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Homeowners Foresee Long-term Mortgage Commitment
Sep 7th
More than a third of homeowners predict they will be nearing retirement before they own their own home, new research suggests.
Responding to a One Account survey, 36 per cent of homeowners predicted they would be at least 60-years-olds before they paid off their mortgage.
A further 20 per cent didn’t expect to fully pay off their mortgage until some time in their 50s, with many also complaining that mortgage commitments were impeding on other areas of their life.
More than two in five claimed not to be able to save because of their mortgage, while nearly one in five 25 to 29-year-olds said it was forcing them to delay starting a family.
However, Debbie Milsom from One Account questioned why homeowners were finding their mortgage such a burden.
Paying off a mortgage should not mean that people have to put their life plans on hold, Ms Milsom said.
She added: It is worrying that homeowners perceive that it will take them until they are in their 60s before they pay it off when they should be spending this time preparing financially for their futures.
Ms Milsom reminded homeowners that there are often flexible solutions for managing payments.
Homeowners with overly expensive payments may also find remortgaging can help to reduce their monthly commitment.
As less people are putting money into pensions, more could begin looking at remortgaging to ensure economic stability during their later years.
Figures released by Moneyfacts have shown that personal pension returns have fallen by as much as a half in the last decade.
The news means that even if Britons are putting the same amount of money into their pension pot every year, their average with-profits pension fund could be half what it would have been in 1996.
These latest figures should serve as a powerful reminder that securing a comfortable retirement will only be possible for those individuals who actively monitor and manage their own pension provision, warned Richard Eagling, editor of Investment, Life & Pensions at Moneyfacts.
The research from Moneyfacts could cause more people to consider other options of financing their retirement, with taking out a remortgaging and downsizing their homes one method to increase the amount of money available in later life.
Providing mortgage & remortgages to homeowners having current or previous credit issues, cannot prove their income or need to consolidate debt from TML Mortgages
Millions Rely On Fictional Mortgage Benefit
Sep 6th
Around 3.85 million home owners believe that a non existent state benefit will enable them to keep up with mortgage repayments in the event of losing their income.
Almost one in ten home owners wrongly believe that the government will pay their mortgage if they are unable to do so for reasons such as redundancy or illness, according to new research.
However, the government will not help anyone with mortgage payments for the first nine months of unemployment and after that, unemployment assistance is only offered to a select group of people who have mortgages of less than £100,000.
A further seven per cent of those surveyed by Lincoln Financial Group were not sure whether government assistance is available, and were seemingly unaware that the last Conservative government scrapped state aid in 1995.
Ian Noble, head of strategic partnerships at Lincoln Financial Group, said that the figures were a warning that million of Britons are enjoying a false sense of financial security, believing that the government will provide financial assistance if and when required.
“That is not the case unfortunately. The government is not going to pay for your mortgage if you lose your job, and assuming that it will place people in real danger is a large risk as it suggests they have no other mortgage protection plan in place,” said Mr. Noble.
Indicative of this perhaps is the news that mortgage repossessions are still continuing to rise dramatically, with repossession orders in England and Wales in the first three months of 2006 witnessing a 57 per cent rise.
© Adfero Ltd
Homeowners are Taking Out Mortgages – not to Purchase a Home – But to Boost Their Purchasing Power
Sep 5th
Real estate has been an outstanding investment in most parts of Canada in the past few years. Home valuations are continuing to rise and have broken through the peak of their 1989 “bubble” in many areas of the country. That’s good news for Canada’s 7.5 million home owners, who are enjoying an average increase of $43,000 in real estate wealth since the upward trend took hold in 1998.
The hot housing market is being fuelled by mortgage rates which are the lowest they’ve been in almost 50 years. First-time home buyers are finding the rates attractive, and home buyers are lining up to purchase their first home or to upgrade to their dream homes. Housing statistics have been capturing headlines for months and the boom is noticeable on key economic indicators.
But the news isn’t just about rising valuations or Canadians moving into their new homes. Quietly in the background, there is a significant trend to refinancing. Canadians who have built up the equity in their home over the last few years are borrowing against that equity in record numbers. According to a report from a major bank, since 2001, Canadian households have taken out approximately $20 billion in cash out of their homes through mortgage refinancing and home equity loans.
