Understanding The Lifetime Mortgage & Its Unique CharacteristicsUnderstanding The Lifetime Mortgage & Its Unique Characteristics

There are lots of different types of mortgages out there and each of them comes with its own requirements. There are rules you must follow, as well as unique requirements you should meet. Apart from classic and buy to let mortgages, you may also run into the so called lifetime mortgage. What does it actually mean and how does it work?

Becoming familiar with the lifetime mortgage

In theory, the lifetime mortgage is fairly simple to understand. Simply put, you get a big loan. It is secured against the home. The good news is you do not need to pay for the home until you die or go into a care home. As a direct consequence, you end up with some extra wealth and easy payments for the upcoming years.

For this type of mortgage to work, you need this place to be your main residence. You gain ownership over it, meaning you can also leave some of its value as inheritance for your children. Furthermore, while this is not a general rule, some lender institutions can provide large sums to those with specific medical conditions and even harmful lifestyle factors like smoking.

The home becomes your property, so maintaining it is your own responsibility. Just like any other loan, it will come with some interest rates. The interest can be repaid as years go by, but you can also add it to the overall loan amount. It is usually a matter of personal preferences and it will most likely affect the final deal.

Whether you end up in permanent care or you die, the home is then sold. The bank will cover the actual loan. Since properties gain in value the extra will go to your beneficiaries. Sure, before selling the property, the bank will first analyse your estate and try to recover the loan without actually selling the property.

If you think about it, some issues may arise in the long run. What if the sale cannot cover the value? The logical way involves having the beneficiaries pay the extra. To protect beneficiaries from getting in debt without doing anything many lifetime mortgages come with a no negative equity guarantee – meaning the beneficiaries will not have to pay back more than the actual value of the home.

Types of lifetime mortgages

There are more types of lifetime mortgages out there and each of them has its own rules. The interest roll up mortgage means you do not have to make any payments – not even for the interest. Everything is paid when the home goes out for sale.

The second option involves the interest paying mortgage. You get the money for the house, but you only pay interest. Some deals may also allow you to make capital payments if you want to – a matter of future plans for your beneficiaries.

Who lifetime mortgages are for

A lifetime mortgage could be a good option, but there are many factors to take in consideration. Keep in mind that it will affect your overall inheritance. If you choose an interest roll up mortgage deal, you might have to pay more than the value of the house, as debt builds up quickly. Opt for a no negative equity guarantee.

Lenders expect the house to be maintained and kept in good position. Variable interest rates will also affect the final price. Plus, you will have to set some money aside to come up with a good final result.

Bottom line, the lifetime mortgage is definitely a good option, but not suitable for everyone. It comes with some requirements and small details that can make or break a deal.

Buy To Let Property Investments Explained – Is There A Good Profit?Buy To Let Property Investments Explained – Is There A Good Profit?

Buy to let is a type of mortgage that may pop up quite often when considering offers from banks and other lending institutions. Such a property is self explanatory. You get a mortgage to pay for it, you buy it and you put it out on the market straight away. You find tenants and the property will pay by itself. Such a mortgage is considered an investment – usually a long term one.

Understanding the concept behind buy to let investments

Buy to let mortgages and classic mortgages operate on the same principles, but they are extremely different. A classic mortgage gives you a house to live in. You end up with a property that you actually make your home. On the other hand, a buy to let investment is a business. You are practically running a small business and it comes with a bunch of small responsibilities.

This type of property investment works by some simple ideas. You can buy the house yourself – assuming you have the funds. You can also come up with a deposit for it, then get a mortgage. Obviously, the mortgage deal and rates will be different from a classic mortgage. Just like any other type of mortgage, there is a risk involved, so you must make sure you have a realistic plan to pay everything back.

Unlike some expectations, you will have to pay the mortgage payments no matter what. If you have tenants, chances are they will cover the mortgage. These days, rental costs are higher than mortgage payments, so you may end up with a bit of extra too. But then, even if the tenants leave and you cannot find someone else to occupy the property straight away, you will still have to make your payments.

