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Types Of Interest Rate – Mortgage

admin — Thu, 22 Jul 2010 19:27:30 +0000

After you have researched into all the different mortgage types and found a suitable one for you. Now is time to look into what type of interest rate you wish to pay. The type of interest you wish to pay will depend on your circumstances and how much you are willing to pay out every month! You will find out below that not all interest rates/types are the same.

Discounted Rate
A discounted rate allows the buyer to pay a reduced payment for a fixed amount of time. After the fixed term is aver the rate usually increases to the national base rate. Discounted rates are attractive for first time buyers and also home buyers who require extra cash for renovations. The term of discount does give you time to get used to having a mortgage payment.

Fixed Rates
With a fixed rate mortgage you are guaranteed the same rate of interest every month for a fix period or term. This rate will not fluctuate as long as you are in an agreement for a fixed term. The fixed term can be anywhere from 1 to 7 years. Do be careful when taking a fixed rate mortgage term don’t forget to ask the lender if you have any obligation to stay with the lender after the fixed term is over?

Variable Rate
Variable rate mortgages do tend to fluctuate around the base rate, and are generally higher then the discounted, fixed and capped rates that are also available. Usually, after you have been at a discounted rate, your interest rate will move up to a variable rate. This could be for a specified time you have agreed to with the lender.

Capped Rate
With a capped rate mortgage, the lender will cap the mortgage rate to a specific amount, which allows the interest rate to never rise above this level for a fixed term. However if the interest rate decreases? So will your rate.

Tracker Mortgages
A tracker mortgage actually tracks the Bank of England base rate. This means your mortgage stays in line with interest rates. The way a tracker reflects on your monthly mortgage interest payments is that they go up when the base rate goes up and go down when the base rate goes down.

Similar to a standard variable rate mortgage a tracker follows the percentage rate imposed by the Bank of England. Unlike the standard variable rate mortgage changes annually or monthly a tracker mortgage guarantees to follow changes in the Bank of England base rate within 2 weeks of the interest rate changing, allowing the borrower to benefit from both falls and rises of the interest rate quicker.

However, there are disadvantage to tracker mortgages. If interest rates were to rise sharply, so too would the cost of a tracker, so in situation like this you would lose out and find yourself paying more per month that you did the previous month. In this type of situation a fixed rate or a capped rate mortgage would have been advantageous to the borrower.

Trackers do work better for the borrower when interest rates are falling but if you look at the bigger picture, they give you clear insight to whatever the Bank of England does with rates. With a tracker both the borrower and the lender know exactly what they are getting.

Flexible Mortgages
With a flexible interest mortgage, you the lender can usually pay more if you have extra cash available, pay less if you need to save a little, maybe even take a holiday from your payments. Flexible is what it is, flexible. Also the interest on a flexible mortgage is calculated daily instead of annually. So you reduce the interest amount with every payment.

Checking the APR
Always remember to check the Annual Percentage Rate (APR) of the mortgage you are considering taking out for a specified term. Usually the lower the APR the cheaper the rate at which you will pay back every month. However do be careful, some lenders will offer you the opportunity to take a very low APR over a fixed period and then a standard rate for a further fixed term. Situations like this can potentially turn to disaster for some people. If you have discounted mortgage rate for two years at 3.9% which totals a monthly payment of £300 per month, after the 3.9% term has ended, you are still in a contract with the lender for a further two years at a rate of 5.9% you will find that the payment will increase substantially.

In this situation you could find yourself not being able to afford the mortgage payment, also unable to transfer your mortgage to another lender due to redemption penalties for early breach of contract.

Redemption Penalties
The various discounted mortgages available e.g. capped, discounted and fixed do tend to carry a redemption penalty. This is due to the lender operating a special rate for the fixed amount of time. Some of the standard rate periods can be for a longer period than the special rate term. So do not forget to read the small print, and always remember to ask about the redemption penalties and the standard rate period of the mortgage you are inquiring about. There are mortgages out there now that offer no fixed penalties or require you to be tied in with a lender over the discounted period!

