Feb
28
Filed Under Finance | Leave a Comment
Nicholas Scoville asked:
The looming credit crunch is affecting markets world wide. The crunch is fueled largely by the alarming number of home foreclosures. The crisis initially began in the sub-prime lending sector, but is starting to show signs of moving into prime mortgages. If you find yourself one of the unfortunate homeowners that has or is about to miss a mortgage payment, use these steps to hopefully avoid the pain of foreclosure and losing your home.
1. Keep in constant communication with your mortgage servicer. If you are about to miss a payment, call them immediately. Never ignore any phone calls or letters they send you.
2. Remember to pay your mortgage payment before any unsecured credit payments. Credit card companies will let you know the moment you miss a payment, and will convince you your life will be over if you don’t pay them. The reason they get so upset is that they can’t take anything from you if you don’t pay. The banks know they can take your house if you don’t pay. Late and missed credit card payments will damage your credit, but nothing like a foreclosure.
3. Never give up hope. There are several steps that can be taken to get you back on the right track with your mortgage lender.
Some of the programs that help you resolve your issues with your lender include:
1. Reinstatement - paying a lump sum to bring the loan current and continuing with payments as normal afterwards.
2. Forbearance - you are allowed to delay payments for a short period of time with the understanding that you will bring the account current at an agreed upon date.
3. Repayment Plan - the lender may allow you to add some of your missed payments to an agreed upon number of future payments, thus bringing your account current.
4. Mortgage Modification - if you can’t pay a lump sum to bring your loan current, but can now make monthly payments, your lender may work with you, possibly adding the past due amount to the principal balance.
5. Selling your home - if you have adequate equity in your home, and are able to sell it for an amount to satisfy your mortgage balance.
6. Short Sale - the bank may accept a lesser payoff for your mortgage if you get an offer on your home. Make sure the bank accepts the amount received from the short sale as paid in full with no recourse, otherwise they can come after you for the difference. Banks are warming up to the short sale because they stand to lose even more money if they have to foreclose on your home.
7. Deed in Lieu of Foreclosure - the lender takes ownership of the property and forgives your debt. Much less damaging to your credit than a foreclosure.
8. FHA/VA - FHA loans and VA loans are government backed loan programs that have special programs to help you avoid foreclosure. Contact the VA or HUD if you have one of these loans for more information.
Your mortgage lender won’t automatically put you on one of these programs, you must work with them, and keep your promises to them. If you simply stop paying, you will lose your house, and any equity you may have in it. Banks are not in the real estate business, and do not want to own your home, they will work with you.
DANNY
The looming credit crunch is affecting markets world wide. The crunch is fueled largely by the alarming number of home foreclosures. The crisis initially began in the sub-prime lending sector, but is starting to show signs of moving into prime mortgages. If you find yourself one of the unfortunate homeowners that has or is about to miss a mortgage payment, use these steps to hopefully avoid the pain of foreclosure and losing your home.
1. Keep in constant communication with your mortgage servicer. If you are about to miss a payment, call them immediately. Never ignore any phone calls or letters they send you.
2. Remember to pay your mortgage payment before any unsecured credit payments. Credit card companies will let you know the moment you miss a payment, and will convince you your life will be over if you don’t pay them. The reason they get so upset is that they can’t take anything from you if you don’t pay. The banks know they can take your house if you don’t pay. Late and missed credit card payments will damage your credit, but nothing like a foreclosure.
3. Never give up hope. There are several steps that can be taken to get you back on the right track with your mortgage lender.
Some of the programs that help you resolve your issues with your lender include:
1. Reinstatement - paying a lump sum to bring the loan current and continuing with payments as normal afterwards.
2. Forbearance - you are allowed to delay payments for a short period of time with the understanding that you will bring the account current at an agreed upon date.
3. Repayment Plan - the lender may allow you to add some of your missed payments to an agreed upon number of future payments, thus bringing your account current.
4. Mortgage Modification - if you can’t pay a lump sum to bring your loan current, but can now make monthly payments, your lender may work with you, possibly adding the past due amount to the principal balance.
5. Selling your home - if you have adequate equity in your home, and are able to sell it for an amount to satisfy your mortgage balance.
6. Short Sale - the bank may accept a lesser payoff for your mortgage if you get an offer on your home. Make sure the bank accepts the amount received from the short sale as paid in full with no recourse, otherwise they can come after you for the difference. Banks are warming up to the short sale because they stand to lose even more money if they have to foreclose on your home.
