Posts Tagged ‘fixed rate mortgage’

The Reasons To Refinance

Saturday, April 3rd, 2010

There are many great reasons to refinance. With lower cost, adjustable rate, and 0-down options, traditional loan programs like 30-year or 15-year fixed rate mortgages don’t always allow us to meet our financial goals. Today, even reducing your mortgage interest rate a little can save you big over the life of your home loan. Take a look below at 5 of the great reasons to refinance.

1. Lower Your Monthly Payment
If you plan to live in your home for a few years, it may make sense to pay a point or two to decrease your interest rate and overall payment. In the long run, you will have paid for the cost of the mortgage refinance with the monthly savings. On the other hand, if you plan on moving in the near future, you may not be in your home long enough to recover the refinancing costs. Calculating the break-even point before you decide to refinance can help determine whether it makes sense.

2. Switch From an Adjustable Rate to a Fixed Rate Mortgage
Adjustable rate mortgages (ARMs) can provide lower initial monthly payments for those who are willing to risk upward market adjustments. They’re also ideal if you don’t plan to own your property for more than a few years. However, if you have made your house a permanent home, you may want to swap your adjustable rate for a 15-, 20- or 30-year fixed rate mortgage. Your interest may be higher than with an ARM, but you have the confidence of knowing what your payment will be every month for the rest of your loan term.

3. Escape Balloon Payment Programs
Like adjustable rate mortgage programs, balloon programs are great when you want lower rates and lower initial monthly payments. However, if you still own the property at the end of the fixed rate term (usually 5 or 7 years), the entire balance of your mortgage is due to the lender. If you’re in a balloon program, you can easily switch over into a new adjustable rate mortgage or fixed rate mortgage.

4. Remove Private Mortgage Insurance (PMI)
Zero or Low down payment options allow homeowners to purchase homes with less than 20% down. Unfortunately, they also usually require private mortgage insurance, which is designed to protect the lender from loan default. As the value of your home increases and the balance on your home decreases, you may be eligible to remove your PMI with a mortgage refinance loan.

5. Cash In on Your Home’s Equity
Your home is a great resource for extra cash. Like most homes, yours has probably increased in value, and that gives you the ability to take some of that cash and put it to good use. Pay off credit cards, make home improvements, pay tuition, replace your current car, or even take a long-overdue vacation. With a cash-out mortgage refinance transaction, it’s easy. And it’s even tax deductible.

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Over 60% of UK Residents Unhappy With Mortgage Pricing

Thursday, December 17th, 2009

According to a recent survey conducted by Creditchoices.co.uk, a majority of UK residents believed that banks were overpricing mortgage deals. 59.5% were of the same opinion while a mere 11.5% considered the bank’s pricing to be fair. 29% were unable to decide either way. 

Mortgage rates are significantly higher than the base rate, according to homeowners and first-time buyers. The other disproportionate factors were high arrangement fees and a large deposit mortgage. Mortgages were still more expensive as compared to the first quarter of 2009 in spite of a base rate of 0.5%.

A 75 % loan-to-value two-year fixed-rate mortgage base rate averages 4.54% today, while the rate was 4.18% six months ago. The average rate for a two-year fixed-rate mortgage was 5.66% a year ago. This was when the base rate was 3%. 

Commercial manager at Creditchoices.co.uk, Chris Eagle, supports the public’s view and says that there is good reason for the public to be discouraged with the high premium that banks charge over the bse rate on all their mortgage deals. According to Mr. Eagle, the premium is higher as compared to the previous year. However, this is an indicator of the banks juggling of funds to hold enough capital to offset their mortgage lending under banking rules. Mr. Eagle stresses the need for lower prices and greater competition among lenders. A greater range of products needs to be offered to the public, who are currently reeling under the pressure to save for large mortgage deposits. 

The online survey was held by Creditchoices.co.uk between 6 September and 6 October 2009 with a total of 986 users participating in the poll. 
Among some of the comments by survey respondents were:
“Interest rates are far too high to attract first-time buyers.”
“They are adding extras on, ie £995 to have the mortgage.”
“Arrangement fees are not just too high; they are a blight on the mortgage market and should be stopped.”
“Very high mortgage deposits required in most cases.”
Some of the comments in favour of banks were:
“At last they’re trying to lend responsibly which they haven’t in the past.”
“I do not think that the former practice of granting 100% mortgages was a good thing. Requiring borrowers to provide a reasonable mortgage deposit is better for them and for the housing market in the long run.”
“I feel the gate has reopened to borrowers with a better view on lending.”

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The Best Investment Ideas Are So Simple So Here’s What To Look For

Wednesday, July 29th, 2009

A lot of people probably don’t realise that the best investment ideas are usually the simplest. The secret is knowing what to look for to get the best return with the lowest risk.