Tags: Amount Of Time, Bank Of England, Bank Of England Base Rate, Capped Rate Mortgage, Capped Rates, Extra Cash, First Time Buyers, Fixed Rate Mortgage, Home Buyers, Interest Rate Mortgage, Mortgage Interest Payments, Mortgage Payment, Mortgage Rate, Mortgage Rates, Mortgage Term, Mortgage Types, Rate Of Interest, Rate Tracker, Tracker Mortgage, Variable Rate Mortgages

Types Of Interest Rate – Mortgage

admin — Thu, 22 Jul 2010 02:25:56 +0000

Homeowners Need

admin — Mon, 19 Jul 2010 13:32:31 +0000

Homeowners ‘Need To Consider Their Options’
By Mark Dawson

An increasing number of people could be safeguarding their financial future, new research suggests.

In a study conducted by the Building Societies Association (BSA), some 2.3 billion pounds was invested into savings accounts at such financial institutions over the course of November. And with this figure being almost three times higher than that recorded during the same month in 2006, many consumers may find that they are able to meet various demands on their spending, such as loans and utility bills, with greater ease. In addition, discounting the amounts saved in September and October, the investments made during November would have been at an all-time high.

Commenting on the figures, Adrian Coles, director general of the BSA, claimed that the money saved between September and November this year is about equal to that over the entire of 2006. He said: “Building societies continued to attract record inflows in November, albeit slightly reduced from the extraordinarily high figures of September and October.

“Much of these savings are likely to come from further withdrawals from Northern Rock bank. They also reflect the attractive rates of interest on offer at building societies which are encouraging people to save. A perception of a possible change in the economic environment may also mean that greater attention is being given to savings these days.”

Meanwhile, findings from the BSA also showed that mortgage lending dropped last month. In November gross lending accounted for 4.1 billion pounds, a fall from the 4.6 billion pounds recorded during the corresponding month in 2006. The director stated that the general decrease in activity over the last 12 months could be attributed to the impact of base rate hikes by the Bank of England’s monetary policy committee and the reduced availability of low-rate loans and other types of competitively-priced credit.

He said: “People coming off a fixed rate in the new year are potentially looking at a big increase in their mortgage repayments. As a consequence, it is important they begin to consider their options to help make their repayments as low as possible when their fixed-rate period finishes.”

Those consumers who are to face an increase in their monthly repayments were advised to take heed of a four-point action plan. At first homeowners are urged to talk to their existing loan lender about their mortgage options available to them, before reviewing any financial commitments, such as loans and plastic cards, in the light that they may face higher mortgage payments. Consequently, those who feel that they may experience problems in paying their mortgage were urged to get in touch with their lender as soon as possible and “make any necessary arrangements” to make sure that their finances will be in “good shape”.

Such sentiments were echoed by Skipton Building Society earlier this year, as a spokesperson told the Bradford Telegraph & Argus that those consumers approaching the end of their fixed-rate deal should “consider their finances”. Saving for the future and making overpayments on their mortgage were put forward as potential ways of reducing financial pressures. For such people, applying for a low-rate loan as a means of debt consolidation could be another way in order to free up more money in which to make mortgage payments.

Mark Dawson writes for the the Loan Arrangers where you can compare loans and apply online for cheap home loans, and the best rate secured loans.

Tags: 1 Billion, 12 Months, All Time High, Attractive Rates, Bank Of England, Building Societies Association, Coles, Director General, Economic Environment, Financial Institutions, Fixed Rate, Low Rate Loans, Mark Dawson, Monetary Policy Committee, Mortgage Lending, Rate Hikes, Savings Accounts, Three Times, Utility Bills, Withdrawals

Fewer loans to consumers in the first quarter of 2008

admin — Mon, 19 Jul 2010 09:55:56 +0000

As loan conditions in the money markets tighten and the banks become unwilling to lend to one another, the market credit costs are rising. People are left with fewer choices and residential property is witnessing a slowdown due to reduction in the number of home loans.