7. Deed in Lieu of Foreclosure - the lender takes ownership of the property and forgives your debt. Much less damaging to your credit than a foreclosure.
8. FHA/VA - FHA loans and VA loans are government backed loan programs that have special programs to help you avoid foreclosure. Contact the VA or HUD if you have one of these loans for more information.
Your mortgage lender won’t automatically put you on one of these programs, you must work with them, and keep your promises to them. If you simply stop paying, you will lose your house, and any equity you may have in it. Banks are not in the real estate business, and do not want to own your home, they will work with you.
DANNY
Feb
20
Filed Under Finance | Leave a Comment
Nicola Cairncross asked:
LANE #3 - Property Investing is the topic I’m going to cover in the second part of this article on how to become a millionaire in just five years.
what you will find is that as many wealthy people made their money in business, as property, and once they have made their money in one of those two lanes, they then invest in the other.
Why? you will find that property is much easier!
In the same way that you have two ways to make a million in business essentially, you have two ways to make a million in property, within five years.
Actually, there are SO MANY ways to make a huge amount in property - like buying, renovating and flipping - but most of them incur capital gains tax whcih will make my sums harder, so I’m going to concentrate on the simplest and most tax efficient methods.
To make (and keep) $1 million in property in five years, you could work out that you need to create $250,000 rental profit per annum, net of tax, or $416,666 per annum gross. That’s $34,722 per month.
If you work out that a good rental profit on a small condo or family unit is $200 per month, then you can see that you need 173 rental units to achieve your goals.
An easier way is to create a property portfolio that appreciates in value by $250,000, per annum, which you can periodically refinance to pull out your equity, tax free (it’s not earned income you see, so not taxable).
If you figure that property appreciates in value by 10% per annum on AVERAGE, which means that some years it will do better, some years not so well, but over time, 10% per annum is reasonable for most of Europe, the UK, the USA and I believe most urban parts of Australia.
So in order to own a property portfolio that will appreciate by $250,000 per annum and that’s 10% then yes, you’ve guessed it, you will need $2.5million worth of property.
And before you tell me that this is impossible, let me tell you about my great friends Greg & Andy, who took £10,000 on a 0% credit card, bought property under market value, did it up a little bit, revalued, refinanced, pulled their deposit back out and went again, which enabled them to build up a £37 million (that’s pounds NOT dollars) within just 10 years.
if you visit our blog you can enjoy Greg & Andy’s very funny story.
They can pull out £3.what is even better is 7 million per annum, tax free.
Do the sums for yourself because every year, the compounding effect kicks in, and every year, their portfolio is growing exponentially, and so then is their available income every year.
One way to make money from property without even owning any (great for people without a deposit, who can’t get a morgage or who’s credit rating isn’t great) is to educate yourself about what makes a great property deal and then go and find those deals and then sell them onto investors with money but no time.
Another way is to find people who HAVE to sell, offer to buy their property at a future date at today’s full market value, then find people who can’t buy now but who can in the future (perhaps they are new to the country and haven’t built up a credit rating yet) and then strike a deal whereby the future owner moves in and rents the property, but has agreed to buy it for todays price, but in two years time. You make money from both deals and often an income at the same time. On The Money Gym blog we go into this in more depth.
There is another way to buy property - guaranteed 405 or 50% under market value. This is not an income strategy in the short term but it could certainly make you a property millionaire within five years.
I hope I’ve fired you up about the possibilities for becoming a property millionaire - there are just SO MANY ways to make money from property.
Look for Part #3 of this article to enjoy the extensive information on Lane #4.
LOGAN
LANE #3 - Property Investing is the topic I’m going to cover in the second part of this article on how to become a millionaire in just five years.
what you will find is that as many wealthy people made their money in business, as property, and once they have made their money in one of those two lanes, they then invest in the other.
Why? you will find that property is much easier!
In the same way that you have two ways to make a million in business essentially, you have two ways to make a million in property, within five years.
Actually, there are SO MANY ways to make a huge amount in property - like buying, renovating and flipping - but most of them incur capital gains tax whcih will make my sums harder, so I’m going to concentrate on the simplest and most tax efficient methods.
To make (and keep) $1 million in property in five years, you could work out that you need to create $250,000 rental profit per annum, net of tax, or $416,666 per annum gross. That’s $34,722 per month.
