How To Obtain A UK Mortgage When You Are An Expat or Overseas Resident

To obtain a mortgage while based overseas for the UK property market is not always that easy anymore as clients are dealing with banks that are based overseas generally. These overseas lenders take a more serious view to applications as they do not always have the means to credit check applicants income adequately. There is…

To obtain a mortgage while based overseas for the UK property market is not always that easy anymore as clients are dealing with banks that are based overseas generally. These overseas lenders take a more serious view to applications as they do not always have the means to credit check applicants income adequately. There is the important fact that income can be from various sources or that the applicable is self-employed so does not derive income from a standard working salary such as being employed by an employer. Overseas lenders will invariably use a number of ways to assess the finances and the source of income for the mortgage that they arewriting on behalf of the client. Firstly lenders will use a stress tested rental ratio and were assuming this is a buy to let mortgage as most expats or overseas residents tend to buy for investment purposes. A lender will do this is working out that the rent is 125% of a stress tested rate. At the moment this is 5% or 6% dependent on which lender is approached. If this does not adequately cover financing the property the lender will then look at the income and expenditure of the applicable. Lenders generally like to see that all expenditure for day to day living includes all living costs, mortgages, loans and day to day living expenses and does not exceed 60% of the applicants total income. This is known as a debt to income ratio. If this passes the lender will then ask the applicant to supply the below documentation

· Proof of ID (Passport & Drivers Identification License) 1 each for joint application ·

. Proof of Address (Utility bill or Rental Lease)

· 6 Months Bank Statements

· 6 Months Salary Pay Slips

· Current statements of existing mortgages

· 3 Months bank statements of rental income monies (if any)

· Others upon request (assets, bank deposits, savings, liabilities etc.)

The general process to proceed on applying for a mortgage is as follows but will be different for all lenders as they have their own in-house criteria of rules and the way they settle and process mortgages through to the completion stage.

Process for Applying for a Mortgage

1. Prepare application and supporting documents

2. Package and submit to lender

3. Provide further documents lender requires

4. Lender grants Agreement to Lend * (Agreement in Principal) (3-4 weeks)

5. Agreement In Principal sent to client

6. Client signs and returns Agreement In Principal top the lender

7. The lender creates a mortgage account for the clients mortgage payments and rental income to be deposited

8. Client pays lender fee

9. The lender instructs valuer to value the property

10. Client pays valuation fee

11. Valuer surveys property

12. Valuer returns valuation report to lender

13. Lawyers taught

14. Lawyers performs searches and prepares Report on Title

15. Lawyer submits Report On Title to lender

16. Lender releases funds to lawyers

17. Lawyers exchanges funds and title

18. Property Completed

19. Full process 8 to 12 weeks

Clients will need to be aware of the tax implications and stamp duty requirements which can be found on the below websites

https://www.gov.UK/stamp-duty-land-tax/overview

* (AIP) Agreement In Principle to lend

https://www.gov.UK/topic/personal-tax/capital-gains-tax

Reverse Mortgage FAQ Answer Popular Questions

Financing can be a confusing proposition for many consumers. In fact, many people have a variety of questions about loans, especially creative ones that may occur after buying a house. A typical reverse mortgage FAQ covers concerns qualifying for this special type of credit. Who Qualifies Homeowners often wonder about the qualifications. Many reverse mortgage…

Financing can be a confusing proposition for many consumers. In fact, many people have a variety of questions about loans, especially creative ones that may occur after buying a house. A typical reverse mortgage FAQ covers concerns qualifying for this special type of credit.

Who Qualifies

Homeowners often wonder about the qualifications. Many reverse mortgage FAQ lists this information near the top simply because so many people want to know whatever they could qualify for this type of financing. Homeowners age 62 or over are eligible to apply for a government-insured loan that would provide funds equal to the value of their home. Only one person of a couple must meet the age requirement; both owners do not have to be over age 62.

Proceeds Amount

The amount of money borrowers can be eligible to receive depends on several factors. The age of the youngest spouse, the home's appraised value, current interest rates, and any applicable government lending limits will determine how much money is available. Older owners with more valuable homes and more equity can expect to get more money.

Limitations on Use

After paying off the previous mortgage with the funds, people are free to use the money for any type of expense. Some people opt to use it for medical expenses or monthly bills. Others prepare for a new remodeling project on a residence. Some choose to plan a vacation with the money.

Existing Mortgages

Owners can have existing financing in place when taking out a reverse mortgage. When closing the loan, the first order of business will be to pay off the existing financing. This must occur because the reverse mortgage must be the first lien on the property. After satisfying this lien, the borrower receives anything left over. This process will eliminate monthly loan payments. However, owners must continue to maintain the property and pay taxes and insurance on it.

Home Qualification

Some homes do not qualify for this type of financing. Secondary residences and vacation homes do not fit the criteria for this financing. In addition, any rental properties that contain more than four units can not be used for this type of loan.

Fees and Repayment

This type of loan will be due for payment at the time of the final borrower selling the property, leaving the residence permanently, or dying. At that time, all interest, advances, and costs will be payable to the lender.

Payments

Borrowers can choose a variety of payment plan options. Choose from a lump sum payment or fixed monthly payments. Some people prefer keeping the funds available as a line of credit. Borrowers can also devise a combination of these options to create a payment plan that fits their needs fairly.

Impact on Benefits

This loan will not have an impact on benefits such as Medicare and Social Security. Anyone receiving Supplemental Security Income or Medicaid must use the funds from the loan immediately. Any money retained will be considered an asset, which could affect future eligibility for benefits.

Learn as much as possible about the process before proceeding with a reverse mortgage. FAQ answers will help educate consumers.

Second Mortgages Demystified

Many homeowners take out a second mortgage to pay off debt or cover home improvement projects. For some, this is a good way to consolidate debt and quickly obtain funds, but is it financially advantageous for you? Prior to turning in an application, you need to be aware of several key components and fees. Annual…

Many homeowners take out a second mortgage to pay off debt or cover home improvement projects. For some, this is a good way to consolidate debt and quickly obtain funds, but is it financially advantageous for you? Prior to turning in an application, you need to be aware of several key components and fees.

