How To Choose Between a Variable or Fixed Rate Mortgage

The difference between fixed and variable rate mortgages has narrowed over the last few years. Fixed rate mortgages have the advantage of peace of mind, as the payments are fixed monthly. However, their rates have also been steadily increasing in recent years. In comparison, variable rate mortgages tend to be lower in their rates, but also include additional risks. As a result, determining which to go with can provide a nerve-racking and daunting task. Here, we will help you choose between a variable or fixed rate mortgage by assessing your risk tolerance, lifestyle, and income.

Rewards vs Risk

As mentioned, variable rate mortgages, which also go by the names adjustable rate mortgages, tend to entice prospective homeowners with their lower base interest rates when compared to fixed-rate mortgages. However, the initially lower interest rates also have their drawbacks, as interest rates are subject to change without notice. As a result, volatile market conditions can cause interest rates to rise exponentially, placing a greater financial strain on buyers who aren’t prepared to absorb the additional costs.

As a result, you need to determine whether or not you can afford a possible interest rate increase in the future before deciding which choice is better for you and your family. For instance, if you think you’ll be able to afford a sudden 2% increase in interest rates, then a variable rate mortgage may be the right choice. To better determine which option will suit you, you need to assess your current income and potential future earnings. If your current job has room for advancement then you may be able to whether any interest increase storms in the not too distant future.

Mitigating Risk

You can actually take advantage of a variable rate mortgage while also mitigating some of the risk by fixing your monthly payments at an amount that is higher than the required minimum payment. In other words, if you simply make the minimum monthly payments then a variable rate mortgage may not be right for you, as you may be unable to take the hit of a marketed interest rate increase in the not too distant future.

This is why many financial advisors recommend that borrowers set their payments at the current 5-year fixed rate. This will allow borrowers to have a buffer in the event that rates rise in the future. In addition, they will be able to benefit from the lower variable interest rate as they will be able to allocate more of their payments in order to pay down the principal.

In other words, you’ll be able to benefit from your prepayment privileges while also staying ahead of your amortization payments. Another advantage is that you’ll be able to lock in for the remainder of the term in the event that interest rates do rise, essentially providing you with the best of both worlds.

Understanding Market Volatility

It doesn’t really matter whether you have a dozen doctorates in economics and finance or just a high school diploma. Trying to determine the ebbs and flows of interest rates is virtually impossible. Some borrowers may opt to stick with a variable rate mortgage when interest rates are low and then switch to a fixed mortgage rate when they notice interest rates start to increase.

However, most financial experts advise against this strategy due to the volatility of the market. The safe bet is to think of your long-term financial goals and needs. That is, if you think you will save more money on average over the long-term by going with the initially lower interest rates of a variable rate mortgage, then chose it.

Analyzing Conversion Rates

If you are currently under a variable mortgage plan then check to see the conversion rates, as well as whether or not you can convert it to a fixed rate at any time. If you can convert at any time with your current plan then find out the interest rate you would obtain if you were to switch out for a fixed mortgage option. Also, don’t just settle for the posted rate. That is, the posted rate may be 5.69% but a little sleuthing may help you obtain a lower fixed rate, such as 3.69%

Opt-In for the Popular Choice

Many Canadians end up choosing a fixed 5-year term when deciding on which mortgage scheme to go with. Also, the drop in rates, as well as the narrowing of the spread between variable mortgages and fixed rate mortgages, have only made choosing a fixed rate mortgage plan even more appealing to many Canadians.

The general rule of thumb is that when fixed-rate interest rates are within a point of their variable rate counterparts, then going with fixed is the way to go. As of this writing, the differential was within 1 percentage point. Many young families with children opt for the fixed mortgage option because it is the safer bet. Having a fixed rate means that families can budget easier and more effectively and plan for the length of their mortgage term. If you are the type of person who always chooses an extended warranty plan when you purchase a new gadget or appliance then it recommended that you choose a fixed mortgage option for that additional peace of mind.

