How Does an Interest Only Mortgage Work?

November 3, 2011 · Leave a Comment

A mortgage is a financial contract between the lender and the borrower. Mortgages are tailored to the individual and the precise terms and conditions given will be dependent on many different factors, such as the loan to value ratio, the amount of the mortgage and a whole range of other circumstances specific to each borrower. Yet despite this there are essentially two different types of mortgages which is the repayment mortgage and the interest only mortgage.

When a mortgage is advanced the borrower will not only have to pay back the principle sum, i.e. the amount advanced, but also an additional amount, i.e. interest, for having the privilege of the mortgage. The amount of interest is dependent on the interest rate, and the interest rate will depend on many factors. There will be an interest charge regardless of whether the borrower has taken on an interest only mortgage or a repayment mortgage.

Mortgages are usually paid on a monthly basis over an agreed number of years. If a borrower has taken out an interest only mortgage the monthly repayment will pay the interest charge only. If the interest rate is fixed, i.e. a specific percentage of the mortgage advanced, the monthly payment will be the same. If the interest rate is variable, i.e. subject to change during the duration of the mortgage, the monthly payment will fluctuate with every change in the base interest rate. Fixed rates are advantageous in that the borrower is certain of the specific monthly payment making it easier to budget, whereas a variable rate interest rate will be preferable when the base rate is on the decline or at a current low.

Since the monthly payment of an interest only mortgage only covers the interest charge the capital advanced, i.e. amount of the mortgage doesn’t decrease. This means that it is never paid off with the normal monthly payment. However, the mortgage will have to be repaid at some time in the future.

Since the interest only mortgage doesn’t change with each payment many may ask what is the point of them. The monthly payment of an interest only mortgage is often much less than that of a repayment mortgage and is likely to make it more affordable for a first time buyer. With an interest only mortgage a first time buyer can purchase a property, hence securing a foot hold on the property ladder, and wait for an ideal time when the property market picks up allowing the property to be sold for more than it was bought for which may result in a sizeable deposit for the next property. During this time the buyer is likely to want to change to a repayment mortgage to start paying off some of the capital. During this time a repayment mortgage is often more affordable than when first starting out.

Alternatively, an interest only mortgage is ideal for those people who already have a property but who buy a second property to rent out or let. The rent generated should cover the mortgage plus all other letting expenses although it is unlikely to generate much of a profit if any at all. When the time is right the land lord will sell the property for more than it was bought for, hence allowing the mortgage to be settled and leaving a nice profit through the capital gain. Rental properties should be seen as a long term investment and the best capital gains are usually made when the property is held for many years.

Before taking out a mortgage, regardless of whether it is an interest only or repayment, it is advisable to seek professional advice. A professional adviser will provide a range of options that will enable a borrower to assess and appraise a whole range of mortgages and choose the most suitable based on the individual’s specific circumstances.

Written by yackers1
ACCA qualified accountant who thirives in the world of business and finance

www.nddproperties.tv A Mortgage Loan modifications generally aim to achieve a specific goal create a payment that’s affordable for the borrower. Most borrowers have the mindset that the process is long, difficult and lenders are not motivated or open to modifying a loan because it is easier for them to initiate foreclosure.

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More Insight on Sbi Nri Home Loan

November 1, 2011 · Leave a Comment

Owning a home is such a great treasure that everyone wants to have or provide for his or her family. You can now move closer to your dream of owning a home by using the SBI NRI home Loan. These are home loans that could be used in construction or purchasing a house or a flat. In addition to that, they can be used to renovate, extend or repair an already existing home. This is not all, you could also use the loans to purchase land upon where you want to build a house. Something more amazing yet is that you can even furnish your home using these loans!

To be eligible for these SBI NRI home loans provided by the State Bank of India, you must be 18 years of age and above with a valid Indian Passport. If you are a PIO card holder, you need to ‘have been staying abroad’ for the past two years with valid contract or a steady income from a business or businesses so that you have the capacity to repay the loan. To get the loan, you have to submit the all the loan application documents filled as required in the foreign offices of the State Bank of India. Currently the bank has its presence in more than 30 countries with an intention of helping Indian expatriates who are working abroad. It also has an offshore unit for banking across the globe. You could visit the State Bank of India which is in the country you are in to get more insight on SBI NRI home Loan

The minimum SBI NRI home loan an individual can apply is around 300,000 rupees while the maximum will be determined by the Estimated Monthly Income/Net Monthly Income ratio whereby the amount of loan is 40% of the total annual income that the specific applicant makes. You will be required to pay a processing fee that amount to 0.05% of the total loan you have applied for though this value should not exceed 10,000 rupees. After you have received the loan, you will make repayments which are based on the Equated Monthly Installments. The repayment period or term for the loan is dependent of the age of the applicant as you can get up to 25years if you are below 35 years of age and if you are above 45 years of age, you can only get a loan term of up to 15 years.