Annual Percentage Rate

As with your original mortgage, the APR is the annual interest rate on a loan or line of credit. If you have not paid off your first loan, the rates for a second may be higher because the lender will only receive payments after the first is completely paid off. The APR can increase if you incur late payments or if you take out a variable interest rate loan, which automatically adjusts payments based on new interest amounts. A variable-rate is appealing to some homeowners because initial payments are usually lower. Over time, the amount typically increases. When you are taking out a second mortgage, consider the APR carefully and do not take the first offer you get, no matter how low or attractive the rate sounds. Shop around and gather your information from at least one bank, one lender, and one credit union. Some lenders may include more than the basic interest charges, so read the fine print. Shopping around and comparing will help ensure you get the best deal possible.

Additional Fees

As with most loans, it's a good idea to find out if there are any prepayment or penalties that can catch you off guard. Many banks charge loan origination fees, which is essentially a processing fee. Originations are usually around one percent of the total amount. Some lenders will also charge appraisal visas. These charges can be incurred because even this process requires an appraisal on the property to determine accurate values. Flexibility is crucial, so avoid signing a contract with excess penalties and regulations.

Penalties and Insurance

In some cases, contracts contain a default penalty, which will increase payments if you miss a deadline. Particularly for second mortgages, default penalties can dramatically increase rates. Try to avoid contracts that include default penalties. Even if you are financially responsible, a simple clerical error could cause a payment to be late. If possible, it's best to avoid this stipulation and not even run the risk. Some lenders offer Voluntary Loan Insurance. Carefully examine this information and be sure you're not doubling up on insurance. Your agreement may already have sufficient coverage, so verify current coverage before buying a new policy.

It is crucial that you find a reputable bank or lender to help you decide whether a second mortgage is a right choice for you. Doing your homework and comparing options will also help you make the best decision. In the end, it could be financially rewarding and protect your credit and assets.

Different Options for Your Home Loans

When you are financing a home, you might think there is only one type of mortgage for which you are eligible. In reality, however, there are most likely several different types. These different types of loans each have their own restrictions, but they are worth looking into. Government You could be able to obtain a…

When you are financing a home, you might think there is only one type of mortgage for which you are eligible. In reality, however, there are most likely several different types. These different types of loans each have their own restrictions, but they are worth looking into.

Government

You could be able to obtain a government-backed mortgage. There are some advantages to going this route, as you can get a lower interest rate, lower down payment, or waived PMI insurance. The most common type of government option is the FHA. They all allow for 3.5 percent down payment instead of the traditional five to ten percent. Unlike some traditional options, you can have a co-signer on this mortgage. However, each state has its own limit on how much you can finance through an FHA mortgage.

There is another type of FHA known as the FHA 203K. This is for homeowners who wish to purchase and renovate properties. The work must be completed by a licensed contractor and must be completed with a specific fixed timetable. You can not do any of the work yourself. There are also budget and repair limits.

A USDA Rural housing opportunity allows you to purchase a low-cost home in rural areas. These have low-interest rates and does allow for 100 percent financing and 30 years fixed interest.

A final type of government-backed loan is the VA. This is for veterans only and allows 100 percent financing with no PMI. Veterans must have a copy of their DD-214 and a Certificate of Eligibility to get one of these loans. There may be limits placed on purchase price based on the area.

Conventional

When you think of a mortgage, you typically think of conventional loans. Fixed-rate and adjustable-rate mortgages are by far the most popular. With a fixed-rate, your interest rate and monthly payments remain the same. You can choose from a variety of term options and it protects you from rising interest rate. Typically, the rate is higher for this type of financing than it is for an adjustable rate.

Adjustable rate financing has a fixed initial rate, which is usually lower than fixed-rate. However, after the initial period, which can be as little as six months or as long as ten years, the rate adjusts annually. You can get longer loan terms, and there is a rate cap, which advances the interest rate going over a certain amount in a given period.

Portfolio

Portfolio loans are probably the least well known. With this type of loan, the group or bank that initiates the financing keeps it in their portfolio; they do not sell it to a secondary source. These are usually given to individuals that may not be able to get a traditional mortgage due to issues with their credit. Lenders see these as a good investment and want to keep the financing on their books. Examples of those who do not qualify for a traditional mortgage, but may qualify for portfolio financing are those with steady income without the steady job such as contractors or anyone who receive 1099s instead of W2s.

Knowing the types of loans available is important. If you do not qualify for one, you may still qualify for a different type and get the home of your dream.

Top Questions to Ask Your Reverse Mortgage Specialists

For many seniors, the recent economic downturn and the rising cost of living have made living on fixed retirement income or social security benefits particularly difficult. Many also encounter rising out-of-pocket health care costs and other unexpected expenses. If you or your parent are having difficulty making ends meet, or if you would simply like…

For many seniors, the recent economic downturn and the rising cost of living have made living on fixed retirement income or social security benefits particularly difficult. Many also encounter rising out-of-pocket health care costs and other unexpected expenses. If you or your parent are having difficulty making ends meet, or if you would simply like more money to enjoy life in your golden years, a reverse mortgage may be a helpful solution.

Any homeowner age 62 or older is eligible to take out a reverse mortgage, which allows you to take out a loan against the equity in your home. You do not have to sell your home, and you may keep your property title in your name. In contrast to a standard mortgage, you will not have to make monthly payments. Instead, your lender makes payments to you. You have a variety of payment options to choose from, such as monthly payments or a lump sum, and there are no income, credit, or employment prerequisites to be eligible. If you decide that this kind of loan is right for you, you will want to work with someone you can trust. Here are some important questions to ask when searching for reverse mortgage specialists to partner with.

Are they a Broker or a Lender?