If you work out that a good rental profit on a small condo or family unit is $200 per month, then you can see that you need 173 rental units to achieve your goals.
An easier way is to create a property portfolio that appreciates in value by $250,000, per annum, which you can periodically refinance to pull out your equity, tax free (it’s not earned income you see, so not taxable).
If you figure that property appreciates in value by 10% per annum on AVERAGE, which means that some years it will do better, some years not so well, but over time, 10% per annum is reasonable for most of Europe, the UK, the USA and I believe most urban parts of Australia.
So in order to own a property portfolio that will appreciate by $250,000 per annum and that’s 10% then yes, you’ve guessed it, you will need $2.5million worth of property.
And before you tell me that this is impossible, let me tell you about my great friends Greg & Andy, who took £10,000 on a 0% credit card, bought property under market value, did it up a little bit, revalued, refinanced, pulled their deposit back out and went again, which enabled them to build up a £37 million (that’s pounds NOT dollars) within just 10 years.
if you visit our blog you can enjoy Greg & Andy’s very funny story.
They can pull out £3.what is even better is 7 million per annum, tax free.
Do the sums for yourself because every year, the compounding effect kicks in, and every year, their portfolio is growing exponentially, and so then is their available income every year.
One way to make money from property without even owning any (great for people without a deposit, who can’t get a morgage or who’s credit rating isn’t great) is to educate yourself about what makes a great property deal and then go and find those deals and then sell them onto investors with money but no time.
Another way is to find people who HAVE to sell, offer to buy their property at a future date at today’s full market value, then find people who can’t buy now but who can in the future (perhaps they are new to the country and haven’t built up a credit rating yet) and then strike a deal whereby the future owner moves in and rents the property, but has agreed to buy it for todays price, but in two years time. You make money from both deals and often an income at the same time. On The Money Gym blog we go into this in more depth.
There is another way to buy property - guaranteed 405 or 50% under market value. This is not an income strategy in the short term but it could certainly make you a property millionaire within five years.
I hope I’ve fired you up about the possibilities for becoming a property millionaire - there are just SO MANY ways to make money from property.
Look for Part #3 of this article to enjoy the extensive information on Lane #4.
LOGAN
Jan
31
Filed Under Finance | Leave a Comment
Angela J. Brinker asked:
In an ideal world, children are raised by their parents and are provided with everything that they would need in order to provide them a stable and promising future. When that time comes, and the parents are now old and have retired, it is now the children who take care of their parents and providing them the comfort and support as they live out their remaining days. However, in the real world, this is not often the case. Oftentimes, senior citizens are left on their own after their children have moved out from the house. While there are some lucky ones whose children would, once in a while, drop by and care for them, a vast majority of the senior citizens would have to rely on themselves and their savings in order to live as comfortably as they can.
To provide some form of support for the senior citizens living on their own in the United States, the US Government had passed the American Homeownership and Economic Opportunity Act of 2000. In it, the government lists the different financial benefits senior citizens may attain resulting to taking out a reverse mortgage plan to live out their remaining years healthy and in comfort. Here are just some of the benefits.
Reduction of Economic Hardship
As an individual gets older, he or she is more in need of certain needs such as medical care and adequate housing. Because majority of the senior citizens living in the United States have already retired, they are only able to rely on their pension and savings that they have kept aside to sustain them after retirement. By getting a reverse mortgage, a senior citizen would be able to liquidate his or her home equity to fund for all the basic necessities he or she would need in order live comfortably and at ease throughout his or there remaining days without having to lose his or her home or having to provide some proof of income.
Assurance from the Government
Unlike other types of mortgages and loan programs available in the market, reverse mortgages are insured and sponsored by the US government. As such, any amount that a senior citizen would be able to take out through a reverse mortgage would be exempted from tax conditions and other fees most mortgages and loan programs are subjected to.
No Repayment Schedules
Perhaps the best benefit and advantage of getting a reverse is the fact that for as long as the senior citizen who had taken out the reverse mortgage or his or her spouse resides in the home that has been placed in the reverse mortgage contract, he or she would not have to worry about making any form of repayments. When one takes out a mortgage or a loan from a creditor or financial institution, it is the responsibility of the borrower to repay the amount that was loaned or mortgaged through a schedule of repayments. In the event that this is not met, then the financial institution or creditor has the authority of seizing the property placed as a form of collateral. In the case of the reverse mortgage program, the senior citizen would have the benefit of being provided the financial aid he or she may need for medical checkups, healthcare, home improvements and other basic necessities.
