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    • Home Mortgage Loans

      Date: 2010.06.13 | Category: Mortgage | Response: 0

      Getting rid of the mortgage early is something that many home owners in the UK aspire to achieve. Being free of the principal financial debt in most people’s lives at the earliest stage possible offers financial security and peace of mind for later on in life. Paying off the mortgage early is no pipe dream though. In 2003, the average age of outright home ownership was 56, by 2004 the average age had fallen dramatically to just 48!

      How home owners pay off their mortgages early

      The secret to paying your mortgage off early lies in choosing the right type of home loan, and this is where flexible mortgage loans and offset mortgage loans step in.

      Flexible mortgage loans, as their name suggests, offer flexible mortgage repayment terms where overpayment of mortgage is allowed by the home owner without incurring a penalty. Some flexible mortgage loans allow overpayment of a limited amount, such as 10% of the mortgage value, while other flexible home mortgage loans cater for unlimited overpayment by the home owner.

      The advantage of flexible home mortgage loans is that as well as allowing you to overpay, you can also underpay, so taking a ‘payment holiday’ if finances become a little thin. Underpayment is of course subject to the terms of the mortgage, and will normally only be allowed if it amounts to less than the funds that have been overpaid.

      Overpayment via flexible home mortgage loans means that you get to reduce your mortgage capital as well as pay off interest accrued on the capital each month. For each successive month that you make an overpayment the amount of interest paid on the overall mortgage is therefore reduced. An overpayment of just 65 on an 80,000 mortgage with the interest rate at 6.0%, will see mortgage loans paid off 5 years early, amounting to a total saving of some 15,000.

      Offset home mortgage loans

      Offset home mortgage loans were unveiled to the home owner in 1998, and have gained a great deal of respect from home owners since that time. Offset mortgage loans help to pay off a mortgage early by using what is known as a ’sweeper’ system. Providing that the home owner has their current andor savings account with the mortgage loans provider, their available balance is ’swept’ across to their mortgage account each day to offsetreduce the amount of mortgage capital subjected to interest.

      To illustrate the advantages of offset mortgage loans, take a mortgage of 100,000 and a balance of 10,000 in your current account andor savings account. Instead of the interest rate being applied to the 100,000 every day or every month, the interest rate would be applied to your mortgage balance less the balance in your current account savings account. This means that interest would only be applied to 90,000 of your mortgage, effectively making 10% of your mortgage interest-free!

    • Free Mortgage Quotes

      Date: 2010.03.07 | Category: Mortgage | Response: 0

      Attaining a mortgage quote is obviously helpful for the people who want to refinance their existing house and purchase a new house in the near future. While in the past this involved sitting through a sometimes arduous and always unnerving interview with a banker, the whole process has become simplified, thanks to the efforts of some companies who provide free mortgage quotes online. There are several companies who provide free mortgage quotes online. All you have to do it to fill a simple online form and send. The rest will be done by the companies who will process your information and quickly return the free quote to you as soon as possible. These quotes will enable you to plan your future in a better and efficient manner. You can get extensive information on fixed rate mortgages, variable rate mortgages and other capped mortgages. You will get an in-depth analysis of different options available to you. The free quotes will unravel the mystery that surrounded the different type of mortgages.

      Advantage of Free Mortgage Rates

      The advantages of free mortgage rates are many. The biggest advantage, of course, is that you can get the mortgage quote free of cost, giving you a good general feel of what the market is bearing. There are no charges, no hard efforts, and no interviews. By simply filling out a form on the website, you can get a number of free quotes from a wide range of lenders. In doing this, you will be better able to look at the bottom line across many loans and in so doing decide which option offers the best solution for you. The world of lending is riddled with hidden contract clauses and indecipherable language. So without proper and careful planning, you can become lost rather quickly.

      The fast service provided by the free mortgage quote providers is another advantage. All the mortgage quotes on the web sites are customized. When you answer the questions on the online form and submit it, your answers will be immediately matched with lenders and brokers who meet your exact financing needs. Typically, you will receive the quotes from multiple lenders very quickly and there will be no long waiting.

      Disadvantages of Free Mortgage Quotes

      Like all other things, free mortgage quotes have both the positive and negative aspects. Sometimes, it becomes difficult to know whether the prices are competitive or not. We have to believe the information we get from the lenders and could do little if these rates are not reasonable. But because lenders receive thousands of leads a day, whereas your local bank may receive only a dozen or so, the online lender may offer unfavorable terms in an effort to sell to only the suckers. That is not to say that all do, however, but merely that you should verify any quotes by attaining at least one quote from a brick and mortar lender.

      The quality of the lenders may be another reason to worry. To expand their business, new online lenders may promise terms they can never meet. While users can investigate the history and third party lending appraisals of the company, for the newest lenders it is difficulty to know the quality of their services only after dealing with them.

    • Fixed Rate Mortgage vs. Adjustable Rate Mortgage

      Date: 2010.01.24 | Category: Mortgage | Response: 0

      The most basic distinction between types of mortgages that are available when you’re looking to finance the purchase of a new home is how the interest rate is determined. Essentially, there are two types of mortgages – fixed rate mortgage and an adjustable rate mortgage. If you choose a fixed rate mortgage, the rate of interest that you are paying on your mortgage remains the same throughout the life of the loan no matter what general interest rates are doing. In an adjustable rate mortgage, the interest rate is periodically adjusted according to an index that rises and falls with the economic times. There are advantages and disadvantages to either, and no easy answer to ‘which is better, a fixed rate mortgage or an adjustable rate mortgage?The main advantage to a fixed rate mortgage is stability. Since the interest rate remains the same over the entire course of the loan, your monthly payment is predictable. You can count on your monthly mortgage payment to be the same amount each month. On the minus side, because the lending institution gives up the chance to raise interest rates if the general interest rates rise, the interest on a fixed rate mortgage is likely to be higher than that of an adjustable rate mortgage.A fixed rate mortgage loan makes the most sense for those that are going to settle into their home for many years. While the initial payments may be larger than with an adjustable rate mortgage, stretching the payments over a longer period of time can minimize the effect on your budget.An adjustable rate is one that is adjusted periodically to take into account the rise or fall of standard interest rates. Generally, the adjustable term is annual – in other words, once a year the lending company has the right to adjust the interest rate on your mortgage in accordance with a chosen index. While adjustable rate mortgages make the most sense in a situation where interest rates are dropping, though it’s dangerous to count on a continued drop in interest rates.Lenders often offer adjustable rate mortgages with a very low first year ‘teaser’ interest rate. After the first year, though, the interest rate on your mortgage can increase by leaps and bounds. Even so, there are limits to how much an adjustable rate can actually adjust. This is dependent on the index chosen and the terms of the loan to which you agree. You may accept a loan with a 2.3% one year adjustable rate, for instance, that becomes a 4.1% adjustable rate mortgage on the first adjustment period.Finally, there’s a new kind of loan in town. A hybrid between adjustable rate mortgages and fixed rate mortgages, they’re known as ‘delayed adjustable’ mortgages. Essentially, you lock in a fixed rate of interest for a number of years – say 3 or 7 or 10. At the end of that period, the loan becomes a 1 year adjustable rate mortgage according to terms set out in the agreement you sign with the mortgage or financial institution.