A broker can help you do all of the legwork when searching for the best rates and terms, but they will most likely charge a broker fee. If you are looking to keep your costs at a minimum, working directly with a lender is a smart choice.

Do They Have Experience as Reverse Mortgage Specialists?

When the housing bubble burst and the market for standard mortgages dwindled, many traditional brokers jumped into the reverse mortgage market. Therefore, many have very little experience with these types of loans, and they may not be as knowledgeable about your options as a lender with many years of specialized experience would be. Look for a lender with a proven track record.

Are they a Member of NRMLA?

The National Reverse Mortgage Lenders Association requires its members to uphold high ethical standards and adhere to a code of conduct. Choosing a lender who is an active member in good standing of this organization will safeguard your interests and ensure you are working with an ethical company.

Are they Approved to Offer HECM Loans?

HECM loans, or Home Equity Conversion Mortgages, are loans that are insured by the Federal Housing Administration. This means that if your lender goes out of business for some reason, you will continue to receive payments as agreed upon. Reverse mortgage specialists must be approved by the FHA to offer this type of loan.

What Kind of Fees Are Involved?

A reputable lender is able to tell you upfront and in detail what kind of fees and costs are associated with whichever loan option you choose. Ask him or her to explain each cost, and be on alert for any hidden fees.

The proceeds from reverse mortgages can be sent any way you like, and for many seniors, they are a beneficial solution to meeting their financial goals.

How to Get a Mortgage Which Will Be the Best One Indeed

Living in Canada is not too tough, but being on a rent can be tricky and the rates can go high. It happens that an individual has enough money and plans to go for a mortgage, then he needs to know a few details and conduct a thorough search prior to going for one. Those…

Living in Canada is not too tough, but being on a rent can be tricky and the rates can go high. It happens that an individual has enough money and plans to go for a mortgage, then he needs to know a few details and conduct a thorough search prior to going for one.

Those staying in Canada need to have a good record when it comes to money and the relationship with the bank. Three important details are imperative and they are listed below.

1. A clean and verifiable credit history from a reputable bank.

2. Permanent Resident Status

3. Enough money to fund at least 35% of the house purchase.

If a person has a job in Canada, then the 35 percent charges will be waived for him. But there are some lenders that may offer more relaxed terms but charge an above average interest rate respectively.

When to apply for the mortgage?

It happens that a person is on a work permit and is not a permanent resident of Canada. Some lenders may offer him a mortgage and require him to keep one 'years worth of the mortgage payments in a bank account until he applies for the permanent residence in Canada.

But being on a work permit is favorable for the individual and will result in a positive income for him. The standard Canadian mortgage requires 25 percent of the house purchase to be financed by the buyer while the remaining 75 percent is covered by the lender.

The banks fund greater than the 75 percent of the property value if the borrower is willing to pay for the indemnity insurance in order to insure mortgage against default. Moreover, banks provide mortgages up to three times the annual gross income to the people that earn average income respectively.

How can an individual get better in terms of his Mortgage?

An individual can get mortgage in Canada in two different ways. He can deal directly with the banks or he can use a mortgage broker as well. In this regard, a few aspects which are vital are stated below.

– Majority of the mortgage brokers are independent advisors. They will try their best to find the best mortgage for the proportional individual in his circumstances.

– Brokers mostly have connections and contacts with many lenders.

– They get paid by the lender rather than the individual.

– Records show that brokers got better mortgages for those who had migrated to Canada and negotiated at better rates as well.

Types of Mortgage

a. Open Mortgage:

Open mortgages can be paid-off or even negotiated at any time without any additional interest.

b. Closed Mortgage:

Closed mortgages can not be paid off early unless the borrower is willing to pay the additional interest. In these mortgages the interest rates are quite low than the open mortgages respectively.

What to do for the Mortgage

To begin with an individual needs to be familiar with the details related to the Mortgage. He just can not be relaxed about going about it and keep in touch with the best brokers and the banks respectively.

He should note down the rates being offered and keep in mind the interested rates which will affect the mortgage. He should get the advice before buying the mortgage from a broker relating to the selection of an open or a close mortgage.

Simplified: Fixed Rate Vs Variable Home Loans: Which One Is for You?

When you're planning to buy a house, one of the most important decisions you should make is about your mortgage. In the situation where you decide that getting a mortgage is your best option when buying your house then the follow-up question is – fixed rate vs. variable rate mortgage? We will discuss more about…

When you're planning to buy a house, one of the most important decisions you should make is about your mortgage. In the situation where you decide that getting a mortgage is your best option when buying your house then the follow-up question is – fixed rate vs. variable rate mortgage? We will discuss more about this topic in this article in order to help you decide which one is most suitable for you. Most importantly, the advice of a professional mortgage broker is what you need at the time.

What is a fixed rate mortgage?

A fixed-rate mortgage charges a set interest rate that does not change through the lifespan of the loan. Despite the fact that the amount of principal and interest paid each month may differ from payment to payment basis, the total payment remains the same. This can give the borrower peace of mind since he already has an idea of ​​how much to pay monthly.

Advantages of fixed rate home loans

  1. One of the main advantages of getting a fixed rate loan is that the borrower is protected from sudden increases in monthly mortgage payments if interest rates rise.
  2. It is easier to understand because all you have to remember is the amount you need to pay every month. No more complicated computations involved.
  3. Most of all, the fact that you already have an idea of ​​how much to pay every month makes it easier to plan your budget and save.

Disadvantages of fixed rate home loans

  1. Qualifying for a loan may be difficult when interest rates are high.
  2. Another disadvantage of getting this mortgage loan is that, depending on the lender, it can be difficult to access for people with less than excellent credit score.
  3. Typically the interest rate is higher, however if the variable rate were to increase the fixed rate would remain stable so there is no risk.

What is a variable rate mortgage?

