Important Issues About Flexible Mortgage

Flexibility is the key to stability. That’s why it’s necessary for this type of mortgage to jump in the list. So basically, we are going to talk about the Lifetime mortgage. Yes, it’s suitable to have the name- “Flexible Mortgage”

WHY?
Well, that’s what we’re going to talk about in this article. The pensioners pile up major stress regarding drastic fall in their regular income. They fear the absence of financial stability in their future years. But, what if this financial instability is cut down by the financial flexibility? Sweet!

So, the knife of financial stability is particularly termed as Lifetime Mortgage.

• What is it?

Lifetime mortgage. It’s a long-term loan that’s secured against the borrower’s property and is repaid when he/she dies or moves to the long-term care. During the loan term, the borrower continues to stay in that property and maintains it-

• How does it Work?

When you are at least 55 years old, you need some kind of financial stability to take care of your monthly expenses and other essentials. What you can do is… you can take out a loan against your home where you live. You’ll be using the money for whatever you need. You’ll still continue to live there and retain your ownership until you die or move to a long term care. That’s when this loan will be repaid.
After you die or move to a long term care, the property against which you took the loan will be sold. The amount fetched out will be used to repay the loan amount to the lender. The remaining amount will be passed on to your heirs.

• Flexibility is divided into further flexible branches!

Drawdown Plans- At this age, regular income is what you’ll crave. But without a job, would that be possible? Yes! With the Drawdown Lifetime Mortgage, you can plan the loan amount into regular incomes for yourself.
So, you’ll still be complimenting your regular expenditure with stable income support. The advantage? The interest will be charged on only the amount you take out for your necessities. So, basically your interest is not going to roll-up and that’s a stress revealing thought!

Enhanced Plans- This is a kind of generous flexibility. It is preferably based on the borrower’s health and lifestyle. Any impairment or serious health issue of the borrower can result in lower life expectancy. This influences the lender to provide larger amount than normal mortgage deals.

Protected Plans- You took the Lifetime Mortgage against your home. Now, when you’ll die, nothing will be left for your family. But you don’t want that, right? So, opt for protected lifetime mortgage plan.
According to this, you’re free to fix up some part or furniture of your home which will be excluded for the mortgage deal; that you can save up as inheritance for your family. It cannot be used to repay the mortgage loan.

Interest Payment Plans- Interest payment mortgage plan is a way to periodically reduce the mortgage debt. If you wish to repay the monthly interest charged against your loan, you need to opt for this plan.
It will prevent the interest roll up. Reducing the compound interest, the final amount to be repaid at the end of the mortgage term will remain equal to the amount borrowed. This is an appreciable option for those mortgage borrowers who have reasonably good retirement income.

• Flexibility Comes with a Price

Being flexible is an advantage but for benefiting yourself with this financial boon, you need to pay some costs. It’s highly necessary that you are perfectly aware about that. So, the costs that’ll be involved in taking up this Lifetime mortgage deal are:

Arrangement Fee: You will have to pay this to the lender while arranging the preferred lifetime mortgage deal.

Legal Fee: When the lifetime mortgage plan is finalized, you will be required to pay some legal and valuation fee.

Advisor Fee: This kind of decisions need through discussions and advice from a learned financial advisor. So, you need to pay the fee for a wise advice.

• Some facts you don’t want to know but you should know!

Well, it needs courage to except the cons of something that shines out as an amazing option. But, like a quarter, everything has two sides. And it will be foolish to stay unaware about these not-so-welcoming facts.

– Curbed State Benefits: The benefits offered by the government like the council tax benefits and pension credits can be affected by this mortgage deal.

– Reduced Inheritance: The rolled-up compound interest can blow up the amount of mortgage to be repaid resulting in highly reduced inheritance for your family.

– Early Repayment: If you’re able to and wish to repay the whole amount prior to the mortgage term decided, you will have to pay an early repayment charge too.

– Equity Release is not highest: The Lifetime Mortgage Plan cannot offer as much as the Home reversion Plan.

Do contact your financial advisor. Explain your personal situation with every detail, discuss the pros and cons in much more detail, ask out all the questions jumping inside and get a customized perfect solution for yourself.

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All About Mortgage Alternatives

The vast majority of those purchasing a residence, at least to a certain degree, use some sort of financing vehicle, or mortgage. These can fall into two basic categories, either a conforming, or non – conforming type. For the most part, this refers to the amount being financed, and may differ somewhat from time to time, and from geographic area, to other location. Once you decide to take out a mortgage, and become qualified by the lender, you must determine, which of the 3 basic types of mortgages to opt for: 1) fixed; 2) adjustable; or 3) balloon.

1. Fixed mortgage: Also known as fixed – term, the most popular length of these is 360 monthly payment, or 30 years. However, they are also available in a variety of other lengths, including: 15 years; 20 years; 25 years; and 40 years, as well as other terms. Obviously the advantage of this type of financing, is you are certain of the principal and interest components, every month, for the length of the loan, That is often comforting, because it provides a degree of peace of mind. However, remember your real estate taxes, and your other escrow items (such as insurance), as well as your utilities, etc, will generally vary, and often increase over time. To qualify for these, in addition to having the necessary credit score, etc, one must have the correct income to monthly payments ratio, etc. Since, at certain times, especially when interest rates are higher than today, this ratio becomes a challenge to many potential homebuyers, etc.

