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Interest-Only Mortgage Deals: Pros and Cons

Posted on 04-06-2010 | By: admin

Category : Finances

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When you're taking on a new mortgage deal, there are a huge number of things to think about. But one fundamental choice you will need to make somewhere along the line is whether you want to be paying off capital each month or only the interest on that capital.

An interest-only mortgage is one in which you only pay off the interest accrued on the total capital each month, meaning the capital owed remains the same throughout the length of the mortgage deal.

Interest-Only Pros:

According to the Financial Services Authority, four in ten households have interest-only mortgages. There are a number of pros to interest-only mortgage deals, primarily that monthly repayments will be significantly lower than with a repayment mortgage. This means that you will keep more of your income each month to spend on yourself, or on home improvements, for example. In fact, with a very low base rate, an interest-only mortgage deal can seem almost impossibly cheap to maintain, depending on the type of mortgage you have.

An interest-only mortgage is also sometimes considered to be preferable in the eyes of buy-to-let investors. This is because they are able to claim back tax on the mortgage interest, and they may reason that rises in the property market will enable them to make capital repayments later on.

Also, with interest-only mortgage deals, you can choose a savings account or repayment vehicle which gains the best interest rates and is tax-efficient. If you can manage this well alongside the mortgage and keep up the payments (and not spend the money you have saved), this option could even save you money in the long run.

Interest-Only Cons:

Interest-only mortgages are considered risky, as they do not provide the borrower with a complete outline for how they will pay off the capital they owe, and this can cause problems when the mortgage term ends if there is outstanding debt and no alternative means of repayment.

Also, while a repayment mortgage may be more expensive in the short term, in the long term you will be reducing the total capital owed which will, in turn, reduce the interest paid as well. With an interest-only mortgage deal, however, the capital will still be payable in full right up until the end of the mortgage term – often 25 years later.

Recommendations

With an interest-only mortgage deal, you will ideally use a separate savings account or repayment vehicle which you also make monthly payments into to ensure you will be able to pay off the capital by the end of the mortgage term. Otherwise you will need to know that there is capital available to pay off the remaining amount owed by the end of the mortgage term.

A repayment vehicle can be an ISA, for example, which you make monthly payments into in order to accrue a lump sum which you can use to pay off the total owed at the end of the mortgage term. You will need to monitor these repayments carefully because different savings options will have different interest rates, which may vary over time, so it's important to make sure you continue to pay in the right amount to stay up-to-date, or you might be in for a nasty surprise later on.

About the Author: At Credit Choices you can compare mortgage deals online. Whatever your individual mortgage needs, we can help you find the best deal.


Equal Rights For Disabled Veterans: Because You Served

Posted on 27-04-2010 | By: admin

Category : Finances

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Veterans have provided a service to this country and are entitled to receive certain benefits, including home loan benefits from the VA loan program. Veterans who were disabled as a result of their service in the military are entitled to additional VA loan benefits, as well as fair and equal protection under the U.S. Department of Housing and Urban Development's Fair Housing Act. VA loan benefits and the protection they receive from this act can help veterans find affordable housing and save money while allowing them to live comfortable lives.

HUD Takes Action Against Discriminatory Landlords

In early March, HUD charged two landlords in New York with violating the Fair Housing Act because they would not allow a disabled veteran, suffering from Post-Traumatic Stress Disorder (PTSD), to have a doctor-prescribed therapeutic dog in his apartment. Once the veteran filed a housing discrimination complaint, the landlords allegedly threatened to evict him from his apartment. The case was reviewed and the verdict ruled in favor of the veteran, stating that the actions of the landlords were indeed a violation of the Fair Housing Act. The landlords received a $16,000 penalty for each violation of the act.

Although the apartment complex had a “no-pets” policy, according to the Fair Housing Act, the landlords should have altered the rules for the veteran because he had a disability, especially since the accommodation in question was a reasonable request. John Trasvina, the Assistant Secretary for Fair Housing and Equal Opportunity, said it is their duty to ensure that veterans “have access to safe and affordable housing, free from discrimination.” HUD's prompt action on this matter shows that the housing needs of veterans are heard and are met accordingly. Just as with anyone else, they do not deserve to be discriminated against.