We might thank the Ontario mortgage industry for the surprising resilience of the North American economy. In the past two years, the North American economy has endured numerous economic fallouts but consumer confidence remains reasonably strong – at least partly because homeowners have seen some of their losses offset by an increase in their real estate wealth. We find that we are sitting on (and sleeping in) the best-performing investment we own. And even if they have no plans to sell, homeowners have found that the return on their investment is still as good as cash in the bank.
That cash has been a key economic stimulus both here and in the U.S., where the trend is even more pronounced. As Canadians look beyond the view of a home as primarily shelter, mortgages become a valuable resource – and homeowners aren’t necessarily waiting for renewal time to cash out some of their gains.
So where is the money going? The equity being pulled out is often being used to pay down other more expensive debt. Credit card interest rates are shockingly high and – as a nation – our credit card and other consumer debt is continuing to grow. And much of the money is being used for increased spending. There has never been a better time to borrow against home equity to build the kitchen of your dreams, add a new wing, embark on the landscaping project you’ve wanted for years, enjoy the vacation you’ve always dreamed of, or help with the high cost of post secondary education. However, as always, never let your enthusiasm for the opportunity to spend get in the way of good common sense about debt management.
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
Refused Credit Mortgages Set To “grow And Grow”
Sep 4th
Refused credit mortgages set to “grow and grow”
14/08/2006 16:25:00
The sub-prime and near-prime mortgage market is tipped to grow and grow following new research.
A survey commissioned by Alliance & Leicester indicates greater demand for refused credit mortgages could be forthcoming, with four in five brokers expecting the market to grow.
The top reasons for borrowers to seek out a sub-prime or near-prime market are defaulting on debts or credit cards payments or simply having a bad credit rating, the research found.
Figures indicate that Britons are increasingly struggling to manager existing debts, suggesting that the potential market for sub-prime mortgages could swell.
Around two lenders in five report that the typical sub-prime customer is likely to be struggling financially, with many on a low income.
More than 85 per cent of brokers also report that customers are now realising that a sub or near prime mortgage can help rebuild a poor credit score.
Mehrdad Yousefi, head of intermediary mortgages at Alliance & Leicester, said: This market is becoming increasingly competitive with more lenders offering these specialised mortgages.
It is encouraging to see that brokers say their clients know the value of these type of mortgages and that it is a good way of getting potential buyers on the housing ladder while enabling them to repair their credit history by maintaining regular payments on their financial commitments.
Datamonitor estimates that 9.1 million people were refused credit by mainstream lenders in 2005, further indicative of potential growth in the refused credit mortgage market.
Personal debt has already crossed the £1 trillion barrier and the rising insolvency rate suggests that borrowers are struggling to cope, indicating a growing demand for refused-credit mortgages in the future.
As traditional lenders were tightening their criteria, the refused credit market could prove ever more attractive and other high street lenders were also likely to start catering for those with a ‘slightly lower credit profile’.
As more lenders capitalise on this growing market, the increased competition could see better deals for mortgage holders.
TML-Mortgages offer Refused Credit Mortgages for people who have been turned down for other remortgages.
The Real Cost of your Cash-back Mortgage Option
Sep 3rd
If you look at the most stressful events in a person’s life, buying a home is on the top ten list. After all, it’s a big decision – both emotionally and financially. Many home buyers go through an anxious period after they’ve arranged for their mortgage and get ready to move into their new home. Knowing you’ll get a pocketful of cash would sure help, wouldn’t it?
That’s a big part of the attraction of cash-back mortgages. A plump cheque is a psychological boost to home buyers who have just made one of the biggest financial commitments of their lives. As mortgage brokers, we like to work with our clients to ensure that they look beyond the temporary “feel good” of the cash, and weigh their options wisely.
Remember that the cash-back option comes with a trade-off: if you choose not to take the cash back, you can get a lower interest rate. Over time, you could see substantial savings in interest payments.
So, start with the most important question: What will the cash be used for? Is this purchase a priority, and is it worth the difference in the rate? Perhaps you have a plan to take advantage of the cash-back to purchase the household appliances for your new home. The extra $3,000 for new kitchen or laundry appliances may be an urgent immediate need and a higher priority overall than the lower interest rate for your mortgage term.