Variable rate mortgages, also known as an adjustable-rate mortgage, have interest rates that vary over time. The initial interest rate on this type of loan is set below the market rate compared to fixed-rate. However, the rate may rise or lower as time passes by.

Advantages of variable rate mortgage

  1. The low initial payments can be very attractive for borrowers.
  2. In falling interest rate environments, borrowers can enjoy lower interest rates.
  3. Qualifying for loans is easier with a variable rate.

Disadvantages of variable rate mortgage

  1. Monthly payments may change frequently and significantly.
  2. It can be difficult to plan your budget because of the different amount of monthly payments.
  3. If you take a large loan, you may challenge your budget if interest rates increases.

Which type of loan is fit for you?

You have to consider many things when accessing a loan and getting financing. You have to consider your finances and the job you currently have. You have to ask yourself 'how big a down payment do I need?' Are you able to pay off your mortgage even if the interest rates rise? How large a mortgage payment can you comfortably afford?

The most popular choice among borrowers is the fixed rate mortgage since it gives them security of fixed monthly payments that they can prepare for.

How about you? Have you thought about the type of mortgage you will apply for? Make sure you weigh all the essential factors and seek guidance from trusted professionals.

Importantly when you are looking for a house in Kelowna or researching Kelowna real estate the smart approach is to get a pre-approval from a mortgage broker so you know in advance how much you can spend comfortably.

Home Loans for Self-Employed Applicants

An increasing number of people who are self-employed believe that they can not get a home loan. But, the reality is different. You can get a home loan but you just have to work a little bit harder and pay close attention to the details. Tips to help you get a Home Loan Here is…

An increasing number of people who are self-employed believe that they can not get a home loan. But, the reality is different. You can get a home loan but you just have to work a little bit harder and pay close attention to the details.

Tips to help you get a Home Loan

Here is a list of useful tips to help you when you are trying to get a home loan as a self-employed applicant:

1. Speak to a Professionally Qualified Expert Finance Broker

If you do not work with a professionally qualified expert finance broker, you will have to consider the possibility of wasting your valuable time by running around on your own trying to find a home loan that best meets your needs and circumstances. But, a finance broker will save your valuable time because he / she has complete knowledge of how loan for self-employed applicants work.

2. Establishing your Borrowing Power

In order to know your borrowing power, a self-employed applicant can:

>> Use a Borrowing Power Calculator, or

>> Seek help from a professionally qualified finance broker and know the amount you can borrow from a lender / credit provider.

3. Determining your serviceability

When assessing your eligibility for a home loan as a self-employed applicant, traditional banking institutions will look for consistency of income as they want to see that:

>> You are a business owner or a partner;

>> You maintain a steady income and that your level of income is sufficient to meet their minimum servicing requirements; and

>> Your business has been ticking along steadily and you have been trading in your current business for at least 24 months.

4. Verifying your Income

To confirm your income as a self-employed applicant, traditional banking institutions will require your most recent two years' Personal and Business Income Tax Returns.

However, tax returns are just one example of how you can verify your income. There are alternative ways to show that you can afford a loan as a self-employed applicant, for example:

>> One way is via your Business Activity Statements (BAS). Your BAS shows the turnover of your business' profit. BAS reflects the current status of your financial situation. As it is completed either monthly or quarterly, it is considered to be an applicable source of income verification by other non-bank lenders / credit providers.

>> Another way your income can be verified is to have your accountant speak with a non-bank lender / credit provider so they can confirm with each other the state of your business' financials.

Note : Tax returns are considered to be the most common and traditional form of income verification for self-employed applicants. You should, however, keep in mind that if you verify your income in an alternative way, some non-bank lenders / credit providers may charge a higher interest rate.

5. Compare Home Loans

Take time and do some homework by comparing home loans that are offered to self-employed applicants by different lenders / credit providers as it can be confusing to know:

>> Should you get a variable rate or fixed rate home loan?

>> Should you get a principal & interest rate or an interest-only rate home loan

>> What payment frequency can you consider (ie weekly, fortnightly or monthly)?

>> Can you make additional repayments?

>> Can you have a redraw facility?

>> What fees and charges will be charged on your home loan (eg application fees, ongoing fees and more)?

>> If you decide to repay your home loan sooner, will you be charged an exit fee or an early termination fee?

>> Will your lender / credit provider charge you a break fee for ending a fixed rate loan before the term expires? If yes, how much will you be charged?

6. Other Factors to Consider

Traditional banking institutions may turn you away just because:

>> Your employment status shows you as being self-employed;

>> Being a self-employed applicant, you lack a regular income;

>> You may be unable to provide business financial statements that prove your ability of paying back the home loan; Egypt

>> You may be recovering from a bad credit history which can happen when you are self-employed (ie it may be that the bad credit history was a result of mitigating circumstances beyond your control).

Note : Even if you have an unpredictable credit file, a traditional banking institution can deny you a loan, simply because you are self-employed and you have an unriable income.

Being self-employed, you may have realized on a number of occasions that you have to jump through a number of hoops just to get a home loan from the traditional banking institutions. But, do not lose hope, get in touch with an expert finance broker and get ready to work for obtaining a home loan easily.

Options of Home Loan Refinancing

If you are looking to save money on your mortgage, then refinancing is probably an option that you have considered. Before you take the plunge, you need to research your options to choose the right one for your needs. You will notice that you have two major options when it comes to restructuring your loan.…

If you are looking to save money on your mortgage, then refinancing is probably an option that you have considered. Before you take the plunge, you need to research your options to choose the right one for your needs.

You will notice that you have two major options when it comes to restructuring your loan. The first is the cash-out choice. The second is the rate-and-term option. Of course, there are other reasons to refinance the terms of your mortgage. You could want to get out of an adjustable-rate agreement or eliminate FHA insurance.

Cash-Out Refinancing

This type of funding occurs when you take out a note for more than you owe on the home. While it may not lower your overall monthly payment, it will allow you to pay off other debt. Before you take one of these loans, you should weigh the pros and cons.