Disabled Veterans Can Receive Other Benefits

Veterans who were disabled during their time in the military not only have access to fair housing advocacy, they are also eligible to receive special VA loan benefits. These benefits already offer great incentives for homebuyers, such as no down payment and no mortgage insurance. But disabled veterans receive the additional VA loan benefit of exemption from paying a funding fee and, in certain states, property taxes, which can save them hundreds or thousands of dollars! Disabled veterans also can receive accommodation grants to make their homes more accessible for their disabilities. These accommodations often include home improvements, such as renovating rooms to allow for greater access or building additions like wheelchair ramps.

As a Deserving Disabled Veteran, Make the Most of Your Rights

Disabled veterans have given up a lot for their country, and now is the time for them to let their country thank them. Disabled veterans can take advantage of multiple benefits the VA loan program has to offer, including access to affordable housing and the right to live in their homes without facing disability discrimination. To learn more about the Fair Housing Act, visit HUD's website at www.hud.gov. To learn more about securing VA loan benefits and the additional benefits available to disabled veterans, contact a VA loan specialist!

About the Author: Victoria Belle-Miller is the newest member of the VeteransLoans.com writing staff. Her background in journalistic writing and ability to evaluate the issues that Americans face in daily life make her a strong addition to the VA loans team and a source of sound mortgage advice!


What to Consider When Switching Your Mortgage

Posted on 12-10-2009 | By: admin

Category : Finances

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There are lots of things to consider when switching your mortgage from one company to another. Usually people switch their mortgages in order to get a better interest rate, so money is typically of utmost importance in these situations. For this reason, ensure that you are reading all of the fine print regarding the fees associated with the mortgages. Check to see if an appraisal of your home is required before the new company will consider offering you a mortgage. If this is necessary, ensure that you find out whether you or the bank will be responsible for the cost of this appraisal. If the bank says that they will cover the cost of the appraisal ensure that you ask if this will still be the case if you decide not to switch your mortgage to them.

Closing costs are another fee to make sure that you look for and ask about when switching your mortgage. Make sure that you ask if there will be closing costs associated with switching your mortgage, and if so, make sure that you find out how much the closing costs will be. Do not settle for estimates in these cases because the bank can always change the figure of an estimate and you can end up paying much more than you had ever anticipated. Ensure that all fees that are associated with switching your mortgage to the new company are in writing and on company letterhead to avoid a, “He said, she said,” debate when it comes time to switch the mortgage.

Before completing the process of switching your mortgage ensure that you have carefully read the loan paperwork and fully understand the interest rates. If you do not fully understand the interest rates and payment schedule ask for a copy of the paperwork to review at your leisure at home and seek advice and guidance. Never ever sign something that you do not fully understand. Switching your mortgage to another company can save you a lot of your hard-earned money, but make sure that you look well in advance of leaping!

Remortgaging will allow you to search for a lower rate in today's competitive market. I Debt consolidation via remortgaging is a great option as remortgaging loans are usually lower than debt loans. Equity remortgaging can allow you to take, in certain circumstances, up to 100% of your home value.

That money can be used for home improvements or even to have extra funds for any need that you have. Make sure that your new lender explains to you the benefits of the remortgage deal that you choose. Remortgaging will allow you to save on your interest rate so that your monthly payments are lower. You should also ask how long your new rate would be in effect, and what your new monthly payments will be. It is a fairly quick process, and you can be usually be remortgaged within a week or less in some instances.

Mortgage Comparison Site The Mortgage Finders helps people get mortgage quotes and mortgage advice that is right for them. If you are considering a re-mortgage or changing your mortgage provider completely then The Mortgage Finders can help you find the best mortgage quote.

Simply visit http://www.the-mortgage-finders.co.uk complete the simple 3 step form and a fully qualified FSA approved Mortgage broker will contact you with the options available to you.

The Mortgage Finders is a UK based Mortgage Comparison and Mortgage Broker website – visit http://www.the-mortgage-finders.co.uk for more information

About the Author: Andrew Black is the resident writer for Mortgage Comparison site The Mortgage Finders – visit teh site to compare over 6,000 UK Mortgage Loans – http://www.the-mortgage-finders.co.uk