Feb 23
adminCheap Mortgages
During the past five years lenders have seen a boom in the demand for second mortgages as borrowers look to capitalise on the equity in their home. The low cost of borrowing coupled with the spiralling value of homes in the UK has led to a substantial strengthening of the equity position of many a homeowner. The equity position of some homeowners is in fact so strong that they now find themselves in the fortunate position of having more equity in their home than they have debts secured against their home on first mortgages and other loans.
Buoyed by the healthy state of positive property equity confidence is running high when it comes to homeowners committing to further borrowing. Many are taking the opportunity to secure second and even third charge loans against the equity in their property in order to release cash funds. Even the more conservative borrowers are now beginning to see the light, despite experts predicting of an imminent slowdown in the housing market.
If you’re thinking about releasing equity in your home through a second mortgage, here are some things you’ll need to consider before you take the plunge: -
Interest rates on second mortgages
The interest rates charged on second mortgages are often higher than those that are levied on first mortgages. This is because lenders see second mortgages as a higher risk than first mortgages and so compensate for this risk through fixing higher interest rates on second mortgages.
The increased risk factor on a second mortgage is down to the fact that these types of mortgages are a second charge on the property. That is to say that in the event of you defaulting on repayment to the point that your home is repossessed, the first mortgage lender legally gets first bite of the cherry when it comes to recovery of the loan. For second loans secured against the property, the lender has to wait its turn, running the risk that it may recover only part of the loan advanced or in some cases none of the loan advanced.
Lending criteria
Different lenders have different lending criteria for second charge mortgages. Whilst all lenders are likely to assess applicants for a second mortgage on the value of their home, their ability to repay the loan and their current income to debt ratio, not all lenders will give the same weight to these factors in the final analysis. This is why you may be rejected by one lender but accepted by another on an almost identical second mortgage offer.
Can you afford the repayments?
For a lender to be convinced that you are able to meet the repayments on a second mortgage, you’ll need to be sure how you’re going to repay the loan. You should never take on a second mortgage without first planning how you will pay the money back.
Different types of second charge mortgages
There are several different types of second charge mortgages to choose from. Be sure to get information on all your options and select the type of second mortgage that is most suitable for your circumstances. It is advisable to never borrow more than the current equity value in your home.
Feb 09
adminCheap Mortgages
Reverse Mortgages – Get The Money You Need – Part 1 Of 4
Reverse Mortgages are loans that allow you to borrow back the equity in your home. Just as you once paid the bank, the bank now pays you. Isn’t that a nice change?
If you are 62 years of age or older, they are a way to borrow against the equity in your home (the value of your home minus any mortgage debt you now have) to provide you with tax-free income. Seniors struggling because of falling retirement account balances and increases in the cost of medical care are looking for new sources of cash to maintain their standard of living.
The amount you can borrow depends on your age, the value of your home and interest rates.
Fortunately, you continue to own and live in the home for the life of the loan. There are no loan payments until you sell the house, die or move out for a period of a year or longer.
You can get the money as a line of credit, a monthly payment, a lump sum, or a combination of all of these. A monthly payment is a guaranteed of income for as long as you live in your residence, whereas; a lump sum could be used as you wish, such as to purchase an annuity that could provide you with a life long income. With a line of credit, you don’t have to pay interest on money you haven’t withdrawn and your money will earn interest while it’s waiting to be used by you.
A Reverse Mortgage might be worth considering if:
-You plan to stay in your home.
-You want to enhance your lifestyle and enjoy your golden years.
-You want funds for major expenses such as medical bills, or for major home repairs.
-You need additional income to live on and your only significant asset is your home.
-You want the peace-of-mind that comes from knowing your financial needs are taken care of.
-You own your home free and clear, or you have a small first mortgage.
-You don’t plan to leave your home to your heirs.
What are some of the potential advantages of Reverse Mortgages?
-It can help you maintain your financial independence or improve your quality of life.
-You can stay in your home and keep title to the property.
-The money you receive is tax-free and is not usually considered income.
-You make no payments until the loan ends or the house is sold.
-Your income is not a consideration in obtaining the loan since there are no payments until the loan ends.
-You cannot owe more than the value of the home at the end of the loan.
If you’re a senior, I hope you can see the benefits of taking advantage of this income source, if you need it.
This is a four part series, one each week right here, same location. In Part 2 next week, we’ll explore much more, including the drawbacks of a reverse mortgage and what types are available.
Aug 11
adminCheap Mortgages
Mortgages are secured loans that are given to first time buyers, homeowners and people who have bad credit. Once you are accepted for the loan, you must repay the debt, which will include interest rates. Some refinancing loans have additional fees attached. The secured loans have collateral attached, means that if you fail to make payments, you are subject to foreclosure or repossession. The bank will come and take your home and sell it for the amount you owe.
This is why it is wise to make sure you know what you are getting into if you plan to refinance to consolidate your debts. Some loans permit buyers to repay the loans in 25 years, while others allow 30 repayments. Few of the lenders available on the Internet that offer refinance loans for consolidation of debts are aware that people go through hard times-or at least they don’t deal with people directly enough to actually feel this hardship through talking to them.
On the loans that offer lower interest rates, combine payments for debt consolidation. If you can manage to pay for the loan in the time stipulated, it is likely that you will take less time to pay back the loan amount borrowed. Once you find a lender to refinance your mortgage and combine your bills for debt consolidation, you will receive a loan based on capital and interest.
The Repayment loans for refinancing and consolidation make it easy, since the lenders will combine the interest and repayments into one monthly installment. Still, few lenders will allow you to repay the interest rates only; however, be aware that these types of loans do not combine your payments for consolidation; rather they put you at risk in some instances.
Still, there are several types of loans available that will help you refinance for debt consolidation, so keep an open mind and mull over your choices carefully before you make a final decision.
One of the most important tasks debtors must carry out to achieve in debt consolidation is keeping away from complications. When debtors have bills that are behind merely because they didn’t have the cash to repay the debts, then their stress will build. Some people may go on binge, spending instead of paying their bills, and procrastinating instead of working to restore their credit.
These people may believe that after three, seven or ten years the problem will end, since the credit reports remove any pending debts after seven years and any bankruptcies after ten years. The fact is, the problem doesn’t go away the problems only get bigger. Yes, it is true: after three years, if you manage to payoff a debt, then the debt is removed from your credit report. In addition, yes, it is true if after seven years you failed to make payments the debt is removed in most instances from your credit report.
Furthermore, it is true that in many cases, after ten years, bankruptcy is removed from your credit report. If you have the patience to wait this long, can tolerate the hassling phone calls and letters, and don’t mind worrying about going to court for this long, then by all means procrastinate.
Bills and debt consolidation is optional, however bill and debt reduction is your best bet. You can do this by start paying as much every month on your bills as possible to reduce your debts.
RSS