Your Questions About Mortgage

Paul asks…

What is the differences between all these different mortgage terms?

I am looking into different mortgage.
Get very confused by so many different kinds of them.
What are the differences?

If we are planning to get a 300K mortgage, and planning to stay in the house for at least 5 years.
What mortgage might be good for us?

30yr fix
why there is 5/1 ARM?? What is the different between all these?

thank u

admin answers:

30 yr fixed is usually safest for the long term because your interest rate and payments remain the same (you can always pay down principal early to reduce total interest and number of payments, as long as you avoid a prepayment penalty).

The 5 or 7 year ARM resets after that number or years which could end up at higher cost and higher payments varying each year after that, depending upon interest rates at that time. The reason for the current mortgage mess is that people who could barely afford the initial rates did not realized how much a 3-4% interest rise would affect payments they could no longer afford. They expected to sell or refi by then, but rising interest rates and dropping property values made that impossible.

Mandy asks…

What are my options in getting a new mortgage; will it be a regular one or an investment mortgage?

I bought a house a year ago and fixed it up while I was living n it. Now I want to buy a new house and rent my current one out. What are my options in getting a new mortgage; will it be a regular one or an investment mortgage?

admin answers:

As long as you plan to live in the new house it should be an owner occupied mortgage. However, you will need to have a written lease on your current home to count the rental income in qualifying for the new mortgage and generally they count the rental income at 50% of what you receive.

Daniel asks…

How do you pay your mortgage or rent when you retire?

I am 28 in the UK. I haven’t got a mortgage. When I am retired and living probably in private rented accommodation, who pays the rent? Or what about if you haven’t finished paying off your mortgage but have to retire? I’m planning for my future!
I am probably never going to have a mortgage. So how do I cope with the rent?

admin answers:

Hi, in the UK, you will actually get a very small state pension – if you are 28 now, let’s face it, it will hardly be worth anything by the time you retire (I’m 35 and not counting on the state either). I doubt it will be enough to cover bills, let alone food and housing.

What you need to do in the very near future is start a private pension – it could be with your employer if you work (usually better as they often contribute a little for you, my employer does), or it could be a personal one. If you can, go and see an independent financial adviser to help you choose the right product as there are just so many out there.

But you can’t just rely on that either, as some pension funds have done badly in the past, so you also need to do some long term savings – an ISA is a good start, and you can put up to £3600 cash each year.
Once you have saved enough, you may want to invest it in a property – I know it looks impossible for the moment, but remember that prices are coming down and you are still very young – if you save for a deposit for the next 7 years, you can then take a 25 years mortgage and it will be paid off when you are 60 – ready for retirement!

If you haven’t finished paying your mortgage, you can do like a lot of elderly people and downsize to a cheaper property, so you are debt free. And if you haven’t bought a place by then, your savings will bring you a nice little income and you’ll use that with your private pension and your state one to pay for everything…

Basically as long as you plan now and put enough aside (and don’t touch it for any reason!), you’ll be fine… Just don’t count on the state or others to look after you as you can see all around you how badly older people are treated.
Good luck

Charles asks…

How to refinance a home mortgage with negative equity?

I really need good options on how to refinance a home mortgage with negative equity. Currently my mortgage wont allow me a refinance. Any options on what i could do?

admin answers:

Sorry, there are no options. None.

Mark asks…

How do you start the mortgage journey?

I have €10,000 loan from college and a car. I have 3 yeasrs to pay it off. How do I begin the mortgage climb? What do I need to do to get a mortgage? How long do I need to be saving with a building society etc any advice greatly appraciated. Oh by the way I’m single, and earning just over €42,000 a year in a permanent pensionable job. Ireland only please.
Apologies for poor spelling typos working off a broken keyboard!

admin answers:

You could start by joining a building society now, and arrange a regular savings plan. The easiest way is to have money deducted by standing order from your pay every payday (assuming your pay is deposited straight into the bank). Then you need to work out a feasible budget. €42,000 a year is roughly €807 a week or €3,500 a month. How much of this do you really need to live on, and how much can you save? The more you save, the less you have to borrow. If you can put a special effort into repaying your existing college loan, you get rid of one burden, and it is a plus in your favour to be able to say to a potential lender that you had repaid this loan early. It shows you to be a responsible person. It also shows that making those payments hasn’t been a struggle, which in turn makes you a better candidate for a loan. You can apply for a mortgage at any time, but the odds are better if you have already been saving seriously with the building society for some months or years.

Have a look at house prices in the area where you want to buy. You will need to save at least 10%. If you make it a challenge, you could do it sooner by reducing other spending. If you can pay off existing loans, that repayment money can then be redirected into extra savings.

Good luck !!

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