Of course, you would be paying off a bill that you would not normally have in addition to the monthly home payment. In essence, though, you are paying that bill as part of your new mortgage note. For something like a high-interest credit card, this means you reduce the overall interest rate. However, you may end up paying more than you would have by simply paying it off using the traditional method.

You also have the risk of turning unsecured debt into secured debt. As with the credit card example, you should have simply missed a payment or two on your card, you would get a lower credit score and some harassment phone calls. However, if you do the same with a mortgage, you could lose your home.

While there are some risks to this method, if you can lower your overall bills and maintain your monthly home payment within a range you can comfortably pay, it could be in your best interest to do so.

Rate-and-Term Refinancing

This is by far the most common type of option used to change loan terms. This option is employed when you take the remaining amount you owe and negotiate new terms for a lower interest rate and the time it will take to repay the note.

When considering a rate-and-term option, you should take into account if it will actually save you money, not just on your monthly payments, but also on the overall repayment amount.

For example, if you are currently paying $ 975 per month on a loan that still has 20 years left to pay, when you are finished, you will have paid $ 232,320 for the remaining term. You can refinance for a lower interest rate and pay $ 668 a month for a term of 30 years. However, you will wind up paying $ 240,480 by the time your loan ends. But if you are able to pay $ 868 over 20 years, you will only pay $ 208,320 in the end.

Refinancing is a great way to save money on your monthly bills and lower your interest rate. You need to look at the overall picture before signing any documents. While it is not something to take lightly, it is something that should be considered heavily.

Is a Reverse Mortgage Right for Me?

In 1960, the average life expectancy in the United States was just under 70 years. By the early 1980s it was around 75, and in 2012 the average hit 79. This trend trend tracks the phenomenal medical advances of the last 50 years. We are living longer, healthier lives, and that's unduly a good thing.…

In 1960, the average life expectancy in the United States was just under 70 years. By the early 1980s it was around 75, and in 2012 the average hit 79. This trend trend tracks the phenomenal medical advances of the last 50 years. We are living longer, healthier lives, and that's unduly a good thing. Our extended lifespans, however, create challenges for retirement planning. The traditional retirement age of 65 was established when the average person was not living past 70. While the retirement age will soon increase to 67, that still leaves around 13 years for retirees to plan and save for. For many retirees, a reverse mortgage can help free up cash to help cover medical costs, pay living expenses, and maintain their property.

Who is Eligible for a Reverse Mortgage?
To be eligible, the youngest homeowner must be 62 or older. You also should have enough equity, roughly 40%, built into the house. You can use the funds to pay down an existing mortgage, but you will not be able to secure a loan if the proceeds from that loan would not cover the existing mortgages.

How Does it Work?
Not surprisingly, it works like a regular mortgage … in reverse. With a standard home loan, you borrow from the bank to buy the property and pay off the balance over time. As you pay off the loan, you are building equity in your home. A reverse mortgage is a loan where the lender pays you, using that built-up equity as collateral.

The payments can be distributed in a number of ways. It can be a line of credit to draw on until the limit is reached, it can be monthly payments over a fixed period of time, or it can be a lump sum. The right disbursement plan depends on what you intend to use the funds for. If you want to use the money to pay for a big home improvement project, a lump sum might be best. If you're using the money to eliminate existing mortgage payments, then monthly installs may work for you. If you need money to cover medical expenses, but are not sure what the total costs will be, a line of credit makes sense.

What about Inheritance?
By drawing the equity out of your property, you will not be able to leave that equity to your heirs. If the value of your house exceeds the loan, your heirs can choose to sell the home to pay off the balance of the loan or pay the loan with other funds and keep the home. If, on the other hand, the debt exceeds the value of the property, your heirs will not be liable for the outstanding balance. Most of the time, there is 'non-recourse' clause which results your heirs from owed more on the home than it's worth.

If you find yourself in a position where your retirement nest-egg no longer covers all your expenses, a reverse mortgage can help free up extra cash to help keep you comfortable in your golden years.

Using Reverse Mortgages To Help Retirement Money Go Further

New research shows that reverse mortgages are an increasingly intelligent way to augment retirement planning. What role should they play for you? New studies reveal that reverse mortgages may be far more beneficial than previously thought. Highly respected professors, economists and financial experts now believe that these tools can play an essential role for all…

New research shows that reverse mortgages are an increasingly intelligent way to augment retirement planning. What role should they play for you?

New studies reveal that reverse mortgages may be far more beneficial than previously thought. Highly respected professors, economists and financial experts now believe that these tools can play an essential role for all retirees. So why have not more advisors been recommending them to their clients? When is the right time to access a reverse mortgage? What are the smart first steps to enhancing your plan?

Why More Financial Advisors Have not Recommended Reverse Mortgages

Individual homeowners know the dilemma all too well. They simply need more money for retirement. For many the bulk of their net worth is in their homes, and they know that their other assets and investments are not providing enough coverage.

MSN Money suggests that in the past advisers have often looked down on these loans as only being for those going into retirement extremely short on funds. Other planners simply have not had the financial motivation. After all; most readily on a commission from assets directly under their own management. Some may not even be aware of the major makeover reverse mortgages have received over the last decade. Fortunately this is changing. New data and better understanding of today's reverse mortgage and credit line options is fueling a complete 180 degree turn in opinion.

The Home Pension – The Data Is In

Experts now believe that we have been looking at the role of housing and home equity all wrong when it comes to retirement and succession planning. Led by Morningstar Investment Management, and its Head of Retirement Research and Senior Research Consultant, we now understand that real estate plays a much larger role in a secure retirement and estate.

Nobel Prize winning economist Robert Merton points out that in other countries that they refer to reverse mortgages as a more appropriate ' Home Pension '. We have gone from a 40 year work life and 10 year retirement, to a 40 year career and possibly a 20 to 30 year retirement. At just 20 years Advisor Perspectives out out that we should be saving 33% of our income during working years. For most this number will be far higher considering a longer retirement is becoming more likely. That's hard when average housing costs in some US metro areas are above 45% of income. MIT and Harvard professor Merton calls this challenge in funding retirement “One of the largest global issues.” Merton points to reverse mortgages as being “ideally suited” to resolving this challenge.