The hundred percent mortgages are fast becoming a thing of the past history with only 14 lenders offering such mortgages. The average loan-to-value in January was 88%. Since December 2007, 41 lenders have reduced their maximum loan offerings, widely affecting the first time buyers in the market.

According to the Bank of England, there was a considerable reduction in mortgage loans during the 3 months to mid-December. Although the mortgage lending increased to £26.5 billion in January – a rise of 11% from £23.9 billion in December – but, still it was lower than most months in 2007.

Economists say that the credit crunch is having an adverse impact on inter bank lending and it is feeding through to corporate and homeowners’ ability to raise loans. This might push the economy close to recession. The housing market is already going through a lean phase. Howard Archer, chief economist at Global Insight, was of the opinion that credit availability would reduce further in the first quarter of 2008, adding to the increasing downward pressures on consumer spending.

Tags: Adverse Impact, Archer, Bank Of England, Chief Economist, Consumer Spending, Credit Availability, Credit Crunch, First Time Buyers, Global Insight, Home Loans, Housing Market, Loan Conditions, Loan Offerings, Maximum Loan, Money Markets, Mortgage Lending, Mortgage Loans, Recession, Residential Property, Slowdown

Some Information Regarding Mortgages And Remortgages

admin — Sun, 18 Jul 2010 18:40:03 +0000

By Liz Moir

There are numerous types of loans that form the group called home loans, and two members of this group are mortgages and remortgages.

Both mortgages and remortgages are secured on residential property, and the amount of mortgage or remortgage that can be granted depends on the available equity on the property.

For those unfamiliar with the term equity this is the amount left when the mortgage secured on the property is deducted from the value of the property itself.

If a property is worth say 320,000 and the mortgage balance is 120,000, the equity would be 200,000.

For both remortgages and mortgages lenders are no longer willing to grant 100% LTV products.

Mortgages and remortgages at even 95% LTV are thin on the ground and are only available from a handful of mortgage lenders.The availability of 90% LTV mortgages and remortgages is not common at present.

The situation in the mortgage and remortgage market place is a very different place now from it was at the end of 2006 up to the beginning of 2007 when 100% LTV remortgages and mortgages were readily available; The Northern Rock Building Society even had a mortgage plan whereby a borrower could borrow up to 25% more than the value of the property. However what happened to that society is history.

Remortgages and mortgages have low rates of interest at this moment in time and tracker remortgages and mortgages are at an all time low.

The tracker remortgage and mortgage do exactly as stated and that is why they are so low at present as they track the Bank Of England Base lending Rate of 0.05%.

Rates as low as 1.98% and 1.99% are out there with the former being available for those with at least a 40% deposit and the latter for those with a minimum 30% deposit.

Even fixed rate remortgages and mortgages are low with rates starting around the 3% mark, and as such although slack equity products are no longer available there are excellent mortgage products still available.

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Tags: 100 Ltv, 100 Mortgages, 90 Ltv, Bank Of England, Bank Of England Base Lending Rate, Base Lending Rate, Equity Products, Handful, Home Loans, Moir, Moment In Time, Mortgage Balance, Mortgage Lenders, Mortgage Plan, Mortgage Products, Mortgages Lenders, Remortgage, Remortgages, Residential Property, Term Equity

Homeowners Need

admin — Wed, 23 Jun 2010 18:30:01 +0000

Homeowners ‘Need To Consider Their Options’
By Mark Dawson

An increasing number of people could be safeguarding their financial future, new research suggests.

Mark Dawson writes for the the Loan Arrangers where you can compare loans and apply online for cheap home loans, and the best rate secured loans.

Some Information Regarding Mortgages And Remortgages

admin — Thu, 11 Mar 2010 00:32:04 +0000