Tag: mortgage
Choosing a Mortgage Broker for Your Home Loan Application
Buying a home is likely one of the biggest financial decisions. It's also a time-consuming and complex process that may leave you feeling overwhelmed. Like most people, you'll want to research to ensure your money is working properly and everything needs to be taken care of properly. Searching for the right home loan is important and can be confusing – especially in today’s mortgage market. Many options include interest-only loans, fixed-rate mortgages, and loans with easy payment options. What’s more, it cannot be easy to be approved for a loan if you have a poor credit history or no credit history. However, there are specialized programs available that cater to specific groups of individuals, such as the Hometown Heroes Program. If you are a qualified professional, such as a first responder, healthcare worker, or educator, this program offers unique benefits and incentives to help you achieve homeownership. To learn more about the Hometown Heroes Program, you can refer to the frequently asked questions (FAQs) provided by the program organizers. These FAQs provide valuable information about eligibility requirements, the application process, loan terms, and any additional perks or advantages offered under the program. Familiarizing yourself with the faq hometown Heroes program can be a helpful step in understanding whether this program aligns with your homeownership goals and financial situation. We know how confusing and frustrating it can be to find the best home loan that fits your needs and budget. That's why Mortgage Broker Melbourne exists to make your life easier. You'll get a better idea about the type of mortgage products available and how much each will cost you in the long run. All About Mortgage Broker While you are still working with your real estate agent to find the home of your dreams, it is important to connect with a local mortgage broker. Mortgage brokers will make sure the process for securing a home loan is as stress-free and easy as possible. They are real estate professionals who can help you find the right loan for your needs. Mortgage brokers do not lend money directly to consumers. Instead, they search for the best rates and costs on mortgages—then match you with a lender that meets your criteria. Depending on their specific setup, a broker may work with multiple lenders or just one lender. While mortgage brokers differ from lenders because they are independent contractors, not affiliated with any particular lender, their role is significant. When you begin the loan application process with a broker, they will thoroughly evaluate your financial situation and apply for loans on your behalf. A good broker will ensure that all of your financial details are complete and accurate, which will result in the quickest possible loan approval. This can help you avoid making multiple trips to a bank to provide additional documents or information. Mortgage brokers charge different rates and fees, but they'll generally take a portion of the loan amount as payment. Larger companies and those with more experience will often charge a higher rate than smaller firms. Related: 7 Expert Tips In Finding The Best Mortgage Broker In Vancouver Why Should You Work With A Mortgage Broker? Working with a mortgage broker can make the process run more smoothly when you decide to buy a home. #Assists In Checking Your Financial Condition Before you get a home loan, it is important to check your financial situation. A home loan is a huge financial commitment, so you should secure your finances first. It is important to have an idea about this if you want to be able to buy a house in the future. A mortgage broker is an expert who can help you make sense of the lending process. Also, a good broker should assess your financial situation to determine how much you can borrow for a new home loan. They will also identify lenders that fit your needs and can choose from several options to get the best deal for you. #Brokers Are Competent And Skilled Mortgage brokers are experts in the home-buying process. They have access to a wide range of lending products, giving you options to choose the best solution for your personal needs. In addition, they learn about each product's potential risks and benefits, so they can help guide you through their decision-making process. #Helpful In Pre-Qualifying For A Home Loan Application Pre-qualifying for a mortgage is the first step of the application process, and it is recommended before you begin your home loan search. It gives you an idea of how much your monthly payments may be if you purchase a home. You can then use this information to help you choose what type of home or property fits within your budget. Surely, you'll find getting a home loan much easier and faster if you go through a mortgage broker. They have a network of banks and lenders, so if your bank doesn't offer what you need, they will get you a mortgage from one of their partners. A mortgage broker can also close the loan faster than going directly through a bank. Conclusion Brokers are there to help you find the best mortgage. They will work with you to find a lender that runs on your schedule and ensure that your application is in good condition before it gets submitted. And when things go awry, a broker will always have your back and guide you through the process of explaining things to lenders. Additional Resource: Buying or Selling a Home in Seattle?Best Home Buying Tips for First Time BuyersThings to Know Before Applying for a Vermont Mortgage LoanWork with a Local Mortgage Broker Company for Your Vancouver Mortgage
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Should You Consider Equity Release To Pay For Live-in Care?