But here is the second question to discuss with your mortgage broker: What will be the impact of the rate difference over time? You’ll need real-life figures to work out the details for your personal situation, but let’s look at an example*:
Let’s say that your cash-back option pays 1% of the mortgage amount on a two-year deal, 3% on five years, and 5% cash back on a ten-year closed mortgage. And let’s assume that you’re looking at borrowing $100,000 for a 5-year term, amortized over 25 years. Not long ago, you might be looking at the difference between cash back and a rate of 6.60%, or a discounted interest rate of 5.29%.
So what’s the bottom line? Your cash-back option would give you $3,000 up-front, but over your 5-year term, you would pay a little over $6,300 more in interest costs than you would have with the discounted rate. The exact cost of the cash-back option in this example is $3,330.44 – paid out over 5 years.
Is that a good deal? It depends. Did you get the much-needed appliances for your home… or use the funds to manage a high-priority expense? Then you probably got good value from the option. If – five years later – you can’t remember where the money went, then perhaps you didn’t make the best trade-off.
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
Forclosures Have Met Their Match? Reverse Mortgages
Sep 2nd
Foreclosure filings were reported on 2.3 million U.S. properties in 2008, an increase of 81 percent from 2007 and up 225 percent from 2006, according to the RealtyTrac U.S. Foreclosure Market Report released January 15, 2009. The soaring number of forclosures have sent ripples through the housing and banking industry with the affects being felt by millions.
According to RealtyTrac, California, Florida, Arizona posted the highest 2008 foreclosure totals. A total of 523,624 California properties received a foreclosure filing in 2008, the nation’s highest state total. Foreclosure activity in the state increased nearly 110 percent from 2007 and nearly 498 percent from 2006. With 385,309 properties receiving a foreclosure filing in 2008, Florida documented the second highest state total. Florida foreclosure activity increased 133 percent from 2007 and nearly 412 percent from 2006. Arizona’s 2008 total of 116,911 properties receiving a foreclosure filing was third highest among the states. Foreclosure activity in Arizona increased 203 percent from 2007 and 655 percent from 2006. Other states with Top 10 totals for 2008 were Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.
With mounting job losses and a weakening economy, forclosures and mortgage delinquencies are expected to continue to rise. The nation’s unemployment rate shot up at the end of the year, reaching 7.2 percent in December — its highest level since early 1993, according to a Labor Department report release January 9, 2009. That puts U.S. job losses at 2.6 million for 2008.
However, with all this doom and gloom in the housing market, there is a glimmer of hope for senior homeowners 62 years of age and older. That hope comes in the form of a HUD Home Equity Conversion Mortgage (HECM) or Reverse Mortgage. Those who have obtained a reverse mortgage need not be concerned with the increasing forclosure rates and whether or not they can make their mortgage payments. With a HECM reverse mortgage, there are no monthly payments required.
Borrowers remain in their homes for life and never have to worry about making a mortgage payment again. All they need to do is keep the property in good repair, pay their property taxes and keep their homeowners insurance current and paid.
For seniors who currently do not have a reverse mortgage, now may be the time to explore the option. It does not matter if a senior is currently late on their mortgage. They may still qualify for a reverse mortgage. To qualify all borrowers on title must be 62 years or older, occupy the property as their primary residence and not currently be in a bankruptcy. That’s it!
MLS Reverse Mortgage has helped save several seniors who were months away from losing their homes.
So, in these tough economic times, there is still hope for seniors looking for mortgage payment relief or cash out to enjoy life’s pleasures.
Learn more online: http://www.mlsreversemortgage.com
Josh Borba has been a mortgage professional since graduating from San Francisco State in 2002. He is currently a Senior Reverse Mortgage Advisor at MLS Reverse Mortgage. Toll Free (888) 888-4834. Visit our website. Read more of our articles online. Government Insured Reverse Mortgage Programs.
How to Use a Mortgage to Manage your Debt and Improve your Credit
Sep 1st
What if there was such a thing as a magic card that you could carry with you, which had the power to open doors for you all over the world? You show someone your magic card and ‘voila’, you can have what you wish for. You would want to protect that card very carefully, wouldn’t you? Your credit is a little like that. Your good credit is a passport to financial opportunities. A poor credit rating can be a terrible obstacle… and repairing your credit is often a slow and difficult process.
