Archive for the ‘Mortgages’ Category

Paying Back Early

Many people, these days, like the idea of paying off their mortgage early. It can be a fantastic feeling, having no debt, but it may not be the best financial decision.

Paying a mortgage back early will mean that you will have your loan for less time. This can be agreat thing, because it means that you will no longer have that interest and debt to worry about each month. However, there can be advantages to keeping the mortgage.

paying the mortgage back

It is important to calculate the costs of paying the mortgage back early and see whether it really is a good idea. This means that you need to look in to the costs of doing this as well as the advantages. Firstly speak to your lender and they will explain whether there is a penalty for paying it back early and how much this is. Then you need to think about the cost in interest of keeping the mortgage. It is difficult to predict what interest rates might do and so it may be worth assuming they stay constant. The money that you are using to pay back the mortgage early, could make you interest if it was invested. Find a good investment that you would be prepared to put it in to and compare that with the mortgage interest cost.

Normally loans cost more than savings accounts and so it may seem obvious that paying it off will be cheaper. However, if you tie your money up long term and you have a low mortgage rate, it is possible to do better. Therefore you do need to do these calculations as they will not be a waste of time.

There is also a risk factor of paying it early that you need to consider. What if, after you have paid off the mortgage, you get short of money. You could have used some of that you saved towards paying it back, but once it is gone you will have to borrow it instead. This could be costly and so it is worth thinking whether it would be better to not pay it back.

WARNING: These 4 Mortgage Blunders Will Ruin Your Chances!

So you have your sights set on that perfect home, but before you get the keys to your new castle you need to get a mortgage loan.

Unfortunately, this is not as easy as it used to be. During the boom times, lenders were giving out mortgages like they were candy, but these days the whole process has become a lot more difficult.

With this in mind, you need to be at the top of your game when applying for a mortgage, and avoid any of these 4 mortgage blunders that could ruin your chances.

Not understanding the market

One of the main blunders made by thousands of people is not understanding the mortgage market before they start applying. The market is constantly changing, and you need up-to-the-minute information to give yourself the best possible chance of success.

Luckily, this information is easy to come across, as there are many websites out there that will supply you with reliable and independent information so you can get up to speed.

Mortgage Blunders

Waiting for rock bottom interest rates

One tactic used by those seeking a mortgage loan is to wait for the interest rates to hit rock bottom. Unfortunately, this is hard to predict, and is normally only realized after the fact and once the interest rates start to move upwards.

Instead, stop waiting for the perfect time to start applying for a mortgage, and start taking action right away.

Not looking at your credit report

It’s always a good idea to be fully prepared before applying for a mortgage, and this involves checking your credit report.

Mortgage lenders will look at your credit report, and use it as one of the main factors in coming to a decision. For this reason, you should get your own copy and look for any mistakes. If there are any mistakes, then you can have them removed, which results in an immediate bump to your credit rating.

Not shopping around

There are now more mortgage lenders than ever before, which means you should use this to your advantage in order to get the best deal possible.

Take the time to seek out as many lenders as possible, and then look to get into contact with as many of them as you can.

Also, it is sometimes a good idea to enlist the services of a broker, who can then contact multiple lenders on your behalf. This way, you can save yourself the tedious hours of doing all of the leg work yourself.

Interest Only vs Repayment Mortgage

The main two types of mortgage are interest only and repayment. It is important to understand what the difference between them is so that you can choose which will be the vest for you.

With an interest only mortgage, you only have to pay the bank the interest each month. Then when the term of the mortgage is up, you will be expected to provide them with the lump sum that you borrowed. With a repayment mortgage you will be expected to pay back both the interest and some of the money borrowed, so that by the end of the term you will have paid it all back.

There are advantages and disadvantages to both types. Some people would rather know that they are paying back what they owe each month and therefore want a repayment mortgage. It is usually the best way to do things financially because a mortgage rate tends to be higher than a savings or investment rate and so anything you can make on money you are putting a way to pay the mortgage with will be less than you will save by paying it off the outstanding balance.

However, if you are only paying off the interest, you can save up the money elsewhere and then if you wish, use it for other things. This is not always recommended because you do need to make sure that you have enough money to pay off the mortgage at the end of the term and if you keep spending what you have saved up, you could be in trouble. However, the flexibility of it, can be very appealing.

It is worth comparing the mortgage rates between the two types as well. You may find that there is a significant difference and this could help you decide which to go for. It is worth trying to predict the total costs and thinking about if you invested the money how much return you may get and which will be a better financial option. If you think there is any chance that you will not have enough self-discipline to save the money up ready to pay off the loan, then you should have a repayment mortgage as you could risk losing your home otherwise.

So deciding on which type of mortgage to go for can depend on the price and whether you think you can trust yourself. You also need to consider whether you think you would be better off with the more flexible option.

UK Mortgager Brokers Are Standing Buy to Help You Get The Exact Home You’ve Waited For!

Trying to get into a new home can be stressful, because you have to figure out the financing for it. Nobody wants to hear that they’ve been rejected for a loan, or that they have to wait even longer to get into their dream home. Although the market has cooled off some, there is still a high demand for top neighborhoods. This means that when a certain house opens up in a neighborhood, you have to make sure that you open the deal quickly to really make sure that everything is where it needs to be. That’s the tricky part — the other part that you have to think about is getting the money together before the home is taken away from you.

This is where quality UK Mortgager brokers come into play. Brokers will hunt for the best deal possible, which means that you no longer have to just hope that everything will line up nicely. You get to know that you will have the type of mortgage that you need in order to get things done.

What about when you know that you have to explore alternative types of financing, like buy to let schemes? This isn’t a problem for the right broker. In fact, this is a great way to become a landlord and build equity. You just need to make sure that you’re looking at things in the right sequence. You don’t want to miss out on your chance to actually own some good properties.

Giving yourself a chance to actually build an investment that you can be proud of might sound difficult, but it doesn’t have to be that way at all. Go with a buy to let broker that understands the marketplace and the unique needs of today’s landlords. Remember that you’re getting the property in order to become a landlord. That’s a big step and very different when compared to getting a home as a regular homeowner. Both are investments in the future, but they have very different outcomes. You’re trying to become a landlord in order to make your money grow in a different way. That’s the real heart of the matter, isn’t it?

Make sure that you’re getting the best advice possible before you make your first move. After all, buying a home — under any scheme — is a challenging thing, and shouldn’t be taken lightly.

What are flexible mortgages?

Some mortgage schemes provide the consumers with a few options – either varying the monthly payments or combining the mortgage account with some other savings account. This is also called “offset” mortgages. This is a very useful option, if you want to close off your loan early.

Listed below are some flexible features (it is not necessary that they are only associated with flexible loans) which are becoming very popular. Look at them and select what is best for you:

Overpayments

This system allows you to pay more than your normal monthly installments and will provide you with two benefits:

► Your loan amount will reduce considerably and hence you will have to pay lower monthly installments.
► If you continue paying the high amount, the loan can be closed much earlier than your usual term.

Except for fixed rate mortgage (where you have to pay an early repayment charge), normal flexible mortgages do not charge you for making overpayments.

Principal


The principal is the total amount of money that you had borrowed. You can give the creditor a sum of money called down payment before taking the whole loan so that there will be a reduction in the total amount of money that has to be financed.



Interest

Interest is the amount that the kinder charges for the money that you have borrowed; it is usually called the interest rate.

Besides, the given rate, the creditor can also charge you points and additional loan costs – every point is one percent of the total financed amount and is paid along with the principal.