Ditech : The Advantages Of A Fixed Rate Mortgage

The major advantage of a fixed rate mortgage is that it presents a predictable housing costs for the life of the loan. A fixed rate mortgage guarantees that your interest rate stays the same, which means that your monthly principle and interest payments through the entire term of the mortgage remain unchanged. With a fixed rate mortgage, your monthly payments would only increase due to increases in property taxes or insurance rates.

A fixed rate mortgage allows you to budget accurately and enjoy lasting peace of mind. Knowing that your mortgage payment will remain the same month after month allows you to plan for lifes other pleasures, like vacations, college educations and retirement. It's pretty simple, if you don't like risk, then a fixed rate mortgage is right for you.

If the interest rates rise above the fixed rate on your mortgage, you will see the real benefits of the fixed rate mortgage. You can use a Fixed Rate Mortgage to finance primary residences, second homes or investment property, or to refinance your current mortgage. You always know that no matter what happens with interest rates, your payments won't change if you've used a fixed rate mortgage.

In general, fixed rate mortgages are seen as the safer alternative to an adjustable rate mortgage. An ARM is considered riskier than a fixed rate mortgage because your payment may change significantly. If you have an ARM, it may be best to lock in a fixed rate mortgage now, in advance of your current loan adjustment.

Ditech : What Is An Offset Mortgage

The offset mortgage is a type of mortgage in which the borrower can use their savings account to offset the mortgage interest. The mortgage interests are substantial amount especially at the start of the mortgage.

Using the interest on savings account, the borrower uses pay off the mortgage interest. In other words, the interest on savings account cancels out the mortgage interest that the borrower pays on a conventional mortgage.

The offset mortgage originally started from Australia. Later, the offset mortgage rises in popularity in the United Kingdom. Before, the mortgage lenders only target the wealthy. Now, the mortgage lenders are widening the market for this type of mortgage.

Since the borrower receives no the interest on savings account, the borrower do not pay the tax on interest on savings account. Naturally, the interest on savings account will be use to pay off the mortgage interest. In United Kingdom, many borrowers are on a high tax bracket. The borrower often sees the forty percent of the interest goes to tax.

In many times, the borrower pays a loan to value ratio of ninety five percent. That means the borrower pays five percent as down payment. Due to competition, many mortgage lenders may offer as low as loan to value ratio of eighty percent.

The interest on savings account is big enough that many mortgage lenders may offer to repay any amount without mortgage penalty. In a conventional mortgage, the borrower pays mortgage penalties on any repayment over the maximum limit to repay the mortgage early.

Usually, the mortgage lenders link the mortgage and savings account into a single account. Therefore, the borrower sees only one balance. This is more commonly known as Common Account Mortgage (CAM). For example, the borrower takes $300,000 mortgage. The borrower uses the savings account that is worth $100,000 to offset the mortgage interest. In return, the borrower only pays interest on $200,000.

The variation of offset mortgage is increasing in numbers due to compete with other mortgage lenders. For example, the mortgage lenders may allow any debts into the account. In short, the borrower can include the personal debt like credit card, and car loan.