Don’t Decide Alone

Deciding on whether to go with a fixed term mortgage or a variable term mortgage is not an easy task, and should not be taken lightly. Volatile market conditions and an uncertain job market can prove dire for some first-time homeowners, so your best bet is to plan a meeting with your financial advisor to determine which option is best suited for your unique needs. They will be able to better assess your finances, your future goals, both career and family in order to recommend the best mortgage solution for you and your loved ones.

For more more information about choosing the right mortgage for you, call Northwood Mortgage on +1 (888) 495-4825 or contact us here.

source: northwoodmortgage.com

Everything You Need To Know About Mortgage Pre-Approval

Getting pre-approved for a mortgage is always good news for prospective homeowners. Unfortunately, many of them tend to mistake pre-approval for actual approval. Hence, it comes as a shock to many of them when they get turned down for a mortgage. Pre-approval is not the same as a final approval, so it is important that you appreciate the difference when looking to secure a mortgage.

Your pre-approved figure may not be your actual figure

It is fairly easy to get pre-approved for a certain amount; that is because lenders often don’t ask for extensive documentation in the pre-approval process. The pre-approval figure is merely an estimate of how much the lender could potentially give. The actual amount is only given after a thorough examination of the property in question and the financial status of the homebuyer. In the end, the amount the prospective homeowner qualifies for might not match the value of the house.

Pre-approved rates are not necessarily the best

Statistics show that most homeowners don’t end up taking the mortgage they were pre-approved for. Pre-approved rates are often slightly higher than the market rate, and this is assuming that you are pre-approved. It is best to check rates 30 days before closing, as they tend to be slightly lower than the market rate.

Your financial situation is crucial

Many lenders pre-approve you without asking for details about your financial situation. However, this will change when it is time for a formal approval. It is only when the lender gets a better idea of you financial situation that they will determine that you can get a mortgage at the pre-approved rate.

The property itself is important

Your financial situation is not the only thing lenders take into consideration. The property itself is also a big factor in whether you get the mortgage. The property might be overpriced, or it may belong to a certain category of buildings that the lender doesn’t approve for.

Pay attention to features

Pay attention to all the features that come with a pre-approval, such as rate holds, discounts, and penalties. Also, choose lenders that have a thorough vetting process for pre-approval. This way you will less likely end up with surprises in the end.

Getting pre-approved is useful, but it is not a guarantee of anything. It is actually quite possible to get a good mortgage without pre-approval. The best way to take advantage of pre-approval is to make sure you have your own finances in order and do as much shopping around as possible. For more information on pre-approval, contact us today.

source:  northwoodmortgage.com

Should You Negotiate Your Mortgage?

Finally thinking about joining the homeowner club – negotiation is a key trick of the trade when it comes to mortgages. If you know the power of negotiation, you will save yourself a lot of hassle, money and time in the end.

Becoming educated on the home buying process and the financial aspects of it, can give you the upper hand. Remember the lenders are competing for your business, you don’t have to just settle for what you can get, you can get the best if you know your stuff.

3 Tips to help you negotiate your mortgage

• Calculate your finances.
It’s important that you are fully aware of your finances. Know your credit score and how much money you have in the bank. If you have a high credit score, try to maintain it. If your credit score is on the lower end, speak with your financial agent to find out the best way for you to improve it. Your finances play a major role in the amount of money you will be offered by lenders and if you are confident with your finances, you will make a better negotiator. Use a mortgage calculator to check out payment and interest options.


• Shop around – visit different lenders and listen to their offers.
Be prepared to visit a few lenders to find the best deal for you. They should lay out all of the information in a clear and concise way, so you will be able to understand 100% of what they are offering.


• Don’t make any impulsive decisions.
Think of the big picture – don’t rush it. Take time to think about the offers and what looks the most attractive to you.

There are many mortgage terms that lenders are usually willing to negotiate, but two of the main ones are:

1. The Amortization Period
Let’s start with what the amortization period is on a mortgage: it is the period of time it will take to repay your debt (mortgage) in installments on a regular fixed schedule. The amortization period makes a huge difference when it comes to your mortgage payments and the amount of interest that you will pay on the mortgage life.