Try and disregard the current property downturn as historically house prices do increase quite dramatically over the years. You can still make a decent low risk investment out of property.

When looking for a good property investment remember the age old adage, LOCATION, LOCATION, LOCATION. If you are looking at a property investment then location is number one on your list.

Property prices usually double every ten years in the UK. You can make the most of your property investment knowing this. Great investment ideas are usually the simplest and property is one of the simplest, and best.

A quick example of a property investment, keeping figures simple. Invest in a house for 150k and keep it for ten years. It should be now worth circa 300k.

Now, using the same figures we would look to pay as little as possible on mortgage repayments as we are talking about big numbers. Remember you always need to keep some cash available for the next good investment idea.

**A bit off topic but you can discover how to shave years off your own mortgage with our mortgage overpayment calculator**

OK, back to the article now.

Chopping and changing lenders can be a hassle, but the ultimate return on your investment can be much more if you do a little work. With property investment ideas a mortgage forms an important part of future profits.

A lot of fledgling investors get caught out by the rises and falls of the property market. They get in late and buy at a peak. Then panic and try to sell in a trough. This can be route one to the poor house doing it like this.

If simple is best then you need a simple formula to turn an investment idea into cold hard cash. If you are looking at property, here’s a simple formula…Get in on a trough, get the best location you can, get the best mortgage rate you can, get the best management team you can to manage rentals.

For centuries it has been proven that the best ideas are the simplest with the wheel being a prime example. Don’t confuse yourself when searching for a good investment idea. Simplest is best. Click this link for some good investment ideas

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Not As Good As Sex But Worth Giving A Fixed Rate Mortgage A Try

Monday, July 20th, 2009

We’ll have a look at what benefits there are to a fixed rate mortgage for you.
Then prepare to be amazed at the savings made with a mortgage overpayment calculator.
You get security from the fixed rate mortgage & you may get a nice surprise from the overpayment calculator.

A fixed rate mortgage is one of the various types available.
You get your interest rate locked for the period of the deal, usually a few years.
Because the interest rate is fixed, so are your monthly payments.

What are the fixed rate mortgage good points?
You benefit by not having the yo-yo effect on your monthly payments. They stay the same every month.
You can benefit by knowing your monthly payment is fixed which allows you to budget more effectively.

Your payment is locked so it really doesn’t matter what the general rates are doing.
In our lifetime we have already seen some distressing interest rate rises.
If the rates rose drastically over a short term those on variable mortgages could struggle to meet payments.

Under certain circumstances, a fixed rate mortgage could be a mistake.
The arrival of a new child could mean you need a bigger home and need to move. These are reasons to avoid fixed rate mortgages.
Any situation which sees you changing mortgage can invoke a horrid redemption penalty on you.

Nearly all fixed rate mortgages have a redemption penalty attached.
These redemption penalties can hit you hard just when you don’t need it.
If a charge like this will hurt you then you must think very carefully before taking a fixed rate mortgage.

It’s worth thinking about paying a bit extra each month in addition to whatever you normally pay.
You are not tied to make the same payments for the duration of the mortgage, usually 25 years.
It’s not often, if at all, that a lender will tell you it’s possible to pay more than your normal minimum monthly payment.

Are there any advantages to paying a bit extra each month?
You can shave several years off your mortgage term by paying slightly more each month.
By paying a bit extra now, the savings mount up substantially later on.

What do you do with a mortgage overpayment calculator?
Enter all the figures that relate to your mortgage.
You can enter a figure that you may think about paying as an extra payment each month.

The calculator tells you how many years you will knock off.
It also tells you what sort of financial saving you can expect to make.
Playing around with the actual overpayment figure can reveal that the more you can pay, the faster you finish your mortgage.

You might be pleasantly surprised at the savings to be made.
If you had a 25 year mortgage and borrowed 100 grand at 5% interest.
You could save over twelve thousand and shorten the mortgage by more than 3 years just by paying an extra 50 each month.

The last example was an overpayment of 50 every month, but what happens if you pay 100 extra.
We’ll use the same mortgage example figures but pay 100 extra.
You can save 20 thousand in cash. You can also shorten your mortgage by more than 6 years.

An extra advantage is you won’t have any payments to make during the last few years of the mortgage.
By paying a little extra now, you could easily be mortgage free well before you ever expected.
You will never hear this from your lender though; it’s simply not in their interests to tell you to pay off early.

If we revisit the example where we knocked more than six years off the mortgage.
This shortening of the mortgage by six years saves you another 40,000 or more.
This is 40 grand in your pocket and not your lenders. Overpaying is difficult, make no mistake, but the rewards can be amazing.

There you have a few benefits of going for a fixed rate mortgage.
You get to sleep easy in the knowledge your payment will stay the same month after month.
We also had a look at the savings to be made by paying a bit extra every month. It all adds up.

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