Robert Powell of the Wall Street Journal's MarketWatch points to new research studies backing up Merton's statements, and providing more insight into the best strategy for leveraging a 'home pension' . Professor of retirement income at the American College of Financial Services in PA, Wade Pfau, says Strategic use of a reverse mortgage can improve retirement outcomes,” and can be used “to protect your retirement income.” Specifically Pfau notes that “Even for wealthier clients, home equity is still a significant asset which should not automatically be lumped into a limiting category of last resort options once all else has failed.”

Incorporating Home Equity into a Retirement Income Strategy

Reverse mortgages can be strategically used to offset any shortcomings of other retirement income sources. Those that suffer down years in their stock and mutual fund accounts can augment income without destroying their nest egg. Or a mix of both reverse mortgage income and yield from other investments can be used to provide a better quality of life during retirement. Summarizing his findings Wade Pfau says “opening the line of credit and the start of retirement and then delaying its use until the portfolio is depleted creates the most downside protection for the retirement-income plan.”

Affording Your Home

Statistics show that 50% of individuals use reverse mortgage proceeds to cover home improvements and maintenance. Many overlook these expenses in retirement planning. Yet, even if you have held a home for 30 years and paid off your original mortgage, you'll probably need a substantial budget to keep that home livable later in life.

Many Realtors have recently been targeting older homeowners with equity in their homes; encouraging them to list their properties for sale, and downsize. This may be a great service for some, but a reverse mortgage can provide more options. Many retirees would prefer to stay in their family homes and remain independent. Reverse mortgages can provide that option. Offers can be used to cover repairs, upgrades, and even in-home healthcare so that homeowners can stay in place, near friends, and have space to entertain the grand kids.

Thanks to flexible lines of credit, and non-recourse status of this loan, this does not have to mean leaving debt behind. In fact; it can aid in leaving a more profitable and easy to manage legacy.

How You Can Learn to Predict Mortgage Rates, Too

How you can learn to predict mortgage rates, too. Many people, particularly, first-home buyers, tend to shop around for the cheapest mortgage rate that they see not knowing, or understanding, that these rates dip and fall. If you get an understanding of how mortgage rates work, you will be in a far better position to…

How you can learn to predict mortgage rates, too.

Many people, particularly, first-home buyers, tend to shop around for the cheapest mortgage rate that they see not knowing, or understanding, that these rates dip and fall. If you get an understanding of how mortgage rates work, you will be in a far better position to land one that really works for you and may even be cheaper than the one you're ready to commit to, say, today.

Here's how mortgage rates work.

The firs thing you should know about these rates is that they are unpredictable. They change. A high rate today may be low tomorrow. At one time, these rates were more stable. They were set by the bank. But since the 1950s, Wall Street took over and adjusted them according to supply and demand. Or more accurately, Wall Street linked them to bonds. So that when bonds – that are bought and sold on Wall Street – drop, mortgage rates do, too.

How can I know today's bonds rates?

It sounds simple: let's keep up with the prices of bonds and we'll know when to shop for our mortgage. Unfortunately, only Wall Street has access to this knowledge (called “mortgage-backed securities” (MBS) data). And they pay tens of thousands of dollars for access to it in real-time.

Here's how you can make an educated guess:

Calculate according to, what's called, the Thirty-year mortgage rates.

These are the events that lower rates in any given 30 years:

  • Falling inflation rates, because low inflation increases demand for mortgage bonds
  • Weaker-than-expected economic data, because a weak economy increases demand for mortgage bonds
  • War, disaster and calamity, because “uncertainty” increases demand for mortgage bonds

Conversely, rising inflation rates; stronger-than-expected economic data; and the “calming down” of a geopolitical situation tend to elevate rates.

The most common mortgages and mortgage rates

You'll also find that mortgages vary according to the level of your credit rating. The higher your credit score, the more likely you are to win a lower mortgage rate.

Mortgage rates also vary by loan type.

There are four main loan types each of which has a different level of interest. In each case, this level of interest hinges on mortgage-secured bonds. The four loan types together make up 90 percent of mortgage loans owed out to US consumers.

Which mortgage loan do you want?

Here is the list:

1. Conventional Mortgages – These loans are backed by Fannie Mae or Freddie Mac who have set regulations and requirements for their procedures. The Fannie Mae mortgage-backed bond is linked to mortgage interest rates via Fannie Mae. The Freddie Mac mortgage-backed bond is linked to mortgage-backed bonds via Freddie Mac.

Mortgage programs that use conventional mortgage interest rates include the “standard” 30-year fixed-rate mortgage rate for borrowers who make a 20% downpayment or more; the HARP loan for underwater borrowers; the Fannie Mae HomePath mortgage for buyers of foreclosed properties; and, the equity-replacing Delayed Financing loan for buyers who pay cash for a home.

2. FHA mortgage – These are mortgage rates given by the Federal Housing Administration (FHA). The upside of these loans is that you have the possibility of a very low downpayment – just 3.5%. They are, therefore, popular and used in all 50 states. The downside is that the premium is split in two parts.

FHA mortgage interest rates are based on mortgage bonds issued by the Government National Mortgage Association (GNMA). Investors, by the way, tend to call GNMA, “Ginnie Mae”. As Ginnie Mae bond prices rise, the interest rates for FHA mortgage plans drop. These plans include the standard FHA loan, as well as FHA specialty products which include the 203k construction bond; the $ 100-down Good Neighbor Next Door program; and the FHA Back to Work loan for homeowners who recently lost their home in a short sale or foreclosure.