Maintain Ownership of the Home
Although the amount of funds that is received from the reverse mortgage plan is taken from the equity of the home of the senior citizen, the ownership of the home is not transferred to the creditor or financial institution. As a result, they do not have to worry about foreclosures and other legal action commonly faced by borrowers that have taken out other types of mortgages or loans.
HERIBERTO
In an ideal world, children are raised by their parents and are provided with everything that they would need in order to provide them a stable and promising future. When that time comes, and the parents are now old and have retired, it is now the children who take care of their parents and providing them the comfort and support as they live out their remaining days. However, in the real world, this is not often the case. Oftentimes, senior citizens are left on their own after their children have moved out from the house. While there are some lucky ones whose children would, once in a while, drop by and care for them, a vast majority of the senior citizens would have to rely on themselves and their savings in order to live as comfortably as they can.
To provide some form of support for the senior citizens living on their own in the United States, the US Government had passed the American Homeownership and Economic Opportunity Act of 2000. In it, the government lists the different financial benefits senior citizens may attain resulting to taking out a reverse mortgage plan to live out their remaining years healthy and in comfort. Here are just some of the benefits.
Reduction of Economic Hardship
As an individual gets older, he or she is more in need of certain needs such as medical care and adequate housing. Because majority of the senior citizens living in the United States have already retired, they are only able to rely on their pension and savings that they have kept aside to sustain them after retirement. By getting a reverse mortgage, a senior citizen would be able to liquidate his or her home equity to fund for all the basic necessities he or she would need in order live comfortably and at ease throughout his or there remaining days without having to lose his or her home or having to provide some proof of income.
Assurance from the Government
Unlike other types of mortgages and loan programs available in the market, reverse mortgages are insured and sponsored by the US government. As such, any amount that a senior citizen would be able to take out through a reverse mortgage would be exempted from tax conditions and other fees most mortgages and loan programs are subjected to.
No Repayment Schedules
Perhaps the best benefit and advantage of getting a reverse is the fact that for as long as the senior citizen who had taken out the reverse mortgage or his or her spouse resides in the home that has been placed in the reverse mortgage contract, he or she would not have to worry about making any form of repayments. When one takes out a mortgage or a loan from a creditor or financial institution, it is the responsibility of the borrower to repay the amount that was loaned or mortgaged through a schedule of repayments. In the event that this is not met, then the financial institution or creditor has the authority of seizing the property placed as a form of collateral. In the case of the reverse mortgage program, the senior citizen would have the benefit of being provided the financial aid he or she may need for medical checkups, healthcare, home improvements and other basic necessities.
Maintain Ownership of the Home
Although the amount of funds that is received from the reverse mortgage plan is taken from the equity of the home of the senior citizen, the ownership of the home is not transferred to the creditor or financial institution. As a result, they do not have to worry about foreclosures and other legal action commonly faced by borrowers that have taken out other types of mortgages or loans.
HERIBERTO
Jan
4
Filed Under Finance | Leave a Comment
Richard Weber asked:
In order to talk about and understand what you should NOT do when refinancing your home mortgage, we should begin by covering some basics about mortgages, refinancing, and a few of the reasons why anybody would want to refinance in the first place.
In terms of the actual nature of a mortgage, there is very little difference between a mortgage and a loan except that a mortgage is always for a home, it is generally paid back over a longer period (5-40 years), and the home itself is used as collateral. Because the real estate that you are buying is used as collateral, this is what is referred to as a ’secure loan.’
When a borrower (you) and a lender (usually the bank) agree upon the terms and time frame of the mortgage, one of the most important things that is in question is the Interest Rate (usually cited as an APR percentage, meaning annual percentage rate). This determines how much the borrower will eventually pay back to the lender.
There is a very simple concept that has been practiced for centuries that is at the heart of an interest rate. If Party A lends money to Party B, and Party B agrees to pay back that money at a later date, Party B will always pay back MORE than the total amount borrowed simply because they had the use of that money over the specific arranged timeframe.
When it comes to refinancing a home loan or mortgage, many people have heard of it and know they can save money this way, but might not know exactly how to do it. When you decide to refinance your home loan, you will work with a different bank or lender that will purchasing the remaining amount of your existing mortgage and provide you with a new one, and you will instead make monthly payments to this new bank.
