Monthly Archives: October 2017

What You Need to Know About Mortgages

A mortgage is generally defined as a loan used to finance the purchase of real estate or a home. These loans come in different types, rates and terms. The specifications of these loans are important, for they along with the initial down payment determine the monthly payment amounts due throughout the life of these loans. The right type of loan may depend on individual circumstances. For those seeking to finance or live in a home for only a few years, an ARM loan, or adjustable rate loan could be best. Those who are looking to stay in a home long term, a fixed rate loan may be best. Those lucky enough to be buying property for the first time may receive the best terms with a first time buyer mortgage. To determine which loan is best, the key concepts of all types of mortgages should be examined.

The most common type of mortgage is the conventional home loan. Conventional home loans can come with fixed or variable interest rate terms and have monthly payment amounts based on an interest rate and the length of the loan. Common lengths of time for fixed rate loans are for 15 or 30 years. There are also 40, 25, 20, and 10 year loans. Generally, the longer the loan term, the lower the monthly payments will be. Most of the time, conventional home loans require a substantial initial down payment to qualify. As with all types of loans, it is best to check with your lender or terms of your offer. Some lenders may reduce the amount of down payment that is required, or even may determine that no down payment is necessary at all.

When choosing the type of mortgage for buying a home or property make sure you shop around the different mortgage brokers and what kind of financial services that they can provide for you.

ARM or Adjustable Rate Mortgages are similar to conventional mortgages but have an adjustment period. The adjustment period is generally 3 to 5 years in which you are given a fixed low interest rate. After this specified period of time, your interest rate will begin to vary based on the rate of a predetermined index, plus an additional agreed upon margin. Many times, the interest rate is recalculated for this type of loan every 6 months or every year. Because interest rates may increase from one period to the next based on the rising or falling of the index, this is considered a more risky type of loan for those seeking to stay in a home over a longer period of time.

For those who qualify, there are also some special loan types to consider. There are FHA loans, which are loans designed for people with lower. And for first time home buyers, there is a first time buyer mortgage. Because the purchase of an initial first home can be confusing for the first time home buyer, many lenders offer these types of loans with simple terms and requirements. They are generally, fixed rate conventional mortgages with little or no down payment required and low interest rates. A first time buyer mortgage is considered one of the most favorable types of mortgage to obtain.

Spanish Financial Services & Mortgages

At Rose Financial Services, being recognised as a specialist mortgage brokerage and independent financial adviser, it is accepted that we are and will remain abreast of any developments affecting the products and services we provide to our clients. In recent weeks and months there have been some changes that I would like to summarise for you. The content can sometimes be complex so, if you want further details and specific advice for your own personal circumstances, please contact us.

1) EU Savings & Tax Directive

In August of this year the EU implemented a little advertised but significant piece of legislation to reduce some of the tax avoidance that has existed for years via numerous international or ‘offshore’ banking centres.

The actions they have taken allow for a freer flow of information between EU states and some offshore centres primarily for the benefit of each member nations tax authorities. In other words, the insurance and investments providers are obliged to not only provide tax-related information but, in some cases, will automatically withhold a percentage of interest to meet the likely tax payable.

The action has the affect of ‘watering down’ some of the benefits previously attached with using offshore arrangements, but they have not fully closed all the windows of use. Indeed, some centres will continue status quo and, if not excluded from the directive, will simply ignore the pressure being applied.

So, for the time being at least, there are some very good reasons to continue to explore the tax breaks on investments offshore.

2) The European Central Bank (ECB) increases its Base Rate by the first time in 4 years

Concern for rising inflation in its EU member states has forced the ECB to take a defensive stance by increasing its base rate by 0.25%. Not a lot and not as much as the markets had expected, but enough to make the cost of borrowing that much more expensive.

Most mortgages in Spain have an interest rate that is priced against an index known as the ‘Euribor’ (European Interbank Offer Rate) which is how banks calculate the interest charged to one another. Because of the long term nature of residential mortgages, the banks use the annual rate when the price a mortgage loan for you. It is the Euribor annual rate that has seen the largest increase of late, again because the money markets expected a half point rise in the ECB’s base rate rather than just a quarter. That has translated to an average mortgage costing 3.5% rather than just 3% just a few weeks ago. Of course, it could be that the quarter point may be enough and the markets may adjust the index in a downwards direction. But it is reasonable to assume that the new price is here to stay for a while.

The 3.5% average rate is an increase of nearly 17% in real terms so it is not insignificant! However, we have to put things into perspective here. A mortgage of Euros 100,000 will now cost 291 a month rather than 250 if arranged on an ‘Interest Only’ basis. Still an awful lot less than the cost of borrowing in the UK!

3) Using your property for pension planning via a SIPP

With effect from next April, the UK Revenue will be offering a tax break by allowing various types of assets, in particular property, to be placed under a tax umbrella known as a ‘Small Self Invested Pension’ or SSIP for short.

Whilst this is not likely to used by most people, even those owning their home, it will be of interest to property portfolio owners and even those folk owning a holiday home overseas. That applies to a lot of people with property in Spain.

Whilst the final rules have yet to be announced by the Inland Revenue, it is understood that the fundamental benefit will be reduce if not eliminate capital gains tax and inheritance tax by transferring such assets into a pension. In the long run, of course, the savings could be significant so this has to be an option to consider when buying property, either in the UK or elsewhere such as Spain.

4) UK pensions – The Turner Report

I know! You are probably fed up with hearing and reading about this. But I am not a politician so I can say what I really think without worrying about the consequence!