Once you get the funds and you purchase the property, you can make profit in two different ways. First, you have the rental yield. Tenants pay the rent and you will need to withdraw the maintenance costs. Agent fees may also be involved. You will usually end up with a small profit or get even. If you lose money on the deal, it will be an insignificant amount.

Second, you need to consider the capital growth. With time, you may consider selling the property. Considering the constant growth of the market, there is a decent chance you will sell the property for more than what you paid. If you manage to keep tenants in all the time and the property pays for itself, everything you make is pure profit.

Who are buy to let investments for

A buy to let property investment is not suitable for everyone and you need to understand a few things before making this big step. You need to be a fan of investments that feel a bit more tangible when compared to other alternatives – such as shares or stocks. You will have to tie up a big chunk of money for many years and you also have to understand that prices may go both up and down.

While the chances are relatively low, you need to be aware of the fact that you may not always earn a profit on this investment. Doing it right will almost always give you a good profit though. Then, just like any other type of mortgage, this one comes with some additional risks too.

Bottom line, a buy to let property investment is a good idea and it can make a good profit, despite implying running a small business, a property and maintenance. All these things will affect the potential return, but it is still a brilliant idea.

Educating Yourself On Priority & Non Priority Bills & DebtsEducating Yourself On Priority & Non Priority Bills & Debts

Debt can be a nightmare. Everyone has it, but lots of people can keep it under control. When things spiral out of control, debts can get overwhelming. You risk facing all kinds of severe consequences and fees keep adding up. You find it impossible. While talking to an adviser is certainly a plus, learning more about debts will also help you make more informed decisions.

Understanding what priority debts mean

When dealing with debts, you need to take them in a certain order and annihilate one at a time. Some debts are more important than others because of their potential consequences – these are the so called priority debts. They may not be the biggest debts though and they may not have the highest interest rates – their consequences dictate their overall importance.

Priority debts could include court fines, TV license debt, gas and electricity bills, rent or mortgage, council tax, child maintenance, VAT, income tax or national insurance and hire purchase agreements. If you face such debts, consider the potential effects associated with any of them and find out what is the worst that could happen.

Why you need to focus on priority bills

Failing to pay your priority bills could lead to various issues. For instance, you could end up with annoying visits from bailiffs. You might end up with court summons, meaning things are escalating. Fail to pay your bills and disconnection will inevitably kick in too – no more lighting or heating. When these debts target your rent or mortgage, you could lose your home too.

In the worst case, you could be made bankrupt. Creditors and other institutions are trying to take everything off you, but there is not much to grab. There are, of course, a few things they may not take. Since they still cannot recover their money, you will be declared bankrupt – you can also file for bankruptcy yourself.

What non priority bills involve

Non priority bills and debts are just as harsh, but the consequences are less serious. You will still be able to keep your home and you can still have lighting and heating. Bailiffs may end up knocking on your door or you could end up in court. You can also try to negotiate a deal and keep firm – they will try their best to gain as much as possible from you.

Non priority debts can go in more directions. For instance, overdrafts go in this category. Personal loans (not secured against an asset that you could lose) are also considered non priority. Loans and money borrowed from family and friends go in the same category, as well as payday loans with no credit check and store card debts. Catalogue debts are just as common.

Water and sewerage bills are often considered to be non priority debts. However, you should see them in a different way. They should be seen as priority bills because they affect your household, comfort and convenience. They represent a continuous service that you must pay for. In other words, the debt will keep going up even if you fail to pay for it. Sooner or later, someone will knock on your door.

As a short final conclusion, debt can be challenging and difficult to deal with, but planning is critical to avoid it. Seeking professional help – free advice usually – is essential, while knowing the difference between priority and non priority bills is just as good. A bit of education will point you in the right direction and help you annihilate bills one after another in the right order. Your bank may also provide access to an advisor when in need.