The SBI NRI home loan come with a reasonable interest rate based on daily diminish balances and you will also get a personal accident insurance cover. In addition to that, the loan could be availed at the place you want to construct your house. This is just but the tip of the iceberg, if you are interested in the SBI NRI home loan or you would like to get more information about the loans given, you could visit State Bank of India website for more insight on SBI NRI home loan. It all begins by opening an account with SBI.

Written by Hurbert Michael
Hurbert Michael is a young, enthusiastic, vibrant and ambitious engineering graduate with a diploma in journalism and currently he pursing a MBA. He e

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Why Foreign exchange market is different from the stock market ?

October 31, 2011 · Leave a Comment

The foreign exchange market is also known as the FX market, and the forex market. Trading that takes place between two counties with different currencies is the basis for the fx market and the background of the trading in this market. The forex market is over thirty years old, established in the early 1970′s. The forex market is one that is not based on any one business or investing in any one business, but the trading and selling of currencies.

The difference between the stock market and the forex market is the vast trading that occurs on the forex market. There is millions and millions that are traded daily on the forex market, almost two trillion dollars is traded daily. The amount is much higher than the money traded on the daily stock market of any country. The forex market is one that involves governments, banks, financial institutions and those similar types of institutions from other countries. The

What is traded, bought and sold on the forex market is something that can easily be liquidated, meaning it can be turned back to cash fast, or often times it is actually going to be cash. From one currency to another, the availability of cash in the forex market is something that can happen fast for any investor from any country.

The difference between the stock market and the forex market is that the forex market is global, worldwide. The stock market is something that takes place only within a country. The stock market is based on businesses and products that are within a country, and the forex market takes that a step further to include any country.

The stock market has set business hours. Generally, this is going to follow the business day, and will be closed on banking holidays and weekends. The forex market is one that is open generally twenty four hours a day because the vast number of countries that are involved in forex trading, buying and selling are located in so many different times zones. As one market is opening, another countries market is closing. This is the continual method of how the forex market trading occurs.

The stock market in any country is going to be based on only that countries currency, say for example the Japanese yen, and the Japanese stock market, or the United States stock market and the dollar. However, in the forex market, you are involved with many types of countries, and many currencies. You will find references to a variety of currencies, and this is a big difference between the stock market and the forex market.

Written by Pipshower

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Financial Planning- A Planning to Achieve One’s Financial Goals

October 30, 2011 · Leave a Comment

 While one cannot predict the future,one should certainly be better prepared for it as all of us have our goals to be fulfilled at every stage of life and these goals will only be achieved if one has done the financial planning. So, its better to start planning now as prevention is always better than cure. Financial planning is a systematic approach whereby the financial planner maximizes customer’s existing financial resources by using the appropriate financial tools and investment vehicles to best achieve his financial goals and objectives.

In other words, financial planning is the process of meeting once life goals through proper management of one’s finances. Life goals can include buying a home, saving for children’s education,buying a car, protecting family against financial risks or planning for retirement. The need for financial planning arises from the need of meeting the financial goals of one’s life & it is financial planning that helps us to take a comprehensive look towards one’s futures financial needs and goals including cash flow, debt management, education funding, retirement planning, estate conservation and portfolio management. Financial planning gives you the direction to make informed decisions about your investments so that you won’t make any mistakes and you can reap the benefits of your financial planning for the rest of your life.

 Financial planning is simple mathematics. There are 3 major components :

Financial Resources (FR)

Financial Planning Tools (FT)

Financial Goals (FG)

 When you want to maximize your existing financial resources by using various financial tools to achieve your financial goals, that is financial planning.

Financial Planning : FR + FT = FG

Benefits of Financial Planning:

Financial Planning ensures that the right amount of money is available in the right hands at the right point of time in future to achieve specific Financial Goals. Virtually anyone with moderate wealth or a decent income can avail the benefits of financial planning like:

Financial Planning is based on individual risk profiling, and it provides a road map to achieve financial goals

Financial Planning helps you take a ‘big picture’ look at your financial position and it guides you to examine your current financial status and determine objectives.

It helps in devising a strategy or plan for how you can meet your goals given your current situation and future plans. It also identifies weaknesses and recommends improvements.

It puts in place the risk management system to meet uncertainties of life through efficient Insurance Planning, Tax Planning and Estate planning.