Although the majority of families looking to refinance their mortgage wish to do so to take advantage of lower interest rates, a few other reasons would be to raise a lump-sum of cash, or to secure against possible volatility in their interest rate values. This last reason, preventing the possible raising of interest rates, usually amounts to switching from an adjustable rate mortgage (ARM) to one with a fixed interest rate.
When a borrower wishes to refinance their mortgage to obtain immediate cash, this is called ‘Cash-Out Refinancing,’ and many people make costly mistakes in this process which you will learn to prevent below.
—–Mistakes To Avoid With Cash-Out Refinancing—-
Cash-out refinancing is borrowing more than the total cost of your home in order to have a chunk of cash left over after you have repaid your existing mortgage.
If you are looking to get some cash to work with using a mortgage, this simply means that you are getting a loan based on the value of your home, with the home itself as collateral. You have to options when it comes to getting cash this way, and the one that you should use depends on what interest rates you are able to secure with each. You can either obtain a second mortgage for the value of the amount of cash that you need, or you can let your new bank know that you need the value of your new mortgage to be HIGHER than the value of your existing one.
Now when most people hear about taking a second mortgage out, their brain tells them that they must avoid this at all costs as it may put them further in debt. But this is not always right, because usually with cash-out refinancing the bank or lender will charge you a higher interest rate than if the value of your new mortgage was THE SAME as your old one.
For the sake of ease and simplicity, let’s just use some basic round numbers in this example: The existing value to be repaid on your mortgage is $200K, and you need $20K cash for something like a hospital bill (or maybe a generous donation to your Tropical Vacation trust fund). You can either obtain a $20K second mortgage at 12% interest, or you can refinance your existing mortgage to $220K at 7%.
Which one is better? The reason most people would say that overall refinancing would be better in this situation is because they are scared off by the higher interest rate number, and they are conditioned to believe that a taking a second mortgage means you are in financial trouble. However, the total amount of interest that you would eventually repay on this smaller second morgage is far less than what you would repay for the larger refinanced mortgage.
—-A Common Mistake When Refinancing For Lower Interest Rates—-
Everybody should agree that it makes sense to refinance your mortgage if you are able to secure a lower interest rate, but at what point does this strategy become profitable?
When most people go about trying to find the answer to this question, the two things that they compare are only their current interest rate and the interest rate they will get if they refinance. The one thing that they will often forget, and the thing that you now know to take into account, is the COST that the new bank or lending institution will charge for the refinancing.
Depending on the bank, the current prevailing interest rate, and the amount of the mortgage, this cost can sometimes be large to the point that it will actually negate the money that you save from the lower interest rate!
TREVOR
In order to talk about and understand what you should NOT do when refinancing your home mortgage, we should begin by covering some basics about mortgages, refinancing, and a few of the reasons why anybody would want to refinance in the first place.
In terms of the actual nature of a mortgage, there is very little difference between a mortgage and a loan except that a mortgage is always for a home, it is generally paid back over a longer period (5-40 years), and the home itself is used as collateral. Because the real estate that you are buying is used as collateral, this is what is referred to as a ’secure loan.’
When a borrower (you) and a lender (usually the bank) agree upon the terms and time frame of the mortgage, one of the most important things that is in question is the Interest Rate (usually cited as an APR percentage, meaning annual percentage rate). This determines how much the borrower will eventually pay back to the lender.
There is a very simple concept that has been practiced for centuries that is at the heart of an interest rate. If Party A lends money to Party B, and Party B agrees to pay back that money at a later date, Party B will always pay back MORE than the total amount borrowed simply because they had the use of that money over the specific arranged timeframe.
When it comes to refinancing a home loan or mortgage, many people have heard of it and know they can save money this way, but might not know exactly how to do it. When you decide to refinance your home loan, you will work with a different bank or lender that will purchasing the remaining amount of your existing mortgage and provide you with a new one, and you will instead make monthly payments to this new bank.
Although the majority of families looking to refinance their mortgage wish to do so to take advantage of lower interest rates, a few other reasons would be to raise a lump-sum of cash, or to secure against possible volatility in their interest rate values. This last reason, preventing the possible raising of interest rates, usually amounts to switching from an adjustable rate mortgage (ARM) to one with a fixed interest rate.
When a borrower wishes to refinance their mortgage to obtain immediate cash, this is called ‘Cash-Out Refinancing,’ and many people make costly mistakes in this process which you will learn to prevent below.
