Re-Mortgaging - The Benefits

Banks are reporting that the numbers of customers re-mortgaging their properties is at its highest ever. Most of these customers are seeking to take advantage of two important trends in the economy. The first is that lower interest rates, and increased competition among banks and financial institutions is leading to better and better deals being available on the market in general. The second is that most borrowers' financial situations have improved dramatically since they have first taken out their mortgage and therefore they are able to get far better terms and interest rates for themselves.



For example, most people who take out a hundred per cent mortgage will be able to switch it, within two years, to a ninety or ninety five per cent mortgage that offer significantly better terms.



For the last couple of years, interest rates in the economy in general have been at historically low levels. Even with recent rate increases, current rates are still far lower than they were when many mortgages still being paid were first taken out. This means that there are savings to be made by fixed rate mortgage holders who can pay off their old mortgage and replace it with a new one taking advantage of today's lower rates.



Even for people with variable mortgage rates there are savings to be made as the formulas for calculating the payable rate may have become more generous in recent years.



This is especially true if you look at the increased competition at play in the mortgage market. The main banks have been joined by a plethora of competitors from Britain, the US and Europe, who are all seeking to carve for themselves a share of the market. They are now offering customers better deals and mortgages with more attractive and flexible terms than any lenders have been willing to do in the past.



New products mean you can take advantage of discount periods, make over or under payments, off set your other savings against your mortgage or take out interest only mortgages. Many people who took out mortgages in the past are deciding to switch to one of these new products.



Also, for many borrowers, as time passes, the value of their home has increased significantly and their income has also increased. This will make them eligible for mortgages that they may not have qualified for in the past.



These mortgages will offer them lower rates and better terms and conditions and so will be persuading them to make the switch and opt to re-mortgage.

Mortgages - How Lenders Work Out Affordability

If you are thinking about purchasing a property it is first important to know how much you can afford to borrow. Mortgage Lenders traditionally used income multiples to work out this amount.



If an applicant was earning 30,000 a year the lender would calculate that they could comfortably afford to borrow 3.5 x their income which is 105,000. If approached with a joint application, lenders would add the two incomes together say 30,000 and 16,000; this would make their total income 46,000.



To work out how much the couple could borrow they would then multiply this figure by 2.5, this would make a total of 115,000.



However these affordability practices have now become outdated with house price inflation and low interest rates, these factors have made the cost of borrowing a mortgage cheaper.



Why The Practice Has Changed?



In the last few years mortgage lenders have started to offer larger amounts, they have increased the income multiples to for example 4 or 5 times salary.



Since the property house price boom, this is often required to give buyers a chance of meeting market prices and seller expectations.



Repossession of property is currently at a historically low level and people have more disposable income making it easier to pay their mortgage. 50 percent of lenders now work out how you can borrow depending upon your ability to pay as opposed to the income multiple criteria discussed above.



This means that everyone applying for a loan is not assessed in the same way, the majority of lenders will be offered more money via this method, some however may not, for example single mothers.



How Affordability Is Calculated



Every lender has a different method for working out how much they are prepared to lend you. All of them will however ask for proof of income, number of dependents, other monthly commitments (credit cards, store cards, etc), and your essential household spend.



Interest rates will also affect your repayments. Unless you choose a fixed rate mortgage, which keep interest on the mortgage at a fixed rate. Interest rate rises can affect a borrowers ability to repay, so it is an important consideration when taken out a mortgage.



How To Avoid Get Into Problems



It is your responsibility to ensure that you do not borrow more than you can afford, banks and lenders obviously have precautions in place to protect their investment, interest rate fluctuations and other potential commitments have to be taken into consideration before taking out a mortgage that could leave you in trouble.



Check out some online mortgage calculators as this will lay out the figures clearly in front of you so you can consider your options.



If you are a first time buyer it is important to take into account some other outgoings such as buildings insurance, mortgage payment insurance, etc.



Read the Key Facts illustration from your lender or broker this will show you the difference interest rate rises or falls can make to your payments.



If you choose a fixed rate deal dont forget you may only be on a low rate for a short period of time after which time your rate can suddenly increase.

Top Reasons Why You Should Opt For Home Mortgage Refinance

Home mortgage refinance has been very popular these days. Find out why people do refinancing, and why you may be better off getting one as well.