3. VA mortgage interest rates – VA mortgage interest rates are also controlled by GMA bonds which is why FHA and VA mortgage bonds often move in tandem with both controlled by fluctuations from the same source. It is also why both move differently than conventional rates. So, some days will see high rates for conventional plans and low rates for VA / FHA; as well as the reverse.

VA mortgage interest rates are used for loans secured by the Department of Veterans Affairs such as the standard VA loan for military borrowers; the VA Energy Efficiency Loan; and the VA Streamline Refinance. VA mortgages also offer 100% financing to US veterans and active service members, with no requirement for mortgage insurance.

USDA mortgage interest rates – USDA mortgage interest rates are also linked to Ginnie Mae secured-bonds (just as FHA and VA mortgage rates are). Of the three, however, USDA rates are often lowest because they are guaranteed by the government and backed by a small mortgage insurance requirement. USDA loans are available in rural and suburban neighborhoods nationwide. The program provides no-money-down financing to US buyers at very low mortgage rates.

Mortgage rates predictions for 2016

Wondering what your chances are for getting a mortgage for a good rate the coming year? Wonder no further.

Here are the predictions for the 30-year trajectory:

  • Fannie Mae mortgage rate forecast: 4.4% in 2016)
  • Freddie Mac forecast: 4.7% Q1 2016, 4.9% Q2 in 2016
  • Mortgage Bankers Association (MBA) forecast: 5.2% in 2016
  • National Association of Realtors (NAR) forecast: 6% in 2016.

In other words, mortgage rates are projected to rise slightly in 2016.

How Do I Know If a Reverse Mortgage Is a Good Idea for Me?

How do I know if a reverse mortgage is a good idea for me? That is a good question. Unfortunately, too many people rush into getting one and regret it later. This kind of loan can reverse your life for the better or toss it down the chutes. To know more and to see whether…

How do I know if a reverse mortgage is a good idea for me?

That is a good question. Unfortunately, too many people rush into getting one and regret it later. This kind of loan can reverse your life for the better or toss it down the chutes. To know more and to see whether you qualify – read on …

What is a reverse mortgage?

A reverse mortgage is a special type of loan that allows older homeowners to borrow against the equity (assets) in their homes. It is called a 'reverse' mortgage because instead of making payments to the lender, you actually get money from him (or her). The interest added to this loan naturally accumulates as the months go on until the amount of this loan soon equals the amount of equity that your home is made up of (or correspond to). So, for instance, the loan amount may have grown to a boggling $ 10 billion which is precisely the value of your home. Not everyone is eligible for this loan.

How do I know if I am eligible?

Age matters. You have to be at least 62 years old to quality. Your home must be your primary residence and then you must have paid off some, or all, of your traditional mortgage. There are limits to how much you can borrow so if you owe too much (or beyond a certain amount) on your traditional mortgage, you may be ineligible. Your reverse mortgage, too, goes towards paying off the original mortgage – that is, if you're in arrears.

What do I do to get this reverse mortgage?

The steps are very simple. The Federal Housing Administration (FHA) offers these type of loans through its Home Equity Conversion Mortgage (HECM) program. Its lenders – or councilors – must be approved by the Department of Housing and Urban Development (HUD). You meet with one to discuss how the loan works and how much it will cost you. The counselor will check your home to see whether it is properly managed for you to qualify for this loan.

Facts I should know before getting this reverse mortgage?

Certainly! The reverse mortgage basically means that you are selling your home off to anyone else, so the moment you move out or die, anyone else living in that house -even spouse or close family members – are naturally evicted too. You can avoid that by signing this person, or people, on as co-borrowers – as long as they are at least aged 62.

Know, too, that the Consumer Financial Protection Bureau advises that you think long and hard before entering into such a loan. Rather than using up your home equity, see if you qualify for a state or local program to lower your bills. Or maybe downsize to a more affordable home. Home equity is often the last resource to turn to a financial emergency, but it may be advisable to speak to both a qualified housing counselor and a trusted financial advisor so that you make the right decision.

Other facts to consider before applying

Are you on a fixed income? If you have little income coming in, you may find yourself in trouble later with being unable to repay the loan. In that case, you may have trouble paying your property taxes and homeowner's insurance, and you could face foreclosure.

Another thing you should consider is whether you have children or heirs that you want to leave your property to. Taking out a reverse mortgage can jeopardize your ability to leave your home to them. (Either they or you will be too happy!)

Secondly, consider the amount of time that you want to continue staying in that home. Such a loan only makes sense if you plan to live in your current home for a long time. This is due a reverse mortgage requires you to pay insurance premiums in case your loan balance grows to be more than your home is worth. If you only stay in your home for a short time, you'll be paying for insurance that you do not need and the loan balance is less likely to grow to more than your home value.

Reverse mortgages can also have high upfront costs. If you sell your house within a few years, you will not have gotten as much benefit from those costs than if you stayed in your home for a longer time.

How much does it cost to get a reverse mortgage? (And other money issues)

You'll pay different depending on the type of mortgage you choose. So shop around. Also plan beforehand on how you're going to complete your property taxes and homeowner's insurance. You do not want to lose your home or be forced to move out.

In short, consider this: Have you thought about downsizing? How about selling your home and using your money from the sale to buy a more affordable one, you could be more financially secure in the long run. That may serve you better than going into the hassle of getting a reverse mortgage …

Choosing Between Fixed and Floating Rate Loans in This Economic Climate

Getting a housing mortgage loan is quite easy, but is it easy to choose which package to go for 20 years? The fixed interest rate is tempting while the floating interest rates are scary. Which one is best for you in this present economic climate? Fixed interest rate Fixed bank rate reiterates to the fixed…

Getting a housing mortgage loan is quite easy, but is it easy to choose which package to go for 20 years? The fixed interest rate is tempting while the floating interest rates are scary. Which one is best for you in this present economic climate?

Fixed interest rate

Fixed bank rate reiterates to the fixed equal installments over the life of the home loan. The interest are served / paid during the early part of the monthly payments. The principal is served in the later parts of the tenure.

