Fixed or flexible rate?

A flexible rate mortgage allows the borrower flexibility in times but a fixed rate might not be the best choice.Variable rate mortgages have normally been a better option for the consumer for more than last 10 years. The interest rate was formerly calculated at an ongoing foundation at prime minus a set percentage. The Flexible Rate Mortgage changed from a Prime Minus offering to a Prime Plus offering because of the credit markets and other reason is the US Credit Crisis in 2008. Availability of funds has become limited and less, to battle with the crisis of scare credit and to constrict the belt slightly, Prime Plus has become the new standard.Prime rate is the best rate which bank offers to their most credit worth client.If you take an example of Canada if the prime lending rate is about 3.50 cent, the owner of prime plus 0.55 per cent mortgage will pay almost 4.05 per cent interest rate .

In the fixed mortgage rate monthly payments of the borrower to the bank or lender remain same for the duration of a loan. The interest rate and certain amount will be given to bank monthly in fixed basis .The most duration of fixed mortgage rate are for 1, 3 and 5 years . The benefit of fixed rate mortgages is that you know accurately how much your mortgage payments are left and whether rates rise or fall. This makes you easy to schedule your budgeting and it is less risky than variable rate mortgage.In a fixed mortgage rate you know accurately how much you have to give monthly but in flexible mortgage rate you give the money which you have left. Mostly flexible mortgage rates are for very long time period because you don’t give exact amount every month. Some times your expenditure increases too much that you skip one of the installment and plan to give in to another month. It is easy for you but the major disadvantage is that the duration of mortgage increases.

The flexible mortgage rate has becoming very popular in the markets of United Kingdom. Many people don’t understand still that what a flexible mortgage is and why it suits their situation. Basically it gives a greater control over managing your finance. Flexible mortgages allow borrowers to pay extra amount when they have some extra money to spend a flexible mortgage also offers borrowers to not pay if they are going on holidays or if they have any financial problem.A flexible mortgage suits the people which have flexible income resources. People who are with flexible income may get a big cheque one week and then nothing for many weeks. Some people like from sale departments who are taking their fixed salary with commission, and the people who earn bonuses can take this type of mortgage.Both types of mortgage have advantages and as well as disadvantages. Every one has its own different circumstances so you should choose mortgage plan according to your income and flexibility.With so many investors and purchasers soon reaching the end of the fixed rate mortgage deals that they entered into two years ago, the remortgage market is looking as buoyant as ever. Although there may be plenty of options out there, the financial climate has changed somewhat since these fixed rate deals were initially offered and many owners may find themselves facing a huge and often unmanageable jump in payments.

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How much house can I afford?

How can I figure out how much of house payment fits into my
budget? That is a common question that many people want answered. When it comes
to buying a house, it is very important to make sure that you don’t strain when
making your monthly payments. You need to do your calculation well to ensure that
your monthly house payment fits into your budget. But the big question is; how
can you do that? In this article, we are going to answer that question by
telling you the factors that you need to consider.

1. Add all your income

In order to know how much you can comfortably afford to make
your monthly house payment, the first thing that you need to do is to add all your
income to know exactly the amount of money that you earn each month. It is very
difficult to come up with a budget if you don’t know how much you can spend.

2. List down all your expenses

Once you add every source of income that you receive each month,
the next crucial step is to list all your monthly expenses. You need to know
how much you spend on rent, food, clothing, utilities, transportation, recreation,
medical, personal among another things. Knowing how much you spend on expenses is
vital because it will help you know how much money you will remain with.

3. Calculate the cost of home ownership

Once you know the exact amount that remains after you have
deducted all your expenses, the next important step is to calculate the cost of
home ownership. If you cannot pay cash for your home, it is recommended that
you ensure that you keep your mortgage payment including home insurance and property
taxes to not more that 25% of the amount that you earn each month. If you
exceed that amount then you will strain yourself and you may end up delay making
your monthly payments at some point.

4. Consider future expenses

This is a very important factor that many people usually
overlook. When figuring out how much of house payment fit into your budget, you
also need to consider future budget that will increase your expenses. For
instance, if you are still single, you must put into consideration the fact
that you will get married at some point and get children. This will increase
your expenses. Or at some point you may want to update the look of your homes hardwood floor refinishing birmingham al. Ensure that you accommodate future expenses into you budget to avoid struggling to make house payment in future.

5. Consider your lifestyle

This is also a very important factor that many people don’t
play close attention to. It is crucial to
consider how your personal lifestyle affects your ability to make monthly payment.
Lifestyle choices that you make will affect your ability to make your monthly
house payment. For instance, if you decide to take your child to a private school,
that is an added expense that can affect your ability to make your payment. Also depending on the space in your new home you may have to look at self storage.

In conclusion, if you want to know how a house payment fits
into you budgets, it is very important to know your monthly income, your total monthly
expenses, future expenses and your lifestyle.

What to know before you go

You finally have a steady job that allows you to consider purchasing a home. Your friends and colleagues have all done it and now you are thinking of going in that direction too. It seems that a quiet, suburban lifestyle could be the thing that will suit you, but how can you be sure that this is the right thing for you? Ask yourself if you are really ready to buy a house? You are looking for the best time to do so, but every evening you hear about the rising real estate prices.

So, before you get in a hurry to go out and immediately get a loan for the purchase, you should sit down and take some points into consideration because, with the amount of money that is involved in such a purchase, everything should be considered before any steps are taken.

If you are in a job that requires you to regularly shift or you cannot be sure where you will be in the near future, then buying a home is not the best idea. You will have to sell your home soon, which can cause a severe loss for you.

Are you buying the house for residential purposes or to fix it up and sell it for a profit? If it is the latter, then remember that prices do tend to dip at times. So, purchase a house that you do not mind living in for any amount of time until the rates are best suited for selling.

You should also consider all the factors and payments that will be included in your purchase of the home. Many times buying a home will be much affordable for you, as opposed to renting a home. If you feel that buying a home will be better for you than renting a property, then it could be a good decision for you.

Owning a home is not just a financial decision, but it is also a highly personal choice. If you are purchasing a property, then you must look at it as the residence for you and your family. If you can actually visualize you and your family living in that home, then purchasing it will definitely be a good choice. Make sure that purchasing the home is just what you want. If the choice is not made on your own, then you could end up feeling quite frustrated by your purchase.

Buying a house involves becoming a part of the community that
surrounds it. Invest time to explore the area together. Visit during
various times of the day and evening; meet those who live nearby; and
note the proximity of malls, schools, and restaurants near the home.
Then, discuss whether you and your partner like the community, and will
be happy living in it.

Buying a home will also require you to make a lot of changes in your lifestyle. Not only will you have to reduce expenses to accommodate the mortgage payments, but also you will have many sacrifices to make. So, choose wisely and make sure that this decision is carried out after a lot of thinking.

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