2. Interest Rates
These rates vary but lenders are able to offers some customers ideal rates.

Speak with one of the experts at Northwood Mortgage to find the best mortgage for you.

source: northwoodmortgage.com

Malaysia's iMoney sees more Pinoys doing financial search online

Expectations of more Filipinos using the internet in search of financial products as the economy grows prompted Kuala Lumpur-based Intelligent Money Sdn. Bhd. (iMoney) to unveil a Philippine counterpart online.

“We have seen penetration rates of about 7.5 percent [for financial related queries] in more developed countries of South East Asia, which leads to the conclusion that the internet search volume will increase in the Philippines over time,” Ching Wei Lee, iMoney chief executive officer, said in an e-mail interview Thursday. 

“It is time to put focus on finances and what better time to introduce it other than when the economy is on an upswing,” he added.

Financial related queries in the Philippines vary depending on the product, Ching noted.

“A good example would be the search per month for credit cards which totaled 487,500 searches equivalent to 1.43 percent of the Filipino Internet population,” he said.

Providing unbiased comparisons among financial institutions products would help consumers choose the best goods and prompt corporations to improve service, Ching said.

“Banks are understandably partial to their own products. The consumer of today needs information that does not side and affiliate with any bank,” he noted, saying iMoney uses earnings from onsite advertising and referral fees to bankroll its free service.

“Traditionally, consumers have often been at the losing end in a typical bank-consumer relationship,” Ching explained.

iMoney Philippines, www.imoney.ph, is a consumer financial portal offering comparison services for credit cards, personal loans, mortgage loans, savings accounts, time deposits and travel insurance offered by major banks and insurance entities of the Philippines.

Intelligent Money runs Malaysia's largest comparison website for financial services and oversees $40 million worth of banking products transacted over its website monthly.

iMoney recently launched a portal for Singapore and Indonesia. — VS, GMA News

source: gmanetwork.com

Saving money on your personal injury claim

If you have suffered a personal injury that was not your fault, then making a personal injury claim could be a wise move, especially if the injury has left you struggling financially.

There are a number of companies offering to help people to effectively make such claims meaning that, if you want to make a personal injury claim, you will have to think very carefully about which company you should turn to in order to save as much money as possible during the personal injury claims process. Thankfully, this post can help you to do just that.

• Use an online compensation calculator – Before you even start making a personal injury claim, you can see how much money you could gain through a successful claim by using an online tool that cites possible compensation amounts for different body parts.
• Get free claiming advice – You don’t necessarily have to pay for reliable advice on making a personal injury claim, as some solicitors’ firms offer it freely over the phone. They can provide tailored advice after you ask them a question and they consider your case.
• Choose a personal injury compensation solicitor – Avoid using the services of a solicitor with generic legal experience. Instead, to save money, you should opt for the services of a solicitor with specialist experience in helping people to make personal injury claims.
• Choose a direct claim solicitor – Whenever possible, opt for the services of a direct claim solicitor, as they will not have to pay insurers, brokers and accident management companies and so can pass on savings to you.
• Choose a solicitor who can offer cash alongside compensation – You should consider one of the solicitors who offer cash along compensation to clients they have won cases for. Such solicitors are able to do this by cutting out middlemen.
• Choose a solicitor with considerable experience – Choosing a solicitor with at least five years’ experience should increase your claim’s likelihood of success.

source: bripblap.com

4 Personal Finance Resolutions This New Year For A Secured Future

The year is coming to an end; it’s time to take stock of our accomplishments in the past one year, especially with our finances, and plan ahead and set goals for the next one year. Usually at this time, people make New Year’s health resolutions, out of which the most common would be to lose weight. Money and personal finance resolutions come up only next on the list.

We all know, mostly New Year’s resolutions are conveniently ignored from the second week of January. People seldom stick to the resolutions until completion! If you too belong to that category, just quit from here or at the most read this page and ignore. Else, set measurable, attainable goals if you think you have the perseverance to stick to the resolutions. Don’t look to jump over seven foot bars but look around for one foot bars that you can step over. Unless and until you set goals and attain them, you will end up as any other mediocre guy aimlessly wandering in life.

Looking at your finances, analyze where you were at the beginning of this year and where you are now. Are you better off now than at the beginning of the year? Has your net worth gone up or have you fallen into debt? If you find you are not better off, it is time to plug the loopholes. One thing is for sure; only if you have checks and balances in your finances, you will have peace of mind and good nights’ sleep.