Although it seems like equity release plans have been around forever, this sector of finance has only been regulated since 2004. However, this has not dented their popularity among over 55s wishing to free up a sum of money rather than leaving it tied up in their property. Many have used the money to fund home DIY projects, help a child onto the housing ladder, or simply for a blowout holiday or new car. Increasingly though many are seeing equity release as a good way to pay for care in their own home in old age. Equity is the value of your home minus any loans or mortgages secured against it which haven’t been fully paid off. If you’re wondering whether this would be right for you read our advice on the advantages and pitfalls of equity release and how the equity in your home could pay for a comfortable old age. What is Equity Release and How Does it Work? This is a method for releasing some of the untapped wealth tied up in your home. Being able to unlock the value of your home and turn this into cash is a way to remain in a much-loved family home. There are two main types of equity release – a lifetime mortgage or a home reversion plan, which is the sale of part or all of the property. A lifetime mortgage is a loan against the value of your home which is not repaid until either the homeowner dies or goes into long-term care, or the property is sold. If you decide to go down this route you must choose carefully between the two types of lifetime mortgage which are: The interest roll-up mortgage, which is the most popular option. With this, you receive either a lump sum or regular amounts, and interest is added to the loan at a fixed or capped rate. An interest-paying mortgage is similar to a standard mortgage in that you pay monthly or ad-hoc payments, and some plans allow you to pay off the capital, to reduce the sum owed at the end. The home reversion plan is only available to those aged at least 65. With this, you can sell all or a percentage of your home to a provider at below the market value and you become a rent-free tenant in your home. You can even sell percentages of the home at off-set intervals. Another, less well known and potentially more risky option is the sale and rent back scheme where you sell your home, at a discount and become a rent-paying tenant in your home. Points to Consider Home care services are increasingly seen as preferable to standard nursing home care for many reasons, not least among them being able to carry on living in your own home being looked after by a trusted live-in carer who becomes your friend. Lifetime mortgages are considered the most popular option for equity release because it allows you to retain full ownership of your property and some come with an option of paying back some of the loans over time in order to reduce the build-up of interest and retain as much of the value of your property to benefit your estate when you die. You can only apply for equity release once you are over 55 and the amount you receive is dependent upon the value of your home (minimum value £70,000) as well as your age. Your property must be in the UK. Benefits of Equity Release For today’s older homeowners who have seen the value of their homes rise significantly over recent years and with the added benefit of current low-interest rates, equity release gives you an amount of cash to spend now or to put towards a live-in care plan. Risks and Pitfalls of Equity Release The biggest problem with equity release is that you do not receive the full market value for your home, indeed the amount you can access would be much less than you would get by selling your home on the open market in the traditional way. Another disadvantage is that any inheritance your beneficiaries expect to receive would be reduced. The upfront costs and fees involved in setting up an equity release plan could be as much as £3000. If you opt for a lifetime mortgage there is a real risk that when the time comes for your home to be sold the amount owed may be more than you borrowed because of the compound interest charged on the mortgage, unless you can pay off some of the debt as you go along. So, if you want to leave a decent inheritance for your family you need to act with caution. Be aware that if you have a substantial amount of cash in the bank this could affect any means-tested benefits you may be entitled to. The upper threshold is currently £16,000 so above this you are ineligible for means-tested benefits. Your tax situation could be impacted. If you choose to pay off the whole of the lifetime mortgage early you could incur penalties. Risks of Home Reversion Scheme You may only receive between 30-60% of the market value of your home and there may be a clause in your contract which forbids you from moving home. Distressingly, once you die the property usually has to be vacated within one month which causes unnecessary upset to the family at a distressing time. Protections from the Equity Release Council You should look for an equity release provider who is a member of the Equity Release Council to ensure that any lifetime mortgage you take out will never exceed the total value of your property. You are also assured that: You can remain in your home until the end of the mortgage term You are provided with an independent solicitor who explains everything clearly to you Interest rates must be fixed or capped and the product must have a ‘no negative equity guarantee'. Always get the best independent adviser who is regulated by the FCA and discuss things with your family before signing on the dotted line. Read Also: What To Leave Behind Once You Have Sold Your Home The Guide to Understanding Your Home Value