—–Mistakes To Avoid With Cash-Out Refinancing—-
Cash-out refinancing is borrowing more than the total cost of your home in order to have a chunk of cash left over after you have repaid your existing mortgage.
If you are looking to get some cash to work with using a mortgage, this simply means that you are getting a loan based on the value of your home, with the home itself as collateral. You have to options when it comes to getting cash this way, and the one that you should use depends on what interest rates you are able to secure with each. You can either obtain a second mortgage for the value of the amount of cash that you need, or you can let your new bank know that you need the value of your new mortgage to be HIGHER than the value of your existing one.
Now when most people hear about taking a second mortgage out, their brain tells them that they must avoid this at all costs as it may put them further in debt. But this is not always right, because usually with cash-out refinancing the bank or lender will charge you a higher interest rate than if the value of your new mortgage was THE SAME as your old one.
For the sake of ease and simplicity, let’s just use some basic round numbers in this example: The existing value to be repaid on your mortgage is $200K, and you need $20K cash for something like a hospital bill (or maybe a generous donation to your Tropical Vacation trust fund). You can either obtain a $20K second mortgage at 12% interest, or you can refinance your existing mortgage to $220K at 7%.
Which one is better? The reason most people would say that overall refinancing would be better in this situation is because they are scared off by the higher interest rate number, and they are conditioned to believe that a taking a second mortgage means you are in financial trouble. However, the total amount of interest that you would eventually repay on this smaller second morgage is far less than what you would repay for the larger refinanced mortgage.
—-A Common Mistake When Refinancing For Lower Interest Rates—-
Everybody should agree that it makes sense to refinance your mortgage if you are able to secure a lower interest rate, but at what point does this strategy become profitable?
When most people go about trying to find the answer to this question, the two things that they compare are only their current interest rate and the interest rate they will get if they refinance. The one thing that they will often forget, and the thing that you now know to take into account, is the COST that the new bank or lending institution will charge for the refinancing.
Depending on the bank, the current prevailing interest rate, and the amount of the mortgage, this cost can sometimes be large to the point that it will actually negate the money that you save from the lower interest rate!
TREVOR
Oct
13
Filed Under Finance | Leave a Comment
SeanHorton asked:
A mortgage calculator is there to help you. It isn’t a substitute for a human being, but it can provide some of the basic information you need.
Actually, however, the term “mortgage calculator” isn’t as simple as it sounds. There is a wide variety of calculators designed for a variety of needs. Whatever question you have about a mortgage, or your financial situation in relation to a mortgage, there is a good chance there will be a mortgage calculator to help you.
So what questions might a mortgage calculator be able to answer for you?
I’ve seen a house I like - can I afford it? The calculator tells you to put in the price of the house and the required deposit. It will tell you the amount you have to borrow at a selected rate - e.g. the current base rate or the rate on offer - in order to buy the house.
What is the maximum amount I can borrow for a mortgage? This is a simple calculator based on your income to give you a basic idea of what you can afford, in order to give you guidance as to what price-bracket you should be looking in. But don’t forget there’s no guarantee that a lender would actually give you that amount - they take other things into consideration such as your credit rating and your other commitments. (A few calculators actually enable you to enter your commitments and regular outgoings as well.)
How much would I have to pay out a month on this loan? The calculator enables you to put in the amount you want to borrow, over how long and at what interest rate. It the gives you the monthly payments for an interest-only or a repayment mortgage.
What would be the effect of a rate change on my repayments? With this calculator you can work out how much more or less a month you would pay in the event of a rate change. You enter the details of your mortgage - amount, rate, term etc. - and then click on increased rate or reduced rate.
Would it be worth my while to take advantage or this good remortgage deal, given the amount of the redemption fee? This can be very helpful. Sometimes you are tempted to remortgage at a good rate but are uncertain whether the redemption fee would cancel out most of your savings. The calculator works out the maximum interest rate you would need to be paying in order to make a switch worthwhile.
These are just some of the mortgage questions a mortgage calculator may be able to help you with. As you see, most of them are very simple. They give you an indication of the direction you should take, but can’t take into consideration all the factors involved in the costs of a mortgage. Everybody’s situation is unique. If you are in any doubt, talk to a whole of market mortgage broker who can look at the complete picture.
MATT
A mortgage calculator is there to help you. It isn’t a substitute for a human being, but it can provide some of the basic information you need.