So, what is the secret to a secured future, prosperity, and peace of mind? Income more than expenses, therefore, savings (capital) and prosperity. Capital thus formed helps in clearing the debt or to invest somewhere to multiply the money and get returns. So for a secured future and peace of mind, you need to have wealth more than debt or zero debt! Is it attainable? Of course yes, if you plan smartly and act accordingly from now onward. So here are the 4 personal finance resolutions this New Year for a secured future for you to act upon.

Increase Inflows

For you to become financially secure, you need to work smarter rather than harder. Rather than depending on a single income, try to diversify your cash flows with multiple income streams. Time is money, only you need to find the ways you can convert your time into money. Think about it. Either offer to work some extra time with your current employer or find a part-time job elsewhere. Sell anything that you think is of no use anymore. Rent out your garage or the unused part of your house. May be, you can use your hobby to make money. The possibilities are many. There are umpteen ways to create multiple income streams, only you need to identify a few.

The key takeaway message from the first resolution: Monetize your time and focus on multiplying your income.

Decrease Outflows

Analyze your spending habits. Find out where your drain holes are. Try to plug them. Begin tax planning right at the beginning of the year. Create and live by a monthly budget with a thrifty lifestyle. Disregard the urge to keep up with Joneses. Cut down every need without compromising the lifestyle, right from electricity to gas. If you are poor at tracking the numbers, take refuge with free budgeting apps like Mint. Don’t buy anything without thinking umpteen times. Don’t go on a shopping spree with your credit card. Use cash wherever possible instead of credit card. Using real money will make you think twice. Ultimately, it’s not how much money you make, but how much you save!
The key takeaway message from the second resolution: Save more. Be content with what you have, never with what you are.

Payoff Debt

Let the next New Year’s resolution be to reduce the debt, whether credit card debt or mortgage. Debt is easy to get into, but hard to get out of. Prolong your debt and you make the lender rich! Unless you make a sincere, planned effort to get out of debt, you are not going to end up debt free. It will suck your energy unknowingly. So, the year end is the best time to review your debts when you are in the mood of making a resolution. Prioritize your debts from high interest to low interest. Retire them in order. Ditch the high-cost debt first. Usually credit card debt is the leverage with highest interest rate and that should be the one that has to be paid off immediately. Use any windfall to clear debt rather than to invest. Avoid getting into further debt with tempting credit offers.

The key takeaway message from the third resolution: Don’t borrow from tomorrow to live today.

Build Wealth

While working on the aforementioned three goals, don’t forget to set aside some amount of your savings as an emergency fund, as unforeseen needs may arise anytime. You may invest your emergency fund in cash equivalent instruments like CDs but it should be available at your call if situation warrants for any emergencies like unemployment, medical emergency etc. If you are in your twenties and haven’t got an own house yet, it would be wise to buy a house somewhere at the outskirts of the city that you live now, if you can afford it with less than 2.5 years of your gross household income. However, it would be stupidity to buy a house if it would take your lifetime savings. Often there would be a standoff in your mind whether to payoff debt or to build wealth. Out of my experience, paying off debt saves more than what the same amount of money invested fetches. History has proved that equity fetches the best returns in the long term. So here too, time is your friend. Invest for a long term. Start early to take advantage of the compounding effect. Whatsoever little money you spare to invest, stick to your own investment principles and screening methods, and at the age of retirement, you should end up rich and prosperous.

The key takeaway message from the fourth resolution: Invest your savings today for a better tomorrow. (Note that I said “savings” and not borrowed money.)

Too much of unrealistic New Year’s resolutions will kill your real enthusiasm to better your finances. The aforementioned points are very simple and not hardbound resolutions at all but common sense that you need to apply whenever you are handling your finances, your hard earned money. It is the way that you should lead an ideal life. Write down your financial goals as a checklist. Keep reviewing them at regular intervals and give yourself a pat on attaining them. Let me hope by the next New Year, you are either free of debt or you are on your way to debt free life! Wish You A Happy And Prosperous New Year.

article source: mtherald.com