I have been in finance a long time and that means around the issue of pension planning and the potential ‘time bomb’ that it is whenever it is raised and brought into the public eye.

There are a few basic facts that cannot be ignored, even politicians try to.

1) We are all living longer! That means that pensions are payable for a longer period and that extra money has to come from somewhere. The UK’s system of ‘Pay as you go’ (tax collected is paid out immediately as a pension) cannot continue to work as the ratio of people paying tax will fall against those in pension payment. Fact!

2) The birth rate is in decline! This has the same effect as 1) above i.e. that, in time, there will be fewer people to pay tax. That being so, can future governments persuade the then tax payers to continue to pay an ever increasing amount? I doubt it! Fact!

3) The UK’s private pension funds are the largest in Europe. That’s simply because we do have the intellect to understand the need to save for the future albeit that the bulk of these monies are via the large public and private pensions funds. However, the small man who does not have the benefit of a company pension really does need to plan more for himself. Fact!

The fundamentals are not good and cannot be avoided. The realities of the decisions that have to be made are obvious but, as always, needs some political courage and conviction to bring about action. What is needed is pretty obvious;

– An older state and retirement age as Lord Turner correctly surmises. But why wait until 2020! It’s an issue now so make the change now!
– Save more! The New Zealanders realised some years ago that they had the same problem and have reacted. They have implemented a second tier pension plan. Yes, it costs more but this is now unavoidable.
– Save more yourself! Do you really want to rely on third parties that may, when you need it the most, not be able to deliver. Savings as a percentage of earnings has fallen dramatically in the UK in recent years as people spend for today. Time to change attitude I think!

Financial Services For Residential and Commercial

Present day has almost everyone competing for business, especially concerning the world of real estate/property. Realtors are in competition on a daily basis with each other and will go out of their way to gain business leads and clients that may in turn bring them even more business down the road. Also, financial services usually go hand-in-hand with real estate/property as does a commercial mortgage.

Often, many individuals need to acquire services or professional expertise that provides them with sound financial advice, especially if the person wants to delve into the real estate / property market. You do not want to go head long into purchasing or selling real estate / property if you have less than great credit for example. This may hinder your business deals and cause you to lose money rather than make money with high interest rates if you are seeking loans and such.

Also, mortgages in general are often what many have to take out when playing in the game of real estate / property. Commercial mortgages on properties are even more important as they deal with strictly larger parcels of property and buildings pretty much of the time. Therefore, you will be dealing with even more money than you would normally concerning most mortgages.

Most services that deal with the financial industry, cover a wide array of certain organizations that help others deal with money and its management. These financial services are important to anyone wishing to take on purchasing or selling properties. You may find these services at many companies that are of the credit card variety, banks and financial institutions, consumer finance companies and other places such as stock brokerages and in many outfits that are sponsored by the government. Enlisting the services and professional help of any of these services may turn out to prove the best financial move you could ever make. They can put you on the right road to getting yourself and your finances in order to take on the real estate / property market.

If you are seriously considering trying to tackle much larger real estate moves, commercial properties are definitely the way to do just that. Mortgages of the commercial type will ask for your financial head to be on straight as do other kinds of mortgages of course, however mortgages that are of the commercial type will ask for more dedication, hard work and determination to buy and sell these properties. There is so much more that go into selling and purchasing properties that are considered commercial. This will also ask that you make smart financial moves and decisions, as you stand to either make a lot more money off these properties or perhaps lose a lot more money if the sound decisions are not made at best. The real estate market is a Ferris wheel of those who know how to play the game and those who think they know. Which one will you be?

Getting Better Deals with Mortgage

There are so many mortgage variations and these can confuse both consumers and professionals when they want to choose a mortgage service. The mortgage industry is in flux as interest rates fluctuate and rules that govern the market change on a daily basis. The rules change so often that you cannot confidently tell someone that there are set rules to follow for a particular mortgage. When you are looking for mortgage outsourcing services, bear this in mind, and take advantage of a good interest rate when it is offered to you in case it increases in the future, or the rules change.

How mortgage lenders, brokers, and agents have created a solution?

With the above in mind, it has made mortgage lenders, brokers, and agents to come in together and work in a way where they are able to offer the mortgage outsourcing services. So this is how it goes – The brokers get the professional who is in need of a mortgage; arranges at a fee how they will get money from a lender who might be a banker or a private organization, which is ready to give out their money. This in turn is used to clear the mortgage and help the professionals get the service they require. Mortgage outsourcing services are the way to go in order to grow your business.

Why mortgage outsourcing companies are preferred?

Mortgage outsourcing services are chosen by modern professionals and consumers. It saves them the hassle of going through the complex processes in acquiring the ideal mortgage for their businesses. Those who offer these services are finding that their client base is growing. Companies now offer their services via websites, which increases client numbers, as they are able to serve people from all over the world.

All data is stored at one place for quick referral

Mortgage outsourcing minimizes risk because all documents and processes involving the mortgage are kept at a central place enabling a business to have access to many mortgage providers without having to duplicate documents and place them in other locations Mortgage outsourcing companies make sure that their databases are kept up to date so that their clients have access to accurate information. Clients are also able to access vital information in the comfort of their offices or homes. At the end of the day, the client saves on the cost of looking in many different places for mortgages, financial services and other services that entails a mortgage acquisition. This act of outsourcing mortgage services and consolidating them in a central place has really saved businesses a lot in terms of time and resources.