Actually, however, the term “mortgage calculator” isn’t as simple as it sounds. There is a wide variety of calculators designed for a variety of needs. Whatever question you have about a mortgage, or your financial situation in relation to a mortgage, there is a good chance there will be a mortgage calculator to help you.
So what questions might a mortgage calculator be able to answer for you?
I’ve seen a house I like - can I afford it? The calculator tells you to put in the price of the house and the required deposit. It will tell you the amount you have to borrow at a selected rate - e.g. the current base rate or the rate on offer - in order to buy the house.
What is the maximum amount I can borrow for a mortgage? This is a simple calculator based on your income to give you a basic idea of what you can afford, in order to give you guidance as to what price-bracket you should be looking in. But don’t forget there’s no guarantee that a lender would actually give you that amount - they take other things into consideration such as your credit rating and your other commitments. (A few calculators actually enable you to enter your commitments and regular outgoings as well.)
How much would I have to pay out a month on this loan? The calculator enables you to put in the amount you want to borrow, over how long and at what interest rate. It the gives you the monthly payments for an interest-only or a repayment mortgage.
What would be the effect of a rate change on my repayments? With this calculator you can work out how much more or less a month you would pay in the event of a rate change. You enter the details of your mortgage - amount, rate, term etc. - and then click on increased rate or reduced rate.
Would it be worth my while to take advantage or this good remortgage deal, given the amount of the redemption fee? This can be very helpful. Sometimes you are tempted to remortgage at a good rate but are uncertain whether the redemption fee would cancel out most of your savings. The calculator works out the maximum interest rate you would need to be paying in order to make a switch worthwhile.
These are just some of the mortgage questions a mortgage calculator may be able to help you with. As you see, most of them are very simple. They give you an indication of the direction you should take, but can’t take into consideration all the factors involved in the costs of a mortgage. Everybody’s situation is unique. If you are in any doubt, talk to a whole of market mortgage broker who can look at the complete picture.
MATT
Oct
4
Filed Under Finance | Leave a Comment
Irene Miller asked:
It is easy to take out loans. Many funding institutions are out there offering a variety of loans and mortgage plans, and people are enticed in order to obtain that brand new car, or a suburb house with white picket fences. But how much information about credit scores do people know about?
A credit score keep tabs on people’s financial credit information when applying for loans. They are often applicable to any types of loans - house, cars, business enterprise, education. One can have different credit scores, and oftentimes they are recorded in any of the three reporting agencies - Equifax, Experian, and TransUnion. For example, if you applied for a mortgage loan, your bank can contact any of these three agencies to verify and obtain data about your credit score. This will guarantee them that you are a perfect candidate for taking out a morgage loan, depending on whether your credit score is high or not.
One thing you should know, however, is that not all companies contact the same credit agency, and not all three credit agencies share the same information about your credit score values. For example, you may have a higher credit score recorded in Equifax, but your Transunion record show that you still have enough credit to apply for a loan. This is often where the confusion comes in. Errors in credit and accounting could provide inaccurate information about your debts and interest rates. For example, you might be overpaying or underpaying a particular mortgage several points higher or lower than the actual interest rate. This costs people an enormous amount of both time and money.
In fact, as decreed by the Federal law, people have the right to obtain a report of their credit score information for free in one of any of the three agencies. Ideally, you can obtain a free credit score report once every year. However, be careful about obtaining those free reports because some require you to sign-up for membership. For example, the Experian reporting agency contains a note in their website informing borrowers that the release of their credit score reports require them to enter their website with a “7-day trial period” - beyond that, members are obliged to pay up the membership fee.
Obtaining enough information about your credit score is key for more astute financial planning. You can monitor how much credit score you have, and make sure you do not exceed the limit of your paying capacity. Getting online credit repair help can assist you in figuring out your loan options. By using this online credit repair help guide, you can be assured that you are making the best decisions for your future goals.
HOWARD
It is easy to take out loans. Many funding institutions are out there offering a variety of loans and mortgage plans, and people are enticed in order to obtain that brand new car, or a suburb house with white picket fences. But how much information about credit scores do people know about?
A credit score keep tabs on people’s financial credit information when applying for loans. They are often applicable to any types of loans - house, cars, business enterprise, education. One can have different credit scores, and oftentimes they are recorded in any of the three reporting agencies - Equifax, Experian, and TransUnion. For example, if you applied for a mortgage loan, your bank can contact any of these three agencies to verify and obtain data about your credit score. This will guarantee them that you are a perfect candidate for taking out a morgage loan, depending on whether your credit score is high or not.