2. Adjustable – rate: When interest rates are higher, these generally come with a lower introductory rate, which means lower payments. The loans are also known as ARM, and that rate is guaranteed for a specific period of time, and then changes. The new rate is generally based on some sort of index, such as COLA, or Treasury Bill rates, etc. For example, if you had a 30 year/ 5 year type, it would mean the rate was guaranteed for 5 years, and then the index would dictate the new rate, after that. There may or may not be a cap, which would mean, a limit on how much it could either increase or decrease. Obviously, the advantage of this, is the considerably lower – rate, at times, for the initial period, as well as locking – in financing for a longer – period (although at a different rate). This might enable someone with lower – income to qualify for a larger mortgage, because the ratio between his monthly income and mortgage payment, might be more favorable, to the borrower. The disadvantage is, that at the end of the initial term, there is a risk of either a rate increase, or a need to attempt to refinance.

3. Balloon: These types of mortgages are offered the least often. They possess either interest – only payments for a specified period, or significantly lower payments for that introductory period. At the end of the period, the borrower must either, pay off the entire loan, or refinance. It is fairly obvious, what both the positive and negative possibilities are!

The more a potential buyer knows, the better off he is. Hopefully, this brief discussion, might add to a buyer’s comfort, security, and ability to make the best decision, for him.

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How To Make Your House A Home

We’ve all heard, at one time or another, the adage, A house is not a home. As a Licensed Real Estate Salesperson, in the State of New York, for over a decade, I have noted that while most potential buyers, say they are going house – hunting, sellers generally refer to the process as selling their home! Why would anyone want to simply live in some inanimate house, when they can create an experience, which represents them, their preferences, lifestyle, etc, and transform it to a home? In many instances, it merely requires a little soul – searching, so you might discover what is most important and relevant to you, and personalizing the scenario, while still living within a budget, as most of us must! Let’s review 5 basic ways, to make a house, your home.

1. Take care of it: Take pride in home ownership. Don’t wait until something goes wrong, or becomes a major issue! Rather, proactively maintain the house, in an organized, thoughtful manner. You’d be amazed how much better most people feel, when their house receives a fresh coat of paint, or a Spring cleaning, etc! Create and utilize a maintenance schedule, that includes both the interior and exterior. Try to calculate how often certain things should be done, as opposed to must be! Most people would like to, but they fail to plan, and then don’t do what they know they should, because of finances. I recommend creating a personal maintenance and repair fund, which you contribute to on a regular basis (either weekly or monthly). This amount should be based on your anticipated maintenance costs. Doesn’t that make sense?

2. Respect it – it will respect you!: Close your eyes and think about being your house. I realize this is a stretch, for many people, but I recommend doing this, because then, you can more easily perceive of how you’d feel, if houses had people – like, feelings! If you want to minimize your exposure to many of the avoidable major/ expensive repairs, do the preventive maintenance, consistently!

3. Serve you purposes/ convenience: How can you personalize the home, so it better serves your personal needs? In doing so, avoid making changes which might negatively impact any future sales price, but consider rooms, furnishings, windows, access, etc, as conveniences. If you aren’t happy, you’ll never make any house, your home!

4. A place for everything: Avoid the lazy tendency to avoid putting things away, but rather create well – considered storage areas and conveniences. When one lives in a neat house, he becomes closer to considering it, a home!

5. Colors; walls; decorating: My wife has always liked using colors, to accent doors, windows, etc. I always thought it was somewhat quirky, until a couple of years, reading several articles about how colors on doors, and around windows/ shingles, etc, makes a house warmer, and more appealing. While you might be tempted to over – reach, when selecting colors for interior walls, you are better off, using color to make a house warmer, and more attractive/ appealing. What will you do, in terms of interior decorating, to personalize your home?

You’re living there, so why not make your house, a home? Doing so, will enhance your enjoyment significantly!

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Things You Need To Know About Mortgage

A mortgage is a kind of agreement. This allows the lender to take away the property if the person fails to pay the cash. Generally, a house or such a costly property is given out in exchange for a loan. The home is the security which is signed for a contract. The borrower is bound to give away the mortgaged item if he fails to make the repayments of the loan. By taking your property the lender will sell it to someone and collect the cash or whatever was due to be paid.

There are several types of mortgages. Some of them are discussed here for you –
Fixed-rate mortgages- These are actually the most simple type of loan. The payments of the loan will be exactly the same for the whole term. This helps to clear the debt fast as the borrowers are made to pay more than they should. Such a loan lasts for a minimum of 15 years to a maximum of 30 years.

Adjustable rate mortgages- This type of loan is quite similar to the earlier one. The only point of difference is that the interest rates might change after a certain period of time. Thus, the monthly payment of the debtor also changes. These kinds of loans are very risky and you will not be sure that how much the rate fluctuation shall be and how the payments might change in the coming years.

Second mortgages- These kinds of mortgage allows you to add another property as a mortgage to borrow some more money. The lender of the second mortgage, in this case, gets paid if there is any money left after repaying the first lender. These kinds of loans are taken for home improvements, higher education, and other such things.

Reverse mortgages- This one is quite interesting. It provides income to the people who are generally over 62 years of age and are having enough equity in their home. The retired people sometimes make use of this kind of loan or mortgage to generate income out of it. They are paid back huge amounts of the money they have spent on the homes years back.

Thus, we hope that you are able to understand the different kinds of mortgages that this article deals with. The idea of mortgage is quite simple- one has to keep something valuable as security to the money lender in exchange for getting or building some valuable thing.

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