What you may not know is that you can actually use an Ontario mortgage to re-establish your credit. Canadians are carrying heavier loads of personal debt than ever before. For some, the cost of servicing those debts is itself an obstacle to correcting the problem. Each month can be a chase to make the interest payments to keep the debt afloat. But if debts are rolled into a new mortgage, your credit can improve rapidly, assuming of course that you don’t rack up any new debts!
Here’s how it works:
Perhaps you have maximized your credit cards – and maybe even have a short-term loan or line of credit that you are also trying to pay down in addition to your regular mortgage payments. You may be considered a “high risk” borrower under these circumstances, even if you are managing to squeeze out your payments each month. Your overall payment history is satisfactory, but your debt load is heavy. If you consolidate your debts into a new mortgage, you can better manage those debts while also restoring your credit rating.
You may not have considered using a mortgage to refinance and manage your debts, but there are a few significant advantages. Your status as a homeowner can give you access to a lower overall borrowing rate. A house is considered very reliable security, so mortgages often offer the best rates available anywhere. In addition, your credit history enjoys an almost immediate boost, as you begin to make your monthly payments. There are many innovative mortgage options available today, including a new mortgage product that has been designed specifically as a credit repair tool.
This specialized mortgage is good news for clients who are trying to distance themselves from their past credit problems. Debt is controlled quickly – since the new mortgage offers an interest rate lower than credit cards that can dramatically reduce the interest charges on your debt — and your credit typically improves in only a few months.
You probably already know that it makes sense to consolidate your debt into one payment. You can generally enjoy substantial savings on interest charges; you have a more manageable monthly payment and better monthly cash flow. Consider how a new mortgage can help you manage your debts – and make it a goal this year to improve your credit rating.
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
If Mortgage Rates Can Fall Through the “floor” of the Prime Rate…what Else is Under the Floor?
Aug 31st
“Lower than prime,” you heard someone say. Like most Canadians, you were probably first skeptical and then confused. We tend to think of the prime lending rate as the invisible “floor” of lending rates. The very best customers can get very close to that floor. It is theoretically possible, we reason, to actually be ON the floor, but not possible to be below it.
Nevertheless, Canadian lenders offer mortgages at prime minus 0.5% to even minus 0.7%. So the floor isn’t the lowest you can go. There’s something under the “floor”. The rate known as “prime” has been the popular benchmark for lending in Canada. When business reporters talk about interest rate movement, they usually talk about what’s happening with prime. But there are other benchmarks in money rates, though they are typically for use by professional money managers. The most significant of these is the Banker’s Acceptance rate.
While “prime” is a set rate which is offered to a lender’s best customers, the Banker’s Acceptance is the rate which financial institutions use to lend money to one another. And it’s typically well below the prime rate. Look for the “Money Rates”section of your favourite newspaper, and you can compare Prime with the Banker’s
Acceptance rates for yourself. “Interesting,” you think, “but why does it matter?” Well, as new lending institutions begin to offer a slate of innovative new loan options, a new mortgage has emerged that is based on the Banker’s Acceptance rate: offering a mortgage rate of 1% over the 3-month Banker’s Acceptance.
If you compared the rock-bottom prime-based variable mortgage rate – prime less 0.5% to 0.7% – with the new adjustable BA-based rate, you would find that the BA-based rate would have delivered significant savings over the past several years, as rates were dropping. There are two reasons for this. Firstly, the BA-based rates have historically been considerably lower than prime. Secondly, the prime rate tends to be “stickier” in an environment where rates are falling. Often, the more fluid, market-based BA rates deliver the rate change more quickly.
Any variable- or adjustable-rate Ontario mortgage is an excellent option when interest rates are either dropping or stable. Not surprisingly, they’ve been a very popular choice in the past few years. There are some rumblings now that rates may begin to increase, but flexible-rate mortgages still remain an excellent choice for those looking to save some interest.
As always, you should consult with a mortgage professional to find the mortgage that suits your personal financial needs. An independent mortgage broker can provide you with information on a broad range of mortgage options from a wide variety of lending institutions, so you can compare features and options at a glance.
And remember, it’s worth taking some time to look beyond prime and explore what’s “under the floor” in mortgage options!