One thing you should know, however, is that not all companies contact the same credit agency, and not all three credit agencies share the same information about your credit score values. For example, you may have a higher credit score recorded in Equifax, but your Transunion record show that you still have enough credit to apply for a loan. This is often where the confusion comes in. Errors in credit and accounting could provide inaccurate information about your debts and interest rates. For example, you might be overpaying or underpaying a particular mortgage several points higher or lower than the actual interest rate. This costs people an enormous amount of both time and money.
In fact, as decreed by the Federal law, people have the right to obtain a report of their credit score information for free in one of any of the three agencies. Ideally, you can obtain a free credit score report once every year. However, be careful about obtaining those free reports because some require you to sign-up for membership. For example, the Experian reporting agency contains a note in their website informing borrowers that the release of their credit score reports require them to enter their website with a “7-day trial period” - beyond that, members are obliged to pay up the membership fee.
Obtaining enough information about your credit score is key for more astute financial planning. You can monitor how much credit score you have, and make sure you do not exceed the limit of your paying capacity. Getting online credit repair help can assist you in figuring out your loan options. By using this online credit repair help guide, you can be assured that you are making the best decisions for your future goals.
HOWARD
Aug
25
Filed Under Finance | Leave a Comment
Liam G asked:
Offset mortgages, which were practically unheard of around six years ago, are becoming an increasingly popular option within today’s market.
They are particularly popular with higher-rate taxpayers and are expected to become more and more common, with lenders saying that 25% of current mortgage holders would be much better off with an offset mortgage.
The basic principle behind offset mortgages is that we tend to pay more interest on debts than we accumulate on savings. Therefore, by linking the two accounts – and even a current account into which your salary is paid – the amount you are in credit by helps to offset the capital owed on the mortgage. In turn, this reduces the interest payable on what you owe.
For instance, if you had an offset mortgage of £100,000 with a savings account of £10,000 and £2,000 in your current account, you would only accrue interest on £88,000 of the mortgage.
Another major advantage with offset mortgages is that the interest saved is not taxed. For instance, instead of getting a net return of 3% on your savings, by offsetting you can expect a net return of 6%
One of the main disadvantages of offset mortgages was the high interest rates attached to them. Such interest rates were often at least 1% or more higher than the most competitive fixed rate mortgage within the market at the time.
As offset mortgages have become more popular though, introductory rates of less than 5% are becoming more and more common.
As to be expected, the highly competitive nature of the lending market has led to banks offering various extras to increase customer base.
The most popular of these include free valuations, legal fees and some lenders even allow you to offset 2 savings accounts. On top of this most lenders offer “super low” introductory interest rates, usually for 6 – 12 months.
The actual interest rate you will end up with will depend on a number of factors, notably the percentage of the properties value that you wish to borrow.
JACKIE
Offset mortgages, which were practically unheard of around six years ago, are becoming an increasingly popular option within today’s market.
They are particularly popular with higher-rate taxpayers and are expected to become more and more common, with lenders saying that 25% of current mortgage holders would be much better off with an offset mortgage.
The basic principle behind offset mortgages is that we tend to pay more interest on debts than we accumulate on savings. Therefore, by linking the two accounts – and even a current account into which your salary is paid – the amount you are in credit by helps to offset the capital owed on the mortgage. In turn, this reduces the interest payable on what you owe.
For instance, if you had an offset mortgage of £100,000 with a savings account of £10,000 and £2,000 in your current account, you would only accrue interest on £88,000 of the mortgage.
Another major advantage with offset mortgages is that the interest saved is not taxed. For instance, instead of getting a net return of 3% on your savings, by offsetting you can expect a net return of 6%
One of the main disadvantages of offset mortgages was the high interest rates attached to them. Such interest rates were often at least 1% or more higher than the most competitive fixed rate mortgage within the market at the time.
As offset mortgages have become more popular though, introductory rates of less than 5% are becoming more and more common.
As to be expected, the highly competitive nature of the lending market has led to banks offering various extras to increase customer base.
The most popular of these include free valuations, legal fees and some lenders even allow you to offset 2 savings accounts. On top of this most lenders offer “super low” introductory interest rates, usually for 6 – 12 months.
The actual interest rate you will end up with will depend on a number of factors, notably the percentage of the properties value that you wish to borrow.
JACKIE