One of the greatest benefits is the fixed interest rate you enjoy regardless of the market conditions. If you want to budget ahead, you may want to have a fixed monthly schedule because it brings more certainty and security for you.

Being fixed, it does not provide you a lower interest rate in case the market interest rate decrees at any point in time. The fixed interest rate usually is 1 to 2.5% higher than the floating rate. Choosing the fixed interest rate is good when you can predict a rise of the interest rates in the coming years.

Floating bank rates

Floating bank rate varies depending on the market conditions. Although it is cheaper than the fixed rate, it can be surprising at times if it increases along with the changing market conditions. However, the fluctuation can be for shorter periods only.

With the floating bank rate, you can potentially pay off your principal faster even if you keep your repayments at the same amount whenever the interest rates go down.

Procedures in purchasing a land or property in Singapore

You can choose the Option to Purchase or Initiate a Sale and Purchase Agreement. The contract can be made by the exercise of an Option, both parties (buyer and seller) signing an Agreement, or by correspondence. Most contracts that are silent on certain points will automatically follow the provisions of the Singapore Law Society's Conditions of Sale 1999, which is usually incorporated in the terms and conditions.

Most banks offer the fixed, variable, and market pegged rates. The fixed bank rate does not allow prepayment. If you choose to prepay, then there is a big likelihood you are going to incur penalty. The variable and the market pegged loans allow full settlement and prepayments without penalty.

Which is which? Floating rate or fixed rate?

Most banks give a fixed rate in 2 or 3 year time frame. Rarely would a bank extend its fixed rate up to 5 years nowdays. If the rate would be much higher after the fixed rate term, then you need to find a refinancing package.

Subject to the fluctuation of the SIBOR rate and of the stability of your income, you can choose the floating rate after your fixed rate expires. Depending on how much you owe your bank, a difference of 1% can already save you much dollars. I would prefer you choose the floating rate, which is typically a 1% lower than the fixed rate.

Low Deposit Home Loans – Buy a Property Without Adequate Cash Deposit

Are you one of the many people who: – Are a first-time home buyer and do not have adequate deposit to buy your first property? – Are a current home owner, but do not have adequate cash deposit to buy another property? Egypt – Are retired and wish to downsize from the family home you…

Are you one of the many people who:

– Are a first-time home buyer and do not have adequate deposit to buy your first property?

– Are a current home owner, but do not have adequate cash deposit to buy another property? Egypt

– Are retired and wish to downsize from the family home you have lived in for 45 years, but have no cash reserves?

If you fit into any of the above situations and you want to buy a property, you may have recognized that:

– It can be frustrating to find a suitable home loan; and

– Major banks and some lenders have introduced strict constraint criteria, since the GFC (Global Financial Crisis).

Interestingly, it does not have to be frustrating to find a suitable home loan, as there are still some lenders / credit providers who offer low deposit home loans. But, the key to finding the right low deposit home loan will come down to knowing which lender / credit provider can provide a suitable low deposit home loan solution that will cater to your particular situation.

If you are looking for a low deposit home loan, here is a list of options you can consider:

Note: Whatever option you decide to choose, will depend on what the “vendor” (seller) is prepared to accept.

Option 1 – 5 Percent Cash Deposit

There are still a number of lenders / credit providers that offer low deposit home loans. They will allow you to borrow up to 95 percent of the Loan-to-Value Ratio (LVR) of the security property. However, given the high LVR, they will be looking closely at your capacity to repay the home loan. So, you will need to:

1. Demonstrate a strong and stable income; and

2. Show at least some genuine savings.

Option 2 – Deposit Bond

Many home buyers do not have the ready cash to pay a deposit of 10 percent of the purchase price of a property. In such a situation, a deposit bond can be of help. It is a guarantee to the vendor, by an insurance company, that the vendor will receive 10 percent deposit.

How does a Deposit Bond work?

By taking out a deposit bond, the home buyer is taking out an insurance policy. The policy tells the vendor that the insurance company will pay 10 percent deposit to him.

Where can a Deposit Bond be used?

A deposit bond can be used as an alternative to a cash deposit. If the deposit bond is used properly, it will be of benefit to all parties involved in a real estate transaction (ie the vendor, the home buyer and the real estate agent). In fact, no money actually changes hands. Instead, all purchase funds are paid in full at settlement, and the deposit fund simply lapses after settlement. Some examples of where a deposit bond can be used are:

– You need a 10 percent deposit, but you only have a 5 percent deposit, and you have been approved for a home loan of 95 percent of the purchase price of the property;

– You have a deposit available, but your funds are tied up in shares or managed funds, and you do not want to liquidate immediately; Egypt

– You are selling one property and purchasing another property, and you do not have a 10 percent cash deposit.

Option 3 – Bank Guarantee

Another option for you to consider is guarantor home loan. It has the potential to help you save thousands of dollars in Lenders Mortgage Insurance (LMI). It is a type of home loan in which another person (such as a parent) puts up their own property as security. It will enable you to borrow up to 10 percent of the purchase price of the property, without needing a deposit.

Normally, if you borrow more than 80 percent of the property value, you are required to pay LMI to the lender / credit provider. So, if you choose to use a guarantor home loan option, then be sure that the LMI premium is waived.

Seek Assistance from Expert

With so many different lenders / credit providers to choose from, you can seek help from a professionally qualified and licensed finance / mortgage broker to do all the leg work for you. He / she will:

– Negotiate with lenders / credit providers on your behalf to arrange a low deposit home loan that best suits your needs and situation;

– Manage the loan process right through to settlement and be there for you at post-settlement;

– Find out your eligibility for the First Home Owners Grant (FHOG) Scheme;

– Explain the process of the FHOG application to you; and

– Help you to determine your overall serviceability position.

Do not worry if you want to buy a property without adequate cash deposit. Simply take help of a licensed finance / mortgage broker and make a quick purchase.