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Buy to Let Mortgage Explained
A buy to let mortgage differs from a regular mortgage since it is for investors or landlords who buy property to rent out to tenants; not for their residential purposes. The essential differences that an investor should be aware of can be provided through professional and experienced advice from mortgage brokers in the UK. Some issues linked to the subject are listed below: Buy to Let mortgage in the UK is available to individuals as well as to corporates and companies. However, a BTL mortgage for a company will have to be through a lender who accepts investment through limited companies. Maximum limit: The amount that can be borrowed is linked to the expected rental income. Lenders usually require the rental income to be 25-30% higher than the mortgage payment. Deposit: A deposit will be required to be paid to the lender; it is usually 25% of the value of the property (though this can escalate to about 40%). Repayments: The two ways of paying back the mortgage are explained below: Interest-only mortgage: is self-explanatory and, every month, only the interest on the loan is paid back. This means lower monthly payments, but the loan will have to be paid at the end of the mortgage period. Repayment mortgage: is when both the interest as well as some portion of the loan itself are paid back. A higher monthly payment will be required, but the advantage is that by the time the mortgage term matures, in all probability, the entire loan would be repaid. Depending on the investor’s capital and budget, advice will be required on the Repayment issue since lenders vary on the repayment requirements. Taxes: Both Capital Gains Tax and Income Tax are payable on buy to let properties. Capital Gains Tax: The rate is payable dependent on the income bracket of the investor. By adjusting property purchase fees (or even losses from another BTL property), this tax can be reduced. Income Tax: Landlords will not be able to deduct the mortgage interest from rental income. Instead, the total mortgage interest payment will receive a 20% tax relief. Fees like council tax or property maintenance charges can be offset if the annual income allowable is exceeded. BTL remortgage: By switching to another deal once the current mortgage is over, a BTL remortgage can sometimes be advantageous as the interest rate can be lower. If a remortgage is required earlier, lenders usually require a minimum time of 6 months after the title deeds are transferred before they will consider this. However, arrangement fees for BTL are high so remortgaging can be expensive and, since interest rates can fluctuate, the pros and cons will need to be carefully reviewed. Regulation of Buy to let mortgage: Most of these mortgages are not regulated by the FCA as they are treated as business borrowing. However, Consumer BTL mortgages are handled in the same way as residential mortgages by the FCA, protecting the investor from fraud or incorrect advice. This type of mortgage is for “accidental landlords” - it is defined as ‘a buy-to-let mortgage contract which is not entered into by the borrower wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower.’ For example, if the property is bought for relatives to live in, it would be considered as a Consumer BTL mortgage. Legislation: Investors need a tenancy agreement, outlining the terms and responsibilities of both parties. The rented property should be kept safe with a fire alarm and all gas and electrical equipment maintained in good condition. An energy performance certificate should be provided to the tenant. The tenant’s right to rent should be checked. The deposit should be protected in a Government-backed scheme. Conclusion: As in every critical decision, the pros and cons need to be weighed. In the case of a Buy to Let mortgage, some of them are: Advantages: Demand: With the demand exceeding supply, the rental market is suitable for investors. Capital gain: Although there is a risk with the value of property fluctuating, “brick-and-mortar” has usually survived and increased in value. Income: With the rental trend increasing, the revenue should be an asset. Disadvantages: High fees: Fees, deposits, and admin/legal costs can be increased. Rental voids: There is the risk of having no tenant or a tenant who is problematic with payments. Legal: Keeping in line with the legal requirements can be a big responsibility. Should a BTL mortgage be decided on, just keep in mind that the stamp duty holiday is till 31 March 2021 and so all necessary documentation should be completed well in time if this benefit is to be availed! Read Also: Federal Government and the Subprime Mortgage Crisis They Created 7 Expert Tips In Finding The Best Mortgage Broker In Vancouver Finding the Best Mortgage Lenders to Buy Your Dream House
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