Financial planning is the process of managing your money to achieve personal economic satisfaction. It allows you to control your financial situation and provides a feeling of security and less stress.

It is a disciplined approach to managing your finances to reach life goals. It involves systematic & disciplined investment mechanism, which helps in creating wealth over a period of time. It helps you to become more responsible towards disciplined investing.

Financial Planning Process:

The Financial Planning Process consists of six steps, using which, you can work out where you are now, what you may need in the future and what you must do to reach your goals.

Step 1: Determine Your Current Financial Situation

Step 2: Develop Financial Goals

Step 3: Develop financial planning alternatives

Step 4: Evaluate Alternatives

Step 5: Create and Implement a Financial Action Plan

Step 6: Re-evaluate and Revise One’s Plan

Financial planning, especially at an early age can help to give your life focus and help you to achieve your goals in life. So, start your financial planning today and fulfill all your dreams & goals of life without any hassles.

Written by jiten702

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Oscar Winning Slumdog Millionaire

October 29, 2011 · Leave a Comment

Slumdog Millionaire won 8 Oscars.  We all know that sometime movies get Oscars even when they are not that good, so you must be wondering if that was the case with Slumdog Millionaire.  No, indeed it was not. Slumdog Millionaire was one of the best movies I have seen this year. I saw all 5 best picture nominated films and Slumdog Millionaire was the best one.  It was a great movie, entertaining to watch, uniquely done and it shows us something that we might not be aware of–the way that the people in India are often forced to live.

Jamal is on the Indian equivalent of the popular show Who Wants to be a Millionaire.  And he does what only one other person has done.  He answers all the questions correctly to win 10 million rupees which is roughly 200,441 American dollars.  The police believe he has cheated to get this result so they arrest Jamal and begin to torture him to get him to tell how he cheated. What follows is a disjointed account of Jamal’s life with each story centering around the question he was asked on Who Wants to Be a Millionaire and how he knows the answer to the question.  So we get an account of Jamal’s life question by question.  We find out that Jamal and his brother Salim were orphaned young and went through many trials as they grew up.  Most of us cannot imagine what they went through.  Along the way they meet Latika who becomes the 3rd member of their little group.  But when Jamal and Salim escape from a bad orphanage Latika is inadvertently left behind.  The rest of Jamal’s life is centered around finding Latika again. Does he find Latika and does he get to keep the money?  Watch this excellent movie and find out.

I love the way the story was written.  A life framed around a series of random trivia questions.  It was a very good and unique way to tell the story.  The story moved well and never dragged or was boring and it made sense. There were also some very nice camera angles used during some of the chase scenes as the children ran through the streets of Mumbai. 

The score was absolutely phenomenal.  I have the CD ordered and can’t wait to listen to the music all over again.  It complemented the movie the way a score is supposed to, but isn’t the case for most films.  It gave emotional depth to the film in a way dialogue or pictures could not.  The movie definitely deserved its Oscars for Score and Song.

The acting was well done as well.  Even though there were no Oscar nominations for all these new faces. Jamal is played by Dev Patel.  He does the part very well.  He looks like the nice guy caught up in circumstances beyond his control.  So he fit his part very well.  I hope to see him in future films.  Salim (Jamal’s Brother) is played by Madhur Mittal who also did a nice job with his role of the older brother doing what he had to do to protect his younger brother. Latika is played by Freida Pinto.  She is a very pretty girl who plays the role of a girl caught up in a world she cannot escape from but desperately does not want to be a part of.  And of course the children who played the younger versions of Jamal, Salim and Latika did an outstanding job.  They did help carry the film as we go from the children being very young to teenage to adult as the story unfolds.

And I also have to mention the director Danny Boyle for having such great vision with this movie.  He has really created a treasure in this film and he much deserved the directing Oscar that he received. 

This was a very good film.  See it as soon as you can.  You won’t regret it.  This is one Oscar film that you will certainly enjoy.  And one that I will be adding to my movie collection.

Written by Aurone

Question by drjpba: How many millionaires could you make with 3 trillion dollars?
Would that be Constitutional? In other words,is it Constitutional for Congress to pass a bill or budget that would create millionaires using 3 trillion dollars.
30,000 families? Still would be better than Obama’s idea.Let’s see,300million in the states.

Best answer:

Answer by Tyranny Response Team
The Constitution does give the congress the power to appropriate money. I don’t think the founders counted on the American public becoming so dumbed down.

Holy hell max, $ 3Trillion is 3,000,000,000,000. That number that you used it $ 3Billion. Is our mathematical ability really that bad in this country? Trillion = 12 zeros

Add your own answer in the comments!

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