Opting for home mortgage refinance should be a major decision to make. However, if you decide on it at the right time and at the right circumstances, it might just be the best financial move that you can ever do for yourself and for your family.



All of us are eager to buy ourselves a home. Along with this eagerness are the anxiety and the pressures from home inspections right down to escrow deadline.



To cope, we often go for any mortgage that we qualify for. Eventually, you may soon realize how you could have found yourself a better deal had you given the mortgage terms more thought. This happens all too often, and this is one of the primary reasons why most people opt for a home mortgage refinance to cut down on the interest being paid for the loan.



In relation to this, loan refinancing proves to improve flexibility in terms of cash flow.



What happens is that instead of looking for ways to cut down on the total mortgage payments, you can look for terms that can enable you to lower your monthly payment. So, if your monthly expenses are relatively tight, you can just imagine how saving $300 through a home mortgage refinance will give you a little more cash flexibility (this accounts for $3,600 a year, which is relatively attractive).



Another top reason for you to go for a home mortgage refinance is to get some extra cash on hand.



Your home is one great resource if you want to earn extra cash for better financial or personal reasons. Your home has most likely increased in terms of value, qualifying you to earn more out of it and put it to better use. Some of the most common related reasons for opting for refinancing to get extra cash include making home improvements, car upgrade, paying off credit cards, paying tuition fees, starting a new business, or going on a dream vacation.



On the other line, there are many people who go with the home mortgage refinance route as a desperate attempt to get themselves out of overwhelming debt.



The rates for refinancing are relatively favorable. If you find yourself with too many small bills with payments that are slowly getting too difficult for you to handle, you can take a lot of weight off your shoulders by getting a home mortgage refinance. This way, you can get enough cash to pay off all the smaller payments so you can concentrate on one monthly payment, which is your mortgage. Considering how some lenders can stretch to up to a 30-year terms, you can easily go back on track to your journey towards financial stability.



Remember that the decision to get a mortgage refinance is a lot less stressful than getting a new home loan. Without the pressure and the deadlines, you can surely give it some good thought to ensure that you are getting a much better deal. So, take your time and shop around for the best home mortgage refinance deal that best fits your situation.

Loan Calculator- Why use a loan payment calculator?

There are times in an individual’s life when they might consider taking out a loan. There are a number of things you will need to know when you take out a loan. You will want to know how much you’ll be paying each and every month to repay your loan. Using a loan calculator help you to determine how much your monthly payment will be before you actually take out a loan. A loan payment calculator can be a very handy tool. The tool will help you decide whether or not you can afford to take out a certain amount in a loan.



 Before taking out a loan it is a good idea to use a loan calculator. So where can you find a loan payment calculator? There are numerous websites on the internet that offer a loan calculator for visitors for free. You can also invest a little money into a much more advanced loan payment calculator software. Some websites might offer a loan calculator which requires no download and gives nearly instant results while other websites might offer a loan payment calculator that requires you to download some type of software at a cost or for free.



Each individual will have a different preference when it comes to what type of loan calculator they wish to use. Â There is something very important to take into consideration when using a loan payment calculator. You should never try to use a mortgage calculator and get an exact figure. A loan calculator should be used to get a solid ballpark figure and nothing more. Do not expect to get an exact amount as the market changes and the figures can change from bank to bank. As mentioned or earlier there are many websites on the internet that offer loan calculators to their another world.



We are going to discuss one website in particular. Â Loan Calculator 1 offers a loan payment calculator that will help you calculate your mortgage. The tool can be used free of charge and provides almost instant results. There are a number of parameters that the tool uses. The parameters include the down payment, purchase price, interest rate, start date, and the loan term. After entering this information into the tool then you will want to push the button to calculate your loan payments.



You have several options to determine how your mortgage is shown. The tool is capable of showing your mortgage per month or per year. The tool is better suited for determining how much the mortgage payment will be each month. Â So how does the loan payment calculator actually work? The tool can easily help you determine your mortgage payment by changing a couple of parameters. The most important parameters used by the loan calculator are the interest rate, the principal balance and the term of the payments.



You will see a high interest compared to your real loan in the beginning. The loan summary will show you your monthly payment as well as the total of your payments and the total of your interest. After you push the calculate button you will see all of these things.