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
Make a Mortgage Broker Part of your Financial Plan
Aug 30th
For most Canadians, buying a home is the largest financial decision they will make in their lifetime. Yet, consumers across the country are more likely to painstakingly review dozens of investment possibilities for their portfolios than to scrutinize their mortgage choices. The mortgage world – like the investment world – can sometimes be confusing. There is a vast array of choices – open, closed, fixed, floating, long or short amortization, prepayment options, portability… and of course, the rate itself.
Making the right mortgage decision can have a huge financial impact over the long term. Many Canadians have an investment advisor to help them sort through their choices. Now, Canadians are also beginning to turn to mortgage brokers to help them make better mortgage decisions. Canadians are just now catching up with their counterparts south of the border, where mortgage brokers already arrange approximately 70 per cent of mortgages for U.S. properties.
So what is a mortgage broker? The role of a mortgage broker is to understand your mortgage needs, seek out the best options for your situation, and guide you through the lending process. A mortgage broker does not work for any individual institution or lender, but is independent, and has up-to-the-minute loan rates for a wide array of banks and other lending institutions.
There was a time when the banks exercised the view that they “owned” their customers, and mortgage brokers were perceived only as a last resort for home buyers with poor credit history. But times have changed, and home buyers in every bracket are learning they can benefit from the professional advice of a mortgage broker.
A good investment advisor can make you thousands of dollars. But a good mortgage broker will SAVE you thousands of dollars. Whether you are buying a home or renewing a mortgage, consider making a mortgage broker part of your financial plan this year.
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
Fixed or Variable-rate Mortgage?
Aug 29th
“Wow!” you say to your spouse as you hit the brakes on the car. “Did you see the mortgage rate those guys are advertising?” Your worries are over, you’re thinking. Just lock in a rate like that for the next ten years, and you’ve got it made.
Not so fast. That rate may not be the one for you. Typically, the lowest available rate – and the one that makes the rate sign look great from the street – will be for a variable or adjustable-rate mortgage. That rate has the potential to be like a roller coaster. The posted variable or adjustable rate is the rate you’re getting today. Unless you have an economic ouija board, you won’t be able to predict what kind of ups and downs are ahead of you.
Let’s take a closer look. A lender will offer different rates for different types of mortgages. The rates are determined based on financial risk -to the institution and to you. When a customer is willing to take on the risk, he/she is rewarded with a lower rate. If the lender is taking on the risk (that is, the customer is promised a particular rate… regardless of what happens in the future), the rate is higher. The longer the term, the higher the risk for the financial institution.
So how do you decide? Fixed-rate mortgages, because they require a low risk tolerance, are usually better suited to first-time buyers or those who haven’t owned a home for a very long period. Ask yourself these questions: Do you like or need to know exactly what your payment is going to be over a longer period of time? Do you want to avoid the need to consistently watch rates? Do you have less than 25% down? If you answered “yes” to all, or most of these questions, a more conservative fixed-rate ontario mortgage could be the better choice for you.
A variable or adjustable-rate mortgage is best suited to people who have a flexible budget and can tolerate higher risk. Ask yourself these questions: Do you watch market conditions? Can you handle any sudden rate increases that could increase your payment? Do you have 25% or more equity in your home? If you answered “yes” to all, or most of these questions, a variable or adjustable-rate mortgage might best suit your needs.
Some lenders offer a special promotional rate for the first few months of a variable-rate mortgage, which you should discuss with your mortgage broker. Also discuss what your rate will be based on – prime minus 0.5% or 0.6% or on Bankers’ Acceptances (BAs) plus 1%. The latter being a new kind of adjustable-rate mortgage that has recently been introduced to the marketplace. Most variables or adjustables allow you to exercise an option to “lock in” a fixed rate at any time for the remaining portion of your mortgage term or for a longer term.
If the uncertainty of a floating rate is going to give you sleepless nights, you’re in good company. Many Canadians prefer the certainty of a fixed-rate mortgage. They know exactly how much they will pay over the term of their mortgage, and they can plan accordingly… with no financial surprises. But if rates do drop… and drop… and drop… you are committed to the “promise” that you have made. Your best option – have a mortgage broker help you decide which option best meets your needs.
The House Team is commited to providing quality information to help people make informed decisions about their mortgage financing needs.
Compare Ontario Mortgage Rates with the traditional banks.
Need a mortgage calculator? Click Here Mortgage Calculator Ontario
