Morgage Lenders

Liam G asked:


Offset mortgages, which were practically unheard of around six years ago, are becoming an increasingly popular option within today’s market.

They are particularly popular with higher-rate taxpayers and are expected to become more and more common, with lenders saying that 25% of current mortgage holders would be much better off with an offset mortgage.

The basic principle behind offset mortgages is that we tend to pay more interest on debts than we accumulate on savings. Therefore, by linking the two accounts – and even a current account into which your salary is paid – the amount you are in credit by helps to offset the capital owed on the mortgage. In turn, this reduces the interest payable on what you owe.

For instance, if you had an offset mortgage of £100,000 with a savings account of £10,000 and £2,000 in your current account, you would only accrue interest on £88,000 of the mortgage.

Another major advantage with offset mortgages is that the interest saved is not taxed. For instance, instead of getting a net return of 3% on your savings, by offsetting you can expect a net return of 6%

One of the main disadvantages of offset mortgages was the high interest rates attached to them. Such interest rates were often at least 1% or more higher than the most competitive fixed rate mortgage within the market at the time.

As offset mortgages have become more popular though, introductory rates of less than 5% are becoming more and more common.

As to be expected, the highly competitive nature of the lending market has led to banks offering various extras to increase customer base.

The most popular of these include free valuations, legal fees and some lenders even allow you to offset 2 savings accounts. On top of this most lenders offer “super low” introductory interest rates, usually for 6 – 12 months.

The actual interest rate you will end up with will depend on a number of factors, notably the percentage of the properties value that you wish to borrow.

Chrisjan Smith asked:


Just over a year and a half ago the real estate market in the United States was red hot and setting records all around the country. It is now coming to a screeching halt. There are a variety of reasons like interest rates that are increasing and also the affordability for the average family that is no longer there. Most experts agree that the slowdown is more than just a passing trend and will continue for at least the next number of years.

With this slowdown in the market, loans that seemed like a great way to save some money up front are now proving to be a bad decision. If you locked yourself into a fixed rate 15 or 30 year mortgage you will be fine during this market correction. If you have an interest only adjustable rate mortgage (ARM) you may be are in a very tenuous position.

Real estate investors were using interest only ARMs to help them turn a quick profit, the practice is also known as flipping. This gave an investor a few years of relatively low monthly payments so they could use their capital to fix the home up.

Unfortunately what happens with an interest only ARM is that not one cent goes towards the principle of the home and no equity is gained. Depending on which type of ARM you have, after three or five years your payment increases so that you begin to pay some money towards the loan’s principle.

Most investors didn’t worry about the fact that none of their payment was going toward the principle because home prices were rising so quickly that the market itself was adding to the equity of their home. With the slowdown that is no longer the case, in fact they may find that after making five years of payments they don’t have any more equity in the home then they did when it was first acquired.

Many people that have purchased a home that they couldn’t really afford used the Option ARM. The Option ARM allows the home owner four ways to pay the monthly payments. You can do the minimum payment option, the interest only option, or you may chose the payment plan that has an amortization schedule to get you paid off in 30 years, and there is also the 15 year payment option.

The worst option you can choose is the minimum payment option. This option is very misleading, it gives you a very low monthly payment, but none of the principle is touched and it does not even cover the monthly accrued interest. If fact, if you were to only make the monthly minimum, the next month you will actually owe more than before you made the payment.

The market has now changed and you should re-evaluate your home mortgage. If you have an ARM or the Option ARM, check with your lender and see what it will take to get you into a fixed rate 15 or 30 year mortgage.

     Given the current economic and housing crisis, the need for legal advice, representation and aid has been at an all-time high. Anaheim attorney, James C Bechler practices in many real estate and legal areas and is accustomed to the various options that may lend a helping hand to those in need of relief. More and more homeowners have been unable to meet their mortgage or make payments on their loans because of this crisis.

     A year ago The Mortgage Forgiveness Debt Relief Act of 2007 was enacted to provide temporary relief for homeowners in dire financial situations. The Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on the home owners principal residence. To qualify for the benefits of mortgage forgiveness one must meet all of three primary requirements. 1) The debt forgiven must be on a mortgage for your principal residence. The principal residence is qualified based on the amount of time that you lived in it over the past five years. 2) The mortgage forgiveness must be because of loss of value in your home or because of a forced short sale in connection with a mortgage foreclosure. A forgiveness that is given in return for services performed for the lender is not allowed. 3) The debt must be forgiven between January 1, 2007 and January 1, 2010 and the debt forgiveness must be on the mortgage used to buy your home.

     It is important to know that if you do not meet any of these requirements, or if you do but would like to further reduce debt, there are other options available. One such option is on a micro financial level to reduce debt and/or expenses in other areas of one’s life. Such options could be modifying your existing loans on your property. This could greatly reduce the interest paid on your loans and help limit the damage of financial hardship. Although the process and paperwork can be confusing and laborious if seeking to obtain a loan modification alone, Real Estate attorneys may help out with these and often have legal staffs that are experts in talking to lenders to receive the most advantagous loan modifications possible.

     The Law Offices of James C Bechler has such a staff and offers free consultations on Mortgage and debt relief. Believe it or not, there are many legal options available during an economic crisis. It is crucial to seek help in such situations and Attorney James Bechler is a licensed real estate broker, real estate attorney and has experience in business litigation and bankruptcy. His multi-disciplinary expertise is exactly the kind of background an attorney needs to gain a full understanding of the legal options available in such complicated matters. He may be reached at 714 496 8090 for free consultation or visit www.jamesbechler.com.



By: Jeremy

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