rate on the product cannot rise even if the base rate rises above this limit. Capped rate mortgages therefore offer the borrower protection against excessive base rate rises while still offering the advantage of saving money through potential decreases in the base rate.
Unlike fixed rate mortgages, variable rate mortgages offer borrowers no protection against interest rate rises and are therefore risky. The amount of monthly repayments due can both rise and fall throughout the term of the mortgage therefore making variable rate mortgages unsuitable for householders who have a tight budget.
Despite this risk, variable rate mortgages do have some advantages. During periods of traditionally high interest rates many borrowers opt for variable rate mortgages if they are expecting the cost of borrowing to fall. This is because any fall in the underlying interest rate will be passed onto them by their lender, resulting in a decrease in their monthly mortgage payments.
Additionally, variable rate mortgages have less stringent terms and conditions than their fixed rate counterparts, and are usually offered with low fees and no tie-in periods. It is essential to assess the fees and charges attached to home loans before applying instead of opting for the product that appears to have the most favourable interest rate structure. This is because the cost of the fees may outweigh the benefits of the interest rates – whether they are fixed or variable.
Because of the various advantages and disadvantages of variable rate home loans, professional and impartial advice should be sought from an independent mortgage broker before applying for a this type of mortgage. An independent broker will be able to offer impartial expert mortgage advice on all types of home loans from the entire range of UK lenders.
By = Michael Sterios, a writer for http://www.ukmortgagesource.co.uk